Amendment of section 32AC.
14. In section 32AC of the Income-tax Act, in sub-section (1A),-
(i) for the words “acquired and installed during any previous year exceeds twenty-five crore rupees”, the words, figures and letters “acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or before the 31st day of March, 2017” shall be substituted;
(ii) before the proviso, the following proviso shall be inserted, namely:-
“Provided that where the installation of the new assets are in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new assets are installed.”;
(iii) in the existing proviso, for the words “Provided that”, the words “Provided further that” shall be substituted.
Notes on Clauses:
Clause 14 of the Bill seeks to amend section 32AC of the Incometax Act relating to investment in new plant or machinery.
Sub-section (1A) of the aforesaid section, inter alia, allows a deduction of a sum equal to fifteen per cent. of the actual cost of new machinery or plant (other than ship or aircrafts), acquired and installed by an assessee being a company engaged in the business of manufacture or production of any article or thing during any financial year, exceeds twenty-five crore rupees, if the acquisition and installation is made during the same financial year.
It is proposed to amend the said sub-section so as to provide that the deduction under the said sub-section shall be allowed if the assets are installed on or before the 31st March, 2017.
It is further proposed to insert a new proviso in the said subsection so as to provide that where the installation of the new assets are in a year other than the year of acquisition, the deduction under the said sub-section shall be allowed in the year in which such new assets are installed.
These amendments will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-2017 and subsequent years.
