Income-tax Act : Depreciation. Indian Bare Acts :

Income-tax Act,1961

Act No : 43

Section : Depreciation.

32. Depreciation (1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed- 2[(i) * * *1 ------------------------------------------------------------------------ 1 Substituted for "(43C)" by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier, "(43C)" was substituted for "(43B)" by the Finance Act, 1988, w.e.f. 1-4-1988; "43B" for "43A" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and "43A" for "43" by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 2 Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to the substitution, clause (ii), as substituted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976, read as under: -> -> ------------------------------------------------------------------------ 1.160 (ii) 1[in the case of any block of assets, such percentage on the written down value thereof as may be prescribed']: 1[4[Provided that where the actual cost of any machinery or plant does not exceed 5[five thousand] rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession:] 6[Provided 7[further] that no deduction shall be allowed under this clause in respect of- (a) any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975, unless it is used- 8(i) in a business of running it on hire for tourists; or (ii) outside India in his business or profession in another country; and (b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more years under an agreement entered into by the Central Government under section 42: Provided 8[also] that where any asset falling within a block of assets is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this clause in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed under this clause in the case of block of assets comprising such asset:] ---------------------------------------------------------------------- "(i) in the case of ships other than ships ordinarily plying on inland waters, such percentage on the actual cost thereof to the assesses as may, in any case or class of cases or in respect of any period or periods, be prescribed: Provided that different percentages may be prescribed for different periods having regard to the date of acquisition of the ship;" 1 Substituted for "in the case of buildings, machinery, plant or furniture, other than ships covered by clause (i), such percentage on the written down value thereof as may in any case or class of cases be prescribed" by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 3 Being omitted by the Finance Act, 1995, w.e.f. 1-4-1996. 4 Inserted by the Finance Act, 1966, w.e.f. 1-4-1966. 5 Substituted for "seven hundred and fifty" by the Finance Act, 1983, w.e.f. 1-4-1984. 6 Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to the substitution, the second proviso, as inserted by the Finance Act, 1975, w.e.f. 1-4-1975 and amended by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-41988, read as under: "Provided further that no deduction shall be allowed under this clause in respect of any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975, and is used otherwise than in a business of running it on hire for tourists:" 7 Being omitted by the Finance Act, 1995, w.e.f. 1-4-1996. 9 Being substituted by "further" by the Finance Act, 1995, w.e.f. 1- 4-1996. ----------------------------------------------------------------------- 1.161 1[Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventy-five per cent of the amount calculated at the percentage, on the written down value of such assets, prescribed under this Act immediately before the commencement of the Taxation Laws (Amendment) Act, 1991.] 2 [Explanation 1.-Where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work, in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation 2.-For the purposes of this clause "written down value of the block of assets" shall have the same meaning as in clause (c) of sub-section (6) of section 43;] 3[(iia) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f 1-4-1988.] ---------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment) Act, 1991, w.e.f. 15-1- 1991. 2 Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 3 Prior to its omission, clause (iia), as inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, read as under: "(iia) in the case of any new machinery or plant (other than ships and aircraft) which has been installed after the 31st day of March, 1980, but before the 1st day of April, 1985, a further sum equal to one-half of the amount admissible under clause (ii) (exclusive of extra allowance for double or multiple shift working of the machinery or plant and the extra allowance in respect of machinery or plant installed in any premises used as a hotel) in respect of the previous year in which such machinery or plant is installed or, if the machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year: Provided that no deduction shall be allowed under this clause in respect of,- (a)any machinery or plant installed in any office premises or any residential accommodation; (b)any office appliances or road transport vehicles; and (c)any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head 'Profits and gains of business or profession' of any one previous year. Explanation.-For the purposes of this clause;- (a) 'new machinery or plant' shall have the meaning assigned to it in clause (2) of the Explanation below clause (vi) of this sub-section; (b) 'residential accommodation' includes accommodation in the nature of a guest house but does not include premises used as a hotel;' ----------------------------------------------------------------------- 1.162 1[(iii) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988.] 2[(iv) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988.] 