Clause 314 - Interpretations in this Code. - Direct Taxes Code, 2010

CHAPTER XIX INTERPRETATIONS AND CONSTRUCTIONS Interpretations in this Code. 314. In this Code, unless the context otherwise requires — (1) "absolute value" means the numerical value without regard to its sign; (2) "accountant" means a chartered accountant within the meaning of the Chartered Accountants Act, 1949 and includes any person who is entitled to act as an auditor of companies under sub-section (2) of section 226 of the Companies Act, 1956; (3) "accrual" in relation to income, expenditure or liability, with its grammatical variations, shall include income, expenditure or liability which has arisen; (4) "accumulated profits" in relation to dividend means— (a) all profits of the company of three consecutive financial years immediately preceding the financial year in which its undertaking is compulsorily acquired in the case where the company is in liquidation consequent to such compulsory acquisition by— (i) the Government; or (ii) a corporation owned or controlled by the Government under any law for the time being in force; and (b) all profits of the company up to the date of distribution or payment of dividend or upto the date of liquidation, as the case may be, in any other case; (5) "actual cost" in relation to a business capital asset shall be the cost computed under section 44; (6) "advance tax" means the advance tax payable in accordance with the provisions of section 205; (7) "advance ruling" shall have the meaning assigned to it in section 267; (8) "agreement" includes any arrangement or understanding or action in concert, whether or not such arrangement, understanding or action, is— (a) in writing; (b) formal; or (c) intended to be enforceable by legal proceedings; (9) "agreement of association" means— (a) a partnership deed in relation to a firm; or (b) an oral, or written, agreement between the participants of any other unincorporated body; (10) "agreement for non-compete" means an agreement for— (a) not carrying out any activity in relation to any business; or (b) not sharing any— (i) know-how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature; or (ii) information or technique likely to assist in the trading or manufacture or processing of goods or provision for services; (11) "agricultural income" means the following income, namely:— (a) any profits and gains derived from cultivation of agricultural land; (b) any rent derived from any agricultural land; (c) any rent derived from any farm house; and (d) any income derived from saplings or seedlings grown in a nursery; (12) "agricultural land" means any land situated in India which is used for agricultural purposes and— (a) is assessed to land revenue in India; or (b) is subject to a local rate assessed and collected by officers of the Government as such; (13) "amalgamated company" means— (a) a company with which amalgamating company or companies merge; or (b) a company formed as a result of merger of two or more amalgamating companies; (14) "amalgamating company" means— (a) a company which merges with another company; or (b) a company which merges with another company to form a new company; (15) "amalgamating co-operative" means— (a) a co-operative which merges with another co-operative; or (b) every co-operative merging to form a new co-operative; (16) "amalgamation" in relation to— (a) a company means the merger of an amalgamating company or companies with an amalgamated company, if — (i) all the assets and liabilities of the amalgamating company immediately before the merger (other than the assets transferred, by sale or distribution on winding up, to the amalgamated company) become the assets and liabilities of the amalgamated company; (ii) shareholders holding seventy-five per cent. or more, in value of the shares in the amalgamating company (other than shares already held by the amalgamated company or its nominee or its subsidiary, immediately before the merger), become shareholders of the amalgamated company; and (iii) the scheme of amalgamation is in accordance with the provisions of the Companies Act, 1956; and (b) a co-operative means the merger of an amalgamating co-operative with an amalgamated co-operative, if— (i) all the assets and liabilities of the amalgamating co-operative immediately before the merger (other than the assets transferred, by sale or distribution on winding up, to the amalgamated co-operative) become the assets and liabilities of the amalgamated co-operative; (ii) the members holding seventy-five per cent. or more voting rights in the amalgamating co-operative become members of the amalgamated co-operative; and (iii) the shareholders holding seventy-five per cent. or more in value of the shares in the amalgamating co-operative (other than the shares held by the amalgamated co-operative or its nominee or its subsidiary, immediately before the merger) become shareholders of the amalgamated cooperative; or (c) an unincorporated body or a proprietory concern means the succession of an amalgamating unincorporated body or proprietory concern with an amalgamated company if— (i) all the assets and liabilities of such body or concern relating to the business immediately before the succession become the assets and liabilities of the amalgamated company; (ii) the participants of the body or the proprietor of the concern do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the amalgamated company; (iii) the aggregate of the shareholding in the amalgamated company of the participants of the body or the proprietor of the concern, upon succession, is not less than fifty per cent. of the total value of the shares in the company; and (iv) in the case of an amalgamating unincorporated body, all the participants immediately before the succession become the shareholders of the company in the same proportion in which their capital accounts stood in the books of such body on the date of the succession; (17) "Appellate Tribunal" means the Appellate Tribunal constituted under section 182; (18) "Approved Fund" means— (a) a provident fund, superannuation fund or gratuity fund approved in accordance with the provisions of the Nineteenth Schedule; (b) a pension fund, which has been approved by the Board in accordance with the Scheme framed and prescribed by the Central Government in this behalf; (c) any other fund which has been approved by the Board in accordance with the scheme framed and prescribed by the Central Government in this behalf. (19) "arm's length price" shall have the meaning assigned to it in section 124; (20) "assessee" means every person— (a) who is required to file a return of his tax bases or the tax bases of any other person in respect of which such person is assessable for the relevant financial year; (b) who files a return of his tax bases, notwithstanding the fact that he is otherwise not required to do so; (c) who is required to furnish any information or document under this Code; (d) in respect of whom any proceeding under this Code has been initiated; (e) by whom any tax, or any other sum of money, is payable under this Code; (f) to whom, or to any other person in respect of which such person is assessable, any amount of refund is payable under this Code; (g) who is deemed to be an assessee under any provision of this Code; or (h) who is deemed to be an assessee in default under any provision of this Code; (21) "assessee in default" means— (a) an assessee who has failed to fulfill his obligation under this Code and has consequently failed to make payment of any amount due from him to the Central Government; or (b) an assessee who is deemed to be assessee in default under any provision of this Code; (22) "Assessing Officer" means the Income Tax Officer, Assistant Commissioner, Assistant Director, Deputy Commissioner, Deputy Director, Joint Commissioner, Joint Director, Additional Commissioner or Additional Director, who is vested with the relevant jurisdiction by virtue of direction or order issued under section 130 or any other provision of this Code; (23) "assessment" includes— (a) reassessment; (b) any order giving effect to the directions of an Appellate Authority; (c) any order under section 191 or section 192; and (d) any order under section 161 rectifying any mistake apparent on the face of the record with reference to sub-clause (a) or sub-clause (b) or sub-clause (c); (24) "asset" means— (a) a business asset; or (b) an investment asset; (25) "Assistant Commissioner" means a person appointed to be an Assistant Commissioner of Income-tax under section 127; (26) "Assistant Director" means a person appointed to be an Assistant Director of Income-tax under section 127; (27) "associated concern" shall have the meaning assigned to "associated enterprise" in section 124; (28) "associated