Section 80HHA of The Income Tax Act,1961

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The Income Tax Act, of 1961 is the main statute of Income Tax in India. It provides for levy, administration, collection, and recovery of Income Tax.

As per Section 80HHA of The Income Tax Act, 1961,

(1) If the gross total income of an assessee includes any profits and gains from a small-scale industrial undertaking in which this section is applied, as per its provisions it should be allowed in computing the total income of the assessee and deduction from such profits and gains of an amount which is equivalent to 20%.

(2) This section is applied to any small-scale industrial undertaking which satisfies all the following conditions, -

(i) it should begin to manufacture or produce articles after 30 September 1977 but before 1 April 1990, in any rural area

(ii) it should not be formed by the splitting up, or the reconstruction, of a business already in existence:

The above condition will not apply in accordance with any small-scale industrial undertaking which is formed as a result of the re-establishment, reconstruction, or revival by the assessee of the business of any such industrial undertaking which 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;

(iv) it employs ten or more workers in a manufacturing process carried on with the aid of power or employs twenty or more workers in a manufacturing process carried on without the aid of power.

Explanation. —Where in the case of a small-scale industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed 20% of the total value of the machinery or plant used in the business, then, for the purposes of clause (iii) of this subsection, the condition specified therein will be deemed to have been fulfilled.

(3) The deduction specified in sub-section (1) will be allowed in computing the total income of each of the ten previous years beginning with the previous year in which the industrial undertaking begins to manufacture or produce articles:

In this condition, the deduction will not be allowed in computing the total income of any of the ten previous years aforesaid in respect of which the industrial undertaking is not a small-scale industrial undertaking.

(4) If the assessee is a person, other than a company or a cooperative society, the deduction under sub-section (1) will not be admissible unless the accounts of the small-scale industrial undertaking for the previous year are relevant to the assessment year for which the deduction is claimed have been audited by an accountant which has been defined in the Explanation of sub-section (2) of section-288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form13 should be duly signed and verified by such accountant.

(5) The provisions of sub-sections (6) and (7) of section-80HH will be applied in relation to the computation of the profits and gains of a small-scale industrial undertaking for the purposes of the deduction under this section as they apply in relation to the computation of the profits and gains of an industrial undertaking for the purposes of the deduction under that section.

(6) If the assessee is entitled to the deduction under section-80-I or section-80J in relation to the profits and gains of a small-scale industrial undertaking to which this section applies, the effect will first be given to the provisions of this section.

(7) Where a deduction in relation to the profits and gains of a small-scale industrial undertaking to which section-80HH is applied and is claimed and allowed under that section for any assessment year, deduction in relation to such profits and gains will not be allowed under this section for the same or any other assessment year.

(8) Nothing in this section will apply to any small-scale industrial mining undertaking.