Tax Planning through Investments

CA. Rajat MohanB.Com(H),ACA, ACS, DISA

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Tax Planning through Investments

SECTION 80-IA(6)COMPUTATION OF PROFITS

OF CERTAIN ACTIVITIES FORMING INTEGRAL PART OF

A HIGHWAY PROJECT.

MOHAN AGGARWAL & ASSOCIATES Chartered Accountants

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(A). TAXPAYER CATEGORY SECTION 80-IA(6)This deduction is available to all categories of

taxpayers.


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(B). CONDITIONS SECTION 80-IA(6) Where housing or other activities are an integral part of the highway

project, profits computed shall not be liable to tax if following conditions are satisfied:

(a) Profit has been transferred to a special reserve account.

(b) Such profit is actually utilized for the highway project excluding housing and other activities before the expiry of 3 years following the year in which such amount was transferred to the reserve account.

(c) The amount remaining unutilized shall be chargeable to tax as income of the year in which such transfer to reserve account took place.


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(d)Inter-unit transaction at market value criteria — Where any goods or services held for the purposes of the undertaking or unit or enterprise or eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the undertaking or unit or enterprise or eligible business and, the consideration, for such transfer as recorded in the accounts of the undertaking or unit or enterprise or eligible business does not correspond to the market value[1] of such goods or services as on the date of the transfer, then, for the purposes of any deduction under this Chapter, the profits and gains of such undertaking or unit or enterprise or eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date.

(B). CONDITIONS SECTION 80-IA(6)

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e) Dual benefit to member AOP/BOI not allowed criteria —Where, benefit of this deduction is given to an association of personsor a body of individuals, no deduction under this section shall again beallowed to member of the association of persons or body of

individualsin relation to the share of such member.

(f)Dual benefit not allowed criteria — Where any amount of profits and gains is claimed and allowed under this section, deduction to the extent of such profits and gains shall not be allowed under any other provisions of Section 10A or Section B or Section BA or Chapter-VIA under the heading ‘C. Deductions in respect of certain incomes’. Deduction under this section shall not exceed the profits and gains of eligible business.



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(g) Assessee shall maintain separate accounts for the activities referred to in Rule 18BBE(1)

(h) Assessee shall submit a certificate from an accountant[1], specifying the amount credited to the reserve account and the amount utilized during the relevant previous year for the highway project. Certificate referred shall be in Form No. 10CCC.



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(C). AMOUNT OF DEDUCTION SECTION 80-IA(6)

Profits of housing or other activities, which are integral part of a highway project, shall be computed on the basis and manner specified below:

(i) In a case where the annual profits of the housing or other activities which are integral part of a highway project can be arrived at in accordance with the regular method of accounting followed, the profits so arrived at as computed under the provisions of the Act; or

(ii) In any other case, the amount of profits arrived at based on the percentage of completion of the activities referred to above clause during the relevant previous year.

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THANK YOUYour comments and suggestions are of utmost

importance and are always welcomed.

CA. Rajat Mohan B.Com(H), ACA, ACS, DISA

MOHAN AGGARWAL & ASSOCIATESChartered AccountantsHead OfficeF-31 D.B. Gupta Market, Karol Bagh, New Delhi-110005Office Phone: 011-23672609 / 23535809

Branch Office18A, IInd Floor, North Avenue Road, West Punjabi Bagh, New Delhi-110026office Phone: 011-47322696/97

Website: www.delhicamohan.comE-mail: [email protected]

mailto:[email protected]

Tax Planning through Investments

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