Deductions From Gross Total Income 2 PDF

CA Final Paper 7 Direct Tax Laws Chapter 11
CA Shekhar Sane
Deductions which give stimulus to growth, as detailed in Chapter VI-A
Deductions which try to meet social objectives
Deductions which give rise to new investment opportunities to assessees
Deductions which can result as an incentive in “expansion” or “diversification”

decisions of an assessee
Deductions, which rationalize cost of education
2
Deductions which rationalize tax liability of handicap, assesses etc.
Concept of ‘Gross Total Income’
Concept of ‘Adjusted Gross Total Income’
Streams of income/s on which deduction is not available
3
Section Synopsis
80A Deductions to be made in computing total income
80AB Deductions to be made with reference to the income included

in the gross total income.
80AC Deduction not to be allowed unless return furnished.
80B Gross Total Income
Deduction in respect of life insurance premia, deferred
80C annuity, contributions to provident fund, subscription to
certain equity shares or debentures, etc.
80CCA Deduction in respect of deposits under National Savings

Scheme or payment to a deferred annuity plan
80CCB Deduction in respect of investment made under Equity Linked

Savings Scheme.
80CCC Deduction in respect of contribution to certain pension funds.
80CCD Deduction in respect of contribution to pension scheme of

Central Government.
4
Section Synopsis
80CCE Limit on deductions under sections 80C, 80CCC and 80CCD.
Deduction in respect of subscription to long-term

80CCF
infrastructure bonds.
80CCG Deduction in respect of investment made under an equity

savings scheme
80D Deduction in respect of health insurance premia.
80DD Deduction in respect of maintenance including medical

treatment of a dependant who is a person with disability.
80DDB Deduction in respect of medical treatment, etc.
Deduction in respect of interest on loan taken for higher
80E
education.
80G Deduction in respect of donations to certain funds,

charitable institutions, etc.
80GG Deductions in respect of rents paid.
5
Section Synopsis
80GGA Deduction in respect of certain donations for scientific research

or rural development.
80GGB Deduction in respect of contributions given by companies to

political parties.
80GGC Deduction in respect of contributions given by any person to

political parties.
Deductions in respect of profits and gains from industrial
80-IA undertakings or enterprises engaged in infrastructure
development, etc.
80-IAB Deductions in respect of profits and gains by an undertaking or

enterprise engaged in development of Special Economic Zone.
Deduction in respect of profits and gains from certain
80-IB industrial undertakings other than infrastructure development
undertakings
6
Section Synopsis
Special provisions in respect of certain undertakings or
80-IC
enterprises in certain special category States
Deduction in respect of profits and gains from business of

80-ID
hotels and convention centres in specified area.
Special provisions in respect of certain undertakings in North-

80-IE
Eastern States.
Deduction in respect of royalties, etc., from certain foreign
80-O
enterprises.
Deduction in respect of profits and gains from business of
80JJA
collecting and processing of bio-degradable waste.
80JJAA Deduction in respect of employment of new workmen.
Deductions in respect of certain incomes of Offshore Banking
80LA
Units and International Financial Services Centre.
80P Deduction in respect of income of co-operative societies.
7
Section Synopsis
Deduction in respect of profits and gains from the business
80Q
of publication of books.
Deduction in respect of professional income of authors of
80QQA
text books in Indian languages.
Deduction in respect of royalty income, etc., of authors of
80QQB
certain books other than text-books.
Deduction in respect of remuneration from certain foreign
80R
sources in the case of professors, teachers, etc.
Deduction in respect of professional income from foreign
80RR
sources in certain cases.
Deduction in respect of remuneration received for services
80RRA
rendered outside India.
80RRB Deduction in respect of royalty on patents.
Deduction in respect of interest on deposits in savings
80TTA
account
80U Deduction in case of a person with disability.
8
Long Term Capital Gains
Short Term Capital Gains u/s.111A
Winnings from lotteries, crossword puzzles – Sec.115BB
Income from race, including horse race – Sec.115BB
Income from card game or other game of any sort – Sec.115BB
Income from gambling or betting of any form – Sec.115BB

Income of a non-resident – Sec 115A(1)(a), 115AB, AC, ACA, AD,
BBA, BBD
9
Particulars Rs.
Income From ‘Salaries’ XXX
Income from ‘House Property’ XXX
Income from ‘Profits & Gains of Business/ XXX
Profession
Income from ‘Capital Gains’ XXX
Income from ‘Other Sources’ XXX
Clubbing Provisions (Sec.60 -65, Chapter V) XXX
Set off of carried forward losses (Sec.70 -75, (XX)
Chapter VI)
Gross Total Income XXXXX
10
Gross Deductions Total
Total Less u/s. 80C to
Income
Income 80U
Gross Total Deductions u/s

Income 80C to 80U
11
Where, in computing the total income of an AOP or BOI, any
deduction is admissible u/s 80G / 80GGA / 80GGC / 80HH /
80HHA / 80HHB / 80HHC / 80HHD / 80I / 80IA / 80IB / 80IC /
80ID / 80IE / 80J / 80JJA,
No deduction under the same section shall be made in

computing the total income of a member of the AOP or BOI in
relation to the share of such member in the income of AOP or
BOI.
12
Where the assessee has taken deduction u/s 10A / 10AA / 10B /
10BA or under any provisions of heading C of this chapter against any
amount of profits and gains of an undertaking or unit or enterprise or
eligible business for any assessment year,
• He is not entitled to deduction in respect of and to the extent of

such profit & gains under any other provisions of this act for such
A.Y.
• The allowable deduction cannot exceed the profits and gains of
such undertaking or unit or enterprise or eligible business as the
case may be.
13
Deduction under section 10A / 10AA / 10B /
10BA or any provisions of heading ‘C’ of this
chapter (deduction in respect of certain
income) is available only if the assessee
claims it in his Return of Income.
14
Where, any goods or services, held for eligible business are
transferred (sold) to a normal business by the assessee, or
vice-versa, the said transfer should be at market value.
If in the books of the eligible business, the transfer is not

recorded at market value, then the profits eligible for
deduction shall be computed by adopting market value for
such goods or services.
15
“Market Value” in relation to any goods or
services sold / supplied or acquired means
The price that such goods or services would

fetch if these were sold or acquired by the
undertaking or the unit or the eligible
business in or from the open market, subject
to statutory or regulatory restrictions if any.
16
If the assessee avails the deduction
under any of the provisions of this
chapter in respect of specified
business, he is not eligible to avail
the deduction u/s 35AD.
17
Deduction in respect of income u/s 80IA,
80IB, 80IC, 80ID, 80IE, 80LA, 80QQB, 80RRB
is allowed only to the extent of which such
income is included in the Gross Total Income
of the assessee.
18
Deduction u/s 80IA, 80IAB, 80IB, 80IC, 80ID and
80IE is allowed only if the return of income is filed
on or before the due date as specified in Sec.
139(1).
Deductions are allowed if it is accompanied by
relevant audit report in prescribed Form, by a
Chartered Accountant.
19
Gross Total Income means the Total income
computed in accordance with the
provisions of Income Tax Act, before
making any deductions under this chapter
20
21
An individual
Eligible Assessee
A Hindu
undivided family
Under this section maximum amount of

Rs.1,00,000 can be deducted from the Gross
total income of the assessee (As Read with
Sec.80 CCC, 80 CCD)
22
Life Insurance / annuities
•Actual amount paid towards Life insurance policy premium
•Amount contributed towards a contract for a deferred annuity
•Amount of deduction from the salary payable by or on behalf of
the Govt. to any individual in accordance to the conditions of his
service, for the purpose of securing a deferred annuity of
making provisions for his spouse or children not exceeding one
fifth of the salary;
The deduction is restricted to 20% of actual capital sum
assured of life insurance policy other than a contract for a
deferred annuity, if the policy is issued on or before
31.03.2012.
23
Amendment If the policy is issued on or after 1.4.2012
The deduction is restricted to 10% of actual capital sum

assured of life insurance policy other than a contract for a
deferred annuity,
Explanation to Sec.80C(3A)
Where the policy is issued on or after 1.4.2012, ‘Actual capital sum
assured’ shall mean the minimum amount assured under the policy,
without taking into account
i. The value of any premium agreed to be returned OR
ii. Any benefit by way of bonus or otherwise over and above the sum
actually assured which is to be or may be received under the policy by
any person
24
Contribution to Unit Linked Insurance Plan,
1971(ULIP)
Contribution to notified annuity plan of the LIC

of India or any other insurer
Contribution to Unit Linked Insurance Plan of the

LIC mutual fund notified u/s.10(23D)
25
Any contributions by an individual to any provident fund to
which PF Act, 1925 applies;
Contribution to Public Provident Fund (PPF)
Contribution by an employee to a recognized provident fund
Contribution by an employee to an approved superannuation

fund
26
Subscription to any notified security of the CG
Investments in National Saving Certificates (NSC)
Subscription to any notified saving certificate
Subscription to any units of a mutual fund referred to

u/s10(23D) or UTI and notified by the CG.
Contribution by an individual to a pension fund set by a mutual

fund notified u/s 10(23D) or UTI as CG may specify
27
Term deposit for a period of not less than 5 years with a scheduled bank in
accordance with a scheme framed by the CG.
Subscriptions to bonds issued by National Bank for Agriculture and Rural
Development (NABARD)
Subscription to any approved units of mutual fund notified in Sec.10(23D) if
proceeds of such issue are utilized in investment in infrastructure company
5 years term deposit in an account under Post Office Time Deposit Scheme
Deposit in an account under the Senior Citizens Savings Scheme [SCSS]
Deposit in National Housing Bank (Tax Saving) Term Deposit Scheme, 2008
28
Housing
• Repayment of any loan borrowed for the purpose of
purchase or construction of residential house property, the
income of which is chargeable to tax under ‘Income from
House property’
• It means deduction is available only when the construction is
completed and assessee gets the possession of the property.
Deduction is also allowed for any expenditure

incurred towards stamp duty, registration
charges for transfer of the house
29
Repayment of principal on loan borrowed for
residential house (whether let out or self occupied)
only is entitled for deduction. Repayment of loan
taken for commercial property is not allowed for
deduction.
Where the loan is availed for any addition,

alteration, repair or renovation no deduction can
be claimed for principal repayment.
Repayment of loan borrowed from relatives,

friends, non-specified employer/ institutions is
not eligible for deduction.
30
Deduction under this clause is not allowed for
following payments
• The admission fee, cost of shares and initial deposit which a
shareholder of a company or a member of a co-operative soc has to
pay
• the cost of any addition, alteration, renovation or repair of, the
house property which is carried out after the completion certificate
is received or after the property or any part of it is occupied.
• Any expenditure for which deduction is allowable u/s 24.
• Subscription to any approved equity or debentures forming part of
any eligible issue of capital by a public company or public financial
institution which is engaged in infrastructure development
31
University /
college/ school/
Full time
Tuition fees Paid to education for
education
institution in
India
Deduction is available for

any two children of the
assessee.
32
Deduction as allowed for the payment made
for “Tuition Fees” only.
Deduction is not allowed for any kind of

donation or payment made for any other
purpose.
e.g. Uniform Fees, Library Fees etc.
33
Subscription to any deposit scheme or as a
contribution to any such fund set up by the
National Housing Bank
Subscription to equity shares or debentures

forming part of any approved eligible issue of
capital made by a public company or public
financial institution.
34
 Deposit with a public sector company engaged
in providing long term finance for construction or
purchase of houses in India for residential purpose
OR
 Deposit with any authority constituted in India
• For the purpose of dealing with and satisfying
the need for housing accommodation OR
 For the purpose of planning, development or
improvement of cities, towns and villages OR
 For both
35
Eligible Investments Persons specified
1 Life Insurance premium Individual – Such individual,

