Amendment of section 80JJAA
18. In section 80JJAA of the Income-tax Act, with effect from the 1st day of April, 2014,—
(i) for sub-section (1), the following sub-section shall be substituted, namely:—
“(1) Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from the manufacture of goods in a factory, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty percent. of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.”;
(ii) in sub-section (2), for clause (a), the following clause shall be substituted, namely:—
“(a) if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company;”;
(iii) in the Explanation,—
(a) in clause (i), in the proviso, for the word “undertaking” at both the places where it occurs,
the word “factory” shall be substituted;
(iv) after clause (iii), the following clause shall be inserted, namely:—
‘(iv) “factory” shall have the same meaning as assigned to it in clause (m) of section 2 of the Factories Act, 1948(63 of 1948).’.
Notes on Clauses:
Clause 18 of the Bill seeks to amend section 80JJAA of the Income-tax Act relating to deduction in respect of employment of new workmen.
The existing provisions contained in sub-section (1) of section 80JJAA provide for a deduction of an amount equal to thirty per cent. of additional wages paid to the new regular workmen employed in any previous year by an Indian company engaged in manufacture or production of article or thing. The deduction is available for three assessment years including the assessment year relevant to the previous year in which such employment is provided.
It is proposed to substitute the said sub-section (1) of section 80JJAA so as to provide that where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from the manufacture of goods in a factory, there shall, be allowed a deduction of an amount equal to thirty per cent. of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.
Sub-section (2) of the aforesaid section, inter alia, provides that no deduction under sub-section (1) shall be available, if the industrial undertaking is formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking.
It is proposed to amend sub-section (2) so as to provide that no deduction under sub-section (1) shall be allowed if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company.
It is also proposed to provide that the term “factory” shall have the same meaning as assigned to it in clause (m) of section 2 of the Factories Act, 1948.
These amendments will take effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.
