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 18[R2] [80U].
(2) The aggregate amount of the deductions19[R3] under this Chapter shall not, in any case, exceed the gross total income
of the assessee.
20[R4] [(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 19a[R5] [or section 80GGC] or section 80HH or section 80HHA or section
80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA 21[R6] [or section 80-IB] or section 80J22[R7] 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.]
(4) 23[R8] [* * *]
Computation of
deduction under section 80M.
80AA. 24[R9] [Omitted by the Finance Act, 1997, w.e.f.
1-4-1998.]
25[R10] [Deductions to
be made with reference to the income included in the gross total income.
26[R11] 80AB. Where
any deduction is required to be made or allowed under any section 27[R12] [* *
*] 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.]
28[R13] [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 Chapter 33[R18] [* * *] 34[R19] [* * *];
B.—Deductions in respect of certain payments
Deduction in respect of life
insurance premia, contributions to provident fund,
etc.
39[R24] 80C. 40[R25] [Omitted by the Finance Act, 1990, w.e.f. 1-4-1991.]
Deduction in respect of investment in certain new shares.
80CC. 41[R26] [Omitted
by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1993.]
42[R27] [Deduction
in respect of deposits under National Savings Scheme or payment to a deferred
annuity plan.
43[R28] 80CCA. (1) Where an assessee, being—
(a) an individual,
or
(b) a Hindu
undivided family, 44[R29] [* * *]
(c) 45[R30] [* * *] has in the
previous year—
(i) deposited
any amount in accordance with such scheme as the Central Government may, by
notification46[R31] in
the Official Gazette, specify in this behalf 47[R32] [* * *]; 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 notification48[R33] 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 :
49[R34] [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:]
50[R35] [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 51[R36] [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 :
52[R37] [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.]
53[R38] [(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 54[R39] [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.]
53[R40] [Deduction
in respect of investment made under Equity Linked Savings Scheme.
80CCB. (1) Where an assessee, being—
(a) an individual, o
(b) a Hindu undivided family, 55[R41] [* *
*]
(c) 56[R42] [* *
*] 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 :
57[R43] [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.]
58[R44] [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 59[R45] [or
any other insurer] 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.]
60[R46] [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 61[R47] [ten]
thousand rupees, the whole of such sum; and
(ii) in any other case, 61[R48] [ten]
thousand rupees :
62[R49] [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 :
64[R51] [Provided
that such insurance shall be in accordance with a scheme65[R52]
framed in this behalf by—
(a) 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;
or
(b) any other insurer and approved by the Insurance Regulatory
and Development Authority established under sub-section (1) of section 3 of the
Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).]]
66[R53] [Explanation.—For
the purpose of this section, “senior citizen” shall have the meaning assigned
to it in the Explanation to section 80DDB.]
67[R54] [Deduction
in respect of maintenance including medical treatment of handicapped dependent68[R55] .
80DD. 69[R56] [(1) Where an assessee, who is a resident in
India, being an individual or a Hindu undivided family has, during the previous
year,—
(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 70[R57] [any
other insurer 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 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 rules71[R58]
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).]
The following section 80DD shall be substituted for the existing section 80DD by the Finance Act, 2003, w.e.f. 1-4-2004 :
Deduction
in respect of maintenance including medical treatment of a dependant who is a
person with disability.
80DD. (1) Where an assessee,
being an individual or a Hindu undivided family, who is a resident in India,
has, during the previous year,—
(a) incurred
any expenditure for the medical treatment (including nursing), training and
rehabilitation of a dependant, being a person with disability; or
(b) paid or deposited any
amount under a scheme framed in this behalf by the Life Insurance Corporation
or any other insurer or the Administrator or the specified company subject to
the conditions specified in sub-section (2) and approved by the Board in this
behalf for the maintenance of a dependant, being a person with disability,the assessee shall, in accordance with and
subject to the provisions of this section, be allowed a deduction of a sum of
fifty thousand rupees from his gross total income in respect of the previous
year:
Provided that where such dependant is a person with
severe disability, the provisions of this sub-section shall have effect as if
for the words “fifty thousand rupees”, the words “seventy-five thousand rupees”
had been substituted.
(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 dependant, being a person with disability, 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 dependant, being a person with disability, or any
other person or a trust to receive the payment on his behalf, for the benefit
of the dependant, being a person with disability.
(3) If
the dependant, being a person with disability, 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) The
assessee, claiming a deduction under this section, shall furnish a copy of the
certificate issued by the medical authority in the prescribed form and manner,
along with the return of income under section 139, in respect of the assessment
year for which the deduction is claimed:
Provided that where the condition of disability
requires reassessment of its extent after a period stipulated in the aforesaid
certificate, no deduction under this section shall be allowed for any
assessment year relating to any previous year beginning after the expiry of the
previous year during which the aforesaid certificate of disability had expired,
unless a new certificate is obtained from the medical authority in the form and
manner, as may be prescribed, and a copy thereof is furnished along with the
return of income.
Explanation.—For
the purposes of this section,—
(a) “Administrator” means the Administrator
as referred to in clause (a) of section 2 of the Unit Trust of India
(Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) 71a[R59] ;
(b) “dependant”
means—
(i) in the case of an individual, the spouse, children, parents,
brothers and sisters of the individual or any of them;
(ii) in the case of a Hindu undivided family, a member of the
Hindu undivided family, dependant wholly or mainly on such individual or Hindu
undivided family for his support and maintenance, and who has not claimed any deduction
under section 80U in computing his total income for the assessment year
relating to the previous year;
(c) “disability” shall have the meaning
assigned to it in clause (i) of section 2 71b[R60]
of the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of
1996);
(d) “Life Insurance Corporation” shall have
the same meaning as in clause (iii) of sub-section (8) of section 88;
(e) “medical authority” means the medical
authority as referred to in clause (p) of section 271b
[R61] of
the Persons with Disabilities (Equal Opportunities, Protection of Rights and
Full Participation) Act, 1995 (1 of 1996).
(f) “person with disability” means a person
as referred to in clause (t) of section 271b[R62]
of the Persons with Disabilities (Equal Opportunities, Protection of Rights and
Full Participation) Act, 1995 (1 of 1996);
(g) “person with severe disability” means a
person with eighty per cent or more of one or more disabilities, as referred to
in sub-section (4) of section 5671b[R63]
of the Persons with Disabilities (Equal Opportunities, Protection of Rights
and Full Participation) Act, 1995 (1 of 1996);
(h) “specified company” means a company as referred to in clause (h) of section 271a[R64] of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002)
72[R65] [Deduction
in respect of medical treatment, etc.
80DDB. Where
an assessee who is resident in India has, during the previous year, 73[R66] [actually]
incurred any expenditure for the medical treatment of such disease or
ailment as may be specified in the rules74[R67]
made in this behalf by the
Board—
(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 75[R68] [forty]
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 form76
[R69] and
from such authority as may be prescribed77[R70]
:
78[R71] [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.]
79[R72] [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 280[R73] of the
Insurance Act, 1938 (4 of 1938);
(iii) “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.]]
The following section 80DDB shall be substituted for the existing section 80DDB by the Finance Act, 2003, w.e.f. 1-4-2004 :
Deduction in respect of medical treatment,
etc.
80DDB. Where an assessee who is resident in
India has, during the previous year, actually paid any amount for the medical
treatment of such disease or ailment as may be specified in the rules made in
this behalf by the Board—
(a) for himself or a dependant, 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 the amount actually paid or a sum of
forty thousand rupees, whichever is less, in respect of that previous year in
which such amount was actually paid :
Provided that no such deduction shall be allowed unless
the assessee furnishes with the return of income, a certificate in such form,
as may be prescribed, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as
may be prescribed, working in a Government hospital :
Provided
further that the deduction
under this section shall be reduced by the amount received, if any, under an
insurance from an insurer, or reimbursed by an employer, for the medical treatment
of the person referred to in clause (a) or clause (b) :
Provided
also that where the amount
actually paid is in respect of the assessee or his dependant 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,—
(i) “dependant” means—
(a) in the case of
an individual, the spouse, children, parents, brothers and sisters of the
individual or any of them,
(b) in the case of
a Hindu undivided family, a member of the Hindu undivided family, dependant
wholly or mainly on such individual or Hindu undivided family for his support and
maintenance;
(ii) “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;
(iii) “insurer” shall have the meaning assigned to it in clause (9)
of section 2 of the Insurance Act, 1938 (4 of 1938) ;
(iv) “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year
81[R74] [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 82[R75] [forty]
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 Gazette83[R76] ,
specify in this behalf;
(c) 83[R77] “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 mathe-matics 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.
80F. 84[R78] [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.]
85[R79] Deduction in respect of donations to certain funds, charitable
institutions, etc.
86[R80] 80G. 87[R81] [(1) In computing the
total income of an assessee88[R82] ,
there shall be deducted, in accordance with and subject to the provisions of
this section,—
89[R83] [(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 90[R84]
[sub-clause (i) or in] 91[R85] [sub-clause
(iiia) 92[R86] [or
in sub-clause (iiiaa) 93[R87] [or
in sub-clause (iiiab)] 94[R88] [or
in sub-clause (iiie)] 95[R89] [or
in sub-clause (iiif)] 96[[R90] or
in sub-clause (iiig)] 97[R91] [or
in sub-clause (iiiga)] or 98[R92] [sub-clause
(iiih) or] 99[R93] [sub-clause
(iiiha) or sub-clause (iiihb)
or sub-clause (iiihc) 1[R94] [or
sub-clause (iiihd)] 2[R95] [or
sub-clause (iiihe)] 3[R96] [or
sub-clause (iiihf)] 4[R97] [or
sub-clause (iiihg) or sub-clause (iiihh)] 5[R98] [or
sub-clause (iiihi)] 6[R99] [or
sub-clause (iiihj)] or] in] sub-clause (vii)
of clause (a) 7[R100] [or in clause (c)] 8[R101] [or in clause (d)] 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 paid9[R102] 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
10[R103] [(iiia) the Prime Minister’s National Relief Fund;
or]
11[R104] [(iiiaa) the Prime Minister’s Armenia Earthquake
Relief Fund; or]
12[R105] [(iiiab) the Africa (Public Contributions - India)
Fund; or]
13[R106] [(iiib) the National Children’s Fund; or]
14[R107] [(iiic) the Indira Gandhi
Memorial Trust, the deed of declaration in respect whereof was registered at
New Delhi on the 21st day of February, 1985; or]
15[R108] [(iiid) the Rajiv Gandhi
Foundation, the deed of declaration in respect whereof was registered at New
Delhi on the 21st day of June, 1991; or]
16[R109] [(iiie) the National Foundation for Communal
Harmony; or]
17[R110] [(iiif) a University or any educational institution
of national eminence as may be approved18[R111] by the prescribed authority19[R112] in this behalf; or]
20[R113] [(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]
21[R114] [(iiiga) any
fund set up by the State Government of Gujarat exclusively for providing relief
to the victims of earthquake in Gujarat; or]
22[R115] [(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]
23[R116] [(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]
24[R117] [(iiihd) the Andhra Pradesh Chief Minister’s Cyclone
Relief Fund, 1996; or]
25[R118] [(iiihe) the National Illness Assistance Fund; or]
26[R119] [(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]
27[R120] [(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]
28[R121] [(iiihi) the Fund for Technology Development and Application
set up by the Central Government; or]
29[R122] [(iiihj) the National Trust for Welfare of Persons
with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities constituted
under sub-section (1) of section 3 of the National Trust for Welfare of Persons
with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,
1999 (44 of 1999); 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 30[R123] [other than the purpose of promoting family
planning; or]
31[R124] [32[R125] [(vi) an 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;]
33[R126] [(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
notified34[R127] 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;
35[R128] [(c)
any sums paid by the assessee, being a company, in the previous year as
donations to the Indian Olympic Association or to any other association or
institution
35a[R129] [established in India, as the Central
Government may, having regard to the prescribed guidelines36[R130] , by notification in the Official Gazette,
specify in this behalf] for—
(i) the development of infrastructure for sports and games; or
(ii) the sponsorship
of sports and games, in India;]
37[R131] [(d)
any sums paid by the assessee, during the period beginning on the 26th
day of January, 2001 and ending on the 30th day of September, 2001, to any
trust, institution or fund to which this section applies for providing relief
to the victims of earthquake in Gujarat.]
(3) 38[R132] [Omitted by the Finance Act, 1994, w.e.f. 1-4-1994.]
39[R133] [(4)
Where the aggregate of the sums referred to in sub-clauses (iv),
(v), (vi) 40[R134] [, (via)] and (vii) of clause (a)
and in 41[R135] [clauses (b) and (c)] 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 :—
42[R136] [(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 12 43[R137] [* * *] 44[R138] [45[R139] [***]] 46[R140] [or clause (23AA)] 47[R141] [or clause (23C)] of section 10 :
48[R142] [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; 49[R143] [* * *]
(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 2550[R144] 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, 51[R145] [52[R146] [***]] or is an institution financed wholly
or in part by the Government or a local authority; 53[R147] [and]
54[R148] [(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 rules55[R149] made in this behalf :
Provided that any approval shall have effect for such
assessment year or years, not exceeding 56[R150] [five] assessment years, as may be specified
in the approval.]
57[R151] [(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.]
58[R152] [(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.]
59[R153] [(5C)
This 60[R154] [section] applies in relation to amounts
referred to in clause (d) of sub-section (2) only if the trust or
institution or fund is established in India for a charitable purpose and it
fulfils the following conditions, namely :—
(i) it is approved in terms of clause (vi) of sub-section
(5);
(ii) it maintains
separate accounts of income and expenditure for providing relief to the victims
of earthquake in Gujarat;
(iii) the donations made to the trust or
institution or fund are applied only for providing relief to the earthquake
victims of Gujarat on or before the 31st day of March, 61[R155] [2004];
62[R156] [(iv)
the amount of donation remaining unutilised on
the 31st day of March, 61[R157] [2004] is transferred to the Prime Minister’s National
Relief Fund on or before the 31st day of March, 61[R158] [2004];]
(v) it renders
accounts of income and expenditure to such authority62a[R159] and in such manner as may be prescribed62b[R160] , on or before the 30th day of June, 61[R161] [2004].]
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).
