CA Bhuvnesh Goyal

Section 35A, of Income Tax Act, 1961 states that (1) In respect of any expenditure of a capital nature incurred after the 28th day of February, 1966 but before the 1st day of April, 1998, on the acquisition of patent rights or copyrights (hereafter, in this section, referred to as rights) used for the purposes of the business, there shall, subject to and in accordance with the provisions of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount of such expenditure. Explanation.—For the purposes of this section,— (i)  “relevant previous years” means the fourteen previous years beginning with the previous year in which such expenditure is incurred or, where such expenditure is incurred before the commencement of the business, the fourteen previous years beginning with the previous year in which the business commenced : Provided that where the rights commenced, that is to say, became effective, in any year prior to the previous year in which expenditure on the acquisition thereof was incurred by the assessee, this clause shall have effect with the substitution for the reference to fourteen years of a reference to fourteen years less the number of complete years which, when the rights are acquired by the assessee, have elapsed since the commencement thereof, and if fourteen years have elapsed as aforesaid, of a reference to one year; (ii)  “appropriate fraction” means the fraction the numerator of which is one and the denominator of which is the number of the relevant previous years. (2) Where the rights come to an end without being subsequently revived or where the whole or any part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) are not less than the cost of acquisition thereof remaining unallowed, no deduction under sub-section (1) shall be allowed in respect of the previous year in which the rights come to an end or, as the case may be, the whole or any part of the rights is sold or in respect of any subsequent previous year. (3) Where the rights either come to an end without being subsequently revived or are sold in their entirety and the proceeds of the sale (so far as they consist of capital sums) are less than the cost of acquisition thereof remaining unallowed, a deduction equal to such cost remaining unallowed or, as the case may be, such cost remaining unallowed as reduced by the proceeds of the sale, shall be allowed in respect of the previous year in which the rights come to an end, or, as the case may be, are sold. (4) Where the whole or any part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) exceed the amount of the cost of acquisition thereof remaining unallowed, so much of the excess as does not exceed the difference between the cost of acquisition of the rights and the amount of such cost remaining unallowed shall be chargeable to income-tax as income of the business of the previous year in which the whole or any part of the rights is sold. Explanation.—Where the whole or any part of the rights is sold in a previous year in which the business is no longer in existence, the provisions of this sub-section shall apply as if the business is in existence in that previous year. (5) Where a part of the rights is sold and sub-section (4) does not apply, the amount of the deduction to be allowed under sub-section (1) shall be arrived at by— (a)  subtracting the proceeds of the sale (so far as they consist of capital sums) from the amount of the cost of acquisition of the rights remaining unallowed; and (b)  dividing the remainder by the number of relevant previous years which have not expired at the beginning of the previous year during which the rights are sold. (6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers the rights to the amalgamated company (being an Indian company),—  (i)  the provisions of sub-sections (3) and (4) shall not apply in the case of the amalgamating company; and (ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the rights. (7) Where in a scheme of demerger, the demerged company sells or otherwise transfers the rights to the resulting company (being an Indian company),—  (i)  the provisions of sub-sections (3) and (4) shall not apply in the case of the demerged company; and (ii)  the provisions of this section shall, as far as may be, apply to the resulting company as they would have applied to the demerged company, if the latter had not sold or otherwise transferred the rights. section 35A of Income Tax Act, 1961 Are you looking to understand about Expenditure on acquisition of patent rights or copyrights ?  This detailed article will tell you all about Expenditure on acquisition of patent rights or copyrights. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. Section 35A of the Indian Income Tax Act, 1961 allows for a deduction of the expenses incurred in acquiring patent rights, copyrights, or rights to know-how by the taxpayers. The deduction, equivalent to one-sixth of the expenses incurred, can be claimed for the previous year. Taxpayers can claim the deduction by meeting certain conditions. Firstly, the expenses must be related to obtaining patent rights, copyrights, or rights to know-how. Secondly, the acquired assets must be used for business or professional purposes. Thirdly, a certificate from the relevant authority confirming the expenses incurred must be obtained.

