Specified Business increased under section 35AD

Deduction in respect of capital expenditure on specified business

Under the existing provisions of section 35AD of the Act, investment-linked tax incentive is provided by way of allowing a deduction in respect of the whole of any expenditure of capital nature (other than expenditure on land, goodwill and financial instrument) incurred wholly and exclusively, for the purposes of the “specified business” during the previous year in which such expenditure is incurred. Currently, the following “specified businesses” are eligible for availing the investment-linked deduction under section 35AD as enumerated in clause (c) of sub-section (8) of the said section:-

(i) setting up and operating a cold chain facility;
(ii) setting up and operating a warehousing facility for storage of agricultural produce;
(iii) laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network;
(iv) building and operating, anywhere in India, a hotel of two-star or above category as classified by the Central Government;
(v) building and operating, anywhere in India, a hospital with at least one hundred beds for patients;
(vi) developing and building a housing project under a scheme for slum redevelopment or rehabilitation, framed by the Central Government or a State Government, as the case may be, and notified by the Board in accordance with the prescribed guidelines;
(vii) developing and building a housing project under a scheme for affordable housing framed by the Central Government or a State Government, as the case may be, and notified by the Board in accordance with the prescribed guidelines;
(viii) production of fertilizer in India;
(ix) setting up and operating an inland container depot or a container freight station notified or approved under the Customs Act, 1962;
(x) bee-keeping and production of honey and beeswax; and
(xi) setting up and operating a warehousing facility for storage of sugar;
 

It is proposed to include two new businesses as “specified business” for the purposes of the investment-linked deduction
under section 35AD so as to promote investment in these sectors, which are :-
(a) laying and operating a slurry pipeline for the transportation of iron ore;
(b) setting up and operating a semiconductor wafer fabrication manufacturing unit, if such unit is notified by the Board in accordance with the prescribed guidelines.

It is also proposed to provide that the date of commencement of operations for availing investment linked deduction in respect
of the two new specified businesses shall be on or after 1st April, 2014.