DEDUCTIONS TO BE MADE IN COMPUTING TOTAL
INCOME
A.—General
Deductions to be made in
computing total income.
80A. (1) In
computing the total income of an assessee, there shall be allowed from his
gross total income, in accordance with and subject to the provisions of this
Chapter, the deductions specified in sections 80C to 89[R2] [80U].
(2) The
aggregate amount of the deductions under this Chapter shall not, in any case,
exceed the gross total income of the assessee.
90[R3] (3) Where,
in computing the total income of an association of persons or a body of
individuals, any deduction is admissible under section 80G or section 80GGA or
section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD orsection 80-I or
section 80-IA 90a[R4] [or section 80-IB] or section 80J *[R5] or section 80JJ, no deduction under the same section shall
be made in computing the total income of a member of the association of persons
or body of individuals in relation to the share of such member in the income of
the association of persons or body of individuals.]
Computation
of deduction under section 80M.
80AA. 92[R7] [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
[Deductions to be made
with reference to the income included in the gross total income.
94[R8] 80AB. Where any deduction is required to be made or allowed under
any section 95[R9] [* * *] included in this Chapter under the heading “C.—Deductions
in respect of certain incomes” in respect of any income of the nature
specified in that section which is included in the gross total income of the
assessee, then, notwithstanding anything contained in that section, for the
purpose of computing the deduction under that section, the amount of income of
that nature as computed in accordance with the provisions of this Act (before
making any deduction under this Chapter) shall alone be deemed to be the amount
of income of that nature which is derived or received by the assessee and which
is included in his gross total income.]
96[R10] [Definitions.
80B. In this
Chapter—
(5) “gross
total income” means the total income computed in accordance with the provisions
of this Act, before making any deduction under this Chapter2 [R15] [* * *]3[R16] [* * *];
B.—Deductions in respect of certain payments
Deduction
in respect of life insurance premia, contributions to provident fund, etc.
80C. 7a-10[R21] [Omitted by
the Finance Act, 1990, w.e.f. 1-4-1991.]
Deduction in respect of investment in certain new shares.
80CC. 10a[R22] [Omitted by
the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1993.]
11[R23] [Deduction
in respect of deposits under National Savings Scheme or payment to a deferred
annuity plan.
12[R24] 80CCA. (1) Where an
assessee, being—
(a) an individual, or
(b) a Hindu undivided family, 13[R25] [* * *]
(c)
[* * *]has in the previous year—
(i) deposited
any amount in accordance with such scheme as the Central Government may, by
notification15[R26] in the Official
Gazette, specify in this behalf 16
[R27] [* * *]; or
(ii) paid
any amount to effect or to keep in force a contract for such annuity plan of
the Life Insurance Corporation as the Central Government may, by notification17 [R28] in the Official
Gazette, specify,out of his income chargeable to tax, he shall, in accordance
with, and subject to, the provisions of this section, be allowed a deduction in
the computation of his total income of the whole of the amount deposited or
paid (excluding interest or bonus accrued or credited to the assessee’s
account, if any) as does not exceed the amount of twenty thousand rupees in the
previous year :
18[R29] [Provided
that in relation to—
(a) the assessment years commencing on the 1st day of April, 1989
and the 1st day of April, 1990, this sub-section shall have effect as if for
the words “twenty thousand rupees”, the words “thirty thousand rupees” had been
substituted;
(b) the
assessment year commencing on the 1st day of April, 1991 and subsequent
assessment years, this sub-section shall have effect as if for the words
“twenty thousand rupees”, the words “forty thousand rupees” had been
substituted:]
19[R30] [Provided
further that no deduction under this sub-section shall be allowed in relation
to any amount deposited or paid under clauses (i) and (ii) on or
after the 1st day of April, 1992.]
(2) Where
any amount—
(a) standing
to the credit of the assessee 20[R31] [under the
scheme referred to in clause (i) of sub-section (1)] in respect of which
a deduction has been allowed under sub-section (1) together with the interest
accrued on such amount is withdrawn in whole or in part in any previous year,
or
(b) is
received on account of the surrender of the policy or as annuity or bonus in
accordance with the annuity plan of the Life Insurance Corporation in any
previous year,an amount equal to the whole of the amount referred to in clause
(a) or clause (b) shall be deemed to be the income of the assessee
of that previous year in which such withdrawal is made or, as the case may be,
amount is received, and shall, accordingly, be chargeable to tax as the income
of that previous year:
21[R32] [Provided
that nothing contained in this sub-section shall apply to any amount received
by the assessee on account of the surrender of the policy in accordance with
the terms of the annuity plan of the Life Insurance Corporation where the
assessee elects to surrender before the 1st day of October, 1992, the said
annuity plan in respect of which he had paid any amount under clause (ii)
of sub-section (1) before the 1st day of April, 1992.]
22[R33] (3) Notwithstanding anything contained in any
other provision of this Act, where a partition has taken place among the members
of a Hindu undivided family or where an association of persons has been
dissolved after a deduction has been allowed under sub-section (1), the
provisions of sub-section (2) shall apply as if the person in receipt of income
referred to therein is the assessee.]
Explanation I.—For the
removal of doubts, it is hereby declared that interest on the deposits made 23[R34] [under the
scheme referred to in clause (i) of sub-section (1)] shall not be
chargeable to tax except in the manner and to the extent specified in
sub-section (2).
Explanation II.—For the purposes of this section, “Life Insurance
Corporation” shall have the same meaning as in clause (a) of sub-section (8) of
section 80C.]
[Deduction in respect of
investment made under Equity Linked Savings Scheme.
80CCB.
(1) Where an assessee, being—
(a) an individual, or
(b) a Hindu undivided family, 24[R35] [* * *]
(c) 25[R36] [* * *]has
acquired in the previous year, out of his income chargeable to tax, units of any
Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of
India established under the Unit Trust of India Act, 1963 (52 of 1963), under
any plan formulated in accordance with such scheme as the Central Government
may, by notification in the Official Gazette, specify in this behalf (hereafter
in this section referred to as the Equity Linked Savings Scheme), he shall, in
accordance with, and subject to, the provisions of this section, be allowed a
deduction in the computation of his total income of so much of the amount
invested as does not exceed the amount of ten thousand rupees in the previous
year :
26[R37] [Provided
that no deduction shall be allowed in relation to any amount invested under
this sub-section on or after the 1st day of April, 1992.]
(2) Where
any amount invested by the assessee in the units issued under a plan formulated
under the Equity Linked Savings Scheme in respect of which a deduction has been
allowed under sub-section (1) is returned to him in whole or in part either by
way of repurchase of such units or on the termination of the plan, by the Fund
or the Trust, as the case may be, in any previous year, it shall be deemed to
be the income of the assessee of that previous year and chargeable to tax
accordingly.
(3) Notwithstanding
anything contained in any other provision of this Act, where a partition has
taken place among the members of a Hindu undivided family or where an
association of persons has been dissolved after a deduction has been allowed
under sub-section (1), the provisions of sub-section (2) shall apply as if the
person in receipt of income referred to therein is the assessee.]
27[R38] [Deduction in
respect of contribution to certain pension funds.
80CCC.
(1) Where an assessee
being an individual has in the previous year paid or deposited any amount out
of his income chargeable to tax to effect or keep in force a contract for any
annuity plan of Life Insurance Corporation of India for receiving pension from
the fund referred to in clause (23AAB) of section 10, he shall, in accordance
with, and subject to, the provisions of this section, be allowed a deduction in
the computation of his total income, of the whole of the amount paid or
deposited (excluding interest or bonus accrued or credited to the assessee’s
account, if any) as does not exceed the amount of ten thousand rupees in the
previous year.
(2) Where
any amount standing to the credit of the assessee in a fund, referred to in
sub-section (1) in respect of which a deduction has been allowed under
sub-section (1), together with the interest or bonus accrued or credited to the
assessee’s account, if any, is received by the assessee or his nominee—
(a) on account of the surrender of the annuity plan whether in whole
or in part, in any previous year, or
(b) as
pension received from the annuity plan,an amount equal
to the whole of the amount referred to in clause (a) or clause (b)
shall be deemed to be the income of the assessee or his nominee, as the case
may be, in that previous year in which such withdrawal is made or, as the case
may be, pension is received, and shall accordingly be chargeable to tax as
income of that previous year.
(3) Where
any amount paid or deposited by the assessee has been taken into account for
the purposes of this section, a rebate with reference to such amount shall not
be allowed under section 88]
28[R39] [Deduction in
respect of medical insurance premia.
80D.(1) In computing the total income of an
assessee, there shall be deducted at the following rates, such sum as is
specified in sub-section (2) and paid by him by cheque in the previous year out
of his income chargeable to tax, namely :—
(i) in a case where such sum does not exceed in the aggregate
[ten] thousand rupees, the whole of such sum; and
(ii) in any other case, 29[R40] [ten] thousand
rupees.
The following proviso shall be inserted after clause (ii)
of sub-section (1) of section 80D by the Finance Act, 1999, w.e.f. 1-4-2000 :
Provided that where
the sum specified in sub-section (2) is
paid to effect or to keep in force an insurance on the health of the assessee,
or his wife or her husband or dependant parents or any member of the family in
case the assessee is a Hindu undivided family, and who is a senior citizen, the
provisions of this section shall have effect as if for the words “ten thousand
rupees”, the words “fifteen thousand rupees” had been substituted.
(2) The
sum referred to in sub-section (1) shall be the following, namely
:—
(a) where
the assessee is an individual, any sum paid to effect or to keep in force an
insurance on the health of the assessee or on the health of the wife or
husband, dependent parents or dependent children of the assessee;
(b) where the assessee is a Hindu undivided family, any sum paid
to effect or to keep in force an insurance on the health of any member of the
family;
Provided that such
insurance shall be in accordance with a scheme31[R42] framed in this behalf
by the General Insurance Corporation of India formed under section 9 of the
General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and
approved by the Central Government in this behalf.]
The following Explanation shall be inserted at the end of
sub-section (2) of section 80D by the Finance Act, 1999, w.e.f. 1-4-2000 :
Explanation.—For the purpose of this section, “senior
citizen” shall have the meaning assigned to it in the Explanation to
section 80DDB.
32[R43] [Deduction in respect of maintenance including medical
treatment of handicapped dependent. 32a[R44]
80DD.
(1) In computing the total
income of an assessee who is a resident of
(a) of
expenditure incurred by way of medical treatment (including nursing), training
and rehabilitation of a handicapped dependent; or
(b) paid
or deposited under any scheme framed in this behalf by the Life Insurance
Corporation or Unit Trust of
Provided that no
such amount shall exceed forty thousand rupees† in the aggregate under
clause (a) or clause (b) or
both.
The following sub-section (1) shall be substituted for the
existing sub-section (1) of section 80DD by the Finance Act, 1999, w.e.f. 1-4-2000 :
(1) Where
an assessee, who is a resident in
(a) incurred any expenditure for the medical
treatment (including nursing), training and rehabilitation of a handicapped
dependant; or
(b) paid or deposited any amount under a
scheme framed in this behalf by the Life Insurance Corporation or Unit Trust of
India subject to the conditions specified in sub-section (2) and approved by
the Board in this behalf for the maintenance of handicapped dependant,the
assessee shall, in accordance with and subject to the provisions of this
section, be allowed a deduction of a sum of forty thousand rupees in respect of
the previous year.
(2) The
deduction under clause (b) of
sub-section (1) shall be allowed only if the following conditions are
fulfilled, namely :—
(a) the
scheme referred to in clause (b) of sub-section (1) provides for payment
of annuity or lump sum amount for the benefit of a handicapped dependant in the
event of the death of the individual or the member of the Hindu undivided
family in whose name subscription to the scheme has been made;
(b) the
assessee nominates either the handicapped dependant or any other person or a
trust to receive the payment on his behalf, for the benefit of the handicapped
dependant.
(3) If
the handicapped dependant predeceases the individual or the member of the Hindu
undivided family referred to in sub-section (2), an amount equal to the amount
paid or deposited under clause (b) of
sub-section (1) shall be deemed to be the income of the assessee of the
previous year in which such amount is received by the assessee and shall
accordingly be chargeable to tax as the income of that previous year.
(4) In
this section,—
(a) “Government
hospital” includes a departmental dispensary whether full-time or part-time
established and run by a Department of the Government for the medical
attendance and treatment of a class or classes of Government servants and
members of their families, a hospital maintained by a local authority and any
other hospital maintained by a local authority and any other hospital with
which arrangements have been made by the Government for the treatment of
Government servants;
(b) “handicapped
dependant” means a person who—
(i) is
a relative of the individual or, as the case may be, is a member of the Hindu
undivided family and is not dependant on any person other than such individual
or Hindu undivided family for his support or maintenance; and
(ii) is
suffering from a permanent physical disability (including blindness) or is
subject to mental retardation, being a permanent physical disability or mental
retardation specified in the rules33[R45] made by the
Board for the purposes of this section, which is certified by a physician, a
surgeon, an oculist or a psychiatrist, as the case may be, working in a
Government hospital, and which has the effect of reducing considerably such person’s
capacity for normal work or engaging in a gainful employment or occupation;
(c) “Life
Insurance Corporation” shall have the same meaning as in clause (iii) of sub-section (8) of section
88;
(d) “Unit
Trust of India” means the Unit Trust of India established under the Unit Trust
of India Act, 1963 (52 of 1963).]
34[R46] [Deduction in respect of medical treatment, etc.
80DDB. Where an assessee who is resident in
(a) for
himself or a dependant relative, in case the assessee is an individual; or
(b) for
any member of a Hindu undivided family, in case the assessee is a Hindu
undivided family,the assessee shall be allowed a deduction of a sum of 34b[R49] [fifteen] thousand rupees in
respect of that previous year in which such expenditure was incurred:
Provided that no such
deduction shall be allowed unless the assessee furnishes a certificate in such
form36[R50] and from such
authority as may be prescribed. 37[R51]
The following second and third provisos shall be inserted
after the existing proviso to section 80DDB by the Finance Act, 1999, w.e.f. 1-4-2000 :
Provided further that
the deduction under this section shall be reduced by the amount received, if
any, under an insurance from an insurer for the medical treatment of the person
referred to in clause (a) or clause (b):
Provided also that
where the expenditure incurred is in respect of the assessee or his dependant
relative or any member of a Hindu undivided family of the assessee and who is a
senior citizen, the provisions of this section shall have effect as if for the
words “forty thousand rupees”, the words “sixty thousand rupees” had been
substituted.
Explanation.—For the
purposes of this section, “dependant” means a person who is not dependant for
his support or maintenance on any person other than the assessee.]
The following Explanation shall be substituted for the
existing Explanation to section 80DDB by the Finance Act, 1999, w.e.f. 1-4-2000
:
Explanation.— For the purposes of this section,—
(i) “dependant” means a person who is not dependant
for his support or maintenance on any person other than the assessee;
(ii) “insurer” shall have the meaning
assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4
of 1938);
(iii) “senior citizen” means an individual
resident in
38[R52] [Deduction in
respect of repayment of loan taken for higher education.
80E.
(1) In computing the total
income of an assessee, being an individual, there shall be deducted, in
accordance with and subject to the provisions of this section, any amount paid
by him in the previous year, out of his income chargeable to tax, by way of
repayment of loan, taken by him from any financial institution or any approved
charitable institution for the purpose of pursuing his higher education, or
interest on such loan:
Provided that the
amount which may be so deducted shall not exceed twenty-five thousand rupees.
(2) The
deduction specified in sub-section (1) shall be allowed in computing the total
income in respect of the initial assessment year and seven assessment years
immediately succeeding the initial assessment year or until the loan referred
to in sub-section (1) together with interest thereon is paid by the assessee in
full, whichever is earlier.
(3) For
the purposes of this section,—
(a) “approved
charitable institution” means an institution specified in, or, as the case may
be, an institution established for charitable purposes and notified by the Central
Government under clause (23C) of section 10 or an institution referred to in
clause (a) of sub-section (2) of section 80G;
(b) “financial
institution” means 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); or any other financial institution which the Central
Government may, by notification in the Official Gazette, specify in this
behalf;
(c) 39[R53] “higher
education” means full-time studies for any graduate or post-graduate course in
engineering, medicine, management or for post-graduate course in applied
sciences or pure sciences including mathematics and statistics;
(d) “initial
assessment year” means the assessment year relevant to the previous year, in
which the assessee starts repaying the loan or interest thereon.]
Deduction in respect of
educational expenses in certain cases.
39a[R54] 80F. [Omitted by
the Finance Act, 1985, w.e.f. 1-4-1986. Original section was inserted by the
Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 in place of section 87A which was
inserted by the Finance Act, 1964, w.e.f. 1-4-1964. New section 80F, dealing
with deduction in respect of amounts applied for charitable or religious
purposes, etc., was inserted by the Direct Tax Laws (Amendment) Act, 1987,
w.e.f. 1-4-1989. This section was omitted by the Direct Tax Laws (Amendment)
Act, 1989, with effect from the same date.]
Deduction in respect of
expenses on higher education in certain cases.
80FF. [Omitted by the Finance (No.
2) Act, 1980, w.e.f. 1-4-1981. Original section was inserted by the Finance
Act, 1975, w.e.f. 1-4-1976.]
40[R55] Deduction in
respect of donations to certain funds, charitable institutions, etc.
41[R56] 80G. 42[R57] [(1) In computing the total income of an assessee,
there shall be deducted, in accordance with and subject to the provisions of
this section,—
43[R58] [(i) in a case where the aggregate of the sums
specified in sub-section (2) includes any sum or sums of the nature specified
in 44[R59] [sub-clause (iiia)
45[R60] [or in
sub-clause (iiiaa) 46[R61] [or in
sub-clause (iiiab)] 47[R62] [or in
sub-clause (iiie)] 48[R63] [or in
sub-clause (iiif)] 49[R64] [or in
sub-clause (iiig)] or 50[R65] [sub-clause (iiih)
or] 51[R66] [sub-clause (iiiha)
or sub-clause (iiihb) or sub-clause (iiihc) 52[R67] [or sub-clause (iiihd)]
53[R68] [or sub-clause (iiihe)]
54[R69] [or sub-clause (iiihf)]
55[R70] [or
sub-clause (iiihg) or sub-clause (iiihh)] 55a[R71] [or sub-clause (iiihi)]
or] in] sub-clause (vii) of clause (a) thereof, an amount
equal to the whole of the sum or, as the case may be, sums of such nature plus
fifty per cent of the balance of such aggregate; and]
(ii) in
any other case, an amount equal to fifty per cent of the aggregate of the sums
specified in sub-section (2).]
(2) The
sums referred to in sub-section (1) shall be the following, namely :—
(a) any
sums paid by the assessee in the previous year as donations to—
(i) the National Defence Fund set up by the Central Government;
or
(ii) the
Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust
adopted by the National Committee at its meeting held on the 17th day of
August, 1964; or
(iii) the Prime Minister’s Drought Relief Fund; or
56[R72] [(iiia) the Prime Minister’s National Relief Fund;
or]
57[R73] [(iiiaa) the Prime Minister’s
58[R74] [(iiiab) the Africa (Public Contributions -
59[R75] [(iiib) the National Children’s Fund; or]
60[R76] [(iiic) the Indira Gandhi Memorial Trust, the deed
of declaration in respect whereof was registered at
61[R77] [(iiid) the Rajiv Gandhi Foundation, the deed of
declaration in respect whereof was registered at
62[R78] [(iiie) the National Foundation for Communal
Harmony; or]
63[R79] [(iiif) a University or any educational
institution of national eminence as may be approved by the prescribed authority64[R80] in this behalf;
or]
65[R81] [(iiig) the Maharashtra Chief Minister’s Relief
Fund during the period beginning on the 1st day of October, 1993 and ending on
the 6th day of October, 1993 or to the Chief Minister’s Earthquake Relief Fund,
Maharashtra; or]
66[R82] [(iiih) any Zila Saksharta
Samiti constituted in any district under the chairmanship of the Collector of
that district for the purposes of improvement of primary education in villages
and towns in such district and for literacy and post-literacy activities.
Explanation.—For the
purposes of this sub-clause, “town” means a town which has a population not
exceeding one lakh according to the last preceding census of which the relevant
figures have been published before the first day of the previous year ; or]
67[R83] [(iiiha) the National Blood Transfusion
Council or to any State Blood Transfusion Council which has its sole object the
control, supervision, regulation or encouragement in India of the services
related to operation and requirements of blood banks.
Explanation.—For the
purposes of this sub-clause,—
(a) “National
Blood Transfusion Council” means a society registered under the Societies
Registration Act, 1860 (21 of 1860) and has an officer not below the rank of an
Additional Secretary to the Government of India dealing with the AIDS Control
Project as its Chairman, by whatever name called;
(b) “State
Blood Transfusion Council” means a society registered, in consultation with the
National Blood Transfusion Council, 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 has Secretary to the Government of that State dealing with the
Department of Health, as its Chairman, by whatever name called; or
(iiihb) any fund set up by a State Government to provide
medical relief to the poor; or
(iiihc) the Army Central Welfare Fund or the Indian Naval
Benevolent Fund or the Air Force Central Welfare Fund established by the armed
forces of the Union for the welfare of the past and present members of such
forces or their dependants; or]
68[R84] [(iiihd) the Andhra Pradesh Chief
Minister’s Cyclone Relief Fund, 1996; or]
69[R85] [(iiihe) the National Illness Assistance Fund; or]
70[R86] [(iiihf) the Chief Minister’s Relief Fund
or the Lieutenant Governor’s Relief Fund in respect of any State or Union
territory, as the case may be :
Provided that such
Fund is—
(a) the
only Fund of its kind established in the State or the Union territory, as the
case may be;
(b) under the overall control of the Chief Secretary or the
Department of Finance of the State or the Union territory, as the case may be;
(c) administered
in such manner as may be specified by the State Government or the Lieutenant
Governor, as the case may be; or]
71[R87] [(iiihg) the National Sports Fund to be
set up by the Central Government; or
(iiihh) the
National Cultural Fund set up by the Central Government; or]
The following sub-clause (iiihi) shall be inserted after
sub-clause (iiihh) of clause (a) of sub-section (2) of section 80G by the
Finance Act, 1999, w.e.f. 1-4-2000 :
(iiihi) the Fund for Technology Development
and Application set up by the Central Government; or
(iv) any other fund or any institution to which this section
applies; or
(v) the
Government or any local authority, to be utilised for any charitable purpose 72[R88] [other than the
purpose of promoting family planning; or]
73[R89] [(vi) any authority referred to in clause (20A)
of section 10; or
74 [R90] [(via) any corporation referred to in clause (26BB)
of section 10; or]
(vii) the
Government or to any such local authority, institution or association as may be
approved in this behalf by the Central Government, to be utilised for the
purpose of promoting family planning;]
(b) any
sums paid by the assessee in the previous year as donations for the renovation
or repair of any such temple, mosque, gurdwara, church or other place as is
notified75[R91] by the Central
Government in the Official Gazette to be of historic, archaeological or
artistic importance or to be a place of public worship of renown throughout any
State or States.
(3) 6[R92] [Omitted by
the Finance Act, 1994, w.e.f. 1-4-1994.]
77[R93] (4) Where the aggregate of the sums
referred to in sub-clauses (iv), (v), (vi) 78[R94] [, (via)]
and (vii) of clause (a) and in clause (b) of sub-section
(2) exceeds ten per cent of the gross total income (as reduced by any portion
thereof on which income-tax is not payable under any provision of this Act and
by any amount in respect of which the assessee is entitled to a deduction
under any other provision of this Chapter), then the amount in excess of ten
per cent of the gross total income shall be ignored for the purpose of
computing the aggregate of the sums in respect of which deduction is to be
allowed under sub-section (1)].
(5) This
section applies to donations to any institution or fund referred to in
sub-clause (iv) of clause (a) of sub-section (2), only if it is
established in India for a charitable purpose and if it fulfils the following
conditions, namely :—
79[R95] [(i) where the institution or fund derives
any income, such income would not be liable to inclusion in its total income
under the provisions of sections 11 and 1280[R96] [* * *] 81[R97] [or clause (23)]
82[R98] [or clause (23AA)]
83[R99] [or clause (23C)]
of section 10:
84[R100] [Provided that where an institution or fund derives
any income, being profits and gains of business, the condition that such
income would not be liable to inclusion in its total income under the
provisions of section 11 shall not apply in relation to such income, if—
(a) the
institution or fund maintains separate books of account in respect of such
business;
(b) the
donations made to the institution or fund are not used by it, directly or
indirectly, for the purposes of such business; and
(c) the
institution or fund issues to a person making the donation a certificate to the
effect that it maintains separate books of account in respect of such business
and that the donations received by it will not be used, directly or
indirectly, for the purposes of such business;]]
(ii) the
instrument under which the institution or fund is constituted does not, or the
rules governing the institution or fund do not, contain any provision for the
transfer or application at any time of the whole or any part of the income or
assets of the institution or fund for any purpose other than a charitable
purpose;
(iii) the
institution or fund is not expressed to be for the benefit of any particular
religious community or caste;
(iv) the
institution or fund maintains regular accounts of its receipts and expenditure;
85[R101] [* * *]
(v) the
institution or fund is either constituted as a public charitable trust or is
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 or under
section 2586[R102] of the Companies Act, 1956 (1 of 1956), or is a University
established by law, or is any other educational institution recognised by the
Government or by a University established by law, or affiliated to any
University established by law, 87[R103] [or is an institution approved by the Central Government
for the purposes of clause (23) of section 10,] or is an institution financed
wholly or in part by the Government or a local authority; 88[R104] [and]
89[R105] [(vi) in
relation to donations made after the 31st day of March, 1992, the institution
or fund is for the time being approved by the Commissioner in accordance with
the rules90[R106] made in this behalf:
Provided that any
approval shall have effect for such assessment year or years, not exceeding 91[R107] [five] assessment years, as may be specified in the
approval.]
92[R108] [(5A) Where a
deduction under this section is claimed and allowed for any assessment year in
respect of any sum specified in sub-section (2), the sum in respect of which
deduction is so allowed shall not qualify for deduction under any other
provision of this Act for the same or any other assessment year.]
The following sub-section (5B) shall be inserted after
sub-section (5A) of section 80G by the Finance Act, 1999, w.e.f. 1-4-2000 :
(5B) Notwithstanding
anything contained in clause (ii) of
sub-section (5) and Explanation 3, an institution or fund which incurs
expenditure, during any previous year, which is of a religious nature for an
amount not exceeding five per cent of its total income in that previous year
shall be deemed to be an institution or fund to which the provisions of this
section apply.
Explanation 1.—An
institution or fund established for the benefit of Scheduled Castes, backward
classes, Scheduled Tribes or of women and children shall not be deemed to be an
institution or fund expressed to be for the benefit of a religious community or
caste within the meaning of clause (iii) of sub-section (5).
93[R109] [Explanation 2.—For the removal of doubts, it is
hereby declared that a deduction to which the assessee is entitled in respect
of any donation made to an institution or fund to which sub-section (5) applies
shall not be denied merely on either or both of the following grounds, namely
:—
94[R110] (i) that,
subsequent to the donation, any part of the income of the institution or fund
has become chargeable to tax due to non-compliance with any of the provisions
of section 11, 95[R111] [section 12 or section 12A];
(ii) that,
under clause (c) of sub-section (1) of section 13, the exemption under
section 1196[R112] [or section 12] is denied to the institution or fund in
relation to any income arising to it from any investment referred to in clause
(h) of sub-section (2) of section 13where the aggregate of the funds
invested by it in a concern referred to in the said clause (h) does not
exceed five per cent of the capital of that concern.]
Explanation 3.—In this
section, “charitable purpose” does not include any purpose the whole or
substantially the whole of which is of a religious nature.
97[R113] [Explanation 4.—For the purposes of this section, an
association approved by the Central Government for the purposes of clause (23)
of section 10 shall also be deemed to be an institution, and every association
or institution approved by the Central Government for the purposes of the said
clause shall be deemed to be an institution established in
98 [R114] [Explanation 5.—For the removal of doubts, it is
hereby declared that no deduction shall be allowed under this section in
respect of any donation unless such donation is of a sum of money.]
1[R116] [Deductions in respect of rents paid.2[R117]
80GG. In computing the total income of an assessee, not being an
assessee having any income falling within clause (13A) of section 10, there
shall be deducted any expenditure incurred by him in excess of ten per cent of
his total income towards payment of rent (by whatever name called) in respect
of any furnished or unfurnished accommodation occupied by him for the purposes
of his own residence, to the extent to which such excess expenditure does not
exceed two thousand rupees per month or twenty-five per cent of his total
income for the year, whichever is less, and subject to such other conditions or
limitations as may be prescribed3[R118] , having regard to the area or place in which such
accommodation is situated and other relevant considerations :
Provided that nothing
in this section shall apply to an assessee in any case where any residential
accommodation is—
(i) owned
by the assessee or by his spouse or minor child or, where such assessee is a
member of a Hindu undivided family, by such family at the place where he
ordinarily resides or performs duties of his office or employment or carries on
his business or profession; or
(ii) owned
by the assessee at any other place, being accommodation in the occupation of
the assessee, the value of which is to be determined under sub-clause (i)
of clause (a) or, as the case may be, clause (b) of sub-section
(2) of section 23.
Explanation.—In this
section, the expressions “ten per cent of his total income” and “twenty-five
per cent of his total income” shall mean ten per cent or twenty-five per cent,
as the case may be, of the assessee’s total income before allowing deduction
for any expenditure under this section.]
4[R119] [Deduction in respect of certain donations for scientific
research or rural development.
80GGA.(1) In computing the total income of an
assessee, there shall be deducted, in accordance with and subject to the provisions
of this section, the sums specified in sub-section (2).
