CHAPTER III

INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

 

Income not included in total income.

10.       In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

            (1)        Agricultural income;

(2)        43[R1] [subject to the provisions of sub-section (2) of section 64,] any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any importable estate, where such sum has been paid out of the income of the estate belonging to the family;

(2A)     [Omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, it was inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date];

44[R2] [45[R3] (3)           any receipts which are of a casual and non-recurring nature, 46[R4] [to the extent such receipts do not exceed five thou­sand rupees in the aggregate]:

                        Provided that this clause shall not apply to—

(i)         Capital gains chargeable under the provisions of sec­tion 45; or

(ii)        Receipts arising from business or the exercise of a profession or occupation; or

(iii)       Receipts by way of addition to the remuneration of an employee;]

47[R5] [(4)48[R6] (i)        in the case of a non-resident, any income by way of interest on such securities or bonds as the Central Gov­ernment may, by notification in the Official Gazette, specific in this behalf, including income by way of premium on the redemption of such bonds;

(ii)        in the case of an individual, who is a person resident outside India as defined in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973)49[R7] any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the said Act the rules made there under;]

50[R8] [(4B)51[R9]          in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued by the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf:

                                    Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made there under.

                        Explanation: For the purposes of this clause,—

(a)        a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India;

(b)        “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made there under;]

52[R10] [(5)       in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—

(a)        from his employer for himself and his family, in con­nection with his proceeding on leave to any place in India;

(b)        from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

            Subject to such conditions as may be prescribed52a[R11]  (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or as­sistance granted to the employees of the Central Government:

            Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

            Explanation: For the purposes of this clause, “family”, in relation to an individual, means—

(i)         the spouse and children of the individual; and

(ii)        the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;]

53[R12] [(5A)     in the case of an individual who is not a citizen of India and is a non-resident, who comes to India solely in connec­tion with the shooting of a cinematograph film in India by the individual, firm or company referred to in clause (d) of the Explanation to clause (i) of sub-section (1) of section 9, any remuneration received by him for rendering any service in connec­tion with such shooting;]

(6)        in the case of an individual who is not a citizen of India,—

54[R13] [(i)         55[R14] subject to such conditions as the Central Gov­ernment may prescribe, passage moneys or the value of any free or concessional passage received by or due to such individual—

(a)        From his employer for himself, his spouse and children, in connection with his proceeding on home leave out of India;

56[R15] [(aa)      from his employer, for his children having full time education in any education institution outside India, in connection with their proceeding to India during vacation;]

(b)        from his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home country out of India after retirement from service in India or after the termination of such service;]

57[R16] [(ii)        the remuneration received by him as an official, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of there officials, for service in such capacity:

            Provided that the remuneration received by him as a trade commis­sioner or other official representative in India of the Govern­ment of a foreign State (not holding office as such in an honor­ary capacity), or as a member of the staff of any of those offi­cials, shall be exempt only if the remuneration of the corre­sponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar purposes in the country concerned enjoys similar exemption in that country :

            Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff;]

(vi)       The remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled—

(a)        The foreign enterprise is not engaged in any trade or business in India;

(b)        His stay in India does not exceed in the aggregate a period of ninety days in such previous year; and

(c)        Such remuneration is not liable to be deducted from the income of the employer chargeable under his Act;

58[R17] [(via)the remuneration received by him as an employee of, or a consultant to, an institution or association or a body established or formed outside India solely for philanthropic purposes, for services rendered by him in India in connection with such purposes; provided that such institution or association or body and the purposes for which his services are rendered in India are approved by the Central Government;]

59[R18] (vii)       60[R19] the remuneration due to or received by him chargeable under the head “Salaries” for services rendered as a technician in the employment 61[R20] [(commencing from a date before the 1st day of April, 1971)] of the Government or of a local authority or of any corporation set up under any special law or in any business carried on in India, if he was not resident in any of the four financial years immediately preceding the financial year in which he arrived in India to the extent mentioned below—

(a)        Where his contract of service 62[R21] [is approved by the Central Government before the commencement of this service or within one year of such commencement]—

(i)         in the case of a technician who has special knowledge and experience in industrial or business management techniques, such remuneration due to or received by him during the period of six months commencing from the date of his arrival in India;

(ii)        in the case of any other technician, such remuneration due to or received by him during the thirty-six months commencing from the date of his arrival in India, and where any such person continues 63[R22] [with the approval of the Central Government obtained before the 1st day of October of the relevant assessment year] to remain in employment in India after the expiry of the thirty-six months aforesaid and the tax on his income chargeable under the head “Salaries” is paid by the employer to the Central Government [which tax in the case of an employer being a company may be paid not withstanding anything contained in 64[R23] section 200 of the Companies Act, 1956 (1 of 1956)], the tax so paid by the employer for a period not exceeding 65[R24] [sixty] months following the expiry of the thirty-six months aforesaid;

(b)        in any other case, not being the case of a technician who has special knowledge and experience in industrial or busi­ness management techniques, such remuneration due to or re­ceived by him for the period of three hundred and sixty-five days in all commencing from the date of his arrival in India.

            Explanation: 66[R25] [For the purposes of this sub-clause,] “techni­cian” means a person having specialized knowledge an experience in—

(i)         Constructional or manufacturing operations, or in mining or in the generation or distribution of electricity or any other form of power, or

(ii)        Industrial or business management techniques,Who is employed in India in a capacity in which such specialized knowledge and experience are actually utilised;

66[R26] [67[R27] (viia)     68[R28] where such individual renders services as a technician in the employment 69[R29] [***] of the Government or of a local authority or of any corporation set up under any special law or of any such institution or body established in India for carrying on scientific research as is approved for the purposes of this sub-clause by the prescribed authority or in any busi­ness carried on in India and the following conditions are ful­filled, namely, that,—

(1)        the individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India, and

(2)        The contract of his service in India is approved by the Central Government, the application for such approval having been made to that Government before the commencement of such service or within six months of such commencement, the remuneration for such services due to or received by him, which is chargeable under the head “Salaries”, to the extent mentioned below, namely:—

70[R30] [(I)        where such services commence from a date after the 31st day of March, 1971 but before the 1st day of April, 1988,—

(A)       such remuneration due to or received by him] during the period of twenty-four months commencing from the date of his arrival in India, in so far as such remuneration does not exceed an amount calculated at the rate of our thousand rupees per month, and where the tax on the excess, if any, of such remunera­tion for the period aforesaid over the amount so calculated is paid to the Central Government by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in 71[R31] section 200 of the Companies Act, 1956 (1 of 1956)], also the tax so paid by the employer; and

(B)       where he continues, with the approval of the Central Government obtained before the 1st day of October of the relevant assessment year, to remain in employment in India after the expiry of the period of twenty-four months aforesaid and the tax on his income chargeable under the head “Salaries” is paid to the Central Government by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in 71[R32] section 200 of the Companies Act, 1956 (1 of 1956)], the tax so paid by the employer for a period not exceed­ing twenty-four months next following the expiry of the first-mentioned twenty-four months;

72[R33] [(II)       where such services commence from a date after the 31st day of March, 1988, and tax on his income chargeable under the head “Salaries” is paid to the Central Government by the employer [which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in 71[R34] section 200 of the Companies Act, 1956 (1 of 1956)], the tax so paid by the employer for a period not exceeding forty-eight months commencing from the date of his arrival in India:

            Provided that nothing in this term shall relate to a period exceeding twenty-four months commencing from the date of his arrival in India if the approval of the Central Government for his employment in India for such period is not obtained before the 1st day of October of the relevant assessment year:]

            73[R35] [Provided 74[R36] [further] that the Central Government may, if it considers it necessary or expedient in the public interest so to do, waive the condition specified in item (I) of this sub-clause in the case of any individual who is employed in India for de­signing, erection or commissioning of machinery or plant or supervising activities connected with such designing, erection or commissioning.]

            Explanation: For the purposes of this sub-clause, “technician” means a person having specialised knowledge and experience in—

(i)         Constructional or manufacturing operations, or in mining or in the generation of electricity or any other form of power, or

(ii)        Agriculture, animal husbandry, dairy farming, deep sea fishing or ship building, 75[R37] [or]

75[R38] [(iii)       76[R39] such other field as the Central Government may, having regard to the availability of Indians having specialised knowledge and experience therein, the needs of the country and other relevant circumstances, by notification in the Official Gazette, specify,]Who is employed in India in a capacity in which such specialised knowledge and experience are actually utilised;]

(viii)      any income chargeable under the head “Salaries” received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employ­ment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year;

77[R40] [78[R41] (ix)any income chargeable under the head “Salaries” received by or due to him during the thirty-six months commencing from the date of his arrival in India for service rendered as a professor or other teacher in a University or other educational institution, and where any such individual continues to remain in employment in India after the expiry of the thirty-six months aforesaid and the tax on his income chargeable under the head “Salaries” is paid by the University or other educational insti­tution concerned to the Central Government, the tax so paid for a period not exceeding twenty-four months following the expiry of the thirty-six months aforesaid, provided in either case the following conditions are fulfilled, namely:—

(i)         such individual was not resident in any of the four financial years immediately preceding the financial year in which he arrived in India; and

(ii)        His contract of service is approved by the Central Government—

(a)        On or before the 1st day of October,1964, in the case of a professor or other teacher whose service commenced before the 1st day of April, 1964;

(b)        Before the commencement of his service or within one year of such commencement, in any other case;]

79[R42] [80[R43] (x)         any sum due to or received by him, during the twenty-four months commencing from the date of his arrival in India, for undertaking any research work in India, provided the following conditions are fulfilled, namely:—

(a)        the research work is undertaken in connection with a research scheme approved in this behalf by the Central Government on or before the 1st day of October of the relevant assessment year; and

(b)        Such sum is payable or paid directly or indirectly by the Government of a foreign State or any institution or associa­tion or other body established outside India;]

81[R44] [(xi)       the remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—

(i)         The Government; or

(ii)        any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments; or

(iii)       Any company which is a subsidiary of a company referred to in item (ii); or

(iv)       Any corporation established by or under a Central, State or Provincial Act; or

(v)        any society registered under the Societies Registration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Central Gov­ernment, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Govern­ments;]

82[R45] [(6A)     where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 and approved by the Central Government, the tax on such income is payable, under the terms of such agreement, by Government or the Indian concern to the Central Government, the tax so paid.

                        Explanation: For the purposes of this clause 83[R46] [and clause (6B)],—

(a)        “Fees for technical services” shall have the same mean­ing as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(b)        “Foreign company” shall have the same meaning as in section 80B;

(C)       “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;]

83[R47] [(6B)     where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into by the Central Government with the Government of a foreign State or an international organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved by the Central Government, the tax so paid;]

84[R48] [((6C)   any income arising to such foreign company, as the Central Government may, by notification in the Official Gazette, specify in this behalf, by way of fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India;]

(7)        Any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for render­ing service outside India;

(8)        in the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause)—

(a)        the remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and

(b)        any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State;

(9)        the income of any member of the family of any such individual as is referred to in clause (8) accompanying 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 required to pay any income or social security tax to the Govern­ment of that foreign State;

85[R49] [86[R50] (10)(i)   any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applica­ble to the members of the defence services;

87[R51] (ii) any gratuity received under the Payment of Gratui­ty Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of that Act;

(iii)       any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retire­ment or on termination of his employment, or any gratuity re­ceived by his widow, children or dependents on his death, to the extent it does not, in either case, exceed one-half month’s salary for each year of completed service, 88[R52] [calculated on the basis of the average salary for the ten months immediately pre­ceding the month in which any such event occurs, subject to such limit89[R53] as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Govern­ment]:

            Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause 90[R54] [shall not exceed the limit so specified] :

            Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous year also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause 90[R55] [shall not exceed the limit so specified] as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.

