[43 OF 1961]
[AS AMENDED BY FINANCE (No. 2) ACT, 1998]
An Act to consolidate and amend the law relating to income-tax and super-tax
Be it enacted by Parliament in the Twelfth
Year of the
CHAPTER
I
PRELIMINARY
Short title,
extent and commencement.
1[2] 1. 2[3] (1) This Act may be called the Income-tax Act, 1961.
(2) It extends to the whole of
(3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1962.
Definitions.
2. In this Act,
unless the context otherwise requires,—
3[4] [(1) “advance
tax” means the advance tax payable in accordance with the provisions of
Chapter XVII-C;]
4[5] [5[6] (1A)] 6[7] "agricultural income”7 [8] means8[9] —
9[10] (a) any rent or revenue derived from land which
is situated in
(b) any income derived from such land by—
(i) agriculture; or
(ii) the
performance by a cultivator or receiver of rent-in-kind of any process
ordinarily employed by a cultivator or receiver of rent-in-kind to render the
produce raised or received by him fit to be taken to market; or
(iii) the
sale by a cultivator or receiver of rent-in-kind of the produce raised or
received by him, in respect of which no process has been performed other than a
process of the nature described in paragraph (ii) of this sub-clause;
(c) any
income derived from any building owned and occupied by the receiver of the rent
or revenue of any such land, or occupied by the cultivator or the receiver of
rent-in-kind, of any land with respect to which, or the produce of which, any
process mentioned in paragraphs (ii) and (iii) of sub-clause (b)
is carried on:
(i) the building is on or in the immediate vicinity of the land,
and is a building which the receiver of the rent or revenue or the cultivator,
or the receiver of rent-in-kind, by reason of his connection with the land,
requires as a dwelling house, or as a store-house, or other out-building, and
(ii) the land is either assessed to land revenue in
(A) in
any area which is comprised within the jurisdiction of a municipality (whether
known as a municipality, municipal corporation, notified area committee, town
area committee, town committee or by any other name) or a cantonment board and
which has a population of not less than ten thousand according to the last
preceding census of which the relevant figures have been published before the
first day of the previous year ; or
10[12] (B) in any area within such distance, not
being more than eight kilometres, from the local
limits of any municipality or cantonment board referred to in item (A),
as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant
considerations, specify in this behalf by notification in the Official
Gazette.]
11[13] [Explanation.—For
the removal of doubts, it is hereby declared that revenue derived from land
shall not include and shall be deemed never to have included any income arising
from the transfer of any land referred to in item (a) or item (b)
of sub-clause (iii) of clause (14) of this section ;]
12[14] [13[15] [(1B)] “amalgamation”, in relation to companies,
means the merger of one or more companies with another company or the merger of
two or more companies to form one company (the company or companies which so
merge being referred to as the amalgamating company or companies and the
company with which they merge or which is formed as a result of the merger, as
the amalgamated company) in such a manner that—
(i) all the property of the amalgamating company or companies
immediately before the amalgamation becomes the property of the amalgamated company
by virtue of the amalgamation ;
(ii) all the liabilities of the amalgamating company or companies
immediately before the amalgamation become the liabilities of the amalgamated
company by virtue of the amalgamation ;
(iii) shareholders
holding not less than nine-tenths in value of the shares in the amalgamating
company or companies (other than shares already held therein immediately before
the amalgamation by, or by a nominee for, the amalgamated company or its
subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation,otherwise than as a result of the acquisition
of the property of one company by another company pursuant to the purchase of
such property by the other company or as a result of the distribution of such
property to the other company after the winding up of the first-mentioned
company ;]
(2) “annual
value”, in relation to any property, means its annual value as determined under
section 23 ;
(4) “Appellate
Tribunal” means the Appellate Tribunal constituted under section 252 ;
(5) “approved gratuity fund” means a gratuity fund which has been
and continues to be approved by the 15[17] [Chief Commissioner
or Commissioner] in accordance with the rules contained in Part C of the Fourth
Schedule ;
(6) “approved superannuation fund” means a superannuation fund or
any part of a superannuation fund which has been and continues to be approved
by the 15[18] [Chief
Commissioner or Commissioner] in accordance with the rules contained in Part B
of the Fourth Schedule ;
16[19] (7) “assessee”
means a person by whom 17[20] [any tax] or any
other sum of money is payable under this Act, and includes—
(a) every
person in respect of whom any proceeding under this Act has been taken for the assessment
of his income or of the income of any other person in respect of which he is
assessable, or of the loss sustained by him or by such other person, or of the
amount of refund due to him or to such other person ;
(b) every
person who is deemed to be an assessee under any
provision of this Act ;
(c) every
person who is deemed to be an assessee in default
under any provision of this Act ;
18[21] [(7A) “Assessing Officer” means the
Assistant Commissioner 18a[22] [or Deputy
Commissioner] 19[23] [or Assistant
Director] 18a[24] [or Deputy
Director] or the Income-tax Officer who is vested with the relevant
jurisdiction by virtue of directions or orders issued under sub-section (1) or
sub-section (2) of section 120 or any other provision of this Act, and the 19a[25] [Joint Commissioner
or Joint Director] who is directed under clause (b) of
sub-section (4) of that section to exercise or perform all or any of the powers
and functions conferred on, or assigned to, an Assessing Officer under this Act
;]
(8) “assessment”
includes reassessment ;
(9) “assessment year” means the period of twelve months
commencing on the 1st day of April every year ;
19b[26] (9A) “Assistant Commissioner” means a
person appointed to be an Assistant Commissioner of Income-tax 19c[27] [or a Deputy
Commissioner of Income-tax] under sub-section (1) of section 117 ;]
(10) “average rate of income-tax” means the rate arrived at by
dividing the amount of income-tax calculated on the total income, by such total
income ;
20[28] [(11) “block of assets” means a
group of assets falling within a class of assets, being buildings, machinery,
plant or furniture, in respect of which the same percentage of depreciation is
prescribed ;]
The
following clause (11) shall be substituted for the existing clause (11) by the
Finance (No. 2) Act, 1998, w.e.f. 1-4-1999 :
(11) “block
of assets” means a group of assets falling within a class of assets comprising—
(a) tangible
assets, being buildings, machinery, plant or furniture;
(b) intangible
assets, being know-how, patents, copyrights, trade-marks, licences,
franchises or any other business or commercial rights of similar nature,in respect of which the same percentage of
depreciation is prescribed;
(12) “Board”
means the 21[29] [Central Board of
Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of
1963)] ;
22[30] (13) “business” includes any trade,
commerce or manufacture or any adventure or concern in the nature of trade,
commerce or manufacture ;
22[31] (14) 23[32] “capital asset”
means property of any kind held by an assessee,
whether or not connected with his business or profession, but does not
include—
(i) any stock-in-trade, consumable stores or raw materials held
for the purposes of his business or profession ;
24[33] [(ii) personal effects, that is to say,
movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him.