2 Public Provident Fund spouse, children
3 ULIP of UTI or LIC MF notified HUF – Any member of HUF
u/s.10(23D)
4 Deferred annuity scheme individual, spouse, children
5 Tuition Fees Any two children of the
individual
36
If the assessee transfers the house property, in respect of which deduction has been
claimed, before the expiry of 5 years from the end of the financial year in which
possession of such property is obtained by him, no deduction shall be allowed in the
previous year in which the house property is transferred. The aggregate deduction allowed
in the past years shall be deemed to be the income of the assessee for the previous year
in which the house property is transferred.
Similar shall be the tax treatment in the case of subscription to shares or debentures in
respect of which deduction has been claimed under this section, and sold within a period
of 3 years from the date of acquisition.
Any amount including interest accrued withdrawn out of the deposits in senior citizen
savings scheme or Post Office Time Deposit Scheme before the expiry of 5 years from the
date of deposit shall be liable to tax. However, in case of demise of the assessee and the
legal heir/nominee receives such sum the same shall not be subject to tax. Withdrawal of
interest on these deposits will not be liable to tax provided it is included in the total income
of the depositor in the previous year.
37
In case the term deposit is jointly held, deduction u/s.80C shall be available only to
the first holder of the deposit. Further, the term deposit in respect of which
deduction was claimed, shall not be pledged to secure loan or as security to any
other asset.
No sectoral limits for various items specified u/s.80C. Therefore, an assessee may
opt to invest even in only one item say insurance premium. However, it shall not
exceed Rs.1,00,000 for the year.
In respect of deferred annuity plan, the insured shall not receive the annuity by
cash payment.
Tuition fee paid for part-time education of children does not qualify for deduction.
Similarly, tuition fee payments made for institutions situated abroad are not entitled
for deduction.
38
Deduction in respect of contribution to
certain pension funds
Eligible
Individual
Assessee
39
Following contributions qualify for deduction under this
section only if the payment is made out of the income
chargeable to tax.
 Contribution made to annuity plan (excluding bonus or

interest accrued or credited to the account) issued by
1. LIC of India or
2. Any other insurer approved by the IRDA
40
The pension amount received by the assessee
or his nominee from this fund is taxable in the
hands of the assessee or his nominee , in the
year of receipt.
If the policy is surrendered before its maturity,

the surrender value including bonus/interest
shall be taxable in the year of receipt.
41
Deduction in respect of contribution to
pension scheme of central government or
scheme as notified
Eligible
Individual
Assessee
42
Nature of Income & Quantum of Deduction
Nature of Income Limit

Salary income 10% of salary
Other Income 10% of Gross Total
Income
Salary includes dearness allowance if the terms of
employment so provide, but excludes all other
allowances and perquisites.
Deduction under this section is available even if
the assessee makes contribution under the
pension scheme by his employer so long as the
contribution does not exceed 10% of his salary in
the previous year.
44
Aggregate amount of
deduction u/s
80C, 80CCC & 80CCD is Rs. 1,00,000/-
restricted to
45
This section has been introduced to provide for a one-time
deduction to a resident individual who has acquired listed equity
shares in a P.Y. in accordance with the scheme notified by the CG.
Deduction would be, the lower of
50% of amount invested in OR Rs.25,000

such equity shares
The maximum deduction of Rs.25,000 would be

available on investment of Rs.50,000 in such
listed equity shares
46
Conditions for claiming deduction
Gross Total Income of the

Rs.10 lakhs
assessee for relevant A.Y.
The assessee should A new retail investor as per the

be requirement specified under the
notified scheme
47
The investment should be made in such listed
shares as may be specified under the notified
scheme.
The minimum lock-in period in respect of such

investment is 3 years from the date of
acquisition in accordance with the notified
scheme.
48
Medical insurance premia
An individual
Eligible Assessee
A Hindu
undivided family
49
Deduction is available if the insurance is made on the
health of following persons
Assessee Insured person
Individual Self, spouse, dependent children, and parents
HUF Any family member
50
Quantum of deduction
Description Mediclaim premium paid in Maximum

respect of deduction
Self, spouse & Parents, u/s 80D
dependent dependent or
children not
No one attained 60 Rs. 15,000 Rs. 15,000 Rs. 30,000
years
Assessee & his family Rs. 15,000 Rs. 20,000 Rs. 35,000
less than 60 years &
parent is a senior
citizen
Assessee and the Rs. 20,000 Rs. 20,000 Rs. 40,000
parent attained the
age of 60 years
51
Deduction is available if the payment is made
by any mode (including credit card), other than
cash under :
Medical insurance scheme of the General Insurance

Corporation approved by the CG OR
Central Govt. health scheme OR
Any other insurer approved by the IRDA
52
Deduction to the extent of Rs.5,000/- shall be
Amendment allowed in respect payment made on account of
preventive health check-up during the P.Y.
The payment,
for this
For Self, spouse, dependent children or parents
purpose only,
may be made
by any mode,
including cash
The said deduction of Rs. 5,000/- is within

the overall limit of Rs.15,000 or Rs. 20,000,
as the case may be.
53
Maintenance including medical treatment of a
dependant with disability
An individual
Eligible Assessee – A
resident in India
A Hindu
undivided family
54
Deduction is allowed in respect of
Any expenditure incurred for the medical treatment

(including nursing), training and rehabilitation of a
dependent with disability OR
An amount paid or deposited by the assessee under any

scheme of LIC or any other insurer or the administrator or
the specified company and approved by the Board for the
maintenance of dependant with disability.
55
Amount of Deduction
Rs. 50,000/- Rs.1,00,000/- where

irrespective of the the dependant is a
expenditure incurred person with severe
or deposit made disability
56
Conditions for deduction
The scheme provides for annuity payment or lump sum

amount for the benefit of the disabled dependant, in the
event of the death of the assessee.
The assessee nominates either dependant with disability or

a trust or any other person to receive the payment on his
behalf, for the benefit of the dependant with disability.
57
If the disabled dependant predeceases the
individual or the member of HUF in whose name
subscription is made, the amount deposited shall
be deemed to be the income of the assessee in
the year in which such amount is received.
The assessee claiming a deduction shall furnish a

copy of the certificate issued by the medical
authority along with the return of income u/s 139
in respect of the AY for which the deduction is
claimed.
58
Dependent
Individual – The spouse, children,
parents, brothers & sister of the HUF – A member of the HUF
individual or any of them
Dependent wholly or mainly on such individual or HUF
Who has not claimed any deduction

For his support and maintenance and
u/s80U
59
Blindness, low vision, leprosy-cured,
Disability hearing impairment, locomotor
disability, mental retardation, mental
means illness, autism, cerebral palsy and
multiple disability.
60
Person with disability means a person so referred
under
The persons with Disabilities (Equal The National Trust for welfare of persons with
opportunities, Protection of Rights Autism, Cerebral Palsy, Mental Retardation and
and Full Participation) Act Multiple Disabilities Act, 1999
Person with severe disability
A person with 80% or more of one or OR a person with severe disability

more disabilities as referred to in Sec referred to in Sec.2(o) of the 1999 Act
56(4) of the 1995 Act referred to above.
61
Deduction in respect of medical treatment etc.
An
Eligible A resident Individual
Assessee in India
A HUF
62
The Any amount actually paid for the medical
deduction treatment of such disease or ailment as may be
is allowed specified in the rules made in this behalf by the
for board for
Diseased person Assessee

Himself or a dependant An individual
Any member of the HUF A HUF
63
Deduction would be, the lower of
Rs.40,000
The amount actually paid in
the previous year (Rs.60,000 if the person is a
senior citizen i.e. a resident
OR individual of the age of 60
years or more)
64
Assessee Dependant
An individual Spouse, children, parents,
brothers and sisters
A HUF A member of the HUF
Who is wholly or mainly dependant

on the assessee for his support
and maintenance.
65
Conditions for deduction
The assessee should posses and produce on demand a certificate in

Form no. 10-I, from a neurologist, an oncologist, a urologist, a
hematologist, an immunologist or such other specialist, as may be
prescribed, working in a Govt. hospital, including approved hospitals
for the treatment of Govt. servants.
The deduction shall be reduced by the amount received, if

any, under an insurance policy or reimbursed by an
employer, for the medical treatment of the assessee or the
dependant.
66
 Individual
Eligibility
 100% of the interest paid on loan taken without

any monetary ceiling limit.
Quantum The assessee can claim the amount of interest in
the initial assessment year & carry forward up to 7
assessment years.
Barring aforesaid TWO categories

of cases, in no other case
Settlement Application can be filed.
67
Terms & The amount is paid by the assessee out of
Conditions his income as interest on loan taken for
his higher education or for his relative’s
higher education.
Relative means spouse, children of that

individual or the student for whom the
individual is the legal guardian. Sec.80
R(3)(e)

68
Higher Education means any course of study pursued after passing the Senior
Secondary examination or its equivalent from any school, Board or university
recognized by the Central Government, State Government, Local Authority or by
any other authorized authorities.
Any amount paid towards interest on loan borrowed from any financial institution
or any approved charitable institution for the purpose of pursuing higher education
is deductible.
69
Deduction in respect of interest on loan taken
for residential house property
Inserted by Finance Act, 2013 w.e.f. 1-4-2014
70
Eligible
Individual
Assessee
71
Conditions to be fulfilled for availing the
deduction under this section
 [a] Assessee does not own any residential property on

the date of sanction of loan.
 [b] Value of the residential property does not exceed
Rs.40 lacs.
 [c] The amount of loan sanctioned for acquisition of
residential house does not exceed Rs.25 lacs.
72
Conditions to be fulfilled for availing the deduction
under this section
 [d] The loan has been sanctioned by the financial institution

during the period 01.04.2013 – 31.03.2014.
 Maximum amount of deduction under this section is Rs.1 lac
 [e] Assessee is not supposed to claim deduction under any
other section of the Income Tax Act, 1961.
 Thus, an interest amount deductible u/s 24(b) to the extent
of Rs.1,50,000 for self occupied property is untouched.
 [f] Balance Interest above Rs.1,00,000/- can be carried
forawrd to the next Assessment Year.
73
 This deduction is over and above Rs.1.50 lacs as
allowed u/s 24(b).
 In other words, an assessee can claim total Rs.2.50
lacs as deduction
u/s 24 (b) Rs.1.50 lacs

u/s 80 EE Rs.1.00 lacs
Total Rs.2.50 lacs
74
For example : If total interest works out to Rs.2.75 lacs, then
remaining portion of Rs.0.25 lacs is carried forward and
deductible in AY 2015-2016
This is a beneficial provision to the assessee.
Legislative intent : To rationalise outflow of an assessee i.e.

assessees should afford to acquire a property who are FIRST
TIME BUYERS !
75
Deduction in respect of donations to certain funds,
charitable institutions etc.
Eligible Any
Assessee assessee
76
Conditions for claiming deduction
The donation should be of a sum of money and not in kind
If the amount of donation exceeds Rs.10,000, it must be

paid by any mode other than cash - Sec.80G(5D)
The donation should be made to specified funds /

institutions
77
Sr. Name of the fund or institution
No.
1. PM’s National Relief Fund
2. PM’s Armenia Earthquake Relief Fund
3. The Africa (Public Contribution -India) Fund
4. The National Foundation for Communal Harmony
5. A University or any educational institution of national eminence as
may be approved
6. The national illness assistance fund
7. Any Zila Saksharta Samiti constituted for the purpose of
improvement of primary education in villages and towns and for
literacy activities
78
No.
8. National Blood Transfusion Council or to any State Blood
Transfusion Council
9. Any fund set up by a State Govt. to provide medical relief to poor
10. The Army Central Welfare Fund or the Indian Naval Benevolent
Fund or the Air Force Central Welfare Fund established by the
armed forces of the Union for the for the welfare of the past and
present members of such forces or their dependants
11. The Chief Minister’s Relief Fund or the Lieutenant Governor’s
Relief Fund in respect of any State or Union Territory
12. The National Sports Fund to be set up by the Central Govt.
13. The National Cultural Fund set up by the Central Govt.
79
No.
14. The Fund for Technology Development and Application setup by
the Central Govt.
15. The National Relief Fund
16. Any fund set up by the State Govt. of Gujarat exclusively for
providing relief to the victims of earthquake in Gujarat
17. National Trust for welfare of persons with Autism, Cerebral Palsy,
Mental Retardation and multiple disabilities under the relevant
Act of 1999
18. Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
19. Maharashtra Chief Minister’s Earthquake Relief Fund
80
No.
1. Jawaharlal Nehru Memorial Fund
2. PM’s Drought Relief Fund
3. The National Children’s Fund
4. Indira Gandhi Memorial Trust
5. Rajiv Gandhi Foundation
81
No.
1. Contribution made by a company as donations to the Indian
Olympic Association or to any other Association or institution
established in India for the development of infrastructure for
sports and games or for the sponsorship of sports and games in
India notified by the Central Govt. in the official gazette
2. Govt. or local authority approved institution / association for
promotion of family planning
82
No.
1. Renovation of notified temple mosque, church or gurudwara or
any other notified place of national importance
2. The Govt. or any local authority, to be utilized for any charitable
purpose other than a purpose of promoting family planning
3. Any corporation established by Govt. for promoting interest of
scheduled class/ scheduled tribe/ backward class
4. Any authority set up for providing housing accommodation or
town planning
5. Any approved public trust or institution
83
The restricted 10% of the
amount referred “adjusted gross
earlier (or the total income”
qualifying amount)
Thus, total deduction for ‘donations eligible for 100% or 50% of

