My client grows and manufactures tea. It put money into the NABARD account after the year had closed and now wants the section 33AB deduction. By when did the deposit have to be made, how much can be claimed, and what has to be filed by the specified date under s.44AB?
Section 33AB(1) allows a deduction to an assessee carrying on the business of growing and manufacturing tea or coffee or rubber in India which has, "before the expiry of six months from the end of the previous year or before the due date of furnishing the return of his income, whichever is earlier", either deposited with the National Bank (NABARD) in a special account under a scheme approved by the Tea Board, Coffee Board or Rubber Board, or deposited in a Deposit Account under a scheme framed by that Board with the previous approval of the Central Government. The deduction is the LOWER of the amount deposited and forty per cent of the profits of that business computed under "Profits and gains of business or profession" before any deduction under section 33AB itself, and it is expressly given before brought-forward losses are set off under section 72. The forty per cent figure is not original: "forty" was substituted for "twenty" by the Finance Act, 2001 with effect from 1 April 2002, so twenty per cent governs assessment years up to AY 2001-02 and forty per cent AY 2002-03 onwards. Coffee and rubber were not in the section at all until the Finance Act, 2003 brought them in with effect from 1 April 2004 — that is, from AY 2004-05; for AY 2003-04 and earlier the section is a tea provision only.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2020-04-01, reported as Section 33AB of the Income-tax Act, 1961, as amended up to 2024. It bears on section 33AB, section 33AB(1), section 33AB(2), section 288(2), section 139(1), section 72, section Rule 5AC of the Income Tax Act 1961, in Deductions & Disallowances, How Tax Law Is Read and Assessment & Scrutiny matters.
Three things decide most section 33AB disputes and all three are in sub-sections (1) and (2). First, the deadline is a double one and the EARLIER of the two limbs governs: six months from the end of the previous year, or the due date for the return. For a 31 March year end the six-month limb expires on 30 September, and where the due date under section 139(1) is 31 October the six-month limb is the earlier and therefore the operative one — a deposit made in October is out of time even though the return is not yet due. The words "the due date of" were themselves only inserted by the Finance Act, 2003 with effect from 1 April 2004; before that the second limb ran to the date the return was actually furnished. Second, the ceiling is forty per cent of the profits of THAT business computed under the business head before any section 33AB deduction — it is a percentage of profits, not of turnover, and the parenthesis fixes the stage of computation at which the profit figure is taken. Third, the audit in sub-section (2) is a condition of admissibility in terms, and its deadline changed in 2020: the deduction "shall not be admissible unless" the accounts of that business have been audited by an accountant as defined in the Explanation below section 288(2) "before the specified date referred to in section 44AB and the assessee furnishes by that date" the report of such audit in the prescribed form. Those words were substituted for "and the assessee furnishes, along with his return of income," by Act No. 12 of 2020 with effect from 1 April 2020, so from AY 2020-21 both the audit and the furnishing of the report must be completed by the specified date in section 44AB — one month before the due date for furnishing the return under section 139(1) — and not with the return; for AY 2019-20 and earlier the report went in along with the return. The departmental footnotes identify the form as Form No. 3AC under rule 5AC and add that rule 12 requires the report to be filed separately rather than attached to the return. An assessee already audited under another law gets partial relief under the proviso, but only partial — it must still file a further report in the section 33AB(2) form. Two further limits bite in practice: where the assessee is a firm, an association of persons or a body of individuals, the first proviso forbids the deduction being taken again in the computation of a partner's or member's income; and the second proviso forbids the same deposit being deducted twice in different years.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The operative words, as transcribed: "33AB. (1) Where an assessee carrying on business of growing and manufacturing tea or coffee or rubber in India has, before the expiry of six months from the end of the previous year or before the due date of furnishing the return of his income, whichever is earlier,— (a) deposited with the National Bank any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board ; or (b) deposited any amount in an account (hereafter in this section referred to as the Deposit Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Tea Board or the Coffee Board or the Rubber Board, as the case may be (hereafter in this section referred to as the deposit scheme), with the previous approval of the Central Government, the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of— (a) a sum equal to the amount or the aggregate of the amounts so deposited ; or (b) a sum equal to forty per cent of the profits of such business (computed under the head "Profits and gains of business or profession" before making any deduction under this section), whichever is less". Sub-section (2), as it stands after the substitution made by Act No. 12 of 2020 with effect from 1 April 2020, reads: "The deduction under sub-section (1) shall not be admissible unless the accounts of such business 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 before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant", followed by a proviso allowing an assessee already audited under another law to file the report required under that law together with a further report in the form prescribed under this sub-section. Before that substitution the words were "and the assessee furnishes, along with his return of income,". The Explanation at the end of the section defines "National Bank" as NABARD established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981, "Coffee Board" under section 4 of the Coffee Act, 1942, "Rubber Board" under section 4(1) of the Rubber Act, 1947 and "Tea Board" under section 4 of the Tea Act, 1953.
