Income-tax Act,1961
Act No : 43
Section :
Conditions for depreciation allowance and development rebate 4.
34.Conditions for depreciation allowance and development rebate4 5[(1) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f 1-4-1988.] 6[(2) Omitted by the Taxation Laws (Amendment & Miscellaneous ---------------------------------------------------------------------- 1 Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 2 The deduction under this section has been discontinued from assessment year 1985-86: see proviso to the section. 3 Inserted by the Finance Act, 1984, w.e.f. 1-4-1985. 5 Prior to the omission, sub-section (1), as amended by the Taxation laws (Amendment) Act, 1970, w.e.f. 1-4-1971, read as under: "(1) The deductions referred to in sub-section (1) or subsection (1A) of section 32 shall be allowed only if the prescribed particulars have been furnished; and the deduction referred to in section 33 shall be allowed only if the particulars prescribed for the purpose of clause (i) and clause (ii) of sub-section (1) of section 32 have been furnished by the assessee in respect of the ship or machinery or plant." 6 Prior to the omission, sub-section (2), as amended by the Finance Act, 1965, w.e.f. 1-4-1965; the Finance (No. 2) Act, 1967, w.e.f. 1-4- 1967; the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971; the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1975 and the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, read as under: ----------------------------------------------------------------------- 1.196 Provisions) Act, 1986, w.e.f. 1-4-1988.] (3)(a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent of the development rebate to be actually allowed is debited to the profit and loss account of 1[any previous year in respect of which the deduction is to be allowed under sub-section (2) of that section or any earlier previous year (being a previous year not earlier than the year in which the ship was acquired or the machinery or plant was installed or the ship, machinery or plant was first put to use)] and credited to a reserve account to be utilised by the assessee during the period of eight years next following for the purposes of the business of the undertaking, other than- (i) for distribution by way of dividends or profits; or (ii) for remittance outside India as profits or for the creation of any asset outside India: Provided that this clause shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958: 2[Provided further that where a ship has been acquired after the 28th day of February, 1966, this clause shall have effect in respect of such ship as if for the words "seventy-five", the word "fifty" had been substituted.] ---------------------------------------------------------------------- "(2) For the purposes of section 32- (i)the aggregate of all deductions in respect of depreciation made under sub-section (1) or sub-section (1A) of section 32 or under the Indian Income-tax Act, 1922 (11 of 1922), or under any Act repealed by that Act or under the Indian Income-tax Act, 1886 (2 of 1886), shall, in no case, exceed the actual cost to the assessee of the building, machinery, plant, furniture, structure or work, as the case may be. Explanation:Where a capital asset is transferred- (i)by a holding company to its subsidiary company or by a subsidiary company to its holding company, or (ii)by a company to another company in a scheme of amalgamation, and the conditions specified in clause (iv) or clause (v) or, as the case may be, clause (vi) of section 47 are satisfied, then, in determining the aggregate of all deductions in respect of depreciation under this clause, account shall also be taken of the deductions in respect of depreciation allowed in the case of the company from which the asset has been transferred; (ii)nothing in clause (i) or clause (ii) or clause (iia) or clause (iv) or clause (v) or clause (vi) of sub-section (1) of section 32 shall be deemed to authorise the allowance for any previous year of any sum in respect of any building, machinery, plant or furniture sold, discarded, demolished or destroyed in that year; (iii)nothing in clause (i) of sub-section (1A) of section 32 shall be deemed to authorise the allowance for any previous year of any sum in respect of any structure or work in or in relation to a building referred to in that sub-section which is sold, discarded, demolished or destroyed or is surrendered as a result of the determination of the lease or other right of occupancy in respect of the building in that year." 1 Substituted for "the relevant previous year" by the Finance Act, 1990, w.r.e.f. 1-4-1962. 2 Inserted by the Finance Act, 1966, w.e.f. 1-4-1966. ------------------------------------------------------------------------ 1.197 1[Explanation.-Omitted by the Finance Act, 1990, w.r.e.f. 1-4- 1962.] (b)If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the-purposes of this Act, and the provisions of subsection (5) of section 155 shall apply accordingly: Provided that this clause shall not apply,- (i) where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958; or (ii) where the ship, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 2 ( 1 of 1956); or (iii) where the sale or transfer of the ship, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-section (3) or sub-section (4) of section 33. 3[34A. Restriction on unabsorbed depreciation and unabsorbed investment allowance for limited period in case of certain domestic companies (1) In computing the profits and gains of the business of a domestic company in relation to the previous year relevant to the assessment year commencing on the 1st day of April, 1992, where effect is to be given to the unabsorbed depreciation allowance or unabsorbed investment allowance or both in relation to any previous year relevant to the assessment year commencing on or before the 1st day of April, 1991, the deduction shall be restricted to two-thirds of such allowance or allowances and the balance,- (a) where it relates to depreciation allowance, be added to the depreciation allowance for the previous year relevant to the assessment year commencing on the 1st day of April, 1993 and be deemed to be part of that allowance or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year and so on for the succeeding previous years; (b) where it relates to investment allowance, be carried forward to the assessment year commencing on the 1st day of April, 1993 and the balance of the investment allowance, if any, still outstanding shall be carried forward to the following assessment year and where the ----------------------------------------------------------------------- 1 Prior to the omission, the Explanation read as under: "Explanation.-For-the removal of doubts, it is hereby declared that the deduction referred to in section 33 shall not be denied by reason only that the amount debited to the profit and loss account of the relevant previous year and credited to the reserve account aforesaid exceeds the amount of the profit of such previous year (as arrived at without making the debit aforesaid) in accordance with the profit and loss account." 3 Inserted by the Finance Act, 1992, w.e.f. 1-4-1992. ----------------------------------------------------------------------- 1.198 period of eight years has expired before the portion of such balance is adjusted, the said period shall be extended beyond eight years till such time the portion of the said balance is absorbed in the profits and gains of the business of the domestic company. (2) For the assessment year commencing on the 1st day of April, 1992, the provisions of sub-section (2) of section 32 and sub-section (3) of section 32A shall apply to the extent such provisions are not inconsistent with the provisions of sub-section (1) of this section. (3)Nothing contained in sub-section (1) shall apply where the amount of unabsorbed depreciation allowance or of the unabsorbed investment allowance, as the case may be, or the aggregate amount of such allowances in the case of a domestic company is less than one lakh rupees. (4)Nothing contained in sections 234B and 234C shall apply to any shortfall in the payment of any tax due on the assessed tax or, as the case may be, returned income where such shortfall is on account of restricting the amount of depreciation allowance or investment allowance under this section and the assessee has paid the amount of shortfall before furnishing the return of income under sub-section (1) of section 139.]
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