32AB. Investment deposit account.- (1) Subject to
the other provisions of this section, where an assessee, whose
total income includes income chargeable to tax under the head
“Profits and gains of business or profession”,
has, out of such income,—
(a) deposited any amount in an account (hereafter in this
section referred to as deposit account) maintained by him
with the Development Bank before the expiry of six months
from the end of the previous year or before furnishing the
return of his income, which-ever is earlier; or
(b) utilised any amount during the previous year for the
purchase of any new ship, new aircraft, new machinery or plant,
without depositing any amount in the deposit account under
clause (a),
in accordance with, and for the purposes specified in, a scheme
(hereafter in this section referred to as the scheme) to be
framed by the Central Government, or if the assessee is carrying
on the business of growing and manufacturing tea in India,
to be approved in this behalf by the Tea Board, the assessee
shall be allowed a deduction (such deduction being allowed
before the loss, if any, brought forward from earlier years
is set off under section 72) of—
(i) a sum equal to the amount, or the aggregate of the amounts,
so deposited and any amount so utilised; or
(ii) a sum equal to twenty per cent of the profits of business
or profession as computed in the accounts of the assessee
audited in accordance with sub-section (5),
whichever is less :
Provided that where such assessee is a firm, or any association
of persons or any body of individuals, the deduction under
this section shall not be allowed in the computation of the
income of any partner, or as the case may be, any member of
such firm, association of persons or body of individuals:
Provided further that no such deduction shall be allowed in
relation to the assessment year commencing on the 1st day
of April, 1991, or any subsequent assessment year.
(2) For the purposes of this section,—
(i) Omitted
(ii) “new ship” or “new aircraft”
includes a ship or aircraft which before the date of acquisition
by the assessee was used by any other person, if it was not
at any time previous to the date of such acquisition owned
by any person resident in India;
(iii) “new machinery or plant” includes machinery
or plant which before its installation by the assessee was
used outside India by any other person, if the following conditions
are fulfilled, namely :—
(a) such machinery or plant was not, at any time previous
to the date of such installation by the assessee, used in
India;
(b) such machinery or plant is imported into India from
any country outside India; and
(c) no deduction on account of depreciation in respect of
such machinery or plant has been allowed or is allowable under
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) “Tea Board” means the Tea Board established
under section 4 of the Tea Act, 1953 (29 of 1953).
(3) The profits of business or profession of an assessee
for the purposes of sub-section (1) shall be an amount arrived
at after deducting an amount equal to the depreciation computed
in accordance with the provisions of sub-section (1) of section
32 from the amounts of profits computed in accordance with
the requirements of Parts II and III of the Schedule VI to
the Companies Act, 1956 (1 of 1956), as increased by the aggregate
of—
(i) the amount of depreciation;
(ii) the amount of income-tax paid or payable, and provision
therefor;
(iii) the amount of surtax paid or payable under the Companies
(Profits) Surtax Act, 1964 (7 of 1964);
(iv) the amounts carried to any reserves, by whatever name
called;
(v) the amount or amounts set aside to provisions made for
meeting liabilities, other than ascertained liabilities;
(vi) the amount by way of provision for losses of subsidiary
companies; and
(vii) the amount or amounts of dividends paid or proposed,
if any debited to the profit and loss account; and as reduced
by any amount or amounts withdrawn from reserves or provisions,
if such amounts are credited to the profit and loss account
.
(4) No deduction under sub-section (1) shall be allowed in
respect of any amount utilised for the purchase of—
(a) any machinery or plant to be installed in any office
premises or residential accommodation, including any accommodation
in the nature of a guest-house;
(b) any office appliances (not being computers);
(c) any road transport vehicles;
(d) any machinery or plant, the whole of the actual cost
of which is allowed as a 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 one previous year;
(e) any new machinery or plant to be installed in an industrial
undertaking, other than a small-scale industrial undertaking,
as defined in section 80HHA, for the purposes of business
of construction, manufacture or production of any article
or thing specified in the list in the Eleventh Schedule.
(5) The deduction under sub-section (1) shall not be admissible
unless the accounts of the business or profession of the assessee
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, along with his return of income,
the report of such audit in the prescribed form duly signed
and verified by such accountant :
Provided that in a case where the assessee is required by
or under any other law to get his accounts audited, it shall
be sufficient compliance with the provisions of this sub-section
if such assessee gets the accounts of such business or profession
audited under such law and furnishes the report of the audit
as required under such other law and a further report in the
form prescribed under this sub-section.
