[43 OF 1961]
[AS AMENDED
BY FINANCE ACT,2003]
An Act to consolidate and amend the law
relating to
income-tax and super-tax
CHAPTER I
PRELIMINARY
Be
it enacted by Parliament in the Twelfth Year of the Republic of India as
follows :—
Short
title, extent and commencement.
1[R2] 1.
2[R3] (1) This
Act may be called the Income-tax Act, 1961.
(2) It extends to the whole of India.
(3) Save as otherwise provided in this Act,
it shall come into force on the 1st day of April, 1962.
2. In
this Act, unless the context otherwise requires,—
3[R4] [(1) “advance tax” means the advance tax
payable in accordance with the provisions of Chapter XVII-C;]
4[R5] [5[R6] (1A)] 6[R7] “agricultural
income”7[R8] means8[R9] —
9[R10] [(a) any rent10[R11] or revenue derived from land10[R12] which is situated in India and is used
for agricultural purposes;]
(b) any
income derived from such land10[R13] by—
(ii) the performance by a cultivator or
receiver of rent-in-kind of any process ordinarily employed by a cultivator or
receiver of rent-in-kind to render the produce raised or received by him fit to
be taken to market10[R15] ; or
(iii) the sale by a cultivator or receiver of
rent-in-kind of the produce raised or received by him, in respect of which no
process has been performed other than a process of the nature described in
paragraph (ii) of this sub-clause ;
(c) any income derived from any building
owned and occupied by the receiver of the rent or revenue of any such land, or
occupied by the cultivator or the receiver of rent-in-kind, of any land with
respect to which, or the produce of which, any process mentioned in paragraphs
(ii) and (iii) of sub-clause (b) is carried on :
9[R15] [Provided that—
(i) the building
is on or in the immediate vicinity of the land, and is a building which the
receiver of the rent or revenue or the cultivator, or the receiver of
rent-in-kind, by reason of his connection with the land, requires as a dwelling
house, or as a store-house, or other out-building, and
(ii) the land is either assessed to land
revenue in India or is subject to a local rate assessed and collected by
officers of the Government as such or where the land is not so assessed to land
revenue or subject to a local rate, it is not situated—
(A) in any area which is comprised within the
jurisdiction of a municipality (whether known as a municipality, municipal
corporation, notified area committee, town area committee, town committee or
by any other name) or a cantonment board and which has a population of not less
than ten thousand according to the last preceding census of which the relevant
figures have been published before the first day of the previous year ; or
(B) in any area within such distance, not being
more than eight kilometres, from the local limits of
any municipality or cantonment board referred to in item (A), as the
Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations,
specify in this behalf by notification in the Official Gazette11[R16] .]
12[R16] [13[R17] [Explanation 1.]—For the removal of
doubts, it is hereby declared that revenue derived from land shall not include
and shall be deemed never to have included any income arising from the transfer
of any land referred to in item (a) or item (b) of sub-clause (iii)
of clause (14) of this section ;]
14[R17] [Explanation 2.—For the removal of
doubts, it is hereby declared that income derived from any building or land referred
to in sub-clause (c) arising from the use of such building or land for
any purpose (including letting for residential purpose or for the purpose of
any business or profession) other than agriculture falling under sub-clause (a)
or sub-clause (b) shall not be agricultural income;]
15[R18] [16[R19] [(1B)] “amalgamation”, in relation to companies, means the merger of
one or more companies with another company or the merger of two or more
companies to form one company (the company or companies which so merge being
referred to as the amalgamating company or companies and the company with which
they merge or which is formed as a result of the merger, as the amalgamated
company) in such a manner that—
(i) all
the property of the amalgamating company or companies immediately before the
amalgamation becomes the property of the amalgamated company by virtue of the
amalgamation ;
(ii) all the liabilities of the amalgamating
company or companies immediately before the amalgamation become the liabilities
of the amalgamated company by virtue of the amalgamation ;
(iii) shareholders
holding not less than 17[R20] [three-fourths] in value of the shares in
the amalgamating company or companies (other than shares already held therein immediately
before the amalgamation by, or by a nominee for, the amalgamated company or its
subsidiary) become shareholders of the amalgamated company by virtue of the
amalgamation, otherwise than as a result of the acquisition of the property of
one company by another company pursuant to the purchase of such property by the
other company or as a result of the distribution of such property to the other
company after the winding up of the first-mentioned company ;]
(2) “annual value”, in relation to any property,
means its annual value as determined under section 23 ;
(4) “Appellate Tribunal” means the Appellate
Tribunal constituted under section 252 ;
(5) “approved gratuity fund” means a
gratuity fund which has been and continues to be approved by the 19[R22] [Chief Commissioner or Commissioner] in
accordance with the rules contained in Part C of the Fourth Schedule ;
(6) “approved superannuation fund” means a
superannuation fund or any part of a superannuation fund which has been and
continues to be approved by the 19[R23] [Chief Commissioner or Commissioner] in
accordance with the rules contained in Part B of the Fourth Schedule ;
20[R24] (7) “assessee”21 [R25] means a person by whom 22[R26] [any tax] or any other sum of money is
payable under this Act, and includes—
(a) every person in respect of whom any
proceeding under this Act has been taken for the assessment of his income or of
the income of any other person in respect of which he is assessable, or of the
loss sustained by him or by such other person, or of the amount of refund due
to him or to such other person ;
(b) every person who is deemed to be an
assessee under any provision of this Act ;
(c) every person who is deemed to be an
assessee in default under any provision of this Act ;
23[R27] [(7A) “Assessing Officer” means the Assistant
Commissioner 24[R28] [or Deputy Commissioner] 25[R29] [or Assistant Director] 24[R30] [or Deputy Director] or the Income-tax
Officer who is vested with the relevant jurisdiction by virtue of directions or
orders issued under sub-section (1) or sub-section (2) of section 120 or any
other provision of this Act, and the 26[R31] [Joint Commissioner or Joint Director]
who is directed under clause (b) of sub-section (4) of that section to
exercise or perform all or any of the powers and functions conferred on, or
assigned to, an Assessing Officer under this Act ;]
(8) “assessment”27 [R32] includes reassessment ;
(9) “assessment year” means the period of
twelve months commencing on the 1st day of April every year ;
28[R33] [(9A) “Assistant Commissioner” means a person
appointed to be an Assistant Commissioner of Income-tax 29[R34] [or a Deputy Commissioner of Income-tax]
under sub-section (1) of section 117 ;]
(10) “average rate of income-tax” means the
rate arrived at by dividing the amount of income-tax calculated on the total
income, by such total income ;
30[R35] [(11) “block of assets” means a group of assets
falling within a class of assets comprising—
(a) tangible assets, being buildings,
machinery, plant or furniture;
(b) intangible
assets, being know-how, patents, copyrights, trade-marks, licences,
franchises or any other business or commercial rights of similar nature, in
respect of which the same percentage of depreciation is prescribed ;]
(12) “Board” means the 31[R36] [Central Board of Direct Taxes constituted
under the Central Boards of Revenue Act, 1963 (54 of 1963)] ;
32[R37] [(12A) “books or books of account” includes
ledgers, day-books, cash books, account-books and other books, whether kept in
the written form or as print-outs of data stored in a floppy, disc, tape or any
other form of electro-magnetic data storage device;]
33[R38] (13) “business”34[R39] includes any trade34[R40] , commerce or manufacture or any adventure34[R41] or concern in the nature of trade34[R42] , commerce or manufacture ;
33[R43] (14) 35[R44] “capital asset” means property36[R45] of any kind held by an assessee, whether
or not connected with his business or profession, but does not include—
(i) any
stock-in-trade, consumable stores or raw materials held for the purposes of his
business or profession ;
37[R46] [(ii) personal effects38[R47] , that is to say, movable property
(including wearing apparel and furniture, but excluding jewellery)
held for personal use38[R48] by the assessee or any member of his family
dependent on him.
