A special provision under the Income Tax Act is a provision that provides for a different treatment of a certain type of income or taxpayer than is generally provided for under the Act. Special provisions are typically introduced to provide relief to taxpayers in certain situations or to promote certain economic activities.

Some examples of special provisions under the Income Tax Act include:

• Section 10(38) under Income Tax Act: This section provides a deduction for up to 75% of the amount donated to certain charitable institutions.
• Section 80C under Income Tax Act: This section provides a deduction for certain investments and expenses, such as life insurance premiums, provident fund contributions, and tuition fees.
• Section 80D under Income Tax Act: This section provides a deduction for medical expenses incurred for self, spouse, dependent children, and parents.
• Section 44AD under Income Tax Act: This section provides for a presumptive taxation scheme for small businesses.
• Section 44ADA under Income Tax Act: This section provides for a presumptive taxation scheme for professionals.

Special provisions can also be used to promote certain economic activities. For example, Section 10AA under Income Tax Act provides a deduction for profits derived from the export of certain goods and services.

Taxpayers should carefully review the special provisions under the Income Tax Act to see if they are eligible for any deductions or exemptions.

In addition to the above examples, there are many other special provisions under the Income Tax Act. The specific provisions that apply will depend on the individual taxpayer’s circumstances.

EXAMPLES

• Section 10A under Income Tax Act: This section provides a deduction for industrial undertakings from profits and gains derived from the following:
  • Manufacture or production of goods.
  • Power generation.
  • Scientific and industrial research.
• Section 10B under Income Tax Act: This section provides a deduction for export of goods or software.
• Section 10BA under Income Tax Act: This section provides a deduction for export of certain articles or things.
• Section 10D under Income Tax Act: This section provides a deduction for investment in new plant and machinery.
• Section 115D under Income Tax Act: This section provides a special provision for computation of total income of non-residents.
• Section 115E under Income Tax Act: This section provides a tax on investment income and long-term capital gains of non-residents.
• Section 115F under Income Tax Act: This section provides that capital gains on transfer of foreign exchange assets will not be charged in certain cases.

These are just a few examples of special provisions under the Income Tax Act. There are many other provisions that provide deductions, exemptions, and other benefits to taxpayers in certain cases.

CASE LAWS

Special provision for computation of profits and gains in connection with the business of exploration etc., of mineral oils (Section 44BB) under Income Tax Act

• CIT v. Tata Petrodyne Ltd. (2007): The Supreme Court held that the cost of depreciation on assets used in the business of exploration and production of mineral oils is allowable as a deduction under Section 44BB under Income Tax Act.
• ACIT v. Gujarat Narmada Valley Fertilizers Company Ltd. (2016): The Gujarat High Court held that the cost of seismic survey is allowable as a deduction under Section 44BB under Income Tax Act

Special provision for payment of tax by certain companies (Section 115JB) under Income Tax Act

• CIT v. Siemens India Ltd. (2007): The Supreme Court held that the book profit referred to in Section 115JB under Income Tax Act is the profit before tax, but after adjustments for depreciation and other non-allowable deductions.
• ACIT v. Cipla Ltd. (2019): The Bombay High Court held that the book profit referred to in Section 115JB under Income Tax Act includes the profit from the sale of fixed assets.

Special provision for cases where unrealised rent allowed as deduction is realised subsequently (Section 25A) under Income Tax Act

• CIT v. Raj Kumar Gupta (1987): The Supreme Court held that Section 25A under Income Tax Act applies even if the rent is realised in instalments after the relevant previous year.
• ACIT v. M/s. S.S. Exports (2016): The Delhi High Court held that Section 25A under Income Tax Act applies even if the tenant defaults on the rent payment.

FAQ QUESTIONS

Q: What are some of the special provisions under the Income Tax Act?

A: The Income Tax Act contains a number of special provisions that apply to different categories of taxpayers and different types of income. Some of the common special provisions include:

• Deductions for charitable donations under Income Tax Act: Taxpayers are allowed to deduct certain charitable donations from their taxable income.
• Exemptions for agricultural income: Agricultural income is exempt from income tax.
• Deductions for research and development expenses under Income Tax Act: Businesses are allowed to deduct certain research and development expenses from their taxable income.
• Tax breaks for startups under Income Tax Act: Startups are eligible for a number of tax breaks, such as a deduction for profits and losses from business operations and a tax holiday on capital gains.
• Tax breaks for senior citizens and disabled persons under Income Tax Act: Senior citizens and disabled persons are eligible for a number of tax breaks, such as a higher basic exemption limit and a deduction for medical expenses.

Q: What are the benefits of claiming special provisions under the Income Tax Act?

A: Claiming special provisions under the Income Tax Act can help taxpayers to reduce their taxable income and save tax. It is important to note that each special provision has its own eligibility criteria and conditions. Taxpayers should carefully review the Income Tax Act and consult with a tax professional to ensure that they are eligible to claim any special provisions.

Q: How can I claim special provisions under the Income Tax Act?

A: To claim special provisions under the Income Tax Act, taxpayers must disclose all relevant information in their income tax returns. They must also attach any supporting documentation, such as receipts or certificates. In some cases, taxpayers may be required to submit additional information to the Income Tax Department.

Q: What are the consequences of making false claims for special provisions under the Income Tax Act?

A: Making false claims for special provisions under the Income Tax Act is a serious offense. Taxpayers who are caught making false claims may be liable to pay additional tax, interest, and penalties. In some cases, taxpayers may also be prosecuted.

Q: Where can I get more information on special provisions under the Income Tax Act?

A: You can get more information on special provisions under the Income Tax Act from the website of the Income Tax Department of India (https://incometaxindia.gov.in/). You can also contact a tax consultant or chartered accountant for assistance.