Finance Bill, 2015 passed by the Lok Sabha, changes made in Finance Bill, 2015

On April 30, 2015, the Lok Sab­ha passed the Finance Bill. The Bill which was pre­sent­ed orig­i­nal­ly in the Lok Sab­ha is not passed in its orig­i­nal shape. All changes made in the Finance Bill, 2015 as passed by the Lok Sab­ha are as follows: 

I. MAT exemp­tion to for­eign companies

The Finance Bill, 2015 pre­sent­ed orig­i­nal­ly pro­posed that long-term cap­i­tal gains and short-term cap­i­tal gains (on which STT is paid) aris­ing to FIIs would be exclud­ed from the charge­abil­i­ty of MAT. Fur­ther, expen­di­tures, if any, deb­it­ed to the prof­it and loss account, cor­re­spond­ing to such income would also be added back to the book prof­it for the pur­pose of com­pu­ta­tion of MAT.

In case of Timken Co., In re [2010] 193 Tax­man 20 the Author­i­ty for Advance Rul­ing held that a for­eign com­pa­ny was not liable to MAT as it had no ‘phys­i­cal pres­ence’ in India and it earned only exempt­ed ‘long-term cap­i­tal gains’. How­ev­er, con­trary rul­ing was giv­en in case of Castle­ton Invest­ment Ltd., In re [2012] 24 taxmann.com 150 (AAR – New Del­hi), where­in it was held that pro­vi­sions of MAT would be equal­ly applic­a­ble to a for­eign company.

Thus, the Finance Bill, 2015 pro­posed to pro­vide relief from MAT only to FIIs with­out extend­ing such relief to for­eign com­pa­nies. The for­eign com­pa­ny would be liable to pay MAT on cap­i­tal gains aris­ing from trans­fer of secu­ri­ties and income aris­ing from roy­al­ty, inter­est or FTS even if such income would not be charge­able to tax or tax­able at low­er rate in India by virtue of applic­a­ble dou­ble tax­a­tion avoid­ance agree­ments (‘DTAA’)or any pro­vi­sion of the Income-Tax Act.

The impact of such pro­pos­al would be that for­eign com­pa­nies would be liable to pay MAT even on that income which was exempt from tax by virtue of DTAAs or Income-tax Act.

There­fore, the Finance Bill, 2015 as passed by Lok Sab­ha pro­pos­es to pro­vide relief from MAT to for­eign com­pa­nies as well. Cap­i­tal gains from trans­fer of secu­ri­ties, inter­est, roy­al­ty and FTS accru­ing or aris­ing to for­eign com­pa­ny has been pro­posed to be exclud­ed from charge­abil­i­ty of MAT if tax payable on such income is less than 18.5%. Fur­ther, expen­di­tures, if any, deb­it­ed to the prof­it loss account, cor­re­spond­ing to such income shall also be added back to the book prof­it for the pur­pose of com­pu­ta­tion of MAT.

II. MAT exemp­tion on notion­al gain aris­ing on trans­fer of share of SPV

The Finance (No. 2) Act, 2014 insert­ed clause (xvii) in Sec­tion 47 to pro­vide that trans­fer of share of spe­cial pur­pos­es vehi­cle (‘SPV’) to a busi­ness trust in exchange of units allot­ted by that trust to the trans­fer­or shall not be regard­ed as trans­fer, thus, no cap­i­tal gain would arise on such transaction.

The Finance Bill, 2015 as passed by Lok Sab­ha pro­pos­es to exclude the fol­low­ing from the charge­abil­i­ty of MAT:

 (a) notion­al gain result­ing from trans­fer of shares of SPV to a busi­ness trust in exchange of units allot­ted by that trust;

 (b) notion­al gain result­ing from any change in car­ry­ing amount of said units; and

 © actu­al gains from trans­fer of said units.

A new clause is pro­posed to be insert­ed to re-com­pute the gains from trans­fer of said units (as referred to in point © above) which shall be added back for com­pu­ta­tion of MAT. It is pro­posed that the amount of gain from trans­fer of said units shall be com­put­ed by tak­ing into account the cost of shares exchanged with units or the car­ry­ing amount of the shares at time of exchange where such shares are car­ried at a val­ue oth­er than the cost through prof­it & loss account.

Accord­ing­ly, notion­al loss aris­ing from trans­fer of asset or notion­al loss aris­ing from change in car­ry­ing amount of said units and actu­al loss from trans­fer of said units shall be added back to the book prof­it for the pur­pose of com­pu­ta­tion of MAT.

