ctp assignment, akanksha jain, 05817003909, mba

8/8/2019 Ctp Assignment, Akanksha Jain, 05817003909, Mba

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ASSIGNMENT

ON

EXEMPT INCOMES- SEC. 10A

SUBMITTED TO:

Mr. Asim Sahore

SUBMITTED BY:

Akanksha Jain

CORPORATE TAX PLANNING

TECNIA INSTITUTE OF ADVANCED

STUDIES


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Chapter II of the Income-tax Act contains a number of provisions in sections 10 to 13A

which exclude various kinds of incomes from the purview of taxation.

Section 10 enumerates a number of incomes at one place, which are otherwise incomes,but which are not to be included in the income for the purpose of taxation

Income of newly established industrial undertakings in free trade zones,

etc. [section10A]

1. General: subject to the provisions of this section, a deduction of such profits and

gains as are derived by n undertaking from the export of articles or things or

computer software, as the case may be, shall be allowed from total income of theassessee.

2. Assessees who are eligible for deduction: Deduction under this section isavailable to all categories viz.individuals, firms, companies, etc.who derive any

profits or gains from an undertaking engaged in the export of articles or things orcomputer software.

3. Essential conditions to claim deduction: The deduction shall apply to an

undertaking which fulfills all the following conditions:

(i) It has begun or begins to manufacture or produce articles or things orcomputer software during the previous year, relevant to the assessment

year.

a) 1981-82 or thereafter, in any free trade zone;b) 1994-95 or thereafter, in any electronic hardware technology park, or

as the case may be, software technology park; or

(ii) It should not be formed by the splitting up or reconstruction of abusiness already in existence.However, deduction is provided if the

unit is formed as a result of the re-establishment, reconstruction or

revival by the assessee of the business of the undertaking as is referredto and satisfying the conditions in section 33B

(iii) It should not be formed by the transfer of machinery or plant,previously used for any purpose, to a new business. However, the

following are the two exceptions to this condition:

1) Machinery or plant which was used outside India by any person other

than the assessee shall not be regarded as machinery or plant previouslyused for any purpose, if the following conditions are fulfilled:

a) The machinery or plant should not be previously used in

India.b) The machinery or plant should be imported into India from

a foreign country.


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c) No deduction on account of depreciation in respect of such

machinery or plant has been allowed or is allowable under

the provisions of this act to any person previously.2) Deduction u/s 10A will, be available if the total value of the second hand

machinery or plant transferred to the new undertaking does not exceed

20percent of the total value of the machinery or plant used in theindustrial unit.

(iv) The sale proceeds of articles or things or computer software exported

out of India should be received in, or brought into, India by theassessee in convertible foreign exchange within a period of six months

from the end of the previous year or, within such further period as the

competent authority may allow in this behalf.

(v) The exemption shall not be admissible unless the assessee furnishes in

the prescribed form [Form No.56F], along with the return of income,

the report of a chartered accountant certifying that the deduction has

been correctly claimed in accordance with the provisions of thissection.

(vi) The provisions of sub section(8) (relating to inter-unit transfer) and

sub-section(10)(relating to showing excess profit from such unit) 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 ofthe undertaking referred to in section 80-IA.

4. Period of tax holiday: The profits and gain from the exports of such undertakingshall not be included in the total income of the assessee in respect of any ten

consecutive assessment years beginning with the assessment years relevant to the

previous year in which the undertaking begins to manufacture or produce articlesor things or computer software. However, no deduction under this section shall be

allowed to any undertaking for the assessment year 2012-13 and thereafter.

5. How to compute profit and gains from exports of such undertakings [section

10A(4)]: For the purpose of the deduction under this section, the profits derived

from export of articles or things or computer software shall be the amount which

bears to the profits of the business of the undertaking, the same proportion as theexport turnover in respect of such articles or things or computer software bears to

the total turnover of the business carried on by the undertaking.

In other words it will be as under:

Profits from business of Export turnover of the undertaking of

the undertaking * such article/things or computer software

Total turnover of business carried on by the

undertaking


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E.G: G Ltd. Furnishes the following particulars for the year 2009-10.

