Section 33 of Income Tax Act "Development rebate"
33. (1)(a) In respect of a new ship or new machinery or
plant (other than office appliances or road transport
vehicles) which is owned by the assessee and is wholly used
for the purposes of the business carried on by him, there
shall, in accordance with and subject to the provisions of
this section and of section 34, be allowed a deduction, in
respect of the previous year in which the ship was acquired
or the machinery or plant was installed or, if the ship,
machinery or plant is first put to use in the immediately
succeeding previous year, then, in respect of that previous
year, a sum by way of development rebate as specified in
clause (b).
(b) The sum referred to in clause (a) shall be-
(A) in the case of a ship, forty per cent of the actual cost
thereof to the assessee;
(B) in the case of machinery or plant,-
(i) where the machinery or plant is installed for the
purposes of business of construction, manufacture or
production of any one or more of the articles or things
specified in the list in the Fifth Schedule,-
(a) thirty-five per cent of the actual cost of the machinery
or plant to the assessee, where it is installed before the
1st day of April, 1970, and
(b) twenty-five per cent of such cost, where it is installed
after the 31st day of March, 1970;
(ii) where the machinery or plant is installed after the
31st day of March, 1967, by an assessee being an Indian
company in premises used by it as a hotel and such hotel is
for the time being approved in this behalf by the Central
Government,-
(a) thirty-five per cent of the actual cost of the machinery
or plant to the assessee, where it is installed before the
1st day of April, 1970, and
(b) twenty-five per cent of such cost, where it is installed
after the 31st day of March, 1970;
(iii) where the machinery or plant is installed after the
31st day of March, 1967, being an asset representing
expenditure of a capital nature on scientific research
related to the business carried on by the assessee,-
(a) thirty-five per cent of the actual cost of the machinery
or plant to the assessee, where it is installed before the
1st day of April, 1970, and
(b) twenty-five per cent of such cost, where it is installed
after the 31st day of March, 1970;
(iv) in any other case,-
(a) twenty per cent of the actual cost of the machinery or
plant to the assessee, where it is installed before the 1st
day of April, 1970, and
(b) fifteen per cent of such cost, where it is installed
after the 31st day of March, 1970.
(1A)(a) An assessee who, after the 31st day of March, 1964,
acquires any ship which before the date of acquisition by
him was used by any other person shall, subject to the
provisions of section 34, also be allowed as a deduction a
sum by way of development rebate at such rate or rates as
may be prescribed, provided that the following conditions
are fulfilled, namely :-
(i) such ship was not previous to the date of such
acquisition owned at any time by any person resident in
India;
(ii) such ship is wholly used for the purposes of the
business carried on by the assessee; and
(iii) such other conditions as may be prescribed.
(b) An assessee who installs any machinery or plant (other
than office appliances or road transport vehicles) which
before such installation by the assessee was used outside
India by any other person shall, subject to the provisions
of section 34, also be allowed as a deduction a sum by way
of development rebate at such rate or rates as may be
prescribed, provided that the following conditions are
fulfilled, namely :-
(i) such machinery or plant was not used in India at any
time previous to the date of such installation by the
assessee;
(ii) it is imported in India by the assessee from any
country outside India;
(iii) no deduction on account of depreciation or development
rebate in respect of such machinery or plant has been
allowed or is allowable under the provisions of the Indian
Income-tax Act, 1922 (11 of 1922), or this Act in computing
the total income of any person for any period prior to the
date of the installation of the machinery or plant by the
assessee;
(iv) such machinery or plant is wholly used for the purposes
of the business carried on by the assessee; and
(v) such other conditions as may be prescribed.
(c) The development rebate under this sub-section shall be
allowed as a deduction in respect of the previous year in
which the ship was acquired or the machinery or plant was
installed or, if the ship, machinery or plant is first put
to use in the immediately succeeding previous year, then, in
respect of that previous year.
(2) In the case of a ship acquired or machinery or plant
installed after the 31st day of December, 1957, where the
total income of the assessee assessable for the assessment
year relevant to the previous year in which the ship was
acquired or the machinery or plant installed or the
immediately succeeding previous year, as the case may be
(the total income for this purpose being computed without
making any allowance under sub-section (1) or sub-section
(1A) of this section or sub-section (1) of section 33A or
any deduction under Chapter VI-A) is nil or is less than the
full amount of the development rebate calculated at the rate
applicable thereto under sub-section (1) or sub-section
(1A), as the case may be,-
(i) the sum to be allowed by way of development rebate for
that assessment year under sub-section (1) or sub-section
(1A) shall be only such amount as is sufficient to reduce
the said total income to nil ; and
(ii) the amount of the development rebate, to the extent to
which it has not been allowed as aforesaid, shall be carried
forward to the following assessment year, and the
development rebate to be allowed for the following
assessment year shall be such amount as is sufficient to
reduce the total income of the assessee assessable for that
assessment year, computed in the manner aforesaid, to nil,
and the balance of the development rebate, if any, still
outstanding shall be carried forward to the following
assessment year and so on, so however, that no portion of
the development rebate shall be carried forward for more
than eight assessment years immediately succeeding the
assessment year relevant to the previous year in which the
ship was acquired or the machinery or plant installed or the
immediately succeeding previous year, as the case may be.
