CHAPTER IV
COMPUTATION OF TOTAL INCOME
Investment in new plant or machinery in notified backward areas in certain States.
32AD. (1) Where an assessee, sets up an undertaking or enterprise for manufactureor production of any article or thing, on or after the 1st day of April, 2015 in any backwardarea notified by the Central Government in this behalf, in the State of Andhra Pradesh orin the State of Bihar or in the State of Telangana or in the State of West Bengal, andacquires and installs any new asset for the purposes of the said undertaking or enterpriseduring the period beginning on the 1st day of April, 2015 and ending before the 1st dayof April, 2020 in the said backward area, then, there shall be allowed a deduction of a sumequal to fifteen per cent. of the actual cost of such new asset for the assessment yearrelevant to the previous year in which such new asset is installed.
(2) If any new asset acquired and installed by the assessee is sold or otherwisetransferred, except in connection with the amalgamation or demerger or re-organisationof business referred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47,within a period of five years from the date of its installation, the amount of deductionallowed under sub-section (1) in respect of such new asset shall be deemed to be theincome of the assessee chargeable under the head “Profits and gains of business orprofession” of the previous year in which such new asset is sold or otherwise transferred,in addition to taxability of gains, arising on account of transfer of such new asset.
(3) Where the new asset is sold or otherwise transferred in connection with theamalgamation or demerger or re-organisation of business referred to in clause (xiii) orclause (xiiib) or clause (xiv) of section 47 within a period of five years from the date ofits installation, the provisions of sub-section (2) shall apply to the amalgamatedcompany or the resulting company or the successor referred to in clause (xiii) orclause (xiiib) or clause (xiv) of section 47, as the case may be, as they would haveapplied to the amalgamating company or the demerged company or the predecessorreferred to in clause (xiii) or clause (xiiib) or clause (xiv) of section 47.
(4) For the purposes of this section, “new asset” means any new plant ormachinery (other than a ship or aircraft) but does not include—
(a) any plant or machinery, which before its installation by the assessee,was used either within or outside India by any other person;
(b) any plant or machinery installed in any office premises or any residentialaccommodation, including accommodation in the nature of a guest house;
(c) any office appliances including computers or computer software;
(d) any vehicle; or
(e) any plant or machinery, the whole of the actual cost of which is allowedas deduction (whether by way of depreciation or otherwise) in computing theincome chargeable under the head “Profits and gains of business or profession” of any previous year.’.