Section 80HHACentral Act

Section 80HHA: [ Deduction in respect of profits and gains from newly established small-scale industrial undertakings in certain areas. [Inserted by Act 29 of 1977, Section 18 (w.e.f. 1.4.1978).]

The Income-tax Act, 1961

[ Deduction in respect of profits and gains from newly established small-scale industrial undertakings in certain areas. [Inserted by Act 29 of 1977, Section 18 (w.e.f. 1.4.1978).]

(1)

Where the gross total income of an assessee includes any profits and gains derived from a small-scale industrial undertaking to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits ad gains of and amount equal to twenty per cent. thereof.

(2)

This section applies to any small-scale industrial undertaking which fulfills all the following conditions, namely:-

(i)

it begins to manufacture or produce articles after the 30th day of September, 1977 ][but before the 1st day of April, 1990] [ Inserted by Act 12 of 1990, Section 21 (w.e.f. 1.4.1990).][, in any rural area; [Inserted by Act 29 of 1977, Section 18 (w.e.f. 1.4.1978).]

(ii)

it is not formed by the splitting up, or the reconstruction, of a business already in existence:

Provided that this condition shall not apply in respect of any small-scale industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33-B, in the circumstances and within the period specified in that section;

(iii)

it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;

(iv)

it employes ten or more workers in a manufacturing process carried on with the aid of power, or employes twenty or more workers in a manufacturing process carried on without the aid of power.

Explanation. - Where in the case of a small-scale industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent. of the total value of the machinery or plant used in the business, then, for the purposes of clause (iii) of this sub-section, the condition specified therein shall be deemed to have been fulfilled.

(3)

The deduction specified in sub-section (1) shall be allowed in computing the total income ] [of each of the ten previous years beginning with the previous year in which the industrial undertaking] [ Substituted by Act 16 of 1981, Section 10, for certain words (w.e.f. 1.4.1981).][begins to manufacture or produce articles:Provided that such deduction shall not be allowed in computing the total income of any of the ten previous years aforesaid in respect of which the industrial undertaking is not a small-scale industrial undertaking within the meaning of clause (b) of the Explanation below sub-section (8).

(4)

Where the assessee is a person, other than a company or a co-operative society, the deduction under sub-section (1) shall not be admissible unless the accounts of the small-scale industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee furnishes, alongwith his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.

(5)

The provisions of sub-sections (6) and (7) of section 80-HH shall, so far as may be, apply in relation to the computation of the profits and gains of a small-scale industrial undertaking for the purposes of the deduction under this section as they apply in relation to the computation of the profits and gains of an industrial undertaking for the purposes of the deduction under that section.

(6)

In a case where the assessee is entitled also to the deduction under ] [Inserted by Act 29 of 1977, Section 18 (w.e.f. 1.4.1978).] [section 80-I] [ Inserted by Act 44 of 1980, Section 35 (w.e.f. 1.4.1981).][or section 80-J in relation to the profits and gains of a small-scale industrial undertaking to which this section applies, effect shall first be given to the provisions of this section.

(7)

Where a deduction in relation to the profits and gains of a small-scale industrial undertaking to which section 80-HH applies is claimed and allowed under that section for any assessment year, deduction in relation to such profits and gains shall not be allowed under this section for the same or any other assessment year.

(8)

Nothing contained in this section shall apply in relation to any small-scale industrial undertaking engaged in mining.Explanation. - For the purposes of this section,-] [Inserted by Act 29 of 1977, Section 18 (w.e.f. 1.4.1978).]

(a)

[ "rural area" means any area other than- [ Substituted by Act 4 of 1988, Section 126, for Clause (a) (w.e.f. 1.4.1989).]

(i)an area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or

(ii)an area within such distance, not being more than fifteen kilometres from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the stage of development of such area (including the extent of, and scope for, urbanisation of such area) and other relevant considerations specify in this behalf by notification in the Official Gazette;]

(b)

[ an industrial undertaking shall be deemed to be a small-scale industrial undertaking which is, on the last day of the previous year, regarded as a small-scale industrial undertaking under section 11-B of the Industries (Development and Regulation) Act, 1951 (65 of 1951).] [ Substituted by Act

27 of 1999

, Section 44, for Clause (b) (w.r.e.f. 1.4.1978).]

Sec 80HH — [ Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas. [Inserted by Act 26 of 1974, Section 9 (w.e.f. 1.4.1974).]

Sec 80HHB — [ Deduction in respect of profits and gains from projects outside India. [Inserted by Act 14 of 1982, Section 18 (w.e.f. 1.4.1983).]

Disclaimer: This section is reproduced for general informational and reference purposes only. Always verify against the latest official gazette and consult a qualified advocate before relying on any provision.