Claiming deduction u/s 80IC

[Toshar Ahuja]

A firm availing claiming 100% deduction u/s 80IC is taken over by a Company on 1/4/2011 (fulfilling conditions of Sec 47(xiii) of Income Tax Act, 1961) on which date 5 years of 100% deduction also expire.  Will it get 25% deduction or 30% deduction for next five years? and if the assessee starts Unit II before 01/04/2012, then will it get 100% deduction for first five years and then 30% deduction for next five years?

[Surender Gupta]

Such type of deduction is allowed in case of amalgamation or demerger only. There is no similar provision in case of firm. Moreover in case of amalgamation or demerger there is a sunset clause of 1.4.2007

AI Summary

Takeover Firm's Tax Deduction Eligibility Under Section 80IC: 100% Expiry, No Amalgamation/Demerger Benefits for Firms. A firm claiming a 100% deduction under section 80IC of the Income Tax Act, 1961, is taken over by a company on April 1, 2011, coinciding with the expiration of the five-year 100% deduction period. The query concerns whether the firm will receive a 25% or 30% deduction for the subsequent five years and if starting a new unit before April 1, 2012, would allow a 100% deduction for the first five years followed by 30% for the next five. The response clarifies that such deductions are applicable only in cases of amalgamation or demerger, with no similar provision for firms.