Income Tax Act, 1961

INCOME TAX ACT, 1961 AS AMENDED BY FINANCE ACT,
Content wise

Chapter
No.
Chapter Heading
Chapter I PRELIMINARY
Chapter II BASIS OF CHARGE
Chapter
III
INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME
Chapter IV COMPUTATION OF TOTAL INCOME
Chapter V
INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEES TOTAL
INCOME
Chapter VI
AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD
OF LOSS
Chapter
VIA
DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME
Chapter
VIB
RESTRICTION ON CERTAIN DEDUCTIONS IN THE CASE OF
COMPANIES
Chapter
VII
INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO
INCOME-TA IS PAYABLE
Chapter
VIII
REBATES AND RELIEFS
Chapter I DOUBLE TAATION RELIEF
Chapter SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TA
Chapter I ADDITIONAL INCOME-TA ON UNDISTRIBUTED PROFITS
Chapter
II
DETERMINATION OF TA IN CERTAIN SPECIAL CASES
Chapter
IIA
SPECIAL PROVISIONS RELATING TO CERTAIN INCOMES OF
NON-RESIDENTS
Chapter
IIB
SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES
Chapter
IIC
SPECIAL PROVISIONS RELATING TO RETAIL TRADE, ETC!
Chapter
IID
SPECIAL PROVISIONS RELATING TO TA ON DISTRIBUTED
PROFITS OF DOMESTIC COMPANIES
Chapter
IIE
SPECIAL PROVISIONS RELATING TO TA ON DISTRIBUTED
INCOME
Chapter
IIF
SPECIAL PROVISIONS RELATING TO TA ON INCOME RECEIVED
FROM VENTURE CAPITAL COMPANIES AND VENTURE CAPITAL
FUNDS
Chapter SPECIAL PROVISIONS RELATING TO INCOME OF SHIPPING
IIG COMPANIES
Chapter
IIH
INCOME-TA ON FRINGE BENEFITS
Chapter
III
INCOME-TA AUTHORITIES
Chapter
IV
PROCEDURE FOR ASSESSMENT
Chapter
IVA
SPECIAL PROVISION FOR AVOIDING REPETITIVE APPEALS
Chapter
IVB
SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES
Chapter
V
LIABILITY IN SPECIAL CASES
Chapter
VI
SPECIAL PROVISIONS APPLICABLE TO FIRMS
Chapter
VII
COLLECTION AND RECOVERY OF TA
Chapter
VIII
RELIEF RESPECTING TA ON DIVIDENDS IN CERTAIN CASES
Chapter
I
REFUNDS
Chapter
IA
SETTLEMENT OF CASES
Chapter
IB
ADVANCE RULINGS
Chapter
APPEALS AND REVISION

Chapter
A
AC"UISITION OF IMMOVABLE PROPERTIES IN CERTAIN CASES
OF TRANSFER TO COUNTERACT EVASION OF TA
Chapter
B
RE"UIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR
REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF
TA
Chapter
C
PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE
PROPERTIES IN CERTAIN CASES OF TRANSFER
Chapter
I
PENALTIES IMPOSABLE
Chapter
II
OFFENCES AND PROSECUTIONS
Chapter
IIA
ANNUITY DEPOSITS
Chapter
IIB
TA CREDIT CERTIFICATES
Chapter
III
MISCELLANEOUS
Chapter I
PRELIMINARY
# Sh$rt t%t&e, e'te(t a() *$++e(*e+e(t
, De-%(%t%$(.
/ 0Pre1%$2. 3ear0 )e-%(e)
Chapter II
BASIS OF CHARGE
4 Char5e $- %(*$+e-ta'
6 S*$pe $- t$ta& %(*$+e
6A
App$rt%$(+e(t $- %(*$+e 7et8ee( .p$2.e. 5$1er(e) 73 P$rt252e.e C%1%&
C$)e
9 Re.%)e(*e %( I()%a
: I(*$+e )ee+e) t$ 7e re*e%1e)
; D%1%)e() %(*$+e
< I(*$+e )ee+e) t$ a**r2e $r ar%.e %( I()%a
Chapter III
INCOMES WHICH DO NO FORM PAR OF OAL INCOME
#= I(*$+e. ($t %(*&2)e) %( t$ta& %(*$+e
#=A
Spe*%a& pr$1%.%$( %( re.pe*t $- (e8&3 e.ta7&%.he) 2()erta>%(5. %( -ree tra)e
?$(e, et*
#=AA
Spe*%a& pr$1%.%$(. %( re.pe*t $- (e8&3 e.ta7&%.he) U(%t. %( Spe*%a& E*$($+%*
@$(e.
#=B
Spe*%a& pr$1%.%$(. %( re.pe*t $- (e8&3 e.ta7&%.he) h2()re) per *e(t e'p$rt-
$r%e(te) 2()erta>%(5.
#=BA Spe*%a& pr$1%.%$(. %( re.pe*t $- e'p$rt $- *erta%( art%*&e. $r th%(5.
#=BB Mea(%(5 $- *$+p2ter pr$5ra++e. %( *erta%( *a.e.
#=C
Spe*%a& pr$1%.%$( %( re.pe*t $- *erta%( %()2.tr%a& 2()erta>%(5. %( N$rth-Ea.ter(
Re5%$(
## I(*$+e -r$+ pr$pert3 he&) -$r *har%ta7&e $r re&%5%$2. p2rp$.e.
#, I(*$+e $- tr2.t. $r %(.t%t2t%$(. -r$+ *$(tr%72t%$(.
#,A C$()%t%$(. a. t$ re5%.trat%$( $- tr2.t., et*!
#,AA Pr$*e)2re -$r re5%.trat%$(
#/ Se*t%$( ## ($t t$ app&3 %( *erta%( *a.e.
#/A Spe*%a& pr$1%.%$( re&at%(5 t$ %(*$+e. $- p$&%t%*a& part%e.
Chapter I!
COMP"AION OF OAL INCOME
Head# o$ in%o&e
#4 Hea). $- %(*$+e
#4A
E'pe()%t2re %(*2rre) %( re&at%$( t$ %(*$+e ($t %(*&2)%7&e %( t$ta&
%(*$+e
A. ' Sa(arie#
#6 Sa&ar%e.
#9 De)2*t%$(. -r$+ .a&ar%e.
#: A Sa&ar3B, AperC2%.%teB a() Apr$-%t. %( &%e2 $- .a&ar3B )e-%(e)
B. ' )O&itted*
#; DOMITTED BY THE FINANCE ACT, #<;; W!E!F! #-4-#<;<E
#< DOMITTED BY THE FINANCE ACT, #<;; W!E!F! #-4-#<;<E
,= DOMITTED BY THE FINANCE ACT, #<;; W!E!F! #-4-#<;<E
,# DOMITTED BY THE FINANCE ACT, #<;; W!E!F! #-4-#<;<E
C. ' In%o&e $ro& ho+#e propert,
,, I(*$+e -r$+ h$2.e pr$pert3
,/ A((2a& 1a&2e h$8 )eter+%(e)

INCOME-TAX ACT, 1961*
43 OF 1961]
AS AMENDED BY FINANCE ACT, 2006]
An Act to consolidate and amend the law relating to income-tax and super-tax
BE it enacted by Parliament in the Twelfth Year of the Republic of India as follows :
CHAPTER I
PRELIMINARY
Short title, extent and commencement.
1
1.
2
1! This "ct may be called the Income#ta$ "ct% 1&'1(
2! It e$tends to the whole of India(
)! *a+e as otherwise pro+ided in this "ct% it shall come into force on the 1st day of
"pril% 1&'2(
Definitions.
2. In this "ct% unless the conte$t otherwise re,uires%
)
-1! ad+ance ta$ means the ad+ance ta$ payable in accordance with the pro+isions
of .hapter /0II#.12
3
-
4
1A!2
'
a5ricultural income
6
means
7
&
-a! any rent
18
or re+enue deri+ed from land
18
which is situated in India and is
used for a5ricultural purposes12
b! any income deri+ed from such land
18
by
i! a5riculture
18
1 or
ii! the performance by a culti+ator or recei+er of rent#in#9ind of any
process ordinarily employed by a culti+ator or recei+er of rent#in#9ind
to render the produce raised or recei+ed by him fit to be ta9en to
mar9et
18
1 or
iii! the sale by a culti+ator or recei+er of rent#in#9ind of the produce raised
or recei+ed by him% in respect of which no process has been performed
other than a process of the nature described in para5raph ii! of this sub#
clause 1
c! any income deri+ed from any buildin5 owned and occupied by the recei+er
of the rent or re+enue of any such land% or occupied by the culti+ator or the
recei+er of rent#in#9ind% of any land with respect to which% or the produce
of which% any process mentioned in para5raphs ii! and iii! of sub#clause
b! is carried on :
&
-Provided that
i! the buildin5 is on or in the immediate +icinity of the land% and is a
buildin5 which the recei+er of the rent or re+enue or the culti+ator% or
the recei+er of rent#in#9ind% by reason of his connection with the land%
re,uires as a dwellin5 house% or as a store#house% or other out#buildin5%
and
ii! the land is either assessed to land re+enue in India or is sub:ect to a
local rate assessed and collected by officers of the ;o+ernment as such
or where the land is not so assessed to land re+enue or sub:ect to a local
rate% it is not situated
A! in any area which is comprised within the :urisdiction of a
municipality whether 9nown as a municipality% municipal
corporation% notified area committee% town area committee% town
committee or by any other name! or a cantonment board and which
has a population of not less than ten thousand accordin5 to the last
precedin5 census of which the rele+ant fi5ures ha+e been
published before the first day of the pre+ious year 1 or
B! in any area within such distance% not bein5 more than ei5ht
9ilometres% from the local limits of any municipality or cantonment
board referred to in item A!% as the .entral ;o+ernment may%
ha+in5 re5ard to the e$tent of% and scope for% urbanisation of that
area and other rele+ant considerations% specify in this behalf by
notification in the <fficial ;a=ette
11
(2
12
-
1)
-Explanation 1(2>or the remo+al of doubts% it is hereby declared that
re+enue deri+ed from land shall not include and shall be deemed ne+er to ha+e
included any income arisin5 from the transfer of any land referred to in item a!
or item b! of sub#clause iii! of clause 14! of this section 12
13
-Explanation 2.>or the remo+al of doubts% it is hereby declared that income
deri+ed from any buildin5 or land referred to in sub#clause c! arisin5 from the
use of such buildin5 or land for any purpose includin5 lettin5 for residential
purpose or for the purpose of any business or profession! other than a5riculture
fallin5 under sub#clause a! or sub#clause b! shall not be a5ricultural income12
14
-
1'
-1B!2 amal5amation% in relation to companies% means the mer5er of one or more
companies with another company or the mer5er of two or more companies to
form one company the company or companies which so mer5e bein5 referred
to as the amal5amatin5 company or companies and the company with which
they mer5e or which is formed as a result of the mer5er% as the amal5amated
company! in such a manner that
i! all the property of the amal5amatin5 company or companies immediately
before the amal5amation becomes the property of the amal5amated
company by +irtue of the amal5amation 1
ii! all the liabilities of the amal5amatin5 company or companies immediately
before the amal5amation become the liabilities of the amal5amated
company by +irtue of the amal5amation 1
iii! shareholders holdin5 not less than
16
-three#fourths2 in +alue of the shares in
the amal5amatin5 company or companies other than shares already held
therein immediately before the amal5amation by% or by a nominee for% the
amal5amated company or its subsidiary! become shareholders of the
amal5amated company by +irtue of the amal5amation%
otherwise than as a result of the ac,uisition of the property of one company by
another company pursuant to the purchase of such property by the other
company or as a result of the distribution of such property to the other company
after the windin5 up of the first#mentioned company 12
2! annual +alue% in relation to any property% means its annual +alue as determined
under section 2) 1
3!
17
-* * *2
4! "ppellate Tribunal means the "ppellate Tribunal constituted under section
242 1
5! appro+ed 5ratuity fund means a 5ratuity fund which has been and continues to
be appro+ed by the
1&
-.hief .ommissioner or .ommissioner2 in accordance
with the rules contained in Part . of the >ourth *chedule 1
6! appro+ed superannuation fund means a superannuation fund or any part of a
superannuation fund which has been and continues to be appro+ed by the
1&
-.hief .ommissioner or .ommissioner2 in accordance with the rules
contained in Part B of the >ourth *chedule 1
28
! assessee
21
means a person by whom
22
-any ta$2 or any other sum of money is
payable under this "ct% and includes
a! e+ery person in respect of whom any proceedin5 under this "ct has been
ta9en for the assessment of his income
2)
-or assessment o! !ringe bene!its2
or of the income of any other person in respect of which he is assessable% or
of the loss sustained by him or by such other person% or of the amount of
refund due to him or to such other person 1
b! e+ery person who is deemed to be an assessee under any pro+ision of this
"ct 1
c! e+ery person who is deemed to be an assessee in default under any
pro+ision of this "ct 1
23
-A! "ssessin5 <fficer means the "ssistant .ommissioner
24
-or ?eputy
.ommissioner2
2'
-or "ssistant ?irector2
24
-or ?eputy ?irector2 or the Income#
ta$ <fficer who is +ested with the rele+ant :urisdiction by +irtue of directions
or orders issued under sub#section 1! or sub#section 2! of section 128 or any
other pro+ision of this "ct% and the
26
-@oint .ommissioner or @oint ?irector2
who is directed under clause b! of sub#section 3! of that section to e$ercise or
perform all or any of the powers and functions conferred on% or assi5ned to% an
"ssessin5 <fficer under this "ct 12
"! assessment
27
includes reassessment 1
#! assessment year means the period of twel+e months commencin5 on the 1st day
of "pril e+ery year 1
2&
-#A! "ssistant .ommissioner means a person appointed to be an "ssistant
.ommissioner of Income#ta$
)8
-or a ?eputy .ommissioner of Income#ta$2
under sub#section 1! of section 116 12
1$! a+era5e rate of income#ta$ means the rate arri+ed at by di+idin5 the amount of
income#ta$ calculated on the total income% by such total income 1
)1
-11! bloc9 of assets means a 5roup of assets fallin5 within a class of assets
comprisin5
a! tan5ible assets% bein5 buildin5s% machinery% plant or furniture1
b! intan5ible assets% bein5 9now#how% patents% copyri5hts% trademar9s%
licences% franchises or any other business or commercial ri5hts of similar
nature%
in respect of which the same percenta5e of depreciation is prescribed 12
12! Board means the
)2
-.entral Board of ?irect Ta$es constituted under the .entral
Boards of Re+enue "ct% 1&') 43 of 1&')!2 1
))
-12A! boo9s or boo9s of account includes led5ers% day#boo9s% cash boo9s% account#
boo9s and other boo9s% whether 9ept in the written form or as print#outs of data
stored in a floppy% disc% tape or any other form of electro#ma5netic data stora5e
de+ice12
)3
13! business
)4
includes any trade
)4
% commerce or manufacture or any ad+enture
)4
or
concern in the nature of trade
)4
% commerce or manufacture 1
)'
14! capital asset means property
)6
of any 9ind held by an assessee% whether or not
connected with his business or profession% but does not include
i! any stoc9#in#trade% consumable stores or raw materials held for the
purposes of his business or profession 1
)7
-ii! personal effects
)&
% that is to say% mo+able property includin5 wearin5
apparel and furniture% but e$cludin5 :ewellery! held for personal use
)&
by
the assessee or any member of his family dependent on him(
Explanation.>or the purposes of this sub#clause% :ewellery includes
a! ornaments made of 5old% sil+er% platinum or any other precious metal or
any alloy containin5 one or more of such precious metals% whether or
not containin5 any precious or semi#precious stone% and whether or not
wor9ed or sewn into any wearin5 apparel 1
b! precious or semi#precious stones% whether or not set in any furniture%
utensil or other article or wor9ed or sewn into any wearin5 apparel 12
38
-iii! a5ricultural land
31
in India% not bein5 land situate
a! in any area which is comprised within the :urisdiction of a
municipality
31
whether 9nown as a municipality% municipal
corporation% notified area committee% town area committee% town
committee% or by any other name! or a cantonment board and which has
a population
31
of not less than ten thousand accordin5 to the last
precedin5 census of which the rele+ant fi5ures ha+e been published
before the first day of the pre+ious year 1 or
b! in any area within such distance% not bein5 more than ei5ht 9ilometres%
from the local limits of any municipality or cantonment board referred
to in item a!% as the .entral ;o+ernment may% ha+in5 re5ard to the
e$tent of% and scope for% urbanisation of that area and other rele+ant
considerations% specify in this behalf by notification in the <fficial
;a=ette
32
12
3)
-i%! ' per cent ;old Bonds% 1&66%
33
-or 6 per cent ;old Bonds% 1&78%2
34
-or
Aational ?efence ;old Bonds% 1&78%2 issued by the .entral ;o+ernment 12
3'
-%! *pecial Bearer Bonds% 1&&1% issued by the .entral ;o+ernment 12
36
-%i! ;old ?eposit Bonds issued under the ;old ?eposit *cheme% 1&&& notified
by the .entral ;o+ernment 12
37
15!
3&
charitable purpose
48
includes relief of the poor% education
48
% medical relief%
and the ad+ancement of any other
48
ob:ect of 5eneral public utility
41
-* * *2 1
42
-15A! .hief .ommissioner means a person appointed to be a .hief .ommissioner of
Income#ta$ under sub#section 1! of section 116 12
4)
-
43
-15B!2 child% in relation to an indi+idual% includes a step#child and an adopted child
of that indi+idual 12
44
-16! .ommissioner means a person appointed to be a .ommissioner of Income#ta$
under sub#section 1! of section 116
4'
-* * *2 12
46
-16A! .ommissioner "ppeals! means a person appointed to be a .ommissioner of
Income#ta$ "ppeals! under sub#section 1! of section 116 12
47
-1! company means
i! any Indian company% or
ii! any body corporate incorporated by or under the laws of a country outside
India% or
iii! any institution% association or body which is or was assessable or was
assessed as a company for any assessment year under the Indian Income#ta$
"ct% 1&22 11 of 1&22!% or which is or was assessable or was assessed under
this "ct as a company for any assessment year commencin5 on or before
the 1st day of "pril% 1&68% or
i%! any institution% association or body% whether incorporated or not and
whether Indian or non#Indian% which is declared by 5eneral or special order
of the Board to be a company :
Provided that such institution% association or body shall be deemed to be a
company only for such assessment year or assessment years whether
commencin5 before the 1st day of "pril% 1&61% or on or after that date! as
may be specified in the declaration 12
1"! company in which the public are substantially interesteda company is said to be
a company in which the public
4&
are substantially interested
'8
-a! if it is a company owned by the ;o+ernment or the Reser+e Ban9 of India
or in which not less than forty per cent of the shares are held whether
sin5ly or ta9en to5ether! by the ;o+ernment or the Reser+e Ban9 of India
or a corporation owned by that ban9 1 or2
'1
-aa! if it is a company which is re5istered under section 24 of the .ompanies
"ct% 1&4' 1 of 1&4'!
'2
1 or
ab! if it is a company ha+in5 no share capital and if% ha+in5 re5ard to its
ob:ects% the nature and composition of its membership and other rele+ant
considerations% it is declared by order of the Board to be a company in
which the public are substantially interested :
Provided that such company shall be deemed to be a company in which the
public are substantially interested only for such assessment year or
assessment years whether commencin5 before the 1st day of "pril% 1&61%
or on or after that date! as may be specified in the declaration 1 or2
')
-ac! if it is a mutual benefit finance company% that is to say% a company which
carries on% as its principal business% the business of acceptance of deposits
from its members and which is declared by the .entral ;o+ernment under
section '28"
'3
of the .ompanies "ct% 1&4' 1 of 1&4'!% to be a &idhi or
Butual Benefit *ociety 1 or2
'4
-ad! if it is a company% wherein shares not bein5 shares entitled to a fi$ed rate
of di+idend whether with or without a further ri5ht to participate in profits!
carryin5 not less than fifty per cent of the +otin5 power ha+e been allotted
unconditionally to% or ac,uired unconditionally by% and were throu5hout the
rele+ant pre+ious year beneficially held by% one or more co#operati+e
societies 12
''
-b! if it is a company which is not a
'6
pri+ate company as defined in the
.ompanies "ct% 1&4' 1 of 1&4'!% and the conditions specified either in
item A! or in item B! are fulfilled% namely :
A! shares in the company not bein5 shares entitled to a fi$ed rate of
di+idend whether with or without a further ri5ht to participate in profits!
were% as on the last day of the rele+ant pre+ious year% listed in a
reco5nised stoc9 e$chan5e in India in accordance with the *ecurities
.ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!% and any rules made
thereunder 1
'7
-B! shares in the company not bein5 shares entitled to a fi$ed rate of
di+idend whether with or without a further ri5ht to participate in profits!
carryin5 not less than fifty per cent of the +otin5 power ha+e been
allotted unconditionally to% or ac,uired unconditionally by% and were
throu5hout the rele+ant pre+ious year beneficially held by
a! the ;o+ernment% or
b! a corporation established by a .entral% *tate or Pro+incial "ct% or
c! any company to which this clause applies or any subsidiary
company of such company
'&
-if the whole of the share capital of
such subsidiary company has been held by the parent company or
by its nominees throu5hout the pre+ious year(2
Explanation.In its application to an Indian company whose business
consists mainly in the construction of ships or in the manufacture or
processin5 of 5oods or in minin5 or in the 5eneration or distribution of
electricity or any other form of power% item B! shall ha+e effect as if
for the words not less than fifty per cent% the words not less than forty
per cent had been substituted 122
1#! co#operati+e society means a co#operati+e society re5istered under the .o#
operati+e *ocieties "ct% 1&12 2 of 1&12!% or under any other law for the time
bein5 in force in any *tate for the re5istration of co#operati+e societies 1

68
-1#A! ?eputy .ommissioner means a person appointed to be a ?eputy .ommissioner
of Income#ta$
61
-* * *2 under sub#section 1! of section 116 1
62
-1#AA! demer5er% in relation to companies% means the transfer% pursuant to a scheme of
arran5ement under sections )&1 to )&3
6)
of the .ompanies "ct% 1&4' 1 of
1&4'!% by a demer5ed company of its one or more underta9in5s to any resultin5
company in such a manner that
i! all the property of the underta9in5% bein5 transferred by the demer5ed
company% immediately before the demer5er% becomes the property of the
resultin5 company by +irtue of the demer5er1
ii! all the liabilities relatable to the underta9in5% bein5 transferred by the
demer5ed company% immediately before the demer5er% become the
liabilities of the resultin5 company by +irtue of the demer5er1
iii! the property and the liabilities of the underta9in5 or underta9in5s bein5
transferred by the demer5ed company are transferred at +alues appearin5 in
its boo9s of account immediately before the demer5er1
i%! the resultin5 company issues% in consideration of the demer5er% its shares to
the shareholders of the demer5ed company on a proportionate basis1
%! the shareholders holdin5 not less than three#fourths in +alue of the shares in
the demer5ed company other than shares already held therein immediately
before the demer5er% or by a nominee for% the resultin5 company or% its
subsidiary! become shareholders of the resultin5 company or companies by
+irtue of the demer5er%
otherwise than as a result of the ac,uisition of the property or assets of the
demer5ed company or any underta9in5 thereof by the resultin5 company1
%i! the transfer of the underta9in5 is on a 5oin5 concern basis1
%ii! the demer5er is in accordance with the conditions% if any% notified under
sub#section 4! of section 62" by the .entral ;o+ernment in this behalf(
Explanation 1.>or the purposes of this clause% underta9in5 shall include any
part of an underta9in5% or a unit or di+ision of an underta9in5 or a business
acti+ity ta9en as a whole% but does not include indi+idual assets or liabilities or
any combination thereof not constitutin5 a business acti+ity(
Explanation 2.>or the purposes of this clause% the liabilities referred to in sub#
clause ii!% shall include
a! the liabilities which arise out of the acti+ities or operations of the
underta9in51
b! the specific loans or borrowin5s includin5 debentures! raised% incurred and
utilised solely for the acti+ities or operations of the underta9in51 and
c! in cases% other than those referred to in clause a! or clause b!% so much of
the amounts of 5eneral or multipurpose borrowin5s% if any% of the demer5ed
company as stand in the same proportion which the +alue of the assets
transferred in a demer5er bears to the total +alue of the assets of such
demer5ed company immediately before the demer5er(
Explanation 3.>or determinin5 the +alue of the property referred to in sub#
clause iii!% any chan5e in the +alue of assets conse,uent to their re+aluation
shall be i5nored(
Explanation 4.>or the purposes of this clause% the splittin5 up or the
reconstruction of any authority or a body constituted or established under a
.entral% *tate or Pro+incial "ct% or a local authority or a public sector company%
into separate authorities or bodies or local authorities or companies% as the case
may be% shall be deemed to be a demer5er if such split up or reconstruction
fulfils
63
-such conditions as may be notified in the <fficial ;a=ette
64
% by the
.entral ;o+ernment21
1#AAA! demer5ed company means the company whose underta9in5 is transferred%
pursuant to a demer5er% to a resultin5 company12
1#B! ?eputy .ommissioner "ppeals! means a person appointed to be a ?eputy
.ommissioner of Income#ta$ "ppeals!
6'
-or an "dditional .ommissioner of
Income#ta$ "ppeals!2 under sub#section 1! of section 116 12
66
-1#'! ?eputy ?irector means a person appointed to be a ?eputy ?irector of Income#
ta$
67
-* * *2 under sub#section 1! of section 116 12
2$!
6&
director% mana5er and mana5in5 a5ent% in relation to a company% ha+e the
meanin5s respecti+ely assi5ned to them in the .ompanies "ct% 1&4' 1 of
1&4'! 1
78
-21! ?irector ;eneral or ?irector means a person appointed to be a ?irector ;eneral
of Income#ta$ or% as the case may be% a ?irector of Income#ta$% under sub#
section 1! of section 116% and includes a person appointed under that sub#
section to be
71
-an "dditional ?irector of Income#ta$ or2 a
72
-@oint2 ?irector of
Income#ta$ or an "ssistant ?irector
7)
-or ?eputy ?irector2 of Income#ta$ 12
22!
73
di+idend
74
includes
a! any distribution
74
by a company of accumulated profits
74
% whether
capitalised or not% if such distribution entails the release by the company to
its shareholders of all or any part of the assets of the company 1
b! any distribution
74
to its shareholders by a company of debentures%
debenture#stoc9% or deposit certificates in any form% whether with or
without interest% and any distribution to its preference shareholders of
shares by way of bonus% to the e$tent to which the company possesses
accumulated profits
7'
% whether capitalised or not 1
c! any distribution
7'
made to the shareholders of a company on its li,uidation%
to the e$tent to which the distribution is attributable to the accumulated
profits of the company immediately before its li,uidation% whether
capitalised or not 1
d! any distribution
76
to its shareholders by a company on the reduction of its
capital% to the e$tent to which the company possesses accumulated profits
76
which arose after the end of the pre+ious year endin5 ne$t before the 1st
day of "pril% 1&))% whether such accumulated profits ha+e been capitalised
or not 1
e! any payment by a company% not bein5 a company in which the public are
substantially interested% of any sum whether as representin5 a part of the
assets of the company or otherwise!
77
-made after the )1st day of Bay%
1&76% by way of ad+ance or loan to a shareholder
7&
% bein5 a person who is
the beneficial owner of shares not bein5 shares entitled to a fi$ed rate of
di+idend whether with or without a ri5ht to participate in profits! holdin5
not less than ten per cent of the +otin5 power% or to any concern in which
such shareholder is a member or a partner and in which he has a substantial
interest hereafter in this clause referred to as the said concern!2 or any
payment by any such company on behalf% or for the indi+idual benefit% of
any such shareholder% to the e$tent to which the company in either case
possesses accumulated profits
76
1
but di+idend does not include
i! a distribution made in accordance with sub#clause c! or sub#clause d! in
respect of any share issued for full cash consideration% where the holder of
the share is not entitled in the e+ent of li,uidation to participate in the
surplus assets 1
&8
-ia! a distribution made in accordance with sub#clause c! or sub#clause d! in so
far as such distribution is attributable to the capitalised profits of the
company representin5 bonus shares allotted to its e,uity shareholders after
the )1st day of Barch% 1&'3%
&1
-and before the 1st day of "pril% 1&'42 12
ii! any ad+ance or loan made to a shareholder
&2
-or the said concern2 by a
company in the ordinary course of its business% where the lendin5 of money
is a substantial part of the business of the company 1
iii! any di+idend paid by a company which is set off by the company a5ainst
the whole or any part of any sum pre+iously paid by it and treated as a
di+idend within the meanin5 of sub#clause e!% to the e$tent to which it is so
set off1
&)
-i%! any payment made by a company on purchase of its own shares from a
shareholder in accordance with the pro+isions of section 66"
&3
of the
.ompanies "ct% 1&4' 1 of 1&4'!1
%! any distribution of shares pursuant to a demer5er by the resultin5 company
to the shareholders of the demer5ed company whether or not there is a
reduction of capital in the demer5ed company!(2
Explanation 1.The e$pression accumulated profits% where+er it occurs in this
clause% shall not include capital 5ains arisin5 before the 1st day of "pril% 1&3'%
or after the )1st day of Barch% 1&37% and before the 1st day of "pril% 1&4'(
Explanation 2.The e$pression accumulated profits in sub#clauses a() *b() *d!
and e!% shall include all profits of the company up to the date of distribution or
payment referred to in those sub#clauses% and in sub#clause c! shall include all
profits of the company up to the date of li,uidation%
&4
-but shall not% where the
li,uidation is conse,uent on the compulsory ac,uisition of its underta9in5 by
the ;o+ernment or a corporation owned or controlled by the ;o+ernment under
any law for the time bein5 in force% include any profits of the company prior to
three successi+e pre+ious years immediately precedin5 the pre+ious year in
which such ac,uisition too9 place2(
&'
-Explanation 3.>or the purposes of this clause%
a! concern means a Cindu undi+ided family% or a firm or an association of
persons or a body of indi+iduals or a company 1
b! a person shall be deemed to ha+e a substantial interest in a concern% other
than a company% if he is% at any time durin5 the pre+ious year% beneficially
entitled to not less than twenty per cent of the income of such concern 12
&6
-22A! domestic company means an Indian company% or any other company which% in
respect of its income liable to ta$ under this "ct% has made the prescribed
arran5ements for the declaration and payment% within India% of the di+idends
includin5 di+idends on preference shares! payable out of such income 12
&7
-22AA! document includes an electronic record as defined in clause t!
&&
of sub#section
1! of section 2 of the Information Technolo5y "ct% 2888 21 of 2888!12
1
-
2
-22B!2 fair mar9et +alue% in relation to a capital asset% means
i! the price that the capital asset would ordinarily fetch on sale in the open
mar9et on the rele+ant date 1 and
ii! where the price referred to in sub#clause i! is not ascertainable% such price
as may be determined in accordance with the rules made under this "ct 12
23!
)
firm% partner and partnership ha+e the meanin5s respecti+ely assi5ned to them
in the Indian Partnership "ct% 1&)2 & of 1&)2! 1 but the e$pression partner
shall also include any person who% bein5 a minor% has been admitted to the
benefits of partnership 1
3
-23A! forei5n company means a company which is not a domestic company 12
4
-*2)B( !ringe bene!its means an+ !ringe bene!its re!erred to in section 115,B-2
'
24! income
6
includes
6
i! profits and 5ains
6
1
ii! di+idend 1
7
-iia! +oluntary contributions recei+ed by a trust created wholly or partly for
charitable or reli5ious purposes or by an institution established wholly or
partly for such purposes
&
-or by an association or institution referred to in
clause 21! or clause 23!% or by a fund or trust or institution referred to in
sub#clause i%! or sub#clause %!
&a
&b
or b+ an+ uni%ersit+ or other
educational institution re!erred to in sub-clause *+i( or b+ an+ hospital or
other institution re!erred to in sub-clause *+ia(]] of clause 23'! of section
182(
Explanation.>or the purposes of this sub#clause% trust includes any other
le5al obli5ation 12
iii! the +alue of any per,uisite or profit in lieu of salary ta$able under clauses
2! and 3! of section 16 1
18
-iiia! any special allowance or benefit% other than per,uisite included under sub#
clause iii!% specifically 5ranted to the assessee to meet e$penses wholly%
necessarily and e$clusi+ely for the performance of the duties of an office or
employment of profit 1
iiib! any allowance 5ranted to the assessee either to meet his personal e$penses
at the place where the duties of his office or employment of profit are
ordinarily performed by him or at a place where he ordinarily resides or to
compensate him for the increased cost of li+in5 12
i%! the +alue of any benefit or per,uisite
11
% whether con+ertible into money or
not% obtained from a company either by a director or by a person who has a
substantial interest in the company% or by a relati+e of the director or such
person% and any sum paid by any such company in respect of any obli5ation
which% but for such payment% would ha+e been payable by the director or
other person aforesaid 1
12
-i%a! the +alue of any benefit or per,uisite
11
% whether con+ertible into money or
not% obtained by any representati+e assessee mentioned in clause iii! or
clause i%! of sub#section 1! of section 1'8 or by any person on whose
behalf or for whose benefit any income is recei+able by the representati+e
assessee such person bein5 hereafter in this sub#clause referred to as the
beneficiary! and any sum paid by the representati+e assessee in respect of
any obli5ation which% but for such payment% would ha+e been payable by
the beneficiary 12
%! any sum char5eable to income#ta$ under clauses ii! and iii! of section 27
or section 31 or section 4& 1
1)
-%a! any sum char5eable to income#ta$ under clause iiia! of section 27 12
13
-%b! any sum char5eable to income#ta$ under clause iiib! of section 27 12
14
-%c! any sum char5eable to income#ta$ under clause iiic! of section 27 12
1'
-%d!2 the +alue of any benefit or per,uisite ta$able under clause i%! of section
27 1
16
-%e! any sum char5eable to income#ta$ under clause %! of section 27 12
%i! any capital 5ains char5eable under section 34 1
%ii! the profits and 5ains of any business of insurance carried on by a mutual
insurance company or by a co#operati+e society% computed in accordance
with section 33 or any surplus ta9en to be such profits and 5ains by +irtue
of pro+isions contained in the >irst *chedule 1
The following sub-clause (viia) shall be inserted after sub-clause (vii) of
clause (24) of section 2 by the Finance Act, 2006, w.e.f. 1-4-2007 :
*+iia( the pro!its and gains o! an+ business o! ban.ing *including pro%iding credit
!acilities( carried on b+ a co-operati%e societ+ with its members-
%iii! -/mitted b+ the 0inance Act) 1#"") w.e.!. 1-4-1#"". /riginal sub-clause
*+iii( was inserted b+ the 0inance Act) 1#64) w.e.!. 1-4-1#64-2
17
-ix! any winnin5s from lotteries
1&
% crossword pu==les% races includin5 horse
races% card 5ames and other 5ames of any sort or from 5amblin5 or bettin5
of any form or nature whatsoe+er(2
28
-Explanation.>or the purposes of this sub#clause%
i! lottery includes winnin5s from pri=es awarded to any person by draw of
lots or by chance or in any other manner whatsoe+er% under any scheme
or arran5ement by whate+er name called1
ii! card 5ame and other 5ame of any sort includes any 5ame show% an
entertainment pro5ramme on tele+ision or electronic mode% in which
people compete to win pri=es or any other similar 5ame 12
21
-x! any sum recei+ed by the assessee from his employees as contributions to
any pro+ident fund or superannuation fund or any fund set up under the
pro+isions of the Employees *tate Insurance "ct% 1&37 )3 of 1&37!% or any
other fund for the welfare of such employees 12
22
-xi! any sum recei+ed under a Deyman insurance policy includin5 the sum
allocated by way of bonus on such policy(
Explanation(>or the purposes of this clause*% the e$pression Deyman
insurance policy shall ha+e the meanin5 assi5ned to it in the Explanation to
clause 1$1! of section 18 12
2)
-xii! any sum referred to in
23
-clause %a!2 of section 2712
24
-xiii! any sum referred to in clause %! of sub#section 2! of section 4'12
25! Income#ta$ <fficer means a person appointed to be an Income#ta$ <fficer
under
2'
-* * *2 section 116 1
26
-25A! India shall be deemed to include the Enion territories of ?adra and Aa5ar
Ca+eli% ;oa% ?aman and ?iu% and Pondicherry%
a! as respects any period% for the purposes of section ' 1 and
b! as respects any period included in the pre+ious year% for the purposes of
ma9in5 any assessment for the assessment year commencin5 on the 1st day
of "pril% 1&')% or for any subse,uent year 12
26! Indian company means a company formed and re5istered under the .ompanies
"ct% 1&4' 1 of 1&4'!% and includes
i! a company formed and re5istered under any law relatin5 to companies
formerly in force in any part of India other than the *tate of @ammu and
Dashmir
27
-and the Enion territories specified in sub#clause iii! of this
clause2! 1
2&
-ia! a corporation established by or under a .entral% *tate or Pro+incial "ct 1
ib! any institution% association or body which is declared by the Board to be a
company under clause 1! 12
ii! in the case of the *tate of @ammu and Dashmir% a company formed and
re5istered under any law for the time bein5 in force in that *tate 1
)8
-iii! in the case of any of the Enion territories of ?adra and Aa5ar Ca+eli% ;oa%
?aman and ?iu% and Pondicherry% a company formed and re5istered under
any law for the time bein5 in force in that Enion territory :2
Provided that the
)1
-re5istered or% as the case may be% principal office of the
company% corporation% institution% association or body2 in all cases is in India 1
)1a
*2'"( in!rastructure capital compan+ means such compan+ which ma.es in%estments
b+ wa+ o! ac2uiring shares or pro%iding long-term !inance to an+ enterprise or
underta.ing wholl+ engaged in the business re!erred to in sub-section *4( o!
section "$-3A or sub-section *1( o! section "$-3AB or an underta.ing
de%eloping and building a housing pro4ect re!erred to in sub-section *1$( o!
section "$-3B or a pro4ect !or constructing a hotel o! not less than three-star
categor+ as classi!ied b+ the 'entral 5o%ernment or a pro4ect !or constructing
a hospital with at least one hundred beds !or patients-
*2'B( in!rastructure capital !und means such !und operating under a trust deed
registered under the pro%isions o! the 6egistration Act) 1#$" *16 o! 1#$"(
established to raise monies b+ the trustees !or in%estment b+ wa+ o! ac2uiring
shares or pro%iding long-term !inance to an+ enterprise or underta.ing wholl+
engaged in the business re!erred to in sub-section *4( o! section "$-3A or sub-
section *1( o! section "$-3AB or an underta.ing de%eloping and building a
housing pro4ect re!erred to in sub-section *1$( o! section "$-3B or a pro4ect !or
constructing a hotel o! not less than three-star categor+ as classi!ied b+ the
'entral 5o%ernment or a pro4ect !or constructing a hospital with at least one
hundred beds !or patients-]
2!
)2
-* * *2
2"! Inspector of Income#ta$ means a person appointed to be an Inspector of
Income#ta$ under sub#section
))
-1!2 of section 116 1
)3
-
)4
2"A! interest means interest payable in any manner in respect of any moneys
borrowed or debt incurred includin5 a deposit% claim or other similar ri5ht or
obli5ation! and includes any ser+ice fee or other char5e in respect of the
moneys borrowed or debt incurred or in respect of any credit facility which has
not been utilised 12
)'
-2"B! interest on securities means%
i! interest on any security of the .entral ;o+ernment or a *tate ;o+ernment 1
ii! interest on debentures or other securities for money issued by or on behalf
of a local authority or a company or a corporation established by a .entral%
*tate or Pro+incial "ct 12
)6
-2"BB! insurer means an insurer% bein5 an Indian insurance company% as defined under
clause A! of section 2
)7
of the Insurance "ct% 1&)7 3 of 1&)7!% which has
been 5ranted a certificate of re5istration under section ) of that "ct12

)&
-2"'! @oint .ommissioner means a person appointed to be a @oint .ommissioner of
Income#ta$ or an "dditional .ommissioner of Income#ta$ under sub#section
1! of section 1161
2"1! @oint ?irector means a person appointed to be a @oint ?irector of Income#ta$ or
an "dditional ?irector of Income#ta$ under sub#section 1! of section 11612
2#! le5al representati+e has the meanin5 assi5ned to it in clause 11! of section 2 of
the .ode of .i+il Procedure% 1&87 4 of 1&87!
38
1
31
-2#A! lon5#term capital asset means a capital asset which is not a short#term capital
asset 1
2#B! lon5#term capital 5ain means capital 5ain arisin5 from the transfer of a lon5#
term capital asset 12
32
-2#'! ma$imum mar5inal rate means the rate of income#ta$ includin5 surchar5e on
income#ta$% if any! applicable in relation to the hi5hest slab of income in the
case of an indi+idual
3)
-% association of persons or% as the case may be% body of
indi+iduals2 as specified in the >inance "ct of the rele+ant year 12
33
*2#1( &ational 7ax 7ribunal means the &ational 7ax 7ribunal established under
section 3 o! the &ational 7ax 7ribunal Act) 2$$5-]
3$! non#resident means a person who is not a resident
34
-% and for the purposes of
sections &2% &)
3'
-* * *2 and 1'7% includes a person who is not ordinarily
resident within the meanin5 of clause 6! of section '2 1
36
31! person includes
i! an indi+idual
37
%
ii! a Cindu undi+ided family
37
%
iii! a company%
i%! a firm
3&
%
%! an association of persons
3&
or a body of indi+iduals
3&
% whether incorporated
or not%
%i! a local authority% and
%ii! e+ery artificial :uridical person% not fallin5 within any of the precedin5 sub#
clauses(
48
-Explanation.>or the purposes of this clause% an association of persons or a
body of indi+iduals or a local authority or an artificial :uridical person shall be
deemed to be a person% whether or not such person or body or authority or
:uridical person was formed or established or incorporated with the ob:ect of
deri+in5 income% profits or 5ains12
32! person who has a substantial interest in the company% in relation to a company%
means a person who is the beneficial owner of shares% not bein5 shares entitled
to a fi$ed rate of di+idend whether with or without a ri5ht to participate in
profits% carryin5 not less than twenty per cent of the +otin5 power 1
33! prescribed means prescribed by rules made under this "ct 1
34! pre+ious year means the pre+ious year as defined in section ) 1
41
35! principal officer% used with reference to a local authority or a company or any
other public body or any association of persons or any body of indi+iduals%
means
a! the secretary% treasurer% mana5er or a5ent of the authority% company%
association or body% or
b! any person connected with the mana5ement or administration of the local
authority% company% association or body upon whom the
42
-"ssessin52
<fficer has ser+ed a notice of his intention of treatin5 him as the principal
officer thereof 1
4)
36! profession includes +ocation
43
1
44
-36A! public sector company means any corporation established by or under any
.entral% *tate or Pro+incial "ct or a ;o+ernment company
4'
as defined in
section '16 of the .ompanies "ct% 1&4' 1 of 1&4'! 12
3!
46
public ser+ant has the same meanin5 as in section 21 of the Indian Penal .ode
34 of 17'8! 1
47
-3A! rate or rates in force or rates in force% in relation to an assessment year or
financial year% means
i! for the purposes of calculatin5 income#ta$ under the first pro+iso to sub#
section 4! of section 1)2% or computin5 the income#ta$ char5eable under
sub#section 3! of section 162 or sub#section 2! of section 163 or section
164 or sub#section 2! of section 16' or deductin5 income#ta$ under section
1&2 from income char5e#able under the head *alaries
4&
-* * *2 or
'8
-computation of the ad+ance ta$ payable under .hapter /0II#. in a case
not fallin5 under
'1
-section 114" or section 114B
'2
-or section 114BB
')
-or
section 114BBB2 or section 114E2 or2 section 1'3
'2
-or section 1'3"
'3
-* *
*22
'4
-or section 1'6B2% the rate or rates of income#ta$ specified in this
behalf in the >inance "ct of the rele+ant year% and for the purposes of
computation of the ad+ance ta$ payable under .hapter /0II#.
''
-in a case
fallin5 under section 114" or section 114B
'6
-or section 114BB
'7
-or
section 114BBB2 or section 114E2 or section 1'3
'6
-or section 1'3"
'&
-* *
*22
68
-or section 1'6B2% the rate or rates specified in section 114" or
61
-section 114B or section 114BB
62
-or section 114BBB2 or section 114E or
section 1'3 or section 1'3"
'&
-* * *2
68
-or section 1'6B2% as the case may
be%2 or the rate or rates of income#ta$ specified in this behalf in the >inance
"ct of the rele+ant year% whiche+er is applicable 12
ii! for the purposes of deduction of ta$ under sections 1&)% 1&3% 1&3"
6)
-%
1&3B2
63
-% 1&3BB2
64
-and 1&3?2% the rate or rates of income#ta$ specified in
this behalf in the >inance "ct of the rele+ant year 12
6'
-iii! for the purposes of deduction of ta$ under section 1&4% the rate or rates of
income#ta$ specified in this behalf in the >inance "ct of the rele+ant year
or the rate or rates of income#ta$ specified in
6'a
an agreement entered into
b+ the 'entral 5o%ernment under section #$) or an agreement noti!ied b+
the 'entral 5o%ernment under section #$A) whiche%er is applicable b+
%irtue o! the pro%isions o! section #$) or section #$A) as the case ma+ be]1
66
3"! reco5nised pro+ident fund means a pro+ident fund which has been and
continues to be reco5nised by the
67
-.hief .ommissioner or .ommissioner2 in
accordance with the rules contained in Part " of the >ourth *chedule% and
includes a pro+ident fund established under a scheme framed under the
Employees Pro+ident >unds "ct% 1&42 1& of 1&42! 1
3#!
6&
-/mitted b+ the 0inance Act) 1##2) w.e.!. 1-4-1##312
4$! re5ular assessment means the assessment made under
78
-sub#section )! of2
section 13) or section 133 1
41! relati+e% in relation to an indi+idual% means the husband% wife% brother or sister
or any lineal ascendant or descendant of that indi+idual 1
71
-41A! resultin5 company means one or more companies includin5 a wholly owned
subsidiary thereof! to which the underta9in5 of the demer5ed company is
transferred in a demer5er and% the resultin5 company in consideration of such
transfer of underta9in5% issues shares to the shareholders of the demer5ed
company and includes any authority or body or local authority or public sector
company or a company established% constituted or formed as a result of
demer5er12
42! resident means a person who is resident in India within the meanin5 of section
' 1
72
-
7)
42A!
73
-short#term capital asset means a capital asset held by an assessee for not
more than
74
-thirty#si$2 months immediately precedin5 the date of its transfer :2
7'
-Provided that in the case of a share held in a company
76
-or any other
security listed in a reco5nised stoc9 e$chan5e in India or a unit of the Enit
Trust of India established under the Enit Trust of India "ct% 1&') 42 of 1&')!
or a unit of a Butual >und specified under clause 231! of section 182
77
-or a
8ero coupon bond2% the pro+isions of this clause shall ha+e effect as if for the
words thirty#si$ months% the words twel+e months had been substituted(2
7&
-Explanation 12(i! In determinin5 the period for which any capital asset is
held by the assessee
a! in the case of a share held in a company in li,uidation% there shall be
e$cluded the period subse,uent to the date on which the company 5oes into
li,uidation 1
b! in the case of a capital asset which becomes the property of the assessee in
the circumstances mentioned in
&8
-sub#section 1!2 of section 3&% there shall
be included the period for which the asset was held by the pre+ious owner
referred to in the said section 1
&1
-c! in the case of a capital asset bein5 a share or shares in an Indian company%
which becomes the property of the assessee in consideration of a transfer
referred to in clause %ii! of section 36% there shall be included the period
for which the share or shares in the amal5amatin5 company were held by
the assessee 12
&2
-d! in the case of a capital asset% bein5 a share or any other security hereafter
in this clause referred to as the financial asset! subscribed to by the assessee
on the basis of his ri5ht to subscribe to such financial asset or subscribed to
by the person in whose fa+our the assessee has renounced his ri5ht to
subscribe to such financial asset% the period shall be rec9oned from the date
of allotment of such financial asset 1
e! in the case of a capital asset% bein5 the ri5ht to subscribe to any financial
asset% which is renounced in fa+our of any other person% the period shall be
rec9oned from the date of the offer of such ri5ht by the company or
institution% as the case may be% ma9in5 such offer 12
&)
-!! in the case of a capital asset% bein5 a financial asset% allotted without any
payment and on the basis of holdin5 of any other financial asset% the period
shall be rec9oned from the date of the allotment of such financial asset 12
&3
-g! in the case of a capital asset% bein5 a share or shares in an Indian company%
which becomes the property of the assessee in consideration of a demer5er%
there shall be included the period for which the share or shares held in the
demer5ed company were held by the assessee 12
&4
-h! in the case of a capital asset% bein5 tradin5 or clearin5 ri5hts of a reco5nised
stoc9 e$chan5e in India ac,uired by a person pursuant to demutualisation or
corporatisation of the reco5nised stoc9 e$chan5e in India as referred to in
clause xiii! of section 36% there shall be included the period for which the
person was a member of the reco5nised stoc9 e$chan5e in India
immediately prior to such demutualisation or corporatisation1
ha! in the case of a capital asset% bein5 e,uity share or shares in a company
allotted pursuant to demutualisation or corporatisation of a reco5nised stoc9
e$chan5e in India as referred to in clause xiii! of section 36% there shall be
included the period for which the person was a member of the reco5nised
stoc9 e$chan5e in India immediately prior to such demutualisation or
corporatisation(2
ii! In respect of capital assets other than those mentioned in clause i!% the
period for which any capital asset is held by the assessee shall be determined
sub:ect to any rules which the Board may ma9e in this behalf(2
&'
-Explanation 2.>or the purposes of this clause% the e$pression security
&6
shall
ha+e the meanin5 assi5ned to it in clause h! of section 2 of the *ecurities
.ontracts Re5ulation! "ct% 1&4' 32 of 1&4'! 12
&7
-42B! short#term capital 5ain means capital 5ain arisin5 from the transfer of a short#
term capital asset 12
&&
-42'! slump sale means the transfer of one or more underta9in5s as a result of the
sale for a lump sum consideration without +alues bein5 assi5ned to the
indi+idual assets and liabilities in such sales(
Explanation 1.>or the purposes of this clause% underta9in5 shall ha+e the
meanin5 assi5ned to it in Explanation 1 to clause 1#AA!(
Explanation 2.>or the remo+al of doubts% it is hereby declared that the
determination of the +alue of an asset or liability for the sole purpose of
payment of stamp duty% re5istration fees or other similar ta$es or fees shall not
be re5arded as assi5nment of +alues to indi+idual assets or liabilities 12
1
-43! ta$ in relation to the assessment year commencin5 on the 1st day of "pril%
1&'4% and any subse,uent assessment year means income#ta$ char5eable under
the pro+isions of this "ct% and in relation to any other assessment year income#
ta$ and super#ta$ char5eable under the pro+isions of this "ct prior to the
aforesaid date
2
-and in relation to the assessment +ear commencing on the 1st
da+ o! April) 2$$6) and an+ subse2uent assessment +ear includes the !ringe
bene!it tax pa+able under section 115,A2 12
)
43A! ta$ credit certificate means a ta$ credit certificate 5ranted to any person in
accordance with the pro+isions of .hapter //II#B
3
and any scheme made
thereunder 12
43B!
4
-* * *2
'
-44! Ta$ Reco+ery <fficer means any Income#ta$ <fficer who may be authorised
by the .hief .ommissioner or .ommissioner% by 5eneral or special order in
writin5% to e$ercise the powers of a Ta$ Reco+ery <fficer 12
45! total income means the total amount of income referred to in section 4%
computed in the manner laid down in this "ct 1
46!
6
-* * *2
7
4!
&
-transfer
18
% in relation to a capital asset% includes%
i! the sale
18
% e$chan5e
18
or relin,uishment
18
of the asset 1 or
ii! the e$tin5uishment of any ri5hts therein
18
1 or
iii! the compulsory ac,uisition thereof under any law 1 or
i%! in a case where the asset is con+erted by the owner thereof into% or is treated
by him as% stoc9#in#trade of a business carried on by him% such con+ersion
or treatment 12
11
-or2
12
-*i+a( the maturit+ or redemption o! a 8ero coupon bond- or2
1)
-%! any transaction in+ol+in5 the allowin5 of the possession of any immo+able
property to be ta9en or retained in part performance of a contract of the
nature referred to in section 4)"
13
of the Transfer of Property "ct% 1772 3
of 1772! 1 or
%i! any transaction whether by way of becomin5 a member of% or ac,uirin5
shares in% a co#operati+e society% company or other association of persons
or by way of any a5reement or any arran5ement or in any other manner
whatsoe+er! which has the effect of transferrin5% or enablin5 the en:oyment
of% any immo+able property(
Explanation.>or the purposes of sub#clauses %! and %i!% immo+able property
shall ha+e the same meanin5 as in clause d! of section 2'&E"12
14
-*37( 8ero coupon bond means a bond
*a( issued b+ an+ in!rastructure capital compan+ or in!rastructure capital !und
or public sector compan+ on or a!ter the 1st da+ o! 9une) 2$$5-
*b( in respect o! which no pa+ment and bene!it is recei%ed or recei%able be!ore
maturit+ or redemption !rom in!rastructure capital compan+ or
in!rastructure capital !und or public sector compan+- and
*c( which the 'entral 5o%ernment ma+) b+ noti!ication in the /!!icial 5a8ette)
speci!+ in this behal!.
14a
***]2
1'
-Previous year defined.
3. >or the purposes of this "ct% pre+ious year means the financial year immediately
precedin5 the assessment year :
Provided that% in the case of a business or profession newly set up% or a source of income
newly comin5 into e$istence% in the said financial year% the pre+ious year shall be the
period be5innin5 with the date of settin5 up of the business or profession or% as the case
may be% the date on which the source of income newly comes into e$istence and endin5
with the said financial year(2
CHAPTER II
BASIS OF CHARGE
Charge of income-tax.
16
4.
17
1! Fhere any .entral "ct enacts that income#ta$
1&
shall be char5ed for any
assessment year at any rate or rates% income#ta$ at that rate or those rates shall be char5ed
for that year in accordance with% and
28
-sub:ect to the pro+isions includin5 pro+isions for
the le+y of additional income#ta$! of% this "ct2
21
in respect of the total income
21
of the
pre+ious year
22
-* * *2 of e+ery person :
Provided that where by +irtue of any pro+ision of this "ct income#ta$ is to be char5ed in
respect of the income of a period other than the pre+ious year% income#ta$ shall be
char5ed accordin5ly(
2! In respect of income char5eable under sub#section 1!% income#ta$ shall be deducted
at the source or paid in ad+ance% where it is so deductible or payable under any pro+ision
of this "ct(
Scope of total income.
2)
5.
23
1! *ub:ect to
24
the pro+isions of this "ct% the total income of any pre+ious year of a
person who is a resident includes all income from whate+er source deri+ed which
a! is recei+ed
2'
or is deemed to be recei+ed
2'
in India in such year by or on behalf
of such person 1 or
b! accrues
2'
or arises
2'
or is deemed
2'
to accrue or arise to him in India durin5 such
year 1 or
c! accrues
2'
or arises
2'
to him outside India durin5 such year :
Provided that% in the case of a person not ordinarily resident in India within the
meanin5 of sub#section '!* of section '% the income which accrues or arises to
him outside India shall not be so included unless it is deri+ed from a business
controlled in or a profession set up in India(
2! *ub:ect to
2'
the pro+isions of this "ct% the total income
2'
of any pre+ious year of a
person who is a non#resident includes all income from whate+er source deri+ed which
a! is recei+ed
2'
or is deemed to be recei+ed
2'
in India in such year by or on behalf
of such person 1 or
b! accrues
2'
or arises
2'
or is deemed to accrue or arise to him in India durin5 such
year(
Explanation 1.Income accruin5 or arisin5 outside India shall not be deemed to be
recei+ed
2'
in India within the meanin5 of this section by reason only of the fact that it is
ta9en into account in a balance sheet prepared in India(
Explanation 2.>or the remo+al of doubts% it is hereby declared that income which has
been included in the total income of a person on the basis that it has accrued
2'
or arisen
2'
or is deemed to ha+e accrued
2'
or arisen
2'
to him shall not a5ain be so included on the
basis that it is recei+ed or deemed to be recei+ed by him in India(
26
-Apportionment of income between spouses governed by Portuguese Civil Code.
5A. 1! Fhere the husband and wife are 5o+erned by the system of community of
property 9nown under the Portu5uese .i+il .ode of 17'8 as .<BBEAI"< ?<*
BEA*! in force in the *tate of ;oa and in the Enion territories of ?adra and Aa5ar
Ca+eli and ?aman and ?iu% the income of the husband and of the wife under any head of
income shall not be assessed as that of such community of property whether treated as
an association of persons or a body of indi+iduals!% but such income of the husband and
of the wife under each head of income other than under the head *alaries! shall be
apportioned e,ually between the husband and the wife and the income so apportioned
shall be included separately in the total income of the husband and of the wife
respecti+ely% and the remainin5 pro+isions of this "ct shall apply accordin5ly(
2! Fhere the husband or% as the case may be% the wife 5o+erned by the aforesaid system
of community of property has any income under the head *alaries% such income shall be
included in the total income of the spouse who has actually earned it(2
Residence in India.
27
6. >or the purposes of this "ct%
1! "n indi+idual is said to be resident in India in any pre+ious year% if he
a! is in India in that year for a period or periods amountin5 in all to one
hundred and ei5hty#two days or more 1 or
b!
2&
-* * *2
c! ha+in5 within the four years precedin5 that year been in India for a period
or periods amountin5 in all to three hundred and si$ty#fi+e days or more% is
in India for a period or periods amountin5 in all to si$ty days or more in
that year(
)8
-Explanation.In the case of an indi+idual%
a! bein5 a citi=en of India% who lea+es India in any pre+ious year
)1
-as a
member of the crew of an
)2
Indian ship as defined in clause 1"! of section
) of the Berchant *hippin5 "ct% 1&47 33 of 1&47!% or2 for the purposes of
employment outside India% the pro+isions of sub#clause c! shall apply in
relation to that year as if for the words si$ty days% occurrin5 therein% the
words one hundred and ei5hty#two days had been substituted 1
b! bein5 a citi=en of India% or a person of Indian ori5in within the meanin5 of
Explanation to clause e! of section 114.% who% bein5 outside India% comes
on a +isit to India in any pre+ious year% the pro+isions of sub#clause c!
shall apply in relation to that year as if for the words si$ty days% occurrin5
therein% the words one hundred and
))
-ei5hty#two2 days had been
substituted(2
2! " Cindu undi+ided family% firm or other association of persons is said to be
resident in India in any pre+ious year in e+ery case e$cept where durin5 that
year the control and mana5ement
)3
of its affairs
)3
is situated wholly
)3
outside
India(
3! " company is said to be resident in India in any pre+ious year% if
i! it is an Indian company 1 or
ii! durin5 that year% the control and mana5ement
)3
of its affairs
)3
is situated
wholly
)3
in India(
4! E+ery other person is said to be resident in India in any pre+ious year in e+ery
case% e$cept where durin5 that year the control and mana5ement of his affairs is
situated wholly outside India(
5! If a person is resident in India in a pre+ious year rele+ant to an assessment year
in respect of any source of income% he shall be deemed to be resident in India in
the pre+ious year rele+ant to the assessment year in respect of each of his other
sources of income(
)4
-6! " person is said to be not ordinarily resident in India in any pre+ious year if
such person is
a! an indi+idual who has been a non#resident in India in nine out of the ten
pre+ious years precedin5 that year% or has durin5 the se+en pre+ious years
precedin5 that year been in India for a period of% or periods amountin5 in all
to% se+en hundred and twenty#nine days or less1 or
b! a Cindu undi+ided family whose mana5er has been a non#resident in India
in nine out of the ten pre+ious years precedin5 that year% or has durin5 the
se+en pre+ious years precedin5 that year been in India for a period of% or
periods amountin5 in all to% se+en hundred and twenty#nine days or less(2
Income deemed to be received.
7. The followin5 incomes shall be deemed to be recei+ed in the pre+ious year :
i! the annual accretion in the pre+ious year to the balance at the credit of an
employee participatin5 in a reco5nised pro+ident fund% to the e$tent pro+ided in
rule ' of Part " of the >ourth *chedule 1
ii! the transferred balance in a reco5nised pro+ident fund% to the e$tent pro+ided in
sub#rule 3! of rule 11 of Part " of the >ourth *chedule 1
)'
-iii! the contribution made% by the .entral ;o+ernment in the pre+ious year% to the
account of an employee under a pension scheme referred to in section 78..?(2
Dividend income.
8.
)6
->or the purposes of inclusion in the total income of an assessee%
a! any di+idend2 declared by a company or distributed or paid by it within the
meanin5 of sub#clause a! or sub#clause b! or sub#clause c! or sub#clause d!
or sub#clause e! of clause 22! of section 2 shall be deemed to be the income of
the pre+ious year in which it is so declared% distributed or paid% as the case may
be 1
)7
-b! any interim di+idend shall be deemed to be the income of the pre+ious year in
which the amount of such di+idend is unconditionally made a+ailable by the
company to the member who is entitled to it(2
Income deemed to accrue or arise in India.
)&
9.
38
1! The followin5 incomes shall be deemed
31
to accrue or arise in India :
32
i! all income accruin5 or arisin5% whether directly or indirectly% throu5h or from
any business connection
3)
in India% or throu5h or from any property
3)
in India%
or throu5h or from any asset or source of income in India%
33
-* * *2 or throu5h
the transfer of a capital asset situate in India(
34
-Explanation 12(>or the purposes of this clause
a! in the case of a business of which all the operations
3'
are not carried out in
India% the income of the business deemed under this clause to accrue or
arise in India shall be only such part of the income as is reasonably
attributable to the operations
3'
carried out in India 1
b! in the case of a non#resident% no income shall be deemed to accrue or arise
in India to him throu5h or from operations which are confined to the
purchase of 5oods in India for the purpose of e$port 1
36
-* * *2
37
-c! in the case of a non#resident% bein5 a person en5a5ed in the business of
runnin5 a news a5ency or of publishin5 newspapers% ma5a=ines or :ournals%
no income shall be deemed to accrue or arise in India to him throu5h or
from acti+ities which are confined to the collection of news and +iews in
India for transmission out of India 12
3&
-d! in the case of a non#resident% bein5
1! an indi+idual who is not a citi=en of India 1 or
2! a firm which does not ha+e any partner who is a citi=en of India or who
is resident in India 1 or
3! a company which does not ha+e any shareholder who is a citi=en of
India or who is resident in India%
no income shall be deemed to accrue or arise in India to such indi+idual%
firm or company throu5h or from operations
48
which are confined to the
shootin5 of any cinemato5raph film in India(2
41
-Explanation 2.>or the remo+al of doubts% it is hereby declared that business
connection shall include any business acti+ity carried out throu5h a person
who% actin5 on behalf of the non#resident%
a! has and habitually e$ercises in India% an authority to conclude contracts on
behalf of the non#resident% unless his acti+ities are limited to the purchase
of 5oods or merchandise for the non#resident1 or
b! has no such authority% but habitually maintains in India a stoc9 of 5oods or
merchandise from which he re5ularly deli+ers 5oods or merchandise on
behalf of the non#resident1 or
c! habitually secures orders in India% mainly or wholly for the non#resident or
for that non#resident and other non#residents controllin5% controlled by% or
sub:ect to the same common control% as that non#resident:
Provided that such business connection shall not include any business acti+ity
carried out throu5h a bro9er% 5eneral commission a5ent or any other a5ent
ha+in5 an independent status% if such bro9er% 5eneral commission a5ent or any
other a5ent ha+in5 an independent status is actin5 in the ordinary course of his
business :
Provided further that where such bro9er% 5eneral commission a5ent or any
other a5ent wor9s mainly or wholly on behalf of a non#resident hereafter in
this pro+iso referred to as the principal non#resident! or on behalf of such non#
resident and other non#residents which are controlled by the principal non#
resident or ha+e a controllin5 interest in the principal non#resident or are
sub:ect to the same common control as the principal non#resident% he shall not
be deemed to be a bro9er% 5eneral commission a5ent or an a5ent of an
independent status(
Explanation 3.Fhere a business is carried on in India throu5h a person referred
to in clause a! or clause b! or clause c! of Explanation 2% only so much of
income as is attributable to the operations carried out in India shall be deemed
to accrue or arise in India12
ii! income which falls under the head *alaries% if it is earned
42
in India(
4)
-Explanation.>or the remo+al of doubts% it is hereby declared that the income
of the nature referred to in this clause payable for
a! ser+ice rendered in India1 and
b! the rest period or lea+e period which is preceded and succeeded by ser+ices
rendered in India and forms part of the ser+ice contract of employment%
shall be re5arded as income earned in India 12
iii! income char5eable under the head *alaries payable by the ;o+ernment to a
citi=en of India for ser+ice outside India 1
i%! a di+idend paid by an Indian company outside India 1
43
-%! income by way of interest payable by
a! the ;o+ernment 1 or
b! a person who is a resident% e$cept where the interest is payable in respect of
any debt incurred% or moneys borrowed and used% for the purposes of a
business or profession carried on by such person outside India or for the
purposes of ma9in5 or earnin5 any income from any source outside India 1
or
c! a person who is a non#resident% where the interest is payable in respect of
any debt incurred% or moneys borrowed and used% for the purposes of a
business or profession carried on by such person in India 1
%i! income by way of royalty
44
payable by
b! a person who is a resident% e$cept where the royalty is payable in respect of
any ri5ht% property or information used or ser+ices utilised for the purposes
of a business or profession carried on by such person outside India or for
the purposes of ma9in5 or earnin5 any income from any source outside
India 1 or
c! a person who is a non#resident% where the royalty is payable in respect of
any ri5ht% property or information used or ser+ices utilised for the purposes
of a business or profession carried on by such person in India or for the
purposes of ma9in5 or earnin5 any income from any source in India :
Provided that nothin5 contained in this clause shall apply in relation to so
much of the income by way of royalty as consists of lump sum consideration
for the transfer outside India of% or the impartin5 of information outside India in
respect of% any data% documentation% drawin5 or specification relatin5 to any
patent% in+ention% model% desi5n% secret formula or process or trade mar9 or
similar property% if such income is payable in pursuance of an a5reement made
before the 1st day of "pril% 1&6'% and the a5reement is appro+ed by the .entral
;o+ernment :
4'
-Provided further that nothin5 contained in this clause shall apply in relation
to so much of the income by way of royalty as consists of lump sum payment
made by a person% who is a resident% for the transfer of all or any ri5hts
includin5 the 5rantin5 of a licence! in respect of computer software supplied
by a non#resident manufacturer alon5 with a computer or computer#based
e,uipment under any scheme appro+ed under the Policy on .omputer *oftware
E$port% *oftware ?e+elopment and Trainin5% 1&7' of the ;o+ernment of
India(2
Explanation 1.>or the purposes of the
46
-first2 pro+iso% an a5reement made on
or after the 1st day of "pril% 1&6'% shall be deemed to ha+e been made before
that date if the a5reement is made in accordance with proposals appro+ed by
the .entral ;o+ernment before that date1 so% howe+er% that% where the recipient
of the income by way of royalty is a forei5n company% the a5reement shall not
be deemed to ha+e been made before that date unless% before the e$piry of the
time allowed under sub#section 1! or sub#section 2! of section 1)& whether
fi$ed ori5inally or on e$tension! for furnishin5 the return of income for the
assessment year commencin5 on the 1st day of "pril% 1&66% or the assessment
year in respect of which such income first becomes char5eable to ta$ under this
"ct% whiche+er assessment year is later% the company e$ercises an option by
furnishin5 a declaration in writin5 to the
47
-"ssessin52 <fficer such option
bein5 final for that assessment year and for e+ery subse,uent assessment year!
that the a5reement may be re5arded as an a5reement made before the 1st day of
"pril% 1&6'(
Explanation 2.>or the purposes of this clause% royalty means consideration
includin5 any lump sum consideration but e$cludin5 any consideration which
would be the income of the recipient char5eable under the head .apital 5ains!
for
i! the transfer of all or any ri5hts includin5 the 5rantin5 of a licence! in
respect of a patent% in+ention% model% desi5n% secret formula or process or
trade mar9 or similar property 1
ii! the impartin5 of any information concernin5 the wor9in5 of% or the use of% a
patent% in+ention% model% desi5n% secret formula or process or trade mar9 or
similar property 1
iii! the use of any patent% in+ention% model% desi5n% secret formula or process or
trade mar9 or similar property 1
i%! the impartin5 of any information concernin5 technical% industrial%
commercial or scientific 9nowled5e% e$perience or s9ill 1
4&
-i%a! the use or ri5ht to use any industrial% commercial or scientific e,uipment
but not includin5 the amounts referred to in section 33BB12
%! the transfer of all or any ri5hts includin5 the 5rantin5 of a licence! in
respect of any copyri5ht% literary% artistic or scientific wor9 includin5 films
or +ideo tapes for use in connection with tele+ision or tapes for use in
connection with radio broadcastin5% but not includin5 consideration for the
sale% distribution or e$hibition of cinemato5raphic films 1 or
%i! the renderin5 of any ser+ices in connection with the acti+ities referred to in
sub#clauses i! to
4&
-i%!% i%a! and2 %!(
'8
-Explanation 3.>or the purposes of this clause% computer software means any
computer pro5ramme recorded on any disc% tape% perforated media or other
information stora5e de+ice and includes any such pro5ramme or any
customi=ed electronic data12
%ii! income by way of fees for technical ser+ices payable
'1
by
b! a person who is a resident% e$cept where the fees are payable in respect of
ser+ices utilised in a business or profession carried on by such person
outside India or for the purposes of ma9in5 or earnin5 any income from any
source outside India 1 or
c! a person who is a non#resident% where the fees are payable in respect of
ser+ices utilised in a business or profession carried on by such person in
India or for the purposes of ma9in5 or earnin5 any income from any source
in India :
'2
-Provided that nothin5 contained in this clause shall apply in relation to any
income by way of fees for technical ser+ices payable in pursuance of an
a5reement made before the 1st day of "pril% 1&6'% and appro+ed by the .entral
;o+ernment(2
')
-Explanation 1.>or the purposes of the fore5oin5 pro+iso% an a5reement made
on or after the 1st day of "pril% 1&6'% shall be deemed to ha+e been made
before that date if the a5reement is made in accordance with proposals
appro+ed by the .entral ;o+ernment before that date(2
Explanation
'3
-22.>or the purposes of this clause% fees for technical ser+ices
means any consideration includin5 any lump sum consideration! for the
renderin5 of any mana5erial% technical or consultancy ser+ices includin5 the
pro+ision of ser+ices of technical or other personnel! but does not include
consideration for any construction
'4
% assembly% minin5 or li9e pro:ect
underta9en by the recipient or consideration which would be income of the
recipient char5eable under the head *alaries(2
2! Aotwithstandin5 anythin5 contained in sub#section 1!% any pension payable outside
India to a person residin5 permanently outside India shall not be deemed to accrue or
arise in India% if the pension is payable to a person referred to in article )13 of the
.onstitution or to a person who% ha+in5 been appointed before the 14th day of "u5ust%
1&36% to be a @ud5e of the >ederal .ourt or of a Ci5h .ourt within the meanin5 of the
;o+ernment of India "ct% 1&)4% continues to ser+e on or after the commencement of the
.onstitution as a @ud5e in India(
.C"PTER III
INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME
Incomes not included in total income.
10. In computin5 the total income of a pre+ious year of any person% any income fallin5
within any of the followin5 clauses shall not be included
1! a5ricultural income 1
''
2!
'6
-sub:ect to the pro+isions of sub#section 2! of section '3%2 any sum recei+ed
by an indi+idual as a member of a Cindu undi+ided family% where such sum has
been paid out of the income of the family% or% in the case of any impartible
estate% where such sum has been paid out of the income of the estate belon5in5
to the family 1
'7
-2A! in the case of a person bein5 a partner of a firm which is separately assessed as
such% his share in the total income of the firm(
Explanation.>or the purposes of this clause% the share of a partner in the total
income of a firm separately assessed as such shall% notwithstandin5 anythin5
contained in any other law% be an amount which bears to the total income of the
firm the same proportion as the amount of his share in the profits of the firm in
accordance with the partnership deed bears to such profits 12
3!
'&
-***2
68
-4! i! in the case of a non#resident% any income by way of interest on such
securities or bonds as the .entral ;o+ernment may% by notification in the
<fficial ;a=ette
61
% specify in this behalf% includin5 income by way of premium
on the redemption of such bonds :
62
-Provided that the .entral ;o+ernment shall not specify% for the purposes of
this sub#clause% such securities or bonds on or after the 1st day of @une% 288212
6)
-
63
ii! in the case of an indi+idual% any income by way of interest on moneys
standin5 to his credit in a Aon#Resident E$ternal! "ccount in any ban9 in
India in accordance with the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of
1&6)!% and the rules made thereunder :
Provided that such indi+idual is a person resident outside India as defined in
clause 2! of section 2
64
of the said "ct or is a person who has been permitted
by the Reser+e Ban9 of India to maintain the aforesaid "ccount 122
6'
-***2
66
-4B! in the case of an indi+idual% bein5 a citi=en of India or a person of Indian ori5in%
who is a non#resident% any income from interest on such sa+in5s certificates
issued
67
-before the 1st day of @une% 28822 by the .entral ;o+ernment as that
;o+ernment may% by notification in the <fficial ;a=ette
6&
% specify in this
behalf :
Provided that the indi+idual has subscribed to such certificates in con+ertible
forei5n e$chan5e remitted from a country outside India in accordance with the
pro+isions of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!% and any
rules made thereunder(
Explanation.>or the purposes of this clause%
a! a person shall be deemed to be of Indian ori5in if he% or either of his parents
or any of his 5randparents% was born in undi+ided India 1
b! con+ertible forei5n e$chan5e means forei5n e$chan5e which is for the time
bein5 treated by the Reser+e Ban9 of India as con+ertible forei5n e$chan5e
for the purposes of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of
1&6)!% and any rules made thereunder 12
78
-5! in the case of an indi+idual% the +alue of any tra+el concession or assistance
recei+ed by% or due to% him%
a! from his employer for himself and his family% in connection with his
proceedin5 on lea+e to any place in India 1
b! from his employer or former employer for himself and his family% in
connection with his proceedin5 to any place in India after retirement from
ser+ice or after the termination of his ser+ice%
sub:ect to such conditions as may be prescribed
71
includin5 conditions as to
number of :ourneys and the amount which shall be e$empt per head! ha+in5
re5ard to the tra+el concession or assistance 5ranted to the employees of the
.entral ;o+ernment :
Provided that the amount e$empt under this clause shall in no case e$ceed the
amount of e$penses actually incurred for the purpose of such tra+el(
Explanation.>or the purposes of this clause% family% in relation to an indi+idual%
means
i! the spouse and children of the indi+idual 1 and
ii! the parents% brothers and sisters of the indi+idual or any of them% wholly
or mainly dependent on the indi+idual1 2
5A!
72
-/mitted b+ the 0inance *&o. 2( Act) 1##") w.e.!. 1-4-1###-2
5B!
7)
-/mitted b+ the 0inance Act) 2$$2) w.e.!. 1-4-2$$3.2
6! in the case of an indi+idual who is not a citi=en of India%
i!
73
-***2
74
-ii! the remuneration recei+ed by him as an official% by whate+er name called%
of an embassy% hi5h commission% le5ation% commission% consulate or the
trade representation of a forei5n *tate% or as a member of the staff of any of
these officials% for ser+ice in such capacity :
Provided that the remuneration recei+ed by him as trade commissioner or
other official representati+e in India of the ;o+ernment of a forei5n *tate
not holdin5 office as such in an honorary capacity!% or as a member of the
staff of any of those officials% shall be e$empt only if the remuneration of
the correspondin5 officials or% as the case may be% members of the staff% if
any% of the ;o+ernment resident for similar purposes in the country
concerned en:oys a similar e$emption in that country :
Provided further that such members of the staff are sub:ects of the country
represented and are not en5a5ed in any business or profession or
employment in India otherwise than as members of such staff 12
%i! the remuneration recei+ed by him as an employee of a forei5n enterprise for
ser+ices rendered by him durin5 his stay in India% pro+ided the followin5
conditions are fulfilled
a! the forei5n enterprise is not en5a5ed in any trade or business in India 1
b! his stay in India does not e$ceed in the a55re5ate a period of ninety
days in such pre+ious year 1 and
c! such remuneration is not liable to be deducted from the income of the
employer char5eable under this "ct 1
%ia!
7'
%ii!
76
-/mitted b+ the 0inance Act) 1##3) w.e.!. 1-4-1##3-2
%iia!
77
%iii! any income char5eable under the head *alaries recei+ed by or due to any
such indi+idual bein5 a non#resident as remuneration for ser+ices rendered
in connection with his employment on a forei5n ship where his total stay in
India does not e$ceed in the a55re5ate a period of ninety days in the
pre+ious year 1
ix!
7&
x!
&8
&1
-xi! the remuneration recei+ed by him as an employee of the ;o+ernment of a
forei5n *tate durin5 his stay in India in connection with his trainin5 in any
establishment or office of% or in any underta9in5 owned by%
i! the ;o+ernment 1 or
ii! any company in which the entire paid#up share capital is held by the
.entral ;o+ernment% or any *tate ;o+ernment or ;o+ernments% or
partly by the .entral ;o+ernment and partly by one or more *tate
;o+ernments 1 or
iii! any company which is a subsidiary of a company referred to in item
ii! 1 or
i%! any corporation established by or under a .entral% *tate or Pro+incial
"ct 1 or
%! any society re5istered under the *ocieties Re5istration "ct% 17'8 13 of
17'8!% or under any other correspondin5 law for the time bein5 in force
and wholly financed by the .entral ;o+ernment% or any *tate
;o+ernment or *tate ;o+ernments% or partly by the .entral
;o+ernment and partly by one or more *tate ;o+ernments 12
&2
-6A! where in the case of a forei5n company deri+in5 income by way of royalty or
fees for technical ser+ices recei+ed from ;o+ernment or an Indian concern in
pursuance of an a5reement made by the forei5n company with ;o+ernment or
the Indian concern after the )1st day of Barch% 1&6'
&)
-but before the 1st day of
@une% 28822
&3
-and%
a! where the a5reement relates to a matter included in the industrial policy% for
the time bein5 in force% of the ;o+ernment of India% such a5reement is in
accordance with that policy 1 and
b! in any other case% the a5reement is appro+ed by the .entral ;o+ernment%
the ta$ on such income is payable% under the terms of the a5reement% by
;o+ernment or the Indian concern to the .entral ;o+ernment% the ta$ so paid2(
Explanation.>or the purposes of this clause
&4
-and clause 6B!2%
a! fees for technical ser+ices shall ha+e the same meanin5 as in Explanation 2
to clause %ii! of sub#section 1! of section & 1
b! forei5n company shall ha+e the same meanin5 as in section 78B 1
c! royalty shall ha+e the same meanin5 as in Explanation 2 to clause %i! of
sub#section 1! of section &12
&'
-6B! where in the case of a non#resident not bein5 a company! or of a forei5n
company deri+in5 income not bein5 salary% royalty or fees for technical
ser+ices! from ;o+ernment or an Indian concern in pursuance of an a5reement
entered into
&6
-before the 1st day of @une% 28822 by the .entral ;o+ernment
with the ;o+ernment of a forei5n *tate or an international or5anisation% the ta$
on such income is payable by ;o+ernment or the Indian concern to the .entral
;o+ernment under the terms of that a5reement or any other related a5reement
appro+ed
&6
-before that date2 by the .entral ;o+ernment% the ta$ so paid 12
&7
-6BB! where in the case of the ;o+ernment of a forei5n *tate or a forei5n enterprise
deri+in5 income from an Indian company en5a5ed in the business of operation
of aircraft% as a consideration of ac,uirin5 an aircraft or an aircraft en5ine
other than payment for pro+idin5 spares% facilities or ser+ices in connection
with the operation of leased aircraft! on lease under
&&
-an a5reement entered
into after the )1st day of Barch% 1&&6 but before the 1st day of "pril% 1&&&% or
entered into after the
&&a
31st da+ o! :arch)
&&b
2$$6]] and appro+ed by the
.entral ;o+ernment in this behalf2 and the ta$ on such income is payable by
such Indian company under the terms of that a5reement to the .entral
;o+ernment% the ta$ so paid(
Explanation(>or the purposes of this clause% the e$pression forei5n enterprise
means a person who is a non#resident12
1
-6'! any income arisin5 to such forei5n company% as the .entral ;o+ernment may%
by notification
2
in the <fficial ;a=ette% specify in this behalf% by way of
)
-royalty or2 fees for technical ser+ices recei+ed in pursuance of an a5reement
entered into with that ;o+ernment for pro+idin5 ser+ices in or outside India in
pro:ects connected with security of India 12
! any allowances or per,uisites paid or allowed as such outside India by the
;o+ernment to a citi=en of India for renderin5 ser+ice outside India 1
"! in the case of an indi+idual who is assi5ned to duties in India in connection
with any co#operati+e technical assistance pro5rammes and pro:ects in
accordance with an a5reement entered into by the .entral ;o+ernment and the
;o+ernment of a forei5n *tate the terms whereof pro+ide for the e$emption
5i+en by this clause!
a! the remuneration recei+ed by him directly or indirectly from the
;o+ernment of that forei5n *tate for such duties% and
b! any other income of such indi+idual which accrues or arises outside India%
and is not deemed to accrue or arise in India% in respect of which such
indi+idual is re,uired to pay any income or social security ta$ to the
;o+ernment of that forei5n *tate 1
3
-"A! in the case of a consultant
a! any remuneration or fee recei+ed by him or it% directly or indirectly% out of
the funds made a+ailable to an international or5anisation -hereafter referred
to in this clause and clause "B! as the a5ency2 under a technical assistance
5rant a5reement between the a5ency and the ;o+ernment of a forei5n
*tate 1 and
b! any other income which accrues or arises to him or it outside India% and is
not deemed to accrue or arise in India% in respect of which such consultant
is re,uired to pay any income or social security ta$ to the ;o+ernment of
the country of his or its ori5in(
Explanation.In this clause% consultant means
i! any indi+idual% who is either not a citi=en of India or% bein5 a citi=en of
India% is not ordinarily resident in India 1 or
ii! any other person% bein5 a non#resident%
en5a5ed by the a5ency for renderin5 technical ser+ices in India in connection
with any technical assistance pro5ramme or pro:ect% pro+ided the followin5
conditions are fulfilled% namely :
1! the technical assistance is in accordance with an a5reement entered into by
the .entral ;o+ernment and the a5ency 1 and
2! the a5reement relatin5 to the en5a5ement of the consultant is appro+ed by
the prescribed authority
4
for the purposes of this clause 1
"B! in the case of an indi+idual who is assi5ned to duties in India in connection
with any technical assistance pro5ramme and pro:ect in accordance with an
a5reement entered into by the .entral ;o+ernment and the a5ency
a! the remuneration recei+ed by him% directly or indirectly% for such duties
from any consultant referred to in clause "A! 1 and
b! any other income of such indi+idual which accrues or arises outside India%
and is not deemed to accrue or arise in India% in respect of which such
indi+idual is re,uired to pay any income or social security ta$ to the
country of his ori5in% pro+ided the followin5 conditions are fulfilled%
namely :
i! the indi+idual is an employee of the consultant referred to in clause "A!
and is either not a citi=en of India or% bein5 a citi=en of India% is not
ordinarily resident in India 1 and
ii! the contract of ser+ice of such indi+idual is appro+ed by the prescribed
authority
4
before the commencement of his ser+ice 12
#! the income of any member of the family of any such indi+idual as is referred to
in clause "!
'
-or clause "A! or% as the case may be% clause "B!2 accompanyin5
him to India% which accrues or arises outside India% and is not deemed to accrue
or arise in India% in respect of which such member is re,uired to pay any
income or social security ta$ to the ;o+ernment of that forei5n *tate
'
-or% as the
case may be% country of ori5in of such member21
6
-
7
1$!
&
i! any death#cum#retirement 5ratuity recei+ed under the re+ised Pension Rules
of the .entral ;o+ernment or% as the case may be% the .entral .i+il *er+ices
Pension! Rules% 1&62% or under any similar scheme applicable to the members
of the ci+il ser+ices of the Enion or holders of posts connected with defence or
of ci+il posts under the Enion such members or holders bein5 persons not
5o+erned by the said Rules! or to the members of the all#India ser+ices or to the
members of the ci+il ser+ices of a *tate or holders of ci+il posts under a *tate or
to the employees of a local authority or any payment of retirin5 5ratuity
recei+ed under the Pension .ode or Re5ulations applicable to the members of
the defence ser+ices 1
ii! any 5ratuity recei+ed under the Payment of ;ratuity "ct% 1&62 )& of
1&62!% to the e$tent it does not e$ceed an amount calculated in accordance with
the pro+isions of sub#sections 2! and )! of section 3
18
of that "ct 1
iii! any other 5ratuity recei+ed by an employee on his retirement or on his
becomin5 incapacitated prior to such retirement or on termination of his
employment% or any 5ratuity recei+ed by his widow% children or dependants on
his death% to the e$tent it does not% in either case% e$ceed one#half months salary
for each year of completed ser+ice
11
%
12
-calculated on the basis of the a+era5e
salary for the ten months immediately precedin5 the month in which any such
e+ent occurs% sub:ect to such limit
1)
as the .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify in this behalf ha+in5 re5ard to the
limit applicable in this behalf to the employees of that ;o+ernment2 :
Provided that where any 5ratuities referred to in this clause
13
are recei+ed by
an employee from more than one employer in the same pre+ious year% the
a55re5ate amount e$empt from income#ta$ under this clause
14
-shall not e$ceed
the limit so specified2 :
Provided further that where any such 5ratuity or 5ratuities was or were
recei+ed in any one or more earlier pre+ious years also and the whole or any
part of the amount of such 5ratuity or 5ratuities was not included in the total
income of the assessee of such pre+ious year or years% the amount e$empt from
income#ta$ under this clause
1'
-shall not e$ceed the limit so specified2 as
reduced by the amount or% as the case may be% the a55re5ate amount not
included in the total income of any such pre+ious year or years(
16
-* * *2
Explanation.
17
-In this clause% and in clause 1$AA!2% salary shall ha+e the
meanin5 assi5ned to it in clause h! of rule 2 of Part " of the >ourth *chedule 12
1&
-
28
1$A!
21
i! any payment in commutation of pension recei+ed under the .i+il Pensions
.ommutation! Rules of the .entral ;o+ernment or under any similar scheme
applicable
22
-to the members of the ci+il ser+ices of the Enion or holders of
posts connected with defence or of ci+il posts under the Enion such members
or holders bein5 persons not 5o+erned by the said Rules! or to the members of
the all#India ser+ices or to the members of the defence ser+ices or to the
members of the ci+il ser+ices of a *tate or holders of ci+il posts under a *tate or
to the employees of a local authority2 or a corporation established by a .entral%
*tate or Pro+incial "ct 1
ii! any payment in commutation of pension recei+ed under any scheme of any
other employer% to the e$tent it does not e$ceed
a! in a case where the employee recei+es any 5ratuity% the commuted +alue of
one#third of the pension which he is normally entitled to recei+e% and
b! in any other case% the commuted +alue of one#half of such pension%
such commuted +alue bein5 determined ha+in5 re5ard to the a5e of the
recipient% the state of his health% the rate of interest and officially reco5nised
tables of mortality 1
2)
-* * *2
23
-iii! any payment in commutation of pension recei+ed from a fund under
clause 23AAB! 12
24
-
2'
1$AA! i! any payment recei+ed by an employee of the .entral ;o+ernment or a
*tate ;o+ernment as the cash e,ui+alent of the lea+e salary in respect of the
period of earned lea+e at his credit at the time of his
26
retirement
27
-whether2 on
superannuation or otherwise 1
ii! any payment of the nature referred to in sub#clause i! recei+ed by an
employee% other than an employee of the .entral ;o+ernment or a *tate
;o+ernment% in respect of so much of the period of earned lea+e at his credit at
the time of his retirement
2&
-whether2 on superannuation
26
or otherwise as does
not e$ceed
)8
-ten2 months% calculated on the basis of the a+era5e salary drawn
by the employee durin5 the period of ten months immediately precedin5 his
retirement
2&
-whether2 on superannuation or otherwise%
)1
-sub:ect to such limit
as the .entral ;o+ernment may% by notification in the <fficial ;a=ette% specify
in this behalf ha+in5 re5ard to the limit
)2
applicable in this behalf to the
employees of that ;o+ernment2 :
Provided that where any such payments are recei+ed by an employee from
more than one employer in the same pre+ious year% the a55re5ate amount
e$empt from income#ta$ under this sub#clause
))
-shall not e$ceed the limit so
specified2 :
Provided further that where any such payment or payments was or were
recei+ed in any one or more earlier pre+ious years also and the whole or any
part of the amount of such payment or payments was or were not included in
the total income of the assessee of such pre+ious year or years% the amount
e$empt from income#ta$ under this sub#clause
)3
-shall not e$ceed the limit so
specified2% as reduced by the amount or% as the case may be% the a55re5ate
amount not included in the total income of any such pre+ious year or years(
)4
-* * *2
Explanation.>or the purposes of sub#clause ii!%
)'
-* * *2 the entitlement to earned lea+e of an employee shall not e$ceed thirty
days for e+ery year of actual ser+ice rendered by him as an employee of the
employer from whose ser+ice he has retired 1
)6
-* * *2
)7
-1$B! any compensation recei+ed by a wor9man under the Industrial ?isputes "ct%
1&36 13 of 1&36!% or under any other "ct or Rules% orders or notifications
issued thereunder or under any standin5 orders or under any award% contract of
ser+ice or otherwise%
)&
-at the time of his retrenchment :
Provided that the amount e$empt under this clause shall not e$ceed
i! an amount calculated in accordance with the pro+isions of
38
clause b! of
section 24> of the Industrial ?isputes "ct% 1&36 13 of 1&36! 1 or
31
-ii! such amount% not bein5 less than fifty thousand rupees% as the .entral
;o+ernment may% by notification
32
in the <fficial ;a=ette% specify in this
behalf%2
whiche+er is less :
Provided further that the precedin5 pro+iso shall not apply in respect of any
compensation recei+ed by a wor9man in accordance with any scheme which
the .entral ;o+ernment may% ha+in5 re5ard to the need for e$tendin5 special
protection to the wor9men in the underta9in5 to which such scheme applies and
other rele+ant circumstances% appro+e in this behalf(2
Explanation.>or the purposes of this clause
a! compensation recei+ed by a wor9man at the time of the closin5 down of the
underta9in5 in which he is employed shall be deemed to be compensation
recei+ed at the time of his retrenchment 1
b! compensation recei+ed by a wor9man% at the time of the transfer whether
by a5reement or by operation of law! of the ownership or mana5ement of
the underta9in5 in which he is employed from the employer in relation to
that underta9in5 to a new employer% shall be deemed to be compensation
recei+ed at the time of his retrenchment if
i! the ser+ice of the wor9man has been interrupted by such transfer 1 or
ii! the terms and conditions of ser+ice applicable to the wor9man after
such transfer are in any way less fa+ourable to the wor9man than those
applicable to him immediately before the transfer 1 or
iii! the new employer is% under the terms of such transfer or otherwise%
le5ally not liable to pay to the wor9man% in the e+ent of his
retrenchment% compensation on the basis that his ser+ice has been
continuous and has not been interrupted by the transfer 1
3)
c! the e$pressions employer and wor9man shall ha+e the same meanin5s as in
the Industrial ?isputes "ct% 1&36 13 of 1&36!12
33
-1$BB! any payments made under the Bhopal ;as Gea9 ?isaster Processin5 of
.laims! "ct% 1&74 21 of 1&74!% and any scheme framed thereunder e$cept
payment made to any assessee in connection with the Bhopal ;as Gea9
?isaster to the e$tent such assessee has been allowed a deduction under this
"ct on account of any loss or dama5e caused to him by such disaster 12
34
-1$'!
3'
any amount recei+ed
36

37
-or recei+able2 by an employee of
i! a public sector company 1 or
ii! any other company 1 or
iii! an authority established under a .entral% *tate or Pro+incial "ct 1 or
i%! a local
3&
-authority 1 or2
48
-%! a co#operati+e society 1 or
%i! a Eni+ersity established or incorporated by or under a .entral% *tate or
Pro+incial "ct and an institution declared to be a Eni+ersity under section )
of the Eni+ersity ;rants .ommission "ct% 1&4' ) of 1&4'! 1 or
%ii! an Indian Institute of Technolo5y within the meanin5 of clause g! of
section )
41
of the Institutes of Technolo5y "ct% 1&'1 4& of 1&'1! 1 or
42
-%iia! any *tate ;o+ernment1 or2
4)
-%iib! the .entral ;o+ernment1 or2
43
-%iic! an institution% ha+in5 importance throu5hout India or in any *tate or *tates%
as the .entral ;o+ernment may% by notification in the <fficial ;a=ette
44
%
specify in this behalf1 or2
%iii! such institute of mana5ement as the .entral ;o+ernment may% by
notification
4'
in the <fficial ;a=ette% specify in this behalf%2
46
-on his2
47
-+oluntary retirement or termination of his ser+ice% in accordance
with any scheme or schemes of +oluntary retirement or in the case of a public
sector company referred to in sub#clause i!% a scheme of +oluntary separation%
to the e$tent such amount does not e$ceed fi+e la9h rupees2 :
Provided that the schemes of the said companies or authorities
4&
-or societies
or Eni+ersities or the Institutes referred to in sub#clauses %ii! and %iii!2% as the
case may be% 5o+ernin5 the payment of such amount are framed in accordance
with such 5uidelines includin5 inter alia criteria of economic +iability! as may
be
'8
prescribed
'1
-***2 :
Provided further that where e$emption has been allowed to an employee
under this clause for any assessment year% no e$emption thereunder shall be
allowed to him in relation to any other assessment year 12
'2
-1$''! in the case of an employee% bein5 an indi+idual deri+in5 income in the nature
of a per,uisite% not pro+ided for by way of monetary payment% within the
meanin5 of clause 2! of section 16% the ta$ on such income actually paid by his
employer% at the option of the employer% on behalf of such employee%
notwithstandin5 anythin5 contained in section 288
')
of the .ompanies "ct%
1&4' 1 of 1&4'!12
'3
-1$1! any sum recei+ed under a life insurance policy% includin5 the sum allocated by
way of bonus on such policy% other than
a( any sum recei+ed under sub#section )! of section 78?? or sub#section )!
of section 78??"1 or
b! any sum recei+ed under a Deyman insurance policy1 or
c! any sum recei+ed under an insurance policy issued on or after the 1st day of
"pril% 288) in respect of which the premium payable for any of the years
durin5 the term of the policy e$ceeds twenty per cent of the actual capital
sum assured:
Provided that the pro+isions of this sub#clause shall not apply to any sum
recei+ed on the death of a person:
Provided further that for the purpose of calculatin5 the actual capital sum
assured under this sub#clause% effect shall be 5i+en to the
'4
E$planation to
sub-section *3( o! section "$' or the E$planation to sub-section *2A( o!
section "") as the case ma+ be](
Explanation.>or the purposes of this clause% Deyman insurance policy means a
life insurance policy ta9en by a person on the life of another person who is or
was the employee of the first#mentioned person or is or was connected in any
manner whatsoe+er with the business of the first#mentioned person12
11! any payment from a pro+ident fund to which the Pro+ident >unds "ct% 1&24 1&
of 1&24!% applies
''
-or from any other pro+ident fund set up by the .entral
;o+ernment and notified
'6
by it in this behalf in the <fficial ;a=ette21
12! the accumulated balance due and becomin5 payable to an employee
participatin5 in a reco5nised pro+ident fund% to the e$tent pro+ided in rule 7 of
Part " of the >ourth *chedule 1
'7
-13! any payment from an appro+ed superannuation fund made
i! on the death of a beneficiary 1 or
ii! to an employee in lieu of or in commutation of an annuity on his retirement
at or after a specified a5e or on his becomin5 incapacitated prior to such
retirement 1 or
iii! by way of refund of contributions on the death of a beneficiary 1 or
i%! by way of refund of contributions to an employee on his lea+in5 the ser+ice
in connection with which the fund is established otherwise than by
retirement at or after a specified a5e or on his becomin5 incapacitated prior
to such retirement% to the e$tent to which such payment does not e$ceed the
contributions made prior to the commencement of this "ct and any interest
thereon12
'&
-
68
13A! any special allowance specifically 5ranted to an assessee by his employer to
meet e$penditure actually incurred on Hpayment of rent by whate+er name
called! in respect of residential accommodation occupied by the assessee% to
such e$tent
61
-* * *2 as may be prescribed
62
ha+in5 re5ard to the area or place in
which such accommodation is situate and other rele+ant considerations(2
6)
-Explanation.>or the remo+al of doubts% it is hereby declared that nothin5
contained in this clause shall apply in a case where
a! the residential accommodation occupied by the assessee is owned by him 1
or
b! the assessee has not actually incurred e$penditure on payment of rent by
whate+er name called! in respect of the residential accommodation
occupied by him 12
63
-14! i! any such special allowance or benefit% not bein5 in the nature of a per,uisite
within the meanin5 of clause 2! of section 16% specifically 5ranted to meet
e$penses wholly% necessarily and e$clusi+ely incurred
64
in the performance of
the duties of an office or employment of profit
6'
%
66
-as may be prescribed2% to
the e$tent to which such e$penses are actually incurred for that purpose 1
ii! any such allowance 5ranted to the assessee either to meet his personal
e$penses at the place where the duties of his office or employment of profit
6'
are ordinarily performed by him or at the place where he ordinarily resides% or
to compensate him for the increased cost of li+in5%
67
-as may be prescribed and
to the e$tent as may be prescribed2 :2
6&
-Provided that nothin5 in sub#clause ii! shall apply to any allowance in the
nature of personal allowance 5ranted to the assessee to remunerate or
compensate him for performin5 duties of a special nature relatin5 to his office
or employment unless such allowance is related to the place of his postin5 or
residence 12
14A!
78
-***2
15!
71
-i! income by way of interest% premium on redemption or other payment on
such securities% bonds% annuity certificates% sa+in5s certificates% other
certificates issued by the .entral ;o+ernment and deposits as the .entral
72
behalf% sub:ect to such conditions and limits as may be specified in the said
notification 12
7)
-iib!
73
-in the case of an indi+idual or a Cindu undi+ided family%2 interest on
such .apital In+estment Bonds as the .entral ;o+ernment may% by
notification
74
in the <fficial ;a=ette% specify in this behalf :2
7'
-Provided that the .entral ;o+ernment shall not specify% for the purposes of
this sub#clause% such .apital In+estment Bonds on or after the 1st day of @une%
288212
76
-iic! in the case of an indi+idual or a Cindu undi+ided family% interest on
such Relief Bonds
77
as the .entral ;o+ernment may% by notification in the
<fficial ;a=ette% specify in this behalf 12
7&
-iid! interest on such bonds% as the .entral ;o+ernment may% by notification
&8
in the <fficial ;a=ette% specify% arisin5 to
a! a non#resident Indian% bein5 an indi+idual ownin5 the bonds 1 or
b! any indi+idual ownin5 the bonds by +irtue of bein5 a nominee or sur+i+or
of the non#resident Indian 1 or
c! any indi+idual to whom the bonds ha+e been 5ifted by the non#resident
Indian :
Provided that the aforesaid bonds are purchased by a non#resident Indian in
forei5n e$chan5e and the interest and principal recei+ed in respect of such
bonds% whether on their maturity or otherwise% is not allowable to be ta9en out
of India :
Provided further that where an indi+idual% who is a non#resident Indian in any
pre+ious year in which the bonds are ac,uired% becomes a resident in India in
any subse,uent year% the pro+isions of this sub#clause shall continue to apply in
relation to such indi+idual :
Provided also that in a case where the bonds are encashed in a pre+ious year
prior to their maturity by an indi+idual who is so entitled% the pro+isions of this
sub#clause shall not apply to such indi+idual in relation to the assessment year
rele+ant to such pre+ious year :
&1
-Provided also that the .entral ;o+ernment shall not specify% for the
purposes of this sub#clause% such bonds on or after the 1st day of @une% 2882(2
Explanation.>or the purposes of this sub#clause% the e$pression non#resident
Indian shall ha+e the meanin5 assi5ned to it in clause e! of section 114.12
iii! interest on securities held by the Issue ?epartment of the .entral Ban9 of
.eylon constituted under the .eylon Bonetary Gaw "ct% 1&3&1
&2
-iiia! interest payable to any ban9 incorporated in a country outside India and
authorised to perform central ban9in5 functions in that country on any deposits
made by it% with the appro+al of the Reser+e Ban9 of India% with any scheduled
ban9(
Explanation.>or the purposes of this sub#clause% scheduled ban9 shall ha+e the
meanin5 assi5ned to it in
&)
-clause ii! of the Explanation to clause %iia! of
sub#section 1! of section )'212
&3
-iiib! interest payable to the Aordic In+estment Ban9% bein5 a multilateral
financial institution constituted by the ;o+ernments of ?enmar9% >inland%
Iceland% Aorway and *weden% on a loan ad+anced by it to a pro:ect appro+ed by
the .entral ;o+ernment in terms of the Bemorandum of Enderstandin5
entered into by the .entral ;o+ernment with that Ban9 on the 24th day of
Ao+ember% 1&7'12
&4
-iiic! interest payable to the European In+estment Ban9% on a loan 5ranted by
it in pursuance of the framewor9#a5reement for financial co#operation entered
into on the 24th day of Ao+ember% 1&&) by the .entral ;o+ernment with that
Ban912
i%! interest payable
&'
-a! by ;o+ernment or a local authority on moneys borrowed by it before
the 1st day of @une% 2881 from% or debts owed by it before the 1st day of
@une% 2881 to% sources outside India12
b! by an industrial underta9in5 in India on moneys borrowed by it under
&6
-a loan a5reement entered into before the 1st day of @une% 2881 with
any such financial institution2 in a forei5n country as may be appro+ed
&7
in this behalf by the .entral ;o+ernment by 5eneral or special order 1
&&
c! by an industrial underta9in5 in India on any moneys borrowed or debt
incurred by it
1
-before the 1st day of @une% 28812 in a forei5n country in
respect of the purchase outside India of raw materials
2
-or components2
or capital plant and machinery%
)
-to the e$tent to which such interest
does not e$ceed the amount of interest calculated at the rate appro+ed
by the .entral ;o+ernment in this behalf
3
% ha+in5 re5ard to the terms of
the loan or debt and its repayment(2
4
-
'
-Explanation 1(2>or the purposes of this item% purchase of capital
plant and machinery includes the purchase of such capital plant and
machinery under a hire#purchase a5reement or a lease a5reement with
an option to purchase such plant and machinery(2
6
-Explanation 2.>or the remo+al of doubts% it is hereby declared that the
usance interest payable outside India by an underta9in5 en5a5ed in the
business of ship#brea9in5 in respect of purchase of a ship from outside
India shall be deemed to be the interest payable on a debt incurred in a
forei5n country in respect of the purchase outside India12
7
-d! by the Industrial >inance .orporation of India established by the
Industrial >inance .orporation "ct% 1&37 14 of 1&37!% or the Industrial
?e+elopment Ban9 of India established under the Industrial
?e+elopment Ban9 of India "ct% 1&'3 17 of 1&'3!%
&
-or the E$port#
Import Ban9 of India established under the E$port#Import Ban9 of India
"ct% 1&71 27 of 1&71!%2
18
-or the Aational Cousin5 Ban9 established
under section ) of the Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76!%2
11
-or the *mall Industries ?e+elopment Ban9 of India established under
section ) of the *mall Industries ?e+elopment Ban9 of India "ct% 1&7&
)& of 1&7&!%2 or the Industrial .redit and In+estment .orporation of
India -a company formed and re5istered under the Indian .ompanies
"ct% 1&1) 6 of 1&1)!2% on any moneys borrowed by it from sources
outside India
12
-before the 1st day of @une% 28812% to the e$tent to which
such interest does not e$ceed the amount of interest calculated at the
rate appro+ed by the .entral ;o+ernment in this behalf% ha+in5 re5ard
to the terms of the loan and its repayment12
1)
-e! by any other financial institution established in India or a ban9in5
company to which the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!%
applies includin5 any ban9 or ban9in5 institution referred to in section
41 of that "ct!% on any moneys borrowed by it from sources outside
India
13
-before the 1st day of @une% 28812 under a loan a5reement
appro+ed by the .entral ;o+ernment where the moneys are borrowed
either for the purpose of ad+ancin5 loans to industrial underta9in5s in
India for purchase outside India of raw materials or capital plant and
machinery or for the purpose of importin5 any 5oods which the .entral
;o+ernment may consider necessary to import in the public interest% to
the e$tent to which such interest does not e$ceed the amount of interest
calculated at the rate appro+ed by the .entral ;o+ernment in this
behalf% ha+in5 re5ard to the terms of the loan and its repayment12
14
-!! by an industrial underta9in5 in India on any moneys borrowed by it in
forei5n currency from sources outside India under a loan a5reement
appro+ed by the .entral ;o+ernment
1'
-before the 1st day of @une%
28812 ha+in5 re5ard to the need for industrial de+elopment in India% to
the e$tent to which such interest does not e$ceed the amount of interest
behalf% ha+in5 re5ard to the terms of the loan and its repayment1
16
-!a! by a scheduled ban9
17
***]
1&
-to a non#resident or to a person who is
not ordinarily resident within the meanin5 of sub#section '! of section
'2 on deposits in forei5n currency where the acceptance of such
deposits by the ban9 is appro+ed by the Reser+e Ban9 of India(
Explanation.>or the purposes of this item% the e$pression scheduled
ban9 shall ha+e the meanin5 assi5ned to it in clause ii! of the
Explanation to clause %iia! of sub#section 1! of section )'12
28
-g! by a public company formed and re5istered in India with the main
ob:ect of carryin5 on the business of pro+idin5 lon5#term finance for
construction or purchase of houses in India for residential purposes%
21
-bein5 a company eli5ible for deduction under clause %iii! of sub#
section 1! of section )'2 on any moneys borrowed by it in forei5n
currency from sources outside India under a loan a5reement appro+ed
by the .entral ;o+ernment
22
-before the 1st day of @une% 288)2% to the
e$tent to which such interest does not e$ceed the amount of interest
behalf% ha+in5 re5ard to the terms of the loan and its repayment(2
Explanation.>or the purposes of
2)
-items !!
23
-% !a!2 and g!2% the
e$pression
24
forei5n currency shall ha+e the meanin5 assi5ned to it in
the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!12
2'
-h! by any public sector company in respect of such bonds or debentures
and sub:ect to such conditions% includin5 the condition that the holder of
such bonds or debentures re5isters his name and the holdin5 with that
company% as the .entral ;o+ernment may% by notification
26
in the
<fficial ;a=ette% specify in this behalf12
27
-i! by ;o+ernment on deposits made by an employee of the .entral
;o+ernment or a *tate ;o+ernment
2&
-or a public sector company2% in
accordance with such scheme as the .entral ;o+ernment may% by
notification
)8
in the <fficial ;a=ette% frame in this behalf% out of the
moneys due to him on account of his retirement% whether on
superannuation or otherwise(2
)1
-
)2
-Explanation 12.>or the purposes of this sub#clause% the e$pression
industrial underta9in5 means any underta9in5 which is en5a5ed in
a! the manufacture or processin5 of 5oods1 or
))
-aa! the manufacture of computer software or recordin5 of pro5ramme on any
disc% tape% perforated media or other information de+ice1 or2
b! the business of 5eneration or distribution of electricity or any other form of
power1 or
)3
-ba! the business of pro+idin5 telecommunication ser+ices1 or2
c! minin51 or
d! the construction of ships1 or
)4
-da! the business of ship#brea9in51 or2
)'
-e! the operation of ships or aircrafts or construction or operation of rail
systems(22
)6
-Explanation 1A.>or the purposes of this sub#clause% the e$pression interest
shall not include interest paid on delayed payment of loan or on default if it is
in e$cess of two per cent per annum o+er the rate of interest payable in terms of
such loan(2
)7
-Explanation 2.>or the purposes of this clause% the e$pression interest
includes hed5in5 transaction char5es on account of currency fluctuation12
)&
-%! interest on
a! securities held by the Felfare .ommissioner% Bhopal ;as 0ictims%
Bhopal% in the Reser+e Ban9s *;G "ccount Ao( *GI?C 8371
b! deposits for the benefit of the +ictims of the Bhopal 5as lea9 disaster
held in such account% with the Reser+e Ban9 of India or with a public
sector ban9% as the .entral ;o+ernment may% by notification
38
in the
<fficial ;a=ette% specify% whether prospecti+ely or retrospecti+ely but in
no case earlier than the 1st day of "pril% 1&&3 in this behalf(
Explanation.>or the purposes of this sub#clause% the e$pression public
sector ban9 shall ha+e the meanin5 assi5ned to it in the Explanation to
clause 231!12
31
-%i! interest on ;old ?eposit Bonds issued under the ;old ?eposit *cheme%
1&&& notified by the .entral ;o+ernment12
32
-%ii! interest on bonds
a! issued by a local authority1 and
b! specified by the .entral ;o+ernment by notification
3)
in the <fficial
;a=ette12
33
*+iii( an+ income b+ wa+ o! interest recei%ed b+ a non-resident or a person
who is not ordinaril+ resident) in 3ndia on a deposit made on or a!ter the 1st
da+ o! April) 2$$5) in an /!!shore Ban.ing ;nit
44a
re!erred to in clause *u( o!
section 2 o! the <pecial Economic =ones Act) 2$$5-]
34
-15A! any payment made% by an Indian company en5a5ed in the business of operation
of aircraft% to ac,uire an aircraft or an aircraft en5ine other than a payment for
pro+idin5 spares% facilities or ser+ices in connection with the operation of
leased aircraft! on lease from the ;o+ernment of a forei5n *tate or a forei5n
enterprise under an a5reement
3'
-
36
-% not bein5 an a5reement entered into
between the 1st day of "pril% 1&&6 and the )1st day of Barch% 1&&&%2 and2
appro+ed by the .entral ;o+ernment in this behalf :
37
-Provided that nothing contained in this clause shall appl+ to an+ such
agreement entered into on or a!ter the
3&
1st da+ o! April)
3&a
2$$6]].2
Explanation.>or the purposes of this clause% the e$pression forei5n enterprise
means a person who is a non#resident12
48
16!
41
scholarships 5ranted to meet the cost of education1
42
-1! any income by way of
i! daily allowance recei+ed by any person by reason of his membership of
Parliament or of any *tate Ge5islature or of any .ommittee thereof1
4)
-* *
*2
43
-ii! any allowance recei+ed by any person by reason of his membership of
Parliament under the Bembers of Parliament .onstituency "llowance!
Rules% 1&7'1
iii! all other allowances not e$ceedin5
44
-two thousand2 rupees per month in the
a55re5ate recei+ed by any person by reason of his membership of any *tate
Ge5islature or of any .ommittee thereof% which the .entral ;o+ernment
may% by notification
4'
in the <fficial ;a=ette% specify in this behalf122
The following sub-clause (iii) shall be substituted for the existing sub-
clause (iii) of clause (17) of section 10 by the Finance Act, 2006, w.e.f. 1-
4-2007 :
*iii( an+ constituenc+ allowance recei%ed b+ an+ person b+ reason o! his
membership o! an+ <tate >egislature under an+ Act or rules made b+ that
<tate >egislature-
46
-1A! any payment made% whether in cash or in 9ind%
i! in pursuance of any award instituted in the public interest by the .entral
;o+ernment or any *tate ;o+ernment or instituted by any other body and
appro+ed
47
by the .entral ;o+ernment in this behalf1 or
ii! as a reward by the .entral ;o+ernment or any *tate ;o+ernment for such
purposes as may be appro+ed
47
by the .entral ;o+ernment in this behalf in
the public interest12
4&
-1"! any income by way of
i! pension recei+ed by an indi+idual who has been in the ser+ice of the
.entral ;o+ernment or *tate ;o+ernment and has been awarded Param 0ir
.ha9ra or Baha 0ir .ha9ra or 0ir .ha9ra or such other 5allantry award as
the .entral ;o+ernment may% by notification
'8
in the <fficial ;a=ette%
specify in this behalf1
ii! family pension recei+ed by any member of the family of an indi+idual
referred to in sub#clause i!(
Explanation.>or the purposes of this clause% the e$pression family shall ha+e
the meanin5 assi5ned to it in the Explanation to clause 5!12
1"A!
'1
'2
-1#! family pension recei+ed by the widow or children or nominated heirs% as the
case may be% of a member of the armed forces includin5 paramilitary forces!
of the Enion% where the death of such member has occurred in the course of
operational duties% in such circumstances and sub:ect to such conditions% as
may be prescribed
')
12
'3
-1#A! the annual +alue of any one palace in the occupation of a Ruler% bein5 a palace%
the annual +alue whereof was e$empt from income#ta$ before the
commencement of the .onstitution Twenty#si$th "mendment! "ct% 1&61% by
+irtue of the pro+isions of the Ber5ed *tates Ta$ation .oncessions! <rder%
1&3&% or the Part B *tates Ta$ation .oncessions! <rder% 1&48% or% as the case
may be% the @ammu and Dashmir Ta$ation .oncessions! <rder% 1&47:
Provided that for the assessment year commencin5 on the 1st day of "pril%
1&62% the annual +alue of e+ery such palace in the occupation
'4
of such Ruler
durin5 the rele+ant pre+ious year shall be e$empt from income#ta$12
''
2$! the income of a local authority which is char5eable under the head
'6
-* * *2
Income from house property% .apital 5ains or Income from other sources or
from a trade or business carried on by it which accrues or arises from the
supply of a commodity or ser+ice
'7
-not bein5 water or electricity! within its
own :urisdictional area or from the supply of water or electricity within or
outside its own :urisdictional area2(
'&
-Explanation.>or the purposes of this clause% the e$pression local authority
means
i! Panchayat as referred to in clause d! of article 23) of the .onstitution
68
1 or
ii! Bunicipality as referred to in clause e! of article 23)P of the
.onstitution
68
1 or
iii! Bunicipal .ommittee and ?istrict Board%
le5ally entitled to% or entrusted by the ;o+ernment with% the control or
mana5ement of a Bunicipal or local fund1 or
i%! .antonment Board as defined in section )
68
of the .antonments "ct% 1&23
2 of 1&23!12
2$A!
61
-***2
62
-
6)
21!
63
any income of a scientific research association for the time bein5 appro+ed for
the purpose of clause ii! of sub#section 1! of section )4:
Provided that the scientific research association
a! applies its income% or accumulates it for application% wholly and e$clusi+ely
to the ob:ects for which it is established% and the pro+isions of sub#section
2! and sub#section )! of section 11 shall apply in relation to such
accumulation sub:ect to the followin5 modifications% namely :
i! in sub#section 2!%
1! the words% brac9ets% letters and fi5ure referred to in clause a! or
clause b! of sub#section 1! read with the Explanation to that sub#
section shall be omitted1
2! for the words to charitable or reli5ious purposes% the words for the
purposes of scientific research shall be substituted1
3! the reference to "ssessin5 <fficer in clause a! thereof shall be
construed as a reference to the prescribed authority referred to in
clause ii! of sub#section 1! of section )41
ii! in sub#section )!% in clause a!% for the words charitable or reli5ious
purposes% the words the purposes of scientific research shall be
substituted1 and
64
-b! does not in+est or deposit its funds% other than
i! any assets held by the scientific research association where such assets
form part of the corpus of the fund of the association as on the 1st day
of @une% 1&6)1
ii! any assets bein5 debentures issued by% or on behalf of% any company or
corporation!% ac,uired by the scientific research association before the
1st day of Barch% 1&7)1
iii! any accretion to the shares% formin5 part of the corpus of the fund
mentioned in sub#clause i!% by way of bonus shares allotted to the
scientific research association1
i%! +oluntary contributions recei+ed and maintained in the form of
:ewellery% furniture or any other article as the Board may% by
notification in the <fficial ;a=ette% specify%
for any period durin5 the pre+ious year otherwise than in any one or more
of the forms or modes specified in sub#section 4! of section 11:2
6'
-Provided further that the e$emption under this clause shall not be denied in
relation to +oluntary contribution% other than +oluntary contribution in cash or
+oluntary contribution of the nature referred to in clause b! of the first pro+iso
to this clause% sub:ect to the condition that such +oluntary contribution is not
held by the scientific research association% otherwise than in any one or more of
the forms or modes specified in sub#section 4! of section 11% after the e$piry of
one year from the end of the pre+ious year in which such asset is ac,uired or
the )1st day of Barch% 1&&2% whiche+er is later:
Provided also2 that nothin5 contained in this clause shall apply in relation to
any income of the scientific research association% bein5 profits and 5ains of
business% unless the business is incidental to the attainment of its ob:ecti+es and
separate boo9s of account are maintained by it in respect of such business:2
66
-Provided also that where the scientific research association is appro+ed by
the .entral ;o+ernment and subse,uently that ;o+ernment is satisfied that
i! the scientific research association has not applied its income in accordance
with the pro+isions contained in clause a! of the first pro+iso1 or
ii! the scientific research association has not in+ested or deposited its funds in
accordance with the pro+isions contained in clause b! of the first pro+iso1
or
iii! the acti+ities of the scientific research association are not 5enuine1 or
i%! the acti+ities of the scientific research association are not bein5 carried out
in accordance with all or any of the conditions sub:ect to which such
association was appro+ed%
it may% at any time after 5i+in5 a reasonable opportunity of showin5 cause
a5ainst the proposed withdrawal to the concerned association% by order%
withdraw the appro+al and forward a copy of the order withdrawin5 the
appro+al to such association and to the "ssessin5 <fficer12
22!
67
22A!
6&
78
-22B! any income of such news a5ency set up in India solely for collection and
distribution of news as the .entral ;o+ernment may% by notification
71
in the
<fficial ;a=ette% specify in this behalf:
Provided that the news a5ency applies its income or accumulates it for
application solely for collection and distribution of news and does not distribute
its income in any manner to its members:
Provided further that any notification issued by the .entral ;o+ernment under
this clause shall% at any one time% ha+e effect for such assessment year or years%
not e$ceedin5 three assessment years includin5 an assessment year or years
commencin5 before the date on which such notification is issued! as may be
specified in the notification:2
72
-Provided also that where the news a5ency has been specified% by
notification% by the .entral ;o+ernment and subse,uently that ;o+ernment is
satisfied that such news a5ency has not applied or accumulated or distributed
its income in accordance with the pro+isions contained in the first pro+iso% it
may% at any time after 5i+in5 a reasonable opportunity of showin5 cause%
rescind the notification and forward a copy of the order rescindin5 the
notification to such a5ency and to the "ssessin5 <fficer12
23!
7)
-/mitted b+ the 0inance Act) 2$$2) w.e.!. 1-4-2$$3-2
73
-
74
23A! any income other than income char5eable under the head
7'
-* * *2 Income
from house property or any income recei+ed for renderin5 any specific ser+ices
or income by way of interest or di+idends deri+ed from its in+estments! of an
association or institution established in India ha+in5 as its ob:ect the control%
super+ision% re5ulation or encoura5ement of the profession of law% medicine%
accountancy% en5ineerin5 or architecture or such other profession
76
as the
.entral ;o+ernment may specify in this behalf% from time to time% by
notification in the <fficial ;a=ette:
Provided that
i! the association or institution applies its income% or accumulates it for
application% solely to the ob:ects for which it is established1 and
ii! the association or institution is for the time bein5 appro+ed
77
for the purpose
of this clause by the .entral ;o+ernment by 5eneral or special order:2
7&
-Provided further that where the association or institution has been appro+ed
by the .entral ;o+ernment and subse,uently that ;o+ernment is satisfied that
i! such association or institution has not applied or accumulated its income in
accordance with the pro+isions contained in the first pro+iso1 or
ii! the acti+ities of the association or institution are not bein5 carried out in
accordance with all or any of the conditions sub:ect to which such
association or institution was appro+ed%
a5ainst the proposed withdrawal to the concerned association or institution% by
order% withdraw the appro+al and forward a copy of the order withdrawin5 the
appro+al to such association or institution and to the "ssessin5 <fficer12
&8
-23AA! any income recei+ed by any person on behalf of any Re5imental >und or Aon#
Public >und established by the armed forces of the Enion for the welfare of the
past and present members of such forces or their dependants12
&1
-23AAA! any income recei+ed by any person on behalf of a fund established% for
such purposes as may be notified
&2
by the Board in the <fficial ;a=ette% for the
welfare of employees or their dependants and of which fund such employees
are members if such fund fulfils the followin5 conditions% namely :
a! the fund
i! applies its income or accumulates it for application% wholly and
e$clusi+ely to the ob:ects for which it is established1 and
ii! in+ests its funds and contributions and other sums recei+ed by it in the
forms or modes specified in sub#section 4! of section 111
b! the fund is appro+ed by the .ommissioner in accordance with the rules
&)
made in this behalf:
Provided that any such appro+al shall at any one time ha+e effect for such
assessment year or years not e$ceedin5 three assessment years as may be
specified in the order of appro+al12
&3
-23AAB! any income of a fund% by whate+er name called% set up by the Gife
Insurance .orporation of India on or after the 1st day of "u5ust% 1&&'
&4
-or any
other insurer2 under a pension scheme%
i! to which contribution is made by any person for the purpose of recei+in5
pension from such fund1
ii! which is appro+ed by the .ontroller of Insurance
&4
-or the Insurance
Re5ulatory and ?e+elopment "uthority established under sub#section 1! of
section ) of the Insurance Re5ulatory and ?e+elopment "uthority "ct%
1&&& 31 of 1&&&!% as the case may be2(
Explanation.>or the purposes of this clause% the e$pression .ontroller of
Insurance shall ha+e the meanin5 assi5ned to it in clause 5B! of section 2 of
the Insurance "ct% 1&)7 3 of 1&)7!
&'
12
&6
-23B! any income of an institution constituted as a public charitable trust or re5istered
under the *ocieties Re5istration "ct% 17'8 21 of 17'8!% or under any law
correspondin5 to that "ct in force in any part of India% and e$istin5 solely for
the de+elopment of 9hadi or +illa5e industries or both% and not for purposes of
profit% to the e$tent such income is attributable to the business of production%
sale% or mar9etin5% of 9hadi or products of +illa5e industries:
Provided that
i! the institution applies its income% or accumulates it for application% solely
for the de+elopment of 9hadi or +illa5e industries or both1 and
ii! the institution is% for the time bein5% appro+ed for the purpose of this clause
by the Dhadi and 0illa5e Industries .ommission:
Provided further that the .ommission shall not% at any one time% 5rant such
appro+al for more than three assessment years be5innin5 with the assessment
year ne$t followin5 the financial year in which it is 5ranted:
&7
-Provided also that where the institution has been appro+ed by the Dhadi and
0illa5e Industries .ommission and subse,uently that .ommission is satisfied
that
i! the institution has not applied or accumulated its income in accordance with
the pro+isions contained in the first pro+iso1 or
ii! the acti+ities of the institution are not bein5 carried out in accordance with
all or any of the conditions sub:ect to which such institution was appro+ed%
a5ainst the proposed withdrawal to the concerned institution% by order%
withdraw the appro+al and forward a copy of the order withdrawin5 the
appro+al to such institution and to the "ssessin5 <fficer(2
i! Dhadi and 0illa5e Industries .ommission means the Dhadi and 0illa5e
Industries .ommission established under the Dhadi and 0illa5e Industries
.ommission "ct% 1&4' '1 of 1&4'!1
ii!
&&
9hadi and +illa5e industries ha+e the meanin5s respecti+ely assi5ned to
them in that "ct12
1
-23BB! any income of an authority whether 9nown as the Dhadi and 0illa5e Industries
Board or by any other name! established in a *tate by or under a *tate or
Pro+incial "ct for the de+elopment of 9hadi or +illa5e industries in the *tate(
2
9hadi and +illa5e industries ha+e
the meanin5s respecti+ely assi5ned to them in the Dhadi and 0illa5e Industries
.ommission "ct% 1&4' '1 of 1&4'!12
)
-23BBA! any income of any body or authority whether or not a body corporate or
corporation sole! established% constituted or appointed by or under any .entral%
*tate or Pro+incial "ct which pro+ides for the administration of any one or
more of the followin5% that is to say% public reli5ious or charitable trusts or
endowments includin5 maths% temples% 5urdwaras% wa9fs% churches%
syna5o5ues% a5iaries or other places of public reli5ious worship! or societies for
reli5ious or charitable purposes re5istered as such under the *ocieties
Re5istration "ct% 17'8 21 of 17'8!% or any other law for the time bein5 in
force:
Provided that nothin5 in this clause shall be construed to e$empt from ta$ the
income of any trust% endowment or society referred to therein12
3
-23BBB! any income of the European Economic .ommunity deri+ed in India by
way of interest% di+idends or capital 5ains from in+estments made out of its
funds under such scheme
4
as the .entral ;o+ernment may% by notification in
the <fficial ;a=ette% specify in this behalf(
Explanation.>or the purposes of this clause% European Economic .ommunity
means the European Economic .ommunity established by the Treaty of Rome
of 24th Barch% 1&4612
'
-23BB' ! any income of the *""R. >und for Re5ional Pro:ects set up by .olombo
?eclaration issued on the 21st day of ?ecember% 1&&1 by the Ceads of *tate or
;o+ernment of the Bember .ountries of *outh "sian "ssociation for Re5ional
.ooperation established on the 7th day of ?ecember% 1&74 by the .harter of
the *outh "sian "ssociation for Re5ional .ooperation12
6
-23BB1! any income of the *ecretariat of the "sian <r5anisation of the *upreme
"udit Institutions re5istered as "*<*"I#*E.RET"RI"T under the *ocieties
Re5istration "ct% 17'8 21 of 17'8! for
7
-se+en pre+ious years rele+ant to the
assessment years be5innin5 on the 1st day of "pril% 2881 and endin5 on the
)1st day of Barch% 288721
23BBE! any income of the Insurance Re5ulatory and ?e+elopment "uthority
established under sub#section 1! of section ) of the Insurance Re5ulatory and
?e+elopment "uthority "ct% 1&&& 31 of 1&&&!12
&
-
18
23'! any income recei+ed by any person on behalf of
i! the Prime Binisters Aational Relief >und1 or
ii! the Prime Binisters >und Promotion of >ol9 "rt!1 or
iii! the Prime Binisters "id to *tudents >und1
11
-or2
12
-iiia!the Aational >oundation for .ommunal Carmony1 or2
1)
-iiiab!any uni+ersity or other educational institution
13
e$istin5
13
solely
13
for
educational purposes and not for purposes of profit% and which is wholly or
substantially financed by the ;o+ernment1 or
iiiac! any hospital or other institution for the reception and treatment of persons
sufferin5 from illness or mental defecti+eness or for the reception and
treatment of persons durin5 con+alescence or of persons re,uirin5 medical
attention or rehabilitation% e$istin5 solely for philanthropic purposes and not
for purposes of profit% and which is wholly or substantially financed by the
;o+ernment1 or
iiiad! any uni+ersity or other educational institution
13
e$istin5
13
solely
13
for
educational purposes and not for purposes of profit if the a55re5ate annual
receipts of such uni+ersity or educational institution do not e$ceed the
amount of annual receipts as may be prescribed
14#1'
1 or
iiiae! any hospital or other institution for the reception and treatment of persons
for purposes of profit% if the a55re5ate annual receipts of such hospital or
institution do not e$ceed the amount of annual receipts as may be
prescribed
14#1'
1 or2
16
-i%! any other fund or institution established for charitable purposes which may
be notified
17
by the .entral ;o+ernment in the <fficial ;a=ette% ha+in5
re5ard to the ob:ects of the fund or institution and its importance throu5hout
India or throu5hout any *tate or *tates1 or
%! any trust includin5 any other le5al obli5ation! or institution wholly for
public reli5ious purposes or wholly for public reli5ious and charitable
purposes% which may be notified
1&
by the .entral ;o+ernment in the
<fficial ;a=ette% ha+in5 re5ard to the manner in which the affairs of the
trust or institution are administered and super+ised for ensurin5 that the
income accruin5 thereto is properly applied for the ob:ects thereof1
28
-%i! any uni+ersity or other educational institution
21
e$istin5
21
solely
21
for
educational purposes and not for purposes of profit% other than those
mentioned in sub#clause iiiab! or sub#clause iiiad! and which may be
appro+ed
22
by the prescribed authority
2)
1 or
%ia! any hospital or other institution for the reception and treatment of persons
for purposes of profit% other than those mentioned in sub#clause iiiac! or
sub#clause iiiae! and which may be appro+ed
23
by the prescribed
authority
24
:2
Provided that the fund or trust or institution
2'
-or any uni+ersity or other
educational institution
26
or any hospital or other medical institution2 referred to
in sub#clause i%! or sub#clause %!
2'
-or sub#clause %i! or sub#clause %ia!2
shall ma9e an application in the prescribed form
27
and manner to the prescribed
authority
2&
for the purpose of 5rant of the e$emption% or continuance thereof%
under sub#clause i%! or sub#clause %!
2&a
:
)8
-Provided further that the .entral ;o+ernment% before notifyin5 the fund or
trust or institution% or the prescribed authority% before appro+in5 any uni+ersity
or other educational institution or any hospital or other medical institution%
under sub#clause i%! or sub#clause %! or sub#clause %i! or sub#clause %ia!%
may call for such documents includin5 audited annual accounts! or
information from the fund or trust or institution or any uni+ersity or other
educational institution or any hospital or other medical institution% as the case
may be% as it thin9s necessary in order to satisfy itself about the 5enuineness of
the acti+ities of the fund or trust or institution or any uni+ersity or other
educational institution or any hospital or other medical institution% as the case
may be% and the .entral ;o+ernment or the prescribed authority% as the case
may be% may also ma9e such in,uiries as it deems necessary in this behalf :2
Provided also that the fund or trust or institution
)1
educational institution
)2
or any hospital or other medical institution2 referred to
in sub#clause i%! or sub#clause %!
)1
))
-a! applies its income% or accumulates it for application% wholly and
e$clusi+ely to the ob:ects for which it is established and in a case where
more than fifteen per cent of its income is accumulated on or after the
1st day of "pril% 2882% the period of the accumulation of the amount
e$ceedin5 fifteen per cent of its income shall in no case e$ceed fi+e
years1 and2
)3
-b! does not in+est or deposit its funds% other than
i! any assets held by the fund% trust or institution
)4
-or any uni+ersity
or other educational institution
)'
or any hospital or other medical
institution2 where such assets form part of the corpus of the fund%
trust or institution
)6
-or any uni+ersity or other educational
institution or any hospital or other medical institution2 as on the 1st
day of @une% 1&6)1
)7
-ia! any asset% bein5 e,uity shares of a public company% held by any
uni+ersity or other educational institution or any hospital or other
medical institution where such assets form part of the corpus of
any uni+ersity or other educational institution or any hospital or
other medical institution as on the 1st day of @une% 1&&712
ii! any assets bein5 debentures issued by% or on behalf of% any
company or corporation!% ac,uired by the fund% trust or institution
)&
-or any uni+ersity or other educational institution
38
or any
hospital or other medical institution2 before the 1st day of Barch%
1&7)1
iii! any accretion to the shares% formin5 part of the corpus mentioned
in sub#clause i!
31
-and sub#clause ia!2% by way of bonus shares
allotted to the fund% trust or institution
)&
educational institution or any hospital or other medical
institution2 1
i%! +oluntary contributions recei+ed and maintained in the form of
:ewellery% furniture or any other article as the Board may% by
notification in the <fficial ;a=ette% specify%
for any period durin5 the pre+ious year otherwise than in any one or
more of the forms or modes specified in sub#section 4! of section 11:2
Provided also that the e$emption under sub#clause i%! or sub#clause %! shall
not be denied in relation to any funds in+ested or deposited before the 1st day
of "pril% 1&7&% otherwise than in any one or more of the forms or modes
specified in sub#section 4! of section 11 if such funds do not continue to
remain so in+ested or deposited after the )8th day of Barch%
32
-1&&)2 :
3)
-Provided also that the e$emption under sub#clause %i! or sub#clause %ia!
shall not be denied in relation to any funds in+ested or deposited before the 1st
day of @une% 1&&7% otherwise than in any one or more of the forms or modes
specified in sub#section 4! of section 11 if such funds do not continue to
remain so in+ested or deposited after the )8th day of Barch% 2881 :2
33
-Provided also that the e$emption under sub#clause i%! or sub#clause %!
3)
-or
sub#clause %i! or sub#clause %ia!2 shall not be denied in relation to +oluntary
contribution% other than +oluntary contribution in cash or +oluntary contribution
of the nature referred to in clause b! of the third pro+iso to this sub#clause%
sub:ect to the condition that such +oluntary contribution is not held by the trust
or institution
34
-or any uni+ersity or other educational institution or any hospital
or other medical institution2% otherwise than in any one or more of the forms or
modes specified in sub#section 4! of section 11% after the e$piry of one year
from the end of the pre+ious year in which such asset is ac,uired or the )1st
day of Barch% 1&&2% whiche+er is later:2
Provided also that nothin5 contained in sub#clause i%! or sub#clause %!
3'
-or
sub#clause %i! or sub#clause %ia!2 shall apply in relation to any income of the
fund or trust or institution
3'
-or any uni+ersity or other educational institution or
any hospital or other medical institution2% bein5 profits and 5ains of business%
unless the business is incidental to the attainment of its ob:ecti+es and separate
boo9s of account are maintained by it in respect of such business:
Provided also that any notification issued by the .entral ;o+ernment under
sub#clause i%! or sub#clause %! shall% at any one time% ha+e effect for such
assessment year or years% not e$ceedin5 three assessment years includin5 an
assessment year or years commencin5 before the date on which such
notification is issued! as may be specified in the notification:2
36
-Provided also that any amount of donation recei+ed by the fund or
institution in terms of clause d! of sub#section 2! of section 78;
37
-in respect
of which accounts of income and e$penditure ha+e not been rendered to the
authority prescribed under clause %! of sub#section 4.! of that section% in the
manner specified in that clause% or2 which has been utilised for purposes other
than pro+idin5 relief to the +ictims of earth,ua9e in ;u:arat or which remains
unutilised in terms of sub#section 4.! of section 78; and not transferred to the
Prime Binisters Aational Relief >und on or before the )1st day of Barch%
3&
-28832 shall be deemed to be the income of the pre+ious year and shall
accordin5ly be char5ed to ta$:2
48
-***2
41
-Provided also that where the fund or trust or institution or any uni+ersity or
other educational institution or any hospital or other medical institution referred
to in sub#clause i%! or sub#clause %! or sub#clause %i! or sub#clause %ia! does
not apply its income durin5 the year of receipt and accumulates it% any payment
or credit out of such accumulation to any trust or institution re5istered under
section 12"" or to any fund or trust or institution or any uni+ersity or other
educational institution or any hospital or other medical institution referred to in
sub#clause i%! or sub#clause %! or sub#clause %i! or sub#clause %ia! shall not
be treated as application of income to the ob:ects for which such fund or trust
or institution or uni+ersity or educational institution or hospital or other
medical institution% as the case may be% is established :
Provided also that where the fund or institution referred to in sub#clause i%! or
trust or institution referred to in sub#clause %! is notified by the .entral
;o+ernment or any uni+ersity or other educational institution referred to in
sub#clause %i! or any hospital or other medical institution referred to in sub#
clause %ia!% is appro+ed by the prescribed authority and subse,uently that
;o+ernment or the prescribed authority is satisfied that
i! such fund or institution or trust or any uni+ersity or other educational
institution or any hospital or other medical institution has not
A! applied its income in accordance with the pro+isions contained in clause
a! of the third pro+iso1 or
B! in+ested or deposited its funds in accordance with the pro+isions
contained in clause b! of the third pro+iso1 or
ii! the acti+ities of such fund or institution or trust or any uni+ersity or other
educational institution or any hospital or other medical institution
A! are not 5enuine1 or
B! are not bein5 carried out in accordance with all or any of the conditions
sub:ect to which it was notified or appro+ed :
41a
Provided also that in case the !und or trust or institution or an+ uni%ersit+
or other educational institution or an+ hospital or other medical institution
re!erred to in the !irst pro%iso ma.es an application on or a!ter the 1st da+ o!
9une) 2$$6 !or the purposes o! grant o! exemption or continuance thereo!) such
application shall be made at an+ time during the !inancial +ear immediatel+
preceding the assessment +ear !rom which the exemption is sought)]
The following thirteenth proviso shall be inserted after the newly inserted
twelfth proviso to clause (23C) of section 10 by the Finance Act, 2006,
w.e.f. 1-4-2007 :
Provided also that an+ anon+mous donation re!erred to in section 115BB' on
which tax is pa+able in accordance with the pro%isions o! the said section shall
be included in the total income)
a5ainst the proposed action to the concerned fund or institution or trust or any
uni+ersity or other educational institution or any hospital or other medical
institution% rescind the notification or% by order% withdraw the appro+al% as the
case may be% and forward a copy of the order rescindin5 the notification or
withdrawin5 the appro+al to such fund or institution or trust or any uni+ersity
or other educational institution or any hospital or other medical institution and
to the "ssessin5 <fficer12
42
-231!
4)
-
43
-
44
-sub:ect to the pro+isions of .hapter /II#E% any income of22
i! a Butual >und re5istered under the *ecurities and E$chan5e Board of India
"ct% 1&&2 14 of 1&&2! or re5ulations made thereunder1
ii! such other Butual >und set up by a public sector ban9 or a public financial
institution or authorised by the Reser+e Ban9 of India and sub:ect to such
conditions as the .entral ;o+ernment may% by notification
4'
in the <fficial
;a=ette% specify in this behalf(2
a! the e$pression public sector ban9 means the *tate Ban9 of India
constituted under the *tate Ban9 of India "ct% 1&44 2) of 1&44!% a
subsidiary ban9 as defined in the *tate Ban9 of India *ubsidiary
Ban9s! "ct% 1&4& )7 of 1&4&!% a corres#pondin5 new Ban9 constituted
under section ) of the Ban9in5 .ompanies "c,uisition and Transfer of
Ender#ta9in5s! "ct% 1&68 4 of 1&68!% or under section ) of the Ban9in5
.ompanies "c,uisition and Transfer of Ender#ta9in5s! "ct% 1&78 38
of 1&78!1
b! the e$pression public financial institution shall ha+e the meanin5
assi5ned to it in section 3" of the .ompanies "ct% 1&4' 1 of 1&4'!
46
12
47
-c! the e$pression
4&
*ecurities and E$chan5e Board of India shall ha+e the
meanin5 assi5ned to it in clause a! of sub#section 1! of section 2 of the
*ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!12
*23E(
'8
'1
-23EA! any income
'1a
) b+ wa+ o! contributions recei%ed !rom recognised stoc.
exchanges and the members thereo!)] of such In+estor Protection >und set up
by reco5nised stoc9 e$chan5es in India% either :ointly or separately% as the
.entral ;o+ernment may% by notification
'2
in the <fficial ;a=ette% specify in
this behalf:
Provided that where any amount standin5 to the credit of the >und and not
char5ed to income#ta$ durin5 any pre+ious year is shared% either wholly or in
part% with a reco5nised stoc9 e$chan5e% the whole of the amount so shared shall
be deemed to be the income of the pre+ious year in which such amount is so
shared and shall accordin5ly be char5eable to income#ta$12
')
-23EB! any income of the .redit ;uarantee >und Trust for *mall
'3
-***2
Industries% bein5 a trust created by the ;o+ernment of India and the *mall
Industries ?e+elopment Ban9 of India established under sub#section 1! of
section ) of the *mall Industries ?e+elopment Ban9 of India "ct% 1&7& )& of
1&7&!% for fi+e pre+ious years rele+ant to the assessment years be5innin5 on the
1st day of "pril% 2882 and endin5 on the )1st day of Barch% 288612

'4
-230! any income by way of di+idends or lon5#term capital 5ains of a +enture capital
fund or a +enture capital company from in+estments made by way of e,uity
shares in a +enture capital underta9in5 :
Provided that such +enture capital fund or +enture capital company is
appro+ed for the purposes of this clause by the prescribed authority
''
in
accordance with the rules
'6
made in this behalf and satisfies the prescribed
conditions :
Provided further that any appro+al by the prescribed authority shall% at any
one time% ha+e effect for such assessment year or years% not e$ceedin5 three
assessment years% as may be specified in the order of appro+al :
'7
-Provided also that nothin5 contained in this clause shall apply in respect of
any in+estment made after the )1st day of Barch% 1&&&(2
'&
-* * *2
'&
-* * *2
a! +enture capital fund means such fund% operatin5 under a trust deed
re5istered under the pro+isions of the Re5istration "ct% 1&87 1' of 1&87!%
established to raise monies by the trustees for in+estments mainly by way of
ac,uirin5 e,uity shares of a +enture capital underta9in5 in accordance with
the prescribed 5uidelines1
b! +enture capital company means such company as has made in+estments by
way of ac,uirin5 e,uity shares of +enture capital underta9in5s in
accordance with the prescribed 5uidelines1 and
68
-c! +enture capital underta9in5 means such domestic company whose shares
are not listed in a reco5nised stoc9 e$chan5e in India and which is en5a5ed
in the business of 5eneration or 5eneration and distribution of electricity or
any other form of power or en5a5ed in the business of pro+idin5
telecommunication ser+ices or in the business of de+elopin5% maintainin5
and operatin5 any infrastructure facility or en5a5ed in the manufacture or
production of such articles or thin5s includin5 computer software! as may
be notified
61
by the .entral ;o+ernment in this behalf1
d! infrastructure facility means a road% hi5hway% brid5e% airport% port% rail
system% a water supply pro:ect% irri5ation pro:ect% sanitation and sewera5e
system or any other public facility of a similar nature as may be notified by
the Board in this behalf in the <fficial ;a=ette and which fulfils the
conditions specified in sub#section 3"! of section 78#I"12
62
-230A! any income by way of di+idends
6)
-) other than di+idends referred to in section
114#<2% or lon5#term capital 5ains of a +enture capital fund or a +enture capital
company from in+estments made by way of e,uity shares in a +enture capital
underta9in5 :
Provided that such +enture capital fund or +enture capital company is
appro+ed% for the purposes of this clause% by the .entral ;o+ernment on an
application made to it in accordance with the rules
63
made in this behalf and
which satisfies the prescribed conditions :
Provided further that any appro+al by the .entral ;o+ernment shall% at any
one time% ha+e effect for such assessment year or years% not e$ceedin5 three
assessment years% as may be specified in the order of appro+al :
64
-Provided also that nothin5 contained in this clause shall apply in respect of
any in+estment made after the )1st day of Barch% 2888(2
a! +enture capital fund means such fund% operatin5 under a trust deed
re5istered under the pro+isions of the Re5istration "ct% 1&87 1' of 1&87!%
established to raise monies by the trustees for in+estments mainly by way of
ac,uirin5 e,uity shares of a +enture capital underta9in5 in accordance with
the prescribed 5uidelines1
b! +enture capital company means such company as has made in+estments by
way of ac,uirin5 e,uity shares of +enture capital underta9in5s in
accordance with the prescribed 5uidelines1 and
c! +enture capital underta9in5 means such domestic company whose shares
are not listed in a reco5nised stoc9 e$chan5e in India and which is en5a5ed
in the
i! business of
A! software1
B! information technolo5y1
'! production of basic dru5s in the pharmaceutical sector1
1! bio#technolo5y1
E! a5riculture and allied sectors1 or
0! such other sectors as may be notified
6'
by the .entral ;o+ernment
in this behalf1 or
ii! production or manufacture of any article or substance for which patent
has been 5ranted to the Aational Research Gaboratory or any other
scientific research institution appro+ed by the ?epartment of *cience
and Technolo5y12
66
-230B! any income of a +enture capital company or +enture capital fund set up to raise
funds for in+estment in a +enture capital underta9in5(
Explanation
67
-12.>or the purposes of this clause%
a! +enture capital company means such company
i! which has been 5ranted a certificate of re5istration under the
*ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!%
and re5ulations made thereunder1
ii! which fulfils the conditions as may be specified% with the appro+al
of the .entral ;o+ernment% by the *ecurities and E$chan5e Board
of India% by notification in the <fficial ;a=ette% in this behalf1
b! +enture capital fund means such fund
6&#78
-i! operatin5 under a trust deed re5istered under the pro+isions of the
Re5istration "ct% 1&87 1' of 1&87! or operatin5 as a +enture
capital scheme made by the Enit Trust of India established under
the Enit Trust of India "ct% 1&') 42 of 1&')!12
ii! which has been 5ranted a certificate of re5istration under the
*ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!%
and re5ulations made thereunder1
iii! which fulfils the conditions as may be specified% with the appro+al
of the .entral ;o+ernment% by the *ecurities and E$chan5e Board
of India% by notification in the <fficial ;a=ette% in this behalf1 and
71
-c! +enture capital underta9in5 means a +enture capital underta9in5
referred to in the *ecurities and E$chan5e Board of India 0enture
.apital >unds! Re5ulations% 1&&' made under the *ecurities and
E$chan5e Board of India "ct% 1&&2 14 of 1&&2! and notified as such in
the <fficial ;a=ette
72
by the Board for the purposes of this clause122
7)
-***2
7)a

73
-
74
*2);( an+ income b+ wa+ o! di%idends
"6
?) other than di%idends re!erred to in
section 115-/@) interest or long-term capital gains o! an in!rastructure capital
!und or an in!rastructure capital compan+
"
?or a co-operati%e ban.@ !rom
in%estments made on or a!ter the 1st da+ o! 9une) 1##" b+ wa+ o! shares or
long-term !inance in
""
?an+ enterprise or underta.ing wholl+ engaged in the
business re!erred to in sub-section *4( o! section "$-3A
7&
or sub-section *3( o!
section "$-3AB] or a housing pro4ect re!erred to in sub-section *1$( o! section
"$-3B@
#$
?or a hotel pro4ect or a hospital pro4ect@ and which has been
appro%ed
#1
b+ the 'entral 5o%ernment on an application made b+ it in
accordance with the rules
#2
made in this behal! and which satis!ies the
prescribed conditions A
&)
-Provided that the income) b+ wa+ o! di%idends) other than di%idends re!erred
to in section 115-/) interest or long-term capital gains o! an in!rastructure
capital compan+) shall be ta.en into account in computing the boo. pro!it and
income-tax pa+able under section 1159B.@
&3
-E$planation 1(20or the purposes o! this clause)
*a( in!rastructure capital compan+ means such compan+ as has made
in%estments b+ wa+ o! ac2uiring shares or pro%iding long term !inance to
an enterprise wholl+ engaged
#5-#6
?in the business re!erred to in this
clause@-
*b( in!rastructure capital !und means such !und operating under a trust deed
registered under the pro%isions o! the 6egistration Act) 1#$" *16 o! 1#$"(
established to raise monies b+ the trustees !or in%estment b+ wa+ o!
ac2uiring shares or pro%iding long-term !inance to an enterprise wholl+
engaged
#5-#6
?in the business re!erred to in this clause@-
*c(
&6
-***2
*d( long-term !inance shall ha%e the meaning assigned to it in clause *+iii( o!
sub-section *1( o! section 36-
&7
-*e( co-operati%e ban.
##
shall ha%e the meaning assigned to it in clause *dd( o!
section 2 o! the 1eposit 3nsurance and 'redit 5uarantee 'orporation Act)
1#61 *4 o! 1#61(1
*f( interest includes an+ !ee or commission recei%ed b+ a !inancial institution
!or gi%ing an+ guarantee to) or enhancing credit in respect o!) an enterprise
which has been appro%ed b+ the 'entral 5o%ernment !or the purposes o!
this clause-2
1
-*5( hotel pro4ect means a pro4ect !or constructing a hotel o! not less than three-
star categor+ as classi!ied b+ the 'entral 5o%ernment-
*h( hospital pro4ect means a pro4ect !or constructing a hospital with at least
one hundred beds !or patients.2
2
-E$planation 2.0or the remo%al o! doubts) it is hereb+ declared that an+
income b+ wa+ o! di%idends) interest or long-term capital gains o! an
in!rastructure capital !und or an in!rastructure capital compan+ !rom
in%estments made be!ore the 1st da+ o! 9une) 1##" b+ wa+ o! shares or long-
term !inance in an+ enterprise carr+ing on the business o! de%eloping)
maintaining and operating an+ in!rastructure !acilit+ shall not be included and
the pro%isions o! this clause as it stood immediatel+ be!ore its amendment b+
the 0inance *&o. 2( Act) 1##" *21 o! 1##"( shall appl+ to such income-2]
)
-
3
24! any income char5eable under the heads Income from house property and
Income from other sources of
a! a re5istered union within the meanin5 of the Trade Enions "ct% 1&2' 1' of
1&2'!% formed primarily for the purpose of re5ulatin5 the relations between
wor9men and employers or between wor9men and wor9men1
b! an association of re5istered unions referred to in sub#clause a!12
25! i! interest on securities which are held by% or are the property of% any pro+ident
fund to which the Pro+ident >unds "ct% 1&24 1& of 1&24!% applies% and any
capital 5ains of the fund arisin5 from the sale% e$chan5e or transfer of such
securities1
ii! any income recei+ed by the trustees on behalf of a reco5nised pro+ident
fund1
iii! any income recei+ed by the trustees on behalf of an appro+ed
superannuation fund1
4
-i%! any income recei+ed by the trustees on behalf of an appro+ed 5ratuity
fund12
'
-%! any income recei+ed
a! by the Board of Trustees constituted under the .oal Bines Pro+ident >unds
and Biscellaneous Pro+isions "ct% 1&37 3' of 1&37!% on behalf of the
?eposit#lin9ed Insurance >und established under section ); of that "ct1 or
b! by the Board of Trustees constituted under the Employees Pro+ident >unds
and Biscellaneous Pro+isions "ct% 1&42 1& of 1&42!% on behalf of the
?eposit#lin9ed Insurance >und established under section '. of that "ct12
6
-25A! any income of the Employees *tate Insurance >und set up under the pro+isions
of the Employees *tate Insurance "ct% 1&37 )3 of 1&37!12
7
-26!
&
in the case of a member of a
18
*cheduled Tribe as defined in clause 25! of
article )'' of the .onstitution% residin5 in any area specified in Part I or Part II
of the Table appended to para5raph 28 of the *i$th *chedule to the .onstitution
or in the
11
-*tates of "runachal Pradesh% Banipur% Bi=oram% Aa5aland and
Tripura2 or in the areas co+ered by notification Ao( T"?IRI)4I48I18&% dated
the 2)rd >ebruary% 1&41% issued by the ;o+ernor of "ssam under the pro+iso to
sub#para5raph )! of the said para5raph 28 -as it stood immediately before the
commencement of the Aorth#Eastern "reas Reor5anisation! "ct% 1&61 71 of
1&61!2
12
-or in the Gada9h re5ion of the *tate of @ammu and Dashmir2% any
income which accrues or arises to him%
a! from any source in the areas
1)
-or *tates aforesaid2% or
b! by way of di+idend or interest on securities12
13
-26A! any income accruin5 or arisin5 to any person
14
-* * *2 from any source in the
district of Gada9h or outside India in any pre+ious year rele+ant to any
assessment year commencin5 before the 1st day of "pril%
1'
-1&7&2% where such
person is resident in the said district in that pre+ious year :
Provided that this clause shall not apply in the case of any such person unless
he was resident in that district in the pre+ious year rele+ant to the assessment
year commencin5 on the 1st day of "pril% 1&'2(
16
-Explanation 12(>or the purposes of this clause% a person shall be deemed to
be resident in the district of Gada9h if he fulfils the re,uirements of sub#section
1!
17
or sub#section 2! or sub#section )! or sub#section 3! of section '% as the
case may be% sub:ect to the modifications that
i! references in those sub#sections to India shall be construed as references to
the said district1 and
ii! in clause i! of sub#section )!% reference to Indian company shall be
construed as reference to a company formed and re5istered under any law
for the time bein5 in force in the *tate of @ammu and Dashmir and ha+in5
its re5istered office in that district in that year(2
1&
-Explanation 2.In this clause% references to the district of Gada9h shall be
construed as references to the areas comprised in the said district on the )8th
day of @une% 1&6&12
26AA!
28
-* * *2
21
-26B! any income of a corporation established by a .entral% *tate or Pro+incial "ct or
of any other body% institution or association bein5 a body% institution or
association wholly financed by ;o+ernment! where such corporation or other
body or institution or association has been established or formed for promotin5
the interests of the
22
-members of the *cheduled .astes or the *cheduled Tribes
or bac9ward classes or of any two or all of them2(
2)
-Explanation.>or the purposes of this clause%
a!
23
*cheduled .astes and
24
*cheduled Tribes shall ha+e the meanin5s
respecti+ely assi5ned to them in clauses 24! and 25! of article )'' of the
.onstitution1
b! bac9ward classes means such classes of citi=ens% other than the *cheduled
.astes and the *cheduled Tribes% as may be notified
i! by the .entral ;o+ernment1 or
ii! by any *tate ;o+ernment%
as the case may be% from time to time12
2'
-26BB! any income of a corporation established by the .entral ;o+ernment or any
*tate ;o+ernment for promotin5 the interests of the members of a minority
community(
Explanation.>or the purposes of this clause% minority community means a
community notified
26
as such by the .entral ;o+ernment in the <fficial ;a=ette
in this behalf12
27
-26BBB! any income of a corporation established by a .entral% *tate or Pro+incial
"ct for the welfare and economic upliftment of e$#ser+icemen bein5 the
citi=ens of India(
Explanation.>or the purposes of this clause% e$#ser+iceman means a person
who has ser+ed in any ran9% whether as combatant or non#combatant% in the
armed forces of the Enion or armed forces of the Indian *tates before the
commencement of the .onstitution but e$cludin5 the "ssam Rifles% ?efence
*ecurity .orps% ;eneral Reser+e En5ineerin5 >orce% Go9 *ahaya9 *ena%
@ammu and Dashmir Bilitia and Territorial "rmy! for a continuous period of
not less than si$ months after attestation and has been released% otherwise than
by way of dismissal or dischar5e on account of misconduct or inefficiency% and
in the case of a deceased or incapacitated e$#ser+iceman includes his wife%
children% father% mother% minor brother% widowed dau5hter and widowed sister%
wholly dependant upon such e$#ser+iceman immediately before his death or
incapacitation12
2&
-2! any income of a co#operati+e society formed for promotin5 the interests of the
members of either the *cheduled .astes or *cheduled Tribes or both referred to
in clause 26B! :
Provided that the membership of the co#operati+e society consists of only
other co#operati+e societies formed for similar purposes and the finances of the
society are pro+ided by the ;o+ernment and such other societies12
2"!
)8
-* * *2
2#!
)1
)2
-2#A! any income accruin5 or arisin5 to
a! the .offee Board constituted under section 3 of the .offee "ct% 1&32 6 of
1&32! in any pre+ious year rele+ant to any assessment year commencin5 on
or after the 1st day of "pril% 1&'2 or the pre+ious year in which such Board
was constituted% whiche+er is later1
b! the Rubber Board constituted under sub#section 1! of section 3 of the
Rubber Board "ct% 1&36 23 of 1&36! in any pre+ious year rele+ant to any
assessment year commencin5 on or after the 1st day of "pril% 1&'2 or the
pre+ious year in which such Board was constituted% whiche+er is later1
c! the Tea Board established under section 3 of the Tea "ct% 1&4) 2& of 1&4)!
in any pre+ious year rele+ant to any assessment year commencin5 on or
after the 1st day of "pril% 1&'2 or the pre+ious year in which such Board
d! the Tobacco Board constituted under the Tobacco Board "ct% 1&64 3 of
1&64! in any pre+ious year rele+ant to any assessment year commencin5 on
or after the 1st day of "pril% 1&64 or the pre+ious year in which such Board
e! the Barine Products E$port ?e+elopment "uthority established under
section 3 of the Barine Products E$port ?e+elopment "uthority "ct% 1&62
1) of 1&62! in any pre+ious year rele+ant to any assessment year
commencin5 on or after the 1st day of "pril% 1&62 or the pre+ious year in
which such "uthority was constituted% whiche+er is later1
!! the "5ricultural and Processed >ood Products E$port ?e+elopment
"uthority established under section 3 of the "5ricultural and Processed
>ood Products E$port ?e+elopment "ct% 1&74 2 of 1&7'! in any pre+ious
year rele+ant to any assessment year commencin5 on or after the 1st day of
"pril% 1&74 or the pre+ious year in which such "uthority was constituted%
whiche+er is later1
g! the *pices Board constituted under sub#section 1! of section ) of the *pices
Board "ct% 1&7' 18 of 1&7'! in any pre+ious year rele+ant to any
assessment year commencin5 on or after the 1st day of "pril% 1&7' or the
pre+ious year in which such Board was constituted% whiche+er is later12
))
-3$!
)3
in the case of an assessee who carries on the business of 5rowin5 and
manufacturin5 tea in India% the amount of any subsidy recei+ed from or throu5h
the Tea Board under any such scheme
)4
for replantation or replacement of tea
bushes
)'
-or for re:u+enation or consolidation of areas used for culti+ation of
tea2 as the .entral ;o+ernment may% by notification in the <fficial ;a=ette%
specify:
Provided that the assessee furnishes to the
)6
-"ssessin52 <fficer% alon5 with his
return of income for the assessment year concerned or within such further time
as the
)6
-"ssessin52 <fficer may allow% a certificate from the Tea Board as to
the amount of such subsidy paid to the assessee durin5 the pre+ious year(
Explanation.In this clause% Tea Board means the Tea Board established under
section 3 of the Tea "ct% 1&4) 2& of 1&4)!12
)7
-31! in the case of an assessee who carries on the business of 5rowin5 and
manufacturin5 rubber% coffee% cardamom or such other commodity in India% as
the .entral ;o+ernment may% by notification in the <fficial ;a=ette% specify in
this behalf% the amount of any subsidy recei+ed from or throu5h the concerned
Board under any such scheme for replantation or replacement of rubber plants%
coffee plants% cardamom plants or plants for the 5rowin5 of such other
commodity or for re:u+enation or consolidation of areas used for culti+ation of
rubber% coffee% cardamom or such other commodity as the .entral ;o+ernment
may% by notification in the <fficial ;a=ette% specify:
Provided that the assessee furnishes to the "ssessin5 <fficer% alon5 with his
return of income for the assessment year concerned or within such further time
as the "ssessin5 <fficer may allow% a certificate from the concerned Board% as
to the amount of such subsidy paid to the assessee durin5 the pre+ious year(
Explanation.In this clause% concerned Board means%
i! in relation to rubber% the Rubber Board constituted under section 3 of the
Rubber "ct% 1&36 23 of 1&36!%
ii! in relation to coffee% the .offee Board constituted under section 3 of the
.offee "ct% 1&32 6 of 1&32!%
iii! in relation to cardamom% the *pices Board constituted under section ) of the
*pices Board "ct% 1&7' 18 of 1&7'!%
i%! in relation to any other commodity specified under this clause% any Board or
other authority established under any law for the time bein5 in force which
the .entral ;o+ernment may% by notification in the <fficial ;a=ette%
)&
-32! in the case of an assessee referred to in sub#section 1"! of section '3% any
income includible in his total income under that sub#section% to the e$tent such
income does not e$ceed one thousand fi+e hundred rupees in respect of each
minor child whose income is so includible12
38
-33! any income arisin5 from the transfer of a capital asset% bein5 a unit of the Enit
*cheme% 1&'3 referred to in *chedule I to the Enit Trust of India Transfer of
Enderta9in5 and Repeal! "ct% 2882 47 of 2882!
31
and where the transfer of
such asset ta9es place on or after the 1st day of "pril% 288212
32
-34! any income by way of di+idends referred to in section 114#<(
3)
E$planation(0or the remo%al o! doubts) it is hereb+ declared that the
di%idend re!erred to in section 115-/ shall not be included in the total income
o! the assessee) being a 1e%eloper or entrepreneur-]
35! any income by way of%
a! income recei+ed in respect of the units of a Butual >und specified under
clause 231!1 or
b! income recei+ed in respect of units from the "dministrator of the specified
underta9in51 or
c! income recei+ed in respect of units from the specified company:
Provided that this clause shall not apply to any income arisin5 from transfer of
units of the "dministrator of the specified underta9in5 or of the specified
company or of a mutual fund% as the case may be(
a! "dministrator means the "dministrator as referred to in clause a! of
section 2 of the Enit Trust of India Transfer of Enderta9in5 and Repeal!
"ct% 2882 47 of 2882!
3)a
1
b! specified company means a company as referred to in clause h! of section
2 of the Enit Trust of India Transfer of Enderta9in5 and Repeal! "ct% 2882
47 of 2882!
3)a
1
36! any income arisin5 from the transfer of a lon5#term capital asset% bein5 an
eli5ible e,uity share in a company purchased on or after the 1st day of Barch%
288) and before the 1st day of Barch% 2883 and held for a period of twel+e
months or more(
Explanation.>or the purposes of this clause% eli5ible e,uity share means%
i! any e,uity share in a company bein5 a constituent of B*E#488 Inde$ of the
*toc9 E$chan5e% Bumbai as on the 1st day of Barch% 288) and the
transactions of purchase and sale of such e,uity share are entered into on a
reco5nised stoc9 e$chan5e in India1
ii! any e,uity share in a company allotted throu5h a public issue on or after the
1st day of Barch% 288) and listed in a reco5nised stoc9 e$chan5e in India
before the 1st day of Barch% 2883 and the transaction of sale of such share
is entered into on a reco5nised stoc9 e$chan5e in India12
33
-3! in the case of an assessee% bein5 an indi+idual or a Cindu undi+ided family% any
income char5eable under the head .apital 5ains arisin5 from the transfer of
a5ricultural land% where
i! such land is situate in any area referred to in item a! or item b! of sub#
clause iii! of clause 14! of section 21
ii! such land% durin5 the period of two years immediately precedin5 the date of
transfer% was bein5 used for a5ricultural purposes by such Cindu undi+ided
family or indi+idual or a parent of his1
iii! such transfer is by way of compulsory ac,uisition under any law% or a
transfer the consideration for which is determined or appro+ed by the
.entral ;o+ernment or the Reser+e Ban9 of India1
i%! such income has arisen from the compensation or consideration for such
transfer recei+ed by such assessee on or after the 1st day of "pril% 2883(
Explanation.>or the purposes of this clause% the e$pression compensation or
consideration includes the compensation or consideration enhanced or further
enhanced by any court% Tribunal or other authority1
3"! any income arisin5 from the transfer of a lon5#term capital asset% bein5 an
e,uity share in a company or a unit of an e,uity oriented fund where
a! the transaction of sale of such e,uity share or unit is entered into on or after
the date on which .hapter 0II of the >inance Ao(2! "ct% 2883 comes into
force1 and
b! such transaction is char5eable to securities transaction ta$ under that
.hapter(
The followin5 pro+iso shall be inserted in clause )7! of section 18 by the
>inance "ct% 288'% w(e(f( 1#3#2886 :
Provided that the income b+ wa+ o! long-term capital gain o! a compan+ shall
be ta.en into account in computing the boo. pro!it and income-tax pa+able
under section 1159B.
Explanation.>or the purposes of this clause% e,uity oriented fund means a fund
i! where the in+estible funds are in+ested by way of e,uity shares in domestic
companies to the e$tent of more than
33a
sixt+-!i%e] per cent of the total
proceeds of such fund1 and
ii! which has been set up under a scheme of a Butual >und specified under
clause 231! :
Provided that the percenta5e of e,uity shareholdin5 of the fund shall be
computed with reference to the annual a+era5e of the monthly a+era5es of the
openin5 and closin5 fi5ures12
34
*)&( an+ speci!ied income) arising !rom an+ international sporting e%ent held in
3ndia) to the person or persons noti!ied b+ the 'entral 5o%ernment in the
/!!icial 5a8ette) i! such international sporting e%ent-
*a( is appro%ed b+ the international bod+ regulating the international sport
relating to such e%ent-
*b( has participation b+ more than two countries-
*c( is noti!ied b+ the 'entral 5o%ernment in the /!!icial 5a8ette !or the
purposes o! this clause.
E$planation(0or the purposes o! this clause) the speci!ied income means the
income) o! the nature and to the extent) arising !rom the international sporting
e%ent) which the 'entral 5o%ernment ma+ noti!+ in this behal!-
*38( an+ income o! an+ subsidiar+ compan+ b+ wa+ o! grant or otherwise recei%ed
!rom an 3ndian compan+) being its holding compan+ engaged in the business o!
generation or transmission or distribution o! power i! receipt o! such income is
!or settlement o! dues in connection with reconstruction or re%i%al o! an
existing business o! power generationA
Provided that the pro%isions o! this clause shall appl+ i! reconstruction or
re%i%al o! an+ existing business o! power generation is b+ wa+ o! trans!er o!
such business to the 3ndian compan+ noti!ied under sub-clause *a( o! clause *+(
o! sub-section *4( o! section "$-3A-
*31( an+ income arising !rom trans!er o! a capital asset) being an asset o! an
underta.ing engaged in the business o! generation or transmission or
distribution o! power where such trans!er is e!!ected on or be!ore the 31st da+
o! :arch) 2$$6) to the 3ndian compan+ noti!ied under sub-clause *a( o! clause
*+( o! sub-section *4( o! section "$-3A-]
34a
*32( an+ speci!ied income arising to a bod+ or authorit+ which
*a( has been established or constituted or appointed under a treat+ or an
agreement entered into b+ the 'entral 5o%ernment with two or more
countries or a con%ention signed b+ the 'entral 5o%ernment-
*b( is established or constituted or appointed not !or the purposes o! pro!it-
*c( is noti!ied b+ the 'entral 5o%ernment in the /!!icial 5a8ette !or the
purposes o! this clause.
E$planation(0or the purposes o! this clause) speci!ied income means the
income) o! the nature and to the extent) arising to the bod+ or authorit+
re!erred to in this clause) which the 'entral 5o%ernment ma+ noti!+ in this
behal!(]
3'
-Special provision in respect of newly established undertakings in free trade zone,
etc.
10A. 1! *ub:ect to the pro+isions of this section% a deduction of such profits and 5ains as
are deri+ed by an underta9in5 from the e$port of articles or thin5s or computer software
for a period of ten consecuti+e assessment years be5innin5 with the assessment year
rele+ant to the pre+ious year in which the underta9in5 be5ins to manufacture or produce
such articles or thin5s or computer software% as the case may be% shall be allowed from
the total income of the assessee :
Provided that where in computin5 the total income of the underta9in5 for any assessment
year% its profits and 5ains had not been included by application of the pro+isions of this
section as it stood immediately before its substitution by the >inance "ct% 2888% the
underta9in5 shall be entitled to deduction referred to in this sub#section only for the
une$pired period of the aforesaid ten consecuti+e assessment years :
Provided further that where an underta9in5 initially located in any free trade =one or
e$port processin5 =one is subse,uently located in a special economic =one by reason of
con+ersion of such free trade =one or e$port processin5 =one into a special economic
=one% the period of ten consecuti+e assessment years referred to in this sub#section shall
be rec9oned from the assessment year rele+ant to the pre+ious year in which the
36
-underta9in5 be5an to manufacture or produce such articles or thin5s or computer
software2 in such free trade =one or e$port processin5 =one :
37
-Provided also that for the assessment year be5innin5 on the 1st day of "pril% 288)% the
deduction under this sub#section shall be ninety per cent of the profits and 5ains deri+ed
by an underta9in5 from the e$port of such articles or thin5s or computer software :2
Provided also that no deduction under this section shall be allowed to any underta9in5
for the assessment year be5innin5 on the 1st day of "pril% 2818 and subse,uent years(
3&
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% the deduction% in
computin5 the total income of an underta9in5% which be5ins to manufacture or produce
articles or thin5s or computer software durin5 the pre+ious year rele+ant to any
assessment year commencin5 on or after the 1st day of "pril% 288)% in any special
economic =one% shall be%
i! hundred per cent of profits and 5ains deri+ed from the e$port of such articles or
thin5s or computer software for a period of fi+e consecuti+e assessment years
be5innin5 with the assessment year rele+ant to the pre+ious year in which the
underta9in5 be5ins to manufacture or produce such articles or thin5s or
computer software% as the case may be% and thereafter% fifty per cent of such
profits and 5ains for further two consecuti+e assessment years% and thereafter1
ii! for the ne$t three consecuti+e assessment years% so much of the amount not
e$ceedin5 fifty per cent of the profit as is debited to the profit and loss account
of the pre+ious year in respect of which the deduction is to be allowed and
credited to a reser+e account to be called the *pecial Economic Jone Re#
in+estment "llowance Reser+e "ccount! to be created and utilised for the
purposes of the business of the assessee in the manner laid down in sub#section
1B! :
48
-Provided that no deduction under this section shall be allowed to an assessee who
does not !urnish a return o! his income on or be!ore the due date speci!ied under sub-
section *1( o! section 13#.2
1B! The deduction under clause ii! of sub#section 1"! shall be allowed only if the
followin5 conditions are fulfilled% namely:
a! the amount credited to the *pecial Economic Jone Re#in+estment "llowance
Reser+e "ccount is to be utilised
i! for the purposes of ac,uirin5 new machinery or plant which is first put to
use before the e$piry of a period of three years ne$t followin5 the pre+ious
year in which the reser+e was created1 and
ii! until the ac,uisition of new machinery or plant as aforesaid% for the
purposes of the business of the underta9in5 other than for distribution by
way of di+idends or profits or for remittance outside India as profits or for
the creation of any asset outside India1
b! the particulars% as may be prescribed
41
in this behalf% ha+e been furnished by the
assessee in respect of new machinery or plant alon5 with the return of income
for the assessment year rele+ant to the pre+ious year in which such plant or
machinery was first put to use(
1.! Fhere any amount credited to the *pecial Economic Jone Re#in+estment
"llowance Reser+e "ccount under clause ii! of sub#section 1"!%
a! has been utilised for any purpose other than those referred to in sub#section
1B!% the amount so utilised1 or
b! has not been utilised before the e$piry of the period specified in sub#clause i!
of clause a! of sub#section 1B!% the amount not so utilised%
shall be deemed to be the profits%
i! in a case referred to in clause a!% in the year in which the amount was so
utilised1 or
ii! in a case referred to in clause b!% in the year immediately followin5 the period
of three years specified in sub#clause i! of clause a! of sub#section 1B!%
and shall be char5ed to ta$ accordin5ly(2
2! This section applies to any underta9in5 which fulfils all the followin5 conditions%
namely :
i! it has be5un or be5ins to manufacture or produce articles or thin5s or computer
software durin5 the pre+ious year rele+ant to the assessment year
a! commencin5 on or after the 1st day of "pril% 1&71% in any free trade =one1
or
b! commencin5 on or after the 1st day of "pril% 1&&3% in any electronic
hardware technolo5y par9% or% as the case may be% software technolo5y
par91
c! commencin5 on or after the 1st day of "pril% 2881 in any special economic
=one1
ii! it is not formed by the splittin5 up% or the reconstruction% of a business already
in e$istence :
Provided that this condition shall not apply in respect of any underta9in5
which is formed as a result of the re#establishment% reconstruction or re+i+al by
the assessee of the business of any such underta9in5s as is referred to in section
))B% in the circumstances and within the period specified in that section1
iii! it is not formed by the transfer to a new business of machinery or plant
pre+iously used for any purpose(
Explanation.The pro+isions of Explanation 1 and Explanation 2 to sub#section 2! of
section 78#I shall apply for the purposes of clause iii! of this sub#section as they apply
for the purposes of clause ii! of that sub#section(
)! This section applies to the underta9in5% if the sale proceeds of articles or thin5s or
computer software e$ported out of India are recei+ed in% or brou5ht into% India by the
assessee in con+ertible forei5n e$chan5e% within a period of si$ months from the end of
the pre+ious year or% within such further period as the competent authority may allow in
this behalf(
Explanation 1.>or the purposes of this sub#section% the e$pression competent authority
means the Reser+e Ban9 of India or such other authority as is authorised under any law
for the time bein5 in force for re5ulatin5 payments and dealin5s in forei5n e$chan5e(
Explanation 2.The sale proceeds referred to in this sub#section shall be deemed to ha+e
been recei+ed in India where such sale proceeds are credited to a separate account
maintained for the purpose by the assessee with any ban9 outside India with the appro+al
of the Reser+e Ban9 of India(
42
-3! >or the purposes of
4)
-sub#sections 1! and 1"!2% the profits deri+ed from e$port of
articles or thin5s or computer software shall be the amount which bears to the profits of
the business of the underta9in5% the same proportion as the e$port turno+er in respect of
such articles or thin5s or computer software bears to the total turno+er of the business
carried on by the underta9in5(2
4! The deduction under
4)
-this section2 shall not be admissible for any assessment year
be5innin5 on or after the 1st day of "pril% 2881% unless the assessee furnishes in the
prescribed form
43
% alon5with the return of income% the report of an accountant% as defined
in the Explanation below sub#section 2! of section 277% certifyin5 that the deduction has
been correctly claimed in accordance with the pro+isions of this section(
'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% in computin5
the total income of the assessee of the pre+ious year rele+ant to the assessment year
immediately succeedin5 the last of the rele+ant assessment years% or of any pre+ious year%
rele+ant to any subse,uent assessment year%
i! section )2% section )2"% section ))% section )4 and clause ix! of sub#section 1!
of section )' shall apply as if e+ery allowance or deduction referred to therein
and relatin5 to or allowable for any of the rele+ant assessment years
44
-endin5
before the 1st day of "pril% 28812% in relation to any buildin5% machinery% plant
or furniture used for the purposes of the business of the underta9in5 in the
pre+ious year rele+ant to such assessment year or any e$penditure incurred for
the purposes of such business in such pre+ious year had been 5i+en full effect
to for that assessment year itself and accordin5ly sub#section 2! of section )2%
clause ii! of sub#section )! of section )2"% clause ii! of sub#section 2! of
section ))% sub#section 3! of section )4 or the second pro+iso to clause ix! of
sub#section 1! of section )'% as the case may be% shall not apply in relation to
any such allowance or deduction1
ii! no loss referred to in sub#section 1! of section 62 or sub#section 1! or sub#
section )! of section 63% in so far as such loss relates to the business of the
underta9in5% shall be carried forward or set off where such loss relates to any of
the rele+ant assessment years
44
-endin5 before the 1st day of "pril% 288121
iii! no deduction shall be allowed under section 78CC or section 78CC" or section
78#I or section 78#I" or section 78#IB in relation to the profits and 5ains of the
underta9in51 and
i%! in computin5 the depreciation allowance under section )2% the written down
+alue of any asset used for the purposes of the business of the underta9in5 shall
be computed as if the assessee had claimed and been actually allowed the
deduction in respect of depreciation for each of the rele+ant assessment year(
6! The pro+isions of sub#section 7! and sub#section 18! of section 78#I" shall% so far as
may be% apply in relation to the underta9in5 referred to in this section as they apply for
the purposes of the underta9in5 referred to in section 78#I"(
4'
-6"! Fhere any underta9in5 of an Indian company which is entitled to the deduction
under this section is transferred% before the e$piry of the period specified in this section%
to another Indian company in a scheme of amal5amation or demer5er%
a! no deduction shall be admissible under this section to the amal5amatin5 or the
demer5ed company for the pre+ious year in which the amal5amation or the
demer5er ta9es place1 and
b! the pro+isions of this section shall% as far as may be% apply to the amal5amated
or the resultin5 company as they would ha+e applied to the amal5amatin5 or
the demer5ed company if the amal5amation or demer5er had not ta9en place(2
46
*B( 7he pro%isions o! this section shall not appl+ to an+ underta.ing) being a ;nit
re!erred to in clause *=c( o! section 2
5a
o! the <pecial Economic =ones Act) 2$$5) which
has begun or begins to manu!acture or produce articles or things or computer so!tware
during the pre%ious +ear rele%ant to the assessment +ear commencing on or a!ter the 1st
da+ o! April) 2$$6 in an+ <pecial Economic =one.]
7! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% where
the assessee% before the due date for furnishin5 the return of income under sub#section 1!
of section 1)&% furnishes to the "ssessin5 <fficer a declaration in writin5 that the
pro+isions of this section may not be made applicable to him% the pro+isions of this
section shall not apply to him for any of the rele+ant assessment years(
#!
47
#A!
4&
Explanation 1.
'8
Explanation 2.>or the purposes of this section%
i! computer software means
a! any computer pro5ramme recorded on any disc% tape% perforated media or
other information stora5e de+ice1 or
b! any customi=ed electronic data or any product or ser+ice of similar nature%
as may be notified
'1
by the Board%
which is transmitted or e$ported from India to any place outside India by any
means1
ii! con+ertible forei5n e$chan5e means forei5n e$chan5e which is for the time
bein5 treated by the Reser+e Ban9 of India as con+ertible forei5n e$chan5e for
the purposes of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!% and
any rules made thereunder or any other correspondin5 law for the time bein5 in
force1
iii! electronic hardware technolo5y par9 means any par9 set up in accordance with
the Electronic Cardware Technolo5y Par9 ECTP! *cheme notified by the
;o+ernment of India in the Binistry of .ommerce and Industry1
i%! e$port turno+er means the consideration in respect of e$port
'2
-by the
underta9in52 of articles or thin5s or computer software recei+ed in% or brou5ht
into% India by the assessee in con+ertible forei5n e$chan5e in accordance with
sub#section )!% but does not include frei5ht% telecommunication char5es or
insurance attributable to the deli+ery of the articles or thin5s or computer
software outside India or e$penses% if any% incurred in forei5n e$chan5e in
pro+idin5 the technical ser+ices outside India1
%! free trade =one means the Dandla >ree Trade Jone and the *antacru=
Electronics E$port Processin5 Jone and includes any other free trade =one
which the .entral ;o+ernment may% by notification in the <fficial ;a=ette%
')
specify for the purposes of this section1
%i! rele+ant assessment year means any assessment year fallin5 within a period of
ten consecuti+e assessment years referred to in this section1
%ii! software technolo5y par9 means any par9 set up in accordance with the
*oftware Technolo5y Par9 *cheme notified by the ;o+ernment of India in the
Binistry of .ommerce and Industry1
%iii! special economic =one means a =one which the .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify as a special economic =one for the
purposes of this section(2
'3
-Explanation 3.>or the remo+al of doubts% it is hereby declared that the profits and 5ains
deri+ed from on site de+elopment of computer software includin5 ser+ices for
de+elopment of software! outside India shall be deemed to be the profits and 5ains
deri+ed from the e$port of computer software outside India(2
'4
-Explanation 4.>or the purposes of this section% manufacture or produce shall include
the cuttin5 and polishin5 of precious and semi#precious stones(2
''
Special provisions in respect of newly established Units in Special Economic
Zones.
10AA. *1( <ub4ect to the pro%isions o! this section) in computing the total income o! an
assessee) being an entrepreneur as re!erred to in clause *:( o! section 2
66a
o! the <pecial
Economic =ones Act) 2$$5) !rom his ;nit) who begins to manu!acture or produce articles
or things or pro%ide an+ ser%ices during the pre%ious +ear rele%ant to an+ assessment
+ear commencing on or a!ter the 1st da+ o! April) 2$$6) a deduction o!
*i( hundred per cent o! pro!its and gains deri%ed !rom the export) o! such articles
or things or !rom ser%ices !or a period o! !i%e consecuti%e assessment +ears
beginning with the assessment +ear rele%ant to the pre%ious +ear in which the
;nit begins to manu!acture or produce such articles or things or pro%ide
ser%ices) as the case ma+ be) and !i!t+ per cent o! such pro!its and gains !or
!urther !i%e assessment +ears and therea!ter-
*ii( !or the next !i%e consecuti%e assessment +ears) so much o! the amount not
exceeding !i!t+ per cent o! the pro!it as is debited to the pro!it and loss account
o! the pre%ious +ear in respect o! which the deduction is to be allowed and
credited to a reser%e account *to be called the <pecial Economic =one 6e-
in%estment 6eser%e Account( to be created and utili8ed !or the purposes o! the
business o! the assessee in the manner laid down in sub-section *2(.
*2( 7he deduction under clause *ii( o! sub-section *1( shall be allowed onl+ i! the
!ollowing conditions are !ul!illed) namel+ A
*a( the amount credited to the <pecial Economic =one 6e-in%estment 6eser%e
Account is to be utilised
*i( !or the purposes o! ac2uiring machiner+ or plant which is !irst put to use
be!ore the expir+ o! a period o! three +ears !ollowing the pre%ious +ear in
which the reser%e was created- and
*ii( until the ac2uisition o! the machiner+ or plant as a!oresaid) !or the
purposes o! the business o! the underta.ing other than !or distribution b+
wa+ o! di%idends or pro!its or !or remittance outside 3ndia as pro!its or !or
the creation o! an+ asset outside 3ndia-
*b( the particulars) as ma+ be speci!ied b+ the 'entral Board o! 1irect 7axes in
this behal!) under clause *b( o! sub-section *1B( o! section 1$A ha%e been
!urnished b+ the assessee in respect o! machiner+ or plant along with the
return o! income !or the assessment +ear rele%ant to the pre%ious +ear in which
such plant or machiner+ was !irst put to use.
*3( ,here an+ amount credited to the <pecial Economic =one 6e-in%estment 6eser%e
Account under clause *ii( o! sub-section *1()
*a( has been utilised !or an+ purpose other than those re!erred to in sub-section
*2() the amount so utilised- or
*b( has not been utilised be!ore the expir+ o! the period speci!ied in sub-clause *i(
o! clause *a( o! sub-section *2() the amount not so utilised)
shall be deemed to be the pro!its)
*i( in a case re!erred to in clause *a() in the +ear in which the amount was so
utilised- or
*ii( in a case re!erred to in clause *b() in the +ear immediatel+ !ollowing the period
o! three +ears speci!ied in sub-clause *i( o! clause *a( o! sub-section *2()
and shall be charged to tax accordingl+ A
Provided that where in computing the total income o! the ;nit !or an+ assessment +ear)
its pro!its and gains had not been included b+ application o! the pro%isions o! sub-section
*B( o! section 1$A) the underta.ing) being the ;nit shall be entitled to deduction
re!erred to in this sub-section onl+ !or the unexpired period o! ten consecuti%e assessment
+ears and therea!ter it shall be eligible !or deduction !rom income as pro%ided in clause
*ii( o! sub-section *1(.
E$planation(0or the remo%al o! doubts) it is hereb+ declared that an underta.ing) being
the ;nit) which had alread+ a%ailed) be!ore the commencement o! the <pecial Economic
=ones Act) 2$$5) the deductions re!erred to in section 1$A !or ten consecuti%e assessment
+ears) such ;nit shall not be eligible !or deduction !rom income under this section A
Provided further that where a ;nit initiall+ located in an+ !ree trade 8one or export
processing 8one is subse2uentl+ located in a <pecial Economic =one b+ reason o!
con%ersion o! such !ree trade 8one or export processing 8one into a <pecial Economic
=one) the period o! ten consecuti%e assessment +ears re!erred to abo%e shall be rec.oned
!rom the assessment +ear rele%ant to the pre%ious +ear in which the ;nit began to
manu!acture) or produce or process such articles or things or ser%ices in such !ree trade
8one or export processing 8one A
Provided also that where a ;nit initiall+ located in an+ !ree trade 8one or export
processing 8one is subse2uentl+ located in a <pecial Economic =one b+ reason o!
con%ersion o! such !ree trade 8one or export processing 8one into a <pecial Economic
=one and has completed the period o! ten consecuti%e assessment +ears re!erred to
abo%e) it shall not be eligible !or deduction !rom income as pro%ided in clause *ii( o! sub-
section *1( with e!!ect !rom the 1st da+ o! April) 2$$6.
*4( 7his section applies to an+ underta.ing being the ;nit) which has begun or begins to
manu!acture or produce articles or things or ser%ices during the pre%ious +ear rele%ant
to the assessment +ear commencing on or a!ter the 1st da+ o! April) 2$$6) in an+ <pecial
Economic =one.
*5( ,here an+ underta.ing being the ;nit which is entitled to the deduction under this
section is trans!erred) be!ore the expir+ o! the period speci!ied in this section) to another
underta.ing) being the ;nit in a scheme o! amalgamation or demerger)
*a( no deduction shall be admissible under this section to the amalgamating or the
demerged ;nit) being the compan+ !or the pre%ious +ear in which the
amalgamation or the demerger ta.es place- and
*b( the pro%isions o! this section shall) as the+ would ha%e applied to the
amalgamating or the demerged ;nit being the compan+ as i! the amalgamation
or demerger had not ta.en place.
*6( >oss re!erred to in sub-section *1( o! section 2 or sub-section *1( or sub-section *3(
o! section 4) in so !ar as such loss relates to the business o! the underta.ing) being the
;nit shall be allowed to be carried !orward or set o!!.
*( 0or the purposes o! sub-section *1() the pro!its deri%ed !rom the export o! articles or
things or ser%ices *including computer so!tware( shall be the amount which bears to the
pro!its o! the business o! the underta.ing) being the ;nit) the same proportion as the
export turno%er in respect o! such articles or things or ser%ices bears to the total
turno%er o! the business carried on b+ the assessee.
*"( 7he pro%isions o! sub-sections *5( and *6( o! section 1$A shall appl+ to the articles or
things or ser%ices re!erred to in sub-section *1( as i!
*a( !or the !igures) letters and word 1st April) 2$$1) the !igures) letters and word
1st April) 2$$6 had been substituted-
*b( !or the word underta.ing) the words underta.ing) being the ;nit had been
substituted.
*#( 7he pro%isions o! sub-section *"( and sub-section *1$( o! section "$-3A shall) so !ar as
ma+ be) appl+ in relation to the underta.ing re!erred to in this section as the+ appl+ !or
the purposes o! the underta.ing re!erred to in section "$-3A.
E$planation 1(0or the purposes o! this section)
*i( export turno%er means the consideration in respect o! export b+ the
underta.ing) being the ;nit o! articles or things or ser%ices recei%ed in) or
brought into) 3ndia b+ the assessee but does not include !reight)
telecommunication charges or insurance attributable to the deli%er+ o! the
articles or things outside 3ndia or expenses) i! an+) incurred in !oreign
exchange in rendering o! ser%ices *including computer so!tware( outside 3ndia-
*ii( export in relation to the <pecial Economic =ones means ta.ing goods or
pro%iding ser%ices out o! 3ndia !rom a <pecial Economic =one b+ land) sea) air)
or b+ an+ other mode) whether ph+sical or otherwise-
*iii( manu!acture shall ha%e the same meaning as assigned to it in clause *r( o!
section 2 o! the <pecial Economic =ones Act) 2$$5
66b
-
*i+( rele%ant assessment +ear means an+ assessment +ear !alling within a period o!
!i!teen consecuti%e assessment +ears re!erred to in this section-
*+( <pecial Economic =one and ;nit shall ha%e the same meanings as assigned to
them under clauses *=a( and *=c(
66b
o! section 2 o! the <pecial Economic =ones
Act) 2$$5.
E$planation 2(0or the remo%al o! doubts) it is hereb+ declared that the pro!its and gains
deri%ed !rom on site de%elopment o! computer so!tware *including ser%ices !or
de%elopment o! so!tware( outside 3ndia shall be deemed to be the pro!its and gains
deri%ed !rom the export o! computer so!tware outside 3ndia.]
'6
-Special provisions in respect of newly established hundred per cent export-
oriented undertakings
'7
.
10B. 1! *ub:ect to the pro+isions of this section% a deduction of such profits and 5ains as
are deri+ed by a hundred per cent e$port#oriented underta9in5 from the e$port of articles
or thin5s or computer software for a period of ten consecuti+e assessment years
be5innin5 with the assessment year rele+ant to the pre+ious year in which the
underta9in5 be5ins to manufacture or produce articles or thin5s or computer software% as
the case may be% shall be allowed from the total income of the assessee :
year% its profits and 5ains had not been included by application of the pro+isions of this
section as it stood immediately before its substitution by the >inance "ct% 2888% the
underta9in5 shall be entitled to the deduction referred to in this sub#section only for the
une$pired period of aforesaid ten consecuti+e assessment years :
'&
-Provided
'&a
further] that for the assessment year be5innin5 on the 1st day of "pril%
288)% the deduction under this sub#section shall be ninety per cent of the profits and 5ains
deri+ed by an underta9in5 from the e$port of such articles or thin5s or computer
software:2
Provided also that no deduction under this section shall be allowed to any underta9in5
for the assessment year be5innin5 on the 1st day of "pril% 2818 and subse,uent years :
'&b
Provided also that no deduction under this section shall be allowed to an assessee
who does not !urnish a return o! his income on or be!ore the due date speci!ied under
sub-section *1( o! section 13#.]
2! This section applies to any underta9in5 which fulfils all the followin5 conditions%
namely :
i! it manufactures or produces any articles or thin5s or computer software1
in e$istence :
the assessee of the business of any such underta9in5 as is referred to in section
))B% in the circumstances and within the period specified in that section 1
Explanation.The pro+isions of Explanation 1 and Explanation 2 to sub#section 2! of
section 78#I shall apply for the purposes of clause iii! of this sub#section as they apply
)! This section applies to the underta9in5% if the sale proceeds of articles or thin5s or
computer software e$ported out of India are recei+ed in% or brou5ht into% India by the
assessee in con+ertible forei5n e$chan5e% within a period of si$ months from the end of
the pre+ious year or% within such further period as the competent authority may allow in
this behalf(
Explanation 1.>or the purposes of this sub#section% the e$pression competent authority
Explanation 2.The sale proceeds referred to in this sub#section shall be deemed to ha+e
been recei+ed in India where such sale proceeds are credited to a separate account
maintained for the purpose by the assessee with any ban9 outside India with the appro+al
of the Reser+e Ban9 of India(
68
-3! >or the purposes of sub#section 1!% the profits deri+ed from e$port of articles or
thin5s or computer software shall be the amount which bears to the profits of the business
of the underta9in5% the same proportion as the e$port turno+er in respect of such articles
or thin5s or computer software bears to the total turno+er of the business carried on by
the underta9in5(2
4! The deduction under sub#section 1! shall not be admissible for any assessment year
be5innin5 on or after the 1st day of "pril% 2881% unless the assessee furnishes in the
prescribed form
61
% alon5 with the return of income% the report of an accountant% as defined
in the Explanation below sub#section 2! of section 277% certifyin5 that the deduction has
been correctly claimed in accordance with the pro+isions of this section(
'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% in computin5
the total income of the assessee of the pre+ious year rele+ant to the assessment year
immediately succeedin5 the last of the rele+ant assessment years% or of any pre+ious year%
rele+ant to any subse,uent assessment year%
i! section )2% section )2"% section ))% section )4 and clause ix! of sub#section 1!
of section )' shall apply as if e+ery allowance or deduction referred to therein
and relatin5 to or allowable for any of the rele+ant assessment years
62
-endin5
before the 1st day of "pril% 28812% in relation to any buildin5% machinery% plant
or furniture used for the purposes of the business of the underta9in5 in the
pre+ious year rele+ant to such assessment year or any e$penditure incurred for
the purposes of such business in such pre+ious year had been 5i+en full effect
to for that assessment year itself and accordin5ly sub#section 2! of section )2%
clause ii! of sub#section )! of section )2"% clause ii! of sub#section 2! of
section ))% sub#section 3! of section )4 or the second pro+iso to clause ix! of
any such allowance or deduction1
underta9in5% shall be carried forward or set#off where such loss relates to any of
the rele+ant assessment years
62
-endin5 before the 1st day of "pril% 288121
78#I or section 78#I" or section 78#IB in relation to the profits and 5ains of the
underta9in51 and
+alue of any asset used for the purposes of the business of the underta9in5 shall
be computed as if the assessee had claimed and been actually allowed the
deduction in respect of depreciation for each of the rele+ant assessment year(
6)
-6"! Fhere any underta9in5 of an Indian company which is entitled to the deduction
to another Indian company in a scheme of amal5amation or demer5er
or resultin5 company as they would ha+e applied to the amal5amatin5 or the
demer5ed company if the amal5amation or the demer5er had not ta9en place(2
7! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% where
the assessee% before the due date for furnishin5 the return of income under sub#section 1!
of section 1)&% furnishes to the "ssessin5 <fficer a declaration in writin5 that the
section shall not apply to him for any of the rele+ant assessment year(
&!
63
&"!
64
Explanation 1.
6'
Explanation 2.>or the purposes of this section%
i! computer software means
a! any computer pro5ramme recorded on any disc% tape% perforated media or
b! any customi=ed electronic data or any product or ser+ice of similar nature
as may be notified
66
by the Board%
which is transmitted or e$ported from India to any place outside India by any
means1
ii! con+ertible forei5n e$chan5e means forei5n e$chan5e which is for the time
force1
iii! e$port turno+er means the consideration in respect of e$port
67
-by the
underta9in52 of articles or thin5s or computer software recei+ed in% or brou5ht
into% India by the assessee in con+ertible forei5n e$chan5e in accordance with
sub#section )!% but does not include frei5ht% telecommunication char5es or
insurance attributable to the deli+ery of the articles or thin5s or computer
software outside India or e$penses% if any% incurred in forei5n e$chan5e in
pro+idin5 the technical ser+ices outside India1
i%! hundred per cent e$port#oriented underta9in5 means an underta9in5 which has
been appro+ed as a hundred per cent e$port#oriented underta9in5 by the Board
appointed in this behalf by the .entral ;o+ernment in e$ercise of the powers
conferred by section 13
6&
of the Industries ?e+elopment and Re5ulation! "ct%
1&41 '4 of 1&41!% and the rules made under that "ct1
%! rele+ant assessment years means any assessment years fallin5 within a period
of ten consecuti+e assessment years% referred to in this section(2
78
-Explanation 3.>or the remo+al of doubts% it is hereby declared that the profits and 5ains
71
-Explanation 4.>or the purposes of this section% manufacture or produce shall include
the cuttin5 and polishin5 of precious and semi#precious stones(2
72
-Special provisions in respect of export of certain articles or things.
10BA. 1! *ub:ect to the pro+isions of this section% a deduction of such profits and 5ains
as are deri+ed by an underta9in5 from the e$port out of India of eli5ible articles or thin5s%
shall be allowed from the total income of the assessee :
year% deduction under section 18" or section 18B has been claimed% the underta9in5 shall
not be entitled to the deduction under this section :
Provided further that no deduction under this section shall be allowed to any
underta9in5 for the assessment year be5innin5 on the 1st day of "pril% 2818 and
subse,uent years(
2! This section applies to any underta9in5 which fulfils the followin5 conditions% namely
:
a! it manufactures or produces the eli5ible articles or thin5s without the use of
imported raw materials1
b! it is not formed by the splittin5 up% or the reconstruction% of a business already
in e$istence :
the assessee of the business of any such underta9in5 as is referred to in section
c! it is not formed by the transfer to a new business of machinery or plant
Explanation.The pro+isions of Explanation 1 and Explanation 2 to sub#section
2! of section 78#I shall apply for the purposes of this clause as they apply for
the purposes of clause ii! of sub#section 2! of that section1
d! ninety per cent or more of its sales durin5 the pre+ious year rele+ant to the
assessment year are by way of e$ports of the eli5ible articles or thin5s1
e! it employs twenty or more wor9ers durin5 the pre+ious year in the process of
manufacture or production(
)! This section applies to the underta9in5% if the sale proceeds of the eli5ible articles or
thin5s e$ported out of India are recei+ed in or brou5ht into% India by the assessee in
con+ertible forei5n e$chan5e% within a period of si$ months from the end of the pre+ious
year or% within such further period as the competent authority may allow in this behalf(
Explanation.>or the purposes of this sub#section% the e$pression competent authority
3! >or the purposes of sub#section 1!% the profits deri+ed from e$port out of India of the
eli5ible articles or thin5s shall be the amount which bears to the profits of the business of
the underta9in5% the same proportion as the e$port turno+er in respect of such articles or
thin5s bears to the total turno+er of the business carried on by the underta9in5(
4! The deduction under sub#section 1! shall not be admissible% unless the assessee
furnishes in the prescribed form
7)
% alon5 with the return of income% the report of an
accountant% as defined in the Explanation below sub#section 2! of section 277% certifyin5
that the deduction has been correctly claimed in accordance with the pro+isions of this
section(
'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where a
deduction is allowed under this section in computin5 the total income of the assessee% no
deduction shall be allowed under any other section in respect of its e$port profits(
Explanation.>or the purposes of this section%
a! con+ertible forei5n e$chan5e means forei5n e$chan5e which is for the time
the purposes of the >orei5n E$chan5e Bana5ement "ct% 1&&& 32 of 1&&&!% and
force1
b! eli5ible articles or thin5s means all hand#made articles or thin5s% which are of
artistic +alue and which re,uires the use of wood as the main raw material1
c! e$port turno+er means the consideration in respect of e$port by the underta9in5
of eli5ible articles or thin5s recei+ed in% or brou5ht into% India by the assessee
in con+ertible forei5n e$chan5e in accordance with sub#section )!% but does
not include frei5ht% telecommunication char5es or insurance attributable to the
deli+ery of the articles or thin5s outside India1
d! e$port out of India shall not include any transaction by way of sale or
otherwise% in a shop% emporium or any other establishment situate in India% not
in+ol+in5 clearance of any customs station
73
as defined in the .ustoms "ct%
1&'2 42 of 1&'2!(2
74
-Meaning of computer programmes in certain cases.
10BB. The profits and 5ains deri+ed by an underta9in5 from the production of computer
pro5rammes under section 18B% as it stood prior to its substitution by section 6 of the
>inance "ct% 2888 18 of 2888!% shall be construed as if for the words computer
pro5rammes% the words computer pro5rammes or processin5 or mana5ement of
electronic data had been substituted in that section(2
7'
-Special provision in respect of certain industrial undertakings in North- Eastern
Region.
10C. 1! *ub:ect to the pro+isions of this section% any profits and 5ains deri+ed by an
assessee from an industrial underta9in5% which has be5un or be5ins to manufacture or
produce any article or thin5 on or after the 1st day of "pril% 1&&7 in any Inte5rated
Infrastructure ?e+elopment .entre or Industrial ;rowth .entre located in the Aorth#
Eastern Re5ion hereafter in this section referred to as the industrial underta9in5! shall
not be included in the total income of the assessee(
2! This section applies to any industrial underta9in5 which fulfils all the followin5
conditions% namely :
i! it is not formed by the splittin5 up% or the reconstruction of% a business already
in e$istence :
Provided that this condition shall not apply in respect of any indus#trial
underta9in5 which is formed as a result of the re#establishment% reconstruction
or re+i+al by the assessee of the business of any such industrial underta9in5 as
is referred to in section ))B% in the circumstances and within the period
specified in that section 1
ii! it is not formed by the transfer to a new business of machinery or plant
Explanation(The pro+isions of Explanation 1 and Explanation 2 to sub#section )! of
section 78#I" shall apply for the purposes of clause ii! of this sub#section as they apply
)! The profits and 5ains referred to in sub#section 1! shall not be included in the total
income of the assessee in respect of ten consecuti+e assessment years be5innin5 with the
assessment year rele+ant to the pre+ious year in which the industrial underta9in5 be5ins
to manufacture or produce articles or thin5s(
3! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% in computin5
the total income of the assessee of any pre+ious year rele+ant to any subse,uent
assessment year%
i! section )2% section )4 and clause ix! of sub#section 1! of section )' shall
apply as if deduction referred to therein and relatin5 to or allowable for any of
the rele+ant assessment years% in relation to any buildin5% machinery% plant or
furniture used for the purposes of the business of the industrial underta9in5 in
the pre+ious year rele+ant to such assessment year or any e$penditure incurred
for the purposes of such business in such pre+ious year had been 5i+en full
effect to for that assessment year itself and% accordin5ly% sub#section 2! of
section )2% sub#section 3! of section )4 or the second pro+iso to clause ix! of
any such deduction1
industrial underta9in5% shall be carried forward or set off where such loss
relates to any of the rele+ant assessment years1
78#I or section 78#I" or section 78#IB or section 78@@" in relation to the profits
and 5ains of the industrial underta9in5s1 and
+alue of any asset used for the purposes of the business of the industrial
underta9in5 shall be computed as if the assessee had claimed and been actually
allowed the deduction in respect of depreciation for each of the rele+ant
assessment years(
may be% apply in relation to the industrial underta9in5 referred to in this section as they
apply for the purposes of the industrial underta9in5 referred to in section 78#I" or section
78#IB% as the case may be(
'! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% where
the assessee before the due date for furnishin5 the return of his income under sub#section
1! of section 1)&% furnishes to the "ssessin5 <fficer a declaration in writin5 that the
section shall not apply to him in any of the rele+ant assessment years :
76
-Provided that no deduction under this section shall be allowed to any underta9in5 for
the assessment year be5innin5 on the 1st day of "pril% 2883 and subse,uent years(2
Explanation(>or the purposes of this section%
i! Inte5rated Infrastructure ?e+elopment .entre means such centres located in the
*tates of the Aorth#Eastern Re5ion% which the .entral ;o+ernment% may% by
notification in the <fficial ;a=ette% specify
77
for the purposes of this section1
ii! Industrial ;rowth .entre means such centres located in the *tates of the Aorth#
Eastern Re5ion% which the .entral ;o+ernment may% by notification in the
<fficial ;a=ette% specify
7&
for the purposes of this section1
iii! Aorth#Eastern Re5ion means the re5ion comprisin5 the *tates of "runachal
Pradesh% "ssam% Banipur% Be5halaya% Bi=oram% Aa5aland% *i99im and
Tripura1
i%! rele+ant assessment years means the ten consecuti+e years be5innin5 with the
year in which the industrial underta9in5 be5ins to manufacture or produce
articles or thin5s(2
&8
Income
&1
from property held for charitable or religious purposes.
&2
11. 1! *ub:ect to the pro+isions of sections '8 to ')% the followin5 income shall not be
included in the total income of the pre+ious year of the person in receipt of the income
&)
-a! income deri+ed from property
&1
held under trust wholly for charitable or
reli5ious purposes% to the e$tent to which such income
&1
is applied
&1
to such
purposes in India1 and% where any such income
&1
is accumulated
&1
or set apart
for application to such purposes in India% to the e$tent to which the income so
accumulated or set apart
&1
is not in e$cess of
&3
-fifteen2 per cent of the income
from such property1
b! income deri+ed from property held under trust in part
&1
only for such purposes%
the trust ha+in5 been created before the commencement of this "ct% to the
e$tent to which such income is applied to such purposes in India1 and% where
any such income is finally set apart for application to such purposes in India% to
the e$tent to which the income so set apart is not in e$cess of
&3
-fifteen2 per
cent of the income from such property1
c! income
&4
-deri+ed2 from property held under trust
i! created on or after the 1st day of "pril% 1&42% for a charitable purpose which
tends to promote international welfare in which India is interested% to the
e$tent to which such income is applied to such purposes outside India% and
ii! for charitable or reli5ious purposes% created before the 1st day of "pril%
1&42% to the e$tent to which such income is applied to such purposes
outside India:
Provided that the Board% by 5eneral or special order% has directed in either case
that it shall not be included in the total income of the person in receipt of such
income1
&'
-d! income in the form of +oluntary contributions made with a specific direction
that they shall form part of the corpus of the trust or institution(2
&6
-Explanation.>or the purposes of clauses a! and b!%
1! in computin5 the
&7
-fifteen2 per cent of the income which may be accumulated
or set apart% any such +oluntary contributions as are referred to in section 12
shall be deemed to be part of the income1
2! if% in the pre+ious year% the income applied to charitable or reli5ious purposes
in India falls short of
&&
-ei5hty#fi+e2 per cent of the income deri+ed durin5 that
year from property held under trust% or% as the case may be% held under trust in
part% by any amount
i! for the reason that the whole or any part of the income has not been
recei+ed durin5 that year% or
ii! for any other reason%
then
a! in the case referred to in sub#clause i!% so much of the income applied to
such purposes in India durin5 the pre+ious year in which the income is
recei+ed or durin5 the pre+ious year immediately followin5 as does not
e$ceed the said amount% and
b! in the case referred to in sub#clause ii!% so much of the income applied to
such purposes in India durin5 the pre+ious year immediately followin5 the
pre+ious year in which the income was deri+ed as does not e$ceed the said
amount%
may% at the option of the person in receipt of the income such option to be
e$ercised in writin5 before the e$piry of the time allowed under sub#section 1!
1
-* * *2 of section 1)&
2
-* * *2 for furnishin5 the return of income! be deemed
to be income applied to such purposes durin5 the pre+ious year in which the
income was deri+ed1 and the income so deemed to ha+e been applied shall not
be ta9en into account in calculatin5 the amount of income applied to such
purposes% in the case referred to in sub#clause i!% durin5 the pre+ious year in
which the income is recei+ed or durin5 the pre+ious year immediately
followin5% as the case may be% and% in the case referred to in sub#clause ii!%
durin5 the pre+ious year immediately followin5 the pre+ious year in which the
income was deri+ed(2
)
-1"! >or the purposes of sub#section 1!%
a! where a capital asset% bein5 property held under trust wholly for charitable or
reli5ious purposes% is transferred and the whole or any part of the net
consideration is utilised for ac,uirin5 another capital asset to be so held% then%
the capital 5ain arisin5 from the transfer shall be deemed to ha+e been applied
to charitable or reli5ious purposes to the e$tent specified hereunder% namely:
i! where the whole of the net consideration is utilised in ac,uirin5 the new
capital asset% the whole of such capital 5ain 1
ii! where only a part of the net consideration is utilised for ac,uirin5 the new
capital asset% so much of such capital 5ain as is e,ual to the amount% if any%
by which the amount so utilised e$ceeds the cost of the transferred asset1
b! where a capital asset% bein5 property held under trust in part only for such
purposes% is transferred and the whole or any part of the net consideration is
utilised for ac,uirin5 another capital asset to be so held% then% the appropriate
fraction of the capital 5ain arisin5 from the transfer shall be deemed to ha+e
been applied to charitable or reli5ious purposes to the e$tent specified
hereunder% namely:
i! where the whole of the net consideration is utilised in ac,uirin5 the new
capital asset% the whole of the appropriate fraction of such capital 5ain1
ii! in any other case% so much of the appropriate fraction of the capital 5ain as
is e,ual to the amount% if any% by which the appropriate fraction of the
amount utilised for ac,uirin5 the new asset e$ceeds the appropriate fraction
of the cost of the transferred asset(
Explanation.In this sub#section%
i! appropriate fraction means the fraction which represents the e$tent to which the
income deri+ed from the capital asset transferred was immediately before such
transfer applicable to charitable or reli5ious purposes1
ii! cost of the transferred asset means the a55re5ate of the cost of ac,uisition as
ascertained for the purposes of sections 37 and 3&! of the capital asset which is
the sub:ect of the transfer and the cost of any impro+ement thereto within the
meanin5 assi5ned to that e$pression in sub#clause b! of clause 1! of section
441
iii! net consideration means the full +alue of the consideration recei+ed or accruin5
as a result of the transfer of the capital asset as reduced by any e$penditure
incurred wholly and e$clusi+ely in connection with such transfer(2
3
-1B! Fhere any income in respect of which an option is e$ercised under clause 2! of
the Explanation to sub#section 1! is not applied to charitable or reli5ious purposes in
India durin5 the period referred to in sub#clause a! or% as the case may be% sub#clause b!%
of the said clause% then% such income shall be deemed to be the income of the person in
receipt thereof
a! in the case referred to in sub#clause i! of the said clause% of the pre+ious year
immediately followin5 the pre+ious year in which the income was recei+ed1 or
b! in the case referred to in sub#clause ii! of the said clause% of the pre+ious year
immediately followin5 the pre+ious year in which the income was deri+ed(2
4
-2!
'
-Fhere
6
-ei5hty#fi+e2 per cent of the income referred to in clause a! or clause b!
of sub#section 1! read with the Explanation to that sub#section is not applied% or is not
deemed to ha+e been applied% to charitable or reli5ious purposes in India durin5 the
pre+ious year but is accumulated or set apart% either in whole or in part% for application to
such purposes in India% such income so accumulated or set apart shall not be included in
the total income of the pre+ious year of the person in receipt of the income% pro+ided the
followin5 conditions are complied with% namely:2
a! such person specifies% by notice in writin5 5i+en to the
7
-"ssessin52 <fficer in
the prescribed
&
manner
18
% the purpose for which the income is bein5
accumulated or set apart and the period for which the income is to be
accumulated or set apart% which shall in no case e$ceed ten years1
11
-b! the money so accumulated
12
or set apart is in+ested or deposited in the forms or
modes specified in sub#section 4!2:2
1)
-Provided that in computin5 the period of ten years referred to in clause a!% the period
durin5 which the income could not be applied for the purpose for which it is so
accumulated or set apart% due to an order or in:unction of any court% shall be e$cluded:2
13
-Provided further that in respect of any income accumulated or set apart on or after the
1st day of "pril% 2881% the pro+isions of this sub#section shall ha+e effect as if for the
words ten years at both the places where they occur% the words fi+e years had been
substituted(2
14
-Explanation."ny amount credited or paid% out of income referred to in clause a! or
clause b! of sub#section 1!% read with the Explanation to that sub#section% which is not
applied% but is accumulated or set apart% to any trust or institution re5istered under section
12"" or to any fund or institution or trust or any uni+ersity or other educational
institution or any hospital or other medical institution referred to in sub#clause i%! or sub#
clause %! or sub#clause %i! or sub#clause %ia! of clause 23'! of section 18% shall not be
treated as application of income for charitable or reli5ious purposes% either durin5 the
period of accumulation or thereafter(2
1'
-)! "ny income referred to in sub#section 2! which
a! is applied to purposes other than charitable or reli5ious purposes as aforesaid or
ceases to be accumulated or set apart for application thereto% or
16
-b! ceases to remain in+ested or deposited in any of the forms or modes specified
in sub#section 4!% or2
c! is not utilised
17
for the purpose for which it is so accumulated or set apart
durin5 the period referred to in clause a! of that sub#section or in the year
immediately followin5 the e$piry thereof%
1&
-d! is credited or paid to any trust or institution re5istered under section 12"" or to
any fund or institution or trust or any uni+ersity or other educational institution
or any hospital or other medical institution referred to in sub#clause i%! or sub#
clause %! or sub#clause %i! or sub#clause %ia! of clause 23'! of section 18%2
shall be deemed to be the income of such person of the pre+ious year in which it is so
applied or ceases to be so accumulated or set apart or ceases to remain so in+ested or
deposited or
28
-credited or paid or2% as the case may be% of the pre+ious year immediately
followin5 the e$piry of the period aforesaid(2
21
-)"! Aotwithstandin5 anythin5 contained in sub#section )!% where due to
circumstances beyond the control of the person in receipt of the income% any income
in+ested or deposited in accordance with the pro+isions of clause b! of sub#section 2!
cannot be applied for the purpose for which it was accumulated or set apart% the
22
-"ssessin52 <fficer may% on an application made to him in this behalf% allow such
person to apply such income for such other charitable or reli5ious purpose in India as is
specified in the application by such person and as is in conformity with the ob:ects of the
trust1 and thereupon the pro+isions of sub#section )! shall apply as if the purpose
specified by such person in the application under this sub#section were a purpose
specified in the notice 5i+en to the
2)
-"ssessin52 <fficer under clause a! of sub#section
2!:2
23
-Provided that the "ssessin5 <fficer shall not allow application of such income by way
of payment or credit made for the purposes referred to in clause d! of sub#section )! of
section 11:2
24
-Provided further that in case the trust or institution% which has in+ested or deposited
its income in accordance with the pro+isions of clause b! of sub#section 2!% is dissol+ed%
the "ssessin5 <fficer may allow application of such income for the purposes referred to
in clause d! of sub#section )! in the year in which such trust or institution was
dissol+ed(2
3! >or the purposes of this section property held under trust includes a business
underta9in5 so held% and where a claim is made that the income of any such underta9in5
shall not be included in the total income of the persons in receipt thereof% the
2'
-"ssessin52 <fficer shall ha+e power to determine the income of such underta9in5 in
accordance with the pro+isions of this "ct relatin5 to assessment1 and where any income
so determined is in e$cess of the income as shown in the accounts of the underta9in5%
such e$cess shall be deemed to be applied to purposes other than charitable or reli5ious
purposes
26
-* * *2(
27
-3"! *ub#section 1! or sub#section 2! or sub#section )! or sub#section )"! shall not
apply in relation to any income of a trust or an institution% bein5 profits and 5ains of
business% unless the business is incidental to the attainment of the ob:ecti+es of the trust
or% as the case may be% institution% and separate boo9s of account are maintained by such
trust or institution in respect of such business(2
2&
-
)8
4! The forms and modes of in+estin5 or depositin5 the money referred to in clause
b! of sub#section 2! shall be the followin5% namely :
i! in+estment in sa+in5s certificates as defined in clause c! of section 2
)1
of the
;o+ernment *a+in5s .ertificates "ct% 1&4& 3' of 1&4&!% and any other
securities or certificates issued by the .entral ;o+ernment under the *mall
*a+in5s *chemes of that ;o+ernment1
ii! deposit in any account with the Post <ffice *a+in5s Ban91
iii! deposit in any account with a scheduled ban9 or a co#operati+e society en5a5ed
in carryin5 on the business of ban9in5 includin5 a co#operati+e land mort5a5e
ban9 or a co#operati+e land de+elopment ban9!(
Explanation.In this clause% scheduled ban9 means the *tate Ban9 of India
constituted under the *tate Ban9 of India "ct% 1&44 2) of 1&44!% a subsidiary
ban9 as defined in the *tate Ban9 of India *ubsidiary Ban9s! "ct% 1&4& )7 of
1&4&!% a correspondin5 new ban9 constituted under section ) of the Ban9in5
.ompanies "c,uisition and Transfer of Enderta9in5s! "ct% 1&68 4 of 1&68!%
or under section ) of the Ban9in5 .ompanies "c,uisition and Transfer
of Enderta9in5s! "ct% 1&78 38 of 1&78!% or any other ban9 bein5 a ban9
included in the *econd *chedule to the Reser+e Ban9 of India "ct% 1&)3 2 of
1&)3!1
i%! in+estment in units of the Enit Trust of India established under the Enit Trust
of India "ct% 1&') 42 of 1&')!1
%! in+estment in any security for money created and issued by the .entral
;o+ernment or a *tate ;o+ernment1
%i! in+estment in debentures issued by% or on behalf of% any company or
corporation both the principal whereof and the interest whereon are fully and
unconditionally 5uaranteed by the .entral ;o+ernment or by a *tate
;o+ernment1
%ii! in+estment or deposit in any
)2
-public sector company2:
))
-Provided that where an in+estment or deposit in any public sector company
has been made and such public sector company ceases to be a public sector
company%
A! such in+estment made in the shares of such company shall be deemed to be
an in+estment made under this clause for a period of three years from the
date on which such public sector company ceases to be a public sector
company1
B! such other in+estment or deposit shall be deemed to be an in+estment or
deposit made under this clause for the period up to the date on which such
in+estment or deposit becomes repayable by such company12
%iii! deposits with or in+estment in any bonds issued by a financial corporation
which is en5a5ed in pro+idin5 lon5#term finance for industrial de+elopment in
India and
)3
-which is eli5ible for deduction under clause %iii! of sub#section 1!
of section )'21
ix! deposits with or in+estment in any bonds issued by a public company formed
and re5istered in India with the main ob:ect of carryin5 on the business of
pro+idin5 lon5#term finance for construction or purchase of houses in India for
residential purposes and
)3
-which is eli5ible for deduction under clause %iii! of
sub#section 1! of section )'21
)4
-ixa! deposits with or in+estment in any bonds issued by a public company formed
and re5istered in India with the main ob:ect of carryin5 on the business of
pro+idin5 lon5#term finance for urban infrastructure in India(
a! lon5#term finance means any loan or ad+ance where the terms under which
moneys are loaned or ad+anced pro+ide for repayment alon5 with interest
thereof durin5 a period of not less than fi+e years1
b! public company
)'
shall ha+e the meanin5 assi5ned to it in section ) of the
.ompanies "ct% 1&4' 1 of 1&4'!1
c! urban infrastructure means a pro:ect for pro+idin5 potable water supply%
sanitation and sewera5e% draina5e% solid waste mana5ement% roads% brid5es
and flyo+ers or urban transport12
x! in+estment in immo+able property(
Explanation.Immo+able property does not include any machi#nery or plant
other than machinery or plant installed in a buildin5 for the con+enient
occupation of the buildin5! e+en thou5h attached to% or permanently fastened
to% anythin5 attached to the earth12
)6
-xi! deposits with the Industrial ?e+elopment Ban9 of India established under the
Industrial ?e+elopment Ban9 of India "ct% 1&'3 17 of 1&'3!12
)7
-xii! any other form or mode of in+estment or deposit as may be prescribed(
)&
2
38
-Income of trusts or institutions from contributions.
31
12.
32
-1!2
3)
"ny +oluntary contributions recei+ed by a trust created wholly for
charitable or reli5ious purposes or by an institution established wholly for such purposes
not bein5 contributions made with a specific direction that they shall form part of the
corpus of the trust or institution! shall for the purposes of section 11 be deemed to be
income deri+ed from property held under trust wholly for charitable or reli5ious purposes
and the pro+isions of that section and section 1) shall apply accordin5ly(2
33
-2! The +alue of any ser+ices% bein5 medical or educational ser+ices% made a+ailable by
any charitable or reli5ious trust runnin5 a hospital or medical institution or an educational
institution% to any person referred to in clause a! or clause b! or clause c! or clause cc!
or clause d! of sub#section )! of section 1)% shall be deemed to be income of such trust
or institution deri+ed from property held under trust wholly for charitable or reli5ious
purposes durin5 the pre+ious year in which such ser+ices are so pro+ided and shall be
char5eable to income#ta$ notwithstandin5 the pro+isions of sub#section 1! of section 11(
Explanation.>or the purposes of this sub#section% the e$pression +alue shall be the +alue
of any benefit or facility 5ranted or pro+ided free of cost or at concessional rate to any
person referred to in clause a! or clause b! or clause c! or clause cc! or clause d! of
sub#section )! of section 1)(2
34
-)! Aotwithstandin5 anythin5 contained in section 11% any amount of donation recei+ed
by the trust or institution in terms of clause d! of sub#section 2! of section 78;
3'
-in
respect of which accounts of income and e$penditure ha+e not been rendered to the
authority prescribed under clause %! of sub#section 4.! of that section% in the manner
specified in that clause% or2 which has been utilised for purposes other than pro+idin5
relief to the +ictims of earth,ua9e in ;u:arat or which remains unutilised in terms of sub#
section 4.! of section 78; and not transferred to the Prime Binisters Aational Relief
>und on or before the )1st day of Barch%
36
-28832 shall be deemed to be the income of
the pre+ious year and shall accordin5ly be char5ed to ta$(2
37
-Conditions as to registration of trusts, etc.
3&
12A.
48
The pro+isions of section 11 and section 12 shall not apply in relation to the
income of any trust or institution unless the followin5 conditions are fulfilled% namely:
a! the person in receipt of the income has made an application for re5istration of
the trust or institution in the prescribed form
41
and in the prescribed manner to
the
42
-***2 .ommissioner before the 1st day of @uly% 1&6)% or before the e$piry
of a period of one year from the date of the creation of the trust or the
establishment of the institution%
4)
-whiche+er is later and such trust or
institution is re5istered under section 12""2 :
43
-Provided that where an application for re5istration of the trust or institution
is made after the e$piry of the period aforesaid% the pro+isions of sections 11
and 12 shall apply in relation to the income of such trust or institution%
i! from the date of the creation of the trust or the establishment of the
institution if the
44
-***2 .ommissioner is% for reasons to be recorded in
writin5% satisfied that the person in receipt of the income was pre+ented
from ma9in5 the application before the e$piry of the period
4'
aforesaid for
sufficient reasons1
ii! from the 1st day of the financial year in which the application is made% if
the
46
-***2 .ommissioner is not so satisfied12
b! where the total income of the trust or institution as computed under this "ct
without 5i+in5 effect to the pro+isions of section 11 and section 12 e$ceeds
47
-fifty2 thousand rupees in any pre+ious year% the accounts of the trust or
institution for that year ha+e been audited by an accountant as defined in the
Explanation below sub#section 2! of section 277 and the person in receipt of
the income furnishes alon5 with the return of income for the rele+ant
assessment year the report of such audit in the prescribed form
4&
duly si5ned
and +erified by such accountant and settin5 forth such particulars as may be
prescribed(2
c!
'8
-***2
'1
-Procedure for registration.
12AA. 1! The
'2
-***2 .ommissioner% on receipt of an application for re5istration of a
trust or institution made under clause a! of section 12"% shall
a! call for such documents or information from the trust or institution as he thin9s
necessary in order to satisfy himself about the 5enuineness of acti+ities of the
trust or institution and may also ma9e such in,uiries as he may deem necessary
in this behalf1 and
b! after satisfyin5 himself about the ob:ects of the trust or institution and the
5enuineness of its acti+ities% he
i! shall pass an order in writin5 re5isterin5 the trust or institution1
ii! shall% if he is not so satisfied% pass an order in writin5 refusin5 to re5ister
the trust or institution%
and a copy of such order shall be sent to the applicant :
Provided that no order under sub#clause ii! shall be passed unless the applicant has been
5i+en a reasonable opportunity of bein5 heard(
')
-1"! "ll applications% pendin5 before the .hief .ommissioner on which no order has
been passed under clause b! of sub#section 1! before the 1st day of @une% 1&&&% shall
stand transferred on that day to the .ommissioner and the .ommissioner may proceed
with such applications under that sub#section from the sta5e at which they were on that
day(2
2! E+ery order 5rantin5 or refusin5 re5istration under clause b! of sub#section 1! shall
be passed before the e$piry of si$ months from the end of the month in which the
application was recei+ed under clause a! of section 12"(2
'3
-)! Fhere a trust or an institution has been 5ranted re5istration under clause b! of sub#
section 1! and subse,uently the .ommissioner is satisfied that the acti+ities of such trust
or institution are not 5enuine or are not bein5 carried out in accordance with the ob:ects
of the trust or institution% as the case may be% he shall pass an order in writin5 cancellin5
the re5istration of such trust or institution:
Provided that no order under this sub#section shall be passed unless such trust or
institution has been 5i+en a reasonable opportunity of bein5 heard(2
'4
-Section 11 not to apply in certain cases.
''
13. 1! Aothin5 contained in section 11
'6
-or section 122 shall operate so as to e$clude
from the total income of the pre+ious year of the person in receipt thereof
a! any part of the
'7
income from the property held under a trust for pri+ate
reli5ious purposes which does not enure for the benefit of the public1
b! in the case of a trust for charitable purposes or a charitable institution created or
established after the commencement of this "ct% any income thereof if the trust
or institution is created or established for the benefit of any particular reli5ious
community or caste1
bb!
'&
-* * *2
c! in the case of a trust for charitable or reli5ious purposes or a charitable or
reli5ious institution% any income thereof
i! if such trust or institution has been created or established after the
commencement of this "ct and under the terms of the trust or the rules
5o+ernin5 the institution% any part of such income enures% or
ii! if any part of such income or any property of the trust or the institution
whene+er created or established! is durin5 the pre+ious year used or
applied%
directly or indirectly for the benefit of any person referred to in sub#section
)! :
Provided that in the case of a trust or institution created or established before
the commencement of this "ct% the pro+isions of sub#clause ii! shall not apply
to any use or application% whether directly or indirectly% of any part of such
income or any property of the trust or institution for the benefit of any person
referred to in sub#section )!% if such use or application is by way of
compliance with a mandatory term of the trust or a mandatory rule 5o+ernin5
the institution :
Provided further that in the case of a trust for reli5ious purposes or a reli5ious
institution whene+er created or established! or a trust for charitable purposes
or a charitable institution created or established before the commencement of
this "ct% the pro+isions of sub#clause ii! shall not apply to any use or
application% whether directly or indirectly% of any part of such income or any
property of the trust or institution for the benefit of any person referred to in
sub#section )! in so far as such use or application relates to any period before
the 1st day of @une% 1&681
68
-d!
61
in the case of a trust for charitable or reli5ious purposes or a charitable or
reli5ious institution% any income thereof% if for any period durin5 the pre+ious
year
i! any funds
62
of the trust or institution are in+ested
62
or deposited
62
after the
27th day of >ebruary% 1&7) otherwise than in any one or more of the forms
or modes specified in sub#section 4! of section 111 or
ii! any funds
62
of the trust or institution in+ested
62
or deposited
62
before the 1st
day of Barch% 1&7) otherwise than in any one or more of the forms or
modes specified in sub#section 4! of section 11 continue to remain so
in+ested or deposited after the )8th day of Ao+ember% 1&7)1 or
iii! any shares in a company -not bein5 a
6)
;o+ernment company as defined in
section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!% or a corporation
established by or under a .entral% *tate or Pro+incial "ct2 are held by the
trust or institution after the )8th day of Ao+ember% 1&7):
Provided that nothin5 in this clause shall apply in relation to
i! any assets held by the trust or institution where such assets form part of the
corpus of the trust or institution as on the 1st day of @une% 1&6)
63
-***21
64
-ia! any accretion to the shares% formin5 part of the corpus mentioned in clause
i!% by way of bonus shares allotted to the trust or institution12
ii! any assets bein5 debentures issued by% or on behalf of% any company or
corporation! ac,uired by the trust or institution before the 1st day of Barch%
1&7)1
6'
-iia! any asset% not bein5 an in+estment or deposit in any of the forms or modes
specified in sub#section 4! of section 11% where such asset is not held by
the trust or institution% otherwise than in any of the forms or modes
specified in sub#section 4! of section 11% after the e$piry of one year from
the end of the pre+ious year in which such asset is ac,uired or the )1st day
of Barch%
66
-1&&)2% whiche+er is later12
iii! any funds representin5 the profits and 5ains of business% bein5 profits and
5ains of any pre+ious year rele+ant to the assessment year commencin5 on
the 1st day of "pril% 1&73 or any subse,uent assessment year(
Explanation.Fhere the trust or institution has any other income in addition to
profits and 5ains of business% the pro+isions of clause iii! of this pro+iso shall
not apply unless the trust or institution maintains separate boo9s of account in
respect of such business(2
67
-Explanation.>or the purposes of sub#clause ii! of clause c!% in determinin5 whether
any part of the income or any property of any trust or institution is durin5 the pre+ious
year used or applied% directly or indirectly% for the benefit of any person referred to in
sub#section )!% in so far as such use or application relates to any period before the 1st
day of @uly% 1&62% no re5ard shall be had to the amendments made to this section by
section 6 -other than sub#clause ii! of clause a! thereof2 of the >inance "ct% 1&62(2
2! Fithout pre:udice to the 5enerality of the pro+isions of clause c!
6&
-and clause d!2 of
sub#section 1!% the income or the property
78
of the trust or institution or any part of such
income or property shall% for the purposes of that clause% be deemed to ha+e been used or
applied for the benefit of a person referred to in sub#section )!%
a! if any part of the income or property
78
of the trust or institution is% or continues
to be% lent
78
to any person referred to in sub#section )! for any period durin5
the pre+ious year without either ade,uate security or ade,uate interest or both1
b! if any land% buildin5 or other property
78
of the trust or institution is% or
continues to be% made a+ailable for the use of any person referred to in sub#
section )!% for any period durin5 the pre+ious year without char5in5 ade,uate
rent or other compensation1
c! if any amount is paid by way of salary% allowance or otherwise durin5 the
pre+ious year to any person referred to in sub#section )! out of the resources of
the trust or institution for ser+ices rendered by that person to such trust or
institution and the amount so paid is in e$cess of what may be reasonably paid
for such ser+ices1
d! if the ser+ices of the trust or institution are made a+ailable to any person
referred to in sub#section )! durin5 the pre+ious year without ade,uate
remuneration or other compensation1
e! if any share% security or other property is purchased by or on behalf of the trust
or institution from any person referred to in sub#section )! durin5 the pre+ious
year for consideration which is more than ade,uate1
!! if any share% security or other property is sold by or on behalf of the trust or
institution to any person referred to in sub#section )! durin5 the pre+ious year
for consideration which is less than ade,uate1
71
-g! if any income or property of the trust or institution is di+erted durin5 the
pre+ious year in fa+our of any person referred to in sub#section )!:
Provided that this clause shall not apply where the income% or the +alue of the
property or% as the case may be% the a55re5ate of the income and the +alue of
the property% so di+erted does not e$ceed one thousand rupees12
h! if any funds
72
of the trust or institution are% or continue to remain% in+ested
72
for
any period durin5 the pre+ious year not bein5 a period before the 1st day of
@anuary% 1&61!% in any concern
72
in which any person referred to in sub#section
)! has a substantial interest(
)! The persons referred to in clause c! of sub#section 1! and sub#section 2! are the
followin5% namely :
a! the author of the trust or the founder of the institution
72
1
b! any person who has made a substantial contribution to the trust or institution%
7)
-that is to say% any person whose total contribution up to the end of the
rele+ant pre+ious year e$ceeds
73
-fifty2 thousand rupees21
c! where such author% founder or person is a Cindu undi+ided family% a member of
the family1
74
-cc! any trustee of the trust or mana5er by whate+er name called! of the
institution12
d! any relati+e of any such author% founder% person%
7'
-member% trustee or
mana5er2 as aforesaid1
e! any concern in which any of the persons referred to in clauses a!% b!% c!
76
-%
cc!2 and d! has a substantial interest(
3! Aotwithstandin5 anythin5 contained in clause c! of sub#section 1!
77
-but without
pre:udice to the pro+isions contained in clause d! of that sub#section2% in a case where
the a55re5ate of the funds of the trust or institution in+ested in a concern in which any
person referred to in sub#section )! has a substantial interest% does not e$ceed fi+e per
cent of the capital
7&
of that concern% the e$emption under section 11
76
-or section 122 shall
not be denied in relation to any income other than the income arisin5 to the trust or the
institution from such in+estment% by reason only that the
&8
-funds2 of the trust or the
institution ha+e been in+ested in a concern in which such person has a substantial
interest(
&1
-4! Aotwithstandin5 anythin5 contained in clause d! of sub#section 1!% where any
assets bein5 debentures issued by% or on behalf of% any company or corporation! are
ac,uired by the trust or institution after the 27th day of >ebruary% 1&7) but before the
24th day of @uly% 1&&1% the e$emption under section 11 or section 12 shall not be denied
in relation to any income other than the income arisin5 to the trust or the institution from
such assets% by reason only that the funds of the trust or the institution ha+e been in+ested
in such assets if such funds do not continue to remain so in+ested in such assets after the
)1st day of Barch% 1&&2(2
&2
-'! Aotwithstandin5 anythin5 contained in sub#section 1! or sub#section 2!% but
without pre:udice to the pro+isions contained in sub#section 2! of section 12% in the case
of a charitable or reli5ious trust runnin5 an educational institution or a medical institution
or a hospital% the e$emption under section 11 or section 12 shall not be denied in relation
to any income% other than the income referred to in sub#section 2! of section 12% by
reason only that such trust has pro+ided educational or medical facilities to persons
referred to in clause a! or clause b! or clause c! or clause cc! or clause d! of sub#
section )!(2
The following sub-section (7) shall be inserted after sub-section (6) of section 13 by
the Finance Act, 2006, w.e.f. 1-4-2007 :
*( &othing contained in section 11 or section 12 shall operate so as to exclude !rom the
total income o! the pre%ious +ear o! the person in receipt thereo!) an+ anon+mous
donation re!erred to in section 115BB' on which tax is pa+able in accordance with the
pro%isions o! that section.
&)
-Explanation 1.>or the purposes of sections 11% 12% 12" and this section% trust includes
any other le5al obli5ation and for the purposes of this section relati+e% in relation to an
indi+idual% means
i! spouse of the indi+idual1
ii! brother or sister of the indi+idual1
iii! brother or sister of the spouse of the indi+idual1
i%! any lineal ascendant or descendant of the indi+idual1
%! any lineal ascendant or descendant of the spouse of the indi+idual1
%i! spouse of a person referred to in sub#clause ii!% sub#clause iii!% sub#clause i%!
or sub#clause %!1
%ii! any lineal descendant of a brother or sister of either the indi+idual or of the
spouse of the indi+idual(2
Explanation 2." trust or institution created or established for the benefit of *cheduled
.astes% bac9ward classes% *cheduled Tribes or women and children shall not be deemed
to be a trust or institution created or established for the benefit of a reli5ious community
or caste within the meanin5 of clause b! of sub#section 1!(
Explanation 3.>or the purposes of this section% a person shall be deemed to ha+e a
substantial interest in a concern%
i! in a case where the concern is a company% if its shares not bein5 shares entitled
to a fi$ed rate of di+idend whether with or without a further ri5ht to participate
in profits! carryin5 not less than twenty per cent of the +otin5 power are% at any
time durin5 the pre+ious year% owned beneficially by such person or partly by
such person and partly by one or more of the other persons referred to in sub#
section )!1
ii! in the case of any other concern% if such person is entitled% or such person and
one or more of the other persons referred to in sub#section )! are entitled in the
a55re5ate% at any time durin5 the pre+ious year% to not less than twenty per cent
of the profits of such concern(2
&3
-Special provision relating to incomes of political parties.
13A. "ny income of a political party which is char5eable under the head
&4
-***2 Income
from house property or Income from other sources or
&'
-.apital 5ains or2 any income by
way of +oluntary contributions recei+ed by a political party from any person shall not be
included in the total income of the pre+ious year of such political party :
Provided that
a! such political party 9eeps and maintains such boo9s of account and other
documents as would enable the
&6
-"ssessin52 <fficer to pro#perly deduce its
income therefrom1
b! in respect of each such +oluntary contribution in e$cess of
&7
-twenty2 thousand
rupees% such political party 9eeps and maintains a record of such contribution
and the name and address of the person who has made such contribution1 and
c! the accounts of such political party are audited by an accountant as defined in
the Explanation below sub#section 2! of section 277 :
&&
-Provided further that if the treasurer of such political party or any other person
authorised by that political party in this behalf fails to submit a report under sub#section
)! of section 2&. of the Representation of the People "ct% 1&41 3) of 1&41! for a
financial year% no e$emption under this section shall be a+ailable for that political party
for such financial year(2
1
-Explanation.>or the purposes of this section% political party means a political party
re5istered under section 2&" of the Representation of the People "ct% 1&41 3) of 1&41!(2
.hapter I0
COMPUTATION OF TOTAL INCOME
Heads of income
Heads of income.
2
14. *a+e as otherwise pro+ided by this "ct% all income shall% for the purposes of char5e
of income#ta$ and computation of total income% be classified under the followin5 heads
of income :
A.*alaries(
)
-***2
'.Income from house property(
1.Profits and 5ains of business or profession(
E..apital 5ains(
0.Income from other sources(
3
-Expenditure incurred in relation to income not includible in total income
4
.
14A.
4a
1!] >or the purposes of computin5 the total income under this .hapter% no
deduction shall be allowed in respect of e$penditure incurred by the assessee in relation
to income which does not form part of the total income under this "ct:2
The following sub-sections (2) and (3) shall be inserted after sub-section (1) as
renumbered] of section 14A by the Finance Act, 2006, w.e.f. 1-4-2007 :
*2( 7he Assessing /!!icer shall determine the amount o! expenditure incurred in relation
to such income which does not !orm part o! the total income under this Act in accordance
with such method as ma+ be prescribed) i! the Assessing /!!icer) ha%ing regard to the
accounts o! the assessee) is not satis!ied with the correctness o! the claim o! the assessee
in respect o! such expenditure in relation to income which does not !orm part o! the total
income under this Act.
*3( 7he pro%isions o! sub-section *2( shall also appl+ in relation to a case where an
assessee claims that no expenditure has been incurred b+ him in relation to income
which does not !orm part o! the total income under this Act.
'
-Provided that nothin5 contained in this section shall empower the "ssessin5 <fficer
either to reassess under section 136 or pass an order enhancin5 the assessment or
reducin5 a refund already made or otherwise increasin5 the liability of the assessee under
section 143% for any assessment year be5innin5 on or before the 1st day of "pril% 2881(2
A.<alaries
Salaries.
6
15.
7
The followin5 income shall be char5eable to income#ta$ under the head *alaries
a! any salary due
&
from an employer or a former employer to an assessee in the
pre+ious year% whether paid
&
or not1
b! any salary paid
&
or allowed
&
to him in the pre+ious year by or on behalf of an
employer or a former employer thou5h not due or before it became due to him1
c! any arrears of salary paid or allowed to him in the pre+ious year by or on behalf
of an employer or a former employer% if not char5ed to income#ta$ for any
earlier pre+ious year(
18
-Explanation 12(>or the remo+al of doubts% it is hereby declared that where any salary
paid in ad+ance is included in the total income of any person for any pre+ious year it
shall not be included a5ain in the total income of the person when the salary becomes
due(
11
-Explanation 2."ny salary% bonus% commission or remuneration% by whate+er name
called% due to% or recei+ed by% a partner of a firm from the firm shall not be re5arded as
salary for the purposes of this section(2
Deductions from salaries.
12
16. The income char5eable under the head *alaries shall be computed after ma9in5 the
followin5 deductions% namely :
i!
1)
-***2
13
-ii! a deduction in respect of any allowance in the nature of an entertainment
allowance specifically 5ranted by an employer to the assessee who is in receipt
of a salary from the ;o+ernment% a sum e,ual to one#fifth of his salary
e$clusi+e of any allowance% benefit or other per,uisite! or fi+e thousand
rupees% whiche+er is less12
14
-iii! a deduction of any sum paid by the assessee on account of a ta$ on employment
within the meanin5 of clause 2! of article 26'
1'
of the .onstitution% le+iable by
or under any law(2
i%!
16
-***2
%!
17
-***2
Salary, perquisite and profits in lieu of salary defined.
1&
17.
28
>or the purposes of sections 14 and 1' and of this section%
1! salary
21
includes
21
i! wa5es1
ii! any annuity or pension1
iii! any 5ratuity
21
1
i%! any fees
21
% commissions% per,uisites or profits in lieu of or in addition to
any salary or wa5es1
%! any ad+ance of salary1
22
-%a! any payment recei+ed by an employee in respect of any period of lea+e not
a+ailed of by him12
%i! the annual accretion to the balance at the credit of an employee
participatin5 in a reco5nised pro+ident fund% to the e$tent to which it is
char5eable to ta$ under rule ' of Part " of the >ourth *chedule1 and
%ii! the a55re5ate of all sums that are comprised in the transferred balance as
referred to in sub#rule 2! of rule 11 of Part " of the >ourth *chedule of an
employee participatin5 in a reco5nised pro+ident fund% to the e$tent to
which it is char5eable to ta$ under sub#rule 3! thereof1
2)
-%iii! the contribution made by the .entral ;o+ernment in the pre+ious year% to
the account of an employee under a pension scheme referred to in section
78..?12
23
2! per,uisite includes
24
i! the +alue of rent#free accommodation pro+ided to the assessee by his
employer1
ii! the +alue of any concession in the matter of rent
2'
respectin5 any
accommodation pro+ided to the assessee by his employer1
iii! the +alue of any benefit or amenity 5ranted or pro+ided free of cost or at
concessional rate in any of the followin5 cases
a! by a company to an employee who is a director thereof1
b! by a company to an employee bein5 a person who has a substantial
interest in the company1
c! by any employer includin5 a company! to an employee to whom the
pro+isions of para5raphs a! and b! of this sub#clause do not apply and
whose income
26
-under the head *alaries whether due from% or paid or
allowed by% one or more employers!% e$clusi+e of the +alue of all
benefits or amenities not pro+ided for by way of monetary payment%
e$ceeds
27
-fifty2 thousand rupees:2
2&
-Provided that nothin5 contained in this sub#clause shall apply to the
+alue of any benefit pro+ided by a company free of cost or at a concessional
rate to its employees by way of allotment of shares% debentures or warrants
directly or indirectly under
)8
-any Employees *toc9 <ption Plan or *cheme
of the company offered to such employees in accordance with the
5uidelines issued in this behalf by the .entral ;o+ernment2
)1
(2
)2
-Explanation.>or the remo+al of doubts% it is hereby declared that the use
of any +ehicle pro+ided by a company or an employer for :ourney by the
assessee from his residence to his office or other place of wor9% or from
such office or place to his residence% shall not be re5arded as a benefit or
amenity 5ranted or pro+ided to him free of cost or at concessional rate for
the purposes of this sub#clause12
iiia!
))
-***2
i%! any sum paid by the employer in respect of any obli5ation which% but for
such payment% would ha+e been payable by the assessee1
%! any sum payable by the employer% whether directly or throu5h a fund% other
than a reco5nised pro+ident fund or an appro+ed superannuation fund
)3
-or
a ?eposit#lin9ed Insurance >und established under section ); of the .oal
Bines Pro+ident >und and Biscellaneous Pro+isions "ct% 1&37 3' of
1&37!% or% as the case may be% section '. of the Employees Pro+ident >unds
and Biscellaneous Pro+isions "ct% 1&42 1& of 1&42!2% to effect an
assurance on the life of the assessee or to effect a contract for an annuity1
and
)4
-*+i( the %alue o! an+ other !ringe bene!it or amenit+
)'
*excluding the !ringe
bene!its chargeable to tax under 'hapter B33-C(
)'
as ma+ be prescribed
)6
A2
)7
-Provided that nothin5 in this clause shall apply to%
i! the +alue of any medical treatment pro+ided to an employee or any member
of his family in any hospital maintained by the employer1
)&
-ii! any sum paid by the employer in respect of any e$penditure actually
incurred by the employee on his medical treatment or treatment of any
member of his family
a! in any hospital maintained by the ;o+ernment or any local authority or
any other hospital appro+ed
38
by the ;o+ernment for the purposes of
medical treatment of its employees1
b! in respect of the prescribed diseases
31
or ailments% in any hospital
appro+ed by the .hief .ommissioner ha+in5 re5ard to the prescribed
5uidelines
32
:
Provided that% in a case fallin5 in sub#clause b!% the employee shall attach
with his return of income a certificate from the hospital specifyin5 the
disease or ailment for which medical treatment was re,uired and the receipt
for the amount paid to the hospital12
iii! any portion of the premium paid by an employer in relation to an employee%
to effect or to 9eep in force an insurance on the health of such employee
under any scheme appro+ed by the .entral ;o+ernment
32a
or the 3nsurance
6egulator+ and 1e%elopment Authorit+ established under sub-section *1( o!
section 3 o! the 3nsurance 6egulator+ and 1e%elopment Authorit+ Act)
1### *41 o! 1###()] for the purposes of clause ib! of sub#section 1! of
section )'1
i%! any sum paid by the employer in respect of any premium paid by the
employee to effect or to 9eep in force an insurance on his health or the
health of any member of his family under any scheme appro+ed by the
.entral ;o+ernment
32a
or the 3nsurance 6egulator+ and 1e%elopment
Authorit+ established under sub-section *1( o! section 3 o! the 3nsurance
6egulator+ and 1e%elopment Authorit+ Act) 1### *41 o! 1###()] for the
purposes of section 78?1
%! any sum paid by the employer in respect of any e$penditure actually
incurred by the employee on his medical treatment or treatment of any
member of his family -other than the treatment referred to in clauses i! and
ii!21 so% howe+er% that such sum does not e$ceed
3)
-fifteen2 thousand rupees
in the pre+ious year1
%i! any e$penditure incurred by the employer on
1! medical treatment of the employee% or any member of the family of
such employee% outside India1
2! tra+el
33
-and2 stay abroad of the employee or any member of the family
of such employee for medical treatment1
3! tra+el and stay abroad of one attendant who accompanies the patient in
connection with such treatment%
34
-sub:ect to the condition that
A! the e$penditure on medical treatment and stay abroad shall be e$cluded
from per,uisite only to the e$tent permitted by the Reser+e Ban9 of
India1 and
B! the e$penditure on tra+el shall be e$cluded from per,uisite only in the
case of an employee whose 5ross total income% as computed before
includin5 therein the said e$penditure% does not e$ceed two la9h
rupees12
%ii! any sum paid by the employer in respect of any e$penditure actually
incurred by the employee for any of the purposes specified in clause %i!
sub:ect to the conditions specified in or under that clause :
3'
-Provided further that for the assessment year be5innin5 on the 1st day of
"pril% 2882% nothin5 contained in this clause shall apply to any employee
whose income under the head *alaries whether due from% or paid or allowed
by% one or more employers! e$clusi+e of the +alue of all per,uisites not
pro+ided for by way of monetary payment% does not e$ceed one la9h rupees(2
Explanation.>or the purposes of clause 2!%
i! hospital includes a dispensary or a clinic
36
-or a nursin5 home21
ii! family% in relation to an indi+idual% shall ha+e the same meanin5 as in
clause 5! of section 181 and
iii! 5ross total income shall ha+e the same meanin5 as in clause 5! of section
78B12
37
-* * *2
3&
3! profits
48
in lieu of salary includes
i! the amount of any compensation
48
due to or recei+ed by an assessee from
his employer or former employer at or in connection with the termination of
his employment or the modification of the terms and conditions relatin5
thereto1
ii! any payment other than any payment referred to in clause 1$!
41
-% clause
1$A!2
42
-% clause 1$B!2% clause 11!%
4)
-clause 12!
43
-% clause 13!2 or
clause 13A!2 of section 18!% due to or recei+ed by an assessee from an
employer or a former employer or from a pro+ident or other fund
44
-* * *2%
to the e$tent to which it does not consist of contributions by the assessee or
4'
-interest on such contributions or any sum recei+ed under a Deyman
insurance policy includin5 the sum allocated by way of bonus on such
policy(
Explanation.>or the purposes of this sub#clause% the e$pression Deyman
insurance policy shall ha+e the meanin5 assi5ned to it in clause 1$1! of
section 1812
46
-iii! any amount due to or recei+ed% whether in lump sum or otherwise% by any
assessee from any person
A! before his :oinin5 any employment with that person1 or
B! after cessation of his employment with that person(2
'.3ncome !rom house propert+
Income from house property.
4&
22.
'8
The annual +alue of property consistin5 of any buildin5s
'1
or lands appurtenant
thereto of which the assessee is the owner
'1
% other than such portions of such property as
he may occupy
'1
for the purposes of any business or profession carried on by him the
profits of which are char5eable to income#ta$% shall be char5eable to income#ta$ under
the head Income from house property
'2
-Annual value how determined.
23. 1! >or the purposes of section 22% the annual +alue of any property shall be deemed
to be
a! the sum for which the property mi5ht reasonably be e$pected to let from year to
year1 or
b! where the property or any part of the property is let and the actual rent recei+ed
or recei+able
')
by the owner in respect thereof is in e$cess of the sum referred
to in clause a!% the amount so recei+ed or recei+able1 or
c! where the property or any part of the property is let and was +acant durin5 the
whole or any part of the pre+ious year and owin5 to such +acancy the actual
rent recei+ed or recei+able by the owner in respect thereof is less than the sum
referred to in clause a!% the amount so recei+ed or recei+able :
Provided that the ta$es le+ied
'3
by any local authority in respect of the property shall be
deducted irrespecti+e of the pre+ious year in which the liability to pay such ta$es was
incurred by the owner accordin5 to the method of accountin5 re5ularly employed by him!
in determinin5 the annual +alue of the property of that pre+ious year in which such ta$es
are actually paid by him(
Explanation.>or the purposes of clause b! or clause c! of this sub#section% the amount of
actual rent recei+ed or recei+able by the owner shall not include% sub:ect to such rules
'4
as
may be made in this behalf% the amount of rent which the owner cannot realise(
2! Fhere the property consists of a house or part of a house which
a! is in the occupation of the owner for the purposes of his own residence1 or
b! cannot actually be occupied by the owner by reason of the fact that owin5 to his
employment% business or profession carried on at any other place% he has to
reside at that other place in a buildin5 not belon5in5 to him%
the annual +alue of such house or part of the house shall be ta9en to be nil(
)! The pro+isions of sub#section 2! shall not apply if
a! the house or part of the house is actually let durin5 the whole or any part of the
pre+ious year1 or
b! any other benefit therefrom is deri+ed by the owner(
3! Fhere the property referred to in sub#section 2! consists of more than one house
a! the pro+isions of that sub#section shall apply only in respect of one of such
houses% which the assessee may% at his option% specify in this behalf1
b! the annual +alue of the house or houses% other than the house in respect of
which the assessee has e$ercised an option under clause a!% shall be
determined under sub#section 1! as if such house or houses had been let(2
''
-Deductions from income from house property.
24. Income char5eable under the head Income from house property shall be computed
after ma9in5 the followin5 deductions% namely:
a! a sum e,ual to thirty per cent of the annual +alue1
b! where the property has been ac,uired% constructed% repaired% renewed or
reconstructed with borrowed capital% the amount of any interest payable on
such capital:
Provided that in respect of property referred to in sub#section 2! of section 2)%
the amount of deduction shall not e$ceed thirty thousand rupees :
Provided further that where the property referred to in the first pro+iso is
ac,uired or constructed with capital borrowed on or after the 1st day of "pril%
1&&& and such ac,uisition or construction is completed
'6
-within three years
from the end of the financial year in which capital was borrowed2% the amount
of deduction under this clause shall not e$ceed one la9h fifty thousand rupees(
Explanation.Fhere the property has been ac,uired or constructed with
borrowed capital% the interest% if any% payable on such capital borrowed for the
period prior to the pre+ious year in which the property has been ac,uired or
constructed% as reduced by any part thereof allowed as deduction under any
other pro+ision of this "ct% shall be deducted under this clause in e,ual
instalments for the said pre+ious year and for each of the four immediately
succeedin5 pre+ious years:2
'7
-Provided also that no deduction shall be made under the second pro+iso
unless the assessee furnishes a certificate% from the person to whom any interest
is payable on the capital borrowed% specifyin5 the amount of interest payable
by the assessee for the purpose of such ac,uisition or construction of the
property% or% con+ersion of the whole or any part of the capital borrowed which
remains to be repaid as a new loan(
Explanation.>or the purposes of this pro+iso% the e$pression new loan means
the whole or any part of a loan ta9en by the assessee subse,uent to the capital
borrowed% for the purpose of repayment of such capital(2
Amounts not deductible from income from house property.
25. Aotwithstandin5 anythin5 contained in section 23% any
'&
-***2 interest char5eable
under this "ct which is payable outside India not bein5 interest on a loan issued for
public subscription before the 1st day of "pril% 1&)7!% on which ta$ has not been paid or
deducted under .hapter /0II#B and in respect of which there is no person in India who
may be treated as an a5ent under section 1') shall not be deducted in computin5 the
income char5eable under the head Income from house property(
68
-Special provision for cases where unrealised rent allowed as deduction is realised
subsequently.
25A. Fhere a deduction has been made under clause x! of sub#section 1! of section 23
61
-as it stood immediately before its substitution by the >inance "ct% 28812 in the
assessment for any year in respect of rent from property let to a tenant which the assessee
cannot realise and subse,uently durin5 any pre+ious year the assessee has realised any
amount in respect of such rent% the amount so realised shall be deemed to be income
char5eable under the head Income from house property and accordin5ly char5ed to
income#ta$ without ma9in5 any deduction under section 2) or section 23
62
-as it stood
immediately before its substitution by the >inance "ct% 28812! as the income of that
pre+ious year% whether the assessee is the owner of that property in that year or not(2
6)
-Unrealised rent received subsequently to be charged to income-tax.
25AA. Fhere the assessee cannot realise rent from a property let to a tenant and
subse,uently the assessee has realised any amount in respect of such rent% the amount so
realised shall be deemed to be income char5eable under the head Income from house
property and accordin5ly char5ed to income#ta$ as the income of that pre+ious year in
which such rent is realised whether or not the assessee is the owner of that property in
that pre+ious year(2
63
-Special provision for arrears of rent received.
25B. Fhere the assessee
a! is the owner of any property consistin5 of any buildin5s or lands appurtenant
thereto which has been let to a tenant1 and
b! has recei+ed any amount% by way of arrears of rent from such property% not
char5ed to income#ta$ for any pre+ious year%
the amount so recei+ed% after deductin5
64
-a sum e,ual to thirty per cent of such amount2%
shall be deemed to be the income char5eable under the head Income from house property
and accordin5ly char5ed to income#ta$ as the income of that pre+ious year in which such
rent is recei+ed% whether the assessee is the owner of that property in that year or not(2
Property owned by co-owners.
6'
26.
66
Fhere property consistin5 of buildin5s or buildin5s and lands appurtenant thereto
is owned by two or more persons and their respecti+e shares are definite and
ascertainable% such persons shall not in respect of such property be assessed as an
association of persons% but the share of each such person in the income from the property
as computed in accordance with sections 22 to 24 shall be included in his total income(
67
-Explanation.>or the purposes of this section% in applyin5 the pro+isions of sub#section
2! of section 2) for computin5 the share of each such person as is referred to in this
section% such share shall be computed% as if each such person is indi+idually entitled to
the relief pro+ided in that sub#section(2
Owner of house property, annual charge, etc., defined.
6&
27. >or the purposes of sections 22 to 2'
i! an indi+idual who transfers otherwise than for ade,uate consideration any
house property to his or her spouse% not bein5 a transfer in connection with an
a5reement to li+e apart% or to a minor child not bein5 a married dau5hter% shall
be deemed to be the owner of the house property so transferred1
ii! the holder of an impartible estate shall be deemed to be the indi+idual owner of
all the properties comprised in the estate 1
78
-iii! a member of a co#operati+e society% company or other association of persons to
whom a buildin5 or part thereof is allotted or leased under a house buildin5
scheme of the society% company or association% as the case may be% shall be
deemed to be the owner of that buildin5 or part thereof 1
iiia! a person who is allowed to ta9e or retain possession of any buildin5 or part
thereof in part performance of a contract of the nature referred to in
71
section
4)" of the Transfer of Property "ct% 1772 3 of 1772!% shall be deemed to be
the owner of that buildin5 or part thereof 1
iiib! a person who ac,uires any ri5hts e$cludin5 any ri5hts by way of a lease from
month to month or for a period not e$ceedin5 one year! in or with respect to
any buildin5 or part thereof% by +irtue of any such transaction as is referred to
in clause !! of section 2'&E"% shall be deemed to be the owner of that buildin5
or part thereof12
i%!
72
-***2
%!
72
-***2
%i! ta$es le+ied by a local authority in respect of any property shall be deemed to
include ser+ice ta$es le+ied by the local authority in respect of the property(
1.Dro!its and gains o! business or pro!ession
Profits and gains of business or profession.
7)
28.
73
The followin5 income shall be char5eable to income#ta$ under the head Profits and
5ains of business or profession%
i! the profits and 5ains
74
of any business or profession
74
which was carried on by
the assessee at any time durin5 the pre+ious year 1
ii! any compensation
74
or other payment due to
74
or recei+ed by
74
%
a! any person% by whate+er name called% mana5in5 the whole or substantially
the whole of the affairs of an Indian company% at or in connection with the
termination of his mana5ement or the modification of the terms and
conditions relatin5 thereto1
b! any person% by whate+er name called% mana5in5 the whole or substantially
the whole of the affairs in India of any other company% at or in connection
with the termination of his office or the modification of the terms and
conditions relatin5 thereto 1
c! any person% by whate+er name called% holdin5 an a5ency in India for any
part of the acti+ities relatin5 to the business of any other person% at or in
connection with the termination of the a5ency or the modification of the
terms and conditions relatin5 thereto 1
7'
-*d! any person% for or in connection with the +estin5 in the ;o+ernment% or in
any corporation owned or controlled by the ;o+ernment% under any law for
the time bein5 in force% of the mana5ement of any property or business 12
iii! income deri+ed by a trade% professional or similar
76
association from specific
ser+ices
76
performed for its members 1
77
-iiia! profits on sale of a licence 5ranted under the Imports .ontrol! <rder% 1&44%
made under the Imports and E$ports .ontrol! "ct% 1&36 17 of 1&36! 12
7&
-iiib! cash assistance by whate+er name called! recei+ed or recei+able by any person
a5ainst e$ports under any scheme of the ;o+ernment of India 12
&8
-iiic! any duty of customs or e$cise re#paid or re#payable as drawbac9 to any person
a5ainst e$ports under the .ustoms and .entral E$cise ?uties ?rawbac9 Rules%
1&61 12
&1
*iiid( an+ pro!it on the trans!er o! the 1ut+ Entitlement Dass Boo. <cheme) being the
1ut+ 6emission <cheme under the export and import polic+ !ormulated and
announced under section 5 o! the 0oreign 7rade *1e%elopment and
6egulation( Act) 1##2 *22 o! 1##2(-]
&2
*iiie( an+ pro!it on the trans!er o! the 1ut+ 0ree 6eplenishment 'erti!icate) being the
1ut+ 6emission <cheme under the export and import polic+ !ormulated and
announced under section 5 o! the 0oreign 7rade *1e%elopment and
6egulation( Act) 1##2 *22 o! 1##2(-]
&)
-i%! the +alue of any benefit or per,uisite% whether con+ertible into money or not%
arisin5 from business or the e$ercise of a profession 12
&3
-%! any interest% salary% bonus% commission or remuneration% by whate+er name
called% due to% or recei+ed by% a partner of a firm from such firm :
Provided that where any interest% salary% bonus% commission or remuneration%
by whate+er name called% or any part thereof has not been allowed to be
deducted under clause b! of section 38% the income under this clause shall be
ad:usted to the e$tent of the amount not so allowed to be deducted 12
&4
-%a! any sum% whether recei+ed or recei+able% in cash or 9ind% under an a5reement
for
a! not carryin5 out any acti+ity in relation to any business1 or
b! not sharin5 any 9now#how% patent% copyri5ht% trade#mar9% licence% franchise
or any other business or commercial ri5ht of similar nature or information
or techni,ue li9ely to assist in the manufacture or processin5 of 5oods or
pro+ision for ser+ices:
Provided that sub#clause a! shall not apply to
i! any sum% whether recei+ed or recei+able% in cash or 9ind% on account of
transfer of the ri5ht to manufacture% produce or process any article or thin5
or ri5ht to carry on any business% which is char5eable under the head
.apital 5ains1
ii! any sum recei+ed as compensation% from the multilateral fund of the
Bontreal Protocol on *ubstances that ?eplete the <=one layer under the
Enited Aations En+ironment Pro5ramme% in accordance with the terms of
a5reement entered into with the ;o+ernment of India(
i! a5reement includes any arran5ement or understandin5 or action in concert%
A! whether or not such arran5ement% understandin5 or action is formal or
in writin51 or
B! whether or not such arran5ement% understandin5 or action is intended to
be enforceable by le5al proceedin5s1
ii! ser+ice means ser+ice of any description which is made a+ailable to
potential users and includes the pro+ision of ser+ices in connection with
business of any industrial or commercial nature such as accountin5%
ban9in5% communication% con+eyin5 of news or information% ad+ertisin5%
entertainment% amusement% education% financin5% insurance% chit funds% real
estate% construction% transport% stora5e% processin5% supply of electrical or
other ener5y% boardin5 and lod5in512
&'
-%i! any sum recei+ed under a Deyman insurance policy includin5 the sum allocated
by way of bonus on such policy(
Explanation.>or the purposes of this clause% the e$pression Deyman insurance
policy shall ha+e the meanin5 assi5ned to it in clause 1$1! of section 18(2
Explanation 1.-/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#.2
Explanation 2.Fhere speculati+e transactions carried on by an assessee are of such a
nature as to constitute a business% the business hereinafter referred to as speculation
business! shall be deemed to be distinct and separate from any other business
Income from profits and gains of business or profession, how computed.
29.
&6
The income referred to in section 27 shall be computed in accordance with the
pro+isions contained in sections )8 to
&7
-3)?2(
Rent, rates, taxes, repairs and insurance for buildings.
&6
30. In respect of rent% rates% ta$es% repairs and insurance for premises% used for the
purposes of the business or profession% the followin5 deductions shall be allowed
a! where the premises are occupied by the assessee
i! as a tenant% the rent paid for such premises 1 and further if he has
underta9en to bear the cost of repairs to the premises% the amount paid on
account of such repairs 1
ii! otherwise than as a tenant% the amount paid by him on account of current
repairs
&&
to the premises 1
b! any sums paid on account of land re+enue% local rates or municipal ta$es 1
c! the amount of any premium paid in respect of insurance a5ainst ris9 of dama5e
or destruction of the premises(
1
-Explanation.>or the remo+al of doubts% it is hereby declared that the amount paid on
account of the cost of repairs referred to in sub#clause i!% and the amount paid on account
of current repairs referred to in sub#clause ii!% of clause a!% shall not include any
e$penditure in the nature of capital e$penditure(2
Repairs and insurance of machinery, plant and furniture.
2
31.
)
In respect of repairs and insurance of machinery% plant or furniture used for the
purposes of the business or profession% the followin5 deductions shall be allowed
i! the amount paid on account of current repairs
3
thereto 1
ii! the amount of any premium paid in respect of insurance a5ainst ris9 of dama5e
or destruction thereof(
4
-Explanation.>or the remo+al of doubts% it is hereby declared that the amount paid on
account of current repairs shall not include any e$penditure in the nature of capital
e$penditure(2
Depreciation.
'
32. 1!
6
-In respect of depreciation of
i! buildin5s
7
% machinery
7
% plant or furniture% bein5 tan5ible assets1
ii! 9now#how% patents% copyri5hts% trade mar9s% licences% franchises or any other
business or commercial ri5hts of similar nature% bein5 intan5ible assets
ac,uired on or after the 1st day of "pril% 1&&7%
owned
7
% wholly or partly% by the assessee
7
and used for the purposes of the business
7
or
profession% the followin5 deductions shall be allowed2
&
-i! in the case of assets of an underta9in5 en5a5ed in 5eneration or 5eneration and
distribution of power% such percenta5e on the actual cost thereof to the assessee
as may be prescribed
18
12
ii!
11
-in the case of any bloc9 of assets% such percenta5e on the written down +alue
thereof as may be prescribed
12
:2
1)
-***2
13
-Provided
14
-***2 that no deduction shall be allowed under this clause in
respect of
a! any motor car manufactured outside India% where such motor car is ac,uired
by the assessee after the 27th day of >ebruary% 1&64
1'
-but before the 1st
day of "pril% 28812% unless it is used
i! in a business of runnin5 it on hire for tourists 1 or
ii! outside India in his business or profession in another country 1 and
b! any machinery or plant if the actual cost thereof is allowed as a deduction in
one or more years under an a5reement entered into by the .entral
;o+ernment under section 32 :2
16
-Provided further that where an asset referred to in clause i! or clause ii!
17
-or clause iia!2% as the case may be% is ac,uired by the assessee durin5 the
pre+ious year and is put to use for the purposes of business or profession for a
period of less than one hundred and ei5hty days in that pre+ious year% the
deduction under this sub#section in respect of such asset shall be restricted to
fifty per cent of the amount calculated at the percenta5e prescribed for an asset
under clause i! or clause ii!
1&
-or clause iia!2% as the case may be :2
28
-Provided also that where an asset bein5 commercial +ehicle is ac,uired by
the assessee on or after the 1st day of <ctober% 1&&7 but before the 1st day of
"pril% 1&&& and is put to use before the 1st day of "pril% 1&&& for the purposes
of business or profession% the deduction in respect of such asset shall be
allowed on such percenta5e on the written down +alue thereof as may be
prescribed(
Explanation.>or the purposes of this pro+iso%
a! the e$pression commercial +ehicle means hea+y 5oods +ehicle% hea+y
passen5er motor +ehicle% li5ht motor +ehicle% medium 5oods +ehicle and
medium passen5er motor +ehicle but does not include ma$i#cab% motor#cab%
tractor and road#roller1
b! the e$pressions hea+y 5oods +ehicle
21
% hea+y passen5er motor +ehicle
22
%
li5ht motor +ehicle
22
% medium 5oods +ehicle
22
% medium passen5er motor
+ehicle
22
% ma$i#cab
2)
% motor#cab
2)
% tractor
22
and road roller shall ha+e the
meanin5s respecti+ely as assi5ned to them in section 2 of the Botor
0ehicles "ct% 1&77 4& of 1&77!:2
23
-Provided also that% in respect of the pre+ious year rele+ant to the assessment
year commencin5 on the 1st day of "pril% 1&&1% the deduction in relation to any
bloc9 of assets under this clause shall% in the case of a company% be restricted to
se+enty#fi+e per cent of the amount calculated at the percenta5e% on the written
down +alue of such assets% prescribed under this "ct immediately before the
commencement of the Ta$ation Gaws "mendment! "ct% 1&&1:2
24
-Provided also that the a55re5ate deduction% in respect of depreciation of
buildin5s% machinery% plant or furniture% bein5 tan5ible assets or 9now#how%
patents% copyri5hts% trademar9s% licences% franchises or any other business or
commercial ri5hts of similar nature% bein5 intan5ible assets allowable to the
predecessor and the successor in the case of succession referred to in clause
xiii! and clause xi%! of section 36 or section 168 or to the amal5amatin5
company and the amal5amated company in the case of amal5amation% or to the
demer5ed company and the resultin5 company in the case of demer5er% as the
case may be% shall not e$ceed in any pre+ious year the deduction calculated at
the prescribed rates as if the succession or the amal5amation or the demer5er%
as the case may be% had not ta9en place% and such deduction shall be
apportioned between the predecessor and the successor% or the amal5amatin5
company and the amal5amated company% or the demer5ed company and the
resultin5 company% as the case may be% in the ratio of the number of days for
which the assets were used by them(2
2'
-Explanation 1.Fhere the business or profession of the assessee is carried on
in a buildin5 not owned by him but in respect of which the assessee holds a
lease or other ri5ht of occupancy and any capital e$penditure is incurred by the
assessee for the purposes of the business or profession on the construction of
any structure or doin5 of any wor9 in or in relation to% and by way of
reno+ation or e$tension of% or impro+ement to% the buildin5% then% the
pro+isions of this clause shall apply as if the said structure or wor9 is a buildin5
owned by the assessee(
Explanation 2.>or the purposes of this
26
-sub#section2 written down +alue of the
bloc9 of assets shall ha+e the same meanin5 as in clause *c! of sub#section 6!
of section 3)(2
27
-Explanation 3.>or the purposes of this sub#section% the e$pressions assets and
bloc9 of assets shall mean
a! tan5ible assets% bein5 buildin5s% machinery% plant or furniture1
b! intan5ible assets% bein5 9now#how% patents% copyri5hts% trade mar9s%
licences% franchises or any other business or commercial ri5hts of similar
nature(
Explanation 4.>or the purposes of this sub#section% the e$pression 9now#how
means any industrial information or techni,ue li9ely to assist in the
manufacture or processin5 of 5oods or in the wor9in5 of a mine% oil#well or
other sources of mineral deposits includin5 searchin5 for disco+ery or testin5
of deposits for the winnin5 of access thereto!(
2&
-Explanation 5.>or the remo+al of doubts% it is hereby declared that the
pro+isions of this sub#section shall apply whether or not the assessee has
claimed the deduction in respect of depreciation in computin5 his total
income12
)8
-*iia( in the case o! an+ new machiner+ or plant *other than ships and aircra!t()
which has been ac2uired and installed a!ter the 31st da+ o! :arch) 2$$5) b+ an
assessee engaged in the business o! manu!acture or production o! an+ article
or thing) a !urther sum e2ual to twent+ per cent o! the actual cost o! such
machiner+ or plant shall be allowed as deduction under clause *ii( A
Provided that no deduction shall be allowed in respect o!
*"( an+ machiner+ or plant which) be!ore its installation b+ the assessee) was
used either within or outside 3ndia b+ an+ other person- or
*B( an+ machiner+ or plant installed in an+ o!!ice premises or an+ residential
accommodation) including accommodation in the nature o! a guest-house-
or
*.( an+ o!!ice appliances or road transport %ehicles- or
*?( an+ machiner+ or plant) the whole o! the actual cost o! which is allowed as
a deduction *whether b+ wa+ o! depreciation or otherwise( in computing
the income chargeable under the head Dro!its and gains o! business or
pro!ession o! an+ one pre%ious +ear-2
)1
-iii! in the case of any buildin5% machinery% plant or furniture in respect of which
depreciation is claimed and allowed under clause i! and which is sold%
discarded% demolished or destroyed in the pre+ious year other than the
pre+ious year in which it is first brou5ht into use!% the amount by which the
moneys payable in respect of such buildin5% machinery% plant or furniture%
to5ether with the amount of scrap +alue% if any% fall short of the written down
+alue thereof :
Provided that such deficiency is actually written off in the boo9s of the
assessee(
1! moneys payable in respect of any buildin5% machinery% plant or furniture
includes
a! any insurance% sal+a5e or compensation moneys payable in respect
thereof1
b! where the buildin5% machinery% plant or furniture is sold% the price for
which it is sold%
so% howe+er% that where the actual cost of a motor car is% in accordance with
the pro+iso to clause 1! of section 3)% ta9en to be twenty#fi+e thousand
rupees% the moneys payable in respect of such motor car shall be ta9en to be
a sum which bears to the amount for which the motor car is sold or% as the
case may be% the amount of any insurance% sal+a5e or compensation moneys
payable in respect thereof includin5 the amount of scrap +alue% if any! the
same proportion as the amount of twenty#fi+e thousand rupees bears to the
actual cost of the motor car to the assessee as it would ha+e been computed
before applyin5 the said pro+iso1
2! sold includes a transfer by way of e$chan5e or a compulsory ac,uisition
under any law for the time bein5 in force but does not include a transfer% in
a scheme of amal5amation% of any asset by the amal5amatin5 company to
the amal5amated company where the amal5amated company is
)2
-an Indian
company or in a scheme of amal5amation of a ban9in5 company% as
referred to in clause c! of section 4 of the Ban9in5 Re5ulation "ct% 1&3&
18 of 1&3&! with a ban9in5 institution as referred to in sub#section 14! of
section 34 of the said "ct% sanctioned and brou5ht into force by the .entral
;o+ernment under sub#section 6! of section 34 of that "ct
))
% of any asset
by the ban9in5 company to the ban9in5 institution(22
i%!
)3
-***2
%!
)4
-***2
%i!
)'
-***2
1"!
)6
-***2
)7
-2! Fhere% in the assessment of the assessee% full effect cannot be 5i+en to any
allowance under sub#section 1! in any pre+ious year% owin5 to there bein5 no profits or
5ains char5eable for that pre+ious year
)&
% or owin5 to the profits or 5ains char5eable
bein5 less than the allowance% then% sub:ect to the pro+isions of sub#section 2! of section
62 and sub#section )! of section 6)% the allowance or the part of the allowance to which
effect has not been 5i+en% as the case may be% shall be added to the amount of the
allowance for depreciation for the followin5 pre+ious year and deemed to be part of that
allowance% or if there is no such allowance for that pre+ious year% be deemed to be the
allowance for that pre+ious year% and so on for the succeedin5 pre+ious years(2
38
-Investment allowance.
31
32
32A. 1! In respect of a ship or an aircraft or machinery or plant specified in sub#section
2!% which is owned by the assessee and is wholly used for the purposes of the business
3)
carried on by him% there shall% in accordance with and sub:ect to the pro+isions of this
section% be allowed a deduction% in respect of the pre+ious year in which the ship or
aircraft was ac,uired or the machinery or plant was installed
3)
or% if the ship% aircraft%
machinery or plant is first put to use in the immediately succeedin5 pre+ious year% then%
in respect of that pre+ious year% of a sum by way of in+estment allowance e,ual to
twenty#fi+e per cent of the actual cost of the ship% aircraft% machinery or plant to the
assessee :
33
-Provided that in respect of a ship or an aircraft or machinery or plant specified in sub#
section 7B!% this sub#section shall ha+e effect as if for the words twenty#fi+e per cent%
the words twenty per cent had been substituted :2
Provided
33
-further2 that no deduction shall be allowed under this section in respect of
a! any machinery or plant installed in any office premises or any residential
accommodation% includin5 any accommodation in the nature of a 5uest house 1
b! any office appliances or road transport +ehicles 1
c! any ship% machinery or plant in respect of which the deduction by way of
de+elopment rebate is allowable under section )) 1 and
d! any machinery or plant% the whole of the actual cost of which is allowed as a
deduction whether by way of depreciation or otherwise! in computin5 the
income char5eable under the head Profits and 5ains of business or profession of
any one pre+ious year(
34
-Explanation.>or the purposes of this sub#section% actual cost means the actual cost of
the ship% aircraft% machinery or plant to the assessee as reduced by that part of such cost
which has been met out of the amount released to the assessee under sub#section '! of
section )2"B(2
2! The ship or aircraft or machinery or plant referred to in sub#section 1! shall be the
followin5% namely :
a! a new ship or new aircraft ac,uired after the )1st day of Barch% 1&6'% by an
assessee en5a5ed in the business of operation of ships or aircraft 1
b! any new machinery or plant installed after the )1st day of Barch% 1&6'%
i! for the purposes of business of 5eneration or distribution of electricity or
any other form of power 1 or
3'
-ii! in a small#scale industrial underta9in5
36
for the purposes of business of
manufacture
36
or production
36
of any article or thin5
36
1 or
iii! in any other industrial underta9in5
36
for the purposes of business of
construction% manufacture
36
or production
36
of any article or thin5% not bein5
an article or thin5
36
specified in the list in the Ele+enth *chedule :2
37
-Provided that nothin5 contained in clauses a! and b! shall apply in relation
to%
i! a new ship or new aircraft ac,uired% or
ii! any new machinery or plant installed%
after the )1st day of Barch% 1&76 but before the 1st day of "pril% 1&77% unless
such ship or aircraft is ac,uired or such machinery or plant is installed in the
circumstances specified in clause a! of sub#section 7B! and the assessee
furnishes e+idence to the satisfaction of the "ssessin5 <fficer as specified in
that clause 12
3&
-c! any new machinery or plant installed after the )1st day of Barch% 1&7)% but
before the
48
-1st day of "pril% 1&762% for the purposes of business of repairs to
ocean#5oin5 +essels or other powered craft if the business is carried on by an
Indian company and the business so carried on is for the time bein5 appro+ed
41
for the purposes of this clause by the .entral ;o+ernment(2
Explanation.>or the purposes of this sub#section and
42
-sub#sections 2B!
4)
-% 2.!2 and
3!2%
43
-1!a! new ship or new aircraft includes a ship or aircraft which before the date of
ac,uisition by the assessee was used by any other person% if it was not at any
time pre+ious to the date of such ac,uisition owned by any person resident in
India 1
b! new machinery or plant includes machinery or plant which before its
installation by the assessee was used outside India by any other person% if the
followin5 conditions are fulfilled% namely :
i! such machinery or plant was not% at any time pre+ious to the date of such
installation by the assessee% used in India 1
ii! such machinery or plant is imported into India from any country outside
India 1 and
iii! no deduction on account of depreciation in respect of such machinery or
plant has been allowed or is allowable under the pro+isions of the Indian
Income#ta$ "ct% 1&22 11 of 1&22!% or this "ct in computin5 the total
income of any person for any period prior to the date of the installation of
the machinery or plant by the assessee%2
2! an industrial underta9in5 shall be deemed to be a small#scale industrial
underta9in5% if the a55re5ate +alue of the machinery and plant other than tools%
:i5s% dies and moulds! installed% as on the last day of the pre+ious year% for the
purposes of the business of the underta9in5
44
-does not e$ceed%
4'
-i! in a case where the pre+ious year ends before the 1st day of "u5ust% 1&78%
ten la9h rupees 1
ii! in a case where the pre+ious year ends after the )1st day of @uly% 1&78% but
before the 17th day of Barch% 1&74% twenty la9h rupees1 and
iii! in a case where the pre+ious year ends after the 16th day of Barch% 1&74%
thirty#fi+e la9h rupees%22
and for this purpose the +alue of any machinery or plant shall be%
a! in the case of any machinery or plant owned by the assessee% the actual cost
thereof to the assessee 1 and
b! in the case of any machinery or plant hired by the assessee% the actual cost
thereof as in the case of the owner of such machinery or plant(
46
-2"! The deduction under sub#section 1! shall not be denied in respect of any
machinery or plant installed and used mainly for the purposes of business of construction%
manufacture or production of any article or thin5% not bein5 an article or thin5 specified
in the list in the Ele+enth *chedule% by reason only that such machinery or plant is also
used for the purposes of business of construction% manufacture or production of any
article or thin5 specified in the said list(2
46a
-2B! Fhere any new machinery or plant is installed after the )8th day of @une% 1&66%
but before the 1st day of "pril%
47
-1&762% for the purposes of business of manufacture or
production of any article or thin5 and such article or thin5
a! is manufactured or produced by usin5 any technolo5y includin5 any process!
or other 9now#how de+eloped in% or
b! is an article or thin5 in+ented in%
a laboratory owned or financed by the ;o+ernment% or a laboratory owned by a
public sector company or a Eni+ersity or by an institution reco5nised in this behalf
by the prescribed authority%
4&
the pro+isions of sub#section 1! shall ha+e effect in relation to such machinery or plant
as if for the words twenty#fi+e per cent% the words thirty#fi+e per cent had been
substituted% if the followin5 conditions are fulfilled% namely :
i! the ri5ht to use such technolo5y includin5 any process! or other 9now#how or
to manufacture or produce such article or thin5 has been ac,uired from the
owner of such laboratory or any person deri+in5 title from such owner 1
ii! the assessee furnishes% alon5 with his return of income for the assessment year
for which the deduction is claimed% a certificate from the prescribed authority
4&
to the effect that such article or thin5 is manufactured or produced by usin5
such technolo5y includin5 any process! or other 9now#how de+eloped in such
laboratory or is an article or thin5 in+ented in such laboratory 1 and
iii! the machinery or plant is not used for the purpose of business of manufacture or
production of any article or thin5 specified in the list in the Ele+enth *chedule(
Explanation(>or the purposes of this sub#section%
a! laboratory financed by the ;o+ernment means a laboratory owned by any body
-includin5 a society re5istered under the *ocieties Re5istration "ct% 17'8 21 of
17'8!2 and financed wholly or mainly by the ;o+ernment1
b!
'8
-***2
c! Eni+ersity means a Eni+ersity established or incorporated by or under a
.entral% *tate or Pro+incial "ct and includes an institution declared under
section ) of the Eni+ersity ;rants .ommission "ct% 1&4' ) of 1&4'! to be a
Eni+ersity for the purposes of that "ct(2
'1
-2.! Fhere any new machinery or plant% bein5 machinery or plant which would assist
in control of pollution or protection of en+ironment and which has been notified
'2
in this
behalf by the .entral ;o+ernment in the <fficial ;a=ette% is installed after the )1st day of
Bay% 1&7)
')
-but before the 1st day of "pril% 1&762% in any industrial underta9in5 referred
to in sub#clause i! or sub#clause ii! or sub#clause iii! of clause b! of sub#section 2!%
the pro+isions of sub#section 1! shall ha+e effect in relation to such machinery or plant
as if for the words twenty#fi+e per cent% the words thirty#fi+e per cent had been
substituted(2
)! Fhere the total income of the assessee assessable for the assessment year rele+ant to
the pre+ious year in which the ship or aircraft was ac,uired or the machinery or plant was
installed% or% as the case may be% the immediately succeedin5 pre+ious year the total
income for this purpose bein5 computed after deduction of the allowances under section
)) and section ))"% but without ma9in5 any deduction under sub#section 1! of this
section or any deduction under .hapter 0I#"! is nil or is less than the full amount of the
in+estment allowance%
i! the sum to be allowed by way of in+estment allowance for that assessment year
under sub#section 1! shall be only such amount as is sufficient to reduce the
said total income to nil 1 and
ii! the amount of the in+estment allowance% to the e$tent to which it has not been
allowed as aforesaid% shall be carried forward to the followin5 assessment year%
and the in+estment allowance to be allowed for the followin5 assessment year
shall be such amount as is sufficient to reduce the total income of the assessee
assessable for that assessment year% computed in the manner aforesaid% to nil%
and the balance of the in+estment allowance% if any% still outstandin5 shall be
carried forward to the followin5 assessment year and so on% so% howe+er% that
no portion of the in+estment allowance shall be carried forward for more than
ei5ht assessment years immediately succeedin5 the assessment year rele+ant to
the pre+ious year in which the ship or aircraft was ac,uired or the machinery or
plant was installed or% as the case may be% the immediately succeedin5 pre+ious
year(
Explanation(Fhere for any assessment year% in+estment allowance is to be allowed in
accordance with the pro+isions of this sub#section in respect of any ship or aircraft
ac,uired or any machinery or plant installed in more than one pre+ious year% and the total
income of the assessee assessable for that assessment year the total income for this
purpose bein5 computed after deduction of the allowances under section )) and section
))"% but without ma9in5 any deduction under sub#section 1! of this section or any
deduction under .hapter 0I#"! is less than the a55re5ate of the amounts due to be
allowed in respect of the assets aforesaid for that assessment year% the followin5
procedure shall be followed% namely :
a! the allowance under clause ii! shall be made before any allowance under
clause i! is made1 and
b! where an allowance has to be made under clause ii! in respect of amounts
carried forward from more than one assessment year% the amount carried
forward from an earlier assessment year shall be allowed before any amount
carried forward from a later assessment year(
3! The deduction under sub#section 1! shall be allowed only if the followin5 conditions
are fulfilled% namely :
i! the particulars prescribed in this behalf ha+e been furnished by the assessee in
respect of the ship or aircraft or machinery or plant1
ii! an amount e,ual to se+enty#fi+e per cent of the in+estment allowance to be
actually allowed is debited to the profit and loss account of
'3
-any pre+ious year
in respect of which the deduction is to be allowed under sub#section )! or any
earlier pre+ious year bein5 a pre+ious year not earlier than the year in which
the ship or aircraft was ac,uired or the machinery or plant was installed or the
ship% aircraft% machinery or plant was first put to use!2 and credited to a reser+e
account to be called the In+estment "llowance Reser+e "ccount! to be utilised
a! for the purposes of ac,uirin5% before the e$piry of a period of ten years ne$t
followin5 the pre+ious year in which the ship or aircraft was ac,uired or the
machinery or plant was installed% a new ship or a new aircraft or new
machinery or plant -other than machinery or plant of the nature referred to
in clauses a!% b! and d! of the
'4
-second2 pro+iso to sub#section 1!2 for
the purposes of the business of the underta9in51 and
b! until the ac,uisition of a new ship or a new aircraft or new machinery or
plant as aforesaid% for the purposes of the business of the underta9in5 other
than for distribution by way of di+idends or profits or for remittance outside
India as profits or for the creation of any asset outside India:
Provided that this clause shall ha+e effect in respect of a ship as if for the word
se+enty#fi+e% the word fifty had been substituted(
Explanation(Fhere the amount debited to the profit and loss account and credited to the
In+estment "llowance Reser+e "ccount under this sub#section is not less than the
amount re,uired to be so credited on the basis of the amount of deduction in respect of
in+estment allowance claimed in the return made by the assessee under section 1)&% but a
hi5her deduction in respect of the in+estment allowance is admissible on the basis of the
total income as proposed to be computed by the
''
-"ssessin52 <fficer under section 13)%
the
''
-"ssessin52 <fficer shall% by notice in writin5 in this behalf% allow the assessee an
opportunity to credit within the time specified in the notice or within such further time as
the
''
-"ssessin52 <fficer may allow% a further amount to the In+estment "llowance
Reser+e "ccount out of the profits and 5ains of the pre+ious year in which such notice is
ser+ed on the assessee or of the immediately precedin5 pre+ious year% if the accounts for
that year ha+e not been made up1 and% if the assessee credits any further amount to such
account within the time aforesaid% the amount so credited shall be deemed to ha+e been
credited to the In+estment "llowance Reser+e "ccount of the pre+ious year in which the
deduction is admissible and such amount shall not be ta9en into account in determinin5
the ade,uacy of the reser+e re,uired to be created by the assessee in respect of the
pre+ious year in which such further credit is made:
Provided that such opportunity shall not be allowed by the
'6
-"ssessin52 <fficer in a case
where the difference in the total income as proposed to be computed by him and the total
income as returned by the assessee arises out of the application of the pro+iso to sub#
section 1! of section 134 or sub#section 2! of that section or the omission by the
assessee to disclose his income fully and truly(
4! "ny allowance made under this section in respect of any ship% aircraft% machinery or
plant shall be deemed to ha+e been wron5ly made for the purposes of this "ct
a! if the ship% aircraft% machinery or plant is sold or otherwise transferred by the
assessee to any person at any time before the e$piry of ei5ht years from the end
of the pre+ious year in which it was ac,uired or installed1 or
b! if at any time before the e$piry of ten years from the end of the pre+ious year in
which the ship or aircraft was ac,uired or the machinery or plant was installed%
the assessee does not utilise the amount credited to the reser+e account under
sub#section 3! for the purposes of ac,uirin5 a new ship or a new aircraft or
new machinery or plant -other than machinery or plant of the nature referred to
in clauses a!% b! and d! of the
'7
-second2 pro+iso to sub#section 1!2 for the
purposes of the business of the underta9in51 or
c! if at any time before the e$piry of the ten years aforesaid% the assessee utilises
the amount credited to the reser+e account under sub#section 3! for distribution
by way of di+idends or profits or for remittance outside India as profits or for
the creation of any assets outside India or for any other purpose which is not a
purpose of the business of the underta9in5%
and the pro+isions of sub#section 3"! of section 144 shall apply accordin5ly:
Provided that nothin5 in clause a! shall apply
i! where the ship% aircraft% machinery or plant is sold or otherwise transferred by
the assessee to the ;o+ernment% a local authority% a corporation established by a
.entral% *tate or Pro+incial "ct or a
'&
section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!1 or
ii! where the sale or transfer of the ship% aircraft% machinery or plant is made in
connection with the amal5amation or succession% referred to in sub#section '!
or sub#section 6!(
'! Fhere% in a scheme of amal5amation% the amal5amatin5 company sells or otherwise
transfers to the amal5amated company any ship% aircraft% machinery or plant% in respect of
which in+estment allowance has been allowed to the amal5amatin5 company under sub#
section 1!%
a! the amal5amated company shall continue to fulfil the conditions mentioned in
sub#section 3! in respect of the reser+e created by the amal5amatin5 company
and in respect of the period within which such ship% aircraft% machinery or plant
shall not be sold or otherwise transferred and in default of any of these
conditions% the pro+isions of sub#section 3"! of section 144 shall apply to the
amal5amated company as they would ha+e applied to the amal5amatin5
company had it committed the default1 and
b! the balance of in+estment allowance% if any% still outstandin5 to the
amal5amatin5 company in respect of such ship% aircraft% machinery or plant%
shall be allowed to the amal5amated company in accordance with the
pro+isions of sub#section )!% so% howe+er% that the total period for which the
balance of in+estment allowance shall be carried forward in the assessments of
the amal5amatin5 company and the amal5amated company shall not e$ceed the
period of ei5ht years specified in sub#section )! and the amal5amated
company shall be treated as the assessee in respect of such ship% aircraft%
machinery or plant for the purposes of this section(
6! Fhere a firm is succeeded to by a company in the business carried on by it as a result
of which the firm sells or otherwise transfers to the company any ship% aircraft%
machinery or plant% the pro+isions of clauses a! and b! of sub#section '! shall% so far as
may be% apply to the firm and the company(
Explanation.The pro+isions of this sub#section shall apply only where
i! all the property of the firm relatin5 to the business immediately before the
succession becomes the property of the company1
ii! all the liabilities of the firm relatin5 to the business immediately before the
succession become the liabilities of the company1 and
iii! all the shareholders of the company were partners of the firm immediately
before the succession(
7! The .entral ;o+ernment% if it considers necessary or e$pedient so to do% may% by
notification in the <fficial ;a=ette% direct that the deduction allowable under this section
shall not be allowed in respect of any ship or aircraft ac,uired or any machinery or plant
installed after such date
68
-***2 as may be specified therein(
61
-7"! The .entral ;o+ernment% if it considers necessary or e$pedient so to do% may% by
notification in the <fficial ;a=ette% omit any article or thin5 from the list of articles or
thin5s specified in the Ele+enth *chedule(2
62
-7B! Aotwithstandin5 anythin5 contained in sub#section 7! or the notification of the
;o+ernment of India in the Binistry of >inance ?epartment of Re+enue! Ao( ;*R
768E!% dated the 12th @une% 1&7'% issued thereunder% the pro+isions of this section shall
apply in respect of%
a! i! a new ship or new aircraft ac,uired after the )1st day of Barch% 1&76 but
before the 1st day of "pril% 1&77% if the assessee furnishes e+idence to the
satisfaction of the "ssessin5 <fficer that he had% before the 12th day of
@une% 1&7'% entered into a contract for the purchase of such ship or aircraft
with the builder or manu#facturer or owner thereof% as the case may be1
ii! any new machinery or plant installed after the )1st day of Barch% 1&76 but
before the 1st day of "pril% 1&77% if the assessee furnishes e+idence to the
satisfaction of the "ssessin5 <fficer that before the 12th day of @une% 1&7'%
he had purchased such machinery or plant or had entered into a contract for
the purchase of such machinery or plant with the manufacturer or owner of%
or a dealer in% such machinery or plant% or had% where such machinery or
plant has been manufactured in an underta9in5 owned by the assessee%
ta9en steps for the manufacture of such machinery or plant:
Provided that nothin5 contained in sub#section 1! shall entitle the assessee
to claim deduction in respect of a ship or aircraft or machinery or plant
referred to in this clause in any pre+ious year e$cept the pre+ious year
rele+ant to the assessment year commencin5 on the 1st day of "pril% 1&7&1
b! a new ship or new aircraft ac,uired or any new machinery or plant installed
after the )1st day of Barch% 1&77% but before such date as the .entral
;o+ernment% if it considers necessary or e$pedient so to do% may% by
6)
% specify in this behalf(
7.! *ub:ect to the pro+isions of clause ii! of sub#section )!% where a deduction has
been allowed to an assessee under sub#section 1! in any assessment year% no deduction
shall be allowed to the assessee under section )2"B in the said assessment year
hereinafter referred to as the initial assessment year! and a bloc9 of further period of four
years be5innin5 with the assessment year immediately succeedin5 the initial assessment
year(2
&! -/mitted b+ the 0inance Act) 1##$) w.r.e.!. 1-4-1#6.2
63
-Investment deposit account.
32AB. 1! *ub:ect to the other pro+isions of this section% where an assessee% whose total
income includes income char5eable to ta$ under the head Profits and 5ains of business or
profession% has% out of such income%
a! deposited any amount in an account hereafter in this section referred to as
deposit account! maintained by him with the ?e+elopment Ban9 before the
e$piry of si$ months from the end of the pre+ious year or before furnishin5 the
return of his income% which#e+er is earlier1 or
b! utilised any amount durin5 the pre+ious year for the purchase of any new ship%
new aircraft% new machinery or plant% without depositin5 any amount in the
deposit account under clause a!%
in accordance with% and for the purposes specified in% a scheme
64
hereafter in this section
referred to as the scheme! to be framed by the .entral ;o+ernment% or if the assessee is
carryin5 on the business of 5rowin5 and manufacturin5 tea in India% to be appro+ed in
this behalf by the Tea Board% the assessee shall be allowed a deduction
6'
-such deduction
bein5 allowed before the loss% if any% brou5ht forward from earlier years is set off under
section 62!2 of
i! a sum e,ual to the amount% or the a55re5ate of the amounts% so deposited and
any amount so utilised1 or
ii! a sum e,ual to twenty per cent of the profits of
66
-***2 business or profession as
computed in the accounts of the assessee audited in accordance with sub#
section 4!%
whiche+er is less :
67
-Provided that where such assessee is a firm% or any association of persons or any body
of indi+iduals% 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 indi+iduals:2
6&
-Provided further that no such deduction shall be allowed in relation to the assessment
year commencin5 on the 1st day of "pril% 1&&1% or any subse,uent assessment year(2
2! >or the purposes of this section%
78
-***2
71
-ii! new ship or new aircraft includes a ship or aircraft which before the date of
ac,uisition by the assessee was used by any other person% if it was not at any
time pre+ious to the date of such ac,uisition owned by any person resident in
India1
iii! new machinery or plant includes machinery or plant which before its
installation by the assessee was used outside India by any other person% if the
a! such machinery or plant was not% at any time pre+ious to the date of such
installation by the assessee% used in India1
b! such machinery or plant is imported into India from any country outside
India1 and
c! no deduction on account of depreciation in respect of such machinery or
plant has been allowed or is allowable under this "ct in computin5 the total
income of any person for any period prior to the date of the installation of
the machinery or plant by the assessee1
i%! Tea Board means the Tea Board established under section 3 of the Tea "ct%
1&4) 2& of 1&4)!(2
)!
72
-The profits of business or profession of an assessee for the purposes of sub#section
1! shall2 be an amount arri+ed at after deductin5 an amount e,ual to the depreciation
computed in accordance with the pro+isions of sub#section 1! of section )2 from the
amounts of profits computed in accordance with the re,uirements of
7)
Parts II and III of
the
73
-*chedule 0I2 to the .ompanies "ct% 1&4' 1 of 1&4'!%
74
-as increased by the
a55re5ate of
i! the amount of depreciation1
ii! the amount of income#ta$ paid or payable% and pro+ision therefor1
iii! the amount of surta$ paid or payable under the .ompanies Profits! *urta$ "ct%
1&'3 6 of 1&'3!1
i%! the amounts carried to any reser+es% by whate+er name called1
%! the amount or amounts set aside to pro+isions made for meetin5 liabilities%
other than ascertained liabilities1
%i! the amount by way of pro+ision for losses of subsidiary companies1 and
%ii! the amount or amounts of di+idends paid or proposed%
if any debited to the profit and loss account1 and as reduced by any amount or amounts
withdrawn from reser+es or pro+isions% if such amounts are credited to the profit and loss
account(
7'
-***22
76
-***2
3! Ao deduction under sub#section 1! shall be allowed in respect of any amount utilised
for the purchase of
a! any machinery or plant to be installed in any office premises or residential
accommodation% includin5 any accommodation in the nature of a 5uest#house1
b! any office appliances not bein5 computers!1
c! any road transport +ehicles1
d! any machinery or plant% the whole of the actual cost of which is allowed as a
any one pre+ious year1
77
-e! any new machinery or plant to be installed in an industrial underta9in5% other
than a small#scale industrial underta9in5% as defined in section 78CC"% for the
purposes of business of construction% manufacture or production of any article
or thin5 specified in the list in the Ele+enth *chedule(2
4! The deduction under sub#section 1! shall not be admissible unless the accounts of the
business or profession of the assessee for the pre+ious year rele+ant to the assessment
year for which the deduction is claimed ha+e been audited by an accountant as defined in
the Explanation below sub#section 2! of section 277 and the assessee furnishes% alon5
with his return of income% the report of such audit in the prescribed form
7&
duly si5ned
and +erified by such accountant :
Provided that in a case where the assessee is re,uired by or under any other law to 5et
his accounts audited% it shall be sufficient compliance with the pro+isions of this sub#
section if such assessee 5ets the accounts of such business or profession audited under
such law and furnishes the report of the audit as re,uired under such other law and a
further report in the form prescribed under this sub#section(
&8
-4"! "ny amount standin5 to the credit of the assessee in the deposit account shall not
be allowed to be withdrawn before the e$piry of a period of fi+e years from the date of
deposit e$cept for the purposes specified in the scheme
&1
-or2 in the circumstances
specified below :
a! closure of business1
b! death of an assessee1
c! partition of a Cindu undi+ided family1
d! dissolution of a firm1
e! li,uidation of a company(2
&2
-Explanation(>or the remo+al of doubts% it is hereby declared that nothin5 contained in
this sub#section shall affect the operation of the pro+isions of sub#section 4""! or sub#
section '! in relation to any withdrawals made from the deposit account either before or
after the e$piry of a period of fi+e years from the date of deposit(2
&2
-4""! Fhere any amount% standin5 to the credit of the assessee in the deposit account%
is withdrawn durin5 any pre+ious year by the assessee in the circumstance specified in
clause a! or clause d! of sub#section 4"!% the whole of such amount shall be deemed to
be the profits and 5ains of business or profession of that pre+ious year and shall
accordin5ly be char5eable to income#ta$ as the income of that pre+ious year% as if the
business had not closed or% as the case may be% the firm had not been dissol+ed(2
&)
-4B! Fhere any amount standin5 to the credit of the assessee in the deposit account is
utilised by the assessee for the purposes of any e$penditure in connection with the
&3
-***2
business or profession in accordance with the scheme% such e$penditure shall not be
allowed in computin5 the income char5eable under the head Profits and 5ains of business
or profession(2
'! Fhere any amount% standin5 to the credit of the assessee in the deposit account%
released durin5 any pre+ious year by the ?e+elopment Ban9 for bein5 utilised by the
assessee for the purposes specified in the scheme or at the closure of the account
&4
--in
circumstances other than the circumstances specified in clauses b!% c! and e! of sub#
section 4"!22% is not utilised in accordance with
&'
-% and within the time specified in%2 the
scheme% either wholly or in part%
&6
-***2 the whole of such amount or% as the case may be%
part thereof which is not so utilised shall be deemed to be the profits and 5ains of
business or profession of that pre+ious year and shall accordin5ly be char5eable to
income#ta$ as the income of that pre+ious year(
6! Fhere any asset ac,uired in accordance with the scheme is sold or otherwise
transferred in any pre+ious year by the assessee to any person at any time before the
e$piry of ei5ht years from the end of the pre+ious year in which it was ac,uired% such part
of the cost of such asset as is relatable to the deductions allowed under sub#section 1!
shall be deemed to be the profits and 5ains of business or profession of the pre+ious year
in which the asset is sold or otherwise transferred and shall accordin5ly be char5eable to
income#ta$ as the income of that pre+ious year:
Provided that nothin5 in this sub#section shall apply
i! where the asset is sold or otherwise transferred by the assessee to ;o+ernment%
a local authority% a corporation established by or under a .entral% *tate or
Pro+incial "ct or a
&7
;o+ernment company as defined in section '16 of the
.ompanies "ct% 1&4' 1 of 1&4'!1 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 continues to apply to the company in the manner applicable to
the firm(
Explanation(The pro+isions of clause ii! of the pro+iso shall apply only where
i! all the properties of the firm relatin5 to the business or profession immediately
before the succession become the properties of the company1
ii! all the liabilities of the firm relatin5 to the business or profession immediately
before the succession become the liabilities of the company1 and
7! The .entral ;o+ernment may% if it considers it necessary or e$pedient so to do% by
notification in the <fficial ;a=ette% omit any article or thin5 from the list of articles or
thin5s specified in the Ele+enth *chedule(
&! The .entral ;o+ernment may% after ma9in5 such in,uiry as it may thin9 fit% direct% by
notification in the <fficial ;a=ette% that the pro+isions of this section shall not apply to
any class of assessees% with effect from such date as it may specify in the notification(
&&
-18! Fhere a deduction has been allowed to an assessee under this section in any
assessment year% no deduction shall be allowed to the assessee under sub#section 1! of
section )2" in the said assessment year hereinafter referred to as the initial assessment
year! and a bloc9 of further period of four years be5innin5 with the assessment year
immediately succeedin5 the initial assessment year2(
Explanation.In this section%
a! computers does not include calculatin5 machines and calculatin5 de+ices1
b! ?e+elopment Ban9 means
i! in the case of an assessee carryin5 on business of 5rowin5 and
manufacturin5 tea in India% the Aational Ban9 for "5riculture and Rural
?e+elopment established under section ) of the Aational Ban9 for
"5riculture and Rural ?e+elopment "ct% 1&71 '1 of 1&71!1
ii! in the case of other assessees% the Industrial ?e+elopment Ban9 of India
established under the Industrial ?e+elopment Ban9 of India "ct% 1&'3 17
of 1&'3! and includes such ban9 or institution as may be specified in the
scheme in this behalf(2
Development rebate.
33.
1
-1!a! In respect of a new ship
2
or new machinery or plant other than office
appliances or road transport +ehicles! which is owned by the assessee and is wholly used
for the purposes of the business carried on by him% there shall% in accordance with and
sub:ect to the pro+isions of this section and of section )3% be allowed a deduction% in
respect of the pre+ious year in which the ship was ac,uired or the machinery or plant was
installed or% if the ship% machinery or plant is first put to use in the immediately
succeedin5 pre+ious year% then% in respect of that pre+ious year% a sum by way of
de+elopment rebate as specified in clause b!(
b! The sum referred to in clause a! shall be
A! in the case of a ship% forty per cent of the actual cost thereof to the assessee1
B! in the case of machinery or plant%
i! where the machinery or plant is installed for the purposes of business of
construction% manufacture or production of any one or more of the articles
or thin5s specified in the list in the >ifth *chedule%
a! thirty#fi+e per cent of the actual cost of the machinery or plant to the
assessee% where it is installed before the 1st day of "pril% 1&68% and
b! twenty#fi+e per cent of such cost% where it is installed after the )1st day
of Barch% 1&681
ii! where the machinery or plant is installed after the )1st day of Barch% 1&'6%
by an assessee bein5 an Indian company in premises used by it as a hotel
and such hotel is for the time bein5 appro+ed in this behalf by the .entral
;o+ernment%
of Barch% 1&681
iii! where the machinery or plant is installed after the )1st day of Barch% 1&'6%
bein5 an asset representin5 e$penditure of a capital nature on scientific
research related to the business carried on by the assessee%
of Barch% 1&681
i%! in any other case%
a! twenty per cent of the actual cost of the machinery or plant to the
b! fifteen per cent of such cost% where it is installed after the )1st day of
Barch% 1&68(2
)
-
3
1"!a! "n assessee who% after the )1st day of Barch% 1&'3% ac,uires any ship which
before the date of ac,uisition by him was used by any other person shall% sub:ect to the
pro+isions of section )3% also be allowed as a deduction a sum by way of de+elopment
rebate at such rate or rates as may be prescribed% pro+ided that the followin5 conditions
i! such ship was not pre+ious to the date of such ac,uisition owned at any time by
any person resident in India1
ii! such ship is wholly used for the purposes of the business carried on by the
assessee1 and
iii! such other conditions as may be prescribed(
b! "n assessee who installs any machinery or plant other than office appliances or road
transport +ehicles! which before such installation by the assessee was used outside India
by any other person shall% sub:ect to the pro+isions of section )3% also be allowed as a
deduction a sum by way of de+elopment rebate at such rate or rates as may be prescribed%
pro+ided that the followin5 conditions are fulfilled% namely :
i! such machinery or plant was not used in India at any time pre+ious to the date
of such installation by the assessee1
ii! it is imported in India by the assessee from any country outside India1
iii! no deduction on account of depreciation or de+elopment rebate in respect of
such machinery or plant has been allowed or is allowable under the pro+isions
of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or this "ct in computin5 the
total income of any person for any period prior to the date of the installation of
the machinery or plant by the assessee1
i%! such machinery or plant is wholly used for the purposes of the business carried
on by the assessee1 and
%! such other conditions as may be prescribed(
c! The de+elopment rebate under this sub#section shall be allowed as a deduction in
respect of the pre+ious year in which the ship was ac,uired or the machinery or plant was
installed or% if the ship% machinery or plant is first put to use in the immediately
succeedin5 pre+ious year% then% in respect of that pre+ious year(2
2! In the case of a ship ac,uired or machinery or plant installed after the )1st day of
?ecember% 1&46% where the total income of the assessee assessable for the assessment
year rele+ant to the pre+ious year in which the ship was ac,uired or the machinery or
plant installed or the immediately succeedin5 pre+ious year% as the case may be the total
income for this purpose bein5 computed without ma9in5 any allowance under sub#
section 1!
4
-or sub#section 1"!2
'
-of this section or sub#section 1! of section ))"2
6
-or
any deduction under .hapter 0I#"
7
-***22! is nil or is less than the full amount of the
de+elopment rebate calculated at the rate applicable thereto under
&
-sub#section 1! or
sub#section 1"!% as the case may be2%
i! the sum to be allowed by way of de+elopment rebate for that assessment year
under sub#section 1!
18
-or sub#section 1"!2 shall be only such amount as is
sufficient to reduce the said total income to nil 1 and
ii! the amount of the de+elopment rebate% to the e$tent to which it has not been
and the de+elopment rebate to be allowed for the followin5 assessment year
and the balance of the de+elopment rebate% if any% still outstandin5 shall be
carried forward to the followin5 assessment year and so on% so howe+er% that no
portion of the de+elopment rebate shall be carried forward for more than ei5ht
assessment years immediately succeedin5 the assessment year rele+ant to the
pre+ious year in which the ship was ac,uired or the machinery or plant
installed or the immediately succeedin5 pre+ious year% as the case may be(
Explanation(Fhere for any assessment year de+elopment rebate is to be allowed in
accordance with the pro+isions of sub#section 2! in respect of ships ac,uired or
machinery or plant installed in more than one pre+ious year% and the total income of the
assessee assessable for that assessment year the total income for this purpose bein5
computed without ma9in5 any allowance under sub#section 1!
11
12
-of this section or sub#section 1! of section ))"2
1)
-or any deduction under .hapter 0I#
"
13
-***22! is less than the a55re5ate of the amounts due to be allowed in respect of the
assets aforesaid for that assessment year% the followin5 procedure shall be followed%
namely :
i! the allowance under clause ii! of sub#section 2! shall be made before any
allowance under clause i! of that sub#section is made1 and
ii! where an allowance has to be made under clause ii! of sub#section 2! in
respect of amounts carried forward from more than one assessment year% the
amount carried forward from an earlier assessment year shall be allowed before
any amount carried forward from a later assessment year(
14
-)! Fhere% in a scheme of amal5amation% the amal5amatin5 company sells or
otherwise transfers to the amal5amated company any ship% machinery or plant in respect
of which de+elopment rebate has been allowed to the amal5amatin5 company under sub#
section 1! or sub#section 1"!%
sub#section )! of section )3 in respect of the reser+e created by the
amal5amatin5 company and in respect of the period within which such ship%
machinery or plant shall not be sold or otherwise transferred and in default of
any of these conditions% the pro+isions of sub#section 4! of section 144 shall
apply to the amal5amated company as they would ha+e applied to the
amal5amatin5 company had it committed the default1 and
b! the balance of de+elopment rebate% if any% still outstandin5 to the amal5amatin5
company in respect of such ship% machinery or plant shall be allowed to the
amal5amated company in accordance with the pro+isions of sub#section 2!% so%
howe+er% that the total period for which the balance of de+elopment rebate shall
be carried forward in the assessments of the amal5amatin5 company and the
amal5amated company shall not e$ceed the period of ei5ht years specified in
sub#section 2! and the amal5amated company shall be treated as the assessee
in respect of such ship% machinery or plant for the purposes of this section and
section )3(2
3! Fhere a firm is succeeded to by a company in the business carried on by it as a result
of which the firm sells or otherwise transfers to the company any ship% machinery or
plant% the pro+isions of clauses a! and b! of sub#section )! shall% so far as may be%
apply to the firm and the company(
Explanation(The pro+isions of this clause shall apply only where
i! all the property of the firm relatin5 to the business immediately before the
succession becomes the property of the company1
ii! all the liabilities of the firm relatin5 to the business immediately before the
succession become the liabilities of the company1 and
1'
-4! The .entral ;o+ernment% if it considers it necessary or e$pedient so to do% may% by
notification
16
in the <fficial ;a=ette% direct that the deduction allowable under this section
shall not be allowed in respect of a ship ac,uired or machinery or plant installed after
such date% not bein5 earlier than three years from the date of such notification% as may be
specified therein(2
17
-'! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% no
deduction by way of de+elopment rebate shall be allowed in respect of any machinery or
plant installed after the )1st day of Barch% 1&'4% in any office premises or any residential
accommodation% includin5 any accommodation in the nature of a 5uest#house:2
1&
-Provided that the pro+isions of this sub#section shall not apply in the case of an
assessee bein5 an Indian company% in respect of any machinery or plant installed by it in
premises used by it as a hotel% where the hotel is for the time bein5 appro+ed in this
behalf by the .entral ;o+ernment(2
28
-Development allowance.
21
33A. 1! In respect of plantin5 of tea bushes on any land in India owned by an assessee
who carries on business of 5rowin5 and manufacturin5 tea in India% a sum by way of
de+elopment allowance e,ui+alent to
i! where tea bushes ha+e been planted on any land not planted at any time with
tea bushes or on any land which had been pre+iously abandoned%
22
-fifty2 per
cent of the actual cost of plantin51 and
ii! where tea bushes are planted in replacement of tea bushes that ha+e died or
ha+e become permanently useless on any land already planted%
2)
-thirty2 per
cent of the actual cost of plantin5%
shall% sub:ect to the pro+isions of this section% be allowed as a deduction
23
-in the manner
specified hereunder% namely :
a! the amount of the de+elopment allowance shall% in the first instance% be
computed with reference to that portion of the actual cost of plantin5 which is
incurred durin5 the pre+ious year in which the land is prepared for plantin5 or
replantin5% as the case may be% and in the pre+ious year ne$t followin5% and the
amount so computed shall be allowed as a deduction in respect of such
pre+ious year ne$t followin51 and
b! thereafter% the de+elopment allowance shall a5ain be computed with reference
to the actual cost of plantin5% and if the sum so computed e$ceeds the amount
allowed as a deduction under clause a!% the amount of the e$cess shall be
allowed as a deduction in respect of the third succeedin5 pre+ious year ne$t
followin5 the pre+ious year in which the land has been prepared for plantin5 or
replantin5% as the case may be :2
24
-Provided that no deduction under clause i! shall be allowed unless the plantin5 has
commenced after the )1st day of Barch% 1&'4% and been completed before the 1st day of
"pril% 1&&8 :
Provided further that no deduction shall be allowed under clause ii! unless the plantin5
has commenced after the )1st day of Barch% 1&'4% and been completed before the 1st day
of "pril% 1&68(2
2! Fhere the total income of the assessee assessable for the assessment year rele+ant to
2'
-the pre+ious year in respect of which the deduction is re,uired to be allowed under sub#
section 1!2
26
-the total income for this purpose bein5 computed after deduction of the
allowance under sub#section 1! or sub#section 1"! or clause ii! of sub#section 2! of
section ))% but without ma9in5 any deduction under sub#section 1! of this section or any
deduction under .hapter 0I#"
27
-***2!2 is nil or is less than the full amount of the
de+elopment allowance calculated at the rates
2&
-and in the manner2 specified in sub#
section 1!
i! the sum to be allowed by way of de+elopment allowance for that assessment
year under sub#section 1! shall be only such amount as is sufficient to reduce
the said total income to nil 1 and
ii! the amount of the de+elopment allowance% to the e$tent to which it has not been
and the de+elopment allowance to be allowed for the followin5 assessment year
and the balance of the de+elopment allowance% if any% still outstandin5 shall be
carried forward to the followin5 assessment year and so on% so% howe+er% that
no portion of the de+elopment allowance shall be carried forward for more than
ei5ht assessment years immediately succeedin5 the assessment year in which
the deduction was first allowable(
Explanation(Fhere for any assessment year de+elopment allowance is to be allowed in
accordance with the pro+isions of sub#section 2! in respect of more than one pre+ious
year% and the total income of the assessee assessable for that assessment year
)8
-the total
income for this purpose bein5 computed after deduction of the allowance under sub#
section 1! or sub#section 1"! or clause ii! of sub#section 2! of section ))% but without
ma9in5 any deduction under sub#section 1! of this section or any deduction under
.hapter 0I#"
)1
-***2!2 is less than the amount of the de+elopment allowance due to be
made in respect of that assessment year% the followin5 procedure shall be followed%
namely :
i! the allowance under clause ii! of sub#section 2! of this section shall be made
before any allowance under clause i! of that sub#section is made1 and
ii! where an allowance has to be made under clause ii! of sub#section 2! of this
section in respect of amounts carried forward from more than one assessment
year% the amount carried forward from an earlier assessment year shall be
allowed before any amount carried forward from a later assessment year(
)! The deduction under sub#section 1! shall be allowed only if the followin5 conditions
i! the particulars prescribed
)2
in this behalf ha+e been furnished by the assessee1
ii! an amount e,ual to se+enty#fi+e per cent of the de+elopment allowance to be
actually allowed is debited to the profit and loss account of the rele+ant
pre+ious year and credited to a reser+e account to be utilised by the assessee
durin5 a period of ei5ht years ne$t followin5 for the purposes of the business of
the underta9in5% other than
a! for distribution by way of di+idends or profits1 or
b! for remittance outside India as profits or for the creation of any asset
outside India1 and
iii! such other conditions as may be prescribed(
3! If any such land is sold or otherwise transferred by the assessee to any person at any
time before the e$piry of ei5ht years from the end of the pre+ious year in which the
deduction under sub#section 1! was allowed% any allowance under this section shall be
deemed to ha+e been wron5ly made for the purposes of this "ct% and the pro+isions of
sub#section 4"! of section 144 shall apply accordin5ly :
Provided that this sub#section shall not apply
i! where the land is sold or otherwise transferred by the assessee to the
;o+ernment% a local authority% a corporation established by a .entral% *tate or
Pro+incial "ct% or a
))
;o+ernment company as defined in section '16 of the
ii! where the sale or transfer of the land is made in connection with the
amal5amation or succession referred to in sub#section 4! or sub#section '!(
)3
-4! Fhere% in a scheme of amal5amation% the amal5amatin5 company sells or
otherwise transfers to the amal5amated company any land in respect of which
de+elopment allowance has been allowed to the amal5amatin5 company under sub#
section 1!%
sub#section )! in respect of the reser+e created by the amal5amatin5 company
and in respect of the period within which such land shall not be sold or
otherwise transferred and in default of any of these conditions% the pro+isions
of sub#section 4"! of section 144 shall apply to the amal5amated company as
they would ha+e applied to the amal5amatin5 company had it committed the
default1 and
b! the balance of de+elopment allowance% if any% still outstandin5 to the
amal5amatin5 company in respect of such land shall be allowed to the
amal5amated company in accordance with the pro+isions of sub#section 2!% so%
howe+er% that the total period for which the balance of de+elopment allowance
shall be carried forward in the assessments of the amal5amatin5 company and
the amal5amated company shall not e$ceed the period of ei5ht years specified
in sub#section 2! and the amal5amated company shall be treated as the
assessee in respect of such land for the purposes of this section(2
'! Fhere a firm is succeeded to by a company in the business carried on by it as a result
of which the firm sells or otherwise transfers to the company any land on which
de+elopment allowance has been allowed% the pro+isions of clauses a! and b! of sub#
section 4! shall% so far as may be% apply to the firm and the company(
Explanation(The pro+isions of this sub#section shall apply if the conditions laid down in
the Explanation to sub#section 3! of section )) are fulfilled(
6! >or the purposes of this section% actual cost of plantin5 means the a55re5ate of
i! the cost of preparin5 the land1
ii! the cost of seeds% cuttin5 and nurseries1
iii! the cost of plantin5 and replantin51 and
i%! the cost of up9eep thereof for the pre+ious year in which the land has been
prepared and the three successi+e pre+ious years ne$t followin5 such pre+ious
year%
reduced by that portion of the cost% if any% as has been met directly or indirectly by any
other person or authority:
)4
-Provided that where such cost e$ceeds
i! forty thousand rupees per hectare in respect of land situate in a hilly area
comprised in the district of ?ar:eelin51 or
ii! thirty#fi+e thousand rupees per hectare in respect of land situate in a hilly area
comprised in an area other than the district of ?ar:eelin51 or
iii! thirty thousand rupees per hectare in any other area%
then% the e$cess shall be i5nored(
Explanation(>or the purposes of this pro+iso% district of ?ar:eelin5 means the district of
?ar:eelin5 as on the 27th day of >ebruary% 1&71% bein5 the date of introduction of the
>inance Bill% 1&71% in the Couse of the People(2
7! The Board may% ha+in5 re5ard to the ele+ation and topo5raphy% by 5eneral or special
order% declare any areas to be
)'
hilly areas for the purposes of this section and such order
shall not be ,uestioned before any court of law or any other authority(
)6
-Explanation(>or the purposes of this section% an assessee ha+in5 a leasehold or other
ri5ht of occupancy in any land shall be deemed to own such land and where the assessee
transfers such ri5ht% he shall be deemed to ha+e sold or otherwise transferred such land(2
)7
-Tea development account
)&
-,coffee development account and rubber development
account2.
33AB. 1! Fhere an assessee carryin5 on business of 5rowin5 and manufacturin5 tea
)&
-or coffee or rubber2 in India has% before the e$piry of si$ months from the end of the
pre+ious year or before
)&
-the due date of2 furnishin5 the return of his income%
38
-whiche+er is earlier%
a! deposited with the Aational Ban9 any amount or amounts in an account
hereafter in this section referred to as the special account! maintained by the
assessee with that Ban9 in accordance with% and for the purposes specified in% a
scheme hereafter in this section referred to as the scheme! appro+ed in this
behalf by the Tea Board
31
-or the .offee Board or the Rubber Board2 1 or
b!
32
-deposited any amount in an account hereafter in this section referred to as
the ?eposit "ccount! opened by the assessee in accordance with% and for the
purposes specified in% a scheme framed by the Tea Board or the .offee Board
or the Rubber Board% as the case may be hereafter in this section referred to as
the deposit scheme!% with the pre+ious appro+al of the .entral ;o+ernment%2
the assessee shall% sub:ect to the pro+isions of this section%2 be allowed a deduction such
deduction bein5 allowed before the loss% if any% brou5ht forward from earlier years is set
off under section 62! of
a! a sum e,ual to the amount or the a55re5ate of the amounts so deposited 1 or
b! a sum e,ual to
3)
-forty2 per cent of the profits of such business computed under
the head Profits and 5ains of business or profession before ma9in5 any
deduction under this section!%
whiche+er is less :
Provided that where such assessee is a firm% or any association of persons or any body of
indi+iduals% 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 indi+iduals :
Provided further that where any deduction% in respect of any amount deposited in the
special account
33
-% or in the
34
-***2 ?eposit "ccount2% has been allowed under this sub#
section in any pre+ious year% no deduction shall be allowed in respect of such amount in
any other pre+ious year(
2! The deduction under sub#section 1! shall not be admissible unless the accounts of
such business of the assessee for the pre+ious year rele+ant to the assessment year for
which the deduction is claimed ha+e been audited by an accountant as defined in the
Explanation below sub#section 2! of section 277 and the assessee furnishes% alon5 with
his return of income% the report of such audit in the prescribed form
3'
duly si5ned and
+erified by such accountant :
section if such assessee 5ets the accounts of such business audited under such law and
furnishes the report of the audit as re,uired under such other law and a further report in
the form prescribed under this sub#section(
)! "ny amount standin5 to the credit of the assessee in
36
-the special account or the
37
-***2 ?eposit "ccount shall not be allowed to be withdrawn e$cept for the purposes
specified in the scheme or% as the case may be% in the deposit scheme2 or in the
circumstances specified below :
a! closure of business 1
b! death of an assessee 1
c! partition of a Cindu undi+ided family 1
d! dissolution of a firm 1
e! li,uidation of a company(
3&
-3! Aotwithstandin5 anythin5 contained in sub#section )!% where any amount standin5
to the credit of the assessee in the special account or in the ?eposit "ccount is released
durin5 any pre+ious year by the Aational Ban9 or withdrawn by the assessee from the
?eposit "ccount% and such amount is utilised for the purchase of
c! any machinery or plant% the whole of the actual cost of which is allowed as a
d! any new machinery or plant to be installed in an industrial underta9in5 for the
or thin5 specified in the list in the Ele+enth *chedule%
the whole of such amount so utilised shall be deemed to be the profits and 5ains of
business of that pre+ious year and shall accordin5ly be char5eable to income#ta$ as the
income of that pre+ious year(2
4! Fhere any amount% standin5 to the credit of the assessee in the special account
48
-or in
the
41
-***2 ?eposit "ccount2% is withdrawn durin5 any pre+ious year by the assessee in
the circumstance specified in clause a! or clause d! of sub#section )!% the whole of such
amount shall be deemed to be the profits and 5ains of business or profession of that
pre+ious year and shall accordin5ly be char5eable to income#ta$ as the income of that
pre+ious year% as if the business had not closed or% as the case may be% the firm had not
been dissol+ed(
'! Fhere any amount standin5 to the credit of the assessee in the special account
48
-or in
the
41
-***2 ?eposit "ccount2 is utilised by the assessee for the purposes of any
e$penditure in connection with such business in accordance with the scheme
48
-or the
deposit scheme2% such e$penditure shall not be allowed in computin5 the income
char5eable under the head Profits and 5ains of business or profession(
6! Fhere any amount% standin5 to the credit of the assessee in the special account
48
-or in
the
41
-***2 ?eposit "ccount2% which is released durin5 any pre+ious year by the Aational
Ban9
42
-or which is withdrawn by the assessee from the
41
-***2 ?eposit "ccount2 for
bein5 utilised by the assessee for the purposes of such business in accordance with the
scheme
42
-or the deposit scheme2 is not so utilised% either wholly or in part% within that
pre+ious 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 5ains of business and accordin5ly char5eable
to income#ta$ as the income of that pre+ious year :
Provided that this sub#section shall not apply in a case where such amount is released
durin5 any pre+ious year at the closure of the account in circumstances specified in
clauses b!% c! and e! of sub#section )!(
7! Fhere any asset ac,uired in accordance with the scheme
4)
-or the deposit scheme2 is
sold or otherwise transferred in any pre+ious year by the assessee to any person at any
time before the e$piry of ei5ht years from the end of the pre+ious year in which it was
ac,uired% such part of the cost of such asset as is relatable to the deduction allowed under
sub#section 1! shall be deemed to be the profits and 5ains of business or profession of
the pre+ious year in which the asset is sold or otherwise transferred and shall accordin5ly
be char5eable to income#ta$ as the income of that pre+ious year :
Pro+incial "ct or a ;o+ernment company
43
as defined in section '16 of the
.ompanies "ct% 1&4' 1 of 1&4'! 1 or
and the scheme
44
-or the deposit scheme2 continues to apply to the company in
the manner applicable to the firm(
Explanation.The pro+isions of clause ii! of the pro+iso shall apply only where
before the succession become the properties of the company 1
before the succession become the liabilities of the company 1 and
&! The .entral ;o+ernment% if it considers necessary or e$pedient so to do% may% by
shall not be allowed after such date as may be specified therein(
4'
-a! .offee Board means the .offee Board constituted under section 3 of the .offee
"ct% 1&32 6 of 1&32!1
aa! Aational Ban9 means the Aational Ban9 for "5riculture and Rural
?e+elopment established under section ) of the Aational Ban9 for "5riculture
and Rural ?e+elopment "ct% 1&71 '1 of 1&71!1
ab! Rubber Board means the Rubber Board constituted under sub#section 1! of
section 3 of the Rubber "ct% 1&36 23 of 1&36!12
b! Tea Board means the Tea Board established under section 3 of the Tea "ct%
1&4) 2& of 1&4)!(2
46
-Site Restoration Fund.
47
33ABA. 1! Fhere an assessee is carryin5 on business consistin5 of the prospectin5 for%
or e$traction or production of% petroleum or natural 5as or both in India and in relation to
which the .entral ;o+ernment has entered into an a5reement with such assessee for such
business% has before the end of the pre+ious year
a! deposited with the *tate Ban9 of India any amount or amounts in an account
hereafter in this section referred to as the special account! maintained by the
assessee with that Ban9 in accordance with% and for the purposes specified in% a
scheme hereafter in this section referred to as the scheme! appro+ed in this
behalf by the ;o+ernment of India in the Binistry of Petroleum and Aatural
;as1 or
b! deposited any amount in an account hereafter in this section referred to as the
*ite Restoration "ccount! opened by the assessee in accordance with% and for
the purposes specified in% a scheme framed by the Binistry referred to in clause
a! hereafter in this section referred to as the deposit scheme!%
the assessee shall% sub:ect to the pro+isions of this section% be allowed a deduction such
deduction bein5 allowed before the loss% if any% brou5ht forward from earlier years is set
off under section 62! of
i! a sum e,ual to the amount or the a55re5ate of the amounts so deposited1 or
ii! a sum e,ual to twenty per cent of the profits of such business computed under
the head Profits and 5ains of business or profession before ma9in5 any
deduction under this section!%
whiche+er is less :
Provided that where such assessee is a firm% or any association of persons or any body of
indi+iduals% 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 indi+iduals :
Provided further that where any deduction% in respect of any amount deposited in the
special account% or in the *ite Restoration "ccount% has been allowed under this sub#
section in any pre+ious year% no deduction shall be allowed in respect of such amount in
any other pre+ious year :
Provided also that any amount credited in the special account or the *ite Restoration
"ccount by way of interest shall be deemed to be a deposit(
2! The deduction under sub#section 1! shall not be admissible unless the accounts of
such business of the assessee for the pre+ious year rele+ant to the assessment year for
4&
duly si5ned and
+erified by such accountant :
section if such assessee 5ets the accounts of such business audited under such law and
furnishes the report of the audit as re,uired under such other law and a further report in
the form prescribed under this sub#section(
)! "ny amount standin5 to the credit of the assessee in the special account or the *ite
Restoration "ccount shall not be allowed to be withdrawn e$cept for the purposes
specified in the scheme or% as the case may be% in the deposit scheme(
3! Aotwithstandin5 anythin5 contained in sub#section )!% no deduction under sub#
section 1! shall be allowed in respect of any amount utilised for the purchase of
c! any machinery or plant% the whole of the actual cost of which is allowed as a
d! any new machinery or plant to be installed in an industrial underta9in5 for the
or thin5 specified in the list in the Ele+enth *chedule(
4! Fhere any amount standin5 to the credit of the assessee in the special account or in
the *ite Restoration "ccount is withdrawn on closure of the account durin5 any pre+ious
year by the assessee% the amount so withdrawn from the account% as reduced by the
amount% if any% payable to the .entral ;o+ernment by way of profit or production share
as pro+ided in the a5reement referred to in section 32% shall be deemed to be the profits
and 5ains of business or profession of that pre+ious year and shall accordin5ly be
char5eable to income#ta$ as the income of that pre+ious year(
Explanation.Fhere any amount is withdrawn on closure of the account in a pre+ious year
in which the business carried on by the assessee is no lon5er in e$istence% the pro+isions
of this sub#section shall apply as if the business is in e$istence in that pre+ious year(
'! Fhere any amount standin5 to the credit of the assessee in the special account or in
the *ite Restoration "ccount is utilised by the assessee for the purposes of any
e$penditure in connection with such business in accordance with the scheme or the
deposit scheme% such e$penditure shall not be allowed in computin5 the income
char5eable under the head Profits and 5ains of business or profession(
6! Fhere any amount% standin5 to the credit of the assessee in the special account or in
the *ite Restoration "ccount% which is released durin5 any pre+ious year by the *tate
Ban9 of India or which is withdrawn by the assessee from the *ite Restoration "ccount
for bein5 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
pre+ious 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 5ains of business and accordin5ly char5eable
to income#ta$ as the income of that pre+ious year(
'8
-***2
7! Fhere any asset ac,uired in accordance with the scheme or the deposit scheme is sold
or otherwise transferred in any pre+ious year by the assessee to any person at any time
before the e$piry of ei5ht years from the end of the pre+ious year in which it was
ac,uired% such part of the cost of such asset as is relatable to the deduction allowed under
sub#section 1! shall be deemed to be the profits and 5ains of business or profession of
the pre+ious year in which the asset is sold or otherwise transferred and shall accordin5ly
be char5eable to income#ta$ as the income of that pre+ious year :
Pro+incial "ct or a ;o+ernment company
'1
as defined in section '16 of the
and the scheme or the deposit scheme continues to apply to the company in the
manner applicable to the firm(
Explanation.The pro+isions of clause ii! of the pro+iso shall apply only where
before the succession become the properties of the company1
before the succession become the liabilities of the company1 and
&! The .entral ;o+ernment may% if it considers necessary or e$pedient so to do% by
shall not be allowed after such date as may be specified therein(
a! *tate Ban9 of India means the *tate Ban9 of India constituted under the *tate
Ban9 of India "ct% 1&44 2) of 1&44!1
b! the e$pression amount standin5 to the credit of the assessee in the special
account or the *ite Restoration "ccount includes interest accrued to such
accounts(2

