Meaning of “Discontinued”

The meaning of discontinued under section 33B of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of discontinued.

meaning of discontinued

Meaning of discontinued defined by court

The phrase ‘discontinued’ used in section 33B of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble ITAT-Ahmedabad explained the meaning of ‘discontinued’ while delivering judgment in ITO vs. Klin products (morvi) (p.) Ltd. [1987] 23 ITD 423 (Ahd. – Trib.) as under :

Meaning: The word ‘discontinued’ under section 33B would mean complete stoppage for sometime which may not necessarily be very long.

Section 33B of Income Tax Act

Rehabilitation allowance.

33B. Where the business of any industrial undertaking carried on in India is discontinued in any previous year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee and used for the purposes of such business as a direct result of—

(i) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature ; or

(ii) riot or civil disturbance ; or

(iii) accidental fire or explosion ; or

(iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war),

and, thereafter, at any time before the expiry of three years from the end of such previous year, the business is re-established, reconstructed or revived by the assessee, he shall, in respect of the previous year in which the business is so re-established, reconstructed or revived, be allowed a deduction of a sum by way of rehabilitation allowance equivalent to sixty per cent of the amount of the deduction allowable to him under clause (iii) of sub-section (1) of section 32 in respect of the building, machinery, plant or furniture so damaged or destroyed :

Provided that no deduction under this section shall be allowed in relation to the assessment year commencing on the 1st day of April, 1985, or any subsequent assessment year.

Explanation.—In this section, “industrial undertaking” means any undertaking which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.

In this article, you can get guidance from high courts on the meaning of discontinued under section 33B of the Income Tax Act.

Updated up to Finance Act 2021

Leave a Reply