38[1] [The Tenth schedule*[2] 

[See section 3(5)]

 

Modifications subject to which the provisions of this act shall apply in cases where the previous year in relation to the assess­ment year commencing on the 1st April, 1989, referred to in section 3(2), exceeds twelve months

 

Definition.

1.         In this Schedule, “transitional previous year” means the period reckoned as the previous year for the assessment year commencing on the 1st day of April, 1989, in the manner specified in sub-section (2) of section 3, and, in a case where 39[3] [the first proviso or the third proviso] to that sub-section applies, the longer or, as the case may be, the longest of the periods reckoned in the manner laid down in 40[4] [the said first proviso or, as the case may be, the said third proviso].

 

Special provisions in a case where the transitional previous year is longer than twelve months.

2.         In a case where the transitional previous year is longer than twelve months, the provisions of this Act and the Finance Act of the relevant year shall apply subject to the modifications speci­fied in rules 3, 4, 5 and 6 of this Schedule.

 

41[5] Modifications pertaining to monetary limits, etc.

3.         The provisions of this Act, specified in column (1) of the Table below shall be subject to the modification that the refer­ence therein to the amount or amounts specified in the corre­sponding entry in column (2) of the said Table, shall be con­strued as a reference to the said amount or amounts as increased by multiplying each such amount by a fraction of which the numer­ator is the number of months in the transitional previous year and the denominator is twelve :

 

Provided that for the purposes of this rule and rules 5 and 6, where the transitional previous year includes a part of a month, then, if such part is fifteen days or more, it shall be increased to one complete month and if such part is less than fifteen days, it shall be ignored :

 

42[6] [Provided further that the amount of ten thousand rupees, specified in column (2) of the said Table against sub-section (2) of section 48, shall be increased during the transitional previ­ous year only where the long-term capital gain arises as a result of two or more transfers of long-term capital assets and at least one of the said transfers is made during the initial period of twelve months comprised within the transitional previous year and the remaining transfer or transfers is or are made during the period beyond the said period of twelve months comprised within the transitional previous year :

 

Provided also that where more than one period in respect of different sources of income are included in the transitional previous year under the first proviso or the third proviso to sub-section (2) of section 3, then the amount or amounts speci­fied in column (2) of the said Table shall be increased to such extent and in such manner as the Board may, having regard to,—

 

(a)        Length of the period or periods included in the transitional previous year in respect of different sources of income;

 

(b)        Length of the transitional previous year; and

(c)        Other relevant factors;Prescribe in this behalf.]

 

43[7] [TABLE

Provision of the Act

Amount

(1)

(2)

 

Rs.

Section 10(3)

5,000

Section 12A(b)

25,000

Section 13(2)(g)

1,000

Section 16(i)

12,000

Section 16(i), proviso

1,000

Section 16(ii)

5,000 and 7,500

Section 23(1)(d)(ii)

3,600

Section 24(2), proviso

5,000

Section 33A(7), proviso

40,000, 35,000 and 30,000

Section 35A

1/14th of the amount of capital expenditure

Section 35AB

1/6th or 1/3rd of the amount paid as lump sum consideration.

Section 35D

1/10th of the amount of certain preliminary ex­penses.

Section 37(2A)

5,000 and 50,000

Section 40A(12)

10,000

Section 44AA(2)(i) and (ii)

25,000 and 2,50,000

Section 44AB

40,00,000 and 10,00,000

Section 48(2)

10,000

Section 80C(1)

6,000, 9,000 and 12,000

Section 80C(3)

1/10th of the actual capital sum assured

Section 80C(4)

60,000 and 40,000

Section 80C(7)(c)

10,000

Section 80CC(2)

20,000

Section 80CCA(1)

30,000

Section 80D(1)

3,000

Section 80L(1)

7,000 (occurring in two places)

Section 80L(1), 1st proviso

3,000

Section 80L(1), 2nd proviso

3,000

Section 80P(2)(c)

40,000, and 20,000

Section 80P(2)(f)

20,000

Section 80U

15,000

Section 139A(2)

50,000]

 

 

44[8] [Modification in section 6.

4.         Where the transitional previous year comprises a period of eighteen months or more, then sub-section (1) of section 6 shall be subject to the modification that references therein to the periods of one hundred and eighty-two days, ninety days and sixty days shall be construed as references, respectively, to the periods of two hundred and seventy-three days, one hundred and thirty-five days and ninety days.