Section 35, of Income Tax Act, 1961 states that (1) In respect of expenditure on scientific research, the following deductions shall be allowed—  (i)  any expenditure (not being in the nature of capital expenditure) laid out or expended on scientific research related to the business. Explanation.—Where any such expenditure has been laid out or expended before the commencement of the business (not being expenditure laid out or expended before the 1st day of April, 1973) on payment of any salary [as defined in Explanation 2 below sub-section (5) of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority to have been laid out or expended on such scientific research, be deemed to have been laid out or expended in the previous year in which the business is commenced ; (ii) an amount equal to one and one half times of any sum paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research : Provided that such association, university, college or other institution for the purposes of this clause—  (A)  is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and  (B)  such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government : Provided further that where any sum is paid to such association, university, college or other institution in a previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this clause shall be equal to the sum so paid; (iia) any sum paid to a company to be used by it for scientific research: Provided that such company— (A)  is registered in India, (B)  has as its main object the scientific research and development, (C)  is, for the purposes of this clause, for the time being approved by the prescribed authority in the prescribed manner, and (D)  fulfils such other conditions as may be prescribed; (iii) any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university, college or other institution to be used for research in social science or statistical research : Provided that such association, university, college or other institution for the purposes of this clause—  (A)  is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and (B)  such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government. Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a research association, university, college or other institution 38[to which clause (ii) or clause (iii) or to a company to which clause (iia)] applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in 39[clause (ii) or clause (iii) or to a company referred to in clause (iia)] has been withdrawn; (iv) in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2) : Provided that the research association, university, college or other institution referred to in clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the Central Government for the purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii) : Provided further that the Central Government may, before granting approval under clause (ii) or clause (iii), call for such documents (including audited annual accounts) or information from the research association, university, college or other institution as it thinks necessary in order to satisfy itself about the genuineness of the activities of the research association, university, college or other institution and that Government may also make such inquiries as it may deem necessary in this behalf : Provided also that any notification issued, by the Central Government under clause (ii) or clause (iii), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification: Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President†, every notification under clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received by the Central Government: 40[Provided also that every notification under clause (ii) or clause (iii) in respect of the research association, university, college or other institution or under clause (iia) in respect of the company issued on or before the date on which this proviso has come into force, shall be deemed to have been withdrawn unless such research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) makes an intimation in such form and manner, as may be prescribed, to the prescribed income-tax authority within three months from the date on which this proviso has come into force, and subject to such intimation the

Section 34A, of Income Tax Act, 1961 states that (1) In computing the profits and gains of the business of a domestic company in relation to the previous year relevant to the assessment year commencing on the 1st day of April, 1992, where effect is to be given to the unabsorbed depreciation allowance or unabsorbed investment allowance or both in relation to any previous year relevant to the assessment year commencing on or before the 1st day of April, 1991, the deduction shall be restricted to two-third of such allowance or allowances and the balance,— (a)  where it relates to depreciation allowance, be added to the depreciation allowance for the previous year relevant to the assessment year commencing on the 1st day of April, 1993 and be 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 ; (b)  where it relates to investment allowance, be carried forward to the assessment year commencing on the 1st day of April, 1993 and the balance of the investment allowance, if any, still outstanding shall be carried forward to the following assessment year and where the period of eight years has expired before the portion of such balance is adjusted, the said period shall be extended beyond eight years till such time the portion of the said balance is absorbed in the profits and gains of the business of the domestic company. (2) For the assessment year commencing on the 1st day of April, 1992, the provisions of sub-section (2) of section 32 and sub-section (3) of section 32A shall apply to the extent such provisions are not inconsistent with the provisions of sub-section (1) of this section. (3) Nothing contained in sub-section (1) shall apply where the amount of unabsorbed depreciation allowance or of the unabsorbed investment allowance, as the case may be, or the aggregate amount of such allowances in the case of a domestic company is less than one lakh rupees. (4) Nothing contained in sections 234B and 234C shall apply to any shortfall in the payment of any tax due on the assessed tax or, as the case may be, returned income where such shortfall is on account of restricting the amount of depreciation allowance or investment allowance under this section and the assessee has paid the amount of shortfall before furnishing the return of income under sub-section (1) of section 139. section 34A of Income Tax Act, 1961 Are you looking to understand about Restriction on unabsorbed depreciation and unabsorbed investment allowance for limited period in case of certain domestic companies ?  This detailed article will tell you all about Restriction on unabsorbed depreciation and unabsorbed investment allowance for limited period in case of certain domestic companies. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. The Income Tax Act of 1961 bestows upon domestic companies certain provisions for depreciation and investment allowance. Nonetheless, specific companies may find themselves unable to utilize these allowances to their fullest extent due to limitations. As a solution to this issue, the government introduced Section 34A in the ITA, which imposes restrictions on unabsorbed depreciation and investment allowance for a particular category of domestic companies for a limited period. Section 34A was incorporated into the ITA in 2017 and applies to companies engaged in power generation or distribution, or operating in the development, maintenance, or operation of a special economic zone (SEZ), and that have claimed depreciation or investment allowance in the previous year relevant to the assessment year commencing on or after April 1, 2017. The section limits the amount of unabsorbed depreciation and investment allowance that can be carried forward for a maximum of eight years from the year in which the allowance was initially claimed. Additionally, the section restricts the amount of unabsorbed depreciation and investment allowance that can be set off against the income of any subsequent year to 40% of the profits of such a year before allowing for such set off and depreciation. If the company amalgamates with another company, the unabsorbed allowances of the amalgamating company will lapse, and the amalgamated company will not be allowed to carry forward such unabsorbed amounts. If the company is reconstituted or restructured, the unabsorbed allowances of the predecessor company will be deemed to be the unabsorbed amounts of the successor company. These limitations are applicable for a limited period and will only be enforced for the assessment years beginning on or after April 1, 2017. It is imperative for companies involved in power generation or distribution or SEZ development that have claimed depreciation or investment allowance to be aware of the constraints imposed by Section 34A of the Income Tax Act of 1961 to comply with the legislation.  

