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Section 32ac query - urgent

ramya (student) (51 Points)

24 March 2016

Hi, can someone help me out with the below quires regarding 32AC relevant for the AY 16-17 1) Has the relaxation of 100 crores been removed? 2) While applying the threshold of 25 crores, are we supposed to apply it on the individual value of each asset or the aggregate value of all the plant and machinery installed during the previous year??

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CMA Poornima Madhava (CMA) (13097 Points)
Replied 25 March 2016

Earlier deduction u/s 32AC was allowable provided the plant and machinery value exceeded 100 lacs in aggregate during fy 13-14 and fy 14-15. After the amendment, deduction is available from fy 14-15 provided the value exceeds 25 lacs during the py

ramya (student) (51 Points)
Replied 26 March 2016

Ohh okay.. thanks alot poornima.. :)

Ajay (CA Job) (512 Points)
Replied 26 March 2016

Dear Ramya

I am trying to add on to what Poornima said.

1. I think your query should have been "Has the THRESHOLD of 100 crores been removed?"

I said that because, rather than "removing the relaxation of Rs.100 Cr", they have enhanced the relaxation by bringing down the threshold to Rs.25 Cr, though with some conditions. To be specific to AY 2016-17, Sec. 32AC (1A) is applicable wherein a complany can claim allowance for investment (acquisituon AND installation) made in new asset exceeding Rs.25 Cr in the FY 2015-16.

Rs.100 Cr Scheme u/s 32AC(1) was applicable only for the block year of FY 2013-14 and FY 2014-15

whereas

Rs.25 Cr Scheme u/s 32AC (1A) is applicale individually to each of FY 2014-15, 2015-16 and 2016-17 ("relevant years").

One main point u/s 32AC(1A) is that the acquistion and installation of (or rather "investment" in) new asset exceeding Rs.25 Cr has to happen individually in any or all of the "relevant year(s)" as this new section does not provide a block year benefit.

2. While applying Rs.25 Cr threshold, aggregate value of new asset acquired and installed in each year has to be taken and not individual value.

Regards

Ajay