Section 10B of Income Tax Act "Special provisions in respect of newly established hundred per cent export-oriented undertakings"
10B. (1) Subject to the provisions of this section, a
deduction of such profits and gains as are derived by a
hundred per cent export-oriented undertaking from the export
of articles or things or computer software for a period of
ten consecutive assessment years beginning with the
assessment year relevant to the previous year in which the
undertaking begins to manufacture or produce articles or
things or computer software, as the case may be, shall be
allowed from the total income of the assessee :
Provided that where in computing the total income of the
undertaking for any assessment year, its profits and gains
had not been included by application of the provisions of
this section as it stood immediately before its substitution
by the Finance Act, 2000, the undertaking shall be entitled
to the deduction referred to in this sub-section only for
the unexpired period of aforesaid ten consecutive assessment
years :
Provided further that for the assessment year beginning on
the 1st day of April, 2003, the deduction under this
sub-section shall be ninety per cent of the profits and
gains derived by an undertaking from the export of such
articles or things or computer software:
Provided also that no deduction under this section shall be
allowed to any undertaking for the assessment year beginning
on the 1st day of April, 2012 and subsequent years :
Provided also that no deduction under this section shall be
allowed to an assessee who does not furnish a return of his
income on or before the due date specified under sub-section
(1) of section 139.
(2) This section applies to any undertaking which fulfils
all the following conditions, namely :-
(i) it manufactures or produces any articles or things or
computer software;
(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 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;
(iii) it is not formed by the transfer to a new business of
machinery or plant previously used for any purpose.
Explanation.-The provisions of Explanation 1 and Explanation
2 to sub- section (2) of section 80-I shall apply for the
purposes of clause (iii) of this sub-section as they apply
for the purposes of clause (ii) of that sub-section.
(3) This section applies to the undertaking, if the sale
proceeds of articles or things or computer software exported
out of India are received in, or brought into, India by the
assessee in convertible foreign exchange, within a period of
six months from the end of the previous year or, within such
further period as the competent authority may allow in this
behalf.
Explanation 1.-For the purposes of this sub-section, the
expression "competent authority" means the Reserve Bank of
India or such other authority as is authorised under any law
for the time being in force for regulating payments and
dealings in foreign exchange.
Explanation 2.-The sale proceeds referred to in this
sub-section shall be deemed to have been received in India
where such sale proceeds are credited to a separate account
maintained for the purpose by the assessee with any bank
outside India with the approval of the Reserve Bank of
India.
(4) For the purposes of sub-section (1), the profits derived
from export of articles or things or computer software 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.
(5) The deduction under sub-section (1) shall not be
admissible for any assessment year beginning on or after the
1st day of April, 2001, unless the assessee furnishes in the
prescribed form, along with the return of income, the report
of an accountant, as defined in the Explanation below
sub-section (2) of section 288, certifying that the
deduction has been correctly claimed in accordance with the
provisions of this section.
(6) Notwithstanding anything contained in any other
provision of this Act, in computing the total income of the
assessee of the previous year relevant to the assessment
year immediately succeeding the last of the relevant
assessment years, or of any previous year, relevant to any
subsequent assessment year,-
(i) section 32, section 32A, section 33, section 35 and
clause (ix) of sub-section (1) of section 36 shall apply as
if every allowance or deduction referred to therein and
relating to or allowable for any of the relevant assessment
years ending before the 1st day of April, 2001, in relation
to any building, machinery, plant or furniture used for the
purposes of the business of the undertaking in the previous
year relevant to such assessment year or any expenditure
incurred for the purposes of such business in such previous
year had been given full effect to for that assessment year
itself and accordingly sub-section (2) of section 32, clause
(ii) of sub-section (3) of section 32A, clause (ii) of
sub-section (2) of section 33, sub-section (4) of section 35
or the second proviso to clause (ix) of sub-section (1) of
section 36, as the case may be, shall not apply in relation
to any such allowance or deduction;
(ii) no loss referred to in sub-section (1) of
section 72 or sub-section (1) or sub-section (3) of section
74, in so far as such loss relates to the business of the
undertaking, 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;
(iii) 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
(iv) 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.
(7) 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.
(7A) 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-
(a) 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
(b) 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.
(8) Notwithstanding anything contained in the foregoing
provisions of this section, where the assessee, before the
due date for furnishing the return of income under
sub-section (1) of section 139, furnishes to 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.
(9) [Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
(9A) [Omitted by the Finance Act, 2003, w.e.f. 1-4-2004.]
Explanation 1.- [Omitted by the Finance Act, 2003, w.e.f.
1-4-2004.]
Explanation 2.-For the purposes of this section,-
(i) "computer software" means-
(a) any computer programme recorded on any disc, tape,
perforated media or other information storage device; or
(b) any customized electronic data or any product or service
of similar nature as may be notified by the Board,
which is transmitted or exported from India to any place
outside India by any means;
(ii) "convertible foreign exchange" means foreign exchange
which is for the time being treated by the Reserve Bank of
India as convertible foreign exchange for the purposes of
the Foreign Exchange Management Act, 1999 (42 of 1999), and
any rules made thereunder or any other corresponding law for
the time being in force;
(iii) "export turnover" means the consideration in respect
of export by the undertaking of articles or things or
computer software received in, or brought into, India by the
assessee in convertible foreign exchange in accordance with
sub-section (3), but does not include freight,
telecommunication charges or insurance attributable to the
delivery of the articles or things or computer software
outside India or expenses, if any, incurred in foreign
exchange in providing the technical services outside India;
(iv) "hundred per cent export-oriented undertaking" means an
undertaking which has been approved as a hundred per cent
export-oriented undertaking by the Board appointed in this
behalf by the Central Government in exercise of the powers
conferred by section 14 of the Industries (Development and
Regulation) Act, 1951 (65 of 1951), and the rules made under
that Act;
(v) "relevant assessment years" means any assessment years
falling within a period of ten consecutive assessment years,
referred to in this section.
Explanation 3.-For the removal of doubts, it is hereby
declared that the profits and gains derived from on site
development of computer software (including services for
development of software) outside India shall be deemed to be
the profits and gains derived from the export of computer
software outside India.
Explanation 4.-For the purposes of this section,
"manufacture or produce" shall include the cutting and
polishing of precious and semi-precious stones.
What are the Definitions under Income Tax 1961? Section 2 of Income Tax Act 1961
What is Previous Year? What is Charge of Income tax? Section 3 and 4 of Income Tax Act 1961
What is Dividend income? Section 8 of Income Tax Act 1961
What is Income deemed to accrue or arise in India? Section 9 of Income Tax Act 1961
What are the Incomes not included in total income? Section 10 of Income Tax Act 1961
What is Meaning of computer programmes in certain cases? Section 10BB of Income Tax Act 1961