enterprise" shall have the meaning assigned to it in section 124; (29) "associated operation" shall have the meaning assigned to it in section 124; (30) "associated person" shall have the meaning assigned to it in section 124; (31) "backward classes" means such classes of citizens, other than the Scheduled Castes and the Scheduled Tribes, as may be notified, from time to time, by the Central Government or any State Government; (32) "banking company" means a company to which the Banking Regulation Act, 1949, applies; (33) "block of assets" means a group of business capital assets falling within a class of business capital assets, for which the same percentage of depreciation is specified; (34) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 and notified by the Central Government for the purposes of this Code; (35) "books" or "books of account" includes ledgers, day-books, cash books, account-books, stock register and other books, kept— (a) in the written form; (b) as data stored in a disc, floppy, tape or any other form of electromagnetic data storage device; or (c) as print outs of the data stored in any of the form referred to in sub-clause (b); (36) "broken-period income" means the income for the period commencing from the date on which the debt instrument is acquired by the person or the beginning of the financial year, whichever is later, and ending on the date on which the security is sold, and calculated in such manner as may be prescribed; (37) "business" includes — (a) any trade, commerce or manufacture; or any adventure or concern of that nature; (b) any profession or vocation; (38) "business asset" means— (a) business trading asset; or (b) business capital asset; (39) "business capital asset" means— (a) any capital asset self-generated in the course of business; (b) any intangible capital asset in the nature of— (i) goodwill of a business, (ii) a trade mark or brand name associated with the business, (iii) a right to manufacture or produce any article or thing, (iv) right to carry on any business, (v) tenancy right in respect of premises occupied by the assessee and used by him for the purposes of his business, or (vi) licence, right or permit (by whatever name called) acquired in connection with, or in the course of, any business; (c) any tangible capital asset in the nature of a building, machinery, plant or furniture; or (d) any other capital asset not being land connected with or used for the purposes of any business of the assessee; (40) "business connection" in relation to a non-resident shall include a permanent establishment; (41) "business reorganisation" means reorganisation of business of two or more residents, involving— (a) an amalgamation; (b) a merger under a scheme sanctioned and brought into force by the Central Government under the Banking Regulation Act, 1949; or 10 of 1949. (c) a demerger; (42) "business trading asset" means stock-in-trade, consumable stores or raw materials held for the purposes of business; (43) "capital asset" means property of any kind held by an assessee other than business trading asset; (44) "capital employed in the business" in relation to actual cost means the aggregate of the paid-up share capital, debentures and long-term borrowings— (a) in a case where the prescribed expenditure referred to in serial number 7 of the Table of the Twenty-second Schedule is incurred before the commencement of the business, as on the last day of the financial year in which the business of the company commences; (b) in any other case as on the last day of the financial year in which the extension of the business is completed, or the new business commences production or operation, in so far as such capital, debentures and long-term borrowings have been issued or obtained in connection with the extension of the business or the setting up of the new business of the company; (45) "capital gains" means the income as computed under section 46; (46) "carbon credit" for trading purposes in respect of its one unit shall mean reduction of one ton of carbon dioxide emissions or emissions of its equivalent gases which can be traded in market at its prevailing market price, which is validated by the United Nations Framework on Climate Change. (47) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game; (48) "Chief Commissioner" means a person appointed to be a Chief Commissioner of Income-tax or Director-General of Income-tax under section 127; (49) "child" in relation to an individual, includes a step-child and an adopted child of that individual; (50) "closely-held company" means a company which is not a widely held company; (51) "cold chain facility" means a chain of facilities for storage or transportation of agricultural and forest produce, meat and meat products, poultry, marine and dairy products, products of horticulture, floriculture and apiculture and processed food items under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce; (52) "Commissioner (Appeals)" means a person appointed to be a Commissioner of Income-tax (Appeals) under section 127; (53) "Commissioner" means a person appointed to be a Commissioner of Income-tax or a Director of Income-tax under section 127; (54) "company" means— (a) any Indian company, (b) any body corporate incorporated by or under the laws of a country outside India, or (c) any person who is or was assessable or was assessed as a company under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961; (55) "Competent Investigating Authority" means any income-tax authority not below the rank of Joint Commissioner prescribed as such; (56) "Comptroller and Auditor-General of India" means the Comptroller and Auditor General of India appointed under article 148 of the Constitution; (57) "computer software" means— (a) any computer programme recorded on any disc, tape, perforated media or other information storage device; or (b) any customised electronic data or any product or service of similar nature, as may be notified by the Board; (58) "Controller of Insurance" shall have the same meaning assigned to it in clause (5B) of section 2 of the Insurance Act, 1938; (59) "converted property" means— (a) any property having been the separate property of an individual has been converted by the individual into property as belonging to the Hindu undivided family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family; or (b) any property which has been transferred by the individual, directly or indirectly, to such family otherwise than for adequate consideration; (60) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949; (61) "co-operative sector company" means a company in which not less than fifty-one per cent. of the paid up equity share capital is beneficially held by, one or more co-operative societies throughout the financial year; (62) "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 or under any State or Provincial Act for the time being in force for the registration of co-operative societies; (63) "cost inflation index" in relation to a financial year means such index as the Central Government may specify by notification, having regard to seventy-five per cent. of the average rise in the consumer price index for non-urban manual employees for the immediately preceding financial year; (64) "cost of the project" in relation to actual cost means the actual cost of the fixed assets, being land, buildings (including expenditure on development of land and buildings), leaseholds, plant, machinery, furniture, fittings and railway sidings, which are shown in the books of the assessee— (a) in a case where the prescribed expenditure referred to in serial number 7 of the Table of the Twenty-second Schedule is incurred before the commencement of the business, as on the last day of the financial year in which the business of the assessee commences; (b) in any other case, as on the last day of the financial year in which the extension of the business is completed, or the new business commences production or operation, in so far as such fixed assets have been acquired or developed in connection with the extension of the business or the setting up of the new business of the assessee; (65) "cultivation" includes any process ordinarily employed by a cultivator or receiver-of-rent in kind to render the produce raised or received by him fit to be taken to market; (66) "current income from ordinary sources" means the net result of the aggregation under sub-section (1) of section 61; (67) "current income from the special source" means the income referred to in sub-section (2) of section 62; (68) "date of setting up of a business" means— (a) in the case of business of manufacturing, production or processing of goods, the date on which the manufacture, production or processing of the goods begins after successful