'2
-Reserves for shipping business.
33AC. 1!
')
-In the case of an assessee% bein5 a ;o+ernment company or a public
company formed and re5istered in India with the main ob:ect of carryin5 on the business
of operation of ships% there shall% in accordance with and sub:ect to the pro+isions of this
section% be allowed a deduction of an amount not e$ceedin5 fifty per cent of profits
deri+ed from the business of operation of ships computed under the head Profits and
5ains of business or profession and before ma9in5 any deduction under this section!% as is
debited to the profit and loss account of the pre+ious year in respect of which the
deduction is to be allowed and credited to a reser+e account% to be utilised in the manner
laid down in sub#section 2! :2
'3
-Provided that where the a55re5ate of the amounts carried to such reser+e account from
time to time e$ceeds twice the a55re5ate of the amounts of the paid#up share capital% the
5eneral reser+es and amount credited to the share premium account of the assessee% no
allowance under this sub#section shall be made in respect of such e$cess :2
'4
-Provided further that for fi+e assessment years commencin5 on or after the 1st day of
"pril% 2881 and endin5 before the 1st day of "pril% 288'% the pro+isions of this sub#
section shall ha+e effect as if for the words an amount not e$ceedin5 fifty per cent of
profits% the words an amount not e$ceedin5 the profits had been substituted:2
''
-Provided also that no deduction shall be allowed under this section for any assessment
year commencin5 on or after the 1st day of "pril% 2884(2
2! The amount credited to the reser+e account under sub#section 1! shall be utilised by
the assessee before the e$piry of a period of ei5ht years ne$t followin5 the pre+ious year
in which the amount was credited
a! for ac,uirin5 a new ship for the purposes of the business of the assessee 1 and
b! until the ac,uisition of a new ship% for the purposes of the business of the
assessee other than for distribution by way of di+idends or profits or for
remittance outside India as profits or for the creation of any asset outside India(
)! Fhere any amount credited to the reser+e account under sub#section 1!%
a! has been utilised for any purpose other than that referred to in clause a! or
clause b! of sub#section 2!% the amount so utilised 1 or
b! has not been utilised for the purpose specified in clause a! of sub#section 2!%
the amount not so utilised 1 or
c! has been utilised for the purpose of ac,uirin5 a new ship as specified in clause
a! of sub#section 2!% but such ship is sold or otherwise transferred
'6
-% other
than in any scheme of demer5er2 by the asses#see to any person at any time
before the e$piry of
'7
-three2 years from the end of the pre+ious year in which it
was ac,uired% the amount so utilised in ac,uirin5 the ship%
utilised 1 or
of ei5ht years specified in sub#section 2! 1 or
iii! in a case referred to in clause c!% in the year in which the sale or transfer too9
place%
and shall be char5ed to ta$ accordin5ly(
'&
-3! Fhere the ship is sold or otherwise transferred other than in any scheme of
demer5er! after the e$piry of the period specified in clause c! of sub#section )! and the
sale proceeds are not utilised for the purpose of ac,uirin5 a new ship within a period of
one year from the end of the pre+ious year in which such sale or transfer too9 place%
68
-so
much of such sale proceeds which represent the amount credited to the reser+e account
and utilised for the purposes mentioned in clause c! of sub#section )!2 shall be deemed
to be the profits of the assessment year immediately followin5 the pre+ious year in which
the ship is sold or transferred(2
a!
61
public company shall ha+e the meanin5 assi5ned to it in section ) of the
.ompanies "ct% 1&4' 1 of 1&4'! 1
62
-aa!
6)
;o+ernment company shall ha+e the meanin5 assi5ned to it in section '16 of
the .ompanies "ct% 1&4' 1 of 1&4'! 12
b! new ship shall ha+e the same meanin5 as in clause ii! of sub#section 2! of
section )2"B
63
-Rehabilitation allowance.
33B. Fhere the business of any industrial underta9in5 carried on in India is discontinued
in any pre+ious year by reason of e$tensi+e dama5e to% or destruction of% any buildin5%
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% earth,ua9e or other con+ulsion of nature 1
or
ii! riot or ci+il disturbance 1 or
iii! accidental fire or e$plosion 1 or
i%! action by an enemy or action ta9en in combatin5 an enemy whether with or
without a declaration of war!%
and% thereafter% at any time before the e$piry of three years from the end of such pre+ious
year% the business is re#established% reconstructed or re+i+ed by the assessee% he shall% in
respect of the pre+ious year in which the business is so re#established% reconstructed or
re+i+ed% be allowed a deduction of a sum by way of rehabilitation allowance e,ui+alent
to si$ty per cent of the amount of the deduction allowable to him under clause iii! of
sub#section 1! of section )2 in respect of the buildin5% machinery% plant or furniture so
dama5ed or destroyed :
64
-Provided that no deduction under this section shall be allowed in relation to the
assessment year commencin5 on the 1st day of "pril% 1&74% or any subse,uent
assessment year(2
Explanation.In this section% industrial underta9in5 means any underta9in5 which is
mainly en5a5ed in the business of 5eneration or distribution of electricity or any other
form of power or in the construction of ships or in the manufacture or processin5 of
5oods or in minin5(2
Conditions for depreciation allowance and development rebate.
34. 1!
6'
-***2
2!
66
-***2
)!a! The deduction referred to in section )) shall not be allowed unless an amount e,ual
to se+enty#fi+e per cent of the de+elopment rebate to be actually allowed is debited to the
profit and loss account of
67
-any pre+ious year in respect of which the deduction is to be
allowed under sub#section 2! of that section or any earlier pre+ious year bein5 a
pre+ious year not earlier than the year in which the ship was ac,uired or the machinery or
plant was installed or the ship% machinery or plant was first put to use!2 and credited to a
reser+e account to be utilised by the assessee durin5 a period of ei5ht years ne$t
followin5 for the purposes of the business of the underta9in5% other than
i! for distribution by way of di+idends or profits 1 or
ii! for remittance outside India as profits or for the creation of any asset outside
India :
Provided that this clause shall not apply where the assessee is a company% bein5 a
licensee within the meanin5 of the Electricity *upply! "ct% 1&37 43 of 1&37!
6&
% or where
the ship has been ac,uired or the machinery or plant has been installed before the 1st day
of @anuary% 1&47 :
78
-Provided further that where a ship has been ac,uired after the 27th day of >ebruary%
1&''% this clause shall ha+e effect in respect of such ship as if for the words se+enty#fi+e%
the word fifty had been substituted(2
Explanation.-/mitted b+ the 0inance Act) 1##$) w.r.e.!. 1-4-1#62. Earlier) it was inserted
b+ the 0inance Act) 1#66) w.r.e.!. 1-4-1#62.2
b! If any ship% machinery or plant is sold or otherwise transferred by the assessee to any
person at any time before the e$piry of ei5ht years from the end of the pre+ious year in
which it was ac,uired or installed% any allowance made under section )) or under the
correspondin5 pro+isions of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% in respect of
that ship% machinery or plant shall be deemed to ha+e been wron5ly made for the
purposes of this "ct% and the pro+isions of sub#section 4! of section 144 shall apply
accordin5ly :
Provided that this clause shall not apply
i! where the ship has been ac,uired or the machinery or plant has been installed
before the 1st day of @anuary% 1&47 1 or
ii! where the ship% machinery or plant is sold or otherwise transferred by the
assessee to the ;o+ernment% a local authority% a corporation established by a
.entral% *tate or Pro+incial "ct or a
71
section '16 of the .ompanies "ct% 1&4' 1 of 1&4'! 1 or
iii! where the sale or transfer of the ship% machinery or plant is made in connection
with the amal5amation or succession% referred to in sub#section )! or sub#
section 3! of section ))(
72
-Restriction on unabsorbed depreciation and unabsorbed investment allowance for
limited period in case of certain domestic companies.
34A. 1! In computin5 the profits and 5ains of the business of a domestic company in
relation to the pre+ious year rele+ant to the assessment year commencin5 on the 1st day
of "pril% 1&&2% where effect is to be 5i+en to the unabsorbed depreciation allowance or
unabsorbed in+estment allowance or both in relation to any pre+ious year rele+ant to the
assessment year commencin5 on or before the 1st day of "pril% 1&&1% the deduction shall
be restricted to two#third of such allowance or allowances and the balance%
a! where it relates to depreciation allowance% be added to the depreciation
allowance for the pre+ious year rele+ant to the assessment year commencin5 on
the 1st day of "pril% 1&&) and be deemed to be part of that allowance or if there
is no such allowance for that pre+ious year% be deemed to be the allowance for
that pre+ious year and so on for the succeedin5 pre+ious years 1
b! where it relates to in+estment allowance% be carried forward to the assessment
year commencin5 on the 1st day of "pril% 1&&) and the balance of the
in+estment allowance% if any% still outstandin5 shall be carried forward to the
followin5 assessment year and where the period of ei5ht years has e$pired
before the portion of such balance is ad:usted% the said period shall be e$tended
beyond ei5ht years till such time the portion of the said balance is absorbed in
the profits and 5ains of the business of the domestic company(
2! >or the assessment year commencin5 on the 1st day of "pril% 1&&2% the pro+isions of
sub#section 2! of section )2 and sub#section )! of section )2" shall apply to the e$tent
such pro+isions are not inconsistent with the pro+isions of sub#section 1! of this section(
)! Aothin5 contained in sub#section 1! shall apply where the amount of unabsorbed
depreciation allowance or of the unabsorbed in+estment allowance% as the case may be% or
the a55re5ate amount of such allowances in the case of a domestic company is less than
one la9h rupees(
3! Aothin5 contained in sections 2)3B and 2)3. shall apply to any shortfall in the
payment of any ta$ due on the assessed ta$ or% as the case may be% returned income where
such shortfall is on account of restrictin5 the amount of depreciation allowance or
in+estment allowance under this section and the assessee has paid the amount of shortfall
before furnishin5 the return of income under sub#section 1! of section 1)&(2
7)
-Expenditure on scientific research.
73
35. 1! In respect of e$penditure on scientific research% the followin5 deductions shall be
allowed
i! any e$penditure not bein5 in the nature of capital e$penditure! laid out or
e$pended on scientific research related to the
73a
business(
74
-Explanation.Fhere any such e$penditure has been laid out or e$pended
before the commencement of the business not bein5 e$penditure laid out or
e$pended before the 1st day of "pril% 1&6)! on payment of any salary -as
defined in Explanation 2
7'
below sub#section 4! of section 38"2 to an
employee en5a5ed in such scientific research or on the purchase of materials
used in such scientific research% the a55re5ate of the e$penditure so laid out or
e$pended within the three years immediately precedin5 the commencement of
the business shall% to the e$tent it is certified by the prescribed authority
76
to
ha+e been laid out or e$pended on such scientific research% be deemed to ha+e
been laid out or e$pended in the pre+ious year in which the business is
commenced 12
77
ii!
7&
-an amount e,ual to one and one#fourth times of any sum paid2 to a scientific
research association which has as its ob:ect the underta9in5 of scientific
research or to a uni+ersity% colle5e or other institution to be used for scientific
research :
Provided that such association% uni+ersity% colle5e or institution is for the time
bein5 appro+ed
&8
for the purposes of this clause by the
&1
-.entral ;o+ernment2
&2
-by notification in the <fficial ;a=ette2 1
&)
-
&3
iii!
&4
-an amount e,ual to one and one#fourth times of any sum paid2 to a
uni+ersity% colle5e or other institution to be used for research in social science
or statistical research :
Provided that such uni+ersity% colle5e or institution is for the time bein5
appro+ed
&'
for the purposes of this clause by the
&6
-.entral ;o+ernment2 by
notification in the <fficial ;a=ette 12
i%! in respect of any e$penditure of a capital nature on scientific research related to
the business carried on by the assessee% such deduction as may be admissible
under the pro+isions of sub#section 2! :
&7
-Provided that the scientific research association% uni+ersity% colle5e or other institution
referred to in clause ii! or clause iii! shall ma9e an application in the prescribed form
and manner to the
&&
-.entral ;o+ernment2 for the purpose of 5rant of appro+al% or
continuance thereof% under clause ii! or% as the case may be% clause iii! :
Provided further that the
&&
-.entral ;o+ernment2 may% before 5rantin5 appro+al under
clause ii! or clause iii!% call for such documents includin5 audited annual accounts! or
information from the scientific research association% uni+ersity% colle5e or other
institution as it thin9s necessary in order to satisfy itself about the 5enuineness of the
acti+ities of the scientific research association% uni+ersity% colle5e or other institution and
that authority may also ma9e such in,uiries as it may deem necessary in this behalf :
Provided also that any notification issued by the
1
-.entral ;o+ernment2 under clause ii!
or clause iii! shall% at any one time% ha+e effect for such assessment year or years% not
e$ceedin5 three assessment years includin5 an assessment year or years commencin5
before the date on which such notification is issued! as may be specified in the
notification(2
2! >or the purposes of clause i%! of sub#section 1!%
2
-i! in a case where such capital e$penditure is incurred before the 1st day of "pril%
1&'6% one#fifth of the capital e$penditure incurred in any pre+ious year shall be
deducted for that pre+ious year 1 and the balance of the e$penditure shall be
deducted in e,ual instalments for each of the four immediately succeedin5
pre+ious years 1
ia! in a case where such capital e$penditure is incurred after the )1st day of Barch%
1&'6% the whole of such capital e$penditure incurred in any pre+ious year
)
shall
be deducted for that pre+ious year :2
3
-Provided that no deduction shall be admissible under this clause in respect of
any e$penditure incurred on the ac,uisition of any land% whether the land is
ac,uired as such or as part of any property% after the 2&th day of >ebruary%
1&73(2
4
-Explanation 12(Fhere any capital e$penditure has been incurred before the
commencement of the business% the a55re5ate of the e$penditure so incurred
within the three years immediately precedin5 the commencement of the
business shall be deemed to ha+e been incurred in the pre+ious year in which
the business is commenced(
'
-Explanation 2.>or the purposes of this clause%
a! land includes any interest in land 1 and
b! the ac,uisition of any land shall be deemed to ha+e been made by the
assessee on the date on which the instrument of transfer of such land to him
has been re5istered under the Re5istration "ct% 1&87 1' of 1&87!% or where
he has ta9en or retained the possession of such land or any part thereof in
part performance of a contract of the nature referred to in section 4)"
6
of
the Transfer of Property "ct% 1772 3 of 1772!% the date on which he has so
ta9en or retained possession of such land or part 12
ii! notwithstandin5 anythin5 contained in clause i!% where an asset representin5
e$penditure of a capital nature
7
-incurred before the 1st day of "pril% 1&'6%2
ceases to be used in a pre+ious year for scientific research related to the
business and the +alue of the asset at the time of the cessation% to5ether with the
a55re5ate of deductions already allowed under clause i! falls short of the said
e$penditure% then
a! there shall be allowed a deduction for that pre+ious year of an amount e,ual
to such deficiency% and
b! no deduction shall be allowed under that clause for that pre+ious year or for
any subse,uent pre+ious year 1
iii! if the asset mentioned in clause ii! is sold% without ha+in5 been used for other
purposes% in the year of cessation% the sale price shall be ta9en to be the +alue of
the asset at the time of the cessation 1 and if the asset is sold% without ha+in5
been used for other purposes% in a pre+ious year subse,uent to the year of
cessation% and the sale price falls short of the +alue of the asset ta9en into
account at the time of cessation% an amount e,ual to the deficiency shall be
allowed as a deduction for the pre+ious year in which the sale too9 place 1
i%! where a deduction is allowed for any pre+ious year under this section in respect
of e$penditure represented wholly or partly by an asset% no deduction shall be
allowed under
&
-clause ii! of sub#section 1!2 of section )2 for the same
18
-or
any other2 pre+ious year in respect of that asset 1
%! where the asset
11
-mentioned in clause ii!2 is used in the business after it ceases
to be used for scientific research related to that business% depreciation shall be
admissible under
12
-clause ii! of sub#section 1!2 of section )2(
1)
-2"!
13
Fhere
14
-% before the 1st day of Barch% 1&73%2 the assessee pays any sum
1'
-bein5 any sum paid with a specific direction that the sum shall not be used for the
ac,uisition of any land or buildin5 or construction of any buildin5!2 to a scientific
research association or uni+ersity or colle5e or other institution referred to in clause ii!
of sub#section 1!
16
-or to a public sector company2 to be used for scientific research
underta9en under a pro5ramme appro+ed in this behalf by the prescribed authority
17
ha+in5 re5ard to the social% economic and industrial needs of India% then%
a! there shall be allowed a deduction of a sum e,ual to one and one#third times the
sum so paid 1 and
b! no deduction in respect of such sum shall be allowed under clause ii! of sub#
section 1! for the same or any other assessment year(2
1&
-Explanation.>or the purposes of this sub#section% public sector company shall ha+e the
same meanin5 as in clause b! of the Explanation below sub#section 2B! of section
)2"(2
28
-2""!
21
Fhere the assessee pays any sum to a Aational Gaboratory
22
-or a
2)
-Eni+ersity
or an Indian Institute of Technolo5y or a specified person2 with a specific direction that
the said sum shall be used for scientific research underta9en under a pro5ramme
appro+ed in this behalf by the prescribed authority
23
% then
a! there shall be allowed a deduction of a sum e,ual to one and one#fourth times
the sum so paid 1 and
b! no deduction in respect of such sum shall be allowed under any other pro+ision
of this "ct :
24
-Provided that the prescribed authority shall% before 5rantin5 appro+al% satisfy itself
about the feasibility of carryin5 out the scientific research and shall submit its report to
the ?irector ;eneral in such form as may be prescribed(
2'
2
26
-Explanation.>or the purposes of this section%
a! Aational Gaboratory means a scientific laboratory functionin5 at the national
le+el under the ae5is of the Indian .ouncil of "5ricultural Research% the Indian
.ouncil of Bedical Research% the .ouncil of *cientific and Industrial Research%
the ?efence Research and ?e+elopment <r5anisation% the ?epartment of
Electronics% the ?epartment of Bio#Technolo5y or the ?epartment of "tomic
Ener5y and which is appro+ed as a Aational Gaboratory by the prescribed
authority in such manner as may be prescribed 1
b! Eni+ersity shall ha+e the same meanin5 as in Explanation to clause ix! of
section 36 1
c! Indian Institute of Technolo5y shall ha+e the same meanin5 as that of Institute
in clause g! of section )
27
of the Institutes of Technolo5y "ct% 1&'1 4& of
1&'1!21
2&
-d! specified person means such person as is appro+ed by the prescribed authority(2
)8
-2"B!1! Fhere a company en5a5ed in the business of
)1
-bio#technolo5y or in the
business of2 manufacture or production of any dru5s% pharmaceuticals% electronic
e,uipments% computers% telecommunication e,uipments% chemicals or any other article or
thin5 notified
)2
by the Board incurs any e$penditure on scientific research not bein5
e$penditure in the nature of cost of any land or buildin5! on in#house research and
de+elopment facility as appro+ed by the prescribed authority
))
% then% there shall be
allowed a deduction of
)3
-a sum e,ual to one and one#half times of the e$penditure2 so
incurred(
)4
-Explanation.>or the purposes of this clause% e$penditure on scientific research% in
relation to dru5s and pharmaceuticals% shall include e$penditure incurred on clinical dru5
trial% obtainin5 appro+al from any re5ulatory authority under any .entral% *tate or
Pro+incial "ct and filin5 an application for a patent under the Patents "ct% 1&68 )& of
1&68!(2
2! Ao deduction shall be allowed in respect of the e$penditure mentioned in clause 1!
under any other pro+ision of this "ct(
3! Ao company shall be entitled for deduction under clause 1! unless it enters into an
a5reement with the prescribed authority for co#operation in such research and
de+elopment facility and for audit of the accounts maintained for that facility(
4! The prescribed authority shall submit its report in relation to the appro+al of the said
facility to the ?irector ;eneral in such form and within such time as may be prescribed(2
)'
-5! Ao deduction shall be allowed in respect of the e$penditure referred to in clause 1!
which is incurred after the )1st day of Barch%
)6
2$$](2
)7
-2B!a! Fhere
)&
-% before the 1st day of Barch% 1&73%2 an assessee has incurred any
e$penditure not bein5 in the nature of capital e$penditure incurred on the ac,uisition of
any land or buildin5 or construction of any buildin5! on scientific research underta9en
under a pro5ramme appro+ed in this behalf by the prescribed authority ha+in5 re5ard to
the social% economic and industrial needs of India% he shall% sub:ect to the pro+isions of
this sub#section% be allowed a deduction of a sum e,ual to one and one#fourth times the
amount of the e$penditure certified by the prescribed authority to ha+e been so incurred
durin5 the pre+ious year(
b! Fhere a deduction has been allowed under clause a! for any pre+ious year in respect
of any e$penditure% no deduction in respect of such e$penditure shall be allowed under
clause i! of sub#section 1! or clause ia! of sub#section 2! for the same or any other
pre+ious year(
c! Fhere a deduction is allowed for any pre+ious year under this sub#section in respect
of e$penditure represented wholly or partly by an asset% no deduction shall be allowed in
respect of that asset under
38
-clause ii! of sub#section 1!2 of section )2 for the same or
any subse,uent pre+ious year(
d! "ny deduction made under this sub#section in respect of any e$penditure on scientific
research in e$cess of the e$penditure actually incurred shall be deemed to ha+e been
wron5ly made for the purposes of this "ct if the assessee fails to furnish within one year
of the period allowed by the prescribed authority for completion of the pro5ramme% a
certificate of its completion obtained from that authority% and the pro+isions of sub#
section 4B! of section 144 shall apply accordin5ly(2
31
-)! If any ,uestion arises under this section as to whether% and if so% to what e$tent% any
acti+ity constitutes or constituted% or any asset is or was bein5 used for% scientific
research% the Board shall refer the ,uestion to
a! the .entral ;o+ernment% when such ,uestion relates to any acti+ity under
clauses ii! and iii! of sub#section 1!% and its decision shall be final1
b! the prescribed authority
32
% when such ,uestion relates to any acti+ity other than
the acti+ity specified in clause a!% whose decision shall be final(2
3! The pro+isions of sub#section 2! of section )2 shall apply in relation to deductions
allowable under clause i%! of sub#section 1! as they apply in relation to deductions
allowable in respect of depreciation(
3)
-4! Fhere% in a scheme of amal5amation% the amal5amatin5 company sells or
otherwise transfers to the amal5amated company bein5 an Indian company! any asset
representin5 e$penditure of a capital nature on scientific research%
i! the amal5amatin5 company shall not be allowed the deduction under clause ii!
or clause iii! of sub#section 2!1 and
ii! the pro+isions of this section shall% as far as may be% apply to the amal5amated
company as they would ha+e applied to the amal5a#matin5 company if the
latter had not so sold or otherwise transferred the asset(22
33
-Expenditure on acquisition of patent rights or copyrights.
35A. 1! In respect of any e$penditure of a capital nature incurred after the 27th day of
>ebruary% 1&''
34
-but before the 1st day of "pril% 1&&72% on the ac,uisition of patent
ri5hts or copyri5hts hereafter% in this section% referred to as ri5hts! used for the purposes
of the business% there shall% sub:ect to and in accordance with the pro+isions of this
section% be allowed for each of the rele+ant pre+ious years% a deduction e,ual to the
appropriate fraction of the amount of such e$penditure(
i! rele+ant pre+ious years means the fourteen pre+ious years be5innin5 with the
pre+ious year in which such e$penditure is incurred or% where such e$penditure
is incurred before the commencement of the business% the fourteen pre+ious
years be5innin5 with the pre+ious year in which the business commenced :
Provided that where the ri5hts commenced% that is to say% became effecti+e% in
any year prior to the pre+ious year in which e$penditure on the ac,uisition
thereof was incurred by the assessee% this clause shall ha+e effect with the
substitution for the reference to fourteen years of a reference to fourteen years
less the number of complete years which% when the ri5hts are ac,uired by the
assessee% ha+e elapsed since the commencement thereof% and if fourteen years
ha+e elapsed as aforesaid% of a reference to one year1
ii! appropriate fraction means the fraction the numerator of which is one and the
denominator of which is the number of the rele+ant pre+ious years(
2! Fhere the ri5hts come to an end without bein5 subse,uently re+i+ed or where the
whole or any part of the ri5hts is sold and the proceeds of the sale so far as they consist
of capital sums! are not less than the cost of ac,uisition thereof remainin5 unallowed% no
deduction under sub#section 1! shall be allowed in respect of the pre+ious year in which
the ri5hts come to an end or% as the case may be% the whole or any part of the ri5hts is
sold or in respect of any subse,uent pre+ious year(
)! Fhere the ri5hts either come to an end without bein5 subse,uently re+i+ed or are sold
in their entirety and the proceeds of the sale so far as they consist of capital sums! are
less than the cost of ac,uisition thereof remainin5 unallowed% a deduction e,ual to such
cost remainin5 unallowed or% as the case may be% such cost remainin5 unallowed as
reduced by the proceeds of the sale% shall be allowed in respect of the pre+ious year in
which the ri5hts come to an end% or% as the case may be% are sold(
3! Fhere the whole or any part of the ri5hts is sold and the proceeds of the sale so far as
they consist of capital sums! e$ceed the amount of the cost of ac,uisition thereof
remainin5 unallowed% so much of the e$cess as does not e$ceed the difference between
the cost of ac,uisition of the ri5hts and the amount of such cost remainin5 unallowed
shall be char5eable to income#ta$ as income of the business of the pre+ious year in which
the whole or any part of the ri5hts is sold(
Explanation.Fhere the whole or any part of the ri5hts is sold in a pre+ious year in which
the business is no lon5er in e$istence% the pro+isions of this sub#section shall apply as if
the business is in e$istence in that pre+ious year(
4! Fhere a part of the ri5hts is sold and sub#section 3! does not apply% the amount of
the deduction to be allowed under sub#section 1! shall be arri+ed at by
a! subtractin5 the proceeds of the sale so far as they consist of capital sums! from
the amount of the cost of ac,uisition of the ri5hts remainin5 unallowed1 and
b! di+idin5 the remainder by the number of rele+ant pre+ious years which ha+e
not e$pired at the be5innin5 of the pre+ious year durin5 which the ri5hts are
sold(2
3'
-'! Fhere% in a scheme of amal5amation% the amal5amatin5 company sells or
otherwise transfers the ri5hts to the amal5amated company bein5 an Indian company!%
i! the pro+isions of sub#sections )! and 3! shall not apply in the case of the
amal5amatin5 company1 and
latter had not so sold or otherwise transferred the ri5hts(2
36
-6! Fhere in a scheme of demer5er% the demer5ed company sells or otherwise transfers
the ri5hts to the resultin5 company bein5 an Indian company!%
i! the pro+isions of sub#sections )! and 3! shall not apply in the case of the
demer5ed company1 and
ii! the pro+isions of this section shall% as far as may be% apply to the resultin5
company as they would ha+e applied to the demer5ed company% if the latter had
not sold or otherwise transferred the ri5hts(2

37
-Expenditure on know-how.
35AB. 1! *ub:ect to the pro+isions of sub#section 2!% where the assessee has paid in any
pre+ious year
3&
-rele+ant to the assessment year commencin5 on or before the 1st day of
"pril% 1&&72 any lump sum consideration for ac,uirin5
48
any 9now#how for use for the
purposes of his business% one#si$th of the amount so paid shall be deducted in computin5
the profits and 5ains of the business for that pre+ious year% and the balance amount shall
be deducted in e,ual instalments for each of the fi+e immediately succeedin5 pre+ious
years(
2! Fhere the 9now#how referred to in sub#section 1! is de+eloped in a laboratory%
uni+ersity or institution referred to in sub#section 2B! of section )2"% one#third of the
said lump sum consideration paid in the pre+ious year by the assessee shall be deducted
in computin5 the profits and 5ains of the business for that year% and the balance amount
shall be deducted in e,ual instalments for each of the two immediately succeedin5
pre+ious years(
41
-)! Fhere there is a transfer of an underta9in5 under a scheme of amal5amation or
demer5er and the amal5amatin5 or the demer5ed company is entitled to a deduction
under this section% then% the amal5amated company or the resultin5 company% as the case
may be% shall be entitled to claim deduction under this section in respect of such
underta9in5 to the same e$tent and in respect of the residual period as it would ha+e been
allowable to the amal5amatin5 company or the demer5ed company% as the case may be%
had such amal5amation or demer5er not ta9en place(2
Explanation.>or the purposes of this section% 9now#how means any industrial information
or techni,ue li9ely to assist in the manufacture or processin5 of 5oods or in the wor9in5
of a mine% oil well or other sources of mineral deposits includin5 the searchin5 for%
disco+ery or testin5 of deposits or the winnin5 of access thereto!(2
42
-Expenditure for obtaining licence to operate telecommunication services.
35ABB. 1! In respect of any e$penditure% bein5 in the nature of capital e$penditure%
incurred for ac,uirin5 any ri5ht to operate telecommunication ser+ices
4)
-either before the
commencement of the business to operate telecommunication ser+ices or thereafter at any
time durin5 any pre+ious year2 and for which payment has actually been made to obtain a
licence% there shall% sub:ect to and in accordance with the pro+isions of this section% be
allowed for each of the rele+ant pre+ious years% a deduction e,ual to the appropriate
fraction of the amount of such e$penditure(
43
-i! rele+ant pre+ious years means%
A! in a case where the licence fee is actually paid before the commencement of
the business to operate telecommunication ser+ices% the pre+ious years
be5innin5 with the pre+ious year in which such business commenced1
B! in any other case% the pre+ious years be5innin5 with the pre+ious year in
which the licence fee is actually paid%
and the subse,uent pre+ious year or years durin5 which the licence% for which
the fee is paid% shall be in force12
denominator of which is the total number of the rele+ant pre+ious years1
iii! payment has actually been made means the actual payment of e$penditure
irrespecti+e of the pre+ious year in which the liability for the e$penditure was
incurred accordin5 to the method of accountin5 re5ularly employed by the
assessee(
2! Fhere the licence is transferred and the proceeds of the transfer so far as they consist
of capital sums! are less than the e$penditure incurred remainin5 unallowed% a deduction
e,ual to such e$penditure remainin5 unallowed% as reduced by the proceeds of the
transfer% shall be allowed in respect of the pre+ious year in which the licence is
transferred(
)! Fhere the whole or any part of the licence is transferred and the proceeds of the
transfer so far as they consist of capital sums! e$ceed the amount of the e$penditure
incurred remainin5 unallowed% so much of the e$cess as does not e$ceed the difference
between the e$penditure incurred to obtain the licence and the amount of such
e$penditure remainin5 unallowed shall be char5eable to income#ta$ as profits and 5ains
of the business in the pre+ious year in which the licence has been transferred(
Explanation.Fhere the licence is transferred in a pre+ious year in which the business is
no lon5er in e$istence% the pro+isions of this sub#section shall apply as if the business is
in e$istence in that pre+ious year(
3! Fhere the whole or any part of the licence is transferred and the proceeds of the
transfer so far as they consist of capital sums! are not less than the amount of
e$penditure incurred remainin5 unallowed% no deduction for such e$penditure shall be
allowed under sub#section 1! in respect of the pre+ious year in which the licence is
transferred or in respect of any subse,uent pre+ious year or years(
4! Fhere a part of the licence is transferred in a pre+ious year and sub#section )! does
not apply% the deduction to be allowed under sub#section 1! for e$penditure incurred
remainin5 unallowed shall be arri+ed at by
a! subtractin5 the proceeds of transfer so far as they consist of capital sums! from
the e$penditure remainin5 unallowed1 and
not e$pired at the be5innin5 of the pre+ious year durin5 which the licence is
transferred(
transfers the licence to the amal5amated company bein5 an Indian company!%
i! the pro+isions of sub#sections 2!% )! and 3! shall not apply in the case of the
latter had not transferred the licence(2
44
-6! Fhere% in a scheme of demer5er% the demer5ed company sells or otherwise
transfers the licence to the resultin5 company bein5 an Indian company!%
company as they would ha+e applied to the demer5ed company if the latter had
not transferred the licence(2
4'
-7! Fhere a deduction for any pre+ious year under sub#section 1! is claimed and
allowed in respect of any e$penditure referred to in that sub#section% no deduction shall
be allowed under sub#section 1! of section )2 for the same pre+ious year or any
subse,uent pre+ious year(2
42
-Expenditure for obtaining licence to operate telecommunication services.
35ABB. 1! In respect of any e$penditure% bein5 in the nature of capital e$penditure%
incurred for ac,uirin5 any ri5ht to operate telecommunication ser+ices
4)
-either before the
commencement of the business to operate telecommunication ser+ices or thereafter at any
time durin5 any pre+ious year2 and for which payment has actually been made to obtain a
licence% there shall% sub:ect to and in accordance with the pro+isions of this section% be
allowed for each of the rele+ant pre+ious years% a deduction e,ual to the appropriate
fraction of the amount of such e$penditure(
43
-i! rele+ant pre+ious years means%
A! in a case where the licence fee is actually paid before the commencement of
the business to operate telecommunication ser+ices% the pre+ious years
be5innin5 with the pre+ious year in which such business commenced1
B! in any other case% the pre+ious years be5innin5 with the pre+ious year in
which the licence fee is actually paid%
and the subse,uent pre+ious year or years durin5 which the licence% for which
the fee is paid% shall be in force12
denominator of which is the total number of the rele+ant pre+ious years1
iii! payment has actually been made means the actual payment of e$penditure
irrespecti+e of the pre+ious year in which the liability for the e$penditure was
incurred accordin5 to the method of accountin5 re5ularly employed by the
assessee(
2! Fhere the licence is transferred and the proceeds of the transfer so far as they consist
of capital sums! are less than the e$penditure incurred remainin5 unallowed% a deduction
e,ual to such e$penditure remainin5 unallowed% as reduced by the proceeds of the
transfer% shall be allowed in respect of the pre+ious year in which the licence is
transferred(
)! Fhere the whole or any part of the licence is transferred and the proceeds of the
transfer so far as they consist of capital sums! e$ceed the amount of the e$penditure
incurred remainin5 unallowed% so much of the e$cess as does not e$ceed the difference
between the e$penditure incurred to obtain the licence and the amount of such
e$penditure remainin5 unallowed shall be char5eable to income#ta$ as profits and 5ains
of the business in the pre+ious year in which the licence has been transferred(
Explanation.Fhere the licence is transferred in a pre+ious year in which the business is
no lon5er in e$istence% the pro+isions of this sub#section shall apply as if the business is
in e$istence in that pre+ious year(
3! Fhere the whole or any part of the licence is transferred and the proceeds of the
transfer so far as they consist of capital sums! are not less than the amount of
e$penditure incurred remainin5 unallowed% no deduction for such e$penditure shall be
allowed under sub#section 1! in respect of the pre+ious year in which the licence is
transferred or in respect of any subse,uent pre+ious year or years(
4! Fhere a part of the licence is transferred in a pre+ious year and sub#section )! does
not apply% the deduction to be allowed under sub#section 1! for e$penditure incurred
remainin5 unallowed shall be arri+ed at by
a! subtractin5 the proceeds of transfer so far as they consist of capital sums! from
the e$penditure remainin5 unallowed1 and
not e$pired at the be5innin5 of the pre+ious year durin5 which the licence is
transferred(
transfers the licence to the amal5amated company bein5 an Indian company!%
latter had not transferred the licence(2
44
-6! Fhere% in a scheme of demer5er% the demer5ed company sells or otherwise
transfers the licence to the resultin5 company bein5 an Indian company!%
company as they would ha+e applied to the demer5ed company if the latter had
not transferred the licence(2
4'
-7! Fhere a deduction for any pre+ious year under sub#section 1! is claimed and
allowed in respect of any e$penditure referred to in that sub#section% no deduction shall
be allowed under sub#section 1! of section )2 for the same pre+ious year or any
subse,uent pre+ious year(2
46
-Expenditure on eligible projects or schemes.
47
35AC. 1! Fhere an assessee incurs any e$penditure by way of payment of any sum to a
public sector company or a local authority or to an association or institution appro+ed
4&
by the Aational .ommittee
'8
for carryin5 out any eli5ible pro:ect or scheme% the assessee
shall% sub:ect to the pro+isions of this section% be allowed a deduction of the amount of
such e$penditure incurred durin5 the pre+ious year :
Provided that a company may% for claimin5 the deduction under this sub#section% incur
e$penditure either by way of payment of any sum as aforesaid or directly on the eli5ible
pro:ect or scheme(
2! The deduction under sub#section 1! shall not be allowed unless the assessee furnishes
alon5 with his return of income a certificate
'1
a! where the payment is to a public sector company or a local authority or an
association or institution referred to in sub#section 1!% from such public sector
company or local authority or% as the case may be% association or institution1
'2
b! in any other case% from an accountant% as defined in the Explanation below sub#
section 2! of section 277%
in such form% manner and containin5 such particulars includin5 particulars relatin5 to the
pro5ress in the wor9 relatin5 to the eli5ible pro:ect or scheme durin5 the pre+ious year!
as may be prescribed(
)! Fhere a deduction under this section is claimed and allowed for any assessment year
in respect of any e$penditure referred to in sub#section 1!% deduction shall not be
allowed in respect of such e$penditure under any other pro+ision of this "ct for the same
or any other assessment year(
')
-3! Fhere an association or institution is appro+ed by the Aational .ommittee under
sub#section 1!% and subse,uently
i! that .ommittee is satisfied that the pro:ect or the scheme is not bein5 carried on
in accordance with all or any of the conditions sub:ect to which appro+al was
5ranted1 or
ii! such association or institution% to which appro+al has been 5ranted% has not
furnished to the Aational .ommittee% after the end of each financial year% a
report in such form and settin5 forth such particulars and within such time as
may be prescribed
')a
%
the Aational .ommittee may% at any time% after 5i+in5 a reasonable opportunity of
showin5 cause a5ainst the proposed withdrawal to the concerned association or
institution% withdraw the appro+al:
Provided that a copy of the order withdrawin5 the appro+al shall be forwarded by the
Aational .ommittee to the "ssessin5 <fficer ha+in5 :urisdiction o+er the concerned
association or institution(
4! Fhere any pro:ect or scheme has been notified as an eli5ible pro:ect or scheme under
clause b! of the Explanation) and subse,uently
i! the Aational .ommittee is satisfied that the pro:ect or the scheme is not bein5
carried on in accordance with all or any of the conditions sub:ect to which such
pro:ect or scheme was notified1 or
ii! a report in respect of such eli5ible pro:ect or scheme has not been furnished
after the end of each financial year% in such form and settin5 forth such
particulars and within such time as may be prescribed
')b
%
such notification may be withdrawn in the same manner in which it was issued:
Provided that a reasonable opportunity of showin5 cause a5ainst the proposed
withdrawal shall be 5i+en by the Aational .ommittee to the concerned association%
institution% public sector company or local authority% as the case may be:
Provided further that a copy of the notification by which the notification of the eli5ible
pro:ect or scheme is withdrawn shall be forwarded to the "ssessin5 <fficer ha+in5
:urisdiction o+er the concerned association% institution% public sector company or local
authority% as the case may be% carryin5 on such eli5ible pro:ect or scheme(2
'3
-'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where
i! the appro+al of the Aational .ommittee% 5ranted to an association or institution%
is withdrawn under sub#section 3! or the notification in respect of eli5ible
pro:ect or scheme is withdrawn in the case of a public sector company or local
authority or an association or institution under sub#section 4!1 or
ii! a company has claimed deduction under the pro+iso to sub#section 1! in
respect of any e$penditure incurred directly on the eli5ible pro:ect or scheme
and the appro+al for such pro:ect or scheme is withdrawn by the Aational
.ommittee under sub#section 4!%
the total amount of the payment recei+ed by the public sector company or the local
authority or the association or the institution% as the case may be% in respect of which such
company or authority or association or institution has furnished a certificate referred to in
clause a! of sub#section 2! or the deduction claimed by a company under the pro+iso to
sub#section 1! shall be deemed to be the income of such company or authority or
association or institution% as the case may be% for the pre+ious year in which such
appro+al or notification is withdrawn and ta$ shall be char5ed on such income at the
ma$imum mar5inal rate in force for that year(2
a! Aational .ommittee means the .ommittee constituted by the .entral
;o+ernment% from amon5st persons of eminence in public life% in accordance
with the rules made under this "ct1
b! eli5ible pro:ect or scheme means such pro:ect or scheme for promotin5 the
social and economic welfare of% or the uplift of% the public as the .entral
;o+ernment may% by notification in the <fficial ;a=ette% specify
'4
in this behalf
on the recommendations of the Aational .ommittee(2
'&
-Expenditure by way of payment to associations and institutions for carrying out
rural development programmes.
68
35CCA.
61
-1! Fhere an assessee incurs any e$penditure by way of payment of any
sum
a! to an association or institution% which has as its ob:ect the underta9in5 of any
pro5ramme of rural de+elopment% to be used for carryin5 out any pro5ramme of
rural de+elopment appro+ed by the prescribed authority
62
1 or
b! to an association or institution% which has as its ob:ect the trainin5 of persons
for implementin5 pro5rammes of rural de+elopment1
6)
-or2
6)
-c! to a rural de+elopment fund set up and notified
63
by the .entral ;o+ernment in
this
64
-behalf1 or2
6'
-d! to the Aational Erban Po+erty Eradication >und set up and notified by the
.entral ;o+ernment in this behalf%2
the assessee shall% sub:ect to the pro+isions of sub#section 2!% be allowed a deduction of
the amount of such e$penditure incurred durin5 the pre+ious year(2
66
-2! The deduction under clause a! of sub#section 1! shall not be allowed in respect of
e$penditure by way of payment of any sum to any association or institution referred to in
the said clause unless the assessee furnishes a certificate from such association or
institution to the effect that
a! the pro5ramme of rural de+elopment had been appro+ed by the prescribed
authority before the 1st day of Barch% 1&7)1 and
b! where such payment is made after the 27th day of >ebruary% 1&7)% such
pro5ramme in+ol+es wor9 by way of construction of any buildin5 or other
structure whether for use as a dispensary% school% trainin5 or welfare centre%
wor9shop or for any other purpose! or the layin5 of any road or the
construction or borin5 of a well or tube#well or the installation of any plant or
machinery% and such wor9 has commenced before the 1st day of Barch% 1&7)(2
67
-2"! The deduction under clause b! of sub#section 1! shall not be allowed in respect
of e$penditure by way of payment of any sum to any association or institution unless the
assessee furnishes a certificate from such association or institution to the effect that
a! the prescribed authority had appro+ed the association or institution before the
1st day of Barch% 1&7)1 and
b! the trainin5 of persons for implementin5 any pro5ramme of rural de+elopment
had been started by the association or institution before the 1st day of Barch%
1&7)(2
67
-2B! Ao certificate of the nature referred to in sub#section 2! or sub#section 2"! shall
be issued by any association or institution unless such association or institution has
obtained from the prescribed authority authorisation in writin5 to issue certificates of
such nature(2
Explanation.>or the purposes of this section% pro5ramme of rural de+elopment shall ha+e
the meanin5 assi5ned to it in the Explanation to sub#section 1! of section )4..(
allowed in respect of such e$penditure under section )4. or section )4.. or section 78;
or any other pro+ision of this "ct for the same or any other assessment year(2
6&
-Expenditure by way of payment to associations and institutions for carrying out
programmes of conservation of natural resources.
35CCB.
78
-1! Fhere an assessee incurs any e$penditure
71
-on or before the )1st day of
Barch% 28822 by way of payment of any sum
a! to an association or institution% which has as its ob:ect the underta9in5 of any
pro5ramme of conser+ation of natural resources or of afforestation% to be used
for carryin5 out any pro5ramme of conser+ation of natural resources or
afforestation appro+ed
72
7)
1 or
b! to such fund for afforestation as may be notified by the .entral ;o+ernment%
the assessee shall% sub:ect to the pro+isions of sub#section 2!% be allowed a deduction of
the amount of such e$penditure incurred durin5 the pre+ious year(2
2! The deduction under
73
-clause a! of2 sub#section 1! shall not be allowed with respect
to e$penditure by way of payment of any sum to any association or institution% unless
such association or institution is for the time bein5 appro+ed in this behalf by the
prescribed authority
74
:
Provided that the prescribed authority shall not 5rant such appro+al for more than three
years at a time(
allowed in respect of such e$penditure under any other pro+ision of this "ct for the same
or any other assessment year(2
7'
-Amortisation of certain preliminary expenses.
76
35D. 1! Fhere an assessee% bein5 an Indian company or a person other than a
company! who is resident in India% incurs% after the )1st day of Barch% 1&68% any
e$penditure specified in sub#section 2!%
i! before the commencement of his business% or
ii! after the commencement of his business% in connection with the e$tension of
his industrial underta9in5 or in connection with his settin5 up a new industrial
unit%
the assessee shall% in accordance with and sub:ect to the pro+isions of this section% be
allowed a deduction of an amount e,ual to one#tenth of such e$penditure for each of the
ten successi+e pre+ious years be5innin5 with the pre+ious year in which the business
commences or% as the case may be% the pre+ious year in which the e$tension of the
industrial underta9in5 is completed or the new industrial unit commences production or
operation :
77
-Provided that where an assessee incurs after the )1st day of Barch% 1&&7% any
e$penditure specified in sub#section 2!% the pro+isions of this sub#section shall ha+e
effect as if for the words an amount e,ual to one#tenth of such e$penditure for each of the
ten successi+e pre+ious years% the words an amount e,ual to one#fifth of such e$penditure
for each of the fi+e successi+e pre+ious years had been substituted(2
2! The e$penditure referred to in sub#section 1! shall be the e$penditure specified in any
one or more of the followin5 clauses% namely :
a! e$penditure in connection with
i! preparation of feasibility report1
ii! preparation of pro:ect report1
iii! conductin5 mar9et sur+ey or any other sur+ey necessary for the business of
the assessee1
i%! en5ineerin5 ser+ices relatin5 to the business of the assessee :
Provided that the wor9 in connection with the preparation of the feasibility
report or the pro:ect report or the conductin5 of mar9et sur+ey or of any other
sur+ey or the en5ineerin5 ser+ices referred to in this clause is carried out by the
assessee himself or by a concern which is for the time bein5 appro+ed
7&
in this
behalf by the Board1
b! le5al char5es for draftin5 any a5reement between the assessee and any other
person for any purpose relatin5 to the settin5 up or conduct of the business of
the assessee1
c! where the assessee is a company% also e$penditure
i! by way of le5al char5es for draftin5 the Bemorandum and "rticles of
"ssociation of the company1
ii! on printin5 of the Bemorandum and "rticles of "ssociation1
iii! by way of fees for re5isterin5 the company under the pro+isions of the
.ompanies "ct% 1&4' 1 of 1&4'!1
i%! in connection with the issue% for public subscription% of shares in or
debentures of the company% bein5 underwritin5 commission% bro9era5e and
char5es for draftin5% typin5% printin5 and ad+ertisement of the prospectus1
d! such other items of e$penditure not bein5 e$penditure eli5ible for any
allowance or deduction under any other pro+ision of this "ct! as may be
prescribed(
)! Fhere the a55re5ate amount of the e$penditure referred to in sub#section 2! e$ceeds
an amount calculated at two and one#half per cent
a! of the cost of the pro:ect% or
b! where the assessee is an Indian company% at the option of the company% of the
capital employed in the business of the company%
the e$cess shall be i5nored for the purpose of computin5 the deduction allowable under
sub#section 1! :
&8
-Provided that where the a55re5ate amount of e$penditure referred to in sub#section 2!
is incurred after the )1st day of Barch% 1&&7% the pro+isions of this sub#section shall ha+e
effect as if for the words two and one#half per cent% the words fi+e per cent had been
substituted(2
Explanation.In this sub#section
a! cost of the pro:ect means
i! in a case referred to in clause i! of sub#section 1!% the actual cost of the
fi$ed assets% bein5 land% buildin5s% leaseholds% plant% machinery% furniture%
fittin5s and railway sidin5s includin5 e$penditure on de+elopment of land
and buildin5s!% which are shown in the boo9s of the assessee as on the last
day of the pre+ious year in which the business of the assessee commences1
ii! in a case referred to in clause ii! of sub#section 1!% the actual cost of the
fi$ed assets% bein5 land% buildin5s% leaseholds% plant% machinery% furniture%
fittin5s and railway sidin5s includin5 e$penditure on de+elopment of land
and buildin5s!% which are shown in the boo9s of the assessee as on the last
day of the pre+ious year in which the e$tension of the industrial
underta9in5 is completed or% as the case may be% the new industrial unit
commences production or operation% in so far as such fi$ed assets ha+e
been ac,uired or de+eloped in connection with the e$tension of the
industrial underta9in5 or the settin5 up of the new industrial unit of the
assessee1
b! capital employed in the business of the company means
i! in a case referred to in clause i! of sub#section 1!% the a55re5ate of the
issued share capital% debentures and lon5#term borrowin5s as on the last day
of the pre+ious year in which the business of the company commences1
ii! in a case referred to in clause ii! of sub#section 1!% the a55re5ate of the
issued share capital% debentures and lon5#term borrowin5s as on the last day
of the pre+ious year in which the e$tension of the industrial underta9in5 is
completed or% as the case may be% the new industrial unit commences
production or operation% in so far as such capital% debentures and lon5#term
borrowin5s ha+e been issued or obtained in connection with the e$tension
of the industrial underta9in5 or the settin5 up of the new industrial unit of
the company1
c! lon5#term borrowin5s means
i! any moneys borrowed by the company from ;o+ernment or the Industrial
>inance .orporation of India or the Industrial .redit and In+estment
.orporation of India or any other financial institution
&1
-which is eli5ible
for deduction under clause %iii! of sub#section 1! of section )'2 or any
ban9in5 institution not bein5 a financial institution referred to abo+e!% or
ii! any moneys borrowed or debt incurred by it in a forei5n country in respect
of the purchase outside India of capital plant and machinery% where the
terms under which such moneys are borrowed or the debt is incurred
pro+ide for the repayment thereof durin5 a period of not less than se+en
years(
3! Fhere the assessee is a person other than a company or a co#operati+e society% no
deduction shall be admissible under sub#section 1! unless the accounts of the assessee
for the year or years in which the e$penditure specified in sub#section 2! is incurred ha+e
been audited by an accountant as defined in the Explanation below sub#section 2! of
section 277% and the assessee furnishes% alon5 with his return of income for the first year
in which the deduction under this section is claimed% the report of such audit in the
prescribed form
&2
duly si5ned and +erified by such accountant and settin5 forth such
particulars as may be prescribed(
4! Fhere the underta9in5 of an Indian company which is entitled to the deduction under
sub#section 1! is transferred% before the e$piry of the period of ten years specified in sub#
section 1!% to another Indian company in a scheme of amal5amation%
i! no deduction shall be admissible under sub#section 1! in the case of the
amal5amatin5 company for the pre+ious year in which the amal5amation ta9es
place1 and
company as they would ha+e applied to the amal5amatin5 company if the
amal5amation had not ta9en place(
&)
-4"! Fhere the underta9in5 of an Indian company which is entitled to the deduction
under sub#section 1! is transferred% before the e$piry of the period specified in sub#
section 1!% to another company in a scheme of demer5er%
demer5ed company for the pre+ious year in which the demer5er ta9es place1
and
company% as they would ha+e applied to the demer5ed company% if the
demer5er had not ta9en place(2
'! Fhere a deduction under this section is claimed and allowed for any assessment year
in respect of any e$penditure specified in sub#section 2!% the e$penditure in respect of
which deduction is so allowed shall not ,ualify for deduction under any other pro+ision
of this "ct for the same or any other assessment year(2
&4
-Amortisation of expenditure incurred under voluntary retirement scheme.
35DDA. 1! Fhere an assessee incurs any e$penditure in any pre+ious year by way of
payment of any sum to an employee
&'
-in connection with2 his +oluntary retirement% in
accordance with any scheme or schemes of +oluntary retirement% one#fifth of the amount
so paid shall be deducted in computin5 the profits and 5ains of the business for that
pre+ious year% and the balance shall be deducted in e,ual instalments for each of the four
immediately succeedin5 pre+ious years(
&6
-2! Fhere the assessee% bein5 an Indian company% is entitled to the deduction under
sub#section 1! and the underta9in5 of such Indian company entitled to the deduction
under sub#section 1! is transferred% before the e$piry of the period specified in that sub#
section% to another Indian company in a scheme of amal5amation% the pro+isions of this
section shall% as far as may be% apply to the amal5amated company as they would ha+e
applied to the amal5amatin5 company if the amal5amation had not ta9en place(
)! Fhere the underta9in5 of an Indian company entitled to the deduction under sub#
section 1! is transferred% before the e$piry of the period specified in that sub#section% to
another company in a scheme of demer5er% the pro+isions of this section shall% as far as
may be% apply to the resultin5 company% as they would ha+e applied to the demer5ed
company% if the demer5er had not ta9en place(
3! Fhere there has been reor5anisation of business% whereby a firm is succeeded by a
company fulfillin5 the conditions laid down in clause xiii! of section 36 or a proprietary
concern is succeeded by a company fulfillin5 the conditions laid down in clause xi%! of
section 36% the pro+isions of this section shall% as far as may be% apply to the successor
company% as they would ha+e applied to the firm or the proprietary concern% if
reor5anisation of business had not ta9en place(
4! Ao deduction shall be allowed in respect of the e$penditure mentioned in sub#section
1! in the case of the amal5amatin5 company referred to in sub#section 2!% in the case of
demer5ed company referred to in sub#section )! and in the case of a firm or proprietary
concern referred to in sub#section 3! of this section% for the pre+ious year in which
amal5amation% demer5er or succession% as the case may be% ta9es place(
'! Ao deduction shall be allowed in respect of the e$penditure mentioned in sub#section
1! under any other pro+ision of this "ct(22
&7
-Deduction for expenditure on prospecting, etc., for certain minerals.
35E. 1! Fhere an assessee% bein5 an Indian company or a person other than a company!
who is resident in India% is en5a5ed in any operations relatin5 to prospectin5 for% or
e$traction or production of% any mineral and incurs% after the )1st day of Barch% 1&68%
any e$penditure specified in sub#section 2!% the assessee shall% in accordance with and
sub:ect to the pro+isions of this section% be allowed for each one of the rele+ant pre+ious
years a deduction of an amount e,ual to one#tenth of the amount of such e$penditure(
2! The e$penditure referred to in sub#section 1! is that incurred by the assessee after the
date specified in that sub#section at any time durin5 the year of commercial production
and any one or more of the four years immediately precedin5 that year% wholly and
e$clusi+ely on any operations relatin5 to prospectin5 for any mineral or 5roup of
associated minerals specified in Part " or Part B% respecti+ely% of the *e+enth *chedule or
on the de+elopment of a mine or other natural deposit of any such mineral or 5roup of
associated minerals :
Provided that there shall be e$cluded from such e$penditure any portion thereof which is
met directly or indirectly by any other person or authority and any sale% sal+a5e%
compensation or insurance moneys realised by the assessee in respect of any property or
ri5hts brou5ht into e$istence as a result of the e$penditure(
)! "ny e$penditure
i! on the ac,uisition of the site of the source of any mineral or 5roup of associated
minerals referred to in sub#section 2! or of any ri5hts in or o+er such site1
ii! on the ac,uisition of the deposits of such mineral or 5roup of associated
minerals or of any ri5hts in or o+er such deposits1 or
iii! of a capital nature in respect of any buildin5% machinery% plant or furniture for
which allowance by way of depreciation is admissible under section )2%
shall not be deemed to be e$penditure incurred by the assessee for any of the purposes
specified in sub#section 2!(
3! The deduction to be allowed under sub#section 1! for any rele+ant pre+ious year shall
be
a! an amount e,ual to one#tenth of the e$penditure specified in sub#section 2!
such one#tenth bein5 hereafter in this sub#section referred to as the
instalment!1 or
b! such amount as is sufficient to reduce to nil the income as computed before
ma9in5 the deduction under this section! of that pre+ious year arisin5 from the
commercial e$ploitation -whether or not such commercial e$ploitation is as a
result of the operations or de+elopment referred to in sub#section 2!2 of any
mine or other natural deposit of the mineral or any one or more of the minerals
in a 5roup of associated minerals as aforesaid in respect of which the
e$penditure was incurred%
whiche+er amount is less :
Provided that the amount of the instalment relatin5 to any rele+ant pre+ious year% to the
e$tent to which it remains unallowed% shall be carried forward and added to the
instalment relatin5 to the pre+ious year ne$t followin5 and deemed to be part of that
instalment% and so on% for succeedin5 pre+ious years% so% howe+er% that no part of any
instalment shall be carried forward beyond the tenth pre+ious year as rec9oned from the
year of commercial production(
a! operation relatin5 to prospectin5 means any operation underta9en for the
purposes of e$plorin5% locatin5 or pro+in5 deposits of any mineral% and
includes any such operation which pro+es to be infructuous or aborti+e1
b! year of commercial production means the pre+ious year in which as a result of
any operation relatin5 to prospectin5% commercial production of any mineral or
any one or more of the minerals in a 5roup of associated minerals specified in
Part " or Part B% respecti+ely% of the *e+enth *chedule% commences1
c! rele+ant pre+ious years means the ten pre+ious years be5innin5 with the year of
commercial production(
'! Fhere the assessee is a person other than a company or a co#operati+e society% no
deduction shall be admissible under sub#section 1! unless the accounts of the assessee
for the year or years in which the e$penditure specified in sub#section 2! is incurred ha+e
been audited by an accountant as defined in the Explanation below sub#section 2! of
section 277% and the assessee furnishes% alon5 with his return of income for the first year
in which the deduction under this section is claimed% the report of such audit in the
prescribed form
&&
duly si5ned and +erified by such accountant and settin5 forth such
particulars as may be prescribed(
6! Fhere the underta9in5 of an Indian company which is entitled to the deduction under
sub#section 1! is transferred% before the e$piry of the period of ten years specified in sub#
section 1!% to another Indian company in a scheme of amal5amation
amal5amatin5 company for the pre+ious year in which the amal5amation ta9es
place1 and
company as they would ha+e applied to the amal5amatin5 company if the
amal5amation had not ta9en place(
1
-6"! Fhere the underta9in5 of an Indian company which is entitled to the deduction
under sub#section 1! is transferred% before the e$piry of the period of ten years specified
in sub#section 1!% to another Indian company in a scheme of demer5er%
demer5ed company for the pre+ious year in which the demer5er ta9es place1
and
company as they would ha+e applied to the demer5ed company% if the
demer5er had not ta9en place(2
7! Fhere a deduction under this section is claimed and allowed for any assessment year
in respect of any e$penditure specified in sub#section 2!% the e$penditure in respect of
which deduction is so allowed shall not ,ualify for deduction under any other pro+ision
of this "ct for the same or any other assessment year(2
Other deductions.
2
36. 1! The deductions pro+ided for in the followin5 clauses shall be allowed in respect
of the matters dealt with therein% in computin5 the income referred to in section 27
)
i! the amount of any premium paid in respect of insurance a5ainst ris9 of dama5e
3
or destruction
3
of stoc9s or stores
3
used for the purposes of the business or
profession1
4
-ia! the amount of any premium paid by a federal mil9 co#operati+e society to
effect or to 9eep in force an insurance on the life of the cattle owned by a
member of a co#operati+e society% bein5 a primary society en5a5ed in
supplyin5 mil9 raised by its members to such federal mil9 co#operati+e
society12
'
-ib! the amount of any premium paid by che,ue by the assessee as an employer to
effect or to 9eep in force an insurance on the health of his employees under a
scheme framed in this behalf by the ;eneral Insurance .orporation of India
formed under section & of the ;eneral Insurance Business Aationalisation!
"ct% 1&62 46 of 1&62! and appro+ed by the .entral ;o+ernment12
The following clause (ib) shall be substituted for the existing clause (ib) of
sub-section (1) of section 36 by the Finance Act, 2006, w.e.f. 1-4-2007 :
*ib( the amount o! an+ premium paid b+ che2ue b+ the assessee as an emplo+er to
e!!ect or to .eep in !orce an insurance on the health o! his emplo+ees under a
scheme !ramed in this behal! b+
*"( the 5eneral 3nsurance 'orporation o! 3ndia !ormed under section # o! the
5eneral 3nsurance Business *&ationalisation( Act) 1#2 *5 o! 1#2( and
appro%ed b+ the 'entral 5o%ernment- or
*B( an+ other insurer and appro%ed b+ the 3nsurance 6egulator+ and
1e%elopment Authorit+ established under sub-section *1( o! section 3 o! the
3nsurance 6egulator+ and 1e%elopment Authorit+ Act) 1### *41 o! 1###(-
6
ii! any sum paid to an employee as bonus or commission
7
for ser+ices rendered%
where such sum would not ha+e been payable to him as profits or di+idend if it
had not been paid as bonus or commission1
&
-* * *2
18
-* * *2
iia!
11
-/mitted b+ the 0inance Act) 1###) w.e.!. 1-4-2$$$.2
12
iii! the amount of the interest
1)
paid in respect of capital
1)
borrowed for the
purposes of the business
1)
or profession :
13
-Provided that any amount of the interest paid% in respect of capital borrowed
for ac,uisition of an asset for e$tension of e$istin5 business or profession
whether capitalised in the boo9s of account or not!1 for any period be5innin5
from the date on which the capital was borrowed for ac,uisition of the asset till
the date on which such asset was first put to use% shall not be allowed as
deduction(2
Explanation.Recurrin5 subscriptions paid periodically by shareholders% or
subscribers in Butual Benefit *ocieties which fulfil such conditions as may be
prescribed% shall be deemed to be capital borrowed within the meanin5 of this
clause1
14
-*iiia( the pro rata amount o! discount on a 8ero coupon bond ha%ing regard to the
period o! li!e o! such bond calculated in the manner as ma+ be prescribed.
E$planation(0or the purposes o! this clause) the expressions
*i( discount means the di!!erence between the amount recei%ed or recei%able
b+ the in!rastructure capital compan+ or in!rastructure capital !und or
public sector compan+ issuing the bond and the amount pa+able b+ such
compan+ or !und or public sector compan+ on maturit+ or redemption o!
such bond-
*ii( period o! li!e o! the bond means the period commencing !rom the date o!
issue o! the bond and ending on the date o! the maturit+ or redemption o!
such bond-
*iii(
14a
***]2
1'
i%!
16
any sum paid
17
by the assessee as an employer by way of contribution towards
a reco5nised pro+ident fund or an appro+ed superannuation fund% sub:ect to
such limits as may be prescribed for the purpose of reco5nisin5 the pro+ident
fund or appro+in5 the superannuation fund% as the case may be1 and sub:ect to
such
1&
conditions as the Board may thin9 fit to specify in cases where the
contributions are not in the nature of annual contributions of fi$ed amounts or
annual contributions fi$ed on some definite basis by reference to the income
char5eable under the head *alaries or to the contributions or to the number of
members of the fund1
28
%!
21
any sum paid

by the assessee as an employer by way of contribution towards
an appro+ed 5ratuity fund created by him for the e$clusi+e benefit of his
employees under an irre+ocable trust1
22
-%a! any sum recei+ed by the assessee from any of his employees to which the
pro+isions of sub#clause x! of clause 24! of section 2 apply% if such sum is
credited by the assessee to the employees account in the rele+ant fund or funds
on or before the due date(
Explanation.>or the purposes of this clause% due date means the date by which
the assessee is re,uired as an employer to credit an employees contribution to
the employees account in the rele+ant fund under any "ct% rule% order or
notification issued thereunder or under any standin5 order% award% contract of
ser+ice or otherwise12
2)
%i! in respect of animals which ha+e been used for the purposes of the business or
profession otherwise than as stoc9#in#trade and ha+e died or become
permanently useless for such purposes% the difference between the actual cost to
the assessee of the animals and the amount% if any% realised in respect of the
carcasses or animals1
2)
%ii! sub:ect to the pro+isions of sub#section 2!% the amount of
23
-any
24
bad debt or
part thereof
24
which is written off as irreco+erable in the accounts of the
assessee for the pre+ious year2:
2'
-Provided that in the case of
26
-an assessee2 to which clause %iia! applies% the
amount of the deduction relatin5 to any such debt or part thereof shall be
limited to the amount by which such debt or part thereof e$ceeds the credit
balance in the pro+ision for bad and doubtful debts account made under that
clause(2
27
-Explanation.>or the purposes of this clause% any bad debt or part thereof
written off as irreco+erable in the accounts of the assessee shall not include any
pro+ision for bad and doubtful debts made in the accounts of the assessee12
2&
-%iia!
)8
-
)1
in respect of any pro+ision for bad and doubtful debts made by
a! a scheduled ban9 -not bein5
)2
-* * *2 a ban9 incorporated by or under the
laws of a country outside India2 or a non#scheduled ban9% an amount
))
-not
e$ceedin5 se+en and one#half per cent2 of the total income computed
before ma9in5 any deduction under this clause and .hapter 0I"! and an
amount not e$ceedin5
)3
-ten2 per cent of the a55re5ate a+era5e ad+ances
made by the rural branches of such ban9 computed in the prescribed
manner :
)4
-Provided that a scheduled ban9 or a non#scheduled ban9 referred to in
this sub#clause shall% at its option% be allowed in any of the rele+ant
assessment years% deduction in respect of any pro+ision made by it for any
assets classified by the Reser+e Ban9 of India as doubtful assets or loss
assets in accordance with the 5uidelines issued by it in this behalf% for an
amount not e$ceedin5 fi+e per cent of the amount of such assets shown in
the boo9s of account of the ban9 on the last day of the pre+ious year:2
)'
-Provided further that for the rele+ant assessment years com#mencin5 on
or after the 1st day of "pril% 288) and endin5 before the 1st day of "pril%
2884% the pro+isions of the first pro+iso shall ha+e effect as if for the words
fi+e per cent% the words ten per cent had been substituted :2
)6
-Provided also that a scheduled ban9 or a non#scheduled ban9 referred to
in this sub#clause shall% at its option% be allowed a further deduction in
e$cess of the limits specified in the fore5oin5 pro+isions% for an amount not
e$ceedin5 the income deri+ed from redemption of securities in accordance
with a scheme framed by the .entral ;o+ernment:
Provided also that no deduction shall be allowed under the third pro+iso
unless such income has been disclosed in the return of income under the
head Profits and 5ains of business or profession( 2
)7
-Explanation.>or the purposes of this sub#clause% rele+ant assessment
years means the fi+e consecuti+e assessment years commencin5 on or after
the 1st day of "pril% 2888 and endin5 before the 1st day of "pril% 288412
b! a ban9% bein5 a ban9 incorporated by or under the laws of a country outside
India% an amount not e$ceedin5 fi+e per cent of the total income computed
before ma9in5 any deduction under this clause and .hapter 0I"!12
)&
-c! a public financial institution or a *tate financial corporation or a *tate
industrial in+estment corporation% an amount not e$ceedin5 fi+e per cent of
the total income computed before ma9in5 any deduction under this clause
and .hapter 0I#"! :2
38
-Provided that a public financial institution or a *tate financial
corporation or a *tate industrial in+estment corporation referred to in this
sub#clause shall% at its option% be allowed in any of the two consecuti+e
assessment years commencin5 on or after the 1st day of "pril% 288) and
endin5 before the 1st day of "pril% 2884% deduction in respect of any
pro+ision made by it for any assets classified by the Reser+e Ban9 of India
as doubtful assets or loss assets in accordance with the 5uidelines issued by
it in this behalf% of an amount not e$ceedin5 ten per cent of the amount of
such assets shown in the boo9s of account of such institution or
corporation% as the case may be% on the last day of the pre+ious year(2
31
-i! non#scheduled ban9 means a
32
ban9in5 company as defined in clause c! of
section 4 of the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!% which is not a
scheduled ban912
3)
-ia!2 rural branch means a branch of a scheduled ban9
33
-or a non#scheduled
ban92 situated in a place which has a population of not more than ten
thousand accordin5 to the last precedin5 census of which the rele+ant
fi5ures ha+e been published before the first day of the pre+ious year1
34
-ii! scheduled ban9 means the *tate Ban9 of India constituted under the *tate
Ban9 of India "ct% 1&44 2) of 1&44!% a subsidiary ban9 as defined in the
*tate Ban9 of India *ubsidiary Ban9s! "ct% 1&4& )7 of 1&4&!% a
correspondin5 new ban9 constituted under section ) of the Ban9in5
.ompanies "c,uisition and Transfer of Enderta9in5s! "ct% 1&68 4 of
1&68!% or under section ) of the Ban9in5 .ompanies "c,uisition and
Transfer of Enderta9in5s! "ct% 1&78 38 of 1&78!% or any other ban9 bein5
a ban9 included in the *econd *chedule to the Reser+e Ban9 of India "ct%
1&)3 2 of 1&)3!% but does not include a co#operati+e ban912
3'
-iii! public financial institution shall ha+e the meanin5 assi5ned to it in section
3"
36
of the .ompanies "ct% 1&4' 1 of 1&4'!1
i%! *tate financial corporation means a financial corporation established under
section ) or section )" or an institution notified under section 3' of the
*tate >inancial .orporations "ct% 1&41 ') of 1&41!1
%! *tate industrial in+estment corporation means a ;o+ernment company
37
within the meanin5 of section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!%
en5a5ed in the business of pro+idin5 lon5#term finance for industrial
pro:ects and
3&
-eli5ible for deduction under clause %iii! of this sub#
section212
%iii!
48
-in respect of any special reser+e created
41
-and maintained2 by a financial
corporation
42
which is en5a5ed in pro+idin5 lon5#term finance for
4)
-industrial
or a5ricultural de+elopment or de+elopment of infrastructure facility in India or
by a public company formed and re5istered in India with the main ob:ect of
carryin5 on the business of pro+idin5 lon5#term finance for construction or
purchase of houses in India for residential purposes% an amount not e$ceedin5
forty per cent of the profits deri+ed from such business of pro+idin5 lon5#term
finance computed under the head Profits and 5ains of business or profession
43
-before ma9in5 any deduction under this clause2! carried to such reser+e
account:2
44
-***2
Provided
4'
-***2 that where the a55re5ate of the amounts carried to such
reser+e account from time to time e$ceeds
46
-twice the amount of2 the paid#up
share capital
47
-and of the 5eneral reser+es2 of the corporation
4&
-or% as the case
may be% the company2% no allowance under this clause shall be made in respect
of such e$cess(
'8
-Explanation.In this clause%
a! financial corporation shall include a public company and a ;o+ernment
company1
b!
'1
public company shall ha+e the meanin5 assi5ned to it in section ) of the
.ompanies "ct% 1&4' 1 of 1&4'!1
c!
'2
;o+ernment company shall ha+e the meanin5 assi5ned to it in section '16
')
-d! infrastructure facility shall ha+e the meanin5 assi5ned to it in clause 235!
of section 1812
The following clause (d) shall be substituted for the existing clause (d)
in the Explanation to clause (viii) of sub-section (1) of section 36 by the
Finance Act, 2006, w.e.f. 1-4-2007 :
*d( in!rastructure !acilit+ means
*i( an in!rastructure !acilit+ as de!ined in the E$planation to clause *i( o!
sub-section *4( o! section "$-3A) or an+ other public !acilit+ o! a similar
nature as ma+ be noti!ied b+ the Board in this behal! in the /!!icial
5a8ette and which !ul!ils the conditions as ma+ be prescribed-
*ii( an underta.ing re!erred to in clause *ii( or clause *iii( or clause *i+( o!
sub-section *4( o! section "$-3A- and
*iii( an underta.ing re!erred to in sub-section *1$( o! section "$-3B-
'3
-e! lon5#term finance means any loan or ad+ance where the terms under which
moneys are loaned or ad+anced pro+ide for repayment alon5 with interest
thereof durin5 a period of not less than fi+e years12
%iiia!
'4
-* * *2
''
-ix! any e$penditure bona !ide incurred by a company for the purpose of promotin5
family plannin5 amon5st its employees :
Provided that where such e$penditure or any part thereof is of a capital nature%
one#fifth of such e$penditure shall be deducted for the pre+ious year in which it
was incurred1 and the balance thereof shall be deducted in e,ual instalments for
each of the four immediately succeedin5 pre+ious years :
Provided further that the pro+isions of sub#section 2! of section )2 and of
sub#section 2! of section 62 shall apply in relation to deductions allowable
under this clause as they apply in relation to deductions allowable in respect of
depreciation :
Provided further that the pro+isions of clauses ii!% iii!% i%! and %! of sub#
section 2!
'6
-and sub#section 4!2 of section )4% of sub#section )! of section 31
and of Explanation 1 to clause 1! of section 3) shall% so far as may be% apply in
relation to an asset representin5 e$penditure of a capital nature for the purposes
of promotin5 family plannin5 as they apply in relation to an asset representin5
e$penditure of a capital nature on scientific research12
'7
-x! any sum paid by a public financial institution by way of contribution towards
'&
-any E$chan5e Ris9 "dministration >und set up by public financial
institutions% either :ointly or separately2(
Explanation.>or the purposes of this clause% public financial institutions shall
ha+e the meanin5 assi5ned to it in
68
section 3" of the .ompanies "ct% 1&4' 1
of 1&4'!12
61
-xi! any e$penditure incurred by the assessee% on or after the 1st day of "pril% 1&&&
but before the 1st day of "pril% 2888% wholly and e$clusi+ely in respect of a
non#Y2D compliant computer system% owned by the assessee and used for the
purposes of his business or profession% so as to ma9e such computer system
Y2D compliant computer system :
Provided that no such deduction shall be allowed in respect of such
e$penditure under any other pro+isions of this "ct :
Provided further that no such deduction shall be admissible unless the
assessee furnishes in the prescribed form
62
% alon5 with the return of income% the
report of an accountant% as defined in the Explanation below sub#section 2! of
section 277% certifyin5 that the deduction has been correctly claimed in
accordance with the pro+isions of this clause(
a! computer system means a de+ice or collection of de+ices includin5 input
and output support de+ices and e$cludin5 calculators which are not
pro5rammable and capable of bein5 used in con:unction with e$ternal files%
or more of which contain computer pro5rammes% electronic instructions%
input data and output data% that performs functions includin5% but not
limited to% lo5ic% arithmetic% data stora5e and retrie+al% communication and
control1
b! Y2D compliant computer system means a computer system capable of
correctly processin5% pro+idin5 or recei+in5 data relatin5 to date within and
between the twentieth and twenty#first century12
6)
-xii! any e$penditure not bein5 in the nature of capital e$penditure! incurred by a
corporation or a body corporate% by whate+er name called% constituted or
established by a .entral% *tate or Pro+incial "ct for the ob:ects and purposes
authorised by the "ct under which such corporation or body corporate was
constituted or established12
63
-*$iii( an+ amount o! ban.ing cash transaction tax paid b+ the assessee during the
pre%ious +ear on the taxable ban.ing transactions entered into b+ him.
E$planation.0or the purposes o! this clause) the expressions ban.ing cash
transaction tax and taxable ban.ing transaction shall ha%e the same meanings
respecti%el+ assigned to them under 'hapter E33 o! the 0inance Act) 2$$5.2
64
2! In ma9in5 any deduction for a bad debt or part thereof% the followin5 pro+isions
shall apply
6'
-i! no such deduction shall be allowed unless such debt or part thereof has been
ta9en into account in computin5 the income of the assessee of the pre+ious year
in which the amount of such debt or part thereof is written off or of an earlier
pre+ious year% or represents money lent in the ordinary course of the business
of ban9in5 or money#lendin5 which is carried on by the assessee12
ii! if the amount ultimately reco+ered on any such debt or part of debt is less than
the difference between the debt or part and the amount so deducted% the
deficiency shall be deductible in the pre+ious year in which the ultimate
reco+ery is made1
iii! any such debt or part of debt may be deducted if it has already been written off
as irreco+erable in the accounts of an earlier pre+ious year
66
-bein5 a pre+ious
year rele+ant to the assessment year commencin5 on the 1st day of "pril% 1&77%
or any earlier assessment year!2% but the
67
-"ssessin52 <fficer had not allowed it
to be deducted on the 5round that it had not been established to ha+e become a
bad debt in that year1
i%! where any such debt or part of debt is written off as irreco+erable in the
accounts of the pre+ious year
6&
-bein5 a pre+ious year rele+ant to the
assessment year commencin5 on the 1st day of "pril% 1&77% or any earlier
assessment year!2 and the
78
-"ssessin52 <fficer is satisfied that such debt or
part became a bad debt in any earlier pre+ious year not fallin5 beyond a period
of four pre+ious years immediately precedin5 the pre+ious year in which such
debt or part is written off% the pro+isions of sub#section '! of section 144 shall
apply1
71
-%! where such debt or part of debt relates to ad+ances made by an assessee to
which clause %iia! of sub#section 1! applies% no such deduction shall be
allowed unless the assessee has debited the amount of such debt or part of debt
in that pre+ious year to the pro+ision for bad and doubtful debts account made
under that clause(2
General.
72
37.
7)
1!
73
"ny e$penditure
74
not bein5 e$penditure of the nature described in sections
)8 to )'
7'
-***2 and not bein5 in the nature of capital e$penditure
74
or personal e$penses
of the assessee!% laid out or e$pended wholly and e$clusi+ely
76
for the purposes of the
business
76
or profession shall be allowed in computin5 the income char5eable under the
head Profits and 5ains of business or profession(
77
-Explanation(>or the remo+al of doubts% it is hereby declared that any e$penditure
incurred by an assessee for any purpose which is an offence or which is prohibited by law
shall not be deemed to ha+e been incurred for the purpose of business or profession and
no deduction or allowance shall be made in respect of such e$penditure(2
2!
7&
-* * *2
&8
-
&1
2B! Aotwithstandin5 anythin5 contained in sub#section 1!% no allowance shall be
made in respect of e$penditure incurred by an assessee on ad+ertisement in any sou+enir%
brochure% tract% pamphlet or the li9e published by a political party(2
)!
&2
-* * *2
)"!
&)
-* * *2
)B!
&3
-* * *2
).!
&4
-* * *2
)?!
&'
-* * *2
3!
&6
-* * *2
4!
&7
-* * *2
Building, etc., partly used for business, etc., or not exclusively so used.
&&
38. 1! Fhere a part of any premises is used as dwellin5 house by the assessee%
a! the deduction under sub#clause i! of clause a! of section )8% in the case of
rent% shall be such amount as the
1
-"ssessin52 <fficer may determine ha+in5
re5ard to the proportionate annual +alue of the part used for the purpose of the
business or profession% and in the case of any sum paid for repairs% such sum as
is proportionate to the part of the premises used for the purpose of the business
or profession1
b! the deduction under clause b! of section )8 shall be such sum as the
2
-"ssessin52 <fficer may determine ha+in5 re5ard to the part so used(
2! Fhere any buildin5% machinery% plant or furniture is not e$clusi+ely used for the
purposes of the business or profession% the deductions under sub#clause ii! of clause a!
and clause c! of section )8% clauses i! and ii! of section )1 and
)
-clause ii! of sub#
section 1!2 of section )2 shall be restricted to a fair proportionate part thereof which the
3
-"ssessin52 <fficer may determine% ha+in5 re5ard to the user of such buildin5%
machinery% plant or furniture for the purposes of the business or profession(
Amounts not deductible.
40. Aotwithstandin5 anythin5 to the contrary in sections )8 to
4
-)72% the followin5
amounts shall not be deducted in computin5 the income char5eable under the head Profits
and 5ains of business or profession%
'
a! in the case of any assessee
6
-i! any interest not bein5 interest on a loan issued for public subscription
before the 1st day of "pril% 1&)7!% royalty% fees for technical ser+ices or
other sum char5eable under this "ct% which is payable%
A! outside India1 or
B! in India to a non#resident% not bein5 a company or to a forei5n
company%
on which ta$ is deductible at source under .hapter /0II#B and such ta$ has
not been deducted or% after deduction% has not been paid durin5 the pre+ious
year% or in the subse,uent year before the e$piry of the time prescribed
under sub#section 1! of section 288 :
Provided that where in respect of any such sum% ta$ has been deducted in
any subse,uent year or% has been deducted in the pre+ious year but paid in
any subse,uent year after the e$piry of the time prescribed under sub#
section 1! of section 288% such sum shall be allowed as a deduction in
computin5 the income of the pre+ious year in which such ta$ has been paid(
Explanation.>or the purposes of this sub#clause%
A! royalty shall ha+e the same meanin5 as in Explanation 2 to clause %i!
of sub#section 1! of section &1
B! fees for technical ser+ices shall ha+e the same meanin5 as in
Explanation 2 to clause %ii! of sub#section 1! of section &1
ia! any interest% commission or bro9era5e% fees for professional ser+ices or fees
for technical ser+ices payable to a resident% or amounts payable to a
contractor or sub#contractor% bein5 resident% for carryin5 out any wor9
includin5 supply of labour for carryin5 out any wor9!% on which ta$ is
deductible at source under .hapter /0II#B and such ta$ has not been
deducted or% after deduction% has not been paid durin5 the pre+ious year% or
in the subse,uent year before the e$piry of the time prescribed under sub#
section 1! of section 288 :
Provided that where in respect of any such sum% ta$ has been deducted in
any subse,uent year or% has been deducted in the pre+ious year but paid in
any subse,uent year after the e$piry of the time prescribed under sub#
section 1! of section 288% such sum shall be allowed as a deduction in
computin5 the income of the pre+ious year in which such ta$ has been paid(
i! commission or bro9era5e shall ha+e the same meanin5 as in clause i!
of the Explanation to section 1&3C1
ii! fees for technical ser+ices shall ha+e the same meanin5 as in
Explanation 2 to clause %ii! of sub#section 1! of section &1
iii! professional ser+ices shall ha+e the same meanin5 as in clause a! of the
Explanation to section 1&3@1
i%! wor9 shall ha+e the same meanin5 as in Explanation 333 to section
1&3.1
ib! any sum paid on account of securities transaction ta$ under .hapter 0II of
the >inance Ao( 2! "ct% 288312
7
-*ic( an+ sum paid on account o! !ringe bene!it tax under 'hapter B33-C-2
&
ii! any sum paid on account of any rate or ta$ le+ied
18
on the profits or 5ains of
any business or profession
18
or assessed at a proportion of% or otherwise on
the basis of% any such profits or 5ains(
18a
E$planation 1(0or the remo%al o! doubts) it is hereb+ declared that !or
the purposes o! this sub-clause) an+ sum paid on account o! an+ rate or tax
le%ied includes and shall be deemed alwa+s to ha%e included an+ sum
eligible !or relie! o! tax under section #$ or) as the case ma+ be) deduction
!rom the 3ndian income-tax pa+able under section #1.]
18b
E$planation 2(0or the remo%al o! doubts) it is hereb+ declared that !or
the purposes o! this sub-clause) an+ sum paid on account o! an+ rate or tax
le%ied includes an+ sum eligible !or relie! o! tax under section #$A-]
11
-
12
iia!any sum paid on account of wealth#ta$(
Explanation.>or the purposes of this sub#clause% wealth#ta$ means wealth#
ta$ char5eable under the Fealth#ta$ "ct% 1&46 26 of 1&46!% or any ta$ of a
similar character char5eable under any law in force in any country outside
India or any ta$ char5eable under such law with reference to the +alue of
the assets of% or the capital employed in% a business or profession carried on
by the assessee% whether or not the debts of the business or profession are
allowed as a deduction in computin5 the amount with reference to which
such ta$ is char5ed% but does not include any ta$ char5eable with reference
to the +alue of any particular asset of the business or profession12
1)
-iii! any payment which is char5eable under the head *alaries% if it is payable
A! outside India1 or
B! to a non#resident%
and if the ta$ has not been paid thereon nor deducted therefrom under
.hapter /0II#B12
i%! any payment to a pro+ident or other fund established for the benefit of
employees of the assessee% unless the assessee has made effecti+e
arran5ements to secure that ta$ shall be deducted at source from any
payments made from the fund which are char5eable to ta$ under the head
*alaries1
13
-%! any ta$ actually paid by an employer referred to in clause 1$''! of section
1812
14
-b! in the case of any firm assessable as such%
i! any payment of salary% bonus% commission or remuneration% by whate+er
name called hereinafter referred to as remuneration! to any partner who is
not a wor9in5 partner1 or
ii! any payment of remuneration to any partner who is a wor9in5 partner% or of
interest to any partner% which% in either case% is not authorised by% or is not
in accordance with% the terms of the partnership deed1 or
iii! any payment of remuneration to any partner who is a wor9in5 partner% or of
interest to any partner% which% in either case% is authorised by% and is in
accordance with% the terms of the partnership deed% but which relates to any
period fallin5 prior to the date of such partnership deed! for which such
payment was not authorised by% or is not in accordance with% any earlier
partnership deed% so% howe+er% that the period of authorisation for such
payment by any earlier partnership deed does not co+er any period prior to
the date of such earlier partnership deed1 or
i%! any payment of interest to any partner which is authorised by% and is in
accordance with% the terms of the partnership deed and relates to any period
fallin5 after the date of such partnership deed in so far as such amount
e$ceeds the amount calculated at the rate of
1'
-twel+e2 per cent simple
interest per annum1 or
16
%! any payment of remuneration to any partner who is a wor9in5 partner%
which is authorised by% and is in accordance with% the terms of the
partnership deed and relates to any period fallin5 after the date of such
partnership deed in so far as the amount of such payment to all the partners
durin5 the pre+ious year e$ceeds the a55re5ate amount computed as
hereunder :
1! in case of a firm carryin5 on a profession referred to in section 33"" or
which is notified for the purpose of that section
a! on the first Rs( 1%88%888
of the boo9#profit or in
case of a loss
Rs( 48%888 or at the rate of &8 per cent
of the boo9# profit% whiche+er is
more1
b! on the ne$t Rs( 1%88%888
of the boo9#profit
at the rate of '8 per cent1
c! on the balance of the
boo9#profit
at the rate of 38 per cent1
2! in the case of any other firm
a! on the first Rs( 64%888 of Rs( 48%888 or at the rate of &8 per cent
the boo9#profit% or in case
of a loss
of the boo9# profit% whiche+er is
more1
b! on the ne$t Rs( 64%888 of
the boo9#profit
at the rate of '8 per cent1
c! on the balance of the
boo9#profit
at the rate of 38 per cent:
Provided that in relation to any payment under this clause to the partner durin5
the pre+ious year rele+ant to the assessment year commencin5 on the 1st day of
"pril% 1&&)% the terms of the partnership deed may% at any time durin5 the said
pre+ious year% pro+ide for such payment(
Explanation 1.Fhere an indi+idual is a partner in a firm on behalf% or for the
benefit% of any other person such partner and the other person bein5 hereinafter
referred to as partner in a representati+e capacity and person so represented%
respecti+ely!%
i! interest paid by the firm to such indi+idual otherwise than as partner in a
representati+e capacity% shall not be ta9en into account for the purposes of
this clause1
ii! interest paid by the firm to such indi+idual as partner in a representati+e
capacity and interest paid by the firm to the person so represented shall be
ta9en into account for the purposes of this clause(
Explanation 2.Fhere an indi+idual is a partner in a firm otherwise than as
partner in a representati+e capacity% interest paid by the firm to such indi+idual
shall not be ta9en into account for the purposes of this clause% if such interest is
recei+ed by him on behalf% or for the benefit% of any other person(
Explanation 3.>or the purposes of this clause% boo9#profit means the net profit%
as shown in the profit and loss account for the rele+ant pre+ious year% computed
in the manner laid down in .hapter I0#? as increased by the a55re5ate amount
of the remuneration paid or payable to all the partners of the firm if such
amount has been deducted while computin5 the net profit(
Explanation 4.>or the purposes of this clause% wor9in5 partner means an
indi+idual who is acti+ely en5a5ed in conductin5 the affairs of the business or
profession of the firm of which he is a partner12
17
-ba! in the case of an association of persons or body of indi+iduals -other than a
company or a co#operati+e society or a society re5istered under the *ocieties
Re5istration "ct% 17'8 21 of 17'8!% or under any law correspondin5 to that
"ct in force in any part of India2% any payment of interest% salary% bonus%
commission or remuneration% by whate+er name called% made by such
association or body to a member of such association or body(
Explanation 1.Fhere interest is paid by an association or body to any member
thereof who has also paid interest to the association or body% the amount of
interest to be disallowed under this clause shall be limited to the amount by
which the payment of interest by the association or body to the member
e$ceeds the payment of interest by the member to the association or body(
Explanation 2.Fhere an indi+idual is a member of an association or body on
behalf% or for the benefit% of any other person such member and the other
person bein5 hereinafter referred to as member in a representati+e capacityand
person so represented% respecti+ely!%
i! interest paid by the association or body to such indi+idual or by such
indi+idual to the association or body otherwise than as member in a
representati+e capacity% shall not be ta9en into account for the purposes of
this clause1
ii! interest paid by the association or body to such indi+idual or by such
indi+idual to the association or body as member in a representati+e capacity
and interest paid by the association or body to the person so represented or
by the person so represented to the association or body% shall be ta9en into
account for the purposes of this clause(
Explanation 3.Fhere an indi+idual is a member of an association or body
otherwise than as member in a representati+e capacity% interest paid by the
association or body to such indi+idual shall not be ta9en into account for the
purposes of this clause% if such interest is recei+ed by him on behalf% or for the
benefit% of any other person(2
c! -/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#.
Earlier) it was amended b+ the 0inance Act) 1#63) w.e.!. 1-4-1#63) 0inance
Act) 1#64) w.e.!. 1-4-1#64) 0inance Act) 1#65) w.e.!. 1-4-1#65) 0inance Act)
1#6") w.e.!. 1-4-1#6#) 0inance *&o. 2( Act) 1#1) w.e.!. 1-4-1#2) 0inance Act)
1#"4) w.e.!. 1-4-1#"5 and 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-
1#"".2
d! -/mitted b+ the 0inance Act) 1#"") w.e.!. 1-4-1#"#.2
Profits chargeable to tax.
41.
3&
-
48
1! Fhere an allowance or deduction has been made in the assessment for any
year in respect of loss% e$penditure or tradin5 liability incurred by the assessee
hereinafter referred to as the first#mentioned person! and subse,uently durin5 any
pre+ious year%
a! the first#mentioned person has obtained
41
% whether in cash or in any other
manner whatsoe+er% any amount in respect of such
41
loss or e$penditure
41
or
some benefit in respect of such tradin5 liability by way of remission or
cessation thereof
41
% the amount obtained by such person or the +alue of benefit
accruin5 to him shall be deemed to be profits and 5ains of business or
profession and accordin5ly char5eable to income#ta$ as the income of that
pre+ious year% whether the business or profession in respect of which the
allowance or deduction has been made is in e$istence in that year or not1 or
b! the successor in business has obtained
41
% whether in cash or in any other manner
whatsoe+er% any amount in respect of which loss or e$penditure was incurred
by the first#mentioned person or some benefit in respect of the tradin5 liability
referred to in clause a! by way of remission or cessation thereof% the amount
obtained by the successor in business or the +alue of benefit accruin5 to the
successor in business shall be deemed to be profits and 5ains of the business or
profession% and accordin5ly char5eable to income#ta$ as the income of that
pre+ious year(
42
-Explanation 1.>or the purposes of this sub#section% the e$pression loss or e$penditure
or some benefit in respect of any such tradin5 liability by way of remission or cessation
thereof shall include the remission or cessation of any liability by a unilateral act by the
first mentioned person under clause a! or the successor in business under clause b! of
that sub#section by way of writin5 off such liability in his accounts(2
4)
-Explanation 22(>or the purposes of this sub#section% successor in business means%
i! where there has been an amal5amation of a company with another company%
the amal5amated company1
ii! where the first#mentioned person is succeeded by any other person in that
business or profession% the other person1
iii! where a firm carryin5 on a business or profession is succeeded by another firm%
the other firm12
43
-i%! where there has been a demer5er% the resultin5 company(2
44
-2! Fhere any buildin5% machinery% plant or furniture%
a! which is owned by the assessee1
b! in respect of which depreciation is claimed under clause i! of sub#section 1!
of section )21 and
c! which was or has been used for the purposes of business%
is sold
4'
% discarded% demolished or destroyed
4'
and the moneys payable
4'
in respect of
such buildin5% machinery% plant or furniture% as the case may be% to5ether with the amount
of scrap +alue% if any% e$ceeds the written down +alue% so much of the e$cess as does not
e$ceed the difference between the actual cost and the written down +alue shall be
char5eable to income#ta$ as income of the business of the pre+ious year in which the
moneys payable for the buildin5% machinery% plant or furniture became due
4'
(
Explanation.Fhere the moneys payable in respect of the buildin5% machinery% plant or
furniture referred to in this sub#section become due in a pre+ious year in which the
business for the purpose of which the buildin5% machinery% plant or furniture was bein5
used is no lon5er in e$istence% the pro+ision of this sub#section shall apply as if the
business is in e$istence in that pre+ious year(2
2"!
46
-***2
)! Fhere an asset representin5 e$penditure of a capital nature on scientific research
within the meanin5 of clause i%! of sub#section 1!%
47
-or clause c! of sub#section 2B!%2
of section )4% read with clause 4! of section 3)% is sold% without ha+in5 been used for
other purposes% and the proceeds of the sale to5ether with the total amount of the
deductions made under clause i!
4&
-or% as the case may be% the amount of the deduction
under clause ia!2 of sub#section 2!%
'8
-or clause c! of sub#section 2B!%2 of section )4
e$ceed the amount of the capital e$penditure% the e$cess or the amount of the deductions
so made% whiche+er is the less% shall be char5eable to income#ta$ as income of the
business or profession of the pre+ious year in which the sale too9 place(
Explanation.Fhere the moneys payable in respect of any asset referred to in this sub#
section become due in a pre+ious year in which the business is no lon5er in e$istence% the
pro+isions of this sub#section shall apply as if the business is in e$istence in that pre+ious
year(
'1
3! Fhere a deduction has been allowed in respect of a bad debt or part of debt under
the pro+isions of clause %ii! of sub#section 1! of section )'% then% if the amount
subse,uently reco+ered on any such debt or part is 5reater than the difference between
the debt or part of debt and the amount so allowed% the e$cess shall be deemed to be
profits and 5ains of business or profession% and accordin5ly char5eable to income#ta$ as
the income of the pre+ious year in which it is reco+ered% whether the business or
profession in respect of which the deduction has been allowed is in e$istence in that year
or not(
'2
-Explanation.>or the purposes of sub#section )!%
1! moneys payable in respect of any buildin5% machinery% plant or furniture
includes
a! any insurance% sal+a5e or compensation moneys payable in respect thereof1
b! where the buildin5% machinery% plant or furniture is sold% the price for which
it is sold%
so% howe+er% that where the actual cost of a motor car is% in accordance with the
pro+iso to clause 1! of section 3)% ta9en to be twenty#fi+e thousand rupees% the
moneys payable in respect of such motor car shall be ta9en to be a sum which
bears to the amount for which the motor car is sold or% as the case may be% the
amount of any insurance% sal+a5e or compensation moneys payable in respect
thereof includin5 the amount of scrap +alue% if any! the same proportion as the
amount of twenty#fi+e thousand rupees bears to the actual cost of the motor car
to the assessee as it would ha+e been computed before applyin5 the said
pro+iso1
2! sold includes a transfer by way of e$chan5e or a compulsory ac,uisition under
any law for the time bein5 in force but does not include a transfer% in a scheme
of amal5amation% of any asset by the amal5amatin5 company to the
amal5amated company where the amal5amated company is an Indian
company(2
')
-3"! Fhere a deduction has been allowed in respect of any special reser+e created and
maintained under clause %iii! of sub#section 1! of section )'% any amount subse,uently
withdrawn from such special reser+e shall be deemed to be the profits and 5ains of
business or profession and accordin5ly be char5eable to income#ta$ as the income of the
pre+ious year in which such amount is withdrawn(
Explanation.Fhere any amount is withdrawn from the special reser+e in a pre+ious year
in which the business is no lon5er in e$istence% the pro+isions of this sub#section shall
apply as if the business is in e$istence in that pre+ious year(2
4! Fhere the business or profession referred to in this section is no lon5er in e$istence
and there is income char5eable to ta$ under sub#section 1!%
'3
-***2 sub#section )!
'4
-%
sub#section 3! or sub#section 3"!2 in respect of that business or profession% any loss% not
bein5 a loss sustained in speculation business
''
-***2% which arose in that business or
profession durin5 the pre+ious year in which it ceased to e$ist and which could not be set
off a5ainst any other income of that pre+ious year shall% so far as may be% be set off
a5ainst the income char5eable to ta$ under the sub#sections aforesaid(
'6
-'! References in sub#section )! to any other pro+ision of this "ct which has been
amended or omitted by the ?irect Ta$ Gaws "mendment! "ct% 1&76 shall%
notwithstandin5 such amendment or omission% be construed% for the purposes of that sub#
section% as if such amendment or omission had not been made(2
Special provision for deductions in the case of business for prospecting, etc., for
mineral oil.
42.
'7
-1!2 >or the purpose of computin5 the profits or 5ains of any business consistin5
of the prospectin5 for or e$traction or production of mineral oils in relation to which the
.entral ;o+ernment has entered into an a5reement with any person for the association or
participation
'&
-of the .entral ;o+ernment or any person authorised by it in such
business2 which a5reement has been laid on the Table of each Couse of Parliament!%
there shall be made in lieu of% or in addition to% the allowances admissible under this "ct%
such allowances as are specified in the a5reement in relation
a! to e$penditure by way of infructuous or aborti+e e$ploration e$penses in
respect of any area surrendered prior to the be5innin5 of commercial
production by the assessee 1
b! after the be5innin5 of commercial production% to e$penditure incurred by the
assessee% whether before or after such commercial production% in respect of
drillin5 or e$ploration acti+ities or ser+ices or in respect of physical assets used
in that connection% e$cept assets on which allowance for depreciation is
admissible under section )2 :
68
-***2
61
-Provided that in relation to any a5reement entered into after the )1st day of
Barch% 1&71% this clause shall ha+e effect sub:ect to the modification that the
words and fi5ures e$cept assets on which allowance for depreciation is
admissible under section )2 had been omitted1 and2
c! to the depletion of mineral oil in the minin5 area in respect of the assessment
year rele+ant to the pre+ious year in which commercial production is be5un and
for such succeedin5 year or years as may be specified in the a5reement1
and such allowances shall be computed and made in the manner specified in the
a5reement% the other pro+isions of this "ct bein5 deemed for this purpose to ha+e been
modified to the e$tent necessary to 5i+e effect to the terms of the a5reement(
62
-2! Fhere the business of the assessee consistin5 of the prospectin5 for or e$traction or
production of petroleum and natural 5as is transferred wholly or partly or any interest in
such business is transferred in accordance with the a5reement referred to in sub#section
1!% sub:ect to the pro+isions of the said a5reement and where the proceeds of the transfer
so far as they consist of capital sums!
a! are less than the e$penditure incurred remainin5 unallowed% a deduction e,ual
to such e$penditure remainin5 unallowed% as reduced by the proceeds of
transfer% shall be allowed in respect of the pre+ious year in which such business
or interest% as the case may be% is transferred1
b! e$ceed the amount of the e$penditure incurred remainin5 unallowed% so much
of the e$cess as does not e$ceed the difference between the e$penditure
incurred in connection with the business or to obtain interest therein and the
amount of such e$penditure remainin5 unallowed% shall be char5eable to
income#ta$ as profits and 5ains of the business in the pre+ious year in which
the business or interest therein% whether wholly or partly% had been transferred :
Provided that in a case where the pro+isions of this clause do not apply% the
deduction to be allowed for e$penditure incurred remainin5 unallowed shall be
arri+ed at by substractin5 the proceeds of transfer so far as they consist of
capital sums! from the e$penditure remainin5 unallowed(
Explanation.Fhere the business or interest in such business is transferred in a
pre+ious year in which such business carried on by the assessee is no lon5er in
e$istence% the pro+isions of this clause shall apply as if the business is in
e$istence in that pre+ious year1
c! are not less than the amount of the e$penditure incurred remainin5 unallowed%
no deduction for such e$penditure shall be allowed in respect of the pre+ious
year in which the business or interest in such business is transferred or in
respect of any subse,uent year or years:
6)
-Provided that where in a scheme of amal5amation or demer5er% the amal5a#matin5 or
the demer5ed company sells or otherwise transfers the business to the amal5amated or
the resultin5 company bein5 an Indian company!% the pro+isions of this sub#section
i! shall not apply in the case of the amal5amatin5 or the demer5ed company1 and
ii! shall% as far as may be% apply to the amal5amated or the resultin5 company as
they would ha+e applied to the amal5amatin5 or the demer5ed company if the
latter had not transferred the business or interest in the business(22
63
-Explanation.>or the purposes of this section% mineral oil includes petroleum and
natural 5as(2
Definitions of certain terms relevant to income from profits and gains of business or
profession.
43. In sections 27 to 31 and in this section% unless the conte$t otherwise re,uires
64
6'
1! actual cost means the actual cost
64
of the assets to the assessee% reduced by that
portion of the cost thereof% if any% as has been met
64
directly or indirectly by any
other person or authority:
66
-Provided that where the actual cost of an asset% bein5 a motor car which is
ac,uired by the assessee after the )1st day of Barch% 1&'6%
67
-but before the 1st
day of Barch% 1&64%2 and is used otherwise than in a business of runnin5 it on
hire for tourists% e$ceeds twenty#fi+e thousand rupees% the e$cess of the actual
cost o+er such amount shall be i5nored% and the actual cost thereof shall be
ta9en to be twenty#fi+e thousand rupees(2
Explanation 1.Fhere an asset is used in the business after it ceases to be used
for scientific research related to that business and a deduction has to be made
under
6&
-clause ii! of sub#section 1!2 of section )2 in respect of that asset% the
actual cost of the asset to the assessee shall be the actual cost to the assessee as
reduced by the amount of any deduction allowed under clause i%! of sub#
section 1! of section )4 or under any correspondin5 pro+ision of the Indian
Income#ta$ "ct% 1&22 11 of 1&22!(
78
-Explanation 2.Fhere an asset is ac,uired by the assessee by way of 5ift or
inheritance% the actual cost of the asset to the assessee shall be the actual cost to
the pre+ious owner% as reduced by
a! the amount of depreciation actually allowed under this "ct and the
correspondin5 pro+isions of the Indian Income#ta$ "ct% 1&22 11 of 1&22!%
in respect of any pre+ious year rele+ant to the assessment year commencin5
before the 1st day of "pril% 1&771 and
b! the amount of depreciation that would ha+e been allowable to the assessee
for any assessment year commencin5 on or after the 1st day of "pril% 1&77%
as if the asset was the only asset in the rele+ant bloc9 of assets(2
Explanation 3.Fhere% before the date of ac,uisition by the assessee% the assets
were at any time used by any other person for the purposes of his business or
profession and the
71
-"ssessin52 <fficer is satisfied that the main purpose of the
transfer of such assets% directly or indirectly to the assessee% was the reduction
of a liability to income#ta$ by claimin5 depreciation with reference to an
enhanced cost!% the actual cost to the assessee shall be such an amount as the
71
-"ssessin52 <fficer may% with the pre+ious appro+al of the
72
-@oint
.ommissioner2% determine ha+in5 re5ard to all the circumstances of the case(
7)
-Explanation 4.Fhere any asset which had once belon5ed to the assessee and
had been used by him for the purposes of his business or profession and
thereafter ceased to be his property by reason of transfer or otherwise% is re#
ac,uired by him% the actual cost to the assessee shall be
i! the actual cost to him when he first ac,uired the asset as reduced by
a! the amount of depreciation actually allowed to him under this "ct or
under the correspondin5 pro+isions of the Indian Income#ta$ "ct% 1&22
11 of 1&22!% in respect of any pre+ious year rele+ant to the assessment
year commencin5 before the 1st day of "pril% 1&771 and
b! the amount of depreciation that would ha+e been allowable to the
assessee for any assessment year commencin5 on or after the 1st day of
"pril% 1&77% as if the asset was the only asset in the rele+ant bloc9 of
assets1 or
ii! the actual price for which the asset is re#ac,uired by him%
whiche+er is less(2
73
-Explanation 4A(Fhere before the date of ac,uisition by the assessee
hereinafter referred to as the first mentioned person!% the assets were at any
time used by any other person hereinafter referred to as the second mentioned
person! for the purposes of his business or profession and depreciation
allowance has been claimed in respect of such assets in the case of the second
mentioned person and such person ac,uires on lease% hire or otherwise assets
from the first mentioned person% then% notwithstandin5 anythin5 contained in
Explanation 3) the actual cost of the transferred assets% in the case of first
mentioned person% shall be the same as the written down +alue of the said
assets at the time of transfer thereof by the second mentioned person(2
Explanation 5.Fhere a buildin5 pre+iously the property of the assessee is
brou5ht into use for the purpose of the business or profession after the 27th day
of >ebruary% 1&3'% the actual cost to the assessee shall be the actual cost of the
buildin5 to the assessee% as reduced by an amount e,ual to the depreciation
calculated at the rate in force on that date that would ha+e been allowable had
the buildin5 been used for the aforesaid purposes since the date of its
ac,uisition by the assessee(
74
-Explanation 6.Fhen any capital asset is transferred by a holdin5 company to
its subsidiary company or by a subsidiary company to its holdin5 company%
then% if the conditions of clause i%! or% as the case may be% of clause %! of
section 36 are satisfied% the actual cost of the transferred capital asset to the
transferee#company shall be ta9en to be the same as it would ha+e been if the
transferor#company had continued to hold the capital asset for the purposes of
its business(2
7'
-Explanation .Fhere% in a scheme of amal5amation% any capital asset is
transferred by the amal5amatin5 company to the amal5amated company and
the amal5amated company is an Indian company% the actual cost of the
transferred capital asset to the amal5amated company shall be ta9en to be the
same as it would ha+e been if the amal5amatin5 company had continued to
hold the capital asset for the purposes of its own business(2
76
-Explanation A.Fhere% in a demer5er% any capital asset is transferred by the
demer5ed company to the resultin5 company and the resultin5 company is an
Indian company% the actual cost of the transferred capital asset to the resultin5
company shall be ta9en to be the same as it would ha+e been if the demer5ed
company had continued to hold the capital asset for the purpose of its own
business :
Provided that such actual cost shall not e$ceed the written down +alue of such
capital asset in the hands of the demer5ed company(2
77
-Explanation ".>or the remo+al of doubts% it is hereby declared that where any
amount is paid or is payable as interest in connection with the ac,uisition of an
asset% so much of such amount as is relatable to any period after such asset is
first put to use shall not be included% and shall be deemed ne+er to ha+e been
included% in the actual cost of such asset(2
7&
-Explanation #.>or the remo+al of doubts% it is hereby declared that where an
asset is or has been ac,uired on or after the 1st day of Barch% 1&&3 by an
assessee% the actual cost of asset shall be reduced by the amount of duty of
e$cise or the additional duty le+iable under section ) of the .ustoms Tariff "ct%
1&64 41 of 1&64! in respect of which a claim of credit has been made and
allowed under the .entral E$cise Rules% 1&33(2
&8
-Explanation 1$.Fhere a portion of the cost of an asset ac,uired by the
assessee has been met directly or indirectly by the .entral ;o+ernment or a
*tate ;o+ernment or any authority established under any law or by any other
person% in the form of a subsidy or 5rant or reimbursement by whate+er name
called!% then% so much of the cost as is relatable to such subsidy or 5rant or
reimbursement shall not be included in the actual cost of the asset to the
assessee :
Provided that where such subsidy or 5rant or reimbursement is of such nature
that it cannot be directly relatable to the asset ac,uired% so much of the amount
which bears to the total subsidy or reimbursement or 5rant the same proportion
as such asset bears to all the assets in respect of or with reference to which the
subsidy or 5rant or reimbursement is so recei+ed% shall not be included in the
actual cost of the asset to the assessee(2
&1
-Explanation 11.Fhere an asset which was ac,uired outside India by an
assessee% bein5 a non#resident% is brou5ht by him to India and used for the
purposes of his business or profession% the actual cost of the asset to the
assessee shall be the actual cost to the assessee% as reduced by an amount e,ual
to the amount of depreciation calculated at the rate in force that would ha+e
been allowable had the asset been used in India for the said purposes since the
date of its ac,uisition by the assessee(2
&2
-Explanation 12.Fhere any capital asset is ac,uired by the assessee under a
scheme for corporatisation of a reco5nised stoc9 e$chan5e in India% appro+ed
by the *ecurities and E$chan5e Board of India established under section ) of
the *ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!% the actual
cost of the asset shall be deemed to be the amount which would ha+e been
re5arded as actual cost had there been no such corporatisation12
2! paid means actually paid
&)
or incurred accordin5 to the method of accountin5
upon the basis of which the profits or 5ains are computed under the head Profits
and 5ains of business or profession1
&3
3! plant
&4
includes ships% +ehicles% boo9s
&4
% scientific apparatus and sur5ical
e,uipment used for the purposes of the business or profession
&'
-but does not
include tea bushes or li+estoc92
&6
-or buildin5s or furniture and fittin5s21
4!
&7
-i! scientific research means any acti+ities for the e$tension of 9nowled5e in
the fields of natural or applied science includin5 a5riculture% animal husbandry
or fisheries12
ii! references to e$penditure incurred on scientific research include all
e$penditure incurred for the prosecution% or the pro+ision of facilities for the
prosecution% of scientific research% but do not include any e$penditure incurred
in the ac,uisition of ri5hts in% or arisin5 out of% scientific research1
iii! references to scientific research related to a business or class of business
include
a! any scientific research which may lead to or facilitate an e$tension of that
business or% as the case may be% all businesses of that class1
b! any scientific research of a medical nature which has a special relation to
the welfare of wor9ers employed in that business or% as the case may be% all
businesses of that class1
&&
5!
1
speculati+e transaction
2
means a transaction in which a contract
2
for the
purchase or sale of any commodity% includin5 stoc9s and shares% is periodically
or ultimately settled otherwise than by the actual deli+ery
2
or transfer of the
commodity or scrips:
Provided that for the purposes of this clause
a! a contract in respect of raw materials or merchandise entered into by a
person in the course of his manufacturin5 or merchantin5 business to 5uard
a5ainst loss throu5h future price fluctuations in respect of his contracts for
actual deli+ery of 5oods manufactured by him or merchandise sold by him1
or
b! a contract in respect of stoc9s and shares entered into by a dealer or in+estor
therein to 5uard a5ainst loss in his holdin5s of stoc9s and shares throu5h
price fluctuations1 or
c! a contract entered into by a member of a forward mar9et or a stoc9
e$chan5e in the course of any transaction in the nature of :obbin5 or
arbitra5e to 5uard a5ainst loss which may arise in the ordinary course of his
business as such member1
)
-or2
)
-*d( an eligible transaction in respect o! trading in deri%ati%es re!erred to in
clause
)a
*ac(] o! section 2
3
o! the <ecurities 'ontracts *6egulation( Act)
1#56 *42 o! 1#56( carried out in a recognised stoc. exchange-2
shall not be deemed to be a speculati+e transaction1
4
-E$planation(0or the purposes o! this clause) the expressions
*i( eligible transaction means an+ transaction)
*"( carried out electronicall+ on screen-based s+stems through a stoc.
bro.er or sub-bro.er or such other intermediar+ registered under
section 12 o! the <ecurities and Exchange Board o! 3ndia Act) 1##2 *15
o! 1##2( in accordance with the pro%isions o! the <ecurities 'ontracts
*6egulation( Act) 1#56 *42 o! 1#56( or the <ecurities and Exchange
Board o! 3ndia Act) 1##2 *15 o! 1##2( or the 1epositories Act) 1##6 *22
o! 1##6( and the rules) regulations or b+e-laws made or directions
issued under those Acts or b+ ban.s or mutual !unds on a recognised
stoc. exchange- and
*B( which is supported b+ a time stamped contract note issued b+ such
stoc. bro.er or sub-bro.er or such other intermediar+ to e%er+ client
indicating in the contract note the uni2ue client identit+ number allotted
under an+ Act re!erred to in sub-clause *"( and permanent account
number allotted under this Act-
*ii( recognised stoc. exchange means a recognised stoc. exchange as re!erred
to in clause *f( o! section 2
6
o! the <ecurities 'ontracts *6egulation( Act)
1#56 *42 o! 1#56( and which !ul!ils such conditions as ma+ be prescribed
and noti!ied
6a
b+ the 'entral 5o%ernment !or this purpose-2
6
6! written down +alue means
a! in the case of assets ac,uired in the pre+ious year% the actual cost to the
assessee1
b! in the case of assets ac,uired before the pre+ious year% the actual cost to the
assessee less all depreciation actually allowed
7
to him under this "ct% or
under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or any "ct repealed by
that "ct% or under any e$ecuti+e orders issued when the Indian Income#ta$
"ct% 177' 2 of 177'!% was in force:
&
-Provided that in determinin5 the written down +alue in respect of
buildin5s% machinery or plant for the purposes of clause ii! of sub#section
1! of section )2% depreciation actually allowed shall not include
depreciation allowed under sub#clauses a!% b! and c! of clause %i! of sub#
section 2! of section 18 of the Indian Income#ta$ "ct% 1&22 11 of 1&22!%
where such depreciation was not deductible in determinin5 the written
down +alue for the purposes of the said clause %i!12
18
-c! in the case of any bloc9 of assets%
i! in respect of any pre+ious year rele+ant to the assessment year
commencin5 on the 1st day of "pril% 1&77% the a55re5ate of the written
down +alues of all the assets fallin5 within that bloc9 of assets at the
be5innin5 of the pre+ious year and ad:usted%
A! by the increase by the actual cost of any asset fallin5 within that
bloc9% ac,uired durin5 the pre+ious year1
B! by the reduction of the moneys payable in respect of any asset
fallin5 within that bloc9% which is sold or discarded or demolished
or destroyed durin5 that pre+ious year to5ether with the amount of
the scrap +alue% if any% so% howe+er% that the amount of such
reduction does not e$ceed the written down +alue as so increased1
and
11
-'! in the case of a slump sale% decrease by the actual cost of the asset
fallin5 within that bloc9 as reduced
a! by the amount of depreciation actually allowed to him under
this "ct or under the correspondin5 pro+isions of the Indian
Income#ta$ "ct% 1&22 11 of 1&22! in respect of any pre+ious
year rele+ant to the assessment year commencin5 before the
1st day of "pril% 1&771 and
b! by the amount of depreciation that would ha+e been allowable
to the assessee for any assessment year commencin5 on or
after the 1st day of "pril% 1&77 as if the asset was the only
asset in the rele+ant bloc9 of assets%
so% howe+er% that the amount of such decrease does not e$ceed the
written down +alue12
ii! in respect of any pre+ious year rele+ant to the assessment year
commencin5 on or after the 1st day of "pril% 1&7&% the written down
+alue of that bloc9 of assets in the immediately precedin5 pre+ious year
as reduced by the depreciation actually allowed in respect of that bloc9
of assets in relation to the said precedin5 pre+ious year and as further
ad:usted by the increase or the reduction referred to in item i!(2
Explanation 1.Fhen in a case of succession in business or profession% an
assessment is made on the successor under sub#section 2! of section 168 the
written down +alue of
12
-any asset or any bloc9 of assets2 shall be the amount
which would ha+e been ta9en as its written down +alue if the assessment had
been made directly on the person succeeded to(
1)
-Explanation 2.Fhere in any pre+ious year% any bloc9 of assets is transferred%
a! by a holdin5 company to its subsidiary company or by a subsidiary
company to its holdin5 company and the conditions of clause i%! or% as the
case may be% of clause %! of section 36 are satisfied1 or
b! by the amal5amatin5 company to the amal5amated company in a scheme of
amal5amation% and the amal5amated company is an Indian company%
then% notwithstandin5 anythin5 contained in clause 1!% the actual cost of the
bloc9 of assets in the case of the transferee#company or the amal5amated
company% as the case may be% shall be the written down +alue of the bloc9 of
assets as in the case of the transferor#company or the amal5amatin5 company
for the immediately precedin5 pre+ious year as reduced by the amount of
depreciation actually allowed in relation to the said precedin5 pre+ious year(2
13
-Explanation 2A.Fhere in any pre+ious year% any asset formin5 part of a
bloc9 of assets is transferred by a demer5ed company to the resultin5 company%
then% notwithstandin5 anythin5 contained in clause 1!% the written down +alue
of the bloc9 of assets of the demer5ed company for the immediately precedin5
pre+ious year shall be reduced by the
14
-written down +alue of the assets2
transferred to the resultin5 company pursuant to the demer5er(
Explanation 2B.Fhere in a pre+ious year% any asset formin5 part of a bloc9 of
assets is transferred by a demer5ed company to the resultin5 company% then%
notwithstandin5 anythin5 contained in clause 1!% the written down +alue of the
bloc9 of assets in the case of the resultin5 company shall be the
1'
-written down
+alue of the transferred assets
16
-***2 of the demer5ed company immediately
before the demer5er(
17
-***22
Explanation 3."ny allowance in respect of any depreciation carried forward
under sub#section 2! of section )2 shall be deemed to be depreciation actually
allowed(
1&
-Explanation 4.>or the purposes of this clause% the e$pressions moneys
payable and sold shall ha+e the same meanin5s as in the Explanation below
sub#section 3! of section 31(2
28
-Explanation 5.Fhere in a pre+ious year% any asset formin5 part of a bloc9 of assets is
transferred by a reco5nised stoc9 e$chan5e in India to a company under a scheme for
corporatisation appro+ed by the *ecurities and E$chan5e Board of India established
under section ) of the *ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!% the
written down +alue of the bloc9 of assets in the case of such company shall be the written
down +alue of the transferred assets immediately before such transfer(2
21
-Special provisions consequential to changes in rate of exchange of currency.
43A. Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where an
assessee has ac,uired any asset in any pre+ious year from a country outside India for the
purposes of his business or profession and% in conse,uence of a chan5e in the rate of
e$chan5e durin5 any pre+ious year after the ac,uisition of such asset% there is an increase
or reduction in the liability of the assessee as e$pressed in Indian currency as compared
to the liability e$istin5 at the time of ac,uisition of the asset! at the time of ma9in5
payment
a! towards the whole or a part of the cost of the asset1 or
b! towards repayment of the whole or a part of the moneys borrowed by him from
any person% directly or indirectly% in any forei5n currency specifically for the
purpose of ac,uirin5 the asset alon5 with interest% if any%
the amount by which the liability as aforesaid is so increased or reduced durin5 such
pre+ious year and which is ta9en into account at the time of ma9in5 the payment%
irrespecti+e of the method of accountin5 adopted by the assessee% shall be added to% or% as
the case may be% deducted from
i! the actual cost of the asset as defined in clause 1! of section 3)1 or
ii! the amount of e$penditure of a capital nature referred to in clause i%! of sub#
section 1! of section )41 or
iii! the amount of e$penditure of a capital nature referred to in section )4"1 or
i%! the amount of e$penditure of a capital nature referred to in clause ix! of sub#
section 1! of section )'1 or
%! the cost of ac,uisition of a capital asset not bein5 a capital asset referred to in
section 48! for the purposes of section 37%
and the amount arri+ed at after such addition or deduction shall be ta9en to be the actual
cost of the asset or the amount of e$penditure of a capital nature or% as the case may be%
the cost of ac,uisition of the capital asset as aforesaid:
Provided that where an addition to or deduction from the actual cost or e$penditure or
cost of ac,uisition has been made under this section% as it stood immediately before its
substitution by the >inance "ct% 2882% on account of an increase or reduction in the
liability as aforesaid% the amount to be added to% or% as the case may be% deducted under
this section from% the actual cost or e$pendi#ture or cost of ac,uisition at the time of
ma9in5 the payment shall be so ad:usted that the total amount added to% or% as the case
may be% deducted from% the actual cost or e$penditure or cost of ac,uisition% is e,ual to
the increase or reduction in the aforesaid liability ta9en into account at the time of
ma9in5 payment(
Explanation 1.In this section% unless the conte$t otherwise re,uires%
a! rate of e$chan5e means the rate of e$chan5e determined or reco5nised by the
.entral ;o+ernment for the con+ersion of Indian currency into forei5n
currency or forei5n currency into Indian currency1
b!
22
forei5n currency and Indian currency ha+e the meanin5s respecti+ely assi5ned
to them in section 2 of the >orei5n E$chan5e Bana5ement "ct% 1&&& 32 of
1&&&!(
Explanation 2(Fhere the whole or any part of the liability aforesaid is met% not by the
assessee% but% directly or indirectly% by any other person or authority% the liability so met
shall not be ta9en into account for the purposes of this section(
Explanation 3(Fhere the assessee has entered into a contract with an authorised dealer
2)
as defined in section 2 of the >orei5n E$chan5e Bana5ement "ct% 1&&& 32 of 1&&&!% for
pro+idin5 him with a specified sum in a forei5n currency on or after a stipulated future
date at the rate of e$chan5e specified in the contract to enable him to meet the whole or
any part of the liability aforesaid% the amount% if any% to be added to% or deducted from%
the actual cost of the asset or the amount of e$penditure of a capital nature or% as the case
may be% the cost of ac,uisition of the capital asset under this section shall% in respect of so
much of the sum specified in the contract as is a+ailable for dischar5in5 the liability
aforesaid% be computed with reference to the rate of e$chan5e specified therein(2
23
-Certain deductions to be only on actual payment.
24
43B.
2'
Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% a
deduction otherwise allowable under this "ct in respect of
26
-a! any sum payable by the assessee by way of ta$
27
% duty% cess or fee% by whate+er
name called% under any law for the time bein5 in force% or2
b! any sum payable by the assessee as an employer by way of contribution to any
pro+ident fund or superannuation fund or 5ratuity fund or any other fund for
the welfare of employees%
2&
-or2
)8
-c! any sum referred to in clause ii! of sub#section 1! of section )'%2
)1
-or2
)1
-d! any sum payable by the assessee as interest on any loan or borrowin5 from any
public financial institution
)2
-or a *tate financial corporation or a *tate
industrial in+estment corporation2% in accordance with the terms and conditions
of the a5reement 5o+ernin5 such loan or borrowin5
))
-% or2
))
-e! any sum payable by the assessee as interest on any
)3
-loan or ad+ances2 from a
scheduled ban9 in accordance with the terms and conditions of the a5reement
5o+ernin5 such loan
)4
-or ad+ances2%2
)'
-or2
)6
-!! any sum payable by the assessee as an employer in lieu of any lea+e at the
credit of his employee%2
shall be allowed irrespecti+e of the pre+ious year in which the liability to pay such sum
was incurred by the assessee accordin5 to the method of accountin5 re5ularly employed
by him! only in computin5 the income referred to in section 27 of that pre+ious year in
which such sum is actually paid by him :
)7
-Provided that nothin5 contained in this section shall apply in relation to any sum
)&
-***2 which is actually paid by the assessee on or before the due date applicable in his
case for furnishin5 the return of income under sub#section 1! of section 1)& in respect of
the pre+ious year in which the liability to pay such sum was incurred as aforesaid and the
e+idence of such payment is furnished by the assessee alon5 with such return(
38
-***22
Explanation
31
-12(>or the remo+al of doubts% it is hereby declared that where a deduction
in respect of any sum referred to in clause a! or clause b! of this section is allowed in
computin5 the income referred to in section 27 of the pre+ious year bein5 a pre+ious
year rele+ant to the assessment year commencin5 on the 1st day of "pril% 1&7)% or any
earlier assessment year! in which the liability to pay such sum was incurred by the
assessee% the assessee shall not be entitled to any deduction under this section in respect
of such sum in computin5 the income of the pre+ious year in which the sum is actually
paid by him(2
32
-Explanation 2.>or the purposes of clause a!% as in force at all material times% any sum
payable means a sum for which the assessee incurred liability in the pre+ious year e+en
thou5h such sum mi5ht not ha+e been payable within that year under the rele+ant law(2
3)
-
33
-Explanation 32(>or the remo+al of doubts it is hereby declared that where a
deduction in respect of any sum referred to in clause c!
34
-or clause d!2 of this section is
allowed in computin5 the income referred to in section 27 of the pre+ious year bein5 a
pre+ious year rele+ant to the assessment year commencin5 on the 1st day of "pril% 1&77%
or any earlier assessment year! in which the liability to pay such sum was incurred by the
assessee% the assessee shall not be entitled to any deduction under this section in respect
of such sum in computin5 the income of the pre+ious year in which the sum is actually
paid by him(2
3'
-Explanation 3A.>or the remo+al of doubts% it is hereby declared that where a deduction
in respect of any sum referred to in clause e! of this section is allowed in computin5 the
income referred to in section 27 of the pre+ious year bein5 a pre+ious year rele+ant to
the assessment year commencin5 on the 1st day of "pril% 1&&'% or any earlier assessment
year! in which the liability to pay such sum was incurred by the assessee% the assessee
shall not be entitled to any deduction under this section in respect of such sum in
computin5 the income of the pre+ious year in which the sum is actually paid by him(2
36
-Explanation 3B.>or the remo+al of doubts% it is hereby declared that where a deduction
in respect of any sum referred to in clause !! of this section is allowed in computin5 the
income% referred to in section 27% of the pre+ious year bein5 a pre+ious year rele+ant to
the assessment year commencin5 on the 1st day of "pril% 2881% or any earlier assessment
year! in which the liability to pay such sum was incurred by the assessee% the assessee
shall not be entitled to any deduction under this section in respect of such sum in
computin5 the income of the pre+ious year in which the sum is actually paid by him(2
36a
E$planation ).(0or the remo%al o! doubts) it is hereb+ declared that a deduction o!
an+ sum) being interest pa+able under clause *d( o! this section) shall be allowed i! such
interest has been actuall+ paid and an+ interest re!erred to in that clause which has been
con%erted into a loan or borrowing shall not be deemed to ha%e been actuall+ paid.]
36b
E$planation )?(0or the remo%al o! doubts) it is hereb+ declared that a deduction o!
an+ sum) being interest pa+able under clause *e( o! this section) shall be allowed i! such
interest has been actuall+ paid and an+ interest re!erred to in that clause which has been
con%erted into a loan or ad%ance shall not be deemed to ha%e been actuall+ paid.]
37
-Explanation 4.>or the purposes of this section%
a! public financial institutions shall ha+e the meanin5 assi5ned to it in section
3"
3&
48
-aa! scheduled ban9 shall ha+e the meanin5 assi5ned to it in the Explanation to
clause iii! of sub#section 4! of section 1112
b! *tate financial corporation means a financial corporation established under
section ) or section )" or an institution notified under section 3' of the *tate
>inancial .orporations "ct% 1&41 ') of 1&41!1
c! *tate industrial in+estment corporation means a ;o+ernment company
41
within the
meanin5 of section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!% en5a5ed in the
business of pro+idin5 lon5#term finance for industrial pro:ects and
42
-eli5ible for
deduction under clause %iii! of sub#section 1! of section )'2.2
4)
-Special provision for computation of cost of acquisition of certain assets.
43C. 1! Fhere an asset -not bein5 an asset referred to in sub#section 2! of section 342
which becomes the property of an amal5amated company under a scheme of
amal5amation% is sold after the 2&th day of >ebruary% 1&77% by the amal5amated company
as stoc9#in#trade of the business carried on by it% the cost of ac,uisition of the said asset
to the amal5amated company in computin5 the profits and 5ains from the sale of such
asset shall be the cost of ac,uisition of the said asset to the amal5amatin5 company% as
increased by the cost% if any% of any impro+ement made thereto% and the e$penditure% if
any% incurred% wholly and e$clusi+ely in connection with such transfer by the
amal5amatin5 company(
2! Fhere an asset -not bein5 an asset referred to in sub#section 2! of section 342 which
becomes the property of the assessee on the total or partial partition of a Cindu undi+ided
family or under a 5ift or will or an irre+ocable trust% is sold after the 2&th day of
>ebruary% 1&77% by the assessee as stoc9#in#trade of the business carried on by him% the
cost of ac,uisition of the said asset to the assessee in computin5 the profits and 5ains
from the sale of such asset shall be the cost of ac,uisition of the said asset to the
transferor or the donor% as the case may be% as increased by the cost% if any% of any
impro+ement made thereto% and the e$penditure% if any% incurred% wholly and e$clusi+ely
in connection with such transfer by way of effectin5 the partition% acceptance of the 5ift%
obtainin5 probate in respect of the will or the creation of the trust!% includin5 the payment
of 5ift#ta$% if any% incurred by the transferor or the donor% as the case may be(2
43
-Special provision in case of income of public financial institutions, public
companies, etc.
43D. Aotwithstandin5 anythin5 to the contrary contained in any other pro+ision of this
"ct%
a! in the case of a public financial institution or a scheduled ban9 or a *tate
financial corporation or a *tate industrial in+estment corporation% the income
by way of interest in relation to such cate5ories of bad or doubtful debts as may
be prescribed
44
ha+in5 re5ard to the 5uidelines issued by the Reser+e Ban9 of
India in relation to such debts1
b! in the case of a public company% the income by way of interest in relation to
such cate5ories of bad or doubtful debts as may be prescribed
4'
ha+in5 re5ard
to the 5uidelines issued by the Aational Cousin5 Ban9 in relation to such debts%
shall be char5eable to ta$ in the pre+ious year in which it is credited by the public
financial institution or the scheduled ban9 or the *tate financial corporation or the *tate
industrial in+estment corporation or the public company to its profit and loss account for
that year or% as the case may be% in which it is actually recei+ed by that institution or ban9
or corporation or company% whiche+er is earlier(
a! Aational Cousin5 Ban9 means the Aational Cousin5 Ban9 established under
section ) of the Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76!1
b! public company means a company%
i! which is a public company within the meanin5 of section )
46
of the
.ompanies "ct% 1&4' 1 of 1&4'!1
ii! whose main ob:ect is carryin5 on the business of pro+idin5 lon5#term
finance for construction or purchase of houses in India for residential
purposes1 and
iii! which is re5istered in accordance with the Cousin5 >inance .ompanies
ACB! ?irections% 1&7& 5i+en under section )8 and section )1 of the
Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76!1
c! public financial institution shall ha+e the meanin5 assi5ned to it in section 3"
47
d! scheduled ban9 shall ha+e the meanin5 assi5ned to it in clause ii! of the
Explanation to clause %iia! of sub#section 1! of section )'1
e! *tate financial corporation means a financial corporation established under
section ) or section )" or an institution notified under section 3' of the *tate
>inancial .orporations "ct% 1&41 ') of 1&41!1
!! *tate industrial in+estment corporation means a ;o+ernment company within
the meanin5 of section '16
4&
of the .ompanies "ct% 1&4' 1 of 1&4'!% en5a5ed
in the business of pro+idin5 lon5#term finance for industrial pro:ects(2
Insurance business.
'8
44. Aotwithstandin5 anythin5 to the contrary contained in the pro+isions of this "ct
relatin5 to the computation of income char5eable under the head Interest on securities%
Income from house property% .apital 5ains or Income from other sources% or in section
1&& or in sections 27 to
'1
-3)B2% the profits and 5ains of any business of insurance%
includin5 any such business carried on by a mutual insurance company or by a co#
operati+e society% shall be computed in accordance with the rules contained in the >irst
*chedule(
'2
-Special provision for deduction in the case of trade, professional or similar
association.
')
44A. 1! Aotwithstandin5 anythin5 to the contrary contained in this "ct% where the
amount recei+ed durin5 a pre+ious year by any trade% professional or
'3
similar association
'4
-other than an association or institution referred to in clause 23A! of section 18!2 from
its members% whether by way of subscription or otherwise not bein5 remuneration
recei+ed for renderin5 any specific ser+ices to such members! falls short of the
e$penditure incurred by such association durin5 that pre+ious year not bein5 e$penditure
deductible in computin5 the income under any other pro+ision of this "ct and not bein5
in the nature of capital e$penditure! solely for the purposes of protection or ad+ancement
of the common interests of its members% the amount so fallen short hereinafter referred
to as deficiency! shall% sub:ect to the pro+isions of this section% be allowed as a deduction
in computin5 the income of the association assessable for the rele+ant assessment year
under the head Profits and 5ains of business or profession and if there is no income
assessable under that head or the deficiency allowable e$ceeds such income% the whole or
the balance of the deficiency% as the case may be% shall be allowed as a deduction in
computin5 the income of the association assessable for the rele+ant assessment year
under any other head(
2! In computin5 the income of the association for the rele+ant assessment year under
sub#section 1!% effect shall first be 5i+en to any other pro+ision of this "ct under which
any allowance or loss in respect of any earlier assessment year is carried forward and set
off a5ainst the income for the rele+ant assessment year(
)! The amount of deficiency to be allowed as a deduction under this section shall in no
case e$ceed one#half of the total income of the association as computed before ma9in5
any allowance under this section(
3! This section applies only to that trade% professional or similar association the income
of which or any part thereof is not distributed to its members e$cept as 5rants to any
association or institution affiliated to it(2
''
-Maintenance of accounts by certain persons carrying on profession or business.
'6
44AA. 1! E+ery person carryin5 on le5al% medical% en5ineerin5 or architectural
profession or the profession of accountancy or technical consultancy or interior
decoration or any other profession as is notified
'7
by the Board in the <fficial ;a=ette
shall 9eep and maintain such boo9s of account and other documents as may enable the
'&
-"ssessin52 <fficer to compute his total income in accordance with the pro+isions of
this "ct(
2! E+ery person carryin5 on business or profession -not bein5 a profession referred to in
sub#section 1!2 shall%
i! if his income from business or profession e$ceeds
68
-one la9h twenty2 thousand
rupees or his total sales% turno+er or 5ross receipts% as the case may be% in
business or profession e$ceed or e$ceeds
61
-ten la9h2 rupees in any one of the
three years immediately precedin5 the pre+ious year1 or
ii! where the business or profession is newly set up in any pre+ious year% if his
income from business or profession is li9ely to e$ceed
62
-one la9h twenty2
thousand rupees or his total sales% turno+er or 5ross receipts% as the case may
be% in business or profession are or is li9ely to e$ceed
6)
-ten la9h2 rupees%
63
-durin5 such pre+ious year1 or
iii! where the profits and 5ains from the business are deemed to be the profits and
5ains of the assessee under section 33"? or section 33"E or section 33">
64
-or
section 33BB or section 33BBB2% as the case may be% and the assessee has
claimed his income to be lower than the profits or 5ains so deemed to be the
profits and 5ains of his business% as the case may be% durin5 such pre+ious
year%2
9eep and maintain such boo9s of account and other documents as may enable the
6'
-"ssessin52 <fficer to compute his total income in accordance with the pro+isions of
this "ct(
)! The Board may% ha+in5 re5ard to the nature of the business or profession carried on
by any class of persons% prescribe
66
% by rules% the boo9s of account and other documents
includin5 in+entories% where+er necessary! to be 9ept and maintained under sub#section
1! or sub#section 2!% the particulars to be contained therein and the form and the manner
in which and the place at which they shall be 9ept and maintained(
3! Fithout pre:udice to the pro+isions of sub#section )!% the Board may prescribe% by
rules% the period for which the boo9s of account and other documents to be 9ept and
maintained under sub#section 1! or sub#section 2! shall be retained(2
67
-Audit of accounts of certain persons carrying on business or profession.
6&
44AB.
78
E+ery person%
a! carryin5 on business shall% if his total sales% turno+er or 5ross receipts% as the
case may be% in business e$ceed or e$ceeds forty la9h rupees in any pre+ious
year
71
-***21 or
b! carryin5 on profession shall% if his 5ross receipts in profession e$ceed ten la9h
rupees in any
72
-pre+ious year1 or
c! carryin5 on the business shall% if the profits and 5ains from the business are
deemed to be the profits and 5ains of such person under section 33"? or
section 33"E or section 33">
7)
-or section 33BB or section 33BBB2% as the
case may be% and he has claimed his income to be lower than the profits or
5ains so deemed to be the profits and 5ains of his business% as the case may be%
in any pre+ious year%2
73
-***2
5et his accounts of such pre+ious year
74
-***2 audited by an accountant before the
specified date and
7'
-furnish by2 that date the report of such audit in the prescribed form
duly si5ned and +erified by such accountant and settin5 forth such particulars as may be
prescribed :
76
-Provided that this section shall not apply to the person% who deri+es income of the
nature referred to in
77
-***2 section 33B or
7&
-section 33BB"2% on and from the 1st day of
"pril% 1&74 or% as the case may be% the date on which the rele+ant section came into force%
whiche+er is later :
Provided further that in a case where such person is re,uired by or under any other law
to 5et his accounts audited
&8
-***2% it shall be sufficient compliance with the pro+isions of
this section if such person 5ets the accounts of such business or profession audited under
such law before the specified date and
&1
-furnishes by2 that date the report of the audit as
re,uired under such other law and a further report
&2
-by an accountant2 in the form
prescribed under this section(
i! accountant shall ha+e the same meanin5 as in the Explanation below sub#section 2!
of section 2771
&)
-ii! specified date% in relation to the accounts of the assessee of the pre+ious year
rele+ant to an assessment year% means the )1st day of <ctober of the assessment
year(22
&4
-
&'
Special provision for computing profits and gains of business of civil
construction, etc.
44AD. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3).% in
the case of an assessee en5a5ed in the business of ci+il construction or supply of labour
for ci+il construction% a sum e,ual to ei5ht per cent of the 5ross receipts paid or payable
to the assessee in the pre+ious year on account of such business or% as the case may be% a
sum hi5her than the aforesaid sum as declared by the assessee in his return of income%
shall be deemed to be the profits and 5ains of such business char5eable to ta$ under the
head Profits and 5ains of business or profession:
Provided that nothin5 contained in this sub#section shall apply in case the aforesaid 5ross
receipts paid or payable e$ceed an amount of forty la9h rupees(
2! "ny deduction allowable under the pro+isions of sections )8 to )7 shall% for the
purposes of sub#section 1!% be deemed to ha+e been already 5i+en full effect to and no
further deduction under those sections shall be allowed :
&6
-Provided that where the assessee is a firm% the salary and interest paid to its partners
shall be deducted from the income computed under sub#section 1! sub:ect to the
conditions and limits specified in clause b! of section 38(2
)! The written down +alue of any asset used for the purpose of the business referred to in
sub#section 1! shall be deemed to ha+e been calculated as if the assessee had claimed
and had been actually allowed the deduction in respect of the depreciation for each of the
rele+ant assessment years(
3! The pro+isions of sections 33"" and 33"B shall not apply in so far as they relate to
the business referred to in sub#section 1! and in computin5 the monetary limits under
those sections% the 5ross receipts or% as the case may be% the income from the said
business shall be e$cluded(
&7
-4! Aothin5 contained in the fore5oin5 pro+isions of this section shall apply% where the
assessee claims and produces e+idence to pro+e that the profits and 5ains from the
aforesaid business durin5 the pre+ious year rele+ant to the assessment year commencin5
on the 1st day of "pril% 1&&6 or any earlier assessment year% are lower than the profits
and 5ains specified in sub#section 1!% and thereupon the "ssessin5 <fficer shall proceed
to ma9e an assessment of the total income or loss of the assessee and determine the sum
payable by the assessee on the basis of assessment made under sub#section )! of section
13)(2
&&
-'! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% an
assessee may claim lower profits and 5ains than the profits and 5ains specified in sub#
section 1!% if he 9eeps and maintains such boo9s of account and other documents as
re,uired under sub#section 2! of section 33"" and 5ets his accounts audited and
furnishes a report of such audit as re,uired under section 33"B(2
Explanation.>or the purposes of this section% the e$pression ci+il construction includes
a! the construction or repair of any buildin5% brid5e% dam or other structure or of any
canal or road1
b! the e$ecution of any wor9s contract(2
1
Special provision for computing profits and gains of business of plying, hiring or
leasing goods carriages.
44AE. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3).% in
the case of an assessee% who owns not more than ten 5oods carria5es
2
-at any time durin5
the pre+ious year2 and who is en5a5ed in the business of plyin5% hirin5 or leasin5 such
5oods carria5es% the income of such business char5eable to ta$ under the head Profits and
5ains of business or profession shall be deemed to be the a55re5ate of the profits and
5ains% from all the 5oods carria5es owned by him in the pre+ious year% computed in
accordance with the pro+isions of sub#section 2!(
2! >or the purposes of sub#section 1!% the profits and 5ains from each 5oods carria5e%
i! bein5 a hea+y 5oods +ehicle% shall be an amount e,ual to
)
-three thousand fi+e
hundred2 rupees for e+ery month or part of a month durin5 which the hea+y
5oods +ehicle is owned by the assessee in the pre+ious year or% as the case may
be% an amount hi5her than the aforesaid amount as declared by him in his return
of income1
ii! other than a hea+y 5oods +ehicle% shall be an amount e,ual to
3
-three thousand
one hundred and fifty2 rupees for e+ery month or part of a month durin5 which
the 5oods carria5e is owned by the assessee in the pre+ious year or% as the case
may be% an amount hi5her than the aforesaid amount as declared by him in his
return of income(
)! "ny deduction allowable under the pro+isions of sections )8 to )7 shall% for the
4
-Provided that where the assessee is a firm% the salary and interest paid to its partners
conditions and limits specified in clause b! of section 38(2
3! The written down +alue of any asset used for the purpose of the business referred to in
those sections% the 5ross receipts or% as the case may be% the income from the said
business shall be e$cluded(
'
-'! Aothin5 contained in the fore5oin5 pro+isions of this section shall apply% where the
assessee claims and produces e+idence to pro+e that the profits and 5ains from the
aforesaid business durin5 the pre+ious year rele+ant to the assessment year commencin5
on the 1st day of "pril% 1&&6 or any earlier assessment year% are lower than the profits
and 5ains specified in sub#sections 1! and 2!% and thereupon the "ssessin5 <fficer shall
proceed to ma9e an assessment of the total income or loss of the assessee and determine
the sum payable by the assessee on the basis of assessment made under sub#section )! of
section 13)(2
6
-6! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% an
sections 1! and 2!% if he 9eeps and maintains such boo9s of account and other
documents as re,uired under sub#section 2! of section 33"" and 5ets his accounts
audited and furnishes a report of such audit as re,uired under section 33"B(2
a! the e$pressions 5oods carria5e
7
and hea+y 5oods +ehicle
7
shall ha+e the meanin5s
respecti+ely assi5ned to them in section 2 of the Botor 0ehicles "ct% 1&77 4& of
1&77!1
b! an assessee% who is in possession of a 5oods carria5e% whether ta9en on hire
purchase or on instalments and for which the whole or part of the amount payable is
still due% shall be deemed to be the owner of such 5oods carria5e(2
&
-Special provisions for computing profits and gains of retail business.
44AF. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3).% in
the case of an assessee en5a5ed in retail trade in any 5oods or merchandise% a sum e,ual
to fi+e per cent of the total turno+er in the pre+ious year on account of such business or%
as the case may be% a sum hi5her than the aforesaid sum as declared by the assessee in his
return of income shall be deemed to be the profits and 5ains of such business char5eable
to ta$ under the head Profits and 5ains of business or profession :
Provided that nothin5 contained in this sub#section shall apply in respect of an assessee
whose total turno+er e$ceeds an amount of forty la9h rupees in the pre+ious year(
2! "ny deduction allowable under the pro+isions of sections )8 to )7 shall% for the
Provided that where the assessee is a firm% the salary and interest paid to its partners
conditions and limits specified in clause b! of section 38(
)! The written down +alue of any asset used for the purpose of the business referred to in
those sections% the total turno+er or% as the case may be% the income from the said
business shall be e$cluded(2
18
-4! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% an
section 1!% if he 9eeps and maintains such boo9s of account and other documents as
re,uired under sub#section 2! of section 33"" and 5ets his accounts audited and
furnishes a report of such audit as re,uired under section 33"B(2
11
-Special provision for computing profits and gains of shipping business in the case
of non-residents.
12
44B. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3)"% in
the case of an assessee% bein5 a non#resident% en5a5ed in the business of operation of
ships% a sum e,ual to se+en and a half per cent of the a55re5ate of the amounts specified
in sub#section 2! shall be deemed to be the profits and 5ains of such business char5eable
to ta$ under the head Profits and 5ains of business or profession(
2! The amounts referred to in sub#section 1! shall be the followin5% namely :
i! the amount paid or payable whether in or out of India! to the assessee or to any
person on his behalf on account of the carria5e of passen5ers% li+estoc9% mail or
5oods shipped at any port in India1 and
ii! the amount recei+ed or deemed to be recei+ed in India by or on behalf of the
assessee on account of the carria5e of passen5ers% li+estoc9% mail or 5oods
shipped at any port outside India(2
1)
-Explanation(>or the purposes of this sub#section% the amount referred to in clause i! or
clause ii! shall include the amount paid or payable or recei+ed or deemed to be recei+ed%
as the case may be% by way of demurra5e char5es or handlin5 char5es or any other
amount of similar nature(2
13
-Special provision for computing profits and gains in connection with the business
of exploration, etc., of mineral oils.
44BB. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 31 and
sections 3) and 3)"% in the case of an assessee
14
-% bein5 a non#resident%2 en5a5ed in the
business of pro+idin5 ser+ices or facilities in connection with% or supplyin5 plant and
machinery on hire used% or to be used% in the prospectin5 for% or e$traction or production
of% mineral oils% a sum e,ual to ten per cent of the a55re5ate of the amounts specified in
sub#section 2! shall be deemed to be the profits and 5ains of such business char5eable to
ta$ under the head Profits and 5ains of business or profession :
Provided that this sub#section shall not apply in a case where the pro+isions of section 32
or section 33? or section 114" or section 2&)" apply for the purposes of computin5
profits or 5ains or any other income referred to in those sections(
a! the amount paid or payable whether in or out of India! to the assessee or to any
person on his behalf on account of the pro+ision of ser+ices and facilities in
connection with% or supply of plant and machinery on hire used% or to be used%
in the prospectin5 for% or e$traction or production of% mineral oils in India1 and
b! the amount recei+ed or deemed to be recei+ed in India by or on behalf of the
assessee on account of the pro+ision of ser+ices and facilities in connection
with% or supply of plant and machinery on hire used% or to be used% in the
prospectin5 for% or e$traction or production of% mineral oils outside India(
1'
-)! Aotwithstandin5 anythin5 contained in sub#section 1!% an assessee may claim
lower profits and 5ains than the profits and 5ains specified in that sub#section% if he 9eeps
and maintains such boo9s of account and other documents as re,uired under sub#section
2! of section 33"" and 5ets his accounts audited and furnishes a report of such audit as
re,uired under section 33"B% and thereupon the "ssessin5 <fficer shall proceed to ma9e
an assessment of the total income or loss of the assessee under sub#section )! of section
13) and determine the sum payable by% or refundable to% the assessee(2
i! plant includes ships% aircraft% +ehicles% drillin5 units% scientific apparatus and
e,uipment% used for the purposes of the said business1
ii! mineral oil includes petroleum and natural 5as(2
16
-Special provision for computing profits and gains of the business of operation of
aircraft in the case of non-residents.
44BBA. 1! Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3)"% in
the case of an assessee% bein5 a non#resident% en5a5ed in the business of operation of
aircraft% a sum e,ual to fi+e per cent of the a55re5ate of the amounts specified in sub#
section 2! shall be deemed to be the profits and 5ains of such business char5eable to ta$
under the head Profits and 5ains of business or profession(
a! the amount paid or payable whether in or out of India! to the assessee or to any
person on his behalf on account of the carria5e of passen5ers% li+estoc9% mail or
5oods from any place in India1 and
b! the amount recei+ed or deemed to be recei+ed in India by or on behalf of the
assessee on account of the carria5e of passen5ers% li+estoc9% mail or 5oods from any
place outside India(2
17
-Special provision for computing profits and gains of foreign companies engaged in
the business of civil construction, etc., in certain turnkey power projects.
1&
44BBB.
28
-1!2 Aotwithstandin5 anythin5 to the contrary contained in sections 27 to
33""% in the case of an assessee% bein5 a forei5n company% en5a5ed in the business of
ci+il construction or the business of erection of plant or machinery or testin5 or
commissionin5 thereof% in connection with a turn9ey power pro:ect appro+ed by the
.entral ;o+ernment in this behalf
21
-***2% a sum e,ual to ten per cent of the amount paid
or payable whether in or out of India! to the said assessee or to any person on his behalf
on account of such ci+il construction% erection% testin5 or commissionin5 shall be deemed
to be the profits and 5ains of such business char5eable to ta$ under the head Profits and
5ains of business or profession(2
22
-2! Aotwithstandin5 anythin5 contained in sub#section 1!% an assessee may claim
lower profits and 5ains than the profits and 5ains specified in that sub#section% if he 9eeps
and maintains such boo9s of account and other documents as re,uired under sub#section
2! of section 33"" and 5ets his accounts audited and furnishes a report of such audit as
re,uired under section 33"B% and thereupon the "ssessin5 <fficer shall proceed to ma9e
an assessment of the total income or loss of the assessee under sub#section )! of section
13) and determine the sum payable by% or refundable to% the assessee(2
2)
-Deduction of head office expenditure in the case of non-residents.
23
24
44C. Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3)"% in the
case of an assessee% bein5 a non#resident% no allowance shall be made% in computin5 the
income char5eable under the head Profits and 5ains of business or profession% in respect
of so much of the e$penditure in the nature of head office e$penditure as is in e$cess of
the amount computed as hereunder% namely:
a! an amount e,ual to fi+e per cent of the ad:usted total income1 or
b!
2'
-***2
c! the amount of so much of the e$penditure in the nature of head office
e$penditure incurred by the assessee as is attributable to the business or
profession of the assessee in India
26
%
whiche+er is the least :
Provided that in a case where the ad:usted total income of the assessee is a loss% the
amount under clause a! shall be computed at the rate of fi+e per cent of the a+era5e
ad:usted total income of the assessee(
i! ad:usted total income means the total income computed in accordance with the
pro+isions of this "ct% without 5i+in5 effect to the allowance referred to in this
section or in sub#section 2! of section )2 or the deduction referred to in section
)2" or section )) or section ))" or the first pro+iso to clause ix! of sub#
section 1! of section )' or any loss carried forward under sub#section 1! of
section 62 or sub#section 2! of section 6) or sub#section 1!
27
-or sub#section
)!2 of section 63 or sub#section )! of section 63" or the deductions under
.hapter 0I#"1
ii! a+era5e ad:usted total income means%
a! in a case where the total income of the assessee is assessable for each of the
three assessment years immediately precedin5 the rele+ant assessment year%
one#third of the a55re5ate amount of the ad:usted total income in respect of
the pre+ious years rele+ant to the aforesaid three assessment years1
b! in a case where the total income of the assessee is assessable only for two
of the aforesaid three assessment years% one#half of the a55re5ate amount of
the ad:usted total income in respect of the pre+ious years rele+ant to the
aforesaid two assessment years1
c! in a case where the total income of the assessee is assessable only for one of
the aforesaid three assessment years% the amount of the ad:usted total
income in respect of the pre+ious year rele+ant to that assessment year1
iii!
2&
-***2
i%! head office e$penditure means e$ecuti+e and 5eneral administration
e$penditure incurred by the assessee outside India% includin5 e$penditure
incurred in respect of
a! rent% rates% ta$es% repairs or insurance of any premises outside India used for
the purposes of the business or profession1
b! salary% wa5es% annuity% pension% fees% bonus% commission% 5ratuity%
per,uisites or profits in lieu of or in addition to salary% whether paid or
allowed to any employee or other person employed in% or mana5in5 the
affairs of% any office outside India1
c! tra+ellin5 by any employee or other person employed in% or mana5in5 the
affairs of% any office outside India1 and
d! such other matters connected with e$ecuti+e and 5eneral administration as
may be prescribed(2
)8
-Special provisions for computing income by way of royalties, etc., in the case of
foreign companies.
44D. Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 33.% in the
case of an assessee% bein5 a forei5n company%
a! the deductions admissible under the said sections in computin5 the income by
way of royalty or fees for technical ser+ices recei+ed
)1
-from ;o+ernment or an
Indian concern in pursuance of an a5reement made by the forei5n company
with ;o+ernment or with the Indian concern2 before the 1st day of "pril% 1&6'%
shall not e$ceed in the a55re5ate twenty per cent of the 5ross amount of such
royalty or fees as reduced by so much of the 5ross amount of such royalty as
consists of lump sum consideration for the transfer outside India of% or the
impartin5 of information outside India in respect of% any data% documentation%
drawin5 or specification relatin5 to any patent% in+ention% model% desi5n% secret
formula or process or trade mar9 or similar property1
b! no deduction in respect of any e$penditure or allowance shall be allowed under
any of the said sections in computin5 the income by way of royalty or fees for
technical ser+ices recei+ed
)1
-from ;o+ernment or an Indian concern in
pursuance of an a5reement made by the forei5n company with ;o+ernment or
with the Indian concern2 after the )1st day of Barch% 1&6'
)2
-but before the 1st
day of "pril% 288)21
c!
))
-***2
d!
)3
-***2
a! fees for technical ser+ices shall ha+e the same meanin5 as in
)4
-Explanation 22
to clause %ii! of sub#section 1! of section &1
b! forei5n company shall ha+e the same meanin5 as in section 78B1
c! royalty shall ha+e the same meanin5 as in
)'
-Explanation 22 to clause %i! of
sub#section 1! of section &1
d! royalty recei+ed
)6
-from ;o+ernment or an Indian concern in pursuance of an
a5reement made by a forei5n company with ;o+ernment or with the Indian
concern2 after the )1st day of Barch% 1&6'% shall be deemed to ha+e been
recei+ed in pursuance of an a5reement made before the 1st day of "pril% 1&6'%
if such a5reement is deemed% for the purposes of the pro+iso to clause %i! of
sub#section 1! of section &% to ha+e been made before the 1st day of "pril%
1&6'(2