the restricted amount’ cannot exceed amount equal to ‘10% of
the adjusted gross total income’
Out of the maximum permissible deduction priority is to be given to

deductions qualifying for 100% restricted deductions and thereafter the
remaining for 50% restricted deductions
84
Computation of ‘Adjusted Gross Total Income’
Particulars Rs.
Gross Total Income XXXX
Less: a) Deductions under chapter VIA, except u/s.80G XX
Less: b) Long Term Capital Gain – Sec 112 XX
Less: c) STCG on listed securities – Sec 111A XX
Less: d) Income of non-residents chargeable to tax in XX
respect of dividend, royalty – Sec 115A,
Units – sec. 115AB, Bonds – sec. 115AC,
Securities – sec. 115AD
Step 1 Adjusted Gross Total Income XXX
85
Computation of allowable amount of Donation
Step 2 Compute 10% of adjusted total income

Step 3 Compute actual donation qualifying for
restricted deduction (50% or 100% as the
case may be)
Step 4 Lower of Step 2 or Step 3 is the maximum

permissible deduction
Step 5 The maximum permissible deduction is

given first for deductions qualifying for
100% restricted deductions and thereafter
the remaining for 50% restricted
deductions
86
The trust/ fund must satisfy following conditions to be eligible
for approval u/s 80G
The income of such institution or fund shall be eligible for

exemption u/s.11 & 12 or u/s.10(23); u/s.10(23AA) or
u/s.10(23C) of the Income Tax Act
The instrument of such trust shall prohibit the transfer or

application of whole or any par of income or assets for any
purpose other than a charitable purpose.
The institution or fund is not for the benefit of any particular

religious community or caste
87
The institution or fund is
i) Registered as a public charitable trust; society
ii) Sec. 25 company,
iii) University or any other educational institution approved by the
Central Govt. u/s.10(23)
The institution maintains regular accounts of its receipts and

expenditure
The approval once granted

u/s.80G is valid in perpetuity
unless it is terminated.
88
Eligibility to deduction on donations made to an institution or a fund shall not be
denied merely on the grounds that subsequent to the donation, any part of the
income of such institution or fund has become taxable due to non-compliance
with any of the provisions for availing exemption of such income.
89
Sec 11 Sec 80G
To Grant exemption to the Does not recognize contributions
income of a charitable or religious to religious trust. Contributions
trust for the benefit of the public. to Charitable trusts are
recognized.
The income of the religious trust Donations for renovation of any
is not meant for private religious temple, mosque, gurudwara,
purposes chruch or other places of public
workship as may be notified by
Central Govt. are eligible.
90
The Supreme Court in Upper Ganges Sugar Mills Ltd vs. CIT
(1997) 227 ITR 578 , has held that the relevant provisions of Sec
11 and Sec 80G have different objectives and apply with
reference to computation of income of different persons and
therefore, there will be no contradiction in the case of the AO
allowing exemption in respect of the income of the religious
trust u/s 11 and denying the benefit of deduction u/s 80 G in
the hands of the donors in respect of donations made to the
religious trust.
91
Deduction for rent paid
Eligible Individual
Assessee who doesn’t receive HRA
92
Deduction is allowed to the extent of least of
Excess of rent paid

25% of total Rs.2,000/- per
over 10% of total
income month
income
93
Total income for this purpose is calculated as follows
Particulars Rs.
Gross Total Income XXXX
Less: a) Deductions under chapter VIA, except u/s.80GG XX
Less: b) Long Term Capital Gain – Sec 112 XX
Less: c) STCG on listed securities – Sec 111A XX
Less: d) Income of non-residents chargeable to tax in XX
respect of dividend, royalty – Sec 115A,
Units – sec. 115AB, Bonds – sec. 115AC,
Securities – sec. 115AD
Total Income XXX
94
Following conditions must be satisfied by the assessee to get
the deduction
The assessee, his spouse, or minor child or the HUF in which

he is a member should not own any residential accommodation
at that place
No claim for self-occupied property should be made in respect

of any accommodation
Assessee must file declaration in Form No.10BA wherein he

confirms the details of rent paid and fulfillment of the other
conditions
95
Donations for scientific research, rural
development, etc.
Eligible All Assessees

not having income chargeable
Assessee under the head ‘Income From
Business / Profession’
96
Following donations qualify for deduction
Any sum paid by the assessee in the P.Y. to

• A research association which has, as its object, the
undertaking of scientific research OR
• A University, college
•or other institution, approved u/s.35(1)(ii)
to be used for scientific research
97
Any sum paid by the assessee in the P.Y. to
• an association or institution which has as his
object, the undertaking of any programme of rural
development
 to be used for carrying out any programme of
rural development approved by the prescribed
authority for purpose of Sec.35CCA
OR
• an institution/ association, approved by the
prescribed authority u/s.35CCA(2), which has as its
object ‘the training of persons for implementing
programs of rural development’
98
Any sum paid to
• Research association, which has as its object the undertaking of
research in social science or statistical research
• University, college or other institution, to be used in research of
social science or statistical research,
The research association, university, college or institution must

be approved under section 35(1)(iii)
Any sum paid to

• a Public Sector Company or
• a local authority or
• an association or
• institution approved by the National Committee (as per Explanation to
Sec35AC)
for carrying out any eligible project or scheme (as per Explanation to
Sec35AC)
99
Any sum paid to a rural development fund set up and notified
u/s.35CCA
Any sum paid to National Urban Poverty Eradication Fund

(NUPEF)
100
If the deduction is claimed under this sec. and
allowed for any A.Y., deduction shall not be allowed
in respect of such payment under any provision of
this act for the same or any A.Y.
If the donation is of Rs.10,000/- or more, the

payment must be made by any mode other than
cash, to avail the deduction. Sec.80 GGA (2A) w.e.f.
AY 1314
101
In case, any person making contribution to
Institution/Association, which was granted approval under
sec 80 GGA, is eligible to claim such contribution as
deduction, even though the approval was withdrawn
subsequently by the Central Government
102
Deduction in respect of contributions given by
companies to political parties
Eligible An Indian
Assessee Company
103
Deduction is available for any sum contributed
in the P.Y. to
• Any political party, registered u/s.29A of the

‘Representation of the People Act, 1951
OR
•An ‘electoral trust’
104
Deduction shall be allowed in respect of any contribution (as defined u/s.293A
of the Companies Act, 1956)
The expenditure incurred, directly

A donation or subscription or
or indirectly, by a company on
payment given by a company to a
advertisement in any publication (a
person for carrying on any activity
souvenir, brochure, tract, pamphlet
which is likely to effect public
or the like) By or on behalf of a
support for a political party
political party or for its advantage
105
Deduction in respect of contributions given
by any person to political parties
Eligible
Any person
Assessee
106
Deduction is available for any sum
contributed in the P.Y. by any person to
• A political party, registered u/s.29A of the
Representation of the People Act or
• An electoral trust
Deduction is not available to a local authority

and an artificial juridical person, wholly or
partly funded by the Govt.
107
108
Deductions in respect of profits & gains from
undertakings or enterprises engaged in
infrastructure development etc.
Eligible Any person

Assessee carrying an ‘eligible business’
109
The section provides a 10 year
tax holiday to the assessee
whose gross total income includes
any profits and gains derived by an
undertaking or enterprise from an
eligible business as referred to in
sub section (4)
110
Eligible Business
Infrastructure
Facility
Telecom
Undertakings
Industrial Parks/
Special Economic
Zones
Power
Undertakings
Reconstruction or revival of
a power generating plant
Students may refer the eligible business

of Sec.80-IB for comparison
111
Deduction of
Sr.
Classification of Industries Profits
No.
derived
Any enterprise carrying on the business of 100% for 10
developing or maintaiming and operating or consecutive
1
developing, maintaining and operating any AY
infrastructure facility
Any undertaking providing telecommuication 100 for first
services whether basic or cellular including 5 years and
2 radio paging, domestic satellite service 30% for the
network of trunking, broadband network and next 5 years
internet services
Any undertaking, Which develops, develops 100% for 10
and operates or maintains and operates an consecutive
3
industrial park or SEZ notified by the Central A.Y.
Govt.
112
Sr. Deduction of
Classification of Industries
No. Profits derived
An undertaking set up in any part of India for 100% for 10
4 the generation or generation and distribution consecutive
of power AY
An undertaking which undertakes substantial 100% for 10
5 renovation and modernization of existing network consecutive
of transmission or distribution lines AY
An undertaking which starts transmission or 100% for 10

distribution of power by laying a network of new consecutive
6
transmission or distribution lines AY
An undertaking owned by an Indian Company and 100% for 10

set up for reconstruction and revival of power consecutive
7
generating plants and such company is notified by AY
the Central Govt.
113
Developing
An enterprise Operating &

carrying on the Maintaining Any
business of infrastructure
facility
Developing,
Operating &
Maintaining
114
Infrastructure facility means
• A road, including toll road,

• A bridge
• A rail system
A highway project including housing or

other activities being an integral part of the
highway project
Widening of an existing road by constructing additional lanes as a part of a highway

project would be regarded as a new infrastructure facility. However, simply relaying of
an existing road would not be considered as a new infrastructure facility – Circular no.4
of 2010 dt. 18.5.2010
115
Infrastructure facility means
• A water supply project, water treatment system,

• irrigation project,
• sanitation & sewerage system or
• solid waste management system
•A port,
•Airport,
•Inland waterway, or Inland port,
•Navigational channel in the sea
116
Conditions to be fulfilled by the enterprise :
It must be owned by
• a company registered in India OR
• a consortium of such companies OR
• an authority/ board/ corporation or any other body established
under any Central or State Act
It should enter into an agreement with the Central / State Govt. or a

local authority or any other statutory body
 for ‘developing’ or ‘operating and maintaining’ or ‘developing,
operating and maintaining’ of a new infrastructure facility
117
Conditions to be fulfilled by the enterprise :
It starts its operations & maintenance on or after 1st April, 1995
If an enterprise, which developed such infrastructure facility,

transfers it to another enterprise; on or after 1-4-1999, and
the transferee enterprise; operates & maintains it according
to the agreement drawn up with the Govt. etc.,
 this section will apply to the transferee enterprise. For the
unexpired period of deduction (which was available to the
first enterprise.)
118
Conditions to be fulfilled by the enterprise
undertaking highway project as mentioned earlier :
 The profit should be transferred to a Special Reserve Account