(2) The sums referred to in sub-section (1)
shall be the following, namely:—
(a) any
sum paid by the assessee in the previous year to a scientific research
association which has as its object the undertaking of scientific research or
to a University, college or other institution to be used for scientific
research:
Provided that such
association, University, college or institution is for the time being approved
for the purposes of clause (ii) of sub-section (1) of section 35;
5[R120] (aa) any
sum paid by the assessee in the previous year to a University, college or other
institution to be used for research in social science or statistical research:
Provided that such
University, college or institution is for the time being approved for the
purposes of clause (iii) of sub-section (1) of section 35;]
(b) any
sum paid by the assessee in the previous year—
(i) to
an association or institution, which has as its object the undertaking of any
programme of rural development, to be used for carrying out any programme of
rural development approved for the purposes of section 35CCA; or
(ii) to
an association or institution which has as its object the training of persons
for implementing programmes of rural development:
6[R121] [Provided that the assessee furnishes the
certificate referred to in sub-section (2) or, as the case may be, sub-section
(2A) of section 35CCA from such association or institution;]
7[R122] [(bb) any
sum paid by the assessee in the previous year to a public sector company or a
local authority or to an association or institution approved by the National
Committee, for carrying out any eligible project or scheme:
Provided that the
assessee furnishes the certificate referred to in clause (a) of
sub-section (2) of section 35AC from such public sector company or local
authority or, as the case may be, association or institution.
Explanation.—For the
purposes of this clause, the expressions “National Committee” and “eligible
project or scheme” shall have the meanings respectively assigned to them in the
Explanation to section 35AC;]
8[R123] [(c) any
sum paid by the assessee in the previous year to an association or institution,
which has as its object the undertaking of any programme of conservation of
natural resources
9[R124] [or of afforestation], to be used for carrying out any programme
of conservation of natural resources 9[R125] [or of afforestation] approved for the purposes of
section 35CCB:
Provided that the
association or institution is for the time being approved for the purposes of
sub-section (2) of section 35CCB;]
10[R126] [(cc) any
sum paid by the assessee in the previous year to such fund for afforestation as
is notified by the Central Government under clause (b) of sub-section
(1) of section 35CCB;]
11[R127] [(d) any
sum paid by the assessee in the previous year to a rural development fund set
up and notified by the Central Government for the purposes of clause (c)
of sub-section (1) of section 35CCA;]
12[R128] [(e) any
sum paid by the assessee in the previous year to the National Urban Poverty
Eradication Fund set up and notified by the Central Government for the
purposes of clause (d) of sub-section (1) of section 35CCA]
(3) Notwithstanding anything contained in sub-section
(1), no deduction under this section shall be allowed in the case of an
assessee whose gross total income includes income which is chargeable under the
head “Profits and gains of business or profession”.
(4) Where a deduction under this section is
claimed and allowed for any assessment year in respect of any payments of the
nature specified in sub-section (2), deduction shall not be allowed in respect
of such payments under any other provision of this Act for the same or any
other assessment year.]]
C.-Deduction in respect of certain incomes
Deduction in case of new
industrial undertakings employing displaced persons, etc.
80H. [Omitted by the Taxation Laws
(Amendment) Act, 1975, w.e.f. 1-4-1976. Originally, it was inserted by the
Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.]
13[R129] [Deduction in respect of
profits and gains from newly established industrial undertakings or hotel
business in backward areas.
14[R130] 80HH.(1) Where the gross total income of an
assessee includes any profits and gains derived from an industrial undertaking,
or the business of a hotel, to which this section applies, there shall, in
accordance with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, a deduction from such profits and
gains of an amount equal to twenty per cent thereof.
(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 after the 31st day of
December, 1970 15[R131] [but before the 1st day of April, 1990], in any backward
area;
(ii) it
is not formed by the splitting up, or the reconstruction, of a business
already in existence in any backward area:
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 not formed by the transfer to a new business of machinery or plant
previously used for any purpose in any backward area;
(iv) it
employs ten or more workers in a manufacturing process carried on with the aid
of power, or employs twenty or more workers in a manufacturing process carried
on without the aid of power.
Explanation.—Where any
machinery or plant or any part thereof previously used for any purpose in any
backward area is transferred to a new business in that area or in any other
backward area and the total value of the machinery or plant or part so
transferred does not exceed twenty per cent of the total value of the machinery
or plant used in the business, then, for the purposes of clause (iii)
of this sub-section, the condition specified therein shall be deemed to have
been fulfilled.
(3) This section applies to the business of
any hotel, where all the following conditions are fulfilled, namely :—
(i) the
business of the hotel has started or starts functioning after the 31st day of
December, 1970 16[R132] [but before the 1st day of April, 1990], in any backward
area;
(ii) the
business of the hotel is not formed by the splitting up, or the reconstruction,
of a business already in existence;
(iii) the
hotel is for the time being approved for the purposes of this sub-section by
the Central Government.
(4) The deduction specified in sub-section (1)
shall be allowed in computing the total income in respect of each of the ten
assessment years beginning with the assessment year relevant to the previous
year in which the industrial undertaking begins to manufacture or produce
articles or the business of the hotel starts functioning :
Provided that,—
(i) in
the case of an industrial undertaking which has begun to manufacture or produce
articles, and
(ii) in
the case of the business of a hotel which has started functioning,after the
31st day of December, 1970, but before the 1st day of April, 1973, this
sub-section shall have effect as if the reference to ten assessment years were
a reference to ten assessment years as reduced by the number of assessment
years which expired before the 1st day of April, 1974.
(5) Where the assessee is a person other than
a company or a co-operative society, the deduction under sub-section (1) shall
not be admissible unless the accounts of the industrial undertaking or the
business of the hotel for the previous year relevant to the assessment year for
which the deduction is claimed have been audited by an accountant as defined in
the Explanation below sub-section (2) of section 288 and the assessee
furnishes, along with his return of income, the report of such audit in the
prescribed form 17[R133] duly signed and verified by such accountant.
(6) Where any goods held for the purposes of
the business of the industrial undertaking or the hotel are transferred to any
other business carried on by the assessee, or where any goods held for the
purposes of any other business carried on by the assessee are transferred to
the business of the industrial undertaking or the hotel and, in either case,
the consideration, if any, for such transfer as recorded in the accounts of the
business of the industrial undertaking or the hotel does not correspond to the
market value of such goods as on the date of the transfer, then, for the
purposes of the deduction under this section, the profits and gains of the
industrial undertaking or the business of the hotel shall be computed as if the
transfer, in either case, had been made at the market value of such goods as on
that date :
Provided that where,
in the opinion of the 18[R134] [Assessing] Officer, the computation of the profits and
gains of the industrial undertaking or the business of the hotel in the manner
hereinbefore specified presents exceptional difficulties, the 18[R135] [Assessing] Officer may compute such profits and gains on
such reasonable basis as he may deem fit.
Explanation.—In this
sub-section, “market value” in relation to any goods means the price that such
goods would ordinarily fetch on sale in the open market.
(7) Where it appears to the 19[R136] [Assessing] Officer that, owing to the close connection between
the assessee carrying on the business of the industrial undertaking or the
hotel to which this section applies and any other person, or for any other
reason, the course of business between them is so arranged that the business
transacted between them produces to the assessee more than the ordinary profits
which might be expected to arise in the business of the industrial undertaking
or the hotel, the 19[R137] [Assessing] Officer shall, in computing the profits and gains
of the industrial undertaking or the hotel for the purposes of the deduction
under this section, take the amount of profits as may be reasonably deemed to
have been derived therefrom.
(9) In a case where the assessee is entitled also
to the deduction under 21[R139] [section 80-I or] section 80Jin relation to the profits
and gains of an industrial undertaking or the business of a hotel to which this
section applies, effect shall first be given to the provisions of this section.
22[R140] [(9A) Where a
deduction in relation to the profits and gains of a small-scale industrial
undertaking to which section 80HHA applies is claimed and allowed under that
section for any assessment year, deduction in relation to such profits and
gains shall not be allowed under this section for the same or any other assessment
year.]
(10) Nothing contained in this section shall
apply in relation to any undertaking engaged in mining.
23[R141] [(11) For the
purposes of this section, “backward area” means such area as the Central
Government may, having regard to the stage of development of that area, by
notification24[R142] in the Official Gazette, specify in this behalf :
Provided that any
notification under this sub-section may be issued so as to have retrospective
effect to a date not earlier than the 1st day of April, 1983.]
25[R143] [Deduction in respect of
profits and gains from newly established small-scale industrial undertakings
in certain areas.
26[R144] 80HHA.(1) Where the gross total income of an assessee
includes any profits and gains derived from a small-scale industrial
undertaking to which this section applies, there shall, in accordance with and
subject to the provisions of this section, be allowed, in computing the total
income of the assessee, a deduction from such profits and gains of an amount
equal to twenty per cent thereof.
(2) This section applies to any
small-scale industrial undertaking which fulfils all the following conditions,
namely :—
(i) it
begins to manufacture or produce articles after the 30th day of September, 1977
27[R145] [but before the 1st day of April, 1990], in any rural area
;
(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 small-scale 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 not formed by the transfer to a new business of machinery or plant
previously used for any purpose ;
(iv) it
employs ten or more workers in a manufacturing process carried on with the aid
of power, or employs twenty or more workers in a manufacturing process carried
on without the aid of power.
Explanation.—Where in
the case of a small-scale industrial undertaking, any machinery or plant or any
part thereof previously used for any purpose is transferred to a new business
and the total value of the machinery or plant or part so transferred does not
exceed twenty per cent of the total value of the machinery or plant used in the
business, then, for the purposes of clause (iii) of this sub-section,
the condition specified therein shall be deemed to have been fulfilled.
(3) The deduction specified in
sub-section (1) shall be allowed in computing the total income 28 [R146] [of each of the ten previous years beginning with the previous
year in which the industrial undertaking] begins to manufacture or produce
articles :
29[R147] [Provided that such deduction shall not be allowed
in computing the total income of any of the ten previous years aforesaid in
respect of which the industrial undertaking is not a small-scale industrial
undertaking within the meaning of clause (b) of the Explanation
below sub-section (8).]
(4) Where the assessee is a person,
other than a company or a co-operative society, the deduction under sub-section
(1) shall not be admissible unless the accounts of the small-scale industrial
undertaking for the previous year relevant to the assessment year for which the
deduction is claimed have been audited by an accountant as defined in the Explanation
below sub-section (2) of section 288 and the assessee furnishes, along with his
return of income, the report of such audit in the prescribed form30[R148] duly signed and verified by such accountant.
(5) The provisions of sub-sections
(6) and (7) of section 80HH shall, so far as may be, apply in relation to the
computation of the profits and gains of a small-scale industrial undertaking
for the purposes of the deduction under this section as they apply in relation
to the computation of the profits and gains of an industrial undertaking for
the purposes of the deduction under that section.
(6) In a case where the assessee is
entitled also to the deduction under 31[R149] [section 80-I or] section 80J in relation to
the profits and gains of a small-scale industrial undertaking to which this
section applies, effect shall first be given to the provisions of this section.
(7) Where a deduction in relation to
the profits and gains of a small-scale industrial undertaking to which section
80HH applies is claimed and allowed under that section for any assessment year,
deduction in relation to such profits and gains shall not be allowed under this
section for the same or any other assessment year.
(8) Nothing contained in this
section shall apply in relation to any small-scale industrial undertaking
engaged in mining.
Explanation.—For the
purposes of this section,—
32[R150] [(a) “rural
area” means any area other than—
(i) an
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
(ii) an
area within such distance, not being more than fifteen kilo-metres from the
local limits of any municipality or cantonment board referred to in sub-clause
(i), as the Central Government may, having regard to the stage of
development of such area (including the extent of, and scope for, urbanisation
of such area) and other relevant considerations specify in this behalf by
notification33[R151] in the Official Gazette ;]
34[R152] [(b) an
industrial undertaking shall be deemed to be a small-scale industrial
undertaking which is, on the last day of the previous year, regarded as a
small-scale industrial undertaking under section 11B35[R153] of the Industries (Development and Regulation) Act, 1951
(65 of 1951)].
36 [R154] [Deduction in respect of profits and gains from projects
outside India.
37[R155] 80HHB. (1) Where the gross total income of an
assessee being an Indian company or a person (other than a company) who is
resident in
(a) the
execution of a foreign project undertaken by the assessee in pursuance of a
contract entered into by him, or
(b) the
execution of any work undertaken by him and forming part of a foreign project
undertaken by any other person in pursuance of a contract entered into by such
other person,with the Government of a foreign State or any statutory or other
public authority or agency in a foreign State, or a foreign enterprise, there
shall, in accordance with and subject to the provisions of this section, be
allowed, in computing the total income of the assessee, a deduction from such
profits and gains of an amount equal to 38[R156] [fifty] per cent thereof :
Provided that the
consideration for the execution of such project or, as the case may be, of such
work is payable in convertible foreign exchange.
(2) For
the purposes of this section,—
(a) “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
thereunder ;
(b) “foreign
project” means a project for—
(i) the
construction of any building, road, dam, bridge or other structure outside
(ii) the
assembly or installation of any machinery or plant outside
(iii) the
execution of such other work (of whatever nature) as may be prescribed.
(3) The
deduction under this section shall be allowed only if the following conditions
are fulfilled, namely :—
(i) the
assessee maintains separate accounts in respect of the profits and gains
derived from the business of the execution of the foreign project, or, as the
case may be, of the work forming part of the foreign project undertaken by him
and, where the assessee is a person other than an Indian company or a
co-operative society, such accounts have been audited by an accountant as
defined in the Explanation below sub-section (2) of section 288 and the
assessee furnishes, along with his return of income, the report of such audit
in the prescribed form 39[R157] duly signed and verified by such accountant ;
39a[R158] [(ia) the
assessee furnishes, along with his return of income, a certificate in the
prescribed form from an accountant as defined in the Explanation below
sub-section (2) of section 288, duly signed and verified by such
accountant, certifying that the deduction has been correctly claimed in
accordance with the provisions of this section ;]
(ii) an
amount equal to 40[R159] [fifty] per cent of the profits and gains referred to in
sub-section (1) is debited to the profit and loss account of the previous year
in respect of which the deduction under this section is to be allowed and
credited to a reserve account (to be called the “Foreign Projects Reserve
Account”) to be utilised by the assessee during a period of five years next
following for the purposes of his business other than for distribution by way
of dividends or profits ;
(iii) an
amount equal to 40[R160] [fifty] per cent of the profits and gains referred to in
sub-section (1) is brought by the assessee in convertible foreign exchange into
India, in accordance with the provisions of the Foreign Exchange Regulation
Act, 1973 (46 of 1973), and any rules made thereunder, within a period of six
months from the end of the previous year referred to in clause (ii) or, 41[R161] [within such
further period as the competent authority may allow in this behalf] :
Provided that where
the amount credited by the assessee to the Foreign Projects Reserve Account in
pursuance of clause (ii) or the amount brought into India by the
assessee in pursuance of clause (iii) or each of the said amounts is
less than 42[R162] [fifty] per cent of the profits and gains referred to in
sub-section (1), the deduction under that sub-section shall be limited to the
amount so credited in pursuance of clause (ii) or the amount so brought
into India in pursuance of clause (iii), whichever is less.
42a[R163] [Explanation.—For
the purposes of clause (iii), the expression “competent authority” means
the Reserve Bank of India or such other authority as is authorised under any
law for the time being in force for regulating payments and dealings in foreign
exchange.]
(4) If
at any time before the expiry of five years from the end of the previous year in
which the deduction under sub-section (1) is allowed, the assessee utilises the
amount credited to the Foreign Projects Reserve Account for distribution by way
of dividends or profits or for any other purpose which is not a purpose of the
business of the assessee, the deduction originally allowed under sub-section
(1) shall be deemed to have been wrongly allowed, and the 43[R164] [Assessing] Officer may, notwithstanding anything contained
in this Act, recompute the total income of the assessee for the relevant
previous year and make the necessary amendment; and the provisions of section
154 shall, so far as may be, apply thereto, the period of four years specified
in sub-section (7) of that section being reckoned from the end of the previous
year in which the money was so utilised.
(5) Notwithstanding
anything contained in any other provision of this Chapter under the heading “C.—Deductions
in respect of certain incomes”, no part of the consideration or of the
income comprised in the consideration payable to the assessee for the execution
of a foreign project referred to in clause (a) of sub-section (1) or of
any work referred to in clause (b) of that sub-section shall qualify for
deduction for any assessment year under any such other provision.]
44[R165] [Deduction in respect of profits and gains from housing
projects in certain cases.
80HHBA.(1) Where the
gross total income of an assessee being an Indian company or a person (other
than a company) who is a resident in India includes any profits and gains derived
from the execution of a housing project awarded to the assessee on the basis of
global tender and such project is aided by the World Bank, there shall, in
accordance with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, a deduction from such profits and
gains of an amount equal to fifty per cent thereof.
(2) The
deductions under this section shall be allowed only if the following conditions
are fulfilled, namely :—
(i) the
assessee maintains separate accounts in respect of the profits and gains
derived from the business of the execution of the housing project undertaken by
him and, where the assessee is a person other than an Indian company or a
co-operative society, such accounts have been audited by an accountant as
defined in the Explanation below sub-section (2) of section 288 and
the assessee furnishes along with his return of income the report of such audit
in the prescribed form44a[R166] duly signed and verified by such accountant;
(ii) an
amount equal to fifty per cent of the profits and gains referred to in
sub-section (1) is debited to the profits and loss account of the previous year
in respect of which the deduction under this section is to be allowed and
credited to a reserve account (to be called the Housing Projects Reserve
Account) to be utilised by the assessee during a period of five years next
following for the purposes of his business other than for distribution by way
of dividends or profit :
Provided that where
the amount credited by the assessee to the Housing Projects Reserve Account in
pursuance of clause (ii) is less than
fifty per cent of the profits and gains referred to in sub-section (1), the
deduction under this section shall be limited to the amount so credited in
pursuance of clause (ii).
(3) If
at any time before the expiry of five years from the end of the previous year
in which the deduction under sub-section (1) is allowed, the assessee utilises
the amount credited to the Housing Projects Reserve Account for distribution by
way of dividends or profit or for any other purpose which is not a purpose of
the business of the assessee, the deduction originally allowed under
sub-section (1) shall be deemed to have been wrongly allowed and the Assessing
Officer may, notwithstanding anything contained in this Act, recompute the
total income of the assessee for the relevant previous year and make necessary
amendment and the provision of section 154 shall, so
far as may be, apply thereto, the period of four years specified in sub-section
(7) of that section being reckoned from the end of the previous year in which
the money was so utilised.
(4) Notwithstanding
anything contained in any other provision of this Chapter under heading
“C.—Deduction in respect of certain incomes”, no part of the income payable to
the assessee for the execution of a housing project under sub-section (1) shall
qualify for deduction for any assessment year under any other provision.
Explanation.—For the purposes of this section,—
(a) “housing
project” means a project for—
(i) the
construction of any building, road, bridge or other structure in any part of
(ii) the
execution of such other work (of whatever nature) as may be prescribed;
(b) “World
Bank” means the International Bank for Reconstruction and Development Bank
referred to in the International Monetary Fund and Bank Act, 1945.]
45[R167] [Deduction in respect of profits retained for export
business.
46[R168] 80HHC.47[R169] [(1) Where an
assessee, being an Indian company or a person (other than a company) resident
in India, is engaged in the business of export out of India of any goods or
merchandise to which this section applies, there shall, in accordance with and
subject to the provisions of this section, be allowed, in computing the total
income of the assessee, a deduction of the 48[R170] [profits] derived by the assessee from the export of such
goods or merchandise :
Provided that if the
assessee, being a holder of an Export House Certificate or a Trading House
Certificate (hereafter in this section referred to as an Export House or a
Trading House, as the case may be,) issues a certificate referred to in clause
(b) of sub-section (4A), that in respect of the amount of the export
turnover specified therein, the deduction under this sub-section is to be
allowed to a supporting manufacturer, then the amount of deduction in the case
of the assessee shall be reduced by such amount which bears to the 49[R171] [total profits derived by the assessee from the export of
trading goods, the same proportion as the amount of export turnover specified
in the said certificate bears to the total export turnover of the assessee in
respect of such trading goods].
(1A) Where
the assessee, being a supporting manufacturer, has during the previous year,
sold goods or merchandise to any Export House or Trading House in respect of
which the Export House or Trading House has issued a certificate under the
proviso to sub-section (1), there shall, in accordance with and subject to the
provisions of this section, be allowed in computing the total income of the
assessee, a deduction of the 50[R172] [profits] derived by the assessee from the sale of goods
or merchandise to the Export House or Trading House in respect of which the
certificate has been issued by the Export House or Trading House.]
(2) (a) This section applies to all goods or merchandise, other than
those specified in clause (b), if the sale proceeds of such goods or
merchandise exported out of India are 51[R173] [received in, or brought into, India] by the assessee 52[R174] [(other than the supporting manufacturer)] in convertible
foreign exchange 53[R175] [, within a period of six months from the end of the
previous year or, 53a[R176] [within such
further period as the competent authority may allow in this behalf].]
53b[R177] [Explanation.—For
the purposes of this clause, the expression “competent authority” means the
Reserve Bank of India or such other authority as is authorised under any law
for the time being in force for regulating payments and dealings in foreign exchange.]
(b) This
section does not apply to the following goods or merchandise, namely :—
(i) mineral
oil ; and
(ii) minerals
and ores 54[R178] [(other than processed minerals and ores specified in the Twelfth
Schedule)].
55[R179] [Explanation 1.—The sale proceeds referred to in
clause (a) shall be deemed to have been received in India where such
sale proceeds are credited to a separate account maintained for the purpose by
the assessee with any bank outside India with the approval of the Reserve Bank
of India.
Explanation 2.—For the
removal of doubts, it is hereby declared that where any goods or merchandise
are transferred by an assessee to a branch, office, warehouse or any other establishment
of the assessee situate outside India and such goods or merchandise are sold
from such branch, office, warehouse or establishment, then, such transfer
shall be deemed to be export out of India of such goods and merchandise and the
value of such goods or merchandise declared in the shipping bill or bill of
export as referred to in sub-section (1) of section 5056[R180] of the Customs Act, 1962 (52 of 1962), shall, for the
purposes of this section, be deemed to be the sale proceeds thereof.]
57[R181] (3) For the purposes
of sub-section (1),—
(a) where
the export out of India is of goods or merchandise manufactured 58[R182] [or processed] by the assessee, the profits derived from
such export shall be the amount which bears to the profits of the business, the
same proportion as the export turnover in respect of such goods bears to the
total turnover of the business carried on by the assessee ;
(b) where
the export out of
(c) where
the export out of India is of goods or merchandise manufactured 59[R183] [or processed] by the assessee and of trading goods, the
profits derived from such export shall,—
(i) in
respect of the goods or merchandise manufactured 59[R184] [or processed] by the assessee, be the amount which bears
to the adjusted profits of the business, the same proportion as the adjusted
export turnover in respect of such goods bears to the adjusted total turnover
of the business carried on by the assessee ; and
(ii) in
respect of trading goods, be the export turnover in respect of such trading
goods as reduced by the direct and indirect costs attributable to export of
such trading goods :
Provided that the
profits computed under clause (a) or clause (b) or clause (c)
of this sub-section shall be further increased by the amount which bears to
ninety per cent of any sum referred to in clause (iiia) (not being
profits on sale of a licence acquired from any other person), and clauses (iiib)
and (iiic) of section 28, the same proportion as the export turnover
bears to the total turnover of the business carried on by the assessee.
Explanation.—For the
purposes of this sub-section,—
(a) “adjusted
export turnover” means the export turnover as reduced by the export turnover in
respect of trading goods ;
(b) “adjusted
profits of the business” means the profits of the business as reduced by the
profits derived from the business of export out of India of trading goods as
computed in the manner provided in clause (b) of sub-section (3) ;
(c) “adjusted
total turnover” means the total turnover of the business as reduced by the
export turnover in respect of trading goods ;
(d) “direct
costs” means costs directly attributable to the trading goods exported out of
(e) “indirect
costs” means costs, not being direct costs, allocated in the ratio of the
export turnover in respect of trading goods to the total turnover ;
(f) “trading
goods” means goods which are not manufactured 60[R185] [or processed] by the assessee.]
61[R186] [(3A) For
the purposes of sub-section (1A), profits derived by a supporting manufacturer
from the sale of goods or merchandise shall be,—
(a) in
a case where the business carried on by the supporting manufacturer consists
exclusively of sale of goods or merchandise to one or more Export Houses or
Trading Houses, the profits of the business 62[R187] [***] ;
(b) in
a case where the business carried on by the supporting manufacturer does not
consist exclusively of sale of goods or merchandise to one or more Export Houses
or Trading Houses, the amount which bears to the profits of the business 63[R188] [***] the same proportion as the turnover in respect of
sale to the respective Export House or Trading House bears to the total
turnover of the business carried on by the assessee.]
64[R189] [(4) The deduction
under sub-section (1) shall not be admissible unless the assessee furnishes in
the prescribed form65[R190] , along with the return of income, the report of an
accountant, as defined in the Explanation below sub-section (2) of
section 288, certifying that the deduction has been correctly claimed 66[R191] [in accordance with the provisions of this section.]]
67[R192] [(4A) The
deduction under sub-section (1A) shall not be admissible unless the supporting
manufacturer furnishes in the prescribed form along with his return of
income,—
68[R193] (a) the
report of an accountant, as defined in the Explanation below sub-section
(2) of section 288, certifying that the deduction has been correctly claimed on
the basis of the 69[R194] [profits] of the supporting manufacturer in respect of his
sale of goods or merchandise to the Export House or Trading House ; and
(b) a
certificate from the Export House or Trading House containing such particulars
as may be prescribed and verified in the manner prescribed70[R195] that in respect of the export turnover mentioned in the
certificate, the Export House or Trading House has not claimed the deduction
under this section :
Provided that the
certificate specified in clause (b) shall be duly certified by the
auditor auditing the accounts of the Export House or Trading House under the
provisions of this Act or under any other law.]
71[R196] [(4B) For the purposes of computing the
total income under sub-section (1) or sub-section (1A), any income not charged
to tax under this Act shall be excluded.]
Explanation.—For the
purposes of this section,—
(a) “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
thereunder ;
72[R197] [(aa) “export
out of India” shall not include any transaction by way of sale or otherwise,
in a shop, 73[R198] emporium or any other establishment situate in India, not
involving clearance at any customs station74[R199] as defined in the Customs Act, 1962 (52 of 1962) ;]
(b) “export
turnover” means the sale proceeds 75[R200] [, received in, or brought into, India] by the assessee in
convertible foreign exchange 76[R201] [in accordance with clause (a) of sub-section (2)]
of any goods or merchandise to which this section applies and which are
exported out of India, but does not include freight or insurance attributable
to the transport of the goods or merchandise beyond the customs station74[R202] as defined in the Customs Act, 1962 (52 of 1962) ;]
77[R203] [(ba) “total
turnover” shall not include freight or insurance attributable to the transport
of the goods or merchandise beyond the customs station74[R204] as defined in the Customs Act, 1962 (52 of 1962) :
Provided
that in relation to any assessment year commencing on or after the 1st day of
April, 1991, the expression “total turnover” shall have effect as if it also
excluded any sum referred to in clauses (iiia),(iiib) and (iiic)
of section 28 ;]
78[R205] [(baa) “profits
of the business” means the profits of the business as computed under the head
“Profits and gains of business or profession” as reduced by—
(1) ninety
per cent of any sum referred to in clauses (iiia),(iiib) and (iiic)
of section 28 or of any receipts by way of brokerage, commission, interest,
rent, charges or any other receipt of a similar nature included in such profits
; and
(2) the
profits of any branch, office, warehouse or any other establishment of the
assessee situate outside
81[R208] [82[R209] [(c)] “Export
House Certificate” or “Trading House Certificate” means a valid Export House
Certificate or Trading House Certificate, as the case may be, issued by the
Chief Controller of Imports and Exports, Government of India ;
82[R210] [(d)] “supporting
manufacturer” means a person being an Indian company or a person (other than a
company) resident in India, 83[R211] [manufacturing (including processing) goods] or merchandise
and selling such goods or merchandise to an Export House or a Trading House for
the purposes of export.]
84[R212] [Deduction in respect of
earnings in convertible foreign exchange.
80HHD.
(1) Where an assessee,
being an Indian company or a person (other than a company) resident in India,
is engaged in the business of a hotel or of a tour operator, approved by the
prescribed authority85[R213] in this behalf or of a travel agent, there shall, in
accordance with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, a deduction of a sum equal to the
aggregate of—
(a) fifty
per cent of the profits derived by him from services provided to foreign
tourists ; and
(b) so
much of the amount out of the remaining profits referred to in clause (a)
as is debited to the profit and loss account of the previous year in respect of
which the deduction is to be allowed and credited to a reserve account to be
utilised for the purposes of the business of the assessee in the manner laid
down in sub-section (4) :
86[R214] [Provided that a hotel or, as the case may be, a
tour operator approved by the prescribed authority on or after the 30th day of
November, 1989 and before the 1st day of October, 1991, shall be deemed to have
been approved by the prescribed authority for the purposes of this section in
relation to the assessment year commencing on the 1st day of April, 1989 or the
1st day of April, 1990 or, as the case may be, the 1st day of April, 1991 if
the assessee was engaged in the business of such hotel or as such tour operator
during the previous year relevant to any of the said assessment years.]
(2) This
section applies only to services provided to foreign tourists the receipts in
relation to which are received 87[R215] [in, or brought into,
88[R217] [Explanation 88a[R218] [1].—For the purposes of this sub-section, any payment received
by an assessee, engaged in the business of a hotel or of a tour operator or of
a travel agent, in Indian currency obtained by conversion of foreign exchange
brought into India through an authorised dealer, 89[R219] [from another hotelier, tour operator or travel agent, as
the case may be,] on behalf of a foreign tourist or group of foreign tourists,
shall be deemed to have been received by the assessee in convertible foreign exchange
if the person making the payment furnishes to the assessee a certificate
specified in sub-section (2A).
88a[R220] [Explanation 2.—For
the purposes of this sub-section, the expression “competent authority” means
the Reserve Bank of
(2A) Every
person making payment to an assessee referred to in the Explanation 88a[R221] [1] to sub-section (2) out
of Indian currency obtained by conversion of foreign exchange received from or
on behalf of a foreign tourist or a group of foreign tourists shall furnish to
that assessee a certificate in the prescribed form90[R222] indicating the amount received in foreign exchange, its
conversion into Indian currency and such other particulars as may be
prescribed.]