)7
-Special provision for computing income by way of royalties, etc., in case of non-
residents.
44DA. 1! The income by way of royalty or fees for technical ser+ices recei+ed from
;o+ernment or an Indian concern in pursuance of an a5reement made by a non#resident
not bein5 a company! or a forei5n company with ;o+ernment or the Indian concern after
the )1st day of Barch% 288)% where such non#resident not bein5 a company! or a forei5n
company carries on business in India throu5h a permanent establishment situated therein%
or performs professional ser+ices from a fi$ed place of profession situated therein% and
the ri5ht% property or contract in respect of which the royalties or fees for technical
ser+ices are paid is effecti+ely connected with such permanent establishment or fi$ed
place of profession% as the case may be% shall be computed under the head Profits and
5ains of business or profession in accordance with the pro+isions of this "ct :
Provided that no deduction shall be allowed%
i! in respect of any e$penditure or allowance which is not wholly and e$clusi+ely
incurred for the business of such permanent establishment or fi$ed place of
profession in India1 or
ii! in respect of amounts% if any% paid otherwise than towards reimbursement of
actual e$penses! by the permanent establishment to its head office or to any of
its other offices(
2! E+ery non#resident not bein5 a company! or a forei5n company shall 9eep and
maintain boo9s of account and other documents in accordance with the pro+isions
contained in section 33"" and 5et his accounts audited by an accountant as defined in
the Explanation below sub#section 2! of section 277 and furnish alon5 with the return of
income% the report of such audit in the prescribed form
)&
duly si5ned and +erified by such
accountant(
a! fees for technical ser+ices shall ha+e the same meanin5 as in Explanation 2 to
clause %ii! of sub#section 1! of section &1
b! royalty shall ha+e the same meanin5 as in Explanation 2 to clause %i! of sub#
section 1! of section &1
c! permanent establishment shall ha+e the same meanin5 as in clause iiia! of
section &2>(2
E.'apital gains
Capital gains.
38
45.
31
-1!2 "ny profits or 5ains arisin5 from the transfer of a capital asset
32
effected in
the pre+ious year shall% sa+e as otherwise pro+ided in sections
3)
-***2
33
-43% 43B%
34
-***2
3'
-
36
-43?%
37
-43E%
3&
-43E"% 43EB%2 43>
48
-% 43; and 43C22222% be char5eable to income#
ta$ under the head .apital 5ains% and shall be deemed to be the income of the pre+ious
year in which the transfer too9 place(
41
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% where any person recei+es
at any time durin5 any pre+ious year any money or other assets under an insurance from
an insurer on account of dama5e to% or destruction of% any capital asset% as a result of
i! flood% typhoon% hurricane% cyclone% earth,ua9e or other con+ulsion of nature1 or
ii! riot or ci+il disturbance1 or
iii! accidental fire or e$plosion1 or
i%! action by an enemy or action ta9en in combatin5 an enemy whether with or
without a declaration of war!%
then% any profits or 5ains arisin5 from receipt of such money or other assets shall be
char5eable to income#ta$ under the head .apital 5ains and shall be deemed to be the
income of such person of the pre+ious year in which such money or other asset was
recei+ed and for the purposes of section 37% +alue of any money or the fair mar9et +alue
of other assets on the date of such receipt shall be deemed to be the full +alue of the
consideration recei+ed or accruin5 as a result of the transfer of such capital asset(
Explanation(>or the purposes of this sub#section% the e$pression insurer shall ha+e the
meanin5 assi5ned to it in clause #! of section 2
42
of the Insurance "ct% 1&)7 3 of 1&)7!(2
4)
-2! Aotwithstandin5 anythin5 contained in sub#section 1!% the profits or 5ains arisin5
from the transfer by way of con+ersion by the owner of a capital asset into% or its
treatment by him as stoc9#in#trade of a business carried on by him shall be char5eable to
income#ta$ as his income of the pre+ious year in which such stoc9#in#trade is sold or
otherwise transferred by him and% for the purposes of section 37% the fair mar9et +alue of
the asset on the date of such con+ersion or treatment shall be deemed to be the full +alue
of the consideration recei+ed or accruin5 as a result of the transfer of the capital asset(2
43
-2"!
44
Fhere any person has had at any time durin5 pre+ious year any beneficial
interest in any securities% then% any profits or 5ains arisin5 from transfer made by the
depository or participant of such beneficial interest in respect of securities shall be
char5eable to income#ta$ as the income of the beneficial owner of the pre+ious year in
which such transfer too9 place and shall not be re5arded as income of the depository who
is deemed to be the re5istered owner of securities by +irtue of sub#section 1! of section
18 of the ?epositories "ct% 1&&'% and for the purposes of
i! section 371 and
ii! pro+iso to clause 42A! of section 2%
the cost of ac,uisition and the period of holdin5 of any securities shall be determined on
the basis of the first#in#first#out method(
Explanation(>or the purposes of this sub#section% the e$pressions beneficial owner
4'
%
depository
4'
and security
4'
shall ha+e the meanin5s respecti+ely assi5ned to them in
clauses a!% e! and l! of sub#section 1! of section 2 of the ?epositories "ct% 1&&'(2
46
-)! The profits or 5ains arisin5 from the transfer of a capital asset by a person to a firm
or other association of persons or body of indi+iduals not bein5 a company or a co#
operati+e society! in which he is or becomes a partner or member% by way of capital
contribution or otherwise% shall be char5eable to ta$ as his income of the pre+ious year in
which such transfer ta9es place and% for the purposes of section 37% the amount recorded
in the boo9s of account of the firm% association or body as the +alue of the capital asset
shall be deemed to be the full +alue of the consideration recei+ed or accruin5 as a result
of the transfer of the capital asset(
3! The profits or 5ains arisin5 from the transfer of a capital asset by way of distribution
of capital assets on the dissolution of a firm or other association of persons or body of
indi+iduals not bein5 a company or a co#operati+e society! or otherwise
47
% shall be
char5eable to ta$ as the income of the firm% association or body% of the pre+ious year in
which the said transfer ta9es place and% for the purposes of section 37% the fair mar9et
+alue of the asset on the date of such transfer shall be deemed to be the full +alue of the
consideration recei+ed or accruin5 as a result of the transfer(2
4&
-4! Aotwithstandin5 anythin5 contained in sub#section 1!% where the capital 5ain arises
from the transfer of a capital asset% bein5 a transfer by way of compulsory ac,uisition
under any law% or a transfer the consideration for which was determined or appro+ed by
the .entral ;o+ernment or the Reser+e Ban9 of India% and the compensation or the
consideration for such transfer is enhanced or further enhanced by any court% Tribunal or
other authority% the capital 5ain shall be dealt with in the followin5 manner% namely :
a! the capital 5ain computed with reference to the compensation awarded in the
first instance
'8
or% as the case may be% the consideration determined or appro+ed
in the first instance by the .entral ;o+ernment or the Reser+e Ban9 of India
shall be char5eable as
'1
-income under the head .apital 5ains of the pre+ious
year in which such compensation or part thereof% or such consideration or part
thereof% was first recei+ed21 and
b! the amount by which the compensation or consideration is enhanced or further
enhanced by the court% Tribunal or other authority shall be deemed to be
income char5eable under the head .apital 5ains of the pre+ious year in which
such amount is recei+ed by the assessee1
'2
-c! where in the assessment for any year% the capital 5ain arisin5 from the transfer
of a capital asset is computed by ta9in5 the compensation or consideration
referred to in clause a! or% as the case may be% enhanced compensation or
consideration referred to in clause b!% and subse,uently such compensation or
consideration is reduced by any court% Tribunal or other authority% such
assessed capital 5ain of that year shall be recomputed by ta9in5 the
compensation or consideration as so reduced by such court% Tribunal or other
authority to be the full +alue of the consideration(2
i! in relation to the amount referred to in clause b!% the cost of ac,uisition and the
cost of impro+ement shall be ta9en to be nil1
ii! the pro+isions of this sub#section shall apply also in a case where the transfer
too9 place prior to the 1st day of "pril% 1&771
iii! where by reason of the death of the person who made the transfer% or for any
other reason% the enhanced compensation or consideration is recei+ed by any
other person% the amount referred to in clause b! shall be deemed to be the
income% char5eable to ta$ under the head .apital 5ains% of such other person(2
')
-'! Aotwithstandin5 anythin5 contained in sub#section 1!% the difference between the
repurchase price of the units referred to in sub#section 2! of section 78..B and the
capital +alue of such units shall be deemed to be the capital 5ains arisin5 to the assessee
in the pre+ious year in which such repurchase ta9es place or the plan referred to in that
section is terminated and shall be ta$ed accordin5ly(
Explanation.>or the purposes of this sub#section% capital +alue of such units means any
amount in+ested by the assessee in the units referred to in sub#section 2! of section
78..B(2
Capital gains on distribution of assets by companies in liquidation.
'3
46. 1! Aotwithstandin5 anythin5 contained in section 34% where the assets of a
company are distributed to its shareholders on its li,uidation
'4
% such distribution shall not
be re5arded as a transfer by the company for the purposes of section 34(
2! Fhere a shareholder on the li,uidation of a company recei+es any money or other
assets
'4
from the company% he shall be char5eable to income#ta$ under the head .apital
5ains% in respect of the money so recei+ed or the mar9et +alue of the other assets on the
date of distribution% as reduced by the amount assessed as di+idend within the meanin5 of
sub#clause c! of clause 22! of section 2 and the sum so arri+ed at shall be deemed to be
the full +alue of the consideration for the purposes of section 37(
''
-Capital gains on purchase by company of its own shares or other specified
securities.
46A.Fhere a shareholder or a holder of other specified securities recei+es any
consideration from any company for purchase of its own shares or other specified
securities held by such shareholder or holder of other specified securities% then% sub:ect to
the pro+isions of section 37% the difference between the cost of ac,uisition and the +alue
of consideration recei+ed by the shareholder or the holder of other specified securities% as
the case may be% shall be deemed to be the capital 5ains arisin5 to such shareholder or the
holder of other specified securities% as the case may be% in the year in which such shares
or other specified securities were purchased by the company(
Explanation.>or the purposes of this section% specified securities shall ha+e the meanin5
assi5ned to it in Explanation to section 66"
'6
of the .ompanies "ct% 1&4' 1 of 1&4'!(2
Transactions not regarded as transfer.
'7
47. Aothin5 contained in section 34 shall apply to the followin5 transfers :
i! any distribution of capital assets
'&
on the total or partial partition of a Cindu
undi+ided family1
ii!
68
-***2
iii! any transfer of a capital asset under a 5ift
61
or will or an irre+ocable trust :
62
-Provided that this clause shall not apply to transfer under a 5ift or an
irre+ocable trust of a capital asset bein5 shares% debentures or warrants allotted
by a company directly or indirectly to its employees under
6)
-any Employees
*toc9 <ption Plan or *cheme of the company offered to such employees in
accordance with the 5uidelines issued by the .entral ;o+ernment in this
behalf212
i%! any transfer of a capital asset by a company to its subsidiary company% if
a! the parent company or its nominees hold the whole of the share capital of
the subsidiary company% and
b! the subsidiary company is an Indian company1
63
-%! any transfer of a capital asset by a subsidiary company to the holdin5 company%
if
a! the whole of the share capital of the subsidiary company is held by the
holdin5 company% and
b! the holdin5 company is an Indian company :2
64
-Provided that nothin5 contained in clause i%! or clause %! shall apply to the
transfer of a capital asset made after the 2&th day of >ebruary% 1&77% as stoc9#
in#trade12
6'
-%i! any transfer% in a scheme of amal5amation
66
% of a capital asset by the
amal5amatin5 company to the amal5amated company if the amal5amated
company is an Indian company12
67
-%ia! any transfer% in a scheme of amal5amation
66
% of a capital asset bein5 a share or
shares held in an Indian company% by the amal5amatin5 forei5n company to the
amal5amated forei5n company% if
a! at least twenty#fi+e per cent of the shareholders of the amal5amatin5
forei5n company continue to remain shareholders of the amal5amated
forei5n company% and
b! such transfer does not attract ta$ on capital 5ains in the country% in which
the amal5amatin5 company is incorporated12
6&
-%iaa! any transfer% in a scheme of amal5amation of a ban9in5 company with a
ban9in5 institution sanctioned and brou5ht into force by the .entral
;o+ernment under sub#section 6! of section 34 of the Ban9in5 Re5ulation "ct%
1&3& 18 of 1&3&!% of a capital asset by the ban9in5 company to the ban9in5
institution(
i! ban9in5 company shall ha+e the same meanin5 assi5ned to it in clause c!
of section 4
78
of the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!1
ii! ban9in5 institution shall ha+e the same meanin5 assi5ned to it in sub#
section 14! of section 34
78
of the Ban9in5 Re5ulation "ct% 1&3& 18 of
1&3&!12
71
-%ib! any transfer% in a demer5er% of a capital asset by the demer5ed company to the
resultin5 company% if the resultin5 company is an Indian company1
%ic! any transfer in a demer5er% of a capital asset% bein5 a share or shares held in an
Indian company% by the demer5ed forei5n company to the resultin5 forei5n
company% if
a!
72
-the shareholders holdin5 not less than three#fourths in +alue of the shares2
of the demer5ed forei5n company continue to remain shareholders of the
resultin5 forei5n company1 and
b! such transfer does not attract ta$ on capital 5ains in the country% in which
the demer5ed forei5n company is incorporated :
Provided that the pro+isions of sections )&1 to )&3
7)
1&4' 1 of 1&4'! shall not apply in case of demer5ers referred to in this clause1
%id! any transfer or issue of shares by the resultin5 company% in a scheme of
demer5er to the shareholders of the demer5ed company if the transfer or issue
is made in consideration of demer5er of the underta9in512
%ii! any transfer by a shareholder% in a scheme of amal5amation% of a capital asset
bein5 a share or shares held by him in the amal5amatin5 company% if
a! the transfer is made in consideration of the allotment to him of any share or
shares in the amal5amated company% and
b! the amal5amated company is an Indian company1
73
-%iia! any transfer of a capital asset% bein5 bonds or
74
-;lobal ?epository Receipts2
referred to in sub#section 1! of section 114".% made outside India by a non#
resident to another non#resident12
7'
-%iii! any transfer of a5ricultural land in India effected before the 1st day of Barch%
1&6812
76
-ix! any transfer of a capital asset% bein5 any wor9 of art% archaeolo5ical% scientific
or art collection% boo9% manuscript% drawin5% paintin5% photo5raph or print% to
the ;o+ernment or a Eni+ersity or the Aational Buseum% Aational "rt ;allery%
Aational "rchi+es or any such other public museum or institution as may be
notified
77
by the .entral ;o+ernment in the <fficial ;a=ette to be of national
importance or to be of renown throu5hout any *tate or *tates(
Explanation.>or the purposes of this clause% Eni+ersity means a Eni+ersity
established or incorporated by or under a .entral% *tate or Pro+incial "ct and
includes an institution declared under section ) of the Eni+ersity ;rants
.ommission "ct% 1&4' ) of 1&4'!% to be a Eni+ersity for the purposes of that
"ct12
7&
-x! any transfer by way of con+ersion of
&8
-bonds or2 debentures% debenture#stoc9
or deposit certificates in any form% of a company into shares or debentures of
that company12
&1
-xi! any transfer made on or before the )1st day of ?ecember%
&2
-1&&72 by a person
not bein5 a company! of a capital asset bein5 membership of a reco5nised
stoc9 e$chan5e to a company in e$chan5e of shares allotted by that company to
the transferor(
Explanation(>or the purposes of this clause% the e$pression membership of a
reco5nised stoc9 e$chan5e means the membership of a stoc9 e$chan5e in India
which is reco5nised under the pro+isions of the *ecurities .ontracts
Re5ulation! "ct% 1&4' 32 of 1&4'!1
xii! any transfer of a capital asset% bein5 land of a sic9 industrial company% made
under a scheme prepared and sanctioned under section 17
&)
of the *ic9
Industrial .ompanies *pecial Pro+isions! "ct% 1&74 1 of 1&7'! where such
sic9 industrial company is bein5 mana5ed by its wor9ers co#operati+e :
Provided that such transfer is made durin5 the period commencin5 from the
pre+ious year in which the said company has become a sic9 industrial company
under sub#section 1! of section 16
&3
of that "ct and endin5 with the pre+ious
year durin5 which the entire net worth of such company becomes e,ual to or
e$ceeds the accumulated losses(
Explanation.>or the purposes of this clause% net worth shall ha+e the meanin5
assi5ned to it in clause ga! of sub#section 1! of section )
&3
of the *ic9
Industrial .ompanies *pecial Pro+isions! "ct% 1&74 1 of 1&7'!12
&4
-xiii!
&'
-any transfer of a capital asset or intan5ible asset by a firm to a company as a
result of succession of the firm by a company in the business carried on by the
firm% or any transfer of a capital asset to a company in the course of
&6
-demutualisation or2 corporatisation of a reco5nised stoc9 e$chan5e in India
as a result of which an association of persons or body of indi+iduals is
succeeded by such company :2
Provided that
a! all the assets and liabilities of the firm
&7
-or of the association of persons or
body of indi+iduals2 relatin5 to the business immediately before the
succession become the assets and liabilities of the company1
b! all the partners of the firm immediately before the succession become the
shareholders of the company in the same proportion in which their capital
accounts stood in the boo9s of the firm on the date of the succession1
c! the partners of the firm do not recei+e any consideration or benefit% directly
or indirectly% in any form or manner% other than by way of allotment of
shares in the company1 and
d! the a55re5ate of the shareholdin5 in the company of the partners of the firm
is not less than fifty per cent of the total +otin5 power in the company and
their shareholdin5 continues to be as such for a period of fi+e years from
the date of the succession1
&&
-e! the
1
-demutualisation or2 corporatisation of a reco5nised stoc9 e$chan5e in
India is carried out in accordance with a scheme for
1
-demutualisation or2
corporatisation which is appro+ed by the *ecurities and E$chan5e Board of
India established under section ) of the *ecurities and E$chan5e Board of
India "ct% 1&&2 14 of 1&&2!12
1
-xiiia! any transfer of a capital asset bein5 a membership ri5ht held by a member of a
reco5nised stoc9 e$chan5e in India for ac,uisition of shares and tradin5 or
clearin5 ri5hts ac,uired by such member in that reco5nised stoc9 e$chan5e in
accordance with a scheme for demutualisation or corporatisation which is
appro+ed by the *ecurities and E$chan5e Board of India established under
section ) of the *ecurities and E$chan5e Board of India "ct% 1&&2 14 of
1&&2!12
xi%! where a sole proprietary concern is succeeded by a company in the business
carried on by it as a result of which the sole proprietary concern sells or
otherwise transfers any capital asset or intan5ible asset to the company :
Provided that
a! all the assets and liabilities of the sole proprietary concern relatin5 to the
business immediately before the succession become the assets and
liabilities of the company1
b! the shareholdin5 of the sole proprietor in the company is not less than fifty
per cent of the total +otin5 power in the company and his shareholdin5
continues to remain as such for a period of fi+e years from the date of the
succession1 and
c! the sole proprietor does not recei+e any consideration or benefit% directly or
indirectly% in any form or manner% other than by way of allotment of shares
in the company1
x%! any transfer in a scheme for lendin5 of any securities under an a5reement or
arran5ement% which the assessee has entered into with the borrower of such
securities and which is sub:ect to the 5uidelines issued by the *ecurities and
E$chan5e Board of India% established under section ) of the *ecurities and
E$chan5e Board of India "ct% 1&&2 14 of 1&&2!
2
-or the Reser+e Ban9 of India
constituted under sub#section 1! of section ) of the Reser+e Ban9 of India "ct%
1&)3 2 of 1&)3!2% in this re5ard(2
)
-Withdrawal of exemption in certain cases.
47A.
3
-1!2 Fhere at any time before the e$piry of a period of ei5ht years from the date of
the transfer of a capital asset referred to in clause i%! or% as the case may be% clause %! of
section 36%
i! such capital asset is con+erted by the transferee company into% or is treated by it
as% stoc9#in#trade of its business1 or
ii! the parent company or its nominees or% as the case may be% the holdin5
company ceases or cease to hold the whole of the share capital of the subsidiary
company%
the amount of profits or 5ains arisin5 from the transfer of such capital asset not char5ed
under section 34 by +irtue of the pro+isions contained in clause i%! or% as the case may
be% clause %! of section 36 shall% notwithstandin5 anythin5 contained in the said clauses%
be deemed to be income char5eable under the head .apital 5ains of the pre+ious year in
which such transfer too9 place(2
4
-2! Fhere at any time% before the e$piry of a period of three years from the date of the
transfer of a capital asset referred to in clause xi! of section 36% any of the shares allotted
to the transferor in e$chan5e of a membership in a reco5nised stoc9 e$chan5e are
transferred% the amount of profits and 5ains not char5ed under section 34 by +irtue of the
pro+isions contained in clause xi! of section 36 shall% notwithstandin5 anythin5
contained in the said clause% be deemed to be the income char5eable under the head
.apital 5ains of the pre+ious year in which such shares are transferred(2
'
-)! Fhere any of the conditions laid down in the pro+iso to clause xiii! or the pro+iso
to clause xi%! of section 36 are not complied with% the amount of profits or 5ains arisin5
from the transfer of such capital asset or intan5ible asset not char5ed under section 34 by
+irtue of conditions laid down in the pro+iso to clause xiii! or the pro+iso to clause xi%!
of section 36 shall be deemed to be the profits and 5ains char5eable to ta$ of the
successor company for the pre+ious year in which the re,uirements of the pro+iso to
clause xiii! or the pro+iso to clause xi%!% as the case may be% are not complied with(2
6
-Mode of computation.
7
48. The income char5eable under the head .apital 5ains shall be computed% by deductin5
from the full +alue of the consideration
&
recei+ed or accruin5 as a result of the transfer of
the capital asset the followin5 amounts% namely :
i! e$penditure incurred wholly and e$clusi+ely in connection with such transfer
&
1
ii! the cost of ac,uisition of the asset and the cost of any impro+ement
&
thereto:
18
Provided that in the case of an assessee% who is a non#resident% capital 5ains arisin5
from the transfer of a capital asset bein5 shares in% or debentures of% an Indian company
shall be computed by con+ertin5 the cost of ac,uisition% e$penditure incurred wholly and
e$clusi+ely in connection with such transfer and the full +alue of the consideration
recei+ed or accruin5 as a result of the transfer of the capital asset into the same forei5n
currency as was initially utilised in the purchase of the shares or debentures% and the
capital 5ains so computed in such forei5n currency shall be recon+erted into Indian
currency% so% howe+er% that the aforesaid manner of computation of capital 5ains shall be
applicable in respect of capital 5ains accruin5 or arisin5 from e+ery rein+estment
thereafter in% and sale of% shares in% or debentures of% an Indian company :
Provided further that where lon5#term capital 5ain arises from the transfer of a lon5#
term capital asset% other than capital 5ain arisin5 to a non#resident from the transfer of
shares in% or debentures of% an Indian company referred to in the first pro+iso% the
pro+isions of clause ii! shall ha+e effect as if for the words cost of ac,uisition and cost
of any impro+ement% the words inde$ed cost of ac,uisition and inde$ed cost of any
impro+ement had respecti+ely been substituted:
11
-Provided also that nothin5 contained in the second pro+iso shall apply to the lon5#term
capital 5ain arisin5 from the transfer of a lon5#term capital asset bein5 bond or debenture
other than capital inde$ed bonds issued by the ;o+ernment :2
12
-Provided also that where shares% debentures or warrants referred to in the pro+iso to
clause iii! of section 36 are transferred under a 5ift or an irre+ocable trust% the mar9et
+alue on the date of such transfer shall be deemed to be the full +alue of consideration
recei+ed or accruin5 as a result of transfer for the purposes of this section :2
1)
-Provided also that no deduction shall be allowed in computin5 the income char5eable
under the head .apital 5ains in respect of any sum paid on account of securities
transaction ta$ under .hapter 0II of the >inance Ao( 2! "ct% 2883(2
i! forei5n currency
13
and Indian currency
13
shall ha+e the meanin5s respecti+ely
assi5ned to them in section 2 of the >orei5n E$chan5e Re5ulation "ct% 1&6)
3' of 1&6)!1
ii! the con+ersion of Indian currency into forei5n currency and the recon+ersion of
forei5n currency into Indian currency shall be at the rate of e$chan5e
prescribed in this behalf1
iii! inde$ed cost of ac,uisition means an amount which bears to the cost of
ac,uisition the same proportion as .ost Inflation Inde$ for the year in which
the asset is transferred bears to the .ost Inflation Inde$ for the first year in
which the asset was held by the assessee or for the year be5innin5 on the 1st
day of "pril% 1&71% whiche+er is later1
i%! inde$ed cost of any impro+ement means an amount which bears to the cost of
impro+ement the same proportion as .ost Inflation Inde$ for the year in which
the asset is transferred bears to the .ost Inflation Inde$ for the year in which
the impro+ement to the asset too9 place1
14
-%! .ost Inflation Inde$% in relation to a pre+ious year% means such Inde$ as the
.entral ;o+ernment may% ha+in5 re5ard to se+enty#fi+e per cent of a+era5e rise
in the .onsumer Price Inde$ for urban non#manual employees for the
immediately precedin5 pre+ious year to such pre+ious year% by notification
1'
in
the <fficial ;a=ette% specify% in this behalf(22
Cost with reference to certain modes of acquisition.
16
49.
17
-1!2 Fhere the capital asset became the property of the assessee
i! on any distribution of assets on the total or partial partition of a Cindu
undi+ided family1
ii! under a 5ift or will1
iii! a! by succession% inheritance or de+olution
1&
% or
28
-b! on any distribution of assets on the dissolution of a firm% body of
indi+iduals% or other association of persons% where such dissolution had
ta9en place at any time before the 1st day of "pril% 1&76% or2
c! on any distribution of assets on the li,uidation of a company% or
d! under a transfer to a re+ocable or an irre+ocable trust% or
e! under any such transfer as is referred to in clause i%!
21
-or clause %!2
22
-or
clause %i!2
2)
-or clause %ia!2
23
-or clause %iaa!2 of section 361
24
-i%! such assessee bein5 a Cindu undi+ided family% by the mode referred to in sub#
section 2! of section '3 at any time after the )1st day of ?ecember% 1&'&%2
the cost of ac,uisition of the asset shall be deemed to be the cost for which the pre+ious
owner of the property ac,uired it% as increased by the cost of any impro+ement of the
assets incurred or borne by the pre+ious owner or the assessee% as the case may be(
2'
-Explanation(In this
26
-sub#section2 the e$pression pre+ious owner of the property in
relation to any capital asset owned by an assessee means the last pre+ious owner of the
capital asset who ac,uired it by a mode of ac,uisition other than that referred to in clause
i! or clause ii! or clause iii!
27
-or clause i%!2 of this
2&
-sub#section2(2
)8
-2! Fhere the capital asset bein5 a share or shares in an amal5amated company which
is an Indian company became the property of the assessee in consideration of a transfer
referred to in clause %ii! of section 36% the cost of ac,uisition of the asset shall be
deemed to be the cost of ac,uisition to him of the share or shares in the amal5amatin5
company(2
)1
-2"! Fhere the capital asset% bein5 a share or debenture in a company% became the
property of the assessee in consideration of a transfer referred to in clause x! of section
36% the cost of ac,uisition of the asset to the assessee shall be deemed to be that part of
the cost of debenture% debenture#stoc9 or deposit certificates in relation to which such
asset is ac,uired by the assessee(2
)2
-2""! Fhere the capital 5ain arises from the transfer of the shares% debentures or
warrants% the +alue of which has been ta9en into account while computin5 the +alue of
per,uisite under clause 2! of section 16% the cost of ac,uisition of such shares%
debentures or warrants shall be the +alue under that clause(2
))
-2B!
)3
-***2
2.! The cost of ac,uisition of the shares in the resultin5 company shall be the amount
which bears to the cost of ac,uisition of shares held by the assessee in the demer5ed
company the same proportion as the net boo9 +alue of the assets transferred in a
demer5er bears to the net worth of the demer5ed company immediately before such
demer5er(
2?! The cost of ac,uisition of the ori5inal shares held by the shareholder in the
demer5ed company shall be deemed to ha+e been reduced by the amount as so arri+ed at
under sub#section 2.!(2
Explanation.>or the purposes of this section% net worth shall mean the a55re5ate of the
paid up share capital and 5eneral reser+es as appearin5 in the boo9s of account of the
demer5ed company immediately before the demer5er(2
)4
-)! Aotwithstandin5 anythin5 contained in sub#section 1!% where the capital 5ain
arisin5 from the transfer of a capital asset referred to in clause i%! or% as the case may be%
clause %! of section 36 is deemed to be income char5eable under the head .apital 5ains
by +irtue of the pro+isions contained in section 36"% the cost of ac,uisition of such asset
to the transferee#company shall be the cost for which such asset was ac,uired by it(2
)'
-Special provision for computation of capital gains in case of depreciable assets.
)6
50. Aotwithstandin5 anythin5 contained in clause 42A! of section 2% where the capital
asset is an asset formin5 part of a bloc9 of assets in respect of which depreciation has
been allowed under this "ct or under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% the
pro+isions of sections 37 and 3& shall be sub:ect to the followin5 modifications :
1! where the full +alue of the consideration recei+ed or accruin5 as a result of the
transfer of the asset to5ether with the full +alue of such consideration recei+ed
or accruin5 as a result of the transfer of any other capital asset fallin5 within the
bloc9 of the assets durin5 the pre+ious year% e$ceeds the a55re5ate of the
followin5 amounts% namely :
i! e$penditure incurred wholly and e$clusi+ely in connection with such
transfer or transfers1
ii! the written down +alue of the bloc9 of assets at the be5innin5 of the
pre+ious year1 and
iii! the actual cost of any asset fallin5 within the bloc9 of assets ac,uired
durin5 the pre+ious year%
such e$cess shall be deemed to be the capital 5ains arisin5 from the transfer of
short#term capital assets1
2! where any bloc9 of assets ceases to e$ist as such% for the reason that all the
assets in that bloc9 are transferred durin5 the pre+ious year% the cost of
ac,uisition of the bloc9 of assets shall be the written down +alue of the bloc9 of
assets at the be5innin5 of the pre+ious year% as increased by the actual cost of
any asset fallin5 within that bloc9 of assets% ac,uired by the assessee durin5 the
pre+ious year and the income recei+ed or accruin5 as a result of such transfer or
transfers shall be deemed to be the capital 5ains arisin5 from the transfer of
short#term capital assets(2
)7
-Special provision for cost of acquisition in case of depreciable asset.
50A. Fhere the capital asset is an asset in respect of which a deduction on account of
depreciation under clause i! of sub#section 1! of section )2 has been obtained by the
assessee in any pre+ious year% the pro+isions of sections 37 and 3& shall apply sub:ect to
the modification that the written down +alue% as defined in clause 6! of section 3)% of the
asset% as ad:usted% shall be ta9en as the cost of ac,uisition of the asset(2
)&
-Special provision for computation of capital gains in case of slump sale.
50B. 1! "ny profits or 5ains arisin5 from the slump sale effected in the pre+ious year
shall be char5eable to income#ta$ as capital 5ains arisin5 from the transfer of lon5#term
capital assets and shall be deemed to be the income of the pre+ious year in which the
transfer too9 place :
Provided that any profits or 5ains arisin5 from the transfer under the slump sale of any
capital asset bein5 one or more underta9in5s owned and held by an assessee for not more
than thirty#si$ months immediately precedin5 the date of its transfer shall be deemed to
be the capital 5ains arisin5 from the transfer of short#term capital assets(
2! In relation to capital assets bein5 an underta9in5 or di+ision transferred by way of
such sale% the net worth of the underta9in5 or the di+ision% as the case may be% shall be
deemed to be the cost of ac,uisition and the cost of impro+ement for the purposes of
sections 37 and 3& and no re5ard shall be 5i+en to the pro+isions contained in the second
pro+iso to section 37(
)! E+ery assessee% in the case of slump sale% shall furnish in the prescribed form
38
alon5
with the return of income% a report of an accountant as defined in the Explanation below
sub#section 2! of section 277% indicatin5 the computation of the net worth of the
underta9in5 or di+ision% as the case may be% and certifyin5 that the net worth of the
underta9in5 or di+ision% as the case may be% has been correctly arri+ed at in accordance
with the pro+isions of this section(
31
-Explanation 1.>or the purposes of this section% net worth shall be the a55re5ate +alue
of total assets of the underta9in5 or di+ision as reduced by the +alue of liabilities of such
underta9in5 or di+ision as appearin5 in its boo9s of account :
Provided that any chan5e in the +alue of assets on account of re+aluation of assets shall
be i5nored for the purposes of computin5 the net worth(
Explanation 2.>or computin5 the net worth% the a55re5ate +alue of total assets shall be%
a! in the case of depreciable assets% the written down +alue of the bloc9 of assets
determined in accordance with the pro+isions contained in sub#item '! of item i!
of sub#clause c! of clause 6! of section 3)1 and
b! in the case of other assets% the boo9 +alue of such assets(22
32
-Special provision for full value of consideration in certain cases.
50C. 1! Fhere the consideration recei+ed or accruin5 as a result of the transfer by an
assessee of a capital asset% bein5 land or buildin5 or both% is less than the +alue adopted or
assessed by any authority of a *tate ;o+ernment hereafter in this section referred to as
the stamp +aluation authority! for the purpose of payment of stamp duty in respect of
such transfer% the +alue so adopted or assessed shall% for the purposes of section 37% be
deemed to be the full +alue of the consideration recei+ed or accruin5 as a result of such
transfer(
2! Fithout pre:udice to the pro+isions of sub#section 1!% where
a! the assessee claims before any "ssessin5 <fficer that the +alue adopted or
assessed by the stamp +aluation authority under sub#section 1! e$ceeds the fair
mar9et +alue of the property as on the date of transfer1
b! the +alue so adopted or assessed by the stamp +aluation authority under sub#
section 1! has not been disputed in any appeal or re+ision or no reference has
been made before any other authority% court or the Ci5h .ourt%
the "ssessin5 <fficer may refer the +aluation of the capital asset to a 0aluation <fficer
and where any such reference is made% the pro+isions of sub#sections 2!% )!% 3!% 4! and
'! of section 1'"% clause i! of sub#section 1! and sub#sections '! and 6! of section
2)"% sub#section 4! of section 23% section )3""% section )4 and section )6 of the
Fealth#ta$ "ct% 1&46 26 of 1&46!% shall% with necessary modifications% apply in relation
to such reference as they apply in relation to a reference made by the "ssessin5 <fficer
under sub#section 1! of section 1'" of that "ct(
Explanation.>or the purposes of this section% 0aluation <fficer shall ha+e the same
meanin5 as in clause r! of section 2 of the Fealth#ta$ "ct% 1&46 26 of 1&46!(
)! *ub:ect to the pro+isions contained in sub#section 2!% where the +alue ascertained
under sub#section 2! e$ceeds the +alue adopted or assessed by the stamp +aluation
authority referred to in sub#section 1!% the +alue so adopted or assessed by such authority
shall be ta9en as the full +alue of the consideration recei+ed or accruin5 as a result of the
transfer(2
Advance money received.
51. Fhere any capital asset was on any pre+ious occasion the sub:ect of ne5otiations for
its transfer% any ad+ance or other money
3)
recei+ed and retained by the assessee in respect
of such ne5otiations shall be deducted from the cost for which the asset was ac,uired or
the written down +alue or the fair mar9et +alue% as the case may be% in computin5 the cost
of ac,uisition(
Profit on sale of property used for residence.
3'
54.
36
-1!2
37
-
3&
-*ub:ect to the pro+isions of sub#section 2!% where% in the case of an
assessee
48
bein5 an indi+idual or a Cindu undi+ided family2% the capital 5ain arises from
the transfer of a lon5#term capital asset
41
-***2% bein5 buildin5s or
48
lands appurtenant
thereto% and bein5 a residential house% the income of which is char5eable under the head
Income from house property hereafter in this section referred to as the ori5inal asset!%
and the assessee has within a period of
42
-one year before or two years after the date on
which the transfer too9 place purchased
4)
2% or has within a period of three years after that
date constructed% a residential house% then2% instead of the capital 5ain bein5 char5ed to
income#ta$ as income of the pre+ious year in which the transfer too9 place% it shall be
dealt with in accordance with the followin5 pro+isions of this section% that is to say%
i! if the amount of the capital 5ain
43
-is 5reater than the cost of
44
-the residential
house2 so purchased or constructed hereafter in this section referred to as the
new asset!2% the difference between the amount of the capital 5ain and the cost
of the new asset shall be char5ed under section 34 as the income of the
pre+ious year1 and for the purpose of computin5 in respect of the new asset any
capital 5ain arisin5 from its transfer within a period of three years of its
purchase or construction% as the case may be% the cost shall be nil1 or
ii! if the amount of the capital 5ain is e,ual to or less than the cost of the new
asset% the capital 5ain shall not be char5ed under section 341 and for the purpose
of computin5 in respect of the new asset any capital 5ain arisin5 from its
transfer within a period of three years of its purchase or construction% as the
case may be% the cost shall be reduced by the amount of the capital 5ain(
4'
-***2
46
-2! The amount of the capital 5ain which is not appropriated by the assessee towards
the purchase of the new asset made within one year before the date on which the transfer
of the ori5inal asset too9 place% or which is not utilised by him for the purchase or
construction of the new asset before the date of furnishin5 the return of income under
section 1)&% shall be deposited by him before furnishin5 such return -such deposit bein5
made in any case not later than the due date applicable in the case of the assessee for
furnishin5 the return of income under sub#section 1! of section 1)&2 in an account in any
such ban9 or institution as may be specified in% and utilised in accordance with% any
scheme
47
frame in this behalf and such return shall be accompanied by proof of such deposit1 and%
for the purposes of sub#section 1!% the amount% if any% already utilised by the assessee for
the purchase or construction of the new asset to5ether with the amount so deposited shall
be deemed to be the cost of the new asset :
Provided that if the amount deposited under this sub#section is not utilised wholly or
partly for the purchase or construction of the new asset within the period specified in sub#
section 1!% then%
i! the amount not so utilised shall be char5ed under section 34 as the income of
the pre+ious year in which the period of three years from the date of the
transfer of the ori5inal asset e$pires1 and
ii! the assessee shall be entitled to withdraw such amount in accordance with the
scheme aforesaid(
Explanation(
4&
-/mitted b+ the 0inance Act) 1##2) w.e.!. 1-4-1##3.2
'8
-Capital gain on transfer of land used for agricultural purposes not to be charged
in certain cases.
'1
54B.
'2
-1!2
')
-*ub:ect to the pro+isions of sub#section 2!% where the capital 5ain arises2
from the transfer of a capital asset bein5 land which% in the two years immediately
precedin5 the date on which the transfer too9 place% was bein5 used by the assessee or a
parent of his for a5ricultural purposes
'3
-hereinafter referred to as the ori5inal asset!2%
and the assessee has% within a period of two years after that date% purchased any other
land for bein5 used for a5ricultural purposes% then% instead of the capital 5ain bein5
char5ed to income#ta$ as income of the pre+ious year in which the transfer too9 place% it
shall be dealt with in accordance with the followin5 pro+isions of this section% that is to
say%
i! if the amount of the capital 5ain is 5reater than the cost of the land so purchased
hereinafter referred to as the new asset!% the difference between the amount of
the capital 5ain and the cost of the new asset shall be char5ed under section 34
as the income of the pre+ious year1 and for the purpose of computin5 in respect
of the new asset any capital 5ain arisin5 from its transfer within a period of
three years of its purchase% the cost shall be nil1 or
transfer within a period of three years of its purchase% the cost shall be reduced%
by the amount of the capital 5ain(2
'4
-2! The amount of the capital 5ain which is not utilised by the assessee for the purchase
of the new asset before the date of furnishin5 the return of income under section 1)&%
shall be deposited by him before furnishin5 such return -such deposit bein5 made in any
case not later than the due date applicable in the case of the assessee for furnishin5 the
return of income under sub#section 1! of section 1)&2 in an account in any such ban9 or
institution as may be specified in% and utilised in accordance with% any scheme
''
which
the .entral ;o+ernment may% by notification in the <fficial ;a=ette% frame in this behalf
and such return shall be accompanied by proof of such deposit1 and% for the purposes of
sub#section 1!% the amount% if any% already utilised by the assessee for the purchase of the
new asset to5ether with the amount so deposited shall be deemed to be the cost of the
new asset :
partly for the purchase of the new asset within the period specified in sub#section 1!%
then%
the pre+ious year in which the period of two years from the date of the transfer
of the ori5inal asset e$pires1 and
scheme aforesaid(
Explanation(
'6
'7
-Capital gain on compulsory acquisition of lands and buildings not to be charged
in certain cases.
'&
54D.
68
-1!2
61
-*ub:ect to the pro+isions of sub#section 2!% where the capital 5ain arises2
from the transfer by way of compulsory ac,uisition under any law of a capital asset%
bein5 land or buildin5 or any ri5ht in land or buildin5% formin5 part of an industrial
underta9in5
62
belon5in5 to the assessee which% in the two years immediately precedin5
the date on which the transfer too9 place% was bein5 used by the assessee for the purposes
of the business of the said underta9in5
6)
-hereafter in this section referred to as the
ori5inal asset!2% and the assessee has within a period of three years after that date
purchased any other land or buildin5 or any ri5ht in any other land or buildin5 or
constructed any other buildin5 for the purposes of shiftin5 or re#establishin5 the said
underta9in5 or settin5 up another industrial underta9in5% then% instead of the capital 5ain
bein5 char5ed to income#ta$ as the income of the pre+ious year in which the transfer too9
place% it shall be dealt with in accordance with the followin5 pro+isions of this section%
that is to say%
i! if the amount of the capital 5ain is 5reater than the cost of the land% buildin5 or
ri5ht so purchased or the buildin5 so constructed such land% buildin5 or ri5ht
bein5 hereafter in this section referred to as the new asset!% the difference
between the amount of the capital 5ain and the cost of the new asset shall be
char5ed under section 34 as the income of the pre+ious year1 and for the
purpose of computin5 in respect of the new asset any capital 5ain arisin5 from
its transfer within a period of three years of its purchase or construction% as the
case may be% the cost shall be nil1 or
transfer within a period of three years of its purchase or construction% as the
case may be% the cost shall be reduced by the amount of the capital 5ain(2
63
-2! The amount of the capital 5ain which is not utilised by the assessee for the purchase
or construction of the new asset before the date of furnishin5 the return of income under
scheme
64
frame in this behalf and such return shall be accompanied by proof of such deposit1 and%
be deemed to be the cost of the new asset:
section 1!% then%
transfer of the ori5inal asset e$pires1 and
scheme aforesaid(
Explanation(
6'
66
-Capital gain on transfer of capital assets not to be charged in certain cases.
67
54E. 1! Fhere the capital 5ain arises from the transfer of a
6&
-lon5#term capital asset2
78
-before the 1st day of "pril% 1&&22% the capital asset so transferred bein5 hereafter in
this section referred to as the ori5inal asset! and the assessee has% within a period of si$
months after the date of such transfer% in+ested or deposited the
71
-whole or any part of
the net consideration2 in any specified asset such specified asset bein5 hereafter in this
section referred to as the new asset!% the capital 5ain shall be dealt with in accordance
with the followin5 pro+isions of this section% that is to say%
a! if the cost of the new asset is not less than the
72
-net consideration2 in respect of
the ori5inal asset% the whole of such capital 5ain shall not be char5ed under
section 341
b! if the cost of the new asset is less than the
72
-net consideration2 in respect of the
ori5inal asset% so much of the capital 5ain as bears to the whole of the capital
5ain the same proportion as the cost of ac,uisition of the new asset bears to the
7)
-net consideration2 shall not be char5ed under section 34:
73
-Provided that in a case where the ori5inal asset is transferred after the 27th day of
>ebruary% 1&7)% the pro+isions of this sub#section shall not apply unless the assessee has
in+ested or deposited the whole or% as the case may be% any part of the net consideration
in the new asset by initially subscribin5 to such new asset:2
74
-Provided further that in a case where the transfer of the ori5inal asset is by way of
compulsory ac,uisition under any law and the full amount of compensation awarded for
such ac,uisition is not recei+ed by the assessee on the date of such transfer% the period of
si$ months referred to in this sub#section shall% in relation to so much of such
compensation as is not recei+ed on the date of the transfer% be rec9oned from the date
immediately followin5 the date on which such compensation is recei+ed by the assessee
7'
-or the )1st day of Barch% 1&&2% whiche+er is earlier2(2
Explanation 1(
76
->or the purposes of this sub#section% specified asset means%
a! in a case where the ori5inal asset is transferred before the 1st day of Barch%
1&6&% any of the followin5 assets% namely:2
i! securities of the .entral ;o+ernment or a *tate ;o+ernment1
ii!
77
sa+in5s certificates as defined in clause c! of section 2 of the ;o+ernment
*a+in5s .ertificates "ct% 1&4& 3' of 1&4&!1
iii! units in the Enit Trust of India established under the Enit Trust of India
"ct% 1&') 42 of 1&')!1
i%! debentures specified by the .entral ;o+ernment for the purposes of clause
ii! of sub#section 1! of section 78G1
%! shares in any Indian company which are issued to the public or are listed in
a reco5nised stoc9 e$chan5e in India in accordance with the *ecurities
.ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!% and any rules made
thereunder%
7&
-where the in+estment in such shares is made before the 1st
day of Barch% 1&6721
&8
-%a! e,uity shares formin5 part of any eli5ible issue of capital% where the
in+estment in such shares is made after the 27th day of >ebruary% 1&6712
%i! deposits for a period of not less than three years with the *tate Ban9 of
India established under the *tate Ban9 of India "ct% 1&44 2) of 1&44!% or
any subsidiary ban9 as defined in the *tate Ban9 of India *ubsidiary
Ban9s! "ct% 1&4& )7 of 1&4&! or any nationalised ban9% that is to say% any
correspondin5 new ban9% constituted under section ) of the Ban9in5
.ompanies "c,uisition and Transfer of Enderta9in5s! "ct% 1&68 4 of
1&68!% or any co#operati+e society en5a5ed in carryin5 on the business of
ban9in5 includin5 a co#operati+e land mort5a5e ban9 or a co#operati+e
land de+elopment ban9!1
&1
-b! in a case where the ori5inal asset is transferred after the 27th day of
>ebruary% 1&6&
&2
-but before the 1st day of Barch% 1&7)2% such Aational Rural
?e+elopment Bonds as the .entral ;o+ernment may notify
&)
in this behalf in the <fficial
;a=ette12
&3
-c!in a case where the ori5inal asset is transferred after the 27th day of >ebruary%
1&7)
&4
-but before the 1st day of "pril% 1&7'2% any of the followin5 assets%
namely :
i! securities of the .entral ;o+ernment which that ;o+ernment may% by
notification in the <fficial ;a=ette% specify in this behalf1
ii! special series of units of the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!% which the .entral ;o+ernment
&'
iii! such Aational Rural ?e+elopment Bonds as ha+e been notified
&'
under
clause b! of E$planation 1 or as may be notified in this behalf under this
clause by the .entral ;o+ernment1
i+! such debentures issued by the Cousin5 and Erban ?e+elopment
.orporation Gimited -a
&6
;o+ernment company as defined in section '16
of the .ompanies "ct% 1&4' 1 of 1&4'!2% as the .entral ;o+ernment may%
by notification in the <fficial ;a=ette% specify in this behalf12
&7
-d!in a case where the ori5inal asset is transferred after the )1st day of Barch%
1&7'% any of the assets specified in clause c! and such bonds issued by any
public sector company% as the .entral ;o+ernment may% by notification
&&
in the
<fficial ;a=ette% specify in this behalf1
1
-***22
2
-e! in a case where the ori5inal asset is transferred after the )1st day of Barch%
1&7&% any of the assets specified in clauses c! and d! and such debentures or
bonds issued by the Aational Cousin5 Ban9 established under section ) of the
Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76!% as the .entral ;o+ernment
)
in the <fficial ;a=ette% specify in this behalf(2
3#4
-Explanation 2(Eli5ible issue of capital shall ha+e the meanin5 assi5ned to it in sub#
section )! of section 78..(2
3#4
-Explanation 3("n assessee shall not be deemed to ha+e in+ested the
'
-whole or any
part of the net consideration in any e,uity shares referred to in sub#clause %a! of clause
a!2 of Explanation 1% unless the assessee has subscribed to or purchased the shares in the
manner specified in sub#section 3! of section 78..(2
Explanation
6
-42(.ost% in relation to any new asset% bein5 a deposit referred to in
7
-sub#
clause %i! of clause a!2 of Explanation 1% means the amount of such deposit(
&
-Explanation 5.Aet consideration% in relation to the transfer of a capital asset% means the
full +alue of the consideration recei+ed or accruin5 as a result of the transfer of the capital
asset as reduced by any e$penditure incurred wholly and e$clusi+ely in connection with
such transfer(
18
-1"! Fhere the assessee deposits after the 26th day of "pril% 1&67% the
11
-whole or any
part of the net consideration in respect2 of the ori5inal asset in any new asset% bein5 a
deposit referred to in
12#1)
-sub#clause %i! of clause a!2 of Explanation 1 below sub#
section 1!% the cost of such new asset shall not be ta9en into account for the purposes of
that sub#section unless the followin5 conditions are fulfilled% namely :
a! the assessee furnishes% alon5 with the deposit% a declaration in writin5% to
the ban9 or the co#operati+e society referred to in the said
12#1)
-sub#clause %i!2 with which
such deposit is made% to the effect that the assessee will not ta9e any loan or ad+ance on
the security of such deposit durin5 a period of three years from the date on which the
deposit is made1
b! the assessee furnishes% alon5 with the return of income for the assessment
year rele+ant to the pre+ious year in which the transfer of the ori5inal asset was effected
or within such further time as may be allowed by the
13
-"ssessin52 <fficer% a copy of the
declaration referred to in clause a! duly attested by an officer not below the ran9 of sub#
a5ent% a5ent or mana5er of such ban9 or an officer of correspondin5 ran9 of such co#
operati+e society(2
14
-1B! Fhere on the fulfilment of the conditions specified in sub#section 1"!% the cost
of the new asset referred to in that sub#section is ta9en into account for the purposes of
sub#section 1!% the assessee shall% within a period of ninety days from the e$piry of the
period of three years rec9oned from the date of such deposit% furnish to the
1'
-"ssessin52
<fficer a certificate from the officer referred to in clause b! of sub#section 1"! to the
effect that the assessee has not ta9en any loan or ad+ance on the security of such deposit
durin5 the said period of three years(2
16
-1.! Aotwithstandin5 anythin5 contained in sub#section 1!% where the capital 5ain
arises from the transfer of the ori5inal asset% made after the )1st day of Barch% 1&&2% in
respect of which the assessee had recei+ed any amount by way of ad+ance on or before
the 2&th day of >ebruary% 1&&2 and had in+ested or deposited the whole or any part of
such amount in the new asset on or before the later date% then% the pro+isions of clauses
a! and b! of sub#section 1! shall apply in the case of such in+estment or deposit as they
apply in the case of in+estment or deposit under that sub#section(2
2! Fhere the new asset is transferred% or con+erted otherwise than by transfer! into
money% within a period of three years from the date of its ac,uisition% the amount of
capital 5ain arisin5 from the transfer of the ori5inal asset not char5ed under section 34 on
the basis of the cost of such new asset as pro+ided in clause a! or% as the case may be%
clause b!% of sub#section 1! shall be deemed to be income char5eable under the head
.apital 5ains relatin5 to
17
-lon5#term capital assets2 of the pre+ious year in which the new
asset is transferred or con+erted otherwise than by transfer! into money(2
1&
-
28
-Explanation 12(Fhere the assessee deposits after the 26th day of "pril% 1&67% the
21
-whole or any part of the net consideration in respect2 of the ori5inal asset in any new
asset% bein5 a deposit referred to in
22
-sub#clause %i! of clause a!2 of Explanation 1
below sub#section 1!% and such assessee ta9es any loan or ad+ance on the security of
such deposit% he shall be deemed to ha+e con+erted otherwise than by transfer! such
deposit into money on the date on which such loan or ad+ance is ta9en(2
2)
-Explanation 2.In a case where the ori5inal asset is transferred after the 27th day of
>ebruary% 1&7) and the assessee in+ests the whole or any part of the net consideration in
respect of the ori5inal asset in any new asset and such assessee ta9es any loan or ad+ance
on the security of such new asset% he shall be deemed to ha+e con+erted otherwise than
by transfer! such new asset on the date on which such loan or ad+ance is ta9en(2
23
-***2
24
-***2
2'
-***2
26
-)! Fhere the cost of the e,uity shares referred to in
27
-sub#clause %a! of clause a!2 of
Explanation 1 below sub#section 1! is ta9en into account for the purposes of clause a!
or clause b! of sub#section 1!
2&
-***2% a deduction with reference to such cost shall not
be allowed under section 78..(2
)8
-Capital gain on transfer of long-term capital assets not to be charged in the case of
investment in
)1
-specified securities2.
)2
54EA. 1! Fhere the capital 5ain arises from the transfer of a lon5#term capital asset
))
-before the 1st day of "pril% 28882 the capital asset so transferred bein5 hereafter in this
section referred to as the ori5inal asset! and the assessee has% at any time within a period
of si$ months after the date of such transfer% in+ested the whole or any part of the net
consideration in any of the
)3
-bonds% debentures% shares of a public company or units of
any mutual fund referred to in clause 231! of section 18%2 specified
)4
by the Board in this
behalf by notification in the <fficial ;a=ette such assets hereafter in this section referred
to as the
)'
-specified securities2!% the capital 5ain shall be dealt with in accordance with
the followin5 pro+isions of this section% that is to say%
a! if the cost of the
)'
-specified securities2 is not less than the net consideration in
respect of the ori5inal asset% the whole of such capital 5ain shall not be char5ed
under section 341
b! if the cost of the
)'
-specified securities2 is less than the net consideration in respect
of the ori5inal asset% so much of the capital 5ain as bears to the whole of the capital
5ain the same proportion as the cost of ac,uisition of the
)'
-specified securities2
bears to the net consideration shall not be char5ed under section 34(
2! Fhere the
)6
-specified securities2 are transferred or con+erted otherwise than by
transfer! into money at any time within a period of three years from the date of their
ac,uisition% the amount of capital 5ain arisin5 from the transfer of the ori5inal asset not
char5ed under section 34 on the basis of the cost of such
)6
-specified securities2 as
pro+ided in clause a! or clause b! of sub#section 1! shall be deemed to be the income
char5eable under the head .apital 5ains relatin5 to lon5#term capital assets of the
pre+ious year in which the
)6
-specified securities2 are transferred or con+erted otherwise
than by transfer! into money(
Explanation.In a case where the ori5inal asset is transferred and the assessee in+ests the
whole or any part of the net consideration in respect of the ori5inal asset in any
)6
-specified securities2 and such assessee ta9es any loan or ad+ance on the security of
such
)6
-specified securities2% he shall be deemed to ha+e con+erted otherwise than by
transfer! such
)6
-specified securities2 into money on the date on which such loan or
ad+ance is ta9en(
)! Fhere the cost of the
)6
-specified securities2 has been ta9en into account for the
purposes of clause a! or clause b! of sub#section 1!% a rebate with reference to such cost
shall not be allowed under section 77(
a! cost% in relation to any
)6
-specified securities2% means the amount in+ested in
such
)6
-specified securities2 out of the net consideration recei+ed or accruin5 as
a result of the transfer of the ori5inal asset 1
b! net consideration% in relation to the transfer of a capital asset% means the full
+alue of the consideration recei+ed or accruin5 as a result of the transfer of the
capital asset as reduced by the e$penditure incurred wholly and e$clusi+ely in
connection with such transfer(
Capital gain on transfer of long-term capital assets not to be charged in certain
cases.
)7
54EB. 1! Fhere the capital 5ain arises from the transfer of a lon5#term capital asset
)&
-before the 1st day of "pril% 28882 the capital asset so transferred bein5 hereafter in this
section referred to as the ori5inal asset!% and the assessee has% at any time within a period
of si$ months after the date of such transfer in+ested the whole or any part of capital
5ains% in any of the assets specified
38
by the Board in this behalf by notification in the
<fficial ;a=ette such assets hereafter in this section referred to as the lon5#term
specified assets!% the capital 5ain shall be dealt with in accordance with the followin5
pro+isions of this section% that is to say%
a! if the cost of the lon5#term specified asset is not less than the capital 5ain
arisin5 from the transfer of the ori5inal asset% the whole of such capital 5ain
shall not be char5ed under section 34 1
b! if the cost of the lon5#term specified asset is less than the capital 5ain arisin5
from the transfer of the ori5inal asset% so much of the capital 5ain as bears to
the whole of the capital 5ain the same proportion as the cost of ac,uisition of
the lon5#term specified asset bears to the whole of the capital 5ain% shall not be
char5ed under section 34(
Explanation..ost% in relation to any lon5#term specified asset% means the amount in+ested
in such specified asset out of capital 5ains recei+ed or accruin5 as a result of the transfer
of the ori5inal asset(
2! Fhere the lon5#term specified asset is transferred or con+erted otherwise than by
transfer! into money at any time within a period of se+en years from the date of its
ac,uisition% the amount of capital 5ains arisin5 from the transfer of the ori5inal asset not
char5ed under section 34 on the basis of the cost of such lon5#term specified asset as
pro+ided in clause a!% or as the case may be% clause b! of sub#section 1! shall be
deemed to be the income char5eable under the head .apital 5ains relatin5 to lon5#term
capital assets of the pre+ious year in which the lon5#term specified asset is transferred or
con+erted otherwise than by transfer! into money(
whole or any part of the capital 5ain recei+ed or accrued as a result of transfer of the
ori5inal asset in any lon5#term specified asset and such assessee ta9es any loan or
ad+ance on the security of such specified asset% he shall be deemed to ha+e con+erted
otherwise than by transfer! such specified asset into money on the date on which such
loan or ad+ance is ta9en(
)! Fhere the cost of the lon5#term specified asset has been ta9en into account for the
purposes of clause a! or clause b! of sub#section 1!% a deduction from the amount of
income#ta$ with reference to such cost shall not be allowed under section 77(2
31
-Capital gain not to be charged on investment in certain bonds.
54EC. 1! Fhere the capital 5ain arises from the transfer of a lon5#term capital asset the
capital asset so transferred bein5 hereafter in this section referred to as the ori5inal asset!
and the assessee has% at any time within a period of si$ months after the date of such
transfer% in+ested the whole or any part of capital 5ains in the lon5#term specified asset%
the capital 5ain shall be dealt with in accordance with the followin5 pro+isions of this
section% that is to say%
a! if the cost of the lon5#term specified asset is not less than the capital 5ain
arisin5 from the transfer of the ori5inal asset% the whole of such capital 5ain
shall not be char5ed under section 341
b! if the cost of the lon5#term specified asset is less than the capital 5ain arisin5
the whole of the capital 5ain the same proportion as the cost of ac,uisition of
the lon5#term specified asset bears to the whole of the capital 5ain% shall not be
2! Fhere the lon5#term specified asset is transferred or con+erted otherwise than by
transfer! into money at any time within a period of three years from the date of its
ac,uisition% the amount of capital 5ains arisin5 from the transfer of the ori5inal asset not
char5ed under section 34 on the basis of the cost of such lon5#term specified asset as
pro+ided in clause a! or% as the case may be% clause b! of sub#section 1! shall be
deemed to be the income char5eable under the head .apital 5ains relatin5 to lon5#term
capital asset of the pre+ious year in which the lon5#term specified asset is transferred or
con+erted otherwise than by transfer! into money(
whole or any part of the capital 5ain recei+ed or accrued as a result of transfer of the
ori5inal asset in any lon5#term specified asset and such assessee ta9es any loan or
ad+ance on the security of such specified asset% he shall be deemed to ha+e con+erted
otherwise than by transfer! such specified asset into money on the date on which such
loan or ad+ance is ta9en(
32
-*3( ,here the cost o! the long-term speci!ied asset has been ta.en into account !or the
purposes o! clause *a( or clause *b( o! sub-section *1()
*a( a deduction !rom the amount o! income-tax with re!erence to such cost shall
not be allowed under section "" !or an+ assessment +ear ending be!ore the 1st
da+ o! April) 2$$6-
*b( a deduction !rom the income with re!erence to such cost shall not be allowed
under section "$' !or an+ assessment +ear beginning on or a!ter the 1st da+ o!
April) 2$$6.2
a! cost% in relation to any lon5#term specified asset% means the amount in+ested in
such specified asset out of capital 5ains recei+ed or accruin5 as a result of the
transfer of the ori5inal asset1
3)
*b( long-term speci!ied asset means an+ bond) redeemable a!ter three +ears and
issued on or a!ter the 1st da+ o! April) 2$$6)
*i( b+ the &ational Cighwa+s Authorit+ o! 3ndia constituted under section 3 o! the
&ational Cighwa+s Authorit+ o! 3ndia Act) 1#"" *6" o! 1#""() and noti!ied b+
the 'entral 5o%ernment in the /!!icial 5a8ette !or the purposes o! this section-
or
*ii( b+ the 6ural Electri!ication 'orporation >imited) a compan+ !ormed and
registered under the 'ompanies Act) 1#56 *1 o! 1#56() and noti!ied b+ the
'entral 5o%ernment in the /!!icial 5a8ette !or the purposes o! this section.]
33
-Capital gain on transfer of certain listed securities or unit not to be charged in
certain cases.
54ED. 1! Fhere the capital 5ain arises from the transfer
34
be!ore the 1st da+ o! April)
2$$6)] of a lon5#term capital asset% bein5 listed securities or unit the capital asset so
transferred bein5 hereafter in this section referred to as the ori5inal asset!% and the
assessee has% within a period of si$ months after the date of such transfer% in+ested the
whole or any part of the capital 5ain in ac,uirin5 e,uity shares formin5 part of an eli5ible
issue of capital such e,uity shares bein5 hereafter in this section referred to as the
specified e,uity shares!% the said capital 5ain shall be dealt with in accordance with the
followin5 pro+isions of this section% that is to say%
a! if the cost of the specified e,uity shares is not less than the capital 5ain arisin5
from the transfer of the ori5inal asset% the whole of such capital 5ain shall not
be char5ed under section 341
b! if the cost of the specified e,uity shares is less than the capital 5ain arisin5
the whole of the capital 5ain the same proportion as the cost of the specified
e,uity shares ac,uired bears to the whole of the capital 5ain shall not be
Explanation.>or the purposes of this sub#section%
i! eli5ible issue of capital means an issue of e,uity shares which satisfies the
followin5 conditions% namely:
a! the issue is made by a public company formed and re5istered in India1
b! the shares formin5 part of the issue are offered for subscription to the
public1
ii! listed securities shall ha+e the same meanin5 as in clause a! of the
Explanation to sub#section 1! of section 1121
iii! unit shall ha+e the meanin5 assi5ned to it in clause b! of the Explanation to
section 114"B(
2! Fhere the specified e,uity shares are sold or otherwise transferred within a period of
one year from the date of their ac,uisition% the amount of capital 5ain arisin5 from the
transfer of the ori5inal asset not char5ed under section 34 on the basis of the cost of such
specified e,uity shares as pro+ided in clause a! or% as the case may be% clause b!% of sub#
section 1! shall be deemed to be the income char5eable under the head .apital 5ains
relatin5 to lon5#term capital assets of the pre+ious year in which such e,uity shares are
sold or otherwise transferred(
3'
-*3( ,here the cost o! the speci!ied e2uit+ shares has been ta.en into account !or the
purposes o! clause *a( or clause *b( o! sub-section *1()
*a( a deduction !rom the amount o! income-tax with re!erence to such cost shall
not be allowed under section "" !or an+ assessment +ear ending be!ore the 1st
da+ o! April) 2$$6-
*b( a deduction !rom the income with re!erence to such cost shall not be allowed
under section "$' !or an+ assessment +ear beginning on or a!ter the 1st da+ o!
April) 2$$6.22
36
-Capital gain on transfer of certain capital assets not to be charged in case of
investment in residential house.
37
54F. 1!
3&
-*ub:ect to the pro+isions of sub#section 3!% where% in the case of an assessee
bein5 an indi+idual or a Cindu undi+ided family2% the capital 5ain arises from the transfer
of any lon5#term capital asset% not bein5 a residential house hereafter in this section
referred to as the ori5inal asset!% and the assessee has% within a period of one year before
or
48
-two years2 after the date on which the transfer too9 place purchased% or has within a
period of three years after that date constructed% a residential house hereafter in this
section referred to as the new asset!% the capital 5ain shall be dealt with in accordance
with the followin5 pro+isions of this section% that is to say%
a! if the cost of the new asset is not less than the net consideration in respect of
section 34 1
b! if the cost of the new asset is less than the net consideration in respect of the
5ain the same proportion as the cost of the new asset bears to the net
consideration% shall not be char5ed under section 34:
41
-Provided that nothin5 contained in this sub#section shall apply where
a! the assessee%
i! owns more than one residential house% other than the new asset% on the date
of transfer of the ori5inal asset1 or
ii! purchases any residential house% other than the new asset% within a period of
one year after the date of transfer of the ori5inal asset1 or
iii! constructs any residential house% other than the new asset% within a period of
three years after the date of transfer of the ori5inal asset1 and
b! the income from such residential house% other than the one residential house
owned on the date of transfer of the ori5inal asset% is char5eable under the head
Income from house property(2
42
-***2
4)
-***2 net consideration% in relation to the transfer of a capital asset% means the full
+alue of the consideration recei+ed or accruin5 as a result of the transfer of the
capital asset as reduced by any e$penditure incurred wholly and e$clusi+ely in
2! Fhere the assessee purchases% within the period of
43
-two years2 after the date of the
transfer of the ori5inal asset% or constructs% within the period of three years after such
date% any residential house% the income from which is char5eable under the head Income
from house property% other than the new asset% the amount of capital 5ain arisin5 from the
transfer of the ori5inal asset not char5ed under section 34 on the basis of the cost of such
new asset as pro+ided in clause a!% or% as the case may be% clause b!% of sub#section 1!%
shall be deemed to be income char5eable under the head .apital 5ains relatin5 to lon5#
term capital assets of the pre+ious year in which such residential house is purchased or
constructed(
)! Fhere the new asset is transferred within a period of three years from the date of its
purchase or% as the case may be% its construction% the amount of capital 5ain arisin5 from
the transfer of the ori5inal asset not char5ed under section 34 on the basis of the cost of
such new asset as pro+ided in clause a! or% as the case may be% clause b!% of sub#section
1! shall be deemed to be income char5eable under the head .apital 5ains relatin5 to
lon5#term capital assets of the pre+ious year in which such new asset is transferred(2
44
-3! The amount of the net consideration which is not appropriated by the assessee
towards the purchase of the new asset made within one year before the date on which the
transfer of the ori5inal asset too9 place% or which is not utilised by him for the purchase
or construction of the new asset before the date of furnishin5 the return of income under
scheme
4'
frame in this behalf and such return shall be accompanied by proof of such deposit 1 and%
be deemed to be the cost of the new asset :
section 1!% then%
i! the amount by which
a! the amount of capital 5ain arisin5 from the transfer of the ori5inal asset not
char5ed under section 34 on the basis of the cost of the new asset as
pro+ided in clause a! or% as the case may be% clause b! of sub#section 1!%
e$ceeds
b! the amount that would not ha+e been so char5ed had the amount actually
utilised by the assessee for the purchase or construction of the new asset
within the period specified in sub#section 1! been the cost of the new asset%
shall be char5ed under section 34 as income of the pre+ious year in which the
period of three years from the date of the transfer of the ori5inal asset e$pires 1
and
ii! the assessee shall be entitled to withdraw the unutilised amount in accordance
with the scheme aforesaid(
Explanation.
46
47
-Exemption of capital gains on transfer of assets in cases of shifting of industrial
undertaking from urban area.
54G. 1! *ub:ect to the pro+isions of sub#section 2!% where the capital 5ain arises from
the transfer of a capital asset% bein5 machinery or plant or buildin5 or land or any ri5hts in
buildin5 or land used for the purposes of the business of an industrial underta9in5 situate
in an urban area% effected in the course of% or in conse,uence of% the shiftin5 of such
industrial underta9in5 hereafter in this section referred to as the ori5inal asset! to any
area other than an urban area! and the assessee has within a period of one year before or
three years after the date on which the transfer too9 place%
a! purchased new machinery or plant for the purposes of business of the industrial
underta9in5 in the area to which the said underta9in5 is shifted 1
b! ac,uired buildin5 or land or constructed buildin5 for the purposes of his
business in the said area 1
c! shifted the ori5inal asset and transferred the establishment of such underta9in5
to such area1 and
d! incurred e$penses on such other purpose as may be specified in a scheme
framed by the .entral ;o+ernment for the purposes of this section%
then% instead of the capital 5ain bein5 char5ed to income#ta$ as income of the pre+ious
year in which the transfer too9 place% it shall be dealt with in accordance with the
followin5 pro+isions of this section% that is to say%
i! if the amount of the capital 5ain is 5reater than the cost and e$penses incurred
in relation to all or any of the purposes mentioned in clauses a! to d! such
cost and e$penses bein5 hereafter in this section referred to as the new asset!%
the difference between the amount of the capital 5ain and the cost of the new
asset shall be char5ed under section 34 as the income of the pre+ious year 1 and
for the purpose of computin5 in respect of the new asset any capital 5ain arisin5
from its transfer within a period of three years of its bein5 purchased% ac,uired%
constructed or transferred% as the case may be% the cost shall be nil 1 or
ii! if the amount of the capital 5ain is e,ual to% or less than% the cost of the new
asset% the capital 5ain shall not be char5ed under section 34 1 and for the
purpose of computin5 in respect of the new asset any capital 5ain arisin5 from
its transfer within a period of three years of its bein5 purchased% ac,uired%
constructed or transferred% as the case may be% the cost shall be reduced by the
amount of the capital 5ain(
Explanation.In this sub#section% urban area means any such area within the limits of a
municipal corporation or municipality as the .entral ;o+ernment may% ha+in5 re5ard to
the population% concentration of industries% need for proper plannin5 of the area and other
rele+ant factors% by 5eneral or special order
4&
% declare to be an urban area for the purposes
of this sub#section(
2! The amount of capital 5ain which is not appropriated by the assessee towards the cost
and e$penses incurred in relation to all or any of the purposes mentioned in clauses a! to
d! of sub#section 1! within one year before the date on which the transfer of the ori5inal
asset too9 place% or which is not utilised by him for all or any of the purposes aforesaid
before the date of furnishin5 the return of income under section 1)&% shall be deposited
by him before furnishin5 such return -such deposit bein5 made in any case not later than
the due date applicable in the case of the assessee for furnishin5 the return of income
under sub#section 1! of section 1)&2 in an account in any such ban9 or institution as may
be specified in% and utilised in accordance with% any scheme
'8
which the .entral
;o+ernment may% by notification in the <fficial ;a=ette% frame in this behalf and such
return shall be accompanied by proof of such deposit 1 and% for the purposes of sub#
section 1!% the amount% if any% already utilised by the assessee for all or any of the
purposes aforesaid to5ether with the amount% so deposited shall be deemed to be the cost
of the new asset :
partly for all or any of the purposes mentioned in clauses a! to d! of sub#section 1!
within the period specified in that sub#section% then%
transfer of the ori5inal asset e$pires 1 and
scheme aforesaid(
Explanation.
'1
'2
Exemption of capital gains on transfer of assets in cases of shifting of industrial
undertaking from urban area to any Special Economic Zone.
54GA. *1( &otwithstanding an+thing contained in section 545) where the capital gain
arises !rom the trans!er o! a capital asset) being machiner+ or plant or building or land
or an+ rights in building or land used !or the purposes o! the business o! an industrial
underta.ing situate in an urban area) e!!ected in the course o!) or in conse2uence o! the
shi!ting o! such industrial underta.ing to an+ <pecial Economic =one) whether de%eloped
in an+ urban area or an+ other area and the assessee has within a period o! one +ear
be!ore or three +ears a!ter the date on which the trans!er too. place)
*a( purchased machiner+ or plant !or the purposes o! business o! the industrial
underta.ing in the <pecial Economic =one to which the said underta.ing is
shi!ted-
*b( ac2uired building or land or constructed building !or the purposes o! his
business in the <pecial Economic =one-
*c( shi!ted the original asset and trans!erred the establishment o! such underta.ing
to the <pecial Economic =one- and
*d( incurred expenses on such other purposes as ma+ be speci!ied in a scheme
!ramed b+ the 'entral 5o%ernment !or the purposes o! this section)
then) instead o! the capital gain being charged to income-tax as income o! the pre%ious
+ear in which the trans!er too. place) it shall) sub4ect to the pro%isions o! sub-section *2()
be dealt with in accordance with the !ollowing pro%isions o! this section) that is to sa+)
*i( i! the amount o! the capital gain is greater than the cost and expenses incurred
in relation to all or an+ o! the purposes mentioned in clauses *a( to *d( *such
cost and expenses being herea!ter in this section re!erred to as the new asset()
the di!!erence between the amount o! the capital gain and the cost o! the new
asset shall be charged under section 45 as the income o! the pre%ious +ear- and
!or the purpose o! computing in respect o! the new asset an+ capital gain
arising !rom its trans!er within a period o! three +ears o! its being purchased)
ac2uired) constructed or trans!erred) as the case ma+ be) the cost shall be Ail1
or
*ii( i! the amount o! the capital gain is e2ual to) or less than) the cost o! the new
asset) the capital gain shall not be charged under section 45) and !or the
purpose o! computing in respect o! the new asset an+ capital gain arising !rom
its trans!er within a period o! three +ears o! its being purchased) ac2uired)
constructed or trans!erred) as the case ma+ be) the cost shall be reduced b+ the
amount o! the capital gain.
E$planation(3n this sub-section)
*a( <pecial Economic =one shall ha%e the meaning assigned to it in clause *=a( o!
the <pecial Economic =ones Act) 2$$5
')
-
*b( urban area means an+ such area within the limits o! a municipal corporation
or municipalit+ as the 'entral 5o%ernment ma+) ha%ing regard to the
population) concentration o! industries) need !or proper planning o! the area
and other rele%ant !actors) b+ general or special order) declare to be an urban
area !or the purposes o! this sub-section.
*2( 7he amount o! capital gain which is not appropriated b+ the assessee towards the
cost and expenses incurred in relation to all or an+ o! the purposes mentioned in clauses
*a( to *d( o! sub-section *1( within one +ear be!ore the date on which the trans!er o! the
original asset too. place) or which is not utilised b+ him !or all or an+ o! the purposes
a!oresaid be!ore the date o! !urnishing the return o! income under section 13#) shall be
deposited b+ him be!ore !urnishing such return ?such deposit being made in an+ case not
later than the due date applicable in the case o! the assessee !or !urnishing the return o!
income under sub-section *1( o! section 13#@ in an account in an+ such ban. or
institution as ma+ be speci!ied in) and utilised in accordance with) an+ scheme which the
'entral 5o%ernment ma+) b+ noti!ication) !rame in this behal! and such return shall be
accompanied b+ proo! o! such deposit- and) !or the purposes o! sub-section *1() the
amount) i! an+) alread+ utilised b+ the assessee !or all or an+ o! the a!oresaid purposes
together with the amount so deposited shall be deemed to be the cost o! the new asset A
Provided that i! the amount deposited under this sub-section is not utilised wholl+ or
partl+ !or all or an+ o! the purposes mentioned in clauses *a( to *d( o! sub-section *1(
within the period speci!ied in that sub-section) then)
*i( the amount not so utilised shall be charged under section 45 as the income o!
the pre%ious +ear in which the period o! three +ears !rom the date o! the
trans!er o! the original asset expires- and
*ii( the assessee shall be entitled to withdraw such amount in accordance with the
scheme a!oresaid.]
'3
-Extension of time for acquiring new asset or depositing or investing amount of
capital gain.
54H. Aotwithstandin5 anythin5 contained in sections 43% 43B% 43?
'4
-***2
''
-) 43E.2
and 43>% where the transfer of the ori5inal asset is by way of compulsory ac,uisition
under any law and the amount of compensation awarded for such ac,uisition is not
recei+ed by the assessee on the date of such transfer% the period for ac,uirin5 the new
asset by the assessee referred to in those sections or% as the case may be% the period
a+ailable to the assessee under those sections for depositin5 or in+estin5 the amount of
capital 5ain in relation to such compensation as is not recei+ed on the date of the transfer%
shall be rec9oned from the date of receipt of such compensation :
Provided that where the compensation in respect of transfer of the ori5inal asset by way
of compulsory ac,uisition under any law is recei+ed before the 1st day of "pril% 1&&1% the
aforesaid period or periods% if e$pired% shall e$tend up to the )1st day of ?ecember%
1&&1(2
Meaning of adjusted, cost of improvement and cost of acquisition.
'6
55. 1! >or the purposes of
'7
-sections 37 and 3&2%
a!
'&
-***2
68
-b! cost of any impro+ement%
1! in relation to a capital asset bein5 5oodwill of a business
61
-or a ri5ht to
manufacture% produce or process any article or thin52
62
-or ri5ht to carry on
any business2 shall be ta9en to be nil 1 and
2! in relation to any other capital asset%2
i! where the capital asset became the property of the pre+ious owner or the
assessee before the
6)
-1st day of "pril%
63
-1&7122%
64
-***2 means all
e$penditure of a capital nature incurred in ma9in5 any additions or
alterations to the capital asset on or after the said date by the pre+ious
owner or the assessee% and
ii! in any other case% means all e$penditure of a capital nature incurred in
ma9in5 any additions or alterations to the capital asset by the assessee
after it became his property% and% where the capital asset became the
property of the assessee by any of the modes specified in
6'
-sub#section
1! of2 section 3&% by the pre+ious owner%
but does not include any e$penditure which is deductible in computin5 the
income char5eable under the head Interest on securities% Income from house
property% Profits and 5ains of business or profession% or Income from other
sources% and the e$pression impro+ement shall be construed accordin5ly(
66
2!
67
->or the purposes of sections 37 and 3&% cost of ac,uisition
6&
%
78
-a! in relation to a capital asset% bein5 5oodwill of a business
71
-or a trade mar9 or
brand name associated with a business2
72
-or a ri5ht to manufacture% produce or
process any article or thin52
7)
-or ri5ht to carry on any business2% tenancy ri5hts%
sta5e carria5e permits or loom hours%
i! in the case of ac,uisition of such asset by the assessee by purchase from a
pre+ious owner% means the amount of the purchase price 1 and
ii! in any other case -not bein5 a case fallin5 under sub#clauses i! to i%! of
sub#section 1! of section 3&2% shall be ta9en to be nil 1
aa!
73
-in a case where% by +irtue of holdin5 a capital asset% bein5 a share or any
other security
74
% within the meanin5 of clause h! of section 2 of the *ecurities
.ontracts Re5ulation! "ct% 1&4' 32 of 1&4'! hereafter in this clause referred
to as the financial asset!% the assessee
A! becomes entitled to subscribe to any additional financial asset 1 or
B! is allotted any additional financial asset without any payment%
then% sub:ect to the pro+isions of sub#clauses i! and ii! of clause b!2%
i! in relation to the ori5inal financial asset% on the basis of which the assessee
becomes entitled to any additional financial asset% means the amount
actually paid for ac,uirin5 the ori5inal financial asset 1
ii! in relation to any ri5ht to renounce the said entitlement to subscribe to the
financial asset% when such ri5ht is renounced by the assessee in fa+our of
any person% shall be ta9en to be nil in the case of such assessee 1
iii! in relation to the financial asset% to which the assessee has subscribed on the
basis of the said entitlement% means the amount actually paid by him for
ac,uirin5 such asset 1
7'
-iiia!in relation to the financial asset allotted to the assessee without any
payment and on the basis of holdin5 of any other financial asset% shall be
ta9en to be nil in the case of such assessee 12 and
i%! in relation to any financial asset purchased by any person in whose fa+our
the ri5ht to subscribe to such asset has been renounced% means the
a55re5ate of the amount of the purchase price paid by him to the person
renouncin5 such ri5ht and the amount paid by him to the company or
institution% as the case may be% for ac,uirin5 such financial asset 12
76
-ab! in relation to a capital asset% bein5 e,uity share or shares allotted to a
shareholder of a reco5nised stoc9 e$chan5e in India under a scheme for
77
-demutualisation or2 corporatisation appro+ed by the *ecurities and E$chan5e
Board of India established under section ) of the *ecurities and E$chan5e
Board of India "ct% 1&&2 14 of 1&&2!% shall be the cost of ac,uisition of his
ori5inal membership of the e$chan5e:2
77
-Provided that the cost of a capital asset% bein5 tradin5 or clearin5 ri5hts of
the reco5nised stoc9 e$chan5e ac,uired by a shareholder who has been allotted
e,uity share or shares under such scheme of demutualisation or corporatisation%
shall be deemed to be nil12
b! in relation to any other capital asset%2
i! where the capital asset became the property of the assessee
7&
before the
&8
-1st day of "pril%
&1
-1&7122% means the cost of ac,uisition of the asset to
the assessee or the fair
&2
mar9et +alue of the asset on the
&)
-1st day of "pril%
&3
-1&7122% at the option of the assessee 1
ii! where the capital asset became the property of the assessee
&4
by any of the
modes specified in
&'
-sub#section 1! of2 section 3&% and the capital asset
became the property of the pre+ious owner before the
&6
-1st day of "pril%
&7
-1&7122% means the cost of the capital asset to the pre+ious owner or the
fair
&&
mar9et +alue of the asset on the
&6
-1st day of "pril%
&7
-1&7122% at the
option of the assessee 1
iii! where the capital asset became the property of the assessee
&&
on the
distribution of the capital assets of a company on its li,uidation and the
assessee has been assessed to income#ta$ under the head .apital 5ains in
respect of that asset under section 3'% means the fair
&&
mar9et +alue of the
asset on the date of distribution 1
i%!
1
-***2
2
-%! where the capital asset% bein5 a share or a stoc9 of a company% became the
property of the assessee on
a! the consolidation and di+ision of all or any of the share capital of the
company into shares of lar5er amount than its e$istin5 shares%
b! the con+ersion of any shares of the company into stoc9%
c! the re#con+ersion of any stoc9 of the company into shares%
d! the sub#di+ision of any of the shares of the company into shares of
smaller amount% or
e! the con+ersion of one 9ind of shares of the company into another 9ind%
means the cost of ac,uisition of the asset calculated with reference to the
cost of ac,uisition of the shares or stoc9 from which such asset is deri+ed(2
)! Fhere the cost for which the pre+ious owner ac,uired the property cannot be
ascertained% the cost of ac,uisition to the pre+ious owner means the fair mar9et +alue on
the date on which the capital asset became the property of the pre+ious owner(
)
-Reference to Valuation Officer.
3
55A. Fith a +iew to ascertainin5 the fair mar9et +alue of a capital asset for the
purposes of this .hapter
4
% the
'
-"ssessin52 <fficer may refer the +aluation of capital asset
to a 0aluation <fficer
a! in a case where the +alue of the asset as claimed by the assessee is in
accordance with the estimate made by a re5istered +aluer% if the
6
-"ssessin52
<fficer is of opinion that the +alue so claimed is less than its fair mar9et +alue 1
b! in any other case% if the
6
-"ssessin52 <fficer is of opinion
i! that the fair mar9et +alue of the asset e$ceeds the +alue of the asset as
claimed by the assessee by more than such percenta5e
7
of the +alue of the
asset as so claimed or by more than such amount
7
as may be prescribed in
this behalf 1 or
ii! that ha+in5 re5ard to the nature of the asset and other rele+ant
circumstances% it is necessary so to do%
&
and where any such reference is made% the pro+isions of sub#sections 2!% )!% 3!% 4!
and '! of section 1'"% clauses ha! and i! of sub#section 1! and sub#sections )"! and
3! of section 2)% sub#section 4! of section 23% section )3""% section )4 and section )6
of the Fealth#ta$ "ct% 1&46 26 of 1&46!% shall with the necessary modifications% apply in
relation to such reference as they apply in relation to a reference made by the
18
-"ssessin52 <fficer under sub#section 1! of section 1'" of that "ct(
Explanation.In this section% 0aluation <fficer has the same meanin5% as in clause r! of
section 2 of the Fealth#ta$ "ct% 1&46 26 of 1&46!(2
>(Income from other sources
Income from other sources.
11
56. 1! Income of e+ery 9ind which is not to be e$cluded from the total income under
this "ct shall be char5eable to income#ta$ under the head Income from other sources% if it
is not char5eable to income#ta$ under any of the heads specified in section 13% items " to
E(
2! In particular% and without pre:udice to the 5enerality of the pro+isions of sub#section
1!% the followin5 incomes% shall be char5eable to income#ta$ under the head Income
from other sources% namely :
i! di+idends 1
12
-ia! income referred to in sub#clause %iii! of clause 24! of section 2 12
1)
-ib! income referred to in sub#clause ix! of clause 24! of section 2 12
13
-ic! income referred to in sub#clause x! of clause 24! of section 2% if such income
is not char5eable to income#ta$ under the head Profits and 5ains of business or
profession 12
14
-id! income by way of interest on securities% if the income is not char5eable to
income#ta$ under the head Profits and 5ains of business or profession 12
ii! income from machinery% plant or furniture belon5in5 to the assessee and let on
hire% if the income is not char5eable to income#ta$ under the head Profits and
5ains of business or profession1
iii! where an assessee lets on hire machinery% plant or furniture belon5in5 to him
and also buildin5s% and the lettin5 of the buildin5s is inseparable from the
lettin5 of the said machinery% plant or furniture% the income from such lettin5% if
it is not char5eable to income#ta$ under the head Profits and 5ains of business
or profession1
1'
-i%! income referred to in sub#clause xi! of clause 24! of section 2% if such income
is not char5eable to income#ta$ under the head Profits and 5ains of business or
profession or under the head *alaries12
16
-%! where any sum of money e$ceedin5 twenty#fi+e thousand rupees is recei+ed
without consideration by an indi+idual or a Cindu undi+ided family from any
person on or after the 1st day of *eptember% 2883% the whole of such sum :
Provided that this clause shall not apply to any sum of money recei+ed
a! from any relati+e1 or
b! on the occasion of the marria5e of the indi+idual1 or
c! under a will or by way of inheritance1 or
d! in contemplation of death of the payer(
Explanation.>or the purposes of this clause% relati+e means
i! spouse of the indi+idual1
ii! brother or sister of the indi+idual1
iii! brother or sister of the spouse of the indi+idual1
i%! brother or sister of either of the parents of the indi+idual1
%! any lineal ascendant or descendant of the indi+idual1
%i! any lineal ascendant or descendant of the spouse of the indi+idual1
%ii! spouse of the person referred to in clauses ii! to %i!(2
Deductions.
17
57. The income char5eable under the head Income from other sources shall be
computed after ma9in5 the followin5 deductions% namely :
i! in the case of di+idends%
1&
-other than di+idends referred to in section 114#<%2
28
-or interest on securities2% any reasonable sum paid by way of commission or
remuneration to a ban9er or any other person for the purpose of realisin5 such
di+idend
21
-or interest2 on behalf of the assessee 1
22
-ia! in the case of income of the nature referred to in sub#clause x! of clause 24! of
section 2 which is char5eable to income#ta$ under the head Income from other
sources% deductions% so far as may be% in accordance with the pro+isions of
clause %a! of sub#section 1! of section )' 12
ii! in the case of income of the nature referred to in clauses ii! and iii! of sub#
section 2! of section 4'% deductions% so far as may be% in accordance with the
pro+isions of sub#clause ii! of clause a! and clause c! of section )8% section
)1 and
2)
-sub#sections 1!
23
-***2 and 2!2 of section )2 and sub:ect to the
pro+isions of
24
-section )72 1
2'
-iia! in the case of income in the nature of family pension% a deduction of a sum
e,ual to thirty#three and one#third per cent of such income or
26
-fifteen2
thousand rupees% whiche+er is less(
Explanation.>or the purposes of this clause% family pension means a re5ular
monthly amount payable by the employer to a person belon5in5 to the family
of an employee in the e+ent of his death 12
iii! any other e$penditure not bein5 in the nature of capital e$penditure! laid out or
e$pended wholly and e$clusi+ely for the purpose
27
of ma9in5 or earnin5 such
income(
2&
-***2
Explanation.-/mitted b+ the 0inance Act) 1#"") w.e.!. 1-4-1#"#.2
Amounts not deductible.
)8
58.
)1
-1!2 Aotwithstandin5 anythin5 to the contrary contained in section 46% the
followin5 amounts shall not be deductible in computin5 the income char5eable under the
head Income from other sources% namely :
a! in the case of any assessee%
i! any personal e$penses of the assessee 1
)2
-ia! any e$penditure of the nature referred to in sub#section 12!
))
of section
38" 12
ii! any interest char5eable under this "ct which is payable outside India not
bein5 interest on a loan issued for public subscription before the 1st day of
"pril% 1&)7! on which ta$ has not been paid or deducted under .hapter
/0II#B
)3
-***2 1
iii! any payment which is char5eable under the head *alaries% if it is payable
outside India% unless ta$ has been paid thereon or deducted therefrom under
.hapter /0II#B 1
i%!
)4
-***2
b!
)'
-***2
)6
-1"! The pro+isions of sub#clause iia! of clause a! of section 38 shall% so far as may
be% apply in computin5 the income char5eable under the head Income from other sources
as they apply in computin5 the income char5eable under the head Profits and 5ains of
business or profession(2
)7
-2! The pro+isions of section 38" shall% so far as may be% apply in computin5 the
income char5eable under the head Income from other sources as they apply in computin5
the income char5eable under the head Profits and 5ains of business or profession(2
)&
-)! In the case of an assessee% bein5 a forei5n company% the pro+isions of section 33?
shall% so far as may be% apply in computin5 the income char5eable under the head Income
from other sources as they apply in computin5 the income char5eable under the head
Profits and 5ains of business or profession(2
38
-3! In the case of an assessee ha+in5 income char5eable under the head Income from
other sources% no deduction in respect of any e$penditure or allowance in connection with
such income shall be allowed under any pro+ision of this "ct in computin5 the income by
way of any winnin5s from lotteries% crossword pu==les% races includin5 horse races% card
5ames and other 5ames of any sort or from 5amblin5 or bettin5 of any form or nature%
whatsoe+er :
Provided that nothin5 contained in this sub#section shall apply in computin5 the income
of an assessee% bein5 the owner of horses maintained by him for runnin5 in horse races%
from the acti+ity of ownin5 and maintainin5 such horses(
Explanation.>or the purposes of this sub#section% horse race means a horse race upon
which wa5erin5 or bettin5 may be lawfully made(2
Profits chargeable to tax.
59. 1! The pro+isions of sub#section 1! of section 31 shall apply% so far as may be% in
computin5 the income of an assessee under section 4'% as they apply in computin5 the
income of an assessee under the head Profits and 5ains of business or profession(
2!
31
-***2
)!
32
-***2
3)
-***2
.C"PTER 0
INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEES TOTAL INCOME
Transfer of income where there is no transfer of assets.
33
60. "ll income arisin5 to any person by +irtue of a transfer
34
whether re+ocable or not
and whether effected before or after the commencement of this "ct shall% where there is
no transfer of the assets from which the income arises% be char5eable to income#ta$ as the
income of the transferor and shall be included in his total income(
Revocable transfer of assets.
61. "ll income arisin5 to any person by +irtue of a re+ocable transfer
34
of assets shall be
char5eable to income#ta$ as the income of the transferor and shall be included in his total
income(
Transfer irrevocable for a specified period.
3'
62. 1! The pro+isions of section '1 shall not apply to any income arisin5 to any person
by +irtue of a transfer
i! by way of trust which is not re+ocable durin5 the lifetime of the beneficiary%
and% in the case of any other transfer% which is not re+ocable durin5 the lifetime
of the transferee 1 or
ii! made before the 1st day of "pril% 1&'1% which is not re+ocable for a period
e$ceedin5 si$ years :
Provided that the transferor deri+es no direct or indirect benefit from such income in
either case(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% all income arisin5 to any
person by +irtue of any such transfer shall be char5eable to income#ta$ as the income of
the transferor as and when the power to re+o9e the transfer arises% and shall then be
included in his total income(
Transfer and revocable transfer defined.
3'
63. >or the purposes of sections '8% '1 and '2 and of this section%
a! a transfer
36
shall be deemed to be re+ocable if
i! it contains any pro+ision for the re#transfer directly or indirectly
36
of the
whole or any part of the income or assets to the transferor% or
ii! it% in any way% 5i+es the transferor a ri5ht to re#assume power directly or
indirectly o+er the whole or any part of the income or assets 1
b! transfer
37
includes any settlement% trust% co+enant% a5reement or arran5ement
37
Income of individual to include income of spouse, minor child, etc.
3&
64.
48
-
41
-1!2 In computin5 the total income of any Indi+idual% there shall be included all
such income as arises directly or indirectly
i!
42
-/mitted b+ the 0inance Act) 1##2) w.e.!. 1-4-1##3(2
ii! to the spouse
4)
of such indi+idual by way of salary% commission% fees or any
other form of remuneration whether in cash or in 9ind from a concern in which
such indi+idual has a substantial interest :
43
-Provided that nothin5 in this clause shall apply in relation to any income
arisin5 to the spouse where the spouse possesses technical or professional
,ualifications
4)
and the income is solely attributable to the application of his or
her technical or professional 9nowled5e and e$perience 12
iii!
44
i%! sub:ect to the pro+isions of clause i! of section 26%
4'
-* * *2 to the spouse
46
of
such indi+idual from assets transferred
46
directly or indirectly to the spouse by
such indi+idual otherwise than for ade,uate consideration
46
or in connection
with an a5reement to li+e apart 1
%!
47
%i! to the sons wife%
4&
-* * *2 of such indi+idual% from assets transferred
46
directly
or indirectly on or after the 1st day of @une% 1&6)% to the sons wife
'8
-* * *2 by
such indi+idual otherwise than for ade,uate consideration1
'1
-* * *2
%ii! to any person
'2
or association of persons from assets transferred
'2
directly or
indirectly otherwise than for ade,uate consideration
'2
to the person or
association of persons by such indi+idual% to the e$tent to which the income
from such assets is for the immediate or deferred benefit
'2
of his or her spouse
')
-* * *21 and2
'3
-%iii! to any person
'2
or association of persons from assets transferred
'2
directly or
indirectly on or after the 1st day of @une% 1&6)% otherwise than for ade,uate
consideration
'2
% to the person or association of persons by such indi+idual% to
the e$tent to which the income from such assets is for the immediate or
deferred benefit
'2
of his sons wife
'4
-* * *2(2
''
-Explanation 1.>or the purposes of clause ii!% the indi+idual in computin5 whose total
income the income referred to in that clause is to be included% shall be the husband or
wife whose total income e$cludin5 the income referred to in that clause! is 5reater 1 and
where any such income is once included in the total income of either spouse% any such
income arisin5 in any succeedin5 year shall not be included in the total income of the
other spouse unless the "ssessin5 <fficer is satisfied% after 5i+in5 that spouse an
opportunity of bein5 heard% that it is necessary
'6
so to do(2
Explanation 2.>or the purposes of clause ii!% an indi+idual shall be deemed to ha+e a
substantial interest in a concern
i! in a case where the concern is a company% if its shares not bein5 shares entitled
to a fi$ed rate of di+idend whether with or without a further ri5ht to participate
in profits! carryin5 not less than twenty per cent of the +otin5 power are% at any
time durin5 the pre+ious year% owned beneficially by such person or partly by
such person and partly by one or more of his relati+es 1
ii! in any other case% if such person is entitled% or such person and one or more of
his relati+es are entitled in the a55re5ate% at any time durin5 the pre+ious year%
to not less than twenty per cent of the profits of such concern(
Explanation 2A.
'7
'&
-Explanation 3.>or the purposes of clauses i%! and %i!% where the assets transferred
directly or indirectly by an indi+idual to his spouse or sons wife hereafter in this
Explanation referred to as the transferee! are in+ested by the transferee%
i! in any business% such in+estment bein5 not in the nature of contribution of
capital as a partner in a firm or% as the case may be% for bein5 admitted to the
benefits of partnership in a firm% that part of the income arisin5 out of the
business to the transferee in any pre+ious year% which bears the same
proportion to the income of the transferee from the business as the +alue of the
assets aforesaid as on the first day of the pre+ious year bears to the total
in+estment in the business by the transferee as on the said day 1
ii! in the nature of contribution of capital as a partner in a firm% that part of the
interest recei+able by the transferee from the firm in any pre+ious year% which
bears the same proportion to the interest recei+able by the transferee from the
firm as the +alue of in+estment aforesaid as on the first day of the pre+ious year
bears to the total in+estment by way of capital contribution as a partner in the
firm as on the said day%
shall be included in the total income of the indi+idual in that pre+ious year(2
68
-1"! In computin5 the total income of any indi+idual% there shall be included all such
income as arises or accrues to his minor child
61
-% not bein5 a minor child sufferin5 from
any disability of the nature specified in section 78E2 :
Provided that nothin5 contained in this sub#section shall apply in respect of such income
as arises or accrues to the minor child on account of any
a! manual wor9 done by him 1 or
b! acti+ity in+ol+in5 application of his s9ill% talent or specialised 9now#led5e and
e$perience(
Explanation.>or the purposes of this sub#section% the income of the minor child shall be
included%
a! where the marria5e of his parents subsists% in the income of that parent whose
total income e$cludin5 the income includible under this sub#section! is
5reater 1 or
b! where the marria5e of his parents does not subsist% in the income of that parent
who maintains the minor child in the pre+ious year%
and where any such income is once included in the total income of either parent% any such
income arisin5 in any succeedin5 year shall not be included in the total income of the
other parent% unless the "ssessin5 <fficer is satisfied% after 5i+in5 that parent an
opportunity of bein5 heard% that it is necessary so to do(2
62
-2! Fhere% in the case of an indi+idual bein5 a member of a Cindu undi+ided family%
any property ha+in5 been the separate property of the indi+idual has% at any time after the
)1st day of ?ecember% 1&'&% been con+erted by the indi+idual into property belon5in5 to
the family throu5h the act of impressin5 such separate property with the character of
property belon5in5 to the family or throwin5 it
6)
-into the common stoc9 of the family or
been transferred by the indi+idual% directly or indirectly% to the family otherwise than for
ade,uate consideration the property so con+erted or transferred bein5 hereinafter
referred to as the con+erted property!2% then% notwithstandin5 anythin5 contained in any
other pro+ision of this "ct or in any other law for the time bein5 in force% for the purpose
of computation of the total income of the indi+idual under this "ct for any assessment
year commencin5 on or after the 1st day of "pril% 1&61%
a! the indi+idual shall be deemed to ha+e transferred the con+erted property%
throu5h the family% to the members of the family for bein5 held by them
:ointly 1
b! the income deri+ed from the con+erted property or any part thereof
63

64
-* * *2
shall be deemed to arise to the indi+idual and not to the family 1
6'
-c! where the con+erted property has been the sub:ect#matter of a partition
whether partial or total! amon5st the members of the family% the income
deri+ed from such con+erted property as is recei+ed by the spouse
66
-* * *2 on
partition shall be deemed to arise to the spouse
66
-* * *2 from assets transferred
indirectly by the indi+idual to the spouse
66
-* * *2 and the pro+isions of sub#
section 1! shall% so far as may be% apply accordin5ly :2
Provided that the income referred to in clause b! or clause c! shall% on bein5 included in
the total income of the indi+idual% be e$cluded from the total income of the family or% as
the case may be% the spouse
67
-* * *2 of the indi+idual(
Explanation
6&
-12(>or the purposes of sub#section 2!%
78
-* * *2 property includes any interest in property% mo+able or immo+able% the proceeds
of sale thereof and any money or in+estment for the time bein5 representin5 the proceeds
of sale thereof and where the property is con+erted into any other property by any
method% such other property(
71
-* * *22
72
-Explanation 2.>or the purposes of this section% income includes loss(2
Liability of person in respect of income included in the income of another person.
65. Fhere% by reason of the pro+isions contained in this .hapter or in clause i! of
section 26% the income from any asset or from membership in a firm of a person other
than the assessee is included in the total income of the assessee% the person in whose
name such asset stands or who is a member of the firm shall% notwithstandin5 anythin5 to
the contrary contained in any other law for the time bein5 in force% be liable% on the
ser+ice of a notice of demand by the
7)
-"ssessin52 <fficer in this behalf% to pay that
portion of the ta$ le+ied on the assessee which is attributable to the income so included%
and the pro+isions of .hapter /0II#? shall% so far as may be% apply accordin5ly :
Provided that where any such asset is held :ointly by more than one person% they shall be
:ointly and se+erally liable to pay the ta$ which is attributable to the income from the
assets so included(
CHAPTER VI
AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD OF LOSS
Aggregation o! income
Total income.
66. In computin5 the total income of an assessee% there shall be included all income on
which no income#ta$ is payable under .hapter 0II
73
-* * *2(
Method of computing a partners share in the income of the firm.
67.
74
7'
-Method of computing a members share in income of association of persons or
body of individuals.
67A.1! In computin5 the total income of an assessee who is a member of an association
of persons or a body of indi+iduals wherein the shares of the members are determinate
and 9nown -other than a company or a cooperati+e society or a society re5istered under
the *ocieties Re5istration "ct% 17'8 21 of 17'8!% or under any law correspondin5 to that
"ct in force in any part of India2% whether the net result of the computation of the total
income of such association or body is a profit or a loss% his share whether a net profit or
net loss! shall be computed as follows% namely :
a! any interest% salary% bonus% commission or remuneration by whate+er name
called% paid to any member in respect of the pre+ious year shall be deducted
from the total income of the association or body and the balance ascertained
and apportioned amon5 the members in the proportions in which they are
entitled to share in the income of the association or body 1
b! where the amount apportioned to a member under clause a! is a profit% any
interest% salary% bonus% commission or remuneration aforesaid paid to the
member by the association or body in respect of the pre+ious year shall be
added to that amount% and the result shall be treated as the members share in the
income of the association or body 1
c! where the amount apportioned to a member under clause a! is a loss% any
interest% salary% bonus% commission or remuneration aforesaid paid to the
member by the association or body in respect of the pre+ious year shall be
ad:usted a5ainst that amount% and the result shall be treated as the members
share in the income of the association or body(
2! The share of a member in the income or loss of the association or body% as computed
under sub#section 1!% shall% for the purposes of assessment% be apportioned under the
+arious heads of income in the same manner in which the income or loss of the
association or body has been determined under each head of income(
)! "ny interest paid by a member on capital borrowed by him for the purposes of
in+estment in the association or body shall% in computin5 his share char5eable under the
head Profits and 5ains of business or profession in respect of his share in the income of
the association or body% be deducted from his share(
Explanation.In this section% paid has the same meanin5 as is assi5ned to it in clause 2! of
section 3)(2
Cash credits.
76
68.
77
Fhere any sum is found credited in the boo9s
7&
of an assessee maintained for any
pre+ious year% and the assessee offers no e$planation about the nature and source thereof
or the e$planation offered by him is not% in the opinion of the
&8
-"ssessin52 <fficer%
satisfactory% the sum so credited may be char5ed to income#ta$ as the income of the
assessee of that pre+ious year(
Unexplained investments.
&1
69. Fhere in the financial year immediately precedin5 the assessment year the assessee
has made in+estments which are not recorded in the boo9s of account% if any% maintained
by him for any source of income% and the assessee offers no e$planation about the nature
and source of the in+estments or the e$planation offered by him is not% in the opinion of
the
&8
-"ssessin52 <fficer% satisfactory% the +alue of the in+estments may be deemed to be
the income of the assessee of such financial year(
&2
-Unexplained money, etc.
&)
69A. Fhere in any financial year the assessee is found to be the owner of any money%
bullion% :ewellery or other +aluable article and such money% bullion% :ewellery or +aluable
article is not recorded in the boo9s of account% if any% maintained by him for any source
of income
&3
% and the assessee offers no e$planation about the nature and source of
ac,uisition of the money% bullion% :ewellery or other +aluable article% or the e$planation
offered by him is not% in the opinion of the
&4
-"ssessin52 <fficer% satisfactory% the money
and the +alue of the bullion% :ewellery or other +aluable article may be deemed to be the
income
&3
of the assessee for such financial year(2
&'
-Amount of investments, etc., not fully disclosed in books of account.
&)
69B.Fhere in any financial year the assessee has made in+estments or is found to be the
owner of any bullion% :ewellery or other +aluable article% and the
&6
-"ssessin52 <fficer
finds that the amount e$pended on ma9in5 such in+estments or in ac,uirin5 such bullion%
:ewellery or other +aluable article e$ceeds the amount recorded in this behalf in the boo9s
of account maintained by the assessee for any source of income% and the assessee offers
no e$planation about such e$cess amount or the e$planation offered by him is not% in the
opinion of the
&7
-"ssessin52 <fficer% satisfactory% the e$cess amount may be deemed to be
the income of the assessee for such financial year(2
&&
-Unexplained expenditure, etc.
1
69C. Fhere in any financial year an assessee has incurred any e$penditure and he
offers no e$planation about the source of such e$penditure or part thereof% or the
e$planation% if any% offered by him is not% in the opinion of the
&7
satisfactory% the amount co+ered by such e$penditure or part thereof% as the case may be%
may be deemed to be the income of the assessee for such financial year :2
2
-Provided that% notwithstandin5 anythin5 contained in any other pro+ision of this "ct%
such une$plained e$penditure which is deemed to be the income of the assessee shall not
be allowed as a deduction under any head of income(2
)
-Amount borrowed or repaid on hundi.
3
69D. Fhere any amount is borrowed on a hundi from% or any amount due thereon is
repaid to% any person otherwise than throu5h an account payee che,ue drawn on a ban9%
the amount so borrowed or repaid shall be deemed to be the income of the person
borrowin5 or repayin5 the amount aforesaid for the pre+ious year in which the amount
was borrowed or repaid% as the case may be :
Provided that% if in any case any amount borrowed on a hundi has been deemed under
the pro+isions of this section to be the income of any person% such person shall not be
liable to be assessed a5ain in respect of such amount under the pro+isions of this section
on repayment of such amount(
Explanation.>or the purposes of this section% the amount repaid shall include the amount
of interest paid on the amount borrowed(2
<et o!!) or carr+ !orward and set o!!
4
-Set off of loss from one source against income from another source under the same
head of income.
70. 1! *a+e as otherwise pro+ided in this "ct% where the net result for any assessment
year in respect of any source fallin5 under any head of income% other than .apital 5ains%
is a loss% the assessee shall be entitled to ha+e the amount of such loss set off a5ainst his
income from any other source under the same head(
2! Fhere the result of the computation made for any assessment year under sections 37
to 44 in respect of any short#term capital asset is a loss% the assessee shall be entitled to
ha+e the amount of such loss set off a5ainst the income% if any% as arri+ed at under a
similar computation made for the assessment year in respect of any other capital asset(
'
-Set off of loss from one head against income from another.
6
71. 1! Fhere in respect of any assessment year the net result of the computation under
any head of income% other than .apital 5ains% is a loss and the assessee has no income
under the head .apital 5ains% he shall% sub:ect to the pro+isions of this .hapter% be
entitled to
7
ha+e the amount of such loss set off a5ainst his income% if any% assessable for
that assessment year under any other head(
2! Fhere in respect of any assessment year% the net result of the computation under any
head of income% other than .apital 5ains% is a loss and the assessee has income assessable
under the head .apital 5ains% such loss may% sub:ect to the pro+isions of this .hapter% be
set off a5ainst his income% if any% assessable for that assessment year under any head of
income includin5 the head .apital 5ains whether relatin5 to short#term capital assets or
any other capital assets!(
&
-2"! Aotwithstandin5 anythin5 contained in sub#section 1! or sub#section 2!% where in
respect of any assessment year% the net result of the computation under the head Profits
and 5ains of business or profession is a loss and the assessee has income assessable under
the head *alaries% the assessee shall not be entitled to ha+e such loss set off a5ainst such
income(2
)! Fhere in respect of any assessment year% the net result of the computation under the
head .apital 5ains is a loss and the assessee has income assessable under any other head
of income% the assessee shall not be entitled to ha+e such loss set off a5ainst income
under the other head(2
18
-3! Fhere the net result of the computation under the head Income from house
property is a loss% in respect of the assessment years commencin5 on the 1st day of "pril%
1&&4 and the 1st day of "pril% 1&&'% such loss shall be first set off under sub#sections 1!
and 2! and thereafter the loss referred to in section 61" shall be set off in the rele+ant
assessment year in accordance with the pro+isions of that section(2
11
-Transitional provisions for set off of loss under the head Income from house
property.
71A. Fhere in respect of the assessment year commencin5 on the 1st day of "pril% 1&&)
or the 1st day of "pril% 1&&3% the net result of the computation under the head Income
from house property is a loss% such loss in so far as it relates to interest on borrowed
capital referred to in clause %i! of sub#section 1! of section 23 and to the e$tent it has
not been set off shall be carried forward and set off in the assessment year commencin5
on the 1st day of "pril% 1&&4% and the balance% if any% in the assessment year commencin5
on the 1st day of "pril% 1&&'% a5ainst the income under any head(2
12
-Carry forward and set off of loss from house property.
71B. Fhere for any assessment year the net result of computation under the head Income
from house property is a loss to the assessee and such loss cannot be or is not wholly set
off a5ainst income from any other head of income in accordance with the pro+isions of
section 61% so much of the loss as has not been so set#off or where he has no income
under any other head% the whole loss shall% sub:ect to the other pro+isions of this .hapter%
be carried forward to the followin5 assessment year and
i! be set off a5ainst the income from house property assessable for that
assessment year1 and
ii! the loss% if any% which has not been set off wholly% the amount of loss not so set
off%
shall be carried forward to the followin5 assessment year% not bein5 more than ei5ht
assessment years immediately succeedin5 the assessment year for which the loss was first
computed(2
Carry forward and set off of business losses.
1)
72.
13
-1! Fhere for any assessment year% the net result of the computation under the
head Profits and 5ains of business or profession is a loss to the assessee% not bein5 a loss
sustained in a speculation business% and such loss cannot be or is not wholly set off
a5ainst income under any head of income in accordance with the pro+isions of section
61% so much of the loss as has not been so set off or%
14
-* * *2 where he has no income
under any other head% the whole loss shall% sub:ect to the other pro+isions of this .hapter%
be carried forward to the followin5 assessment year% and
i! it shall be set off a5ainst the profits and 5ains% if any% of any business or
profession carried on by him and assessable for that assessment year 1
1'
-* * *2
ii! if the loss cannot be wholly so set off% the amount of loss not so set off shall be
carried forward to the followin5 assessment year and so on :2
16
-Provided that where the whole or any part of such loss is sustained in any such
business as is referred to in section ))B which is discontinued in the circumstances
specified in that section% and% thereafter% at any time before the e$piry of the period of
three years referred to in that section% such business is re#established% reconstructed or
re+i+ed by the assessee% so much of the loss as is attributable to such business shall be
carried forward to the assessment year rele+ant to the pre+ious year in which the business
is so re#established% reconstructed or re+i+ed% and
a! it shall be set off a5ainst the profits and 5ains% if any% of that business or any
other business carried on by him and assessable for that assessment year 1 and
b! if the loss cannot be wholly so set off% the amount of loss not so set off shall% in
case the business so re#established% reconstructed or re+i+ed continues to be
carried on by the assessee% be carried forward to the followin5 assessment year
and so on for se+en assessment years immediately succeedin5(2
2! Fhere any allowance or part thereof is% under sub#section 2! of section )2 or sub#
section 3! of section )4% to be carried forward% effect shall first be 5i+en to the pro+isions
of this section(
)! Ao loss
17
-other than the loss referred to in the pro+iso to sub#section 1! of this
section!2 shall be carried forward under this section for more than ei5ht assessment years
immediately succeedin5 the assessment year for which the loss was first computed(
1&
-Provisions relating to carry forward and set off of accumulated loss and
unabsorbed depreciation allowance in amalgamation or demerger, etc.
72A.
28
-1! Fhere there has been an amal5amation of a company ownin5 an industrial
underta9in5 or a ship or a hotel with another company or an amal5amation of a ban9in5
company referred to in clause c! of section 4 of the Ban9in5 Re5ulation "ct% 1&3& 18 of
1&3&! with a specified ban9% then% notwithstandin5 anythin5 contained in any other
pro+ision of this "ct% the accumulated loss and the unabsorbed depreciation of the
amal5amatin5 company shall be deemed to be the loss or% as the case may be% allowance
for depreciation of the amal5amated company for the pre+ious year in which the
amal5amation was effected% and other pro+isions of this "ct relatin5 to set off and carry
forward of loss and allowance for depreciation shall apply accordin5ly(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% the accumulated loss shall not
be set off or carried forward and the unabsorbed depreciation shall not be allowed in the
assessment of the amal5amated company unless
a! the amal5amatin5 company
i! has been en5a5ed in the business% in which the accumulated loss occurred
or depreciation remains unabsorbed% for three or more years1
ii! has held continuously as on the date of the amal5amation at least three#
fourths of the boo9 +alue of fi$ed assets held by it two years prior to the
date of amal5amation1
b! the amal5amated company
i! holds continuously for a minimum period of fi+e years from the date of
amal5amation at least three#fourths of the boo9 +alue of fi$ed assets of the
amal5amatin5 company ac,uired in a scheme of amal5amation1
ii! continues the business of the amal5amatin5 company for a minimum period
of fi+e years from the date of amal5amation1
iii! fulfils such other conditions as may be prescribed
21
to ensure the re+i+al of
the business of the amal5amatin5 company or to ensure that the
amal5amation is for 5enuine business purpose(2
)! In a case where any of the conditions laid down in sub#section 2! are not complied
with% the set off of loss or allowance of depreciation made in any pre+ious year in the
hands of the amal5amated company shall be deemed to be the income of the
amal5amated company char5eable to ta$ for the year in which such conditions are not
complied with(
3! Aotwithstandin5 anythin5 contained in any other pro+isions of this "ct% in the case of
a demer5er% the accumulated loss and the allowance for unabsorbed depreciation of the
demer5ed company shall
a! where such loss or unabsorbed depreciation is directly relatable to the
underta9in5s transferred to the resultin5 company% be allowed to be carried
forward and set off in the hands of the resultin5 company1
b! where such loss or unabsorbed depreciation is not directly relatable to the
underta9in5s transferred to the resultin5 company% be apportioned between the
demer5ed company and the resultin5 company in the same proportion in which
the assets of the underta9in5s ha+e been retained by the demer5ed company
and transferred to the resultin5 company% and be allowed to be carried forward
and set off in the hands of the demer5ed company or the resultin5 company% as
the case may be(
4! The .entral ;o+ernment may% for the purposes of this "ct% by notification in the
<fficial ;a=ette% specify such conditions as it considers necessary to ensure that the
demer5er is for 5enuine business purposes(
'! Fhere there has been reor5anisation of business% whereby% a firm is succeeded by a
company fulfillin5 the conditions laid down in clause xiii! of section 36 or a proprietary
concern is succeeded by a company fulfillin5 the conditions laid down in clause xi%! of
section 36% then% notwithstandin5 anythin5 contained in any other pro+ision of this "ct%
the accumulated loss and the unabsorbed depreciation of the predecessor firm or the
proprietary concern% as the case may be% shall be deemed to be the loss or allowance for
depreciation of the successor company for the purpose of pre+ious year in which business
reor5anisation was effected and other pro+isions of this "ct relatin5 to set off and carry
forward of loss and allowance for depreciation shall apply accordin5ly :
Provided that if any of the conditions laid down in the pro+iso to clause xiii! or the
pro+iso to clause xi%! to section 36 are not complied with% the set off of loss or allowance
of depreciation made in any pre+ious year in the hands of the successor company% shall
be deemed to be the income of the company char5eable to ta$ in the year in which such
conditions are not complied with(
a! accumulated loss means so much of the loss of the predecessor firm or the
proprietary concern or the amal5amatin5 company or the demer5ed company%
as the case may be% under the head Profits and 5ains of business or profession
not bein5 a loss sustained in a speculation business! which such predecessor
firm or the proprietary concern or amal5amatin5 company or demer5ed
company% would ha+e been entitled to carry forward and set off under the
pro+isions of section 62 if the reor5anisation of business or amal5amation or
demer5er had not ta9en place1
22
-aa! industrial underta9in5 means any underta9in5 which is en5a5ed in
i! the manufacture or processin5 of 5oods1 or
ii! the manufacture of computer software1 or
iii! the business of 5eneration or distribution of electricity or any other form of
power1 or
2)
-iiia! the business of pro+idin5 telecommunication ser+ices% whether basic or
cellular% includin5 radio pa5in5% domestic satellite ser+ice% networ9 of
trun9in5% broadband networ9 and internet ser+ices1 or2
i%! minin51 or
%! the construction of ships% aircrafts or rail systems12
b! unabsorbed depreciation means so much of the allowance for depreciation of
the predecessor firm or the proprietary concern or the amal5amatin5 company
or the demer5ed company% as the case may be% which remains to be allowed
and which would ha+e been allowed to the predecessor firm or the proprietary
concern or amal5amatin5 company or demer5ed company% as the case may be%
under the pro+isions of this "ct% if the reor5anisation of business or
amal5amation or demer5er had not ta9en place12
23
-c! specified ban9 means the *tate Ban9 of India constituted under the *tate Ban9
of India "ct% 1&44 2) of 1&44! or a subsidiary ban9 as defined in the *tate
Ban9 of India *ubsidiary Ban9s! "ct% 1&4& )7 of 1&4&! or a correspondin5
new ban9 constituted under section ) of the Ban9in5 .ompanies "c,uisition
and Transfer of Enderta9in5s! "ct% 1&68 4 of 1&68! or under section ) of the
Ban9in5 .ompanies "c,uisition and Transfer of Enderta9in5s! "ct% 1&78 38
of 1&78!(2
24
-Provisions relating to carry forward and set-off of accumulated loss and
unabsorbed depreciation allowance in scheme of amalgamation of banking company
in certain cases.
72AA. Aotwithstandin5 anythin5 contained in sub#clauses i! to iii! of clause 1B! of
section 2 or section 62"% where there has been an amal5amation of a ban9in5 company
with any other ban9in5 institution under a scheme sanctioned and brou5ht into force by
the .entral ;o+ernment under sub#section 6! of section 34 of the Ban9in5 Re5ulation
"ct% 1&3& 18 of 1&3&!
2'
% the accumulated loss and the unabsorbed depreciation of such
ban9in5 company shall be deemed to be the loss or% as the case may be% allowance for
depreciation of such ban9in5 institution for the pre+ious year in which the scheme of
amal5amation was brou5ht into force and other pro+isions of this "ct relatin5 to set#off
and carry forward of loss and allowance for depreciation shall apply accordin5ly(
i! accumulated loss means so much of the loss of the amal5amatin5 ban9in5
company under the head Profits and 5ains of business or profession not bein5
a loss sustained in a speculation business! which such amal5amatin5 ban9in5
company% would ha+e been entitled to carry forward and set#off under the
pro+isions of section 62 if the amal5amation had not ta9en place1
ii! ban9in5 company shall ha+e the same meanin5 assi5ned to it in clause c! of
section 4 of the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!
2'
1
iii! ban9in5 institution shall ha+e the same meanin5 assi5ned to it in sub#section
14! of section 34 of the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!
2'
1
i%! unabsorbed depreciation means so much of the allowance for depreciation of
the amal5amatin5 ban9in5 company which remains to be allowed and which
would ha+e been allowed to such ban9in5 company if amal5amation had not
ta9en place(2
Losses in speculation business.
26
73. 1! "ny loss% computed in respect of a speculation business carried on by the
assessee% shall not be set off e$cept a5ainst profits and 5ains% if any% of another
speculation business(
2! Fhere for any assessment year any loss computed in respect of a speculation business
has not been wholly set off under sub#section 1!% so much of the loss as is not so set off
or the whole loss where the assessee had no income from any
26a
other speculation
business% shall% sub:ect to the other pro+isions of this .hapter% be carried forward to the
followin5 assessment year% and
i! it shall be set off a5ainst the profits and 5ains% if any% of any speculation
business carried on by him assessable for that assessment year 1 and
ii! if the loss cannot be wholly so set off% the amount of loss not so set off shall be
carried forward to the followin5 assessment year and so on(
)! In respect of allowance on account of depreciation or capital e$penditure on scientific
research% the pro+isions of sub#section 2! of section 62 shall apply in relation to
speculation business as they apply in relation to any other business(
3! Ao loss shall be carried forward under this section for more than
27
-!our2 assessment
years immediately succeedin5 the assessment year for which the loss was first computed(
2&
-Explanation.Fhere any part of the business of a company
)8
-other than a company
whose 5ross total income consists mainly of income which is char5eable under the heads
Interest on securities% Income from house property% .apital 5ains and Income from other
sources2% or a company the principal business of which is the business of ban9in5 or the
5rantin5 of loans and ad+ances! consists in the purchase and sale of shares of other
companies% such company shall% for the purposes of this section% be deemed to be
carryin5 on a speculation business to the e$tent to which the business consists of the
purchase and sale of such shares(2
)1
-Losses under the head Capital gains.
74.
)2
-1! Fhere in respect of any assessment year% the net result of the computation
under the head .apital 5ains is a loss to the assessee% the whole loss shall% sub:ect to the
other pro+isions of this .hapter% be carried forward to the followin5 assessment year% and
a! in so far as such loss relates to a short#term capital asset% it shall be set off
a5ainst income% if any% under the head .apital 5ains assessable for that
assessment year in respect of any other capital asset1
b! in so far as such loss relates to a lon5#term capital asset% it shall be set off
a5ainst income% if any% under the head .apital 5ains assessable for that
assessment year in respect of any other capital asset not bein5 a short#term
capital asset1
c! if the loss cannot be wholly so set off% the amount of loss not so set off shall be
carried forward to the followin5 assessment year and so on(2
2! Ao loss shall be carried forward under this section for more than ei5ht assessment
years immediately succeedin5 the assessment year for which the loss was first computed(
)!
))
)3
-Losses from certain specified sources falling under the head Income from other
sources.
74A. 1!
)4
-* * *2
2!
)'
-* * *2
)6
-)!
)7
-* * *2 In the case of an assessee% bein5 the owner of horses maintained by him
for runnin5 in horse races such horses bein5 hereafter in this sub#section referred to as
race horses!%
)&
-the amount of loss incurred by the assessee in the acti+ity of ownin5 and
maintainin5 race horses in any assessment year shall not be set off a5ainst income% if any%
from any source other than the acti+ity of ownin5 and maintainin5 race horses in that
year and2 shall% sub:ect to the other pro+isions of this .hapter% be carried forward to the
followin5 assessment year and
a! it shall be set off a5ainst the income% if any%
38
-from the acti+ity of ownin5 and
maintainin5 race horses2 assessable for that assessment year :
Provided that the acti+ity of ownin5 and maintainin5 race horses is carried on
by him in the pre+ious year rele+ant for that assessment year 1 and
b! if the loss cannot be wholly so set off% the amount of loss not so set off shall be
carried forward to the followin5 assessment year and so on1 so% howe+er% that
no portion of the loss shall be carried forward for more than four assessment
years immediately succeedin5 the assessment year for which the loss was first
computed(
Explanation.>or the purposes of this sub#section
a! amount of loss incurred by the assessee in the acti+ity of ownin5 and
maintainin5 race horses means
i! in a case where the assessee has no income by way of sta9e money% the
amount of e$penditure not bein5 in the nature of capital e$penditure! laid
out or e$pended by him wholly and e$clusi+ely for the purposes of
maintainin5 race horses 1
ii! in a case where the assessee has income by way of sta9e money% the amount
by which such income falls short of the amount of e$penditure not bein5 in
the nature of capital e$penditure! laid out or e$pended by the assessee
wholly and e$clusi+ely for the purposes of maintainin5 race horses 1
b! horse race means a horse race upon which wa5erin5 or bettin5 may be lawfully
made 1
c! income by way of sta9e money means the 5ross amount of pri=e money
recei+ed on a race horse or race horses by the owner thereof on account of the
horse or horses or any one or more of the horses winnin5 or bein5 placed
second or in any lower position in horse races(2
31
-Losses of firms.
75. Fhere the assessee is a firm% any loss in relation to the assessment year commencin5
on or before the 1st day of "pril% 1&&2% which could not be set off a5ainst any other
income of the firm and which had been apportioned to a partner of the firm but could not
be set off by such partner prior to the assessment year commencin5 on the 1st day of
"pril% 1&&)% then% such loss shall be allowed to be set off a5ainst the income of the firm
sub:ect to the condition that the partner continues in the said firm and to be carried
forward for set off under sections 68% 61% 62% 6)% 63 and 63"(2
6'( -<BITTE? BY TCE >IA"A.E ".T% 1&&2% F(E(>( 1#3#1&&)2
66( -<BITTE? BY TCE >IA"A.E ".T% 1&&2% F(E(>( 1#3#1&&)2
Carry forward and set off of losses in case of change in constitution of firm or on
succession.
32
78.
3)
-1! Fhere a chan5e has occurred in the constitution of a firm% nothin5 in this
.hapter shall entitle the firm to ha+e carried forward and set off so much of the loss
proportionate to the share of a retired or deceased partner as e$ceeds his share of profits%
if any% in the firm in respect of the pre+ious year(2
2! Fhere any person carryin5 on any business or profession has been succeeded in such
capacity by another person otherwise than by inheritance% nothin5 in this .hapter shall
entitle any person other than the person incurrin5 the loss to ha+e it carried forward and
set off a5ainst his income(
Carry forward and set off of losses in the case of certain companies.
79. Aotwithstandin5 anythin5 contained in this .hapter% where a chan5e in shareholdin5
has ta9en place in a pre+ious year in the case of a company% not bein5 a company in
which the public are substantially interested% no loss
33
incurred in any year prior to the
pre+ious year shall be carried forward and set off a5ainst the income of the pre+ious year
unless
a! on the last day of the pre+ious year the shares of the company carryin5 not less
than fifty#one per cent of the +otin5 power were beneficially held by persons
who beneficially held shares of the company carryin5 not less than fifty#one per
cent of the +otin5 power on the last day of the year or years in which the loss
was incurred
34
-* * *2 :
3'
-Provided that nothin5 contained in this section shall apply to a case where a
chan5e in the said +otin5 power ta9es place in a pre+ious year conse,uent upon
the death of a shareholder or on account of transfer of shares by way of 5ift to
any relati+e of the shareholder ma9in5 such 5ift :2
36
-Provided further that nothin5 contained in this section shall apply to any
chan5e in the shareholdin5 of an Indian company which is a subsidiary of a
forei5n company as a result of amal5amation or demer5er of a forei5n company
sub:ect to the condition that fifty#one per cent shareholders of the
amal5amatin5 or demer5ed forei5n company continue to be the shareholders of
the amal5amated or the resultin5 forei5n company(2
b!
37
-/mitted b+ the 0inance Act) 1#"") w.e.!. 1-4-1#"#.2
Submission of return for losses.
80. Aotwithstandin5 anythin5 contained in this .hapter% no loss which has not been
determined in pursuance of a return filed
3&
-in accordance with the pro+isions of sub#
section )! of section 1)&2% shall be carried forward and set off under sub#section 1! of
section 62 or sub#section 2! of section 6) or sub#section 1!
48
-or sub#section )!2 of
section 63
41
-or sub#section )! of section 63"2(
42
-CHAPTER VI-A
DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME
A.5eneral
Deductions to be made in computing total income.
80A. 1! In computin5 the total income of an assessee% there shall be allowed from his
5ross total income% in accordance with and sub:ect to the pro+isions of this .hapter% the
deductions specified in sections 78. to
4)
-78E2(
2! The a55re5ate amount of the deductions
43
under this .hapter shall not% in any case%
e$ceed the 5ross total income of the assessee(
44
-)! Fhere% in computin5 the total income of an association of persons or a body of
indi+iduals% any deduction is admissible under section 78; or section 78;;"
4'
-or
section 78;;.2 or section 78CC or section 78CC" or section 78CCB or section
78CC. or section 78CC? or section 78#I or section 78#I"
46
-or section 78#IB2 or section
78@
47
or section 78@@ % no deduction under the same section shall be made in computin5
the total income of a member of the association of persons or body of indi+iduals in
relation to the share of such member in the income of the association of persons or body
of indi+iduals(2
3!
4&
-* * *2
Computation of deduction under section 80M.
80AA.
'8
-/mitted b+ the 0inance Act) 1##) w.e.!. 1-4-1##".2
'1
-Deductions to be made with reference to the income included in the gross total
income.
'2
80AB. Fhere any deduction is re,uired to be made or allowed under any section
')
-* *
*2 included in this .hapter under the headin5 '.1eductions in respect o! certain incomes
in respect of any income of the nature specified in that section which is included in the
5ross total income of the assessee% then% notwithstandin5 anythin5 contained in that
section% for the purpose of computin5 the deduction under that section% the amount of
income of that nature as computed in accordance with the pro+isions of this "ct before
ma9in5 any deduction under this .hapter! shall alone be deemed to be the amount of
income of that nature which is deri+ed or recei+ed by the assessee and which is included
in his 5ross total income(2
')a
Deduction not to be allowed unless return furnished.
80AC. ,here in computing the total income o! an assessee o! the pre%ious +ear rele%ant
to the assessment +ear commencing on the 1st da+ o! April) 2$$6 or an+ subse2uent
assessment +ear) an+ deduction is admissible under section "$-3A or section "$-3AB or
section "$-3B or section "$-3') no such deduction shall be allowed to him unless he
!urnishes a return o! his income !or such assessment +ear on or be!ore the due date
speci!ied under sub-section *1( o! section 13#.]
'3
-Definitions.
80B. In this .hapter
1!
'4
-* * *2
2!
''
-* * *2
3!
'6
-* * *2
4!
'7
-* * *2
5! 5ross total income means the total income computed in accordance with the
pro+isions of this "ct% before ma9in5 any deduction under this .hapter
'&
-* * *2
68
-* * *21
6!
61
-* * *2
!
62
-* * *2
"!
6)
-* * *2
#!
63
-* * *2(2
B.1eductions in respect o! certain pa+ments
64
-Deduction in respect of life insurance premia, deferred annuity, contributions to
provident fund, subscription to certain equity shares or debentures, etc.
6'
80C.
66
*1( 3n computing the total income o! an assessee) being an indi%idual or a Cindu
undi%ided !amil+) there shall be deducted) in accordance with and sub4ect to the
pro%isions o! this section) the whole o! the amount paid or deposited in the pre%ious +ear)
being the aggregate o! the sums re!erred to in sub-section *2() as does not exceed one
la.h rupees.
*2( 7he sums re!erred to in sub-section *1( shall be an+ sums paid or deposited in the
pre%ious +ear b+ the assessee
*i( to e!!ect or to .eep in !orce an insurance on the li!e o! persons speci!ied in sub-
section *4(-
*ii( to e!!ect or to .eep in !orce a contract !or a de!erred annuit+) not being an
annuit+ plan re!erred to in clause *$ii() on the li!e o! persons speci!ied in sub-
section *4(A
Provided that such contract does not contain a pro%ision !or the exercise b+
the insured o! an option to recei%e a cash pa+ment in lieu o! the pa+ment o! the
annuit+-
*iii( b+ wa+ o! deduction !rom the salar+ pa+able b+ or on behal! o! the 5o%ernment
to an+ indi%idual being a sum deducted in accordance with the conditions o!
his ser%ice) !or the purpose o! securing to him a de!erred annuit+ or ma.ing
pro%ision !or his spouse or children) in so !ar as the sum so deducted does not
exceed one-!i!th o! the salar+-
*i+( as a contribution b+ an indi%idual to an+ pro%ident !und to which the Dro%ident
0unds Act) 1#25 *1# o! 1#25( applies-
*+( as a contribution to an+ pro%ident !und set up b+ the 'entral 5o%ernment and
noti!ied
"
b+ it in this behal! in the /!!icial 5a8ette) where such contribution is
to an account standing in the name o! an+ person speci!ied in sub-section *4(-
*+i( as a contribution b+ an emplo+ee to a recognised pro%ident !und-
*+ii( as a contribution b+ an emplo+ee to an appro%ed superannuation !und-
*+iii( as subscription to an+ such securit+ o! the 'entral 5o%ernment or an+ such
deposit scheme as that 5o%ernment ma+) b+ noti!ication in the /!!icial 5a8ette)
speci!+ in this behal!-
*i$( as subscription to an+ such sa%ings certi!icate as de!ined in clause *c( o!
section 2
#
o! the 5o%ernment <a%ings 'erti!icates Act) 1#5# *46 o! 1#5#() as
the 'entral 5o%ernment ma+) b+ noti!ication
"$
in the /!!icial 5a8ette) speci!+
in this behal!-
*$( as a contribution) in the name o! an+ person speci!ied in sub-section *4() !or
participation in the ;nit-lin.ed 3nsurance Dlan) 1#1 *herea!ter in this section
re!erred to as the ;nit-lin.ed 3nsurance Dlan( speci!ied in <chedule 33 o! the
;nit 7rust o! 3ndia *7rans!er o! ;nderta.ing and 6epeal( Act) 2$$2 *5" o!
2$$2(-
*$i( as a contribution in the name o! an+ person speci!ied in sub-section *4( !or
participation in an+ such unit-lin.ed insurance plan o! the >3' :utual 0und
78a
noti!ied under] clause *2)?( o! section 1$) as the 'entral 5o%ernment ma+)
b+ noti!ication
71
in the /!!icial 5a8ette) speci!+ in this behal!-
*$ii( to e!!ect or to .eep in !orce a contract !or such annuit+ plan o! the >i!e
3nsurance 'orporation or an+ other insurer as the 'entral 5o%ernment ma+)
b+ noti!ication
"2
in the /!!icial 5a8ette) speci!+-
*$iii( as subscription to an+ units o! an+ :utual 0und
72a
noti!ied under] clause
*2)?( o! section 1$ or !rom the Administrator or the speci!ied compan+ under
an+ plan !ormulated in accordance with such scheme as the 'entral
5o%ernment ma+) b+ noti!ication
"3
in the /!!icial 5a8ette) speci!+ in this
behal!-
*$i+( as a contribution b+ an indi%idual to an+ pension !und set up b+ an+ :utual
0und
7)a
noti!ied under] clause *2)?( o! section 1$ or b+ the Administrator or
the speci!ied compan+) as the 'entral 5o%ernment ma+) b+ noti!ication
"4
in the
/!!icial 5a8ette) speci!+ in this behal!-
*$+( as subscription to an+ such deposit scheme o!) or as a contribution to an+ such
pension !und set up b+) the &ational Cousing Ban. established under section 3
o! the &ational Cousing Ban. Act) 1#" *53 o! 1#"( *herea!ter in this section
re!erred to as the &ational Cousing Ban.() as the 'entral 5o%ernment ma+) b+
noti!ication in the /!!icial 5a8ette) speci!+ in this behal!-
*$+i( as subscription to an+ such deposit scheme o!
*a( a public sector compan+ which is engaged in pro%iding long-term !inance
!or construction or purchase o! houses in 3ndia !or residential purposes- or
*b( an+ authorit+ constituted in 3ndia b+ or under an+ law enacted either !or
the purpose o! dealing with and satis!+ing the need !or housing
accommodation or !or the purpose o! planning) de%elopment or
impro%ement o! cities) towns and %illages) or !or both)
as the 'entral 5o%ernment ma+) b+ noti!ication in the /!!icial 5a8ette) speci!+
in this behal!-
*$+ii( as tuition !ees *excluding an+ pa+ment towards an+ de%elopment !ees or
donation or pa+ment o! similar nature() whether at the time o! admission or
therea!ter)
*a( to an+ uni%ersit+) college) school or other educational institution situated
within 3ndia-
*b( !or the purpose o! !ull-time education o! an+ o! the persons speci!ied in sub-
section *4(-
*$+iii( !or the purposes o! purchase or construction o! a residential house propert+ the
income !rom which is chargeable to tax under the head 3ncome !rom house
propert+ *or which would) i! it had not been used !or the assessees own
residence) ha%e been chargeable to tax under that head() where such pa+ments
are made towards or b+ wa+ o!
*a( an+ instalment or part pa+ment o! the amount due under an+ sel!-!inancing
or other scheme o! an+ de%elopment authorit+) housing board or other
authorit+ engaged in the construction and sale o! house propert+ on
ownership basis- or
*b( an+ instalment or part pa+ment o! the amount due to an+ compan+ or co-
operati%e societ+ o! which the assessee is a shareholder or member
towards the cost o! the house propert+ allotted to him- or
*c( repa+ment o! the amount borrowed b+ the assessee !rom
*1( the 'entral 5o%ernment or an+ <tate 5o%ernment) or
*2( an+ ban.) including a co-operati%e ban.) or
*)( the >i!e 3nsurance 'orporation) or
*3( the &ational Cousing Ban.) or
*4( an+ public compan+ !ormed and registered in 3ndia with the main
ob4ect o! carr+ing on the business o! pro%iding long-term !inance !or
construction or purchase o! houses in 3ndia !or residential purposes
which is eligible !or deduction under clause *+iii( o! sub-section *1( o!
section 36) or
*'( an+ compan+ in which the public are substantiall+ interested or an+ co-
operati%e societ+) where such compan+ or co-operati%e societ+ is
engaged in the business o! !inancing the construction o! houses) or
*6( the assessees emplo+er where such emplo+er is an authorit+ or a board
or a corporation or an+ other bod+ established or constituted under a
'entral or <tate Act) or
*7( the assessees emplo+er where such emplo+er is a public compan+ or a
public sector compan+ or a uni%ersit+ established b+ law or a college
a!!iliated to such uni%ersit+ or a local authorit+ or a co-operati%e
societ+- or
*d( stamp dut+) registration !ee and other expenses !or the purpose o! trans!er
o! such house propert+ to the assessee)
but shall not include an+ pa+ment towards or b+ wa+ o!
*"( the admission !ee) cost o! share and initial deposit which a shareholder o! a
compan+ or a member o! a co-operati%e societ+ has to pa+ !or becoming
such shareholder or member- or
*B( the cost o! an+ addition or alteration to) or reno%ation or repair o!) the
house propert+ which is carried out a!ter the issue o! the completion
certi!icate in respect o! the house propert+ b+ the authorit+ competent to
issue such certi!icate or a!ter the house propert+ or an+ part thereo! has
either been occupied b+ the assessee or an+ other person on his behal! or
been let out- or
*.( an+ expenditure in respect o! which deduction is allowable under the
pro%isions o! section 24-
*$i$( as subscription to e2uit+ shares or debentures !orming part o! an+ eligible
issue o! capital appro%ed b+ the Board on an application made b+ a public
compan+ or as subscription to an+ eligible issue o! capital b+ an+ public
!inancial institution in the prescribed !orm
"4a
.
E$planation(0or the purposes o! this clause)
*i( eligible issue o! capital means an issue made b+ a public compan+ !ormed
and registered in 3ndia or a public !inancial institution and the entire
proceeds o! the issue are utilised wholl+ and exclusi%el+ !or the purposes o!
an+ business re!erred to in sub-section *4( o! section "$-3A-
*ii( public compan+ shall ha%e the meaning assigned to it in section 3
"5
o! the
'ompanies Act) 1#56 *1 o! 1#56(-
*iii( public !inancial institution shall ha%e the meaning assigned to it in section
4A
"6
o! the 'ompanies Act) 1#56 *1 o! 1#56(-
*$$( as subscription to an+ units o! an+ mutual !und re!erred to in clause *2)?( o!
section 1$ and appro%ed b+ the Board on an application made b+ such mutual
!und in the prescribed !orm
"6a
A
Provided that this clause shall appl+ i! the amount o! subscription to such
units is subscribed onl+ in the eligible issue o! capital o! an+ compan+.
E$planation(0or the purposes o! this clause eligible issue o! capital means an
issue re!erred to in clause *i( o! the E$planation to clause *$i$( o! sub-section
*2(.
The following clause (xxi) shall be inserted after clause (xx) of sub-section
(2) of section 80C by the Finance Act, 2006, w.e.f. 1-4-2007 :
*$$i( as term deposit
*a( !or a !ixed period o! not less than !i%e +ears with a scheduled ban.- and
*b( which is in accordance with a scheme !ramed and noti!ied) b+ the 'entral
5o%ernment) in the /!!icial 5a8ette !or the purposes o! this clause.
E$planation(0or the purposes o! this clause) scheduled ban. means the <tate
Ban. o! 3ndia constituted under the <tate Ban. o! 3ndia Act) 1#55 *23 o! 1#55()
or a subsidiar+ ban. as de!ined in the <tate Ban. o! 3ndia *<ubsidiar+ Ban.s(
Act) 1#5# *3" o! 1#5#() or a corresponding new ban. constituted under section
3 o! the Ban.ing 'ompanies *Ac2uisition and 7rans!er o! ;nderta.ings( Act)
1#$ *5 o! 1#$() or under section 3 o! the Ban.ing 'ompanies *Ac2uisition
and 7rans!er o! ;nderta.ings( Act) 1#"$ *4$ o! 1#"$() or an+ other ban.) being
a ban. included in the <econd <chedule to the 6eser%e Ban. o! 3ndia Act) 1#34
*2 o! 1#34(.
*3( 7he pro%isions o! sub-section *2( shall appl+ onl+ to so much o! an+ premium or other
pa+ment made on an insurance polic+ other than a contract !or a de!erred annuit+ as is
not in excess o! twent+ per cent o! the actual capital sum assured.
E$planation(3n calculating an+ such actual capital sum assured) no account shall be
ta.en
*i( o! the %alue o! an+ premiums agreed to be returned) or
*ii( o! an+ bene!it b+ wa+ o! bonus or otherwise o%er and abo%e the sum actuall+
assured) which is to be or ma+ be recei%ed under the polic+ b+ an+ person.
*4( 7he persons re!erred to in sub-section *2( shall be the !ollowing) namel+A
*a( !or the purposes o! clauses *i() *+() *$( and *$i( o! that sub-section)
*i( in the case o! an indi%idual) the indi%idual) the wi!e or husband and an+
child o! such indi%idual) and
*ii( in the case o! a Cindu undi%ided !amil+) an+ member thereo!-
*b( !or the purposes o! clause *ii( o! that sub-section) in the case o! an indi%idual)
the indi%idual) the wi!e or husband and an+ child o! such indi%idual-
*c( !or the purposes o! clause *$+ii( o! that sub-section) in the case o! an
indi%idual) an+ two children o! such indi%idual.
*5( ,here) in an+ pre%ious +ear) an assessee
*i( terminates his contract o! insurance re!erred to in clause *i( o! sub-section *2()
b+ notice to that e!!ect or where the contract ceases to be in !orce b+ reason o!
!ailure to pa+ an+ premium) b+ not re%i%ing contract o! insurance)
*a( in case o! an+ single premium polic+) within two +ears a!ter the date o!
commencement o! insurance- or
*b( in an+ other case) be!ore premiums ha%e been paid !or two +ears- or
*ii( terminates his participation in an+ unit-lin.ed insurance plan re!erred to in
clause *$( or clause *$i( o! sub-section *2() b+ notice to that e!!ect or where he
ceases to participate b+ reason o! !ailure to pa+ an+ contribution) b+ not
re%i%ing his participation) be!ore contributions in respect o! such participation
ha%e been paid !or !i%e +ears- or
*iii( trans!ers the house propert+ re!erred to in clause *$+iii( o! sub-section *2(
be!ore the expir+ o! !i%e +ears !rom the end o! the !inancial +ear in which
possession o! such propert+ is obtained b+ him) or recei%es bac.) whether b+
wa+ o! re!und or otherwise) an+ sum speci!ied in that clause)
then)
*a( no deduction shall be allowed to the assessee under sub-section *1( with
re!erence to an+ o! the sums) re!erred to in clauses *i() *$() *$i( and *$+iii( o!
sub-section *2() paid in such pre%ious +ear- and
*b( the aggregate amount o! the deductions o! income so allowed in respect o! the
pre%ious +ear or +ears preceding such pre%ious +ear) shall be deemed to be the
income o! the assessee o! such pre%ious +ear and shall be liable to tax in the
assessment +ear rele%ant to such pre%ious +ear.
*6( 3! an+ e2uit+ shares or debentures) with re!erence to the cost o! which a deduction is
allowed under sub-section *1() are sold or otherwise trans!erred b+ the assessee to an+
person at an+ time within a period o! three +ears !rom the date o! their ac2uisition) the
aggregate amount o! the deductions o! income so allowed in respect o! such e2uit+
shares or debentures in the pre%ious +ear or +ears preceding the pre%ious +ear in which
such sale or trans!er has ta.en place shall be deemed to be the income o! the assessee o!
such pre%ious +ear and shall be liable to tax in the assessment +ear rele%ant to such
pre%ious +ear.
E$planation(A person shall be treated as ha%ing ac2uired an+ shares or debentures on
the date on which his name is entered in relation to those shares or debentures in the
register o! members or o! debenture-holders) as the case ma+ be) o! the public compan+.
*( 0or the purposes o! this section)
*a( the insurance) de!erred annuit+) pro%ident !und and superannuation !und
re!erred to in clauses *i( to *+ii(-
*b( unit-lin.ed insurance plan and annuit+ plan re!erred to in clauses *$ii( to
*$iiia(-
*c( pension !und and subscription to deposit scheme re!erred to in clauses *$iiic(
to *$i+a(-
*d( amount borrowed !or purchase or construction o! a residential house re!erred
to in clause *$+()
o! sub-section *2( o! section "" shall be eligible !or deduction under the corresponding
pro%isions o! this section and the deduction shall be allowed in accordance with the
pro%isions o! this section.
*"( 3n this section)
*i( Administrator means the Administrator as re!erred to in clause *a( o! section 2
o! the ;nit 7rust o! 3ndia *7rans!er o! ;nderta.ing and 6epeal( Act) 2$$2 *5"
o! 2$$2(-
*ii( contribution to an+ !und shall not include an+ sums in repa+ment o! loan-
*iii( insurance shall include
*a( a polic+ o! insurance on the li!e o! an indi%idual or the spouse or the child
o! such indi%idual or a member o! a Cindu undi%ided !amil+ securing the
pa+ment o! speci!ied sum on the stipulated date o! maturit+) i! such person
is ali%e on such date notwithstanding that the polic+ o! insurance pro%ides
onl+ !or the return o! premiums paid *with or without an+ interest thereon(
in the e%ent o! such person d+ing be!ore the said stipulated date-
*b( a polic+ o! insurance e!!ected b+ an indi%idual or a member o! a Cindu
undi%ided !amil+ !or the bene!it o! a minor with the ob4ect o! enabling the
minor) a!ter he has attained ma4orit+ to secure insurance on his own li!e b+
adopting the polic+ and on his being ali%e on a date *a!ter such adoption(
speci!ied in the polic+ in this behal!-
*i+( >i!e 3nsurance 'orporation means the >i!e 3nsurance 'orporation o! 3ndia
established under the >i!e 3nsurance 'orporation Act) 1#56 *31 o! 1#56(-
*+( public compan+ shall ha%e the same meaning as in section 3
76
o! the
'ompanies Act) 1#56 *1 o! 1#56(-
*+i( securit+ means a 5o%ernment securit+ as de!ined in clause *2( o! section 2
77
o!
the Dublic 1ebt Act) 1#44 *1" o! 1#44(-
*+ii( speci!ied compan+ means a compan+ as re!erred to in clause *h( o! section 2 o!
the ;nit 7rust o! 3ndia *7rans!er o! ;nderta.ing and 6epeal( Act) 2$$2 *5" o!
2$$2(-
*+iii( trans!er shall be deemed to include also the transactions re!erred to in clause
*f( o! section 26#;A.2
Deduction in respect of investment in certain new shares.
80CC.
7&
-/mitted b+ the 0inance *&o. 2( Act) 1##6) w.r.e.!. 1-4-1##3.2
&8
-Deduction in respect of deposits under National Savings Scheme or payment to a
deferred annuity plan.
&1
80CCA. 1! Fhere an assessee% bein5
a! an indi+idual% or
b! a Cindu undi+ided family%
&2
-* * *2
c!
&)
-* * *2
has in the pre+ious year
i! deposited any amount in accordance with such scheme as the .entral
&3
in the <fficial ;a=ette% specify in this behalf
&4
-* * *21 or
ii! paid any amount to effect or to 9eep in force a contract for such annuity plan of
the Gife Insurance .orporation as the .entral ;o+ernment may% by
notification
&'
in the <fficial ;a=ette% specify%
out of his income char5eable to ta$% he shall% in accordance with% and sub:ect to% the
pro+isions of this section% be allowed a deduction in the computation of his total income
of the whole of the amount deposited or paid e$cludin5 interest or bonus accrued or
credited to the assessees account% if any! as does not e$ceed the amount of twenty
thousand rupees in the pre+ious year :
&6
-Provided that in relation to
a! the assessment years commencin5 on the 1st day of "pril% 1&7& and the 1st day
of "pril% 1&&8% this sub#section shall ha+e effect as if for the words twenty
thousand rupees% the words thirty thousand rupees had been substituted1
b! the assessment year commencin5 on the 1st day of "pril% 1&&1 and subse,uent
assessment years% this sub#section shall ha+e effect as if for the words twenty
thousand rupees% the words forty thousand rupees had been substituted:2
&7
-Provided further that no deduction under this sub#section shall be allowed in relation
to any amount deposited or paid under clauses i! and ii! on or after the 1st day of "pril%
1&&2(2
2! Fhere any amount
a! standin5 to the credit of the assessee
&&
-under the scheme referred to in clause
i! of sub#section 1!2 in respect of which a deduction has been allowed under
sub#section 1! to5ether with the interest accrued on such amount is withdrawn
in whole or in part in any pre+ious year% or
b! is recei+ed on account of the surrender of the policy or as annuity or bonus in
accordance with the annuity plan of the Gife Insurance .orporation in any
pre+ious year%
an amount e,ual to the whole of the amount referred to in clause a! or clause b! shall be
deemed to be the income of the assessee of that pre+ious year in which such withdrawal
is made or% as the case may be% amount is recei+ed% and shall% accordin5ly% be char5eable
to ta$ as the income of that pre+ious year :
1
-Provided that nothin5 contained in this sub#section shall apply to any amount recei+ed
by the assessee on account of the surrender of the policy in accordance with the terms of
the annuity plan of the Gife Insurance .orporation where the assessee elects to surrender
before the 1st day of <ctober% 1&&2% the said annuity plan in respect of which he had paid
any amount under clause ii! of sub#section 1! before the 1st day of "pril% 1&&2(2
2
-)! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where a
partition has ta9en place amon5 the members of a Cindu undi+ided family or where an
association of persons has been dissol+ed after a deduction has been allowed under sub#
section 1!% the pro+isions of sub#section 2! shall apply as if the person in receipt of
income referred to therein is the assessee(2
Explanation 3.>or the remo+al of doubts% it is hereby declared that interest on the deposits
made
)
-under the scheme referred to in clause i! of sub#section 1!2 shall not be
char5eable to ta$ e$cept in the manner and to the e$tent specified in sub#section 2!(
Explanation 33.>or the purposes of this section% Gife Insurance .orporation shall ha+e the
same meanin5 as in clause a! of sub#section 7! of section 78.(2
3
Deduction in respect of investment made under Equity Linked Savings Scheme.
80CCB. 1! Fhere an assessee% bein5
a! an indi+idual% or
b! a Cindu undi+ided family%
4
-* * *2
c!
'
-* * *2
has ac,uired in the pre+ious year% out of his income char5eable to ta$% units of any
Butual >und specified under clause 231! of section 18 or of the Enit Trust of India
established under the Enit Trust of India "ct% 1&') 42 of 1&')!% under any plan
formulated in accordance with such scheme as the .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify in this behalf hereafter in this section referred
to as the E,uity Gin9ed *a+in5s *cheme!% he shall% in accordance with% and sub:ect to% the
pro+isions of this section% be allowed a deduction in the computation of his total income
of so much of the amount in+ested as does not e$ceed the amount of ten thousand rupees
in the pre+ious year :
6
-Provided that no deduction shall be allowed in relation to any amount in+ested under
this sub#section on or after the 1st day of "pril% 1&&2(2
2! Fhere any amount in+ested by the assessee in the units issued under a plan
formulated under the E,uity Gin9ed *a+in5s *cheme in respect of which a deduction has
been allowed under sub#section 1! is returned to him in whole or in part either by way of
repurchase of such units or on the termination of the plan% by the >und or the Trust% as the
case may be% in any pre+ious year% it shall be deemed to be the income of the assessee of
that pre+ious year and char5eable to ta$ accordin5ly(
)! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where a
partition has ta9en place amon5 the members of a Cindu undi+ided family or where an
association of persons has been dissol+ed after a deduction has been allowed under sub#
section 1!% the pro+isions of sub#section 2! shall apply as if the person in receipt of
income referred to therein is the assessee(2
7
-Deduction in respect of contribution to certain pension funds.
80CCC. 1! Fhere an assessee bein5 an indi+idual has in the pre+ious year paid or
deposited any amount out of his income char5eable to ta$ to effect or 9eep in force a
contract for any annuity plan of Gife Insurance .orporation of India
&
-or any other
insurer2 for recei+in5 pension from the fund referred to in clause 23AAB! of section 18%
he shall% in accordance with% and sub:ect to% the pro+isions of this section% be allowed a
deduction in the computation of his total income% of the whole of the amount paid or
deposited e$cludin5 interest or bonus accrued or credited to the assessees account% if
any! as does not e$ceed the amount of
&a
ten thousand] rupees in the pre+ious year(
2! Fhere any amount standin5 to the credit of the assessee in a fund% referred to in sub#
section 1! in respect of which a deduction has been allowed under sub#section 1!%
to5ether with the interest or bonus accrued or credited to the assessees account% if any% is
recei+ed by the assessee or his nominee
a! on account of the surrender of the annuity plan whether in whole or in part% in
any pre+ious year% or
b! as pension recei+ed from the annuity plan%
an amount e,ual to the whole of the amount referred to in clause a! or clause b! shall be
deemed to be the income of the assessee or his nominee% as the case may be% in that
pre+ious year in which such withdrawal is made or% as the case may be% pension is
recei+ed% and shall accordin5ly be char5eable to ta$ as income of that pre+ious year(
18
-*3( ,here an+ amount paid or deposited b+ the assessee has been ta.en into account
!or the purposes o! this section)
*a( a rebate with re!erence to such amount shall not be allowed under section ""
!or an+ assessment +ear ending be!ore the 1st da+ o! April) 2$$6-
*b( a deduction with re!erence to such amount shall not be allowed under section
"$' !or an+ assessment +ear beginning on or a!ter the 1st da+ o! April) 2$$6.22
11
-Deduction in respect of contribution to pension scheme of Central Government.
80CCD.1! Fhere an assessee% bein5 an indi+idual employed by the .entral ;o+ernment
on or after the 1st day of @anuary% 2883% has in the pre+ious year paid or deposited any
amount in his account under a pension scheme notified or as may be notified by the
.entral ;o+ernment% he shall% in accordance with% and sub:ect to% the pro+isions of this
section% be allowed a deduction in the computation of his total income% of the whole of
the amount so paid or deposited as does not e$ceed ten per cent of his salary in the
pre+ious year(
2! Fhere% in the case of an assessee referred to in sub#section 1!% the .entral
;o+ernment ma9es any contribution to his account referred to in that sub#section% the
assessee shall be allowed a deduction in the computation of his total income% of the whole
of the amount contributed by the .entral ;o+ernment as does not e$ceed ten per cent of
his salary in the pre+ious year(
)! Fhere any amount standin5 to the credit of the assessee in his account referred to in
sub#section 1!% in respect of which a deduction has been allowed under that sub#section
or sub#section 2!% to5ether with the amount accrued thereon% if any% is recei+ed by the
assessee or his nominee% in whole or in part% in any pre+ious year%
a! on account of closure or his optin5 out of the pension scheme referred to in
sub#section 1!1 or
b! as pension recei+ed from the annuity plan purchased or ta9en on such closure
or optin5 out%
the whole of the amount referred to in clause a! or clause b! shall be deemed to be the
income of the assessee or his nominee% as the case may be% in the pre+ious year in which
such amount is recei+ed% and shall accordin5ly be char5ed to ta$ as income of that
pre+ious year(
12
-*4( ,here an+ amount paid or deposited b+ the assessee has been allowed as a
deduction under sub-section *1()
*a( no rebate with re!erence to such amount shall be allowed under section "" !or
an+ assessment +ear ending be!ore the 1st da+ o! April) 2$$6-
*b( no deduction with re!erence to such amount shall be allowed under section
"$' !or an+ assessment +ear beginning on or a!ter the 1st da+ o! April) 2$$6.2
Explanation.>or the purposes of this section% salary includes dearness allowance% if the
terms of employment so pro+ide% but e$cludes all other allowances and per,uisites(2
1)
-Limit on deductions under sections 80C, 80CCC and 80CCD.
80CCE. 7he aggregate amount o! deductions under section "$') section "$''' and
section "$''1 shall not) in an+ case) exceed one la.h rupees.2
13
-Deduction in respect of medical insurance premia.
80D. 1! In computin5 the total income of an assessee% there shall be deducted at the
followin5 rates% such sum as is specified in sub#section 2! and paid by him by che,ue in
the pre+ious year out of his income char5eable to ta$% namely :
i! in a case where such sum does not e$ceed in the a55re5ate
14
-ten2 thousand
rupees% the whole of such sum1 and
ii! in any other case%
14
-ten2 thousand rupees :
1'
-Provided that where the sum specified in sub#section 2! is paid to effect or to 9eep in
force an insurance on the health of the assessee% or his wife or her husband or dependant
parents or any member of the family in case the assessee is a Cindu undi+ided family%
and who is a senior citi=en% the pro+isions of this section shall ha+e effect as if for the
words ten thousand rupees% the words fifteen thousand rupees had been substituted(2
2! The sum referred to in sub#section 1! shall be the followin5% namely :
a! where the assessee is an indi+idual% any sum paid to effect or to 9eep in force
an insurance on the health of the assessee or on the health of the wife or
husband% dependent parents or dependent children of the assessee1
b! where the assessee is a Cindu undi+ided family% any sum paid to effect or to
9eep in force an insurance on the health of any member of the family :
c!
16
-* * *2
17
-Provided that such insurance shall be in accordance with a scheme
1&
framed in this
behalf by
a! the ;eneral Insurance .orporation of India formed under section & of the
;eneral Insurance Business Aationalisation! "ct% 1&62 46 of 1&62! and
appro+ed by the .entral ;o+ernment in this behalf1 or
b! any other insurer and appro+ed by the Insurance Re5ulatory and ?e+elopment
"uthority established under sub#section 1! of section ) of the Insurance
Re5ulatory and ?e+elopment "uthority "ct% 1&&& 31 of 1&&&!(22
28
-Explanation.>or the purpose of this section% senior citi=en shall ha+e the meanin5
assi5ned to it in the Explanation to section 78??B(2
21
-Deduction in respect of maintenance including medical treatment of a dependant
who is a person with disability.
80DD. 1! Fhere an assessee% bein5 an indi+idual or a Cindu undi+ided family% who is a
resident in India% has% durin5 the pre+ious year%
a! incurred any e$penditure for the medical treatment includin5 nursin5!% trainin5
and rehabilitation of a dependant% bein5 a person with disability1 or
b! paid or deposited any amount under a scheme framed in this behalf by the Gife
Insurance .orporation or any other insurer or the "dministrator or the specified
company sub:ect to the conditions specified in sub#section 2! and appro+ed by
the Board in this behalf for the maintenance of a dependant% bein5 a person
with disability%
the assessee shall% in accordance with and sub:ect to the pro+isions of this section% be
allowed a deduction of a sum of fifty thousand rupees from his 5ross total income in
respect of the pre+ious year:
Provided that where such dependant is a person with se+ere disability% the pro+isions of
this sub#section shall ha+e effect as if for the words fifty thousand rupees% the words
se+enty#fi+e thousand rupees had been substituted(
2! The deduction under clause b! of sub#section 1! shall be allowed only if the
followin5 conditions are fulfilled% namely:
a! the scheme referred to in clause b! of sub#section 1! pro+ides for payment of
annuity or lump sum amount for the benefit of a dependant% bein5 a person with
disability% in the e+ent of the death of the indi+idual or the member of the
Cindu undi+ided family in whose name subscription to the scheme has been
made1
b! the assessee nominates either the dependant% bein5 a person with disability% or
any other person or a trust to recei+e the payment on his behalf% for the benefit
of the dependant% bein5 a person with disability(
)! If the dependant% bein5 a person with disability% predeceases the indi+idual or the
member of the Cindu undi+ided family referred to in sub#section 2!% an amount e,ual to
the amount paid or deposited under clause b! of sub#section 1! shall be deemed to be the
income of the assessee of the pre+ious year in which such amount is recei+ed by the
assessee and shall accordin5ly be char5eable to ta$ as the income of that pre+ious year(
3! The assessee% claimin5 a deduction under this section% shall furnish a copy of the
certificate issued by the medical authority in the prescribed form and manner
22
% alon5
with the return of income under section 1)&% in respect of the assessment year for which
the deduction is claimed:
Provided that where the condition of disability re,uires reassessment of its e$tent after a
period stipulated in the aforesaid certificate% no deduction under this section shall be
allowed for any assessment year relatin5 to any pre+ious year be5innin5 after the e$piry
of the pre+ious year durin5 which the aforesaid certificate of disability had e$pired%
unless a new certificate is obtained from the medical authority in the form and manner% as
may be prescribed% and a copy thereof is furnished alon5 with the return of income(
a! "dministrator means the "dministrator as referred to in clause a! of section 2
of the Enit Trust of India Transfer of Enderta9in5 and Repeal! "ct% 2882 47
of 2882!
2)
1
b! dependant means
i! in the case of an indi+idual% the spouse% children% parents% brothers and
sisters of the indi+idual or any of them1
ii! in the case of a Cindu undi+ided family% a member of the Cindu undi+ided
family%
dependant wholly or mainly on such indi+idual or Cindu undi+ided family for
his support and maintenance% and who has not claimed any deduction under
section 78E in computin5 his total income for the assessment year relatin5 to
the pre+ious year1
c! disability shall ha+e the meanin5 assi5ned to it in clause i! of section 2
23
of the
Persons with ?isabilities E,ual <pportunities% Protection of Ri5hts and >ull
Participation! "ct% 1&&4 1 of 1&&'!
24
-and includes autism% cerebral palsy and
multiple disability referred to in clauses a!% c! and h! of section 2 of the
Aational Trust for Felfare of Persons with "utism% .erebral Palsy% Bental
Retardation and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!21
d! Gife Insurance .orporation shall ha+e the same meanin5 as in clause iii! of
sub#section 7! of section 771
e! medical authority means the medical authority as referred to in clause p! of
section 2
2'
of the Persons with ?isabilities E,ual <pportunities% Protection of
Ri5hts and >ull Participation! "ct% 1&&4 1 of 1&&'!
26
-or such other medical
authority as may% by notification% be specified by the .entral ;o+ernment for
certifyin5 autism% cerebral palsy% multiple disabilities% person with disability
and se+ere disability referred to in clauses a!% c!% h!% 4! and o! of section 2
of the Aational Trust for Felfare of Persons with "utism% .erebral Palsy%
Bental Retardation and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!21
!! person with disability means a person as referred to in clause t! of section 2
2'
of the Persons with ?isabilities E,ual <pportunities% Protection of Ri5hts and
>ull Participation! "ct% 1&&4 1 of 1&&'!
26
-or clause 4! of section 2 of the
27
-*5( person with se+ere disability means
i! a person with ei5hty per cent or more of one or more disabilities% as referred
to in sub#section 3! of section 4' of the Persons with ?isabilities E,ual
<pportunities% Protection of Ri5hts and >ull Participation! "ct% 1&&4 1 of
1&&'!
2'
1 or
ii! a person with se+ere disability referred to in clause o! of section 2 of the
Retardation and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!
2'
12
h! specified company means a company as referred to in clause h! of section 2
2&
of the Enit Trust of India Transfer of Enderta9in5 and Repeal! "ct% 2882 47
of 2882!(2
)8
-Deduction in respect of medical treatment, etc.
80DDB. Fhere an assessee who is resident in India has% durin5 the pre+ious year%
actually paid any amount for the medical treatment of such disease or ailment as may be
specified in the rules
)1
made in this behalf by the Board
a! for himself or a dependant% in case the assessee is an indi+idual1 or
b! for any member of a Cindu undi+ided family% in case the assessee is a Cindu
undi+ided family%
the assessee shall be allowed a deduction of the amount actually paid or a sum of forty
thousand rupees% whiche+er is less% in respect of that pre+ious year in which such amount
was actually paid :
Provided that no such deduction shall be allowed unless the assessee furnishes with the
return of income% a certificate in such form% as may be prescribed
)1
% from a neurolo5ist% an
oncolo5ist% a urolo5ist% a haematolo5ist% an immunolo5ist or such other specialist% as may
be prescribed
)1
% wor9in5 in a ;o+ernment hospital :
Provided further that the deduction under this section shall be reduced by the amount
recei+ed% if any% under an insurance from an insurer% or reimbursed by an employer% for
the medical treatment of the person referred to in clause a! or clause b! :
Provided also that where the amount actually paid is in respect of the assessee or his
dependant or any member of a Cindu undi+ided family of the assessee and who is a
senior citi=en% the pro+isions of this section shall ha+e effect as if for the words forty
thousand rupees% the words si$ty thousand rupees had been substituted(
i! dependant means
a! in the case of an indi+idual% the spouse% children% parents% brothers and
sisters of the indi+idual or any of them%
b! in the case of a Cindu undi+ided family% a member of the Cindu undi+ided
family%
dependant wholly or mainly on such indi+idual or Cindu undi+ided family for
his support and maintenance1
ii! ;o+ernment hospital includes a departmental dispensary whether full#time or
part#time established and run by a ?epartment of the ;o+ernment for the
medical attendance and treatment of a class or classes of ;o+ernment ser+ants
and members of their families% a hospital maintained by a local authority and
any other hospital with which arran5ements ha+e been made by the
;o+ernment for the treatment of ;o+ernment ser+ants1
iii! insurer
)2
shall ha+e the meanin5 assi5ned to it in clause #! of section 2 of the
Insurance "ct% 1&)7 3 of 1&)7!1
i%! senior citi=en means an indi+idual resident in India who is of the a5e of si$ty#
fi+e years or more at any time durin5 the rele+ant pre+ious year(2
))
-Deduction in respect of interest on loan taken for higher education.
80E. *1( 3n computing the total income o! an assessee) being an indi%idual) there shall be
deducted) in accordance with and sub4ect to the pro%isions o! this section) an+ amount
paid b+ him in the pre%ious +ear) out o! his income chargeable to tax) b+ wa+ o! interest
on loan ta.en b+ him !rom an+ !inancial institution or an+ appro%ed charitable institution
!or the purpose o! pursuing his higher education.
*2( 7he deduction speci!ied in sub-section *1( shall be allowed in computing the total
income in respect o! the initial assessment +ear and se%en assessment +ears immediatel+
succeeding the initial assessment +ear or until the interest re!erred to in sub-section *1(
is paid b+ the assessee in !ull) whiche%er is earlier.
*3( 0or the purposes o! this section)
*a( appro%ed charitable institution means an institution speci!ied in) or) as the
case ma+ be) an institution established !or charitable purposes and noti!ied b+
the 'entral 5o%ernment under clause *2).( o! section 1$ or an institution
re!erred to in clause *a( o! sub-section *2( o! section "$5-
*b( !inancial institution means a ban.ing compan+ to which the Ban.ing
6egulation Act) 1#4# *1$ o! 1#4#( applies *including an+ ban. or ban.ing
institution re!erred to in section 51 o! that Act(- or an+ other !inancial
institution which the 'entral 5o%ernment ma+) b+ noti!ication in the /!!icial
5a8ette
)3
) speci!+ in this behal!-
*c( higher education means !ull-time studies !or an+ graduate or post-graduate
course in engineering) medicine) management or !or post-graduate course in
applied sciences or pure sciences including mathematics and statistics-
*d( initial assessment +ear means the assessment +ear rele%ant to the pre%ious
+ear) in which the assessee starts pa+ing the interest on the loan.2
Deduction in respect of educational expenses in certain cases.
80F.
)4
-/mitted b+ the 0inance Act) 1#"5) w.e.!. 1-4-1#"6. /riginal section was inserted
b+ the 0inance *&o. 2( Act) 1#6) w.e.!. 1-4-1#6" in place o! section "A which was
inserted b+ the 0inance Act) 1#64) w.e.!. 1-4-1#64. 3t was later amended b+ the 0inance
Act) 1#6") w.e.!. 1-4-1#6#. &ew section "$0) dealing with deduction in respect o!
amounts applied !or charitable or religious purposes) etc.) was inserted b+ the 1irect 7ax
>aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#. 7his section was omitted b+ the 1irect
7ax >aws *Amendment( Act) 1#"#) with e!!ect !rom the same date.2
Deduction in respect of expenses on higher education in certain cases.
80FF. -/mitted b+ the 0inance *&o. 2( Act) 1#"$) w.e.!. 1-4-1#"1. /riginal section was
inserted b+ the 0inance Act) 1#5) w.e.!. 1-4-1#6.2
)'
Deduction in respect of donations to certain funds, charitable institutions, etc.
)6
80G.
)7
-1! In computin5 the total income of an assessee
)&
% there shall be deducted% in
accordance with and sub:ect to the pro+isions of this section%
38
-i! in a case where the a55re5ate of the sums specified in sub#section 2! includes
any sum or sums of the nature specified in
31
-sub#clause i! or in2
32
-sub#clause
iiia!
3)
-or in sub#clause iiiaa!
33
-or in sub#clause iiiab!2
34
-or in sub#clause
iiie!2
3'
-or in sub#clause iii!!2
36
-or in sub#clause iiig!2
37
-or in sub#clause
iiiga!2 or
3&
-sub#clause iiih! or2
48
-sub#clause iiiha! or sub#clause iiihb! or
sub#clause iiihc!
41
-or sub#clause iiihd!2
42
-or sub#clause iiihe!2
4)
-or sub#
clause iiih!!2
43
-or sub#clause *iiihg( or sub#clause iiihh!2
44
-or sub#clause
iiihi!2
4'
-or sub#clause iiih4!2 or2 in2 sub#clause %ii! of clause a!
46
-or in
clause c!2
47
-or in clause d!2 thereof% an amount e,ual to the whole of the sum
or% as the case may be% sums of such nature plus fifty per cent of the balance of
such a55re5ate1 and2
ii! in any other case% an amount e,ual to fifty per cent of the a55re5ate of the sums
specified in sub#section 2!(2
2! The sums referred to in sub#section 1! shall be the followin5% namely :
a! any sums paid
4&
by the assessee in the pre+ious year as donations to
i! the Aational ?efence >und set up by the .entral ;o+ernment1 or
ii! the @awaharlal Aehru Bemorial >und referred to in the ?eed of ?eclaration
of Trust adopted by the Aational .ommittee at its meetin5 held on the 16th
day of "u5ust% 1&'31 or
iii! the Prime Binisters ?rou5ht Relief >und1 or
'8
-iiia!the Prime Binisters Aational Relief >und1 or2
'1
-iiiaa! the Prime Binisters "rmenia Earth,ua9e Relief >und1 or2
'2
-iiiab! the "frica Public .ontributions # India! >und1 or2
')
-iiib!the Aational .hildrens >und1 or2
'3
-iiic! the Indira ;andhi Bemorial Trust% the deed of declaration in respect
whereof was re5istered at Aew ?elhi on the 21st day of >ebruary% 1&741 or2
'4
-iiid!the Ra:i+ ;andhi >oundation% the deed of declaration in respect whereof
was re5istered at Aew ?elhi on the 21st day of @une% 1&&11 or2
''
-iiie! the Aational >oundation for .ommunal Carmony1 or2
'6
-iii!! a Eni+ersity or any educational institution of national eminence as may be
appro+ed
'7
'&
in this behalf1 or2
68
-iiig!the Baharashtra .hief Binisters Relief >und durin5 the period be5innin5
on the 1st day of <ctober% 1&&) and endin5 on the 'th day of <ctober% 1&&)
or to the .hief Binisters Earth,ua9e Relief >und% Baharashtra1 or2
61
-iiiga! any fund set up by the *tate ;o+ernment of ;u:arat e$clusi+ely for
pro+idin5 relief to the +ictims of earth,ua9e in ;u:arat1 or2
62
-iiih!any Jila *a9sharta *amiti constituted in any district under the chairmanship
of the .ollector of that district for the purposes of impro+ement of primary
education in +illa5es and towns in such district and for literacy and post#
literacy acti+ities(
Explanation.>or the purposes of this sub#clause% town means a town which
has a population not e$ceedin5 one la9h accordin5 to the last precedin5
census of which the rele+ant fi5ures ha+e been published before the first
day of the pre+ious year 1 or2
6)
-iiiha! the Aational Blood Transfusion .ouncil or to any *tate Blood Transfusion
.ouncil which has its sole ob:ect the control% super+ision% re5ulation or
encoura5ement in India of the ser+ices related to operation and
re,uirements of blood ban9s(
a! Aational Blood Transfusion .ouncil means a society re5istered under
the *ocieties Re5istration "ct% 17'8 21 of 17'8! and has an officer not
below the ran9 of an "dditional *ecretary to the ;o+ernment of India
dealin5 with the "I?* .ontrol Pro:ect as its .hairman% by whate+er
name called1
b! *tate Blood Transfusion .ouncil means a society re5istered% in
consultation with the Aational Blood Transfusion .ouncil% under the
*ocieties Re5istration "ct% 17'8 21 of 17'8! or under any law
correspondin5 to that "ct in force in any part of India and has *ecretary
to the ;o+ernment of that *tate dealin5 with the ?epartment of Cealth%
as its .hairman% by whate+er name called1 or
iiihb! any fund set up by a *tate ;o+ernment to pro+ide medical relief to the
poor1 or
iiihc! the "rmy .entral Felfare >und or the Indian Aa+al Bene+olent >und or the
"ir >orce .entral Felfare >und established by the armed forces of the
Enion for the welfare of the past and present members of such forces or
their dependants1 or2
63
-iiihd!the "ndhra Pradesh .hief Binisters .yclone Relief >und% 1&&'1 or2
64
-iiihe! the Aational Illness "ssistance >und1 or2
6'
-iiih!! the .hief Binisters Relief >und or the Gieutenant ;o+ernors Relief >und in
respect of any *tate or Enion territory% as the case may be :
Provided that such >und is
a! the only >und of its 9ind established in the *tate or the Enion territory%
as the case may be1
b! under the o+erall control of the .hief *ecretary or the ?epartment of
>inance of the *tate or the Enion territory% as the case may be1
c! administered in such manner as may be specified by the *tate
;o+ernment or the Gieutenant ;o+ernor% as the case may be1 or2
66
-iiihg! the Aational *ports >und to be set up by the .entral ;o+ernment1 or
iiihh! the Aational .ultural >und set up by the .entral ;o+ernment1 or2
67
-iiihi! the >und for Technolo5y ?e+elopment and "pplication set up by the
.entral ;o+ernment1 or2
6&
-iiih4! the Aational Trust for Felfare of Persons with "utism% .erebral Palsy%
Bental Retardation and Bultiple ?isabilities constituted under sub#section
1! of section ) of the Aational Trust for Felfare of Persons with "utism%
.erebral Palsy% Bental Retardation and Bultiple ?isabilities "ct% 1&&& 33
of 1&&&!1 or2
i%! any other fund or any institution to which this section applies1 or
%! the ;o+ernment or any local authority% to be utilised for any charitable
purpose
78
-other than the purpose of promotin5 family plannin51 or2
71
-
72
-%i! an authority constituted in India by or under any law enacted either for the
purpose of dealin5 with and satisfyin5 the need for housin5 accommodation
or for the purpose of plannin5% de+elopment or impro+ement of cities%
towns and +illa5es% or for both12
7)
-%ia! any corporation referred to in clause 26BB! of section 181 or2
%ii! the ;o+ernment or to any such local authority% institution or association as
may be appro+ed in this behalf by the .entral ;o+ernment% to be utilised
for the purpose of promotin5 family plannin512
b! any sums paid by the assessee in the pre+ious year as donations for the
reno+ation or repair of any such temple% mos,ue% 5urdwara% church or other
place as is notified
73
by the .entral ;o+ernment in the <fficial ;a=ette to be of
historic% archaeolo5ical or artistic importance or to be a place of public worship
of renown throu5hout any *tate or *tates1
74
-c! any sums paid by the assessee% bein5 a company% in the pre+ious year as
donations to the Indian <lympic "ssociation or to any other association or
institution
7'
-established in India% as the .entral ;o+ernment may% ha+in5
re5ard to the prescribed 5uidelines
76
% by notification in the <fficial ;a=ette
77
%

for
i! the de+elopment of infrastructure for sports and 5ames1 or
ii! the sponsorship of sports and 5ames%
in India12
7&
-d! any sums paid by the assessee% durin5 the period be5innin5 on the 2'th day of
@anuary% 2881 and endin5 on the )8th day of *eptember% 2881% to any trust%
institution or fund to which this section applies for pro+idin5 relief to the
+ictims of earth,ua9e in ;u:arat(2
)!
&8
&1
-3! Fhere the a55re5ate of the sums referred to in sub#clauses i%!% %!% %i!
&2
-% %ia!2
and %ii! of clause a! and in
&)
-clauses b! and c!2 of sub#section 2! e$ceeds ten per cent
of the 5ross total income as reduced by any portion thereof on which income#ta$ is not
payable under any pro+ision of this "ct and by any amount in respect of which the
assessee is entitled to a deduction under any other pro+ision of this .hapter!% then the
amount in e$cess of ten per cent of the 5ross total income shall be i5nored for the purpose
of computin5 the a55re5ate of the sums in respect of which deduction is to be allowed
under sub#section 1!2(
4! This section applies to donations to any institution or fund referred to in sub#clause
i%! of clause a! of sub#section 2!% only if it is established in India for a charitable
purpose and if it fulfils the followin5 conditions% namely :
&3
-i! where the institution or fund deri+es any income% such income would not be
liable to inclusion in its total income under the pro+isions of sections 11 and 12
&4
-* * *2
&'
-
&6
-***22
&7
-or clause 23AA!2
&&
-or clause 23'!2 of section 18 :
1
-Provided that where an institution or fund deri+es any income% bein5 profits
and 5ains of business% the condition that such income would not be liable to
inclusion in its total income under the pro+isions of section 11 shall not apply
in relation to such income% if
a! the institution or fund maintains separate boo9s of account in respect of
such business1
b! the donations made to the institution or fund are not used by it% directly or
indirectly% for the purposes of such business1 and
c! the institution or fund issues to a person ma9in5 the donation a certificate to
the effect that it maintains separate boo9s of account in respect of such
business and that the donations recei+ed by it will not be used% directly or
indirectly% for the purposes of such business122
ii! the instrument under which the institution or fund is constituted does not% or the
rules 5o+ernin5 the institution or fund do not% contain any pro+ision for the
transfer or application at any time of the whole or any part of the income or
assets of the institution or fund for any purpose other than a charitable purpose1
iii! the institution or fund is not e$pressed to be for the benefit of any particular
reli5ious community or caste1
i%! the institution or fund maintains re5ular accounts of its receipts and
e$penditure1
2
-* * *2
%! the institution or fund is either constituted as a public charitable trust or is
re5istered under the *ocieties Re5istration "ct% 17'8 21 of 17'8!% or under any
law correspondin5 to that "ct in force in any part of India or under section 24
)
of the .ompanies "ct% 1&4' 1 of 1&4'!% or is a Eni+ersity established by law%
or is any other educational institution reco5nised by the ;o+ernment or by a
Eni+ersity established by law% or affiliated to any Eni+ersity established by
law%
3
-
4
-***22 or is an institution financed wholly or in part by the ;o+ernment
or a local authority1
'
-and2
6
-%i! in relation to donations made after the )1st day of Barch% 1&&2% the institution
or fund is for the time bein5 appro+ed by the .ommis#sioner in accordance
with the rules
7
made in this behalf :
Provided that any appro+al shall ha+e effect for such assessment year or years%
not e$ceedin5
&
-fi+e2 assessment years% as may be specified in the appro+al(2
18
-4"! Fhere a deduction under this section is claimed and allowed for any assessment
year in respect of any sum specified in sub#section 2!% the sum in respect of which
deduction is so allowed shall not ,ualify for deduction under any other pro+ision of this
"ct for the same or any other assessment year(2
11
-4B! Aotwithstandin5 anythin5 contained in clause ii! of sub#section 4! and
Explanation 3) an institution or fund which incurs e$penditure% durin5 any pre+ious year%
which is of a reli5ious nature for an amount not e$ceedin5 fi+e per cent of its total
income in that pre+ious year shall be deemed to be an institution or fund to which the
pro+isions of this section apply(2
12
-4.! This
1)
-section2 applies in relation to amounts referred to in clause d! of sub#
section 2! only if the trust or institution or fund is established in India for a charitable
purpose and it fulfils the followin5 conditions% namely :
i! it is appro+ed in terms of clause %i! of sub#section 4!1
ii! it maintains separate accounts of income and e$penditure for pro+idin5 relief to
the +ictims of earth,ua9e in ;u:arat1
iii! the donations made to the trust or institution or fund are applied only for
pro+idin5 relief to the earth,ua9e +ictims of ;u:arat on or before the )1st day
of Barch%
13
-288321
14
-i%! the amount of donation remainin5 unutilised on the )1st day of Barch%
13
-28832
is transferred to the Prime Binisters Aational Relief >und on or before the )1st
day of Barch%
13
-2883212
%! it renders accounts of income and e$penditure to such authority
1'
and in such
manner as may be prescribed
16
% on or before the )8th day of @une%
13
-28832(2
Explanation 1."n institution or fund established for the benefit of *cheduled .astes%
bac9ward classes% *cheduled Tribes or of women and children shall not be deemed to be
an institution or fund e$pressed to be for the benefit of a reli5ious community or caste
within the meanin5 of clause iii! of sub#section 4!(
17
-Explanation 2.>or the remo+al of doubts% it is hereby declared that a deduction to
which the assessee is entitled in respect of any donation made to an institution or fund to
which sub#section 4! applies shall not be denied merely on either or both of the
followin5 5rounds% namely :
1&
-i! that% subse,uent to the donation% any part of the income of the institution or
fund has become char5eable to ta$ due to non# compliance with any of the
pro+isions of section 11%
28
-section 12 or section 12"21
ii! that% under clause c! of sub#section 1! of section 1)% the e$emption under
section 11
21
-or section 122 is denied to the institution or fund in relation to any
income arisin5 to it from any in+estment referred to in clause h! of sub#section
2! of section 1) where the a55re5ate of the funds in+ested by it in a concern
referred to in the said clause h! does not e$ceed fi+e per cent of the capital of
that concern(22
Explanation 3.In this section% charitable purpose does not include any purpose the whole
or substantially the whole of which is of a reli5ious nature(
22
-Explanation 4.>or the purposes of this section% an association or institution ha+in5 as
its ob:ect the control% super+ision% re5ulation or encoura5ement in India of such 5ames or
sports as the .entral ;o+ernment may% by notification in the <fficial ;a=ette
2)
% specify in
this behalf% shall be deemed to be an institution established in India for a charitable
purpose(2
23
-Explanation 5.>or the remo+al of doubts% it is hereby declared that no deduction shall
be allowed under this section in respect of any donation unless such donation is of a sum
of money(2
'!
24
-* * *2
2'
-Deductions in respect of rents paid.
26
80GG. In computin5 the total income of an assessee% not bein5 an assessee ha+in5 any
income fallin5 within clause 13A! of section 18% there shall be deducted any e$penditure
incurred by him in e$cess of ten per cent of his total income towards payment of rent by
whate+er name called! in respect of any furnished or unfurnished accommodation
occupied by him for the purposes of his own residence% to the e$tent to which such e$cess
e$penditure does not e$ceed two thousand rupees per month or twenty#fi+e per cent of
his total income for the year% whiche+er is less% and sub:ect to such other conditions or
limitations as may be prescribed
27
% ha+in5 re5ard to the area or place in which such
accommodation is situated and other rele+ant considerations :
Provided that nothin5 in this section shall apply to an assessee in any case where any
residential accommodation is
i! owned by the assessee or by his spouse or minor child or% where such assessee
is a member of a Cindu undi+ided family% by such family at the place where he
ordinarily resides or performs duties of his office or employment or carries on
his business or profession1 or
ii! owned by the assessee at any other place% bein5 accommodation in the
occupation of the assessee% the +alue of which is to be determined
2&
-under
clause a! of sub#section 2! or% as the case may be% clause a! of sub#section 3!
of section 2)2(
Explanation.In this section% the e$pressions ten per cent of his total income and twenty#
fi+e per cent of his total income shall mean ten per cent or twenty#fi+e per cent% as the
case may be% of the assessees total income before allowin5 deduction for any e$penditure
under this section(2
)8
-Deduction in respect of certain donations for scientific research or rural
development.
80GGA. 1! In computin5 the total income of an assessee% there shall be deducted% in
accordance with and sub:ect to the pro+isions of this section% the sums specified in sub#
section 2!(
a! any sum paid by the assessee in the pre+ious year to a scientific research
association which has as its ob:ect the underta9in5 of scientific research or to a
Eni+ersity% colle5e or other institution to be used for scientific research :
Provided that such association% Eni+ersity% colle5e or institution is for the time
bein5 appro+ed for the purposes of clause ii! of sub#section 1! of section )41
)1
-aa! any sum paid by the assessee in the pre+ious year to a Eni+ersity% colle5e or
other institution to be used for research in social science or statistical research :
Provided that such Eni+ersity% colle5e or institution is for the time bein5
appro+ed for the purposes of clause iii! of sub#section 1! of section )412
b! any sum paid by the assessee in the pre+ious year
i! to an association or institution% which has as its ob:ect the underta9in5 of
any pro5ramme of rural de+elopment% to be used for carryin5 out any
pro5ramme of rural de+elopment appro+ed for the purposes of section
)4.."1 or
ii! to an association or institution which has as its ob:ect the trainin5 of
persons for implementin5 pro5rammes of rural de+elopment :
)2
-Provided that the assessee furnishes the certificate referred to in sub#section
2! or% as the case may be% sub#section 2"! of section )4.." from such
association or institution12
))
-bb! any sum paid by the assessee in the pre+ious year to a public sector company or
a local authority or to an association or institution appro+ed by the Aational
.ommittee% for carryin5 out any eli5ible pro:ect or scheme :
Provided that the assessee furnishes the certificate referred to in clause a! of
sub#section 2! of section )4". from such public sector company or local
authority or% as the case may be% association or institution(
Explanation.>or the purposes of this clause% the e$pressions Aational
.ommittee and eli5ible pro:ect or scheme shall ha+e the meanin5s respecti+ely
assi5ned to them in the Explanation to section )4".12
)3
-c!
)4
-any sum paid by the assessee in any pre+ious year endin5 on or before the
)1st day of Barch% 28822 to an association or institution% which has as its ob:ect
the underta9in5 of any pro5ramme of conser+ation of natural resources
)'
-or of
afforestation2% to be used for carryin5 out any pro5ramme of conser+ation of
natural resources
)'
-or of afforestation2 appro+ed for the purposes of section
)4..B :
Provided that the association or institution is for the time bein5 appro+ed for
the purposes of sub#section 2! of section )4..B12
)6
-cc!
)4
-any sum paid by the assessee in any pre+ious year endin5 on or before the
)1st day of Barch% 28822 to such fund for afforestation as is notified by the
.entral ;o+ernment under clause b! of sub#section 1! of section )4..B12
)7
-d! any sum paid by the assessee in the pre+ious year to a rural de+elopment fund
set up and notified by the .entral ;o+ernment for the purposes of clause c! of
sub#section 1! of section )4.."12
)&
-e! any sum paid by the assessee in the pre+ious year to the Aational Erban
Po+erty Eradication >und set up and notified by the .entral ;o+ernment for the
purposes of clause d! of sub#section 1! of section )4.."(2
)! Aotwithstandin5 anythin5 contained in sub#section 1!% no deduction under this
section shall be allowed in the case of an assessee whose 5ross total income includes
income which is char5eable under the head Profits and 5ains of business or profession(
3! Fhere a deduction under this section is claimed and allowed for any assessment year
in respect of any payments of the nature specified in sub#section 2!% deduction shall not
be allowed in respect of such payments under any other pro+ision of this "ct for the same
or any other assessment year(22
38
-Deduction in respect of contributions given by companies to political parties.
80GGB. In computin5 the total income of an assessee% bein5 an Indian company% there
shall be deducted any sum contributed by it% in the pre+ious year to any political party(
Explanation.>or the remo+al of doubts% it is hereby declared that for the purposes of this
section% the word contribute% with its 5rammatical +ariation% has the meanin5 assi5ned to
it under section 2&)"
31
of the .ompanies "ct% 1&4' 1 of 1&4'!(
Deduction in respect of contributions given by any person to political parties.
80GGC. In computin5 the total income of an assessee% bein5 any person% e$cept local
authority and e+ery artificial :uridical person wholly or partly funded by the ;o+ernment%
there shall be deducted any amount of contribution made by him% in the pre+ious year% to
a political party(
Explanation.>or the purposes of sections 78;;B and 78;;.% political party means a
political party re5istered under section 2&" of the Representation of the People "ct% 1&41
3) of 1&41!(2
'.1eductions in respect o! certain incomes
Deduction in case of new industrial undertakings employing displaced persons, etc.
80H. -/mitted b+ the 7axation >aws *Amendment( Act) 1#5) w.e.!. 1-4-1#6. /riginall+)
it was inserted b+ the 0inance *&o. 2( Act) 1#6) w.e.!. 1-4-1#6".2
32
-Deduction in respect of profits and gains from newly established industrial
undertakings or hotel business in backward areas.
3)
80HH. 1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed
33
from an industrial underta9in5
33
% or the business of a hotel% to which this section
applies% there shall% in accordance with and sub:ect to the pro+isions of this section% be
allowed% in computin5 the total income of the assessee% a deduction from such profits and
5ains of an amount e,ual to twenty per cent thereof(
i! it has be5un or be5ins to manufacture or produce
33
articles
33
after the )1st day
of ?ecember% 1&68
34#3'
-but before the 1st day of "pril% 1&&82% in any bac9ward
area1
in e$istence in any bac9ward area :
Provided that this condition shall not apply in respect of any industrial
specified in that section1
pre+iously used for any purpose in any bac9ward area1
i%!
33
it employs ten or more wor9ers
36
in a manufacturin5 process carried on with
the aid of power% or employs twenty or more wor9ers in a manufacturin5
process carried on without the aid of power(
Explanation.Fhere any machinery or plant or any part thereof pre+iously used for any
purpose in any bac9ward area is transferred to a new business in that area or in any other
bac9ward area and the total +alue of the machinery or plant or part so transferred does not
e$ceed twenty per cent of the total +alue of the machinery or plant used in the business%
then% for the purposes of clause iii! of this sub#section% the condition specified therein
shall be deemed to ha+e been fulfilled(
)! This section applies to the business of any hotel% where all the followin5 conditions
i! the business of the hotel has started or starts functionin5 after the )1st day of
?ecember% 1&68
37
-but before the 1st day of "pril% 1&&82% in any bac9ward
area1
ii! the business of the hotel is not formed by the splittin5 up% or the reconstruction%
of a business already in e$istence1
iii! the hotel is for the time bein5 appro+ed for the purposes of this sub#section by
the .entral ;o+ernment(
3! The deduction specified in sub#section 1! shall be allowed in computin5 the total
income in respect of each of the ten assessment years be5innin5 with the assessment year
rele+ant to the pre+ious year in which the industrial underta9in5 be5ins to manufacture or
produce articles or the business of the hotel starts functionin5 :
Provided that%
i! in the case of an industrial underta9in5 which has be5un to manufacture or
produce articles% and
ii! in the case of the business of a hotel which has started functionin5%
after the )1st day of ?ecember% 1&68% but before the 1st day of "pril% 1&6)% this sub#
section shall ha+e effect as if the reference to ten assessment years were a reference to ten
assessment years as reduced by the number of assessment years which e$pired before the
1st day of "pril% 1&63(
4! Fhere the assessee is a person other than a company or a co#operati+e society% the
deduction under sub#section 1! shall not be admissible unless the accounts of the
industrial underta9in5 or the business of the hotel for the pre+ious year rele+ant to the
assessment year for which the deduction is claimed ha+e been audited by an accountant
as defined in the Explanation below sub#section 2! of section 277 and the assessee
furnishes% alon5 with his return of income% the report of such audit in the prescribed
form
3&
duly si5ned and +erified by such accountant(
'! Fhere any 5oods held for the purposes of the business of the industrial underta9in5 or
the hotel are transferred to any other business carried on by the assessee% or where any
5oods held for the purposes of any other business carried on by the assessee are
transferred to the business of the industrial underta9in5 or the hotel and% in either case%
the consideration% if any% for such transfer as recorded in the accounts of the business of
the industrial underta9in5 or the hotel does not correspond to the mar9et +alue of such
5oods as on the date of the transfer% then% for the purposes of the deduction under this
section% the profits and 5ains of the industrial underta9in5 or the business of the hotel
shall be computed as if the transfer% in either case% had been made at the mar9et +alue of
such 5oods as on that date :
Provided that where% in the opinion of the
48
-"ssessin52 <fficer% the computation of the
profits and 5ains of the industrial underta9in5 or the business of the hotel in the manner
hereinbefore specified presents e$ceptional difficulties% the
41
-"ssessin52 <fficer may
compute such profits and 5ains on such reasonable basis as he may deem fit(
Explanation.In this sub#section% mar9et +alue in relation to any 5oods means the price
that such 5oods would ordinarily fetch on sale in the open mar9et(
6! Fhere it appears to the
41a
-"ssessin52 <fficer that% owin5 to the close connection
between the assessee carryin5 on the business of the industrial underta9in5 or the hotel to
which this section applies and any other person% or for any other reason% the course of
business between them is so arran5ed that the business transacted between them produces
to the assessee more than the ordinary profits which mi5ht be e$pected to arise in the
business of the industrial underta9in5 or the hotel% the
41a
-"ssessin52 <fficer shall% in
computin5 the profits and 5ains of the industrial underta9in5 or the hotel for the purposes
of the deduction under this section% ta9e the amount of profits as may be reasonably
deemed to ha+e been deri+ed therefrom(
7!
42
-***2
&! In a case where the assessee is entitled also to the deduction under
4)
-section 78#I or2
section 78@ in relation to the profits and 5ains of an industrial underta9in5 or the business
of a hotel to which this section applies% effect shall first be 5i+en to the pro+isions of this
section(
43
-&"! Fhere a deduction in relation to the profits and 5ains of a small#scale industrial
underta9in5 to which section 78CC" applies is claimed and allowed under that section
for any assessment year% deduction in relation to such profits and 5ains shall not be
allowed under this section for the same or any other assessment year(2
18! Aothin5 contained in this section shall apply in relation to any underta9in5 en5a5ed
in minin5(
44
-11! >or the purposes of this section% bac9ward area means such area as the .entral
;o+ernment may% ha+in5 re5ard to the sta5e of de+elopment of that area% by notification
4'
in the <fficial ;a=ette% specify in this behalf :
Provided that any notification under this sub#section may be issued so as to ha+e
retrospecti+e effect to a date not earlier than the 1st day of "pril% 1&7)(2
46
-Deduction in respect of profits and gains from newly established small-scale
industrial undertakings in certain areas.
47
80HHA. 1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed from a small#scale industrial underta9in5 to which this section applies% there
shall% in accordance with and sub:ect to the pro+isions of this section% be allowed% in
computin5 the total income of the assessee% a deduction from such profits and 5ains of an
amount e,ual to twenty per cent thereof(
2! This section applies to any small#scale industrial underta9in5 which fulfils all the
followin5 conditions% namely :
i! it be5ins to manufacture or produce articles after the )8th day of *eptember%
1&66
4&
-but before the 1st day of "pril% 1&&82% in any rural area 1
in e$istence :
Provided that this condition shall not apply in respect of any small#scale
industrial underta9in5 which is formed as a result of the re#establishment%
reconstruction or re+i+al by the assessee of the business of any such industrial
underta9in5 as is referred to in section ))B% in the circumstances and within the
period specified in that section 1
pre+iously used for any purpose 1
i%! it employs ten or more wor9ers in a manufacturin5 process carried on with the
aid of power% or employs twenty or more wor9ers in a manufacturin5 process
carried on without the aid of power(
Explanation.Fhere in the case of a small#scale industrial underta9in5% any machinery or
plant or any part thereof pre+iously used for any purpose is transferred to a new business
and the total +alue of the machinery or plant or part so transferred does not e$ceed twenty
per cent of the total +alue of the machinery or plant used in the business% then% for the
purposes of clause iii! of this sub#section% the condition specified therein shall be
deemed to ha+e been fulfilled(
)! The deduction specified in sub#section 1! shall be allowed in computin5 the total
income
'8
-of each of the ten pre+ious years be5innin5 with the pre+ious year in which the
industrial underta9in52 be5ins to manufacture or produce articles :
'1
-Provided that such deduction shall not be allowed in computin5 the total income of
any of the ten pre+ious years aforesaid in respect of which the industrial underta9in5 is
not a small#scale industrial underta9in5 within the meanin5 of clause b! of the
Explanation below sub#section 7!(2
3! Fhere the assessee is a person% other than a company or a co#operati+e society% the
deduction under sub#section 1! shall not be admissible unless the accounts of the small#
scale industrial underta9in5 for the pre+ious year rele+ant to the assessment year for
'2
duly si5ned and
+erified by such accountant(
4! The pro+isions of sub#sections '! and 6! of section 78CC shall% so far as may be%
apply in relation to the computation of the profits and 5ains of a small#scale industrial
underta9in5 for the purposes of the deduction under this section as they apply in relation
to the computation of the profits and 5ains of an industrial underta9in5 for the purposes
of the deduction under that section(
'! In a case where the assessee is entitled also to the deduction under
')
-section 78#I or2
section 78@ in relation to the profits and 5ains of a small#scale industrial underta9in5 to
which this section applies% effect shall first be 5i+en to the pro+isions of this section(
6! Fhere a deduction in relation to the profits and 5ains of a small#scale industrial
underta9in5 to which section 78CC applies is claimed and allowed under that section for
any assessment year% deduction in relation to such profits and 5ains shall not be allowed
under this section for the same or any other assessment year(
7! Aothin5 contained in this section shall apply in relation to any small#scale industrial
underta9in5 en5a5ed in minin5(
'3
-a! rural area means any area other than
i! an area which is comprised within the :urisdiction of a municipa#lity
whether 9nown as a municipality% municipal corporation% notified area
committee% town area committee% town committee or by any other name! or
a cantonment board and which has a population of not less than ten
thousand accordin5 to the last precedin5 census of which the rele+ant
fi5ures ha+e been published before the first day of the pre+ious year 1 or
ii! an area within such distance% not bein5 more than fifteen 9ilo#metres from
the local limits of any municipality or cantonment board referred to in sub#
clause i!% as the .entral ;o+ernment may% ha+in5 re5ard to the sta5e of
de+elopment of such area includin5 the e$tent of% and scope for%
urbanisation of such area! and other rele+ant considerations specify in this
behalf by notification
'4
in the <fficial ;a=ette 12
''
-b( an industrial underta9in5 shall be deemed to be a small#scale industrial
underta9in5 which is% on the last day of the pre+ious year% re5arded as a small#
scale industrial underta9in5 under section 11B
'6
of the Industries ?e+elopment
and Re5ulation! "ct% 1&41 '4 of 1&41!2(
'7
-Deduction in respect of profits and gains from projects outside India.
'&
80HHB.1! Fhere the 5ross total income of an assessee bein5 an Indian company or a
person other than a company! who is resident in India includes any profits and 5ains
deri+ed from the business of
68
a! the e$ecution of a forei5n pro:ect
68
underta9en by the assessee in pursuance of a
contract entered into by him% or
b! the e$ecution of any wor9 underta9en by him and formin5 part of a forei5n
pro:ect
61
underta9en by any other person in pursuance of a contract entered into
by such other person%
with the ;o+ernment of a forei5n *tate or any statutory or other public authority or
a5ency in a forei5n *tate% or a forei5n enterprise% there shall% in accordance with and
sub:ect to the pro+isions of this section% be allowed% in computin5 the total income of the
assessee%
62
-a deduction from such profits and 5ains of an amount e,ual to
i! forty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
28811
ii! thirty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
28821
iii! twenty per cent thereof for an assessment year be5innin5 on the 1st day of
"pril% 288)1
i%! ten per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
2883%
and no deduction shall be allowed in respect of the assessment year be5innin5 on the 1st
day of "pril% 2884 and any subse,uent assessment year2 :
Provided that the consideration for the e$ecution of such pro:ect or% as the case may be%
of such wor9 is payable in con+ertible forei5n e$chan5e(
any rules made thereunder 1
b! forei5n pro:ect means a pro:ect for
i! the construction of any buildin5% road% dam% brid5e or other structure
outside India 1
ii! the assembly or installation of any machinery or plant outside India 1
iii! the e$ecution of such other wor9 of whate+er nature! as may be
prescribed
6)
(
)! The deduction under this section shall be allowed only if the followin5 conditions are
fulfilled% namely :
i! the assessee maintains separate accounts in respect of the profits and 5ains
deri+ed from the business of the e$ecution of the forei5n pro:ect% or% as the case
may be% of the wor9 formin5 part of the forei5n pro:ect underta9en by him and%
where the assessee is a person other than an Indian company or a co#operati+e
society% such accounts ha+e been audited by an accountant as defined in the
Explanation below sub#section 2! of section 277 and the assessee furnishes%
alon5 with his return of income% the report of such audit in the prescribed
form
63
duly si5ned and +erified by such accountant 1
64
-ia! the assessee furnishes% alon5 with his return of income% a certificate in the
prescribed form
6'
from an accountant as defined in the Explanation below sub#
section 2! of section 277% duly si5ned and +erified by such accountant%
certifyin5 that the deduction has been correctly claimed in accordance with the
pro+isions of this section 12
ii! an amount e,ual to
66
-such percenta5e of the profits and 5ains as is referred to
in sub#section 1! in relation to the rele+ant assessment year2 is debited to the
profit and loss account of the pre+ious year in respect of which the deduction
under this section is to be allowed and credited to a reser+e account to be
called the >orei5n Pro:ects Reser+e "ccount! to be utilised by the assessee
durin5 a period of fi+e years ne$t followin5 for the purposes of his business
other than for distribution by way of di+idends or profits 1
iii! an amount e,ual to
67
in sub#section 1! in relation to the rele+ant assessment year2 is brou5ht by the
assessee in con+ertible forei5n e$chan5e into India% in accordance with the
pro+isions of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!% and any
rules made thereunder% within a period of si$ months from the end of the
pre+ious year referred to in clause ii! or%
6&
-within such further period as the
competent authority may allow in this behalf2 :
Provided that where the amount credited by the assessee to the >orei5n Pro:ects Reser+e
"ccount in pursuance of clause ii! or the amount brou5ht into India by the assessee in
pursuance of clause iii! or each of the said amounts is less than
78
-such percenta5e of the
profits and 5ains as is referred to in sub#section 1! in relation to the rele+ant assessment
year2% the deduction under that sub#section shall be limited to the amount so credited in
pursuance of clause ii! or the amount so brou5ht into India in pursuance of clause iii!%
whiche+er is less(
71
-Explanation.>or the purposes of clause iii!% the e$pression competent authority means
the Reser+e Ban9 of India or such other authority as is authorised under any law for the
time bein5 in force for re5ulatin5 payments and dealin5s in forei5n e$chan5e(2
3! If at any time before the e$piry of fi+e years from the end of the pre+ious year in
which the deduction under sub#section 1! is allowed% the assessee utilises the amount
credited to the >orei5n Pro:ects Reser+e "ccount for distribution by way of di+idends or
profits or for any other purpose which is not a purpose of the business of the assessee% the
deduction ori5inally allowed under sub#section 1! shall be deemed to ha+e been wron5ly
allowed% and the
72
-"ssessin52 <fficer may% notwithstandin5 anythin5 contained in this
"ct% recompute the total income of the assessee for the rele+ant pre+ious year and ma9e
the necessary amendment1 and the pro+isions of section 143 shall% so far as may be% apply
thereto% the period of four years specified in sub#section 6! of that section bein5
rec9oned from the end of the pre+ious year in which the money was so utilised(
4! Aotwithstandin5 anythin5 contained in any other pro+ision of this .hapter under the
headin5 '.1eductions in respect o! certain incomes% no part of the consideration or of the
income comprised in the consideration payable to the assessee for the e$ecution of a
forei5n pro:ect referred to in clause a! of sub#section 1! or of any wor9 referred to in
clause b! of that sub#section shall ,ualify for deduction for any assessment year
7)
under
any such other pro+ision(2
73
-Deduction in respect of profits and gains from housing projects in certain cases.
80HHBA. 1! Fhere the 5ross total income of an assessee bein5 an Indian company or a
person other than a company! who is a resident in India includes any profits and 5ains
deri+ed from the e$ecution of a housin5 pro:ect awarded to the assessee on the basis of
5lobal tender and such pro:ect is aided by the Forld Ban9% there shall% in accordance with
and sub:ect to the pro+isions of this section% be allowed% in computin5 the total income of
the assessee%
74
-a deduction from such profits and 5ains of an amount e,ual to
i! forty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
28811
ii! thirty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
28821
iii! twenty per cent thereof for an assessment year be5innin5 on the 1st day of
"pril% 288)1
i%! ten per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
2883%
day of "pril% 2884 and any subse,uent assessment year2(
2! The deductions under this section shall be allowed only if the followin5 conditions are
fulfilled% namely :
i! the assessee maintains separate accounts in respect of the profits and 5ains
deri+ed from the business of the e$ecution of the housin5 pro:ect underta9en by
him and% where the assessee is a person other than an Indian company or a co#
operati+e society% such accounts ha+e been audited by an accountant as defined
in the Explanation below sub#section 2! of section 277 and the assessee
furnishes alon5 with his return of income the report of such audit in the
prescribed form
7'
duly si5ned and +erified by such accountant1
ii! an amount e,ual to
76
in sub#section 1! in relation to the rele+ant assessment year2 is debited to the
profits and loss account of the pre+ious year in respect of which the deduction
under this section is to be allowed and credited to a reser+e account to be
called the Cousin5 Pro:ects Reser+e "ccount! to be utilised by the assessee
durin5 a period of fi+e years ne$t followin5 for the purposes of his business
other than for distribution by way of di+idends or profit :
Provided that where the amount credited by the assessee to the Cousin5 Pro:ects Reser+e
"ccount in pursuance of clause ii! is less than
76
-such percenta5e of the profits and 5ains
as is referred to in sub#section 1! in relation to the rele+ant assessment year2% the
deduction under this section shall be limited to the amount so credited in pursuance of
clause ii!(
)! If at any time before the e$piry of fi+e years from the end of the pre+ious year in
which the deduction under sub#section 1! is allowed% the assessee utilises the amount
credited to the Cousin5 Pro:ects Reser+e "ccount for distribution by way of di+idends or
profit or for any other purpose which is not a purpose of the business of the assessee% the
deduction ori5inally allowed under sub#section 1! shall be deemed to ha+e been wron5ly
allowed and the "ssessin5 <fficer may% notwithstandin5 anythin5 contained in this "ct%
recompute the total income of the assessee for the rele+ant pre+ious year and ma9e
necessary amendment and the pro+ision of section 143 shall% so far as may be% apply
rec9oned from the end of the pre+ious year in which the money was so utilised(
3! Aotwithstandin5 anythin5 contained in any other pro+ision of this .hapter under
headin5 '.1eduction in respect o! certain incomes% no part of the income payable to the
assessee for the e$ecution of a housin5 pro:ect under sub#section 1! shall ,ualify for
deduction for any assessment year under any other pro+ision(
a! housin5 pro:ect means a pro:ect for
i! the construction of any buildin5% road% brid5e or other structure in any part
of India1
ii! the e$ecution of such other wor9 of whate+er nature! as may be prescribed1
b! Forld Ban9 means the International Ban9 for Reconstruction and ?e+elopment
Ban9 referred to in the International Bonetary >und and Ban9 "ct% 1&34(2
77
-Deduction in respect of profits retained for export business.
7&
80HHC.
&8
-1! Fhere an assessee% bein5 an Indian company or a person other than a
company! resident in India% is en5a5ed in the business of e$port out of India of any 5oods
or merchandise to which this section applies% there shall% in accordance with and sub:ect
to the pro+isions of this section% be allowed% in computin5 the total income of the
assessee%
&1
-a deduction to the e$tent of profits
&2
% referred to in sub#section 1B!%2 deri+ed
by the assessee from the e$port of such 5oods or merchandise :
Provided that if the assessee% bein5 a holder of an E$port Couse .ertificate or a Tradin5
Couse .ertificate hereafter in this section referred to as an E$port Couse or a Tradin5
Couse% as the case may be%! issues a certificate referred to in clause b! of sub#section
3"!% that in respect of the amount of the e$port turno+er specified therein% the deduction
under this sub#section is to be allowed to a supportin5 manufacturer% then the amount of
deduction in the case of the assessee shall be reduced by such amount which bears to the
&)
-total profits deri+ed by the assessee from the e$port of tradin5 5oods% the same
proportion as the amount of e$port turno+er specified in the said certificate bears to the
total e$port turno+er of the assessee in respect of such tradin5 5oods2(
1"! Fhere the assessee% bein5 a supportin5 manufacturer% has durin5 the pre+ious year%
sold 5oods or merchandise to any E$port Couse or Tradin5 Couse in respect of which the
E$port Couse or Tradin5 Couse has issued a certificate under the pro+iso to sub#section
1!% there shall% in accordance with and sub:ect to the pro+isions of this section% be
allowed in computin5 the total income of the assessee%
&3
-a deduction to the e$tent of
profits% referred to in sub#section 1B!%2 deri+ed by the assessee from the sale of 5oods or
merchandise to the E$port Couse or Tradin5 Couse in respect of which the certificate has
been issued by the E$port Couse or Tradin5 Couse(2
&4
-1B! >or the purposes of sub#sections 1! and 1"!% the e$tent of deduction of the
profits shall be an amount e,ual to
i! ei5hty per cent thereof for an assessment year be5innin5 on the 1st day of
"pril% 28811
&'
-ii! se+enty per cent thereof for an assessment year be5innin5 on the 1st day of
"pril% 28821
iii! fifty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
288)1
i%! thirty per cent thereof for an assessment year be5innin5 on the 1st day of "pril%
2883%2
day of "pril% 2884 and any subse,uent assessment year(2
2!a! This section applies to all 5oods or merchandise% other than those specified in
clause b!% if the sale proceeds
&6
of such 5oods or merchandise e$ported out of India are
&7
-recei+ed in% or brou5ht into% India2 by the assessee
&&
-other than the supportin5
manufacturer!2 in con+ertible forei5n e$chan5e
1
-% within a period of si$ months from the
end of the pre+ious year or%
2
-within such further period as the competent authority may
allow in this behalf2(2
)
-Explanation.>or the purposes of this clause% the e$pression competent authority means
b! This section does not apply to the followin5 5oods or merchandise% namely :
i! mineral oil 1 and
ii! minerals
3
and ores
4
-other than
3
processed minerals and ores specified in the
Twelfth *chedule!2(
'
-Explanation 1.The sale proceeds referred to in clause a! shall be deemed to ha+e been
recei+ed in India where such sale proceeds are credited to a separate account maintained
for the purpose by the assessee with any ban9 outside India with the appro+al of the
Reser+e Ban9 of India(
Explanation 2.>or the remo+al of doubts% it is hereby declared that where any 5oods or
merchandise are transferred by an assessee to a branch% office% warehouse or any other
establishment of the assessee situate outside India and such 5oods or merchandise are
sold from such branch% office% warehouse or establishment% then% such transfer shall be
deemed to be e$port out of India of such 5oods and merchandise and the +alue of such
5oods or merchandise declared in the shippin5 bill or bill of e$port as referred to in sub#
6
of the .ustoms "ct% 1&'2 42 of 1&'2!% shall% for the purposes
of this section% be deemed to be the sale proceeds thereof(2
7
-)! >or the purposes of sub#section 1!%
a! where the e$port out of India is of 5oods or merchandise manufactured
&
-or
processed2 by the assessee% the profits
18
deri+ed from such e$port shall be the
amount which bears to the profits
11
of the business
11
% the same proportion as the
e$port turno+er in respect of such 5oods bears to the total turno+er of the
business carried on by the assessee 1
b! where the e$port out of India is of tradin5 5oods% the profits deri+ed from such
e$port shall be the e$port turno+er
11
in respect of such tradin5 5oods as reduced
by the direct costs and indirect costs attributable to such e$port 1
c! where the e$port out of India is of 5oods or merchandise manufactured
12
-or
processed2 by the assessee and of tradin5 5oods% the profits deri+ed from such
e$port shall%
i! in respect of the 5oods or merchandise manufactured
12
-or processed2 by the
assessee% be the amount which bears to the ad:usted profits of the business%
the same proportion as the ad:usted e$port turno+er in respect of such 5oods
bears to the ad:usted total turno+er of the business carried on by the
assessee 1 and
ii! in respect of tradin5 5oods% be the e$port turno+er in respect of such tradin5
5oods as reduced by the direct and indirect costs attributable to e$port of
such tradin5 5oods :
Provided that the profits computed under clause a! or clause b! or clause c! of this
sub#section shall be further increased by the amount which bears to ninety per cent of any
sum referred to in clause iiia! not bein5 profits on sale of a licence ac,uired from any
other person!% and clauses iiib! and iiic! of section 27% the same proportion as the e$port
turno+er bears to the total turno+er of the business carried on by the assessee :
1)
Provided further that in the case o! an assessee ha%ing export turno%er not exceeding
rupees ten crores during the pre%ious +ear) the pro!its computed under clause *a( or
clause *b( or clause *c( o! this sub-section or a!ter gi%ing e!!ect to the !irst pro%iso) as the
case ma+ be) shall be !urther increased b+ the amount which bears to ninet+ per cent o!
an+ sum re!erred to in clause *iiid( or clause *iiie() as the case ma+ be) o! section 2") the
same proportion as the export turno%er bears to the total turno%er o! the business carried
on b+ the assessee A
Provided also that in the case o! an assessee ha%ing export turno%er exceeding rupees
ten crores during the pre%ious +ear) the pro!its computed under clause *a( or clause *b(
or clause *c( o! this sub-section or a!ter gi%ing e!!ect to the !irst pro%iso) as the case ma+
be) shall be !urther increased b+ the amount which bears to ninet+ per cent o! an+ sum
re!erred to in clause *iiid( o! section 2") the same proportion as the export turno%er
bears to the total turno%er o! the business carried on b+ the assessee) i! the assessee has
necessar+ and su!!icient e%idence to pro%e that)
*a( he had an option to choose either the dut+ drawbac. or the 1ut+ Entitlement
Dass Boo. <cheme) being the 1ut+ 6emission <cheme- and
*b( the rate o! drawbac. credit attributable to the customs dut+ was higher than
the rate o! credit allowable under the 1ut+ Entitlement Dass Boo. <cheme)
being the 1ut+ 6emission <cheme A
Provided also that in the case o! an assessee ha%ing export turno%er exceeding rupees
ten crores during the pre%ious +ear) the pro!its computed under clause *a( or clause *b(
or clause *c( o! this sub-section or a!ter gi%ing e!!ect to the !irst pro%iso) as the case ma+
be) shall be !urther increased b+ the amount which bears to ninet+ per cent o! an+ sum
re!erred to in clause *iiie( o! section 2") the same proportion as the export turno%er bears
to the total turno%er o! the business carried on b+ the assessee) i! the assessee has
necessar+ and su!!icient e%idence to pro%e that)
*a( he had an option to choose either the dut+ drawbac. or the 1ut+ 0ree
6eplenishment 'erti!icate) being the 1ut+ 6emission <cheme- and
*b( the rate o! drawbac. credit attributable to the customs dut+ was higher than
the rate o! credit allowable under the 1ut+ 0ree 6eplenishment 'erti!icate)
being the 1ut+ 6emission <cheme.
E$planation(0or the purposes o! this clause) rate o! credit allowable means the rate o!
credit allowable under the 1ut+ 0ree 6eplenishment 'erti!icate) being the 1ut+
6emission <cheme calculated in the manner as ma+ be noti!ied b+ the 'entral
5o%ernment :]
13
Provided also that in case the computation under clause *a( or clause *b( or clause *c(
o! this sub-section is a loss) such loss shall be set o!! against the amount which bears to
ninet+ per cent o!
*a( an+ sum re!erred to in clause *iiia( or clause *iiib( or clause *iiic() as the case
ma+ be) or
*b( an+ sum re!erred to in clause *iiid( or clause *iiie() as the case ma+ be) o!
section 2") as applicable in the case o! an assessee re!erred to in the second or
the third or the !ourth pro%iso) as the case ma+ be)
the same proportion as the export turno%er bears to the total turno%er o! the business
carried on b+ the assessee(]
a! ad:usted e$port turno+er means the e$port turno+er as reduced by the e$port
turno+er in respect of tradin5 5oods 1
b! ad:usted profits of the business means the profits of the business as reduced by
the profits deri+ed from the business of e$port out of India of tradin5 5oods as
computed in the manner pro+ided in clause b! of sub#section )! 1
c! ad:usted total turno+er means the total turno+er of the business as reduced by
the e$port turno+er in respect of tradin5 5oods 1
d! direct costs means costs directly attributable to the tradin5 5oods e$ported out
of India includin5 the purchase price of such 5oods 1
e! indirect costs means costs% not bein5 direct costs% allocated in the ratio of the
e$port turno+er in respect of tradin5 5oods to the total turno+er 1
!! tradin5 5oods means 5oods which are not manufactured
14
-or processed2 by the
assessee(2
1'
-)"! >or the purposes of sub#section 1"!% profits deri+ed by a supportin5
manufacturer from the sale of 5oods or merchandise shall be%
a! in a case where the business carried on by the supportin5 manufacturer consists
e$clusi+ely of sale of 5oods or merchandise to one or more E$port Couses or
Tradin5 Couses% the profits of the business
16
-***2 1
b! in a case where the business carried on by the supportin5 manufacturer does not
consist e$clusi+ely of sale of 5oods or merchandise to one or more E$port
Couses or Tradin5 Couses% the amount which bears to the profits of the
business
16
-***2 the same proportion as the turno+er in respect of sale to the
respecti+e E$port Couse or Tradin5 Couse bears to the total turno+er of the
business carried on by the assessee(2
17#1&
-3! The deduction under sub#section 1! shall not be admissible unless the assessee
28
that the deduction has been correctly claimed
21
-in accordance with the pro+isions of this
section:22
22
-Provided that in the case of an underta9in5 referred to in sub#section 3.!% the assessee
shall also furnish alon5 with the return of income% a certificate from the underta9in5 in
the special economic =one containin5 such particulars as may be prescribed
2)
% duly
certified by the auditor auditin5 the accounts of the underta9in5 in the special economic
=one under the pro+isions of this "ct or under any other law for the time bein5 in force(2
23
-3"! The deduction under sub#section 1"! shall not be admissible unless the
supportin5 manufacturer furnishes in the prescribed form alon5 with his return of income%
a! the report of an accountant
24
% as defined in the Explanation below sub#section
2! of section 277% certifyin5 that the deduction has been correctly claimed on
the basis of the
2'
-profits2 of the supportin5 manufacturer in respect of his sale
of 5oods or merchandise to the E$port Couse or Tradin5 Couse 1 and
b! a certificate from the E$port Couse or Tradin5 Couse containin5 such
particulars as may be prescribed and +erified in the manner prescribed
26
that in
respect of the e$port turno+er mentioned in the certificate% the E$port Couse or
Tradin5 Couse has not claimed the deduction under this section :
Provided that the certificate specified in clause b! shall be duly certified by
the auditor auditin5 the accounts of the E$port Couse or Tradin5 Couse under
the pro+isions of this "ct or under any other law(2
27
-3B! >or the purposes of computin5 the total income under sub#section 1! or sub#
section 1"!% any income not char5ed to ta$ under this "ct shall be e$cluded(2
2&
-3.! The pro+isions of this section shall apply to an assessee%
a! for an assessment year be5innin5 after the )1st day of Barch% 2883 and endin5
before the 1st day of "pril% 28841
b! who owns any underta9in5 which manufactures or produces 5oods or
merchandise anywhere in India outside any special economic =one! and sells
the same to any underta9in5 situated in a special economic =one which is
eli5ible for deduction under section 18" and such sale shall be deemed to be
e$port out of India for the purposes of this section(2
any rules made thereunder 1
)8
-aa! e$port out of India shall not include any transaction by way of sale or
otherwise
)1
% in a shop%
)2
emporium or any other establishment situate in India%
not in+ol+in5 clearance at any customs station
))
as defined in the .ustoms "ct%
1&'2 42 of 1&'2! 12
b! e$port turno+er means the sale proceeds
)3
-% recei+ed in% or brou5ht into% India2
by the assessee in con+ertible forei5n e$chan5e
)4
-in accordance with clause a!
of sub#section 2!2 of any 5oods or merchandise to which this section applies
and which are e$ported out of India% but does not include frei5ht or insurance
attributable to the transport of the 5oods or merchandise beyond the customs
station
))
as defined in the .ustoms "ct% 1&'2 42 of 1&'2! 12
)'#)6
-ba! total turno+er shall not include frei5ht or insurance attributable to the transport
of the 5oods or merchandise beyond the customs station as defined in the
.ustoms "ct% 1&'2 42 of 1&'2!
))
:
Provided that in relation to any assessment year commencin5 on or after the
1st day of "pril% 1&&1% the e$pression total turno+er shall ha+e effect as if it
also e$cluded any sum referred to in clauses iiia!% iiib!
)7
% *iiic() *iiid( and
*iiie(] of section 27 12
)&
-baa! profits of the business means the profits of the business as computed under the
head Profits and 5ains of business or profession as reduced by
1! ninety per cent of any sum referred to in clauses iiia!% iiib!
38
% *iiic() *iiid(
and *iiie(] of section 27 or of any receipts by way of bro9era5e%
commission% interest% rent% char5es or any other receipt of a similar nature
included in such profits
31
1 and
2! the profits of any branch% office% warehouse or any other establishment of
the assessee situate outside India 12
32
-***2
3)
-
33
-c!2 E$port Couse .ertificate or Tradin5 Couse .ertificate means a +alid E$port
Couse .ertificate or Tradin5 Couse .ertificate% as the case may be% issued by
the .hief .ontroller of Imports and E$ports% ;o+ernment of India 1
33
-d!2 supportin5 manufacturer means a person bein5 an Indian company or a person
other than a company! resident in India%
34
-manufacturin5 includin5
processin5! 5oods2 or merchandise and sellin5 such 5oods or merchandise to an
E$port Couse or a Tradin5 Couse for the purposes of e$port12
3'
-e! special economic =one shall ha+e the meanin5 assi5ned to it in clause %iii! of
the Explanation 2 to section 18"(2
36
-Deduction in respect of earnings in convertible foreign exchange.
80HHD. 1! Fhere an assessee% bein5 an Indian company or a person other than a
company! resident in India% is en5a5ed in the business of a hotel or of a tour operator%
appro+ed by the prescribed authority
37
in this behalf or of a tra+el a5ent% there shall% in
accordance with and sub:ect to the pro+isions of this section% be allowed%
3&
-in computin5
the total income of the assessee
a! for an assessment year be5innin5 on the 1st day of "pril% 2881% a deduction of a
sum e,ual to the a55re5ate of
i! forty per cent of the profits deri+ed by him from ser+ices pro+ided to
forei5n tourists1 and
ii! so much of the amount not e$ceedin5 forty per cent of the profits referred to
in sub#clause i! as is debited to the profit and loss account of the pre+ious
year in respect of which the deduction is to be allowed and credited to a
reser+e account to be utilised for the purposes of the business of the
assessee in the manner laid down in sub#section 3!1
b! for an assessment year be5innin5 on the 1st day of "pril% 2882% a deduction of a
i! thirty per cent of the profits deri+ed by him from ser+ices pro+ided to
ii! so much of the amount not e$ceedin5 thirty per cent of the profits referred
to in sub#clause i! as is debited to the profit and loss account of the
pre+ious year in respect of which the deduction is to be allowed and
credited to a reser+e account to be utilised for the purposes of the business
of the assessee in the manner laid down in sub#section 3!1
c! for an assessment year be5innin5 on the 1st day of "pril% 288)% a deduction of a
i!
48
-twenty#fi+e2 per cent of the profits deri+ed by him from ser+ices pro+ided
to forei5n tourists1 and
ii! so much of the amount not e$ceedin5
48
-twenty#fi+e2 per cent of the profits
referred to in sub#clause i! as is debited to the profit and loss account of the
of the assessee in the manner laid down in sub#section 3!1
d! for an assessment year be5innin5 on the 1st day of "pril% 2883% a deduction of a
i!
41
-fifteen2 per cent of the profits deri+ed by him from ser+ices pro+ided to
ii! so much of the amount not e$ceedin5
41
-fifteen2 per cent of the profits
referred to in sub#clause i! as is debited to the profit and loss account of the
of the assessee in the manner laid down in sub#section 3!%
day of "pril% 2884 and any subse,uent assessment year2 :
42
-Provided that a hotel or% as the case may be% a tour operator appro+ed by the
prescribed authority on or after the )8th day of Ao+ember% 1&7& and before the 1st day of
<ctober% 1&&1% shall be deemed to ha+e been appro+ed by the prescribed authority for the
purposes of this section in relation to the assessment year commencin5 on the 1st day of
"pril% 1&7& or the 1st day of "pril% 1&&8 or% as the case may be% the 1st day of "pril%
1&&1 if the assessee was en5a5ed in the business of such hotel or as such tour operator
durin5 the pre+ious year rele+ant to any of the said assessment years(2
2! This section applies only to ser+ices pro+ided to forei5n tourists the receipts in
relation to which are recei+ed
4)
-in% or brou5ht into% India by the assessee in con+ertible
forei5n e$chan5e within a period of si$ months from the end of the pre+ious year or%
43
-within such further period as the competent authority may allow in this behalf2(2
44
-Explanation
4'
-12(>or the purposes of this sub#section% any payment recei+ed by an
assessee% en5a5ed in the business of a hotel or of a tour operator or of a tra+el a5ent% in
Indian currency obtained by con+ersion of forei5n e$chan5e brou5ht into India throu5h
an authorised dealer%
46
-from another hotelier% tour operator or tra+el a5ent% as the case
may be%2 on behalf of a forei5n tourist or 5roup of forei5n tourists% shall be deemed to
ha+e been recei+ed by the assessee in con+ertible forei5n e$chan5e if the person ma9in5
the payment furnishes to the assessee a certificate specified in sub#section 2"!(
47
-Explanation 2.>or the purposes of this sub#section% the e$pression competent authority
for the time bein5 in force for re5ulatin5 payments and dealin5s in forei5n e$chan5e(2
2"! E+ery person ma9in5 payment to an assessee referred to in the Explanation
47
-12 to
sub#section 2! out of Indian currency obtained by con+ersion of forei5n e$chan5e
recei+ed from or on behalf of a forei5n tourist or a 5roup of forei5n tourists shall furnish
to that assessee a certificate in the prescribed form
4&
indicatin5 the amount recei+ed in
forei5n e$chan5e% its con+ersion into Indian currency and such other particulars as may
be prescribed(2
'8
-)! >or the purposes of sub#section 1!% profits deri+ed from ser+ices pro+ided to
forei5n tourists shall be the amount which bears to the profits of the business as
computed under the head Profits and 5ains of business or profession! the same proportion
as the receipts specified in sub#section 2!
'1
--as reduced by any payment% referred to in
sub#section 2"!% made by the assessee22 bear to the total receipts of the business carried
on by the assessee(2
3! The amount credited to the reser+e account under clause b! of sub#section 1!% shall
be utilised by the assessee before the e$piry of a period of fi+e years ne$t followin5 the
pre+ious year in which the amount was credited for the followin5 purposes% namely :
a! construction of new hotels appro+ed by the prescribed authority in this behalf
or e$pansion of facilities in e$istin5 hotels already so appro+ed1
b! purchase of new cars and new coaches by tour operators already so appro+ed or
by tra+el a5ents 1
c! purchase of sports e,uipment for mountaineerin5% tre99in5% 5olf% ri+er#raftin5
and other sports in or on water 1
d! construction of conference or con+ention centres 1
e! pro+ision of such new facilities for the 5rowth of Indian tourism as the .entral
;o+ernment may% by notification in the <fficial ;a=ette% specify in this behalf 1
'2
-!! subscription to e,uity shares formin5 part of any eli5ible issue of capital made
by a public company:2
Provided that where any of the acti+ities referred to in clauses a! to
')
-!!2 would result
in creation of any asset owned by the assessee outside India% such asset should be created
only after obtainin5 prior appro+al of the prescribed authority(
4! Fhere any amount credited to the reser+e account under clause b! of sub#section 1!%
a! has been utilised for any purpose other than those referred to in sub#section 3!%
the amount so utilised1 or
b! has not been utilised in the manner specified in sub#section 3!% the amount not
so utilised%
utilised1 or
of fi+e years specified in sub#section 3!%
and shall be char5ed to ta$ accordin5ly(
'3
-4"! Fhere any amount credited to the reser+e account under clause b! of sub#section
1! has been utilised for subscription to any e,uity shares referred to in clause !! of sub#
section 3! and either whole or any part of such e,uity shares are transferred or con+erted
into money by the assessee at any time within a period of three years from the date of
their ac,uisition% the a55re5ate amount so utilised in respect of such e,uity shares shall
be deemed to be the profits of the pre+ious year in which the e,uity shares are transferred
or con+erted into money(
Explanation." person shall be treated as ha+in5 ac,uired any shares on the date on which
his name is entered in relation to those shares in the re5ister of members of the public
company(2
'! The deduction under sub#section 1! shall not be admissible unless the assessee
'4
that the deduction has been correctly claimed on the basis of the
''
-
'6
-***2 amount of
con+ertible forei5n e$chan5e recei+ed by the assessee for ser+ices pro+ided by him to
forei5n tourists
'7
-% payments made by him to any assessee referred to in sub#section
2"!2 and the payments recei+ed by him in Indian currency as referred to in the
Explanation
'&
-12 to sub#section 2!(2
68
-6! Fhere a deduction under sub#section 1! is claimed and allowed in respect of
profits deri+ed from the business of a hotel% such part of profits shall not ,ualify to that
e$tent for deduction for any assessment year under any other pro+isions of this .hapter
under the headin5 '.1eductions in respect o! certain incomes% and shall in no case
e$ceed the profits and 5ains of such hotel(2
a! tra+el a5ent means a tra+el a5ent or other person not bein5 an airline or a
shippin5 company! who holds a +alid licence 5ranted by the Reser+e Ban9 of
India under section )2
61
of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of
1&6)!1
b! con+ertible forei5n e$chan5e shall ha+e the meanin5 assi5ned to it in clause a!
of the Explanation to section 78CC.1
c! ser+ices pro+ided to forei5n tourists shall not include ser+ices by way of sale in
any shop owned or mana5ed by the person who carries on the business of a
hotel or of a tour operator or of a tra+el a5ent1
62
-d!
6)
authorised dealer%
63
forei5n e$chan5e and
64
Indian currency shall ha+e the
meanin5s respecti+ely assi5ned to them in clauses b!% h! and .! of section 2
of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!12
6'
-e! eli5ible issue of capital means an issue made by a public company formed and
re5istered in India and the entire proceeds of the issue is utilised wholly and
e$clusi+ely for the purpose of carryin5 on the business of
i! settin5 up and runnin5 of new hotels appro+ed by the prescribed authority1
or
ii! pro+idin5 such new facility for the 5rowth of tourism in India% as the
.entral ;o+ernment may% by notification in the <fficial ;a=ette% specify(2
66
-Deduction in respect of profits from export of computer software, etc.
67
80HHE. 1! Fhere an assessee% bein5 an Indian company or a person other than a
company! resident in India% is en5a5ed in the business of%
i! e$port out of India of computer software or its transmission from India to a
place outside India by any means1
ii! pro+idin5 technical ser+ices outside India in connection with the de+elopment
or production of computer software%
there shall% in accordance with and sub:ect to the pro+isions of this section% be allowed% in
computin5 the total income of the assessee%
6&
-a deduction to the e$tent of the profits%
referred to in sub#section 1B!%2 deri+ed by the assessee from such business :
78
-***2
71
-Provided that if the assessee% bein5 a company% en5a5ed in the e$port out of India of
computer software% issues a certificate referred to in clause b! of sub#section 3"!% that in
respect of the amount of the e$port specified therein% the deduction under this sub#section
is to be allowed to a supportin5 software de+eloper% then the amount of deduction in the
case of an assessee shall be reduced by such amount which bears to the total profits
deri+ed by the assessee from the e$port% the same proportion as the amount of the e$port
turno+er specified in such certificate bears to the total e$port turno+er of the assessee(
72
-Explanation.>or the remo+al of doubts% it is hereby declared that the profits and 5ains
1"! Fhere the assessee% bein5 a supportin5 software de+eloper% has durin5 the pre+ious
year% de+eloped and sold computer software to an e$portin5 company in respect of which
the said company has issued a certificate under the pro+iso to sub#section 1!% there shall%
in accordance with and sub:ect to the pro+isions of this section% be allowed in computin5
the total income of the assessee a deduction of the profits deri+ed by the assessee from
the de+elopin5 and sellin5 of computer software to the e$portin5 company in respect of
which the certificate has been issued by the said company
7)
-to such e$tent and for such
years as specified in sub#section 1B!2(2
7)
-1B! >or the purposes of sub#sections 1! and 1"!% the e$tent of deduction of profits
shall be an amount e,ual to
i! ei5hty per cent of such profits for an assessment year be5innin5 on the 1st day
of "pril% 28811
73
"pril% 28821
288)1
2883%2
2! The deduction specified in sub#section 1! shall be allowed only if the consideration
in respect of the computer software referred to in that sub#section is recei+ed in% or
brou5ht into% India by the assessee in con+ertible forei5n e$chan5e% within a period of si$
months from the end of the pre+ious year or%
74
-within such further period as the
competent authority may allow in this behalf2(
Explanation
7'
-12(The said consideration shall be deemed to ha+e been recei+ed in India
where it is credited to a separate account maintained for the purpose by the assessee with
any ban9 outside India with the appro+al of the Reser+e Ban9 of India(
76
-Explanation 2.>or the purposes of this sub#section% the e$pression competent authority
for the time bein5 in force for re5ulatin5 payments and dealin5s in forei5n e$chan5e(2
)! >or the purposes of sub#section 1!% profits deri+ed from the business referred to in
that sub#section shall be the amount which bears to the profits of the business% the same
proportion as the e$port turno+er bears to the total turno+er of the business carried on by
the assessee(
77
-)"! >or the purposes of sub#section 1"!% profits deri+ed by a supportin5 software
de+eloper shall be%
i! in a case where the business carried on by the supportin5 software de+eloper
consists e$clusi+ely of de+elopin5 and sellin5 of computer software to one or
more e$portin5 companies solely en5a5ed in e$ports% the profits of such
business1
ii! in a case where the business carried on by a supportin5 software de+eloper does
not consist e$clusi+ely of de+elopin5 and sellin5 of computer software to one
or more e$portin5 companies% the amount which bears to the profits of the
business% the same proportion as the turno+er in respect of sale to the respecti+e
e$portin5 company bears to the total turno+er of the business carried on by the
assessee(2
3! The deduction under sub#section 1! shall not be admissible unless the assessee
7&
section(
&8
-3"! The deduction under sub#section 1"! shall not be admissible unless the
supportin5 software de+eloper furnishes in the prescribed form alon5 with his return of
income%
*i! the report of an accountant
&1
% as defined in the Explanation below sub#section
2! of section 277% certifyin5 that the deduction has been correctly claimed on
the basis of the profits of the supportin5 software de+eloper in respect of sale of
computer software to the e$portin5 company1 and
ii! a certificate
&2
from the e$portin5 company containin5 such particulars as may
be prescribed and +erified in the manner prescribed that in respect of the e$port
turno+er mentioned in the certificate% the e$portin5 company has not claimed
deduction under this section :
Provided that the certificate specified in clause b! shall be duly certified by the auditor
auditin5 the accounts of the e$portin5 assessee under the pro+isions of this "ct or under
any other law(2
4! Fhere a deduction under this section is claimed and allowed in respect of profits of
the business referred to in sub#section 1! for any assessment year% no deduction shall be
allowed in relation to such profits under any other pro+ision of this "ct for the same or
any other assessment year(
a! con+ertible forei5n e$chan5e shall ha+e the meanin5 assi5ned to it in clause a!
&)
-b! computer software means%
i! any computer pro5ramme recorded on any disc% tape% perforated media or
ii! any customised electronic data or any product or ser+ice of similar nature as
may be notified
&3
by the Board%
which is transmitted or e$ported from India to a place outside India by any
means12
c! e$port turno+er means the consideration in respect of computer software
recei+ed in% or brou5ht into% India by the assessee in con+er#tible forei5n
e$chan5e in accordance with sub#section 2!% but does not include frei5ht%
telecommunication char5es or insurance attributable to the deli+ery of the
computer software outside India or e$penses% if any% incurred in forei5n
e$chan5e in pro+idin5 the technical ser+ices outside India1
&4
-ca! e$portin5 company means a company referred to in sub#section 1! ma9in5
actual e$port of computer software12
d! profits of the business means the profits of the business as computed under the
1! ninety per cent of any receipts by way of bro9era5e% commission% interest%
rent% char5es or any other receipt of a similar nature included in such
profits1 and
2! the profits of any branch% office% warehouse or any other esta#blishment of
the assessee situate outside India1
e! total turno+er shall not include
i! any sum referred to in clauses iiia!% iiib! and iiic! of section 271
ii! any frei5ht% telecommunication char5es or insurance attribu#table to the
deli+ery of the computer software outside India1 and
iii! e$penses% if any% incurred in forei5n e$chan5e in pro+idin5 the technical
ser+ices outside India12
&'
-ea! supportin5 software de+eloper means an Indian company or a person other
than a company! resident in India% de+elopin5 and sellin5 com#puter software
to an e$portin5 company for the purposes of e$port(2
&6
-Deduction in respect of profits and gains from export or transfer of film software,
etc.
80HHF. 1! Fhere an assessee% bein5 an Indian company
&7
-or a person other than a
company! resident in India2% is en5a5ed in the business of e$port or transfer by any means
out of India% of any film software% tele+ision software% music software% tele+ision news
software% includin5 telecast ri5hts hereafter in this section referred to as the software or
software ri5hts!% there shall% in accordance with and sub:ect to the pro+isions of this
section% be allowed% in computin5 the total income of the assessee%
&&
-a deduction to the
e$tent of profits% referred to in sub#section 1"!%2