            91[R56] [***]

            Explanation : 92[R57] [In this clause, and in clause (10AA), “salary” shall have the meaning assigned to it in clause (h) or rule 2 of Part A of the Fourth Schedule;]

93[R58] [94[R59] (10A)    (i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable 95[R60] [to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act;

(ii)        Any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed—

(a)        In a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

(b)        in any other case, the commuted value of one-half of such pension,such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality:

                        96[R61] [***]

97[R62] [(10AA)(i)         any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement 98[R63] [whether] on superan­nuation or otherwise;

(ii) any payment of the nature referred to in sub-clause (i) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retire­ment 98[R64] [whether] on superannuation or otherwise as does not exceed 99[R65] [eight] months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement 1[R66] [whether] on superannuation or otherwise, 2[R67] [subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit3[R68] applicable in this behalf to the employees of the Government]:

                        Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggre­gate amount exempt from income-tax under this sub-clause 4[R69] [shall not exceed the limit so specified]:

                        Provided further that where any such payment or payments was or were received in any one or more earlier previous 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 previous year or years, the amount exempt from income-tax under this sub-clause 4[R70] [shall not exceed the limit so specified], as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.

5[R71] [***]

            Explanation: For the purposes of sub-clause (ii),—

6[R72] [***] the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired;

7[R73] [***]

8[R74] [(10B)     any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued there under or under any standing orders or under any award, contract of service or otherwise, 9[R75] [at the time of his retrenchment:

            Provided that the amount exempt under this clause shall not exceed—

(i)         An amount calculated in accordance with the provisions of 10[R76] clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947); or

11[R77] [(ii)        such amount, not being less than fifty thousand rupees, as the Central Government may, by notification in the Official Gazette, specify in this behalf,]Whichever is less:

            Provided further that the preceding proviso shall not apply in respect of any compensation received by a workman in accordance with any scheme which the Central Government may, having regard to the need for extending special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in this behalf.]

            Explanation: For the purposes of this clause—

(a)        compensation received by a workman at the time of the closing down of the undertaking in which he is employed shall be deemed to be compensation received at the time of his retrenchment;

(b)        compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is em­ployed from the employer in relation to that undertaking to a new employer, shall be deemed to be compensation received at the time of his retrenchment if—

(i)         the service of the work man has been interrupted by such transfer; or

(ii)        the terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before the transfer; or

(iii)       the new employer is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer;

12[R78] (c)         the expressions “employer” and “workman” shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947);]

13[R79] [(10C)   any payment received by an employee of a public sector company at the time of his voluntary retirement in accord­ance with any scheme which the Central Government may, having regard to the economic viability of such company and other rele­vant circumstances, approve in this behalf;]

(11)      any payment from a provident fund to which the Provi­dent Funds Act, 1925 (19 of 1925), applies 14[R80] [or from any other provident fund set up by the Central Government and notified15[R81] by it in this behalf in the Official Gazette];

(12)      The accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule;

16[R82] [(13)     any payment from an approved superannuation fund made—

(i)         on the death of a beneficiary; or

(ii)        to an employee in lieu of or in commutation of any annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or

(iii)       by way of refund of contributions on the death of a beneficiary; or

(iv)       by way of refund of contributions to an employee on his leaving the service in connection with which the fund is estab­lished otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon;]

17[R83] [18[R84] (13A)    19[R85] any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent 20[R86] [***] as may by prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.]

            21[R87] [Explanation: For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where—

(a)        The residential accommodation occupied by the assessee is owned by him; or

(b)        The assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupies by him;]

22[R88] [(14)     (i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as the Central Government may, by notification23[R89] in the Official Gazette, speci­fy, to the extent to which such expenses are actually incurred for that purpose;

            (ii) any such 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 the place where he ordinarily resides, or to compensate him for the increased cost of living, as the Central Government may, by notification in the Official Gazette, specify, to the extent specified in the notification:]

                        24[R90] [Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence;]

25[R91] [(14A)   any income received by a public financial institu­tion as exchange risk premium from any person borrowing foreign currency from such institution, provided the amount of such premium is credited by such institution to a fund specified under clause (23E).

            Explanation: For the purposes of this clause,—

            (i)         The expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

            (ii)        the expression “exchange risk premium” means a premium paid by a person borrowing foreign currency from a pubic finan­cial institution to cover the risk which may be borne by such institution on account of fluctuations in exchange rate of for­eign currencies borrowed by such institution;]

26[R92] (15)       27[R93] [            (i) income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification28[R94] in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification;]

            29[R95] [(iib) 30[R96] [in the case of an individual or a Hindu undi­vided family,] interest on such 31[R97] Capital Investment Bonds as the Central Government may, by notification in the Official Gazette, specify in this behalf;]

            32[R98] [(iic) in the case of an individual or a Hindu undivided family, interest on such Relief Bonds as the Central Government may, by notification in the Official Gazette, specify in this behalf;]

            33[R99] [(iid) interest on such bonds, as the Central Government may, by notification34[R100] in the Official Gazette, specify, arising to—

(a)        a non-resident Indian, being an individual owning the bonds; or

(b)        any individual owning the bonds by virtue of being a nominee or survivor of the non-resident Indian; or

(c)        any individual to whom the bonds have been gifted by the non-resident Indian:

            Provided that the aforesaid bonds are purchased by a non-resident Indian in foreign exchange and the interest and principal re­ceived in respect of such bonds, whether on their maturity or otherwise, is not allowable to be taken out of India:

            Provided further that where an individual, who is a non-resident Indian in any previous year in which the bonds are acquired, becomes a resident in India in any subsequent year, the provisions of this sub-clause shall continue to apply in relation to such individual:

            Provided also that in a case where the bonds are encashed in a previous year prior to their maturity by an individual who is so entitled, the provisions of this sub-clause shall not apply to such individual in relation to the assessment year relevant to such previous year.

            Explanation: For the purposes of this sub-clause, the expression “non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C;]

            (iii) interest on securities held by the Issue  epart­ment of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949;

                        35[R101] [(iiia) interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country on any deposits made by it, with the approval of the Reserve Bank of India, with any schedule bank.

            Explanation: For the purposes of this sub-clause, “scheduled bank” shall have the meaning assigned to it in 36[R102] [clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36];]

            (iv) Interest payable—

(a)        By Government or a local authority on moneys borrowed by it from 37[R103] [, or debts owed by it to,] sources outside India;

38[R104] (b)       by an industrial undertaking in India on moneys borrowed by it under a loan agreement entered into with any such financial institution in a foreign country as may be approved in this behalf by the Central Government by general or special order;

39[R105] (c)       by an industrial undertaking in India on any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of raw materials 40[R106] [or components] or capital plant and machinery, 41[R107] [to the extent to which such interest does not exceed the amount of interest calcu­lated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan or debt and its repayment].

                                    40[R108] [Explanation : For the purposes of this item, “purchase of capital plaint and machinery” includes the purchase of such capital plant and machinery under a hire-purchase agreement or a lease agreement with an option to purchase such plant and machin­ery;]

42[R109] [(d)      by the Industrial Finance Corporation of India established by the Industrial Finance Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964), 40[R110] [or the Export-Import Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981),] or the Industrial Credit and Investment Corporation of India [a company formed and registered under the Indian Companies Act, 1913 (7 of 1913)], on any moneys borrowed by it from sources outside India, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Gov­ernment in this behalf, having regard to the terms of the loan and its repayment;]

42[R111] [(e)      by any other financial institution established in India or a banking company to which the Banking Regulation Act, 1949(10 of 1949), applies (including any bank or banking institu­tion referred to in section 51 of that Act), on any moneys bor­rowed by it from sources outside India under a loan agreement approved by the Central Government where the moneys are borrowed either for the purpose of advancing loans to industrial under­takings in India for purchase outside India of raw materials or capital plant and machinery or for the purpose of importing any goods which the Central Government may consider necessary to import in the public interest, to the extent to which such inter­est does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;]

43[R112] [(f)       by an industrial undertaking in India on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government having regard to the need for industrial development in India, to extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Govern­ment in this behalf, having regard to the terms of the loan and its repayment;

44[R113] [(g)      by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, being a company approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36 on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment.]

            Explanation: For the purposes of 45[R114] [items (f) and (g)], the expression 46[R115] "foreign currency” shall have the meaning assigned to it in the Foreign Exchange Regulation Act, 1973 (46 of 1973);]

47[R116] [(h)      by any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Gov­ernment may, by notification48[R117] in the Official Gazette, specify in this behalf;]

49[R118] [(i)       by Government on deposits made by an employee of the Central Government or a State Government 50[R119] [or a public sector company], in accordance with such scheme as the Central Government may, by notification in the Official Gazette, frame in this behalf, out of the moneys due to him on account of his retirement, whether on superannuation or otherwise;]

            50a[R120]  [(v) interest on securities held by the Registrar, Supreme Court, in Reserve Bank’s Account No. SL/DHO 48;]

50b[R121] [(15A)           any payment made, by an Indian company engaged in the business of operation of aircraft, to acquire an aircraft on lease from the Government of a foreign State or a foreign enter­prise under an agreement approved by the Central Government in this behalf.

            Explanation: For the purpose of this clause, “foreign enter­prise” means a person who is a non-resident];

51[R122] (16)     scholarships granted to meet the cost of educa­tion;

52[R123] [(17)any income by way of—

(i)         daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof;53[R124] [***]

54[R125] [(ii)      any allowance received by any person by reason of his membership of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986;

(iii)       all other allowances not exceeding six hundred rupees per month in the aggregate received by any person by reason of his membership of any State Legislature or of any Committee thereof, which the Central Government may, by notifica­tion55[R126] in the Official Gazette, specify in this behalf;]]

56[R127] [(17A) 57[R128] any payment made, whether in cash or in kind,—

(i)         in pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body and approved by the Central Govern­ment in this behalf; or

(ii)        as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;]

58[R129] [(18A) any ex gratia payments made by the Central Govern­ment consequent on the abolition of Privy Purse;]

(19)      59[R130] [***]

60[R131] [(19A) the annual value of any one palace in the occupa­tion of a Ruler, being a palace, the annual value whereof was exempt from income-tax before the commencement of the Constitu­tion (Twenty-sixth Amendment) Act, 1971, by virtue of the provi­sions of the Merged States (Taxation Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958:

                        Provided that for the assessment year commencing on the 1st day of April, 1972, the annual value of every such palace in the occupation of such Ruler during the relevant previous year shall be exempt from income-tax;]

(20)      the income of a local authority which is chargeable under the head 61[R132] [***] “Income from house property”, “Capital gains” 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 service 62[R133] [(not being water or electricity) within its own jurisdictional area or from the supply of water or elec­tricity within or outside its own jurisdictional area];

63[R134] [(20A) any income of an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both;]

64[R135] [(21)    65[R136] any some of a scientific research association for the time being approved for the purpose of clause (ii) of sub-section (I) of section 35:

            Provided that the scientific research association—

(a)        applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is estab­lished, and the provisions of sub-section (2) and sub-section (3) of section 11 shall apply in relation to such accumulation sub­ject to the following modifications, namely:—

