Section 32AB of ITA, 1961 : Section 32Ab: Investment Deposit Account

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., which is engaged in the manufacturing of electronic components. The company earned profits in the financial year 2020-21 and wants to invest in expanding its manufacturing capabilities. To do so, XYZ Pvt. Ltd. decides to purchase new machinery for its plant. The company is aware of Section 32AB of the Income-tax Act, 1961, which provides incentives for such investments.

Before the due date of filing the income tax return for the year 2020-21, XYZ Pvt. Ltd. deposits a portion of its profits into a deposit account with the Development Bank, as per Section 32AB(1)(a). Alternatively, the company directly utilizes a portion of its profits to purchase new machinery, as al...

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