Period of commencement : The undertaking must start its operation or substantial expansion** as given in table :
|Name of state
||23 December, 2002 - 31 March, 2007
|Himachal Pradesh or Uttaranchal
||07 January 2003 - 31 March, 2012
|North Estern States ( Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagalnd and Tripura )
||24 December, 1997 - 31 March, 2007
** Substantial expansion here means :
Amount of investment in Plant & Machinery for expansion
Book value of plant & machinery as on the 1st day of PY in which substantial expansion is taken
If the proportion of investment comes 50% or more, then it’s substantial expansion.
Example : Given below is data :
A ltd completed 1 expansion in two year. Proportion of amount of investment to book values of plant and machineries 51% (calculated as per the formula given above)
B ltd completed 2 expansion in two years. Proportion of amount of investment to book values of plant and machineries for first year is 28% and for second year is 23% which is in total 51%
In the above example, expansion by A Ltd will be termed as substantial expansion to claim deduction under this section because one expansion is completed in two years. However, in the case of B Ltd, two expansion was made in two years and both of the expansions will not qualify as substantial expansion as individually expansion is less than 50%.