Amendment of section 80JJAA.
22. In section 80JJAA of the Income-tax Act, with effect from the 1st day of April, 2016,-
(a) in sub-section (1), the words “being an Indian company,” shall be omitted;
(b) in sub-section (2), for clause (a), the following clause shall be substituted, namely:-
“(a) if the factory is acquired by the assessee by way of transfer from any other person or as a result of any business re-organisation;”;
(c) in the Explanation, in clause (i), for the words “one hundred workmen”, the words “fifty workmen” shall be substituted.
Notes on Clauses:
Clause 22 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 the aforesaid section, inter alia, provide for deduction to an Indian Company, deriving profits from manufacture of goods in a factory. The quantum of deduction allowed is 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.
Clause (a) of sub-section (2), inter alia, provides that no deduction under sub-section (1) shall be available 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.
The Explanation to the said section defines “additional wages” to mean the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year.
It is proposed to amend sub-section (1) of the said section so as to provide that where the gross total income of any assessee includes any profits and gains derived from the manufacture of goods in a factory, the assessee shall be allowed a deduction 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.
It is further proposed to amend clause (a) of sub-section (2) so as to provide that no deduction under sub-section (1) shall be allowed, if the factory is acquired by the assessee by way of transfer from any other person or as a result of any business reorganisation. It is also proposed to amend clause (i) of the said Explanation so as to provide “additional wages” to mean the wages paid to the new regular workmen in excess of fifty workmen employed during the previous year.
These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016- 17 and subsequent years.
