IBA was introduced by Income Tax Act 1945 to encourage post-war
reconstruction by productive industry. Broadly, allowances were
then available on the capital cost of constructing buildings or
structures (or sometimes on buying them unused) provided that the
building or structure was used for manufacturing or processing.
There could then be, and still can be, many interests in land (and
hence in the building or structure). In order to keep the relief
simple allowances were available only to a person holding "the
relevant interest" in the building. It replaced the old mills and
The broad framework from 1945 still applies. Originally IBA was aimed at productive industry but its scope is now much wider and includes buildings and structures like tunnels, bridges, roads used for highway concessions, qualifying hotels and commercial buildings in enterprise zones.