Section 34, of Income Tax Act, 1961 states that (1) [***] (2) [***] (3)(a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent of the development rebate to be actually allowed is debited to the profit and loss account of any previous year in respect of which the deduction is to be allowed under sub-section (2) of that section or any earlier previous year (being a previous year not earlier than the year in which the ship was acquired or the machinery or plant was installed or the ship, machinery or plant was first put to use) and credited to a reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking, other than—  (i)  for distribution by way of dividends or profits ; or (ii)  for remittance outside India as profits or for the creation of any asset outside India : Provided that this clause shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958 : Provided further that where a ship has been acquired after the 28th day of February, 1966, this clause shall have effect in respect of such ship as if for the words “seventy-five”, the word “fifty” had been substituted. Explanation.—[Omitted by the Finance Act, 1990, w.r.e.f. 1-4-1962. Earlier, it was inserted by the Finance Act, 1966, w.r.e.f. 1-4-1962.] (b) If any ship, 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, any allowance made under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act, and the provisions of sub-section (5) of section 155 shall apply accordingly : Provided that this clause shall not apply—  (i)  where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958 ; or (ii)  where the ship, 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 36Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; or (iii) where the sale or transfer of the ship, machinery or plant is made in connection with the amalgamation or succession, referred to in sub-section (3) or sub-section (4) of section 33. section 34 of Income Tax Act, 1961 Are you looking to understand about Conditions for depreciation allowance and development rebate ?  This detailed article will tell you all about Conditions for depreciation allowance and development rebate. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. Depreciation allowance and development rebate are two vital components of the Income Tax Section 34 that grant taxpayers relief for investing in fixed assets. The primary aim of these incentives is to motivate businesses to make capital expenditures and enhance their equipment and infrastructure. In this blog, we will delineate the conditions for claiming depreciation allowance and development rebate. Depreciation allowance is a deduction that businesses can avail for the wear and tear of their fixed assets over time. This deduction enables businesses to recover the cost of their assets and reduce their taxable income. The following are the eligibility requirements for claiming depreciation allowance: Possession: The asset must be owned by the taxpayer, regardless of whether it is an individual, company, or firm. Assets held on lease or rent are not eligible for depreciation. Usage: The asset must be employed for business or professional purposes. If the asset is utilized for personal purposes, it is not eligible for depreciation. Asset categorization: The asset must belong to one of the specified categories of assets under the Income Tax Act. These categories include buildings, plant and machinery, furniture, and vehicles. Asset life: The asset must have a determinable useful life, which is the estimated time that the asset will be in use. Different classes of assets have varying useful lives, which are prescribed by the Income Tax Act. Asset condition: The asset must be in use and in good condition. Depreciation cannot be claimed for assets that are not in use. Development rebate is a tax incentive offered to businesses for investing in new machinery and equipment. The development rebate reduces the cost of new assets and encourages businesses to modernize and upgrade their equipment. The following are the conditions for claiming development rebate: Investment: The taxpayer must invest in new machinery or equipment for the purpose of the business or profession. Usage: The new machinery or equipment must be used for business or professional purposes. Eligible assets: The new machinery or equipment must fall under the specified categories of eligible assets. These categories include plant and machinery, ships, and aircraft. Asset condition: The new machinery or equipment must be in use and in good condition. Claiming the rebate: The taxpayer can claim the development rebate in the year in which the asset is put to use. The amount of the rebate is calculated as a percentage of the cost of the asset, which is prescribed by the Income Tax Act. In conclusion, depreciation allowance and development rebate are crucial tax incentives that encourage businesses to invest in fixed assets. These incentives are available to businesses that meet the specified conditions, which include possession, usage, asset categorization, asset life,