A new clause is pro­posed to be insert­ed to re-com­pute the loss from trans­fer of said units which shall be reduced from the book prof­it. It is pro­posed that the amount of loss from trans­fer of said units shall be com­put­ed by tak­ing into account the cost of shares exchanged with units or the car­ry­ing amount of the shares at time of exchange where such shares are car­ried at a val­ue oth­er than the cost through prof­it & loss account.

III. Deduc­tion under Sec­tion 80D in case of individual

The Finance Bill, 2015 as pre­sent­ed orig­i­nal­ly omit­ted to pro­pose amend­ment to clause (a) and clause (b) of sub-sec­tion (2) of Sec­tion 80D to enable assessee to claim deduc­tion of Rs. 25,000 instead of Rs. 15,000. How­ev­er, sub-sec­tion (4) of Sec­tion 80D was amend­ed to allow deduc­tion of Rs. 30,000 instead of Rs. 25,000 if indi­vid­ual or his fam­i­ly mem­ber or any of his par­ent is a senior cit­i­zen or very senior citizen.

Accord­ing­ly, it is pro­posed in the Finance Bill, 2015 as passed by the Lok Sab­ha that the exist­ing deduc­tion of Rs. 15,000 shall be sub­sti­tut­ed with Rs. 25,000. The fol­low­ing table high­lights the deduc­tion avail­able to an Indi­vid­ual under Sec­tion 80D:

Deduc­tion in respect of	Indi­vid­ual and his family (none of them is a senior citizen)	Par­ents of Individual (none of them is a senior citizen)	Indi­vid­ual and his family (if senior cit­i­zen or very senior citizen)	Par­ents of Individual (if senior cit­i­zen or very senior citizen)
	(a)	(b)	©	(d)
■  Health Insurance	25,000	25,000	30,000	30,000
■  Con­tri­bu­tion to CGHS	25,000	-	25,000	-
■  Pre­ven­tive health check-up (refer Note)	5,000	5,000	5,000	5,000
■  Med­ical expen­di­ture if no amount is paid in respect of health insurance	-	-	30,000 (only in case of very senior citizen)	30,000 (only in case of very senior citizen)
Max­i­mum Deduction	25,000	25,000	30,000	30,000

Note: Deduc­tion for pre­ven­tive health check-up of assessee, spouse, depen­dent chil­dren and par­ents shall not exceed in aggre­gate Rs 5,000.

 (a) Max­i­mum deduc­tion, if indi­vid­ual or any mem­ber of his fam­i­ly or any of his par­ent is not senior or very senior cit­i­zen: Rs. 50,000 [(a) + (b)]

 (b) Max­i­mum deduc­tion if indi­vid­ual or any mem­ber of his fam­i­ly is not senior cit­i­zen but any of his par­ent is a senior cit­i­zen or very senior cit­i­zen: Rs. 55,000 [(a) + (d)]

 © Max­i­mum deduc­tion if indi­vid­ual or any mem­ber of his fam­i­ly and any of his par­ent is senior cit­i­zen or very senior cit­i­zen: Rs. 60,000 [ © + (d)]

IV. Res­i­den­tial Sta­tus of a Company

The Finance Bill, 2015 as pre­sent­ed ear­li­er pro­posed to amend Sec­tion 6 to pro­vide that a com­pa­ny shall be said to be res­i­dent in India if its place of effec­tive man­age­ment, at any time in that year, is in India. In oth­er words, the con­cept of Con­trol or Man­age­ment (whol­ly in India) is replaced with Place of Effec­tive Man­age­ment (at any time in India).

The amend­ment pro­posed in the orig­i­nal Finance Bill, 2015 might have caused dif­fi­cul­ty in estab­lish­ing the place of effec­tive man­age­ment as a com­pa­ny might have place of effec­tive man­age­ment in more than one coun­try at any point of time dur­ing the year.

Thus, the Finance Bill, 2015 as passed by the Lok Sab­ha has pro­posed to omit the words ‘at any time’ which shall have effect that a com­pa­ny shall be deemed to be res­i­dent in India if its place of effec­tive man­age­ment is in India.