deri+ed by the assessee from
such business(
1
-1"! >or the purposes of sub#section 1!% the e$tent of deduction of profits shall be an
amount e,ual to
i! ei5hty per cent of such profits for an assessment year be5innin5 on the 1st day
of "pril% 28811
2
"pril% 28821
288)1
2883%2
2! The deduction specified in sub#section 1! shall be allowed only if the consideration
in respect of the software or software ri5hts referred to in that sub#section is recei+ed in%
or brou5ht into% India by the assessee in con+ertible forei5n e$chan5e% within a period of
si$ months from the end of the pre+ious year or within such further period as the
competent authority may allow in this behalf(
)! >or the purposes of sub#section 1!% profits deri+ed from the business referred to in
that sub#section shall be the amount which bears to the profits of the business% the same
proportion as the e$port turno+er bears to the total turno+er of the business carried on by
the assessee(
3! The deduction under sub#section 1! shall not be admissible unless the assessee
)
section(
4! Fhere a deduction under this section is claimed and allowed in respect of profits of
the business referred to in sub#section 1! for any assessment year% no deduction shall be
allowed in relation to such profits under any other pro+ision of this "ct for the same or
any other assessment year(
'! Aotwithstandin5 anythin5 contained in this section% no deduction shall be allowed in
respect of the software or software ri5hts referred to in sub#section 1!% if such business is
prohibited by any law for the time bein5 in force(
a! competent authority means the Reser+e Ban9 of India or such other authority as
is authorised under any law for the time bein5 in force for re5ulatin5 payments
and dealin5s in forei5n e$chan5e1
b! con+ertible forei5n e$chan5e shall ha+e the meanin5 assi5ned to it in clause a!
c! e$port turno+er means the consideration in respect of the software or software
ri5hts specified in clauses d!% e!% g!% h! and i!% recei+ed in% or brou5ht into%
India by the assessee in con+ertible forei5n e$chan5e in accordance with sub#
section 2!% but does not include frei5ht% telecommunication char5es or
insurance attributable to the deli+ery of such software outside India or
e$penses% if any% incurred in forei5n e$chan5e in pro+idin5 the technical
ser+ices outside India1
d! film software means a copy of a cinemato5raph film made by any process
analo5ous to cinemato5raphy on acetate polyester or celluloid film positi+e%
ma5netic tape% di5ital media or other optical or ma5netic de+ices and certified
by the Board of film certification constituted by the .entral ;o+ernment under
section ) of the .inemato5raph "ct% 1&42 )6 of 1&42!1
e! music software includes series of sounds or music recorded on ma5netic tape%
cassette% compact discs and di5ital media which can be played or reproduced on
any appropriate apparatus1
!! profits of the business means the profits of the business as computed under the
A! ninety per cent of any receipts by way of bro9era5e% commission% interest%
rent% char5es or any other receipt of a similar nature included in such
profits1 and
B! the profits of any branch% office% warehouse or any other esta#blishment of
the assessee situated outside India1
g! telecast ri5hts means a licence or contract to e$hibit motion pictures or
tele+ision pro5rammes o+er a tele+ision networ9 either throu5h terrestrial
transmission or throu5h a satellite broadcast in a specified territory1
h! tele+ision news software means a collection of sounds and ima5es% reporta5e%
data and +oice of actualities broadcast either throu5h terrestrial transmission%
wire or satellite% li+e or pre#recorded on +ideo cassettes or di5ital media1
i! tele+ision software means any pro5ramme or series of sounds and ima5es
recorded on film or tape or di5ital media or broadcast throu5h terrestrial
transmitter% satellite or any other means of diffusion1
4! total turno+er shall not include
A! any sum referred to in clauses iiia!% iiib! and iiic! of section 271
B! any frei5ht% telecommunication char5es or insurance attributable to the
deli+ery of the film software% music software% telecast ri5hts% tele+ision
news software% or tele+ision software as defined in clause d!% e!% g!% h! or
i!% as the case may be% outside India1
'! e$penses% if any% incurred in forei5n e$chan5e in pro+idin5 the technical
ser+ices outside India(2
3
-Deduction in respect of profits and gains from industrial undertakings after a
certain date, etc.
4
80-I. 1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed from an industrial underta9in5
'
or a ship or the business of a hotel
6
-or the
business of repairs to ocean#5oin5 +essels or other powered craft2% to which this section
applies% there shall% in accordance with and sub:ect to the pro+isions of this section% be
5ains of an amount e,ual to twenty per cent thereof :
Provided that in the case of an assessee% bein5 a company% the pro+isions of this sub#
section shall ha+e effect
7
-in relation to profits and 5ains deri+ed from an industrial
underta9in5 or a ship or the business of a hotel2 as if for the words twenty per cent% the
words twenty#fi+e per cent had been substituted(
&
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% in relation to any profits
and 5ains deri+ed by an assessee from
i! an industrial underta9in5 which be5ins to manufacture or produce articles or
thin5s or to operate its cold stora5e plant or plants1 or
ii! a ship which is first brou5ht into use1 or
iii! the business of a hotel which starts functionin5%
on or after the 1st day of "pril% 1&&8%
18
-but before the 1st day of "pril% 1&&12% there shall%
in accordance with and sub:ect to the pro+isions of this section% be allowed in computin5
the total income of the assessee% a deduction from such profits and 5ains of an amount
e,ual to twenty#fi+e per cent thereof :
Provided that in the case of an assessee% bein5 a company% the pro+isions of this sub#
section shall ha+e effect in relation to profits and 5ains deri+ed from an industrial
underta9in5 or a ship or the business of a hotel as if for the words twenty#fi+e per cent%
the words thirty per cent had been substituted(2
i! it is not formed
11
by the splittin5 up
11
% or the reconstruction
11
% of a business
already in e$istence1
ii! it is not formed by the transfer
12
to a new business of machinery or plant
pre+iously used for any purpose1
iii! it manufactures or produces
12
any article
12
or thin5% not bein5 any article or
thin5 specified in the list in the Ele+enth *chedule% or operates one or more
cold stora5e plant or plants% in any part of India% and be5ins to manufacture or
produce articles or thin5s or to operate such plant or plants% at any time within
the period of
1)
-ten2 years ne$t followin5 the )1st day of Barch% 1&71% or such
further period as the .entral ;o+ernment may% by notification in the <fficial
;a=ette% specify with reference to any particular industrial underta9in51
i%! in a case where the industrial underta9in5 manufactures or produces articles or
thin5s% the underta9in5 employs ten or more wor9ers in a manufacturin5
process carried on with the aid of power% or employs twenty or more wor9ers in
a manufacturin5 process carried on without the aid of power :
Provided that the condition in clause i! shall not apply in respect of any industrial
underta9in5 which is formed as a result of the re#establishment% reconstruction or re+i+al
by the assessee of the business of any such industrial underta9in5 as is referred to in
section ))B% in the circumstances and within the period specified in that section :
Provided further that the condition in clause iii! shall% in relation to a small#scale
industrial underta9in5% apply as if the words not bein5 any article or thin5 specified in the
list in the Ele+enth *chedule had been omitted(
Explanation 1.>or the purposes of clause ii! of this sub#section% any machinery or plant
which was used outside India by any person other than the assessee shall not be re5arded
as machinery or plant pre+iously used for any purpose% if the followin5 conditions are
fulfilled% namely :
a! such machinery or plant was not% at any time pre+ious to the date of the
b! such machinery or plant is imported into India from any country outside India1
and
c! no deduction on account of depreciation in respect of such machi#nery or plant
has been allowed or is allowable under the pro+isions of this "ct in computin5
the total income of any person for any period prior to the date of the installation
of the machinery or plant by the assessee(
Explanation 2(Fhere in the case of an industrial underta9in5% any machinery or plant or
any part thereof pre+iously used for any purpose is transferred to a new business and the
total +alue of the machinery or plant or part so transferred does not e$ceed twenty per
cent of the total +alue of the machinery or plant used in the business% then% for the
purposes of clause ii! of this sub#section% the condition specified therein shall be deemed
to ha+e been complied with(
Explanation 3(>or the purposes of this sub#section% small#scale industrial underta9in5
shall ha+e the same meanin5 as in clause b! of the Explanation below sub#section 7! of
section 78CC"(
)! This section applies to any ship% where all the followin5 conditions are fulfilled%
namely :
i! it is owned by an Indian company and is wholly used for the purposes of the
business carried on by it1
ii! it was not% pre+ious to the date of its ac,uisition by the Indian company% owned
or used in Indian territorial waters by a person resident in India1 and
iii! it is brou5ht into use by the Indian company at any time within the period of
13
-ten2 years ne$t followin5 the 1st day of "pril% 1&71(
3! This section applies to the business of any hotel% where all the followin5 conditions
i! the business of the hotel is not formed by the splittin5 up% or the reconstruction%
of a business already in e$istence or by the transfer to a new business of a
buildin5 pre+iously used as a hotel or of any machinery or plant pre+iously
used for any purpose1
ii! the business of the hotel is owned and carried on by a company re5istered in
India with a paid#up capital of not less than fi+e hundred thousand rupees1
iii! the hotel is for the time bein5 appro+ed for the purposes of this sub#section by
the .entral ;o+ernment1
i%! the business of the hotel starts functionin5 after the )1st day of Barch% 1&71%
but before the 1st day of "pril%
14
-1&&12(
1'
-3"! This section applies to the business of repairs to ocean#5oin5 +essels or other
powered craft which fulfils all the followin5 conditions% namely :
i! the business is not formed by the splittin5 up% or the reconstruction% of a
business already in e$istence1
iii! it is carried on by an Indian company and the wor9 by way of repairs to ocean#
5oin5 +essels or other powered craft has been commenced by such company
after the )1st day of Barch% 1&7)% but before the 1st day of "pril% 1&771 and
i%! it is for the time bein5 appro+ed for the purposes of this sub#section by the
.entral ;o+ernment(2
4! The deduction specified in sub#section 1! shall be allowed in computin5 the total
income in respect of the assessment year rele+ant to the pre+ious year in which the
industrial underta9in5 be5ins to manufacture or produce articles or thin5s% or to operate
its cold stora5e plant or plants or the ship is first brou5ht into use or the business of the
hotel starts functionin5
16
-or the company commences wor9 by way of repairs to ocean#
5oin5 +essels or other powered craft2 such assessment year bein5 hereafter in this
section referred to as the initial assessment year! and each of the se+en assessment years
immediately succeedin5 the initial assessment year :
Provided that in the case of an assessee% bein5 a co#operati+e society% the pro+isions of
this sub#section shall ha+e effect as if for the words se+en assessment years% the words
nine assessment years had been substituted :
17
-Provided further that in the case of an assessee carryin5 on the business of repairs to
ocean#5oin5 +essels or other powered craft% the pro+isions of this sub#section shall ha+e
effect as if for the words se+en assessment years% the words four assessment years had
been substituted:2
1&
-Provided also that in the case of
i! an industrial underta9in5 which be5ins to manufacture or produce articles or
thin5s or to operate its cold stora5e plant or plants1 or
ii! a ship which is first brou5ht into use1 or
iii! the business of a hotel which starts functionin5%
on or after the 1st day of "pril% 1&&8
28
-but before the 1st day of "pril% 1&&12% pro+isions
of this sub#section shall ha+e effect as if for the words se+en assessment years% the words
nine assessment years had been substituted :
Provided also that in the case of an assessee% bein5 a co#operati+e society% deri+in5
profits and 5ains from an industrial underta9in5 or a ship or a hotel referred to in the third
pro+iso% the pro+isions of that pro+iso shall ha+e effect as if for the words nine
assessment years% the words ele+en assessment years had been substituted(2
'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% the profits and
5ains of an industrial underta9in5 or a ship or the business of a hotel
21
-or the business of
repairs to ocean#5oin5 +essels or other powered craft2 to which the pro+isions of sub#
section 1! apply shall% for the purposes of determinin5 the ,uantum of deduction under
sub#section 1! for the assessment year immediately succeedin5 the initial assessment
year or any subse,uent assessment year% be computed as if such industrial underta9in5 or
ship or the business of the hotel
21
-or the business of repairs to ocean#5oin5 +essels or
other powered craft2 were the only source of income of the assessee durin5 the pre+ious
years rele+ant to the initial assessment year and to e+ery subse,uent assessment year up
to and includin5 the assessment year for which the determination is to be made(
6! Fhere the assessee is a person other than a company or a co#operati+e society% the
deduction under sub#section 1! from profits and 5ains deri+ed from an industrial
underta9in5 shall not be admissible unless the accounts of the industrial underta9in5 for
the pre+ious year rele+ant to the assessment year for which the deduction is claimed ha+e
been audited by an accountant% as defined in the Explanation below sub#section 2! of
section 277% and the assessee furnishes% alon5 with his return of income% the report of
such audit in the prescribed form
22
7! Fhere any 5oods held for the purposes of the business of the industrial underta9in5 or
the hotel or the operation of the ship
2)
-or the business of repairs to ocean#5oin5 +essels
or other powered craft2 are transferred to any other business carried on by the assessee% or
where any 5oods held for the purposes of any other business carried on by the assessee
are transferred to the business of the industrial underta9in5 or the hotel or the operation
of the ship
23
-or the business of repairs to ocean#5oin5 +essels or other powered craft2
and% in either case% the consideration% if any% for such transfer as recorded in the accounts
of the business of the industrial underta9in5 or the hotel or the operation of the ship
23
-or
the business of repairs to ocean#5oin5 +essels or other powered craft2 does not
correspond to the mar9et +alue of such 5oods as on the date of the transfer% then% for the
purposes of the deduction under this section% the profits and 5ains of the industrial
underta9in5 or the business of the hotel or the operation of the ship
23
-or the business of
repairs to ocean#5oin5 +essels or other powered craft2 shall be computed as if the
transfer% in either case% had been made at the mar9et +alue of such 5oods as on that date :
Provided that where% in the opinion of the
24
-"ssessin52 <fficer% the computation of the
profits and 5ains of the industrial underta9in5 or the business of the hotel or the operation
of the ship
23
-or the business of repairs to ocean#5oin5 +essels or other powered craft2 in
the manner hereinbefore specified presents e$ceptional difficulties% the
24
-"ssessin52
<fficer may compute such profits and 5ains on such reasonable basis as he may deem fit(
Explanation(In this sub#section% mar9et +alue% in relation to any 5oods% means the price
that such 5oods would ordinarily fetch on sale in the open mar9et(
&! Fhere it appears to the
24
-"ssessin52 <fficer that% owin5 to the close connection
between the assessee carryin5 on the business of the industrial underta9in5 or the hotel or
the operation of the ship
23
-or the business of repairs to ocean#5oin5 +essels or other
powered craft2 to which this section applies and any other person% or for any other reason%
the course of business between them is so arran5ed that the business transacted between
them produces to the assessee more than the ordinary profits which mi5ht be e$pected to
arise in the business of the industrial underta9in5 or the hotel or the operation of the ship
2'
-or the business of repairs to ocean#5oin5 +essels or other powered craft2% the
26
-"ssessin52 <fficer shall% in computin5 the profits and 5ains of the industrial
underta9in5 or the hotel or the ship
27
-or the business of repairs to ocean#5oin5 +essels or
other powered craft2 for the purposes of the deduction under this section% ta9e the amount
of profits as may be reasonably deemed to ha+e been deri+ed therefrom(
18! The .entral ;o+ernment may% after ma9in5 such in,uiry as it may thin9 fit% direct%
by notification in the <fficial ;a=ette% that the e$emption conferred by this section shall
not apply to any class of industrial underta9in5s with effect from such date as it may
specify in the notification(2
2&
-Deductions in respect of profits and gains from industrial undertakings or
enterprises engaged in infrastructure development, etc.
)8
80-IA.
)1
-1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed by an underta9in5 or an enterprise from any business referred to in sub#section
3! such business bein5 hereinafter referred to as the eli5ible business!% there shall% in
accordance with and sub:ect to the pro+isions of this section% be allowed% in computin5
the total income of the assessee% a deduction of an amount e,ual to hundred per cent of
the profits and 5ains deri+ed from such business for ten consecuti+e assessment years(2
2! The deduction specified in sub#section 1! may% at the option of the assessee% be
claimed by him for any ten consecuti+e assessment years out of fifteen years be5innin5
from the year in which the underta9in5 or the enterprise de+elops and be5ins to operate
any infrastructure facility or starts pro+idin5 telecommunication ser+ice or de+elops an
industrial par9
)2
-or de+elops
))
-***2 a special economic =one referred to in clause iii! of
sub#section 3!2 or 5enerates power or commences transmission or distribution of power
)3
-or underta9es substantial reno+ation and modernisation of the e$istin5 transmission or
distribution lines2 :
)4
-Provided that where the assessee de+elops or operates and maintains or de+elops%
operates and maintains any infrastructure facility referred to in clause a! or clause b! or
clause c! of the Explanation to clause i! of sub#section 3!% the pro+isions of this sub#
section shall ha+e effect as if for the words fifteen years% the words twenty years had been
substituted(2
)'
-2"! Aotwithstandin5 anythin5 contained in sub#section 1! or sub#section 2!% the
deduction in computin5 the total income of an underta9in5 pro+idin5 telecommunication
ser+ices% specified in clause ii! of sub#section 3!% shall be hundred per cent of the profits
and 5ains of the eli5ible business for the first fi+e assessment years commencin5 at any
time durin5 the periods as specified in sub#section 2! and thereafter% thirty per cent of
such profits and 5ains for further fi+e assessment years(2
)! This section applies to
)6
-an
)7
-underta9in52 referred to in
)&
-clause ii! or2 clause i%!
of sub#section 3!2 which fulfils all the followin5 conditions% namely :
i! it is not formed by splittin5 up% or the reconstruction% of a business already in
e$istence :
Provided that this condition shall not apply in respect of an
)7
-underta9in52 which is
formed as a result of the re#establishment% reconstruction or re+i+al by the assessee
of the business of any such
)7
-underta9in52 as is referred to in section ))B% in the
circumstances and within the period specified in that section1
ii! it is not formed by the transfer to a new business of machinery or plant pre+iously
used for any purpose:
38
-Provided that nothin5 contained in this sub#section shall apply in the case of transfer%
either in whole or in part% of machinery or plant pre+iously used by a *tate Electricity
Board referred to in clause 6! of section 2 of the Electricity "ct% 288) )' of 288)!%
whether or not such transfer is in pursuance of the splittin5 up or reconstruction or
reor5anisation of the Board under Part /III of that "ct(2
Explanation 1.>or the purposes of clause ii!% any machinery or plant which was used
outside India by any person other than the assessee shall not be re5arded as machinery or
plant pre+iously used for any purpose% if the followin5 conditions are fulfilled% namely :
b! such machinery or plant is imported into India from any country outside India1
and
c! no deduction on account of depreciation in respect of such machinery or plant
has been allowed or is allowable under the pro+isions of this "ct in computin5
the total income of any person for any period prior to the date of the installation
of machinery or plant by the assessee(
Explanation 2.Fhere in the case of an
31
-underta9in52% any machinery or plant or any part
thereof pre+iously used for any purpose is transferred to a new business and the total
+alue of the machinery or plant or part so transferred does not e$ceed twenty per cent of
the total +alue of the machinery or plant used in the business% then% for the purposes of
clause ii! of this sub#section% the condition specified therein shall be deemed to ha+e
been complied with(
3! This section applies to
i! any enterprise carryin5 on the business
32
-of i! de+elopin5 or ii! operatin5 and
maintainin5 or iii! de+elopin5% operatin5 and maintainin52 any infrastructure
facility which fulfils all the followin5 conditions% namely :
a! it is owned by a company re5istered in India or by a consortium of such
companies
3)
-or b+ an authorit+ or a board or a corpora-tion or an+ other
bod+ established or constituted under an+ 'entral or <tate Act-2
33
-b! it has entered into an a5reement with the .entral ;o+ernment or a *tate
;o+ernment or a local authority or any other statutory body for i!
de+elopin5 or ii! operatin5 and maintainin5 or iii! de+elopin5% operatin5
and maintainin5 a new infrastructure facility12
c! it has started or starts operatin5 and maintainin5 the infrastructure facility
on or after the 1st day of "pril% 1&&4:
Provided that where an infrastructure facility is transferred on or after the
1st day of "pril% 1&&& by an enterprise which de+eloped such infrastructure
facility hereafter referred to in this section as the transferor enterprise! to
another enterprise hereafter in this section referred to as the transferee
enterprise! for the purpose of operatin5 and maintainin5 the infrastructure
facility on its behalf in accordance with the a5reement with the .entral
;o+ernment% *tate ;o+ernment% local authority or statutory body% the
pro+isions of this section shall apply to the transferee enterprise as if it were
the enterprise to which this clause applies and the deduction from profits
and 5ains would be a+ailable to such transferee enterprise for the une$pired
period durin5 which the transferor enterprise would ha+e been entitled to
the deduction% if the transfer had not ta9en place(
34
-Explanation(>or the purposes of this clause% infrastructure facility means
a! a road includin5 toll road% a brid5e or a rail system1
b! a hi5hway pro:ect includin5 housin5 or other acti+ities bein5 an inte5ral
part of the hi5hway pro:ect1
c! a water supply pro:ect% water treatment system% irri5ation pro:ect% sanitation
and sewera5e system or solid waste mana5ement system1
d! a port
3'
% airport% inland waterway or inland port12
36
-ii! any underta9in5 which has started or starts pro+idin5 telecommunication
ser+ices% whether basic or cellular% includin5 radio pa5in5% domestic satellite
ser+ice% networ9 of trun9in5% broadband networ9 and internet ser+ices on or
after the 1st day of "pril% 1&&4% but on or before the )1st day of Barch%
37
-28842(2
Explanation.>or the purposes of this clause% domestic satellite means a satellite
owned and operated by an Indian company for pro+idin5 telecommunication
ser+ice1
iii! any underta9in5 which de+elops% de+elops and operates or maintains and
operates an industrial par9
3&
-or special economic =one2 notified
48
by the
.entral ;o+ernment in accordance with the scheme framed
48
and notified
41
by
that ;o+ernment for the period be5innin5 on the 1st day of "pril% 1&&6 and
endin5 on the )1st day of Barch%
42
-288'2 :
4)
-Provided that in a case where an underta9in5 de+elops an industrial par9 on
or after the 1st day of "pril% 1&&& or a special economic =one on or after the 1st
day of "pril% 2881 and transfers the operation and maintenance of such
industrial par9 or such special economic =one% as the case may be% to another
underta9in5 hereafter in this section referred to as the transferee underta9in5!%
the deduction under sub#section 1! shall be allowed to such transferee
underta9in5 for the remainin5 period in the ten consecuti+e assessment years as
if the operation and maintenance were not so transferred to the transferee
underta9in512
The following second proviso shall be inserted after the first proviso to
clause (iii) of sub-section (4) of section 80-IA by the Finance Act, 2006,
w.e.f. 1-4-2007 :
Provided further that in the case o! an+ underta.ing which de%elops) de%elops
and operates or maintains and operates an industrial par.) the pro%isions o!
this clause shall ha%e e!!ect as i! !or the !igures) letters and words 31st da+ o!
:arch) 2$$6) the !igures) letters and words 31st da+ o! :arch) 2$$#F had been
substituted-
i%! an
43
-underta9in52 which%
a! is set up in any part of India for the 5eneration or 5eneration and
distribution of power if it be5ins to 5enerate power at any time durin5 the
period be5innin5 on the 1st day of "pril% 1&&) and endin5 on the )1st day
of Barch%
43a
44
-2$$62]1
b! starts transmission or distribution by layin5 a networ9 of new transmission
or distribution lines at any time durin5 the period be5innin5 on the 1st day
of "pril% 1&&& and endin5 on the )1st day of Barch%
43a
44
-2$$62] :
Provided that the deduction under this section to an
4'
-underta9in52 under
sub#clause b! shall be allowed only in relation to the profits deri+ed from
layin5 of such networ9 of new lines for transmission or distribution1
46
-c! underta9es substantial reno+ation and modernisation of the e$istin5
networ9 of transmission or distribution lines at any time durin5 the period
be5innin5 on the 1st day of "pril% 2883 and endin5 on the )1st day of
Barch%
46a
2$$6](
Explanation.>or the purposes of this sub#clause% substantial reno+ation and
modernisation means an increase in the plant and machinery in the networ9
of transmission or distribution lines by at least fifty per cent of the boo9
+alue of such plant and machinery as on the 1st day of "pril% 288312
47
*+( an underta.ing owned b+ an 3ndian compan+ and set up !or reconstruction or
re%i%al o! a power generating plant) i!
*a( such 3ndian compan+ is !ormed be!ore the 3$th da+ o! &o%ember) 2$$5
with ma4orit+ e2uit+ participation b+ public sector companies !or the
purposes o! en!orcing the securit+ interest o! the lenders to the compan+
owning the power generating plant and such 3ndian compan+ is noti!ied
4&
be!ore the 31st da+ o! 1ecember) 2$$5 b+ the 'entral 5o%ernment !or the
purposes o! this clause-
*b( such underta.ing begins to generate or transmit or distribute power be!ore
the 31st da+ o! :arch) 2$$.]
4! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% the profits and
5ains of an eli5ible business to which the pro+isions of sub#section 1! apply shall% for the
purposes of determinin5 the ,uantum of deduction under that sub#section for the
assessment year immediately succeedin5 the initial assessment year or any subse,uent
assessment year% be computed as if such eli5ible business were the only source of income
of the assessee durin5 the pre+ious year rele+ant to the initial assessment year and to
e+ery subse,uent assessment year up to and includin5 the assessment year for which the
determination is to be made(
'! Aotwithstandin5 anythin5 contained in sub#section 3!% where housin5 or other
acti+ities are an inte5ral part of the hi5hway pro:ect and the profits of which are
computed on such basis and manner as may be prescribed
'8
% such profit shall not be liable
to ta$ where the profit has been transferred to a special reser+e account and the same is
actually utilised for the hi5hway pro:ect e$cludin5 housin5 and other acti+ities before the
e$piry of three years followin5 the year in which such amount was transferred to the
reser+e account1 and the amount remainin5 unutilised shall be char5eable to ta$ as
income of the year in which such transfer to reser+e account too9 place(
6!
'1
-The deduction2 under sub#section 1! from profits and 5ains deri+ed from an
'2
-underta9in52 shall not be admissible unless the accounts of the
'2
-underta9in52 for the
pre+ious year rele+ant to the assessment year for which the deduction is claimed ha+e
been audited by an accountant% as defined in the Explanation below sub#section 2! of
section 277% and the assessee furnishes% alon5 with his return of income% the report of
such audit in the prescribed form
')
7! Fhere any 5oods
'3
-or ser+ices2 held for the purposes of the eli5ible business are
transferred to any other business carried on by the assessee% or where any 5oods
'3
-or
ser+ices2 held for the purposes of any other business carried on by the assessee are
transferred to the eli5ible business and% in either case% the consideration% if any% for such
transfer as recorded in the accounts of the eli5ible business does not correspond to the
mar9et +alue of such 5oods
'3
-or ser+ices2 as on the date of the transfer% then% for the
purposes of the deduction under this section% the profits and 5ains of such eli5ible
business shall be computed as if the transfer% in either case% had been made at the mar9et
+alue of such 5oods
'3
-or ser+ices2 as on that date :
Provided that where% in the opinion of the "ssessin5 <fficer% the computation of the
profits and 5ains of the eli5ible business in the manner hereinbefore specified presents
e$ceptional difficulties% the "ssessin5 <fficer may compute such profits and 5ains on
such reasonable basis as he may deem fit(
'4
-Explanation.>or the purposes of this sub#section% mar9et +alue% in relation to any 5oods
or ser+ices% means the price that such 5oods or ser+ices would ordinarily fetch in the open
mar9et(2
&! Fhere any amount of profits and 5ains of an
''
-underta9in52 or of an enterprise in the
case of an assessee is claimed and allowed under this section for any assessment year%
deduction to the e$tent of such profits and 5ains shall not be allowed under any other
pro+isions of this .hapter under the headin5 '.1eductions in respect o! certain incomes%
and shall in no case e$ceed the profits and 5ains of such eli5ible business of
''
-underta9in52 or enterprise% as the case may be(
18! Fhere it appears to the "ssessin5 <fficer that% owin5 to the close connection
between the assessee carryin5 on the eli5ible business to which this section applies and
any other person% or for any other reason% the course of business between them is so
arran5ed that the business transacted between them produces to the assessee more than
the ordinary profits which mi5ht be e$pected to arise in such eli5ible business% the
"ssessin5 <fficer shall% in computin5 the profits and 5ains of such eli5ible business for
the purposes of the deduction under this section% ta9e the amount of profits as may be
reasonably deemed to ha+e been deri+ed therefrom(
11! The .entral ;o+ernment may% after ma9in5 such in,uiry as it may thin9 fit% direct%
by notification in the <fficial ;a=ette% that the e$emption conferred by this section shall
not apply to any class of industrial underta9in5 or enterprise with effect from such date as
it may specify in the notification(
12! Fhere any underta9in5 of an Indian company which is entitled to the deduction
the demer5ed company if the amal5amation or demer5er had not ta9en place(
'6
*13( &othing contained in this section shall appl+ to an+ <pecial Economic =ones
noti!ied on or a!ter the 1st da+ o! April) 2$$5 in accordance with the scheme
re!erred to in sub-clause *iii( o! clause *c( o! sub-section *4(.]
'6
Deductions in respect of profits and gains by an undertaking or enterprise
engaged in development of Special Economic Zone.
80-IAB. *1( ,here the gross total income o! an assessee) being a 1e%eloper) includes
an+ pro!its and gains deri%ed b+ an underta.ing or an enterprise !rom an+ business o!
de%eloping a <pecial Economic =one) noti!ied on or a!ter the 1st da+ o! April) 2$$5
under the <pecial Economic =ones Act) 2$$5) there shall) in accordance with and sub4ect
to the pro%isions o! this section) be allowed) in computing the total income o! the
assessee) a deduction o! an amount e2ual to one hundred per cent o! the pro!its and
gains deri%ed !rom such business !or ten consecuti%e assessment +ears.
*2( 7he deduction speci!ied in sub-section *1( ma+) at the option o! the assessee) be
claimed b+ him !or an+ ten consecuti%e assessment +ears out o! !i!teen +ears beginning
!rom the +ear in which a <pecial Economic =one has been noti!ied b+ the 'entral
5o%ernment A
Provided that where in computing the total income o! an+ underta.ing) being a
1e%eloper !or an+ assessment +ear) its pro!its and gains had not been included b+
application o! the pro%isions o! sub-section *13( o! section "$-3A) the underta.ing being
the 1e%eloper shall be entitled to deduction re!erred to in this section onl+ !or the
unexpired period o! ten consecuti%e assessment +ears and therea!ter it shall be eligible
!or deduction !rom income as pro%ided in sub-section *1( or sub-section *2() as the case
ma+ be A
Provided further that in a case where an underta.ing) being a 1e%eloper who de%elops
a <pecial Economic =one on or a!ter the 1st da+ o! April) 2$$5 and trans!ers the
operation and maintenance o! such <pecial Economic =one to another 1e%eloper
*herea!ter in this section re!erred to as the trans!eree 1e%eloper() the deduction under
sub-section *1( shall be allowed to such trans!eree 1e%eloper !or the remaining period in
the ten consecuti%e assessment +ears as i! the operation and maintenance were not so
trans!erred to the trans!eree 1e%eloper.
*3( 7he pro%isions o! sub-section *5( and sub-sections *( to *12( o! section "$-3A shall
appl+ to the <pecial Economic =ones !or the purpose o! allowing deductions under sub-
section *1(.
E$planation(0or the purposes o! this section) 1e%eloper and <pecial Economic =one
shall ha%e the same meanings respecti%el+ as assigned to them in clauses *5( and *=a( o!
section 2 o! the <pecial Economic =ones Act) 2$$5
'6a
]
?eduction in respect of profits and 5ains from certain industrial underta9in5s other than
infrastructure de+elopment underta9in5s(
80-IB. 1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed from any business referred to in sub#sections )! to
'7
-11!% 11"! and 11B!2
such business bein5 hereinafter referred to as the eli5ible business!% there shall% in
accordance with and sub:ect to the pro+isions of this section% be allowed% in computin5
the total income of the assessee% a deduction from such profits and 5ains of an amount
e,ual to such percenta5e and for such number of assessment years as specified in this
section(
i! it is not formed
'&
by splittin5 up
'&
% or the reconstruction
'&
% of a business already
in e$istence :
Provided that this condition shall not apply in respect of an industrial
specified in that section1
iii! it manufactures or produces any article or thin5% not bein5 any article or thin5
specified in the list in the Ele+enth *chedule% or operates one or more cold
stora5e plant or plants% in any part of India :
Provided that the condition in this clause shall% in relation to a small scale
industrial underta9in5 or an industrial underta9in5 referred to in sub#section 3!
shall apply as if the words not bein5 any article or thin5 specified in the list in
the Ele+enth *chedule had been omitted(
Explanation 1.>or the purposes of clause ii!% any machinery or plant which
was used outside India by any person other than the assessee shall not be
re5arded as machinery or plant pre+iously used for any purpose% if the
b! such machinery or plant is imported into India from any country outside
India1 and
c! no deduction on account of depreciation in respect of such machinery or
plant has been allowed or is allowable under the pro+isions of this "ct in
computin5 the total income of any person for any period prior to the date of
the installation of the machinery or plant by the assessee(
Explanation 2.Fhere in the case of an industrial underta9in5% any machinery or
plant or any part thereof pre+iously used for any purpose is transferred to a new
business and the total +alue of the machinery or plant or part so transferred
does not e$ceed twenty per cent of the total +alue of the machinery or plant
used in the business% then% for the purposes of clause ii! of this sub#section% the
condition specified therein shall be deemed to ha+e been complied with1
i%! in a case where the industrial underta9in5 manufactures or produces articles or
thin5s% the underta9in5 employs ten or more wor9ers in a manufacturin5
process carried on with the aid of power% or employs twenty or more wor9ers in
a manufacturin5 process carried on without the aid of power(
)! The amount of deduction in the case of an industrial underta9in5 shall be twenty#fi+e
per cent or thirty per cent where the assessee is a company!% of the profits and 5ains
deri+ed from such industrial underta9in5 for a period of ten consecuti+e assessment years
or twel+e consecuti+e assessment years where the assessee is a co#operati+e society!
be5innin5 with the initial assessment year sub:ect to the fulfilment of the followin5
i! it be5ins to manufacture or produce% articles or thin5s or to operate such plant
or plants at any time durin5 the period be5innin5 from the 1st day of "pril%
1&&1 and endin5 on the )1st day of Barch% 1&&4 or such further period as the
.entral ;o+ernment may% by notification in the <fficial ;a=ette% specify with
reference to any particular underta9in51
ii! where it is an industrial underta9in5 bein5 a small scale industrial underta9in5%
it be5ins to manufacture or produce articles or thin5s or to operate its cold
stora5e plant -not specified in sub#section 3! or sub#section 4!2 at any time
durin5 the period be5innin5 on the 1st day of "pril% 1&&4 and endin5 on the
)1st day of Barch%
68
-28822(
61
3! The amount of deduction in the case of an industrial underta9in5 in an industrially
bac9ward *tate specified in the Ei5hth *chedule shall be hundred per cent of the profits
and 5ains deri+ed from such industrial underta9in5 for fi+e assessment years be5innin5
with the initial assessment year and thereafter twenty#fi+e per cent or thirty per cent
where the assessee is a company! of the profits and 5ains deri+ed from such industrial
underta9in5 :
Provided that the total period of deduction does not e$ceed ten consecuti+e assessment
years or twel+e consecuti+e assessment years where the assessee is a co#operati+e
society! sub:ect to fulfilment of the condition that it be5ins to manufacture or produce
articles or thin5s or to operate its cold stora5e plant or plants durin5 the period be5innin5
on the 1st day of "pril% 1&&) and endin5 on the )1st day of Barch%
62
-28832 :
Provided further that in the case of such industries in the Aorth#Eastern Re5ion% as may
be notified
6)
by the .entral ;o+ernment% the amount of deduction shall be hundred per
cent of profits and 5ains for a period of ten assessment years% and the total period of
deduction shall in such a case not e$ceed ten assessment years :
63
-Provided also that no deduction under this sub#section shall be allowed for the
assessment year be5innin5 on the 1st day of "pril% 2883 or any subse,uent year to any
underta9in5 or enterprise referred to in sub#section 2! of section 78#I.:2
64
-Provided also that in the case of an industrial underta9in5 in the *tate of @ammu and
Dashmir% the pro+isions of the first pro+iso shall ha+e effect as if for the fi5ures% letters
and words )1st day of Barch% 2883% the fi5ures% letters and words )1st day of Barch%
6'
-2$$2 had been substituted :
Provided also that no deduction under this sub#section shall be allowed to an industrial
underta9in5 in the *tate of @ammu and Dashmir which is en5a5ed in the manufacture or
production of any article or thin5 specified in Part . of the Thirteenth *chedule(2
4! The amount of deduction in the case of an industrial underta9in5 located in such
industrially bac9ward districts as the .entral ;o+ernment may% ha+in5 re5ard to the
prescribed 5uidelines
66
% by notification
67
in the <fficial ;a=ette% specify in this behalf as
industrially bac9ward district of cate5ory " or an industrially bac9ward district of
cate5ory B shall be%
i! hundred per cent of the profits and 5ains deri+ed from an industrial underta9in5
located in a bac9ward district of cate5ory " for fi+e assessment years
be5innin5 with the initial assessment year and thereafter% twenty#fi+e per cent
or thirty per cent where the assessee is a company! of the profits and 5ains of
an industrial underta9in5 :
Provided that the total period of deduction shall not e$ceed ten consecuti+e
assessment years or where the assessee is a co#operati+e society% twel+e
consecuti+e assessment years :
Provided further that the industrial underta9in5 be5ins to manufacture or
produce articles or thin5s or to operate its cold stora5e plant or plants at any
time durin5 the period be5innin5 on the 1st day of <ctober% 1&&3 and endin5 on
the )1st day of Barch%
6&
-288321
ii! hundred per cent of the profits and 5ains deri+ed from an industrial underta9in5
located in a bac9ward district of cate5ory B for three assessment years
be5innin5 with the initial assessment year and thereafter% twenty#fi+e per cent
or thirty per cent where the assessee is a company! of the profits and 5ains of
an industrial underta9in5 :
Provided that the total period of deduction does not e$ceed ei5ht consecuti+e
assessment years or where the assessee is a co#operati+e society% twel+e
consecuti+e assessment years! :
Provided further that the industrial underta9in5 be5ins to manufacture or
produce articles or thin5s or to operate its cold stora5e plant or plants at any
time durin5 the period be5innin5 on the 1st day of <ctober% 1&&3 and endin5 on
the )1st day of Barch%
6&
-28832(
'! The amount of deduction in the case of the business of a ship shall be thirty per cent
of the profits and 5ains deri+ed from such ship for a period of ten consecuti+e assessment
years includin5 the initial assessment year pro+ided that the ship
i! is owned by an Indian company and is wholly used for the purposes of the
business carried on by it1
ii! was not% pre+ious to the date of its ac,uisition by the Indian company% owned
or used in Indian territorial waters by a person resident in India1 and
iii! is brou5ht into use by the Indian company at any time durin5 the period
be5innin5 on the 1st day of "pril% 1&&1 and endin5 on the )1st day of Barch%
1&&4(
6! The amount of deduction in the case of any hotel shall be
a! fifty per cent of the profits and 5ains deri+ed from the business of such hotel
for a period of ten consecuti+e years be5innin5 from the initial assessment year
as is located in a hilly area or a rural area or a place of pil5rima5e or such other
place as the .entral ;o+ernment may% ha+in5 re5ard to the need for
de+elopment of infrastructure for tourism in any place and other rele+ant
considerations% specify by notification in the <fficial ;a=ette and such hotel
starts functionin5 at any time durin5 the period be5innin5 on the 1st day of
"pril% 1&&8 and endin5 on the )1st day of Barch% 1&&3 or be5innin5 on the 1st
day of "pril% 1&&6 and endin5 on the )1st day of Barch% 2881:
Provided that nothin5 contained in this clause shall apply to a hotel located at a
place within the municipal :urisdiction whether 9nown as a municipality%
municipal corporation% notified area committee or a cantonment board or by
any other name! of .alcutta% .hennai% ?elhi or Bumbai% which has started or
starts functionin5 on or after the 1st day of "pril% 1&&6 and before the )1st day
of Barch% 2881:
Provided further that the said hotel is appro+ed by the prescribed authority for
the purpose of this clause in accordance with the rules
78
made under this "ct
and where the said hotel is appro+ed by the prescribed authority before the )1st
day of Barch% 1&&2% shall be deemed to ha+e been appro+ed by the prescribed
authority for the purpose of this section in relation to the assessment year
commencin5 on the 1st day of "pril% 1&&11
b! thirty per cent of the profits and 5ains deri+ed from the business of such hotel
as is located in any place other than those mentioned in sub#clause a! for a
period of ten consecuti+e years be5innin5 from the initial assessment year if
such hotel has started or starts functionin5 at any time durin5 the period
be5innin5 on the 1st day of "pril% 1&&1 and endin5 on the )1st day of Barch%
1&&4 or be5innin5 on the 1st day of "pril% 1&&6 and endin5 on the )1st day of
Barch% 2881:
Provided that nothin5 contained in this clause shall apply to a hotel located at a
place within the municipal :urisdiction whether 9nown as a municipality%
municipal corporation% notified area committee% town area committee or a
cantonment board or by any other name! of .alcutta% .hennai% ?elhi or
Bumbai% which has started or starts functionin5 on or after the 1st day of "pril%
1&&6 and before the )1st day of Barch% 28811
c! the deduction under clause a! or clause b! shall be a+ailable only if
i! the business of the hotel is not formed by the splittin5 up% or the
reconstruction% of a business already in e$istence or by the transfer to a new
business of a buildin5 pre+iously used as a hotel or of any machinery or
plant pre+iously used for any purpose1
ii! the business of the hotel is owned and carried on by a company re5istered
in India with a paid#up capital of not less than fi+e hundred thousand
rupees1
iii! the hotel is for the time bein5 appro+ed by the prescribed authority
71
:
Provided that any hotel appro+ed by the prescribed authority
71
before the
1st day of "pril% 1&&& shall be deemed to ha+e been appro+ed under this
sub#section(
72
-6"! The amount of deduction in the case of any multiple$ theatre shall be
a! fifty per cent of the profits and 5ains deri+ed% from the business of buildin5%
ownin5 and operatin5 a multiple$ theatre% for a period of fi+e consecuti+e years
be5innin5 from the initial assessment year in any place :
Provided that nothin5 contained in this clause shall apply to a multiple$ theatre
located at a place within the municipal :urisdiction whether 9nown as a
municipality% municipal corporation% notified area committee or a cantonment
board or by any other name! of .hennai% ?elhi% Bumbai or Dol9ata1
b! the deduction under clause a! shall be allowable only if
i! such multiple$ theatre is constructed at any time durin5 the period
Barch% 28841
ii! the business of the multiple$ theatre is not formed by the splittin5 up% or the
reconstruction% of a business already in e$istence or by the transfer to a new
business of any buildin5 or of any machinery or of plant pre+iously used for
any purpose1
iii! the assessee furnishes alon5with the return of income% the report of an audit
in such form and containin5 such particulars as may be prescribed
7)
and
duly si5ned and +erified by an accountant% as defined in the Explanation
below sub#section 2! of section 277% certifyin5 that the deduction has been
correctly claimed(
6B! The amount of deduction in the case of any con+ention centre shall be
a! fifty per cent of the profits and 5ains deri+ed% by the assessee from the business
of buildin5% ownin5 and operatin5 a con+ention centre% for a period of fi+e
consecuti+e years be5innin5 from the initial assessment year1
b! the deduction under clause a! shall be allowable only if
i! such con+ention centre is constructed at any time durin5 the period
Barch% 28841
ii! the business of the con+ention centre is not formed by the splittin5 up% or
the reconstruction% of a business already in e$istence or by the transfer to a
new business of any buildin5 or of any machinery or plant pre+iously used
for any purpose1
iii! the assessee furnishes alon5with the return of income% the report of an audit
in such form and containin5 such particulars as may be prescribed
73
% and
duly si5ned and +erified by an accountant% as defined in the Explanation
below sub#section 2! of section 277% certifyin5 that the deduction has been
correctly claimed(2
7! The amount of deduction in the case of any company carryin5 on scientific research
and de+elopment shall be hundred per cent of the profits and 5ains of such business for a
period of fi+e assessment years be5innin5 from the initial assessment year if such
company
a! is re5istered in India1
b! has the main ob:ect of scientific and industrial research and de+elopment1
c! is for the time bein5 appro+ed by the prescribed authority
74
at any time before
the 1st day of "pril% 1&&&(
7'
-7"! The amount of deduction in the case of any company carryin5 on scientific
research and de+elopment shall be hundred per cent of the profits and 5ains of such
business for a period of ten consecuti+e assessment years% be5innin5 from the initial
assessment year% if such company
i! is re5istered in India1
ii! has its main ob:ect the scientific and industrial research and de+elopment1
iii! is for the time bein5 appro+ed by the prescribed authority
76
at any time after the
)1st day of Barch% 2888 but before the 1st day of "pril%
77
-2$$21
i%! fulfils such other conditions as may be prescribed
7&
(2
&! The amount of deduction to an underta9in5 which be5ins commercial production or
refinin5 of mineral oil shall be hundred per cent of the profits for a period of se+en
consecuti+e assessment years includin5 the initial assessment year :
Provided that where the underta9in5 is located in Aorth#Eastern Re5ion% it has be5un or
be5ins commercial production of mineral oil before the 1st day of "pril% 1&&6 and where
it is located in any part of India% it be5ins commercial production of mineral oil on or
after the 1st day of "pril% 1&&6 :
Provided further that where the underta9in5 is en5a5ed in refinin5 of mineral oil% it
be5ins refinin5 on or after the 1st day of <ctober% 1&&7(
&8
-18! The amount of deduction in the case of an underta9in5 de+elopin5 and buildin5
housin5 pro:ects appro+ed before the )1st day of Barch% 2886 by a local authority shall
be hundred per cent of the profits deri+ed in the pre+ious year rele+ant to any assessment
year from such housin5 pro:ect if%
a! such underta9in5 has commenced or commences de+elopment and construction
of the housin5 pro:ect on or after the 1st day of <ctober% 1&&7 and completes
such construction%
i! in a case where a housin5 pro:ect has been appro+ed by the local authority
before the 1st day of "pril% 2883% on or before the )1st day of Barch% 28871
ii! in a case where a housin5 pro:ect has been% or% is appro+ed by the local
authority on or after the 1st day of "pril% 2883% within four years from the
end of the financial year in which the housin5 pro:ect is appro+ed by the
local authority(
i! in a case where the appro+al in respect of the housin5 pro:ect is obtained
more than once% such housin5 pro:ect shall be deemed to ha+e been
appro+ed on the date on which the buildin5 plan of such housin5 pro:ect is
first appro+ed by the local authority1
ii! the date of completion of construction of the housin5 pro:ect shall be ta9en
to be the date on which the completion certificate in respect of such housin5
pro:ect is issued by the local authority1
b! the pro:ect is on the si=e of a plot of land which has a minimum area of one
acre:
Provided that nothin5 contained in clause a! or clause b! shall apply to a
housin5 pro:ect carried out in accordance with a scheme framed by the .entral
;o+ernment or a *tate ;o+ernment for reconstruction or rede+elopment of
e$istin5 buildin5s in areas declared to be slum areas under any law for the time
bein5 in force and such scheme is notified by the Board in this behalf1
c! the residential unit has a ma$imum built#up area of one thousand s,uare feet
where such residential unit is situated within the city of ?elhi or Bumbai or
within twenty#fi+e 9ilometres from the municipal limits of these cities and one
thousand and fi+e hundred s,uare feet at any other place1 and
d! the built#up area of the shops and other commercial establishments included in
the housin5 pro:ect does not e$ceed fi+e per cent of the a55re5ate built#up area
of the housin5 pro:ect or two thousand s,uare feet% whiche+er is less(2
11! Aotwithstandin5 anythin5 contained in clause iii! of sub#section 2! and sub#
sections )!% 3! and 4!% the amount of deduction in a case of industrial underta9in5
deri+in5 profit from the business of settin5 up and operatin5 a cold chain facility for
a5ricultural produce% shall be hundred per cent of the profits and 5ains deri+ed from such
industrial underta9in5 for fi+e assessment years be5innin5 with the initial assessment
year and thereafter% twenty#fi+e per cent or thirty per cent where the assessee is a
company! of the profits and 5ains deri+ed from the operation of such facility in a manner
that the total period of deduction does not e$ceed ten consecuti+e assessment years or
twel+e consecuti+e assessment years where the assessee is a co#operati+e society! and
sub:ect to fulfilment of the condition that it be5ins to operate such facility on or after the
1st day of "pril% 1&&& but before the
&1
-1st day of "pril% 28832(
&2
-11"! The amount of deduction in a case of
&)
-an underta9in5 deri+in5 profit from the
business of processin5% preser+ation and pac9a5in5 of fruits or +e5etables or from2 the
inte5rated business of handlin5% stora5e and transportation of food5rains% shall be
hundred per cent of the profits and 5ains deri+ed from such underta9in5 for fi+e
assessment years be5innin5 with the initial assessment year and thereafter% twenty#fi+e
per cent or thirty per cent where the assessee is a company! of the profits and 5ains
deri+ed from the operation of such business in a manner that the total period of deduction
does not e$ceed ten consecuti+e assessment years and sub:ect to fulfilment of the
condition that it be5ins to operate such business on or after the 1st day of "pril% 2881(2
&3
-11B! The amount of deduction in the case of an underta9in5 deri+in5 profits from the
business of operatin5 and maintainin5 a hospital in a rural area shall be hundred per cent
of the profits and 5ains of such business for a period of fi+e consecuti+e assessment
years% be5innin5 with the initial assessment year% if
i! such hospital is constructed at any time durin5 the period be5innin5 on the 1st
day of <ctober% 2883 and endin5 on the )1st day of Barch% 28871
ii! the hospital has at least one hundred beds for patients1
iii! the construction of the hospital is in accordance with the re5ulations% for the
time bein5 in force% of the local authority1 and
i%! the assessee furnishes alon5 with the return of income% the report of audit in
such form and containin5 such particulars as may be prescribed
&4
% and duly
si5ned and +erified by an accountant% as defined in the Explanation below sub#
section 2! of section 277% certifyin5 that the deduction has been correctly
claimed(
Explanation.>or the purposes of this sub#section% a hospital shall be deemed to ha+e been
constructed on the date on which a completion certificate in respect of such construction
is issued by the concerned local authority(2
12! Fhere any underta9in5 of an Indian company which is entitled to the deduction
the demer5ed company if the amal5amation or demer5er had not ta9en place(
1)! The pro+isions contained in sub#section 4! and sub#sections 6! to 12! of section
78#I" shall% so far as may be% apply to the eli5ible business under this section
&'
(
&6
-a! built#up area means the inner measurements of the residential unit at the floor
le+el% includin5 the pro:ections and balconies% as increased by the thic9ness of
the walls but does not include the common areas shared with other residential
units12
&7
-aa!2 cold chain facility means a chain of facilities for stora5e or transportation of
a5ricultural produce under scientifically controlled conditions includin5
refri5eration and other facilities necessary for the preser+ation of such produce1
&&
-
1
-ab!2 con+ention centre means a buildin5 of a prescribed area comprisin5 of
con+ention halls to be used for the purpose of holdin5 conferences and
seminars% bein5 of such si=e and number and ha+in5 such other facilities and
amenities% as may be prescribed
2
12
b! hilly area means any area located at a hei5ht of one thousand metres or more
abo+e the sea le+el1
c! initial assessment year
i! in the case of an industrial underta9in5 or cold stora5e plant or ship or
hotel% means the assessment year rele+ant to the pre+ious year in which the
industrial underta9in5 be5ins to manufacture or produce articles or thin5s%
or to operate its cold stora5e plant or plants or the cold chain facility or the
ship is first brou5ht into use or the business of the hotel starts functionin51
ii! in the case of a company carryin5 on scientific and industrial research and
de+elopment% means the assessment year rele+ant to the pre+ious year in
which the company is appro+ed by the prescribed authority for the purposes
of sub#section 7!1
iii! in the case of an underta9in5 en5a5ed in the business of commercial
production or refinin5 of mineral oil referred to in sub#section &!% means
the assessment year rele+ant to the pre+ious year in which the underta9in5
commences the commercial production or refinin5 of mineral oil1
)
-i%! in the case of an underta9in5 en5a5ed
3
-in the business of processin5%
preser+ation and pac9a5in5 of fruits or +e5etables or2 in the inte5rated
business of handlin5% stora5e and transportation of food5rains% means the
assessment year rele+ant to the pre+ious year in which the underta9in5
be5ins such business12
4
-%! in the case of a multiple$ theatre% means the assessment year rele+ant to the
pre+ious year in which a cinema hall% bein5 a part of the said multiple$
theatre% starts operatin5 on a commercial basis1
%i! in the case of a con+ention centre% means the assessment year rele+ant to
the pre+ious year in which the con+ention centre starts operatin5 on a
commercial basis12
'
-%ii! in the case of an underta9in5 en5a5ed in operatin5 and maintainin5 a
hospital in a rural area% means the assessment year rele+ant to the pre+ious
year in which the underta9in5 be5ins to pro+ide medical ser+ices12
d! Aorth#Eastern Re5ion means the re5ion comprisin5 the *tates of "runachal
Pradesh% "ssam% Banipur% Be5halaya% Bi=oram% Aa5aland% *i99im and
Tripura1
6
-da! multiple$ theatre means a buildin5 of a prescribed area% comprisin5 of two or
more cinema theatres and commercial shops of such si=e and number and
ha+in5 such other facilities and amenities as may be prescribed
7
12
e! place of pil5rima5e means a place where any temple% mos,ue% 5urdwara%
church or other place of public worship of renown throu5hout any *tate or
*tates is situated1
!! rural area means any area other than
i! an area which is comprised within the :urisdiction of a municipality
whether 9nown as a municipality% municipal corporation% notified area
committee% town area committee or by any other name! or a cantonment
board and which has a population of not less than ten thousand accordin5 to
the precedin5 census of which rele+ant fi5ures ha+e been published before
the first day of the pre+ious year1 or
ii! an area within such distance not bein5 more than fifteen 9ilometres from
the local limits of any municipality or cantonment board referred to in sub#
clause i!% as the .entral ;o+ernment may% ha+in5 re5ard to the sta5e of
de+elopment of such area includin5 the e$tent of% and scope for%
urbanisation of such area and other rele+ant considerations specify in this
behalf by notification in the <fficial ;a=ette
&
1
g! small#scale industrial underta9in5 means an industrial underta9in5 which is% as
on the last day of the pre+ious year% re5arded as a small#scale industrial
underta9in5 under section 11B
18
of the Industries ?e+elopment and
Re5ulation! "ct% 1&41 '4 of 1&41!(2
11
-Special provisions in respect of certain undertakings or enterprises in certain
special category States
12
.
80-IC. 1! Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed by an underta9in5 or an enterprise from any business referred to in sub#section
2!% there shall% in accordance with and sub:ect to the pro+isions of this section% be
5ains% as specified in sub#section )!(
2! This section applies to any underta9in5 or enterprise%
a! which has be5un or be5ins to manufacture or produce any article or thin5% not
bein5 any article or thin5 specified in the Thirteenth *chedule% or which
manufactures or produces any article or thin5% not bein5 any article or thin5
specified in the Thirteenth *chedule and underta9es substantial e$pansion
durin5 the period be5innin5
i! on the 2)rd day of ?ecember% 2882 and endin5 before the 1st day of "pril%
2812% in any E$port Processin5 Jone or Inte5rated Infrastructure
?e+elopment .entre or Industrial ;rowth .entre or Industrial Estate or
Industrial Par9 or *oftware Technolo5y Par9 or Industrial "rea or Theme
Par9% as notified by the Board in accordance with the scheme framed and
notified
1)
by the .entral ;o+ernment in this re5ard% in the *tate of *i99im1
or
ii! on the 6th day of @anuary% 288) and endin5 before the 1st day of "pril%
Par9% as notified by the Board in accordance with the scheme framed and
notified
1)
by the .entral ;o+ernment in this re5ard% in the *tate of
Cimachal Pradesh or the *tate of Ettaranchal1 or
iii! on the 23th day of ?ecember% 1&&6 and endin5 before the 1st day of "pril%
Par9% as notified
1)
by the Board in accordance with the scheme framed and
notified by the .entral ;o+ernment in this re5ard% in any of the Aorth#
Eastern *tates1
b! which has be5un or be5ins to manufacture or produce any article or thin5%
specified in the >ourteenth *chedule or commences any operation specified in
that *chedule% or which manufactures or produces any article or thin5% specified
in the >ourteenth *chedule or commences any operation specified in that
*chedule and underta9es substantial e$pansion durin5 the period be5innin5
i! on the 2)rd day of ?ecember% 2882 and endin5 before the 1st day of "pril%
2812% in the *tate of *i99im1 or
ii! on the 6th day of @anuary% 288) and endin5 before the 1st day of "pril%
2812% in the *tate of Cimachal Pradesh or the *tate of Ettaranchal1 or
iii! on the 23th day of ?ecember% 1&&6 and endin5 before the 1st day of "pril%
2886% in any of the Aorth#Eastern *tates(
)! The deduction referred to in sub#section 1! shall be
i! in the case of any underta9in5 or enterprise referred to in sub#clauses i! and
iii! of clause a! or sub#clauses i! and iii! of clause b!% of sub#section 2!%
one hundred per cent of such profits and 5ains for ten assessment years
commencin5 with the initial assessment year1
ii! in the case of any underta9in5 or enterprise referred to in sub#clause ii! of
clause a! or sub#clause ii! of clause b!% of sub#section 2!% one hundred per
cent of such profits and 5ains for fi+e assessment years commencin5 with the
initial assessment year and thereafter% twenty#fi+e per cent or thirty per cent
where the assessee is a company! of the profits and 5ains(
3! This section applies to any underta9in5 or enterprise which fulfils all the followin5
conditions% namely:
i! it is not formed by splittin5 up% or the reconstruction% of a business already in
e$istence :
Provided that this condition shall not apply in respect of an underta9in5 which
is formed as a result of the re#establishment% reconstruction or re+i+al by the
assessee of the business of any such underta9in5 as is referred to in section
Explanation.The pro+isions of Explanations 1 and 2 to sub#section )! of section 78#I"
shall apply for the purposes of clause ii! of this sub#section as they apply for the
purposes of clause ii! of that sub#section(
4! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% in computin5
the total income of the assessee% no deduction shall be allowed under any other section
contained in .hapter 0I" or in section 18" or section 18B% in relation to the profits and
5ains of the underta9in5 or enterprise(
'! Aotwithstandin5 anythin5 contained in this "ct% no deduction shall be allowed to any
underta9in5 or enterprise under this section% where the total period of deduction inclusi+e
of the period of deduction under this section% or under the second pro+iso to sub#section
3! of section 78#IB or under section 18.% as the case may be% e$ceeds ten assessment
years(
6! The pro+isions contained in sub#section 4! and sub#sections 6! to 12! of section 78#
I" shall% so far as may be% apply to the eli5ible underta9in5 or enterprise under this
section
13
(
i! Industrial "rea means such areas% which the Board% may% by notification in the
<fficial ;a=ette% specify in accordance with the scheme framed and notified by
ii! Industrial Estate means such estates% which the Board% may% by notification in
the <fficial ;a=ette% specify in accordance with the scheme framed and notified
by the .entral ;o+ernment1
iii! Industrial ;rowth .entre means such centres% which the Board% may% by
notification in the <fficial ;a=ette% specify in accordance with the scheme
framed and notified by the .entral ;o+ernment1
i%! Industrial Par9 means such par9s% which the Board% may% by notification in the
%! Initial assessment year means the assessment year rele+ant to the pre+ious year
in which the underta9in5 or the enterprise be5ins to manufacture or produce
articles or thin5s% or commences operation or completes substantial e$pansion1
%i! Inte5rated Infrastructure ?e+elopment .entre means such centres% which the
Board% may% by notification in the <fficial ;a=ette% specify in accordance with
the scheme framed and notified by the .entral ;o+ernment1
%ii! Aorth#Eastern *tates means the *tates of "runachal Pradesh% "ssam% Banipur%
Be5halaya% Bi=oram% Aa5aland and Tripura1
%iii! *oftware Technolo5y Par9 means any par9 set up in accordance with the
*oftware Technolo5y Par9 *cheme notified by the ;o+ernment of India in the
Binistry of .ommerce and Industry1
ix! substantial e$pansion means increase in the in+estment in the plant and
machinery by at least fifty per cent of the boo9 +alue of plant and machinery
before ta9in5 depreciation in any year!% as on the first day of the pre+ious year
in which the substantial e$pansion is underta9en1
x! Theme Par9 means such par9s% which the Board% may% by notification in the
the .entral ;o+ernment.2
Deduction in respect of profits and gains from newly established industrial
undertakings or ships or hotel business in certain cases.
801.
14
-/mitted b+ the 0inance *&o. 2( Act) 1##6) w.r.e.!. 1-4-1#"#.2
Deduction in respect of profits and gains from business of poultry farming.
8011.
1'
-/mitted b+ the 0inance Act) 1##) w.e.!. 1-4-1##".2
16
-Deduction in respect of profits and gains from business of collecting and
processing of bio-degradable waste.
8011A. Fhere the 5ross total income of an assessee includes any profits and 5ains
deri+ed from the business of collectin5 and processin5 or treatin5 of bio#de5radable
waste for 5eneratin5 power
17
-or producin5 bio#fertili=ers% bio#pesticides or other
biolo5ical a5ents or for producin5 bio#5as or2 ma9in5 pellets or bri,uettes for fuel or
or5anic manure% there shall be allowed% in computin5 the total income of the assessee%
1&
-a
deduction of an amount e,ual to the whole of such profits and 5ains for a period of fi+e
consecuti+e assessment years be5innin5 with the assessment year rele+ant to the pre+ious
year in which such business commences2(2
28
-Deduction in respect of employment of new workmen.
8011AA.1! Fhere the 5ross total income of an assessee% bein5 an Indian company%
includes any profits and 5ains deri+ed from any industrial underta9in5 en5a5ed in the
manufacture or production of article or thin5% there shall% sub:ect to the conditions
specified in sub#section 2!% be allowed a deduction of an amount e,ual to thirty per cent
of additional wa5es paid to the new re5ular wor9men employed by the assessee in the
pre+ious year for three assessment years includin5 the assessment year rele+ant to the
pre+ious year in which such employment is pro+ided(
2! Ao deduction under sub#section 1! shall be allowed
a! if the industrial underta9in5 is formed by splittin5 up or reconstruction of an
e$istin5 underta9in5 or amal5amation with another industrial underta9in51
b! unless the assessee furnishes alon5 with the return of income the report of the
accountant% as defined in the Explanation below sub#section 2! of section 277
5i+in5 such particulars in the report as may be prescribed
21
(
Explanation.>or the purposes of this section% the e$pressions%
i! additional wa5es means the wa5es paid to the new re5ular wor9men in e$cess
of one hundred wor9men employed durin5 the pre+ious year :
Provided that in the case of an e$istin5 underta9in5% the additional wa5es shall
be nil if the increase in the number of re5ular wor9men employed durin5 the
year is less than ten per cent of e$istin5 number of wor9men employed in such
underta9in5 as on the last day of the precedin5 year1
ii! re5ular wor9man% does not include
a! a casual wor9man1 or
b! a wor9man employed throu5h contract labour1 or
c! any other wor9man employed for a period of less than three hundred days
durin5 the pre+ious year1
iii! wor9man shall ha+e the meanin5 assi5ned to it in clause s! of section 2
22
of the
Industrial ?isputes "ct% 1&36 13 of 1&36!(2
Deduction in respect of dividends attributable to profits and gains from new
industrial undertakings or ships or hotel business.
80K.
2)
-/mitted b+ the 0inance Act) 1#"6) w.e.!. 1-4-1#". /riginal section was inserted)
in place o! section "5 which was deleted) b+ the 0inance *&o. 2( Act) 1#6) w.e.!. 1-4-
1#6".2
Deductions in respect of interest on certain securities, dividends, etc.
80L.
23
-/mitted b+ the 0inance Act) 2$$5) w.e.!. 1-4-2006.2
24
Deductions in respect of certain incomes of Offshore Banking Units and
International Financial Services Centre.
80LA. *1( ,here the gross total income o! an assessee)
*i( being a scheduled ban.) or) an+ ban. incorporated b+ or under the laws o! a
countr+ outside 3ndia- and ha%ing an /!!shore Ban.ing ;nit in a <pecial
Economic =one- or
*ii( being a ;nit o! an 3nternational 0inancial <er%ices 'entre)
includes an+ income re!erred to in sub-section *2() there shall be allowed) in accordance
with and sub4ect to the pro%isions o! this section) a deduction !rom such income) o! an
amount e2ual to
*a( one hundred per cent o! such income !or !i%e consecuti%e assessment +ears
beginning with the assessment +ear rele%ant to the pre%ious +ear in which the
permission) under clause *a( o! sub-section *1( o! section 23 o! the Ban.ing
6egulation Act) 1#4# *1$ o! 1#4#( or permission or registration under the
<ecurities and Exchange Board o! 3ndia Act) 1##2 *15 o! 1##2( or an+ other
rele%ant law was obtained) and therea!ter-
*b( !i!t+ per cent o! such income !or !i%e consecuti%e assessment +ears.
*2( 7he income re!erred to in sub-section *1( shall be the income
*a( !rom an /!!shore Ban.ing ;nit in a <pecial Economic =one- or
*b( !rom the business re!erred to in sub-section *1( o! section 6 o! the Ban.ing
6egulation Act) 1#4# *1$ o! 1#4#( with an underta.ing located in a <pecial
Economic =one or an+ other underta.ing which de%elops) de%elops and
operates or de%elops) operates and maintains a <pecial Economic =one- or
*c( !rom an+ ;nit o! the 3nternational 0inancial <er%ices 'entre !rom its business
!or which it has been appro%ed !or setting up in such a 'entre in a <pecial
Economic =one.
*3( &o deduction under this section shall be allowed unless the assessee !urnishes along
with the return o! income)
*i( the report) in the !orm speci!ied b+ the 'entral Board o! 1irect 7axes under
clause *i( o! sub-section *2(
25a
o! section "$>A) as it stood immediatel+ be!ore
its substitution b+ this section) o! an accountant as de!ined in the E$planation
below sub-section *2( o! section 2"") certi!+ing that the deduction has been
correctl+ claimed in accordance with the pro%isions o! this section
25b
- and
*ii( a cop+ o! the permission obtained under clause *a( o! sub-section *1( o!
section 23 o! the Ban.ing 6egulation Act) 1#4# *1$ o! 1#4#(.
E$planation(0or the purposes o! this section)
*a( 3nternational 0inancial <er%ices 'entre shall ha%e the same meaning as
assigned to it in clause *,( o! section 2 o! the <pecial Economic =ones Act)
2$$5
2'
-
*b( scheduled ban. shall ha%e the same meaning as assigned to it in clause *e( o!
section 2 o! the 6eser%e Ban. o! 3ndia Act) 1#34 *2 o! 1#34(
26
-
*c( <pecial Economic =one shall ha%e the same meaning as assigned to it in
clause *=a(
2'
o! section 2 o! the <pecial Economic =ones Act) 2$$5-
*d( ;nit shall ha%e the same meaning as assigned to it in clause *=c(
2'
o! section
2 o! the <pecial Economic =ones Act) 2$$5.]
27
-Deduction in respect of certain inter-corporate dividends.
80M. -/mitted b+ the 0inance Act) 2$$3) w.e.!. 1-4-2$$4.2

Deduction in the case of an Indian company in respect of royalties, etc., received
from any concern in India.
80MM.
2&
-/mitted b+ the 0inance Act) 1#"3) w.e.!. 1-4-1#"4. /riginal section was
inserted b+ the 0inance Act) 1#6#) w.e.!. 1-4-1#$.2
Deduction in respect of dividends received from certain foreign companies.
80N.
)8
-/mitted b+ the 0inance Act) 1#"5) w.e.!. 1-4-1#"6. 7his topic was originall+
dealt with b+ section "5B which was inserted b+ the 0inance Act) 1#66) w.e.!. 1-4-1#66.
/mitted section "$& was inserted in place o! section "5B which was deleted b+ the
0inance *&o. 2( Act) 1#6) w.e.!. 1-4-1#6".2
)1
-
)2
Deduction in respect of royalties, etc., from certain foreign enterprises.
))
80-O.
)3
-Fhere the 5ross total income of an assessee% bein5 an Indian company
)4
-or a
person other than a company! who is resident in India22% includes
)'
-any income recei+ed
by the assessee from the ;o+ernment of a forei5n *tate or forei5n enterprise
)6
in
consideration for the use
)6
outside India of any patent% in+ention% desi5n or re5istered
trade mar92
)7
-***2
)&
-and such income is recei+ed in con+ertible forei5n e$chan5e in
India% or ha+in5 been recei+ed in con+ertible forei5n e$chan5e outside India% or ha+in5
been con+erted into con+ertible forei5n e$chan5e outside India% is brou5ht into India% by
or on behalf of the assessee in accordance with any law for the time bein5 in force for
re5ulatin5 payments and dealin5s in forei5n e$chan5e% there shall be allowed% in
accordance with and sub:ect to the pro+isions of this section%
38
-a deduction of an amount
e,ual to
i! forty per cent for an assessment year be5innin5 on the 1st day of "pril% 28811
ii! thirty per cent for an assessment year be5innin5 on the 1st day of "pril% 28821
iii! twenty per cent for an assessment year be5innin5 on the 1st day of "pril% 288)1
i%! ten per cent for an assessment year be5innin5 on the 1st day of "pril% 2883%
of the income so recei+ed in% or brou5ht into% India% in computin5 the total income of the
assessee and no deduction shall be allowed in respect of the assessment year be5innin5
on the 1st day of "pril% 2884 and any subse,uent assessment year22 :
31
-***2
32
-Provided
3)
-***2 that such income is recei+ed in India within a period of si$ months
from the end of the pre+ious year% or
33
-within such further period as the competent
authority may allow in this behalf2:2
34
-Provided further that no deduction under this section shall be allowed unless the
assessee furnishes a certificate% in the prescribed form
3'
% alon5 with the return of income%
certifyin5 that the deduction has been correctly claimed in accordance with the pro+isions
of this section(2
36
i! con+ertible forei5n e$chan5e means forei5n e$chan5e which is for the time
the purposes of the law for the time bein5 in force for re5ulatin5 payments and
dealin5s in forei5n e$chan5e1
37
-ii! forei5n enterprise means a person who is a non#resident122
3&
-iii! ser+ices rendered or a5reed to be rendered outside India shall include ser+ices
rendered from India but shall not include ser+ices rendered in India12
48
-i%! competent authority means the Reser+e Ban9 of India or such other authority as
and dealin5s in forei5n e$chan5e(2
2!
41
-***22
42
-Deduction in respect of income of co-operative societies.
4)
80P. 1! Fhere% in the case of an assessee bein5 a co#operati+e society% the 5ross total
income includes any income referred to in sub#section 2!% there shall be deducted% in
accordance with and sub:ect to the pro+isions of this section% the sums specified in sub#
section 2!% in computin5 the total income of the assessee(
a! in the case of a co#operati+e society en5a5ed in
i! carryin5 on the business of ban9in5 or pro+idin5 credit facilities
43
to its
members
43
% or
ii! a cotta5e industry
44
% or
4'
-iii! the mar9etin5
44
of a5ricultural produce 5rown by its members% or2
i%! the purchase of a5ricultural implements% seeds% li+estoc9 or other articles
intended for a5riculture for the purpose of supplyin5 them to its members%
or
%! the processin5% without the aid of power% of the a5ricultural produce of its
members%
46
-or2
46
-%i! the collecti+e disposal of the labour of its members% or
%ii! fishin5 or allied acti+ities% that is to say% the catchin5% curin5% processin5%
preser+in5% storin5 or mar9etin5 of fish or the purchase of materials and
e,uipment in connection therewith for the purpose of supplyin5 them to its
members%2
the whole of the amount of profits and 5ains of business attributable to any one
or more of such acti+ities
47
:
4&
-Provided that in the case of a co#operati+e society fallin5 under sub#clause
%i!% or sub#clause %ii!% the rules and bye#laws of the society restrict the +otin5
ri5hts to the followin5 classes of its members% namely:
1! the indi+iduals who contribute their labour or% as the case may be% carry on
the fishin5 or allied acti+ities1
2! the co#operati+e credit societies which pro+ide financial assistance to the
society1
3! the *tate ;o+ernment12
'8
-b! in the case of a co#operati+e society% bein5 a primary society en5a5ed in
supplyin5 mil9% oilseeds% fruits or +e5etables raised or 5rown by its members to
i! a federal co#operati+e society% bein5 a society en5a5ed in the business of
supplyin5 mil9% oilseeds% fruits% or +e5etables% as the case may be1 or
ii! the ;o+ernment or a local authority1 or
iii! a ;o+ernment company
'1
as defined in section '16 of the .ompanies "ct%
1&4' 1 of 1&4'!% or a corporation established by or under a .entral% *tate
or Pro+incial "ct bein5 a company or corporation en5a5ed in supplyin5
mil9% oilseeds% fruits or +e5etables% as the case may be% to the public!%
the whole of the amount of profits and 5ains of such business12
c! in the case of a co#operati+e society en5a5ed in acti+ities
'2
other than those
specified in clause a! or clause b! either independently of% or in addition to%
all or any of the acti+ities so specified!% so much of its profits and 5ains
attributable
')
to such acti+ities as
'3
-does not e$ceed%
i! where such co#operati+e society is a consumers co#operati+e society%
'4
-one
hundred2 thousand rupees1 and
ii! in any other case%
''
-fifty2 thousand rupees(
Explanation.In this clause% consumers co#operati+e society means a society for
the benefit of the consumers12
d! in respect of any income by way of interest or di+idends deri+ed by the co#
operati+e society from its in+estments with any other co#operati+e society% the
whole of such income1
e! in respect of any income deri+ed by the co#operati+e society from the lettin5 of
5odowns or warehouses
'6
for stora5e% processin5 or facilitatin5 the mar9etin5
of commodities
'6
% the whole of such income1
!! in the case of a co#operati+e society% not bein5 a housin5 society or an urban
consumers society or a society carryin5 on transport business or a society
en5a5ed in the performance of any manufacturin5 operations with the aid of
power% where the 5ross total income does not e$ceed twenty thousand rupees%
the amount of any income by way of interest on securities
'7
-***2 or any
income from house property char5eable under section 22(
Explanation.>or the purposes of this section% an urban consumers co#operati+e society
means a society for the benefit of the consumers within the limits of a municipal
corporation% municipality% municipal committee% notified area committee% town area or
cantonment(
)! In a case where the assessee is entitled also to the deduction under
'&
-***2
68
-section
78CC2
61
-or section 78CC"2
62
-or section 78CCB2
6)
-or section 78CC.2
63
-or section
78CC?2
64
-or section 78#I2
6'
-or section 78#I"2 or section
66
78@
67
-***2
6&
-***2% the
deduction under sub#section 1! of this section% in relation to the sums specified in clause
a! or clause b! or clause c! of sub#section 2!% shall be allowed with reference to the
income% if any% as referred to in those clauses included in the 5ross total income as
reduced by the deductions under
78
-***2
71
-section 78CC%2
72
-section 78CC"%2
7)
-section
78CCB%2
73
-section 78CC.%2
74
-section 78CC?%2
7'
-section 78#I%2
76
-section 78#I"%2
77
-
7&
-section 78@
&8
and section 78@@22(2
3!
&1
-***2
The following sub-section (4) shall be inserted after sub-section (3) of section 80P by
the Finance Act, 2006, w.e.f. 1-4-2007 :
*4( 7he pro%isions o! this section shall not appl+ in relation to an+ co-operati%e ban.
other than a primar+ agricultural credit societ+ or a primar+ co-operati%e agricultural
and rural de%elopment ban..
E$planation.0or the purposes o! this sub-section)
*a( co-operati%e ban. and primar+ agricultural credit societ+ shall ha%e the meanings
respecti%el+ assigned to them in Dart E o! the Ban.ing 6egulation Act) 1#4# *1$ o!
1#4#(-
*b( primar+ co-operati%e agricultural and rural de%elopment ban. means a societ+
ha%ing its area o! operation con!ined to a talu. and the principal ob4ect o! which is
to pro%ide !or long-term credit !or agricultural and rural de%elopment acti%ities.
&2
-Deduction in respect of profits and gains from the business of publication of
books.
&)
80Q. 1! Fhere in the case of an assessee the 5ross total income of the pre+ious year
rele+ant to the assessment year commencin5 on the 1st day of "pril% 1&&2% or to any one
of the four assessment years ne$t followin5 that assessment year% includes any profits and
5ains deri+ed from a business carried on in India of printin5 and publication of boo9s or
publication of boo9s% there shall% in accordance with and sub:ect to the pro+isions of this
section% be allowed% in computin5 the total income of the assessee% a deduction from such
profits and 5ains of an amount e,ual to twenty per cent thereof(
2! In a case where the assessee is entitled also to the deduction under section 78CC or
section 78CC" or section 78CC. or section 78#I or section 78#I" or section 78@
&3
or
section 78P% in relation to any part of the profits and 5ains referred to in sub#section 1!%
the deduction under sub#section 1! shall be allowed with reference to such profits and
5ains included in the 5ross total income as reduced by the deductions under section
78CC% section 78CC"% section 78CC.% section 78#I% section 78#I"% section 78@
&3
and
section 78P(
)! >or the purposes of this section% boo9s shall not include newspapers% :ournals%
ma5a=ines% diaries% brochures% tracts% pamphlets and other publications of a similar nature
by whate+er name called(2
Deduction in respect of profits and gains from the business of publication of books.
80QQ.
&4
-/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#.
/riginal section was inserted b+ the 7axation >aws *Amendment( Act) 1#$) w.e.!. 1-4-
1#1.2
&'
-Deduction in respect of professional income of authors of text books in Indian
languages.
80QQA. 1! Fhere% in the case of an indi+idual resident in India% bein5 an author% the
5ross total income of the pre+ious year rele+ant to the assessment year
&6
-commencin5 on
a! the 1st day of "pril% 1&78% or to any one of the nine assessment years ne$t
followin5 that assessment year1 or
b! the 1st day of "pril% 1&&2% or to any one of the four assessment years ne$t
followin5 that assessment year%
includes2 any income deri+ed by him in the e$ercise of his profession on account of any
lump sum consideration for the assi5nment or 5rant of any of his interests in the
copyri5ht of any boo9% or of royalties or copyri5ht fees whether recei+able in lump sum
or otherwise! in respect of such boo9% there shall% in accordance with and sub:ect to the
pro+isions of this section% be allowed% in computin5 the total income of the assessee% a
deduction from such income of an amount e,ual to twenty#fi+e per cent thereof(
2! Ao deduction under sub#section 1! shall be allowed unless
a! the boo9 is either in the nature of a dictionary% thesaurus or encyclopaedia or is
one that has been prescribed or recommended as a te$t boo9% or included in the
curriculum% by any Eni+ersity% for a de5ree or post#5raduate course of that
Eni+ersity1 and
b! the boo9 is written in any lan5ua5e specified in the Ei5hth *chedule to the
.onstitution
&7
or in any such other lan5ua5e as the .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify in this behalf ha+in5 re5ard to the
need for promotion of publication of boo9s of the nature referred to in clause
a! in that lan5ua5e and other rele+ant factors(
i! author includes a :oint author1
ii! lump sum% in re5ard to royalties or copyri5ht fees% includes an ad+ance
payment on account of such royalties or copyri5ht fees which is not returnable1
iii! Eni+ersity shall ha+e the same meanin5 as in the Explanation to clause ix! of
section 36(2
&&
-Deduction in respect of royalty income, etc., of authors of certain books other
than text-books.
80QQB.1! Fhere% in the case of an indi+idual resident in India% bein5 an author% the
5ross total income includes any income% deri+ed by him in the e$ercise of his profession%
on account of any lump sum consideration for the assi5nment or 5rant of any of his
interests in the copyri5ht of any boo9 bein5 a wor9 of literary% artistic or scientific nature%
or of royalty or copyri5ht fees whether recei+able in lump sum or otherwise! in respect
of such boo9% there shall% in accordance with and sub:ect to the pro+isions of this section%
be allowed% in computin5 the total income of the assessee% a deduction from such income%
computed in the manner specified in sub#section 2!(
2! The deduction under this section shall be e,ual to the whole of such income referred
to in sub#section 1!% or an amount of three la9h rupees% whiche+er is less :
Provided that where the income by way of such royalty or the copyri5ht fee% is not a
lump sum consideration in lieu of all ri5hts of the assessee in the boo9% so much of the
income% before allowin5 e$penses attributable to such income% as is in e$cess of fifteen
per cent of the +alue of such boo9s sold durin5 the pre+ious year shall be i5nored :
Provided further that in respect of any income earned from any source outside India% so
much of the income shall be ta9en into account for the purpose of this section as is
brou5ht into India by% or on behalf of% the assessee in con+ertible forei5n e$chan5e within
a period of si$ months from the end of the pre+ious year in which such income is earned
or within such further period as the competent authority may allow in this behalf(
)! Ao deduction under this section shall be allowed unless the assessee furnishes a
certificate in the prescribed form
1
and in the prescribed manner% duly +erified by any
person responsible for ma9in5 such payment to the assessee as referred to in sub#section
1!% alon5 with the return of income% settin5 forth such particulars as may be prescribed
1
(
3! Ao deduction under this section shall be allowed in respect of any income earned
from any source outside India% unless the assessee furnishes a certificate% in the
prescribed form
2
from the prescribed authority
)
% alon5 with the return of income in the
prescribed manner(
4! Fhere a deduction for any pre+ious year has been claimed and allowed in respect of
any income referred to in this section% no deduction in respect of such income shall be
allowed under any other pro+ision of this "ct in any assessment year(
a! author includes a :oint author1
b! boo9s shall not include brochures% commentaries% diaries% 5uides% :ournals%
ma5a=ines% newspapers% pamphlets% te$t#boo9s for schools% tracts and other
publications of similar nature% by whate+er name called1
c! competent authority means the Reser+e Ban9 of India or such other authority as
and dealin5s in forei5n e$chan5e1
d! lump sum% in re5ard to royalties or copyri5ht fees% includes an ad+ance
payment on account of such royalties or copyri5ht fees which is not returnable(2
3
-Deduction in respect of remuneration from certain foreign sources in the case of
professors, teachers, etc.
4
80R. Fhere the 5ross total income of an indi+idual who is a citi=en of India includes any
remuneration recei+ed by him outside India from any Eni+ersity or other educational
institution established outside India or
'
-any other association or body established outside
India2% for any ser+ice rendered by him durin5 his stay outside India in his capacity as a
professor% teacher or research wor9er in such Eni+ersity% institution% association or body%
there shall be
6
-allowed% in computin5 the total income of the indi+idual%
7
-a deduction
from such remuneration of an amount e,ual to
i! si$ty per cent of such remuneration for an assessment year be5innin5 on the 1st
day of "pril% 28811
ii! forty#fi+e per cent of such remuneration for an assessment year be5innin5 on
the 1st day of "pril% 28821
iii! thirty per cent of such remuneration for an assessment year be5innin5 on the
1st day of "pril% 288)1
i%! fifteen per cent of such remuneration for an assessment year be5innin5 on the
1st day of "pril% 2883%
as is brou5ht into India by% or on behalf of% the assessee in con+ertible forei5n e$chan5e
within a period of si$ months from the end of the pre+ious year or within such further
period as the competent authority may allow in this behalf and no deduction shall be
allowed in respect of the assessment year be5innin5 on the 1st day of "pril% 2884 and any
subse,uent assessment year22 :
&
-Provided that no deduction under this section shall be allowed unless the assessee
furnishes a certificate% in the prescribed form
18
of this section(22
11
-***2
12
-Explanation.>or the purposes of this section% the e$pression competent authority means
1)
-Deduction in respect of professional income from foreign sources in certain cases.
13
80RR. Fhere the 5ross total income of an indi+idual resident in India% bein5 an author%
playwri5ht% artist%
14
-musician% actor or sportsman includin5 an athlete!2% includes any
income deri+ed by him in the e$ercise of his profession from the ;o+ernment of a
forei5n *tate or any person not resident in India%
1'
-there shall be allowed% in computin5
the total income of the indi+idual%
16
-a deduction from such income of an amount e,ual to
i! si$ty per cent of such income for an assessment year be5innin5 on the 1st day
of "pril% 28811
ii! forty#fi+e per cent of such income for an assessment year be5innin5 on the 1st
day of "pril% 28821
iii! thirty per cent of such income for an assessment year be5innin5 on the 1st day
of "pril% 288)1
i%! fifteen per cent of such income for an assessment year be5innin5 on the 1st day
of "pril% 2883%
17
-Provided that no deduction under this section shall be allowed unless the assessee
1&
of this section(22
28
-Explanation.>or the purposes of this section% the e$pression competent authority means
21
-Deduction in respect of remuneration received for services rendered outside
India.
22
80RRA. 1! Fhere the 5ross total income of an indi+idual who is a citi=en of India
includes any remuneration
2)
recei+ed by him in forei5n currency from any employer
2)
bein5 a forei5n employer or an Indian concern! for any ser+ice rendered by him outside
India% there shall% in accordance with and sub:ect to the pro+isions of this section% be
allowed% in computin5 the total income of the indi+idual%
23
-a deduction from such
remuneration of an amount e,ual to
i! si$ty per cent of such remuneration for an assessment year be5innin5 on the 1st
day of "pril% 28811
ii! forty#fi+e per cent of such remuneration for an assessment year be5innin5 on
the 1st day of "pril% 28821
iii! thirty per cent of such remuneration for an assessment year be5innin5 on the
1st day of "pril% 288)1
i%! fifteen per cent of such remuneration for an assessment year be5innin5 on the
1st day of "pril% 2883%
24
-Provided that no deduction under this sub#section shall be allowed unless the assessee
2'
of this section(22
26
-***2
2! The deduction under this section shall be allowed
i! in the case of an indi+idual who is or was% immediately before underta9in5 such
ser+ice% in the employment of the .entral ;o+ernment or any *tate
;o+ernment% only if such ser+ice is sponsored by the .entral ;o+ernment1
ii! in the case of any other indi+idual% only if he is a technician and the terms and
conditions of his ser+ice outside India are appro+ed in this behalf by the
.entral ;o+ernment or the prescribed authority(
a! forei5n currency
27
shall ha+e the meanin5 assi5ned to it in the >orei5n
E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!1
b! forei5n employer means%
i! the ;o+ernment of a forei5n *tate1 or
ii! a forei5n enterprise1 or
iii! any association or body established outside India1
c! technician means a person ha+in5 specialised 9nowled5e and e$perience in
i! constructional or manufacturin5 operations or minin5 or the 5eneration or
distribution of electricity or any other form of power1 or
ii! a5riculture% animal husbandry% dairy farmin5% deep sea fishin5 or ship
buildin51 or
iii! public administration or industrial or business mana5ement1 or
i%! accountancy1 or
%! any field of natural or applied science includin5 medical science! or social
science1 or
%i! any other field which the Board may prescribe
2&
in this behalf%
who is employed in a capacity in which such specialised 9nowled5e and
e$perience are actually utilised12
)8
-d! competent authority means the Reser+e Ban9 of India or such other authority as
and dealin5s in forei5n e$chan5e(2
)1
-Deduction in respect of royalty on patents.
80RRB. 1! Fhere in the case of an assessee% bein5 an indi+idual% who is
a! resident in India1
b! a patentee1
c! in receipt of any income by way of royalty in respect of a patent re5istered on
or after the 1st day of "pril% 288) under the Patents "ct% 1&68 )& of 1&68!% and
his 5ross total income of the pre+ious year includes royalty% there shall% in accordance
with and sub:ect to the pro+isions of this section% be allowed a deduction% from such
income% of an amount e,ual to the whole of such income or three la9h rupees% whiche+er
is less:
Provided that where a compulsory licence is 5ranted in respect of any patent under the
Patents "ct% 1&68 )& of 1&68!% the income by way of royalty for the purpose of allowin5
deduction under this section shall not e$ceed the amount of royalty under the terms and
conditions of a licence settled by the .ontroller under that "ct :
Provided further that in respect of any income earned from any source outside India% so
much of the income% shall be ta9en into account for the purpose of this section as is
brou5ht into India by% or on behalf of% the assessee in con+ertible forei5n e$chan5e within
a period of si$ months from the end of the pre+ious year in which such income is earned
or within such further period as the competent authority referred to in clause c! of the
Explanation to section 78KKB may allow in this behalf(
2! Ao deduction under this section shall be allowed unless the assessee furnishes a
certificate in the prescribed form
)2
% duly si5ned by the prescribed authority
))
% alon5 with
the return of income settin5 forth such particulars as may be prescribed(
)! Ao deduction under this section shall be allowed in respect of any income earned
from any source outside India% unless the assessee furnishes a certificate in the prescribed
form
)3
% from the authority or authorities% as may be prescribed
)4
% alon5 with the return of
income(
3! Fhere a deduction for any pre+ious year has been claimed and allowed in respect of
any income referred to in this section% no deduction in respect of such income shall be
allowed% under any other pro+ision of this "ct in any assessment year(
a! .ontroller shall ha+e the meanin5 assi5ned to it in clause b! of sub#section 1!
of section 2 of the Patents "ct% 1&68 )& of 1&68!
)'
1
b! lump sum includes an ad+ance payment on account of such royalties which is
not returnable1
c! patent means a patent includin5 a patent of addition! 5ranted under the Patents
"ct% 1&68 )& of 1&68!1
d! patentee means the person% bein5 the true and first in+entor of the in+ention%
whose name is entered on the patent re5ister as the patentee% in accordance with
the Patents "ct% 1&68 )& of 1&68!% and includes e+ery such person% bein5 the
true and first in+entor of the in+ention% where more than one person is
re5istered as patentee under that "ct in respect of that patent1
e! patent of addition shall ha+e the meanin5 assi5ned to it in clause 2! of sub#
section 1! of section 2 of the Patents "ct% 1&68 )& of 1&68!
)6
1
!! patented article and patented process shall ha+e the meanin5s respecti+ely
assi5ned to them in clause o! of sub#section 1! of section 2 of the Patents "ct%
1&68 )& of 1&68!
)6
1
g! royalty% in respect of a patent% means consideration includin5 any lump sum
consideration but e$cludin5 any consideration which would be the income of
the recipient char5eable under the head .apital 5ains or consideration for sale
of product manufactured with the use of patented process or of the patented
article for commercial use! for
i! the transfer of all or any ri5hts includin5 the 5rantin5 of a licence! in
respect of a patent1 or
ii! the impartin5 of any information concernin5 the wor9in5 of% or the use of% a
patent1 or
iii! the use of any patent1 or
i%! the renderin5 of any ser+ices in connection with the acti+ities referred to in
sub#clauses i! to iii!1
h! true and first in+entor shall ha+e the meanin5 assi5ned to it in clause +! of sub#
section 1! of section 2 of the Patents "ct% 1&68 )& of 1&68!
)7
(2
31
-1./ther deductions
32
-Deduction in case of a person with disability.
80U. 1! In computin5 the total income of an indi+idual% bein5 a resident% who% at any
time durin5 the pre+ious year% is certified by the medical authority to be a person with
disability% there shall be allowed a deduction of a sum of fifty thousand rupees :
Provided that where such indi+idual is a person with se+ere disability% the pro+isions of
this sub#section shall ha+e effect as if for the words fifty thousand rupees% the words
se+enty#fi+e thousand rupees had been substituted(
2! E+ery indi+idual claimin5 a deduction under this section shall furnish a copy of the
certificate issued by the medical authority in the form and manner% as may be
prescribed
3)
% alon5 with the return of income under section 1)&% in respect of the
assessment year for which the deduction is claimed :
Provided that where the condition of disability re,uires reassessment of its e$tent after a
period stipulated in the aforesaid certificate% no deduction under this section shall be
allowed for any assessment year relatin5 to any pre+ious year be5innin5 after the e$piry
of the pre+ious year durin5 which the aforesaid certificate of disability had e$pired%
unless a new certificate is obtained from the medical authority in the form and manner% as
may be prescribed
3)
% and a copy thereof is furnished alon5 with the return of income
under section 1)&(
33
-Explanation(>or the purposes of this section%
a! disability shall ha+e the meanin5 assi5ned to it in clause i! of section 2 of the
34
% and includes autism% cerebral palsy and
multiple disabilities referred to in clauses a!% c! and h! of section 2
3'
of the
*b( medical authority means the medical authority as referred to in clause p! of
section 2 of the Persons with ?isabilities E,ual <pportunities% Protection of
Ri5hts and >ull Participation! "ct% 1&&4 1 of 1&&'!
36
% or such other medical
authority as may% by notification% be specified by the .entral ;o+ernment for
certifyin5 autism% cerebral palsy% multiple disabilities% person with disability
and se+ere disability referred to in clauses a!% c!% h!% 4! and o! of section 2
of the Aational Trust for Felfare of Persons with "utism% .erebral Palsy%
Bental Retardation and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!
36a
1
c! person with disability means a person referred to in clause t! of section 2 of the
36
% or clause 4! of section 2 of the Aational
Trust for Felfare of Persons with "utism% .erebral Palsy% Bental Retardation
and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!
36a
1
d! person with se+ere disability means
i! a person with ei5hty per cent or more of one or more disabilities% as referred
to in sub#section 3! of section 4' of the Persons with ?isabilities E,ual
<pportunities% Protection of Ri5hts and >ull Participation! "ct% 1&&4 1 of
1&&'!
36
1 or
ii! a person with se+ere disability referred to in clause o! of section 2 of the
Retardation and Bultiple ?isabilities "ct% 1&&& 33 of 1&&&!
36a
(22
CHAPTER VII
INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO INCOME-
TAX IS PAYABLE
81. to 85C. -/mitted b+ the 0inance *&o. 2( Act) 1#6) w.e.!. 1-4-1#6". Dro%isions o!
sections "1) "2) "3) "4) "5) "5A) "5B and "5' were incorporated !rom the same date in
sections "$D) "$G) 1$*2&() "$9 *now omitted() "$H *now omitted() "$: *now omitted()
"$& *now omitted( and "$-/) respecti%el+.2
3&
-Share of member of an association of persons or body of individuals in the income
of the association or body.
86. Fhere the assessee is a member of an association of persons or body of indi+iduals
other than a company or a co#operati+e society or a society re5istered under the *ocieties
Re5istration "ct% 17'8 21 of 17'8!% or under any law correspondin5 to that "ct in force
in any part of India!% income#ta$ shall not be payable by the assessee in respect of his
share in the income of the association or body computed in the manner pro+ided in
section '6" :
Provided that%
a! where the association or body is char5eable to ta$ on its total income at the
ma$imum mar5inal rate or any hi5her rate under any of the pro+isions of this
"ct% the share of a member computed as aforesaid shall not be included in his
total income1
b! in any other case% the share of a member computed as aforesaid shall form part
of his total income :
Provided further that where no income#ta$ is char5eable on the total income of the
association or body% the share of a member computed as aforesaid shall be char5eable to
ta$ as part of his total income and nothin5 contained in this section shall apply to the
case(2
Deduction from tax on certain securities.
86A.
48
-/mitted b+ the 0inance Act) 1#"") w.e.!. 1-4-1#"#. /riginal section was inserted
b+ the 0inance Act) 1#65) w.e.!. 1-4-1#65.2
.C"PTER 0III
41
-REBATES AND RELIEFS]
42
-A.6ebate o! income-tax
Rebate to be allowed in computing income-tax.
87. 1! In computin5 the amount of income#ta$ on the total income of an assessee with
which he is char5eable for any assessment year% there shall be allowed from the amount
of income#ta$ as computed before allowin5 the deductions under this .hapter!% in
accordance with and sub:ect to the pro+isions of
4)
-sections 77% 77"% 77B% 77.% 77? and
77E2% the deductions specified in those sections(
2! The a55re5ate amount of the deductions under section 77 or section 77"
43
-or section
77B2
44
-or section 77.2
4'
-or section 77? or section 77E2 shall not% in any case% e$ceed
the amount of income#ta$ as computed before allowin5 the deductions under this
.hapter! on the total income of the assessee with which he is char5eable for any
assessment year(
Rebate on educational expenses in certain cases.
87A. -/mitted b+ the 0inance *&o. 2( Act) 1#6) w.e.!. 1-4-1#6"(2
Rebate on life insurance premia, contribution to provident fund, etc.
46
88.
47
-1! *ub:ect to the pro+isions of this section% an assessee% bein5 an indi+idual% or a
Cindu undi+ided family% shall be entitled to a deduction% from the amount of income#ta$
as computed before allowin5 the deductions under this .hapter! on his total income with
which he is char5eable for any assessment year% of an amount e,ual to
i! in the case of an indi+idual or a Cindu undi+ided family% whose 5ross total
income before 5i+in5 effect to deductions under .hapter 0I#"% is one la9h fifty
thousand rupees or less% twenty per cent of the a55re5ate of the sums referred to
in sub#section 2!:
Provided that an indi+idual shall be entitled to a deduction of an amount e,ual
to thirty per cent of the a55re5ate of the sums referred to in sub#section 2! if
his income under the head *alaries
a! does not e$ceed one la9h rupees durin5 the pre+ious year before allowin5
the deduction under section 1'1 and
b! is not less than ninety per cent of his 5ross total income% as defined in sub#
section 4! of section 78B1
ii! in the case of an indi+idual or a Cindu undi+ided family% whose 5ross total
income before 5i+in5 effect to deductions under .hapter 0I#"% is more than
one la9h fifty thousand rupees but does not e$ceed fi+e la9h rupees% fifteen per
cent of the a55re5ate of the sums referred to in sub#section 2!1
iii! in the case of an indi+idual or a Cindu undi+ided family% whose 5ross total
income before 5i+in5 effect to deductions under .hapter 0I#"% e$ceeds fi+e
la9h rupees% nil(2
2! The sums referred to in sub#section 1! shall be any sums paid or deposited in the
pre+ious year by the assessee
4&
-***2
i! to effect or to 9eep in force an insurance on the life of persons specified in sub#
section 3!1
ii! to effect or to 9eep in force a contract for a deferred annuity%
'8
-not bein5 an
annuity plan referred to in clause xiiia!2% on the life of persons specified in
sub#section 3! :
Provided that such contract does not contain a pro+ision for the e$ercise by the
insured of an option to recei+e a cash payment in lieu of the payment of the
annuity1
iii! by way of deduction from the salary payable by or on behalf of the ;o+ernment
to any indi+idual bein5 a sum deducted in accordance with the conditions of his
ser+ice% for the purpose of securin5 to him a deferred annuity or ma9in5
pro+ision for his wife or children% in so far as the sum so deducted does not
e$ceed one#fifth of the salary1
i%! as a contribution by an indi+idual to any pro+ident fund to which the Pro+ident
>unds "ct% 1&24 1& of 1&24!% applies1
%! as a contribution to any pro+ident fund set up by the .entral ;o+ernment and
notified
'1
by it in this behalf in the <fficial ;a=ette% where such contribution is
to an account standin5 in the name of any person specified in sub#section 3!1
%i! as a contribution by an employee to a reco5nised pro+ident fund1
%ii! as a contribution by an employee to an appro+ed superannuation fund1
%iii! in a ten#year account or a fifteen#year account under the Post <ffice *a+in5s
Ban9 .umulati+e Time ?eposits! Rules% 1&4&% as amended from time to time%
where such sums are deposited in an account standin5 in the name of the
persons specified in sub#section 3!1
ix! as subscription to any such security of the .entral ;o+ernment
'2
-or any such
deposit scheme2 as that ;o+ernment may% by notification
')
in the <fficial
;a=ette% specify in this behalf1
x! as subscription to the Aational *a+in5s .ertificates 0I Issue! and Aational
*a+in5s .ertificates 0II Issue! issued under the ;o+ernment *a+in5s
.ertificates "ct% 1&4& 3' of 1&4&!1
xi! as subscription to any such sa+in5s certificate
'3
as defined in clause c! of
section 2 of the ;o+ernment *a+in5s .ertificates "ct% 1&4& 3' of 1&4&!% as the
'4
this behalf1
xii! as a contribution%
''
-in the name of any person2 specified in sub#section 3!% for
participation in the Enit#lin9ed Insurance Plan% 1&61 hereafter in this section
referred to as the Enit#lin9ed Insurance Plan! deemed to ha+e been made under
sub#clause a! of clause "! of section 1& of the Enit Trust of India "ct% 1&')
42 of 1&')!1
xiii! as a contribution
'6
-in the name of any person specified in sub#section 3!2 for
participation in any such unit#lin9ed insurance plan of the GI. Butual >und
notified under clause 231! of section 18% as the .entral ;o+ernment may% by
notification
'7
'&
-xiiia! to effect or to 9eep in force a contract for such annuity plan of the Gife
Insurance .orporation
68
-or any other insurer2 as the .entral ;o+ernment may%
by notification
61
in the <fficial ;a=ette% specify1
xiiib! as subscription% not e$ceedin5 ten thousand rupees% to any units of any Butual
>und notified under clause 231! of section 18 or the Enit Trust of India
established under the Enit Trust of India "ct% 1&') 42 of 1&')!% under any
plan formulated in accordance with such scheme as the .entral ;o+ernment
may% by notification in the <fficial ;a=ette% specify in this behalf1
xiiic! as a contribution by an indi+idual to any pension fund set up by any Butual
>und notified under clause 231! of section 18
62
-or by the Enit Trust of India
established under the Enit Trust of India "ct% 1&') 42 of 1&')!2% as the .entral
6)
behalf12
xi%! as subscription to any such deposit scheme of
63
-% or as a contribution to any
such pension fund set up by%2 the Aational Cousin5 Ban9 established under
section ) of the Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76! hereafter in
this section referred to as the Aational Cousin5 Ban9!% as the .entral
64
behalf1
6'
-xi%a! as subscription to any such deposit scheme of
a! a public sector company which is en5a5ed in pro+idin5 lon5#term finance
for construction or purchase of houses in India for residential purposes1 or
b! any authority constituted in India by or under any law enacted either for the
purpose of dealin5 with and satisfyin5 the need for housin5 accommodation
or for the purpose of plannin5% de+elopment or impro+ement of cities%
towns and +illa5es% or for both%
not bein5 a scheme the interest on deposits whereunder ,ualifies for the
purposes of computin5 the deduction under section 78G% as the .entral
;o+ernment may% by notification in the <fficial ;a=ette% specify in this behalf12
66
-xi%b! as tuition fees e$cludin5 any payment towards any de+elopment fees or
donation or payment of similar nature!% whether at the time of admission or
thereafter%
a! to any uni+ersity% colle5e% school or other educational institution situated
within India1
b! for the purpose of full#time education of any of the persons specified in
sub#section 3!12
x%! for the purposes of purchase or construction of a residential house property the
67
-* * *2 income from which is char5eable to ta$ under the head Income from
house property or which would% if it had not been used for the assessees own
residence% ha+e been char5eable to ta$ under that head!% where such payments
are made towards or by way of
a! any instalment or part payment of the amount due under any self#financin5
or other scheme of any de+elopment authority% housin5 board or other
authority en5a5ed in the construction and sale of house property on
ownership basis1 or
b! any instalment or part payment of the amount due to any company or co#
operati+e society of which the assessee is a shareholder or member towards
the cost of the house property allotted to him1 or
c! repayment of the amount borrowed by the assessee from
1! the .entral ;o+ernment or any *tate ;o+ernment% or
2! any ban9% includin5 a co#operati+e ban9% or
3! the Gife Insurance .orporation% or
4! the Aational Cousin5 Ban9% or
5! any public company formed and re5istered in India with the main ob:ect
of carryin5 on the business of pro+idin5 lon5#term finance for
construction or purchase of houses in India for residential purposes
6&
-which is eli5ible for deduction under clause %iii! of sub#section 1! of
section )'2% or
6! any company in which the public are substantially interested or any co#
operati+e society% where such company or co#operati+e society is
en5a5ed in the business of financin5 the construction of houses% or
78
-6A! the assessees employer where such employer is an authority or a board
or a corporation or any other body established or constituted under a
.entral or *tate "ct% or2
! the assessees employer where such employer is a public company or a
public sector company or a Eni+ersity established by law or a colle5e
affiliated to such Eni+ersity or a local authority
71
-or a co#operati+e
society21
d! stamp duty% re5istration fee and other e$penses for the purpose of transfer
of such house property to the assessee%
but shall not include any payment towards or by way of
A! the admission fee% cost of share and initial deposit which a shareholder of a
company or a member of a co#operati+e society has to pay for becomin5
such shareholder or member1 or
B! -/mitted b+ the 0inance *&o. 2( Act) 1##1) w.e.!. 1-4-1##2-2
'! the cost of any addition or alteration to% or reno+ation or repair of% the house
property which is carried out after the issue of the completion certificate in
respect of the house property by the authority competent to issue such
certificate or after the house property or any part thereof has either been
occupied by the assessee or any other person on his behalf or been let out1
or
1! any e$penditure in respect of which deduction is allowable under the
pro+isions of section 231
72
-x%i! as subscription to e,uity shares or debentures formin5 part of any eli5ible issue
of capital appro+ed by the Board on an application made by a public company
7)
-or as subscription to any eli5ible issue of capital by any public financial
institution2 in the prescribed form
73
:
Provided that where a deduction is claimed and allowed under this clause with
reference to the cost of any e,uity shares or debentures% the cost of such shares
or debentures shall not be ta9en into account for the purposes of sections 43E"
and 43EB(
74
-Explanation.>or the purposes of this clause%
i! eli5ible issue of capital means an issue made by a public company formed
and re5istered in India or a public financial institution and the entire
proceeds of the issue are utilised wholly and e$clusi+ely for the purposes of
any business referred to in sub#section 3! of section 78#I"1
ii! public company
7'
shall ha+e the meanin5 assi5ned to it in section ) of the
.ompanies "ct% 1&4' 1 of 1&4'!1
iii! public financial institution
76
shall ha+e the meanin5 assi5ned to it in section
3" of the .ompanies "ct% 1&4' 1 of 1&4'!12
x%ii! as subscription to any units of any mutual fund referred to in clause 231! of
section 18 and appro+ed by the Board on an application made by such mutual
fund in the prescribed form
77
:
Provided that where a deduction is claimed and allowed under this clause with
reference to the cost of units% the cost of such units shall not be ta9en into
account for the purposes of sections 43E" and 43EB :
Provided further that this clause shall apply if the amount of subscription to
such units is subscribed only in the eli5ible issue of capital of any company(
Explanation.>or the purposes of this clause eli5ible issue of capital means an
issue referred to in clause i! of the Explanation to clause x%i! of sub#section
2! of section 77(2
7&
-2"! The pro+isions of sub#section 2! shall apply only to so much of any premium or
other payment made on an insurance policy other than a contract for a deferred annuity as
is not in e$cess of twenty per cent of the actual capital sum assured(
Explanation.In calculatin5 any such actual capital sum% no account shall be ta9en
i! of the +alue of any premiums a5reed to be returned% or
ii! of any benefit by way of bonus or otherwise o+er and abo+e the sum actually
assured% which is to be% or% may be% recei+ed under the policy by any person(2
&8
-)! The sums referred to in sub#section 2! shall be paid or deposited at any time durin5
the pre+ious year% and the assessee% bein5 an indi+idual or a Cindu undi+ided family%
shall be entitled to a deduction under sub#section 1! on so much of the a55re5ate of such
sums paid or deposited as does not e$ceed the total income of the assessee% char5eable to
ta$ durin5 the rele+ant pre+ious year(2
3! The persons referred to in sub#section 2! shall be the followin5% namely :
&1
-a! for the purposes of clauses i!% %!% xii! and xiii! of that sub#section%
i! in the case of an indi+idual% the indi+idual% the wife or husband and any
child of such indi+idual% and
ii! in the case of a Cindu undi+ided family% any member thereof12
b! for the purposes of clause ii! of that sub#section%
i! in the case of an indi+idual% the indi+idual% the wife or husband and any
child of such indi+idual% and
ii!
&2
-***2
c! for the purposes of
&)
-clause %iii!2 of that sub#section%
i! in the case of an indi+idual% such indi+idual or a minor of whom he is the
5uardian1
ii! in the case of a Cindu undi+ided family% any member of the family1
iii!
&3
-***2
&4
-d! for the purpose of clause xi%b! of that sub#section% in the case of an indi+idual%
any two children of such indi+idual(2
&'
-4! Fhere the a55re5ate of any sums specified in clause i! to clause x%ii! of sub#
section 2! e$ceeds an amount of one hundred thousand rupees% a deduction under sub#
section 1! shall be allowed with reference to so much of the a55re5ate as does not
e$ceed an amount of one hundred thousand rupees:
Provided that where the a55re5ate of any sums specified in clause i! to clause x%! of
sub#section 2! e$ceeds an amount of se+enty thousand rupees% a deduction under sub#
section 1! in respect of such sums shall be allowed with reference to so much of the
a55re5ate as does not e$ceed an amount of se+enty thousand rupees:
Provided further that where the a55re5ate of any sums specified in clause x%! of sub#
section 2! e$ceeds an amount of twenty thousand rupees% a deduction under sub#section
1! in respect of such sums shall be allowed with reference to so much of the a55re5ate as
does not e$ceed an amount of twenty thousand rupees:
&6
-Provided also that where the a55re5ate of any sum specified in clause xi%b! of sub#
section 2! e$ceeds an amount of twel+e thousand rupees in respect of a child% a
deduction under sub#section 1! in respect of such sum shall be allowed with reference to
so much of the a55re5ate as does not e$ceed an amount of twel+e thousand rupees in
respect of such child(2
&7
-*5A( -/mitted b+ the 0inance Act) 2$$2) w.e.!. 1-4-2$$3.2
&&
-*6( -/mitted b+ the 0inance Act) 2$$2) w.e.!. 1-4-2$$3.2
6! Fhere% in any pre+ious year% an assessee
i! terminates his contract of insurance referred to in clause i! of sub#section 2!%
by notice to that effect or where the contract ceases to be in force by reason of
failure to pay any premium% by not re+i+in5
1
-contract of insurance%
a! in case of any sin5le premium policy% within two years after the date of
commencement of insurance1 or
b! in any other case% before premiums ha+e been paid for two years1 or2
ii! terminates his participation in any unit#lin9ed insurance plan referred to in
clause xii! or clause xiii! of sub#section 2!% by notice to that effect or where
he ceases to participate by reason of failure to pay any contribution% by not
re+i+in5 his participation% before contributions in respect of such participation
ha+e been paid for fi+e years1 or
iii! transfers the house property referred to in clause x%! of sub#section 2! before
the e$piry of fi+e years from the end of the financial year in which possession
of such property is obtained by him% or recei+es bac9% whether by way of
refund or otherwise% any sum specified in that clause%
then%
a! no deduction shall be allowed to the assessee under sub#section 1! with
reference to any of the sums% referred to in clauses i!% xii!% xiii! and x%! of
sub#section 2!% paid in such pre+ious year1 and
b! the a55re5ate amount of the deductions of income#ta$ so allowed in respect of
the pre+ious year or years precedin5 such pre+ious year% shall be deemed to be
ta$ payable by the assessee in the assessment year rele+ant to such pre+ious
year and shall be added to the ta$ on the total income of the assessee with
which he is char5eable for such assessment year(
2
-6"! If any e,uity shares or debentures% with reference to the cost of which a deduction
is allowed under sub#section 1!% are sold or otherwise transferred by the assessee to any
person at any time within a period of three years from the date of their ac,uisition% the
a55re5ate amount of the deductions of income#ta$ so allowed in respect of such e,uity
shares or debentures in the pre+ious year or years precedin5 the pre+ious year in which
such sale or transfer has ta9en place shall be deemed to be ta$ payable by the assessee for
the assessment year rele+ant to such pre+ious year and shall be added to the amount of
income#ta$ on the total income of the assessee with which he is char5eable for such
assessment year(
Explanation." person shall be treated as ha+in5 ac,uired any shares or debentures on the
date on which his name is entered in relation to those shares or debentures in the re5ister
of members or of debenture#holders% as the case may be% of the public company(2
7! In this section%
i! contribution to any fund shall not include any sums in repayment of loan1
ii! insurance shall include
a! a policy of insurance on the life of an indi+idual or the spouse or the child
of such indi+idual or a member of a Cindu undi+ided family securin5 the
payment of specified sum on the stipulated date of maturity% if such person
is ali+e on such date notwithstandin5 that the policy of insurance pro+ides
only for the return of premiums paid with or without any interest thereon!
in the e+ent of such person dyin5 before the said stipulated date1
b! a policy of insurance effected by an indi+idual or a member of a Cindu
undi+ided family for the benefit of a minor with the ob:ect of enablin5 the
minor% after he has attained ma:ority to secure insurance on his own life by
adoptin5 the policy and on his bein5 ali+e on a date after such adoption!
specified in the policy in this behalf1
iii! Gife Insurance .orporation means the Gife Insurance .orporation of India
established under the Gife Insurance .orporation "ct% 1&4' )1 of 1&4'!1
i%! public company
)
shall ha+e the same meanin5 as in section ) of the .ompanies
"ct% 1&4' 1 of 1&4'!1
%! security means a ;o+ernment security
3
as defined in clause 2! of section 2 of
the Public ?ebt "ct% 1&33 17 of 1&33!1
%i! transfer shall be deemed to include also the transactions referred to in clause !!
of section 2'&E"(
4
-*#( &o deduction !rom the amount o! income-tax shall be allowed under this section to
an assessee) being an indi%idual or a Cindu undi%ided !amil+ !or the assessment +ear
beginning on the 1st da+ o! April) 2$$6 and subse2uent +ears.2
Rebate in respect of investment in certain new shares or units.
88A.
'
-/mitted b+ the 0inance *&o. 2( Act) 1##6) w.r.e.!. 1-4-1##4.2
Rebate of income-tax in case of individuals of sixty-five years or above.
88B.
6
Rebate of income-tax in case of women below sixty-five years.
88C.
7
Rebate of income-tax in case of certain individuals.
88D.
&
18
-Rebate in respect of securities transaction tax.
88E. 1! Fhere the total income of an assessee in a pre+ious year includes any income%
char5eable under the head Profits and 5ains of business or profession% arisin5 from
ta$able securities transactions% he shall be entitled to a deduction% from the amount of
income#ta$ on such income arisin5 from such transactions% computed in the manner
pro+ided in sub#section 2!% of an amount e,ual to the securities transaction ta$ paid by
him in respect of the ta$able securities transactions entered into in the course of his
business durin5 that pre+ious year:
Provided that no deduction under this sub#section shall be allowed unless the assessee
furnishes alon5 with the return of income% e+idence of payment of securities transaction
ta$ in the prescribed form
11
:
Provided further that the amount of deduction under this sub#section shall not e$ceed
the amount of income#ta$ on such income computed in the manner pro+ided in sub#
section 2!(
2! >or the purposes of sub#section 1!% the amount of income#ta$ on the income arisin5
from the ta$able securities transactions% referred to in that sub#section% shall be e,ual to
the amount calculated by applyin5 the a+era5e rate of income#ta$ on such income(
Explanation(>or the purposes of this section% the e$pressions% ta$able securities
transaction and securities transaction ta$ shall ha+e the same meanin5s respecti+ely
assi5ned to them under .hapter 0II of the >inance Ao( 2! "ct% 2883(2
B.6elie! !or income-tax@
12
-Relief when salary, etc., is paid in arrears or in advance.
89. Fhere an assessee is in receipt of a sum in the nature of salary% bein5 paid in arrears
or in ad+ance or is in receipt% in any one financial year% of salary for more than twel+e
months or a payment which under the pro+isions of clause 3! of section 16 is a profit in
lieu of salary% or is in receipt of a sum in the nature of family pension as defined in the
Explanation to clause iia! of section 46% bein5 paid in arrears% due to which his total
income is assessed at a rate hi5her than that at which it would otherwise ha+e been
assessed% the "ssessin5 <fficer shall% on an application made to him in this behalf% 5rant
such relief as may be prescribed
1)
(2
Tax relief in relation to export turnover.
89A. -/mitted b+ the 0inance Act) 1#"3) w.e.!. 1-4-1#"3. 7he pro%isions o! this section
were later substituted b+ scheme contained in section "$CC') inserted b+ the 0inance
Act) 1#"3) w.e.!. 1-4-1#"3. /riginall+ section "#A was inserted b+ the 0inance Act) 1#"2)
w.e.!. 1-6-1#"2.2
CHAPTER IX
DOUBLE TAXATION RELIEF
13
-Agreement with foreign countries.
14
90.
1'
-1!2 The .entral ;o+ernment may enter into an a5reement with the ;o+ernment
of any country outside India
16
-a! for the 5rantin5 of relief in respect of
i! income on which ha+e been paid both income#ta$ under this "ct and
income#ta$ in that country1 or
ii! income#ta$ char5eable under this "ct and under the correspondin5 law in
force in that country to promote mutual economic relations% trade and
in+estment% or2
b! for the a+oidance of double ta$ation of income under this "ct and under the
correspondin5 law in force in that country% or
c! for e$chan5e of information for the pre+ention of e+asion or a+oidance of
income#ta$ char5eable under this "ct or under the correspondin5 law in force
in that country% or in+esti5ation of cases of such e+asion or a+oidance% or
d! for reco+ery of income#ta$ under this "ct and under the correspondin5 law in
force in that country%
and may% by notification in the <fficial ;a=ette% ma9e such pro+isions as may be
necessary for implementin5 the a5reement(2
17
-2! Fhere the .entral ;o+ernment has entered into an a5reement with the ;o+ernment
of any country outside India under sub#section 1! for 5rantin5 relief of ta$% or as the case
may be% a+oidance of double ta$ation% then% in relation to the assessee to whom such
a5reement applies% the pro+isions of this "ct shall apply to the e$tent they are more
beneficial to that assessee(2
1&
-)! "ny term used but not defined in this "ct or in the a5reement referred to in sub#
section 1! shall% unless the conte$t otherwise re,uires% and is not inconsistent with the
pro+isions of this "ct or the a5reement% ha+e the same meanin5 as assi5ned to it in the
notification issued by the .entral ;o+ernment in the <fficial ;a=ette in this behalf(2
28
-Explanation.>or the remo+al of doubts% it is hereby declared that the char5e of ta$ in
respect of a forei5n company at a rate hi5her than the rate at which a domestic company
is char5eable% shall not be re5arded as less fa+ourable char5e or le+y of ta$ in respect of
such forei5n company
21
-***2(2
21a
Adoption by Central Government of agreements between specified associations
for double taxation relief.
90A. *1( An+ speci!ied association in 3ndia ma+ enter into an agreement with an+
speci!ied association in the speci!ied territor+ outside 3ndia and the 'entral 5o%ernment
ma+) b+ noti!ication in the /!!icial 5a8ette) ma.e such pro%isions as ma+ be necessar+
!or adopting and implementing such agreement
*a( !or the granting o! relie! in respect o!
*i( income on which ha%e been paid both income-tax under this Act and income-
tax in an+ speci!ied territor+ outside 3ndia- or
*ii( income-tax chargeable under this Act and under the corresponding law in
!orce in that speci!ied territor+ outside 3ndia to promote mutual economic
relations) trade and in%estment) or
*b( !or the a%oidance o! double taxation o! income under this Act and under the
corresponding law in !orce in that speci!ied territor+ outside 3ndia) or
*c( !or exchange o! in!ormation !or the pre%ention o! e%asion or a%oidance o!
income-tax chargeable under this Act or under the corresponding law in !orce in
that speci!ied territor+ outside 3ndia) or in%estigation o! cases o! such e%asion or
a%oidance) or
*d( !or reco%er+ o! income-tax under this Act and under the corresponding law in
!orce in that speci!ied territor+ outside 3ndia.
*2( ,here a speci!ied association in 3ndia has entered into an agreement with a speci!ied
association o! an+ speci!ied territor+ outside 3ndia under sub-section *1( and such
agreement has been noti!ied under that sub-section) !or granting relie! o! tax) or as the
case ma+ be) a%oidance o! double taxation) then) in relation to the assessee to whom such
agreement applies) the pro%isions o! this Act shall appl+ to the extent the+ are more
bene!icial to that assessee.
*3( An+ term used but not de!ined in this Act or in the agreement re!erred to in sub-
section *1( shall) unless the context otherwise re2uires) and is not inconsistent with the
pro%isions o! this Act or the agreement) ha%e the same meaning as assigned to it in the
noti!ication issued b+ the 'entral 5o%ernment in the /!!icial 5a8ette in this behal!.
E$planation 1(0or the remo%al o! doubts) it is hereb+ declared that the charge o! tax in
respect o! a compan+ incorporated in the speci!ied territor+ outside 3ndia at a rate
higher than the rate at which a domestic compan+ is chargeable) shall not be regarded
as less !a%ourable charge or le%+ o! tax in respect o! such compan+.
E$planation 2(0or the purposes o! this section) the expressions
*a( speci!ied association means an+ institution) association or bod+) whether
incorporated or not) !unctioning under an+ law !or the time being in !orce in 3ndia
or the laws o! the speci!ied territor+ outside 3ndia and which ma+ be noti!ied as
such b+ the 'entral 5o%ernment !or the purposes o! this section-
*b( speci!ied territor+ means an+ area outside 3ndia which ma+ be noti!ied as such b+
the 'entral 5o%ernment !or the purposes o! this section.]
Countries with which no agreement exists.
22
91. 1! If any person who is resident in India in any pre+ious year pro+es that% in respect
of his income which accrued or arose durin5 that pre+ious year outside India and which
is not deemed to accrue or arise in India!% he has paid in any country with which there is
no a5reement under section &8 for the relief or a+oidance of double ta$ation% income#ta$%
by deduction or otherwise% under the law in force in that country% he shall be entitled to
the deduction from the Indian income#ta$ payable by him of a sum calculated on such
doubly ta$ed income
2)
at the Indian rate of ta$ or the rate of ta$ of the said country%
whiche+er is the lower% or at the Indian rate of ta$ if both the rates are e,ual(
2! If any person who is resident in India in any pre+ious year pro+es that in respect of his
income which accrued or arose to him durin5 that pre+ious year in Pa9istan he has paid in
that country% by deduction or otherwise% ta$ payable to the ;o+ernment under any law for
the time bein5 in force in that country relatin5 to ta$ation of a5ricultural income% he shall
be entitled to a deduction from the Indian income#ta$ payable by him
a! of the amount of the ta$ paid in Pa9istan under any law aforesaid on such income
which is liable to ta$ under this "ct also1 or
b! of a sum calculated on that income at the Indian rate of ta$1
whiche+er is less(
)! If any non#resident person is assessed on his share in the income of a re5istered firm
assessed as resident in India in any pre+ious year and such share includes any income
accruin5 or arisin5 outside India durin5 that pre+ious year and which is not deemed to
accrue or arise in India! in a country with which there is no a5reement under section &8
for the relief or a+oidance of double ta$ation and he pro+es that he has paid income#ta$
by deduction or otherwise under the law in force in that country in respect of the income
so included he shall be entitled to a deduction from the Indian income#ta$ payable by him
of a sum calculated on such doubly ta$ed income so included at the Indian rate of ta$ or
the rate of ta$ of the said country% whiche+er is the lower% or at the Indian rate of ta$ if
both the rates are e,ual(
i! the e$pression Indian income#ta$ means income#ta$
23
-***2 char5ed in accordance
with the pro+isions of this "ct1
ii! the e$pression Indian rate of ta$ means the rate determined by di+idin5 the amount
of Indian income#ta$ after deduction of any relief due under the pro+isions of this
"ct but before deduction of any relief due under this
24
-.hapter2% by the total
income1
iii! the e$pression rate of ta$ of the said country means income#ta$ and super#ta$
actually paid in the said country in accordance with the correspondin5 laws in force
in the said country after deduction of all relief due% but before deduction of any
relief due in the said country in respect of double ta$ation% di+ided by the whole
amount of the income as assessed in the said country1
i%! the e$pression income#ta$ in relation to any country includes any e$cess profits ta$
or business profits ta$ char5ed on the profits by the ;o+ernment of any part of that
country or a local authority in that country(
CHAPTER X
SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX
2'
-
26
-Computation of income from international transaction having regard to arms
length price.
92. 1! "ny income arisin5 from an international transaction shall be computed ha+in5
re5ard to the arms len5th price(
Explanation.>or the remo+al of doubts% it is hereby clarified that the allowance for any
e$pense or interest arisin5 from an international transaction shall also be determined
ha+in5 re5ard to the arms len5th price(
2! Fhere in an international transaction% two or more associated enterprises enter into a
mutual a5reement or arran5ement for the allocation or apportionment of% or any
contribution to% any cost or e$pense incurred or to be incurred in connection with a
benefit% ser+ice or facility pro+ided or to be pro+ided to any one or more of such
enterprises% the cost or e$pense allocated or apportioned to% or% as the case may be%
contributed by% any such enterprise shall be determined ha+in5 re5ard to the arms len5th
price of such benefit% ser+ice or facility% as the case may be(
)! The pro+isions of this section shall not apply in a case where the computation of
income under sub#section 1! or the determination of the allowance for any e$pense or
interest under that sub#section% or the determination of any cost or e$pense allocated or
apportioned% or% as the case may be% contributed under sub#section 2!% has the effect of
reducin5 the income char5eable to ta$ or increasin5 the loss% as the case may be%
computed on the basis of entries made in the boo9s of account in respect of the pre+ious
year in which the international transaction was entered into(2
Meaning of associated enterprise.
92A. 1! >or the purposes of this section and sections &2% &2B% &2.% &2?% &2E and &2>%
associated enterprise% in relation to another enterprise% means an enterprise
a! which participates% directly or indirectly% or throu5h one or more
intermediaries% in the mana5ement or control or capital of the other enterprise1
or
b! in respect of which one or more persons who participate% directly or indirectly%
or throu5h one or more intermediaries% in its mana5ement or control or capital%
are the same persons who participate% directly or indirectly% or throu5h one or
more intermediaries% in the mana5ement or control or capital of the other
enterprise(
2!
27
->or the purposes of sub#section 1!% two enterprises shall be deemed to be
associated enterprises if% at any time durin5 the pre+ious year%2
a! one enterprise holds% directly or indirectly% shares carryin5 not less than twenty#
si$ per cent of the +otin5 power in the other enterprise1 or
b! any person or enterprise holds% directly or indirectly% shares carryin5 not less
than twenty#si$ per cent of the +otin5 power in each of such enterprises1 or
c! a loan ad+anced by one enterprise to the other enterprise constitutes not less
than fifty#one per cent of the boo9 +alue of the total assets of the other
enterprise1 or
d! one enterprise 5uarantees not less than ten per cent of the total borrowin5s of
the other enterprise1 or
e! more than half of the board of directors or members of the 5o+ernin5 board% or
one or more e$ecuti+e directors or e$ecuti+e members of the 5o+ernin5 board
of one enterprise% are appointed by the other enterprise1 or
!! more than half of the directors or members of the 5o+ernin5 board% or one or
more of the e$ecuti+e directors or members of the 5o+ernin5 board% of each of
the two enterprises are appointed by the same person or persons1 or
g! the manufacture or processin5 of 5oods or articles or business carried out by
one enterprise is wholly dependent on the use of 9now#how% patents%
copyri5hts% trade#mar9s% licences% franchises or any other business or
commercial ri5hts of similar nature% or any data% documentation% drawin5 or
specification relatin5 to any patent% in+ention% model% desi5n% secret formula or
process% of which the other enterprise is the owner or in respect of which the
other enterprise has e$clusi+e ri5hts1 or
h! ninety per cent or more of the raw materials and consumables re,uired for the
manufacture or processin5 of 5oods or articles carried out by one enterprise% are
supplied by the other enterprise% or by persons specified by the other enterprise%
and the prices and other conditions relatin5 to the supply are influenced by such
other enterprise1 or
i! the 5oods or articles manufactured or processed by one enterprise% are sold to
the other enterprise or to persons specified by the other enterprise% and the
prices and other conditions relatin5 thereto are influenced by such other
enterprise1 or
4! where one enterprise is controlled by an indi+idual% the other enterprise is also
controlled by such indi+idual or his relati+e or :ointly by such indi+idual and
relati+e of such indi+idual1 or
.! where one enterprise is controlled by a Cindu undi+ided family% the other
enterprise is controlled by a member of such Cindu undi+ided family or by a
relati+e of a member of such Cindu undi+ided family or :ointly by such
member and his relati+e1 or
l! where one enterprise is a firm% association of persons or body of indi+iduals%
the other enterprise holds not less than ten per cent interest in such firm%
association of persons or body of indi+iduals1 or
m! there e$ists between the two enterprises% any relationship of mutual interest% as
may be prescribed(
Meaning of international transaction.
92B.1! >or the purposes of this section and sections &2% &2.% &2? and &2E% international
transaction means a transaction between two or more associated enterprises% either or
both of whom are non#residents% in the nature of purchase% sale or lease of tan5ible or
intan5ible property% or pro+ision of ser+ices% or lendin5 or borrowin5 money% or any other
transaction ha+in5 a bearin5 on the profits% income% losses or assets of such enterprises%
and shall include a mutual a5reement or arran5ement between two or more associated
enterprises for the allocation or apportionment of% or any contribution to% any cost or
e$pense incurred or to be incurred in connection with a benefit% ser+ice or facility
pro+ided or to be pro+ided to any one or more of such enterprises(
2! " transaction entered into by an enterprise with a person other than an associated
enterprise shall% for the purposes of sub#section 1!% be deemed to be a transaction entered
into between two associated enterprises% if there e$ists a prior a5reement in relation to the
rele+ant transaction between such other person and the associated enterprise% or the terms
of the rele+ant transaction are determined in substance between such other person and the
associated enterprise(
Computation of arms length price.
92C. 1! The arms len5th price in relation to an international transaction shall be
determined by any of the followin5 methods% bein5 the most appropriate method% ha+in5
re5ard to the nature of transaction or class of transaction or class of associated persons or
functions performed by such persons or such other rele+ant factors as the Board may
prescribe
2&
% namely :
a! comparable uncontrolled price method1
b! resale price method1
c! cost plus method1
d! profit split method1
e! transactional net mar5in method1
!! such other method as may be prescribed
)8
by the Board(
2! The most appropriate method referred to in sub#section 1! shall be applied% for
determination of arms len5th price% in the manner as may be prescribed
)1
:
)2
-Provided that where more than one price is determined by the most appropriate
method% the arms len5th price shall be ta9en to be the arithmetical mean of such prices%
or% at the option of the assessee% a price which may +ary from the arithmetical mean by an
amount not e$ceedin5 fi+e per cent of such arithmetical mean(2
)! Fhere durin5 the course of any proceedin5 for the assessment of income% the
"ssessin5 <fficer is% on the basis of material or information or document in his
possession% of the opinion that
a! the price char5ed or paid in an international transaction has not been
determined in accordance with sub#sections 1! and 2!1 or
b! any information and document relatin5 to an international transaction ha+e not
been 9ept and maintained by the assessee in accordance with the pro+isions
contained in sub#section 1! of section &2? and the rules made in this behalf1 or
c! the information or data used in computation of the arms len5th price is not
reliable or correct1 or
d! the assessee has failed to furnish% within the specified time% any information or
document which he was re,uired to furnish by a notice issued under sub#
section )! of section &2?%
the "ssessin5 <fficer may proceed to determine the arms len5th price in relation to
the said international transaction in accordance with sub#sections 1! and 2!% on the
basis of such material or information or document a+ailable with him:
Provided that an opportunity shall be 5i+en by the "ssessin5 <fficer by ser+in5 a notice
callin5 upon the assessee to show cause% on a date and time to be specified in the notice%
why the arms len5th price should not be so determined on the basis of material or
information or document in the possession of the "ssessin5 <fficer(
3! Fhere an arms len5th price is determined by the "ssessin5 <fficer under sub#section
)!% the "ssessin5 <fficer may compute the total income of the assessee ha+in5 re5ard to
the arms len5th price so determined :
Provided that no deduction under section 18"
)2a
or section 1$AA] or section 18B or
under .hapter 0I#" shall be allowed in respect of the amount of income by which the
total income of the assessee is enhanced after computation of income under this sub#
section :
Provided further that where the total income of an associated enterprise is computed
under this sub#section on determination of the arms len5th price paid to another
associated enterprise from which ta$ has been deducted
))
-or was deductible2 under the
pro+isions of .hapter /0IIB% the income of the other associated enterprise shall not be
recomputed by reason of such determination of arms len5th price in the case of the first
mentioned enterprise(
)3
-Reference to Transfer Pricing Officer.
92CA. 1! Fhere any person% bein5 the assessee% has entered into an international
transaction in any pre+ious year% and the "ssessin5 <fficer considers it necessary or
e$pedient so to do% he may% with the pre+ious appro+al of the .ommissioner% refer the
computation of the arms len5th price in relation to the said international transaction under
section &2. to the Transfer Pricin5 <fficer(
2! Fhere a reference is made under sub#section 1!% the Transfer Pricin5 <fficer shall
ser+e a notice on the assessee re,uirin5 him to produce or cause to be produced on a date
to be specified therein% any e+idence on which the assessee may rely in support of the
computation made by him of the arms len5th price in relation to the international
transaction referred to in sub#section 1!(
)! <n the date specified in the notice under sub#section 2!% or as soon thereafter as may
be% after hearin5 such e+idence as the assessee may produce% includin5 any information
or documents referred to in sub#section )! of section &2? and after considerin5 such
e+idence as the Transfer Pricin5 <fficer may re,uire on any specified points and after
ta9in5 into account all rele+ant materials which he has 5athered% the Transfer Pricin5
<fficer shall% by order in writin5% determine the arms len5th price in relation to the
international transaction in accordance with sub#section )! of section &2. and send a
copy of his order to the "ssessin5 <fficer and to the assessee(
3! <n receipt of the order under sub#section )!% the "ssessin5 <fficer shall proceed to
compute the total income of the assessee under sub#section 3! of section &2. ha+in5
re5ard to the arms len5th price determined under sub#section )! by the Transfer Pricin5
<fficer(
4! Fith a +iew to rectifyin5 any mista9e apparent from the record% the Transfer Pricin5
<fficer may amend any order passed by him under sub#section )!% and the pro+isions of
section 143 shall% so far as may be% apply accordin5ly(
'! Fhere any amendment is made by the Transfer Pricin5 <fficer under sub#section 4!%
he shall send a copy of his order to the "ssessin5 <fficer who shall thereafter proceed to
amend the order of assessment in conformity with such order of the Transfer Pricin5
<fficer(
6! The Transfer Pricin5 <fficer may% for the purposes of determinin5 the arms len5th
price under this section% e$ercise all or any of the powers specified in clauses a! to d! of
sub#section 1! of section 1)1 or sub#section '! of section 1))(
Explanation.>or the purposes of this section% Transfer Pricin5 <fficer means a @oint
.ommissioner or ?eputy .ommissioner or "ssistant .ommissioner authorised by the
Board
)4
to perform all or any of the functions of an "ssessin5 <fficer specified in
sections &2. and &2? in respect of any person or class of persons(2
Maintenance and keeping of information and document by persons entering into an
international transaction.
92D. 1! E+ery person who has entered into an international transaction shall 9eep and
maintain such information and document in respect thereof% as may be prescribed
)'
(
2! Fithout pre:udice to the pro+isions contained in sub#section 1!% the Board may
prescribe the period for which the information and document shall be 9ept and
maintained under that sub#section(
)! The "ssessin5 <fficer or the .ommissioner "ppeals! may% in the course of any
proceedin5 under this "ct% re,uire any person who has entered into an international
transaction to furnish any information or document in respect thereof% as may be
prescribed under sub#section 1!% within a period of thirty days from the date of receipt of
a notice issued in this re5ard :
Provided that the "ssessin5 <fficer or the .ommissioner "ppeals! may% on an
application made by such person% e$tend the period of thirty days by a further period not
e$ceedin5 thirty days(
Report from an accountant to be furnished by persons entering into international
transaction.
92E. E+ery person who has entered into an international transaction durin5 a pre+ious
year shall obtain a report from an accountant and furnish such report on or before the
specified date in the prescribed form duly si5ned and +erified in the prescribed manner by
such accountant and settin5 forth such particulars as may be prescribed
)6
(
Definitions of certain terms relevant to computation of arms length price, etc.
92F. In sections &2% &2"% &2B% &2.% &2? and &2E% unless the conte$t otherwise re,uires%
i! accountant shall ha+e the same meanin5 as in the Explanation below sub#
ii! arms len5th price means a price which is applied or proposed to be applied in a
transaction between persons other than associated enterprises% in uncontrolled
conditions1
iii! enterprise means a person includin5 a permanent establishment of such
person! who is% or has been% or is proposed to be% en5a5ed in any acti+ity%
relatin5 to the production% stora5e% supply% distribution% ac,uisition or control of
articles or 5oods% or 9now#how% patents% copyri5hts% trade#mar9s% licences%
franchises or any other business or commercial ri5hts of similar nature% or any
data% documentation% drawin5 or specification relatin5 to any patent% in+ention%
model% desi5n% secret formula or process% of which the other enterprise is the
owner or in respect of which the other enterprise has e$clusi+e ri5hts% or the
pro+ision of ser+ices of any 9ind%
)7
-or in carryin5 out any wor9 in pursuance of
a contract%2 or in in+estment% or pro+idin5 loan or in the business of ac,uirin5%
holdin5% underwritin5 or dealin5 with shares% debentures or other securities of
any other body corporate% whether such acti+ity or business is carried on%
directly or throu5h one or more of its units or di+isions or subsidiaries% or
whether such unit or di+ision or subsidiary is located at the same place where
the enterprise is located or at a different place or places1
)&
-iiia! permanent establishment% referred to in clause iii!% includes a fi$ed place of
business throu5h which the business of the enterprise is wholly or partly carried
on12
38
-i%! specified date shall ha+e the same meanin5 as assi5ned to due date in
Explanation 2 below sub#section 1! of section 1)&12
%! transaction includes an arran5ement% understandin5 or action in concert%
A! whether or not such arran5ement% understandin5 or action is formal or in
writin51 or
B! whether or not such arran5ement% understandin5 or action is intended to be
enforceable by le5al proceedin5(2
Avoidance of income-tax by transactions resulting in transfer of income to non-
residents.
31
93. 1! Fhere there is a transfer of assets by +irtue or in conse,uence whereof% either
alone or in con:unction with associated operations% any income becomes payable to a
non#resident% the followin5 pro+isions shall apply
a! where any person has% by means of
32
any such transfer% either alone or in
con:unction with associated operations% ac,uired any ri5hts by +irtue of which
he has% within the meanin5 of this section% power to en:oy% whether forthwith or
in the future% any income of a non#resident person which% if it were income of
the first#mentioned person% would be char5eable to income#ta$% that income
shall% whether it would or would not ha+e been char5eable to income#ta$ apart
from the pro+isions of this section% be deemed to be income of the first#
mentioned person for all the purposes of this "ct1
b! where% whether before or after any such transfer% any such first#mentioned
person recei+es or is entitled to recei+e any capital sum the payment whereof is
in any way connected with the transfer or any associated operations% then any
income which% by +irtue or in conse,uence of the transfer% either alone or in
con:unction with associated operations% has become the income of a non#
resident shall% whether it would or would not ha+e been char5eable to income#
ta$ apart from the pro+isions of this section% be deemed to be the income of the
first#mentioned person for all the purposes of this "ct(
Explanation.The pro+isions of this sub#section shall apply also in relation to transfers of
assets and associated operations carried out before the commencement of this "ct(
2! Fhere any person has been char5ed to income#ta$ on any income deemed to be his
under the pro+isions of this section and that income is subse,uently recei+ed by him%
whether as income or in any other form% it shall not a5ain be deemed to form part of his
income for the purposes of this "ct(
)! The pro+isions of this section shall not apply if the first#mentioned person in sub#
section 1! shows to the satisfaction of the
3)
-"ssessin52 <fficer that
a! neither the transfer nor any associated operation had for its purpose
33
or for one
of its purposes the a+oidance of liability to ta$ation1 or
b! the transfer and all associated operations were bona !ide commercial
transactions and were not desi5ned for the purpose of a+oidin5 liability to
ta$ation(
a! references to assets representin5 any assets% income or accumulations of
income include references to shares in or obli5ation of any company to which%
or obli5ation of any other person to whom% those assets% that income or those
accumulations are or ha+e been transferred1
b! any body corporate incorporated outside India shall be treated as if it were a
non#resident1
c! a person shall be deemed to ha+e power to en:oy the income of a non#resident
if
i! the income is in fact so dealt with by any person as to be calculated at some
point of time and% whether in the form of income or not% to enure for the
benefit of the first#mentioned person in sub#section 1!% or
ii! the receipt or accrual of the income operates to increase the +alue to such
first#mentioned person of any assets held by him or for his benefit% or
iii! such first#mentioned person recei+es or is entitled to recei+e at any time any
benefit pro+ided or to be pro+ided out of that income or out of moneys
which are or will be a+ailable for the purpose by reason of the effect or
successi+e effects of the associated operations on that income and assets
which represent that income% or
i%! such first#mentioned person has power by means of the e$ercise of any
power of appointment or power of re+ocation or otherwise to obtain for
himself% whether with or without the consent of any other person% the
beneficial en:oyment of the income% or
%! such first#mentioned person is able% in any manner whatsoe+er and whether
directly or indirectly% to control the application of the income1
d! in determinin5 whether a person has power to en:oy income% re5ard shall be
had to the substantial result and effect of the transfer and any associated
operations% and all benefits which may at any time accrue to such person as a
result of the transfer and any associated operations shall be ta9en into account
irrespecti+e of the nature or form of the benefits(
3! a! "ssets includes property or ri5hts of any 9ind and transfer in relation to ri5hts
includes the creation of those ri5hts 1
b! associated operation% in relation to any transfer% means an operation of any 9ind
effected by any person in relation to
i! any of the assets transferred% or
ii! any assets representin5% whether directly or indirectly% any of the assets
transferred% or
iii! the income arisin5 from any such assets% or
i%! any assets representin5% whether directly or indirectly% the accumulations of
income arisin5 from any such assets 1
c! benefit includes a payment of any 9ind 1
d! capital sum means
i! any sum paid or payable by way of a loan or repayment of a loan 1 and
ii! any other sum paid or payable otherwise than as income% bein5 a sum which is
not paid or payable for full consideration in money or moneys worth(
Avoidance of tax by certain transactions in securities.
34
94. 1! Fhere the owner of any securities in this sub#section and in sub#section 2!
referred to as the owner! sells or transfers those securities% and buys bac9 or reac,uires
the securities% then% if the result of the transaction is that any interest becomin5 payable in
respect of the securities is recei+able otherwise than by the owner% the interest payable as
aforesaid shall% whether it would or would not ha+e been char5eable to income#ta$ apart
from the pro+isions of this sub#section% be deemed% for all the purposes of this "ct% to be
the income of the owner and not to be the income of any other person(
Explanation.The references in this sub#section to buyin5 bac9 or reac,uirin5 the
securities shall be deemed to include references to buyin5 or ac,uirin5 similar securities%
so% howe+er% that where similar securities are bou5ht or ac,uired% the owner shall be
under no 5reater liability to income#ta$ than he would ha+e been under if the ori5inal
securities had been bou5ht bac9 or reac,uired(
2! Fhere any person has had at any time durin5 any pre+ious year any beneficial interest
in any securities% and the result of any transaction relatin5 to such securities or the income
thereof is that% in respect of such securities within such year% either no income is recei+ed
by him or the income recei+ed by him is less than the sum to which the income would
ha+e amounted if the income from such securities had accrued from day to day and been
apportioned accordin5ly% then the income from such securities for such year shall be
deemed to be the income of such person(
)! The pro+isions of sub#section 1! or sub#section 2! shall not apply if the owner% or
the person who has had a beneficial interest in the securities% as the case may be% pro+es
to the satisfaction of the
3'
-"ssessin52 <fficer
a! that there has been no a+oidance of income#ta$% or
b! that the a+oidance of income#ta$ was e$ceptional and not systematic and that
there was not in his case in any of the three precedin5 years any a+oidance of
income#ta$ by a transaction of the nature referred to in sub#section 1! or sub#
section 2!(
3! Fhere any person carryin5 on a business which consists wholly or partly in dealin5 in
securities% buys or ac,uires any securities and sells bac9 or retransfers the securities% then%
if the result of the transaction is that interest becomin5 payable in respect of the securities
is recei+able by him but is not deemed to be his income by reason of the pro+isions
contained in sub#section 1!% no account shall be ta9en of the transaction in computin5 for
any of the purposes of this "ct the profits arisin5 from or loss sustained in the business(
4! *ub#section 3! shall ha+e effect% sub:ect to any necessary modifications% as if
references to sellin5 bac9 or retransferrin5 the securities included references to sellin5 or
transferrin5 similar securities(
'! The
36
-"ssessin52 <fficer may% by notice in writin5% re,uire any person to furnish him
within such time as he may direct not bein5 less than twenty#ei5ht days!% in respect of all
securities of which such person was the owner or in which he had a beneficial interest at
any time durin5 the period specified in the notice% such particulars as he considers
necessary for the purposes of this section and for the purpose of disco+erin5 whether
income#ta$ has been borne in respect of the interest on all those securities(
37
-6! Fhere
a! any person buys or ac,uires any securities or unit within a period of three
months prior to the record date1
3&
-b! such person sells or transfers
i! such securities within a period of three months after such date1 or
ii! such unit within a period of nine months after such date12
c! the di+idend or income on such securities or unit recei+ed or recei+able by such
person is e$empt%
then% the loss% if any% arisin5 to him on account of such purchase and sale of securities or
unit% to the e$tent such loss does not e$ceed the amount of di+idend or income recei+ed
or recei+able on such securities or unit% shall be i5nored for the purposes of computin5
his income char5eable to ta$(2
48
-7! Fhere
a! any person buys or ac,uires any units within a period of three months prior to
the record date1
b! such person is allotted additional units without any payment on the basis of
holdin5 of such units on such date1
c! such person sells or transfers all or any of the units referred to in clause a!
within a period of nine months after such date% while continuin5 to hold all or
any of the additional units referred to in clause b!%
then% the loss% if any% arisin5 to him on account of such purchase and sale of all or any of
such units shall be i5nored for the purposes of computin5 his income char5eable to ta$
and notwithstandin5 anythin5 contained in any other pro+ision of this "ct% the amount of
loss so i5nored shall be deemed to be the cost of purchase or ac,uisition of such
additional units referred to in clause b! as are held by him on the date of such sale or
transfer(2
a! interest includes a di+idend 1
41
-aa! record date means such date as may be fi$ed by
i! a company for the purposes of entitlement of the holder of the securities to
recei+e di+idend1 or
ii! a Butual >und or the "dministrator of the specified underta9in5 or the
specified company as referred to in the Explanation to clause 35! of
section 18% for the purposes of entitlement of the holder of the units to
recei+e income% or additional unit without any consideration% as the case
may be12
b! securities includes stoc9s and shares 1
c! securities shall be deemed to be similar if they entitle their holders to the same
ri5hts a5ainst the same persons as to capital and interest and the same remedies
for the enforcement of those ri5hts% notwithstandin5 any difference in the total
nominal amounts of the respecti+e securities or in the form in which they are
held or in the manner in which they can be transferred1
42
-d! unit shall ha+e the meanin5 assi5ned to it in clause b! of the Explanation to
section 114"B(2
.hapter /II
?etermination of ta$ in certain special cases
4&
-?etermination of ta$ where total income includes income on which no ta$ is payable(
110. Fhere there is included in the total income of an assessee any income on which no
income#ta$ is payable under the pro+isions of this "ct% the assessee shall be entitled to a
deduction% from the amount of income#ta$ with which he is char5eable on his total
income% of an amount e,ual to the income#ta$ calculated at the a+era5e rate of income#
ta$ on the amount on which no income#ta$ is payable(2

Tax on accumulated balance of recognised provident fund.
111. 1! Fhere the accumulated balance due to an employee participatin5 in a reco5nised
pro+ident fund is included in his total income% owin5 to the pro+isions of rule 7 of Part "
of the >ourth *chedule not bein5 applicable% the
'8
-"ssessin52 <fficer shall calculate the
total of the +arious sums of
'1
-ta$2 in accordance with the pro+isions of sub#rule 1! of
rule & thereof(
2! Fhere the accumulated balance due to an employee participatin5 in a reco5nised
pro+ident fund which is not included in his total income under the pro+isions of rule 7 of
Part " of the >ourth *chedule becomes payable% super#ta$ shall be calculated in the
manner pro+ided in sub#rule 2! of rule & thereof(
'2
-Tax on short term capital gains in certain cases.
111A. 1! Fhere the total income of an assessee includes any income char5eable under
the head .apital 5ains% arisin5 from the transfer of a short#term capital asset% bein5 an
e,uity share in a company or a unit of an e,uity oriented fund and
a! the transaction of sale of such e,uity share or unit is entered into on or after the
date on which .hapter 0II of the >inance Ao( 2! "ct% 2883 comes into force1
and
b! such transaction is char5eable to securities transaction ta$ under that .hapter%
the ta$ payable by the assessee on the total income shall be the a55re5ate of
i! the amount of income#ta$ calculated on such short#term capital 5ains at the rate
of ten per cent1 and
ii! the amount of income#ta$ payable on the balance amount of the total income as
if such balance amount were the total income of the assessee:
Provided that in the case of an indi+idual or a Cindu undi+ided family% bein5 a resident%
where the total income as reduced by such short#term capital 5ains is below the
ma$imum amount which is not char5eable to income#ta$% then% such short#term capital
5ains shall be reduced by the amount by which the total income as so reduced falls short
of the ma$imum amount which is not char5eable to income#ta$ and the ta$ on the
balance of such short#term capital 5ains shall be computed at the rate of ten per cent(
2! Fhere the 5ross total income of an assessee includes any short term capital 5ains
referred to in sub#section 1!% the deduction under .hapter 0I#" shall be allowed from
the 5ross total income as reduced by such capital 5ains(
)! Fhere the total income of an assessee includes any short term capital 5ains referred to
in sub#section 1!% the rebate under section 77 shall be allowed from the income#ta$ on
the total income as reduced by such capital 5ains(
Explanation.>or the purposes of this section% the e$pression e,uity oriented fund shall
ha+e the meanin5 assi5ned to it in the Explanation to clause 3"! of section 18(2
63
-Tax on long-term capital gains.
'3
112. 1! Fhere the total income of an assessee includes any income% arisin5 from the
transfer of a lon5#term capital asset% which is char5eable under the head .apital 5ains% the
ta$ payable by the assessee on the total income shall be the a55re5ate of%
a! in the case of an indi+idual or a Cindu undi+ided family%
'4
-bein5 a resident%2
i! the amount of income#ta$ payable on the total income as reduced by the
amount of such lon5#term capital 5ains% had the total income as so reduced
been his total income 1 and
ii! the amount of income#ta$ calculated on such lon5#term capital 5ains at the
rate of twenty per cent :
Provided that where the total income as reduced by such lon5#term capital
5ains is below the ma$imum amount which is not char5eable to income#ta$%
then% such lon5#term capital 5ains shall be reduced by the amount by which the
total income as so reduced falls short of the ma$imum amount which is not
char5eable to income#ta$ and the ta$ on the balance of such lon5#term capital
5ains shall be computed at the rate of twenty per cent 1
b! in the case of a
''
-domestic2 company%
been its total income 1 and
rate of
'6
-twenty2 per cent :
'7
-***2
'&
-c! in the case of a non#resident not bein5 a company! or a forei5n company%
been its total income 1 and
rate of twenty per cent 12
68
-d!2 in any other case
61
-of a resident2%
amount of lon5#term capital 5ains% had the total income as so reduced been
its total income 1 and
rate of
62
-twenty2 per cent(
Explanation.
6)
-***2
63
-Provided that where the ta$ payable in respect of any income arisin5 from the transfer
of a lon5#term capital asset% bein5 listed securities
64
-or unit2
6'
-or 8ero coupon bond2%
e$ceeds ten per cent of the amount of capital 5ains before 5i+in5 effect to the pro+isions
of the second pro+iso to section 37% then% such e$cess shall be i5nored for the purpose of
computin5 the ta$ payable by the assessee(
66
-Explanation.>or the purposes of this sub#section%
a! listed securities means the securities
i! as defined in clause h! of section 2
67
of the *ecurities .ontracts
Re5ulation! "ct% 1&4' )2 of 1&4'!1 and
ii! listed in any reco5nised stoc9 e$chan5e in India1
b! unit shall ha+e the meanin5 assi5ned to it in clause b! of Explanation to
section 114"B(22
2! Fhere the 5ross total income of an assessee includes any income arisin5 from the
transfer of a lon5#term capital asset% the 5ross total income shall be reduced by the
amount of such income and the deduction under .hapter 0I#" shall be allowed as if the
5ross total income as so reduced were the 5ross total income of the assessee(
)! Fhere the total income of an assessee includes any income arisin5 from the transfer
of a lon5#term capital asset% the total income shall be reduced by the amount of such
income and the rebate under section 77 shall be allowed from the income#ta$ on the total
income as so reduced(
79
-Tax in the case of block assessment of search cases.
113. The total undisclosed income of the bloc9 period% determined under section 147B.%
shall be char5eable to ta$ at the rate of si$ty per cent:2
78
-Provided that the ta$ char5eable under this section shall be increased by a surchar5e% if
any% le+ied by any .entral "ct and applicable in the assessment year rele+ant to the
pre+ious year in which the search is initiated under section 1)2 or the re,uisition is made
under section 1)2"(2
72
Tax on dividends, royalty and technical service fees in the case of foreign
companies.
7)
115A.
73
-1! Fhere the total income of
a! a non#resident not bein5 a company! or of a forei5n company% includes any
income by way of
i! di+idends
74
-other than di+idends referred to in section 114#<2 1 or
ii! interest recei+ed from ;o+ernment or an Indian concern on monies
borrowed or debt incurred by ;o+ernment or the Indian concern in forei5n
currency 1 or
iii! income recei+ed in respect of units% purchased in forei5n currency% of a
Butual >und specified under clause 231! of section 18 or of the Enit Trust
of India%
the income#ta$ payable shall be a55re5ate of
A! the amount of income#ta$ calculated on the amount of income by way of
di+idends
74
-other than di+idends referred to in section 114#<2% if any%
included in the total income% at the rate of twenty per cent 1
B! the amount of income#ta$ calculated on the amount of income by way of
interest referred to in sub#clause ii!% if any% included in the total income% at
the rate of twenty per cent 1
'! the amount of income#ta$ calculated on the income in respect of units
referred to in sub#clause iii!% if any% included in the total income% at the rate
of twenty per cent 1 and
1! the amount of income#ta$ with which he or it would ha+e been char5eable
had his or its total income been reduced by the amount of income referred
to in sub#clause i!% sub#clause ii! and sub#clause iii! 1
b!
7'
-a non#resident not bein5 a company! or a forei5n company% includes any
income by way of royalty or fees for technical ser+ices other than income
referred to in sub#section 1! of section 33?"2 recei+ed from ;o+ernment or an
Indian concern in pursuance of an a5reement made by the forei5n company
with ;o+ernment or the Indian concern after the )1st day of Barch% 1&6'% and
where such a5reement is with an Indian concern% the a5reement is appro+ed by
the .entral ;o+ernment or where it relates to a matter included in the industrial
policy% for the time bein5 in force% of the ;o+ernment of India% the a5reement is
in accordance with that policy% then% sub:ect to the pro+isions of sub#sections
1"! and 2!% the income#ta$ payable shall be the a55re5ate of%
76
-A! the amount of income#ta$ calculated on the income by way of royalty% if
any% included in the total income% at the rate of thirty per cent if such
royalty is recei+ed in pursuance of an a5reement made on or before the )1st
day of Bay% 1&&6 and twenty per cent where such royalty is recei+ed in
pursuance of an a5reement made after the )1st day of Bay% 1&&6
77
-but
be!ore the 1st da+ o! 9une) 2$$521
""
-*""( the amount o! income-tax calculated on the income b+ wa+ o! ro+alt+) i!
an+) included in the total income) at the rate o! ten per cent i! such ro+alt+
is recei%ed in pursuance o! an agreement made on or a!ter the 1st da+ o!
9une) 2$$5-2
B! the amount of income#ta$ calculated on the income by way of fees for
technical ser+ices% if any% included in the total income% at the rate of thirty
per cent if such fees for technical ser+ices are recei+ed in pursuance of an
a5reement made on or before the )1st day of Bay% 1&&6 and twenty per
cent where such fees for technical ser+ices are recei+ed in pursuance of an
a5reement made after the )1st day of Bay% 1&&6
77
-but be!ore the 1st da+ o!
9une) 2$$52 1 and2
""
-*BB(the amount o! income-tax calculated on the income b+ wa+ o! !ees !or
technical ser%ices) i! an+) included in the total income) at the rate o! ten per
cent i! such !ees !or technical ser%ices are recei%ed in pursuance o! an
agreement made on or a!ter the 1st da+ o! 9une) 2$$5- and2
'! the amount of income#ta$ with which it would ha+e been char5eable had its
total income been reduced by the amount of income by way of royalty and
fees for technical ser+ices(
a! fees for technical ser+ices shall ha+e the same meanin5 as in Explanation 2 to
clause %ii! of sub#section 1! of section & 1
b! forei5n currency shall ha+e the same meanin5 as in the Explanation below item
g! of sub#clause i%! of clause 15! of section 18 1
c! royalty shall ha+e the same meanin5 as in Explanation 2 to clause %i! of sub#
section 1! of section & 1
d! Enit Trust of India means the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!(2
7&
-1"! Fhere the royalty referred to in clause b! of sub#section 1! is in consideration
for the transfer of all or any ri5hts includin5 the 5rantin5 of a licence! in respect of
copyri5ht in any boo9 to an Indian concern
&8
-or in respect of any computer software to a
person resident in India2% the pro+isions of sub#section 1! shall apply in relation to such
royalty as if the words
&1
-
&2
-the a5reement is appro+ed by the .entral ;o+ernment or
where it relates to a matter2 included in the industrial policy% for the time bein5 in force%
of the ;o+ernment of India% the a5reement is in accordance with that policy2 occurrin5 in
the said clause had been omitted :
Provided that such boo9 is on a sub:ect% the boo9s on which are permitted% accordin5 to
the Import Trade .ontrol Policy of the ;o+ernment of India for the period commencin5
from the 1st day of "pril% 1&66% and endin5 with the )1st day of Barch% 1&67% to be
imported into India under an <pen ;eneral Gicence :
&)
-Provided further that such computer software is permitted accordin5 to the Import
Trade .ontrol Policy of the ;o+ernment of India for the time bein5 in force to be
imported into India under an <pen ;eneral Gicence(2
&3
-Explanation 12(In this sub#section% <pen ;eneral Gicence means an <pen ;eneral
Gicence issued by the .entral ;o+ernment in pursuance of the Imports .ontrol! <rder%
1&44(2
&4
-Explanation 2(In this sub#section% the e$pression computer software shall ha+e the
meanin5 assi5ned to it in clause b! of the Explanation to section 78CCE(2
2! Aothin5 contained in sub#section 1! shall apply in relation to any income by way of
royalty recei+ed by a forei5n company from an Indian concern in pursuance of an
a5reement made by it with the Indian concern after the )1st day of Barch% 1&6'% if such
a5reement is deemed% for the
&'
-purposes of the first pro+iso2 to clause %i! of sub#section
1! of section &% to ha+e been made before the 1st day of "pril% 1&6'1 and the pro+isions
of the annual >inance "ct for calculatin5% char5in5% deductin5 or computin5 income#ta$
shall apply in relation to such income as if such income had been recei+ed in pursuance
of an a5reement made before the 1st day of "pril% 1&6'(2
&6
-)! Ao deduction in respect of any e$penditure or allowance shall be allowed to the
assessee under sections 27 to 33. and section 46 in computin5 his or its income referred
to in sub#section 1!(
3! Fhere in the case of an assessee referred to in sub#section 1!%
a! the 5ross total income consists only of the income referred to in clause a! of
that sub#section% no deduction shall be allowed to him or it under .hapter 0I#
"1
b! the 5ross total income includes any income referred to in clause a! of that sub#
section% the 5ross total income shall be reduced by the amount of such income
and the deduction under .hapter 0I#" shall be allowed as if the 5ross total
income as so reduced were the 5ross total income of the assessee(
4! It shall not be necessary for an assessee referred to in sub#section 1! to furnish under
sub#section 1! of section 1)& a return of his or its income if
a! his or its total income in respect of which he or it is assessable under this "ct
durin5 the pre+ious year consisted only of income referred to in clause a! of
sub#section 1!1 and
b! the ta$ deductible at source under the pro+isions of .hapter /0II#B has been
deducted from such income(2
98
-Tax on income from units purchased in foreign currency or capital gains arising
from their transfer.
115AB. 1! Fhere the total income of an assessee% bein5 an o+erseas financial
or5anisation hereinafter referred to as <ffshore >und! includes
a! income recei+ed in respect of units purchased in forei5n currency1 or
b! income by way of lon5#term capital 5ains arisin5 from the transfer of units
purchased in forei5n currency%
the income#ta$ payable shall be the a55re5ate of
i! the amount of income#ta$ calculated on the income in respect of units referred
to in clause a!% if any% included in the total income% at the rate of ten per cent1
ii! the amount of income#ta$ calculated on the income by way of lon5#term capital
5ains referred to in clause b!% if any% included in the total income% at the rate of
ten per cent1 and
iii! the amount of income#ta$ with which the <ffshore >und would ha+e been
char5eable had its total income been reduced by the amount of income referred
to in clause a! and clause b!(
2! Fhere the 5ross total income of the <ffshore >und%
a! consists only of income from units or income by way of lon5#term capital 5ains
arisin5 from the transfer of units% or both% no deduction shall be allowed to the
assessee under sections 27 to 33.
&&
-***2 or clause i! or clause iii! of section
46 or under .hapter 0I#"
1
-and nothin5 contained in the pro+isions of the
second pro+iso to section 37 shall apply to income referred to in clause b! of
sub#section 1!21
b! includes any income referred to in clause a!% the 5ross total income shall be
reduced by the amount of such income and the deduction under .hapter 0I#"
shall be allowed as if the 5ross total income as so reduced were the 5ross total
income of the assessee(
a! o+erseas financial or5anisation means any fund% institution% association or
body% whether incorporated or not% established under the laws of a country
outside India% which has entered into an arran5ement for in+estment in India
with any public sector ban9 or public financial institution or a mutual fund
specified under clause 231! of section 18 and such arran5ement is appro+ed
by the
2
-*ecurities and E$chan5e Board of India% established under the
*ecurities and E$chan5e Board of India "ct% 1&&2 14 of 1&&2!%2 for this
purpose1
b! unit means unit of a mutual fund specified under clause 231! of section 18 or
of the Enit Trust of India1
c! forei5n currency
)
shall ha+e the meanin5 as in the >orei5n E$chan5e
Re5ulation "ct% 1&6) 3' of 1&6)!1
d! public sector ban9 shall ha+e the meanin5 assi5ned to it in clause 231! of
section 181
e! public financial institution shall ha+e the meanin5 assi5ned to it in section 3"
3
!! Enit Trust of India means the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!2(
4
-Tax on income from bonds or Global Depository Receipts purchased in foreign
currency or capital gains arising from their transfer.
115AC. 1! Fhere the total income of an assessee% bein5 a non#resident% includes
a! income by way of interest on bonds of an Indian company issued in accordance
with such scheme as the .entral ;o+ernment may% by notification in the
<fficial ;a=ette
'
% specify in this behalf% or on bonds of a public sector company
sold by the ;o+ernment% and purchased by him in forei5n currency1 or
b! income by way of di+idends
6
-% other than di+idends referred to in section 114#
<%2 on ;lobal ?epository Receipts
i! issued in accordance with such scheme as the .entral ;o+ernment may%
by notification in the <fficial ;a=ette
7
% specify in this behalf% a5ainst the
initial issue of shares of an Indian company and purchased by him in
forei5n currency throu5h an appro+ed intermediary1 or
ii! issued a5ainst the shares of a public sector company sold by the
;o+ernment and purchased by him in forei5n currency throu5h an
appro+ed intermediary1 or
iii!
&
-issued or2 re#issued in accordance with such scheme as the .entral
;o+ernment may% by notification in the <fficial ;a=ette7% specify in this
behalf% a5ainst the e$istin5 shares of an Indian company purchased by him
in forei5n currency throu5h an appro+ed intermediary1 or
i%!
18
-***2
c! income by way of lon5#term capital 5ains arisin5 from the transfer of bonds
referred to in clause a! or% as the case may be% ;lobal ?epository Receipts
referred to in clause b!%
i! the amount of income#ta$ calculated on the income by way of interest or
di+idends
11
-% other than di+idends referred to in section 114#<2 % as the case
may be% in respect of bonds referred to in clause a! or ;lobal ?epository
Receipts referred to in clause b!% if any% included in the total income% at the rate
of ten per cent1
5ains referred to in clause c!% if any% at the rate of ten per cent1 and
iii! the amount of income#ta$ with which the non#resident would ha+e been
char5eable had his total income been reduced by the amount of income referred
to in clauses a!% b! and c!(
2! Fhere the 5ross total income of the non#resident
a! consists only of income by way of interest or di+idends
12
-% other than di+idends
referred to in section 114#<2 in respect of bonds referred to in clause a! of sub#
section 1! or% as the case may be% ;lobal ?epository Receipts referred to in
clause b! of that sub#section% no deduction shall be allowed to him under
sections 27 to 33. or clause i! or clause iii! of section 46 or under .hapter
0I#"1
b! includes any income referred to in clause a! or clause b! or clause c! of sub#
section 1!% the 5ross total income shall be reduced by the amount of such
income and the deduction under .hapter 0I#" shall be allowed as if the 5ross
total income as so reduced% were the 5ross total income of the assessee(
)! Aothin5 contained in the first and second pro+isos to section 4" shall apply for the
computation of lon5#term capital 5ains arisin5 out of the transfer of lon5#term capital
asset% bein5 bonds or ;lobal ?epository Receipts referred to in clause c! of sub#section
1!(
3! It shall not be necessary for a non#resident to furnish under sub#section 1! of section
13# a return of his income if
a! his total income in respect of which he is assessable under this "ct durin5 the
pre+ious year consisted only of income referred to in clauses a! and b! of sub#
section 1!1 and
deducted from such income(
4! Fhere the assessee ac,uired ;lobal ?epository Receipts or bonds in an amal5amated
or resultin5 company by +irtue of his holdin5 ;lobal ?epository Receipts or bonds in the
amal5amatin5 or demer5ed company% as the case may be% in accordance with the
pro+isions of sub#section 1!% the pro+isions of that sub#section shall apply to such ;lobal
?epository Receipts or bonds(
a! appro+ed intermediary means an intermediary who is appro+ed in accordance
with such scheme as may be notified
13
by the .entral ;o+ernment in the
<fficial ;a=ette1
*b( 5lobal 1epositor+ 6eceipts shall ha%e the same meaning as in clause *a( o! the
E$planation to section 115A'A.@
13
-Tax on income from Global Depository Receipts purchased in foreign currency or
capital gains arising from their transfer.
115ACA.
14
-1! Fhere the total income of an assessee% bein5 an indi+idual% who is a
resident and an employee of an Indian company en5a5ed in specified 9nowled5e based
industry or ser+ice% or an employee of its subsidiary en5a5ed in specified 9nowled5e
based industry or ser+ice hereafter in this section referred to as the resident employee!%
includes
a! income by way of di+idends
1'
-% other than di+idends referred to in section 114#
<%2 on ;lobal ?epository Receipts of an Indian company en5a5ed in specified
9nowled5e based industry or ser+ice% issued in accordance with such
Employees *toc9 <ption *cheme as the .entral ;o+ernment may% by
16
% specify in this behalf and purchased by
him in forei5n currency1 or
b! income by way of lon5#term capital 5ains arisin5 from the transfer of ;lobal
?epository Receipts referred to in clause a!%
i! the amount of income#ta$ calculated on the income by way of di+idends 1'-%
other than di+idends referred to in section 114#<%2 in respect of ;lobal
?epository Receipts referred to in clause a!% if any% included in the total
income% at the rate of ten per cent1
5ains referred to in clause b!% if any% at the rate of ten per cent1 and
iii! the amount of income#ta$ with which the resident employee would ha+e been
char5eable had his total income been reduced by the amount of income referred
to in clauses a! and b!(
a! specified 9nowled5e based industry or ser+ice means
i! information technolo5y software1
ii! information technolo5y ser+ice1
iii! entertainment ser+ice1
i%! pharmaceutical industry1
%! bio#technolo5y industry1 and
%i! any other industry or ser+ice% as may be specified by the .entral
;o+ernment% by notification in the <fficial ;a=ette1
b! subsidiary shall ha+e the meanin5 assi5ned to it in section 3
17
of the .ompanies
"ct% 1&4' 1 of 1&4'! and includes subsidiary incorporated outside
India(2
2! Fhere the 5ross total income of the resident employee
a! consists only of income by way of di+idends
1&
-% other than di+idends referred
to in section 114#<%2 in respect of ;lobal ?epository Receipts referred to in
clause a! of sub#section 1!% no deduction shall be allowed to him under any
other pro+ision of this "ct1
b! includes any income referred to in clause a! or clause b! of sub#section 1!%
the 5ross total income shall be reduced by the amount of such income and the
deduction under any pro+ision of this "ct shall be allowed as if the 5ross total
income as so reduced were the 5ross total income of the assessee(
)! Aothin5 contained in the first and second pro+isos to section 4" shall apply for the
computation of lon5#term capital 5ains arisin5 out of the transfer of lon5#term capital
asset% bein5 ;lobal ?epository Receipts referred to in clause b! of sub#section 1!(
a! ;lobal ?epository Receipts means any instrument in the form of a depository
receipt or certificate by whate+er name called! created by the <+erseas
?epository Ban9 outside India and issued to non#resident in+estors a5ainst the
issue of ordinary shares or forei5n currency con+ertible bonds of issuin5
company1
b! information technolo5y ser+ice means any ser+ice which results from the use of
any information technolo5y software o+er a system of information technolo5y
products for realisin5 +alue addition1
c! information technolo5y software means any representation of instructions% data%
sound or ima5e% includin5 source code and ob:ect code% recorded in a machine
readable form and capable of bein5 manipulated or pro+idin5 inter#acti+ity to a
user% by means of an automatic data processin5 machine fallin5 under headin5
information technolo5y products but does not include non#information
technolo5y products1
d! <+erseas ?epository Ban9 means a ban9 authorised by the issuin5 company to
issue ;lobal ?epository Receipts a5ainst issue of >orei5n .urrency
.on+ertible Bonds or ordinary shares of the issuin5 company(2
20
-Tax on income of Foreign Institutional Investors from securities or capital gains
arising from their transfer.
115AD. 1! Fhere the total income of a >orei5n Institutional In+estor includes
21
-a! income
22
-other than income by way of di+idends referred to in section 114#<2
recei+ed in respect of securities other than unit referred to in section 114"B!1
or2
b! income by way of short#term or lon5#term capital 5ains arisin5 from the
transfer of such securities%
i! the amount of income#ta$ calculated on the income in respect of securities
referred to in clause a!% if any% included in the total income% at the rate of
twenty per cent1
ii! the amount of income#ta$ calculated on the income by way of short#term
capital 5ains referred to in clause b!% if any% included in the total income% at the
rate of thirty per cent :
23
-Provided that the amount of income#ta$ calculated on the income by way of
short#term capital 5ains referred to in section 111A shall be at the rate of ten per
cent12
iii! the amount of income#ta$ calculated on the income by way of lon5#term capital
5ains referred to in clause b!% if any% included in the total income% at the rate of
ten per cent1 and
i%! the amount of income#ta$ with which the >orei5n Institutional In+estor would
ha+e been char5eable had its total income been reduced by the amount of
income referred to in clause a! and clause b!(
2! Fhere the 5ross total income of the >orei5n Institutional In+estor
a! consists only of income in respect of securities referred to in clause a! of sub#
section 1!% no deduction shall be allowed to it under sections 27 to 33. or
clause i! or clause iii! of section 46 or under .hapter 0I#"1
b! includes any income referred to in clause a! or clause b! of sub#section 1!%
the 5ross total income shall be reduced by the amount of such income and the
deduction under .hapter 0I#" shall be allowed as if the 5ross total income as
so reduced% were the 5ross total income of the >orei5n Institutional In+estor(
)! Aothin5 contained in the first and second pro+isos to section 37 shall apply for the
computation of capital 5ains arisin5 out of the transfer of securities referred to in clause
b! of sub#section 1!(
a! the e$pression >orei5n Institutional In+estor means such in+estor as the .entral
;o+ernment may% by notification in the <fficial ;a=ette
23
% specify in this
behalf1
b! the e$pression securities
24
shall ha+e the meanin5 assi5ned to it in clause h! of
section 2 of the *ecurities .ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!(2
26
-Tax on profits and gains of life insurance business.
115B.
26
-1!2 Fhere the total income of an assessee includes any profits and 5ains from
life insurance business% the income#ta$ payable shall be the a55re5ate of
i! the amount of income#ta$ calculated on the amount of profits and 5ains of the
life insurance business included in the total income% at the rate of twel+e and
one#half per cent1 and
ii! the amount of income#ta$ with which the assessee would ha+e been char5eable
had the total income of the assessee been reduced by the amount of profits and
5ains of the life insurance business(2
27
-2! Aotwithstandin5 anythin5 contained in sub#section 1! or in any other law for the
time bein5 in force or any instrument ha+in5 the force of law% the assessee shall% in
addition to the payment of income#ta$ computed under sub#section 1!% deposit% durin5
2&
-the pre+ious years rele+ant to the assessment years commencin5 on the 1st day of
"pril% 1&7& and the 1st day of "pril% 1&&82% an amount e,ual to thirty#three and one#third
per cent of the amount of income#ta$ computed under clause i! of sub#section 1!% in
such social security fund hereafter in this sub#section referred to as the security fund!% as
the .entral ;o+ernment may% by notification
)8
behalf :
Provided that where the assessee ma9es durin5 the said pre+ious
)1
-years2 any deposit of
an amount of not less than two and one#half per cent of the profits and 5ains of the life
insurance business in the security fund% the amount of income#ta$ payable by the assessee
under the said clause i! shall be reduced by an amount e,ual to two and one#half per cent
of such profits and 5ains and% accordin5ly% the deposit of thirty#three and one#third per
cent re,uired to be made under this sub#section shall be calculated on the income#ta$ as
so reduced(2
32
-Tax on winnings from lotteries, crossword puzzles, races including horse races,
card games and other games of any sort or gambling or betting of any form or
nature whatsoever.
115BB. Fhere the total income of an assessee includes any income by way of winnin5s
from any lottery or crossword pu==le or race includin5 horse race not bein5 income from
the acti+ity of ownin5 and maintainin5 race horses! or card 5ame and other 5ame of any
sort or from 5amblin5 or bettin5 of any form or nature whatsoe+er% the income#ta$
payable shall be the a55re5ate of
i! the amount of income#ta$ calculated on income by way of winnin5s from such
lottery or crossword pu==le or race includin5 horse race or card 5ame and other
5ame of any sort or from 5amblin5 or bettin5 of any form or nature whatsoe+er%
at the rate of
))
-thirty2 per cent1 and
had his total income been reduced by the amount of income referred to in
clause i!(
Explanation.>or the purposes of this section% horse race shall ha+e the same meanin5 as
in section 63"(2
34
-Tax on non-resident sportsmen or sports associations.
115BBA. 1! Fhere the total income of an assessee%
a! bein5 a sportsman includin5 an athlete!% who is not a citi=en of India and is a
non#resident% includes any income recei+ed or recei+able by way of
i! participation in India in any 5ame other than a 5ame the winnin5s
wherefrom are ta$able under section 114BB! or sport1 or
ii! ad+ertisement1 or
iii! contribution of articles relatin5 to any 5ame or sport in India in newspapers%
ma5a=ines or :ournals1 or
b! bein5 a non#resident sports association or institution% includes any amount
5uaranteed to be paid or payable to such association or institution in relation to
any 5ame other than a 5ame the winnin5s wherefrom are ta$able under section
114BB! or sport played in India%
the income#ta$ payable by the assessee shall be the a55re5ate of
i! the amount of income#ta$ calculated on income referred to in clause a! or
clause b! at the rate of ten per cent1 and
had the total income of the assessee been reduced by the amount of income
referred to in clause a! or clause b! :
Provided that no deduction in respect of any e$penditure or allowance shall be allowed
under any pro+ision of this "ct in computin5 the income referred to in clause a! or
clause b!(
2! It shall not be necessary for the assessee to furnish under sub#section 1! of section
1)& a return of his income if
pre+ious year consisted only of income referred to in clause a! or clause b! of
sub#section 1!1 and
deducted from such income(2
)4
-Tax on income from units of an open-ended equity oriented fund of the Unit Trust
of India or of Mutual Funds.
115BBB. 1! Fhere the total income of an assessee includes any income from units of
an open#ended e,uity oriented fund of the Enit Trust of India or of a Butual >und% the
income#ta$ payable shall be the a55re5ate of
a! the amount of income#ta$ calculated on income from units of an open#ended
e,uity oriented fund of the Enit Trust of India or of a Butual >und% at the rate
of ten per cent1 and
b! the amount of income#ta$ with which the assessee would ha+e been char5eable
had his total income been reduced by the amount of income referred to in
clause a!(
2! Aothin5 contained in sub#section 1! shall apply in relation to any income from units
of an open#ended e,uity oriented fund of the Enit Trust of India or of the Butual >und
arisin5 after the )1st day of Barch% 288)(
Explanation(>or the purposes of this section% the e$pressions Butual >und% open#ended
e,uity oriented fund and Enit Trust of India shall ha+e the meanin5s respecti+ely
assi5ned to them in the Explanation to section 114T(2
The following section 115BBC shall be inserted after section 115BBB by the Finance
Act, 2006, w.e.f. 1-4-2007 :
Anonymous donations to be taxed in certain cases.
115BBC. *1( ,here the total income o! an assessee) being a person in receipt o! income
on behal! o! an+ uni%ersit+ or other educational institution re!erred to in sub-clause
*iiiad( or sub-clause *+i( or an+ hospital or other institution re!erred to in sub-clause
*iiiae( or sub-clause *+ia( or an+ !und or institution re!erred to in sub-clause *i+( or an+
trust or institution re!erred to in sub-clause *+( o! clause *2).( o! section 1$ or an+ trust
or institution re!erred to in section 11) includes an+ income b+ wa+ o! an+ anon+mous
donation) the income-tax pa+able shall be the aggregate o!
*i( the amount o! income-tax calculated on the income b+ wa+ o! an+ anon+mous
donation) at the rate o! thirt+ per cent- and
*ii( the amount o! income-tax with which the assessee would ha%e been chargeable
had his total income been reduced b+ the amount o! income re!erred to in
clause *i(.
*2( 7he pro%isions o! sub-section *1( shall not appl+ to an+ anon+mous donation recei%ed
b+
*a( an+ trust or institution created or established wholl+ !or religious purposes-
*b( an+ trust or institution created or established wholl+ !or religious and
charitable purposes other than an+ anon+mous donation made with a speci!ic
direction that such donation is !or an+ uni%ersit+ or other educational
institution or an+ hospital or other medical institution run b+ such trust or
institution.
)! >or the purposes of this section% anonymous donation means any +oluntary
contribution referred to in sub#clause iia! of clause 24! of section 2% where a person
recei+in5 such contribution does not maintain a record of the identity indicatin5 the name
and address of the person ma9in5 such contribution and such other particulars as may be
prescribed(
The following section 115BBC shall be inserted after section 115BBB by the Finance
Act, 2006, w.e.f. 1-4-2007 :
Anonymous donations to be taxed in certain cases.
115BBC. *1( ,here the total income o! an assessee) being a person in receipt o! income
on behal! o! an+ uni%ersit+ or other educational institution re!erred to in sub-clause
*iiiad( or sub-clause *+i( or an+ hospital or other institution re!erred to in sub-clause
*iiiae( or sub-clause *+ia( or an+ !und or institution re!erred to in sub-clause *i+( or an+
trust or institution re!erred to in sub-clause *+( o! clause *2).( o! section 1$ or an+ trust
or institution re!erred to in section 11) includes an+ income b+ wa+ o! an+ anon+mous
donation) the income-tax pa+able shall be the aggregate o!
*i( the amount o! income-tax calculated on the income b+ wa+ o! an+ anon+mous
donation) at the rate o! thirt+ per cent- and
*ii( the amount o! income-tax with which the assessee would ha%e been chargeable
had his total income been reduced b+ the amount o! income re!erred to in
clause *i(.
*2( 7he pro%isions o! sub-section *1( shall not appl+ to an+ anon+mous donation recei%ed
b+
*a( an+ trust or institution created or established wholl+ !or religious purposes-
*b( an+ trust or institution created or established wholl+ !or religious and
charitable purposes other than an+ anon+mous donation made with a speci!ic
direction that such donation is !or an+ uni%ersit+ or other educational
institution or an+ hospital or other medical institution run b+ such trust or
institution.
)! >or the purposes of this section% anonymous donation means any +oluntary
contribution referred to in sub#clause iia! of clause 24! of section 2% where a person
recei+in5 such contribution does not maintain a record of the identity indicatin5 the name
and address of the person ma9in5 such contribution and such other particulars as may be
prescribed(
Special provision for computation of total income of non-residents.
115D. 1! Ao deduction in respect of any e$penditure or allowance shall be allowed
under any pro+ision of this "ct in computin5 the in+estment income of a non#resident
Indian(
2! Fhere in the case of an assessee% bein5 a non#resident Indian%
a! the 5ross total income consists only of in+estment income or income by way of
lon5#term capital 5ains or both% no deduction shall be allowed to the assessee
38
-under .hapter 0I#" and nothin5 contained in the pro+isions of the second
pro+iso to section 37 shall apply to income char5eable under the head .apital
5ains21
b! the 5ross total income includes any income referred to in clause a!% the 5ross
total income shall be reduced by the amount of such income and the deductions
under .hapter 0I#" shall be allowed as if the 5ross total income as so reduced
were the 5ross total income of the assessee(
31
-Tax on investment income and long-term capital gains.
115E. Fhere the total income of an assessee% bein5 a non#resident Indian% includes
a! any income from in+estment or income from lon5#term capital 5ains of an asset
other than a specified asset1
b! income by way of lon5#term capital 5ains%
the ta$ payable by him shall be the a55re5ate of
i! the amount of income#ta$ calculated on the income in respect of in+estment
income referred to in clause a!% if any% included in the total income% at the rate of
twenty per cent1
5ains referred to in clause b!% if any% included in the total income% at the rate of ten
per cent1 and
iii! the amount of income#ta$ with which he would ha+e been char5eable had his total
income been reduced by the amount of income referred to in clauses a! and b!(2
Capital gains on transfer of foreign exchange assets not to be charged in certain
cases.
115F. 1! Fhere% in the case of an assessee bein5 a non#resident Indian% any lon5#term
capital 5ains arise from the transfer of a forei5n e$chan5e asset the asset so transferred
bein5 hereafter in this section referred to as the ori5inal asset!% and the assessee has%
within a period of si$ months after the date of such transfer% in+ested
32
-***2 the whole or
any part of the net consideration in any specified asset
3)
-***2% or in any sa+in5s
certificates referred to in clause 4B! of section 18 such specified asset
33
-***2% or such
sa+in5s certificates bein5 hereafter in this section referred to as the new asset!% the capital
5ain shall be dealt with in accordance with the followin5 pro+isions of this section% that is
to say%
a! if the cost of the new asset is not less than the net consideration in respect of
section 341
b! if the cost of the new asset is less than the net consideration in respect of the
5ain the same proportion as the cost of ac,uisition of the new asset bears to the
net consideration shall not be char5ed under section 34(
i! cost% in relation to any new asset% bein5 a deposit
34
-***2 referred to in sub#
clause iii!% or specified under sub#clause %!% of clause !! of section 114.%
means the amount of such deposit1
ii! net consideration% in relation to the transfer of the ori5inal asset% means the full
+alue of the consideration recei+ed or accruin5 as a result of the transfer of
such asset as reduced by any e$penditure incurred wholly and e$clusi+ely in
2! Fhere the new asset is transferred or con+erted otherwise than by transfer! into
money% within a period of three years from the date of its ac,uisition% the amount of
capital 5ain arisin5 from the transfer of the ori5inal asset not char5ed under section 34 on
the basis of the cost of such new asset as pro+ided in clause a! or% as the case may be%
clause b!% of sub#section 1! shall be deemed to be income char5eable under the head
.apital 5ains relatin5 to capital assets other than short#term capital assets of the pre+ious
year in which the new asset is transferred or con+erted otherwise than by transfer! into
money(
Return of income not to be filed in certain cases.
115G. It shall not be necessary for a non#resident Indian to furnish under sub#section 1!
of section 1)& a return of his income if
pre+ious year consisted only of in+estment income or income by way of lon5#
term capital 5ains or both1 and
deducted from such income(
Benefit under Chapter to be available in certain cases even after the assessee
becomes resident.
115H. Fhere a person% who is a non#resident Indian in any pre+ious year% becomes
assessable as resident in India in respect of the total income of any subse,uent year% he
may furnish to the
3'
-"ssessin52 <fficer a declaration in writin5 alon5 with his return of
income under section 1)& for the assessment year for which he is so assessable% to the
effect that the pro+isions of this .hapter shall continue to apply to him in relation to the
in+estment income deri+ed from any forei5n e$chan5e asset bein5 an asset of the nature
referred to in sub#clause ii! or sub#clause iii! or sub#clause i%! or sub#clause %! of
clause !! of section 114.1 and if he does so% the pro+isions of this .hapter shall continue
to apply to him in relation to such income for that assessment year and for e+ery
subse,uent assessment year until the transfer or con+ersion otherwise than by transfer!
into money of such assets(
Chapter not to apply if the assessee so chooses.
115-I. " non#resident Indian may elect not to be 5o+erned by the pro+isions of this
.hapter for any assessment year by furnishin5
36
-his return of income for that assessment
year under section 1)& declarin5 therein2 that the pro+isions of this .hapter shall not
apply to him for that assessment year and if he does so% the pro+isions of this .hapter
shall not apply to him for that assessment year and his total income for that assessment
year shall be computed and ta$ on such total income shall be char5ed in accordance with
the other pro+isions of this "ct(2
48
-CHAPTER XII-B
SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES
Special provisions relating to certain companies.
1151. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where
in the case of an assessee bein5 a company
3&
-other than a company en5a5ed in the
business of 5eneration or distribution of electricity!2% the total income% as computed under
this "ct in respect of any pre+ious year rele+ant to the assessment year commencin5 on
or after the 1st day of "pril% 1&77
48
-but before the 1st day of "pril% 1&&12 hereafter in
this section referred to as the rele+ant pre+ious year!% is less than thirty per cent of its
boo9 profit% the total income of such assessee char5eable to ta$ for the rele+ant pre+ious
year shall be deemed to be an amount e,ual to thirty per cent of such boo9 profit(
41
-1"! E+ery assessee% bein5 a company% shall% for the purposes of this section% prepare
its profit and loss account for the rele+ant pre+ious year in accordance with the pro+isions
of Parts II and III of *chedule 0I to the .ompanies "ct% 1&4' 1 of 1&4'!(2
Explanation.>or the purposes of this section% boo9 profit means the net profit as shown in
the profit and loss account for the rele+ant pre+ious year
42
-prepared under sub#section
1"!2% as increased by
a! the amount of income#ta$ paid or payable% and the pro+ision therefore1 or
b! the amounts carried to any reser+es
4)
-other than the reser+es specified in
section 78CC?
43
-or sub#section 1! of section ))".2!2% by whate+er name
called1 or
c! the amount or amounts set aside to pro+isions made for meetin5 liabilities%
other than ascertained liabilities1 or
d! the amount by way of pro+ision for losses of subsidiary companies1 or
e! the amount or amounts of di+idends paid or proposed1 or
!! the amount or amounts of e$penditure relatable to any income to which any of
the pro+isions of .hapter III
44
-applies1 or2
4'
-g! the amount withdrawn from the reser+e account under section 78CC?% where it
has been utilised for any purpose other than those referred to in sub#section 3!
of that section1 or
h! the amount credited to the reser+e account under section 78CC?% to the e$tent
that amount has not been utilised within the period specified in sub#section 3!
of that section12
46
-ha! the amount deemed to be the profits under sub#section )! of section ))".%2
47
-if any amount referred to in clauses a! to !! is debited or% as the case may be% the
amount referred to in clauses g! and h! is not credited2 to the profit and loss account%
and as reduced by%
i! the amount withdrawn from reser+es
4&
-other than the reser+es specified in
section 78CC?!2 or pro+isions% if any such amount is credited to the
'8
-profit
and loss account :
Provided that% where this section is applicable to an assessee in any pre+ious
year includin5 the rele+ant pre+ious year!% the amount withdrawn from
reser+es created or pro+isions made in a pre+ious year rele+ant to the
assessment year commencin5 on or after the 1st day of "pril% 1&77 shall not be
reduced from the boo9 profit unless the boo9 profit of such year has been
increased by those reser+es or pro+isions out of which the said amount was
withdrawn! under this Explanation- or2
ii! the amount of income to which any of the pro+isions of .hapter III applies% if
any such amount is credited to the profit and loss account1 or
'1
-iii! the amounts -as arri+ed at after increasin5 the net profit by the amounts referred
to in clauses a! to !! and reducin5 the net profit by the amounts referred to in
clauses i! and ii!2 attributable to the business% the profits from which are
eli5ible for deduction under section 78CC. or section 78CC?1 so% howe+er%
that such amounts are computed in the manner specified in sub#section )! or
sub#section )"! of section 78CC. or sub#section )! of section 78CC?% as the
case may be1 or2
'2
-i%!2 the amount of the loss or the amount of depreciation which would be re,uired
to be set off a5ainst the profit of the rele+ant pre+ious year as if the pro+isions
of clause b! of the first pro+iso to sub#section 1! of section 284 of the
.ompanies "ct% 1&4' 1 of 1&4'!% are applicable(
2! Aothin5 contained in sub#section 1! shall affect the determination of the amounts in
relation to the rele+ant pre+ious year
')
to be carried forward to the subse,uent year or
years under the pro+isions of sub#section 2! of section )2 or sub#section )! of section
)2" or clause ii! of sub#section 1! of section 62 or section 6) or section 63 or sub#
section )! of section 63" or sub#section )! of section 78@(2
64
-Deemed income relating to certain companies.
1151A. 1! Aotwithstandin5 anythin5 contained in any other pro+isions of this "ct%
where in the case of an assessee% bein5 a company% the total income% as computed under
this "ct in respect of any pre+ious year rele+ant to the assessment year commencin5 on
or after the 1st day of "pril% 1&&6
'4
-but before the 1st day of "pril% 28812 hereafter in
this section referred to as the rele+ant pre+ious year! is less than thirty per cent of its
boo9 profit% the total income of such assessee char5eable to ta$ for the rele+ant pre+ious
year shall be deemed to be an amount e,ual to thirty per cent of such boo9 profit(
2! E+ery assessee% bein5 a company% shall% for the purposes of this section prepare its
profit and loss account for the rele+ant pre+ious year in accordance with the pro+isions of
Parts II and III of *chedule 0I
''
to the .ompanies "ct% 1&4' 1 of 1&4'! :
Provided that while preparin5 profit and loss account% the depreciation shall be
calculated on the same method and rates which ha+e been adopted for calculatin5 the
depreciation for the purpose of preparin5 the profit and loss account laid before the
company at its annual 5eneral meetin5 in accordance with the pro+isions of section 218
of the .ompanies "ct% 1&4' 1 of 1&4'! :
Provided further that where a company has adopted or adopts the financial year under
the .ompanies "ct% 1&4' 1 of 1&4'!% which is different from the pre+ious year under the
"ct% the method and rates for calculation of depreciation shall correspond to the method
and rates which ha+e been adopted for calculatin5 the depreciation for such financial year
or part of such financial year fallin5 within the rele+ant pre+ious year(
the profit and loss account for the rele+ant pre+ious year prepared under sub#section 2!%
as increased by
a! the amount of income#ta$ paid or payable% and the pro+ision therefor1 or
b! the amounts carried to any reser+es by whate+er name called1 or
e! the amount or amounts of di+idends paid or proposed1 or
!! the amount or amounts of e$penditure relatable to any income to which any of
the pro+isions of .hapter III applies1
if any amount referred to in clauses a! to !! is debited to the profit and loss account% and
as reduced by%
i! the amount withdrawn from any reser+es or pro+isions if any such amount is
credited to the profit and loss account :
Provided that% where this section is applicable to an assessee in any pre+ious
year includin5 the rele+ant pre+ious year!% the amount withdrawn from
reser+es created or pro+isions made in a pre+ious year rele+ant to the
assessment year commencin5 on or after the 1st day of "pril% 1&&6
'6
-but
endin5 before the 1st day of "pril% 28812 shall not be reduced from the boo9
profit unless the boo9 profit of such year has been increased by those reser+es
or pro+isions out of which the said amount was withdrawn! under this
Explanation1 or
ii! the amount of income to which any of the pro+isions of .hapter III applies% if
any such amount is credited to the profit and loss account1 or
'7
-iii! the amount of loss brou5ht forward or unabsorbed depreciation% whiche+er is
less as per boo9s of account(
Explanation(>or the purposes of this clause%
a! the loss shall not include depreciation1
b! the pro+isions of this clause shall not apply if the amount of loss brou5ht
forward or unabsorbed depreciation is nil- or2
i%! the amount of profits deri+ed by an industrial underta9in5 from the business of
5eneration or 5eneration and distribution of power1 or
%! the amount of profits deri+ed by an industrial underta9in5 located in an
industrially bac9ward *tate or district as referred to in
'&
-sub#section 3! and
sub#section 4! of section 78#IB2% for the assessment years such industrial
underta9in5 is eli5ible to claim a deduction of hundred per cent of the
68
-profits
and 5ains under sub#section 3! or sub#section 4! of section 78#IB21 or
%i! the amount of profits deri+ed by an industrial underta9in5 from the business of
de+elopin5% maintainin5 and operatin5 any infrastructure facility
61
-as defined
in the Explanation to sub#section 3! of section 78#I" and sub:ect to fulfillin5
the conditions laid down in that sub#section21 or
%ii! the amount of profits of sic9 industrial company for the assessment year
commencin5 from the assessment year rele+ant to the pre+ious year in which
the said company has become a sic9 industrial company under sub#section 1!
of section 16 of the *ic9 Industrial .ompanies *pecial Pro+isions! "ct% 1&74
1 of 1&7'! and endin5 with the assessment year durin5 which the entire net
worth of such company becomes e,ual to or e$ceeds the accumulated losses(
assi5ned to it in clause ga!
62
of sub#section 1! of section ) of the *ic9
Industrial .ompanies *pecial Pro+isions! "ct% 1&74 1 of 1&7'!1
6)
-or2
6)
-%iii! the amount of profits eli5ible for deduction under section 78CC.% computed
under clause a!% b! or c! of sub#section )! or sub#section )"!% as the case
may be% of that section% and sub:ect to the conditions specified in sub#sections
3! and 3"! of that section1
ix! the amount of profits eli5ible for deduction under section 78CCE% computed
under sub#section )! of that section(2
)! Aothin5 contained in sub#section 1! shall affect the determination of the amounts in
relation to the rele+ant pre+ious year to be carried forward to the subse,uent year or years
under the pro+isions of sub#section 2! of section )2 or sub#section )! of section )2" or
clause ii! of sub#section 1! of section 62 or section 6) or section 63 or sub#section )! of
section 63"(
3! *a+e as otherwise pro+ided in this section% all other pro+isions of this "ct shall apply
to e+ery assessee% bein5 a company% mentioned in this section(2
63
-Tax credit in respect of tax paid on deemed income relating to certain companies.
1151AA. 1! Fhere any amount of ta$ is paid under sub#section 1! of section 114@" by
an assessee bein5 a company for any assessment year% then% credit in respect of ta$ so
paid shall be allowed to him in accordance with the pro+isions of this section(
5
-*1A( ,here an+ amount o! tax is paid under sub-section *1( o! section 1159B b+ an
assessee) being a compan+ !or the assessment +ear commencing on the 1st da+ o! April)
2$$6 and an+ subse2uent assessment +ear) then) credit in respect o! tax so paid shall be
allowed to him in accordance with the pro%isions o! this section.2
2! The ta$ credit to be allowed under sub#section 1! shall be the difference of the ta$
paid for any assessment year under sub#section 1! of section 114@"
64
-or under sub-
section *1( o! section 1159B) as the case ma+ be)2 and the amount of ta$ payable by the
assessee on his total income computed in accordance with the other pro+isions of this "ct
:
Provided that no interest shall be payable on the ta$ credit allowed under sub#section 1!(
)! The amount of ta$ credit determined under sub#section 2! shall be carried forward
and set off in accordance with the pro+isions of sub#section 3! and sub#section 4! but
such carry forward shall not be allowed beyond the fifth assessment year immediately
succeedin5 the assessment year in which ta$ credit becomes allowable under sub#section
1!(
The following sub-sections (2) to (3A) shall be substituted for the existing sub-
sections (2) and (3) of section 1151AA by the Finance Act, 2006, w.e.f. 1-4-2007 :
*2( 7he tax credit to be allowed under sub-section *1( shall be the di!!erence o! the tax
paid !or an+ assessment +ear under sub-section *1( o! section 1159A and the amount o!
tax pa+able b+ the assessee on his total income computed in accordance with the other
pro%isions o! this ActA
Provided that no interest shall be pa+able on the tax credit allowed under sub-section
*1(.
*2A( 7he tax credit to be allowed under sub-section *1A( shall be the di!!erence o! the tax
paid !or an+ assessment +ear under sub-section *1( o! section 1159B and the amount o!
tax pa+able b+ the assessee on his total income computed in accordance with the other
pro%isions o! this ActA
Provided that no interest shall be pa+able on the tax credit allowed under sub-section
*1A(.
*3( 7he amount o! tax credit determined under sub-section *2( shall be carried !orward
and set o!! in accordance with the pro%isions o! sub-sections *4( and *5( but such carr+
!orward shall not be allowed be+ond the !i!th assessment +ear immediatel+ succeeding
the assessment +ear in which tax credit becomes allowable under sub-section *1(.
*3A( 7he amount o! tax credit determined under sub-section *2A( shall be carried
!orward and set o!! in accordance with the pro%isions o! sub-sections *4( and *5( but such
carr+ !orward shall not be allowed be+ond the se%enth assessment +ear immediatel+
succeeding the assessment +ear in which tax credit becomes allowable under sub-section
*1A(.
3! The ta$ credit shall be allowed set#off in a year when ta$ becomes payable on the
total income computed in accordance with the pro+isions of this "ct other than section
114@"
6'
-or section 114@B% as the case may be2(
4! *et off in respect of brou5ht forward ta$ credit shall be allowed for any assessment
year to the e$tent of the difference between the ta$ on his total income and the ta$ which
would ha+e been payable under the pro+isions of sub#section 1! of section 114@"
66
-or
section 114@B% as the case may be2 for that assessment year(
'! Fhere as a result of an order under sub#section 1! or sub#section )! of section 13)%
section 133% section 136% section 143% section 144% sub#section 3! of section 234?%
section 248% section 243% section 2'8% section 2'2% section 2') or section 2'3% the amount
of ta$ payable under this "ct is reduced or increased% as the case may be% the amount of
ta$ credit allowed under this section shall also be increased or reduced accordin5ly(2
66
-Special provision for payment of tax by certain companies.
67
1151B. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where
in the case of an assessee% bein5 a company% the income#ta$% payable on the total income
as computed under this "ct in respect of any pre+ious year rele+ant to the assessment
year commencin5 on or after the 1st day of "pril%
67a
2$$1]% is less than
67b
se%en and
one-hal! per cent] of its boo9 profit%
6&
-such boo9 profit shall be deemed to be the total
income of the assessee and the ta$ payable by the assessee on such total income shall be
the amount of income#ta$ at the rate of
67b
se%en and one-hal! per cent]2(
2! E+ery assessee% bein5 a company% shall% for the purposes of this section% prepare its
78
Provided that while preparin5 the annual accounts includin5 profit and loss account%
i! the accountin5 policies1
ii! the accountin5 standards adopted for preparin5 such accounts includin5 profit
and loss account1
iii! the method and rates adopted for calculatin5 the depreciation%
shall be the same as ha+e been adopted for the purpose of preparin5 such accounts
includin5 profit and loss account and laid before the company at its annual 5eneral
meetin5 in accordance with the pro+isions of section 218 of the .ompanies "ct% 1&4' 1
of 1&4'! :
Provided further that where the company has adopted or adopts the financial year under
the .ompanies "ct% 1&4' 1 of 1&4'!% which is different from the pre+ious year under
this "ct%
and loss account1
shall correspond to the accountin5 policies% accountin5 standards and the method and
rates for calculatin5 the depreciation which ha+e been adopted for preparin5 such
accounts includin5 profit and loss account for such financial year or part of such financial
year fallin5 within the rele+ant pre+ious year(
as increased by
b! the amounts carried to any reser+es% by whate+er name called
71
-% other than a
reser+e specified under section ))".21 or
e! the amount or amounts of di+idends paid or proposed 1 or
!! the amount or amounts of e$penditure relatable to any income to which
71a
section 1$
"2
?*other than the pro%isions contained in clause *235( thereo!(@
or section 1$A or section 1$B or section 11 or section 12 appl+)]
The following clause () shall be inserted after clause (f) of Explanation to
sub-section (2) of section 1151B by the Finance Act, 2006, w.e.f. 1-4-2007 :
*5( the amount o! depreciation%
"2a
i! an+ amount re!erred to in clauses *a( to *f( is debited to the pro!it and loss account)
and as reduced b+]
7)
-i! the amount withdrawn from any reser+e or pro+ision e$cludin5 a reser+e
created before the 1st day of "pril% 1&&6 otherwise than by way of a debit to
the profit and loss account!% if any such amount is credited to the profit and loss
account:
Provided that where this section is applicable to an assessee in any pre+ious
year% the amount withdrawn from reser+es created or pro+isions made in a
pre+ious year rele+ant to the assessment year commencin5 on or after the 1st
day of "pril% 1&&6 shall not be reduced from the boo9 profit unless the boo9
profit of such year has been increased by those reser+es or pro+isions out of
which the said amount was withdrawn! under this Explanation or Explanation
below the second pro+iso to section 114@"% as the case may be1 or2
ii! the amount of income to which any of the pro+isions of
7)a
section 1$
73
-*other
than the pro%isions contained in clause *235( thereo!(2] or section 18" or
section 18B or section 11 or section 12 apply% if any such amount is credited to
the profit and loss account1 or
The following clauses (iia) and (iib) shall be inserted after clause (ii) in the
Explanation to sub-section (2) of section 1151B by the Finance Act, 2006,
w.e.f. 1-4-2007 :
*iia( the amount o! depreciation debited to the pro!it and loss account *excluding the
depreciation on account o! re%aluation o! assets(- or
*iib( the amount withdrawn !rom re%aluation reser%e and credited to the pro!it and
loss account) to the extent it does not exceed the amount o! depreciation on
account o! re%aluation o! assets re!erred to in clause *iia(- or
74
i%! the amount of profits eli5ible for deduction under section 78CC.% computed
under clause a! or clause b! or clause c! of sub#section )! or sub#section
)"!% as the case may be% of that section% and sub:ect to the conditions specified
in that section1 or
%! the amount of profits eli5ible for deduction under section 78CCE computed
under sub#section )! or sub#section )"!% as the case may be% of that section%
and sub:ect to the conditions specified in that section1 or
%i! the amount of profits eli5ible for deduction under section 78CC> computed
under sub#section )! of that section% and sub:ect to the conditions specified in
that section1 or
commencin5 on and from the assessment year rele+ant to the pre+ious year in
which the said company has become a sic9 industrial company under sub#
7'
of the *ic9 Industrial .ompanies *pecial Pro+isions!
"ct% 1&74 1 of 1&7'! and endin5 with the assessment year durin5 which the
entire net worth of such company becomes e,ual to or e$ceeds the accumulated
losses(
76
of the *ic9
Industrial .ompanies *pecial Pro+isions! "ct% 1&74 1 of 1&7'!(
section 63"(
3! E+ery company to which this section applies% shall furnish a report in the prescribed
form
77
from an accountant as defined in the Explanation below sub#section 2! of section
277% certifyin5 that the boo9 profit has been computed in accordance with the pro+isions
of this section alon5 with the return of income filed under sub#section 1! of section 1)&
or alon5 with the return of income furnished in response to a notice under clause i! of
sub#section 1! of section 132(
7&
*6( 7he pro%isions o! this section shall not appl+ to the income accrued or arising on
or a!ter the 1st da+ o! April) 2$$5 !rom an+ business carried on) or ser%ices rendered) b+
an enterpreneur or a 1e%eloper) in a ;nit or <pecial Economic =one) as the case ma+
be.]
66
-Special provision for payment of tax by certain companies.
67
1151B. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where
in the case of an assessee% bein5 a company% the income#ta$% payable on the total income
as computed under this "ct in respect of any pre+ious year rele+ant to the assessment
year commencin5 on or after the 1st day of "pril%
67a
2$$1]% is less than
67b
se%en and
one-hal! per cent] of its boo9 profit%
6&
-such boo9 profit shall be deemed to be the total
income of the assessee and the ta$ payable by the assessee on such total income shall be
the amount of income#ta$ at the rate of
67b
se%en and one-hal! per cent]2(
2! E+ery assessee% bein5 a company% shall% for the purposes of this section% prepare its
78
Provided that while preparin5 the annual accounts includin5 profit and loss account%
and loss account1
shall be the same as ha+e been adopted for the purpose of preparin5 such accounts
includin5 profit and loss account and laid before the company at its annual 5eneral
meetin5 in accordance with the pro+isions of section 218 of the .ompanies "ct% 1&4' 1
of 1&4'! :
Provided further that where the company has adopted or adopts the financial year under
the .ompanies "ct% 1&4' 1 of 1&4'!% which is different from the pre+ious year under
this "ct%
and loss account1
shall correspond to the accountin5 policies% accountin5 standards and the method and
rates for calculatin5 the depreciation which ha+e been adopted for preparin5 such
accounts includin5 profit and loss account for such financial year or part of such financial
year fallin5 within the rele+ant pre+ious year(
as increased by
b! the amounts carried to any reser+es% by whate+er name called
71
-% other than a
reser+e specified under section ))".21 or
e! the amount or amounts of di+idends paid or proposed 1 or
!! the amount or amounts of e$penditure relatable to any income to which
71a
section 1$
"2
?*other than the pro%isions contained in clause *235( thereo!(@
or section 1$A or section 1$B or section 11 or section 12 appl+)]
The following clause () shall be inserted after clause (f) of Explanation to
*5( the amount o! depreciation%
"2a
i! an+ amount re!erred to in clauses *a( to *f( is debited to the pro!it and loss account)
and as reduced b+]
7)
-i! the amount withdrawn from any reser+e or pro+ision e$cludin5 a reser+e
created before the 1st day of "pril% 1&&6 otherwise than by way of a debit to
the profit and loss account!% if any such amount is credited to the profit and loss
account:
Provided that where this section is applicable to an assessee in any pre+ious
year% the amount withdrawn from reser+es created or pro+isions made in a
pre+ious year rele+ant to the assessment year commencin5 on or after the 1st
day of "pril% 1&&6 shall not be reduced from the boo9 profit unless the boo9
profit of such year has been increased by those reser+es or pro+isions out of
which the said amount was withdrawn! under this Explanation or Explanation
below the second pro+iso to section 114@"% as the case may be1 or2
ii! the amount of income to which any of the pro+isions of
7)a
section 1$
73
-*other
than the pro%isions contained in clause *235( thereo!(2] or section 18" or
section 18B or section 11 or section 12 apply% if any such amount is credited to
the profit and loss account1 or
The following clauses (iia) and (iib) shall be inserted after clause (ii) in the
Explanation to sub-section (2) of section 1151B by the Finance Act, 2006,
w.e.f. 1-4-2007 :
*iia( the amount o! depreciation debited to the pro!it and loss account *excluding the
depreciation on account o! re%aluation o! assets(- or
*iib( the amount withdrawn !rom re%aluation reser%e and credited to the pro!it and
loss account) to the extent it does not exceed the amount o! depreciation on
account o! re%aluation o! assets re!erred to in clause *iia(- or
74
i%! the amount of profits eli5ible for deduction under section 78CC.% computed
under clause a! or clause b! or clause c! of sub#section )! or sub#section
)"!% as the case may be% of that section% and sub:ect to the conditions specified
in that section1 or
%! the amount of profits eli5ible for deduction under section 78CCE computed
under sub#section )! or sub#section )"!% as the case may be% of that section%
and sub:ect to the conditions specified in that section1 or
%i! the amount of profits eli5ible for deduction under section 78CC> computed
under sub#section )! of that section% and sub:ect to the conditions specified in
that section1 or
commencin5 on and from the assessment year rele+ant to the pre+ious year in
which the said company has become a sic9 industrial company under sub#
7'
of the *ic9 Industrial .ompanies *pecial Pro+isions!
"ct% 1&74 1 of 1&7'! and endin5 with the assessment year durin5 which the
entire net worth of such company becomes e,ual to or e$ceeds the accumulated
losses(
76
of the *ic9
Industrial .ompanies *pecial Pro+isions! "ct% 1&74 1 of 1&7'!(
section 63"(
3! E+ery company to which this section applies% shall furnish a report in the prescribed
form
77
from an accountant as defined in the Explanation below sub#section 2! of section
277% certifyin5 that the boo9 profit has been computed in accordance with the pro+isions
of this section alon5 with the return of income filed under sub#section 1! of section 1)&
or alon5 with the return of income furnished in response to a notice under clause i! of
7&
*6( 7he pro%isions o! this section shall not appl+ to the income accrued or arising on
or a!ter the 1st da+ o! April) 2$$5 !rom an+ business carried on) or ser%ices rendered) b+
an enterpreneur or a 1e%eloper) in a ;nit or <pecial Economic =one) as the case ma+
be.]
Interest payable for non-payment of tax by domestic companies.
115P. Fhere the principal officer of a domestic company and the company fails to pay
the whole or any part of the ta$ on distributed profits referred to in sub#section 1! of
section 114#<% within the time allowed under sub#section )! of that section% he or it shall
be liable to pay simple interest at the rate of
&6
-one2 per cent for e+ery month or part
thereof on the amount of such ta$ for the period be5innin5 on the date immediately after
the last date on which such ta$ was payable and endin5 with the date on which the ta$ is
actually paid(
When company is deemed to be in default.
115Q. If any principal officer of a domestic company and the company does not pay ta$
on distributed profits in accordance with the pro+isions of section 115-O% then% he or it
shall be deemed to be an assessee in default in respect of the amount of ta$ payable by
him or it and all the pro+isions of this "ct for the collection and reco+ery of income#ta$
shall apply(
Explanation.>or the purposes of this .hapter% the e$pression di+idends shall ha+e the
same meanin5 as is 5i+en to di+idend in clause 22! of section 2 but shall not include sub#
clause e! thereof(2
!8
CHAPTER XII-E
SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED INCOME
Tax on distributed income to unit holders.
115R. 1! Aotwithstandin5 anythin5 contained in any other pro+isions of this "ct and
section )2 of the Enit Trust of India "ct% 1&') 42 of 1&')!%
&&
-any amount of income
distributed on or before the )1st day of Barch% 2882 by the Enit Trust of India to its unit
holders2 shall be char5eable to ta$ and the Enit Trust of India shall be liable to pay
additional income#ta$ on such distributed income at the rate of
1
-ten2 per cent :
Provided that nothin5 contained in this sub#section shall apply in respect of any income
distributed to a unit holder of open#ended e,uity oriented funds in respect of any
distribution made from such fund for a period of three years commencin5 from the 1st
day of "pril% 1&&&(
2
-2! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% any amount
of income distributed by the specified company or a Butual >und to its unit holders shall
be char5eable to ta$ and such specified company or Butual >und shall be liable to pay
additional income#ta$ on such distributed income
)
-at the rate of
i! twel+e and one#half per cent on income distributed to any person bein5 an
indi+idual or a Cindu undi+ided family1 and
ii! twenty per cent on income distributed to any other person:2
Provided that nothin5 contained in this sub#section shall apply in respect of any income
distributed%
a! by the "dministrator of the specified underta9in5% to the unit holders1 or
b! to a unit holder of
)a
***] e,uity oriented funds in respect of any distribution
made from such funds
3
-***2(
Explanation.>or the purposes of this sub#section% "dministrator and specified company
shall ha+e the meanin5s respecti+ely assi5ned to them in the Explanation to clause 35!
of section 18(2
)! The person responsible for ma9in5 payment of the income distributed by the Enit
Trust of India or a Butual >und and the Enit Trust of India or the Butual >und% as the
case may be% shall be liable to pay ta$ to the credit of the .entral ;o+ernment within
fourteen days from the date of distribution or payment of such income% whiche+er is
earlier(
4
-)"! The person responsible for ma9in5 payment of the income distributed by the Enit
Trust of India or a Butual >und and the Enit Trust of India or the Butual >und% as the
case may be% shall on or before the 14th day of *eptember in each year% furnish to the
prescribed income#ta$ authority
'
% a statement in the prescribed form and +erified in the
prescribed manner% 5i+in5 the details of the amount of income distributed to unit holders
durin5 the pre+ious year% the ta$ paid thereon and such other rele+ant details as may be
prescribed
'
(2
*4( &o deduction under an+ other pro%ision o! this Act shall be allowed to the ;nit 7rust
o! 3ndia or to a :utual 0und in respect o! the income which has been charged to tax
under sub-section *1( or sub-section *2(.
Interest payable for non-payment of tax.
115S. Fhere the person responsible for ma9in5 payment of the income distributed by
the
6
-specified company as referred to in clause h! of section 2 of the Enit Trust of India
Transfer of Enderta9in5 and Repeal! "ct% 2882
7
47 of 2882! or a Butual >und and the
specified company2 or the Butual >und% as the case may be% fails to pay the whole or any
part of the ta$ referred to in sub#section 1! or sub#section 2! of section 114R% within the
time allowed under sub#section )! of that section% he or it shall be liable to pay simple
interest at the rate of
&
-one2 per cent e+ery month or part thereof on the amount of such
ta$ for the period be5innin5 on the date immediately after the last date on which such ta$
was payable and endin5 with the date on which the ta$ is actually paid(
Unit Trust of India or Mutual Fund to be an assessee in default.
115T. If any person responsible for ma9in5 payment of the income distributed by the
18
-specified company as referred to in clause h! of section 2 of the Enit Trust of India
Transfer of Enderta9in5 and Repeal! "ct% 2882
11
47 of 2882! or a Butual >und and the
specified company2 or the Butual >und% as the case may be% does not pay ta$% as is
referred to in sub#section 1! or sub#section 2! of section 114R% then% he or it shall be
deemed to be an assessee in default in respect of the amount of ta$ payable by him or it
and all the pro+isions of this "ct for the collection and reco+ery of income#ta$ shall
apply(
Explanation. >or the purposes of this .hapter%
a! Butual >und means a Butual >und specified under clause 231! of section 1$1
b!
11a
***] e,uity oriented fund means
i! the Enit *cheme% 1&'3 made by the Enit Trust of India1 and
ii! such fund where the in+estible funds are in+ested by way of e,uity shares
in domestic companies to the e$tent of more than
11b
sixt+-!i%e] per cent of
the total proceeds of such fund :
Provided that the percenta5e of e,uity share holdin5 of the fund shall be
computed with reference to the annual a+era5e of the monthly a+era5es of the
openin5 and closin5 fi5ures1
*c( Enit Trust of India means the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!(2
"#
CHAPTER XII-$
SPECIAL PROVISIONS RELATING TO TAX ON INCOME RECEIVED FROM
VENTURE CAPITAL COMPANIES AND VENTURE CAPITAL FUNDS
Tax on income in certain cases.
115U.1! Aotwithstandin5 anythin5 contained in any other pro+isions of this "ct% any
income recei+ed by a person out of in+estments made in a +enture capital company or
+enture capital fund shall be char5eable to income#ta$ in the same manner as if it were
the income recei+ed by such person had he made in+estments directly in the +enture
capital underta9in5(
2! The person responsible for ma9in5 payment of the income on behalf of a +enture
capital company or a +enture capital fund and the +enture capital company or +enture
capital fund shall furnish% within such time as may be prescribed% to the person recei+in5
such income and to the prescribed income#ta$ authority
1)
% a statement in the prescribed
form
1)
and +erified in the prescribed manner% 5i+in5 details of the nature of the income
paid durin5 the pre+ious year and such other rele+ant details as may be prescribed(
)! The income paid by the +enture capital company and the +enture capital fund shall be
deemed to be of the same nature and in the same proportion in the hands of the person
recei+in5 such income as it had been recei+ed by% or had accrued to% the +enture capital
company or the +enture capital fund% as the case may be% durin5 the pre+ious year(
3! The pro+isions of .hapter /II#? or .hapter /II#E or .hapter /0II#B shall not apply
to the income paid by a +enture capital company or +enture capital fund under this
.hapter(
Explanation.>or the purposes of this .hapter% +enture capital company% +enture capital
fund and +enture capital underta9in5 shall ha+e the meanin5s respecti+ely assi5ned to
them in clause 2)>B! of section 18(2
"4
-CHAPTER XII-%
SPECIAL PROVISIONS RELATING TO INCOME OF SHIPPING COMPANIES
A.:eaning o! certain expressions
Definitions.
115V. In this .hapter% unless the conte$t otherwise re,uires%
a!bareboat charter means hirin5 of a ship for a stipulated period on terms which
5i+e the charterer possession and control of the ship% includin5 the ri5ht to
appoint the master and crew1
b!bareboat charter#cum#demise means a bareboat charter where the ownership of
the ship is intended to be transferred after a specified period to the company to
whom it has been chartered1
c!?irector#;eneral of *hippin5 means the ?irector#;eneral of *hippin5 appointed
by the .entral ;o+ernment under sub#section 1! of section 6 of the Berchant
*hippin5 "ct% 1&47 33 of 1&47!1
d!factory ship includes a +essel pro+idin5 processin5 ser+ices in respect of
processin5 of the fishin5 produce1
e!fishin5 +essel shall ha+e the meanin5 assi5ned to it in clause 12! of section )
15
of
the Berchant *hippin5 "ct% 1&47 33 of 1&47!1
!! pleasure craft means a ship of a 9ind whose primary use is for the purposes of
sport or recreation1
g!,ualifyin5 company means a company referred to in section 115E'1
h!,ualifyin5 ship means a ship referred to in section 115E11
i! sea5oin5 ship means a ship if it is certified as such by the competent authority of
any country1
4! tonna5e income means the income of a tonna5e ta$ company computed in
accordance with the pro+isions of this .hapter1
.!tonna5e ta$ acti+ities means the acti+ities referred to in sub#sections 2! and 4! of
section 115E-31
l! tonna5e ta$ company means a ,ualifyin5 company in relation to which tonna5e
ta$ option is in force1
m!tonna5e ta$ scheme means a scheme for computation of profits and 5ains of
business of operatin5 ,ualifyin5 ships under the pro+isions of this .hapter(

B.'omputation o! tonnage income !rom business o! operating 2uali!+ing ships
Computation of profits and gains from the business of operating qualifying ships.
115VA. Aotwithstandin5 anythin5 to the contrary contained in sections 27 to 3).% in the
case of a company% the income from the business of operatin5 ,ualifyin5 ships% may% at
its option% be computed in accordance with the pro+isions of this .hapter and such
income shall be deemed to be the profits and 5ains of such business char5eable to ta$
under the head Profits and 5ains of business or profession(

Operating ships.
115VB. >or the purposes of this .hapter% a company shall be re5arded as operatin5 a
ship if it operates any ship whether owned or chartered by it and includes a case where
e+en a part of the ship has been chartered in by it in an arran5ement such as slot charter%
space charter or :oint charter :
Provided that a company shall not be re5arded as the operator of a ship which has been
chartered out by it on bareboat charter#cum#demise terms or on bareboat charter terms for
a period e$ceedin5 three years(
Qualifying company.
115VC. >or the purposes of this .hapter% a company is a ,ualifyin5 company if
a! it is an Indian company1
b! the place of effecti+e mana5ement of the company is in India1
c! it owns at least one ,ualifyin5 ship1 and
d! the main ob:ect of the company is to carry on the business of operatin5 ships(
Explanation.>or the purposes of this section% place of effecti+e mana5ement of the
company means
A!the place where the board of directors of the company or its e$ecuti+e directors%
as the case may be% ma9e their decisions1 or
*B( in a case where the board of directors routinely appro+e the commercial and
strate5ic decisions made by the e$ecuti+e directors or officers of the company%
the place where such e$ecuti+e directors or officers of the company perform
their functions(
Qualifying ship.
115VD. >or the purposes of this .hapter% a ship is a ,ualifyin5 ship if
a! it is a sea 5oin5 ship or +essel of fifteen net tonna5e or more1
b! it is a ship re5istered under the Berchant *hippin5 "ct% 1&47 33 of 1&47!% or a
ship re5istered outside India in respect of which a licence has been issued by
the ?irector#;eneral of *hippin5 under section 38' or section 386 of the
Berchant *hippin5 "ct% 1&47 33 of 1&47!1 and
c! a +alid certificate in respect of such ship indicatin5 its net tonna5e is in force%
but does not include
i! a sea 5oin5 ship or +essel if the main purpose for which it is used is the
pro+ision of 5oods or ser+ices of a 9ind normally pro+ided on land1
ii! fishin5 +essels1
iii! factory ships1
i%! pleasure crafts1
%! harbour and ri+er ferries1
%i! offshore installations1
%ii!
16
-***2
*%iii(a ,ualifyin5 ship which is used as a fishin5 +essel for a period of more than
thirty days durin5 a pre+ious year(
Manner of computation of income under tonnage tax scheme.
115VE. 1! " tonna5e ta$ company en5a5ed in the business of operatin5 ,ualifyin5 ships
shall compute the profits from such business under the tonna5e ta$ scheme(
2! The business of operatin5 ,ualifyin5 ships 5i+in5 rise to income referred to in sub#
section 1! of section 115E-3 shall be considered as a separate business hereafter in this
.hapter referred to as the tonna5e ta$ business! distinct from all other acti+ities or
business carried on by the company(
)! The profits referred to in sub#section 1! shall be computed separately from the profits
and 5ains from any other business(
3! The tonna5e ta$ scheme shall apply only if an option to that effect is made in
accordance with the pro+isions of section 115ED(
4! Fhere a company en5a5ed in the business of operatin5 ,ualifyin5 ships is not
co+ered under the tonna5e ta$ scheme or% has not made an option to that effect% as the
case may be% the profits and 5ains of such company from such business shall be
computed in accordance with the other pro+isions of this "ct(
Tonnage income.
115VF. *ub:ect to the other pro+isions of this .hapter% the tonna5e income shall be
computed in accordance with section 1140; and the income so computed shall be
deemed to be the profits char5eable under the head Profits and 5ains of business or
profession and the rele+ant shippin5 income referred to in sub#section 1! of section
1140#I shall not be char5eable to ta$(
Computation of tonnage income.
115VG. 1! The tonna5e income of a tonna5e ta$ company for a pre+ious year shall be
the a55re5ate of the tonna5e income of each ,ualifyin5 ship computed in accordance with
the pro+isions of sub#sections 2! and )!(
2! >or the purposes of sub#section 1!% the tonna5e income of each ,ualifyin5 ship shall
be the daily tonna5e income of each such ship multiplied by
a! the number of days in the pre+ious year1 or
b! the number of days in part of the pre+ious year in case the ship is operated by
the company as a ,ualifyin5 ship for only part of the pre+ious year% as the case
may be(
)! >or the purposes of sub#section 2!% the daily tonna5e income of a ,ualifyin5 ship
ha+in5 tonna5e referred to in column 1! of the Table below shall be the amount specified
in the correspondin5 entry in column 2! of the Table:
T"BGE
Guali!+ing ship ha%ing
net tonnage
Amount o! dail+ tonnage
income
*1( *2(
up to 1%888 Rs( 3' for each 188 tons
e$ceedin5 1%888 but not more Rs( 3'8 plus Rs( )4 for each
than 18%888 188 tons e$ceedin5 1%888 tons
e$ceedin5 18%888 but not more Rs( )%'18 plus Rs( 27 for each
than 24%888 188 tons e$ceedin5 18%888 tons
e$ceedin5 24%888 Rs( 6%718 plus Rs( 1& for each 188 tons
e$ceedin5 24%888 tons(
3! >or the purposes of this .hapter% the tonna5e shall mean the tonna5e of a ship
indicated in the certificate referred to in section 115EB and includes the deemed tonna5e
computed in the prescribed manner
1
(
Explanation.>or the purposes of this sub#section% deemed tonna5e shall be the tonna5e in
respect of an arran5ement of purchase of slots% slot charter and an arran5ement of sharin5
of brea9#bul9 +essel(
4! The tonna5e shall be rounded off to the nearest multiple of hundred tons and for this
purpose any tonna5e consistin5 of 9ilo5rams shall be i5nored and thereafter if such
tonna5e is not a multiple of hundred% then% if the last fi5ure in that amount is fifty tons or
more% the tonna5e shall be increased to the ne$t hi5her tonna5e which is a multiple of
hundred and if the last fi5ure is less than fifty tons% the tonna5e shall be reduced to the
ne$t lower tonna5e which is a multiple of hundred1 and the tonna5e so rounded off shall
be the tonna5e of the ship for the purposes of this section(
'! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% no deduction
or set off shall be allowed in computin5 the tonna5e income under this .hapter(
Calculation in case of joint operation, etc.
115VH. 1! Fhere a ,ualifyin5 ship is operated by two or more companies by way of
:oint interest in the ship or by way of an a5reement for the use of the ship and their
respecti+e shares are definite and ascertainable% the tonna5e income of each such
company shall be an amount e,ual to a share of income proportionate to its share of that
interest(
2! *ub:ect to the pro+isions of sub#section 1!% where two or more companies are
operators of a ,ualifyin5 ship% the tonna5e income of each company shall be computed as
if each had been the only operator(
Relevant shipping income.
115V-I. 1! >or the purposes of this .hapter% the rele+ant shippin5 income of a tonna5e
ta$ company means
i! its profits from core acti+ities referred to in sub#section 2!1
ii! its profits from incidental acti+ities referred to in sub#section 4!:
Provided that where the a55re5ate of all such incomes specified in clause ii! e$ceeds
one#fourth per cent of the turno+er from core acti+ities referred to in sub#section 2!% such
e$cess shall not form part of the rele+ant shippin5 income for the purposes of this
.hapter and shall be ta$able under the other pro+isions of this "ct(
2! The core acti+ities of a tonna5e ta$ company shall be
i! its acti+ities from operatin5 ,ualifyin5 ships1 and
ii! other ship#related acti+ities mentioned as under :
A! shippin5 contracts in respect of
i! earnin5 from poolin5 arran5ements1
ii! contracts of affrei5htment(
a! poolin5 arran5ement means an a5reement between two or more persons
for pro+idin5 ser+ices throu5h a pool or operatin5 one or more ships
and sharin5 earnin5s or operatin5 profits on the basis of mutually
a5reed terms1
b! contract of affrei5htment means a ser+ice contract under which a
tonna5e ta$ company a5rees to transport a specified ,uantity of
specified products at a specified rate% between desi5nated loadin5 and
dischar5in5 ports o+er a specified period1
B! specific shippin5 trades% bein5
i! on#board or on#shore acti+ities of passen5er ships comprisin5 of fares
and food and be+era5es consumed on board1
ii! slot charters% space charters% :oint charters% feeder ser+ices% container
bo$ leasin5 of container shippin5(
)! The .entral ;o+ernment% if it considers necessary or e$pedient so to do% may% by
notification in the <fficial ;a=ette% e$clude any acti+ity referred to in clause ii! of sub#
section 2! or prescribe the limit up to which such acti+ities shall be included in the core
acti+ities for the purposes of this section(
3! E+ery notification issued under this .hapter shall be laid% as soon as may be after it is
issued% before each Couse of Parliament% while it is in session for a total period of thirty
days which may be comprised in one session or in two or more successi+e sessions% and
if% before the e$piry of the session immediately followin5 the session or the successi+e
sessions aforesaid% both Couses a5ree in ma9in5 any modification in the notification% or
both Couses a5ree that the notification should not be issued% the notification shall
thereafter ha+e effect only in such modified form or be of no effect% as the case may be1
so% howe+er% that any such modification or annulment shall be without pre:udice to the
+alidity of anythin5 pre+iously done under that notification(
4! The incidental acti+ities shall be the acti+ities which are incidental to the core
acti+ities and which may be prescribed
1"
for the purpose(
'! Fhere a tonna5e ta$ company operates any ship% which is not a ,ualifyin5 ship% the
income attributable to operatin5 such non#,ualifyin5 ship shall be computed in
accordance with the other pro+isions of this "ct(
6! Fhere any 5oods or ser+ices held for the purposes of tonna5e ta$ business are
transferred to any other business carried on by a tonna5e ta$ company% or where any
5oods or ser+ices held for the purposes of any other business carried on by such tonna5e
ta$ company are transferred to the tonna5e ta$ business and% in either case% the
consideration% if any% for such transfer as recorded in the accounts of the tonna5e ta$
business does not correspond to the mar9et +alue of such 5oods or ser+ices as on the date
of the transfer% then% the rele+ant shippin5 income under this section shall be computed as
if the transfer% in either case% had been made at the mar9et +alue of such 5oods or ser+ices
as on that date:
Provided that where% in the opinion of the "ssessin5 <fficer% the computation of the
rele+ant shippin5 income in the manner hereinbefore specified presents e$ceptional
difficulties% the "ssessin5 <fficer may compute such income on such reasonable basis as
he may deem fit(
Explanation.>or the purposes of this sub#section% mar9et +alue% in relation to any 5oods
or ser+ices% means the price that such 5oods or ser+ices would ordinarily fetch on sale in
the open mar9et(
7! Fhere it appears to the "ssessin5 <fficer that% owin5 to the close connection between
the tonna5e ta$ company and any other person% or for any other reason% the course of
business between them is so arran5ed that the business transacted between them produces
to the tonna5e ta$ company more than the ordinary profits which mi5ht be e$pected to
arise in the tonna5e ta$ business% the "ssessin5 <fficer shall% in computin5 the rele+ant
shippin5 income of the tonna5e ta$ company for the purposes of this .hapter% ta9e the
amount of income as may reasonably be deemed to ha+e been deri+ed therefrom(
Explanation.>or the purposes of this .hapter% in case the rele+ant shippin5 income of a
tonna5e ta$ company is a loss% then% such loss shall be i5nored for the purposes of
computin5 tonna5e income(
Treatment of common costs.
115V1. 1! Fhere a tonna5e ta$ company also carries on any business or acti+ity other
than the tonna5e ta$ business% common costs attributable to the tonna5e ta$ business shall
be determined on a reasonable basis(
2! Fhere any asset% other than a ,ualifyin5 ship% is not e$clusi+ely used for the tonna5e
ta$ business by the tonna5e ta$ company% depreciation on such asset shall be allocated
between its tonna5e ta$ business and other business on a fair proportion to be determined
by the "ssessin5 <fficer% ha+in5 re5ard to the use of such asset for the purpose of the
tonna5e ta$ business and for the other business(
Depreciation.
115VK. 1! >or the purposes of computin5 depreciation under clause i%! of section
1140G% the depreciation for the first pre+ious year of the tonna5e ta$ scheme hereafter
in this section referred to as the first pre+ious year! shall be computed on the written
down +alue of the ,ualifyin5 ships as specified under sub#section 2!(
2! The written down +alue of the bloc9 of assets% bein5 ships% as on the first day of the
first pre+ious year% shall be di+ided in the ratio of the boo9 written down +alue of the
,ualifyin5 ships hereafter in this section referred to as the ,ualifyin5 assets! and the
boo9 written down +alue of the non#,ualifyin5 ships hereafter in this section referred to
as the other assets!(
)! The bloc9 of ,ualifyin5 assets as determined under sub#section 2! shall constitute a
separate bloc9 of assets for the purposes of this .hapter(
3! >or the purposes of sub#section 2!% the boo9 written down +alue of the bloc9 of
,ualifyin5 assets and the bloc9 of other assets shall be computed in the followin5 manner%
namely:
a! the boo9 written down +alue of each ,ualifyin5 asset and each other asset as on
the first day of the pre+ious year and which form part of the bloc9 of assets to
be di+ided shall be determined by ta9in5 the boo9 written down +alue of each
asset appearin5 in the boo9s of account as on the last day of the precedin5
pre+ious year:
Provided that any chan5e in the +alue of the assets conse,uent to their
re+aluation after the date on which the >inance Ao( 2! "ct% 2883 recei+es the
assent of the President shall be i5nored1
b! the boo9 written down +alue of all the ,ualifyin5 assets and other assets shall
be a55re5ated1 and
c! the ratio of the a55re5ate boo9 written down +alue of the ,ualifyin5 assets to
the a55re5ate boo9 written down +alue of the other assets shall be determined(
4! Fhere an asset formin5 part of a bloc9 of ,ualifyin5 assets be5ins to be used for
purposes other than the tonna5e ta$ business% an appropriate portion of the written down
+alue allocable to such asset shall be reduced from the written down +alue of that bloc9
and shall be added to the bloc9 of other assets(
Explanation.>or the purposes of this sub#section% appropriate portion of the written down
+alue allocable to the asset% which be5ins to be used for purposes other than the tonna5e
ta$ business% shall be an amount which bears the same proportion to the written down
+alue of the bloc9 of ,ualifyin5 assets as on the first day of the pre+ious year as the boo9
written down +alue of the asset be5innin5 to be used for purposes other than tonna5e ta$
business bears to the boo9 written down +alue of all the assets formin5 the bloc9 of
,ualifyin5 asset(
'! Fhere an asset formin5 part of a bloc9 of other assets be5ins to be used for tonna5e
ta$ business% an appropriate portion of the written down +alue allocable to such asset
shall be reduced from the written down +alue of the bloc9 of other assets and shall be
added to the bloc9 of ,ualifyin5 asset(
Explanation.>or the purposes of this sub#section% appropriate portion of written down
+alue allocable to the asset which be5ins to be used for the tonna5e ta$ business shall be
an amount which bears the same proportion to the written down +alue of the bloc9 of
other assets as on the first day of the pre+ious year as the boo9 written down +alue of the
asset be5innin5 to be used for tonna5e ta$ business bears to the total boo9 written down
+alue of all the assets formin5 the bloc9 of other assets(
6! >or the purposes of computin5 depreciation under clause i%! of section 115E> in
respect of an asset mentioned in sub#sections 4! and '!% depreciation computed for the
pre+ious year shall be allocated in the ratio of the number of days for which the asset was
used for the tonna5e ta$ business and for purposes other than tonna5e ta$ business(
Explanation 1.>or the remo+al of doubts% it is hereby declared that for the purposes of
this "ct% depreciation on the bloc9 of ,ualifyin5 assets and bloc9 of other assets so
created shall be allowed as if such written down +alue referred to in sub#section 2! had
been brou5ht forward from the precedin5 pre+ious year(
Explanation 2.>or the purposes of this section% boo9 written down +alue means the
written down +alue as appearin5 in the boo9s of account(
General exclusion of deduction and set off, etc.
115VL. Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% in
computin5 the tonna5e income of a tonna5e ta$ company for any pre+ious year hereafter
in this section referred to as the rele+ant pre+ious year! in which it is char5eable to ta$ in
accordance with this .hapter
i! sections )8 to 3)B shall apply as if e+ery loss% allowance or deduction referred
to therein and relatin5 to or allowable for any of the rele+ant pre+ious years%
had been 5i+en full effect to for that pre+ious year itself1
ii! no loss referred to in sub#sections 1! and )! of section $ or sub#sections 1!
and 2! of section 1 or sub#section 1! of section 2 or sub#section 1! of
section 2A% in so far as such loss relates to the business of operatin5 ,ualifyin5
ships of the company% shall be carried forward or set off where such loss relates
to any of the pre+ious years when the company is under the tonna5e ta$
scheme1
iii! no deduction shall be allowed under .hapter 0I#" in relation to the profits and
5ains from the business of operatin5 ,ualifyin5 ships1 and
+alue of any asset used for the purposes of the tonna5e ta$ business shall be
computed as if the company has claimed and has been actually allowed the
deduction in respect of depreciation for the rele+ant pre+ious years(
Exclusion of loss.
115VM. 1! *ection 62 shall apply in respect of any losses that ha+e accrued to a
company before its option for tonna5e ta$ scheme and which are attributable to its
tonna5e ta$ business% as if such losses had been set off a5ainst the rele+ant shippin5
income in any of the pre+ious years when the company is under the tonna5e ta$ scheme(
2! The losses referred to in sub#section 1! shall not be a+ailable for set off a5ainst any
income other than rele+ant shippin5 income in any pre+ious year be5innin5 on or after
the company e$ercises its option under section 115ED(
)! "ny apportionment necessary to determine the losses referred to in sub#section 1!
shall be made on a reasonable basis(
Chargeable gains from transfer of tonnage tax assets.
115VN. "ny profits or 5ains arisin5 from the transfer of a capital asset bein5 an asset
formin5 part of the bloc9 of ,ualifyin5 assets shall be char5eable to income#ta$ in
accordance with the pro+isions of section 34% read with section 48% and the capital 5ains
so arisin5 shall be computed in accordance with the pro+isions of sections 34 to 41:
Provided that for the purpose of computin5 such profits or 5ains% the pro+isions of
section 5$ shall ha+e effect as if for the words written down +alue of the bloc9 of assets%
the words written down +alue of the bloc9 of ,ualifyin5 assets had been substituted(
Explanation.>or the purposes of this .hapter% written down +alue of the bloc9 of
,ualifyin5 assets means the written down +alue computed in accordance with the
pro+isions of sub#section 2! of section 1140D(
Exclusion from provisions of section 1151B.
115V-O. The boo9 profit or loss deri+ed from the acti+ities of a tonna5e ta$ company%
referred to in sub#section 1! of section 1140#I% shall be e$cluded from the boo9 profit of
the company for the purposes of section 114@B(
'.Drocedure !or option o! tonnage tax scheme
Method and time of opting for tonnage tax scheme.
115VP. 1! " ,ualifyin5 company may opt for the tonna5e ta$ scheme by ma9in5 an
application to the @oint .ommissioner ha+in5 :urisdiction o+er the company in the form
and manner as may be prescribed
1&
% for such scheme(
2! The application under sub#section 1! may be made by any e$istin5 ,ualifyin5
company at any time after the )8th day of *eptember% 2883 but before the 1st day of
@anuary% 2884 hereafter referred to as the initial period!:
Provided that
i! a company incorporated after the initial period1 or
ii! a ,ualifyin5 company incorporated before the initial period but which becomes
a ,ualifyin5 company for the first time after the initial period%
may ma9e an application within three months of the date of its incorporation or the date
on which it became a ,ualifyin5 company% as the case may be(
)! <n receipt of an application for option for tonna5e ta$ scheme under sub#section 1!%
the @oint .ommissioner may call for such information or documents from the company as
he thin9s necessary in order to satisfy himself about the eli5ibility of the company and
after satisfyin5 himself about such eli5ibility of the company to ma9e such option for
tonna5e ta$ scheme% he
i! shall pass an order in writin5 appro+in5 the option for tonna5e ta$ scheme1 or
ii! shall% if he is not so satisfied% pass an order in writin5 refusin5 to appro+e the
option for tonna5e ta$ scheme%
and a copy of such order shall be sent to the applicant:
Provided that no order under clause ii! shall be passed unless the applicant has been
5i+en a reasonable opportunity of bein5 heard(
3! E+ery order 5rantin5 or refusin5 the appro+al of the option for tonna5e ta$ scheme
under clause i! or clause ii!% as the case may be% of sub#section )! shall be passed
before the e$piry of one month from the end of the month in which the application was
recei+ed under sub#section 1!(
4! Fhere an order 5rantin5 appro+al is passed under sub#section )!% the pro+isions of
this .hapter shall apply from the assessment year rele+ant to the pre+ious year in which
the option for tonna5e ta$ scheme is e$ercised(
Period for which tonnage tax option to remain in force.
115VQ. 1! "n option for tonna5e ta$ scheme% after it has been appro+ed under sub#
section )! of section 1140P% shall remain in force for a period of ten years from the date
on which such option has been e$ercised and shall be ta9en into account from the
assessment year rele+ant to the pre+ious year in which such option is e$ercised(
2! "n option for tonna5e ta$ scheme shall cease to ha+e effect from the assessment year
rele+ant to the pre+ious year in which
a! the ,ualifyin5 company ceases to be a ,ualifyin5 company1
b! a default is made in complyin5 with the pro+isions contained in section 115E7
or section 115E; or section 115EE1
c! the tonna5e ta$ company is e$cluded from the tonna5e ta$ scheme under
section 115E='1
d! the ,ualifyin5 company furnishes to the "ssessin5 <fficer% a declaration in
writin5 to the effect that the pro+isions of this .hapter may not be made
applicable to it%
and the pro!its and gains o! the compan+ !rom the business o! operating 2uali!+ing ships
shall be computed in accordance with the other pro%isions o! this Act.
Renewal of tonnage tax scheme.
115VR. 1! "n option for tonna5e ta$ scheme appro+ed under sub#section )! of section
1140P may be renewed within one year from the end of the pre+ious year in which the
option ceases to ha+e effect(
*2( 7he pro%isions o! sections 115ED and 115EG shall appl+ in relation to a renewal o!
the option !or tonnage tax scheme in the same manner as the+ appl+ in relation to the
appro%al o! option !or tonnage tax scheme.
Prohibition to opt for tonnage tax scheme in certain cases.
115VS. " ,ualifyin5 company% which% on its own% opts out of the tonna5e ta$ scheme or
ma9es a default in complyin5 with the pro+isions of section 1140T or section 1140E or
section 11400 or whose option has been e$cluded from tonna5e ta$ scheme in pursuance
of an order made under sub#section 1! of section 1140J.% shall not be eli5ible to opt for
tonna5e ta$ scheme for a period of ten years from the date of optin5 out or default or
order% as the case may be(
1.'onditions !or applicabilit+ o! tonnage tax scheme
Transfer of profits to Tonnage Tax Reserve Account.
115VT. 1! " tonna5e ta$ company shall% sub:ect to and in accordance with the
pro+isions of this section% be re,uired to credit to a reser+e account hereafter in this
section referred to as the Tonna5e Ta$ Reser+e "ccount! an amount not less than twenty
per cent of the boo9 profit deri+ed from the acti+ities referred to in clauses i! and ii! of
sub#section 1! of section 1140#I in each pre+ious year to be utilised in the manner laid
down in sub#section )!:
Provided that a tonna5e ta$ company may transfer a sum in e$cess of twenty per cent of
the boo9 profit and such e$cess sum transferred shall also be utilised in the manner laid
down in sub#section )!(
Explanation.>or the purposes of this section% boo9 profit shall ha+e the same meanin5 as
in the Explanation to sub#section 2! of section 1159B so far as it relates to the income
deri+ed from the acti+ities referred to in clauses i! and ii! of sub#section 1! of section
115E-3(
2! Fhere the company has boo9 profit from the business of operatin5 ,ualifyin5 ships
and boo9 loss from any other sources% and conse,uently% the company is not in a position
to create the full or any part of the reser+es under sub#section 1!% the company shall
create the reser+es to the e$tent possible in that pre+ious year and the shortfall% if any%
shall be added to the amount of the reser+es re,uired to be created for the followin5
pre+ious year and such shortfall shall be deemed to be part of the reser+e re,uirement of
that followin5 pre+ious year :
Provided that to the e$tent the shortfall in creation of reser+es durin5 a particular
pre+ious year is carried forward to the followin5 pre+ious year under this sub#section% the
company shall be considered as ha+in5 created sufficient reser+es for the first mentioned
pre+ious year:
Provided further that nothin5 contained in the first pro+iso shall apply in respect of the
second year in case the shortfall in creation of reser+es continues for two consecuti+e
pre+ious years(
)! The amount credited to the Tonna5e Ta$ Reser+e "ccount under sub#section 1! shall
be utilised by the company before the e$piry of a period of ei5ht years ne$t followin5 the
pre+ious year in which the amount was credited
a! for ac,uirin5 a new ship for the purposes of the business of the company1 and
b! until the ac,uisition of a new ship% for the purposes of the business of operatin5
,ualifyin5 ships other than for distribution by way of di+idends or profits or for
remittance outside India as profits or for the creation of any asset outside India(
3! Fhere any amount credited to the Tonna5e Ta$ Reser+e "ccount under sub#section
1!%
a! has been utilised for any purpose other than that referred to in clause a! or
clause b! of sub#section )!1 or
b! has not been utilised for the purpose specified in clause a! of sub#section )!1
or
c! has been utilised for the purpose of ac,uirin5 a new ship as specified in clause
a! of sub#section )!% but such ship is sold or otherwise transferred% other than
in any scheme of demer5er by the company to any person at any time before
the e$piry of three years from the end of the pre+ious year in which it was
ac,uired%
an amount which bears the same proportion to the total rele+ant shippin5 income of the
year in which such reser+e was created% as the amount out of such reser+e so utilised or
not utilised bears to the total reser+e created durin5 that year under sub#section 1! shall
be ta$able under the other pro+isions of this "ct
utilised1 or
of ei5ht years specified in sub#section )!1 or
iii! in a case referred to in clause c!% in the year in which the sale or transfer too9
place:
Provided that the income so ta$able under the other pro+isions of this "ct shall be
reduced by the proportionate tonna5e income char5ed to ta$ in the year of creation of
such reser+es(
4! Aotwithstandin5 anythin5 contained in any other pro+ision of this .hapter% where the
amount credited to the Tonna5e Ta$ Reser+e "ccount in accordance with sub#section 1!
is less than the minimum amount re,uired to be credited under sub#section 1!% an amount
which bears the same proportion to the total rele+ant shippin5 income% as the shortfall in
credit to the reser+es bears to the minimum reser+e re,uired to be credited under sub#
section 1! shall not be ta$able under the tonna5e ta$ scheme and shall be ta$able under
the other pro+isions of this "ct(
'! If the reser+e re,uired to be created under sub#section 1! is not created for any two
consecuti+e pre+ious years% the option of the company for tonna5e ta$ scheme shall cease
to ha+e effect from the be5innin5 of the pre+ious year followin5 the second consecuti+e
pre+ious year in which the failure to create the reser+e under sub#section 1! had
occurred(
Explanation(>or the purposes of this section% new ship includes a ,ualifyin5 ship which%
before the date of ac,uisition by the ,ualifyin5 company was used by any other person% if
it was not at any time pre+ious to the date of such ac,uisition owned by any person
resident in India(
Minimum training requirement for tonnage tax company.
115VU. 1! " tonna5e ta$ company% after its option has been appro+ed under sub#section
)! of section 1140P% shall comply with the minimum trainin5 re,uirement in respect of
trainee officers in accordance with the 5uidelines
28
framed by the ?irector#;eneral of
*hippin5 and notified in the <fficial ;a=ette by the .entral ;o+ernment(
2! The tonna5e ta$ company shall be re,uired to furnish a copy of the certificate issued
by the ?irector#;eneral of *hippin5 alon5 with the return of income under section 13# to
the effect that such company has complied with the minimum trainin5 re,uirement in
accordance with the 5uidelines referred to in sub#section 1! for the pre+ious year(
)! If the minimum trainin5 re,uirement is not complied with for any fi+e consecuti+e
pre+ious years% the option of the company for tonna5e ta$ scheme shall cease to ha+e
effect from the be5innin5 of the pre+ious year followin5 the fifth consecuti+e pre+ious
year in which the failure to comply with the minimum trainin5 re,uirement under sub#
section 1! had occurred(
Limit for charter in of tonnage.
21
115VV. 1! In the case of e+ery company which has opted for tonna5e ta$ scheme% not
more than forty#nine per cent of the net tonna5e of the ,ualifyin5 ships operated by it
durin5 any pre+ious year shall be chartered in(
2! The proportion of net tonna5e referred to in sub#section 1! in respect of a pre+ious
year shall be calculated based on the a+era5e of net tonna5e durin5 that pre+ious year(
)! >or the purposes of sub#section 2!% the a+era5e of net tonna5e shall be computed in
such manner as may be prescribed in consultation with the ?irector#;eneral of *hippin5(
3! Fhere the net tonna5e of ships chartered in e$ceeds the limit under sub#section 1!
durin5 any pre+ious year% the total income of such company in relation to that pre+ious
year shall be computed as if the option for tonna5e ta$ scheme does not ha+e effect for
that pre+ious year(
4! Fhere the limit under sub#section 1! had e$ceeded in any two consecuti+e pre+ious
years% the option for tonna5e ta$ scheme shall cease to ha+e effect from the be5innin5 of
the pre+ious year followin5 the second consecuti+e pre+ious year in which the limit had
e$ceeded(
Explanation.>or the purposes of this section% the term chartered in shall e$clude a ship
chartered in by the company on bareboat charter#cum#demise terms(
Maintenance and audit of accounts.
115VW."n option for tonna5e ta$ scheme by a tonna5e ta$ company shall not ha+e
effect in relation to a pre+ious year unless such company
i! maintains separate boo9s of account in respect of the business of operatin5
,ualifyin5 ships1 and
ii! furnishes% alon5 with the return of income for that pre+ious year% the report of
an accountant% in the prescribed form
22
duly si5ned and +erified by such
accountant(
Explanation(>or the purposes of this section% accountant shall ha+e the same meanin5 as
in the E$planation below sub#section 2! of section 277(
Determination of tonnage.
115VX. 1! >or the purposes of this .hapter%
a! the tonna5e of a ship shall be determined in accordance with the +alid
certificate indicatin5 its tonna5e1
b! +alid certificate means%
i! in case of ships re5istered in India
a! ha+in5 a len5th of less than twenty#four metres% a certificate issued
under the Berchant *hippin5 Tonna5e Beasurement of *hip! Rules%
1&76 made under the Berchant *hippin5 "ct% 1&47 33 of 1&47!1
b! ha+in5 a len5th of twenty#four metres or more% an international tonna5e
certificate issued under the pro+isions of the .on+ention on Tonna5e
Beasurement of *hips% 1&'&% as specified in the Berchant *hippin5
Tonna5e Beasurement of *hip! Rules% 1&76 made under the Berchant
*hippin5 "ct% 1&47 33 of 1&47!1
ii! in case of ships re5istered outside India% a licence issued by the ?irector#
;eneral of *hippin5 under section 38' or section 386 of the Berchant
*hippin5 "ct% 1&47 33 of 1&47! specifyin5 the net tonna5e on the basis of
Tonna5e .ertificate issued by the >la5 *tate "dministration where the ship
is re5istered or any other e+idence acceptable to the ?irector#;eneral of
*hippin5 produced by the ship owner while see9in5 permission for
charterin5 in the ship(
E.Amalgamation and demerger o! shipping companies
Amalgamation.
115VY. Fhere there has been an amal5amation of a company with another company or
companies% then% sub:ect to the other pro+isions of this section% the pro+isions relatin5 to
the tonna5e ta$ scheme shall% as far as may be% apply to the amal5amated company if it is
a ,ualifyin5 company:
Provided that where the amal5amated company is not a tonna5e ta$ company% it shall
e$ercise an option for tonna5e ta$ scheme under sub#section 1! of section 115ED within
three months from the date of the appro+al of the scheme of amal5amation:
Provided further that where the amal5amatin5 companies are tonna5e ta$ companies%
the pro+isions of this .hapter shall% as far as may be% apply to the amal5amated company
for such period as the option for tonna5e ta$ scheme which has the lon5est une$pired
period continues to be in force:
Provided also that where one of the amal5amatin5 companies is a ,ualifyin5 company as
on the 1st day of <ctober% 2883 and which has not e$ercised the option for tonna5e ta$
scheme within the initial period% the pro+isions of this .hapter shall not apply to the
amal5amated company and the income of the amal5amated company from the business
of operatin5 ,ualifyin5 ships shall be computed in accordance with the other pro+isions
of this "ct(
Demerger.
115VZ. Fhere in a scheme of demer5er% the demer5ed company transfers its business to
the resultin5 company before the e$piry of the option for tonna5e ta$ scheme% then%
sub:ect to the other pro+isions of this .hapter% the tonna5e ta$ scheme shall% as far as may
be% apply to the resultin5 company for the une$pired period if it is a ,ualifyin5 company:
Provided that the option for tonna5e ta$ scheme in respect of the demer5ed company
shall remain in force for the une$pired period of the tonna5e ta$ scheme if it continues to
be a ,ualifyin5 company(
0.:iscellaneous
Effect of temporarily ceasing to operate qualifying ships.
115VZA. 1! " temporary cessation as a5ainst permanent cessation! of operatin5 any
,ualifyin5 ship by a company shall not be considered as a cessation of operatin5 of such
,ualifyin5 ship and the company shall be deemed to be operatin5 such ,ualifyin5 ship for
the purposes of this .hapter(
2! Fhere a ,ualifyin5 company continues to operate a ship% which temporarily ceases to
be a ,ualifyin5 ship% such ship shall not be considered as a ,ualifyin5 ship for the
purposes of this .hapter(
5.Dro%isions o! this 'hapter not to appl+ in certain cases
Avoidance of tax.
115VZB. 1! *ub:ect to the pro+isions of this .hapter% the tonna5e ta$ scheme shall not
apply where a tonna5e ta$ company is a party to any transaction or arran5ement which
amounts to an abuse of the tonna5e ta$ scheme(
2! >or the purposes of sub#section 1!% a transaction or arran5ement shall be considered
an abuse if the enterin5 into or the application of such transaction or arran5ement results%
or would but for this section ha+e resulted% in a ta$ ad+anta5e bein5 obtained for
i! a person other than a tonna5e ta$ company1 or
ii! a tonna5e ta$ company in respect of its non#tonna5e ta$ acti+ities(
Explanation.>or the purposes of this section% ta$ ad+anta5e include%
i! the determination of the allowance for any e$pense or interest% or the determination
of any cost or e$pense allocated or apportioned% or% as the case may be% which has
the effect of reducin5 the income or increasin5 the loss% as the case may be% from
acti+ities other than tonna5e ta$ acti+ities char5eable to ta$% computed on the basis
of entries made in the boo9s of account in respect of the pre+ious year in which the
transaction was entered into1 or
ii! a transaction or arran5ement which produces to the tonna5e ta$ company more
than ordinary profits which mi5ht be e$pected to arise from tonna5e ta$ acti+ities(
Exclusion from tonnage tax scheme.
115VZC. 1! Fhere a tonna5e ta$ company is a party to any transaction or arran5ement
referred to in sub#section 1! of section 1140JB% the "ssessin5 <fficer shall% by an order
in writin5% e$clude such company from the tonna5e ta$ scheme:
Provided that an opportunity shall be 5i+en by the "ssessin5 <fficer by ser+in5 a notice
callin5 upon such company to show cause% on a date and time to be specified in the
notice% why it should not be e$cluded from the tonna5e ta$ scheme:
Provided further that no order under this sub#section shall be passed without the
pre+ious appro+al of the .hief .ommissioner(
2! The pro+isions of this section shall not apply where the company shows to the
satisfaction of the "ssessin5 <fficer that the transaction or arran5ement was a bona !ide
commercial transaction and had not been entered into for the purpose of obtainin5 ta$
ad+anta5e under this .hapter(
)! Fhere an order has been passed under sub#section 1! by the "ssessin5 <fficer
e$cludin5 the tonna5e ta$ company from the tonna5e ta$ scheme% the option for tonna5e
ta$ scheme shall cease to be in force from the first day of the pre+ious year in which the
transaction or arran5ement was entered into(2
#&
-CHAPTER XII-H
#&A
INCOME-TAX ON FRINGE BENEFITS
"(Beanin5 of certain e$pressions
Definitions.
115W. 3n this 'hapter) unless the context otherwise re2uires)
*a( emplo+er means)
*i( a compan+-
*ii( a !irm-
23
*iii( an association o! persons or a bod+ o! indi%iduals) whether incorporated or
not-]
*i+( a local authorit+- and
*+( e%er+ arti!icial 4uridical person) not !alling within an+ o! the preceding sub-
clausesA
24
Provided that an+ person eligible !or exemption under clause *2).( o!
section 1$ or registered under section 12AA or a political part+ registered
under section 2#A o! the 6epresentation o! the Deople Act) 1#51 *43 o! 1#51(
shall not be deemed to be an emplo+er !or the purposes o! this 'hapter-]
*b( !ringe bene!it tax or tax means the tax chargeable under section 115,A.
B(Basis of char5e
Charge of fringe benefit tax.
115WA.*1( 3n addition to the income-tax charged under this Act) there shall be charged
!or e%er+ assessment +ear commencing on or a!ter the 1st da+ o! April) 2$$6) additional
income-tax *in this Act re!erred to as !ringe bene!it tax( in respect o! the !ringe bene!its
pro%ided or deemed to ha%e been pro%ided b+ an emplo+er to his emplo+ees during the
pre%ious +ear at the rate o! thirt+ per cent on the %alue o! such !ringe bene!its.
*2( &otwithstanding that no income-tax is pa+able b+ an emplo+er on his total income
computed in accordance with the pro%isions o! this Act) the tax on !ringe bene!its shall be
pa+able b+ such emplo+er.
Fringe benefits.
115WB. *1( 0or the purposes o! this 'hapter) !ringe bene!its means an+ consideration
!or emplo+ment pro%ided b+ wa+ o!
*a( an+ pri%ilege) ser%ice) !acilit+ or amenit+) directl+ or indirectl+) pro%ided b+ an
emplo+er) whether b+ wa+ o! reimbursement or otherwise) to his emplo+ees
*including !ormer emplo+ee or emplo+ees(-
*b( an+ !ree or concessional tic.et pro%ided b+ the emplo+er !or pri%ate 4ourne+s o!
his emplo+ees or their !amil+ members- and
*c( an+ contribution b+ the emplo+er to an appro%ed superannuation !und !or
emplo+ees.
*2( 7he !ringe bene!its shall be deemed to ha%e been pro%ided b+ the emplo+er to his
emplo+ees) i! the emplo+er has) in the course o! his business or pro!ession *including an+
acti%it+ whether or not such acti%it+ is carried on with the ob4ect o! deri%ing income)
pro!its or gains( incurred an+ expense on) or made an+ pa+ment !or) the !ollowing
purposes) namel+A
*"( entertainment-
*B( pro%ision o! hospitalit+ o! e%er+ .ind b+ the emplo+er to an+ person) whether
b+ wa+ o! pro%ision o! !ood or be%erages or in an+ other manner whatsoe%er
and whether or not such pro%ision is made b+ reason o! an+ express or implied
contract or custom or usage o! trade but does not include
*i( an+ expenditure on) or pa+ment !or) !ood or be%erages pro%ided b+ the
emplo+er to his emplo+ees in o!!ice or !actor+-
*ii( an+ expenditure on or pa+ment through paid %ouchers which are not
trans!erable and usable onl+ at eating 4oints or outlets-
*.( con!erence *other than !ee !or participation b+ the emplo+ees in an+
con!erence(.
E$planation(0or the purposes o! this clause) an+ expenditure on con%e+ance)
tour and tra%el *including !oreign tra%el() on hotel) or boarding and lodging in
connection with an+ con!erence shall be deemed to be expenditure incurred !or
the purposes o! con!erence-
*?( sales promotion including publicit+A
Provided that an+ expenditure on ad%ertisement)
*i( being the expenditure *including rental( on ad%ertisement o! an+ !orm in
an+ print *including 4ournals) catalogues or price lists( or electronic media
or transport s+stem-
*ii( being the expenditure on the holding o!) or the participation in) an+ press
con!erence or business con%ention) !air or exhibition-
*iii( being the expenditure on sponsorship o! an+ sports e%ent or an+ other e%ent
organised b+ an+ 5o%ernment agenc+ or trade association or bod+-
*i+( being the expenditure on the publication in an+ print or electronic media o!
an+ notice re2uired to be published b+ or under an+ law or b+ an order o! a
court or tribunal-
*+( being the expenditure on ad%ertisement b+ wa+ o! signs) art wor.) painting)
banners) awnings) direct mail) electric spectaculars) .ios.s) hoardings) bill
boards or b+ wa+ o! such other medium o! ad%ertisement-
25a
and]
*+i( being the expenditure b+ wa+ o! pa+ment to an+ ad%ertising agenc+ !or the
purposes o! clauses *i( to *+( abo%e)
The following clauses (vii) and (viii) shall be inserted after clause (vi) of
proviso to clause (') of sub-section (2) of section 115WB by the Finance
Act, 2006, w.e.f. 1-4-2007 :
*+ii( being the expenditure on distribution o! !ree samples o! medicines or o!
medical e2uipment) to doctors- and
*+iii( being the expenditure b+ wa+ o! pa+ment to an+ person o! repute !or
promoting the sale o! goods or ser%ices o! the business o! the emplo+er)
shall not be considered as expenditure on sales promotion including publicit+-
*E( emplo+ees wel!are.
E$planation(0or the purposes o! this clause) an+ expenditure incurred or
pa+ment made to !ul!il an+ statutor+ obligation or mitigate occupational
ha8ards or pro%ide !irst aid !acilities in the hospital or dispensar+ run b+ the
emplo+er shall not be considered as expenditure !or emplo+ees wel!are-
*>( con%e+ance)
25b
tour and tra%el *including !oreign tra%el(]-
*;( use o! hotel) boarding and lodging !acilities-
*C( repair) running *including !uel() maintenance o! motor cars and the amount o!
depreciation thereon-
*I( repair) running *including !uel( and maintenance o! aircra!ts and the amount
o! depreciation thereon-
*@( use o! telephone *including mobile phone( other than expenditure on leased
telephone lines-
*D( maintenance o! an+ accommodation in the nature o! guest house other than
accommodation used !or training purposes-
*G( !esti%al celebrations-
*B( use o! health club and similar !acilities-
*A( use o! an+ other club !acilities-
*<( gi!ts- andI
*P( scholarships.
The following clause (Q) shall be inserted after clause (P) in sub-section (2) of
section 115WB by the Finance Act, 2006, w.e.f. 1-4-2007 :
*G( tour and tra%el *including !oreign tra%el(.
*3( 0or the purposes o! sub-section *1() the pri%ilege) ser%ice) !acilit+ or amenit+ does not
include per2uisites in respect o! which tax is paid or pa+able b+ the emplo+ee
24c
or an+
bene!it or amenit+ in the nature o! !ree or subsidised transport or an+ such allowance
pro%ided b+ the emplo+er to his emplo+ees !or 4ourne+s b+ the emplo+ees !rom their
residence to the place o! wor. or such place o! wor. to the place o! residence](
Value of fringe benefits.
115WC.*1( 0or the purpose o! this 'hapter) the %alue o! !ringe bene!its shall be the
aggregate o! the !ollowing) namel+A
*a( cost at which the bene!its re!erred to in clause *b( o! sub-section *1( o! section
115,B) is pro%ided b+ the emplo+er to the general public as reduced b+ the
amount) i! an+) paid b+) or reco%ered !rom) his emplo+ee or emplo+eesA
Provided that in a case where the expenses o! the nature re!erred to in clause
*b( o! sub-section *1( o! section 115,B are included in an+ other clause o! sub-
section *2( o! the said section) the total expenses included under such other
clause shall be reduced b+ the amount o! expenditure re!erred to in the said
clause b! !or computing the %alue o! !ringe bene!its-
*b( actual amount o! the contribution re!erred to in clause *c( o! sub-section *1( o!
section 115,B-
The following clause (b) shall be substituted for the existing clause (b) of
sub-section (1) of section 115WC by the Finance Act, 2006, w.e.f. 1-4-2007 :
*b( the amount o! contribution) re!erred to in clause *c( o! sub-section *1( o!
section 115,B) which exceeds one la.h rupees in respect o! each emplo+ee-
*c( twent+ per cent o! the expenses re!erred to in clauses *"( to *D( o! sub-section
*2( o! section 115,B-
*d( !i!t+ per cent o! the expenses re!erred to in clauses *G( to *P( o! sub-section *2(
o! section 115,B.
The following clause (e) shall be inserted after clause (d) of sub-section (1)
of section 115WC by the Finance Act, 2006, w.e.f. 1-4-2007 :
*e( !i%e per cent o! the expenses re!erred to in clause *G( o! sub-section *2( o!
section 115,B.
*2( &otwithstanding an+thing contained in sub-section *1()
*a( in the case o! an emplo+er engaged in the business o! hotel) the %alue o! !ringe
bene!its !or the purposes re!erred to in clause *B( o! sub-section *2( o! section
115,B shall be !i%e per cent instead o! twent+ per cent re!erred to in clause *c(
o! sub-section *1(-
The following clauses (aa) and (ab) shall be inserted after clause (a) of sub-
section (2) of section 115WC by the Finance Act, 2006, w.e.f. 1-4-2007 :
*aa( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
goods b+ aircra!t) the %alue o! !ringe bene!its !or the purposes re!erred to in
clause *B( o! sub-section *2( o! section 115,B shall be !i%e per cent instead o!
twent+ per cent re!erred to in clause *c( o! sub-section *1(-
*ab( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
goods b+ ship) the %alue o! !ringe bene!its !or the purposes re!erred to in clause
*B( o! sub-section *2( o! section 115,B shall be !i%e per cent instead o! twent+
per cent re!erred to in clause *c( o! sub-section *1(-
*b( in the case o! an emplo+er engaged in the business o! construction) the %alue o!
!ringe bene!its !or the purposes re!erred to in clause >! o! sub-section *2( o!
section 115,B shall be !i%e per cent instead o! twent+ per cent re!erred to in
clause *c( o! sub-section *1(-
*c( in the case o! an emplo+er engaged in the business o! manu!acture or
production o! pharmaceuticals) the %alue o! !ringe bene!its !or the purposes
re!erred to in clauses *>( and *;( o! sub-section *2( o! section 115,B shall be
!i%e per cent instead o! twent+ per cent re!erred to in clause *c( o! sub-section
*1(1
*d( in the case o! an emplo+er engaged in the business o! manu!acture or
production o! computer so!tware) the %alue o! !ringe bene!its !or the purposes
re!erred to in clauses >! and *;( o! sub-section *2( o! section 115,B shall be
!i%e per cent instead o! twent+-per cent re!erred to in clause *c( o! sub-section
*1(-
The following clauses (da) and (db) shall be inserted after clause (d) of sub-
section (2) of section 115WC by the Finance Act, 2006, w.e.f. 1-4-2007 :
*da( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
clause *;( o! sub- section *2( o! section 115,B shall be !i%e per cent instead o!
*db( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
goods b+ ship) the %alue o! !ringe bene!its !or the purposes re!erred to in clause
*;( o! sub-section *2( o! section 115,B shall be !i%e per cent instead o! twent+
per cent re!erred to in clause *c( o! sub-section *1(-
*e( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
goods b+ motor car) the %alue o! !ringe bene!its !or the purposes re!erred to in
clause C! o! sub-section *2( o! section 115,B shall be !i%e per cent instead o!
*f( in the case o! an emplo+er engaged in the business o! carriage o! passengers or
clause *I( o! sub-section *2( o! section 115,B shall be ta.en as Ail(