(5A) Any amount standing to the credit of the assessee in
the deposit account shall not be allowed to be withdrawn before
the expiry of a period of five years from the date of deposit
except for the purposes specified in the scheme or in the
circumstances specified below :—
(a) closure of business;
(b) death of an assessee;
(c) partition of a Hindu undivided family;
(d) dissolution of a firm;
(e) liquidation of a company.
Explanation.—For the removal of doubts, it is hereby
declared that nothing contained in this sub-section shall
affect the operation of the provisions of sub-section (5AA)
or sub-section (6) in relation to any withdrawals made from
the deposit account either before or after the expiry of a
period of five years from the date of deposit.
(5AA) Where any amount, standing to the credit of the assessee
in the deposit account, is withdrawn during any previous year
by the assessee in the circumstance specified in clause (a)
or clause (d) of sub-section (5A), the whole of such amount
shall be deemed to be the profits and gains of business or
profession of that previous year and shall accordingly be
chargeable to income-tax as the income of that previous year,
as if the business had not closed or, as the case may be,
the firm had not been dissolved.
(5B) Where any amount standing to the credit of the assessee
in the deposit account is utilised by the assessee for the
purposes of any expenditure in connection with the business
or profession in accordance with the scheme, such expenditure
shall not be allowed in computing the income chargeable under
the head “Profits and gains of business or profession”.
(6) Where any amount, standing to the credit of the assessee
in the deposit account, released during any previous year
by the Development Bank for being utilised by the assessee
for the purposes specified in the scheme or at the closure
of the account 75 [[in circumstances other than the circumstances
specified in clauses (b), (c) and (e) of sub-section (5A),
is not utilised in accordance with , and within the time specified
in,] the scheme, either wholly or in part, the whole of such
amount or, as the case may be, part thereof which is not so
utilised shall be deemed to be the profits and gains of business
or profession of that previous year and shall accordingly
be chargeable to income-tax as the income of that previous
year.
(7) Where any asset acquired in accordance with the scheme
is sold or otherwise transferred in any previous year by the
assessee to any person at any time before the expiry of eight
years from the end of the previous year in which it was acquired,
such part of the cost of such asset as is relatable to the
deductions allowed under sub-section (1) shall be deemed to
be the profits and gains of business or profession of the
previous year in which the asset is sold or otherwise transferred
and shall accordingly be chargeable to income-tax as the income
of that previous year:
Provided that nothing in this sub-section shall apply—
(i) where the asset is sold or otherwise transferred by
the assessee to Government, a local authority, a corporation
established by or under a Central, State or Provincial Act
or a Government company as defined in section 617 of the Companies
Act, 1956 (1 of 1956); or
(ii) where the sale or transfer of the asset is made in connection
with the succession of a firm by a company in the business
or profession carried on by the firm as a result of which
the firm sells or otherwise transfers to the company any asset
and the scheme continues to apply to the company in the manner
applicable to the firm.
Explanation.—The provisions of clause (ii) of the proviso
shall apply only where—
(i) all the properties of the firm relating to the business
or profession immediately before the succession become the
properties of the company;
(ii) all the liabilities of the firm relating to the business
or profession 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.
(8) The Central Government may, if it considers it necessary
or expedient so to do, by notification in the Official Gazette,
omit any article or thing from the list of articles or things
specified in the Eleventh Schedule.
(9) The Central Government may, after making such inquiry
as it may think fit, direct, by notification in the Official
Gazette, that the provisions of this section shall not apply
to any class of assessees, with effect from such date as it
may specify in the notification.
(10) Where a deduction has been allowed to an assessee under
this section in any assessment year, no deduction shall be
allowed to the assessee under sub-section (1) of section 32A
in the said assessment year (hereinafter referred to as the
initial assessment year) and a block of further period of
four years beginning with the assessment year immediately
succeeding the initial assessment year.
Explanation.—In this section,—
(a) “computers” does not include calculating
machines and calculating devices;
(b) “Development Bank” means—
(i) in the case of an assessee carrying on business of growing
and manufacturing tea in India, the National Bank for Agriculture
and Rural Development established under section 3 of the National
Bank for Agriculture and Rural Development Act, 1981 (61 of
1981);
(ii) in the case of other assessees, the Industrial Development
Bank of India established under the Industrial Development
Bank of India Act, 1964 (18 of 1964) and includes such bank
or institution as may be specified in the scheme in this behalf.
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