33. Development rebate.- (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.
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