Income-tax
Act, 1961
[43 OF 1961]
[AS AMENDED BY FINANCE ACT, 1990 and
the direct
tax laws (second amendment) Act, 1989]
An Act to consolidate and amend the
law relating to
income-tax and super-tax
Chapter I
Preliminary
Short title, extent and commencement.
1. (1) This Act may be
called the Income-tax Act, 1961.1[1]
(2) It extends to the whole of
(3) Save as
otherwise provided in this Act, it shall come into force on the 1st day of
April, 1962.
2. In this Act, unless the context otherwise requires,—
2[2] [3[3] (1) “advance
tax” means the advance tax payable in accordance with the provisions of Chapter
XVII-C;]
4[4] [(1A) 5[5] "agricultural income”6[6] means—
7-8
[7]
[(a) any
rent to revenue derived from land which is situated
in
(b) Any
income derived from such land by—
(i) Agriculture;
or
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or
(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause;
(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on:
(i) the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building, and
(ii) The land is either assessed to land revenue in
(A) in any area which is comprised within the jurisdiction of a municipality (whether known 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 according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
9[9] [(B) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette,]
10[10] [Explanation : For the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of this section;]
11[11] [12[12] [(1B)] “amalgamation”, in relation to companies, means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that—
(i) All the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of the amalgamation;
(ii) All the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation;
(iii) Shareholders holding not less than nine-tenths in value of the shares in the amalgamating company or companies (other than shares already held therein immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation,Otherwise than as a result of the acquisition 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 winding up of the first-mentioned company;]
(2) “Annual value”, in relation to any property, means its annual value as determined under section 23;
(4) “Appellate Tribunal” means the Appellate Tribunal constituted under section 252;
(5) “Approved gratuity fund” means a gratuity fund which has been
and continues to be approved by the 14[14] [Chief
Commissioner or Commissioner] in accordance with the rules contained in Part C
of the Fourth Schedule;
(6) “Approved superannuation fund” means a superannuation fund or any part of a superannuation fund which has been and continues to be approved by the 14[15] [Chief Commissioner or Commissioner] in accordance with the rules contained in Part B of the Fourth Schedule;
(7) “Assessee” means a person by whom 15[16] [any tax] or any other sum of money is payable under this Act, and includes—
(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income 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;
(b) every person who is deemed to be an assessee under any provision of this Act;
(c) every person who is deemed to be an assessee in default under any provision of this Act;
16[17] [(7A) “Assessing Officer” means the Assistant Commissioner or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Deputy Commissioner who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;]
(8) “Assessment” includes reassessment;
(9) “Assessment year” means the period of twelve months commencing on the 1st day of April every year;
16[18] [(9A)“Assistant Commissioner” means a person appointed to be an Assistant Commissioner of Income-tax under sub-section (1) of section 117;]
(10) “Average rate of income-tax” means the rate arrived at by dividing the amount of income-tax calculated on the total income, by such total income;
17[19] [(11) “block of assets” means a group of assets falling within a class of assets, being buildings, machinery, plant or furniture, in respect of which the same percentage of depreciation is prescribed;]
(12) “Board” means the 18[20] [Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)];
(13) “Business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;
19[21] (14)“capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include—
(i) Any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession;
20[22] [(ii) personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him.