Explanation.—For the purposes of this sub-clause, “jewellery”
includes—
(a) ornaments
made of gold, silver, platinum or any other precious metal or any alloy
containing one or more of such precious metals, whether or not containing any
precious or semi-precious stone, and whether or not worked or sewn into any
wearing apparel ;
(b) precious
or semi-precious stones, whether or not set in any furniture, utensil or other
article or worked or sewn into any wearing apparel ;]
25[34] (iii) agricultural land in
(a) in
any area which is comprised within the jurisdiction of a municipality (whether
known as a municipality, municipal corporation, notified area committee, town
area committee, town committee, or by any other name) or a cantonment board and
which has a population of not less than ten thousand according to the last
preceding census of which the relevant figures have been published before the
first day of the previous year ; or
26[35] (b) in any area within such distance, not being
more than eight kilometres, from the local limits of
any municipality or cantonment board referred to in item (a), as the
Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant
considerations, specify in this behalf by notification in the Official Gazette
;]
27[36] [(iv) 6½ per cent Gold Bonds, 1977,28[37] [or 7 per cent
Gold Bonds, 1980,]
29[38] [or National Defence Gold Bonds, 1980,] issued by the Central Government
;]
30[39] [(v) Special Bearer Bonds, 1991, issued by the
Central Government ;]
31[40] (15) 32[41] “charitable
purpose” includes relief of the poor, education, medical relief, and the
advancement of any other object of general public utility 33[42] [* * *] ;
34[43] [(15A) “Chief Commissioner” means a person
appointed to be a Chief Commissioner of Income-tax under sub-section (1) of
section 117 ;]
35[44] [36[45] [(15B)] “child”, in relation to an individual, includes
a step-child and an adopted child of that individual ;]
37[46] [(16) “Commissioner” means a person appointed
to be a Commissioner of Income-tax under sub-section (1) of section 117 38[47] [* * *] ;]
39[48] [(16A) “Commissioner (Appeals)” means a person
appointed to be a Commissioner of Income-tax (Appeals) under sub-section (1) of
section 117 ;]
(i) any Indian company, or
(ii) any
body corporate incorporated by or under the laws of a country outside
(iii) any
institution, association or body which is or was assessable or was assessed as
a company for any assessment year under the Indian Income-tax Act, 1922 (11 of
1922), or which is or was assessable or was assessed under this Act as a
company for any assessment year commencing on or before the 1st day of April,
1970, or
(iv) any
institution, association or body, whether incorporated or not and whether
Indian or non-Indian, which is declared by general or special order of the
Board to be a company :
Provided that such institution, association or body shall be deemed
to be a company only for such assessment year or assessment years (whether
commencing before the 1st day of April, 1971, or on or after that date) as may
be specified in the declaration ;]
(18) “company
in which the public are substantially interested”—a company is said to be a
company in which the public are substantially interested—
41[50] [(a) if it is a company owned by the
Government or the Reserve Bank of India or in which not less than forty per
cent of the shares are held (whether singly or taken together) by the
Government or the Reserve Bank of
42[51] [(aa) if it is
a company which is registered under section 25 of the Companies Act, 1956 (1 of
1956)43[52] ; or
(ab) if it
is a company having no share capital and if, having regard to its objects, the
nature and composition of its membership and other relevant considerations, it
is declared by order of the Board to be a company in which the public are substantially
interested :
Provided that such company shall be deemed to be a company in which
the public are substantially interested only for such assessment year or
assessment years (whether commencing before the 1st day of April, 1971, or on
or after that date) as may be specified in the declaration ; or]
44[53] [(ac) if it is a mutual benefit finance company,
that is to say, a company which carries on, as its principal business, the
business of acceptance of deposits from its members and which is declared by
the Central Government under section 620A45[54] of the Companies
Act, 1956 (1 of 1956), to be a Nidhi or Mutual
Benefit Society ; or]
46[55] [(ad) if it is a company, wherein 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 fifty per cent
of the voting power have been allotted unconditionally to, or acquired
unconditionally by, and were throughout the relevant previous year beneficially
held by, one or more co-operative societies ;]
47[56] [(b) if it is a company which is not a 48[57] private company
as defined in the Companies Act, 1956 (1 of 1956), and the conditions specified
either in item (A) or in item (B) are fulfilled, namely :—
(A) shares
in the company (not being shares entitled to a fixed rate of dividend whether
with or without a further right to participate in profits) were, as on the last
day of the relevant previous year, listed in a recognised
stock exchange in India in accordance with the Securities Contracts
(Regulation) Act, 1956 (42 of 1956), and any rules made thereunder
;
49[58] [(B) shares in the company (not being shares
entitled to a fixed rate of dividend whether with or without a further right to
participate in profits) carrying not less than fifty per cent of the voting
power have been allotted unconditionally to, or acquired unconditionally by,
and were throughout the relevant previous year beneficially held by—
(a) the
Government, or
(b) a
corporation established by a Central, State or Provincial Act, or
(c) any company
to which this clause applies or any subsidiary company of such company 50[59] [if the whole of
the share capital of such subsidiary company has been held by the parent
company or by its nominees throughout the previous year.]
