Income Tax Act, 2025
Section 5: Subs. by Act 46 of 1986, s. 10, for the Explanation (w.e.f. 101986).
5. Subs. by Act 46 of 1986, s. 10, for the Explanation (w.e.f. 101986).
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1[80HHA. Deduction in respect of profits and gains from newly established small-scale
industrial undertakings in certain areas.—(1) Where the gross total income of an assessee includes any
profits and gains derived from a small-scale industrial undertaking to which this section applies, there
shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total
income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent
thereof.
(2) This section applies to any small-scale industrial undertaking which fulfils all the following
conditions, namely:—
(i) it begins to manufacture or produce articles after the 30th day of September, 1977 2[but before
the 1st day of April, 1990], in any rural area;
(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 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 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;
(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 twenty per cent of the total value of the
machinery or plant used in the business, then, for the purposes of clause (iii) of this sub-section, the
condition specified therein shall be deemed to have been fulfilled.
(3) The deduction specified in sub-section (1) shall be allowed in computing the total income 3[of
each of the ten previous years beginning with the previous year in which the industrial undertaking]
begins to manufacture or produce articles:
4[Provided that such deduction shall 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 within the meaning of clause (b) of the Explanation below sub-section (8).]
(4) Where the assessee is a person, other than a company or a co-operative society, the deduction
under sub-section (1) shall not be admissible unless the accounts of the small-scale industrial undertaking
for the previous year relevant to the assessment year for which the deduction is claimed have been audited
by an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee
furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and
verified by such accountant.
Where the gross total income of an assessee includes any
profits and gains derived from a small-scale industrial undertaking to which this section applies, there
shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total
income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent
thereof.
This section applies to any small-scale industrial undertaking which fulfils all the following
conditions, namely:—
it begins to manufacture or produce articles after the 30th day of September, 1977 2[but before
the 1st day of April, 1990], in any rural area;
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 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 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;
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 twenty per cent of the total value of the
machinery or plant used in the business, then, for the purposes of clause
of this sub-section, the
condition specified therein shall be deemed to have been fulfilled.
The deduction specified in sub-section
shall be allowed in computing the total income 3[of
each of the ten previous years beginning with the previous year in which the industrial undertaking]
begins to manufacture or produce articles:
4[Provided that such deduction shall 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 within the meaning of clause
of the Explanation below sub-section
Where the assessee is a person, other than a company or a co-operative society, the deduction
under sub-section
shall not be admissible unless the accounts of the small-scale industrial undertaking
for the previous year relevant to the assessment year for which the deduction is claimed have been audited
by an accountant as defined in the Explanation below sub-section
of section 288 and the assessee
furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and
verified by such accountant.