Deduction under section 32AC to be available in the year of installation in respect of actual cost of new plant and machinery acquired in the P.Y.2015-16 and P.Y.2016-17, if the actual cost of such new plant and machinery acquired in the relevant previous year exceeds ` 25 crores, even if the new plant and machinery has not been installed in the relevant previous year but has been installed on or before 31.3.2017 :
Effective from: A.Y.2016-17
(i) Section 32AC(1A) provides for deduction@15% of actual cost of new plant and machinery acquired and installed in a previous year by a company engaged in manufacturing or production of any article or thing, if the actual cost exceeds Rs 25 crore. However, for claim of deduction, the acquisition and installation had to be done in the same previous year.
(ii) This tax benefit is available in respect of new plant and machinery acquired and installed in the P.Y.2014-15, P.Y.2015-16 and P.Y.2016-17, provided the actual cost of plant and machinery acquired and installed in the relevant previous year exceeds Rs 25 crore.
(iii) The requirement of acquisition and installation in the year causes genuine hardship in cases in which assets having been acquired could not be installed in same previous year.
(iv) Therefore, section 32AC(1A) has been amended to provide that acquisition of the plant and machinery, the actual cost of which exceeds Rs 25 crore, has to be made in the relevant previous year. However, installation may be made by 31.03.2017 in order to avail the benefit of deduction of 15%.
(v) Where the installation of the new asset is in a year other than the year of acquisition, the deduction under this sub-section shall be allowed in the year in which the new asset is installed, provided the installation is on or before 31.3.2017
Example
|
Company |
Actual cost
of new plant and machinery (Rs) |
Previous
year of acquisition |
Previous
Year of installation |
Assessment
Year in which deduction u/s 32AC can be claimed |
Deduction u/s 32AC (Rs ) |
|
B Ltd. |
40 crores |
P.Y.2015-16 | P.Y.2016-17 | A.Y.2017-18 | 6 crores
|
| C Ltd. | 50 crores | P.Y.2016-17 | P.Y.2016-17 | A.Y.2017-18 |
7.50 crores |
|
D Ltd. |
60 crores |
P.Y.2016-17 | P.Y.2017-18 | – |
– |