• Shubham Mishra

Section 32AC of Income Tax Act, 1961: Investment in new plant or Machinery

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(1) If a company that is an assessee purchases and installs new equipment after March 31, 2013, but before April 1, 2015, and the total actual cost of those new assets exceeds one hundred crore rupees, the company will be eligible for the following deductions:


(a) if the total actual cost of all new assets acquired and installed after the 31st of March 2013 but before the first day of April 2014 exceeds one hundred crore rupees, a sum equal to 15% of the actual cost of those new assets for the assessment year beginning on the first day of April 2014; and


(b) A payment equal to 15% of the actual cost of new assets purchased and installed after March 31, 2013, but before April 1, 2015, less any deductions allowed under clause (a) for the assessment year beginning on April 1, 2015.


(1A) When an assessee, a company engaged in the manufacture or production of any good or service, purchases and installs new assets, and the total actual cost of those assets was over twenty-five crore rupees in any prior year, and those assets were installed on or before March 31, 2017, a deduction equal to 15% of the total actual cost of those new assets will be permitted for the assessment year.


The deduction under this sub-section shall be allowed in the year in which the new assets are installed if the installation of the new assets occurs in a year other than the year of acquisition.


The assessee is eligible to claim a deduction under subsection (1) for the assessment year starting on April 1, 2015, but no deduction under this sub-section will be permitted for that assessment year.


(1B) No assessment year beginning on or after April 1, 2018, may make a deduction under subsection (1A) of this clause.


(2) The amount of the deduction allowed under subsection (1) or subsection (1A) in respect of any new asset acquired and installed by the assessee is deemed to be the assessee's income charged under the head "Profits and gains of business or profession" of the prior year in which such new asset was installed if sold or otherwise transferred, except in connection with the amalgamation or demerger, within five years of the date of its installation.


(3) The provisions of subsection (2) shall apply to the amalgamated company or the resulting company, as the case may be, as they would have applied to the amalgamating company or the demerged company, if the new asset is sold or otherwise transferred in connection with the amalgamation or demerger within five years of the date of its installation.


(4) For the purposes of this section, "new asset" refers to any new plant or machinery (other than ships or aircraft), but does not include:

* Any plant or machinery that, prior to its installation by the assessee, was used by any other person either within or outside India;

* Any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house;

* Any office appliances, including computers or computer equipment.

* Any equipment;

* Any plant or machinery, the full actual cost of which is permitted as a deduction (whether through depreciation or another method) in computing the income chargeable under the head "Profits and gains of business or profession" of any prior year.

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