91[R223] [(3) For the
purposes of sub-section (1), profits derived from services provided to foreign
tourists shall be the amount which bears to the profits of the business (as
computed under the head “Profits and gains of business or profession”) the same
proportion as the receipts specified in sub-section (2) 92[R224] [[as reduced by any payment, referred to in sub-section
(2A), made by the assessee]] bear to the total receipts of the business carried
on by the assessee.]
(4) The
amount credited to the reserve account under clause (b) of sub-section
(1), shall be utilised by the assessee before the expiry of a period of five
years next following the previous year in which the amount was credited for the
following purposes, namely :—
(a) construction
of new hotels approved by the prescribed authority in this behalf or expansion
of facilities in existing hotels already so approved ;
(b) purchase
of new cars and new coaches by tour operators already so approved or by travel
agents ;
(c) purchase
of sports’ equipment for mountaineering, trekking, golf, river-rafting and
other sports in or on water ;
(d) construction
of conference or convention centres ;
(e) provision
of such new facilities for the growth of Indian tourism as the Central
Government may, by notification in the Official Gazette, specify in this
behalf ;
The following clause (f) shall be inserted after clause (e)
of sub-section (4) of section 80HHD by the Finance Act, 1999, w.e.f. 1-4-2000
:
(f) subscription to equity shares forming
part of any eligible issue of capital made by a public company:
Provided that where
any of the activities referred to in clauses (a) to 92a[R225] [(e)]
would result in creation of any asset owned by the assessee outside India, such
asset should be created only after obtaining prior approval of the prescribed
authority.
(5) Where
any amount credited to the reserve account under clause (b) of
sub-section (1),—
(a) has
been utilised for any purpose other than those referred to in sub-section (4),
the amount so utilised; or
(b) has
not been utilised in the manner specified in sub-section (4), the amount not so
utilised,shall be deemed to be the profits,—
(i) in
a case referred to in clause (a), in the year in which the amount was so
utilised; or
(ii) in
a case referred to in clause (b), in the year immediately following the
period of five years specified in sub-section (4),and shall be charged to tax
accordingly.
The following sub-section (5A) shall be inserted after
sub-section (5) of section 80HHD by the Finance Act, 1999, w.e.f. 1-4-2000 :
(5A) Where
any amount credited to the reserve account under clause (b) of sub-section (1) has been utilised for subscription
to any equity shares referred to in clause (f) of sub-section (4) and
either whole or any part of such equity shares are transferred or converted
into money by the assessee at any time within a period of three years from the
date of their acquisition, the aggregate amount so utilised in respect of such
equity shares shall be deemed to be the profits of the previous year in which
the equity shares are transferred or converted into money.
Explanation.—A person shall be treated as having
acquired any shares on the date on which his name is entered in relation to
those shares in the register of members of the public company.
(6) The
deduction under sub-section (1) shall not be admissible unless the assessee furnishes
in the prescribed form93[R226] , along with the return of income, the report of an
accountant, as defined in the Explanation below sub-section (2) of
section 288, certifying that the deduction has been correctly claimed on the
basis of the 94[R227] [95[R228] [***] amount of convertible foreign exchange received by
the assessee for services provided by him to foreign tourists 96[R229] [, payments made by him to any assessee referred to in
sub-section (2A)] and the payments received by him in Indian currency as
referred to in the Explanation 96a[R230] [1] to sub-section (2).]
97[R231] [(7) Where a
deduction under sub-section (1) is claimed and allowed in respect of profits
derived from the business of a hotel, such part of profits shall not qualify to
that extent for deduction for any assessment year under any other provisions of
this Chapter under the heading “C.—Deductions in respect of certain
incomes”, and shall in no case exceed the profits and gains of such hotel.]
Explanation.—For the
purposes of this section,—
(a) “travel
agent” means a travel agent or other person (not being an airline or a shipping
company) who holds a valid licence granted by the Reserve Bank of India under
section 3298[R232] of the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(b) “convertible
foreign exchange” shall have the meaning assigned to it in clause (a) of
the Explanation to section 80HHC;
(c) “services
provided to foreign tourists” shall not include services by way of sale in any shop
owned or managed by the person who carries on the business of a hotel or of a
tour operator or of a travel agent;
99[R233] [(d) 1[R234] “authorised dealer”, 2[R235] “foreign exchange” and 3[R236] “Indian currency” shall have the meanings respectively
assigned to them in clauses (b), (h) and (k) of section 2
of the Foreign Exchange Regulation Act, 1973 (46 of 1973).]
The following clause (e) shall be inserted after clause (d)
of Explanation to section 80HHD by the Finance Act, 1999, w.e.f. 1-4-2000 :
(e) “eligible issue of capital” means an
issue made by a public company formed and registered in
(i) setting up and running of new hotels
approved by the prescribed authority; or
(ii) providing such new facility for the
growth of tourism in
4[R237] [Deduction in respect of profits from export of computer
software, etc.
80HHE.
(1) Where an assessee,
being an Indian company or a person (other than a company) resident in
(i) export
out of
(ii) providing
technical services outside
6[R239] [Provided that if the assessee, being a company,
engaged in the export out of India of computer software, issues a certificate
referred to in clause (b) of sub-section (4A), that in respect of the
amount of the export specified therein, the deduction under this sub-section is
to be allowed to a supporting software developer, then the amount of deduction
in the case of an assessee shall be reduced by such amount which bears to the
total profits derived by the assessee from the export, the same proportion as
the amount of the export turnover specified in such certificate bears to the
total export turnover of the assessee.
(1A) Where
the assessee, being a supporting software developer, has during the previous
year, developed and sold computer software to an exporting company in respect
of which the said company has issued a certificate under the proviso to
sub-section (1), there shall, in accordance with and subject to the provisions
of this section, be allowed in computing the total income of the assessee a
deduction of the profits derived by the assessee from the developing and selling
of computer software to the exporting company in respect of which the
certificate has been issued by the said company.]
(2) The
deduction specified in sub-section (1) shall be allowed only if the
consideration in respect of the computer software referred to in that
sub-section is received in, or brought into, India by the assessee in
convertible foreign exchange, within a period of six months from the end of the
previous year or, 6a[R240] [within such
further period as the competent authority may allow in this behalf].
Explanation 6b[R241] [1].—The said
consideration shall be deemed to have been received in India where it is
credited to a separate account maintained for the purpose by the assessee with
any bank outside India with the approval of the Reserve Bank of India.
6b[R242] [Explanation 2.—For
the purposes of this sub-section, the expression “competent authority” means
the Reserve Bank of India or such other authority as is authorised under any
law for the time being in force for regulating payments and dealings in foreign
exchange.]
(3) For
the purposes of sub-section (1), profits derived from the business referred to
in that sub-section shall be the amount which bears to the profits of the
business, the same proportion as the export turnover bears to the total
turnover of the business carried on by the assessee.
7[R243] [(3A) For
the purposes of sub-section (1A), profits derived by a supporting software
developer shall be,—
(i) in a case where the business carried on
by the supporting software developer consists exclusively of developing and
selling of computer software to one or more exporting companies solely engaged
in exports, the profits of such business;
(ii) in a case where the business carried on
by a supporting software developer does not consist exclusively of developing
and selling of computer software to one or more exporting companies, the amount
which bears to the profits of the business, the same proportion as the turnover
in respect of sale to the respective exporting company bears to the total
turnover of the business carried on by the assessee.]
(4) The
deduction under sub-section (1) shall not be admissible unless the assessee
furnishes in the prescribed form8[R244] , along with the return of income, the report of an
accountant, as defined in the Explanation below sub-section (2) of
section 288, certifying that the deduction has been correctly claimed in
accordance with the provisions of this section.
9[R245] [(4A) The deduction
under sub-section (1A) shall not be admissible unless the supporting software
developer furnishes in the prescribed form along with his return of income,—
*[R246] (i) the report of an accountant9a[R247] , as defined in the Explanation
below sub-section (2) of section 288, certifying that the deduction has
been correctly claimed on the basis of the profits of the supporting software
developer in respect of sale of computer software to the exporting company;
and
*[R248] (ii) a certificat e 10a[R249] from the exporting company containing such particulars as
may be prescribed and verified in the manner prescribed that in respect of the
export turnover mentioned in the certificate, the exporting company has not
claimed deduction under this section :
Provided that the
certificate specified in clause (b) shall be duly certified by the auditor
auditing the accounts of the exporting assessee under the provisions of this
Act or under any other law.]
(5) Where
a deduction under this section is claimed and allowed in respect of profits of
the business referred to in sub-section (1) for any assessment year, no
deduction shall be allowed in relation to such profits under any other
provision of this Act for the same or any other assessment year.
Explanation.—For the
purposes of this section,—
(a) “convertible
foreign exchange” shall have the meaning assigned to it in clause (a) of
the Explanation to section 80HHC;
(b) “computer
software” means any computer programme recorded on any disc, tape, perforated
media or other information storage device and includes any such programme 10[R250] [or any customised electronic data] which is
transmitted from India to a place outside India by any means;
(c) “export
turnover” means the consideration in respect of computer software received in,
or brought into, India by the assessee in convertible foreign exchange in
accordance with sub-section (2), but does not include freight,
telecommunication charges or insurance attributable to the delivery of the
computer software outside India or expenses, if any, incurred in foreign
exchange in providing the technical services outside India;
10[R251] [(ca) “exporting
company” means a company referred to in sub-section (1) making actual export of
computer software;]
(d) “profits
of the business” means the profits of the business as computed under the head
“Profits and gains of business or profession” as reduced by—
(1) ninety
per cent of any receipts by way of brokerage, commission, interest, rent,
charges or any other receipt of a similar nature included in such profits; and
(2) the
profits of any branch, office, warehouse or any other establishment of the
assessee situate outside
(e) “total
turnover” shall not include—
(i) any
sum referred to in clauses (iiia), (iiib) and (iiic) of
section 28;
(ii) any
freight, telecommunication charges or insurance attributable to the delivery
of the computer software outside
(iii) expenses,
if any, incurred in foreign exchange in providing the technical services outside
10b[R252] [(ea) “supporting
software developer” means an Indian company or a person (other than a company)
resident in India, developing and selling computer software to an exporting
company for the purposes of export.]
The following section 80HHF shall be inserted after section
80HHE by the Finance Act, 1999, w.e.f.
1-4-2000 :
Deduction in respect of
profits and gains from export or transfer of film software, etc.
80HHF. (1) Where an
assessee, being an Indian company, is engaged in the business of export or
transfer by any means out of India, of any film software, television software,
music software, television news software, including telecast rights (hereafter
in this section referred to as the software or software rights), there shall,
in accordance with and subject to the provisions of this section, be allowed,
in computing the total income of the assessee, a deduction of the profits
derived by the assessee from such business.
(2) The
deduction specified in sub-section (1) shall be allowed only if the
consideration in respect of the software or software rights referred to in that
sub-section is received in, or brought into, India by the assessee in
convertible foreign exchange, within a period of six months from the end of the
previous year or within such further period as the competent authority may
allow in this behalf.
(3) For
the purposes of sub-section (1), profits derived from the business referred to
in that sub-section shall be the amount which bears to the profits of the
business, the same proportion as the export turnover bears to the total
turnover of the business carried on by the assessee.
(4) The
deduction under sub-section (1) shall not be admissible unless the assessee
furnishes in the prescribed form, along with the return of income, the report
of an accountant, as defined in the Explanation
below sub-section (2) of section 288, certifying that the deduction has
been correctly claimed in accordance with the provisions of this section.
(5) Where
a deduction under this section is claimed and allowed in respect of profits of
the business referred to in sub-section (1) for any assessment year, no
deduction shall be allowed in relation to such profits under any other
provision of this Act for the same or any other assessment year.
(6) Notwithstanding
anything contained in this section, no deduction shall be allowed in respect
of the software or software rights referred to in sub-section (1), if such
business is prohibited by any law for the time being in force.
Explanation.—For the purposes of this section,—
(a) “competent authority” means the Reserve
Bank of India or such other authority as is authorised under any law for the
time being in force for regulating payments and dealings in foreign exchange;
(b) “convertible foreign exchange” shall
have the meaning assigned to it in clause (a) of the Explanation to
section 80HHC;
(c) “export turnover” means the
consideration in respect of the software or software rights specified in
clauses (d), (e), (g), (h) and (i), received
in, or brought into, India by the assessee in convertible foreign exchange in
accordance with sub-section (2), but does not include freight,
telecommunication charges or insurance attributable to the delivery of such
software outside India or expenses, if any, incurred in foreign exchange in
providing the technical services outside India;
(d) “film software” means a copy of a
cinematograph film made by any process analogous to cinematography on acetate polyester
or celluloid film positive, magnetic tape, digital media or other optical or
magnetic devices and certified by the Board of film certification constituted
by the Central Government under section 3 of the Cinematograph Act, 1952 (37 of
1952);
(e) “music software” includes series of
sounds or music recorded on magnetic tape, cassette, compact discs and digital
media which can be played or reproduced on any appropriate apparatus;
(f) “profits of the business” means the
profits of the business as computed under the head “Profits and gains of business
or profession” as reduced by—
(A) ninety per cent of any receipts by way of
brokerage, commission, interest, rent, charges or any other receipt of a
similar nature included in such profits; and
(B) the profits of any branch, office,
warehouse or any other establishment of the assessee situated outside
(g) “telecast rights” means a licence or
contract to exhibit motion pictures or television programmes over a television
network either through terrestrial transmission or through a satellite
broadcast in a specified territory;
(h) “television news software” means a
collection of sounds and images, reportage, data and voice of actualities
broadcast either through terrestrial transmission, wire or satellite, live or
pre-recorded on video cassettes or digital media;
(i) “television software” means any
programme or series of sounds and images recorded on film or tape or digital
media or broadcast through terrestrial transmitter, satellite or any other
means of diffusion;
(j) “total turnover” shall not include—
(A) any sum referred to in clauses (iiia),
(iiib) and (iiic) of section 28;
(B) any freight, telecommunication charges or
insurance attributable to the delivery of the film software, music software,
telecast rights, television news software, or television software as defined in
clause (d), (e), (g), (h) or (i), as the
case may be, outside India;
(C) expenses, if any, incurred in foreign
exchange in providing the technical services outside
11[R253] [Deduction in respect of profits and gains from industrial
undertakings after a certain date, etc.
12[R254] 80-I. (1) Where the gross total income of an
assessee includes any profits and gains derived from an industrial undertaking
or a ship or the business of a hotel 13[R255] [or the business of repairs to ocean-going vessels or other
powered craft], to which this section applies, there shall, in accordance with
and subject to the provisions of this section, be allowed, in computing the
total income of the assessee, a deduction from such profits and gains of an
amount equal to twenty per cent thereof:
Provided that in the
case of an assessee, being a company, the provisions of this sub-section shall
have effect 14 [R256] [in relation to profits and gains derived from an
industrial undertaking or a ship or the business of a hotel] as if for the
words “twenty per cent”, the words “twenty-five per cent” had been substituted.
15[R257] [(1A) Notwithstanding
anything contained in sub-section (1), in relation to any profits and gains
derived by an assessee from—
(i) an
industrial undertaking which begins to manufacture or produce articles or
things or to operate its cold storage plant or plants; or
(ii) a
ship which is first brought into use; or
(iii) the
business of a hotel which starts functioning,on or after the 1st day of April,
1990, 16[R258] [but before the 1st day of April, 1991], there shall, in
accordance with and subject to the provisions of this section, be allowed in
computing the total income of the assessee, a deduction from such profits and
gains of an amount equal to twenty-five per cent thereof :
Provided that in the
case of an assessee, being a company, the provisions of this sub-section shall
have effect in relation to profits and gains derived from an industrial
undertaking or a ship or the business of a hotel as if for the words “twenty-five
per cent”, the words “thirty per cent” had been substituted.]
(2) This
section applies to any industrial undertaking which fulfils all the following
conditions, namely :—
(i) it
is not formed by the splitting up, or the reconstruction, of a business
already in existence;
(ii) it
is not formed by the transfer to a new business of machinery or plant
previously used for any purpose;
(iii) it
manufactures or produces any article or thing, not being any article or thing
specified in the list in the Eleventh Schedule , or operates one or more cold
storage plant or plants, in any part of India, and begins to manufacture or
produce articles or things or to operate such plant or plants, at any time
within the period of 17[R259] [ten] years next following the 31st day of March, 1981, or
such further period as the Central Government may, by notification in the
Official Gazette, specify with reference to any particular industrial
undertaking;
(iv) in
a case where the industrial undertaking manufactures or produces articles or
things, the undertaking employs ten or more workers in a manufacturing process
carried on with the aid of power, or employs twenty or more workers in a
manufacturing process carried on without the aid of power :
Provided that the
condition in clause (i) 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 :
Provided further that
the condition in clause (iii) shall, in relation to a small-scale
industrial undertaking, apply as if the words “not being any article or thing specified
in the list in the Eleventh Schedule” had been omitted.
Explanation 1.—For the
purposes of clause (ii) of this sub-section, any machinery or plant
which was used outside India by any person other than the assessee shall not be
regarded as machinery or plant previously used for any purpose, if the following
conditions are fulfilled, namely :—
(a) such
machinery or plant was not, at any time previous to the date of the
installation by the assessee, used in
(b) such
machinery or plant is imported into
(c) no
deduction on account of depreciation in respect of such machinery or plant has
been allowed or is allowable under the provisions of this Act in computing the
total income of any person for any period prior to the date of the installation
of the machinery or plant by the assessee.
Explanation 2.—Where
in the case of an industrial undertaking, any machinery or plant or any part
thereof previously used for any purpose is transferred to a new business and
the total value of the machinery or plant or part so transferred does not
exceed twenty per cent of the total value of the machinery or plant used in the
business, then, for the purposes of clause (ii) of this sub-section, the
condition specified therein shall be deemed to have been complied with.
Explanation 3.—For the
purposes of this sub-section, “small-scale industrial undertaking” shall have
the same meaning as in clause (b) of the Explanation below
sub-section (8) of section 80HHA.
(3) This
section applies to any ship, where all the following conditions are fulfilled,
namely :—
(i) it
is owned by an Indian company and is wholly used for the purposes of the
business carried on by it;
(ii) it
was not, previous to the date of its acquisition by the Indian company, owned
or used in Indian territorial waters by a person resident in India; and
(iii) it
is brought into use by the Indian company at any time within the period of 18[R260] [ten] years next following the 1st day of April, 1981.
(4) This
section applies to the business of any hotel, where all the following
conditions are fulfilled, namely :—
(i) the
business of the hotel is not formed by the splitting up, or the reconstruction,
of a business already in existence or by the transfer to a new business of a
building previously used as a hotel or of any machinery or plant previously
used for any purpose;
(ii) the
business of the hotel is owned and carried on by a company registered in
(iii) the
hotel is for the time being approved for the purposes of this sub-section by
the Central Government;
(iv) the
business of the hotel starts functioning after the 31st day of March, 1981, but
before the 1st day of April, 19[R261] [1991].
20[R262] [(4A) This
section applies to the business of repairs to ocean-going vessels or other
powered craft which fulfils all the following conditions, namely :—
(i) the
business is not formed by the splitting up, or the reconstruction, of a
business already in existence;
(ii) it
is not formed by the transfer to a new business of machinery or plant
previously used for any purpose;
(iii) it
is carried on by an Indian company and the work by way of repairs to
ocean-going vessels or other powered craft has been commenced by such company
after the 31st day of March, 1983, but before the 1st day of April, 1988; and
(iv) it
is for the time being approved for the purposes of this sub-section by the
Central Government.]
(5) The
deduction specified in sub-section (1) shall be allowed in computing the total
income in respect of the assessment year relevant to the previous year in which
the industrial undertaking begins to manufacture or produce articles or things,
or to operate its cold storage plant or plants or the ship is first brought
into use or the business of the hotel starts functioning 21[R263] [or the company commences work by way of repairs to
ocean-going vessels or other powered craft] (such assessment year being
hereafter in this section referred to as the initial assessment year) and each
of the seven assessment years immediately succeeding the initial assessment
year :
Provided that in the
case of an assessee, being a co-operative society, the provisions of this
sub-section shall have effect as if for the words “seven assessment years”, the
words “nine assessment years” had been substituted :
22[R264] [Provided further that in the case of an assessee
carrying on the business of repairs to ocean-going vessels or other powered
craft, the provisions of this sub-section shall have effect as if for the words
“seven assessment years”, the words “four assessment years” had been
substituted:]
23[R265] [Provided also that in the case of—
(i) an
industrial undertaking which begins to manufacture or produce articles or
things or to operate its cold storage plant or plants; or
(ii) a
ship which is first brought into use; or
(iii) the
business of a hotel which starts functioning,on or after the 1st day of April,
1990 24[R266] [but before the 1st day of April, 1991], provisions of
this sub-section shall have effect as if for the words “seven assessment
years”, the words “nine assessment years” had been substituted :
Provided also that in
the case of an assessee, being a co-operative society, deriving profits and
gains from an industrial undertaking or a ship or a hotel referred to in the
third proviso, the provisions of that proviso shall have effect as if for the
words “nine assessment years”, the words “eleven assessment years” had been
substituted.]
(6) Notwithstanding
anything contained in any other provision of this Act, the profits and gains of
an industrial undertaking or a ship or the business of a hotel 25[R267] [or the business of repairs to ocean-going vessels or
other powered craft] to which the provisions of sub-section (1) apply shall,
for the purposes of determining the quantum of deduction under sub-section (1)
for the assessment year immediately succeeding the initial assessment year or
any subsequent assessment year, be computed as if such industrial undertaking
or ship or the business of the hotel 25[R268] [or the business of repairs to ocean-going vessels or
other powered craft] were the only source of income of the assessee during the
previous years relevant to the initial assessment year and to every subsequent
assessment year up to and including the assessment year for which the
determination is to be made.
(7) Where
the assessee is a person other than a company or a co-operative society, the
deduction under sub-section (1) from profits and gains derived from an
industrial undertaking shall not be admissible unless the accounts of the
industrial undertaking for the previous year relevant to the assessment year
for which the deduction is claimed have been audited by an accountant, as
defined in the Explanation below sub-section (2) of section 288, and the
assessee furnishes, along with his return of income, the report of such audit
in the prescribed form 26 [R269] duly signed and verified by such accountant.
(8) Where
any goods held for the purposes of the business of the industrial undertaking
or the hotel or the operation of the ship 27[R270] [or the business of repairs to ocean-going vessels or
other powered craft] are transferred to any other business carried on by the
assessee, or where any goods held for the purposes of any other business
carried on by the assessee are transferred to the business of the industrial
undertaking or the hotel or the operation of the ship 27[R271] [or the business of repairs to ocean-going vessels or
other powered craft] and, in either case, the consideration, if any, for such
transfer as recorded in the accounts of the business of the industrial
undertaking or the hotel or the operation of the ship 27[R272] [or the business of repairs to ocean-going vessels or
other powered craft] does not correspond to the market value of such goods as
on the date of the transfer, then, for the purposes of the deduction under this
section, the profits and gains of the industrial undertaking or the business of
the hotel or the operation of the ship 27[R273] [or the business of repairs to ocean-going vessels or
other powered craft] shall be computed as if the transfer, in either case, had
been made at the market value of such goods as on that date:
Provided that where,
in the opinion of the 28[R274] [Assessing] Officer, the computation of the profits and
gains of the industrial undertaking or the business of the hotel or the
operation of the ship 27[R275] [or the business of repairs to ocean-going vessels or
other powered craft] in the manner hereinbefore specified presents exceptional
difficulties, the 28 [R276] [Assessing] Officer may compute such profits and gains on
such reasonable basis as he may deem fit.
Explanation.—In this
sub-section, “market value”, in relation to any goods, means the price that
such goods would ordinarily fetch on sale in the open market.
(9) Where
it appears to the 28 [R277] [Assessing] Officer that, owing to the close connection
between the assessee carrying on the business of the industrial undertaking or
the hotel or the operation of the ship 27[R278] [or the business of repairs to ocean-going vessels or
other powered craft] to which this section applies and any other person, or for
any other reason, the course of business between them is so arranged that the
business transacted between them produces to the assessee more than the
ordinary profits which might be expected to arise in the business of the
industrial undertaking or the hotel or the operation of the ship 29 [R279] [or the business of repairs to ocean-going vessels or other
powered craft], the 30[R280] [Assessing] Officer shall, in computing the profits and
gains of the industrial undertaking or the hotel or the ship 29[R281] [or the business of repairs to ocean-going vessels or other
powered craft] for the purposes of the deduction under this section, take the
amount of profits as may be reasonably deemed to have been derived therefrom.
(10) The
Central Government may, after making such inquiry as it may think fit, direct,
by notification in the Official Gazette, that the exemption conferred by this
section shall not apply to any class of industrial undertakings with effect
from such date as it may specify in the notification.]
31[R282] [Deduction in respect of profits and gains from industrial
undertakings, etc., in certain cases.
32[R283] 80-IA. (1) Where the gross total income of an
assessee includes any profits and gains derived from any business of an
industrial undertaking or a hotel or 33[R284] [operation of a ship or developing, maintaining and
operating any infrastructure facility 34[R285] [or scientific and industrial research and development] 35[R286] [or providing telecommunication services whether basic or
cellular] 36[R287] [including radio paging, domestic satellite service or network
of trunking and electronic data interchange services or construction and
development of housing projects] 37[R288] [or operating an industrial park or commercial production 36[R289] [or refining] of mineral oil in the North
Eastern Region] 38[R290] [or in any part of India on or after the 1st day of April,
1997] (such business being hereinafter referred to as the eligible business)],
to which this section applies, there shall, in accordance with and subject to
the provisions of this section, be allowed, in computing the total income of
the assessee, a deduction from such profits and gains of an amount equal to the
percentage specified in sub-section (5) and for such number of assessment years
as is specified in sub-section (6).
(2) This
section applies to any industrial undertaking which fulfils all the following
conditions, namely :—
(i) it
is not formed by splitting up, or the reconstruction, of a business already in
existence:
Provided that this
condition shall not apply in respect of an 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;
(ii) it
is not formed by the transfer to a new business of machinery or plant
previously used for any purpose;
(iii) it
manufactures or produces any article or thing, not being any article or thing
specified in the list in the Eleventh Schedule, or operates one or more cold
storage plant or plants, in any part of
Provided that the
condition in this clause shall, in relation to a small scale industrial
undertaking 39[R291] [or an industrial undertaking referred to in sub-clause (b)
of clause (iv) which begins to manufacture or produce an article or
thing during the period beginning on the 1st day of April, 1993 and ending on
the 31st day of March, 40[R292] [2000]], apply as if the words “not being any article or
thing specified in the list in the Eleventh Schedule” had been omitted;
41[R293] [(iv)(a) in
the case of an industrial undertaking not specified in sub-clause (b) 42[R294] [or sub-clause (c)], it begins to manufacture or
produce articles or things or to operate such plant or plants, at any time
during the period beginning on the 1st day of April, 1991 and ending on the
31st day of March, 1995, or such further period as the Central Government may,
by notification in the Official Gazette, specify with reference to any
particular industrial undertaking;
(b) in the case of an industrial
undertaking located in an industrially backward State specified in the Eighth Schedule
or set up in any part of India for the generation, or generation and
distribution, of power, it begins to manufacture or produce articles or things
or to operate its cold storage plant or plants or to generate power at any time
during the period beginning on the 1st day of April, 1993 and ending on the
31st day of March, 40[R295] [2000]:]
43[R296] [Provided that in the case of an industrial
undertaking set up in any part of India for the generation, or generation and
distribution, of power, the period ending shall have effect as if for the
figures “1998”, the figures 44[R297] [2003] had been substituted;]
45[R298] [(c) in the
case of an industrial undertaking located in such industrially backward
district as the Central Government may, having regard to the prescribed
guidelines, by notification46[R299] in the Official Gazette, specify in this behalf 47[R300] [as an industrially backward district of Category A or an
industrially backward district of Category B and], it begins to manufacture or
produce articles or things or to operate its cold storage plant or plants at
any time during the period beginning on the 1st day of October, 1994 and ending
on the 31st day of March, 48[R301] [2000];]
49[R302] [(d) in the
case of an industrial undertaking being a small scale industrial undertaking,
not specified in sub-clause (b) or in sub-clause (c), it begins
to manufacture or produce articles or things or to operate its cold storage
plant at any time during the period beginning on the 1st day of April, 1995 and
ending on the 31st day of March, 2000;]
(v) in
a case where the industrial undertaking manufactures or produces articles or
things, the undertaking employs ten or more workers in a manufacturing process
carried on with the aid of power, or employs twenty or more workers in a
manufacturing process carried on without the aid of power.
Explanation 1.—For the
purposes of clause (ii) of this sub-section, any machinery or plant which
was used outside India by any person other than the assessee shall not be
regarded as machinery or plant previously used for any purpose, if the following
conditions are fulfilled, namely :—
(a) such
machinery or plant was not, at any time previous to the date of the
installation by the assessee, used in
(b) such
machinery or plant is imported into
(c) no
deduction on account of depreciation in respect of such machinery or plant has
been allowed or is allowable under the provisions of this Act in computing the
total income of any person for any period prior to the date of the installation
of the machinery or plant by the assessee.
Explanation 2.—Where
in the case of an industrial undertaking, any machinery or plant or any part
thereof previously used for any purpose is transferred to a new business and
the total value of the machinery or plant or part so transferred does not
exceed twenty per cent of the total value of the machinery or plant used in the
business, then, for the purposes of clause (ii) of this sub-section, the
condition specified therein shall be deemed to have been complied with.
(3) This
section applies to any ship, where all the following conditions are fulfilled,
namely :—
(i) it
is owned by an Indian company and is wholly used for the purposes of the
business carried on by it;
(ii) it
was not, previous to the date of its acquisition by the Indian company, owned
or used in Indian territorial waters by a person resident in India; and
(iii) it
is brought into use by the Indian company at any time during the period
beginning on the 1st day of April, 1991 and ending on the 31st day of March,
1995.