Explanation.—For
the purposes of this sub-clause, “jewellery”
includes—
(a) ornaments made of gold, silver, platinum
or any other precious metal or any alloy containing one or more of such precious
metals, whether or not containing any precious or semi-precious stone, and
whether or not worked or sewn into any wearing apparel ;
(b) precious or semi-precious stones,
whether or not set in any furniture, utensil or other article or worked or sewn
into any wearing apparel ;]
39[R49] [(iii) agricultural land40[R50] in India, not being land situate—
(a) in any area which is comprised within
the jurisdiction of a municipality40[R51] (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
population40[R52] 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
(b) in any area within such distance, not
being more than eight kilometres, from the local
limits of any municipality or cantonment board referred to in item (a),
as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant
considerations, specify in this behalf by notification in the Official Gazette41[R53] ;]
42[R54] [(iv) 6½ per cent Gold Bonds, 1977,43[R55] [or 7 per cent Gold Bonds, 1980,] 44[R56] [or National Defence
Gold Bonds, 1980,] issued by the Central Government ;]
45[R57] [(v) Special Bearer Bonds, 1991, issued by the Central Government ;]
46[R58] [(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999
notified by the Central Government ;]
47[R59] (15) 48[R60] “charitable purpose”49[R61] includes relief of the poor, education49[R62] , medical relief, and the advancement of
any other 49[R63] object of general public utility
50[R64] [* * *] ;
51[R65] [(15A) “Chief Commissioner” means a person
appointed to be a Chief Commissioner of Income-tax under sub-section (1) of
section 117 ;]
52[R66] [53[R67] [(15B)] “child”, in relation to an individual, includes
a step-child and an adopted child of that individual ;]
54[R68] [(16) “Commissioner” means a person appointed to
be a Commissioner of Income-tax under sub-section (1) of section 117 55[R69] [* *
*] ;]
56[R70] [(16A) “Commissioner (Appeals)” means a person
appointed to be a Commissioner of Income-tax (Appeals) under sub-section (1) of
section 117 ;]
57[R71] [(17) “company” means—
(i) any
Indian company, or
(ii) any body corporate incorporated by or
under the laws of a country outside India, or
(iii) any institution, association or body
which is or was assessable or was assessed as a company for any assessment year
under the Indian Income-tax Act, 1922 (11 of 1922), or which is or was
assessable or was assessed under this Act as a company for any assessment year
commencing on or before the 1st day of April, 1970, or
(iv) any institution, association or body,
whether incorporated or not and whether Indian or non-Indian, which is
declared by general or special order of the Board to be a company :
Provided
that such institution, association or body shall be deemed to be a company only
for such assessment year or assessment years (whether commencing before the
1st day of April, 1971, or on or after that date) as may be specified in the
declaration ;]
(18) “company in which the public are
substantially interested”—a com-pany is said to be a
company in which the public58[R72] are substantially interested—
59[R73] [(a) if it is a company owned by the Government
or the Reserve Bank of India or in which not less than forty per cent of the
shares are held (whether singly or taken together) by the Government or the
Reserve Bank of India or a corporation owned by that bank ; or]
60[R74] [(aa) if it is a company which is registered
under section 25 of the Companies Act, 1956 (1 of 1956)61[R75] ; or
(ab) if it
is a company having no share capital and if, having regard to its objects, the
nature and composition of its membership and other relevant considerations, it
is declared by order of the Board to be a company in which the public are substantially
interested :
Provided
that such company shall be deemed to be a company in which the public are
substantially interested only for such assessment year or assessment years
(whether commencing before the 1st day of April, 1971, or on or after that
date) as may be specified in the declaration ; or]
62[R76] [(ac) if it is a mutual benefit finance company,
that is to say, a company which carries on, as its principal business, the
business of acceptance of deposits from its members and which is declared by
the Central Government under section 620A63[R77] of the Companies Act, 1956 (1 of 1956),
to be a Nidhi or Mutual Benefit Society ; or]
64[R78] [(ad) if it is a company, wherein shares (not being
shares entitled to a fixed rate of dividend whether with or without a further
right to participate in profits) carrying not less than fifty per cent of the
voting power have been allotted unconditionally to, or acquired unconditionally
by, and were throughout the relevant previous year beneficially held by, one or
more co-operative societies ;]
65[R79] [(b) if it is a company which is not a 66[R80] private company as defined in the
Companies Act, 1956 (1 of 1956), and the conditions specified either in item (A)
or in item (B) are fulfilled, namely :—
(A) shares in the company (not being shares
entitled to a fixed rate of dividend whether with or without a further right to
participate in profits) were, as on the last day of the relevant previous year,
listed in a recognised stock exchange in India in
accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956),
and any rules made thereunder ;
67[R81] [(B) shares in the company (not being shares entitled to a fixed rate
of dividend whether with or without a further right to participate in profits)
carrying not less than fifty per cent of the voting power have been allotted
unconditionally to, or acquired unconditionally by, and were throughout the
relevant previous year beneficially held by—
(a) the Government, or
(b) a corporation established by a Central,
State or Provincial Act, or
(c) any company to which this clause applies
or any subsidiary company of such company 68[R82] [if the whole of the share capital of such
subsidiary company has been held by the parent company or by its nominees
throughout the previous year.]
Explanation.—In its
application to an Indian company whose business consists mainly in the construction
of ships or in the manufacture or processing of goods or in mining or in the
generation or distribution of electricity or any other form of power, item (B)
shall have effect as if for the words “not less than fifty per cent”, the words
“not less than forty per cent” had been substituted ;]]
(19) “co-operative society” means a
co-operative society registered under the Co-operative Societies Act, 1912 (2
of 1912), or under any other law for the time being in force in any State for
the registration of co-operative societies ;
69[R83] [(19A) “Deputy Commissioner” means a person
appointed to be a Deputy Commissioner of Income-tax 70[R84] [* * *] under sub-section (1) of section
117 ;
71[R85] [(19AA) “demerger”, in
relation to companies, means the transfer, pursuant to a scheme of arrangement
under sections 391 to 39472[R86] of the Companies Act, 1956 (1 of 1956),
by a demerged company of its one or more undertakings
to any resulting company in such a manner that—
(i) all the property of the undertaking,
being transferred by the demerged company,
immediately before the demerger, becomes the property
of the resulting company by virtue of the demerger;
(ii) all
the liabilities relatable to the undertaking, being transferred by the demerged company, immediately before the demerger, become the liabilities of the resulting company
by virtue of the demerger;
(iii) the
property and the liabilities of the undertaking or undertakings being
transferred by the demerged company are transferred
at values appearing in its books of account immediately before the demerger;
(iv) the
resulting company issues, in consideration of the demerger,
its shares to the shareholders of the demerged
company on a proportionate basis;
(v) the shareholders holding not less than
three-fourths in value of the shares in the demerged
company (other than shares already held therein immediately before the demerger, or by a nominee for, the resulting company or,
its subsidiary) become shareholders of the resulting company or companies by
virtue of the demerger, otherwise than as a result of
the acquisition of the property or assets of the demerged
company or any undertaking thereof by the resulting company;
(vi) the
transfer of the undertaking is on a going concern basis;
(vii) the
demerger is in accordance with the conditions, if
any, notified under sub-section (5) of section 72A by the Central Government in
this behalf.
Explanation
1.—For the purposes of this clause, “undertaking” shall
include any part of an undertaking, or a unit or division of an undertaking or
a business activity taken as a whole, but does not include individual assets or
liabilities or any combination thereof not constituting a business activity.
Explanation
2.—For the purposes of this clause, the liabilities
referred to in sub-clause (ii), shall include—
(a) the liabilities which arise out of the
activities or operations of the undertaking;
(b) the specific loans or borrowings
(including debentures) raised, incurred and utilised
solely for the activities or operations of the undertaking; and
(c) in cases, other than those referred to
in clause (a) or clause (b), so much of the amounts of general or
multipurpose borrowings, if any, of the demerged
company as stand in the same proportion which the value of the assets
transferred in a demerger bears to the total value of
the assets of such demerged company immediately
before the demerger.
Explanation
3.—For determining the value of the property
referred to in sub-clause (iii),
any change in the value of assets consequent to their revaluation shall be
ignored.