V. Fil­ing of return is manda­to­ry if assessee has for­eign assets

The Finance Bill, 2015 as passed by the Lok Sab­ha has pro­posed manda­to­ry fil­ing of return by a per­son, being a res­i­dent oth­er than not ordi­nar­i­ly res­i­dent in India, who at any time dur­ing the pre­vi­ous year:

 (a) holds, as a ben­e­fi­cial own­er or oth­er­wise, any asset (includ­ing finan­cial inter­est in any enti­ty) locat­ed out­side India or has sign­ing author­i­ty in any account locat­ed out­side India; or

 (b) is a ben­e­fi­cia­ry of any asset (includ­ing any finan­cial inter­est in any enti­ty) locat­ed out­side India.

How­ev­er, fil­ing of return shall not be manda­to­ry under this pro­vi­so for an indi­vid­ual, being a ben­e­fi­cia­ry of any asset (includ­ing any finan­cial inter­est in any enti­ty) locat­ed out­side India, if income aris­ing from such an asset is includi­ble in the income of the per­son who is ben­e­fi­cial own­er of such an asset.

The mean­ing of the ‘ben­e­fi­cial own­er’ and ‘ben­e­fi­cia­ry’ has been pro­posed as under:

 (a) ‘Ben­e­fi­cial own­er’ in respect of an asset means an indi­vid­ual who has pro­vid­ed, direct­ly or indi­rect­ly, con­sid­er­a­tion for the asset for the imme­di­ate or future ben­e­fit, direct or indi­rect, of him­self or any oth­er person;

 (b) ‘Ben­e­fi­cia­ry’ in respect of an asset means an indi­vid­ual who derives ben­e­fit from the asset dur­ing the pre­vi­ous year and the con­sid­er­a­tion for such asset has been pro­vid­ed by any per­son oth­er than such beneficiary.

VI. Sub­si­dies are no longer cap­i­tal receipts

There had been dis­pute between the rev­enue and the tax­pay­ers about the treat­ment of the sub­sidy received from Gov­ern­ment or any oth­er author­i­ty. The issue whether sub­sidy shall be treat­ed as cap­i­tal receipt or rev­enue receipt became a debat­able issue.

Var­i­ous Courts have pro­nounced on this issue tak­ing into con­sid­er­a­tion the pur­pose and object for which the sub­sidy has been giv­en, which are as follows:

 (a) In case of Sah­ney Steel & Press Works Ltd. v. CIT [1997] 94 Tax­man 368 (SC), it was held by the Supreme Court that sub­sidy giv­en to assessee by way of refund of sales tax to enable the assessee to run the busi­ness more prof­itably is to be treat­ed as rev­enue receipt.

 (b) In case of CIT v. Pon­ni Sug­ars & Chem­i­cals Ltd. [2008] 174 Tax­man 87 (SC), it was held by the Supreme Court that it is the object for which sub­sidy is giv­en which deter­mines nature of incen­tive sub­sidy and where sub­sidy is giv­en to uti­lize it for repay­ment of term loans under­tak­en by assesse for set­ting-up new unit/expansion of exist­ing busi­ness, it would be treat­ed as cap­i­tal receipt.

 © In case of CIT v. Reliance Indus­tries Ltd. [2010] 8 218 (Bom.), it was held by the Bom­bay High Court that sub­sidy in the form of sales tax incen­tive would be treat­ed as cap­i­tal receipt if it is giv­en to set-up a new unit in a back­ward area to gen­er­ate employment.

To end the dis­pute, it is pro­posed to amend the def­i­n­i­tion of ‘Income’ under Sec­tion 2(24) in the Finance Bill, 2015 as passed by the Lok Sabha.

A new sub-clause (xvi­ii) is pro­posed to be insert­ed in Sec­tion 2(24) to pro­vide that assis­tance in the form of a sub­sidy or grant or cash incen­tive or duty draw­back or waiv­er or con­ces­sion or reim­burse­ment (by what­ev­er name called) by the Cen­tral Gov­ern­ment or a State Gov­ern­ment or any author­i­ty or body or agency in cash or kind to the assesse [oth­er than one con­sid­ered under Expla­na­tion 10 to Sec­tion 43(1)] would be includ­ed in assessee’s income.

Thus, any sub­sidy which is not reduced from the actu­al cost of the asset in view of pro­vi­sions of Explanation10 to Sec­tion 43(1) shall be tax­able as rev­enue receipts of the assessee.

VII. Bad debts could be claimed with­out writ­ing off debt in books of account

Bad Debts of a busi­ness are allowed as deduc­tions under Sec­tion 36(1)(vii). The deduc­tion is avail­able in respect of any bad debt or part there­of which is writ­ten off as irrecov­er­able in the accounts of the assessee for the pre­vi­ous year.

