Conditions to be Fulfilled (Eligible Assessce)

                        Benefit u/s 32AD is available to all kinds of assessees (corporate as well as non-corporate assessees).

                        The assessee sets up an undertaking/enterprise for manufacture or production of any article or thing on or after April 1, 2015.

                        Such undertaking must be set up in any backward area (notified by the Central Government) in Andhra Pradesh, Bihar, Telengana and West Bengal.

                        The assessee acquires and installs a new plant and machinery' for the purposes of such undertaking on or after April 1, 2015 but before April 1, 2020.

Meaning of 'New Plant & Machinery' '

New plant & machinery' does not include:

                        Second hand plant & machinery whether Indian or imported (ie P&M should be brand new)

                        Any plant & machinery installed in any office premises or any residential accommodation like guest houses (ie plant & machinery should be installed at factory)

                        Any office appliances including computers or computer software

                        Any vehicle, ship or aircraft Any plant & machinery, the actual cost of which is allowed to be debited to P&L A/c (ie plant & machinery for which deduction is claimed u/s 35, 35AD, etc)

Quantum of Deduction

An investment allowance of 15% of the aggregate investment in 'new plant & machinery' acquired and installed is available in the year in which such new asset is installed.

Note: The amount of investment allowance shall not be reduced to arrive at the WDV of the plant & machinery.

Lock-in Period of 5 Years

                        New P&M in respect of which investment allowance has been claimed u/s 32AD must not be transferred for a period of 5 years from the date of its installation.

                        If such plant & machinery is sold/transferred within a period of 5 years, deduction allowed earner shall be deemed as PGBP income of the previous year in which such plant & machinery has been sold/transferred.

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