.(Procedure for filin5 of return in respect of frin5e benefits% assessment and payment of
ta$ in respect thereof
Return of fringe benefits.
115WD.*1( ,ithout pre4udice to the pro%isions contained in section 13#) e%er+ emplo+er
who during a pre%ious +ear has paid or made pro%ision !or pa+ment o! !ringe bene!its to
his emplo+ees) shall) on or be!ore the due date) !urnish or cause to be !urnished a return
o! !ringe bene!its to the Assessing /!!icer in the prescribed !orm and %eri!ied in the
prescribed manner and setting !orth such other particulars as ma+ be prescribed) in
respect o! the pre%ious +ear.
Explanation.3n this sub-section) due date means)
*a( where the emplo+er is
*i( a compan+- or
*ii( a person *other than a compan+( whose accounts are re2uired to be
audited under this Act or under an+ other law !or the time being in !orce)
the 31st da+ o! /ctober o! the assessment +ear-
*b( in the case o! an+ other emplo+er) the 31st da+ o! 9ul+ o! the assessment +ear.
2! In the case of any employer who% in the opinion of the "ssessin5 <fficer% is
responsible for payin5 frin5e benefit ta$ under this "ct and who has not furnished a
return under sub#section 1!% the "ssessin5 <fficer may% after the due date% issue a notice
to him and ser+e the same upon him% re,uirin5 him to furnish within thirty days from the
date of ser+ice of the notice% the return in the prescribed form and +erified in the
prescribed manner and settin5 forth such other particulars as may be prescribed(
*3( An+ emplo+er responsible !or pa+ing !ringe bene!it tax who has not !urnished a return
within the time allowed under sub-section *1( or within the time allowed under a notice
issued under sub-section *2() ma+ !urnish the return !or an+ pre%ious +ear) at an+ time
be!ore the expir+ o! one +ear !rom the end o! the rele%ant assessment +ear or be!ore the
completion o! the assessment) whiche%er is earlier.
*4( 3! an+ emplo+er) ha%ing !urnished a return under sub-section *1() or in pursuance o! a
notice issued under sub-section *2() disco%ers an+ omission or an+ wrong statement
therein) he ma+ !urnish a re%ised return at an+ time be!ore the expir+ o! one +ear !rom
the end o! the rele%ant assessment +ear or be!ore the completion o! the assessment)
whiche%er is earlier
Assessment.
115WE. *1( ,here a return has been made under section 115,1)
*i( i! an+ tax or interest is !ound due on the basis o! such return) a!ter ad4ustment
o! an+ ad%ance tax paid) an+ tax paid on sel!-assessment and an+ amount paid
otherwise b+ wa+ o! tax or interest) then) without pre4udice to the pro%isions o!
sub-section *2() an intimation shall be sent to the assessee speci!+ing the sum
so pa+able) and such intimation shall be deemed to be a notice o! demand
issued under section 156 and all the pro%isions o! this Act shall appl+
accordingl+- and
*ii( i! an+ re!und is due on the basis o! such return) it shall be granted to the
assessee and an intimation to this e!!ect shall be sent to the assesseeA
Provided that except as otherwise pro%ided in this sub-section) the ac.nowledge-ment o!
the return shall be deemed to be an intimation under this sub-section where either no
sum is pa+able b+ the assessee or no re!und is due to himA
Provided further that no intimation under this sub-section shall be sent a!ter the expir+
o! one +ear !rom the end o! the !inancial +ear in which the return is made.
*2( ,here a return has been !urnished under section 115,1) the Assessing /!!icer shall)
i! he considers it necessar+ or expedient to ensure that the assessee has not understated
the %alue o! !ringe bene!its or has not underpaid the tax in an+ manner) ser%e on the
assessee a notice re2uiring him on a date to be speci!ied therein) either to attend his
o!!ice or to produce) or cause to be produced) an+ e%idence on which the assessee ma+
rel+ in support o! the returnA
Provided that no notice under this sub-section shall be ser%ed on the assessee a!ter the
expir+ o! twel%e months !rom the end o! the month in which the return is !urnished.
*3( /n the da+ speci!ied in the notice issued under sub-section *2() or as soon a!terwards
as ma+ be) a!ter hearing such e%idence as the assessee ma+ produce and such other
e%idence as the Assessing /!!icer ma+ re2uire on speci!ied points) and a!ter ta.ing into
account all rele%ant material which he has gathered) the Assessing /!!icer shall) b+ an
order in writing) ma.e an assessment o! the %alue o! the !ringe bene!its paid or pa+able
b+ the assessee) and determine the sum pa+able b+ him or re!und o! an+ amount due to
him on the basis o! such assessment.
*4( ,here a regular assessment under sub-section *3( or section 115,0 is made)
*a( an+ tax or interest paid b+ the assessee under sub-section *1( shall be deemed
to ha%e been paid towards such regular assessment-
*b( i! no re!und is due on regular assessment or the amount re!unded under sub-
section *1( exceeds the amount re!undable on regular assessment) the whole or
the excess amount so re!unded shall be deemed to be tax pa+able b+ the
assessee and the pro%isions o! this Act shall appl+ accordingl+.
Best judgment assessment.
115WF. *1( 3! an+ person) being an emplo+er
*a( !ails to ma.e the return re2uired under sub-section *1( o! section 115,1 and
has not made a return under sub-section *3( or a re%ised return under sub-
section *4( o! that section) or
*b( !ails to compl+ with all the terms o! a notice issued under sub-section *2( o!
section 115,1 or !ails to compl+ with a direction issued under sub-section
*2A( o! section 142) or
*c( ha%ing made a return) !ails to compl+ with all the terms o! a notice issued
under sub-section *2( o! section 115,E)
the Assessing /!!icer) a!ter ta.ing into account all rele%ant material which the Assessing
/!!icer has gathered) shall) a!ter gi%ing the assessee an opportunit+ o! being heard) ma.e
the assessment o! the !ringe bene!its to the best o! his 4udgment and determine the sum
pa+able b+ the assessee on the basis o! such assessmentA
Provided that such opportunit+ shall be gi%en b+ the Assessing /!!icer b+ ser%ing a
notice calling upon the assessee to show cause) on a date and time to be speci!ied in the
notice as to wh+ the assessment should not be completed to the best o! his 4udgmentA
Provided further that it shall not be necessar+ to gi%e such opportunit+ in a case where
a notice under sub-section *2( o! section 115,1 has been issued prior to the ma.ing o!
an assessment under this section.
Fringe benefits escaping assessment.
115WG. 3! the Assessing /!!icer has reason to belie%e that an+ !ringe bene!its
chargeable to tax ha%e escaped assessment !or an+ assessment +ear) he ma+) sub4ect to
the pro%isions o! sections 115,C) 15$ and 153) assess or reassess such !ringe bene!its
and also an+ other !ringe bene!its chargeable to tax which ha%e escaped assessment and
which come to his notice subse2uentl+ in the course o! the proceedings under this
section) !or the assessment +ear concerned *herea!ter re!erred to as the rele%ant
assessment +ear(.
E$planation(0or the purposes o! this section) the !ollowing shall also be deemed to be
cases where !ringe bene!its chargeable to tax ha%e escaped assessment) namel+A
*a( where no return o! !ringe bene!its has been !urnished b+ the assessee-
*b( where a return o! !ringe bene!its has been !urnished b+ the assessee but no
assessment has been made and it is noticed b+ the Assessing /!!icer that the
assessee has understated the %alue o! !ringe bene!its in the return-
*c( where an assessment has been made) but the !ringe bene!its chargeable to tax
ha%e been under-assessed.
Issue of notice where fringe benefits have escaped assessment.
115WH. *1( Be!ore ma.ing the assessment or reassessment under section 115,5) the
Assessing /!!icer shall ser%e on the assessee a notice re2uiring him to !urnish within
such period as ma+ be speci!ied in the notice) a return o! the !ringe bene!its in respect o!
which he is assessable under this 'hapter during the pre%ious +ear corresponding to the
rele%ant assessment +ear) in the prescribed !orm and %eri!ied in the prescribed manner
and setting !orth such other particulars as ma+ be prescribed) and the pro%isions o! this
'hapter shall) so !ar as ma+ be) appl+ accordingl+ as i! such return were a return
re2uired to be !urnished under section 115,1.
*2( 7he Assessing /!!icer shall) be!ore issuing an+ notice under this section) record his
reasons !or doing so.
*3( &o notice under sub-section *1( shall be issued !or the rele%ant assessment +ear a!ter
the expir+ o! six +ears !rom the end o! the rele%ant assessment +ear.
E$planation.3n determining !ringe bene!its chargeable to tax which ha%e escaped
assessment !or the purposes o! this sub-section) the pro%isions o! the E$planation to
section 115,5 shall appl+ as the+ appl+ !or the purposes o! that section.
3! In a case where an assessment under sub#section )! of section 114FE or section
114F; has been made for the rele+ant assessment year% no notice shall be issued under
sub#section 1! by an "ssessin5 <fficer% after the e$piry of four years from the end of the
rele+ant assessment year% unless the .hief .ommissioner or .ommissioner is satisfied%
on the reasons recorded by the "ssessin5 <fficer% that it is a fit case for the issue of such
notice(
Payment of fringe benefit tax.
115WI. &otwithstanding that the regular assessment in respect o! an+ !ringe bene!its is
to be made in a later assessment +ear) the tax on such !ringe bene!its shall be pa+able in
ad%ance during an+ !inancial +ear) in accordance with the pro%isions o! section 115,9)
in respect o! the !ringe bene!its which would be chargeable to tax !or the assessment +ear
immediatel+ !ollowing that !inancial +ear) such !ringe bene!its being herea!ter in this
'hapter re!erred to as the current !ringe bene!its.
Advance tax in respect of fringe benefits.
115W1. *1( E%er+ assessee who is liable to pa+ ad%ance tax under section 115,3) shall
on his own accord) pa+ ad%ance tax on his current !ringe bene!its calculated in the
manner laid down in sub-section *2(.
*2( 7he amount o! ad%ance tax pa+able b+ an assessee in the !inancial +ear shall be thirt+
per cent o! the %alue o! the !ringe bene!its re!erred to in section 115,') paid or pa+able
in each 2uarter and shall be pa+able on or be!ore the 15th da+ o! the month !ollowing
such 2uarterA
Provided that the ad%ance tax pa+able !or the 2uarter ending on the 31st da+ o! :arch
o! the !inancial +ear shall be pa+able on or be!ore the 15th da+ o! :arch o! the said
!inancial +ear.
*3( ,here an assessee) has !ailed to pa+ the ad%ance tax !or an+ 2uarter or where the
ad%ance tax paid b+ him is less than thirt+ per cent o! the %alue o! !ringe bene!its paid or
pa+able in that 2uarter) he shall be liable to pa+ simple interest at the rate o! one per
cent on the amount b+ which the ad%ance tax paid !alls short o!) thirt+ per cent o! the
%alue o! !ringe bene!its !or an+ 2uarter) !or e%er+ month or part o! the month !or which
the short!all continues.
Interest for default in furnishing return of fringe benefits.
115WK. *1( ,here the return o! !ringe bene!its !or an+ assessment +ear under sub-
section *1( or sub-section *3( o! section 115,1 or in response to a notice under sub-
section *2( o! that section) is !urnished a!ter the due date) or is not !urnished) the
emplo+er shall be liable to pa+ simple interest at the rate o! one per cent !or e%er+ month
or part o! a month comprised in the period commencing on the date immediatel+
!ollowing the due date) and)
*a( where the return is !urnished a!ter the due date) ending on the date o!
!urnishing o! the return- or
*b( where no return has been !urnished) ending on the date o! completion o! the
assessment under section 115,0)
on the amount o! the tax on the %alue o! !ringe bene!its as determined under sub-section
*1( o! section 115,E or regular assessment as reduced b+ the ad%ance tax paid under
section 115,9.
E$planation 1(3n this section) due date means the date speci!ied in the E$planation to
sub-section *1( o! section 115,1 as applicable in the case o! the emplo+er.
E$planation 2(,here) in relation to an assessment +ear) an assessment is made !or the
!irst time under section 115,5) the assessment so made shall be regarded as a regular
assessment !or the purposes o! this section.
*2( 7he pro%isions contained in sub-sections *2( to *4( o! section 234A shall) so !ar as
ma+ be) appl+ to this section.
Application of other provisions of this Act.
115WL. <a%e as otherwise pro%ided in this 'hapter) all other pro%isions o! this Act
shall) as !ar as ma+ be) appl+ in relation to !ringe bene!its also.2
CHAPTER XIII
INCOME-TAX AUTHORITIES
A.Appointment and control
26
-Income-tax authorities.
116. There shall be the followin5 classes of income#ta$ authorities for the purposes of
this "ct% namely :
a! the .entral Board of ?irect Ta$es constituted under the .entral Boards of
Re+enue "ct% 1&') 43 of 1&')!%
b! ?irectors#;eneral of Income#ta$ or .hief .ommissioners of Income#ta$%
c! ?irectors of Income#ta$ or .ommissioners of Income#ta$ or .ommissioners of
Income#ta$ "ppeals!%
26
-cc! "dditional ?irectors of Income#ta$ or "dditional .ommissioners of Income#
ta$ or "dditional .ommissioners of Income#ta$ "ppeals!%2
27
-cca! @oint ?irectors of Income#ta$ or @oint .ommissioners of Income#ta$%2
d! ?eputy ?irectors of Income#ta$ or ?eputy .ommissioners of Income#ta$ or
?eputy .ommissioners of Income#ta$ "ppeals!%
e! "ssistant ?irectors of Income#ta$ or "ssistant .ommissioners of Income#ta$%
!! Income#ta$ <fficers%
g! Ta$ Reco+ery <fficers%
h! Inspectors of Income#ta$(2
29
-Appointment of income-tax authorities.
117. 1! The .entral ;o+ernment may appoint such persons as it thin9s fit to be income#
ta$ authorities(
2! Fithout pre:udice to the pro+isions of sub#section 1!% and sub:ect to the rules and
orders of the .entral ;o+ernment re5ulatin5 the conditions of ser+ice of persons in
public ser+ices and posts% the .entral ;o+ernment may authorise the Board% or a
?irector#;eneral% a .hief .ommissioner or a ?irector or a .ommissioner to appoint
income#ta$ authorities below the ran9 of an "ssistant .ommissioner
)8
-or ?eputy
.ommissioner2(
)! *ub:ect to the rules and orders of the .entral ;o+ernment re5ulatin5 the conditions of
ser+ice of persons in public ser+ices and posts% an income# ta$ authority authorised in this
behalf by the Board may appoint such e$ecuti+e or ministerial staff as may be necessary
to assist it in the e$ecution of its functions(2
31
-Control of income-tax authorities.
118. The Board may% by notification in the <fficial ;a=ette% direct that any income#ta$
authority or authorities specified in the notification shall be subordinate to such other
income#ta$ authority or authorities as may be specified in such notification(2
32
-Instructions to subordinate authorities.
))
119. 1! The Board may% from time to time% issue such orders% instructions and
directions to other income#ta$ authorities as it may deem fit for the proper administration
of this "ct% and such authorities and all other persons employed in the e$ecution of this
"ct shall obser+e and follow such orders% instructions and directions of the Board :
Provided that no such orders% instructions or directions shall be issued
a! so as to re,uire any income#ta$ authority to ma9e a particular assess#ment or to
dispose of a particular case in a particular manner1 or
b! so as to interfere with the discretion of the
)3
-* * *2
)4
-.ommissioner "ppeals!2
in the e$ercise of his appellate functions(
2! Fithout pre:udice to the 5enerality of the fore5oin5 power%
)'
a! the Board may% if it considers it necessary or e$pedient so to do% for the purpose
of proper and efficient mana5ement of the wor9 of assessment and collection of
re+enue% issue% from time to time whether by way of rela$ation of any of the
pro+isions of sections
)6
-115D) 115<) 115,1) 115,E) 115,0) 115,5)
115,C) 115,9) 115,H)2
)7
-1)&%2 13)% 133% 136% 137% 143% 144
)&
-% 147B>"2%
38
-sub#section 1"! of section 281% sections 218% 211% 2)3"% 2)3B% 2)3.2% 261
and 26) or otherwise!% 5eneral or special orders in respect of any class of
incomes
31
-or !ringe bene!its2 or class of cases% settin5 forth directions or
instructions not bein5 pre:udicial to assessees! as to the 5uidelines% principles
or procedures to be followed by other income#ta$ authorities in the wor9
relatin5 to assessment or collection of re+enue or the initiation of proceedin5s
for the imposition of penalties and any such order
32
may% if the Board is of
opinion that it is necessary in the public interest so to do% be published and
circulated in the prescribed manner for 5eneral information1
b! the Board may% if it considers it desirable or e$pedient so to do for a+oidin5
5enuine hardship in any case or class of cases% by 5eneral or special order%
authorise
3)
-any income#ta$ authority% not bein5 a
33
-***2 .ommissioner
"ppeals!2 to admit an application or claim for any e$emption% deduction%
refund or any other relief under this "ct after the e$piry of the period specified
by or under this "ct for ma9in5 such application or claim and deal with the
same on merits in accordance with law1
34
-c! the Board may% if it considers it desirable or e$pedient so to do for a+oidin5
5enuine hardship in any case or class of cases% by 5eneral or special order for
reasons to be specified therein% rela$ any re,uirement contained in any of the
pro+isions of .hapter I0 or .hapter 0I#"% where the assessee has failed to
comply with any re,uirement specified in such pro+ision for claimin5
deduction thereunder% sub:ect to the followin5 conditions% namely:
i! the default in complyin5 with such re,uirement was due to circumstances
beyond the control of the assessee1 and
ii! the assessee has complied with such re,uirement before the completion of
assessment in relation to the pre+ious year in which such deduction is
claimed :
Provided that the .entral ;o+ernment shall cause e+ery order issued under this
clause to be laid before each Couse of Parliament(2
)!
3'
-***2
B(@urisdiction
47
-1urisdiction of income-tax authorities.
37
120. 1! Income#ta$ authorities shall e$ercise all or any of the powers and perform all
or any of the functions conferred on% or% as the case may be% assi5ned to such authorities
by or under this "ct in accordance with such directions as the Board may issue for the
e$ercise of the powers and performance of the functions by all or any of those authorities(
4"a
E$planation.0or the remo%al o! doubts) it is hereb+ declared that an+ income-tax
authorit+) being an authorit+ higher in ran.) ma+) i! so directed b+ the Board) exercise
the powers and per!orm the !unctions o! the income-tax authorit+ lower in ran. and an+
such direction issued b+ the Board shall be deemed to be a direction issued under sub-
section *1(.]
2! The directions of the Board under sub#section 1! may authorise any other income#ta$
authority to issue orders in writin5 for the e$ercise of the powers and performance of the
functions by all or any of the other income#ta$ authorities who are subordinate to it(
)! In issuin5 the directions or orders referred to in sub#sections 1! and 2!% the Board or
other income#ta$ authority authorised by it may ha+e re5ard to any one or more of the
followin5 criteria% namely :
a! territorial area1
b! persons or classes of persons1
c! incomes or classes of income1 and
d! cases or classes of cases(
3! Fithout pre:udice to the pro+isions of sub#sections 1! and 2!% the Board may% by
5eneral or special order% and sub:ect to such conditions% restrictions or limitations as may
be specified therein%
a! authorise any ?irector ;eneral or ?irector to perform such functions of any
other income#ta$ authority as may be assi5ned to him by the Board1
b! empower the ?irector ;eneral or .hief .ommissioner or .ommissioner to
issue orders in writin5 that the powers and functions conferred on% or as the
case may be% assi5ned to% the "ssessin5 <fficer by or under this "ct in respect
of any specified area or persons or classes of persons or incomes or classes of
income or cases or classes of cases% shall be e$ercised or performed by a
3&
-@oint2 .ommissioner
48
-or a
3&
-@oint2 ?irector2% and% where any order is made
under this clause% references in any other pro+ision of this "ct% or in any rule
made thereunder to the "ssessin5 <fficer shall be deemed to be references to
such
3&
-@oint2 .ommissioner
48
-or
3&
-@oint2 ?irector2 by whom the powers and
functions are to be e$ercised or performed under such order% and any pro+ision
of this "ct re,uirin5 appro+al or sanction of the
3&
-@oint2 .ommissioner shall
not apply(
4! The directions and orders referred to in sub#sections 1! and 2! may% where+er
considered necessary or appropriate for the proper mana5ement of the wor9% re,uire two
or more "ssessin5 <fficers whether or not of the same class! to e$ercise and perform%
concurrently% the powers and functions in respect of any area or persons or classes of
persons or incomes or classes of income or cases or classes of cases1 and% where such
powers and functions are e$ercised and performed concurrently by the "ssessin5 <fficers
of different classes% any authority lower in ran9 amon5st them shall e$ercise the powers
and perform the functions as any hi5her authority amon5st them may direct% and% further%
references in any other pro+ision of this "ct or in any rule made thereunder to the
"ssessin5 <fficer shall be deemed to be references to such hi5her authority and any
pro+ision of this "ct re,uirin5 appro+al or sanction of any such authority shall not apply(
'! Aotwithstandin5 anythin5 contained in any direction or order issued under this
section% or in section 123% the Board may% by notification in the <fficial ;a=ette% direct
that for the purpose of furnishin5 of the return of income or the doin5 of any other act or
thin5 under this "ct or any rule made thereunder by any person or class of persons% the
income#ta$ authority e$ercisin5 and performin5 the powers and functions in relation to
the said person or class of persons shall be such authority as may be specified in the
notification(2
53
-1urisdiction of Assessing Officers.
43
124. 1! Fhere by +irtue of any direction or order issued under sub#section 1! or sub#
section 2! of section 128% the "ssessin5 <fficer has been +ested with :urisdiction o+er
any area% within the limits of such area% he shall ha+e :urisdiction
a! in respect of any person carryin5 on a business or profession% if the place at
which he carries on his business or profession is situate within the area% or
where his business or profession is carried on in more places than one% if the
principal place of his business or profession is situate within the area% and
b! in respect of any other person residin5 within the area(
2! Fhere a ,uestion arises under this section as to whether an "ssessin5 <fficer has
:urisdiction to assess any person% the ,uestion shall be determined by the ?irector
;eneral or the .hief .ommissioner or the .ommissioner1 or where the ,uestion is one
relatin5 to areas within the :urisdiction of different ?irectors ;eneral or .hief
.ommissioners or .ommissioners% by the ?irectors ;eneral or .hief .ommissioners or
.ommissioners concerned or% if they are not in a5reement% by the Board or by such
?irector ;eneral or .hief .ommissioner or .ommissioner as the Board may% by
notification in the <fficial ;a=ette% specify(
)! Ao person shall be entitled to call in ,uestion the :urisdiction of an "ssessin5 <fficer
a! where he has made a return
44
-under sub-section *1( o! section 115,1 or2
under sub#section 1! of section 1)&% after the e$piry of one month from the
date on which he was ser+ed with a notice under sub#section 1! of section 132
or
44
-sub-section *2( o! section 115,E or2 sub# section 2! of section 13) or
after the completion of the assessment% whiche+er is earlier1
b! where he has made no such return% after the e$piry of the time allowed by the
notice under
4'
-sub-section *2( o! section 115,1 or sub-section *1( o! section
142 or under sub-section *1( o! section 115,C or under section 14" !or the
ma.ing o! the return or b+ the notice under the !irst pro%iso to section 115,0
or under the !irst pro%iso to section 1442 to show cause why the assessment
should not be completed to the best of the :ud5ment of the "ssessin5 <fficer%
whiche+er is earlier(
3! *ub:ect to the pro+isions of sub#section )!% where an assessee calls in ,uestion the
:urisdiction of an "ssessin5 <fficer% then the "ssessin5 <fficer shall% if not satisfied with
the correctness of the claim% refer the matter for determination under sub#section 2!
before the assessment is made(
4! Aotwithstandin5 anythin5 contained in this section or in any direction or order issued
under section 128% e+ery "ssessin5 <fficer shall ha+e all the powers conferred by or
under this "ct on an "ssessin5 <fficer in respect of the income accruin5 or arisin5 or
recei+ed within the area% if any% o+er which he has been +ested with :urisdiction by +irtue
of the directions or orders issued under sub#section 1! or sub#section 2! of section 128(2
60
-Power to transfer cases
61
.
'2
127. 1! The ?irector ;eneral or .hief .ommissioner or .ommissioner may% after
5i+in5 the assessee a reasonable opportunity of bein5 heard in the matter% where+er it is
possible to do so% and after recordin5 his reasons for doin5 so% transfer any case
')
from
one or more "ssessin5 <fficers subordinate to him whether with or without concurrent
:urisdiction! to any other "ssessin5 <fficer or "ssessin5 <fficers whether with or
without concurrent :urisdiction! also subordinate to him(
2! Fhere the "ssessin5 <fficer or "ssessin5 <fficers from whom the case is to be
transferred and the "ssessin5 <fficer or "ssessin5 <fficers to whom the case is to be
transferred are not subordinate to the same ?irector ;eneral or .hief .ommissioner or
.ommissioner%
a! where the ?irectors ;eneral or .hief .ommissioners or .ommissioners to
whom such "ssessin5 <fficers are subordinate are in a5reement% then the
?irector ;eneral or .hief .ommissioner or .ommissioner from whose
:urisdiction the case is to be transferred may% after 5i+in5 the assessee a
reasonable opportunity of bein5 heard in the matter% where+er it is possible to
do so% and after recordin5 his reasons for doin5 so% pass the order1
b! where the ?irectors ;eneral or .hief .ommissioners or .ommissioners
aforesaid are not in a5reement% the order transferrin5 the case may% similarly%
be passed by the Board or any such ?irector ;eneral or .hief .ommissioner or
.ommissioner as the Board may% by notification in the <fficial ;a=ette%
authorise in this behalf(
)! Aothin5 in sub#section 1! or sub#section 2! shall be deemed to re,uire any such
opportunity to be 5i+en where the transfer is from any "ssessin5 <fficer or "ssessin5
<fficers whether with or without concurrent :urisdiction! to any other "ssessin5 <fficer
or "ssessin5 <fficers whether with or without concurrent :urisdiction! and the offices of
all such officers are situated in the same city% locality or place(
3! The transfer of a case under sub#section 1! or sub#section 2! may be made at any
sta5e
'3
of the proceedin5s% and shall not render necessary the re#issue of any notice
already issued by the "ssessin5 <fficer or "ssessin5 <fficers from whom the case is
transferred(
Explanation.In section 128 and this section% the word case% in relation to any person
whose name is specified in any order or direction issued thereunder% means all
proceedin5s under this "ct
'4
in respect of any year which may be pendin5 on the date of
such order or direction or which may ha+e been completed on or before such date% and
includes also all proceedin5s under this "ct which may be commenced after the date of
such order or direction in respect of any year(2
Change of incumbent of an office.
'6
129. Fhene+er in respect of any proceedin5 under this "ct an income#ta$ authority
ceases to e$ercise :urisdiction and is succeeded by another who has and e$ercises
:urisdiction% the income#ta$ authority so succeedin5 may continue the proceedin5 from
the sta5e at which the proceedin5 was left by his predecessor :
Provided that the assessee concerned may demand that before the proceedin5 is so
continued the pre+ious proceedin5 or any part thereof be reopened or that before any
order of assessment is passed a5ainst him% he be reheard(
.(Powers
Power regarding discovery, production of evidence, etc.
68
131. 1! The
61
62
-?eputy .ommissioner "ppeals!2%
6)
-@oint
.ommissioner2
63
-% .ommissioner "ppeals!2 and
64
-.hief .om#missioner or
.ommissioner2 shall% for the purposes of this "ct% ha+e the same powers as are +ested in
a court under the .ode of .i+il Procedure% 1&87 4 of 1&87!% when tryin5 a suit in respect
of the followin5 matters% namely :
a! disco+ery and inspection1
b! enforcin5 the attendance of any person% includin5 any officer of a ban9in5
company and e$aminin5 him on oath1
c! compellin5 the production of boo9s of account and other documents1 and
d! issuin5 commissions(
6'
-1"!
66
-If the ?irector ;eneral or ?irector or
67
-@oint2 ?irector or "ssistant ?irector
6&
-or ?eputy ?irector2% or the authorised officer referred to in sub#section 1! of section
1)2 before he ta9es action under clauses i! to %! of that sub#section
78
%2 has reason to
suspect that any income has been concealed% or is li9ely to be concealed% by any person or
class of persons% within his :urisdiction% then% for the purposes of ma9in5 any en,uiry or
in+esti5ation relatin5 thereto% it shall be competent for him to e$ercise the powers
conferred under sub# section 1! on the income#ta$ authorities referred to in that sub#
section% notwithstandin5 that no proceedin5s with respect to such person or class of
persons are pendin5
78
before him or any other income#ta$ authority(2
2! -/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#.2
)! *ub:ect to any rules made in this behalf% any authority referred to in sub#section 1!
71
-or sub#section 1"!2 may impound and retain in its custody for such period as it thin9s
fit any boo9s of account or other documents produced before it in any proceedin5 under
this "ct :
Provided that an
72
-"ssessin52 <fficer
7)
-or an
73
-"ssistant ?irector
74
-or ?eputy
?irector222 shall not
a! impound any boo9s of account or other documents without recordin5 his
reasons for so doin5% or
b! retain in his custody any such boo9s or documents for a period e$ceedin5
fifteen days e$clusi+e of holidays! without obtainin5 the appro+al of the
7'
-
76
-.hief .ommissioner or ?irector ;eneral or .ommissioner or ?irector
therefor% as the case may be(22
88
-Search and seizure.
7&
132.
&8
1! Fhere the
&1
-?irector ;eneral or ?irector2 or the
&2
-.hief .ommissioner or
.ommissioner2
&)
-or any such
&3
-@oint ?irector2 or
&4
-@oint .ommissioner2 as may be
empowered in this behalf by the Board2% in conse,uence of information
&'
in his
possession% has reason to belie+e
&'
that
a! any person to whom a summons under sub#section 1! of section )6 of the
Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under sub#section 1! of section
1)1 of this "ct% or a notice under sub#section 3! of section 22 of the Indian
Income#ta$ "ct% 1&22% or under sub#section 1! of section 132 of this "ct was
issued to produce% or cause to be produced% any boo9s of account or other
documents has omitted or failed to produce% or cause to be produced% such
boo9s of account or other documents as re,uired by such summons or notice% or
b! any person to whom a summons or notice as aforesaid has been or mi5ht be
issued will not% or would not% produce or cause to be produced% any boo9s of
account or other documents which will be useful for% or rele+ant to% any
proceedin5 under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under this
"ct% or
c! any person is in possession of any money% bullion% :ewellery or other +aluable
article or thin5
&6
and such money% bullion% :ewellery or other +aluable article or
thin5 represents either wholly or partly income or property
&7
-which has not
been% or would not be% disclosed
&6
2 for the purposes of the Indian Income#ta$
"ct% 1&22 11 of 1&22!% or this "ct hereinafter in this section referred to as the
undisclosed income or property!%
&&
-then%
A! the
1
2
.ommissioner2% as the case may be% may authorise any
)
-@oint ?irector2%
3
-@oint
.ommissioner2%
4
-"ssistant ?irector
'
-or ?eputy ?irector22%
6
-"ssistant
.ommissioner
'
-or ?eputy .ommissioner2 or Income#ta$ <fficer2% or
B! such
)
-@oint ?irector2% or
3
-@oint .ommissioner2% as the case may be% may
authorise any
4
-"ssistant ?irector
'
-or ?eputy ?irector22%
6
-"ssistant
.ommissioner
'
-or ?eputy .ommissioner2 or Income#ta$ <fficer2%
the officer so authorised in all cases bein5 hereinafter referred to as the authorised
officer! to2
i! enter and search
7
any
&
-buildin5% place% +essel% +ehicle or aircraft2 where he has
reason to suspect that such boo9s of account% other documents% money% bullion%
:ewellery or other +aluable article or thin5 are 9ept1
ii! brea9 open the loc9 of any door% bo$% loc9er% safe% almirah or other receptacle
for e$ercisin5 the powers conferred by clause i! where the 9eys thereof are not
a+ailable1
18
-iia! search any person who has 5ot out of% or is about to 5et into% or is in% the
buildin5% place% +essel% +ehicle or aircraft% if the authorised officer has reason to
suspect that such person has secreted about his person any such boo9s of
account% other documents% money% bullion% :ewellery or other +aluable article or
thin512
11
-iib! re,uire any person who is found to be in possession or control of any boo9s of
account or other documents maintained in the form of electronic record as
defined in clause t! of sub#section 1! of section 2 of the Information
Technolo5y "ct% 2888 21 of 2888!
12
% to afford the authorised officer the
necessary facility to inspect such boo9s of account or other documents12
iii! sei=e
1)
any such
1)
boo9s of account% other documents% money% bullion% :ewellery
or other +aluable article or thin5 found as a result of such search:
14
-Provided that bullion% :ewellery or other +aluable article or thin5% bein5
stoc9#in#trade of the business% found as a result of such search shall not be
sei=ed but the authorised officer shall ma9e a note or in+entory of such stoc9#
in#trade of the business12
i%! place mar9s of identification on any boo9s of account or other documents or
ma9e or cause to be made e$tracts or copies therefrom1
%! ma9e a note or an in+entory of any such money% bullion% :ewellery or other
+aluable article or thin5 :
14
-Provided that where any buildin5% place% +essel% +ehicle or aircraft referred to in clause
i! is within the area of :urisdiction of any
1'
-.hief .ommissioner or .ommissioner2% but
such
1'
-.hief .ommissioner or .ommissioner2 has no :urisdiction o+er the person
referred to in clause a! or clause b! or clause c!% then% notwithstandin5 anythin5
contained in section
16
-1282% it shall be competent for him to e$ercise the powers under
this sub#section in all cases where he has reason to belie+e that any delay in 5ettin5 the
authorisation from the
17
-.hief .ommissioner or .ommissioner2 ha+in5 :urisdiction o+er
such person may be pre:udicial to the interests of the re+enue :2
1&
-Provided further that where it is not possible or practicable to ta9e physical
possession of any +aluable article or thin5 and remo+e it to a safe place due to its +olume%
wei5ht or other physical characteristics or due to its bein5 of a dan5erous nature% the
authorised officer may ser+e an order on the owner or the person who is in immediate
possession or control thereof that he shall not remo+e% part with or otherwise deal with it%
e$cept with the pre+ious permission of such authorised officer and such action of the
authorised officer shall be deemed to be sei=ure of such +aluable article or thin5 under
clause iii!:2
2$
Provided also that nothin5 contained in the second pro+iso shall apply in case of any
+aluable article or thin5% bein5 stoc9#in#trade of the business(2
21
-1"! Fhere any
22
-.hief .ommissioner or .ommissioner2% in conse,uence of
information in his possession% has reason to suspect that any boo9s of account% other
documents% money% bullion% :ewellery or other +aluable article or thin5 in respect of
which an officer has been authorised by the
2)
-?irector ;eneral or ?irector2 or any other
23
-.hief .ommissioner or .ommissioner2 or any such
24
-@oint ?irector2 or
2'
-@oint
.ommissioner2 as may be empowered in this behalf by the Board to ta9e action under
clauses i! to %! of sub#section 1! are or is 9ept in any buildin5% place% +essel% +ehicle or
aircraft not mentioned in the authorisation under sub#section 1!% such
26
-.hief
.ommissioner or .ommissioner2 may% notwithstandin5 anythin5 contained in section
27
-1282% authorise the said officer to ta9e action under any of the clauses aforesaid in
respect of such buildin5% place% +essel% +ehicle or aircraft(2
2! The authorised officer may re,uisition the ser+ices of any police officer or of any
officer of the .entral ;o+ernment% or of both% to assist him for all or any of the purposes
specified in sub#section 1!
2&
-or sub#section 1"!2 and it shall be the duty of e+ery such
officer to comply with such re,uisition(
)! The authorised officer may% where it is not practicable
)8
to sei=e any such boo9s of
account% other documents% money% bullion% :ewellery or other +aluable article or thin5%
)1
-for reasons other than those mentioned in the second pro+iso to sub#section 1!%2 ser+e
an order on the owner or the person who is in immediate possession
)8
or control thereof
that he shall not remo+e% part with or otherwise deal with it e$cept with the pre+ious
permission of such officer and such officer may ta9e such steps as may be necessary for
ensurin5 compliance with this sub#section(
)2
-Explanation.>or the remo+al of doubts% it is hereby declared that ser+in5 of an order as
aforesaid under this sub#section shall not be deemed to be sei=ure of such boo9s of
account% other documents% money% bullion% :ewellery or other +aluable article or thin5
under clause iii! of sub#section 1!(2
3! The authorised officer may% durin5 the course of the search or sei=ure% e$amine on
oath any person who is found to be in possession or control of any boo9s of account%
documents% money% bullion% :ewellery or other +aluable article or thin5 and any statement
made by such person durin5 such e$amination may thereafter be used in e+idence in any
proceedin5 under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under this "ct(
))
-Explanation.>or the remo+al of doubts% it is hereby declared that the e$amination of
any person under this sub#section may be not merely in respect of any boo9s of account%
other documents or assets found as a result of the search% but also in respect of all matters
rele+ant for the purposes of any in+esti5ation connected with any proceedin5 under the
Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under this "ct(2
)3
-3"! Fhere any boo9s of account% other documents% money% bullion% :ewellery or other
+aluable article or thin5 are or is found in the possession or control of any person in the
course of a search% it may be presumed
i! that such boo9s of account% other documents% money% bullion% :ewellery or other
+aluable article or thin5 belon5 or belon5s to such person 1
ii! that the contents of such boo9s of account and other documents are true 1 and
iii! that the si5nature and e+ery other part of such boo9s of account and other
documents which purport to be in the handwritin5 of any particular person or
which may reasonably be assumed to ha+e been si5ned by% or to be in the
handwritin5 of% any particular person% are in that persons handwritin5% and in
the case of a document stamped% e$ecuted or attested% that it was duly stamped
and e$ecuted or attested by the person by whom it purports to ha+e been so
e$ecuted or attested(2
4!
)4
-***2
'!
)'
-***2
6!
)6
-***2
7! The boo9s of account or other documents sei=ed under sub#section 1!
)7
-or sub#
section 1"!2 shall not be retained by the authorised officer for a period e$ceedin5
)&
-thirty days from the date of the order of assessment under
38
-section 14)" or2 clause c!
of section 147B.2 unless the reasons for retainin5 the same are recorded by him in
writin5 and the appro+al of the
31
-.hief .ommissioner% .ommissioner% ?irector ;eneral
or ?irector2 for such retention is obtained :
Provided that the
31
-.hief .ommissioner% .ommissioner% ?irector ;eneral or ?irector2
shall not authorise the retention of the boo9s of account and other documents for a period
e$ceedin5 thirty days after all the proceedin5s under the Indian Income#ta$ "ct% 1&22 11
of 1&22!% or this "ct in respect of the years for which the boo9s of account or other
documents are rele+ant are completed(
32
-7"! "n order under sub#section )! shall not be in force for a period e$ceedin5 si$ty
days from the date of the order(2
&! The person from whose custody any boo9s of account or other documents are sei=ed
under sub#section 1!
3)
-or sub#section 1"!2 may ma9e copies thereof% or ta9e e$tracts
therefrom% in the presence of the authorised officer or any other person empowered by
him in this behalf% at such place and time as the authorised officer may appoint in this
behalf(
33
-&"! Fhere the authorised officer has no :urisdiction o+er the person referred to in
clause a! or clause b! or clause c! of sub#section 1!% the boo9s of account or other
documents% or any money% bullion% :ewellery or other +aluable article or thin5 hereafter
in this section and in sections 1)2" and 1)2B referred to as the assets! sei=ed under that
sub#section shall be handed o+er by the authorised officer to the "ssessin5 <fficer ha+in5
:urisdiction o+er such person within a period of si$ty days from the date on which the last
of the authorisations for search was e$ecuted and thereupon the powers e$ercisable by
the authorised officer under sub#section 7! or sub#section &! shall be e$ercisable by
such "ssessin5 <fficer(2
18! If a person le5ally entitled to the boo9s of account or other documents sei=ed under
sub#section 1!
34
-or sub#section 1"!2 ob:ects for any reason to the appro+al 5i+en by the
3'
-.hief .ommissioner% .ommissioner% ?irector ;eneral or ?irector2 under sub#section
7!% he may ma9e an application to the Board statin5 therein the reasons for such
ob:ection and re,uestin5 for the return of the boo9s of account or other documents
36
-and
the Board may% after 5i+in5 the applicant an opportunity of bein5 heard% pass such orders
as it thin9s fit2(
11!
37
-***2
11"!
3&
-***2
12!
48
-***2
41
-1)! The pro+isions of the .ode of .riminal Procedure% 1&6) 2 of 1&63!% relatin5 to
searches and sei=ure shall apply% so far as may be% to searches and sei=ure under sub#
section 1! or sub#section 1"!(2
42
13! The Board may ma9e rules in relation to any search or sei=ure under this section 1
in particular% and without pre:udice to the 5enerality of the fore5oin5 power% such rules
may pro+ide for the procedure to be followed by the authorised officer
i! for obtainin5 in5ress into
4)
-any buildin5% place% +essel% +ehicle or aircraft2 to be
searched where free in5ress thereto is not a+ailable 1
ii! for ensurin5 safe custody of any boo9s of account or other documents or assets
sei=ed(
43
-Explanation 1.>or the purposes of sub#section &"!% e$ecution of an authorisation for
search shall ha+e the same meanin5 as assi5ned to it in Explanation 2 to section 147BE(2
Explanation 2.In this section% the word proceedin5 means any proceedin5 in respect of
any year% whether under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or this "ct% which
may be pendin5 on the date on which a search is authorised under this section or which
may ha+e been completed on or before such date and includes also all proceedin5s under
this "ct which may be commenced after such date in respect of any year(2
55
-Powers to requisition books of account, etc.
4'
132A.
46
1! Fhere the
47
4&
.ommissioner2% in conse,uence of information in his possession% has reason to belie+e
that
a! any person to whom a summons under sub#section 1! of section )6 of the
Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under sub#section 1! of section
1)1 of this "ct% or a notice under sub#section 3! of section 22 of the Indian
Income#ta$ "ct% 1&22% or under sub#section 1! of section 132 of this "ct was
issued to produce% or cause to be produced% any boo9s of account or other
documents has omitted or failed to produce% or cause to be produced% such
boo9s of account or other documents% as re,uired by such summons or notice
and the said boo9s of account or other documents ha+e been ta9en into custody
by any officer or authority
'8
under any other law for the time bein5 in force% or
b! any boo9s of account or other documents will be useful for% or rele+ant to% any
proceedin5 under the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or under this
"ct and any person to whom a summons or notice as aforesaid has been or
mi5ht be issued will not% or would not% produce or cause to be produced% such
boo9s of account or other documents on the return of such boo9s of account or
other documents by any officer or authority by whom or which such boo9s of
account or other documents ha+e been ta9en into custody under any other law
for the time bein5 in force% or
c! any assets represent either wholly or partly income or property which has not
been% or would not ha+e been% disclosed for the purposes of the Indian Income#
ta$ "ct% 1&22 11 of 1&22!% or this "ct by any person from whose possession or
control such assets ha+e been ta9en into custody by any officer or authority
under any other law for the time bein5 in force%
then% the
'1
'2
-.hief .ommissioner or .ommissioner2
may authorise any
')
-@oint ?irector2%
'3
-@oint .ommissioner2%
'4
-"ssistant ?irector
''
-or
?eputy ?irector22%
'6
-"ssistant .ommissioner
''
-or ?eputy .ommissioner2 or Income#ta$
<fficer2 hereafter in this section and in sub#section 2! of section 267? referred to as the
re,uisitionin5 officer! to re,uire the officer or authority referred to in clause a! or clause
b! or clause c!% as the case may be% to deli+er such boo9s of account% other documents or
assets to the re,uisitionin5 officer(
2! <n a re,uisition bein5 made under sub#section 1!% the officer or authority referred to
in clause a! or clause b! or clause c!% as the case may be% of that sub#section shall
deli+er the boo9s of account% other documents or assets to the re,uisitionin5 officer either
forthwith or when such officer or authority is of the opinion that it is no lon5er necessary
to retain the same in his or its custody(
)! Fhere any boo9s of account% other documents or assets ha+e been deli+ered to the
re,uisitionin5 officer% the pro+isions of sub#sections 3"! to 13! both inclusi+e! of
section 1)2 and section 1)2B shall% so far as may be% apply as if such boo9s of account%
other documents or assets had been sei=ed under sub#section 1! of section 1)2 by the
re,uisitionin5 officer from the custody of the person referred to in clause a! or clause b!
or clause c!% as the case may be% of sub#section 1! of this section and as if for the words
the authorised officer occurrin5 in any of the aforesaid sub#sections 3"! to 13!% the
words the re,uisitionin5 officer were substituted(2
'7
-Application of seized or requisitioned assets.
132B. 1! The assets sei=ed under section 1)2 or re,uisitioned under section 1)2" may be
dealt with in the followin5 manner% namely:
i! the amount of any e$istin5 liability under this "ct% the Fealth#ta$ "ct% 1&46
26 of 1&46!% the E$penditure#ta$ "ct% 1&76 )4 of 1&76!% the ;ift#ta$ "ct%
1&47 17 of 1&47! and the Interest#ta$ "ct% 1&63 34 of 1&63!% and the amount
of the liability determined on completion of the assessment
'&
-under section
14)" and the assessment of the year rele+ant to the pre+ious year in which
search is initiated or re,uisition is made% or the amount of liability determined
on completion of the assessment under .hapter /I0#B for the bloc9 period% as
the case may be2 includin5 any penalty le+ied or interest payable in connection
with such assessment! and in respect of which such person is in default or is
deemed to be in default% may be reco+ered out of such assets:
68
-Provided that where the person concerned ma9es an application to the
"ssessin5 <fficer within thirty days from the end of the month in which the
asset was sei=ed% for release of asset and the nature and source of ac,uisition of
any such asset is e$plained2 to the satisfaction of the "ssessin5 <fficer% the
amount of any e$istin5 liability referred to in this clause may be reco+ered out
of such asset and the remainin5 portion% if any% of the asset may be released%
with the prior appro+al of the .hief .ommissioner or .ommissioner% to the
person from whose custody the assets were sei=ed:
Provided further that such asset or any portion thereof as is referred to in the
first pro+iso shall be released within a period of one hundred and twenty days
from the date on which the last of the authorisations for search under section
1)2 or for re,uisition under section 1)2"% as the case may be% was e$ecuted1
ii! if the assets consist solely of money% or partly of money and partly of other
assets% the "ssessin5 <fficer may apply such money in the dischar5e of the
liabilities referred to in clause i! and the assessee shall be dischar5ed of such
liability to the e$tent of the money so applied1
iii! the assets other than money may also be applied for the dischar5e of any such
liability referred to in clause i! as remains undischar5ed and for this purpose
such assets shall be deemed to be under distraint as if such distraint was
effected by the "ssessin5 <fficer or% as the case may be% the Ta$ Reco+ery
<fficer under authorisation from the .hief .ommissioner or .ommissioner
under sub#section 4! of section 22' and the "ssessin5 <fficer or% as the case
may be% the Ta$ Reco+ery <fficer may reco+er the amount of such liabilities by
the sale of such assets and such sale shall be effected in the manner laid down
in the Third *chedule(
2! Aothin5 contained in sub#section 1! shall preclude the reco+ery of the amount of
liabilities aforesaid by any other mode laid down in this "ct(
)! "ny assets or proceeds thereof which remain after the liabilities referred to in clause
i! of sub#section 1! are dischar5ed shall be forthwith made o+er or paid to the persons
from whose custody the assets were sei=ed(
3! a! The .entral ;o+ernment shall pay simple interest at the rate of
61
-si$2 per cent per
annum on the amount by which the a55re5ate amount of money sei=ed under section 1)2
or re,uisitioned under section 1)2"% as reduced by the amount of money% if any% released
under the first pro+iso to clause i! of sub#section 1!% and of the proceeds% if any% of the
assets sold towards the dischar5e of the e$istin5 liability referred to in clause i! of sub#
section 1!% e$ceeds the a55re5ate of the amount re,uired to meet the liabilities referred
to in clause i! of sub#section 1! of this section(
b! *uch interest shall run from the date immediately followin5 the e$piry of the period
of one hundred and twenty days from the date on which the last of the authorisations for
search under section 1)2 or re,uisition under section 1)2" was e$ecuted to the date of
completion of the assessment
62
-under section 14)" or2 under .hapter /I0#B(
i! bloc9 period shall ha+e the meanin5 assi5ned to it in clause a! of section 15"B1
*ii( execution o! an authorisation !or search or re2uisition shall ha%e the same
meaning as assigned to it in E$planation 2 to section 15"BE.@
Power to call for information.
6)
133. The
63
-"ssessin52 <fficer% the
64
-?eputy .ommissioner "ppeals!%2
6'
-the
66
-@oint
.ommissioner2 or the .ommissioner "ppeals!2 may% for the purposes of this "ct%
1! re,uire any firm to furnish him with a return of the names and addresses of the
partners of the firm and their respecti+e shares 1
2! re,uire any Cindu undi+ided family to furnish him with a return of the names
and addresses of the mana5er and the members of the family 1
3! re,uire any person whom he has reason to belie+e to be a trustee% 5uardian or
a5ent% to furnish him with a return of the names of the persons for or of whom
he is trustee% 5uardian or a5ent% and of their addresses 1
4! re,uire any assessee to furnish a statement of the names and addresses of all
persons to whom he has paid in any pre+ious year rent% interest% commission%
royalty or bro9era5e% or any annuity% not bein5 any annuity ta$able under the
head *alaries amountin5 to more than
67
-one thousand rupees% or such hi5her
amount as may be prescribed2% to5ether with particulars of all such payments
made 1
5! re,uire any dealer% bro9er or a5ent or any person concerned in the mana5ement
of a stoc9 or commodity e$chan5e to furnish a statement of the names and
addresses of all persons to whom he or the e$chan5e has paid any sum in
connection with the transfer% whether by way of sale% e$chan5e or otherwise% of
assets% or on whose behalf or from whom he or the e$chan5e has recei+ed any
such sum% to5ether with particulars of all such payments and receipts 1
6! re,uire any person% includin5 a ban9in5 company or any officer thereof% to
furnish information in relation to such points or matters% or to furnish
statements of accounts and affairs +erified in the manner specified by the
6&
78
-?eputy .ommissioner "ppeals!2
71
-% the
72
-@oint
.ommissioner2 or the .ommissioner "ppeals!2% 5i+in5 information in relation
to such points or matters as% in the opinion of the
7)
73
71
-% the
72
-@oint .ommissioner2 or the
.ommissioner "ppeals!2% will be useful for% or rele+ant to% any
74
-en,uiry
7'

or2
proceedin5
7'
under this "ct :
76
-Provided that the powers referred to in clause 6!% may also be e$ercised by
the ?irector#;eneral% the .hief .ommissioner% the ?irector and the
.ommissioner :2
77
-Provided further that the power in respect of an in,uiry% in a case where no
proceedin5 is pendin5% shall not be e$ercised by any income#ta$ authority
below the ran9 of ?irector or .ommissioner without the prior appro+al of the
?irector or% as the case may be% the .ommissioner(2
7&
-Power of survey.
&8
133A. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% an
income#ta$ authority may enter
a! any place within the limits of the area assi5ned to him% or
b! any place occupied by any person in respect of whom he e$ercises :urisdiction%
&1
-or2
&1
-c! any place in respect of which he is authorised for the purposes of this section
by such income#ta$ authority% who is assi5ned the area within which such place
is situated or who e$ercises :urisdiction in respect of any person occupyin5
such place%2
at which a business or profession is carried on% whether such place be the principal place
or not of such business or profession% and re,uire any proprietor% employee or any other
person who may at that time and place be attendin5 in any manner to% or helpin5 in% the
carryin5 on of such business or profession
i! to afford him the necessary facility to inspect such boo9s of account or other
documents as he may re,uire and which may be a+ailable at such place%
ii! to afford him the necessary facility to chec9 or +erify the cash% stoc9 or other
+aluable article or thin5 which may be found therein% and
iii! to furnish such information as he may re,uire as to any matter which may be
useful for% or rele+ant to% any proceedin5 under this "ct(
Explanation.>or the purposes of this sub#section% a place where a business or profession
is carried on shall also include any other place% whether any business or profession is
carried on therein or not% in which the person carryin5 on the business or profession states
that any of his boo9s of account or other documents or any part of his cash or stoc9 or
other +aluable article or thin5 relatin5 to his business or profession are or is 9ept(
2! "n income#ta$ authority may enter any place of business or profession referred to in
sub#section 1! only durin5 the hours at which such place is open for the conduct of
business or profession and% in the case of any other place% only after sunrise and before
sunset(
)! "n income#ta$ authority actin5 under this section may%
i! if he so deems necessary% place mar9s of identification on the boo9s of account
or other documents inspected by him and ma9e or cause to be made e$tracts or
copies therefrom%
&2
-ia! impound and retain in his custody for such period as he thin9s fit any boo9s of
account or other documents inspected by him:
Provided that such income#ta$ authority shall not
a! impound any boo9s of account or other documents e$cept after
recordin5 his reasons for so doin51 or
&)
-b! retain in his custody any such boo9s of account or other documents for
a period e$ceedin5 ten days e$clusi+e of holidays! without obtainin5
the appro+al of the .hief .ommissioner or ?irector ;eneral therefor% as
the case may be%22
ii! ma9e an in+entory of any cash% stoc9 or other +aluable article or thin5 chec9ed
or +erified by him%
iii! record the statement of any person which may be useful for% or rele+ant to% any
proceedin5 under this "ct(
3! "n income#ta$ authority actin5 under this section shall% on no account% remo+e or
cause to be remo+ed from the place wherein he has entered%
&3
-***2 any cash% stoc9 or
other +aluable article or thin5(
4! Fhere% ha+in5 re5ard to the nature and scale of e$penditure incurred by an assessee%
in connection with any function% ceremony or e+ent% the income#ta$ authority is of the
opinion that it is necessary or e$pedient so to do% he may% at any time after such function%
ceremony or e+ent% re,uire the assessee by whom such e$penditure has been incurred or
any person who% in the opinion of the income#ta$ authority% is li9ely to possess
information as respects the e$penditure incurred% to furnish such information as he may
re,uire as to any matter which may be useful for% or rele+ant to% any proceedin5 under
this "ct and may ha+e the statements of the assessee or any other person recorded and
any statement so recorded may thereafter be used in e+idence in any proceedin5 under
this "ct(
'! If a person under this section is re,uired to afford facility to the income#ta$ authority
to inspect boo9s of account or other documents or to chec9 or +erify any cash% stoc9 or
other +aluable article or thin5 or to furnish any information or to ha+e his statement
recorded either refuses or e+ades to do so% the income#ta$ authority shall ha+e all the
powers under
&4
-sub#section 1! of section 1)12 for enforcin5 compliance with the
re,uirement made :
&'
-Provided that no action under sub#section 1! shall be ta9en by an "ssistant ?irector
or a ?eputy ?irector or an "ssessin5 <fficer or a Ta$ Reco+ery <fficer or an Inspector
of Income#ta$ without obtainin5 the appro+al of the @oint ?irector or the @oint
.ommissioner% as the case may be(2
&6
-a! income#ta$ authority means a .ommissioner% a @oint .ommissioner% a ?irector%
a @oint ?irector% an "ssistant ?irector or a ?eputy ?irector or an "ssessin5
<fficer% or a Ta$ Reco+ery <fficer% and for the purposes of clause i! of sub#
section 1!% clause i! of sub#section )! and sub#section 4!% includes an
Inspector of Income#ta$12
b! proceedin5 means any proceedin5 under this "ct in respect of any year which
may be pendin5 on the date on which the powers under this section are
e$ercised or which may ha+e been completed on or before such date and
includes also all proceedin5s under this "ct which may be commenced after
such date in respect of any year(2
&7
-Power to collect certain information.
133B. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% an
income#ta$ authority may% for the purpose of collectin5 any information which may be
useful for% or rele+ant to% the purposes of this "ct% enter
a! any buildin5 or place within the limits of the area assi5ned to such authority 1
or
b! any buildin5 or place occupied by any person in respect of whom he e$ercises
:urisdiction%
at which a business or profession is carried on% whether such place be the principal place
or not of such business or profession% and re,uire any proprietor% employee or any other
person who may at that time and place be attendin5 in any manner to% or helpin5 in% the
carryin5 on of such business or profession to furnish such information as may be
prescribed
&&
(
2! "n income#ta$ authority may enter any place of business or profession referred to in
sub#section 1! only durin5 the hours at which such place is open for the conduct of
business or profession(
)! >or the remo+al of doubts% it is hereby declared that an income#ta$ authority actin5
under this section shall% on no account% remo+e or cause to be remo+ed from the buildin5
or place wherein he has entered% any boo9s of account or other documents or any cash%
stoc9 or other +aluable article or thin5(
Explanation.In this section% income#ta$ authority means a
1
-@oint .ommissioner2% an
2
-"ssistant ?irector2
)
-or ?eputy ?irector2 or an
3
-"ssessin52 <fficer% and includes an
Inspector of Income#ta$ who has been authorised by the
3
-"ssessin52 <fficer to e$ercise
the powers conferred under this section in relation to the area in respect of which the
3
-"ssessin52 <fficer e$ercises :urisdiction or part thereof(2
Power to inspect registers of companies.
134. The
4
'
-?eputy .ommissioner "ppeals!2%
6
-the
7
-@oint
.ommissioner2 or the .ommissioner "ppeals!2% or any person subordinate to him
authorised in writin5 in this behalf by the
4
'
-?eputy
.ommissioner "ppeals!2%
6
-the
7
-@oint .ommissioner2 or the .ommissioner "ppeals!2%
may inspect% and if necessary% ta9e copies% or cause copies to be ta9en% of any re5ister of
the members% debenture holders or mort5a5ees of any company or of any entry in such
re5ister(
Power of
&
-Director General or Director2,
18
-Chief Commissioner or Commissioner2
and
11
-1oint Commissioner2.
135. The
&
-?irector ;eneral or ?irector2% the
18
and the
11
-@oint .ommissioner2 shall be competent to ma9e any en,uiry under this "ct%
and for this purpose shall ha+e all the powers that an
12
-"ssessin52 <fficer has under this
"ct in relation to the ma9in5 of en,uiries(
Proceedings before income-tax authorities to be judicial proceedings.
1)
136. "ny proceedin5 under this "ct before an income#ta$ authority shall be deemed to
be a :udicial proceedin5 within the meanin5 of sections 1&) and 227 and for the purposes
of section 1&' of the Indian Penal .ode 34 of 17'8!
13
-and e+ery income#ta$ authority
shall be deemed to be a .i+il .ourt for the purposes of section 1&4% but not for the
purposes of .hapter //0I of the .ode of .riminal Procedure% 1&6) 2 of 1&63!2(
14
-Disclosure of information respecting assessees.
1'
138.
16
-1!a! The Board or any other income#ta$ authority specified by it by a 5eneral
or special order in this behalf may furnish or cause to be furnished to
i! any officer% authority or body performin5 any functions under any law relatin5
to the imposition of any ta$% duty or cess% or to dealin5s in
17
forei5n e$chan5e
as defined in section 2d! of the >orei5n E$chan5e Re5ulation "ct% 1&36 6 of
1&36!
1&
1 or
ii! such officer% authority or body performin5 functions under any other law as the
.entral ;o+ernment may% if in its opinion it is necessary so to do in the public
interest% specify by notification
28
in the <fficial ;a=ette in this behalf%
any such information
21
-recei+ed or obtained by any income#ta$ authority in the
performance of his functions under this "ct2% as may% in the opinion of the Board or other
income#ta$ authority% be necessary for the purpose of enablin5 the officer% authority or
body to perform his or its functions under that law(
b! Fhere a person ma9es an application to the
22
in the prescribed form
2)
for any information relatin5 to any assessee
23
-recei+ed or
obtained by any income#ta$ authority in the performance of his functions under this "ct2%
the
24
-.hief .ommissioner or .ommissioner2 may% if he is satisfied that it is in the public
interest so to do% furnish or cause to be furnished the information as9ed for
2'
-***2 and his
decision in this behalf shall be final and shall not be called in ,uestion in any court of
law(2
2! Aotwithstandin5 anythin5 contained in sub#section 1! or any other law for the time
bein5 in force% the .entral ;o+ernment may% ha+in5 re5ard to the practices and usa5es
customary or any other rele+ant factors% by order notified
26
in the <fficial ;a=ette% direct
that no information or document shall be furnished or produced by a public ser+ant in
respect of such matters relatin5 to such class of assessees or e$cept to such authorities as
may be specified in the order(2
'CAD7E6 B3E
PROCEDURE FOR ASSESSMENT
27
Return of income.
2&
139.
)8
-1! E+ery person
)1
%
a! bein5 a company
)2
-or a !irm21 or
b! bein5 a person other than a company
)2
-or a !irm2% if his total income or the
total income of any other person in respect of which he is assessable under this
"ct durin5 the pre+ious year e$ceeded the ma$imum amount which is not
char5eable to income#ta$%
shall% on or before the due date% furnish a return of his income or the income of such other
person durin5 the pre+ious year% in the prescribed form
))
and +erified in the prescribed
manner and settin5 forth such other particulars as may be prescribed :
Provided that a person referred to in clause b!% who is not re,uired to furnish a return
under this sub#section and residin5 in such area as may be specified by the Board in this
behalf by notification
)3
in the <fficial ;a=ette% and who
)4
-during the pre%ious +ear
incurs an expenditure o! !i!t+ thousand rupees or more towards consumption o!
electricit+ or2 at any time durin5 the pre+ious year fulfils any one of the followin5
i! is in occupation of an immo+able property e$ceedin5 a specified floor area%
whether by way of ownership% tenancy or otherwise% as may be specified
)'
by
the Board in this behalf1 or
ii! is the owner or the lessee of a motor +ehicle other than a two#wheeled motor
+ehicle% whether ha+in5 any detachable side car ha+in5 e$tra wheel attached to
such two#wheeled motor +ehicle or not1 or
iii!
)6
-***2
i%! has incurred e$penditure for himself or any other person on tra+el to any
forei5n country1 or
%! is the holder of a credit card
)7
% not bein5 an add#on card% issued by any ban9 or
institution1 or
%i! is a member of a club where entrance fee char5ed is twenty#fi+e thousand
rupees or more%
shall furnish a return% of his income
)7a
during an+ pre%ious +ear ending be!ore the 1st
da+ o! April) 2$$5]% on or before the due date in the prescribed form
)&
and +erified in the
prescribed manner and settin5 forth such other particulars as may be prescribed :
Provided further that the .entral ;o+ernment may% by notification
38
in the <fficial
;a=ette% specify the class or classes of persons to whom the pro+isions of the first pro+iso
shall not apply:
Provided also that e+ery company
31
-or a !irm2 shall furnish on or before the due date the
return in respect of its income or loss in e+ery pre+ious year:
31
-Provided also that e%er+ person) being an indi%idual or a Cindu undi%ided !amil+ or
an association o! persons or a bod+ o! indi%iduals) whether incorporated or not) or an
arti!icial 4uridical person) i! his total income or the total income o! an+ other person in
respect o! which he is assessable under this Act during the pre%ious +ear) without gi%ing
e!!ect to the pro%isions o! section 1$A or section 1$B or section 1$BA or 'hapter E3-A
exceeded the maximum amount which is not chargeable to income-tax) shall) on or
be!ore the due date) !urnish a return o! his income or the income o! such other person
during the pre%ious +ear) in the prescribed !orm and %eri!ied in the prescribed manner
and setting !orth such other particulars as ma+ be prescribed.2
Explanation 1.>or the purposes of this sub#section% the e$pression motor +ehicle shall
ha+e the meanin5 assi5ned to it in clause 2"! of section 2
32
of the Botor 0ehicles "ct%
1&77 4& of 1&77!(
Explanation 2.In this sub#section% due date means%
a! where the assessee is
i! a company1 or
ii! a person other than a company! whose accounts are re,uired to be audited
under this "ct or under any other law for the time bein5 in force1 or
iii! a wor9in5 partner of a firm whose accounts are re,uired to be audited under
this "ct or under any other law for the time bein5 in force%
the )1st day of <ctober of the assessment year1
b! in the case of a person other than a company% referred to in the first pro+iso to
this sub#section% the )1st day of <ctober of the assessment year1
c! in the case of any other assessee% the )1st day of @uly of the assessment year(
Explanation 3.>or the purposes of this sub#section% the e$pression tra+el to any forei5n
country does not include tra+el to the nei5hbourin5 countries or to such places of
pil5rima5e as the Board may specify in this behalf by notification
3)
in the <fficial
;a=ette(2
33
-1"! Fithout pre:udice to the pro+isions of sub#section 1!% any person% bein5 an
indi+idual who is in receipt of income char5eable under the head *alaries may% at his
option% furnish a return of his income for any pre+ious year to his employer% in
accordance with such scheme as may be specified by the Board in this behalf% by
34
% and sub:ect to such conditions as may be specified
therein% and such employer shall furnish all returns of income recei+ed by him on or
before the due date% in such form includin5 on a floppy% dis9ette% ma5netic cartrid5e
tape% .?#R<B or any other computer readable media! and manner as may be specified
in that scheme% and in such case% any employee who has filed a return of his income to his
employer shall be deemed to ha+e furnished a return of income under sub#section 1!% and
the pro+isions of this "ct shall apply accordin5ly(2
3'
-***22
36
-1B! Fithout pre:udice to the pro+isions of sub#section 1!% any person% bein5 a
company or bein5 a person other than a company% re,uired to furnish a return of income
under sub#section 1!% may% at his option% on or before the due date% furnish a return of his
income for any pre+ious year in accordance with such scheme as may be specified by the
Board in this behalf by notification in the <fficial ;a=ette
37
and sub:ect to such
conditions as may be specified therein% in such form includin5 on a floppy% dis9ette%
ma5netic cartrid5e tape% .?#R<B or any other computer readable media! and in the
manner as may be specified in that scheme% and in such case% the return of income
furnished under such scheme shall be deemed to be a return furnished under sub#section
1!% and the pro+isions of this "ct shall apply accordin5ly(2
3&
-***2
)! If any person who
48
-***2 has sustained a loss in any pre+ious year under the head
Profits and 5ains of business or profession or under the head .apital 5ains and claims that
the loss or any part thereof should be carried forward under sub#section 1! of section 62%
or sub#section 2! of section 6)% or sub#section 1!
41
-or sub#section )!2 of section 63%
42
-or sub#section )! of section 63"2% he may furnish% within the time allowed under sub#
section 1!
4)
-***2% a return of loss in the prescribed form
43
and +erified in the prescribed
manner and containin5 such other particulars as may be prescribed% and all the pro+isions
of this "ct shall apply as if it were a return under sub#section 1!(
44
-3! "ny person who has not furnished a return within the time allowed
4'
to him under
sub#section 1!% or within the time allowed under a notice issued under sub#section 1! of
section 132% may furnish the return for any pre+ious year at any time
4'
before the e$piry
of one year from the end of the rele+ant assessment year or before the completion of the
assessment% whiche+er is earlier :
Provided that where the return relates to a pre+ious year rele+ant to the assessment year
commencin5 on the 1st day of "pril% 1&77% or any earlier assessment year% the reference
to one year aforesaid shall be construed as a reference to two years from the end of the
rele+ant assessment year(2
46
-
47
-3"!
4&
E+ery person in receipt of income deri+ed from property held under trust or
other le5al obli5ation wholly for charitable or reli5ious purposes or in part only for such
purposes% or of income bein5 +oluntary contributions referred to in sub#clause iia! of
clause 24! of section 2% shall% if the total income in respect of which he is assessable as a
representati+e assessee the total income for this purpose bein5 computed under this "ct
without 5i+in5 effect to the pro+isions of sections 11 and 12! e$ceeds the ma$imum
amount which is not char5eable to income#ta$% furnish a return of such income of the
pre+ious year in the prescribed form and +erified in the prescribed manner and settin5
forth such other particulars as may be prescribed and all the pro+isions of this "ct shall%
so far as may be% apply as if it were a return re,uired to be furnished under sub#section
1!(22
'8
-3B!
'1
The chief e$ecuti+e officer whether such chief e$ecuti+e officer is 9nown as
*ecretary or by any other desi5nation! of e+ery political party shall% if the total income in
respect of which the political party is assessable the total income for this purpose bein5
computed under this "ct without 5i+in5 effect to the pro+isions of section 1)"! e$ceeds
the ma$imum amount which is not char5eable to income#ta$% furnish a return of such
income of the pre+ious year in the prescribed form and +erified in the prescribed manner
and settin5 forth such other particulars as may be prescribed and all the pro+isions of this
"ct% shall% so far as may be% apply as if it were a return re,uired to be furnished under
sub#section 1!(2
'2
-3.! E+ery
a! scientific research association referred to in clause 21! of section 181
b! news a5ency referred to in clause 22B! of section 181
c! association or institution referred to in clause 23A! of section 181
d! institution referred to in clause 23B! of section 181
e! fund or institution referred to in sub#clause i%! or trust or institution referred to
in sub#clause %! or any uni+ersity or other educational institution referred to in
'2a
sub-clause *iiiad( or] sub#clause %i! or any hospital or other medical
institution referred to in
'2a
sub-clause *iiiae( or] sub#clause %ia! of clause
23'! of section 181
f! trade union referred to in sub#clause a! or association referred to in sub#clause
b! of clause 24! of section 1$%
shall% if the total income in respect of which such scientific research association% news
a5ency% association or institution% fund or trust or uni+ersity or other educational
institution or any hospital or other medical institution or trade union is assessable%
without 5i+in5 effect to the pro+isions of section 18% e$ceeds the ma$imum amount
which is not char5eable to income#ta$% furnish a return of such income of the pre+ious
year in the prescribed form
')
and +erified in the prescribed manner and settin5 forth such
other particulars as may be prescribed and all the pro+isions of this "ct shall% so far as
may be% apply as if it were a return re,uired to be furnished under sub#section 1!(2
')a
*41( E%er+ uni%ersit+) college or other institution re!erred to in clause *ii( and
clause *iii( o! sub-section *1( o! section 35) which is not re2uired to !urnish return o!
income or loss under an+ other pro%ision o! this section) shall !urnish the return in
respect o! its income or loss in e%er+ pre%ious +ear and all the pro%isions o! this Act
shall) so !ar as ma+ be) appl+ as i! it were a return re2uired to be !urnished under sub-
section *1(.]
'3
-4! If any person% ha+in5 furnished a return under sub#section 1!% or in pursuance of a
notice issued under sub#section 1! of section 132% disco+ers any omission or any wron5
statement therein% he may furnish a re+ised return at any time before the e$piry of one
year from the end of the rele+ant assessment year or before the completion of the
assessment% whiche+er is earlier :
Provided that where the return relates to the pre+ious year rele+ant to the assessment
year commencin5 on the 1st day of "pril% 1&77% or any earlier assessment year% the
reference to one year aforesaid shall be construed as a reference to two years from the
end of the rele+ant assessment year(2
'4
-'! The prescribed form of the returns referred to
''
-in sub#sections 1! and )! of this
section% and in clause i! of sub#section 1! of section 1322 shall% in such cases as may be
prescribed% re,uire the assessee to furnish the particulars of income e$empt from ta$%
assets of the prescribed nature
'6
-% +alue and belon5in5 to him% his ban9 account and
credit card held by him2% e$penditure e$ceedin5 the prescribed limits incurred by him
under prescribed heads and such other out5oin5s as may be prescribed(
'"! Fithout pre:udice to the pro+isions of sub#section '!% the prescribed form of the
returns referred to
'7
-in
'&
-***2 this section% and in clause i! of sub#section 1! of section
1322 shall% in the case of an assessee en5a5ed in any business or profession% also re,uire
him to furnish
68
-the report of any audit
61
-referred to in section 33"B% or% where the
report has been furnished prior to the furnishin5 of the return% a copy of such report
to5ether with proof of furnishin5 the report2% the2 particulars of the location and style of
the principal place where he carries on the business or profession and all the branches
thereof% the names and addresses of his partners% if any% in such business or profession
and% if he is a member of an association or body of indi+iduals% the names of the other
members of the association or the body of indi+iduals and the e$tent of the share of the
assessee and the shares of all such partners or the members% as the case may be% in the
profits of the business or profession and any branches thereof(2
6!
62
-***2
6)
-
63
7!a!
64
-Fhere the return under sub#section 1! or sub#section 2! or sub#section 3!
for an assessment year is furnished after the specified date% or is not furnished% then
-whether or not the
6'
-"ssessin52 <fficer has e$tended the date for furnishin5 the return
under sub#section 1! or sub#section 2!2% the assessee shall be liable to pay simple
interest at
66
-fifteen2 per cent per annum% rec9oned from the day immediately followin5
the specified date to the date of the furnishin5 of the return or% where no return has been
furnished% the date of completion of the assessment under section 133% on the amount of
the ta$ payable on the total income as determined on re5ular assessment% as reduced by
the ad+ance ta$% if any% paid% and any ta$ deducted at source :
Provided that the
67
-"ssessin52 <fficer may% in such cases and under such circumstances
6&
% reduce or wai+e the interest payable by any assessee under this
sub#section(
Explanation 1.>or the purposes of this sub#section% specified date% in relation to a return
for an assessment year% means%
a! in the case of e+ery assessee whose total income% or the total income of any
person in respect of which he is assessable under this "ct% includes any
income from business or profession% the date of the e$piry of four months
from the end of the pre+ious year or where there is more than one pre+ious
year% from the end of the pre+ious year which e$pired last before the
commencement of the assessment year or the )8th day of @une of the
assessment year% whiche+er is later1
b! in the case of e+ery other assessee% the )8th day of @une of the assessment
year(2
78
-Explanation 2.Fhere% in relation to an assessment year% an assessment is made for the
first time under section 136% the assessment so made shall be re5arded as a re5ular
assessment for the purposes of this sub#section(2
71
-b! Fhere as a result of an order under section 136 or section 143 or section 144 or
section 248 or section 243 or section 2'8 or section 2'2 or section 2') or section 2'3
72
-or an order of the *ettlement .ommission under sub#section 3! of section 234?2% the
amount of ta$ on which interest was payable under this sub#section has been increased or
reduced% as the case may be% the interest shall be increased or reduced accordin5ly% and
i! in a case where the interest is increased% the
"3
-"ssessin52 <fficer shall
ser+e on the assessee% a notice of demand in the prescribed form specifyin5
the sum payable% and such notice of demand shall be deemed to be a notice
under section 156 and the pro+isions of this "ct shall apply accordin5ly1
ii! in a case where the interest is reduced% the e$cess interest paid% if any% shall
be refunded(22
73
-c! The pro+isions of this sub#section shall apply in respect of the assessment for the
assessment year commencin5 on the 1st day of "pril% 1&77% or any earlier assessment
year% and references therein to the other pro+isions of this "ct shall be construed as
references to the said pro+isions as they were applicable to the rele+ant assessment year(2
74
-&! Fhere the
7'
-"ssessin52 <fficer considers that the return of income furnished by
the assessee is defecti+e% he may intimate the defect to the assessee and 5i+e him an
opportunity to rectify the defect within a period of fifteen days from the date of such
intimation or within such further period which% on an application made in this behalf% the
7'
-"ssessin52 <fficer may% in his discretion% allow1 and if the defect is not rectified within
the said period of fifteen days or% as the case may be% the further period so allowed% then%
notwithstandin5 anythin5 contained in any other pro+ision of this "ct% the return shall be
treated as an in+alid return and the pro+isions of this "ct shall apply as if the assessee
had failed to furnish the return :
Provided that where the assessee rectifies the defect after the e$piry of the said period of
fifteen days or the further period allowed% but before the assessment is made% the
7'
-"ssessin52 <fficer may condone the delay and treat the return as a +alid return(
Explanation(>or the purposes of this sub#section% a return of income shall be re5arded as
defecti+e unless all the followin5 conditions are fulfilled% namely :
a! the anne$ures% statements and columns in the return of income relatin5 to
computation of income char5eable under each head of income% computation
of 5ross total income and total income ha+e been duly filled in1
b! the return is accompanied by a statement showin5 the computation of the
ta$ payable on the basis of the return1
"
-bb! the return is accompanied by the report of the audit referred to in section
44AB% or% where the report has been furnished prior to the furnishin5 of the
return% by a copy of such report to5ether with proof of furnishin5 the
report12
c! the return is accompanied by proof of
i! the ta$% if any% claimed to ha+e been deducted
87a
or collected] at source
88
-before the 1st day of "pril%
89
2$$"]2 and the ad+ance ta$ and ta$ on self#
assessment% if any% claimed to ha+e been paid :
#$
-Provided that where the return is not accompanied by proof of the ta$% if
any% claimed to ha+e been deducted
#$a
or collected] at source% the return of
income shall not be re5arded as defecti+e if
a! a certificate for ta$ deducted was not furnished under section 2$3 to the
person furnishin5 his return of income1
The following clause (a) shall be substituted for the existing clause
(a) of proviso to sub-clause (i) of clause (c) in the Explanation to
sub-section (9) of section 139 by the $inance Act( #))*, w.e.f. 1-4-
2007 :
*a( a certi!icate !or tax deducted or collected was not !urnished under
section 2$3 or section 2$6' to the person !urnishing his return o!
income-
b! such certificate is produced within a period of two years specified under
sub#section 13! of section 15512
ii! the amount of compulsory deposit% if any% claimed to ha+e been made under
the .ompulsory ?eposit *cheme Income#ta$ Payers! "ct% 1&63 )7 of
1&63!1
d! where re5ular boo9s of account are maintained by the assessee% the return is
accompanied by copies of
i! manufacturin5 account% tradin5 account% profit and loss account or% as the
case may be% income and e$penditure account or any other similar account
and balance sheet1
ii! in the case of a proprietary business or profession% the personal account of
the proprietor1 in the case of a firm% association of persons or body of
indi+iduals% personal accounts of the partners or members1 and in the case
of a partner or member of a firm% association of persons or body of
indi+iduals% also his personal account in the firm% association of persons or
body of indi+iduals1
e! where the accounts of the assessee ha+e been audited% the return is
accompanied by copies of the audited profit and loss account and balance
sheet and the auditors report
#1
-and% where an audit of cost accounts of the
assessee has been conducted% under section 2))B
#2
1&4' 1 of 1&4'!% also the report under that section21
!! where re5ular boo9s of account are not maintained by the assessee% the
return is accompanied by a statement indicatin5 the amounts of turno+er or%
as the case may be% 5ross receipts% 5ross profit% e$penses and net profit of
the business or profession and the basis on which such amounts ha+e been
computed% and also disclosin5 the amounts of total sundry debtors% sundry
creditors% stoc9#in#trade and cash balance as at the end of the pre+ious
year :2
#2a
Provided that the Board ma+) b+ rules made b+ it)
*a( dispense) !or a class or classes o! persons) with an+ o! the conditions speci!ied
in clauses *a( to *f(- or
*b( include an+ o! the conditions speci!ied in clauses *a( to *f( o! this E$planation
in the !orm o! return prescribed under sub-section *1( or sub-section *6( o! this
section.]
18!
&)
-/mitted b+ the 0inance *&o. 2( Act) 1##1) w.e.!. 1-4-1##1.2

&3
-Permanent account number
&4
.
139A. 1! E+ery person%
i! if his total income or the total income of any other person in respect of which
he is assessable under this "ct durin5 any pre+ious year e$ceeded the
ma$imum amount which is not char5eable to income#ta$1 or
ii! carryin5 on any business or profession whose total sales% turno+er or 5ross
receipts are or is li9ely to e$ceed
&'
-fi+e la9h2 rupees in any pre+ious year1 or
iii! who is re,uired to furnish a return of income under
&6
-sub-section *4A( o!
section 13#- or
i%! being an emplo+er) who is re2uired to !urnish a return o! !ringe bene!its under
section 115,1)2
and who has not been allotted a permanent account number shall% within such time% as
may be prescribed
&7
% apply to the "ssessin5 <fficer for the allotment of a permanent
account number(
&&
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% the .entral ;o+ernment
1
in the <fficial ;a=ette% specify% any class or classes of persons by
whom ta$ is payable under this "ct or any ta$ or duty is payable under any other law for
the time bein5 in force includin5 importers and e$porters whether any ta$ is payable by
them or not and such persons shall% within such time as mentioned in that notification%
apply to the "ssessin5 <fficer for the allotment of a permanent account number(2
1a
*1B( &otwithstanding an+thing contained in sub-section *1() the 'entral 5o%ernment
ma+) !or the purpose o! collecting an+ in!ormation which ma+ be use!ul !or or rele%ant to
the purposes o! this Act) b+ noti!ication in the /!!icial 5a8ette) speci!+) an+ class or
classes o! persons who shall appl+ to the Assessing /!!icer !or the allotment o! the
permanent account number and such persons shall) within such time as mentioned in that
noti!ication) appl+ to the Assessing /!!icer !or the allotment o! a permanent account
number.]
1b
*2( 7he Assessing /!!icer) ha%ing regard to the nature o! the transactions as ma+ be
prescribed) ma+ also allot a permanent account number) to an+ other person *whether
an+ tax is pa+able b+ him or not() in the manner and in accordance with the procedure as
ma+ be prescribed.]
)! "ny person% not fallin5 under sub#section 1! or sub#section 2!% may apply to the
"ssessin5 <fficer for the allotment of a permanent account number and% thereupon% the
"ssessin5 <fficer shall allot a permanent account number to such person forthwith(
3! >or the purpose of allotment of permanent account numbers under the new series% the
Board may% by notification
2
in the <fficial ;a=ette% specify the date from which the
persons referred to in sub#sections 1! and 2! and other persons who ha+e been allotted
permanent account numbers and residin5 in a place to be specified in such notification%
shall% within such time as may be specified% apply to the "ssessin5 <fficer for the
allotment of a permanent account number under the new series and upon allotment of
such permanent account number to a person% the permanent account number% if any%
allotted to him earlier shall cease to ha+e effect :
Provided that the persons to whom permanent account number under the new series has
already been allotted shall not apply for such number a5ain(
4! E+ery person shall
a! ,uote such number in all his returns to% or correspondence with% any income#ta$
authority1
b! ,uote such number in all challans for the payment of any sum due under this
"ct1
c! ,uote such number in all documents pertainin5 to such transactions as may be
prescribed
)
by the Board in the interests of the re+enue% and entered into by
him:
Provided that the Board may prescribe different dates for different transactions
or class of transactions or for different class of persons:
3
-Provided further that a person shall ,uote ;eneral Inde$ Re5ister Aumber
till such time Permanent "ccount Aumber is allotted to such person12
d! intimate the "ssessin5 <fficer any chan5e in his address or in the name and
nature of his business on the basis of which the permanent account number was
allotted to him(
4
-4"! E+ery person recei+in5 any sum or income or amount from which ta$ has been
deducted under the pro+isions of .hapter /0IIB% shall intimate his permanent account
number to the person responsible for deductin5 such ta$ under that .hapter :
'
-***2
Provided further that a person referred to in this sub#section shall intimate the ;eneral
Inde$ Re5ister Aumber till such time permanent account number is allotted to such
person(
4B! Fhere any sum or income or amount has been paid after deductin5 ta$ under
.hapter /0IIB% e+ery person deductin5 ta$ under that .hapter shall ,uote the permanent
account number of the person to whom such sum or income or amount has been paid by
him
i! in the statement furnished in accordance with the pro+isions of sub#section
2.! of section 1&21
ii! in all certificates furnished in accordance with the pro+isions of section 28)1
iii! in all returns prepared and deli+ered or caused to be deli+ered in accordance
with the pro+isions of section 28' to any income#ta$ authority1
'a
*i+( in all 2uarterl+ statements prepared and deli%ered or caused to be deli%ered in
accordance with the pro%isions o! sub-section *3( o! section 2$$A]
Provided that the .entral ;o+ernment may% by notification
6
in the <fficial ;a=ette%
specify different dates from which the pro+isions of this sub#section shall apply in respect
of any class or classes of persons:
Provided further that nothin5 contained in sub#sections 4"! and 4B! shall apply in
case of a person whose total income is not char5eable to income#ta$ or who is not
re,uired to obtain permanent account number under any pro+ision of this "ct if such
person furnishes to the person responsible for deductin5 ta$% a declaration referred to in
section 1&6" in the form and manner prescribed thereunder to the effect that the ta$ on
his estimated total income of the pre+ious year in which such income is to be included in
computin5 his total income will be nil(
4.! E+ery buyer
7
-or licensee or lessee2 referred to in section 28'. shall intimate his
permanent account number to the
7a
seller] referred to in that section(
4?! E+ery
7b
seller] collectin5 ta$ in accordance with the pro+isions of section 28'.
shall ,uote the permanent account number of e+ery buyer
7
-or licensee or lessee2 referred
to in that section
i! in all certificates furnished in accordance with the pro+isions of sub#section 4!
of section 28'.1
ii! in all returns prepared and deli+ered or caused to be deli+ered in accordance
with the pro+isions of sub#section 4"! or sub#section 4B! of section 28'. to
an income#ta$ authority12
7c
*iii( in all 2uarterl+ statements prepared and deli%ered or caused to be deli%ered in
accordance with the pro%isions o! sub-section *3( o! section 2$6'.]
'! E+ery person recei+in5 any document relatin5 to a transaction prescribed under clause
c! of sub#section 4! shall ensure that the Permanent "ccount Aumber
&
-or the ;eneral
Inde$ Re5ister Aumber2 has been duly ,uoted in the document(
6! Ao person who has already been allotted a permanent account number under the new
series shall apply% obtain or possess another permanent account number(
18
-E$planation(0or the remo%al o! doubts) it is hereb+ declared that an+ person) who has
been allotted a permanent account number under an+ clause other than clause *i+( o!
sub-section *1() shall not be re2uired to obtain another permanent account number and
the permanent account number alread+ allotted to him shall be deemed to be the
permanent account number in relation to !ringe bene!it tax.2
11
7! The Board may ma9e rules pro+idin5 for
a! the form and the manner in which an application may be made for the allotment
of a permanent account number and the particulars which such application shall
contain1
b! the cate5ories of transactions in relation to which Permanent "ccount Aumbers
&
-or the ;eneral Inde$ Re5ister Aumber2 shall be ,uoted by e+ery person in the
documents pertainin5 to such transactions1
c! the cate5ories of documents pertainin5 to business or profession in which such
numbers shall be ,uoted by e+ery person1
12
-d! class or classes of persons to whom the pro+isions of this section shall not
apply1
e! the form and the manner in which the person who has not been allotted a
Permanent "ccount Aumber or who does not ha+e ;eneral Inde$ Re5ister
Aumber shall ma9e his declaration1
!! the manner in which the Permanent "ccount Aumber or the ;eneral Inde$
Re5ister Aumber shall be ,uoted in respect of the cate5ories of transactions
referred to in clause c!*1
g! the time and the manner in which the transactions referred to in clause c!*
shall be intimated to the prescribed authority(2
a! "ssessin5 <fficer includes an income#ta$ authority who is assi5ned the duty of
allottin5 permanent account numbers1
b! permanent account number means a number which the "ssessin5 <fficer may
allot to any person for the purpose of identification and includes a permanent
account number allotted under the new series1
c! permanent account number under the new series means a permanent account
number ha+in5 ten alphanumeric characters and issued in the form of a
laminated card12
1)
-d! ;eneral Inde$ Re5ister Aumber means a number 5i+en by an "ssessin5 <fficer
to an assessee in the ;eneral Inde$ Re5ister maintained by him and containin5
the desi5nation and particulars of the ward or circle or ran5e of the "ssessin5
<fficer(2
1)a
Scheme for submission of returns through Tax Return Preparers.
139B. *1( 0or the purpose o! enabling an+ speci!ied class or classes o! persons in
preparing and !urnishing returns o! income) the Board ma+) without pre4udice to the
pro%isions o! section 13#) !rame a <cheme) b+ noti!ication in the /!!icial 5a8ette)
pro%iding that such persons ma+ !urnish their returns o! income through a 7ax 6eturn
Dreparer authorised to act as such under the <cheme.
*2( E%er+ 7ax 6eturn Dreparer shall assist the persons !urnishing the return o! income in
such manner as ma+ be speci!ied in the <cheme !ramed under this section and a!!ix his
signature on such return.
*3( 0or the purposes o! this section)
*a( 7ax 6eturn Dreparer means an+ indi%idual) ?not being a person re!erred to in
clause *ii( or clause *iii( or clause *i+( o! sub-section *2( o! section 2"" or an
emplo+ee o! the speci!ied class or classes o! persons@) who has been authorised
to act as a 7ax 6eturn Dreparer under the <cheme !ramed under this section-
*b( speci!ied class or classes o! persons means an+ person) other than a compan+
or a person) whose accounts are re2uired to be audited under section 44AB or
under an+ other law !or the time being in !orce) who is re2uired to !urnish a
return o! income under this Act.
*4( 7he <cheme !ramed b+ the Board under this section ma+ pro%ide !or the !ollowing)
namel+A
*a( the manner in which and the period !or which the 7ax 6eturn Dreparers shall
be authorised under sub-section *3(-
*b( the educational and other 2uali!ications to be possessed) and the training and
other conditions re2uired to be !ul!illed) b+ a person to act as a 7ax 6eturn
Dreparer-
*c( the code o! conduct !or the 7ax 6eturn Dreparers-
*d( the duties and obligations o! the 7ax 6eturn Dreparers-
*e( the circumstances under which the authorisation gi%en to a 7ax 6eturn
Dreparer ma+ be withdrawn-
*f( an+ other matter which is re2uired to be) or ma+ be) speci!ied b+ the <cheme
!or the purposes o! this section.
*5( 7he <cheme !ramed b+ the Board under this section shall be laid) as soon as ma+ be
a!ter it is !ramed) be!ore each Couse o! Darliament) while it is in session) !or a total
period o! thirt+ da+s which ma+ be comprised in one session or in two or more successi%e
sessions) and i!) be!ore the expir+ o! the session immediatel+ !ollowing the session or the
successi%e sessions a!oresaid) both Couses agree in ma.ing an+ modi!ication in the
scheme or both Couses agree that the <cheme should not be !ramed) the <cheme shall
therea!ter ha%e e!!ect onl+ in such modi!ied !orm or be o! no e!!ect) as the case ma+ be-
so) howe%er) that an+ such modi!ication or annulment shall be without pre4udice to the
%alidit+ o! an+thing pre%iousl+ done under that <cheme.]
Return by whom to be signed.
13
140. The return under
14
-section 115,1 or2 section 1)& shall be si5ned and +erified
1'
-a! in the case of an indi+idual%
i! by the indi+idual himself1
ii! where he is absent from India% by the indi+idual himself or by some person
duly authorised by him in this behalf1
iii! where he is mentally incapacitated from attendin5 to his affairs% by his
5uardian or any other person competent to act on his behalf1 and
i%! where% for any other reason% it is not possible for the indi+idual to si5n the
return% by any person duly authorised by him in this behalf:
Provided that in a case referred to in sub#clause ii! or sub#clause i%!% the
person si5nin5 the return holds a +alid power of attorney from the indi+idual to
do so% which shall be attached to the return12
b! in the case of a Cindu undi+ided family% by the 9arta% and% where the 9arta is
absent from India or is mentally incapacitated from attendin5 to his affairs% by
any other adult member of such family1
16
-c! in the case of a company% by the mana5in5 director thereof% or where for any
una+oidable reason such mana5in5 director is not able to si5n and +erify the
return% or where there is no mana5in5 director% by any director thereof :
17
-Provided that where the company is not resident in India% the return may be
si5ned and +erified by a person who holds a +alid power of attorney from such
company to do so% which shall be attached to the return :
Provided further that%
a! where the company is bein5 wound up% whether under the orders of a court
or otherwise% or where any person has been appointed as the recei+er of any
assets of the company% the return shall be si5ned and +erified by the
li,uidator referred to in sub#section 1! of section 1671
b! where the mana5ement of the company has been ta9en o+er by the .entral
;o+ernment or any *tate ;o+ernment under any law% the return of the
company shall be si5ned and +erified by the principal officer thereof12
cc! in the case of a firm% by the mana5in5 partner thereof% or where for any
una+oidable reason such mana5in5 partner is not able to si5n and +erify the
return% or where there is no mana5in5 partner as such% by any partner thereof%
not bein5 a minor1
d! in the case of a local authority% by the principal officer thereof12
1&
-dd! in the case of a political party referred to in sub#section 3B! of section 1)&% by
the chief e$ecuti+e officer of such party whether such chief e$ecuti+e officer is
9nown as secretary or by any other desi5nation!12
e! in the case of any other association% by any member of the association or the
principal officer thereof1 and
!! in the case of any other person% by that person or by some person competent to
act on his behalf(
28
-Self-assessment.
21
140A.
22
-1! Fhere any ta$ is payable on the basis of any return re,uired to be furnished
under
2)
-
23
-section 115,1 or section 115,C or2 section 1)& or section 132
24
-or section
137 or
2'
-section 14)" or2% as the case may be% section 147B.22%
2'a
a!ter ta.ing into
account the amount o! tax) i! an+) alread+ paid under an+ pro%ision o! this Act)]
26
-the
assessee shall be liable to pay such ta$ to5ether with interest payable under any pro+ision
of this "ct for any delay in furnishin5 the return or any default or delay in payment of
ad+ance ta$% before furnishin5 the return and the return shall be accompanied by proof of
payment of such ta$ and interest(2
27
-Explanation(Fhere the amount paid by the assessee under this sub#section falls short
of the a55re5ate of the ta$ and interest as aforesaid% the amount so paid shall first be
ad:usted towards the interest payable as aforesaid and the balance% if any% shall be
ad:usted towards the ta$ payable(2
2&
-*1A( 0or the purposes o! sub-section *1() interest pa+able)
*i( under section 234A shall be computed on the amount o! the tax on the total
income as declared in the return as reduced b+ the ad%ance tax) i! an+) paid
and an+ tax deducted or collected at source-
The following clause (i) shall be substituted for the existing clause (i) of
sub-section (1A) of section 140A by the Finance Act, 2006, w.e.f. 1-4-2007 :
*i( under section 234A shall be computed on the amount o! the tax on the total
income as declared in the return as reduced b+ the amount o!)
*a( ad%ance tax) i! an+) paid-
*b( an+ tax deducted or collected at source-
*c( an+ relie! o! tax or deduction o! tax claimed under section #$ or section #1
on account o! tax paid in a countr+ outside 3ndia-
*d( an+ relie! o! tax claimed under section #$A on account o! tax paid in an+
speci!ied territor+ outside 3ndia re!erred to in that section- and
*e( an+ tax credit claimed to be set o!! in accordance with the pro%isions o!
section 1159AA-
*ii( under section 115,H shall be computed on the amount o! tax on the %alue o!
the !ringe bene!its as declared in the return as reduced b+ the ad%ance tax)
paid) i! an+(2
)8
-1B! >or the purposes of sub#section 1!% interest payable under section 2)3B shall be
computed on an amount e,ual to the assessed ta$ or% as the case may be% on the amount
by which the ad+ance ta$ paid falls short of the assessed ta$(
Explanation.>or the purposes of this sub#section% assessed ta$ means the ta$ on the total
income as declared in the return as reduced by the amount of ta$ deducted or collected at
source% in accordance with the pro+isions of .hapter /0II% on any income which is
sub:ect to such deduction or collection and which is ta9en into account in computin5 such
total income(2
The following Explanation shall be substituted for the existing Explanation to sub-
section (1B) of section 140A by the Finance Act, 2006, w.e.f. 1-4-2007 :
E$planation.0or the purposes o! this sub-section) assessed tax means the tax on the total
income as declared in the return as reduced b+ the amount o!)
*i( tax deducted or collected at source) in accordance with the pro%isions o!
'hapter BE33) on an+ income which is sub4ect to such deduction or collection
and which is ta.en into account in computing such total income-
*ii( an+ relie! o! tax or deduction o! tax claimed under section #$ or section #1 on
account o! tax paid in a countr+ outside 3ndia-
*iii( an+ relie! o! tax claimed under section #$A on account o! tax paid in an+
speci!ied territor+ outside 3ndia re!erred to in that section- and
*i+( an+ tax credit claimed to be set o!! in accordance with the pro%isions o! section
1159AA.
2! "fter a re5ular assessment under
)1
-section 115,E or section 115,0 or2 section 13)
or section 133
)2
-or an assessment under
))
-section 14)" or2 section 147B.2 has been
made% any amount paid under sub#section 1! shall be deemed to ha+e been paid towards
such re5ular assessment
)2
-or assessment% as the case may be2(
)3
-)! If any assessee fails to pay the whole or any part of such ta$ or interest or both in
accordance with the pro+isions of sub#section 1!% he shall% without pre:udice to any other
conse,uences which he may incur% be deemed to be an assessee in default in respect of
the ta$ or interest or both remainin5 unpaid% and all the pro+isions of this "ct shall apply
accordin5ly(2
)4
-3! The pro+isions of this section as they stood immediately before their amendment by
the ?irect Ta$ Gaws "mendment! "ct% 1&76 3 of 1&77!% shall apply to and in relation to
any assessment for the assessment year commencin5 on the 1st day of "pril% 1&77% or any
earlier assessment year and references in this section to the other pro+isions of this "ct
shall be construed as references to those pro+isions as for the time bein5 in force and
applicable to the rele+ant assessment year(2
Inquiry before assessment.
)6
142. 1! >or the purpose of ma9in5 an assessment under this "ct% the
)7
-"ssessin52
<fficer may ser+e on any person who has made a return
)&
-under section 115,1 or
section 13#
38
-or in whose case the time allowed under sub-section *1( o! section 13#2 for
furnishin5 the return has e$pired2 a notice re,uirin5 him% on a date to be therein specified%
31
-i! where such person has not made a return
32
-within the time allowed under sub#
section 1! of section 1)&2
32a
-or be!ore the end o! the rele%ant assessment
+ear2% to furnish a return of his income or the income of any other person in
respect of which he is assessable under this "ct% in the prescribed form and
+erified in the prescribed manner
3)
and settin5 forth such other particulars as
may be prescribed% or :2
3)a
Provided that where an+ notice has been ser%ed under this sub-section !or
the purposes o! this clause a!ter the end o! the rele%ant assessment +ear
commencing on or a!ter the 1st da+ o! April) 1##$ to a person who has not
made a return within the time allowed under sub-section *1( o! section 13# or
be!ore the end o! the rele%ant assessment +ear) an+ such notice issued to him
shall be deemed to ha%e been ser%ed in accordance with the pro%isions o! this
sub-section)]
33
-ii!2 to produce% or cause to be produced% such accounts or documents as the
34
-"ssessin52 <fficer may re,uire% or
3'
-iii!2
36
to furnish in writin5 and +erified in the prescribed manner information in such
form and on such points or matters includin5 a statement of all assets and
liabilities of the assessee% whether included in the accounts or not! as the
37
-"ssessin52 <fficer may re,uire :
Provided that
a! the pre+ious appro+al of the
3&
-@oint .ommissioner2 shall be obtained before
re,uirin5 the assessee to furnish a statement of all assets and liabilities not
included in the accounts 1
b! the
48
-"ssessin52 <fficer shall not re,uire the production of any accounts
relatin5 to a period more than three years prior to the pre+ious year(
2! >or the purpose of obtainin5 full information in respect of the income or loss of any
person% the
48
-"ssessin52 <fficer may ma9e such in,uiry as he considers necessary(
41
-2"!
42
If% at any sta5e of the proceedin5s before him% the
4)
-"ssessin52 <fficer% ha+in5
re5ard to the nature and comple$ity
43
of the
43
accounts of the assessee and the interests of
the re+enue% is of the opinion that it is necessary so to do% he may% with the pre+ious
appro+al of the
44
-.hief .ommissioner or .ommissioner2% direct the assessee to 5et the
accounts audited by an accountant% as defined in the Explanation below sub#section 2! of
section 277% nominated by the
44
-.hief .ommissioner or .ommissioner2 in this behalf
and to furnish a report of such audit in the prescribed form
4'
duly si5ned and +erified by
such accountant and settin5 forth such particulars as may be prescribed and such other
particulars as the
46
-"ssessin52 <fficer may re,uire(
2B! The pro+isions of sub#section 2"! shall ha+e effect notwithstandin5 that the
accounts of the assessee ha+e been audited under any other law for the time bein5 in
force or otherwise(
2.! E+ery report under sub#section 2"! shall be furnished by the assessee to the
46
-"ssessin52 <fficer within such period as may be specified by the
46
-"ssessin52
<fficer :
Provided that the
46
-"ssessin52 <fficer may% on an application made in this behalf by the
assessee and for any 5ood and sufficient reason% e$tend the said period by such further
period or periods as he thin9s fit 1 so% howe+er% that the a55re5ate of the period ori5inally
fi$ed and the period or periods so e$tended shall not% in any case% e$ceed one hundred
and ei5hty days from the date on which the direction under sub#section 2"! is recei+ed
by the assessee(
2?! The e$penses of% and incidental to% any audit under sub#section 2"! includin5 the
remuneration of the accountant! shall be determined by the
47
.ommissioner2 which determination shall be final! and paid by the assessee and in
default of such payment% shall be reco+erable from the assessee in the manner pro+ided in
.hapter /0II#? for the reco+ery of arrears of ta$(2
)! The assessee shall% e$cept where the assessment is made under section 133% be 5i+en
an opportunity of bein5 heard in respect of any material 5athered on the basis of any
in,uiry under sub#section 2!
4&
-or any audit under sub#section 2"!2 and proposed to be
utilised for the purposes of the assessment(
'8
'1
-Estimate by Valuation Officer in certain cases.
142A. 1! >or the purposes of ma9in5 an assessment or reassessment under this "ct%
where an estimate of the +alue of any in+estment referred to in section '& or section '&B
or the +alue of any bullion% :ewellery or other +aluable article referred to in section '&"
or section '&B is re,uired to be made% the "ssessin5 <fficer may re,uire the 0aluation
<fficer to ma9e an estimate of such +alue and report the same to him(
2! The 0aluation <fficer to whom a reference is made under sub#section 1! shall% for
the purposes of dealin5 with such reference% ha+e all the powers that he has under section
)7" of the Fealth#ta$ "ct% 1&46 26 of 1&46!(
)! <n receipt of the report from the 0aluation <fficer% the "ssessin5 <fficer may% after
5i+in5 the assessee an opportunity of bein5 heard% ta9e into account such report in
ma9in5 such assessment or reassessment:
Provided that nothin5 contained in this section shall apply in respect of an assessment
made on or before the )8th day of *eptember% 2883% and where such assessment has
become final and conclusi+e on or before that date% e$cept in cases where a reassessment
is re,uired to be made in accordance with the pro+isions of section 14)"(
Explanation.In this section% 0aluation <fficer has the same meanin5 as in clause r! of
'2
-Assessment
')
(
'3
143.
'4
-1! Fhere a return has been made under section 1)&% or in response to a notice
under sub#section 1! of section 132%
i! if any ta$ or interest is found due on the basis of such return% after ad:ustment
of any ta$ deducted at source% any ad+ance ta$ paid% any ta$ paid on self#
assessment and any amount paid otherwise by way of ta$ or interest% then%
without pre:udice to the pro+isions of sub#section 2!
''
% an intimation shall be
sent to the assessee specifyin5 the sum so payable% and such intimation shall be
deemed to be a notice of demand issued under section 14' and all the
pro+isions of this "ct shall apply accordin5ly1 and
ii! if any refund is due on the basis of such return% it shall be 5ranted to the
assessee and an intimation to this effect shall be sent to the assessee :
Provided that e$cept as otherwise pro+ided in this sub#section% the
ac9nowled5ement of the return shall be deemed to be an intimation under this sub#
section where either no sum is payable by the assessee or no refund is due to him :
Provided further that no intimation under this sub#section shall be sent after the
e$piry of
'6
-one year from the end of the financial year in which the return is made :2
'7
-Provided also that where the return made is in respect of the income first
assessable in the assessment year commencin5 on the 1st day of "pril% 1&&&% such
intimation may be sent at any time up to the )1st day of Barch% 2882(2
1"!
'&
-/mitted b+ the 0inance Act) 1###) w.e.!. 1-6-1###.2
1B!
68
1
-2! Fhere a return has been furnished under section 13#% or in response to a notice
under sub#section 1! of section 142% the "ssessin5 <fficer shall%
i! where he has reason to belie+e that any claim of loss% e$emption% deduction%
allowance or relief made in the return is inadmissible% ser+e on the assessee a
notice specifyin5 particulars of such claim of loss% e$emption% deduction%
allowance or relief and re,uire him% on a date to be specified therein to
produce% or cause to be produced% any e+idence or particulars specified therein
or on which the assessee may rely% in support of such claim:
62
-Provided that no notice under this clause shall be ser+ed on the assessee on
or after the 1st day of @une% 288)12
ii! notwithstandin5 anythin5 contained in clause i!% if he considers it necessary or
e$pedient to ensure that the assessee has not understated the income or has not
computed e$cessi+e loss or has not under#paid the ta$ in any manner% ser+e on
the assessee a notice re,uirin5 him% on a date to be specified therein% either to
attend his office or to produce% or cause to be produced% any e+idence on which
the assessee may rely in support of the return:
Provided that no notice under
3
-clause ii!2 shall be ser+ed on the assessee
after the e$piry of twel+e months from the end of the month in which the return
is furnished(2
4
-)! <n the day specified in the notice%
i! issued under clause i! of sub#section 2!% or as soon afterwards as may be% after
hearin5 such e+idence and after ta9in5 into account such particulars as the
assessee may produce% the "ssessin5 <fficer shall% by an order in writin5% allow
or re:ect the claim or claims specified in such notice and ma9e an assessment
determinin5 the total income or loss accordin5ly% and determine the sum
payable by the assessee on the basis of such assessment1
ii! issued under clause ii! of sub#section 2!% or as soon afterwards as may be%
after hearin5 such e+idence as the assessee may produce and such other
e+idence as the "ssessin5 <fficer may re,uire on specified points% and after
ta9in5 into account all rele+ant material which he has 5athered% the "ssessin5
<fficer shall% by an order in writin5% ma9e an assessment of the total income or
loss of the assessee% and determine the sum payable by him or refund of any
amount due to him on the basis of such assessment:2
5
-Provided that in the case of a
a! scientific research association referred to in clause 21! of section 181
b! news a5ency referred to in clause 22B! of section 181
c! association or institution referred to in clause 23A! of section 181
d! institution referred to in clause 23B! of section 181
e! fund or institution referred to in sub#clause i%! or trust or institution referred to
in sub#clause %! or any uni+ersity or other educational institution referred to in
sub#clause %i! or any hospital or other medical institution referred to in sub#
clause %ia! of clause 23'! of section 18%
which is re,uired to furnish the return of income under sub#section 3.! of section 13#%
no order ma9in5 an assessment of the total income or loss of such scientific research
association% news a5ency% association or institution or fund or trust or uni+ersity or other
educational institution or any hospital or other medical institution% shall be made by the
"ssessin5 <fficer% without 5i+in5 effect to the pro+isions of section 1$% unless
i! the "ssessin5 <fficer has intimated the .entral ;o+ernment or the prescribed
authority the contra+ention of the pro+isions of clause 21! or clause 22B! or
clause 23A! or clause 23B! or sub#clause i%! or sub#clause %! or sub#clause
%i! or sub#clause %ia! of clause 23'! of section 18% as the case may be% by
such scientific research association% news a5ency% association or institution or
fund or trust or uni+ersity or other educational institution or any hospital or
other medical institution% where in his +iew such contra+ention has ta9en place1
and
ii! the appro+al 5ranted to such scientific research association or other association
or institution or uni+ersity or other educational institution or hospital or other
medical institution has been withdrawn or notification issued in respect of such
news a5ency or fund or trust or institution has been rescinded :2
5a
Provided further that where the Assessing /!!icer is satis!ied that the acti%ities o!
the uni%ersit+) college or other institution re!erred to in clause *ii( and clause *iii( o! sub-
section *1( o! section 35 are not being carried out in accordance with all or an+ o! the
conditions sub4ect to which such uni%ersit+) college or other institution was appro%ed) he
ma+) a!ter gi%ing a reasonable opportunit+ o! showing cause against the proposed
withdrawal to the concerned uni%ersit+) college or other institution) recommend to the
'entral 5o%ernment to withdraw the appro%al and that 5o%ernment ma+ b+ order)
withdraw the appro%al and !orward a cop+ o! the order to the concerned uni%ersit+)
college or other institution and the Assessing /!!icer.]
6'
-3! Fhere a re5ular assessment under sub#section )! of this section or section 133 is
made%
a! any ta$ or interest paid by the assessee under sub#section 1! shall be deemed to
ha+e been paid towards such re5ular assessment 1
b! if no refund is due on re5ular assessment or the amount refunded under sub#
section 1! e$ceeds the amount refundable on re5ular assessment% the whole or
the e$cess amount so refunded shall be deemed to be ta$ payable by the
assessee and the pro+isions of this "ct shall apply accordin5ly(
4!
66
78
-* * *2

Best judgment assessment.
6&
144.
78
-1!2 If any person
a! fails to ma9e the return re,uired
81
-under sub#section 1! of section 1)&2 and
has not made a return or a re+ised return under sub#section 3! or sub#section
4! of that section% or
b! fails to comply with all the terms of a notice issued under sub#section 1! of
section 142
82
-or fails to comply with a direction issued under sub#section 2"!
of that section2% or
c! ha+in5 made a return% fails to comply with all the terms of a notice issued under
sub#section 2! of section 143%
the
7)
-"ssessin52 <fficer% after ta9in5 into account all rele+ant material which the
7)
-"ssessin52 <fficer has 5athered%
73
-shall% after 5i+in5 the assessee an opportunity of
bein5 heard% ma9e the assessment
74
2 of the total income or loss to the best of his :ud5ment
and determine the sum payable by the assessee
7'
-* * *2 on the basis of such assessment :
76
-Provided that such opportunity shall be 5i+en by the "ssessin5 <fficer by ser+in5 a
notice callin5 upon the assessee to show cause% on a date and time to be specified in the
notice% why the assessment should not be completed to the best of his :ud5ment :
Provided further that it shall not be necessary to 5i+e such opportunity in a case where a
notice under sub#section 1! of section 132 has been issued prior to the ma9in5 of an
assessment under this section(2
77
7&
-Power of
&8
-1oint Commissioner2 to issue directions in certain cases.
&1
144A.
&2
-* * *2 "
&8
-@oint .ommissioner2 may% on his own motion or on a reference
bein5 made to him by the
&)
-"ssessin52 <fficer or on the application of an assessee% call
for and e$amine the record of any proceedin5 in which an assessment is pendin5 and% if
he considers that% ha+in5 re5ard to the nature of the case or the amount in+ol+ed or for
any other reason% it is necessary or e$pedient so to do% he may issue such directions as he
thin9s fit for the 5uidance of the
&)
-"ssessin52 <fficer to enable him to complete the
assessment and such directions shall be bindin5 on the
&)
-"ssessin52 <fficer :
Provided that no directions which are pre:udicial to the assessee shall be issued before an
opportunity is 5i+en to the assessee to be heard(
Explanation.>or the purposes of this
&3
-section2 no direction as to the lines on which an
in+esti5ation connected with the assessment should be made
&4
% shall be deemed to be a
direction pre:udicial to the assessee(
&'
-* * *22
&7
-Method of accounting.
&&
145. 1! Income char5eable under the head Profits and 5ains of business or profession or
Income from other sources shall% sub:ect to the pro+isions of sub#section 2!% be
computed in accordance with either cash or mercantile system of accountin5 re5ularly
&&
employed by the assessee(
2! The .entral ;o+ernment may notify in the <fficial ;a=ette
1
from time to time
accountin5 standards to be followed by any class of assessees or in respect of any class of
income(
)! Fhere the "ssessin5 <fficer is not satisfied about the correctness or completeness of
the accounts of the assessee% or where the method of accountin5 pro+ided in sub#section
1! or accountin5 standards as notified under sub#section 2!% ha+e not been re5ularly
followed by the assessee% the "ssessin5 <fficer may ma9e an assessment in the manner
pro+ided in section 133(2
2
-Method of accounting in certain cases.
145A. Aotwithstandin5 anythin5 to the contrary contained in section 134% the +aluation of
purchase and sale of 5oods and in+entory for the purposes of determinin5 the income
char5eable under the head Profits and 5ains of business or profession shall be
a! in accordance with the method of accountin5 re5ularly employed by the
assessee1 and
b! further ad:usted to include the amount of any ta$% duty% cess or fee by whate+er
name called! actually paid or incurred by the assessee to brin5 the 5oods to the
place of its location and condition as on the date of +aluation(
Explanation. >or the purposes of this section% any ta$% duty% cess or fee by whate+er
name called! under any law for the time bein5 in force% shall include all such payment
notwithstandin5 any ri5ht arisin5 as a conse,uence to such payment(2
3
-Income escaping assessment.
4
147. If the
'
-"ssessin52 <fficer
6
-has reason to belie+e
7
2 that any income char5eable to
ta$ has escaped assessment
7
for any assessment year% he may% sub:ect to the pro+isions of
sections 137 to 14)% assess or reassess
7
such income and also any other income
char5eable to ta$ which has escaped assessment and which comes to his notice
subse,uently in the course of the proceedin5s under this section% or recompute the loss or
the depreciation allowance or any other allowance% as the case may be% for the assessment
year concerned hereafter in this section and in sections 137 to 14) referred to as the
rele+ant assessment year! :
Provided that where an assessment under sub#section )! of section 13) or this section
has been made for the rele+ant assessment year% no action shall be ta9en under this
section after the e$piry of four years from the end of the rele+ant assessment year% unless
any income char5eable to ta$ has escaped assessment for such assessment year by reason
of the failure
&
on the part of the assessee to ma9e a return under section 1)& or in
response to a notice issued under sub#section 1! of section 132 or section 137 or to
disclose fully and truly all material facts
&
necessary for his assessment% for that
assessment year(
Explanation 1.Production before the "ssessin5 <fficer of account boo9s or other
e+idence from which material e+idence could with due dili5ence ha+e been disco+ered by
the "ssessin5 <fficer will not necessarily
&
amount to disclosure within the meanin5 of
the fore5oin5 pro+iso(
Explanation 2.>or the purposes of this section% the followin5 shall also be deemed to be
cases where income char5eable to ta$ has escaped assessment% namely :
a! where no return of income has been furnished by the assessee althou5h his total
income or the total income of any other person in respect of which he is
assessable under this "ct durin5 the pre+ious year e$ceeded the ma$imum
amount which is not char5eable to income#ta$ 1
b! where a return of income has been furnished by the assessee but no assessment
has been made and it is noticed by the "ssessin5 <fficer that the assessee has
understated the income or has claimed e$cessi+e loss% deduction% allowance or
relief in the return 1
c! where an assessment has been made% but
i! income char5eable to ta$ has been underassessed 1 or
ii! such income has been assessed at too low a rate 1 or
iii! such income has been made the sub:ect of e$cessi+e relief under this "ct 1
or
i%! e$cessi+e loss or depreciation allowance or any other allowance under this
"ct has been computed(2
18
-Issue of notice where income has escaped assessment.
11
148.
12
-1!2 Before ma9in5 the assessment% reassessment or recomputation under
section 136% the "ssessin5 <fficer shall ser+e
1)
on the assessee a notice re,uirin5 him to
furnish within such period%
13
-* * *2 as may be specified in the notice% a return of his
income or the income of any other person in respect of which he is assessable under this
"ct durin5 the pre+ious year correspondin5 to the rele+ant assessment year% in the
prescribed form and +erified in the prescribed manner and settin5 forth such other
particulars as may be pres#cribed1 and the pro+isions of this "ct shall% so far as may be
14
%
apply accordin5ly as if such return were a return re,uired to be furnished under section
1)& :2
14a
Provided that in a case
*a( where a return has been !urnished during the period commencing on the 1st
da+ o! /ctober) 1##1 and ending on the 3$th da+ o! <eptember) 2$$5 in
response to a notice ser%ed under this section) and
*b( subse2uentl+ a notice has been ser%ed under sub-section *2( o! section 143
a!ter the expir+ o! twel%e months speci!ied in the pro%iso to sub-section *2( o!
section 143) as it stood immediatel+ be!ore the amendment o! said sub-section
b+ the 0inance Act) 2$$2 *2$ o! 2$$2( but be!ore the expir+ o! the time limit !or
ma.ing the assessment) re-assessment or re-computation as speci!ied in sub-
section *2( o! section 153) e%er+ such notice re!erred to in this clause shall be
deemed to be a %alid noticeA
Provided further that in a case
*a( where a return has been !urnished during the period commencing on the 1st
da+ o! /ctober) 1##1 and ending on the 3$th da+ o! <eptember) 2$$5) in
response to a notice ser%ed under this section) and
*b( subse2uentl+ a notice has been ser%ed under clause *ii( o! sub-section *2( o!
section 143 a!ter the expir+ o! twel%e months speci!ied in the pro%iso to clause
*ii( o! sub-section *2( o! section 143) but be!ore the expir+ o! the time limit !or
ma.ing the assessment) re-assessment or re-computation as speci!ied in sub-
section *2( o! section 153) e%er+ such notice re!erred to in this clause shall be
deemed to be a %alid notice.]
14b
E$planation.0or the remo%al o! doubts) it is hereb+ declared that nothing contained in
the !irst pro%iso or the second pro%iso shall appl+ to an+ return which has been !urnished
on or a!ter the 1st da+ o! /ctober) 2$$5 in response to a notice ser%ed under this
section.]
1'
-2! The "ssessin5 <fficer shall% before issuin5 any notice under this section% record his
reasons for doin5 so(2
Time limit for notice.
149.
16
-1! Ao notice under section 137 shall be issued
17
for the rele+ant assessment year%
1&
-a! if four years ha+e elapsed from the end of the rele+ant assessment year% unless
the case falls under clause b!1
b! if four years% but not more than si$ years% ha+e elapsed from the end of the
rele+ant assessment year unless the income char5eable to ta$ which has
escaped assessment amounts to or is li9ely to amount to one la9h rupees or
more
28
for that year(2
Explanation.In determinin5 income char5eable to ta$ which has escaped assessment for
the purposes of this sub#section% the pro+isions of Explanation 2 of section 136 shall
apply as they apply for the purposes of that section(2
2! The pro+isions of sub#section 1! as to the issue of notice shall be sub:ect to the
pro+isions of section 141(
)! If the person on whom a notice under section 137 is to be ser+ed is a person treated as
the a5ent of a non#resident under section 1') and the assessment% reassessment or
recomputation to be made in pursuance of the notice is to be made on him as the a5ent of
such non#resident% the notice shall not be issued after the e$piry of a period of two years
from the end of the rele+ant assessment year(
Provision for cases where assessment is in pursuance of an order on appeal, etc.
150. 1! Aotwithstandin5 anythin5 contained in section 13&% the notice under section 137
may be issued at any time for the purpose of ma9in5 an assessment or reassessment or
recomputation in conse,uence of or to 5i+e effect to any findin5 or direction contained in
an order passed by any authority in any proceedin5 under this "ct by way of appeal%
reference or re+ision
21
-or by a .ourt in any proceedin5 under any other law2(
2! The pro+isions of sub#section 1! shall not apply in any case where any such
assessment% reassessment or recomputation as is referred to in that sub#section relates to
an assessment year in respect of which an assessment% reassessment or recomputation
could not ha+e been made at the time the order which was the sub:ect#matter of the
appeal% reference or re+ision% as the case may be% was made by reason of any other
pro+ision limitin5 the time within which any action for assessment% reassessment or
recomputation may be ta9en(
22
-Sanction for issue of notice.
151. 1! In a case where an assessment under sub#section )! of section 13) or section
136 has been made for the rele+ant assessment year% no notice shall be issued under
section 137
2)
-by an "ssessin5 <fficer% who is below the ran9 of "ssistant .ommissioner
23
-or ?eputy .ommissioner2% unless the
24
-@oint2 .ommissioner is satisfied on the reasons
recorded by such "ssessin5 <fficer that it is a fit case for the issue of such notice2 :
Provided that% after the e$piry of four years from the end of the rele+ant assessment year%
no such notice shall be issued unless the .hief .ommissioner or .ommissioner is
satisfied% on the reasons recorded by the "ssessin5 <fficer aforesaid% that it is a fit case
for the issue of such notice(
2! In a case other than a case fallin5 under sub#section 1!% no notice shall be issued
under section 137 by an "ssessin5 <fficer% who is below the ran9 of
24
-@oint2
.ommissioner% after the e$piry of four years from the end of the rele+ant assessment
year% unless the
24
-@oint2 .ommissioner is satisfied% on the reasons recorded by such
"ssessin5 <fficer% that it is a fit case for the issue of such notice(2
Other provisions.
152. 1! In an assessment% reassessment or recomputation made under section 136% the ta$
shall be char5eable at the rate or rates at which it would ha+e been char5ed had the
income not escaped assessment(
2! Fhere an assessment is reopened
2'
-under section 1362% the assessee may% if he has
not impu5ned any part of the ori5inal assessment order for that year either under sections
23' to 237 or under section 2'3% claim that the proceedin5s under section 136 shall be
dropped on his showin5 that he had been assessed on an amount or to a sum not lower
than what he would be ri5htly liable for e+en if the income alle5ed to ha+e escaped
assessment had been ta9en into account% or the assessment or computation had been
properly made :
Provided that in so doin5 he shall not be entitled to reopen matters concluded by an order
under section 143% 144% 2'8% 2'2% or 2')(
Time limit for completion of assessments and reassessments.
153.
26
-1! Ao order of assessment
27
shall be made under section 13) or section 133 at any
time after the e$piry of
a! two years from the end of the assessment year in which the income was first
assessable 1 or
b! one year from the end of the financial year in which a return or a re+ised return
relatin5 to the assessment year commencin5 on the 1st day of "pril% 1&77% or
any earlier assessment year% is filed under sub#section 3! or sub#section 4! of
section 1)&%
whiche+er is later :2
27a
Provided that in case the assessment +ear in which the income was !irst assessable is
the assessment +ear commencing on the 1st da+ o! April) 2$$4 or an+ subse2uent
assessment +ear) the pro%isions o! clause *a( shall ha%e e!!ect as i! !or the words two
+ears) the words twent+-one months had been substituted.]
2&
-*1A( &o order o! assessment shall be made under section 115,E or section 115,0 at
an+ time a!ter the expir+ o!
2&a
twent+-one months] !rom the end o! the assessment +ear in
which the !ringe bene!its were !irst assessable.
*1B( &o order o! assessment or reassessment shall be made under section 115,5 a!ter
the expir+ o!
2&b
nine months] !rom the end o! the !inancial +ear in which the notice under
section 115,C was ser%ed.2
)8
-2! Ao order of assessment% reassessment or recomputation shall be made under section
136 after the e$piry of
)1
-one year2 from the end of the financial year in which the notice
under section 137 was ser+ed :
)2
-Provided that where the notice under section 137 was ser+ed on or after the 1st day of
"pril% 1&&& but before the 1st day of "pril% 2888% such assessment% reassessment or
recomputation may be made at any time up to the )1st day of Barch% 2882 :2
)2a
Provided further that where the notice under section 14" was ser%ed on or a!ter the
1st da+ o! April) 2$$5) the pro%isions o! this sub-section shall ha%e e!!ect as i! !or the
words one +ear) the words nine months had been substituted.]
))
-2"! Aotwithstandin5 anythin5 contained in sub#sections 1!
)3
-% 1A!% 1B!2 and 2!% in
relation to the assessment year commencin5 on the 1st day of "pril% 1&61% and any
subse,uent assessment year% an order of fresh assessment in pursuance of an order under
section 248 or section 243 or section 2') or section 2'3% settin5 aside or cancellin5 an
assessment% may be made at any time before the e$piry of one year from the end of the
financial year in which the order under section 248 or section 243 is recei+ed by the
.hief .ommissioner or .ommissioner or% as the case may be% the order under section 2')
or section 2'3 is passed by the .hief .ommissioner or .ommissioner:
Provided that where the order under section 248 or section 243 is recei+ed by the .hief
.ommissioner or .ommissioner or% as the case may be% the order under section 2') or
section 2'3 is passed by the .hief .ommissioner or .ommissioner% on or after the 1st
day of "pril% 1&&& but before the 1st day of "pril% 2888% such an order of fresh
assessment may be made at any time up to the )1st day of Barch% 2882 :2
)3a
Provided further that where the order under section 254 is recei%ed b+ the 'hie!
'ommissioner or 'ommissioner or) as the case ma+ be) the order under section 263 or
section 264 is passed b+ the 'ommissioner on or a!ter the 1st da+ o! April) 2$$5) the
pro%isions o! this sub-section shall ha%e e!!ect as i! !or the words one +ear) the words
nine months had been substituted.]
)! The pro+isions of sub#sections 1!
)3
-% 1A!% 1B!2 and 2! shall not apply to the
followin5 classes of assessments% reassessments and recomputations which may%
)4
-sub:ect to the pro+isions of sub#section 2"!%2 be completed at any time
i!
)'
-***2
ii! where the assessment% reassessment or recomputation is made on the assessee
or any person
)6
in conse,uence of or to 5i+e effect to
)6
any findin5 or direction
)7
contained in an order under section 248% 243% 2'8% 2'2% 2')% or 2'3
)&
-or in an
order of any court in a proceedin5 otherwise than by way of appeal or reference
under this "ct2 1
iii! where% in the case of a firm% an assessment is made on a partner of the firm in
conse,uence of an assessment made on the firm under section 136(
38
-Explanation 1.In computin5 the period of limitation for the purposes of this section
i! the time ta9en in reopenin5 the whole or any part of the proceedin5 or in 5i+in5
an opportunity to the assessee to be re#heard under the pro+iso to section 12&%
or
ii! the period durin5 which the assessment proceedin5
31
is stayed by an order or
in:unction of any court% or
32
-iia! the period commencin5 from the date on which the "ssessin5 <fficer intimates
the .entral ;o+ernment or the prescribed authority% the contra+ention of the
pro+isions of clause 21! or clause 22B! or clause 23A! or clause 23B! or
sub#clause i%! or sub#clause %! or sub#clause %i! or sub#clause %ia! of clause
23'! of section 18% under clause i! of the pro+iso to sub#section )! of section
13) and endin5 with the date on which the copy of the order withdrawin5 the
appro+al or rescindin5 the notification% as the case may be% under those clauses
is recei+ed by the "ssessin5 <fficer12
iii! the period commencin5 from the date on which the
3)
-"ssessin52 <fficer directs
the assessee to 5et his accounts audited under sub#section 2"! of section 132
and endin5 with
33
-the last date on which the assessee is re,uired to furnish2 a
report of such audit under that sub#section% or
i%!
34
-* * *2
3'
-i%a! the period not e$ceedin5 si$ty days! commencin5 from the date on which the
36
-"ssessin52 <fficer recei+ed the declaration under sub#section 1! of section
147" and endin5 with the date on which the order under sub#section )! of that
section is made by him% or2
%! in a case where an application made before the Income#ta$ *ettlement
.ommission under section 234. is re:ected by it or is not allowed to be
proceeded with by it% the period commencin5 from the date on which such
application is made and endin5 with the date on which the order under sub#
section 1! of section 234? is recei+ed by the .ommissioner under sub#section
2! of that section%
37
-or2
37
-%i! the period commencin5 from the date on which an application is made before
the "uthority for "d+ance Rulin5s under sub#section 1! of section 234K and
endin5 with the date on which the order re:ectin5 the application is recei+ed by
the .ommissioner under sub#section )! of section 234R% or
%ii! the period commencin5 from the date on which an application is made before
endin5 with the date on which the ad+ance rulin5 pronounced by it is recei+ed
by the .ommissioner under sub#section 6! of section 234R%2
shall be e$cluded :
3&
-Provided that where immediately after the e$clusion of the aforesaid time or period%
the period of limitation referred to in sub#sections 1!%
48
-1A!% 1B!%2 2! and 2"!
a+ailable to the "ssessin5 <fficer for ma9in5 an order of assessment% reassessment or
recomputation% as the case may be% is less than si$ty days% such remainin5 period shall be
e$tended to si$ty days and the aforesaid period of limitation shall be deemed to be
e$tended accordin5ly(2
Explanation 2.Fhere% by an order
41
-referred to in clause ii! of sub#section )!2% any
income is e$cluded from the total income of the assessee for an assessment year% then% an
assessment of such income for another assessment year shall% for the purposes of section
148 and this section% be deemed to be one made in conse,uence of or to 5i+e effect to any
findin5 or direction contained in the said order(
Explanation 3.Fhere% by an order
41
-referred to in clause ii! of sub#section )!2% any
income is e$cluded from the total income of one person and held to be the income of
another person
42
% then% an assessment of such income on such other person shall% for the
purposes of section 148 and this section% be deemed to be one made in conse,uence of or
to 5i+e effect to any findin5 or direction contained in the said order% pro+ided such other
person was 5i+en an opportunity of bein5 heard before the said order was passed(
4)
-Assessment in case of search or requisition.
153A. Aotwithstandin5 anythin5 contained in section 1)&% section 136% section 137%
section 13&% section 141 and section 14)% in the case of a person where a search is
initiated under section 1)2 or boo9s of account% other documents or any assets are
re,uisitioned under section 1)2" after the )1st day of Bay% 288)% the "ssessin5 <fficer
shall
a! issue notice to such person re,uirin5 him to furnish within such period% as may
be specified in the notice% the return of income in respect of each assessment
year fallin5 within si$ assessment years referred to in clause b!% in the
prescribed form and +erified in the prescribed manner and settin5 forth such
other particulars as may be prescribed and the pro+isions of this "ct shall% so
far as may be% apply accordin5ly as if such return were a return re,uired to be
furnished under section 1)&1
b! assess or reassess the total income of si$ assessment years immediately
precedin5 the assessment year rele+ant to the pre+ious year in which such
search is conducted or re,uisition is made :
Provided that the "ssessin5 <fficer shall assess or reassess the total income in respect of
each assessment year fallin5 within such si$ assessment years:
Provided further that assessment or reassessment% if any% relatin5 to any assessment year
fallin5 within the period of si$ assessment years referred to in this section pendin5 on the
date of initiation of the search under section 1)2 or ma9in5 of re,uisition under section
1)2"% as the case may be% shall abate(
Explanation(>or the remo+al of doubts% it is hereby declared that%
i! sa+e as otherwise pro+ided in this section% section 14)B and section 14).% all
other pro+isions of this "ct shall apply to the assessment made under this
section1
ii! in an assessment or reassessment made in respect of an assessment year under
this section% the ta$ shall be char5eable at the rate or rates as applicable to such
assessment year(
Time-limit for completion of assessment under section 153A.
153B. 1! Aotwithstandin5 anythin5 contained in section 14)% the "ssessin5 <fficer shall
ma9e an order of assessment or reassessment%
a! in respect of each assessment year fallin5 within si$ assessment years referred
to in clause b! of section 14)"% within a period of two years from the end of
the financial year in which the last of the authorisations for search under
section 1)2 or for re,uisition under section 1)2" was e$ecuted1
b! in respect of the assessment year rele+ant to the pre+ious year in which search
is conducted under section 1)2 or re,uisition is made under section 1)2"%
within a period of two years from the end of the financial year in which the last
of the authorisations for search under section 1)2 or for re,uisition under
section 1)2" was e$ecuted :
43
-Provided that in case of other person referred to in section 14).% the period of
limitation for ma9in5 the assessment or reassessment shall be the period as referred to in
clause a! or clause b! of this sub#section or one year from the end of the financial year
in which boo9s of account or documents or assets sei=ed or re,uisitioned are handed o+er
under section 14). to the "ssessin5 <fficer ha+in5 :urisdiction o+er such other person%
whiche+er is later:2
43a
Provided further that in the case where the last o! the authorisations !or search
under section 132 or !or re2uisition under section 132A was executed during the
!inancial +ear commencing on the 1st da+ o! April) 2$$4 or an+ subse2uent !inancial
+ear)
*i( the pro%isions o! clause *a( or clause *b( o! this sub-section shall ha%e e!!ect as
i! !or the words two +ears the words twent+-one months had been substituted-
*ii( the period o! limitation !or ma.ing the assessment or re-assessment in case o!
other person re!erred to in section 153') shall be the period o! twent+-one
months !rom the end o! the !inancial +ear in which the last o! the authorisations
!or search under section 132 or !or re2uisition under section 132A was
executed or nine months !rom the end o! the !inancial +ear in which boo.s o!
account or documents or assets sei8ed or re2uisitioned are handed o%er under
section 153' to the Assessing /!!icer ha%ing 4urisdiction o%er such other
person) whiche%er is later.]
Explanation(In computin5 the period of limitation for the purposes of this section%
i! the period durin5 which the assessment proceedin5 is stayed by an order or
in:unction of any court1 or
ii! the period commencin5 from the day on which the "ssessin5 <fficer directs the
assessee to 5et his accounts audited under sub#section 2"! of section 132 and
endin5 on the day on which the assessee is re,uired to furnish a report of such
audit under that sub#section1 or
iii! the time ta9en in reopenin5 the whole or any part of the proceedin5 or in 5i+in5
an opportunity to the assessee of bein5 re#heard under the pro+iso to section
12&1 or
i%! in a case where an application made before the *ettlement .ommission under
section 234. is re:ected by it or is not allowed to be proceeded with by it% the
period commencin5 from the date on which such application is made and
endin5 with the date on which the order under sub#section 1! of section 234?
is recei+ed by the .ommissioner under sub#section 2! of that section%
44
-or2
44
-%! the period commencin5 from the date on which an application is made before
endin5 with the date on which the order re:ectin5 the application is recei+ed by
the .ommissioner under sub#section )! of section 234R% or
%i! the period commencin5 from the date on which an application is made before
endin5 with the date on which the ad+ance rulin5 pronounced by it is recei+ed
by the .ommissioner under sub#section 6! of section 234R%2
shall be e$cluded :
Provided that where immediately after the e$clusion of the aforesaid period% the period
of limitation referred to in clause a! or clause b! of this section* a+ailable to the
"ssessin5 <fficer for ma9in5 an order of assessment or reassessment% as the case may be%
is less than si$ty days% such remainin5 period shall be e$tended to si$ty days and the
aforesaid period of limitation shall be deemed to be e$tended accordin5ly(
2! The authorisation referred to in clause a! and clause b! of sub#section 1! shall be
deemed to ha+e been e$ecuted%
a! in the case of search% on the conclusion of search as recorded in the last
panchnama drawn in relation to any person in whose case the warrant of
authorisation has been issued1
b! in the case of re,uisition under section 1)2"% on the actual receipt of the boo9s
of account or other documents or assets by the "uthorised <fficer(
Assessment of income of any other person.
153C.
4'
-1!2 Aotwithstandin5 anythin5 contained in section 1)&% section 136% section
137% section 13&% section 141 and section 14)% where the "ssessin5 <fficer is satisfied
that any money% bullion% :ewellery or other +aluable article or thin5 or boo9s of account
or documents sei=ed or re,uisitioned belon5s or belon5 to a person other than the person
referred to in section 14)"% then the boo9s of account or documents or assets sei=ed or
re,uisitioned shall be handed o+er to the "ssessin5 <fficer ha+in5 :urisdiction o+er such
other person and that "ssessin5 <fficer shall proceed a5ainst each such other person and
issue such other person notice and assess or reassess income of such other person in
accordance with the pro+isions of section 14)" :2
4'a
-Provided that in case of such other person% the reference to the date of initiation of the
search under section 1)2 or ma9in5 of re,uisition under section 1)2" in the second
pro+iso to section 14)" shall be construed as reference to the date of recei+in5 the boo9s
of account or documents or assets sei=ed or re,uisitioned by the "ssessin5 <fficer ha+in5
:urisdiction o+er such other person(
2! Fhere boo9s of account or documents or assets sei=ed or re,uisitioned as referred to
in sub#section 1! has or ha+e been recei+ed by the "ssessin5 <fficer ha+in5 :urisdiction
o+er such other person after the due date for furnishin5 the return of income for the
assessment year rele+ant to the pre+ious year in which search is conducted under section
1)2 or re,uisition is made under section 1)2" and in respect of such assessment year
a! no return of income has been furnished by such other person and no notice
under sub#section 1! of section 132 has been issued to him% or
b! a return of income has been furnished by such other person but no notice under
sub#section 2! of section 13) has been ser+ed and limitation of ser+in5 the
notice under sub#section 2! of section 13) has e$pired% or
c! assessment or reassessment% if any% has been made%
before the date of recei+in5 the boo9s of account or documents or assets sei=ed or
re,uisitioned by the "ssessin5 <fficer ha+in5 :urisdiction o+er such other person% such
"ssessin5 <fficer shall issue the notice and assess or reassess total income of such other
person of such assessment year in the manner pro+ided in section 14)"(2
Rectification of mistake.
46
154.
47
-1! Fith a +iew to rectifyin5 any mista9e apparent from the record
4&
an income#
ta$ authority referred to in section 11' may%
a! amend any order passed by it under the pro+isions of this "ct 1
'8
-b! amend any intimation or deemed intimation under sub#section 1! of section
13)(22
'1
-1"! Fhere
'1a
any matter has been considered and decided in any proceedin5 by way
of appeal or re+ision relatin5 to an order referred to in sub#section 1!% the authority
passin5 such order may% notwithstandin5 anythin5 contained in any law for the time
bein5 in force% amend the order under that sub#section in relation to any matter other than
the matter which has been so considered and decided(2
2! *ub:ect to the other pro+isions of this section% the authority concerned
a! may ma9e an amendment under sub#section 1! of its own motion% and
b! shall ma9e such amendment for rectifyin5 any such mista9e which has been
brou5ht to its notice by the assessee% and where the authority concerned is the
'2
-***2
')
-.ommissioner "ppeals!2% by the
'3
-"ssessin52 <fficer also(
'4
-* * *2
)! "n amendment% which has the effect of enhancin5 an assessment or reducin5 a refund
or otherwise increasin5 the liability of the assessee% shall not be made under this section
unless the authority concerned has 5i+en notice to the assessee of its intention so to do
and has allowed the assessee a reasonable opportunity of bein5 heard(
3! Fhere an amendment is made under this section% an order shall be passed in writin5
by the income#ta$ authority concerned(
4! *ub:ect to the pro+isions of section 231% where any such amendment has the effect of
reducin5 the assessment% the
''
-"ssessin52 <fficer shall ma9e any refund which may be
due to such assessee(
'! Fhere any such amendment has the effect of enhancin5 the assessment or reducin5 a
refund already made% the
''
-"ssessin52 <fficer shall ser+e on the assessee a notice of
demand in the prescribed form specifyin5 the sum payable
'6
% and such notice of demand
shall be deemed to be issued under section 14' and the pro+isions of this "ct shall apply
accordin5ly(
6! *a+e as otherwise pro+ided in section 144 or sub#section 3! of section 17' no
amendment under this section shall be made after the e$piry of four years
'7
-from the end
of the financial year in which the order
'&
sou5ht to be amended was passed(2
68
-7! Fithout pre:udice to the pro+isions of sub#section 6!% where an application for
amendment under this section is made by the assessee on or after the 1st day of @une%
2881 to an income#ta$ authority referred to in sub#section 1!% the authority shall pass an
order% within a period of si$ months from the end of the month in which the application is
recei+ed by it%
a! ma9in5 the amendment1 or
b! refusin5 to allow the claim(2
Other amendments.
155. 1!
61
-Fhere% in respect of any completed assessment
62
of a partner in a firm for the
assessment year commencin5 on the 1st day of "pril% 1&&2% or any earlier assessment
year%2 it is found
a! on the assessment or reassessment of the firm% or
b! on any reduction or enhancement made in the income of the firm under this
section% section 143% section 248% section 243% section 2'8% section 2'2% section
2') or section 2'3%
6)
-or2
63
-c! on any order passed under sub#section 3! of section 234? on the application
made by the firm%2
that the share of the partner in the income of the firm has not been included in the
assessment of the partner or% if included% is not correct% the
64
amend the order of assessment of the partner with a +iew to the inclusion of the share in
the assessment or the correction thereof% as the case may be1 and the pro+isions of section
143 shall% so far as may be% apply thereto% the period of four years specified in sub#section
6! of that section bein5 rec9oned
6'
-from the end of the financial year in which the final
order was passed2 in the case of the firm(
66
-1"! Fhere in respect of any completed assessment of a firm it is found
a! on the assessment or reassessment of the firm% or
b! on any reduction or enhancement made in the income of the firm under this
section% section 143% section 248% section 243% section 2'8% section 2'2% section
2') or section 2'3% or
c! on any order passed under sub#section 3! of section 234? on the application
made by the firm%
that any remuneration to any partner is not deductible under clause b! of section 38% the
"ssessin5 <fficer may amend the order of assessment of the partner with a +iew to
ad:ustin5 the income of the partner to the e$tent of the amount not so deductible 1 and the
pro+isions of section 143 shall% so far as may be% apply thereto% the period of four years
specified in sub#section 6! of that section bein5 rec9oned from the end of the financial
year in which the final order was passed in the case of the firm(2
2! Fhere in respect of any completed assessment of a member of an association of
persons or of a body of indi+iduals it is found
a! on the assessment or reassessment of the association or body% or
b! on any reduction or enhancement made in the income of the asso#ciation or
body under this section% section 143% section 248% section 243% section 2'8%
section 2'2% section 2') or section 2'3%
67
-or2
67
-c! on any order passed under sub#section 3! of section 234? on the application
made by the association or body%2
that the share of the member in the income of the association or body% as the case may be%
has not been included in the assessment of the member or% if included% is not correct% the
6&
-"ssessin52 <fficer may amend the order of assessment of the member with a +iew to
the inclusion of the share in the assessment or the correction thereof% as the case may be 1
and the pro+isions of section 143 shall% so far as may be% apply thereto% the period of four
years specified in sub#section 6! of that section bein5 rec9oned
78
-from the end of the
financial year in which the final order was passed2 in the case of the association or body%
as the case may be(
)!
71
-* * *2
3! Fhere as a result of proceedin5s initiated under section 136% a loss or depreciation has
been recomputed and in conse,uence thereof it is necessary to recompute the total
income of the assessee for the succeedin5 year or years to which the loss or depreciation
allowance has been carried forward and set off under the pro+isions of sub#section 1! of
section 62% or sub#section 2! of section 6)% or sub#section 1!
72
-or sub#section )!2 of
section 63%
7)
-or sub#section )! of section 63"%2 the
73
-"ssessin52 <fficer may proceed to
recompute the total income in respect of such year or years and ma9e the necessary
amendment 1 and the pro+isions of section 143 shall% so far as may be% apply thereto% the
period of four years specified in sub#section 6! of that section bein5 rec9oned
74
-from the
end of the financial year in which the order was passed2 under section 136(
7'
-3"! Fhere an allowance by way of in+estment allowance has been made wholly or
partly to an assessee
76
in respect of a ship or an aircraft or any machinery or plant in any
assessment year under section )2" and subse,uently
a! at any time before the e$piry of ei5ht years from the end of the pre+ious year in
the ship% aircraft% machinery or plant is sold or otherwise transferred by the
assessee to any person other than the ;o+ernment% a local authority% a
corporation established by a .entral% *tate or Pro+incial "ct or a
77
;o+ernment
company as defined in section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!% or
in connection with any amal5amation or succession referred to in sub#section
'! or sub#section 6! of section )2" 1 or
b! at any time before the e$piry of ten years from the end of the pre+ious year in
the assessee does not utilise the amount credited to the reser+e account under
sub#section 3! of section )2" for the purposes of ac,uirin5 a new ship or a
new aircraft or new machinery or plant other than machinery or plant of the
nature referred to in clauses a!% b! and d! of the
7&
-second2 pro+iso to sub#
section 1! of section )2"! for the purposes of the business of the underta9in5 1
or
c! at any time before the e$piry of ten years referred to in clause b! the assessee
utilises the amount credited to the reser+e account under sub#section 3! of
section )2"
i! for distribution by way of di+idends or profits 1 or
ii! for remittance outside India as profits or for the creation of any asset
outside India 1 or
iii! for any other purpose which is not a purpose of the business of the
underta9in5%
the in+estment allowance ori5inally allowed shall be deemed to ha+e been wron5ly
allowed% and the
&8
rec9oned%
i! in a case referred to in clause a!% from the end of the pre+ious year in which
the sale or other transfer too9 place 1
ii! in a case referred to in clause b!% from the end of the ten years referred to in
that clause 1
iii! in a case referred to in clause c!% from the end of the pre+ious year in which
the amount was utilised(
Explanation.>or the purposes of clause b!% new ship or new aircraft or new machinery or
plant shall ha+e the same meanin5s as in the
&1
-Explanation below sub#section 2! of
section )2"2(2
4! Fhere an allowance by way of de+elopment rebate has been made wholly or partly to
an assessee in respect of a ship% machinery or plant installed after the )1st day of
?ecember% 1&46% in any assessment year under section )) or under the correspondin5
pro+isions of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% and subse,uently
i! at any time before the e$piry of ei5ht years from the end of the pre+ious year in
which the ship was ac,uired or the machinery or plant was installed% the ship%
machinery or plant is sold or otherwise transferred
&2
by the assessee to any
person other than the ;o+ernment% a local authority% a corporation established
by a .entral% *tate or Pro+incial "ct or a
&)
section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!% or in connection with any
amal5amation or succession referred to in sub#section )! or sub#section 3! of
section )) 1 or
ii! at any time before the e$piry of the ei5ht years referred to in sub#section )! of
section )3% the assessee utilises the amount credited to the reser+e account
under clause a! of that sub#section
a! for distribution by way of di+idends or profits 1 or
outside India 1 or
c! for any other purpose which is not a purpose of the business of the
underta9in5%
the de+elopment rebate ori5inally allowed shall be deemed to ha+e been wron5ly
allowed% and the
&3
rec9oned from the end of the pre+ious year in which the sale or transfer too9 place or the
money was so utilised(
&4
-4"! Fhere an allowance by way of de+elopment allowance has been made wholly or
partly to an assessee in respect of the cost of plantin5 in any area in any assessment year
under section ))" and subse,uently
i! at any time before the e$piry of ei5ht years from the end of the pre+ious year in
which such allowance was made% the land is sold or otherwise transferred by
the assessee to any person other than the ;o+ernment% a local authority% a
corporation established by a .entral% *tate or Pro+incial "ct or a ;o+ernment
company
&'
as defined in section '16 of the .ompanies "ct% 1&4' 1 of 1&4'!%
or in connection with any amal5amation or succession referred to in sub#
section 4! or sub#section '! of section ))" 1 or
ii! at any time before the e$piry of the ei5ht years referred to in sub#section )! of
section ))"% the assessee utilises the amount credited to the reser+e account
under clause ii! of that sub#section
a! for distribution by way of di+idends or profits 1 or
outside India 1 or
c! for any other purpose which is not a purpose of the business of the
underta9in5 1
the de+elopment allowance ori5inally allowed shall be deemed to ha+e been wron5ly
allowed% and the
&6
the necessary amendment 1 and the pro+isions of section 143 shall% so far as may be%
apply thereto% the period of four years specified in sub#section 6! of that section bein5
rec9oned from the end of the pre+ious year in which the sale or transfer too9 place or the
money was so utilised(2
&7
-Explanation.>or the purposes of this sub#section% where an assessee ha+in5 any
leasehold or other ri5ht of occupancy in any land transfers such ri5ht% he shall be deemed
to ha+e sold or otherwise transferred such land(2
&&
-4B! Fhere any deduction in respect of any e$penditure on scientific research has been
made in any assessment year under sub#section 2B! of section )4 and the assessee fails
to furnish a certificate of completion of the pro5ramme obtained from the prescribed
authority within one year of the period allowed for its completion by such authority% the
deduction ori5inally made in e$cess of the e$penditure actually incurred shall be deemed
to ha+e been wron5ly made% and the
1
-"ssessin52 <fficer may% notwithstandin5 anythin5
contained in this "ct% recompute the total income of the assessee for the rele+ant pre+ious
year and ma9e the necessary amendment1 and the pro+isions of section 143 shall% so far
as may be% apply thereto% the period of four years specified in sub#section 6! of that
section bein5 rec9oned from the end of the pre+ious year in which the period allowed for
the completion of the pro5ramme by the prescribed authority e$pired(2
'!
2
-/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1##2.2
6! Fhere as a result of any proceedin5 under this "ct% in the assessment for any year of
a company in whose case an order under section 183 has been made for that year% it is
necessary to recompute the distributable income of that company% the
)
-"ssessin52
<fficer may proceed to recompute the distributable income and determine the
3
-ta$2
payable on the basis of such recomputation and ma9e the necessary amendment 1 and the
pro+isions of section 143 shall% so far as may be% apply thereto% the period of four years
specified in sub#section 6! of that section bein5 rec9oned
4
-from the end of the financial
year in which the final order was passed2 in the case of the company in respect of that
proceedin5(
6"!
'
6
-6B! Fhere in the assessment for any year% the capital 5ain arisin5 from the transfer of a
capital asset is not char5ed under section 34 by +irtue of the pro+isions of clause i%! or%
as the case may be% clause %! of section 36% but is deemed under section 36" to be
income char5eable under the head .apital 5ains of the pre+ious year in which the transfer
too9 place by reason of
i! such capital asset bein5 con+erted by the transferee company into% or bein5
treated by it% as stoc9#in#trade of its business 1 or
ii! the parent company or its nominees or% as the case may be% the holdin5
company ceasin5 to hold the whole of the share capital of the subsidiary
company%
at any time before the e$piry of the period of ei5ht years from the date of such transfer%
the
7
-"ssessin52 <fficer may% notwithstandin5 anythin5 contained in this "ct% recompute
the total income of the transferor company for the rele+ant pre+ious year and ma9e the
necessary amendment 1 and the pro+isions of section 143 shall% so far as may be% apply
rec9oned from the end of the pre+ious year in which the capital asset was so con+erted or
treated or in which the parent company or its nominees or% as the case may be% the
holdin5 company ceased to hold the whole of the share capital of the subsidiary
company(2
7!
&
7"!
18
&!
11
&"!
12
18!
1)
13
-18"! Fhere in the assessment for any year% a capital 5ain arisin5 from the transfer of
a
14
-lon5#term capital asset2% is char5ed to ta$ and within a period of si$ months after the
date of such transfer% the assessee has made any in+estment or deposit in any specified
asset within the meanin5 of Explanation 1 to sub#section 1! of section 43E% the
1'
-"ssessin52 <fficer shall amend the order of assessment so as to e$clude the amount of
the capital 5ain not char5eable to ta$ under the pro+isions of
16
-sub#section 1! of2 section
43E 1 and the pro+isions of section 143 shall% so far as may be% apply thereto% the period
of four years specified in sub#section 6! of that section bein5
17
-rec9oned from the end of
the financial year in which the assessment was made(2
18B!
1&
18.!
28
21
-11! Fhere in the assessment for any year% a capital 5ain arisin5 from the transfer of
any ori5inal asset as is referred to in section 43C is char5ed to ta$ and within the period
e$tended under that section the assessee ac,uires the new asset referred to in that section
or% as the case may be% deposits or in+ests the amount of such capital 5ain within the
period so e$tended% the "ssessin5 <fficer shall amend the order of assessment so as to
e$clude the amount of the capital 5ain not char5eable to ta$ under any of the sections
referred to in section 43C1 and the pro+isions of section 143 shall% so far as may be% apply
thereto% the period of four years specified in sub#section 6! of section 143 bein5
rec9oned from the end of the pre+ious year in which the compensation was recei+ed by
the assessee(2
21a
*11A( ,here in the assessment !or an+ +ear) the deduction under section 1$A or
section 1$B or section 1$BA has not been allowed on the ground that such income has
not been recei%ed in con%ertible !oreign exchange in 3ndia) or ha%ing been recei%ed in
con%ertible !oreign exchange outside 3ndia) or ha%ing been con%erted into con%ertible
!oreign exchange outside 3ndia) has not been brought into 3ndia) b+ or on behal! o! the
assessee with the appro%al o! the 6eser%e Ban. o! 3ndia or such other authorit+ as is
authorised under an+ law !or the time being in !orce !or regulating pa+ments and
dealings in !oreign exchange and subse2uentl+ such income or part thereo! has been or
is recei%ed in) or brought into) 3ndia in the manner a!oresaid) the Assessing /!!icer shall
amend the order o! assessment so as to allow deduction under section 1$A or section
1$B or section 1$BA) as the case ma+ be) in respect o! such income or part thereo! as is
so recei%ed in) or brought into) 3ndia) and the pro%isions o! section 154 shall) so !ar as
ma+ be) appl+ thereto) and the period o! !our +ears shall be rec.oned !rom the end o! the
pre%ious +ear in which such income is so recei%ed in) or brought into) 3ndia.]
22
-12! Fhere in the assessment for any year commencin5 before the 1st day of "pril%
1&77% the deduction under section 78#< in respect of any income% bein5 the whole or any
part of income by way of royalty% commission% fees or any similar payment as is referred
to in that section% has not been allowed on the 5round that such income has not been
recei+ed in con+ertible forei5n e$chan5e in India% or ha+in5 been recei+ed in con+ertible
forei5n e$chan5e outside India% or ha+in5 been con+erted into con+ertible forei5n
e$chan5e outside India% has not been brou5ht into India% by or on behalf of the assessee in
accordance with any law for the time bein5 in force for re5ulatin5 payments and dealin5s
in forei5n e$chan5e and subse,uently such income or part thereof has been or is recei+ed
in% or brou5ht into% India in the manner aforesaid% the "ssessin5 <fficer shall amend the
order of assessment so as to allow deduction under section 78#< in respect of such
income or part thereof as is so recei+ed in% or brou5ht into% India1 and the pro+isions of
section 143 shall% so far as may be% apply thereto% the period of four years specified in
sub#section 6! of that section bein5 rec9oned from the end of the pre+ious year in which
such income is so recei+ed in% or brou5ht into% India1 so% howe+er% that the period from
the 1st day of "pril% 1&77 to the )8th day of *eptember% 1&&1 shall be e$cluded in
computin5 the period of four years(2
2)
-1)! Fhere in the assessment for any year% the deduction under section 78CCB or
section 78CC. or section 78CC? or section 78CCE or section 78#< or section 78R or
section 78RR or section 78RR" has not been allowed on the 5round that such income has
not been recei+ed in con+ertible forei5n e$chan5e in India% or ha+in5 been recei+ed in
con+ertible forei5n e$chan5e outside India% or ha+in5 been con+erted into con+ertible
forei5n e$chan5e outside India% has not been brou5ht into India% by or on behalf of the
assessee with the appro+al of the Reser+e Ban9 of India or such other authority as is
authorised under any law for the time bein5 in force for re5ulatin5 payments and dealin5s
in forei5n e$chan5e and subse,uently such income or part thereof has been or is recei+ed
in% or brou5ht into% India in the manner aforesaid% the "ssessin5 <fficer shall amend the
order of assessment so as to allow deduction under section 78CCB or section 78CC. or
section 78CC? or section 78CCE or section 78#< or section 78R or section 78RR or
section 78RR"% as the case may be% in respect of such income or part thereof as is so
recei+ed in% or brou5ht into% India1 and the pro+isions of section 143 shall% so far as may
be% apply thereto% and the period of four years shall be rec9oned from the end of the
pre+ious year in which such income is so recei+ed in% or brou5ht into% India(2
24
-13! Fhere in the assessment for any pre+ious year or in any intimation or deemed
intimation under sub#section 1! of section 143 for any pre+ious year%
24a
credit !or tax
deducted in accordance with the pro%isions o! section 1##] has not been 5i+en on the
5round that the certificate furnished under section 2$3
24b
or section 2$6'] was not filed
with the return and subse,uently such certificate is produced before the "ssessin5 <fficer
within two years from the end of the assessment year in which such income is assessable%
the "ssessin5 <fficer shall amend the order of assessment or any intimation or deemed
intimation under sub#section 1! of section 143% as the case may be% and the pro+isions of
section 154 shall% so far as may be% apply thereto :
Provided that nothin5 contained in this sub#section shall apply unless the income from
which the ta$ has been deducted
24b
or income on which the tax has been collected] has
been disclosed in the return of income filed by the assessee for the rele+ant assessment
year(
14! Fhere in the assessment for any year% a capital 5ain arisin5 from the transfer of a
capital asset% bein5 land or buildin5 or both% is computed by ta9in5 the full +alue of the
consideration recei+ed or accruin5 as a result of the transfer to be the +alue adopted or
assessed by any authority of a *tate ;o+ernment for the purpose of payment of stamp
duty in accordance with sub#section 1! of section 5$'% and subse,uently such +alue is
re+ised in any appeal or re+ision or reference referred to in clause b! of sub#section 2!
of that section% the "ssessin5 <fficer shall amend the order of assessment so as to
compute the capital 5ain by ta9in5 the full +alue of the consideration to be the +alue as so
re+ised in such appeal or re+ision or reference1 and the pro+isions of section 154 shall% so
far as may be% apply thereto% and the period of four years shall be rec9oned from the end
of the pre+ious year in which the order re+isin5 the +alue was passed in that appeal or
re+ision or reference(2
25
-1'! Fhere in the assessment for any year% a capital 5ain arisin5 from the transfer of a
capital asset% bein5 a transfer by way of compulsory ac,uisition under any law% or a
transfer% the consideration for which was determined or appro+ed by the .entral
;o+ernment or the Reser+e Ban9 of India% is computed by ta9in5 the compensation or
consideration as referred to in clause a! or% as the case may be% the compensation or
consideration enhanced or further enhanced as referred to in clause b! of sub#section 4!
of section 45% to be the full +alue of consideration deemed to be recei+ed or accruin5 as a
result of the transfer of the asset and subse,uently such compensation or consideration is
reduced by any court% Tribunal or other authority% the "ssessin5 <fficer shall amend the
order of assessment so as to compute the capital 5ain by ta9in5 the compensation or
consideration as so reduced by the court% Tribunal or any other authority to be the full
+alue of consideration1 and the pro+isions of section 154 shall% so far as may be% apply
thereto% and the period of four years shall be rec9oned from the end of the pre+ious year
in which the order reducin5 the compensation was passed by the court% Tribunal or other
authority(
16! Fhere a deduction has been allowed to an assessee in any assessment year under
section "$66B in respect of any patent% and subse,uently by an order of the .ontroller or
the Ci5h .ourt under the Patents "ct% 1&68 )& of 1&68!%
i! the patent was re+o9ed% or
ii! the name of the assessee was e$cluded from the patents re5ister as patentee in
respect of that patent%
the deduction from the income by way of royalty attributable to the period durin5 which
the patent had been re+o9ed or the period for which the assessees name was e$cluded as
patentee in respect of that patent% shall be deemed to ha+e been wron5ly allowed and the
"ssessin5 <fficer may% notwithstandin5 anythin5 contained in this "ct% recompute the
total income of the assessee for the rele+ant pre+ious year and ma9e necessary
amendment1 and the pro+isions of section 154 shall% so far as may be% apply thereto% the
period of four years specified in sub#section 6! of that section bein5 rec9oned from the
end of the pre+ious year in which such order of the .ontroller referred to in clause b! of
sub#section 1!% or the Ci5h .ourt referred to in clause i! of sub#section 1! of section 2%
of the Patents "ct% 1&68 )& of 1&68!% as the case may be% was passed(2
2'
a! additional compensation shall ha+e the meanin5 assi5ned to it in clause 1! of the
Explanation to sub#section 2! of section 431
b! additional consideration% in relation to the transfer of any capital asset the
consideration for which was determined or appro+ed by the .entral ;o+ernment or
the Reser+e Ban9 of India% means the difference between the amount of
consideration for such transfer as enhanced by any court% tribunal or other authority
and the amount of consideration which would ha+e been payable if such
enhancement had not been made(2
Notice of demand
27
.
156. Fhen any ta$% interest% penalty% fine or any other sum
27
-***2 is payable in
conse,uence of any order passed under this "ct% the
2&
)8
ser+e
upon the assessee a notice of dmand in the prescribed form
)1
specifyin5 the sum so
payable(

Intimation of loss.
157. Fhen% in the course of the assessment of the total income of any assessee% it is
established that a loss has ta9en place which the assessee is entitled to ha+e carried
forward and set off under the pro+isions of sub#section 1! of section 62% sub#section 2!
of section 6)%
)2
-sub#section 1!
))
-or sub#section )!2 of section 63 or sub#section )! of
section 63"2% the
)3
-"ssessin52 <fficer shall notify to the assessee by an order in writin5
the amount of the loss as computed by him for the purposes of sub#section 1! of section
62% sub#section 2! of section 6)%
)4
-sub#section 1!
)'
-or sub#section )!2 of section 63 or
sub#section )! of section 63"2(
Intimation of assessment of firm.
158.
)6
-Fhene+er% in respect of the assessment year commencin5 on the 1st day of
"pril% 1&&2% or any earlier assessment year% a re5istered firm is assessed2% or an
unre5istered firm is assessed under the pro+isions of clause b! of section 17)% the
)7
-"ssessin52 <fficer shall notify to the firm by an order in writin5 the amount of its total
income assessed and the apportionment thereof between the se+eral partners(
&!
-CHAPTER XIV-A
SPECIAL PROVISION FOR AVOIDING REPETITIVE APPEALS
Procedure when assessee claims identical question of law is pending before High
Court or Supreme Court.
158A.
38
1! Aotwithstandin5 anythin5 contained in this "ct% where an assessee claims
that any ,uestion of law arisin5 in his case for an assessment year which is pendin5
before the
31
-"ssessin52 <fficer or any appellate authority such case bein5 hereafter in
this section referred to as the rele+ant case! is identical with a ,uestion of law arisin5 in
his case for another assessment year which is pendin5 before the Ci5h .ourt on a
reference under section 24' or
32
-before the *upreme .ourt on a reference under section
246 or in appeal under section 2'8" before the Ci5h .ourt or in appeal under section 2'1
before the *upreme .ourt2 such case bein5 hereafter in this section referred to as the
other case!% he may furnish to the
3)
-"ssessin52 <fficer or the appellate authority% as the
case may be% a declaration in the prescribed form and +erified
38
in the prescribed manner%
that if the
3)
-"ssessin52 <fficer or the appellate authority% as the case may be% a5rees to
apply in the rele+ant case the final decision on the ,uestion of law in the other case% he
shall not raise such ,uestion of law in the rele+ant case in appeal before any appellate
authority or
33
-in appeal before the Ci5h .ourt under section 2'8" or in appeal before the
*upreme .ourt under section 2'12(
2! Fhere a declaration under sub#section 1! is furnished to any appellate authority% the
appellate authority shall call for a report from the
34
-"ssessin52 <fficer on the correctness
of the claim made by the assessee and% where the
34
-"ssessin52 <fficer ma9es a re,uest to
the appellate authority to 5i+e him an opportunity of bein5 heard in the matter% the
appellate authority shall allow him such opportunity(
)! The
34
-"ssessin52 <fficer or the appellate authority% as the case may be% may% by order
in writin5%
i! admit the claim of the assessee if he or it is satisfied that the ,uestion of law
arisin5 in the rele+ant case is identical with the ,uestion of law in the other
case1 or
ii! re:ect the claim if he or it is not so satisfied(
3! Fhere a claim is admitted under sub#section )!%
a! the
34
-"ssessin52 <fficer or% as the case may be% the appellate authority may
ma9e an order disposin5 of the rele+ant case without awaitin5 the final decision
on the ,uestion of law in the other case1 and
b! the assessee shall not be entitled to raise% in relation to the rele+ant case% such
,uestion of law in appeal before any appellate authority or
3'
- in appeal before
the Ci5h .ourt under section 2'8" or the *upreme .ourt under section 2'122(
4! Fhen the decision on the ,uestion of law in the other case becomes final% it shall be
applied to the rele+ant case and the
34
-"ssessin52 <fficer or the appellate authority% as the
case may be% shall% if necessary% amend the order referred to in clause a! of sub#section
3! conformably to such decision(
'! "n order under sub#section )! shall be final and shall not be called in ,uestion in any
proceedin5 by way of appeal% reference or re+ision under this "ct(
Explanation( In this section%
a! appellate authority means the
36
-?eputy .ommissioner "ppeals!2% the
.ommissioner "ppeals! or the "ppellate Tribunal1
b! case% in relation to an assessee% means any proceedin5 under this "ct for the
assessment of the total income of the assessee or for the imposition of any penalty or
fine on him(2
48
-CHAPTER XIV-B+
SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES
Definitions.
158B. In this .hapter% unless the conte$t otherwise re,uires%
3&
-a!bloc9 period means the period comprisin5 pre+ious years rele+ant to si$ assessment
years precedin5 the pre+ious year in which the search was conducted under section
1)2 or any re,uisition was made under section 1)2" and also includes the period up
to the date of the commencement of such search or date of such re,uisition in the
pre+ious year in which the said search was conducted or re,uisition was made :
Provided that where the search is initiated or the re,uisition is made before the 1st
day of @une% 2881% the pro+isions of this clause shall ha+e effect as if for the words
si$ assessment years% the words ten assessment years had been substituted12
b! undisclosed income includes any money% bullion% :ewellery or other +aluable article
or thin5 or any income based on any entry in the boo9s of account or other
documents or transactions% where such money% bullion% :ewellery% +aluable article%
thin5% entry in the boo9s of account or other document or transaction represents
wholly or partly income or property which has not been or would not ha+e been
disclosed for the purposes of this "ct
48
-% or any e$pense% deduction or allowance
claimed under this "ct which is found to be false2(
Assessment of undisclosed income as a result of search.
158BA. 1! Aotwithstandin5 anythin5 contained in any other pro+isions of this "ct%
where after the )8th day of @une% 1&&4 a search is initiated under section 1)2 or boo9s of
account% other documents or any assets are re,uisitioned under section 1)2" in the case
of any person% then% the "ssessin5 <fficer shall proceed to assess the undisclosed income
in accordance with the pro+isions of this .hapter(
2! The total undisclosed income relatin5 to the bloc9 period shall be char5ed to ta$% at
the rate specified in section 11)% as income of the bloc9 period irrespecti+e of the
pre+ious year or years to which such income relates and irrespecti+e of the fact whether
re5ular assessment for any one or more of the rele+ant assessment years is pendin5 or
not(
41
-Explanation.>or the remo+al of doubts% it is hereby declared that
a! the assessment made under this .hapter shall be in addition to the re5ular
assessment in respect of each pre+ious year included in the bloc9 period1
b! the total undisclosed income relatin5 to the bloc9 period shall not include the
income assessed in any re5ular assessment as income of such bloc9 period1
c! the income assessed in this .hapter shall not be included in the re5ular
assessment of any pre+ious year included in the bloc9 period(2
)! Fhere the assessee pro+es to the satisfaction of the "ssessin5 <fficer that any part of
income referred to in sub#section 1! relates to an assessment year for which the pre+ious
year has not ended or the date of filin5 the return of income under sub#section 1! of
section 1)& for any pre+ious year has not e$pired% and such income or the transactions
relatin5 to such income are recorded on or before the date of the search or re,uisition in
the boo9s of account or other documents maintained in the normal course relatin5 to such
pre+ious years% the said income shall not be included in the bloc9 period(
Computation of undisclosed income of the block period.
158BB. 1! The undisclosed income of the bloc9 period shall be the a55re5ate of the total
income of the pre+ious years fallin5 within the bloc9 period computed%
42
-in accordance
with the pro+isions of this "ct% on the basis of e+idence found as a result of search or
re,uisition of boo9s of account or other documents and such other materials or
information as are a+ailable with the "ssessin5 <fficer and relatable to such e+idence2% as
reduced by the a55re5ate of the total income% or as the case may be% as increased by the
a55re5ate of the losses of such pre+ious years% determined%
a! where assessments under section 13) or section 133 or section 136 ha+e been
concluded
4)
-prior to the date of commencement of the search or the date of
re,uisition2% on the basis of such assessments1
b! where returns of income ha+e been filed under section 1)&
43
-or in response to a
notice issued under sub#section 1! of section 132 or section 1372 but
assessments ha+e not been made till the date of search or re,uisition% on the
basis of the income disclosed in such returns1
55
-c! where the due date for filin5 a return of income has e$pired% but no return of
income has been filed%
A! on the basis of entries as recorded in the boo9s of account and other
documents maintained in the normal course on or before the date of the
search or re,uisition where such entries result in computation of loss for
any pre+ious year fallin5 in the bloc9 period1 or
B! on the basis of entries as recorded in the boo9s of account and other
search or re,uisition where such income does not e$ceed the ma$imum
amount not char5eable to ta$ for any pre+ious year fallin5 in the bloc9
period1
ca! where the due date for filin5 a return of income has e$pired% but no return of
income has been filed% as nil% in cases not fallin5 under clause c!12
d! where the pre+ious year has not ended or the date of filin5 the return of income
under sub#section 1! of section 1)& has not e$pired% on the basis of entries
relatin5 to such income or transactions as recorded in the boo9s of account and
other documents maintained in the normal course on or before the date of the
search or re,uisition relatin5 to such pre+ious years1
e! where any order of settlement has been made under sub#section 3! of section
234?% on the basis of such order1
!! where an assessment of undisclosed income had been made earlier under clause
c! of section 147B.% on the basis of such assessment(
Explanation(>or the purposes of determination of undisclosed income%
a! the total income or loss of each pre+ious year shall% for the purpose of
a55re5ation% be ta9en as the total income or loss computed in accordance with
the pro+isions of
4'
-this "ct2 without 5i+in5 effect to set off of brou5ht forward
losses under .hapter 0I or unabsorbed depreciation under sub#section 2! of
section )2:
46
-Provided that in computin5 deductions under .hapter 0I#" for the purposes
of the said a55re5ation% effect shall be 5i+en to set off of brou5ht forward
section )212
47
-b! of a firm% returned income and total income assessed for each of the pre+ious
years fallin5 within the bloc9 period shall be the income determined before
allowin5 deduction of salary% interest% commission% bonus or remuneration by
whate+er name called
4&
-to any partner not bein5 a wor9in5 partner2 :
Provided that undisclosed income of the firm so determined shall not be
char5eable to ta$ in the hands of the partners% whether on allocation or on
account of enhancement12
c! assessment under section 13) includes determination of income under sub#
section 1! or sub#section 1B! of section 13)(
2! In computin5 the undisclosed income of the bloc9 period% the pro+isions of sections
'7% '&% '&"% '&B and '&. shall% so far as may be% apply and references to financial year
in those sections shall be construed as references to the rele+ant pre+ious year fallin5 in
the bloc9 period includin5 the pre+ious year endin5 with the date of search or of the
re,uisition(
)! The burden of pro+in5 to the satisfaction of the "ssessin5 <fficer that any
undisclosed income had already been disclosed in any return of income filed by the
assessee before the commencement of search or of the re,uisition% as the case may be%
shall be on the assessee(
3! >or the purpose of assessment under this .hapter% losses brou5ht forward from the
pre+ious year under .hapter 0I or unabsorbed depreciation under sub#section 2! of
section )2 shall not be set off a5ainst the undisclosed income determined in the bloc9
assessment under this .hapter% but may be carried forward for bein5 set off in the re5ular
assessments(
Computation of undisclosed income of the block period.
158BB. 1! The undisclosed income of the bloc9 period shall be the a55re5ate of the total
income of the pre+ious years fallin5 within the bloc9 period computed%
42
-in accordance
with the pro+isions of this "ct% on the basis of e+idence found as a result of search or
re,uisition of boo9s of account or other documents and such other materials or
information as are a+ailable with the "ssessin5 <fficer and relatable to such e+idence2% as
reduced by the a55re5ate of the total income% or as the case may be% as increased by the
a55re5ate of the losses of such pre+ious years% determined%
a! where assessments under section 13) or section 133 or section 136 ha+e been
concluded
4)
-prior to the date of commencement of the search or the date of
re,uisition2% on the basis of such assessments1
b! where returns of income ha+e been filed under section 1)&
43
-or in response to a
notice issued under sub#section 1! of section 132 or section 1372 but
assessments ha+e not been made till the date of search or re,uisition% on the
basis of the income disclosed in such returns1
55
-c! where the due date for filin5 a return of income has e$pired% but no return of
income has been filed%
A! on the basis of entries as recorded in the boo9s of account and other
search or re,uisition where such entries result in computation of loss for
any pre+ious year fallin5 in the bloc9 period1 or
B! on the basis of entries as recorded in the boo9s of account and other
search or re,uisition where such income does not e$ceed the ma$imum
amount not char5eable to ta$ for any pre+ious year fallin5 in the bloc9
period1
ca! where the due date for filin5 a return of income has e$pired% but no return of
income has been filed% as nil% in cases not fallin5 under clause c!12
d! where the pre+ious year has not ended or the date of filin5 the return of income
under sub#section 1! of section 1)& has not e$pired% on the basis of entries
relatin5 to such income or transactions as recorded in the boo9s of account and
other documents maintained in the normal course on or before the date of the
search or re,uisition relatin5 to such pre+ious years1
e! where any order of settlement has been made under sub#section 3! of section
234?% on the basis of such order1
!! where an assessment of undisclosed income had been made earlier under clause
c! of section 147B.% on the basis of such assessment(
Explanation(>or the purposes of determination of undisclosed income%
a! the total income or loss of each pre+ious year shall% for the purpose of
a55re5ation% be ta9en as the total income or loss computed in accordance with
the pro+isions of
4'
-this "ct2 without 5i+in5 effect to set off of brou5ht forward
section )2:
46
-Provided that in computin5 deductions under .hapter 0I#" for the purposes
of the said a55re5ation% effect shall be 5i+en to set off of brou5ht forward
section )212
47
-b! of a firm% returned income and total income assessed for each of the pre+ious
years fallin5 within the bloc9 period shall be the income determined before
allowin5 deduction of salary% interest% commission% bonus or remuneration by
whate+er name called
4&
-to any partner not bein5 a wor9in5 partner2 :
Provided that undisclosed income of the firm so determined shall not be
char5eable to ta$ in the hands of the partners% whether on allocation or on
account of enhancement12
c! assessment under section 13) includes determination of income under sub#
section 1! or sub#section 1B! of section 13)(
2! In computin5 the undisclosed income of the bloc9 period% the pro+isions of sections
'7% '&% '&"% '&B and '&. shall% so far as may be% apply and references to financial year
in those sections shall be construed as references to the rele+ant pre+ious year fallin5 in
the bloc9 period includin5 the pre+ious year endin5 with the date of search or of the
re,uisition(
)! The burden of pro+in5 to the satisfaction of the "ssessin5 <fficer that any
undisclosed income had already been disclosed in any return of income filed by the
assessee before the commencement of search or of the re,uisition% as the case may be%
shall be on the assessee(
3! >or the purpose of assessment under this .hapter% losses brou5ht forward from the
pre+ious year under .hapter 0I or unabsorbed depreciation under sub#section 2! of
section )2 shall not be set off a5ainst the undisclosed income determined in the bloc9
assessment under this .hapter% but may be carried forward for bein5 set off in the re5ular
assessments(
Time limit for completion of block assessment.
158BE.
65
-1! The order under section 147B. shall be passed
a! within one year from the end of the month in which the last of the authorisations for
search under section 1)2 or for re,uisition under section 1)2"% as the case may be%
was e$ecuted in cases where a search is initiated or boo9s of account or other
documents or any assets are re,uisitioned after the )8th day of @une% 1&&4% but
before the 1st day of @anuary% 1&&61
b! within two years from the end of the month in which the last of the authorisations
for search under section 1)2 or for re,uisition under section 1)2"% as the case may
be% was e$ecuted in cases where a search is initiated or boo9s of account or other
documents or any assets are re,uisitioned on or after the 1st day of @anuary% 1&&6(
2! The period of limitation for completion of bloc9 assessment in the case of the other
person referred to in section 147B? shall be
a! one year from the end of the month in which the notice under this .hapter was
ser+ed on such other person in respect of search initiated or boo9s of account or
other documents or any assets re,uisitioned after the )8th day of @une% 1&&4% but
before the 1st day of @anuary% 1&&61 and
b! two years from the end of the month in which the notice under this .hapter was
ser+ed on such other person in respect of search initiated or boo9s of account or
other documents or any assets are re,uisitioned on or after the 1st day of @anuary%
1&&6(2
66
-Explanation 1.In computin5 the period of limitation for the purposes of this section%
i! the period durin5 which the assessment proceedin5 is stayed by an order or
in:unction of any court1 or
ii! the period commencin5 from the day on which the "ssessin5 <fficer directs the
assessee to 5et his accounts audited under sub#section 2"! of section 142 and
endin5 on the day on which the assessee is re,uired to furnish a report of such audit
under that sub#section1 or
iii! the time ta9en in reopenin5 the whole or any part of the proceedin5 or 5i+in5 an
opportunity to the assessee to be re#heard under the pro+iso to section 12#1 or
i%! in a case where an application made before the *ettlement .ommission under
section 245' is re:ected by it or is not allowed to be proceeded with by it% the period
commencin5 on the date on which such application is made and endin5 with the date
on which the order under sub#section 1! of section 2451 is recei+ed by the
.ommissioner under sub#section 2! of that section%
shall be e$cluded:
of limitation referred to in sub#section 1! or sub#section 2! a+ailable to the "ssessin5
<fficer for ma9in5 an order under clause c! of section 15"B' is less than si$ty days%
such remainin5 period shall be e$tended to si$ty days and the aforesaid period of
limitation shall be deemed to be e$tended accordin5ly(2
'6
-Explanation 2.>or the remo+al of doubts% it is hereby declared that the authorisation
referred to in sub#section 1! shall be deemed to ha+e been e$ecuted%
a! in the case of search% on the conclusion of search as recorded in the last panchnama
drawn in relation to any person in whose case the warrant of authorisation has been
issued1
b! in the case of re,uisition under section 1)2"% on the actual receipt of the boo9s of
account or other documents or assets by the "uthorised <fficer(2
Certain interests and penalties not to be levied or imposed.
158BF. Ao interest under the pro+isions of section 2)3"% 2)3B or 2)3. or penalty under
the pro+isions of clause c! of sub#section 1! of section 261 or section 261" or section
261B shall be le+ied or imposed upon the assessee in respect of the undisclosed income
determined in the bloc9 assessment(
'7
-Levy of interest and penalty in certain cases.
158BFA. 1! Fhere the return of total income includin5 undisclosed income for the
bloc9 period% in respect of search initiated under section 1)2 or boo9s of account% other
documents or any assets re,uisitioned under section 1)2" on or after the 1st day of
@anuary% 1&&6% as re,uired by a notice under clause a! of section 147B.% is furnished
after the e$piry of the period specified in such notice% or is not furnished% the assessee
shall be liable to pay simple interest at the rate of
'&
-one2 per cent of the ta$ on
undisclosed income% determined under clause c! of section 147B.% for e+ery month or
part of a month comprised in the period commencin5 on the day immediately followin5
the e$piry of the time specified in the notice% and
a! where the return is furnished after the e$piry of the time aforesaid% endin5 on
the date of furnishin5 the return1 or
b! where no return has been furnished% on the date of completion of assessment
under clause c! of section 147B.(
2! The "ssessin5 <fficer or the .ommissioner "ppeals! in the course of any
proceedin5s under this .hapter% may direct that a person shall pay by way of penalty a
sum which shall not be less than the amount of ta$ le+iable but which shall not e$ceed
three times the amount of ta$ so le+iable in respect of the undisclosed income determined
by the "ssessin5 <fficer under clause c! of section 147B. :
Provided that no order imposin5 penalty shall be made in respect of a person if
i! such person has furnished a return under clause a! of section 147B.1
ii! the ta$ payable on the basis of such return has been paid or% if the assets sei=ed
consist of money% the assessee offers the money so sei=ed to be ad:usted a5ainst
the ta$ payable1
iii! e+idence of ta$ paid is furnished alon5 with the return1 and
i%! an appeal is not filed a5ainst the assessment of that part of income which is
shown in the return :
Provided further that the pro+isions of the precedin5 pro+iso shall not apply where the
undisclosed income determined by the "ssessin5 <fficer is in e$cess of the income
shown in the return and in such cases the penalty shall be imposed on that portion of
undisclosed income determined which is in e$cess of the amount of undisclosed income
shown in the return(
)! Ao order imposin5 a penalty under sub#section 2! shall be made%
a! unless an assessee has been 5i+en a reasonable opportunity of bein5 heard1
b! by the "ssistant .ommissioner
68
-or ?eputy .ommissioner2 or the "ssistant
?irector
68
-or ?eputy ?irector2% as the case may be% where the amount of
penalty e$ceeds twenty thousand rupees e$cept with the pre+ious appro+al of
the
61
-@oint2 .ommissioner or the
61
-@oint2 ?irector% as the case may be1
c! in a case where the assessment is the sub:ect#matter of an appeal to the
.ommissioner "ppeals! under section 23'
62
-or section 23'"2 or an appeal to
the "ppellate Tribunal under section 24)% after the e$piry of the financial year
in which the proceedin5s% in the course of which action for the imposition of
penalty has been initiated% are completed% or si$ months from the end of the
month in which the order of the .ommissioner "ppeals! or% as the case may
be% the "ppellate Tribunal is recei+ed by the .hief .ommissioner or the
.ommissioner% whiche+er period e$pires later1
d! in a case where the assessment is the sub:ect#matter of re+ision under section
2')% after the e$piry of si$ months from the end of the month in which such
order of re+ision is passed1
e! in any case other than those mentioned in clauses c! and d!% after the e$piry of
the financial year in which the proceedin5s% in the course of which action for
the imposition of penalty has been initiated% are completed% or si$ months from
the end of the month in which action for imposition of penalty is initiated%
whiche+er period e$pires later1
!! in respect of search initiated under section 1)2 or boo9s of account% other
documents or any assets re,uisitioned under section 1)2"% after the )8th day of
@une% 1&&4 but before the 1st day of @anuary% 1&&6(
Explanation.In computin5 the period of limitation for the purpose of this section%
i! the time ta9en in 5i+in5 an opportunity to the assessee to be reheard under the
pro+iso to section 12&1
ii! the period durin5 which the immunity 5ranted under section 234C remained in
force1 and
iii! the period durin5 which the proceedin5s under sub#section 2! are stayed by an
order or in:unction of any court%
shall be e$cluded(
3! "n income#ta$ authority on ma9in5 an order under sub#section 2! imposin5 a
penalty% unless he is himself an "ssessin5 <fficer% shall forthwith send a copy of such
order to the "ssessin5 <fficer(2
73
-Authority competent to make the block assessment.
158BG. The order of assessment for the bloc9 period shall be passed by an "ssessin5
<fficer not below the ran9 of an "ssistant .ommissioner
63
-or ?eputy .ommissioner2 or
an "ssistant ?irector
63
-or ?eputy ?irector2% as the case may be :
Provided that no such order shall be passed without the pre+ious appro+al of
a! the .ommissioner or ?irector% as the case may be% in respect of search initiated
under section 1)2 or boo9s of account% other documents or any assets re,uisitioned
under section 1)2"% after the )8th day of @une% 1&&4 but before the 1st day of
@anuary% 1&&61
b! the
64
-@oint2 .ommissioner or the
64
-@oint2 ?irector% as the case may be% in respect of
search initiated under section 1)2 or boo9s of account% other documents or any
assets re,uisitioned under section 1)2"% on or after the 1st day of @anuary% 1&&6(2
Application of other provisions of this Act.
158BH. *a+e as otherwise pro+ided in this .hapter% all other pro+isions of this "ct shall
apply to assessment made under this .hapter(2
6'
-Chapter not to apply after certain date.
158BI. The pro+isions of this .hapter shall not apply where a search is initiated under
section 1)2% or boo9s of account% other documents or any assets are re,uisitioned under
section 1)2" after the )1st day of Bay% 288)(2
CHAPTER XV
LIABILITY IN SPECIAL CASES
A.>egal representati%es
Legal representatives.
77
159. 1! Fhere a person dies% his le5al representati+e shall be liable to pay any sum
which the deceased would ha+e been liable to pay if he had not died% in the li9e manner
and to the same e$tent as the deceased(
2! >or the purpose of ma9in5 an assessment includin5 an assessment% reassessment or
recomputation under section 136! of the income of the deceased and for the purpose of
le+yin5 any sum in the hands of the le5al representati+e in accordance with the pro+isions
of sub#section 1!%
a! any proceedin5 ta9en a5ainst the deceased before his death shall be deemed to ha+e
been ta9en a5ainst the le5al representati+e and may be continued a5ainst the le5al
representati+e from the sta5e at which it stood on the date of the death of the
deceased1
b! any proceedin5 which could ha+e been ta9en a5ainst the deceased if he had
sur+i+ed% may be ta9en a5ainst the le5al representati+e1 and
c! all the pro+isions of this "ct shall apply accordin5ly(
)! The le5al representati+e of the deceased shall% for the purposes of this "ct% be deemed
to be an assessee(
3! E+ery le5al representati+e shall be personally liable for any ta$ payable by him in his
capacity as le5al representati+e if% while his liability for ta$ remains undischar5ed% he
creates a char5e on or disposes of or parts with any assets
67
of the estate of the deceased%
which are in% or may come into% his possession% but such liability shall be limited to the
+alue of the asset so char5ed% disposed of or parted with(
4! The pro+isions of sub#section 2! of section 1'1% section 1'2% and section 1'6% shall%
so far as may be and to the e$tent to which they are not inconsistent with the pro+isions
of this section% apply in relation to a le5al representati+e(
'! The liability of a le5al representati+e under this section shall% sub:ect to the pro+isions
of sub#section 3! and sub#section 4!% be limited to the e$tent to which the estate is
capable of meetin5 the liability(
B.6epresentati%e assessees - 5eneral pro%isions
Representative assessee.
79
160. 1! >or the purposes of this "ct% representati+e assessee means
i! in respect of the income of a non#resident specified in
78
-***2 sub#section 1! of
section &% the a5ent of the non#resident% includin5 a person who is treated as an
a5ent under section 1')1
ii! in respect of the income of a minor% lunatic or idiot% the 5uardian or mana5er
who is entitled to recei+e or is in receipt of such income on behalf of such
minor% lunatic or idiot1
iii! in respect of income which the .ourt of Fards% the "dministrator# ;eneral% the
<fficial Trustee or any recei+er or mana5er includin5 any person% whate+er his
desi5nation% who in fact mana5es property on behalf of another! appointed by
or under any order of a court% recei+es or is entitled to recei+e% on behalf or for
the benefit of any person% such .ourt of Fards% "dministrator#;eneral% <fficial
Trustee% recei+er or mana5er1
i%! in respect of income which a trustee
71
appointed under a trust declared by a
duly e$ecuted instrument in writin5 whether testamentary or otherwise
-includin5 any wa9f
71
deed which is +alid under the Bussalman Fa9f
0alidatin5 "ct% 1&1) ' of 1&1)!%2 recei+es or is entitled to recei+e on behalf or
for the benefit of any person% such trustee or trustees1
72
-%! in respect of income which a trustee appointed under an oral trust recei+es or is
entitled to recei+e on behalf or for the benefit of any person% such trustee or
trustees(
Explanation 1." trust which is not declared by a duly e$ecuted instrument in writin5
-includin5 any wa9f deed which is +alid under the Bussalman Fa9f 0alidatin5 "ct%
1&1) ' of 1&1)!%2 shall be deemed% for the purposes of clause i%!% to be a trust declared
by a duly e$ecuted instrument in writin5 if a statement in writin5% si5ned by the trustee or
trustees% settin5 out the purpose or purposes of the trust% particulars as to the trustee or
trustees% the beneficiary or beneficiaries and the trust property% is forwarded to the
7)
i! where the trust has been declared before the 1st day of @une% 1&71% within a period of
three months from that day1 and
ii! in any other case% within three months from the date of declaration of the trust(
Explanation 2.>or the purposes of clause %!% oral trust means a trust which is not
declared by a duly e$ecuted instrument in writin5 -includin5 any wa9f deed which is
+alid under the Bussalman Fa9f 0alidatin5 "ct% 1&1) ' of 1&1)!%2 and which is not
deemed under Explanation 1 to be a trust declared by a duly e$ecuted instrument in
writin5(2
2! E+ery representati+e assessee shall be deemed to be an assessee for the purposes of
this "ct(
Liability of representative assessee.
161. 1! E+ery representati+e assessee% as re5ards the income in respect of which he is a
representati+e assessee% shall be sub:ect to the same duties% responsibilities and liabilities
as if the income were income recei+ed by or accruin5 to or in fa+our of him beneficially%
and shall be liable to assessment in his own name in respect of that income1 but any such
assessment shall be deemed to be made upon him in his representati+e capacity only% and
the ta$ shall% sub:ect to the other pro+isions contained in this .hapter% be le+ied upon and
reco+ered from him in li9e manner and to the same e$tent as it would be le+iable upon
and reco+erable from the person represented by him(
73
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% where any income in
respect of which the person mentioned in clause i%! of sub#section 1! of section 1'8 is
liable as representati+e assessee consists of% or includes% profits and 5ains of business% ta$
shall be char5ed on the whole of the income in respect of which such person is so liable
at the ma$imum mar5inal rate :
Provided that the pro+isions of this sub#section shall not apply where such profits and
5ains are recei+able under a trust declared by any person by will e$clusi+ely for the
benefit of any relati+e dependent on him for support and maintenance% and such trust is
the only trust so declared by him(
74
-***2
2! Fhere any person is% in respect of any income% assessable under this .hapter in the
capacity of a representati+e assessee% he shall not% in respect of that income% be assessed
Right of representative assessee to recover tax paid.
162. 1! E+ery representati+e assessee who% as such% pays any sum under this "ct% shall
be entitled to reco+er the sum so paid from the person on whose behalf it is paid% or to
retain out of any moneys that may be in his possession or may come to him in his
representati+e capacity% an amount e,ual to the sum so paid(
2! "ny representati+e assessee% or any person who apprehends that he may be assessed
as a representati+e assessee% may retain out of any money payable by him to the person
on whose behalf he is liable to pay ta$ hereinafter in this section referred to as the
principal!% a sum e,ual to his estimated liability under this .hapter% and in the e+ent of
any disa5reement between the principal and such representati+e assessee or person as to
the amount to be so retained% such representati+e assessee or person may secure from the
7'
-"ssessin52 <fficer a certificate statin5 the amount to be so retained pendin5 final
settlement of the liability% and the certificate so obtained shall be his warrant for retainin5
that amount(
)! The amount reco+erable from such representati+e assessee or person at the time of
final settlement shall not e$ceed the amount specified in such certificate% e$cept to the
e$tent to which such representati+e assessee or person may at such time ha+e in his hands
additional assets of the principal(
'.6epresentati%e assessees<pecial cases
Who may be regarded as agent.
87
163. 1! >or the purposes of this "ct% a5ent% in relation to a non#resident% includes any
person in India
a! who is employed by or on behalf of the non#resident1 or
b! who has any business connection with the non#resident1 or
c! from or throu5h whom the non#resident is in receipt of any income% whether
directly or indirectly1 or
d! who is the trustee of the non#resident1
and includes also any other person who% whether a resident or non#resident% has ac,uired
by means of a transfer% a capital asset in India :
Provided that a bro9er in India who% in respect of any transactions% does not deal directly
with or on behalf of a non#resident principal but deals with or throu5h a non#resident
bro9er shall not be deemed to be an a5ent under this section in respect of such
transactions% if the followin5 conditions are fulfilled% namely:
i! the transactions are carried on in the ordinary course of business throu5h the
first#mentioned bro9er1 and
ii! the non#resident bro9er is carryin5 on such transactions in the ordinary course
of his business and not as a principal(
""
-Explanation.>or the purposes of this sub#section% the e$pression business connection
shall ha+e the meanin5 assi5ned to it in Explanation 2 to clause i! of sub#section 1! of
section # of this "ct(2
2! Ao person shall be treated as the a5ent of a non#resident unless he has had an
opportunity of bein5 heard by the
7&
-"ssessin52 <fficer as to his liability to be treated as
such(
90
-Charge of tax where share of beneficiaries unknown.
164. 1!
&1
-*ub:ect to the pro+isions of sub#sections 2! and )!% where2 any income in
respect of which the persons mentioned in clauses iii! and i%! of sub#section 1! of
section 1'8 are liable as representati+e assessees or any part thereof is not specifically
recei+able on behalf or for the benefit of
&2
any one person or where the indi+idual shares
of the persons on whose behalf or for whose benefit such income or such part thereof is
recei+able are indeterminate or un9nown such income% such part of the income and such
persons bein5 hereafter in this section referred to as rele+ant income% part of rele+ant
income and beneficiaries% respecti+ely!%
&)
-ta$ shall be char5ed on the rele+ant income or
part of rele+ant income at the ma$imum mar5inal rate
&3
:2
Provided that in a case where
&4
-i! none of the beneficiaries has any other income char5eable under this "ct
e$ceedin5 the ma$imum amount not char5eable to ta$ in the case of an
&'
-association of persons2 or is a beneficiary under any other trust1 or2
ii! the rele+ant income or part of rele+ant income is recei+able under
&6
-a trust
declared by any person by will and such trust is the only trust so declared by
him21 or
iii! the rele+ant income or part of rele+ant income is recei+able under a trust
created before the 1st day of Barch% 1&68% by a non#testamentary instrument
and the
&7
-"ssessin52 <fficer is satisfied% ha+in5 re5ard to all the circumstances
e$istin5 at the rele+ant time% that the trust was created bona !ide e$clusi+ely for
the benefit of the relati+es of the settlor% or where the settlor is a Cindu
undi+ided family% e$clusi+ely for the benefit of the members of such family% in
circumstances where such relati+es or members were mainly dependent on the
settlor for their support and maintenance1 or
i%! the rele+ant income is recei+able by the trustees on behalf of a pro+ident fund%
superannuation fund% 5ratuity fund% pension fund or any other fund created
bona !ide by a person carryin5 on a business or profession e$clusi+ely for the
benefit of persons employed in such business or profession%
ta$ shall be char5ed
&&
-on the rele+ant income or part of rele+ant income as if it2 were the
total income of an
1
-association of persons2 :
2
-Provided further that where any income in respect of which the person mentioned in
clause i%! of sub#section 1! of section 1'8 is liable as representati+e assessee consists
of% or includes% profits and 5ains of business% the precedin5 pro+iso shall apply only if
such profits and 5ains are recei+able under a trust declared by any person by will
e$clusi+ely for the benefit of any relati+e dependent on him for support and maintenance%
and such trust is the only trust so declared by him(2
)
-2! In the case of rele+ant income which is deri+ed from property held under trust
wholly for charitable or reli5ious purposes%
3
-or which is of the nature referred to in sub#
clause iia! of clause 24! of section 2%2
4
-or which is of the nature referred to in sub#
section 3"! of section 11%2 ta$ shall be char5ed on so much of the rele+ant income as is
not e$empt under section 11
'
-or section 122% as if the rele+ant income not so e$empt
were the income of an association of persons :
6
-Provided that in a case where the whole or any part of the rele+ant income is not
e$empt under section 11 or section 12 by +irtue of the pro+isions contained in clause c!
or clause d! of sub#section 1! of section 1)% ta$ shall be char5ed on the rele+ant income
or part of rele+ant income at the ma$imum mar5inal rate(22
7
-)! In a case where the rele+ant income is deri+ed from property held under trust in part
only for charitable or reli5ious purposes
&
-or is of the nature referred to in sub#clause iia!
of clause 24! of section 22
18
-or is of the nature referred to in sub#section 3"! of section
11%2 and either the rele+ant income applicable to purposes other than charitable or
reli5ious purposes or any part thereof!
11
-is not specifically recei+able on behalf or for
the benefit of any one person or the indi+idual shares of the beneficiaries in the income so
applicable are indeterminate or un9nown% the ta$ char5eable on the rele+ant income shall
be the a55re5ate of
a! the ta$ which would be char5eable on that part of the rele+ant income which is
applicable to charitable or reli5ious purposes as reduced by the income% if any%
which is e$empt under section 11! as if such part or such part as so reduced!
were the total income of an association of persons1 and
b! the ta$ on that part of the rele+ant income which is applicable to purposes other
than charitable or reli5ious purposes% and which is either not specifically
recei+able on behalf or for the benefit of any one person or in respect of which
the shares of the beneficiaries are indeterminate or un9nown% at the ma$imum
mar5inal rate :2
Provided that in a case where
12
-i! none of the beneficiaries in respect of the part of the rele+ant income which is
not applicable to charitable or reli5ious purposes has any other income
char5eable under this "ct e$ceedin5 the ma$imum amount not char5eable to
ta$ in the case of an association of persons or is a beneficiary under any other
trust1 or2
ii! the rele+ant income is recei+able under
1)
-a trust declared by any person by will
and such trust is the only trust so declared by him21 or
iii! the rele+ant income is recei+able under a trust created before the 1st day of
Barch% 1&68% by a non#testamentary instrument and the
13
-"ssessin52 <fficer is
satisfied% ha+in5 re5ard to all the circumstan#ces e$istin5 at the rele+ant time%
that the trust% to the e$tent it is not for charitable or reli5ious purposes% was
created bona !ide e$clusi+ely for the benefit of the relati+es of the settlor% or
where the settlor is a Cindu undi+ided family% e$clusi+ely for the benefit of the
members of such family% in circumstances where such relati+es or members
were mainly dependent on the settlor for their support and maintenance%
ta$ shall be char5ed
14
-on the rele+ant income2 as if the rele+ant income as reduced by
the income% if any% which is e$empt under section 11! were the total income of an
association of persons :2
1'
-Provided further that where the rele+ant income consists of% or includes% profits and
5ains of business% the precedin5 pro+iso shall apply only if the income is recei+able under
a trust declared by any person by will e$clusi+ely for the benefit of any relati+e
dependent on him for support and maintenance% and such trust is the only trust so
declared by him :
Provided also that in a case where the whole or any part of the rele+ant income is not
e$empt under section 11 or section 12 by +irtue of the pro+isions contained in clause c!
or clause d! of sub#section 1! of section 1)% ta$ shall be char5ed on the rele+ant income
or part of rele+ant income at the ma$imum mar5inal rate(22
16
-Explanation 1.>or the purposes of this section%
i! any income in respect of which the persons mentioned in clause iii! and clause
i%! of sub#section 1! of section 1'8 are liable as representati+e assessee or any
part thereof shall be deemed as bein5 not specifically recei+able on behalf or
for the benefit of any one person unless the person on whose behalf or for
whose benefit such income or such part thereof is recei+able durin5 the
pre+ious year is e$pressly stated in the order of the court or the instrument of
trust or wa9f deed% as the case may be% and is identifiable as such on the date of
such order% instrument or deed 1
ii! the indi+idual shares of the persons on whose behalf or for whose benefit such
income or such part thereof is recei+ed shall be deemed to be indeterminate or
un9nown unless the indi+idual shares of the persons on whose behalf or for
whose benefit such income or such part thereof is recei+able% are e$pressly
stated in the order of the court or the instrument of trust or wa9f deed% as the
case may be% and are ascertainable as such on the date of such order% instrument
or deed(
Explanation 2.