Explanation: For the purposes of this sub-clause, “jewellery” includes—
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel;]
21[23] [(iii) agricultural
land in
22[24] (a) in any area which is comprised within the jurisdiction of a municipality (whether known 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 according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
22[25] (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;]
23[26] [(iv) 6½ per cent Gold Bonds, 1977, 24[27] [or 7 per cent Gold Bonds, 1980,] 25[28] [or National Defence Gold Bonds, 1980,] issued by the Central Government;]
26[29] [(v) Special Bearer Bonds, 1991, issued by the Central Government;]
27[30] (15) “charitable purpose” includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility 28[31] [* * *];
29[32] (15A) “Chief Commissioner” means a person appointed to be a Chief Commissioner of Income-tax under sub-section (1) of section 117;]
30[33] [31[34] (15B)] “child”, in relation to an individual, includes a step-child and an adopted child of that individual;]
32[35] [(16) “Commissioner” means a person appointed to be a Commissioner of Income-tax under sub-section (1) of section 117 33[36] [* * *];]
34[37] [(16A) “Commissioner (Appeals)” means a person appointed to be a Commissioner of Income-tax (Appeals) under sub-section (1) of section 117;]
(i) any Indian company, or
(ii) any body corporate incorporated by or under the laws of a
country outside
(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-tax Act, 1922, (11 of 1922), or which is or was assessable or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970, or
(iv) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general 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 commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration;]
(18) “company in which the public are substantially interested”—a company is said to be a company in which the public are substantially interested—
36[39] [(a) if it is a company owned by the Government or the Reserve Bank of India or in which not less than forty per cent of the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a corporation owned by that bank; or]
37[40] [(aa) if it is a company which is registered under section 25 of the Companies Act, 1956 (1 of 1956); or
(ab) if it is a company having no share capital and if, having regard to its objects, the nature and composition of its membership and other relevant 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 commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration; or]
38[41] [(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 Central Government under section 620A of the Companies Act, 1956 (1 of 1956), to be a Nidhi or Mutual Benefit Society; or]
39[42] [(b) if it is a company which is not a 40[43] private company as defined in the Companies Act, 1956 (1 of 1956), and the conditions specified either in item (A) or in item (B) are fulfilled, namely:—
(A) shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) were, as on the last day of the relevant previous year, listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made there under;
41[44] [(B) shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by—
(a) The Government, or
(b) A corporation established by a Central, State or Provincial Act, or
(c) any company to which this clause applies or any subsidiary company of such company 42[45] [if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year.]
Explanation: In its application to an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power; item (B) shall have effect as if for the words “not less than fifty per cent”, the words “not less than forty per cent” had been substituted;]]
(19) “Co-operative society” means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies;
43[46] [(19A) “Deputy Commissioner” means a person appointed to be a Deputy Commissioner of Income-tax under sub-section (1) of section 117;
(19B) “Deputy Commissioner (Appeals)” means a person appointed to be a Deputy Commissioner of Income-tax (Appeals) under sub-section (1) of section 117;]
44[47] (20) “director”, “manager” and “managing agent”, in relation to a company, have the meanings respectively assigned to them in the Companies Act, 1956 (1 of 1956);
45[48] [(21) “Director General or Director” means a person appointed to be a Director General of Income-tax or, as the case may be, a Director of Income-tax, under sub-section (1) of section 117, and includes a person appointed under that sub-section to be a Deputy Director of Income-tax or an Assistant Director of Income-tax;]
46[49] (22) “dividend” includes—
(a) Any distribution by a company of accumulated profits, 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;
(b) any distribution to its shareholders by a company of debentures, debenture-stock, 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 extent to which the company possesses accumulated profits, whether capitalised or not;
(c) Any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not;
(d) any distribution to its shareholders by a company on the reduction of its capital, to the extent to which the company possesses accumulated profits which arose after the end of the previous year ending next before the 1st day of April, 1933, whether such accumulated profits have been capitalised or not;
(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) 47[50] [made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting 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),] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits;But “dividend” 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 event of liquidation to participate in the surplus assets;
48[51] [(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 representing bonus shares allotted to its equity shareholders after the 31st day of March, 1964, 49[52] [and before the 1st day of April, 1965];]
(ii) Any advance or loan made to a shareholder 50[53] [or the said concern] by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off.
Explanation 1 : The expression “accumulated profits”, wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948, and before the 1st day of April, 1956.
Explanation 2 : The expression “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 liquidation, 51[54] [but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place].
52[55] [Explanation 3: For the purposes of this clause,—
(a) “Concern” means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company;
(b) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern;]
53[56] [(22A) “domestic company” means an Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income;]
54[57] [55[58] [(22B)] “fair market value”, in relation to a capital asset, means—
(i) The price that the capital asset would ordinarily fetch on sale in the open market on the relevant date; 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 Act;]
56[59] (23) “firm”, “partner” and “partnership” have the meanings respectively assigned to them in the Indian Partnership Act, 1932 (9 of 1932); but the expression “partner” shall also include any person who, being a minor, has been admitted to the benefits of partnership;
57[60] [(23A)“foreign company” means a company which is not a domestic company;]
(24) “Income” includes—
(i) Profits and gains;
(ii) Dividend;
58[61] [(iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes 59[62] [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 (iv) or sub-clause (v) of clause (23C), of section 10].