Explanation.—In its application to an Indian company whose business
consists mainly in the construction of ships or in the manufacture or
processing of goods or in mining or in the generation or distribution of
electricity or any other form of power, item (B) shall have effect as if
for the words “not less than fifty per cent”, the words “not less than forty
per cent” had been substituted ;]]
(19) “Co-operative
society” means a co-operative society registered under the Co-operative
Societies Act, 1912 (2 of 1912), or under any other law for the time being in
force in any State for the registration of co-operative societies ;
51[60] [(19A) “Deputy Commissioner” means a person
appointed to be a Deputy Commissioner of Income-tax 51a[61] [* * *] under
sub-section (1) of section 117 ;
(19B) “Deputy
Commissioner (Appeals)” means a person appointed to be a Deputy Commissioner of
Income-tax (Appeals) 52[62] or an Additional
Commissioner of Income-tax (Appeals)] under sub-section (1) of section 117 ;]
53[63] [(19C) “Deputy Director” means a person
appointed to be a Deputy Director of Income-tax 53a[64] * * *]
under sub-section (1) of section 117 ;]
(20) 54[65] “director”,
“manager” and “managing agent”, in relation to a company, have the meanings
respectively assigned to them in the Companies Act, 1956 (1 of 1956) ;
55[66] (21) “Director General or Director”
means a person appointed to be a Director General of Income-tax or, as the case
may be, a Director of Income-tax, under sub-section (1) of section 117, and
includes a person appointed under that sub-section to be56[67] [an Additional
Director of Income-tax or] a 56a[68] [Joint]
Director of Income-tax or an Assistant Director 56b[69] [or Deputy
Director] of Income-tax ;]
57[70] (22) 58[71] “dividend”
includes—
(a) any
distribution by a company of accumulated profits, whether capitalised
or not, if such distribution entails the release by the company to its
shareholders of all or any part of the assets of the company ;
(b) any
distribution to its shareholders by a company of debentures, debenture-stock,
or deposit certificates in any form, whether with or without interest, and any
distribution to its preference shareholders of shares by way of bonus, to the
extent to which the company possesses accumulated profits, whether capitalised or not ;
(c) any
distribution made to the shareholders of a company on its liquidation, to the extent
to which the distribution is attributable to the accumulated profits of the
company immediately before its liquidation, whether capitalised
or not ;
(d) any
distribution to its shareholders by a company on the reduction of its capital,
to the extent to which the company possesses accumulated profits which arose
after the end of the previous year ending next before the 1st day of April,
1933, whether such accumulated profits have been capitalised
or not ;
(e) any
payment by a company, not being a company in which the public are substantially
interested, of any sum (whether as representing a part of the assets of the
company or otherwise)59[72] [made after the
31st day of May, 1987, by way of advance or loan to a shareholder, being a person
who is the beneficial owner of shares (not being shares entitled to a fixed
rate of dividend whether with or without a right to participate in profits)
holding not less than ten per cent of the voting power, or to any concern in
which such shareholder is a member or a partner and in which he has a
substantial interest (hereafter in this clause referred to as the said
concern)] or any payment by any such company on behalf, or for the individual
benefit, of any such shareholder, to the extent to which the company in either
case possesses accumulated profits ;but “dividend” does not include—
(i) a distribution made in accordance with sub-clause (c)
or sub-clause (d) in respect of any share issued for full cash
consideration, where the holder of the share is not entitled in the event of
liquidation to participate in the surplus assets ;
60[73] [(ia) a
distribution made in accordance with sub-clause (c) or sub-clause (d)
in so far as such distribution is attributable to the capitalised
profits of the company representing bonus shares allotted to its equity
shareholders after the 31st day of March, 1964, 61[74] [and before the
1st day of April, 1965] ;]
(ii) any
advance or loan made to a shareholder 62[75] [or the said
concern] by a company in the ordinary course of its business, where the
lending of money is a substantial part of the business of the company ;
(iii) any
dividend paid by a company which is set off by the company against the whole or
any part of any sum previously paid by it and treated as a dividend within the
meaning of sub-clause (e), to the extent to which it is so set off.
Explanation
1.—The expression “accumulated profits”,
wherever it occurs in this clause, shall not include capital gains arising
before the 1st day of April, 1946, or after the 31st day of March, 1948, and
before the 1st day of April, 1956.
Explanation
2.—The expression “accumulated profits” in
sub-clauses (a), (b), (d) and (e), shall include all profits of
the company up to the date of distribution or payment referred to in those
sub-clauses, and in sub-clause (c) shall include all profits of the
company up to the date of liquidation, 63[76] [but shall not,
where the liquidation is consequent on the compulsory acquisition of its
undertaking by the Government or a corporation owned or controlled by the
Government under any law for the time being in force, include any profits of
the company prior to three successive previous years immediately preceding the
previous year in which such acquisition took place].
64[77] [Explanation
3.—For the purposes of this clause,—
(a) “concern”
means a Hindu undivided family, or a firm or an association of persons or a
body of individuals or a company ;
(b) a
person shall be deemed to have a substantial interest in a concern, other than
a company, if he is, at any time during the previous year, beneficially
entitled to not less than twenty per cent of the income of such concern ;]
65[78] [(22A) “domestic company” means an Indian
company, or any other company which, in respect of its income liable to tax
under this Act, has made the prescribed arrangements for the declaration and
payment, within India, of the dividends (including dividends on preference
shares) payable out of such income ;]
66[79] [67[80] [(22B)] “fair market value”, in relation to a capital
asset, means—
(i) the price that the capital asset would ordinarily fetch on
sale in the open market on the relevant date ; and
(ii) where
the price referred to in sub-clause (i) is not
ascertainable, such price as may be determined in accordance with the rules
made under this Act ;]
(23) 68[81] “firm”, “partner”
and “partnership” have the meanings respectively assigned to them in the Indian
Partnership Act, 1932 (9 of 1932) ; but the expression “partner” shall also
include any person who, being a minor, has been admitted to the benefits of
partnership ;
69[82] [(23A) “foreign company” means a company which
is not a domestic company ;]
70[83] (24) “income” includes—
(i) profits and gains ;
(ii) dividend
;
71[84] [(iia) voluntary
contributions received by a trust created wholly or partly for charitable or
religious purposes or by an institution established wholly or partly for such
purposes 72[85] [or by an
association or institution referred to in clause (21) or clause (23),
or by a fund or trust or institution referred to in sub-clause (iv) or
sub-clause (v) of clause (23C), of section 10].
