SECTION 10 A DETAILS PART 1

this section is posting a great challenge along with its followers namely 10 AA and 10 B.the section specifies " subject to the provisions of this section, a deduction of such profits and gains are derived by such undertakings from the export of articles or things or computer for a period of 10 consecutive assessment year relevant to the previous year in which undertaking begins to manufacture or produce articles or things or computer software, as the case may be allowed from the total income of the assessee:"now the section has to be analysed in detail so that we have some background before we go into the proviso:1. this section is covered under the third chapter of the it act which talks about exemptions. but this section starts off with the word deduction. so this is a peculiarity of a deduction section under the exemption chapter is the observation to be made. but what difference is this deduction going to apply for??? here is a point to think about. if there s a deduction then there is no question as to whether profits are there or not. so deduction is availed for losses and carry forward is also possible for deductions. how s this?? chapter 6 a deductions are not subject to losses but section 10 a talks about incomes that do not form part of total income so if there s no income no exemptionbut deduction is a high possibility. the set off of losses will not be available as there is exemption clause that by itself sets off the set off provisions. thus the classiiaction of this section as a deduction implications with exemption section is a vital understanding.2. the next important catch of the section is pgbp thru exports. so if a firm has income under any other head being a n enterprise in the units prescribed under this section the same shall not be availed for exemption. the firm shall also be not exempt from business incomes if such business income arises out of domestic business. so a vital condition is export. (clarifications shll be discussed about export oriented units in section 10B.) so there must be business income in the form of profits and gains thru exports. the next filter applied is that of articles or things or goods manufactured including computer software. so this section specifically includes the following items which implies anyting beyond this section s coverage shall not avail exemption even if it satisfies the condn of export and pgbp. so the 3 condns area. profits and gains of business or professionb. export of goods manufactured articles things etc.c. good articles things and computer software alone are covered under this section.3.the next very catchy part of this section is that deduction is available for 10 years beginning from the year in which the firm starts to produce or manufacture the said articles or things.so if the institutions covered under this section register themselves after they commence production, the delay in the registration is penalised by considering the year of first commencement of business. so if i start an undertaking and begin manufactring in year 2000 and get registered on 2002. my exemption shall not be 10 years but 8 years, because the exemption beginbs irrespective of whether the registration is complete or not. thus this is another note to be taken care.thus i have completed a small portion in this ocean in my next discussion i shall deal in depth about:what are the various types of enterprises covered?is there a possibility of conversion and the rest of the topics in this section

i would again be indebted to thank my tax masters ajith and tgs and my elder sisters who motivated me my parents who contributed to my brain, and finally my love-lord shiva.shambo mahadeva