                        (i)         in sub-section (2),—

(1)        the words, brackets, letters and figure “referred to in clause (a) or clause (b) of sub-section (1) read with the Expla­nation to that sub-section” shall be omitted;

(2)        for the words “to charitable or religious purposes”, the words “for the purposes of scientific research” shall be substituted;

(3)        the reference to “Assessing Officer” 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 35;

(ii)        in sub-section (3), in clause (a), for the words “charitable or religious purposes”, the words “the purposes of scientific research” shall be substituted; and

(b)        does not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify) for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11:

                        Provided further that nothing contained in this clause shall apply in relation to any income of the scientific research asso­ciation, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of accounts are maintained by it in respect of such busi­ness;]

(22)      any income of a university or other educational insti­tution, existing solely for educational purposes and not for purposes of profit;

66[R137] [(22A) any income of a hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit;]

67[R138] [68[R139] (23)   69[R140] any income of an association or institution established in India which may be notified by the Central Govern­ment in the Official Gazette having regard to the fact that the association or institution has as its object the control, super­vision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such other games or sports as the Central Government may, by notification in the Official Gazette, specify in this behalf:

            Provided that the association or institution shall make an appli­cation in the prescribed form and manner to the prescribed au­thority for the purpose of grant of the exemption, or continu­ance thereof, under this clause:

            Provided further that the Central Government may, before notify­ing the association or institution under this clause call for such documents (including audited annual accounts) or information from the association or institution as it thinks necessary in order to satisfy itself about the genuineness of the activities of the association or institution and that Government may also make such inquiries as it may deem necessary in this behalf:

            Provided also that the association or institution,—

(a)        applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established and the provisions of sub-section (2) and sub-section (3) of section 11 shall apply in relation to such accumulation subject to the following modifications, namely:—

                        (i)         in sub-section (2),—

(1)        the words, brackets, letters and figure “referred to in clause (a) or clause (b) of sub-section (1) read with the Expla­nation to that sub-section” shall be omitted;

(2)        for the words “to charitable or religious purposes”, the words “for the purposes of games or sports” shall be substi­tuted;

(3)        the reference to “Assessing Officer” in clause (a) thereof shall be construed as a reference to the “prescribed authority” referred to in the first proviso to this clause;

(ii)        in sub-section (3), in clause (a), for the words “charitable or religious purposes”, the words “the purposes of games or sports” shall be substituted; and

(b)        does not invest or deposit its funds (other than volun­tary contributions received and maintained in the form of jewel­lery, furniture or any other article as the Board may, by notifi­cation in the Official Gazette, specify) for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; and

(c)        does not distribute any part of its income in any manner to its members except as grants to any association or institution affiliated to it :

            Provided also that the exemption under this clause shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 1990:

            Provided also that nothing contained in this clause shall apply in relation to any income of the association or institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of accounts are maintained by it in respect of such business:

            Provided also that any notification issued by the Central Govern­ment under this clause in relation to any association or institu­tion shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years, (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification;]

70[R141] [(23A) any income (other than income chargeable under the head 71[R142] [***] “Income from house property” or any income received for rendering any specific services or income by way of interest or dividends derived from its investments) of an association or institution established in India having as its object the con­trol, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or such other profession72[R143]  as the Central Government may specify in this behalf, from time to time, by notification in the Official Gazette:

            Provided that—

(i)         the association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and

(ii)        the association or institution is for the time being approved for the purpose of this clause by the Central Government by general or special order;]

73[R144] [(23AA)          any income received by any person on behalf of any Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependents;]

74[R145] (23B)   any income of an institution constituted as a public charitable trust or registered under the Societies Regis­tration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India, and existing solely for the development of khadi or village industries or both, and not for purposes of profit, to the extent such income is attributable to the business of production, sale, or marketing, of khadi or products of village industries:

            Provided that—

(i)            the institution applies its income, or accumulates it for application, solely for the development of khadi or village industries or both; and

(ii)           the institution is, for the time being, approved for the purpose of this clause by the Khadi and Village Industries Commission:

                        Provided further that the Commission shall not, at any one time, grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted.

            Explanation: For the purposes of this clause,—

(i)         “Khadi and Village Industries Commission” means the Khadi and Village Industries Commission established under the Khadi and Village Industries Commission Act, 1956 (61 of 1956);

(ii)        “khadi” and “village industries” have the meaning respectively assigned to them in that Act;]

75-76[R146] [(23BB)      any income of an authority (whether known as the Khadi and Village Industries Board or by any other name) established in State by or under a State or Provincial Act for the development of khadi or village industries in the State.

            Explanation: For the purposes of this clause, “khadi” and “village industries” have the meanings respectively assigned to them in the Khadi and Village Industries Commission Act, 1956 (61 of 1956);]

75-76[R147] [(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 Central, State or Provincial Act which provides for the administration of any one or more of the following, that is to say, public religious or charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or other places of public reli­gious worship) or societies for religious or charitable purposes registered as such under the Societies Registration Act, 1860 (21 of 1860), or any other law for the time being in force:

            Provided that nothing in this clause shall be construed to exempt from tax the income of any trust, endowment or society referred to therein;]

77[R148] [78[R149] (23C) any income received by any person on behalf of—

(i)         the Prime Minister’s National Relief Fund; or

(ii)        the Prime Minister’s Fund (Promotion of Folk Art); or

(iii)       the Prime Minister’s Aid to Students Fund; 79[R150] [or]

            80[R151] (iv)       81-82[R152] any other fund or institution established for charitable purposes which may be notified by the Central Govern­ment in the Official Gazette, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or

81-82[R153]  (v) any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be notified by the Central Government in the Official Gazette, having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof:

            Provided that the fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) shall make an application in the prescribed form and manner to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v) :

                        Provided further that the Central Government may, before notify­ing the fund or trust or institution under sub-clause (iv) or sub-clause (v), call for such documents (including audited annual accounts) or information from the fund or trust or institutions as it thinks necessary in order to satisfy itself about the genuineness of the activities of the fund or trust or institution and that Government may also make such inquiries as it may deem necessary in this behalf:

            Provided also that the fund or trust or institution referred to in sub-clause (iv) or sub-clause (v)—

(a)        applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is estab­lished; and

(b)        does not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewel­lery, furniture or any other article as the Board may, by notifi­cation in the Official Gazette, specify) for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11:

            Provided also that the exemption under sub-clause (iv) sub-clause (v) shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 1990:

            Provided also that nothing contained in sub-clause (iv) or sub-clause (v) shall apply in relation to any income of the fund or trust or institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business:

            Provided also that any notification issued by the Central Gov­ernment under sub-clause (iv) or sub-clause (v) shall, at any one time, have effect for such assessment year or years, not exceed­ing three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification;]

83[R154] [(23D) any income 84[R155] [of] such Mutual Fund set up by a public sector bank or a public financial institution and subject to such conditions 85[R156] [***] as the Central Government may, by notification86[R157]  in the Official Gazette, specify in this behalf.

            Explanation: For the purposes of this clause,—

(a)        the expression “public sector bank” means the State Bank of India constituted under the State Bank of India Act, 1955(23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a correspond­ing new Bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);

(b)        the expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956).]

87[R158] (23E)   any income of such Exchange Risk Administration Fund set up by public financial institutions, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf:

            Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a public financial institution, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax.

            Explanation: For the purposes of this clause, the expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);]

(24)      any income chargeable under the heads 88[R159] [***] “Income from house property” and “Income from other sources” of a regis­tered union within the meaning of the Indian Trade Unions Act, 1926 (16 of 1926), formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen;

(25)(i)     interest on securities which are held by, or are the property of, any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securi­ties;

(ii)     any income received by the trustees on behalf of a recog­nised provident fund;

(iii)    any income received by the trustees on behalf of an ap­proved superannuation fund;

89[R160] [(iv) any income received by the trustees on behalf of an approved gratuity fund;]

90[R161] [(v) any income received—

(a)        by the Board of Trustees constituted under the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the Deposit-linked Insurance Fund estab­lished under section 3G of that Act; or

(b)        by the Board of Trustees constituted under the Employ­ees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the Deposit-linked Insurance Fund established under section 6C of that Act;]

91[R162] [(26)    in the case of a member of a 92[R163] Scheduled Tribe as de­fined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I and Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Nagaland, Manipur and Tripura or in the Union territories of Arunachal Pradesh and Mizoram or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20[as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971 (18 of 1971)], any income which ac­crues or arises to him,—

(a)        From any source in the areas, States or Union territo­ries aforesaid, or

(b)        by way of dividend or interest on securities;]

93[R164] [94[R165] (26A) any income accruing or arising to any person 95[R166] [***] from any source in the district of Ladakh or outside India in any previous year relevant to any assessment year com­mencing before the 1st day of April, 96[R167] [1989], where such person is resident in the said district in that previous year:

            Provided that this clause shall not apply in the case of any such person unless he was resident in that district in the previous year relevant to the assessment year commencing on the 1st day of April, 1962.

            Explanation 97[R168] [1] : For the purposes of this clause, a person shall be deemed to be resident in the district of Ladakh if he fulfils the requirements of sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) of section 6, as the case may be, subject to the modification that—

(i)         References in those sub-sections to India shall be construed as references to the said district; and

(ii)        in clause (i) of sub-section (3), reference to Indian company shall be construed as reference to a company formed and registered under any law for the time being in force in the State of Jammu and Kashmir and having its registered office in that district in that year.]

                        98[R169] [Explanation 2 : In this clause, references to the district of Ladakh shall be construed as references to the areas comprised in the said district on the 30th day of June, 1979;]

99[R170] [(26AA)          any income of a person by way of winnings from any lottery, the draw of which is held in pursuance of any agreement entered into on or before the 28th day of February, 1989 between the State Government of Sikkim and the organizing agents of such lottery, where such person is resident in the State of Sikkim in any previous year.

            Explanation : For the purposes of this clause, a person shall be deemed to be resident in the State of Sikkim if he fulfils the requirements of clause (1) or clause (2) or clause (3) or clause (4) of section 6, as the case may be, subject to the modification that—

(i)         References in those clauses to India shall be construed as references to the State of Sikkim; and

(ii)        in sub-clause (i) of clause (3), reference to Indian company shall be construed as reference to a company formed and registered under any law for the time being in force in the State of Sikkim and having its registered office in that State in that year;]

1[R171] [(26B)   any income of a corporation established by a Central, State or Provincial Act or of any other body, institu­tion or association (being a body, institution or association wholly financed by Government) where such corporation or other body or institution or association has been established or formed for promoting the interests of the members of either the Sched­uled Castes or the Scheduled Tribes or of both.

            Explanation: For the purposes of this clause, 2[R172] "Scheduled Castes” and “Scheduled Tribes” shall have the meanings respectively assigned to them in clauses (24) and (25) of article 366 of the Constitution;]

(27)      3[R173] [***]

4[R174] [(28)      any amount adjusted or paid in respect of a tax credit certificate under the provisions of Chapter XXIIB and any scheme made thereunder;]

5[R175] [(29)      in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of go downs or warehouses for storage, processing or facilitating the marketing of commodities;]

6[R176] (30)       7[R177] in the case of an assessee who carries on the business of growing and manufacturing tea in India, the amount of any subsidy received from or through the Tea Board under any such scheme8[R178] for Replantation or replacement of tea bushes 9[R179] or for rejuvenation or consolidation of areas used for cultivation of tea] as the Central Government may, by notification in the Offi­cial Gazette, specify:

                        Provided that the assessee furnishes to the 10[R180] Assessing] Offi­cer, along with his return of income for the assessment year concerned or within such further time as the 10[R181] [Assessing] Offi­cer may allow, a certificate from the Tea Board as to the amount of such subsidy paid to the assessee during the previous year.