-/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-
1#"#(2
18
-Charge of tax in case of oral trust.
164A. Fhere a trustee recei+es or is entitled to recei+e any income on behalf or for the
benefit of any person under an oral trust% then% notwithstandin5 anythin5 contained in any
other pro+ision of this "ct% ta$ shall be char5ed on such income at the ma$imum
mar5inal rate(
i!
1&
-***2
ii! oral trust shall ha+e the meanin5 assi5ned to it in Explanation 2 below sub#
section 1! of section 1'8(2
Case where part of trust income is chargeable.
165. Fhere part only of the income of a trust is char5eable under this "ct% that
proportion only of the income recei+able by a beneficiary from the trust which the part so
char5eable bears to the whole income of the trust shall be deemed to ha+e been deri+ed
from that part(
1.6epresentati%e assessees - :iscellaneous pro%isions
Direct assessment or recovery not barred.
28
166.Aothin5 in the fore5oin5 sections in this .hapter shall pre+ent either the direct
assessment of the person on whose behalf or for whose benefit income therein referred to
is recei+able% or the reco+ery from such person of the ta$ payable in respect of such
income(
Remedies against property in cases of representative assessees.
167. The
21
-"ssessin52 <fficer shall ha+e the same remedies a5ainst all property of any
9ind +ested in or under the control or mana5ement of any representati+e assessee as he
would ha+e a5ainst the property of any person liable to pay any ta$% and in as full and
ample a manner% whether the demand is raised a5ainst the representati+e assessee or
a5ainst the beneficiary direct(
22
-11.0irms) association o! persons and bod+ o! indi%iduals2
23
-Charge of tax in the case of a firm.
24
167A. In the case of a firm which is assessable as a firm% ta$ shall be char5ed on its total
income at the
24
-rate as specified in the >inance "ct of the rele+ant year2(2
26
-Charge of tax where shares of members in association of persons or body of
individuals unknown, etc.
26
167B. 1! Fhere the indi+idual shares of the members of an association of persons or
body of indi+iduals other than a company or a co#operati+e society or a society
re5istered under the *ocieties Re5istration "ct% 17'8 21 of 17'8! or under any law
correspondin5 to that "ct in force in any part of India! in the whole or any part of the
income of such association or body are indeterminate or un9nown% ta$ shall be char5ed
on the total income of the association or body at the ma$imum mar5inal rate :
Provided that% where the total income of any member of such association or body is
char5eable to ta$ at a rate which is hi5her than the ma$imum mar5inal rate% ta$ shall be
char5ed on the total income of the association or body at such hi5her rate(
2! Fhere% in the case of an association of persons or body of indi+iduals as aforesaid
-not bein5 a case fallin5 under sub#section 1!2%
i! the total income of any member thereof for the pre+ious year e$cludin5 his
share from such association or body! e$ceeds the ma$imum amount which is
not char5eable to ta$ in the case of that member under the >inance "ct of the
rele+ant year% ta$ shall be char5ed on the total income of the association or
body at the ma$imum mar5inal rate1
ii! any member or members thereof is or are char5eable to ta$ at a rate or rates
which is or are hi5her than the ma$imum mar5inal rate% ta$ shall be char5ed on
that portion or portions of the total income of the association or body which is
or are relatable to the share or shares of such member or members at such
hi5her rate or rates% as the case may be% and the balance of the total income of
the association or body shall be ta$ed at the ma$imum mar5inal rate(
Explanation.>or the purposes of this section% the indi+idual shares of the members of an
association of persons or body of indi+iduals in the whole or any part of the income of
such association or body shall be deemed to be indeterminate or un9nown if such shares
in relation to the whole or any part of such income! are indeterminate or un9nown on the
date of formation of such association or body or at any time thereafter(2
E.Executors
Executors.
168. 1! *ub:ect as hereinafter pro+ided% the income of the estate of a deceased person
shall be char5eable to ta$ in the hands of the e$ecutor%
a! if there is only one e$ecutor% then% as if the e$ecutor
27
were an indi+idual1 or
b! if there are more e$ecutors than one% then% as if the e$ecutors were an
association of persons1
and for the purposes of this "ct% the e$ecutor shall be deemed to be resident or non#
resident accordin5 as the deceased person was a resident or non#resident durin5 the
pre+ious year in which his death too9 place(
2! The assessment of an e$ecutor under this section shall be made separately from any
assessment that may be made on him in respect of his own income(
)! *eparate assessments shall be made under this section on the total income of each
completed pre+ious year or part thereof as is included in the period from the date of the
death to the date of complete distribution to the beneficiaries of the estate accordin5 to
their se+eral interests
2&
(
3! In computin5 the total income of any pre+ious year under this section% any income of
the estate of that pre+ious year distributed to% or applied to the benefit of% any specific
le5atee of the estate durin5 that pre+ious year shall be e$cluded1 but the income so
e$cluded shall be included in the total income of the pre+ious year of such specific
le5atee(
Explanation(In this section% e$ecutor includes an administrator or other person
administerin5 the estate of a deceased person
)8
(
Right of executor to recover tax paid.
169. The pro+isions of section 1'2 shall% so far as may be% apply in the case of an
e$ecutor in respect of ta$ paid or payable by him as they apply in the case of a
representati+e assessee(
0.<uccession to business or pro!ession
Succession to business otherwise than on death.
170. 1! Fhere a person carryin5 on any business or profession such person hereinafter
in this section bein5 referred to as the predecessor! has been succeeded therein by any
other person hereinafter in this section referred to as the successor! who continues to
carry on that business or profession%
a! the predecessor shall be assessed in respect of the income of the pre+ious year
in which the succession too9 place up to the date of succession1
b! the successor shall be assessed in respect of the income of the pre+ious year
after the date of succession(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% when the predecessor cannot
be found% the assessment of the income of the pre+ious year in which the succession too9
place up to the date of succession and of the pre+ious year precedin5 that year shall be
made on the successor in li9e manner and to the same e$tent as it would ha+e been made
on the predecessor% and all the pro+isions of this "ct shall% so far as may be% apply
accordin5ly(
)! Fhen any sum payable under this section in respect of the income of such business or
profession for the pre+ious year in which the succession too9 place up to the date of
succession or for the pre+ious year precedin5 that year% assessed on the predecessor%
cannot be reco+ered from him% the
)1
-"ssessin52 <fficer shall record a findin5 to that
effect and the sum payable by the predecessor shall thereafter be payable by and
reco+erable from the successor% and the successor shall be entitled to reco+er from the
predecessor any sum so paid(
3! Fhere any business or profession carried on by a Cindu undi+ided family is
succeeded to% and simultaneously with the succession or after the succession there has
been a partition of the :oint family property between the members or 5roups of members%
the ta$ due in respect of the income of the business or profession succeeded to% up to the
date of succession% shall be assessed and reco+ered in the manner pro+ided in section
161% but without pre:udice to the pro+isions of this section(
Explanation(>or the purposes of this section% income includes any 5ain accruin5 from the
transfer% in any manner whatsoe+er% of the business or profession as a result of the
succession(
5.Dartition
Assessment after partition of a Hindu undivided family.
171. 1! " Cindu family hitherto assessed as undi+ided shall be deemed for the purposes
of this "ct to continue to be a Cindu undi+ided family% e$cept where and in so far as a
findin5 of partition has been 5i+en under this section in respect of the Cindu undi+ided
family(
2! Fhere% at the time of ma9in5 an assessment under section 13) or section 133% it is
claimed by or on behalf of any member of a Cindu family assessed as undi+ided that a
partition% whether total or partial% has ta9en place amon5 the members of such family% the
)2
-"ssessin52 <fficer shall ma9e an in,uiry thereinto after 5i+in5 notice of the in,uiry to
all the members of the family(
)! <n the completion of the in,uiry% the
)2
-"ssessin52 <fficer shall record a findin5 as to
whether there has been a total or partial partition of the :oint family property% and% if there
has been such a partition% the date on which it has ta9en place(
3! Fhere a findin5 of total or partial partition has been recorded by the
)2
-"ssessin52
<fficer under this section% and the partition too9 place durin5 the pre+ious year%
a! the total income of the :oint family in respect of the period up to the date of
partition shall be assessed as if no partition had ta9en place1 and
b! each member or 5roup of members
))
shall% in addition to any ta$ for which he
or it may be separately liable and notwithstandin5 anythin5 contained in clause
2! of section 18% be :ointly and se+erally liable for the ta$ on the income so
assessed(
4! Fhere a findin5 of total or partial partition has been recorded by the
)3
-"ssessin52
<fficer under this section% and the partition too9 place after the e$piry of the pre+ious
year% the total income of the pre+ious year of the :oint family shall be assessed as if no
partition had ta9en place1 and the pro+isions of clause b! of sub#section 3! shall% so far
as may be% apply to the case(
'! Aotwithstandin5 anythin5 contained in this section% if the
)3
-"ssessin52 <fficer finds
after completion of the assessment of a Cindu undi+ided family that the family has
already effected a partition% whether total or partial% the
)3
proceed to reco+er the ta$ from e+ery person who was a member of the family before the
partition% and e+ery such person shall be :ointly and se+erally liable for the ta$ on the
income so assessed(
6! >or the purposes of this section% the se+eral liability of any member or 5roup of
members thereunder shall be computed accordin5 to the portion of the :oint family
property allotted to him or it at the partition% whether total or partial(
7! The pro+isions of this section shall% so far as may be% apply in relation to the le+y and
collection of any penalty% interest% fine or other sum in respect of any period up to date of
the partition% whether total or partial% of a Cindu undi+ided family as they apply in
relation to the le+y and collection of ta$ in respect of any such period(
)4
-&! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section%
where a partial partition has ta9en place after the )1st day of ?ecember% 1&67% amon5 the
members of a Cindu undi+ided family hitherto
)4a
assessed as undi+ided%
a! no claim that such partial partition has ta9en place shall be in,uired into under
sub#section 2! and no findin5 shall be recorded under sub#section )! that such
partial partition had ta9en place and any findin5 recorded under sub#section )!
to that effect whether before or after the 17th day of @une% 1&78% bein5 the date
of introduction of the >inance Ao( 2! Bill% 1&78% shall be null and +oid1
b! such family shall continue to be liable to be assessed under this "ct as if no
such partial partition had ta9en place1
c! each member or 5roup of members of such family immediately before such
partial partition and the family shall be :ointly and se+erally liable for any ta$%
penalty% interest% fine or other sum payable under this "ct by the family in
respect of any period% whether before or after such partial partition1
d! the se+eral liability of any member or 5roup of members aforesaid shall be
computed accordin5 to the portion of the :oint family property allotted to him
or it at such partial partition%
and the pro+isions of this "ct shall apply accordin5ly(2
Explanation(In this section%
a! partition means
i! where the property admits of a physical di+ision% a physical di+ision of the
property% but a physical di+ision of the income without a physical di+ision
of the property producin5 the income shall not be deemed to be a partition1
or
ii! where the property does not admit of a physical di+ision% then such di+ision
as the property admits of% but a mere se+erance of status shall not be
deemed to be a partition1
b! partial partition means a partition which is partial as re5ards the persons
constitutin5 the Cindu undi+ided family% or the properties belon5in5 to the
Cindu undi+ided family% or both(
C.Dro!its o! non-residents !rom occasional shipping business
Shipping business of non-residents.
)'
172. 1! The pro+isions of this section shall% notwithstandin5 anythin5 contained in the
other pro+isions of this "ct% apply for the purpose of the le+y and reco+ery of ta$ in the
case of any ship% belon5in5 to or chartered by a non#resident% which carries passen5ers%
li+estoc9% mail or 5oods shipped at a port in India
)6
-***2(
2! Fhere such a ship carries passen5ers% li+estoc9% mail or 5oods shipped at a port in
India%
)7
-se+en and a half2 per cent of the amount paid or payable on account of such
carria5e to the owner or the charterer or to any person on his behalf% whether that amount
is paid or payable in or out of India% shall be deemed to be income accruin5 in India to the
owner or charterer on account of such carria5e(
)! Before the departure from any port in India of any such ship% the master of the ship
shall prepare and furnish to the
)&
-"ssessin52 <fficer a return of the full amount paid or
payable to the owner or charterer or any person on his behalf% on account of the carria5e
of all passen5ers% li+estoc9% mail or 5oods shipped at that port since the last arri+al of the
ship thereat:
Provided that where the
)&
-"ssessin52 <fficer is satisfied that it is not possible for the
master of the ship to furnish the return re,uired by this sub#section before the departure
of the ship from the port and pro+ided the master of the ship has made satisfactory
arran5ements for the filin5 of the return and payment of the ta$ by any other person on
his behalf% the
)&
-"ssessin52 <fficer may% if the return is filed within thirty days of the
departure of the ship% deem the filin5 of the return by the person so authorised by the
master as sufficient compliance with this sub#section(
3! <n receipt of the return% the
38
-"ssessin52 <fficer shall assess the income referred to
in sub#section 2! and determine the sum payable as ta$ thereon at the rate or rates
31
-in
force2 applicable to the total income of a company which has not made the arran5ements
referred to in section 1&3 and such sum shall be payable by the master of the ship(
4! >or the purpose of determinin5 the ta$ payable under sub#section 3!% the
38
-"ssessin52 <fficer may call for such accounts or documents as he may re,uire(
'! " port clearance shall not be 5ranted to the ship until the .ollector of .ustoms% or
other officer duly authorised to 5rant the same% is satisfied that the ta$ assessable under
this section has been duly paid or that satisfactory arran5ements ha+e been made for the
payment thereof(
6! Aothin5 in this section shall be deemed to pre+ent the owner or charterer of a ship
from claimin5 before the e$piry of the assessment year rele+ant to the pre+ious year in
which the date of departure of the ship from the Indian port falls% that an assessment be
made of his total income of the pre+ious year and the ta$ payable on the basis thereof be
determined in accordance with the other pro+isions of this "ct% and if he so claims% any
payment made under this section in respect of the passen5ers% li+estoc9% mail or 5oods
shipped at Indian ports durin5 that pre+ious year shall be treated as a payment in ad+ance
of the ta$
32
le+iable for that assessment year% and the difference between the sum so paid
and the amount of ta$ found payable by him on such assessment shall be paid by him or
refunded to him% as the case may be(
3)
-7! >or the purposes of this section% the amount referred to in sub#section 2! shall
include the amount paid or payable by way of demurra5e char5e or handlin5 char5e or
any other amount of similar nature(2
3.6eco%er+ o! tax in respect o! non-residents
Recovery of tax in respect of non-resident from his assets.
173. Fithout pre:udice to the pro+isions of sub#section 1! of section 1'1 or of section
1'6% where the person entitled to the income referred to in clause i! of sub#section 1! of
section & is a non#resident% the ta$ char5eable thereon% whether in his name or in the
name of his a5ent who is liable as a representati+e assessee% may be reco+ered by
deduction under any of the pro+isions of .hapter /0II#B and any arrears of ta$ may be
reco+ered also in accordance with the pro+isions of this "ct from any assets of the non#
resident which are% or may at any time come% within India(
9.Dersons lea%ing 3ndia
Assessment of persons leaving India.
174. 1! Aotwithstandin5 anythin5 contained in section 3% when it appears to the
33
-"ssessin52 <fficer that any indi+idual may lea+e India durin5 the current assessment
year or shortly after its e$piry and that he has no present intention of returnin5 to India%
the total income of such indi+idual for the period from the e$piry of the pre+ious year for
that assessment year up to the probable date of his departure from India shall be
char5eable to ta$ in that assessment year(
2! The total income of each completed pre+ious year or part of any pre+ious year
included in such period shall be char5eable to ta$ at the rate or rates in force in that
assessment year% and separate assessments shall be made in respect of each such
completed pre+ious year or part of any pre+ious year(
)! The
33
-"ssessin52 <fficer may estimate the income of such indi+idual for such period
or any part thereof% where it cannot be readily determined in the manner pro+ided in this
"ct(
3! >or the purpose of ma9in5 an assessment under sub#section 1!% the
34
-"ssessin52
<fficer may ser+e a notice upon such indi+idual re,uirin5 him to furnish within such
time% not bein5 less than se+en days% as may be specified in the notice% a return in the
same form and +erified in the same manner
3'
-as a return under clause i! of sub#section
1! of section 1322% settin5 forth his total income for each completed pre+ious year
comprised in the period referred to in sub#section 1! and his estimated total income for
any part of the pre+ious year comprised in that period1 and the pro+isions of this "ct
shall% so far as may be% and sub:ect to the pro+isions of this section% apply as if the notice
were a
36
-notice issued under clause i! of sub#section 1! of section 1322(
4! The ta$ char5eable under this section shall be in addition to the ta$% if any% char5eable
'! Fhere the pro+isions of sub#section 1! are applicable% any notice issued by the
37
-"ssessin52 <fficer under
3&
-clause i! of sub#section 1! of section 132 or2 section 137
in respect of any ta$ char5eable under any other pro+ision of this "ct may%
notwithstandin5 anythin5 contained in
3&
-clause i! of sub#section 1! of section 132 or2
section 137% as the case may be% re,uire the furnishin5 of the return by such indi+idual
within such period% not bein5 less than se+en days% as the
37
-"ssessin52 <fficer may thin9
proper(
48
-9A(Association o! persons or bod+ o! indi%iduals or arti!icial 4uridical person !ormed
!or a particular e%ent or purpose
Assessment of association of persons or body of individuals or artificial juridical
person formed for a particular event or purpose.
174A.Aotwithstandin5 anythin5 contained in section 3% where it appears to the "ssessin5
<fficer that any association of persons or a body of indi+iduals or an artificial :uridical
person% formed or established or incorporated for a particular e+ent or purpose is li9ely to
be dissol+ed in the assessment year in which such association of persons or a body of
indi+iduals or an artificial :uridical person was formed or established or incorporated or
immediately after such assessment year% the total income of such association or body or
:uridical person for the period from the e$piry of the pre+ious year for that assessment
year up to the date of its dissolution shall be char5eable to ta$ in that assessment year%
and the pro+isions of sub#sections 2! to '! of section 163 shall% so far as may be% apply
to any proceedin5s in the case of any such person as they apply in the case of persons
lea+in5 India(2
H.Dersons tr+ing to alienate their assets
Assessment of persons likely to transfer property to avoid tax.
175. Aotwithstandin5 anythin5 contained in section 3% if it appears to the
41
-"ssessin52
<fficer durin5 any current assessment year that any person is li9ely to char5e% sell%
transfer% dispose of or otherwise part with any of his assets with a +iew to a+oidin5
payment of any liability under the pro+isions of this "ct% the total income of such person
for the period from the e$piry of the pre+ious year for that assessment year to the date
when the
41
-"ssessin52 <fficer commences proceedin5s under this section shall be
char5eable to ta$ in that assessment year% and the pro+isions of sub#sections 2!% )!% 3!%
4! and '! of section 163 shall% so far as may be% apply to any proceedin5s in the case of
any such person as they apply in the case of persons lea+in5 India(
G(?iscontinuance of business% or dissolution
Discontinued business.
42
176. 1! Aotwithstandin5 anythin5 contained in section 3% where any business or
profession is discontinued in any assessment year% the income of the period from the
e$piry of the pre+ious year for that assessment year up to the date of such discontinuance
may% at the discretion of the
41
-"ssessin52 <fficer% be char5ed to ta$ in that assessment
year(
2! The total income of each completed pre+ious year or part of any pre+ious year
included in such period shall be char5eable to ta$ at the rate or rates in force in that
assessment year% and separate assessments shall be made in respect of each such
completed pre+ious year or part of any pre+ious year(
)! "ny person discontinuin5 any business or profession shall 5i+e to the
4)
-"ssessin52
<fficer notice of such discontinuance within fifteen days thereof(
43
-)"! Fhere any business is discontinued in any year% any sum recei+ed after the
discontinuance shall be deemed to be the income of the recipient and char5ed to ta$
accordin5ly in the year of receipt% if such sum would ha+e been included in the total
income of the person who carried on the business had such sum been recei+ed before
such discontinuance(2
3! Fhere any profession is discontinued in any year on account of the cessation of the
profession by% or the retirement or death of% the person carryin5 on the profession% any
sum recei+ed after the discontinuance shall be deemed to be the income of the recipient
and char5ed to ta$ accordin5ly in the year of receipt% if such sum would ha+e been
included in the total income of the aforesaid person had it been recei+ed before such
discontinuance(
4! Fhere an assessment is to be made under the pro+isions of this section% the
4)
-"ssessin52 <fficer may ser+e on the person whose income is to be assessed or% in the
case of a firm% on any person who was a partner of such firm at the time of its
discontinuance or% in the case of a company% on the principal officer thereof% a notice
containin5 all or any of the re,uirements which may be included in a notice under
44
-clause i! of sub#section 1! of section 1322 and the pro+isions of this "ct shall% so far
as may be% apply accordin5ly as if the notice were a notice issued under
44
-clause i! of
'! The ta$ char5eable under this section shall be in addition to the ta$% if any% char5eable
6! Fhere the pro+isions of sub#section 1! are applicable% any notice issued by the
4'
-"ssessin52 <fficer under
46
-clause i! of sub#section 1! of section 132 or2 section 137
in respect of any ta$ char5eable under any other pro+isions of this "ct may%
notwithstandin5 anythin5 contained in
47
-clause i! of sub#section 1! of section 132 or2
section 137% as the case may be% re,uire the furnishin5 of the return by the person to
whom the aforesaid notices are issued within such period% not bein5 less than se+en days%
as the
4&
-"ssessin52 <fficer may thin9 proper(
Association dissolved or business discontinued.
177. 1! Fhere any business or profession carried on by an association of persons has
been discontinued or where an association of persons is dissol+ed% the
'8
-"ssessin52
<fficer shall ma9e an assessment of the total income of the association of persons as if no
such discontinuance or dissolution had ta9en place% and all the pro+isions of this "ct%
includin5 the pro+isions relatin5 to the le+y of a penalty or any other sum char5eable
under any pro+ision of this "ct shall apply% so far as may be% to such assessment(
2! Fithout pre:udice to the 5enerality of the fore5oin5 sub#section% if the
'8
-"ssessin52
<fficer or the
'1
-* * *2
'2
-.ommissioner "ppeals!2 in the course of any proceedin5 under
this "ct in respect of any such association of persons as is referred to in that sub#section
is satisfied that the association of persons was 5uilty of any of the acts specified in
.hapter //I% he may impose or direct the imposition of a penalty in accordance with the
pro+isions of that .hapter(
)! E+ery person who was at the time of such discontinuance or dissolution a member of
the association of persons% and the le5al representati+e of any such person who is
deceased% shall be :ointly and se+erally liable for the amount of ta$% penalty or other sum
payable% and all the pro+isions of this "ct% so far as may be% shall apply to any such
assessment or imposition of penalty or other sum(
3! Fhere such discontinuance or dissolution ta9es place after any proceedin5s in respect
of an assessment year ha+e commenced% the proceedin5s may be continued a5ainst the
persons referred to in sub#section )! from the sta5e at which the proceedin5s stood at the
time of such discontinuance or dissolution% and all the pro+isions of this "ct shall% so far
as may be% apply accordin5ly(
4! Aothin5 in this section shall affect the pro+isions of sub#section '! of section 14& (
Company in liquidation.
178. 1! E+ery person
a! who is the li,uidator of any company which is bein5 wound up% whether under
the orders of a court or otherwise 1 or
b! who has been appointed the recei+er of any assets of a company%
hereinafter referred to as the li,uidator! shall% within thirty days after he has become
such li,uidator% 5i+e notice of his appointment as such to the
')
-"ssessin52 <fficer who is
entitled to assess the income of the company(
2! The
')
-"ssessin52 <fficer shall% after ma9in5 such in,uiries or callin5 for such
information as he may deem fit% notify to the li,uidator within three months from the date
on which he recei+es notice of the appointment of the li,uidator the amount which% in the
opinion of the
'3
-"ssessin52 <fficer% would be sufficient to pro+ide for any ta$ which is
then% or is li9ely thereafter to become% payable by the company(
'4
-)! The li,uidator
a! shall not% without the lea+e of the
''
-.hief .ommissioner or .ommissioner2%
part with any of the assets of the company or the properties in his hands until he
has been notified by the
'6
-"ssessin52 <fficer under sub#section 2! 1 and
b! on bein5 so notified% shall set aside an amount% e,ual to the amount notified
and% until he so sets aside such amount% shall not part with any of the assets of
the company or the properties in his hands :
Provided that nothin5 contained in this sub#section shall debar the li,uidator from
partin5 with such assets or properties for the purpose of the payment of the ta$ payable
by the company or for ma9in5 any payment to secured creditors whose debts are entitled
under law to priority of payment o+er debts due to ;o+ernment on the date of li,uidation
or for meetin5 such costs and e$penses of the windin5 up of the company as are in the
opinion of the
'7
-.hief .ommissioner or .ommissioner2 reasonable(
3! If the li,uidator fails to 5i+e the notice in accordance with sub#section 1! or fails to
set aside the amount as re,uired by sub#section )! or parts with any of the assets of the
company or the properties in his hands in contra+ention of the pro+isions of that sub#
section% he shall be personally liable for the payment of the ta$ which the company would
be liable to pay :
Provided that if the amount of any ta$ payable by the company is notified under sub#
section 2!% the personal liability of the li,uidator under this sub#section shall be to the
e$tent of such amount(2
4! Fhere there are more li,uidators than one% the obli5ations and liabilities attached to
the li,uidator under this section shall attach to all the li,uidators :ointly and se+erally(
'! The pro+isions of this section shall ha+e effect notwithstandin5 anythin5 to the
contrary contained in any other law for the time bein5 in force(
'&
-:.Dri%ate companies2
Liability of directors of private company in liquidation.
179.
68
-1!2 Aotwithstandin5 anythin5 contained in the .ompanies "ct% 1&4' 1 of
1&4'!%
61
-where any ta$ due from a pri+ate company in respect of any income of any
pre+ious year or from any other company in respect of any income of any pre+ious year
durin5 which such other company was a pri+ate company2 cannot be reco+ered% then%
e+ery person who was a director of the pri+ate company at any time durin5 the rele+ant
pre+ious year shall be :ointly and se+erally liable for the payment of such ta$ unless he
pro+es that the non#reco+ery cannot be attributed to any 5ross ne5lect% misfeasance or
breach of duty on his part in relation to the affairs of the company(
62
-2! Fhere a pri+ate company is con+erted into a public company and the ta$ assessed
in respect of any income of any pre+ious year durin5 which such company was a pri+ate
company cannot be reco+ered% then% nothin5 contained in sub#section 1! shall apply to
any person who was a director of such pri+ate company in relation to any ta$ due in
respect of any income of such pri+ate company assessable for any assessment year
commencin5 before the 1st day of "pril% 1&'2(2
&.<pecial pro%isions !or certain .inds o! income
73
Royalties or copyright fees for literary or artistic work.
180. Fhere the time ta9en by the author of a literary or artistic wor9 in the ma9in5
thereof is more than twel+e months% the amount recei+ed or recei+able by him durin5 any
pre+ious year on account of any lump sum consideration for the assi5nment or 5rant of
any of his interests in the copyri5ht of that wor9 or of royalties or copyri5ht fees whether
recei+able in lump sum or otherwise!% in respect of that wor9% shall% if he so claims% be
allocated for purposes of assessment in such manner and to such period as may be
prescribed :
63
-Provided that nothin5 contained in this section shall apply in relation to the pre+ious
year rele+ant to the assessment year commencin5 on or after the 1st day of "pril% 2888(2
Explanation.>or the purposes of this section% the e$pression author includes a :oint
author% and the e$pression lump sum% in re5ard to royalties or copyri5ht fees% includes an
ad+ance payment on account of such royalties or copyri5ht fees which is not returnable(
75
-Consideration for know-how.
180A. Fhere the time ta9en by an indi+idual% who is resident in India% for de+elopin5
any 9now#how is more than twel+e months% he may elect that the 5ross amount of any
lump sum consideration recei+ed or recei+able by him durin5 the pre+ious year
6'
-rele+ant to the assessment year commencin5 on the 1st day of "pril% 2888 or earlier
assessment years2 for allowin5 use of such 9now#how shall be treated for the purposes of
char5in5 income#ta$ for that year and for each of the two immediately precedin5
pre+ious years as if one#third thereof were included in his income char5eable to ta$ for
each of those years respecti+ely and if he so elects% notwithstandin5 anythin5 contained in
any other pro+ision of this "ct%
a! such 5ross amount shall be so treated% and
b! the assessments for each of the two precedin5 pre+ious years shall% if made% be
accordin5ly rectified under section 143% the period of four years specified in
sub#section 6! of that section bein5 rec9oned from the end of the financial year
in which the assessment relatin5 to the pre+ious year in which the amount was
recei+ed or recei+able by such indi+idual is made(
Explanation.>or the purposes of this section% the e$pression 9now#how has the meanin5
assi5ned to it in section )4"B(2
81
-Assessment as a firm.
184. 1! " firm shall be assessed as a firm for the purposes of this "ct% if
i! the partnership is e+idenced by an instrument
72
1 and
ii! the indi+idual shares of the partners are specified
7)
in that instrument
72
(
2! " certified copy of the instrument of partnership referred to in sub#section 1! shall
accompany the return of income of the firm of the pre+ious year rele+ant to the
assessment year commencin5 on or after the 1st day of "pril% 1&&) in respect of which
assessment as a firm is first sou5ht(
Explanation.>or the purposes of this sub#section% the copy of the instrument of
partnership shall be certified in writin5 by all the partners not bein5 minors! or% where
the return is made after the dissolution of the firm% by all persons not bein5 minors! who
were partners in the firm immediately before its dissolution and by the le5al
representati+e of any such partner who is deceased(
)! Fhere a firm is assessed as such for any assessment year% it shall be assessed in the
same capacity for e+ery subse,uent year if there is no chan5e in the constitution of the
firm or the shares of the partners as e+idenced by the instrument of partnership on the
basis of which the assessment as a firm was first sou5ht(
3! Fhere any such chan5e had ta9en place in the pre+ious year% the firm shall furnish a
certified copy of the re+ised instrument of partnership alon5 with the return of income for
the assessment year rele+ant to such pre+ious year and all the pro+isions of this section
shall apply accordin5ly(
"4
-4! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where% in
respect of any assessment year% there is on the part of a firm any such failure as is
mentioned in section 144% the firm shall be so assessed that no deduction by way of any
payment of interest% salary% bonus% commission or remuneration% by whate+er name
called% made by such firm to any partner of such firm shall be allowed in computin5 the
income char5eable under the head Profits and 5ains of business or profession and such
interest% salary% bonus% commission or remuneration shall not be char5eable to income#ta$
under clause %! of section 2"(2
74
-Assessment when section 184 not complied with.
185. Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct% where a firm
does not comply with the pro+isions of section 1"4 for any assessment year% the firm
shall be so assessed that no deduction by way of any payment of interest% salary% bonus%
commission or remuneration% by whate+er name called% made by such firm to any partner
of such firm shall be allowed in computin5 the income char5eable under the head Profits
and 5ains of business or profession and such interest% salary% bonus% commission or
remuneration shall not be char5eable to income#ta$ under clause %! of section 2"(2
'.'hanges in constitution) succession and dissolution
Change in constitution of a firm.
187. 1! Fhere at the time of ma9in5 an assessment under section 13) or section 133 it
is found that a chan5e has occurred in the constitution of a firm% the assessment shall be
made on the firm as constituted at the time of ma9in5 the assessment(
7'
-***2
2! >or the purposes of this section% there is a chan5e in the constitution of the firm
a! if one or more of the partners cease to be partners
76
or one or more new partners
are admitted% in such circumstances that one or more of the persons who were
partners of the firm before the chan5e continue as partner or partners after the
chan5e 1 or
76
b! where all the partners continue with a chan5e in their respecti+e shares or in the
shares of some of them :
77
-Provided that nothin5 contained in clause a! shall apply to a case where the firm is
dissol+ed on the death of any of its partners(2
Succession of one firm by another firm.
188. Fhere a firm carryin5 on a business or profession is succeeded by another firm%
and the case is not one co+ered by section 176% separate assessments shall be made on the
predecessor firm and the successor firm in accordance with the pro+isions of section 168(
89
-1oint and several liability of partners for tax payable by firm.
188A. E+ery person who was% durin5 the pre+ious year% a partner of a firm% and the le5al
representati+e of any such person who is deceased% shall be :ointly and se+erally liable
alon5 with the firm for the amount of ta$% penalty or other sum payable by the firm for
the assessment year to which such pre+ious year is rele+ant% and all the pro+isions of this
"ct% so far as may be% shall apply to the assessment of such ta$ or imposition or le+y of
such penalty or other sum(2
Firm dissolved or business discontinued.
189. 1! Fhere any business or profession carried on by a firm has been discontinued or
where a firm is dissol+ed% the
&8
-"ssessin52 <fficer shall ma9e an assessment of the total
income of the firm as if no such discontinuance or dissolution had ta9en place% and all the
pro+isions of this "ct% includin5 the pro+isions relatin5 to the le+y of a penalty or any
other sum char5eable under any pro+ision of this "ct% shall apply% so far as may be% to
such assessment(
2! Fithout pre:udice to the 5enerality of the fore5oin5 sub#section% if the
&1
-"ssessin52
<fficer or the
&2
-***2
&)
-.ommissioner "ppeals!2 in the course of any proceedin5 under
this "ct in respect of any such firm as is referred to in that sub#section is satisfied that the
firm was 5uilty of any of the acts specified in .hapter //I% he may impose or direct the
imposition of a penalty in accordance with the pro+isions of that .hapter(
)! E+ery person who was at the time of such discontinuance or dissolution a partner of
the firm% and the le5al representati+e of any such person who is deceased% shall be :ointly
and se+erally liable for the amount of ta$% penalty or other sum payable% and all the
pro+isions of this "ct% so far as may be% shall apply to any such assessment or imposition
of penalty or other sum(
Explanation.
&3
3! Fhere such discontinuance or dissolution ta9es place after any proceedin5s in respect
of an assessment year ha+e commenced% the proceedin5s may be continued a5ainst the
person referred to in sub#section )! from the sta5e at which the proceedin5s stood at the
time of such discontinuance or dissolution% and all the pro+isions of this "ct shall% so far
as may be% apply accordin5ly(
4! Aothin5 in this section shall affect the pro+isions of sub#section '! of section 14&(
95
-Provisions applicable to past assessments of firms.
189A. In relation to the assessment of any firm and its partners for the assessment year
commencin5 on the 1st day of "pril% 1&&2% or any earlier assessment year% the pro+isions
of this .hapter as they stood immediately before the 1st day of "pril% 1&&)% shall
continue to apply(2
C,apte- XVII
Collection and recovery of tax
A.5eneral
Deduction at source and advance payment.
&'
190. 1! Aotwithstandin5 that the re5ular assessment in respect of any income is to be
made in a later assessment year% the ta$ on such income shall be payable by deduction
&6
-or collection2 at source or by ad+ance payment
&7
-or by payment under sub#section
1"! of section 1&22% as the case may be% in accordance with the pro+isions of this
.hapter(
2! Aothin5 in this section shall pre:udice the char5e of ta$ on such income under the
pro+isions of sub#section 1! of section 3(
Direct payment.
&&
191.
1
-***2 In the case of income in respect of which pro+ision is not made under this
.hapter for deductin5 income#ta$ at the time of payment% and in any case where income#
ta$ has not been deducted in accordance with the pro+isions of this .hapter% income#ta$
shall be payable by the assessee direct(
2
-***2
)
-Explanation.>or the remo+al of doubts% it is hereby declared that if any person referred
to in section 288 and in the cases referred to in section 1&3% the principal officer and the
company of which he is the principal officer does not deduct the whole or any part of the
ta$ and such ta$ has not been paid by the assessee direct% then% such person% the principal
officer and the company shall% without pre:udice to any other conse,uences which he or it
may incur% be deemed to be an assessee in default as referred to in sub#section 1! of
section 281 in respect of such ta$(2
B.1eduction at source
Salary.
3
192.
4
1! "ny person responsible for payin5 any income char5eable under the head
*alaries shall% at the time of payment% deduct income#ta$
'
-***2 on the amount payable at
the a+era5e rate of income#ta$
6
-***2 computed on the basis of the
7
-rates in force2 for the
financial year in which the payment is made% on the estimated income of the assessee
under this head for that financial year(
&
-1"! Fithout pre:udice to the pro+isions contained in sub#section 1!% the person
responsible for payin5 any income in the nature of a per,uisite which is not pro+ided for
by way of monetary payment% referred to in clause 2! of section 16% may pay% at his
option% ta$ on the whole or part of such income without ma9in5 any deduction therefrom
at the time when such ta$ was otherwise deductible under the pro+isions of sub#section
1!(
1B! >or the purpose of payin5 ta$ under sub#section 1"!% ta$ shall be determined at the
a+era5e of income#ta$ computed on the basis of the rates in force for the financial year%
on the income char5eable under the head *alaries includin5 the income referred to in sub#
section 1"!% and the ta$ so payable shall be construed as if it were% a ta$ deductible at
source% from the income under the head *alaries as per the pro+isions of sub#section 1!%
and shall be sub:ect to the pro+isions of this .hapter(2
18
-2! Fhere% durin5 the financial year% an assessee is employed simultaneously under
more than one employer% or where he has held successi+ely employment under more than
one employer% he may furnish to the person responsible for ma9in5 the payment referred
to in sub#section 1! bein5 one of the said employers as the assessee may% ha+in5 re5ard
to the circumstances of his case% choose!% such details of the income under the head
*alaries due or recei+ed by him from the other employer or employers% the ta$ deducted
at source therefrom and such other particulars% in such form and +erified in such manner
11
% and thereupon the person responsible for ma9in5 the payment
referred to abo+e shall ta9e into account the details so furnished for the purposes of
ma9in5 the deduction under sub#section 1!(2
12
-2"! Fhere the assessee% bein5 a ;o+ernment ser+ant or an employee in a
1)
-company%
co#operati+e society% local authority% uni+ersity% institution% association or body2 is
entitled to the relief under sub#section 1! of section 7&% he may furnish to the person
responsible for ma9in5 the payment referred to in sub#section 1!% such particulars% in
such form and +erified in such manner as may be prescribed% and thereupon the person
responsible as aforesaid shall compute the relief on the basis of such particulars and ta9e
it into account in ma9in5 the deduction under sub#section 1!(2
13
-Explanation.>or the purposes of this sub#section% Eni+ersity means a Eni+ersity
established or incorporated by or under a .entral% *tate or Pro+incial "ct% and includes an
institution declared under section ) of the Eni+ersity ;rants .ommission "ct% 1&4' ) of
1&4'!% to be a Eni+ersity for the purposes of that "ct(2
14
-2B! Fhere an assessee who recei+es any income char5eable under the head *alaries
has% in addition% any income char5eable under any other head of income not bein5 a loss
under any such head other than the loss under the head Income from house property! for
the same financial year% he may send to the person responsible for ma9in5 the payment
referred to in sub#section 1! the particulars of
a! such other income and of any ta$ deducted thereon under any other pro+ision
of this .hapter1
b! the loss% if any% under the head Income from house property%
in such form and +erified in such manner as may be prescribed
1'
% and thereupon the
person responsible as aforesaid shall ta9e
i! such other income and ta$% if any% deducted thereon1 and
ii! the loss% if any% under the head Income from house property%
also into account for the purposes of ma9in5 the deduction under sub#section 1! :
Provided that this sub#section shall not in any case ha+e the effect of reducin5 the ta$
deductible e$cept where the loss under the head Income from house property has been
ta9en into account% from income under the head *alaries below the amount that would be
so deductible if the other income and the ta$ deducted thereon had not been ta9en into
account(2
16
-2.! " person responsible for payin5 any income char5eable under the head *alaries
shall furnish to the person to whom such payment is made a statement 5i+in5 correct and
complete particulars of per,uisites or profits in lieu of salary pro+ided to him and the
+alue thereof in such form and manner as may be prescribed
17
(2
)! The person responsible for ma9in5 the payment referred to in sub#section 1!
1&
-or
sub#section 1"!2
28
-or sub#section 2! or sub#section 2"! or sub#section 2B!2 may% at
the time of ma9in5 any deduction% increase or reduce the amount to be deducted under
this section for the purpose of ad:ustin5 any e$cess or deficiency arisin5 out of any
pre+ious deduction or failure to deduct durin5 the financial year(
3! The trustees of a reco5nised pro+ident fund% or any person authorised by the
re5ulations of the fund to ma9e payment of accumulated balances due to employees%
shall% in cases where sub#rule 1! of rule & of Part " of the >ourth *chedule applies% at the
time an accumulated balance due to an employee is paid% ma9e therefrom the deduction
pro+ided in rule 18 of Part " of the >ourth *chedule(
21
4! Fhere any contribution made by an employer% includin5 interest on such
contributions% if any% in an appro+ed superannuation fund is paid to the employee%
22
-ta$2
on the amount so paid shall be deducted by the trustees of the fund to the e$tent pro+ided
in rule ' of Part B of the >ourth *chedule(
2)
'! >or the purposes of deduction of ta$ on salary payable in forei5n currency% the +alue
in rupees of such salary shall be calculated at the prescribed rate of e$chan5e(
23
-***2
25
Interest on securities.
2'
193. The person responsible for payin5
26
-to a resident2 any income
27
-by way of
interest on securities2 shall%
2&
-at the time of credit of such income to the account of the
payee or at the time of payment thereof in cash or by issue of a che,ue or draft or by any
other mode% whiche+er is earlier2% deduct income#ta$
)8
-***2 at the rates in force on the
amount of the interest payable :
)1
-***2
)2
-Provided
))
-***2 that no ta$ shall be deducted from
i! any interest payable on 3 per cent Aational ?efence Bonds% 1&62% where the
bonds are held by an indi+idual% not bein5 a non#resident1 or
)3
-ia! any interest payable to an indi+idual on 3 per cent Aational ?efence Goan%
1&'7% or 3 per cent Aational ?efence Goan% 1&621 or2
)4
-ib! any interest payable on Aational ?e+elopment Bonds1 or2
ii!
)'
-***2
)6
-iia! any interest payable on 6#Year Aational *a+in5s .ertificates I0 Issue!1 or2
)7
-iib! any interest payable on such debentures% issued by any institution or authority%
or any public sector company% or any co#operati+e society includin5 a co#
operati+e land mort5a5e ban9 or a co#operati+e land de+elopment ban9!% as the
)&
this behalf12
38
-***22
iii! any interest payable on ' per cent ;old Bonds% 1&66% or 6 per cent ;old Bonds%
1&78% where the Bonds are held by an indi+idual not bein5 a non#resident% and
the holder thereof ma9es a declaration in writin5 before the person responsible
for payin5 the interest that the total nominal +alue of the ' per cent ;old
Bonds% 1&66% or% as the case may be% the 6 per cent ;old Bonds% 1&78% held by
him includin5 such bonds% if any% held on his behalf by any other person! did
not in either case e$ceed ten thousand rupees at any time durin5 the period to
which the interest relates1
iiia!
31
-* * *2
32
-i%! any interest payable on any security of the .entral ;o+ernment or a *tate
;o+ernment12
3)
-%! any interest payable to an indi+idual% who is resident in India% on debentures
issued by a company in which the public are substantially interested% bein5
debentures listed on a reco5nised stoc9 e$chan5e in India in accordance with
the *ecurities .ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!% and any rules
made thereunder% if
a! the interest is paid by the company by an account payee che,ue1 and
b! the amount of such interest or% as the case may be% the a55re5ate of the
amounts of such interest paid or li9ely to be paid durin5 the financial year
by the company to such indi+idual does not e$ceed
33
-two thousand and fi+e
hundred rupees212
34
-%i! any interest payable to the Gife Insurance .orporation of India established
under the Gife Insurance .orporation "ct% 1&4' )1 of 1&4'!% in respect of any
securities owned by it or in which it has full beneficial interest1 or
%ii! any interest payable to the ;eneral Insurance .orporation of India hereafter in
this clause referred to as the .orporation! or to any of the four companies
hereafter in this clause referred to as such company!% formed by +irtue of the
schemes framed under sub#section 1! of section 1' of the ;eneral Insurance
Business Aationalisation! "ct% 1&62 46 of 1&62!% in respect of any securities
owned by the .orporation or such company or in which the .orporation or
such company has full beneficial interest1 or
%iii! any interest payable to any other insurer in respect of any securities owned by it
or in which it has full beneficial interest(2
3'
-Explanation
36
-***2(>or the purposes of this section% where any income by way of
interest on securities is credited to any account% whether called Interest payable account
or *uspense account or by any other name% in the boo9s of account of the person liable to
pay such income% such creditin5 shall be deemed to be credit of such income to the
account of the payee and the pro+isions of this section shall apply accordin5ly(2
Explanation 2.
37
Dividends.
3&
194.
48
The principal officer of an Indian company or a company which has made the
prescribed arran5ements for the declaration and payment of di+idends includin5
di+idends on preference shares! within India% shall% before ma9in5 any payment in cash
or before issuin5 any che,ue or warrant in respect of any di+idend or before ma9in5 any
distribution or payment to a shareholder%
41
-who is resident in India%2 of any di+idend
within the meanin5 of sub#clause a! or sub#clause b! or sub#clause c! or sub#clause d!
or sub#clause e! of clause 22! of section 2% deduct from the amount of such di+idend%
income#ta$
42
-***2 at the rates in force :
4)
-Provided that no such deduction shall be made in the case of a shareholder% bein5 an
indi+idual% if
a! the di+idend is paid by the company by an account payee che,ue1 and
b! the amount of such di+idend or% as the case may be% the a55re5ate of the
amounts of such di+idend distributed or paid or li9ely to be distributed or paid
durin5 the financial year by the company to the shareholder% does not e$ceed
43
-two thousand fi+e hundred2 rupees:
Provided further that the pro+isions of this section shall not apply to such income
credited or paid to
a! the Gife Insurance .orporation of India established under the Gife Insurance
.orporation "ct% 1&4' )1 of 1&4'!% in respect of any shares owned by it or in
which it has full beneficial interest1
b! the ;eneral Insurance .orporation of India hereafter in this pro+iso referred to
as the .orporation! or to any of the four companies hereafter in this pro+iso
referred to as such company!% formed by +irtue of the schemes framed under
sub#section 1! of section 1' of the ;eneral Insurance Business
Aationalisation! "ct% 1&62 46 of 1&62!% in respect of any shares owned by the
.orporation or such company or in which the .orporation or such company has
full beneficial interest1
c! any other insurer in respect of any shares owned by it or in which it has full
beneficial interest :2
44
-Provided also that no such deduction shall be made in respect of any di+idends
referred to in section 114#<(2
56
-Interest other than Interest on securities.
46
194A.
47
1! "ny person
4&
% not bein5 an indi+idual or a Cindu undi+ided family% who is
responsible for payin5
4&
to a resident any income by way of interest other than income
'8
-by way of interest on securities2% shall% at the time of credit of such income to the
account of the payee
'1
or at the time of payment thereof in cash or by issue of a che,ue or
draft or by any other mode% whiche+er is earlier% deduct income#ta$ thereon at the rates in
force :
'2
-Provided that an indi+idual or a Cindu undi+ided family% whose total sales% 5ross
receipts or turno+er from the business or profession carried on by him e$ceed the
monetary limits specified under clause a! or clause b! of section 33"B durin5 the
financial year immediately precedin5 the financial year in which such interest is credited
or paid% shall be liable to deduct income#ta$ under this section(2
')
-Explanation.>or the purposes of this section% where any income by way of interest as
aforesaid is credited to any account% whether called Interest payable account or *uspense
account or by any other name% in the boo9s of account of the person liable to pay such
income% such creditin5 shall be deemed to be credit of such income to the account of the
payee and the pro+isions of this section shall apply accordin5ly(2
2!
'3
)! The pro+isions of sub#section 1! shall not apply
'4
-i! where the amount of such income or% as the case may be% the a55re5ate of the
amounts of such income credited or paid or li9ely to be credited or paid durin5
the financial year by the person referred to in sub#section 1! to the account of%
or to% the payee% does not e$ceed
''
-fi+e thousand rupees2:2
'6
-Provided that in respect of the income credited or paid in respect of
a! time deposits with a ban9in5 company to which the Ban9in5 Re5ulation
"ct% 1&3& 18 of 1&3&! applies includin5 any ban9 or ban9in5 institution
referred to in section 41 of that "ct!1 or
b! time deposits with a co#operati+e society en5a5ed in carryin5 on the
business of ban9in51
c! deposits with a public company which is formed and re5istered in India
with the main ob:ect of carryin5 on the business of pro+idin5 lon5#term
finance for construction or purchase of houses in India for residential
purposes
'7
-and which is eli5ible for deduction under clause %iii! of sub#
section 1! of section )'2
'&
-***2%
68
-* * *2 the aforesaid amount shall be computed with reference to the income
credited or paid by a branch of the ban9in5 company or the co#operati+e
society or the public company% as the case may be12
ii!
61
-***2
iii! to such income credited or paid to
a! any ban9in5 company to which the Ban9in5 Re5ulation "ct% 1&3& 18 of
1&3&!% applies% or any co#operati+e society en5a5ed in carryin5 on the
business of ban9in5 includin5 a co#operati+e land mort5a5e ban9!% or
b! any financial corporation established by or under a .entral% *tate or
Pro+incial "ct% or
c! the Gife Insurance .orporation of India established under the Gife Insurance
.orporation "ct% 1&4' )1 of 1&4'!% or
d! the Enit Trust of India established under the Enit Trust of India "ct% 1&')
42 of 1&')!% or
e! any company or co#operati+e society carryin5 on the business of insurance%
or
!! such other institution% association or body
62
-or class of institutions%
associations or bodies2 which the .entral ;o+ernment may% for reasons to
be recorded in writin5% notify
6)
in this behalf in the <fficial ;a=ette1
63
-i%! to such income credited or paid by a firm to a partner of the firm12
%! to such income credited or paid by a co#operati+e society
64
-to a member
thereof or2 to any other co#operati+e society12
6'
-%i! to such income credited or paid in respect of deposits under any scheme framed
by the .entral ;o+ernment and notified
66
by it in this behalf in the <fficial
;a=ette1
67
-%ii! to such income credited or paid in respect of deposits other than time deposits
made on or after the 1st day of @uly% 1&&4! with a ban9in5 company to which
the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&! applies includin5 any ban9 or
ban9in5 institution referred to in section 41 of that "ct!1
%iia! to such income credited or paid in respect of%
a! deposits with a primary a5ricultural credit society or a primary credit
society or a co#operati+e land mort5a5e ban9 or a co#operati+e land
de+elopment ban91
b! deposits other than time deposits made on or after the 1st day of @uly%
1&&4! with a co#operati+e society% other than a co#operati+e society or ban9
referred to in sub#clause a!% en5a5ed in carryin5 on the business of
ban9in512
6&
-%iii! to such income credited or paid by the .entral ;o+ernment under any pro+ision
of this "ct or the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or the Estate ?uty
"ct% 1&4) )3 of 1&4)!% or the Fealth#ta$ "ct% 1&46 26 of 1&46!% or the ;ift#
ta$ "ct% 1&47 17 of 1&47!% or the *uper Profits Ta$ "ct% 1&') 13 of 1&')!% or
the .ompanies Profits! *urta$ "ct% 1&'3 6 of 1&'3!% or the Interest#ta$ "ct%
1&63 34 of 1&63!12
78
-ix! to such income credited or paid by way of interest on the compensation amount
awarded by the Botor "ccidents .laims Tribunal where the amount of such
income or% as the case may be% the a55re5ate of the amounts of such income
credited or paid durin5 the financial year does not e$ceed fifty thousand
rupees12
71
-x! to such income which is paid or payable by an infrastructure capital company
or infrastructure capital fund or a public sector company in relation to a =ero
coupon bond issued on or after the 1st day of @une% 2884 by such company or
fund or public sector company(2
72
Explanation 1.>or the purposes of clauses i!% %ii! and %iia!% time deposits means
deposits e$cludin5 recurrin5 deposits! repayable on the e$piry of fi$ed periods(
Explanation 2.
72a
***]
7)
-3! The person responsible for ma9in5 the payment referred to in sub#section 1! may%
at the time of ma9in5 any deduction% increase or reduce the amount to be deducted under
this section for the purpose of ad:ustin5 any e$cess or deficiency arisin5 out of any
pre+ious deduction or failure to deduct durin5 the financial year(2
Explanation.-/mitted b+ the 0inance Act) 1##2) w.e.!. 1-6-1##2.2
84
-Winnings from lottery or crossword puzzle.
74
194B.
7'
The person responsible for payin5 to any person any income by way of
winnin5s from any lottery or crossword pu==le
76
-or card 5ame and other 5ame of any
sort2 in an amount e$ceedin5
77
-fi+e thousand rupees2 shall% at the time of payment
thereof% deduct income#ta$ thereon at the rates in force:
7&
-***22
&8
-Provided
&1
-***2 that in a case where the winnin5s are wholly in 9ind or partly in cash
and partly in 9ind but the part in cash is not sufficient to meet the liability of deduction of
ta$ in respect of whole of the winnin5s% the person responsible for payin5 shall% before
releasin5 the winnin5s% ensure that ta$ has been paid in respect of the winnin5s(2
92
-Winnings from horse race.
194BB.
&)
"ny person% bein5 a boo9ma9er or a person to whom a licence has been 5ranted
by the ;o+ernment under any law for the time bein5 in force for horse racin5 in any race
course or for arran5in5 for wa5erin5 or bettin5 in any race course% who is responsible for
payin5 to any person any income by way of winnin5s from any horse race in an amount
e$ceedin5
&3
-two thousand fi+e hundred rupees2 shall% at the time of payment thereof%
deduct income#ta$ thereon at the rates in force(
&4
-***22
96
-Payments to contractors and sub-contractors.
&6
194C.
&7
1! "ny person responsible for payin5 any sum to any residenthereafter in this
section referred to as the contractor! for carryin5 out any wor9
&&
includin5 supply of
labour for carryin5 out any wor9! in pursuance of a contract between the contractor
&&
and
a! the .entral ;o+ernment or any *tate ;o+ernment1 or
b! any local authority1 or
c! any corporation established by or under a .entral% *tate or Pro+incial "ct1 or
d! any company1
1
-or2
2
-e! any co#operati+e
)
-society1 or22
3
-!! any authority% constituted in India by or under any law% en5a5ed either for the
purpose of dealin5 with and satisfyin5 the need for housin5 accommodation or
for the purpose of plannin5% de+elopment or impro+ement of cities% towns and
+illa5es% or for both1 or
g! any society re5istered under the *ocieties Re5istration "ct% 17'8 21 of 17'8!
or under any law correspondin5 to that "ct in force in any part of India1 or
h! any trust1 or
i! any Eni+ersity established or incorporated by or under a .entral% *tate or
Pro+incial "ct and an institution declared to be a Eni+ersity under section ) of
the Eni+ersity ;rants .ommission "ct% 1&4' ) of 1&4'!1
4
-or2
4
-4! any firm%2
shall% at the time of credit of such sum to the account of the contractor or at the time of
payment thereof in cash or by issue of a che,ue or draft or by any other mode% whiche+er
is earlier%
'
-deduct an amount e,ual to
i! one per cent in case of ad+ertisin5%
ii! in any other case two per cent%
of such sum as income#ta$ on income comprised therein(2
2! "ny person bein5 a contractor and not bein5 an indi+idual or a Cindu undi+ided
family! responsible for payin5 any sum to any resident hereafter in this section referred
to as the sub#contractor! in pursuance of a contract with the sub#contractor for carryin5
out% or for the supply of labour for carryin5 out% the whole or any part of the wor9
underta9en by the contractor or for supplyin5 whether wholly or partly any labour which
the contractor has underta9en to supply shall% at the time of credit of such sum to the
account of the sub#contractor or at the time of payment thereof in cash or by issue of a
che,ue or draft or by any other mode% whiche+er is earlier% deduct an amount e,ual to one
per cent of such sum as income#ta$ on income comprised therein:
6
-Provided that an indi+idual or a Cindu undi+ided family% whose total sales% 5ross
receipts or turno+er from the business or profession carried on by him e$ceed the
financial year immediately precedin5 the financial year in which such sum is credited or
paid to the account of the sub#contractor% shall be liable to deduct income#ta$ under this
sub#section(2
7
-Explanation 3.>or the purposes of sub#section 2!% the e$pression contractor shall also
include a contractor who is carryin5 out any wor9 includin5 supply of labour for
carryin5 out any wor9! in pursuance of a contract between the contractor and the
;o+ernment of a forei5n *tate or a forei5n enterprise or any association or body
established outside India(2
&
-
18
-Explanation 332(>or the purposes of this section% where any sum referred to in sub#
section 1! or sub#section 2! is credited to any account% whether called *uspense account
or by any other name% in the boo9s of account of the person liable to pay such income%
such creditin5 shall be deemed to be credit of such income to the account of the payee
and the pro+isions of this section shall apply accordin5ly(2
11
-Explanation 333.>or the purposes of this section% the e$pression wor9 shall also include
a! ad+ertisin51
b! broadcastin5 and telecastin5 includin5 production of pro5rammes for such
broadcastin5 or telecastin51
c! carria5e of 5oods and passen5ers by any mode of transport other than by
railways1
d! caterin5(2
)! Ao deduction shall be made under sub#section 1! or sub#section 2! from
12
-i! the amount of any sum credited or paid or li9ely to be credited or paid to the
account of% or to% the contractor or sub#contractor% if such sum does not e$ceed
twenty thousand rupees:
Provided that where the a55re5ate of the amounts of such sums credited or
paid or li9ely to be credited or paid durin5 the financial year e$ceeds fifty
thousand rupees% the person responsible for payin5 such sums referred to in
sub#section 1! or% as the case may be% sub#section 2! shall be liable to deduct
income#ta$
1)
-under this section:2
13
-Provided further that no deduction shall be made under sub#section 2!%
from the amount of any sum credited or paid or li9ely to be credited or paid
durin5 the pre+ious year to the account of the sub#contractor durin5 the course
of business of plyin5% hirin5 or leasin5 5oods carria5es% on production of a
declaration to the person concerned payin5 or creditin5 such sum% in the
prescribed form
13a
and +erified in the prescribed manner and within such time
as may be prescribed% if such sub#contractor is an indi+idual who has not
owned more than two 5oods carria5es at any time durin5 the pre+ious year:
Provided also that the person responsible for payin5 any sum as aforesaid to
the sub#contractor referred to in the second pro+iso shall furnish to the
prescribed income#ta$ authority or the person authorised by it such particulars
as may be prescribed in such form and within such time as may be prescribed1
or2
ii! any sum credited or paid before the 1st day of @une% 1&621
14
-or2
1'
-iii! any sum credited or paid before the 1st day of @une% 1&6)% in pursuance of a
contract between the contractor and a co#operati+e society or in pursuance of a
contract between such contractor and the sub#contractor in relation to any wor9
includin5 supply of labour for carryin5 out any wor9! underta9en by the
contractor for the co#operati+e society(2
16
-Explanation.>or the purposes of clause i!% 5oods carria5e shall ha+e the same meanin5
as in the Explanation to sub#section 6! of section 33"E(2
3!
18
-***2
4!
18
-***22
19
-Insurance commission.
28
194D.
21
"ny person responsible for payin5 to a resident any income by way of
remuneration or reward% whether by way of commission or otherwise% for solicitin5 or
procurin5 insurance business includin5 business relatin5 to the continuance% renewal or
re+i+al of policies of insurance! shall% at the time of credit of such income to the account
of the payee or at the time of payment thereof in cash or by issue of a che,ue or draft or
by any other mode% whiche+er is earlier% deduct income#ta$ thereon at the rates in force :
Provided that no deduction shall be made under this section from any such income
credited or paid before the 1st day of @une% 1&6):2
22
-Provided further that no deduction shall be made under this section in a case where
the amount of such income or% as the case may be% the a55re5ate of the amounts of such
income credited or paid or li9ely to be credited or paid durin5 the financial year to the
account of% or to% the payee% does not e$ceed fi+e thousand rupees(2
23
-Payments to non-resident sportsmen or sports associations.
24
194E. Fhere any income referred to in section 114BB" is payable to a non#resident
sportsman includin5 an athlete! who is not a citi=en of India or a non#resident sports
association or institution% the person responsible for ma9in5 the payment shall% at the time
of credit of such income to the account of the payee or at the time of payment thereof in
cash or by issue of a che,ue or draft or by any other mode% whiche+er is earlier% deduct
income#ta$ thereon at the rate of ten per cent(2
25
-Payments in respect of deposits under National Savings Scheme, etc.
26
194EE. The person responsible for payin5 to any person any amount referred to in clause
a! of sub#section 2! of section 78.." shall% at the time of payment thereof% deduct
income#ta$ thereon at the rate of twenty per cent :
Provided that no deduction shall be made under this section where the amount of such
payment or% as the case may be% the a55re5ate amount of such payments to the payee
durin5 the financial year is less than two thousand fi+e hundred rupees :
Provided further that nothin5 contained in this section shall apply to the payment of the
said amount to the heirs of the assessee(2
27
-Payments on account of repurchase of units by Mutual Fund or Unit Trust of
India.
28
194F. The person responsible for payin5 to any person any amount referred to in sub#
section 2! of section 78..B shall% at the time of payment thereof% deduct income#ta$
thereon at the rate of twenty per cent(2
29
-Commission, etc., on the sale of lottery tickets.
30
194G.
)1
-1!2 "ny person who is responsible for payin5% on or after the 1st day of
<ctober% 1&&1 to any person% who is or has been stoc9in5% distributin5% purchasin5 or
sellin5 lottery tic9ets% any income by way of commission% remuneration or pri=e by
whate+er name called! on such tic9ets in an amount e$ceedin5 one thousand rupees shall%
at the time of credit of such income to the account of the payee or at the time of payment
of such income in cash or by the issue of a che,ue or draft or by any other mode%
whiche+er is earlier% deduct income#ta$ thereon at the rate of ten per cent(
2!
)2
-***2
)!
32
-***2
Explanation.>or the purposes of this section% where any income is credited to any
account% whether called *uspense "ccount or by any other name% in the boo9s of account
of the person liable to pay such income% such creditin5 shall be deemed to be credit of
such income to the account of the payee and the pro+isions of this section shall apply
accordin5ly(2
))
-Commission or brokerage
)3
.
194H. "ny person% not bein5 an indi+idual or a Cindu undi+ided family% who is
responsible for payin5% on or after the 1st day of @une% 2881% to a resident% any income by
way of commission not bein5 insurance commission referred to in section 1&3?! or
bro9era5e% shall% at the time of credit of such income to the account of the payee or at the
time of payment of such income in cash or by the issue of a che,ue or draft or by any
other mode% whiche+er is earlier% deduct income#ta$ thereon at the rate of
)4
-fi+e2 per cent
:
Provided that no deduction shall be made under this section in a case where the amount
of such income or% as the case may be% the a55re5ate of the amounts of such income
credited or paid or li9ely to be credited or paid durin5 the financial year to the account of%
or to% the payee% does not e$ceed two thousand fi+e hundred rupees :
)'
-Provided further that an indi+idual or a Cindu undi+ided family% whose total sales%
5ross receipts or turno+er from the business or profession carried on by him e$ceed the
financial year immediately precedin5 the financial year in which such commission or
bro9era5e is credited or paid% shall be liable to deduct income#ta$ under this section(2
i! commission or bro9era5e includes any payment recei+ed or recei+able% directly
or indirectly% by a person actin5 on behalf of another person for ser+ices
rendered not bein5 professional ser+ices! or for any ser+ices in the course of
buyin5 or sellin5 of 5oods or in relation to any transaction relatin5 to any asset%
+aluable article or thin5% not bein5 securities1
ii! the e$pression professional ser+ices means ser+ices rendered by a person in the
course of carryin5 on a le5al% medical% en5ineerin5 or architectural profession
or the profession of accountancy or technical consultancy or interior decoration
or such other profession as is notified by the Board for the purposes of section
44AA1
iii! the e$pression securities shall ha+e the meanin5 assi5ned to it in clause h! of
section 2 of the *ecurities .ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!
3
1
i%! where any income is credited to any account% whether called *uspense account
or by any other name% in the boo9s of account of the person liable to pay such
income% such creditin5 shall be deemed to be credit of such income to the
38
-Rent.
)&
194-I. "ny person% not bein5 an indi+idual or a Cindu undi+ided family% who is
responsible for payin5 to
38
-a resident2 any income by way of rent
31
% shall% at the time of
credit of such income to the account of the payee or at the time of payment thereof in
cash or by the issue of a che,ue or draft or by any other mode% whiche+er is earlier%
32
-deduct income#ta$ thereon at the rate of
a! fifteen per cent if the payee is an indi+idual or a Cindu undi+ided family1 and
b! twenty per cent in other cases :2
income or% as the case may be% the a55re5ate of the amounts of such income credited or
paid or li9ely to be credited or paid durin5 the financial year by the aforesaid person to
the account of% or to% the payee% does not e$ceed one hundred and twenty thousand rupees
:
3)
financial year immediately precedin5 the financial year in which such income by way of
rent is credited or paid% shall be liable to deduct income#ta$ under this section(2
43a
*i( rent means an+ pa+ment) b+ whate%er name called) under an+ lease) sub-lease)
tenanc+ or an+ other agreement or arrangement !or the use o! *either
separatel+ or together( an+)
*a( land- or
*b( building *including !actor+ building(- or
*c( land appurtenant to a building *including !actor+ building(- or
*d( machiner+- or
*e( plant- or
*f( e2uipment- or
*5( !urniture- or
*h( !ittings)
whether or not an+ or all o! the abo%e are owned b+ the pa+ee-]
ii! where any income is credited to any account% whether called *uspense account
or by any other name% in the boo9s of account of the person liable to pay such
income% such creditin5 shall be deemed to be credit of such income to the
44
-Fees for professional or technical services.
45
3'
1941. 1! "ny person% not bein5 an indi+idual or a Cindu undi+ided family% who is
responsible for payin5 to a resident any sum by way of
a! fees for professional ser+ices% or
b! fees for technical ser+ices%
3'a
or]
46a
*c( ro+alt+) or
*d( an+ sum re!erred to in clause *+a( o! section 2")]
shall% at the time of credit of such sum to the account of the payee or at the time of
payment thereof in cash or by issue of a che,ue or draft or by any other mode% whiche+er
is earlier% deduct an amount e,ual to fi+e per cent of such sum as income#ta$ on income
comprised therein :
Provided that no deduction shall be made under this section
A! from any sums as aforesaid credited or paid before the 1st day of @uly% 1&&41 or
B! where the amount of such sum or% as the case may be% the a55re5ate of the
amounts of such sums credited or paid or li9ely to be credited or paid durin5
the financial year by the aforesaid person to the account of% or to% the payee%
does not e$ceed
i! twenty thousand rupees% in the case of fees for professional ser+ices
referred to in clause a!% or
ii! twenty thousand rupees% in the case of fees for technical ser+ices referred to
in
3'b
clause *b() or]
46c
*iii( twent+ thousand rupees) in the case o! ro+alt+ re!erred to in clause *c() or
*i+( twent+ thousand rupees) in the case o! sum re!erred to in clause *d( :]
36
financial year immediately precedin5 the financial year in which such sum by way of fees
for professional ser+ices or technical ser+ices is credited or paid% shall be liable to deduct
income#ta$ under this section :2
4"
-Provided also that no indi+idual or a Cindu undi+ided family referred to in the second
pro+iso shall be liable to deduct income#ta$ on the sum by way of fees for professional
ser+ices in case such sum is credited or paid e$clusi+ely for personal purposes of such
indi+idual or any member of Cindu undi+ided family(2
2!
3&
-***2
)!
3&
-***2
a! professional ser+ices means ser+ices rendered by a person in the course of
carryin5 on le5al% medical% en5ineerin5 or architectural profession or the
profession of accountancy or technical consultancy or interior decoration or
ad+ertisin5 or such other profession as is notified by the Board for the purposes
of section 33"" or of this section1
b! fees for technical ser+ices shall ha+e the same meanin5 as in Explanation 2 to
clause %ii! of sub#section 1! of section &1
4#a
*ba(ro+alt+ shall ha%e the same meaning as in E$planation 2 to clause *+i( o! sub-
section *1( o! section #-]
c! where any sum referred to in sub#section 1! is credited to any account% whether
called suspense account or by any other name% in the boo9s of account of the
person liable to pay such sum% such creditin5 shall be deemed to be credit of
such sum to the account of the payee and the pro+isions of this section shall
apply accordin5ly(
48
-Income in respect of units.
41
194K. Fhere any income is payable to a resident in respect of units of a Butual >und
specified under clause 231! of section 18 or of the Enit Trust of India% the person
responsible for ma9in5 the payment shall% at the time of credit of such income to the
account of payee or at the time of payment thereof in cash or by issue of a che,ue or draft
or by any other mode% whiche+er is earlier% deduct income#ta$ thereon at the rate of ten
per cent :
Provided that the pro+isions of this section shall not apply where the amount of such
income or% as the case may be% the a55re5ate of the amounts of such income credited or
paid or li9ely to be credited or paid durin5 the financial year by the person responsible for
ma9in5 the payment to the account of% or to% the payee does not e$ceed
42
-two thousand
fi+e hundred2 rupees :
Provided further that the amount of one thousand* rupees shall be computed with
reference to the income credited or paid
a! in respect of a branch office of the Butual >und or of the Enit Trust of India% as
the case may be% and
b! under a particular scheme under which the units ha+e been issued :
4)
-Provided also that no deduction shall be made under this section from any such
income credited or paid on or after the 1st day of "pril% 288)(2
a! Enit Trust of India means the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!1
b! where any income as aforesaid is credited to any account% whether called
*uspense account or by any other name% in the boo9s of account of the person
liable to pay such income% such creditin5 shall be deemed to be credit of such
income to the account of the payee and the pro+isions of this section shall apply
accordin5ly(2
43
-Payment of compensation on acquisition of capital asset.
194L. "ny person responsible for payin5 to a resident any sum bein5 in the nature of
compensation or the enhanced compensation or the consideration or the enhanced
consideration on account of compulsory ac,uisition% under any law for the time bein5 in
force% of any capital asset shall% at the time of payment of such sum in cash or by issue of
a che,ue or draft or by any other mode% whiche+er is earlier% deduct an amount e,ual to
ten per cent of such sum as income#ta$ on income comprised therein :
payment or% as the case may be% the a55re5ate amount of such payments to a resident
durin5 the financial year does not e$ceed one hundred thousand rupees:2
44
-Provided further that no deduction shall be made under this section from any payment
made on or after the 1st day of @une% 2888(2
56
-Payment of compensation on acquisition of certain immovable property
5
(
194LA. "ny person responsible for payin5 to a resident any sum% bein5 in the nature of
compensation or the enhanced compensation or the consideration or the enhanced
consideration on account of compulsory ac,uisition% under any law for the time bein5 in
force% of any immo+able property other than a5ricultural land!% shall% at the time of
payment of such sum in cash or by issue of a che,ue or draft or by any other mode%
whiche+er is earlier% deduct an amount e,ual to ten per cent of such sum as income#ta$
thereon:
payment or% as the case may be% the a55re5ate amount of such payments to a resident
durin5 the financial year does not e$ceed one hundred thousand rupees(
i! a5ricultural land means a5ricultural land in India includin5 land situate in any area
referred to in items a! and b! of sub#clause iii! of clause 14! of section 21
ii! immo+able property means any land other than a5ricultural land! or any buildin5
or part of a buildin5(2
Other sums.
47
195.
4&
-1!
'8
"ny person responsible for payin5 to a non#resident% not bein5 a company%
or to a forei5n company% any interest
'1
-***2 or any other sum char5eable under the
pro+isions of this "ct not bein5 income char5eable under the head *alaries
'2
-***2!
shall% at the time of credit of such income to the account of the payee or at the time of
payment thereof in cash or by the issue of a che,ue or draft or by any other mode%
whiche+er is earlier% deduct income#ta$ thereon at the rates in force :
')
-Provided that in the case of interest payable by the ;o+ernment or a public sector ban9
within the meanin5 of clause 231! of section 18 or a public financial institution within
the meanin5 of that clause% deduction of ta$ shall be made only at the time of payment
thereof in cash or by the issue of a che,ue or draft or by any other mode :2
64
-Provided further that no such deduction shall be made in respect of any di+idends
referred to in section 115-/(2
Explanation.>or the purposes of this section% where any interest or other sum as aforesaid
is credited to any account% whether called Interest payable account or *uspense account
or by any other name% in the boo9s of account of the person liable to pay such income%
such creditin5 shall be deemed to be credit of such income to the account of the payee
and the pro+isions of this section shall apply accordin5ly(2
2! Fhere the person responsible for payin5 any such sum char5eable under this "ct
other than
'4
-***2
''
-***2
'6
-***2
'7
-***2 salary! to a non#resident considers that the
whole of such sum would not be income char5eable in the case of the recipient% he may
ma9e an application to the
'&
-"ssessin52 <fficer to determine%
68
-by 5eneral or special
order2% the appropriate proportion of such sum so char5eable% and upon such
determination% ta$ shall be deducted under sub#section 1! only on that proportion of the
sum which is so char5eable(
61
-***2
62
-)! *ub:ect to rules
6)
made under sub#section 4!% any person entitled to recei+e any
interest or other sum on which income#ta$ has to be deducted under sub#section 1! may
ma9e an application in the prescribed form to the
63
-"ssessin52 <fficer for the 5rant of a
certificate authorisin5 him to recei+e such interest or other sum without deduction of ta$
under that sub#section% and where any such certificate is 5ranted% e+ery person
responsible for payin5 such interest or other sum to the person to whom such certificate is
5ranted shall% so lon5 as the certificate is in force% ma9e payment of such interest or other
sum without deductin5 ta$ thereon under sub#section 1!(
3! " certificate 5ranted under sub#section )! shall remain in force till the e$piry of the
period specified therein or% if it is cancelled by the
63
-"ssessin52 <fficer before the e$piry
of such period% till such cancellation(
4! The Board may% ha+in5 re5ard to the con+enience of assessees and the interests of
re+enue% by notification in the <fficial ;a=ette% ma9e rules specifyin5 the cases in which%
and the circumstances under which% an application may be made for the 5rant of a
certificate under sub#section )! and the conditions sub:ect to which such certificate may
be 5ranted and pro+idin5 for all other matters connected therewith(2
75
-Income payable net of tax(
76
195A.
66
-In a case other than that referred to in sub#section 1"! of section 1&2% where
under an a5reement2 or other arran5ement% the ta$ char5eable on any income referred to
in the fore5oin5 pro+isions of this .hapter is to be borne by the person by whom the
income is payable% then% for the purposes of deduction of ta$ under those pro+isions such
income shall be increased to such amount as would% after deduction of ta$ thereon at the
rates in force for the financial year in which such income is payable% be e,ual to the net
amount payable under such a5reement or arran5ement(2
78
-Interest or dividend or other sums payable to Government, Reserve Bank or
certain corporations.
196. Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this .hapter% no
deduction of ta$ shall be made by any person from any sums payable to
i! the ;o+ernment% or
ii! the Reser+e Ban9 of India% or
iii! a corporation established by or under a .entral "ct which is% under any law for
the time bein5 in force% e$empt from income#ta$ on its income% or
i%! a Butual >und specified under clause 231! of section 18%
where such sum is payable to it by way of interest or di+idend in respect of any securities
or shares owned by it or in which it has full beneficial interest% or any other income
accruin5 or arisin5 to it(2
79
-Income in respect of units of non-residents.
80
196A. 1! "ny person responsible for payin5 to a non#resident% not bein5 a company% or
to a forei5n company% any income in respect of units of a Butual >und specified under
clause 231! of section 18 or of the Enit Trust of India shall% at the time of credit of such
income to the account of the payee or at the time of payment thereof in cash or by the
issue of a che,ue or draft or by any other mode% whiche+er is earlier% deduct income#ta$
thereon at the rate of twenty per cent :
71
-Provided that no deduction shall be made under this section from any such income
credited or paid on or after the 1st day of "pril% 288)(2
2! Aotwithstandin5 anythin5 contained in sub#section 1!% no deduction of ta$ shall be
made from any income payable in respect of units of the Enit Trust of India to a non#
resident Indian or a non#resident Cindu undi+ided family% where the units ha+e been
ac,uired from the Enit Trust of India out of the funds in a Aon#resident E$ternal!
"ccount maintained with any ban9 in India or by remittance of funds in forei5n currency%
in accordance% in either case% with the pro+isions of the >orei5n E$chan5e Re5ulation
"ct% 1&6) 3' of 1&6)!% and the rules made thereunder(
Explanation.>or the purposes of this section
a!
72
forei5n currency shall ha+e the meanin5 assi5ned to it in the >orei5n
E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!1
b! non#resident Indian shall ha+e the meanin5 assi5ned to it in clause e! of
section 114.1
c! Enit Trust of India means the Enit Trust of India established under the Enit
Trust of India "ct% 1&') 42 of 1&')!1
d! where any income as aforesaid is credited to any account% whether called
*uspense account or by any other name% in the boo9s of account of the person
liable to pay such income% such creditin5 shall be deemed to be credit of such
income to the account of the payee and the pro+isions of this section shall apply
accordin5ly(2
83
-Income from units.
84
196B.
74
-Fhere any income in respect of units referred to in section 114"B or by way of
lon5#term capital 5ains arisin5 from the transfer of such units is payable to an <ffshore
>und2% the person responsible for ma9in5 the payment shall% at the time of credit of such
income to the account of the payee or at the time of payment thereof in cash or by the
issue of a che,ue or draft or by any other mode% whiche+er is earlier% deduct income#ta$
thereon at the rate of ten per cent(2
86
-Income from foreign currency bonds or shares
87
of Indian company.
88
196C.
7&
-Fhere any income by way of interest or di+idends in respect of
&8
-bonds or
;lobal ?epository Receipts2 referred to in section 114". or by way of lon5#term capital
5ains arisin5 from the transfer of such
&1
-bonds or ;lobal ?epository Receipts2 is payable
to a non#resident2% the person responsible for ma9in5 the payment shall% at the time of
credit of such income to the account of the payee or at the time of payment thereof in
cash or by the issue of a che,ue or draft or by any other mode% whiche+er is earlier%
deduct income#ta$ thereon at the rate of ten per cent :
&2
-Provided that no such deduction shall be made in respect of any di+idends referred to
in section 114#<(2
93
-Income of Foreign Institutional Investors from securities.
94
196D. 1! Fhere any income in respect of securities referred to in clause a! of sub#
section 1! of section 114"? is payable to a >orei5n Institutional In+estor% the person
responsible for ma9in5 the payment shall% at the time of credit of such income to the
account of the payee or at the time of payment thereof in cash or by issue of a che,ue or
draft or by any other mode% whiche+er is earlier% deduct income#ta$ thereon at the rate of
twenty per cent :
#5
-Provided that no such deduction shall be made in respect of any di+idends referred to
in section 115-/(2
2! Ao deduction of ta$ shall be made from any income% by way of capital 5ains arisin5
from the transfer of securities referred to in section 114"?% payable to a >orei5n
Institutional In+estor(2
Certificate for deduction at lower rate.
197.
&'
1!
&6
-*ub:ect to rules made under sub#section 2"!%
&7
-where% in the case of any
income of any person
&&
-or sum payable to any person2% income#ta$ is re,uired to be
deducted at the time of credit or% as the case may be% at the time of payment at the rates in
force under the pro+isions of sections 1&2% 1&)%
1
-1&3%2 1&3"%
2
-1&3.%2 1&3?%
2
-1&3;2
)
-%1&3C2
3
-% 1&3#I2
4
-% 1&3@2
'
-% 1&3D2
6
-***2
7
-% 1&3G"2 and 1&4% the "ssessin5 <fficer is
satisfied2 that the total income
&
-***2 of the recipient :ustifies the deduction of income#
ta$
18
-***2 at any lower rates or no deduction of income#ta$
11
-***2% as the case may be%
the
12
-"ssessin52 <fficer shall% on an application made by the assessee in this behalf% 5i+e
to him such certificate as may be appropriate(
2! Fhere any such certificate is 5i+en% the person responsible for payin5 the income
shall% until such certificate is cancelled by the
1)
-"ssessin52 <fficer% deduct income#ta$
13
-***2 at the rates specified in such certificate or deduct no ta$% as the case may be(
14
-2"! The Board may% ha+in5 re5ard to the con+enience of assessees and the interests of
certificate under sub#section 1! and the conditions sub:ect to which such certificate may
)!
1'
-***2
17
-No deduction to be made in certain cases.
17
197A.
1&
1! Aotwithstandin5 anythin5 contained in
28
-***2 section 1&3
21
-***2
22
-or
section 1&3EE2% no deduction of ta$ shall be made under any of the said sections in the
case of an indi+idual% who is resident in India% if such indi+idual furnishes to the person
responsible for payin5 any income of the nature referred to in
2)
-***2 section 1&3
23
-
24
-***2 or% as the case may be% section 1&3EE2% a declaration in writin5 in duplicate in
the prescribed form and +erified in the prescribed manner to the effect that
2'
-the ta$ on
his estimated total income of the pre+ious year in which such income is to be included in
computin5 his total income will be nil(2
26
-1"! Aotwithstandin5 anythin5 contained in
27
-section 1&) or2 section 1&3" or section
1&3D% no deduction of ta$ shall be made under
2&
-any2 of the said sections in the case of a
person not bein5 a company or a firm!% if such person furnishes to the person responsible
for payin5 any income of the nature referred to in
27
-section 1&) or2 section 1&3" or
section 1&3D% as the case may be% a declaration in writin5 in duplicate in the prescribed
form and +erified in the prescribed manner to the effect that the ta$ on his estimated total
income of the pre+ious year in which such income is to be included in computin5 his total
income will be nil.2
)8
-1B! The pro+isions of this section shall not apply where the amount of any income of
the nature referred to in sub#section 1! or sub#section 1"!% as the case may be% or the
a55re5ate of the amounts of such incomes credited or paid or li9ely to be credited or paid
durin5 the pre+ious year in which such income is to be included e$ceeds the ma$imum
amount which is not char5eable to income#ta$(2
)1
-1.! Aotwithstandin5 anythin5 contained in section 1&) or section 1&3 or section 1&3"
or section 1&3EE or section 1&3D or sub#section 1B! of this section% no
deduction of ta$ shall be made in the case of an indi+idual resident in India%
who is of the a5e of si$ty#fi+e years or more at any time durin5 the pre+ious
year and is entitled to a deduction from the amount of income#ta$ on his total
income referred to in section 77B
*
% if such indi+idual furnishes to the person
responsible for payin5 any income of the nature referred to in section 1&) or
section 1&3 or section 1&3" or section 1&3EE or section 1&3D% as the case may
be% a declaration in writin5 in duplicate in the prescribed form
)2
and +erified in
the prescribed manner to the effect that the ta$ on his estimated total income of
the pre+ious year in which such income is to be included in computin5 his total
income will be nil(2
))
11! &otwithstanding an+thing contained in this section) no deduction o! tax shall be
made b+ the /!!shore Ban.ing ;nit !rom the interest paid
a! on deposit made on or a!ter the 1st da+ o! April) 2$$5) b+ a non-resident or a person
not ordinaril+ resident in 3ndia- or
b! on borrowing) on or a!ter the 1st da+ o! April) 2$$5) !rom a non-resident or a
person not ordinaril+ resident in 3ndia.
E$planation(0or the purposes o! this sub-section /!!shore Ban.ing ;nit shall ha%e the
same meaning as assigned to it in clause *u( o! section 2 o! the <pecial Economic =ones
Act) 2$$5
))a
.]
2! The person responsible for payin5 any income of the nature referred to in sub#section
1!
)3
)4
-or sub#section 1.!2 shall deli+er or cause to be deli+ered to
the
)'
-.hief .ommissioner or .ommissioner2 one copy of the declaration referred to in
sub#section 1!
)6
)7
-or sub#section 1.!2 on or before the se+enth
day of the month ne$t followin5 the month in which the declaration is furnished to him(2
Tax deducted is income received.
198. "ll sums deducted in accordance with
)&
-the fore5oin5 pro+isions of this .hapter2
shall% for the purpose of computin5 the income of an assessee% be deemed to be income
recei+ed:
38
-Provided that the sum bein5 the ta$ paid% under sub#section 1"! of section 1&2 for the
purpose of computin5 the income of an assessee% shall not be deemed to be income
recei+ed(2
Credit for tax deducted.
31
199.
32
-1!2 "ny deduction made in accordance with
3)
-the fore5oin5 pro+isions of this
.hapter2 and paid to the .entral ;o+ernment shall be treated as a payment of
33
-ta$2 on
behalf of the person from whose income the deduction was made% or of the owner of the
security
34
-% or depositor or owner of property or of unit#holder2 or of the shareholder% as
the case may be% and credit shall be 5i+en to him for the amount so deducted on the
production of the certificate furnished under section 28) in the assessment
3'
-***2
36
-made under this "ct for the assessment year for which such income is assessable2 :
37
-Provided that
i! in a case where such person or owner
3&
-or depositor or unit#holder2 or
shareholder is a person% whose income is included under the pro+isions of
section '8% section '1% section '3% section &) or section &3 in the total income
of another person% the payment shall be deemed to ha+e been made on behalf
of% and the credit shall be 5i+en to% such other person1
ii! in any other case% where the di+idend on any share is assessable as the income
of a person other than the shareholder% the payment shall be deemed to ha+e
been made on behalf of% and the credit shall be 5i+en to% such other person in
such circumstances as may be prescribed :
48
-Provided further that where any property% deposit% security% unit or share is owned
:ointly by two or more persons not constitutin5 a partnership% the payment shall be
deemed to ha+e been made on behalf of% and credit shall be 5i+en to% each such person in
the same proportion in which rent% interest on deposit or on security or income in respect
of unit or di+idend on share is assessable as his income(22
41
-2! "ny sum referred to in sub#section 1"! of section 1&2 and paid to the .entral
;o+ernment shall be treated as the ta$ paid on behalf of the person in respect of whose
income% such payment of ta$ has been made and credit shall be 5i+en to him for the
amount so paid on production of the certificate furnished under section 28) in the
assessment under this "ct for the assessment year for which such income is assessable(2
52
-)! Fhere any deduction is made in accordance with the fore5oin5 pro+isions of this
.hapter on or after the 1st day of "pril%
53
2$$"] and paid to the .entral ;o+ernment% the
amount of ta$ deducted and specified in the statement referred to in section 2$3AA shall
be treated as ta$ paid on behalf of the persons referred to in sub#section 1! or% as the case
may be% sub#section 2! and credit shall be 5i+en to him for the amount so deducted in the
assessment made under this "ct for the assessment year for which such income is
assessable without the production of certificate(2
Duty of person deducting tax.
200.
43
-1!2
44
"ny person deductin5 any sum in accordance with
4'
-the fore5oin5
pro+isions of this .hapter2 shall pay within the prescribed time% the sum so deducted to
the credit of the .entral ;o+ernment or as the Board directs(
46
-2! "ny person bein5 an employer% referred to in sub#section 1"! of section 1&2 shall
pay% within the prescribed time% the ta$ to the credit of the .entral ;o+ernment or as the
Board directs(2
5"
-)! "ny person deductin5 any sum on or after the 1st day of "pril% 2884 in accordance
with the fore5oin5 pro+isions of this .hapter or% as the case may be% any person bein5 an
employer referred to in sub#section 1"! of section 1#2 shall% after payin5 the ta$
deducted to the credit of the .entral ;o+ernment within the prescribed time% prepare
,uarterly statements for the period endin5 on the )8th @une% the )8th *eptember% the )1st
?ecember and the )1st Barch in each financial year and deli+er or cause to be deli+ered
to the prescribed income#ta$ authority
5"a
or the person authorised by such authority such
statement in such form
5#
and +erified in such manner and settin5 forth such particulars
and within such time as may be prescribed(2
Consequences of failure to deduct or pay.
60
201. 1! If any such person
'1
-referred to in section 2882 and in the cases referred to in
section 1&3% the principal officer and the company of which he is the principal officer
does not deduct
'2
-the whole or any part of the ta$2 or after deductin5 fails to pay the ta$
as re,uired by or under this "ct% he or it shall% without pre:udice to any other
conse,uences which he or it may incur% be deemed to be an assessee in default in respect
of the ta$ :
Provided that no penalty shall be char5ed under section 221 from such person% principal
officer or company unless the
')
-"ssessin52 <fficer is satisfied that such person or
principal officer or company% as the case may be% has
'3
-without 5ood and sufficient
reasons2 failed to deduct and pay the ta$(
'4
-1"!
''
Fithout pre:udice to the pro+isions of sub#section 1!% if any such person%
principal officer or company as is referred to in that sub#section does not deduct
'6
-the
whole or any part of the ta$2 or after deductin5 fails to pay the ta$ as re,uired by or under
this "ct% he or it shall be liable to pay simple interest at
'7
-twel+e2 per cent per annum on
the amount of such ta$ from the date on which such ta$ was deductible to the date on
which such ta$ is actually paid
'7a
and such interest shall be paid be!ore !urnishing the
2uarterl+ statement !or each 2uarter in accordance with the pro%isions o! sub-section *3(
o! section 2$$](2
2! Fhere the ta$ has not been paid as aforesaid after it is deducted%
'&
-the amount of the
ta$ to5ether with the amount of simple interest thereon referred to in sub#section 1"!2
shall be a char5e upon all the assets of the person% or the company% as the case may be%
referred to in sub#section 1!(
Deduction only one mode of recovery.
202. The power to
68
-reco+er2 ta$ by deduction under
61
.hapter2 shall be without pre:udice to any other mode of reco+ery(
72
-Certificate for tax deducted.
6)
203.
63
-1!2
64
E+ery person deductin5 ta$ in accordance with
6'
-the fore5oin5 pro+isions
of this .hapter2
66
-shall% within such period as may be prescribed from the time of credit
or payment of the sum% or% as the case may be% from the time of issue of a che,ue or
warrant for payment of any di+idend to a shareholder2% furnish to the person to whose
account such credit is 5i+en or to whom such payment is made or the che,ue or warrant
is issued% a certificate to the effect that ta$ has been deducted% and specifyin5 the amount
so deducted% the rate at which the ta$ has been deducted and such other particulars as
may be prescribed(2
67
-2! E+ery person% bein5 an employer% referred to in sub#section 1"! of section 1&2
shall% within such period% as may be prescribed% furnish to the person in respect of whose
income such payment of ta$ has been made% a certificate to the effect that ta$ has been
paid to the .entral ;o+ernment% and specify the amount so paid% the rate at which the ta$
has been paid and such other particulars as may be prescribed(2
#
-)! Fhere the ta$ has been deducted or paid in accordance with the fore5oin5
pro+isions of this .hapter on or after the 1st day of "pril%
"$
2$$"]% there shall be no
re,uirement to furnish a certificate referred to in sub#section 1! or% as the case may be%
sub#section 2!(2
"1
-Tax deduction and collection account number.
203A. 1! E+ery person% deductin5 ta$ or collectin5 ta$ in accordance with the
pro+isions of this .hapter% who has not been allotted a ta$ deduction account number or%
as the case may be% a ta$ collection account number% shall% within such time as may be
prescribed
"2
% apply to the "ssessin5 <fficer for the allotment of a ta$ deduction and
collection account number(
2! Fhere a ta$ deduction account number or% as the case may be% a ta$ collection
account number or a ta$ deduction and collection account number has been allotted to a
person% such person shall ,uote such number
a! in all challans for the payment of any sum in accordance with the pro+isions of
section 2$$ or sub#section )! of section 2$6'1
b! in all certificates furnished under section 2$3 or sub#section 4! of section
2$6'1
"2a
*ba( in all the 2uarterl+ statements prepared and deli%ered or caused to be
deli%ered in accordance with the pro%isions o! sub-section *3( o! section 2$$ or
sub-section *3( o! section 2$6'-]
c! in all the returns% deli+ered in accordance with the pro+isions of section 2$6 or
sub#section 4"! or sub#section 4B! of section 2$6' to any income#ta$
authority1 and
d! in all other documents pertainin5 to such transactions as may be prescribed in
the interests of re+enue(2
"3
-Furnishing of statement of tax deducted.
203AA. The prescribed income#ta$ authority or the person authorised by such authority
referred to in sub#section )! of section 2$$% shall% within the prescribed time after the end
of each financial year be5innin5 on or after the 1st day of "pril%
"3a
2$$"] prepare and
deli+er to e+ery person from whose income the ta$ has been deducted or in respect of
whose income the ta$ has been paid a statement in the prescribed form specifyin5 the
amount of ta$ deducted or paid and such other particulars as may be prescribed(
"4
2
Meaning of person responsible for paying.
204. >or the purposes of
74
-the fore5oin5 pro+isions of this .hapter2 and
7'
section 274 %
the e$pression person responsible for payin5 means
i! in the case of payments of income char5eable under the head *alaries% other
than payments by the .entral ;o+ernment or the ;o+ernment of a *tate% the
employer himself or% if the employer is a company% the company itself%
includin5 the principal officer thereof1
ii! in the case of payments of income char5eable under the head Interest on
securities% other than payments made by or on behalf of the .entral
;o+ernment or the ;o+ernment of a *tate% the local authority% corporation or
company% includin5 the principal officer thereof1
76
-iia! in the case of any sum payable to a non#resident Indian% bein5 any sum
representin5 consideration for the transfer by him of any forei5n e$chan5e
asset% which is not a short#term capital asset% the authorised dealer responsible
for remittin5 such sum to the non#resident Indian or for creditin5 such sum to
his Aon#resident E$ternal! "ccount maintained in accordance with the >orei5n
E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!% and any rules made thereunder12
iii!
77
-in the case of credit% or% as the case may be% payment2 of any other sum
char5eable under the pro+isions of this "ct% the payer himself% or% if the payer is
a company% the company itself includin5 the principal officer thereof(
7&
a! non#resident Indian and forei5n e$chan5e asset shall ha+e the meanin5s
assi5ned to them in .hapter /II#"1
b! authorised dealer
&8
shall ha+e the meanin5 assi5ned to it in clause b! of section
2 of the >orei5n E$chan5e Re5ulation "ct% 1&6) 3' of 1&6)!(2
Bar against direct demand on assessee.
205. Fhere ta$ is deductible at the source under
&1
.hapter2% the assessee shall not be called upon to pay the ta$ himself to the e$tent to
which ta$ has been deducted from that income(
92
-Persons deducting tax to furnish prescribed returns.
&)
206.
&3
-1!2 The prescribed person
&4
in the case of e+ery office of ;o+ernment% the
principal officer in the case of e+ery company% the prescribed person
&4
in the case of
e+ery local authority or other public body or association% e+ery pri+ate employer and
e+ery other person responsible for deductin5 ta$
&4a
be!ore the 1st da+ o! April) 2$$5]
under the fore5oin5 pro+isions of this .hapter
&'
-shall% within the prescribed time after
the end of each financial year% prepare and deli+er or cause to be deli+ered2 to the
&6

&7
-or such other authority or a5ency as may be
prescribed2% such returns
&&
in such form and +erified in such manner and settin5 forth
such particulars as may be prescribed:2
#"
-Provided that the Board may% if it considers necessary or e$pedient so to do% frame a
scheme
99a
for the purposes of filin5 such returns with such other authority or a5ency
referred to in this sub#section(2
1
-2! Fithout pre:udice to the pro+isions of sub#section 1!% the person responsible for
deductin5 ta$ under the fore5oin5 pro+isions of this .hapter other than
2
-the prescribed
person in the case of e+ery office of the ;o+ernment and2 the principal officer in the case
of e+ery company may% at his option% deli+er or cause to be deli+ered such return to the
prescribed income#ta$ authority in accordance with such scheme as may be specified by
the Board in this behalf% by notification in the <fficial ;a=ette
3
% and sub:ect to such
conditions as may be specified therein% on or before the prescribed time after the end of
each financial year% on a floppy% dis9ette% ma5netic cartrid5e tape% .?#R<B or any other
computer readable media hereinafter referred to as the computer media! and in the
manner as may be specified in that scheme :
4
-Provided that the prescribed person in the case of e+ery office of ;o+ernment and the
principal officer in the case of e+ery company responsible for deductin5 ta$ under the
fore5oin5 pro+isions of this .hapter shall% deli+er or cause to be deli+ered% within the
prescribed time after the end of each financial year% such returns on computer media
under the said scheme(2
)! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in force% a
return filed on computer media shall be deemed to be a return for the purposes of this
section and the rules made thereunder and shall be admissible in any proceedin5s
thereunder% without further proof of production of the ori5inal% as e+idence of any
contents of the ori5inal or of any fact stated therein(
3! Fhere the "ssessin5 <fficer considers that the return deli+ered or caused to be
deli+ered under sub#section 2! is defecti+e% he may intimate the defect to the person
responsible for deductin5 ta$ or the principal officer in the case of a company% as the case
may be% and 5i+e him an opportunity of rectifyin5 the defect within a period of fifteen
days from the date of such intimation or within such further period which% on an
application made in this behalf% the "ssessin5 <fficer may% in his discretion% allow1 and if
the defect is not rectified within the said period of fifteen days or% as the case may be% the
further period so allowed% then% notwithstandin5 anythin5 contained in any other
pro+ision of this "ct% such return shall be treated as an in+alid return and the pro+isions
of this "ct shall apply as if such person had failed to deli+er the return(2
4
-Furnishing of quarterly return in respect of payment of interest to residents
without deduction of tax.
206A. 1! "ny ban9in5 company or co#operati+e society or public company referred to
in the pro+iso to clause i! of sub#section )! of section 1&3" responsible for payin5 to a
resident any income not e$ceedin5 fi+e thousand rupees by way of interest other than
interest on securities!% shall prepare ,uarterly returns for the period endin5 on the )8th
@une% the )8th *eptember% the )1st ?ecember and the )1st Barch in each financial year
and deli+er or cause to be deli+ered to the prescribed income#ta$ authority
4a
or the person
authorised by such authority the ,uarterly returns as aforesaid% in the prescribed form
4b
%
+erified in such manner and within such time as may be prescribed% on a floppy% dis9ette%
ma5netic cartrid5e tape% .?#R<B or any other computer readable media(
2! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% re,uire any
person other than a person mentioned in sub#section 1! responsible for payin5 to a
resident any income liable for deduction of ta$ at source under .hapter /0II% to prepare
and deli+er or cause to be deli+ered ,uarterly returns in the prescribed form and +erified
in such manner and within such time as may be prescribed% to the prescribed income#ta$
authority or the person authorised by such authority on a floppy% dis9ette% ma5netic
cartrid5e tape% .?#R<B or any other computer readable media(2
Person paying dividend to certain residents without deduction of tax to furnish
prescribed return.
206B.
'
-/mitted b+ the 0inance *&o. 2( Act) 1##6) w.e.!. 1-1$-1##6.2
6
-BB.'ollection at source
Profits and gains from the business of trading in alcoholic liquor, forest produce,
scrap, etc.
7
206C.
&
-
18
1! E+ery person% bein5 a seller shall% at the time of debitin5 of the amount
payable by the buyer to the account of the buyer or at the time of receipt of such amount
11
from the said buyer in cash or by the issue of a che,ue or draft or by any other mode%
whiche+er is earlier% collect from the buyer of any 5oods of the nature specified in
column 2! of the Table below% a sum e,ual to the percenta5e% specified in the
correspondin5 entry in column )! of the said Table% of such amount as income#ta$:
12
-7AB>E
<3.
&o
&ature o! contract or licence or lease etc. Dercentage
*1( *2( *3(
i! "lcoholic li,uor for human consumption and tendu
lea+es
Ten per cent
ii! Tendulea+es >i+e per cent(
iii! Timber obtained under a forest lease Two and one#half per
cent(
i%! Timber obtained by any mode other than under a forest
lease
Two and one#half per
cent(
%! "ny other forest produce not bein5 timber or tendu
lea+es
Two and one#half per
cent(
%i! *crap one per cent :2
1)
-Provided that e+ery person% bein5 a seller shall at the time% durin5 the period
be5innin5 on the 1st day of @une% 288) and endin5 on the day immediately precedin5 the
date on which the Ta$ation Gaws "mendment! "ct% 288) comes into force% of debitin5
of the amount payable by the buyer to the account of the buyer or of receipt of such
amount from the said buyer in cash or by the issue of a che,ue or draft or by any other
mode% whiche+er is earlier% collect from the buyer of any 5oods of the nature specified in
column 2! of the Table as it stood immediately before the 1st day of @une% 288)% a sum
e,ual to the percenta5e% specified in the correspondin5 entry in column )! of the said
Table% of such amount as income#ta$ in accordance with the pro+isions of this section as
they stood immediately before the 1st day of @une% 288)(22
13
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% no collection of ta$ shall
be made in the case of a buyer% who is resident in India% if such buyer furnishes to the
person responsible for collectin5 ta$% a declaration in writin5 in duplicate in the
prescribed form
14
and +erified in the prescribed manner to the effect that the 5oods
referred to in column 2! of the aforesaid Table are to be utilised for the purposes of
manufacturin5% processin5 or producin5 articles or thin5s and not for tradin5 purposes(
1B! The person responsible for collectin5 ta$ under this section shall deli+er or cause to
be deli+ered to the .hief .ommissioner or .ommissioner one copy of the declaration
referred to in sub#section 1"! on or before the se+enth day of the month ne$t followin5
the month in which the declaration is furnished to him(2
16
-1.! E+ery person% who 5rants a lease or a licence or enters into a contract or otherwise
transfers any ri5ht or interest either in whole or in part in any par9in5 lot or toll pla=a or
mine or ,uarry% to another person% other than a public sector company hereafter in this
section referred to as licensee or lessee! for the use of such par9in5 lot or toll pla=a or
mine or ,uarry for the purpose of business shall% at the time of debitin5 of the amount
payable by the licensee or lessee to the account of the licensee or lessee or at the time of
receipt of such amount from the licensee or lessee in cash or by the issue of a che,ue or
draft or by any other mode% whiche+er is earlier% collect from the licensee or lessee of any
such licence% contract or lease of the nature specified in column 2! of the Table below% a
sum e,ual to the percenta5e% specified in the correspondin5 entry in column )! of the
said Table% of such amount as income#ta$:
T"BGE
<3. &o &ature o! contract or licence or lease etc. Dercentage
*1( *2( *3(
i! Par9inlot Two per cent
ii! Toll pla=a Two per cent
iii! Binini5 and ,uarryin5 Two per cent2
2! The power to reco+er ta$ by collection under sub#section 1!
16
-or sub#section 1.!2
shall be without pre:udice to any other mode of reco+ery(
)! "ny person collectin5 any amount under sub#section 1!
16
-or sub#section 1.!2 shall
pay within
17
-the prescribed time2 the amount so collected to the credit of the .entral
;o+ernment or as the Board directs :
1&
-Provided that the person collectin5 ta$ on or after the 1st day of "pril% 2884 in
accordance with the fore5oin5 pro+isions of this section shall% after payin5 the ta$
collected to the credit of the .entral ;o+ernment within the prescribed time% prepare
,uarterly statements for the period endin5 on the )8th @une% the )8th *eptember% the )1st
?ecember and the )1st Barch in each financial year and deli+er or cause to be deli+ered
to the prescribed income#ta$ authority
1&a
% or the person authorised by such authority% such
statement in such form and +erified in such manner and settin5 forth such particulars and
within such time as may be prescribed(
28
2
3! "ny amount collected in accordance with the pro+isions of this section and paid under
sub#section )! shall be deemed as payment of ta$ on behalf of the person from whom the
amount has been collected and credit shall be 5i+en to him for the amount so collected on
the production of the certificate furnished under sub#section 4! in the assessment made
under this "ct for the assessment year for which such income is assessable :
21
-Provided that where any amount is collected in accordance with the pro+isions of this
section on or after the 1st day of "pril%
22
2$$"] and paid under sub#section )! to the
credit of the .entral ;o+ernment% the amount of ta$ collected and specified in the
statement referred to in the second pro+iso to sub#section 4! shall be deemed as payment
of ta$ on behalf of the person from whom the amount has been collected and credit shall
be 5i+en to him for the amount so collected in the assessment made under this "ct for the
assessment year for which such income is assessable without the production of
certificate(2
4! E+ery person collectin5 ta$ in accordance with the pro+isions of this section shall
within
2)
-such period as may be prescribed
23
from the time of debit2 or receipt of the
amount furnish to the buyer
24
-or licensee or lessee2 to whose account such amount is
debited or from whom such payment is recei+ed% a certificate to the effect that ta$ has
been collected% and specifyin5 the sum so collected% the rate at which the ta$ has been
collected and such other particulars as may be prescribed
23
:
2'
-Provided that no certificate may be furnished in a case where ta$ has been collected in
accordance with the fore5oin5 pro+isions of this section on or after the 1st day of "pril%
26
2$$"] :
Provided further that the prescribed income#ta$ authority or the person authorised by
such authority referred to in sub#section )! shall% within the prescribed time after the end
of each financial year
27a
beginning on or a!ter the 1st da+ o! April) 2$$"]% prepare and
deli+er to the buyer referred to in sub#section 1! or% as the case may be% to the licensee or
lessee referred to in sub#section 1.!% a statement in the prescribed form
27
specifyin5 the
amount of ta$ collected and such other particulars as may be prescribed(2
2&
-4"! E+ery person collectin5 ta$
2&a
be!ore the 1st da+ o! April) 2$$5] in accordance
with the pro+isions of this section shall
)8
-prepare within the prescribed time after the end
of each financial year2% and deli+er or cause to be deli+ered to the prescribed income#ta$
authority
)1

)2
-or such other authority or a5ency as may be prescribed2 such returns in such
form and +erified in such manner and settin5 forth such particulars and within such time
))
:2
34
-Provided that the Board may% if it considers necessary or e$pedient so to do% frame a
scheme
33a
for the purposes of filin5 such returns with such other authority or a5ency
referred to in this sub#section(2
35
-4B! Fithout pre:udice to the pro+isions of sub#section 4"!% any person collectin5 ta$%
other than in a case where the seller is a company% the .entral ;o+ernment or a *tate
;o+ernment% may at his option% deli+er or cause to be deli+ered such return to the
31
in accordance with such scheme
35a
as may be specified
by the Board in this behalf% by notification in the <fficial ;a=ette% and sub:ect to such
conditions as may be specified therein% on or before the prescribed time after the end of
each financial year% on a floppy% dis9ette% ma5netic cartrid5e tape% .?#R<B or any other
computer readable media hereinafter referred to as the computer media! and in the
manner as may be specified in that scheme
36
:
Provided that where the person collectin5 ta$ is a company or the .entral ;o+ernment or
a *tate ;o+ernment% such person shall% in accordance with the pro+isions of this section%
deli+er or cause to be deli+ered% within the prescribed time after the end of each financial
year% such returns on computer media under the said scheme(
4.! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in force% a
return filed on computer media shall be deemed to be a return for the purposes of sub#
section 4"! and the rules made thereunder and shall be admissible in any proceedin5s
made thereunder% without further proof of production of the ori5inal% as e+idence of any
contents of the ori5inal or of any facts stated therein(
4?! Fhere the "ssessin5 <fficer considers that the return deli+ered or caused to be
deli+ered under sub#section 4B! is defecti+e% he may intimate the defect to the person
collectin5 ta$ and 5i+e him an opportunity of rectifyin5 the defect within a period of
fifteen days from the date of such intimation or within such further period which% on an
application made in this behalf% the "ssessin5 <fficer may% in his discretion% allow1 and if
the defect is not rectified within the said period of fifteen days or% as the case may be% the
further period so allowed% then% notwithstandin5 anythin5 contained in any other
pro+ision of this "ct% such return shall be treated as an in+alid return and the pro+isions
of this "ct shall apply as if such person had failed to deli+er the return(2
'! "ny person responsible for collectin5 the ta$ who fails to collect the ta$ in
accordance with the pro+isions of this section% shall% notwithstandin5 such failure% be
liable to pay the ta$ to the credit of the .entral ;o+ernment in accordance with the
pro+isions of sub#section )!(
The following sub-section (6A) shall be inserted after sub-section (6) of section 206C
by the Finance Act, 2006, w.e.f. 1-4-2007 :
*6A( 3! an+ person responsible !or collecting tax in accordance with the pro%isions o! this
section does not collect the whole or an+ part o! the tax or a!ter collecting) !ails to pa+
the tax as re2uired b+ or under this Act) he shall) without pre4udice to an+ other
conse2uences which he ma+ incur) be deemed to be an assessee in de!ault in respect o!
the taxA
Provided that no penalt+ shall be charged under section 221 !rom such person unless the
Assessing /!!icer is satis!ied that the person has without good and su!!icient reasons
!ailed to collect and pa+ the tax.
6! Fithout pre:udice to the pro+isions of sub#section '!% if the
)'a
seller] does not collect
the ta$ or after collectin5 the ta$ fails to pay it as re,uired under this section% he shall be
liable to pay simple interest at the rate of
)6
-one2 per cent per month or part thereof on the
amount of such ta$ from the date on which such ta$ was collectible to the date on which
the ta$ was actually paid
)6a
and such interest shall be paid be!ore !urnishing the
2uarterl+ statement !or each 2uarter in accordance with the pro%isions o! sub-section
*3(](
7! Fhere the ta$ has not been paid as aforesaid% after it is collected% the amount of the
ta$ to5ether with the amount of simple interest thereon referred to in sub#section 6! shall
be a char5e upon all the assets of the
)6b
seller](2
)7
-&! Fhere the "ssessin5 <fficer is satisfied that the total income of the buyer
)&
-or
licensee or lessee2 :ustifies the collection of the ta$ at any lower rate than the rele+ant rate
specified in sub#section 1!
)&
-or sub#section 1.!2% the "ssessin5 <fficer shall% on an
application
38
made by the buyer
31
-or licensee or lessee2 in this behalf% 5i+e to him a
certificate for collection of ta$ at such lower rate than the rele+ant rate specified in sub#
section 1!
31
-or sub#section 1.!2(
18! Fhere a certificate under sub#section &! is 5i+en% the person responsible for
collectin5 the ta$ shall% until such certificate is cancelled by the "ssessin5 <fficer% collect
the ta$ at the rates specified in such certificate(
11! The Board may% ha+in5 re5ard to the con+enience of assessees and the interests of
certificate under sub#section &! and the conditions sub:ect to which such certificate may
32
a! buyer means a person who obtains in any sale% by way of auction% tender or any
other mode% 5oods of the nature specified in the Table in sub#section 1! or the
ri5ht to recei+e any such 5oods but does not include%
3)
-i! a public sector company% the .entral ;o+ernment% a *tate ;o+ernment% and
an embassy% a hi5h commission% le5ation% commission% consulate and the
trade representation% of a forei5n *tate and a club1 or
ii! a buyer in the retail sale of such 5oods purchased by him for personal
consumption12
33
-b! scrap means waste and scrap from the manufacture or mechanical wor9in5 of
materials which is definitely not usable as such because of brea9a5e% cuttin5 up%
wear and other reasons1
c! seller means the .entral ;o+ernment% a *tate ;o+ernment or any local
authority or corporation or authority established by or under a .entral% *tate or
Pro+incial "ct% or any company or firm or co#operati+e society and also
includes an indi+idual or a Cindu undi+ided family whose total sales% 5ross
receipts or turno+er from the business or profession carried on by him e$ceed
the monetary limits specified under clause a! or clause b! of section 33"B
durin5 the financial year immediately precedin5 the financial year in which the
5oods of the nature specified in the Table in sub#section 1! are sold(22
34
-Tax collection account number.
206CA. 1! E+ery person collectin5 ta$ in accordance with the pro+isions of section
28'.% shall% within such time as may be prescribed
3'
% apply to the "ssessin5 <fficer for
the allotment of a ta$#collection account number
36
(
2! Fhere a ta$ collection account number has been allotted to a person% such person
shall ,uote such number
a! in all challans for the payment of any sum in accordance with the pro+isions of
sub#section )! of section 28'.1
b! in all certificates furnished under sub#section 4! of section 28'.1
c! in all the returns deli+ered in accordance with the pro+isions of sub#section
4"! or sub#section 4B! of section 28'. to any income#ta$ authority1 and
d! in all other documents pertainin5 to such transactions as may be prescribed in
the interest of re+enue:2
37
-Provided that the pro+isions of this section shall not apply on or after the 1st day of
<ctober% 2883(2
'.Ad%ance pa+ment o! tax
49
-Liability for payment of advance tax.
207. Ta$ shall be payable in ad+ance durin5 any financial year% in accordance with the
pro+isions of sections 287 to 21& both inclusi+e!% in respect of the total income of the
assessee which would be char5eable to ta$ for the assessment year immediately followin5
that financial year% such income bein5 hereafter in this .hapter referred to as current
income
48
(2
51
-Conditions of liability to pay advance tax.
208. "d+ance ta$ shall be payable durin5 a financial year in e+ery case where the
amount of such ta$ payable by the assessee durin5 that year% as computed in accordance
with the pro+isions of this .hapter% is
42
-fi+e thousand2 rupees or more(2
Computation of advance tax.
209.
4)
-1! The amount of ad+ance ta$ payable by an assessee in the financial year shall%
sub:ect to the pro+isions of sub#sections 2! and )!% be computed as follows% namely :
a! where the calculation is made by the assessee for the purposes of payment of
ad+ance ta$ under sub#section 1! or sub#section 2! or sub#section 4! or sub#
section '! of section 218% he shall first estimate his current income and
income#ta$ thereon shall be calculated at the rates in force in the financial year1
b! where the calculation is made by the "ssessin5 <fficer for the purpose of
ma9in5 an order under sub#section )! of section 218% the total income of the
latest pre+ious year in respect of which the assessee has been assessed by way
of re5ular assessment or the total income returned by the assessee in any return
of income furnished by him for any subse,uent pre+ious year% whiche+er is
hi5her% shall be ta9en and income#ta$ thereon shall be calculated at the rates in
force in the financial year1
c! where the calculation is made by the "ssessin5 <fficer for the purpose of
ma9in5 an amended order under sub#section 3! of section 218% the total
income declared in the return furnished by the assessee for the later pre+ious
year% or% as the case may be% the total income in respect of which the re5ular
assessment% referred to in that sub#section has been made% shall be ta9en and
income#ta$ thereon shall be calculated at the rates in force in the financial year1
d! the income#ta$ calculated under clause a! or clause b! or clause c! shall% in
each case% be reduced by the amount of income#ta$ which would be deductible
43
-or collectible2 at source durin5 the said financial year under any pro+ision of
this "ct from any income as computed before allowin5 any deductions
admissible under this "ct! which has been ta9en into account in computin5 the
current income or% as the case may be% the total income aforesaid1 and the
amount of income#ta$ as so reduced shall be the ad+ance ta$ payable(2
44
-2! Fhere the >inance "ct of the rele+ant year pro+ides that% in the case of any class of
assessees% net a5ricultural income as defined in that "ct! shall be ta9en into account for
the purposes of computin5 ad+ance ta$% then% the net a5ricul#tural income to be ta9en into
account in the case of any assessee fallin5 in that class% shall be
a! in cases
4'
-where the "ssessin5 <fficer ma9es an order under sub#section )! or
sub#section 3! of section 2182%
i! if the total income of the latest pre+ious year in respect of which the
assessee has been assessed by way of re5ular assessment forms the basis of
computation of ad+ance ta$ payable by him% the net a5ricultural income
which has been ta9en into account for the purposes of char5in5 income#ta$
for the assessment year rele+ant to that pre+ious year1 or
46
-ii! if the total income declared by the assessee for the later pre+ious year
referred to in sub#section 3! of section 218 forms the basis of computation
of ad+ance ta$% the net a5ricultural income as returned by the assessee in
the return of income for the assessment year rele+ant to such later pre+ious
year12
47
-b! in cases where the ad+ance ta$ is paid by the assessee on the basis of his
estimate of his current income under sub#section 1! or sub#section 2! or sub#
section 4! or sub#section '! of section 218% the net a5ricultural income% as
estimated by him% of the period which would be the pre+ious year for the
immediately followin5 assessment year(2
)! Fhere the >inance "ct of the rele+ant year specifies any separate rate or rates for the
purposes of computin5 ad+ance ta$ in the case of e+ery Cindu undi+ided family which
has at least one member whose total income of the pre+ious year e$ceeds the ma$imum
amount not char5eable to income#ta$ in his case% then% the
4&
-"ssessin52 <fficer shall% for
ma9in5 an order under
'8
-sub#section )! or sub#section 3! of2 section 218 in the case of
any such Cindu undi+ided family% compute sub:ect to the pro+isions of section 1'3! the
ad+ance ta$ at such rate or rates
a! in a case where the total income of the latest pre+ious year in respect of which
the Cindu undi+ided family has been assessed by way of re5ular assessment
forms the basis of computation of ad+ance ta$% if the total income of any
member of the family for the assessment year rele+ant to such latest pre+ious
year e$ceeds the ma$imum amount not char5eable to income#ta$ in his case1
b! in a case where the total income of the pre+ious year
'1
-in respect of which a
return of income is furnished by the Cindu undi+ided family under section 1)&
or in response to a notice under sub#section 1! of section 1322 forms the basis
of computation of ad+ance ta$% if the total income of any member of the family
for the assessment year rele+ant to such pre+ious year e$ceeds the ma$imum
amount not char5eable to income#ta$ in his case(
63
-Payment of advance tax by the assessee of his own accord or in pursuance of
order of Assessing Officer.
210. 1! E+ery person who is liable to pay ad+ance ta$ under section 287 whether or
not he has been pre+iously assessed by way of re5ular assessment! shall% of his own
accord% pay% on or before each of the due dates specified in section 211% the appropriate
percenta5e% specified in that section% of the ad+ance ta$ on his current income% calculated
in the manner laid down in section 28&(
2! " person who pays any instalment or instalments of ad+ance ta$ under sub#section
1!% may increase or reduce the amount of ad+ance ta$ payable in the remainin5
instalment or instalments to accord with his estimate of his current income and the
ad+ance ta$ payable thereon% and ma9e payment of the said amount in the remainin5
instalment or instalments accordin5ly(
)! In the case of a person who has been already assessed by way of re5ular assessment in
respect of the total income of any pre+ious year
'3
-***2% the "ssessin5 <fficer% if he is of
opinion that such person is liable to pay ad+ance ta$% may% at any time durin5 the
financial year but not later than the last day of >ebruary% by order in writin5% re,uire such
person to pay ad+ance ta$ calculated in the manner laid down in section 28&% and issue to
such person a notice of demand under section 14' specifyin5 the instalment or
instalments in which such ta$ is to be paid(
3! If% after the ma9in5 of an order by the "ssessin5 <fficer under sub#section )! and at
any time before the 1st day of Barch% a return of income is furnished by the assessee
under section 1)& or in response to a notice under sub#section 1! of section 132% or a
re5ular assessment of the assessee is made in respect of a pre+ious year later than that
referred to in sub#section )!% the "ssessin5 <fficer may ma9e an amended order and
issue to such assessee a notice of demand under section 14' re,uirin5 the assessee to pay%
on or before the due date or each of the due dates specified in section 211 fallin5 after the
date of the amended order% the appropriate percenta5e% specified in section 211% of the
ad+ance ta$ computed on the basis of the total income declared in such return or in
respect of which the re5ular assessment aforesaid has been made(
4! " person who is ser+ed with an order of the "ssessin5 <fficer under sub#section )!
or an amended order under sub#section 3! may% if in his estimation the ad+ance ta$
payable on his current income would be less than the amount of the ad+ance ta$ specified
in such order or amended order% send an intimation in the prescribed form
'4
to the
"ssessin5 <fficer to that effect and pay such ad+ance ta$ as accords with his estimate%
calculated in the manner laid down in section 28&% at the appropriate percenta5e thereof
specified in section 211% on or before the due date or each of the due dates specified in
section 211 fallin5 after the date of such intimation(
'! " person who is ser+ed with an order of the "ssessin5 <fficer under sub#section )!
or amended order under sub#section 3! shall% if in his estimation the ad+ance ta$ payable
on his current income would e$ceed the amount of ad+ance ta$ specified in such order or
amended order or intimated by him under sub#section 4!% pay on or before the due date
of the last instalment specified in section 211% the appropriate part or% as the case may be%
the whole of such hi5her amount of ad+ance ta$ as accords with his estimate% calculated
in the manner laid down in section 28&(2
66
-Instalments of advance tax and due dates.
67
211.
'7
-1! "d+ance ta$ on the current income calculated in the manner laid down in
section 28& shall be payable by
a! all the companies% who are liable to pay the same% in four instalments durin5
each financial year and the due date of each instalment and the amount of such
instalment shall be as specified in Table I below :
T"BGE I
1ue date o! installment Amount pa+able
<n or before the 14th @une Aot less than fifteen per cent of such
ad+ance ta$(
<n or before the 14th *eptember Aot less than forty#fi+e per cent of such
ad+ance ta$% as reduced by the amount% if
any% paid in the earlier instalment(
<n or before the 14th ?ecember Aot less than se+enty#fi+e per cent of
such ad+ance ta$% as reduced by the
amount or amounts% if any% paid in the
earlier instalment or instalments(
<n or before the 14th Barch The whole amount of such ad+ance ta$ as
reduced by the amount or amounts% if
any% paid in the earlier instalment or
instalments1
b! all the assessees other than companies!% who are liable to pay the same% in
three instalments durin5 each financial year and the due date of each instalment
and the amount of such instalment shall be as specified in Table II below :
T"BGE II
1ue date o! installment Amount pa+able
<n or before the 14th *eptember Aot less than thirty per cent of such
ad+ance ta$(
<n or before the 14th ?ecember Aot less than si$ty per cent of such
ad+ance ta$% as reduced by the amount %
if any% paid in the earlier instalment or
instalments(
<n or before the 14th Barch The whole amount of such ad+ance ta$ as
reduced by the amount or amounts% if
any% paid in the earlier instalment or
instalments(
Provided that any amount paid by way of ad+ance ta$ on or before the )1st day of Barch
shall also be treated as ad+ance ta$ paid durin5 the financial year endin5 on that day for
all the purposes of this "ct(2
2! If the notice of demand issued under section 14' in pursuance of an order of the
"ssessin5 <fficer under sub#section )! or sub#section 3! of section 218 is ser+ed after
any of the due dates specified in sub#section 1!% the appropriate part or% as the case may
be% the whole of the amount of the ad+ance ta$ specified in such notice shall be payable
on or before each of such of those dates as fall after the date of ser+ice of the notice of
demand(2
70
Interest payable by Government.
61
214. 1! The .entral ;o+ernment shall pay simple interest at
62
-fifteen2 per cent per
annum on the amount by which the a55re5ate sum of any instalments of ad+ance ta$ paid
durin5 any financial year in which they are payable under sections 286 to 21) e$ceeds the
amount of the
6)
-assessed ta$2 from the 1st day of "pril ne$t followin5 the said financial
year to the date of the re5ular assessment for the assessment year immediately followin5
the said financial year% and where any such instalment is paid after the e$piry of the
financial year% durin5 which it is payable by reason of the pro+isions of section 21)%
interest as aforesaid shall also be payable on that instalment from the date of its payment
to the date of re5ular assessment :
63
-Provided that in respect of any amount refunded on a pro+isional assessment under
section 131"% no interest shall be paid for any period after the date of such pro+isional
assessment(2
64
-1"! Fhere as a result of an order under section 136 or section 143 or section 144 or
6'
amount on which interest was payable under sub#section 1! has been increased or
reduced% as the case may be% the interest shall be increased or reduced accordin5ly% and in
a case where the interest is reduced% the
66
-"ssessin52 <fficer shall ser+e on the assessee%
a notice of demand in the prescribed form specifyin5 the amount of the e$cess interest
payable and re,uirin5 him to pay such amount 1 and such notice of demand shall be
deemed to be a notice under section 14' and the pro+isions of this "ct shall apply
accordin5ly(2
2! <n any portion of such amount which is refunded under this .hapter% interest shall be
payable only up to the date on which the refund was made(
67
-)! This section and sections 214% 21' and 216 shall not apply in respect of any
assessment for the assessment year commencin5 on the 1st day of "pril% 1&7&% or any
subse,uent assessment year and% in the application of the said sections to the assessment
for any earlier assessment year% references therein -e$cept in sub#section 1"! and sub#
section )! of section 2142 to the other pro+isions of this "ct shall be construed as
references to those pro+isions as for the time bein5 in force and applicable to the rele+ant
assessment year(2
6&
-Explanation 1.In this section% assessed ta$ shall ha+e the same meanin5 as in sub#
section 4! of section 214(
Explanation 2.Fhere% in relation to an assessment year% an assessment is made for the
first time under section 136% the assessment so made shall be re5arded as a re5ular
assessment for the purposes of this section(2
Interest payable by assessee.
78
215.
71
-
72
1! Fhere% in any financial year% an assessee has paid
7)
-ad+ance ta$ under
section 28&" or section 212 on the basis of his own estimate includin5 re+ised
estimate!2% and the ad+ance ta$ so paid is less than se+enty#fi+e per cent of the assessed
ta$% simple interest at the rate of
73
-fifteen2 per cent per annum from the 1st day of "pril
ne$t followin5 the said financial year up to the date of the re5ular assessment shall be
payable by the assessee upon the amount by which the ad+ance ta$ so paid falls short of
the assessed ta$ :2
74
-Provided that in the case of an assessee% bein5 a company% the pro+isions of this sub#
section shall ha+e effect as if for the words se+enty#fi+e per cent% the words ei5hty#three
and one#third per cent had been substituted(2
7'
-2! Fhere before the date of completion of a re5ular assessment% ta$ is paid by the
assessee under section 138" or otherwise%
i! interest shall be calculated in accordance with the fore5oin5 pro+ision up to the
date on which the ta$ is so paid 1 and
ii! thereafter% interest shall be calculated at the rate aforesaid on the amount by
which the ta$ as so paid in so far as it relates to income sub:ect to ad+ance ta$!
falls short of the assessed ta$(2
76
-)! Fhere as a result of an order under section 136 or section 143 or section 144 or
77
amount on which interest was payable under sub#section 1! has been increased or
i! in a case where the interest is increased% the
7&
-"ssessin52 <fficer shall ser+e on
the assessee% a notice of demand in the prescribed form specifyin5 the sum
payable% and such notice of demand shall be deemed to be a notice under
section 14' and the pro+isions of this "ct shall apply accordin5ly 1
ii! in a case where the interest is reduced% the e$cess interest paid% if any% shall be
refunded(2
3! In such cases and under such circumstances as may be prescribed
&8
% the
7&
-"ssessin52
<fficer may reduce or wai+e the interest payable by the assessee under this section(
&1
-4! In this section and sections 216 and 26)% assessed ta$ means the ta$ determined on
the basis of the re5ular assessment reduced by the amount of ta$ deductible in
accordance with the pro+isions of sections 1&2 to 1&3% section 1&3"
&2
-% section 1&3.2
&)
-%
section 1&3?2
&3
-% section 1&4 and section 1&'"2 so far as such ta$ relates to income
sub:ect to ad+ance ta$ and so far as it is not due to +ariations in the rates of ta$ made by
the >inance "ct enacted for the year for which the re5ular assessment is made(2
96
Interest payable by assessee in case of under-estimate, etc.
&6
216. Fhere% on ma9in5 the re5ular assessment% the
&7
-"ssessin52 <fficer finds that any
assessee has
&&
-a! under
1
-section 28&" or section 2122 under#estimated the ad+ance ta$ payable
by him and thereby reduced the amount payable in either of the first two
instalments 1 or2
b! under section 21) wron5ly deferred the payment of ad+ance ta$ on a part of his
income 1
he may direct that the assessee shall pay simple interest at
2
-fifteen2 per cent per annum
i! in the case referred to in clause a!% for the period durin5 which the payment
was deficient% on the difference between the amount paid in each such
instalment and the amount which should ha+e been paid% ha+in5 re5ard to the
a55re5ate ad+ance ta$ actually paid durin5 the year 1 and
ii! in the case referred to in clause b!% for the period durin5 which the payment of
ad+ance ta$ was so deferred(
Explanation.>or the purposes of this section% any instalment due before the e$piry of si$
months from the commencement of the pre+ious year in respect of which it is to be paid
shall be deemed to ha+e become due fifteen days after the e$piry of the said si$ months(
the purposes of this section and sections 21'% 216 and 26)(2
Interest payable by assessee when no estimate made.
)
217.
3
-1! Fhere% on ma9in5 the re5ular assessment%
4
-the
'
-"ssessin52 <fficer finds
a! that any such person as is referred to in clause a! of sub#section 1! of section
28&" has not sent the statement referred to in that clause or the estimate in lieu
of such statement referred to in sub#section 2! of that section 1 or
b! that any such person as is referred to in clause b! of sub#section 1! of section
28&" has not sent the estimate referred to in that clause%2
simple interest at the rate of
6
-fifteen2 per cent per annum from the 1st day of "pril ne$t
followin5 the financial year in which the ad+ance ta$ was payable in accordance with the
said
7
-sub#section 1! or sub#section 2!2 up to the date of the re5ular assessment shall be
payable by the assessee upon the amount e,ual to the assessed ta$ as defined in sub#
section 4! of section 214(2
&
-1"! Fhere% on ma9in5 the re5ular assessment% the
18
-"ssessin52 <fficer finds that
11
-any person who is re,uired to send an estimate under sub#section 3! of section 28&"
or2 any such person as is referred to in sub#section )"! of section 212 has not sent the
estimate referred to therein% simple interest at the rate of
12
-fifteen2 per cent per annum
from the 1st day of "pril ne$t followin5 the financial year in which the ad+ance ta$ was
payable in accordance with the said
1)
-sub#section 3! or% as the case may be% sub#section
)"!2 up to the date of the re5ular assessment shall be payable by the assessee upon the
amount by which the ad+ance ta$ paid by him falls short of the assessed ta$ as defined in
sub#section 4! of section 214(2
2! The pro+isions of sub#sections 2!% )! and 3! of section 214 shall apply to interest
payable under this section as they apply to interest payable under that section(
When assessee deemed to be in default.
218.
13
-If any assessee does not pay on the date specified in sub#section 1! of section
211% any instalment of the ad+ance ta$ that he is re,uired to pay by an order of the
"ssessin5 <fficer under sub#section )! or sub#section 3! of section 218 and does not% on
or before the date on which any such instalment as is not paid becomes due% send to the
"ssessin5 <fficer an intimation under sub#section 4! of section 218 or does not pay on
the basis of his estimate of his current income the ad+ance ta$ payable by him under sub#
section '! of section 218% he shall be deemed to be an assessee in default in respect of
such instalment or instalments(2
Credit for advance tax.
219. "ny sum% other than a penalty or interest% paid by or reco+ered from an assessee as
ad+ance ta$ in pursuance of this .hapter shall be treated as a payment of ta$ in respect of
the income of the period which would be the pre+ious year for an assessment for the
assessment year ne$t followin5 the financial year in which it was payable% and credit
therefor shall be 5i+en to the assessee in the re5ular assessment(
14
-***2
1.'ollection and reco%er+
When tax payable and when assessee deemed in default.
1'
220. 1! "ny amount% otherwise than by way of ad+ance ta$% specified as payable in a
notice of demand under section 14' shall be paid within
16
-thirty2 days of the ser+ice of
the notice at the place and to the person mentioned in the notice :
Provided that% where the
17
-"ssessin52 <fficer has any
17a
reason to belie+e that it will
be
17a
detrimental to re+enue if the full period of
1&
-thirty2 days aforesaid is allowed% he
may% with the pre+ious appro+al of the
28
-@oint .ommissioner2% direct that the sum
specified in the notice of demand shall be paid within such period bein5 a period less than
the period of
21
-thirty2 days aforesaid% as may be specified by him in the notice of
demand(
22
2! If the amount specified in any notice of demand under section 14' is not paid within
the period limited under sub#section 1!% the assessee shall be liable to pay simple interest
at
2)
-
23
-one2 per cent for e+ery month or part of a month comprised in the period
commencin5 from the day immediately followin5 the end of the period mentioned in sub#
section 1! and endin5 with the day on which the amount is paid:2
24
-Provided that% where as a result of an order under section 143% or section 144% or
section 248% or section 243% or section 2'8% or section 2'2% or section 2'3
2'
-or an order of
the *ettlement .ommission under sub#section 3! of section 234?2% the amount on which
interest was payable under this section had been reduced% the interest shall be reduced
accordin5ly and the e$cess interest paid% if any% shall be refunded :2
26
-Provided further that in respect of any period commencin5 on or before the )1st day
of Barch% 1&7& and endin5 after that date% such interest shall% in respect of so much of
such period as falls after that date% be calculated at the rate of one and one#half per cent%
for e+ery month or part of a month(2
27
-2"! Aotwithstandin5 anythin5 contained in sub#section 2!%
2&
-the
)8
-.hief
.ommissioner or .ommissioner2 may2 reduce or wai+e the amount of interest
)1
-paid or2
payable by an assessee under the said sub#section if
)2
-he is satisfied2 that
i! payment of such amount
))
-has caused or2 would cause 5enuine hardship to the
assessee 1
ii! default in the payment of the amount on which interest
))
-has been paid or2 was
payable under the said sub#section was due to circumstances beyond the control
of the assessee 1 and
iii! the assessee has co#operated in any in,uiry relatin5 to the assessment or any
proceedin5 for the reco+ery of any amount due from him(2
)! Fithout pre:udice to the pro+isions contained in sub#section 2!
)3
% on an application
made by the assessee before the e$piry of the due date under sub#section 1!% the
)4
-"ssessin52 <fficer may e$tend the time for payment or allow payment by instalments%
sub:ect to such conditions as he may thin9 fit to impose in the circumstances of the case(
3! If the amount is not paid within the time limited under sub#section 1! or e$tended
under sub#section )!% as the case may be% at the place and to the person mentioned in the
said notice the assessee shall be deemed to be in default(
4! If% in a case where payment by instalments is allowed under sub#section )!% the
assessee commits defaults in payin5 any one of the instalments within the time fi$ed
under that sub#section% the assessee shall be deemed to be in default as to the whole of the
amount then outstandin5% and the other instalment or instalments shall be deemed to ha+e
been due on the same date as the instalment actually in default(
'! Fhere an assessee has presented an appeal under section 23'
)'
-or section 23'"2 the
)6
-"ssessin52 <fficer may% in his discretion and sub:ect to such conditions as he may
thin9 fit to impose in the circumstances of the case% treat the assessee as not bein5 in
default in respect of the amount in dispute in the appeal% e+en thou5h the time for
payment has e$pired% as lon5 as such appeal remains undisposed of(
6! Fhere an assessee has been assessed in respect of income arisin5 outside India in a
country the laws of which prohibit or restrict the remittance of money to India% the
)6
-"ssessin52 <fficer shall not treat the assessee as in default in respect of that part of the
ta$ which is due in respect of that amount of his income which% by reason of such
prohibition or restriction% cannot be brou5ht into India% and shall continue to treat the
assessee as not in default in respect of such part of the ta$ until the prohibition or
restriction is remo+ed(
Explanation.>or the purposes of this section% income shall be deemed to ha+e been
brou5ht into India if it has been utilised or could ha+e been utilised for the purposes of
any e$penditure actually incurred by the assessee outside India or if the income% whether
capitalised or not% has been brou5ht into India in any form(
Penalty payable when tax in default.
)7
221.
)&
-1! Fhen an assessee is in default or is deemed to be in default in ma9in5 a
payment of ta$% he shall% in addition to the amount of the arrears
38
and the amount of
interest payable under sub#section 2! of section 228% be liable% by way of penalty% to pay
such amount as the
31
-"ssessin52 <fficer may direct
32
% and in the case of a continuin5
default% such further amount or amounts as the
3)
-"ssessin52 <fficer may% from time to
time% direct% so% howe+er% that the total amount of penalty does not e$ceed the amount of
ta$ in arrears :
Provided that before le+yin5 any such penalty% the assessee shall be 5i+en a reasonable
opportunity of bein5 heard :
33
-Provided further that where the assessee pro+es to the satisfaction of the
34
-"ssessin52
<fficer that the default was for 5ood and sufficient reasons
3'
% no penalty shall be le+ied
under this section(2
36
-Explanation.>or the remo+al of doubt% it is hereby declared that an assessee shall not
cease to be liable to any penalty under this sub#section merely by reason of the fact that
before the le+y of such penalty he has paid the ta$(2
2! Fhere as a result of any final order the amount of ta$% with respect to the default in
the payment of which the penalty was le+ied% has been wholly reduced% the penalty le+ied
shall be cancelled and the amount of penalty paid shall be refunded(
Certificate to Tax Recovery Officer.
222.
37
-1! Fhen an assessee is in default or is deemed to be in default in ma9in5 a
payment of ta$% the Ta$ Reco+ery <fficer may draw up under his si5nature a statement in
the prescribed form
3&
specifyin5 the amount of arrears due from the assessee such
statement bein5 hereafter in this .hapter and in the *econd *chedule referred to as
certificate! and shall proceed to reco+er from such assessee the amount specified in the
certificate by one or more of the modes mentioned below% in accordance with the rules
laid down in the *econd *chedule2
a! attachment and sale of the assessees mo+able property 1
b! attachment and sale of the assessees immo+able property 1
c! arrest of the assessee and his detention in prison 1
d! appointin5 a recei+er for the mana5ement of the assessees mo+able and
immo+able properties(
48
-Explanation.>or the purposes of this sub#section% the assessees mo+able or immo+able
property shall include any property which has been transferred% directly or indirectly on
or after the 1st day of @une% 1&6)% by the assessee to his spouse or minor child or sons
wife or sons minor child% otherwise than for ade,uate consideration% and which is held
by% or stands in the name of% any of the persons aforesaid1 and so far as the mo+able or
immo+able property so transferred to his minor child or his sons minor child is
concerned% it shall% e+en after the date of attainment of ma:ority by such minor child or
sons minor child% as the case may be% continue to be included in the assessees mo+able or
immo+able property for reco+erin5 any arrears due from the assessee in respect of any
period prior to such date(2
41
-2! The Ta$ Reco+ery <fficer may ta9e action under sub#section 1!% notwithstandin5
that proceedin5s for reco+ery of the arrears by any other mode ha+e been ta9en(2
42
-Tax Recovery Officer by whom recovery is to be effected.
223. 1! The Ta$ Reco+ery <fficer competent to ta9e action under section 222 shall be
a! the Ta$ Reco+ery <fficer within whose :urisdiction the assessee carries on his
business or profession or within whose :urisdiction the principal place of his
business or profession is situate% or
b! the Ta$ Reco+ery <fficer within whose :urisdiction the assessee resides or any
mo+able or immo+able property of the assessee is situate%
the :urisdiction for this purpose bein5 the :urisdiction assi5ned to the Ta$ Reco+ery
<fficer under the orders or directions issued by the Board% or by the .hief .ommissioner
or .ommissioner who is authorised in this behalf by the Board in pursuance of section
128(
2! Fhere an assessee has property within the :urisdiction of more than one Ta$
Reco+ery <fficer and the Ta$ Reco+ery <fficer by whom the certificate is drawn up
a! is not able to reco+er the entire amount by sale of the property% mo+able or
immo+able% within his :urisdiction% or
b! is of the opinion that% for the purpose of e$peditin5 or securin5 the reco+ery of
the whole or any part of the amount under this .hapter% it is necessary so to do%
he may send the certificate or% where only a part of the amount is to be reco+ered% a copy
of the certificate certified in the prescribed manner
4)
and specifyin5 the amount to be
reco+ered to a Ta$ Reco+ery <fficer within whose :urisdiction the assessee resides or has
property and% thereupon% that Ta$ Reco+ery <fficer shall also proceed to reco+er the
amount under this .hapter as if the certificate or copy thereof had been drawn up by
him(2
54
-Validity of certificate and cancellation or amendment thereof.
224. It shall not be open to the assessee to dispute the correctness of any certificate drawn
up by the Ta$ Reco+ery <fficer on any 5round whatsoe+er% but it shall be lawful for the
Ta$ Reco+ery <fficer to cancel the certificate if% for any reason% he thin9s it necessary so
to do% or to correct any clerical or arithmetical mista9e therein(2
55
-Stay of proceedings in pursuance of certificate and amendment or cancellation
thereof.
225. 1! It shall be lawful for the Ta$ Reco+ery <fficer to 5rant time for the payment of
any ta$ and when he does so% he shall stay the proceedin5s for the reco+ery of such ta$
until the e$piry of the time so 5ranted(
2! Fhere the order 5i+in5 rise to a demand of ta$ for which a certificate has been drawn
up is modified in appeal or other proceedin5 under this "ct% and% as a conse,uence
thereof% the demand is reduced but the order is the sub:ect#matter of further proceedin5
under this "ct% the Ta$ Reco+ery <fficer shall stay the reco+ery of such part of the
amount specified in the certificate as pertains to the said reduction for the period for
which the appeal or other proceedin5 remains pendin5(
)! Fhere a certificate has been drawn up and subse,uently the amount of the
outstandin5 demand is reduced
4'
as a result of an appeal or other proceedin5 under this
"ct% the Ta$ Reco+ery <fficer shall% when the order which was the sub:ect#matter of such
appeal or other proceedin5 has become final and conclusi+e% amend the certificate% or
cancel it% as the case may be(2
Other modes of recovery.
226.
46
-1! Fhere no certificate has been drawn up under section 222% the "ssessin5
<fficer may reco+er the ta$ by any one or more of the modes pro+ided in this section(
1"! Fhere a certificate has been drawn up under section 222% the Ta$ Reco+ery <fficer
may% without pre:udice to the modes of reco+ery specified in that section% reco+er the ta$
by any one or more of the modes pro+ided in this section(2
2! If any assessee is in receipt of any income char5eable under the head *alaries% the
47
-"ssessin52 <fficer
4&
-or Ta$ Reco+ery <fficer2 may re,uire any person payin5 the
same to deduct from any payment subse,uent to the date of such re,uisition any arrears
of ta$ due from such assessee% and such person shall comply with any such re,uisition
and shall pay the sum so deducted to the credit of the .entral ;o+ernment or as the
Board directs :
Provided that any part of the salary e$empt from attachment in e$ecution of a decree of a
ci+il court under section '8 of the .ode of .i+il Procedure% 1&87 4 of 1&87!
'8
% shall be
e$empt from any re,uisition made under this sub#section(
)! i! The
'1
-"ssessin52 <fficer
'2
-or Ta$ Reco+ery <fficer2 may% at any time or from
time to time% by notice in writin5 re,uire any person from whom money is due or may
become due
')
to the assessee or any person who holds or may subse,uently hold money
'3
for or on account of the assessee to pay to the
'4
-"ssessin52 <fficer
''
-or Ta$ Reco+ery
<fficer2 either forthwith upon the money becomin5 due or bein5 held or at or within the
time specified in the notice not bein5 before the money becomes due or is held! so much
of the money as is sufficient to pay the amount due by the assessee in respect of arrears or
the whole of the money when it is e,ual to or less than that amount(
ii! " notice under this sub#section may be issued to any person who holds or may
subse,uently hold any money for or on account of the assessee :ointly with any other
person and for the purposes of this sub#section% the shares of the :oint holders in such
account shall be presumed% until the contrary is pro+ed% to be e,ual(
iii! " copy of the notice shall be forwarded to the assessee at his last address 9nown to
the
'4
-"ssessin52 <fficer
''
-or Ta$ Reco+ery <fficer2% and in the case of a :oint account to
all the :oint holders at their last addresses 9nown to the
'4
-"ssessin52 <fficer
''
-or Ta$
Reco+ery <fficer2(
i%! *a+e as otherwise pro+ided in this sub#section% e+ery person to whom a notice is
issued under this sub#section shall be bound to comply with such notice% and% in
particular% where any such notice is issued to a post office% ban9in5 company or an
insurer% it shall not be necessary for any pass boo9% deposit receipt% policy or any other
document to be produced for the purpose of any entry% endorsement or the li9e bein5
made before payment is made% notwithstandin5 any rule% practice or re,uirement to the
contrary(
%! "ny claim respectin5 any property in relation to which a notice under this sub#section
has been issued arisin5 after the date of the notice shall be +oid as a5ainst any demand
contained in the notice(
%i! Fhere a person to whom a notice under this sub#section is sent ob:ects to it by a
statement on oath that the sum demanded or any part thereof is not due to the assessee or
that he does not hold any money for or on account of the assessee% then nothin5 contained
in this sub#section shall be deemed to re,uire such person to pay any such sum or part
thereof% as the case may be% but if it is disco+ered that such statement was false in any
material particular% such person shall be personally liable to the
'6
-"ssessin52 <fficer
'7
-or
Ta$ Reco+ery <fficer2 to the e$tent of his own liability to the assessee on the date of the
notice% or to the e$tent of the assessees liability for any sum due under this "ct%
whiche+er is less(
%ii! The
'6
-"ssessin52 <fficer
'7
-or Ta$ Reco+ery <fficer2 may% at any time or from time
to time% amend or re+o9e any notice issued under this sub#section or e$tend the time for
ma9in5 any payment in pursuance of such notice(
%iii! The
'6
-"ssessin52 <fficer
'7
-or Ta$ Reco+ery <fficer2 shall 5rant a receipt for any
amount paid in compliance with a notice issued under this sub#section% and the person so
payin5 shall be fully dischar5ed from his liability to the assessee to the e$tent of the
amount so paid(
ix! "ny person dischar5in5 any liability to the assessee after receipt of a notice under
this sub#section shall be personally liable to the
'6
-"ssessin52 <fficer
'7
-or Ta$ Reco+ery
<fficer2 to the e$tent of his own liability to the assessee so dischar5ed or to the e$tent of
the assessees liability for any sum due under this "ct% whiche+er is less(
x! If the person to whom a notice under this sub#section is sent fails to ma9e payment in
pursuance thereof to the
'6
-"ssessin52 <fficer
'7
-or Ta$ Reco+ery <fficer2% he shall be
deemed to be an assessee in default in respect of the amount specified in the notice and
further proceedin5s may be ta9en a5ainst him for the realisation of the amount as if it
were an arrear of ta$ due from him% in the manner pro+ided in sections 222 to 224 and the
notice shall ha+e the same effect as an attachment of a debt by the Ta$ Reco+ery <fficer
in e$ercise of his powers under section 222(
3! The
'6
-"ssessin52 <fficer
'7
-or Ta$ Reco+ery <fficer2 may apply to the court in
whose custody there is money belon5in5 to the assessee for payment to him of the entire
amount of such money% or% if it is more than the ta$ due% an amount sufficient to
dischar5e the ta$(
'&
-4! The
68
-"ssessin52 <fficer
61
-or Ta$ Reco+ery <fficer2 may% if so authorised by the
62
-.hief .ommissioner or .ommissioner2 by 5eneral or special order% reco+er any arrears
of ta$ due from an assessee by distraint and sale of his mo+able property in the manner
laid down in the Third *chedule(2
Recovery through State Government.
227. If the reco+ery of ta$ in any area has been entrusted to a *tate ;o+ernment under
clause 1! of article 247 of the .onstitution% the *tate ;o+ernment may direct% with
respect to that area or any part thereof1 that ta$ shall be reco+ered therein with% and as an
addition to% any municipal ta$ or local rate% by the same person and in the same manner
as the municipal ta$ or local rate is reco+ered(
74
-Recovery of tax in pursuance of agreements with foreign countries.
228A. 1! Fhere an a5reement is entered into by the .entral ;o+ernment with the
;o+ernment of any country outside India for reco+ery of income#ta$ under this "ct and
the correspondin5 law in force in that country and the ;o+ernment of that country or any
authority under that ;o+ernment which is specified in this behalf in such a5reement
sends to the Board a certificate for the reco+ery of any ta$ due under such correspondin5
law from a person ha+in5 any property in India% the Board may forward such certificate
to any Ta$ Reco+ery <fficer within whose :urisdiction such property is situated and
thereupon such Ta$ Reco+ery <fficer shall
a! proceed to reco+er the amount specified in the certificate in the manner in
which he would proceed to reco+er the amount
64
-specified in a certificate
drawn up by him under section 22221 and
b! remit any sum so reco+ered by him to the Board after deductin5 his e$penses in
connection with the reco+ery proceedin5s(
6'
-2! Fhere an assessee is in default or is deemed to be in default in ma9in5 a payment
of ta$% the Ta$ Reco+ery <fficer may% if the assessee has property in a country outside
India bein5 a country with which the .entral ;o+ernment has entered into an a5reement
for the reco+ery of income#ta$ under this "ct and the correspondin5 law in force in that
country!% forward to the Board a certificate drawn up by him under section 222 and the
Board may ta9e such action thereon as it may deem appropriate ha+in5 re5ard to the
terms of the a5reement with such country(2
Recovery of penalties, fine, interest and other sums.
229. "ny sum imposed by way of interest% fine% penalty% or any other sum payable under
the pro+isions of this "ct% shall be reco+erable in the manner pro+ided in this .hapter for
the reco+ery of arrears of ta$(
Tax clearance certificate.
66
230.
67
-1! *ub:ect to such e$ceptions as the .entral ;o+ernment may% by notification in
the <fficial ;a=ette% specify in this behalf% no person%
a! who is not domiciled in India1
b! who has come to India in connection with business% profession or employment1
and
c! who has income deri+ed from any source in India%
shall lea+e the territory of India by land% sea or air unless he furnishes to such authority
#
i! an underta9in5 in the prescribed form
78
from his employer1 or
ii! throu5h whom such person is in receipt of the income%
to the effect that ta$ payable by such person who is not domiciled in India shall be paid
by the employer referred to in clause i! or the person referred to in clause ii!% and the
6&
shall% on receipt of the underta9in5% immediately 5i+e to such
person a no ob:ection certificate
71
% for lea+in5 India:
Provided that nothin5 contained in sub#section 1! shall apply to a person who is not
domiciled in India but +isits India as a forei5n tourist or for any other purpose not
connected with business% profession or employment(
1"! *ub:ect to such e$ceptions as the .entral ;o+ernment may% by notification in the
<fficial ;a=ette% specify in this behalf% e+ery person% who is domiciled in India at the
time of his departure from India% shall furnish% in the prescribed form
72
to the income#ta$
authority or such other authority as may be prescribed
7)
a! the permanent account number allotted to him under section 1)&":
Provided that in case no such permanent account number has been allotted to
him% or his total income is not char5eable to income#ta$ or he is not re,uired to
obtain a permanent account number under this "ct% such person shall furnish a
certificate in the prescribed form1
b! the purpose of his +isit outside India1
c! the estimated period of his stay outside India:
73
Provided that no person
i! who is domiciled in India at the time of his departure1 and
ii! in respect of whom circumstances e$ist which% in the opinion of an income#ta$
authority render it necessary for such person to obtain a certificate under this
section%
shall lea+e the territory of India by land% sea or air unless he obtains a certificate from the
income#ta$ authority statin5 that he has no liabilities under this "ct% or the Fealth#ta$
"ct% 1&46 26 of 1&46!% or the ;ift#ta$ "ct% 1&47 17 of 1&47!% or the E$penditure#ta$
"ct% 1&76 )4 of 1&76!% or that satisfactory arran5ements ha+e been made for the
payment of all or any of such ta$es which are or may become payable by that person :
Provided* that no income#ta$ authority shall ma9e it necessary for any person who is
domiciled in India to obtain a certificate under this section unless he records the reasons
therefor and obtains the prior appro+al of the .hief .ommissioner of Income#ta$(2
2! If the owner or charterer of any ship or aircraft carryin5 persons from any place in the
territory of India to any place outside India allows any person to whom sub#section 1!
74
-or the first pro+iso to sub#section 1"!2 applies to tra+el by such ship or aircraft
without first satisfyin5 himself that such person is in possession of a certificate as
re,uired by that sub#section% he shall be personally liable to pay the whole or any part of
the amount of ta$% if any% payable by such person as the
7'
-"ssessin52 <fficer may%
ha+in5 re5ard to the circumstances of the case% determine(
)! In respect of any sum payable by the owner or charterer of any ship or aircraft under
sub#section 2!% the owner or charterer% as the case may be% shall be deemed to be an
assessee in default for such sum% and such sum shall be reco+erable from him in the
manner pro+ided in this .hapter as if it were an arrear of ta$(
76
3! The Board may ma9e rules for re5ulatin5 any matter necessary for% or incidental to%
the purpose of carryin5 out the pro+isions of this section(
Explanation.>or the purposes of this section% the e$pressions owner and charterer include
any representati+e% a5ent or employee empowered by the owner or charterer to allow
persons to tra+el by the ship or aircraft(
Recovery by suit or under other law not affected.
232. The se+eral modes of reco+ery specified in this .hapter shall not affect in any way
a! any other law for the time bein5 in force relatin5 to the reco+ery of debts due to
;o+ernment1 or
b! the ri5ht of the ;o+ernment to institute a suit for the reco+ery of the arrears due
from the assessee1
and it shall be lawful for the
&8
-"ssessin52 <fficer or the ;o+ernment% as the case may be%
to ha+e recourse to any such law or suit% notwithstandin5 that the ta$ due is bein5
reco+ered from the assessee by any mode specified in this .hapter(
&2
-0.3nterest chargeable in certain cases
&)
Interest for defaults in furnishing return of income.
234A. 1! Fhere the return of income for any assessment year under sub# section 1! or
sub#section 3! of section 1)&% or in response to a notice under sub#section 1! of section
132% is furnished after the due date% or is not furnished% the assessee shall
&3
be liable to
pay simple interest at the rate of
&4
-one2 per cent for e+ery month or part of a month
comprised in the period commencin5 on the date immediately followin5 the due date%
and%
a! where the return is furnished after the due date% endin5 on the date of furnishin5
of the return1 or
b! where no return has been furnished% endin5 on the date of completion of the
assessment under section 133%
#5a
on the amount o!
#6
-the tax on the total income as determined under sub-section *1( o!
section 143 or on regular assessment as reduced b+ the ad%ance tax) i! an+) paid and an+
tax deducted or collected at source2](
Explanation 1.In this section% due date means the date specified in sub#section 1! of
section 1)& as applicable in the case of the assessee(
&6
-Explanation 2.In this sub#section% ta$ on the total income as determined under sub#
section 1! of section 13) shall not include the additional income#ta$% if any% payable
under section 13)(2
first time under section 136
&7
-or section 14)"2% the assessment so made shall be re5arded
as a re5ular assessment for the purposes of this section(
Explanation 4.
&&
-* * *2
2! The interest payable under sub#section 1! shall be reduced by the interest% if any% paid
under section 138" towards the interest char5eable under this section(
)! Fhere the return of income for any assessment year% re,uired by a notice under
section 137
1
-or section 14)"2 issued
2
-after the determination of income under sub#
section 1! of section 13) or2 after the completion of an assessment under sub#section )!
of section 13) or section 133 or section 136% is furnished after the e$piry of the time
allowed under such notice% or is not furnished% the assessee shall be liable to pay simple
interest at the rate of
)
-one2 per cent for e+ery month or part of a month comprised in the
period commencin5 on the day immediately followin5 the e$piry of the time allowed as
aforesaid% and%
a! where the return is furnished after the e$piry of the time aforesaid% endin5 on
the date of furnishin5 the return1 or
b! where no return has been furnished% endin5 on the date of completion of the re#
assessment or re#computation under *ection 136
3
-or reassessment under
section 14)"2%
on the amount by which the ta$ on the total income determined on the basis of such re#
assessment or re#computation e$ceeds the ta$ on the total income determined
4
-under
sub#section 1! of section 13) or2 on the basis of the earlier assessment aforesaid(
Explanation.
'
-* * *2
3! Fhere as a result of an order under section 143 or section 144 or section 248 or
section 243 or section 2'8 or section 2'2 or section 2') or section 2'3 or an order of the
*ettlement .ommission under sub#section 3! of section 234?% the amount of ta$ on
which interest was payable under sub#section 1! or sub#section )! of this section has
been increased or reduced% as the case may be% the interest shall be increased or reduced
accordin5ly% and
i! in a case where the interest is increased% the "ssessin5 <fficer shall ser+e on
the assessee a notice of demand in the prescribed form specifyin5 the sum
payable% and such notice of demand shall be deemed to be a notice under
section 14' and the pro+isions of this "ct shall apply accordin5ly1
refunded(
4! The pro+isions of this section shall apply in respect of assessments for the assessment
year commencin5 on the 1st day of "pril% 1&7& and subse,uent assessment years(2
6
-Interest for defaults in payment of advance tax.
234B. 1! *ub:ect to the other pro+isions of this section% where% in any financial year% an
assessee who is liable to pay ad+ance ta$ under section 287 has failed to pay such ta$ or%
where the ad+ance ta$ paid by such assessee under the pro+isions of section 218 is less
than ninety per cent of the assessed ta$% the assessee shall
7
be liable to pay simple interest
at the rate of
&
-one2 per cent for e+ery month or part of a month comprised in the period
from the 1st day of "pril ne$t followin5 such financial year
18
-to the date of
determination of total income under sub#section 1! of section 13)
11
-and where a re5ular
assessment is made% to the date of such re5ular assessment% on an amount22 e,ual to the
assessed ta$ or% as the case may be% on the amount by which the ad+ance ta$ paid as
aforesaid falls short of the assessed ta$(
12
-Explanation 1.In this section% assessed ta$ means the ta$ on the total income
determined under sub#section 1! of section 13) or on re5ular assessment as reduced by
the amount of ta$ deducted or collected at source in accordance with the pro+isions of
.hapter /0II on any income which is sub:ect to such deduction or collection and which
is ta9en into account in computin5 such total income(2
The following Explanation " shall be substituted for the existing Explanation " to
E$planation 1(3n this section) assessed tax means the tax on the total income determined
under sub-section *1( o! section 143 and where a regular assessment is made) the tax on
the total income determined under such regular assessment as reduced b+ the amount o!)
*i( an+ tax deducted or collected at source in accordance with the pro%isions o!
'hapter BE33 on an+ income which is sub4ect to such deduction or collection
*ii( an+ relie! o! tax allowed under section #$ on account o! tax paid in a countr+
outside 3ndia-
*iii( an+ relie! o! tax allowed under section #$A on account o! tax paid in a
speci!ied territor+ outside 3ndia re!erred to in that section-
*i+( an+ deduction) !rom the 3ndian income-tax pa+able) allowed under section #1)
on account o! tax paid in a countr+ outside 3ndia- and
*+( an+ tax credit allowed to be set o!! in accordance with the pro%isions o! section
1159AA.
first time under section 136
1)
-or section 14)"2% the assessment so made shall be re5arded
as a re5ular assessment for the purposes of this section(
13
-Explanation 3.In Explanation 1 and in sub#section )! ta$ on the total income
determined under sub#section 1! of section 13) shall not include the additional income#
ta$% if any% payable under section 13)(2
2! Fhere% before the date of
14
-determination of total income under sub#section 1! of
section 13) or2 completion of a re5ular assessment% ta$ is paid by the assessee under
section 138a or otherwise%
i! interest shall be calculated in accordance with the fore5oin5 pro+isions of this
section up to the date on which the ta$ is so paid% and reduced by the interest% if
any% paid under section 138" towards the interest char5eable under this section1
ii! thereafter% interest shall be calculated at the rate aforesaid on the amount by
which the ta$ so paid to5ether with the ad+ance ta$ paid falls short of the
assessed ta$(
)! Fhere% as a result of an order of re#assessment or re#computation under section 136
1'
-or section 14)"2% the amount on which interest was payable under sub#section 1! is
increased% the assessee shall be liable to pay simple interest at the rate of
16
-one2 per cent
for e+ery month or part of a month comprised in the period commencin5 on the day
followin5
17
-the date of determination of total income under sub#section 1! of section
13)
1&
-and where a re5ular assessment is made as is referred to in sub#section 1!
followin5 the date of such re5ular assessment22 and endin5 on the date of the re#
assessment or re#computation under section 136
28
-or section 14)"2% on the amount by
which the ta$ on the total income determined on the basis of the re#assessment or re#
computation e$ceeds the ta$ on the total income determined
28a
-under sub#section 1! of
section 13) or2 on the basis of the re5ular assessment aforesaid(
Explanation.
21
-* * *2
3! Fhere% as a result of an order under section 143 or section 144 or section 248 or
*ettlement .ommission under sub#section 3! of section 234?% the amount on which
interest was payable under sub#section 1! or sub#section )! has been increased or
i! in a case where the interest is increased% the "ssessin5 <fficer shall ser+e on
the assessee a notice of demand in the prescribed form specifyin5 the sum
payable and such notice of demand shall be deemed to be a notice under section
14' and the pro+isions of this "ct shall apply accordin5ly1
refunded(
22
-Interest for deferment of advance tax.
234C. 1!
2)
-Fhere in any financial year%
a! the company which is liable to pay ad+ance ta$ under section 287 has failed to
pay such ta$ or
i! the ad+ance ta$ paid by the company on its current income on or before the
14th day of @une is less than fifteen per cent of the ta$ due on the returned
income or the amount of such ad+ance ta$ paid on or before the 14th day of
*eptember is less than forty#fi+e per cent of the ta$ due on the returned
income or the amount of such ad+ance ta$ paid on or before the 14th day of
?ecember is less than se+enty#fi+e per cent of the ta$ due on the returned
income% then% the company shall
23
be liable to pay simple interest at the rate
of
24
-one2 per cent per month for a period of three months on the amount of
the shortfall from fifteen per cent or forty#fi+e per cent or se+enty#fi+e per
cent% as the case may be% of the ta$ due on the returned income1
ii! the ad+ance ta$ paid by the company on its current income on or before the
14th day of Barch is less than the ta$ due on the returned income% then% the
company shall be liable to pay simple interest at the rate of
24
-one2 per cent
on the amount of the shortfall from the ta$ due on the returned income:
Provided that if the ad+ance ta$ paid by the company on its current income on
or before the 14th day of @une or the 14th day of *eptember% is not less than
twel+e per cent or% as the case may be% thirty#si$ per cent of the ta$ due on the
returned income% then% it shall not be liable to pay any interest on the amount of
the shortfall on those dates1
b! the assessee% other than a company% who is liable to pay ad+ance ta$ under
section 287 has failed to pay such ta$ or%
i! the ad+ance ta$ paid by the assessee on his current income on or before the
14th day of *eptember is less than thirty per cent of the ta$ due on the
returned income or the amount of such ad+ance ta$ paid on or before the
14th day of ?ecember is less than si$ty per cent of the ta$ due on the
returned income% then% the assessee shall be liable to pay simple interest at
the rate of
24
-one2 per cent per month for a period of three months on the
amount of the shortfall from thirty per cent or% as the case may be% si$ty per
cent of the ta$ due on the returned income1
ii! the ad+ance ta$ paid by the assessee on his current income on or before the
14th day of Barch is less than the ta$ due on the returned income% then% the
assessee shall be liable to pay simple interest at the rate of
24
-one2 per cent
on the amount of the shortfall from the ta$ due on the returned income :2
2'#26
-Provided that nothin5 contained in this sub#section shall apply to any shortfall in the
payment of the ta$ due on the returned income where such shortfall is on account of
under#estimate or failure to estimate
a! the amount of capital 5ains1 or
b! income of the nature referred to in sub#clause ix! of clause 24! of section 2%
and the assessee has paid the whole of the amount of ta$ payable in respect of income
referred to in clause a! or clause b!% as the case may be% had such income been a part of
the total income% as part of the
27
-remainin5 instalments of ad+ance ta$ which are due or
where no such instalments are due2% by the )1st day of Barch of the financial year:2
2&
-Provided further that nothin5 contained in this sub#section shall apply to any shortfall
in the payment of the ta$ due on the returned income where such shortfall is on account
of increase in the rate of surchar5e under section 2 of the >inance "ct% 2888 18 of 2888!%
as amended by the Ta$ation Gaws "mendment! "ct% 2888 1 of 2881!% and the assessee
has paid the amount of shortfall% on or before the 14th day of Barch% 2881 in respect of
the instalment of ad+ance ta$ due on the 14th day of @une% 2888% the 14th day of
*eptember% 2888 and the 14th day of ?ecember% 2888 :2
)8
-Provided also that nothin5 contained in this sub#section shall apply to any shortfall in
the payment of the ta$ due on the returned income where such shortfall is on account of
increase in the rate of surchar5e under section 2 of the >inance "ct% 2888 18 of 2888! as
amended by the Ta$ation Gaws "mendment! "ct% 2881 3 of 2881! and the assessee has
paid the amount of shortfall on or before the 14th day of Barch% 2881 in respect of the
instalment of ad+ance ta$ due on the 14th day of @une% 2888% the 14th day of *eptember%
2888 and 14th day of ?ecember% 2888(2
Explanation.In this section% ta$ due on the returned income means the ta$ char5eable on
the total income declared in the return of income furnished by the assessee for the
assessment year commencin5 on the 1st day of "pril imme#diately followin5 the
financial year in which the ad+ance ta$ is paid
)1
-or payable2% as reduced by
)2
-the amount
of ta$ deductible or collectible at source in accordance with the pro+isions of .hapter
/0II on any income which is sub:ect to such deduction or collection2 and which is ta9en
into account in computin5 such total income(
The following Explanation shall be substituted for the existing Explanation to sub-
section (1) of section 234C by the Finance Act, 2006, w.e.f. 1-4-2007:
E$planation.3n this section) tax due on the returned income means the tax chargeable on
the total income declared in the return o! income !urnished b+ the assessee !or the
assessment +ear commencing on the 1st da+ o! April immediatel+ !ollowing the !inancial
+ear in which the ad%ance tax is paid or pa+able) as reduced b+ the amount o!)
*i( an+ tax deductible or collectible at source in accordance with the pro%isions o!
'hapter BE33 on an+ income which is sub4ect to such deduction or collection
*ii( an+ relie! o! tax allowed under section #$ on account o! tax paid in a countr+
outside 3ndia-
*iii( an+ relie! o! tax allowed under section #$A on account o! tax paid in a
speci!ied territor+ outside 3ndia re!erred to in that section-
*i+( an+ deduction) !rom the 3ndian income-tax pa+able) allowed under section #1)
on account o! tax paid in a countr+ outside 3ndia- and
*+( an+ tax credit allowed to be set o!! in accordance with the pro%isions o! section
1159AA.
))
-Interest on excess refund.
234D. 1! *ub:ect to the other pro+isions of this "ct% where any refund is 5ranted to the
assessee under sub#section 1! of section 13)% and
a! no refund is due on re5ular assessment1 or
b! the amount refunded under sub#section 1! of section 13) e$ceeds the amount
refundable on re5ular assessment%
the assessee shall be liable to pay simple interest at the rate of
)3
-one#half2 per cent on the
whole or the e$cess amount so refunded% for e+ery month or part of a month comprised in
the period from the date of 5rant of refund to the date of such re5ular assessment(
2! Fhere% as a result of an order under section 143 or section 144 or section 248 or
*ettlement .ommission under sub#section 3! of section 234?% the amount of refund
5ranted under sub#section 1! of section 13) is held to be correctly allowed% either in
whole or in part% as the case may be% then% the interest char5eable% if any% under sub#
section 1! shall be reduced accordin5ly(
Explanation.Fhere% in relation to an assessment year% an assessment is made for the first
time under section 136 or section 14)"% the assessment so made shall be re5arded as a
re5ular assessment for the purposes of this section(2
Relief to company in respect of dividend paid out of past taxed profits.
236.
)4
1! Fhere in respect of any pre+ious year rele+ant to the assessment year
commencin5 after the )1st day of Barch% 1&'8% an Indian company or a company which
has made the prescribed arran5ements for the declaration and payment of di+idends
within India% pays any di+idend wholly or partly out of its profits and 5ains actually
char5ed to income#ta$ for any assessment year endin5 before the 1st day of "pril% 1&'8%
and deducts ta$ therefrom in accordance with the pro+isions of .hapter /0II#B% credit
shall be 5i+en to the company a5ainst the income#ta$% if any% payable by it on the profits
and 5ains of the pre+ious year durin5 which the di+idend is paid% of a sum calculated in
accordance with the pro+isions of sub#section 2!% and% where the amount of credit so
calculated e$ceeds the income#ta$ payable by the company as aforesaid% the e$cess shall
be refunded(
2! The amount of income#ta$ to be 5i+en as credit under sub#section 1! shall be a sum
e,ual to ten per cent of so much of the di+idends referred to in sub#section 1! as are paid
out of the profits and 5ains actually char5ed to income#ta$ for any assessment year
endin5 before the 1st day of "pril% 1&'8(
Explanation 1.>or the purposes of this section% the a55re5ate of the di+idends declared by
a company in respect of any pre+ious year shall be deemed first to ha+e come out of the
distributable income of that pre+ious year and the balance% if any% out of the undistributed
part of the distributable income of one or more pre+ious years immediately precedin5 that
pre+ious year as would be :ust sufficient to co+er the amount of such balance and as has
not li9ewise been ta9en into account for co+erin5 such balance of any other pre+ious
year(
Explanation 2.The e$pression distributable income of any pre+ious year shall mean the
total income
)'
-as computed before ma9in5 any deduction under .hapter 0I#"!2
assessed for that year as reduced by
i! the amount of ta$ payable by the company in respect of
)6
-its2 total income1
ii! the amount of any other ta$ le+ied under any law for the time bein5 in force on
the company by the ;o+ernment or by a local authority in e$cess of the
amount% if any% which has been allowed in computin5 the total income1
)7
-iii! any sum with reference to which a deduction is allowable to the company under
the pro+isions of section 78;1 and2
i%! in the case of a ban9in5 company% the amount actually transferred to a reser+e
fund under section 16 of the Ban9in5 .ompanies "ct% 1&3& 18 of 1&3&!%
and as increased by
a! any profits and 5ains or receipts of the company% not included in its total
income
)&
-as computed before ma9in5 any deduction under .hapter 0I#"!21
and
b! any amount attributable to any allowance made in computin5 the profits and
5ains of the company for purposes of assessment% which the company has not
ta9en into account in its profit and loss account(
38
-Relief to certain charitable institutions or funds in respect of certain dividends.
236A. 1!
31
-Fhere se+enty#fi+e per cent of the share capital of any company is
throu5hout the pre+ious year beneficially held by an institution or fund established in
India for a charitable purpose the income from di+idend whereof is e$empt under section
112% credit shall be 5i+en to the institution or fund a5ainst the ta$% if any% payable by it% of
a sum calculated in accordance with the pro+isions of sub#section 2!% in respect of its
income from di+idends other than di+idends on preference shares! declared or
distributed durin5 the pre+ious year rele+ant to any assessment year be5innin5 on or after
the 1st day of "pril%
32
-1&''2
3)
-by such a company2% and where the amount of credit so
calculated e$ceeds the ta$% if any% payable by the said institution or fund% the e$cess shall
be refunded(
33
-2! The amount to be 5i+en as credit under sub#section 1! shall be a sum which bears
to the amount of the ta$ payable by the company under the pro+isions of the annual
>inance "ct with reference to the rele+ant amount of distributions of di+idends by it the
same proportion as the amount of the di+idends other than di+idends on preference
shares! recei+ed by the institution or fund from the company bears to the total amount of
di+idends other than di+idends on preference shares! declared or distributed by the
company durin5 the pre+ious year(
Explanation.In sub#section 2! of this section and in section 278JB% the e$pression the
rele+ant amount of distributions of di+idends has the meanin5 assi5ned to it in the
>inance "ct of the rele+ant year(22
.hapter /I/
REFUNDS
Refunds.
34
237. If any person satisfies the
3'
-"ssessin52 <fficer that the amount of ta$ paid by him
or on his behalf or treated as paid by him or on his behalf for any assessment year
e$ceeds the amount with which he is properly char5eable
36
under this "ct for that year%
he shall be entitled to a refund
36
of the e$cess(
Person entitled to claim refund in certain special cases.
37
238. 1! Fhere the income of one person is included under any pro+ision of this "ct in
the total income of any other person% the latter alone shall be entitled to a refund under
this .hapter in respect of such income(
3&
-*1A( ,here the %alue o! !ringe bene!its pro%ided or deemed to ha%e been pro%ided b+
one emplo+er is included under an+ pro%isions o! 'hapter B33-C in the %alue o! !ringe
bene!its pro%ided or deemed to ha%e been pro%ided b+ an+ other emplo+er) the latter
alone shall be entitled to a re!und under this 'hapter in respect o! such !ringe bene!its.2
2! Fhere throu5h death% incapacity% insol+ency% li,uidation or other cause% a person is
unable to claim or recei+e any refund due to him% his le5al representati+e or the trustee or
5uardian or recei+er% as the case may be% shall be entitled to claim or recei+e such refund
for the benefit of such person or his estate(
Form of claim for refund and limitation.
48
239.
41
1! E+ery claim for refund under this .hapter shall be made in the prescribed
form and +erified in the prescribed manner(
42
-2! Ao such claim shall be allowed% unless it is made within the period specified
hereunder% namely :
a! where the claim is in respect of income which is assessable for any assessment
year commencin5 on or before the 1st day of "pril% 1&'6% four years from the
last day of such assessment year1
b! where the claim is in respect of income which is assessable for the assessment
year commencin5 on the first day of "pril% 1&'7% three years from the last day
of the assessment year1
c! where the claim is in respect of income which is assessable for any other
assessment year%
4)
-one2 year from the last day of such assessment year12
43
-*d( where the claim is in respect o! !ringe bene!its which are assessable !or an+
assessment +ear commencing on or a!ter the !irst da+ o! April) 2$$6) one +ear
!rom the last da+ o! such assessment +ear.2
Refund on appeal, etc.
240. Fhere% as a result of any order passed in appeal or other proceedin5 under this "ct
44
%
refund of any amount becomes due to the assessee% the
4'
-"ssessin52 <fficer shall% e$cept
as otherwise pro+ided in this "ct% refund the amount to the assessee without his ha+in5 to
ma9e any claim in that behalf:
46
-Provided that where% by the order aforesaid%
a! an assessment is set aside or cancelled and an order of fresh assessment is
directed to be made% the refund% if any% shall become due only on the ma9in5 of
such fresh assessment1
b! the assessment is annulled% the refund shall become due only of the amount% if
any% of the ta$ paid in e$cess of the ta$ char5eable on the total income returned
by the assessee(2
Correctness of assessment not to be questioned.
242. In a claim under this .hapter% it shall not be open to the assessee to ,uestion the
correctness of any assessment or other matter decided which has become final and
conclusi+e or as9 for a re+iew of the same% and the assessee shall not be entitled to any
relief on such claim e$cept refund of ta$ wron5ly paid or paid in e$cess(
4&
Interest on delayed refunds.
243.
'8
-1! If the
'1
-"ssessin52 <fficer does not 5rant the refund%
a! in any case where the total income of the assessee does not consist solely of
income from interest on securities or di+idends% within three months from the
end of the month in which the total income is determined under this "ct% and
b! in any other case% within three months from the end of the month in which the
claim for refund is made under this .hapter%
the .entral ;o+ernment shall pay the assessee simple interest at
'2
-fifteen2 per cent per
annum on the amount directed to be refunded from the date immediately followin5 the
e$piry of the period of three months aforesaid to the date of the order 5rantin5 the refund(
Explanation.If the delay in 5rantin5 the refund within the period of three months
aforesaid is attributable to the assessee% whether wholly or in part% the period of the delay
attributable to him shall be e$cluded from the period for which interest is payable(2
2! Fhere any ,uestion arises as to the period to be e$cluded for the purposes of
calculation of interest under the pro+isions of this section% such ,uestion shall be
determined by the
')
-.hief .ommissioner or .ommissioner2 whose decision shall be
final(
'3
-)! The pro+isions of this section shall not apply in respect of any assessment for the
assessment year commencin5 on the 1st day of "pril% 1&7& or any subse,uent assessment
years(2
Interest on refund where no claim is needed.
'4
244. 1! Fhere a refund is due to the assessee in pursuance of an order referred to in
section 238 and the
''
-"ssessin52 <fficer does not 5rant the refund within a period of
'6
-three months from the end of the month in which such order is passed2% the .entral
;o+ernment shall pay to the assessee simple interest at
'7
-fifteen2 per cent per annum on
the amount of refund due from the date immediately followin5 the e$piry of the period of
'&
-three2 months aforesaid to the date on which the refund is 5ranted(
68
-1"! Fhere the whole or any part of the refund referred to in sub#section 1! is due to
the assessee% as a result of any amount
61
ha+in5 been paid by him after the )1st day of
Barch% 1&64% in pursuance of any order of assessment
62
or penalty and such amount or
any part thereof ha+in5 been found in appeal or other proceedin5 under this "ct to be in
e$cess of the amount which such assessee is liable to pay as ta$ or penalty% as the case
may be% under this "ct% the .entral ;o+ernment shall pay to such assessee simple interest
at the rate specified in sub#section 1! on the amount so found to be in e$cess from the
date on which such amount was paid to the date on which the refund is 5ranted :
Provided that where the amount so found to be in e$cess was paid in instalments% such
interest shall be payable on the amount of each such instalment or any part of such
instalment% which was in e$cess% from the date on which such instalment was paid to the
date on which the refund is 5ranted :
Provided further that no interest under this sub#section shall be payable for a period of
one month from the date of the passin5 of the order in appeal or other proceedin5 :
Provided also that where any interest is payable to an assessee under this sub#section% no
interest under sub#section 1! shall be payable to him in respect of the amount so found to
be in e$cess(2
2! Fhere a refund is withheld under the pro+isions of section 231% the .entral
;o+ernment shall pay interest at the aforesaid rate on the amount of refund ultimately
determined to be due as a result of the appeal or further proceedin5 for the period
commencin5 after the e$piry of
6)
-three months from the end of the month in which the
order referred to in section 231 is passed2 to the date the refund is 5ranted(
63
-)! The pro+isions of this section shall not apply in respect of any assessment for the
assessment year commencin5 on the 1st day of "pril% 1&7&% or any subse,uent
assessment years(2
64
-Interest on refunds.
6'
244A. 1!
66
-Fhere refund of any amount becomes due to the assessee under this "ct2%
he shall% sub:ect to the pro+isions of this section% be entitled to recei+e% in addition to the
said amount% simple interest thereon calculated in the followin5 manner% namely :
a! where the refund is out of any ta$
67
-paid under section 115,9 or2
6&
-collected
at source under section 28'. or2 paid by way of ad+ance ta$ or treated as paid
under section 1&&% durin5 the financial year immediately precedin5 the
assessment year% such interest shall be calculated at the rate of
78
-one#half per
cent2 for e+ery month or part of a month comprised in the period from the 1st
day of "pril of the assessment year to the date on which the refund is 5ranted:
Provided that no interest shall be payable if the amount of refund is less than
ten per cent of the ta$ as determined
71
-under
72
-sub-section *1( o! section
115,E or2 sub#section 1! of section 13) or2 on re5ular assessment1
b! in any other case% such interest shall be calculated at the rate of
7)
-one#half per
cent2 for e+ery month or part of a month comprised in the period or periods
from the date or% as the case may be% dates of payment of the ta$ or penalty to
the date on which the refund is 5ranted(
Explanation.>or the purposes of this clause% date of payment of ta$ or penalty means the
date on and from which the amount of ta$ or penalty specified in the notice of demand
issued under section 14' is paid in e$cess of such demand(
2! If the proceedin5s resultin5 in the refund are delayed for reasons attributable to the
assessee% whether wholly or in part% the period of the delay so attributable to him shall be
e$cluded from the period for which interest is payable% and where any ,uestion arises as
to the period to be e$cluded% it shall be decided by the .hief .ommissioner or
.ommissioner whose decision thereon shall be final(
)! Fhere% as a result of an order under
73
-sub-section *3( o! section 115,E or section
115,0 or section 115,5 or2
74
-sub#section )! of section 13) or section 133 or2 section
136 or section 143 or section 144 or section 248 or section 243 or section 2'8 or section
2'2 or section 2') or section 2'3 or an order of the *ettlement .ommission under sub#
section 3! of section 234?% the amount on which interest was payable under sub#section
1! has been increased or reduced% as the case may be% the interest shall be increased or
reduced accordin5ly% and in a case where the interest is reduced% the "ssessin5 <fficer
shall ser+e on the assessee a notice of demand in the prescribed form specifyin5 the
amount of the e$cess interest paid and re,uirin5 him to pay such amount1 and such notice
of demand shall be deemed to be a notice under section 14' and the pro+isions of this "ct
shall apply accordin5ly(
year commencin5 on the 1st day of "pril% 1&7&% and subse,uent assessment years :2
7'
-Provided that in respect o! assessment o! !ringe bene!its) the pro%isions o! this sub-
section shall ha%e e!!ect as i! !or the !igures 1#"#) the !igures 2$$6 had been substituted.2
Set off of refunds against tax remaining payable.
76
245. Fhere under any of the pro+isions of this "ct% a refund is found
77
to be due to any
person% the
7&
&8
&1
-% .ommissioner
"ppeals!2 or
&2
-.hief .ommissioner or .ommissioner2% as the case may be% may% in lieu
of payment
&)
of the refund% set off the amount to be refunded or any part of that amount%
a5ainst the sum% if any% remainin5 payable under this "ct by the person to whom the
refund is due% after 5i+in5 an intimation in writin5 to such person of the action proposed
to be ta9en under this section(
&3
-CHAPTER XIX-A
SETTLEMENT OF CASES
&4
-Definitions.
245A. In this .hapter% unless the conte$t otherwise re,uires%
a! Bench means a Bench of the *ettlement .ommission1
b! case means any proceedin5 under this "ct for the assessment or reassessment
of any person in respect of any year or years% or by way of appeal or re+ision in
connection with such assessment or reassessment% which may be pendin5
before an income#ta$ authority on the date on which an application under sub#
section 1! of section 234. is made :
Provided that where any appeal or application for re+ision has been preferred
after the e$piry of the period specified for the filin5 of such appeal or
application for re+ision under this "ct and which has not been admitted% such
appeal or re+ision shall not be deemed to be a proceedin5 pendin5 within the
meanin5 of this clause1
c! .hairman means the .hairman of the *ettlement .ommission1
d! income#ta$ authority means an income#ta$ authority specified in section 11'1
e! Bember means a Bember of the *ettlement .ommission% and includes the
.hairman and a 0ice#.hairman1
!! *ettlement .ommission means the Income#ta$ *ettlement .ommission
constituted under section 234B1
g! 0ice#.hairman means a 0ice#.hairman of the *ettlement .ommission(2
Income-tax Settlement Commission.
245B. 1! The .entral ;o+ernment shall constitute a .ommission to be called the
Income#ta$ *ettlement .ommission
&'
-* * *2 for the settlement of cases under this
.hapter(
2! The *ettlement .ommission shall consist of a .hairman
&6
-and as many 0ice#
.hairmen and other members as the .entral ;o+ernment thin9s fit2 and shall function
within the ?epartment of the .entral ;o+ernment dealin5 with direct ta$es(
2"!
&7
-* * *2
)! The .hairman
&&
-% 0ice#.hairman2 and other members of the *ettlement .ommission
shall be appointed by the .entral ;o+ernment from amon5st persons of inte5rity and
outstandin5 ability% ha+in5 special 9nowled5e of% and% e$perience in% problems relatin5 to
direct ta$es and business accounts:
Provided that% where a member of the Board is appointed as the .hairman
&&
-% 0ice#
.hairman2 or as a member of the *ettlement .ommission% he shall cease to be a member
of the Board(
1
-* * *2
2
-1urisdiction and powers of Settlement Commission.
245BA. 1! *ub:ect to the other pro+isions of this .hapter% the :urisdiction% powers and
authority of the *ettlement .ommission may be e$ercised by Benches thereof(
2! *ub:ect to the other pro+isions of this section% a Bench shall be presided o+er by the
.hairman or a 0ice#.hairman and shall consist of two other Bembers(
)! The Bench for which the .hairman is the Presidin5 <fficer shall be the principal
Bench and the other Benches shall be 9nown as additional Benches(
3! Aotwithstandin5 anythin5 contained in sub#sections 1! and 2!% the .hairman may
authorise the 0ice#.hairman or other Bember appointed to one Bench to dischar5e also
the functions of the 0ice#.hairman or% as the case may be% other Bember of another
Bench(
4! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% and
sub:ect to any rules that may be made in this behalf% when one of the persons constitutin5
a Bench whether such person be the Presidin5 <fficer or other Bember of the Bench! is
unable to dischar5e his functions owin5 to absence% illness or any other cause or in the
e+ent of the occurrence of any +acancy either in the office of the Presidin5 <fficer or in
the office of one or the other Bembers of the Bench% the remainin5 two persons may
function as the Bench and if the Presidin5 <fficer of the Bench is not one of the
remainin5 two persons% the senior amon5 the remainin5 persons shall act as the Presidin5
<fficer of the Bench :
Provided that if at any sta5e of the hearin5 of any such case or matter% it appears to the
Presidin5 <fficer that the case or matter is of such a nature that it ou5ht to be heard of by
a Bench consistin5 of three Bembers% the case or matter may be referred by the Presidin5
<fficer of such Bench to the .hairman for transfer to such Bench as the .hairman may
deem fit(
)
-4"! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this section% the
.hairman may% for the disposal of any particular case% constitute a *pecial Bench
consistin5 of more than three Bembers(2
'! *ub:ect to the other pro+isions of this .hapter% the places at which the principal
Bench and the additional Benches shall ordinarily sit shall be such as the .entral
3
in the <fficial ;a=ette% specify
)
-and the *pecial Bench
shall sit at a place to be fi$ed by the .hairman(22
4
-Vice-Chairman to act as Chairman or to discharge his functions in certain
circumstances.
245BB. 1! In the e+ent of the occurrence of any +acancy in the office of the .hairman
by reason of his death% resi5nation or otherwise% the 0ice#.hairman or% as the case may
be% such one of the 0ice#.hairmen as the .entral ;o+ernment may% by notification in the
<fficial ;a=ette% authorise in this behalf% shall act as the .hairman until the date on
which a new .hairman% appointed in accordance with the pro+isions of this .hapter to
fill such +acancy% enters upon his office(
2! Fhen the .hairman is unable to dischar5e his functions owin5 to absence% illness or
any other cause% the 0ice#.hairman or% as the case may be% such one of the 0ice#
.hairmen as the .entral ;o+ernment may% by notification in the <fficial ;a=ette%
authorise in this behalf% shall dischar5e the functions of the .hairman until the date on
which the .hairman resumes his duties(2
'
-Power of Chairman to transfer cases from one Bench to another.
245BC. <n the application of the assessee or the
6
.ommissioner2 and after notice to them% and after hearin5 such of them as he may desire
to be heard% or on his own motion without such notice% the .hairman may transfer any
case pendin5 before one Bench% for disposal% to another Bench(2
7
-Decision to be by majority.
245BD. If the Bembers of a Bench differ in opinion on any point% the point shall be
decided accordin5 to the opinion of the ma:ority% if there is a ma:ority% but if the
Bembers are e,ually di+ided% they shall state the point or points on which they differ%
and ma9e a reference to the .hairman who shall either hear the point or points himself or
refer the case for hearin5 on such point or points by one or more of the other Bembers of
the *ettlement .ommission and such point or points shall be decided accordin5 to the
opinion of the ma:ority of the Bembers of the *ettlement .ommission who ha+e heard
the case% includin5 those who first heard it(2
Application for settlement of cases.
&
245C.
18
-1! "n assessee may% at any sta5e of a case relatin5 to him
11
% ma9e an
application in such form and in such manner as may be prescribed% and containin5 a full
and true disclosure of his income which has not been disclosed before the
12
-"ssessin52
<fficer% the manner in which such income has been deri+ed% the additional amount of
income#ta$ payable on such income and such other particulars as may be prescribed% to
the *ettlement .ommission to ha+e the case settled and any such application shall be
disposed of in the manner hereinafter pro+ided:
1)
-Provided that no such application shall be made unless%
a! the assessee has furnished the return of income which he is or was re,uired to
furnish under any of the pro+isions of this "ct1 and
b! the additional amount of income#ta$ payable on the income disclosed in the
application e$ceeds
13
-one hundred2 thousand rupees(2
1"! >or the purposes of sub#section 1! of this section and sub#sections 2"! to 2?! of
section 234?% the additional amount of income#ta$ payable in respect of the income
disclosed in an application made under sub#section 1! of this section shall be the amount
calculated in accordance with the pro+isions of sub#sections 1B! to 1?!(
14
-1B! Fhere the income disclosed in the application relates to only one pre+ious year%
i! if the applicant has not furnished a return in respect of the total income of that
year whether or not an assessment has been made in respect of the total
income of that year!% then% e$cept in a case co+ered by clause iii!% ta$ shall be
calculated on the income disclosed in the application as if such income were
the total income1
ii! if the applicant has furnished a return in respect of the total income of that year
whether or not an assessment has been made in pursuance of such return!% ta$
shall be calculated on the a55re5ate of the total income returned and the income
disclosed in the application as if such a55re5ate were the total income1
iii! if the proceedin5 pendin5 before the income#ta$ authority is in the nature of a
proceedin5 for reassessment of the applicant under section 136 or by way of
appeal or re+ision in connection with such reassessment% and the applicant has
not furnished a return in respect of the total income of that year in the course of
such proceedin5 for reassessment% ta$ shall be calculated on the a55re5ate of
the total income as assessed in the earlier proceedin5 for assessment under
section 13) or section 133 or section 136 and the income disclosed in the
application as if such a55re5ate were the total income(2
14
-1.! The additional amount of income#ta$ payable in respect of the income disclosed
in the application relatin5 to the pre+ious year referred to in sub#section 1B! shall be%
a! in a case referred to in clause i! of that sub#section% the amount of ta$
calculated under that clause1
b! in a case referred to in clause ii! of that sub#section% the amount of ta$
calculated under that clause as reduced by the amount of ta$ calculated on the
total income returned for that year1
c! in a case referred to in clause iii! of that sub#section% the amount of ta$
calculated under that clause as reduced by the amount of ta$ calculated on the
total income assessed in the earlier proceedin5 for assessment under section
13) or section 133 or section 136(2
1?! Fhere the income disclosed in the application relates to more than one pre+ious
year% the additional amount of income#ta$ payable in respect of the income disclosed for
each of the years shall first be calculated in accordance with the pro+isions of sub#
sections 1B! and 1.! and the a55re5ate of the amount so arri+ed at in respect of each of
the years for which the application has been made under sub#section 1! shall be the
additional amount of income#ta$ payable in respect of the income disclosed in the
application(
1E!
1'
-***2
2! E+ery application made under sub#section 1! shall be accompanied by such fees as
may be prescribed
16
(
)! "n application made under sub#section 1! shall not be allowed to be withdrawn by
the applicant(
Procedure on receipt of an application under section 245C.
17
245D. 1! <n receipt of an application under section 234.% the *ettlement .ommission
shall call for a report from the .ommissioner and on the basis of the materials contained
in such report and ha+in5 re5ard to the nature and circumstances of the case or the
comple$ity of the in+esti5ation in+ol+ed therein%
1&
-the *ettlement .ommission% shall%
where it is possible% by order% re:ect the application or allow the application to be
proceeded with within a period of one year from the end of the month in which such
application was made under section 234.2 :
Provided that an application shall not be re:ected under this sub#section unless an
opportunity has been 5i+en to the applicant of bein5 heard :
28
-Provided further that the .ommissioner shall furnish the report within a period of
forty#fi+e days of the receipt of communication from the *ettlement .ommission in case
of all applications made under section 234. on or after the 1st day of @uly% 1&&4 and if
the .ommissioner fails to furnish the report within the said period% the *ettlement
.ommission may ma9e the order without such report(2
1"!
21
-/mitted b+ the 0inance *&o. 2( Act) 1##1) w.e.!. 2-#-1##1.2
2! " copy of e+ery order under sub#section 1! shall be sent to the applicant and to the
.ommissioner(
22
-2"! *ub:ect to the pro+isions of sub#section 2B!% the assessee shall% within thirty#fi+e
days of the receipt of a copy of the order under sub#section 1!
2)
-allowin5 the application
to be proceeded with2% pay the additional amount of income#ta$ payable on the income
disclosed in the application and shall furnish proof of such payment to the *ettlement
.ommission(2
2)
-2B! If the *ettlement .ommission is satisfied% on an application made in this behalf by
the assessee% that he is unable for 5ood and sufficient reasons to pay the additional
amount of income#ta$ referred to in sub#section 2"! within the time specified in that
sub#section% it may e$tend the time for payment of the amount which remains unpaid or
allow payment thereof by instalments if the assessee furnishes ade,uate security for the
payment thereof(2
2)
-2.! Fhere the additional amount of income#ta$ is not paid within the time specified
under sub#section 2"!% then% whether or not the *ettlement .ommission has e$tended the
time for payment of the amount which remains unpaid or has allowed payment thereof by
instalments under sub#section 2B!% the assessee shall be liable to pay simple interest at
fifteen per cent per annum on the amount remainin5 unpaid from the date of e$piry of the
period of thirty#fi+e days referred to in sub#section 2"!(2
2)
-2?! Fhere the additional amount of income#ta$ referred to in sub#section 2"! is not
paid by the assessee within the time specified under that sub#section or e$tended under
sub#section 2B!% as the case may be% the *ettlement .ommission may direct that the
amount of income#ta$ remainin5 unpaid% to5ether with any interest payable thereon under
sub#section 2.!% be reco+ered and any penalty for default in ma9in5 payment of such
additional amount may be imposed and reco+ered% in accordance with the pro+isions of
.hapter /0II% by the
23
-"ssessin52 <fficer ha+in5 :urisdiction o+er the assessee(2
)! Fhere an application is allowed to be proceeded with under sub#section 1!% the
*ettlement .ommission may call for the rele+ant records from the .ommissioner and
after e$amination of such records% if the *ettlement .ommission is of the opinion that
any further en,uiry or in+esti5ation in the matter is necessary% it may direct the
.ommissioner to ma9e or cause to be made such further en,uiry or in+esti5ation and
furnish a report on the matters co+ered by the application and any other matter relatin5 to
the case(
3! "fter e$amination of the records and the report of the .ommissioner% recei+ed under
sub#section 1!% and the report% if any% of the .ommissioner recei+ed under sub#section
)!% and after 5i+in5 an opportunity to the applicant and to the .ommissioner to be heard%
either in person or throu5h a representati+e duly authorised in this behalf% and after
e$aminin5 such further e+idence as may be placed before it or obtained by it% the
*ettlement .ommission may% in accordance with the pro+isions of this "ct% pass such
order as it thin9s fit on the matters co+ered by the application and any other matter
relatin5 to the case not co+ered by the application% but referred to in the report of the
.ommissioner under sub#section 1! or sub#section )!(
24
-3"! In e+ery application allowed to be proceeded with under sub#section 1!% the
*ettlement .ommission shall% where it is possible% pass an order under sub#section 3!
within a period of four years from the end of the financial year in which such application
was allowed to be proceeded with(2
2'
-4! *ub:ect to the pro+isions of section 234B"% the materials brou5ht on record before
the *ettlement .ommission shall be considered by the Bembers of the concerned Bench
before passin5 any order under sub#section 3! and% in relation to the passin5 of such
order% the pro+isions of section 234B? shall apply(2
'! E+ery order passed under sub#section 3! shall pro+ide for the terms of settlement
26
includin5 any demand by way of
27
-ta$% penalty or interest2% the manner in which any sum
due under the settlement
26
shall be paid and all other matters to ma9e the settlement
effecti+e and shall also pro+ide that the settlement shall be +oid if it is subse,uently
found by the *ettlement .ommission that it has been obtained by fraud or
misrepresentation of facts(
2&
-'"! Fhere any ta$ payable in pursuance of an order under sub#section 3! is not paid
by the assessee within thirty#fi+e days of the receipt of a copy of the order by him% then%
whether or not the *ettlement .ommission has e$tended the time for payment of such ta$
or has allowed payment thereof by instalments% the assessee shall be liable to pay simple
interest at fifteen per cent per annum on the amount remainin5 unpaid from the date of
e$piry of the period of thirty#fi+e days aforesaid(2
6! Fhere a settlement becomes +oid as pro+ided under sub#section '!% the proceedin5s
with respect to the matters co+ered by the settlement shall be deemed to ha+e been
re+i+ed from the sta5e at which the application was allowed to be proceeded with by the
*ettlement .ommission and the income#ta$ authority concerned% may% notwithstandin5
anythin5 contained in any other pro+ision of this "ct% complete such proceedin5s at any
time before the e$piry of two years from the end of the financial year in which the
settlement became +oid(
)8
-7! >or the remo+al of doubts% it is hereby declared that nothin5 contained in section
14) shall apply to any order passed under sub#section 3! or to any order of assessment%
reassessment or recomputation re,uired to be made by the
)1
-"ssessin52 <fficer in
pursuance of any directions contained in such order passed by the *ettlement
.ommission
)2
-and nothin5 contained in the pro+iso to sub#section 1! of section 17'
shall apply to the cancellation of the re5istration of a firm re,uired to be made in
pursuance of any such directions as aforesaid(22
))
-Power of Settlement Commission to order provisional attachment to protect
revenue.
245DD. 1! Fhere% durin5 the pendency of any proceedin5 before it% the *ettlement
.ommission is of the opinion that for the purpose of protectin5 the interests of the
re+enue it is necessary so to do% it may% by order% attach pro+isionally any property
belon5in5 to the applicant in the manner pro+ided in the *econd *chedule :
Provided that where a pro+isional attachment made under section 271B is pendin5
immediately before an application is made under section 234.% an order under this sub#
section shall continue such pro+isional attachment up to the period up to which an order
made under section 271B would ha+e continued if such application had not been made :
Provided further that where the *ettlement .ommission passes an order under this sub#
section after the e$piry of the period referred to in the precedin5 pro+iso% the pro+isions
of sub#section 2! shall apply to such order as if the said order had ori5inally been passed
by the *ettlement .ommission(
2! E+ery pro+isional attachment made by the *ettlement .ommission under sub#section
1! shall cease to ha+e effect after the e$piry of a period of si$ months from the date of
the order made under sub#section 1! :
Provided that the *ettlement .ommission may% for reasons to be recorded in writin5%
e$tend the aforesaid period by such further period or periods as it thin9s fit% so% howe+er%
that the total period of e$tension shall not in any case e$ceed two years(2
Power of Settlement Commission to reopen completed proceedings.
245E. If the *ettlement .ommission is of the opinion the reasons for such opinion to be
recorded by it in writin5! that% for the proper disposal of the case pendin5 before it% it is
necessary or e$pedient to reopen any proceedin5 connected with the case but which has
been completed
)3
-* * *2 under this "ct by any income#ta$ authority before the
application under section 234. was made% it may% with the concurrence of the applicant%
reopen such proceedin5 and pass such order thereon as it thin9s fit% as if the case in
relation to which the application for settlement had been made by the applicant under that
section co+ered such proceedin5 also :
)4
-Provided that no proceedin5 shall be reopened by the *ettlement .ommission under
this section if the period between the end of the assessment year to which such a
proceedin5 relates and the date of application for settlement under section 234. e$ceeds
nine years(2
Powers and procedure of Settlement Commission.
245F. 1! In addition to the powers conferred on the *ettlement .ommission under this
.hapter% it shall ha+e all the powers which are +ested in an income#ta$ authority under
this "ct(
2! Fhere an application made under section 234. has been allowed to be proceeded
with under section 234?% the *ettlement .ommission shall% until an order is passed under
sub#section 3! of section 234?% ha+e% sub:ect to the pro+isions of sub#section )! of that
section% e$clusi+e :urisdiction to e$ercise the powers and perform the functions of an
income#ta$ authority under this "ct in relation to the case(
)! Aotwithstandin5 anythin5 contained in sub#section 2! and in the absence of any
e$press direction to the contrary by the *ettlement .ommission% nothin5 contained in this
section shall affect the operation of any other pro+ision of this "ct re,uirin5 the applicant
to pay ta$ on the basis of self#assessment
)'
-* * *2 in relation to the matters before the
*ettlement .ommission(
3! >or the remo+al of doubt% it is hereby declared that% in the absence of any e$press
direction by the *ettlement .ommission to the contrary% nothin5 in this .hapter shall
affect the operation of the pro+isions of this "ct in so far as they relate to any matters
other than those before the *ettlement .ommission(
4!
)6
-* * *2
'!
)7
-* * *2
)&
-6! The *ettlement .ommission shall% sub:ect to the pro+isions of this .hapter% ha+e
power to re5ulate its own procedure and the procedure of Benches thereof in all matters
arisin5 out of the e$ercise of its powers or of the dischar5e of its functions% includin5 the
places at which the Benches shall hold their sittin5s(2
Inspection, etc., of reports.
245G.
38
Ao person shall be entitled to inspect% or obtain copies of% any reports made by
any income#ta$ authority to the *ettlement .ommission1 but the *ettlement .ommission
may% in its discretion% furnish copies thereof to any such person on an application made to
it in this behalf and on payment of the prescribed fee :
Provided that% for the purpose of enablin5 any person whose case is under consideration
to rebut any e+idence brou5ht on record a5ainst him in any such report% the *ettlement
.ommission shall% on an application made in this behalf% and on payment of the
prescribed fee by such person% furnish him with a certified copy of any such report or part
thereof rele+ant for the purpose(
Power of Settlement Commission to grant immunity from prosecution and penalty.
245H. 1! The *ettlement .ommission may% if it is satisfied that any person who made
the application for settlement under section 234. has co#oper#ated with the *ettlement
.ommission in the proceedin5s before it and has made a full and true disclosure of his
income and the manner in which such income has been deri+ed% 5rant to such person%
sub:ect to such conditions as it may thin9 fit to impose% immunity from prosecution for
any offence under this "ct or under the Indian Penal .ode 34 of 17'8! or under any
other .entral "ct for the time bein5 in force and also
31
-either wholly or in part!2 from
the imposition of any penalty under this "ct% with respect to the case co+ered by the
settlement :
32
-Provided that no such immunity shall be 5ranted by the *ettlement .ommission in
cases where the proceedin5s for the prosecution for any such offence ha+e been instituted
before the date of receipt of the application under section 234.(2
32
-1"! "n immunity 5ranted to a person under sub#section 1! shall stand withdrawn if
such person fails to pay any sum specified in the order of settlement passed under sub#
section 3! of section 234? within the time specified in such order or within such further
time as may be allowed by the *ettlement .ommission% or fails to comply with any other
condition sub:ect to which the immunity was 5ranted and thereupon the pro+isions of this
"ct shall apply as if such immunity had not been 5ranted(2
2! "n immunity 5ranted to a person under sub#section 1! may% at any time% be
withdrawn by the *ettlement .ommission% if it is satisfied that such person
3)
-* * *2 had%
in the course of the settlement proceedin5s% concealed any particulars material to the
settlement or had 5i+en false e+idence% and thereupon such person may be tried for the
offence with respect to which the immunity was 5ranted or for any other offence of
which he appears to ha+e been 5uilty in connection with the settlement and shall also
become liable to the imposition of any penalty under this "ct to which such person would
ha+e been liable% had not such immunity been 5ranted(
Order of settlement to be conclusive.
245-I. E+ery order of settlement passed under sub#section 3! of section 234? shall be
conclusi+e as to the matters stated therein and no matter co+ered by such order shall% sa+e
as otherwise pro+ided in this .hapter% be reopened in any proceedin5 under this "ct or
under any other law for the time bein5 in force(
Recovery of sums due under order of settlement.
2451. "ny sum specified in an order of settlement passed under sub#section 3! of section
234? may% sub:ect to such conditions% if any% as may be specified therein% be reco+ered%
and any penalty for default in ma9in5 payment of such sum may be imposed and
reco+ered in accordance with the pro+isions of .hapter /0II% by the
34
-"ssessin52
<fficer ha+in5 :urisdiction o+er the person who made the application for settlement under
section 234.(
Bar on subsequent application for settlement in certain cases.
245K. Fhere%
i! an order of settlement passed under sub#section 3! of section 234? pro+ides
for the imposition of a penalty on the person who made the application under
section 234. for settlement% on the 5round of concealment of particulars of his
income1 or
ii! after the passin5 of an order of settlement under the said sub#section 3! in
relation to a case% such person is con+icted of any offence under .hapter //II
in relation to that case1
3'
-or2
36
-iii! the case of such person is sent bac9 to the
37
-"ssessin52 <fficer by the
*ettlement .ommission under section 234C"%2
then% he shall not be entitled to apply for settlement under section 234. in relation to any
other matter(
Proceedings before Settlement Commission to be judicial proceedings.
245L. "ny proceedin5 under this .hapter before the *ettlement .ommission shall be
deemed to be a :udicial proceedin5 within the meanin5 of sections 1&) and 227% and for
the purposes of section 1&'% of the Indian Penal .ode 34 of 17'8!(
48
-CHAPTER XIX-B
ADVANCE RULINGS
Definitions.
245N. In this .hapter% unless the conte$t otherwise re,uires%
41
-a! ad+ance rulin5 means
i! a determination by the "uthority in relation to a transaction which has been
underta9en or is proposed to be underta9en by a non#resident applicant1 or
ii! a determination by the "uthority in relation to
42
-the ta$ liability of a non#
resident arisin5 out of2 a transaction which has been underta9en or is
proposed to be underta9en by a resident applicant with
4)
-such2 non#
resident%
and such determination shall include the determination of any ,uestion of
law or of fact specified in the application1
iii! a determination or decision by the "uthority in respect of an issue relatin5
to computation of total income which is pendin5 before any income#ta$
authority or the "ppellate Tribunal and such determination or decision shall
include the determination or decision of any ,uestion of law or of fact
relatin5 to such computation of total income specified in the application :
43
-Provided that where an ad+ance rulin5 has been pronounced% before the date
on which the >inance "ct% 288) recei+es the assent of the President% by the
"uthority in respect of an application by a resident applicant referred to in sub#
clause ii! of this clause as it stood immediately before such date% such rulin5
shall be bindin5 on the persons specified in section 234*12
b! applicant means any person who
i! is a non#resident referred to in sub#clause i! of clause a!1 or
ii! is a resident referred to in sub#clause ii! of clause a!1 or
iii! is a resident fallin5 within any such class or cate5ory of persons as the
.entral ;o+ernment may% by notification in the <fficial ;a=ette
44
% specify
in this behalf1 and
i%! ma9es an application under sub#section 1! of section 234K12
c! application means an application made to the "uthority under sub#section 1!
of section 234K1
d! "uthority means the "uthority for "d+ance Rulin5s constituted under section
234#<1
e! .hairman means the .hairman of the "uthority1
!! Bember means a Bember of the "uthority and includes the .hairman(
Authority for Advance Rulings.
245-O. 1! The .entral ;o+ernment shall constitute an "uthority for 5i+in5 ad+ance
rulin5s% to be 9nown as "uthority for "d+ance Rulin5s(
2! The "uthority shall consist of the followin5 Bembers appointed by the .entral
;o+ernment% namely :
a! a .hairman% who is a retired @ud5e of the *upreme .ourt1
b! an officer of the Indian Re+enue *er+ice who is ,ualified to be a member of the
.entral Board of ?irect Ta$es1
c! an officer of the Indian Ge5al *er+ice who is% or is ,ualified to be% an
"dditional *ecretary to the ;o+ernment of India(
)! The salaries and allowances payable to% and the terms and conditions of ser+ice of% the
Bembers shall be such as may be prescribed(
3! The .entral ;o+ernment shall pro+ide the "uthority with such officers and staff as
may be necessary for the efficient e$ercise of the powers of the "uthority under this "ct(
4! The office of the "uthority shall be located in ?elhi(
Vacancies, etc., not to invalidate proceedings.
245P. Ao proceedin5 before% or pronouncement of ad+ance rulin5 by% the "uthority shall
be ,uestioned or shall be in+alid on the 5round merely of the e$istence of any +acancy or
defect in the constitution of the "uthority(
Application for advance ruling.
245Q. 1! "n applicant desirous of obtainin5 an ad+ance rulin5 under this .hapter may
ma9e an application in such form and in such manner as may be prescribed
4'
% statin5 the
,uestion on which the ad+ance rulin5 is sou5ht(
2! The application shall be made in ,uadruplicate and be accompanied by a fee of two
thousand fi+e hundred rupees(
)! "n applicant may withdraw an application within thirty days from the date of the
application(
Procedure on receipt of application.
245R. 1! <n receipt of an application% the "uthority shall cause a copy thereof to be
forwarded to the .ommissioner and% if necessary% call upon him to furnish the rele+ant
records :
Provided that where any records ha+e been called for by the "uthority in any case% such
records shall% as soon as possible% be returned to the .ommissioner(
2! The "uthority may% after e$aminin5 the application and the records called for% by
order% either allow or re:ect the application :
46
-Provided that the "uthority shall not allow the application where the ,uestion raised in
the application%
i! is already pendin5 before any income#ta$ authority or "ppellate Tribunal
-e$cept in the case of a resident applicant fallin5 in sub#clause iii! of clause b!
of section 234A2 or any court1
ii! in+ol+es determination of fair mar9et +alue of any property1
iii! relates to a transaction or issue which is desi5ned prima !acie for the a+oidance
of income#ta$ -e$cept in the case of a resident applicant fallin5 in sub#clause
iii! of clause b! of section 234A2:2
Provided further that no application shall be re:ected under this sub#section unless an
opportunity has been 5i+en to the applicant of bein5 heard:
Provided also that where the application is re:ected% reasons for such re:ection shall be
5i+en in the order(
)! " copy of e+ery order made under sub#section 2! shall be sent to the applicant and to
the .ommissioner(
3! Fhere an application is allowed under sub#section 2!% the "uthority shall% after
e$aminin5 such further material as may be placed before it by the applicant or obtained
by the "uthority% pronounce its ad+ance rulin5 on the ,uestion specified in the
application(
4! <n a re,uest recei+ed from the applicant% the "uthority shall% before pronouncin5 its
ad+ance rulin5% pro+ide an opportunity to the applicant of bein5 heard% either in person or
throu5h a duly authorised representati+e(
Explanation(>or the purposes of this sub#section% authorised representati+e shall ha+e the
meanin5 assi5ned to it in sub#section 2! of section 277% as if the applicant were an
assessee(
'! The "uthority shall pronounce its ad+ance rulin5 in writin5 within si$ months of the
receipt of application(
6! " copy of the ad+ance rulin5 pronounced by the "uthority% duly si5ned by the
Bembers and certified in the prescribed manner
47
shall be sent to the applicant and to the
.ommissioner% as soon as may be% after such pronouncement(
4&
-Appellate authority not to proceed in certain cases.
245RR. Ao income#ta$ authority or the "ppellate Tribunal shall proceed to decide any
issue in respect to which an application has been made by an applicant% bein5 a resident%
under sub#section 1! of
'8
-section 234K2(2
Applicability of advance ruling.
245S. 1! The ad+ance rulin5 pronounced by the "uthority under section 234R shall be
bindin5 only
a! on the applicant who had sou5ht it1
b! in respect of the transaction in relation to which the rulin5 had been sou5ht1 and
c! on the .ommissioner% and the income#ta$ authorities subordinate to him% in
respect of the applicant and the said transaction(
2! The ad+ance rulin5 referred to in sub#section 1! shall be bindin5 as aforesaid unless
there is a chan5e in law or facts on the basis of which the ad+ance rulin5 has been
pronounced(
Advance ruling to be void in certain circumstances.
245T. 1! Fhere the "uthority finds% on a representation made to it by the .ommissioner
or otherwise% that an ad+ance rulin5 pronounced by it under sub#section '! of section
234R has been obtained by the applicant by fraud or misrepresentation of facts% it may%
by order% declare such rulin5 to be +oid ab initio and thereupon all the pro+isions of this
"ct shall apply after e$cludin5 the period be5innin5 with the date of such ad+ance rulin5
and endin5 with the date of order under this sub#section! to the applicant as if such
ad+ance rulin5 had ne+er been made(
2! " copy of the order made under sub#section 1! shall be sent to the applicant and the
.ommissioner(
Powers of the Authority.
245U. 1! The "uthority shall% for the purpose of e$ercisin5 its powers% ha+e all the
powers of a ci+il court under the .ode of .i+il Procedure% 1&87 4 of 1&87! as are
referred to in section 1)1 of this "ct(
2! The "uthority shall be deemed to be a ci+il court for the purposes of section 1&4% but
not for the purposes of .hapter //0I% of the .ode of .riminal Procedure% 1&6) 2 of
1&63! and e+ery proceedin5 before the "uthority shall be deemed to be a :udicial
proceedin5 within the meanin5 of sections 1&) and 227% and for the purpose of section
1&'% of the Indian Penal .ode 34 of 17'8!(
Procedure of Authority.
245V. The "uthority shall% sub:ect to the pro+isions of this .hapter% ha+e power to
re5ulate
'1
its own procedure in all matters arisin5 out of the e$ercise of its powers under
this "ct(2
CHAPTER XX
APPEALS AND REVISION
'2
-A.Appeals
')
-***2 to the 1eput+ 'ommissioner *Appeals( and 'ommissioner *Appeals(
Appealable orders.
246. 1! *ub:ect to the pro+isions of sub#section 2!% any assessee a55rie+ed by any of the
followin5 orders of an "ssessin5 <fficer other than the ?eputy .ommissioner! may
appeal to the ?eputy .ommissioner "ppeals!
'3
-before the 1st day of @une% 28882 a5ainst
such order
a! an order a5ainst the assessee% where the assessee denies his liability to be
assessed
'4
under this "ct
''
-% or an intimation under sub#section 1! or sub#
section 1B! of section 13)% where the assessee ob:ects to the ma9in5 of
ad:ustments%2 or any order of assessment under sub#section )! of section 13)
or section 133% where the assessee ob:ects to the amount of income assessed% or
to the amount of ta$ determined% or to the amount of loss computed% or to the
status under which he is assessed1
b! an order of assessment% reassessment or recomputation under section 136 or
section 1481
c! an order under section 143 or section 144 ha+in5 the effect of enhancin5 the
assessment or reducin5 a refund or an order refusin5 to allow the claim made
by the assessee under either of the said sections1
d! an order made under section 1') treatin5 the assessee as the a5ent of a non#
resident1
e! an order under sub#section 2! or sub#section )! of section 1681
!! an order under section 1611
g! any order under clause b! of sub#section 1! or under sub#section 2! or sub#
section )! or sub#section 4! of section 174
'6
-***2
'7
-in respect of any
assessment for the assessment year commencin5 on or before the 1st day of
"pril% 1&&221
h! an order cancellin5 the re5istration of a firm under sub#section 1! or under
sub#section 2! of section 17'
'&
-***2
68
-in respect of any assessment for the
assessment year commencin5 on or before the 1st day of "pril% 1&&221
i! an order under section 2811
4! an order under section 21' in respect of any assessment for the assessment year
commencin5 on the 1st day of "pril% 1&77 or any earlier assessment year1
.! an order under section 2)61
l! an order imposin5 a penalty under
i! section 221% or
ii! section 261% section 261"% section 261B%
61
-***2
62
-section 262"% section
262"" or section 262BB21
iii!
6)
-***2 section 262% section 262B or section 26)% as they stood immediately
before the 1st day of "pril% 1&7&% in respect of any assessment for the
assessment year commencin5 on the 1st day of "pril% 1&77 or any earlier
assessment years(
63
-1"! Aotwithstandin5 anythin5 contained in sub#section 1!% e+ery appeal filed% on or
after the 1st day of <ctober% 1&&7 but before the 1st day of @une% 2888% before the ?eputy
.ommissioner "ppeals! and any matter arisin5 out of or connected with such appeal and
which is so pendin5 shall stand transferred to the .ommissioner "ppeals! and the
.ommissioner "ppeals! may proceed with such appeal or matter from the sta5e at which
it was on that day(2
2! Aotwithstandin5 anythin5 contained in sub#section 1!% any assessee a55rie+ed by any
of the followin5 orders whether made before or after the appointed day! may appeal to
the .ommissioner "ppeals!
64
-before the 1st day of @une% 28882 a5ainst such order
a!
6'
-an intimation or order specified in sub#section 1! where such intimation is
sent or such order2 is made by the ?eputy .ommissioner in e$ercise of the
powers or functions conferred on or assi5ned to him under section 128 or
section 1231
b! an order specified in clauses a! to e! both inclusi+e! and clauses i! to l!
both inclusi+e! of sub#section 1!
66
-or an order under section 183% as it stood
immediately before the 1st day of "pril% 1&77 in respect of any assessment for
the assessment year commencin5 on the 1st day of "pril% 1&76 or any earlier
assessment year2 made a5ainst the assessee% bein5 a company1
c! an order of assessment made after the )8th day of *eptember% 1&73% on the
basis of the directions issued by the ?eputy .ommissioner under section 133"1
d! an order made by the ?eputy .ommissioner under section 1431
67
-da! an order of assessment made by an "ssessin5 <fficer under clause c! of
section 147B.% in respect of search initiated under section 1)2 or boo9s of
account% other documents or any assets re,uisitioned under section 1)2"% on or
after the 1st day of @anuary% 1&&61
db! an order imposin5 a penalty under sub#section 2! of section 147B>"12
e! an order imposin5 a penalty under section 261B
6&
-or section 261BB21
78
-ee! an order made by a ?eputy .ommissioner imposin5 a penalty under section
261.% section 261? or section 261E12
!! an order made by a ?eputy .ommissioner or a ?eputy ?irector imposin5 a
penalty under section 262"1
71
-!!! an order made by a ?eputy .ommissioner imposin5 a penalty under section
262""12
72
-g! an order imposin5 a penalty under .hapter //I by the Income#ta$ <fficer or
the "ssistant .ommissioner where such penalty has been imposed with the
pre+ious appro+al of the ?eputy .ommissioner under sub#section 2! of section
26312
h! an order made by an "ssessin5 <fficer other than ?eputy .ommissioner!
under the pro+isions of this "ct in the case of such person or classes of persons
as the Board may% ha+in5 re5ard to the nature of the cases% the comple$ities
in+ol+ed and other rele+ant considerations% direct(
)! Aotwithstandin5 anythin5 contained in sub#section 1!% the Board or the ?irector
;eneral% or the .hief .ommissioner or .ommissioner if so authorised by the Board% may%
by order in writin5% transfer any appeal which is pendin5 before a ?eputy .ommissioner
"ppeals! and any matter arisin5 out of or connected with such appeal and which is so
pendin5% to the .ommissioner "ppeals! if the Board or% as the case may be% the ?irector
;eneral or .hief .ommissioner or .ommissioner at the re,uest of the appellant or
otherwise! is satisfied that it is necessary or e$pedient so to do ha+in5 re5ard to the nature
of the case% the comple$ities in+ol+ed and other rele+ant considerations and the
.ommissioner "ppeals! may proceed with such appeal or matter% from the sta5e at
which it was before it was so transferred:
Provided that the appellant may demand that before proceedin5 further with the appeal
or matter% the pre+ious proceedin5 or any part thereof be re#opened or that he be reheard(
a! appointed day means the 18th day of @uly% 1&67% bein5 the day appointed under
section )& of the >inance Ao( 2! "ct% 1&66 2& of 1&66!1
b! status means the cate5ory under which the assessee is assessed as indi+idual%
Cindu undi+ided family and so on(2
7)
-Appealable orders before Commissioner (Appeals).
246A. 1! "ny assessee a55rie+ed by any of the followin5 orders whether made before
or after the appointed day! may appeal to the .ommissioner "ppeals! a5ainst
a! an order
73
-passed by a @oint .ommissioner under clause ii! of sub#section )!
of section 1140P or an order2 a5ainst the assessee where the assessee denies
his liability to be assessed under this "ct or an intimation under sub#section 1!
or sub#section 1B! of section 13)% where the assessee ob:ects to the ma9in5 of
ad:ustments% or any order of assessment under sub#section )! of section 13) or
section 133% to the income assessed% or to the amount of ta$ determined% or to
the amount of loss computed% or to the status under which he is assessed1
74
-*aa( an order o! assessment under sub-section *3( o! section 115,E or section
115,0) where the assessee) being an emplo+er ob4ects to the %alue o! !ringe
bene!its assessed-
*ab( an order o! assessment or reassessment under section 115,5-2
b! an order of assessment% reassessment or recomputation under section 136 or
section 1481
7'
-ba! an order of assessment or reassessment under section 14)"12
c! an order made under section 143 or section 144 ha+in5 the effect of enhancin5
the assessment or reducin5 a refund or an order refusin5 to allow the claim
made by the assessee under either of the said sections1
d! an order made under section 1') treatin5 the assessee as the a5ent of a non#
resident1
e! an order made under sub#section 2! or sub#section )! of section 1681
!! an order made under section 1611
g! an order made under clause b! of sub#section 1! or under sub#section 2! or
sub#section )! or sub#section 4! of section 174 in respect of an assessment for
the assessment year commencin5 on or before the 1st day of "pril% 1&&21
h! an order cancellin5 the re5istration of a firm under sub#section 1! or under
sub#section 2! of section 17' in respect of any assessment for the assessment
year commencin5 on or before the 1st day of "pril% 1&&2 or any earlier
assessment year1
76
-ha! an order made under section 28112
i! an order made under section 2)61
4! an order imposin5 a penalty under
A! section 2211 or
B! section 261% section 261"% section 261>%
77
-section 210B)2 section 262""
or section 262BB1
'! section 262% section 262B or section 26)% as they stood immediately before
the 1st day of "pril% 1&7&% in respect of an assessment for the assessment
year commencin5 on the 1st day of "pril% 1&77% or any earlier assessment
years1
""a
*:a( an order o! imposing or enhancing penalt+ under sub-section *1A( o! section
25-]
.! an order of assessment made by an "ssessin5 <fficer under clause c! of
section 147B.% in respect of search initiated under section 1)2 or boo9s of
account% other documents or any assets re,uisitioned under section 1)2" on or
after the 1st day of @anuary% 1&&61
l! an order imposin5 a penalty under sub#section 2! of section 147B>"1
m! an order imposin5 a penalty under section 261B or section 261BB1
n! an order made by a ?eputy .ommissioner imposin5 a penalty under section
261.
77b
) section 21'A]% section 261? or section 261E1
o! an order made by a ?eputy .ommissioner or a ?eputy ?irector imposin5 a
penalty under section 262"1
p! an order made by a ?eputy .ommissioner imposin5 a penalty under section
262""1
2! an order imposin5 a penalty under .hapter //I1
r! an order made by an "ssessin5 <fficer other than a ?eputy .ommissioner
under the pro+isions of this "ct in the case of such person or class of persons%
as the Board may% ha+in5 re5ard to the nature of the cases% the comple$ities
in+ol+ed and other rele+ant considerations% direct(
Explanation.>or the purposes of this sub#section% where on or after the 1st day of
<ctober% 1&&7% the post of ?eputy .ommissioner has been redesi5nated as
@oint .ommissioner and the post of ?eputy ?irector has been redesi5nated as
@oint ?irector% the references in this sub#section for ?eputy .ommissioner and
?eputy ?irector shall be substituted by @oint .ommissioner and @oint ?irector
respecti+ely(
7&
-1"! E+ery appeal filed by an assessee in default a5ainst an order under section 281 on
or after the 1st day of <ctober% 1&&7 but before the 1st day of @une% 2888 shall be deemed
to ha+e been filed under this section(2
2! Aotwithstandin5 anythin5 contained in sub#section 1! of section 23'% e+ery appeal
under this "ct which is pendin5 immediately before the appointed day% before the ?eputy
.ommissioner "ppeals! and any matter arisin5 out of or connected with such appeals
and which is so pendin5 shall stand transferred on that date to the .ommissioner
"ppeals! and the .ommissioner "ppeals! may proceed with such appeal or matter from
the sta5e at which it was on that day :
Provided that the appellant may demand that before proceedin5 further with the appeal
or matter% the pre+ious proceedin5 or any part thereof be reopened or that he be re#heard(
Explanation.>or the purposes of this section% appointed day means the day appointed by
the .entral ;o+ernment by notification
&8
in the <fficial ;a=ette(2
Appeal by person denying liability to deduct tax.
248. "ny person ha+in5 in accordance with the pro+isions of sections 1&4 and 288
deducted and paid ta$ in respect of any sum char5eable under this "ct% other than
interest% who denies his liability to ma9e such deduction% may appeal to the
&2
-* * *2
&)
-.ommissioner "ppeals!2 to be declared not liable to ma9e such deduction(
Form of appeal and limitation.
249. 1! E+ery appeal under this .hapter shall be in the prescribed form
&3
and shall be
+erified in the prescribed manner
&4
-and shall% in case of an appeal made to the
.ommissioner "ppeals! on or after the 1st day of <ctober% 1&&7% irrespecti+e of the date
of initiation of the assessment proceedin5s relatin5 thereto be accompanied by a fee of%
i! where the total income of the assessee as computed by the "ssessin5 <fficer in
the case to which the appeal relates is one hundred thousand rupees or less% two
hundred fifty rupees1
ii! where the total income of the assessee% computed as aforesaid% in the case to
which the appeal relates is more than one hundred thousand rupees but not
more than two hundred thousand rupees% fi+e hundred rupees1
iii! where the total income of the assessee% computed as aforesaid% in the case to
which the appeal relates is more than two hundred thousand rupees% one
thousand rupees12
&'
-i%! where the sub:ect matter of an appeal is not co+ered under clauses i!% ii! and
iii!% two hundred fifty rupees(2
2! The appeal shall be presented within thirty days of the followin5 date% that is to say%
a! where the appeal relates to any ta$ deducted under sub#section 1! of section
1&4% the date of payment of the ta$% or
b! where the appeal relates to any assessment or penalty% the date of ser+ice of the
notice of demand relatin5 to the assessment or penalty:
&6
-Provided that% where an application has been made under section 13' for
reopenin5 an assessment% the period from the date on which the application is
made to the date on which the order passed on the application is ser+ed on the
assessee shall be e$cluded% or2
c! in any other case% the date on which intimation of the order sou5ht to be
appealed a5ainst is ser+ed(
&7
-2"! Aotwithstandin5 anythin5 contained in sub#section 2!% where an order has been
made under section 281 on or after the 1st day of <ctober% 1&&7 but before the 1st day of
@une% 2888 and the assessee in default has not presented any appeal within the time
specified in that sub#section% he may present such appeal before the 1st day of @uly%
2888(2
)! The
&&
-***2
1
-.ommissioner "ppeals!2 may admit an appeal after the e$piration of
the said period if he is satisfied that the appellant had sufficient cause for not presentin5 it
within that period(
2
-3! Ao appeal under this .hapter shall be admitted unless at the time of filin5 of the
appeal%
a! where a return has been filed by the assessee% the assessee has paid the ta$ due
on the income returned by him1 or
b! where no return has been filed by the assessee% the assessee has paid an amount
e,ual to the amount of ad+ance ta$ which was payable by him:
Provided that%
)
-in a case fallin5 under clause b! and2 on an application made by the
appellant in this behalf% the
3
-* * *2
4
-.ommissioner "ppeals!2 may% for any 5ood and
sufficient reason to be recorded in writin5% e$empt him from the operation of the
pro+isions of
'
-that clause2(2
Procedure in appeal.
6
250. 1! The
7
-* * *2
&
-.ommissioner "ppeals!2 shall fi$ a day and place for the hearin5
of the appeal% and shall 5i+e notice of the same to the appellant and to the
18
-"ssessin52
<fficer a5ainst whose order the appeal is preferred(
2! The followin5 shall ha+e the ri5ht to be heard at the hearin5 of the appeal
a! the appellant% either in person or by an authorised representati+e1
b! the
18
-"ssessin52 <fficer% either in person or by a representati+e(
)! The
11
-* * *2
12
-.ommissioner "ppeals!2 shall ha+e the power to ad:ourn the hearin5
of the appeal from time to time(
3! The
1)
-* * *2
13
-.ommissioner "ppeals!2 may% before disposin5 of any appeal% ma9e
such further in,uiry as he thin9s fit% or may direct the
14
-"ssessin52 <fficer to ma9e
further in,uiry and report the result of the same to the
1)
-* * *2
13
-.ommissioner
"ppeals!2(
4! The
1)
-* * *2
13
-.ommissioner "ppeals!2 may% at the hearin5 of an appeal% allow the
appellant to 5o into any 5round of appeal not specified in the 5rounds of appeal% if the
1)
-* * *2
13
-.ommissioner "ppeals!2 is satisfied that the omission of that 5round from the
form of appeal was not wilful or unreasonable(
'! The order of the
1)
-* * *2
13
-.ommissioner "ppeals!2 disposin5 of the appeal shall be
in writin5 and shall state the points for determination% the decision thereon and the reason
for the decision(
1'
-'"! In e+ery appeal% the .ommissioner "ppeals!% where it is possible% may hear and
decide such appeal within a period of one year from the end of the financial year in which
such appeal is filed before him under sub#section 1! of section 23'"(2
6! <n the disposal of the appeal% the
1)
-* * *2
13
-.ommissioner "ppeals!2 shall
communicate the order passed by him to the assessee and to the
16
-.hief .ommissioner
or .ommissioner2(
Powers of the
1)
-* * *2
13
-Commissioner (Appeals)2(
251. 1! In disposin5 of an appeal% the
1)
-* * *2
13
-.ommissioner "ppeals!2 shall ha+e the
followin5 powers
a! in an appeal a5ainst an order of assessment% he may confirm% reduce% enhance
or annul the assessment
17
1
1&
-* * *2
b! in an appeal a5ainst an order imposin5 a penalty% he may confirm or cancel
such order or +ary it so as either to enhance or to reduce the penalty1
c! in any other case% he may pass such orders in the appeal as he thin9s fit(
2! The
28
-* * *2
21
-.ommissioner "ppeals!2 shall not enhance an assessment or a
penalty or reduce the amount of refund unless the appellant has had a reasonable
opportunity of showin5 cause a5ainst such enhancement or reduction(
Explanation(In disposin5 of an appeal% the
28
-* * *2
21
-.ommissioner "ppeals!2 may
consider and decide any matter arisin5 out of the proceedin5s in which the order appealed
a5ainst was passed% notwithstandin5 that such matter was not raised before the
28
-* * *2
21
-.ommissioner "ppeals!2 by the appellant(
B.Appeals to the Appellate 7ribunal
Appellate Tribunal.
252. 1! The .entral ;o+ernment shall constitute an "ppellate Tribunal consistin5 of as
many :udicial and accountant members as it thin9s fit to e$ercise the powers and
dischar5e the functions conferred on the "ppellate Tribunal by this "ct(
22
-2! " :udicial member shall be a person who has for at least ten years held a :udicial
office in the territory of India or who has been a member of the
2)
-Indian2 Ge5al *er+ice
and has held a post in ;rade
23
-II2 of that *er+ice or any e,ui+alent or hi5her post for at
least three years or who has been an ad+ocate for at least ten years(
i! in computin5 the period durin5 which a person has held :udicial office in the
territory of India% there shall be included any period% after he has held any
:udicial office% durin5 which the person has been an ad+ocate or has held the
office of a member of a Tribunal or any post% under the Enion or a *tate%
re,uirin5 special 9nowled5e of law1
ii! in computin5 the period durin5 which a person has been an ad+ocate% there
shall be included any period durin5 which the person has held :udicial office or
the office of a member of a Tribunal or any post% under the Enion or a *tate%
re,uirin5 special 9nowled5e of law after he became an ad+ocate(
2"! "n accountant member shall be a person who has for at least ten years been in the
practice of accountancy as a chartered accountant under the .hartered "ccountants "ct%
1&3& )7 of 1&3&!% or as a re5istered accountant under any law formerly in force or partly
as a re5istered accountant and partly as a chartered accountant% or who has been a
member of the Indian Income#ta$ *er+ice% ;roup " and has held the post of
24
-"dditional2 .ommissioner of Income#ta$ or any e,ui+alent or hi5her post for at least
three years(2
2'
-)! The .entral ;o+ernment shall appoint the *enior 0ice#President or one of the
0ice#Presidents of the "ppellate Tribunal to be the President thereof(2
26
-3! The .entral ;o+ernment may appoint one or more members of the "ppellate
Tribunal to be the 0ice#President or% as the case may be% 0ice#Presidents thereof(2
27
-3"! The .entral ;o+ernment may appoint one of the 0ice#Presidents of the "ppellate
Tribunal to be the *enior 0ice#President thereof(2
2&
4!
)8
-The *enior 0ice#President or a 0ice#President2 shall e$ercise such of the powers
and perform such of the functions of the President as may be dele5ated to him by the
President by a 5eneral or special order in writin5(
)1
Appeals to the Appellate Tribunal.
)2
253. 1! "ny assessee a55rie+ed by any of the followin5 orders may appeal to the
"ppellate Tribunal a5ainst such order
a! an order passed by a
))
)3
-before the 1st day
of <ctober% 1&&72
)4
-or% as the case may be% a .ommissioner "ppeals!2 under
)'
-***2
)6
-section 1432%
)7
-***2 section 248%
)&
-section 261% section 261" or
section 262"21 or
38
-b! an order passed by an "ssessin5 <fficer under clause c! of section 147B.% in
respect of search initiated under section 1)2 or boo9s of account% other
documents or any assets re,uisitioned under section 1)2"% after the )8th day of
@une% 1&&4% but before the 1st day of @anuary% 1&&61 or2
31
-ba! an order passed by an "ssessin5 <fficer under sub#section 1! of section
1140J.1 or2
c! an order passed by a .ommissioner
32
-under section 12"" or2 under section
2')
3)
-or under section 2612
33
-or under section 262"2
34
-***2 or an order
passed by him under section 143 amendin5 his order under section 2')2
3'
-or an
order passed by a .hief .ommissioner or a ?irector ;eneral or a ?irector
under section 262"(2
2! The .ommissioner may% if he ob:ects to any order passed by a
36
-?eputy
.ommissioner "ppeals!2
37
-before the 1st day of <ctober% 1&&72
3&
-or% as the case may
be% a .ommissioner "ppeals!2 under
48
-section 143 or2 section 248% direct the
41
-"ssessin52 <fficer to appeal to the "ppellate Tribunal a5ainst the order(
)! E+ery appeal under sub#section 1! or sub#section 2! shall be filed within si$ty days
of the date on which the order sou5ht to be appealed a5ainst is communicated to the
assessee or to the .ommissioner% as the case may be :
42
-Provided that in respect of any appeal under clause b! of sub#section 1!% this sub#
section shall ha+e effect as if for the words si$ty days% the words thirty days had been
substituted(2
3! The
4)
-"ssessin52 <fficer or the assessee% as the case may be% on receipt of notice that
an appeal a5ainst the order of the
43
44
-or% as the case
may be% the .ommissioner "ppeals!2 has been preferred under sub#section 1! or sub#
section 2! by the other party% may% notwithstandin5 that he may not ha+e appealed
a5ainst such order or any part thereof1 within thirty days of the receipt of the notice% file a
memorandum of cross#ob:ections% +erified in the prescribed manner% a5ainst any part of
the order
4'
of the
46
44
-or% as the case may be% the
.ommissioner "ppeals!2% and such memorandum shall be disposed of by the "ppellate
Tribunal as if it were an appeal presented within the time specified in sub#section )!(
4! The "ppellate Tribunal may admit an appeal or permit the filin5 of a memorandum of
cross#ob:ections after the e$piry of the rele+ant period referred to in sub#section )! or
sub#section 3!% if it is satisfied that there was sufficient cause for not presentin5 it within
that period(
47
-'! "n appeal to the "ppellate Tribunal shall be in the prescribed form
4&
and shall be
+erified in the prescribed manner and shall% in the case of an appeal made% on or after the
1st day of <ctober% 1&&7% irrespecti+e of the date of initiation of the assessment
proceedin5s relatin5 thereto% be accompanied by a fee of%
a! where the total income of the assessee as computed by the "ssessin5 <fficer% in
the case to which the appeal relates% is one hundred thousand rupees or less%
fi+e hundred rupees%
b! where the total income of the assessee% computed as aforesaid% in the case to
which the appeal relates is more than one hundred thousand rupees but not
more than two hundred thousand rupees% one thousand fi+e hundred rupees%
c! where the total income of the assessee% computed as aforesaid% in the case to
which the appeal relates is more than two hundred thousand rupees% one per
cent of the assessed income% sub:ect to a ma$imum of ten thousand rupees%
'8
-d! where the sub:ect matter of an appeal relates to any matter% other than those
specified in clauses a!% b! and c!% fi+e hundred rupees:2
Provided that no such fee shall be payable in the case of an appeal referred to in sub#
section 2! or a memorandum of cross#ob:ections referred to in sub#section 3!(
6! "n application for stay of demand shall be accompanied by a fee of fi+e hundred
rupees(2
Orders of Appellate Tribunal.
254. 1! The "ppellate Tribunal may% after 5i+in5 both the parties to the appeal an
opportunity of bein5 heard% pass such orders thereon as it thin9s fit
'1
(
1"!
'2
-***2
2! The "ppellate Tribunal may% at any time within four years from the date of the order%
with a +iew to rectifyin5 any mista9e apparent from the record
')
% amend any order passed
by it under sub#section 1!% and shall ma9e such amendment
')
if the mista9e is brou5ht to
its notice by the assessee or the
'3
-"ssessin52 <fficer :
Provided that an amendment which has the effect of enhancin5 an assessment or
reducin5 a refund or otherwise increasin5 the liability of the assessee% shall not be made
under this sub#section unless the "ppellate Tribunal has 5i+en notice to the assessee of its
intention to do so and has allowed the assessee a reasonable opportunity of bein5 heard :
'4
-Provided further that any application filed by the assessee in this sub#section on or
after the 1st day of <ctober% 1&&7% shall be accompanied by a fee of fifty rupees(2
''
-2"! In e+ery appeal% the "ppellate Tribunal% where it is possible% may hear and decide
such appeal within a period of four years from the end of the financial year in which such
appeal is filed under sub#section 1!
'6
-or sub#section 2!2 of section 24) :
'7
Provided that where an order of stay is made in any proceedin5s relatin5 to an appeal
filed under sub#section 1! of section 24)% the "ppellate Tribunal shall dispose of the
appeal within a period of one hundred and ei5hty days from the date of such order :
Provided further that if such appeal is not so disposed of within the period specified in
the first pro+iso% the stay order shall stand +acated after the e$piry of the said period(2
2B! The cost of any appeal to the "ppellate Tribunal shall be at the discretion of that
Tribunal(2
)! The "ppellate Tribunal shall send a copy of any orders passed under this section to
the assessee and to the
'&
-
68
-***2 .ommissioner2(
3!
61
<a%e as pro%ided in the &ational 7ax 7ribunal Act) 2$$5]% orders passed by the
"ppellate Tribunal on appeal shall be final(
Procedure of Appellate Tribunal.
62
255. 1! The powers and functions of the "ppellate Tribunal may be e$ercised and
dischar5ed by Benches constituted by the President of the "ppellate Tribunal from
amon5 the members thereof(
2! *ub:ect to the pro+isions contained in sub#section )!% a Bench shall consist of one
:udicial member and one accountant member(
)! The President or any other member of the "ppellate Tribunal authorised in this behalf
by the .entral ;o+ernment may% sittin5 sin5ly% dispose of any case which has been
allotted to the Bench of which he is a member and which pertains to an assessee whose
total income as computed by the
6)
-"ssessin52 <fficer in the case does not e$ceed
63
-fi+e
hundred thousand rupees2% and the President may% for the disposal of any particular case%
constitute a *pecial Bench consistin5 of three or more members% one of whom shall
necessarily be a :udicial member and one an accountant member(
3! If the members of a Bench differ in opinion on any point% the point shall be decided
accordin5 to the opinion of the ma:ority% if there is a ma:ority% but if the members are
e,ually di+ided% they shall state the point or points on which they differ% and the case
shall be referred by the President of the "ppellate Tribunal for hearin5 on such point or
points by one or more of the other members of the "ppellate Tribunal% and such point or
points shall be decided accordin5 to the opinion of the ma:ority of the members of the
"ppellate Tribunal who ha+e heard the case% includin5 those who first heard it(
64
4! *ub:ect to the pro+isions of this "ct% the "ppellate Tribunal shall ha+e power to
re5ulate its own procedure and the procedure of Benches thereof in all matters arisin5 out
of the e$ercise of its powers or of the dischar5e of its functions% includin5 the places at
which the Benches shall hold their sittin5s(
'! The "ppellate Tribunal shall% for the purpose of dischar5in5 its functions% ha+e all the
powers which are +ested in the income#ta$ authorities referred to in section 1)1% and any
proceedin5 before the "ppellate Tribunal shall be deemed to be a :udicial proceedin5
within the meanin5 of sections 1&) and 227 and for the purpose of section 1&' of the
Indian Penal .ode 34 of 17'8!% and the "ppellate Tribunal shall be deemed to be a ci+il
court for all the purposes of section 1&4 and .hapter ///0 of the .ode of .riminal
Procedure% 17&7 4 of 17&7!
6'
(
66
***]
Statement of case to Supreme Court in certain cases.
257. If% on an application made
6&
-a5ainst an order made under section 243 before the 1st
day of <ctober% 1&&7%2 under section 24' the "ppellate Tribunal is of the opinion that% on
account of a conflict in the decisions of Ci5h .ourts in respect of any particular ,uestion
of law% it is e$pedient that a reference should be made direct to the *upreme .ourt% the
"ppellate Tribunal may draw up a statement of the case and refer it throu5h its President
direct to the *upreme .ourt(
72
Effect to the decisions of Supreme Court and of the National Tax Tribunal.
260. *1( 7he <upreme 'ourt upon hearing an+ re!erence made to it b+ the Appellate
7ribunal under section 25 shall decide the 2uestion o! law raised therein) and shall
deli%er its 4udgment
7)
thereon containing the grounds on which such decision is !ounded)
and a cop+ o! the 4udgment shall be sent under the seal o! the 'ourt and the signature o!
the 6egistrar to the Appellate 7ribunal which shall pass such orders as are necessar+ to
dispose o! the case con!orming to such 4udgment.
*2( ,here the &ational 7ax 7ribunal deli%ers a 4udgment in an appeal !iled be!ore it or
in an+ matter trans!erred to it under the &ational 7ax 7ribunal Act) 2$$5) e!!ect shall be
gi%en to the order o! that 7ribunal b+ the Assessing /!!icer on the basis o! certi!ied cop+
o! the 4udgment.
*3( 7he cost o! an+ re!erence to the <upreme 'ourt which shall not include the !ee !or
ma.ing the re!erence shall be at the discretion o! the 'ourt.]
73
-''.Appeals to Cigh 'ourt
74
Appeal to High Court.
260A.
7'
1! "n appeal shall lie to the Ci5h .ourt from e+ery order passed in appeal
7'
by
the "ppellate Tribunal
76
be!ore the date o! establishment o! the &ational 7ax 7ribunal]%
if the Ci5h .ourt is satisfied that the case in+ol+es a substantial ,uestion of law
7'
2!
77
-The .hief .ommissioner or the .ommissioner or an assessee a55rie+ed by any
order passed by the "ppellate Tribunal may file an appeal to the Ci5h .ourt and such
appeal under this sub#section shall be2
a! filed within one hundred and twenty days from the date on which the order
appealed a5ainst is
7&
-recei+ed by the assessee or the .hief .ommissioner or
.ommissioner21
b!
&8
-***2
c! in the form of a memorandum of appeal precisely statin5 therein the substantial
,uestion of law in+ol+ed(
)! Fhere the Ci5h .ourt is satisfied that a substantial ,uestion of law is in+ol+ed in any
case% it shall formulate that ,uestion(
3! The appeal shall be heard only on the ,uestion so formulated% and the respondents
shall% at the hearin5 of the appeal% be allowed to ar5ue that the case does not in+ol+e such
,uestion :
Provided that nothin5 in this sub#section shall be deemed to ta9e away or abrid5e the
power of the court to hear% for reasons to be recorded% the appeal on any other substantial
,uestion of law not formulated by it% if it is satisfied that the case in+ol+es such ,uestion(
4! The Ci5h .ourt shall decide the ,uestion of law so formulated and deli+er such
:ud5ment thereon containin5 the 5rounds on which such decision is founded and may
award such cost as it deems fit(
'! The Ci5h .ourt may determine any issue which
a! has not been determined by the "ppellate Tribunal1 or
b! has been wron5ly determined by the "ppellate Tribunal% by reason of a
decision on such ,uestion of law as is referred to in sub#section 1!(
&1
-6! *a+e as otherwise pro+ided in this "ct% the pro+isions of the .ode of .i+il
Procedure% 1&87 4 of 1&87!% relatin5 to appeals to the Ci5h .ourt shall% as far as may be%
apply in the case of appeals under this section(2
Case before High Court to be heard by not less than two 1udges.
260B. 1! Fhen an appeal has been filed before the Ci5h .ourt under section 2'8"% it
shall be heard by a bench of not less than two @ud5es of the Ci5h .ourt% and shall be
decided in accordance with the opinion of such @ud5es or of the ma:ority% if any% of such
@ud5es(
2! Fhere there is no such ma:ority% the @ud5es shall state the point of law upon which
they differ and the case shall then be heard upon that point only by one or more of the
other @ud5es of the Ci5h .ourt and such point shall be decided accordin5 to the opinion
of the ma:ority of the @ud5es who ha+e heard the case includin5 those who first heard it(2
1.Appeals to the <upreme 'ourt
Appeal to Supreme Court.
261. "n appeal shall lie to the *upreme .ourt from any :ud5ment of the Ci5h .ourt
deli+ered
&2
be!ore the establishment o! the &ational 7ax 7ribunal] on a reference made
under section 24'
&)
-a5ainst an order made under section 243 before the 1st day of
<ctober% 1&&7 or an appeal made to Ci5h .ourt in respect of an order passed under
section 243 on or after that date2 in any case which the Ci5h .ourt certifies to be a fit one
for appeal to the *upreme .ourt(
Hearing before Supreme Court.
262. 1! The pro+isions of the .ode of .i+il Procedure% 1&87 4 of 1&87!% relatin5 to
appeals to the *upreme .ourt shall% so far as may be% apply in the case of appeals under
section 2'1 as they apply in the case of appeals from decrees of a Ci5h .ourt :
Provided that nothin5 in this section shall be deemed to affect the pro+isions of sub#
section 1! of section 2'8 or section 2'4(
2! The costs of the appeal shall be in the discretion of the *upreme .ourt(
)! Fhere the :ud5ment of the Ci5h .ourt is +aried or re+ersed in the appeal% effect shall
be 5i+en to the order of the *upreme .ourt in the manner pro+ided in section 2'8 in the
case of a :ud5ment of the Ci5h .ourt(
E(Re+ision by the .ommissioner
Revision of orders prejudicial to revenue.
263. 1! The .ommissioner may call for and e$amine the record
&3
of any proceedin5
under this "ct% and if he considers that any order passed therein by the
&4
-"ssessin52
<fficer is erroneous in so far
&3
as it is pre:udicial to the interests of the re+enue
&3
% he may%
after 5i+in5 the assessee an opportunity of bein5 heard and after ma9in5 or causin5 to be
made such in,uiry as he deems necessary% pass such order thereon as the circumstances
of the case :ustify% includin5 an order enhancin5 or modifyin5 the assessment% or
cancellin5 the assessment
&3
and directin5 a fresh assessment(
&'
-Explanation(>or the remo+al of doubts% it is hereby declared that% for the purposes of
this sub#section%
a! an order passed
&6
-on or before or after the 1st day of @une% 1&772 by the
"ssessin5 <fficer shall include
i! an order of assessment made by the "ssistant .ommissioner
&7#&&
-or ?eputy
.ommissioner2 or the Income#ta$ <fficer on the basis of the directions
issued by the
1
-@oint2 .ommissioner under section 133"1
ii! an order made by the
1
-@oint2 .ommissioner in e$ercise of the powers or in
the performance of the functions of an "ssessin5 <fficer conferred on% or
assi5ned to% him under the orders or directions issued by the Board or by
the .hief .ommissioner or ?irector ;eneral or .ommissioner authorised
by the Board in this behalf under section 1281
b! record
2
-shall include and shall be deemed always to ha+e included2 all records
relatin5 to any proceedin5 under this "ct a+ailable at the time of e$amination
by the .ommissioner1
c! where any order referred to in this sub#section and passed by the "ssessin5
<fficer had been the sub:ect matter of any appeal
)
-filed on or before or after
the 1st day of @une% 1&772% the powers of the .ommissioner under this sub#
section shall e$tend
)
-and shall be deemed always to ha+e e$tended2 to such
matters as had not been considered and decided in such appeal(2
3
-2! Ao order shall be made under sub#section 1! after the e$piry of two years from the
end of the financial year in which the order sou5ht to be re+ised was passed(2
)! Aotwithstandin5 anythin5 contained in sub#section 2!% an order in re+ision under this
section may be passed at any time in the case of an order which has been passed in
conse,uence of% or to 5i+e effect to% any findin5 or direction contained in an order of the
"ppellate Tribunal%
4
&ational 7ax 7ribunal)] the Ci5h .ourt or the *upreme .ourt(
Explanation(In computin5 the period of limitation for the purposes of sub#section 2!% the
time ta9en in 5i+in5 an opportunity to the assessee to be reheard under the pro+iso to
section 12& and any period durin5 which any proceedin5 under this section is stayed by
an order or in:unction of any court shall be e$cluded(
Revision of other orders.
'
264. 1! In the case of any order
6
other than an order
6
to which section 2') applies
passed by an authority subordinate to him% the .ommissioner may% either of his own
motion or on an application by the assessee for re+ision% call for the record of any
proceedin5 under this "ct in which any such order has been passed and may ma9e such
in,uiry or cause such in,uiry to be made and% sub:ect to the pro+isions of this "ct% may
pass such order thereon% not bein5 an order pre:udicial to the assessee% as he thin9s fit(
2! The .ommissioner shall not of his own motion re+ise any order under this section if
the order has been made more than one year pre+iously(
)! In the case of an application for re+ision under this section by the assessee% the
application must be made within one year from the date on which the order in ,uestion
was communicated to him or the date on which he otherwise came to 9now of it%
whiche+er is earlier:
Provided that the .ommissioner may% if he is satisfied that the assessee was pre+ented
by sufficient cause
7
from ma9in5 the application within that period% admit an application
made after the e$piry of that period(
3! The .ommissioner shall not re+ise any order under this section in the followin5 cases
a! where an appeal a5ainst the order lies to the
&
18
-or to the .ommissioner "ppeals!2 or to the "ppellate Tribunal but has not
been made and the time within which such appeal may be made has not
e$pired% or% in the case of an appeal
11
-to the .ommissioner "ppeals! or2 to the
"ppellate Tribunal% the assessee has not wai+ed his ri5ht of appeal1 or
b! where the order is pendin5 on an appeal before the
12
-?eputy .ommissioner
"ppeals!21 or
c! where the order
1)
has been made the sub:ect of an appeal
13
-to the
.ommissioner "ppeals! or2 to the "ppellate Tribunal(
4! E+ery application by an assessee for re+ision under this section shall be accompanied
by a fee of
14
-fi+e hundred2 rupees(
1'
-'! <n e+ery application by an assessee for re+ision under this sub#section% made on or
after the 1st day of <ctober% 1&&7% an order shall be passed within one year from the end
of the financial year in which such application is made by the assessee for re+ision(
Explanation(In computin5 the period of limitation for the purposes of this sub#section% the
time ta9en in 5i+in5 an opportunity to the assessee to be re#heard under the pro+iso to
section 12& and any period durin5 which any proceedin5 under this section is stayed by
an order or in:unction of any court shall be e$cluded(
6! Aotwithstandin5 anythin5 contained in sub#section '!% an order in re+ision under
sub#section '! may be passed at any time in conse,uence of or to 5i+e effect to any
findin5 or direction contained in an order of the "ppellate Tribunal%
16
&ational 7ax
7ribunal)] the Ci5h .ourt or the *upreme .ourt(2
Explanation 1."n order by the .ommissioner declinin5 to interfere shall% for the purposes
of this section% be deemed not to be an order pre:udicial to the assessee(
Explanation 2.>or the purposes of this section% the
17
shall be deemed to be an authority subordinate to the .ommissioner(
0.5eneral
Tax to be paid notwithstanding reference, etc.
265. Aotwithstandin5 that a reference has been made to the Ci5h .ourt or the *upreme
.ourt or an appeal has been preferred to the *upreme .ourt% ta$ shall be payable in
accordance with the assessment made in the case(
Execution for costs awarded by Supreme Court.
266. The Ci5h .ourt may% on petition made for the e$ecution of the order of the *upreme
.ourt in respect of any costs awarded thereby% transmit the order for e$ecution to any
court subordinate to the Ci5h .ourt(
1&
-Amendment of assessment on appeal.
267. Fhere as a result of an appeal under section 23'
28
-or section 23'"2 or section 24)%
any chan5e is made in the assessment of a body of indi+iduals or an association of
persons or a new assessment of a body of indi+iduals or an association of persons is
ordered to be made% the
21
-* * *2 .ommissioner "ppeals! or the "ppellate Tribunal% as
the case may be% shall pass an order authorisin5 the "ssessin5 <fficer either to amend the
assessment made on any member of the body or association or ma9e a fresh assessment
on any member of the body or association(2
Exclusion of time taken for copy
22
.
268. In computin5 the period of limitation prescribed for an appeal
2)
-or an application2
under this "ct% the day on which the order complained of was ser+ed and% if the assessee
was not furnished with a copy of the order when the notice of the order was ser+ed upon
him% the time re,uisite for obtainin5 a copy of such order% shall be e$cluded(
Definition of High Court.
269. In this .hapter%
Ci5h .ourt means
i! in relation to any *tate% the Ci5h .ourt for that *tate 1
23
-ii! in relation to the Enion territory of ?elhi% the Ci5h .ourt of ?elhi 1
iia!
24
-* * *22
iii!
2'
-* * *2
i%! in relation to the Enion territory of the "ndaman and Aicobar Islands% the Ci5h
.ourt at .alcutta 1
%! in relation to the Enion territory of
26
-Ga9shadweep2% the Ci5h .ourt of Derala 1
27
-%a! in relation to the Enion territory of .handi5arh% the Ci5h .ourt of Pun:ab and
Caryana 12
2&
-%i! in relation to the Enion territories of ?adra and Aa5ar Ca+eli and
)8
-* * *2
?aman and ?iu% the Ci5h .ourt at Bombay 1 and
%ii! in relation to the Enion territory of Pondicherry% the Ci5h .ourt at Badras(2
)1
-CHAPTER XX-A
ACQUISITION OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF
TRANSFER TO COUNTERACT EVASION OF TAX
Definitions.
269A. In this .hapter% unless the conte$t otherwise re,uires%
a!
)2
-apparent consideration%
1! in relation to any immo+able property transferred% bein5 immo+able
property of the nature referred to in sub#clause i! of clause e!% means%2
i! if the transfer is by way of sale% the consideration for such transfer as
specified in the instrument of transfer 1
ii! if the transfer is by way of e$chan5e%
A! in a case where the consideration for the transfer consists of a thin5
or thin5s only% the price that such thin5 or thin5s would ordinarily
fetch on sale in the open mar9et on the date of e$ecution of the
instrument of transfer 1
B! in a case where the consideration for the transfer consists of a thin5
or thin5s and a sum of money% the a55re5ate of the price that such
thin5 or thin5s would ordinarily fetch on sale in the open mar9et
on the date of e$ecution of the instrument of transfer and such
sum 1
))
-iii! if the transfer is by way of lease%
A! in a case where the consideration for the transfer consists of
premium only% the amount of premium as specified in the
B! in a case where the consideration for the transfer consists of rent
only% the a55re5ate of the moneys if any! payable by way of rent
and the amounts for the ser+ice or thin5s formin5 part of or
constitutin5 the rent% as specified in the instrument of transfer 1
'! in a case where the consideration for the transfer consists of
premium and rent% the a55re5ate of the amount of the premium% the
moneys if any! payable by way of rent and the amounts for the
ser+ice or thin5s formin5 part of or constitutin5 the rent% as
specified in the instrument of transfer%
and where the whole or any part of the consideration for such transfer is
payable on any date or dates fallin5 after the date of such transfer% the +alue
of the consideration payable after such date shall be deemed to be the
discounted +alue of such consi#deration% as on the date of such transfer%
determined by adoptin5 the rate of interest at ei5ht per cent per annum 1
2! in relation to any immo+able property transferred% bein5 immo+able
property of the nature referred to in sub#clause ii! of clause e!% means%
i! in a case where the consideration for the transfer consists of a sum of
money only% such sum 1
ii! in a case where the consideration for the transfer consists of a thin5 or
thin5s only% the price that such thin5 or thin5s would ordinarily fetch on
sale in the open mar9et on the date of the transfer 1
iii! in a case where the consideration for the transfer consists of a thin5 or
thin5s and a sum of money% the a55re5ate of the price that such thin5 or
thin5s would ordinarily fetch on sale in the open mar9et on the date of
the transfer and such sum%
payable on any date or dates fallin5 after the date of such transfer% the +alue
of the consideration payable after such date shall be deemed to be the
discounted +alue of such consideration% as on the date of such transfer%
determined by adoptin5 the rate of interest at ei5ht per cent per annum 12
b! competent authority means
)3
-a
)4
-@oint2 .ommissioner2 authorised by the
.entral ;o+ernment under section 2'&B to perform the functions of a
competent authority under this .hapter 1
c! court means a principal ci+il court of ori5inal :urisdiction unless the .entral
;o+ernment has appointed as it is hereby authorised to do! any special :udicial
officer within any specified local limits to perform the functions of the court
under this .hapter 1
)'
-d! fair mar9et +alue%
i! in relation to any immo+able property transferred by way of sale or
e$chan5e% bein5 immo+able property of the nature referred to in sub#clause
i! of clause e!% means the price that the immo+able property would
ordinarily fetch on sale in the open mar9et on the date of e$ecution of the
instrument of transfer of such property 1
ii! in relation to any immo+able property transferred by way of lease% bein5
immo+able property of the nature referred to in sub#clause i! of clause e!%
means the premium that such transfer would ordinarily fetch in the open
mar9et on the date of e$ecution of the instrument of transfer of such
property% if the consideration for such transfer had been by way of premium
only 1
iii! in relation to any immo+able property transferred% bein5 immo+able
property of the nature referred to in sub#clause ii! of clause e!% means the
consideration in the form of money that such transfer would ordinarily fetch
in the open mar9et on the date of the transfer% if such transfer had been
made only for consideration in money 12
e!
)6
-immo+able property means%
i! any land or any buildin52 or part of a buildin5% and includes%where any land
or any buildin5 or part of a buildin5 is transferred to5ether with any
machinery% plant% furniture% fittin5s or other thin5s% such machinery% plant%
furniture% fittin5s or other thin5s also(
Explanation.>or the purposes of this
)7
-sub#clause2% land% buildin5% part of a
buildin5% machinery% plant% furniture% fittin5s and other thin5s include any
ri5hts therein 1
)&
-ii! any ri5hts of the nature referred to in clause b! of sub#section 1! of section
2'&"B 12
38
-!! instrument of transfer means the instrument of transfer re5istered under the
Re5istration "ct% 1&87 1' of 1&87!% or% as the case may be% the statement
re5istered under section 2'&"B with the competent authority 12
g! person interested% in relation to any immo+able property% includes all persons
claimin5% or entitled to claim% an interest in the compensation payable on
account of the ac,uisition of that property under this .hapter 1
31
-h! transfer%
i! in relation to any immo+able property referred to in sub#clause i! of clause
e!% means transfer of such property by way of sale or e$chan5e or lease for
a term of not less than twel+e years% and includes allowin5 the possession of
such property to be ta9en or retained in part performance of a contract of
the nature referred to in section 4)"
32
of the Transfer of Property "ct% 1772
3 of 1772!(
Explanation.>or the purposes of this sub#clause% a lease which pro+ides for
the e$tension of the term thereof by a further term or terms shall be deemed
to be a lease for a term of not less than twel+e years if the a55re5ate of the
term for which such lease has been 5ranted and the further term or terms for
which it can be so e$tended is not less than twel+e years 1
ii! in relation to any immo+able property of the nature referred to in sub#clause
ii! of clause e!% means the doin5 of anythin5 whether by way of transfer
of shares in a co#operati+e society or company or by way of any a5reement
or arran5ement or in any other manner whatsoe+er! which has the effect of
transferrin5% or enablin5 the en:oyment of% such property(2
3)
-Registration of certain transactions.
269AB. 1! The followin5 transactions% that is to say%
a! e+ery transaction in+ol+in5 the allowin5 of the possession of any immo+able
property to be ta9en or retained in part performance of a contract of the nature
referred to in section 4)"
33
of the Transfer of Property "ct% 1772 3 of 1772!%
and
b! e+ery transaction whether by way of becomin5 a member of% or ac,uirin5
shares in% a co#operati+e society% company or other association of persons or by
way of any a5reement or any arran5ement of whate+er nature! whereby a
person ac,uires any ri5hts in or with respect to any buildin5 or part of a
buildin5 whether or not includin5 any machinery% plant% furniture% fittin5s or
other thin5s therein! which has been constructed or which is to be constructed
-not bein5 a transaction by way of sale% e$chan5e or lease of such buildin5 or
part of a buildin5 which is re,uired to be re5istered under the Re5istration "ct%
1&87 1' of 1&87!2%
shall be reduced to writin5 in the form of a statement by each of the parties to such
transaction or by any of the parties to such transaction actin5 on behalf of himself and on
behalf of the other parties(
34
2! E+ery statement in respect of a transaction referred to in sub#section 1! shall
a! be in the prescribed form 1
b! set forth such particulars as may be prescribed 1 and
c! be +erified in the prescribed manner%
and re5istered with the competent authority% in such manner and within such time as may
be prescribed% by each of the parties to such transaction or by any of the parties to such
transaction actin5 on behalf of himself and on behalf of the other parties(2
3'
Competent authority.
269B.
36
1! The .entral ;o+ernment may% by 5eneral or special order published in the
<fficial ;a=ette%
a! authorise as many
37
-
3&
-@oint2 .ommissioners2% as it thin9s fit% to perform the
functions of a competent authority under this .hapter 1 and
b! define the local limits within which the competent authorities shall perform
their functions under this .hapter(
2! In respect of any function to be performed by a competent authority under any
pro+ision of this .hapter in relation to any immo+able property referred to in section
2'&.% the competent authority referred to therein shall%
a! in a case where such property is situate within the local limits of the :urisdiction
of only one competent authority% be such competent authority 1
b! in a case where such property is situate within the local limits of the :urisdiction
of two or more competent authorities% be the competent authority empowered to
perform such functions in relation to such property in accordance with rules
made in this behalf by the Board under section 2&4(
48
-Explanation.>or the purposes of this sub#section% immo+able property% bein5 ri5hts of
the nature referred to in clause b! of sub#section 1! of section 2'&"B in% or with respect
to% any buildin5 or part of a buildin5 which has been constructed or which is to be
constructed shall be deemed to be situate at the place where the buildin5 has been
constructed or is to be constructed(2
)! Ao person shall be entitled to call in ,uestion the :urisdiction of a competent authority
in respect of any immo+able property after the e$piry of thirty days from the date on
which such competent authority initiates proceedin5s under section 2'&? for the
ac,uisition of such property(
3! *ub:ect to the pro+isions of sub#section )!% where the :urisdiction of a competent
authority is ,uestioned% the competent authority shall% if satisfied with the correctness of
the claim% by order in writin5% determine the ,uestion accordin5ly and if he is not so
satisfied% he shall refer the ,uestion to the Board and the Board shall% by order in writin5%
determine the ,uestion(
Immovable property in respect of which proceedings for acquisition may be taken.
41
269C. 1! Fhere the competent authority has reason to belie+e that any immo+able
property of a fair mar9et +alue e$ceedin5
42
-one hundred2 thousand rupees has been
transferred by a person hereafter in this .hapter referred to as the transferor! to another
person hereafter in this .hapter referred to as the transferee! for an apparent
consideration which is less than the fair mar9et +alue of the property and that the
consideration for such transfer as a5reed to between the parties has not been truly stated
in the instrument of transfer with the ob:ect of
a! facilitatin5 the reduction or e+asion of the liability of the transferor to pay ta$
under this "ct in respect of any income arisin5 from the transfer 1 or
b! facilitatin5 the concealment of any income or any moneys or other assets which
ha+e not been or which ou5ht to be disclosed by the transferee for the purposes
of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% or this "ct or the Fealth#ta$
"ct% 1&46 26 of 1&46!%
the competent authority may% sub:ect to the pro+isions of this .hapter% initiate
proceedin5s for the ac,uisition of such property under this .hapter :
Provided that before initiatin5 such proceedin5s% the competent authority shall record his
reasons for doin5 so :
Provided further that no such proceedin5s shall be initiated unless the competent
authority has reason to belie+e that the fair mar9et +alue of the property e$ceeds the
apparent consideration therefor by more than fifteen per cent of such apparent
consideration(
2! In any proceedin5s under this .hapter in respect of any immo+able property%
a! where the fair mar9et +alue of such property e$ceeds the apparent
consideration therefor by more than twenty#fi+e per cent of such apparent
consideration% it shall be conclusi+e proof that the consideration for such
transfer as a5reed to between the parties has not been truly stated in the
b! where the property has been transferred for an apparent consideration which is
less than its fair mar9et +alue% it shall be presumed% unless the contrary is
pro+ed% that the consideration for such transfer as a5reed to between the parties
has not been truly stated in the instrument of transfer with such ob:ect as is
referred to in clause a! or clause b! of sub#section 1!(
4)
Preliminary notice.
269D. 1! The competent authority shall initiate proceedin5s for the ac,uisition% under
this .hapter% of any immo+able property referred to in section 2'&. by notice to that
effect published in the <fficial ;a=ette :
Provided that no such proceedin5s shall be initiated in respect of any immo+able
property after the e$piration of a period of
43
-nine2 months from the end of the month in
which the instrument of transfer in respect of such property is re5istered under the
Re5istration "ct% 1&87 1' of 1&87!%
44
-or% as the case may be% section 2'&"B2 :
Provided further that
a! in a case where it is determined under sub#section 3! of section 2'&B by the
competent authority who has initiated proceedin5s for the ac,uisition of any
immo+able property under this .hapter or by the Board that such competent
authority has no :urisdiction to initiate such proceedin5s% the competent
authority ha+in5 :urisdiction may initiate such proceedin5s within
i! the period of
4'
-nine2 months specified in the fore5oin5 pro+iso 1 or
ii! a period of thirty days from the date of such determination%
whiche+er period e$pires later 1
b! in a case where proceedin5s for the ac,uisition of any immo+able property
under this .hapter could not be initiated durin5 any period of time by reason of
any in:unction or order of any court prohibitin5 the initiation of such
proceedin5s or pre+entin5 the e$amination of documents or other materials
re,uired to be e$amined for the purpose of determinin5 whether such
proceedin5s should be initiated% the time of the continuance of the in:unction or
order% the day on which it was issued or made and the day on which it was
withdrawn shall be e$cluded in computin5 the period durin5 which such
proceedin5s may be initiated under this sub#section(
2! The competent authority shall
a! cause a notice under sub#section 1! in respect of any immo+able property to be
ser+ed on the transferor% the transferee% the person in occupation of the
property% if the transferee is not in occupation thereof% and on e+ery person
whom the competent authority 9nows to be interested in the property 1
b! cause such notice to be published
i! in his office by affi$in5 a copy thereof to a conspicuous place 1
ii! in the locality in which the immo+able property to which it relates is situate%
by affi$in5 a copy thereof to a conspicuous part of the property and also by
ma9in5 9nown in such manner as may be prescribed the substance of such
notice at con+enient places in the said locality(
46
-Explanation.The pro+isions of the Explanation to sub#section 2! of section 2'&B shall
apply for the purposes of this sub#section as they apply for the purposes of that sub#
section(2
Objections.
269E. 1! <b:ections a5ainst the ac,uisition of the immo+able property in respect of
which a notice has been published in the <fficial ;a=ette under sub#section 1! of section
2'&? may be made
a! by the transferor or the transferee or any other person referred to in clause a!
of sub#section 2! of that section% within a period of forty#fi+e days from the
date of such publication or a period of thirty days from the date of ser+ice of
notice on such person under the said clause% whiche+er period e$pires later 1
b! by any other person interested in such immo+able property% within forty#fi+e
days from the date of such publication(
2! E+ery ob:ection under sub#section 1! shall be made to the competent authority in
writin5(
)! >or the remo+al of doubts% it is hereby declared that ob:ection may be made under
sub#section 1! that the pro+isions of clause a! of sub#section 2! of section 2'&. do not
apply in relation to any immo+able property on the 5round that the fair mar9et +alue of
such property does not e$ceed the apparent consideration therefor by more than twenty#
fi+e per cent of such apparent consideration(
Hearing of objections.
269F. 1! The competent authority shall fi$ a day and place for the hearin5 of the
ob:ections made under section 2'&E a5ainst the ac,uisition under this .hapter of any
immo+able property% and shall 5i+e notice of the same to e+ery person who has made
such ob:ection :
Provided that such notice shall also be 5i+en to the transferee of such property e+en if he
has not made any such ob:ection(
2! E+ery person to whom a notice is 5i+en under sub#section 1! shall ha+e the ri5ht to
be heard at the hearin5 of the ob:ections(
)! The competent authority shall ha+e the power to ad:ourn the hearin5 of the ob:ections
from time to time(
3! The competent authority may% before disposin5 of the ob:ections% ma9e such further
in,uiry as he thin9s fit(
4! The decision of the competent authority in respect of the ob:ections heard shall be in
writin5 and shall state the reasons for the decision with respect to each ob:ection(
'! If after hearin5 the ob:ections% if any% and after ta9in5 into account all the rele+ant
material on record% the competent authority is satisfied that%
a! the immo+able property to which the proceedin5s relate is of a fair mar9et
+alue e$ceedin5
47
-one hundred2 thousand rupees 1
b! the fair mar9et +alue of such property e$ceeds the apparent consideration
therefor by more than fifteen per cent of such apparent consideration 1 and
c! the consideration for such transfer as a5reed to between the parties has not been
truly stated in the instrument of transfer with such ob:ect as is referred to in
clause a! or clause b! of sub#section 1! of section 2'&.%
he may% after obtainin5 the appro+al of the .ommissioner% ma9e an order for the
ac,uisition of the property under this .hapter(
Explanation.In this sub#section% .ommissioner% in relation to a competent authority%
means such .ommissioner as the Board may% by 5eneral or special order in writin5%
specify in this behalf(
6! If the competent authority is not satisfied as pro+ided in sub#section '!% he shall% by
order in writin5% declare that the property will not be ac,uired under this .hapter(
7! The competent authority shall ser+e a copy of his order under sub#section '! or sub#
section 6!% as the case may be% on the transferor% the transferee and on e+ery person who
has made ob:ections a5ainst such ac,uisition under section 2'&E(
&! In any proceedin5s under this .hapter in respect of any immo+able property% no
ob:ection shall be entertained on the 5round that althou5h the apparent consideration for
the property is less than the fair mar9et +alue of the property on the date of the e$ecution
of the instrument of transfer
4&
-or where such property is of the nature referred to in sub#
clause ii! of clause e! of section 2'&" on the date of the transfer2% the consideration as
a5reed to between the parties has been truly stated in the instrument of transfer because
such consideration was a5reed to ha+in5 re5ard to the price that such property would
ha+e ordinarily fetched
'8
-on such transfer in the open mar9et on the date of the
conclusion of the a5reement to transfer the property2% e$cept where such a5reement has
been re5istered under the Re5istration "ct% 1&87 1' of 1&87!(
Appeal against order for acquisition.
'1
269G. 1! "n appeal may be preferred to the "ppellate Tribunal a5ainst the order for
the ac,uisition of any immo+able property made by the competent authority under
section 2'&>%
a! by the transferor or the transferee or any other person referred to in sub#section
7! of that section% within a period of forty#fi+e days from the date of such order
or a period of thirty days from the date of ser+ice of a copy of the order on such
person under the said sub#section% whiche+er period e$pires later 1
b! by any other person interested in such immo+able property% within forty#fi+e
days from the date of such order :
Provided that the "ppellate Tribunal may% on an application made in this behalf before
the e$piry of the said period of forty#fi+e days or% as the case may be% thirty days% permit%
by order% the appeal to be presented within such further period as may be specified
therein if the applicant satisfies the "ppellate Tribunal that he has sufficient cause for not
bein5 able to present the appeal within the said period of forty#fi+e days or% as the case
may be% thirty days(
'2
2! E+ery appeal under this section shall be in the prescribed form and shall be +erified
in the prescribed manner and shall be accompanied by a fee of
')
-two hundred2 rupees(
)! The "ppellate Tribunal shall fi$ a day and place for the hearin5 of the appeal and
shall 5i+e notice of the same to the appellant and to the competent authority(
3! The "ppellate Tribunal may% after 5i+in5 the appellant and the competent authority an
opportunity of bein5 heard% pass such orders thereon as it thin9s fit(
4! The "ppellate Tribunal may% at any time within thirty days from the date of the order%
with a +iew to rectifyin5 any mista9e apparent from the record% amend any order passed
by it under sub#section 3! and shall ma9e such amendment if the mista9e is brou5ht to its
notice by the appellant or the competent authority :
Provided that if any such amendment is li9ely to affect any person pre:udicially% it shall
not be made without 5i+in5 to such person a reasonable opportunity of bein5 heard(
'! The "ppellate Tribunal shall send a copy of any orders passed under this section to
the appellant and to the .ommissioner(
6! *a+e as pro+ided in section 2'&C% orders passed by the "ppellate Tribunal on appeal
shall be final(
7! E+ery appeal under this section shall be disposed of as e$peditiously as possible and
endea+our shall be made to dispose of e+ery such appeal within ninety days from the date
on which it is presented(
&! The pro+isions of section 244 e$cept sub#section )! thereof! shall% so far as may be%
apply in relation to the powers% functions and proceedin5s of the "ppellate Tribunal
under this section as they apply in relation to the powers% functions and proceedin5s of
the "ppellate Tribunal under .hapter //(
Appeal to High Court.
269H. 1! The .ommissioner or any person a55rie+ed by any order of the "ppellate
Tribunal under section 2'&; may% within si$ty days of the date on which he is ser+ed
with notice of such order under that section% prefer an appeal a5ainst such order to the
Ci5h .ourt on any ,uestion of law :
Provided that the Ci5h .ourt may% on an application made in this behalf before the
e$piry of the said period of si$ty days% permit% by order% the appeal to be presented within
such further period as may be specified therein% if the applicant satisfies the Ci5h .ourt
that he has sufficient cause for not bein5 able to present the appeal within the said period
of si$ty days(
2! "n appeal under sub#section 1! shall be heard by a Bench of not less than two @ud5es
of the Ci5h .ourt and the pro+isions of section 24& shall apply in relation to any such
appeal as they apply in relation to a case referred to the Ci5h .ourt under section 24'(
)! The costs of the appeal shall be in the discretion of the Ci5h .ourt(
Vesting of property in Central Government.
269-I. 1! "s soon as may be after the order for ac,uisition of any immo+able property
made under sub#section '! of section 2'&> becomes final% the competent authority may%
by notice in writin5% order any person who may be in possession of the immo+able
property to surrender or deli+er possession thereof to the competent authority or any
other person duly authorised in writin5 by the competent authority in this behalf% within
thirty days of the date of the ser+ice of the notice(
Explanation.>or the purposes of this sub#section% an order for the ac,uisition of any
immo+able property hereafter in this Explanation referred to as the order for ac,uisition!
made under sub#section '! of section 2'&> becomes final%
a! in a case where the order for ac,uisition is not made the sub:ect of an appeal to
the "ppellate Tribunal under section 2'&;% upon the e$piry of the period
durin5 which such appeal may be presented under that section 1
b! in a case where the order for ac,uisition is made the sub:ect of an appeal to the
"ppellate Tribunal under section 2'&;%
i! if the order for ac,uisition is confirmed by the "ppellate Tribunal and the
order of the "ppellate Tribunal is not made the sub:ect of an appeal to the
Ci5h .ourt under section 2'&C% upon the e$piry of the period durin5 which
such appeal may be presented under that section to the Ci5h .ourt 1
ii! if the order of the "ppellate Tribunal is made the sub:ect of an appeal to the
Ci5h .ourt under section 2'&C% upon the confirmation of the order for
ac,uisition by the Ci5h .ourt(
2! If any person refuses or fails to comply with the notice under sub#section 1!% the
competent authority or other person duly authorised by the competent authority under
that sub#section may ta9e possession of the immo+able property and may% for that
purpose% use such force as may be necessary(
)! Aotwithstandin5 anythin5 contained in sub#section 2!% the competent authority may%
for the purpose of ta9in5 possession of any property referred to in sub#section 1!%
re,uisition the ser+ices of any police officer to assist him and it shall be the duty of such
3! Fhen the possession of the immo+able property is surrendered or deli+ered under
sub#section 1! to the competent authority or a person duly authorised by him in that
behalf or% as the case may be% when the possession thereof is ta9en under sub#section 2!
or sub#section )! by such authority or person% the property shall +est absolutely in the
.entral ;o+ernment free from all encumbrances :
Provided that nothin5 in this sub#section shall operate to dischar5e the transferee or any
other person not bein5 the .entral ;o+ernment! from liability in respect of such
encumbrances and% notwithstandin5 anythin5 contained in any other law% such liability
may be enforced a5ainst the transferee or such other person by a suit for dama5es(
'3
-4! Aotwithstandin5 anythin5 contained in sub#section 3! or any other law or any
instrument or any a5reement for the time bein5 in force% where an order for ac,uisition of
any immo+able property% bein5 ri5hts of the nature referred to in clause b! of sub#section
1! of section 2'&"B% in or with respect to any buildin5 or part of a buildin5 which has
been constructed or which is to be constructed% has become final% then% such order shall%
by its own force% ha+e the effect of
a! +estin5 such ri5hts in the .entral ;o+ernment% and
b! placin5 the .entral ;o+ernment in the same position in relation to such ri5hts
as the person in whom such ri5hts would ha+e continued to +est if such order
had not become final%
and the competent authority may issue such directions as he may deem fit to any person
concerned for ta9in5 the necessary steps for compliance with the pro+isions of clauses a!
and b!(
'! In the case of any immo+able property% bein5 ri5hts of the nature referred to in clause
b! of sub#section 1! of section 2'&"B% in or with respect to any buildin5 or part of a
buildin5% the pro+isions of sub#sections 1!% 2! and )! shall ha+e effect as if the
references to immo+able property therein were a reference to such buildin5 or% as the case
may be% part of such buildin5(2
Compensation.
2691. 1! Fhere any immo+able property is ac,uired under this .hapter% the .entral
;o+ernment shall pay for such ac,uisition compensation which shall be a sum e,ual to
the a55re5ate of the amount of the apparent consideration for its transfer and fifteen per
cent of the said amount :
'4
-Provided that in a case where% under the a5reement between the parties concerned% the
whole or any part of the consideration for the transfer of such immo+able property is
payable on any date or dates fallin5 after the date on which such property is ac,uired% the
compensation payable by the .entral ;o+ernment shall be the a55re5ate of the followin5
amounts% namely :
i! an amount e,ual to fifteen per cent of the apparent consideration 1
ii! the amount% if any% that has become payable in accordance with such a5reement
on or before the date on which such property is ac,uired under this .hapter 1
and
iii! the amount payable after the date on which such property is ac,uired under this
.hapter(2
2! Aotwithstandin5 anythin5 contained in sub#section 1!%
a! where% after the transfer to the transferee of the property referred to in that sub#
section but before the +estin5 of the property in the .entral ;o+ernment% the
property has been dama5ed otherwise than as a result of normal wear and
tear!% the compensation payable under that sub#section shall be reduced by such
amount as the competent authority and the persons entitled to the compensation
may a5ree within fifteen days of the +estin5 of the property in the .entral
;o+ernment or in default of such a5reement as the court may% on a reference
made to it in this behalf by the competent authority or by any person duly
authorised for the purpose by the competent autho#rity% determine to be the
amount that may ha+e to be e$pended for restorin5 the property to the
condition in which it was at the time of such transfer 1
b! where% after the transfer of such property to the transferee but before the date of
publication in the <fficial ;a=ette of the notice in respect of such property
under sub#section 1! of section 2'&?% any impro+ements ha+e been made to
the property% whether by way of addition or alteration or in any other manner%
the compensation payable in respect of such property under sub#section 1!
shall be increased by such amount as the competent authority and the persons
entitled to the compensation may a5ree within fifteen days of the +estin5 of the
property in the .entral ;o+ernment or in default of such a5reement as the court
may% on a reference made to it in this behalf by the competent authority or by
any person duly authorised for the purpose by the competent authority%
determine to be the amount spent for ma9in5 such impro+ements(
)! E+ery reference under clause a! or clause b! of sub#section 2! shall be made within
thirty days of the date on which the immo+able property to which it relates becomes
+ested in the .entral ;o+ernment or within such further period as the court may% on an
application made in this behalf before the e$piry of the said period and on bein5 satisfied
that there is sufficient cause for doin5 so% allow and such reference shall state clearly the
compensation payable under sub#section 1! in respect of the immo+able property and the
amount by which% accordin5 to the estimate of the competent authority% such
compensation shall be reduced under clause a! or% as the case may be% increased under
clause b!% of sub#section 2!(
3! The amount by which the compensation payable under sub#section 1! in respect of
any immo+able property ac,uired under this .hapter falls short of the amount which
would ha+e been payable as compensation if that property had been ac,uired under the
Gand "c,uisition "ct% 17&3 1 of 17&3!% after the issue of a preliminary notice under
section 3 of that "ct on the date of publication in the <fficial ;a=ette of the notice in
respect of the property under sub#section 1! of section 2'&?% shall be deemed to ha+e
been realised by the .entral ;o+ernment as a penalty from the transferee for bein5 a
party to a transfer with such ob:ect as is referred to in clause a! or clause b! of sub#
section 1! of section 2'&.% and no penalty shall be le+ied for any assessment year on the
transferee
a! under clause iii! of sub#section 1! of section 261% for concealin5 the
particulars or furnishin5 inaccurate particulars of so much of his income as is
utilised by him for payin5 to the transferor% by way of consideration for the
property% any amount in e$cess of the apparent consideration for the property%
notwithstandin5 that such amount is included in the income of the transferee 1
b! under clause iii! of sub#section 1! of section 17 of the Fealth#ta$ "ct% 1&46
26 of 1&46!% for concealin5 the particulars or furnishin5 inaccurate particulars
of so much of his assets as are utilised by him for payin5 to the transferor% by
way of consideration for the property% any amount in e$cess of the apparent
consideration for the property% notwithstandin5 that such assets are included in
the net wealth of the transferee(
Payment or deposit of compensation.
269K. 1! The amount of compensation payable in accordance with the pro+isions of
section 2'&@ for the ac,uisition of any immo+able property shall be tendered to the
person or persons entitled thereto% as soon as may be% after the property becomes +ested
in the .entral ;o+ernment under sub#section 3! of section 2'&#I :
''
-Provided that in a case fallin5 under the pro+iso to sub#section 1! of section 2'&@% the
amounts referred to in clause i! and clause ii! of that pro+iso shall be tendered to the
person or persons entitled thereto% as soon as may be% after the property becomes +ested
in the .entral ;o+ernment under section 2'&#I% and the amount referred to in clause iii!
of the said pro+iso shall be tendered on the date on which it would be payable in
accordance with the a5reement between the parties concerned% and where such amount is
payable in instalments on different dates% then in such instalments on those dates :2
Provided
'6
-further2 that in any case where a reference is or has to be made under sub#
section 2! of section 2'&@ to the court for the determination of the amount by which the
compensation payable under sub#section 1! of that section shall be reduced or increased%
the amount of such compensation as reduced or increased by the amount estimated in that
behalf by the competent authority for the purposes of such reference shall be tendered as
aforesaid(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% if any dispute arises as to the
apportionment of the compensation amon5st persons claimin5 to be entitled thereto% the
.entral ;o+ernment shall deposit in the court the compensation re,uired to be tendered
under sub#section 1! and refer such dispute for the decision of the court and the decision
of the court thereon shall be final(
)! Aotwithstandin5 anythin5 contained in sub#section 1!% if the persons entitled to
compensation do not consent to recei+e it% or if there is no person competent to alienate
the immo+able property% or if there is any dispute as to the title to recei+e the
compensation% the .entral ;o+ernment shall deposit in the court the compensation
re,uired to be tendered under sub#section 1! and refer the matter for the decision of the
court :
Provided that nothin5 herein contained shall affect the liability of any person who may
recei+e the whole or any part of the compensation for any immo+able property ac,uired
under this .hapter to pay the same to the person lawfully entitled thereto(
3! If the .entral ;o+ernment fails to tender under sub#section 1! or deposit under sub#
section 2! or sub#section )! the whole or any part of the compensation re,uired to be
tendered or deposited thereunder within thirty days of the date on which the immo+able
property to which the compensation relates becomes +ested in the .entral ;o+ernment
under sub#section 3! of section 2'&#I% the .entral ;o+ernment shall be liable to pay
simple interest at the rate of
'7
-fifteen2 per cent per annum rec9oned from the day
immediately followin5 the date of e$piry of the said period up to the date on which it so
tenders or deposits such compensation or% as the case may be% such part of the
compensation(
4! Fhere any amount of compensation includin5 interest% if any% thereon! has been
deposited in the court under this section% the court may% either of its own motion or on an
application made by or on behalf of any party interested or claimin5 to be interested in
such amount% order the same to be in+ested in such ;o+ernment or other securities as it
may thin9 proper% and may direct the interest or other proceeds of any such in+estment to
be accumulated and paid in such manner as will% in its opinion% 5i+e the parties interested
therein the same benefit therefrom as they mi5ht ha+e had from the immo+able property
in respect whereof such amount has been deposited or as near thereto as may be(
Assistance by Valuation Officers.
269L. 1! The competent authority may%
a! for the purpose of initiatin5 proceedin5s for the ac,uisition of any immo+able
property under section 2'&. or for the purpose of ma9in5 an order under
section 2'&> in respect of any immo+able property% re,uire a 0aluation <fficer
to determine the fair mar9et +alue of such property and report the same to him 1
b! for the purpose of estimatin5 the amount by which the compensation payable
under sub#section 1! of section 2'&@ in respect of any immo+able property
may be reduced or% as the case may be% increased under clause a! or clause b!
of sub#section 2! of that section% re,uire the 0aluation <fficer to ma9e such
estimate and report the same to him(
2! The 0aluation <fficer to whom a reference is made under clause a! or clause b! of
sub#section 1! shall% for the purpose of dealin5 with such reference% ha+e all the powers
that he has under section )7" of the Fealth#ta$ "ct% 1&46 26 of 1&46!(
)! If in an appeal under section 2'&; a5ainst the order for ac,uisition of any immo+able
property% the fair mar9et +alue of such property is in dispute% the "ppellate Tribunal
shall% on a re,uest bein5 made in this behalf by the competent authority% 5i+e an
opportunity of bein5 heard to any 0aluation <fficer nominated for the purpose by the
competent authority(
Explanation.In this section% 0aluation <fficer has the same meanin5 as in clause r! of
section 2 of the Fealth#ta$ "ct% 1&46 26 of 1&46!(
Powers of competent authority.
269M. The competent authority shall ha+e% for the purposes of this .hapter% all the
powers that a .ommissioner has% for the purposes of this "ct% under section 1)1(
Rectification of mistakes.
269N. Fith a +iew to rectifyin5 any mista9e apparent from the record% the competent
authority may amend any order made by him under this .hapter at any time before the
time for presentin5 an appeal a5ainst such order has e$pired% either on his own motion or
on the mista9e bein5 brou5ht to his notice by any person affected by the order :
not be made without 5i+in5 to such person a reasonable opportunity of bein5 heard(
Appearance by authorised representative or registered valuer.
269-O. "ny person who is entitled or re,uired to attend before a competent authority or
the "ppellate Tribunal in any proceedin5 under this .hapter% otherwise than when
re,uired to attend personally for e$amination on oath or affirmation% may attend
a! by an authorised representati+e in connection with any matter 1
b! by a re5istered +aluer in connection with any matter relatin5 to the +aluation of
any immo+able property for the purposes of this .hapter or the estimation of
the amount by which the compensation payable under sub#section 1! of section
2'&@ for the ac,uisition of any immo+able property may be reduced or% as the
case may be% increased in accordance with the pro+isions of clause a! or clause
b! of sub#section 2! of that section(
i! authorised representati+e has the same meanin5 as in section 277 1
'&
ii! re5istered +aluer has the same meanin5 as in clause oaa! of section 2 of the
Fealth#ta$ "ct% 1&46 26 of 1&46!(
Statement to be furnished in respect of transfers of immovable property.
269P.
68
1! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in
force% no re5isterin5 officer appointed under the Re5istration "ct% 1&87 1' of 1&87!%
shall re5ister any document which purports to transfer any immo+able property belon5in5
to any person unless a statement in duplicate in respect of such transfer% in the prescribed
form and +erified in the prescribed manner and settin5 forth such particulars as may be
prescribed% is furnished to him alon5 with the instrument of transfer :
61
-Provided that the pro+isions of this sub#section shall not apply in relation to any
document which purports to transfer any immo+able property for an apparent
consideration not e$ceedin5
62
-fifty2 thousand rupees(
Explanation.>or the purposes of this pro+iso% apparent consideration shall ha+e the
meanin5 assi5ned to it in clause a! of section 2'&" sub:ect to the modifications that for
the e$pressions immo+able property transferred and instrument of transfer occurrin5 in
that clause% the e$pressions immo+able property purported to be transferred and
document purportin5 to transfer such immo+able property shall% respecti+ely% be
substituted(2
2! The re5isterin5 officer shall% at the end of e+ery fortni5ht% forward to the competent
authority%
a! one set of the statements recei+ed by him under sub#section 1! durin5 the
fortni5ht 1 and
b!
6)
a return in the prescribed form and +erified in the prescribed manner and
settin5 forth such particulars as may be prescribed in respect of documents of
the nature referred to in sub#section 1! which ha+e been re5istered by him
durin5 the fortni5ht(
Chapter not to apply to transfers to relatives.
269Q. The pro+isions of this .hapter shall not apply to or in relation to any transfer of
immo+able property made by a person to his relati+e on account of natural lo+e and
affection for a consideration which is less than its fair mar9et +alue if a recital to that
effect is made in the instrument of transfer(
Properties liable for acquisition under this Chapter not to be acquired under other
laws.
269R. Aotwithstandin5 anythin5 contained in the Gand "c,uisition "ct% 17&3 1 of
17&3!% or any correspondin5 law for the time bein5 in force% no immo+able property
referred to in section 2'&. shall be ac,uired for any purpose of the Enion under that "ct
or such law unless the time for initiation of proceedin5s for the ac,uisition of such
property under this .hapter has e$pired without such proceedin5s ha+in5 been initiated
or unless the competent authority has declared that such property will not be ac,uired
under this .hapter(
63
-Chapter not to apply where transfer of immovable property made after a certain
date.
269RR. The pro+isions of this .hapter shall not apply to or in relation to the transfer of
any immo+able property made after the )8th day of *eptember% 1&7'(2
Chapter not to extend to State of 1ammu and Kashmir.
269S. The pro+isions of this .hapter shall not e$tend to the *tate of @ammu and
Dashmir(2
64
-CHAPTER XX-B
REQUIREMENT AS TO MODE OF
6'
ACCEPTANCE, PAYMENT OR]
REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX
6'
-Mode of taking or accepting certain loans and deposits.
66
269SS. Ao person shall% after the )8th day of @une% 1&73% ta9e or accept from any other
person hereafter in this section referred to as the depositor!% any loan or deposit
otherwise than by an account payee che,ue or account payee ban9 draft if%
a! the amount of such loan or deposit or the a55re5ate amount of such loan and
deposit 1 or
b! on the date of ta9in5 or acceptin5 such loan or deposit% any loan or deposit
ta9en or accepted earlier by such person from the depositor is remainin5 unpaid
whether repayment has fallen due or not!% the amount or the a55re5ate amount
remainin5 unpaid 1 or
c! the amount or the a55re5ate amount referred to in clause a! to5ether with the
amount or the a55re5ate amount referred to in clause b!%
is
67
-twenty2 thousand rupees or more :
Provided that the pro+isions of this section shall not apply to any loan or deposit ta9en or
accepted from% or any loan or deposit ta9en or accepted by%
a! ;o+ernment 1
b! any ban9in5 company% post office sa+in5s ban9 or co#operati+e ban9 1
c! any corporation established by a .entral% *tate or Pro+incial "ct 1
d! any ;o+ernment company
6&
1&4' 1 of 1&4'! 1
e! such other institution% association or body or class of institutions% associations
or bodies which the .entral ;o+ernment may% for reasons to be recorded in
writin5% notify
78
in this behalf in the <fficial ;a=ette :
71
-Provided further that the pro+isions of this section shall not apply to any loan or
deposit where the person from whom the loan or deposit is ta9en or accepted and the
person by whom the loan or deposit is ta9en or accepted are both ha+in5 a5ricultural
income and neither of them has any income char5eable to ta$ under this "ct(2
72
-i! ban9in5 company means a company to which the Ban9in5 Re5ulation "ct%
1&3& 18 of 1&3&!% applies and includes any ban9 or ban9in5 institution
referred to in section 41 of that "ct 12
ii! co#operati+e ban9 shall ha+e the meanin5 assi5ned to it in Part 0 of the
Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&! 1
iii! loan or deposit means loan or deposit of money(2
7)
-Mode of repayment of certain loans or deposits
73
.
269T. Ao branch of a ban9in5 company or a co#operati+e ban9 and no other company or
co#operati+e society and no firm or other person shall repay any loan or deposit made
with it otherwise than by an account payee che,ue or account payee ban9 draft drawn in
the name of the person who has made the loan or deposit if
a! the amount of the loan or deposit to5ether with the interest% if any% payable
thereon% or
b! the a55re5ate amount of the loans or deposits held by such person with the
branch of the ban9in5 company or co#operati+e ban9 or% as the case may be% the
other company or co#operati+e society or the firm% or other person either in his
own name or :ointly with any other person on the date of such repayment
to5ether with the interest% if any% payable on such loans or deposits%
is twenty thousand rupees or more:
Provided that where the repayment is by a branch of a ban9in5 company or co#operati+e
ban9% such repayment may also be made by creditin5 the amount of such loan or deposit
to the sa+in5s ban9 account or the current account if any! with such branch of the person
to whom such loan or deposit has to be repaid :
74
-Provided further that nothin5 contained in this section shall apply to repayment of
any loan or deposit ta9en or accepted from
i! ;o+ernment1
ii! any ban9in5 company% post office sa+in5s ban9 or co#operati+e ban91
iii! any corporation established by a .entral% *tate or Pro+incial "ct1
i%! any ;o+ernment company
7'
1&4' 1 of 1&4'!1
%! such other institution% association or body or class of institutions% associations
or bodies which the .entral ;o+ernment may% for reasons to be recorded in
writin5% notify in this behalf in the <fficial ;a=ette(2
i! ban9in5 company shall ha+e the meanin5 assi5ned to it in clause i! of the
Explanation to section 2'&**1
ii! co#operati+e ban9 shall ha+e the meanin5 assi5ned to it in Part 0 of the
Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!1
iii! loan or deposit means any loan or deposit of money which is repayable after
notice or repayable after a period and% in the case of a person other than a
company% includes loan or deposit of any nature(2
76
-Mode of repayment of Special Bearer Bonds, 1991.
269TT. Aotwithstandin5 anythin5 contained in any other law for the time bein5 in force%
the amount payable on redemption of *pecial Bearer Bonds% 1&&1% shall be paid only by
an account payee che,ue or account payee ban9 draft drawn in the name of the person to
whom such payment is to be made(2
77
-CHAPTER XX-C
PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES
IN CERTAIN CASES OF TRANSFER
Commencement of Chapter.
269U. The pro+isions of this .hapter shall come into force on such date as the .entral
7&
in the <fficial ;a=ette% appoint% and different dates
may be appointed for different areas(
Definitions.
269UA. In this .hapter% unless the conte$t otherwise re,uires%
a! a5reement for transfer means an a5reement% whether re5istered under the
Re5istration "ct% 1&87 1' of 1&87! or not% for the transfer of any immo+able
property 1
b! apparent consideration%
1! in relation to any immo+able property in respect of which an a5reement for
transfer is made% bein5 immo+able property of the nature referred to in sub#
clause i! of clause d!% means%
i! if the immo+able property is to be transferred by way of sale% the
consideration for such transfer as specified in the a5reement for transfer
1
ii! if the immo+able property is to be transferred by way of e$chan5e%
A! in a case where the consideration for the transfer consists of a
thin5
&8
or thin5s only% the price that such thin5 or thin5s would
ordinarily fetch on sale in the open mar9et on the date on which
the a5reement for transfer is made 1
B! in a case where the consideration for the transfer consists of a thin5
or thin5s and a sum of money% the a55re5ate of the price that such
thin5 or thin5s would ordinarily fetch on sale in the open mar9et
on the date on which the a5reement for transfer is made% and such
sum 1
iii! if the immo+able property is to be transferred by way of lease%
A! in a case where the consideration for the transfer consists of
premium only% the amount of premium as specified in the
a5reement for transfer 1
B! in a case where the consideration for the transfer consists of rent
only% the a55re5ate of the moneys if any! payable by way of rent
and the amounts for the ser+ice or thin5s formin5 part of or
constitutin5 the rent% as specified in the a5reement for transfer 1
'! in a case where the consideration for the transfer consists of
premium and rent% the a55re5ate of the amount of the premium% the
moneys if any! payable by way of rent and the amounts for the
ser+ice or thin5s formin5 part of or constitutin5 the rent% as
specified in the a5reement for transfer%
payable on any date or dates fallin5 after the date of such a5reement for
transfer% the +alue of the consideration payable after such date shall be
deemed to be the discounted +alue
&1
of such consideration% as on the date of
such a5reement for transfer% determined by adoptin5 such rate of interest as
may be prescribed in this behalf 1
2! in relation to any immo+able property in respect of which an a5reement for
transfer is made% bein5 immo+able property of the nature referred to in sub#
clause ii! of clause d!% means%
i! in a case where the consideration for the transfer consists of a sum of
money only% such sum 1
ii! in a case where the consideration for the transfer consists of a thin5 or
thin5s only% the price that such thin5 or thin5s would ordinarily fetch on
sale in the open mar9et on the date on which the a5reement for transfer
is made 1
iii! in a case where the consideration for the transfer consists of a thin5 or
thin5s and a sum of money% the a55re5ate of the price that such thin5 or
thin5s would ordinarily fetch on sale in the open mar9et on the date on
which the a5reement for transfer is made% and such sum%
payable on any date or dates fallin5 after the date of such a5reement for
transfer% the +alue of the consideration payable after such date shall be
deemed to be the discounted +alue
&2
of such consideration% as on the date of
such a5reement for transfer% determined by adoptin5 such rate of interest as
may be prescribed in this behalf 1
&)
c! appropriate authority means an authority constituted under section 2'&EB to
perform the functions of an appropriate authority under this .hapter 1
d! immo+able property means
i! any land or any buildin5 or part of a buildin5% and includes% where any land
or any buildin5 or part of a buildin5 is to be transferred to5ether with any
machinery% plant% furniture% fittin5s or other thin5s% such machinery% plant%
furniture% fittin5s or other thin5s also(
Explanation.>or the purposes of this sub#clause% land% buildin5% part of a
buildin5% machinery% plant% furniture% fittin5s and other thin5s include any
ri5hts therein 1
ii! any ri5hts in or with respect to any land or any buildin5 or a part of a
buildin5 whether or not includin5 any machinery% plant% furniture% fittin5s
or other thin5s therein! which has been constructed or which is to be
constructed% accruin5 or arisin5 from any transaction whether by way of
becomin5 a member of% or ac,uirin5 shares in% a co#operati+e society%
company or other association of persons or by way of any a5reement or any
arran5ement of whate+er nature!% not bein5 a transaction by way of sale%
e$chan5e or lease of such land% buildin5 or part of a buildin5 1
e! person interested
&3
% in relation to any immo+able property% includes all persons
claimin5% or entitled to claim% an interest in the consideration payable on
account of the +estin5 of that property in the .entral ;o+ernment under this
.hapter 1
!! transfer
&3
%
i! in relation to any immo+able property referred to in sub#clause i! of clause
d!% means transfer of such property by way of sale or e$chan5e or lease for
a term of not less than twel+e years% and includes allowin5 the possession of
such property to be ta9en or retained in part performance of a contract of
the nature referred to in section 4)"
&4
of the Transfer of Property "ct% 1772
3 of 1772!(
Explanation.>or the purposes of this sub#clause% a lease which pro+ides for
the e$tension of the term thereof by a further term or terms shall be deemed
to be a lease for a term of not less than twel+e years% if the a55re5ate of the
term for which such lease is to be 5ranted and the further term or terms for
which it can be so e$tended is not less than twel+e years 1
ii! in relation to any immo+able property of the nature referred to in sub#clause
ii! of clause d!% means the doin5 of anythin5 whether by way of admittin5
as a member of or by way of transfer of shares in a co#operati+e society or
company or other association of persons or by way of any a5reement or
arran5ement or in any other manner whatsoe+er! which has the effect of
transferrin5% or enablin5 the en:oyment of% such property(
Appropriate authority.
269UB. 1! The .entral ;o+ernment may% by order% publish in the <fficial ;a=ette%
a! constitute as many appropriate authorities% as it thin9s fit% to perform the
functions of an appropriate authority under this .hapter 1 and
b! define the local limits within which the appropriate authorities shall perform
their functions under this .hapter(
2! "n appropriate authority shall consist of three persons% two of whom shall be
members of the Indian Income#ta$ *er+ice% ;roup "% holdin5 the post of .ommissioner
of Income#ta$ or any e,ui+alent or hi5her post% and one shall be a member of the .entral
En5ineerin5 *er+ice% ;roup "% holdin5 the post of .hief En5ineer or any e,ui+alent or
hi5her post(
)! In respect of any function to be performed by an appropriate authority under any
pro+ision of this .hapter in relation to any immo+able property referred to in section
2'&E.% the appropriate authority referred to therein shall%
a! in a case where such property is situate within the local limits of the :urisdiction
of only one appropriate authority% be such appropriate authority 1
b! in a case where such property is situate within the local limits of the :urisdiction
of two or more appropriate authorities% be the appropriate authority empowered
to perform such functions in relation to such property in accordance with the
rules
&'
made in this behalf by the Board under section 2&4(
Explanation.>or the purposes of this sub#section% immo+able property bein5 ri5hts of the
nature referred to in sub#clause ii! of clause d! of section 2'&E" in% or with respect to%
any land or any buildin5 or part of a buildin5 which has been constructed or which is to
be constructed shall be deemed to be situate at the place where the land is situate or% as
the case may be% where the buildin5 has been constructed or is to be constructed(
Restrictions on transfer of immovable property.
269UC. 1! Aotwithstandin5 anythin5 contained in the Transfer of Property "ct% 1772 3
of 1772!% or in any other law for the time bein5 in force%
&6
-no transfer of any immo+able
property in such area and of such +alue e$ceedin5 fi+e la9h rupees% as may be
prescribed
&7
2% shall be effected e$cept after an a5reement for transfer is entered into
between the person who intends transferrin5 the immo+able property hereinafter referred
to as the transferor! and the person to whom it is proposed to be transferred hereinafter
referred to as the transferee! in accordance with the pro+isions of sub#section 2! at least
&&
-four2 months before the intended date of transfer(
2! The a5reement referred to in sub#section 1! shall be reduced to writin5 in the form of
a statement by each of the parties to such transfer or by any of the parties to such transfer
actin5 on behalf of himself and on behalf of the other parties(
1
)! E+ery statement referred to in sub#section 2! shall%
i! be in the prescribed form 1
ii! set forth such particulars as may be prescribed 1 and
iii! be +erified in the prescribed manner%
and shall be furnished to the appropriate authority in such manner and within such time
as may be prescribed% by each of the parties to such transaction or by any of the parties to
such transaction actin5 on behalf of himself and on behalf of the other parties(
2
-3! Fhere it is found that the statement referred to in sub#section 2! is defecti+e% the
appropriate authority may intimate the defect to the parties concerned and 5i+e them an
opportunity to rectify the defect within a period of fifteen days from the date of such
intimation or within such further period which% on an application made in this behalf% the
appropriate authority may% in its discretion% allow and if the defect is not rectified within
the said period of fifteen days% or as the case may be% the further period so allowed% then%
notwithstandin5 anythin5 contained in any other pro+ision of this .hapter% the statement
shall be deemed ne+er to ha+e been furnished(2
Order by appropriate authority for purchase by Central Government of immovable
property.
269UD. 1!
)
-*ub:ect to the pro+isions of sub#sections 1"! and 1B!% the appropriate
authority2% after the receipt of the statement under sub#section )! of section 2'&E. in
respect of any immo+able property% may% notwithstandin5 anythin5 contained in any
other law or any instrument or any a5reement for the time bein5 in force%
3
-* * *2 ma9e
an order for the purchase by the .entral ;o+ernment of such immo+able property at an
amount e,ual to the amount of apparent consideration :
Provided that no such order shall be made in respect of any immo+able property after the
e$piration of a period of two months from the end of the month in which the statement
referred to in section 2'&E. in respect of such property is recei+ed by the appropriate
authority :
4
-Provided further that where the statement referred to in section 2'&E. in respect of
any immo+able property is recei+ed by the appropriate authority on or after the 1st day of
@une% 1&&)% the pro+isions of the first pro+iso shall ha+e effect as if for the words two
months% the words three months had been substituted :2
'
-Provided also that the period of limitation referred to in the second pro+iso shall be
rec9oned% where any defect as referred to in sub#section 3! of section 2'&E. has been
intimated% with reference to the date of receipt of the rectified statement by the
appropriate authority :2
Provided
6
-also2 that in a case where the statement referred to in section 2'&E. in
respect of the immo+able property concerned is 5i+en to an appropriate authority% other
than the appropriate authority ha+in5 :urisdiction in accordance with the pro+isions of
section 2'&EB to ma9e the order referred to in this sub#section in relation to the
immo+able property concerned% the period of limitation referred to in
7
-the first and
second pro+isos2 shall be rec9oned with reference to the date of receipt of the statement
by the appropriate authority ha+in5 :urisdiction to ma9e the order under this sub#section :
&
-Provided also that the period of limitation referred to in the second pro+iso shall be
rec9oned% where any stay has been 5ranted by any court a5ainst the passin5 of an order
for the purchase of the immo+able property under this .hapter% with reference to the date
of +acation of the said stay(2
18
-1"! Before ma9in5 an order under sub#section 1!% the appropriate authority shall 5i+e
a reasonable opportunity of bein5 heard to the transferor% the person in occupation of the
immo+able property if the transferor is not in occupation of the property% the transferee
and to e+ery other person whom the appropriate authority 9nows to be interested
11
in the
property(
1B! E+ery order made by the appropriate authority under sub#section 1! shall specify
the 5rounds on which it is made(2
2! The appropriate authority shall cause a copy of its order under sub#section 1! in
respect of any immo+able property to be ser+ed on the transferor% the person in
occupation of the immo+able property if the transferor is not in occupation thereof% the
transferee% and on e+ery other person whom the appropriate authority 9nows to be
interested in the property(
Vesting of property in Central Government.
269UE. 1! Fhere an order under sub#section 1! of section 2'&E? is made by the
appropriate authority in respect of an immo+able property referred to in sub#clause i! of
clause d! of section 2'&E"% such property shall% on the date of such order% +est in the
.entral ;o+ernment
12
-in terms of the a5reement for transfer
1)
referred to in sub#section
1! of section 2'&E.2 :
13
-Provided that where the appropriate authority% after 5i+in5 an opportunity of bein5
heard to the transferor% the transferee or other persons interested in the said property%
under sub#section 1"! of section 2'&E?% is of the opinion that any encumbrance on the
property or leasehold interest specified in the aforesaid a5reement for transfer is so
specified with a +iew to defeat the pro+isions of this .hapter% it may% by order% declare
such encumbrance or leasehold interest to be +oid and thereupon the aforesaid property
shall +est in the .entral ;o+ernment free from such encumbrance or leasehold interest(2
2! The transferor or any other person who may be in possession of the immo+able
property in respect of which an order under sub#section 1! of section 2'&E? is made%
shall surrender or deli+er possession thereof to the appropriate authority or any other
person duly authorised by the appropriate authority in this behalf within fifteen days of
the ser+ice of such order on him :
13
-Provided that the pro+isions of this sub#section and sub#sections )! and 3! shall not
apply where the person in possession of the immo+able property% in respect of which an
order under sub#section 1! of section 2'&E? is made% is a bona !ide holder of any
encumbrance on such property or a bona !ide lessee of such property% if the said
encumbrance or lease has not been declared +oid under the pro+iso to sub#section 1! and
such person is eli5ible to continue in possession of such property e+en after the transfer
in terms of the aforesaid a5reement for transfer(2
)! If any person refuses or fails to comply with the pro+isions of sub#section 2!% the
appropriate authority or other person duly authorised by it under that sub#section may
ta9e possession of the immo+able property and may% for that purpose% use such force as
may be necessary(
3! Aotwithstandin5 anythin5 contained in sub#section 2!% the appropriate authority may%
for the purpose of ta9in5 possession of any property referred to in sub#section 1!%
re,uisition the ser+ices of any police officer to assist him and it shall be the duty of such
4! >or the remo+al of doubts% it is hereby declared that nothin5 in this section shall
operate to dischar5e the transferor or any other person not bein5 the .entral
;o+ernment! from liability in respect of any encumbrances on the property and%
notwithstandin5 anythin5 contained in any other law for the time bein5 in force% such
liability may be enforced a5ainst the transferor or such other person(
'! Fhere an order under sub#section 1! of section 2'&E? is made in respect of an
immo+able property% bein5 ri5hts of the nature referred to in sub#clause ii! of clause d!
of section 2'&E"% such order shall ha+e the effect of
a! +estin5 such ri5ht in the .entral ;o+ernment 1 and
b! placin5 the .entral ;o+ernment in the same position in relation to such ri5hts
as the person in whom such a ri5ht would ha+e continued to +est if such order
had not been made(
6! Fhere any ri5hts in respect of any immo+able property% bein5 ri5hts in% or with
respect to% any land or any buildin5 or part of a buildin5 which has been constructed or
which is to be constructed% ha+e been +ested in the .entral ;o+ernment under sub#
section '!% the pro+isions of sub#sections 1!% 2!% )! and 3! shall% so far as may be%
ha+e effect as if the references to immo+able property therein were references to such
land or buildin5 or part thereof% as the case may be(
Consideration for purchase of immovable property by Central Government.
269UF. 1! Fhere an order for the purchase of any immo+able property by the .entral
;o+ernment is made under sub#section 1! of section 2'&E?% the .entral ;o+ernment
shall pay% by way of consideration for such purchase% an amount e,ual to the amount of
the apparent consideration(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% where% after the a5reement for
the transfer of the immo+able property referred to in that sub#section has been made but
before the property +ests in the .entral ;o+ernment under section 2'&EE% the property
has been dama5ed otherwise than as a result of normal wear and tear!% the amount of the
consideration payable under that sub#section shall be reduced by such sum as the
appropriate authority% for reasons to be recorded in writin5% may by order determine(
Payment or deposit of consideration.
269UG. 1! The amount of consideration payable in accordance with the pro+isions of
section 2'&E> shall be tendered to the person or persons entitled thereto% within a period
of one month from the end of the month in which the immo+able property concerned
becomes +ested in the .entral ;o+ernment under sub#section 1!% or% as the case may be%
sub#section '!% of section 2'&EE :
Provided that if any liability for any ta$ or any other sum remainin5 payable under this
"ct% the Fealth#ta$ "ct% 1&46 26 of 1&46!% the ;ift#ta$ "ct% 1&47 17 of 1&47!% the
Estate ?uty "ct% 1&4) )3 of 1&4)!% or the .ompanies Profits! *urta$ "ct% 1&'3 6 of
1&'3!% by any person entitled to the consideration payable under section 2'&E>% the
appropriate authority may% in lieu of the payment of the amount of consideration% set off
the amount of consideration or any part thereof a5ainst such liability or sum% after 5i+in5
an intimation in this behalf to the person entitled to the consideration(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% if any dispute arises as to the
apportionment of the amount of consideration amon5st persons claimin5 to be entitled
thereto% the .entral ;o+ernment shall deposit with the appropriate authority the amount
of consideration re,uired to be tendered under sub#section 1! within the period specified
therein(
)! Aotwithstandin5 anythin5 contained in sub#section 1!% if the person entitled to the
amount of consideration does not consent to recei+e it% or if there is any dispute
14
as to the
title
14
to recei+e the amount of consideration% the .entral ;o+ernment shall deposit with
the appropriate authority the amount of consideration re,uired to be tendered under sub#
section 1! within the period specified therein :
Provided that nothin5 herein contained shall affect the liability of any person who may
recei+e the whole or any part of the amount of consideration for any immo+able property
+ested in the .entral ;o+ernment under this .hapter to pay the same to the person
lawfully entitled thereto(
3! Fhere any amount of consideration has been deposited with the appropriate authority
under this section% the appropriate authority may% either of its own motion or on an
application made by or on behalf of any person interested or claimin5 to be interested in
such amount% order the same to be in+ested in such ;o+ernment or other securities as it
may thin9 proper% and may direct the interest or other proceeds of any such in+estment to
be accumulated and paid in such manner as will% in its opinion% 5i+e the parties interested
therein the same benefits therefrom as they mi5ht ha+e had from the immo+able property
in respect whereof such amount has been deposited or as near thereto as may be(
Re-vesting of property in the transferor on failure of payment or deposit of
consideration.
269UH. 1! If the .entral ;o+ernment fails to tender under sub#section 1! of section
2'&E; or deposit under sub#section 2! or sub#section )! of the said section% the whole
or any part of the amount of consideration re,uired to be tendered or deposited
thereunder within the period specified therein in respect of any immo+able property
which has +ested in the .entral ;o+ernment under sub#section 1! or% as the case may be%
sub#section '! of section 2'&EE% the order to purchase the immo+able property by the
.entral ;o+ernment made under sub#section 1! of section 2'&E? shall stand abro5ated
and the immo+able property shall stand re#+ested in the transferor after the e$piry of the
aforesaid period :
Provided that where any dispute referred to in sub#section 2! or sub#section )! of
section 2'&E; is pendin5 in any court for decision% the time ta9en by the court to pass a
final order under the said sub#sections shall be e$cluded in computin5 the said period(
2! Fhere an order made under sub#section 1! of section 2'&E? is abro5ated and the
immo+able property re#+ested in the transferor under sub#section 1!% the appropriate
authority shall ma9e% as soon as may be% a declaration in writin5 to this effect and shall
a! deli+er a copy of the declaration to the persons mentioned in sub#section 2! of
section 2'&E? 1 and
b! deli+er or cause to be deli+ered possession of the immo+able property bac9 to
the transferor% or% as the case may be% to such other person as was in possession
of the property at the time of its +estin5 in the .entral ;o+ernment under
section 2'&EE(
Powers of the appropriate authority.
269UI. The appropriate authority shall ha+e% for the purposes of this .hapter% all the
powers that a
1'
-.hief .ommissioner or .ommissioner2 of Income#ta$ has for the
purposes of this "ct under section 1)1(
Rectification of mistakes.
269U1. Fith a +iew to rectifyin5 any mista9e apparent from the record% the appropriate
authority may amend any order made by it under this .hapter% either on its own motion
or on the mista9e bein5 brou5ht to its notice by any person affected by the order :
not be made without 5i+in5 to such person a reasonable opportunity of bein5 heard :
Provided further that no amendment shall be made under this section after the e$piry of
si$ months from the end of the month in which the order sou5ht to be amended was
made(
Restrictions on revocation or alteration of certain agreements for the transfer of
immovable property or on transfer of certain immovable property.
269UK. 1! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in
force% no person shall re+o9e or alter an a5reement for the transfer of an immo+able
property or transfer such property in respect of which a statement has been furnished
under section 2'&E. unless%
a! the appropriate authority has not made an order for the purchase of the
immo+able property by the .entral ;o+ernment under section 2'&E? and the
period specified for the ma9in5 of such order has e$pired 1 or
b! in a case where an order for the purchase of the immo+able property by the
.entral ;o+ernment has been made under sub#section 1! of section 2'&E?%
the order stands abro5ated under sub#section 1! of section 2'&EC(
2! "ny transfer of any immo+able property made in contra+ention of the pro+isions of
sub#section 1! shall be +oid(
Restrictions on registration, etc., of documents in respect of transfer of immovable
property.
269UL. 1! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in
force% no re5isterin5 officer appointed under the Re5istration "ct% 1&87 1' of 1&87!%
shall re5ister any document which purports to transfer immo+able property e$ceedin5 the
+alue prescribed under section 2'&E. unless a certificate from the appropriate authority
that it has no ob:ection to the transfer of such property for an amount e,ual to the
apparent consideration therefor as stated in the a5reement for transfer of the immo+able
property in respect of which it has recei+ed a statement under sub#section )! of section
2'&E.% is furnished alon5 with such document(
2! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in force% no
person shall do anythin5 or omit to do anythin5 which will ha+e the effect of transfer of
any immo+able property unless the appropriate authority certifies that it has no ob:ection
to the transfer of such property for an amount e,ual to the apparent consideration therefor
as stated in the a5reement for transfer of the immo+able property in respect of which it
has recei+ed a statement under sub#section )! of section 2'&E.(
)! In a case where the appropriate authority does not ma9e an order under sub#section
1! of section 2'&E? for the purchase by the .entral ;o+ernment of an immo+able
property% or where the order made under sub#section 1! of section 2'&E? stands
abro5ated under sub#section 1! of section 2'&EC% the appropriate authority shall issue a
certificate of no ob:ection referred to in sub#section 1! or% as the case may be% sub#
section 2! and deli+er copies thereof to the transferor and the transferee(
Immunity to transferor against claims of transferee for transfer.
269UM. Aotwithstandin5 anythin5 contained in any other law or in any instrument or
any a5reement for the time bein5 in force% when an order for the purchase of any
immo+able property by the .entral ;o+ernment is made under this .hapter% no claim by
the transferee shall lie a5ainst the transferor by reason of such transfer bein5 not in
accordance with the a5reement for the transfer of the immo+able property entered into
between the transferor and transferee :
Provided that nothin5 contained in this section shall apply if the order for the purchase of
the immo+able property by the .entral ;o+ernment is abro5ated under sub#section 1! of
section 2'&EC(
Order of appropriate authority to be final and conclusive.
269UN. *a+e as otherwise pro+ided in this .hapter% any order made under sub#section
1! of section 2'&E? or any order made under sub#section 2! of section 2'&E> shall be
final and conclusi+e and shall not be called in ,uestion in any proceedin5 under this "ct
or under any other law for the time bein5 in force(
Chapter not to apply to certain transfers.
269UO. The pro+isions of this .hapter shall not apply to or in relation to any immo+able
property where the a5reement for transfer of such property is made by a person to his
relati+e on account of natural lo+e and affection% if a recital to that effect is made in the
a5reement for transfer(2
16
-Chapter not to apply where transfer of immovable property effected after certain
date.
269UP. The pro+isions of this .hapter shall not apply to% or in relation to% the transfer of
any immo+able property effected on or after the 1st day of @uly% 2882(2
1&
-Failure to furnish returns, comply with notices, concealment of income, etc.
28
271. 1! If the
21
-"ssessin52 <fficer or the
22
-***2
2)
-.ommissioner "ppeals!2
23
-or the
.ommissioner2 in the course of any proceedin5s under this "ct% is satisfied that any
person
a!
24
-* * *2
b! has
2'
-* * *2 failed to comply with a notice
26
-under sub-section *2( o! section
115,1 or under sub-section *2( o! section 115,E or2 under sub#section 1!
of section 132 or sub#section 2! of section 13)
27
-or fails to comply with a
direction issued under sub#section 2"! of section 1322% or
c! has concealed the particulars of his income or
2&
-* * *2 furnished inaccurate
particulars of
)8
such income) or]
)1
%
)2
-*d( has concealed the particulars o! the !ringe bene!its or !urnished inaccurate
particulars o! such !ringe bene!its)2
he may direct that such person shall pay by way of penalty%
i!
))
-* * *2
)3
-ii! in the cases referred to in clause b!%
)4
-in addition to ta$% if any% payable2 by
him%
)'
-a sum of ten thousand rupees2 for each such failure 12
)6
-iii! in the cases referred to in clause c!
)7
-or clause *d(2%
)&
-in addition to ta$% if
any% payable2 by him% a sum which shall not be less than% but which shall not
e$ceed
38
-three times2% the amount of ta$ sou5ht to be e+aded by reason of
the concealment of particulars of his income
31
or !ringe bene!its] or the
furnishin5 of inaccurate particulars of such income
31
-or !ringe bene!its2(
32
-* * *2
3)
-Explanation 1.Fhere in respect of any facts material to the computation of the total
income of any person under this "ct%
A! such person fails to offer an e$planation or offers an e$planation which is
found by the
33
34
-***2
3'
-.ommissioner
"ppeals!2
36
-or the .ommissioner2 to be false% or
B! such person offers an e$planation which he is not able to substantiate
37
-and fails to pro+e that such e$planation is bona !ide and that all the facts
relatin5 to the same and material to the computation of his total income
ha+e been disclosed by him2%
then% the amount added or disallowed in computin5 the total income of such person as a
result thereof shall% for the purposes of clause c! of this sub#section% be deemed to
represent the income in respect of which particulars ha+e been concealed(
3&
-* * *2
Explanation 2.Fhere the source of any receipt% deposit% out5oin5 or in+estment in any
assessment year is claimed by any person to be an amount which had been added in
computin5 the income or deducted in computin5 the loss in the assessment of such person
for any earlier assessment year or years but in respect of which no penalty under clause
iii! of this sub#section had been le+ied% that part of the amount so added or deducted in
such earlier assessment year immediately precedin5 the year in which the receipt% deposit%
out5oin5 or in+estment appears such earlier assessment year hereafter in this
Explanation referred to as the first precedin5 year! which is sufficient to co+er the
amount represented by such receipt% deposit or out5oin5 or +alue of such in+estment
such amount or +alue hereafter in this Explanation referred to as the utilised amount!
shall be treated as the income of the assessee% particulars of which had been concealed or
inaccurate particulars of which had been furnished for the first precedin5 year1 and where
the amount so added or deducted in the first precedin5 year is not sufficient to co+er the
utilised amount% that part of the amount so added or deducted in the year immediately
precedin5 the first precedin5 year which is sufficient to co+er such part of the utilised
amount as is not so co+ered shall be treated to be the income of the assessee% particulars
of which had been concealed or inaccurate particulars of which had been furnished for
the year immediately precedin5 the first precedin5 year and so on% until the entire utilised
amount is co+ered by the amounts so added or deducted in such earlier assessment years(
48
-Explanation 3.Fhere any person
41
-***2 fails% without reasonable cause% to furnish
within the period specified in sub#section 1! of section 14) a return of his income which
he is re,uired to furnish under section 1)& in respect of any assessment year commencin5
on or after the 1st day of "pril% 1&7&% and until the e$piry of the period aforesaid% no
notice has been issued to him under clause i! of sub#section 1! of section 132 or section
137 and the "ssessin5 <fficer or the
42
-***2 .ommissioner "ppeals! is satisfied that in
respect of such assessment year such person has ta$able income% then% such person shall%
for the purposes of clause c! of this sub#section% be deemed to ha+e concealed the
particulars of his income in respect of such assessment year% notwithstandin5 that such
person furnishes a return of his income at any time after the e$piry of the period aforesaid
in pursuance of a notice under section 137(2
Explanation 4.>or the purposes of clause iii! of this sub#section% the e$pression the
amount of ta$ sou5ht to be e+aded%
4)
-a! in any case where the amount of income in respect of which particulars ha+e
been concealed or inaccurate particulars ha+e been furnished has the effect of
reducin5 the loss declared in the return or con+ertin5 that loss into income%
means the ta$ that would ha+e been char5eable on the income in respect of
which particulars ha+e been concealed or inaccurate particulars ha+e been
furnished had such income been the total income12
b! in any case to which Explanation 3 applies% means the ta$ on the total income
assessed 1
c! in any other case% means the difference between the ta$ on the total income
assessed and the ta$ that would ha+e been char5eable had such total income
been reduced by the amount of income in respect of which particulars ha+e
been concealed or inaccurate particulars ha+e been furnished(2
43
-Explanation 5.Fhere in the course of a search under section 1)2% the assessee is found
to be the owner of any money% bullion% :ewellery or other +aluable article or thin5
hereafter in this Explanation referred to as assets! and the assessee claims that such
assets ha+e been ac,uired by him by utilisin5 wholly or in part! his income%
a! for any pre+ious year which has ended before the date of the search% but the
return of income for such year has not been furnished before the said date or%
where such return has been furnished before the said date% such income has
not been declared therein 1 or
b! for any pre+ious year which is to end on or after the date of the search%
then% notwithstandin5 that such income is declared by him in any return of income
furnished on or after the date of the search% he shall% for the purposes of imposition of a
penalty under clause c! of sub#section 1! of this section% be deemed to ha+e concealed
the particulars of his income or furnished inaccurate particulars of such income%
44
-unless%
1! such income is% or the transactions resultin5 in such income are recorded%
i! in a case fallin5 under clause a!% before the date of the search 1
and
ii! in a case fallin5 under clause b!% on or before such date%
in the boo9s of account% if any% maintained by him for any source of income or
such income is otherwise disclosed to the
4'
.ommissioner2 before the said date 1 or
2!he% in the course of the search% ma9es a statement under sub#section 3! of section
1)2 that any money% bullion% :ewellery or other +aluable article or thin5 found in his
possession or under his control% has been ac,uired out of his income which has not
been disclosed so far in his return of income to be furnished before the e$piry of time
specified in
46
-* * *2 sub#section 1! of section 1)&% and also specifies in the statement
the manner in which such income has been deri+ed and pays the ta$% to5ether with
interest% if any% in respect of such income(2
47
-Explanation 6.Fhere any ad:ustment is made in the income or loss declared in the
return under the pro+iso to clause a! of sub#section 1! of section 13) and additional ta$
char5ed under that section% the pro+isions of this sub#section shall not apply in relation to
the ad:ustment so made(2
4&
-Explanation .Fhere in the case of an assessee who has entered into an international
transaction defined in section &2B% any amount is added or disallowed in computin5 the
total income under sub#section 3! of section &2.% then% the amount so added or
disallowed shall% for the purposes of clause c! of this sub#section% be deemed to represent
the income in respect of which particulars ha+e been concealed or inaccurate particulars
ha+e been furnished% unless the assessee pro+es to the satisfaction of the "ssessin5
<fficer or the .ommissioner "ppeals!
'8
-or the .ommissioner2 that the price char5ed or
paid in such transaction was computed in accordance with the pro+isions contained in
section &2. and in the manner prescribed under that section% in 5ood faith and with due
dili5ence(2
'1
-1"! Fhere any penalty is imposable by +irtue of Explanation 2 to sub#section 1!%
proceedin5s for the imposition of such penalty may be initiated notwithstandin5 that any
proceedin5s under this "ct in the course of which such penalty proceedin5s could ha+e
been initiated under sub#section 1! ha+e been completed(
2! Fhen the person liable to penalty is a re5istered firm or an unre5istered firm which
has been assessed under clause b! of section 17)% then notwithstandin5 anythin5
contained in the other pro+isions of this "ct% the penalty imposable under sub#section 1!
shall be the same amount as would be imposable on that firm if that firm were an
unre5istered firm(
)!
'2
-/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#"#) w.e.!. 1-4-1#"#.2
3! If the
')
'3
-***2
'4
-.ommissioner "ppeals!2 in the course of
any proceedin5s under this "ct% is satisfied that the profits of a re5istered firm ha+e been
distributed otherwise than in accordance with the shares of the partners as shown in the
instrument of partnership on the basis of which the firm has been re5istered under this
"ct% and that any partner has thereby returned his income below its real amount% he may
direct that such partner shall% in addition to the ta$% if any% payable by him% pay by way of
penalty a sum not e$ceedin5 one and a half times the amount of ta$ which has been
a+oided% or would ha+e been a+oided if the income returned by such partner had been
accepted as his correct income1 and no refund or other ad:ustment shall be claimable by
any other partner by reason of such direction(2
3"! and 3B! -/mitted b+ the 7axation >aws *Amendment( Act) 1#5) w.e.!. 1-1$-1#5.
/riginal sub-sections *4A( and *4B( were inserted b+ the 3ncome-tax *Amendment( Act)
1#65) w.e.!. 12-3-1#65. >ater on sub-section *4A( was substituted b+ the 7axation >aws
*Amendment( Act) 1#$) w.e.!. 1-4-1#1.2
''
the ?irect Ta$ Gaws "mendment! "ct% 1&7& shall apply to and in relation to any
assessment for the assessment year commencin5 on the 1st day of "pril% 1&77% or any
'6
-*6( An+ re!erence in this section to the income shall be construed as a re!erence to the
income or !ringe bene!its) as the case ma+ be) and the pro%isions o! this section shall) as
!ar as ma+ be) appl+ in relation to an+ assessment in respect o! !ringe bene!its also.2
'7
-Failure to keep, maintain or retain books of account, documents, etc.
271A. Fithout pre:udice to the pro+isions of section 261% if any person
'&
-***2 fails to
9eep and maintain any such boo9s of account and other documents as re,uired by section
33"" or the rules made thereunder% in respect of any pre+ious year or to retain such
boo9s of account and other documents for the period specified in the said rules% the
68
61
-***2
62
-.ommissioner "ppeals!2 may direct that such
person shall pay% by way of penalty%
6)
-a sum of twenty#fi+e thousand rupees2(
63
-Penalty for failure to keep and maintain information and document in respect of
international transaction.
271AA. Fithout pre:udice to the pro+isions of section 261% if any person fails to 9eep
and maintain any such information and document as re,uired by sub#section 1! or sub#
section 2! of section &2?% the "ssessin5 <fficer or .ommissioner "ppeals! may direct
that such person shall pay% by way of penalty% a sum e,ual to two per cent of the +alue of
each international transaction entered into by such person(2
64
-Failure to get accounts audited.
271B. If any person fails
6'
-***2 to 5et his accounts audited in respect of any pre+ious
year or years rele+ant to an assessment year or
66
-furnish a report of such audit as
re,uired under section 33"B2% the
67
-"ssessin52 <fficer may direct that such person shall
pay% by way of penalty% a sum e,ual to one#half per cent of the total sales% turno+er or
5ross receipts% as the case may be% in business% or of the 5ross receipts in profession% in
such pre+ious year or years or a sum of one hundred thousand rupees% whiche+er is less(2
6&
-Penalty for failure to furnish report under section 92E.
271BA. If any person fails to furnish a report from an accountant as re,uired by section
&2E% the "ssessin5 <fficer may direct that such person shall pay% by way of penalty% a
sum of one hundred thousand rupees(2
78
-Failure to subscribe to the eligible issue of capital.
271BB. Fhoe+er fails to subscribe any amount of subscription to the units issued under
any scheme referred to in sub#section 1! of section 77"
71
to the eli5ible issue of capital
under that sub#section within the period of si$ months specified therein% may be directed
by the
72
-@oint2 .ommissioner to pay% by way of penalty% a sum e,ual to twenty per cent
of such amount(2
7)
-Penalty for failure to deduct tax at source.
271C.
73
-1! If any person fails to
a! deduct the whole or any part of the ta$ as re,uired by or under the pro+isions of
.hapter /0II#B1 or
b! pay the whole or any part of the ta$ as re,uired by or under
i! sub#section 2! of section 114#<1 or
ii! the second pro+iso to section 1&3B%
then% such person shall be liable to pay% by way of penalty% a sum e,ual to the amount of
ta$ which such person failed to deduct or pay as aforesaid(2
74
-2! "ny penalty imposable under sub#section 1! shall be imposed by the
7'
-@oint2
.ommissioner(2
The following section 271CA shall be inserted after section 271C by the Finance Act,
2006, w.e.f. 1-4-2007 :
Penalty for failure to collect tax at source.
271CA. *1( 3! an+ person !ails to collect the whole or an+ part o! the tax as re2uired b+
or under the pro%isions o! 'hapter BE33-BB) then) such person shall be liable to pa+) b+
wa+ o! penalt+) a sum e2ual to the amount o! tax which such person !ailed to collect as
a!oresaid.
*2( An+ penalt+ imposable under sub-section *1( shall be imposed b+ the 9oint
'ommissioner.
76
-Penalty for failure to comply with the provisions of section 269SS.
271D.
77
-1!2 If a person ta9es or accepts any loan or deposit in contra+ention of the
pro+isions of section 2'&**% he shall be liable to pay% by way of penalty% a sum e,ual to
the amount of the loan or deposit so ta9en or accepted(2
7&
&8
-@oint2
.ommissioner(2
&1
-Penalty for failure to comply with the provisions of section 269T.
271E.
&2
-1!2 If a person repays any
&)
-loan or2 deposit referred to in section 2'&T
otherwise than in accordance with the pro+isions of that section% he shall be liable to pay%
by way of penalty% a sum e,ual to the amount of the
&)
-loan or2 deposit so repaid(2
&3
&4
-@oint2
.ommissioner(2
&'
-Penalty for failure to furnish return of income.
271F. If a person who is re,uired to furnish a return of his income% as re,uired under sub#
section 1! of section 1)& or by the pro+isos to that sub#section% fails to furnish such
return before the end of the rele+ant assessment year% the "ssessin5 <fficer may direct
that such person shall pay% by way of penalty% a sum of fi+e thousand rupees(2
&6
-Penalty for failure to furnish annual information return.
271FA. If a person who is re,uired to furnish an annual information return% as re,uired
under sub#section 1! of section 274B"% fails to furnish such return within the time
prescribed under that sub#section% the income#ta$ authority prescribed under the said sub#
section may direct that such person shall pay% by way of penalty% a sum of one hundred
rupees for e+ery day durin5 which the failure continues(2
&7
-Penalty for failure to furnish return of fringe benefits.
271FB. 3! an emplo+er) who is re2uired to !urnish a return o! !ringe bene!its) as re2uired
under sub-section *1( o! section 115,1) !ails to !urnish such return within the time
prescribed under that sub-section) the Assessing /!!icer ma+ direct that such emplo+er
shall pa+) b+ wa+ o! penalt+) a sum o! one hundred rupees !or e%er+ da+ during which the
!ailure continues.2
&&
-Penalty for failure to furnish information or document under section 92D.
271G. If any person who has entered into an international transaction fails to furnish any
such information or document as re,uired by sub#section )! of section &2?% the
"ssessin5 <fficer or the .ommissioner "ppeals! may direct that such person shall pay%
by way of penalty% a sum e,ual to two per cent of the +alue of the international
transaction for each such failure(2
1
-Penalty for failure to answer questions, sign statements, furnish information,
returns or statements, allow inspections, etc.
272A. 1! If any person%
a! bein5 le5ally bound to state the truth of any matter touchin5 the sub:ect of his
assessment% refuses to answer any ,uestion put to him by an income#ta$
authority in the e$ercise of its powers under this "ct1 or
b! refuses to si5n any statement made by him in the course of any proceedin5s
under this "ct% which an income#ta$ authority may le5ally re,uire him to si5n1
or
c! to whom a summons is issued under sub#section 1! of section 1)1 either to
attend to 5i+e e+idence or produce boo9s of account or other documents at a
certain place and time omits to attend or produce boo9s of account or
documents at the place or time%
d!
2
-***2
he shall pay% by way of penalty%
)
-a sum of ten thousand rupees2 for each such default or
failure(
2! If any person fails
a! to comply with a notice issued under sub#section '! of section &31 or
b! to 5i+e the notice of discontinuance of his business or profession as re,uired by
sub#section )! of section 16'1 or
c! to furnish in due time any of the returns% statements or particulars mentioned in
section 1)) or section 28'
3
-***2
4
-or section 28'.2 or section 274B1 or
d! to allow inspection of any re5ister referred to in section 1)3 or of any entry in
such re5ister or to allow copies of such re5ister or of any entry therein to be
ta9en1 or
'
-e! to furnish the return of income which he is re,uired to furnish under sub#
section 3"! or sub#section 3.! of section 1)& or to furnish it within the time
allowed and in the manner re,uired under those sub#sections1 or2
!! to deli+er or cause to be deli+ered in due time a copy of the declaration
mentioned in section 1&6"1 or
g! to furnish a certificate as re,uired by section 28)
6
-or section 28'.21 or
h! to deduct and pay ta$ as re,uired by sub#section 2! of section 22'1
7
-i! to furnish a statement as re,uired by sub#section 2.! of section 1&212
&
-*4( to deli+er or cause to be deli+ered in due time a copy of the declaration referred
to in sub#section 1"! of section 28'.12
18
-.! to deli+er or cause to be deli+ered a copy of the statement within the time
specified in sub#section )! of section 288 or the pro+iso to sub#section )! of
section 28'.12
11
-l! to deli+er or cause to be deli+ered the ,uarterly return within the time specified
in sub#section 1! of section 28'"%2
he shall pay% by way of penalty% a sum
12
-of one hundred rupees2 for e+ery day durin5
which the failure continues:
1)
-Provided that the amount of penalty for failures in relation to
13
-a declaration
mentioned in section 1&6"% a certificate as re,uired by section 28) and2 returns under
sections 28' and 28'.
13a
and statements under sub-section *3( o! section 2$$ or the
pro%iso to sub-section *3( o! section 2$6'] shall not e$ceed the amount of ta$ deductible
or collectible
14
% as the case may be(2
)! "ny penalty imposable under sub#section 1! or sub#section 2! shall be imposed
a! in a case where the contra+ention% failure or default in respect of which such
penalty is imposable occurs in the course of any proceedin5 before an income#
ta$ authority not lower in ran9 than a
1'
-@oint2 ?irector or a
1'
-@oint2
.ommissioner% by such income#ta$ authority1
b! in a case fallin5 under clause !! of sub#section 2!% by the .hief .ommissioner
or .ommissioner1 and
c! in any other case% by the
16
-@oint2 ?irector or the
16
-@oint2 .ommissioner(
3! Ao order under this section shall be passed by any income#ta$ authority referred to in
sub#section )! unless the person on whom the penalty is proposed to be imposed is 5i+en
an opportunity of bein5 heard in the matter by such authority(
Explanation.In this section% income#ta$ authority includes a ?irector ;eneral% ?irector%
1'
-@oint2 ?irector and an "ssistant ?irector
17
-or ?eputy ?irector2 while e$ercisin5 the
powers +ested in a court under the .ode of .i+il Procedure% 1&87 4 of 1&87!% when
tryin5 a suit in respect of the matters specified in sub#section 1! of section 1)1(2
1&
-Penalty for failure to comply with the provisions of section 133B.
272AA. 1! If a person
28
-***2 fails to comply with the pro+isions of section 1))B% he
shall% on an order passed by the
21
-@oint .ommissioner2%
22
-"ssistant ?irector2
2)
-or
?eputy ?irector2 or the
23
-"ssessin52 <fficer% as the case may be% pay% by way of penalty%
a sum which may e$tend to one thousand rupees(
2! Ao order under sub#section 1! shall be passed unless the person on whom the penalty
is proposed to be imposed is 5i+en an opportunity of bein5 heard in the matter(
24
-Penalty for failure to comply with the provisions of section 139A.
272B. 1! If a person fails to comply with the pro+isions of section 1)&"% the "ssessin5
<fficer may direct that such person shall pay% by way of penalty% a sum of ten thousand
rupees(
2! If a person who is re,uired to ,uote his permanent account number in any document
referred to in clause c! of sub#section 4! of section 1)&"% or to intimate such number as
re,uired by sub#section 4"!
2'
-or sub#section 4.!2 of that section% ,uotes or intimates a
number which is false% and which he either 9nows or belie+es to be false or does not
belie+e to be true% the "ssessin5 <fficer may direct that such person shall pay% by way of
penalty% a sum of ten thousand rupees(
)! Ao order under sub#section 1! or sub#section 2! shall be passed unless the person% on
whom the penalty is proposed to be imposed% is 5i+en an opportunity of bein5 heard in
the matter(2
26
-Penalty for failure to comply with the provisions of section 203A.
272BB. 1! If a person fails to comply with the pro+isions of section 28)"% he shall% on
an order passed by the
27
-"ssessin52 <fficer% pay% by way of penalty%
2&
-a sum of ten
thousand rupees2(
2&a
*1A( 3! a person who is re2uired to 2uote his tax deduction account number or) as the
case ma+ be) tax collection account number or tax deduction and collection account
number in the challans or certi!icates or statements or other documents re!erred to in
sub-section *2( o! section 2$3A) 2uotes a number which is !alse) and which he either
.nows or belie%es to be !alse or does not belie%e to be true) the Assessing /!!icer ma+
direct that such person shall pa+) b+ wa+ o! penalt+) a sum o! ten thousand rupees.]
2! Ao order under sub#section 1!
2&a
or sub-section *1A(] shall be passed unless the
person on whom the penalty is proposed to be imposed is 5i+en an opportunity of bein5
heard in the matter(2
)8
-Penalty for failure to comply with the provisions of section 206CA.
272BBB. 1! If a person fails to comply
)1
-before the 1st day of <ctober% 28832 with the
pro+isions of section 28'."% he shall% on an order passed by the "ssessin5 <fficer% pay%
by way of penalty% a sum of ten thousand rupees(
2! Ao order under sub#section 1! shall be passed unless the person on whom the penalty
is proposed to be imposed% is 5i+en an opportunity of bein5 heard in the matter(2
)2
-False estimate of, or failure to pay, advance tax.
273.
))
-1! If the
)3
-"ssessin52 <fficer% in the course of any proceedin5s in connection
with the re5ular assessment
)4
for any assessment year% is satisfied that any assessee
a! has furnished under clause a! of sub#section 1! of section 28&" a statement of
the ad+ance ta$ payable by him which he 9new or had reason to belie+e to be
untrue% or
b! has
)'
-***2 failed to furnish a statement of the ad+ance ta$ payable by him in
accordance with the pro+isions of clause a! of sub#section 1! of section 28&"%
he may direct that such person shall% in addition to the amount of ta$% if any% payable by
him% pay by way of penalty a sum
i! which% in the case referred to in clause a!% shall not be less than ten per cent
but shall not e$ceed one and a half times the amount by which the ta$ actually
paid durin5 the financial year immediately precedin5 the assessment year under
the pro+isions of .hapter /0II#. falls short of
1! se+enty#fi+e per cent of the assessed ta$ as defined in sub#section 4! of
section 214% or
2! the amount which would ha+e been payable by way of ad+ance ta$ if the
assessee had furnished a correct and complete statement in accordance with
the pro+isions of clause a! of sub#section 1! of section 28&"%
whiche+er is less1
ii! which% in the case referred to in clause b!% shall not be less than ten per cent
but shall not e$ceed one and a half times of se+enty#fi+e per cent of the
assessed ta$ as defined in sub#section 4! of section 2142:
)6
section shall ha+e effect as if for the words se+enty#fi+e per cent% at both the places where
they occur% the words ei5hty#three and one#third per cent had been substituted(2
)7
-2!2 If the
)&
-"ssessin52 <fficer% in the course of any proceedin5s in connection with
the re5ular assessment for the assessment year commencin5 on the 1st day of "pril% 1&68%
or any subse,uent assessment year% is satisfied that any assessee
38
-a! has furnished under sub#section 1! or sub#section 2! or sub#section )! or sub#
section 4! of section 28&"% or under sub#section 1! or sub#section 2! of
section 212% an estimate of the ad+ance ta$ payable by him which he 9new or
had reason to belie+e to be untrue% or2
31
-aa! has furnished
32
-under sub#section 3! of section 28&" or2 under sub#section
)"! of section 212 an estimate of the ad+ance ta$ payable by him which he
9new or had reason to belie+e to be untrue% or2
b! has
3)
-***2 failed to furnish an estimate of the ad+ance ta$ payable by him in
accordance with the pro+isions of
33
-clause b! of sub#section 1! of section
28&"2% or
c! has
34
-***2 failed to furnish an estimate of the ad+ance ta$ payable by him in
accordance with the pro+isions of
3'
-sub#section 3! of section 28&" or2 sub#
section )"! of section 212%
he may direct that such person shall% in addition to the amount of ta$% if any% payable by
him% pay by way of penalty a sum
i! which% in the case referred to in clause a!% shall not be less than ten per cent
the pro+isions of .hapter /0II#. falls short of
1! se+enty#fi+e per cent of the assessed ta$ as defined in sub#section 4! of
section 214% or
36
-2! where a statement under clause a! of sub#section 1! of section 28&" was
furnished by the assessee or where a notice under section 218 was issued to
the assessee% the amount payable under such statement or% as the case may
be% such notice%2
whiche+er is less1
37
-ia! which% in the case referred to in clause aa!% shall not be less than ten per cent
the pro+isions of .hapter /0II#. falls short of se+enty#fi+e per cent of the
assessed ta$ as defined in sub#section 4! of section 21412
ii! which% in the case referred to in clause b!% shall not be less than ten per cent
but shall not e$ceed one and a half times of se+enty#fi+e per cent of the
assessed ta$ as defined in sub#section 4! of section 2141 and
3&
-iii! which% in the case referred to in clause c!% shall not be less than ten per cent
but shall not e$ceed one and a half times the amount by which
a! where the assessee has sent a statement under clause a!% or an estimate
under clause b! of sub#section 1! of section 28&"% or an estimate in lieu of
a statement under sub#section 2! of that section% the ta$ payable in
accordance with such statement or estimate1 or
b! where the assessee was re,uired to pay ad+ance ta$ in accordance with the
notice issued to him under section 218% the ta$ payable under such notice%
falls short of se+enty#fi+e per cent of the assessed ta$ as defined in sub#section
4! of section 214:22
48
section shall ha+e effect as if for the words se+enty#fi+e per cent% where+er they occur%
the words ei5hty#three and one#third per cent had been substituted(2
41
-Explanation
42
-12(>or the purposes of clause ia!% the amount paid by the assessee on or
before the date e$tended by the
4)
-.hief .ommissioner or .ommissioner2 under the
43
-first2
44
-pro+iso to sub#section 3! of section 28&" or% as the case may be%2
43
-first2
pro+iso to sub#section )"! of section 212 shall% where the date so e$tended falls beyond
the financial year immediately precedin5 the assessment year% also be re5arded as ta$
actually paid durin5 that financial year(2
4'
-Explanation 2.Fhen the person liable to penalty is a re5istered firm or an unre5istered
firm which has been assessed under clause b! of section 17)% then% notwithstandin5
anythin5 contained in the other pro+isions of this "ct% the penalty imposable under this
section shall be the same amount as would be imposable on that firm if that firm were an
unre5istered firm(2
46
-)! The pro+isions of this section shall apply to and in relation to any assessment for
the assessment year commencin5 on the 1st day of "pril% 1&77% or any earlier assessment
year% and references in this section to the other pro+isions of this "ct shall be construed
as references to those pro+isions as for the time bein5 in force and applicable to the
rele+ant assessment year(2
47
-Power to reduce or waive penalty, etc., in certain cases.
4&
273A. 1! Aotwithstandin5 anythin5 contained in this "ct% the
'8
-
'1
-***2 .ommissioner2
may% in his discretion% whether on his own motion or otherwise%
i!
'2
-***2
ii! reduce or wai+e the amount of penalty imposed or imposable on a person under
clause iii! of sub#section 1! of section 2611 *-or2
iii!
')
-***2
if he is satisfied that such person
a!
'3
-***2
b! in the case referred to in clause ii!% has% prior to the detection
'4
by the
''
-"ssessin52 <fficer% of the concealment of particulars of income or of the
inaccuracy of particulars furnished in respect of such income% +oluntarily
'6
and
in 5ood faith
'6
% made full and true disclosure
'6
of such particulars1
c!
'7
-***2
and also has%
'&
-in the case referred to in clause b!2% co#operated
'6
in any en,uiry relatin5
to the assessment of his income and has either paid or made satisfactory arran5ements for
the payment of any ta$ or interest payable in conse,uence of an order passed under this
"ct in respect of the rele+ant assessment year(
Explanation
68
-***2(>or the purposes of this sub#section% a person shall be deemed to
ha+e made full and true disclosure of his income or of the particulars relatin5 thereto in
any case where the e$cess of income assessed o+er the income returned is of such a
nature as not to attract the pro+isions of clause c! of sub#section 1! of section 261(
68
-***2
2! Aotwithstandin5 anythin5 contained in sub#section 1!%
a!
61
-***2
b! if in a case fallin5 under clause c! of sub#section 1! of section 261% the amount
of income in respect of which the penalty is imposed or imposable for the
rele+ant assessment year% or% where such disclosure relates to more than one
assessment year% the a55re5ate amount of such income for those years% e$ceeds
a sum of fi+e hundred thousand rupees%
no order reducin5 or wai+in5 the penalty under sub#section 1! shall be made by
62
-the
.ommissioner e$cept with the pre+ious appro+al of the .hief .ommis#sioner or ?irector
;eneral% as the case may be2(
)! Fhere an order has been made under sub#section 1! in fa+our of any person% whether
such order relates to one or more assessment years% he shall not be entitled to any relief
under this section in relation to any other assessment year at any time after the ma9in5 of
such order :
6)
-Provided that where an order has been made in fa+our of any person under sub#section
1! on or before the 23th day of @uly% 1&&1% such person shall be entitled to further relief
only once in relation to other assessment year or years if he ma9es an application to the
income#ta$ authority referred to in sub#section 3! at any time before the 1st day of "pril%
1&&2(2
3! Fithout pre:udice to the powers conferred on him by any other pro+ision of this "ct%
the
63
-
64
-***2 .ommissioner2 may% on an application made in this behalf by an assessee%
and after recordin5 his reasons for so doin5% reduce or wai+e the amount of any penalty
payable by the assessee under this "ct or stay or compound any proceedin5 for the
reco+ery of any such amount% if he is satisfied that
i! to do otherwise would cause 5enuine hardship to the assessee% ha+in5 re5ard to
the circumstances of the case1 and
ii! the assessee has co#operated in any in,uiry relatin5 to the assessment or any
proceedin5 for the reco+ery of any amount due from him:
6'
-Provided that where the amount of any penalty payable under this "ct or% where such
application relates to more than one penalty% the a55re5ate amount of such penalties
e$ceeds one hundred thousand rupees% no order reducin5 or wai+in5 the amount or
compoundin5 any proceedin5 for its reco+ery under this sub#section shall be made by
66
-the .ommissioner e$cept with the pre+ious appro+al of the .hief .ommissioner or
?irector ;eneral% as the case may be2(
4! E+ery order made under this section shall be final and shall not be called into ,uestion
by any court or any other authority(2
67
-'! The pro+isions of this section
6&
-as they stood immediately before their amendment
by the ?irect Ta$ Gaws "mendment! "ct% 1&7&2 shall apply to and in relation to any
assessment for the assessment year commencin5 on the 1st day of "pril% 1&77% or any
earlier assessment year% and references in this section to the other pro+isions of this "ct
78
-6! Aotwithstandin5 anythin5 contained in sub#section '!% the pro+isions of sub#
section 1!% sub#section 2!% or% as the case may be% sub#section 3! -as they stood
immediately before their amendment by the ?irect Ta$ Gaws "mendment! "ct% 1&7& )
of 1&7&!2% shall apply in the case of reduction or wai+er of penalty or interest in relation
to any assessment for the assessment year commencin5 on the 1st day of "pril% 1&77 or
any earlier assessment year% with the modifications that the power under the said sub#
section 1! shall be e$ercisable only by the .ommissioner and instead of the pre+ious
appro+al of the Board% the .ommissioner shall obtain the pre+ious appro+al of the .hief
.ommissioner or ?irector ;eneral% as the case may be% while dealin5 with such case(2
71
-Penalty not to be imposed in certain cases.
273B. Aotwithstandin5 anythin5 contained in the pro+isions of
72
-clause b! of sub#
section 1! of2
7)
-section 261% section 261"%
73
-section 261""%2 section 261B
74
-% section
261B"2%
7'
-section 261BB%2 section 261.%
7'a
section 21'A) ] section 261?% section
261E%
76
-section 261>%
77
-section 261>"%2
7&
-section 210B%2
&8
-section 261;%22 clause c!
or clause d! of sub#section 1! or sub#section 2! of section 262"% sub#section 1! of
section 262""2 or
&1
-section 262B or2
&2
-sub#section 1!
&2a
or sub-section *1A(] of
section 262BB or2
&)
-sub#section 1! of section 262BBB or2 clause b! of sub#section 1!
or clause b! or clause c! of sub#section 2! of section 26)% no penalty shall be imposable
on the person or the assessee% as the case may be% for any failure referred to in the said
pro+isions if he pro+es that there was reasonable cause
&3
for the said failure(2
Procedure.
274. 1! Ao order imposin5 a penalty under this .hapter shall be made unless the
assessee has been heard% or has been 5i+en a reasonable opportunity of bein5 heard(
&4
-2! Ao order imposin5 a penalty under this .hapter shall be made
a! by the Income#ta$ <fficer% where the penalty e$ceeds ten thousand rupees1
b! by the "ssistant .ommissioner
&'
-or ?eputy .ommissioner2% where the penalty
e$ceeds twenty thousand rupees%
e$cept with the prior appro+al of the
&6
-@oint2 .ommissioner(2
&7
-)! "n income#ta$ authority on ma9in5 an order under this .hapter imposin5 a penalty%
unless he is himself the "ssessin5 <fficer% shall forthwith send a copy of such order to
the "ssessin5 <fficer(2
&&
-Bar of limitation for imposing penalties.
275.
1
-1!2 Ao order imposin5 a penalty under this .hapter shall be passed
2
-a! in a case where the rele+ant assessment or other order is the sub:ect#matter of
an appeal to the
)
-***2 .ommissioner "ppeals! under section 23'
3
-or section
23'"2 or an appeal to the "ppellate Tribunal under section 24)% after the e$piry
of the financial year in which the proceedin5s% in the course of which action for
the imposition of penalty has been initiated% are completed% or si$ months from
the end of the month in which the order of the
4
-***2 .ommissioner "ppeals!
or% as the case may be% the "ppellate Tribunal is recei+ed by the .hief
.ommissioner or .ommissioner% whiche+er period e$pires later :
'
-Provided that in a case where the rele+ant assessment or other order is the
sub:ect matter of an appeal to the .ommissioner "ppeals! under section 23' or
section 23'"% and the .ommissioner "ppeals! passes the order on or after the
1st day of @une% 288) disposin5 of such appeal% an order imposin5 penalty shall
be passed before the e$piry of the financial year in which the proceedin5s% in
the course of which action for imposition of penalty has been initiated% are
completed% or within one year from the end of the financial year in which the
order of the .ommissioner "ppeals! is recei+ed by the .hief .ommissioner or
.ommissioner% whiche+er is later12
b! in a case where the rele+ant assessment or other order is the sub:ect#matter of
re+ision under section 2')
6
-or section 2'32% after the e$piry of si$ months from
the end of the month in which such order of re+ision is passed1
c! in any other case% after the e$piry of the financial year in which the
proceedin5s% in the course of which action for the imposition of penalty has
been initiated% are completed% or si$ months from the end of the month in which
action for imposition of penalty is initiated% whiche+er period e$pires later(2
a
*1A( 3n a case where the rele%ant assessment or other order is the sub4ect-matter o! an
appeal to the 'ommissioner *Appeals( under section 246 or section 246A or an appeal to
the Appellate 7ribunal under section 253 or an appeal to the Cigh 'ourt under section
26$A or an appeal to the <upreme 'ourt under section 261 or re%ision under section 263
or section 264 and an order imposing or enhancing or reducing or cancelling penalt+ or
dropping the proceedings !or the imposition o! penalt+ is passed be!ore the order o! the
'ommissioner *Appeals( or the Appellate 7ribunal or the Cigh 'ourt or the <upreme
'ourt is recei%ed b+ the 'hie! 'ommissioner or the 'ommissioner or the order o!
re%ision under section 263 or section 264 is passed) an order imposing or enhancing or
reducing or cancelling penalt+ or dropping the proceedings !or the imposition o! penalt+
ma+ be passed on the basis o! assessment as re%ised b+ gi%ing e!!ect to such order o! the
'ommissioner *Appeals( or) the Appellate 7ribunal or the Cigh 'ourt) or the <upreme
'ourt or order o! re%ision under section 263 or section 264A
Provided that no order o! imposing or enhancing or reducing or cancelling penalt+ or
dropping the proceedings !or the imposition o! penalt+ shall be passed
*a( unless the assessee has been heard) or has been gi%en a reasonable
opportunit+ o! being heard-
*b( a!ter the expir+ o! six months !rom the end o! the month in which the order o!
the 'ommissioner *Appeals( or the Appellate 7ribunal or the Cigh 'ourt or the
<upreme 'ourt is recei%ed b+ the 'hie! 'ommissioner or the 'ommissioner or
the order o! re%ision under section 263 or section 264 is passedA
Provided further that the pro+isions of sub#section 2! of section 263 shall apply in
respect of the order imposin5 or enhancin5 or reducin5 penalty under this sub#section(]
7
any action initiated for the imposition of penalty on or before the )1st day of Barch%
1&7&(2
&
-Explanation.In computin5 the period of limitation for the purposes of this section%
i! the time ta9en in 5i+in5 an opportunity to the assessee to be reheard under the
pro+iso to section 12&1
ii! any period durin5 which the immunity 5ranted under section 234C remained in
force1 and
iii! any period durin5 which a proceedin5 under this .hapter for the le+y of penalty
is stayed by an order or in:unction of any court%
shall be e$cluded(22
CHAPTER XXII
OFFENCES AND PROSECUTIONS
18
-Contravention of order made under sub-section (3) of section 132.
275A. Fhoe+er contra+enes any order referred to in
11
-the second pro+iso to sub#section
1! or2 sub#section )! of section 1)2 shall be punishable with ri5orous imprisonment
which may e$tend to two years and shall also be liable to fine(2
12
-Failure to comply with the provisions of clause (iib) of sub-section (1) of section
132.
275B. If a person who is re,uired to afford the authorised officer the necessary facility to
inspect the boo9s of account or other documents% as re,uired under clause iib! of sub#
section 1! of section 1)2% fails to afford such facility to the authorised officer% he shall be
punishable with ri5orous imprisonment for a term which may e$tend to two years and
shall also be liable to fine(2
1)
-Removal, concealment, transfer or delivery of property to thwart tax recovery.
276. Fhoe+er fraudulently remo+es% conceals% transfers or deli+ers to any person
13
% any
property or any interest therein% intendin5 thereby to pre+ent that property or interest
therein from bein5 ta9en in e$ecution of a certificate under the pro+isions of the *econd
*chedule shall be punishable with ri5orous imprisonment for a term which may e$tend to
two years and shall also be liable to fine(2
14
-Failure to comply with the provisions of sub-sections (1) and (3) of section 178.
276A. If a person
1'
-***2
i! fails to 5i+e the notice in accordance with sub#section 1! of section 1671 or
ii! fails to set aside the amount as re,uired by sub#section )! of that section1 or
iii! parts with any of the assets of the company or the properties in his hands in
contra+ention of the pro+isions of the aforesaid sub#section%
he shall be punishable with ri5orous imprisonment for a term which may e$tend to two
years :
Provided that in the absence of special and ade,uate reasons to the contrary to be
recorded in the :ud5ment of the court% such imprisonment shall not be for less than si$
months(2
Failure to comply with the provisions of section 269AB or section 269-I.
276AA. -/mitted b+ the 0inance Act) 1#"6) w.e.!. 1-1$-1#"6. /riginal section was
inserted b+ the 3ncome-tax *Amendment( Act) 1#"1) w.e.!. 1--1#"2.2
16
-Failure to comply with the provisions of sections 269UC, 269UE and 269UL.
276AB. Fhoe+er
17
-***2 fails to comply with the pro+isions of section 2'&E. or fails to
surrender or deli+er possession of the property under sub#section 2! of section 2'&EE or
contra+enes the pro+isions of sub#section 2! of section 2'&EG shall be punishable with
ri5orous imprisonment for a term which may e$tend to two years and shall also be liable
to fine :
Provided that in the absence of special and ade,uate reasons to the contrary to be
recorded in the :ud5ment of the court% such imprisonment shall not be for less than si$
months(2
1&
-Failure to pay tax to the credit of Central Government under Chapter XII-D or
XVII-B.
276B. If a person fails to pay to the credit of the .entral ;o+ernment%
a! the ta$ deducted at source by him as re,uired by or under the pro+isions of
.hapter /0II#B1 or
b! the ta$ payable by him% as re,uired by or under
i! sub#section 2! of section 114#<1 or
ii! the second pro+iso to section 1&3B%
he shall be punishable with ri5orous imprisonment for a term which shall not be less than
three months but which may e$tend to se+en years and with fine(2
28
-Failure to pay the tax collected at source.
276BB. If a person fails to pay to the credit of the .entral ;o+ernment% the ta$ collected
by him as re,uired under the pro+isions of section 28'.% he shall be punishable with
ri5orous imprisonment for a term which shall not be less than three months but which
may e$tend to se+en years and with fine(2

