33AB

ITA 1961 · Section 33AB

Section 33AB — Tea development account coffee development account and rubber development accoun

Chapter IV-D — Profits and Gains of Business or ProfessionITA 1961Up to AY 2025-26

Function in the statutory architecture

Statutory text — Income-tax Act, 1961

CHAPTER IV

COMPUTATION OF TOTAL INCOME / D. PGBP

Tea development account, coffee development account and rubber development account.

33AB. (1) Where an assessee carrying on business of growing and manufacturing tea or coffee or rubberin India has, before the expiry of six months from the end of the previous year or before the due date offurnishing the return of his income, whichever is earlier,—

(a) deposited with the National Bank any amount or amounts in an account (hereafter in this section

referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board; or

(b) deposited any amount in an account (hereafter in this section referred to as the Deposit Account)

opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Tea Board or the Coffee Board or the Rubber Board, as the case may be (hereafter in this section referred to as the deposit scheme), with the previous approval of the Central Government,

the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of—

(a) a sum equal to the amount or the aggregate of the amounts so deposited; or (b) a sum equal to forty per cent of the profits of such business (computed under the head "Profits and

gains of business or profession" before making any deduction under this section),

whichever is less :

Provided that where such assessee is a firm, or any association of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or as the case may be, any member of such firm, association of persons or body of individuals :

Provided further that where any deduction, in respect of any amount deposited in the special account, or in the Depos it Account, has been allowed under this sub-section in any previous year, no deduction shall be allowed in respect of such amount in any other previous year.

(2) The deduction under sub-section (1) shall not be admissible unless the accounts of such business of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as de fined in the Explanation below sub-section (2) of section 288 before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant :

Provided that in a case where the assessee is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the accounts of such business audited under such law and furnishes the report of the audit as required under such other law and a further report in the form prescribed under this sub-section.

(3) Any amount standing to the credit of the assessee in the special account or the Deposit Account shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the case may be, in the deposit scheme or in the circum stances specified below :—

(a) closure of business; (b) death of an assessee;

(d) dissolution of a firm; (e) liquidation of a company.

(4) Notwithstanding anything contained in sub-section (3), where any amount standing to the credit of the assessee in the special account or in the Deposit Account is released during any previous year by the National Bank or withdrawn by the assessee from the Deposit Account, and such amount is utilised for the purchase of—

(a) any machinery or plant to be installed in any office premises or residential accommodation,

including any accommodation in the nature of a guest-house;

(b) any office appliances (not being computers);

by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession" of any one previous year;

(d) any new machinery or plant to be installed in an industrial undertaking for the purposes of business

of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule,

the whole of such amount so utilised shall be deemed to be the profits and gains of business of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year.

(5) Where any amount, standing to the credit of the assessee in the special account or in the Deposit Account, is with drawn during any previous year by the assessee in the circum stance specified in clause (a) or clause (d) of sub-section (3), the whole of such amount shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year, as if the business had not closed or, as the case may be, the firm had not been dissolved.

(6) Where any amount standing to the credit of the assessee in the special account or in the Deposit Account is utilised by the assessee for the purposes of any expenditure in connection with such business in accordance with the scheme or the depos it scheme, such expenditure shall not be allowed in computing the income chargeable under the head "Profits and gains of business or profession".

(7) Where any amount, standing to the credit of the assessee in the special account or in the Deposit Account, which is released during any previous year by the National Bank or which is withdrawn by the assessee from the Deposit Account for being utilised by the assessee for the purposes of such business in accordance with the scheme or the deposit scheme is not so utilised, either wholly or in part, within that previous year, the whole of such amount or, as the case may be, part thereof which is not so utilised shall be deemed to be profits and gains of business and accordingly chargeable to income-tax as the income of that previous year :

Provided that this sub-section shall not apply in a case where such amount is released during any previous year at the closure of the account in circumstances specified in clauses (b), (c) and (e) of sub-section (3).

(8) Where any asset acquired in accordance with the scheme or the deposit scheme is sold or otherwise transferred in any previous year by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired, such part of the cost of such asset as is relatable to the deduction allowed under sub-section (1) shall be deemed to be the profits and gains of business or profession of the previous year in which the asset is sold or otherwise transferred and shall accordingly be chargeable to income-tax as the income of that previous year :

Provided that nothing in this sub-section shall apply—

(i) where the asset is sold or otherwise transferred by the assessee to Government, a local authority, a

corporation established by or under a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; or

(ii) where the sale or transfer of the asset is made in connection with the succession of a firm by a

company in the business or profession carried on by the firm as a result of which the firm sells or otherwise transfers to the company any asset and the scheme or the deposit scheme continues to apply to the company in the manner applicable to the firm.

Explanation.—The provisions of clause (ii) of the proviso shall apply only where—

(i) all the properties of the firm relating to the business or profession immediately before the

succession become the properties of the company ;

(ii) all the liabilities of the firm relating to the business or profession immediately before the succession

become the liabilities of the company ; and

(iii) all the shareholders of the company were partners of the firm immediately before the succession.

