List of Specified Business Under Section 35AD Of Income Tax:

Introduction to Section 35AD:

• As per provisions of section 35AD, the deduction is available towards any capital expenditure, wholly and exclusively, incurred for carrying on a specified business.
• Under this Section 35AD is not available towards expenditure incurred for acquisition of any land or financial instrument or goodwill.
• This deduction is not available when payment/ aggregate of payment exceeds INR 10,000 to a person in a single day and such payment is done via cash or bearer cheque or crossed cheque.

List of following specified business is eligible for deduction under section 35AD

Conditions and Some Key Notes for Eligible of Deduction under Section 35AD:

• The specified business should not have been set up by splitting up/ reconstruction of the already existing business.
• Plant and Machinery should be New with following exceptions

a) Imported old Plant and Machinery(Plant and Machinery on which dep. not claimed under IT Act.)
b) 20% of total Plant and Machinery can be old (Second Hand)

• If Assessee is in the business of Laying cross country Pipeline then some portion of pipeline should be made available for use of others on common carrier basis.
• Deduction allowed on all Capital expenses except (a) Land (b) Goodwill (c) Financial instruments.

Further, any expenditure in respect of which payment or aggregate of payment made to a person of an amount exceeding 10,000 in a day otherwise than by a/c payee cheque or an alc payee DD or use of electronic clearing system through a bank account would not be eligible for deduction or any other mode as may be prescribed.

• Depreciation not allowed if deduction claimed u/s 35AD
• If asset (on which deduction claimed u/s 35AD is allowed) sold, then the entire sales price shall be taxable.
• Loss of specified business can be set off only against specified business income irrespective of whether the latter is eligible for deduction under section 35AD. Example: A assessee can therefore, set-off the losses of a hospital or hotel which begins to operate after 1/04/2010 and which is eligible for deduction section 35AD, against the profits of the existing business of operating a hospital (with at least 100 beds for patients) or a hotel (of two-star or above category) started before 1/04/2010.beven if the latter is not eligible for deduction under section 35AD
• If deduction u/s 35AD is claimed then deduction u/s 80IA to 80RRB & 10AA deduction shall not be allowed.
• In case of Hotel (2 star or more) if Assesse transfers operation to another person, then Assessee shall be deemed to be carrying on the specified business.
• Infrastructure facility means:

1. A road including toll road, a bridge or a rail system.
2. A highway project including housing or other activities being an integral part of the highway project.
3. Water supply project, water treatment system, irrigation project, sanitation and sewage system or solid waste management system.
4. A port, airport, inland waterway inland port or navigational channel in the sea

• Business of cross-country pipeline and new infrastructure facility should be owned by Indian Company or consortium of such companies or by an authority or a board or corporation or any other body established or constituted under any Central or State Act.
• Business of cross-country pipeline should be approved by the Petroleum and Natural Gas Regulatory Board and notified by the Central Government. Under New infrastructure facility entity should have entered into an agreement with the CG/SG/Local Authority or any other Govt body.
• Asset (on which deduction claimed u/s 35AD) should be exclusively used for specified business for minimum 8 years, from the year of acquisition.

If Asset Mis-Utilized  Within 8 Years:

If it is used for non-specified business within 8 years then following shall be taxable under PGBP

If asset is transferred from specified business to non-specified business within 8 years then Actual cost shall be-