63[R162] [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 :—
64[R163] [(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, 65[R164] [section 12 or section 12A];
(ii) that, under clause (c) of
sub-section (1) of section 13, the exemption under section 11 66[R165] [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 13 where 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.
67[R166] [Explanation 4.—For the purposes of this
section, an association or institution having as its object the control,
supervision, regulation or encouragement in India of such games or sports as
the Central Government may, by notification in the Official Gazette67a[R167] , specify in this behalf, shall be deemed to
be an institution established in India for a charitable purpose.]
68[R168] [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.]
70[R170] [Deductions in respect of rents paid.71[R171]
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 prescribed72[R172] , 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 73[R173] [under clause (a) of sub-section (2)
or, as the case may be, clause (a) of sub-section (4) 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.]
74[R174] [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;
75[R175] [(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 :
76[R176] [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;]
77[R177] [(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;]
78[R178] [(c) 79[R179] [any sum paid by the assessee in any
previous year ending on or before the 31st day of March, 2002] to an association
or institution, which has as its object the undertaking of any programme of conservation of natural resources 80[R180] [or of afforestation],
to be used for carrying out any programme of
conservation of natural resources 80[R181] [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;]
81[R182] [(cc)
79[R183] [any sum paid by the assessee in any
previous year ending on or before the 31st day of March, 2002] to such fund for afforestation
as is notified by the Central Government under clause (b) of sub-section
(1) of section 35CCB;]
82[R184] [(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;]
83[R185] [(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.]]
83a[R186] [Deduction in respect of contributions given
by companies to political parties.
80GGB. In
computing the total income of an assessee, being an Indian company, there
shall be deducted any sum contributed by it, in the previous year to any
political party.
Explanation.—For the removal of
doubts, it is hereby declared that for the purposes of this section, the word
“contribute”, with its grammatical variation, has the meaning assigned to it
under section 293A of the Companies Act, 1956 (1 of 1956).]
83a[R187] [Deduction in respect of contributions given
by any person to political parties.
80GGC.
In computing the total
income of an assessee, being any person, except local authority and every
artificial juridical person wholly or partly funded by the Government, there
shall be deducted any amount of contribution made by him, in the previous year,
to a political party.
Explanation.—For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).]
C.—Deductions 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.]
84[R188] [Deduction in respect of profits and
gains from newly established industrial undertakings or hotel business in
backward areas.
85[R189] 80HH. (1) Where the gross total income of an assessee includes any
profits and gains derived86[R190] from an industrial undertaking86[R191] , 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 articles86[R192] after the 31st day of December, 1970 87[R193] [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 workers87a[R194] 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 88[R195] [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 form89[R196] 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 90[R197] [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 91[R198] [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 91[R199] [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 91[R200] [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.
(8)
92[R201] [***]
(9) In a case where the assessee is entitled also to the deduction
under 93[R202] [section 80-I or] section 80J in 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.
94[R203] [(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.
95[R204] [(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 notification96[R205] 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.]
97[R206] [Deduction in respect of profits and
gains from newly established small-scale industrial undertakings in certain
areas.
98[R207] 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 99[R208] [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 1[R209] [of each of the ten previous years beginning
with the previous year in which the industrial undertaking] begins to manufacture
or produce articles :
2[R210] [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 form3[R211] 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 4[R212] [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,—
5[R213] [(a) “rural
area” means any area other than—
(i) an
area which is comprised within the jurisdiction of a municipa-lity
(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 notification6[R214] in the Official Gazette ;]
7[R215] [(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 11B8[R216] of the Industries (Development and Regulation) Act, 1951 (65 of 1951)].
9[R217] [Deduction in respect of profits and
gains from projects outside India.
10[R218] 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 India includes any profits and gains
derived from the business of11[R219] —
(a) the execution
of a foreign project11[R220] 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 project11[R221] 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, 12[R222] [a deduction from such profits and gains of an
amount equal to—
(i) forty per cent thereof for an
assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent thereof for an assessment year beginning on
the 1st day of April, 2002;
(iii) twenty per cent thereof for an assessment
year beginning on the 1st day of April, 2003;
(iv) ten per cent thereof for an assessment year beginning on the
1st day of April, 2004, and no deduction shall be allowed in respect of the
assessment year beginning on the 1st day of April, 2005 and any subsequent
assessment year] :
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 India ;
(ii) the assembly or
installation of any machinery or plant outside India ;
(iii) the execution of
such other work (of whatever nature) as may be prescribed13[R223] .
(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 form14[R224] duly signed and verified by such accountant ;
15[R225] [(ia) the assessee furnishes, along with his return
of income, a certificate in the prescribed form16[R226] 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 17[R227] [such percentage of the profits and gains as
is referred to in sub-section (1) in relation to the relevant assessment year]
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 17[R228] [such percentage of the profits and gains as
is referred to in sub-section (1) in relation to the relevant assessment year]
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, 18[R229] [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 19[R230] [such percentage of the profits and gains as
is referred to in sub-section (1) in relation to the relevant assessment year],
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.
20[R231] [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
21[R232] [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 year22[R233] under any such other provision.]
23[R234] [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, 24[R235] [a deduction from such profits and gains of an
amount equal to—
(i) forty
per cent thereof for an assessment year beginning on the 1st day of April,
2001;
(ii) thirty per cent thereof for an
assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent thereof for an assessment
year beginning on the 1st day of April, 2003;
(iv) ten per cent thereof for an assessment
year beginning on the 1st day of April, 2004, and no deduction shall be
allowed in respect of the assessment year beginning on the 1st day of April,
2005 and any subsequent assessment year].
(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 form25[R236] duly
signed and verified by such accountant;
(ii) an amount equal to 26[R237] [such
percentage of the profits and gains as is referred to in sub-section (1) in relation
to the relevant assessment year] 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 26[R238] [such
percentage of the profits and gains as is referred to in sub-section (1) in
relation to the relevant assessment year], 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
India;
(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.]
27[R239] [Deduction in respect of profits retained
for export business.
28[R240] 80HHC. 29[R241] [(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, 30[R242] [a deduction to the extent of profits31[R243] referred to in sub-section (1B),] 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 32[R244] [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, 33[R245] [a deduction to the extent of profits,
referred to in sub-section (1B),] 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.]
34[R246] [(1B) For the purposes
of sub-sections (1) and (1A), the extent of deduction of the profits shall be
an amount equal to—
(i) eighty
per cent thereof for an assessment year beginning on the 1st day of April,
2001;
35[R247] [(ii)
seventy per cent thereof for an assessment year beginning on the 1st day
of April, 2002;
(iii) fifty per cent
thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) thirty per cent
thereof for an assessment year beginning on the 1st day of April, 2004,] and
no deduction shall be allowed in respect of the assessment year beginning on
the 1st day of April, 2005 and any subsequent assessment year.]
(2) (a) This section applies to all goods or
merchandise, other than those specified in clause (b), if the sale
proceeds36[R248] of such goods or merchandise exported out of
India are 37[R249] [received in, or brought into, India] by the
assessee 38[R250] [(other than the supporting manufacturer)] in
convertible foreign exchange 39[R251] [, within a period of six months from the end
of the previous year or, 40[R252] [within such further period as the competent
authority may allow in this behalf].]
41[R253] [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) minerals42[R254] and ores 43[R255] [(other than processed minerals and ores
specified in the Twelfth Schedule)].
44[R256] [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 5045[R257] of the Customs Act, 1962 (52 of 1962), shall,
for the purposes of this section, be deemed to be the sale proceeds thereof.]
46[R258] [(3)
For the purposes of sub-section (1),—
(a) where the export out of India is of
goods or merchandise manufactured 47[R259] [or processed] by the assessee, the profits48[R260] derived from such export shall be the amount
which bears to the profits of the business48a[R261] , 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 India is of trading goods, the profits derived from such export
shall be the export turnover in respect of such trading goods as reduced by the
direct costs and indirect costs attributable to such export ;
(c) where the export out of India is of
goods or merchandise manufactured 49[R262] [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 49[R263] [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 India
including the purchase price of such goods ;
(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 49[R264] [or processed] by the assessee.]
50[R265] [(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 51[R266] [***] ;
(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 52[R267] [***] 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.]
53[R268] [(4) The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form54[R269] , 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 55[R270] [in accordance with the provisions of this section.]]
The following proviso shall be
inserted in sub-section (4) of section 80HHC by the Finance Act, 2003, w.e.f. 1-4-2004 :
Provided
that in the case of an undertaking referred to in sub-section (4C), the
assessee shall also furnish along with the return of income, a certificate
from the undertaking in the special economic zone containing such particulars
as may be prescribed, duly certified by the auditor auditing the accounts of
the undertaking in the special economic zone under the provisions of this Act
or under any other law for the time being in force.
56[R271] [(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,—
57[R272] (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 58[R273] [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 prescribed59 [R274] 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.]
60[R275] [(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.]
The following sub-section (4C)
shall be inserted after sub-section (4B) by the Finance Act, 2003, w.e.f. 1-4-2004 :
(4C The provisions of this section shall apply to an assessee,—
(a) for an
assessment year beginning after the 31st day of March, 2004 and ending before
the 1st day of April, 2005;
(b) who owns any undertaking which manufactures or produces goods or merchandise anywhere in India (outside any special economic zone) and sells the same to any undertaking situated in a special economic zone which is eligible for deduction under section 10A and such sale shall be deemed to be export out of India for the purposes of this section.
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
;
61[R276] [(aa) “export out of India” shall not include any
transaction by way of sale or otherwise, in a shop,62[R277] emporium or any other establishment situate in
India, not involving clearance at any customs station63[R278] as defined in the Customs Act, 1962 (52 of
1962) ;]
(b) “export turnover” means the sale
proceeds 64[R279] [, received in, or brought into, India] by the
assessee in convertible foreign exchange 65[R280] [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
station63
[R281] as defined in the Customs Act, 1962 (52 of 1962) ;]
66[R282] [(ba) “total turnover” shall not include freight
or insurance attributable to the transport of the goods or merchandise beyond
the customs station63[R283] 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 ;]
67[R284] [(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 India ;]
70[R287] [71[R288] [(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 ;
71[R289] [(d)] “supporting manufacturer” means a person
being an Indian company or a person (other than a company) resident in India, 72[R290] [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.]
The following clause (e) shall be inserted after clause (d) in Explanation
to section 80HHC by the Finance Act, 2003, w.e.f.
1-4-2004 :
(e) “special economic zone” shall have
the meaning assigned to it in clause (viii) of the Explanation 2 to
section 10A.
73[R291] [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
authority74[R292] in this behalf or of a travel agent, there
shall, in accordance with and subject to the provisions of this section, be
allowed, 75[R293] [in computing the total income of the
assessee—
(a) for an assessment year beginning on
the 1st day of April, 2001, a deduction of a sum equal to the aggregate of—
(i) forty
per cent of the profits derived by him from services provided to foreign
tourists; and
(ii) so much of the amount not exceeding
forty per cent of the profits referred to in sub-clause (i)
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);
(b) for an assessment year beginning on
the 1st day of April, 2002, a deduction of a sum equal to the aggregate of—
(i) thirty
per cent of the profits derived by him from services provided to foreign
tourists; and
(ii) so much of the amount not exceeding
thirty per cent of the profits referred to in sub-clause (i)
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);
(c) for an assessment year beginning on
the 1st day of April, 2003, a deduction of a sum equal to the aggregate of—
(i) 76[R294] [twenty-five] per cent of the profits
derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding 76[R295] [twenty-five] per cent of the profits
referred to in sub-clause (i) 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);
(d) for an assessment year beginning on
the 1st day of April, 2004, a deduction of a sum equal to the aggregate of—
(i) 77[R296] [fifteen] per cent of the profits
derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding 77[R297] [fifteen] per cent of the profits
referred to in sub-clause (i) 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), and no
deduction shall be allowed in respect of the assessment year beginning on the
1st day of April, 2005 and any subsequent assessment year] :
78[R298] [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 79[R299] [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, 80[R300] [within such further period as the competent
authority may allow in this behalf].]
81[R301] [Explanation 82[R302] [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, 83[R303] [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).
84[R304] [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.]
(2A) Every person making payment to an assessee referred to in the Explanation
84[R305] [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 form85[R306] indicating the amount received in foreign exchange, its conversion into
Indian currency and such other particulars as may be prescribed.]
86[R307] [(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) 87[R308] [[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 ;
88[R309] [(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 89[R310] [(f)] 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.
90[R311] [(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 form91[R312] , 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 92[R313] [93[R314] [***] amount of convertible foreign exchange
received by the assessee for services provided by him to foreign tourists 94[R315] [, 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 95[R316] [1] to sub-section (2).]
96[R317] [(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 3297[R318] 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;
98[R319] [(d)
99[R320] “authorised dealer”, 1[R321] “foreign exchange” and 2[R322] “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);]
3[R323] [(e)
“eligible issue of capital” means an issue made by a public company
formed and registered in India and the entire proceeds of the issue is utilised wholly and exclusively for the purpose of carrying
on the business of—
(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 India, as the Central Government may,
by notification in the Official Gazette, specify.]
4[R324] [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 India, is engaged in the
business of,—
(i) export out of India of computer software or its transmission
from India to a place outside India by any means;
(ii) providing technical services outside
India in connection with the development or production of computer software, there
shall, in accordance with and subject to the provisions of this section, be
allowed, in computing the total income of the assessee, 5[R325] [a deduction
to the extent of the profits, referred to in sub-section (1B),] derived
by the assessee from such business :
7[R327] [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.
8[R328] [Explanation.—For the removal of
doubts, it is hereby declared that the profits and gains derived from on site
development of computer software (including services
for development of software) outside India shall be deemed to be the profits
and gains derived from the export of computer software outside India.]
(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 9[R329] [to such extent and for such years as
specified in sub-section (1B)].]
9[R330] [(1B)
For the purposes of sub-sections (1) and (1A),
the extent of deduction of profits shall be an amount equal to—
(i) eighty
per cent of such profits for an assessment year beginning on the 1st day of
April, 2001;
10[R331] [(ii) seventy per cent thereof for an
assessment year beginning on the 1st day of April, 2002;
(iii) fifty per cent thereof for an assessment
year beginning on the 1st day of April, 2003;
(iv) thirty per cent thereof for an assessment
year beginning on the 1st day of April, 2004,] and
no deduction shall be allowed in respect of the assessment year beginning on
the 1st day of April, 2005 and any subsequent assessment year.]