Section 33B, of Income Tax Act, 1961 states that Where the business of any industrial undertaking carried on in India is discontinued in any previous year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee and used for the purposes of such business as a direct result of—  (i)  flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature ; or (ii)  riot or civil disturbance ; or (iii) accidental fire or explosion ; or (iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war), and, thereafter, at any time before the expiry of three years from the end of such previous year, the business is re-established, reconstructed or revived by the assessee, he shall, in respect of the previous year in which the business is so re-established, reconstructed or revived, be allowed a deduction of a sum by way of rehabilitation allowance equivalent to sixty per cent of the amount of the deduction allowable to him under clause (iii) of sub-section (1) of section 32 in respect of the building, machinery, plant or furniture so damaged or destroyed : Provided that no deduction under this section shall be allowed in relation to the assessment year commencing on the 1st day of April, 1985, or any subsequent assessment year. Explanation.—In this section, “industrial undertaking” means any undertaking which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. section 33B of Income Tax Act, 1961 Are you looking to understand about Rehabilitation allowance ?  This detailed article will tell you all about Rehabilitation allowance. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. The allowance for rehabilitation is a benefit accessible to Indian companies through Section 33B of the Income Tax Act, 1961. This benefit is designed to aid companies in restoring and revitalizing their business by providing financial support. This benefit is particularly useful for companies that face obstacles as a result of unforeseen events, economic slumps, or technological advancements. The purpose of this benefit is to help companies recover and make contributions to the growth of the economy. To be eligible for the rehabilitation allowance, companies must fulfill specific criteria as stated in Section 33B. Firstly, the company must be engaged in the production or manufacturing of goods. Secondly, the company must have incurred expenses related to rehabilitating their business. Finally, the company must have acquired the necessary authorizations and approvals from the relevant authorities for the rehabilitation project. Companies can claim up to 30% of the expenses incurred for rehabilitating their business. Expenses that qualify for this allowance include the acquisition of new plant and machinery, installation of new technology, renovation of buildings, and any other costs directly related to the rehabilitation of the business. It is important to note that only companies can apply for the rehabilitation allowance, and it is not available to individuals or partnerships. Furthermore, the allowance cannot be claimed for any expenses that are capital in nature. There are also certain conditions and limitations that apply to this allowance, and companies must comply with them to avoid disqualification of the claim. In summary, the rehabilitation allowance is a valuable provision that helps struggling companies and encourages them to invest in the rehabilitation of their business. It provides a tax benefit to companies and promotes economic growth. Companies must adhere to all the conditions outlined in Section 33B to claim the rehabilitation allowance.  

Section 33AC, of Income Tax Act, 1961 states that (1) In the case of an assessee, being a Government company or a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount not exceeding fifty per cent of profits derived from the business of operation of ships (computed under the head “Profits and gains of business or profession” and before making any deduction under this section), as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account, to be utilised in the manner laid down in sub-section (2) : Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the aggregate of the amounts of the paid-up share capital, the general reserves and amount credited to the share premium account of the assessee, no allowance under this sub-section shall be made in respect of such excess : Provided further that for five assessment years commencing on or after the 1st day of April, 2001 and ending before the 1st day of April, 2006, the provisions of this sub-section shall have effect as if for the words “an amount not exceeding fifty per cent of profits”, the words “an amount not exceeding the profits” had been substituted: Provided also that no deduction shall be allowed under this section for any assessment year commencing on or after the 1st day of April, 2005. (2) The amount credited to the reserve account under sub-section (1) shall be utilised by the assessee before the expiry of a period of eight years next following the previous year in which the amount was credited— (a)  for acquiring a new ship for the purposes of the business of the assessee ; and (b)  until the acquisition of a new ship, for the purposes of the business of the assessee 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. (3) Where any amount credited to the reserve account under sub-section (1),— (a)  has been utilised for any purpose other than that referred to in clause (a) or clause (b) of sub-section (2), the amount so utilised ; or (b)  has not been utilised for the purpose specified in clause (a) of sub-section (2), the amount not so utilised ; or (c)  has been utilised for the purpose of acquiring a new ship as specified in clause (a) of sub-section (2), but such ship is sold or otherwise transferred, other than in any scheme of demerger by the assessee to any person at any time before the expiry of three years from the end of the previous year in which it was acquired, the amount so utilised in acquiring the ship, shall be deemed to be the profits,—  (i)  in a case referred to in clause (a), in the year in which the amount was so utilised ; or (ii)  in a case referred to in clause (b), in the year immediately following the period of eight years specified in sub-section (2) ; or (iii) in a case referred to in clause (c), in the year in which the sale or transfer took place, and shall be charged to tax accordingly. (4) Where the ship is sold or otherwise transferred (other than in any scheme of demerger) after the expiry of the period specified in clause (c) of sub-section (3) and the sale proceeds are not utilised for the purpose of acquiring a new ship within a period of one year from the end of the previous year in which such sale or transfer took place, so much of such sale proceeds which represent the amount credited to the reserve account and utilised for the purposes mentioned in clause (c) of sub-section (3) shall be deemed to be the profits of the assessment year immediately following the previous year in which the ship is sold or transferred. section 33AC of Income Tax Act, 1961 Are you looking to understand about Reserves for shipping business?  