Not a judgment. The statutory position is that the deduction is available only to an assessee growing AND manufacturing tea, coffee or rubber in India; that the deposit must be made before the earlier of six months from the end of the previous year and the due date for the return; that the deduction is the lower of the deposit and forty per cent of the profits of that business computed under the business head before the section 33AB deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB — a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that a firm's or AOP's deduction cannot be repeated in a partner's or member's computation; and that the same deposit cannot be deducted in more than one year. Forty per cent governs AY 2002-03 onwards and twenty per cent the years before; coffee and rubber are within the section only from AY 2004-05.
Not a judgment; no judicial reasoning is stated for the section itself.
a sum equal to forty per cent of the profits of such business (computed under the head "Profits and gains of business or profession" before making any deduction under this section)
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Handle my notice → Ask a CA on WhatsAppSection 33AB(1) allows a deduction to an assessee carrying on the business of growing and manufacturing tea or coffee or rubber in India which has, "before the expiry of six months from the end of the previous year or before the due date of furnishing the return of his income, whichever is earlier", either deposited with the National Bank (NABARD) in a special account under a scheme approved by the Tea Board, Coffee Board or Rubber Board, or deposited in a Deposit Account under a scheme framed by that Board with the previous approval of the Central Government. The deduction is the LOWER of the amount deposited and forty per cent of the profits of that business computed under "Profits and gains of business or profession" before any deduction under section 33AB itself, and it is expressly given before brought-forward losses are set off under section 72. The forty per cent figure is not original: "forty" was substituted for "twenty" by the Finance Act, 2001 with effect from 1 April 2002, so twenty per cent governs assessment years up to AY 2001-02 and forty per cent AY 2002-03 onwards. Coffee and rubber were not in the section at all until the Finance Act, 2003 brought them in with effect from 1 April 2004 — that is, from AY 2004-05; for AY 2003-04 and earlier the section is a tea provision only. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 33AB, section 33AB(1), section 33AB(2), section 288(2), section 139(1), section 72, section Rule 5AC of the Income Tax Act 1961. It is reported as Section 33AB of the Income-tax Act, 1961, as amended up to 2024. Three things decide most section 33AB disputes and all three are in sub-sections (1) and (2). First, the deadline is a double one and the EARLIER of the two limbs governs: six months from the end of the previous year, or the due date for the return. For a 31 March year end the six-month limb expires on 30 September, and where the due date under section 139(1) is 31 October the six-month limb is the earlier and therefore the operative one — a deposit made in October is out of time even though the return is not yet due. The words "the due date of" were themselves only inserted by the Finance Act, 2003 with effect from 1 April 2004; before that the second limb ran to the date the return was actually furnished. Second, the ceiling is forty per cent of the profits of THAT business computed under the business head before any section 33AB deduction — it is a percentage of profits, not of turnover, and the parenthesis fixes the stage of computation at which the profit figure is taken. Third, the audit in sub-section (2) is a condition of admissibility in terms, and its deadline changed in 2020: the deduction "shall not be admissible unless" the accounts of that business have been audited by an accountant as defined in the Explanation below section 288(2) "before the specified date referred to in section 44AB and the assessee furnishes by that date" the report of such audit in the prescribed form. Those words were substituted for "and the assessee furnishes, along with his return of income," by Act No. 12 of 2020 with effect from 1 April 2020, so from AY 2020-21 both the audit and the furnishing of the report must be completed by the specified date in section 44AB — one month before the due date for furnishing the return under section 139(1) — and not with the return; for AY 2019-20 and earlier the report went in along with the return. The departmental footnotes identify the form as Form No. 3AC under rule 5AC and add that rule 12 requires the report to be filed separately rather than attached to the return. An assessee already audited under another law gets partial relief under the proviso, but only partial — it must still file a further report in the section 33AB(2) form. Two further limits bite in practice: where the assessee is a firm, an association of persons or a body of individuals, the first proviso forbids the deduction being taken again in the computation of a partner's or member's income; and the second proviso forbids the same deposit being deducted twice in different years. If it applies to you, the first step is this: Work out both limbs of the deadline on the facts and take the earlier. Six months from the end of the previous year is a fixed date; the due date under section 139(1) moves with extensions. Where the six-month date is the earlier, a CBDT extension of the return due date does not save a late deposit.