(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, 11[R332] [within such further period as the competent
authority may allow in this behalf].
Explanation 12[R333] [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.
12[R334] [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.
13[R335] [(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 form14[R336] , 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.
15[R337] [(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,—
*[R338] (i) the
report of an accountant16[R339] ,
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
†[R340] (ii) a certificate17[R341]
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;
18[R342] [(b) “computer software” means,—
(i) any computer programme recorded on any disc, tape, perforated media or
other information storage device; or
(ii) any customised electronic data or any product or service of
similar nature as may be notified19[R343] by the Board,
which is transmitted or exported 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 conver-tible foreign
exchange in accordance with sub-section (2), but does not include freight,
telecommunication charges or insurance attri-butable
to the delivery of the computer software outside India or expenses, if any,
incurred in foreign exchange in providing the technical services outside India;
20[R344] [(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 esta-blishment of the assessee situate outside India;
(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 attribu-table to the delivery of the computer software outside
India; and
(iii) expenses, if any, incurred in foreign exchange in providing
the technical services outside India;]
21[R345] [(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.]
22[R346] [Deduction in respect of profits and gains
from export or transfer of film software, etc.
80HHF. (1) Where an assessee, being an
Indian company 23[R347] [or a person (other than a company) resident
in India], 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, 24[R348] [a deduction to the extent of the profits,
referred to in sub-section (1A),] derived by the
assessee from such business.
25[R349] [(1A) For the purposes of
sub-section (1), the extent of deduction of profits shall be an amount equal
to—
(i) eighty
per cent of such profits for an assessment year beginning on the 1st day of
April, 2001;
26[R350] [(ii) seventy per cent thereof for an
assessment year beginning on the 1st day of April, 2002;
(iii) fifty per cent thereof for an assessment
year beginning on the 1st day of April, 2003;
(iv) thirty
per cent thereof for an assessment year beginning on the 1st day of April,
2004,] and no deduction shall be allowed in respect of the assessment year
beginning on the 1st day of April, 2005 and any subsequent assessment year.]
(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 form27[R351] , 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 esta-blishment of the assessee
situated outside India;
(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
India.]
28[R352] [Deduction in respect of profits and gains from industrial
undertakings after a certain date, etc.
29[R353] 80-I. (1) Where the gross total income of an assessee includes any profits
and gains derived from an industrial undertaking30[R354] or a ship or the business of a hotel 31[R355] [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 32[R356] [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.
33[R357] [(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, 34[R358] [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 formed35[R359] by the splitting up35[R360] , or the reconstruction35[R361] , of a business already in existence;
(ii) it is not formed by the transfer36 [R362] to a new business of machinery or plant previously
used for any purpose;
(iii) it manufactures
or produces36[R363] any article36[R364] 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 37[R365] [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 workers36[R366] 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 India;
(b) such machinery or plant is imported into India from any
country outside India; and
(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 38[R367] [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 India with a
paid-up capital of not less than five hundred thousand rupees;
(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,
39[R368] [1991].
40[R369] [(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 41[R370] [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 :
42[R371] [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:]
43[R372] [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 44[R373] [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
45[R374] [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 45[R375] [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 form46[R376] 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 47[R377] [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 47[R378] [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 47[R379] [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 47[R380] [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 48[R381] [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 47[R382] [or the business of repairs to ocean-going
vessels or other powered craft] in the manner hereinbefore specified presents
exceptional difficulties, the 48[R383] [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 48[R384] [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 47[R385] [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 49[R386] [or the business of repairs to ocean-going
vessels or other powered craft], the 50[R387] [Assessing] Officer shall, in computing the
profits and gains of the industrial undertaking or the hotel or the ship 51[R388] [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.]
52[[R389] Deductions in respect of profits and gains from
industrial undertakings or enterprises engaged in infrastructure development,
etc.52a[R390]
80-IA. 53[R391] [(1) Where
the gross total income of an assessee includes any profits and gains derived by
an undertaking or an enterprise from any business 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 of an
amount equal to hundred per cent of the profits and gains derived from such
business for ten consecutive assessment years.]
(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 54[R392] [or
develops 54a[[R393] ***] a
special economic zone referred to in clause (iii) of sub-section (4)]
or generates power or commences transmission or distribution of power :
55[R394] [Provided that
where the assessee develops or operates and maintains or develops, operates and
maintains any infrastructure facility referred to in clause (a) or
clause (b) or clause (c) of the 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.]
56[R395] [(2A) Notwithstanding anything contained in
sub-section (1) or sub-section (2), the deduction in computing the total income
of an undertaking providing telecommunication services, specified in clause (ii)
of sub-section (4), shall be hundred per cent of the profits and gains of the
eligible business for the first five assessment years commencing at any time
during the periods as specified in sub-section (2) and thereafter, thirty per
cent of such profits and gains for further five assessment years.]
(3) This section applies to 57[R396] [an 58-59[R397] [undertaking]
referred to in clause (iv) of sub-section (4)] 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 58-59[R398]
[undertaking] which is formed as a
result of the re-establishment, re-construction or revival by the assessee of
the business of any such 58-59[R399] [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 India;
(b) such
machinery or plant is imported into India from any country outside India; and
(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 58-59[R400] [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 60[R401] [of (i) developing or (ii) operating and maintaining or (iii) developing,
operating and maintaining] any infrastructure facility which fulfils all
the following conditions, namely :—
(a) it is owned by a company registered in India or by a
consortium of such companies;
61[R402] [(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
or (ii)
operating and maintaining or (iii) developing, operating and maintaining a new infrastructure
facility;]
(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.
62[R403] [Explanation.—For
the purposes of this clause, “infrastructure facility” means—
(a) a road including toll road, a bridge or a rail system;
(b) a highway project including housing or other activities
being an integral part of the highway project;
(c) a water supply project, water treatment system, irrigation
project, sanitation and sewerage system or solid waste management system;
(d) a port63[R404] ,
airport, inland waterway or inland port;]
64[R405] [(ii) any undertaking which has started or starts
providing telecommunication services, whether basic or cellular, including
radio paging, domestic satellite service, network of trunking,
broadband network and internet services on or after the 1st day of April, 1995,
but on or before the 31st day of March, 64a[R406] [2003].]
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 65[R407] [or special economic zone] notified66[R408] by the Central Government in accordance with the scheme
framed66[R409] and notified67[R410] by that Government for the period beginning on the 1st day
of April, 1997 and ending on the 31st day of March, 68[R411] [2006] :
68a[R412] [Provided that
in a case where an undertaking develops an industrial park on or after the 1st
day of April, 1999 or a special economic zone on or after the 1st day of April,
2001 and transfers the operation and maintenance of such industrial park or
such special economic zone, as the case may be, 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 as
if the operation and maintenance were not so transferred to the transferee
undertaking;]
(iv) an 69[R413] [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, 70[R414] [2006];
(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, 70[R415] [2006] :
Provided that the deduction under this section to an 71[R416] [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 prescribed72[R417] , 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) 73[R418] [The deduction] under sub-section (1)
from profits and gains derived from an 71[R419] [undertaking] shall not be admissible unless
the accounts of the 71[R420] [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 form74[R421] duly signed and verified by such accountant.
(8) Where any goods 75[R422] [or services] held for the purposes of
the eligible business are transferred to any other business carried on by the
assessee, or where any goods 75[R423] [or services] 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 75[R424] [or services] 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 75[R425] [or services] 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.
76[R426] [Explanation.—For the purposes of this
sub-section, “market value”, in relation to any goods or services, means the
price that such goods or services would ordinarily fetch in the open market.]
(9) Where any amount of profits and gains of an 77[R427] [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 77[R428] [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) 78[R429] [and (11A)] (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
formed79[R430] by splitting up79[R431] , or the reconstruction79[R432] , 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 India :
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
India;
(b) such machinery or plant is imported
into India from any country outside India; and
(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, 80[R433] [2002].
81[R434] (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, 82[R435] [2004] :
Provided
further that in the case of such industries in the North-Eastern
Region, as may be notified83[R436] 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.
The following third proviso shall be inserted after the second proviso to sub-section (4) of section 80-IB by the Finance Act, 2003, w.e.f. 1-4-2004 :
Provided also that no deduction under this sub-section shall be allowed for the assessment year beginning on the 1st day of April, 2004 or any subsequent year to any undertaking or enterprise referred to in sub-section (2) of section 80-IC.
(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 guidelines84[R437] , by notification85[R438] 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, 86-87[R439] [2004];
(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, 86-87[R440] [2004].
(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
rules88[R441] 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 India with a paid-up capital of not
less than five hundred thousand rupees;
(iii) the hotel is for
the time being approved by the prescribed autho-rity89[R442] :
Provided that any hotel approved by the prescribed
authority89[R443] before the 1st day of April, 1999 shall be
deemed to have been approved under this sub-section.
90[R444] [(7A)
The amount of deduction in the case of any
multiplex theatre shall be—
(a) fifty
per cent of the profits and gains derived, from the business of building,
owning and operating a multiplex theatre, for a period of five consecutive
years beginning from the initial assessment year in any place
:
Provided that nothing contained in this clause shall
apply to a multiplex theatre 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 Chennai, Delhi,
Mumbai or Kolkata;
(b) the deduction under clause (a) shall be allowable
only if—
(i) such multiplex theatre is constructed at any time during the
period beginning on the 1st day of April, 2002 and ending on the 31st day of
March, 2005;
(ii) the
business of the multiplex theatre 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 any building or of any machinery or of plant previously used for
any purpose;
(iii) the
assessee furnishes alongwith the return of income,
the report of an audit in such form and containing such particulars as may be
prescribed90a[R445] and duly signed and verified by an
accountant, as defined in the Explanation
below sub-section (2) of section 288, certifying that the deduction has been
correctly claimed.
(7B) The amount of deduction in the case of
any convention centre shall be—
(a) fifty
per cent of the profits and gains derived, by the assessee from the business of
building, owning and operating a convention centre, for a period of five
consecutive years beginning from the initial assessment year;
(b) the deduction under clause (a)
shall be allowable only if—
(i) such convention centre is constructed at any time during the
period beginning on the 1st day of April, 2002 and ending on the 31st day of
March, 2005;
(ii)
the business of the convention
centre 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 any building or of
any machinery or plant previously used for any purpose;
(iii) the
assessee furnishes alongwith the return of income,
the report of an audit in such form and containing such particulars as may be
prescribed, and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288,
certifying that the deduction has been correctly claimed.]
(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 India;
(b) has the main object of scientific and
industrial research and development;
(c) is for the time
being approved by the prescribed authority91 [R446] at
any time before the 1st day of April, 1999.
92[R447] [(8A)
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 ten consecutive assessment years,
beginning from the initial assessment year, if such company—
(i) is registered in India;
(ii) has
its main object the scientific and industrial research and development;
(iii) is for the time being approved by the
prescribed authority93[R448] at any time after the 31st day of March, 2000
but before the 1st day of April, 93a[R449] [2003];
(iv) fulfils such other conditions as may be prescribed94[R450] ]
(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 India, it begins commercial production of
mineral oil on or after the 1st day of April, 1997 :
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 95[R451] [before the 31st day of March, 95a[R452] [2005]] 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 96[R453] [***];
(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 Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and
one thousand and five hundred square feet at any other place.
(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 96a[R454] [31st day of March, 2003].
97[R455] [(11A) The amount of deduction in a case of an
undertaking deriving profit from the integrated business of handling, storage
and transportation of foodgrains, shall be hundred
per cent of the profits and gains derived from such 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 business in a manner that the
total period of deduction does not exceed ten consecutive assessment years and
subject to fulfilment of the condition that it begins
to operate such business on or after the 1st day of April, 2001.]
(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 section97a[R456]
(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;
98[R457] [(aa) “convention
centre” means a building of a prescribed area comprising of convention halls to
be used for the purpose of holding conferences and seminars, being of such size
and number and having such other facilities and amenities, as may be prescribed;]
(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;
99[R458] [(iv)
in the case of an undertaking engaged in the integrated business of
handling, storage and transportation of foodgrains,
means the assessment year relevant to the previous year in which the
undertaking begins such business;]
1[R459] [(v) in the case of a multiplex theatre, means the assessment year
relevant to the previous year in which a cinema hall, being a part of the said
multiplex theatre, starts operating on a commercial basis;
(vi) in
the case of a convention centre, means the assessment year relevant to the
previous year in which the convention centre starts
operating on a commercial basis;]
(d) “North-Eastern
Region” means the region comprising the States of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
2[R460] [(da)
“multiplex theatre” means a building of a prescribed area, comprising of
two or more cinema theatres and commercial shops of such size and number and
having such other facilities and amenities as may be prescribed2a[R461] ;]
(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 3[R462] ;
(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 11B4[R463] of the Industries (Development and Regulation)
Act, 1951 (65 of 1951).]
The following section 80-IC shall be inserted after section 80-IB by the Finance
Act, 2003, w.e.f. 1-4-2004 :
Special provisions in respect
of certain undertakings or enterprises in certain special category States.
80-IC. (1) Where
the gross total income of an assessee includes any profits and gains derived by
an undertaking or an enterprise from any business referred to in sub-section
(2), 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, as specified in sub-section (3).
