Beware!Benefit stops on 1/4/2010 for 100 % Export oriented units u/s 10B-Part I

Under Section 10B of the I T Act ,100 % export-oriented undertaking gets very substantial amount of exemption from tax on its profits for a period of 10 consecutive assessment years beginning with the assessment year in which the undertaking begins to manufacture or production allowed from the total income of the assessee .

No deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years .

Conditions for Availing Exemption is that Assessee :

1. furnishes a return of its income on or before the due date of filing return.
   
2. manufactures or produces any articles or things or computer software;
   
3. is not formed by the splitting up, or the reconstruction, of a business already in existence. Exception to this condition is that the undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ;
   
4. is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
   
5. the sale proceeds are received in, or brought into India in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as RBI may allow .
   
6. furnishes in the prescribed form71, along with the return of income, the report of an accountant, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.
   

Deduction Allowed is :

the profits derived from export shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking.

Sacrifices

1. The unabsorbed depreciation allowance, expenditure of scientific research and family planning are not allowed to be carried forward and set off against the income of the assessment years following the period of deduction.
   
2. no loss shall be carried forward or set-off where such loss relates to any of the relevant assessment years ending before the 1st day of April, 2001;
3. no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80-IA or section 80-IB in relation to the profits and gains of the undertaking; and
4. in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment year.

Effect of Amalgamation/Merger

The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the undertaking referred to in section 80-IA.

Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger

• no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and
  
• 
  
• the provisions of this section shall, as far as may be, apply to the amalgamated or resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or the demerger had not taken place.

Is Provision Necessarily applicable ?
where the assessee,, furnishes before the due date for furnishing the return of income under sub-section (1) of section 139 the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment year.

Tags: Demerger, 10B, Expemption

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