Gautam Nayak Contractor, Nayak & Kishnadwala 21 st March 2013 FINANCE BILL DEDUCTIONS AVAILABLE TO INDUSTRY

INVESTMENT ALLOWANCE – S.32AC CNK 2 Available to companies engaged in manufacture/ production of articles/things Deduction of 15% of new plant & machinery acquired & installed from 1 st April 2013 to 31 st March 2015 Available only if aggregate cost of new P & M exceeds Rs 100 crore No transfer or sale of new P & M for 5 years – proportionate withdrawal in year of transfer Amalgamation/Demerger not regarded as transfer - amalgamated/resulting co to hold for remaining period No need to create reserve

INVESTMENT ALLOWANCE – S.32AC CNK 3 Eligible Entities Only companies – not partnerships/LLPs Service cos, infrastructure cos, construction cos will not qualify Mining cos eligible Power generation cos may qualify Software product cos will get benefit Cos doing job work may qualify if process results in commercially different article or thing No list of prohibited articles or things

INVESTMENT ALLOWANCE – S.32AC CNK 4 Deduction If limit not crossed in AY , but in AY , entire deduction in AY In addition to depreciation & additional depreciation Part of business deductions – no separate carry forward, carry forward as part of business loss Deduction available only if business commenced – new business where profits & gains not computed would not get deduction No deduction for MAT – no book entry

INVESTMENT ALLOWANCE – S.32AC CNK 5 New P & M To exclude vehicles, ship, aircraft, office appliances (including computers & software), secondhand P & M, machinery installed in offices /residential accommodation/guest house, 100% cost deductible assets Not necessary that used for manufacture/production Secondhand used outside India not eligible Computers & software which are part of production plant or machinery would be eligible Dumpers, Tippers not vehicles if used in production process Assets given on lease – whether eligible? Cost to include interest – expln 8 to s.43(1)

INVESTMENT ALLOWANCE – S.32AC CNK 6 Acquired & Installed Both acqn & installn to be within eligible period Not acqn > 100cr + Installn > 100 cr – assets acqd & installed during period to exceed Rs 100 crore No requirement of put to use If acqd & installed in time, but business commenced after , no deduction Self constructed asset – whether acqd? Acquisition on finance lease – whether eligible? Installn – placing in position for use – not necessarily affixing to earth or premises Where installn over period of time, date of compltn of installn Even if electric connection pending, amts to installn

NEW WORKMEN DEDN – S.80JJAA CNK 7 30% of wages paid to new additional regular employees exceeding 100 if increase of at least 10% over earlier year For 3 assessment years Earlier available to industrial undertaking engaged in manufacture/ production of new article/thing Software company eligible – Texas Instruments 115 TTJ (Bang) 976 Now restricted to employees employed in factory mfg goods Software, mining cos would not be eligible What if eligible for first year in AY ? Now not available where factory hived off/transferred from another entity/acqd by amalgamation What if transfer/amalgn prior to amendment?

KEYMAN INSURANCE POLICIES CNK 8 Sums received under Keyman Insurance Policy taxable u/s.2(24)(xi) rws 17(3)(ii), 28(vi), and 56(2)(iv) Exception for Keyman insurance Policy u/s.10(10D) – not exempt as life insurance policy Rajan Nanda – 349 ITR 8 (Del) – ceases to be Keyman Insurance Policy on assignment to keyman – therefore exempt u/s.10(10D) Amndt – Keyman Insurance Policy will continue to remain Keyman Insurance Policy even after assignment