21
-Wilful attempt to evade tax, etc.
276C. 1! If a person wilfully attempts in any manner whatsoe+er to e+ade
22
any ta$%
penalty or interest char5eable or imposable under this "ct% he shall% without pre:udice to
any penalty that may be imposable on him under any other pro+ision of this "ct% be
punishable%
i! in a case where the amount sou5ht to be e+aded e$ceeds one hundred thousand
rupees% with ri5orous imprisonment for a term which shall not be less than si$
months but which may e$tend to se+en years and with fine1
ii! in any other case% with ri5orous imprisonment for a term which shall not be less
than three months but which may e$tend to three years and with fine(
2! If a person wilfully attempts in any manner whatsoe+er to e+ade the payment of any
ta$% penalty or interest under this "ct% he shall% without pre:udice to any penalty that may
be imposable on him under any other pro+ision of this "ct% be punishable with ri5orous
imprisonment for a term which shall not be less than three months but which may e$tend
to three years and shall% in the discretion of the court% also be liable to fine(
Explanation.>or the purposes of this section% a wilful attempt to e+ade any ta$% penalty or
interest char5eable or imposable under this "ct or the payment thereof shall include a
case where any person
i! has in his possession or control any boo9s of account or other documents bein5
boo9s of account or other documents rele+ant to any proceedin5 under this "ct!
containin5 a false entry or statement1 or
ii! ma9es or causes to be made any false entry or statement in such boo9s of account or
other documents1 or
iii! wilfully omits or causes to be omitted any rele+ant entry or statement in such boo9s
of account or other documents1 or
i%! causes any other circumstance to e$ist which will ha+e the effect of enablin5 such
person to e+ade any ta$% penalty or interest char5eable or imposable under this "ct
or the payment thereof(2

2)
-Failure to furnish returns of income.
276CC. If a person wilfully fails to furnish in due time
23
-the return o! !ringe bene!its
which he is re2uired to !urnish under sub-section *1( o! section 115,1 or b+ notice
gi%en under sub-section *2( o! the said section or section 115,C or2 the return of income
which he is re,uired to furnish under sub#section 1! of section 1)& or by notice 5i+en
under
24
-clause i! of sub#section 1! of section 1322 or section 137
2'
-or section 14)"2% he
shall be punishable%
i! in a case where the amount of ta$% which would ha+e been e+aded if the failure
had not been disco+ered
26
% e$ceeds one hundred thousand rupees% with ri5orous
imprisonment for a term which shall not be less than si$ months but which may
e$tend to se+en years and with fine1
ii! in any other case% with imprisonment for a term which shall not be less than
three months but which may e$tend to three years and with fine:
Provided that a person shall not be proceeded a5ainst under this section for failure to
furnish in due time the
27
-return o! !ringe bene!its under sub-section *1( o! section
115,1 or2 return of income under sub#section 1! of section 1)&
i! for any assessment year commencin5 prior to the 1st day of "pril% 1&641 or
ii! for any assessment year commencin5 on or after the 1st day of "pril 1&64% if
a! the return is furnished by him before the e$piry of the assessment year1 or
b! the ta$ payable by him on the total income determined on re5ular
assessment% as reduced by the ad+ance ta$% if any% paid% and any ta$
deducted at source% does not e$ceed three thousand rupees(2

2&
-Failure to furnish return of income in search cases.
276CCC. If a person wilfully fails to furnish in due time the return of total income which
he is re,uired to furnish by notice 5i+en under clause a! of section 147B.% he shall be
punishable with imprisonment for a term which shall not be less than three months but
which may e$tend to three years and with fine :
Provided that no person shall be punishable for any failure under this section in respect
of search initiated under section 1)2 or boo9s of account% other documents or any assets
re,uisitioned under section 1)2"% after the )8th day of @une% 1&&4 but before the 1st day
of @anuary% 1&&6(2
)8
-Failure to produce accounts and documents.
276D. If a person wilfully fails to produce% or cause to be produced% on or before the date
specified in any notice ser+ed on him under sub#section 1! of section 132% such accounts
and documents as are referred to in the notice
)1
-or wilfully fails to comply with a
direction issued to him under sub#section 2"! of that section2% he shall be punishable
with ri5orous imprisonment for a term which may e$tend to one year or with fine e,ual to
a sum calculated at a rate which shall not be less than four rupees or more than ten rupees
for e+ery day durin5 which the default continues% or with both(2

)3
-False statement in verification, etc.
277. If a person
)4
ma9es a statement in any +erification under this "ct or under any rule
made thereunder% or deli+ers an account or statement which is false% and which he either
9nows or belie+es to be false% or does not belie+e to be true% he shall be punishable%
i! in a case where the amount of ta$% which would ha+e been e+aded if the
statement or account had been accepted as true% e$ceeds one hundred thousand
than three months but which may e$tend to three years and with fine(2
)'
-Falsification of books of account or document, etc.
277A. If any person hereafter in this section referred to as the first person! wilfully and
with intent to enable any other person hereafter in this section referred to as the second
person! to e+ade any ta$ or interest or penalty char5eable and imposable under this "ct%
ma9es or causes to be made any entry or statement which is false and which the first
person either 9nows to be false or does not belie+e to be true% in any boo9s of account or
other document rele+ant to or useful in any proceedin5s a5ainst the first person or the
second person% under this "ct% the first person shall be punishable with ri5orous
imprisonment for a term which shall not be less than three months but which may e$tend
to three years and with fine(
Explanation.>or the purposes of establishin5 the char5e under this section% it shall not be
necessary to pro+e that the second person has actually e+aded any ta$% penalty or interest
char5eable or imposable under this "ct(2

)6
-Abetment of false return, etc.
278. If a person abets or induces in any manner another person to ma9e and deli+er an
account or a statement or declaration relatin5 to any income
)7
-or an+ !ringe bene!its2
char5eable to ta$ which is false and which he either 9nows to be false or does not belie+e
to be true or to commit an offence under sub#section 1! of section 26'.% he shall be
punishable%
i! in a case where the amount of ta$% penalty or interest which would ha+e been
e+aded% if the declaration% account or statement had been accepted as true% or
which is wilfully attempted to be e+aded% e$ceeds one hundred thousand
than three months but which may e$tend to three years and with fine(2
)&
-Punishment for second and subsequent offences.
278A. If any person con+icted of an offence under section 26'B or sub#section 1! of
section 26'. or section 26'..
38
-or section 26'??2
31
-or section 26'E2 or section 266 or
section 267 is a5ain con+icted of an offence under any of the aforesaid pro+isions% he
shall be punishable for the second and for e+ery subse,uent offence with ri5orous
imprisonment for a term which shall not be less than si$ months but which may e$tend to
se+en years and with fine(2
32
-Punishment not to be imposed in certain cases.
278AA. Aotwithstandin5 anythin5 contained in the pro+isions of section 26'"% section
26'"B%
3)
-or section 26'B%2 no person shall be punishable for any failure referred to in
the said pro+isions if he pro+es that there was reasonable cause
33
for such failure(2

34
-Offences by companies.
278B. 1! Fhere an offence under this "ct has been committed by a company
3'
% e+ery
person who% at the time the offence was committed% was in char5e of% and was
responsible to% the company for the conduct of the business of the company as well as the
company shall be deemed to be 5uilty of the offence and shall be liable to be proceeded
a5ainst and punished accordin5ly:
Provided that nothin5 contained in this sub#section shall render any such person liable to
any punishment if he pro+es that the offence was committed without his 9nowled5e or
that he had e$ercised all due dili5ence to pre+ent the commission of such offence(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% where an offence under this
"ct has been committed by a company and it is pro+ed that the offence has been
committed with the consent or conni+ance of% or is attributable to any ne5lect on the part
of% any director% mana5er% secretary or other officer of the company% such director%
mana5er% secretary or other officer shall also be deemed to be 5uilty of that offence and
shall be liable to be proceeded a5ainst and punished accordin5ly(
36
-)! Fhere an offence under this "ct has been committed by a person% bein5 a
company% and the punishment for such offence is imprisonment and fine% then% without
pre:udice to the pro+isions contained in sub#section 1! or sub#section 2!% such company
shall be punished with fine and e+ery person% referred to in sub#section 1!% or the
director% mana5er% secretary or other officer of the company referred to in sub#section 2!%
shall be liable to be proceeded a5ainst and punished in accordance with the pro+isions of
this "ct(2
a! company means a body corporate% and includes
i! a firm1 and
ii! an association of persons or a body of indi+iduals whether incorporated or
not1 and
b! director% in relation to
i! a firm% means a partner in the firm1
ii! any association of persons or a body of indi+iduals% means any member
controllin5 the affairs thereof(2
37
-Offences by Hindu undivided families.
278C. 1! Fhere an offence under this "ct has been committed by a Cindu undi+ided
family% the 9arta thereof shall be deemed to be 5uilty of the offence and shall be liable to
be proceeded a5ainst and punished accordin5ly:
Provided that nothin5 contained in this sub#section shall render the 9arta liable to any
punishment if he pro+es that the offence was committed without his 9nowled5e or that he
had e$ercised all due dili5ence to pre+ent the commission of such offence(
2! Aotwithstandin5 anythin5 contained in sub#section 1!% where an offence under this
"ct% has been committed by a Cindu undi+ided family and it is pro+ed that the offence
has been committed with the consent or conni+ance of% or is attributable to any ne5lect on
the part of% any member of the Cindu undi+ided family% such member shall also be
deemed to be 5uilty of that offence and shall be liable to be proceeded a5ainst and
punished accordin5ly(2

3&
-Presumption as to assets, books of account, etc., in certain cases.
278D. 1! Fhere durin5 the course of any search made under section 1)2% any money%
bullion% :ewellery or other +aluable article or thin5 hereafter in this section referred to as
the assets! or any boo9s of account or other documents has or ha+e been found in the
possession or control of any person and such assets or boo9s of account or other
documents are tendered by the prosecution in e+idence a5ainst such person or a5ainst
such person and the person referred to in section 267 for an offence under this "ct% the
pro+isions of sub#section 3"! of section 1)2 shall% so far as may be% apply in relation to
such assets or boo9s of account or other documents(
2! Fhere any assets or boo9s of account or other documents ta9en into custody% from the
possession or control of any person% by the officer or authority referred to in clause a! or
clause b! or clause c!% as the case may be% of sub#section 1! of section 1)2" are
deli+ered to the re,uisitionin5 officer under sub#section 2! of that section and such
assets% boo9s of account or other documents are tendered by the prosecution in e+idence
a5ainst such person or a5ainst such person and the person referred to in section 267 for an
offence under this "ct% the pro+isions of sub#section 3"! of section 1)2 shall% so far as
may be% apply in relation to such assets or boo9s of account or other documents(2

48
-Presumption as to culpable mental state.
278E. 1! In any prosecution for any offence under this "ct which re,uires a culpable
mental state on the part of the accused% the court shall presume the e$istence of such
mental state but it shall be a defence for the accused to pro+e the fact that he had no such
mental state with respect to the act char5ed as an offence in that prosecution(
Explanation.In this sub#section% culpable mental state includes intention% moti+e or
9nowled5e of a fact or belief in% or reason to belie+e% a fact(
2! >or the purposes of this section% a fact is said to be pro+ed only when the court
belie+es it to e$ist beyond reasonable doubt and not merely when its e$istence is
established by a preponderance of probability(2

Prosecution to be at instance of
41
-Chief Commissioner or Commissioner2.
42
279.
4)
-1! " person shall not be proceeded a5ainst for an offence under section 264"
43
-% section 264B2% section 26'% section 26'"% section 26'B% section 26'BB% section
26'.% section 26'..% section 26'?% section 266
44
-% section 266"2 or section 267 e$cept
with the pre+ious sanction of the .ommissioner or .ommissioner "ppeals! or the
appropriate authority:
Provided that the .hief .ommissioner or% as the case may be% ?irector ;eneral may
issue such instructions or directions to the aforesaid income#ta$ authorities as he may
deem fit for institution of proceedin5s under this sub#section(
Explanation.>or the purposes of this section% appropriate authority shall ha+e the same
meanin5 as in clause c! of section 2'&E"(2
4'
-1"! " person shall not be proceeded a5ainst for an offence under section 26'. or
section 266 in relation to the assessment for an assessment year in respect of which the
penalty imposed or imposable on him under clause iii! of sub#section 1! of section 261
has been reduced or wai+ed by an order under section 26)"(2
46
-2! "ny offence under this .hapter may% either before or after the institution of
proceedin5s% be compounded by the .hief .ommissioner or a ?irector ;eneral(2
47
-)! Fhere any proceedin5 has been ta9en a5ainst any person under sub#section 1!% any
statement made or account or other document produced by such person before any of the
income#ta$ authorities specified in
4&
-clauses a! to g!2 of section 11' shall not be
inadmissible as e+idence for the purpose of such proceedin5s merely on the 5round that
such statement was made or such account or other document was produced in the belief
that the penalty imposable would be reduced or wai+ed%
'8
-under section 26)"2 or that the
offence in respect of which such proceedin5 was ta9en would be compounded(2
'1
-Explanation.>or the remo+al of doubts% it is hereby declared that the power of the
Board to issue orders% instructions or directions under this "ct shall include and shall be
deemed always to ha+e included the power to issue instructions or directions includin5
instructions or directions to obtain the pre+ious appro+al of the Board! to other income#
ta$ authorities for the proper composition of offences under this section(2
'2
-Certain offences to be non-cognizable.
279A. Aotwithstandin5 anythin5 contained in the .ode of .riminal Procedure% 1&6) 2 of
1&63!% an offence punishable under section 26'B or section 26'. or section 26'.. or
section 266 or section 267 shall be deemed to be non#co5ni=able within the meanin5 of
that .ode(2
')
-Proof of entries in records or documents.
279B. Entries in the records or other documents in the custody of an income# ta$
authority shall be admitted in e+idence in any proceedin5s for the prosecution of any
person for an offence under this .hapter% and all such entries may be pro+ed either by the
production of the records or other documents in the custody of the income#ta$ authority
containin5 such entries% or by the production of a copy of the entries certified by the
income#ta$ authority ha+in5 custody of the records or other documents under its
si5nature and statin5 that it is a true copy of the ori5inal entries and that such ori5inal
entries are contained in the records or other documents in its custody(2

Disclosure of particulars by public servants.
280. 1! If a public ser+ant
'3
-furnishes any information or produces any document in
contra+ention of the pro+isions of sub#section 2! of section 1)72% he shall be punishable
with imprisonment which may e$tend to si$ months% and shall also be liable to fine(
2! Ao prosecution shall be instituted under this section e$cept with the pre+ious sanction
of the .entral ;o+ernment(
CHAPTER XXIII
MISCELLANEOUS
68
-Certain transfers to be void.
281. 1! Fhere% durin5 the pendency of any proceedin5 under this "ct or after the
completion thereof% but before the ser+ice of notice under rule 2 of the *econd *chedule%
any assessee creates a char5e on% or parts with the possession by way of sale% mort5a5e%
5ift% e$chan5e or any other mode of transfer whatsoe+er! of% any of his assets in fa+our of
any other person% such char5e or transfer shall be +oid as a5ainst any claim in respect of
any ta$ or any other sum payable by the assessee as a result of the completion of the said
proceedin5 or otherwise :
Provided that such char5e or transfer shall not be +oid if it is made
i! for ade,uate consideration and without notice of the pendency of such
proceedin5 or% as the case may be% without notice of such ta$ or other sum
payable by the assessee 1 or
ii! with the pre+ious permission of the
61
-"ssessin52 <fficer(
2! This section applies to cases where the amount of ta$ or other sum payable or li9ely
to be payable e$ceeds fi+e thousand rupees and the assets char5ed or transferred e$ceed
ten thousand rupees in +alue(
Explanation.In this section% assets means land% buildin5% machinery% plant% shares%
securities and fi$ed deposits in ban9s% to the e$tent to which any of the assets aforesaid
does not form part of the stoc9#in#trade of the business of the assessee(2
6)
-Provisional attachment to protect revenue in certain cases.
63
281B. 1! Fhere% durin5 the pendency of any proceedin5 for the assessment of any
income or for the assessment or reassessment of any income which has escaped
assessment% the
64
-"ssessin52 <fficer is of the opinion that for the purpose of protectin5
the interests of the re+enue it is necessary so to do% he may% with the pre+ious appro+al of
the
6'
-.hief .ommissioner% .ommissioner% ?irector ;eneral or ?irector2% by order in
writin5% attach pro+isionally any property belon5in5 to the assessee in the manner
pro+ided in the *econd *chedule(
66
-Explanation.>or the purposes of this sub#section% proceedin5s under sub#section 4! of
section 1)2 shall be deemed to be proceedin5s for the assessment of any income or for
the assessment or reassessment of any income which has escaped assessment(2
2! E+ery such pro+isional attachment shall cease to ha+e effect after the e$piry of a
period of si$ months from the date of the order made under sub#section 1! :
Provided that the
67
-.hief .ommissioner% .ommissioner% ?irector ;eneral or ?irector2
may% for reasons to be recorded in writin5% e$tend the aforesaid period by such further
period or periods as he thin9s fit% so% howe+er% that the total period of e$tension shall not
in any case e$ceed two years :
6&
-Provided further that where an application for settlement under section 234. is made%
the period commencin5 from the date on which such application is made and endin5 with
the date on which an order under sub#section 1! of section 234? is made shall be
e$cluded from the period specified in the precedin5 pro+iso(2
Service of notice generally.
282. 1! " notice or re,uisition under this "ct may be ser+ed on the person therein named
either by post or as if it were a summons issued by a court under the .ode of .i+il
Procedure% 1&87 4 of 1&87!(
2! "ny such notice or re,uisition may be addressed
a! in the case of a firm or a Cindu undi+ided family% to any member of the firm or
to the mana5er or any adult member of the family 1
b! in the case of a local authority or company% to the principal officer thereof 1
c! in the case of any other association or body of indi+iduals% to the principal
officer or any member thereof 1
d! in the case of any other person not bein5 an indi+idual!% to the person who
mana5es or controls his affairs(

Service of notice when family is disrupted or firm, etc., is dissolved.
283. 1! "fter a findin5 of total partition has been recorded by the
78
-"ssessin52 <fficer
under section 161 in respect of any Cindu family% notices under this "ct in respect of the
income of the Cindu family shall be ser+ed on the person who was the last mana5er of
the Cindu family% or% if such person is dead% then on all adults who were members of the
Cindu family immediately before the partition(
2! Fhere a firm or other association of persons is dissol+ed% notices under this "ct in
respect of the income of the firm or association may be ser+ed on any person who was a
partner not bein5 a minor! or member of the association% as the case may be%
immediately before its dissolution(

Service of notice in the case of discontinued business.
284. Fhere an assessment is to be made under section 16'% the
71
ser+e on the person whose income is to be assessed% or% in the case of a firm or an
association of persons% on any person who was a member of such firm or association at
the time of its discontinuance or% in the case of a company% on the principal officer
thereof% a notice containin5 all or any of the re,uirements which may be included in a
notice under sub#section 2! of section 1)&% and the pro+isions of this "ct shall% so far as
may be% apply accordin5ly as if the notice were a notice issued under that section(
7)
-Submission of statements by producers of cinematograph films.
285B.
73
"ny person carryin5 on the production of a cinemato5raph film durin5 the whole
or any part of any financial year shall% in respect of the period durin5 which such
production is carried on by him in such financial year% prepare and deli+er or cause to be
deli+ered to the
74
-"ssessin52 <fficer% within thirty days from the end of such financial
year or within thirty days from the date of the completion of the production of the film%
whiche+er is earlier% a statement in the prescribed form containin5 particulars of all
payments of o+er
7'
-fifty2 thousand rupees in the a55re5ate made by him or due from him
to each such person as is en5a5ed by him in such production
76
-***2(2
77
-Obligation to furnish annual information return
7&
.
285BA. 1! "ny person% bein5
a! an assessee1 or
b! the prescribed person in the case of an office of ;o+ernment1 or
c! a local authority or other public body or association1 or
d! the Re5istrar or *ub#Re5istrar appointed under section ' of the Re5istration
"ct% 1&87 1' of 1&87!1 or
e! the re5isterin5 authority empowered to re5ister motor +ehicles under .hapter
I0 of the Botor 0ehicles "ct% 1&77 4& of 1&77!1 or
!! the Post Baster ;eneral as referred to in clause 4! of section 2 of the Indian
Post <ffice "ct% 17&7 ' of 17&7!1 or
g! the .ollector referred to in clause c! of section ) of the Gand "c,uisition "ct%
17&3 1 of 17&3!1 or
h! the reco5nised stoc9 e$chan5e referred to in clause !! of section 2 of the
*ecurities .ontracts Re5ulation! "ct% 1&4' 32 of 1&4'!1 or
i! an officer of the Reser+e Ban9 of India% constituted under section ) of the
Reser+e Ban9 of India "ct% 1&)3 2 of 1&)3!1 or
4! a depository referred to in clause e! of sub#section 1! of section 2 of the
?epositories "ct% 1&&' 22 of 1&&'!%
who is responsible for re5isterin5% or% maintainin5 boo9s of account or other document
containin5 a record of any specified financial transaction% under any law for the time
bein5 in force% shall furnish an annual information return
&8
% in respect of such specified
financial transaction which is re5istered or recorded by him durin5 any financial year
be5innin5 on or after the 1st day of "pril% 2883 and information relatin5 to which is
rele+ant and re,uired for the purposes of this "ct% to the prescribed income#ta$
authority
&1
or such other authority or a5ency as may be prescribed(
2! The annual information return referred to in sub#section 1! shall be furnished within
the prescribed time
&2
after the end of such financial year% in such form and manner
includin5 on a floppy% dis9ette% ma5netic cartrid5e tape% .?#R<B or any computer
readable media! as may be
&8
prescribed
&2a
(
)! >or the purposes of sub#section 1!% specified financial transaction means any
a! transaction of purchase% sale or e$chan5e of 5oods or property or ri5ht or
interest in a property1 or
b! transaction for renderin5 any ser+ice1 or
c! transaction under a wor9s contract1 or
d! transaction by way of an in+estment made or an e$penditure incurred1 or
e! transaction for ta9in5 or acceptin5 any loan or deposit%
which may be prescribed
&)
:
Provided that the Board may prescribe different +alues for different transactions in
respect of different persons ha+in5 re5ard to the nature of such transaction :
Provided further that the +alue or% as the case may be% the a55re5ate +alue of such
transactions durin5 a financial year so prescribed shall not be less than fifty thousand
rupees(
3! Fhere the prescribed income#ta$ authority considers that the annual information
return furnished under sub#section 1! is defecti+e% he may intimate the defect to the
person who has furnished such return and 5i+e him an opportunity of rectifyin5 the defect
within a period of one month from the date of such intimation or within such further
period which% on an application made in this behalf% the prescribed income#ta$ authority
may% in his discretion% allow1 and if the defect is not rectified within the said period of
one month or% as the case may be% the further period so allowed% then% notwithstandin5
anythin5 contained in any other pro+ision of this "ct% such return shall be treated as an
in+alid return and the pro+isions of this "ct shall apply as if such person had failed to
furnish the annual information return(
4! Fhere a person who is re,uired to furnish an annual information return under sub#
section 1! has not furnished the same within the prescribed time% the prescribed income#
ta$ authority may ser+e upon such person a notice re,uirin5 him to furnish such return
within a period not e$ceedin5 si$ty days from the date of ser+ice of such notice and he
shall furnish the annual information return within the time specified in the notice(2
&3
-Publication of information respecting assessees in certain cases.
287. 1! If the .entral ;o+ernment is of opinion that it is necessary or e$pedient in the
public interest to publish the names of any assessees and any other particulars relatin5 to
any proceedin5s
&4
-or prosecutions2 under this "ct in respect of such assessees% it may
cause to be published such names and particulars in such manner as it thin9s fit(
&'
-2! Ao publication under this section shall be made in relation to any penalty imposed
under this "ct until the time for presentin5 an appeal to the
&6
-* * *2
&7
-.ommissioner
"ppeals!2 has e$pired without an appeal ha+in5 been presented or the appeal% if
presented% has been disposed of(2
Explanation.In the case of a firm% company or other association of persons% the names of
the partners of the firm% directors% mana5in5 a5ents% secretaries and treasurers% or
mana5ers of the company% or the members of the association% as the case may be% may
also be published if% in the opinion of the .entral ;o+ernment% the circumstances of the
case :ustify it(2
&&
-Appearance by registered valuer in certain matters.
287A. "ny assessee who is entitled or re,uired to attend before any income#ta$ authority
or the "ppellate Tribunal in connection with any matter relatin5 to the +aluation of any
asset% otherwise than when re,uired under section 1)1 to attend personally for
e$amination on oath or affirmation% may attend by a re5istered +aluer(
Explanation.In this section% re5istered +aluer has the same meanin5 as in clause oaa! of
1
Appearance by authorised representative.
2
)
288. 1! "ny assessee who is entitled or re,uired to attend before any income#ta$
authority or the "ppellate Tribunal in connection with any proceedin5 under this "ct
otherwise than when re,uired under section 1)1 to attend personally for e$amination on
oath or affirmation% may% sub:ect to the other pro+isions of this section% attend by an
authorised representati+e(
3
2! >or the purposes of this section% authorised representati+e means a person authorised
by the assessee in writin5 to appear on his behalf% bein5
i! a person related to the assessee in any manner% or a person re5ularly employed
by the assessee1 or
ii! any officer of a *cheduled Ban9 with which the assessee maintains a current
account or has other re5ular dealin5s1 or
iii! any le5al practitioner who is entitled to practise in any ci+il court in India1 or
i%! an accountant1 or
%! any person who has passed any accountancy e$amination reco5nised in this
behalf by the Board
4
1 or
%i! any person who has ac,uired such educational ,ualifications as the Board may
prescribe
'
for this purpose1 or
6
-%ia! any person who% before the comin5 into force of this "ct in the Enion territory
of ?adra and Aa5ar Ca+eli% ;oaV% ?aman and ?iu% or Pondicherry% attended
before an income#ta$ authority in the said territory on behalf of any assessee
otherwise than in the capacity of an employee or relati+e of that assessee1 or2
%ii! any other person who% immediately before the commencement of this "ct% was
an income#ta$ practitioner within the meanin5 of clause i%! of sub#section 2!
of section '1 of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% and was actually
practisin5 as such(
Explanation(In this section% accountant means a
7
chartered accountant within the meanin5
of the .hartered "ccountants "ct% 1&3& )7 of 1&3&!% and includes% in relation to any
*tate% any person who by +irtue of the pro+isions of sub#section 2! of section 22'
&
of the
.ompanies "ct% 1&4' 1 of 1&4'!% is entitled to be appointed to act as an auditor of
companies re5istered in that *tate(
)!
18
-***2
3! Ao person
a! who has been dismissed or remo+ed from ;o+ernment ser+ice after the 1st day
of "pril% 1&)71 or
b! who has been con+icted of an offence connected with any income#ta$
proceedin5 or on whom a penalty has been imposed under this "ct% other than a
penalty imposed on him under
11
-clause ii! of sub# section 1! of2 section 2611
or
c! who has become an insol+ent%
shall be ,ualified to represent an assessee under sub#section 1!% for all times in the case
of a person referred to in sub#clause a!*% for such time as the
12
.ommissioner2 may by order determine in the case of a person referred to in sub#clause
b!*% and for the period durin5 which the insol+ency continues in the case of a person
referred to in sub#clause c!*(
4! If any person
a! who is a le5al practitioner or an accountant is found 5uilty of misconduct in his
professional capacity by any authority entitled to institute disciplinary
proceedin5s a5ainst him% an order passed by that authority shall ha+e effect in
relation to his ri5ht to attend before an income#ta$ authority as it has in relation
to his ri5ht to practise as a le5al practitioner or accountant% as the case may be1
1)
b! who is not a le5al practitioner or an accountant% is found 5uilty of misconduct
in connection with any income#ta$ proceedin5s by the prescribed authority% the
13
may direct that he shall thenceforth be dis,ualified to
represent an assessee under sub#section 1!(
'! "ny order or direction under clause b! of sub#section 3! or clause b! of sub#section
4! shall be sub:ect to the followin5 conditions% namely :
a! no such order or direction shall be made in respect of any person unless he has
been 5i+en a reasonable opportunity of bein5 heard1
b! any person a5ainst whom any such order or direction is made may% within one
month of the ma9in5 of the order or direction% appeal to the Board to ha+e the
order or direction cancelled1 and
c! no such order or direction shall ta9e effect until the e$piration of one month
from the ma9in5 thereof% or% where an appeal has been preferred% until the
disposal of the appeal(
6! " person dis,ualified to represent an assessee by +irtue of the pro+isions of sub#
section )! of section '1 of the Indian Income#ta$ "ct% 1&22 11 of 1&22!% shall be
dis,ualified to represent an assessee under sub#section 1!(
14
-Rounding off of income.
288A.
1'
-The amount of total income2 computed in accordance with the fore5oin5
pro+isions of this "ct shall be rounded off to the nearest multiple of ten rupees and for
this purpose any part of a rupee consistin5 of paise shall be i5nored and thereafter if such
amount is not a multiple of ten% then% if the last fi5ure in that amount is fi+e or more% the
amount shall be increased to the ne$t hi5her amount which is a multiple of ten and if the
last fi5ure is less than fi+e% the amount shall be reduced to the ne$t lower amount which
is a multiple of ten1 and the amount so rounded off shall be deemed to be the total income
of the assessee for the purposes of this "ct(2
16
-***2
1"-1#
Rounding off amount payable and refund due.
288B. An+ amount pa+able) and the amount o! re!und due) under the pro%isions o! this
Act shall be rounded o!! to the nearest multiple o! ten rupees and !or this purpose an+
part o! a rupee consisting o! paise shall be ignored and therea!ter i! such amount is not a
multiple o! ten) then) i! the last !igure in that amount is !i%e or more) the amount shall be
increased to the next higher amount which is a multiple o! ten and i! the last !igure is less
than !i%e) the amount shall be reduced to the next lower amount which is a multiple o!
ten.]
Receipt to be given.
289. " receipt shall be 5i+en for any money paid or reco+ered under this "ct(

Indemnity.
290. E+ery person deductin5% retainin5% or payin5 any ta$ in pursuance of this "ct in
respect of income belon5in5 to another person is hereby indemnified for the deduction%
retention% or payment thereof(
Power to tender immunity from prosecution.
291. 1! The .entral ;o+ernment may% if it is of opinion the reasons for such opinion
bein5 recorded in writin5! that with a +iew to obtainin5 the e+idence of any person
appearin5 to ha+e been directly or indirectly concerned in or pri+y to the concealment of
income or to the e+asion of payment of ta$ on income
28
-it is necessary or e$pedient so to
do2% tender to such person immunity from prosecution for any offence under this "ct or
under the Indian Penal .ode 34 of 17'8!% or under any other .entral "ct for the time
bein5 in force and also from the imposition of any penalty under this "ct on condition of
his ma9in5 a full and true disclosure of the whole circumstances relatin5 to the
concealment of income or e+asion of payment of ta$ on income(
2! " tender of immunity made to% and accepted by% the person concerned% shall% to the
e$tent to which the immunity e$tends% render him immune from prosecution for any
offence in respect of which the tender was made or from the imposition of any penalty
under this "ct(
)! If it appears to the .entral ;o+ernment that any person to whom immunity has been
tendered under this section has not complied with the condition on which the tender was
made or is wilfully concealin5 anythin5 or is 5i+in5 false e+idence% the .entral
;o+ernment may record a findin5 to that effect% and thereupon the immunity shall be
deemed to ha+e been withdrawn% and any such person may be tried for the offence in
respect of which the tender of immunity was made or for any other offence of which he
appears to ha+e been 5uilty in connection with the same matter and shall also become
liable to the imposition of any penalty under this "ct to which he would otherwise ha+e
been liable(
Cognizance of offences.
292. Ao court inferior to that of a presidency ma5istrate or a ma5istrate of the first class
shall try any offence under this "ct(
21
-Section 360 of the Code of Criminal Procedure, 1973, and the Probation of
Offenders Act, 1958, not to apply.
292A. Aothin5 contained in section )'8
22
of the .ode of .riminal Procedure% 1&6) 2 of
1&63!% or in the Probation of <ffenders "ct% 1&47 28 of 1&47!% shall apply to a person
con+icted of an offence under this "ct unless that person is under ei5hteen years of a5e(2
2)
-Return of income, etc., not to be invalid on certain grounds.
292B. Ao return of income% assessment% notice% summons or other proceedin5% furnished
or made or issued or ta9en or purported to ha+e been furnished or made or issued or ta9en
in pursuance of any of the pro+isions of this "ct shall be in+alid or shall be deemed to be
in+alid merely by reason of any mista9e% defect or omission in such return of income%
assessment% notice% summons or other proceedin5 if such return of income% assessment%
notice% summons or other proceedin5 is in substance and effect in conformity with or
accordin5 to the intent and purpose of this "ct(2
Bar of suits in civil courts.
293. Ao suit shall be brou5ht in any ci+il court to set aside or modify any
23
-***2
24
-proceedin5 ta9en
2'
or2 order made under this "ct1 and no prosecution% suit or other
proceedin5 shall lie a5ainst
26
-the ;o+ernment or2 any officer of the ;o+ernment for
anythin5 in 5ood faith done or intended to be done under this "ct(
27
-Power to make exemption, etc., in relation to participation in the business of
prospecting for, extraction, etc., of mineral oils.
293A. 1! If the .entral ;o+ernment is satisfied that it is necessary or e$pedient so to do
in the public interest% it may% by notification
2&
in the <fficial ;a=ette% ma9e an e$emption%
reduction in rate or other modification in respect of income#ta$ in fa+our of any class of
persons specified in sub#section 2! or in re5ard to the whole or any part of the income of
such class of persons
)8
-or in re5ard to the status in which such class of persons or the
members thereof are to be assessed on their income from the business referred to in
clause a! of sub#section 2! :
Provided that the notification for modification in respect of the status may be 5i+en
effect from an assessment year be5innin5 on or after the 1st day of "pril% 1&&)(2
2! The persons referred to in sub#section 1! are the followin5% namely :
a! persons with whom the .entral ;o+ernment has entered into a5reements for
the association or participation of that ;o+ernment or any person authorised by
that ;o+ernment in any business consistin5 of the prospectin5 for or e$traction
or production of mineral oils1
b! persons pro+idin5 any ser+ices or facilities or supplyin5 any ship% aircraft%
machinery or plant whether by way of sale or hire! in connection with any
business consistin5 of the prospectin5 for or e$traction or production of mineral
oils carried on by that ;o+ernment or any person specified by that ;o+ernment
in this behalf by notification in the <fficial ;a=ette1 and
c! employees of the persons referred to in clause a! or clause b!(
)! E+ery notification issued under this section shall be laid before each Couse of
Parliament(
)1
a! mineral oil includes petroleum and natural 5as1
b! status means the cate5ory under which the assessee is assessed as indi+idual%
Cindu undi+ided family and so on(22
)2
-Power of Central Government or Board to condone delays in obtaining approval.
293B. Fhere% under any pro+ision of this "ct% the appro+al of the .entral ;o+ernment or
the Board is re,uired to be obtained before a specified date% it shall be open to the .entral
;o+ernment or% as the case may be% the Board to condone% for sufficient cause% any delay
in obtainin5 such appro+al(2
Act to have effect pending legislative provision for charge of tax.
294. If on the 1st day of "pril in any assessment year pro+ision has not yet been made by
a .entral "ct for the char5in5 of income#ta$
))
-***2 for that assessment year% this "ct
shall ne+ertheless ha+e effect until such pro+ision is so made as if the pro+ision in force
in the precedin5 assessment year or the pro+ision proposed in the Bill then before
Parliament% whiche+er is more fa+ourable to the assessee% were actually in force(
)3
-Power to make exemption, etc., in relation to certain Union territories.
294A. If the .entral ;o+ernment considers it necessary or e$pedient so to do for
a+oidin5 any hardship or anomaly or remo+in5 any difficulty that may arise as a result of
the application of this "ct to the Enion territories of ?adra and Aa5ar Ca+eli% ;oa*%
?aman and ?iu% and Pondicherry% or in the case of the Enion territory of Pondicherry% for
implementin5 any pro+ision of the Treaty of .ession concluded between >rance and
India on the 27th day of Bay% 1&4'% that ;o+ernment may% by 5eneral or special order%
ma9e an e$emption% reduction in rate or other modification in respect of income#ta$ or
super#ta$ in fa+our of any assessee or class of assessees or in re5ard to the whole or any
part of the income of any assessee or class of assessees :
Provided that the power conferred by this section shall not be e$ercisable after the )1st
day of Barch% 1&'6% e$cept for the purpose of rescindin5 an e$emption% reduction or
modification already made(2
Power to make rules.
295. 1! The Board may% sub:ect to the control of the .entral ;o+ernment% by notification
in the ;a=ette of India% ma9e rules for the whole or any part of India for carryin5 out the
purposes of this "ct(
2! In particular% and without pre:udice to the 5enerality of the fore5oin5 power% such
rules may pro+ide for all or any of the followin5 matters :
a!
)4
the ascertainment and determination of any class of income1
b! the manner in which and the procedure by which the income shall be arri+ed at
in the case of
i!
)'
income deri+ed in part from a5riculture and in part from business1
ii!
)6
persons residin5 outside India1
)7
-iii! an indi+idual who is liable to be assessed under the pro+isions of sub#
section 2! of section '312
c!
)&
the determination of the +alue of any per,uisite char5eable to ta$ under this
"ct in such manner and on such basis as appears to the Board to be proper and
reasonable1
d!
38
the percenta5e on the written down +alue which may be allowed as
depreciation in respect of buildin5s% machinery% plant or furniture1
31
-dd!
32
the e$tent to which% and the conditions sub:ect to which% any e$penditure
referred to in sub#section )! of section )6 may be allowed12
3)
-dda!
33
the matters specified in sub#sections 2! and )! of section 33""12
e!
34
-***2
3'
-ee!
36
the conditions or limitations sub:ect to which any payment of rent made by an
assessee shall be deducted under section 78;;1
eea! the cases% the nature and +alue of assets% the limits and heads of e$penditure
and the out5oin5s% which are re,uired to be prescribed under sub#section '! of
section 1)&1
eeb!
37
the time within which any person may apply for the allotment of a permanent
account number% the form and the manner in which such application may be
made and the particulars which such application shall contain and the
transactions with respect to which permanent account numbers shall be ,uoted
on documents relatin5 to such transactions under section 1)&"
3&
1
eec!
48
the form of the report of audit and the particulars which such report shall
contain under sub#section 2"! of section 13212
!!
41
the manner in which and the period to which any such income as is referred to
in section 178 may be allocated1
g!
42
the authority to be prescribed for any of the purposes of this "ct1
h!
4)
the procedure for 5i+in5 effect to the terms of any a5reement for the 5rantin5
of relief in respect of double ta$ation or for the a+oidance of double ta$ation
which may be entered into by the .entral ;o+ernment under this "ct1
i! the form and manner in which any application% claim% return or information
may be made or furnished and the fees that may be le+ied in respect of any
application or claim1
4! the manner in which any document re,uired to be filed under this "ct may be
+erified1
.!
43
the procedure to be followed on applications for refunds1
44
-..!
4'
the procedure to be followed in calculatin5 interest payable by assessees or
interest payable by ;o+ernment to assessees under any pro+ision of this "ct%
includin5 the roundin5 off of the period for which such interest is to be
calculated in cases where such period includes a fraction of a month% and
specifyin5 the circumstances in which and the e$tent to which petty amounts of
interest payable by assessees may be i5nored12
l!
46
the re5ulation of any matter for which pro+ision is made in section 2)81
m!
47
the form and manner in which any appeal or cross#ob:ection may be filed
under this "ct% the fee payable in respect thereof and the manner in which
intimation of any such order as is referred to in clause c! of sub#section 2! of
section 23& may be ser+ed1
4&
-mm!
'8
the circumstances in which% the conditions sub:ect to which and the manner in
which% the
'1
-* * *2
'2
-.ommissioner "ppeals!2 may permit an appellant to
produce e+idence which he did not produce or which he was not allowed to
produce before the
')
-"ssessin52 <fficer12
'3
-mma!
'4
the form in which the statement under section 274B shall be deli+ered to the
')
-"ssessin52 <fficer12
n!
''
the maintenance of a re5ister of persons other than le5al practi#tioners or
accountants as defined in sub#section 2! of section 277 practisin5 before
income#ta$ authorities and for the constitution of and the procedure to be
followed by the authority referred to in sub#section 4! of that section1
o! the issue of certificate +erifyin5 the payment of ta$ by assessees1
p! any other matter which by this "ct is to be% or may be% prescribed(
)! In cases comin5 under clause b! of sub#section 2!% where the income liable to ta$
cannot be definitely ascertained% or can be ascertained only with an amount of trouble and
e$pense to the assessee which in the opinion of the Board is unreasonable% the rules made
under this section may
a! prescribe methods by which an estimate of such income may be made1 and
b! in cases comin5 under sub#clause i! of clause b! of sub#section 2! specify the
proportion of the income which shall be deemed to be income liable to ta$1
and an assessment based on such estimate or proportion shall be deemed to be duly made
in accordance with the pro+isions of this "ct(
'6
-3! The power to ma9e rules conferred by this section shall include the power to 5i+e
retrospecti+e effect% from a date not earlier than the date of commencement of this "ct% to
the rules or any of them and% unless the contrary is permitted whether e$pressly or by
necessary implication!% no retrospecti+e effect shall be 5i+en to any rule so as to
pre:udicially affect the interests of assessees(2
'7
-
'&
-Rules and certain notifications to be placed before Parliament.
296. The .entral ;o+ernment shall cause e+ery rule made under this "ct
68
-% the rules of
procedure framed by the *ettlement .ommission under sub#section 6! of section 234>%
the "uthority for "d+ance Rulin5s under section 2340 and the "ppellate Tribunal under
sub#section 4! of section 2442 and e+ery notification issued under sub#clause i%! of
clause 23'! of section 18 to be laid as soon as may be after the rule is made or the
notification is issued before each Couse of Parliament while it is in session% for a total
period of thirty days% which may be comprised in one session or in two or more
successi+e sessions% and if% before the e$piry of the session immediately followin5 the
session or the successi+e sessions aforesaid% both Couses a5ree in ma9in5 any
modification in the rule or notification or both Couses a5ree that the rule or notification
should not be made or issued% that rule or notification shall thereafter ha+e effect% only in
such modified form or be of no effect% as the case may be1 so% howe+er% that any such
modification or annulment shall be without pre:udice to the +alidity of anythin5
pre+iously done under that rule or notification(22
Repeals and savings.
297. 1! The Indian Income#ta$ "ct% 1&22 11 of 1&22!% is hereby repealed(
2! Aotwithstandin5 the repeal of the Indian Income#ta$ "ct% 1&22 11 of 1&22!
hereinafter referred to as the repealed "ct!%
a! where a return of income has been filed before the commencement of this "ct
by any person for any assessment year% proceedin5s for the assessment
61
of that
person for that year may be ta9en and continued as if this "ct had not been
passed1
b! where a return of income is filed after the commencement of this "ct otherwise
than in pursuance of a notice under section )3 of the repealed "ct by any
person for the assessment year endin5 on the )1st day of Barch% 1&'2% or any
earlier year% the assessment of that person for that year shall be made in
accordance with the procedure specified in this "ct1
c! any proceedin5 pendin5 on the commencement of this "ct before any income#
ta$ authority% the "ppellate Tribunal or any court% by way of appeal% reference%
or re+ision% shall be continued and disposed of as if this "ct had not been
passed1
d! where in respect of any assessment year after the year endin5 on the )1st day of
Barch% 1&38%
i! a notice under section )3 of the repealed "ct had been issued before the
commencement of this "ct% the proceedin5s in pursuance of such notice
may be continued and disposed of as if this "ct had not been passed1
ii! any income char5eable to ta$ had escaped assessment within the meanin5
of that e$pression in section 136 and no proceedin5s under section )3 of the
repealed "ct in respect of any such income are pendin5 at the
commencement of this "ct% a notice under section 137 may% sub:ect to the
pro+isions contained in section 13& or section 148% be issued with respect to
that assessment year and all the pro+isions of this "ct shall apply
accordin5ly
62
1
e!
6)
-sub:ect to the pro+isions of clause g! and clause 4! of this sub#section%2
section 2)" of the repealed "ct shall continue to ha+e effect in relation to the
assessment of any company or its shareholders for the assessment year endin5
on the )1st day of Barch% 1&'2 or any earlier year% and the pro+isions of the
repealed "ct shall apply to all matters arisin5 out of such assessment as fully
and effectually as if this "ct had not been passed1
!! any proceedin5 for the imposition of a penalty in respect of any assessment
completed before the first day of "pril% 1&'2% may be initiated and any such
penalty may be imposed as if this "ct had not been passed1
g! any proceedin5 for the imposition of a penalty in respect of any assessment for
the year endin5 on the )1st day of Barch% 1&'2% or any earlier year% which is
completed on or after the 1st day of "pril% 1&'2% may be initiated and any such
penalty may be imposed under this "ct1
h! any election or declaration made or option e$ercised by an assessee under any
pro+ision of the repealed "ct and in force immediately before the
commencement of this "ct shall be deemed to ha+e been an election or
declaration made or option e$ercised under the correspondin5 pro+ision of this
"ct1
i! where% in respect of any assessment completed before the commencement of
this "ct% a refund falls due after such commencement or default is made after
such commencement in the payment of any sum due under such completed
assessment%
63
the pro+isions of this "ct relatin5 to interest payable by the
.entral ;o+ernment on refunds and interest payable by the assessee for default
shall apply1
4! any sum payable by way of income#ta$% super#ta$% interest% penalty or
otherwise under the repealed "ct may be reco+ered under this "ct% but without
pre:udice to any action already ta9en for the reco+ery of such sum under the
repealed "ct1
.! any a5reement entered into% appointment made% appro+al 5i+en% reco5nition
5ranted% direction% instruction% notification% order or rule issued under any
pro+ision of the repealed "ct shall% so far as it is not inconsistent with the
correspondin5 pro+ision of this "ct% be deemed to ha+e been entered into%
made% 5ranted% 5i+en or issued under the correspondin5 pro+ision aforesaid and
shall continue in force accordin5ly1
l!
64
any notification issued under sub#section 1! of section '8
6'
-or section '8"2
of the repealed "ct and in force immediately before the commencement of this
"ct shall% to the e$tent to which pro+ision has not been made under this "ct%
continue in force
66
-***2:
67
-Provided that the .entral ;o+ernment may rescind any such notification or
amend it so as to rescind any e$emption% reduction in rate or other modification
made thereunder12
m! where the period prescribed for any application% appeal% reference or re+ision
under the repealed "ct had e$pired on or before the commencement of this "ct%
nothin5 in this "ct shall be construed as enablin5 any such application% appeal%
reference or re+ision to be made under this "ct by reason only of the fact that a
lon5er period therefor is prescribed or pro+ision is made for e$tension of time
in suitable cases by the appropriate authority(
Power to remove difficulties.
298. 1! If any difficulty arises in 5i+in5 effect to the pro+isions of this "ct the .entral
;o+ernment may% by 5eneral or special order% do anythin5 not inconsistent with such
pro+isions which appears to it to be necessary or e$pedient for the purpose of remo+in5
the difficulty(
2! In particular% and without pre:udice to the 5enerality of the fore5oin5 power% any such
order may pro+ide for the adaptations or modifications sub:ect to which the repealed "ct
shall apply in relation to the assessments for the assessment year endin5 on the )1st day
of Barch% 1&'2% or any earlier year(
6&
-)! If any difficulty arises in 5i+in5 effect to the pro+isions of this "ct as amended by
the ?irect Ta$ Gaws "mendment! "ct% 1&76% the .entral ;o+ernment may% by order% do
anythin5 not inconsistent with such pro+isions for the purpose of remo+in5 the difficulty:
Provided that no such order shall be made after the e$piration of three years from the 1st
day of "pril% 1&77(
3! E+ery order made under sub#section )! shall be laid before each Couse of
Parliament(2
THE $IR/T /CHE'01E
IA*ER"A.E BE*IAE**
-<ee section 332
A.>i!e insurance business
Profits of life insurance business to be computed separately.
1. In the case of a person who carries on or at any time in the pre+ious year carried on life
insurance business% the profits and 5ains of such person from that business shall be
computed separately from his profits and 5ains from any other business(
78
-Computation of profits of life insurance business.
2. The profits and 5ains of life insurance business shall be ta9en to be the annual a+era5e
of the surplus arri+ed at by ad:ustin5 the surplus or deficit disclosed by the actuarial
+aluation made in accordance with the Insurance "ct% 1&)7 3 of 1&)7!% in respect of the
last inter#+aluation period endin5 before the commencement of the assessment year% so as
to e$clude from it any surplus or deficit included therein which was made in any earlier
inter#+aluation period(2
Deductions.
3. -/mitted b+ the 0inance Act) 1#6) w.e.!. 1-4-1#. Earlier) the rule was !irst amended
b+ the 0inance Act) 1#66) w.e.!. 1-4-1#66 and b+ the 0inance Act) 1#65) w.e.!. 1-4-1#65.2
Adjustment of tax paid by deduction at source.
4. Fhere for any year an assessment of the profits of life insurance business is made in
accordance with the annual a+era5e of a surplus disclosed by a +aluation for an inter#
+aluation period e$ceedin5 twel+e months% then% in computin5 the income#ta$ payable for
that year% credit shall not be 5i+en in accordance with section 1&& for the income#ta$ paid
in the pre+ious year% but credit shall be 5i+en for the annual a+era5e of the income#ta$
paid by deduction at source from interest on securities or otherwise durin5 such period(
B./ther insurance business
Computation of profits and gains of other insurance business.
5. The profits and 5ains of any business of insurance other than life insurance shall be
ta9en to be the balance of the profits disclosed by the annual accounts% copies of which
are re,uired under the Insurance "ct% 1&)7 3 of 1&)7!% to be furnished to the .ontroller
of Insurance% sub:ect to the followin5 ad:ustments:
a! sub:ect to the other pro+isions of this rule% any e$penditure or allowance
71
-includin5 any amount debited to the profit and loss account either by way of
a pro+ision for any ta$% di+idend% reser+e or any other pro+ision as may be
prescribed2 which is not admissible under the pro+isions of sections )8 to
72
-3)B2 in computin5 the profits and 5ains of a business shall be added bac91
b!
7)
-***2
73
c! such amount carried o+er to a reser+e for une$pired ris9s as may be prescribed
in this behalf shall be allowed as a deduction(
'./ther pro%isions
Profits and gains of non-resident person.
6. 1! The profits and 5ains of the branches in India of a person not resident in India and
carryin5 on any business of insurance% may% in the absence of more reliable data% be
deemed to be that proportion of the world income of such person which corresponds to
the proportion which his premium income deri+ed from India bears to his total premium
income(
2! >or the purposes of this rule% the world income in relation to life insurance business of
a person not resident in India shall be computed in the manner laid down in this "ct for
the computation of the profits and 5ains of life insurance business carried on in India(
Interpretation.
7. 1! >or the purposes of these rules
i!
74
-***2
ii! in+estments includes securities% stoc9s and shares1
iii!
7'
-***2
i%! life insurance business
76
means life insurance business as defined in clause 11!
of section 2 of the Insurance "ct% 1&)7 3 of 1&)7! 1
%! rule means a rule contained in this *chedule(
2! References in these rules to the Insurance "ct% 1&)7 3 of 1&)7!% or any pro+ision
thereof% shall% in relation to the Gife Insurance .orporation of India% be construed as
references to that "ct or pro+ision as read with section 3)
77
of the Gife Insurance
.orporation "ct% 1&4' )1 of 1&4'!(
TCE *E.<A? *.CE?EGE
PR<.E?ERE ><R RE.<0ERY <> T"/
7&
--<ee sections 222 and 26'22

PART I
;EAER"G PR<0I*I<A*
Definitions.
1. In this *chedule% unless the conte$t otherwise re,uires%
&8
-a! certificate% e$cept in rules 6% 33% '4 and sub#rule 2! of rule ''% means the
certificate drawn up by the Ta$ Reco+ery <fficer under section 222 in respect
of any assessee referred to in that section12
b! defaulter means the assessee mentioned in the certificate1
c! e$ecution% in relation to a certificate% means reco+ery of arrears in pursuance of
the certificate1
d! mo+able property includes 5rowin5 crops1
e! officer means a person authorised to ma9e an attachment or sale under this
*chedule1
!! rule means a rule contained in this *chedule1 and
g! share in a corporation includes stoc9% debenture#stoc9% debentures or bonds(
Issue of notice.
2.
&1
-Fhen a certificate has been drawn up by the Ta$ Reco+ery <fficer2 for the reco+ery
of arrears under this *chedule% the Ta$ Reco+ery <fficer shall cause to be ser+ed upon
the defaulter a notice re,uirin5 the defaulter to pay the amount specified in the certificate
within fifteen days from the date of ser+ice of the notice and intimatin5 that in default
steps would be ta9en to realise the amount under this *chedule(
When certificate may be executed.
3. Ao step in e$ecution of a certificate shall be ta9en until the period of fifteen days has
elapsed since the date of the ser+ice of the notice re,uired by the precedin5 rule :
Provided that% if the Ta$ Reco+ery <fficer is satisfied that the defaulter is li9ely to
conceal% remo+e or dispose of the whole or any part of such of his mo+able property as
would be liable to attachment in e$ecution of a decree of a ci+il court and that the
realisation of the amount of the certificate would in conse,uence be delayed or
obstructed% he may at any time direct% for reasons to be recorded in writin5% an attachment
of the whole or any part of such property:
Provided further that if the defaulter whose property has been so attached furnishes
security to the satisfaction of the Ta$ Reco+ery <fficer% such attachment shall be
cancelled from the date on which such security is accepted by the Ta$ Reco+ery <fficer(
Mode of recovery.
4. If the amount mentioned in the notice is not paid within the time specified therein or
within such further time as the Ta$ Reco+ery <fficer may 5rant in his discretion% the Ta$
Reco+ery <fficer shall proceed to realise the amount by one or more of the followin5
modes :
a! by attachment and sale of the defaulters mo+able property1
b! by attachment and sale of the defaulters immo+able property1
c! by arrest of the defaulter and his detention in prison1
d! by appointin5 a recei+er for the mana5ement of the defaulters mo+able and
immo+able properties(
Interest, costs and charges recoverable.
5. There shall be reco+erable% in the proceedin5s in e$ecution of e+ery certificate%
a! such interest upon the amount of ta$ or penalty or other sum to which the
certificate relates as is payable in accordance with sub#section 2! of section
228% and
b! all char5es incurred in respect of
i! the ser+ice of notice upon the defaulter to pay the arrears% and of warrants
and other processes% and
ii! all other proceedin5s ta9en for realisin5 the arrears(
Purchasers title.
6. 1! Fhere property is sold in e$ecution of a certificate% there shall +est in the purchaser
merely the ri5ht% title and interest of the defaulter at the time of the sale% e+en thou5h the
property itself be specified(
2! Fhere immo+able property is sold in e$ecution of a certificate% and such sale has
become absolute% the purchasers ri5ht% title and interest shall be deemed to ha+e +ested in
him from the time when the property is sold% and not from the time when the sale
becomes absolute(
Suit against purchaser not maintainable on ground of purchase being made on
behalf of plaintiff.
7. 1! Ao suit shall be maintained a5ainst any person claimin5 title under a purchase
certified by the Ta$ Reco+ery <fficer in the manner laid down in this *chedule% on the
5round that the purchase was made on behalf of the plaintiff or on behalf of some one
throu5h whom the plaintiff claims(
2! Aothin5 in this section shall bar a suit to obtain a declaration that the name of any
purchaser certified as aforesaid was inserted in the certificate fraudulently or without the
consent of the real purchaser% or interfere with the ri5ht of a third person to proceed
a5ainst that property% thou5h ostensibly sold to the certified purchaser% on the 5round that
it is liable to satisfy a claim of such third person a5ainst the real owner(
&2
-Disposal of proceeds of execution.
8. 1! Fhene+er assets are realised by sale or otherwise in e$ecution of a certificate% the
proceeds shall be disposed of in the followin5 manner% namely :
a! they shall first be ad:usted towards the amount due under the certificate in
e$ecution of which the assets were realised and the costs incurred in the course
of such e$ecution1
b! if there remains a balance after the ad:ustment referred to in clause a!% the
same shall be utilised for satisfaction of any other amount reco+erable from the
assessee under this "ct which may be due on the date on which the assets were
realised1 and
c! the balance% if any% remainin5 after the ad:ustments under clauses a! and b!
shall be paid to the defaulter(
2! If the defaulter disputes any ad:ustment under clause b! of sub#rule 1!% the Ta$
Reco+ery <fficer shall determine the dispute(2
General bar to jurisdiction of civil courts, save where fraud alleged.
9. E$cept as otherwise e$pressly pro+ided in this "ct% e+ery ,uestion arisin5 between the
&)
-Ta$ Reco+ery2 <fficer and the defaulter or their representati+es% relatin5 to the
e$ecution% dischar5e or satisfaction of a certificate
&3
-***2% or relatin5 to the confirmation
or settin5 aside by an order under this "ct of a sale held in e$ecution of such certificate%
shall be determined% not by suit% but by order of the Ta$ Reco+ery <fficer before whom
such ,uestion arises :
Provided that a suit may be brou5ht in a ci+il court in respect of any such ,uestion upon
the 5round of fraud(
Property exempt from attachment.
10. 1! "ll such property as is by the .ode of .i+il Procedure% 1&87 4 of 1&87!%
e$empted from attachment and sale in e$ecution of a decree of a ci+il court shall be
e$empt from attachment and sale under this *chedule(
2! The Ta$ Reco+ery <fficers decision as to what property is so entitled to e$emption
shall be conclusi+e(
Investigation by Tax Recovery Officer.
11. 1! Fhere any claim is preferred to% or any ob:ection is made to the attachment or sale
of% any property in e$ecution of a certificate% on the 5round that such property is not
liable to such attachment or sale% the Ta$ Reco+ery <fficer shall proceed to in+esti5ate
the claim or ob:ection :
Provided that no such in+esti5ation shall be made where the Ta$ Reco+ery <fficer
considers that the claim or ob:ection was desi5nedly or unnecessarily delayed(
2! Fhere the property to which the claim or ob:ection applies has been ad+ertised for
sale% the Ta$ Reco+ery <fficer orderin5 the sale may postpone it pendin5 the
in+esti5ation of the claim or ob:ection% upon such terms as to security or otherwise as the
Ta$ Reco+ery <fficer shall deem fit(
)! The claimant or ob:ector must adduce e+idence to show that
a! in the case of immo+able property! at the date of the ser+ice of the notice
issued under this *chedule to pay the arrears% or
b! in the case of mo+able property! at the date of the attachment%
he had some interest in% or was possessed
&4
of% the property in ,uestion(
3! Fhere% upon the said in+esti5ation% the Ta$ Reco+ery <fficer is satisfied that% for the
reason stated in the claim or ob:ection% such property was not% at the said date% in the
possession of the defaulter or of some person in trust for him or in the occupancy of a
tenant or other person payin5 rent to him% or that% bein5 in the possession of the defaulter
at the said date% it was so in his possession% not on his own account or as his own
property% but on account of or in trust for some other person% or partly on his own account
and partly on account of some other person% the Ta$ Reco+ery <fficer shall ma9e an
order releasin5 the property% wholly or to such e$tent as he thin9s fit% from attachment or
sale(
4! Fhere the Ta$ Reco+ery <fficer is satisfied that the property was% at the said date% in
the possession of the defaulter as his own property and not on account of any other
person% or was in the possession of some other person in trust for him% or in the
occupancy of a tenant or other person payin5 rent to him% the Ta$ Reco+ery <fficer shall
disallow the claim(
'! Fhere a claim or an ob:ection is preferred% the party a5ainst whom an order is made
may institute a suit in a ci+il court to establish the ri5ht which he claims to the property in
dispute1 but% sub:ect to the result of such suit if any!% the order of the Ta$ Reco+ery
<fficer shall be conclusi+e(
Removal of attachment on satisfaction or cancellation of certificate.
12. Fhere
a! the amount due% with costs and all char5es and e$penses resultin5 from the
attachment of any property or incurred in order to hold a sale% are paid to the
Ta$ Reco+ery <fficer% or
b! the certificate is cancelled%
the attachment shall be deemed to be withdrawn and% in the case of immo+able property%
the withdrawal shall% if the defaulter so desires% be proclaimed at his e$pense% and a copy
of the proclamation shall be affi$ed in the manner pro+ided by this *chedule for a
proclamation of sale of immo+able property(
Officer entitled to attach and sell.
13. The attachment and sale of mo+able property and the attachment and sale of
immo+able property may be made by such persons as the Ta$ Reco+ery <fficer may
from time to time direct(
Defaulting purchaser answerable for loss on resale.
14. "ny deficiency of price which may happen on a resale by reason of the purchasers
default% and all e$penses attendin5 such resale% shall be certified to the Ta$ Reco+ery
<fficer by the officer holdin5 the sale% and shall% at the instance of either the
&'
-Ta$
Reco+ery2 <fficer or the defaulter% be reco+erable from the defaultin5 purchaser under
the procedure pro+ided by this *chedule:
Provided that no such application shall be entertained unless filed within fifteen days
from the date of resale(
Adjournment or stoppage of sale.
15. 1! The Ta$ Reco+ery <fficer may% in his discretion% ad:ourn any sale hereunder to a
specified day and hour1 and the officer conductin5 any such sale may% in his discretion%
ad:ourn the sale% recordin5 his reasons for such ad:ournment :
Provided that% where the sale is made in% or within the precincts of% the office of the Ta$
Reco+ery <fficer% no such ad:ournment shall be made without the lea+e of the Ta$
Reco+ery <fficer(
2! Fhere a sale of immo+able property is ad:ourned under sub#rule 1! for a lon5er
period than one calendar month% a fresh proclamation of sale under this *chedule shall be
made unless the defaulter consents to wai+e it(
)! E+ery sale shall be stopped if% before the lot is 9noc9ed down% the arrears and costs
includin5 the costs of the sale! are tendered to the officer conductin5 the sale% or proof is
5i+en to his satisfaction that the amount of such arrears and costs has been paid to the
Ta$ Reco+ery <fficer who ordered the sale(
Private alienation to be void in certain cases.
16. 1! Fhere a notice has been ser+ed on a defaulter under rule 2% the defaulter or his
representati+e in interest shall not be competent to mort5a5e% char5e% lease or otherwise
deal with any property
&6
belon5in5 to him e$cept with the permission of the Ta$
Reco+ery <fficer% nor shall any ci+il court issue any process a5ainst such property in
e$ecution of a decree for the payment of money(
2! Fhere an attachment has been made under this *chedule% any pri+ate transfer or
deli+ery of the property attached or of any interest therein and any payment to the
defaulter of any debt% di+idend or other moneys contrary to such attachment% shall be +oid
as a5ainst all claims enforceable under the attachment(
Prohibition against bidding or purchase by officer.
17. Ao officer or other person ha+in5 any duty to perform in connection with any sale
under this *chedule shall% either directly or indirectly% bid for% ac,uire or attempt to
ac,uire any interest in the property sold(
Prohibition against sale on holidays.
18. Ao sale under this *chedule shall ta9e place on a *unday or other 5eneral holiday
reco5nised by the *tate ;o+ernment or on any day which has been notified by the *tate
;o+ernment to be a local holiday for the area in which the sale is to ta9e place(
Assistance by police.
19. "ny officer authorised to attach or sell any property or to arrest the defaulter or
char5ed with any duty to be performed under this *chedule% may apply to the officer#in#
char5e of the nearest police station for such assistance as may be necessary in the
dischar5e of his duties% and the authority to whom such application is made shall depute a
sufficient number of police officers for furnishin5 such assistance(
&7
-Entrustment of certain functions by Tax Recovery Officer.
19A. " Ta$ Reco+ery <fficer may% with the pre+ious appro+al of the
&&
-@oint2
.ommissioner% entrust any of his functions as the Ta$ Reco+ery <fficer to any other
officer lower than him in ran9 not bein5 lower in ran9 than an Inspector of Income#ta$!
and such officer shall% in relation to the functions so entrusted to him% be deemed to be a
Ta$ Reco+ery <fficer(2
PART II
"TT".CBEAT "A? *"GE <> B<0"BGE PR<PERTY
Attachment
Warrant.
20. E$cept as otherwise pro+ided in this *chedule% when any mo+able property is to be
attached% the officer shall be furnished by the Ta$ Reco+ery <fficer or other officer
empowered by him in that behalf! a warrant in writin5 and si5ned with his name
specifyin5 the name of the defaulter and the amount to be realised(
Service of copy of warrant.
21. The officer shall cause a copy of the warrant to be ser+ed on the defaulter(
Attachment.
22. If% after ser+ice of the copy of the warrant% the amount is not paid forthwith% the
officer shall proceed to attach the mo+able property of the defaulter(
Property in defaulters possession.
23. Fhere the property to be attached is mo+able property other than a5ricultural
produce! in the possession of the defaulter% the attachment shall be made by actual
sei=ure% and the officer shall 9eep the property in his own custody or the custody of one
of his subordinates and shall be responsible for due custody thereof:
Provided that when the property sei=ed is sub:ect to speedy and natural decay or when
the e$pense of 9eepin5 it in custody is li9ely to e$ceed its +alue% the officer may sell it at
once(
Agricultural produce.
24. Fhere the property to be attached is a5ricultural produce the attachment shall be
made by affi$in5 a copy of the warrant of attachment
a! where such produce is 5rowin5 crop%on the land on which such crop has 5rown%
or
b! where such produce has been cut or 5athered%on the threshin5 floor or place for
treadin5 out 5rain or the li9e% or fodder#stac9% on or in which it is deposited%
and another copy on the outer door or on some other conspicuous part of the house in
which the defaulter ordinarily resides% or with the lea+e of the Ta$ Reco+ery <fficer% on
the outer door or on some other conspicuous part of the house in which he carries on
business or personally wor9s for 5ain% or in which he is 9nown to ha+e last resided or
carried on business or personally wor9ed for 5ain( The produce shall% thereupon% be
deemed to ha+e passed into the possession of the Ta$ Reco+ery <fficer(
Provisions as to agricultural produce under attachment.
25. 1! Fhere a5ricultural produce is attached% the Ta$ Reco+ery <fficer shall ma9e such
arran5ements for the custody% watchin5% tendin5% cuttin5 and 5atherin5 thereof as he may
deem sufficient1
1
-and he shall ha+e power to defray the cost of such arran5ements2(
2! *ub:ect to such conditions as may be imposed by the Ta$ Reco+ery <fficer in this
behalf% either in the order of attachment or in any subse,uent order% the defaulter may
tend% cut% 5ather and store the produce and do any other act necessary for maturin5 or
preser+in5 it1 and% if the defaulter fails to do all or any of such acts% any person appointed
by the Ta$ Reco+ery <fficer in this behalf may% sub:ect to the li9e conditions% do all or
any of such acts% and the costs incurred by such person shall be reco+erable from the
defaulter as if they were included in the certificate(
)! "5ricultural produce attached as a 5rowin5 crop shall not be deemed to ha+e ceased
to be under attachment or to re,uire re#attachment merely because it has been se+ered
from the soil(
3! Fhere an order for the attachment of a 5rowin5 crop has been made at a considerable
time before the crop is li9ely to be fit to be cut or 5athered% the Ta$ Reco+ery <fficer
may suspend the e$ecution of the order for such time as he thin9s fit% and may% in his
discretion% ma9e a further order prohibitin5 the remo+al of the crop pendin5 the e$ecution
of the order of attachment(
4! " 5rowin5 crop which from its nature does not admit of bein5 stored shall not be
attached under this rule at any time less than twenty days before the time at which it is
li9ely to be fit to be cut or 5athered(
Debts and shares, etc.
26. 1! In the case of
a! a debt not secured by a ne5otiable instrument%
b! a share in a corporation% or
c! other mo+able property not in the possession of the defaulter e$cept property
deposited in% or in the custody of% any court%
the attachment shall be made by a written order prohibitin5%
i! in the case of the debtthe creditor from reco+erin5 the debt and the debtor from
ma9in5 payment thereof until the further order of the Ta$ Reco+ery <fficer1
ii! in the case of the sharethe person in whose name the share may be standin5
from transferrin5 the same or recei+in5 any di+idend thereon1
iii! in the case of the other mo+able property e$cept as aforesaid!the person in
possession of the same from 5i+in5 it o+er to the defaulter(
2! " copy of such order shall be affi$ed on some conspicuous part of the office of the
Ta$ Reco+ery <fficer% and another copy shall be sent% in the case of the debt% to the
debtor% in the case of the share% to the proper officer of the corporation% and in the case of
the other mo+able property e$cept as aforesaid!% to the person in possession of the same(
)! " debtor prohibited under clause i! of sub#rule 1! may pay the amount of his debt to
the Ta$ Reco+ery <fficer% and such payment shall dischar5e him as effectually as
payment to the party entitled to recei+e the same(
Attachment of decree.
27. 1! The attachment of a decree of a ci+il court for the payment of money or for sale in
enforcement of a mort5a5e or char5e shall be made by the issue to the ci+il court of a
notice re,uestin5 the ci+il court to stay the e$ecution of the decree unless and until
i! the Ta$ Reco+ery <fficer cancels the notice% or
ii! the
2
-Ta$ Reco+ery2 <fficer or the defaulter applies to the court recei+in5 such
notice to e$ecute the decree(
2! Fhere a ci+il court recei+es an application under clause ii! of sub#rule 1!% it shall% on
the application of the
)
-Ta$ Reco+ery2 <fficer or the defaulter and sub:ect to the
pro+isions of the .ode of .i+il Procedure% 1&87 4 of 1&87!% proceed to e$ecute the
attached decree and apply the net proceeds in satisfaction of the certificate(
)! The
)
-Ta$ Reco+ery2 <fficer shall be deemed to be the representati+e of the holder of
the attached decree% and to be entitled to e$ecute such attached decree in any manner
lawful for the holder thereof(
Share in movable property.
28. Fhere the property to be attached consists of the share or interest of the defaulter in
mo+able property belon5in5 to him and another as co#owners% the attachment shall be
made by a notice to the defaulter prohibitin5 him from transferrin5 the share or interest or
char5in5 it in any way(
Salary of Government servants.
29. "ttachment of the salary or allowances of ser+ants of the ;o+ernment or a local
authority may be made in the manner pro+ided by rule 37 of <rder 21 of the >irst
*chedule to the .ode of .i+il Procedure% 1&87 4 of 1&87!% and the pro+isions of the said
rule shall% for the purposes of this rule% apply sub:ect to such modifications as may be
necessary(
Attachment of negotiable instrument.
30. Fhere the property is a ne5otiable instrument not deposited in a court nor in the
custody of a public officer% the attachment shall be made by actual sei=ure% and the
instrument shall be brou5ht before the Ta$ Reco+ery <fficer and held sub:ect to his
orders(
Attachment of property in custody of court or public officer.
31. Fhere the property to be attached is in the custody of any court or public officer% the
attachment shall be made by a notice to such court or officer% re,uestin5 that such
property% and any interest or di+idend becomin5 payable thereon% may be held sub:ect to
the further orders of the Ta$ Reco+ery <fficer by whom the notice is issued:
Provided that% where such property is in the custody of a court% any ,uestion of title or
priority arisin5 between the
)
-Ta$ Reco+ery2 <fficer and any other person% not bein5 the
defaulter% claimin5 to be interested in such property by +irtue of any assi5nment%
attachment or otherwise% shall be determined by such court(
Attachment of partnership property.
32. 1! Fhere the property to be attached consists of an interest of the defaulter% bein5 a
partner% in the partnership property% the Ta$ Reco+ery <fficer may ma9e an order
char5in5 the share of such partner in the partnership property and profits with payment of
the amount due under the certificate% and may% by the same or subse,uent order% appoint a
recei+er of the share of such partner in the profits% whether already declared or accruin5
and of any other money which may become due to him in respect of the partnership% and
direct accounts and in,uiries and ma9e an order for the sale of such interest or such other
order as the circumstances of the case may re,uire(
2! The other persons shall be at liberty at any time to redeem the interest char5ed or% in
the case of a sale bein5 directed% to purchase the same(
Inventory.
33. In the case of attachment of mo+able property by actual sei=ure% the officer shall% after
attachment of the property% prepare an in+entory of all the property attached% specifyin5
in it the place where it is lod5ed or 9ept% and shall forward the same to the Ta$ Reco+ery
<fficer and a copy of the in+entory shall be deli+ered by the officer to the defaulter(
Attachment not to be excessive.
34. The attachment by sei=ure shall not be e$cessi+e% that is to say% the property attached
shall be as nearly as possible proportionate to the amount specified in the warrant(
Seizure between sunrise and sunset.
35. "ttachment by sei=ure shall be made after sunrise and before sunset and not
otherwise(
Power to break open doors, etc.
36. The officer may brea9 open any inner or outer door or window of any buildin5 and
enter any buildin5 in order to sei=e any mo+able property if the officer has reasonable
5rounds to belie+e that such buildin5 contains mo+able property liable to sei=ure under
the warrant and the officer has notified his authority and intention of brea9in5 open if
admission is not 5i+en( Ce shall% howe+er% 5i+e all reasonable opportunity to women to
withdraw(
<ale
Sale.
37. The Ta$ Reco+ery <fficer may direct that any mo+able property attached under this
*chedule or such portion thereof as may seem necessary to satisfy the certificate shall be
sold(
Issue of proclamation.
38. Fhen any sale of mo+able property is ordered by the Ta$ Reco+ery <fficer% the Ta$
Reco+ery <fficer shall issue a proclamation% in the lan5ua5e of the district% of the
intended sale% specifyin5 the time and place of sale and whether the sale is sub:ect to
confirmation or not(
Proclamation how made.
39. 1! *uch proclamation shall be made by beat of drum or other customary mode%
a! in the case of property attached by actual sei=ure
i! in the +illa5e in which the property was sei=ed% or% if the property was
sei=ed in a town or city% then% in the locality in which it was sei=ed1 and
ii! at such other places as the Ta$ Reco+ery <fficer may direct1
b! in the case of property attached otherwise than by actual sei=ure% in such places%
if any% as the Ta$ Reco+ery <fficer may direct(
2! " copy of the proclamation shall also be affi$ed in a conspicuous part of the office of
the Ta$ Reco+ery <fficer(
Sale after fifteen days.
40. E$cept where the property is sub:ect to speedy and natural decay or when the e$pense
of 9eepin5 it in custody is li9ely to e$ceed its +alue% no sale of mo+able property under
this *chedule shall% without the consent in writin5 of the defaulter% ta9e place until after
the e$piry of at least fifteen days calculated from the date on which a copy of the sale
proclamation was affi$ed in the office of the Ta$ Reco+ery <fficer(
Sale of agricultural produce.
41. 1! Fhere the property to be sold is a5ricultural produce% the sale shall be held%
a! if such produce is a 5rowin5 cropon or near the land on which such crop has
5rown% or
b! if such produce has been cut or 5atheredat or near the threshin5 floor or place
for treadin5 out 5rain or the li9e% or fodder#stac9% on or in which it is deposited:
Provided that the Ta$ Reco+ery <fficer may direct the sale to be held at the nearest place
of public resort% if he is of opinion that the produce is thereby li9ely to sell to 5reater
ad+anta5e(
2! Fhere% on the produce bein5 put up for sale%
a! a fair price% in the estimation of the person holdin5 the sale% is not offered for it%
and
b! the owner of the produce% or a person authorised to act on his behalf% applies to
ha+e the sale postponed till the ne$t day or% if a mar9et is held at the place of
sale% the ne$t mar9et day%
the sale shall be postponed accordin5ly% and shall be then completed% whate+er price may
be offered for the produce(
Special provisions relating to growing crops.
42. 1! Fhere the property to be sold is a 5rowin5 crop and the crop from its nature
admits of bein5 stored but has not yet been stored% the day of the sale shall be so fi$ed as
to admit of the crop bein5 made ready for storin5 before the arri+al of such day% and the
sale shall not be held until the crop has been cut or 5athered and is ready for storin5(
2! Fhere the crop from its nature does not admit of bein5 stored or can be sold to a
5reater ad+anta5e in an unripe sta5e e.g.) as 5reen wheat!% it may be sold before it is cut
and 5athered% and the purchaser shall be entitled to enter on the land% and to do all that is
necessary for the purpose of tendin5 or cuttin5 or 5atherin5 the crop(
Sale to be by auction.
43. The property shall be sold by public auction in one or more lots as the officer may
consider ad+isable% and if the amount to be realised by sale is satisfied by the sale of a
portion of the property% the sale shall be immediately stopped with respect to the
remainder of the lots(
Sale by public auction.
44. 1! Fhere mo+able property is sold by public auction% the price of each lot shall be
paid at the time of sale or as soon after as the officer holdin5 the sale directs and in
default of payment% the property shall forthwith be resold(
2! <n payment of the purchase#money% the officer holdin5 the sale shall 5rant a
certificate specifyin5 the property purchased% the price paid and the name of the
purchaser% and the sale shall become absolute(
)! Fhere the mo+able property to be sold is a share in 5oods belon5in5 to the defaulter
and a co#owner% and two or more persons% of whom one is such co#owner% respecti+ely
bid the same sum for such property or for any lot% the biddin5 shall be deemed to be the
biddin5 of the co#owner(
Irregularity not to vitiate sale, but any person injured may sue.
45. Ao irre5ularity in publishin5 or conductin5 the sale of mo+able property shall +itiate
the sale% but any person sustainin5 substantial in:ury by reason of such irre5ularity at the
hand of any other person may institute a suit in a ci+il court a5ainst him for
compensation% or if such other person is the purchaser! for the reco+ery of the specific
property and for compensation in default of such reco+ery(
Negotiable instruments and shares in a corporation.
46. Aotwithstandin5 anythin5 contained in this *chedule% where the property to be sold is
a ne5otiable instrument or a share in a corporation% the Ta$ Reco+ery <fficer may%
instead of directin5 the sale to be made by public auction% authorise the sale of such
instrument or share throu5h a bro9er(
Order for payment of coin or currency notes to the
3
-Assessing] Officer.
47. Fhere the property attached is current coin or currency notes% the Ta$ Reco+ery
<fficer may% at any time durin5 the continuance of the attachment%
4
-direct that such coins
or notes shall be credited to the .entral ;o+ernment and the amount so credited shall be
dealt with in the manner specified in rule 72(
PART III
"TT".CBEAT "A? *"GE <> IBB<0"BGE PR<PERTY
Attachment
Attachment.
48. "ttachment of the immo+able property of the defaulter shall be made by an order
prohibitin5 the defaulter from transferrin5 or char5in5 the property in any way and
prohibitin5 all persons from ta9in5 any benefit under such transfer or char5e(
Service of notice of attachment.
49. " copy of the order of attachment shall be ser+ed on the defaulter(
Proclamation of attachment.
50. The order of attachment shall be proclaimed at some place on or ad:acent to the
property attached by beat of drum or other customary mode% and a copy of the order shall
be affi$ed on a conspicuous part of the property and on the notice board of the office of
the Ta$ Reco+ery <fficer(
Attachment to relate back from the date of service of notice.
51. Fhere any immo+able property is attached under this *chedule% the attachment shall
relate bac9 to% and ta9e effect from% the date on which the notice to pay the arrears% issued
under this *chedule% was ser+ed upon the defaulter(
<ale
Sale and proclamation of sale.
52. 1! The Ta$ Reco+ery <fficer may direct that any immo+able property which has
been attached% or such portion thereof as may seem necessary to satisfy the certificate%
shall be sold(
2! Fhere any immo+able property is ordered to be sold% the Ta$ Reco+ery <fficer shall
cause a proclamation of the intended sale to be made in the lan5ua5e of the district(
Contents of proclamation.
53. " proclamation of sale of immo+able property shall be drawn up after notice to the
defaulter% and shall state the time and place of sale% and shall specify% as fairly and
accurately as possible%
a! the property to be sold1
b! the re+enue% if any% assessed upon the property or any part thereof1
c! the amount for the reco+ery of which the sale is ordered1
'
-***2
6
-cc! the reser+e price% if any% below which the property may not be sold1 and2
d! any other thin5 which the Ta$ Reco+ery <fficer considers it material for a
purchaser to 9now% in order to :ud5e the nature and +alue of the property(
Mode of making proclamation.
54. 1! E+ery proclamation for the sale of immo+able property shall be made at some
place on or near such property by beat of drum or other customary mode% and a copy of
the proclamation shall be affi$ed on a conspicuous part of the property and also upon a
conspicuous part of the office of the Ta$ Reco+ery <fficer(
2! Fhere the Ta$ Reco+ery <fficer so directs% such proclamation shall also be published
in the <fficial ;a=ette or in a local newspaper% or in both1 and the cost of such
publication shall be deemed to be costs of the sale(
)! Fhere the property is di+ided into lots for the purpose of bein5 sold separately% it
shall not be necessary to ma9e a separate proclamation for each lot% unless proper notice
of the sale cannot% in the opinion of the Ta$ Reco+ery <fficer% otherwise be 5i+en(
Time of sale.
55. Ao sale of immo+able property under this *chedule shall% without the consent in
writin5 of the defaulter% ta9e place until after the e$piration of at least thirty days
calculated from the date on which a copy of the proclamation of sale has been affi$ed on
the property or in the office of the Ta$ Reco+ery <fficer% whiche+er is later(
Sale to be by auction.
56. The sale shall be by public auction to the hi5hest bidder and shall be sub:ect to
confirmation by the Ta$ Reco+ery <fficer :
7
-Provided that no sale under this rule shall be made if the amount bid by the hi5hest
bidder is less than the reser+e price% if any% specified under clause cc! of rule 4)(2
Deposit by purchaser and resale in default.
57. 1! <n e+ery sale of immo+able property% the person declared to be the purchaser
shall pay% immediately after such declaration% a deposit of twenty#fi+e per cent on the
amount of his purchase money% to the officer conductin5 the sale1 and% in default of such
deposit% the property shall forthwith be resold(
2! The full amount of purchase money payable shall be paid by the purchaser to the Ta$
Reco+ery <fficer on or before the fifteenth day from the date of the sale of the property(
Procedure in default of payment.
58. In default of payment within the period mentioned in the precedin5 rule% the deposit
may% if the Ta$ Reco+ery <fficer thin9s fit% after defrayin5 the e$penses of the sale% be
forfeited to the ;o+ernment% and the property shall be resold% and the defaultin5
purchaser shall forfeit all claims to the property or to any part of the sum for which it may
subse,uently be sold(
Authority to bid.
59.
&
-1! Fhere the sale of a property% for which a reser+e price has been specified under
clause cc! of rule 4)% has been postponed for want of a bid of an amount not less than
such reser+e price% it shall be lawful for an
18
-"ssessin52 <fficer% if so authorised by the
11
-.hief .ommissioner or .ommissioner2 in this behalf% to bid for the property on behalf
of the .entral ;o+ernment at any subse,uent sale(2
12
-2!2 "ll persons biddin5 at the sale shall be re,uired to declare% if they are biddin5 on
their own behalf or on behalf of their principals( In the latter case% they shall be re,uired
to deposit their authority% and in default their bids shall be re:ected(
1)
-)! Fhere the
18
-"ssessin52 <fficer referred to in sub#rule 1! is declared to be the
purchaser of the property at any subse,uent sale% nothin5 contained in rule 46 shall apply
to the case and the amount of the purchase price shall be ad:usted towards the amount
specified in the certificate(2
Application to set aside sale of immovable property on deposit.
60. 1! Fhere immo+able property has been sold in e$ecution of a certificate% the
defaulter% or any person whose interests are affected by the sale% may% at any time within
thirty days from the date of the sale% apply to the Ta$ Reco+ery <fficer to set aside the
sale% on his depositin5
13
a!
14
-***2 the amount specified in the proclamation of sale as that for the reco+ery
of which the sale was ordered% with interest thereon at the rate of
1'
-fifteen2 per
cent per annum% calculated from the date of the proclamation of sale to the date
when the deposit is made1 and
b! for payment to the purchaser% as penalty% a sum e,ual to fi+e per cent of the
purchase money% but not less than one rupee(
2! Fhere a person ma9es an application under rule '1 for settin5 aside the sale of his
immo+able property% he shall not% unless he withdraws that application% be entitled to
ma9e or prosecute an application under this rule(
Application to set aside sale of immovable property on ground of non-service of
notice or irregularity.
61. Fhere immo+able property has been sold in e$ecution of a certificate%
16
-such
Income#ta$ <fficer as may be authorised by the .hief .ommissioner or .ommissioner in
this behalf2% the defaulter% or any person whose interests are affected by the sale% may% at
any time within thirty days from the date of the sale% apply to the Ta$ Reco+ery <fficer to
set aside the sale of the immo+able property on the 5round that notice was not ser+ed on
the defaulter to pay the arrears as re,uired by this *chedule or on the 5round of a material
irre5ularity in publishin5 or conductin5 the sale:
Provided that
a! no sale shall be set aside on any such 5round unless the Ta$ Reco+ery <fficer
is satisfied that the applicant has sustained substantial in:ury by reason of the
non#ser+ice or irre5ularity1 and
b! an application made by a defaulter under this rule shall be disallowed unless the
applicant deposits the amount reco+erable from him in the e$ecution of the
certificate(
Setting aside sale where defaulter has no saleable interest.
62. "t any time within thirty days of the sale% the purchaser may apply to the Ta$
Reco+ery <fficer to set aside the sale on the 5round that the defaulter had no saleable
interest in the property sold(
Confirmation of sale.
63. 1! Fhere no application is made for settin5 aside the sale under the fore5oin5 rules
or where such an application is made and disallowed by the Ta$ Reco+ery <fficer% the
Ta$ Reco+ery <fficer shall if the full amount of the purchase money has been paid!
ma9e an order confirmin5 the sale% and% thereupon% the sale shall become absolute(
2! Fhere such application is made and allowed% and where% in the case of an application
made to set aside the sale on deposit of the amount and penalty and char5es% the deposit is
made within thirty days from the date of the sale% the Ta$ Reco+ery <fficer shall ma9e an
order settin5 aside the sale :
Provided that no order shall be made unless notice of the application has been 5i+en to
the persons affected thereby(
Return of purchase money in certain cases.
64. Fhere a sale of immo+able property is set aside% any money paid or deposited by the
purchaser on account of the purchase% to5ether with the penalty% if any% deposited for
payment to the purchaser% and such interest as the Ta$ Reco+ery <fficer may allow% shall
be paid to the purchaser(
Sale certificate.
65. 1! Fhere a sale of immo+able property has become absolute% the Ta$ Reco+ery
<fficer shall 5rant a certificate specifyin5 the property sold% and the name of the person
who at the time of sale is declared to be the purchaser(
2! *uch certificate shall state the date on which the sale became absolute(
Postponement of sale to enable defaulter to raise amount due under certificate.
66. 1! Fhere an order for the sale of immo+able property has been made% if the defaulter
can satisfy the Ta$ Reco+ery <fficer that there is reason to belie+e that the amount of the
certificate may be raised by the mort5a5e or lease or pri+ate sale of such property% or
some part thereof% or of any other immo+able property of the defaulter% the Ta$ Reco+ery
<fficer may% on his application% postpone the sale of the property comprised in the order
for sale% on such terms% and for such period as he thin9s proper% to enable him to raise the
amount(
2! In such case% the Ta$ Reco+ery <fficer shall 5rant a certificate to the defaulter%
authorisin5 him% within a period to be mentioned therein% and notwithstandin5 anythin5
contained in this *chedule% to ma9e the proposed mort5a5e% lease or sale:
Provided that all moneys payable under such mort5a5e% lease or sale shall be paid% not to
the defaulter% but to the Ta$ Reco+ery <fficer:
Provided also that no mort5a5e% lease or sale under this rule shall become absolute until
it has been confirmed by the Ta$ Reco+ery <fficer(
Fresh proclamation before re-sale.
67. E+ery re#sale of immo+able property% in default of payment of the purchase money
within the period allowed for such payment% shall be made after the issue of a fresh
proclamation in the manner and for the period hereinbefore pro+ided for the sale(
Bid of co-sharer to have preference.
68. Fhere the property sold is a share of undi+ided immo+able property% and two or more
persons% of whom one is a co#sharer% respecti+ely bid the same sum for such property or
for any lot% the bid shall be deemed to be the bid of the co#sharer(
17
-Acceptance of property in satisfaction of amount due from the defaulter.
68A. 1! Fithout pre:udice to the pro+isions contained in this Part% an
1&
-"ssessin52
<fficer% duly authorised by the
28
-.hief .ommissioner or .ommissioner2 in this behalf%
may accept in satisfaction of the whole or any part of the amount due from the defaulter
the property% the sale of which has been postponed for the reason mentioned in sub#rule
1! of rule 4&% at such price as may be a5reed upon between the
21
-"ssessin52 <fficer and
the defaulter(
2! Fhere any property is accepted under sub#rule 1!% the defaulter shall deli+er
possession of such property to the
22
-"ssessin52 <fficer and on the date the possession of
the property is deli+ered to the
22
-"ssessin52 <fficer% the property shall +est in the .entral
;o+ernment and the .entral ;o+ernment shall% where necessary% intimate the concerned
Re5isterin5 <fficer appointed under the Re5istration "ct% 1&87 1' of 1&87!% accordin5ly(
)! Fhere the price of the property a5reed upon under sub#rule 1! e$ceeds the amount
due from the defaulter% such e$cess shall be paid by the
22
-"ssessin52 <fficer to the
defaulter within a period of three months from the date of deli+ery of possession of the
property and where the
22
-"ssessin52 <fficer fails to pay such e$cess within the period
aforesaid% the .entral ;o+ernment shall% for the period commencin5 on the e$piry of
such period and endin5 with the date of payment of the amount remainin5 unpaid% pay
simple interest at
2)
-si$2 per cent per annum to the defaulter on such amount(2
23
-Time limit for sale of attached immovable property.
68B. 1! Ao sale of immo+able property shall be made under this Part after the e$piry of
three years
24
from the end of the financial year in which the order 5i+in5 rise to a demand
of any ta$% interest% fine% penalty or any other sum% for the reco+ery of which the
immo+able property has been attached% has become conclusi+e under the pro+isions of
section 234#I or% as the case may be% final in terms of the pro+isions of .hapter //:
Provided that where the immo+able property is re,uired to be re#sold due to the amount
of hi5hest bid bein5 less than the reser+e price or under the circumstan#ces mentioned in
rule 46 or rule 47 or where the sale is set aside under rule '1% the aforesaid period of
limitation for the sale of the immo+able property shall stand e$tended by one year(
2! In computin5 the period of limitation under sub#rule 1!% the period
i! durin5 which the le+y of the aforesaid ta$% interest% fine% penalty or any other
sum is stayed by an order or in:unction of any court1 or
ii! durin5 which the proceedin5s of attachment or sale of the immo+able property
are stayed by an order or in:unction of any court1 or
iii! commencin5 from the date of the presentation of any appeal a5ainst the order
passed by the Ta$ Reco+ery <fficer under this *chedule and endin5 on the day
the appeal is decided%
shall be e$cluded :
of limitation for the sale of the immo+able property is less than 178 days% such remainin5
period shall be e$tended to 178 days and the aforesaid period of limitation shall be
deemed to be e$tended accordin5ly(
)! Fhere any immo+able property has been attached under this Part before the 1st day
of @une% 1&&2% and the order 5i+in5 rise to a demand of any ta$% interest% fine% penalty or
any other sum% for the reco+ery of which the immo+able property has been attached% has
also become conclusi+e or final before the said date% that date shall be deemed to be the
date on which the said order has become conclusi+e or% as the case may be% final(
3! Fhere the sale of immo+able property is not made in accordance with the pro+isions
of sub#rule 1!% the attachment order in relation to the said property shall be deemed to
ha+e been +acated on the e$piry of the time of limitation specified under this rule(2

PART IV
"PP<IATBEAT <> RE.EI0ER
Appointment of receiver for business.
69. 1! Fhere the property of a defaulter consists of a business% the Ta$ Reco+ery <fficer
may attach the business and appoint a person as recei+er to mana5e the business(
2! "ttachment of a business under this rule shall be made by an order prohibitin5 the
defaulter from transferrin5 or char5in5 the business in any way and prohibitin5 all
persons from ta9in5 any benefit under such transfer or char5e% and intimatin5 that the
business has been attached under this rule( " copy of the order of attachment shall be
ser+ed on the defaulter% and another copy shall be affi$ed on a conspicuous part of the
premises in which the business is carried on and on the notice board of the office of the
Ta$ Reco+ery <fficer(
Appointment of receiver for immovable property.
70. Fhere immo+able property is attached% the Ta$ Reco+ery <fficer may% instead of
directin5 a sale of the property% appoint a person as recei+er to mana5e such property(
Powers of receiver.
71. 1! Fhere any business or other property is attached and ta9en under mana5ement
under the fore5oin5 rules% the recei+er shall% sub:ect to the control of the Ta$ Reco+ery
<fficer% ha+e such powers as may be necessary for the proper mana5ement of the
property and the realisation of the profits% or rents and profits% thereof(
2! The profits% or rents and profits% of such business or other property% shall% after
defrayin5 the e$penses of mana5ement% be ad:usted towards dischar5e of the arrears% and
the balance% if any% shall be paid to the defaulter(
Withdrawal of management.
72. The attachment and mana5ement under the fore5oin5 rules may be withdrawn at any
time at the discretion of the Ta$ Reco+ery <fficer% or if the arrears are dischar5ed by
receipt of such profits and rents or are otherwise paid(
PART V
"RRE*T "A? ?ETEATI<A <> TCE ?E>"EGTER
Notice to show cause.
73. 1! Ao order for the arrest and detention in ci+il prison of a defaulter shall be made
unless the Ta$ Reco+ery <fficer has issued and ser+ed a notice upon the defaulter callin5
upon him to appear before him on the date specified in the notice and to show cause why
he should not be committed to the ci+il prison% and unless the Ta$ Reco+ery <fficer% for
reasons recorded in writin5% is satisfied
a! that the defaulter% with the ob:ect or effect of obstructin5 the e$ecution of the
certificate% has% after
2'
-the drawin5 up of the certificate by the Ta$ Reco+ery
<fficer2% dishonestly transferred% concealed% or remo+ed any part of his
property% or
b! that the defaulter has% or has had since
2'
-the drawin5 up of the certificate by the
Ta$ Reco+ery <fficer2% the means to pay the arrears or some substantial part
thereof and refuses or ne5lects or has refused or ne5lected to pay the same(
2! Aotwithstandin5 anythin5 contained in sub#rule 1!% a warrant for the arrest of the
defaulter may be issued by the Ta$ Reco+ery <fficer if the Ta$ Reco+ery <fficer is
satisfied% by affida+it or otherwise% that with the ob:ect or effect of delayin5 the e$ecution
of the certificate% the defaulter is li9ely to abscond or lea+e the local limits of the
:urisdiction of the Ta$ Reco+ery <fficer(
)! Fhere appearance is not made in obedience to a notice issued and ser+ed under sub#
rule 1!% the Ta$ Reco+ery <fficer may issue a warrant for the arrest of the defaulter(
26
-)"! " warrant of arrest issued by a Ta$ Reco+ery <fficer under sub#rule 2! or sub#
rule )! may also be e$ecuted by any other Ta$ Reco+ery <fficer within whose
:urisdiction the defaulter may for the time bein5 be found(2
3! E+ery person arrested in pursuance of a warrant of arrest under
27
-this rule2 shall be
brou5ht before the Ta$ Reco+ery <fficer
2&
-issuin5 the warrant2 as soon as practicable
and in any e+ent within twenty#four hours of his arrest e$clusi+e of the time re,uired for
the :ourney!:
Provided that% if the defaulter pays the amount entered in the warrant of arrest as due and
the costs of the arrest to the officer arrestin5 him% such officer shall at once release him(
)8
-Explanation.>or the purposes of this rule% where the defaulter is a Cindu undi+ided
family% the 9arta thereof shall be deemed to be the defaulter(2
Hearing.
74. Fhen a defaulter appears before the Ta$ Reco+ery <fficer in obedience to a notice to
show cause or is brou5ht before the Ta$ Reco+ery <fficer under rule 6)%
)1
-the Ta$
Reco+ery <fficer shall 5i+e the defaulter2 an opportunity of showin5 cause why he
should not be committed to the ci+il prison(
Custody pending hearing.
75. Pendin5 the conclusion of the in,uiry% the Ta$ Reco+ery <fficer may% in his
discretion% order the defaulter to be detained in the custody of such officer as the Ta$
Reco+ery <fficer may thin9 fit or release him on his furnishin5 security to the
satisfaction of the Ta$ Reco+ery <fficer for his appearance when re,uired(
Order of detention.
76. 1! Epon the conclusion of the in,uiry% the Ta$ Reco+ery <fficer may ma9e an order
for the detention of the defaulter in the ci+il prison and shall in that e+ent cause him to be
arrested if he is not already under arrest:
Provided that in order to 5i+e the defaulter an opportunity of satisfyin5 the arrears% the
Ta$ Reco+ery <fficer may% before ma9in5 the order of detention% lea+e the defaulter in
the custody of the officer arrestin5 him or of any other officer for a specified period not
e$ceedin5 14 days% or release him on his furnishin5 security to the satisfaction of the Ta$
Reco+ery <fficer for his appearance at the e$piration of the specified period if the arrears
are not so satisfied(
2! Fhen the Ta$ Reco+ery <fficer does not ma9e an order of detention under sub#rule
1! he shall% if the defaulter is under arrest% direct his release(
Detention in and release from prison.
77. 1! E+ery person detained in the ci+il prison in e$ecution of a certificate may be so
detained%
a! where the certificate is for a demand of an amount e$ceedin5 two hundred and
fifty rupeesfor a period of si$ months% and
b! in any other casefor a period of si$ wee9s:
Provided that he shall be released from such detention
i! on the amount mentioned in the warrant for his detention bein5 paid to the
officer#in#char5e of the ci+il prison% or
)2
-ii! on the re,uest of the Ta$ Reco+ery <fficer on any 5round other than the
5rounds mentioned in rules 67 and 6&(2
))
-***2
2! " defaulter released from detention under this rule shall not% merely by reason of his
release% be dischar5ed from his liability for the arrears1 but he shall not be liable to be
rearrested under the certificate in e$ecution of which he was detained in the ci+il prison(
Release.
78. 1! The Ta$ Reco+ery <fficer may order the release of a defaulter who has been
arrested in e$ecution of a certificate upon bein5 satisfied that he has disclosed the whole
of his property and has placed it at the disposal of the Ta$ Reco+ery <fficer and that he
has not committed any act of bad faith(
2! If the Ta$ Reco+ery <fficer has 5round for belie+in5 the disclosure made by a
defaulter under sub#rule 1! to ha+e been untrue% he may order the rearrest of the defaulter
in e$ecution of the certificate% but the period of his detention in the ci+il prison shall not
in the a55re5ate e$ceed that authorised by rule 66(
Release on ground of illness.
79. 1! "t any time after a warrant for the arrest of a defaulter has been issued% the Ta$
Reco+ery <fficer may cancel it on the 5round of his serious illness(
2! Fhere a defaulter has been arrested% the Ta$ Reco+ery <fficer may release him if% in
the opinion of the Ta$ Reco+ery <fficer% he is not in a fit state of health to be detained in
the ci+il prison(
)! Fhere a defaulter has been committed to the ci+il prison% he may be released
therefrom by the Ta$ Reco+ery <fficer on the 5round of the e$istence of any infectious
or conta5ious disease% or on the 5round of his sufferin5 from any serious illness(
3! " defaulter released under this rule may be rearrested% but the period of his detention
in the ci+il prison shall not in the a55re5ate e$ceed that authorised by rule 66(
Entry into dwelling house.
80. >or the purpose of ma9in5 an arrest under this *chedule
a! no dwellin5 house shall be entered after sunset and before sunrise1
b! no outer door of a dwellin5 house shall be bro9en open unless such dwellin5
house or a portion thereof is in the occupancy of the defaulter and he or other
occupant of the house refuses or in any way pre+ents access thereto1 but% when
the person e$ecutin5 any such warrant has duly 5ained access to any dwellin5
house% he may brea9 open the door of any room or apartment if he has reason to
belie+e that the defaulter is li9ely to be found there1
c! no room% which is in the actual occupancy of a woman who% accordin5 to the
customs of the country% does not appear in public% shall be entered into unless
the officer authorised to ma9e the arrest has 5i+en notice to her that she is at
liberty to withdraw and has 5i+en her reasonable time and facility for
withdrawin5(
Prohibition against arrest of women or minors, etc.
81. The Ta$ Reco+ery <fficer shall not order the arrest and detention in the ci+il prison
of
a! a woman% or
b! any person who% in his opinion% is a minor or of unsound mind(
PART VI
BI*.EGG"AE<E*
Officers deemed to be acting judicially.
82. E+ery
)3
-.hief .ommissioner or .ommissioner2% Ta$ Reco+ery <fficer or other
officer actin5 under this *chedule shall% in the dischar5e of his functions under this
*chedule% be deemed to be actin5 :udicially within the meanin5 of the @udicial <fficers
Protection "ct% 1748 17 of 1748!(
Power to take evidence.
83. E+ery
)4
-.hief .ommissioner or .ommissioner2% Ta$ Reco+ery <fficer or other
officer actin5 under the pro+isions of this *chedule shall ha+e the powers of a ci+il court
while tryin5 a suit for the purpose of recei+in5 e+idence% administerin5 oaths% enforcin5
the attendance of witnesses and compellin5 the production of documents(
Continuance of certificate.
84. Ao certificate shall cease to be in force by reason of the death of the defaulter(
Procedure on death of defaulter.
85.
)'
-If at any time after the certificate is drawn up by the Ta$ Reco+ery <fficer2 the
defaulter dies% the proceedin5s under this *chedule e$cept arrest and detention! may be
continued a5ainst the le5al representati+e of the defaulter% and the pro+isions of this
*chedule shall apply as if the le5al representati+e were the defaulter(
Appeals.
86.
)6
-1! "n appeal from any ori5inal order passed by the Ta$ Reco+ery <fficer under
this *chedule% not bein5 an order which is conclusi+e% shall lie to the .hief .ommissioner
or .ommissioner(2
2! E+ery appeal under this rule must be presented within thirty days from the date of the
order appealed a5ainst(
)! Pendin5 the decision of any appeal% e$ecution of the certificate may be stayed if the
appellate authority so directs% but not otherwise(
)7
-3! Aotwithstandin5 anythin5 contained in sub#rule 1!% where a .hief .ommissioner
or .ommissioner is authorised to e$ercise powers as such in respect of any area% then% all
appeals a5ainst the orders passed before the date of such authorisation by any Ta$
Reco+ery <fficer authorised to e$ercise powers as such in respect of that area% or an area
which is included in that area% shall lie to such .hief .ommissioner or .ommissioner(2
Review.
87. "ny order passed under this *chedule may% after notice to all persons interested% be
re+iewed by the
)&
-.hief .ommissioner or .ommissioner2% Ta$ Reco+ery <fficer or
other officer who made the order% or by his successor in office% on account of any mista9e
apparent from the record(
Recovery from surety.
88. Fhere any person has under this *chedule become surety for the amount due by the
defaulter% he may be proceeded a5ainst under this *chedule as if he were the defaulter(
Penalties.
89. -/mitted b+ the 1irect 7ax >aws *Amendment( Act) 1#") w.e.!. 1-4-1#"#.2
Subsistence allowance.
90. 1! Fhen a defaulter is arrested or detained in the ci+il prison% the sum payable for
the subsistence of the defaulter from the time of arrest until he is released shall be borne
by the
38
-Ta$ Reco+ery <fficer2(
2! *uch sum shall be calculated on the scale fi$ed by the *tate ;o+ernment for the
subsistence of :ud5ment#debtors arrested in e$ecution of a decree of a ci+il court(
)! *ums payable under this rule shall be deemed to be costs in the proceedin5:
Provided that the defaulter shall not be detained in the ci+il prison or arrested on account
of any sum so payable(
Forms.
91. The Board may prescribe the form to be used for any order% notice% warrant% or
certificate to be issued under this *chedule(
Power to make rules.
92. 1! The Board may ma9e rules% consistent with the pro+isions of this "ct% re5ulatin5
the procedure to be followed by
31
-.hief .ommissioners% .ommissioners2% Ta$ Reco+ery
<fficers and other officers actin5 under this *chedule(
2! In particular% and without pre:udice to the 5enerality of the power conferred by sub#
rule 1!% such rules may pro+ide for all or any of the followin5 matters% namely:
a! the area within which
31
-.hief .ommissioners% .ommissioners2 or Ta$
Reco+ery <fficers may e$ercise :urisdiction1
b! the manner in which any property sold under this *chedule may be deli+ered1
c! the e$ecution of a document or the endorsement of a ne5otiable instrument or a
share in a corporation% by or on behalf of the Ta$ Reco+ery <fficer% where such
e$ecution or endorsement is re,uired to transfer such ne5otiable instrument or
share to a person who has purchased it under a sale under this *chedule1
d! the procedure for dealin5 with resistance or obstruction offered by any person
to a purchaser of any immo+able property sold under this *chedule% in
obtainin5 possession of the property1
e! the fees to be char5ed for any process issued under this *chedule1
!! the scale of char5es to be reco+ered in respect of any other proceedin5 ta9en
under this *chedule1
g! reco+ery of pounda5e fee1
h! the maintenance and custody% while under attachment% of li+estoc9 or other
mo+able property% the fees to be char5ed for such maintenance and custody% the
sale of such li+estoc9 or property% and the disposal of proceeds of such sale1
i! the mode of attachment of business(
Saving regarding charge.
93. Aothin5 in this *chedule shall affect any pro+ision of this "ct whereunder the ta$ is a
first char5e upon any asset(
32
-Continuance of certain pending proceedings and power to remove difficulties.
94. "ll proceedin5s for the reco+ery of ta$ pendin5 immediately before the comin5 into
force of the amendments to this *chedule by the ?irect Ta$ Gaws "mendment! "ct%
1&76 shall be continued under this *chedule as amended by that "ct from the sta5e they
had reached% and% for this purpose% e+ery certificate issued by the
3)
-"ssessin52 <fficer
under section 222 before such amendment shall be deemed to be a certificate drawn up
by the Ta$ Reco+ery <fficer under that section after such amendment% and% if any
difficulty arises in continuin5 the said proceedin5s% the Board may issue whether by way
of modification% not affectin5 the substance% of any rule in this *chedule or otherwise!
5eneral or special orders which appear to it to be necessary or e$pedient for the purpose
of remo+in5 the difficulty(2
THE THIR' /CHE'01E
PR<.E?ERE ><R ?I*TR"IAT BY
33
-"**E**IA; <>>I.ER2
34
-<R T"/
RE.<0ERY <>>I.ER2
-<ee section 22'4!2
Distraint and sale.
Fhere any distraint and sale of mo+able property are to be effected by any
33
-"ssessin5
<fficer2
34
-or Ta$ Reco+ery <fficer2 authorised for the purpose% such distraint and sale
shall be made% as far as may be% in the same manner as attachment and sale of any
mo+able property attachable by actual sei=ure% and the pro+isions of the *econd *chedule
relatin5 to attachment and sale shall% so far as may be% apply in respect of such distraint
and sale(
The >ourth *chedule
PART A
3'
RE.<;AI*E? PR<0I?EAT >EA?*
36
-<ee sections 23"!% 1812!% 1825!% )'1!i%!%
37
761!d!% 111% 1&23!2
Application of Part.
1. This Part shall not apply to any pro+ident fund to which the Pro+ident >unds "ct% 1&24
1& of 1&24!% applies(
Definitions.
2. In this Part% unless the conte$t otherwise re,uires%
a! employer means any person who maintains a pro+ident fund for the benefit of
his or its employees% bein5
i! a Cindu undi+ided family% company% firm or other association of persons% or
ii! an indi+idual en5a5ed in a business or profession the profits and 5ains
whereof are assessable to income#ta$ under the head Profits and 5ains of
business or profession1
b! employee means an employee participatin5 in a pro+ident fund% but does not
include a personal or domestic ser+ant1
c! contribution means any sum credited by or on behalf of any employee out of
his salary% or by an employer out of his own moneys% to the indi+idual account
of an employee% but does not include any sum credited as interest1
d! balance to the credit of an employee means the total amount to the credit of his
indi+idual account in a pro+ident fund at any time1
e! annual accretion% in relation to the balance to the credit of an employee% means
the increase to such balance in any year% arisin5 from contributions and interest1
!! accumulated balance due to an employee means the balance to his credit% or
such portion thereof as may be claimable by him under the re5ulations of the
fund% on the day he ceases to be an employee of the employer maintainin5 the
fund1
g! re5ulations of a fund means the special body of re5ulations 5o+ernin5 the
constitution and administration of a particular pro+ident fund1 and
h! salary includes dearness allowance% if the terms of employment so pro+ide% but
e$cludes all other allowances and per,uisites(
According and withdrawal of recognition.
3. 1! The
3&
-.hief .ommissioner or .ommissioner2 may accord reco5nition to any
pro+ident fund which% in his opinion% satisfies the conditions prescribed in rule 3 and the
rules made by the Board in this behalf% and may% at any time% withdraw such reco5nition
if% in his opinion% the pro+ident fund contra+enes any of those conditions(
The following proviso shall be inserted to sub-rule (1) of rule 3 in Part A of the
Fourth Schedule by the Finance Act, 2006, w.e.f. 1-4-2007 :
Provided that in a case where recognition has been accorded to an+ pro%ident !und on
or be!ore the 31st da+ o! :arch) 2$$6 and such pro%ident !und does not satis!+ the
conditions set out in clause *ea( o! rule 4) the recognition to such !und shall be
withdrawn) i! such !und does not satis!+) on or be!ore the 31st da+ o! :arch) 2$$) the
conditions set out in the said clause and an+ other condition which the Board ma+) b+
rules speci!+) in this behal!.
2! "n order accordin5 reco5nition shall ta9e effect on such date as the
48
-.hief
.ommissioner or .ommissioner2 may fi$ in accordance with any rules the Board may
ma9e in this behalf% such date not bein5 later than the last day of the financial year in
which the order is made(
)! "n order withdrawin5 reco5nition shall ta9e effect from the date on which it is made(
3! "n order accordin5 reco5nition to a pro+ident fund shall not% unless the
48
-.hief
.ommissioner or .ommissioner2 otherwise directs% be affected by the fact that the fund is
subse,uently amal5amated with another pro+ident fund on the occurrence of an
amal5amation of the underta9in5s in connection with which the two funds are
maintained% or that it subse,uently absorbs the whole or a part of another pro+ident fund
belon5in5 to an underta9in5 which is wholly or in part transferred to or mer5ed in the
underta9in5 of the employer maintainin5 the first#mentioned fund(
Conditions to be satisfied by recognised provident funds.
4. In order that a pro+ident fund may recei+e and retain reco5nition% it shall% sub:ect to the
pro+isions of rule 4% satisfy the conditions set out below and any other conditions which
the Board may% by rules% specify
a! all employees shall be employed in India% or shall be employed by an employer
whose principal place of business is in India1
b! the contributions of an employee in any year shall be a definite proportion of
his salary for that year% and shall be deducted by the employer from the
employees salary in that proportion% at each periodical payment of such salary
in that year% and credited to the employees indi+idual account in the fund1
c! the contributions of an employer to the indi+idual account of an employee in
any year shall not e$ceed the amount of the contributions of the employee in
that year% and shall be credited to the employees indi+idual account at inter+als
not e$ceedin5 one year1
d! the fund shall be +ested in two or more trustees or in the <fficial Trustee under
a trust which shall not be re+ocable% sa+e with the consent of all the
beneficiaries1
e! the fund shall consist of contributions as abo+e specified% recei+ed by the
trustees% of accumulations thereof% and of interest credited in respect of such
contributions and accumulations% and of securities purchased therewith and of
any capital 5ains arisin5 from the transfer of capital assets of the fund% and of
no other sums1
The following clause (ea) shall be inserted after clause (e) of rule 4 in Part
A of the Fourth Schedule by the Finance Act, 2006, w.e.f. 1-4-2007 :
*ea( the !und o! an establishment to which the pro%isions o! sub-section *3( or sub-
section *4( o! section 1 o! the Emplo+ees Dro%ident 0unds and :iscellaneous
Dro%isions Act) 1#52 *1# o! 1#52(
5$a
appl+) and such establishment has been
exempted under section 1 o! the said Act !rom the operation o! all or an+ o!
the pro%isions o! an+ <cheme re!erred to in that section-
!! the employer shall not be entitled to reco+er any sum whatsoe+er from the
fund% sa+e in cases where the employee is dismissed for misconduct or
+oluntarily lea+es his employment otherwise than on account of ill#health or
other una+oidable cause before the e$piration of the term of ser+ice specified in
this behalf in the re5ulations of the fund :
Provided that in such cases the reco+eries made by the employer shall be
limited to the contributions made by him to the indi+idual account of the
employee% and to interest credited in respect of such contributions in
accordance with the re5ulations of the fund and the accumulations thereof1
g! the accumulated balance due to an employee shall be payable on the day he
ceases to be an employee of the employer maintainin5 the fund1
h! sa+e as pro+ided in clause g! or in accordance with such conditions and
restrictions as the Board may% by rules% specify% no portion of the balance to the
credit of an employee shall be payable to him(
Relaxation of conditions.
5. 1! Aotwithstandin5 anythin5 contained in clause a! of rule 3% the
41
-.hief
.ommissioner or .ommissioner2 may% if he thin9s fit and sub:ect to such conditions% if
any% as he thin9s proper to attach to the reco5nition% accord reco5nition to a fund
maintained by an employer whose principal place of business is not in India% pro+ided the
proportion of employees employed outside India does not e$ceed ten per cent(
2! Aotwithstandin5 anythin5 contained in clause b! of rule 3% an employee who retains
his employment while ser+in5 in the armed forces of the Enion or when ta9en into or
employed in the national ser+ice under any law for the time bein5 in force% may% whether
he recei+es from the employer any salary or not% contribute to the fund durin5 his ser+ice
in the armed forces of the Enion or while so ta9en into or employed in the national
ser+ice a sum not e$ceedin5 the amount he would ha+e contributed had he continued to
ser+e the employer(
)! Aotwithstandin5 anythin5 contained in clause e! or clause g! of rule 3%
a! at the re,uest made in writin5 by the employee who ceases to be an employee
of the employer maintainin5 the fund% the trustees of the fund may consent to
retain the whole or any part of the accumulated balance due to the employee to
be drawn by him at any time on demand1
b! where the accumulated balance due to an employee who has ceased to be an
employee is retained in the fund in accordance with the precedin5 clause% the
fund may consist also of interest in respect of such accumulated balance1
42
-c! the fund may also consist of any amount transferred from the indi+idual
account of an employee in any reco5nised pro+ident fund maintained by his
former employer and the interest in respect thereof(2
3! *ub:ect to any rules
4)
which the Board may ma9e in this behalf% the
43
-.hief
.ommissioner or .ommissioner2 may% in respect of any particular fund% rela$ the
pro+isions of clause c! of rule 3%
a! so as to permit the payment of lar5er contributions by an employer to the
indi+idual accounts of employees whose salaries do not in each case e$ceed
fi+e hundred rupees per mensem1 and
b! so as to permit the creditin5 by employers to the indi+idual accounts of
employees of periodical bonuses or other contributions of a contin5ent nature%
where the calculation and payment of such bonuses or other contributions is
pro+ided for on definite principles by the re5ulations of the fund(
4! Aotwithstandin5 anythin5 contained in clause h! of rule 3% in order to enable an
employee to pay the amount of ta$ assessed on his total income as determined under sub#
rule 3! of rule 11% he shall be entitled to withdraw from the balance to his credit in the
reco5nised pro+ident fund a sum not e$ceedin5 the difference between such amount and
the amount to which he would ha+e been assessed if the transferred balance referred to in
sub#rule 2! of rule 11 had not been included in his total income(
Employers annual contributions, when deemed to be income received by employee.
6. That portion of the annual accretion in any pre+ious year to the balance at the credit of
an employee participatin5 in a reco5nised pro+ident fund as consists of
a! contributions made by the employer in e$cess of
44
-twel+e2 per cent of the
salary of the employee% and
b! interest credited on the balance to the credit of the employee in so far as it
4'
-***2 is allowed at a rate e$ceedin5 such rate as may be fi$ed by the .entral
;o+ernment in this behalf by notification in the <fficial ;a=ette%
shall be deemed to ha+e been recei+ed by the employee in that pre+ious year and shall be
included in his total income for that pre+ious year% and shall be liable to income#ta$
46
-***2(
47
-Exemption for employees contributions.
7. "n employee participatin5 in a reco5nised pro+ident fund shall% in respect of his own
contributions to his indi+idual account in the fund in the pre+ious year% be entitled to a
deduction in the computation of his total income of an amount determined in accordance
with
4&
-section 78.2(2
Exclusion from total income of accumulated balance.
8. The accumulated balance due and becomin5 payable to an employee participatin5 in a
reco5nised pro+ident fund shall be e$cluded from the computation of his total income
i! if he has rendered continuous ser+ice with his employer for a period of fi+e
years or more% or
ii! if% thou5h he has not rendered such continuous ser+ice% the ser+ice has been
terminated by reason of the employees ill#health% or by the contraction or
discontinuance of the employers business or other cause beyond the control of
the employee%
'8
-or2
'8
-iii! if% on the cessation of his employment% the employee obtains employment with
any other employer% to the e$tent the accumulated balance due and becomin5
payable to him is transferred to his indi+idual account in any reco5nised
pro+ident fund maintained by such other employer(
Explanation.Fhere the accumulated balance due and becomin5 payable to an employee
participatin5 in a reco5nised pro+ident fund maintained by his employer includes any
amount transferred from his indi+idual account in any other reco5nised pro+ident fund or
funds maintained by his former employer or employers% then% in computin5 the period of
continuous ser+ice for the purposes of clause i! or clause ii! the period or periods for
which such employee rendered continuous ser+ice under his former employer or
employers aforesaid shall be included(2
Tax on accumulated balance.
9. 1! Fhere the accumulated balance due to an employee participatin5 in a reco5nised
pro+ident fund is included in his total income owin5 to the pro+isions of rule 7 not bein5
applicable% the
'1
-"ssessin52 <fficer shall calculate the total of the +arious sums of
'2
-ta$2
which would ha+e been payable by the employee in respect of his total income for each
of the years concerned if the fund had not been a reco5nised pro+ident fund% and the
amount by which such total e$ceeds the total of all sums paid by or on behalf of such
employee by way of ta$ for such years shall be payable by the employee in addition to
any other
')
-ta$2 for which he may be liable for the pre+ious year in which the
accumulated balance due to him becomes payable(
2! Fhere the accumulated balance due to an employee participatin5 in a reco5nised
pro+ident fund which is not included in his total income under the pro+isions of rule 7
becomes payable% an amount e,ual to the a55re5ate of the amounts of super#ta$ on
annual accretions that would ha+e been payable under section 47E of the Indian Income#
ta$ "ct% 1&22 11 of 1&22!% for any assessment year up to and includin5 the assessment
year 1&)2#))% if the Indian Income#ta$ *econd "mendment! "ct% 1&)) 17 of 1&))!% had
come into force on the 14th day of Barch% 1&)8% shall be payable by the employee in
addition to any other ta$ payable by him for the pre+ious year in which such balance
becomes payable(
Deduction at source of tax payable on accumulated balance.
10. The trustees of a reco5nised pro+ident fund% or any person authorised by the
re5ulations of the fund to ma9e payment of accumulated balances due to employees%
shall% in cases where sub#rule 1! of rule & applies% at the time an accumulated balance
due to an employee is paid% deduct therefrom the amount payable under that rule and all
the pro+isions of .hapter /0II#B shall apply as if the accumulated balance were income
char5eable under the head *alaries(
Treatment of balance in newly recognised provident fund.
11. 1! Fhere reco5nition is accorded to a pro+ident fund with e$istin5 balances% an
account shall be made of the fund up to the day immediately precedin5 the day on which
the reco5nition ta9es effect% showin5 the balance to the credit of each employee on such
day% and containin5 such further particulars as the Board may prescribe(
2! The account shall also show in respect of the balance to the credit of each employee
the amount thereof which is to be transferred to that employees account in the reco5nised
pro+ident fund% and such amount hereinafter called his transferred balance! shall be
shown as the balance to his credit in the reco5nised pro+ident fund on the date on which
the reco5nition of the fund ta9es effect% and sub#rule 3! of this rule and sub#rule 4! of
rule 4 shall apply thereto(
)! "ny portion of the balance to the credit of an employee in the e$istin5 fund which is
not transferred to the reco5nised fund shall be e$cluded from the accounts of the
reco5nised fund and shall be liable to income#ta$
'3
-***2 in accordance with the
pro+isions of this "ct% other than this Part(
3! *ub:ect to such rules as the Board may ma9e in this behalf% the
'4
-"ssessin52 <fficer
shall ma9e a calculation of the a55re5ate of all sums comprised in a transferred balance
which would ha+e been liable to income#ta$ if this Part had been in force from the date of
the institution of the fund% without re5ard to any ta$ which may ha+e been paid on any
sum% and such a55re5ate if any! shall be deemed to be income recei+ed by the employee
in the pre+ious year in which the reco5nition of the fund ta9es effect and shall be
included in the employees total income for that pre+ious year% and% for the purposes of
assessment% the remainder of the transferred balance shall be disre5arded% but no other
e$emption or relief% by way of refund or otherwise% shall be 5ranted in respect of any sum
comprised in such transferred balance :
Provided that% in cases of serious accountin5 difficulty% the
''
.ommissioner2 may% sub:ect to the said rules% ma9e a summary calculation of such
a55re5ate(
4! Aothin5 in this rule shall affect the ri5hts of the persons administerin5 an
unreco5nised pro+ident fund or dealin5 with it% or with the balance to the credit of any
indi+idual employee before reco5nition is accorded% in any manner which may be lawful(
Accounts of recognised provident funds.
12. 1! The accounts of a reco5nised pro+ident fund shall be maintained by the trustees of
the fund and shall be in such form and for such periods% and shall contain such
particulars% as the Board may prescribe(
2! The accounts shall be open to inspection at all reasonable times by income#ta$
authorities% and the trustees shall furnish to the
'6
-"ssessin52 <fficer such abstracts
thereof as the Board may prescribe(
Appeals.
13. 1! "n employer ob:ectin5 to an order of the
'7
.ommissioner2 refusin5 to reco5nise or an order withdrawin5 reco5nition from a
pro+ident fund may appeal% within si$ty days of such order% to the Board(
2! The appeal shall be in such form and shall be +erified in such manner and shall be
sub:ect to the payment of such fee as the Board may prescribe(
Treatment of fund transferred by employer to trustee.
14. 1! Fhere an employer% who maintains a pro+ident fund whether reco5nised or not!
for the benefit of his employees and has not transferred the fund or any portion of it%
transfers such fund or portion to trustees in trust for the employees participatin5 in the
fund% the amount so transferred shall be deemed to be of the nature of capital e$penditure(
2! Fhen an employee participatin5 in such fund is paid the accumulated balance due to
him therefrom% any portion of such balance as represents his share in the amount so
transferred to the trustees without addition of interest% and e$clusi+e of the employees
contributions and interest thereon! shall% if the employer has made effecti+e arran5ements
to secure that ta$ shall be deducted at source from the amount of such share when paid to
the employee% be deemed to be an e$penditure by the employer within the meanin5 of
section )6% incurred in the pre+ious year in which the accumulated balance due to the
employee is paid(
'&
Provisions relating to rules.
15. 1! In addition to any power conferred by this Part% the Board may ma9e rules
a! prescribin5 the statements and other information to be submitted alon5 with an
application for reco5nition1
b! limitin5 the contributions to a reco5nised pro+ident fund by employees of a
company who are shareholders in the company1
68
-bb! re5ulatin5 the in+estment or deposit of the moneys of a reco5nised pro+ident
fund :
Provided that no rule made under this clause shall re,uire the in+estment of
more than fifty per cent of the moneys of such fund in ;o+ernment securities
61
as defined in section 2 of the Public ?ebt "ct% 1&33 17 of 1&33!12
c! pro+idin5 for the assessment by way of penalty of any consideration recei+ed
by an employee for an assi5nment of% or creation of a char5e upon% his
beneficial interest in a reco5nised pro+ident fund1
d! determinin5 the e$tent to and the manner in which e$emption from payment of
62
-ta$2 may be 5ranted in respect of contributions and interest credited to the
indi+idual accounts of employees in a pro+ident fund from which reco5nition
has been withdrawn1 and
e! 5enerally% to carry out the purposes of this Part and to secure such further
control o+er the reco5nition of pro+ident funds and the administration of
reco5nised pro+ident funds as it may deem re,uisite(
2! "ll rules made under this Part shall be sub:ect to the pro+isions of section 2&'(
PART B
"PPR<0E? *EPER"AAE"TI<A >EA?*
6)
-<ee sections 26!% 1813!% 1825!iii!% )'1!i%!%
63
761!e!% 1&24!%
64
-28'22
Definitions.
1. In this Part% unless the conte$t otherwise re,uires% employer% employee% contribution
and salary ha+e% in relation to superannuation funds% the meanin5s assi5ned to those
e$pressions in rule 2 of Part " in relation to pro+ident funds(
Approval and withdrawal of approval.
2. 1! The
6'#66
-.hief .ommissioner or .ommissioner2 may accord appro+al to any
superannuation fund or any part of a superannuation fund which% in his opinion% complies
with the re,uirements of rule )% and may at any time withdraw such appro+al% if% in his
opinion% the circumstances of the fund or part cease to warrant the continuance of the
appro+al(
2! The
6'#66
-.hief .ommissioner or .ommissioner2 shall communicate in writin5 to the
trustees of the fund the 5rant of appro+al with the date on which the appro+al is to ta9e
effect% and% where the appro+al is 5ranted sub:ect to conditions% those conditions(
)! The
6'#66
trustees of the fund any withdrawal of appro+al with the reasons for such withdrawal and
the date on which the withdrawal is to ta9e effect(
3! The
6'#66
-.hief .ommissioner or .ommissioner2 shall neither refuse nor withdraw
appro+al to any superannuation fund or any part of a superannuation fund unless he has
5i+en the trustees of that fund a reasonable opportunity of bein5 heard in the matter(
Conditions for approval.
3. In order that a superannuation fund may recei+e and retain appro+al% it shall satisfy the
conditions set out below and any other conditions which the Board may% by rules%
prescribe
67
a! the fund shall be a fund established under an irre+ocable trust in connection
with a trade or underta9in5 carried on in India% and not less than ninety per cent
of the employees shall be employed in India1
b! the fund shall ha+e for its sole purpose the pro+ision of annuities for employees
in the trade or underta9in5 on their retirement at or after a specified a5e or on
their becomin5 incapacitated prior to such retirement% or for the widows%
children or dependants of persons who are or ha+e been such employees on the
death of those persons 1
c! the employer in the trade or underta9in5 shall be a contributor to the fund 1 and
d! all annuities% pensions and other benefits 5ranted from the fund shall be payable
only in India(
Application for approval.
4. 1! "n application for appro+al of a superannuation fund or part of a superannuation
fund shall be made in writin5 by the trustees of the fund to the
6&
-"ssessin52 <fficer by
whom the employer is assessable% and shall be accompanied by a copy of the instrument
under which the fund is established and by two copies of the rules
78
-and% where the fund
has been in e$istence durin5 any year or years prior to the financial year in which the
application for appro+al is made% also two copies of the accounts of the fund relatin5 to
such prior year or years not bein5 more than three years immediately precedin5 the year
in which the said application is made!2 for which such accounts ha+e been made up% but
the
71
-.hief .ommissioner or .ommissioner2 may re,uire such further information to be
supplied as he thin9s proper(
2! If any alteration in the rules% constitution% ob:ects or conditions of the fund is made at
any time after the date of the application for appro+al% the trustees of the fund shall
forthwith communicate such alteration to the
72
-"ssessin52 <fficer mentioned in sub#rule
1!% and in default of such communication any appro+al 5i+en shall% unless the
7)
-.hief
.ommissioner or .ommissioner2 otherwise orders% be deemed to ha+e been withdrawn
from the date on which the alteration too9 effect(
Contributions by employer when deemed to be income of employer.
5. Fhere any contributions by an employer includin5 the interest thereon% if any! are
repaid to the employer% the amount so repaid shall be deemed for the purpose of income#
ta$
73
-***2 to be the income of the employer of the pre+ious year in which it is so repaid(
Deduction of tax on contributions paid to an employee.
74
6. Fhere any contributions made by an employer% includin5 interest on contributions% if
any% are paid to an employee durin5 his lifetime
7'
-in circumstances other than those
referred to in clause 13! of section 182%
76
-ta$2 on the amounts so paid shall be deducted
at the a+era5e rate of
76
-ta$2 at which the employee was liable to
76
-ta$2 durin5 the
precedin5 three years or durin5 the period% if less than three years% when he was a
member of the fund% and shall be paid by the trustees to the credit of the .entral
;o+ernment within the prescribed time and in such manner as the Board may direct(
Deduction from pay of and contributions on behalf of employee to be included in
return.
7. Fhere an employer deducts from the emoluments paid to an employee or pays on his
behalf any contributions of that employee to an appro+ed superannuation fund% he shall
include all such deductions or payments in the return which he is re,uired to furnish
under
77
-***2 section 28'(
Appeals.
7&
refusin5 to accord appro+al to a superannuation fund or an order withdrawin5 such
appro+al may appeal% within si$ty days of such order% to the Board(
sub:ect to the payment of such fee as may be prescribed(
&8
Liability of trustees on cessation of approval.
9. If a fund or a part of a fund for any reason ceases to be an appro+ed superannuation
fund% the trustees of the fund shall ne+ertheless remain liable to ta$ on any sum paid on
account of returned contributions includin5 interest on contributions% if any!% in so far as
the sum so paid is in respect of contributions made before the fund or part of the fund
ceased to be an appro+ed superannuation fund under the pro+isions of this Part(
Particulars to be furnished in respect of superannuation funds.
10. The trustees of an appro+ed superannuation fund and any employer who contributes
to an appro+ed superannuation fund shall% when re,uired by notice from the
&1#
&2
-"ssessin52 <fficer% within such period% not bein5 less than twenty#one days from the
date of the notice% as may be specified in the notice% furnish such return% statement%
particulars or information% as the
&1#&2
-"ssessin52 <fficer may re,uire(
11. 1! In addition to any power conferred by this Part% the Board may ma9e rules
application for appro+al 1
b! prescribin5 the returns% statements% particulars% or information which the
&1#
&2
-"ssessin52 <fficer may re,uire from the trustees of an appro+ed
superannuation fund or from the employer 1
c! limitin5 the ordinary annual contribution and any other contributions to an
appro+ed superannuation fund by an employer 1
&)
-cc! re5ulatin5 the in+estment or deposit of the moneys of an appro+ed
superannuation fund :
more than fifty per cent of the moneys of such fund in
&3
;o+ernment securities
as defined in section 2 of the Public ?ebt "ct% 1&33 17 of 1&33! 12
d! pro+idin5 for the assessment by way of penalty of any consideration recei+ed
by an employee for an assi5nment of% or creation of a char5e upon% his
beneficial interest in an appro+ed superannuation fund 1
e! determinin5 the e$tent to% and the manner in% which e$emption from payment
of
&4
-ta$2 may be 5ranted in respect of any payment made from a
superannuation fund from which appro+al has been withdrawn 1
!! pro+idin5 for the withdrawal of appro+al in the case of a fund which ceases to
satisfy the re,uirements of this Part or of the rules made thereunder 1 and
g! 5enerally% to carry out the purposes of this Part and to secure such further
control o+er the appro+al of the superannuation funds and the administration of
appro+ed superannuation funds as it may deem re,uisite(
PART C
"PPR<0E? ;R"TEITY >EA?*
&'
-<ee sections 25!%
&6
-1825!i%!%2 161!iii!% )'1!%!2
Definitions.
1. In this Part% unless the conte$t otherwise re,uires employer% employee% contribution
and salary ha+e% in relation to 5ratuity funds% the meanin5s assi5ned to those e$pressions
in rule 2 of Part " in relation to pro+ident funds(
Approval and withdrawal of approval.
2. 1! The
&7
-.hief .ommissioner or .ommissioner2 may accord appro+al to any 5ratuity
fund which% in his opinion% complies with the re,uirements of rule ) and may at any time
withdraw such appro+al if% in his opinion% the circum#stances of the fund cease to warrant
the continuance of the appro+al(
2! The
&7
trustees of the fund the 5rant of appro+al with the date on which the appro+al is to ta9e
effect and where the appro+al is 5ranted sub:ect to conditions% those conditions(
)! The
&7
trustees of the fund any withdrawal of appro+al with the reasons for such withdrawal and
the date on which the withdrawal is to ta9e effect(
3! The
&&
-.hief .ommissioner or .ommissioner2 shall neither refuse nor withdraw
appro+al to any 5ratuity fund unless he has 5i+en the trustees of that fund a reasonable
opportunity of bein5 heard in the matter(
Conditions for approval.
3. In order that a 5ratuity fund may recei+e and retain appro+al% it shall satisfy the
conditions set out below and any other conditions which the Board may% by rules%
prescribe
a! the fund shall be a fund established under an irre+ocable trust in connection
with a trade or underta9in5 carried on in India% and not less than ninety per cent
of the employees shall be employed in India 1
b! the fund shall ha+e for its sole purpose the pro+ision of a 5ratuity to employees
in the trade or underta9in5 on their retirement at or after a specified a5e or on
their becomin5 incapacitated prior to such retirement or on termination of their
employment after a minimum period of ser+ice specified in the rules of the
fund or to the widows% children or dependants of such employees on their death
1
c! the employer in the trade or underta9in5 shall be a contributor to the fund 1 and
d! all benefits 5ranted by the fund shall be payable only in India(
Application for approval.
4. 1! "n application for appro+al of a 5ratuity fund shall be made in writin5 by the
trustees of the fund to the
1
-"ssessin52 <fficer by whom the employer is assessable and
shall be accompanied by a copy of the instrument under which the fund is established and
by two copies of the rules
2
-and% where the fund has been in e$istence durin5 any year or
years prior to the financial year in which the application for appro+al is made% also two
copies of the accounts of the fund relatin5 to such prior year or years not bein5 more
than three years immediately precedin5 the year in which the said application is made!2
for which such accounts ha+e been made up% but the
)
.ommissioner2 may re,uire such further information to be supplied as he thin9s proper(
2! If any alteration in the rules% constitution% ob:ects or conditions of the fund is made at
any time after the date of the application for appro+al% the trustees of the fund shall
forthwith communicate such alterations to the
3
-"ssessin52 <fficer mentioned in sub#rule
1!% and in default of such communication% any appro+al 5i+en shall% unless the
)
-.hief
.ommissioner or .ommissioner2 otherwise orders% be deemed to ha+e been withdrawn
from the date on which the alteration too9 effect(
Gratuity deemed to be salary.
5. Fhere any 5ratuity is paid to an employee durin5 his lifetime% the 5ratuity shall be
treated as salary paid to the employee for the purposes of this "ct(
Liability of trustees on cessation of approval.
6. If a 5ratuity fund for any reason ceases to be an appro+ed 5ratuity fund% the trustees of
the fund shall ne+ertheless remain liable to ta$ on any 5ratuity paid to any employee(
Contributions by employer, when deemed to be income of employer.
7. Fhere any contributions by an employer includin5 the interest thereon% if any! are
repaid to the employer% the amount so repaid shall be deemed for the purposes of income#
ta$
4
-***2 to be the income of the employer of the pre+ious year in which they are so
repaid(
Appeals.
'
refusin5 to accord appro+al to a 5ratuity fund or an order withdrawin5 such appro+al may
appeal% within si$ty days of such order% to the Board(
sub:ect to the payment of such fee as may be prescribed(
6
7
-Particulars to be furnished in respect of gratuity funds.
8A. The trustees of an appro+ed 5ratuity fund and any employer who contributes to an
appro+ed 5ratuity fund shall% when re,uired by notice from the
&#18
furnish within such period% not bein5 less than twenty#one days from the date of the
notice% as may be specified in the notice% such return% statement% particulars or
information% as the
&#18
-"ssessin52 <fficer may re,uire(2
9. 1! In addition to any power conferred in this Part% the Board may ma9e rules
application for appro+al 1
b! limitin5 the ordinary annual and other contributions of an employer to the
fund 1
11
-bb! re5ulatin5 the in+estment or deposit of the moneys of an appro+ed 5ratuity fund
:
more than fifty per cent of the moneys of such fund in ;o+ernment securities
12
as defined in section 2 of the Public ?ebt "ct% 1&33 17 of 1&33! 12
c! pro+idin5 for the assessment by way of penalty of any consideration recei+ed
by an employee for an assi5nment of% or the creation of a char5e upon% his
beneficial interest in an appro+ed 5ratuity fund 1
d! pro+idin5 for the withdrawal of the appro+al in the case of a fund which ceases
to satisfy the re,uirements of this Part or the rules made thereunder 1 and
e! 5enerally% to carry out the purposes of this Part and to secure such further
control o+er the appro+al of 5ratuity funds and the administration of 5ratuity
funds as it may deem re,uisite(
1)
-THE $I$TH /CHE'01E
13
--<ee section ))1!b!B!i!22
GI*T <> "RTI.GE* "A? TCIA;*
1! Iron and steel metal!% ferro#alloys and special steels(
2! "luminium% copper% lead and =inc metals!(
3!
14
-.oal% li5nite% iron ore2% bau$ite% man5anese ore% dolomite% limestone% ma5nesite
and mineral oil(
4! Industrial machinery specified under the headin5 7( Industrial machinery% sub#
headin5 "( Ba:or items of specialised e,uipment used in specific industries% of
the >irst *chedule to the Industries ?e+elopment and Re5ulation! "ct% 1&41 '4
of 1&41!(
5! Boilers and steam 5eneratin5 plants% steam en5ines and turbines and internal
combustion en5ines(
6! >lame and drip proof motors(
! E,uipment for the 5eneration and transmission of electricity includin5
transformers% cables and transmission towers(
"! Bachine tools and precision tools includin5 their attachments and accessories%
cuttin5 tools and small tools!% dies and :i5s(
#! Tractors% earth#mo+in5 machinery and a5ricultural implements(
1$! Botor truc9s and buses(
11! *teel castin5s and for5in5s and malleable iron and steel castin5s(
12! .ement and refractories(
13! >ertilisers% namely% ammonium sulphate% ammonium sulphate nitrate double
salt!% ammonium nitrate% calcium ammonium nitrate nitrolime stone!% ammonium
chloride% superphosphate% urea and comple$ fertilisers of synthetic ori5in
containin5 both nitro5en and phosphorus% such as ammonium phosphates%
ammonium sulphate phosphate and ammo#nium nitro phosphate(
14! *oda ash(
15! Pesticides(
16! Paper and pulp
1'
-includin5 newsprint2(
1! Electronic e,uipment% namely% radar e,uipment% computers% electronic accountin5
and business machines% electronic communication e,uipment% electronic control
instruments and basic components% such as +al+es% transistors% resistors%
condensers% coils% ma5netic materials and microwa+e components(
1"! Petrochemicals includin5 correspondin5 products manufactured from other basic
raw materials li9e calcium carbide% ethyl alcohol or hydrocarbons from other
sources(
1#! *hips(
2$! "utomobile ancillaries(
21! *eamless tubes(
22! ;ears(
23! Ball% roller and tapered bearin5s(
24! .omponent parts of the articles mentioned in item Aos( 3!% 4!% 6! and &!% that is
to say% such parts as are essential for the wor9in5 of the machinery referred to in
the items aforesaid and ha+e been 5i+en for that purpose some special shape or
,uality which would not be essential for their use for any other purpose and are in
complete finished form and ready for fitment(
25! .otton seed oil(
1'
-26! Tea(
2! Printin5 machinery(2
16
-2"! Processed seeds(
2#! Processed concentrates for cattle and poultry feed(
3$! Processed includin5 fro=en! fish and fish products(
31! 0e5etable oils and oil#ca9es manufactured by the sol+ent e$traction process from
seeds other than cotton seed(2
17
-32! Te$tiles includin5 those dyed% printed or otherwise processed! made wholly or
mainly of cotton% includin5 cotton yarn% hosiery and rope(
33! Te$tiles includin5 those dyed% printed or otherwise processed! made wholly or
mainly of :ute% includin5 :ute twine and :ute rope(22
THE /IXTH /CHE'01E
-/mitted b+ the 0inance Act) 1#2) w.e.!. 1-4-1#3. /riginall+) the <chedule was
inserted b+ the 0inance Act) 1#6") w.e.!. 1-4-1#6# and was later amended b+ the 0inance
*&o. 2( Act) 1#1) w.e.!. 1-4-1#2.2
1&
-THE /EVE2TH /CHE'01E
-<ee section )4E2
PART A
BIAER"G*
1( "luminium ores(
2( "patite and phosphatic ores(
)( Beryl(
3( .hrome ore(
4( .oal and li5nite(
'( .olumbite% *amars9ite and other minerals of the rare earths 5roup(
6( .opper(
7( ;old(
&( ;ypsum(
18( Iron ore(
11( Gead(
12( Ban5anese ore(
1)( Bolybdenum(
13( Aic9el ores(
14( Platinum and other precious metals and their ores(
1'( Pitchblende and other uranium ores(
16( Precious stones(
17( Rutile(
1&( *il+er(
28( *ulphur and its ores(
21( Tin(
22( Tun5sten ores(
2)( Eraniferous allanite% mona=ite and other thorium minerals(
23( Eranium bearin5 tailin5s left o+er from ores after e$traction of copper and 5old%
ilmenite and other titanium ores(
24( 0anadium ores(
2'( Jinc(
26( Jircon(
PART B
;R<EP* <> "**<.I"TE? BIAER"G*
1( "patite% Beryl% .assiterite% .olumbite% Emerald% >elspar% Gepidolite% Bica%
Pitchblende% Kuart=% *amars9ite% *cheelite% Topa=% Tantalite% Tourmaline(
2( Iron% Ban5anese% Titanium% 0anadium and Aic9el minerals(
)( Gead% Jinc% .opper% .admium% "rsenic% "ntimony% Bismuth% .obalt% Aic9el%
Bolybdenum% and Eranium minerals% and ;old and *il+er% "rsinopyrite%
.halcopyrite% Pyrite% Pyphrotite and Pentalandite(
3( .hromium% <smiridium% Platinum and Aic9el minerals(
4( Dyanite% *illimanite% .orrundum% ?umortierite and Topa=(
'( ;old% *il+er% Tellurium% *elenium and Pyrite(
6( Barytes% >luorite% .halcocite% *elenium% and minerals of Jinc% Gead and *il+er(
7( Tin and Tun5sten minerals(
&( Gimestone% ?olomite and Ba5nesite(
18( Ilmenite% Bona=ite% Jircon% Rutile% ;arnet and *illimanite(
11( *ulphides of .opper and Iron(
12( .oal% >ireclay and *hale(
1)( Ba5netite and "patite(
13( Ba5nesite and .hromite(
14( Talc *oapstone and *teatite! and ?olomite(
1'( Bau$ite% Gaterite% "luminous .lays% Githomor5e% Titanium% 0anadium% ;allium and
.olumbium minerals(2
28
-THE EI%HTH /CHE'01E
-<ee section 78#I"2!i%!b!2
GI*T <> IA?E*TRI"GGY B".DF"R? *T"TE* "A? EAI<A TERRIT<RIE*
1! "runachal Pradesh
2! "ssam
3! ;oa
4! Cimachal Pradesh
5! @ammu and Dashmir
6! Banipur
! Be5halaya
"! Bi=oram
#! Aa5aland
1$! *i99im
11! Tripura
12! "ndaman and Aicobar Islands
13! ?adra and Aa5ar Ca+eli
14! ?aman and ?iu
15! Ga9shadweep
16! Pondicherry(2
THE 2I2TH /CHE'01E
21
-/mitted b+ the 7axation >aws *Amendment J :iscellaneous Dro%isions( Act) 1#"6)
w.e.!. 1-4-1#"". /riginal &inth <chedule was inserted b+ the 1irect 7axes *Amendment(
Act) 1#4) w.e.!. 1-4-1#5.2
THE TE2TH /CHE'01E
-<ee section )4!2
22
-/mitted b+ the 0inance Act) 1###) w.e.!. 1-4-2$$$.2
2)
-THE E1EVE2TH /CHE'01E
-<ee section )2"%
23
-section )2"B%2
24
-section 78..*)!a!i!% section 78#I2!2
2'
-% section 78@3! and section 77" )!a!i!2
GI*T <> "RTI.GE* <R TCIA;*
1( Beer% wine and other alcoholic spirits(
2( Tobacco and tobacco preparations% such as% ci5ars and cheroots% ci5arettes%
biris% smo9in5 mi$tures for pipes and ci5arettes% chewin5 tobacco and snuff(
)( .osmetics and toilet preparations(
3( Tooth paste% dental cream% tooth powder and soap(
4( "erated waters in the manufacture of which blended fla+ourin5 concentrates in
any form are used(
26
-Explanation(Blended fla+ourin5 concentrates shall include% and shall be
deemed always to ha+e included% synthetic essences in any form(2
'( .onfectionery and chocolates(
6( ;ramophones% includin5 record#players and 5ramophone records(
7(
27
-***2
&(
2&
-Pro:ectors2
18( Photo5raphic apparatus and 5oods(
11#21(
27
-***2
22( <ffice machines and apparatus such as typewriters% calculatin5 machines% cash
re5isterin5 machines% che,ue writin5 machines% intercom machines and
teleprinters(
Explanation(The e$pression office machines and apparatus includes all
machines and apparatus used in offices% shops% factories% wor9shops%
educational institutions% railway stations% hotels and restaurants for doin5 office
wor9
)8
-and for data processin5 not bein5 computers within the meanin5 of
section )2"B!2(
2)( *teel furniture% whether made partly or wholly of steel(
23( *afes% stron5 bo$es% cash and deed bo$es and stron5 room doors(
24( Gate$ foam spon5e and polyurethane foam(
2'(
)1
-***2
26( .rown cor9s% or other fittin5s of cor9% rubber% polyethylene or any other
material(
27( Pilfer#proof caps for pac9a5in5 or other fittin5s of cor9% rubber% polyethylene or
any other material(
2&(
)2
-***22
))
-THE T3E1$TH /CHE'01E
-<ee section 78CC.2!b!ii!2
PR<.E**E? BIAER"G* "A? <RE*
i! Pul+erised or micronisedbarytes% calcite% steatite% pyrophylite% wollastonite%
=ircon% bentonite% red or yellow o$ide% red or yellow ochre% talc% ,uart=%
feldspar% silica powder% 5arnet% silliminite% fireclay% ballclay% man5anese
dio$ide ore(
ii! Processed or acti+atedbentonite% diatomious earth% fullers earth(
iii! Processed9aoline china clay!% whitin5% calcium carbonate(
i%! Beneficated#chromite% flourspar% 5raphite% +ermiculite% ilmenite% brown ilmenite
lenco$ene! rutile% mona=ite and other mineral concentrates(
%! Bica bloc9s% mica splittin5s% mica condenser films% mica powder% micanite%
sil+ered mica% punched mica% mica paper% mica tapes% mica fla9es(
%i! E$foliated#+ermiculite% calcined 9yanite% ma5nesite% calcined ma5nesite%
calcined alumina(
%ii! *i=ed iron ore processed by mechanical screenin5 or crushin5 and screenin5
throu5h dry process or mechanical crushin5% screenin5% washin5 and
classification throu5h wet process(
%iii! Iron ore concentrates processed throu5h crushin5% 5rindin5 or ma5netic
separation(
ix! "55lomerated iron ore(
x! .ut and polished minerals and roc9s includin5 cut and polished 5ranite(
Explanation(>or the purposes of this *chedule% processed% in relation to any mineral or
ore% means
a! dressin5 throu5h mechanical means to obtain concentrates after remo+al of
5an5ue and unwanted deleterious substances or throu5h other means without
alterin5 the minerolo5ical identity1
b! pul+erisation% calcination or micronisation1
c! a55lomeration from fines1
d! cuttin5 and polishin51
e! washin5 and le+i5ation1
!! benefication by mechanical crushin5 and screenin5 throu5h dry process1
g! si=in5 by crushin5% screenin5% washin5 and classification throu5h wet process1
h! other up5radin5 techni,ues such as remo+al of impurities throu5h chemical
treatment% refinin5 by 5ra+ity separation% bleachin5% floata#tion or filtration(2
)3
-THE THIRTEE2TH /CHE'01E
)4
--<ee sections "$-3B*4( and "$-3'*2(22
GI*T <> "RTI.GE* <R TCIA;*
P"RT "
FOR THE STATE OF SIKKIM
<. &o. Article or thing
1( Tobacco and tobacco products includin5 ci5arettes% ci5ars and 5ut9a% etc(!
2( "erated branded be+era5es
)( Pollution#causin5 paper and paper products
P"RT B
FOR THE STATE OF HIMACHAL PRADESH AND THE STATE OF
UTTARANCHAL
<.
&o.
Acti%it+ or article or thing Excise
classi!ication
<ub-class under
&ational 3ndustrial
'lassi!ication *&3'()
1##"
1( Tobacco and tobacco products
includin5 ci5arettes and pan masala
23(81 to 23(83
and 21(8'
1'88
2( Thermal Power Plant coalIoil based! 38182 or 3818)
)( .oal washeriesIdry coal processin5
3( Inor5anic .hemicals e$cludin5
medicinal 5rade o$y5en 2783(11!%
medicinal 5rade hydro5en pero$ide
2736(11!% compressed air 2741()8!
.hapter 27
4( <r5anic chemicals e$cludin5
Pro+itaminsI +itamins% Cormones
2&()'!% ;lycosides 2&()&!% su5ars*
2&(38!
.hapter 2& 23116
'( Tannin5 and dyein5 e$tracts% tannins
and their deri+ati+es% dyes% colours%
paints and +arnishes1 putty% fillers and
other mastics1 in9s
.hapter )2 2311) or 23113
6( Barble and mineral substances not
classified elsewhere
24(83 24(84 1318' or 13186
7( >lour millsIrice mills 11(81 14)11
&( >oundries usin5 coal
18( Binerals fuels% mineral oils and
products of their distillation1
bituminous substances : mineral wa$es
.hapter 26
11( *ynthetic rubber products 38(82 231)1
12( .ement clin9ers and asbestos% raw
includin5 fibre
2482(18%
248)(88

1)( E$plosi+e includin5 industrial
e$plosi+es% detonators and fuses%
firewor9s% matches% propellant
powders% etc(!
)'(81 to )'(8' 232&2
13( Bineral or chemical fertili=ers )1(82 to )1(84 2312
14( Insecticides% fun5icides% herbicides and
pesticides basic manufacture and
formulation!
)787(18 23211 or 2321&
1'( >ibre 5lass and articles thereof 68(13 2'182
16( Banufacture of pulp # wood pulp%
mechanical or chemical includin5
dissol+in5 pulp!
36(81 21811
17( Branded aerated waterIsoft drin9s
non#fruit based!
2281(28%
2282(28
14431 or 14432
1&( Paper 3781 21811 to 2181&
Fritin5 or printin5 paper% etc( 3782(18
Paper or paperboard% etc( 3782(28
Baplitho paper% etc( 3782()8
Aewsprint% in rolls or sheets 3781(88
.raft paper% etc( 3783(18
*anitary towels% etc( 3717(18
.i5arette paper 37(1)
;rease#proof paper 378'(18
Toilet or facial tissue% etc( 378)
Paper and paper board% laminated
internally with bitumen% tar or asphalt
3786(18
.arbon or similar copyin5 paper 378&(18
Products consistin5 of sheets of paper
or paperboard% impre5nated% coated or
co+ered with plastics% etc(
3711(28
Paper and paperboard% coated%
impre5nated or co+ered with wa$% etc(
3711(38
28( Plastics and articles thereof )&(8& to )&(142
**erial Ao( 4 # Reproduction by synthesis not allowed as also downstream industries for
su5ar(

)'
-P"RT .
FOR THE STATE OF 1AMMU AND KASHMIR

<. &o. Article or thing
1( .i5arettesIci5ars of tobacco% manufactured tobacco and substitutes
2( ?istilledIbrewed alcoholic drin9s
)( "erated branded be+era5es and their concentrates(2

)6
-THE $40RTEE2TH /CHE'01E
-<ee section 78#I.2!2
GI*T <> "RTI.GE* <R TCIA;* <R <PER"TI<A*
P"RT "
FOR THE NORTH-EASTERN STATES
1( >ruit and 0e5etable Processin5 industries manufacturin5 or producin5
i! .anned or bottled products1
ii! "septic pac9a5ed products1
iii! >ro=en products1
i%! ?e#hydrated products1
%! <leoresins(
2( Beat and Poultry Product industries manufacturin5 or producin5
i! Beat Products buffalo% sheep% 5oat and por9!1
ii! Poultry production1
iii! E55 Powder Plant(
)( .ereal Based Product industries manufacturin5 or producin5
i! Bai=e Billin5 includin5 starch and its deri+ati+es1
ii! Bread% Biscuits% Brea9fast .ereal(
3( >ood and Be+era5e industries manufacturin5 or producin5
i! *nac9s1
ii! Aon#alcoholic be+era5es1
iii! .onfectionery includin5 chocolate1
i%! Pasta products1
%! Processed spices% etc(1
%i! Processed pulses1
%ii! Tapioca products(
4( Bil9 and mil9 based product industries manufacturin5 or producin5
i! Bil9 powder1
ii! .heese1
iii! ButterI5hee1
i%! Infant food1
%! Feanin5 food1
%i! Balted mil9 food(
'( >ood pac9a5in5 industry(
6( Paper products industry(
7( @ute and mesta products industry(
&( .attle or poultry or fishery feed products industry(
18( Edible <il processin5 or +anaspati industry(
11( Processin5 of essential oils and fra5rances industry(
12( Processin5 and raisin5 of plantation crops # tea% rubber% coffee% coconuts% etc(
1)( ;as based Intermediate Products Industry manufacturin5 or producin5
i! ;as e$ploration and production1
ii! ;as distribution and bottlin51
iii! Power 5eneration1
i%! Plastics1
%! Yarn raw materials1
%i! >ertili=ers1
%ii! Bethanol1
%iii! >ormaldehyde and >R resin melamine and B> resin1
ix! Bethylamine% Ce$amethylene tetramine% "mmonium bi#carbonate1
x! Aitric "cid and "mmonium Aitrate1
xi! .arbon blac91
xii! Polymer chips(
13( "5ro forestry based industry(
14( Corticulture industry(
1'( Bineral based industry(
16( >loriculture industry(
17( "5ro#based industry(
P"RT B
FOR THE STATE OF SIKKIM
<.
&o.
Acti%it+ or article or thing or operation
1( Eco#Tourism includin5 Cotels% Resorts% *pa% "musement Par9s and Ropeways(
2( Candicrafts and handlooms(
)( Fool and sil9 reelin5% wea+in5 and processin5% printin5% etc(
3( >loriculture(
4( Precision En5ineerin5 includin5 watch ma9in5(
'( Electronics includin5 computronics hardware and software and Information
Technolo5y IT! related industries(
6( >ood processin5 includin5 "5ro#based industries( Processin5% preser+ation and
pac9a5in5 of fruits and +e5etables e$cludin5 con+entional 5rindin5Ie$traction
units!(
7( Bedicinal and aromatic Cerbs # Plantation and Processin5(
&( Raisin5 and processin5 of plantation crops% i.e.) tea% oran5es and carda#mom(
18( Bineral based industry(
11( Pharma products(
12( Coney(
1)( Biotechnolo5y(
P"RT .
FOR THE STATE OF HIMACHAL PRADESH AND THE STATE OF
UTTARANCHAL
<.
&o
.
Acti%it+ or article or thing or
operation
4K6 digit
excise
classi!ication
<ub-class
under &3'
classi!ication
37'*C<(
classi!ication
on 1##" 4K6 digit
1( >loriculture # # 8'8) or
8'8128 or
8'82&828 or
8'823888
2( Bedicinal herbs and aromatic
herbs% etc(% processin5
# #
)( Coney # # 838&88
3( Corticulture and a5ro#based
industries such as

a! *auces% 9etchup% etc( 21(8) 141)4 to 141)6
and 141)&

b! >ruit :uices and fruit pulp 2282(38
c! @ams% :ellies% +e5etable :uices%
puree% pic9les% etc(
28(81
d! Preser+ed fruits and +e5etables
e! Processin5 of fresh fruits and
+e5etables includin5
pac9a5in5

!! Processin5% preser+ation%
pac9a5in5 of mushrooms

4( >ood Processin5 Industry
e$cludin5 those included in the
Thirteenth *chedule
1&(81 to 1&(83
'( *u5ar and its by#products # # 1681&188
6( *il9 and sil9 products 48(83
48(84 1611'
7( Fool and wool products 41(81 to
41(12 16116
&( Fo+en fabrics E$cisable
5arments!
# # '181 to '116
18( *ports 5oods and articles and
e,uipment for 5eneral physical
e$ercise and e,uipment for
ad+enture sportsIacti+ities%
tourism to be specified% by
notification% by the .entral
;o+ernment!
&48'(88
11( Paper and paper products
e$cludin5 those in the

Thirteenth *chedule as per
e$cise classification!
12( Pharma products )8(8) to )8(84
1)( Information and
.ommunication Technolo5y
Industry% .omputer hardware%
.all .entres
73(61 )888'I6
13( Bottlin5 of mineral water 2281
14( Eco#tourism includin5 hotels%
resorts% spa% entertainmentI
amusement par9s and
ropeways
# 44181
1'( Industrial 5ases based on
atmospheric fraction!

