Section 80-IA/80-IB

Profits and gains from industrial undertakings, etc.

BOLT Scheme of Railways - The Indian Railways have formulated a Build-Own-Lease-Transfer (B-O-L-T) Scheme, whereunder a private enterprise will provide the necessary and crucial components of a railway system, own them for a stipulated period but will not maintain or operate the same. Instead, the enterprises will lease the asset back to Indian Railways for maintenance and operation and shall ultimately transfer it to Indian Railways. The said B-O-L-T Scheme shall be eligible for the benefit of section 80-IA, since it is not legally possible for any enterprise other than the Indian Railways to maintain and operate a railway system. However, this concession shall be applicable only to an infrastructure facility meant for development of Rail System and not to any other infrastructural facility including rolling stocks—Circular : No. 733, dated 3-1-1996.

Definition of “port” as infrastructure facility for the purpose of sections 10(23G) and 80-IA - Structures at ports for storage, loading and unloading, etc., will fall under the definition of “port” for the purposes of sections 10(23G) and 80-IA of the Income-tax Act, 1961, if the following conditions are fulfilled :

(a) the concerned port authority has issued a certificate that the said structures form part of the port, and

(b) such structures have been built under BOT or BOLT Schemes and there is an agreement that the same would be transferred to the said authority on the expiry of the time stipulated in the agreement - Circular : No. 793, dated 23-6-2000.

However, for and from assessment year 2002-03 onwards, structures at the ports for storage, loading and unloading etc. will be included in the definition of “port” for the purpose of sections 10(23G) and 80IA of the Income-tax Act, 1961, if the following condition is fulfilled:

- the concerned port authority has issued a certificate that the said structures form part of the port. – Circular 10/2005, dated 16-12-2005.

Infrastructure facilities, definition as amended by Finance Act, 2001- ‘Infrastructure facility’ as defined in Explanation to sub-clause (c) of clause (i) of sub-section (4) of section 80-IA, as it stood prior to its substitution by the Finance Act, 2001, meant :

(i) a road, bridge, airport, inland waterways and inland ports, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette;

(ii) a highway project including housing or other activities being an integral part of the highway project; and

(iii) a water supply, water management system, irrigation project, sanitation and sewerage system or solid waste management system.

The Finance Act, 2001 has further rationalised the above definition. The definition of ‘Infrastructure facility’, as given in the Explanation introduced with effect from 1-4-2002 excludes ‘any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette’. Under the earlier provisions, several public facilities have already been notified by the Board as ‘infrastructure facilities’. In this connection, a need has been felt to clarify doubts as to whether such notified “infrastructure facilities” would continue to be eligible for such benefit on or after 1-4-2002. It is, hereby clarified that :

“Such projects, for which agreements have been entered into on or after 1-4-1995 but on or before 31-3-2001 and which have been notified by the Board on or before 31-3-2001, would continue to be exempt, subject to the fulfilment of the conditions prescribed in section 80-IA(4)(i)(b), as it existed prior to its substitution by the Finance Act, 2001.” - Circular : No. 7/2002, dated 26-8-2002.

Notified Company under section 80-IA(4)(v)(a) - In exercise of the powers conferred by sub-clause (a) of clause (v) of sub-section (4) of section 80-IA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Ratnagiri Gas & Power Private Limited, being an Indian company, (having its registered office at ‘NTPC Bhawan’ SCOPE Complex, 7, Institutional Area, Lodhi Road, New Delhi-110 003) for the purposes of the said sub-clause - Notification No. 263/2005 [F. No. 142/45/2005-TPL], dated 23-12-2005.

Effluent treatment and conveyance system - Infrastructure facility under section 80-IA - In order to control environmental degradation, due to discharge of effluents into nearby rivers by industries, the Pollution Control Boards have prescribed norms for treatment and conveyance of effluents to a safe disposal point. As a result, a number of plants have been set up for treatment of effluents and its conveyance system. In this context, a number of representations have been received seeking clarification as to whether the ‘effluent treatment and conveyance system’ may be treated as an ‘infrastructure facility’ for the purposes of tax benefit under section 80-IA.

Under the treatment of effluents and its conveyance system, the effluents emanating from chemical industries are to be conveyed inside the sea through onshore pipeline and before discharging effluent through pipeline, entire load of effluent is to be treated to marine standards. Therefore, it is a part of ‘water treatment system’ and would accordingly, qualify as an infrastructure facility for the purposes of tax benefit under section 80-IA. However, an enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining such infrastructure facility shall be eligible to the tax benefit under section 80-IA, subject to fulfilment of other conditions laid down therein - Circular No. 1/2006, dated 12-1-2006.

“States” include Union Territories - The word ‘State’ in sub-section (4) of section 80-IB includes the Union Territories specified in the Eighth Schedule—Circular : No. 788, dated 11-4-2000.

