Chapter VII
Incomes forming part of total
income on which no income-tax is payable
Omitted By The
Finance
81. to 85C. [Omitted by the Finance (No. 2) Act, 1967,
w.e.f. 1-4-1968. Provisions of sections 81, 82, 83, 84, 85, 85A, 85B and
85C were incorporated from the same date in sections 80P, 80Q (now omitted),
10(29), 80J, 80K (now omitted), 80M, 80N (not omitted) and 80-O, respectively.]
42[R1] [Other incomes.
86. Income-tax shall not be payable by an
assessee in respect of the following—
(iii) if the assessee is a partner of an
unregistered firm 44[R4] [(not
being an unregistered firm assessed as a registered firm under clause (b) of
section 183)], any portion of the assessee’s share in the profits and gains of
the firm computed in the manner laid down in section 67 on which income-tax 45[R5] [is
payable] by the firm;
47[R7] [(v)if the assessee is a member of an association of persons or
a body of individuals (other than a company or a co-operative society or a
society 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), his
share in the income of the association or body computed in the manner provided
in section 67A:
Provided that,—
(a) where the association or body is
chargeable to tax on its total income at the maximum marginal rate or any
higher rate, under any of the provisions of this Act, the share of a member
computed as aforesaid shall not be included in his total income;
(b) in any other
case, the share of a member computed as aforesaid shall form part of his total
income:
Provided further that where no
income-tax is chargeable on the total income of the association or body, the
share of a member computed as aforesaid shall be chargeable to tax as part of
his total income and nothing contained in this section shall apply to the
case].]
Deduction from tax on certain securities.
48[R8] 86A.[Omitted by the Finance Act, 1988, w.e.f. 1-4-1989. Original
section was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
[R1]Restored to its original provision by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, section 86 was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[R2]Omitted by the Finance Act, 1965, w.e.f.
1-4-1965.
[R3]Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R4]Inserted by the Finance (No. 2) Act, 1971,
w.e.f. 1-4-1971.
[R5]Substituted for “has already been paid” by
the Finance Act, 1964, w.e.f. 1-4-1964.
[R6]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969.
[R7]Substituted Direct Tax Laws (Amendment) Act, 1989,
w.e.f. 1-4-1989. Prior to its substitution, clause (v), as amended by
the Finance Act, 1981, w.e.f. 1-4-1981, stood as under:
“(v)
if the assessee is a member of an association of persons,
or a body of individuals other than a Hindu undivided family, a company or a
firm, any portion of the amount which he is entitled to receive from the
association or body on which income-tax has already been paid by the
association or body.
Explanation : For the purposes of
this clause, in the case of an association of persons which is assessable under
section 167A, each of the members of the association whose shares in the income
or, as the case may be, part of the income of such association are
indeterminate or unknown, shall be deemed to be entitled to receive an equal share
in the total income or, as the case may be, such part of the total income of
the association and the individual share of such member in such total income
or, as the case may be, part of the total income shall be determined accordingly.”
[R8]Prior to its omission,
section 86A as amended by the Finance Act, 1966, w.e.f. 1-4-1966, stood as
under:
“Where there is included in the total income of
an assessee—
(i)
The interest due on any security of the Central Government issued or
declared to be income-tax free, or
(ii)
The interest due on any security of a State Government issued income-tax
free, the income-tax whereon is payable by the State Government,
The
assessee shall be entitled to a deduction from the amount of income-tax with
which he is chargeable on his total income, of an amount equal to the
income-tax calculated on the amount so included at the average rate of
income-tax or at the rate of twenty-seven and a half per cent, whichever is
less”.