(2) This section applies to any undertaking or enterprise,—
(a) which has begun or begins to manufacture or produce any article
or thing, not being any article or thing specified in the Thirteenth Schedule,
or which manufactures or produces any article or thing, not being any article
or thing specified in the Thirteenth Schedule and undertakes substantial
expansion during the period beginning—
(i) on
the 23rd day of December, 2002 and ending before the 1st day of April, 2012, in
any Export Processing Zone or Integrated Infrastructure Development Centre or
Industrial Growth Centre or Industrial Estate or Industrial Park or Software
Technology Park or Industrial Area or Theme Park, as notified by the Board in
accordance with the scheme framed and notified by the Central Government in
this regard, in the State of Sikkim; or
(ii) on the 7th day of January, 2003 and
ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated
Infrastructure Development Centre or Industrial Growth Centre or Industrial
Estate or Industrial Park or Software Technology Park or Industrial Area or
Theme Park, as notified by the Board in accordance with the scheme framed and
notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal;
or
(iii) on the 24th day of December, 1997 and
ending before the 1st day of April, 2007, in any Export Processing Zone or
Integrated Infrastructure Development Centre or Industrial Growth Centre or
Industrial Estate or Industrial Park or Software Technology Park or Industrial
Area or Theme Park, as notified by the Board in accordance with the scheme
framed and notified by the Central Government in this regard, in any of the
North-Eastern States;
(b) which has begun or begins to manufacture or produce any
article or thing, specified in the Fourteenth Schedule or commences any
operation specified in that Schedule, or which manufactures or produces any
article or thing, specified in the Fourteenth Schedule or commences any
operation specified in that Schedule and undertakes substantial expansion
during the period beginning—
(i) on the 23rd day of December, 2002 and ending before the 1st
day of April, 2012, in the State of Sikkim; or
(ii) on the 7th day of January, 2003 and
ending before the 1st day of April, 2012, in the State of Himachal
Pradesh or the State of Uttaranchal; or
(iii) on the 24th day of December, 1997 and ending before the 1st
day of April, 2007, in any of the North-Eastern States.
(3) The deduction referred to in sub-section (1) shall be—
(i) in
the case of any undertaking or enterprise referred to in sub-clauses (i) and (iii) of clause (a) or sub-clauses (i)
and (iii) of clause (b), of sub-section (2), one hundred per cent
of such profits and gains for ten assessment years commencing with the initial
assessment year;
(ii) in
the case of any undertaking or enterprise referred to in sub-clause (ii)
of clause (a) or sub-clause (ii) of clause (b), of
sub-section (2), one hundred per cent of such profits and gains for five
assessment years commencing 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.
(4) This section applies to any undertaking
or enterprise 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 undertaking which is formed as a
result of the re-establishment, reconstruction or revival by the assessee of
the business of any such 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.—The
provisions of Explanations 1 and 2 to sub-section (3) of
section 80-IA shall apply for the purposes of clause (ii) of this
sub-section as they apply for the purposes of clause (ii) of that
sub-section.
(5) Notwithstanding anything contained in
any other provision of this Act, in computing the total income of the assessee,
no deduction shall be allowed under any other section contained in Chapter VIA
or in section 10A or section 10B, in relation to the profits and gains of the
undertaking or enterprise.
(6) Notwithstanding anything contained in this
Act, no deduction shall be allowed to any undertaking or enterprise under this
section, where the total period of deduction inclusive of the period of
deduction under this section, or under the second proviso to sub-section (4) of
section 80-IB or under section 10C, as the case may be, exceeds ten assessment
years.
(7) 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 undertaking or enterprise under this section.
(8) For the purposes of this section,—
(i) “Industrial
Area” means such areas, which the Board, may, by notification in the Official
Gazette, specify in accordance with the scheme framed and notified by the
Central Government;
(ii) “Industrial Estate” means such estates,
which the Board, may, by notification in the Official Gazette, specify in
accordance with the scheme framed and notified by the Central Government;
(iii) “Industrial Growth Centre” means such centres, which the Board, may, by notification in the
Official Gazette, specify in accordance with the scheme framed and notified by
the Central Government;
(iv) “Industrial Park” means such parks, which
the Board, may, by notification in the Official Gazette, specify in accordance
with the scheme framed and notified by the Central Government;
(v) “Initial assessment year” means the
assessment year relevant to the previous year in which the undertaking or the
enterprise begins to manufacture or produce articles or things, or commences
operation or completes substantial expansion;
(vi) “Integrated Infrastructure Development
Centre” means such centres, which the Board, may, by
notification in the Official Gazette, specify in accordance with the scheme
framed and notified by the Central Government;
(vii) “North-Eastern States” means the States of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura;
(viii) “Software Technology Park” means any park
set up in accordance with the Software Technology Park Scheme notified by the
Government of India in the Ministry of Commerce and Industry;
(ix) “substantial
expansion” means increase in the investment in the plant and machinery by at
least fifty per cent of the book value of plant and machinery (before taking
depreciation in any year), as on the first day of the previous year in which
the substantial expansion is undertaken;
(x) “Theme Park” means such parks, which the
Board, may, by notification in the Official Gazette, specify in accordance with
the scheme framed and notified by the Central Government.
Deduction
in respect of profits and gains from newly established industrial undertakings
or ships or hotel business in certain cases.
80J. 5[R464] [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. 6[R465] [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
7[R466] [Deduction in respect of profits 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 8[R467] [or producing bio-fertilizers, bio-pesticides or other
biological agents or for producing bio-gas or] making pellets or briquettes for
fuel or organic manure, there shall be allowed, in computing the total income
of the assessee,
9[R468] [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].]
10[R469] [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 prescribed11[R470] .
Explanation.—For the purposes of this section, the
expressions,—
(i) “additional wages” means the wages paid to the new regular
workmen 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 workmen 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 212[R471]
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.
80K. 13[R472] [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.]
14[R473] Deductions in respect
of interest on certain securities, dividends, etc.
15[R474] 80L. (1) 16[R475] [Where the gross total income of an assessee,
being—
(a) an individual17[R476] ,
or
(b) a Hindu undivided family, 18[R477] [***]
(c) 19[R478] [***]includes any income by
way of—]
(i) interest on
any security of the Central Government or a State Government 20[R479] [***];
21[R480] [(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);]
22[R481] [(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 notification23[R482]
in the Official Gazette, specify in this behalf;
25[R484] [(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 26[R485] [other]
scheme framed by the Central Government
and notified27[R486] by
it in this behalf in the Official Gazette;
28[R487] [(iiia) interest
on deposits under the Post Office (Monthly Income Account) Rules, 1987;]
28a[R488] [29[R489] [(iv) dividends from any Indian company;
(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) other than the income arising from transfer of such units;
(va) income received in respect of units of a
Mutual Fund specified under clause (23D) of section 10
other than the income arising from transfer of such units;]]
(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); 30[R490] [***]
31[R491] [(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;]
32[R492] [(vii) interest on deposits with a financial
corporation which is engaged in providing long-term finance for industrial
development in India 33[R493] [and
which is eligible for deduction under clause (viii) of sub-section (1)
of section 36] 34[R494] [***];
36[R496] [(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;]
37[R497] [(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;
38[R498] [(ix) dividends from any co-operative society;] 39[R499] [or]
40[R500] [(x) interest on deposits with 41[R501] [*
* *] 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 42[R502] [and
which is eligible for deduction under clause (viii) of sub-section (1)
of section 36], 43[R503] [* * *]] 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 :—
44[R504] [(1)] in a case where the amount of such income
does not exceed in the aggregate 45[R505] [twelve]
thousand rupees, the whole of such amount; and
44[R506] [(2)] in any other case, 45[R507] [twelve] thousand rupees :
46[R508] [Provided that where any income
referred to in 47[R509] [clause (i)] 48[R510] [* * *] 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.]
51[R513] [Explanation.—For the purposes of this
sub-section, the expression “security” means a Government security52[R514] as defined in clause (2) of section 2
of the Public Debt Act, 1944 (18 of 1944).]
(2)
53[R515] [***]
54[R516] [(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.]
The following section 80LA shall be inserted after section 80L by the Finance
Act, 2003, w.e.f. 1-4-2004 :
Deduction in
respect of certain incomes of Offshore Banking Units.
80LA.
(1) Where
the gross total income of an assessee,—
(i) being a scheduled bank (not being a bank incorporated by or
under the laws of a country outside India);
(ii) owning an offshore banking unit in a
special economic zone, includes any income referred to in sub-section (2),
there shall be allowed, in accordance with and subject to the provisions of
this section, a deduction from such income, of an amount equal to—
(a) one hundred per cent of such income for
three consecutive assessment years beginning with the assessment year
relevant to the previous year in which the permission, under clause (a)
of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of
1949), was obtained, and thereafter;
(b) fifty per cent of such income for two
consecutive assessment years.
(2) The income referred to in sub-section
(1) shall be the income—
(a) from an
offshore banking unit in a special economic zone;
(b) from the business, referred to in
sub-section (1) of section 6 of the Banking Regulation Act, 1949 (10 of 1949),
with an undertaking located in a special economic zone or any other undertaking
which develops, develops and operates or operates and maintains a special
economic zone;
(c) received in convertible foreign
exchange, in accordance with the regulations made under the Foreign Exchange
Management Act, 1999 (42 of 1999).
(3) No deduction under this section shall be
allowed unless the assessee furnishes along with the return of income,—
(i) in
the prescribed form, 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; and
(ii) a copy of the
permission obtained under clause (a) of sub-section (1) of section 23 of
the Banking Regulation Act, 1949 (10 of 1949).
Explanation.—For
the purposes of this section,—
(a) “convertible
foreign exchange” shall have the same meaning assigned to it in clause (a)
of the Explanation below sub-section (4C) of section 80HHC;
(b) “Offshore Banking Unit” means a branch
of a bank in India located in the special economic zone and has obtained the
permission under clause (a) of sub-section (1) of section 23 of the
Banking Regulation Act, 1949 (10 of 1949);
(c) “scheduled
bank” shall have the same meaning assigned to it in clause (e) of
section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);
(d) “special economic zone” shall have the same meaning assigned
to it in clause (viii) of the Explanation 2 to section 10A.
54a[R517] [55[R518] [Deduction in respect of certain
inter-corporate dividends.
80M. (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 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.
(2) Where any deduction, in respect of the amount of dividend distributed
by the domestic company, has been allowed under sub-section (1) in any previous
year, no deduction shall be allowed in respect of such amount in any other
previous year.
Explanation.—For the purposes of this section, the expression “due date”
means the date for furnishing the return of income under sub-section (1) of
section 139.]]
Deduction in the case of an
Indian company in respect of royalties, etc., received from any concern in
India.
80MM. 56[R519] [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.
80N. 57[R520] [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. Omitted 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.]
58[R521] [59[R522] Deduction in
respect of royalties, etc., from certain foreign enterprises.
60[R523] 80-O. 61[R524] [Where the gross total income of an assessee,
being an Indian company 62[R525] [or a person (other than a company) who is
resident in India]], includes 63[R526] [any income received by the assessee from the
Government of a foreign State or foreign enterprise64[R527] in consideration for the use 64[R528] outside India of any patent, invention, design
or registered trade mark] 65[R529] [***] 66[R530] [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, 67[R531] [a deduction of an amount equal to—
(i) forty per cent for an assessment year
beginning on the 1st day of April, 2001;
(ii) thirty per cent for an assessment year beginning on the 1st
day of April, 2002;
(iii) twenty per cent for an assessment year beginning on the 1st
day of April, 2003;
(iv) ten per cent for an assessment year beginning on the 1st day
of April, 2004, of the income so received in, or brought into, India, in
computing the total income of the assessee and no deduction shall be allowed in
respect of the assessment year beginning on the 1st day of April, 2005 and any
subsequent assessment year]] :
69[R533] [Provided 70[R534] [***] that such income is received in India
within a period of six months from the end of the previous year, or 71[R535] [within such further period as the competent
authority may allow in this behalf]:]
72[R536] [Provided further that no
deduction under this section shall be allowed unless the assessee furnishes a
certificate, in the prescribed form73[R537] , along with the return of income, certifying
that the deduction has been correctly claimed in accordance with the provisions
of this section.]
74[R538] [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;
75[R539] [(ii) “foreign enterprise” means a person who is
a non-resident;]]
76[R540] [(iii) services rendered or agreed to be rendered
outside India shall include services rendered from India but shall not include
services rendered in India;]
77[R541] [(iv) “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.]
79[R543] [Deduction in respect of income of
co-operative societies.
80[R544] 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 facilities81 [R545] to
its members81[R546]
or
(ii) a cottage industry81a[R547] ,
or
82[R548] [(iii) the marketing81a[R549] 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, 83[R550] [or]
83[R551] [(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 activities84[R552] :
85[R553] [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;]
86[R554] [(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 company87[R555] 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 activities88[R556]
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 attributable89[R557]
to such activities as 90[R558] [does
not exceed,—
(i) where such
co-operative society is a consumers’ co-operative society, 91[R559] [one
hundred] thousand rupees; and
(ii) in any other case, 92[R560] [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 warehouses93 [R561] for
storage, processing or facilitating the marketing of commodities93[R562] ,
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 94[R563] [***]
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 95[R564] [***] 96[R565] [section 80HH] 97[R566] [or section 80HHA] 98[R567] [or section 80HHB] 99[R568] [or section 80HHC] 1[R569] [or section 80HHD] 2[R570] [or section 80-I] 3[R571] [or section 80-IA] or section 4[R572] 80J 5[R573] [***] 6[R574] [***], 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 7[R575] [***] 8[R576] [section 80HH,] 9[R577] [section 80HHA,] 10[R578] [section 80HHB,] 11[R579] [section 80HHC,] 12[R580] [section 80HHD,] 13[R581] [section 80-I,] 14[R582] [section 80-IA,] 15[R583] [16[R584] [section 80J17[R585] and section 80JJ]].]
19[R587] [Deduction in respect of profits and gains from the business of
publication of books.
20[R588] 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 80J21[R589] 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 80J21 [R590] 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.
80QQ. 22[R591] [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.]
23[R592] [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 India, being an author, the gross total income of the previous year relevant
to the assessment year 24[R593] [commencing on—
(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 Constitution25[R594]
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.]
The following section
80QQB shall be inserted after section 80QQA by the Finance Act, 2003, w.e.f. 1-4-2004 :
Deduction
in respect of royalty income, etc., of authors of certain books other than
text-books.
80QQB. (1) Where, in the case of an
individual resident in India, being an author,
the gross total income 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 being
a work of literary, artistic or scientific nature, or of royalty 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, computed in the manner specified in sub-section (2).
(2) The deduction under this section shall be
equal to the whole of such income referred to in sub-section (1), or an amount
of three lakh rupees, whichever is less :
Provided that where the income by way of such
royalty or the copyright fee, is not a lump sum consideration in lieu of all
rights of the assessee in the book, so much of the income, before allowing
expenses attributable to such income, as is in excess of fifteen per cent of
the value of such books sold during the previous year shall be ignored :
Provided further that in respect of any income earned from
any source outside India, so much of the income shall be taken into account for
the purpose of this section 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 in which such income is earned or within such further
period as the competent authority may allow in this behalf.
