By Prashant Chaubey
On 29 April 2010, the FINANCE BILL 2010, was passed by Lok Sabha with some important amendments. One of the important amendments is to provide investment-linked incentive to builders and operators of hospitals and developers and builders of slum redevelopment or rehabilitation projects. The abovementioned amendments have been included in Clause 10 of the FINANCE BILL, 2010.
Clause 10 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deductions in respect of expenditure on specified business. Under the existing provisions of the aforesaid section, deduction in respect of expenditure of capital nature incurred, wholly or exclusively, during the year for a specified business is allowed.
In FINANCE BILL 2009, the specified business under clause (c) of sub-section (8) included the following businesses, namely –
setting up and operating a cold chain facility;
setting up and operating a warehousing facility for storage of agricultural produce;
laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.
On 26 February 2010, the FINANCE BILL 2010, included the following business under the abovementioned sub-section –
building and operating, anywhere in India, a new hotel of two-star or above category as classified by the Central Government;
Additionally, on 29 April 2010, with the Notice of Amendments, the FINANCE BILL 2010 has included two more businesses under sub-section (8) of section 35AD, namely –
building and operating, anywhere in India, a new hospital with at least one hundred beds for patients;
developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed;
Sub-section (5) of the aforesaid section 35AD prescribes the conditions as regards the date of commencement of the specified business. Hotels, hospitals and slum redevelopment or rehabilitation projects commencing development or operations on or after the 1st day of April, 2010, would be able to take advantage of the investment-linked incentive.
These abovementioned amendments will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
The perceptible benefit of the amendments is that it would encourage more investments in sectors such as hotels, hospitals and housing with special focus on slum redevelopment or rehabilitation. It would lead to improving the urban infrastructure of the country.