Explanation
4.—For the purposes of this clause, the
splitting up or the reconstruction of any authority or a body constituted or established
under a Central, State or Provincial Act, or a local authority or a public
sector company, into separate authorities or bodies or local authorities or
companies, as the case may be, shall be deemed to be a demerger
if such split up or reconstruction fulfils 73[R87] [such conditions as may
be notified in the Official Gazette74[R88] , by the Central
Government];
(19AAA) “demerged
company” means the company whose undertaking is transferred, pursuant to a demerger, to a resulting company;]
(19B) “Deputy Commissioner (Appeals)” means a
person appointed to be a Deputy Commissioner of Income-tax (Appeals) 75[R89] [or an Additional Commissioner of
Income-tax (Appeals)] under sub-section (1) of section 117 ;]
76[R90] [(19C) “Deputy Director” means a person appointed
to be a Deputy Director of Income-tax 77[R91] [* * *] under sub-section (1) of section
117 ;]
(20) 78[R92] “director”, “manager” and “managing
agent”, in relation to a company, have the meanings respectively assigned to them
in the Companies Act, 1956 (1 of 1956) ;
79[R93] [(21) “Director General or Director” means a
person appointed to be a Director General of Income-tax or, as the case may be,
a Director of Income-tax, under sub-section (1) of section 117, and includes a
person appointed under that sub-section to be 80[R94] [an Additional Director of Income-tax or]
a 81[R95] [Joint] Director of Income-tax or an
Assistant Director 82[R96] [or Deputy Director] of Income-tax ;]
83[R97] (22) 84[R98] “dividend”85[R99] includes—
(a) any
distribution85[R100]
by a company of accumulated profits85[R101] ,
whether capitalised or not, if such distribution
entails the release by the company to its shareholders of all or any part of
the assets of the company ;
(b) any
distribution85 to its shareholders by
a company of debentures, debenture-stock, or deposit certificates in any form,
whether with or without interest, and any distribution to its preference
shareholders of shares by way of bonus, to the extent to which the company possesses
accumulated profits86[R102] ,
whether capitalised or not ;
(c) any
distribution86[R103]
made to the shareholders of a company on its liquidation, to the extent to
which the distribution is attributable to the accumulated profits of the company
immediately before its liquidation, whether capitalised
or not ;
(d) any
distribution87[R104]
to its shareholders by a company on the reduction of its capital, to the extent
to which the company possesses accumulated profits87[R105]
which arose after the end of the previous year ending next before the 1st day
of April, 1933, whether such accumulated profits have been capitalised
or not ;
(e) any payment by a company, not being a
company in which the public are substantially interested, of any sum (whether
as representing a part of the assets of the company or otherwise) 88[R106] [made after
the 31st day of May, 1987, by way of advance or loan to a shareholder89[R107] , being a
person who is the beneficial owner of shares (not being shares entitled to a fixed
rate of dividend whether with or without a right to participate in profits)
holding not less than ten per cent of the voting power, or to any concern in
which such shareholder is a member or a partner and in which he has a
substantial interest (hereafter in this clause referred to as the said
concern)] or any payment by any such company on behalf, or for the individual
benefit, of any such shareholder, to the extent to which the company in either
case possesses accumulated profits87[R108] ; but
“dividend” does not include—
(i) a distribution made in accordance with
sub-clause (c) or sub-clause (d) in respect of any share issued
for full cash consideration, where the holder of the share is not entitled in
the event of liquidation to participate in the surplus assets ;
90[R109] [(ia) a
distribution made in accordance with sub-clause (c) or sub-clause (d)
in so far as such distribution is attributable to the capitalised
profits of the company representing bonus shares allotted to its equity
shareholders after the 31st day of March, 1964, 91[R110] [and
before the 1st day of April, 1965] ;]
(ii) any advance or loan made to a shareholder 92[R111] [or
the said concern] by a company in the ordinary course of its business, where
the lending of money is a substantial part of the business of the company ;
(iii) any dividend paid by a company which is set off by the company
against the whole or any part of any sum previously paid by it and treated as a
dividend within the meaning of sub-clause (e), to the extent to which it
is so set off;
93[R112] [(iv) any
payment made by a company on purchase of its own shares from a shareholder in
accordance with the provisions of section 77A 94 [R113] of the Companies Act, 1956 (1 of 1956);
(v) any distribution of shares pursuant to a demerger
by the resulting company to the shareholders of the demerged
company (whether or not there is a reduction of capital in the demerged company).]
Explanation 1.—The
expression “accumulated profits”, wherever it occurs in this clause, shall not
include capital gains arising before the 1st day of April, 1946, or after the
31st day of March, 1948, and before the 1st day of April, 1956.
Explanation 2.—The
expression “accumulated profits” in sub-clauses (a), (b), (d) and (e),
shall include all profits of the company up to the date of distribution or
payment referred to in those sub-clauses, and in sub-clause (c) shall
include all profits of the company up to the date of liquidation, 95[R114] [but
shall not, where the liquidation is consequent on the compulsory acquisition
of its undertaking by the Government or a corporation owned or controlled by
the Government under any law for the time being in force, include any profits
of the company prior to three successive previous years immediately preceding
the previous year in which such acquisition took place].
96[R114] [Explanation
3.—For the purposes of this clause,—
(a) “concern”
means a Hindu undivided family, or a firm or an association of persons or a
body of individuals or a company ;
(b) a
person shall be deemed to have a substantial interest in a concern, other than
a company, if he is, at any time during the previous year, beneficially
entitled to not less than twenty per cent of the income of such concern ;]
97[R115] [(22A) “domestic company” means an Indian
company, or any other company which, in respect of its income liable to tax
under this Act, has made the prescribed arrangements for the declaration and
payment, within India, of the dividends (including dividends on preference shares)
payable out of such income ;]
98[R116] [(22AA) “document” includes an electronic
record as defined in clause (t)99[R117] of sub-section (1) of
section 2 of the Information Technology Act, 2000 (21 of 2000);]
1[R118] [2[R119] [(22B)] “fair market value”, in relation to a
capital asset, means—
(i) the price that the capital asset would
ordinarily fetch on sale in the open market on the relevant date ; and
(ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be
determined in accordance with the rules made under this Act ;]
(23) 3[R120] “firm”,
“partner” and “partnership” have the meanings respectively assigned to them in
the Indian Partnership Act, 1932 (9 of 1932) ; but the expression “partner”
shall also include any person who, being a minor, has been admitted to the
benefits of partnership ;
4[R121] [(23A) “foreign company” means a company which is
not a domestic company ;]
5[R122] (24) “income”6[R123]
includes 6 [R124] —
(i) profits and gains6[R125]
;
(ii) dividend ;
7[R126] [(iia) voluntary
contributions received by a trust created wholly or partly for charitable or
religious purposes or by an institution established wholly or partly for such
purposes 8[R127] [or
by an association or institution referred to in clause (21) or clause (23),
or by a fund or trust or institution referred to in sub-clause (iv) or
sub-clause (v) of clause (23C), of section 10].
Explanation.—For
the purposes of this sub-clause, “trust” includes any other legal obligation ;]
9[R128] (iii) the value of any perquisite or profit
in lieu of salary taxable under clauses (2) and (3) of section 17
;
10[R129] [(iiia) 11[R130] any
special allowance or benefit, other than perquisite included under sub-clause (iii),
specifically granted to the assessee to meet expenses wholly, necessarily and
exclusively for the performance of the duties of an office or employment of
profit ;
(iiib) 12[R131] any
allowance granted to the assessee either to meet his personal expenses at the
place where the duties of his office or employment of profit are ordinarily
performed by him or at a place where he ordinarily resides or to compensate him
for the increased cost of living ;]
13[R132] (iv) the value of any benefit or perquisite14[R133] ,
whether convertible into money or not, obtained from a company either by a
director or by a person who has a substantial interest in the company, or by a
relative of the director or such person, and any sum paid by any such company
in respect of any obligation which, but for such payment, would have been
payable by the director or other person aforesaid ;
15[R134] [(iva) the
value of any benefit or perquisite14[R135] ,
whether convertible into money or not, obtained by any representative assessee
mentioned in clause (iii) or clause (iv) of sub-section (1) of
section 160 or by any person on whose behalf or for whose benefit any income is
receivable by the representative assessee (such person being hereafter in this
sub-clause referred to as the “beneficiary”) and any sum paid by the
representative assessee in respect of any obligation which, but for such payment,
would have been payable by the beneficiary ;]
(v) any
sum chargeable to income-tax under clauses (ii) and (iii) of
section 28 or section 41 or section 59 ;
16[R136] [(va) any
sum chargeable to income-tax under clause (iiia)
of section 28 ;]
17[R137] [(vb) any
sum chargeable to income-tax under clause (iiib)
of section 28 ;]
18[R138] [(vc) any
sum chargeable to income-tax under clause (iiic)
of section 28 ;]
19[R139] [(vd)] the
value of any benefit or perquisite taxable under clause (iv) of section
28 ;
20[R140] [(ve) any
sum chargeable to income-tax under clause (v) of section 28 ;]
(vi) any capital gains chargeable under section 45 ;
(vii) the profits and gains of any business of insurance carried on
by a mutual insurance company or by a co-operative society, computed in
accordance with section 44 or any surplus taken to be such profits and gains by
virtue of provisions contained in the First Schedule ;
(viii) 21[R141] [Omitted
by the Finance Act, 1988, w.e.f. 1-4-1988. Original
sub-clause (viii) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.]