How­ev­er, deduc­tion is allowed sub­ject to con­di­tions laid down under sec­tion 36(2), inter-alia, debt should have been tak­en into account in com­put­ing the income of the pre­vi­ous year in which the amount of bad debt is writ­ten off or of an ear­li­er pre­vi­ous year.

Till Assess­ment Year 1988–89, there was no require­ment of writ­ing off of the bad debt in the books of account. From Assess­ment Year 1989–90, the law was amend­ed to pro­vide for deduc­tion in the year of write-off of the bad debt. So, the amend­ment made writ­ing-off of bad-debts in books of account manda­to­ry to claim deduc­tion thereof.

In view of cur­rent pro­vi­sions, no deduc­tion is allowed to an assessee if any income, not record­ed in books of accounts but offered to tax as per Income Com­pu­ta­tion and Dis­clo­sure Stan­dards, turns into bad-debts. In oth­er words, assessee can­not write-off a debt which was not record­ed in the books of account but was actu­al­ly offered to tax. In this case, no deduc­tion is allow­able to assessee as debts are not writ­ten-off from books of accounts.

In order to remove this anom­aly, it is pro­posed in the Finance Bill, 2015 as passed by the Lok Sab­ha that bad-debts could be claimed with­out writ­ing off in books of account if the amount of debt or part there­of has been tak­en into account in com­put­ing the income of the assessee of the pre­vi­ous year in which the amount of such debt or part there­of becomes irrecov­er­able or of an ear­li­er pre­vi­ous year on the basis of income com­pu­ta­tion and dis­clo­sure stan­dard noti­fied under sec­tion 145(2) with­out record­ing the same in the accounts.

Thus, Sec­tion 36(vii), once again, pro­posed to be amend­ed to get back to orig­i­nal posi­tion (i.e., the posi­tion that stood till Assess­ment Year 1988–89) but to a lim­it­ed extent.

VIII. Inter­est on loan tak­en for acqui­si­tion of an asset could only be cap­i­tal­ized till the asset is first put to use

Cur­rent­ly, Sec­tion 36(1)(iii) allows deduc­tion for inter­est paid in respect of cap­i­tal bor­rowed for the pur­pos­es of the busi­ness or pro­fes­sion while com­put­ing the income from busi­ness or profession.

How­ev­er, any inter­est paid in respect of cap­i­tal bor­rowed for acqui­si­tion of an asset for exten­sion of exist­ing busi­ness or pro­fes­sion (whether cap­i­tal­ized in the books of account or not) for any peri­od begin­ning from the date on which the cap­i­tal was bor­rowed for acqui­si­tion of the asset till the date on which such asset was first put to use, was not allowed as deduction.

The Finance Bill, 2015 as passed by Lok Sab­ha pro­pos­es to remove this dis­tinc­tion in allowa­bil­i­ty of inter­est in case of exist­ing busi­ness and in case of exten­sion of exist­ing busi­ness. It pro­pos­es to remove the words “for exten­sion of exist­ing busi­ness or pro­fes­sion” from pro­vi­so to Sec­tion 36(1)(iii). Thus, it is pro­posed that inter­est on bor­row­ings used for acqui­si­tion of asset till the asset is put to use shall not be allowed as deduc­tion in any case.

IX. Deter­mi­na­tion of peri­od of hold­ing and cost of acqui­si­tion in case of shares acquired on redemp­tion of GDRs

Sec­tion 2(42A) of the Act is silent on the com­pu­ta­tion of peri­od of hold­ing in case of shares which are acquired on redemp­tion of GDRs as referred to in Sec­tion 115AC(1)(b). Accord­ing­ly, the Finance Bill, 2015 as passed by the Lok Sab­ha pro­pos­es that the peri­od of hold­ing in this case shall be reck­oned from the date on which a request for redemp­tion is made by the assessee.

In this case, the cost of acqui­si­tion shall be com­put­ed in accor­dance with sub-sec­tion (2ABB) pro­posed to be insert­ed in Sec­tion 49 by the Finance Bill, 2015 as passed by the Lok Sabha.

It is pro­posed that cost of acqui­si­tion of shares acquired by a non-res­i­dent on redemp­tion of GDRs shall be the price of such shares as pre­vail­ing on any rec­og­nized stock exchange on the date on which a request for redemp­tion is made by the assessee.

