Meaning of “Expansion of a unit”

The meaning of expansion of a unit under section 80J 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 expansion of a unit.

Meaning of expansion of a unit defined by court

The phrase ‘expansion of a unit’ used in section 80J of the Income Tax Act came up before hon’ble ITAT-Delhi in ITO Vs. Delhi Press Samachar Patra (P.) Ltd. [1990] 32 ITD 650 (Delhi-Trib.) and it explained.

Meaning : The ‘expansion of a unit’ would mean enlarging of the production capacity by adding one or more machines to an existing unit, which machines by themselves are incapable of producing the same final product.

Section 80J of Income Tax Act

Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.

80J. [Omitted by the Finance (No. 2) Act, 1996, w.r.e.f.1-4-1989.]

In this article, you can get guidance from high courts on the meaning of expansion of a unit under section 80J of the Income Tax Act.

Updated up to Finance Act 2021