3[(v) Omitted by the Taxation Laws (Amendment & Miscellaneous ---------------------------------------------------------------------- 1 Prior to its omission, clause (iii), as amended by the Finance Act, 1966, w.e.f. 1-4-1966 and the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967, read as under: "(iii) in the case of any building, machinery, plant or furniture which is sold, discarded, demolished or destroyed in the previous year (other than the previous year in which it is first brought into use), the amount by which the moneys payable in respect of such building, machinery, plant or furniture, together with the amount of scrap value, if any, fall short of the written down value thereof: Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,- (1)'moneys payable' in respect of any building, machinery, plant or furniture includes- (a)any insurance, salvage or compensation moneys payable in respect thereof; (b)where the building, machinery, plant or furniture is sold, the price for which it is sold, so, however, that where the actual cost of a motor car is, in accordance with the proviso to clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect of such motor car shall be taken to be a sum which bears to the amount for which the motor car is sold or, as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso; (2)'sold' includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian company;" 2 Prior to the omission, clause (iv), as amended by the Finance Act, 1966, w.e.f. 1-4-1966; Finance Act, 1976, w.e.f. 1-4-1977, Finance Act, 1978, w.e.f. 1-4-1979 and Finance Act, 1983, w.e.f. 1-4- 1984, read as under: "(iv) in the case of any building which has been newly erected after the 31st day of March, 1961, where the building is used solely for the purpose of residence of persons employed in the business and the income of each such person chargeable under the head "Salaries" is ten thousand rupees or less, or where the building is used solely or mainly for the welfare of such persons as a hospital, creche, school, canteen, library, recreational centre, shelter, restroom, or lunch room, a sum equal to forty per cent of the actual cost of the building to the assessee in respect of the previous year of erection of the building.' 3 Prior to the omission, clause (v), as inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and amended by the Finance Act, 1983, w.e.f. 1-4-1984, read as under: "(v) in the case of any new building, the erection of which is completed after the 31st day of March, 1967, where the building is owned by an Indian company and used by such company as a hotel and such hotel is for the time being approved in this behalf by the Central Government, a sum equal to ---------------------------------------------------------------------- 1.163 Provisions) Act, 1986, w.e.f. 1-4-1988.] 1[(vi) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f 1-4-1988.] ------------------------------------------------------------------------ -> -> twenty-five per cent of the actual cost of erection of the building to the assessee, in respect of the previous year in which the erection of the building is completed or, if such building is first brought into use as a hotel in the immediately succeeding previous year, then in respect of that previous year;" 1 Prior to the omission, clause (vi), as inserted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1975 and amended by the Finance Act, 1976, w.e.f. 1-4-1976, read as under-. "(vi) in the case of a new ship or a new aircraft acquired after the 31st day of May, 1974, by an assessee engaged in the business of the operation of ships or aircraft or in the case of the new machinery or plant (other than the office appliances or road transport vehicles) installed after that date for the purpose' of business of generation or distribution of electricity or any other for-in of the power or of construction, manufacture or production of any one or more of the articles or things specified in items 1 to 24 (both inclusive) in the list in the Ninth Schedule or in the case of new machinery or plant (other than office appliances or road transport vehicles) installed after that date in a small scale industrial under-taking for the purposes of business of manufacture or production of any other articles or things, a sum equal to twenty per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee, in respect of the previous year in which the ship or aircraft is acquired or the machinery or plant is installed or if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year; but any such sum shall not deductible in determining the written down value for the purposes of clause (ii): Provided that the assessee may, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income for the assessment year in respect of which he first becomes entitled to deduction under this clause, furnish to the Income-tax Officer a declaration in writing that the provisions of this clause, shall not apply to him, and if he does so, the provisions of this clause shall not apply to him for that assessment year and for every subsequent assessment year; so, however, that the assessee may, by notice in writing furnished to the Income- tax Officer before the expiry of the time allowed under sub- section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income for any such subsequent assessment year, revoke his declaration and upon such revocation, the provisions of this clause shall apply to the assessee for that subsequent assessment year and for every assessment year thereafter: Provided further that no deduction shall be allowed under this clause in respect of- (a)any machinery or plant installed in any office premises or any residential accommodation, including any accommodation in the nature of a guest house; (b)any ship, aircraft, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33; and (c)any ship or aircraft acquired after the 31st day of March, 1976, or any machinery or plant installed after that date. Explanation.-For the purposes of this clause,- (1) "new ship" or 'new aircraft" includes a ship or aircraft which before the date of the acquisition by the assessee was used by any other person, if it was not at any time previous to the date -> -> ---------------------------------------------------------------------- 1.164 1[(1A) Omitted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988.] (2) Where, in the assessment of the assessee 2[* * *1 full effect cannot -> -> of such acquisition owned by any person resident in India; ---------------------------------------------------------------------- (2)'new machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely:- (a)such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India; (b)such machinery or plant is imported into India from any country outside India; and (c)no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee; (3)an industrial undertaking shall be deemed to be a small scale industrial undertaking, if the aggregate value of the machinery and plant installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed seven hundred and fifty thousand rupees; and for this purpose the value of any machinery or plant shall be,- (a)in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee; and (b)in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant.' 1 Prior