Incentive for acquisition and installation of new plant or machinery by manufacturing company
In order to encourage substantial investment in plant or machinery, it is proposed to insert a new section 32AC in the Income-tax Act to provide that where an assessee, being a company,—
(a) is engaged in the business of manufacture of an article or thing; and
(b) invests a sum of more than Rs.100 crore in new assets (plant or machinery) during the period beginning from 1st April, 2013 and ending on 31st March, 2015,
then, the assessee shall be allowed—
(i) for assessment year 2014-15, a deduction of 15% of aggregate amount of actual cost of new assets acquired and installed during the financial year 2013-14, if the cost of such assets exceeds Rs.100 crore;
(ii) for assessment year 2015-16, a deduction of 15% of aggregate amount of actual cost of new assets, acquired and installed during the period beginning on 1st April, 2013 and ending on 31st March, 2015, as reduced by the deduction allowed, if any, for assessment year 2014-15.
The phrase “new asset” has been defined as new plant or machinery but does not include—
(i) any plant or machinery which before its installation by the assessee was used either within or outside India by any other person;
(ii) any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house;
(iii) any office appliances including computers or computer software;
(iv) any vehicle;
(v) ship or aircraft; or
(vi) any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any previous year.
It is further proposed to provide suitable safeguards so as to restrict the transfer of the plant or machinery for a period of 5 years. However, this restriction shall not apply in a case of amalgamation or demerger but shall continue to apply to the amalgamated company or resulting company, as the case may be.
This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
yes, normal depreciation u/s 32(1)(ii) and additional dep u/s 32(1)(iia) also available in addition to deduction u/s 32AC because 32AC provides deduction nd 32(1) deals wih depreciation. nd in accouns books 32AC has no connection i.e no treatment in asset a/c and in income tax wdv of block will not be reduced by amount of deduction computed u/s 32AC.
It seems that the condition stated is acquired and installed after 31.3.2013 but before 1.4.2015. Therefore both the activities has to take place during the period 2013-14 & 2014-15. The capital items which have been ordered, reached and is in capital-work-in-progress will not qualify for this additional deduction u/s 32AC. What is your views
The other question is that this will not be applicable for the capital items that falls under 100% block as the whole of the amount would have been claimed as deduction and therefore hit by the exclusion list mentioned in 32AC(4)(v) (definition of the New Asset).
Again one has to note that the restriction applies to all vehicles and not only restricted to motor car alone.
is it along with 20% additional depreciation u/s32(i)(ii)????