Explanation: For the purposes of this sub-clause, “trust” includes any other legal obligation;]
60[63] (iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17;
61[64] [(iiia)any special allowance or benefit, other than perquisite included under sub-clause (iii), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit;
(iiib) any allowance granted to the assessee either to meet his personal expenses 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 living;]
60[65] (iv) the value of any benefit or perquisite, whether convertible 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 relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid;
62[66] [(iva)the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 160 or by any person on whose behalf or for whose benefit any income is receivable by the representative assessee (such person being hereafter in this sub-clause referred to as the “beneficiary”) and any sum paid by the representative assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary;]
(v) any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or section 41 or section 59;
63[67] [(va) any sum chargeable to income-tax under clause (iiia) of section 28;]
64[68] [(vb) any sum chargeable to income-tax under clause (iiib) of section 28;]
64a[69] [(vc)any sum chargeable to income-tax under clause (iiic) of section 28;]
64b[70] [(vd)]the value of any benefit or perquisite taxable under clause (iv) of section 28;
(vi) any capital gains chargeable under section 45;
(vii) the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions contained in the First Schedule;
64c[71] (viii)[Omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Original sub-clause (viii) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.]
65[72] [(ix) any winnings from lotteries, crossword puzzles, races including horse race, card games and other games of any sort or from gambling or betting of any form or nature whatsoever;]
66[73] [(x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948) or any other fund for the welfare of such employees;]
(25) “Income-tax Officer” means a person appointed to be an Income-tax Officer under 67[74] [* * *] section 117;
68[75] [(25A) “
(a) as respects any period, for the purposes of section 6; and
(b) as respects any period included in the previous year, for the purposes of making any assessment for the assessment year commencing on the 1st day of April, 1963, or for any subsequent year;]
(26) “Indian company” means a company formed and registered under the Companies Act, 1956 (1 of 1956), and includes—
(i) a company formed and registered under any law relating to companies formerly in force in any part of India (other than the State of Jammu and Kashmir 69[76] [and the Union territories specified in sub-clause (iii) of this clause]);
70[77] [(ia) a corporation established by or under a Central, State or Provincial Act;
(ib) any institution, association or body which is declared by the Board to be a company under clause (17);]
(ii) in the case of the State of
69[78] [(iii) in the case of any of the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, a company formed and registered under any law for the time being in force in that Union territory:]
Provided
that the 71[79] [egistered or, as the case may be,
principal office of the company, corporation, institution, association or body]
in all cases in
(28) “Inspector of Income-tax” means a person appointed to be an Inspector of Income-tax under sub-section 73[81] [(1)] of section 117;
74[82] [75[83] (28A) “interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right to obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;]
76[84] [(28B) “interest on securities” means,—
(i) interest
on any security of the Central Government or a State Government;
(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 Central, State or Provincial Act;]
(29) 77[85] “legal
representative” has the meaning assigned to it in clause (11) of section 2 of the
Code of Civil Procedure, 1908 (5 of 1908);
78[86] [(29A) “long-term capital asset” means a capital asset which is not a short-term capital asset;
(29B) “long-term capital gain” means capital gain arising from the transfer of a long-term capital asset;]
79[87] [(29C) “maximum marginal rate” means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual as specified in the Finance Act of the relevant year;]
(30) “Non-resident” means a person who is not a “resident”, and for the purposes of sections 92, 93 80[88] [* * *] and 168, includes a person who is not ordinarily resident within the meaning of sub-section (6) of section 6;
(31) “Person” includes—
(i) An individual,
(ii) A Hindu undivided family,
(iii) A company,
(iv) A firm,
(v) An association of persons or a body of individuals, whether incorporated or not,
(vi) A local authority, and
(vii) Every artificial juridical person, not falling within any of the preceding sub-clauses;
(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 being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits, carrying not less than twenty per cent of the voting power;
(33) “Prescribed” means prescribed by rules made under this Act;
(34) “Previous year” means the previous year as defined in section 3;
(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 individuals, means—
(a) The secretary, treasurer, manager or agent of the authority, company, association or body, or
(b) any person connected with the management or administration of the local authority, company, association or body upon whom the 81[89] [Assessing] Officer has served a notice of his intention of treating him as the principal officer thereof;
(36) “Profession” includes vocation;
82[90] [(36A) “public sector company” means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);]
(37) 83[91] "public servant” has the same meaning as in section 21 of the Indian Penal Code (45 of 1860);
84[92] [(37A) “rate or rates in force” or “rates in force”, in relation to an assessment year or financial year, mean—
