Section 80IA(4) of the Income Tax Act
Income-tax Act, 2025: s.138
Section 80IA(4) falls under section 80IA of the Income-tax Act, 1961, which corresponds to section 138 (Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc) of the Income-tax Act, 2025.
Read section 138 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 80IA(4) is CIT v. ABG Heavy Industries Ltd. (322 ITR 323), cited in 229 of the 475 judgments on BharatTax that turn on this section.
Leading authorities on Section 80IA(4)
The Assessing Officer cannot deny a Section 80IA deduction by merely asserting that the assessee is not a "developer" without considering the relevant agreements and facts. Entitlement to Section 80IA deduction requires a thorough examination of the assessee's role as a developer.
Deduction under section 80-IA is available to developers who undertake entrepreneurial investment risk, not merely to contractors who undertake business risk. The nature of the work undertaken determines eligibility.
Expenditure incurred for acquiring a lease is capital expenditure if it brings into existence an asset or advantage for the enduring benefit of the business. The court distinguishes between 'premium' and 'rent' based on the parties' conscious choice of terms.
Income from a deferred VAT rebate granted by a state government for sales tax incentives is not considered income derived from an industrial undertaking and is therefore not eligible for deduction under Section 80IC.
Reopening an assessment is not permissible solely on the basis of a change of opinion by the Assessing Officer if there was a full disclosure of material facts by the assessee during the original assessment under section 143(3).
In the interpretation of taxing statutes, exemption provisions are to be construed strictly, but once eligibility criteria are met, the exemption notification should be liberally construed to give it full play.
Where an assessee enters into a development contract where it undertakes all acts from project design to handing over, it is considered to be developing a facility as a whole, not performing a specific work. This implies the ownership of the site is not transferred.
An assessee is entitled to claim the benefit under Section 80IA(4)(i) even in the absence of a specific agreement with the Central/State Government, local authority or statutory body, if the proposal was accepted by the Government on certain conditions which were duly complied with.
Unabsorbed depreciation of an amalgamating company cannot be added to the written down value of assets in the hands of the amalgamated company. The Supreme Court has dismissed a special leave petition against a High Court decision on this point, implicitly upholding this proposition.