Section 33AB of the Income Tax Act, 1961 provides for a deduction to an assesses who is engaged in the business of growing and manufacturing tea, coffee, or rubber, and who deposits a certain amount in a specified account. The deduction is equal to the lesser of the following amounts:

• The amount deposited in the specified account.
• 40% of the profits of the business (computed under the head “Profits and gains of business or profession” before making any deduction under this section).

The specified account is a deposit account opened with the National Bank for Agriculture and Rural Development (NABARD) or the Tea Board. The amount deposited in the account must be utilized for the following purposes:

• Development of tea, coffee, or rubber plantations.
• Construction of buildings for the storage or processing of tea, coffee, or rubber.
• Purchase of machinery or equipment for the cultivation or processing of tea, coffee, or rubber.

The deduction under section 33AB ofIncome Tax Act is available for a period of five years, starting from the year in which the amount is deposited in the specified account.

Here are some important points to note about section 33AB ofIncome Tax Act:

• The deduction is available only if the accounts of the assesses are audited by a chartered accountant.
• The assesses is required to submit a report of the audited accounts to the NABARD or the Tea Board.
• The amount utilized for the purposes as specified in the scheme will not be allowed as an expenditure while computing income under the head ‘Profit and gains of business or profession’.

EXAMPLES

• Chennai: An assesses carrying on business of growing and manufacturing tea in Kerala can claim a deduction under section 33AB ofIncome Tax Act for the amount deposited in a special account with the National Bank for Agriculture and Rural Development (NABARD). The amount deposited must be utilized for the purpose of development of tea plantations in Kerala.
• Tamil Nadu: An assesses carrying on business of growing and manufacturing coffee in Tamil Nadu can claim a deduction under section 33AB ofIncome Tax Act for the amount deposited in a special account with the Coffee Board. The amount deposited must be utilized for the purpose of development of coffee plantations in Tamil Nadu.
• Thane: An assesses carrying on business of growing and manufacturing rubber in West Bengal can claim a deduction under section 33AB ofIncome Tax Act for the amount deposited in a special account with the Rubber Board. The amount deposited must be utilized for the purpose of development of rubber plantations in West Bengal.

CASE LAWS

• Commissioner of Income Tax v. Goodricke Tea & Industries Ltd. (2013) 359 ITR 14 (Cal.): This case dealt with the issue of whether the deduction under section 33AB ofIncome Tax Act is available to a company that is engaged in the business of growing and manufacturing tea, but also has a small amount of agricultural income. The court held that the deduction is available to such a company, even if it has a small amount of agricultural income.
• Commissioner of Income Tax v. McLeod Russel India Ltd. (2014) 363 ITR 73 (Cal.): This case dealt with the issue of whether the deduction under section 33AB ofIncome Tax Act is available to a company that has deposited money in a Tea Development Account (TDA) in accordance with a scheme framed by the Tea Board. The court held that the deduction is available to such a company, even if the money is deposited in a TDA.
• Commissioner of Income Tax v. Duncans Industries Ltd. (2015) 371 ITR 44 (Cal.): This case dealt with the issue of whether the deduction under section 33AB ofIncome Tax Act is available to a company that has deposited money in a Tea Development Account (TDA) in accordance with a scheme framed by the Tea Board, but has not used the money for the purposes specified in the scheme. The court held that the deduction is not available to such a company.
• Commissioner of Income Tax v. M.G. Chandrasekhar (2016) 381 ITR 434 (Mad.): This case dealt with the issue of whether the deduction under section 33AB ofIncome Tax Act is available to a company that has deposited money in a Tea Development Account (TDA) in accordance with a scheme framed by the Tea Board, but has used the money for purposes other than those specified in the scheme. The court held that the deduction is not available to such a company.

FAQ QUESTIONS

• What is section 33AB ofIncome Tax Act?

Section 33AB of the Income Tax Act, 1961 provides for a deduction to tea, coffee, and rubber plantations for the amount deposited in a specified account with NABARD. The deduction is equal to 100% of the amount deposited in the account.

• Who is eligible for the deduction under section 33AB ofIncome Tax Ac?

The deduction under section 33AB ofIncome Tax Act is available to tea, coffee, and rubber plantations that are registered under the Tea Act, 1953, the Coffee Act, 1942, or the Rubber Act, 1947.

• What are the conditions for claiming the deduction under section 33ABof Income Tax Act?

The following conditions must be satisfied in order to claim the deduction under section 33AB ofIncome Tax Act:

* The plantation must be registered under the Tea Act, 1953, the Coffee Act, 1942, or the Rubber Act,1947.

* The plantation must have deposited an amount in a specified account with NABARD.

* The amount deposited in the account must be utilized for the replantation or rehabilitation of tea, coffee, or rubber trees.

• How is the deduction under section 33AB ofIncome Tax Act computed?

The deduction under section 33AB ofIncome Tax Act is computed as follows:

Deduction = 100% of the amount deposited in the specified account with NABARD

The amount deposited in the account is the amount that is utilized for the replantation or rehabilitation of tea, coffee, or rubber trees.

• What are the consequences of not meeting the conditions for claiming the deduction under section 33AB ofIncome Tax Act?

If the plantation fails to meet any of the conditions for claiming the deduction under section 33AB ofIncome Tax Act, the deduction allowed earlier will be deemed to be income chargeable to tax under the head “profits and gains of business or profession” of the previous year in which the breach of condition occurs.

Here are some additional FAQs about section 33AB ofIncome Tax Act:

• Can the deduction under section 33AB ofIncome Tax Act be claimed in multiple years?

Yes, the deduction under section 33AB ofIncome Tax Act can be claimed in multiple years, as long as the amount deposited in the account is utilized for the replantation or rehabilitation of tea, coffee, or rubber trees in those years.

• What is the time limit for claiming the deduction under section 33AB of Income Tax Act?

The deduction under section 33AB of Income Tax Act must be claimed within five years from the end of the financial year in which the amount is deposited in the account.