 

Modification in respect of depreciation allowance.

5.         Where the assessee’s income under the head “Profits and gains of business or profession” or under the head “Income from other sources” for a period of thirteen months or more is included in his total income for the transitional previous year, the allow­ance under clause (ii) of sub-section (1) of section 32 or, as the case may be, under clause (ii) of section 57 in respect of depreciation on block of assets calculated in the manner stated in clause (ii) of sub-section (1) of section 32, shall be in­creased by multiplying it by a fraction of which the numerator is the number of months in the transitional previous year and the denominator is twelve :

 

Provided that where more than one period in respect of income under the head “Profits and gains of business or profession” or under the head “Income from other sources” are included in the transitional previous year under the first proviso or the third proviso to sub-section (2) of section 3, the allowance in respect of depreciation on block of assets shall be calculated separately for each such period included in the transitional previous year in the manner stated in clause (ii) of sub-section (1) of section 32 and increased, where necessary, by multiplying it by a frac­tion of which the numerator is the number of months in such period (after excluding the number of months relatable to the period in relation to which depreciation on block of assets has been allowed or is allowable in the previous year relevant to the assessment year commencing on the 1st day of April, 1988) and the denominator is twelve.]

 

Modification in respect of rate of tax.

6.         The tax chargeable on the total income of the transitional previous year shall be calculated at the average rate of tax on the amount obtained by multiplying such total income by a frac­tion of which the numerator is twelve and the denominator is the number of months in the transitional previous year, as if the resultant amount were the total income :

 

45[9] .[Provided that where more than one period in respect of dif­ferent sources of income are included in the transitional previ­ous year under the first proviso or the third proviso to sub-section (2) of section 3, then the tax shall be chargeable at the average rate of tax, calculated in accordance with the provisions of this rule, on the total income of the transitional previous year after excluding from such total income the income relatable to any such period or periods which has already been included or is includible in the total income of the previous year or previ­ous years relevant to the assessment year commencing on the 1st day of April, 1988.]

 

Power of Board to grant relief in case of hardship.

7.         The Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship, by general or special order, grant appropriate relief in any case or class of cases where the transitional previous year is longer than twelve months.

 

 [1]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original Tenth Schedule was inserted by the Finance Act, 1975, w.e.f. 1-4-1976 and was later on omitted by the Finance Act, 1985, w.e.f. 1-4-1986. Prior to its omission, the original Tenth Schedule stood as under :

“[See section 40A(8)]

List of institutions and bodies

1. The Industrial Finance Corporation of India, estab­lished under the Industrial Finance Corporation Act, 1948 (15 of 1948).

2. Financial Corporations or Joint Financial Corporations, established under the State Financial Corporations Act, 1951 (63 of 1951), and any institution deemed under section 46 of that Act to be a Financial Corporation established by the State Government for the State within the meaning of that Act.

3. The Shipping Development Fund Committee, constituted under section 15 of the Merchant Shipping Act, 1958 (44 of 1958).

4. The Unit Trust of India, established under the Unit Trust of India Act, 1963 (52 of 1963).

5. The Industrial Development Bank of India, established under the Industrial Development Bank of India Act, 1964 (18 of 1964).

6. State Electricity Boards, constituted under the Elec­tricity (Supply) Act, 1948 (54 of 1948).

7. The Life Insurance Corporation of India, established under the Life Insurance Corporation Act, 1956 (31 of 1956).

8. The Rehabilitation Industries Corporation of India Limited.

9. The State Trading Corporation of India Limited.

10. The Minerals and Metals Trading Corporation of India Limited.

11. The Rural Electrification Corporation Limited.

12. The Agricultural Finance Corporation Limited.

13. The Industrial Reconstruction Corporation of India Limited.

14. The Industrial Credit and Investment Corporation of India Limited.

15. The National Industrial Development Corporation of India Limited.

16. The State Industrial and Investment Corporation of Maharashtra Limited.”

 [2]See rule 125.

 [3]Substituted for “the proviso” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.

 [4]Substituted for “the said proviso,” ibid.

 [5]See rule 125.

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

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

 [8]Substituted, ibid.

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