to the omission, sub-section (1A), as inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-197 1, read as under: "(1A) Where the business or profession is carried on in a building not owned by the assessee but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession after the 31st day of March, 1970, on the construction of any structure or doing of any work in or in relation to, and by way of renovation or extension of, or improvement to, the building then, in respect of depreciation of such structure or work, the following deductions shall, subject to the provisions of section 34, be allowed:- (i) such percentage on the written down value of the structure or work as may in any case or class of cases be prescribed; (ii) in the case of any such structure or work which is sold, discarded, demolished, destroyed or is surrendered as a result of the determination of the lease or other right of occupancy in respect of the building in the previous year (other than the previous year in which it is constructed or done) the amount by which the moneys payable in respect of such structure or work together with the amount of scrap value if any, fall short of the written down value thereof: Provided that such deficiency is actually written off in the books of the assessee. Explanation.-For the purposes of this clause,- , (i) "moneys payable", in respect of any structure or work, includes- (a) any insurance or compensation moneys payable in respect thereof; (b) where the structure or work is sold, the price for which it is sold; and (ii) "sold" shall have the meaning assigned to it in the Explanation to clause (iii) of sub-section (1)." 2 The words "or, if the assessee is a registered firm or an unregistered firm assessed as a registered firm, in the assessment of its partners" omitted by the Finance ---------------------------------------------------------------------- 1.165 be given to any allowance 1[under clause (ii) of sub-section (1)] in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub- section (2) of section 72 and sub-section (3) of section 73, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years. 1 Substituted for "under clause (i) or clause (ii) or clause (iia) or clause (iv) or clause (v) or clause (vi) of sub-section (1) or under clause (i) of sub-section (1A)" by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. ---------------------------------------------------------------------- 1.166 1[32A. Investment allowance 2 3(1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee: 4 [Provided that in respect of a ship or an aircraft or machinery or plant specified in sub-section (8B), this sub-section shall have effect as if for the words "twenty-five percent", the words "twenty per cent" had been substituted:] Provided 5[further] that no deduction shall be allowed under this section in respect of- (a) any machinery or plant installed in any office premises or an residential accommodation, including any accommodation in the nature of a guest house; (b) any office appliances or road transport vehicles; (c) any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33; and (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head ------------------------------------------------------------------------ 1 Inserted by the Finance Act, 1976, w.e.f. 1-4-1976. 2 The allowance under this section will not be available in respect of any new ship or aircraft acquired or any new machinery or plant installed after 31 March, 1990. 4 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 5 ibid. ----------------------------------------------------------------------- 1.167 "Profits and gains of business or profession" of any one previous year. 1[Explanation.-For the purposes of this sub-section, "actual cost" means the actual cost of the ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been met out of the amount released to the assessee under sub-section (6) of section 32AB.] (2) The ship or aircraft or machinery or plant referred to in, sub-section (1) shall be the following, namely:- (a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships or aircraft; (b) any new machinery or plant installed after the 31st day of March, 1976,- (i) for the purposes of business of generation or distribution of electricity or any other form of power; or 2[(ii) in a small scale industrial undertaking for the purposes of business of manufacture or production of any article or thing; or (iii) in any other industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule:] 3 [Provided that nothing contained in clauses (a) and (b) shall (i) a new ship or new aircraft acquired, or (ii) any new machinery or plant installed, after the 31st day of March, 1987 but before the 1st day of April, 1988, unless such ship or aircraft is acquired or such machinery or plant is installed in the circumstances specified in clause (a) of sub-section (8B) and the assessee furnishes evidence to the satisfaction of the Assessing Officer as specified in that clause;] 4[ (c) any new machinery or plant installed after the 31st day of March, 1983, but before the 5[1st day of April, 1987,] for the purposes of business of repairs to ocean-going vessels or other powered craft if the business is carried on by an Indian company and the business so carried on is for the time being approved' for the purposes of this clause by the Central Government.] ---------------------------------------------------------------------- 1 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 2 Substituted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978. 3 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 4 Inserted by the Finance Act, 1983, w.e.f. 1-4-1984. 5 Substituted for "1st day of April, 1988" by the Finance Act, 1986, w.e.f. 1-4-1987. ----------------------------------------------------------------------- 1.168 Explanation.-For the purposes of this sub-section and 1[sub- sections (2B), 2[, (2C) and (4)],- 3[(1) (a) 'new ship' or "new aircraft" includes a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India; (b) "new machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely,- (i)such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India; (ii)such machinery or plant is imported into India from any country outside India; and (iii)no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee,) (2) an industrial undertaking shall be deemed to be a small scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the under-taking 4 [does not exceed,- 5[(i)in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees; (ii) in a case where the previous year ends after the 31st day of July, 1980, but before the 18th day of March, 1985, twenty lakh rupees; and (iii)in a case where the previous year ends after the 17th day of March, 1985, thirty-five lakh rupees,]] and for this purpose the value of any machinery or plant shall be,- --------------------------------------------------------------------- 1 Substituted for 'sub-section (4), by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978. 