(3) No deduction under this section shall be
allowed unless the assessee furnishes a certificate in the prescribed form and
in the prescribed manner, duly verified by any person responsible for making
such payment to the assessee as referred to in sub-section (1), along with the
return of income, setting forth such particulars as may be prescribed.
(4) No deduction under this section shall be
allowed in respect of any income earned from any source outside India, unless
the assessee furnishes a certificate, in the prescribed form from the
prescribed authority, along with the return of income in the prescribed manner.
(5) Where a deduction for any previous year
has been claimed and allowed in respect of any income referred to in this
section, no deduction in respect of such income shall be allowed under
any other provision of this Act in any assessment year.
Explanation.—For
the purposes of this section,—
(a) “author”
includes a joint author;
(b) “books” shall not include brochures,
commentaries, diaries, guides, journals, magazines, newspapers, pamphlets,
text-books for schools, tracts and other publications of similar nature, by
whatever name called;
(c) “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;
(d) “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.
26[R595] [Deduction in respect of remuneration from certain foreign sources in
the case of professors, teachers, etc.27[R596]
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 or 28[R597] [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 29[R598] [allowed, in computing the total income of the
individual, 30[R599] [a deduction from such remuneration of an
amount equal to—
(i) sixty
per cent of such remuneration for an assessment year beginning on the 1st day
of April, 2001;
(ii) forty-five per cent of such remuneration
for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent of such remuneration for
an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent of such remuneration for
an assessment year beginning on the 1st day of April, 2004, 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 within such further
period as the competent authority may allow in this behalf and no deduction
shall be allowed in respect of the assessment year beginning on the 1st day of
April, 2005 and any subsequent assessment year] :
31[R600] [Provided that no deduction under this
section shall be allowed unless the assessee furnishes a certificate, in the
prescribed form32[R601] , along with the
return of income, certifying that the deduction has been correctly claimed in
accordance with the provisions of this section.]]
34[R603] [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.]
35[R604] [Deduction in respect of professional
income from foreign sources in certain cases.
36[R605] 80RR. Where the gross total income of an
individual resident in India, being an author, playwright, artist, 37[R606] [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, 38[R607] [there shall be allowed, in computing the
total income of the individual, 39[R608] [a deduction from such income of an amount
equal to—
(i) sixty
per cent of such income for an assessment year beginning on the 1st day of
April, 2001;
(ii) forty-five per cent of such income for
an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent of such income for an
assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent of such income for an assessment
year beginning on the 1st day of April, 2004, 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 within such further period as
the competent authority may allow in this behalf and no deduction shall be
allowed in respect of the assessment year beginning on the 1st day of April,
2005 and any subsequent assessment year] :
40[R609] [Provided that no deduction under this
section shall be allowed unless the assessee furnishes a certificate, in the
prescribed form41[R610] , along with the
return of income, certifying that the deduction has been correctly claimed in
accordance with the provisions of this section.]]
42[R611] [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.]
43[R612] [Deduction in respect of remuneration
received for services rendered outside India.
44[R613] 80RRA. (1) Where the gross total income of an
individual who is a citizen of India includes any remuneration45[R614] received by him in foreign currency from any
employer45[R615] (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, 46[R616] [a deduction from such remuneration of an
amount equal to—
(i) sixty
per cent of such remuneration for an assessment year beginning on the 1st day
of April, 2001;
(ii) forty-five per
cent of such remuneration for an assessment year beginning on the 1st day of
April, 2002;
(iii) thirty per cent
of such remuneration for an assessment year beginning on the 1st day of April,
2003;
(iv) fifteen per cent
of such remuneration for an assessment year beginning on the 1st day of April,
2004, 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 within such further period as the competent authority may allow in this
behalf and no deduction shall be allowed in respect of the assessment year
beginning on the 1st day of April, 2005 and any subsequent assessment year] :
47[R617] [Provided that no deduction under this
sub-section shall be allowed unless the assessee furnishes a certificate, in
the prescribed form48[R618] , 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 India are approved in this behalf by the Central
Government or the prescribed authority.
Explanation.—For the purposes of this section,—
(a) “foreign
currency”50[R620] 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 India;
(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 prescribe51[R621] in this behalf, who is employed in a capacity in which such specialised knowledge and experience are actually utilised;]
52[R622] [(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.]
The following section 80RRB shall be inserted
after section 80RRA by the Finance Act, 2003, w.e.f.
1-4-2004 :
Deduction in respect of
royalty on patents.
80RRB. (1) Where
in the case of an assessee, being an individual, who is—
(a) resident in India;
(b) a patentee;
(c) in
receipt of any income by way of royalty in respect of a patent registered on or
after the 1st day of April, 2003 under the Patents Act, 1970 (39 of 1970), and his
gross total income of the previous year includes royalty, there shall, in
accordance with and subject to the provisions of this section, be allowed a
deduction, from such income, of an amount equal to the whole of such income or
three lakh rupees, whichever is less:
Provided that where a compulsory licence is granted
in respect of any patent under the Patents Act, 1970 (39 of 1970), the income
by way of royalty for the purpose of allowing
deduction under this section shall not exceed the amount of royalty under the
terms and conditions of a licence settled by the Controller under that Act :
Provided further that in respect of any
income earned from any source outside India, so much of the income, shall be
taken into account for the purpose of this section 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 in which such income is earned
or within such further period as the competent authority referred to in clause
(c) of the Explanation to section 80QQB may
allow in this behalf.
(2) No deduction under this section shall be
allowed unless the assessee furnishes a certificate in the prescribed form,
duly signed by the prescribed authority, along with the return of income
setting forth such particulars as may be prescribed.
(3) No deduction under this section shall be
allowed in respect of any income earned from any source outside India, unless
the assessee furnishes a certificate in the prescribed form, from the authority
or authorities, as may be prescribed, along with the return of income.
(4) Where
a deduction for
any previous year has been claimed and allowed in respect of any income
referred to in this section, no deduction in respect of such income shall be
allowed, under any other provision of this Act in any assessment year.
Explanation.—For the purposes of this section,—
(a) “Controller”
shall have the meaning assigned to it in clause (b)
of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970)52a[R623] ;
(b) “lump sum” includes an advance payment on account of such
royalties which is not returnable;
(c) “patent” means a patent (including a patent of addition)
granted under the Patents Act, 1970 (39 of 1970);
(d) “patentee”
means the person, being the true and first inventor of the invention, whose
name is entered on the patent register as the patentee, in accordance with the
Patents Act, 1970 (39 of 1970), and includes every such person, being the true
and first inventor of the invention, where more than one person is registered
as patentee under that Act in respect of that patent;
(e) “patent of addition” shall have the meaning assigned to it in
clause (q)
of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970) 52b[R624] ;
(f) “patented article” and “patented process” shall have the
meanings respectively assigned to them in clause (o) of sub-section (1) of section 2 of the
Patents Act, 1970 (39 of 1970) 52b[R625] ;
(g) “royalty”,
in respect of a patent, means consideration (including any lump sum
consideration but excluding any consideration which would be the income of the
recipient chargeable under the head “Capital gains” or consideration for sale
of product manufactured with the use of patented process or of the patented
article for commercial use) for—
(i) the transfer of all or any rights (including the granting
of a licence) in respect of a patent; or
(ii) the imparting
of any information concerning the working of, or the use of, a patent; or
(iii) the use of any
patent; or
(iv) the rendering of
any services in connection with the activities referred to in sub-clauses (i) to (iii);
(h) “true and first inventor” shall have the meaning assigned to
it in clause (y)
of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970)52b[R626] .
Deduction in
respect of compensation for termination of managing agency, etc., in the case
of assessees other than companies.
80S. 53[R627] [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.
80T. 54[R628] [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.
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 and amended by the Finance
(No. 2) Act, 1980, w.e.f. 1-4-1981.]
56[R630] [Deduction in the case of permanent physical disability (including
blindness).
57[R631] 80U. 58[R632] 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 rules59[R633] 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 60[R634] [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
section 80DD.]
The following section 80U shall be substituted for the existing section
80U by the Finance Act, 2003, w.e.f. 1-4-2004 :
Deduction in case of a person with disability.
80U. (1) In computing the total income of an
individual, being a resident, who, at any time during the previous year, is
certified by the medical authority to be a person with disability, there shall
be allowed a deduction of a sum of fifty thousand rupees :
Provided that where such individual is a person
with severe disability, the provisions of this sub-section shall have effect
as if for the words “fifty thousand rupees”, the words “seventy-five thousand
rupees” had been substituted.
(2) Every
individual claiming a deduction under this section shall furnish a copy of the
certificate issued by the medical authority in the form and manner, as may be
prescribed, along with the return of income under section 139, in respect of
the assessment year for which the deduction is claimed :
Provided that where the condition of disability
requires reassessment of its extent after a period stipulated in the aforesaid
certificate, no deduction under this section shall be allowed for any
assessment year relating to any previous year beginning after the expiry of the
previous year during which the aforesaid certificate of disability had
expired, unless a new certificate is obtained from the medical authority in the
form and manner, as may be prescribed, and a copy thereof is furnished along
with the return of income under section 139.
Explanation.—For the purposes of this section,—
(a) “disability” shall have the meaning
assigned to it in clause (i)
of section 2 of the Persons with Disabilities (Equal Opportunities, Protection
of Rights and Full Participation) Act, 1995 (1 of 1996)60a[R635] ;
(b) “medical authority” means the medical
authority as referred to in clause (p)
of section 2 of the Persons with Disabilities (Equal Opportunities, Protection
of Rights and Full Participation) Act, 1995 (1 of 1996)60b[R636] ;
(c) “person with
disability” means a person referred to in clause (t) of section 2 of the Persons with
Disabilities (Equal Opportunities, Protection of Rights and Full Participation)
Act, 1995 (1 of 1996)60b[R637] ;
(d) “person with
severe disability” means a person with eighty per cent or more of one or more
disabilities, as referred to in sub-section (4) of section 56 of the Persons
with Disabilities (Equal Opportunities, Protection of Rights and Full Participation)
Act, 1995 (1 of 1996)60b[R638] .
Deduction from
gross total income of the parent in certain cases.
80V. 61[R639] [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.
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]For the meaning of the term “deductions
[R4]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.”
[R5].Inserted
by the Election and Other Related Laws (Amendment) Act, 2003, w.e.f. 11-9-2003.
[R6]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R7]Now omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.
[R8]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.
[R9]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.”
[R10]Inserted
by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R11]For relevant case laws
[R12]Words “(except section 80M)” omitted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R13]Inserted
by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 in
place of original section 80D.
[R14]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R15]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 ;
[R16]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969.
[R17]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);’
[R18]Words
“or under section 280-O” omitted by the Finance Act, 1988, w.e.f.
1-4-1988.
[R19]Words
“and without applying the provisions of section 64” omitted by the Taxation
Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1968.
[R20]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;’
[R21]Omitted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R22]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);’
[R23]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R24]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R25]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.
[R26]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 India and the issue is wholly and exclusively
for the purposes of carrying on the business of—
(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 India for residential purposes :
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.
[R27]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.
[R28]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
[R30]Omitted by the Finance
Act, 1994, w.r.e.f. 1-4-1988. Prior to its omission,
clause (c), as substituted by the Finance Act, 1988, w.e.f. 1-4-1988, 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.”
[R31]For notified scheme, see Income-tax Act.
[R32]“(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
[R33]For notified annuity plans, see Income-tax Act.
[R34]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.’
[R35]Inserted
by the Finance Act, 1992, w.e.f. 1-4-1993.
[R36]Substituted for “under the National Savings Scheme” by the Finance (No. 2) Act, 1991, w.e.f. 1-10-199
[R37]Inserted
by the Finance Act, 1992, w.e.f. 1-4-1993.
[R38]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1991.
[R39]Substituted
for “under the National Savings Scheme” by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991.
[R40]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1991.
[R41]Word “or” omitted by the Finance Act, 1994, w.r.e.f. 1-4-1991
[R42]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.”
[R43]Inserted by the Finance Act, 1992, w.e.f. 1-4-1993
[R44]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R45]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R46]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 dependants was 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.”
[R47]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.
[R48]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.
[R49]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R50]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 :”
[R51]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, proviso read as under :
“Provided that such insurance shall be in accordance with a scheme 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.”
[R52]For a
scheme providing for hospitalisation and domiciliary hospitalisation benefit, see Direct Taxes Circulars.
[R53]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R54]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. Deduction in respect of
medical treatment, etc., of handicapped dependants—(1) 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 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 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).’
[R55]See Circular No. 775, dated 26-3-1999.
[R56]Substituted by the Finance Act, 1999, w.e.f. 1-4-2000. Prior to its substitution, sub-section
(1), as substituted by the Finance (No. 2) Act, 1998, w.e.f.
1-4-1999, read as under :
“(1) In computing the total income of an
assessee who is a resident of India, being an individual or a Hindu undivided
family, there shall be deducted, in accordance with and subject to the provisions
of this section, the amount—
(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 India subject to the conditions
specified in sub-section (2) and approved by the Board in this behalf for the
maintenance of handicapped dependant,
out of
his income chargeable to tax :
Provided that no such amount shall exceed forty thousand rupees in the aggregate under clause (a) or clause (b) or both.”
[R57]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002.
[R58]See rule 11A.
[R59]See Direct Taxes Manual, Volume 3.
[R60]See Appendix I for definition of relevant terms under Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
[R61]See Appendix I for definition of relevant terms under Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
[R62]See Appendix
I for definition of
relevant terms under Persons with Disability (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995.
[R63]See Appendix I for definition of relevant terms under Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
[R64]See Direct Taxes Manual, Volume 3.
[R65]Inserted
by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R66]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R67]See rule
11DD for specified diseases.
[R68]Substituted
for “fifteen” by the Finance Act, 1999, w.e.f.
1-4-2000.
[R69]See Form 10-I.
[R70]Prescribed authority is ‘any doctor registered with Indian Medical Association with Post-graduate qualifications’.