Explanation.—For the purposes of this sub-clause, “trust” includes any
other legal obligation ;]
73[86] (iii) the value of any perquisite or
profit in lieu of salary taxable under clauses (2) and (3) of
section 17 ;
74[87] [(iiia) 75[88] any special
allowance or benefit, other than perquisite included under sub-clause (iii),
specifically granted to the assessee to meet expenses
wholly, necessarily and exclusively for the performance of the duties of an
office or employment of profit ;
(iiib) 75[89] any allowance
granted to the assessee either to meet his personal
expenses at the place where the duties of his office or employment of profit
are ordinarily performed by him or at a place where he ordinarily resides or to
compensate him for the increased cost of living ;]
76[90] (iv) the value of any benefit or perquisite,
whether convertible into money or not, obtained from a company either by a
director or by a person who has a substantial interest in the company, or by a
relative of the director or such person, and any sum paid by any such company
in respect of any obligation which, but for such payment, would have been
payable by the director or other person aforesaid ;
77[91] [(iva) the
value of any benefit or perquisite, whether convertible into money or not,
obtained by any representative assessee mentioned in
clause (iii) or clause (iv) of sub-section (1) of section 160 or
by any person on whose behalf or for whose benefit any income is receivable by
the representative assessee (such person being
hereafter in this sub-clause referred to as the “beneficiary”) and any sum paid
by the representative assessee in respect of any
obligation which, but for such payment, would have been payable by the
beneficiary ;]
(v) any
sum chargeable to income-tax under clauses (ii) and (iii) of
section 28 or section 41 or section 59 ;
78[92] [(va) any
sum chargeable to income-tax under clause (iiia)
of section 28 ;]
79[93] [(vb) any
sum chargeable to income-tax under clause (iiib)
of section 28 ;]
80[94] [(vc) any
sum chargeable to income-tax under clause (iiic)
of section 28 ;]
81[95] [(vd)] the
value of any benefit or perquisite taxable under clause (iv) of section
28 ;
82[96] [(ve) any
sum chargeable to income-tax under clause (v) of section 28 ;]
(vi) any
capital gains chargeable under section 45 ;
(vii) the
profits and gains of any business of insurance carried on by a mutual insurance
company or by a co-operative society, computed in accordance with section 44 or
any surplus taken to be such profits and gains by virtue of provisions contained
in the First Schedule ;
83[97] (viii) [Omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Original sub-clause (viii) was
inserted by the Finance Act, 1964, w.e.f. 1-4-1964.]
84[98] [(ix) any winnings from lotteries, crossword
puzzles, races including horse races, card games and other games of any sort or
from gambling or betting of any form or nature whatsoever ;]
85[99] [(x) any sum received by the assessee from his employees as contributions to any
provident fund or superannuation fund or any fund set up under the provisions
of the Employees’ State Insurance Act, 1948 (34 of 1948), or any other fund for
the welfare of such employees ;]
86[100] [(xi) any
sum received under a Keyman insurance policy
including the sum allocated by way of bonus on such policy.
Explanation.—For the purposes of this clause, the expression “Keyman insurance policy” shall have the meaning assigned to
it in the Explanation to clause (10D) of section 10 ;]
(25) “Income-tax
Officer” means a person appointed to be an Income-tax Officer under 87[101] [* * *] section 117 ;
88[102] [(25A) “
(a) as
respects any period, for the purposes of section 6 ; and
(b) as respects
any period included in the previous year, for the purposes of making any
assessment for the assessment year commencing on the 1st day of April, 1963, or
for any subsequent year ;]
(26) “Indian
company” means a company formed and registered under the Companies Act, 1956 (1
of 1956), and includes—
(i) a company formed and registered under any law relating to
companies formerly in force in any part of India (other than the State of Jammu
and Kashmir 89[103] [and the Union territories specified in sub-clause (iii)
of this clause]) ;
90[104] [(ia) a corporation established by or under a
Central, State or Provincial Act ;
(ib) any institution, association or body
which is declared by the Board to be a company under clause (17) ;]
(ii) in the
case of the State of
91[105] [(iii) in
the case of any of the Union territories of Dadra and
Nagar Haveli, Goa†, Daman and Diu, and
Provided that the 92[106] [egistered or, as the case may
be, principal office of the company, corporation, institution, association or
body] in all cases is in
(28) “Inspector
of Income-tax” means a person appointed to be an Inspector of Income-tax under
sub-section 94[108] [(1)] of section 117;
95[109] [96[110] (28A) “interest”
means interest payable in any manner in respect of any moneys borrowed or debt
incurred (including a deposit, claim or other similar right or obligation) and
includes any service fee or other charge in respect of the moneys borrowed or
debt incurred or in respect of any credit facility which has not been utilised ;]
97[111] [(28B) “interest
on securities” means,—
(i) Interest on any security of the Central Government or a
State Government;
(ii) interest
on debentures or other securities for money issued by or on behalf of a local
authority or a company or a corporation established by a Central, State or
Provincial Act ;]
97a[112] [(28C) “Joint
Commissioner” means a person appointed to be a Joint Commissioner of Income-tax
or an Additional Commissioner of Income-tax under sub-section (1) of section
117;
(28D) “Joint
Director” means a person appointed to be a Joint Director of Income-tax or an
Additional Director of Income-tax under sub-section (1) of section 117;]
(29) 98[113] “legal representative” has the meaning assigned to it in
clause (11) of section 2 of the Code of Civil Procedure, 1908 (5 of
1908) ;
99[114] [(29A) “long-term
capital asset” means a capital asset which is not a short-term capital asset ;
(29B) “long-term
capital gain” means capital gain arising from the transfer of a long-term
capital asset ;]
1[115] [(29C) “maximum
marginal rate” means the rate of income-tax (including surcharge on income-tax,
if any) applicable in relation to the highest slab of income in the case of an
individual 2[116] [, association of persons or, as the case may be, body of
individuals] as specified in the Finance Act of the relevant year ;]
(30) “Non-resident”
means a person who is not a “resident”, and for the purposes of sections 92, 933[117] [* * *] and 168, includes a person who is not ordinarily
resident within the meaning of sub-section (6)*of section 6 ;
4[118] (31) “person”
includes—
(i) an individual,
(ii) a
Hindu undivided family,
(iii) a
company,
(iv) a firm,
(v) an
association of persons or a body of individuals, whether incorporated or not,
(vi) a
local authority, and
(vii) every
artificial juridical person, not falling within any of the preceding
sub-clauses ;
(32) “person
who has a substantial interest in the company”, in relation to a company, means
a person who is the beneficial owner of shares, not being shares entitled to a fixed
rate of dividend whether with or without a right to participate in profits,
carrying not less than twenty per cent of the voting power ;
(33) “Prescribed”
means prescribed by rules made under this Act;
‘(34) “Previous
year” means the previous year as defined in section 3 ;
5[119] (35) “principal
officer”, used with reference to a local authority or a company or any other
public body or any association of persons or any body of individuals, means—
(a) The
secretary, treasurer, manager or agent of the authority, company, association
or body, or
(b) any
person connected with the management or administration of the local authority,
company, association or body upon whom the 6[120] [Assessing] Officer has served a notice of his intention of