                        Explanation : In this clause, “Tea Board” means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953);]

11[R182] (31)     in the case of an assessee who carries on the business of growing and manufacturing rubber, coffee, cardamom or such other commodity in India, as the Central Government may, by notification in the Official Gazette, specify in this behalf, the amount of any subsidy received from or through the concerned Board under any such scheme for Replantation or replacement of rubber plants, coffee plants, cardamom plants or plants for the growing of such other commodity or for rejuvenation or consolida­tion of areas used for cultivation of rubber, coffee, cardamom or such other commodity as the Central Government may, by notifica­tion in the Official Gazette, specify:

            Provided that the assessee furnishes to the Assessing Officer, along with his return of income for the assessment year concerned or within such further time as the Assessing Officer may allow, a certificate from the concerned Board, as to the amount of such subsidy paid to the assessee during the previous year.

            Explanation: In this clause, “concerned Board” means,—

(i)         in relation to rubber, the Rubber Board constituted under section 4 of the Rubber Act, 1947 (24 of 1947),

(ii)        in relation to coffee, the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942),

(iii)       in relation to cardamom, the Spices Board consti­tuted under section 3 of the Spices Board Act, 1986 (10 of 1986),

(iv)       in relation to any other commodity specified under this clause, any Board or other authority established under any law for the time being in force which the Central Government may, by notification in the Official Gazette, specify in this behalf.]

12[R183] [Special provision in respect of newly established industrial undertakings in free trade zones.

10A.(1)      Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which this section applies shall not be included in the total income of the assessee.

(2)     This section applies to any industrial undertaking which fulfils all the following conditions, namely:—

(i)   it has begun or begins to manufacture or produce arti­cles or things during the previous year relevant to the assess­ment year commencing on or after the 1st day of April, 1981, in any free trade zone;

(ii)  it is not formed by the splitting up, or the recon­struction, of a business already in existence:

                                    Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;

(iii) it is nor formed by the transfer to a new business of machinery or plant previously used for any purpose.

 

      Explanation: The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-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.

 

13[R184] [(3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of any five consecutive assessment years, falling within a period of eight years beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, specified by the assessee at his option:

 

Provided that nothing in this sub-section shall be construed to extend the aforesaid five assessment years to cover any period after the expiry of the said period of eight years.]

 

(4)        Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately suc­ceeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,—

(i)         section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in rela­tion to any building, machinery, plant or furniture used for the purposes of the business of the industrial undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowance or deduc­tion;

(ii)        no loss referred to in sub-section (1) of section 72 or sub-section (1) 14[R185] [or sub-section (3)] or section 74 and no deficiency referred to in sub-section (3) of section 80J, in so far as such loss or deficiency relates to the business of the industrial undertaking shall be carried forward or set off where such loss, or, as the case may be, deficiency relates to any of the relevant assessment years;

(iii)       no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80J in relation to the profits and gains of the industrial undertaking; and

(iv)       in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the industrial undertaking shall be computed as if the assessee had claimed and been actually allowed the deduc­tion in respect of depreciation for each of the relevant assess­ment years.

 

(5)        Where an industrial undertaking in any free trade zone has begun to manufacture or produce articles or things in any previ­ous year relevant to the assessment year commencing on or after the 1st day of April, 1977, but before the 1st day of April, 1981, the assessee may, at his option, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income for the assessment year commencing on the 1st day of April, 1981, furnish to the 14a[R186] [Assessing Officer] a declaration in writing that the provisions of sub-section (1) may be made applicable to him for each of the relevant assessment years as reduced by the number of assessment years which expired before the 1st day of April, 1981, and if he does so, then, the provisions of sub-section (1) shall apply to him for each of such relevant assessment years and the provisions of sub-section (4) shall also apply in computing the total income of the assessee for the assessment year immediately succeeding the last of the relevant assessment years and any subsequent assessment year.

 

(6)        The provisions of sub-section (8) and sub-section (9) of section 80-I shall, so far as may be, apply in relation to the industrial undertaking referred to in this section as they apply for the purposes of the industrial undertaking referred to in section 80-I.

(7)        Notwithstanding anything contained in the foregoing provi­sions of this section, where the assessee, 15[R187] [before the due date for furnishing the return of income under sub-section (1) of section 139] 16[R188] [***], furnishes to the 17[R189] [Assessing] Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years.

 

18[R190] [(8)      References in sub-section (5) to any other provision of this Act which has been amended or omitted by the Direct Tax Laws (Amendment) Act, 1987 shall, notwithstanding such amendment or omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not been made.]

Explanation: For the purposes of this section,—

(i)         “Free trade zone” means the Kandla Free Trade Zone and the Santacruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notifica­tion19[R191]  in the Official Gazette, specify for the purposes of this section;

20[R192] [(ii)      “relevant assessment years” means the five consec­utive assessment years specified by the assessee at his option under sub-section (3);]

21[R193] [(iii)      “manufacture” includes any—

(a)        Process, or

(b)        Assembling, or

(c)        Recording of programmes on any disc, tape, perforated media or other information storage device.]

 

22[R194] [Special provision in respect of newly established hundred per cent export oriented undertakings.

10B.(1)      Subject to the provisions of this section, any profits and gains derived by an assessee from a hundred per cent export-oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee.

(2)     This section applies to any undertaking which fulfils all the following conditions, namely:—

(i)   it manufactures or produces any article or thing;

(ii)  it is not formed by the splitting up, or the recon­struction, of a business already in existence :

                  Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that sec­tion;

(iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

            Explanation: The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-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.

 

(3)     The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of any five consecutive assessment years, falling within a period of eight years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things, specified by the assessee at his option:

 

Provided that nothing in this sub-section shall be construed to extend the aforesaid five assessment years to cover any period after the expiry of the said period of eight years.

 

(4)     Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately suc­ceeding the last of the relevant assessment years, or of any previous year relevant to any subsequent assessment year,—

        

(i)   section 32, section 32A, section 33 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub-section (2) of section 33 or the second provi­so to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowance or deduction;

 

(ii)  no loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years;

 

(iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I in relation to the profits and gains of the undertaking; and

 

(iv) in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment years.

 

(5) Where the undertaking has begun to manufacture or produce articles or things in any previous year relevant to the assess­ment year commencing before the 1st day of April, 1989, the assessee may, at his option, before the due date for furnishing the return of his income under sub-section (1) of section 139 for the assessment year commencing on the 1st day of April, 1989, furnish to the Assessing Officer a declaration in writing that the provisions of sub-section (1) may be made applicable to him for any five consecutive assessment years falling within a period of eight years beginning with the assessment year commencing on the 1st day of April, 1989, and if he does so, then, the provi­sions of sub-section (1) shall apply to him for each of such assessment years and the provisions of sub-section (4) shall also apply in computing the total income of the assessee for the assessment year immediately succeeding the last of such assess­ment years and any subsequent assessment year.

 

(6) The provisions of sub-section (8) and sub-section (9) of section 80-I shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the industrial undertaking referred to in section 80-I.

 

(7) Notwithstanding anything contained in the foregoing provi­sions of this section, where the assessee, before the due date for furnishing the return of his income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years.

 

            Explanation: For the purposes of this section,—

 

(i)         “hundred per cent export-oriented undertaking” means an undertaking which has been approved as a hundred per cent export oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951) and the rules made under that Act;

 

(ii)        “relevant assessment years” means the five consecutive assessment years specified by the assessee at his option under sub-section (3) or sub-section (5), as the case may be;

           

            (iii)       “Manufacture” includes any—

(a)        Process, or

(b)        Assembling, or

(c)        Recording of programmes on any disc, tape, perforated media or other information storage device.]

 

23[R195] [Income from property held for charitable or religious pur­poses.

24[R196] 11.(1)  Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income—

25[R197] [(a)            income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent of the income from such property;

(b)     income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent which the income so set apart is not in excess of twenty-five per cent of the income from such property;]

(c)     Income 26[R198] [derived] from property held under trust—

(i)   created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and

(ii)  for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India;

                  Provided that the Board, by general 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 income.

27[R199] [(d)         income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution;]

28[R200] [Explanation: For the purposes of clauses (a) and (b),—

(1)        in computing the twenty-five per cent of the income which may be accumulated or set apart, any such voluntary contri­butions as are referred to in section 12 shall be deemed to be part of the income;

(2)        if, in the previous year, the income applied to char­itable or religious purposes in India falls short of seventy-five per cent of the income derived during 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 received during 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 during the previous year in which the income is received or during the previous year immediately following as does not exceed 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 during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount,may at the option of the person in receipt of the income (such option to be exercised in writing before th expiry of the time allowed under sub-section (1) 29[R201] [***] of section 139 30[R202] [***] for furnishing the return of income) be deemed to be income applied to such purposes during the previous year in which the income was derived; and the income so deemed to have been applied shall not be taken into account in calculating the amount of income applied to such purposes, in the case referred to in sub-clause (i), during the previous year in which the income is received or during the previous year immediately following, as the case may be, and, in the case referred to in sub-clause (ii), during the previous year immediately following the previous year in which the income was derived.]

31[R203] [(1A)for the purposes of sub-section (1),—

(a)        where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent speci­fied hereunder, namely :—

 

(i)         where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain;

 

(ii)        where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so uti­lised exceeds the cost of the transferred asset;

 

(b)        where a capital asset, being 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 acquiring another capital asset to be so held, then, the appropriate frac­tion of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:—

(i)         Where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain;

(ii)        in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset.

Explanation: In this sub-section,—

(i)         “appropriate fraction” means the fraction which repre­sents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes;

(ii)        “cost of the transferred asset” means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub-clause (b) of clause (1) of section 55;

(iii)       “net consideration” means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.]

 

32[R204] [(1B)Where any income in respect of which an option is exer­cised under clause (2) of the Explanation to sub-section (1) is not applied to charitable or religious purposes in India during 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 previous year immediately following the previous year in which the income was received, or

(b)        in the case referred to in sub-clause (ii) of the said clause, of the previous year immediately following the previous year in which the income was derived.]

 

33[R205] [(2) 34[R206] [Where seventy-five 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 have been applied, to charitable or religious purposes in India during the previous 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 previous year of the person in receipt of the income, provided the following conditions are complied with, namely :—]

35[R207] (a)       such person specifies, by notice in writing given to the 36[R208] [Assessing] Officer in the prescribed manner, the pur­pose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years;

37[R209] [(b)      the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5)].]

38[R210] (3)       Any income referred to in sub-section (2) which—

 

(a)        is applied to purposes other than charitable or reli­gious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or

 

39[R211] [(b)      ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or]

 

(c)        is not utilised for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof,Shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or, as the case may be, of the previous year immediately following the expiry of the period aforesaid.]