trial run of the plant; or (b) in any other case, the date on which it is ready to commence its commercial operations; (69) "debt" includes a loan or borrowing; (70) "debt instrument" means a paper or electronic obligation that enables the borrower to raise funds by promising to repay the lender, or investor, in accordance with the terms of a contract and includes note, bond, certificate, mortgage, lease, loan, borrowing or other agreement between the borrower and the lender; (71) "deduction of tax at source" or "collection of tax at source" with all their grammatical variations, mean deduction or collection of tax under Chapter XIII; (72) "deductor" means a person responsible for making any payment in respect of which he is liable to deduct tax at source under Sub-chapter A of Chapter-XIII; (73) "demerged company" means— (a) the company whose undertaking is transferred, pursuant to a demerger, to a resulting company; or (b) the authority or the body constituted or established under a Central, State or Provincial Act, or a local authority or a public sector company, which is split up or reconstructed, to form a resulting company; (74)"demerger" means— (a) the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, by a demerged company of one or more of its undertakings to any resulting company, if— (i) all the assets and liabilities of the undertaking or undertakings 1 of 1956. immediately before the transfer become the assets and liabilities of the resulting company; (ii) the assets and the liabilities are transferred at values (other than change in the value of assets consequent to their revaluation) appearing in its books of account immediately before the transfer; (iii) the resulting company issues, in consideration of the transfer, its equity shares to the shareholders of the demerged company on a proportionate basis; (iv) the shareholders holding seventy-five per cent. or more, in value of the shares in the demerged company (other than shares already held by the resulting company or its nominee or its subsidiary, immediately before the transfer), become shareholders of the resulting company or companies, otherwise than as a result of the acquisition of the assets of the demerged company or any undertaking thereof by the resulting company; (v) the transfer of the undertaking is on a going concern basis; and (vi) the transfer is in accordance with such other conditions as may be notified by the Central Government having regard to the necessity to ensure that the transfer is for genuine business purposes; or (b) the splitting up, or the reconstruction, of any authority or a body constituted or established under a Central, State or Provincial Act, or a local authority or a public sector company to form a resulting company, in accordance with the conditions as may be notified by the Central Government; (75) "Deputy Commissioner" means a person appointed to be a Deputy Commissioner of Income-tax under section 127; (76) "Deputy Director" means a person appointed to be a Deputy Director of Income-tax under section 127; (77) "Director" means a person appointed to be a Director of Income-tax under section 127; (78) "Director General" means a person appointed to be a Director General of Income-tax under section 127; (79) "director", "manager" and "managing agent", in relation to a company, have the meanings respectively assigned to them in the Companies Act, 1956; (80) "Dispute Resolution Panel" means a collegium comprising of three Commissioners of Income-tax constituted by the Board for this purpose; (81) "dividend" distributed or paid by a company (I) includes— (a) any distribution by a company of accumulated profits, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company; (b) any distribution to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, whether with or without interest, and any distribution to shareholders of its preference shares by way of bonus, to the extent to which the company possesses accumulated profits, whether capitalised or not; (c) any distribution made to the shareholders (other than shareholders not entitled in the event of liquidation to participate in the surplus assets) of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not; (d) any distribution to its shareholders (other than shareholders not entitled in the event of liquidation to participate in the surplus assets) by a company on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalised or not; and (e) any payment by a closely-held company, to the extent of its accumulated profits, if such payment is— (i) by way of advance or loan to a shareholder being the beneficial owner of equity shares holding not less than ten per cent. of the voting power; or (ii) by way of advance or loan to any Hindu undivided family, or a firm, or an association of persons, or a body of individuals, or a company (in this clause referred to as the said concern), in which such shareholder is a member or a partner or a shareholder, and in which he has a substantial interest; or (iii) to any person on behalf, or for the individual benefit, of such shareholder; (II) but does not include:— (a) any advance or loan made to a shareholder or the said concern by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company; (b) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off; (c) any payment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 77A of the Companies Act, 1956; and (d) any distribution of shares pursuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company); (82) "dividend distribution tax" means the tax chargeable under section 109; (83) "document" includes an electronic record as defined in clause (t) of subsection (1) of section 2 of the Information Technology Act, 2000; (84) "domestic company" means a company resident in India; (85) "disaster" shall have the same meaning as assigned to it under clause (d) of section 2 of the Disaster Management Act, 2005; (86) "due date" means— (a) in relation to the return of tax bases— (i) the 30th June following the financial year if the person is not a company and does not derive any income from business; or (ii) the 31st August following the financial year, in all other cases; or (b) in relation to any other return, such date as may be prescribed; (c) in relation to the report required to be furnished under section 88, the 31st August following the financial year. (87) "electoral trust" means a trust so approved by the Board in accordance with the scheme made in this regard by the Central Government. (88) "employer" means a person who controls an individual under an express or implied contract of employment and is obliged to compensate him by way of salary; (89) "equity oriented" in relation to a scheme means the scheme— (a) of a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder; and (b) which invests sixty-five per cent. or more of its investible funds in the form of equity shares in domestic companies, computed with reference to the annual average of the monthly averages of the opening and closing figures; (90) "equity shares" shall have the same meaning as assigned to it in section 85 of the Companies Act, 1956; (91) "execution of an authorisation for search or requisition" means — (a) in the case of a search, on the conclusion of the search as recorded in the last panchnama drawn in relation to the person in whose case the authorisation has been issued; or (b) in the case of requisition under section 136, on the date on which all the books of accounts, other documents or assets are received by the Requisitioning Officer; (92) "ex-serviceman" means— (a) a person who has served in any rank, whether as combatant or noncombatant, in the armed forces of the Union (but excluding the Assam Rifles, Defence Security Corps, General Reserve Engineering Force, Lok Sahayak Sena, Jammu and Kashmir Militia and Territorial Army) for a continuous period of not less than six months after attestation and has been released, otherwise than by way of dismissal or discharge on account of misconduct or inefficiency; and (b) in the case of a deceased or incapacitated ex-serviceman, it includes the spouse, children, father, mother, minor brother, widowed daughter and widowed sister, wholly dependant upon such ex-serviceman immediately before his death or incapacitation; (93) "fair market value", in relation to an asset, means the price determined in such manner as may be prescribed; (94) "family" in relation to an individual, means — (a) the spouse and children of the individual; and (b) the parents, brothers or sisters of the individual, if mainly dependant on the individual; (95) "family pension" means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of the death of the employee; (96) "farm house" means any building which fulfills the following conditions, namely:— (a) it