Amended and updated notes on section 80-ID of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction in respect of profits and gains from business of hotels and convention centres in specified area.
Chapter VIA (Sections 80A to 80U) of the Income Tax Act 1961 deals with the provisions related to deductions to be made in computing total income. Section 80-ID of IT Act 1961-2023 provides for deduction in respect of profits and gains from business of hotels and convention centres in specified area.
Recently, we have discussed in detail section 80-IC (Special provisions in respect of certain undertakings or enterprises in certain special category States) of IT Act 1961. Today, we learn the provisions of section 80-ID of Income-tax Act 1961. The amended provision of section 80-ID is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 80-ID of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section 80-ID: Deduction in respect of profits and gains from business of hotels and convention centres in specified area
Section 80-ID(1) of Income Tax Act
Where the gross total income of an assessee includes any profits and gains derived by an undertaking from any business referred to in sub-section (2) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for five consecutive assessment years beginning from the initial assessment year.
Section 80-ID(2) of Income Tax Act
This section applies to any undertaking,—
- (i) engaged in the business of hotel located in the specified area, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2007 and ending on the 31st day of July, 2010; or
- (ii) engaged in the business of building, owning and operating a convention centre, located in the specified area, if such convention centre is constructed at any time during the period beginning on the 1st day of April, 2007 and ending on the 31st day of July, 2010; or
- (iii) engaged in the business of hotel located in the specified district having a World Heritage Site, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013.
Section 80-ID(3) of Income Tax Act
The deduction under sub-section (1) shall be available only if—
- (i) the eligible business is not formed by the splitting up, or the reconstruction, of a business already in existence;
- (ii) the eligible business is not formed by the transfer to a new business of a building previously used as a hotel or a convention centre, as the case may be;
- (iii) the eligible business is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
Explanation: The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section;
- (iv) the assessee furnishes along with the return of income, the report of an audit in such form and containing such particulars as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed.
Section 80-ID(4) of Income Tax Act
Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or section 10AA, in relation to the profits and gains of the undertaking.
Section 80-ID(5) of Income Tax Act
The provisions contained in sub-section (5) and sub-sections (8) to (11) of section 80-IA shall, so far as may be, apply to the eligible business under this section.
Section 80-ID(6) of Income Tax Act
For the purposes of this section,—
- (a) “convention centre” means a building of a prescribed area comprising of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed;
- (b) “hotel” means a hotel of two-star, three-star or four-star category as classified by the Central Government;
- (c) “initial assessment year“—
- (i) in the case of a hotel, means the assessment year relevant to the previous year in which the business of the hotel starts functioning;
- (ii) in the case of a convention centre, means the assessment year relevant to the previous year in which the convention centre starts operating on a commercial basis;
- (d) “specified area” means the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad;
- (e) “specified district having a World Heritage Site” means districts, specified in column (2) of the Table below, of the States, specified in the corresponding entry in column (3) of the said Table
TABLE
| S. No. | Name of district | Name of State |
|---|---|---|
| (1) | (2) | (3) |
| 1. | Agra | Uttar Pradesh |
| 2. | Jalgaon | Maharashtra |
| 3. | Aurangabad | Maharashtra |
| 4. | Kancheepuram | Tamil Nadu |
| 5. | Puri | Orissa |
| 6. | Bharatpur | Rajasthan |
| 7. | Chhatarpur | Madhya Pradesh |
| 8. | Thanjavur | Tamil Nadu |
| 9. | Bellary | Karnataka |
| 10. | South 24 Parganas (excluding areas falling within the Kolkata urban agglomeration on the basis of the 2001 census) | West Bengal |
| 11. | Chamoli | Uttarakhand |
| 12. | Raisen | Madhya Pradesh |
| 13. | Gaya | Bihar |
| 14. | Bhopal | Madhya Pradesh |
| 15. | Panchmahal | Gujarat |
| 16. | Kamrup | Assam |
| 17. | Goalpara | Assam |
| 18. | Nagaon | Assam |
| 19. | North Goa | Goa |
| 20. | South Goa | Goa |
| 21 | Darjeeling | West Bengal |
| 22. | Nilgiri | Tamil Nadu. |