Income-tax Act, 1961 - Legacy provision
Section 10C of Income Tax Act 1961: Industrial Undertakings in North-Eastern Region
Section 10C provided a tax exemption for profits and gains derived from specified industrial undertakings that began manufacturing or producing articles or things in notified Integrated Infrastructure Development Centres or Industrial Growth Centres in the North-Eastern Region.
What did Section 10C provide?
Under sub-section (1), profits and gains derived by an assessee from an eligible industrial undertaking were not included in total income where the undertaking began to manufacture or produce an article or thing on or after 1 April 1998 in an Integrated Infrastructure Development Centre or Industrial Growth Centre located in the North-Eastern Region.
Conditions for an industrial undertaking
Sub-section (2) required the industrial undertaking to satisfy the following conditions:
- It must not have been formed by splitting up or reconstructing a business already in existence.
- The above restriction did not apply where the undertaking resulted from re-establishment, reconstruction or revival of a business referred to in Section 33B, in the circumstances and within the period specified there.
- It must not have been formed by transferring to a new business machinery or plant previously used for any purpose.
- For the machinery or plant condition, the relevant explanations to Section 80-IA applied as provided by Section 10C.
Period of exemption under Section 10C
Sub-section (3) contemplated exclusion of eligible profits and gains from total income for ten consecutive assessment years, beginning with the assessment year relevant to the previous year in which the industrial undertaking began manufacturing or producing articles or things.
However, the later proviso expressly stopped the deduction from the assessment year beginning on 1 April 2004 and every subsequent assessment year. Accordingly, Section 10C does not provide a current tax holiday.
Computation rules for subsequent assessment years
Sub-section (4) contained special rules intended to prevent the exempt period from creating duplicated deductions or carry-forward benefits in later years. In substance, the provision dealt with depreciation and specified allowances, losses connected with the industrial undertaking, overlapping deductions and written down value.
| Rule | Effect under legacy Section 10C |
|---|---|
| Sections 32, 35 and specified Section 36 allowance | Relevant deductions were treated as having been given full effect for the exempt assessment years. |
| Losses under Sections 72 and 74 | Specified losses relating to the industrial undertaking and relevant assessment years could not be carried forward or set off as provided in Section 10C(4). |
| Other profit-linked deductions | No deduction was allowed under the listed provisions, including Sections 80HH, 80HHA, 80-I, 80-IA, 80-IB and 80JJA, in relation to the same profits and gains. |
| Written down value | Depreciation was treated as if it had been claimed and actually allowed for each relevant assessment year. |
Sub-section (5) also applied the relevant provisions of Section 80-IA concerning transfers and arrangements producing more than ordinary profits, so far as applicable.
Declaration not to apply Section 10C
Under sub-section (6), an assessee could furnish a written declaration to the Assessing Officer before the due date for filing the return under Section 139(1), stating that Section 10C should not apply. If such a declaration was furnished, the section did not apply for any of the relevant assessment years.
Definitions under Section 10C
Integrated Infrastructure Development Centre
A centre located in a State of the North-Eastern Region and specified by the Central Government by notification in the Official Gazette for the purposes of Section 10C.
Industrial Growth Centre
A centre located in a State of the North-Eastern Region and specified by the Central Government by notification in the Official Gazette for the purposes of Section 10C.
North-Eastern Region
For Section 10C, the North-Eastern Region comprised Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
Relevant assessment years
The expression meant the ten consecutive years beginning with the year in which the industrial undertaking began to manufacture or produce articles or things.
Present relevance of Section 10C after 1 April 2026
The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the Income-tax Act, 1961. The old Act nevertheless remains relevant for periods and proceedings preserved by the transition and savings provisions. The Income Tax Department has also clarified that matters relating to periods before the new Act took effect continue under the applicable old-law framework.
Because Section 10C had already ceased to allow a deduction from AY 2004-05 onward, this page should be read as a reference to the historical provision and any legacy issue to which the saved provisions of the 1961 Act remain relevant.
Related Income Tax provisions
For surrounding provisions, see Section 10 - incomes not included in total income, Section 10A, Section 10AA, Section 10B, Section 10BA and Section 10BB.
This article is a general legal and tax reference. For a legacy assessment, appeal or proceeding, the applicable law depends on the relevant period, facts, amendments and transition provisions.