is situated on, or in the immediate vicinity of an agricultural land; (b) the building is used exclusively— (i) as a dwelling house, store-house, or other out-building, for agricultural purpose; or (ii) to carry out any process to render the produce raised or received by the owner fit to be taken to the market; and (c) the building is— (i) occupied by the cultivator or the receiver of rent-in-kind; or (ii) owned and occupied by the receiver of rent; (97)"fees for technical services" — (a) means any consideration (including any lump sum consideration) paid or payable, directly or indirectly, for— (i) rendering of any managerial, technical or consultancy services; (ii) provision of services of technical or other personnel; or (iii) development and transfer of a design, drawing, plan or software, or such other services; and (b) does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Income from employment"; (98) "finance charges" means— (a) any interest; or (b) any incidental financial charges; (99) "financial institution" means— (a) a banking company or a scheduled bank; (b) a non-banking financial company; (c) a public financial institution; (d) state financial corporations; (e) state industrial investment corporations; or (f) a housing finance public company; (100) "financial intermediary" means stock broker or sub-broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 or the Depositories Act, 1996; (101)"financial lease" with its grammatical variations, means a lease transaction where— (a) contract for lease is entered into between two parties for leasing of a specific asset; (b) such contract is for use and occupation of the asset by the lessee; (c) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and (d) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment; (102) "financial year" or "year" means— (a) the period beginning with the date of setting up of a business and ending with the 31st day of March following the date of setting up of such business; (b) the period beginning with the date on which a source of income newly comes into existence and ending with the 31st day of March following the date on which such new source comes into existence; (c) the period beginning with the 1st day of the financial year and ending with the date of discontinuance of the business or dissolution of the unincorporated body or liquidation of the company, as the case may be; (d) the period beginning with the 1st day of the financial year and ending with the date of retirement or death of a participant of the unincorporated body; (e) the period immediately following the date of retirement, or death, of a participant of the unincorporated body and ending with the date of retirement, or death, of another participant or the 31st day of March following the date of the retirement, or death, as the case may be; or (f) the period of twelve months commencing from the 1st day of April of the relevant year in any other case; (103) "firm" shall have the meaning assigned to it in the Indian Partnership Act, 1932 and shall include a limited liability partnership as defined in the Limited Liability Partnership Act, 2008; (104) "foreign company" means a company which is not a domestic company; (105) "foreign currency" shall have the same meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999; (106) "forward contract" means a contract with an authorised person, as defined in section 2 of the Foreign Exchange Management Act, 1999, for providing a specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract; (107) "general public" shall have the same meaning assigned to it in clause (c) of section 103; (108) "Global Depository Receipts" means any instrument (by whatever name called) (a) created by the Overseas Depository Bank outside India against issue of foreign currency convertible bonds or ordinary shares, of a domestic company; and (b) issued to non-residents; (109) "gross total income" for a financial year means the aggregate of the gross total income from ordinary sources and the gross total income from special sources, for that financial year; (110) "gross total income from ordinary sources" of a financial year means the net result of the aggregation under sub-section (2) or sub-section (3) of section 61, for that financial year; (111) "gross total income from the special source" of a financial year means the net result of the aggregation under sub-section (2) or sub-section (3) of section 62, for that special source for that financial year; (112) "head office expenditure" means executive and general administration expenditure incurred by the assessee outside India, including expenditure incurred in respect of— (a) rent, rates, taxes, repairs or insurance of any premises outside India used for the purposes of the business; (b) salary, wages, annuity, pension, fees, bonus, commission, gratuity, perquisites or profits in lieu of or in addition to salary, whether paid or allowed to any employee or other person employed in, or managing the affairs of, any office outside India; (c) traveling by any employee or other person employed in, or managing the affairs of, any office outside India; and (d) such other matters connected with administration as may be prescribed; (113) "heavy goods vehicle" shall have the same meaning as assigned to it in section 2 of the Motor Vehicles Act, 1988; (114) "horse race" means a horse race upon which wagering or betting is lawfully made; (115) "hospital" includes a dispensary or a clinic or a nursing home; (116) "house property" means— (a) any building or land appurtenant thereto; along with facilities and services whether in-built or provided separately; or (b) any building along with any machinery, plant, furniture or any other facility or services whether inbuilt or provided separately; (117) "housing development company" means any public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes; (118) "housing-finance public company" means a company— (a) which is a public company; (b) whose main object is carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes; and (c) which is registered in accordance with the Housing Finance Companies (NHB) Directions, 1989 given under section 30 and section 31 of the National Housing Bank Act, 1987; (119) "incidental financial charges" means any fee, commission, brokerage, tax payable or any other similar expenditure incurred for the purposes of borrowing or incurring any debt or in respect of any credit facility which has not been utilised; (120) "income" includes,— (a) gross salary referred to in section 22; (b) gross rent referred to in section 26; (c) the amount of any accrual or receipt from the businesses referred to in column (2) of the Table in sub-section (2) of section 32; (d) gross earnings from the business referred to in section 32; (e) full value of the consideration received or accruing as a result of the transfer of any investment asset referred to in section 50; (f) gross residuary income referred to in section 58; (g) gross receipts referred to in section 93; (h) voluntary contributions received by a political party or an electoral trust; (i) any sum deducted at source on payment received, in accordance with the provisions of Chapter XIII; and (j) income of the nature referred to in column (3) of the Table in Part III of the First Schedule; (121) "income from business" means the profits of the business as computed under section 32; (122) "income under the head 'Capital gains' " means the income in respect of that head as computed under sub-section (3) or sub-section (4), as the case may be; of section 60; (123) "income under the head 'Income from business' " means the income in respect of that head, as computed under sub-section (9) of section 60; (124) "income from employment" means the income as computed under section 21; (125) "income under the head 'Income from employment' " means the income in respect of that head, as computed under sub-section (1) of section 60; (126) "income from house property" means the income as computed under section 25; (127) "income under the head 'Income from house property' " means the income in respect of that head, as computed under sub-section (1) of section 60; (128) "income from residuary sources" means the income as computed under section 55; (129) "income under the head 'Income from residuary sources' " means the income in respect of the head as computed under sub-section (11) of section 60; (130) "Income-tax Officer" means a person appointed to be an Income-tax Officer under section 127; (131) "India" means— (a) the territory of India as referred to in article 1 of the Constitution; (b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976; (c) the sea-bed and the subsoil underlying the territorial waters; and (d) the air space above its territory