Amendment of section 35AD.
18. In section 35AD of the Income-tax Act, with effect from the 1st day of April, 2018,-
(a) sub-section (1A) shall be omitted;
(b) in sub-section (2), after clause (iii), the following clause shall be inserted, namely:-
“(iv) where the business is of the nature referred to in sub-clause (xiv) of clause (c) of sub-section (8), such business,-
(A) is owned by a company registered in India or by a consortium of such companies or by an authority or a board or corporation or any other body established or constituted under any Central or State Act;
(B) entity referred to in sub-clause (A) has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for developing or operating and maintaining or developing, operating and maintaining, a new infrastructure facility.”;
(c) in sub-section (5),-
(I) in clause (aj), the word “and” occurring at the end shall be omitted;
(II) after clause (aj), the following clause shall be inserted, namely:-
“(ak) on or after the 1st day of April, 2017, where the specified business is in the nature of developing or operating and maintaining or developing, operating and maintaining, any infrastructure facility; and”;
(d) in sub-section (8),-
(I) after clause (b), the following clause shall be inserted, namely:-
‘(ba) “infrastructure facility” means-
(i) a road including toll road, a bridge or a rail system;
(ii) a highway project including housing or other activities being an integral part of the highway project;
(iii) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;
(iv) a port, airport, inland waterway, inland port or navigational channel in the sea;’;
(II) in clause (c), after sub-clause (xiii), the following sub-clause shall be inserted, namely:-
“(xiv) developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility.”.
Notes on Clauses:
Clause 18 of the Bill seeks to amend section 35AD of the Income tax Act relating to deduction in respect of expenditure on specified business.
Under the existing provisions of aforesaid section, deduction in respect of expenditure of capital nature incurred, wholly or exclusively, during the year for a specified business is allowed. Sub-section (1A) of the aforesaid section provides 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), the deduction under subsection (1) shall be allowed to an amount equal to one and onehalf times of the expenditure referred to therein.
It is proposed to omit the said sub-section (1A).
It is further proposed to amend sub-section (2) of the said section 35AD so as to provide the deduction under this section to an assessee engaged in developing, operating and maintaining or developing, operating and maintaining the infrastructure facility.
It is also proposed to amend sub-section (8) of the said section so as to define the expression “infrastructure facility” in the said section in the light of amendment proposed to sub-section (2) of the said section.
These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018- 2019 and subsequent years.
