Section 32AD INVESTMENT ALLOWANCE FOR NOTIFIED BACKWARD AREAS
Section 32AD INVESTMENT ALLOWANCE FOR NOTIFIED BACKWARD AREAS
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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