and territorial waters; (132) "Indian company" means a body corporate which— (a) is registered or established or constituted by or under— (i) the Companies Act, 1956; (ii) a Central, State or Provincial Act; (iii) any law relating to companies formerly in force in any part of India other than the State of Jammu and Kashmir; (iv) any law for the time being in force in the State of Jammu and Kashmir; and (b) has its registered or, as the case may be, principal office in India; (133) "Indian currency" shall have the same meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999; (134) "Indian income-tax" means income-tax charged in accordance with the provisions of this Code; (135) "Indian rate of tax" means the rate determined by dividing the amount of Indian income-tax after deduction of any relief due under the provisions of this Code but before deduction of any relief due under section 207, by the total income; (136) "Indian ship" shall have the same meaning as assigned to it in clause (18) of section 3 of the Merchant Shipping Act, 1958; (137) "infrastructure facility" means the following facilities, namely:— (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; and (d) a port, airport, inland waterway or inland port; (138) "Inspector of Income-tax" means a person appointed to be an Inspector of Income-tax under section 127; (139) "insurer" means an Indian insurance company under clause (7A) and any person referred to in clause (9) of section 2 of the Insurance Act, 1938, which has been granted a certificate of registration under section 3 of that Act; (140) "interest" means any amount payable to any person (including any participant), in any manner, in respect of any borrowing or debt incurred or any other similar right or obligation and includes any service fee or other charges in respect of the money borrowed or debt incurred or in respect of any credit facility which has not been utilised; (141) "investment asset" means,— (a) any capital asset which is not a business capital asset; (b) any security held by a Foreign Institutional Investor; (c) any undertaking or division of a business; (142) "jewellery" in relation to a capital asset, includes— (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article, worked or sewn into any wearing apparel; (143) "Joint Commissioner" means a person appointed to be a Joint Commissioner of Income-tax or an Additional Commissioner of Income-tax under section 127; (144) "Joint Director" means a person appointed to be a Joint Director of Income-tax or an Additional Director of Income-tax under section 127; (145) "Keyman insurance policy" means a life insurance policy taken by— (a) an employer on the life of an employee or a former employee; or (b) a person on the life of another person who is, or was, connected in any manner whatsoever with the business of the first-mentioned person; (146) "khadi" and "village industries" shall have the meanings respectively assigned to them in the Khadi and Village Industries Commission Act, 1956; (147) "legal representative" shall have the same meaning as assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908; (148) "liabilities" in relation to a demerger shall include— (a) the liabilities which arise out of the activities or operations of the undertaking; (b) the loans or borrowings (including debentures) raised, incurred and utilised solely for the activities or operations of the undertaking; and (c) in cases, other than those referred to in clause (a) or clause (b), so much of the amounts of general or multipurpose borrowings, if any, of the asses-see as they stand in the same proportion which the value of the assets transferred in a demerger bears to the total value of the assets of such assessee immediately before the demerger; (149) "life insurer" means an insurer who is wholly engaged in the business of providing assurance on the life of human beings; (150) "light goods vehicle or other vehicle" means a vehicle which is not a heavy goods vehicle; (151) "local authority" means— (a) a Panchayat as referred to in clause (d) of article 243 of the Constitution; (b) a Municipality as referred to in clause (e) of article 243P of the Constitution; (c) a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; or (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (152) "long-term borrowings" means— (a) moneys borrowed from the Government, a scheduled bank or a financial institution where the terms of the borrowings provide for the repayment during a period of not less than five years; or (b) moneys borrowed or debt incurred in a foreign country for the purchase of plant and machinery outside India, where the terms of the borrowings provide for the repayment during a period of not less than seven years; (153) "long-term finance" means any loan or advance where the terms under which money is loaned or advanced provide for its repayment along with interest thereon during a period of not less than five years; (154) "long term leasing" means— (a) a lease for a term of not less than twelve years; or (b) a lease which provides for the extension of its term by a further term or terms, and the aggregate of the term for which such lease is granted or to be extended is not less than twelve years; (155) "lottery" includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called; (156) "manufacture", with its grammatical variations, means a change in a nonliving physical object or article or thing— (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure; (157) "material" includes any books of account, document, money, bullion, jewellery or other valuable article or thing; (158) "maximum marginal rate" means the rate of income-tax applicable in relation to the highest slab of income in the case of an individual or Hindu undivided family or artificial juridical person, as specified in the First Schedule; (159) "medical authority" means,— (i) the medical authority referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or (ii) such other medical authority as may be notified by the Central Government for this purpose. (160) "mineral" includes a group of associated minerals specified in Part I or Part II of the Eighteenth Schedule; (161) "mineral oil" shall have the meaning assigned to it in the Eleventh Schedule; (162) "mutual benefit finance company" means a company— (a) which carries on, as its principal business, the business of acceptance of deposits from its members; and (b) which is a Nidhi or Mutual Benefit Society within the meaning of section 620A of the Companies Act, 1956; (163) "mutual fund" means a mutual fund registered as such under the Securities and Exchange Board of India Act, 1992; (164) "NABARD" means the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981; (165) "National Housing Bank" means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987; (166) "net worth" in relation to,— (a) a demerged company, mean the aggregate of the paid-up share capital and general reserves as appearing in the books of account of the demerged company immediately before the demerger; and (b) an undertaking or division transferred under slump sale, means the value determined in such manner as may be prescribed; (167) "new investment asset" means the new investment asset within the meaning of section 55; (168) "New Pension System Trust" means the New Pension System Trust established on the 27th day of February, 2008 under the provisions of the Indian Trusts Act, 1882; (169) "non-profit organisation" means an organisation, by whatever name called, including a trust, if— (i) it is not established for the benefit of any particular caste or religious community; (ii) it does not provide any benefit for the members of any particular caste or religious community; (iii) it is established for the benefit of the general public or for the benefit of the Scheduled Castes, the Scheduled Tribes, backward classes, women or children; (iv) it is established for carrying on charitable activities; (v) it is not established for the benefit of any of its members; (vi) it actually carries on the charitable activities during the financial year; (vii) the actual beneficiaries of its activities are the general public, the Scheduled Castes, the Scheduled Tribes, backward classes, or women or children; and (viii) it is registered as such under section 98; (170) "non-resident" means a person who is not a resident; (171) "non-resident deductee" means a person who is non-resident in India and receives any amount which is liable to deduction of tax at source under Chapter XIII; (172) "notice" means the legal instrumentality by which intimation is provided; (173) "notification" means a notification published in the Gazette of India and the expression "notify" shall be construed accordingly; (174) "option" in relation to