2 Inserted by the Finance Act, 1983, w.e.f. 1-6-1983. 3 Substituted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to the substitution, it read as under: "(1) 'new ship' or "new aircraft" or "new machinery or plant' shall have the same meanings as in the Explanation to clause (vi) of sub-section (1) of section 32;" 4 Substituted for "does not exceed ten lakh rupees" by the Finance Act, 1981, w.e.f. 1-4-1981. 5 Substituted for clauses (i) and (ii) by the Finance Act, 1986, w.r.e.f. 1-4-1985. Prior to the substitution, these clauses read as under: "(i) in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees; and (ii) in a case where the previous year ends after the 31st day of July, 1980, twenty lakh rupees;" ----------------------------------------------------------------------- 1.169 (a) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee; and (b) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant. 1[(2A) The deduction under sub-section (1) shall not be denied in respect of any machinery or plant installed and used mainly for the purposes of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule, by reason only that such machinery or plant is also used for the purposes of business of construction, manufacture or production of any article or thing specified in the said list.] 2[(2B) Where any new machinery or plant is installed after the 30th day of June, 1977, but before the 1st day of April, 3[1987], for the purposes of business of manufacture or production of any article or thing and such article or thing- (a) is manufactured or produced by using any technology (including any process) or other know-how developed in; or (b) is an article or thing invented in, a laboratory owned or financed by the Government, or a laboratory owned by a public sector company or a university or by an institution recognised in this behalf by the prescribed authority, 4 the provisions of sub-section (1) shall have effect in relation to such machinery or plant as if for the words "twenty-five per cent", the words "thirty-five per cent" had been substituted, if the following conditions are fulfilled, namely,- (i) the right to use such technology (including any process) or other know-how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner; (ii) the assessee furnishes, along with his return of income for the assessment year for which the deduction is claimed, a certificate from the prescribed authority' to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory; and (iii) the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule. Explanation.-For the purposes of this sub-section,- (a) "laboratory financed by the Government" means a laboratory owned by any body [including a society registered under the ----------------------------------------------------------------------- 1 Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978. 2 Ibid. 3 Substituted for "1982" by the Finance Act, 1982, w.e.f. 1-4-1982. 5 Ibid. ----------------------------------------------------------------------- 1.170 Societies Registration Act, 1860 (21 of 1860)], and financed wholly or mainly by the Government; 1[(b) Omitted by the Finance Act, 1987, w.e.f 1-4-1987.] (c) "University" means a university established or incorporated by or under a Central, State or Provincial Act and includes an institution declared under section 3 of the University Grants Commission Act, 19562 (3 of 1956), to be a university for the purposes of that Act.] 3[(2C) Where any new machinery or plant, being machinery or plant which would assist in control of pollution or protection of environment and which has been notified4 in this behalf by the Central Government in the Official Gazette, is installed after the 31st day of May, 1983 4[but before the 1st day of April, 1987] in any industrial undertaking referred to in sub-clause (i) or sub-clause (ii) or sub- clause (iii) of clause (b) of sub-section (2), the provisions of sub- section (1) shall have effect in relation to such machinery or plant as if for the words "twenty-five per cent", the words "thirty-five per cent" had been substituted.] (3) Where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, or, as the case may be, the immediately succeeding previous year (the total income for this purpose being computed after deduction of the allowances under section 33 and section 33A, but without making any deduction under sub-section (1) of this section or any deduction under Chapter VI-A) is nil or is less than the full amount of the investment allowance,- (i) the sum to be allowed by way of investment allowance for that assessment year under sub-section (1) shall be only such amount as is sufficient to reduce the said total income to nil; and (ii) the amount of the investment allowance, to the extent to which it has not been allowed as aforesaid, shall be carried forward to the following assessment year, and the investment allowance to be allowed for the following assessment year shall be such amount as is sufficient to reduce the total income of the assessee assessable for that assessment year, computed in the manner aforesaid, to nil, and the balance of the investment allowance, if any, still outstanding shall be carried for-ward to the following assessment year and so on, so, however, that no portion of the investment allowance shall be carried forward for more than eight assessment years immediately succeeding the assessment year relevant to the previous year in which the ship or aircraft was acquired or the ---------------------------------------------------------------------- 1 Prior to the omission, it read as under: "(b) "Public sector company" means any corporation established by or under any Central, State or Provincial Act, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);" 3 Inserted by the Finance Act, 1983, w.e.f. 1-6-1983. 5 Inserted by Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4- 1989. ------------------------------------------------------------------------ 1.171 machinery or plant was installed or, as the case may be, the immediately succeeding previous year. Explanation.