[R71]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R72]Substituted by the
Finance Act, 1999, w.e.f. 1-4-2000. Prior to
its substitution, Explanation, as inserted by the Finance (No. 2) Act,
1996, w.e.f. 1-4-1997, read as under
:
“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.”
[R73]For definition of “insurer” under section 2(9) of the Insurance Act, 1938, see Appendix One.
[R74]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.
[R75]Substituted
for “twenty-five” by the Finance Act, 2000, w.e.f.
1-4-2001.
[R76]For notified institutions and Circular No. 688, dated 23-8-1994
[R77]For notified institutions and Circular No. 688, dated 23-8-1994
[R78]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.”
[R79]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.
[R80]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, 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, Circular No. 752, dated 26-3-1997; Circular No. 777, dated 1-7-1999, Circular No. 782, dated 13-11-1999, Circular No. 4/2001, dated 12-2-2001 and Circular No. 7/2001, dated 21-3-2001.
[R81]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.
[R82]For the meaning of the expression “in computing the total income of an assessee”
[R83]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”
[R84]Inserted by the Income-tax (Amendment) Act, 1999, w.e.f. 1-4-2000.
[R85]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.
[R87]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R91]Inserted by the Taxation Laws (Amendment) Act, 2001, w.r.e.f. 3-2-2001
[R92]Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
[R95]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-4-1997.
[R96]Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R101]Inserted by the Taxation Laws (Amendment) Act, 2001, w.r.e.f. 3-2-2001.
[R103]Inserted by the Income-tax (Amendment) Act, 1976, w.r.e.f. 9-9-1975.
[R104]Inserted by the Income-tax (Amendment) Act, 1989, w.e.f. 24-1-1989
[R105]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R106]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.
[R107]Inserted
by the Finance Act, 1985, w.e.f. 1-4-1985.
[R108]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R109]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
[R110]Inserted by the Finance Act, 1993, w.e.f. 1-4-1994.
[R111]For notified educational institution, refer Direct Taxes Circulars
[R112]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.
[R113]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994.
[R115]Inserted by the Finance Act,
1995, w.e.f. 1-4-1996.
[R116]Inserted
by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R117]Inserted by the Income-tax (Amendment) Act, 1996, w.e.f. 14-11-1996.
[R118]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-4-1997.
[R119]Inserted
by the Finance Act, 1997, w.e.f. 1-4-1998.
[R120]Sub-clauses
(iiihg) and (iiihh)
inserted by the Finance (No. 2) Act, 1998, w.e.f.
1-4-1999.
[R121]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R122]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002
[R123]Inserted
by the Finance Act, 1976, w.e.f. 1-4-1977.
[R124]Sub-clauses (vi) and (vii) inserted by the Finance Act, 1976, w.e.f. 1-4-1977.
[R125]Substituted by the
Finance Act, 2002, w.e.f. 1-4-2003. Prior to
its substitution, sub-clause (vi) read as under :
“(vi) any authority referred to in clause (20A) of section 10; or”
[R126]Inserted
by the Finance Act, 1995, w.e.f. 1-4-1995.
[R127]For complete list of places of public worship, etc., notified under this clause, see Direct Taxes Circulars.
[R128]Inserted by the Finance Act, 2000, w.e.f. 1-4-2001.
[R129]Substituted for “as notified by the Central Government under clause (23) of section 10” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R130]See rule 18AAAAA.
[R131]Inserted by the Taxation Laws (Amendment) Act, 2001, w.r.e.f. 3-2-2001.
[R132]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.”
[R133]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, 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).”
[R134]Inserted
by the Finance Act, 1995, w.e.f. 1-4-1995.
[R135]Substituted
for “clause (b)” by the Finance Act, 2000, w.e.f.
1-4-2001.
[R136]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
[R137]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
[R138]Inserted
by the Finance Act, 1973, w.e.f. 1-4-1974.
[R139]Words “or clause (23)” omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R140]Inserted by the Finance Act,
1987, w.e.f. 1-4-1988.
[R142]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R143]Word
“and” omitted by the Finance Act, 1994, w.e.f.
1-4-1994.
[R144]For
text of section 25 of the Companies Act, 1956, see Appendix One.
[R145]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.
[R146]Words “or is an institution approved by the Central Government for the purposes of clause (23) of section 10,” omitted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R147]Inserted by the Finance Act, 1994, w.e.f. 1-4-1994.
[R148]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991.
[R149]See rule 11AA and Form No. 10G.
[R150]Substituted for “three” by the Finance Act, 1993, w.e.f. 1-4-1993.
[R151]Inserted by the Finance (No. 2) Act, 1980, w.r.e.f. 1-4-1962.
[R152]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R153]Inserted
by the Taxation Laws (Amendment) Act, 2001, w.r.e.f.
3-2-2001.
[R154]Substituted for “sub-section” by the Finance Act, 2002, w.r.e.f. 3-2-2001.
[R155]Substituted for “2003” by the Finance Act, 2003, w.r.e.f. 3-2-2001. Earlier, “2003” was substituted for “2002” by the Finance Act, 2002, w.r.e.f. 3-2-2001.
[R156]Substituted by the
Finance Act, 2002, w.r.e.f. 3-2-2001. Prior to its
substitution, clause (iv) read as under:
“(iv) the amount of donation remaining unutilised on the 31st day of March, 2002 is transferred to the Prime Minister’s National Relief Fund on or before the 31st day of March, 2002;”
[R157]Substituted for “2003” by the Finance Act, 2003, w.r.e.f. 3-2-2001. Earlier, “2003” was substituted for “2002” by the Finance Act, 2002, w.r.e.f. 3-2-2001.
[R158]Substituted
for “2003” by the Finance Act, 2003, w.r.e.f. 3-2-2001.
Earlier, “2003” was substituted for “2002” by the Finance Act, 2002, w.r.e.f. 3-2-2001.
[R159]Prescribed authority under rule 18AAAA, is Director General of Income-tax (Exemptions)
[R160]See rule 18AAAA and Form No.10AA.
[R161]Substituted for “2003” by the Finance Act, 2003, w.r.e.f. 3-2-2001. Earlier, “2003” was substituted
for “2002” by the Finance Act, 2002, w.r.e.f.
3-2-2001.
[R162]Substituted by the Finance Act, 1970, w.e.f. 1-4-1971.
[R163]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.
[R164]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R165]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R166]Substituted by the Finance Act, 2002, w.e.f. 1-4-2003. Prior to its substitution, Explanation 4,
as inserted by the Finance Act, 1973, w.e.f.
1-4-1974, later on omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and restored to its original provision by
the Direct Tax Laws (Amendment) Act, 1989, w.e.f.
1-4-1989, read as under :
“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 India for a charitable purpose.”
[R167]For notified games and sports, see Income-tax Act.
[R168]Inserted by the Finance Act, 1976, w.e.f. 1-4-1976.
[R169]Omitted by the Finance Act, 1968, w.e.f. 1-4-1969.
[R170]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 the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, was omitted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R171]See also Circular No. 327, dated 8-2-1982.
[R172]Rule 11B provides that to claim deduction under section 80GG, the assessee should file a declaration in Form No. 10BA.
[R173]Substituted
for “under sub-clause (i) of clause (a)
or, as the case may be, clause (b) of sub-section (2) of section 23” by
the Finance Act, 2001, w.e.f. 1-4-2002.
[R174]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
[R175]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R176]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.”
[R177]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R178]Inserted by the Finance Act, 1982, w.e.f. 1-6-1982.
[R179]Substituted
for “any sum paid by the assessee in the previous year” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R180]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1991.
[R181]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991
[R182]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991.
[R183]Substituted
for “any sum paid by the assessee in the previous year” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R184]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.
[R185]Inserted by the Finance Act,
1995, w.e.f. 1-4-1996.
[R186]Inserted
by the Election and Other Related Laws (Amendment) Act, 2003, w.e.f. 11-9-2003.
[R187]Inserted
by the Election and Other Related Laws (Amendment) Act, 2003, w.e.f. 11-9-2003.
[R188]Inserted
by the Direct Taxes (Amendment) Act, 1974, w.e.f.
1-4-1974.
[R189]See
also Circular No. 484, dated 1-5-1987. For details, see Direct Taxes Circulars.
[R190]For the meaning of the terms/expressions “derived”, “industrial undertaking”, “manufacture or produce” and “articles”,
[R191]For the meaning of the terms/expressions “derived”, “industrial undertaking”, “manufacture or produce” and “articles”
[R192]For the meaning of the terms/expressions “derived”, “industrial undertaking”, “manufacture or produce” and “articles”
[R193]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1990.
[R194]For the meaning of the term “workers”
[R195]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1990.
[R196]See
rule 18B and Form No. 10C for form of audit report.
[R197]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R198]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R199]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R200]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R201]Omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976.
[R202]Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R203]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R204]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.’
[R205]For notified backward areas, see Direct Taxes Circulars.
[R206]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978
[R207]For relevant case laws
[R208]Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.
[R209]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
[R210]Inserted
by the Finance Act, 1981, w.e.f. 1-4-1981.
[R211]See rule 18BB and Form No. 10CC for form of audit report.
[R212]Inserted
by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R213]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 ;’
[R214]For
specified areas, see
Direct Taxes Circulars.
[R215]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.”
[R216]For
text of section 11B of the Industries (Development and Regulation) Act, 1951, see Appendix
One.
[R217]Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.
[R218]See also Circular No. 563, dated 23-5-1990, Circular No. 575, dated 31-8-1990 and Circular No. 711, dated 24-7-1995.
[R219]For the meaning of the expression “business of the execution of a foreign project”
[R220]For the meaning of the expression “business of the execution of a foreign project”
[R221]For the meaning of the expression “business of the execution of a foreign project”
[R222]Substituted for “a deduction from such profits and gains of an amount equal to fifty per cent thereof” by the Finance Act, 2000, w.e.f. 1-4-2001. Prior to its substitution, the quoted portion was amended by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
[R223]See rule 17D.
[R224]See
rule 18BBA(1) and Form No. 10CCA for form of audit report.
[R225]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R226]See rule 18BBA(1B) and Form No. 10CCAH
[R227] Substituted for “fifty per cent of the profits and gains referred to in sub-section (1)” by the Finance Act, 2000, w.e.f. 1-4-2001. Earlier the quoted portion was amended by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
[R228]Substituted
for “fifty per cent of the profits and gains referred to in sub-section (1)” by
the Finance Act, 2000, w.e.f. 1-4-2001. Earlier the quoted portion was amended by the
Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
[R229]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.
[R230]Substituted
for “fifty per cent of the profits and gains referred to in sub-section (1)” by
the Finance Act, 2000, w.e.f. 1-4-2001. Earlier the
quoted portion was amended by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
[R231]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R232]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R233]For the meaning of the expression “any assessment year”
[R234]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R235]Substituted for “a deduction from such profits and gains of an amount equal to fifty per cent thereof” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R236]See rule 18BBA(1A) and Form No. 10CCAA.
[R237]Substituted for “fifty per cent of the profits and gains referred to in sub-section (1)” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R238]Substituted for “fifty per cent of the profits and gains referred to in sub-section (1)” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R239]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).’
[R240]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, Circular No. 729, dated 1-11-1995 and Circular No. 1/2001, dated 17-1-2001.
[R241]Substituted by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to its substitution, sub-section (1), was amended by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987.
[R242]Substituted for “a deduction of the profits” by the Finance Act, 2000, w.e.f. 1-4-2001. Earlier the quoted portion was amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R243]For the meaning of term “profits
[R244]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.
[R245]Substituted for “a deduction of the profits” by the Finance Act, 2000, w.e.f. 1-4-2001. Earlier the quoted portion was amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R246]Inserted
by the Finance Act, 2000, w.e.f. 1-4-2001.
[R247]Substituted by the
Finance Act, 2001, w.e.f. 1-4-2002. Prior to their
substitution, clauses (ii), (iii) and (iv) read as under :
“(ii) sixty per cent
thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) forty per cent
thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) twenty per cent thereof for an assessment year beginning on the 1st day of April, 2004,”
[R248]For the meaning of the expression “sale proceeds .... assessee”
[R249]Substituted for “receivable” by the Finance Act, 1990, w.e.f. 1-4-1991.
[R250]Inserted
by the Finance Act, 1990, w.r.e.f. 1-4-1989.
[R251]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991.
[R252]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”
[R253]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R254] For meaning of the term “minerals”,
[R255]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R256]Inserted,
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R257]For
text of section 50 of the Customs Act, 1962, see Appendix One.
[R258]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.’
[R259] Inserted by the Finance Act, 1992, w.e.f. 1-4-1992.
[R260]For the meaning of the term “profits”
[R261]For the meaning of the term “business”
[R262]Inserted by the Finance Act, 1992, w.e.f. 1-4-1992.
[R263]Inserted
by the Finance Act, 1992, w.e.f. 1-4-1992.
[R264]Inserted
by the Finance Act, 1992, w.e.f. 1-4-1992.
[R265]Inserted
by the Finance Act, 1988, w.e.f. 1-4-1989.
[R266]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.
[R267]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.
[R268]Inserted
by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1987.
[R269]See
rule 18BBA(3) and Form No. 10CCAC for form of report
of accountant.
[R270]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.
[R271]Inserted
by the Finance Act, 1988, w.e.f. 1-4-1989.
[R272] See rule 18BBA(3) and Form No. 10CCAC for form of report of accountant
[R273]Substituted
for “income” by the Direct Tax Laws (Amendment) Act, 1989, w.e.f.
1-4-1989.
[R274]See rule 18BBA(2) and Form No. 10CCAB for form of certificate from export/trading house to supporting manufacturer.
[R275]Inserted by the Finance Act, 1999, w.r.e.f. 1-4-1992.
[R276]Inserted by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1986.
[R277]See Circular No. 624, dated 23-1-1992
[R278]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 ;
[R279]Substituted
for “receivable” by the Finance Act, 1990, w.e.f.
1-4-1991.
[R280]Inserted by the Finance Act, 1990, w.e.f. 1-4-1991.
[R281]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
[R282]Inserted
by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1987.
[R283]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 ;’
[R284]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R285]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 ;
[R286]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.
[R287]Inserted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R288]Relettered by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R289]Relettered by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R290]Substituted for “manufacturing goods” by the Finance Act, 1990, w.e.f. 1-4-1991.
