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CS Executive · Tax Laws and Practice · Deductions

Sunrise Infra Ltd. has an eligible undertaking whose profits qualify for deduction under Section 138 of the Income-tax Act, 2025. How is the amount and period of the deduction determined?

Section 138 ties the deduction to the old section 80-IA: both the amount and the number of years are those that would have applied under the 1961 Act as if it had not been repealed. It does not create new rates or periods.

  1. ACalculated and allowed for years as under section 80-IA of the Income-tax Act, 1961, as if that Act had not been repealedCorrect
  2. BFixed at 100% of profits for any ten years chosen by the assessee within twenty years
  3. CCalculated at 50% of profits for an unlimited period
  4. DAllowed only if the profits are reinvested within one year

Explanation

Section 138 states the deduction is calculated as per section 80-IA of the 1961 Act and allowed only for the tax years that would have been allowed under it, as if that Act had not been repealed. The other options invent rates, choices of years or reinvestment conditions not found in the text.

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