50[R303] (4) 51[R304] [This section applies to the business of any hotel—
(a) where
conditions (i), (ii) and (v); and
(b) either
of the conditions (iii) or (iv); or
(c) either
of the conditions (iiia) or (iva),are fulfilled, namely :—]
(i) the
business of the hotel is not formed by the splitting up, or the
reconstruction, of a business already in existence or by the transfer to a new
business of a building previously used as a hotel or of any machinery or plant
previously used for any purpose;
(ii) the
business of the hotel is owned and carried on by a company registered in
(iii) the
business of the hotel, located in a hilly area or a rural area or a place of
pilgrimage or such other place as the Central Government may having regard to
the need for development of infrastructure for tourism in any place and other
relevant considerations specify for the purpose of this clause, starts
functioning at any time during the period beginning on the 1st day of April,
1990 and ending on the 31st day of March, 1994;
52[R305] [(iiia) the
business of the hotel, located in a hilly area or a rural area or a place of
pilgrimage or such other place as the Central Government may, having regard to
the need for development of infrastructure for tourism in any place and other
relevant considerations, specify for the purpose of this clause, starts
functioning at any time during the period beginning on the 1st day of April,
1997 and ending on the 31st day of March, 2001 :
Provided that nothing
contained in this clause shall apply to any hotel located at a place within the
municipal jurisdiction (whether known as a municipality, municipal corporation,
notified area committee, town area committee or a cantonment board or by any
other name) of
(iv) the
business of the hotel—
(1) located
in any place, or
(2) located
in a place other than a place referred to in clause (iii) of this
sub-section,starts functioning at any time during the period beginning on the
1st day of April, 1991 and ending on the 31st day of March, 1995;
52[R306] [(iva) the
business of the hotel, located in a place other than a place referred to in
clause (iiia) of this sub-section and not being located at a place
within the municipal jurisdiction (whether known as a municipality, municipal
corporation, notified area committee, town area committee or a cantonment board
or by any other name) of Calcutta, Chennai, Delhi and Mumbai, starts
functioning at any time during the period beginning on the 1st day of April,
1997 and ending on the 31st day of March, 2001;]
(v) the
hotel is for the time being approved by the prescribed authority53[R307] .
54[R308] [(4A) This section
applies to any enterprise carrying on the business of developing, maintaining
and operating any infrastructure facility which fulfils all the following
conditions, namely :—
(i) the
enterprise is owned by a company registered in
(ii) the
enterprise has entered into an agreement with the Central Government or a State
Government or a local authority or any other statutory body for developing,
maintaining and operating a new infrastructure facility subject to the
condition that such infrastructure facility shall be transferred to the Central
Government, State Government, local authority or such other statutory body, as
the case may be, within the period stipulated in the agreement;
(iii) the
enterprise starts operating and maintaining the infrastructure facility on or
after the 1st day of April, 1995.]
55[R309] [(4B) This section
applies to any company registered in
(i) the
company has the main object of scientific and industrial research and
development;
(ii) the
company is for the time being approved by the prescribed authority56[R310] at any time before the 1st day of April, 57[R311] [1999].]
58[R312] [(4C) This section
applies to any undertaking which starts providing telecommunication services
whether basic or cellular 59[R313] [including radio paging, domestic satellite service or
network of trunking and electronic data interchange services] at any
time on or after the 1st day of April, 1995 but before the 31st day of March,
2000.]
60[R314] [(4D) This section
applies to any undertaking which begins to operate an industrial park notified
by the Central Government in accordance with the scheme framed and notified by
that Government for the period beginning on the 1st day of April, 1997 and
ending on the 31st day of March, 2002.
(4E) This section applies to any
undertaking which begins commercial production 61[R315] [or refining] of mineral oil in the North Eastern
Region 62[R316] [or in any part of
63[R317] [Provided that the provisions of this section
shall apply in case of refining of mineral oil where the undertaking begins
refining on or after the 1st day of October, 1998.]
63[R318] [(4F) This
section applies to an undertaking, engaged in developing and building housing
projects approved by a local authority subject to the condition that the size
of the plot of land has a minimum area of one acre, and the residential unit
has a built up area not exceeding one thousand square feet :
Provided that the
undertaking commences development and construction of the housing project on or
after the 1st day of October, 1998 and completes the same before the 31st day
of March, 2001.]
(5) The
amount referred to in sub-section (1) shall be—
64[R319] [(i)(a) in
the case of an industrial undertaking referred to in sub-clause (a) 65[R320] [or sub-clause (d)] of clause (iv) of
sub-section (2), twenty-five per cent of the profits and gains derived from
such industrial undertakings;
(b) in the case of an industrial undertaking
referred to in sub-clause (b) 66[R321] [or sub-clause (c)] of clause (iv) of
sub-section (2), hundred per cent of the profits and gains derived from such
industrial undertaking for the initial five assessment years and thereafter
twenty-five per cent of the profits and gains derived from such industrial
undertaking :
Provided that where
the assessee is a company, the provisions of this clause shall have effect as
if for the words “twenty-five per cent”, the words “thirty per cent” had been
substituted :]
67[R322] [Provided further that
in case of an industrial undertaking located in an industrially backward
district of Category B, the provisions of this clause shall have effect as if for
the words “five assessment years”, the words “three assessment years” had
been substituted;]
68 [R323] [(ia) in
the case of an enterprise referred to in sub-section (4A), hundred per cent of
the profits and gains derived from such business for the initial five
assessment years and thereafter, thirty per cent of such profits and gains;]
69[R324] [(ib) in the case of a company referred to in
sub-section (4B), hundred per cent of the profits and gains derived from such
business;]
70[R325] [(ic) in
the case of an undertaking referred to in sub-section (4C), hundred per cent of
the profits and gains derived from such business for the initial five
assessment years and thereafter, twenty-five per cent of the profits and gains
derived from such business:
Provided that where
the assessee is a company, the provisions of this clause shall have effect as
if for the words “twenty-five per cent”, the words “thirty per cent” had been
substituted;]
71[R326] [(id) in
the case of an industrial park referred to in sub-section (4D), hundred per
cent of the profits and gains derived from such business for the initial five
assessment years and thereafter, twenty-five per cent of the profits and gains
derived from such business :
Provided that where
the assessee is a company, the provisions of this clause shall have effect as
if for the words “twenty-five per cent”, the words “thirty per cent” had been
substituted;]
(ii) in
the case of a hotel referred to in clause (iii) of sub-section (4),
fifty per cent of the profits and gains derived from the business of such
hotel:
Provided that the said
hotel is approved by the prescribed authority for the purpose of this clause in
accordance with the rules72[R327] made under this Act :
Provided further that the
said hotel approved by the prescribed authority before the 31st day of March,
1992, shall be deemed to have been approved by the prescribed authority for the
purposes of this section in relation to the assessment year commencing on the
1st day of April, 1991;
73[R328] [(iia) in
the case of a hotel referred to in clause (iiia) of sub-section (4),
fifty per cent of the profits and gains derived from the business of such hotel
:
Provided that the said
hotel is approved by the prescribed authority74[R329] for the purposes of this clause in accordance with the
rules made under this Act;]
(iii) in
the case of a hotel referred to in clause (iv) 73[R330] [or clause (iva)] of sub-section (4), thirty per
cent of the profits and gains derived from the business of such hotel;
(iv) in
the case of a ship, thirty per cent of the profits and gains derived from such
ship;
73[R331] [(v) in
the case of undertaking referred to in sub-section (4E) hundred per cent of
profits and gains derived from such business for the initial seven assessment
years.]
75 [R332] [(vi) in the case of a housing project referred to in
sub-section (4F), hundred per cent of profits and gains derived from such
business.]
(6) The
number of assessment years referred to in sub-section (1) shall, including the
initial assessment year, be—
(i) twelve
in the case of an assessee, being a co-operative society, deriving profits and
gains from an industrial undertaking;
76[R333] (ii) ten
in the case of an assessee, not being a co-operative society, deriving profits
and gains from an industrial undertaking specified in sub-clause (a) or
sub-clause (b) or sub-clause (d) of clause (iv) of
sub-section (2) or located in an industrially backward district of Category A
specified in sub-clause (c) of clause (iv) of that sub-section;
(iia) eight
in the case of an assessee deriving profits and gains from an industrial
undertaking located in an industrially backward district of Category B
specified in sub-clause (c) of clause (iv) of sub-section (2) and
such an undertaking is not covered under clauses (i) and (ii) of
this sub-section;]
(iii) ten
in the case of any other assessee deriving profits and gains, from a ship or
the business of a hotel;
77[R334] (iv) any
ten consecutive assessment years falling within a period of twelve assessment
years beginning with the assessment year in which an assessee begins operating
and maintaining infrastructure facility :]
78[R335] [Provided that where the assessee begins operating
and maintaining any infrastructure facility referred to in sub-clause (ii)
of clause (ca) of sub-section (12), the provisions of this clause shall have
effect as if for the word “twelve”, the word “twenty” had been substituted;]
79[R336] [(v) five
in the case of an assessee, being a company referred to in sub-section (4B),
deriving profits and gains from scientific and industrial research and
development;]
80[R337] [(vi)
ten in the case of an assessee, being an
undertaking referred to in sub-section (4C), deriving profits and gains from
telecommunication services whether basic or cellular 81[R338] [including radio paging and domestic satellite service];]
82[R339] [(vii)
ten in the case of an assessee, being an
undertaking referred to in sub-section (4D), deriving profits and gains from
operating an industrial park.;
(viii) seven
in the case of an assessee being an undertaking referred to in sub-section (4E)
deriving profits and gains from commercial production 83[R340] [or refining] of mineral oil in the North Eastern
Region 84[R341] [and other parts of the country on or after the 1st day of
April, 1997]].
(7) Notwithstanding
anything contained in any other provision of this Act, the profits and gains of
an eligible business to which the provisions of sub-section (1) apply shall,
for the purposes of determining the quantum of deduction under sub-section (5)
for the assessment year immediately succeeding the initial assessment year or
any subsequent assessment year, be computed as if such eligible business were
the only source of income of the assessee during the previous year relevant to
the initial assessment year and to every subsequent assessment year up to and
including the assessment year for which the determination is to be made.
85[R342] [(7A) Notwithstanding anything contained in
sub-section (4A), where housing or other activities are an integral part of the
highway project and the profits of which are computed on such basis and manner
as may be prescribed86[R343] , such profit shall not be liable to tax where the profit
has been transferred to a special reserve account and the same is actually
utilised for the highway project excluding housing and other activities before
the expiry of three years following the year in which such amount was
transferred to the reserve account; and the amount remaining unutilised shall
be chargeable to tax as income of the year in which transfer to reserve account
took place.]
(8) Where
the assessee is a person other than a company or a co-operative society, the
deduction under sub-section (1) from profits and gains derived from an
industrial undertaking shall not be admissible unless the accounts of the
industrial undertaking for the previous year relevant to the assessment year
for which the deduction is claimed have been audited by an accountant, as
defined in the Explanation below sub-section (2) of section 288, and the
assessee furnishes, along with his return of income, the report of such audit
in the prescribed form87[R344] duly signed and verified by such accountant.
(9) Where
any goods held for the purposes of the eligible business are transferred to
any other business carried on by the assessee, or where any goods held for the
purposes of any other business carried on by the assessee are transferred to
the eligible business and, in either case, the consideration, if any, for such
transfer as recorded in the accounts of the eligible business does not
correspond to the market value of such goods as on the date of the transfer,
then, for the purposes of the deduction under this section, the profits and
gains of such eligible business shall be computed as if the transfer, in
either case, had been made at the market value of such goods as on that date:
Provided that where,
in the opinion of the Assessing Officer, the computation of the profits and
gains of the eligible business in the manner hereinbefore specified presents
exceptional difficulties, the Assessing Officer may compute such profits and
gains on such reasonable basis as he may deem fit.
Explanation.—In this
sub-section, “market value”, in relation to any goods, means the price that
such goods would ordinarily fetch on sale in the open market.
88[R345] [(9A) Where any
amount of profits and gains of an industrial undertaking or of a hotel in the
case of an assessee is claimed and allowed under this section for any
assessment year, deduction to the extent of such profits and gains shall not be
allowed under any other provisions of this Chapter under the heading “C.—Deductions
in respect of certain incomes”, and shall in no case exceed the profits and
gains of the undertaking or hotel, as the case may be.]
(10) Where
it appears to the Assessing Officer that, owing to the close connection between
the assessee carrying on the eligible business to which this section applies
and any other person, or for any other reason, the course of business between
them is so arranged that the business transacted between them produces to the
assessee more than the ordinary profits which might be expected to arise in
such eligible business, the Assessing Officer shall, in computing the profits
and gains of such eligible business for the purposes of the deduction under
this section, take the amount of profits as may be reasonably deemed to have
been derived therefrom.
(11) The
Central Government may, after making such inquiry as it may think fit, direct,
by notification in the Official Gazette, that the exemption conferred by this
section shall not apply to any class of industrial undertaking with effect from
such date as it may specify in the notification.
(12) For
the purposes of this section,—
89[R346] [(a) “domestic
satellite” means a satellite owned and operated by an Indian company for
providing telecommunication service;]
90[R347] [(aa)] “hilly
area” means any area located at a height of one thousand metres or more above
the sea level;
(b) “Industrial
undertaking” shall have the meaning assigned to it in the Explanation
to section 33B;
91[R348] [(c) “initial
assessment year”—
(1) in
the case of an industrial undertaking or cold storage plant or ship or hotel,
means the assessment year relevant to the previous year in which the
industrial undertaking begins to manufacture or produce articles or things, or
to operate its cold storage plant or plants or the ship is first brought into
use or the business of the hotel starts functioning;
(2) in
the case of an enterprise, carrying on the business of developing, operating
and maintaining any infrastructure facility, means the assessment year
specified by the assessee at his option to be the initial year, not falling
beyond the twelfth assessment year starting from the previous year in which the
enterprise begins operating and maintaining the infrastructure facility;
92[R349] [(3) in the
case of a company carrying on scientific and industrial research and
development, means the assessment year relevant to the previous year in which
the company is approved by the prescribed authority for the purposes of
sub-section (4B);]
93[R350] [(4) in
the case of an undertaking referred to in sub-section (4C) means the assessment
year relevant to the previous year in which the undertaking starts to provide
the telecommunication services whether basic or cellular 94[R351] [including radio paging and domestic satellite service];]
95[R352] [(5) in the case
of an undertaking operating an industrial park referred to in sub-section (4D)
means the assessment year relevant to the previous year in which the
undertaking starts operating such industrial park notified for the purposes of
the said sub-section;
(6) in
the case of an undertaking engaged in the business of commercial production 94[R353] [or refining] of mineral oil referred to in
sub-section (4E) means the assessment year relevant to the previous year in which
the undertaking commences the commercial production of mineral oil;]
96[R354] [(ca) “infrastructure
facility” means—
(i) a
road, bridge, airport, port, 97[R355] [inland waterways and inland ports,] rail system or
any other public facility of a similar nature as may be notified98[R356] by the Board in this behalf in the Official Gazette;
(ii) a
highway project including housing or other activities being an integral part of
the highway project; and
(iii) a
water supply project, irrigation project, sanitation and sewarage system;]
(d) “place
of pilgrimage” means a place where any temple, mosque, gurdwara, church or
other place of public worship of renown throughout any State or States is
situated;
(e) “rural
area” means any area other than—
(i) an
area which is comprised within the jurisdiction of a municipality (whether
known as a municipality, municipal corporation, notified area committee, town
area committee or by any other name) or a cantonment board and which has a
population of not less than ten thousand according to the preceding census of
which relevant figures have been published before the first day of the previous
year; or
(ii) an
area within such distance not being more than fifteen kilometres from the local
limits of any municipality or cantonment board referred to in sub-clause (i),
as the Central Government may, having regard to the stage of development of
such area (including the extent of, and scope for, urbanisation of such area)
and other relevant considerations specify in this behalf by notification in the
Official Gazette;
99[R357] [(f) “small-scale
industrial undertaking” means an industrial undertaking which is, as on the
last day of the previous year, regarded as a small-scale industrial
undertaking under section 11B1[R358] of the Industries (Development and Regulation) Act, 1951
(65 of 1951);]
2[R359] (g) “North
Eastern Region” means the region comprising of the States of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.]
The following
sections 80-IA and 80-IB shall be substituted for the existing section 80-IA by
the Finance Act, 1999, w.e.f. 1-4-2000 :
Deductions in respect of
profits and gains from industrial undertakings or enterprises engaged in
infrastructure development, etc.
80-IA. (1) Where the
gross total income of an assessee includes any profits and gains derived from
any business of an industrial undertaking or an enterprise referred to in
sub-section (4) (such business being hereinafter referred to as the eligible
business), there shall, in accordance with and subject to the provisions of
this section, be allowed, in computing the total income of the assessee, a
deduction from such profits and gains of an amount equal to hundred per cent of
profits and gains derived from such business for the first five assessment
years commencing at any time during the periods as specified in sub-section (2)
and thereafter, twenty-five per cent of the profits and gains for further five
assessment years :
Provided that where
the assessee is a company, the provisions of this sub-section shall have effect
as if for the words “twenty-five per cent”, the words “thirty per cent” had
been substituted.
(2) The
deduction specified in sub-section (1) may, at the option of the assessee, be
claimed by him for any ten consecutive assessment years out of fifteen years
beginning from the year in which the undertaking or the enterprise develops and
begins to operate any infrastructure facility or starts providing telecommunication
service or develops an industrial park or generates power or commences
transmission or distribution of power :
Provided that where
the assessee begins operating and maintaining any infrastructure facility
referred to in clause (b) of Explanation
to clause (i) of sub-section (4), the provisions of this
sub-section shall have effect as if for the words “fifteen years”, the words
“twenty years” had been substituted.
(3) This
section applies to any industrial undertaking which fulfils all the following
conditions, namely :—
(i) it is not formed by splitting up, or
the reconstruction, of a business already in existence :
Provided that this
condition shall not apply in respect of an industrial undertaking which is
formed as a result of the re-establishment, re-construction 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;
(ii) it is not formed by the transfer to a
new business of machinery or plant previously used for any purpose.
Explanation 1.—For the purposes of clause (ii),
any machinery or plant which was used outside India by any person other than
the assessee shall not be regarded as machinery or plant previously used for
any purpose, if the following conditions are fulfilled, namely :—
(a) such machinery or plant was not, at any
time previous to the date of the installation by the assessee, used in
(b) such machinery or plant is imported into
(c) no deduction on account of depreciation
in respect of such machinery or plant has been allowed or is allowable under
the provisions of this Act in computing the total income of any person for any
period prior to the date of the installation of machinery or plant by the
assessee.
Explanation 2.—Where in the case of an industrial
undertaking, any machinery or plant or any part thereof previously used for any
purpose is transferred to a new business and the total value of the machinery
or plant or part so transferred does not exceed twenty per cent of the total
value of the machinery or plant used in the business, then, for the purposes of
clause (ii) of this sub-section, the condition specified therein shall
be deemed to have been complied with.
(4) This
section applies to—
(i) any enterprise carrying on the business
of (i) developing, (ii) maintaining and operating or (iii)
developing, maintaining and operating any infrastructure facility which
fulfils all the following conditions, namely :—
(a) it is owned by a company registered in
(b) it has entered into an agreement with
the Central Government or a State Government or a local authority or any other
statutory body for (i) developing, (ii) maintaining and operating
or (iii) developing, maintaining and operating a new infrastructure
facility subject to the condition that such infrastructure facility shall be
transferred to the Central Government, State Government, local authority or
such other statutory body, as the case may be, within the period stipulated in
the agreement;
(c) it has started or starts operating and
maintaining the infrastructure facility on or after the 1st day of April, 1995:
Provided that where
an infrastructure facility is transferred on or after the 1st day of April,
1999 by an enterprise which developed such infrastructure facility (hereafter
referred to in this section as the transferor enterprise) to another enterprise
(hereafter in this section referred to as the transferee enterprise) for the
purpose of operating and maintaining the infrastructure facility on its behalf
in accordance with the agreement with the Central Government, State Government,
local authority or statutory body, the provisions of this section shall apply
to the transferee enterprise as if it were the enterprise to which this clause
applies and the deduction from profits and gains would be available to such
transferee enterprise for the unexpired period during which the transferor
enterprise would have been entitled to the deduction, if the transfer had not
taken place.
Explanation.—For the purposes of this clause,
“infrastructure facility” means,—
(a) a road, bridge, airport, port, inland
waterways and inland ports, rail system or any other public facility of a
similar nature as may be notified by the Board in this behalf in the Official
Gazette;
(b) a highway project including housing or
other activities being an integral part of the highway project; and
(c) a water supply project, irrigation
project, sanitation and sewerage system;
(ii) any undertaking which has started or
starts providing telecommunication services whether basic or cellular,
including radio paging, domestic satellite service or network of trunking and
electronic data interchange services at any time on or after the 1st day of
April, 1995, but before the 31st day of March, 2000.
Explanation.—For the purposes of this clause, “domestic
satellite” means a satellite owned and operated by an Indian company for
providing telecommunication service,
(iii) any undertaking which develops, develops
and operates or maintains and operates an industrial park notified by the
Central Government in accordance with the scheme framed and notified by that
Government for the period beginning on the 1st day of April, 1997 and ending on
the 31st day of March, 2002:
Provided that in a
case where an undertaking develops an industrial park on or after the 1st day
of April, 1999 and transfers the operation and maintenance of such industrial
park to another undertaking (hereafter in this section referred to as the transferee
undertaking) the deduction under sub-section (1), shall be allowed to such transferee undertaking for
the remaining period in the ten consecutive assessment years in a manner as if
the operation and maintenance were not so transferred to the transferee
undertaking;
(iv) an industrial undertaking which,—
(a) is set up in any part of India for the
generation or generation and distribution of power if it begins to generate
power at any time during the period beginning on the 1st day of April, 1993 and
ending on the 31st day of March, 2003;
(b) starts transmission or distribution by
laying a network of new transmission or distribution lines at any time during
the period beginning on the 1st day of April, 1999 and ending on the 31st day
of March, 2003 :
Provided that the
deduction under this section to an industrial undertaking under sub-clause (b) shall be allowed only in relation to the profits
derived from laying of such network of new lines for transmission or
distribution.
(5) Notwithstanding
anything contained in any other provision of this Act, the profits and gains of
an eligible business to which the provisions of sub-section (1) apply shall,
for the purposes of determining the quantum of deduction under that sub-section
for the assessment year immediately succeeding the initial assessment year or
any subsequent assessment year, be computed as if such eligible business were
the only source of income of the assessee during the previous year relevant to
the initial assessment year and to every subsequent assessment year up to and
including the assessment year for which the determination is to be made.
(6) Notwithstanding
anything contained in sub-section (4), where housing or other activities are an
integral part of the highway project and the profits of which are computed on
such basis and manner as may be prescribed, such profit shall not be liable to
tax where the profit has been transferred to a special reserve account and the
same is actually utilised for the highway project excluding housing and other
activities before the expiry of three years following the year in which such
amount was transferred to the reserve account; and the amount remaining
unutilised shall be chargeable to tax as income of the year in which such
transfer to reserve account took place.
(7) Where
the assessee is a person other than a company or a co-operative society, the
deduction under sub-section (1) from
profits and gains derived from an industrial undertaking shall not be
admissible unless the accounts of the industrial undertaking for the previous
year relevant to the assessment year for which the deduction is claimed have
been audited by an accountant, as defined in the Explanation below
sub-section (2) of section 288, and the assessee furnishes, along
with his return of income, the report of such audit in the prescribed form duly
signed and verified by such accountant.
(8) Where
any goods held for the purposes of the eligible business are transferred to
any other business carried on by the assessee, or where any goods held for the
purposes of any other business carried on by the assessee are transferred to
the eligible business and, in either case, the consideration, if any, for such
transfer as recorded in the accounts of the eligible business does not
correspond to the market value of such goods as on the date of the transfer,
then, for the purposes of the deduction under this section, the profits and
gains of such eligible business shall be computed as if the transfer, in either
case, had been made at the market value of such goods as on that date :
Provided that
where, in the opinion of the Assessing Officer, the computation of the profits
and gains of the eligible business in the manner hereinbefore specified
presents exceptional difficulties, the Assessing Officer may compute such
profits and gains on such reasonable basis as he may deem fit.
Explanation.—For the purposes of this sub-section,
“Market value”, in relation to any goods, means the price that such goods would
ordinarily fetch on sale in the open market.
(9) Where
any amount of profits and gains of an industrial undertaking or of an
enterprise in the case of an assessee is claimed and allowed under this section
for any assessment year, deduction to the extent of such profits and gains
shall not be allowed under any other provisions of this Chapter under the
heading “C. — Deductions in respect
of certain incomes”, and shall in no case exceed the profits and gains of
such eligible business of industrial undertaking or enterprise, as the case may
be.
(10) Where
it appears to the Assessing Officer that, owing to the close connection between
the assessee carrying on the eligible business to which this section applies
and any other person, or for any other reason, the course of business between
them is so arranged that the business transacted between them produces to the
assessee more than the ordinary profits which might be expected to arise in
such eligible business, the Assessing Officer shall, in computing the profits
and gains of such eligible business for the purposes of the deduction under
this section, take the amount of profits as may be reasonably deemed to have
been derived therefrom.
(11) The
Central Government may, after making such inquiry as it may think fit, direct,
by notification in the Official Gazette, that the exemption conferred by this
section shall not apply to any class of industrial undertaking or enterprise
with effect from such date as it may specify in the notification.
(12) Where
any undertaking of an Indian company which is entitled to the deduction under
this section is transferred, before the expiry of the period specified in this
section, to another Indian company in a scheme of amalgamation or demerger—
(a) no deduction shall be admissible under
this section to the amalgamating or the demerged company for the previous year
in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as
far as may be, apply to the amalgamated or the resulting company as they would
have applied to the amalgamating or the demerged company if the amalgamation or
demerger had not taken place.
Deduction in respect of
profits and gains from certain industrial undertakings other than
infrastructure development undertakings.
80-IB. (1) Where the gross
total income of an assessee includes any profits and gains derived from any
business referred to in sub-sections (3)
to (11) (such business being hereinafter referred to as the eligible
business), there shall, in accordance with and subject to the provisions of
this section, be allowed, in computing the total income of the assessee, a
deduction from such profits and gains of an amount equal to such percentage
and for such number of assessment years as specified in this section.
(2) This
section applies to any industrial undertaking which fulfils all the following
conditions, namely:—
(i) it is not formed by splitting up, or
the reconstruction, of a business already in existence :
Provided that this
condition shall not apply in respect of an 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;
(ii) it is not formed by the transfer to a
new business of machinery or plant previously used for any purpose;
(iii) it manufactures or produces any article
or thing, not being any article or thing specified in the list in the Eleventh
Schedule, or operates one or more cold storage plant or plants, in any part
of
Provided that the
condition in this clause shall, in relation to a small scale industrial
undertaking or an industrial undertaking referred to in sub-section (4) shall apply as if the words “not being any article or
thing specified in the list in the Eleventh Schedule” had been omitted.
Explanation 1.—For the purposes of clause (ii),
any machinery or plant which was used outside India by any person other than
the assessee shall not be regarded as machinery or plant previously used for
any purpose, if the following conditions are fulfilled, namely:—
(a) such machinery or plant was not, at any
time previous to the date of the installation by the assessee, used in
(b) such machinery or plant is imported into
(c) no deduction on account of depreciation
in respect of such machinery or plant has been allowed or is allowable under
the provisions of this Act in computing the total income of any person for any
period prior to the date of the installation of the machinery or plant by the
assessee.
Explanation 2.—Where in the case of an industrial
undertaking, any machinery or plant or any part thereof previously used for any
purpose is transferred to a new business and the total value of the machinery
or plant or part so transferred does not exceed twenty per cent of the total
value of the machinery or plant used in the business, then, for the purposes of
clause (ii) of this sub-section, the condition specified therein shall
be deemed to have been complied with;
(iv) in a case where the industrial
undertaking manufactures or produces articles or things, the undertaking
employs ten or more workers in a manufacturing process carried on with the aid
of power, or employs twenty or more workers in a manufacturing process carried
on without the aid of power.
(3) The
amount of deduction in the case of an industrial undertaking shall be
twenty-five per cent (or thirty per cent where the assessee is a company), of
the profits and gains derived from such industrial undertaking for a period of
ten consecutive assessment years (or twelve consecutive assessment years where
the assessee is a co-operative society) beginning with the initial assessment
year subject to the fulfilment of the following conditions, namely:—
(i) it begins to manufacture or produce,
articles or things or to operate such plant or plants at any time during the
period beginning from the 1st day of April, 1991 and ending on the 31st day of
March, 1995 or such further period as the Central Government may, by
notification in the Official Gazette, specify with reference to any particular
undertaking;
(ii) where it is an industrial undertaking being
a small scale industrial undertaking, it begins to manufacture or produce
articles or things or to operate its cold storage plant [not specified in
sub-section (4) or sub-section (5)] at any time during the period beginning on
the 1st day of April, 1995 and ending on the 31st day of March, 2000.
(4) The
amount of deduction in the case of an industrial undertaking in an
industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived
from such industrial undertaking for five assessment years beginning with the
initial assessment year and thereafter twenty-five per cent (or thirty per cent
where the assessee is a company) of the profits and gains derived from such
industrial undertaking :
Provided that the
total period of deduction does not exceed ten consecutive assessment years (or
twelve consecutive assessment years where the assessee is a co-operative
society) subject to fulfilment of the condition that it begins to manufacture
or produce articles or things or to operate its cold storage plant or plants
during the period beginning on the 1st day of April, 1993 and ending on the
31st day of March, 2000:
Provided further that in the case of such industries in the North-Eastern Region,
as may be notified by the Central Government, the amount of deduction shall be
hundred per cent of profits and gains for a period of ten assessment years,
and the total period of deduction shall in such a case not exceed ten assessment
years.