 It should be actually utilized for the highway project, excluding
housing & other activities, before the expiry of 3 years from the
transfer
 The remaining amount unutilized shall be chargeable to tax as
income of the year of the transfer.
119
Quantum of 100% of profits derived by the
enterprise from the business
Deduction of the ‘infrastructure facility.
Any 10 consecutive
Period of assessment years, out of 20
deduction years beginning from the year
of operation.
120
Any undertaking providing telecommunication services
whether basic or cellular
Including radio paging, domestic satellite service network of

trunking, broadband network and internet services
121
Conditions to be complied with by the undertaking
Its operations should On or after

have been started 1st April 1995
But on or before
31st March
2005
122
Quantum 100% of profits derived by the
enterprise from the business
and period
of the ‘infrastructure facility
of Deduction for first 5 consecutive years
30% of profits in the next 5

years out of 15 years
beginning from the year of
operation.
123
Developing
An Developing & An
enterprise Operating
Industrial
Maintaining & Park
Operating
124
Conditions to be complied with by the undertaking
Its operations should On or after

have been started 1st April 1997
But on or before
31st March
2011
125
Deduction enterprise
Any 10 consecutive
of operation.
126
An undertaking set up in any part of India for the generation or
generation and distribution of power
(should begin to generate power between 1.4.1993-31.3.2013)
An undertaking which starts transmission or distribution of

power by laying a network of new transmission or distribution
lines ( between 1.4.1999-31.3.2013)
An undertaking which undertakes substantial renovation and

modernization of existing network of transmission or
distribution lines (between 1.4.2004-31.3.2013)
127
Substantial renovation and modernization
means
 an increase in the plant and machinery in the
network of transmission or distribution lines by at
least 50% of the book value of such plant and
machinery as on 1st April, 2004.
128
Deduction power undertaking
Any 10 consecutive
of operation.
129
Conditions to be fulfilled by Telecom and Power
undertakings
It is not formed by splitting up or reconstruction of a

business already in existence
This condition is not applicable in the case of an undertaking which is formed as a

result of reconstruction, re-establishment or revival of the business of any
undertaking
 which has been discontinued in any P.Y. due to extensive damage or
destruction
 of any building, machinery, plant or furniture
Due to any natural calamity or other unforeseen circumstances such as
 flood, typhoon, hurricane, cyclone, earthquake or other natural calamity
 Riot or civil disturbance
 Accidental fire or explosion
 enemy action or action taken in combat
 And such business is re-established or revived within 3 years from the end of
such P.Y.
130
It should not be formed by the transfer of the
machinery or plant previously used for any
purpose
The condition is not applicable in case of transfer, either in

whole or in part, of machinery or plant previously used by a
State Electricity Board
 Irrespective of whether or not such transfer is in
pursuance of the splitting up or reconstruction of such State
Electricity Board under Part XIII of the Electricity Act, 2003
131
The condition is not applicable to second hand machinery
or plant imported by the assessee if
 Such machinery or plant was not used in India prior to
the date of installation by the assessee.
 No deduction on account of depreciation was allowed to
any person prior to the date of installation by the assessee
Where the total value of any plant or machinery previously

used and now transferred to the new business
 does not exceed 20% of the total value of the machinery
or plant used in the new business,
Such plant or machinery will be considered as new for this
purpose
132
An Set up for
undertaking reconstruction or revival
owned by an of a power generating
Indian plant
company
Notified by the Central

Govt.
133
Conditions to be fulfilled by the undertaking
 The Indian Company should be formed before 30-11-2005

 Majority equity participation should be by public sector
companies
 for the purpose of enforcing the security interest of the
lenders to the company owning the power generating plant
The Indian company should have been notified by the Central

Govt. before 31.12.2005
The undertaking should begin to generate, or transmit, or

distribute power before 31.3.2011
134
Quantum of 100% of profits derived by
Deduction such undertaking
Any 10 consecutive
of operation.
135
Income of a subsidiary company by way of grant or otherwise
received from an Indian holding company, engaged in the
business of generation, transmission or distribution of power,
is exempt
 if such receipt is for settlement of dues in connection with
reconstruction or revival of an existing business of power
generation
The exemption shall apply only to reconstruction or revival

of an existing business of power generation is by of
transfer of such business to the Indian company as
notified u/s. 80-IA(4)(v)(a).
136
The profits and gains of the eligible business shall be computed
as if such eligible business were the only source of the income of
the assessee during the relevant P.Y.
The accounts of the industrial undertaking should be audited by

a Chartered Accountant.
The transfer of the goods or services held for the purpose of

the eligible business, to other business, or vice versa, should
be at “Market Value”
If in the opinion of the A.O., the computation of Market Value

presents exceptional difficulties, he may compute the profits
on such reasonable basis as he may deem fit.[Sub-sec.(8)]
137
The deductions shall not exceed the profits and gains of the
eligible business
When the deduction is claimed and allowed under this

section for any A.Y., no deduction in respect of such profits
will be allowed under any other section of this chapter.
AO may make an adjustment while computing the profits of

the eligible business on the basis of the reasonable profit
that can be derived, if the transaction between the assesses
and other person is so arranged that the transaction
produces excessive profits to the eligible business.
138
Central Govt. may declare any class of industrial undertaking or
enterprise as not being entitled to deduction, with effect from the
date specified in the said notification issued in the official gazette
Deduction under this section would not be available in case of any

SEZ notified on or after 1.4.2005 in accordance with the Industrial
Park Scheme, 2002 & notified schemes for SEZs
[Sec.80IA(4)(c)(iii)(13)]
Tax holiday u/s.80-IA would not be available in relation to a

business which is in the nature of a works contract awarded by
any person (including CG/SG), and executed by the undertaking or
enterprise referred to in Sec80-IA(1).
139
The objective of tax benefit under sec 80 IA is to encourage private sector participation
by way of investments in development of infrastructure sector. The intention of this
section is not to give tax benefit for the persons who merely execute the civil
construction work or any other works contract awarded by any person including the
Central or State Government. Thus the assessee who is entitled to claim deduction
under this section is a person who makes the investment himself and executes the
infrastructure development work – Explanation to Sec 80 IA.
When goods have been destroyed by fire and insurance compensation has been
received, the same shall be regarded as part of eligible profits. Just as loss of stock
would go to reduce the eligible profits in the year of such loss, insurance compensation
shall go to increase the eligible profits – CIT vs. Sportking India Ltd. (2010) 324 ITR
283 (Delhi)
140
If the Indian Co. carrying on ‘eligible business’ is transferred to
another Indian Co. by Amalgamation or demerger
Deduction will not be available to the amalgamating or demerged

company in the year of amalgamation/demerger.
The provisions of this section will apply to the amalgamated or

resulting “assessee” as they would have applied to the
amalgamation/demerged co. if the amalgamation / demerger did not
taken place.
Such transfer of benefit of deduction will not be

available if the amalgamation / demerger is
effected on or after 1.4.2007.
141
Deductions in respect of profits and gains by an
undertaking or enterprise engaged in development of
SEZ
Any Assessee
Eligible A Whose GTI includes
profits/gains from
Assessee Developer developing a SEZ notified
on or after 1.4.2005
under SEZ Act, 2005
142
Developer
A An A Co-
A State Govt.
person Authority developer
Who/ which has been granted a letter of approval by the

Central Govt. u/s3(10) of the SEZ Act, 2005.
143
Quantum of 100% of profits derived by
Deduction such undertaking
Any 10 consecutive
years beginning from the year
deduction in which a SEZ has been
notified by the ‘CG’
144
Deduction is available only if the accounts are audited by a Chartered
Accountant
If a developer who develops a SEZ on or after 1.4.2005, transfers the

operation and maintenance of such SEZ to another Developer, the
deduction shall be allowed to transferee for the remaining period in the
10 consecutive A.Y. as if the operation and maintenance were not
transferred.
The profits from the eligible business should be computed as if the said
eligible business were the only business of the assessee.
The transfer of the goods or services held for the purpose of the
eligible business, to other business, or vice versa, should be at “Market
Value”
145
Deduction should not exceed the profits of such eligible
business.
When the deduction is claimed and allowed under this section

for any A.Y., no deduction in respect of such profits will be
allowed under any other section of this chapter.
Deduction under chapter VIA is not allowed against such

profits.
Central Govt. may declare any class of industrial undertaking or

enterprise as not being entitled to deduction, with effect from the
date specified in the said notification issued in the official gazette
146
Deduction will not be available to the amalgamating or demerged co.

in the year of amalgamation/demerger.

resulting as they would have applied to the amalgamation/demerged
co. if the amalgamation / demerger dad not taken place.
147
Deduction in respect of profits and gains from
certain industrial undertakings other than
infrastructure development undertakings, etc.
Eligible Any Assessee

Assessee Whose GTI includes profits/gains
from Eligible business
148
Eligible business means :
1. An industrial undertaking including SSI
2. A ship
3. A hotel, multiple theatre or convention centre
4. Scientific and industrial research and development
5. Commercial production or refining of mineral oil or commercial
production of natural gas in licensed blocks
6. Construction and development of housing projects approved by a
local authority
7. Setting up and operating a cold chain facility for agricultural
produce.
8. Processing, preservation and packaging of fruits and vegetables or
meat and meat products or poultry or marine or dairy products or,
the integrated business of handling, storage and transportation of
food grains
9. Operating and maintaining a hospital in a rural area.
Students may refer Eligible businesses of Sec.80IA

for comparison 149
Deduction is available to Small Scale Industrial
Undertaking operating cold storage plant
SSI should begin its operation between

1.4.1995-31.3.2002
150
Deduction is available to undertakings located in the
industrially backward states other than those claiming
deduction u/s.80-IC
Industrially backward states as specified in the Eighth schedule :
1. Arunachal Pradesh 2. Assam

3. Goa 4. Himachal Pradesh
5. Jammu & Kashmir 6. Manipur
7. Meghalaya 8. Mizoram
9. Nagaland 10. Sikkim
11.Tripura 12. Andaman & Nicobar Islands
13.Dadra & Nagar Haveli 14. Daman & Diu
15.Lakshadweep 16. Pondicherry
151
Conditions to be complied with
It shall start its operations by manufacturing or producing

articles or things between 1.4.1993-31.3.2004
Undertaking in Jammu & Kashmir,

 shall start between 1.4.1993-31.3.2012
 shall not manufacture or produce any article specified in
Part C of the 13th schedule of the IT Act.
An assessee located in any state in the North Eastern

Region is eligible for deduction of 100% of profits for a
period of 10 consecutive assessment years.
152
Deduction is available to Industrial Undertaking deriving
profit from the business of setting up and operating
cold chain facility for agricultural produce.
The Cold Chain Facility shall begin its operation between

1.4.1999-1.4.2004.
153
Eligible Business :
Undertaking engaged in business of processing, preservation and

packaging of
1. Fruits or vegetables
2. Meat and meat products
3. Poultry, marine or dairy products OR
In the integrated business of handling, storage and transportation of
food grains
154
Undertaking shall begin its operations as :
Undertaking engaged in On or after

processing, preservation and packaging of fruits 1.4.2001
or vegetables or
the integrated business of handling, storage and
transportation of food grains
processing, preservation and packaging of meat 1.4.2009
products, poultry, marine or dairy products
Co-operative societies are treated on par with non-

company assessees for the purpose of quantum and
period of deduction u/s.80-IB(11A)
155
Status of Assessee Period of deduction Quantum of Deduction
Co-operative Soc. For the first 5 100% of profits earned
assessment years
For the next 7 years 25% of profits earned
Company Assessee For the first 5 100% of profits earned

assessment years
Any other Assessee For the first 5 100% of profits earned

assessment years
156
Deduction in respect of Industrial undertaking
located in industrially backward district notified
by the Central Govt.
Condition to be complied :
The industrial undertaking shall begin its operations

between 1.10.1994-31.3.2004
157
Quantum and period of deduction
Status of Period of deduction Quantum of

assessee Category A Category B deduction on
profits earned
Co-operative First 5 A.Ys First 3 A.Y.s 100%
Society Next 7 A.Y.s Next 9 A.Y.s 25%
Company First 5 A.Ys First 3 A.Y.s 100%
Assessee Next 5 A.Y.s Next 5 A.Y.s 30%
Any other First 5 A.Ys First 3 A.Y.s 100%
assessee Next 5 A.Y.s Next 5 A.Y.s 25%
158
Conditions to be fulfilled
1. It should be owned by an Indian company and should be wholly

used for its business purpose.
2. It was not owned or used in Indian territorial waters by any
person resident in India prior to the date of its acquisition by
the Indian company.
3. It was brought into use by the Indian company at any time
between 1.4.1991-31.3.1995
159
Quantum of 30% of profits derived by such
Deduction undertaking
First 10 consecutive AY,

