Income Tax Act, 2025
Section 2: Subs. by Act 18 of 2008, s. 8, for “industrial undertaking" (w.e.f. 12009).
2. Subs. by Act 18 of 2008, s. 8, for “industrial undertaking" (w.e.f. 12009).
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completed or, as the case may be, the new 1[unit] commences production or operation, in so far as
such fixed assets have been acquired or developed in connection with the extension of the
2[undertaking] or the setting up of the new 1[unit] of the assessee;
(b) “capital employed in the business of the company” means—
(i) in a case referred to in clause (i) of sub-section (1), the aggregate of the issued share
capital, debentures and long-term borrowings as on the last day of the previous year in which the
business of the company commences;
(ii) in a case referred to in clause (ii) of sub-section (1), the aggregate of the issued share
capital, debentures and long-term borrowings as on the last day of the previous year in which the
extension of the 2[undertaking] is completed or, as the case may be, the new 1[unit] commences
production or operation, in so far as such capital, debentures and long-term borrowings have been
issued or obtained in connection with the extension of the 2[undertaking] or the setting up of the
new 2[unit] of the company;
(c) “long-term borrowings” means—
(i) any moneys borrowed by the company from Government or the Industrial Finance
Corporation of India or the Industrial Credit and Investment Corporation of India or any other
financial institution3[which is eligible for deduction under clause (viii) of sub-section (1) of
section 36] or any banking institution (not being a financial institution referred to above), or
(ii) any moneys borrowed or debt incurred by it in a foreign country in respect of the
purchase outside India of capital plant and machinery, where the terms under which such moneys
are borrowed or the debt is incurred provide for the repayment thereof during a period of not less
than seven years.
(4) Where the assessee is a person other than a company or a co-operative society, no deduction shall
be admissible under sub-section (1) unless the accounts of the assessee for the year or years in which the
expenditure specified in sub-section (2) is incurred 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 for the first year in which the deduction under this section is claimed, the report of such audit in
the prescribed form duly signed and verified by such accountant and setting forth such particulars as may
be prescribed.
(5) Where the undertaking of an Indian company which is entitled to the deduction under
sub-section (1) is transferred, before the expiry of the period of ten years specified in sub-section (1), to
another Indian company in a scheme of amalgamation,—
(i) no deduction shall be admissible under sub-section (1) in the case of the amalgamating
company for the previous year in which the amalgamation takes place; and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as
they would have applied to the amalgamating company if the amalgamation had not taken place.
4[(5A) Where the undertaking of an Indian company which is entitled to the deduction under subsection (1) is transferred, before the expiry of the period specified in sub-section (1), to another company
in a scheme of demerger,—
(i) no deduction shall be admissible under sub-section (1) in the case of the demerged company
for the previous year in which the demerger takes place; and
“capital employed in the business of the company” means—
in a case referred to in clause
of sub-section
in a case referred to in clause
of sub-section
“long-term borrowings” means—
any moneys borrowed by the company from Government or the Industrial Finance
Corporation of India or the Industrial Credit and Investment Corporation of India or any other
financial institution3[which is eligible for deduction under clause
of sub-section
of
section 36] or any banking institution (not being a financial institution referred to above), or
any moneys borrowed or debt incurred by it in a foreign country in respect of the
purchase outside India of capital plant and machinery, where the terms under which such moneys
are borrowed or the debt is incurred provide for the repayment thereof during a period of not less
than seven years.
Where the assessee is a person other than a company or a co-operative society, no deduction shall
be admissible under sub-section
unless the accounts of the assessee for the year or years in which the
expenditure specified in sub-section
is incurred 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 for the first year in which the deduction under this section is claimed, the report of such audit in
the prescribed form duly signed and verified by such accountant and setting forth such particulars as may
be prescribed.
Where the undertaking of an Indian company which is entitled to the deduction under
sub-section
is transferred, before the expiry of the period of ten years specified in sub-section
no deduction shall be admissible under sub-section
in the case of the amalgamating
company for the previous year in which the amalgamation takes place; and
the provisions of this section shall, as far as may be, apply to the amalgamated company as
they would have applied to the amalgamating company if the amalgamation had not taken place.
4[
Where the undertaking of an Indian company which is entitled to the deduction under subsection
is transferred, before the expiry of the period specified in sub-section
no deduction shall be admissible under sub-section
in the case of the demerged company
for the previous year in which the demerger takes place; and