-Where for any assessment year, investment allowance is to be allowed in accordance with the provisions of this sub-section in respect of any ship or aircraft acquired or any machinery or plant installed in more than one previous year, and the total income of the assessee assessable for that assessment year [the total income for this purpose being computed after deduction of the allowances under section 33 and section 33A, but without making any deduction under sub-section (1) of this section or any deduction under Chapter VI-A] is less than the aggregate of the amounts due to be allowed in respect of the assets aforesaid for that assessment year, the following procedure shall be followed, namely,- (a) the allowance under clause (ii) shall be made before any allowance under clause (i) is made; and (b) where an allowance has to be made under clause (ii) in respect of amounts carried forward from more than one assessment year, the amount carried forward from an earlier assessment year shall be allowed before any amount carried forward from a later assessment year. (4) The deduction under sub-section (1) shall be allowed only if the following conditions are fulfilled, namely,- (i) the particulars prescribed in this behalf have been furnished by the assessee in respect of the ship or aircraft or machinery or plant; (ii) an amount equal to seventy-five per cent of the investment allowance to be actually allowed is debited to the profit and loss account of 1[any previous year in respect of which the deduction is to be allowed under sub-section (3) or any earlier previous year (being a previous year not earlier than the year in which the ship or aircraft was acquired or the machinery or plant was installed or the ship, aircraft, machinery or plant was first put to use)] and credited to a reserve account (to be called the "Investment Allowance Reserve Account") to be utilised,- (a) for the purposes of acquiring, before the expiry of a period of ten years next following the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, a new ship or a new aircraft or new machinery or plant [other than machinery or plant of the nature referred to in clauses (a), (b) and (d) of the 2[second] proviso to sub-section (1)] for the purposes of the business of the undertaking; and (b) until the acquisition of a new ship or a new aircraft or new machinery or plant as aforesaid, for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India: ----------------------------------------------------------------------- 1 Substituted for "the previous year in respect of which the deduction is to be allowed" by the Finance Act, 1990, w.r.e.f. 1-4- 1976. 2 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. ---------------------------------------------------------------------- 1.172 Provided that this clause shall have effect in respect of a ship as if for the word "seventy-five", the word "fifty" had been substituted. Explanation.-Where the amount debited to the profit and loss account and credited to the Investment Allowance Reserve Account under this subsection is not less than the amount required to be so credited on the basis of the amount of deduction in respect of investment allowance claimed in the return made by the assessee under section 139, but a higher deduction in respect of the investment allowance is admissible on the basis of the total income as proposed to be computed by the 3[Assessing] Officer under section 143, the 4[Assessing] Officer shall, by notice in writing in this behalf, allow the assessee an opportunity to credit within the time specified in the notice or within such further time as the 3[Assessing] Officer may allow, a further amount to the Investment Allowance Reserve Account out of the profits and gains of the previous year in which such notice is served on the assessee or of the immediately preceding previous year, if the accounts for that year have not been made up; and, if the assessee credits any further amount to such account within the time aforesaid, the amount so credited shall be deemed to have been credited to the Investment Allowance Reserve Account of the previous year in which the deduction is admissible and such amount shall not be taken into account in determining the adequacy of the reserve required to be created by the assessee in respect of the previous year in which such further credit is made: Provided that such opportunity shall not be allowed by the 4 [Assessing] Officer in a case where the difference in the total income as proposed to be computed by him and the total income as returned by the assessee arises out of the application of the proviso to sub- section (1) of section 145 or sub-section (2) of that section or the omission by the assessee to disclose his income fully and truly. (5) Any allowance made under this section in respect of any ship, aircraft, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act,- (a) if the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed; or (b) if at any time before the expiry of ten years from the end of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed, the assessee does not utilise the amount credited to the reserve account under sub-section (4) for the purposes of acquiring a new ship or a new aircraft or new machinery or plant [other than machinery or plant of the nature referred to in clauses (a), (b) and (d) of the 5[second] proviso to ---------------------------------------------------------------------- 1 Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 2 Ibid. 3 Ibid. 4 Ibid. 5 Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. ----------------------------------------------------------------------- 1.173 sub-section (1)] for the purposes of the business of the undertaking; or (c) if at any time before the expiry of the ten years aforesaid, the assessee utilises the amount credited to the reserve account under sub-section (4) for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any assets outside India or for any other purpose which is not a purpose of the business of the undertaking, and the provisions of sub-section (4A) of section 155 shall apply accordingly: Provided that nothing in clause (a) shall apply,- (i) where the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee to the Government, a local authority, a corporation established by a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 19561 (1 of 1956); or (ii) where the sale or transfer of the ship, aircraft, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-section (6) or sub-section (7). (6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated company any ship, aircraft, machinery or plant, in respect of which investment allowance has been allowed to the amalgamating company under sub-section (1),- (a) the amalgamated company shall continue to fulfil the conditions mentioned in sub-section (4) in respect of the reserve created by the amalgamating company and in respect of the period within which such ship, aircraft, machinery or plant shall not be sold or otherwise transferred and in default of any of these conditions, the provisions of sub- section (4A) of section 155 shall apply to the amalgamated company as they would have applied to the amalgamating company had it committed the default; and (b) the balance of investment allowance, if any, still outstanding to the amalgamating company in respect of such ship, aircraft, machinery or plant, shall be allowed to the amalgamated company in accordance with the provisions of sub- section (3), so, however, that the total period for which the balance of investment allowance shall be carried forward in the assessments of the amalgamating company and the amalgamated company shall not exceed the period of eight years specified in sub-section (3) and the amalgamated company shall be treated as the assessee in respect of such ship, aircraft, machinery or plant for the purposes of this section. (7) Where a firm is succeeded to by a company in the business carried company any ship, aircraft, machinery or plant, the provisions of clauses (a) and (b) of sub-section (6) shall, so far as may be, apply to the firm and the company. ----------------------------------------------------------------------- 1.174 Explanation.-The provisions of this sub-section shall apply only where- (i) all the property of the firm relating to the business immediately before the succession becomes the property of the company; (ii) all the liabilities of the firm relating to the business immediately before the succession become the liabilities of the company; and (iii) all the shareholders of the company were partners of the firm immediately before the succession. (8) The Central Government, if it considers necessary or expedient so to do, may, by notification in the Official Gazette, direct that the deduction allowable under this section shall not be allowed in respect of any ship or aircraft acquired or any machinery or plant installed after such date 1[* * *] as may be specified therein. 2[(8A) The Central Government, if it considers necessary or expedient so to do, may, by notification in the Official Gazette, omit any article or thing from the list of articles or things specified in the Eleventh Schedule.] 3[(8B) Notwithstanding anything contained in sub-section (8) or the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. GSR 870(E), dated the 12th June, 1986, issued thereunder, the provisions of this section shall apply in respect of,- (a) (i) a new ship or new aircraft acquired after the 31st day of March, 1987 but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that he had, before the 12th day of June, 1986, entered into a contract for the purchase of such ship or aircraft with the builder or manufacturer or owner thereof, as the case may be; (ii) any new machinery or plant installed after the 31st day of March, 1987 but before the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing Officer that before the 12th day of June, 1986, he had purchased such machinery or plant or had entered into a contract for the purchase of such machinery or plant with the manufacturer or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant has been manufactured in an undertaking owned by the assessee, taken steps for the manufacture of such machinery or plant: --------------------------------------------------------------------- 1 The words 'not being earlier than three years from the date of such notification' omitted by the Finance Act, 1986, w.e.f. 1-4-1986. 2 Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978. 3 Substituted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Prior to the substitution, sub-section (8B), as inserted by the Finance Act, 1986, w.e.f. 1-4-1987, read as under: "(8B) Subject to the provisions of clause (ii) of sub-section (3), no deduction shall be allowed under this section in the case of an assessee who has claimed the deduction allowable under section 32AB." ----------------------------------------------------------------------- 1.175 Provided that nothing contained in sub-section (1) shall entitle the assessee to claim deduction in respect of a ship or aircraft or machinery or plant referred to in this clause in any previous year except the previous year relevant to the assessment year commencing on the 1st day of April, 1989; (b) a new ship or new aircraft acquired or any new machinery or plant installed after the 31st day of March, 1988, but before such date as the Central Government, if it considers necessary or expedient so to do, may, by notification' in the Official Gazette, specify in this behalf. (8C) Subject to the provisions of clause (ii) of sub-section (3), where a deduction has been allowed to an assessee under sub-section (1) in any assessment year, no deduction shall be allowed to the assessee under section 32AB in the said assessment year (hereinafter referred to as the initial assessment year) and a block of further period of four years beginning with the assessment year immediately succeeding the initial assessment year.] 2[(9) Omitted by the Finance Act, 1990, w.r.e.f. 1-4-1976.]] 3[32AB. Investment deposit account4 (1) Subject to the other provisions of this section, where an assessee, whose total income includes income chargeable to tax under the head "Profits and gains of business or profession", has, out of such income,- (a) deposited any amount in an account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier; or ----------------------------------------------------------------------- 1 A notification has been issued to provide that the allowance under this section will not be available in respect of any new ship or aircraft acquired or any new machinery or plant installed after 31 March, 1990: 2 Prior to the omission, sub-section (9) read as under: "(9) For the removal of doubts, it is hereby declared that the deduction under sub-section (1) shall not be denied by reason only that the amount debited to the profit and loss account of the relevant previous year and credited to the Investment Allowance Reserve Account exceeds the amount of the profit of such previous year (as arrived at without making the debit aforesaid), in accordance with the profit and loss account." 