Period of including the AY. Relevant to
deduction the P.Y. in which the ship is
first brought into use.
160
Conditions to be fulfilled
1. It is not formed by splitting up, or the reconstruction of,

an existing business or by the transfer to the new
business of a building previously used as a hotel or of
any plant or machinery previously used for any purpose.
2. It should be owned and carried on by a company
registered in India with a paid up capital of Rs.5,00,000
or more.
3. It is approved by the prescribed authority.
161
Location of the hotel Quantum and Period of
deduction
In case of hotels located in a hilly 50% of the profits for first 10
area or a rural area or a place of consecutive assessment
pilgrimage or such other place as years
the CG, may specify
Any other place 30% of the profits for first 10
consecutive assessment
years
Municipal limits of Delhi, Chennai, Nil
Mumbai or Kolkata
162
The hotel should be approved and must start functioning at any
time between 1.4.1990 – 31.3.1994
or between 1.4.1997-31.3.2001
163
Word Meaning
Hilly area Any area located at a height of 1,000 mtrs. or more above
the sea level.
Place of A place where any temple, mosque, gurudwara, church or
pilgrimage other place of public worship of renown throughout any
State or States is situated
Rural area Any area other than:
 an area which is comprised within the jurisdiction of a
municipality or a cantonment board which has a
population of 10,000 or more
 an area within 15 kms from the local limits of any
municipality or cantonment board.
164
Conditions
1. The company is registered in India

2. It has the main object of scientific & industrial
research & development
3. The company is approved by the prescribed
authority, (the secretary in the Dept. of scientific &
Industrial Research & Development, Ministry of
Science & Technology, Govt. of India) at any time
before 1.4.1999
165
Quantum of 100% of profits derived
Deduction by such undertaking
Period of First 10 consecutive

deduction AY, including the AY.
166
It is located in India and begins commercial production on or

after 1.4.1997.
The deduction is not applicable for blocks licensed under a

contract awarded after 31.3.2011 under the ‘New Exploration
Licensing Policy’ or in pursuance of any law or in any other
manner.
It is engaged in refining of mineral oil and begins refining

between 1.10.1998-31.3.2012
167
It is engaged in the production of natural gas in blocks licensed

under VIII round of bidding award of exploration contracts (NELP-
VIII) under ‘New Exploration Licensing Policy announced by the GOI
And
Begins commercial production of natural gas on or after 1.4.2009.
It is engaged in commercial production of natural gas in blocks

licensed under the IV Round of bidding for award for exploration
contracts for Coal Bed Methane blocks and begins commercial
production of natural gas on or after 1.4.2009
168
Explanation to Sec.80-IB(9)
For claiming deduction, all blocks licensed under a single
contract awarded under the New Exploration Licensing
Policy announced by the GOI vide resolution no. O-
19018/22/95-ONG.DO.VL, Dt. 10.2.1999 or in pursuance
of any law for the time being in force or by the Central or
State Govt. in any other manner shall be treated as a
‘single undertaking’.
169
Period of First 7 consecutive AY,

deduction including the initial AY.
170
It completes development and construction of the

housing project within 5 years from the end of the
FY in which the housing project is approved by the
local authority.
The plot of land, on which the project is developed,

is at least 1 acre.
171
Each residential unit should be of
Location Maximum size of the area

Delhi / Mumbai (including 25 1,000 sq.ft.
kms. from the municipality limits
of Delhi / Mumbai
Any other place 1,500 sq.ft.
The built up area of shops and other commercial establishments

included in the housing project shall not exceed 3% of the
aggregate built up are OR 5,000 sq.ft. whichever is higher.
172
Only one residential unit shall be allotted to any person

other than an individual
Where, a residential unit is allotted to an individual, then

any other residential unit in that housing project shall
not be allotted to
i. Himself
ii. The spouse or the minor children of such individual
iii. The HUF in which such individual is the karta
iv. The nominee representing such individual, spouse,
the minor children of such individual or the HUF in
which such individual is the karta.
173
Deduction from eligible projects
Deduction is not allowed to a contractor
174
Hospitals in a ‘rural area’
constructed between
1.10.2004-31.3.2008
Eligible [Sec.80-IB(11B)]
Business Hospital located anywhere in

India other than the specific
areas mentioned in the
section. [Sec.80-IB(11C)]
175
The hospital shall have at least 100 beds for patients.
The construction should be in accordance with the

regulations or bye-laws of the local authority
Hospital shall be deemed to have been constructed on the

date on which a completion certificate is issued by the local
authority.
176

177
Conditions common to all sub sections
It is not formed by splitting up, or the reconstruction of an

existing business
It is not formed by the transfer to a new business of any plant or

machinery previously used for any other purpose.
 Up to 20% of total value of plant & machinery can be ‘plant
and machinery already used.’
The condition is not applicable to second hand machinery or plant

imported from outside India by the assessee if
 Such machinery or plant was not used in India at any time
 No deduction on account of depreciation was allowed or is
allowable to any person earlier.
178
Conditions common to all sub sections


Thus, the amount of any loss incurred from eligible business in

any of the years falling within the period for which deduction
is opted shall reduce the profits in the subsequent years. (Even
though, it might have been set off against other income of the
assessee during the earlier years.)
179
Deduction will not be available to the amalgamating or demerged co.

in the year of amalgamation/demerger.

resulting as they would have applied to the amalgamation/demerged
co. if the amalgamation / demerger did not taken place.
180
The deductions shall not exceed the profits and gains of the
eligible business
When the deduction is claimed and allowed under this section

for any A.Y., no deduction in respect of such profits will be
allowed under any other section of this chapter.
Central Govt. may declare any class of industrial undertaking

or enterprise as not being entitled to deduction, with effect
from any date specified
Other conditions with reference to inter-unit transfer,

restriction on double deduction, transactions between associate
entities are similar to the provisions discussed u/s.80-IA
181
In computing the profits qualifying for deduction in respect of an eligible undertaking, the loss
incurred by other non eligible undertakings should not be set-off. The income computer before
set-off should be on the basis for quantifying the amount of deduction. The deduction so
quantified shall be allowed subject to the gross total income – CIT vs. Caara workshops P. Ltd.
(1986) 161 ITR 320 (SC); English Electric Co.Ltd vs CIT(1997) 249 ITR 793
The incentive deduction u/s 80 IA / 80 IB shall be allowed to a new undertaking even though the
undertaking is manufacturing the same product of other existing units. So long as the
undertaking satisfies all conditions, deduction shall not be denied on the ground that the
undertaking is manufacturing similar product – Bajaj Tempo Ltd. Vs. CIT(1992) 96 ITR 188 (SC).
Again, where the new undertaking is sharing some of the common facilities for the purpose of
manufacture of article or thing deduction shall not be denied. The guiding factor in all these
cases is to test whether the undertaking is separate and distinct. Once it is substantiated,
deduction shall be allowed – CIT vs. Kerala Chemicals and Proteins Ltd. (2009) 308 ITR 339
(Ker).
182
Deductions u/s 80 IA and 80 IB are available from the year of commencement of production.
Trial production enables claiming of depreciation on assets used for such production but not for
availing these deductions under chapter VIA, commercial production should begin. In a case
where the trial production was in one year and the commerical production was in the next year,
than the benefit of these deductions would be available only from the year of commericail
production – CIT vs. Nestor Pharmaceuticals Ltd. (2010) 322 ITR 631 (delhi)
Sale of import entitlements / DEPB/ Duty Drawback cannot be regarded as income derived from
industrial undertaking and therefore, not included in computing income for special deduction –
CIT vs. Sterling Foods (1999) 237 ITR 579 (SC); Liberty India vs. CIT (2009) 317 ITR 218 (SC)
Interest income derived by an undertaking on delayed collection of sale proceeds shall be

treated as part of sale of proceeds and therefore entitled to deduction – Phatela Cotgin
Industries P. Ltd. Vs. CIT (2008) 303 ITR 411 (P & H)
183
The aseessee company must be engaged in the business of manufacture or prioduction of any
article or thing. In the case of preparing food packages for selling the same or preparing
foodstuffs for serving in the hotel there is no question of manufacture or production. The raw
material is at the most processed so as to make it eatble. The same analogy holds good for
fllight kitchen preparing food packets to serve the passengers – Indian Hotels Co. Ltd. And
Others vs. ITO (2000) 245 ITR 538 (SC).
For the purpose of availing dedution u/s 80 IB, the prfit should be derived from the running of the
eligible industrial undertaking. In case the assessee lease out the undertaking and derives rental
income, such rent cannot be considered as profit “derived from the industrial undertaking and
therefore, cannot claim deduction u/s80 IB – Sterliing Foods vs. CIT (1984) 150 ITR 292 (Kar)
and CIT vs. Cemet Distribution Ltd. (1994) 208 ITR 355 (Del)
184
Deduction in respect of Undertakings in
Special category states
Any Assessee
Eligible Whose GTI includes profits/gains
Assessee from manufacture or production of

any article or thing (other than
those specified in 13th schedule)
185
The deduction is available where the business is carried on
in any
• Export Processing Zone OR
• Integrated Infrastructure Development Centre OR
• Industrial Growth Centre OR
• Industrial Estate OR
• Industrial Park OR
• Software Technology Park OR
• Industrial Area OR
•Theme Park
As specified by the CBDT
186
Deduction can be availed by an undertaking which newly
commences the business or undertakes substantial expansion as:
Sr. No. Place of Business Period for Deduction

(State) commencement of
business or expansion
1. Sikkim 23.12.2002-1.4.2007 100% of profits for first
10 A.Y.s (only up to
A.Y.2008-09)
2. Himachal Pradesh 7.1.2003-1.4.2012 100% of profits for first
or Uttaranchal 5 A.Y.s & thereafter, 30%
for companies, 25% for
other assessees
3. Any of the North 24.12.1997-1.4.2007 100% of profits for first
Eastern State 10 A.Y.s
187
increase in the investment in
the plant and machinery by at
Substantial least 50% of the book value of
expansion plant and machinery as on the
first day of the previous year in
which substantial expansion is
undertaken.
188

existing business
It is not formed by the transfer to a new business of any plant
or machinery previously used for any other purpose.

189


No deduction can be claimed by the assessee under any other

section contained in chapter VI-A.
190
Incase the assessee was already claiming the benefit

u/s.80-IB(4), the aggregate period of deduction
availed by the assessee in respect of the undertaking
or enterprise u/s80-IC or u/s.80-IB(4) together shall
not exceed 10 A.Y.s
191
Deduction for gains from business of hotel and
convention centers

192
Eligible business means :
 Hotel located in the specified area

 building, owning and operating a convention centre,
located in a specified area
 Hotels located in the specified districts having a ‘World
Heritage Site’
193
The hotel or convention centre is constructed and started or starts

functioning between 1.4.2007-31.7.2010
The hotel having ‘World Heritage Site’ should be constructed between

1.4.2008-31.3.2013.

existing business
194


195


as if such eligible business were the only source of the income
of the assessee during the relevant P.Y.
No deduction can be claimed by the assessee under any other

section contained in Chapter VI-A and 10AA.
196
Meanings of the words for the purpose of this section :
Word Meanings
Specified Area National Capital Territory of Delhi and districts of
Faridabad, Gurgaon, Gautam Budh Nagar &
Ghaziabad
Convention Centre A building of a prescribed area comprising of
convention halls to be used for the purpose of
holding conferences and seminars, being of such
size and number and having such other facilities &
amenities as may be prescribed
Hotel A hotel of two-star, three-star or four star
category as classified by the Central Govt.
197

198
Deduction in respect of Undertakings in north
eastern states

199
Deduction is available for :
 Manufacturing or production of any eligible

article or thing or undertaking substantial
expansion during 1.4.2007-31.3.2017 in any
North-Eastern States
 Carrying on any eligible business during

1.4.2007-31.3.2017 in any North-Eastern States
200
Hotel (not
Minimum below 2 star
capacity Providing category)
25 beds medical &
Adventure &
health
leisure sports
services – including
Nursing
ropeways
home
Running an old- Eligible Operating

vocational
age home
Business training
institute
 Hotel management
 Catering & Food Craft
 Entrepreneurship
Running IT
development
Manufacturing related  nursing & para-
of IT hardware training medical
centre.  civil aviation related
training
Bio-
 Fashion designing
technology
Industrial training
201
Tobacco
Plastic
carry bags Deduction not
< 20 Pan masala
available for
microns
Goods
produced by
petroleum oil
7 gas
refineries 202
Arunachal
Pradesh
Tripura Assam
North-
Sikkim
Eastern Manipur
States
Nagaland
Meghala
ya
Mizoram
203
Substantial expansion means :
 Increase in the investment in the plant and
machinery by at least 25% of the book value of
plant & machinery
 before taking depreciation
 as on the first day of the previous year in
which expansion is undertaken
204
The business is not formed by the splitting up or the reconstruction of

a business already in existence


205

The return of Income should be submitted on or before the due

date as given u/s.139(1)
If deduction is availed under this section, then no deduction shall

be allowed u/s.10AA and sections 80C to 80U
Other conditions with reference to set off of loss of eligible
undertaking, inter-unit transfer, restriction on double deduction,
transactions between associated entities are similar to the
provisions as discussed earlier.
206
Period of First 10 consecutive

deduction AY, including the initial
AY.
207
The deduction u/s. 80-IA, IB, IC, ID or IE is available to an
undertaking and not to an assessee. Conditions mentioned
should be complied by the undertaking
If the undertaking is existing, then deduction cannot be claimed

only because it is taken over by a new assessee.
An existing assessee can form new undertaking and avail

deduction under this section.
Textile
Machinery
Corp. Ltd. vs.
CIT (1997) 107
ITR 195 (SC)
208
 All assessees
Eligibility
 100% of profits and gains derived from the

business for a period of 5 consecutive assessment
Quantum years relevant to the previous year in which such
business commences.