This detailed article will tell you all about Reserves for shipping business. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. Shipping is an integral component of global trade, contributing significantly to the world’s economy. The Indian shipping industry is a vital driver of the country’s economic growth. It’s essential to comprehend the concept of Reserves for Shipping Business under Section 33AC of the Income Tax Act. Section 33AC permits individuals or entities engaged in shipbuilding, repairing, or operating businesses to claim a deduction of a specified amount from their taxable income. This provision was introduced in the Finance Act of 2007 and subsequently amended in the Finance Act of 2017. The Reserves for Shipping Business are the funds that shipping companies set aside for repairing, maintaining, and replacing their ships. This reserve fund is critical to meeting financial obligations in unforeseen events, such as accidents, damage to ships, or emergencies. Under Section 33AC, shipping companies can claim a deduction of 20% of the amount deposited in the reserve fund for a period of ten years. The deduction is available to companies involved in operating, repairing, or building ships. To claim the deduction under Section 33AC, the shipping company must satisfy the following conditions: The company must be involved in the shipbuilding, repairing, or operating business. The reserve fund must be created to repair, maintain, or replace the ships. The reserve funds should not be used for any other purpose. The deduction is available for ten years. The company must file its income

Section 33ABA, of Income Tax Act, 1961 states that (1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year— (a) deposited with the State Bank of India 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 Government of India in the Ministry of Petroleum and Natural Gas; or (b) deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the deposit scheme), 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—  (i)  a sum equal to the amount or the aggregate of the amounts so deposited; or (ii)  a sum equal to twenty 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 : 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 : Provided further that where any deduction, in respect of any amount deposited in the special account, or in the Site Restoration Account, has been allowed under this sub-section in any previous year, no deduction shall be allowed in respect of such amount in any other previous year : Provided also that any amount credited in the special account or the Site Restoration Account by way of interest shall be deemed to be a deposit. (2) 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 31[before the specified date referred to in section 44AB and the assessee furnishes by that date] the report of such audit in the prescribed form32 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 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. (3) Any amount standing to the credit of the assessee in the special account or the Site Restoration Account shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the case may be, in the deposit scheme. (4) Notwithstanding anything contained in sub-section (3), 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 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; (d)  any new machinery or plant to be installed in an industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule. (5) Where any amount standing to the credit of the assessee in the special account or in the Site Restoration Account is withdrawn on closure of the account during any previous year by the assessee, the amount so withdrawn from the account, as reduced by the amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement referred to in section 42, 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. Explanation.—Where any amount is withdrawn on closure of the account in a previous year in which the business carried on by the assessee is no longer in existence, the provisions of this sub-section shall apply as if the business is in existence in that previous year. (6) Where any amount standing to the credit of the assessee in the special account or in the Site Restoration Account is utilised by the assessee for the purposes of any expenditure in connection with such business in accordance with the scheme or the deposit scheme, such expenditure shall not be allowed in computing the income chargeable under the head “Profits and gains of business or profession”. (7) Where any amount, standing to the credit of the assessee in the special account or in the Site Restoration Account, which is released during any previous year by the State Bank of India or which is withdrawn by the assessee from the Site Restoration Account for being utilised by the assessee for the purposes of such business in accordance with the scheme