(i) for the purposes of calculating income-tax under the first proviso to sub-section (5) of section 132, or computing the income-tax chargeable under sub-section (4) of section 172 or sub-section (2) of section 174 of section 175 or sub-section (2) of section 176 or deducting income-tax under section 192 from income chargeable under the head “Salaries” 85[93] [***] or 86[94] [computation of the “advance tax” payable under Chapter XVII-C in a case not falling under 87[95] [section 115A or section 115B 88[96] [or section 115BB or section 115E] or ] section 164 88[97] [or section 164A 89[98] [***]] 90[99] [or section 167B], the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, and for the purposes of computation of the “advance tax” payable under Chapter XVII-C 91[100] [in a case falling under section 115A or section 115B 92[101] [or section 115BB or section 115E] or section 164 92[102] [or section 164A 93[103] [***]] 94[104] [or section 167B], the rate or rates specified in section 115A or 95[105] [section 115B or section 115BB or section 115E or section 164 or section 164A 93[106] [***] 94[107] [ or section 167B],as the case may be,] or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, whichever is applicable];
(ii) for the purposes of deduction of tax under sections 193, 194, 194A 96[108] [,194B] 97[109] [,194BB] 98[110] [,194D] 99[111] [***] and 195, the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year;]
1[112] (38) “recognised provident fund” means a provident fund which has been and continues to be recognised the 2[113] [Chief Commissioner or Commissioner] in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees’ Provided Funds Act, 1952 (19 of 1952);
3[114] [(39) “registered firm” means a firm registered under the provisions of clause (a) of sub-section (1) of section 185 or deemed to be registered under the provisions of sub-section (6) of that section or under those provisions read with sub-section (7) of section 184;]
(40) “Regular assessment” means the assessment made under 3a[115] [sub-section(3) of] section 143 or section 144;
(41) “Relative”, in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual;
(42) “Resident” means a person who is resident in
4[116] [5[117] [(42A) 6[118] [“short-term capital asset” means a capital asset held by an assessee for not more than 7[119] [thirty-six] months immediately preceding the date of its transfer;]
8[120] [Provided that in the case of a share held in a company, the provisions of this clause shall have effect as if for the words “thirty-six months”, the words “twelve months” had been substituted.]
Explanation: (i) In determining the period for which any capital asset is held by the assessee—
(a) In the case of a share held in a company in liquidation, there shall be excluded the period subsequent to the date on which the company goes into liquidation;
(b) In the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in 9[121] [sub-section (1)] of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section;
10[122] (c) in the case of a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, there shall be included the period for which the share or shares in the amalgamating company were held by the assessee;]
(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 subject to any rules which the Board may make in this behalf;]
11[123] (42B) “short-term capital gain” means capital gain arising from the transfer of a short-term capital asset;]
13[125] [(43) “tax” in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date;]
14[126] [(43A) “tax credit certificate” means a tax credit certificate granted to any person in accordance with provisions of Chapter XXII-B and any scheme made there under;]
16[128] [(44) “Tax Recovery Officer” means any Income-tax Officer who may be authorised by the Chief Commissioner or Commissioner, by general or special order in writing, to exercise the powers of a Tax Recovery Officer;]
(45) “Total income” means the total amount of income referred to in section 5, computed in the manner laid down in this Act;
(47) 18[130] [“transfer”, in relation to a capital asset, includes,—
(i) the sale, exchange or relinquishment of the asset; or
(ii) the extinguishment of any rights therein; or
(iii) the compulsory acquisition thereof under any law; or
(iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment;] 19[131] [or]
19[132] (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or
(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.
Explanation: For the purposes of sub-clauses (v) and (VI), “immovable property” shall have the same meaning as in clause (d) of section 269UA;]
20[133] [(48) “unregistered firm” means a firm which is not a registered firm.]
21[134] [22[135] "Previous year” defined.
3.(1) Save as otherwise provided in this section, “previous year” for the purposes of this Act, means the financial year immediately preceding the assessment year:
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.
(2) “Previous year”, in relation to the assessment year commencing on the 1st day of April, 1989, means the period which begins with the date immediately following the last day of the previous year relevant to the assessment year commencing on the 1st day of April, 1988 and ends on the 31st day of March, 1989 :
Provided that where the assessee has adopted more than one period as the “previous year” in relation to the assessment year commencing on the 1st day of April, 1988 for different sources of his income, the previous year in relation to the assessment year commencing on the 1st day of April, 1989 shall be reckoned separately in the manner aforesaid in respect of each such source of income, and the longer or the longest of the periods so reckoned shall be the previous year for the said assessment year :
23[136] [Provided further that in the case of a business or profession newly set up, or a source of income newly coming into existence on or after the 1st day of April, 1987 but before the 1st day of April, 1988 and where the accounts in relation to such business or profession or source of income have not been made up to the 31st day of March, 1988, the “previous year” in relation to the assessment year commencing on the 1st day of April, 1989, shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending on the 31st day of March, 1989:
Provided also that where the assessee has adopted one or more periods as the “previous year” in relation to the assessment year commencing on the 1st day of April, 1988, for any source or sources of his income, in addition to the business or profession or source of income referred to in the second proviso, the previous year in relation to the assessment year commencing on the 1st day of April, 1989, shall be reckoned separately in the manner aforesaid in respect of each such source of income, and the longer or the longest of the periods so reckoned shall be the previous year in relation to the said assessment year.]