(5) The
amount of deduction in the case of an industrial undertaking located in such
industrially backward districts as the Central Government may, having regard to
the prescribed guidelines, by notification in the Official Gazette, specify in
this behalf as industrially backward district of category ‘A’ or an
industrially backward district of category ‘B’ shall be,—
(i) hundred per cent of the profits and
gains derived from an industrial undertaking located in a backward district of
category ‘A’ for five assessment years beginning with the initial assessment
year and thereafter, twenty-five per cent (or thirty per cent where the
assessee is a company) of the profits and gains of an industrial undertaking:
Provided that
the total period of deduction shall not exceed ten consecutive assessment years
or where the assessee is a co-operative society, twelve consecutive assessment
years:
Provided further that
the industrial undertaking begins to manufacture or produce articles or things
or to operate its cold storage plant or plants at any time during the period
beginning on the 1st day of October, 1994 and ending on the 31st day of March,
2000;
(ii) hundred per cent of the profits and
gains derived from an industrial undertaking located in a backward district of
category ‘B’ for three assessment years beginning with the initial assessment
year and thereafter, twenty-five per cent (or thirty per cent where the
assessee is a company) of the profits and gains of an industrial undertaking :
Provided that
the total period of deduction does not exceed eight consecutive assessment
years (or where the assessee is a co-operative society, twelve consecutive
assessment years) :
Provided further that
the industrial undertaking begins to manufacture or produce articles or things
or to operate its cold storage plant or plants at any time during the period
beginning on the 1st day of October, 1994 and ending on the 31st day of March,
2000.
(6) The
amount of deduction in the case of the business of a ship shall be thirty per
cent of the profits and gains derived from such ship for a period of ten
consecutive assessment years including the initial assessment year provided
that the ship—
(i) is owned by an Indian company and is wholly
used for the purposes of the business carried on by it;
(ii) was not, previous to the date of its
acquisition by the Indian company, owned or used in Indian territorial waters
by a person resident in India; and
(iii) is brought into use by the Indian company
at any time during the period beginning on the 1st day of April, 1991 and
ending on the 31st day of March, 1995.
(7) The
amount of deduction in the case of any hotel shall be—
(a) fifty per cent of the profits and gains
derived from the business of such hotel for a period of ten consecutive years
beginning from the initial assessment year as is located in a hilly area or a
rural area or a place of pilgrimage or such other place as the Central
Government may, having regard to the need for development of infrastructure for
tourism in any place and other relevant considerations, specify by notification
in the Official Gazette and such hotel starts functioning at any time during
the period beginning on the 1st day of April, 1990 and ending on the 31st day
of March, 1994 or beginning on the 1st day of April, 1997 and ending on the
31st day of March, 2001:
Provided that
nothing contained in this clause shall apply to a hotel located at a place
within the municipal jurisdiction (whether known as a municipality, municipal
corporation, notified area committee or a cantonment board or by any other
name) of Calcutta, Chennai, Delhi or Mumbai, which has started or starts
functioning on or after the 1st day of April, 1997 and before the 31st day of
March, 2001:
Provided further that the said hotel is approved by the prescribed authority
for the purpose of this clause in accordance with the rules made under this Act
and where the said hotel is approved by the prescribed authority before the
31st day of March, 1992, shall be deemed to have been approved by the
prescribed authority for the purpose of this section in relation to the
assessment year commencing on the 1st day of April, 1991;
(b) thirty per cent of the profits and gains
derived from the business of such hotel as is located in any place other than
those mentioned in sub-clause (a) for a period of ten consecutive years
beginning from the initial assessment year if such hotel has started or starts
functioning at any time during the period beginning on the 1st day of April,
1991 and ending on the 31st day of March, 1995 or beginning on the 1st day of
April, 1997 and ending on the 31st day of March, 2001:
Provided that
nothing contained in this clause shall apply to a hotel located at a place
within the municipal jurisdiction (whether known as a municipality, municipal
corporation, notified area committee, town area committee or a cantonment board
or by any other name) of Calcutta, Chennai, Delhi or Mumbai, which has started
or starts functioning on or after the 1st day of April, 1997 and before the
31st day of March, 2001;
(c) the deduction under clause (a) or
clause (b) shall be available only if—
(i) the business of the hotel is not formed
by the splitting up, or the reconstruction, of a business already in existence
or by the transfer to a new business of a building previously used as a hotel
or of any machinery or plant previously used for any purpose;
(ii) the business of the hotel is owned and
carried on by a company registered in
(iii) the hotel is for the time being approved
by the prescribed authority:
Provided that any
hotel approved by the prescribed authority before the 1st day of April, 1999
shall be deemed to have been approved under this sub-section.
(8) The
amount of deduction in the case of any company carrying on scientific research
and development shall be hundred per cent of the profits and gains of such
business for a period of five assessment years beginning from the initial
assessment year if such company—
(a) is registered in
(b) has the main object of scientific and
industrial research and development;
(c) is for the time being approved by the
prescribed authority at any time before the 1st day of April, 1999.
(9) The
amount of deduction to an undertaking which begins commercial production or
refining of mineral oil shall be hundred per cent of the profits for a period
of seven consecutive assessment years including the initial assessment year :
Provided that where
the undertaking is located in North-Eastern Region, it has begun or begins
commercial production of mineral oil before the 1st day of April, 1997 and
where it is located in any part of
Provided further that
where the undertaking is engaged in refining of mineral oil, it begins refining
on or after the 1st day of October, 1998.
(10) The
amount of profits in case of an undertaking developing and building housing
projects approved by a local authority, shall be hundred per cent of the
profits derived in any previous year relevant to any assessment year from such
housing project if,—
(a) such undertaking has commenced or
commences development and construction of the housing project on or after the
1st day of October, 1998 and completes the same before the 31st day of March,
2001;
(b) the project is on the size of a plot of
land which has a minimum area of one acre; and
(c) the residential unit has a maximum
built-up area of one thousand square feet where such residential unit is
situated within the cities of
(11) Notwithstanding
anything contained in clause (iii) of
sub-section (2) and sub-sections (3), (4) and (5), the amount of deduction in a
case of industrial undertaking deriving profit from the business of setting up
and operating a cold chain facility for agricultural produce, shall be hundred
per cent of the profits and gains derived from such industrial undertaking for
five assessment years beginning with the initial assessment year and
thereafter, twenty-five per cent (or thirty per cent where the assessee is a
company) of the profits and gains derived from the operation of such facility
in a manner that the total period of deduction does not exceed ten consecutive
assessment years (or twelve consecutive assessment years where the assessee is
a co-operative society) and subject to fulfilment of the condition that it
begins to operate such facility on or after the 1st day of April, 1999 but
before the 31st day of March, 2003.
(12) Where
any undertaking of an Indian company which is entitled to the deduction under
this section is transferred, before the expiry of the period specified in this
section, to another Indian company in a scheme of amalgamation or demerger—
(a) no deduction shall be admissible under
this section to the amalgamating or the demerged company for the previous year
in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as
far as may be, apply to the amalgamated or the resulting company as they would
have applied to the amalgamating or the demerged company if the amalgamation or
demerger had not taken place.
(13) The
provisions contained in sub-section (5) and
sub-sections (7) to (12) of section 80-Ia shall, so far as may be,
apply to the eligible business under this section.
(14) For
the purposes of this section,—
(a) “cold chain facility” means a chain of
facilities for storage or transportation of agricultural produce under scientifically
controlled conditions including refrigeration and other facilities necessary
for the preservation of such produce;
(b) “hilly area” means any area located at a
height of one thousand metres or more above the sea level;
(c) “initial assessment year”—
(i) in the case of an industrial
undertaking or cold storage plant or ship or hotel, means the assessment year
relevant to the previous year in which the industrial undertaking begins to
manufacture or produce articles or things, or to operate its cold storage plant
or plants or the cold chain facility or the ship is first brought into use or
the business of the hotel starts functioning;
(ii) in the case of a company carrying on scientific
and industrial research and development, means the assessment year relevant to
the previous year in which the company is approved by the prescribed authority
for the purposes of sub-section (8);
(iii) in the case of an undertaking engaged in
the business of commercial production or refining of mineral oil referred to in
sub-section (9), means the assessment year relevant to the previous year in
which the undertaking commences the commercial production or refining of
mineral oil;
(d) “North-Eastern Region” means the region
comprising the States of
(e) “place of pilgrimage” means a place
where any temple, mosque, gurdwara, church or other place of public worship of
renown throughout any State or States is situated;
(f) “rural area” means any area other than—
(i) an area which is comprised within the
jurisdiction of a municipality (whether known as a municipality, municipal
corporation, notified area committee, town area committee or by any other name)
or a cantonment board and which has a population of not less than ten thousand
according to the preceding census of which relevant figures have been published
before the first day of the previous year; or
(ii) an area within such distance not being
more than fifteen kilometres from the local limits of any municipality or
cantonment board referred to in sub-clause (i), as the Central
Government may, having regard to the stage of development of such area including
the extent of, and scope for, urbanisation of such area and other relevant
considerations specify in this behalf by notification in the Official Gazette;
(g) “small-scale industrial undertaking”
means an industrial undertaking which is, as on the last day of the previous
year, regarded as a small-scale industrial undertaking under section 11B of the
Industries (Development and Regulation) Act, 1951 (65 of 1951).
Deduction in respect of
profits and gains from newly established industrial undertakings or ships or
hotel business in certain cases.
80J. 3[R360] [Omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.]
Deduction in respect of
profits and gains from business of poultry farming.
80JJ. 4[R361] [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
5[R362] Deduction in respect of
profit and gains from business of collecting and processing of bio-degradable
waste.
80JJA. Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for generating power 5a[R363] [, producing bio-gas,] making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, 5b[R364] [a deduction from such profits and gains of an amount equal to the whole of such income, or five lakh rupees, whichever is less].]
6[R365] Deduction in respect of
employment of new workmen.
80JJAA.(1) Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from any industrial undertaking engaged in the manufacture or production of article or thing, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided.
(2) No deduction under sub-section (1) shall be allowed—
(a) if the industrial undertaking is formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking;
(b) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed6a[R366] .
Explanation.—For the purposes of this section, the expressions,—
(i) “additional wages” means the wages paid to the new regular workman in excess of one hundred workmen employed during the previous year :
Provided that in the case of an existing undertaking, the additional wages shall be nil if the increase in the number of regular workman employed during the year is less than ten per cent of existing number of workmen employed in such undertaking as on the last day of the preceding year;
(ii) “regular workman”, does not include—
(a) a casual workman; or
(b) a workman employed through contract labour; or
(c) any other workman employed for a period of less than three hundred days during the previous year;
(iii) “workman” shall have the meaning assigned to it in clause (s) of section 2 7[R367] of the Industrial Disputes Act, 1947 (14 of 1947).]
Deduction in respect of
dividends attributable to profits and gains from new industrial undertakings or
ships or hotel business.
8[R368] 80K. [Omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Original section was inserted, in place of section 85 which was deleted, by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.]
9[R369] Deductions in respect of interest on certain securities, dividends*,[R370] etc.
10[R371] 80L. (1) 11[R372] [Where the gross total income of an assessee, being—
(a) an individual, or
(b) a Hindu undivided family, 12[R373] [***]
(c) 13[R374] [***]includes any income by way of—]
(i) interest on any security of the Central Government or a State Government 14[R375] [***];
15[R376] [(ia) interest on National Savings Certificates (VI Issue) or National Savings Certificates (VII Issue) or National Savings Certificates (VIII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959);]
16[R377] [(ii) interest on such debentures, issued by any institution or authority or any public sector company, or any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank), as the Central Government may, by notification17[R378] in the Official Gazette, specify in this behalf;
19[R380] [(iia) interest on deposits under such National Deposit Scheme as may be framed by the Central Government and notified by it in this behalf in the Official Gazette;]
(iii) interest on deposits under any 20[R381] [other] scheme framed by the Central Government and notified21[R382] by it in this behalf in the Official Gazette;
22[R383] [(iiia) interest on deposits under the Post Office (Monthly Income Account) Rules, 1987;]
23a[R385] [(v) income received in respect of units from the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963);
24[R386] [(va) income received in respect of units of a Mutual Fund specified under clause (23D) of section 10;]]
(vi) interest on deposits with 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) 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); 25[R387] [***]
26 [R388] [(via) interest on deposits with any such bank, not being a banking company or a co-operative society referred to in clause (vi) but being a bank established by or under any law made by Parliament, as may be approved by the Central Government for the purposes of this clause;]
27[R389] [(vii) interest on deposits with a financial
corporation which is engaged in providing long-term finance for industrial
development in
Provided that the corporation 29[R391] [***] is for the time being approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36;]
30[R392] [(viia) interest on deposits with any 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;]
31[R393] [(viii) interest on deposits with a co-operative society, not being a co-operative society referred to in clause (vi), made by a member of the society; 32[R394] [or]
33[R395] [(ix) dividends from any co-operative society;]
34 [R396] [(x) interest on deposits with 35[R397] [* * *] any 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:
35a[R398] [Provided that the company is for the time being approved by the Central Government for the purpose of clause (viii) of sub-section (1) of section 36,]]there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction as specified hereunder, namely :—
36[R399] [(1)] in a case where the amount of such income does not exceed in the aggregate 37[R400] [twelve] thousand rupees, the whole of such amount; and
36[R401] [(2)] in any other case, 37[R402] [twelve] thousand rupees :
38[R403] [Provided that where any income referred to in 39[R404] [clause (i)] 39a[R405] [clause (v) or clause (va)] remains unallowed after the deduction under the foregoing provision of this section, there shall be allowed in computing the total income of the assessee, an additional deduction of an amount equal to so much of such income as has remained unallowed; so, however, that the amount of such additional deduction shall not exceed three thousand rupees.]
42[R408] [Explanation.—For the purposes of this sub-section, the expression “security” means a Government security43[R409] as defined in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944).]
45[R411] (3) For the removal of doubts, it is hereby declared that where the income referred to in sub-section (1) is derived from any asset held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under the said sub-section in respect of such income in computing the total income of any partner of the firm or any member of the association or body.]
Deduction in respect of
certain inter-corporate dividends.
80M. 46[R412] [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
Deduction in the case of
an Indian company in respect of royalties, etc., received from any concern in
47[R413] 80MM. [Omitted by the Finance Act, 1983, w.e.f. 1-4-1984. Original section was inserted by the Finance Act, 1969, w.e.f. 1-4-1970.]
Deduction in respect of
dividends received from certain foreign companies.
48[R414] 80N. [Omitted by the Finance Act, 1985, w.e.f. 1-4-1986. This topic was originally dealt with by section 85B which was inserted by the Finance Act, 1966, w.e.f. 1-4-1966. Present section 80N was inserted in place of section 85B which was deleted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.]
49[R415] [50[R416] Deduction in respect of
royalties, etc., from certain foreign enterprises.
51[R417] 80-O. 52[R418] [Where the gross total income of an assessee, being an Indian company 53[R419] [or a person (other than a company) who is resident in India]], includes 54[R420] [any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design or registered trade mark] 55[R421] [***] 56[R422] [and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty per cent of the income so received in, or brought into, India, in computing the total income of the assessee]:
58[R424] [Provided
59[R425] [***] that
such income is received in
61[R427] [Provided further that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form, along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.]
62[R428] [Explanation.—For the purposes of this section,—
(i) “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 law for the time being in force for regulating payments and dealings in foreign exchange;
63[R429] (ii) “foreign enterprise” means a person who is a non-resident;]]
64[R430] (iii) services rendered or agreed to be
rendered outside
64a[R431] (iv) “competent authority” means the
Reserve Bank of
66[R433] [Deduction in respect of income of co-operative societies.
67[R434] 80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.
(2) The sums referred to in sub-section (1) shall be the following, namely:—
(a) in the case of a co-operative society engaged in—
(i) carrying on the business of banking or providing credit facilities to its members, or
(ii) a cottage industry, or
68[R435] (iii) the marketing of agricultural produce grown by its members, or]
(iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or
(v) the processing, without the aid of power, of the agricultural produce of its members, 69[R436] [or]
69[R437] (vi) the collective disposal of the labour of its members, or
(vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,]the whole of the amount of profits and gains of business attributable to any one or more of such activities:
70[R438] [Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:—
(1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities;
(2) the co-operative credit societies which provide financial assistance to the society;
(3) the State Government;]
71[R439] (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to—
(i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or
(ii) the Government or a local authority; or
(iii) a Government company72 [R440] 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 (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public),the whole of the amount of profits and gains of such business;]
(c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as 73[R441] [does not exceed,—
(i) where such co-operative society is a consumers’ co-operative society, 74[R442] [one hundred] thousand rupees; and
(ii) in any other case, 75[R443] [fifty] thousand rupees.
Explanation.—In this clause, “consumers’ co-operative society” means a society for the benefit of the consumers;]
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;
(e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income;
(f) in the case of a co-operative society, not being a housing society or an urban consumers’ society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities 76[R444] [***] or any income from house property chargeable under section 22.
Explanation.—For the purposes of this section, an “urban consumers’ co-operative society” means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment.
(3) In a case where the assessee is entitled also to the deduction under 77[R445] [***] 78[R446] [section 80HH] 79[R447] [or section 80HHA] 80[R448] [or section 80HHB] 81[R449] [or section 80HHC] 82[R450] [or section 80HHD] 83[R451] [or section 80-I] 84[R452] [or section 80-IA] or section 85[R453] 80J 86[R454] [* * *] 87[R455] [***], the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the deductions under 88[R456] [***] 89[R457] [section 80HH,] 90[R458] [section 80HHA,] 91[R459] [section 80HHB,] 92[R460] [section 80HHC,] 93[R461] [section 80HHD,] 94[R462] [section 80-I,] 95[R463] [section 80-IA,] 96[R464] [97[R465] [section 80J85[R466] and section 80JJ]].]
99[R468] [Deduction in respect of profits and gains from the
business of publication of books.
1[R469] 80Q. (1) Where in the case of an assessee the gross total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1992, or to any one of the four assessment years next following that assessment year, includes any profits and gains derived from a business carried on in India of printing and publication of books or publication of books, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof.
(2) In a case where the assessee is entitled also to the deduction under section 80HH or section 80HHA or section 80HHC or section 80-I or section 80-IA or section 80J 1a[R470] or section 80P, in relation to any part of the profits and gains referred to in sub-section (1), the deduction under sub-section (1) shall be allowed with reference to such profits and gains included in the gross total income as reduced by the deductions under section 80HH, section 80HHA, section 80HHC, section 80-I, section 80-IA, section 80J† and section 80P
(3) For the purposes of this section, “books” shall not include newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of a similar nature by whatever name called.]
Deduction in respect of
profits and gains from the business of publication of books.
2[R471] 80QQ. [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Original section was inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971.]
3[R472] Deduction in respect of professional income of authors of text books in Indian languages.
80QQA.
(1) Where, in the case of an
individual resident in
(a) the 1st day of April, 1980, or to any one of the nine assessment years next following that assessment year; or
(b) the 1st day of April, 1992, or to any one of the four assessment years next following that assessment year, includes] any income derived by him in the exercise of his profession on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book, or of royalties or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to twenty-five per cent thereof.
(2) No deduction under sub-section (1) shall be allowed unless—
(a) the book is either in the nature of a dictionary, thesaurus or encyclopaedia or is one that has been prescribed or recommended as a text book, or included in the curriculum, by any University, for a degree or post-graduate course of that University; and
(b) the book is written in any language specified in the Eighth Schedule to the Constitution 5[R474] or in any such other language as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the need for promotion of publication of books of the nature referred to in clause (a) in that language and other relevant factors.
Explanation.—For the purposes of this section,—
(i) “author” includes a joint author;
(ii) “lump sum”, in regard to royalties or copyright fees, includes an advance payment on account of such royalties or copyright fees which is not returnable;
(iii) “University” shall have the same meaning as in the Explanation to clause (ix) of section 47.]
6[R475] Deduction in respect of remuneration from certain foreign sources in the case of professors, teachers, etc.7[R476]
80R. Where the gross total income of an individual who is a citizen of India includes any remuneration received by him outside India from any University or other educational institution established outside India or8[R477] [any other association or body established outside India], for any service rendered by him during his stay outside India in his capacity as a professor, teacher or research worker in such University, institution, association or body, there shall be 9[R478] [allowed, in computing the total income of the individual, a deduction from such remuneration of an amount 10[R479] [equal to seventy-five per cent of such remuneration, as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or 10a[R480] [within such further period as the competent authority may allow in this behalf]:
Provided that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form11[R481] , along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.]]
12a[R483] [Explanation.—For the purposes of this section, the expression “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.]
13[R484] [Deduction in respect of professional
income from foreign sources in certain cases.
14[R485] 80RR. Where the gross total income of an individual resident in India, being an author, playwright, artist, 15[R486] [musician, actor or sportsman (including an athlete)], includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India, 16[R487] [there shall be allowed, in computing the total income of the individual, a deduction from such income of an amount 17[R488] [equal to seventy-five per cent of such income, as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or 17a[R489] [within such further period as the competent authority may allow in this behalf] :
Provided that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form18[R490] , along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.]]
18a[R491] [Explanation.—For the purposes of this section, the expression “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.]
19[R492] [Deduction in respect of remuneration
received for services rendered outside
20[R493] 80RRA. (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration 21[R494] [of an amount 22[R495] [equal to seventy-five per cent of such remuneration, as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or 22a[R496] [within such further period as the competent authority may allow in this behalf] :
Provided that no deduction under this sub-section shall be allowed unless the assessee furnishes a certificate, in the prescribed form23[R497] , along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.]]
(2) The deduction under this section shall be allowed—
(i) in the case of an individual who is or was, immediately before undertaking such service, in the employment of the Central Government or any State Government, only if such service is sponsored by the Central Government;
(ii) in the case of any other individual,
only if he is a technician and the terms and conditions of his service outside
Explanation.—For the purposes of this section,—
(a) “foreign currency”25[R499] shall have the meaning assigned to it in the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(b) “foreign employer” means,—
(i) the Government of a foreign State; or
(ii) a foreign enterprise; or
(iii) any association or body established
outside
(c) “technician” means a person having specialised knowledge and experience in—
(i) constructional or manufacturing operations or mining or the generation or distribution of electricity or any other form of power; or
(ii) agriculture, animal husbandry, dairy farming, deep sea fishing or ship building; or
(iii) public administration or industrial or business management; or
(iv) accountancy; or
(v) any field of natural or applied science (including medical science) or social science; or
(vi) any other field which the Board may prescribe26 [R500] in this behalf, who is employed in a capacity in which such specialised knowledge and experience are actually utilised;]
26a[R501] [(d) “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.]
Deduction in respect of
compensation for termination of managing agency, etc., in the case of assessees
other than companies.
27[R502] 80S. [Omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Original section was introduced in place of old section 112 by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.]
Deduction in respect of
long-term capital gains in the case of assessees other than companies.
28[R503] 80T. [Omitted by the Finance Act, 1987, w.e.f. 1-4-1988. Original section was inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 in replacement of section 114.]
Deduction in respect of
winnings from lottery.
29[R504] 80TT. [Omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Original section was inserted by the Finance Act, 1972, w.e.f. 1-4-1972.]
31[R506] [Deduction in the case of
permanent physical disability (including blindness).
32[R507] 80U. 33[R508] In computing the total income of an individual, being a resident, who, at the end of the previous year, is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in the rules34[R509] made in this behalf by the Board, which is certified by a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital, and which has the effect of reducing considerably such individual’s capacity for normal work or engaging in a gainful employment or occupation, there shall be allowed a deduction of a sum of 35[R510] [forty] thousand rupees :
Provided that such individual produces the aforesaid certificate before the Assessing Officer in respect of the first assessment year for which he claims deduction under this section :
Provided further that the requirement of producing the aforesaid certificate from a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital shall not apply to an individual who has already produced a certificate before the Assessing Officer under the provisions of this section as they stood immediately before the 1st day of April, 1992.
Explanation.—For the purposes of this section, the expression “Government hospital” shall have the meaning assigned to it in the Explanation to section80DD.]
Deduction from gross total
income of the parent in certain cases.
80V. 36[R511] [Omitted by the Finance Act, 1994, w.e.f. 1-4-1995.]
Deduction in respect of
expenses incurred in connection with certain proceedings under the Act.
36a[R512] 80VV. [Omitted by the Finance Act, 1985, w.e.f. 1-4-1986. Original section was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.]
[R1]Chapter VI-A, consisting of sections 80A, 80B, 80C, 80D, 80E, 80F, 80G, 80H, 80-I, 80J, 80K, 80L, 80M, 80N, 80-O, 80-P, 80Q, 80R, 80S and 80T, was substituted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. The original Chapter, consisting of only sections 80A to 80D, was inserted by the Finance Act, 1965, w.e.f. 1-4-1965. In the original Chapter, section 80A was amended by the Finance Act, 1966, w.e.f. 1-4-1966 and new section 80E was inserted by the Finance (No. 2) Act, 1966, w.e.f. 1-4-1966
[R2]Substituted for “80VV” by the Finance Act, 1985, w.e.f. 1-4-1986. Earlier, “80VV” was substituted for “80U” by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976 and “80U” was substituted for “80T” by the Finance Act, 1968, w.e.f. 1-4-1969
[R3]Substituted for sub-section (3) by the Finance Act, 1992, w.e.f. 1-4-1993. Prior to substitution, sub-section (3), as amended by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971, the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972, the Finance Act, 1972, w.e.f. 1-4-1972, the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974, the Finance Act, 1974, w.e.f. 1-4-1975, the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976, the Finance Act, 1975, w.e.f. 1-4-1976, the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978, the Finance Act, 1979, w.e.f. 1-4-1980, the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, the Finance Act, 1982, w.e.f. 1-4-1983, the Finance Act, 1983, w.e.f. 1-4-1983/1-4-1984, the Finance Act, 1985, w.e.f. 1-4-1986, the Finance Act, 1986, w.e.f. 1-4-1987, the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989, the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989 and the Finance Act, 1989, w.e.f. 1-4-1989, read as under :
“(3) Where, in computing the total income of a firm, association of persons or body of individuals, any deduction is admissible under section 80G or section 80GGA or section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80J or section 80JJ, no deduction under the same section shall be made in computing the total income of a partner of the firm or, as the case may be, of a member of the association of persons or body of individuals in relation to the share of such partner in the income of the firm or the share of such member in the income of the association of persons or body of individuals.”
[R4]The italicised words shall be inserted by the Finance Act, 1999,w.e.f. 1-4-2000
[R6]Omitted by the Finance Act, 1978, w.e.f. 1-4-1979. Originally, sub-section (4) was inserted by the Finance Act, 1976, w.e.f. 1-4-1977.
[R7]Prior to its omission, section 80AA, as inserted by the Finance (No. 2) Act, 1980, w.r.e.f. 1-4-1968, subject to the savings prescribed in section 44 of the said Act, read as under :
“80AA. Computation of deduction under section 80M.—Where any deduction is required to be allowed under section 80M in respect of any income by way of dividends from a domestic company which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, the deduction under that section shall be computed with reference to the income by way of such dividends as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) and not with reference to the gross amount of such dividends.”
Section 44 of the Finance (No. 2) Act, 1980, read as under:
“44. Saving in certain cases.—Where before the 18th day of June, 1980 (being the date on which the Finance (No. 2) Bill, 1980, was introduced), the Supreme Court has, on an appeal or a reference in respect of the assessment of an assessee for any particular assessment year, held that the deduction under section 80M is to be allowed in a manner different from that provided in section 80AA of the Income-tax Act, as inserted by section 12 of this Act, then, nothing contained in the said section 80AA shall apply to the assessment of such assessee for that particular assessment year.”
[R8]For relevant case laws, See Case Laws
[R9]Words “(except section 80M)” omitted by the Finance Act, 1997, w.e.f. 1-4-1998
[R10]Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 in place of original section 80D
[R11]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R12]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, clause (2) stood as under :
‘(2) “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 ;
[R13]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969
[R14]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, clause (4) stood as under :
‘(4) “foreign company” means a company which is not a domestic company as defined in clause (2);
[R15]“or under section 280-O” omitted by the Finance Act, 1988, w.e.f. 1-4-1988.
[R16]“and without applying the provisions of section 64” omitted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1968
[R17]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, clause (6) stood as under :
‘(6) “income”, in relation to a handicapped dependant, means the aggregate income of such person from all sources;
[R18]Omitted by the Finance Act, 1972, w.e.f. 1-4-1973
[R19]Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, clause (8) stood as under :
‘(8) “relative”, in relation to an individual, means—
(a) the mother, father, husband or wife of the individual, or
(b) a son, daughter, brother, sister, nephew or niece of the individual, or
(c) a grandson or grand-daughter of the individual, or
(d) the spouse of any person referred to in sub-clause (b);
[R20]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976
[R21]Subject-matter of this section has been dealt with by different sections
at different times, viz., (i) section 87 as originally enacted; (ii)
original section 80A as introduced by the Finance Act, 1965, w.e.f. 1-4-1965;
and (iii) then section 80C was introduced by the Finance (No. 2) Act,
1967, w.e.f. 1-4-1968 and the same was replaced by section 88 with effect from
1-4-1991.
8. Section 80C on
earlier occasions was amended by the Finance Act, 1968, w.e.f. 1-4-1969,
Finance Act, 1969, w.e.f. 1-4-1970, Finance Act, 1970, w.e.f. 1-4-1971, Finance
(No. 2) Act, 1971, w.e.f. 1-4-1972, Finance Act, 1972, w.e.f. 1-4-1973, Finance
Act, 1973, w.e.f. 1-4-1974, Finance Act, 1975, w.e.f. 1-4-1976, Finance Act,
1976, w.e.f. 1-4-1977, Finance Act, 1978, w.e.f. 1-4-1979, Finance Act, 1979,
w.e.f. 1-4-1980, Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, Finance Act, 1982,
w.e.f. 1-4-1983, Finance Act, 1983, w.e.f. 1-4-1984, Taxation Laws (Amendment)
Act, 1984, w.r.e.f. 1-4-1971, Taxation Laws (Amendment) Act, 1984, w.r.e.f.
1-4-1983, Finance Act, 1987, w.e.f. 1-4-1988, Direct Tax Laws (Amendment) Act,
1989, w.e.f. 1-4-1989, Direct Tax Laws (Second Amdt.) Act, 1989, w.r.e.f.