209
Terms & Assessee must be engaged in business of
Conditions collecting and processing or treating of
bio-degradable waste for generating
power or producing bio-fertilizers, bio-
pesticides or other biological agents or for
producing bio-gas, making patents or
briquettes for fuel or organic manure.

210
Terms & The Gross total Income should include
Conditions profit & gains derived from an industrial
undertaking engaged in the manufacture
or production of article or thing.
The industrial undertaking is not formed
by splitting up or reconstruction of an
existing undertaking or amalgamation with
another industrial undertaking.
Audit Report of a Chartered Accountant
should be furnished along with the return
of income
Regular workmen does not include casual
workmen or workmen employed through
contract labour or any other workmen
employed for a period of less than 300
days during the previous year.
211
 Indian Company
Eligibility
 Deduction for 3 previous years commencing from

the previous year in which such employment is
Quantum provided by
New Industrial Undertaking : 30% of the wages
paid to the regular workmen in excess of 100
regular workmen employed during the year
Existing Undertaking : 30% of the wages paid to
new regular workmen provided these is at least 10%
increase in number of regular workmen over the
existing memberof of cases,
workmenin no other
employed case
in such
Settlement
undertaking, as on the last day Application can be filed.
of the preceding
year.
212
 Schedule Bank or any bank incorporated by or
under the laws of a country outside India; and
Eligibility having an Off-shore banking unit in a SEZ or
Unit of a International Financial Service Centre
 100% of such income for 5 consecutive

Sunset assessment years in which permission to operate
Clause such unit has been obtained under Banking
Regulation Act or SEBI or relevant law.
 50% of such income for next 5 consecutive
assessment years.

213
Terms & The deduction shall be allowed only if the
Conditions assessee furnishes along with the return of
income –
A report from a Chartered Accountant

about the correctness of the claim of
deduction in Form 10CCF and
A copy of the permission obtained from

the Reserve Bank of India

214
 Co-operative Societies
Eligibility
 100% of the profits of a Co-op Soc.

 The whole of interest and dividend income
Quantum derived by a Co-op Soc.
 The whole of the interest income from securities
and property income in case of a co-op soc. other
than housing society or urban consumer soc. or a
soc. Carrying on transport business
 Rs.50,000 – in respect of other activities carried
on either independently or in addition to defined
activities of cases, in no other case
 Rs. 100000 – Settlement Application
in case of consumer can
co-op soc. , inbe filed.
respect of other activities carried on either
independently or in addition to defined activities
215
Terms & Co-operative Society is engaged in
Conditions following activities :
• Carrying on business of banking or
providing credit facilities to its members or
• Cottage industry or
• Marketing of the agricultural produce of
its members or
• Purchase of Agricultural implements,
seeds, live stock or other articles intended
for agriculture for the purpose of
supplying them to its members
• Processing without aid of power of the
agricultural produce of its members or
• The collective disposal of the labour of its
members or
• Fishing or allied activities or
• Primary co-opBarring aforesaid
soc. engaged TWO categories
in supplying
of milk, oilseeds,offruits
cases,andinvegetables.
no other case
216
217
Surplus = Income – Expenditure. This surplus is contributed
to the common fund for future utilization to the benefit of
the contributors
Deficit = Expenditure – Income. The deficit shall be absorbed

by the common fund.
218
The surplus derived by a mutual concern is not chargeable to
tax.
Surplus arising on account of

subscriptions, membership fee,
entrance fee etc to a association,
trade, professional which functions
on the principle of mutuality is not
chargeable to tax.
219
It may be noted from 80P(1)(e) referred above that a co-op soc. Is eligible in respect of
income from letting of godowns or warehouses for storage, processing or facilitating the
marketing of commodities.
In a case where the co-op soc derives income by way of commission from public distribution
for controlled commodities is found to be not deductible. This view was upheld by rge
Supreme Court in Udaipur Sahkari Upbhokta Thok Bhandar Ltd. Vs. CIT [2009] 315 ITR 21
220
Deduction under sec 80P is a beneficial provision and therefore shall be interpreted
liberally. Though, the section provides that the soc. Shall deal in marketing of
agricultural produce raised by its members.
The Punjab & Haryana High Court in CIT vs. Punjab State Co-op Supply &
marketing federation ltd’s case 46 taxam 156(1989) has held that deduction shall
be allowed even in a case where the member is not himself the producer of
agriculture produce and such produce was purchased and sold by him to the
society. Hence th agricultural produce need not be the one actually produced by
the member of the soc. This view was followed by the same High Court again in
CIT vs. Haryana State Co-op Supply & Marketing Federation Ltd. (1989) 70 CTR
94
221
The Kerla High Court has held that where a Co-op Soc carries on activities which
gives rise to income deductible and also carries on activities which give rise to non
deductible income, such non deductible income shall be taxed after allowing
proportionate expenditure permissible u/s 80P – Kottayam District Co-op Bank Ltd.
Vs. CIT (1990) 188 ITR 568
Interest arising from investment made, in compliance with statutory provisions to

enable the co-op soc. To carry on banking business, out of reserve fund by a co-op
soc. Engaged in banking business is exempt u/s 80P. This placement of such funds
being imperative for the purpose of carrying on banking business, the income
thereform would be income from the assessee’s business and there is noting in
Sec 80P which restricts the exemption applicable only to income derived from
working or circulating capital – CIT vs. Karnataka State Co-op Apex Bank (2001)
251 ITR 194 (SC) ; CIT vs. Ramanathapuram Dist. Co-op Central Bank Ltd. (2002)
255 ITR 423 (SC)
222
The assessee, co-op soc. Was formed to promote the economic interest of its
members by purchasing auto rickshaw vehicles and selling them on hire
purchase terms to the members. The assessee claimed exemption u/s 80P on
the ground that it was carrying on the business of providing credit facilities to its
members. Held that the society is not eligible for exemption as the activity cannot
be construed as providing “credit facilities” to members – Madras Auto
Rickshaw Drivers Co-op Soc vs. CIT (1998) 249 ITR 330 (SC)
223
 An Individual who is a resident, being
Eligibility an author/joint author.
 Amount of eligible income or Rs. 3

Quantum lacs, whichever is lower.

224
Computation of Eligible Income
Nature of Royalty Quantum Eligible Amount

In case of Lump Amount received A
sum royalty or receivable
In case of royalty Max. 15% shall B
otherwise than be allowed
by way of lump
sum (i.e. as a %
of Sales)
Eligible Income (A + B)

225
Terms & Deduction is allowable in respect of royalty
Conditions income or copyright fee of authors of
certain books other than textbooks for
assignment or grant of any interest in the
A certificate copyright of any book.
in prescribed
form 10CCD Work of literary , artistic or scientific nature
duly verified qualify for deduction. Books for this
by any purpose shall not include brochures,
person commentaries, diaries, guides, etc for
responsible schools, tracts and other publications of
for making similar nature.
such
payment to If income is earned by the author from any
the assessee source outside India, only so much of the
shall be income brought into India in convertible
furnished foreign exchange within a period of 6
along with months from the end of the previous year in
the return of which such income is earned or within such
income period allowed by RBI shall be considered
for the deduction.
226
 An Individual who is a resident being
Eligibility a patentee, including a co-owner of the
patent.
 Amount of any income by way of

Quantum royalty in respect of registered patent to
the extent of the whole of such income
or Rs. 3 lacs, whichever is less.

227
Terms & He being a patentee, registered under the
Conditions Patents Act, 1970, on or after 1.4.2003 as
the true and first inventor in respect of an
invention, including a co-owner of the
A certificate patent.
in prescribed
form 10CCE Deduction is not allowed to assignees or
duly signed mortgagees in respect of all or any rights
by the in the patent.
Controller
should be
furnished If income is earned from any source
along with outside India, the amount of the income
the return of brought into India in convertible foreign
income for exchange within a period of 6 months
availing from the end of the previous year in which
Barringoraforesaid
such income is earned within suchTWO categories
deduction
of RBI
period allowed by cases,
shallinbeno other case
considered
for the deduction.
228
Royalty in respect of a patent
Means consideration,
including any lump sum
but excluding
any consideration in the nature of capital gains or
consideration for sale of product manufactured with the
use of the patented process or of the patented article.
229
Deduction in respect of Interest received from
deposits in Saving Account/s.
Eligible Individual
Assessee & HUF
230
Quantum of
Deduction
OR
Interest on
deposits in a Rs. 10,000/-
Savings Account
Whichever is lower
231
For the purpose of deduction, the said Saving
account should be with
A Banking company to which the Banking Regulation

Act, 1949 (10 of 1949), applies.
(including any bank or banking institution referred to in
Section 51 of that Act)
A Co-operative Society engaged in carrying on the

business of Banking,
(including a co-operative land mortgage bank or a co-
operative land development bank)
A post office as defined in Sec.2(k) of the Indian Post

office Act, 1898 (6 of 1898).
232
If interest is received from any deposit
in a savings account held by, or on
behalf of
 a firm, an association of persons, or a
body of individuals,
 deduction is not allowed to any
partner of the firm, or any member of
the association or any individual of the
body.
233
The deposits repayable
Time Deposits on expiry of fixed
periods
234
The Income should be first offered to tax and then the deduction under
this section should be claimed.
Assessee may have more than one saving account.
Interest received on all saving accounts of the assessee is deductible

upto Rs.10,000 in aggregate.
Saving account must be in Assessee's name.
No deduction is available in respect of interest on Savings accounts of

other family members, whether dependent or not.
23
5
If the saving account is jointly held by 2 or more persons,
deduction under this section will be allowed to First holder.
In case of joint account, 'the owner of the source of income'

should be entitled to the deduction.
23
6
 An Individual who is a resident and
Eligibility  Who is Certified by a Medical Authority to
be a person with disability at any time
during the previous year
 The Amount of Deduction shall be Rs.

Quantum 50,000.
 In case of severe disability, the amount of
deduction is Rs. 1,00,000.