treating him as the principal officer thereof ;
7[121] (36) “profession”
includes vocation ;
8[122] [(36A) “public
sector company” means any corporation established by or under any Central,
State or Provincial Act or a Government company9[123] as defined in section 617 of the Companies Act, 1956 (1 of
1956) ;]
(37) 10[124] “public servant” has the same meaning as in section 21 of
the Indian Penal Code (45 of 1860) ;
11[125] [(37A) “rate
or rates in force” or “rates in force”, in relation to an assessment year or
financial year, mean—
(i) for the purposes of calculating income-tax under the first
proviso to sub-section (5) of section 132, or computing the income-tax
chargeable under sub-section (4) of section 172 or sub-section (2) of section
174 or section 175 or sub-section (2) of section 176 or deducting income-tax
under section 192 from income chargeable under the head “Salaries” 12[126] [* * *] or 13[127] [computation of the “advance tax” payable under Chapter
XVII-C in a case not falling under 14[128] [section 115A or section 115B 15[129] [or section 115BB or section 115E] or] section 16415[130] [or section 164A16[131] [* * *]] 17[132] [or section 167B], the rate or rates of income-tax
specified in this behalf in the Finance Act of the relevant year, and for the
purposes of computation of the “advance tax” payable under Chapter XVII-C18[133] [in a case falling under section 115A or section 115B19[134] [or section 115BB or section 115E] or section 16419[135] [or section 164A20[136] [* * *]]21[137] [or section 167B], the rate or rates specified in section
115A or 22[138] [section 115B or section 115BB or section 115E or section
164 or section 164A20[139] [* * *]21[140] [or section 167B], as the case may be,] or the rate or
rates of income-tax specified in this behalf in the Finance Act of the relevant
year, whichever is applicable ;]
(ii) For
the purposes of deduction of tax under sections 193, 194, 194A23[141] [, 194B]24[142] [, 194BB]25[143] [and 194D], the rate or rates of income-tax specified in
this behalf in the Finance Act of the relevant year ;]
26[144] [(iii) for
the purposes of deduction of tax under section 195, the rate or rates of
income-tax specified in this behalf in the Finance Act of the relevant year or
the rate or rates of income-tax specified in an agreement entered into by the
Central Government under section 90, whichever is applicable by virtue of the
provisions of section 90 ;]
27[145] (38) “recognized
provident fund” means a provident fund which has been and continues to be recognised by the 28[146] [Chief Commissioner or Commissioner] in accordance with the
rules contained in Part A of the Fourth Schedule, and includes a provident fund
established under a scheme framed under the Employees’ Provident Funds Act,
1952 (19 of 1952) ;
(39) 29[147] [Omitted by the Finance Act, 1992, w.e.f.
1-4-1993.]
(40) “regular
assessment” means the assessment made under 30[148] [sub-section (3) of] section 143 or section 144 ;
(41) “Relative”,
in relation to an individual, means the husband, wife, brother or sister or any
lineal ascendant or descendant of that individual ;
(42) “Resident”
means a person who is resident in
31[149] [32[150] (42A) 33[151] [“short-term capital asset” means a capital asset held by
an assessee for not more than34[152] [thirty-six] months immediately preceding the date of its
transfer :]
35[153] [Provided that in the case of a share held in a
company 36[154] [or any other security listed in a recognised
stock exchange in India or a unit of the Unit Trust of India established under
the Unit Trust of India Act, 1963 (52 of 1963) or a unit of a Mutual Fund
specified under clause (23D) of section 10], the provisions of this
clause shall have effect as if for the words “thirty-six months”, the words
“twelve months” had been substituted.]
(i) In determining the period for which any capital asset is held
by the assessee—
(a) in
the case of a share held in a company in liquidation, there shall be excluded
the period subsequent to the date on which the company goes into liquidation ;
(b) in
the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in 38[156] [sub-section (1)] of section 49, there shall be included
the period for which the asset was held by the previous owner referred to in
the said section ;
39[157] [(c) in
the case of a capital asset being a share or shares in an Indian company, which
becomes the property of the assessee in consideration
of a transfer referred to in clause (vii) of section 47, there shall be
included the period for which the share or shares in the amalgamating company
were held by the assessee ;]
40[158] [(d) in
the case of a capital asset, being a share or any other security (hereafter in
this clause referred to as the financial asset) subscribed to by the assessee on the basis of his right to subscribe to such financial
asset or subscribed to by the person in whose favour
the assessee has renounced his right to subscribe to
such financial asset, the period shall be reckoned from the date of allotment
of such financial asset ;
(e) in
the case of a capital asset, being the right to subscribe to any financial
asset, which is renounced in favour of any other
person, the period shall be reckoned from the date of the offer of such right
by the company or institution, as the case may be, making such offer ;]
41[159] [(f) in the
case of a capital asset, being a financial asset, allotted without any payment
and on the basis of holding of any other financial asset, the period shall be
reckoned from the date of the allotment of such financial asset ;]
(ii) In
respect of capital assets other than those mentioned in clause (i), the period for which any capital asset is held
by the assessee shall be determined subject to any
rules which the Board may make in this behalf ;]
40[160] [Explanation 2.—For the purposes of this clause, the
expression “security”42[161] shall have the meaning assigned to it in clause (h)
of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;]
43[162] [(42B) “short-term
capital gain” means capital gain arising from the transfer of a short-term
capital asset ;]
45[164] [(43) “tax”
in relation to the assessment year commencing on the 1st day of April, 1965,
and any subsequent assessment year means income-tax chargeable under the
provisions of this Act, and in relation to any other assessment year income-tax
and super-tax chargeable under the provisions of this Act prior to the
aforesaid date ;]
46[165] [(43A) “tax
credit certificate” means a tax credit certificate granted to any person in accordance
with the provisions of Chapter XXII-B47[166] and any scheme made thereunder ;]
49[168] [(44) “Tax
Recovery Officer” means any Income-tax Officer who may be authorised
by the Chief Commissioner or Commissioner, by general or special order in
writing, to exercise the powers of a Tax Recovery Officer ;]
(45) “total
income” means the total amount of income referred to in section 5, computed in
the manner laid down in this Act ;
51[170] (47) 52[171] [“transfer”, in relation to a capital asset, includes,—
(i) the sale, exchange or relinquishment of the asset ; or
(ii) the
extinguishment of any rights therein ; or
(iii) the
compulsory acquisition thereof under any law ; or
(iv) in a
case where the asset is converted by the owner thereof into, or is treated by
him as, stock-in-trade of a business carried on by him, such conversion or
treatment ;]53[172] [or]
53[173] [(v) any
transaction involving the allowing of the possession of any immovable property
to be taken or retained in part performance of a contract of the nature
referred to in section 53A54 [174] of the Transfer of Property Act, 1882 (4 of 1882) ; or
(vi) any
transaction (whether by way of becoming a member of, or acquiring shares in, a
co-operative society, company or other association of persons or by way of any
agreement or any arrangement or in any other manner whatsoever) which has the
effect of transferring, or enabling the enjoyment of, any immovable property.