22[R142] [(ix) any winnings from lotteries23[R143] ,
crossword puzzles, races including horse races, card games and other games of
any sort or from gambling or betting of any form or nature whatsoever.]
24[R144] [Explanation.—For
the purposes of this sub-clause,—
(i) “lottery” includes winnings from prizes
awarded to any person by draw of lots or by chance or in any other manner whatsoever,
under any scheme or arrangement by whatever name called;
(ii) “card game and other game of any sort”
includes any game show, an entertainment programme on
television or electronic mode, in which people compete to win prizes or any
other similar game ;]
25[R145] [(x) any sum received by the assessee from
his employees as contributions to any provident fund or superannuation fund or
any fund set up under the provisions of the Employees’ State Insurance Act,
1948 (34 of 1948), or any other fund for the welfare of such employees ;]
26[R146] [(xi) any sum received under a Keyman insurance policy including the sum allocated by way
of bonus on such policy.
Explanation.—For
the purposes of this clause*[R147] ,
the expression “Keyman insurance policy” shall have
the meaning assigned to it in the Explanation to clause (10D) of
section 10 ;]
27[R148] [(xii) any sum referred to in 27a[R149] [clause
(va)]
of section 28;]
(25) “Income-tax Officer” means a person
appointed to be an Income-tax Officer under 28[R150] [*
* *] section 117 ;
29[R151] [(25A) “India” shall be deemed to include the
Union territories of Dadra and Nagar
Haveli, Goa†[R152] ,
Daman and Diu, and Pondicherry,—
(a) as
respects any period, for the purposes of section 6 ; and
(b) as
respects any period included in the previous year, for the purposes of making
any assessment for the assessment year commencing on the 1st day of April,
1963, or for any subsequent year ;]
(26) “Indian company” means a company formed and
registered under the Companies Act, 1956 (1 of 1956), and includes—
(i) a company formed and registered under
any law relating to companies formerly in force in any part of India (other
than the State of Jammu and Kashmir 30[R153] [and
the Union territories specified in sub-clause (iii) of this clause]) ;
31[R154] [(ia) a
corporation established by or under a Central, State or Provincial Act ;
(ib) any institution, association or body
which is declared by the Board to be a company under clause (17) ;]
(ii) in the case of the State of Jammu and Kashmir, a company
formed and registered under any law for the time being in force in that State ;
32[R155] [(iii) in the case of any of the Union territories
of Dadra and Nagar Haveli, Goa†[R156] ,
Daman and Diu, and Pondicherry,
a company formed and registered under any law for the time being in force in
that Union territory :]
Provided
that the 33[R157] [egistered or, as the case may be, principal office of the
company, corporation, institution, association or body] in all cases is in
India ;
(28) “Inspector of Income-tax” means a person
appointed to be an Inspector of Income-tax under sub-section 35[R159] [(1)]
of section 117 ;
36[R160] [37[R161] (28A) “interest” means interest payable in any
manner in respect of any moneys borrowed or debt incurred (including a
deposit, claim or other similar right or obligation) and includes any service
fee or other charge in respect of the moneys borrowed or debt incurred or in
respect of any credit facility which has not been utilised
;]
38[R162] [(28B) “interest on securities” means,—
(i) interest on any security of the Central
Government or a State Government ;
(ii) interest
on debentures or other securities for money issued by or on behalf of a local
authority or a company or a corporation established by a Central, State or
Provincial Act ;]
39[R163] [(28BB) “insurer” means an insurer, being an Indian
insurance company, as defined under clause (7A) of section 2 40[R164] of the Insurance Act, 1938 (4 of 1938), which has been
granted a certificate of registration under section 3 of that Act;]
41[R165] [(28C) “Joint Commissioner” means a person
appointed to be a Joint Commissioner of Income-tax or an Additional Commissioner
of Income-tax under sub-section (1) of section 117;
(28D) “Joint Director” means a person appointed
to be a Joint Director of Income-tax or an Additional Director of Income-tax
under sub-section (1) of section 117;]
(29) “legal representative” has the meaning
assigned to it in clause (11) of section 2 of the Code of Civil
Procedure, 1908 (5 of 1908)42[R166]
;
43[R167] [(29A) “long-term capital asset” means a capital
asset which is not a short-term capital asset ;
(29B) “long-term capital gain” means
capital gain arising from the transfer of a long-term capital asset ;]
44[R168] [(29C) “maximum marginal rate” means the
rate of income-tax (including surcharge on income-tax, if any) applicable in
relation to the highest slab of income in the case of an individual 45[R169] [,
association of persons or, as the case may be, body of individuals] as
specified in the Finance Act of the relevant year ;]
(30) “non-resident” means a person who is not a
“resident”
46[R170] [,
and for the purposes of sections 92, 93 47[R171] [*
* *] and 168, includes a person who is not ordinarily resident within the
meaning of clause (6) of section 6] ;
48[R172] (31) “person” includes—
(ii) a Hindu undivided family49[R174] ,
(iii) a company,
(v) an
association of persons50[R176]
or a body of individuals50[R177] ,
whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling within any of
the preceding sub-clauses.
51[R178] [Explanation.—For
the purposes of this clause, an association of persons or a body of individuals
or a local authority or an artificial juridical person shall be deemed to be a
person, whether or not such person or body or authority or juridical person was
formed or established or incorporated with the object of deriving income,
profits or gains;]
(32) “person who has a substantial interest in
the company”, in relation to a company, means a person who is the beneficial
owner of shares, not being shares entitled to a fixed rate of dividend whether
with or without a right to participate in profits, carrying not less than
twenty per cent of the voting power ;
(33) “prescribed” means prescribed by rules
made under this Act ;
(34) “previous year” means the previous year as
defined in section 3 ;
52[R179] (35) “principal officer”, used with reference to
a local authority or a company or any other public body or any association of
persons or any body of individuals, means—
(a) the
secretary, treasurer, manager or agent of the authority, company, association
or body, or
(b) any
person connected with the management or administration of the local authority,
company, association or body upon whom the 53[R180] [Assessing]
Officer has served a notice of his intention of treating him as the principal
officer thereof ;
54[R181] (36) “profession” includes vocation55[R182]
;
56[R183] [(36A) “public sector company” means any
corporation established by or under any Central, State or Provincial Act or a
Government company57[R184]
as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;]
(37) 58[R185] “public
servant” has the same meaning as in section 21 of the Indian Penal Code (45 of
1860) ;
59[R186] [(37A) “rate or rates in force” or “rates in
force”, in relation to an assessment year or financial year, means—
(i) for the purposes of calculating
income-tax under the first proviso to sub-section (5) of section 132, or
computing the income-tax chargeable under sub-section (4) of section 172 or
sub-section (2) of section 174 or section 175 or sub-section (2) of section 176
or deducting income-tax under section 192 from income charge-able under the
head “Salaries” 60[R187] [*
* *] or 61[R188] [computation
of the “advance tax” payable under Chapter XVII-C in a case not falling under 62[R189] [section
115A or section 115B 63[R190] [or
section 115BB 64[R191] [or
section 115BBB] or section 115E] or] section 164 63[R192] [or
section 164A 65[R193] [*
* *]] 66[R194] [or
section 167B], the rate or rates of income-tax specified in this behalf in the Finance
Act of the relevant year, and for the purposes of computation of the “advance
tax” payable under Chapter XVII-C 67[R195] [in
a case falling under section 115A or section 115B 68[R196] [or
section 115BB 69[R197] [or
section 115BBB] or section 115E] or section 164 68[R198] [or
section 164A
70[R199] [*
* *]] 71[R200] [or
section 167B], the rate or rates specified in section 115A or 72[R201] [section
115B or section 115BB 73[R202] [or
section 115BBB] or section 115E or section 164 or section 164A 70[R203] [*
* *] 71 [R204] or
section 167B], as the case may be,] or the rate or rates of income-tax
specified in this behalf in the Finance Act of the relevant year, whichever is
applicable ;]
(ii) for the purposes of deduction of tax under sections 193, 194,
194A 74[R205] [,
194B] 75[R206] [,
194BB] 76[R207] [and
194D], the rate or rates of income-tax specified in this behalf in the Finance
Act of the relevant year ;]
77[R208] [(iii) for the purposes of deduction of tax under