1-4-1984, Direct Tax Laws (Second Amdt.) Act, 1989, w.e.f. 1-4-1990 and Finance
Act, 1989, w.e.f. 1-4-1990. Prior to omission, section 80C read as under :
‘80C. Deduction in respect of life insurance premia,
contributions to provident fund, etc.—(1) In computing the total income of
an assessee, there shall be deducted, in accordance with and subject to the
provisions of this section, an amount calculated, with reference to the aggregate
of the sums specified in sub-section (2), at the following rates, namely :—
|
(a) where such aggregate
does not exceed Rs. 6,000 |
the whole of such aggregate |
|
(b) where such aggregate exceeds Rs. 6,000 but does not
exceed Rs. 12,000 |
Rs. 6,000 plus 50 per
cent of the amount by which such aggregate exceeds Rs. 6,000 ; |
|
(c) where such aggregate
exceeds Rs. 12,000 |
Rs. 9,000 plus 40 per
cent of the amount by which such aggregate exceeds Rs. 12,000 |
(2) The sums referred to in sub-section (1) shall be the
following, namely :—
(a) where the assessee is an individual, any sums
paid in the previous year by the assessee out of his income chargeable to tax—
(i) to effect or to keep in force an insurance on
the life of the assessee or on the life of the wife or husband or any child of
the assessee; or
(ii) to effect or to keep in force a contract for a
deferred annuity not being an annuity plan referred to in clause (ii) of
sub-section (1) of section 80CCA, on the life of the assessee or on the life of
the wife or husband or any child of the assessee :
Provided that such
contract does not contain a provision for the exercise by the insured of an
option to receive a cash payment in lieu of the payment of the annuity; or
(iii) as a contribution to any provident fund to
which the Provident Funds Act, 1925 (19 of 1925), applies; or
(iv) as a contribution to any provident fund set up
by the Central Government and notified by it in this behalf in the Official
Gazette; or
(v) as a contribution for participation in the
Unit-linked Insurance Plan, 1971 made under section 19(1)(cc) of
the Unit Trust of India Act, 1963 (52 of 1963); or
(vi) as a contribution for participation in any such
unit-linked insurance plan of the LIC Mutual Fund notified under clause (23D)
of section 10, as the Central Government may, by notification in the Official
Gazette, specify in this behalf;
(b) where the assessee is a Hindu undivided family,—
(i) any sums paid in the previous year by the assessee
out of its income chargeable to tax—
(1) to effect or to keep in force an insurance on
the life of any member of the family; or
(2) as a contribution to any provident fund referred
to in sub-clause (iv) of clause (a), where such contribution is
to an account standing in the name of any member of the family; or
(ii) any sums deposited in the previous year by the
assessee out of its income chargeable to tax in a ten-year account or a
fifteen-year account under the Post Office Savings Bank (Cumulative Time
Deposits) Rules, 1959, as amended from time to time, where such sums are
deposited in an account standing in the name of any member of the family.
Explanation.—For the
purposes of sub-clause (i) of clause (a) and sub-clause (i)
of clause (b) of this sub-section, an insurance on the life of any
person referred to therein shall include—
(i) a policy of insurance on the life of such person
securing the payment of a specified sum on the stipulated date of maturity of
the policy, if such person is alive on such date, notwithstanding that the
policy of insurance provides only for the return of premiums paid (with or
without any interest thereon) in the event of such person dying before the
said stipulated date;
(ii) a policy of insurance effected by a person for
the benefit of a minor with the object of enabling the minor, after he has
attained majority, to secure an insurance on his own life by adopting the
policy and on his being alive on a date (after such adoption) specified in the
policy in this behalf;
(c) any sum deducted in the previous year from the
salary payable by or on behalf of the Government to any individual being a sum
deducted in accordance with the conditions of his service, for the purpose of
securing to him a deferred annuity or making provision for his wife or
children, in so far as the sum so deducted does not exceed one-fifth of the
salary;
(d) if the assessee is an employee participating in
a recognised provident fund, his own contributions to his individual account
in the fund in the previous year, in so far as the aggregate of such
contributions does not exceed one-fifth of his salary in that previous year.
Explanation.—In clause
(d) of this sub-section, “salary” shall have the meaning assigned to it
in clause (h) of rule 2 of Part A of the Fourth Schedule;
(e) if the assessee is an employee participating in
an approved superannuation fund, any sum paid in the previous year by him by
way of contribution towards the superannuation fund;
(f) where the assessee is an individual, any sums
deposited, in the previous year by the assessee out of his income chargeable
to tax, in a ten-year account or a fifteen-year account under the Post Office
Savings Bank (Cumulative Time Deposits) Rules, 1959, as amended from time to
time;
(g) where the assessee is an association of persons
or a body of individuals consisting, in either case, only of husband and wife
governed by the system of community of property in force in the State of
(i) any sums paid in the previous year by the
assessee out of its income chargeable to tax—
(1) to effect or to keep in force an insurance on
the life of any member of such association or body or on the life of any child of
any of the members of such association or body; or
(2) to effect or to keep in force a contract for a
deferred annuity on the life of any member of such association or body or any
child of any of the members of such association or body :
Provided that such
contract does not contain a provision for the exercise by the insured of an
option to receive a cash payment in lieu of the payment of the annuity; or
(3) as a contribution to any provident fund referred
to in sub-clause (iv) of clause (a); or
(4) as a contribution for participation by any one
member of such association or body in the Unit-linked Insurance Plan;
(ii) any sums deposited in the previous year by such
association or body out of its income chargeable to tax in a 10-year account
or a 15-year account under the Post Office Savings Bank (Cumulative Time
Deposits) Rules, 1959, as amended from time to time;
(h) where the assessee is an individual or a Hindu
undivided family or where the assessee is an association of persons or a body
of individuals consisting, in either case, only of husband and wife governed by
the system of community of property in force in the State of Goa and the Union
territories of Dadra and Nagar Haveli and Daman and Diu, any sums paid in the
previous year by such assessee out of his or its income chargeable to tax,—
(i) as subscription to any such security of the
Central Government as that Government may, by notification in the Official
Gazette, specify in this behalf; or
(ia) as subscription to any such deposit scheme of the
National Housing Bank established under section 3 of the National Housing Bank
Act, 1987 (53 of 1987), as the Central Government may, by notification in the
Official Gazette, specify in this behalf;
(ib) as subscription to any such savings certificate
as defined in clause (c) of section 2 of the Government Savings
Certificates Act, 1959 (46 of 1959), as the Central Government may, by
notification in the Official Gazette, specify in this behalf;
(ii) for the purposes of purchase or construction of
a residential house property the construction of which is completed after the
31st day of March, 1987, and the income from which is chargeable to tax under
the head “Income from house property” (or which would, if it had not been used
for the assessee’s own residence, have been chargeable to tax under that head),
where such payments are made towards or by way of—
(a) any instalment or part payment of the amount due
under any self-financing or other scheme of any development authority, housing
board or other authority engaged in the construction and sale of house property
on ownership basis; or
(b) any instalment or part payment of the amount due
to any company or co-operative society of which the assessee is a shareholder
or member towards the cost of the house property allotted to him; or
(c) re-payment of the amount borrowed by the
assessee from—
(1) the Central Government or any State Government,
or
(2) any bank, including a co-operative bank, or
(3) the Life Insurance Corporation, or
(3A) the National Housing Bank, or
(4) any 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 which is approved for the purposes of clause (viii) of
sub-section (1) of section 36, or
(5) any company in which the public are
substantially interested or any co-operative society, where such company or
co-operative society is engaged in the business of financing the construction
of houses, or
(6) the assessee’s employer where such employer is a
public company or a public sector company or a University established by law or
a college affiliated to such University or a local authority;
(d) stamp duty, registration fee and other expenses
for the purpose of transfer of such house property to the assessee,
but shall not include any payment towards or by way of—
(A) the admission fee, cost of share and initial
deposit which a shareholder of a company or a member of a co-operative society
has to pay for becoming such shareholder or member; or
(B) the cost of the land, except where the
consideration for the purchase of the house property is a composite amount and
the cost of the land alone cannot be separately ascertained; or
(C) the cost of any addition or alteration to, or
renovation or repair of, the house property which is carried out after the
issue of the completion certificate in respect of the house property by the
authority competent to issue such certificate or after the house property or
any part thereof has either been occupied by the assessee or any other person
on his behalf or been let out; or
(D) any expenditure in respect of which deduction is
allowable under the provisions of section 24;
(i) where the assessee is an individual or a Hindu
undivided family or where the assessee is an association of persons or a body
of individuals consisting, in either case, only of husband and wife governed by
the system of community of property in force in the State of Goa and the Union
territories of Dadra and Nagar Haveli and Daman and Diu, any sums paid in the
previous year by such assessee out of his or its income chargeable to tax as
subscription to the National Savings Certificates (VI Issue) and National
Savings Certificates (VII Issue) issued under the Government Savings
Certificates Act, 1959 (46 of 1959).
(3) The provisions of clauses (a), (b) and (g)
of sub-section (2) shall apply only to so much of any premium or other payment
made on a policy other than a contract for a deferred annuity as is not in
excess of ten per cent of the actual capital sum assured.
Explanation.—In
calculating any such capital sum, no account shall be taken—
(i) of the value of any premiums agreed to be
returned, or
(ii) of any benefit by way of bonus or otherwise
over and above the sum actually assured, which is to be or may be received
under the policy by any person.
(4) The aggregate of the sums referred to in sub-section
(2), which qualifies for the purposes of computing the deduction under sub-section
(1), shall not exceed—
(i) in the case of an individual, being an author,
playwright, artist, musician, actor or sportsman (including an athlete),
sixty thousand rupees;
(ii) in the case of any other individual or a Hindu
undivided family or any such association of persons or a body of individuals
as is referred to in clause (g) or clause (h) of sub-section (2),
forty thousand rupees.
(5) If the assessee participating in any unit-linked
insurance plan referred to in sub-clause (v) or sub-clause (vi)
of clause (a) of sub-section (2), or in the case of an assessee being an
association of persons or a body of individuals referred to in clause (g)
of sub-section (2), the member thereof participating in any such plan,
terminates his participation in that plan (by notice to that effect or where he
ceases to participate by reason of failure to pay any contribution, by not
reviving his participation) before contributions in respect of such
participation have been paid for five years, then—
(a) no deduction shall be allowed to the assessee
under this section in respect of the contribution, if any, paid in the previous
year in which the participation is so terminated; and
(b) the deductions allowed in respect of the contributions
paid in the previous years preceding the previous year referred to in clause (a)
shall be deemed to be the income of the assessee of that previous year and
shall be chargeable to tax accordingly.
Explanation 1.—For the
purposes of this sub-section, the deduction allowed under this section in
respect of the contribution paid in any previous year shall be the amount by
which the deduction allowed under this section for that year exceeds the deduction
which would have been allowed for that year if no such contribution had been
paid during that year.
(6) If the assessee, being—
(a) an individual, has effected or kept in force an
insurance on the life of the assessee or on the life of the wife or husband or
any child of the assessee; or
(b) a Hindu undivided family, has effected or kept
in force an insurance on the life of any member of the family; or
(c) an association of persons or a body of
individuals referred to in clause (g) of sub-section (2), has effected
or kept in force an insurance on the life of any member of such association or
body or on the life of any child of any of the members of such association or
body,
terminates the contract of insurance (by notice to that
effect or where the contract ceases to be in force by reason of failure to pay
any premiums, by not reviving the contract of insurance) before premiums have
been paid for two years, then—
(i) no deduction shall be allowed to the assessee
under this section in respect of the premiums, if any, paid in the previous
year in which the policy is so terminated; and
(ii) the deduction allowed in respect of the
premiums paid in the previous year or years preceding the previous year referred
to in clause (i) shall be deemed to be the income of the assessee of
such previous year or years and shall be chargeable to tax accordingly.
Explanation 1.—For the
purposes of this sub-section, the deduction allowed under this section in
respect of the premiums paid in any previous year shall be the amount by which
the deduction allowed under this section for that year exceeds the deduction
which would have been allowed for that year if no such premiums had been paid
during that year.
Explanation 2.—In a
case where an assessee terminates his participation in any unit-linked
insurance plan referred to in sub-clause (v) or sub-clause (vi)
of clause (a) of sub-section (2) in any previous year and also
terminates a contract of insurance in that year, the deduction allowed under
this section in respect of the contribution or premiums paid in any previous
year shall, for the purposes of the Explanation to sub-section (5) and Explanation
1, be the amount by which the deduction allowed under this section for that
year exceeds the deduction which would have been allowed for that year if no
such contribution or premiums had been paid during that year.
(7) In the case of an assessee referred to in clause (h)
of sub-section (2),—
(a) where any sums specified in sub-clause (ii)
of that clause, with reference to which the deduction under sub-section (1) has
been allowed are refunded to or received back by the assessee in any previous
year (hereinafter referred to as the relevant previous year), then,—
(i) no deduction shall be allowed to the assessee
under sub-section (1) with reference to any of the sums, specified in that
sub-clause, paid in the relevant previous year; and
(ii) the aggregate amount of the deductions so
allowed in respect of the previous year or previous years preceding the
relevant previous year shall be deemed to be the income of the assessee of the
relevant previous year and shall be chargeable to tax under the head “Income
from other sources”;
(b) where the house property referred to in
sub-clause (ii) of that clause is transferred by the assessee before the
expiry of five years from the end of the financial year in which possession of
such property is obtained by him, then—
(i) no deduction shall be allowed to the assessee
under sub-section (1) with reference to any of the sums, specified in that
sub-clause, paid in the previous year in which the transfer is so made; and
(ii) the aggregate amount of the deductions allowed
under sub-section (1) with reference to the sums specified in that sub-clause
in respect of the previous year or previous years preceding the previous year
referred to in sub-clause (i) of this clause shall be deemed to be the
income of the assessee of the previous year in which the transfer is made and
shall be chargeable to tax under the head “Income from other sources”;
(c) where the aggregate of any sums specified in
sub-clause (ii) of that clause exceeds an amount of ten thousand rupees,
a deduction under sub-section (1) shall be allowed with reference to so much of
the aggregate as does not exceed an amount of ten thousand rupees.
(8) In this section,—
(a) “Life Insurance Corporation” means the Life
Insurance Corporation of India established under the Life Insurance Corporation
Act, 1956 (31 of 1956);
(b) “public company” shall have the same meaning as
in section 3 of the Companies Act, 1956 (1 of 1956);
(c) “transfer” shall be deemed to include also the
transactions referred to in clause (f) of section 269UA;
(d) “contribution” to any fund shall not include any
sums in repayment of loan.’
9 . On section 80C, as
it stood prior to 1-4-1991, see Circular No. 321, dated 15-1-1982,
Circular No. 337, dated 4-5-1982, Circular No. 233, dated 5-12-1977, Circular
No. 404, dated 15-1-1985, Letter [F. No. 14/18/61-IT(A-I)], dated 14-8-1962,
Circular No. 194, dated 20-3-1976, Circular No. 498, dated 4-11-1987, Circular
No. 405, dated 15-1-1985, as corrected by Circular No. 418, dated 2-5-1985,
Circular No. 518, dated 9-8-1988 and Circular No. 574, dated 22-8-1990.
10. Notified Schemes
were:
(a) Public provident fund vide Notification
No. SO 2431, dated 2-7-1968.
(b) Dhanraksha 1989 Plan of LIC Mutual Fund - see
Notification No. GSR 55(E), dated 9-2-1990.
(c) NSC (VIII Issue) - See Notification No. 270(E), dated 29-3-1990.
[R22]Prior to its omission, section 80CC, as inserted by the Finance Act, 1978, w.e.f. 1-4-1978 and later on amended by the Finance Act, 1982, w.e.f. 1-4-1983; Finance Act, 1984, w.e.f. 1-4-1984/1-4-1985; Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1978; Finance Act, 1985, w.e.f. 1-4-1985; Finance Act, 1987, w.e.f. 1-4-1987; Finance Act, 1988, w.e.f. 1-4-1989/1-4-1990; Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989; Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1990; Finance Act, 1989, w.e.f. 1-4-1990 and Finance Act, 1994, w.r.e.f. 1-4-1978, read as under :
‘80CC. Deduction in respect of investment in certain new shares.—(1) Where an assessee, being—
(a) an individual, or
(b) a Hindu undivided family,
(c) [* * *]
has acquired in the previous year (being a previous year relevant to the assessment year, commencing on the 1st day of April, 1979, or any subsequent assessment year) out of his income chargeable to tax, equity shares forming part of any eligible issue of capital, or units of any Mutual Fund specified under clause (23D) of section 10 or units issued under any scheme of the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963), if the amount of subscription to any units, issued by the Mutual Fund or, as the case may be, the Unit Trust of India under such scheme, is subscribed only to eligible issue of capital, he shall, in accordance with and subject to the provisions of this section, be allowed a deduction in the computation of his total income of an amount equal to fifty per cent of the cost of such shares to him.
Explanation.—Where in any previous year the assessee has acquired any shares referred to in this sub-section and has, within a period of six months from the end of that previous year paid the whole or a part of the amount, if any, remaining unpaid on such shares, the amount so paid shall be deemed to have been paid by the assessee towards the cost of such shares in that previous year.
(2) Where the aggregate cost to the assessee of the shares referred to in sub-section (1) which are acquired by him in the previous year exceeds twenty thousand rupees, the deduction under that sub-section shall be allowed only with reference to such of those shares (being shares the aggregate cost whereof to the assessee does not exceed twenty thousand rupees) as are specified by him in this behalf.
(3) For the purposes of this section, “eligible issue of capital” means an issue of equity shares which satisfies the following conditions, namely :—
(a) the issue is made by a public company formed and registered in
(i) construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule; or
(ii) providing long-term finance for construction or purchase of
houses in
Provided that in the case of a public company carrying on the business referred to in sub-clause (ii), such company* is approved by the Central Government for the purposes of this section; or
(iia) a hospital; or
(iii) a hotel approved by the prescribed† authority; or
(iv) operation of ships;
(b) the issue is an issue of capital made by the company for the first time:
Provided that this clause shall not apply in the case of an issue of equity shares made by a public company formed and registered in India with the main object of carrying on the business of operation of ships;
(c) the shares forming part of the issue are offered for subscription to the public and such offer for subscription is made by the company before the 1st day of April, 1990;
(d) such other conditions as may be prescribed:
Provided that in the case of a company which had originally been incorporated as a private company but has become a public company under the provisions of the Companies Act, 1956 (1 of 1956), an issue of equity shares made by it for the first time after it has become a public company shall not be regarded as an eligible issue of capital, if—
(i) such company had declared, distributed or paid any dividend when it was a private company; or
(ii) any of the shares forming part of such issue is offered for subscription at a premium.
Explanation 1.—If any question arises as to whether any issue of equity shares would constitute an eligible issue of capital for the purposes of this section, the question shall be referred to the Central Government whose decision thereon shall be final.
Explanation 2.—In this sub-section and sub-section (4), “public company” shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956).
(4) The deduction under sub-section (1) shall not be allowed unless the assessee has—
(i) subscribed to the shares in pursuance of an offer for subscription to the public made by the public company or in pursuance of a reservation or an option in his favour by reason of his being a promoter of the company; or
(ii) purchased the shares from a person who is specified as an underwriter in respect of the issue of such shares in pursuance of clause 11 of Part I of Schedule II to the Companies Act, 1956 (1 of 1956), and who has acquired such shares by virtue of his obligation as such underwriter.
(5) If any equity shares, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, an amount equal to fifty per cent of the cost to the assessee of the shares so sold or otherwise transferred shall be deemed to be the income of the assessee of the previous year in which the shares are so sold or transferred and shall be chargeable to tax accordingly.
Explanation.—A person shall be treated as having acquired any shares on the date on which his name is entered in relation to those shares in the register of members of the company.
(6) Where a deduction is claimed and allowed under sub-section (1) with reference to the cost of any equity shares, the cost of such shares shall not be taken into account for the purposes of section 54E.’
*Can Fin Homes Ltd., Bangalore was notified.
†The prescribed authority under rule 18AA is Director-General, Directorate of Tourism, Government of India.
[R23]Substituted by the Finance Act, 1988, w.e.f. 1-4-1988. Original section 80CCA was inserted by the Finance Act, 1987, w.e.f. 1-4-1988
[R24]See also Circular No. 527, dated 9-12-1988, Notification No. GSR 903(E), dated 6-9-1988, Circular No. 531, dated 17-3-1989, Circular No. 532, dated 17-3-1989 and Circular No. 534, dated 7-4-1989
[R25]Word “or” omitted by the Finance Act, 1994, w.r.e.f. 1-4-1988
[R26]For notified scheme
[R27]“(hereafter in this section referred to as the National Savings Scheme)” omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991.
[R28]For notified annuity plans
[R29]Substituted by the Finance Act, 1990, w.e.f. 1-4-1991. Prior to substitution, proviso read as under :
‘Provided that in relation to the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years, this sub-section shall have effect as if for the words “twenty thousand rupees”, the words “thirty thousand rupees” had been substituted.’
[R30]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993.
[R31] Substituted for “under the National Savings Scheme” by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991
[R32]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993
[R33]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R34] Substituted for “under the National Savings Scheme” by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991
[R35]Word “or” omitted by the Finance Act, 1994, w.r.e.f. 1-4-1991.
[R36]Omitted by the Finance Act, 1994, w.r.e.f. 1-4-1991. Prior to its omission, clause (c), as inserted by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
“(c) an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the State of Goa and the Union territories of Dadra and Nagar Haveli and Daman and Diu.”
[R37]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993
[R38]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R39]Inserted by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987. Original section 80D dealing with deduction in respect of medical treatment, etc., of handicapped dependantswas introduced by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 replacing old section 80B which was inserted by the Finance Act, 1965, w.e.f. 1-4-1965. Original section 80D, as amended by the Finance Act, 1981, w.e.f. 1-4-1982 and the Finance Act, 1968, w.e.f. 1-4-1969, stood as under before its omission by the Finance Act, 1984, w.e.f. 1-4-1985:
“80D. Deduction in respect of medical treatment, etc., of handicapped dependants.—(1) Where an assessee who is resident in India, being an individual or Hindu undivided family, who has, during the previous year, incurred out of his or its income chargeable to income-tax, any expenditure for the medical treatment (including nursing) of a person who—
(a) is a relative of the individual or, as the case may be, is a member of the Hindu undivided family and is not dependent on any person other than such individual or Hindu undivided family for his support or maintenance, and
(b) is suffering from a physical or mental disability which is certified by a registered medical practitioner to have the effect of reducing considerably such person’s capacity for normal work or engaging in a gainful employment (hereafter in this section referred to as handicapped dependant),
the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount specified in sub-section (2) in the computation of his total income in respect of the previous year.
(2) The deduction under sub-section (1) shall be—
(i) in a case where the handicapped dependant has, for a period of one hundred and eighty-two days or more during the previous year, been admitted in a hospital or a nursing home or a medical institution or in such other institution as may be notified by the Central Government in the Official Gazette to be an institution for the care of handicapped persons, and fees and charges for his medical treatment (including nursing) are payable to such hospital or nursing home or medical or other institution, as the case may be, a sum of four thousand eight hundred rupees, or
(ii) in any other case, a sum of one thousand two hundred rupees.”
[R40]Substituted for “six” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Earlier “six” was substituted for “three” by the Finance Act, 1992, w.e.f. 1-4-1993.
[R41]Omitted by the Finance Act, 1994, w.r.e.f. 1-4-1987. Prior to its omission, clause (c), as inserted by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987, read as under :
“(c) where the assessee is an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu, any sum paid to effect or to keep in force an insurance on the health of any member of such association or body or on the health of the dependent children of the members of such an association or body:”
[R42]For a scheme providing for hospitalisation and domiciliary hospitalisation benefit.
[R43]Section 80DD substituted for sections 80DD and 80DDA by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. Prior to their substitution, section 80DD, as inserted by the Finance Act, 1990, w.e.f. 1-4-1991 and thereafter amended by the Finance Act, 1992, w.e.f. 1-4-1993 and Finance Act, 1993, w.e.f. 1-4-1994, and section 80DDA, as inserted by the Finance Act, 1995, w.e.f. 1-4-1996, read as under :
‘80DD(†See Circular No. 702, dated 3-4-1995, issued in relation to old section 80DD.). Deduction in respect of medical treatment, etc., of handicapped dependants—Where an assessee who is resident in India, being an individual or a Hindu undivided family has, during the previous year, incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a person who—
(a) is a relative of the individual or, as the case may be, is a member of the Hindu undivided family and is not dependent on any person other than such individual or Hindu undivided family for his support or maintenance, and
(b) is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in the rules(*See rule 11A.) made in this behalf by the Board, which is certified by a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital, and which has the effect of reducing considerably such person’s capacity for normal work or engaging in a gainful employment or occupation,the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of a sum of fifteen thousand rupees in respect of the previous year.
(2) [* * *]
Explanation.—For the purposes of this section, the expression “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants.
80DDA. Deduction in respect of deposit made for maintenance of handicapped dependent.—(1) In computing the total income of an assessee who is resident in India, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, an amount not exceeding twenty thousand rupees paid or deposited by him in the previous year, out of his income chargeable to tax, under any scheme framed in this behalf by the Life Insurance Corporation or the Unit Trust of India subject to the conditions specified in sub-section (2) and approved by the Board in this behalf.
(2) The deduction under sub-section (1) shall be allowed only if the following conditions are fulfilled, namely :—
(a) the scheme referred to in sub-section (1) provides for payment of annuity or lump sum amount for the benefit of a handicapped dependant in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made;
(b) the assessee nominates either the handicapped dependant or any other person or a trust to receive the payment on his behalf, for the benefit of the handicapped dependant.
(3) If the handicapped dependant predeceases the individual or the member of the Hindu undivided family referred to in sub-section (2), an amount equal to the amount paid or deposited under sub-section (1) shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year.
(4) In this section,—
(a) “Government hospital” shall have the meaning assigned to it in the Explanation to section 80DD;
(b) “handicapped dependant” shall mean a person who—
(i) is a relative of the individual or, as the case may be, is a member of the Hindu undivided family and is not dependant on any person other than such individual or Hindu undivided family for his support or maintenance; and
(ii) is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in the rules(*See rule 11A.) made by the Board for the purposes of section 80DD, which is certified by a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital, and which has the effect of reducing considerably such person’s capacity for normal work or engaging in a gainful employment or occupation;
(c) “Life Insurance Corporation” shall have the same meaning as in clause (iii) of sub-section (8) of section 88;
(d) “Unit Trust of India” means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963).’
[R44]See Circular No. 775, dated 26-3-1999.
†See Circular No. 702, dated 3-4-1995, issued in relation to old section 80DD
[R45]See rule 11A issued in relation to old section 80DD
[R46]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997
[R47]The italicised word shall be inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R48]See rule 11DD for specified diseases
[R49]Word “forty” shall be substituted for “fifteen” by the Finance Act, 1999, w.e.f. 1-4-2000
[R50]See Form 10-I
[R51]Prescribed authority is ‘any doctor registered with Indian Medical Association with Post-graduate qualifications’
[R52]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995. Earlier section 80E with heading “Deduction in respect of payment for securing retirement annuities” was inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Section 80E, thereafter, was amended by the Finance Act, 1968, w.e.f. 1-4-1969 and the Finance Act, 1984, w.e.f. 1-4-1984 and later on by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. This topic was dealt with by original section 80C which was inserted by the Finance Act, 1965, w.e.f. 1-4-1965
[R53]See also Circular No. 688, dated 23-8-1994
[R54]Omitted section 80F, as amended by the Finance Act, 1968, w.e.f. 1-4-1969, stood as under :
“80F. Deduction in respect of educational expenses in certain cases.—(1) Where an individual, being a resident, who is not a citizen of India, has expended any sum in the previous year out of his income chargeable to tax for the full time education of his child wholly or mainly dependent on him and who is not more than twenty-one years of age, at any University, college, school or other educational institution situate in a country outside India, he shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount specified in sub-section (2) in the computation of his total income.
(2) The amount referred to in sub-section (1) shall be—
(i) in the case of an individual who has one such child, one thousand five hundred rupees; and
(ii) in the case of an individual who has more than one such child, three thousand rupees.”
[R55]This section was inserted in place of section 88 which was deleted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Now section 88 has taken the place of section 80C
[R56]See also Letter [F. No. 45/313/66-ITJ (61)], dated 2-12-1966, Circular No. 123, dated 31-10-1973, Letter [F. No. 16/38/64-IT(B)], dated 24-10-1964, Circular No. 416, dated 11-4-1985, Letter [F. No. 81/60/62-IT], dated 11-12-1962, Letter [F. No. 69/94/62-IT], dated 14-1-1963, Letter [F. No. 16/5/67-IT (A-I)], dated 5-4-1967, Circular No. 178, dated 23-9-1975, Letter [F. No. 69/22/63-IT], dated 28-9-1963, Letter [F. No. 69/13/62-IT], dated 20-7-1962 and Letter [F. No. 69/34/62-IT], dated 11-7-1962, Letter No. W 110421/1/77-C & G (FP), dated 11-1-1977, Circular No. 678, dated 10-2-1994 and Circular No. 752, dated 26-3-1997
[R57]Substituted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier, it was substituted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R58]Substituted for the following clause (i) by the Finance Act, 1985, w.e.f. 1-4-1986 :
“(i) in a case where the aggregate of the sums specified in sub-section (2) includes any sum specified in sub-clause (vii) of clause (a) thereof, an amount equal to the whole of such sum plus fifty per cent of the balance of such aggregate; and”
[R59]Restored to its original expression by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, this was substituted by the Direct Tax Laws (Amendment) Act, 1987 with effect from the same date.
[R60]Inserted by the Income-tax (Amendment) Act, 1989, w.e.f. 24-1-1989.
[R61]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991
[R62]Inserted by the Finance Act, 1993, w.e.f. 1-4-1993
[R63]Inserted, by the Finance Act, 1993., w.e.f. 1-4-1994.
[R64]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994.
[R65]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R66]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R67]Inserted by the Income-tax (Amendment) Act, 1996, w.e.f. 14-11-1996
[R68]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-4-1997.
[R69]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R70]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R71]The italicised words shall be inserted by the Finance Act, 1999, w.e.f. 1-4-2000
[R72]Inserted by the Income-tax (Amendment) Act, 1976, w.r.e.f. 9-9-1975.
[R73]Inserted by the Income-tax (Amendment) Act, 1989, w.e.f. 24-1-1989
[R74]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991
[R75]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983
[R76]Inserted by the Finance Act, 1985, w.e.f. 1-4-1985.
