Statutory position — s.35AD: the fourteen specified businesses and the commencement date each must satisfy under s.35AD(5), the hundred per cent capital deduction, the 150 per cent window that ran from AY 2013-14 to AY 2017-18, and the day the deduction became optional
CBDT Circulars & InstructionsCuts both ways
My client is setting up a cold storage and wants the section 35AD deduction. Which businesses are actually within the section, from what date does each qualify, is the deduction still a hundred per cent, and can we choose not to claim it?
Section 35AD allows a deduction of the WHOLE of any capital expenditure incurred wholly and exclusively for a specified business in the previous year in which it is incurred, with a proviso pulling pre-commencement capital expenditure into the year operations commence if it was capitalised in the books on that date. Since the Finance Act, 2020 (Act 12 of 2020) amended sub-section (1) with effect from 1 April 2020, the words are "An assessee shall, if he opts, be allowed a deduction" — the deduction became OPTIONAL from AY 2020-21, which is what makes the section 115BAA and 115BAB concessional regimes workable. There are fourteen specified businesses in section 35AD(8)(c), and each qualifies only if it commences operations on or after the date given for it in section 35AD(5). These are the dates the business must have COMMENCED OPERATIONS on or after; they are not the dates on which each business was added to the list by amendment, and the two do not coincide. The dates are as follows: cross-country natural gas pipeline networks from 1 April 2007; a two-star-or-above hotel, a hospital with at least a hundred beds, and a slum redevelopment or rehabilitation housing project from 1 April 2010; an affordable housing project and a new or newly installed fertiliser plant from 1 April 2011; an inland container depot or container freight station, bee-keeping and honey and beeswax production, and a sugar warehousing facility from 1 April 2012; a slurry pipeline for transporting iron ore and a semi-conductor wafer fabrication unit from 1 April 2014; a new infrastructure facility from 1 April 2017; and everything else falling within the list — cold chain facilities, agricultural produce warehousing and crude or petroleum oil pipelines — from 1 April 2009. A weighted deduction of one and one-half times ran alongside for five businesses under sub-section (1A), inserted by the Finance Act, 2012 with effect from 1 April 2013 and OMITTED by the Finance Act, 2016 (Act 28 of 2016) with effect from 1 April 2018; so 150 per cent is available for AY 2013-14 to AY 2017-18 and a hundred per cent before and after.