3 Inserted by the Finance Act, 1986, w.e.f. 1-4-1987. 4 The Finance Act, 1990, has declared that the allowance under this section will not be available from assessment year 1991-92 onwards: see second proviso to sub-section (1). ----------------------------------------------------------------------- 1.176 (b) utilised any amount during the previous year for the purchase of any new ship, new aircraft, new machinery or plant, without depositing any amount in the deposit account under clause (a), in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) to be framed by the Central Government,' or if the assessee is carrying on the business of growing and manufacturing tea in India, to be approved in this behalf by the Tea Board, the assessee shall be allowed a deduction 2[(such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72)] of- (i) a sum equal to the amount, or the aggregate of the amounts, so deposited and any amount so utilised; or (ii) a sum equal to twenty per cent of the profits of 3[* business or profession as computed in the accounts of the assessee audited in accordance with sub-section (5), whichever is less: 4 [Provided that where such assessee is a firm, or any association of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or as the case may be, any 'Member, of such firm, association of persons or body of individuals:] 5[Provided further that no such deduction shall be allowed in relation to the assessment year commencing on the 1st day of April, 1991, or any subsequent assessment year.] (2) For the purposes of this section,- 6[(i)Omitted by the Finance Act, 1989, w.e.f. 1-4-1991.] 7[(ii) "new ship" or "new aircraft" includes a ship or aircraft which before the date of acquisition by the assessee was used by any other ----------------------------------------------------------------------- 1 The Investment Deposit Account Scheme, 1986 has been framed under this section. 2 Inserted by the Finance Act, 1987, w.e.f. 1-4-1987. 3 The word 'eligible' omitted by the Finance Act, 1989, w.e.f. 1-4- 1991. 4 Inserted by the Finance Act, 1987, w.e.f. 1-4-1987. 5 Inserted by the Finance Act, 1990, w.e.f. 1-4-1990. 6 Prior to the omission, clause (i) read as under: "(i) 'eligible business or profession" shall mean business or profession, other than- (a)the business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule carried on by an industrial undertaking, which is not a small scale industrial undertaking as defined in section 80HHA; (b)the business of leasing or hiring of machinery or plant to an industrial undertaking, other than a small scale industrial undertaking as defined in section 80HHA, engaged in the business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule;" 7 Substituted for clause (ii) by the Finance Act, 1987, w.e.f. 1-4- 1987. Prior to the substitution, clause (ii) read as under-. "(ii) 'new ship' or "new aircraft" or new machinery or plant' shall have the same meanings as in the Explanation to clause (vi) of sub-section (1) of section 32." ---------------------------------------------------------------------- 1.177 person, if it was not at any time previous to the date of such acquisition owned by any person resident in India; (iii) 'new machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely:- (a) such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee; (iv) "Tea Board" means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953).] (3) 1[The profits of business or profession of an assessee for the purposes of sub-section (1) shall] be an amount arrived at after deducting an amount equal to the depreciation computed in accordance with the provisions of sub-section (1) of section 32 from the amounts of profits computed in accordance with the requirements of Parts II and III of the 2[Schedule VI] to the Companies Act, 1956 (1 of 1956), 3[as increased by the aggregate of- (i) the amount of depreciation; (ii) the amount of income-tax paid or payable, and provision there for; (iii) the amount of surtax paid or payable under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (iv) the amounts carried to any reserves, by whatever name called; (v) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (vi) the amount by way of provision for losses of subsidiary companies; and (vii) the amount or amounts of dividends paid or proposed, if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account; 4[* ----------------------------------------------------------------------- 1 Substituted for 'The profits of eligible business or profession of an assessee for the purposes of sub-section (1) shall,- (a) in a case where separate accounts in respect of such eligible business or profession are maintained,' by the Finance Act, 1989, w.e.f. 1-4-1991. 2 Substituted for 'Sixth Schedule', ibid. 3 Substituted for 'as increased by an amount equal to the depreciation, if any, debited in the audited profit and loss account; and by the Finance Act, 1987, w.e.f. 1-4-1987. 4 The word "and" omitted by the Finance Act, 1989, w.e.f. 1-4-1991. ----------------------------------------------------------------------- 1.178 1[(b) Omitted by the Finance Act, 1989, w.e.f. 1-4-1991.] (4) No deduction under sub-section (1) shall be allowed in respect of any amount utilised for the purchase of- (a) any machinery or plant to be installed in any office premises or residential accommodation, including any accommodation in the nature of a guest house; (b) any office appliances (not being computers); (c) any road transport vehicles; (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year; 2[(e) any new machinery or plant to be installed in an industrial undertaking, other than a small scale industrial undertaking, as defined in section 80HHA, for the purposes of business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule.] (5) The deduction under sub-section (1) shall not be admissible unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form3 duly signed and verified by such accountant: Provided that in a case where the assessee is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the accounts of such business or profession audited under such law and furnishes the report of the audit as required under such other law and a further report in the form prescribed under this sub-section. 