237
Terms & A copy of the certificate issued by the
Conditions Medical Authority is required to be
furnished in respect of assessment
year for which the deduction is claimed
along with return of income
Where the condition of disability

requires reassessment of its extent
after a period stipulated in the medical
certificate, deduction for any year
falling after the expiry of the said
period shall be allowed only if a new
certificate is obtained and furnished.
238
Terms & Disability means physical disability or
Conditions total blindness or partial blindness or
mental retardation reducing his
capacity substantially for gainful
employment
Certificate has to be obtained from a

physician, surgeon, etc working in a
Govt. Hospital.
Following disabilities shall be regarded
as a permanent physical disability
[Rule 11DD] eg.
Permanent Physical disability of more
than 50% in one limb or permanent
and total loss of voice
or permanent
deafness etcof cases, in no other case
239
24
0
Section Particulars Omitted by
No.
80AA Computation of deduction u/s.80M Finance Act,
1997
80CC Deduction in respect of investment in Finance (No. 2)
certain new shares Act, 1996
80F Deductions in respect of educational Finance
expenses in certain cases Act1985
80FF Deductions in respect of expenses of higher Finance (No. 2)
education in certain cases Act, 1980
80H Deduction in case of new industrial Taxation Laws
undertakings employing displaced persons, (Amendment)
etc Act, 1975
241
No.
80J Deduction in respect of profits and gains Finance (No. 2)
from newly established industrial Act, 1996
undertakings or ships or hotel business in
certain cases
80JJ Deduction in respect of profits & gains from Finance Act,
business of poultry farming 1997
80K Deduction in respect of dividends Finance (No. 2)
attributable to profits and gains from new Act, 1967
industrial undertakings or ships or hotel
business
80L Deduction in respect of interest on certain Finance Act,
securities, dividends, etc. 2005
80M Deduction in respect of certain inter- Finance Act,
corporate dividends 2003
242
No.
80MM Deduction in the case of an Indian Finance Act,
Company in respect of royalties etc., 1983
received from any concern in India
80N Deduction in respect of dividends received Finance Act,
from certain foreign companies 1985
80QQ Deduction in respect of profits and gains Direct Tax Laws
from the business of publication of books (Amendment)
Act, 1987
80S Deduction in respect of compensation for Finance Act,
termination of managing agency, etc., in 1986
the case of assessees other than
companies
243
Section No. Particulars Omitted by
80T Deduction in respect of long term Finance Act, 1987
capital gains in the case of
assessees other than companies.
80TT Deduction in respect of winnings Finance Act, 1986
from lottery
80V Deduction from Gross Total Income Finance Act, 1994
of the parent in certain cases
80VV Deduction in respect of expenses Finance Act, 1985
incurred in connection with certain
proceedings under the Act.
80VVA of Restriction on certain deductions in Finance Act, 1987
Chapter VI-B the case of companies
244
Section Particulars Last applicable
No. Assessment Year
80CCB Deduction in respect of investment made A.Y. 1992-93
under Equity Linked Savings Scheme
80CCF Deduction in respect of subscription to A.Y. 2012-13
long term infrastructure bonds
80HH Deduction in respect of profits and gains A.Y. 1990-91
from newly established industrial
undertakings or hotel business in
backward areas
80HHA Deduction in respect of profits and gains A.Y. 1990-91
from newly established small-scale
industrial undertakings in certain cases
245
Section Particulars Last applicable
No. Assessment Year
80HHB Deduction in respect of profits and gains A.Y. 2004-05
from projects outside India
80HHBA Deduction in respect of profits and gains A.Y. 2004-05
from housing projects in certain cases
80HHC Deduction in respect of profits retained for A.Y. 2004-05
export business
80HHD Deduction in respect of earnings in A.Y. 2004-05
convertible foreign exchange
80HHE Deduction in respect of profits from export A.Y. 2004-05
of computer software, etc.
80HHF Deduction in respect of profits and gains A.Y. 2004-05
from export or transfer of film software etc.
246
section 32A section 80CC
(3)(a)(i),
section 32AB section 80-I(2
section 80J(4) 88A (3)(a)(i)
LIST OF ARTICLES OR THINGS

1. Beer, wine and other alcoholic spirits.
2. Tobacco and tobacco preparations, such as, cigars and
cheroots, cigarettes, biris, smoking mixtures for pipes and
cigarettes, chewing tobacco and snuff.
3. Cosmetics and toilet preparations
4. Tooth paste, dental cream, tooth powder and soap.
24
7
5. Aerated waters in the manufacture of which blended flavouring

concentrates in any form are used. Explanation.—“Blended
flavouring concentrates” shall include, and shall be deemed
always to have included, synthetic essences in any form.
6. Confectionery and chocolates
7. Gramophones, including record-players and gramophone

records
8. Omitted
9. Projectors.
10.Photographic apparatus and goods.
11-21. Omitted
24
8
22.Office machines and apparatus such as typewriters, calculating

machines, cash registering machines, cheque writing
machines, intercom machines and teleprinters. Explanation.—
The expression “office machines and apparatus” includes all
machines and apparatus used in offices, shops, factories,
workshops, educational institutions, railway stations, hotels
and restaurants for doing office work and for data processing
(not being computers within the meaning of section 32AB).
23. Steel furniture, whether made partly or wholly of steel.
24. Safes, strong boxes, cash and deed boxes and strong room
doors.
25. Latex foam sponge and polyurethane foam.
26. Omitted
24
9
27.Crown corks, or other fittings of cork, rubber, polyethylene or

any other material.
28.Pilfer-proof caps for packaging or other fittings of cork,

rubber, polyethylene or any other material.
29. Omitted
25
0
Form No. Description
Audit report under sections 80-I(7)/80-IA(7)/80-IB/80-IC
10CCB
10CCBA Audit report under section 80-IB(7A)

10CCBB Audit report under section 80-IB(7B) /(14)
Audit report under section 80-ID(3)(iv)
10CCBBA
10CCBC Audit report under section 80-IB(11B)

10CCBD Audit report under section 80-IB(11C)
Certificate under sub-section (3) of section 80QQB for
10CCD Authors of certain books in receipt of Royalty income,
etc.
25
1
Certificate under sub-section (2) of section 80RRB for
10CCE
Patentees in receipt of royalty income, etc.
10CCF Report under section 80LA(3) of the Income-tax Act, 1961
10DA Report under section 80JJAA of the Income-tax Act, 1961
Application for grant of approval or continuance thereof to

10G institution or fund under section 80G(5)(vi) of the Income-
tax Act, 1961
10H Certificate of foreign inward remittance
Form of certificate under second proviso to section 80-O
10HA
of the Income-tax Act, 1961
25
2
10I Certificate of prescribed authority for the purposes of section

80DDB
Certificate of the medical authority for certifying person with
10IA disability, severe disability, autism, cerebral palsy and multiple
disability for purposes of section 80DD and section 80U
25
3
25
4
 M, a CA, derives Rs.1,63,000 as taxable professional income.
Income from other sources is Rs.7,000.
 He pays Mediclaim insurance premium Rs.2,000 for insuring
the health of his non-dependant parents, Rs.3,000 for self
and spouse and Rs.2,000 for his brother.
 He pays Rs.2000 in cash for routine health check-up.
 He incurs Rs.12,000 expenditure on medical treatment of his

dependant mentally retarded (severe disability) sister in
approved hospital duly certified.
 He pays rent of Rs.2,500 p.m.
Calculate his Total Income for A.Y. 2013-14 after claiming

deductions under chapter VI-A.
255
Computation of Total Income A.Y. 2013-14
Particulars Rs. Rs.

Professional Income 1,63,000
Income from other sources 7,000
Gross Total Income 1,70,000
Less: Deductions under Chapter VI-A
1. Mediclaim Insurance – 80D (2000+3000) 5,000
2. Expenditure for Preventive health check up 2,000
3. Expenditure for dependant mentally 1,00,000
retarded sister – 80DD
Total c/f 1,07,000
256
Particulars Rs. Rs.
Total b/f 1,07,000
3. Rent paid – 80GG
Least of the following is eligible for deduction
i) Excess of rent paid over 10% of total
Income (30,000-6,300) = 23,700
ii) 25% of total income = 15,750

iii) Ceiling limit Rs.2,000 p.m. = 24,000 15,750 1,22,750
Total Income 47,250
257
 Mediclaim insurance for insuring health of M’s brother does
not qualify for deduction u/s80D.
 Mediclaim insurance for non-dependant parents shall qualify
for deduction u/s.80D.
 Payment made in cash for preventive health check-up
qualifies for deduction u/s.80D within the specified limit of
Rs.15,000 or Rs.20,000 as the case may be.
 Deduction u/s.80DD is a flat amount of Rs.1,00,000
irrespective of the actual expenditure incurred (for persons
with severe disability).
 Total Income for the purpose of sec.80GG
Less: Deduction u/s.80D & 80DD 1,07,000
Total Income 63,000
258
Compute deduction u/s 80G in the following case
Particulars A Rs. B Rs. C Rs.

National Defense Fund 6,000 10,000 ___
Approved Public Trust 7,000 8,000 5,000
PM’s National Relief Fund 8,000 ____ 10,000
Approved Temple renovation 2,000 3,000 ___
Central Govt. – for promotion of ___ ___ 8,000
family planning
Gross Total Income of the assessee may be commonly assumed as Rs.

1Lakh. Each of the assessee is entitled to deduction u/s.80D and 80GGA
to the tune of Rs.10,000.
259
Computation of Deduction u/s.80G
Particulars Gross Net Deduction

Qualifying Qualifying
Amount Amt
Rs. Rs. % Amount Rs.
In the case of Mr. A
National Defense Fund 6,000 6,000 100 6,000
Approved Public Trust *7,000 7,000 50 3,500
PM’s National Relief 8,000 8,000 100 8,000
Fund
Approved Temple *2,000 2,000 50 1,000
Renovation
Deduction u/s.80G 18,500
260
Amount Amt

In the case of Mr. B
National Defense Fund 10,000 10,000 100 10,000
Approved Public Trust *8,000 8,000 50 4,000
Approved Temple *3,000 1,000 50 500
Renovation
261
Amount Amt

In the case of Mr. C
Approved Public Trust *5,000 1,000 50 500
PM’s National Relief 10,000 10,000 100 10,000
Fund
Promotion of family *8,000 8,000 100 8,000
planning
262
Note :
 * These amounts qualify subject to the overall limit

of 10% of total income of Rs.90,000. The total of
these amounts exceeding Rs.9,000/- (being 10% of
Rs.90,000) is not eligible for deduction.
263
X suffers from disability duly certified by a specialist, X is employed
as personal assistant to the Managing Director in a private company
on a monthly salary of Rs.8000. Besides, X submits the following
particulars of income for the year ending 31.3.2013
Particulars Amount(Rs.)
Interest from Indian Co. 5000
Dividend from UTI 3000
Interest from bank 5000
Determine the taxable income for the assessment year 2013-14
264
Computation of taxable income for the A.Y. 2013-14
Particulars Rs. Amount(Rs.)

I. Interest from Salary 96000
II. Income from other sources :
- Interest from Co. 5000

- UTI Income [Exempt u/s Nil
10(35)
- Interest from banks 5000 10000
Gross Total Income 106000
Less : Deduction under 50000
Chapter
VI-A : Sec – 80 U
Taxable Income 56000
265
Bombay Suburban Co-op Soc., which is engaged in processing
agricultural produce of its members, without the aid of power, and
its marketing, furnishes the following particulars, determine its net
income for the A.Y. 2013-14 :
Particulars Amount(Rs.)
Income from Processing of Agricultural Produce 17000
Income from Marketing Agricultural Produce 3000
Dividends from another co-op society 55000
Income from letting godowns 10000
Income from agency business 85000
266
Computation of net income for the A.Y. 2013-14

I. Interest from letting of 10000
godowns
II. Business Income :
- from processing 17000

- from marketing 3000
- from agency 85000 105000
III. Dividend Income 55000
Gross Total Income 170000
267
Computation of net income for the A.Y. 2013-14

Less : Deductions u/s 80P
a. Processing - sec 80P(2)(a) 17000
b. Marketing sec 80P(2)(a)(iii) 3000

c. Agency business sec 80P(2)(c) 50000
d. Dividend sec 80P(2)(d) 55000
e. Letting of godowns 80P(2)(e) 10000 135000
Net Income 35000
268
Mr. Harsh, aged 66 years running business as a proprietor furnishes the
particulars of
his income for the year ended 31-3-2013 as under:
(a) Net Profit of Rs.3,15,500 from the wholesale business of textiles and
fabrics arrived at after charge of following expenses in the Profit & Loss
Account:
I. Personal travelling expenses of Rs.12,750.
II. Purchase of furniture items for shop on 13-6-2012 of Rs.25,000 but
charged in shop expenses.
(b) He owns a house of two storeys constructed with financial assistance of

HDFC out of which ground floor is used by him for self use and first floor was
on rent for Rs.8,500 p.m.
from April, 2012. The municipal tax paid for the whole house was of Rs.2,500
and interest paid on housing loan taken for the construction was Rs. 52,000.
Both the floors of the house are identical.
269
(c) He had deposited insurance premium on the life of self of Rs.12,500, wife
Rs.13,500, son and daughter of Rs.28,000, made investment of Rs.50,000 in the
bonds issued by NABARD and paid Rs.22,500 by credit card for medi-claim
insurance of the family.
Compute taxable income and the amount of tax payable by Mr. Harsh on such
income for the Assessment Year 2013-14
270
Computation of total income of Mr. Harsh for the A.Y.2013-14
Particulars Rs. Rs.