X. Eas­ing some con­di­tions if invest­ment fund is owned by For­eign Govt. or Cen­tral Bank

An amend­ment was made in Finance Act (No. 2) 2014 to pro­vide that income aris­ing to For­eign Port­fo­lio Investors (‘FPIs’) from trans­ac­tion in secu­ri­ties will be treat­ed as cap­i­tal gains. How­ev­er, the pro­vi­sions of the Act have not been ade­quate­ly amend­ed to address the appre­hen­sion of the fund man­agers that their loca­tion in India would con­sti­tute busi­ness con­nec­tion of off­shore funds in India, result­ing in a large num­ber of off­shore funds choos­ing to locate their invest­ment man­ag­er out­side India.

In order to facil­i­tate loca­tion of fund man­agers of off-shore funds in India Sec­tion 9A has been pro­posed in the Act in line with inter­na­tion­al best prac­tices, to pro­vid­ed that loca­tion of funds man­ag­er shall not con­sti­tute busi­ness con­nec­tion sub­ject to cer­tain conditions.

The Finance Bill, 2015 as passed by the Lok Sab­ha pro­pos­es to with­draw fol­low­ing con­di­tions in case of an invest­ment fund set-up by the Gov­ern­ment or Cen­tral Bank of a for­eign State or a sov­er­eign fund or any oth­er noti­fied fund:

 (a) The fund has a min­i­mum of 25 mem­bers who are, direct­ly or indi­rect­ly, not con­nect­ed persons;

 (b) Any mem­ber of the fund along with the con­nect­ed per­sons shall not have par­tic­i­pa­tion inter­est, direct­ly or indi­rect­ly, in the fund exceed­ing 10%; and

 © The aggre­gate par­tic­i­pa­tion inter­est, direct­ly or indi­rect­ly, of ten or less mem­bers along with their con­nect­ed per­sons in the fund, shall be less than 50%.

XI. Rules shall be pre­scribed for the pur­pose of Sec­tion 9A

It is pro­posed to insert sub-sec­tion (7A) in Sec­tion 9A that the pro­vi­sions of this sec­tion shall be applied in accor­dance with such guide­lines and in such man­ner as the Board may pre­scribe in this behalf

XII. Amount paid for pur­chase of sug­ar­cane allowed as deduc­tion to the extent price fixed by the Government

A new clause (xvii) is pro­posed to be insert­ed in Sec­tion 36(1) to pro­vide that the amount of expen­di­ture incurred by a co-oper­a­tive soci­ety engaged in the busi­ness of man­u­fac­ture of sug­ar for pur­chase of sug­ar­cane could be allowed as deduc­tion, how­ev­er, the deduc­tion could­n’t exceed the price fixed or approved by the Gov­ern­ment for sugarcane.

In oth­er words, a co-oper­a­tive soci­ety engaged in the man­u­fac­ture of sug­ar would be allowed as deduc­tion towards pur­chase of sug­ar­cane to the extent of low­er of following:

 (a) Actu­al pur­chase price of sug­ar­cane, or

 (b) Price of sug­ar­cane fixed or approved by the Government

XIII. Mean­ing of ‘Spec­i­fied per­son’ enlarged for pur­pose of Sec­tion 10(23EE)

Under the pro­vi­sions of Secu­ri­ties Con­tracts (Reg­u­la­tion) (Stock Exchanges and Clear­ing Cor­po­ra­tions) Reg­u­la­tions, 2012 noti­fied by SEBI, the Clear­ing Cor­po­ra­tions are man­dat­ed to estab­lish a fund, called Core Set­tle­ment Guar­an­tee Fund for each seg­ment of each rec­og­nized stock exchange to guar­an­tee the set­tle­ment of trades exe­cut­ed in respec­tive seg­ments of the exchange.

Under the exist­ing pro­vi­sions, income by way of con­tri­bu­tions to the Investor Pro­tec­tion Fund set- up by rec­og­nized stock exchanges in India, or by com­mod­i­ty exchanges in India or by a depos­i­to­ry shall be exempt from taxation.

On sim­i­lar lines, it is pro­posed to exempt the income of the Core Set­tle­ment Guar­an­tee Fund aris­ing from con­tri­bu­tion received and invest­ment made by the fund and from the penal­ties imposed by the Clear­ing Cor­po­ra­tion sub­ject to sim­i­lar con­di­tions as pro­vid­ed in case of Investor Pro­tec­tion Fund set-up by a rec­og­nized stock exchange or a com­mod­i­ty exchange or a depository.

How­ev­er, where any amount stand­ing to the cred­it of the Fund and not charged to income-tax dur­ing any pre­vi­ous year is shared, either whol­ly or in part with the spec­i­fied per­son, the whole of the amount so shared shall be deemed to be the income of the pre­vi­ous year in which such amount is shared.