Notified industrially backward districts under section 80-IB(5) - In exercise of the powers conferred by sub-section (5) of section 80-IB of the Income-tax Act, 1961 (43 of 1961), and in supersession of the notification of the Government of India, in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number 714(E), dated 7th October, 1997, except as respects things done or omitted to be done before such supersession, the Central Government specifies the following districts as industrially backward districts of category ‘A’ and category ‘B’ under sub-section (5) of section 80-IB, read with rule 11EA, of the Income-tax Rules, 1962, namely :—

A. Category ‘A’ industrially backward districts :

1. Godda	Bihar
2. Gumla	Bihar
3. Araria	Bihar
4. Gadchiroli	Maharashtra
5. Madhepura	Bihar
6. Sidharthnagar	Uttar Pradesh
7. Dumka	Bihar
8. Mandla	Madhya Pradesh
9. Khagaria	Bihar
10. Kishanganj	Bihar
11. Malda	West Bengal
12. Palamau	Bihar
13. Phulbani	Orissa
14. Madhubani	Bihar
15. Kalahandi	Orissa
16. Jehanabad	Bihar
17. Saharsa	Bihar
18. West Dinajpur	West Bengal
19. Nawadah	Bihar
20. Bahraich	Uttar Pradesh
21. Sitamarhi	Bihar
22. Sahebganj	Bihar
23. Murshidabad	West Bengal
24. Cooch Behar	West Bengal
25. Bankura	West Bengal
26. Panna	Madhya Pradesh
27. Pratapgarh	Uttar Pradesh
28. Maharajganj	Uttar Pradesh
29. Jalore	Rajasthan
30. Aurangabad	Bihar
31. East Champaran	Bihar
32. Banda	Uttar Pradesh
33. Barmer	Rajasthan
34. Purnia	Bihar
35. Bastar	Madhya Pradesh
36. Siwan	Bihar
37. Vaishali	Bihar
38. Basti	Uttar Pradesh
39. Sarguja	Madhya Pradesh
40. Chamoli	Uttar Pradesh
41. Jaisalmer	Rajasthan
42. Lohardagga	Bihar
43. Chhatarpur	Madhya Pradesh
44. Uttarkashi	Uttar Pradesh
45. Churu	Rajasthan
46. Wayanad	Kerala
47. Idukki	Kerala
48. Jalpaiguri	West Bengal
49. Almora	Uttar Pradesh
50. Pithoragarh	Uttar Pradesh
51. Tehri Garhwal	Uttar Pradesh
52. The Dangs	Gujarat
53. Banswara	Rajasthan

B. Category ‘B’ Industrially backward districts :

1. Srikakulam	Andhra Pradesh
2. Mahbubnagar	Andhra Pradesh
3. Katiyar	Bihar
4. Bhagalpur	Bihar
5. Gopalganj	Bihar
6. Darbhanga	Bihar
7. West Champaran	Bihar
8. Saran	Bihar
9. Bhojpur	Bihar
10. Samastipur	Bihar
11. Deoghar	Bihar
12. Nalanda	Bihar
13. Gaya	Bihar
14. Mazaffarpur	Bihar
15. Rohtas	Bihar
16. Banaskantha	Gujarat
17. Sabarkantha	Gujarat
18. Bidar	Karnataka
19. Seoni	Madhya Pradesh
20. Tikamgarh	Madhya Pradesh
21. Shivpuri	Madhya Pradesh
22. Balaghat	Madhya Pradesh
23. Jhabua	Madhya Pradesh
24. Sidhi	Madhya Pradesh
25. Vidisha	Madhya Pradesh
26. Raigarh	Madhya Pradesh
27. Morena	Madhya Pradesh
28. Betul	Madhya Pradesh
29. Rajgarh	Madhya Pradesh
30. Rajnandgaon	Madhya Pradesh
31. Sagar	Madhya Pradesh
32. Beed	Maharashtra
33. Bolangir	Orissa
34. Mayurbhanj	Orissa
35. Balasore	Orissa
36. Ganjam	Orissa
37. Dungarpur	Rajasthan
38. Dholpur	Rajasthan
39. Sawai Madhopur	Rajasthan
40. Tonk	Rajasthan
41. Nagaur	Rajasthan
42. Jhalawar	Rajasthan
43. Sikar	Rajasthan
44. Hardoi	Uttar Pradesh
45. Lalitpur	Uttar Pradesh
46. Hamirpur	Uttar Pradesh
47. Badaun	Uttar Pradesh
48. Fatehpur	Uttar Pradesh
49. Azamgarh	Uttar Pradesh
50. Etah	Uttar Pradesh
51. Barabanki	Uttar Pradesh
52. Etawah	Uttar Pradesh
53. Deoria	Uttar Pradesh
54. Ghazipur	Uttar Pradesh
55. Ballia	Uttar Pradesh
56. Jaunpur	Uttar Pradesh
57. Sitapur	Uttar Pradesh
58. Jalaun	Uttar Pradesh
59. Unnao	Uttar Pradesh
60. Faizabad	Uttar Pradesh
61. Kanpur Dehat	Uttar Pradesh
62. Mainpur	Uttar Pradesh
63. Gonda	Uttar Pradesh
64. Farukhabad	Uttar Pradesh
65. Sultanpur	Uttar Pradesh
66. Mirzapur	Uttar Pradesh
67. Mau	Uttar Pradesh
68. Purulia	West Bengal
69. Birbhum	West Bengal
70. Midnapore	West Bengal

Explanation : For the purpose of this notification, the districts correspond to the districts mentioned in the Report of the Study Group on Identification of Backward Districts dated 4th October, 1994 and are based on districts as they stood in the Census Report of 1991. Where a district specified as an industrially backward district for the purposes of section 80-IB is reorganised, either by split or otherwise, after the Census Report of 1991, all the areas comprised in the district as it existed in the Census Report of 1991 will qualify for the purpose of this rule.