16( Candicrafts
17( Aon#timber forest product#
based industries(2

"PPEA?I/ <AE
TEXT OF REMAINING PROVISIONS OF ALLIED ACTS REFERRED TO IN
INCOME-TAX ACT
SECTION 5(c) OF BANKING REGULATION ACT, 1949
Interpretation
5. In this "ct% unless there is anythin5 repu5nant in this sub:ect or conte$t%
** ** **
c! ban9in5 company means any company which transacts the business of ban9in5 in
India1
Explanation."ny company which is en5a5ed in the manufacture of 5oods or
carries on any trade and which accepts deposits of money from the public merely
for the purpose of financin5 its business as such manufacturer or trader shall not
be deemed to transact the business of ban9in5 within the meanin5 of this clause1
SECTION 45 OF BANKING REGULATION ACT, 1949
Power of Reserve Bank to apply to Central Government for suspension of business
by a banking company and to prepare scheme of reconstitution or amalgamation
45. 1! Aotwithstandin5 anythin5 contained in the fore5oin5 pro+isions of this Part or in
any other law or any a5reement or other instrument% for the time bein5 in force% where it
appears to the Reser+e Ban9 that there is 5ood reason so to do% the Reser+e Ban9 may
apply to the .entral ;o+ernment for an order of moratorium in respect of a ban9in5
company(
2! The .entral ;o+ernment% after considerin5 the application made by the Reser+e Ban9
under sub#section 1!% may ma9e an order of moratorium stayin5 the commencement or
continuance of all actions and proceedin5s a5ainst the company for a fi$ed period of time
on such terms and conditions as it thin9s fit and proper and may from time to time e$tend
the period so howe+er that the total period of moratorium shall not e$ceed si$ months(
)! E$cept as otherwise pro+ided by any directions 5i+en by the .entral ;o+ernment in
the order made by it under sub#section 2! or at any time thereafter% the ban9in5 company
shall not durin5 the period of moratorium ma9e any payment to any depositors or
dischar5e any liabilities or obli5ations to any other creditors(
3! ?urin5 the period of moratorium% if the Reser+e Ban9 is satisfied that
a! in the public interest1 or
b! in the interests of the depositors1 or
c! in order to secure the proper mana5ement of the ban9in5 company1 or
d! in the interests of the ban9in5 system of the country as a whole%
it is necessary so to do% the Reser+e Ban9 may prepare a scheme
i! for the reconstruction of the ban9in5 company% or
ii! for the amal5amation of the ban9in5 company with any other ban9in5 institution
in this section referred to as the transferee ban9!(
4! The scheme aforesaid may contain pro+isions for all or any of the followin5 matters%
namely :
a! the constitution% name and re5istered office% the capital% assets% powers% ri5hts%
interests% authorities and pri+ile5es% the liabilities% duties and obli5ations% of the
ban9in5 company on its reconstruction or% as the case may be% of the transferee
ban91
b! in the case of amal5amation of the ban9in5 company% the transfer to the transferee
ban9 of the business% properties% assets and liabilities of the ban9in5 company on
such terms and conditions as may be specified in the scheme1
c! any chan5e in the Board of ?irectors% or the appointment of a new Board of
?irectors% of the ban9in5 company on its reconstruction or% as the case may be% of
the transferee ban9 and the authority by whom% the manner in which% and the
other terms and conditions on which% such chan5e or appointment shall be made
and in the case of appointment of a new Board of ?irectors or of any ?irector% the
period for which such appointment shall be made1
d! the alteration of the memorandum and articles of association of the ban9in5
company on its reconstruction or% as the case may be% of the transferee ban9 for
the purpose of alterin5 the capital thereof or for such other purposes as may be
necessary to 5i+e effect to the reconstruction or amal5amation1
e! sub:ect to the pro+isions of the scheme% the continuation by or a5ainst the ban9in5
company on its reconstruction or% as the case may be% the transferee ban9% of any
actions or proceedin5s pendin5 a5ainst the ban9in5 company immediately before
the date of the order of moratorium1
!! the reduction of the interest or ri5hts which the members% depositors and other
creditors ha+e in or a5ainst the ban9in5 company before its reconstruction or
amal5amation to such e$tent as the Reser+e Ban9 considers necessary in the
public interest or in the interests of the members% depositors and other creditors or
for the maintenance of the business of the ban9in5 company1
g! the payment in cash or otherwise to depositors and other creditors in full
satisfaction of their claim
i! in respect of their interest or ri5hts in or a5ainst the ban9in5 company
before its reconstruction or amal5amation1 or
ii! where their interest or ri5hts aforesaid in or a5ainst the ban9in5 company
has or ha+e been reduced under clause !!% in respect of such interest or
ri5hts as so reduced1
h! the allotment to the members of the ban9in5 company for shares held by them
therein before its reconstruction or amal5amation -whether their interest in such
shares has been reduced under clause !! or not2% of shares in the ban9in5
company on its reconstruction or% as the case may be% in the transferee ban9 and
where any members claim payment in cash and not allotment of shares% or where
it is not possible to allot shares to any members% the payment in cash to those
members in full satisfaction of their claim
i! in respect of their interest in shares in the ban9in5 company before its
reconstruction or amal5amation1 or
ii! where such interest has been reduced under clause !!% in respect of their
interest in shares as so reduced1
i! the continuance of the ser+ices of all the employees of the ban9in5 company
e$ceptin5 such of them as not bein5 wor9men within the meanin5 of the
Industrial ?isputes "ct% 1&36 13 of 1&36! are specifically mentioned in the
scheme! in the ban9in5 company itself on its reconstruction or% as the case may
be% in the transferee ban9 at the same remuneration and on the same terms and
conditions of ser+ice% which they were 5ettin5 or% as the case may be% by which
they were bein5 5o+erned% immediately before the date of the order of
moratorium :
Provided that the scheme shall contain a pro+ision that
i! the ban9in5 company shall pay or 5rant not later than the e$piry of the
period of three years from the date on which the scheme is sanctioned by
the .entral ;o+ernment% to the said employees the same remuneration and
the same terms and conditions of ser+ice as are% at the time of such payment
or 5rant% applicable to employees of correspondin5 ran9 or status of a
comparable ban9in5 company to be determined for this purpose by the
Reser+e Ban9 whose determination in this respect shall be final!1
ii! the transferee ban9 shall pay or 5rant not later than the e$piry of the
aforesaid period of three years% to the said employees the same
remuneration and the same terms and conditions of ser+ice as are% at the
time of such payment or 5rant% applicable to the other employees of
correspondin5 ran9 or status of the transferee ban9 sub:ect to the
,ualifications and e$perience of the said employees bein5 the same as or
e,ui+alent to those of such other employees of the transferee ban9 :
Provided further that if in any case under clause ii! of the first pro+iso any
doubt or difference arises as to whether the ,ualification and e$perience of any of
the said employees are the same as or e,ui+alent to the ,ualifications and
e$perience of the other employees of correspondin5 ran9 or status of the
transferee ban9% the doubt or difference shall be referred% before the e$piry of a
period of three years from the date of the payment or 5rant mentioned in that
clause% to the Reser+e Ban9 whose decision thereon shall be final1
4! notwithstandin5 anythin5 contained in clause i! where any of the employees of
the ban9in5 company not bein5 wor9men within the meanin5 of the Industrial
?isputes "ct% 1&36 13 of 1&36! are specifically mentioned in the scheme under
clause i!% or where any employees of the ban9in5 company ha+e by notice in
writin5 5i+en to the ban9in5 company or% as the case may be% the transferee ban9
at any time before the e$piry of one month ne$t followin5 the date on which the
scheme is sanctioned by the .entral ;o+ernment% intimated their intention of not
becomin5 employees of the ban9in5 company on its reconstruction or% as the case
may be% of the transferee ban9% the payment to such employees of compensation%
if any% to which they are entitled under the Industrial ?isputes "ct% 1&36 13 of
1&36!% and such pension% 5ratuity% pro+ident fund and other retirement benefits
ordinarily admissible to them under the rules or authorisations of the ban9in5
company immediately before the date of the order of moratorium1
.! any other terms and conditions for the reconstruction or amal5amation of the
ban9in5 company1
l! such incidental% conse,uential and supplemental matters as are necessary to
secure that the reconstruction or amal5amation shall be fully and effecti+ely
carried out(
'!a! " copy of the scheme prepared by the Reser+e Ban9 shall be sent in draft to the
ban9in5 company and also to be transferee ban9 and any other ban9in5 company
concerned in the amal5amation% for su55estions and ob:ections% if any% within such period
as the Reser+e Ban9 may specify for this purpose1
b! The Reser+e Ban9 may ma9e such modifications% if any% in the draft scheme as it may
consider necessary in the li5ht of the su55estions and ob:ections recei+ed from the
ban9in5 company and also from the transferee ban9% and any other ban9in5 company
concerned in the amal5amation and from any members% depositors or other creditors of
each of those companies and the transferee ban9(
6! The scheme shall thereafter be placed before the .entral ;o+ernment for its sanction
and the .entral ;o+ernment may sanction the scheme without any modifications or with
such modifications as it may consider necessary1 and the scheme as sanctioned by the
.entral ;o+ernment shall come into force on such date as the .entral ;o+ernment may
specify in this behalf:
Provided that different dates may be specified for different pro+isions of the scheme(
6"! The sanction accorded by the .entral ;o+ernment under sub#section 6!% whether
before or after the commencement of section 21 of the Ban9in5 Gaws Biscellaneous
Pro+isions! "ct% 1&') 44 of 1&')!% shall be conclusi+e e+idence that all the re,uirements
of this section relatin5 to reconstruction% or% as the case may be% amal5amation ha+e been
complied with and a copy of the sanctioned scheme certified in writin5 by an officer of
the .entral ;o+ernment to be a true copy thereof% shall% in all le5al proceedin5s whether
in appeal or otherwise and whether instituted before or after the commencement of the
said section 21!% be admitted as e+idence to the same e$tent as the ori5inal scheme(
7! <n and from the date of the comin5 into operation of the scheme or any pro+ision
thereof% the scheme or such pro+ision shall be bindin5 on the ban9in5 company or% as the
case may be% on the transferee ban9 and any other ban9in5 company concerned in the
amal5amation and also on all the members% depositors and other creditors and employees
of each of those companies and of the transferee ban9% and on any other person ha+in5
any ri5ht or liability in relation to any of those companies or the transferee ban9
includin5 the trustees or other persons mana5in5% or connected in any other manner with%
any pro+ident fund or other fund maintained by any of those companies or the transferee
ban9(
&! <n and from the date of the comin5 into operation of% or as the case may be% the date
specified in this behalf in% the scheme% the properties and assets of the ban9in5 company
shall% by +irtue of and to the e$tent pro+ided in the scheme% stand transferred to% and +est
in% and the liabilities of the ban9in5 company shall% by +irtue of and to the e$tent
pro+ided in the scheme% stand transferred to% and become the liabilities of% the transferee
ban9(
18! If any difficulty arises in 5i+in5 effect to the pro+isions of the scheme% the .entral
;o+ernment may by order do anythin5 not inconsistent with such pro+isions which
appears to it necessary or e$pedient for the purpose of remo+in5 the difficulty(
11! .opies of the scheme or of the any order made under sub#section 18! shall be laid
before both Couses of Parliament% as soon as may be% after the scheme has been
sanctioned by the .entral ;o+ernment% or% as the case may be% the order has been made(
12! Fhere the scheme is a scheme for amal5amation of the ban9in5 company% any
business ac,uired by the transferee ban9 under the scheme or under any pro+ision thereof
shall% after the comin5 into operation of the scheme or such pro+ision% be carried on by
the transferee ban9 in accordance with the law 5o+ernin5 the transferee ban9% sub:ect to
such modifications in that law or such e$emptions of the transferee ban9 from the
operation of any pro+isions thereof as the .entral ;o+ernment on the recommendation of
the Reser+e Ban9 may% by notification in the <fficial ;a=ette% ma9e for the purpose of
5i+in5 full effect to the scheme :
Provided that no such modification or e$emption shall be made so as to ha+e effect for a
period of more than se+en years from the date of the ac,uisition of such business(
1)! Aothin5 in this section shall be deemed to pre+ent the amal5amation with a ban9in5
institution by a sin5le scheme of se+eral ban9in5 companies in respect of each of which
an order of moratorium has been made under this section(
13! The pro+isions of this section and of any scheme made under it shall ha+e effect
notwithstandin5 anythin5 to the contrary contained in any other pro+isions of this "ct or
in any other law or any a5reement% award or other instrument for the time bein5 in force(
14! In this section% ban9in5 institution means any ban9in5 company and includes the
*tate Ban9 of India or a subsidiary ban9 or a correspondin5 new ban9(
Explanation(References in this section to the terms and conditions of ser+ice as
applicable to an employee shall not be construed as e$tendin5 to the ran9 and status of
such employee(
SECTION 3 OF CANTONMENTS ACT, 1924
Definition of cantonments.
3. 1! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% declare any
place or places in which any part of the >orces is ,uartered or which% bein5 in the +icinity
of any such place or places% is or are re,uired for the ser+ice of such forces to be a
cantonment for the purpose of this "ct and of all other enactments for the time bein5 in
force% and may% by a li9e notification% declare that any cantonment shall cease to be a
cantonment(
2! The .entral ;o+ernment may% by a li9e notification% define the limits of any
cantonment for the aforesaid purposes(
)! Fhen any place is declared a cantonment for the first time% the .entral ;o+ernment
may% until a Board is constituted in accordance with the pro+isions of this "ct% by order
ma9e any pro+ision which appears necessary to it either for the administration of the
cantonment or for the constitution of the Board(
3! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% direct that in
any place declared a cantonment under sub#section 1! the pro+isions of any enactment
relatin5 to local self#5o+ernment other than this "ct shall ha+e effect only to such e$tent
or sub:ect to such modifications% or that any authority constituted under any such
enactment shall e$ercise authority only to such e$tent% as may be specified in the
notification(
SECTION 2 OF COMPANIES ACT, 1956
Definitions.
** ** **
13! director includes any person occupyin5 the position of director% by whate+er name
called 1
** ** **
24! mana5er means an indi+idual not bein5 the mana5in5 a5ent! who% sub:ect to the
superintendence% control and direction of the Board of directors% has the
mana5ement of the whole% or substantially the whole% of the affairs of a company%
and includes a director or any other person occupyin5 the position of a mana5er%
by whate+er name called% and whether under a contract of ser+ice or not 1
** ** **
Definitions of company, existing company, private company and public company.
3. 1! In this "ct% unless the conte$t otherwise re,uires% the e$pressions company%
e$istin5 company% pri+ate company and public company% shall% sub:ect to the pro+isions
of sub#section 2!% ha+e the meanin5s specified below :
i! company means a company formed and re5istered under this "ct or an e$istin5
company as defined in clause ii! 1
ii! e$istin5 company means a company formed and re5istered under any of the
pre+ious companies laws specified below :
a! any "ct or "cts relatin5 to companies in force before the Indian .ompanies
"ct% 17'' 18 of 17''! and repealed by that "ct 1
b! the Indian .ompanies "ct% 17'' 18 of 17''! 1
c! the Indian .ompanies "ct% 1772 ' of 1772! 1
d! the Indian .ompanies "ct% 1&1) 6 of 1&1)! 1
e! the Re5istration of Transferred .ompanies <rdinance% 1&32 43 of 1&32! 1
!! any law correspondin5 to any of the "cts or the <rdinance aforesaid and in
force
1! in the mer5ed territories or in a Part B *tate other than the *tate of
@ammu and Dashmir!% or any part thereof% before the e$tension thereto of
the Indian .ompanies "ct% 1&1) 6 of 1&1)! 1 or
2! in the *tate of @ammu and Dashmir% or any part thereof% before the
commencement of the @ammu and Dashmir E$tension of Gaws! "ct%
1&4'% in so far as ban9in5% insurance and financial corporations are
concerned% and before the commencement of the .entral Gaws E$tension
to @ammu and Dashmir! "ct% 1&'7% in so far as other corporations are
concerned 1 and
g! the Portu5uese .ommercial .ode% in so far as it relates to sociedades
anonimas 1
iii! pri+ate company means a company which has a minimum paid#up capital of one
la9h rupees or such hi5her paid#up capital as may be prescribed% and by its
articles%
a! restricts the ri5ht to transfer its shares% if any 1
b! limits the number of its members to fifty not includin5
i! persons who are in the employment of the company 1 and
ii! persons who% ha+in5 been formerly in the employment of the company%
were members of the company while in that employment and ha+e
continued to be members after the employment ceased 1 and
c! prohibits any in+itation to the public to subscribe for any shares in% or
debentures of% the company 1
d! prohibits any in+itation or acceptance of deposits from persons other than its
members% directors or their relati+es :
Provided that where two or more persons hold one or more shares in a company
:ointly% they shall% for the purposes of this definition% be treated as a sin5le
member 1
i%! public company means a company which
a! is not a pri+ate company 1
b! has a minimum paid#up capital of fi+e la9h rupees or such hi5her paid#up
capital% as may be prescribed 1
c! is a pri+ate company which is a subsidiary of a company which is not a
pri+ate company(
2! Enless the conte$t otherwise re,uires% the followin5 companies shall not be included
within the scope of any of the e$pressions defined in clauses i! to i%! of sub#section 1!%
and such companies shall be deemed% for the purposes of this "ct% to ha+e been formed
and re5istered outside India :
a! a company the re5istered office whereof is in Burma% "den or Pa9istan and which
immediately before the separation of that country from India was a company as
defined in clause i! of sub#section 1! 1
b!** ** **
Meaning of holding company and subsidiary.
4. 1! >or the purposes of this "ct% a company shall% sub:ect to the pro+isions of sub#
section )!% be deemed to be a subsidiary of another if% but only if%
a! that other controls the composition of its Board of directors1 or
b! that other
i! where the first#mentioned company is an e$istin5 company in respect of
which the holders of preference shares issued before the commencement of
this "ct ha+e the same +otin5 ri5hts in all respects as the holders of e,uity
shares% e$ercises or controls more than half of the total +otin5 power of
such company1
ii! where the first#mentioned company is any other company% holds more than
half in nominal +alue of its e,uity share capital1 or
c! the first#mentioned company is a subsidiary of any company which is that others
subsidiary(
Ill5st-ation
.ompany B is a subsidiary of .ompany "% and .ompany . is a subsidiary of
.ompany B( .ompany . is a subsidiary of .ompany "% by +irtue of clause c!
abo+e( If .ompany ? is a subsidiary of .ompany .% .ompany ? will be a
subsidiary of .ompany B and conse,uently also of .ompany "% by +irtue of
clause c! abo+e% and so on(
2! >or the purposes of sub#section 1!% the composition of a companys Board of directors
shall be deemed to be controlled by another company if% but only if% that other company
by the e$ercise of some power e$ercisable by it at its discretion without the consent or
concurrence of any other person% can appoint or remo+e the holders of all or a ma:ority of
the directorships1 but for the purposes of this pro+ision that other company shall be
deemed to ha+e power to appoint to a directorship with respect to which any of the
followin5 conditions is satisfied% that is to say
a! that a person cannot be appointed thereto without the e$ercise in his fa+our by
that other company of such a power as aforesaid1
b! that a persons appointment thereto follows necessarily from his appointment as
director or mana5er of% or to any other office or employment in% that other
company1 or
c! that the directorship is held by an indi+idual nominated by that other company or
a subsidiary thereof(
)! In determinin5 whether one company is a subsidiary of another
a! any shares held or power e$ercisable by that other company in a fiduciary
capacity shall be treated as not held or e$ercisable by it1
b! sub:ect to the pro+isions of clauses c! and d!% any shares held or power
e$ercisable
i! by any person as a nominee for that other company e$cept where that other
is concerned only in a fiduciary capacity!1 or
ii! by% or by a nominee for% a subsidiary of that other company% not bein5 a
subsidiary which is concerned only in a fiduciary capacity1
shall be treated as held or e$ercisable by that other company1
c! any shares held or power e$ercisable by any person by +irtue of the pro+isions of
any debentures of the first#mentioned company or of a trust deed for securin5 any
issue of such debentures shall be disre5arded1
d! any shares held or power e$ercisable by% or by a nominee for% that other or its
subsidiary -not bein5 held or e$ercisable as mentioned in clause c!2 shall be
treated as not held or e$ercisable by that other% if the ordinary business of that
other or its subsidiary% as the case may be% includes the lendin5 of money and the
shares are held or the power is e$ercisable as aforesaid by way of security only
for the purposes of a transaction entered into in the ordinary course of that
business(
3! >or the purposes of this "ct% a company shall be deemed to be the holdin5 company
of another if% but only if% that other is its subsidiary(
4! In this section% the e$pression company includes any body corporate% and the
e$pression e,uity share capital has the same meanin5 as in sub#section 2! of section 74(
'! In the case of a body corporate which is incorporated in a country outside India% a
subsidiary or holdin5 company of the body corporate under the law of such country shall
be deemed to be a subsidiary or holdin5 company of the body corporate within the
meanin5 and for the purposes of this "ct also% whether the re,uirements of this section
are fulfilled or not(
6! " pri+ate company% bein5 a subsidiary of a body corporate incorporated outside India%
which% if incorporated in India% would be a public company within the meanin5 of this
"ct% shall be deemed for the purposes of this "ct to be a subsidiary of a public company
if the entire share capital in that pri+ate company is not held by that body corporate
whether alone or to5ether with one or more other bodies corporate incorporated outside
India(
SECTION 4A OF COMPANIES ACT, 1956
Public financial institutions.
4A. 1! Each of the financial institutions specified in this sub#section shall be re5arded%
for the purposes of this "ct% as a public financial institution% namely :
i! the Industrial .redit and In+estment .orporation of India Gimited% a company
formed and re5istered under the Indian .ompanies "ct% 1&1) 6 of 1&1)! 1
ii! the Industrial >inance .orporation of India% established under section ) of the
Industrial >inance .orporation "ct% 1&37 14 of 1&37! 1
iii! the Industrial ?e+elopment Ban9 of India% established under section ) of the
Industrial ?e+elopment Ban9 of India "ct% 1&'3 17 of 1&'3! 1
i%! the Gife Insurance .orporation of India% established under section ) of the Gife
Insurance .orporation "ct% 1&4' )1 of 1&4'! 1
%! the Enit Trust of India% established under section ) of the Enit Trust of India "ct%
1&') 42 of 1&')!1
%i! the infrastructure ?e+elopment >inance .ompany Gimited% a company formed
and re5istered under this "ct1
%ii! -***2
2! *ub:ect to the pro+isions of sub#section 1!% the .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify such other institution as it may thin9 fit to be
a public financial institution :
Provided that no institution shall be so specified unless
i! it has been established or constituted by or under any .entral "ct% or
ii! not less than fifty#one per cent of the paid#up share capital of such institution is
held or controlled by the .entral ;o+ernment(
NOTIFIED INSTITUTIONS UNDER SECTION 4A(2) OF COMPANIES ACT,
1956
In e$ercise of the powers conferred by sub#section 2! of section 3" of the .ompanies
"ct% 1&4' 1 of 1&4'!% the .entral ;o+ernment hereby specifies the followin5 institutions
to be public financial institutions% namely :
1! The Industrial Reconstruction .orporation of India established under the Industrial
Reconstruction Ban9 of India "ct% 1&73 '2 of 1&73!1 2! The ;eneral Insurance
.orporation of India established under the ;eneral Insurance Business Aationalisation!
"ct% 1&62 46 of 1&62!1 3! The Aational Insurance .ompany Gimited% formed and
re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1 4! The Aew India "ssurance
.ompany Gimited% formed and re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1 5!
The <riental >ire and ;eneral Insurance .ompany Gimited% formed and re5istered under
the .ompanies "ct% 1&4' 1 of 1&4'!1 6! The Enited >ire and ;eneral Insurance
.ompany Gimited% formed and re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1 !
* * *1 "! Tourism >inance .orporation of India Gimited% formed and re5istered under the
.ompanies "ct% 1&4' 1 of 1&4'!1 #! I>.I 0enture .apital >unds Gimited% formed and
re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1 1$! Technolo5y ?e+elopment
and Information .ompany of India Gimited% formed and re5istered under the .ompanies
"ct% 1&4' 1 of 1&4'!1 11! Power >inance .orporation Gimited% formed and re5istered
under the .ompanies "ct% 1&4' 1 of 1&4'!1 12! Aational Cousin5 Ban9 established
under the Aational Cousin5 Ban9 "ct% 1&76 4) of 1&76!1 13! *mall Industries
?e+elopment Ban9 of India established under the *mall Industries ?e+elopment Ban9 of
India "ct% 1&7& )& of 1&7&!1 14! Rural Electrification .orporation Gtd(% formed and
re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1 15! Indian Railway >inance
.orpn( Gtd(1 16! Industrial >inance .orporation of India Gtd( formed and re5istered
under the .ompanies "ct% 1&4'1 1! "ndhra Pradesh *tate >inancial .orporation1 1"!
"ssam >inancial .orporation1 1#! Bihar *tate >inancial .orporation1 2$! ?elhi
>inancial .orporation1 21! ;u:arat *tate >inancial .orporation1 22! Caryana >inancial
.orporation1 23! Cimachal Pradesh >inancial .orporation1 24! @ammu L Dashmir *tate
>inancial .orporation1 25! Darnata9a *tate >inancial .orporation1 26! Derala >inancial
.orporation1 2! Badhya Pradesh >inancial .orporation1 2"! Baharashtra *tate
>inancial .orporation1 2#! <rissa *tate >inancial .orporation1 3$! Pun:ab >inancial
.orporation1 31! Ra:asthan >inancial .orporation1 32! Tamilnadu Industrial
?e+elopment .orporation Gimited1 33! Ettar Pradesh >inancial .orporation1 34! Fest
Ben5al >inancial .orporation1 35! Indian Renewable Ener5y ?e+elopment "5ency Gtd(1
36! Aorth Eastern ?e+elopment >inance .orpn( Gtd(1 3! Cousin5 L Erban
?e+elopment .orpn( Gtd(1 3"! E$port#Import Ban9 of India1 3#! Aational Ban9 for
"5riculture L Rural ?e+elopment A"B"R?!1 4$! Aational .o#operati+e ?e+elopment
.orporation A.?.!1 41! Aational ?airy ?e+elopment Board1 42! Pradeshiya
Industrial and In+estment .orporation of E(P( Gimited1 43! Ra:asthan *tate Industrial
?e+elopment and In+estment .orporation Gimited1 44! *I.<B Gimited1 45! Fest
Ben5al Industrial ?e+elopment .orporation Gimited1 46! Tamil Aadu Industrial
?e+elopment .orporation Gimited1 4! Pun:ab *tate Industrial ?e+elopment .orpn( Gtd(
P*I?.!
Source : &oti!ication &o. </ 132#) dated 13-5-1#") as amended b+ </ 2#$1) dated #-
1$-1#"- </ *E() dated 3-1-1##$- </ 23"*E() dated 2$-3-1##$- </ 64*E() dated 31-"-
1##$- </ 321*E() dated 12-4-1##$- </ 4"4*E() dated 26--1##1- </ "12*E() dated 2-
12-1##1- </ 12"*E() dated 11-2-1##2- </ 65*E() dated "-1$-1##3- </ #"*E() dated
15-2-1##5- </ 24*E() dated 2"-3-1##5- </ "43*E() dated 1-1$-1##5- </ 52#*E()
dated 23--1##6- </ "3*E() dated #-12-1##6- </ 433*E() dated 14-6-1###- </ 44$*E()
dated 1-4-2$$2- </ 322*E() dated 25-3-2$$3- </ 51"*E() dated #-5-2$$3- </ 21#*E()
dated 23-2-2$$4- </ 544*E() dated 3$-4-2$$4 and </ 1531*E() dated 25-1$-2$$5.
Power to dispense with Limited in name of charitable or other company.
25. 1! Fhere it is pro+ed to the satisfaction of the .entral ;o+ernment that an
association
a! is about to be formed as a limited company for promotin5 commerce% art% science%
reli5ion% charity or any other useful ob:ect% and
b! intends to apply its profits% if any% or other income in promotin5 its ob:ects% and to
prohibit the payment of any di+idend to its members%
the .entral ;o+ernment may% by licence% direct that the association may be re5istered as
a company with limited liability% without the addition to its name of the word Gimited or
the words Pri+ate Gimited(
2! The association may thereupon be re5istered accordin5ly1 and on re5istration shall
en:oy all the pri+ile5es% and sub:ect to the pro+isions of this section! be sub:ect to all the
obli5ations% of limited companies(
)! Fhere it is pro+ed to the satisfaction of the .entral ;o+ernment
a! that the ob:ects of a company re5istered under this "ct as a limited company are
restricted to those specified in clause a! of sub#section 1!% and
b! that by its constitution the company is re,uired to apply its profits% if any% or other
income in promotin5 its ob:ects and is prohibited from payin5 any di+idend to its
members%
the .entral ;o+ernment may% by licence% authorise the company by a special resolution
to chan5e its name% includin5 or consistin5 of the omission of the word Gimited or the
words Pri+ate Gimited1 and section 2) shall apply to a chan5e of name under this sub#
section as it applies to a chan5e of name under section 21(
3! " firm may be a member of any association or company licensed under this section%
but on the dissolution of the firm% its membership of the association or company shall
cease(
4! " licence may be 5ranted by the .entral ;o+ernment under this section on such
conditions and sub:ect to such re5ulations as it thin9s fit% and those conditions and
re5ulations shall be bindin5 on the body to which the licence is 5ranted% and where the
5rant is under sub#section 1!% shall% if the .entral ;o+ernment so directs% be inserted in
the memorandum% or in the articles% or partly in the one and partly in the other(
'! It shall not be necessary for a body to which a licence is so 5ranted to use the word
Gimited or the words Pri+ate Gimited as any part of its name and% unless its articles
otherwise pro+ide% such body shall% if the .entral ;o+ernment by 5eneral or special order
so directs and to the e$tent specified in the directions% be e$empt from such of the
pro+isions of this "ct as may be specified therein(
6! The licence may at any time be re+o9ed by the .entral ;o+ernment% and upon
re+ocation% the Re5istrar shall enter the word Gimited or the words Pri+ate Gimited at the
end of the name upon the re5ister of the body to which it was 5ranted1 and the body shall
cease to en:oy the e$emption 5ranted by this section :
Provided that% before a licence is so re+o9ed% the .entral ;o+ernment shall 5i+e notice in
writin5 of its intention to the body% and shall afford it an opportunity of bein5 heard in
opposition to the re+ocation(
7! a! " body in respect of which a licence under this section is in force shall not alter
the pro+isions of its memorandum with respect to its ob:ects e$cept with the pre+ious
appro+al of the .entral ;o+ernment si5nified in writin5(
b! The .entral ;o+ernment may re+o9e the licence of such a body if it contra+enes the
pro+isions of clause a!(
c! In accordin5 the appro+al referred to in clause a!% the .entral ;o+ernment may +ary
the licence by ma9in5 it sub:ect to such conditions and re5ulations as that ;o+ernment
thin9s fit% in lieu of% or in addition to% the conditions and re5ulations% if any% to which the
licence was formerly sub:ect(
d! Fhere the alteration proposed in the pro+isions of the memorandum of a body under
this sub#section is with respect to the ob:ects of the body so far as may be re,uired to
enable it to do any of the thin5s specified in clauses a! to g! of sub#section 1! of section
16% the pro+isions of this sub#section shall be in addition to% and not in dero5ation of% the
pro+isions of that section(
&! Epon the re+ocation of a licence 5ranted under this section to a body the name of
which contains the words .hamber of .ommerce% that body shall% within a period of
three months from the date of re+ocation or such lon5er period as the .entral
;o+ernment may thin9 fit to allow% chan5e its name to a name which does not contain
those words1 and
a! the notice to be 5i+en under the pro+iso to sub#section 6! to that body shall
include a statement of the effect of the fore5oin5 pro+isions of this sub#section1
and
b! section 2) shall apply to a chan5e of name under this sub#section as it applies to a
chan5e of name under section 21(
18! If the body ma9es default in complyin5 with the re,uirements of sub#section &!% it
shall be punishable with fine which may e$tend to fi+e thousand rupees for e+ery day
durin5 which the default continues(
Power of company to purchase its own securities.
77A.1! Aotwithstandin5 anythin5 contained in this "ct% but sub:ect to the pro+isions of
sub#section 2! of this section and section 66B% a company may purchase its own shares
or other specified securities hereinafter referred to as buy#bac9! out of
i! its free reser+es1 or
ii! the securities premium account1 or
iii! the proceeds of any shares or other specified securities :
Provided that no buy#bac9 of any 9ind of shares or other specified securities shall be
made out of the proceeds of an earlier issue of the same 9ind of shares or same 9ind of
other specified securities(
2! Ao company shall purchase its own shares or other specified securities under sub#
section 1!% unless
a! the buy#bac9 is authorised by its articles1
b! a special resolution has been passed in 5eneral meetin5 of the company
authorisin5 the buy#bac9 :
Provided that nothin5 contained in this clause shall apply in any case where
A! the buy#bac9 is or less than ten per cent of the total paid#up e,uity capital and
free reser+es of the company1 and
B! such buy#bac9 has been authorised by the Board by means of a resolution
passed at its meetin5 :
Provided further that no offer of buy#bac9 shall be made within a period of three
hundred and si$ty#fi+e days rec9oned from the date of the precedin5 offer of buy#
bac9% if any(
Explanation A >or the purposes of this clause% the e$pression offer of buy#bac9
means the offer of such buy#bac9 made in pursuance of the resolution of the
Board referred in the first pro+iso1
c! the buy#bac9 is or less than twenty#fi+e per cent of the total paid#up capital and
free reser+es of the company :
Provided that the buy#bac9 of e,uity shares in any financial year shall not e$ceed
twenty#fi+e per cent of its total paid#up e,uity capital in that financial year1
d! the ratio of the debt owed by the company is not more than twice the capital and
its free reser+es after such buy#bac9 :
Provided that the .entral ;o+ernment may prescribe a hi5her ratio of the debt
than that specified under this clause for a class or classes of companies(
Explanation.>or the purposes of this clause% the e$pression debt includes all
amounts of unsecured and secured debts1
e! all the shares or other specified securities for buy#bac9 are fully paid#up1
!! the buy#bac9 of the shares or other specified securities listed on any reco5nised
stoc9 e$chan5e is in accordance with the re5ulations made by the *ecurities and
E$chan5e Board of India in this behalf1
g! the buy#bac9 in respect of shares or other specified securities other than those
specified in clause !! is in accordance with the 5uidelines as may be prescribed(
)! The notice of the meetin5 at which special resolution is proposed to be passed shall be
accompanied by an e$planatory statement statin5
a! a full and complete disclosure of all material facts1
b! the necessity for the buy#bac91
c! the class of security intended to be purchased under the buy#bac91
d! the amount to be in+ested under the buy#bac91 and
e! the time limit for completion of buy#bac9(
3! E+ery buy#bac9 shall be completed within twel+e months from the date of passin5 the
special resolution or a resolution passed by the Board under clause b! of sub#section 2!(
4! The buy#bac9 under sub#section 1! may be
a! from the e$istin5 security holders on a proportionate basis1 or
b! from the open mar9et1 or
c! from odd lots% that is to say% where the lot of securities of a public company%
whose shares are listed on a reco5nised stoc9 e$chan5e% is smaller than such
mar9etable lot% as may be specified by the stoc9 e$chan5e1 or
d! by purchasin5 the securities issued to employees of the company pursuant to a
scheme of stoc9 option or sweat e,uity(
'! Fhere a company has passed a special resolution under clause b! of sub#section 2!
or the Board has passed a resolution under the first pro+iso to clause b! of that sub#
section to buy#bac9 its own shares or other securities under this section% it shall% before
ma9in5 such buy#bac9% file with the Re5istrar and the *ecurities and E$chan5e Board of
India a declaration of sol+ency in the form as may be prescribed and +erified by an
affida+it to the effect that the Board has made a full in,uiry into the affairs of the
company as a result of which they ha+e formed an opinion that it is capable of meetin5 its
liabilities and will not be rendered insol+ent within a period of one year of the date of
declaration adopted by the Board% and si5ned by at least two directors of the company%
one of whom shall be the mana5in5 director% if any :
Provided that no declaration of sol+ency shall be filed with the *ecurities and E$chan5e
Board of India by a company whose shares are not listed on any reco5nised stoc9
e$chan5e(
6! Fhere a company buys#bac9 its own securities% it shall e$tin5uish and physically
destroy the securities so bou5ht#bac9 within se+en days of the last date of completion of
buy#bac9(
7! Fhere a company completes a buy#bac9 of its shares or other specified securities
under this section% it shall not ma9e further issue of the same 9ind of shares includin5
allotment of further shares under clause a! of sub#section 1! of section 71! or other
specified securities within a period of si$ months e$cept by way of bonus issue or in the
dischar5e of subsistin5 obli5ations such as con+ersion of warrants% stoc9 option schemes%
sweat e,uity or con+ersion of preference shares or debentures into e,uity shares(
&! Fhere a company buys#bac9 its securities under this section% it shall maintain a
re5ister of the securities so bou5ht% the consideration paid for the securities bou5ht#bac9%
the date of cancellation of securities% the date of e$tin5uishin5 and physically destroyin5
of securities and such other particulars as may be prescribed(
18! " company shall% after the completion of the buy#bac9 under this section% file with
the Re5istrar and the *ecurities and E$chan5e Board of India% a return containin5 such
particulars relatin5 to the buy#bac9 within thirty days of such completion% as may be
prescribed :
Provided that no return shall be filed with the *ecurities and E$chan5e Board of India by
a company whose shares are not listed on any reco5nised stoc9 e$chan5e(
11! If a company ma9es default in complyin5 with the pro+isions of this section or any
rules made thereunder% or any re5ulations made under clause !! of sub#section 2!% the
company or any officer of the company who is in default shall be punishable with
imprisonment for a term which may e$tend to two years% or with fine which may e$tend
to fifty thousand rupees% or with both(
a! specified securities includes employees stoc9 option or other securities as may be
notified by the .entral ;o+ernment from time to time1
b! free reser+es shall ha+e the meanin5 assi5ned to it in clause b! of Explanation to
section )62"(
Prohibition of tax-free payments.
200. 1! Ao company shall pay to any officer or employee thereof% whether in his
capacity as such or otherwise% remuneration free of any ta$% or otherwise calculated by
reference to% or +aryin5 with% any ta$ payable by him% or the rate or standard rate of any
such ta$% or the amount thereof(
Explanation.In this sub#section% the e$pression ta$ comprises any 9ind of income#ta$
includin5 super#ta$(
2! Fhere by +irtue of any pro+ision in force immediately before the commencement of
this "ct% whether contained in the companys articles% or in any contract made with the
company% or in any resolution passed by the company in 5eneral meetin5 or by the
companys Board of directors% any officer or employee of the company holdin5 any office
at the commencement of this "ct is entitled to remuneration in any of the modes
prohibited by sub#section 1!% such pro+ision shall ha+e effect durin5 the residue of the
term for which he is entitled to hold such office at such commencement% as if it pro+ided
instead for the payment of a 5ross sum sub:ect to the ta$ in ,uestion% which% after
deductin5 such ta$% would yield the net sum actually specified in such pro+ision(
)! This section shall not apply to any remuneration
a! which fell due before the commencement of this "ct% or
b! which may fall due after the commencement of this "ct% in respect of any period
before such commencement(
SECTION 205(1) OF COMPANIES ACT, 1956
Dividend to be paid only out of profits.
205. 1! Ao di+idend shall be declared or paid by a company for any financial year e$cept
out of the profits of the company for that year arri+ed at after pro+idin5 for depreciation
in accordance with the pro+isions of sub#section 2! or out of the profits of the company
for any pre+ious financial year or years arri+ed at after pro+idin5 for depreciation in
accordance with those pro+isions and remainin5 undistributed or out of both or out of
moneys pro+ided by the .entral ;o+ernment or a *tate ;o+ernment for the payment of
di+idend in pursuance of a 5uarantee 5i+en by that ;o+ernment :
Provided that
a! if the company has not pro+ided for depreciation for any pre+ious financial year
or years which falls or fall after the commencement of the .ompanies
"mendment! "ct% 1&'8% it shall% before declarin5 or payin5 di+idend for any
financial year pro+ide for such depreciation out of the profits of that financial year
or out of the profits of any other pre+ious financial year or years1
b! if the company has incurred any loss in any pre+ious financial year or years%
which falls or fall after the commencement of the .ompanies "mendment! "ct%
1&'8% then% the amount of the loss or an amount which is e,ual to the amount
pro+ided for depreciation for that year or those years whiche+er is less% shall be
set off a5ainst the profits of the company for the year for which di+idend is
proposed to be declared or paid or a5ainst the profits of the company for any
pre+ious financial year or years% arri+ed at in both cases after pro+idin5 for
depreciation in accordance with the pro+isions of sub#section 2! or a5ainst both1
c! the .entral ;o+ernment may% if it thin9s necessary so to do in the public interest%
allow any company to declare or pay di+idend for any financial year out of the
profits of the company for that year or any pre+ious financial year or years
without pro+idin5 for depreciation :
Provided further that it shall not be necessary for a company to pro+ide for depreciation
as aforesaid where di+idend for any financial year is declared or paid out of the profits of
any pre+ious financial year or years which falls or fall before the commencement of the
.ompanies "mendment! "ct% 1&'8(
SECTION 226(2) OF COMPANIES ACT, 1956
Qualifications and disqualifications of auditors.
226. 1! ** ** **
2! a! Aotwithstandin5 anythin5 contained in sub#section 1!% but sub:ect to the
pro+isions of any rules made under clause b!% the holder of a certificate 5ranted under a
law in force in the whole or any portion of a Part B *tate immediately before the
commencement of the Part B *tates Gaws! "ct% 1&41 ) of 1&41! or of the @ammu and
Dashmir E$tension of Gaws! "ct% 1&4' '2 of 1&4'!% as the case may be% entitlin5 him to
act as an auditor of companies in the territories which% immediately before the 1st
Ao+ember% 1&4'% were comprised in that *tate or any portion thereof% shall be entitled to
be appointed to act as an auditor of companies re5istered anywhere in India(
b! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% ma9e rules
pro+idin5 for the 5rant% renewal% suspension or cancellation of auditors certificates to
persons in the territories which% immediately before the 1st Ao+ember% 1&4'% were
comprised in Part B *tates for the purposes of clause a!% and prescribin5 conditions and
restrictions for such 5rant% renewal% suspension or cancellation(
SECTION 233B OF COMPANIES ACT, 1956
Audit of cost accounts in certain cases.
233B. 1! Fhere in the opinion of the .entral ;o+ernment it is necessary so to do in
relation to any company re,uired under clause d! of sub#section 1! of section 28& to
include in its boo9s of account the particulars referred to therein% the .entral ;o+ernment
may% by order% direct that an audit of cost accounts of the company shall be conducted in
such manner as may be specified in the order by an auditor who shall be a cost
accountant within the meanin5 of the .ost and For9s "ccountants "ct% 1&4& 2) of
1&4&! :
Provided that if the .entral ;o+ernment is of opinion that sufficient number of cost
accountants within the meanin5 of the .ost and For9s "ccountants "ct% 1&4& 2) of
1&4&!% are not a+ailable for conductin5 the audit of the cost accounts of companies
5enerally% that ;o+ernment may% by notification in the <fficial ;a=ette% direct that% for
such period as may be specified in the said notification% such chartered accountant within
the meanin5 of the .hartered "ccountants "ct% 1&3& )7 of 1&3&!% as possesses the
prescribed ,ualifications% may also conduct the audit of the cost accounts of companies%
and thereupon a chartered accountant possessin5 the prescribed ,ualifications may be
appointed to audit the cost accounts of the company(
2! The auditor under this section shall be appointed by the Board of directors of the
company in accordance with the pro+isions of sub#section 1B! of section 223 and with
the pre+ious appro+al of the .entral ;o+ernment :
Provided that before the appointment of any auditor is made by the Board% a written
certificate shall be obtained by the Board from the auditor proposed to be so appointed to
the effect that the appointment% if made% will be in accordance with the pro+isions of sub#
section 1B! of section 223(
)! "n audit conducted by an auditor under this section shall be in addition to an audit
conducted by an auditor appointed under section 223(
3! "n auditor shall ha+e the same powers and duties in relation to an audit conducted by
him under this section as an auditor of a company has under sub#section 1! of section
226 and such auditor shall ma9e his report to the .entral ;o+ernment in such form and
within such time as may be prescribed and shall also at the same time forward a copy of
the report to the company(
4! a! " person referred to in sub#section )! or sub#section 3! of section 22' shall not
be appointed or re#appointed for conductin5 the audit of the cost accounts of a company(
b! " person appointed% under section 223% as an auditor of a company% shall not be
appointed or re#appointed for conductin5 the audit of the cost accounts of that company(
c! If a person% appointed for conductin5 the audit of cost accounts of a company%
becomes sub:ect% after his appointment% to any of the dis,ualifications specified in clause
a! or clause b! of this sub#section% he shall% on and from the date on which he becomes
so sub:ect% cease to conduct the audit of the cost accounts of the company(
'! Epon receipt of an order under sub#section 1!% it shall be the duty of the company to
5i+e all facilities and assistance to the person appointed for conductin5 the audit of the
cost accounts of the company(
6! The company shall% within thirty days from the date of receipt of a copy of the report
referred to in sub#section 3!% furnish the .entral ;o+ernment with full information and
e$planations on e+ery reser+ation or ,ualification contained in such report(
7! If% after considerin5 the report referred to in sub#section 3! and the information and
e$planations furnished by the company under sub#section 6!% the .entral ;o+ernment is
of opinion that any further information or e$planation is necessary% that ;o+ernment may
call for such further information and e$planation and thereupon the company shall
furnish the same within such time as may be specified by that ;o+ernment(
&! <n receipt of the report referred to in sub#section 3! and the informations and
e$planations furnished by the company under sub#section 6! and sub#section 7!% the
.entral ;o+ernment may ta9e such action on the report% in accordance with the
pro+isions of this "ct or any other law for the time bein5 in force% as it may consider
necessary(
18! The .entral ;o+ernment may direct the company whose cost accounts ha+e been
audited under this section to circulate to its members% alon5 with the notice of the annual
5eneral meetin5 to be held for the first time after the submission of such report% the whole
or such portion of the said report as it may specify in this behalf(
11! If default is made in complyin5 with the pro+isions of this section% the company
shall be liable to be punished with fine which may e$tend to fi+e thousand rupees% and
e+ery officer of the company who is in default% shall be liable to be punished with
imprisonment for a term which may e$tend to three years% or with fine which may e$tend
to fifty thousand rupees% or with both(
Prohibitions and restrictions regarding political contributions.
293A. 1! Aotwithstandin5 anythin5 contained in any other pro+ision of this "ct%
a! no ;o+ernment company1 and
b! no other company which has been in e$istence for less than three financial years%
shall contribute any amount or amounts% directly or indirectly%
i! to any political party1 or
ii! for any political purpose to any person(
2! " company% not bein5 a company referred to in clause a! or clause b! of sub#section
1!% may contribute any amount or amounts% directly or indirectly%
a! to any political party1 or
b! for any political purpose to any person:
Provided that the amount or% as the case may be% the a55re5ate of the amounts which
may be so contributed by a company in any financial year shall not e$ceed fi+e per cent
of its a+era5e net profits determined in accordance with the pro+isions of sections )3&
and )48 durin5 the three immediately precedin5 financial years(
Explanation : Fhere a portion of a financial year of the company falls before the
commencement of the .ompanies "mendment! "ct% 1&74% and a portion falls after such
commencement% the latter portion shall be deemed to be a financial year within the
meanin5 and for the purposes% of this sub#section:
Provided further that no such contribution shall be made by a company unless a
resolution authorisin5 the ma9in5 of such contribution is passed at a meetin5 of the Board
of directors and such resolution shall% sub:ect to the other pro+isions of this section% be
deemed to be :ustification in law for the ma9in5 and the acceptance of the contribution
authorised by it(
)! Fithout pre:udice to the 5enerality of the pro+isions of sub#sections 1! and 2!%
a! a donation or subscription or payment caused to be 5i+en by a company on its
behalf or on its account to a person who% to its 9nowled5e% is carryin5 on any
acti+ity which% at the time at which such donation or subscription or payment was
5i+en or made% can reasonably be re5arded as li9ely to effect public support for a
political party shall also be deemed to be contribution of the amount of such
donation% subscription or payment to such person for a political purpose1
b! the amount of e$penditure incurred% directly or indirectly% by a company on
ad+ertisement in any publication bein5 a publication in the nature of a sou+enir%
brochure% tract% pamphlet or the li9e! by or on behalf of a political party or for its
ad+anta5e shall also be deemed%
i! where such publication is by or on behalf of a political party% to be a
contribution of such amount to such political party% and
ii! where such publication is not by or on behalf of but for the ad+anta5e of a
political party% to be a contribution for a political purpose to the person
publishin5 it(
3! E+ery company shall disclose in its profit and loss account any amount or amounts
contributed by it to any political party or for any political purpose to any person durin5
the financial year to which that account relates% 5i+in5 particulars of the total amount
contributed and the name of the party or person to which or to whom such amount has
been contributed(
4! If a company ma9es any contribution in contra+ention of the pro+isions of this
section%
a! the company shall be punishable with fine which may e$tend to three times the
amount so contributed1 and
b! e+ery officer of the company who is in default shall be punishable with
imprisonment for a term which may e$tend to three years and shall also be liable
to fine(
Explanation.>or the purposes of this section% political party means a political party
re5istered under section 2&" of the Representation of the People "ct% 1&41 3) of 1&41!(
Power to compromise or make arrangements with creditors and members.
391. 1! Fhere a compromise or arran5ement is proposed
a! between a company and its creditors or any class of them1 or
b! between a company and its members or any class of them%
the Tribunal may% on the application of the company or of any creditor or member of the
company% or% in the case of a company which is bein5 wound up% of the li,uidator% order a
meetin5 of the creditors or class of creditors% or of the members or class of members% as
the case may be% to be called% held and conducted in such manner as the Tribunal directs(
2! If a ma:ority in number representin5 three#fourths in +alue of the creditors% or class of
creditors% or members% or class of members% as the case may be% present and +otin5 either
in person or% where pro$ies are allowed under the rules made under section '3)% by
pro$y% at the meetin5% a5ree to any compromise or arran5ement% the compromise or
arran5ement shall% if sanctioned by the Tribunal% be bindin5 on all the creditors% all the
creditors of the class% all the members% or all the members of the class% as the case may
be% and also on the company% or in the case of a company which is bein5 wound up% on
the li,uidator and contributories of the company :
Provided that no order sanctionin5 any compromise or arran5ement shall be made by the
Tribunal unless the Tribunal is satisfied that the company or any other person by whom
an application has been made under sub#section 1! has disclosed to the Tribunal% by
affida+it or otherwise% all material facts relatin5 to the company% such as the latest
financial position of the company% the latest auditors report on the accounts of the
company% the pendency of any in+esti5ation proceedin5s in relation to the company
under sections 2)4 to 241% and the li9e(
)! "n order made by the Tribunal under sub#section 2! shall ha+e no effect until a
certified copy of the order has been filed with the Re5istrar(
3! " copy of e+ery such order shall be anne$ed to e+ery copy of the memorandum of the
company issued after the certified copy of the order has been filed as aforesaid% or in the
case of a company not ha+in5 a memorandum% to e+ery copy so issued of the instrument
constitutin5 or definin5 the constitution of the company(
4! If default is made in complyin5 with sub#section 3!% the company% and e+ery officer
of the company who is in default% shall be punishable with fine which may e$tend to one
hundred rupees for each copy in respect of which default is made(
'! The Tribunal may% at any time after an application has been made to it under this
section% stay the commencement or continuation of any suit or proceedin5 a5ainst the
company on such terms as the Tribunal thin9s fit% until the application is finally disposed
of(
6! ** ** **
Power of Tribunal to enforce compromise and arrangement.
392. 1! Fhere the Tribunal ma9es an order under section )&1 sanctionin5 a
compromise or an arran5ement in respect of a company% it
a! shall ha+e power to super+ise the carryin5 out of the compromise or an
arran5ement1 and
b! may% at the time of ma9in5 such order or at any time thereafter% 5i+e such
directions in re5ard to any matter or ma9e such modifications in the compromise
or arran5ement as it may consider necessary for the proper wor9in5 of the
compromise or arran5ement(
2! If the Tribunal aforesaid is satisfied that a compromise or an arran5ement sanctioned
under section )&1 cannot be wor9ed satisfactorily with or without modifications% it may%
either on its own motion or on the application of any person interested in the affairs of the
company% ma9e an order windin5 up the company% and such an order shall be deemed to
be an order made under section 3)) of this "ct(
)! The pro+isions of this section shall% so far as may be% also apply to a company in
respect of which an order has been made before the commencement of the .ompanies
"mendment! "ct% 2881 sanctionin5 a compromise or an arran5ement(
Information as to compromises or arrangements with creditors and members.
393. 1! Fhere a meetin5 of creditors or any class of creditors% or of members or any
class of members% is called under section )&1%
a! with e+ery notice callin5 the meetin5 which is sent to a creditor or member% there
shall be sent also a statement settin5 forth the terms of the compromise or
arran5ement and e$plainin5 its effect% and in particular% statin5 any material
interests of the directors% mana5in5 director or mana5er of the company% whether
in their capacity as such or as members or creditors of the company or otherwise%
and the effect on those interests% of the compromise or arran5ement% if% and in so
far as% it is different from the effect on the li9e interests of other persons1 and
b! in e+ery notice callin5 the meetin5 which is 5i+en by ad+ertisement% there shall be
included either such a statement as aforesaid or a notification of the place at
which and the manner in which creditors or members entitled to attend the
meetin5 may obtain copies of such a statement as aforesaid(
2! Fhere the compromise or arran5ement affects the ri5hts of debenture holders of the
company% the said statement shall 5i+e the li9e information and e$planation as respects
the trustees of any deed for securin5 the issue of the debentures as it is re,uired to 5i+e as
respects the companys directors(
)! Fhere a notice 5i+en by ad+ertisement includes a notification that copies of a
statement settin5 forth the terms of the compromise or arran5ement proposed and
e$plainin5 its effect can be obtained by creditors or members entitled to attend the
meetin5% e+ery creditor or member so entitled shall% on ma9in5 an application in the
manner indicated by the notice% be furnished by the company% free of char5e% with a copy
of the statement(
3! Fhere default is made in complyin5 with any of the re,uirements of this section% the
company% and e+ery officer of the company who is in default% shall be punishable with
fine which may e$tend to fifty thousand rupees1 and for the purpose of this sub#section
any li,uidator of the company and any trustee of a deed for securin5 the issue of
debentures of the company shall be deemed to be an officer of the company :
Provided that a person shall not be punishable under this sub#section if he shows that the
default was due to the refusal of any other person% bein5 a director% mana5in5 director%
mana5er or trustee for debenture holders% to supply the necessary particulars as to his
material interests(
4! E+ery director% mana5in5 director% or mana5er of the company% and e+ery trustee for
debenture holders of the company% shall 5i+e notice to the company of such matters
relatin5 to himself as may be necessary for the purposes of this section1 and if he fails to
do so% he shall be punishable with fine which may e$tend to fi+e thousand rupees(
Provisions for facilitating reconstruction and amalgamation of companies.
394. 1! Fhere an application is made to the Tribunal under section )&1 for the
sanctionin5 of a compromise or arran5ement proposed between a company and any such
persons as are mentioned in that section% and it is shown to the Tribunal
a! that the compromise or arran5ement has been proposed for the purposes of% or in
connection with% a scheme for the reconstruction of any company or companies%
or the amal5amation of any two or more companies1 and
b! that under the scheme the whole or any part of the underta9in5% property or
liabilities of any company concerned in the scheme in this section referred to as a
transferor company! is to be transferred to another company in this section
referred to as the transferee company!%
the Tribunal may% either by the order sanctionin5 the compromise or arran5ement or by a
subse,uent order% ma9e pro+ision for all or any of the followin5 matters :
i! the transfer to the transferee company of the whole or any part of the underta9in5%
property or liabilities of any transferor company1
ii! the allotment or appropriation by the transferee company of any shares%
debentures% policies% or other li9e interests in that company which% under the
compromise or arran5ement% are to be allotted or appropriated by that company to
or for any person1
iii! the continuation by or a5ainst the transferee company of any le5al proceedin5s
pendin5 by or a5ainst any transferor company1
i%! the dissolution% without windin5 up% of any transferor company1
%! the pro+ision to be made for any persons who% within such time and in such
manner as the Tribunal directs% dissent from the compromise or arran5ement1 and
%i! such incidental% conse,uential and supplemental matters as are necessary to
secure that the reconstruction or amal5amation shall be fully and effecti+ely
carried out :
Provided that no compromise or arran5ement proposed for the purposes of% or in
connection with% a scheme for the amal5amation of a company% which is bein5 wound up%
with any other company or companies% shall be sanctioned by the Tribunal unless the
Tribunal has recei+ed a report from the Re5istrar that the affairs of the company ha+e not
been conducted in a manner pre:udicial to the interests of its members or to public
interest :
Provided further that no order for the dissolution of any transferor company under
clause i%! shall be made by the Tribunal unless the <fficial Gi,uidator has% on scrutiny of
the boo9s and papers of the company% made a report to the Tribunal that the affairs of the
company ha+e not been conducted in a manner pre:udicial to the interests of its members
or to public interest(
2! Fhere an order under this section pro+ides for the transfer of any property or
liabilities% then% by +irtue of the order% that property shall be transferred to and +est in%
and those liabilities shall be transferred to and become the liabilities of% the transferee
company1 and in the case of any property% if the order so directs% freed from any char5e
which is% by +irtue of the compromise or arran5ement% to cease to ha+e effect(
)! Fithin thirty days after the ma9in5 of an order under this section% e+ery company in
relation to which the order is made shall cause a certified copy thereof to be filed with the
Re5istrar for re5istration(
If default is made in complyin5 with this sub#section% the company% and e+ery officer of
the company who is in default% shall be punishable with fine which may e$tend to fi+e
hundred rupees(
3! In this section
a! property includes property% ri5hts and powers of e+ery description1 and liabili#ties
includes duties of e+ery description1 and
b! transferee company does not include any company other than a company within
the meanin5 of this "ct1 but transferor company includes any body corporate%
whether a company within the meanin5 of this "ct or not(
Power to modify Act in its application to Nidhis, etc.
620A. 1! In this section% &idhi or Butual Benefit *ociety means a company which the
.entral ;o+ernment may% by notification in the <fficial ;a=ette% declare to be a &idhi or
Butual Benefit *ociety% as the case may be(
2! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% direct that any
of the pro+isions of this "ct specified in the notification
a! shall not apply to any &idhi or Butual Benefit *ociety% or
b! shall apply to any &idhi or Butual Benefit *ociety with such e$ceptions%
modifications and adaptations as may be specified in the notification(
)! " copy of e+ery notification issued under sub#section 1! shall be laid as soon as may
be after it is issued% before each Couse of Parliament(
NOTIFIED NIDHIS/MUTUAL BENEFIT SOCIETIES UNDER SECTION 620A
OF COMPANIES ACT, 1956
In e$ercise of the powers conferred by section '28" of the .ompanies "ct% 1&4' 1 of
1&4'!% the .entral ;o+ernment hereby
i! declares the companies specified in *chedules I and II anne$ed hereto as nidhis
and mutual benefit societies respecti+ely1 and
ii! directs that the pro+isions of the said "ct specified in column 1! of *chedule III
anne$ed hereto shall not apply or% as the case may be% shall apply with the
e$ceptions% modifications and adaptations specified in the correspondin5 entry in
column 2! thereof% to such nidhis and mutual benefit societies(
<'CE1;>E 3 A &31C3<
1( "damba99am @anopa9ara *aswatha Aidhi Gtd(% Badras
2( "landur Pra:a *ahay *aswatha Aidhi Gtd(% Badras
)( Bhu+ana5iri Cindu *aswatha Paropa9ara Aidhi Gtd(% Badras
3( .hennai *ri "ndal ?hanase9ara *aswatha Aidhi Gtd(% Badras
4( .hennai *ri E9ambareswarar *aswatha Aidhi Gtd(% Badras
'( .hidambaram Cindu *aswatha @ananu9ula Aidhi Gtd(% Badras
6( .hin5leput ?hanase9ara Aidhi Gtd(% Badras
7( .hoolai @anopa9ara Aidhi Gtd(% Badras
&( .on:ee+aram Codsonpet ?hanase9ara Aidhi Gtd(% Badras
18( .uddalore Permanent >und Gtd(% Badras
11( E5more Benefit *ociety Third Branch Gtd(% Badras
12( Dumba9onam Butual Benefit >und Gtd(% Badras
1)( Badras .atholic Permanent >und Gtd(% Badras
13( Badras .hristian Benefit >und Gtd(% Badras
14( Badras Butual Benefit Permanent >und Gtd(% Badras
1'( Badras Purasawal9am Cindu @anopa9ara *aswatha Aidhi or the Permanent
;eneral Benefit >und Gtd(% Badras
16( Badura Cindu Permanent >und Gtd(% Badras
17( Buthialpet Benefit >und Gtd(% Badras
1&( Bylapore Cindu Permanent >und Gtd(% Badras
28( Aa5apatnam Permanent >und Gtd(% Badras
21( Au5amba99am *aswatha ?hanna Ra9sha Aidhi Gtd(% Badras
22( Pudupa99am Permanent >und Gtd(% Badras
2)( Puraswal9am ?hana 0ardhana *aswatha Aidhi Gtd(% Badras
23( Purasawal9am Cindu *anthatha *an5a Aidhi 1st Branch Gtd(% Badras
24( Puraswal9am Permanent >und Gtd(% Badras
2'( Paraspara *ahaya Aidhi Perambur! Gtd(% Badras
26( *hiali @anopa9ara Aidhi Gtd(% Badras
27( *i+a5ana *hri Beena9shi *wadeshi *aswatha Aidhi Gtd(% Badras
2&( *hri 0illiputhur Permanent >und Gtd(% Badras
)8( *unrise .orporation Gtd(% Badras
)1( Thiya5arayana5ar >und Gtd(% Badras
)2( Tinnel+elly ?istrict Permanent >und Gtd(% Badras
))( Tiru+atteeswaran Cindu @anopa9ara Aidhi Gtd(% Badras
)3( Triplicate Permanent >und Gtd(% Badras
)4( Tri+ellore @anopa9ara *aswatha Aidhi Gtd(% Badras
)'( 0illupuram Peoples Butual Benefit *ociety Gtd(% Badras
)6( "biramapuram >und Gtd(% Badras
)7( "rcot ?hana *e9ara Aidhi Gtd(% Badras
)&( "rcot Tiru+allu+ar Aidhi Gtd(% Badras
38( *araswathi 0ilasam *hanmu5ananda Aidhi Gtd(% Badras
31( Thiruma5al Butual Benefit >und Gtd(% Badras
32( 0arala9shmi >und! 0ellore! Gtd(% Badras
3)( 0ellore *aswatha Aidhi Gtd(% Badras
33( Fala:abad ?hanase9ara *aswatha Aidhi Gtd(% Badras
34( .hittoor *aswatha Aidhi Gtd(% "ndhra Pradesh
3'( Badanapalle *ri 0en9ateswara Aidhi Gtd(% "ndhra Pradesh
36( "nantapur *ri *atyanarayana Aidhi Gtd(% "ndhra Pradesh
37( Aellore Permanent >und Gtd(% "ndhra Pradesh
3&( "doni "rya 0aisya >und Gtd(% "ndhra Pradesh
48( ?harama+aram Butual Benefit Permanent >und% "ndhra Pradesh
41( "nantapur Aational >und Gtd(% "ndhra Pradesh
42( Cindupur Butual Benefit Permanent >und Gtd(% "ndhra Pradesh
4)( Bada9asira Butual Benefit Permanent >und Gtd(% "ndhra Pradesh
43( Penu9onda Baruthi Benefit Permanent >und Gtd(% "ndhra Pradesh
44( Ban5alore .antonment Permanent >und Gtd(% Bysore
4'( Carapanahallai *ree 0en9ataramanaswamy Permanent Bhandar Gtd(% Bysore
46( Ballary Brucepettah Cindu Butual Benefit Permanent >und Gtd(% Bysore
47( Cospet Ryots "5ro#Industrial .orporation Gtd(% Bysore
4&( "nantapur *ree 0asa+amba Permanent >und Gtd(% "ndhra Pradesh
'8( *hri 0asa+i Parmeswari Permanent >und Gtd(% Badras
'1( Duries L Trades Gtd(% Erna9ulam
'2( *aidapet *aswatha Aidhi Gtd(% Badras
')( *hree Ra:a5opaul Benefit >und Gtd(% Badras
'3( The Badras .hromepet Permanent >und Gtd(% Badras
'4( The "doni Butual Benefit Permanent >und Gtd(% "ndhra Pradesh
''( *riman Badh+a *idhanta Permanent Aidhi Gtd(
'6( Thirumylai *aswatha *ahaya Aidhi Gtd(
'7( Taheri "id >und Gtd(
'&( Dumba9onam ?iocesan .atholics Permanent >und Gtd(
68( Batha 0ara Aidhi Gtd(
61( "mritsar Radhasaomi >inance .o( P(! Gtd(
62( Aambalam Benefit *ociety Gtd(
6)( Ba99al Aala "bi+irthi Aidhi Gtd(
63( Dilpan9 Benefit *ociety Gtd(
64( *amarasa Butual Benefit >und Gtd(
6'( .hromepet *aswatha Aidhi Gtd(
66( *ri Ra:a Ra:a .holan Butual Benefit >und Gtd(
67( Pal5hat Permanent >und Gtd(
6&( ;rama Aala *aswatha Aidhi Gtd(
78( Dondan Butual Benefit >und Gtd(
71( *ri *aithai Butual Benefit >und Gtd(
72( Bini Butual Benefit >und Gtd(
7)( "nnana5ar @anopa9ara Aidhi Gtd(
73( ?hanala9shmi >und India! Gtd(
74( "min:i9arai Benefit >und Gtd(% Badras
7'(
76( @awahar Aa5ar Aidhi Badras! Gtd(
77( *henoy Aa5ar *aswatha Aidhi Gtd(% Badras
7&(
&8(
&1( Dayanat Permanent >und Gtd(
&2( Pira+om >unds Gtd(
&)( .hennapuri Butual Benefit >und Gtd(
&3( .hetpet *aswatha Aidhi Gtd(
&4( Royapettah Benefit >und Gtd(
&'( *henoy Aa5ar Benefit >und Gtd(
&6( Dalaima5al Butual Benefit >und Gtd(
&7( Bini Buthoottu Butual >und Gtd(
&&( ?ra+idian Benefit >und Gtd(
188( "sho9na5ar @anopa9ara *aswatha Aidhi Gtd(
181(
182( *t( Barys >inance Gtd(
18)( Tamilnadu 0iswa9arma Butual Benefit >und Gtd(
183( *hree "mbi9a Aidhi Gtd(
184( Fest Bambalam Permanent >und Gtd(
18'( "l#>alah Butual Benefits Gtd(
186( Banipal *owbha5ya Aidhi Gtd(
187( @ayala9shmi Butual Benefits >und Gtd(
18&( Dodam Ba99am Benefits >und Gtd(
118(
111( Par9 Town Benefit >und Gtd(
112(
11)(
113(
114( Danchi Butual Benefit >und Gtd(
11'( Thiruman5alam @anopa9ara Permanent >und Gtd(
116( *t( Barys >und Gtd(
117( *ree+ari Benefit *ociety Gtd(
11&( ;illna5ar Benefit >und Gtd(
128( Derala Permanent >und Gtd(
121( Pammal Ba99al Aala >und Gtd(
122( Pondicherry Butual Benefit >und Gtd(
12)( Bliss Benefit >und Gtd(
123#1)1(
1)2( "lwarpet Benefit >und Gimited% Badras(
1))( "l#Aa:ib Billi Butual Benefit >unds Gimited% Ettar Pradesh(
1)3( Airappu9attil Butual >unds Gimited% Derala(
1)4( Bannady Permanent >und Gimited(
1)'( 0irudhuna5ar Benefit >und Gimited(
1)6( *ri "9ila9rishna Benefit *ociety Gimited(
1)7( *outh East Benefit >und Gimited% Badras(
1)&( Rasi Aidhi Gimited% .oimbatore(
138( *ri Dandaswamy Permanent >und Gtd(% Badras(
131( *ri Padmanabha Permanent >und Gtd(% Badras(
132(
13)( *ubam Benefit >und Gtd(% Tamil Aadu
133( *aibala Benefit >und Gtd(% Tamil Aadu(
134( Thulansi Drishna Permanent >und Gtd(% Badras(
13'( Indian Bembers Benefit >und Gtd(% Badras(
136( Aan5anallur Permanent >und Gtd(% Badras(
137( Pera+allur Permanent >und Gtd(% Badras(
13&( "yodhya Benefit >und Gtd(% Badras(
148( *elf ;rowth Aidhi Gtd(% Ban5alore(
141( *hri *amundeswari Benefit >und Gtd(
142( I.* Benefit >und Gtd(
14)( *hri Aa+rathana Benefit >und Gtd(
143( *ulli+an ;arden Benefit >und Gtd(
144( *habab Islamic In+estment and Butual Benefits India! Gimited% Guc9now(
14'( 0en9atesapuram Benefit >und Gimited% Badras(
146( .anara Aidhi Gimited% Banipal(
147( *BP Butual Benefit Gimited% Caldwani% Ettar Pradesh(
14&( Trywell >inance Butual Benefit .ompany Gimited% Aew ?elhi(
1'8( The Casnapuram Butual Benefit Permanent >und Gimited% Badras(
1'1( Banappuram Benefit >und Gimited% Trissur(
1'2( ;ala$y Butual Benefit .ompany Gimited% Guc9now(
1')( "la5endran Benefit >und Gimited% Badras(
1'3(
to
161(
162( ?e+ta Butual Benefits Gimited% Beerut(
16)( *an:ee+arayan Benefit >und Gimited% Badras(
163( Banali Benefit >und Gimited% Badras(
164( Eldico Butual Benefit .ompany Gimited% Guc9now(
16'( *idhartha Butual Benefit >und Gimited% Aew ?elhi(
166( Palla+an Butual Benefit >und Gimited% Badras(
167( ?e+idas >inance Gimited% Puttur(
16&( Thiru#0i#Da Aa5ar Benefit >und Gimited% Badras(
178( Dumari Benefit >und Gimited% Badras(
171( 0ella+edu Benefit >und Gimited% 0ella+edu% Tamil Aadu(
172( Prompte99 Benefit >und Gimited% Badras(
17)( *ar+a:ana Benefit >und Gimited% Badras(
173( *ri Buthu9umaraswamy Permanent >und Gimited% Badras(
174( Perfect Benefit >und Gimited% Badras(
17'( Trichy Roc9city Benefit >und Gimited% Trichy% Tamil Aadu(
176( 0edaraniam Benefit >und Gimited% 0edaraniam% Tamil Aadu(
177( .rystal India Butual Benefits Gimited% ?istrict Aainital% Ettar Pradesh(
17&( ;owthami Permanent >und Gimited% Da9inada% "ndhra Pradesh(
1&8( Da+eripatnam Benefit >und Gimited% ?harmapuri% Tamil Aadu(
1&1( *hri *hanthi Aath Benefit >und Gimited% 0illupuram% Tamil Aadu(
1&2( 0ee:ay Benefit >und Gimited% Badras(
1&)( .hepau9 Benefit >und Gimited% .hennai
1&3( Ba55yala9shmi Benefit >und Gimited% .hennai
1&4( *amayapuram Bariamman Benefit >und Gimited% Trichy% Tamilnadu
1&'( Ga9shmipuram Benefit >und Gimited% Tiruninra+ur% .hennai
1&6( *ri ?e+i5ayathri Benefit >und Gimited% .hennai
1&7( Era+i 0inaya5ar Benefit >und Gimited% Danya9umari ?istrict% Tamilnadu
1&&( Bha+sar Baratah Benefit >und Gimited% .hennai
288( Bin:ur Benefit >und Gimited% Bin:ur% Tamilnadu
281( *a9thi Benefit >und Gimited% .hennai
282( Dulitalai Benefit >unds Gimited% Dulitalai% Tamilnadu
28)( Dudumba 0ila99u Benefit >und Gimited% Than:a+ur% Tamilnadu(
283( Darur Benefit >und Gimited% Darur% Tamil Aadu(
284( Town Benefit >und Dumba9onam! Gimited% Dumba9onam% Tamil Aadu(
28'( .ity Benefit >und Dumba9onam! Gimited% Dumba9onam% Tamil Aadu(
286( Dasthuribai Benefit >und Gimited% 0ellore% Tamil Aadu(
287( Berchants Benefit >und Gimited% )31% Indira Aa5ar% Aey+eli # '86781% Tamil
Aadu(
28&( Bethel Benefit >und Gimited% ))% <ld Ao( 17! *rini+asa Ra5ha+an Road% *rini+asa
Aa5ar% Perun5alathur% .hennai # '888')(
218( Tindi+anam Benefit >und Gimited% Ao( 3% Thiru+allu+ar *treet% Tindi+anam #
'83881% Tamil Aadu(
211( Aeema Benefit >und Gimited% Aeema Buildin5s% "door% Pathanamthitta ?istt(%
Derala # '&142)(
212( *ri Bara5athambi5ai Benefit >und Gimited% 3''% @(A( *treet% Tindi+anam # '83881%
Tamilnadu
21)( 0artha9a Bandal Aidhi Gimited% /GI'81)% T(?( *hoppin5 .omple$% T(?( Fest
Road% Erna9ulam # '728)4% Derala(
213( "yana+aram Permanent >und Gimited% 11I6% Parasurama Easwaran Doil *treet%
"yana+aram% .hennai # '8882)(
214( "mara+atthi Benefit >und Gimited% Ao( 14% 1st *treet% .onransmith Road%
;opalapuram% .hennai # '8887'(
21'( *ree 0en9ata Drupa Permanent >und Gimited% )#4#1)1% "drathi Gane% Tirupati #
416481% "ndhra Pradesh(
216( "rumba99am Benefit >und Gimited% 27"% Aew Ao( '% Poonamallee Ci5h Road%
"rumba99am% .hennai # '8818'(
217( Thiru+anmiyoor Permanent >und Gimited% "nnamalai .omple$% 12)#"% ?r(
Buthula9shmi Road% .hennai # '88831(
21&( Cari *an9ara Benefit >und Gimited% Ao( 4% East *treet% Tiru9oilur # '84646%
Tamilnadu(
228( .hiran:ee+i Benefit >und Gimited% 1)I6% Thiruchendur Road% Tuticorin # '2788)%
Tamilnadu(
221( *ri Benefit >und Gimited% )&% Ba=aar *treet% *ir9ali # '8&118% Tamilnadu(
222( 0illi+a99am @anopa9ara >und Gimited% 1% Beetu *treet% 0illi+a99am% .hennai #
'8883&(
22)( *outh Badras Benefit >und Gimited% 28% Dallu9aran *treet% Bylapore% .hennai#
'88883(
223( Thiru+allur Thripurasundari Benefit >und Gimited% ))% Aorth Ra:a *treet%
Tiru+allur#'82881% Tamilnadu(
224( *ri "nnamalai Benefit >und Gimited% 1st >loor% "nnamalai Tower% 48% Dubera
*treet% 0illupuram#'84'82% Tamilnadu(
22'( Thendral Benefit >und Gtd(% Ao( 33% 'th .ross *treet% B(D(B( Aa5ar% .hennai#
'888)&(
226( T(0(R( Benefit >und Gimited% ''% East Bain *treet% Thiru+arur#'18881% Tamilnadu(
227( Galapet Benefit >und Gimited% 2I'8 Aew Ao( 2I76!% Bain Road% Galapet#')&184%
Darur ?istrict% Tamilnadu(
22&( @eya Bharath Benefit >und Gimited% Aew Ao( 147!% .(A(D( Road% .hepau9%
.hennai#'88884(
2)8( Twin .ities Permanent >und Gimited% 1#1#6&8% "sho9 Aa5ar E$tension%
;andhina5ar% Cyderabad#488878% "ndhra Pradesh(
2)1( Thiya5aduru5am Benefit >und Gimited% Ao( 6% Da+arai *treet% Thiya5aduru5am#
'8'28'% Tamilnadu(
2)2( *embiam Benefit >und Gimited% Aew Ao( 143 <ld Ao( 241!% Paper Bills Road% Ist
>loor% Perambur% .hennai#'88811(
2))( 0i:aysubham Benefit >und Gimited% 116% Aorth .ar *treet% *ir9ali#'8&118%
Tamilnadu(
2)3( Badurai .ity Benefit >und Gimited% 61% Aorth 0eli *treet% *imma99al% Badurai#
'24881% Tamilnadu(
2)4( Ra:apalayam Benefit >und Gimited% 327#"% "mbalapuli Ba=ar% Ist >loor%
Ra:apalayam#'2'116% Tamilnadu(
2)'( Pra9asam ?istrict Permanent >und Gimited% 2)#1#18'% ;andhi Road% <n5ole#
42)881% "ndhra Pradesh(
2)6( .ollector Aa5ar Benefit >und Gimited% 2I2'6% Bu5appair East% .hennai#'88848(
2)7( .hordia Benefit >und Gimited% 2&I"2% Panruti Road% Elundurpet#'8'186%
Tamilnadu(
2)&( *RB Benefit >und Gimited% )% 0eerasamy *treet% Fest Bambalam% .hennai#
'888))(
238( East Fest Benefit >und Gimited% >31I3% Ist( >loor% >irst Bain Road% "nna Aa5ar
East% .hennai#'88182(
231( 0ariar Benefit >und Gimited% >lat Ao( 1&)I7% "siad .olony% @awaharlal Aehru Road%
"nna Aa5ar% Fest E$tension% .hennai#'88181(
232( "=a$ Benefit >und Gimited% Ao( '''I1% T(C( Road% .hennai#'8881&(
23)( Buthoot Bercantile *yndicate Gimited% 64% "ttu9al *hoppin5 .omple$% East >ort%
Thiru+ananthapura#'&482)% Derala(
233( Ettiramerur Benefit >und Gimited% Ao( 34% Ba=ar *treet% Ettiramerur#'8)38'%
Tamilnadu(
234( Dasi 0iswanathar .hennai! Benefit >und Gimited% Ao( &% Bar9et *treet% 1st >loor!%
"yana+aram% .hennai#'8882)(
23'( Ra: Benefit >und Gimited% 2>% Bharathy Road% .uddalore#'86 881% Tamil Aadu(
236( Trisea Benefit >und Gimited% 226>% Roy Buildin5% Ra:a99aman5alam Road%
Ramanputhoor% Aa5ercoil#3% Tamil Aadu(
237( 0ila+ancode *elfreliance .redit *er+ices Gimited% ;ood Aews .entre%
Ennamala9adai#'2& 16&% Tamil Aadu(
23&( Buthoot B( ;eor5e Permanent >und Gimited% P(B( Ao( 11% Buthoot Buildin5s%
Do=hencherry% Derala(
248( Aorth Fest Badras Benefit *ociety Gimited% 4&I22"% >irst Bain Road% @awahar
Aa5ar% .hennai#'88872(
241( Purasai Benefit >und Gimited% '8 <ld Ao( 1'&!% 0ellala *treet% Purasawal9am%
.hennai#'88873(
242( ?hana .ha9ra Permanent >und India! Gimited% ?oor Ao( )#46I1% <pp( 0inaya9a
Temple% Bain Road% Dondapalli#421227% 0i:ayawada% "ndhra Pradesh(
24)( 0i:aya Drishna Benefit >und Gimited% ;a:a+alli Bansions% 11#13#4% <pp( *(B(I(
0ela5aleti+ari *treet% 0i:ayawada#428881% "ndhra Pradesh(
243( Rani Ban5ammal Benefit >und Gimited% 1'8% Bi5 Ba=ar *treet% Trichy#'28887%
Tamil Aadu(
244( *ree 0aradara:a Benefit >und Gimited% Aew Ao( 13&I1% <ld Ao( ')I1 Purasawal9am
Ci5h Road% Purasawal9am% .hennai#'88886(
24'( *ri Daalihambal Benefit >und Gimited% Ao( 271I17% T(C( Road% .hennai#'88821(
246( .oastal Permanent >und Gimited% 11#'2#124% .anal Road% 0i:ayawada#428881%
"ndhra Pradesh(
<'CE1;>E 33 A :;7;A> BE&E037 </'3E73E<
E+ery mutual insurance company as defined in clause a! of sub#section 1! of section &4
of the Insurance "ct% 1&)7 3 of 1&)7!(
PARTS II & III OF SCHEDULE VI TO COMPANIES ACT, 1956
SCHEDULE VI
DA67 33
REKEIREBEAT* "* T< PR<>IT "A? G<** "..<EAT
1. The pro+isions of this Part shall apply to the income and e$penditure account referred
to in sub#section 2! of section 218 of the "ct% in li9e manner as they apply to a profit and
loss account% but sub:ect to the modification of references as specified in that sub#section(
2. The profit and loss account
a! shall be so made out as clearly to disclose the result of the wor9in5 of the
company durin5 the period co+ered by the account1 and
b! shall disclose e+ery material feature% includin5 credits or receipts and debits or
e$penses in respect of non#recurrin5 transactions or transactions of an e$ceptional
nature(
3. The profit and loss account shall set out the +arious items relatin5 to the income and
e$penditure of the company arran5ed under the most con+enient heads1 and in particular%
shall disclose the followin5 information in respect of the period co+ered by the account :
i!a! The turno+er% that is% the a55re5ate amount for which sales are effected by the
company% 5i+in5 the amount of sales in respect of each class of 5oods dealt
with by the company% and indicatin5 the ,uantities of such sales for each class
separately(
b! .ommission paid to sole sellin5 a5ents within the meanin5 of section 2&3 of
the "ct(
c! .ommission paid to other sellin5 a5ents(
d! Bro9era5e and discount on sales% other than the usual trade discount(
ii! a! In the case of manufacturin5 companies%
1! The +alue of the raw materials consumed% 5i+in5 item#wise brea9#up and
indicatin5 the ,uantities thereof( In this brea9#up% as far as possible% all
important basic raw materials shall be shown as separate items( The
intermediates or components procured from other manufacturers may% if their
list is too lar5e to be included in the brea9#up% be 5rouped under suitable
headin5s without mentionin5 the ,uantities% pro+ided all those items which in
+alue indi+idually account for 18M or more of the total +alue of the raw
material consumed shall be shown as separate and distinct items with
,uantities thereof in the brea9#up(
2! The openin5 and closin5 stoc9s of 5oods produced% 5i+in5 brea9#up in
respect of each class of 5oods and indicatin5 the ,uantities thereof(
b! In the case of tradin5 companies% the purchases made and the openin5 and
closin5 stoc9s% 5i+in5 brea9#up in respect of each class of 5oods traded in by
the company and indicatin5 the ,uantities thereof(
c! In the case of companies renderin5 or supplyin5 ser+ices% the 5ross income
deri+ed from ser+ices rendered or supplied(
d! In the case of a company% which falls under more than one of the cate5ories
mentioned in a!% b! and c! abo+e% it shall be sufficient compliance with the
re,uirements herein if the total amounts are shown in respect of the openin5
and closin5 stoc9s% purchases% sales and consumption of raw material with
+alue and ,uantitati+e brea9#up and the 5ross income from ser+ices rendered
is shown(
e! In the case of other companies% the 5ross income deri+ed under different
heads(
&ote 1A The ,uantities of raw materials% purchases% stoc9s and the turn# o+er%
shall be e$pressed in ,uantitati+e denominations in which these are normally
purchased or sold in the mar9et(
&ote 2 : >or the purpose of items ii!a!% ii!b! and ii!d!% the items for which
the company is holdin5 separate industrial licences% shall be treated as
separate classes of 5oods% but where a company has more than one industrial
licence for production of the same item at different places or for e$pansion of
the licensed capacity% the item co+ered by all such licences shall be treated as
one class( In the case of tradin5 companies% the imported items shall be
classified in accordance with the classification adopted by the .hief
.ontroller of Imports and E$ports in 5rantin5 the import licences(
&ote 3 : In 5i+in5 the brea9#up of purchases% stoc9s and turno+er% items li9e
spare parts and accessories% the list of which is too lar5e to be included in the
brea9#up% may be 5rouped under suitable headin5s without ,uantities%
pro+ided all those items% which in +alue indi+idually account for 18M or more
of the total +alue of the purchases% stoc9s% or turno+er% as the case may be% are
shown as separate and distinct items with ,uantities thereof in the brea9#up(
iii! In the case of all concerns ha+in5 wor9s#in#pro5ress% the amounts for which such
wor9s ha+e been completed at the commencement and at the end of the
accountin5 period(
i%! The amount pro+ided for depreciation% renewals or diminution in +alue of fi$ed
assets(
If such pro+ision is not made by means of a depreciation char5e% the method
adopted for ma9in5 such pro+ision(
If no pro+ision is made for depreciation% the fact that no pro+ision has been made
shall be stated and the ,uantum of arrears of depreciation computed in accordance
with section 2842! of the "ct shall be disclosed by way of a note(
%! The amount of interest on the companys debentures and other fi$ed loans% that is
to say% loans for fi$ed periods% statin5 separately the amount of interest% if any%
paid or payable to the mana5in5 director% the mana5in5 a5ent% the secretaries and
treasurers and the mana5er% if any(
%i! The amount of char5e for Indian income#ta$ and other Indian ta$ation on profits%
includin5% where practicable% with Indian income#ta$ any ta$ation imposed
elsewhere to the e$tent of the relief% if any% from Indian income#ta$ and
distin5uishin5% where practicable% between income#ta$ and other ta$ation(
%ii! The amounts reser+ed for
a! repayment of share capital1 and
b! repayment of loans(
%iii!a! The a55re5ate% if material% of any amounts set aside or proposed to be set
aside% to reser+es% but not includin5 pro+isions made to meet any specific
liability% contin5ency or commitment 9nown to e$ist at the date as at which
the balance sheet is made up(
b! The a55re5ate% if material% of any amounts withdrawn from such reser+es(
ix! a!The a55re5ate% if material% of the amounts set aside to pro+isions made for
meetin5 specific liabilities% contin5encies or commitments(
b! The a55re5ate% if material% of the amounts withdrawn from such pro+isions% as
no lon5er re,uired(
x! E$penditure incurred on each of the followin5 items% separately for each item :
a! .onsumption of stores and spare parts(
b! Power and fuel(
c! Rent(
d! Repairs to buildin5s(
e! Repairs to machinery(
!! 1! *alaries% wa5es and bonus(
2! .ontribution to pro+ident and other funds(
3! For9men and staff welfare e$penses to the e$tent not ad:usted from any
pre+ious pro+ision or reser+e(
&ote 1 : Information in respect of this item should also be 5i+en in the balance
sheet under the rele+ant pro+ision or reser+e account(
&ote 2 ** ** **
g! Insurance(
h! Rates and ta$es% e$cludin5 ta$es on income(
i! Biscellaneous e$penses :
Provided that any item under which the e$penses e$ceed 1 per cent of the
total re+enue of the company or Rs( 4%888% whiche+er is hi5her% shall be
shown as a separate and distinct item a5ainst an appropriate account head in
the Profit and Goss "ccount and shall not be combined with any other item to
be shown under Biscellaneous e$penses(
xi! a!The amount of income from in+estments% distin5uishin5 between trade
in+estments and other in+estments(
b! <ther income by way of interest% specifyin5 the nature of the income(
c! The amount of income#ta$ deducted if the 5ross income is stated under sub#
para5raphs a! and b! abo+e(
xii! a! Profits or losses on in+estments showin5 distinctly the e$tent of the profits or
losses earned or incurred on account of membership of a partnership firm to
the e$tent not ad:usted from any pre+ious pro+ision or reser+e(
&ote : Information in respect of this item should also be 5i+en in the balance
sheet under the rele+ant pro+ision or reser+e account(
b! Profits or losses in respect of transactions of a 9ind% not usually underta9en by
the company or underta9en in circumstances of an e$ceptional or non#
recurrin5 nature% if material in amount(
c! Biscellaneous income(
xiii!a! ?i+idends from subsidiary companies(
b! Pro+isions for losses of subsidiary companies(
xi%! The a55re5ate amount of the di+idends paid% and proposed% and statin5 whether
such amounts are sub:ect to deduction of income#ta$ or not(
x%! "mount% if material% by which any items shown in the profit and loss account are
affected by any chan5e in the basis of accountin5(
4. The profit and loss account shall also contain or 5i+e by way of a note detailed
information% showin5 separately the followin5 payments pro+ided or made durin5 the
financial year to the directors includin5 mana5in5 directors! the mana5in5 a5ents%
secretaries and treasurers or mana5er% if any% by the company% the subsidiaries of the
company and any other person :
i! mana5erial remuneration under section 1&7 of the "ct paid or payable durin5 the
financial year to the directors includin5 mana5in5 directors!% the mana5in5 a5ent%
secretaries and treasurers or mana5er% if any1
-ii! e$penses reimbursed to the mana5in5 a5ent under section )431
iii! commission or other remuneration payable separately to a mana5in5 a5ent or his
associate under sections )4'% )46 and )471
-i%! commission recei+ed or recei+able under section )4& of the "ct by the mana5in5
a5ent or his associate as sellin5 or buyin5 a5ent of other concerns in respect of
contracts entered into by such concerns with the company1
%! the money +alue of the contracts for the sale or purchase of 5oods and materials
or supply of ser+ices% entered into by the company with the mana5in5 a5ent or his
associate under section )'8 durin5 the financial year1
%i! other allowances and commission includin5 5uarantee commission details to be
5i+en!1
%ii! any other per,uisites or benefits in cash or in 9ind statin5 appro$imate money
+alue where practicable!1
%iii!pensions% etc(%
a! pensions%
b! 5ratuities%
c! payments from pro+ident funds% in e$cess of own subscriptions and interest
thereon%
d! compensation for loss of office%
e! consideration in connection with retirement from office(
4A. The profit and loss account shall contain or 5i+e by way of a note a statement
showin5 the computation of net profits in accordance with section )3& of the "ct with
rele+ant details of the calculation of the commissions payable by way of percenta5e of
such profits to the directors includin5 mana5in5 directors!% the mana5in5 a5ents%
secretaries and treasurers or mana5er if any!(
4B. The profit and loss account shall further contain or 5i+e by way of a note detailed
information in re5ard to amounts paid to the auditor% whether as fees% e$penses or
otherwise for ser+ices rendered
a! as auditor1
b! as ad+iser% or in any other capacity% in respect of
i! ta$ation matters1
ii! company law matters1
iii! mana5ement ser+ices1 and
c! in any other manner(
4C.In the case of manufacturin5 companies% the profit and loss account shall also contain%
by way of a note in respect of each class of 5oods manufactured% detailed ,uantitati+e
information in re5ard to the followin5% namely :
a! the licensed capacity where licence is in force!1
b! the installed capacity1 and
c! the actual production(
&ote 1 : The licensed capacity and installed capacity of the company as on the last date of
the year to which the profit and loss account relates% shall be mentioned a5ainst items a!
and b! abo+e% respecti+ely(
&ote 2 : "5ainst item c!% the actual production in respect of the finished products meant
for sale shall be mentioned( In cases where semi#processed products are also sold by the
company% separate details thereof shall be 5i+en(
&ote 3 : >or the purposes of this para5raph% the items for which the company is holdin5
separate industrial licences shall be treated as separate classes of 5oods but where a
company has more than one industrial licence for production of the same item at different
places or for e$pansion of the licensed capacity% the item co+ered by all such licences
shall be treated as one class(
4D. The profit and loss account shall also contain by way of a note the followin5
information% namely :
a! +alue of imports calculated on .(I(>( basis by the company durin5 the financial
year in respect of :
i! raw materials1
ii! components and spare parts1
iii! capital 5oods1
b! e$penditure in forei5n currency durin5 the financial year on account of royalty%
9now#how% professional% consultation fees% interest% and other matters1
c! +alue of all imported raw materials% spare parts and components consumed durin5
the financial year and the +alue of all indi5enous raw materials% spare parts and
components similarly consumed and the percenta5e of each to the total
consumption1
d! the amount remitted durin5 the year in forei5n currencies on account of di+idends%
with a specific mention of the number of non#resident shareholders% the number of
shares held by them on which the di+idends were due and the year to which the
di+idends related1
e! earnin5s in forei5n e$chan5e classified under the followin5 heads% namely :
i! e$port of 5oods calculated on >(<(B( basis1
ii! royalty% 9now#how% professional and consultation fees1
iii! interest and di+idend1
i%! other income% indicatin5 the nature thereof(
5. The .entral ;o+ernment may direct that a company shall not be obli5ed to show the
amount set aside to pro+isions other than those relatin5 to depreciation% renewal or
diminution in +alue of assets% if the .entral ;o+ernment is satisfied that the information
should not be disclosed in the public interest and would pre:udice the company% but
sub:ect to the condition that in any headin5 statin5 an amount arri+ed at after ta9in5 into
account the amount set aside as such% the pro+ision shall be so framed or mar9ed as to
indicate that fact(
6. 1! E$cept in the case of the first profit and loss account laid before the company after
the commencement of the "ct% the correspondin5 amounts for the immediately precedin5
financial year for all items shown in the profit and loss account shall also be 5i+en in the
profit and loss account(
2! The re,uirement in sub#clause 1! shall% in the case of companies preparin5 ,uarterly
or half#yearly accounts% relate to the profit and loss account for the period which entered
on the correspondin5 date of the pre+ious year(
N&ote : Reference to mana5in5 a5ents% secretaries and treasurers should be omitted(
DA67 333
IATERPRET"TI<A
7. 1! >or the purposes of Parts I and II of this *chedule% unless the conte$t otherwise
re,uires%
a! the e$pression pro+ision shall% sub:ect to sub#clause 2! of this clause% mean any
amount written off or retained by way of pro+idin5 for depreciation renewals or
diminution in +alue of assets% or retained by way of pro+idin5 for any 9nown
liability of which the amount cannot be determined with substantial accuracy1
b! the e$pression reser+e shall not% sub:ect as aforesaid% include any amount written
off or retained by way of pro+idin5 for depreciation% renewals or diminution in
+alue of assets or retained by way of pro+idin5 for any 9nown liability 1
c! the e$pression capital reser+e shall not include any amount re5arded as free for
distribution throu5h the profit and loss account1 and the e$pression re+enue
reser+e shall mean any reser+e other than a capital reser+e1
and in this sub#clause the e$pression liability shall include all liabilities in respect of
e$penditure contracted for and all disputed or contin5ent liabilities(
2! Fhere
a! any amount written off or retained by way of pro+idin5 for depreciation% renewals
or diminution in +alue of assets% not bein5 an amount written off in relation to
fi$ed assets before the commencement of this "ct1 or
b! any amount retained by way of pro+idin5 for any 9nown liability1
is in e$cess of the amount which in the opinion of the directors is reasonably necessary
for the purpose% the e$cess shall be treated for the purposes of this *chedule as a reser+e
and not as a pro+ision(
8. >or the purposes aforesaid% the e$pression ,uoted in+estment means an in+estment as
respects which there has been 5ranted a ,uotation or permission to deal on a reco5nised
stoc9 e$chan5e% and the e$pression un,uoted in+estment shall be construed accordin5ly(
ARTICLES 243(d) & 243P(e) OF CONSTITUTION OF INDIA
Definitions.
243 ** ** **
d! Panchayat means an institution by whate+er name called! of self#;o+ernment
constituted under article 23)B% for the rural areas1
Definitions
243P ** ** **
e! Bunicipality means an institution of self#;o+ernment constituted under article
23)K1
ARTICLE 276(2) OF CONSTITUTION OF INDIA
276. 2! The total amount payable in respect of any one person to the *tate or to any one
municipality% district board% local board or other local authority in the *tate by way of
ta$es on professions% trades% callin5s and employments shall not e$ceed two thousand and
fi+e hundred rupees per annum(
EIGHTH SCHEDULE TO THE CONSTITUTION OF INDIA
-"rticles )331! and )412
Languages
1( "ssamese( 12
(
Banipuri(
2( Ben5ali( 1)
(
Barathi(
)( Bodo 13
(
Aepali(
3( ?o5ri 14
(
<riya(
4( ;u:arati( 1'
(
Pun:abi(
'( Cindi( 16
(
*ans9rit(
6( Dannada( 17
(
*anthali(
7( Dashmiri( 1&
(
*indhi(
&( Don9ani( 28
(
Tamil(
18
(
Baithili 21
(
Telu5u(
11
(
Balayalam( 22
(
Erdu(
SECTION 60 OF CODE OF CIVIL PROCEDURE, 1908
Property liable to attachment and sale in execution of decree.
60. 1! The followin5 property is liable to attachment and sale in e$ecution of a decree%
namely% lands% houses or other buildin5s% 5oods% money% ban9 notes% che,ues% bills of
e$chan5e% hundis% promissory notes% ;o+ernment securities% bonds or other securities for
money% debts% shares in a corporation and% sa+e as hereinafter mentioned% all other
saleable property% mo+able or immo+able% belon5in5 to the :ud5ment#debtor% or o+er
which% or the profits of which% he has a disposin5 power which he may e$ercise for his
own benefit% whether the same be held in the name of the :ud5ment#debtor or by another
person in trust for him or on his behalf :
Provided that the followin5 properties shall not be liable to such attachment or sale%
namely :
a! the necessary wearin5#apparel% coo9in5 +essels% beds and beddin5 of the
:ud5ment#debtor% his wife and children% and such personal ornaments as% in
accordance with reli5ious usa5e% cannot be parted with by any woman 1
b! tools of artisans% and% where the :ud5ment#debtor is an a5riculturist% his
implements of husbandry and such cattle and seed#5rain as may% in the opinion of
the .ourt% be necessary to enable him to earn his li+elihood as such% and such
portion of a5ricultural produce or of any class of a5ricultural produce as may ha+e
been declared to be free from liability under the pro+isions of the ne$t followin5
section 1
c! houses and other buildin5s with the materials and the sites thereof and the land
immediately appurtenant thereto and necessary for their en:oyment! belon5in5 to
an a5riculturist or a labourer or a domestic ser+ant and occupied by him 1
d! boo9s of account 1
e! a mere ri5ht to sue for dama5es 1
!! any ri5ht of personal ser+ice 1
g! stipends and 5ratuities allowed to pensioners of the ;o+ernment or of a local
authority or of any other employer% or payable out of any ser+ice family pension
fund notified in the <fficial ;a=ette by the .entral ;o+ernment or the *tate
;o+ernment in this behalf% and political pension 1
h! the wa5es of labourers and domestic ser+ants% whether payable in money or in
9ind 1
i! salary to the e$tent of the first one thousand rupees and two#thirds of the
remainder in e$ecution of any decree other than a decree for maintenance :
Provided that where any part of such portion of the salary as is liable to
attachment has been under attachment% whether continuously or intermittently% for
a total period of twenty#four months% such portion shall be e$empt from
attachment until the e$piry of a further period of twel+e months% and% where such
attachment has been made in e$ecution of one and the same decree% shall% after the
attachment has continued for a total period of twenty#four months% be finally
e$empt from attachment in e$ecution of that decree 1
ia! one#third of the salary in e$ecution of any decree for maintenance1
4! the pay and allowances of persons to whom the "ir >orce "ct% 1&48 34 of 1&48!%
or the "rmy "ct% 1&48 3' of 1&48!% or the Aa+y "ct% 1&46 '2 of 1&46!% applies 1
.! all compulsory deposits and other sums in or deri+ed from any fund to which the
Pro+ident >unds "ct% 1&24 1& of 1&24!% for the time bein5 applies% in so far as
they are declared by the said "ct not to be liable to attachment 1
.a! all deposits and other sums in or deri+ed from any fund to which the Public
Pro+ident >und "ct% 1&'7 2) of 1&'7!% for the time bein5 applies% in so far as
they are declared by the said "ct as not to be liable to attachment 1
.b! all moneys payable under a policy of insurance on the life of the :ud5ment# debtor
1
.c! the interest of lessee of a residential buildin5 to which the pro+isions of law for
the time bein5 in force relatin5 to control of rents and accommodation apply 1
l! any allowance formin5 part of the emoluments of any ser+ant of the ;o+ernment
or of any ser+ant of a Railway company or local authority which the appropriate
;o+ernment may by notification in the <fficial ;a=ette declare to be e$empt from
attachment% and any subsistence 5rant or allowance made to any such ser+ant
while under suspension 1
m! an e$pectancy of succession by sur+i+orship or other merely contin5ent or
possible ri5ht or interest 1
n! a ri5ht to future maintenance 1
o! any allowance declared by any Indian law to be e$empt from liability to
attachment or sale in e$ecution of a decree 1 and
p! where the :ud5ment#debtor is a person liable for the payment of land#re+enue% any
mo+able property which% under any law for the time bein5 applicable to him% is
e$empt from sale for the reco+ery of an arrear of such re+enue(
Explanation 3 : The moneys payable in relation to the matters mentioned in clauses g!%
h!% i!% ia!% 4!% l! and o! are e$empt from attachment or sale% whether before or after
they are actually payable% and% in the case of salary% the attachable portion thereof is liable
to attachment% whether before or after it is actually payable(
Explanation 33 : In clauses i! and ia!% salary means the total monthly emoluments%
e$cludin5 any allowance declared e$empt from attachment under the pro+isions of clause
l!% deri+ed by a person from his employment whether on duty or on lea+e(
Explanation 333 : In clause l! appropriate ;o+ernment means
i! as respect any person in the ser+ice of the .entral ;o+ernment% or any ser+ant of
a Railway "dministration or of a cantonment authority or of the port authority of
a ma:or port% the .entral ;o+ernment1
ii! -omitted-2
iii! as respects any other ser+ant of the ;o+ernment or a ser+ant of any other local
authority% the *tate ;o+ernment(
Explanation 3E : >or the purposes of this pro+iso% wa5es includes bonus% and labourer
includes a s9illed% uns9illed or semi#s9illed labourer(
Explanation E : >or the purposes of this pro+iso% the e$pression a5riculturist means a
person who culti+ates land personally and who depends for his li+elihood mainly on the
income from a5ricultural land% whether as owner% tenant% partner or a5ricultural labourer(
Explanation E3 : >or the purposes of Explanation E) an a5riculturist shall be deemed to
culti+ate land personally% if he culti+ates land
a! by his own labour% or
b! by the labour of any member of his family% or
c! by ser+ants or labourers on wa5es payable in cash or in 9ind not bein5 as a share
of the produce!% or both(
1"! Aotwithstandin5 anythin5 contained in any other law for the time bein5 in force% an
a5reement by which a person a5rees to wai+e the benefit of any e$emption under this
section shall be +oid(
2! Aothin5 in this section shall be deemed to e$empt houses and other buildin5s with
the materials and the sites thereof and the lands immediately appurtenant thereto and
necessary for their en:oyment! from attachment or sale in e$ecution of decrees for rent of
any such house% buildin5% site or land(
SECTION 360 OF CODE OF CRIMINAL PROCEDURE, 1973
Order to release on probation of good conduct or after admonition.
360. 1! Fhen any person not under twenty#one years of a5e is con+icted of an offence
punishable with fine only or with imprisonment for a term of se+en years or less% or when
any person under twenty#one years of a5e or any woman is con+icted of an offence not
punishable with death or imprisonment for life% and no pre+ious con+iction is pro+ed
a5ainst the offender% if it appears to the .ourt before which he is con+icted% re5ard bein5
had to the a5e% character or antecedents of the offender% and to the circumstances in
which the offence was committed% that it is e$pedient that the offender should be released
on probation of 5ood conduct% the .ourt may% instead of sentencin5 him at once to any
punishment% direct that he be released on his enterin5 into a bond% with or without
sureties% to appear and recei+e sentence when called upon durin5 such period not
e$ceedin5 three years! as the .ourt may direct and in the meantime to 9eep the peace and
be of 5ood beha+iour :
Provided that where any first offender is con+icted by a Ba5istrate of the second class
not specially empowered by the Ci5h .ourt% and the Ba5istrate is of opinion that the
powers conferred by this section should be e$ercised% he shall record his opinion to that
effect% and submit the proceedin5s to a Ba5istrate of the first class% forwardin5 the
accused to% or ta9in5 bail for his appearance before% such Ba5istrate% who shall dispose of
the case in the manner pro+ided by sub#section 2!(
2! Fhere proceedin5s are submitted to a Ba5istrate of the first class as pro+ided by sub#
section 1!% such Ba5istrate may thereupon pass such sentence or ma9e such order as he
mi5ht ha+e passed or made if the case had ori5inally been heard by him% and% if he thin9s
further in,uiry or additional e+idence on any point to be necessary% he may ma9e such
in,uiry or ta9e such e+idence himself or direct such in,uiry or e+idence to be made or
ta9en(
)! In any case in which a person is con+icted of theft% theft in a buildin5% dishonest
misappropriation% cheatin5 or any offence under the Indian Penal .ode 34 of 17'8!
punishable with not more than two years imprisonment or any offence punishable with
fine only and no pre+ious con+iction is pro+ed a5ainst him% the .ourt before which he
is so con+icted may% if it thin9s fit% ha+in5 re5ard to the a5e% character% antecedents or
physical or mental condition of the offender and to the tri+ial nature of the offence or any
e$tenuatin5 circumstances under which the offence was committed% instead of sentencin5
him to any punishment% release him after due admonition(
3! "n order under this section may be made by any "ppellate .ourt or by the Ci5h
.ourt or .ourt of *ession when e$ercisin5 its powers of re+ision(
4! Fhen an order has been made under this section in respect of any offender% the Ci5h
.ourt or .ourt of *ession may% on appeal when there is a ri5ht of appeal to such .ourt% or
when e$ercisin5 its powers of re+ision% set aside such order% and in lieu thereof pass
sentence on such offender accordin5 to law :
Provided that the Ci5h .ourt or .ourt of *ession shall not under this sub#section inflict a
5reater punishment than mi5ht ha+e been inflicted by the .ourt by which the offender
was con+icted(
'! The pro+isions of sections 121% 123 and )6) shall% so far as may be% apply in the case
of sureties offered in pursuance of the pro+isions of this section(
6! The .ourt% before directin5 the release of an offender under sub#section 1!% shall be
satisfied that an offender or his surety if any! has a fi$ed place of abode or re5ular
occupation in the place for which the .ourt acts or in which the offender is li9ely to li+e
durin5 the period named for the obser+ance of the conditions(
7! If the .ourt which con+icted the offender% or a .ourt which could ha+e dealt with the
offender in respect of his ori5inal offence% is satisfied that the offender has failed to
obser+e any of the conditions of his reco5ni=ance% it may issue a warrant for his
apprehension(
&! "n offender% when apprehended on any such warrant% shall be brou5ht forthwith
before the .ourt issuin5 the warrant% and such .ourt may either remand him in custody
until the case is heard or admit him to bail with a sufficient surety conditioned on his
appearin5 for sentence and such .ourt may% after hearin5 the case% pass sentence(
18! Aothin5 in this section shall affect the pro+isions of the Probation of <ffenders "ct%
1&47 28 of 1&47!% or the .hildren "ct% 1&'8 '8 of 1&'8!% or any other law for the time
bein5 in force for the treatment% trainin5 or rehabilitation of youthful offenders(
SECTION 50 OF CUSTOMS ACT, 1962
Entry of goods for exportation.
50. 1! The e$porter of any 5oods shall ma9e entry thereof by presentin5 to the proper
officer in the case of 5oods to be e$ported in a +essel or aircraft% a shippin5 bill% and in
the case of 5oods to be e$ported by land% a bill of e$port in the prescribed form(
2! The e$porter of any 5oods% while presentin5 a shippin5 bill or bill of e$port% shall at
the foot thereof ma9e and subscribe to a declaration as to the truth of its contents(
SECTION 2(1)(a), (e) AND (l) OF DEPOSITORIES ACT, 1996
Definitions.
2. 1! In this "ct% unless the conte$t otherwise re,uires%
a! beneficial owner means a person whose name is recorded as such with a
depository1
** ** **
e! depository means a company formed and re5istered under the .ompanies "ct%
1&4' 1 of 1&4'!% and which has been 5ranted a certificate of re5istration under
sub#section 1"! of section 12 of the *ecurities and E$chan5e Board of India "ct%
1&&2 14 of 1&&2!1
** ** **
l! security means such security as may be specified by the Board1
** ** **
SECTION 1 OF EMPLOYEES PROVIDENT FUNDS AND
MISCELLANEOUS PROVISIONS ACT, 1952
Short title, extent and application.
** ** **
)! *ub:ect to the pro+isions contained in section 1'% it applies
a! to e+ery establishment which is a factory en5a5ed in any industry specified in
*chedule I and in which twenty or more persons are employed% and
b! to any other establishment employin5 twenty or more persons or class of such
establishments which the .entral ;o+ernment may% by notification in the <fficial
;a=ette% specify in this behalf :
Provided that the .entral ;o+ernment may% after 5i+in5 not less than two months notice
of its intention so to do% by notification in the <fficial ;a=ette% apply the pro+isions of
this "ct to any establishment employin5 such number of persons less than twenty as may
be specified in the notification(
3! Aotwithstandin5 anythin5 contained in sub#section )! of this section or sub#section
1! of section 1'% where it appears to the .entral Pro+ident >und .ommissioner% whether
on an application made to him in this behalf or otherwise% that the employer and the
ma:ority of employees in relation to any establishment ha+e a5reed that the pro+isions of
this "ct should be made applicable to the establishment% he may% by notification in the
<fficial ;a=ette% apply the pro+isions of this "ct to that establishment on and from the
date of such a5reement or from any subse,uent date specified in such a5reement(

SECTION 2 OF FOREIGN EXCHANGE MANAGEMENT ACT, 1999
Definitions.
** ** **
c! authorised person means an authorised dealer% money chan5er% offshore ban9in5
unit or any other person for the time bein5 authorised under sub#section 1! of
section 18 to deal in forei5n e$chan5e or forei5n securities1
** ** **
h! currency includes all currency notes% postal notes% postal orders% money orders%
che,ues% drafts% tra+ellers che,ues% letters of credit% bills of e$chan5e and
promissory notes% credit cards or such other similar instruments% as may be
notified by the Reser+e Ban91
** ** **
m! forei5n currency means any currency other than Indian currency1
n! forei5n e$chan5e means forei5n currency and includes%
i! deposits% credits and balances payable in any forei5n currency%
ii! drafts% tra+ellers che,ues% letters of credit or bills of e$chan5e% e$pressed or
drawn in Indian currency but payable in any forei5n currency%
iii! drafts% tra+ellers che,ues% letters of credit or bills of e$chan5e drawn by
ban9s% institutions or persons outside India% but payable in Indian currency1
** ** **
2! Indian currency means currency which is e$pressed or drawn in Indian rupees
but does not include special ban9 notes and special one rupee notes issued under
section 27" of the Reser+e Ban9 of India "ct% 1&)3 2 of 1&)3!1
** ** **
%! person resident in India means
i! a person residin5 in India for more than one hundred and ei5hty#two days
durin5 the course of the precedin5 financial year but does not include
A! a person who has 5one out of India or who stays outside India% in either
case
a! for or on ta9in5 up employment outside India% or
b! for carryin5 on outside India a business or +ocation outside India% or
c! for any other purpose% in such circumstances as would indicate his
intention to stay outside India for an uncertain period1
B! a person who has come to or stays in India% in either case% otherwise
than
a! for or on ta9in5 up employment in India% or
b! for carryin5 on in India a business or +ocation in India% or
c! for any other purpose% in such circumstances as would indicate his
intention to stay in India for an uncertain period1
ii! any person or body corporate re5istered or incorporated in India%
iii! an office% branch or a5ency in India owned or controlled by a person
resident outside India%
i%! an office% branch or a5ency outside India owned or controlled by a person
resident in India1
w! person resident outside India means a person who is not resident in India1
SECTION 21 OF INDIAN PENAL CODE, 1860
Public servant.
21. The words public ser+ant denote a person fallin5 under any of the descriptions
hereinafter followin5% namely :
** ** **
<econd # E+ery .ommissioned <fficer in the Bilitary% Aa+al or "ir >orces of India1
7hird # E+ery @ud5e includin5 any person empowered by law to dischar5e% whether by
himself or as a member of any body of persons% any ad:udicatory functions1
0ourth # E+ery officer of a .ourt of @ustice includin5 a li,uidator% recei+er or .ommis#
sioner! whose duty it is% as such officer% to in+esti5ate or report on any matter of law or
fact% or to ma9e% authenticate% or 9eep any document% or to ta9e char5e or dispose of any
property% or to e$ecute any :udicial process% or to administer any oath% or to interpret% or
to preser+e order in the .ourt% and e+ery person specially authorised by a .ourt of @ustice
to perform any of such duties1
0i!th # E+ery :uryman% assessor% or member of a panchayat assistin5 a .ourt of @ustice or
public ser+ant1
<ixth # E+ery arbitrator or other person to whom any cause or matter has been referred for
decision or report by any .ourt of @ustice% or by any other competent public authority1
<e%enth # E+ery person who holds any office by +irtue of which he is empowered to place
or 9eep any person in confinement1
Eighth # E+ery officer of the ;o+ernment whose duty it is% as such officer% to pre+ent
offences% to 5i+e information of offences% to brin5 offenders to :ustice% or to protect the
public health% safety or con+enience1
&inth # E+ery officer whose duty it is% as such officer% to ta9e% recei+e% 9eep or e$pend
any property on behalf of the ;o+ernment% or to ma9e any sur+ey% assessment or contract
on behalf of the ;o+ernment% or to e$ecute any re+enue#process% or to in+esti5ate% or to
report% on any matter affectin5 the pecuniary interests of the ;o+ernment% or to ma9e%
authenticate or 9eep any document relatin5 to the pecuniary interests of the ;o+ernment%
or to pre+ent the infraction of any law for the protection of the pecuniary interests of the
;o+ernment1
7enth # E+ery officer whose duty it is% as such officer% to ta9e% recei+e% 9eep or e$pend
any property% to ma9e any sur+ey or assessment or to le+y any rate or ta$ for any secular
common purpose of any +illa5e% town or district% or to ma9e% authenticate or 9eep any
document for the ascertainin5 of the ri5hts of the people of any +illa5e% town or district1
Ele%enth # E+ery person who holds any office by +irtue of which he is empowered to
prepare% publish% maintain or re+ise an electoral roll or to conduct an election or part of an
election1
7wel!th # E+ery person
a! in the ser+ice or pay of the ;o+ernment or remunerated by fees or commission for
the performance of any public duty by the ;o+ernment1
b! in the ser+ice or pay of a local authority% a corporation established by or under a
.entral% Pro+incial or *tate "ct or a ;o+ernment company as defined in section
'16 of the .ompanies "ct% 1&4' 1 of 1&4'!(
3llustration
" Bunicipal .ommissioner is a public ser+ant(
Explanation 1.Persons fallin5 under any of the abo+e descriptions are public ser+ants%
whether appointed by the ;o+ernment or not(
Explanation 2.Fhere+er the words public ser+ant occur% they shall be understood of
e+ery person who is in actual possession of the situation of a public ser+ant% whate+er
le5al defect there may be in his ri5ht to hold that situation(
Explanation 3.The word election denotes an election for the purpose of selectin5
members of any le5islati+e% municipal or other public authority% of whate+er character%
the method of selection to which is by% or under% any law prescribed as by election(
SECTION 2 OF INDUSTRIAL DISPUTES ACT, 1947
Definitions.
2. In this "ct% unless there is anythin5 repu5nant in the sub:ect or conte$t%
** ** **
g! employer means
i! in relation to an industry carried on by or under the authority of any
department of the .entral ;o+ernment or a *tate ;o+ernment% the authority
prescribed in this behalf% or where no authority is prescribed% the head of the
department1
ii! in relation to an industry carried on by or on behalf of a local authority% the
chief e$ecuti+e officer of that authority1
** ** **
s! wor9man means any person includin5 an apprentice! employed in any industry to
do any manual% uns9illed% s9illed% technical% operational% clerical or super+isory
wor9 for hire or reward% whether the terms of employment be e$press or implied%
and for the purposes of any proceedin5 under this "ct in relation to an industrial
dispute% includes any such person who has been dismissed% dischar5ed or
retrenched in connection with or as a conse,uence of% that dispute% or whose
dismissal% dischar5e or retrenchment has led to that dispute% but does not include
any such person
i! who is sub:ect to the "ir >orce "ct% 1&48 34 of 1&48!% or the "rmy "ct% 1&48
3' of 1&48!% or the Aa+y "ct% 1&46 '2 of 1&46!1 or
ii! who is employed in the police ser+ice or as an officer or other employee of a
prison1 or
iii! who is employed mainly in a mana5erial or administrati+e capacity1 or
i%! who% bein5 employed in a super+isory capacity% draws wa5es e$ceedin5 one
thousand si$ hundred rupees per mensem or e$ercises% either by the nature of
the duties attached to the office or by reason of the powers +ested in him%
functions mainly of a mana5erial nature(
SECTION 11B OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT,
1951
Power of Central Government to specify the requirements which shall be complied
with by the small scale industrial undertakings.
11B. 1! The .entral ;o+ernment may% with a +iew to ascertainin5 which ancillary and
small scale industrial underta9in5s need supporti+e measures% e$emptions or other
fa+ourable treatment under this "ct to enable them to maintain their +iability and stren5th
so as to be effecti+e in :
a! promotin5 in a harmonious manner the industrial economy of the country and
easin5 the problem of unemployment% and
b! securin5 that the ownership and control of the material resources of the
community are so distributed as best to subser+e the common 5ood%
specify% ha+in5 re5ard to the factors mentioned in sub#section 2!% by notified order% the
re,uirements which shall be complied with by an industrial underta9in5 to enable it to be
re5arded% for the purposes of this "ct% as an ancillary% or a small scale industrial
underta9in5 and different re,uirements% may be so specified for different purposes or
with respect to industrial underta9in5s en5a5ed in the manufacture or production of
different articles :
Provided that no industrial underta9in5 shall be re5arded as an ancillary industrial
underta9in5 unless it is% or is proposed to be% en5a5ed in :
i! the manufacture of parts% components% sub#assemblies% toolin5s or intermediates1
or
ii! renderin5 of ser+ices% or supplyin5 or renderin5% not more than fifty per cent of its
production or its total ser+ices% as the case may be% to other units for production of
other articles(
2! The factors referred to in sub#section 1! are the followin5% namely :
a! the in+estment by the industrial underta9in5 in :
i! plant and machinery% or
ii! land% buildin5s% plant and machinery1
b! the nature of ownership of the industrial underta9in51
c! the smallness of the number of wor9ers employed in the industrial underta9in51
d! the nature% cost and ,uality of the product of the industrial underta9in51
e! forei5n e$chan5e% if any% re,uired for the import of any plant or machinery by the
industrial underta9in51 and
!! such other rele+ant factors as may be prescribed(
)! " copy of e+ery notified order proposed to be made under sub#section 1! shall be laid
in draft before each Couse of Parliament% while it is in session% for a total period of thirty
days which may be comprised in one session or in two or more successi+e sessions% and
if% before the e$piry of the session immediately followin5 the session or the successi+e
sessions aforesaid% both Couses a5ree in disappro+in5 the issue of the proposed notified
order or both Couses a5ree in ma9in5 any modification in the proposed notified order%
the notified order shall not be made% or as the case may be% shall be made only in such
modified form as may be a5reed upon by both the Couses(
3! Aotwithstandin5 anythin5 contained in sub#section 1!% an industrial underta9in5
which% accordin5 to the law for the time bein5 in force% fell% immediately before the
commencement of the Industries ?e+elopment and Re5ulation! "mendment "ct% 1&73%
under the definition of an ancillary% or small scale industrial underta9in5% shall% after such
commencement% continue to be re5arded as an ancillary% or small scale industrial
underta9in5 for the purposes of this "ct until the definition aforesaid is altered or
superseded by any notified order made under sub#section 1!(
REQUIREMENTS TO BE COMPLIED WITH BY INDUSTRIAL
UNDERTAKINGS FOR BEING REGARDED AS SMALL SCALE/ANCILLARY
INDUSTRIES
SO 857(E), DATED 10-12-1999 # Fhereas the .entral ;o+ernment considers it
necessary with a +iew to ascertain which ancillary and small scale industrial underta9in5s
need supporti+e measures% e$emption or other fa+ourable treatment under the Industries
?e+elopment and Re5ulation! "ct% 1&41 '4 of 1&41! hereinafter referred to as the said
"ct! to enable them to maintain their +iability and stren5th so as to be effecti+e in
a! promotin5 in a harmonious manner the industrial economy of the country and
easin5 the problem of unemployment% and
b! securin5 that the ownership and control of the material resources of the
community are so distributed as best to subser+e the common 5ood1
"nd whereas the draft notification was laid before each Couse of Parliament for a period
of thirty days as re,uired under sub#section )! of section 11B of the said "ct1
"nd whereas no modification in the proposed notification has been su55ested by both the
Couses of Parliament1
Aow% therefore% in e$ercise of the powers conferred by sub#section 1! of section 11B and
sub#section 1! of section 2&B of the said "ct% and in supersession of the notification of
the ;o+ernment of India in the Binistry of Industry ?epartment of Industrial
?e+elopment! Ao( *(<( 2)2E!% dated the 2nd "pril% 1&&1% the .entral ;o+ernment
hereby specifies the followin5 factors on the basis of which an industrial underta9in5
shall be re5arded as a small scale or as an ancillary industrial underta9in5 for the
purposes of the said "ct :
1! <mall scale industrial underta.ing # "n industrial underta9in5 in which the
in+estment in fi$ed assets in plant and machinery% whether held on ownership terms or on
lease or on hire#purchase% does not e$ceed rupees one crore :
Provided that the in+estment ceilin5 in respect of the small scale industrial underta9in5%
manufacturin5 the items specified in the "ppendi$ to this <rder shall not e$ceed rupees
fi+e crore(
2! Ancillar+ industrial underta.ing - "n industrial underta9in5 which is en5a5ed or is
proposed to be en5a5ed in the manufacturin5 or production of parts% components% sub#
assemblies% toolin5 or intermediates% or the renderin5 of ser+ices% and underta9in5
supplies or proposes to supply or renders not more than fifty per cent of its production or
ser+ices% as the case may be% to one or more other industrial underta9in5s and whose
in+estment in fi$ed assets in plant and machinery% whether held on ownership terms or on
lease or on hire#purchase% does not e$ceed rupees one crore :
Provided that the in+estment ceilin5 in respect of the ancillary industrial underta9in5%
manufacturin5 the items specified in the "ppendi$ to this <rder shall not e$ceed rupees
fi+e crore(
&ote 1 : Ao small#scale or ancillary industrial underta9in5 referred to abo+e shall be
subsidiary of% or owned or controlled by any other industrial underta9in5(
Explanation.>or the purposes of this note%
A! owned shall ha+e the meanin5 as deri+ed from the definition of the e$pression
owner specified in clause !! of section ) of the said "ct1
B! subsidiary shall ha+e the same meanin5 as in clause 4! of section 2% read with
section 3% of the .ompanies "ct% 1&4' 1 of 1&4'!1
'! the e$pression controlled by any other industrial underta9in5 means as under :
i! where two or more industrial underta9in5s are set up by the same person as a
proprietor% each of such industrial underta9in5s shall be considered to be
controlled by the other industrial underta9in5 or underta9in5s%
ii! where two or more industrial underta9in5s are set up as partnership firms
under the Indian Partnership "ct% 1&)2 1 of 1&)2! and one or more partners
are common partner or partners in such firms% each such underta9in5 shall be
considered to be controlled by the other underta9in5 or underta9in5s%
iii! where industrial underta9in5s are set up by companies under the .ompanies
"ct% 1&4' 1 of 1&4'!% an industrial underta9in5 shall be considered to be
controlled by other industrial underta9in5 if%
a! the e,uity holdin5 by other industrial underta9in5 in it e$ceeds twenty#
four per cent of its total e,uity1 or
b! the mana5ement control of an underta9in5 is passed on to the other
industrial underta9in5 by way of the Bana5in5 ?irector of the first#
mentioned underta9in5 bein5 also the Bana5in5 ?irector or ?irector in
the other industrial underta9in5 or the ma:ority of ?irectors on the Board
of the first#mentioned underta9in5 bein5 the e,uity holders in the other
industrial underta9in5 in terms of the pro+isions of the followin5 items a!
and b! of sub#clause i%!1
i%! the e$tent of e,uity participation by other industrial underta9in5 or
underta9in5s in the underta9in5 as per sub#clause iii! abo+e shall be wor9ed
out as follows :
a! the e,uity participation by other industrial underta9in5 shall include both
forei5n and domestic e,uity1
b! e,uity participation by other industrial underta9in5 shall mean total e,uity
held in an industrial underta9in5 by other industrial underta9in5 or
underta9in5s% whether small#scale or otherwise% put to5ether as well as the
e,uity held by persons who are ?irectors in any other industrial
underta9in5 or underta9in5s e+en if the person concerned is a ?irector in
other Industrial Enderta9in5 or Enderta9in5s1
c! e,uity held by a person% ha+in5 special technical ,ualification and
e$perience% appointed as a ?irector in a small#scale industrial underta9in5%
to the e$tent of ,ualification shares% if so pro+ided in the "rticles of
"ssociation% shall not be counted in computin5 the e,uity held by other
industrial underta9in5 or underta9in5s e+en if the person concerned is a
?irector in the other industrial underta9in5 or underta9in5s1
%! where an industrial underta9in5 is a subsidiary of% or is owned or controlled
by% any other industrial underta9in5 or underta9in5s in terms of sub#clause i!%
ii! or iii! and if the total in+estment in fi$ed assets in plant and machinery of
the first#mentioned industrial underta9in5 and the other industrial underta9in5
or underta9in5s clubbed to5ether e$ceeds the limit of in+estment specified in
para5raph 1! or 2! of this notification% as the case may be% none of these
industrial underta9in5s shall be considered to be a small scale or ancillary
industrial underta9in5(
&ote 2 : a! In calculatin5 the +alue of plant and machinery for the purposes of
para5raphs 1! and 2! of this notification% the ori5inal price thereof% irrespecti+e of
whether the plant and machinery are new or second#hand% shall be ta9en into account(
b! In calculatin5 the +alue of plant and machinery% the followin5 shall be e$cluded%
namely :
i! the cost of e,uipment such as tools% :i5s% dies% moulds and spare parts for
maintenance and the cost of consumable stores1
ii! the cost of installation of plant and machinery1
iii! the cost of research and de+elopment e,uipment and pollution control e,uipment1
i%! the cost of 5eneration sets and e$tra transformer installed by the underta9in5 as
per the re5ulations of the *tate Electricity Board1
%! the ban9 char5es and ser+ice char5es paid to the Aational *mall Industries
.orporation or the *tate *mall Industries .orporation1
%i! the cost in+ol+ed in procurement or installation of cables% wirin5% bus bars%
electrical control panels not those mounted on indi+idual machines!% oil circuit
brea9ers or miniature circuit brea9ers which are necessary to be used for
pro+idin5 electrical power to the plant and machinery or for safety measures1
%ii! the cost of 5as producer plants1
%iii!transportation char5es e$cludin5 of sales ta$ and e$cise! for indi5enous
machinery from the place of manufacturin5 to the site of the factory1
ix! char5es paid for technical 9now#how for erection of plant and machinery1
x! cost of such stora5e tan9s which store raw materials% finished products only and
are not lin9ed with the manufacturin5 process1 and
xi! cost of fire#fi5htin5 e,uipments(
c! In the case of imported machinery% the followin5 shall be included in calculatin5 the
+alue% namely :
i! import duty e$cludin5 miscellaneous e$penses as transportation from the port to
the site of the factory% demurra5e paid at the port!1
ii! the shippin5 char5es1
iii! customs clearance char5es1 and
i%! sales ta$(
E+ery industrial underta9in5 which has been issued a certificate of re5istration under
section 18 of the said "ct or a licence under sections 11% 11" and 1) of the said "ct by
the .entral ;o+ernment and are co+ered by the pro+isions of para5raphs 1! and 2!
abo+e relatin5 to the ancillary or small#scale industrial underta9in5% may be re5istered% at
the discretion of the owner% as such% within a period of one hundred and ei5hty days from
the date of publication of this notification in the <fficial ;a=ette(
APPENDIX
GI*T <> ITEB*
-<ee pro+iso to para5raph 1! or 2!2
Droduct
'ode
&ame o! the items
2'8181 .otton cloth 9nitted
2'8182 .otton +ests 9nitted
2'818) .otton soc9s 9nitted
2'8183 .otton under5arments 9nitted
2'818' .otton shawls 9nitted
2'81&& <ther cotton 9nitted wears
2'8281 Foollen cloth 9nitted
2'8282 Foollen +ests 9nitted
2'828) Foollen soc9s 9nitted
2'8283 Foollen scar+es 9nitted
2'8284 Foollen under5arments 9nitted
2'828' Foollen caps 9nitted
2'8286 Foollen shawls 9nitted
2'8287 Foollen 5lo+es
2'8286 Foollen mufflers 9nitted
2'82&& <ther woollen 9nitted wears
"rt sil9IBan#made fibre hosiery
2'8)18 1( *ynthetic 9nitted soc9s and stoc9in5(
2'8)82 2( *ynthetic 9nitted underwears such as +est% briefs and drawer
2'8)83 )( *ynthetic 9nitted outerwears such as :ersey slipo+ers% pullo+ers%
cardi5ans and :ac9ets
2'8)87 3( *ynthetic 9nitted children wear such as baby suits% 9nic9er% froc9%
underwear and outwear
2'8)8&81 4( *ynthetic 9nitted fabrics e$cept hi5h pile fabric made by sil+er 9nittin5%
and synthetic 9nitted blan9ets
2'8)11 '( *ynthetic 9nitted swimwear such as trun9 and costume
2'8)12 6( *ynthetic 9nitted wear such as scarf% muffler% shawl% cap% ties% blouse and
:ean
2'8)1) 7( *ynthetic 9nitted shirt% T#*hirt% collar shirt and sports#s9irts
2'8)13 &( *ynthetic 9nitted hose
2'8)14 18( *ynthetic 9nitted 5as mantle fabric
2'8)1' 11( <ther synthetic 9nitwear
)3)181 Cac9saw frames
)3)182 Pliers
)3)18) *crew dri+ers
)3)183 *panners
)3)18' Cammers
)3)187 "n+ils
)3)18& Food wor9in5 saws
)3)111 Frenches
)3)112 Dni+es and shearin5 blades all types includin5 those of metal% paper%
bamboo and wood for manual operations!
)3)11) Aail pullers
)3)113 .hisels
)3)114 Pincers
)3)11' Fire cutters
)3)1&& <ther hand tools for blac9smithy% carpentry% hand for5in5% foundry% etc(
Stationery Sector
)1&&11 Fritin5 in9s and fountain pen in9s
)76181 Ball point pens
)7618) >ountain pens
)76183 Pen nibs
)76184 >ountain pens and ball pens components e$cludin5 metallic tips
)76281 Pencils
)76381 Cand staplin5 machine
)76481 Paper pins
)76'81 .arbon paper
)76'8218 Typewriter ribbon for mechanical typewriters
)76&81 Cand numberin5 machines
)76&8) Pencil sharpeners
)76&86 Pen holders
Drugs and Pharmaceuticals Sector
)18'8181 Para amino phenol#indl( ;rade
)18'27 Pyra=olones
)18'48 Ben=yl ben=oate
)18'47 Aiacinamide
)1)124 Paracetamol
)1)14781 Bethyl parabens and sodium salt startin5 from para hydro$y ben=oic acid
)1)14&81 Ethyl parabens and sodium salt startin5 from para hydro$y ben=oic acid
)1)1&481 Propyle parabens and sodium salt startin5 from para hydro$y ben=oic acid
)1)1&'8 .alcium 5luconate
)1812' "luminium hydro$ide 5el(
2'1381 "ll types of sports nets
)74181 *huttle coc9s
)74183 Coc9ey stic9s
)7418418 Protecti+e e,uipments for sports% li9e pads% 5lo+es% etc( of leather 5oods
)7418' ?umb#bells and chest e$panders
)74186 .ric9et and hoc9ey balls
)74187 >ootball% +olley ball and bas9et ball co+ers(
20-21 Food and Allied Industries
282481 Pic9les and chutneys
284181 Bread
303 Plastic Products
)8)684 Polypropylene bo$ strappin5
)8)&1281 P0. Pipes includin5 conduits#Epto # 118 mm dia
)8)&)481 >ittin5s for P0. pipes includin5 conduits upto # 118 mm dia(
31 Chemicals and chemical products
1+estu!! basic d+es <peci!ication
)1228)81 1( Basic yellow 2
)1228)82 2( Basic 5reen 3
)1228)8) )( Basic 5reen 1
)1228)83 3( Basic +iolet 11
)1228)84 4( Basic +iolet 1
)1228)8' '( Basic blue 6
)1228)86 6( Basic +iolet 18
)1228)87 7( Basic blue Bethylene Blue! &
"J< ?YE*
?irect
)1228681 1( ?irect yellow 7
)1228682 2( ?irect yellow 16
)122868) )( ?irect yellow &
)1228683 3( ?irect yellow 2&
)1228684 4( ?irect red .on5o red! 27
)122868' '( ?irect red 1)
)1228686 6( ?irect dye -Brilliant .on5o .
"!2

)1228687 7( ?irect red 1
)122868& &( ?irect brown 2
)1228618 18( ?irect brown 4&
)1228611 11( ?irect oran5e 1
)1228612 12( ?irect yellow 28
)122861) 1)( ?irect oran5e 1
)1228613 13( ?irect +iolet 34
)1228614 14( ?irect +iolet 1
)122861' 1'( ?irect blac9 2&
)1228616 16( ?irect blue 2
)1228617 17( ?irect blue '
)122861& 1&( ?irect red '1
)1228624 24( ?irect yellow 3
)122862' 2'( ?irect yellow .hrysopheninc! 12
)1228626 26( ?irect +iolet 6
)1228627 27( ?irect +iolet )1
)122862& 2&( ?irect +iolet &
)12286)8 )8( ?irect +iolet 41
)82286)1 )1( ?irect red 71
)12286)2 )2( ?irect yellow 33
)12286)) ))( ?irect red )1
)12286)3 )3( ?irect oran5e 2'
)12286)4 )4( ?irect red 2)
)12286)
'
)'( ?irect red 7)
)12286)
6
)6( ?irect brown 1
)12286)
7
)7( ?irect brown 4
)12286)
&
)&( ?irect blac9 )7
)122863
8
38( ?irect 5reen 1
)122863
1
31( ?irect 5reen '
)122863
2
32( ?irect 5reen 7
)122863
)
3)( ?irect brown 64
)122863
3
33( ?irect blue 61
)122863
4
34( ?irect blac9 4'
".I? ?YE*
)12286'
1
1( "cid yellow )'
)12286'
2
2( "cid oran5e 6
)12286'
)
)( "cid red 77
)12286'
3
3( "cid red >ood Red 6! 17
)12286'
4
4( "cid red >ood Red 18! 1
)12286'
'
'( "cid +iolet >ood Red 11! 6
)12286'
6
6( "cid yellow 11
)12286'
7
7( "cid yellow 6'
)12286'
&
&( "cid yellow >ood Yellow 4! 16
)122866
8
18( "cid yellow >ood Yellow 3! 2)
)122866
1
11( "cid brown 44
)122866
2
12( "cid oran5e 23
)122866
)
1)( "cid brown 13
)122866
3
13( "cid blac9 1
)122866
4
14( "cid red 74
)122866 1'( "cid yellow 32
'
)122866
7
17( "cid blue 11)
)122866
&
1&( "cid red 132
)122867
1
21( "cid red 16
)122867
2
22( "cid yellow 6)
A"PCTC<G*
)122878
1
1( "=oic couplin5 .omponents
Aaphthol "*!
2
)122878
2
2( "=oic couplin5 .omponent
Aaphthol "*E!
18
)122878
)
)( "=oic couplin5 .omponent
Aaphthol "*#B*!
16
)122878
3
Aaphthol "*#?!
1&
)122878
4
Aaphthol "*#TR!
7
)122878
'
'( "=oic couplin5 .omponent
Aaphthol "*#<G!
28
)122878
6
Aaphthol "*#GT!
23
)122878
7
Aaphthol "*#PC!
13
)122878
&
&( "=oic couplin5 .omponent
Aaphthol "*#B<!
3
)122871
8
Aaphthol "*#*F!
6
)122871
1
Aaphthol "*#;!
4
)1228&8
1
Phthalocyanine Blue E$cept for
.apti+e consumption for
manufacture of Phthele .yanine
5reen(!

6eacti%e d+es <peci!ication
)1221881 1( Brilliant red B#4B Reacti+e Red#2
)1221882 2( Brilliant red C#6B Reacti+e Red#3
)122188) )( Rubine B#4B Reacti+e Red#'
)1221883 3( *carlet C#.R Reacti+e Red#7
)1221884 4( Brilliant red B#7B Reacti+e Red#11
)122188' '( Brilliant red C#7B Reacti+e Red#)1
)1221886 6( Rubine C#BA Reacti+e Red#)2
)1221887 7( Pin9 RB Reacti+e Red#)6
)122188& &( Brilliant red EB Reacti+e Red#6)
)1221818 18( Brilliant pin9 B Reacti+e Red#63
)1221811 11( Brilliant
purple
C#RR Reacti+e 0iolet#1
ma5enta
B Reacti+e 0iolet#1)
)122181) 1)( Brilliant +iolet PR Reacti+e 0iolet#13
)1221813 13( Brilliant +iolet 4R/ Reacti+e 0iolet#21
)1221814 14( Ba5enta B
)122181' 1'( Yellow BY#
R
Reacti+e Yellow#1
)1221816 16( Yellow 3#"* Reacti+e Yellow#)
)1221817 17( Yellow BY#
R
Reacti+e Yellow#3
)122181& 1&( Yellow B#
;R
Reacti+e Yellow#6
)1221828 28( Yellow C#3; Reacti+e Yellow#17
yellow
B#3; Reacti+e Yellow#22
yellow
'; Reacti+e Yellow#3)
)122182) 2)( Yellow R Reacti+e Yellow#33
)1221823 23( Blac9 C#A Reacti+e Blac9#7
)1221824 24( Brilliant blue C#68 Reacti+e Blue#)
)122182' 2'( Brilliant blue B#R Reacti+e Blue#3
)1221826 26( Brilliant blue C#;R Reacti+e Blue#4
)1221827 27( Aa+y blue B#)R Reacti+e Blue#&
)122182& 2&( Brilliant blue C#4; Reacti+e Blue#24
)12218)8 )8( Aa+y blue C#)R Reacti+e Blue#27
)12218)1 )1( Aa+y blue R/ Reacti+e Blue#)&
)12218)2 )2( Blue BRR Reacti+e Blue#4'
)12218)) ))( Aa+y blue R/ Reacti+e Blue#4&
)12218)3 )3( <ran5e B/#
;
Reacti+e <ran5e#1
)12218)4 )4( Brilliant B#2R Reacti+e <ran5e#3
oran5e
)12218)' )'( ;olden yellow C#R Reacti+e <ran5e#11
)12218)6 )6( Brilliant
oran5e
C#2R Reacti+e <ran5e#1)
)12218)7 )7( <ran5e Reacti+e <ran5e#13
)12218)& )&( <ran5e ;E/ Reacti+e <ran5e#)'
oran5e
R/ Reacti+e <ran5e#)6
oran5e
)R/ Reacti+e <ran5e#)7
)1221832 32( Brown 3#RC Reacti+e Brown#&
)122183) 3)( Brown B#3R Reacti+e Brown#18
)1221833 33( Yellow C#"* Reacti+e Yellow#3'
)1221834 34( Aa+y blue )RC Reacti+e Blue#2'

0ast colour bases
)1221181 1( >ast Yellow ;; base "=oic ?ia=o .omp 33! )6888
)1221182 2( >ast <ran5e ;. base "=oic ?ia=o .omp 2! )6884
)122118) )( >ast scarlet ;;I;.* Base "=oic ?ia=o .omp
)!
)6818
)1221183 3( "=oic ?ia=o .omp 6 )68)8
)1221184 4( >ast red ) ;G Base "=oic ?ia=o .omp &! )6838
)1221186 6( >ast red DB Base "=oic ?ia=o .omp )2! )68&8
)122118& &( >ast red ;G Base "=oic ?ia=o .omp 7! )6118
)1221118 18( >ast red RIR. base "=oic ?ia=o .omp 18! )6128
)1221111 11( >ast red B Base "=oic ?ia=o .omp 4! )6124
)1221112 12( >ast scarlet RIR. base "=oic ?ia=o .omp 1)! )61)8
)122111) 1)( >ast +iolet B Base "=oic ?ia=o .omp 31! )61'4
)1221113 13( >ast blue BB Base "=oic ?ia=o .omp 28! )6164
)1221114 14( >ast 5arment ;<. Base "=oic ?ia=o .omp 3! )621&

Glass and Ceramics
)28181 >ire clay% bric9s and bloc9s containin5 less than 38M alumina
6oo!ing tiles
)28381 )( Roofin5 tiles#clay
)2&282 6( Roofin5 tiles#cement concrete
0looring tiles
)28382 )( >loorin5 tiles#clay
)2')1' 4( >loorin5 tiles#marble e$cludin5 tiles of thic9ness less than 18
mm!
)2'1)6 '( >loorin5 tiles#5ranite e$cludin5 tiles of thic9ness less than 18
mm!
)27&8) 6( >loorin5 tiles#cement mosaic
)2&283 7( >loorin5 tiles#cement concrete
Ceramic table wares and allied items in stone wares, semi
vitreous wares and earthern wares namely:
)2)181 1( ?inner sets
)2)182 2( Tea sets
)2)18) )( .ups and sauces
)22183 3( @ars and other containers
)21882 Bloc9 ;lass
)2188) 0itrite ;lass e$cept for capti+e use!
)2118'81 ;lass beads e$cept industrial beads
)21282814 ;lass mirrors e$cludin5 those manufactured by usin5 automatic
spray or +acuum coatin5 process(
)21387 *cientific laboratory 5lassware e$cludin5 boro silicate type!
)2138& Bicro#co+er 5lasses and slides for microscopes
)21681 ;lass ban5les
)21&87 ;lass holloware by mouth blown andIor semi#automatic process
)21&8&81 *odalime silica pressed 5lass tumbler
)21&8&82 1( *odalime silica pressed 5lass plates
)21&8&8) 2( *odalime silica pressed 5lass bowls
)21&8&83 )( *odalime silica pressed 5lass ashtrays
)21&8&84 3( *odalime silica pressed 5lass +ases
)21&18 ;lass marbles "ll types!
)2))81 Gow tension insulators
Chemical porcelain items as follows:
)2)78381 1( >lat tipped basins
)2)&8382 2( Round and rectan5ular type dishes
)2)&838) )( .ombustion posts
)2)&8383 3( .rucibles
)2)&8384 4( >ilter funnels for +acuum pressure
)2)&838' '( ;ra+ity filtrations
)2)&8386 6( Pipette rests
)28&8387 7( *pottin5 plates
)2)&838& &( ?esiccator plates
)23281 Gime used for construction and lime wash
)2328381 Cydrated lime used for construction and lime wash(
)23&81 Plaster of Paris e$ceptin5 for use as construction material!
)2'&8' *toneware :ars and bowls 9undi
)2'&83 *alt 5la=ed sewer pipes
)78'8'81 ThermometersEp to 148 de5ree!.
)7118281 <phthalmic lenses from blan9s ;lass!
Auto parts components and ancillaries
)63'8' ;rease nipples
)63687 ;un metal bushes
)63621 Cose pipes and radiator hoses#"uto
)63622 Corn buttons
)6362'81 *hac9le pins#"utomobile use
)63642 Radiator 5rills#"uto
)6364& *eat cushion
)63667 *un shades#"uto
)6367881 *ide lamps assembly#"uto e$cludin5 combination lamp assembly
)63711 Battery cables and fittin5s
)63712 Battery cell tester
)637'& Electrical fuse bo$es#"uto
)63768 Electrical fuses#"uto
)6377) >uel tan9 caps#"uto
)63&81 "rmature tester
)63&82 Battery terminal lifters
)63&8) .ondensers and resistance testers
)63&83 >enders% spoons and hammers
)63&84 >eeler 5au5es
)63&8' >larin5 tools
)63&86 ;ear flushers
)63&87 Puller of all types
)63&8& Rin5 e$panders
)63&18 Rin5 compressors
)63&11 *crew e$tractors
)63&12 *par9 Plu5 tester and cleaners
)63&1) *tud remo+erse$tractors
)63&13 Toe#in 5au5es
)63&14 Tyre +al+e pullout tools
)63&1' Tube cutter
)63&16 >lan5in5 tools
)63&21 Paintin5 e,uipments li9e spray 5uns etc(
)63&24 ;rease 5uns
)63&2' Tyre inflators # Both hand and foot operated
)63&&3 "uto rubber components as follows:
)63&&381 1( Bra9e pedals
)63&&382 2( .lutch pedals
)63&&38) ): ?ust co+ers
)63&&383 3( Fiper blade components
)63&&384 4( Findscreen beedin5s
)63&&38' '( ?oor channels
)63&&386 6( Rubber beedin5
)82'861 7( Rubber mats
)64783 *po9es and nipples#"uto cycle other than swa5ed type and all items
in the ?ru5s and Pharmaceuticals *ector(

SECTION 14 OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT,
1951
Procedure for the grant of licence or permission.
14. Before 5rantin5 any licence or permission under section 11% section 11"% section 1)
or section 2&B% the .entral ;o+ernment may re,uire such officer or authority as it may
appoint for the purpose% to ma9e a full and complete in+esti5ations in respect of
applications recei+ed in this behalf% and report to it the result of such in+esti5ation and in
ma9in5 any such in+esti5ation% the officer or authority shall follow such procedure as
may be prescribed(
SECTION 2(1)(t) OF INFORMATION TECHNOLOGY ACT, 2000
Definitions.
** ** **
t! electronic record means data% record or data 5enerated% ima5e or sound stored%
recei+ed or sent in an electronic form or micro film or computer 5enerated micro
fiche1
SECTION 2 OF INSURANCE ACT, 1938
Definitions.
2. In this "ct% unless there is anythin5 repu5nant in the sub:ect or conte$t%
** ** **
5B! .ontroller of Insurance means the officer appointed by the .entral ;o+ernment
under section 2B to e$ercise all the powers% dischar5e the functions and performs
the duties of the "uthority under this "ct or the Gife Insurance .orporation "ct%
1&4' )1 of 1&4'! or the ;eneral Insurance Business Aationalisation! "ct% 1&62
46 of 1&62! or the Insurance Re5ulatory and ?e+e#lopment "uthority "ct% 1&&&1
** ** **
A! Indian insurance company means any insurer bein5 a company
a! which is formed and re5istered under the .ompanies "ct% 1&4' 1 of 1&4'!1
b! in which the a55re5ate holdin5s of e,uity shares by a forei5n company% either
by itself or throu5h its subsidiary companies or its nominees% do not e$ceed
twenty#si$ per cent paid#up e,uity capital of such Indian insurance company1
c! whose sole purpose is to carry on life insurance business or 5eneral insurance
business or re#insurance business(
Explanation>or the purposes of this clause% the e$pression forei5n company
shall ha+e the meanin5 assi5ned to it under clause 23A! of section 2 of the
Income#ta$ "ct% 1&'1 3) of 1&'1!1
** ** **
#! insurer means
a! any indi+idual or unincorporated body of indi+iduals or body corporate
incorporated under the law of any country other than India% carryin5 on
insurance business not bein5 a person specified in sub#clause c! of this clause
which
i! carries on that business in India% or
ii! has his or its principal place of business or is domiciled in India% or
iii! with the ob:ect of obtainin5 insurance business% employs a representati+e%
or maintains a place of business% in India1
b! any body corporate -not bein5 a person specified in sub#clause c! of this
clause2 carryin5 on the business of insurance% which is a body corporate
incorporated under any law for the time bein5 in force in India1 or stands to
any such body corporate in the relation of a subsidiary company within the
meanin5 of the Indian .ompanies "ct% 1&1) 6 of 1&1)!% as defined by sub#
section 2! of section 2 of that "ct% and
c! any person who in India has a standin5 contract with underwriters who are
members of the *ociety of Glyods whereby such person is authorised within
the terms of such contract to issue protection notes% co+er notes% or other
documents 5rantin5 insurance co+er to others on behalf of the underwriters%
but does not include a principal a5ent% chief a5ent% special a5ent% or an insurance a5ent or
a pro+ident society as defined in Part III1
SECTION 43 OF LIFE INSURANCE CORPORATION ACT, 1956
Application of the Insurance Act.
43. 1! The followin5 sections of the Insurance "ct shall% so far as may be% apply to the
.orporation as they apply to any other insurer% namely :
*ections 2% 2B% )% 17% 2'% ))% )7% )&% 31% 34% 3'% 36"% 48% 41% 42% 118"% 118B% 118.% 11&%
121% 122 and 12)(
2! The .entral ;o+ernment shall as soon as may be after the commencement of this "ct%
by notification in the <fficial ;a=ette% direct that the followin5 sections of the Insurance
"ct shall apply to the .orporation sub:ect to such conditions and modifications as may be
specified in the notification% namely :
*ections 2?% 18% 11% 1)% 13% 14% 28% 21% 22% 2)% 24% 26"% 27"% )4% )'% )6% 38% 38"% 38B%
3)% 33% 182 to 18'% 186 to 118% 111% 11)% 113 and 11'"(
2"! *ection 32 of the Insurance "ct shall ha+e effect in relation to the issue to any
indi+idual of a license to act as an a5ent for the purpose of solicitin5 or procurin5 life
insurance business for the .orporation as if the reference to an officer authorised by the
"uthority in this behalf in sub#section 1! thereof included a reference to an officer of the
.orporation authorised by the "uthority in this behalf(
)! The .entral ;o+ernment may% by notification in the <fficial ;a=ette% direct that all or
any of the pro+isions of the Insurance "ct other than those specified in sub#section 1! or
sub#section 2!% shall apply to the .orporation sub:ect to such conditions and
modifications as may be specified in the notification(
3! E+ery notification issued under sub#section 2! or sub#section )! shall be laid for not
less than thirty days before both Couses of Parliament as soon as possible after it is
issued% and shall be sub:ect to such modifications as Parliament may ma9e durin5 the
session in which it is so laid or the session immediately followin5(
4! *a+e as pro+ided in this section% nothin5 contained in the Insurance "ct shall apply to
the .orporation(
SECTION 3(12) OF MERCHANT SHIPPING ACT, 1958
Definitions.
** ** **
12! fishin5 +essel means a ship fitted with mechanical means of propulsion which is
e$clusi+ely en5a5ed in sea fishin5 for profit1
SECTION 2 OF NATIONAL TRUST FOR WELFARE OF PERSONS WITH
AUTISM, CEREBRAL PALSY, MENTAL RETARDATION AND MULTIPLE
DISABILITIES ACT, 1999
Definitions.
a! autism means a condition of une+en s9ill de+elopment primarily affectin5 the
communication and social abilities of a person% mar9ed by repetiti+e and
ritualistic beha+iour1
** ** **
c! cerebral palsy means a 5roup of non#pro5ressi+e conditions of a person
characterised by abnormal motor control posture resultin5 from brain insult or
in:uries occurrin5 in the pre#natal% perinatal or infant period of de+elopment1
** ** **
g! mental retardation means a condition of arrested or incomplete de+elopment of
mind of a person which is specially characterised by sub#normality of
intelli5ence1
h! multiple disabilities means a combination of two or more disabilities as defined in
clause i! of section 2 of the Persons with ?isabilities E,ual <pportunities%
Protection of Ri5hts and >ull Participation! "ct% 1&&4 1 of 1&&'!1
** ** **
4! person with disability means a person sufferin5 from any of the conditions
relatin5 to autism% cerebral palsy% mental retardation or a combination of any two
or more of such conditions and includes a person sufferin5 from se+ere multiple
disability1
** ** **
o! se+ere disability means disability with ei5hty per cent or more of one or more of
multiple disabilities1
** ** **
SECTION 2 OF PATENTS ACT, 1970
Definitions and interpretation
2. ** ** **
b! .ontroller means the .ontroller ;eneral of Patents% ?esi5ns and Trade Bar9s
referred to in section 6)1
** ** **
o! patented article and patented process mean respecti+ely an article or process in
respect of which a patent is in force1
** ** **
2! patent of addition means a patent 5ranted in accordance with section 431
** ** **
+! true and first in+entor does not include either the first importer of an in+ention
into India% or a person to whom an in+ention is first communicated from outside
India(
SECTION 4 OF PAYMENT OF GRATUITY ACT, 1972
Payment of gratuity.
4. (1)** ** **
2! >or e+ery completed year of ser+ice or part thereof in e$cess of si$ months% the
employer shall pay 5ratuity to an employee at the rate of fifteen days wa5es based on the
rate of wa5es last drawn by the employee concerned :
Provided that in the case of a piece#rated employee% daily wa5es shall be computed on
the a+era5e of the total wa5es recei+ed by him for a period of three months immediately
precedin5 the termination of his employment% and% for this purpose% the wa5es paid for
any o+ertime wor9 shall not be ta9en into account :
Provided further that in the case of an employee who is employed in a seasonal
establishment and who is not so employed throu5hout the year% the employer shall pay
the 5ratuity at the rate of se+en days wa5es for each season(
Explanation.In the case of a monthly rated employee% the fifteen days wa5es shall be
calculated by di+idin5 the monthly rate of wa5es last drawn by him by twenty#si$ and
multiplyin5 the ,uotient by fifteen(
)! The amount of 5ratuity payable to an employee shall not e$ceed three la9hs and fifty
thousand rupees(
** ** **
SECTION 2 OF PERSONS WITH DISABILITIES (EQUAL OPPORTUNITIES,
PROTECTION OF RIGHTS & FULL PARTICIPATION) ACT, 1995
Definitions
2. ** ** **
a! appropriate ;o+ernment means%
i! in relation to the .entral ;o+ernment or any establishment wholly or
substantially financed by that ;o+ernment% or a .antonment Board
constituted under the .antonment "ct% 1&23 2 of 1&23!% the .entral
;o+ernment1
ii! in relation to a *tate ;o+ernment or any establishment wholly or
substantially financed by that ;o+ernment% or any local authority% other
than a .antonment Board% the *tate ;o+ernment1
iii! in respect of the .entral .o#ordination .ommittee and the .entral
E$ecuti+e .ommittee% the .entral ;o+ernment1
i%! in respect of the *tate .o#ordination .ommittee and the *tate E$ecuti+e
.ommittee% the *tate ;o+ernment1
b! blindness refers to a condition where a person suffers from any of the followin5
i! total absence of si5ht1 or
ii! +isual acuity not e$ceedin5 'I'8 or 28I288 snellen! in the better eye with
correctin5 lenses1 or
iii! limitation of the field of +ision subtendin5 an an5le of 28 de5ree or worse1
** ** **
i! disability means
i! blindness1
ii! low +ision1
iii! leprosy#cured1
i%! hearin5 impairment1
%! locomotor disability1
%i! mental retardation1
%ii! mental illness1
** ** **
l! hearin5 impairment means loss of si$ty decibels or more in the better ear in the
con+ersational ran5e of fre,uencies1
** ** **
n! leprosy#cured person means any person who has been cured of leprosy but is
sufferin5 from
i! loss of sensation in hands or feet as well as loss of sensation and paresis in
the eye and eye#lid but with no manifest deformity1
ii! manifest deformity and paresis but ha+in5 sufficient mobility in their hands
and feet to enable them to en5a5e in normal economic acti+ity1
iii! e$treme physical deformity as well as ad+anced a5e which pre+ents him
from underta9in5 any 5ainful occupation%
and the e$pression leprosy#cured shall be construed accordin5ly1
o! locomotor disability means disability of the bones% :oints or muscles leadin5 to
substantial restriction of the mo+ement of the limbs or any form of cerebral
palsy1
p! medical authority means any hospital or institution specified for the purposes of
this "ct by notification by the appropriate ;o+ernment1
2! mental illness means any mental disorder other than mental retardation1
r! mental retardation means a condition of arrested or incomplete de+elopment of
mind of a person which is specially characterised by subnormality of
intelli5ence1
** ** **
t! person with disability means a person sufferin5 from not less than forty per cent
of any disability as certified by a medical authority1
u! person with low +ision means a person with impairment of +isual functionin5
e+en after treatment or standard refracti+e correction but who uses or is
potentially capable of usin5 +ision for the plannin5 or e$ecution of a tas9 with
appropriate assisti+e de+ice1
** ** **
w! rehabilitation refers to a process aimed at enablin5 persons with disabilities to
reach and maintain their optimal physical% sensory% intellectual% psychiatric or
social functional le+els1
SECTION 56 OF PERSONS WITH DISABILITIES (EQUAL OPPORTUNITIES,
PROTECTION OF RIGHTS & FULL PARTICIPATION) ACT, 1995
Institutions for persons with severe disabilities.
56. 1! The appropriate ;o+ernment may establish and maintain institutions for persons
with se+ere disabilities at such places as it thin9s fit(
2! Fhere% the appropriate ;o+ernment is of opinion that any institution other than an
institution% established under sub#section 1!% is fit for the rehabilitation of the persons
with se+ere disabilities% the ;o+ernment may reco5nise such institution as an institution
for persons with se+ere disabilities for the purposes of this "ct :
Provided that no institution shall be reco5nised under this section unless such institution
has complied with the re,uirements of this "ct and the rules made thereunder(
)! E+ery institution established under sub#section 1! shall be maintained in such manner
and satisfy such conditions as may be prescribed by the appropriate ;o+ernment(
3! >or the purposes of this section person with se+ere disability means a person with
ei5hty per cent or more of one or more disabilities(
SECTION 2(E) OF RESERVE BANK OF INDIA ACT, 1934
Definitions.
2( In this "ct% unless there is anythin5 repu5nant in the sub:ect or conte$t% #
** ** **
e! scheduled ban9 means a ban9 included in the *econd *chedule1
SECTION 2(ac) OF SECURITIES CONTRACTS (REGULATION) ACT, 1956
Definitions.
** ** **
ac! deri+ati+e includes#
"! a security deri+ed from a debt instrument% share% loan% whether secured or
unsecured% ris9 instrument or contract for differences or any other form of
security1
B! a contract which deri+es its +alue from the prices% or inde$ of prices% of underlyin5
securities1
SECTION 3(1)(ga) OF SICK INDUSTRIAL COMPANIES (SPECIAL
PROVISIONS) ACT, 1985
Definitions.
** ** **
ga! net worth means the sum total of the paid#up capital and free reser+es(
Explanation.>or the purposes of this clause% free reser+es means all reser+es credited out
of the profits and share premium account but does not include reser+es credited out of re#
e+aluation of assets% write bac9 of depreciation pro+isions and amal5amation(
** ** **
SECTION 17 OF SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS)
ACT, 1985
Powers of Board to make suitable order on the completion of inquiry.
17. 1! If after ma9in5 an in,uiry under section 1'% the Board is satisfied that a company
has become a sic9 industrial company% the Board shall% after considerin5 all the rele+ant
facts and circumstances of the case% decide% as soon as may be by order in writin5%
whether it is practicable for the company to ma9e its net worth e$ceed the accumulated
losses within a reasonable time(
2! If the Board decides under sub#section 1! that it is practicable for a sic9 industrial
company to ma9e its net worth e$ceed the accumulated losses within a reasonable time%
the Board% shall% by order in writin5 and sub:ect to such restrictions or conditions as may
be specified in the order% 5i+e such time to the company as it may deem fit to ma9e its net
worth e$ceed the accumulated losses(
)! If the Board decides under sub#section 1! that it is not practicable for a sic9 industrial
company to ma9e its net worth e$ceed the accumulated losses within a reasonable time
and that it is necessary or e$pedient in the public interest to adopt all or any of the
measures specified in section 17 in relation to the said company it may% as soon as may
be% by order in writin5% direct any operatin5 a5ency specified in the order to prepare%
ha+in5 re5ard to such 5uidelines as may be specified in the order% a scheme pro+idin5 for
such measures in relation to such company(
3! The Board may%
a! if any of the restrictions or conditions specified in an order made under sub#
section 2! are not complied with by the company concerned% or if the company
fails to re+i+e in pursuance of the said order% re+iew such order on a reference in
that behalf from any a5ency referred to in sub#section 2! of section 14 or on its
own motion and pass a fresh order in respect of such company under sub#section
)!1
b! if the operatin5 a5ency specified in an order made under sub#section )! ma9es a
submission in that behalf% re+iew such order and modify the order in such manner
as it may deem appropriate(
SECTION 18 OF SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS)
ACT, 1985
Preparation and sanction of schemes.
18. 1! Fhere an order is made under sub#section )! of section 16 in relation to any sic9
industrial company% the operatin5 a5ency specified in the order shall prepare% as
e$peditiously as possible and ordinarily within a period of ninety days from the date of
such order% a scheme with respect to such company pro+idin5 for any one or more of the
followin5 measures% namely :
a! the financial reconstruction of the sic9 industrial company1
b! the proper mana5ement of the sic9 industrial company by chan5e in% or ta9e o+er
of% the mana5ement of the sic9 industrial company1
c! the amal5amation of
i! the sic9 industrial company with any other company% or
ii! any other company with the sic9 industrial company1
hereafter in this section% in the case of sub#clause i!% the other company% and in
the case of sub#clause ii!% the sic9 industrial company% referred to as transferee
company!1
d! the sale or lease of a part or whole of any industrial underta9in5 of the sic9
industrial company1
da! the rationalisation of mana5erial personnel% super+isory staff and wor9men in
accordance with law1
e! such other pre+enti+e% ameliorati+e and remedial measures as may be appropriate1
!! such incidental% conse,uential or supplemental measures as may be necessary or
e$pedient in connection with or for the purposes of the measures specified in
clauses a! to e!(
2! The scheme referred to in sub#section 1! may pro+ide for any one or more of the
followin5% namely :
a! the constitution% name and re5istered office% the capital% assets% powers% ri5hts%
interests% authorities and pri+ile5es% duties and obli5ations of the sic9 industrial
company or% as the case may be% of the transferee company1
b! the transfer to the transferee company of the business% properties% assets and
liabilities of the sic9 industrial company on such terms and conditions as may be
specified in the scheme1
c! any chan5e in the Board of ?irectors% or the appointment of a new Board of
?irectors% of the sic9 industrial company and the authority by whom% the manner
in which and the other terms and conditions on which% such chan5e or
appointment shall be made and in the case of appointment of a new Board of
?irectors or of any director% the period for which such appointment shall be made1
d! the alteration of the memorandum or articles of association of the sic9 industrial
company or% as the case may be% of the transferee company for the purpose of
alterin5 the capital structure thereof or for such other purposes as may be
necessary to 5i+e effect to the reconstruction or amal5amation1
e! the continuation by% or a5ainst% the sic9 industrial company or% as the case may be%
the transferee company of any action or other le5al proceedin5 pendin5 a5ainst
the sic9 industrial company immediately before the date of the order made under
sub#section )! of section 161
!! the reduction of the interest or ri5hts which the shareholders ha+e in the sic9
industrial company to such e$tent as the Board considers necessary in the interests
of the reconstruction% re+i+al or rehabilitation of the sic9 industrial company or
for the maintenance of the business of the sic9 industrial company1
g! the allotment to the shareholders of the sic9 industrial company of shares in the
sic9 industrial company or% as the case may be% in the transferee company and
where any shareholder claims payment in cash and not allotment of shares% or
where it is not possible to allot shares to any shareholder% the payment of cash to
those shareholders in full satisfaction of their claims
i! in respect of their interest in shares in the sic9 industrial company before its
reconstruction or amal5amation1 or
ii! where such interest has been reduced under clause !! in respect of their
interest in shares as so reduced1
h! any other terms and conditions for the reconstruction or amal5amation of the sic9
industrial company1
i! sale of the industrial underta9in5 of the sic9 industrial company free from all
encumbrances and all liabilities of the company or other such encumbrances and
liabilities as may be specified% to any person% includin5 a co#operati+e society
formed by the employees of such underta9in5 and fi$in5 of reser+e price for such
sale1
4! lease of the industrial underta9in5 of the sic9 industrial company to any person%
includin5 a co#operati+e society formed by the employees of such underta9in51
.! method of sale of the assets of the industrial underta9in5 of the sic9 industrial
company such as by public auction or by in+itin5 tenders or in any other manner
as may be specified and for the manner of publicity therefor1
l! transfer or issue of the shares in the sic9 industrial company at the face +alue or at
the intrinsic +alue which may be at discount +alue or such other +alue as may be
specified to any industrial company or any person includin5 the e$ecuti+es and
employees of the sic9 industrial company1
m! such incidental% conse,uential and supplemental matters as may be necessary to
secure that the reconstruction or amal5amation or other measures mentioned in
the scheme are fully and effecti+ely carried out(
)! a! The scheme prepared by the operatin5 a5ency shall be e$amined by the Board and
a copy of the scheme with modification% if any% made by the Board shall be sent% in draft%
to the sic9 industrial company and the operatin5 a5ency and in the case of amal5amation%
also to any other company concerned% and the Board shall publish or cause to be
published the draft scheme in brief in such daily newspapers as the Board may consider
necessary% for su55estions and ob:ections% if any% within such period as the Board may
specify(
b! The Board may ma9e such modifications% if any% in the draft scheme as it may
consider necessary in the li5ht of the su55estions and ob:ections recei+ed from the sic9
industrial company and the operatin5 a5ency and also from the transferee company and
any other company concerned in the amal5amation and from any shareholder or any
creditors or employees of such companies :
Provided that where the scheme relates to amal5amation% the said scheme shall be laid
before the company other than the sic9 industrial company in the 5eneral meetin5 for the
appro+al of the scheme by its shareholders and no such scheme shall be proceeded with
unless it has been appro+ed% with or without modification% by a special resolution passed
by the shareholders of the transferee company(
3! The scheme shall thereafter be sanctioned% as soon as may be% by the board
hereinafter referred to as the sanctioned scheme! and shall come into force on such date
as the Board may specify in this behalf :
Provided that different dates may be specified for different pro+isions of the scheme(
4! The Board may on the recommendations of the operatin5 a5ency or otherwise% re+iew
any sanctioned scheme and ma9e such modifications as it may deem fit or may by order
in writin5 direct any operatin5 a5ency specified in the order% ha+in5 re5ard to such
5uidelines as may be specified in the order% to prepare a fresh scheme pro+idin5 for such
measures as the operatin5 a5ency may consider necessary(
'! Fhen a fresh scheme is prepared under sub#section 4!% the pro+isions of sub#sections
)! and 3! shall apply in relation thereto as they apply to in relation to a scheme prepared
under sub#section 1!(
'"! Fhere a sanctioned scheme pro+ides for the transfer of any property or liability of
the sic9 industrial company in fa+our of any other company or person or where such
scheme pro+ides for the transfer of any property or liability of any other company or
person in fa+our of the sic9 industrial company% then% by +irtue of% and to the e$tent
pro+ided in% the scheme% on and from the date of comin5 into operation of the sanctioned
scheme or any pro+ision thereof% the property shall be transferred to% and +est in% and the
liability shall become the liability of% such other company or person or% as the case may
be% the sic9 industrial company(
6! The sanction accorded by the Board under sub#section 3! shall be conclusi+e
e+idence that all the re,uirements of this scheme relatin5 to the reconstruction or
amal5amation% or any other measure specified therein ha+e been complied with and a
copy of the sanctioned scheme certified in writin5 by an officer of the Board to be a true
copy thereof% shall% in all le5al proceedin5s whether in appeal or otherwise! be admitted
as e+idence(
7! <n and from the date of the comin5 into operation of the sanctioned scheme or any
pro+ision thereof% the scheme or such pro+ision shall be bindin5 on the sic9 industrial
company and the transferee company or% as the case may be% the other company and also
on the shareholders% creditors and 5uarantors and employees of the said companies(
&! If any difficulty arises in 5i+in5 effect to the pro+isions of the sanctioned scheme% the
Board may% on the recommendation of the operatin5 a5ency -or otherwise2% by order do
anythin5% not inconsistent with such pro+isions% which appears to it to be necessary or
e$pedient for the purpose of remo+in5 the difficulty(
18! The Board may% if it deems necessary or e$pedient so to do% by order in writin5%
direct any operatin5 a5ency specified in the order to implement a sanctioned scheme with
such terms and conditions and in relation to such sic9 industrial company as may be
specified in the order(
11! Fhere the whole of the underta9in5 of the sic9 industrial company is sold under a
sanctioned scheme% the Board may distribute the sale proceeds to the parties entitled
thereto in accordance with the pro+isions of section 42&" and other pro+isions of the
.ompanies "ct% 1&4' 1 of 1&4'!(
12! The Board may monitor periodically the implementation of the sanctioned scheme(

SECTION 2 OF SPECIAL ECONOMIC ZONES ACT, 2005
Definitions.
** ** **
g! ?e+eloper means a person who% or a *tate ;o+ernment which% has been 5ranted
by the .entral ;o+ernment a letter of appro+al under sub#section 18! of section )
and includes an authority and a .o#?e+eloper1
** ** **
4! entrepreneur means a person who has been 5ranted a letter of appro+al by the
?e+elopment .ommissioner under sub#section &! of section 141
** ** **
2! International >inancial *er+ices .entre means an International >inancial *er+ices
.entre which has been appro+ed by the .entral ;o+ernment under sub#section 1!
of section 171
r! manufacture means to ma9e% produce% fabricate% assemble% process or brin5 into
e$istence% by hand or by machine% a new product ha+in5 a distincti+e name%
character or use and shall include processes such as refri5eration% cuttin5%
polishin5% blendin5% repair% rema9in5% re#en5ineerin5 and includes a5riculture%
a,uaculture% animal husbandry% floriculture% horticulture% pisciculture% poultry%
sericulture% +iticulture and minin51
** ** **
u! <ffshore Ban9in5 Enit means a branch of a ban9 located in a *pecial Economic
Jone and which has obtained the permission under clause a! of sub#section 1! of
section 2) of the Ban9in5 Re5ulation "ct% 1&3& 18 of 1&3&!1
** ** **
8a! *pecial Economic Jone means each *pecial Economic Jone notified under the
pro+iso to sub#section 3! of section ) and sub#section 1! of section 3 includin5
>ree Trade and Farehousin5 Jone! and includes an e$istin5 *pecial Economic
Jone1
** ** **
8c! Enit means a Enit set up by an entrepreneur in a *pecial Economic Jone and
includes an e$istin5 Enit% an <ffshore Ban9in5 Enit and a Enit in an International
>inancial *er+ices .entre whether established before or established after the
commencement of this "ct1
** ** **

SECTION 2(e) OF TRADE UNIONS ACT, 1926
Definitions.
2. ** ** **
e! re5istered Trade Enion means a Trade Enion re5istered under this "ct1
SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882
Part performance.
53A. Fhere any person contracts to transfer for consideration any immo+able property
by writin5 si5ned by him or on his behalf from which the terms necessary to constitute
the transfer can be ascertained with reasonable certainty%
and the transferee has% in part performance of the contract% ta9en possession of the
property or any part thereof% or the transferee% bein5 already in possession% continues in
possession in part performance of the contract and has done some act in furtherance of
the contract%
and the transferee has performed or is willin5 to perform his part of the contract%
then notwithstandin5 that where there is an instrument of transfer% that the transfer has
not been completed in the manner prescribed therefor by the law for the time bein5 in
force% the transferor or any person claimin5 under him shall be debarred from enforcin5
a5ainst the transferee and persons claimin5 under him any ri5ht in respect of the property
of which the transferee has ta9en or continued in possession% other than a ri5ht e$pressly
pro+ided by the terms of the contract :
Provided that nothin5 in this section shall affect the ri5hts of a transferee for
consideration who has no notice of the contract or of the part performance thereof(
"PPEA?I/ TF<
AN ANALYSIS OF RELEVANT RULES OF INCOME-TAX RULES
SECTION 2(1A)/RULES 7 AND 8: INCOME WHICH IS PARTIALLY
AGRICULTURAL AND PARTIALLY FROM BUSINESS : COMPUTATION OF
Rule 6 pro+ides that for disinte5ratin5 a composite business income which is partially
a5ricultural and partially non#a5ricultural% the mar9et +alue of any a5ricultural produce%
raised by the assessee or recei+ed by him as rent#in#9ind and utilised as raw material in
his business% is deducted( Ao further deduction is permissible in respect of any
e$penditure incurred by the assessee as culti+ator or recei+er of rent#in#9ind(
Fhere a5ricultural produce is ordinarily sold in the mar9et in its raw state% or after
application to it of any process ordinarily employed by a culti+ator or recei+er of rent#in#
9ind to render it fit to be ta9en to mar9et% the mar9et +alue will be the +alue calculated
accordin5 to the a+era5e price at which it has been so sold durin5 the rele+ant pre+ious
year(
Fhere a5ricultural produce is not ordinarily sold in the mar9et in its raw state or after
application to it of any process aforesaid% the mar9et +alue will be the a55re5ate of
i! the e$penses of culti+ation1
ii! the land re+enue or rent paid for the area in which it was 5rown1 and
iii! such amount as the "ssessin5 <fficer finds% ha+in5 re5ard to all the circum#
stances in each case to represent a reasonable profit(
Rule 7 pro+ides that the income in respect of the business of 5rowin5 tea lea+es and
manufacturin5 tea is computed under the "ct as if it were deri+ed from business% after
ma9in5 permissible deductions( 38 per cent of the income so arri+ed at is treated as
business income and the balance '8 per cent is treated as a5ricultural income(
In computin5 such income an allowance shall be made in respect of the cost of plantin5
bushes in replacement of bushes that ha+e died or become permanently useless in an area
already planted% if such area has not pre+iously been abandoned( Cowe+er% for the
purpose of determinin5 such cost% no deduction shall be made in respect of the amount of
any subsidy which% under the pro+isions of clause 3$! of section 18% is not includible in
the total income(
SECTION 9/RULE 10 : INCOME IN CASE OF NON-RESIDENTS/
DETERMINATION OF INCOME FROM TRANSACTIONS WITH NON-
RESIDENTS : COMPUTATION OF
Fhere actual amount of income accruin5 or arisin5 to any non#resident person% whether
directly or indirectly :
throu5h or from any business connection in India1 or
throu5h or from any property in India1 or
throu5h or from any assetIsource of income in India1 or
throu5h or from any money lent at interest and brou5ht into India 1
is% accordin5 to "ssessin5 <fficer% not definitely ascertainable% the amount of such
income can be calculated in either of the followin5 manner :
" percenta5e of turno+er so accruin5 or arisin5 as the "ssessin5 <fficer may consider
to be reasonable1 or
"n amount which bears the same proportion to the total profits and 5ains of business of
such person% as the receipts so accruin5 or arisin5 bear to the total receipt of the business1
or
"n amount calculated in the manner which "ssessin5 <fficer may deem suitable(
Profits and 5ains deri+ed from any business carried on in the manner referred to in
section &2 may also be determined in the manner indicated abo+e(
Before% in+o9in5 any of the three methods mentioned abo+e% the "ssessin5 <fficer has to
be satisfied that the assessee does not ha+e the re,uired material or e+en otherwise the
real or actual amount of income is not ascertainable( If the actual income can be
calculated by ma9in5 some ad:ustments to income disclosed in the accounts maintained
in respect of Indian income% rule 18 cannot be applied(
6ule 1$*i( # Rele+ant material for wor9in5 out reasonable percenta5e has to be pro+ided
by the assessee( *ome of the rele+ant factors which "ssessin5 <fficer should ta9e into
account while applyin5 the reasonable percenta5e are : nature of business1 rate of net
profit made by non#resident in business1 usual rate of profit in that line of businesses1
type of business operation carried on in India% etc(
6ule 1$*ii( # Rule 18ii! is applicable only if income is from business( >ollowin5 steps
need be ta9en :
.ompute total world income of non#resident assessee from business in accordance with
pro+isions of Indian Income#ta$ Gaws(
?etermine the proportion between the receipts accruin5 or arisin5 within the ta$able
territories and total world receipt of business(
?etermine profits or 5ains of business by application of that proportion for the
purposes of assessment to income#ta$(
The income so determined will be ta$able without any further allowances(
SECTION 10(14)/RULE 2BB: PRESCRIBED ALLOWANCES WHICH ARE
EXEMPT UPTO PRESCRIBED LIMITS
*ection 1814! 5rants e$emption on special allowances and benefits( .lause 14! is
di+ided into two parts(
1! Ender sub#clause i! of clause 14! of section 18% any prescribed special allowance or
benefit% other than those in the nature of a per,uisite% specifically 5ranted to meet
e$penses wholly% necessarily and e$clusi+ely incurred in the performance of the duties of
an office or employment of profit% is e$empt to the e$tent to which such e$penses are
actually incurred for that purpose( The allowances prescribed for this purpose which are
fully e$empt! are spelt out in rule 2BB1!( These allowances are as follows :
"ny allowance 5ranted to meet the cost of tra+el on tour or on transfer% includin5 any
sum paid in connection with transfer% pac9in5 and transportation of personal effects on
such transfer(
"ny allowance% whether 5ranted on tour or for the period of :ourney in connection with
transfer% to meet the ordinary daily char5es incurred by an employee on account of
absence from his normal place of duty(
"ny allowance 5ranted to meet the e$penditure incurred on con+eyance in performance
of duties of an office or employment of profit% pro+ided that free con+eyance is not
pro+ided by the employer(
"ny allowance 5ranted to meet the e$penditure incurred on a helper% where such helper
is en5a5ed for the performance of duties of an office or employment of profit(
"ny allowance 5ranted for encoura5in5 the academic% research and trainin5 pursuits in
educational and research institutions(
"ny allowance 5ranted to meet the e$penditure incurred on the purchase or
maintenance of uniform for wear durin5 the performance of the duties of an office or
employment of profit(
2! Ender sub#clause ii! of section 1814!% any prescribed allowance 5ranted to the
assessee either to meet his personal e$penses at the place where the duties of his office or
employment of profit are ordinarily performed by him or at the place where he ordinarily
resides% or to compensate him for the increased cost of li+in5% is e$empt upto the
prescribed extent. Rule 2BB2! enumerates these allowances and the limits upto which
they are e$empt( These allowances are as follows :
&ame o! allowanceKplaces where exempt Extent o!
exemption
i! "ny special compensatory allowance in the nature of
**pecial .ompensatory Cilly "reas! "llowance or Ci5h
"ltitude "llowance or Encon5enial .limate "llowance
or *now Bound "rea "llowance or "+alanche
"llowance

i! "t places mentioned under Item I in .ol( ) of *l( Ao(
1 of the Table in rule 2BB2!
Rs( 788* per
month
ii! *iachen area of @ammu and Dashmir Rs( 6%888* per
month
iii! "ll other places situated at a hei5ht of 1%888 metres Rs( )88* per
or more abo+e sea le+el month
ii! *"ny special compensatory allowance in the nature of
Border "rea "llowance or Remote locality allowance or
?ifficult "rea "llowance or ?isturbed "rea "llowance

a! "t places mentioned under Item I in .ol( ) of *l( Ao(
2 of the Table in rule 2BB2!
Rs( 1%)88* per
month
b! Installations in the .ontinental *helf of India and the
E$clusi+e Economic Jone of India
Rs( 1%188 per
month
c! "t places mentioned in Item III in .ol( ) of *l( Ao( 2
of the Table in rule 2BB2!
Rs( 1%848* per
month
d! "t places mentioned in Item I0 in .ol( ) of *l( Ao( 2
Rs( 648* per
month
e! @o5 >alls in *himo5a ?istrict in Darnata9a Rs( )88 per month
!! "t places mentioned in Item 0I in .ol( ) of *l( Ao( 2
Rs( 288* per
month
iii! **pecial .ompensatory Tribal "reasI*cheduled "reasI
"5ency "reas! "llowance in *tates mentioned in .ol( )
of *l( Ao( ) of Table in rule 2BB2!
Rs( 288* per
month
i%! "ny allowance 5ranted to an employee wor9in5 in any
transport system to meet his personal e$penditure durin5
his duty performed in the course of runnin5 of such
transport from one place to another place% pro+ided that
such employee is not in receipt of daily allowance whole
of India!
68 per cent of such
allowance upto a
ma$imum of Rs(
'%888* per month
%! .hildren Educational "llowance whole of India! Rs( 188* per
month per child
upto a ma$imum
of two children
%i! "ny allowance 5ranted to an employee to meet the hostel
e$penditure on his child whole of India!
Rs( )88* per
month per child%
upto a ma$imum
of two children
%ii! .ompensatory >ield "rea "llowance% at places
mentioned in .ol( ) of *l( Ao( 6 of Table in rule 2BB2!
Rs( 2%'88* per
month
%iii! .ompensatory Bodified >ield "rea "llowance at places
mentioned in .ol( ) of *l( Ao( 7 of Table in rule 2BB2!
Rs( 1%888* per
month
ix! "ny special allowance in the nature of counter#
insur5ency allowance 5ranted to the members of the
armed forces operatin5 in areas away from their
permanent locations whole of India!
Rs( )%&88* per
month
x! Transport allowance 5ranted to an employee -other than
an employee referred to in xi!2 to meet his e$penditure
Rs( 788 per month
for the purpose of commutin5 between the place of his
residence and the place of his duty whole of India!
xi! Transport allowance 5ranted to an employee% who is
blind or orthopaedically handicapped with disability of
lower e$tremities% to meet his e$penditure for the
purpose of commutin5 between the place of his residence
and the place of his duty whole of India!
Rs( 1%'88 per
month
xii! Ender5round allowance 5ranted to an employee who is
wor9in5 in uncon5enial% unnatural climate in
under5round coal mines whole of India!
Rs( 788 per month
N
xiii! "ny special allowance in the nature of hi5h altitude
uncon5enial climate! allowance 5ranted to the member
of the armed forces operatin5 in hi5h altitude areas

a! >or altitude of &%888 to 14%888 feet Rs( 1%8'8 per
month
b! >or altitude abo+e 14%888 feet Rs( 1%'88 per
month
N
xi%! "ny special allowance 5ranted to the members of the
armed forces in the nature of special compensatory
hi5hly acti+e field area allowance whole of India!
Rs( 3%288 per
month
x%! "ny special allowance 5ranted to the member of the
armed forces in the nature of Island duty! allowance
"ndaman L Aicobar and Ga9shadweep ;roup of
Islands!
Rs( )%248 per
month
Note : "n assessee who claims e$emption under %ii! and %iii! abo+e% will not be entitled
to the e$emption in respect of the allowance referred to at ii!(
"n assessee who claims e$emption under ix! will not be entitled to the e$emption in
respect of the allowance referred to at ii! disturbed area allowance!(
SECTION 32/RULE 5(2) : DEPRECIATION : PRESCRIBED CONDITIONS FOR
CLAIMING HIGHER RATE OF DEPRECIATION
Aormal rate of depreciation in case of plant and machinery is 24M( Cowe+er% if the
followin5 conditions are satisfied% then plant and machinery shall be treated as a part of
bloc9 of assets ,ualifyin5 for depreciation at the rate of 38 per cent 48 per cent for the
assessment years 1&77#7& to 1&&1#&2! by +irtue of rule 42! :
Aew machinery or plant is installed durin5 the pre+ious year rele+ant to the assessment
year 1&77#7& or any subse,uent year!% for the purposes of business of manufacture or
production of any article or thin5 not bein5 any article specified in the Ele+enth
*chedule!(
*uch article or thin5 is manufactured or produced by usin5 any technolo5y includin5
any process! or other 9now#how de+eloped in% or is an article or thin5 in+ented in% a
laboratory owned or financed by the ;o+ernment or a laboratory owned by a public
sector company or a Eni+ersity or an institution reco5nised in this behalf by the
*ecretary% ?epartment of *cientific and Industrial Research% ;o+ernment of India(
The ri5ht to use such technolo5y includin5 any process! or other 9now#how or to
manufacture or produce such article or thin5 has been ac,uired from the owner of such
laboratory or any person deri+in5 title from such owner(
The return% furnished by the assessee for any pre+ious year in which the said machinery
or plant is ac,uired% shall be accompanied by a certificate from the *ecretary% ?epartment
of *cientific and Industrial Research% ;o+ernment of India% to the effect that such article
or thin5 is manufactured or produced by usin5 such technolo5y includin5 any process!
or other 9now#how de+eloped in such laboratory or is an article or thin5 in+ented in such
laboratory(
SECTION 40A(3)/RULE 6DD : BUSINESS DISALLOWANCE - CASH
PAYMENTS EXCEEDING PRESCRIBED LIMIT - PRESCRIBED CASES &
CIRCUMSTANCES IN WHICH PAYMENT IN SUM EXCEEDING -
PRESCRIBED LIMIT MAY BE MADE OTHERWISE THAN BY CHEQUE
Ender section 38")!% as amended with effect from 1#3#1&&'% any payment made by an
assessee for a sum e$ceedin5 Rs( 28%888 will ,ualify for deduction in full% only if such
payment is made by means of a crossed che,ue or by a crossed ban9 draft( If such a
payment is made throu5h any other means% twenty per cent of such payment will not be
allowed as a deduction( Prior to 1#3#1&&'% this sub#section pro+ided for a total ban on
deduction of the entire amount% if payment was made otherwise than by way of crossed
che,ue or crossed ban9 draft( Cowe+er% rule '??4!% as it stood then% pro+ided for a
5eneral e$ception% in cases where the assessee satisfied the assessin5 authority that
payment could not be made throu5h crossed che,ueIdraft% i! due to e$ceptional or
una+oidable circumstances% or ii! due to impracticability of ma9in5 payment in the
prescribed manner% or iii! due to 5enuine hardship that such payment would cause to the
payee( This clause 4! in rule '?? has since been omitted with effect from 24#6#1&&4 and
new clauses 4! to l! are inserted in rule '?? with effect from 1#12#1&&4( Cenceforth the
flat disallowance of 28 per cent of the amount will operate without any e$ception% in all
situations other than those specifically e$cluded in rule '??( Ender this rule% as it stands
after amendment by Twenty#first "mendment Rules% with effect from 1#12#1&&4!% no
disallowance under section 38")! will be made where payment is made in the followin5
casesIcircumstances :
1. Fhere payment is made to ban9in5 and other credit institutions li9e
RBII*BII*cheduled Ban9sI.ommercial Ban9s in public and pri+ate
sectorIGI.IETIII.I.III>.III?BII.o#operati+e ban9 or land mort5a5e ban9IPrimary
a5ricultural credit societyIPrimary credit societyIBadras Industrial In+estment
.orporation Gtd(% BadrasI"ndhra Pradesh Industrial ?e+elopment .orporation Gtd(%
CyderabadIDerala *tate Industrial ?e+elopment .orporation Gtd(% Tri+andrumI*tate
Industrial and In+estment .orporation of Baharashtra Gtd(% BombayIPublic *tate
Industrial ?e+elopment .orporation Gtd(% .handi5arhIAational Industrial
?e+elopment .orporation Gtd(% Aew ?elhiIBysore *tate Industrial In+estment and
?e+elopment .orporation Gtd(% Ban5aloreICaryana *tate Industrial ?e+elopment
.orporation Gtd(% .handi5arhI*tate >inancial .orporation(
2. Payments to .entral and *tate ;o+ernments% if the rules framed by such a
;o+ernment pro+ides for payment in le5al tender% such as payment of direct ta$es%
customs or e$cise duties% sales ta$% railway frei5ht% etc( Thus% in case of payments
made to railways on account of railway frei5ht char5es or for boo9in5 wa5ons%
section 38")! will not apply # <ee .ircular Ao( )3% dated 4#)#1&68(
3. Payments made by boo9 ad:ustment by an assessee in the account of payee a5ainst
money due to assessee for any 5oods supplied or ser+ices rendered by him to payee(
4. Payments throu5h the ban9in5 system% li9e letters of credit% mail transfers% tele5ra#
phic transfers% boo9 ad:ustment in the same ban9 or between one ban9 and another%
and bills of e$chan5e includin5 hundies made payable to a ban9(
5. Payments to a culti+ator% 5rower or producer towards purchase of a5ricultural or
forest produce or produce of animal husbandry includin5 hides and s9ins! or dairy or
poultry farmin5 or fish or fish products or products of horticulture or apiculture%
whether processed or not(
6. Payments to a producer towards purchase of his products if they are manufactured or
processed without the aid of power in a cotta5e industry(
7. Payments made to a person who ordinarily resides or carries on business in a +illa5e
which is not ser+ed by any ban9( Cowe+er% if payment is made to such a +illa5er in a
town ha+in5 ban9in5 facilities% the e$ception will not operate(
8. Payments of terminal benefits li9e 5ratuityIretrenchment compensation% etc(% to
employees drawin5 salary not e$ceedin5 Rs( 6%488 per annum(
9. *alary paid to an employee after deductin5 ta$ at source under section 1&2! when
such employee is temporarily posted for a continuance period of 14 days or more in a
place other than his normal place of duty or on a ship% and he does not maintain any
account in any ban9 at such place or ship(
10. Payments re,uired to be made on a day on which the ban9s are closed either on
account of holiday or stri9e(
11. Payment made by any person to his a5ent who is re,uired to ma9e payment in cash
for 5oods or ser+ices on behalf of such person(
12. Payment made by an authorised dealerImoney chan5er a5ainst purchase of forei5n
currency or tra+ellers che,ue in normal course of his business(
SECTION 89/RULE 21A - RELIEF WHEN SALARY IS PAID IN ARREARS OR
IN ADVANCE, ETC. - RULES FOR COMPUTATION OF
*ometimes a salaried employee may recei+e lump sum payments in the form of arrears of
salary% 5ratuity% lea+e encashment and commuted +alue of pension( These payments
relate to ser+ices rendered in the past% and in the case of 5ratuity% lea+e encashment and
commuted +alue of pension% may not be fully e$empt from ta$ due to the fact that the
prescribed conditions and monetary limits are not met with( If these lump sum payments
are ta$ed in the year of receipt% the ta$ incidence will be +ery hi5h due to the
pro5ressi+ely increasin5 slab rates of ta$( To miti5ate the hardship that may be caused
due to the hi5h incidence of ta$% the "ct pro+ides for allowin5 ta$ relief on such lump
sum payments(
3tems on which relie! is allowable # Relief is allowed on the followin5 items :
*alary recei+ed in arrears or in ad+ance
;ratuity recei+ed after puttin5 in ser+ice of not less than fi+e years une$empt portion!
.ompensation for termination of employment% pro+ided that the employee had put in at
least three years continuous ser+ice and the une$pired period of ser+ice is at least three
years
.ommuted +alue of pension une$empt portion!
Gea+e encashment une$empt portion!(
>amily pension referred to in Explanation to section 46iia! -%ide section 7&% as
amended by >inance "ct% 2882% w(r(e(f( 1#3#1&&'(2
Cow to compute relie! on receipt o! arrears o! salar+ or salar+ recei%ed in ad%ance # The
relief on salary recei+ed in arrears or in ad+ance hereinafter to be referred as additional
salary! is computed in the manner laid down in rule 21"2! as under :
1. .alculate the ta$ payable on the total income% includin5 the additional salary% of the
rele+ant pre+ious year in which the same is recei+ed(
2. .alculate the ta$ payable on the total income% e$cludin5 the additional salary% of the
rele+ant pre+ious year in which the additional salary is recei+ed(
3. >ind out the difference between the ta$ at 1! and 2!(
4. .ompute the ta$ on the total income after includin5 the additional salary in the
pre+ious year to which such salary relates(
5. .ompute the ta$ on the total income after e$cludin5 the additional salary in the
pre+ious year to which such salary relates(
6. >ind out the difference between ta$ at 4! and 5!(
. The e$cess of ta$ computed at 3! o+er ta$ computed at 6! is the amount of relief
admissible under section 7&1!( Ao relief is% howe+er% admissible if ta$ computed at 3! is
less than the ta$ computed at 6!( In such a case% the assessee#employee need not apply
for relief(
If the additional salary relates to more than one pre+ious year% salary would be spread
o+er the pre+ious years to which it pertains in the manner e$plained abo+e(
Cow to compute relie! in respect o! gratuit+ # Ender section 7&1!% a relief can be claimed
if 5ratuity is recei+ed in e$cess of the limits specified( Cowe+er% no relief is admissible if
ta$able 5ratuity is in respect of ser+ices rendered for less than fi+e years( .ases in which
the relief is admissible may be di+ided into two cate5ories% namely% a! where the 5ratuity
payable is in respect of past ser+ice of 14 years or more% and b! where such period is 4
years or more but less than 14 years( Relief in a case belon5in5 to the first cate5ory is
wor9ed out as under :
1. .ompute the a+era5e rate of ta$ on the total income% includin5 the 5ratuity in the year
of receipt(
2. >ind out the ta$ on 5ratuity at the a+era5e rate of ta$ computed at 1! abo+e(
3. .ompute the a+era5e rate of ta$ by addin5 one#third of the 5ratuity to the other income
of each of the three precedin5 years(
4. >ind out the a+era5e of the three#a+era5e rates computed in the manner specified in 3!
abo+e and compute the ta$ on 5ratuity at that rate(
5. The difference between ta$ on the 5ratuity computed at 2! and that at 4! will be the
relief admissible under section 7&1!(
In cases co+ered under the second cate5ory% the relief is computed on the similar lines as
abo+e with the only difference that instead of a+era5e of the a+era5e rates of the
precedin5 three years% the a+era5e of the rates of the precedin5 two years is computed by
addin5 one#half of the 5ratuity to the other income of each of precedin5 two years(
'omputation o! relie! in respect o! compensation on termination o! emplo+ment # If
compensation is recei+ed by the assessee from his employer or former employer at or in
connection with termination of his employment after continuous ser+ice for not less than
) years and where the une$pired portion of his term of employment is also not less than )
years% the relief is calculated in the same manner as if the 5ratuity was paid to the
employee in respect of ser+ice rendered for a period of 14 years or more(
'omputation o! relie! in respect o! pa+ment in commutation o! pension # " relief can be
claimed in respect of payment in commutation of pension recei+ed in e$cess of the
prescribed limits( *uch relief is computed in the same manner as if the 5ratuity was paid
to the employee in respect of ser+ice rendered for a period of 14 years or more(
'omputation o! relie! in respect o! other pa+ments # In respect of payment recei+ed by an
employee other than those mentioned abo+e% the relief under section 7&1! will be 5ranted
by the .entral Board of ?irect Ta$es after e$aminin5 the circumstances of each
indi+idual case(
Cow to claim the relie! # In the normal course% the assessee should claim the relief only in
the return of income for the assessment year rele+ant to the pre+ious year in which the
lump sum payment is recei+ed( >or this purpose% a mere application for relief settin5 out
the detailed calculations can be appended to the return of income( "lternati+ely% he can
apply to the IT< e+en before payment is made for a direction to the employer to deduct
ta$ at a lower rate(
"s an e$ception to this 5eneral procedure% a special facility is afforded by the "ct to an
assessee who falls under any of the followin5 cate5ories :
a ;o+ernment ser+ant
employee of a company% co#operati+e society% local authority% Eni+ersity% institution%
association or body(
In the case of such an assessee% the relief can be wor9ed out and allowed e+en at the time
of deduction of ta$ at source by the employer( >or this purpose% the assessee#employee
will ha+e to furnish the prescribed particulars in >orm Ao( 18E(
SECTION 139A/RULE 114 : PERMANENT ACCOUNT NUMBER
What is a Permanent Account Number
1. " Permanent "ccount Aumber hereafter referred to as P"A! is a ten di5it
alphanumerical number which is issued in the form of laminated card by an "ssessin5
<fficer of the Income#ta$ ?epartment( It is re,uired by e+ery person whether an
assessee or not! for the purpose of i! ,uotin5 it in all correspondence% returns% statement%
etc(% sent by the person to the income#ta$ authorities% and ii! ,uotin5 it at the time of
enterin5 into certain specified financial transactions(
Persons who should compulsorily obtain PAN
2. *ection 1)&" imposes a statutory obli5ation on the persons specified below% to apply
to the "ssessin5 <fficer for the allotment of a P"A(
2.1 Dersons ha%ing taxable income # E+ery person whose total income durin5 any
pre+ious year e$ceeded the ma$imum amount which is not char5eable to income#ta$ is
re,uired to apply for a P"A( Thus an indi+idualICE>IB<II"<P must apply for P"A if
hisIits total income had e$ceeded% or is li9ely to e$ceed% the ma$imum amount which is
not char5eable to income#ta$( In the case of other entities companies% firms% etc(!% since
there is no non#ta$able income limit% they must apply for P"A if they ha+e ta$able
income under the "ct% without reference to the actual total income(
2.2 Dersons carr+ing on business or pro!ession # E+ery person who is carryin5 on any
business or profession whose total sales% turno+er or 5ross receipts are or is li9ely to
e$ceed Rs( 4%88%888 per annum limit% must also apply for P"A( In their cases% the
,uestion whether they ha+e any ta$able income under the "ct or not is not at all rele+ant(
2.3 'haritableKreligious trusts # E+ery person in receipt of income deri+ed from property
held under trust or other le5al obli5ation wholly or in part for charitable or reli5ious
purposes% and who is liable to be assessed as representati+e assessee in respect of such
income% must apply for P"A(
2.4 &oti!ied persons under section 13#A*1A( # The .entral ;o+ernment may% by
notification in the <fficial ;a=ette% specify any class or classes of persons by whom ta$ is
payable under this "ct or any ta$ or duty is payable under any other law for the time
bein5 in force includin5 importers and e$porters whether any ta$ is payable by them or
not and such persons shall% within such time as mentioned in that notification% apply to
the "ssessin5 <fficer for the allotment of a P"A(
The followin5 persons ha+e been notified in this re5ard :
E$porters and Importers who are re,uired to obtain an importer#e$porter code
under section 6 of the >orei5n Trade ?e+elopment and Re5ulation! "ct% 1&&2(
.entral e$cise assessees(
Persons issuin5 in+oices under the .EA0"T .redit Rules% and who are re,uired
to be re5istered under the .entral E$cise Rules(
*er+ice ta$ assessees(
Persons re5istered under the .entral *ales Ta$ "ct or *tate *ales Ta$ Gaws(
Suo motu allotment of PAN
3. *ection 1)&"2! empowers the "ssessin5 <fficer to allot a P"A to any person other
than the persons fallin5 under the cate5ories mentioned in para 2(
Allotment of PAN on the request of any other person
4. Ender section 1)&")!% any person not fallin5 under the cate5ories mentioned in para
2 and para 3% may apply to the "ssessin5 <fficer for the allotment of a P"A( In such
cases% the "ssessin5 <fficer is mandatorily re,uired to allot a P"A to the person
forthwith( It is ad+ised that e+en persons who are not mandatorily re,uired to obtain a
P"A may obtain a P"A% in +iew of the fact that the P"A is re,uired to be ,uoted while
enterin5 into certain specified transactions% as e$plained in rules 113B to 113?( "n
apparently wron5 notion that is pre+ailin5 is that% if a person obtains a P"A% he must
statutorily file a return of income( There is no such re,uirement under the "ct( In fact% it
seems that section 1)&")! has been specifically inserted with the ob:ect of enablin5
persons to obtain a P"A in ad+ance% so as to meet any e+entuality that may arise in the
future when they want to or may ha+e to enter into specified financial transactions for
which ,uotin5 P"A is mandatory( The P"A card may come in handy at any time% and
possession of that card well in ad+ance is thus a necessity( This apart% this card ser+es as
an identity card e+en for other purposes% especially for senior citi=ens% li9e railway
reser+ations or airline reser+ations(
Persons to whom section 139A will not apply
5. Ender rule 113.1!% the pro+isions of section 1)&" shall not apply to the followin5
persons :
i! Persons who ha+e a5ricultural income and are not in receipt of any other income
char5eable to income#ta$(
ii! Aon#residents% i.e.) persons who are not resident(
There is thus no obli5ation on the aforesaid persons to apply for and obtain a P"A(
Application for allotment of PAN
6. *ection 1)&" stipulates that i! persons who are mandatorily re,uired to obtain P"A%
and ii! persons who want to obtain a P"A e+en thou5h they are not mandatorily re,uired
to obtain a P"A should apply to the "ssessin5 <fficer for the allotment of a P"A( Fith
effect from 1#6#288)% the application can be filed with the P"A ser+ice centres Refer
para 13!(
Form of application
7. The application must be filed in >orm Ao( 3&"% as substituted by the Income#ta$
*e+enth "mendment! Rules% 288) with effect from 2&#4#288)( The form must be
submitted in duplicate( In the case of indi+iduals% an attested passport si=e photo5raph of
the indi+idual must be affi$ed(
To whom to apply
8. The application is to be made to the "ssessin5 <fficer ha+in5 :urisdiction o+er the
person(
Supporting documents
9. Fith effect from 2&#4#288)% the application must be accompanied by the documents
mentioned below% as proof of identity and address of the applicant(
<l.
&o
.
Applicant 1ocuments as proo! o! identit+ and address
*1( *2( *3(
1( Indi+idual i! Proof of identity
.opy of school lea+in5 certificate or matriculation certificate
or de5ree of a reco5nised educational institution or depository
account or credit card or ban9 account or water bill or ration
card or property ta$ assessment order or passport or +oter
identity card or dri+in5 licence or certificate of identity si5ned
by a Bember of Parliament or Bember of Ge5islati+e
"ssembly or Bunicipal .ouncillor or a ;a=etted <fficer% as
the case may be(
In case of a person bein5 a minor% any of the abo+e documents
of any of the parents or 5uardian of such minor shall be
deemed to be the proof of identity(
ii! Proof of address
.opy of electricity bill or telephone bill or depository account
or credit card or ban9 account or ration card or employer
certificate or passport or +oter identity card or property ta$
assessment order or dri+in5 licence or rent receipt or
certificate of address si5ned by a Bember of Parliament or
Bember of Ge5islati+e "ssembly or Bunicipal .ouncillor or a
;a=etted <fficer% as the case may be(
In case of a person bein5 a minor% any of the abo+e documents
of any of the parents or 5uardian of such minor shall be
deemed to be the proof of address(
2( Cindu
undi+ided
family
.opy of any document applicable in the case of an indi+idual
specified in serial number 1% in respect of 9arta of the Cindu
undi+ided family% as proof of identity and address(
)( .ompany .opy of certificate of re5istration issued by the Re5istrar of
.ompanies(
3( >irm .opy of certificate of re5istration issued by the Re5istrar of
>irms or copy of partnership deed(
4( "ssociation
of persons
trusts!
.opy of trust deed or copy of certificate of re5istration number
issued by the .harity .ommissioner(
'( "ssociation
of persons
other than
trusts! or
body of
indi+iduals
or local
authority or
artificial
:uridical
person
.opy of a5reement or copy of certificate of re5istration
number issued by .harity .ommissioner or Re5istrar of .o#
operati+e *ocieties or any other competent authority or any
other document ori5inatin5 from any .entral or *tate
;o+ernment ?epartment establishin5 identity and address of
such person(
The new series of PAN
10. >or pro+idin5 better ser+ice to the ta$payers% the department has introduced in the
year 1&&' a scheme for issue of P"A under the new series( This P"A has ten
alphanumeric characters and is issued in the form of a laminated card( E+en persons who
had applied for and were allotted P"A prior to the introduction of the new scheme% are
re,uired to apply for P"A under the new series(
Only one PAN for a person
11. " person can ha+e only one P"A under the new series( *ection 1)&"6! of the "ct
specifically prohibits a person who has been allotted a P"A under the new series from
applyin5% obtainin5 and possessin5 another P"A( -<ee also pro+iso to section 1)&"3!2
Time-limit for making application
12. The time#limits as prescribed under rule 113 for +arious cate5ories of persons are
5i+en below in tabular form :
<l.
&o.
'ategor+ o! person 7ime-limit prescribed Authorit+
1( Persons whose total income durin5
the accountin5 year e$ceeds the
ma$imum amount which is not
char5eable to income#ta$ see para
2.1!
)1st Bay of the
rele+ant assessment
year
Rule 113)!i!
2( Persons not fallin5 under 1! abo+e%
but ha+in5 receipts from business or
profession% the a55re5ate of which
durin5 any accountin5 year is or is
li9ely to e$ceed Rs( 4 la9hs see para
2.2!
Before the end of the
said accountin5 year
Rule 113)!ii!
)( .haritable and reli5ious trusts see
para 2.3!
Before the end of the
said accountin5 year
Rule 113)!iii!
3( E$porters and Importers see para
2.4!
Before ma9in5 any
e$port or import

4( .entral e$cise assessees Refer para
2.4!
Before ma9in5
application for
re5istration under
.entral E$cise
Rules
Aotification Ao(
*< 664E!%
dated 2&#7#2888
'( *er+ice ta$ assessees Refer para 2.4! Before ma9in5
application for
re5istration under
*er+ice Ta$ Rules

6( Persons re5istered under the
.entralI*tate *ales Ta$ "cts Refer
para 2.4!
Before ma9in5
application for
re5istration under the
rele+ant sales ta$ law
Aotification Ao(
*< 128'E!%
dated 12#12#
2881
Cowe+er% with the introduction of the new series of P"A% section 1)&"3! of the "ct
pro+ides that for the purpose of allotment of P"A under the new series% the Board may
specify under a notification the date from which the persons co+ered under the said
notification will ha+e to apply for P"A(
Time limit %ide Aotification Ao( *< 12)E!% dated 11#2#1&&7% as amended by
Aotification *< )43E!% dated 27#3#1&&7 and *< 43)E!% dated )#'#1&&7 is as under:
"ssessment year 1&&6#&7 : )1st "u5ust% 1&&7
"ssessment year 1&&7#&& : )1st "u5ust% 1&&7
"ssessment year 1&&&#2888 or any subse,uent

assessment year
: )8th @une of rele+ant
assessment year(
In the case of 'handra.ant Handlal <heth +( ;nion o! 3ndia -28822 244 ITR 386I124
Ta$man &64 .al(!% the .ourt held that there should be a time#bound pro5ramme for the
purpose of issuance of P"A number and deli+ery of P"A card% and construed three
months period as the ma$imum period for the same from the date of application(
This decision has now become academic% in +iew of the fact that% with effect from 1#6#
288)% the procedure for allotment of P"A has been partially outsourced and streamlined
in such a manner that a person 5enerally recei+es his P"A card within a wee9 of applyin5
for it(
Obtaining PAN through Service Centres
13. >rom 1#6#288)% P"A *er+ice .entres function in +arious citiesItowns where income#
ta$ offices are located( These *er+ice .entres ha+e been entrusted with the wor9 of
recei+in5 applications for allotment of P"A% and also for the personal deli+ery of P"A
cards to the applicants( *ome of the important aspects in these clarifications are
mentioned below :
Efforts will be made to issue P"A cards within a fortni5ht of ma9in5 the
application(
;rie+ances arisin5 out of errors on P"A data will be attended to within 18
wor9in5 days% and where+er re,uired% new P"A cards will be issued(
The photo5raph to be affi$ed must be a coloured photo5raph stamp si=e )(4 cm
2(4 cm!( " photo5raph is compulsory only in the case of applicants who are
indi+iduals(
If the applicant cannot si5n% left hand thumb impression of the applicant should be
affi$ed on >orm Ao( 3&" at the place meant for si5natures and 5ot attested by a
Ba5istrate or a Aotary Public or a ;a=etted <fficer% under official seal and stamp(
>emale applicants% irrespecti+e of marital status% should write only fathers name
in the application(
Bention of telephone number is not compulsory% but if pro+ided it may help in
faster communication(
In the case of non#residents% minor% lunatic% idiot% court of wards and such other
persons% the application can be made by their representati+e assessee under
section 1'8 of the "ct(
*er+ice .entres will assist applicants to correctly fill up >orm Ao( 3&"% but shall
not recei+e any incomplete and deficient P"A application(
*er+ice char5e of Rs( '8 per application will ha+e to be paid in cash to the *er+ice
.entre at the time of furnishin5 the application( This amount includes the cost of
tamper#proof P"A card(
"ll P"A allotted and P"A cards issued by the department will remain +alid( "ll
persons who ha+e been allotted a P"A need not apply a5ain(
Persons holdin5 P"A card issued by the department can ma9e a fresh application
to the *er+ice .entre for the issue of the new tamper proof card% by indicatin5
details of the e$istin5 card in the application% and in addition% by surrenderin5 the
old P"A card(
The *er+ice .entre ETII*G! will ensure deli+ery of the new P"A card at the
address indicated by the applicant in >orm Ao( 3&"% a5ainst ac9nowled5ement(
SECTION 139A/RULES 114B TO 114D : QUOTING OF PERMANENT
ACCOUNT NUMBER IN DOCUMENTS PERTAINING TO CERTAIN
PRESCRIBED TRANSACTIONS
The statutory requirement
1. Ender section 1)&"4!% e+ery person shall ,uote the P"A allotted to him in the
followin5 documents:
"ll returns submitted to any income#ta$ authority(
"ll correspondence with any income#ta$ authority -i.e.) .B?T% ?irectors#;eneral
of Income#ta$% .hief .ommissioners of Income#ta$% ?irectors of Income#ta$%
.ommissioner of Income#ta$% "ddl(I?eputyI@oint ?irectors% "ssistant
?irectorsI"ssistant .ommissioners of Income#ta$% Income#ta$ <fficers% Ta$
Reco+ery <fficers% and Inspectors of Income#ta$2(
"ll challans for the payment of any sum due under the "ct(
"ll documents pertainin5 to such transactions as may be prescribed by the .B?T
in the interests of re+enue% and entered into by him( -This aspect is e$plained in
detail in para 32( *ection 1)&"'! pro+ides that e+ery person recei+in5 any
document relatin5 to such a prescribed transaction must ensure that P"A has been
duly ,uoted in the document(
E+ery person is also re,uired to intimate the "ssessin5 <fficer any chan5e in his address
or in the name and nature of his business on the basis of which the P"A was allotted to
him(
The requirements under the Rules
2. *ection 1)&"7! of the "ct% as amended with effect from 1#7#1&&7% pro+ides inter alia
that the Board may ma.e rules pro+idin5 for the followin5 aspects:
The cate5ories of transactions in relation to which P"A should be ,uoted by
e+ery person in the documents pertainin5 to the aforesaid transactions(
.lass or classes of persons to whom the aforesaid re,uirement shall not apply(
The form and manner in which the person who has not been allotted P"A shall
ma9e his declaration(
The manner in which P"A should be ,uoted in the said transactions(
The time and manner in which the said transactions should be intimated to the
prescribed authority(
Rules 113B to 113? co+er the aforesaid aspects% and they came into effect from 1#11#
1&&7(
These rules ha+e been amended by the Income#ta$ 16th "mendment! Rules% 2883 with
effect from 1#12#2883% so as to
i! enlar5e the scope of the prescribed transactions%
ii! omit reference to ;eneral Inde$ Re5ister Aumber with the result that% from 1#12#
2883% it is mandatory to ,uote P"A and P"A alone! in the documents relatin5 to
the prescribed transactions% and
iii! pro+ide that any person who does not ha+e a P"A and who enters into any
transaction specified in rule 113B shall ma9e a declaration in >orm Ao( '8 as
amended!% 5i+in5 therein the particulars of such transactions(
The prescribed transactions
3. Initially% some transactions were prescribed for the purpose of ,uotin5 of P"A% in
cases where transactions were entered into on or after 1#11#1&&7 or 1&#'#2882( Fith
effect from 1#12#2883% fi+e more transactions ha+e been prescribed for this purpose(
These transactions are e$plained in the succeedin5 para5raphs :
3.1 7ransactions entered into on or a!ter 1-11-1##" or 1#-6-2$$2 # The followin5
transactions are prescribed(
3.1a PR<PERTY ?E"G* # Transactions relatin5 to sale or purchase of any immo+able
property +alued at Rs( 4 la9hs or more are specified for this purpose( "pparently% the
monetary limit will apply to the +alue shown in the document for transfer( *ince both sale
and purchase are co+ered% the seller as well as the purchaser must ,uote his P"A% or must
file the declaration in >orm Ao( '8(
3.1b 0ECI.GE ?E"G* # Transactions relatin5 to sale or purchase of a motor +ehicle or
+ehicle as defined in section 22"! of the Botor 0ehicles "ct% which re,uires re5istration
by a re5isterin5 authority under .hapter I0 of that "ct are ne$t specified for this purpose(
Cowe+er% sale or purchase of any two#wheeled +ehicles% inclusi+e of any detachable side#
car ha+in5 an e$tra wheel attached to the motor +ehicle% are e$cluded( Thus saleIpurchase
of scooters% mopeds and the li9e does not attract the re,uirement of ,uotin5 P"A( Cere
also% since both sale and purchase are specified% both the seller and the purchaser must
,uote his P"A% or file the declaration in >orm Ao( '8(
3.1c >I/E? ?EP<*IT* IA B"AD* # Transaction in+ol+in5 time deposits i.e.) fi$ed
deposits! in any ban9 nationalised ban9s% scheduled ban9s% co#operati+e ban9s% etc(!% are
ne$t specified% if the amount in+ol+ed on each occasion e$ceeds Rs( 48%888( If a minor
ha+in5 no ta$able income desires to open such an account% he must ,uote P"A of his
father or mother or 5uardian% as the case may be in the document co+erin5 the transaction
i.e.) application for openin5 account!( If the parent or a 5uardian does not ha+e a P"A%
declaration in >orm Ao( '8 can be filed( Cowe+er% if the father does not ha+e a P"A but
the mother has a P"A% declaration in >orm Ao( '8 cannot be filed( The P"A of the
mother must be ,uoted( The same will apply to cases where the father has a P"A but not
the mother( The P"A of the father must be ,uoted(
3.1d ?EP<*IT* IA P<*T <>>I.E* # Transactions in+ol+in5 a deposit e$ceedin5 Rs(
48%888 in an+ account with Post <ffice *a+in5s Ban9 are ne$t specified( The use of the
words any account ma9es it clear that the account may be a sa+in5s ban9 account% or time
deposit account( In+estment in A*.s% I0Ps are% howe+er% not co+ered% since they are not
deposits in a Post <ffice *a+in5s Ban9(
3.1e <PEAIA; B"AD "..<EAT* # Transactions in+ol+in5 openin5 an account in any
ban9 nationalised ban9s% scheduled ban9s% co#operati+e ban9s% etc(! are ne$t specified(
The account contemplated here may be a current account% sa+in5s account% or o+erdraft
account1 time deposits referred to in para 3.1c are not co+ered(
If a minor ha+in5 no ta$able income desires to open such an account% he must ,uote P"A
of his father or mother or 5uardian% as the case may be% in the document co+erin5 the
transaction i.e.% application for openin5 the account!( The position e$plained in para
3.1c will apply in this case also(
3.1f AEF TEGEPC<AE .<AAE.TI<A* # Ba9in5 an application for installation of a
telephone connection includin5 a cellular telephone connection! is ne$t specified(
3.1g C<TEG BIGG* # The ne$t item pertains to payment to hotels and restaurants a5ainst
their bills% if the bills are for amounts e$ceedin5 Rs( 24%888 at any one time(
3.1h *C"RE TR"A*".TI<A* # Transactions in+ol+in5 contracts of a +alue e$ceedin5
Rs( 1 la9h% for sale or purchase of securities are ne$t specified( >or this purpose% the term
security is defined in section 2h! of the *ecurities .ontracts Re5ulation! "ct% which
reads as follows :
*ecurities include
i! *hares% scrips% stoc9s% bonds% debentures% debenture stoc9 or other mar9etable
securities of a li9e nature in or of any incorporated company or other body
corporate1
ia! ?eri+ati+e1
ib! Enits or any other instrument issued by any collecti+e in+estment scheme to
the in+estors in such schemes1
ic! *ecurity receipt as defined in clause 8g! of section 2 of the *ecuritisation L
Reconstruction of >inancial "ssets L Enforcement of *ecurity Interest "ct%
28821
id! Enits or any other instrument issued to the in+estors under any mutual fund
scheme1
ii! ;o+ernment securities1
iia! *uch other instruments as may be declared by the .entral ;o+ernment to be
securities1 and
iii! Ri5hts or interest in securities(
3.1i ."*C P"YBEAT* T< B"AD* - The followin5 items are prescribed :
i! Payments in cash for purchase of ban9 drafts or pay orders or ban9ers che,ues
from a ban9in5 company% for an amount a55re5atin5 Rs( 48%888 or more durin5
any one day(
ii! ?eposit in cash a55re5atin5 Rs( 48%888 or more with any ban9in5 company
durin5 any one day(
3.1j ."*C P"YBEAT* ><R ><REI;A TR"0EG - Payment in cash in connection
with tra+el to any forei5n country% of an amount e$ceedin5 Rs( 24%888 at any one time%
has also been prescribed( >or this purpose% payment in cash in connection with tra+el
includes payment in cash towards fare% or to a tra+el a5ent or a tour operator% or for the
purchase of forei5n currency( The e$pression tra+el to any forei5n country does not
include tra+el to the followin5 countries :
a! *audi "rabia% on Ca: pil5rima5e or5anised by the .entral Ca: .ommittee%
Bumbai 1
b! .hina% on pil5rima5e to Dailash Bansaro+ar or5anised by the Binistry of
E$ternal "ffairs% ;o+ernment of India 1
c! Ban5ladesh% Bhutan% Baldi+es% Aepal% Pa9istan and *ri Gan9a(
3.2 7ransactions entered into on or a!ter 1-12-2$$4 # The followin5 transactions ha+e
been prescribed by the Income#ta$ 16th "mendment! Rules% 2883:
3.2a "PPGI."TI<A ><R I**EE <> " .RE?IT ."R? # If a person ma9es an
application to any ban9% or to any ban9in5 institution% or to any other company or
institution% for issue of a credit card% the said person must ,uote his P"A in the
application for issue of such credit card(
3.2b PER.C"*E <> EAIT* <> BETE"G >EA?* # If a person applies to any mutual
fund for purchase of its units for an amount of Rs( 48%888 or more% the person must ,uote
his P"A in the rele+ant application made to the mutual fund( -This re,uirement% it may
be noted% will apply only for in+estment in units% and not for in+estment in a mutual fund
for any other purpose(2
3.2c ".KEI*ITI<A <> *C"RE* IA .<BP"AIE* # If a person pays Rs( 48%888 or
more to a company for ac,uirin5 shares issued by it% the person must ,uote his P"A in
the rele+ant application( It must be noted that the payment must be to a company directly%
and such a contin5ency will arise only in respect of initial public issues and issue of ri5ht
shares( Fhere payment is made for ac,uirin5 shares throu5h a stoc9 bro9er% and from
shareholder% the transaction will not fall under this cate5ory(
3.2d ".KEI*ITI<A <> ?EBEATERE*IB<A?* # If a person pays Rs( 48%888 or more
to a company or an institution for ac,uirin5 debentures or bonds issued by such company
or institution% the person must ,uote his P"A in the rele+ant application(
3.2e ".KEI*ITI<A <> RBI B<A?* # If a person pays Rs( 48%888 or more to the
Reser+e Ban9 of India for ac,uirin5 bonds issued by the said Ban9% the person must
,uote his P"A in the rele+ant application(
Filing of declaration by persons having no PAN
4. Ender the second pro+iso to rule 113B% as substituted by the Income#ta$ 16th
"mendment! Rules% 2883 with effect from 1#12#2883% any person who does not ha+e a
P"A and who enters into any transaction e$plained in para 3 shall ma9e a declaration in
>orm Ao( '8 5i+in5 therein the particulars of such transaction( This re,uirement can
apply only to the persons who are not mandatorily re,uired to obtain a P"A( "nyway%
this pro+iso stresses the important fact that none of the transactions e$plained in para 3
can be entered into without ,uotin5 the P"A or filin5 declaration in >orm Ao( '8(
Persons having agricultural income
5. Ender rule 113.1!a!% the pro+isions of section 1)&" shall not apply to the persons
who ha+e a5ricultural income and are not in receipt of any other income char5eable to
income#ta$( Cence% such persons are not mandatorily re,uired to obtain a P"A( Cowe+er%
under the pro+iso to the said pro+ision% such persons are re,uired to ma9e a declaration in
>orm Ao( '1 in respect of transactions e$plained in para 3.
Non-residents
6. Ender rule 113.1!b!% the pro+isions of section 1)&" shall not apply to the non#
residents referred to in section 23$! -i.e. a person who is not a resident2( Therefore% non#
residents are not mandatorily re,uired to obtain a P"A( They need not file any
declaration also in respect of transactions e$plained in para 3.
Government transactions
7. Ender rule 113.1!c!% the pro+isions of section 1)&" shall not apply to transactions
where .entral ;o+ernment% *tate ;o+ernments and .onsular <ffices are the payers(
Responsibility of the other party
8. Ender sub#rule 2! of rule 113.% the person who has recei+ed any document relatin5 to
a transaction e$plained in para 3 -refer para 8.1 for details2 is re,uired to ensure that
P"A is ,uoted in the document concerned% and also +erify that P"A ,uoted is correct( "
photostat copy of P"A may be insisted upon for +erification(
8.1 Dersons speci!ied in rule 114'*2( - Persons specified in rule 113.2! are as under :
a! a re5isterin5 officer appointed under the Re5istration "ct% 1&87 1' of 1&87!1
b! a re5isterin5 authority referred to in para 3.1b1
c! any mana5er or officer of a ban9 referred to in paras 3-1c, 3.1i and 3.2a1
d! post master1
e! stoc9 bro9er% sub#bro9er% share transfer a5ent% ban9er to an issue% trustee of a trust
deed% re5istrar to issue% merchant ban9er% underwriter% portfolio mana5er%
in+estment ad+iser and such other intermediaries re5istered under section 12 of
the *ecurities and E$chan5e Board of India "ct1
!! any authority or company recei+in5 application for installation of a telephone by
it1
g! any person raisin5 bills referred to in para 3.1g or para 3.1j1
h! any person who purchases or sells the immo+able property or motor +ehicle1
i! principal officer of a company referred to in paras 3.2a, 3.2c and 3.2d1
4! principal officer of an institution referred to in paras 3.2a and 3.2d1
.! trustee of a mutual fund referred to in para 3.2b1
l! officer of Reser+e Ban9 of India referred to in para 3.2e(
Follow-up action by other party
9. Ender rule 113? as substituted by the Income#ta$ 16th "mendment! Rules% 2883 with
effect from 1#12#2883% the persons mentioned in para 8.1 shall forward the followin5
documents to the .ommissioner of Income#ta$ .entral Information Branch! ha+in5
territorial :urisdiction o+er the area in which the transaction is entered into :
i! copies of declaration in >orm Ao( '8% e$cept the copies of declaration in respect
of openin5 ban9 accounts% e$plained in para 3.1e -Refer para 4 also2(
ii! .opies of declaration in >orm Ao( '1 -Refer para 52
The transmission of these documents is re,uired to be made in two instalments accordin5
to the followin5 time schedule :
Deriod during which declaration is recei%ed 1ue date !or transmission
1st "pril to )8th *eptember )1st <ctober
1st <ctober to )1st Barch )8th "pril
Provisions applicable to TDS and TCS transactions
10. The followin5 pro+isions ha+e been made in respect of ?eduction of Ta$ at *ource
T?*! and .ollection of Ta$ at *ource T.*!(
10.1 3ntimating DA& to tax deductorKtax collector # P"A has to be intimated in the
followin5 situations :
10.1a T?* TR"A*".TI<A* # Ender section 1)&"4"!% e+ery person recei+in5 any
sum or income or amount from which ta$ has been deducted under the pro+isions of
.hapter /0II#B -sections 1&2 to 1&'?2 shall intimate his P"A to the person responsible
for deductin5 such ta$( Till )1#)#2884% under first pro+iso to section 1)&"4"!% this
re,uirement was not applicable to non#residents satisfyin5 any of the followin5
conditions :
i! their income consists only of items mentioned in section 114".3!% %i8.) a!
interest from notified bonds or bonds of public sector companies sold by
;o+ernment and purchased in forei5n currency% b! di+idend on ;lobal
?epository Receipts% and c! lon5#term capital 5ains on transfer of items
mentioned in a! or b!1
ii! non#resident sportsmen or sports associations referred to in section 114BB"2!1
iii! non#resident Indians ha+in5 only in+estment income or lon5#term capital 5ains or
both% referred to in section 114;(
The abo+esaid pro+iso has now been omitted with effect from 1#3#2884(
10.1b T.* TR"A*".TI<A* # Ender section 1)&"4.!% e+ery buyer or licensee or
lessee referred to in section 28'. shall intimate his P"A to the seller referred to in that
section(
10.2 Guoting o! DA& b+ tax deductor # Ender section 1)&"4B!% the ta$ deductor is
re,uired to ,uote the P"A of the person to whom any sum or income or amount has been
paid after deductin5 ta$ at source% in the followin5 documents :
i! *tatement furnished under section 1&22.!(
ii! "ll certificates furnished under section 28)(
iii! "ll returns furnished to the department under section 28'(
This pro+ision ta9es effect from 1#3#2882 in respect of ban9in5 companies and co#
operati+e ban9s% and from 1#'#2881 in respect of any other persons(
10.3 7he exception # Ender the second pro+iso to section 1)&"4B!% the re,uirement of
intimatin5 P"A para 10.1a! and ,uotin5 P"A para 10.2! will not apply in the case of a
person whose total income is not char5eable to income#ta$ or who is not re,uired to
obtain a P"A% if such person furnishes to the ta$ deductor a declaration in >orm Ao(
1&6" in the prescribed form and manner to the effect that the ta$ on his estimated total
income of the pre+ious year in which such income is to be included in computin5 his total
income will be nil.
10.4 Guoting o! DA& b+ tax collector # Ender section 1)&"4?!% e+ery seller collectin5
ta$ under section 28'. shall ,uote the P"A of e+ery buyer or licensee or lessee in the
followin5 documents :
i! "ll certificates furnished in accordance with section 28'.4.!(
ii! "ll returns furnished to the department under sub#section 4"! or sub#section
4B! of section 28'.(
SECTION 203A/RULE 114A : TAX DEDUCTION AND COLLECTION
ACCOUNT NUMBER
The statutory background
1. *ection 28)" of the Income#ta$ "ct% as substituted with effect from 1#18#2883 by the
>inance Ao( 2! "ct% 2883% re,uires that e+ery person deductin5 ta$ or collectin5 ta$ in
accordance with the pro+isions of .hapter /0II of the "ct *ections 1&2 to 1&'? and
section 28'.!% who has not been allotted a Ta$ ?eduction "ccount Aumber T?"A! or a
Ta$ .ollection "ccount Aumber T."A!% shall% within such time as ma+ be prescribed
apply to the "ssessin5 <fficer for the allotment of a 7ax 1eduction and 'ollection
Account &umber T?."A!( The earlier pro+isions under which persons deductin5 ta$ at
source ha+e to obtain a T?"A and person collectin5 ta$ at source ha+e to obtain a T."A
ha+e been mer5ed( Fith effect from 1#18#2883% persons deductin5 ta$ or collectin5 ta$
for the first time must obtain only a T?."A(
Rule 113"% as substituted with effect from 7#12#2883 by the Income#ta$ 28th
"mendment! Rules% 2883% lays down the prescriptions in this re5ard(
The Form of the application
2. Rule 113"1! stipulates that the application for allotment of T?."A shall be made in
>orm Ao( 3&B( The application shall be made in duplicate(
To whom should the application be made
3. Ender rule 113"2!% the application shall be made to one of the followin5 authorities :
Fhere the function of allotment of T?."A has been assi5ned by the .hief
.ommissionerI.ommissioner to any particular "ssessin5 <fficer% the application
is to be made to that desi5nated "ssessin5 <fficer(
In any other case% the application is to be made to the "ssessin5 <fficer ha+in5
:urisdiction to assess the applicant(
Time-limit for making the application
4. Rule 113")! fi$es the time#limit for ma9in5 the application% as follows :
'ategor+ o! person 1ue date !or !iling application
a
!
Fhere a person has deducted or
collected ta$ prior to 1#18#2883(
<n or before )1#1#2884(
b
!
Fhere a person has deducted or
deducts ta$% or has collected or
collects ta$% on or after 1#18#
2883(
Fithin one month from the end of the
month in which ta$ was deducted or
collected% as the case may be% or )1#1#
2884% whiche%er is later.
Note : Item a! will apply only to persons who ha+e not been allotted a T?"A or T."A
already under the old set#up% since section 28)" re,uires only such persons to apply for
T?."A(
Quoting of TDCAN on certain documents
5. Ender section 28)"2!% where a T?"A or T."A or T?."A has been allotted to a
person% such person shall ,uote such number in the followin5 documents :
a! in all challans for the payment of any ta$ deducted or ta$ collected to ;o+ernment
account as re,uired under sections 288 or 28'.)!1
b! in all certificates furnished for ta$ deducted or ta$ collected under section 28) or
28'.4!( It may be noted that the re,uirement of furnishin5 these certificates has
been dispensed with% in respect of ta$ deductedIcollected on or after 1#3#2884!1
c! in all the returns deli+ered in accordance with section 28'% 28'.4"! or
28'.4B!1
d! in all other documents pertainin5 to such transactions as may be prescribed in the
interests of re+enue(
It may be noted that mention of all the three Aumbers %i8.) T?"A% T."A and T?."A!
in this sub#section itself 5i+es a clear indication to the effect that those persons who ha+e
earlier been allotted T?"A or T."A should continue to ,uote that number only in the
specified documents% and that no obli5ation is cast on them to apply afresh for the
allotment of T?."A(
SECTION 285BA/RULE 114E : ANNUAL INFORMATION RETURN
The statutory background
1. *ection 274B"% as substituted by the >inance Ao( 2! "ct% 2883 with effect from 1#3#
2884% casts an obli5ation on certain specified persons to furnish an "nnual Information
Return containin5 details of certain specified transactions re5istered or recorded by them
durin5 e+ery financial year( The first Return will co+er such transactions for the financial
year 2883#84(
The scheme of section 274B" is briefly e$plained in this para5raph in the chronolo5ical
order(
1.1 Dersons who are obliged to !urnish annual in!ormation return # *ub#section 1!
prescribes the followin5 persons who are re,uired to furnish the annual information
return :
"n assessee1
Prescribed person in the case of an office of ;o+ernment1
" local authority or other public body or association1
Re5istrar or *ub#Re5istrar appointed under section ' of the Re5istration "ct%
1&871
Re5isterin5 authority empowered to re5ister motor +ehicles under .hapter I0 of
the Botor 0ehicles "ct% 1&771
Post Baster#;eneral as referred to in clause 4! of section 2 of the Indian Post
<ffice "ct% 17&71
.ollector referred to in clause c! of section ) of the Gand "c,uisition "ct% 17&31
Reco5nised stoc9 e$chan5e referred to in clause !! of section 2 of the *ecurities
.ontracts Re5ulation! "ct% 1&4'1
"n officer of the Reser+e Ban9 of India% constituted under section ) of the
Reser+e Ban9 of India "ct% 1&)31
" depository referred to in clause e! of sub#section 1! of section 2 of the
?epositories "ct% 1&&'(
The aforesaid persons who are responsible for re5isterin5% or maintainin5 boo9s of
account or other document containin5 a record of any specified financial transaction%
under any law for the time bein5 in force% are directed to furnish an annual information
return% in respect of such financial transaction which is re5istered or recorded by him
durin5 any financial year be5innin5 on or after 1#3#2883 and information relatin5 to
which is rele+ant and re,uired for the purposes of the Income#ta$ "ct( The return is
re,uired to be furnished to the prescribed income-tax authorit+ or to such other authority
or a5ency as ma+ be prescribed. Thus% the first return under this pro+ision will co+er
specified financial transactions recorded durin5 the financial year 2883#84% i.e.% 1#3#2883
to )1#)#2884(
1.2 1ue date !or !urnishing the return # *ub#section 2! pro+ides that the annual
information return shall be furnished within the prescribed time after the end of the
rele+ant financial year( The return is re,uired to be in such form and manner includin5
on a floppy% dis9ette% ma5netic cartrid5e tape% .?#R<B or any computer readable
media! as ma+ be prescribed(
1.3 :eaning o! speci!ied !inancial transaction # *ub#section )! defines the term
specified financial transaction as to mean
a! transaction of purchase% sale or e$chan5e of 5oods or property or ri5ht or interest
in a property1 or
b! transaction for renderin5 any ser+ice1 or
c! transaction under a wor9s contract1 or
d! transaction by way of an in+estment made or an e$penditure incurred1 or
e! transaction for ta9in5 or acceptin5 any loan or deposit%
which ma+ be prescribed.
1.4 :onetar+ limit on the %alue o! transactions # The two pro+isos under sub#section )!
are rele+ant( Ender the first pro+iso% the Board .B?T! is empowered to prescribe
different +alues for different transactions in respect of different persons% ha+in5 re5ard to
the nature of such transaction( This means that% in respect of the same transaction% the
monetary limits can be fi$ed differently for certain class of persons when compared with
the monetary limit prescribed for other classes of persons( Ender the second pro+iso% the
+alue or a55re5ate +alue durin5 a financial year prescribed for this purpose shall not be
less than Rs( 48%888( This ma9es it clear that any financial transaction ha+in5 indi+idual
+alue of less than Rs( 48%888 or a55re5ate +alue for the year of less than Rs( 48%888 has
been 5ranted total immunity from the scheme of furnishin5 annual information return(
This is bound to pro+ide considerable relief to both the parties to such transactions(
1.5 7reatment o! de!ecti%e returns # *ub#section 3! re,uires the prescribed income#ta$
authority to intimate defects% if any% to the person who has furnished the return and to
5i+e that person an opportunity of rectifyin5 the defect% normally within a period of one
month from the date on which the defect is intimated to that person( The sub#section also
+ests discretion in the prescribed income#ta$ authority to e$tend the said period of one
month in appropriate cases% if the person applies for such e$tension of time( Cowe+er% if
the defect is not rectified within one month or within any e$tended period 5ranted by the
prescribed income#ta$ authority% the return will be treated as an in+alid return% and penal
pro+isions will apply as if the person has failed to furnish the annual information return(
1.6 &otice calling !or the return # *ub#section 4! pro+ides a reprie+e to such of those
persons who ha+e failed to furnish the annual return within time thou5h they should ha+e
done so( In such cases% this sub#section pro+ides that the prescribed income#ta$ authority
may ser+e upon such person a notice re,uirin5 him to furnish such return within a
specified date which should not be beyond a period of '8 days from the date of ser+ice of
the notice( >or e$ample% if the notice callin5 for the return is ser+ed on% say% 1#18#2884%
the prescribed income#ta$ authority can allow time upto any date which is not beyond )8#
11#2884( <n receipt of the notice% the person shall furnish the annual information return
within the time specified in the notice( It must% howe+er% be noted that the sub#section
uses the e$pression may ser+e and not the e$pression shall ser+e( Cence% it is entirely
within the discretion of the prescribed income#ta$ authority to issue such a notice% and the
defence of non#issue of notice is not a+ailable to the delin,uent person(
Contents of Rule 114E
2 To ma9e a be5innin5 in 5i+in5 effect to the pro+isions of section 274B"% the matters
enumerated in paras 3 to 9 ha+e been prescribed in the newly inserted rule 113E which
has been notified under the Income#ta$ 16th "mendment! Rules% 2883 issued under
Aotification Ao( *< 1)1'E!% dated 1#12#2883( Rule 113E has been totally substituted
with effect from 1#12#2883 by the Income#ta$ 21
st
"mendment! Rules% 2884(
Format of the return
3. Ender rule 113E1!% the annual information return is re,uired to be furnished in >orm
Ao( '1"% and it shall be +erified in the manner indicated in that >orm(
The notified financial transactions and persons
4. The Table in rule 113E2! specifies the financial transactions% their monetary +alue%
and the persons who should furnish the return in respect of those transactions( These are
5i+en below in tabular form :
<l.
&o.
&ature o! the transaction Ealue Derson liable to !ile return
1. "55re5ate of cash deposits in a
year in any sa+in5s account of a
person maintained in the ban9
Rs( 18
la9hs or
more
Ban9in5 companiesIinstitutions
2. "55re5ate of payments in a year
by any person a5ainst bills
raised in respect of a credit card
issued to that person
Rs( 2
la9hs or
more
Ban9in5 companies or institutions or
any other company or institution
issuin5 the credit card
3. Receipts from any person for
ac,uirin5 units of a Butual
>und
Rs( 2
la9hs or
more
Butual >und issuin5 the units
ac,uirin5 bonds or debentures
Rs( 4
la9hs or
more
.ompany or institution issuin5 said
bonds or debentures
ac,uirin5 shares
Rs( 1
la9h or
more
.ompany issuin5 the said shares
6. Purchase or sale by any person
of immo+able property
Rs( )8
la9hs or
more
Re5istrarI*ub#Re5istrar re5isterin5
the sale deed
. "55re5ate of receipts in a year
from any person for bonds
issued by the Reser+e Ban9 of
India
Rs( 4
la9hs or
more
<fficer duly authori=ed in this behalf
by the Reser+e Ban9 of India
Authority to whom return is to be furnished
5. Ender rule 113E)!% the return is re,uired to be furnished to the .ommissioner of
Income#ta$ .entral Information Branch!( The pro+iso to this sub#rule stipulates that
where the .B?T has authorised an a5ency to recei+e such return on behalf of the
.ommissioner of Income#ta$ .entral Information Branch!% the return shall be furnished
to that a5ency( The Aational *ecurities ?epository Gtd( A*?G!% includin5 its front
offices called TIA >acilitation .entres% has been authorised to act as the a5ency to
recei+e this return on behalf of the .ommissioner( Their address is: Trade Forld% 3th
>loor% Damla Bills .ompound% Gower Parel% Bumbai # 388 81)(
The medium in which return is to be furnished
6. Rule 113E3!a! stipulates that the return comprisin5 Part " and Part B of >orm Ao( '4
referred to in sub#rule 1! shall be furnished on computer readable media bein5 a floppy
)(4 inch and 1(33 BB capacity! or .?#R<B '48 BB or hi5her capacity! or ?i5ital
0ideo ?isc ?0?!% alon5 with Part " thereof on paper( Cowe+er a person responsible for
furnishin5 the return% may% at his option% furnish the return throu5h online transmission of
electronic data to a ser+er desi5nated by the "nnual Information Return # "dministrator
under the di5ital si5nature of the person specified in para 114E.9( ?i5ital si5nature
means a di5ital si5nature issued by any .ertifyin5 "uthority authorised to issue such
certificates by the .ontroller of .ertifyin5 "uthorities( The ?irector 5eneral of Income#
ta$ systems! has been appointed as the "nnual Information Return # "dministrator( -<ee
sub#rule 6! of rule 113E2( Cis address is : "R" .entre% E#2% @handewalan E$tension%
Aew ?elhi( The return shall be prepared in accordance with the data structure specified
by the "nnual Information Return # "dministrator(
Obligations cast on the person furnishing the return
7. Ender rule 113E3!b!% the person responsible for furnishin5 the return shall ensure
that
i! if the data relatin5 to the return or statement is copied usin5 data compression or
bac9up software utility% the correspondin5 software utility or procedure for its
decompression or restoration shall also be furnished alon5 with the computer
media return or statement1 and
ii! the return is accompanied with a certificate re5ardin5 clean and +irus free data(
Due date for furnishing the return
8. Rule 113E4! re,uires that the annual information return shall be furnished on or
before )1st "u5ust immediately followin5 the financial year in which the transaction is
re5istered or recorded( Thus% the first return co+erin5 transactions durin5 the period 1#3#
2883 to )1#)#2884 should be filed on or before )1#7#2884(
Who should sign the return
9. Ender rule 113E'!% the return shall be si5ned and +erified by the followin5 persons:
9.1 ,hen person is an assessee # Fhere the person is an assessee as defined in section
2! of the Income#ta$ "ct% the return must be si5ned by a person specified in section 138
of that "ct(
This will apply to ban9in5 companies% ban9in5 institutions and companies referred to in
*l( Aos( 1% 2% 3 and 4 of the Table 5i+en in para 4( Ender section 138c!% the return in the
case of a company is re,uired to be si5ned by the mana5in5 director thereof( Cowe+er%
where for any una+oidable reasons such mana5in5 director is not able to si5n the return
or to +erify it% or where there is no mana5in5 director% the return can be si5ned by any
director of the company( Fhere the company is not resident in India% the return may be
si5ned and +erified by a person who holds a +alid power of attorney from the company to
do so% and a copy of such power of attorney must be attached to the return(
9.2 ,hen person does not !all under pa-a !." # This co+ers *l( Aos( )% ' and 6 of the
Table 5i+en in para 4( In their cases the return must be si5ned and +erified by the
followin5 persons :
Butual >unds Trustee of the mutual fund or such other person mana5in5 the
affairs of the Butual >und as may be authorised by the trustee
in this behalf(
PurchaseIsale of Re5istrar or *ub#Re5istrar appointed under section '
immo+able property of the Re5istration "ct(
RBI Bonds <fficer of RBI who is duly authori=ed by the RBI in this
behalf(
Points to be noted in respect of notified transactions
10 *ome of the important points that must be 9ept note of in respect of the transactions
mentioned in para 4 are e$plained in the succeedin5 para5raphs :
10.1 'ash deposits in ban.s # Two important points that must be noted at the +ery outset
are :
The information to be furnished must be in respect of deposits made in cash by
the account holder( ?eposits made otherwise than by cash li9e che,ues% ??s and
transfer ad:ustments! are not to be ta9en into account for the monetary limit of Rs(
18 la9hs in a year(
?eposits in a sa+in5s account must alone be considered( ?eposits in other
accounts% li9e current account% fi$ed deposit account% recurrin5 deposit account%
etc(% are not to be ta9en into account(
;enerally spea9in5% cash inflow occurs almost on a day#to#day basis in businesses carried
on by a! retail shop9eepers% b! mil9 +endin5 booths% c! pri+ate telephone booths% d!
cinema houses% e! hotels and restaurants% !! shoppin5 malls% g! 5rocery stores% h!
railway reser+ation centres% i! railway boo9in5 offices both for issue of tic9ets and for
carria5e of 5oods and parcels!% 4! transport of passen5ers by road% .! auto#ric9shawallas%
l! ta$i operators% etc( "ll these persons remit the daily sale proceeds to their ban9
account on the same day% if possible% or at best on the succeedin5 day( Bost of them
deposit the moneys in sa+in5s account only( If the a+era5e daily deposits made by these
persons crosses Rs( )%888% the a55re5ate of cash deposits made in the year will e$ceed
Rs( 18 la9hs( The ban9s will ha+e to furnish the re,uisite information in respect of all
such persons(
"nother important point to be noted is that the information must be furnished by a ban9
in respect of deposits held by any person in that ban9(The term branch of a ban9 has not
been used( Therefore each ban9 is the unit% both for the purpose of determinin5 the
a55re5ate of cash deposits made by any person as well as for the purpose of furnishin5
the information( Thus% if a person has more than one sa+in5s account in different
branches of the same ban9 which is possible as well as permissible!% that ban9 will be
re,uired to furnish the information in respect of that person if the a55re5ate of cash
deposits made by that person in the +arious branches of the ban9 has e$ceeded Rs( 18
la9hs for the year% e+en thou5h such a55re5ate in respect of each such branch has not
e$ceeded this limit(
10.2 'redit card pa+ments # The monetary limit of Rs( 2 la9h will apply to each credit
card issued by the company( If any add#on card has been issued% that will be in a different
name% and e+en billin5 in respect of such add#on card is done separately by the company
issuin5 the credit card( Cence% in cases where a primary credit card and an add#on card
has been issued by the same company% information will ha+e to be furnished only in
respect of that credit card throu5h which payment has been made in e$cess of Rs( 2 la9hs
durin5 the year( *imilarly% where a person is holdin5 more than one credit card issued by
different companiesIban9s% the information will be re,uired to be furnished only by such
of those companiesIban9s in respect of which payments made throu5h credit cards issued
by them has e$ceeded Rs( 2 la9hs for the year(
10.3 3n%estments in mutual !unds # If a mutual fund has recei+ed more than Rs( 2 la9hs
from any person for ac,uirin5 units of that fund% the said mutual fund is re,uired to
furnish the information about such person in the annual information return( It must be
noted that
a! the words in a year ha+e not been used% and the word receipt has been used in
sin5ular( Therefore% the monetary limit of Rs( 2 la9hs will apply to each
in+estment and not to the a55re5ate in+estments made durin5 the year( If a person
ma9es in+estment of% say% Rs( 1(&8 la9hs each on three different occasions durin5
the year in the same mutual fund% it seems that the mutual fund is not obli5ed to
furnish information in respect of such person in the "nnual Information Return1
b! the receipt of amount must be for ac,uirin5 units and not for any other purpose(
10.4 3ssue o! bonds and debentures # If a company or institution has recei+ed Rs( 4 la9hs
or more from any person for ac,uirin5 bonds and debentures issued by that
companyIinstitution% information in respect of that transaction is re,uired to be furnished
in the "nnual Information Return by the said companyIinstitution( Issue of bonds and
debentures is only an occasional feature% and is not open#ended as in the case of units(
That is perhaps why the words in a year ha+e not been used% and it cannot be inferred that
the a55re5ate receipts from the same person durin5 the year should be considered for
applyin5 the monetary limit of Rs( 4 la9hs( Each receipt must be considered separately%
and if it is less than Rs( 4 la9hs% the ,uestion of furnishin5 information in respect of such
a receipt does not seem to arise(
10.5 3ssue o! shares # If a company has recei+ed Rs( 1 la9h or more from any person for
ac,uirin5 shares issued by that company throu5h a public or ri5hts issue% information in
respect of such a transaction is re,uired to be furnished in the "nnual Information Return
by the said company( Public issues and ri5hts issues are 5enerally one#time affairs e+en
durin5 the same year!% and hence the term in a year has not been used( The monetary
limit of Rs( 1 la9h will hence apply to each receipt only( <ee also para 10.4!
10.6 DurchaseKsale o! immo%able propert+ # .ases where immo+able properties +alued at
Rs( )8 la9hs or more are purchased or sold% are re,uired to be reported by the Re5istrar or
the *ub#Re5istrar% i.e.% the re5isterin5 authority( *ince the information is re,uired to be
furnished by the re5isterin5 authority% the definition of immo+able property in the
Re5istration "ct% 1&87 may be rele+ant( Ender section 26! of that "ct% immo+able
property includes land% buildin5s% hereditary allowances% ri5hts to ways% li5hts% ferries%
fisheries or any other benefit to arise out of land and thin5s attached to the earth or
permanently fastened to anythin5 which is attached to the earth% but not standin5 timber%
5rowin5 crops nor 5rass( The monetary limit of Rs( )8 la9hs will apply to the +alue
adopted by the re5isterin5 authority(
10.7 6B3 Bonds # If the Reser+e Ban9 of India RBI! has recei+ed Rs( 4 la9hs or more in
a year from any person for issue of bonds floated by RBI% information in respect of such
transactions is re,uired to be furnished in the "nnual Information Return( The monetary
limit applies to the a55re5ate of the amounts recei+ed durin5 the year from a person and
not to each and e+ery indi+idual receipt( Thus% if any person has subscribed Rs( 1 la9h
each on fi+e occasions durin5 the year for issue of RBI bonds% information in respect of
that person must be furnished in the "nnual Information Return by the RBI(

Income Tax Act, 1961

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Income Tax Act, 1961

Enviado por

Direitos autorais:

Formatos disponíveis

INCOME TAX ACT, 1961 AS AMENDED BY FINANCE ACT,

APPEALS AND REVISION

"ssessment year 1&&6#&7 : )1st "u5ust% 1&&7

"ssessment year 1&&7#&& : )1st "u5ust% 1&&7

"ssessment year 1&&&#2888 or any subse,uent

Você também pode gostar