[R77]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R78]Inserted by the Finance Act, 1993, w.e.f. 1-4-1993. Earlier sub-clause (iiie) was omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989 and earlier inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[R79]Inserted by the Finance Act, 1993, w.e.f. 1-4-1994
[R80]The prescribed authority under rule 18AAA is as follows : in relation to a university or any non-technical institution of national eminence : Director-General (Income-tax Exemption) in concurrence with the Secretary, University Grants Commission; in relation to any technical institution of national eminence : Director-General (Income-tax Exemption) in concurrence with the Secretary, All India Council of Technical Education.
[R81]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994
[R82]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R83]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997
[R84]Inserted by the Income-tax (Amendment) Act, 1996, w.e.f. 14-11-1996.
[R85]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-4-1997
[R86]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R87]Sub-clauses (iiihg) and (iiihh) inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R88]Inserted by the Finance Act, 1976, w.e.f. 1-4-1977
[R89]Inserted by the Finance Act, 1976, w.e.f. 1-4-1977.
[R90]Inserted by the Finance Act, 1995, w.e.f. 1-4-1995.
[R91]For complete list of places of public worship, etc., notified under this clause
[R92]Prior to its omission, sub-section (3) read as under :
“(3) No deduction shall be allowed under sub-section (1) if the aggregate of the sums referred to in sub-section (2) is less than two hundred and fifty rupees.”
[R93]Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its substitution, sub-section (4), as amended by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1968 and Finance (No. 2) Act, 1977, w.e.f. 1-4-1978 and substituted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, stood as under :
“(4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi) and (vii) of clause (a) and in clause (b) of sub-section (2) exceeds the smaller of the following amounts, that is to say,—
(i) ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), and
(ii) five hundred thousand rupees,then, the amount by which such aggregate exceeds such smaller amount shall be ignored for the purpose of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1).”
[R94]Inserted by the Finance Act, 1995, w.e.f. 1-4-1995
[R95]Restored to its original provision by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, it was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date
[R96]Words “or clause (22) or clause (22A)” omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. Earlier “or clause (22A)” was inserted by the Finance Act, 1970, w.e.f. 1-4-1970
[R97]Inserted by the Finance Act, 1973, w.e.f. 1-4-1974
[R98]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[R99]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R100]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R101]Word “and” omitted by the Finance Act, 1994, w.e.f. 1-4-1994
[R102]For text of section 25 of the Companies Act, 1956
[R103]Inserted by the Finance Act, 1973, w.e.f. 1-4-1974. Restored to its original expression 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.
[R104]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994
[R105]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991
[R106]See rule 11AA and Form No. 10G.
[R107]Substituted for “three” by the Finance Act, 1993, w.e.f. 1-4-1993
[R108]Inserted by the Finance (No. 2) Act, 1980, w.r.e.f. 1-4-1962.
[R109]Substituted by the Finance Act, 1970, w.e.f. 1-4-1971
[R110]Restored to its original position by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, clauses (i) and (ii) were substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date
[R111]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R112]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973
[R113]Inserted by the Finance Act, 1973, w.e.f. 1-4-1974. Restored to its original provision 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.
[R114]Inserted by the Finance Act, 1976, w.e.f. 1-4-1976.
[R115]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969
[R116]Reintroduced by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998. Earlier original section 80GG, as inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976 and further amended by the Finance Act, 1982, w.e.f. 1-4-1983, the Finance Act, 1983, w.e.f. 1-4-1984, the Finance Act, 1986, w.e.f. 1-4-1987 and Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, was omitted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R117]See also Circular No. 327, dated 8-2-1982.
[R118]Rule 11B provides that to claim deduction under section 80GG, the assessee should file a declaration in Form No. 10BA.
[R119]Inserted by the Finance Act, 1979, w.e.f. 1-4-1980. Restored to its original position by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier section 80GGA was omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[R120]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R121]Substituted for the following by the Finance Act, 1983, w.e.f. 1-4-1983 :
“Provided that the association or institution is for the time being approved for the purposes of sub-section (2) of section 35CCA.”
[R122]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R123]Inserted by the Finance Act, 1982, w.e.f. 1-6-1982
[R124]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R125]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R126]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R127]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983
[R128]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R129]Inserted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974
[R130]See also Circular No. 484, dated 1-5-1987.
[R131]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R132]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990
[R133]See rule 18B and Form No. 10C for form of audit report.
[R134]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R135]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R136]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R137]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R138]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976
[R139]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981
[R140]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978
[R141]Substituted for the following Explanation by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 10-9-1986 :
‘Explanation.—In this section, “backward area” means an area specified in the list in the Eighth Schedule
[R142]For notified backward areas
[R143]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978
[R144]For relevant case laws, See Case Laws
[R145]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R146]Substituted for “in respect of each of the ten assessment years beginning with the assessment year relevant to the previous year in which the small-scale industrial undertaking” by the Finance Act, 1981, w.e.f. 1-4-1981
[R147]Inserted by the Finance Act, 1981, w.e.f. 1-4-1981
[R148]See rule 18BB and Form No. 10CC for form of audit report
[R149]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981
[R150]Substituted for the following clause by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 :
‘(a) “rural area” shall have the same meaning as in clause (b) of the Explanation to sub-section (1) of section 35CC ;
[R151]For specified areas.
[R152]Substituted by the Finance Act, 1999, w.r.e.f. 1-4-1978. Prior to its substitution, clause (b), as amended by the Finance Act, 1981, w.e.f. 1-4-1981 and Finance Act, 1986, w.r.e.f. 1-4-1985, read as under :
“(b) an industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed,—
(1) in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees ;
(2) in a case where the previous year ends after the 31st day of July, 1980 but before the 18th day of March, 1985, twenty lakh rupees ; and
(3) in a case where the previous year ends after the 17th day of March, 1985, thirty-five lakh rupees,
and for this purpose the value of any machinery or plant shall be,—
(i) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee ; and
(ii) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant.”
[R153]For text of section 11B of the Industries (Development and Regulation ) Act 1951
[R154]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983
[R155]See also Circular No. 563, dated 23-5-1990, Circular No. 575, dated 31-8-1990 and Circular No. 711, dated 24-7-1995.
[R156]Substituted for “twenty-five” by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987
[R157]See rule 18BBA (1) and Form No. 10CCA for form of audit report
[R158]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R159]Substituted for “twenty-five” by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987
[R160]Substituted for “twenty-five” by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
[R161]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution the said portion as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988, read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf.”
[R162]Substituted for “twenty-five” by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987
[R163]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R164]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R165]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R166]See rule 18BBA (1A) and Form No. 10CCAA.
[R167]Substituted by the Finance Act, 1985, w.e.f. 1-4-1986. Original section, as inserted by the Finance Act, 1983, w.e.f. 1-4-1983, stood as under :
‘80HHC. Deduction in respect of export turnover.—(1) Where the assessee, being an Indian company or a person (other than a company) who is resident in India, exports out of India during the previous year relevant to an assessment year any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, the following deductions, namely :—
(a) a deduction of an amount equal to one per cent of the export turnover of such goods or merchandise during the previous year ; and
(b) a deduction of an amount equal to five per cent of the amount by which the export turnover of such goods or merchandise during the previous year exceeds the export turnover of such goods or merchandise during the immediately preceding previous year.
(2)(a) This section applies to all goods or merchandise [other than those specified in clause (b)] if the sale proceeds of such goods or merchandise exported out of India are receivable by the assessee in convertible foreign exchange.
(b) The goods or merchandise referred to in clause (a) are the following, namely :—
(i) agricultural primary commodities, not being produce of plantations ;
(ii) mineral oil ;
(iii) minerals and ores ; and
(iv) such other goods or merchandise as the Central Government may, by notification in the Official Gazette, specify in this behalf.
(3) No deduction under clause (b) of sub-section (1) shall be allowed unless the assessee had, during the immediately preceding previous year, exported out of India goods or merchandise to which this section applies.
Explanation.—For the purposes of this section,—
(a) “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 thereunder;
(b) “export turnover” means the sale proceeds of any goods or merchandise exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962).
[R168]See also Letter [F.No. 178/206/83-IT (A-I)], dated 22-5-1984, Circular No. 466, dated 14-8-1986, Circular No. 562, dated 23-5-1990, Circular No. 564, dated 5-7-1990, Circular No. 571, dated 1-8-1990, Circular No. 575, dated 31-8-1990, Circular No. 600, dated 23-4-1991, Circular No. 624, dated 23-1-1992, Circular No. 693, dated 17-11-1994 and Circular No. 729, dated 1-11-1995
[R169]Substituted by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to its substitution, sub-section (1), as amended by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987, stood as under :
“(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction equal to the aggregate of—
(a) four per cent of the net foreign exchange realisation ; and
(b) fifty per cent of so much of the profits derived by the assessee from the export of such goods or merchandise as exceeds the amount referred to in clause (a) :
Provided that the deduction under this sub-section shall not exceed the profits derived by the assessee from the export of such goods or merchandise :
Provided further that an amount equal to the amount of the deduction claimed under this sub-section is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of the assessee.”
[R170]Substituted for “whole of the income” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R171]Substituted for the words “total profits of the export business of the assessee the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee” by the Finance Act, 1992, w.e.f. 1-4-1992
[R172]Substituted for “whole of the income” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R173]Substituted for “receivable” by the Finance Act, 1990, w.e.f. 1-4-1991
[R174]Inserted by the Finance Act, 1990., w.r.e.f. 1-4-1989
[R175]Inserted by the Finance Act, 1990., w.e.f. 1-4-1991
[R176]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution, the said portion, as inserted by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf.”
[R177]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R178]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R179]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R180]For text of section 50 of the Customs Act, 1962
[R181]Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to substitution, sub-section (3), as substituted by the Finance Act, 1990, w.e.f. 1-4-1991, stood as under :
‘(3) For the purposes of sub-section (1), profits derived from the export of goods or merchandise out of India shall be the amount which bears to the profits of the business (as computed under the head “Profits and gains of business or profession”), the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.
[R182]Inserted by the Finance Act, 1992, w.e.f. 1-4-1992
[R183]Inserted by the Finance Act, 1992, w.e.f. 1-4-1992.
[R184]Inserted by the Finance Act, 1992, w.e.f. 1-4-1992
[R185]Inserted by the Finance Act, 1992, w.e.f. 1-4-1992
[R186]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R187]Words ‘as computed under the head “Profits and gains of business or profession”’ omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R188]Words ‘(as computed under the head “Profits and gains of business or profession”)’ omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R189]Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987
[R190]See rule 18BBA (3) and Form No. 10CCAC for form of report of accountant
[R191]Substituted for “on the basis of the amount of export turnover” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier, words “export turnover” were substituted for “net foreign exchange realisation as determined in accordance with the Import and Export Policy of the Government of India for the relevant period” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R192]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989
[R193]See rule 18BBA (3) and Form No. 10CCAC for form of report of accountant.
[R194]Substituted for “income” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R195]See rule 18BBA (2) and Form No. 10CCAB for form of certificate from export/trading house to supporting manufacturer.
[R196]Inserted by the Finance Act, 1999, w.r.e.f. 1-4-1992
[R197]Inserted by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1986
[R198]See Circular No. 624, dated 23-1-1992
[R199]Section 2(13) of the Customs Act, 1962, defines “customs station” as follows :
‘(13) “customs station” means any customs port, customs airport or land customs station
[R200]Substituted for “receivable” by the Finance Act, 1990, w.e.f. 1-4-1991
[R201]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R202]Section 2(13) of the Customs Act, 1962, defines “customs station” as follows :
‘(13) “customs station” means any customs port, customs airport or land customs station
[R203]Inserted by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1987.
[R204]Section 2(13) of the Customs Act, 1962, defines “customs station” as follows :
‘(13) “customs station” means any customs port, customs airport or land customs station
[R205]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R206]Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. Prior to its omission, clause (bb) as inserted by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
‘ “total turnover” shall not include any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28
[R207]Clause (c) omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Original clause (c) was inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987
[R208]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989
[R209]Relettered by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R210]Relettered by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R211]Substituted for “manufacturing goods” by the Finance Act, 1990, w.e.f. 1-4-1991
[R212]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R213]The prescribed authority under rule 18BBA(5) is Director General, Directorate General of Tourism, Government of India
[R214]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991
[R215]Substituted for “by the assessee in convertible foreign exchange” by the Finance Act, 1990, w.e.f. 1-4-1991.
[R216]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution the quoted portion, as amended by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf”
[R217]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R218]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R219]Substituted for “from a tour operator or, as the case may be, a travel agent” by the Finance Act, 1994, w.e.f. 1-4-1995
[R220]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R221]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R222]See rule 18BBA (6) and Form No. 10CCAE for certificate from person making payment to an assessee engaged in business of tour operator/hotel/travel agent
[R223]Substituted by the Finance Act, 1990, w.e.f. 1-4-1991
[R224]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995
[R225]Letter “(f)” shall be substituted for “(e)” by the Finance Act, 1999, w.e.f. 1-4-2000
[R226]See rule 18BBA (4) and Form No. 10CCAD for form of report of accountant.
[R227]Substituted for “amount of convertible foreign exchange received by the assessee for services provided by him to the foreign tourists” by the Finance (No. 2) Act, 1991, w.e.f.1-4-1992
[R228]Words “aggregate of the” omitted by the Finance Act, 1994, w.e.f. 1-4-1995
[R229]Inserted, by the Finance Act, 1994.w.e.f. 1-4-1995
[R230]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R231]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R232]Section 32 has been omitted by the Foreign Exchange Regulation (Amendment) Act, 1993, w.r.e.f. 8-1-1993.
[R233]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R234]For definition of “authorised dealer
[R235]Clause (h) of section 2 of the Foreign Exchange Regulation Act, 1973, defines “foreign exchange” as follows :
‘(h) “foreign exchange” means foreign currency and includes—
(i) all deposits, credits and balances payable in any foreign currency, and any drafts, traveller’s cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency;
(ii) any instrument payable, at the option of the drawee or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other
[R236]For definition of “Indian currency
[R237]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991
[R238]Proviso omitted by the Finance Act, 1995, w.e.f. 1-4-1996. Prior to its omission, the proviso, as amended by the Finance Act, 1993, w.e.f. 13-5-1993 and the Finance Act, 1994, w.e.f. 13-5-1994, read as under :
“Provided that no such deduction shall be allowed in relation to the assessment year commencing on the 1st day of April, 1996 or any subsequent assessment year.
[R239]Proviso and sub-section (1A) inserted by the Finance (No. 2) Act, 1998,w.e.f. 1-4-1999
[R240]Substituted for the portion beginning with the words “where the Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution, the said portion, as inserted by the Finance (No. 2) Act, 1990, w.e.f. 1-4-1991, read as under :
“where the Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Commissioner may allow in this behalf”
[R241]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R242]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R243]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R244]See rule 18BBA (7) and Form No. 10CCAF for form of report of accountant
[R245]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R246](i)” should be read as “(a)”
[R247]See rule 18BBA (7) and Form No. 10CCAF for form of report of accountant.
[R248](ii)” should be read as “(b)”
[R249]See rule 18BBA (8) and Form No. 10CCAG
[R250]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R251]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R252]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R253]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981. Originally, provision relating to priority industries was dealt with by section 80E which was inserted by the Finance Act, 1966, w.e.f. 1-4-1966. That section was omitted and in its place section 80-I was introduced by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Section 80-I was also omitted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R254]For relevant case laws, See Case Laws
[R255]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R256]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R257]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R258]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991
[R259]Substituted for “fourteen” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. Earlier “fourteen” was substituted for “nine” by the Finance Act, 1990, w.e.f. 1-4-1990 which was earlier substituted for “four” by the Finance Act, 1985, w.e.f. 1-4-1985.
[R260]Substituted for “fourteen” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. Earlier “fourteen” was substituted for “nine” by the Finance Act, 1990, w.e.f. 1-4-1990 which was earlier substituted for “four” by the Finance Act, 1985, w.e.f. 1-4-1985
[R261]Substituted for “1995” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. Earlier “1995” was substituted for “1990” by the Finance Act, 1990, w.e.f. 1-4-1990 which was earlier substituted for “1985” by the Finance Act, 1985, w.e.f. 1-4-1985
[R262]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R263]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R264]Inserted, by the Finance Act, 1983, w.e.f. 1-4-1984
[R265]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990
[R266]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-199
[R267]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R268]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R269]See rule 18BBB and Form No. 10CCB for form of audit report.
[R270]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R271]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R272]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R273]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R274]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R275]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R276]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R277]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R278]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R279]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R280]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R281]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
2. Section 80-IA shall be replaced alongwith a new section heading, namely , “Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.” by the Finance Act 1999 , w.e.f. 1-4-2000
[R282]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R284]Substituted for “operation of a ship (such business being hereinafter referred to as the eligible business)” by the Finance Act, 1995, w.e.f. 1-4-1996.
[R285]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R286]Inserted by the Finance Act, 1997, w.r.e.f. 1-4-1996.
[R287]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R288]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R289]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R290]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998.
[R291]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994.
[R292]Substituted for “1998” by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998
[R293]Substituted by the Finance Act, 1993, w.e.f. 1-4-1994. Prior to its substitution, clause (iv) read as under :
“(iv) it begins to manufacture or produce articles or things or to operate such plant or plants, at any time during the period beginning on the 1st day of April, 1991 and ending on the 31st day of March, 1995, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;”
[R294]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995
[R295]Substituted for “1998” by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998
[R296]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998
[R297]Substituted for “2000” by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R298]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R299]See rule 11EA and Appendix III of the Income-tax Rules
[R300]Inserted by the Income-tax (Amendment) Act, 1998, w.r.e.f. 1-4-1995
[R301]Substituted for “1999” by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998
[R302]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
[R303]See rule 18BBC (2)/(3) for conditions to be fulfilled for obtaining approval of prescribed authority.
For the purposes of section 80-IA(4)(iii) and first proviso to clause (ii) of sub-section (5) of section 80-IA, rule 18BBC(2) lays down following conditions to be fulfilled for obtaining approval of prescribed authority:
n Hotel is situated in an area or place specified under clause (iii) of section 80-IA(4).
n There are not more than 300 hotel rooms of 3 star category and above in the aggregate in areas or places specified under clause (iii) of section 80-IA(4) within the jurisdiction of the revenue sub-division in which hotel is located.
n Where the hotel is located in a place where there is need for development of infrastructure for tourism, such place has been specified by Central Government under clause (iii) of section 80-IA(4) on the recommendation of the Department of Tourism.
Rule 18BBC(3) lays down the conditions to be fulfilled for obtaining approval of prescribed authority : For the purpose of clause (iiia) of sub-section (4) and the proviso of clause (iia) of sub-section (5) of section 80-IA, a hotel shall be approved by the prescribed authority if the following conditions are fulfilled, namely:—
n Such hotel is located in an area or place specified under clause (iiia) of the said sub-section (4) of section 80-IA.
n There are not more than 1,000 hotel rooms of 3-star category and above in the aggregate, in areas or places specified under clause (iiia) of sub-section (4) of section 80-IA within the jurisdiction of the revenue sub-division in which the hotel is located.
n In case the hotel is located in a place where there is need for development of infrastructure for tourism, such place has been specified by the Central Government under clause (iiia) of sub-section (4) of section 80-IA on the recommendations of the Department of Tourism.
The prescribed authority under rule 18BBC(1) is :
(a) in relation to hotels located in an area or place referred to in clause (iii) or clause (iiia) of section 80-IA(4) : Director General (Income-tax Exemption) who shall grant approval on the concurrence of the Director General in the Directorate General of Tourism, Government of India;
(b) in relation to hotels located in any place referred to in clause (iv) or clause (iva) of section 80-IA(4) : Director General in the Directorate General of Tourism, Government of India.
[R304]Substituted for the portion beginning with the words “This section applies” and ending with the words “either of the conditions (iii) or (iv) are fulfilled, namely:—” by the Finance Act, 1997, w.e.f. 1-4-1998. Prior to substitution, the quoted portion read as under :
“This section applies to the business of any hotel, where conditions (i), (ii), (v), and either of the conditions (iii) or (iv), are fulfilled, namely :—”
[R305]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R306]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R308]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R309]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997
[R310]See rules 18AAB/18BBD. Prescribed authority is Secretary, Department of Scientific & Industrial Research, Ministry of Science & Technology, Government of India
[R311]Substituted for “1998” by the Finance (No. 2) Act, 1998, w.r.e.f. 1-4-1998
[R312]Inserted by the Finance Act, 1997, w.r.e.f. 1-4-1996
[R313]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R314]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R315]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R316]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998
[R317]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R318]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R319]Substituted by the Finance Act, 1993, w.e.f. 1-4-1994
[R320]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R321]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995
[R322]Inserted by the Income-tax (Amendment) Act, 1998, w.r.e.f. 1-4-1995
[R323]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R324]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R325]Inserted by the Finance Act, 1997, w.r.e.f. 1-4-1996
[R326]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R327]Rule 18BBC (2) lays down the prescribed authority/conditions to be fulfilled for obtaining approval of prescribed authority
[R328]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R330]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R331]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R332]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R333]Substituted for clause (ii) by the Income-tax (Amendment) Act, 1998, w.r.e.f. 1-4-1995. Prior to its substitution, clause (ii) read as under :
“(ii) ten in the case of any other assessee deriving profits and gains from an industrial undertaking;”
[R334]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
[R335]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998
[R336]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R337]Inserted by the Finance Act, 1997, w.r.e.f. 1-4-1996
[R338]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R339]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R340]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R341]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998
[R342]Inserted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998.
[R343]See rule 18BBE and Form No. 10CCC.
[R344]See rule 18BBB and Form No. 10CCB for form of audit report
[R345]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R346]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R347]Clause (a) renumbered as clause (aa), by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R348]Clauses (c) and (ca) substituted for clause (c) by the Finance Act, 1995, w.e.f. 1-4-1996. Prior to its substitution, clause (c) read as under:
‘(c) “initial assessment year” means the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning;
[R349]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997
[R350]Inserted by the Finance Act, 1997, w.r.e.f. 1-4-1996.
[R351]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R352]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998
[R353]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R354]Substituted by the Income-tax (Amendment) Act, 1998, w.e.f. 1-4-1998. Prior to its substitution, clause (ca), as substituted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, read as under :
‘(ca) “infrastructure facility” means—
(i) a road, highway, bridge, airport, port, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette;
(ii) a water supply project, irrigation project, sanitation and sewerage system;’
Earlier clause (ca) was inserted by the Finance Act, 1995, w.e.f. 1-4-1996
[R355]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R356]For notified infrastructure facility
[R357]Substituted by the Finance Act, 1992, w.e.f. 1-4-1993
[R358]For the text of section 11B of the Industries (Development & Regulation) Act, 1951 and notification issued thereunder
[R359]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
2. Section 80-IA shall be replaced alongwith a new section heading, namely , “Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.” by the Finance Act 1999 , w.e.f. 1-4-2000
[R360]Prior to its omission, section 80J, as inserted in place of section 84 (which was omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968), and later amended by the Finance Act, 1969, w.e.f. 1-4-1969, Finance Act, 1972, w.e.f. 1-4-1973, Finance Act, 1973, w.e.f. 1-4-1974, Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974, Finance Act, 1975, w.e.f. 1-4-1975/1-4-1976, Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976, Finance (No. 2) Act, 1977, w.e.f. 1-4-1978, Finance Act, 1979, w.e.f. 1-4-1979, Finance (No. 2) Act, 1980, w.r.e.f. 1-4-1972, Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 and Finance Act, 1988, w.e.f. 1-4-1988, read as under :
‘80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.—(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80HH or section 80HHA) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub-section (1A) in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year):
Provided that in relation to the profits and gains derived by an assessee, being a company, from an industrial undertaking which begins to manufacture or produce articles or to operate its cold storage plant or plants after the 31st day of March, 1976, or from a ship which is first brought into use after that date, or from the business of a hotel which starts functioning after that date, the provisions of this sub-section shall have effect as if for the words “six per cent”, the words “seven and a half per cent” had been substituted.
(1A) (I) For the purposes of this section, the capital employed in an industrial undertaking or the business of a hotel shall, except as otherwise expressly provided in this section, be computed in accordance with clauses (II) to (IV) and the capital employed in a ship shall be computed in accordance with clause (V).
(II) The aggregate of the amounts representing the values of the assets as on the first day of the computation period of the undertaking or of the business of the hotel to which this section applies shall first be ascertained in the following manner :—
(i) in the case of assets entitled to depreciation, their written down value;
(ii) in the case of assets acquired by purchase and not entitled to depreciation, their actual cost to the assessee;
(iii) in the case of assets acquired otherwise than by purchase and not entitled to depreciation, the value of the assets when they became assets of the business;
(iv) in the case of assets, being debts due to the person carrying on the business, the nominal amount of those debts;
(v) in the case of assets, being cash in hand or bank, the amount thereof.
Explanation 1.—In this clause, “actual cost” has the same meaning as in clause (1) of section 43.
Explanation 2.—In this clause and in clause (III), “computation period” means the period for which profits and gains of the industrial undertaking or business of the hotel are computed under sections 28 to 43A.
Explanation 3.—In this clause and in clause (V), “written down value” has the same meaning as in clause (6) of section 43.
Explanation 4.—Where the cost of any asset has been satisfied otherwise than in cash, the then value of the consideration actually given for the asset shall be treated as the actual cost of the asset.
(III) From the aggregate of the amounts as ascertained under clause (II) shall be deducted the aggregate of the amounts, as on the first day of the computation period, of borrowed moneys and debts owed by the assessee (including amounts due towards any liability in respect of tax).
Explanation.—For the purposes of this clause,—
(i) “tax” means—
(a) income-tax or super-tax (including advance tax) due under any provision of this Act;
(b) wealth-tax due under any provision of the Wealth-tax Act, 1957 (27 of 1957);
(c) gift-tax due under any provision of the Gift-tax Act, 1958 (18 of 1958);
(d) super profits tax due under any provision of the Super Profits Tax Act, 1963 (14 of 1963);
(e) surtax due under any provision of the Companies (Profits) Surtax Act, 1964 (7 of 1964);
(ii) any liability in respect of tax shall be deemed to have become due—
(a) in the case of advance tax due under any provision of this Act, on the date on which such advance tax is payable; and
(b) in the case of any other tax, on the first day of the period within which it is required to be paid.
(IV) The resultant sum as determined under clause (III) shall be diminished by the value, as ascertained under clause (II), of any investments the income from which is not taken into account in computing the profits of the business and any moneys not required for the purpose of the business, in so far as the aggregate of such investments or moneys exceed the amount of the borrowed moneys which under clause (III) are required to be deducted in computing the capital.
(V) The capital employed in a ship shall be taken to be the written down value of the ship as reduced by the aggregate of the amounts owed by the assessee as on the computation date on account of moneys borrowed or debts incurred in acquiring that ship.
Explanation.—In this clause, “computation date” in relation to a ship, means—
(a) in respect of the previous year in which the ship is first brought into use, the date on which it is so brought into use;
(b) in respect of any subsequent previous year, the first day of such previous year.
(2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or to operate its cold storage plant or plants or the ship is first brought into use or the business of the hotel starts functioning (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:
Provided that in the case of an assessee, being a co-operative society, the provisions of this sub-section shall have effect as if for the words “four assessment years”, the words “six assessment years” had been substituted.
(3) Where the amount of the profits and gains derived from the industrial undertaking or ship or business of the hotel, as the case may be, included in the total income (as computed without applying the provisions of section 64 and before making any deduction under Chapter VI-A) in respect of the previous year relevant to an assessment year commencing on or after the 1st day of April, 1967 (not being an assessment year prior to the initial assessment year or subsequent to the fourth assessment year as reckoned from the end of the initial assessment year) falls short of the relevant amount of capital employed during the previous year, the amount of such shortfall, or, where there are no such profits and gains, an amount equal to the relevant amount of capital employed during the previous year (such amount, in either case, being hereafter, in this section, referred to as deficiency) shall be carried forward and set off against the profits and gains referred to in sub-section (1) [as computed after allowing the deductions, if any, admissible under section 80HH or section 80HHA and the said sub-section (1)] in respect of the previous year relevant to the next following assessment year and, if there are no such profits and gains for that assessment year, or where the deficiency exceeds such profits and gains, the whole or balance of the deficiency, as the case may be, shall be set off against such profits and gains for the next following assessment year and if and so far as such deficiency cannot be wholly so set off, it shall be set off against such profits and gains assessable for the next following assessment year and so on :
Provided that—
(i) in no case shall the deficiency or any part thereof be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year;
(ii) where there is more than one deficiency and each such deficiency relates to a different assessment year, the deficiency which relates to an earlier assessment year shall be set off under this sub-section before setting off the deficiency in relation to a later assessment year:
Provided further that in the case of an assessee being a co-operative society, the provisions of this sub-section shall have effect as if for the words “fourth assessment year”, the words “sixth assessment year” had been substituted.
(4) This section applies to any industrial undertaking which fulfils all the following conditions, namely:—
(i) it is not formed by the splitting up, or the reconstruction, of a business already in existence;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
(iv) in a case where the industrial undertaking manufactures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power:
Provided that the condition in clause (i) 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:
Provided further that, where any building or any part thereof previously used for any purpose is transferred to the business of the industrial undertaking, the value of the building or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking:
Provided also that in the case of an industrial undertaking which manufactures or produces any article specified in the list in the Eleventh Schedule, the provisions of clause (iii) shall have effect as if for the words “thirty-three years”, the words “thirty-one years” had been substituted.
Explanation 1.—For the purposes of clause (ii) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:—
(a) such machinery or plant was not, at any time, previous to the
date of the installation by the assessee, used in
(b) such machinery or plant is imported into
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
Explanation 2.—Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with and the total value of machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking.]
(5) This section applies to any ship, where all the following conditions are fulfilled, namely:—
(i) it is owned by an Indian company and is wholly used for the purposes of the business carried on by it;
(ii) it was not, previous to the date of its acquisition by the Indian company, owned and used in Indian territorial waters by a person resident in India; and
(iii) it is brought into use by the Indian company at any time within a period of thirty-three years next following the 1st day of April, 1948.
(6) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely:—
(a) the business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose;
(b) the business of the hotel is owned and carried on by a company
registered in
(c) [***];
(d) the hotel is for the time being approved for the purposes of this sub-section by the Central Government;
(e) the business of the hotel starts functioning on or after the 1st day of April, 1961, but before the 1st day of April, 1981.
