Section 10C of ITA, 1961 : Section 10C: Special Provision In Respect Of Certain Industrial Undertakings In North-Eastern Region

Explanation using Example

Imagine that Ms. Aisha starts a new company, "GreenTech Innovations," which manufactures eco-friendly packaging materials. GreenTech Innovations is located in an Industrial Growth Centre in Assam, part of the North-Eastern Region of India. The company begins its manufacturing operations on April 2, 2021.

Under Section 10C of the Income-tax Act, 1961, GreenTech Innovations is eligible for a tax exemption on its profits and gains since it fulfills the conditions:

1. It is a new undertaking and not formed by splitting up or reconstruction of an existing business.
2. It has not used any machinery or plant previously used for any other purpose.

As a result, the profits earned by GreenTech Innovations from the manufacturing of eco-friendly packaging materials will not be included in the total income of the company for ten consecutive assessment years, starting from the assessment year 2022-2023.

However, certain deductions such as depreciation under section 32 and losses under sections 72 and 74 cannot be carried forward in relation to the exempted profits. Also, no other deductions under sections like 80HH, 80HHA, 80-I, 80-IA, 80-IB, or 80JJA can be claimed for these profits.

If Ms. Aisha decides that she does not want to avail the benefits of Section 10C, she must submit a written declaration to the Assessing Officer before the due date for filing the income tax return.

It is important to note that this exemption under Section 10C is not available for the assessment year starting on April 1, 2004, and subsequent years, which means that GreenTech Innovations would not be able to claim this exemption for those years.