THE THIRTEENTH SCHEDULE
COMPUTATION OF PROFITS OF A SPECIFIED BUSINESS
1. The provisions of this Schedule shall apply to the following specified businesses which fulfill the prescribed conditions and are notified by the Central Government in the Official Gazette :-
(a) business of generation, transmission or distribution of power;
(b) business of developing, or operating and maintaining, any infrastructure facility;
(c) business of operating and maintaining a hospital in any area, other than the excluded area;
(d) business of processing, preservation and packaging of fruits and vegetables.
(e) business of laying and operating a cross country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of the network;
(f) business of setting up and operating a cold chain facility; and
(g) business of setting up and operating a warehousing facility for storage of agricultural produce.
2. The profits of every specified business shall be computed separately under this Schedule.
3. The profits of any specified business shall be the gross income from the business carried on by the assessee at any time during the financial year as reduced by the amount of business expenditure incurred by the assessee, wholly and exclusively, for the purposes of the business during the year.
4. The gross income referred to in rule 1 shall be the aggregate of,-
(a) the accruals or receipts derived by the assessee from the business;
(b) the accruals or receipts derived by the assessee from the demolition, destruction, discarding or transferring of any business captial asset (other than land, goodwill or financial instrument) in respect of which deduction has been allowed, or allowable, under sub-rule 5 in any financial year; and
(c) the amounts referred to in sub-section (2) of section 31.
5. The amount of business expenditure referred to in rule 1 shall be the aggregate of the amount of,-
(a) operating expenditure referred to in section 33, incurred by the assessee;
(b) permitted finance charges referred to in section 34, incurred by the assessee;
(c) expenditure on any license charges, rental fees or other charges, if actually paid;
(d) expenditure on purchase, lease or rental of land or land rights;
(e) capital expenditure incurred by the assessee;
(f) expenditure referred to in clauses (a) to (e) incurred before commencement of the business;
(g) the amount of negative profit computed under this Schedule for any financial year immediately preceeding the relevant financial year.
6. The profits of the specified business shall be treated as 'nil' if the profits determined under rule 1 is negative.
7. The profits computed under rule 1 shall be presumed to have been computed,-
(a) after giving full effect to every loss, allowance or deduction referred to in subsections (1) to (3) of section 33, sub-section (1) of section 34 and sections 35 to section 38;
(b) after giving full effect to any deduction allowable under sub-chapter-I of Chapter III in relation to the profits of the specified business.
8. The written down value of any business asset used in the specified business shall be computed as if the assessee has claimed and has been actually allowed the deduction in respect of depreciation under section 36, initial depreciation under section 37 and terminal allowance under section 38.
9. The amount of common costs (including depreciation) attributable to the specified business shall be determined in the prescribed manner.
10. The successor in a business reorganisation of the specified business shall be allowed a deduction in respect of the negative profit determined in the case of the predecessor for,-
(a) the financial year immediately preceeding the financial year in which the business reorganisation has taken place if the reorganisation is on the first day of the financial year; and
(b) the period beginning with the first day of the financial year and ending on the day immediately preceeding the date of business reorganisation, in any other case.
11. The deduction to the successor shall be allowed,-
(a) in the financial year immediately following the year in which the business reorganisation has taken place if the reorganisation is on the last day of the financial year; and
(b) in the same financial year if the business reorganisation has taken place at any other time during the financial year.
12. The provisions of this Schedule shall apply to the business referred to in rule 1, which fulfills all the following conditions, namely:-
(a) it is not set up by splitting up, or the reconstruction, of a business already in existence;
(b) it is not set up by the transfer to the specified business of machinery or plant previously used of any purpose; and
(c) in a case where the business is of the nature referred to in clause (e) of sub-rule 1, the business,-
(i) is owned by a company formed and registered in India under the Companies Act, 1956 or by a consortium of such companies or by an authority or a board or a corporation established or constituted under any Central or State Act;
(ii) has been approved by the Petroleum and Natural Gas Regulatory Board established under the sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 and notified by the Central Government in the Official Gazette in this behalf;
(iii) has made not less than one-third of its total pipeline capacity available for use on common carrier basis by any person other than the assessee or an associated person; and
(iv) fulfils any other condition as may be prescribed.
13. For the purposes of this Schedule, unless the context otherwise requires,-
(a) an "associated person", in relation to the assessee, means a person,-
(i) who participates, directly or indirectly, or through one or more intermediaries in the management or control or capital of the assessee;
(ii) who holds, directly or indirectly, shares carrying not less than twenty-six per cent. of the voting power in the capital of the assessee;
(iii) who appoints more than half of the Board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of the assessee; or
(iv) who guarantees not less than ten per cent. of the total borrowings of the assessee;
(b) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if-
(i) the machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India;
(ii) the machinery or plant is imported into India from any country outside India; and
(iii) no deduction on account of depreciation in respect of the machinery or plant has been allowed or is allowable under the provisions of this Code, or the Income-tax Act, 1961, in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee;
(c) the condition specified in clasue (ii) of sub-rule 11 shall be deemed to have been complied with if the total value of the machinery or plant or any part thereof, previously used for any purpose and transferred to the business referred to in sub-rule 1, does not exceed twenty per cent of the total value of the machinery or plant used in the business;
(d) the capital expenditure referred to in sub-rule 3 shall not include any expenditure incurred on the acquisition of any land, goodwill or financial instrument.
(e) 'excluded area' means the area comprising-
(i) Greater Mumbai urban agglomeration;
(ii) Delhi urban agglomeration;
(iii) Kolkata urban agglomeration;
(iv) Chennai urban agglomeration;
(v) Hyderabad urban agglomeration;
(vi) Bangalore urban agglomeration;
(vii) Ahmedabad urban agglomeration;
(viii) District of Faridabad;
(ix) District of Gurgaon;
(x) District of Gautam Budh Nagar;
(xi) District of Ghaziabad;
(xii) District of Gandhinagar; and
(xiii) City of Secunderabad; and
(f) area comprising any urban agglomeration means the area included in the relevant urban agglomeration on the basis of the 2001 census.
