Ection 36(1) (viii), -verification u/s 80c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 any public company formed and registered in India with
the main object of carrying on the business of providing
long term finance for construction or purchase of
houses in India for residential purposes which is eligible
for deduction under section 36(1) (viii),

query:-
for eg:-if diwan housing finance co falls under above categoty or not how to check & verify?
please suggest the sources of gathering the information.

CA Ghanshyam Joshi

CA Ghanshyam Joshi (Expert)
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11 May 2012 Special deduction to Specified Entities engaged in eligible business [Section
36(1)(viii)]
(a) This section provides deduction in respect of any special reserve created and maintained
by a specified entity.
(b) The quantum of deduction, however, should not exceed 20% of the profits derived from
eligible business computed under the head “Profits and gains of business or profession”
carried to such reserve account.
(c) The eligible business for different entities specified are given in the table below –
Specified entity - A housing finance company - Eligible business - Business of providing long-term finance
for the construction or purchase of
houses in India for residential purposes
(d) However, where the aggregate amount carried to such reserve account exceeds twice
the amount of paid up share capital and general reserve, no deduction shall be allowed in
respect of such excess.
(e) Infrastructure facility has been defined to mean -
(a) (1) an infrastructure facility as defined in the Explanation to clause (i) of subsection
(4) of section 80-IA i.e.
(i) a road including toll road, a bridge or a rail system;
(ii) a highway project including housing or other activities being an integral
part of the highway project;
(iii) a water supply project, water treatment system, irrigation project,
sanitation and sewerage system or solid waste management system; and
(iv) a port, airport, inland waterway or inland port or a navigational channel in
the sea
(2) any other public facility of a similar nature as may be notified by the CBDT in
this behalf in the Official Gazette and which fulfils the prescribed conditions;
(b) an undertaking referred to in clause (ii) or clause (iii) or clause (iv) of sub-section (4)
of section 80-IA (i.e. an undertaking providing telecommunication services, an undertaking developing, developing and operating, maintaining and operating an industrial park or SEZ notified by the Central Government, an undertaking generating, distributing or transmitting power); and
(c) an undertaking referred to in sub-section (10) of section 80-IB i.e. an undertaking developing and building housing projects approved by a local authority.
Conditions to be fulfilled by a public facility to be eligible to be notified as an infrastructure facility [Notification No.187/2006 dated 20.7.2006 ]
Rule 6ABAA has been inserted in the Income-tax Rules, 1962 which specifies the conditions to be fulfilled by a public facility to be eligible to be notified as an infrastructure facility in accordance with the provisions of clause (d) of the Explanation to clause (viii) of sub-section
(1) of section 36. The conditions specified therein are -
(a) it is owned by a company registered in India or by a consortium of such companies or by
an authority or a board or a corporation or any other body established or constituted
under any Central or State Act;
(b) it has entered into an agreement with the Central Government or a State Government or
a local authority or any other statutory body for (i) developing or (ii) operating and
maintaining or (iii) developing, operating and maintaining a new infrastructure facility similar in nature to an infrastructure facility referred to in the Explanation to section 80IA(4)(i);
(c) it has started or starts operating and maintaining such infrastructure facility on or after 1st April, 1995.
Notification of public facilities as infrastructure facility for the purpose of section 36(1)(viii) [Notification No. 188/2006, dated 20.7.2006]
The following public facilities have been notified by the CBDT as infrastructure facility for purposes of section 36(1)(viii)-
(1) Inland Container Depot and Container Freight Station notified under the Customs Act, 1962
(2) Mass Rapid Transit system
(3) Light Rail Transit system
(4) Expressways
(5) Intra-urban or semi-urban roads like ring roads or urban by-passes or flyovers
(6) Bus and truck terminals
(7) Subways
(8) Road dividers
(9) Bulk Handling Terminals which are developed or maintained or operated for development
of rail system
(10) Multilevel Computerised Car Parking.
Deduction in respect of income from long-term finance for development of infrastructure facilities - The deduction will now be available also to approved financial corporations providing long-term finance for development of infrastructure facilities in India.
For this purpose, the expression “infrastructure facility” shall have the meaning assigned to it in section 80-IA.