 

40[R212] [(3A)Notwithstanding anything contained in sub-section (3), where due to circumstances beyond the control of the person in receipt of the income, any income invested or deposited in accordance with the provisions of clause (b) of sub-section (2) cannot be applied for the purpose for which it was accumulated or set apart, the 41[R213] [Assessing] Officer may, on an application made to him in this behalf, allow such person to apply such income for such other charitable or religious purpose in India as is speci­fied in the application by such person and as is in conformity with the objects of the trust; and thereupon the provisions of sub-section (3) shall apply as if the purpose specified by such person in the application under this sub-section where a purpose specified in the notice given to the 41[R214] [Assessing] Officer under clause (a) of sub-section (2).]

(4)        For the purposes of this section “property held under trust” includes a business undertaking so held, and where a claim is made that the income of any such undertaking shall not be includ­ed in the total income of the persons in receipt thereof, the 41[R215] [Assessing] Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes 42[R216] [***].

 

43[R217] [(4A)Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income, being profits and gains of business, unless—

(a)        the business is carried on by a trust wholly for public religious purposes and the business consists of printing and publication of books or publication of books or is of a kind notified by the Central Government in this behalf in the Official Gazette; or

(b)        the business is carried on by an institution wholly for charitable purposes and the work in connection with the business is mainly carried on by the beneficiaries of the institution,and separate books of account are maintained by the trust or institution in respect of such business.]

44[R218] [(5) The forms and modes of investing or depositing the money referred to in clause (b) of sub-section (2) shall be the follow­ing, namely:—

 

(i)         investment in 45[R219] savings certificates as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government;

 

(ii)        Deposit in any account with the Post Office Savings Bank;

 

(iii)       Deposit in any account with a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank).

                        Explanation : In this clause, “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Scheduled to the Reserve Bank of India Act, 1934 (2 of 1934);

 

(iv)       investment in units of the Unit Trust of India estab­lished under the Unit Trust of India Act, 1963 (52 of 1963);

 

(v)        Investment in any security for money created and issued by the Central Government or a State Government;

           

(vi)       Investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government;

           

(vii)      Investment or deposit in any 46[R220] [public sector company];

           

(viii)      deposits with or investment in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India and which is approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36;

           

(ix)       deposits with or investment in any bonds issued by a public company formed and registered in India with the main objects of carrying on the business of providing long-term fi­nance for construction or purchase of houses in India for residential purposes and which is approved by the Central Govern­ment for the purposes of clause (viii) of sub-section (1) of section 36;

           

(x)        Investment in immovable property;

                       

Explanation: “Immovable property” does not include any machinery or plant (other than machinery or plant installed in a building for the convenient occupation of the building) even though at­tached to, or permanently fastened to, anything attached to the earth;]

           

47[R221] [(xi)     deposits with the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964);]

 

48[R222] [(xii)     any other form or mode of investment or deposit as may be prescribed.*[R223] ]

 

49[R224] [Income of trusts or institutions from contributions.

12.       Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being 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 derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply according­ly.]

 

50[R225] [Conditions as to registration of trusts, etc.

51[R226] 12A.The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:—

52[R227] (a)       the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the 53[R228] [Chief Commissioner or Commissioner] before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later:

 

Provided that the 53[R229] [Chief Commissioner or Commissioner] may, in his discretion, admit an application for the registration of any trust or institution after the expiry of the period aforesaid;

 

54[R230] (b)       where the total income of the trust or institution as computed under this Act without giving effect to the provi­sions of section 11 and section 12 exceeds twenty-five thousand rupees in any previous year, the accounts of the trust or insti­tution for that year have been audited by an accountant as de­fined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be pre­scribed.]

 

55[R231] [Section 11 not to apply in certain cases.

56[R232] 13.(1) Nothing contained in section 11 57[R233] [or section 12] shall operate so as to exclude from the total income of the previous year of the person in receipt thereof—

 

(a)     any part of the income from the property held under a trust for private religious purposes which does not ensure for the benefit of the public;

 

(b)     in the case of a trust for charitable purposes or a charitable institution created or established after the commence­ment of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste;

(bb)   58[R234] [***]

 

(c)     in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof—

 

(i)         if such trust or institution has been created or estab­lished after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income endures, or

 

(ii)        if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied,directly or indirectly for the benefit of any person referred to in sub-section (3) :

 

Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions 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 (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution :

 

Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or estab­lished) or a trust for charitable purposes or a charitable insti­tution created or established before the commencement of this Act, the provisions 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 (3) in so far as such use or application relates to any period before the 1st day of June, 1970;

 

59[R235] [(d)      in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, it for any period during the previous year—

 

(i)         any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section11; or

 

(ii)        any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983; or

 

(iii)       any shares in a company [not being a 60[R236] Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act] are held by the trust or institution after the 30th day of November, 1983 :

 

Provided that nothing 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 June, 1973 and such assets were not purchased by the trust or institution or acquired by it by conversion of, or in exchange for, any other asset;

 

(ii)        Any assets (being debentures issued by, or on behalf of, any company or corporation) acquired by the trust or institu­tion before the 1st day of March, 1983;

 

(iii)       Any funds representing the profits and gains of business, being profits and gains of any previous year relevant to the assessment year commencing on the 1st day of April, 1984 or any subsequent assessment year.

 

Explanation: Where the trust or institution has any other income in addition to profits and gains of business, the provisions of clause (iii) of this proviso shall not apply unless the trust or institution maintains separate books of account in respect of such business.]

 

61[R237] [Explanation : For the purposes of sub-clause (ii) of clause (c), in determining whether any part of the income or any proper­ty of any trust or institution is during the previous year used or applied, directly or indirectly, for the benefit of any person referred to in sub-section (3), in so far as such use or applica­tion relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972.]

 

(2)  Without prejudice to the generality of the provisions of clause (c) 62[R238] [and clause (d)] of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),—

 

(a)        if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub-section (3) for any period during the previous year without either adequate security or adequate interest or both;

(b)        if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compen­sation;

(c)        if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section (3) out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid is in excess of what may be reasonably paid for such services;

 

(d)        if the services of the trust or institution are made available to any person referred to in sub-section (3) during the previous year without adequate remuneration or other compensa­tion;

 

(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 (3) during the previous year for consideration which is more than adequate;

 

(f)         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 (3) during the previous year for consideration which is less than adequate;

 

63[R239] [(g) if any income or property of the trust or institu­tion is diverted during the previous year in favour of any per­son referred to in sub-section (3):

 

Provided that this clause shall not apply where the income, or the value of the property or, as the case may be, the aggregate of the income and the value of the property, so diverted does not exceed one thousand rupees;]

(h)        if any funds of the trust or institution are, or con­tinue or remain, invested for any period during the previous year (not being a period before the 1st day of January, 1971) in any concern in which any person referred to in sub-section (3) has a substantial interest.

 

(3)  The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely :—

 

(a)        the author of the trust or the founder of the institu­tion;

(b)        any person who has made a substantial contribution to the trust or institution, 64[R240] [that is to say, any person whose total contribution up to the end of the relevant previous year exceeds 65[R241] [twenty-five thousand rupees]];

(c)        where such author, founder or person is a Hindu undi­vided family, a member of the family;

66[R242] [cc) Any trustee of the trust or manager (by whatever name called) of the institution;]

(d)        any relative of any such author, founder, person, 67[R243] [member, trustee or manager] as aforesaid;

(e)        any concern in which any of the persons referred to in clauses (a),

(b), (c) 66[R244] [,(cc)] and (d) has a substantial inter­est.

 

(4)  Notwithstanding anything contained in clause (c) of sub-section (1) 68[R245] [but without prejudice to the provisions contained in clause (d) of that sub-section], in a case whether the aggre­gate of the funds of the trust or institution invested in a concern in which any person referred to in sub-section (3) has a substantial interest, does not exceed five per cent of the capi­tal of that concern, the exemption under section 11 66[R246] [or section 12] shall not be denied in relation to any income other than the income arising to the trust or the institution from such invest­ment, by reason only that the 69[R247] [funds] of the trust or the institution have been invested in a concern in which such person has a substantial interest.

 

(5)  70[R248] [***]

 

(6)  71[R249] [***]

 

72[R250] [Explanation 1 : For the purposes of sections 11, 12, 12A and this section, “trust” includes any other legal obligation and for the purposes of this section “relative”, in relation to an indi­vidual, means—

(i)         spouse of the individual;

(ii)        Brother or sister of the individual;

(iii)       Brother or sister of the spouse of the individual;

(iv)       Any lineal ascendant or descendant of the individual;

(v)        Any lineal ascendant or descendant of the spouse of the individual;

(vi)       spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or sub-clause (v);

(vii)      any lineal descendant of a brother or sister of either the individual or of the spouse of the individual.]

 

Explanation 2 : A trust or institution created or established for the benefit of Scheduled Castes, Backward Classes, Schedule Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of sub-section (1).

 

Explanation 3 : For the purposes of this section, a person shall be deemed to have a substantial interest in a concern,—

 

(i)         in a case where the concern is a company, if its shares (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 twenty per cent of the voting power are, at any time during the previous 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 (3);

 

(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

 

(3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.]

 

73[R251] [Special provision relating to incomes of political parties.

13A.    Any income of a political party which is chargeable under the head 74[R252] [***] “Income from house property” or “Income from other sources” are any income by way of voluntary contributions received by a political party from any person shall not be in­cluded in the total income of the previous year of such political party :

           

            Provided that—

           

(a)        such political party keeps and maintains such books of account and other documents as would enable the 75[R253] [Assessing] Officer to properly deduce its income there from;

           

(b)        in respect of each such voluntary contribution in excess of ten thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution; and

           

(c)        The accounts of such political party are audited by an accountant as defined in the Explanation below sub-section (2) of section 288.

 

Explanation: For the purposes of this section, “political party” means an association or body of individual citizens of India registered with the Election Commission of India as a political party under paragraph 3 of the Election Symbols (Reservation and Allotment) Order, 1968, and includes a political party deemed to be registered with that Commission under the proviso to sub-paragraph (2) of that paragraph.]

 

 [R1]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.

 [R2]Substituted by the Finance Act, 1972, w.e.f. 1-4-1972. Section 59 of the said Finance Act, which has made in independent provision in regard to this amendment, read as follows:

“Certain casual and non-recurring receipts not to be included in the total income for the assessment year 1972-73.—Notwithstand­ing the amendments made by this Act to the Income-tax Act, in computing, in the case of any person, the total income of a previous year relevant to the assessment year commencing on the 1st day of April, 1972, any income failing within clause (3) of section 10 of the Income-tax Act as it stood immediately before the 1st day of April, 1972, shall not be included.”

 [R3]See also Circular No. 158, dead 27-12-1974, Letter F. No. 24/42/66-IT(A-I), dated 3-2-1966 and circular No. 22(XXIII-22), dated 12-9-1960.

 [R4]Substituted for “not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate” by the Finance Act, 1986, w.e.f. 1-4-1987.

 [R5]Substituted for clauses (4) and (4A) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to their substitution, clause (4), as amended by the Finance Act, 1964, w.e.f. 1-4-1964, and clause (4A) as inserted by the Finance Act, 1964, w.e.f. 1-4-1965 and subsequently amended by the Finance Act, 1968, w.e.f. 1-4-1969 and substituted by the Finance Act, 1982, w.e.f. 1-4-1982, stood as under:

‘(4) in the case of a non-resident, any income from interest on such securities as the Central Government may, by notification in the Official Gazette, specific in this behalf, or any income from interest on, or from premium on the redemption of, any bonds issued by the Central Government under a loan agreement between the Central Government and the International Bank for Recon­struction and Development or under a loan agreement between the Central Government and the Development Loan Fund of the United States of America or by any industrial undertaking or financial corporation in India under a loan agreement with the said Bank or Fund, as the case may be, which is guaranteed by the Central Government;

(4A) in the case of a person resident outside India, any income from interest on moneys standing to his credit in a Non-resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder.