(3) Where the previous year in relation to the assessment year commencing on the 1st day of April, 1989, referred to in sub-section
(2) exceeds a period of twelve months, the provisions of this Act shall apply subject to the modifications specified in the rules in the Tenth Schedule.]
[1]For applicability of the Act to State of Sikkim, see section 26 of the Finance Act, 1989.
[2]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[3]See also Instruction No. 745 [F.No. 228/28/74-IT (A-II)], dated 30-8-1974 and Circular No. 310, dated 29-7-1981.
[4]Renumbered as clause (1A) Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[5]See rules 7 and 8.
[6]The Finance Act, 1973 introduced for the first time a scheme of partially integrated taxation of non-agricultural income with incomes derived from agriculture for the purposes of determining the rate of income-tax that will apply to certain non-corporate assessees. The scheme is since continued by the Annual Finance Acts. The provisions applicable for the assessment year 1989-90 are contained in section 2(9)(e) of, and Part IV of the First Schedule to, the Finance Act, 1989.
[7]Substituted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1962.
[8]Substituted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1962.
[9]Specified urban areas.
[10]Inserted by the Finance Act, 1989 with retrospective effect from 1-4-1970.
[11]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[12]Renumbered as clause (1B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[13]Clause (3) omitted by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988. Prior to its omission, clause (3)
stood as under:
‘(3) “Appellate Assistant Commissioner” means a person appointed to be an Appellate Assistant Commissioner of Income-tax under sub-section (1) of section 117.’
[14]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[15]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[16]Substituted for “income-tax or super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[17]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[18]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[19]Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Original clause was earlier omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[20]Substituted for “Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 (4 of 1924)” by the Central Boards of Revenue Act, 1963, w.e.f. 1-1-1964.
[21]See also Letter F.No. 34/11/65-IT (A-I), dated 15-1-1966.
[22]Substituted by the Finance Act, 1972, w.e.f. 1-4-1973.
[23]Substituted for “(iii)
agricultural land in
[26]Inserted by the Taxation Laws (Amendment) Act, 1962, w.e.f. 13-12-1962.
[27]Inserted by the Finance (No. 2) Act, 1965, w.e.f. 1-4-1965.
[28]Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965.
[29]Inserted by the Special Bearer Bonds (Immunities and Exemptions) Act, 1981, w.e.f. 12-1-1981.
[30]See also circular No. 395, dated 24-9-1984.
[31]“Not involving the carrying on of any activity for profit” omitted by the Finance Act, 1983, w.e.f. 1-4-1984.
[32]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[33]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[34]Renumbered by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[35]Substituted by the Finance Act, 1970, w.e.f. 1-4-1970.
[36]“, and includes a person appointed to be an Additional Commissioner of Income-tax under that sub-section” omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[37]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 10-7-1978.
[38]Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[39]Substituted by the Finance Act, 1964, w.e.f. 1-4-1964.
[40]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[41]Inserted by the Finance Act, 1985, with retrospective effect from 1-4-1984.
[42]Substituted by the Finance Act, 1969, w.e.f. 1-4-1970. Earlier, clause (b) was amended first by the Finance Act, 1965, w.e.f. 1-4-1965 and then by the Finance Act, 1966, w.e.f. 1-4-1966.
[43]For definition of “private company” in clause (iii) of section 3(1) of the Companies Act, 1956, see footnote 28 on p. 1.153 post.
[44]Substituted by the Finance Act, 1983, w.e.f. 2-4-1983.
[45]Substituted for “where such subsidiary company fulfils the conditions laid down in clause (b) of section 108” by the Finance Act, 1987, w.e.f. 1-4-1988.