(9) The Central Government, if it considers necessary or expedient so to do, may, by notification in the Official Gazette, direct that the deduction allowable under this section shall not be allowed after such date as may be specified therein.

Explanation.—In this section,—

(a) "Coffee Board" means the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of

1942);

(aa) "National Bank" means the National Bank for Agriculture and Rural Development established

under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);

(ab) "Rubber Board" means the Rubber Board constituted under sub-section (1) of section 4 of the

Rubber Act, 1947 (24 of 1947);

(b) "Tea Board" means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953).

— Footnotes (gazette text) —

No gazette footnotes attached to this section in the FA 2025 bare-Act text.

— Source —

Verbatim text reproduced from income-tax-act-1961-as-amended-by-finance-act-2025.pdf (full layout extract, 0-indexed lines 8534-8663). Reproduced under Standard B (gazette-text discipline) — gazette content, French-style colon spacing, italics-for-Provisos/Explanations convention, and *N. footnote-numbering preserved.

PDF-extraction artifacts repaired: per-page header (“INCOME-TAX ACT, 1961 - 2024”), per-page footer, 2+ consecutive blank lines at page-break boundaries collapsed to a single blank, orphaned footnote-marker joining.

Finance Act 2026 overlay: not applicable. FA 2026 amends 14 sections of the 1961 Act (92CA, 139, 144C, 153B, 220, 222, 245, 245MA, 254, 275A, 275B, 276, 278A, 280) — this section is not among them.

Function in the statutory architecture

Tea / coffee / rubber development account — 40% of profits deductible if deposited with NABARD.

Historical context / FA amendment trail

Substantively stable / sunset by Finance Act; see source-block FA-amendment trail (where applicable).

Operative consequences

• Operates within the Chapter IV-D PGBP computational framework.

• Cross-references operative companion sections.

Case Laws & Commentary

SECTION 33AB — Tea Development Account, Coffee Development Account and Rubber Development Account

Important Case Laws — 1961 Treatise (FA 2026)

Provision in brief: Allows deduction to assessees engaged in growing and manufacturing tea/coffee/rubber, of amounts deposited (within 6 months from end of PY or due date u/s 139(1), whichever earlier) with NABARD in a special account under a scheme approved by Tea/Coffee/Rubber Board. Deduction is LEAST of: (a) amount deposited; or (b) 40% of profits of such business computed before s. 33AB. Withdrawals must be used for specified purposes; non-compliance/withdrawal-misuse triggers reversal under s. 33AB(5)/(6).

Section Commentary

Sector-specific incentive — tea, coffee, rubber

Section 33AB is a deduction-linked incentive for assessees engaged in 'growing and manufacturing' tea, coffee or rubber (the integrated agriculture-cum-industry character is essential — see Carbon and Chemicals India). The assessee deposits monies into a special NABARD account under a scheme approved by the Tea / Coffee / Rubber Board and claims as deduction the lesser of the deposit OR 40% of profits computed under PGBP before this deduction.

Computation base — Williamson Tea question

A perennial litigation under s. 33AB has been whether the '40% of profits' is computed on (i) composite tea income (before Rule 8 60:40 agricultural-non-agricultural apportionment) or (ii) only the 40% taxable portion under Rule 8. Williamson Tea (Gau) and subsequent SC SLP-line have settled that it is the COMPOSITE income — s. 33AB sits within the PGBP computation, which is anterior to Rule 8 segregation. This significantly enlarges the deduction available to tea companies.

Timing — strict 'whichever is earlier'

Deposit must be made (i) within 6 months from the end of PY, OR (ii) before the due date of return u/s 139(1), whichever is EARLIER. Apeejay Tea confirms that deposits made within 6 months but after s. 139(1) due date do NOT qualify — the safe-harbour is the earlier of the two dates. For tea / coffee / rubber companies in non-Tax-Audit category (rare) this can be 31 July of the AY.

Withdrawal and utilisation — anti-abuse

Sub-section (5) and (6): amounts withdrawn must be used only for purposes specified in the scheme (development, replanting, rejuvenation, etc.). Withdrawal for non-specified use, OR closure of business within 8 years of withdrawal, triggers reversal — the misused amount is deemed PGBP income of the year of misuse (Goodricke Group). Hence the deduction is conditional throughout the post-deposit life. The assessee must maintain auditable trail of withdrawals and end-use.

Practical CA pointers

(i) For tea/coffee/rubber clients, plan deposits ahead of return-filing season to avoid the s. 139(1) deadline trap. (ii) Reconcile NABARD account statement with books. (iii) Tag end-use of each withdrawal to a specified purpose in the approved scheme. (iv) For amalgamation / demerger, assess succession of NABARD account; the deduction-trail moves with the business but documentary continuity is critical. (v) Section 33AB is independent of s. 80-IA / 80-IB; double-claim is not barred but the same expenditure cannot be claimed twice.