[R291]Inserted
by the Direct Tax Laws (Amendment) Act, 1989, w.e.f.
1-4-1989.
[R292]The
prescribed authority under rule 18BBA(5) is Director General,
Directorate General of Tourism, Government of India.
[R293]Substituted for the portion beginning with the words “in computing the total income of the assessee, a deduction of a sum equal to the aggregate of—” and ending with the words “manner laid down in sub-section (4) :” by the Finance Act, 2000, w.e.f. 1-4-2001. Prior to its substitution, the quoted portion read as under :
“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) :”
[R294]Substituted
for “twenty” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R295]Substituted for “twenty” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R296]Substituted
for “ten” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R297]Substituted
for “ten” by the Finance Act, 2002, w.e.f. 1-4-2003.
[R298]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991.
[R299]Substituted for “by the assessee in convertible foreign exchange” by the Finance Act, 1990, w.e.f. 1-4-1991.
[R300]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.”
[R301]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R302]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R303]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.
[R304]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R305]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R306]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
[R307]Substituted by the Finance Act, 1990, w.e.f. 1-4-1991
[R308]Inserted
by the Finance Act, 1994, w.e.f. 1-4-1995.
[R309]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R310]Substituted for “(e)” by the Finance Act, 1999, w.e.f. 1-4-2000.
[R311]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R312]See rule 18BBA(4) and Form No. 10CCAD for form of report of accountant.
[R313]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.
[R314]Words “aggregate of the” omitted by the Finance Act, 1994, w.e.f. 1-4-1995.
[R315]Inserted
by the Finance Act, 1994, w.e.f. 1-4-1995.
[R316]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R317]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R318]Section 32 has been omitted by the Foreign Exchange Regulation (Amendment) Act, 1993, w.r.e.f. 8-1-1993.
[R319]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R320]Section 2(b) of
the Foreign Exchange Regulation Act, 1973, defines “authorised
dealer” as under:
‘(b) “authorised dealer” means a person
for the time being authorised under section 6 to deal
in foreign exchange;’
For the definition of term under FEMA, 1999, see Appendix I
[R321]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 ;’
For the definition of term under FEMA, 1999, see Appendix I.
[R322]Section 2(k) of the Foreign Exchange Regulation Act, 1973, defines “Indian currency” as under:
‘(k) “Indian currency” means currency which is
expressed or drawn in Indian rupees but does not include special bank notes and
special one rupee notes issued under section 28A of the Reserve Bank of India
Act, 1934 (20 of 1934);’
For the definition of term under FEMA, 1999, see Appendix I.
[R323]Inserted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R324]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R325]Substituted for “a deduction of the profits” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R326]Proviso omitted by the Finance Act, 1995, w.e.f. 1-4-1996. Prior to its omission, the proviso, was amended by the Finance Act, 1993, w.e.f. 13-5-1993 and the Finance Act, 1994, w.e.f. 13-5-1994.
[R327]Proviso
and sub-section (1A) inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R328]Inserted by the Finance Act, 2001, w.e.f. 1-4-2001.
[R329]Inserted by the Finance Act, 2000, w.e.f. 1-4-2001.
[R330]Inserted by the Finance Act, 2000, w.e.f. 1-4-2001.
[R331]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to their substitution, clauses (ii),
(iii) and (iv) read as under :
“(ii) sixty
per cent of such profits for an assessment year beginning on the 1st day of
April, 2002;
(iii) forty
per cent of such profits for an assessment year beginning on the 1st day of
April, 2003;
(iv) twenty per cent of such profits for an assessment year beginning on the 1st day of April, 2004,”
[R332]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 was inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R333]Inserted by the Finance Act, 1999, w.e.f. 1-6-1999.
[R334]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R335]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R336]See
rule 18BBA(7) and Form No. 10CCAF for form of report
of accountant.
[R337]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R338] *“(i)” should be read as “(a)”.
[R339]See
rule 18BBA(7) and Form No. 10CCAF for form of report
of accountant.
[R340] †“(ii)” should be read as “(b)”.
[R341]See rule 18BBA(8) and Form No. 10CCAG.
[R342]Substituted by the
Finance Act, 2000, w.e.f. 1-4-2001. Prior to its
substitution, item (b), as amended by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999, read as under :
‘(b) “computer software” means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme or any customised electronic data which is transmitted from India to a place outside India by any means;’
[R343]For
notified information technology enabled products/services, see
Income-tax Act.
[R344]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R345]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R346]Inserted
by the Finance Act, 1999, w.e.f. 1-4-2000.
[R347]Inserted by the Finance Act, 2000, w.e.f. 1-4-2000.
[R348]Substituted for “a deduction of the profits” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R349]Inserted by the Finance Act, 2000, w.e.f. 1-4-2001.
[R350]Substituted
by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to
their substitution, clauses (ii), (iii) and (iv) read as under :
“(ii) sixty per cent
of such profits for an assessment year beginning on the 1st day of April, 2002;
(iii) forty per cent of
such profits for an assessment year beginning on the 1st day of April, 2003;
(iv) twenty per cent of such profits for an assessment year beginning on the 1st day of April, 2004,”
[R351]See rule 18BBA(9) and Form No. 10CCAI
[R352]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.
[R353]For relevant case laws
[R354]For the meaning of the expression “industrial undertaking”
[R355]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1984.
[R356]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R357]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1990.
[R358]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R359]For the meaning of the terms/expressions “formed”, “splitting up” and “reconstruction”
[R360]For the meaning of the terms/expressions “formed”, “splitting up” and “reconstruction
[R361]For the meaning of the terms/expressions “formed”, “splitting up” and “reconstruction,’
[R362]For the meaning of the terms/expressions “transfer”, “manufactures or produces”, “articles” and “workers”
[R363]For the meaning of the terms/expressions “transfer”, “manufactures or produces”, “articles” and “workers”
[R364]For
the meaning of the terms/expressions “transfer”, “manufactures or produces”,
“articles” and “workers”,
[R365]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
[R366]For the meaning of the terms/expressions “transfer”, “manufactures or produces”, “articles” and “workers”
[R367]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
[R368]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.
[R369]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1984.
[R370]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R371]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R372]Inserted
by the Finance Act, 1990, w.e.f. 1-4-1990.
[R373]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
[R374]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1984.
[R375]Inserted by the Finance Act,
1983, w.e.f. 1-4-1984.
[R376]See
rule 18BBB and Form No. 10CCB for form of audit report.
[R377]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1984.
[R378]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R379]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R380]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R381]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R382]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R383]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R384]Substituted
for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
[R385]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984
[R386]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1984.
[R387]Substituted for “Income-tax” by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988
[R388]Inserted by the Finance Act, 1983, w.e.f. 1-4-1984.
[R389]Sections 80-IA and 80-IB substituted for section 80-IA
by the Finance Act, 1999, w.e.f. 1-4-2000. Prior to
its substitution, section 80-IA, as inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991 and later on amended by the Finance Act,
1992, w.e.f. 1-4-1993, Finance Act, 1993, w.e.f. 1-4-1994, Finance Act, 1994, w.e.f.
1-4-1994/1-4-1995, Finance Act, 1995, w.e.f.
1-4-1996, Finance (No. 2) Act, 1996, w.e.f. 1-4-1997,
Finance Act, 1997, w.r.e.f. 1-4-1996/w.e.f. 1-4-1998,
Income-tax (Amendment) Act, 1998, w.r.e.f.
1-4-1995/w.e.f. 1-4-1998, and Finance (No. 2) Act, 1998, w.r.e.f.
1-4-1998/w.e.f. 1-4-1999, read as under :
‘80-IA. Deduction in respect of profits
and gains from industrial undertakings, etc., in certain cases.—(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 operation of a ship or
developing, maintaining and operating any infrastructure facility or scientific
and industrial research and development or providing telecommunication services
whether
basic or cellular including radio paging, domestic satellite service or network of trunking and electronic data interchange services or construction and development of housing projects or operating an industrial park or commercial production or refining of mineral oil in the North Eastern Region 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 India :
Provided that the condition in
this clause shall, in relation to a small scale industrial undertaking 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,
2000, apply as if the words “not being any article or thing specified in the
list in the Eleventh Schedule” had been omitted;
(iv) (a) in the case of an industrial undertaking not
specified in sub-clause (b) 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, 2000 :
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 “2003” had been substituted;
(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
notification in the Official
Gazette, specify in this behalf, 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, 2000;
(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 India;
(b) such machinery or plant is imported into India from any
country outside India; and
(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.
(4) 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 India with a paid-up capital of not less than five
hundred thousand rupees;
(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;
(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, munici-pal
corporation, notified area committee, town area committee or a cantonment board
or by any other name) of Calcutta, Chennai, Delhi and Mumbai;
(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;
(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
authority.
(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 India or by a consortium of such companies;
(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.
(4B) This section applies to any company
registered in India carrying on scientific and industrial research and
development which fulfils all the following conditions, namely
:—
(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
authority at any time before the 1st day of April, 1999.
(4C) This section applies to any
undertaking which starts providing telecommunication services whether basic or
cellular including radiopaging, 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.
(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 or refining of mineral oil in
the North-Eastern Region
or in any part of India on or after the 1st day of April, 1997 :
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.
(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—
(i) (a) in the case of an industrial
undertaking referred to in sub-clause (a) 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) 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 :
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;
(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;
(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;
(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;
(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 rules 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;
(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 authority 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) 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;
(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;
(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;
(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;
(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 :
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;
(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;
(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 including radiopaging and domestic satellite service;
(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 or refining of mineral oil in the North-Eastern Region 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.
(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 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 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 form 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.
(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,—
(a) “domestic satellite” means a satellite owned and operated by
an Indian company for providing telecommunication service;
(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;
(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;
(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);
(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 including radiopaging and domestic satellite service;
(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 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;
(ca) “infrastructure facility” means—
(i) 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;
(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
sewerage 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;
(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 11B of
the Industries (Development and Regulation) Act, 1951 (65 of 1951);
(g) “North Eastern Region” means the region comprising of the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.’
[R390]See Circular No. 7/2002, dated 26-8-2002.
[R391]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, sub-section (1) read as under :
‘(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.’
[R392]Inserted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R393]Words “or develops and operates or maintains and operates” omitted by the Finance Act, 2003, w.r.e.f. 1-4-2002.
[R394]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, proviso read as
under :
‘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.’
[R395]Inserted by the Finance Act, 2001, w.e.f. 1-4-2001
[R396]Substituted for “any industrial undertaking” by the Finance Act, 2000, w.e.f. 1-4-2000.
[R397]Substituted
for “industrial undertaking” by the Finance Act, 2001, w.e.f.
1-4-2002.
[R398]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R399]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R400]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002
[R401]Substituted
for “of (i) developing, (ii)
maintaining and operating or (iii) developing, maintaining and
operating” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R402]Substituted
by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to
its substitution, sub-clause (b) read as under :
“(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;”
[R403]Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to its substitution, Explanation,
as amended by the Finance Act, 2000, w.e.f.
1-4-2001, read as under :
‘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, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;’
[R404]For
definition of “port”, see Circular No. 793, dated 23-6-2000. For
details, see
Income-tax Act.
[R405]Substituted by the Finance Act, 2001, w.e.f. 1-4-2001. Prior to its substitution, clause (ii) read as under :
‘(ii) any undertaking which has started or starts providing telecommunication services whether basic or cellular, including radiopaging, 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.’
[R406]Figures “2004” shall be substituted for “2003” by the Finance Act, 2003, w.e.f. 1-4-2004.
[R407]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R408] For notified Industrial Park Scheme, 2002, and notified Scheme for Special Economic Zones, see Income-tax Rules.
[R409]For notified Industrial Park Scheme, 2002, and notified Scheme for Special Economic Zones, see Income-tax Rules.
[R410]See rule 18C
[R411]Substituted for “2002” by the Finance Act, 2001, w.e.f. 1-4-2001.
[R412]Substituted by the Finance Act, 2003, w.r.e.f. 1-4-2002. Prior to its substitution, the
proviso read as under :
“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;”
[R414]Substituted for “2003” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R415]Substituted for “2003” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R416]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R417]See
rule 18BBE and Form No. 10CCC.
[R418]Substituted for “Where the assessee is a person other than a company or a co-operative society, the deduction” by the Finance Act, 2002, w.e.f. 1-4-2003
[R419]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R420]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R421]See rule 18BBB
and Form No. 10CCB.
[R422]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R423]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002.
[R424]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002
[R425]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R426]Substituted
by the Finance Act, 2001, w.e.f. 1-4-2002. Prior to
its substitution, Explanation read as under :
‘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.’
[R427]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R428]Substituted for “industrial undertaking” by the Finance Act, 2001, w.e.f. 1-4-2002.
[R429]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002.
[R430]For
the meaning of the terms/expressions “formed”, “splitting up” and
“reconstruction”, see
Direct Taxes Manual, Vol. 3.
[R431]For the meaning of the terms/expressions “formed”, “splitting up” and “reconstruction”, see Direct Taxes Manual, Vol. 3.
[R432]For the meaning of the terms/expressions “formed”, “splitting up” and “reconstruction”, see Direct Taxes Manual, Vol. 3.
[R433]Substituted
for “2000” by the Finance Act, 2000, w.e.f.
1-4-2001.
[R434]See also
Circular No. 788, dated 11-4-2000. For details, see Income-tax
Act.
[R435]Substituted for “2002” by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier “2002” was substituted for “2000” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R436]For
notified industries, see Income-tax Act.
[R437]See rule 11EA
and Appendix III of Income-tax Rules.
[R438]For notified industrially backward districts, see Income-tax Act.
[R439]Substituted for “2002” by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier “2002” was substituted for “2000” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R440] Substituted for “2002” by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier “2002” was substituted for “2000” by the Finance Act, 2000, w.e.f. 1-4-2001.
[R441]See rule 18BBC
[R442]See rule 18BBC.
[R443]See rule 18BBC.
[R444]Sub-sections (7A) and (7B) inserted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R445]See rule 18DB and Form No. 10CCBA.
[R446]See rule
18BBD.
[R447]Inserted
by the Finance Act, 2000, w.e.f. 1-4-2001.
[R448]Prescribed authority is secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India.