Explanation : In this clause, “person resident outside India” shall have the meaning assigned to it in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973);’

 [R6]

 [R7]Definition of “person resident outside India” in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 is as follows :

‘(q) “Person resident outside India” means a person who is not resident in India;’

 [R8]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.

 [R9]For specified savings certificates

 [R10]Substituted by the Direct Tax Laws (Second Amendment) Act, 1989, 1-4-1989.

Earlier clause (5), as amended by the Finance Act, 1975, w.e.f. 1-4-1975, the Taxation Laws (Amendment) Act, 1970, w.r.e.f. 1-4-1962 and the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989, read as under:

‘(5) subject to such conditions as the Central Government may prescribe (including conditions as to number of journeys and the amount which shall be exempt per head) in the case of an individual, the value of any travel concession or assistance received by or due to him,—

(a) from his employer for himself and his family, in con­nection with his proceeding on leave to any place in India;

(b) from his employer or former employer for himself and his family, in con­nection with his proceeding to any place in India after retire­ment from service or after the termination of his service:

Provided that the amount exempt under sub-section (a) or sub-clause (b) shall not, except in such cases and under such circum­stances as may be prescribed having regard to the travel conces­sion or assistance granted to the employees of the Central Gov­ernment, exceed the value of the travel concession or assistance which would have been received by or due to the individual in connection with his proceeding to any place in India on leave or, as the case may be, after retirement from service or after the termination of his service:

Provided further that the amount exempt under this clauses shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

Explanation : For the purposes of this clause, “family”, in relation to an individual means—

(i) the spouse and children of the individual; and

(ii) the parents, brother and sisters of the individual or any of them, wholly or mainly dependent on the individual;’

 [R11]See rule 2B.

 [R12]Inserted by the Taxation Law (Amendment) Act, 1984, with retrospective effect from 1-4-1982.

 [R13]Substituted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1962.

 [R14]

 [R15]Inserted by the Finance (No. 2) Act, 1977, with retro­spective effect from 1-4-1972.

 [R16]Substituted fro the existing sub-clause (ii) to (v) by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to their substitu­tion, sub-clauses (ii) to (v) stood as under:

“(ii) the remuneration received by him as ambassador, high commissioner, envoy, minister, charge d’ affaires, commis­sioner, counsellor or the secretary, adviser or attache of an embassy, high commission, legation or commission of a foreign State, for service in such capacity;

(iii) The remuneration received by him as a consul de carriere, whether called a consul-general, consul, vice-consul, consular agent, pro-consul or by any other name, of a foreign State for service in such capacity;

(iv) The remuneration received by him as a trade commission­er or other official representative in India of the Government of a foreign State (not holding office as

such in an honorary capac­ity), if the remuneration of the corresponding officials, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country;

(v) the remuneration received by him as a member of the staff of any of the officials referred to in clause (ii), clause (iii) or clause (iv), if the member—

(a) is a subject of the country represented;

(b) is not engaged in any business or profession or employ­ment in India otherwise than as an member of such staff;

and further, where the individual is a member of the staff of any official referred to in clause (iv), if the country represented has made corresponding provisions for similar exemptions in the case of members of the staff of the corresponding officials of the Government;”

 [R17]Inserted by the Taxation laws (Amendment) Act, 1975, w.e.f 1-10-1975.

 [R18]For application to the Government for its approval of contract of service

 [R19]See also Circular O.M. No. 22/26/66-IT (A-I), dated 16-11-1966 and Instruction No. 1255 [F.No. 458/35/78-FTD], dated 8-5-1979. See also Notification Nos. SO 437(E), dated 4-6-1980 and SO 803(E), dated 11-10-1989.

 [R20]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.

 [R21]Substituted for “was approved by the Central Government before the commencement of his service” by the Finance Act, 1964, w.e.f. 1-4-1964.

 [R22]Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.

 [R23]Section 200 of the Companies Act lays down as under: ‘200. Prohibition of tax-free payments.—(1) No company shall pay to any officer or employee thereof, whether in his capacity as such or otherwise, remuneration free of any tax, or otherwise calculated by reference to, or varying with, any tax payable by him, or the rate or standard rate of any such tax, or the amount thereof.

Explanation: In this sub-section, the expression “tax” comprises any kind of income-tax including super-tax.

(2) Where by virtue of any provision in force immediately before the commencement of

this Act, whether contained in the company’s articles, or in any contract made with the company, or in any resolution passed by the company in general meeting or by the company’s Board of directors, any officer or employee of the company holding any office at the commencement of this Act is entitled to remuneration in any of the modes prohibited by sub-section (1), such provision shall have effect during the residue of the term for which he is entitled to hold such office at such commencement, as if it provided instead for the payment of a gross sum subject to the tax in question, which, after deducting such tax, would yield the net sum actually specified in such provision.

(3) This section shall not apply to any remuneration—

(a) Which fell due before the commencement of this Act, or

(b) Which may fall due after the commencement of this Act, in respect of any period before such commencement.’

 [R24]Substituted for “twenty-four” by the Finance Act, 1965, w.e.f. 1-4-1965.

 [R25]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.

 [R26]Inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.

 [R27]See also Circular O.M. No. 22/26/66-IT (A-I), dated 16-11-1966 and Instruction No. 1255 [F.No. 458/35/78-FTD], dated 8-5-1979. See also foot note 60, p. 1.35 ante.

 [R28]See rule 16A and also see footnote 59 on p. 135 ante.

 [R29]“(Commencing from a date after the 31st day of March, 1971)” omitted by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R30]Substituted for “(A) such remuneration due to or re­ceived by him” by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R31]See footnote 64

 [R32]See footnote 64

 [R33]Inserted by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R34]See footnote 64

 [R35]Inserted by the Direct Taxes (Amendment) Act, 1974, with retrospective effect from 1-4-1973.

 [R36]Inserted by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R37]Inserted by the Finance Act, 1979, w.e.f. 1-6-1979.

 [R38]Inserted by the Finance Act, 1979, w.e.f. 1-6-1979.

 [R39]

 [R40]Inserted by the Finance Act, 1964, w.e.f. 1-4-1964.

 [R41]See also Press Note, dated 26-10-1966, issued by the Ministry of Finance (Department of Revenue and Insurance).

 [R42]Inserted by the Finance Act, 1964, w.e.f. 1-4-1964.

 [R43]See also Press Note, dated 26-10-1966, issued by the Ministry of Finance (Department of Revenue and Insurance).

 [R44]Inserted by the Finance Act, 1976, w.e.f. 1-4-1976.

 [R45]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.

 [R46]Inserted by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R47]Inserted by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R48]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R49]Substituted for existing clause (10) by the Finance Act, 1974, w.e.f. 1-4-1975. Original clause was amended first by the Finance Act, 1972, w.e.f. 1-4-1973 and then by the Finance Act, 1974, with retrospective effect from 1-6-1972/1-4-1962. Effect of the amendments is explained in paras 20 and 21 of Circu­lar No. 138, dated 17-6-1974

 [R50]For specified exemption limit

 [R51]Sub-sections (2) and (3) of section 4 of the Payment of Gratuity Act, 1972 lay down the basis for calculating amount of gratuity as under:

“(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termi­nation of his employment, and, for this purpose, the wages paid for any overtime work shall not be then into account :

Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days’ wages for each season.

Explanation: In the case of a monthly rated employee, the fif­teen days’ wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed fifty thousand rupees.”

 [R52]Substituted for “calculated on the basis of the aver­age salary for the three years immediately preceding the year in which the gratuity is paid, subject to a maximum of *thirty-six thousand rupees or twenty months’ salary so calculated, whichever is less” by the Direct Taxes (Amendment) Act, 1987, w.e.f. 1-4-1989.

*Substituted for “thirty thousand rupees” by the Finance Act, 1983, w.r.e.f. 1-4-1982.

 [R53]Rs. 1,00,000 has been specified as the limit vide Notification No. GSR 405, dated 28-4-1988.

 [R54]Substituted for “shall not exceed *thirty-six thousand rupees” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

*Substituted for “thirty thousand rupees” by the Finance Act, 1983, with retrospective effect from 1-4-1982.

 [R55]Substituted for “shall not exceed *thirty-six thousand rupees” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

*Substituted for “thirty thousand rupees” by the Finance Act, 1983, with retrospective effect from 1-4-1982.

 [R56]Omitted by the Direct Taxes (Amendment) Act, 1987, w.e.f. 1-4-1989. Original third and fourth provisos were inserted by the Finance Act, 1983 with retrospective effect from 1-4-1982 and read as under :

Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub-clause (i), increase, by notification in the Official Ga­zette, the limit of thirty-six thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provi­sions of this clause, up to such maximum amount:

Provided also that in relation to cases in which the event (that is to say retirement of the employee or his becoming incapacited or termination of his employment or his death, as the case may be) on which gratuity is received had taken place before the 31st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this clause shall have effect as if for the words “thirty-six thousand rupees”, at the three places where they occur, the words “thirty thousand rupees” had been substituted.’

 [R57]Substituted for “In this clause” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

 [R58]Inserted by the Finance (No. 2) Act, 1965, with retro­spective effect from 1-4-1962.

 [R59]See also Circular No. 286, dated 17-11-1980.

 [R60]Substituted for “to the members of the Defence Services or to the employees of a State Government, a local authority” by the Finance Act, 1974, with retrospective effect from 1-4-1962.

 [R61]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original proviso stood as under:

“Provided that the maximum limit of payment specified in sub-clause (ii)(a) or sub-clause (ii)(b) shall not apply in respect of any such payment made before the 19th day of August, 1965;”

 [R62]Inserted by the Finance Act, 1982, with retrospective effect from 1-4-1978.

 [R63]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1978.

 [R64]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1978.

 [R65]Substituted for “six” by the Direct Tax Laws (Amend­ment) Act, 1987, with retrospective effect from 1-7-1986.

 [R66]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1978.

 [R67]Substituted for “or thirty thousand rupees, whichever is less” by the Direct Tax Laws (Amendment) Act, 1987, with retrospective effect from 1-7-1986.

 [R68][Notification No. SO 553(E), dated 8-6-1988]

 [R69]Substituted for “shall not exceed thirty thousand rupees” by the Direct Tax Laws (Amendment) Act, 1987, with retro­spective effect from 1-7-1986.

 [R70]Substituted for “shall not exceed thirty thousand rupees” by the Direct Tax Laws (Amendment) Act, 1987, with retro­spective effect from 1-7-1986.

 [R71]Third and fourth provisos omitted, ibid. Prior to their omission, as amended by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1978, stood as under:

‘Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub-clause (i), increase, by notification in the Official Gazette, the limit of thirty thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provisions of this sub-clause, up to such maximum amount:

Provided also that in relation to an employee retiring whether on superannuation or otherwise before the 1st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this sub-clause shall have effect as if for the words “thirty thousand rupees”, at the three places where they occur, the words “twenty-five thousand five hundred rupees” had been substituted.’

 [R72]“(i)” omitted by the Direct Tax Laws (Amendment) Act, 1987, with retrospective effect from 1-7-1986.

 [R73]Clause (ii) omitted by the Direct Tax Laws (Amendment) Act, 1987, with retrospective effect from 1-7-1986. Omitted clause stood as under:

‘(ii) “Salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule.’