It is pro­posed in the Finance Bill, 2015 as passed by the Lok Sab­ha to change the mean­ing of the ‘spec­i­fied per­son’ which shall mean following:

 (a) Any rec­og­nized clear­ing cor­po­ra­tion which estab­lish­es and main­tains the Core Set­tle­ment Guar­an­tee Fund;

 (b) Any rec­og­nized stock exchange being a share­hold­er in such rec­og­nized clear­ing cor­po­ra­tion or a con­tri­bu­tion to the Core Set­tle­ment Guar­an­tee Fund; and

 © Any clear­ing mem­ber con­tribut­ing to the Core Set­tle­ment Guar­an­tee Fund.

 The Secu­ri­ties Con­tracts (Reg­u­la­tion) (Stock Exchanges And Clear­ing Cor­po­ra­tions) Reg­u­la­tions, 2012 defines the fol­low­ing terms as under-

   •  Clear­ing Corporations

Clear­ing cor­po­ra­tions, also known as ‘Clear­ing hous­es’, are enti­ties that are estab­lished to under­take the activ­i­ty of clear­ing and set­tle­ment of trades in securities/other instruments/products that are dealt with or trad­ed on a rec­og­nized stock exchange. It is oblig­a­tory for stock exchanges to use the ser­vices of recog­nised clear­ing corporation(s) for clear­ing and set­tle­ment of its trades. How­ev­er, clear­ing hous­es are required to take pri­or approval from SEBI before asso­ci­at­ing with stock exchanges to han­dle the con­fir­ma­tion, set­tle­ment and deliv­ery of transactions.

   •  Core Set­tle­ment Guar­an­tee Fund:

Clear­ing Cor­po­ra­tions are required to estab­lish a fund, called Core Set­tle­ment Guar­an­tee Fund (Core SGF) for each seg­ment of each rec­og­nized stock exchange to guar­an­tee the set­tle­ment of trades exe­cut­ed in respec­tive seg­ments of the exchange. The fund shall be uti­lized to com­plete the set­tle­ment in the event of clear­ing member(s) fail­ing to hon­our set­tle­ment oblig­a­tion. Clear­ing Cor­po­ra­tions must ensure that the cor­pus of the fund should be ade­quate to meet the set­tle­ment oblig­a­tions aris­ing on account of fail­ure of clear­ing member(s). The stock exchanges shall have to con­tribute 25 % of their total assets towards the core fund, while 50% is required to be con­tributed by the Clear­ing Cor­po­ra­tion. Clear­ing mem­bers can­not con­tribute more than 25 % of the total fund size. Clear­ing Cor­po­ra­tions must also peri­od­i­cal­ly con­duct stress test to ascer­tain the suf­fi­cien­cy of the cor­pus of the fund.

XIV. Addi­tion­al Depre­ci­a­tion and Invest­ment Allowance allowed to indus­tries set-up in Bihar and West Bengal

The Finance Bill, 2015 as pre­sent­ed on Feb­ru­ary 28, 2015 pro­posed to allow high­er addi­tion­al depre­ci­a­tion at the rate of 35% (instead of 20%) in respect of the actu­al cost of new machin­ery or plant acquired and installed by a man­u­fac­tur­ing under­tak­ing or enter­prise set-up in the noti­fied back­ward area of the State of Andhra Pradesh and the State of Telangana.

This high­er addi­tion­al depre­ci­a­tion shall be avail­able in respect of acqui­si­tion and instal­la­tion of any new machin­ery or plant dur­ing the peri­od between 01-04-2015 and 31-03-2020.

Sim­i­lar­ly, it is pro­posed to insert a new sec­tion 32AD to pro­vide for an addi­tion­al invest­ment allowance of an amount equal to 15% of the cost of new asset acquired and installed by an assessee, if:

 (a) it sets-up an under­tak­ing or enter­prise in any noti­fied back­ward areas in the State of Andhra Pradesh and the State of Telan­gana; and

 (b) the new assets are acquired and installed dur­ing the peri­od between 01-04-2015 and 31-03-2020.

The Finance Bill, 2015 as passed by the Lok Sab­ha pro­pos­es to extend the ben­e­fit of addi­tion­al depre­ci­a­tion and invest­ment allowance to the man­u­fac­tur­ing under­tak­ing or enter­prise set-up in the noti­fied back­ward area of State of Bihar and State of West Ben­gal as well.