section 195, the rate or rates of income-tax specified in this behalf in the
Finance Act of the relevant year or the rate or rates of income-tax specified
in an agreement entered into by the Central Government under section 90,
whichever is applicable by virtue of the provisions of section 90 ;]
78[R209] (38) “recognised
provident fund” means a provident fund which has been and continues to be recognised by the 79[R210] [Chief
Commissioner or Commissioner] in accordance with the rules contained in Part A
of the Fourth Schedule, and includes a provident fund established under a
scheme framed under the Employees’ Provident Funds Act, 1952 (19 of 1952) ;
(39) 80[R211] [Omitted
by the Finance Act, 1992, w.e.f. 1-4-1993;]
(40) “regular assessment” means the assessment
made under 81[R212] [sub-section
(3) of] section 143 or section 144 ;
(41) “relative”, in relation to an individual,
means the husband, wife, brother or sister or any lineal ascendant or
descendant of that individual ;
82[R213] [(41A) “resulting company” means one or more
companies (including a wholly owned subsidiary thereof) to which the
undertaking of the demerged company is transferred in
a demerger and, the resulting company in
consideration of such transfer of undertaking, issues shares to the
shareholders of the demerged company and includes any
authority or body or local authority or public sector company or a company
established, constituted or formed as a result of demerger;]
(42) “resident” means a person who is resident
in India within the meaning of section 6 ;
83[R214] [84[R215] (42A) 85[R216] [“short-term
capital asset” means a capital asset held by an assessee for not more than 86[R217] [thirty-six]
months immediately preceding the date of its transfer :]
87[R218] [Provided
that in the case of a share held in a company 88
[R219] [or
any other security listed in a recognised stock
exchange in India or a unit of the Unit Trust of India established under the
Unit Trust of India Act, 1963 (52 of 1963) or a unit of a Mutual Fund specified
under clause (23D) of section 10], the provisions of this clause shall
have effect as if for the words “thirty-six months”, the words “twelve months”
had been substituted.]
89[R220] [Explanation
1].—(i) In determining the period for
which any capital asset is held by the assessee—
(a) in the case of a share held in a company
in liquidation, there shall be excluded the period subsequent to the date on
which the company goes into liquidation ;
(b) in the case of a capital asset which
becomes the property of the assessee in the circumstances mentioned in 90[R221] [sub-section
(1)] of section 49, there shall be included the period for which the asset was
held by the previous owner referred to in the said section ;
91[R222] [(c) in the case of a capital asset being a share
or shares in an Indian company, which becomes the property of the assessee in
consideration of a transfer referred to in clause (vii) of section 47,
there shall be included the period for which the share or shares in the
amalgamating company were held by the assessee ;]
92[R223] [(d) in the case of a capital asset, being a
share or any other security (hereafter in this clause referred to as the
financial asset) subscribed to by the assessee on the basis of his right to
subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to
such financial asset, the period shall be reckoned from the date of allotment
of such financial asset ;
(e) in the case of a capital asset, being
the right to subscribe to any financial asset, which is renounced in favour of any other person, the period shall be reckoned
from the date of the offer of such right by the company or institution, as the
case may be, making such offer ;]
93[R224] [(f) in the case of a capital asset, being a financial
asset, allotted without any payment and on the basis of holding of any other
financial asset, the period shall be reckoned from the date of the allotment of
such financial asset ;]
94[R225] [(g)
in the case of a capital asset,
being a share or shares in an Indian company, which becomes the property of the
assessee in consideration of a demerger, there shall
be included the period for which the share or shares held in the demerged company were held by the assessee ;]
The following sub-clauses (h) and (ha) shall be inserted after sub-clause (g) in clause (i) of Explanation 1 to clause (42A) of section 2 by the Finance
Act, 2003, w.e.f. 1-4-2004 :
(h) in
the case of a capital asset, being trading or clearing rights of a recognised stock exchange in India acquired by a person
pursuant to demutualisation or corporatisation
of the recognised stock exchange in India as referred
to in clause (xiii)
of section 47, there shall be included the period for which the person was a
member of the recognised stock exchange in India
immediately prior to such demutualisation or corporatisation;
(ha) in the case of a capital
asset, being equity share or shares in a company allotted pursuant to demutualization
or corporatisation of a recognised
stock exchange in India as referred to in clause (xiii) of section 47, there
shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to
such demutualisation or corporatisation;
(ii) In respect of capital assets other than
those mentioned in clause (i), the period for
which any capital asset is held by the assessee shall be determined subject to
any rules which the Board may make in this behalf ;]
95[R226]
[Explanation 2.—For the purposes of this clause, the
expression “security”96[R227]
shall have the meaning assigned to it in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;]
97[R228] [(42B) “short-term capital gain” means capital
gain arising from the transfer of a short-term capital asset ;]
98[R229] [(42C) “slump
sale” means the transfer of one or more undertakings as a result of the sale
for a lump sum consideration without values being assigned to the individual
assets and liabilities in such sales.
Explanation 1.—For the purposes of this clause, “undertaking” shall have
the meaning assigned to it in Explanation 1 to clause (19AA).
Explanation 2.—For the removal of doubts, it is hereby declared that the
determination of the value of an asset or liability for the sole purpose of
payment of stamp duty, registration fees or other similar taxes or fees shall
not be regarded as assignment of values to individual assets or liabilities ;]
99[R230] [(43) “tax” in relation to the assessment year
commencing on the 1st day of April, 1965, and any subsequent assessment year
means income-tax chargeable under the provisions of this Act, and in relation
to any other assessment year income-tax and super-tax chargeable under the
provisions of this Act prior to the aforesaid date ;]
1[R231] [(43A) “tax credit certificate” means a tax
credit certificate granted to any person in accordance with the provisions of
Chapter XXII-B2
[R232] and
any scheme made thereunder ;]
4[R234] [(44) “Tax Recovery Officer” means any
Income-tax Officer who may be authorised by the
Chief Commissioner or Commissioner, by general or special order in writing, to
exercise the powers of a Tax Recovery Officer ;]
(45) “total income” means the total
amount of income referred to in section 5, computed in the manner laid down in
this Act ;
6[R236] (47) 7 [R237] [“transfer”8[R238] ,
in relation to a capital asset, includes,—
(i) the sale8[R239] ,
exchange8 [R240] or
relinquishment
8[R241]
of the asset ; or
(ii) the extinguishment of any rights therein8[R242]
; or
(iii) the compulsory acquisition thereof under any law ; or
(iv) in a case where the asset is converted by the owner thereof
into, or is treated by him as, stock-in-trade of a business carried on by him,
such conversion or treatment ;] 9[R243]
[or]
9[R244] [(v) any transaction involving the allowing of
the possession of any immovable property to be taken or retained in part
performance of a contract of the nature referred to in section 53A10[R245]
of the Transfer of Property Act, 1882 (4 of 1882) ; or
(vi) any transaction (whether by way of becoming a member of, or
acquiring shares in, a co-operative society, company or other association of
persons or by way of any agreement or any arrangement or in any other manner
whatsoever) which has the effect of transferring, or enabling the enjoyment of,
any immov-able property.
Explanation.—For
the purposes of sub-clauses (v) and (vi), “immovable property”
shall have the same meaning as in clause (d) of section 269UA.]
(48) 11[R246] [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
12[R247] [“Previous year” defined.
3. For the
purposes of this Act, “previous year” means the financial year immediately
preceding the assessment year :
Provided that, in the case of a business or profession newly set up, or a source
of income newly coming into existence, in the said financial year, the previous
year shall be the period beginning with the date of setting up of the business
or profession or, as the case may be, the date on which the source of income
newly comes into existence and ending with the said financial year.]