 [R74]Inserted by the Finance Act, 1975, w.e.f. 1-4-1976.

 [R75]Substituted for the following by the Finance Act, 1985, w.e.f. 1-4-1986:

“At the time of his retrenchment, to the extent such compensation does not exceed—

(i) An amount calculated in accordance with the provisions of clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947); or

(ii) twenty thousand rupees,

Whichever is less.”

 [R76]Clause (b) of section 25F of the Industrial Disputes Act, 1947 lays down as follows:

‘(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days’ average pay “for every completed year of continuous service” or any part thereof in excess of six months; and’

 [R77]Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original clause (ii) reads as under :

‘(ii) fifty thousand rupees’

 [R78]Definitions of “employer” and “workman”, in clause (g) and clause (s) of section 2 of the Industrial Disputes Act, 1947, are as under:

‘(g) “Employer” means—

(i) In relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;

(ii) In relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that author­ity;’

‘(s) “workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical operational, clerical or supervisory work for hire or reward, whether the terms of employment by express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—

(i) Who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or

(ii) Who is employed in the police service or as an officer or other employee of a prison; or

(iii) Who is employed mainly in a managerial or adminis­trative capacity; or

(iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.’

 [R79]Inserted by the Finance Act, 1987, w.e.f. 1-4-1987.

 [R80]Inserted by the Finance Act, 1968, w.e.f. 1-4-1969.

 [R81]For notified pubic provident fund, [Notification No. SO 2430, dated 2-7-1968].

 [R82]Substituted by the Finance Act, 1965, with retrospec­tive effect from 1-4-1962.

 [R83]Inserted by the Direct Taxes (Amendment) Act, 1964, w.e.f. 6-10-1964.

 [R84]See also Circular No. 90, dated 26-6-1972, Letter F. No. 12/19/64-IT (A-I), dated 2-1-1967 and Letter F. No. 12/19/64-IT(B), dated 22-2-1966.

 [R85]See rule 2A.

 [R86]“(Not exceeding four hundred rupees per month)” omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Earlier, in this omitted expression “four” was substituted for “three” by the Finance Act, 1975, w.e.f. 1-4-1975.

 [R87]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1976.

 [R88]Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its substitution, clause (14), as amended by the Finance Act, 1975, with retrospective effect from 1-4-1962, read as under:

“(14.) any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose.

Explanation: For the removal of doubts, it is hereby declared that any allowance granted to the assessee 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 the place where he ordinarily resides shall not be regarded, for the pur­poses of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties;”

 [R89]For notified allowances See Notification Nos. 143(E), dated 21-2-1989; SO No. 144(E), dated 21-2-1989, as amended by, SO 259 (E), dated 27-3-1990; SO 8386, dated 9-6-1989; and SO 267(E), dated 29-3-1990 [See Hand book to Income-tax Act, 1990 EDn. pp. 99 to 104].

 [R90]Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R91]Inserted by the Finance Act, 1989, w.e.f. 1-4-1989.

 [R92]See also Letter [F. No. 21/221-64-IT (A-I)], dated 24-8-1964.

 [R93]Substituted for sub-clauses (i), (ia), (ib), (ii) and (iia) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original sub-clauses (ia) and (ib) were inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965 and special Bearer Bonds (Immunities & Exemp­tions) Act, 1981, w.e.f. 12-1-1981 respectively; sub-clause (ii) was amended by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965, the Finance Act, 1979, w.e.f. 1-4-1980 and the Finance Act, 1987, with retrospective effect from 1-4-1983; sub-clause (iia) was inserted by the Finance Act, 1968, w.e.f. 1-4-1969. The said sub-clauses, prior to their substitution, stood as under:

“(i) monthly payment on the 15-Year Annuity Certificates issued by or under the authority of the Central Government or such other annuity certificates issued by or under the authority of that Government as the Government may, by notification in the Official Gazette, specify in this behalf, to the extent to which the amounts of the certificates do not exceed in each case the maximum amount which is permitted to be invested therein;

(ia) annual payment on National Defence Gold Bonds, 1980;

(ib) premium on the redemption of Special Bearer Bonds, 1991;

(ii) interest on Treasury Savings Deposit Certificates, Post Office Cash Certificates, Post Office National Savings Certificates, National Plan Certificates, Twelve-Year National Plan Savings certificates any such other certificates, issued by the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf, interest on deposit in Post Office Savings Banks and bonus in respect of deposit under the Post Office Cumulative Time Deposits Rules, 1981, to the extent to which the amounts of such certificates or deposits do not exceed in each case the maximum amount which is permitted to be invested or deposited therein:

Provided that where in the case of an assessee the interest on deposits in a Public account of the nature referred to in item (6) in the Table below rule 4 of the Post Office Savings Account Rules, 1981, exceeds two thousand two hundred and fifty rupees, the amount of interest on such deposits that shall not be includ­ed in the total income of the assessee under this sub-clause shall be two thousand two hundred and fifty rupees;

(iia) interest on fixed deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette, to the extent to which the amounts of such deposits do not exceed, in each case, the maximum amount which is permitted to be deposited therein.”

 [R94]For notified securities, bonds, annuity certificates, savings certificates, etc.

 [R95]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.

 [R96]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R97]For notified capital investment bonds

 [R98]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R99]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R100]For specified NRI bonds

 [R101]Inserted by the Finance Act, 1985, w.e.f. 1-4-1985.

 [R102]Substituted for “the Explanation to clause (iii) of sub-section (5) of section 11” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

 [R103]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R104]

 [R105]

 [R106]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R107]Substituted for “in any case where the loan or debt is approved by the Central Government, having regard to its terms generally and in particular to the teams of its repayment” by the Finance Act, 1964, w.e.f. 1-4-1964.

 [R108]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R109]Inserted by the Direct Taxes (Amendment) Act, 1974, with retrospective effect from 1-4-1973.

 [R110]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R111]Inserted by the Direct Taxes (Amendment) Act, 1974, with retrospective effect from 1-4-1973.

 [R112]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.

 [R113]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R114]Substituted for “this item”, ibid.

 [R115]Expression “foreign currency” has been defined in clause (g) of section 2 of the Foreign Exchange Regulation Act, 1973, as follows:

‘(g) “Foreign currency” means any currency other than “Indian currency;’

*”Indian currency” has been defined in clause (k); see footnote 29 on p. 1.185 post.

 [R116]Inserted by the Finance Act, 1987, w.e.f. 1-4-1987.

 [R117]For specified bonds/debentures of public sector compa­nies.

 [R118]Inserted by the Finance Act, 1989, w.e.f. 1-4-1990.

 [R119]Shall be inserted by the Finance Act, 1990, w.e.f. 1-4-1991.

 [R120]Inserted, ibid. w.r.e.f. 1-4-1989.

 [R121]Inserted by the Income-tax (Amendment) Act, 1989, w.e.f. 24-1-1989.

 [R122]See also Letter F. No. 24/35/66-IT (A-I), dated 4-10-1966, Letter F. No. 24/2/69-IT (A-I), dated 14-1-1968, Letter F. No. 24/25/68-IT (A-I), dated 18-9-1969, Letter F. No. 24/22-67-IT (A-I), dated 7-7-1967, Letter F. No. 25/37/66-IT (A-I), dated 12-2-1964, Letter F. No. 24/7/64-IT (A-I), dated 24-3-1964, Letter F. No. 24/4/64-IT (A-I), dated 12-2-1964, Letter F. No. 24/34/62-IT (A-I), dated 25-1-1963, Circular No. 3(XXIII-23), dated 12-1-1961, Circular No. 49(XXIII-12), dated 13-12-1956, Income-tax Circulars, published by Directorate of Inspection (Research, Statistics and Publication), 1968 edn., p. 89 and Circular No. 11 (XXIII-24), dated 4-4-1961.

 [R123]Substituted for the following clause 17, as amended by the Finance Act, 1976, w.e.f. 1-4-1976, by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1986.

“(17) any daily allowance received by any person by reason of his membership of Parliament or of any State Legisla­ture or of any Committee thereof or any allowance received by a member of either House of Parliament under the Members of Parlia­ment (Additional Facilities) Rules, 1975;”

 [R124]“And” omitted by the Finance Act, 1987, with retrospec­tive effect from 1-4-1986.

 [R125]Substituted for the following sub-clause (ii) [earlier amended by the Taxation Laws (Amendment and Miscellaneous Provi­sions) Act, 1986, w.e.f. 1-4-1986] by the Finance Act, 1987, with retrospective effect from 1-4-1986:

“(ii) all other allowances not exceeding rupees twelve hundred and fifty per month in the aggregate received by any person by reason of his membership of Parliament or of any Com­mittee thereof, or all other allowances not exceeding rupees six hundred per month in the aggregate received by any person by reason of his membership of any State Legislature or any Commit­tee thereof which the Central Government may, by notification in the Official Gazette, specify in this behalf;”

 [R126]

 [R127]Substituted for clauses (17A), (17B) and (18) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original clauses (17A) and (17B) were inserted by the Direct Taxes (Amend­ment) Act, 1974, with retrospective effect from 1-4-1973. Clause (17A) was later on amended by the Finance Act, 1980, w.e.f. 1-4-1980. The aforesaid clauses, prior to their substitution, stood as under:

“(17A) any payment made, whether in cash or in kind, in pursuance of awards for literary, scientific or artistic work or attainment or for service for alleviating the distress of the poor, the weak and the ailing, or for proficiency in sports and games, instituted by the Central Government or by any State Government or approved by the Central Government in this behalf:

Provided that the approval granted by the Central Government shall have effect for such assessment year or years (including an assessment year or years commencing before the date of which such approval is granted) as may be specified in the order granting the approval;

(17B) any payment made, whether in cash or in kind, as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;

(18) any payment made, whether in cash or in kind, by the Central Government or any State Government in pursuance of gal­lantry awards instituted or approved by the Central Government;”

 [R128]

 [R129]Inserted by the Rulers of Indian States (Abolition of Privileges) Act, 1972, w.e.f. 9-9-1972.

 [R130]Omitted, ibid. w.e.f. 2-4-1973.

 [R131]Inserted, ibid. with retrospective effect from 28-12-1971.

 [R132]“Interest on securities,” omitted by the finance Act, 1988, w.e.f. 1-4-1989.

 [R133]Substituted for “within its own jurisdictional area” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.

 [R134]Inserted by the Finance Act, 1970, with retrospective effect from 1-4-1962.

 [R135]Substituted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1990. Earlier clause (21) as amended by the Finance Act, 1983, w.e.f. 1-4-1984, Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, stood as under:

“(21) any income of a scientific research association for the time being approved for the purpose of clause (ii) of sub-section (1) of section 35 which is applied solely to the purposes of that association :

Provided that nothing contained in this clause shall apply if for any period during the previous year—

(i) any sums by way of contributions received by the asso­ciation are invested or deposited after the 28th day of February, 1983, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; or

(ii) any funds of the association invested or deposited before the 1st day of March, 1983, otherwise than in any one or more of the forms or modes specified in sub-section (5) of sec­tion 11 continue to remain so invested or deposited after the 30th day of November, 1983; or

(iii) any shares in a company (not being a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) or a corporation established by or under a Central, State or Provincial Act) are held by the association after the 30th day of November, 1983;”

 [R136]See rule 17 and Form No. 10.

 [R137]Inserted by the Finance Act, 1970, w.e.f. 1-4-1970.

