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Tax reliefs, which will be withdrawn

What are the tax concessions, which are withdrawn?

There were apprehensions of large-scale withdrawal of exemptions in view of the exercise, which was undertaken by the Government prior to budget. But restrictions are few. A concession that has been removed is deduction under Sec. 36(1)(v) in respect of contribution by public financial institutions towards Expenditure Risk Administration Fund. Exemption for Venture Capital Funds under Sec. 10(23FB) will be restricted to companies investing in venture capital undertakings limited to businesses specified in Explanation (c) to the section.

There is also withdrawal of continued benefit of Sec. 80IA for undertakings on transfer of the undertaking on amalgamation or demerger after March 31, 2007. This is rather odd, because in similar circumstances, the Board in F.No.15/5/63-IT (A-I) dated December 13, 1963, had taken a view, which would recognise continued benefit even in the hands of the successor as long as the conditions continue to be complied with. This was followed by the High Courts, as for example, in CIT v P.K. Engineering & Forging (P) Ltd. (1996) 87 Taxman 101 (Cal) and A.G.S. Tibre & Chemical Industries (P) Ltd. v CIT (1998) 233 ITR 207 (Mad). The benefit of Sec. 80IA is now barred for undertakings shifted to Special Economic Zones vide amendment to Sec. 10AA by limiting the benefit to new undertakings. This amendment is made retrospective from AY 2000-01. Minimum Alternate Tax is extended to industrial undertakings covered by Sec. 10A and 10B.

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