Explanation.—For the purposes of sub-clauses (v) and (vi),
“immovable property” shall have the same meaning as in clause (d) of
section 269UA.]
(48) 55[175] [Omitted by the Finance Act, 1992, w.e.f.
1-4-1993.]
56[176] [57[177] “Previous year” defined.
3. (1) Save as otherwise provided in this section, “previous year” for the purposes of this Act, means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.
(2) “Previous year”, in relation to the assessment year, commencing on the 1st day of April, 1989, means the period which begins with the date immediately following the last day of the previous year relevant to the assessment year commencing on the 1st day of April, 1988 and ends on the 31st day of March, 1989 :
58[178] Provided that where the assessee has adopted more than one period as the “previous year” in relation to the assessment year commencing on the 1st day of April, 1988 for different sources of his income, the previous year in relation to the assessment year commencing on the 1st day of April, 1989 shall be reckoned separately in the manner aforesaid in respect of each such source of income, and the longer or the longest of the periods so reckoned shall be the previous year for the said assessment year :
59[179] [Provided further that in the case of a business or profession newly set up, or a source of income newly coming into existence on or after the 1st day of April, 1987 but before the 1st day of April, 1988 and where the accounts in relation to such business or profession or source of income have not been made up to the 31st day of March, 1988, the “previous year” in relation to the assessment year commencing on the 1st day of April, 1989, shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending on the 31st day of March, 1989 :
60[180] Provided also that where the assessee has adopted one or more periods as the “previous year” in relation to the assessment year commencing on the 1st day of April, 1988, for any source or sources of his income, in addition to the business or profession or source of income referred to in the second proviso, the previous year in relation to the assessment year commencing on the 1st day of April, 1989, shall be reckoned separately in the manner aforesaid in respect of each such source of income, and the longer or the longest of the periods so reckoned shall be the previous year in relation to the said assessment year.]
(3) Where the previous year in relation to the assessment year commencing on the 1st day of April, 1989, referred to in sub-section (2) exceeds a period of twelve months, the provisions of this Act shall apply subject to the modifications specified in the rules in the Tenth Schedule.]
[1]Amendments made by the Income-tax (Amendment) Act, 1998 and the Finance (No. 2) Act, 1998, notwithstanding the dates from which they come into effect have been printed in italics enclosed with bold square brackets. Amendments made by the Income-tax (Amendment) Act, 1996, the Income-tax (Amendment) Act, 1997, and the Finance Act, 1997, coming into force from April 1, 1998 have also been printed in italics but enclosed within medium square brackets.
[2]For applicability of the Act to State of Sikkim, see section 26 of the Finance Act, 1989.
For extension of Act to continental shelf of
[3]For effective date for the applicability of the Act in the State of Sikkim, see Notification No. SO 148(E), dated 23-2-1989. For details, see Income-tax Act.
[4]. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[5]Renumbered as clause (1A) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[6]For relevant case laws, see Income-tax Act.
[7]See rules 7 and 8 for manner of computation of income which is partially agricultural and partially from business. See also Appendix Two for an analysis of rules 7 and 8.
[8]The Finance Act, 1973 introduced for the first time a scheme of partially integrated taxation of non-agricultural income with incomes derived from agriculture for the purposes of determining the rate of income-tax that will apply to certain non-corporate assessees. The scheme is since continued by the Annual Finance Acts. The provisions applicable for the assessment year 1998-99 are contained in section 2(2)/2(10)(c) and Part IV of the First Schedule to the Finance (No. 2) Act, 1998
[9]See also Instruction No. 745 [F. No. 228/28/74-IT(A-II)], dated 30-8-1974 and Circular No. 310, dated 29-7-1981. For details, see Income-tax Act.
[10]Substituted by the Taxation Laws (Amendment) Act, 1970, w.r.e.f. 1-4-1962.
[11]Substituted by the Taxation Laws (Amendment) Act, 1970, w.r.e.f. 1-4-1962.
[12]For specified urban areas
[13]Inserted by the Finance Act, 1989
[14]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[15]Renumbered as clause (1B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[16]Clause (3) omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. Prior to its omission, clause (3) stood as under :
‘(3) “Appellate Assistant Commissioner” means a person appointed to be an Appellate Assistant Commissioner of Income-tax under sub-section (1) of section 117.’
[17]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[18]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[19]For relevant case laws, see Income-tax Act.
[20]Substituted for “income-tax or super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[21]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[22]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[23]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
[24]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[25]Substituted for “Deputy Commissioner or Deputy Director” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Earlier “or Deputy Director” was inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
[26]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[27]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[28]Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Original clause was earlier omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[29]Substituted for “Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 (4 of 1924)” by the Central Boards of Revenue Act, 1963, w.e.f. 1-1-1964.
[30]For relevant case laws, see Income-tax Act.
[31]For relevant case laws, see Income-tax Act.
[32]See also Letter F.No. 34/11/65-IT(A-I), dated 15-1-1966. For details, see Income-tax Act.
[33]Substituted by the Finance Act, 1972, w.e.f. 1-4-1973.
[34]Substituted
for “(iii) agricultural land in
[35]For specified urban areas,
[36]Inserted by the Taxation Laws (Amendment) Act, 1962, w.e.f. 13-12-1962.
[37]Inserted by the Finance (No. 2) Act, 1965, w.e.f. 1-4-1965.
[38]. Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965.
[39]Inserted by the Special Bearer Bonds (Immunities and Exemptions) Act, 1981, w.e.f. 12-1-1981.
[40]See also Circular No. 395, dated 24-9-1984. For details, see Income-tax Act.
[41]For relevant case laws, see Income-tax Act.
[42]“not involving the carrying on of any activity for profit” omitted by the Finance Act, 1983, w.e.f. 1-4-1984.
[43]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[44]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[45]Renumbered by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[46]Substituted by the Finance Act, 1970, w.e.f. 1-4-1970.