2. This notification shall apply for the previous year relevant to the assessment year commencing on the 1st day of April, 2000 and subsequent assessment years—Notification : No. SO 440(E), dated 15-6-1999.

Notified industries in North-Eastern Region under section 80-IB(4), second proviso  - In exercise of the powers conferred by the second proviso to sub-section (4) of section 80-IB of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the following industries in the North-Eastern Region to be the industries for the purposes of said proviso, namely:—

Name of Industries in the North-Eastern Region:

1. Fruit and Vegetable Processing industries manufacturing or producing—

(i) Canned or Bottled Products;

(ii) Aseptic Packaged Products;

(iii) Frozen Products;

(iv) Dehydrated Products;

(v) Oleoresins.

2. Meat and Poultry Product industries manufacturing or producing—

(i) Meat Products (buffalo, sheep, goat and pork);

(ii) Poultry production;

(iii) Egg Powered Plant.

3. Cereal Based Products industries manufacturing or producing—

(i) Maize Milling including starch and its derivatives;

(ii) Bread Biscuits, Breakfast Cereals, etc.

4. Food and Beverage industries manufacturing or producing—

(i) Snacks;

(ii) Non-alcoholic beverages;

(iii) Confectionery including chocolate;

(iv) Pasta Products;

(v) Processed Spices, etc.;

(vi) Processed Pulses;

(vii) Tapioca Products.

5. Milk and Milk based Product industries manufacturing or producing—

(i) Milk Powder;

(ii) Cheese;

(iii) Butter/Ghee;

(iv) Infant food;

(v) Weaning Food;

(vi) Malted Milk Food.

6. Food Packaging Industry

7. Paper Products Industry

8. Jute & Mesta Products Industry

9. Cattle/Poultry/Fishery Feed Products Industry

10. Edible Oil Processing/Vanaspati Industry

11. Processing of Essential Oils and Fragrances Industry

12. Processing and Raising of Plantation Crops industries manufacturing or producing Tea, Rubber, Coffee, Coconuts, etc.

13. Gas based Intermediate Products industry manufacturing or producing—

(i) Gas Exploration and Production;

(ii) Gas Distribution and Bottling;

(iii) Power Generation;

(iv) Plastics;

(v) Yarn Raw Materials;

(vi) Fertilizers;

(vii) Methanol;

(viii) Formaldehyde and FR Resin Melamine and MF Resin;

(ix) Methylamine, Hexamethiene Tetramine, Ammonium Bi-Carbonate;

(x) Nitric Acid and Ammonium Nitrate;

(xi) Carbon Black;

(xii) Polymer Chips;

14. Agro forestry based Industry

15. Horticulture Industry

16. Mineral based Industry

17. Floriculture Industry

18. Agro based Industry. - Notification No. SO 627(E), dated 4-8-1999.

Notified areas falling outside local limits of municipality or cantonment board under section 80-IB(14) - In exercise of powers conferred by clause (f) of sub-section (14) of section 80-IB of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the stage of development of such area including the extent of and scope for urbanisation of such area and other relevant consideration specifies the areas shown in column 3 of the Schedule below and falling outside the local limits of the municipality or cantonment board, as the case may be, shown in the corresponding entry in column (2) thereof, for the purposes of the said section, namely :

Schedule

Sl. No.	Name of the municipality or cantonment board	Details of the area
(1)	(2)	(3)
1.	Mumbai, Calcutta, Delhi, Hyderabad, Chennai and New Delhi	Areas up to a distance of 15 kilometres in all directions from the municipal limits, or, as the case may be, cantonment limits.
2.	Ahmedabad, Bangalore, Kanpur, Lucknow, Nagpur and Pune	Areas up to a distance of 12 kilometres in all directions from the municipal limits, or, as the case may be, cantonment limits.
3.	Agra, Allahabad, Amritsar, Bhopal, Cochin, Coimbatore, Dhanbad, Gwalior, Indore, Jabalpur, Jaipur, Jamshedpur, Ludhiana, Madurai, Patna, Salem, Sholapur, Srinagar, Surat, Tiruchirapally, Trivandrum, Varanasi (Benaras) and Vadodara (Baroda)	Areas up to a distance of 10 kilometres in all directions from the municipal limits, or, as the case may be, cantonment limits.
4.	Any other municipality or cantonment board	Areas up to a distance of 8 kilometres in all directions from the municipal limits, or, as the case may be, cantonment limits.

2. It shall be deemed to have come into force on the 1st day of April, 2000—Notification : No. SO 1014, dated 6-10-1999.