Section 33A of ITA, 1961 : Section 33A: Development Allowance

Explanation using Example

Imagine a tea company, "GreenLeaf Teas Ltd.," which operates in the business of growing and manufacturing tea in India. In 2021, they decide to expand their tea plantations and prepare a new area of land for planting tea bushes. The actual cost incurred for planting tea bushes on this new land, which has never been planted with tea before, amounts to INR 10,00,000.

Under Section 33A of the Income-tax Act, 1961, GreenLeaf Teas Ltd. would be eligible for a development allowance. Since this is a new plantation area, they would qualify for a deduction equivalent to 50% of the actual cost of planting, which in this case would be INR 5,00,000 (50% of INR 10,00,000).

The company would need to meet certain condi...

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