Chapter VII
Incomes Forming Part of Total income on which no
income-tax is payable
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 (now omitted) and 80-O, respectively.]
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 65[4] [(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 66[5] [is payable] by the firm;
[***]
68[7] [(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.
69[8] 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.]
[1]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.
[2]Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[3]Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[4]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[5]Substituted for “has already been paid” by the Finance Act, 1964, w.e.f. 1-4-1964.
[6]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969.
[7]Substituted by the 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.”
[8]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”.