Section 33B of the Income-tax Act, 1961: Rehabilitation Allowance
Section 33B historically provided a rehabilitation allowance where an industrial undertaking in India had to discontinue business because specified events extensively damaged or destroyed its business assets and the business was subsequently revived.
What is rehabilitation allowance under Section 33B?
Rehabilitation allowance was an additional income-tax deduction linked to the restoration of an industrial undertaking after extensive damage to, or destruction of, qualifying assets. It applied only if the undertaking's business was discontinued as a direct consequence of one of the events listed in the section and was re-established, reconstructed or revived within the prescribed time.
Industrial undertaking meant an undertaking mainly engaged in electricity or other power generation or distribution, ship construction, manufacturing or processing goods, or mining. The affected buildings, machinery, plant or furniture had to be owned by the assessee and used in that business.
Qualifying causes and reconstruction conditions
- Natural disasters: flood, typhoon, hurricane, cyclone, earthquake or another convulsion of nature.
- Public disorder: riot or civil disturbance.
- Accidents: accidental fire or explosion.
- Enemy action: enemy action or action taken in combating an enemy, whether or not war was formally declared.
The undertaking had to resume through re-establishment, reconstruction or revival before the expiry of three years from the end of the previous year in which its business was discontinued. The allowance, when historically available, related to the previous year of that revival.
Historical rate and calculation
The statutory rate was 60% of the deduction allowable under the former Section 32(1)(iii) in respect of the damaged or destroyed building, machinery, plant or furniture. It was not a flat 60% of the cost of rebuilding, the replacement asset cost, or the total loss.
| Historical calculation | Illustration |
|---|---|
| Deduction otherwise allowable under former Section 32(1)(iii) | Rs. 1,00,000 |
| Section 33B rehabilitation allowance (60%) | Rs. 60,000 |
This example is for understanding the former provision only and does not create a present-day deduction.
Why Section 33B is no longer claimable
The proviso inserted with effect from 1 April 1985 states that no deduction under Section 33B shall be allowed in relation to the assessment year commencing on 1 April 1985 or any subsequent assessment year. Consequently, claims for later assessment years cannot rely on Section 33B, even if a business has suffered damage and been reconstructed.
For contemporary tax treatment of business damage, insurance receipts, repairs, replacement assets or depreciation, examine the provisions applicable to the relevant tax year rather than applying this discontinued allowance.
Related legal provisions and official sources
Section 33B historically referred to Section 32(1)(iii), the former depreciation-related balancing allowance for specified disposed or destroyed assets. This cross-reference must be interpreted in its historical statutory context, not as an automatic reference to today's depreciation rules.
Historical statutory text and amendment notes
The following material is preserved from the original webpage for reference. It is historical text and should not be read as a current deduction entitlement.
Read the original Section 33B text and amendment history
1Where 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 32in respect of the building, machinery, plant or furniture so damaged or destroyed: 2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
(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 32in respect of the building, machinery, plant or furniture so damaged or destroyed: 2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
(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 32in respect of the building, machinery, plant or furniture so damaged or destroyed: 2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
(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 32in respect of the building, machinery, plant or furniture so damaged or destroyed: 2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
(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 32in respect of the building, machinery, plant or furniture so damaged or destroyed: 2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
2 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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
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. -------------------- 1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967). 2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
1. Ins. by Act 20 of 1967, s. 11 (w.e.f. 1-4-1967).
2. Ins. by Act 21 of 1984, s. 5 (w.e.f. 1-4-1985).
Frequently asked questions
Can Section 33B rehabilitation allowance be claimed in 2026?
No. The statutory proviso excludes assessment year 1985-86 and every subsequent assessment year. Section 33B is therefore historical, not a current deduction.
What was the rehabilitation allowance rate?
The historical deduction was 60% of the deduction allowable under the former section 32(1)(iii) for the damaged or destroyed assets, subject to the original conditions.
Which events qualified for the historical allowance?
Specified natural disasters, riots or civil disturbance, accidental fire or explosion, and enemy action could qualify where the business was discontinued due to extensive damage or destruction.
What was the reconstruction deadline?
The business had to be re-established, reconstructed or revived within three years from the end of the previous year in which it was discontinued.
Information is educational and should be checked against the legislation and official guidance applicable to the relevant assessment or tax year.