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Deduction in respect of profits and gains from housing projects

Section 143 — Deduction in respect of profits and gains from housing projects

Old Act equivalent: Section 80-IBA of IT Act 1961 Sub-part: Deductions from total income

Statutory Text

  1. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any busi ness referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business for ten consecutive tax years commencing with the initial tax year. (2) This section applies to any undertaking which during the period beginning on the 1st April, 2007 and ending before the 1st April, 2017, has begun or begins, in any of the North-Eastern States,—

(a) to manufacture or produce any eligible article or thing; or

(b) to undertake substantial expansion to manufacture or produce any eli gible article or thing; or

(c) to carry on any eligible business. (3) This section applies to any undertaking which fulfils all the following conditions:—

(a) it is not formed by splitting up, or the reconstruction, of a business already in existence (other than an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 140(4), in the circumstances and within the period specified therein);

(b) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

(4) For the purposes of sub-section (3)(b), the provisions of section 140(5) and (6) shall apply. (5) Irrespective of anything contained in any other provision of this Act, in com puting the total income of the assessee, no deduction shall be allowed under any other section contained in this Chapter in relation to the profits and gains of the undertaking. (6) Irrespective of anything contained in this Act, no deduction shall be allowed to any undertaking under this section, where the total period of deduction inclusive of the period of deduction under this section or under second proviso to section 80-IB(4) of the Income-tax Act, 1961 (43 of 1961) exceeds ten tax years. (7) The provisions contained in section 140(7) to (15) shall, so far as may be, apply to the eligible undertaking under this section. (8) For the purposes of this section,—

(a) “eligible article or thing” means the article or thing other than the following:—

(i) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), which pertains to tobacco and manufactured tobacco substitutes;

(ii) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(iii) plastic carry bags of less than twenty microns as specified by the Ministry of Environment and Forests vide notification numbers S.O. 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and

(iv) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), produced by petroleum oil or gas refineries;

(b) “eligible business” means the business of—

(i) hotel (not below two star category);

(ii) adventure and leisure sports including ropeways;

(iii) providing medical and health services in the nature of nursing home with a minimum capacity of twenty-five beds;

(iv) running an old-age home;

(v) operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training;

(vi) running information technology related training centre;

(vii) manufacturing of information technology hardware; and

(viii) bio-technology;

(c) “initial tax year” means the tax year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion;

(d) “North-Eastern States” means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;

(e) “substantial expansion” means increase in the investment in the plant and machinery by at least 25% of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the tax year in which the substantial expansion is undertaken. Special provisions in respect of newly established Units in Special Economic Zones.

Provisos

None.

Explanations

None.

Tables

Present in statutory text above — see formatted section.

Key Structure

  • Applies to: All assessees deriving profits from housing projects
  • Conditions: Housing project approved by competent authority; carpet area within prescribed limits; project completed within specified time
  • Time limits: Project approved after 01-06-2016 and before 31-03-2022; completed within 5 years from date of approval
  • Monetary limits: 100% of profits from housing project; carpet area limits: 30 sq.m (metro cities) or 60 sq.m (others); stamp duty value within Rs.45 lakhs
  • Exceptions: Assessee must not own more than 1 residential house at time of loan sanction

Cross-References

  • Section 80
  • Section 140

Amendment Notes

None noted from the extracted pages.

Practical Notes

  • Circular 19/2019
  • Circular 23/2019
  • Circular 8/2014
  • Circular 9/2015
  • Circular Instruction 2/2023

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