The operative words, as transcribed: "33AB. (1) Where an assessee carrying on business of growing and manufacturing tea or coffee or rubber in India has, before the expiry of six months from the end of the previous year or before the due date of furnishing the return of his income, whichever is earlier,— (a) deposited with the National Bank any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board ; or (b) deposited any amount in an account (hereafter in this section referred to as the Deposit Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Tea Board or the Coffee Board or the Rubber Board, as the case may be (hereafter in this section referred to as the deposit scheme), with the previous approval of the Central Government, the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of— (a) a sum equal to the amount or the aggregate of the amounts so deposited ; or (b) a sum equal to forty per cent of the profits of such business (computed under the head "Profits and gains of business or profession" before making any deduction under this section), whichever is less". Sub-section (2), as it stands after the substitution made by Act No. 12 of 2020 with effect from 1 April 2020, reads: "The deduction under sub-section (1) shall not be admissible unless the accounts of such business 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 before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant", followed by a proviso allowing an assessee already audited under another law to file the report required under that law together with a further report in the form prescribed under this sub-section. Before that substitution the words were "and the assessee furnishes, along with his return of income,". The Explanation at the end of the section defines "National Bank" as NABARD established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981, "Coffee Board" under section 4 of the Coffee Act, 1942, "Rubber Board" under section 4(1) of the Rubber Act, 1947 and "Tea Board" under section 4 of the Tea Act, 1953. The matter was decided on 2020-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that the deduction is available only to an assessee growing AND manufacturing tea, coffee or rubber in India; that the deposit must be made before the earlier of six months from the end of the previous year and the due date for the return; that the deduction is the lower of the deposit and forty per cent of the profits of that business computed under the business head before the section 33AB deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB — a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that a firm's or AOP's deduction cannot be repeated in a partner's or member's computation; and that the same deposit cannot be deducted in more than one year. Forty per cent governs AY 2002-03 onwards and twenty per cent the years before; coffee and rubber are within the section only from AY 2004-05.
Not a judgment; no judicial reasoning is stated for the section itself. In the words reproduced by the source cited on this page: "a sum equal to forty per cent of the profits of such business (computed under the head "Profits and gains of business or profession" before making any deduction under this section)"
It was decided by the CBDT Circulars & Instructions on 2020-04-01 and is reported as Section 33AB of the Income-tax Act, 1961, as amended up to 2024. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 33AB, section 33AB(1), section 33AB(2), section 288(2), section 139(1), section 72, section Rule 5AC, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that the deduction is available only to an assessee growing AND manufacturing tea, coffee or rubber in India; that the deposit must be made before the earlier of six months from the end of the previous year and the due date for the return; that the deduction is the lower of the deposit and forty per cent of the profits of that business computed under the business head before the section 33AB deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB — a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that a firm's or AOP's deduction cannot be repeated in a partner's or member's computation; and that the same deposit cannot be deducted in more than one year. Forty per cent governs AY 2002-03 onwards and twenty per cent the years before; coffee and rubber are within the section only from AY 2004-05. It arises in Deductions & Disallowances, How Tax Law Is Read and Assessment & Scrutiny matters, on section 33AB, section 33AB(1), section 33AB(2), section 288(2), section 139(1), section 72, section Rule 5AC of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Check which account the money went into. Sub-section (1)(a) is a deposit with NABARD in a special account under a Board-approved scheme; sub-section (1)(b) is a deposit in a Deposit Account under a Board-framed deposit scheme carrying the previous approval of the Central Government. A deposit outside both routes is not a section 33AB deposit at all. Compute the ceiling on the profits of the eligible business alone, taken under the business head before the section 33AB deduction, and put that computation on the record. If the deposit exceeds forty per cent of that figure, the excess is simply not deductible in that year and, by the second proviso, cannot be carried to another year either. Get the section 33AB(2) audit and the report done EARLY. From AY 2020-21 the accounts must be audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB — one month before the section 139(1) due date — and not with the return; a report filed with the return is out of time and the deduction is inadmissible in terms. For AY 2019-20 and earlier the report went in along with the return. If the accounts are already audited under the Companies Act or another law, still obtain and file the further report the proviso requires; the relief in the proviso is from a duplicate audit, not from the report. For a firm or AOP, do not repeat the claim in the partners' or members' returns. The first proviso to sub-section (1) shuts that off. Check the assessment year against the figures before relying on any of them: twenty per cent up to AY 2001-02 and forty per cent from AY 2002-03; tea only up to AY 2003-04 and tea, coffee or rubber from AY 2004-05.