[R449]Figures
“2004” shall be substituted for “2003” by the Finance Act, 2003, w.e.f. 1-4-2004.
[R450]See
rule 18DA.
[R451]Inserted
by the Finance Act, 2000, w.e.f. 1-4-2001.
[R452]Substituted
for “2001” by the Finance Act, 2003, w.r.e.f. 1-4-2002.
[R453]Words
“and completes the same before the 31st day of March, 2003” omitted, by the
Finance Act, 2003, w.r.e.f. 1-4-2002. Earlier
the omitted words were amended by the Finance Act, 2000, w.e.f.
1-4-2001.
[R454]Words “1st day of April, 2004” shall be substituted for “31st day of March, 2003” by the Finance Act, 2003, w.e.f. 1-4-2004.
[R455]Inserted by the Finance Act, 2001, w.e.f. 1-4-2002
[R456]See rule 18BBB and Form No. 10CCB
[R457]Inserted
by the Finance Act, 2002, w.e.f. 1-4-2003.
[R458]Inserted
by the Finance Act, 2001, w.e.f. 1-4-2002.
[R459]Sub-clauses
(v) and (vi) inserted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R460]Inserted by the Finance Act, 2002, w.e.f. 1-4-2003.
[R461]See rule 18DB.
[R462]For notified areas falling outside local limits of municipality or cantonment board, see Income-tax Act.
[R463]For the text of section 11B of the Industries (Development & Regulation) Act, 1951, and notification issued thereunder, see appendix one.
[R464]Prior to its omission, section 80J was 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.
[R465]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 later on omitted by the Finance Act, 1985, w.e.f. 1-4-1986.
[R466]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.
[R467]Substituted
for “, producing bio-gas,” by the Finance Act, 1999, w.e.f.
1-4-2000.
[R468]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.
[R469]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R470]See
rule 19AB and Form No. 10DA for form of report.
[R471]For
text of clause (s) of section 2 of the Industrial Disputes Act, 1947,
defining “workman”, see
Appendix One.
[R472]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.”
[R473]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.
[R474]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.
[R475]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.
[R476]For the meaning of the term “individual”
[R477]Word “or” omitted by the Finance Act, 1994, w.r.e.f. 1-4-1968.
[R478]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,”
[R479]“(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.
[R480]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);”
[R481]Substituted by the Finance Act, 1986, w.e.f. 1-4-1987.
[R482]For complete list of notified
debentures, bonds or institutions, see Direct Taxes Circulars.
[R483]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);’
[R484]Inserted by the Finance Act, 1984, w.e.f. 1-4-1985.
For National Deposits Scheme, refer Direct Taxes Circulars. It has since been discontinued on and from 1-4-1987 vide Notification No. F. 4(13) W & M/87, dated 31-3-1987.
[R485]Inserted
by the Finance Act, 1984, w.e.f. 1-4-1985.
[R486]For other notified schemes, see Income-tax Act.
[R487]Inserted
by the Finance Act, 1988, w.e.f. 1-4-1989.
[R488]Clauses
(iv), (v) and (va) shall be
omitted by the Finance Act, 2003, w.e.f. 1-4-2004.
[R489]Clauses
(iv), (v) and (va) inserted by the Finance Act, 2002,
w.e.f. 1-4-2003. Earlier existing clause (iv) was
omitted by the Finance
Act, 1997, w.e.f. 1-4-1998 and clauses (v) and
(va) were omitted by the Finance Act, 1999, w.e.f. 1-4-2000. Prior to its omission clause (va) was inserted by the Direct Tax Laws (Amendment)
Act, 1987, w.e.f. 1-4-1988.
[R490]“or” omitted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R491]Inserted by the Finance
Act, 1983, w.e.f. 1-4-1984.
For the banks notified under this clause, see Income-tax Act.
[R492]Substituted
by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R493]Inserted
by the Finance Act, 2000, w.e.f. 1-4-2000.
[R494]Words “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.
[R495]Proviso
omitted by the Finance Act, 2000, w.e.f. 1-4-2000.
Prior to its omission, the proviso, as amended by the Finance Act, 1988, w.e.f. 1-4-1989, read as under :
“Provided that the corporation is for the time being approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36;”
[R496]Inserted
by the Taxation Laws (Amendment) Act, 1975, w.e.f.
1-4-1976.
[R497]Inserted
by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R498]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R499]Inserted by the Finance Act, 1972, w.e.f. 1-4-1973.
[R500]Inserted
by the Finance Act, 1988, w.e.f. 1-4-1989.
[R501]Words “,
or dividend received from,” omitted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R502] Inserted by the Finance Act, 2000, w.e.f. 1-4-2000
[R503]Proviso omitted by the
Finance Act, 1999, w.e.f. 1-4-2000. Prior to its
omission, proviso read as under :
“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,”
[R505]Substituted for “nine” by the Finance Act, 2003, w.e.f. 1-4-2003. Earlier “nine” was substituted for “twelve” by the Finance Act, 2001, w.e.f. 1-4-2002, “twelve” was substituted for “thirteen” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, “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.
[R506]Substituted for “(a)” and “(b)”, respectively, by the Finance Act, 1982, w.e.f. 1-4-1983.
[R507]Substituted for “nine” by the Finance Act, 2003, w.e.f. 1-4-2003. Earlier “nine” was substituted for “twelve” by the Finance Act, 2001, w.e.f. 1-4-2002, “twelve” was substituted for “thirteen” by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, “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
[R509]Substituted for “clause (iv)” by the Finance Act, 1997, w.e.f. 1-4-1998.
[R510]Words “, clause (v) or clause (va)” omitted by the Finance Act, 1999, w.e.f. 1-4-2000.
[R511]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.
[R512]Omitted by the Finance Act, 1992, w.e.f. 1-4-1993. Prior to omission, first and second provisos were 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.
[R514]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;’
[R515]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).”
[R516]Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1976.
[R517]Section
80M shall be omitted by the Finance Act, 2003, w.e.f.
1-4-2004.
[R518]Inserted by the Finance Act, 2002, w.e.f. 1-4-2003. Earlier 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 had 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, was 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, and later on omitted by the Finance Act, 1997, w.e.f. 1-4-1998.
[R519]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.
[R520]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.
[R521]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.
[R522]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.
[R523]For relevant case laws
[R524]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
[R525]Inserted
by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R526]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.
[R527]For the meaning of the terms/expressions “foreign enterprise” and “use”,
[R528]For the meaning of the terms/expressions “foreign enterprise” and “use
[R529]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.
[R530]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
[R531]Substituted
for the portion beginning with the words “a deduction of an amount” and ending
with the words “total income of the assessee” by the Finance Act, 2000, w.e.f. 1-4-2001. Prior to its substitution the quoted
portion read as under :
“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”
[R532]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.
[R533]Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
[R534]Word
“also” omitted by the Finance (No. 2) Act, 1991, w.e.f.
1-4-1992.
[R535]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 ”.
[R536]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R537]See rule 29AA and Form No. 10HA.
[R538]Substituted for the 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.”
[R539]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 India in the manner permitted by the Reserve Bank of India shall be deemed to have been brought into India in accordance with the law for the time being in force for regulating payments and dealings in foreign exchange, on the date on which such permission is given;”
[R540]Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
[R541]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R542]Omitted by the Finance Act, 1974, w.e.f. 1-4-1975.
[R543]Inserted in place of section 81, which was deleted, by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968.
[R544]See also Circular No. 319, dated 11-1-1982 and Circular No. 722, dated 19-9-1995.
[R545]For the meaning of the terms/expressions “providing credit facilities” and “members”
[R546]For the meaning of the terms/expressions “providing credit facilities” and “members”
[R547]For the meaning of the term/expression “cottage industry
[R548]Substituted by the Income-tax
(Second Amendment) Act, 1998, 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”
[R549]For the meaning of the term/expression “cottage industry”
[R550]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R551]Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972
[R552]For
the meaning of the expression “the whole of the amount of ................ such
activities”,
[R553]Inserted
by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.
[R554]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.
[R555]For definition of “Government company
[R556]For the meaning of the term “activities
[R557]For the meaning of the term “attributable”
[R558]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.
[R559]Substituted
for “forty” by the Finance (No. 2) Act, 1998, w.e.f.
1-4-1999.
[R560]Substituted for “twenty” by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R561]For the meaning of the expressions “godowns or warehouses” and “facilitating the marketing of commodities”
[R562]For
the meaning of the expressions “godowns or warehouses”
and “facilitating the marketing of commodities”,
[R563]“chargeable under section 18” omitted by the Finance Act, 1988, w.e.f. 1-4-1989.
[R564]“section 80H or” omitted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976
[R565]Inserted
by the Direct Taxes (Amendment) Act, 1974, w.e.f.
1-4-1974.
[R566]Inserted
by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R567]Inserted
by the Finance Act, 1982, w.e.f. 1-4-1983.
[R568]Inserted
by the Finance Act, 1983, w.e.f. 1-4-1983.
[R569]Inserted
by the Direct Tax Laws (Amendment) Act, 1989, w.e.f.
1-4-1989.
[R570]Inserted
by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
[R571]Inserted by the Finance Act, 1993, w.r.e.f. 1-4-1991.
[R573]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.
[R574]“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.
[R576]Inserted by the Direct Taxes (Amendment) Act, 1974, w.e.f. 1-4-1974.
[R577]Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-4-1978.
[R579]Inserted by the Finance Act, 1983, w.e.f. 1-4-1983.
[R580]Inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R582]Inserted by the Finance Act, 1993, w.r.e.f. 1-4-1991
[R583]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.
[R585]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.
[R587]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.
[R588]See also Circular No. 706,
dated 26-6-1995, as corrected by Circular No. 746, dated 26-7-1996.
For relevant case laws
[R589]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989
[R590]Section 80J has now been omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1989.
[R591]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.
[R592]Inserted
by the Finance Act, 1979, w.e.f. 1-4-1980.
[R593]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.
[R594]For
text of Eighth Schedule to the Constitution, see Appendix One.
[R595]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.
[R596]For relevant case laws
[R597]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.
[R598]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
[R599]Substituted for the portion beginning with the words “a deduction from such remuneration of an amount” and ending with the words “competent authority may allow in this behalf” by the Finance Act, 2000, w.e.f. 1-4-2001. Prior to its substitution, the quoted portion, as amended by the Finance Act, 1990, w.e.f. 1-4-1991, Finance (No. 2) Act, 1996, w.e.f. 1-4-1997 and Finance Act, 1999, w.e.f. 1-6-1999, read as under :
“a deduction from such remuneration of an amount 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 within such further period as the competent authority may allow in this behalf.”
[R600]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997
[R601]See rule 29A and Form No. 10H
[R602]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.”
[R603]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R604]Inserted
by the Finance Act, 1969, w.e.f. 1-4-1970.
[R605]See also Circular No. 31, dated 25-10-1969 and Circular No. 675, dated 3-1-1994.
[R606]Substituted for “musician or actor” by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980
[R607]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
[R608]Substituted
for the portion beginning with the words “a deduction from such income of an
amount” and ending with the words “competent authority may allow in this behalf” by the
Finance Act, 2000, w.e.f. 1-4-2001. Prior to its
substitution, the quoted portion, as amended by the Finance Act, 1990, w.e.f. 1-4-1991, Finance (No. 2) Act, 1996, w.e.f. 1-4-1997 and Finance Act, 1999, w.e.f.
1-6-1999, read as under :
“a deduction from such income of an amount 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 within such further period as the competent authority may allow in this behalf”
[R609]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R610]See rule 29A and Form No. 10H.
[R611]Inserted
by the Finance Act, 1999, w.e.f. 1-6-1999.
[R612]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.
[R613]See also Circular No. 356, dated 17-3-1983 and Circular No. 705, dated 20-6-1995.
[R614]For the meaning of the terms “employer” and “remuneration”,
[R615]For the meaning of the terms “employer” and “remuneration”,
[R616]Substituted for the portion beginning with the
words “a deduction from such remuneration” and ending with the words “authority
may allow in this behalf” by the Finance Act, 2000, w.e.f.
1-4-2001. Prior to its substitution, the quoted portion, as amended by the
Finance Act, 1987, w.e.f. 1-4-1988, Finance (No. 2)
Act, 1996, w.e.f. 1-4-1997 and Finance Act, 1999, w.e.f. 1-6-1999, read as under :
“a deduction from such remuneration of an amount 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 within such further period as the competent authority may allow in this behalf”
[R617]Inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
[R618]See rule 29A and Form No. 10H.
[R619]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.”
[R620]For definition of “foreign currency”
[R621]Prescribed fields under rule 11C are as follows :
1.
Profession of actuaries;
2.
Banking;
3.
Insurance;
4. Journalism.
[R622]Inserted by the Finance Act, 1999, w.e.f.
1-6-1999.
[R623]For
text of section 2(1)(b) of the Patents Act, 1970, see Appendix
One.
[R624]For text of section 2(1)(o)/(q)/(y) of the Patents Act, 1970, see Appendix One.
[R625]For text of section 2(1)(o)/(q)/(y) of the Patents Act, 1970, see Appendix One.
[R626]For text of section 2(1)(o)/(q)/(y) of the Patents Act, 1970, see Appendix One.
[R627]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.”
[R628]Prior
to its omission, section 80T was 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.
[R629]Inserted
by the Finance Act, 1968, w.e.f. 1-4-1969.
[R630]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.”
[R631]See also Circular No. 653, dated 15-6-1993.
[R632]For relevant case laws
[R633]See rule 11D for specified categories of ‘permanent physical disability’
[R634]Substituted for “twenty” by the Finance Act, 1995, w.e.f. 1-4-1996.
[R635]For text of section 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995, see Appendix One.
[R636]For text of sections 2(p)/(t) and 56(4) of the Persons with Disabilities (Equal Opportunities and Protection of Rights and Full Participation) Act, 1995, see Appendix One.
[R637]For
text of sections 2(p)/(t) and 56(4) of
the Persons with Disabilities (Equal Opportunities and Protection of Rights and
Full Participation) Act, 1995, see Appendix One.
[R638]For text of sections 2(p)/(t) and 56(4) of the Persons with Disabilities (Equal Opportunities and Protection of Rights and Full Participation) Act, 1995, see Appendix One.
[R639]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.