[46]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[47]Definitions of expressions “director” and “manager” in
clauses (13) and (24) of section 2 of the Companies Act, 1956,
are as follows:
‘(13)
“Director” includes any person occupying the position of director, by whatever
name called;’
‘(24) “manager” means an individual (not being the managing agent) who, subject to the superintendence, control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of the company, and includes a director or any other person occupying the position of a manager, by whatever name called, and whether under a contract of service or not;’
[48]Substituted for the following clause (21) by the
Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988:
‘(21) “Director of Inspection” means a person appointed to be a Director of Inspection under sub-section (1) of section 117, and includes a person appointed to be an Additional Director of Inspection, a Deputy Director of Inspection or an Assistant Director of Inspection;’
[49]See also Circular No. 5-P (
[50]Substituted for “by way of advance or loan to a shareholder, being a person who has a substantial interest in the company,” by the Finance Act, 1987, w.e.f. 1-4-1988.
[51]Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.
[52]Inserted by the Finance Act, 1966, w.e.f. 1-4-1966.
[53]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[54]Inserted by the Direct Taxes (Amendment) Act, 1964, with retrospective effect from 1-4-1962.
[55]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[56]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[57]Inserted by the Finance Act, 1964, w.e.f. 1-4-1964.
[58]Renumbered as clause (22B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[59]Section 4 of the Indian Partnership Act, 1932 defines
expression “firm”, “partner” and “partnership” as follows:
‘“Partnership”
is the relation between persons who have agreed to share the profits of a
business carried on by all any of them acting for all.
Persons who have entered into partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”.’
[60]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[61]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[62]Substituted for “or by a trust or institution of national importance referred to in clause (d) of sub-section (1) of section 80F” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the said expression was substituted for “, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution” by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[63]See also Board’s Letter to Indian Merchants Chamber published in Chamber’s Annual Report, 1963
[64]Inserted by the Direct Tax Laws (Amendment) Act, 1989, with retrospective effect from 1-4-1962.
[65]See also Board’s Letter to Indian Merchants Chamber published in Chamber’s Annual Report, 1963, p. 87.
[66]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980.
[67]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1962.
[68]Inserted, ibid. w.r.e.f. 1-4-1967.
[69]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1972.
[70]Renumbered by the Finance Act, 1990, w.r.e.f. 1-4-1964. Earlier existing clause (va) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.
[71]Prior to its omission, sub-clause (viii) read as
under:
“(viii) Any annuity due, or commuted value of any annuity paid, under the provisions of section 280D;”
[72]Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
[73]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[74]“Sub-section (1) of” omitted by the Direct Tax Laws (Amendment) Act, 1989, with retrospective effect from 1-4-1988. Earlier, that expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[75]Inserted by the Taxation
Laws (Extension to
[76]Inserted by the Taxation
Laws (Extension to
[77]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[78]Inserted by the Taxation
Laws (Extension to
[79]Substituted for “registered office of the company” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[80]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988. Omitted clause (27) stood as under:
‘(27) “Inspecting Assistant Commissioner” means a person appointed to be an Inspecting Assistant Commissioner of Income-tax under sub-section (1) of section 117;’
[81]Substituted for “(2)” Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[82]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[83]See also Letter S.No. 164/18/77-IT (A-I), dated 13-7-1978.
[84]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[85]Clause (11) of section 2 of the Code of Civil
Procedure defines “legal representative” as follows:
(11) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued;’.
[86]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[87]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[88]“, 113” omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[89]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[90]Inserted by the Finance Act, 1987, w.e.f. 1-4-1987.
[91]Definition of “public servant” in section 21 of the
Indian Penal Code is as follows:
‘The
words “public servant” denote a person falling under any of the descriptions
hereinafter following, namely:—
** **
**
Second - Every Commissioned in the Military, Naval or Air
Forces of
Third - Every Judge including any person empowered by law to
discharge, whether by himself or as a member of any body of persons, any
adjudicatory functions;
Fourth - Every officer of a Court of Justice (including a
liquidator, receiver or Commissioner) whose duty it is, as such officer, to
investigate or report on any matter of law or fact, or to make, authenticate,
or keep any document, or to take charge or dispose of any property, or to
execute any judicial process, or to administer any oath, or to interpret, or to
preserve order in the Court, and every person specially authorised by a Court
of Justice to perform any of such duties;
Fifth - Every juryman, assessor, or member of a panchayat assisting
a Court of Justice or public servant;
Sixth - Every arbitrator or other person to whom any cause
or matter has been referred for decision or report by any Court of Justice, or
by any other competent public authority;
Seventh - Every person who holds any office by virtue of which
he is empowered to place or keep any person in confinement;
Eighth - Every officer of the Government whose duty it is, as
such officer, to prevent offences, to give information of offences, to bring
offenders to justice, or to protect the public health, safety or convenience;
Ninth - Every officer whose duty it is, as such officer, to
take, receive, keep or expend any property on behalf of the Government, or to
make any survey, assessment on contract on behalf of the Government, or to
execute any revenue-process, or to investigate, or to report, on any matter
affecting the pecuniary interests of the Government, or to make, authenticate
or keep any document relating to the pecuniary interests of the Government, or
to prevent the infraction of any law of the protection of the pecuniary
interests of the Government;
Tenth - Every officer whose duty, it is, as such officer, to
take, receive, keep or expend any property, to make any survey or assessment or
to levy any rate or tax for any secular common purpose of any village, town or
district, or to make, authenticate or keep any document for the ascertaining
of the rights of the people of any village, town or district;
Eleventh - Every person who holds any office by virtue of which
he is empowered to prepare, publish, maintain or revise an electoral roll or
to conduct an election or part of an election;
Twelfth
- Every person—
(a)
in the service or pay of the Government or remunerated by fees or commission
for the performance of any public duty by the Government;
(b)
in the service or pay of a local authority, a corporation established by or
under Central, Provincial or State Act or a Government company as defined in
section 617 of the Companies Act, 1956 (1 of 1956).
