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CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Kaveri Infra Ltd has an eligible infrastructure undertaking whose profits qualify for a deduction under section 138 of the Income-tax Act, 2025, computed as per section 80-IA of the 1961 Act. Which statement correctly describes the period for which this deduction is allowed?

The deduction under section 138 is allowed only for those tax years that section 80-IA of the 1961 Act would have allowed, as if that Act had not been repealed. The amount is likewise calculated as per section 80-IA, so there is no independent period.

  1. AOnly for tax years that would have been allowed under section 80-IA of the 1961 Act as if that Act had not been repealedCorrect
  2. BFor any tax year in which the undertaking earns profits, without time limit
  3. CFor a fixed five tax years from the date of commencement of the 2025 Act
  4. DFor the tax years chosen by the assessee irrespective of the old section

Explanation

Section 138(ii) provides that the deduction is allowed only for such tax years as would have been allowed under section 80-IA of the 1961 Act as if it had not been repealed. The amount is also calculated as per section 80-IA. The other options introduce unlimited, fixed or elective periods that the text does not provide.

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