Explanation.—Where in the case of the business of a hotel, any building, or any part thereof, previously used as a hotel, or any machinery or plant, or any part thereof, previously used for any purpose, is transferred to a new business and the total value of the building, machinery or plant or part so transferred does not exceed twenty per cent of the total value of the building, machinery or plant used in the business, then, for the purposes of clause (a) of this sub-section, the condition specified therein shall be deemed to have been complied with and the total value of the building, machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the business of the hotel.
(6A) Where the assessee is a person other than a company or a co-operative society, the deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.
(6B) Where any goods held for the purposes of the business of the industrial undertaking or the hotel or the operation of the ship are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the business of the industrial undertaking or the hotel or the operation of the ship and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the business of the industrial undertaking or the hotel or the operation of the ship does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship shall be computed as if the transfer, in either case, had been made at the market value of such goods as on that date:
Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit.
Explanation.—In this sub-section, “market value”, in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market.
(6C) Where it appears to the Assessing Officer that, owing to the close connection between the assessee carrying on the business of the industrial undertaking or the hotel or the operation of the ship to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in the business of the industrial undertaking or the hotel or the operation of the ship, the Assessing Officer shall, in computing the profits and gains of the industrial undertaking or the hotel or the ship for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom.
(7) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the exemption conferred by this section shall not apply to any class of industrial undertakings with effect from such date as it may specify in the notification.’
[R361]Prior to its omission, section 80JJ, as inserted by the Finance Act, 1989, w.e.f.1-4-1990, read as under :
“80JJ. Deduction in respect of profits and gains from business of poultry farming.—Where the gross total income of an assessee includes any profits and gains derived from business of poultry farming, there shall be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to thirty-three and one-third per cent thereof.”
Earlier section 80JJ, was inserted by the Finance Act, 1975, w.e.f. 1-4-1976, amended by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981 and the Finance Act, 1983, w.e.f. 1-4-1984 and omitted by the Finance Act, 1985, w.e.f. 1-4-1986
[R362]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. Earlier section 80JJA was inserted by the Finance Act, 1979, w.e.f. 1-4-1980 and later on omitted by the Finance Act, 1983, w.e.f. 1-4-1984
[R363]Words “or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or” shall be substituted for “, producing bio-gas,” by the Finance Act, 1999, w.e.f. 1-4-2000
[R364]Words “a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences” shall be substituted for “a deduction from such profits and gains of an amount equal to the whole of such income, or five lakh rupees, whichever is less”, by the Finance Act, 1999, w.e.f. 1-4-2000.
[R365]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R366]See rule 19AB and Form No. 10DA for form of report.
[R367]For text of clause (s) of section 2 of the Industrial Disputes Act, 1947, defining “workman”
[R368]Omitted section 80K was originally inserted from 1-4-1968 by the Finance (No. 2) Act, 1967, and amended from the same date. The section, as substituted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1968 and amended by the Finance Act, 1975, w.e.f. 1-4-1975, stood as follows :
“80K. Deduction in respect of dividends attributable to profits and gains from new industrial undertakings or ships or hotel business.—Where the gross total income of an assessee,being—
(a) the owner of any share or shares in a company, or
(b) a person who is chargeable to tax under this Act on the income by way of dividends on any share or shares in a company owned by any other person, includes any income by way of dividends paid or deemed to have been paid by the company in respect of such share or shares, there shall, subject to any rules that may be made by the Board in this behalf, be allowed, in computing his total income, a deduction from such income by way of dividends of an amount equal to such part thereof as is attributable to the profits and gains derived by the company from an industrial undertaking or ship or the business of a hotel, on which no tax is payable by the company under this Act for any assessment year commencing prior to the 1st day of April, 1968, or in respect of which the company is entitled to a deduction under section 80J for the assessment year commencing on the 1st day of April, 1968, or for any subsequent assessment year:
Provided that no deduction under this section shall be allowed in respect of any income by way of dividends which is attributable to the profits and gains derived by the company from an industrial undertaking which begins to manufacture or produce articles or to operate its cold storage plant or plants after the 31st day of March, 1976, or from a ship which is first brought into use after that date or from the business of a hotel which starts functioning after that date.”
[R369]Substituted by the Finance Act, 1970, w.e.f. 1-4-1971. Original section was inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and was later on substituted by the Finance Act, 1968, w.e.f. 1-4-1969
[R370]Word “dividends” should be omitted in view of omission of clause (iv) by the Finance Act, 1997, w.e.f. 1-4-1998
[R371]See also Press Note, dated 30-3-1982, issued by Press Information Bureau, Circular No. 243, dated 22-6-1978, Circular No. 406, dated 15-1-1985, Circular No. 64, dated 25-8-1971 and Circular No. 687, dated 19-8-1994
[R372]Substituted for “Where the gross total income of an assessee includes any income by way of—” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R373]Word “or” omitted by the Finance Act, 1994, w.r.e.f. 1-4-1968
[R374]Omitted by the Finance Act, 1994, w.r.e.f. 1-4-1968. Prior to its omission, clause (c), as amended by the Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1972, read as under:
“(c) an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu,”
[R375]“(not being interest payable under section 280D in respect of any annuity deposit made under Chapter XXII-A)” omitted by the Finance Act, 1988, w.e.f. 1-4-1988
[R376]Substituted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to substitution
sub-clause (ia), as inserted by the Direct Tax Laws (Second Amendment)
Act, 1989, w.r.e.f.
1-4-1984, read as under :
“(ia) interest on National Savings Certificates (VI Issue) and National Savings Certificates (VII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959);”
[R377]Substituted by the Finance Act, 1986, w.e.f. 1-4-1987
[R378]For complete list of notified debentures, bonds or institutions
[R379]Explanation omitted by the Finance Act, 1987, w.e.f. 1-4-1987. Omitted Explanation, which was part of clause (ii), as substituted by the Finance Act, 1986, w.e.f. 1-4-1987, read as under:
‘Explanation.—For the purposes of this clause, “public sector company” means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);’
[R381]Inserted by the Finance Act, 1984, w.e.f. 1-4-1985.
[R382]For other notified schemes
[R383]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989
[R384]Clause (iv) omitted by the Finance Act, 1997, w.e.f. 1-4-1998. Prior to its omission, clause (iv) read as under :
“(iv) dividends from any Indian company;”
[R385]Clauses (v) and (va) shall be omitted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R386]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R387]“or” omitted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972
[R389]Substituted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981
[R390]“or with 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” omitted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R391]“or, as the case may be, the company” omitted by the Finance Act, 1988, w.e.f. 1-4-1989
[R392]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R393]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R394]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973
[R395]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973
[R396]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989
[R397]Words “, or dividend received from,” omitted by the Finance Act, 1997, w.e.f. 1-4-1998
[R398]Proviso to clause (x) shall be omitted by the Finance Act, 1999, w.e.f. 1-4-2000
[R399]Substituted for “(a)” and “(b)”, respectively, by the Finance Act, 1982, w.e.f. 1-4-1983
[R400]Substituted for “thirteen” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Earlier “thirteen” was substituted for “ten” by the Finance Act, 1995, w.e.f. 1-4-1996, “ten” was substituted for “seven” by the Finance Act, 1993, w.e.f. 1-4-1994, “seven” was substituted for “four” by the Finance Act, 1983, w.e.f. 1-4-1984 and “four” was substituted for “three” by the Finance Act, 1982, w.e.f. 1-4-1983.
[R401]Substituted for “(a)” and “(b)”, respectively, by the Finance Act, 1982, w.e.f. 1-4-1983
[R402]Substituted for “thirteen” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Earlier “thirteen” was substituted for “ten” by the Finance Act, 1995, w.e.f. 1-4-1996, “ten” was substituted for “seven” by the Finance Act, 1993, w.e.f. 1-4-1994, “seven” was substituted for “four” by the Finance Act, 1983, w.e.f. 1-4-1984 and “four” was substituted for “three” by the Finance Act, 1982, w.e.f. 1-4-1983
[R403]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R404]Substituted for “clause (iv)” by the Finance Act, 1997, w.e.f. 1-4-1998.
[R405]Words “, clause (v) or clause (va)” shall be omitted by the Finance Act, 1999, w.e.f. 1-4-2000
[R406]Proviso omitted by the Finance Act, 1983, w.e.f. 1-4-1984. The original proviso was inserted by the Finance Act, 1982, w.e.f. 1-4-1983.
[R407]Omitted by the Finance Act, 1992, w.e.f. 1-4-1993. Prior to omission, existing first and second provisos as inserted by the Finance Act, 1984, w.e.f. 1-4-1985 and later substituted by the Finance Act, 1988, w.e.f. 1-4-1989, read as under:
“Provided that where the gross total income of the assessee includes any income by way of interest on any deposits referred to in clause (iia), or income in respect of units referred to in clause (v) or clause (va), or income by way of interest or dividend referred to in clause (x), there shall be allowed in computing the total income of the assessee, a further deduction of an amount equal to so much of such income as has not been allowed by way of deduction under the foregoing provisions of this sub-section; so, however, that the amount of such further deduction shall not exceed three thousand rupees:
Provided further that where any income by way of interest on any deposits referred to in clause (iia) or any dividends referred to in clause (iv) remains unallowed after the deduction under the foregoing provisions of this section, there shall be allowed in computing the total income of the assessee, an additional deduction of an amount equal to so much of such income as has remained unallowed; so, however, that the amount of such additional deduction shall not exceed three thousand rupees.
[R408]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R409]Clause (2) of section 2 of the Public Debt Act, 1944,
defines “Government security” as follows:
‘(2) “Government security” means—
(a) a security, created and issued, whether before or after the
commencement of this Act, by the Central Government for the purpose of raising
a public loan, and having one of the following forms, namely:—
(i) stock transferable by registration in the books of the Bank;
or
(ii) a promissory note payable to order; or
(iii) a bearer bond payable to bearer; or
(iv) a form prescribed in this behalf;
(b) any other security created and issued by the Central Government in such form and for such of the purposes of this Act as may be prescribed;’
[R410]Omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Prior to its omission, sub-section (2) stood as under :
“(2) In a case where the assessee is entitled also to the deduction under section 80K in relation to the whole or any part of the income by way of dividends referred to in clause (iv) of sub-section (1), only so much of such income by way of dividends as may remain after the deduction under section 80K shall be taken into account for the purpose of allowing the deduction under sub-section (1).”
[R411]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1976
[R412]Prior to its omission, section 80M, as substituted by the Finance Act, 1990, w.e.f. 1-4-1991, and further amended by the Finance Act, 1993, w.e.f. 1-4-1994, read as under :
‘†80M. Deduction in respect of certain inter-corporate dividends.—(1) Where the gross total income of a domestic company, in any previous year, includes any income by way of dividends from another domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of such domestic company, a deduction of an amount equal to,—
(i) in the case of a scheduled bank or a public financial institution or a State financial corporation or a State industrial investment corporation or a company registered under section 25 of the Companies Act, 1956 (1 of 1956), sixty per cent of the income by way of dividends from another domestic company;
(ii) in the case of any other domestic company, so much of the amount of income by way of dividends from another domestic company as does not exceed the amount of dividend distributed by the first-mentioned domestic company on or before the due date :
Provided that where any domestic company receives any income by way of dividend from the units of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), such domestic company shall, subject to the aforesaid provisions, be eligible for deduction to the extent of—
(a) four-fifth of such income in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1994;
(b) two-fifth of such income in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1995,and no deduction shall be allowed on such income in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1996 and any subsequent previous year.
(2) Where any deduction, in respect of the amount of dividend distributed by the domestic company, has been allowed under clause (ii) of sub-section (1) in any previous year, no deduction shall be allowed in respect of such amount in any other previous year.
(3) Where the dividend distributed is in respect of any period comprised in the previous year ending on the 31st day of March, 1990, no deduction shall be allowed in respect of such dividend.
Explanation.—For the purposes of this section, the expressions—
(i) “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 included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), and which is a domestic company;
(ii) “public financial institution” shall have the meaning assigned to it in section 4A of Companies Act, 1956 (1 of 1956);
(iii) “State financial corporation” and “State industrial investment corporation” shall have the same meanings as in section 43B;
(iv) “due date” means the date for furnishing the return of income under sub-section (1) of section 139.’
Original section 80M was introduced in place of section 85A (inserted by the Finance Act, 1965, w.e.f. 1-4-1965) by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Section 80M, which has earlier undergone several amendments by the Finance Act, 1968, w.e.f. 1-4-1968, Finance Act, 1970, w.e.f. 1-4-1971, Finance (No. 2) Act, 1971, w.e.f. 1-4-1972, Finance Act, 1975, w.e.f. 1-4-1976, Finance Act, 1976, w.e.f. 1-4-1977, Finance Act, 1981, w.e.f. 1-4-1982, Finance Act, 1982, w.e.f. 1-4-1983, Finance Act, 1984, w.e.f. 1-4-1985 and Finance Act, 1986, w.e.f. 1-4-1987.
†See also Circular No. 58, dated 15-4-1971.
[R413]Prior to its omission, section 80MM was amended by the Finance Act, 1970, w.e.f. 1-4-1970, the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972 and the Finance Act, 1974, w.e.f. 1-4-1975.
[R414]Omitted section was amended by the Finance Act, 1968, w.e.f. 1-4-1969, the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972, the Finance Act, 1974, w.r.e.f. 1-4-1969/w.e.f. 1-4-1975 and the Finance Act, 1984, w.e.f. 1-4-1985
[R415]Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972. This topic was originally dealt with by section 85C which was inserted by the Finance Act, 1966, w.e.f. 1-4-1966. Section 80-O was inserted, in place of section 85C which was deleted, by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Section 80-O was later on amended by the Finance Act, 1968, w.e.f. 1-4-1969
[R416]See
also Circular No. 253, dated 30-4-1979, Circular No. 533, dated 27-3-1989,
Circular
No. 575, dated 31-8-1990, Circular No. 700, dated 23-3-1995 and Circular No.
731, dated
20-12-1995
[R417]For relevant case laws, See Case Laws
[R418]Substituted for “(1) Where the gross total income of an assessee, being an Indian company or a person (other than a company) who is resident in India,” by the Finance Act, 1974, w.e.f. 1-4-1975
[R419]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R420]Substituted for the portion beginning with the words “any income by way of royalty” and ending with the words “outside India to such Government or enterprise by the assessee,” by the Finance Act, 1997, w.e.f. 1-4-1998. Earlier the quoted portion was amended by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992
[R421]Words “under an agreement approved in this behalf by the Chief Commissioner or the Director General;” omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier these words were substituted for “under an agreement approved by the Board in this behalf” by the Finance Act, 1988, w.e.f. 1-4-1989
[R422]Substituted for “and such income is received in convertible foreign exchange in India, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty per cent of the income so received in India in computing the total income of the assessee” (as it stood after the amendment made by the Finance Act, 1987) by the Finance Act, 1988, w.e.f. 1-4-1988. Earlier, this portion of the section was amended by the Finance Act, 1974, with retrospective effect from 1-4-1972 and later on by the Finance Act, 1984, w.e.f. 1-4-1985
[R423]Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to omission, the provisos as substituted by the Finance Act, 1988, w.e.f. 1-4-1989, read as under:
“Provided that the application for the approval of the agreement referred to in this section is made to the Chief Commissioner or, as the case may be, the Director General in the prescribed form and verified in the prescribed manner before the1st day of October of the assessment year in relation to which the approval is first sought:
Provided further that the approval of the Chief Commissioner or, as the case may be, the Director General shall not be necessary in the case of any such agreement which has been approved for the purposes of the deduction under this section by the Central Government before the 1st day of April, 1972 or by the Board before the 1st day of April, 1989, and every application for such approval of any such agreement pending with the Board immediately before the 1st day of April, 1989, shall stand transferred to the Chief Commissioner or the Director General for disposal.”
[R424]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988
[R425]Word “also” omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R426]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to its substitution the said portion, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988, read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf”
[R427]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R428]Substituted for following Explanation, which was earlier inserted by the Finance Act, 1974, with retrospective effect from 1-4-1972, by the Finance Act, 1985, w.e.f. 1-4-1986:
“Explanation.—The provisions of the Explanation to section 80N shall apply for the purposes of this section as they apply for the purposes of that section.”
[R429]Substituted for the following clause (ii) by the Finance Act, 1987, w.e.f. 1-4-1988:
“(ii) any income used by the assessee outside
[R430]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R431]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R432]Omitted by the Finance Act, 1974, w.e.f. 1-4-1975
[R433]Inserted in place of section 81, which was deleted, by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968
[R434]See also Circular No. 319, dated 11-1-1982 and Circular No. 722, dated 19-9-1995
[R435]Substituted by the Income-tax (Second Amendment) Act, 1999, w.r.e.f. 1-4-1968. Prior to its substitution, sub-clause (iii), as inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968, read as under :
“(iii) the marketing of the agricultural produce of its members, or”
[R436]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972
[R437]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972
[R438]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R439]Substituted by the Finance Act, 1983, w.e.f. 1-4-1984. Earlier it was substituted by the Finance Act, 1978, w.e.f. 1-4-1979
[R440]For definition of “Government company”
[R441]Substituted for “does not exceed twenty thousand rupees” by the Finance Act, 1979, w.e.f. 1-4-1980. Italicised words were substituted for “fifteen thousand” by the Finance Act, 1969, w.e.f. 1-4-1970
[R442]Substituted for “forty” by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R443]Substituted for “twenty” by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R444]“chargeable under section 18” omitted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R445]“section 80H or” omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976
[R446]Inserted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974
[R447]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978
[R448]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.
[R449]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983
[R450]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R451]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R452]Inserted by the Finance Act, 1993, w.r.e.f. 1-4-1991
[R453]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.
[R454]Words “or section 80JJ” omitted by the Finance Act, 1997, w.e.f. 1-4-1998. Earlier the quoted words were inserted by the Finance Act, 1975, w.e.f. 1-4-1976 and later on omitted by the Finance Act, 1985, w.e.f. 1-4-1986 and again inserted by the Finance Act, 1989, w.e.f. 1-4-1990.
[R455]“or section 80JJA”, which expression was earlier inserted by the Finance Act, 1979, w.e.f. 1-4-1980, omitted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R456]“section 80H,” omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976
[R457]Inserted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974
[R458]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R459]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983
[R460]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.
[R461]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989
[R462]Inserted by the Finance Act, 1981, w.e.f. 1-4-1981
[R463]Inserted by the Finance Act, 1993, w.r.e.f. 1-4-1991
[R464]Substituted for “section 80J and section 80JJ” by the Finance Act, 1985, w.e.f. 1-4-1986. Earlier, “section 80J and section 80JJ” was substituted for “section 80J, section 80JJ and section 80JJA” by the Finance Act, 1983, w.e.f. 1-4-1984, “section 80J, section 80JJ and section 80JJA” substituted for “section 80J and section 80JJ” by the Finance Act, 1979, w.e.f. 1-4-1980 and “sections 80J and 80JJ” substituted for “and section 80J” by the Finance Act, 1975, w.e.f. 1-4-1976
[R465]Substituted for “and section 80J” by the Finance Act, 1989, w.e.f. 1-4-1990.
[R466]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.
[R467]Omitted by the Finance Act, 1969, w.e.f. 1-4-1970
[R468]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier section 80Q was omitted by the Finance Act, 1972, w.e.f. 1-4-1973. Originally, it was inserted in place of section 82 which was deleted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.
[R469]See also Circular No. 706, dated 26-6-1995, as corrected by Circular No. 746, dated 26-7-1996
[R470]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989
[R471]Prior to its omission, section 80QQ, was amended by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974, Finance Act, 1975, w.e.f. 1-4-1975, Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976, Finance (No. 2) Act, 1977, w.e.f. 1-4-1978, Finance Act, 1979, w.e.f. 1-4-1980 and Finance Act, 1981, w.e.f. 1-4-1981
[R472]Inserted by the Finance Act, 1979, w.e.f. 1-4-1980
[R473]Substituted for the words “commencing on the 1st day of April, 1980, or to any one of the nine assessment years next following that assessment year, includes” by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier word “nine” was substituted for “four” by the Finance Act, 1985, w.e.f. 1-4-1985.
[R474]For text of Eighth Schedule to the Constitution
[R475]This topic was dealt with by original section 80F which was inserted by the Finance (No. 2) Act, 1967, with retrospective effect from 1-4-1966. Section 80R was introduced in place of section 80F, which was deleted, by the Finance Act, 1967, w.e.f. 1-4-1968
[R476]For relevant case laws, See Case Laws
[R477]Substituted for “such other association or body established outside India as may be notified in this behalf by the Central Government in the Official Gazette” by the Finance Act, 1983, w.e.f. 1-4-1984.
[R478]Substituted for the words “allowed a deduction from such remuneration of an amount equal to fifty per cent thereof, in computing the total income of the individual:” by the Finance Act, 1990, w.e.f. 1-4-1991
[R479]Substituted for the portion beginning with the words “equal to” and ending with the words “whichever is higher” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Prior to substitution, the quoted portion, as amended by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
“equal to,—
(i) fifty per cent of the remuneration; or
(ii) seventy-five per cent of such remuneration as is brought into India by, or on behalf of, the assessee in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder,
whichever is higher.”
[R480]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution, the said portion read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf”
[R481]See rule 29A and Form No. 10H
[R482]Omitted by the Finance Act, 1990, w.e.f. 1-4-1991. Prior to its omission, proviso read as under:
“Provided that where the individual renders continuous service outside India in such University, institution, association or body for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remuneration for such service relating to any period after the expiry of the thirty-six months aforesaid.”
[R483]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999
[R484]Inserted by the Finance Act, 1969, w.e.f. 1-4-1970.
[R485]See also Circular No. 31, dated 25-10-1969 and Circular No. 675, dated 3-1-1994
[R486]Substituted for “musician or actor” by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980.
[R487]Substituted for the words “and such income is received in, or brought into, India by him or on his behalf in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and any rules made thereunder, there shall be allowed a deduction from such income of an amount equal to twenty-five per cent of the income so received or brought, in computing the total income of the individual” by the Finance Act, 1990, w.e.f. 1-4-1991.
[R488]Substituted for the portion beginning with the words “equal to” and ending with the words “whichever is higher” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Prior to substitution, the quoted portion, as amended by the Finance Act, 1990, w.e.f. 1-4-1991, read as under :
“equal to,—
(i) fifty per cent of the income; or
(ii) seventy-five per cent of such income as is brought into India by, or on behalf of, the assessee in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder,whichever is higher.”
[R489]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution, the said portion read as under :
“where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf ”
[R490]See rule 29A and Form No. 10H.18a. Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R491]Inserted by the Finance Act, 1999. w.e.f. 1-6-1999
[R492]Substituted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978. Original section was inserted by the Finance Act, 1975, w.e.f. 1-4-1975.
[R493]See also Circular No. 356, dated 17-3-1983 and Circular No. 705, dated 20-6-1995
[R494]Substituted for “of an amount equal to fifty per cent thereof” by the Finance Act, 1987, w.e.f. 1-4-1988.
[R495]Substituted for the portion beginning with the words “equal to” and ending with the words “whichever is higher” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997. Prior to substitution, the quoted portion, as amended by the Finance Act, 1987, w.e.f. 1-4-1988, read as under :
“equal to,—
(i) fifty per cent of the remuneration; or
(ii) seventy-five per cent of such remuneration as is brought into India by, or on behalf of, the assessee in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder,
whichever is higher.”
[R496]Substituted for the portion beginning with the words “where the Chief Commissioner” and ending with the words “may allow in this behalf” by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to substitution, the portion read as under :
“Where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf.”
[R497]See rule 29A and Form No. 10H
[R498]Omitted by the Finance Act, 1990, w.e.f. 1-4-1991. Prior to omission, proviso read as under:
“Provided that where the individual renders continuous service outside India under or for such employer for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remuneration for such service relating to any period after the expiry of the thirty-six months aforesaid.”
[R499]For definition of “foreign currency”
[R500]Prescribed fields under rule 11C are as follows:
1. Profession of actuaries;
2. Banking;
3. Insurance;
4. Journalism
[R501]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R502]Omitted section 80S, as amended by the Finance Act, 1973, w.r.e.f. 1-4-1972, stood as under:
“80S. Deduction in respect of compensation for termination of managing agency, etc., in the case of assessees other than companies.—Where the gross total income of an assessee not being a company includes any income by way of compensation or other payment which is chargeable as the profits and gains of business or profession in accordance with the provisions of sub-clause (a) or sub-clause (b) or sub-clause (c) of clause (ii) of section 28, there shall be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to twenty-five per cent thereof, so, however, that the amount of the deduction under this section shall not, in any case, exceed one hundred thousand rupees.”
[R503]Section 80T, as amended by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972, the Finance (No. 2) Act, 1974, w.e.f. 1-4-1975, the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, the Finance Act, 1982, w.e.f. 1-4-1983 and the Finance Act, 1986, w.e.f. 1-4-1987, stood as under:
‘80T. Deduction in respect of long-term capital gains in the case of assessees other than companies.—Where the gross total income of an assessee not being a company includes any income chargeable under the head “Capital gains” relating to capital assets other than short-term capital assets (such income being, hereinafter, referred to as long-term capital gains), there shall be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to,—
(a) in a case where the long-term capital gains do not exceed ten thousand rupees, the whole of such long-term capital gains;
(b) in any other case, ten thousand rupees as increased by a sum equal to—
(A) fifty per cent of the amount by which the long-term capital gains relating to capital assets, being buildings or lands or any rights in buildings or lands or gold, bullion or jewellery, exceed ten thousand rupees;
(B) sixty per cent of the amount by which the long-term capital gains relating to any other capital assets exceed ten thousand rupees:
Provided that where the long-term capital gains relate to—
(i) buildings or lands or any rights in buildings or lands;
(ii) gold, bullion or jewellery; and
(iii) any other capital asset,or to any two of the categories of capital assets mentioned in the foregoing clauses of this proviso (the assets falling under each clause being treated as a separate category), the deduction of ten thousand rupees referred to in this clause shall be allowed in the following order, namely:—
(1) the deduction shall first be allowed against long-term capital gains relating to the assets mentioned in clause (i);
(2) next, where the amount of the long-term capital gains relating to the assets mentioned in clause (i) is less than ten thousand rupees, a deduction equal to the amount of the difference between ten thousand rupees and such capital gains shall be allowed against the long-term capital gains relating to the assets mentioned in clause (ii); and
(3) thereafter, the balance, if any, of the said ten thousand rupees shall be allowed as a deduction against the long-term capital gains relating to the assets mentioned in clause (iii),and the provisions of sub-clause (A) and sub-clause (B) of this clause shall apply as if the references to ten thousand rupees therein were references to the amount of deduction allowed in accordance with clauses (1), (2) and (3) of this proviso
[R504]Section 80TT, as amended by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, stood as under :
“80TT. Deduction in respect of winnings from lottery.—Where the gross total income of an assessee, not being a company, includes any income by way of winnings from any lottery (such income being hereafter in this section referred to as winnings), there shall be allowed, in computing the total income of the assessee, a deduction from the winnings of an amount equal to,—
(a) in a case where the winnings do not exceed five thousand rupees, the whole of such winnings ;
(b) in any other case, five thousand rupees as increased by a sum equal to fifty per cent of the amount by which the winnings exceed five thousand rupees.”
[R505]Inserted by the Finance Act, 1968, w.e.f. 1-4-1969
[R506]Substituted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to substitution, section 80U, as amended by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971, Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, Finance Act, 1984, w.e.f. 1-4-1985, Finance Act, 1987, w.e.f. 1-4-1988, Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 and the Finance Act, 1989, w.e.f. 1-4-1990, read as under:
“80U. Deduction in the case of totally blind or physically handicapped resident persons.—
(1) In computing the total income of an individual, being a resident, who, as at the end of the previous year,—
(i) is totally blind, or
(ii) is subject to or suffers from a permanent physical disability (other than blindness) being a permanent physical disability specified in the rules made in this behalf by the Board, and which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation, or
(iii) is subject to mental retardation to the extent specified in the rules made in this behalf by the Board, and which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation,
there shall be allowed a deduction of a sum of fifteen thousand rupees:
Provided that such individual produces before the Assessing Officer, in respect of the first assessment year for which deduction is claimed under this section,—
(a) in a case referred to in clause (i), a certificate as to his total blindness from a registered medical practitioner being an oculist;
(b) in a case referred to in clause (ii), a certificate as to the permanent physical disability referred to in the said clause from a registered medical practitioner; and
(c) in a case referred to in clause (iii), a certificate as to the mental retardation from a psychiatrist working in a Government hospital.
(2) The Board shall, in making any rules for specifying any disability or mental retardation for the purposes of clause (ii) or clause (iii), as the case may be, of sub-section (1), have regard to the nature of such disability or mental retardation and the effect which such disability or mental retardation is likely to have on the capacity of a person subject thereto, or suffering therefrom, to engage in a gainful employment or occupation.”
[R507]See also Circular No. 653, dated 15-6-1993
[R508]For relevant case laws, See Case Laws
[R509]See rule 11D for specified categories of ‘permanent physical disability’
[R510]Substituted for “twenty” by the Finance Act, 1995, w.e.f. 1-4-1996
[R511]Prior to omission section 80V, as inserted by the Finance Act, 1993, w.e.f. 1-4-1994, read as under :
“80V. Deduction from gross total income of the parent in certain cases.—Where a minor child, whose income is included in the total income of one of his parents under sub-section (1A) of section 64, is suffering from any disability of the nature specified in section 80U, then, in computing the total income of such parent, there shall be allowed from the gross total income of such parent a deduction of a sum to which such minor child would have been entitled under section 80U had the total income of such minor child been computed separately.”
Earlier existing section 80V was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976 and later on omitted by the Finance Act, 1985, w.e.f. 1-4-1986
[R512]Omitted section 80VV read as under :
“80VV. Deduction in respect of expenses incurred in connection with certain proceedings under the Act.—In computing the total income of an assessee, there shall be allowed by way of deduction any expenditure incurred by him in the previous year in respect of any proceedings before any income-tax authority or the Appellate Tribunal or any Court relating to the determination of any liability under this Act, by way of tax, penalty or interest :
Provided that no deduction under this section shall, in any case, exceed in the aggregate five thousand rupees.”