[R1]Amendments
made by the Finance Act, 2003, notwithstanding the dates from which they
come into effect have been printed in italics enclosed with bold square
brackets. Amendments made by the Finance Act, 2002, coming into force from
April 1, 2003 have also been printed in italics but enclosed within medium
square brackets.
[R2]For
applicability of the Act to State of Sikkim, see section 26 of the
Finance Act, 1989.
For extension of Act to Continental Shelf of India, see Notification No. GSR 304(E), dated 31-3-1983.
[R3]reffective date for the applicability of the Act in the
State of Sikkim, see Notification No. SO 148(E), dated 23-2-1989.
[R4]Inserted
by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1989.
[R5]Renumbered as clause (1A) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[R6]For
relevant case laws
[R7]See rules 7 and 8 for manner of computation of income which is partially agricultural and partially from business. See also Appendix Two for an analysis of rules 7 and 8. See also rule 7A (income from manufacture of rubber) and rule 7B (income from manufacture of coffee).
[R8]The
Finance Act, 1973 introduced for the first time a scheme of partially
integrated taxation of non-agricultural income with incomes derived from
agriculture for the purposes of determining the rate of income-tax that will
apply to certain
non-corporate assessees. The scheme is since
continued by the Annual Finance Acts. The provisions applicable for the
assessment year 2003-2004 are contained in section 2(2)/2(11)(c)
and Part IV of the First Schedule to the Finance Act, 2003.
[R9]See also Instruction No. 745 [F. No. 228/28/74-IT(A-II)], dated 30-8-1974 and Circular No. 310, dated 29-7-1981
[R10]Substituted by the Taxation Laws (Amendment) Act, 1970, w.r.e.f. 1-4-1962.
[R11]For meaning of the terms/expressions “rent”, “revenue”, “derived”, “revenue derived from land”, “such land”, “agriculture” and “market”
[R12]For meaning of the
terms/expressions “rent”, “revenue”, “derived”, “revenue derived from land”,
“such land”, “agriculture” and “market”
[R13]For meaning of the terms/expressions “rent”, “revenue”, “derived”, “revenue derived from land”, “such land”, “agriculture” and “market”
[R14]For meaning of the terms/expressions “rent”,
“revenue”, “derived”, “revenue derived from land”, “such land”, “agriculture”
and “market”
[R15]For meaning of the
terms/expressions “rent”, “revenue”, “derived”, “revenue derived from land”,
“such land”, “agriculture” and “market”
[R16]For
specified urban areas, refer Direct
Taxes Circulars.
[R17]Explanation renumbered
as Explanation 1 by the Finance Act, 2000, w.e.f.
1-4-2001.
[R18]Inserted by the Finance (No.
2) Act, 1967, w.e.f. 1-4-1967.
[R19]Renumbered
as clause (1B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[R20]Substituted for “nine-tenths” by the Finance Act, 1999, w.e.f. 1-4-2000.
[R21]Clause (3) omitted by the Direct Tax Laws
(Amendment) Act, 1987, w.e.f. 1-4-1988.
Prior to its omission, clause (3) stood as under :
‘(3) “Appellate Assistant Commissioner” means a person appointed to be an Appellate Assistant Commissioner of Income-tax under sub-section (1) of section 117; ’
[R22]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R23]Substituted for “Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R24]For relevant
case laws
[R25]For meaning of the term “assessee
[R26]Substituted for “income-tax or super-tax” by the Finance Act, 1965, w.e.f. 1-4-1965.
[R27]Inserted
by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988.
[R28]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R29]Inserted
by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
[R30]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R31]Substituted for “Deputy Commissioner or Deputy Director” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Earlier “or Deputy Director” was inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996
[R32]For the meaning of the term “assessment
[R33]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R34]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R35]Substituted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. Prior to its substitution, clause (11), as inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988, read as under :
‘(11) “block of assets” means a group of assets falling within a class of assets, being buildings, machinery, plant or furniture, in respect of which the same percentage of depreciation is prescribed ;’
Original clause was earlier omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R36]Substituted for “Central Board of Revenue constituted
under the Central Board of Revenue Act, 1924 (4 of 1924)” by the Central Boards
of Revenue Act, 1963, w.e.f. 1-1-1964.
[R37]Inserted by the Finance Act,
2001, w.e.f. 1-6-2001.
[R38]For relevant case laws
[R39]For the meaning of the terms/expressions “business”, “trade”, “adventure” and “in the nature of trade”
[R40]For the meaning of the terms/expressions “business”, “trade”, “adventure” and “in the nature of trade”
[R41]For the meaning of the
terms/expressions “business”, “trade”, “adventure” and “in the nature of trade”
[R42]For the meaning of the
terms/expressions “business”, “trade”, “adventure” and “in the nature of trade”
[R43]For
relevant case laws
[R44]See also Letter F. No. 34/11/65-IT(A-I), dated 15-1-1966.
[R46]Substituted by the Finance
Act, 1972, w.e.f. 1-4-1973.
[R47]For the meaning of the expressions “personal effects” and “personal use”
[R49]Substituted for “(iii) agricultural land in India” by the Finance Act, 1970, w.e.f. 1-4-1970.
[R50]For the meaning of the terms/expressions “agricultural land”, “municipality” and “population”
[R51]For the meaning of the terms/expressions “agricultural land”, “municipality” and “population”
[R52]For the meaning of the
terms/expressions “agricultural land”, “municipality” and “population”
[R53]For
specified urban areas, refer Direct
Taxes Circulars.
[R54]Inserted by the Taxation Laws (Amendment) Act, 1962, w.e.f. 13-12-1962.
[R55]Inserted
by the Finance (No. 2) Act, 1965, w.e.f. 1-4-1965.
[R56]Inserted by the
Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965.
[R57]Inserted by the Special Bearer Bonds (Immunities and Exemptions) Act, 1981, w.e.f. 12-1-1981.
[R58]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R59]See
also Circular No. 395, dated 24-9-1984.
[R60]For relevant case laws
[R61]For the meaning of terms/expression “charitable purpose”, “education” and “object of general public utility”
[R62]For the meaning of terms/expression “charitable purpose”, “education” and “object of general public utility”
[R63]For the meaning of terms/expression “charitable purpose”, “education” and “object of general public utility”
[R64]“not involving the carrying on of any activity
for profit” omitted by the Finance Act, 1983, w.e.f.
1-4-1984.
[R66]Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R68]Substituted by the Finance Act, 1970, w.e.f. 1-4-1970
[R69]Words “, and includes a person
appointed to be an Additional
Commissioner of Income-tax under that sub-section” omitted by the Direct Tax
Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R71]Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[R72]For the
meaning of the term “public”
[R73]Substituted by the Finance Act, 1964, w.e.f. 1-4-1964.
[R74]Inserted
by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[R75]For text of section 25 of the Companies Act, 1956, see Appendix One.
[R76]Inserted
by the Finance Act, 1985, w.r.e.f. 1-4-1984.
[R77]For text of section 620A of the Companies Act, 1956, and notified Nidhi thereunder, see Appendix One.
[R78]Inserted by the Finance Act,
1992, w.e.f. 1-4-1993.
[R79]Substituted by the Finance Act, 1969, w.e.f. 1-4-1970. Earlier, clause (b) was amended first by the Finance Act, 1965, w.e.f. 1-4-1965 and then by the Finance Act, 1966, w.e.f. 1-4-1966.
[R80]Clause (iii) of section
3(1) of the Companies Act, 1956, defines “private company”. For text of section
3, see Appendix One.
[R81]Substituted by the Finance Act, 1983, w.e.f. 2-4-1983.
[R82]Substituted
for “where such subsidiary company fulfils the conditions laid down in clause (b)
of section 108” by the Finance Act, 1987, w.e.f.
1-4-1988.
[R83]Inserted
by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988.
[R84]Words
“or an Additional Commissioner of Income-tax” omitted by the Finance (No.
2) Act, 1998, w.e.f. 1-10-1998. Earlier the
quoted words were inserted by the Finance Act, 1994, w.e.f.
1-6-1994.
[R85]Clauses (19AA) and (19AAA) inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R86] For text of sections 391 to 394 of the Companies Act, 1956, see
Appendix One.
[R87]Substituted
for “the conditions specified in sub-clauses (i)
to (vii) of this clause, to the extent applicable” by the Finance Act,
2000, w.e.f. 1-4-2000.
