Deduction in respect of profits and gains from certain industrial undertakings.

141

In respect of any tax year, where––

• (a) the gross total income of an assessee, includes any profits and gains derived from any business referred to in section 80-IB of the Income-tax Act, 1961; and

• (b) such assessee is eligible to claim a deduction from the profits and gains derived from such business for such tax year under the provisions of the said section, if the said Act had not been repealed, there shall be allowed, in computing the total income of the assessee, a deduction from the profits and gains derived from such business, subject to the conditions that—

  • (i) the amount of deduction is calculated as per the provisions of section 80-IB of the Income-tax Act, 1961; and
  • (ii) the deduction under this Act shall be allowed only for such tax years, as would have been allowed under section 80-IB of the Income-tax Act, 1961, if the said Act had not been repealed.

Explanation

Section Summary:

Section 141 of the new income tax law allows taxpayers to claim a deduction on profits and gains derived from certain industrial undertakings, as specified under the now-repealed Section 80-IB of the Income-tax Act, 1961. This section ensures that taxpayers who were eligible for deductions under the old law can continue to claim them under the new law, provided they meet the same conditions.

Key Changes:

1. Continuity of Deductions: The new law retains the deduction benefits previously available under Section 80-IB of the Income-tax Act, 1961, even though that section has been repealed.
2. Eligibility Criteria: The eligibility criteria and calculation methods for the deduction remain unchanged from the old law.

Practical Implications:

• For Taxpayers: Businesses or individuals engaged in eligible industrial undertakings can continue to claim deductions on their profits and gains, provided they meet the conditions outlined in the repealed Section 80-IB.
• For Compliance: Taxpayers must ensure that their business activities and income qualify under the conditions of the repealed Section 80-IB to claim the deduction under the new law.

Critical Concepts:

• Section 80-IB of the Income-tax Act, 1961: This section provided deductions for profits and gains from specific industrial undertakings, such as those in infrastructure, housing projects, and certain manufacturing activities. The new law allows taxpayers to continue claiming these deductions as if Section 80-IB were still in force.
• Gross Total Income: This refers to the total income of the taxpayer before any deductions are applied.

Compliance Steps:

1. Verify Eligibility: Ensure that the business or industrial undertaking qualifies under the conditions specified in the repealed Section 80-IB.
2. Calculate Deduction: Compute the deduction amount as per the provisions of Section 80-IB.
3. Claim Deduction: Include the calculated deduction in the tax return for the relevant tax year.

Examples:

• Scenario 1: A manufacturing company that started operations in 2018 and was eligible for a deduction under Section 80-IB can continue to claim the deduction under Section 141 of the new law for the remaining eligible years.
• Scenario 2: A housing project approved before the repeal of Section 80-IB can still claim deductions on profits from the project under the new law, provided the project meets the original eligibility criteria.

This section ensures that taxpayers who were relying on deductions under the old law are not disadvantaged by its repeal, maintaining consistency and fairness in the tax system.