Illustration
A
Municipal Commissioner is a public servant.
Explanation
1 : Persons falling under any of the
above descriptions are public servants, whether appointed by the Government or
not.
Explanation
2 : Wherever the words “public
servant” occur, they shall be understood of ever person who is in actual
possession of the situation of a public servant, whatever legal defect there
may be in his right to hold that situation.
Explanation 3 : The word “election” denotes and election for the purpose of selecting members of any legislative, municipal or other public authority, of whatever character, the method of selection to which is by, or under, any law prescribed as by election.’
[92]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[93]“Or sub-section (9) of section 80E from any payment referred to therein” omitted by the Direct Tax laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Originally, the said expression was inserted by the Finance Act, 1968, w.e.f. 1-4-1968.
[94]Substituted for ‘computation of the “advance tax” payable under Chapter XVII-C, the rate or rates of income-tax specified in this behalf in this behalf in the Finance Act of the relevant year’ by the Finance Act, 1970, w.e.f. 1-4-1971.
[95]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[96]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[97]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[98]“Or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[99]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[100]Substituted for “in a case falling under section 164, the rate specified in that section” by the Finance Act, 1976, w.e.f. 1-6-1976.
[101]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[102]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[103]“Or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[104]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[105]Substituted for “section 115B or, as the case may be, section 164” by the Direct Tax Law (amendment) Act, 1987, w.e.f. 1-4-1988.
[106]“Or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[107]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[108]Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
[109]Inserted by the Finance Act, 1978, w.e.f. 1-4-1978.
[110]Inserted by the Finance Act, 1973, w.e.f. 1-4-1973.
[111]“, 194E” omitted by the Direct Tax Laws (Amendment) Act, 1989 with retrospective effect from 1-4-1988. Earlier that expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[112]See also Circular No. 153, dated 30-11-1974.
[113]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.1-4-1988:
[114]Substituted by the Direct Tax Laws (Second Amendment)
Act, 1989, w.e.f. 1-4-1989. Earlier clause (39) as omitted by the
Direct Tax Laws (Amendment) Act, 1987, w.e.f. -4-1989 and later reintroduced by
the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, read as under:
‘(39) “registered firm” means a firm registered under the provisions of clause (a) of sub-section (1) of section 185 or under that provision read with sub-section (7) of section 184;’
[115]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1989.
[116]Inserted by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962.
[117]See also Circular No. 415, dated 14-3-1985.
[118]Substituted for the portion beginning with “short-term capital asset” and ending with “preceding the date of its transfer’” by the Finance Act, 1973, w.e.f. 1-4-1974. Earlier clause (42A) was first amended by the Finance Act, 1966, w.e.f. 1-4-1966 and later by the Finance Act, 1968, w.f.b. 1-4-1969.
[119]Substituted for “sixty” by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[120]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[121]Substituted for “clauses (i) of (iii)” by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[122]Inserted, ibid.
[123]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[124]Omitted by the Finance Act, 1990, w.e.f. 1-4-1990.
Prior to omission, clause (42C), as inserted by the Direct Tax Laws
(Second Amendment) Act, 1989, w.e.f., 1-4-1990, read as under:
‘(42C) “security” means a Government security as defined in clause (2) of section 2 of the public Debt Act, 1944 (18 of 1944);’
[125]Substituted by the Finance Act, 1965, w.e.f. 1-4-1965.
[126]Inserted, ibid.
