CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 35DDA.
11. In section 35DDA of the Income-tax Act, with effect from the 1st day of April, 2011,—
(a) after sub-section (4), the following sub-section shall be inserted, namely:—
"(4A) Where there has been reorganisation of business, whereby a private company or unlisted public company is succeeded by a limited liability partnership fulfilling the conditions laid down in the proviso to clause (xiiib) of section 47, the provisions of this section shall, as far as may be, apply to the successor limited liability partnership, as they would have applied to the said company, if reorganisation of business had not taken place.";
(b) in sub-section (5), for the words, brackets and figures "sub-section (3) and in the case of a firm or proprietary concern referred to in sub-section (4)", the words, brackets, figures and letter "subsection (3), in the case of a firm or proprietary concern referred to in sub-section (4) and in the case of a company referred to in sub-section (4A)" shall be substituted.
Notes on Clauses:
Clause 11 of the Bill seeks to amend section 35DDA of the Income-tax Act relating to amortisation of expenditure incurred under voluntary retirement scheme.
The existing provisions contained in the aforesaid section provide that where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee at the time of his voluntary retirement under any scheme of voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the
profits and gains of the business for that previous year and the balance shall be deducted in equal instalments for each of the four immediately succeeding previous years.
Sub-clause (a) proposes to amend the aforesaid section so as to insert a new sub-section (4A) to provide that in case of succession of a private company or unlisted public company by a limited liability partnership, the provisions of the said section shall apply to the successor limited liability partnership as they would have applied to the predecessor company.
Sub-clause (b) proposes to amend sub-section (5) of the aforesaid section to provide that in case of such conversion, no deduction under the said section shall be allowed to the predecessor company in the previous year in which the conversion takes place.
These amendments will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
