15 July 2011
My client had bought the windmill in 2006 and 2008 resp. 2 machines separate in there mother co.
My client is planning to to sell these 2 machines to their sister co. on current market value, or book value etc.
can Second company ( Sister Concern)can claim the 10 year tax holiday U/S 80 IA . As the tax holiday benefits has not been taken by the 1st company i.e. mother company.
also update whether my client can take 20% additional depreciation on wind mill in 1st year like they do so on other plant and machinery ?
16 July 2011
Sub section 3 of section 80IA restricts deduction on such transfer where machinery has been used previously for "any" purpose. "Any" includes all the purposes including the purposes covered under this section.
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Further transfer of Plant & Machinery and restructuring of business is allowed in case of State Electicity Boards only.
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Explanation 1 and Explanation 2 are also restricting such transfer
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Sister concern means a different assessee in the eye of IT
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In my view, by taking such step, the assessee as well as its sister concern will lose the benefit of S 80IA.
16 July 2011
Kindly go through the respective section under which you want to claim the exemption and see the restriction. Transfer of wind mill is to be considered as second hand machinery which is not permitted.
CAclubindia