[127]Omitted by the Direct Tax Laws (Amendment) Act, 1987,
w.e.f. 1-4-1989. Original clause (43B) was inserted by the finance (No.
2) Act, 1971, w.e.f. 1-1-1972 and read as under:
(43B) “Tax Recovery Commissioner” means a Commissioner or an Assistant Commissioner of Income-tax who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Commissioner;’
[128]Substituted by the Direct Tax Laws (Amendment) Act,
1987 [as amended by the Direct Tax Laws (Amendment) Act, 1989], w.r.e.f.
1-4-1988. Prior to its substitution, clause (44), as substituted by the
Finance Act, 1963 with retrospective effect from 1-4-1962, stood as under :
(44)
“Tax Recovery Officer” means—
(i)
a Collector or an Additional Collector;
(ii)
any such officer empowered to effect recovery of arrears of land revenue or
other public demand under any law relating to land revenue or other public
demand for the time being in force in the State as may be authorised by the
Government, by general or special notification in the Official Gazette, to
exercise the powers of a Tax Recovery Officer;
(iii) any Gazette Officer of the Central or a State Government who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Officer:
[129]Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[130]Substituted for the following by the Taxation Laws
(Amendment) Act, 1984, w.e.f. 1-4-1985:
‘“transfer”, in relation to a capital asset, includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law;’
[131]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[132]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[133]Reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, it was omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[134]Substituted by the Direct Tax Laws (Amendment) Act,
1987, w.e.f. 1-4-1989. Prior to its substitution, section 3 as amended by the
Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 stood as under:
‘3. “Previous
year “defined.—(1) For the purposes of this Act. “Previous year” means—
(a)
The financial year immediately preceding the assessment year; or
(b)
if the accounts of the assessee have been made up to a date within the said
financial year, then, at the option of the assessee, the twelve months ending
on such date; or
(c)
in the case of any person or business or class of persons or business not
falling within clause (a) or clause (b), such period as may be
determined by the Board or by any authority authorised by the Board in this
behalf; or
(d)
in the case of a business or profession newly set up in the said financial
year, the period beginning with the date of the setting up of the business or
profession and—
(i)
ending with the said financial year, or
(ii)
if the accounts of the assessee have been made up to a date within the said
financial year, then, at the option of the assessee, ending on that date, or
(iii)
ending with the period, if any, determined under clause (c),
as
the case may be; or
(e)
in the case of a business or profession newly set up in the twelve months
immediately preceding the said financial year—
(i)
if the accounts of the assessee have been made up to a date within the said
financial year and the period from the date of the setting up of the business
or
profession to such date does not exceed twelve months, then, at the option of
the assessee, such period, or
(ii)
if any period has been determined under clause (c), then the period
beginning with the date of the setting up of the business or procession and
ending with that period,
as
the case may be; or
(f)
where the assessee is a partner in a firm and the firm has been assessed as
such, then, in respect of the assessee’s share in the income of the firm, the
period determined as the previous year for the assessment of the income of the
firm; or
(g)
in respect of profits and gains from life insurance business, the year
immediately preceding the assessment year for which annual accounts are
required to be prepared under the Insurance Act, 1938 (4 of 1938), or under
that Act read with section 43 of the Life Insurance Corporation Act, 1956 (31
of 1956).
(2)
Where an assessee has newly set up a business or profession in the said
financial year and his account are made up to a date in the assessment year in
respect of a period not exceeding twelve months from the date of such setting
up, then, notwithstanding anything contained in sub-clause (iii) of
clause (d) of sub-section (1), the assessee shall, in respect of that
business or profession, at his option, be deemed to have no previous year for
the said assessment year under that clause and such option shall, in relation
to the immediately succeeding assessment year, have effect as an option
exercised under sub-clause (i) of clause (e) of sub-section (1).
(3)
Subject to the other provisions of this section, an assessee may have different
previous years in respect separate sources of his income.
(4) Where in respect of a particular source of income or in respect of a business or profession newly set up, an assessee has once exercised the option under clause (b) or sub-clause (ii) of clause (d) or sub-clause (i) of clause (e) of sub-section (1) or has once been assessed, then, he shall not, in respect of that source, or, as the case may be, business or profession, be entitled to vary the meaning of the expression “previous year” as then applicable to him, except with the consent of the Assessing Officer and upon such conditions as the Assessing Officer may think fit to impose.’
[135]See also PIB Press Release, dated 10-6-1988 and Instruction S.No. 165/4/88-IT (A-I), dated 4-2-1988.
[136]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.