sweat equity shares means a right but not an obligation, granted to an employee to apply for the sweat equity shares at a predetermined price; (175) "original investment asset" means an investment asset in respect of which deduction under section 55 is claimed; (176) "Overseas Depository Bank" means a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company; (177) "owner" in relation to a house property includes— (a) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child; (b) the holder of an impartible estate; (c) a member of a co-operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association; and (d) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. (178) "paid"— (a) in relation to "Income from business" or "Income from residuary sources", means incurred or actually paid, according to the method of accounting on the basis of which the income under those heads are computed; and (b) in all other cases, mean actually paid; (179) "participant" means— (a) a partner in relation to a firm; or (b) a member in relation to an association of persons or body of individuals; (180) "partner" shall have the same meaning as assigned to it in the Indian Partnership Act, 1932 and shall include— (a) a partner of a limited liability partnership as defined in the Limited Liability Partnership Act, 2008; and (b) any person who, being a minor, has been admitted to the benefits of partnership; (181) "partnership" shall have the same meaning as assigned to it in the Indian Partnership Act, 1932 and shall include a limited liability partnership as defined in the Limited Liability Partnership Act, 2008; (182) "permanent account number" means a permanent account number allotted to a person under section 292; (183) "permanent establishment" means a fixed place of business through which the business of a non-resident assessee is wholly or partly carried on and— (a) includes— (i) a place of management; (ii) a branch; (iii) an office; (iv) a factory; (v) a workshop; (vi) a sales outlet; (vii) a warehouse in relation to a person providing storage facilities for others; (viii) a farm, plantation other place where agricultural, forestry, plantation or related activities are carried on; (ix) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (x) a building site or construction, installation or assembly project or supervisory activities in connection therewith; (xi) furnishing of services, including consultancy services, by the assessee through employees or other personnel engaged by him for such purpose; and (xii) an installation or structure or plant or equipment, used for exploration or for exploitation of natural resources; and (b) deemed to include— (i) a person, other than an independent agent being a broker, general commission agent or any other agent of independent status acting in the ordinary course of his business, acting in India on behalf of an assessee, if such person— (A) has and habitually exercises in India an authority to conclude contracts on behalf of the assessee, unless his activities are limited to the purchase of goods or merchandise for the assessee; (B) habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the assessee; or (C) habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and other non-residents controlling, controlled by, or subject to the same common control, as that non-resident; (ii) the person acting in India on behalf of an assessee engaged in the business of insurance, through whom the assessee collects premia in the territory of India or insures risks situated therein; (iii) a substantial equipment in India which is being used by, for or under any contract with the assessee; (184) "person" includes— (a) an individual, (b) a Hindu undivided family, (c) a company, (d) a co-operative society or any other society, (e) a firm, (f) a non-profit organisation, (g) an association of persons, (h) a body of individuals, (i) a local authority, (j) every artificial juridical person, not falling within any of the preceding sub-clauses; whether or not the society, firm or organisation, association, body, local authority or artificial juridical person was formed or established or incorporated with the object of deriving income; (185) "person having a substantial interest in a concern", with its grammatical variations, means— (a) a person who is the beneficial owner (including the beneficial ownership held by one or more of his relatives, in case the person is an individual) of equity shares carrying not less than twenty per cent. of the voting power, at any time during the financial year, in a concern being a company; and (b) a person who is, at any time during the financial year, beneficially entitled (including the income which is beneficially entitled to one or more of his relative, in case the person is an individual) to not less than twenty per cent. of the income in any other concern being a Hindu undivided family, or a firm or an unincorporated body; (186) "person of Indian origin" means any person who or either of whose parents or any of whose grand parents— (i) was born in India, or (ii) was born in India as defined in the Government of India Act, 1935, in case the person or the parent or the grand parent was born before the 15th day of August, 1947; (187) "person responsible for making specified payment" means— (a) an employer who makes the payment which is in the nature of salary; (b) any person who makes the payment of the nature specified in column (2) of the Schedule or the Fourth Schedule; (188) "person with disability" means a person referred to,— (i) in clause (t) of section 2 of the Persons With Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or (ii) in clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999. (189) "person with severe disability" means— (i) 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; or (ii) a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999; (190) "personal effect" in relation to a capital asset means any movable property including wearing apparel and furniture held for personal use by the assessee or any member of his family dependant on him, but excludes,— (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; and (f) any work of art; (191) "perquisite" means,— (a) the amenity, facility, privilege or service, whether convertible into money or not, provided directly or indirectly to an employee by the employer, whether by way of reimbursement or otherwise, being— (i) the value of any accommodation computed in such manner as may be prescribed; (ii) any sum payable to effect an assurance on life or to effect a contract for an annuity; (iii) the value of any sweat equity share allotted or transferred, as on the date on which the option is exercised by the employee; or (iv) the value of any obligation which, but for payment by the employer, would have been payable by the employee, computed in such manner as may be prescribed; (b) the value of any amenity, facility, privilege or service, other than those referred to in sub-clause (a) computed in such manner as may be prescribed but does not include,— (i) the value of any medical treatment provided to an employee or any member of his family in a hospital maintained by the employer; (ii) any sum paid by an employer in respect of any expenditure actually incurred by an employee on medical treatment of himself or his family members in any hospital maintained by the Government or any local authority or any other hospital approved by the Government; (iii) any sum paid by an employer in respect of any expenditure actually incurred by an employee on medical treatment of himself or his family members with regard to specified diseases, in any hospital approved by the Chief Commissioner in accordance with such guidelines as may be prescrbed; (iv) any premium paid or reimbursed by an employer to effect or to keep in force an insurance on the health of an employee under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority; (v) any sum paid by an employer in respect of any expenditure actually incurred by an employee on medical treatment of himself or his family members [other than the expenditure on treatment referred to in items (i), (ii) and (iii)] to the extent it does not exceed fifty thousand rupees in a financial year; (vi) any sum paid by an employer in respect of any expenditure actually incurred by an employee outside India on medical treatment of himself or his family members (including expenditure incurred on travel and stay abroad) if,— (A) the expenditure does not exceed the amount permitted by the Reserve Bank of India; and (B) the income from employment excluding the amount of expenditure referred to in this sub-clause of such employee does not exceed five lakh rupees in the financial year; (192) "place of effective management" means— (i) the