[47]“, and includes a person appointed to be an Additional Commissioner of Income-tax under that sub-section” omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[48]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 10-7-1978.
[49]Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[50]Substituted by the Finance Act, 1964, w.e.f. 1-4-1964.
[51]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[52]For text of section 25 of the Companies Act, 1956, see Appendix One.
[53]Inserted by the Finance Act, 1985, with retrospective effect from 1-4-1984.
[54]For text of section 620A of the Companies Act, 1956, and notified Nidhi thereunder, see Appendix One.
[55]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993.
[56]Substituted by the Finance Act, 1969, w.e.f. 1-4-1970. Earlier, clause (b) was amended first by the Finance Act, 1965, w.e.f. 1-4-1965 and then by the Finance Act, 1966, w.e.f. 1-4-1966.
[57]Clause (iii) of section 3(1) of the Companies Act, 1956, defines “private company”. For text of section 3, see Appendix One.
[58]Substituted by the Finance Act, 1983, w.e.f. 2-4-1983.
[59]Substituted for “where such subsidiary company fulfils the conditions laid down in clause (b) of section 108” by the Finance Act, 1987, w.e.f. 1-4-1988.
[60]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[61]Words “or an Additional Commissioner of Income-tax” omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Earlier the quoted words were inserted by the Finance Act, 1994, w.e.f. 1-6-1994.
[62]Inserted by the Finance Act, 1994, w.e.f. 1-6-1994.
[63]Inserted, ibid.
[64]Words “or an Additional Director of Income-tax” omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[65]Clauses (13), (24) and (25) of section 2 of the Companies Act, 1956, define expressions “director”, “manager” and “managing agent”, respectively. For text of provisions, see Appendix One.
[66]Substituted for the following clause (21) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 :
‘(21) “Director of Inspection” means a person appointed to be a Director of Inspection under sub-section (1) of section 117, and includes a person appointed to be an Additional Director of Inspection, a Deputy Director of Inspection or an Assistant Director of Inspection ;’
[67]Inserted by the Finance Act, 1994, w.e.f. 1-6-1994.
[68]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[69]Inserted, ibid.
[70]See also Circular No. 5-P (para 56), dated 9-10-1967. For details, see Income-tax Act.
[71]For relevant case laws, see Income-tax Act.
[72]Substituted for “by way of advance or loan to a shareholder, being a person who has a substantial interest in the company,” by the Finance Act, 1987, w.e.f. 1-4-1988.
[73]Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.
[74]Inserted by the Finance Act, 1966, w.e.f. 1-4-1966.
[75]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[76]Inserted by the Direct Taxes (Amendment) Act, 1964, w.r.e.f. 1-4-1962.
[77]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[78]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[79]Inserted by the Finance Act, 1964, w.e.f. 1-4-1964.
[80]Renumbered as clause (22B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[81]Section 4 of the Indian Partnership Act, 1932, defines expressions “firm”, “partner” and “partnership” as follows :
‘ “Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Persons who have entered into partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”.’
[82]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[83]For relevant case laws, see Income-tax Act.
[84]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[85]Substituted for “or by a trust or institution of national importance referred to in clause (d) of sub-section (1) of section 80F” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the said expression was substituted for “, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution” by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[86]See also Board’s Letter to Indian Merchants Chamber published in Chamber’s Annual Report, 1963,. For details, see Income-tax Act.
[87]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f. 1-4-1962.
[88]See also Circular No. 701, dated 23-3-1995. For details, see Income-tax Act.
[89]See also Circular No. 701, dated 23-3-1995. For details, see Income-tax Act.
[90]See also Board’s Letter to Indian Merchants Chamber published in Chamber’s Annual Report, 1963,. For details, see Income-tax Act.
[91]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980.
[92]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1962.
[93]Inserted, ibid., w.r.e.f. 1-4-1967.
[94]Inserted, ibid., w.r.e.f. 1-4-1972.
[95]Relettered by the Finance Act, 1990, w.r.e.f. 1-4-1962. Earlier existing clause (va) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.
[96]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993.
[97]Prior to its omission, sub-clause (viii) read as under :
“(viii) any annuity due, or commuted value of any annuity paid, under the provisions of section 280D ;”
[98]Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
[99]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[100]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
[101]“sub-section (1) of” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f. 1-4-1988. Earlier, that expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[102]Inserted
by the Taxation Laws (Extension to
[103]Inserted, ibid.
[104]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[105]Inserted
by the Taxation Laws (Extension to
[106]Substituted for “registered office of the company” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[107]. Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. Omitted clause (27) stood as under:
‘(27) “Inspecting Assistant Commissioner” means a person appointed to be an Inspecting Assistant Commissioner of Income-tax under sub-section (1) of section 117;’
[108]Substituted for “(2)” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[109]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[110]See also Letter F. No. 164/18/77-IT(A-I), dated 13-7-1978. For details, see Income-tax Act.
[111]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[112]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[113]Clause (11) of section 2 of the Code of Civil Procedure defines “legal representative” as follows :
‘(11) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued ;’
[114]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[115]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[116]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[117]“, 113” omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[118]For relevant case laws, see Income-tax Act.
[119]For relevant case laws, see Income-tax Act.
[120]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[121]For relevant case laws, see Income-tax Act.
[122]Inserted by the Finance Act, 1987, w.e.f. 1-4-1987.
[123]Section 617 of the Companies Act, 1956, defines “Government company” as follows :
‘617. Definition of “Government company”.—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 any 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.’
[124]Section 21 of the Indian Penal Code defines “public servant”. For text of section 21, see Appendix One.
[125]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[126]“or sub-section (9) of section 80E from any payment referred to therein” omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Originally, the said expression was inserted by the Finance Act, 1968, w.e.f. 1-4-1968.
[127]Substituted for ‘computation of the “advance tax” payable under Chapter XVII-C, the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year’ by the Finance Act, 1970, w.e.f. 1-4-1971.
[128]Inserted by the Finance Act, 1976, w.e.f. 1-6-1976.
[129]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[130]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[131]“or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[132]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[133]Substituted for “in a case falling under section 164, the rate specified in that section” by the Finance Act, 1976, w.e.f. 1-6-1976.
[134]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[135]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[136]“or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[137]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[138]Substituted for “section 115B or, as the case may be, section 164” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[139]“or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[140]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[141]Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
[142]Inserted by the Finance Act, 1978, w.e.f. 1-4-1978.