Still good law. The text is verified on departmental pages carrying six different "Year:" stamps (2002, 2009, 2011, 2012, 2016, 2017, 2021 and 2024 (No. 1)). Sub-sections (1) and (3) to (9) are identical on the Year 2009 and Year 2024 pages. Sub-section (2) was substituted by Act No. 12 of 2020 with effect from 1 April 2020, so the audit and report deadline stated here governs AY 2020-21 onwards and the earlier "along with his return of income" requirement governs AY 2019-20 and earlier. The pre-2002 twenty per cent text is reproduced inside the Calcutta High Court's judgment in Goodricke Group Ltd v CIT-II dated 19 May 2011 for AY 1997-98, which is independent proof that the footnote recording the Finance Act 2001 substitution is genuine. I did not check judicial treatment of sub-sections (1) and (2) beyond Goodricke and the Calcutta High Court's later judgment in Singlo (India) Tea Ltd. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 33AB was transcribed in full from a published text of the Income-tax Act, 1961 printing the heading "Tea development account, coffee development account and rubber development account". The same operative text was found in the editions of 2011, 2012 and 2016, the last of which confirmed both the forty per cent figure and the tea-coffee-rubber heading. The commencement dates come from the numbered footnote lists carried by the older editions, which agree with one another: inserted by the Finance Act, 1985 w.e.f. 1-4-1986 and amended by the Finance Act, 1987 w.e.f. 1-4-1988; substituted by the Finance Act, 1990 w.e.f. 1-4-1991; the six-month/return deadline, the Deposit Account route, the firm proviso and the sub-sections (3) to (8) machinery inserted by the Finance Act, 1994 w.e.f. 1-4-1995; "forty" substituted for "twenty" by the Finance Act, 2001 w.e.f. 1-4-2002 (this footnote appears in both the 2001 and the 2002 editions, in the earlier one in the prospective form "Word 'forty' shall be substituted for 'twenty'"); and the extension to coffee and rubber, the words "the due date of", the substitution of sub-section (4) and the Coffee Board and Rubber Board definitions all by the Finance Act, 2003 w.e.f. 1-4-2004. One further amendment is recorded. Act No. 12 of 2020, with effect from 1 April 2020, substituted the words "and the assessee furnishes, along with his return of income," in sub-section (2) with "before the specified date referred to in section 44AB and the assessee furnishes by that date". That is carried by footnote 96 in the 2021 edition, and the amended text is printed again in the 2024 edition; the 2017 edition still prints the old words, so the change is bracketed by the editions as well as footnoted. Sub-sections (1) and (3) to (9) are word for word the same in the 2024 edition as in the earliest one read, so no other amendment has been made. The 2021 and 2024 editions also carry the footnote "Now section 2(45) of the Companies Act, 2013" against the reference to section 617 of the Companies Act, 1956, which closes that question. One limit: the Act numbers of the Finance Acts named in these footnotes have not been verified, only the Act names and dates as printed. The audit form (Form No. 3AC) and rule 5AC are taken from those footnotes; rule 5AC itself has not been read, so the form number is reported as the footnote states it and is not independently dated. Some footnotes cross-refer to a commercial publication; nothing in this entry comes from it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that the deduction is available only to an assessee growing AND manufacturing tea, coffee or rubber in India; that the deposit must be made before the earlier of six months from the end of the previous year and the due date for the return; that the deduction is the lower of the deposit and forty per cent of the profits of that business computed under the business head before the section 33AB deduction; that it is given before brought-forward losses are set off under section 72; that it is inadmissible unless the accounts of that business are audited, and the report in the prescribed form furnished, before the specified date referred to in section 44AB — a requirement substituted by Act No. 12 of 2020 with effect from 1 April 2020 for the earlier requirement to furnish the report along with the return; that a firm's or AOP's deduction cannot be repeated in a partner's or member's computation; and that the same deposit cannot be deducted in more than one year. Forty per cent governs AY 2002-03 onwards and twenty per cent the years before; coffee and rubber are within the section only from AY 2004-05.
TaxSphere, “Statutory position — s.33AB: the tea, coffee and rubber development account — the deposit deadline, the forty per cent ceiling, the Form 3AC audit, and which assessment years each figure governs”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-33ab-tea-coffee-rubber-development-account-deposit-deadline-forty-per-cent-ceiling-and-form-3ac-audit/ (validity last checked 2026-09-09)
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