Amendment of section 32AC
11. In section 32AC of the Income-tax Act, .with effect from the 1st day of April, 2015,—
(i) after sub-section (1), the following sub-sections shall be inserted, namely:—
“(1A) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new assets and the amount of actual cost of such new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent. of the actual cost of such new assets for the assessment year relevant to that previous year:
Provided that no deduction under this sub-section shall be allowed for the assessment year commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under sub-section (1) for the said assessment year.
(1B) No deduction under sub-section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018.”;
(ii) in sub-section (2), after the words, brackets and figure “allowed under sub-section (1)”, the words, brackets, figure and letter “or sub-section (1A)” shall be inserted.
Notes on Clauses:
Clause 11 of the Bill seeks to amend section 32AC of the Income-tax Act relating to Investment in new plant or machinery.
The existing provisions contained in sub-section (1) of aforesaid section provide that where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,-
(a) for the assessment year commencing on the 1st April, 2014, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st March, 2013 but before the 1st April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and
(b) for the assessment year commencing on the 1st April, 2015, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st March, 2013 but before the 1st April, 2015, as reduced by the amount of deduction allowed, if any, under clause (a).
It is proposed to insert a new sub-section (1A) in section 32AC so as to provide that where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset and the amount of actual cost of the new assets acquired and installed during any previous year exceeds twenty-five crore rupees, then, there shall be allowed a deduction of a sum equal to fifteen per cent. of the actual cost of such new assets for the assessment year relevant to that previous year.
It is further proposed to insert a proviso so as to provide that no deduction under sub-section (1A) shall be allowed for the assessment year beginning on the 1st day of April, 2015 to the assessee who is eligible to claim deduction under sub-section (1) of the said section for the said assessment year.
It is also proposed to insert a new sub-section (1B) in the said section 32AC so as to provide that no deduction under sub- section (1A) shall be allowed for any assessment year commencing on or after the 1st day of April, 2018.
Sub-section (2) of the aforesaid section provides that if any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger, within a period of five years from the date of its installation, the amount of deduction allowed under sub-section (1) in respect of such new asset shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset.
It is proposed to amend sub-section (2) of section 32AC to make a reference to sub-section (1A) so as to bring the assessee under the said newly inserted sub-section into the purview of said sub-section (2).
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