 [R138]Substituted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1990. Earlier clause (23), as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, stood as under:

“(23) any income of an association or institution estab­lished in India having as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such games or sports as the Central Government may specify in this behalf from time to time by noti­fication in the Official Gazette:

Provided that—

(i) The association or institution applies its income, or accumu­lates it for application, solely to the objects for which it is established;

(ii) No part of the income of the association or institution is distributed in any manner to its members except as grants to any association or institution affiliated to it; and

(iii) The association or institution is, for the time being, approved for the purpose of this clause by the Central Government by general or special order;

 [R139]See rule 2C and Form No. 55

 [R140]See rule 17 and Form No. 10.

 [R141]Inserted by the Finance (No. 2) Act, 1965, with retro­spective effect from 1-4-1962.

 [R142]“Inserted on securities or” omitted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R143]

 [R144]Inserted by the Finance (No. 2) Act, 1980, with retro­spective effect from 1-4-1962.

 [R145]Inserted by the Finance Act, 1974, w.e.f. 1-6-1974.

 [R146]Inserted by the Finance Act, 1979, with retrospec­tive effect from 1-4-1962.

 [R147]Inserted by the Finance Act, 1979, with retrospec­tive effect from 1-4-1962.

 [R148]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.

 [R149]See also Circular No. 557, dated 19-3-1990.

 [R150]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.

 [R151]Substituted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1990. Earlier, sub-clauses (iv) and (v), as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, stood as under :

“(iv) any other fund or institution established for charitable purposes which may be notified by the Central Govern­ment in the Official Gazette, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or

(v) any trust (including any other legal obligation) or institution, being a trust or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be notified by the Central Government in the Official Gazette, having regard to the manner in which the af­fairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the purposes thereof:

Provided that any notification issued by the Central Government under sub-clause (iv) or sub-clause (v) shall have effect for such assessment year or years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification;’

 [R152]See rule 2C and Form No. 56.

 [R153]See rule 2C and Form No. 56.

 [R154]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R155]Substituted for “from” by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R156]“, including the condition that at least ninety per cent of such income shall be distributed to the holders of its units every year,” omitted by the Direct Tax Laws (Amendment) Act, 1989, with retrospective effect from 1-4-1988. Earlier “such income shall be distributed to the holder of its units” were substituted for “the income from the mutual fund shall be dis­tributed to the unit holders” by the Finance Act, 1988, w.e.f. 1-4-1988.

 [R157]

 [R158]Inserted by the Finance Act, 1989, w.e.f. 1-4-1989.

 [R159]“Interest on securities,”’ omitted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R160]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R161]Inserted by the Labour Provident Fund Laws (Amendment) Act, 1976, w.e.f. 1-8-1976.

 [R162]Substituted by the North-Eastern Areas (Reorganisation) (Adaptation of Laws on Union Subjects) Order, 1974, with retrospective effect from 21-1-1972, Earlier, clause (26) was amended first by the State of Nagaland (Adaptation of Laws on Union Subjects) Order, 1965, with retrospective effect from 1-12-1963 and then by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1962.

 [R163]Expression “Scheduled Tribes” has been defined in clause (25) of article 366 of the Constitution as under:

‘(25) “Scheduled Tribes” means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under article 342 to be Scheduled Tribes for the purposes of this Constitution;’

 [R164]Inserted by the Finance (No. 2) Act, 1965, with retro­spective effect from 1-4-1962.

 [R165]See also Circular No. 67, dated 23-9-1971.

 [R166]“(Not being an individual who is in the service of Government)” omitted by the Finance (No. 2) Act, 1971, with retrospective effect from 1-4-1962.

 [R167]Substituted for “1986” by the Finance Act, 1985, w.e.f. 1-4-1985. Earlier “1986” was substituted for “1983” by the Fi­nance Act, 1983, w.e.f. 1-4-1983, “1983” was substituted for “1980” by the Finance Act 1980, w.e.f. 1-4-1980, “1980” was substituted for “1975” by the Finance (No. 2) Act, 1977, with retrospective effect from 1-4-1975 and “1975” was substituted for “1970” by the Finance (No. 2) Act, 1971, with retrospective effect from 1-4-1970.

 [R168]Numbered as Explanation 1 by the Finance Act, 1983, with retrospective effect from 1-4-1980.

 [R169]Inserted by the Finance Act, 1983, with retrospective effect from 1-4-1980.

 [R170]Inserted by the Finance Act, 1989, w.e.f. 1-4-1990.

 [R171]Inserted by the Finance Act, 1980, with retrospective effect from 1-4-1972.

 [R172]Expression “Scheduled Castes” has been defined in clause (24) of article 366 of the Constitution as under:

  • “Scheduled Castes” means such castes, races or tribes or parts of or groups within such castes, races or tribes as are deemed under article 341 to be Scheduled Castes for the purposes of this Constitution;’

*For definition of “Scheduled Tribes”, see footnote 92 on p. 1.63 ante.

 [R173]Omitted by the Finance Act, 1975, w.e.f. 1-4-1976 and re-enacted in section 80JJ with modification. Originally, clause (27) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964 and later on amended by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.

 [R174]Substituted by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965. Original clause was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.

 [R175]Inserted by the Finance (No. 2) Act, w.e.f. 1-4-1968.

 [R176]Inserted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1969.

 [R177]See rule 8(2).

 [R178]

 [R179]Inserted by the Finance Act, 1984, w.e.f. 1-4-1985.

 [R180]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R181]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R182]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R183]Inserted by the Finance Act, 1981, w.e.f. 1-4-1981.

 [R184]Substituted for the following sub-section (3) by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987:

“(3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things (such assessment year being hereafter in this section referred to as the initial assessment year) and each of the four assessment years immediately succeeding the initial assessment year.”

 [R185]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.

 [R186]Substituted for “Income-tax Officer” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R187]Substituted for “before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income” by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R188]“For the initial assessment year” omitted by the Taxa­tion Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987.

 [R189]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R190]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 as amended by the Finance Act, 1988 from the same date.

 [R191]

 [R192]Substituted for the following clause (ii) by the Taxa­tion Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987:

‘(ii) “Relevant assessment years” means the initial assessment year and four assessment years immediately succeeding the initial assessment year.’

 [R193]Inserted by the Finance Act, 1987, with retrospective effect from 1-4-1981.

 [R194]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R195]Section 11, which was omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989, is reintroduced by the Direct Tax Laws (Amendment) Act, 1989, with effect from the same date with modifications.

 [R196]See also Circular No. 100, dated 24-1-1973, Circular No. 273, dated 3-6-1980, Circular No. 52, dated 30-12-1970, Circular No. 12-P (LXX-7 of 1968), dated 26-11-1968, Circular No. 5-P (LXX-6 of 1968), dated 19-6-1968 and Letter [F. No. 20/10/67-IT)], dated 1-5-1967.

 [R197]Substituted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976. Earlier, clauses (a) and (b) were amended by the Finance Act, 1970, w.e.f. 1-4-1971.

 [R198]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R199]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R200]Substituted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976. Earlier, the Explanation was also substituted by the Finance Act, 1970, w.e.f. 1-4-1971.

 [R201]“Or sub-section (2)” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R202]“Whether fixed originally or on extension”, ibid.

 [R203]Inserted by the Finance (No. 2) Act, 1971, with retro­spective effect from 1-4-1962.

 [R204]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f 1-4-1976.

 [R205]Substituted by the Finance Act, 1970, w.e.f. 1-4-1971.

 [R206]Substituted for the portion beginning with “Where any income referred to in” and ending with “are complied with, name­ly:—” by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.

 [R207]See rule 17 and Form No. 10.

 [R208]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R209]Substituted by the Finance Act, 1983, w.e.f. 1-4-1983. Original clause (b) was earlier amended by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.

 [R210]Substituted by the Finance Act, 1970, w.e.f. 1-4-1971.

 [R211]Substituted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R212]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.

 [R213]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R214]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R215]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R216]“And accordingly chargeable to tax within the meaning of sub-section (3)” omitted by the Finance Act, 1970, w.e.f 1-4-1971.

 [R217]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.

 [R218]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R219]Expression “savings certificates” is defined in clause (2) of section 2 of the Government Savings Certificates Act, 1959 as under :

‘(c) “Savings certificate” means a savings certificate to which this Act applies.’

Section 1(3) provides that the Act would apply to such class of savings certificates as the Central Government specifies by notification in the Official Gazette.

 [R220]Substituted for “Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956)” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R221]Inserted by the Finance Act, 1984, w.e.f. 1-4-1985.

 [R222]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [R223]* See rule 17C.

 [R224]Reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, section 12 was omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. Original section 12 was substituted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R225]Reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, 12A was omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. Original section 12A was inserted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R226]See also Circular No. 143, dated 20-8-1974.

 [R227]See rule 17A and Form No. 10A.

 [R228]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R229]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

 [R230]See rule 17B and Form No. 10B.

 [R231]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. Original section 13 was substituted by the Finance Act, 1970, w.e.f. 1-4-1971, and prior to its substitution, it was amended by the Finance Act, 1966, w.e.f. 1966 and the Finance Act, 1963, with retrospective effect from 1-4-1962.

 [R232]See also Circular No. 51, dated 23-12-1970 and No. 335, dated 13-4-1982.

 [R233]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R234]Omitted by the Finance Act, 1983, w.e.f. 1-4-1984. Original clause (bb), as inserted by the Taxation Laws (Amend­ment) Act, 1975, w.e.f. 1-4-1977, read as under:

“(bb) in the case of a charitable trust or institution for the relief of the poor, education or medical relief, which carries on any business, any income derived from such business, unless the business is carried on in the course of the actual carrying out of a primary purpose of the trust or institution;”

 [R235]Substituted by the Finance Act, 1983, w.e.f. 1-4-1983. Original clause was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1977. It was later on amended by the Fi­nance (No. 2) Act, 1977, w.e.f. 1-4-1978 and by the Finance Act, 1982, w.e.f. 1-4-1982.

 [R236]“Government company” has been defined in section 617 of the Companies Act, 1956 as under:

“For the purposes of this Act, Government company means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by and State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a compa­ny which is a subsidiary of a Government company as thus defined.”

 [R237]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R238]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R239]Substituted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R240]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1977.

 [R241]Substituted for “five thousand rupees” by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1-4-1985.

 [R242]Inserted by the Finance, Act, 1972, w.e.f. 1-4-1973.

 [R243]Substituted for “or member”, ibid

 [R244]Inserted by the Finance, Act, 1972, w.e.f. 1-4-1973.

 [R245]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.

 [R246]Inserted by the Finance, Act, 1972, w.e.f. 1-4-1973.

 [R247]Substituted for “moneys” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.

 [R248]Omitted by the Finance Act, 1983, w.e.f. 1-4-1983. Original sub-section (5), was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1977. It was later on amended by the Finance Act, 1976, w.e.f. 1-4-1977, the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978 and the Finance Act, 1982, w.e.f. 1-4-1982.

 [R249]Omitted by the Finance Act, 1983, w.e.f. 1-4-1983. Original sub-section (5), was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1977.

 [R250]Substituted by the Finance Act, 1972, w.e.f. 1-4-1973.

 [R251]Inserted by the Taxation Laws (Amendment) Act, 1978, w.e.f. 1-4-1979.

 [R252]“Interest on securities”, omitted by the Finance Act, 1988, w.e.f. 1-4-1989.

 [R253]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.