Explanation.-Where for any assessment year development
rebate is to be allowed in accordance with the provisions of
sub-section (2) in respect of ships acquired or machinery or
plant installed in more than one previous year, and the
total income of the assessee assessable for that assessment
year (the total income for this purpose being computed
without making any allowance under sub-section (1) or
sub-section (1A) of this section or sub-section (1) of
section 33A or any deduction under Chapter VI-A) is less
than the aggregate of the amounts due to be allowed in
respect of the assets aforesaid for that assessment year,
the following procedure shall be followed, namely :-
(i) the allowance under clause (ii) of sub-section (2) shall
be made before any allowance under clause (i) of that
sub-section is made; and
(ii) where an allowance has to be made under clause (ii) of
sub-section (2) in respect of amounts carried forward from
more than one assessment year, the amount carried forward
from an earlier assessment year shall be allowed before any
amount carried forward from a later assessment year.
(3) Where, in a scheme of amalgamation, the amalgamating
company sells or otherwise transfers to the amalgamated
company any ship, machinery or plant in respect of which
development rebate has been allowed to the amalgamating
company under sub-section (1) or sub-section (1A),-
(a) the amalgamated company shall continue to fulfil the
conditions mentioned in sub-section (3) of section 34 in
respect of the reserve created by the amalgamating company
and in respect of the period within which such ship,
machinery or plant shall not be sold or otherwise
transferred and in default of any of these conditions, the
provisions of sub-section (5) of section 155 shall apply to
the amalgamated company as they would have applied to the
amalgamating company had it committed the default; and
(b) the balance of development rebate, if any, still
outstanding to the amalgamating company in respect of such
ship, machinery or plant shall be allowed to the amalgamated
company in accordance with the provisions of sub-section
(2), so, however, that the total period for which the
balance of development rebate shall be carried forward in
the assessments of the amalgamating company and the
amalgamated company shall not exceed the period of eight
years specified in sub-section (2) and the amalgamated
company shall be treated as the assessee in respect of such
ship, machinery or plant for the purposes of this section
and section 34.
(4) Where a firm is succeeded to by a company in the
business carried on by it as a result of which the firm
sells or otherwise transfers to the company any ship,
machinery or plant, the provisions of clauses (a) and (b) of
sub-section (3) shall, so far as may be, apply to the firm
and the company.
Explanation.-The provisions of this clause shall apply only
where-
(i) all the property of the firm relating to the business
immediately before the succession becomes the property of
the company;
(ii) all the liabilities of the firm relating to the
business immediately before the succession become the
liabilities of the company; and
(iii) all the shareholders of the company were partners of
the firm immediately before the succession.
(5) The Central Government, if it considers it necessary or
expedient so to do, may, by notification in the Official
Gazette, direct that the deduction allowable under this
section shall not be allowed in respect of a ship acquired
or machinery or plant installed after such date, not being
earlier than three years from the date of such notification,
as may be specified therein.
(6) Notwithstanding anything contained in the foregoing
provisions of this section, no deduction by way of
development rebate shall be allowed in respect of any
machinery or plant installed after the 31st day of March,
1965, in any office premises or any residential
accommodation, including any accommodation in the nature of
a guest-house:
Provided that the provisions of this sub-section shall not
apply in the case of an assessee being an Indian company, in
respect of any machinery or plant installed by it in
premises used by it as a hotel, where the hotel is for the
time being approved in this behalf by the Central
Government.
What is Development rebate? Section 33 of Income Tax Act 1961
What is Development allowance? Section 33A of Income Tax Act 1961
What is Site Restoration Fund? Section 33ABA of Income Tax Act 1961
What is Reserves for shipping business? Section 33AC of Income Tax Act 1961
What is Rehabilitation allowance? Section 33B of Income Tax Act 1961
What is Expenditure on scientific research? Section 35 of Income Tax Act 1961
What is Expenditure on know-how? Section 35AB of Income Tax Act 1961
What is Expenditure on eligible projects or schemes? Section 35AC of Income Tax Act 1961
What is Amortisation of certain preliminary expenses? Section 35D of Income Tax Act 1961