[R88]For notified conditions
[R89]Inserted by the Finance Act, 1994, w.e.f. 1-6-1994.
[R90]Inserted
by the Finance Act, 1994, w.e.f. 1-6-1994.
[R91]Words “or an Additional Director of Income-tax” omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R92]Clauses (13), (24) and (25) of section 2 of the Companies Act, 1956, define expressions “director”, “manager” and “managing agent”, respectively. For text of provisions, see Appendix One.
[R93]Substituted for the following clause (21) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 :
‘(21) “Director of Inspection” means a person appointed to be a Director of Inspection under sub-section (1) of section 117, and includes a person appointed to be an Additional Director of Inspection, a Deputy Director of Inspection or an Assistant Director of Inspection ;’
[R94]Inserted by the Finance Act, 1994, w.e.f. 1-6-1994
[R95]Substituted
for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f.
1-10-1998.
[R96]Inserted by the Finance (No.
2) Act, 1998, w.e.f. 1-10-1998.
[R97]See
also Circular No. 5-P (para 56), dated 9-10-1967.
[R98]For
relevant case laws
[R99]For the meaning of the terms
“dividend”, “distribution” and “profits”
[R100]For the meaning of the terms “dividend”, “distribution” and “profits”
[R101]For
the meaning of the terms “dividend”, “distribution” and “profits”
[R102]For the meaning of the terms “profits” and “distribution
[R103]For the meaning of the terms “profits” and “distribution
[R104]For the meaning of the terms “profits” and “distribution
[R105]For
the meaning of the terms “profits” and “distribution”
[R106]Substituted for “by way of advance or loan to a shareholder, being a person who has a substantial interest in the company,” by the Finance Act, 1987, w.e.f. 1-4-1988.
[R107]For the meaning of the term “shareholder
[R108]For the meaning of the terms “profits” and “distribution
[R109]Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.
[R110]Inserted by the Finance Act, 1966, w.e.f. 1-4-1966
[R111]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1988.
[R112]Inserted
by the Finance Act, 1999,w.e.f. 1-4-2000.
[R113]For
text of section 77A of the Companies Act, 1956, see Appendix One.
[R114]Inserted
by the Direct Taxes (Amendment) Act, 1964, w.r.e.f.
1-4-1962.
[R115]Inserted
by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1989.
[R116]Inserted
by the Finance Act, 2001, w.e.f. 1-6-2001.
[R117]For
definition of “document” under section 2(1)(t) of Information Technology
Act, 2000, see Appendix One.
[R118]Inserted by the Finance Act,
1964, w.e.f. 1-4-1964.
[R119]Renumbered as clause (22B) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[R120]Section
4 of the Indian Partnership Act, 1932, defines expressions “firm”, “partner”
and “partnership” as follows :
‘ “Partnership” is the relation between persons who have
agreed to share the profits of a business carried on by all or any of them
acting for all.
Persons who have entered into partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”.’
[R121]Inserted
by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1989.
[R122]For relevant case laws
[R123]For
the meaning of the terms/expression “income”, “includes” and “profits and gains”
[R124]For the meaning of the terms/expression “income”, “includes” and “profits and gains”
[R126]Inserted
by the Finance Act, 1972, w.e.f. 1-4-1973.
[R127]Substituted
for “or by a trust or institution of national importance referred to in clause
(d) of sub-section
(1) of section 80F” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the said expression was
substituted for “, not being contributions made with a specific direction that
they shall form part of the corpus of the trust or institution” by the Direct
Tax Laws (Amendment) Act, 1987, with effect from the same date.
[R128]See also Board’s Letter to Indian Merchants Chamber published in Chamber’s Annual Report, 1963
[R129]Inserted
by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f.
1-4-1962.
[R130]See
also Circular No. 701, dated 23-3-1995.
[R131]See
also Circular No. 701, dated 23-3-1995.
[R132]See also Board’s Letter to Indian
Merchants Chamber published in Chamber’s Annual Report, 1963
[R136]Inserted
by the Finance Act, 1990, w.r.e.f. 1-4-1962.
[R137]Inserted
by the Finance Act, 1990, w.r.e.f. 1-4-1967.
[R138]Inserted by the Finance Act, 1990, w.r.e.f. 1-4-1972.
[R139]Relettered by the Finance Act, 1990, w.r.e.f. 1-4-1962. Earlier the original sub-clause (va) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.
[R140]Inserted
by the Finance Act, 1992, w.e.f. 1-4-1993.
[R141]Prior to its omission,
sub-clause (viii) read as under :
“(viii) any annuity due, or commuted value of any annuity paid, under the provisions of section 280D ;”
[R142]Inserted
by the Finance Act, 1972, w.e.f. 1-4-1972.
[R143]For the meaning of the term “lotteries
[R144]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R145]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1988.
[R146]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996
[R147]Should be read as “sub-clause”.
[R148]Inserted
by the Finance Act, 2002, w.e.f. 1-4-2003.
[R149]Substituted for “clause (vii)” by the Finance Act, 2003, w.e.f. 1-4-2003.
[R150]Words “sub-section (1) of” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f. 1-4-1988. Earlier, that expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date.
[R151]Inserted by the Taxation Laws (Extension to Union Territories) Regulation, 1963, w.e.f. 1-4-1963.
[R152]Now State of Goa.
[R153]Inserted
by the Taxation Laws (Extension to Union Territories) Regulation, 1963, w.e.f. 1-4-1963.
[R154]Inserted
by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
[R155]Inserted
by the Taxation Laws (Extension to Union Territories) Regulation, 1963, w.e.f. 1-4-1963.
[R156]Now
State of Goa.
[R157]Substituted for “registered office of the company” by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971
[R158]Omitted by the Direct
Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
Omitted clause (27) stood as under :
‘(27) “Inspecting Assistant Commissioner” means a person appointed to be an Inspecting Assistant Commissioner of Income-tax under sub-section (1) of section 117 ;’
[R159]Substituted
for “(2)” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f.
1-4-1988.
[R160]Inserted by the Finance Act,
1976, w.e.f. 1-6-1976.
[R161]See
also Letter F. No. 164/18/77-IT(A-I), dated 13-7-1978.
[R162]Inserted
by the Finance Act, 1988, w.e.f. 1-4-1989.
[R163]Inserted by the Finance Act,
2001, w.e.f. 1-4-2002.
[R164]For
text of section 2(7A) of the Insurance Act, see Appendix
One.
[R165]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R166]Clause (11) of
section 2 of the Code of Civil Procedure defines “legal representative” as
follows :
(11) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued ;’
[R167]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988
[R168]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[R169]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R170]Inserted
by the Finance Act, 1999, w.e.f. 1-4-1999. Earlier
these words were omitted by the Finance (No. 2) Act, 1998, w.e.f.
1-4-1999.
[R171]omitted
by the Finance Act, 1965, w.e.f. 1-4-1965.
[R172]For
relevant case laws
[R173]For the meaning of the term/expression “individual” and “Hindu undivided family”
[R174]For the meaning of the term/expression “individual” and “Hindu undivided family
[R175]For the meaning of the term/expressions “firm”, “association of persons” and “body of individuals”
[R176]For the meaning of the term/expressions “firm”, “association of persons” and “body of individuals
[R177]For the meaning of the term/expressions “firm”, “association of persons” and “body of individuals
[R178]Inserted
by the Finance Act, 2002, w.e.f. 1-4-2002.
[R179]For relevant case laws
[R180]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R181]For relevant case laws, see Income-tax Act.
[R182]For
the meaning of the term “vocation
[R183]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1987.
[R184]Section 617 of the
Companies Act, 1956, defines “Government company” as follows :
‘617. Definition of “Government company”.—For the purposes of this Act, Government company means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a Government company as thus defined.’
[R185]Section
21 of the Indian Penal Code defines “public servant”. For text of section 21,
see Appendix One.
[R186]Inserted by the Finance (No.
2) Act, 1967, w.e.f. 1-4-1967.
[R187]“or sub-section (9) of section 80E from any payment referred to therein” omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Originally, the said expression was inserted by the Finance Act, 1968, w.e.f. 1-4-1968.
[R188]Substituted for ‘computation of the “advance tax” payable under Chapter XVII-C, the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year’ by the Finance Act, 1970, w.e.f. 1-4-1971.
