Deduction u/s 80-IA for Power Generation

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bhargav (Querist)
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02 December 2010 80 IA deduction to Power generating companies are availble.

Case :
A company is engage in power generation by wind mill. Comapny want to buy second hand windmill. Can they claim deduction u/s section 80-IA ?

My opinion :

Confusion under following two explanation u/s 80 IA

Explanation 1 : For the purposes of clause (ii) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely :- (a) Such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;

(b) Such machinery or plant is imported into India from any country outside India; and

(c) No deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
Explanation 2 : Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent. of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with.

Pls guide whether the company buying second hand wind mill can claim deduction under section 80IA for balance period.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 December 2010 Company can continue to claim deduction on profits of existing unit only when it constitute a new enterprise/undertaking for second hand wind mill which is being purchased.

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