Investment incentive for new plant or machinery in notified backward areas permits deduction subject to a limited-term clawback and exclusions.

A special capital allowance allows a deduction of fifteen per cent of the actual cost of qualifying new plant or machinery installed for a manufacturing or production undertaking in notified backward areas of Andhra Pradesh, Bihar, Telangana or West Bengal during the prescribed period. If such new asset is sold or transferred within five years of installation the deduction is deemed business income, with the tax consequence transferring to the amalgamated, resulting or successor entity in specified reorganisations. The section defines "new asset" and lists exclusions including previously used plant, office or residential installations, office appliances and vehicles.

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