[R189]Inserted
by the Finance Act, 1976, w.e.f. 1-6-1976.
[R190]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R191]Inserted
by the Finance Act, 2002, w.e.f. 1-4-2003.
[R193]“or
section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R195]Substituted for “in a case falling under section 164, the rate specified in that section” by the Finance Act, 1976, w.e.f. 1-6-1976.
[R197]Inserted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R198]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R199]“or section 167A”
omitted by the Direct Tax Laws
(Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier this
expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R201]Substituted for “section 115B or, as the case may be, section 164” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R203] “or section 167A” omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier this expression was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R204]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[R205]Inserted by the Finance Act, 1972, w.e.f. 1-4-1972.
[R208]Substituted
by the Finance Act, 1992, w.e.f. 1-6-1992. Prior to its
substitution, sub-clause (iii), as inserted by the Finance (No. 2) Act,
1991, w.e.f. 1-10-1991, read as under :
“(iii) for the purposes of deduction of tax under section 195, the rate or rates of income-tax specified in section 115A or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, whichever is applicable ;”
[R211]Prior
to omission, clause (39) was substituted by the Direct Tax Laws (Second
Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier clause
(39) was omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and was later reintroduced by the Direct
Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
Prior to omission, it read as under :
‘(39) “registered firm” means a firm registered under the provisions of clause (a) of sub-section (1) of section 185 or deemed to be registered under the provisions of sub-section (6) of that section or under those provisions read with sub-section (7) of section 184 ;’
[R213]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R214]Inserted
by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962.
[R215]See also Circular No. 415, dated 14-3-1985 and Circular No. 704, dated 28-4-1995. For details and relevant case laws, see to Income-tax Act.
[R216]Substituted
for the portion beginning with “short-term capital asset” and ending with
“preceding the date of its transfer ;” by the Finance Act, 1973, w.e.f. 1-4-1974. Earlier clause (42A) was first
amended by the Finance Act, 1966, w.e.f. 1-4-1966 and
later by the Finance Act, 1968, w.e.f. 1-4-1969.
[R217]Substituted
for “sixty” by the Finance (No. 2) Act, 1977, w.e.f.
1-4-1978.
[R218]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[R219]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R220]Existing Explanation renumbered as Explanation 1 by the Finance Act, 1994, w.e.f. 1-4-1995.
[R221]Substituted for “clauses (i) to (iii)” by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[R222]Inserted
by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[R223]Inserted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R224]Inserted by the Finance Act, 1995, w.e.f.
1-4-1996.
[R225]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R226]Inserted
by the Finance Act, 1994, w.e.f. 1-4-1995.
[R227]Clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956, defines “securities” as follows :
‘(h) “securities” include—
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;
(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(ii) Government securities;
(iia) such other instruments as may be declared by the Central Government to be securities; and
(iii) rights or interest in securities;’
[R228]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1988.
[R229]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000. Earlier clause (42C) was inserted by the Direct Tax Laws (Second Amendment) Act, 1989, w.e.f. 1-4-1990 and later on omitted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R230]Substituted
by the Finance Act, 1965, w.e.f. 1-4-1965.
[R231]Inserted
by the Finance Act, 1965, w.e.f. 1-4-1965.
[R232]Chapter XXII-B was omitted by the Finance Act, 1990, w.e.f. 1-4-1990
[R233]Omitted by the Direct Tax Laws (Amendment) Act,
1987, w.e.f. 1-4-1989. Original clause (43B)
as inserted by the Finance (No. 2) Act, 1971, w.e.f.
1-1-1972, read as under :
‘(43B) “Tax Recovery Commissioner” means a Commissioner or an Assistant Commissioner of Income-tax who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Commissioner;’
[R234]Substituted
by the Direct Tax Laws (Amendment) Act, 1987 [as amended by the Direct Tax Laws
(Amendment) Act, 1989], w.r.e.f. 1-4-1988. Prior to
its substitution,
clause (44), as substituted by the Finance Act, 1963, w.r.e.f. 1-4-1962, stood as under :
‘(44) “Tax
Recovery Officer” means—
(i) a Collector or an Additional Collector;
(ii) any
such officer empowered to effect recovery of arrears of land revenue or other
public demand under any law relating to land revenue or other public demand for
the time being in force in the State as may be authorised
by the State Government, by general or special notification in the Official
Gazette, to exercise the powers of a Tax Recovery Officer;
(iii) any Gazetted Officer of the Central or a State Government who may be authorised by the Central Government, by general or special notification in the Official Gazette, to exercise the powers of a Tax Recovery Officer;’
[R235]Omitted by the Finance Act,
1965, w.e.f. 1-4-1965.
[R236]For relevant case laws See also Circular No. 751, dated 10-2-1997 on Stock Lending Scheme.
[R237]Substituted
for the following by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1-4-1985:
‘ “transfer”, in relation to a capital asset, includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law;’
[R238]For the meaning of the terms/expression “transfer”, “sale”, “exchange”, “relinquishment” and “extinguishment of any rights therein”
[R239]For
the meaning of the terms/expression “transfer”, “sale”, “exchange”, “relinquishment” and
“extinguishment of any rights therein”
[R240]For the meaning of the terms/expression “transfer”, “sale”, “exchange”, “relinquishment” and “extinguishment of any rights therein”
[R241]For the meaning of the
terms/expression “transfer”, “sale”, “exchange”, “relinquishment” and
“extinguishment of any rights therein”
[R242]For the meaning of the terms/expression “transfer”, “sale”, “exchange”, “relinquishment” and “extinguishment of any rights therein”
[R243]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1988.
[R244]Inserted
by the Finance Act, 1987, w.e.f. 1-4-1988.
[R245]For text of section 53A of the Transfer of Property Act, 1882, see Appendix One.
[R246]Prior to omission,
clause (48), as reintroduced by the Direct Tax Laws (Amendment) Act,
1989, w.e.f. 1-4-1989 which was earlier omitted by
the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date, read
as under :
‘(48) “unregistered firm” means a firm which is not a registered firm.’
[R247]Substituted by the Finance Act, 1999, w.e.f. 1-4-2000. Prior to its substitution, section 3, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, read as under :
‘3. “Previous year” defined.—(1) Save as otherwise provided in this section, “previous year” for the purposes of this Act, means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set up,
or a source of income newly coming into existence, in the said financial year,
the previous year shall be the period beginning with the date of setting up of
the business or profession or, as the case may be, the date on which the source
of income newly comes into existence and ending with the said financial year.
(2) “Previous year”, in relation to the assessment year,
commencing on the 1st day of April, 1989, means the period which begins with
the date immediately following the last day of the previous year relevant to
the assessment year commencing on the 1st day of April, 1988 and ends on the
31st day of March, 1989 :
Provided that where the assessee has adopted more than one period as
the “previous year” in relation to the assessment year commencing on the 1st
day of April, 1988 for different sources of his income, the previous year in
relation to the assessment year commencing on the 1st day of April, 1989 shall
be reckoned separately in the manner aforesaid in respect of each such source
of income, and the longer or the longest of the periods so reckoned shall be
the previous year for the said assessment year :
Provided further that in the case of a
business or profession newly set up, or a source of income newly coming into
existence on or after the 1st day of April, 1987 but before the 1st day of
April, 1988 and where the accounts in relation to such business or profession
or source of income have not been made up to the 31st day of March, 1988, the
“previous year” in relation to the assessment year commencing on the 1st day
of April, 1989, shall be the period beginning with the date of setting up of
the business or profession or, as the case may be, the date on which the source
of income newly comes into existence and ending on the 31st day of March, 1989
:
Provided also that where the assessee
has adopted one or more periods as the “previous year” in relation to the
assessment year commencing on the 1st day of April, 1988, for any source or
sources of his income, in addition to the business or profession or source of
income referred to in the second proviso, the previous year in relation to the
assessment year commencing on the 1st day of April, 1989, shall be reckoned
separately in the manner aforesaid in respect of each such source of income,
and the longer or the longest of the periods so reckoned shall be the previous
year in relation to the said assessment year.
(3) Where the previous year in relation to the assessment year commencing on the 1st day of April, 1989, referred to in sub-section (2) exceeds a period of twelve months, the provisions of this Act shall apply subject to the modifications specified in the rules in the Tenth Schedule.’