TOTAL SALES OF THE UNDERTAKING 5000000EXPORT SALES 4000000

DOMESTIC SALES 1000000

MONEY BROUGHT IN INDIA IN CONVERTIBLE FOREIGN

EXCHANGE UPTO 30-09-2009

3600000

PROFIT FROM THE ABOVE UNDERTAKING 500000

CALCULATION OF DEDUCTION UNDER SEC 10A

= 500000 * 3600000

5000000

= Rs. 3600000

6. Banon enjoyment of other tax benefits:

1) If the deduction under section 10A pertains to the assessment year 2001-02 orany subsequent years, then unabsorbed depreciation, unabsorbed capital

expenditure on scientific research, unabsorbed family planning expenditure

relating to such undertaking will be allowed to be carried forward and set offas per provisions of Income-tax act.

2) Similarly, brought forward losses under sections 72(1), 74(1) and 74(3) ofsuch undertaking with respect to assessment year 2001-02 and onwards shall

be carried forward and set off as per the provisions of the Income-tax Act.

3) Deduction under section 80-IA or 80-IB shall not be allowed in such cases.

4) WDV of any asset used for the purpose of the business of the undertaking

shall be computed as if the assessee had claimed and been actually alloweddeduction in respect of depreciation for each of the relevant assessment year.

7. Option not to claim benefit of tax holiday [Section 10A (8)]:Sub-section (8)gives an option to any eligible industrial undertaking not to avail the benefit for

any of the relevant assessment years. An assessee may, before the due date for

filing the return of income under section 139(1) furnish a declaration in writingthat the provisions of the section may not be made applicable to him for the said

year forming part of the relevant assessment years. On such declaration,

provisions of section 10A shall not apply to the assessee for any of the said

relevant assessment year.

8. Deduction under this section allowable in case of amalgamation and

demerger [Section 10A(7A)]:where any undertaking of an Indian company


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which is entitled to the deduction under this section is transferred to another

Indian company under a scheme of amalgamation or demerger,the deduction shall

be allowable in the hands of the amalgamated or the resulting company. Howeverno deduction shall be admissible under this section to the amalgamating company

or the demerged company for the previous year in which the amalgamation or

demerger takes place.

9. Deduction under section 10A is not to be allowed if return of income is not

submitted by due date: No deduction under this section shall be allowed to anassessee who does not furnish a return of his income on or before the due date

specified under section139(1).

Some important term:

Computer Software means,--

(i) any computer programme recorded on any disc, tape, perforated media orother information storage device ; or

(ii) any customized electronic data or any product or service of similar nature,as may be notified by the Board, which is transmitted or exported from India

to any place outside India by any means ;

Convertible Foreign Exchange means foreign exchange which is for the time beingtreated by the Reserve Bank of India as convertible foreign exchange for the purposes of

the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder

or any other corresponding law for the time being in force ;

Electronic Hardware Technology Parkmeans any park set up in accordance with the

Electronic Hardware Technology Park (EHTP) scheme notified by the Government of

India in the Ministry, of Commerce and Industry;

Export Turnover means the consideration in respect of export by the undertaking of

articles or things or computer software received in, or brought into India by the assessee

in convertible foreign exchange in accordance with sub-section (5), but does not include

freight, telecommunication charges or insurance attributable to the delivery of the articlesor things or computer software outside India or expenses, if any, incurred in foreign

exchange in providing the technical services outside India.

Free Trade Zone means the Kandla Free Trade Zone and the Santacruz ElectronicsExport Processing Zone and includes any other free trade zone which the Central

Government may, by notification in the Official Gazette, specify for the purposes of this

section;

Relevant Assessment Year means any assessment year falling within a period of tenconsecutive assessment years referred to in this section;


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Software Technology Park means any park set up in accordance with the Software

Technology Park Scheme notified by the Government of India in the Ministry of

Commerce and Industry;

ctp assignment, akanksha jain, 05817003909, mba

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