Income Tax Act, 2025
Section 5: Ins. Act 7 of 2017, s. 7 (w.e.f. 12018).
5. Ins. Act 7 of 2017, s. 7 (w.e.f. 12018).
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(i) for the purposes of acquiring machinery or plant which is first put to use before the expiry
of a period of three years following the previous year in which the reserve was created; and
(ii) until the acquisition of the machinery or plant as aforesaid, for the purposes of the
business of the undertaking other than for distribution by way of dividends or profits or for
remittance outside India as profits or for the creation of any asset outside India;
(b) the particulars, as may be specified by the Central Board of Direct Taxes in this behalf, under
clause (b) of sub-section (1B) of section 10A have been furnished by the assessee in respect of
machinery or plant along with the return of income for the assessment year relevant to the previous
year in which such plant or machinery was first put to use.
(3) Where any amount credited to the Special Economic Zone Re-investment Reserve Account under
clause (ii) of sub-section (1),—
(a) has been utilised for any purpose other than those referred to in sub-section (2), the amount so
utilised; or
(b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of
sub-section (2), the amount not so utilised,
shall be deemed to be the profits,—
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of three years
specified in sub-clause (i) of clause (a) of sub-section (2),
and shall be charged to tax accordingly:
Provided that where in computing the total income of the Unit for any assessment year, its profits
and gains had not been included by application of the provisions of sub-section (7B) of section 10A,
the undertaking, being the Unit shall be entitled to deduction referred to in this sub-section only for
the unexpired period of ten consecutive assessment years and thereafter it shall be eligible for
deduction from income as provided in clause (ii) of sub-section (1).
Explanation.—For the removal of doubts, it is hereby declared that an undertaking, being the
Unit, which had already availed, before the commencement of the Special Economic Zones Act,
2005, the deductions referred to in section 10A for ten consecutive assessment years, such Unit shall
not be eligible for deduction from income under this section:
Provided further that where a Unit initially located in any free trade zone or export processing
zone is subsequently located in a Special Economic Zone by reason of conversion of such free trade
zone or export processing zone into a Special Economic Zone, the period of ten consecutive
assessment years referred to above shall be reckoned from the assessment year relevant to the
previous year in which the Unit began to manufacture, or produce or process such articles or things or
services in such free trade zone or export processing zone:
Provided also that where a Unit initially located in any free trade zone or export processing zone
is subsequently located in a Special Economic Zone by reason of conversion of such free trade zone
or export processing zone into a Special Economic Zone and has completed the period of ten
consecutive assessment years referred to above, it shall not be eligible for deduction from income as
provided in clause (ii) of sub-section (1) with effect from the 1st day of April, 2006.
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1[(4) This section applies to any undertaking, being the Unit, which fulfils all the following
conditions, namely:—
(i) it has begun or begins to manufacture or produce articles or things or provide services during
the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006
in any Special Economic Zone;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is
formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of
any such undertaking as 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.
Explanation.—The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply
for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that subsection.]
(5) Where any undertaking being the Unit which is entitled to the deduction under this section is
transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit
in a scheme of amalgamation or demerger,—
(a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit,
being the company for the previous year in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as they would have applied to the amalgamating or the
demerged Unit being the company as if the amalgamation or demerger had not taken place.
(6) Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74,
in so far as such loss relates to the business of the undertaking, being the Unit shall be allowed to be
carried forward or set off.
(7) For the purposes of sub-section (1), the profits derived from the export of articles or things or
services (including computer software) shall be the amount which bears to the profits of the business of
the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or
things or services bears to the total turnover of the business carried on 2[by the undertaking]:
3[Provided that the provisions of this sub-section [as amended by section 6 of the Finance (No. 2)
Act, 2009 (33 of 2009)] shall have effect for the assessment year beginning on the 1st day of April, 2006
and subsequent assessment years.]
(8) The provisions of sub-sections (5) and (6) of section 10A shall apply to the articles or things or
services referred to in sub-section (1) as if—
(a) for the figures, letters and word “1st April, 2001”, the figures, letters and word “1st April,
2006” had been substituted;
(b) for the word “undertaking”, the words “undertaking, being the Unit” had been substituted.
(9) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be,
apply in relation to the undertaking referred to in this section as they apply for the purposes of the
undertaking referred to in section 80-IA.
for the purposes of acquiring machinery or plant which is first put to use before the expiry
of a period of three years following the previous year in which the reserve was created; and
until the acquisition of the machinery or plant as aforesaid, for the purposes of the
business of the undertaking other than for distribution by way of dividends or profits or for
remittance outside India as profits or for the creation of any asset outside India;
the particulars, as may be specified by the Central Board of Direct Taxes in this behalf, under
clause
of sub-section
of section 10A have been furnished by the assessee in respect of
machinery or plant along with the return of income for the assessment year relevant to the previous
year in which such plant or machinery was first put to use.
Where any amount credited to the Special Economic Zone Re-investment Reserve Account under
clause
of sub-section
has been utilised for any purpose other than those referred to in sub-section
has not been utilised before the expiry of the period specified in sub-clause
of clause
of
sub-section
in a case referred to in clause
in a case referred to in clause
of clause
of sub-section
of section 10A,
the undertaking, being the Unit shall be entitled to deduction referred to in this sub-section only for
the unexpired period of ten consecutive assessment years and thereafter it shall be eligible for
deduction from income as provided in clause
of sub-section
of sub-section
with effect from the 1st day of April, 2006.
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1[
This section applies to any undertaking, being the Unit, which fulfils all the following
conditions, namely:—
it has begun or begins to manufacture or produce articles or things or provide services during
the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006
in any Special Economic Zone;
it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is
formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of
any such undertaking as is referred to in section 33B, in the circumstances and within the period
specified in that section;
it is not formed by the transfer to a new business, of machinery or plant previously used for
any purpose.
Explanation.—The provisions of Explanations 1 and 2 to sub-section
of section 80-IA shall apply
for the purposes of clause
of this sub-section as they apply for the purposes of clause
of that subsection.]
Where any undertaking being the Unit which is entitled to the deduction under this section is
transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit
in a scheme of amalgamation or demerger,—
no deduction shall be admissible under this section to the amalgamating or the demerged Unit,
being the company for the previous year in which the amalgamation or the demerger takes place; and
the provisions of this section shall, as they would have applied to the amalgamating or the
demerged Unit being the company as if the amalgamation or demerger had not taken place.
Loss referred to in sub-section
of section 72 or sub-section
or sub-section
of section 74,
in so far as such loss relates to the business of the undertaking, being the Unit shall be allowed to be
carried forward or set off.
For the purposes of sub-section
The provisions of sub-sections
and
of section 10A shall apply to the articles or things or
services referred to in sub-section
as if—
for the figures, letters and word “1st April, 2001”, the figures, letters and word “1st April,
2006” had been substituted;
for the word “undertaking”, the words “undertaking, being the Unit” had been substituted.
The provisions of sub-section
and sub-section
of section 80-IA shall, so far as may be,
apply in relation to the undertaking referred to in this section as they apply for the purposes of the
undertaking referred to in section 80-IA.