4[(5A) Any amount standing to the credit of the assessee in the deposit account shall not be allowed to be withdrawn before the expiry of a period of five years from the date of deposit except for the purposes specified in the scheme 5[or] in the circumstances specified below:- (a) closure of business; (b) death of an assessee; ----------------------------------------------------------------------- 1 Prior to the omission, clause (b) read as under: "(b) in a case where such separate accounts are not maintained or are not available, be such amount which bears to the total profits of the business or profession of the assessee after allowing depreciation in accordance with the provisions of sub-section (1) of section 32, the same proportion as the total sales, turnover or gross receipts of the eligible business or profession bear to the total sales, turnover or gross receipt of the business or profession carried on by the assessee." 2 Inserted by the Finance Act, 1989, w.e.f. 1-4-1991. 4 Inserted by the Finance Act, 1987, w.e.f. 1-4-1987. 5 Substituted for 'and' by the Finance Act, 1989, w.r.e.f. 1-4- 1987. ----------------------------------------------------------------------- 1.179 (c) partition of a Hindu undivided family; (d) dissolution of a firm; (e) liquidation of a company.] 1[Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall affect the operation of the provisions of sub-section (5AA) or sub-section (6) in relation to any withdrawals made from the deposit account either before or after the expiry of a period of five years from the date of deposit.] 2[5AA) Where any amount, standing to the credit of the assessee in the deposit account, is withdrawn during any previous year by the assessee in the circumstance specified in clause (a) or clause (d) of sub-section (5A), the whole of such amount shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year, as if the business had not closed or, as the case may be, the firm had not been dissolved.] 3[(5B) Where any amount standing to the credit of the assessee in the deposit account is utilised by the assessee for the purposes of any expenditure in connection with the 4[* * *] business or profession in accordance with the scheme, such expenditure shall not be allowed in computing the income chargeable under the head "Profits and gains of business or profession".] (6) Where any amount, standing to the credit of the assessee in the deposit account, released during any previous year by the Development Bank for being utilised by the assessee for the purposes specified in the scheme or at the closure of the account, 5[[in circumstances other than the circumstances specified in clauses (b), (c) and (e) of sub-section (5A)]], is not utilised in accordance with 6[, and within the time specified in,] the scheme, either wholly or in part, 7[* * *] the whole of such amount or as the case may be, part thereof which is not so utilised shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year. (7) Where any asset acquired in accordance with the scheme is sold or other-wise transferred in any previous year by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired, such part of the cost of such asset as is relatable to the deductions allowed under sub- section (1) shall be deemed to be the profits and gains of business or profession of the previous year in which the asset is sold or otherwise transferred and shall accordingly be chargeable to income- tax as the income of that previous year: Provided that nothing in this sub-section shall apply- ---------------------------------------------------------------------- 1 Inserted by the Finance Act, 1989, w.r.e.f. 1-4-1987. 2 Ibid. 3 Inserted by the Finance Act, 1987, w.e.f. 1-4-1987. 4 The word 'eligible' omitted by the Finance Act, 1989, w.e.f. 1-4- 1991. 5 Inserted, ibid, w.r.e.f. 1-4-1987. 6 Inserted by the Finance Act, 1987, w.e.f. 1-4-1987. 7 The words 'within that previous year,' omitted, ibid. ------------------------------------------------------------------------- 1.180 (i) where the asset is sold or otherwise transferred by the assessee to Government, a local authority, a corporation established by or under a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 1 (1 of 1956); or (ii) where the sale or transfer of the asset is made in connection with the succession of a firm by a company in the business or profession carried on by the firm as a result of which the firm sells or otherwise transfers to the company any asset and the scheme continues to apply to the company in the manner applicable to the firm. Explanation.-The provisions of clause (ii) of the proviso shall apply only where- (i) all the properties of the firm relating to the business or profession immediately before the succession become the properties of the company; (ii) all the liabilities of the firm relating to the business or profession immediately before the succession become the liabilities of the company; and (iii) all the shareholders of the company were partners of the firm immediately before the succession. (8) The Central Government may, if it considers it necessary or expedient so to do, by notification in the Official Gazette, omit any article or thing from the list of articles or things specified in the Eleventh Schedule. (9) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the provisions of this section shall not apply to any class of assessees, with effect from such date as it may specify in the notification. 2[(10) Where a deduction has been allowed to an assessee under this section in any assessment year, no deduction shall be allowed to the assessee under sub-section (1) of section 32A in the said assessment year (hereinafter referred to as the initial assessment year) and a block of further period of four years beginning with the assessment year immediately succeeding the initial assessment year.] Explanation.-In this section,- (a) "computers" does not include calculating machines and calculating devices; (b) "Development Bank" means- (i)in the case of an assessee carrying on business of growing and manufacturing tea in India, the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981); ---------------------------------------------------------------------- 2 Substituted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Prior to the substitution, sub-section (10) read as under: "(10) No deduction shall be allowed under this section in the case of an assessee who has claimed the deduction allowable under section 33AB." ---------------------------------------------------------------------- 1.181 (ii) in the case of other assessees, the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964) and includes such bank or institution as may be specified in the scheme in this behalf.]