place where the board of directors of the company or its executive directors, as the case may be, make their decisions; or (ii) in a case where the board of directors routinely approve the commercial and strategic decisions made by the executive directors or officers of the company, the place where such executive directors or officers of the company perform their functions: (193) "plant" includes ships, aircrafts, vehicles, books, scientific apparatus and surgical equipment but does not include tea bushes, livestock, buildings or furniture and fittings; (194) "political party" means a political party registered and recognised under the Representation of the People Act, 1951; (195) "predecessor" in relation to a business reorganisation means— (a) the amalgamating company, in the case of amalgamation; (b) the merging company in the case of business reorganisation referred to in sub-clause (b) of clause (41); (c) the demerged company, in the case of demerger; or (d) the unincorporated body or the proprietary concern, in the case of business reorganisation referred to in sub-clause (a) of clause (41); (196) "preference shares" means preference shares within the meaning of section 85 of the Companies Act, 1956; (197) "pre-paid taxes" means tax paid by way of, — (a) tax deduction at source on payment received; (b) tax collection at source on payment made; (c) advance-tax; (d) self-assessment tax; or (e) foreign tax credit; (f) credit for tax paid on book profit; (198) "prescribed" means prescribed by rules made under this Code; (199) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities; (200) "principal officer" in relation to a person, being a local authority or any other public body or a company or an unincorporated body, means— (a) the secretary, treasurer, manager or agent of the person, or (b) any person connected with the management or administration of the person upon whom the Assessing Officer has served a notice of his intention of treating him as the principal officer thereof; (201) "private discretionary trust" means any entity, whether incorporated or not, which fulfills the following conditions, namely:— (a) the shares of its beneficiaries are indeterminate or unknown; (b) it is not a non-profit organisation; and (c) it is not registered under any law of the Central, State or Provincial Government for the regulation of the religious endowments; (202)"profits in lieu of or in addition to any salary" includes— (a) the amount of any compensation due to or received by an employee from his employer or former employer at or in connection with his voluntary retirement, the termination of his employment, or the modification of the terms and conditions relating thereto; (b) any sum received under a keyman insurance policy including the sum allocated by way of bonus on such policy, if any part of the contribution to the policy is made by his employer or former employer; and (c) any amount due to or received, directly or indirectly, by any assessee from any person— (i) before his joining any employment with that person; or (ii) after cessation of his employment with that person; (203) "public company" shall have the same meaning as assigned to it in section 3 of the Companies Act, 1956; (204) "public financial institution" shall have the same meaning assigned to it in section 4A of the Companies Act, 1956; (205) "public sector company" means— (a) any corporation established by or under any Central, State or Provincial Act, or (b) a Government company as defined in section 617 of the Companies Act, 1956; (206) "public servant" shall have the same meaning as assigned to it in section 21 of the Indian Penal Code; (207) "rate of exchange" means the rate of exchange determined or recognised by the Central Government for the conversion of Indian rupee into foreign currency or vice versa; (208) "rate of tax of the other country" means income-tax or wealth-tax, or as the case may be, and surcharge or cess thereon, if any, actually paid in the other country in accordance with the corresponding laws in force in the said country after deduction of all relief due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country; (209) "rate in force" , in relation to a financial year means the rate of income-tax or wealth-tax, as the case may be, specified for the relevant purpose— (a) in this Code; or (b) in the relevant agreement entered into by the Central Government under section 291; (210) "re-assessment" means any assessment of tax bases in pursuance of a notice issued under section 159, whether or not— (a) a return of tax bases has been filed before, or after, the issue of the said notice; or (b) an assessment of the tax bases has been made before the issue of the said notice; (211) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose; (212) "recognised commodity exchanges" means a registered association as defined in clause (jj) of section 2 of the Forward Contracts (Regulation) Act, 1952; (213)"registered valuer" means a person registered as such by the Board for determining the value of any asset in accordance with the procedure as may be prescribed; (214) "relative", in relation to an individual, means— (a) spouse of the individual; (b) brother or sister of the individual; (c) brother or sister of the spouse of the individual; (d) brother or sister of either of the parents of the individual; (e) any lineal ascendant or descendant of the individual; (f) any lineal ascendant or descendant of the spouse of the individual; (g) spouse of the persons referred to in sub-clauses (b) to (f); or (h) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual; (215) "remission or cessation of any liability" includes the remission or cessation of any liability— (a) by a unilateral act by the assessee by way of writing off such liability in his account or creating a reserve (by whatever name called); or (b) by virtue of there being no transaction with the creditor during the period of five years from the end of the financial year in which the last transaction took place; (216) "Reserve Bank of India" means the Bank constituted under sub-section (1) of section 3 of the Reserve Bank of India Act, 1934; 2 of 1934. (217) "resident" means a person who is resident in India within the meaning of section 4; (218) "resident deductee" means a person who is resident and receives any amount liable to deduction of tax at source under Chapter XIII; (219) "resulting company" means— (a) one or more companies (including a wholly owned subsidiary thereof) to which the undertaking of the demerged company is transferred in a demerger, and the resulting company in consideration of such transfer of undertaking, issues shares to the shareholders of the demerged company; or (b) any authority, body, local authority or a company established, constituted or formed as a result of demerger; (220) "royalty" 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") for— (a) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, trade mark, secret formula, process, or similar property; (b) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula, process, trade mark, or similar property; (c) the use of any patent, invention, model, design, secret formula, process, trade mark, or similar property; (d) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill; (e) the use or right to use of any industrial, commercial or scientific equipment including ship or aircraft but excluding the amount, referred to in item numbers 17 and 18 of the Table in the Fourteenth Schedule, which is subjected to tax in accordance with the provisions of that Schedule; (f) the use or right to use of transmission by satellite, cable, optic fiber or similar technology; (g) the transfer of all or any rights (including the granting of a licence) in respect of — (i) any copyright of literary, artistic or scientific work; (ii) cinematographic films or work on films, tapes or any other means of reproduction; or (iii) live coverage of any event; (h) the rendering of any services in connection with the activities referred to in sub-clauses (a) to (g); (221) "rural area" means any area not being an urban area; (222) "safe harbour", in relation to computation of arm's length price under section 117, means circumstances in which the income-tax authorities shall accept the transfer price declared by the assessee; (223) "salary" includes,— (a) wages; (b) remuneration; (c) perquisites; (d) profits in lieu of or in addition to any salary; (e) any advance or arrear of salary; (f) any allowance or benefit granted to an employee— (i) to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or where he ordinarily resides; (ii) to compensate him for the increased cost of living; (iii) to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit; (iv) to remunerate or compensate