Amendment of section 35AD.
09. In section 35AD of the Income-tax Act,—
(a) after sub-section (1), the following sub-section shall be inserted with effect from the 1st day of April, 2013, namely:—
“(1A) Where the specified business is of the nature referred to in sub-clause (i) or sub-clause (ii) or sub-clause (v) or sub-clause (vii) or sub-clause (viii) of clause (c) of sub-section (8) and has commenced its operations on or after the 1st day of April, 2012, the deduction under sub-section (1) shall be allowed of an amount equal to one and one-half times of the expenditure referred to therein.”;
(b) in sub-section (5), with effect from the 1st day of April, 2013,—
(A) in clause (ae), the word “and” shall be omitted;
(B) after clause (ae), the following clauses shall be inserted, namely:—
“(af) on or after the 1st day of April, 2012, where the specified business is in the nature of setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962; (52 of 1962.)
(ag) on or after the 1st day of April, 2012, where the specified business is in the nature of bee-keeping and production of honey and beeswax;
(ah) on or after the 1st day of April, 2012, where the specified business is in the nature of setting up and operating a warehousing facility for storage of sugar; and”;
(C) in clause (b), for the words, brackets and letters “clause (a), clause (aa), clause (ab) and clause (ac)”, the words “any of the above clauses” shall be substituted;
(c) after sub-section (6), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2011, namely:—
“(6A) Where the assessee builds a hotel of two-star or above category as classified by the Central Government and subsequently, while continuing to own the hotel, transfers the operation thereof to another person, the assessee shall be deemed to be carrying on the specified business referred to in sub-clause (iv) of clause (c) of sub-section (8).”;
(d) in sub-section (8), in clause (c), after sub-clause (viii), the following sub-clauses shall be inserted with effect from the 1st day of April, 2013, namely:—
“(ix) setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962; (52 of 1962.)
(x) bee-keeping and production of honey and beeswax;
(xi) setting up and operating a warehousing facility for storage of sugar;”.
Notes on Clauses:
Clause 9 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business.
The provisions of sub-section (1) of the aforesaid section 35AD, inter alia, allow one hundred per cent. deduction in respect of any capital expenditure incurred, other than expenditure incurred on the acquisition of any land or goodwill or financial instrument, during the year by the specified business subject to the provisions contained in that section.
The specified businesses eligible for the said deduction have been listed under clause (c) of sub-section (8).
It is proposed to insert sub-section (1A) to the aforesaid section so as to provide that where the specified business is of the nature referred to in sub-clause (i) or sub-clause (ii) or sub-clause (v) or sub-clause (vii) or sub-clause (viii) of clause (c) of sub-section (8) and has commenced its operations on or after the 1st day of April, 2012, the deduction under sub-section (1) shall be allowed of an amount equal to one and one-half times of the expenditure referred to therein.
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.
It is further proposed to amend the provisions of sub-sections (5) and (8) of the aforesaid section to include three new categories of business as specified business, namely, -
(i) setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962;
(ii) bee-keeping and production of honey and beeswax;
(iii) setting up and operating a warehousing facility for storage of sugar. It is also proposed that the date of commencement of operations of these three specified businesses for the purposes of the aforesaid deductions shall be on or after 1st April, 2012.
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.
It is also proposed to insert sub-section (6A) to the aforesaid section to provide that where the assessee builds a hotel of two-star or above category as classified by the Central Government and subsequently, while continuing to own the hotel, transfers the operation thereof to another person, the assessee shall be deemed to be carrying on the specified business of building and operating hotel.
This amendment will take effect retrospectively from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent assessment years.