Income from house property
Self occupied portion (50%)
Annual Value under section 23(2) Nil
Less:
Deduction under section 24
(b) Interest on housing loan [Rs.52,000 × 50%] (26,000) (26,000)
Let out portion (50%)
Income of rented out portion being rent of
Rs.8,500 p.m.
received for 12 months
(Rent received has been taken as the
GAV in the absence of other information)
271
Computation of total income of Mr. Harsh for the A.Y.2013-14
Particulars Rs. Rs.

Gross Annual Value under section 23(1)
(8,500 × 12) 1,02,000
Less:
50% of municipal taxes paid allowable in
respect of
rented out portion (i.e., 50%of 2,500) 1,250
Net Annual Value (NAV) 1,00,750
Less:Deduction under section 24
30% of NAV under section 24(a) 30,225
Interest on housing loan under section
24(b) 26,000 56,225 44,525
Income from house property 18,525
272
Particulars Rs. Rs.
Profits and gains of business or profession
Net profit as per profit and loss account of
wholesale business
of textiles and fabrics 3,15,500
Add:
Expenses charged in profit and loss account
either not
allowable or to be considered separately
-
Personal travelling expenses of proprietor 12,750
Purchase of furniture items wrongly debited 25,000
to shop expenses 3,53,250
Less:
Depreciation on furniture @ 10% on Rs.25,000 2,500
Income from Profits and Gains of Business or
Profession 3,50,750
273
Particulars Rs. Rs.
Less:
Deduction under Chapter VI-A
Under section 80C
[Life insurance premium ]
Bonds issued by NABARD
Maximum allowable upto Rs.1 lakh 1,00,000
Under section 80D [Medical insurance
premium] 20,000 1,20,000
Total Income 2,49,275
Tax on Total Income NIL

Add : Education Cess & SHEC @3% NIL
Tax Payable (Rounded Off) NIL
274
The Assessee, a Co-op Soc., engaged in banking activities, earned
interest income out of the reserve funds, which had been invested
with SBI/RBI in compliance with Statutory provisions in order to carry
on banking business and declined to allow the claim, but restricted its
claim to that part of interest income derived from working or
circulating capital. Examine the validity of action of Assessing Officer.
275
Deduction u/s 80P is allowable only to primary agricultural credit
society and to primary co-operative agricultural and rural
development bank.
For other assesses, no deduction under sec 80P is allowable
If the assessee is a Primary Agricultural Credit Society or Primary Co-
op Agricultural and Rural Development Bank then the assessing
officer’s action is untenable.
Refer to CIT vs. Karnataka State Co-op Apex Bank (2001) 251 ITR
194.
276
Examine the correctness of the
statement that "there exists no
difference in the treatment of
income claimed under section 10
with those claimed under Chapter
VI -A of the Income - tax Act”
277
The statement is incorrect.
Section 10 lists out the items of income which do not form part of total income.
Thus, such income are fully or partly exempt from tax. Items of income which are
exempt under section 10 shall not form part of any head of income. Therefore, the
income which are claimed as exempt under section 10 are excluded from gross
total income, in the sense , they are not included in the computation of gross total
income.
However, for claiming deduction under Chapter VIA, the income must be included
under the respective head of income for computation of gross total income and
thereafter, deduction can be claimed under the respective section as specified in
Chapter VI - A to arrive at the total income. In short, section 10 provides for
exemption of income whereas Chapter VI - A provides for deductions from gross
total income.
278
Can the provisions of section 14A of the
Income-tax Act, 1961 be applied for
disallowing expenditure relating to
income for which deduction is available
under Chapter VIA, or the section can be
invoked only in respect of expenditure
relating to income exempt under the
provisions of section 10?
279
Chapter III, comprising sections 10 to 13B, deals with
incomes which do not form part of total income. As per
section 14A(1), for the purposes of computing the total
income under Chapter IV, no deduction shall be allowed
in respect of expenditure incurred by the assessee in
relation to income which does not form part of the total
income under the Income - tax Act, 1961.
280
Therefore, from a plain reading of section 14A, it is apparent that
the intention of the section is to disallow expenditure in relation
to income which does not form part of total income i.e.,
expenditure in relation to income exempt under section 10 to 13B.
Therefore, the provisions of section 14A cannot be applied for disallowing

expenditure relating to income for which deduction is available under
Chapter VIA
281
 Whether any senior citizen is allowed an
additional limit for availing deduction
u/s80D?
 Answer : Yes, a senior citizen is entitled to an
additional deduction of Rs.5,000 i.e. such an
amount can get extended to Rs.20,000
282
 Is deduction u/s 80 C available in respect of
tuition fees paid for a third child ?
 Answer : The deduction is restricted to two
children only. Thus, an assessee can chose
any two children for availing such a
deduction.
283
 Is deduction available u/s 80 CCF for
investing in "infrastructure bonds" for the AY
13-14 ?
 Answer : No deduction is not available since
AY 13-14, for investment in infrastructure
bonds upto Rs.20,000
284
 What is the pre-requisite of a political party,
so as to have deduction u/s 80 GGB of the
Income Tax Act, 1961 ?
 Answer : The political party means a political
party registered u/s 29 A of the
Representation of the People Act, 1951 ( 43
of 1951 )
285
 Is donation in kind eligible so as to claim
deduction u/s 80 G of the Income Tax Act,
1961 ?
 Answer : No. Deductions in kind are not
eligble for availing deduction u/s 80 G of the
Income Tax Act, 1961
286
 Is deduction available u/s 80 E for an
individual acting as a legal guardian ?
 Answer : Yes. The term "relative" includes
spouse, children of an individual and also
student for whom individual is the legal
guardian.
287
 Can an interest on loan obtained from a
private party eligible for deduction u/s 80 E
for higher education ?
 Answer : No. Loan should be borrowed from
any financial institution or any approved
charitable institution for the purpose of
pursuing higher education
288
 Is deduction u/s 80 GGC available to a local
authority, contributing to a political party ?
 Answer : No. deudction is not available to a
local auhority and every artificial judicial
person wholly or partly funded by the
Government
289
 Is an activity of "relaying of an existing road"
considered as an "infrastructure facility" for
the purposes of Section 80-IA (4) ?
 Answer : No. as per Circular No. 4/2010
dated 18.05.2010; simply relaying of an
existing road can not be considered as
"infrastructure facility"
290
 Whether deduction u/s 80 JJA is available for
any 5 assessment years ?
 Answer : No. Deduction is available for 5
consecutive assessment years, relevant to the
previous year in which such business of
"collecting and processing of bio-degradable
waste" commences.
291
 Whether a deduction u/s 80 IB(10) is available
to merely a "works contractor" ?
 Answer : Deduction is not available to merely
a works contractor. It is futher clarified that,
deduction is not available to any undertaking
which executes the housing project as a
works contract awarded by any person (
including the Central or State Government )
292
 Is deduction u/s 80 U is available to a non-
resident individual ?
 Answer : Deduction is available only to a
“resident individual” who is certified by a
Medical Authority.
293
Deductions under Chapter VI-A are restricted to
Gross Total Income.
Deductions u/s 80 C aim to provide incentive by

rationalising tax, if payment is made, which
results in "savings"
• (a) to a public provident fund
• (b) to a national savings certificate
294
Deductions u/s 80 C towards “principal amount” for a loan
obtained for acquiring a house property enables assessee to
rationalize tax.
Deduction u/s 80 E provides incentive to an assessee by providing

deduction of interest, if loan is taken for "higher education"
These are examples of elevating quality of human life.
295
Deduction u/s 80 IB (10) enables an assessee to
claim deduction @ 100 % of taxable income from
an undertaking engaged in developing and
building housing projects.
This provision thus, is an incentive to such

developers and/or promoters and developers who
are engaged in undertaking such housing projects
296
Section 80 U does have a significant human touch. It provides
deduction for a resident individual in case of "disability" or
"severe disability"
Section 80 QQB focusses on elite class of society who add value

i.e. "authors" of certain books by providing deduction by way of
a royalty. This deduction is available to a resident individual
29
7
Various deductios u/s 80 IA enable an assessee, which generate "value" in
the soceity as deductions under various sub-sections are available for
[a] infrastructure facilities
[b] hospital having minimum 100 beds
[c] hotel or convention at specified locations
298
Deduction u/s 80 JJA provides an incentive to an
assessee who is in the business of "collecting and
processing bio-degradable waste"
Such deduction is @ 100 % of profits and gains for

first 5 consecutive years. Thus this is not only
beneficial for an assessee but also for society as a
whole.
299
Deduction u/s 80 P which is available to co-operative
societies is intended to elevate such activities which are
widely spread across the country.
These activities enriches human life more particularly in

non-subarban areas.
300
301

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CA Final Paper 7 Direct Tax Laws Chapter 11

Deductions which try to meet social objectives

Deductions which give rise to new investment opportunities to assessees

Deductions which can result as an incentive in “expansion” or “diversification”

Deductions, which rationalize cost of education

Concept of ‘Gross Total Income’

Concept of ‘Adjusted Gross Total Income’

Streams of income/s on which deduction is not available

80AB Deductions to be made with reference to the income included

80CCA Deduction in respect of deposits under National Savings

80CCB Deduction in respect of investment made under Equity Linked

80CCD Deduction in respect of contribution to pension scheme of

80CCE Limit on deductions under sections 80C, 80CCC and 80CCD.

Deduction in respect of subscription to long-term

80CCG Deduction in respect of investment made under an equity

80DD Deduction in respect of maintenance including medical

80G Deduction in respect of donations to certain funds,

80GGA Deduction in respect of certain donations for scientific research

80GGB Deduction in respect of contributions given by companies to

80GGC Deduction in respect of contributions given by any person to

80-IAB Deductions in respect of profits and gains by an undertaking or

Deduction in respect of profits and gains from business of

Special provisions in respect of certain undertakings in North-

Short Term Capital Gains u/s.111A

Winnings from lotteries, crossword puzzles – Sec.115BB

Income from race, including horse race – Sec.115BB

Income from card game or other game of any sort – Sec.115BB

Income from gambling or betting of any form – Sec.115BB

Gross Total Deductions u/s

No deduction under the same section shall be made in

• He is not entitled to deduction in respect of and to the extent of

If in the books of the eligible business, the transfer is not

The price that such goods or services would

Under this section maximum amount of

The deduction is restricted to 10% of actual capital sum

Contribution to notified annuity plan of the LIC

Contribution to Unit Linked Insurance Plan of the

Contribution to Public Provident Fund (PPF)

Contribution by an employee to a recognized provident fund

Contribution by an employee to an approved superannuation

Investments in National Saving Certificates (NSC)

Subscription to any notified saving certificate

Subscription to any units of a mutual fund referred to

Contribution by an individual to a pension fund set by a mutual

Deposit in an account under the Senior Citizens Savings Scheme [SCSS]

Deduction is also allowed for any expenditure

Where the loan is availed for any addition,

Repayment of loan borrowed from relatives,

Deduction is available for

Deduction is not allowed for any kind of

Subscription to equity shares or debentures

1 Life Insurance premium Individual – Such individual,

 Contribution made to annuity plan (excluding bonus or

If the policy is surrendered before its maturity,

Nature of Income Limit

Deduction would be, the lower of

50% of amount invested in OR Rs.25,000

The maximum deduction of Rs.25,000 would be

Gross Total Income of the

The assessee should A new retail investor as per the

The minimum lock-in period in respect of such

Assessee Insured person

Individual Self, spouse, dependent children, and parents