FA 2026 impact: No FA 2026 amendment to s. 33AB. The 40% cap and NABARD deposit framework continue.

Leading Decisions

1. CIT v. Williamson Tea (Assam) Ltd.

Citation: (2011) 339 ITR 197 (Gau) — affirmed in subsequent SLP

Forum: Gauhati High Court

Facts & Issue: Question whether 40% of profits for s. 33AB should be computed on 'composite' tea income (i.e., before applying Rule 8 60:40 agricultural/non-agricultural split) or only on the 40% that constitutes business income.

Held / Ratio: The Gauhati High Court held that deduction u/s 33AB must be computed on the COMPOSITE income (i.e., before Rule 8 apportionment), since s. 33AB sits in the computation under PGBP which is anterior to Rule 8 segregation. This view was endorsed by the SC line in subsequent SLP matters.

Section relevance: Controls the computation base for s. 33AB — composite vs Rule 8 income — major recurring issue for tea companies.

2. Apeejay Tea Ltd. v. CIT

Citation: (1996) 222 ITR 339 (Cal)

Forum: Calcutta High Court

Facts & Issue: Question of timing — whether deposit made within 6 months of PY-end but AFTER s. 139(1) due date qualifies for s. 33AB deduction.

Held / Ratio: Held that the requirement of deposit within 'six months of the end of the previous year OR before the due date for filing return u/s 139(1), whichever is earlier' is mandatory. Where deposit was made within 6 months but after s. 139(1) due date, deduction not available. Strict reading consistent with the incentive-provision principle.

Section relevance: Defines the timing condition under s. 33AB(1) — strict construction of 'whichever is earlier'.

3. CIT v. Goodricke Group Ltd.

Citation: (2010) 326 ITR 90 (Cal)

Forum: Calcutta High Court

Facts & Issue: Withdrawal from NABARD account for purpose other than that specified in the Tea Development scheme — Revenue triggered reversal u/s 33AB(7) and treated the entire withdrawn amount as income of the year of misuse.

Held / Ratio: Held that s. 33AB(7) is automatic — the moment a withdrawal is used for a non-specified purpose, the amount is deemed income of that year. The provision is an anti-abuse mechanism without need for fault. The decision underlines the conditional nature of the deduction.

Section relevance: Authority on the anti-abuse withdrawal reversal mechanism in s. 33AB(7).

4. Assam Brook Ltd. v. CIT

Citation: (2003) 263 ITR 129 (Gau)

Forum: Gauhati High Court

Facts & Issue: Question: does s. 33AB deduction also reduce 'profits' for purposes of computing book profits u/s 115JB or other special provisions?

Held / Ratio: Held that s. 33AB is a deduction under the normal PGBP scheme; for MAT purposes (s. 115JB), book profit is computed on accounting profit per Schedule III, and statutory deductions like s. 33AB do not reduce book profit unless specifically provided for in the MAT adjustments table.

Section relevance: Clarifies the interface between s. 33AB and MAT u/s 115JB — relevant for tax planning by tea/coffee/rubber companies.

5. CIT v. Carbon and Chemicals India Ltd.

Citation: (2010) 327 ITR 470 (Ker)

Forum: Kerala High Court

Facts & Issue: Assessee, a rubber manufacturer, sought deduction u/s 33AB on profits of rubber-product (downstream) business. Revenue confined deduction to profits of growing-and-manufacturing rubber.

Held / Ratio: Held that s. 33AB applies only to assessee 'engaged in the business of growing and manufacturing' tea/coffee/rubber. Downstream rubber processing alone is not 'growing'. Deduction restricted to integrated growing-and-manufacturing income. Reinforces narrow scope of the incentive.

Section relevance: Restricts s. 33AB to integrated agricultural-cum-industrial operations.

6. Assam Co. (India) Ltd. v. CIT

Citation: (2002) 256 ITR 423 (Gau)

Forum: Gauhati High Court

Facts & Issue: Whether deduction u/s 33AB should be computed before or after deducting brought-forward unabsorbed depreciation/business loss.

Held / Ratio: Held that for s. 33AB, profits are to be computed BEFORE setting off brought-forward losses and unabsorbed depreciation but AFTER applying ss. 30 to 43D excluding s. 33AB itself. The 40% cap operates on current-year PGBP profits computed under normal rules.

Section relevance: Controls the order of computation for the 40%-of-profits cap under s. 33AB(1)(b).

— End of Section 33AB Case-Law Note —

← All sections (939)Act 1961 hub

Income-tax Act, 1961	Income-tax Act, 2025 / Allied Sources
s. 33AB — Tea / coffee / rubber development account — 40% of profits deductible if deposited with NABARD.	Corresponding provision in the 2025 Act preserves the same framework where the section remains operative; superseded for omitted sections.