[143]Substituted for “, 194D and 195” by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991.
[144]Substituted by the Finance Act, 1992, w.e.f. 1-6-1992. Prior to substitution, sub-clause (iii), as inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991, read as under :
“(iii) for the purposes of deduction of tax under section 195, the rate or rates of income-tax specified in section 115A or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, whichever is applicable ;”
[145]See also Circular No. 153, dated 30-11-1974. For details, see Income-tax Act.
[146]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[147]Prior to omission, clause (39) was substituted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier clause (39) was omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and was later reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Prior to omission, it read as under :
‘(39) “registered firm” means a firm registered under the provisions of clause (a) of sub-section (1) of section 185 or deemed to be registered under the provisions of sub-section (6) of that section or under those provisions read with sub-section (7) of section 184 ;’
[148]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1989.
[149]Inserted by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962.
[150]See also Circular No. 415, dated 14-3-1985 and Circular No. 704, dated 28-4-1995. For details and relevant case laws, see Income-tax Act.
[151]Substituted for the portion beginning with “short-term capital asset” and ending with “preceding the date of its transfer ;” by the Finance Act, 1973, w.e.f. 1-4-1974. Earlier clause (42A) was first amended by the Finance Act, 1966, w.e.f. 1-4-1966 and later by the Finance Act, 1968, w.e.f. 1-4-1969.
[152]Substituted for “sixty” by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[153]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[154]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[155]Existing Explanation renumbered as Explanation 1, ibid.
[156]Substituted for “clauses (i) to (iii)” by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[157]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[158]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[159]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
[160]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[161]Clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956, defines “securities” as follows :
‘(h) “securities” include—
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate ;
(ii) Government securities ;
(iia) such other instruments as may be declared by the Central Government to be securities ; and
(iii) rights or interest in securities ;’
[162]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[163]Omitted by the Finance Act, 1990, w.e.f. 1-4-1990. Prior to omission, clause (42C), as inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1990, read as under :
‘(42C) “security” means a Government security as defined in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944) ;’
[164]Substituted by the Finance Act, 1965, w.e.f. 1-4-1965.
[165]Inserted, ibid.
[166]Chapter XXII-B has been omitted with effect from 1-4-1990.
[167]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original clause (43B) was inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-1-1972 and read as under :
‘(43B) “Tax Recovery Commissioner” means a Commissioner or an Assistant Commissioner of Income-tax who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Commissioner ;’
[168]Substituted by the Direct Tax Laws (Amendment) Act, 1987 [as amended by the Direct Tax Laws (Amendment) Act, 1989], w.r.e.f. 1-4-1988. Prior to its substitution, clause (44), as substituted by the Finance Act, 1963, w.r.e.f. 1-4-1962, stood as under :
‘(44) “Tax Recovery Officer” means—
(i) a Collector or an Additional Collector ;
(ii) any such officer empowered to effect recovery of arrears of land revenue or other public demand under any law relating to land revenue or other public demand for the time being in force in the State as may be authorised by the State Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Officer ;
(iii) any Gazetted Officer of the Central or a State Government who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Officer ;’
[169]Omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[170]For relevant case laws, see Income-tax Act. See also Circular No. 751, dated 10-2-1997 on Stock Lending Scheme.
[171]Substituted for the following by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1-4-1985 :
‘ “transfer”, in relation to a capital asset, includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law ;’
[172]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[173]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[174]For text of section 53A of the Transfer of Property Act, 1882, see Appendix One.
[175]Prior to omission clause (48), as reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989 which was earlier omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date, read as under :
‘(48) “unregistered firm” means a firm which is not a registered firm.’
[176]Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its substitution, section 3 as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 stood as under:
‘3. “Previous year” defined.—(1) For the purposes of this Act, “previous year” means—
(a) the financial year immediately preceding the assessment year ; or
(b) if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee, the twelve months ending on such date ; or
(c) in the case of any person or business or class of persons or business not falling within clause (a) or clause (b), such period as may be determined by the Board or by any authority authorised by the Board in this behalf ; or
(d) in the case of a business or profession newly set up in the said financial year, the period beginning with the date of the setting up of the business or profession and—
(i) ending with the said financial year, or
(ii) if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee, ending on that date, or
(iii) ending with the period, if any, determined under clause (c),
as the case may be ; or
(e) in the case of a business or profession newly set up in the twelve months immediately preceding the said financial year—
(i) if the accounts of the assessee have been made up to a date within the said financial year and the period from the date of the setting up of the business or profession to such date does not exceed twelve months, then, at the option of the assessee, such period, or
(ii) if any period has been determined under clause (c), then the period beginning with the date of the setting up of the business or profession and ending with that period,
as the case may be ; or
(f) where the assessee is a partner in a firm and the firm has been assessed as such, then, in respect of the assessee’s share in the income of the firm, the period determined as the previous year for the assessment of the income of the firm ; or
(g) in respect of profits and gains from life insurance business, the year immediately preceding the assessment year for which annual accounts are required to be prepared under the Insurance Act, 1938 (4 of 1938), or under that Act read with section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956).
(2) Where an assessee has newly set up a business or profession in the said financial year and his accounts are made up to a date in the assessment year in respect of a period not exceeding twelve months from the date of such setting up, then, notwithstanding anything contained in sub-clause (iii) of clause (d) of sub-section (1), the assessee shall, in respect of that business or profession, at his option, be deemed to have no previous year for the said assessment year under that clause and such option shall, in relation to the immediately succeeding assessment year, have effect as an option exercised under sub-clause (i) of clause (e) of sub-section (1).
(3) Subject to the other provisions of this section, an assessee may have different previous years in respect of separate sources of his income.
(4) Where in respect of a particular source of income or in respect of a business or profession newly set up, an assessee has once exercised the option under clause (b) or sub-clause (ii) of clause (d) or sub-clause (i) of clause (e) of sub-section (1) or has once been assessed, then, he shall not, in respect of that source, or, as the case may be, business or profession, be entitled to vary the meaning of the expression “previous year” as then applicable to him, except with the consent of the Assessing Officer and upon such conditions as the Assessing Officer may think fit to impose.’
[177]See also PIB Press Release, dated 10-6-1988 and Instruction F.No. 165/4/88-IT(A-I), dated 4-2-1988. For details, see Income-tax Act.
[178]See rule 125 for rules for calculation of deductions/allowance for the transitional previous year relating to assessment year 1989-90.
[179]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[180]See rule 125.