him for performing duties of a special nature relating to his office or employment of profit; or (v) which is in the nature of house rent allowance; (g) any allowance, other than the allowances referred to in sub-clause (f), concession or assistance; (h) any payment received by an employee in respect of any period of leave not availed by him; (i) any contribution made by an employer, in the financial year, to the account of an employee under a pension fund; (j) any contribution made by an employer, in the financial year, to the account of an employee in any other fund; (k) any amount of interest credited, in the financial year, on the balance to the credit of an employee in a fund referred to in clause (j); (l) any annuity, pension or any commutation thereof; (m) any gratuity; (n) any fees or commission; (224) "Schedule" means a Schedule to this Code; (225) "scheduled bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act, 1934; (226) "Scheduled Castes" and "Scheduled Tribes" shall have the meaning respectively assigned to them in clauses (24) and (25) of article 366 of the Constitution; (227) "scientific research and development" means systemic investigation and research in a field of technology, natural or applied science (including agriculture, animal husbandary or fisheries) if— (a) it is carried out by the assessee by means of experiment or analysis; (b) it is in the nature of— (i) basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view; (ii) applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view; or (iii) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing materials, devices, products or processes, including incremental improvements thereto; and (c) it is not in the nature of— (i) market research or sales promotion; (ii) quality control or routine testing of materials, devices, products or processes; (iii) research in social sciences or humanities; (iv) prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas; (v) the commercial production of a new or improved material, device or product or the commercial use of a new or improved process; (vi) style changes; or (vii) routine data collection; (228) "security" shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; (229) "Securities and Exchange Board of India" means the Board established under section 3 of the Securities and Exchange Board of India Act, 1992; (230) "self-assessment tax" means the tax paid after the financial year but before filing the return of tax bases; (231) "senior citizen" means an individual resident in India who attains the age of sixty-five years or more at any time during the financial year; (232) "service" for the purposes of non-compete agreement means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial nature such as accounting, banking, merchant banking, communication, conveying of news or information, advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, construction, transport, storage, processing, supply of electrical or other energy, boarding and lodging; (233) "Sikkimese" means,— (a) an individual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961 (in this clause referred to as the "Register of Sikkim Subjects"), immediately before the 26th day of April, 1975; 42 of 1956. (b) an individual, whose name is included in the Register of Sikkim Subjects by virtue of the Government of India Order No.26030/36/90-I.C.I., dated the 7th August, 1990 and Order of even number dated the 8th April, 1991; or (c) any other individual, whose name does not appear in the Register of Sikkim Subjects, but it is established beyond doubt that the name of such individual's father or husband or paternal grandfather or brother from the same father has been recorded in that register; (234) "slump sale" means the sale of any undertaking or division of a business for a lump-sum consideration without values being assigned to the individual assets and liabilities in such sale, other than the assignment of values to the assets or liabilities for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees; (235) "society" means a society registered under the Societies Registration Act, 1860 or under any law corresponding to that Act in force in any part of India; (236) "sold" includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of business reorganisation, of any asset by the predecessor to the successor; (237) "special modes of acquisition" means— (a) acquisition of converted property by a Hindu Undivided Family; or (b) acquisition by any person in any of the following manner,— (i) upon distribution of any asset on the total or partial partition of a Hindu undivided family; (ii) by way of a gift; (iii) under a will; (iv) by way of succession, inheritance or devolution; (v) upon distribution of any asset on the dissolution of an unincorporated body; (vi) upon distribution of any asset on the liquidation of a company; (vii) upon a revocable or an irrevocable settlement to a trust; or (viii) under a transaction referred to in clause (d) to clause (h) of sub-section (1) of section 47; (238) "special source", in its grammatical variation, shall have the meaning assigned to it in section 15. (239) "specified association" means any institution, association or body, whether incorporated or not, functioning under any law for the time being in force in India or the laws of the specified territory outside India and notified as such by the Central Government; (240) "specified derivative transaction" means any transaction in derivatives, if— (a) it is carried out electronically on screen-based systems of a recognised stock exchange; (b) it is carried out by a bank or mutual fund or any other person, through a financial intermediary; and (c) it is supported by a time stamped contract note issued by the financial intermediary to every client indicating in the contract note— (i) the unique client identity number allotted under any law for the time being in force; and (ii) the permanent account number allotted under this Code; (241) "specified knowledge-based industry or service" means— (a) information technology software; (b) information technology service; (c) entertainment service; (d) pharmaceutical industry; (e) bio-technology industry; and (f) any other industry or service, as may be notified by the Central Government; (242) "specified territory" means any area outside India and notified as such by the Central Government; (243) "speculative business" means speculative transactions carried on in the nature of a business; (244) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips other than the following transactions; namely,— (a) a specified derivative transaction; (b) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchandising business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured, or merchandise sold by him; (c) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; and (d) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; (245) "speed boat" means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometers per hour in still water and so designed that when running at such speed, its bow will rise; (246) "stamp duty value" means— (a) the value adopted, or assessed, by any authority of the Central Government or a State Government for the purposes of payment of stamp duty in respect of an immovable property; or (b) the value which the stamp valuation authority would have, notwithstanding anything in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of payment of stamp duty; (247) "State Bank of India" means the State Bank of India constituted under the State Bank of India Act, 1955; 23 of 1955. (248) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951; (249) "State industrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956, engaged In the business of providing long-term finance for industrial projects; (250) "State Pooled Finance Entity" means such entity which is set up in accordance with the guidelines for the Pooled Finance Development Scheme notified by the Central Government; (251) "subsidiary" shall have the same meaning as assigned to it in section 4 of the Companies Act, 1956 and includes subsidiary incorporated outside India; (252) "successor" in a "business reorganisation" means— (a) the amalgamated company or amalgamated co-operative, in the case of amalgamation; (b) the merged company in the case of business reorganisation referred to in sub-clause (b) of clause (41); (c) the resulting company, in the case of demerger; (253) "successor in business" means— (a) a successor in a "business reorganisation"; (b) a firm which succeeds another firm carrying on a business; and (c) a person who succeeds any other person in a business; (254) "sweat equity share" means— (a) any security underlying any employees stock option granted under any plan, or scheme, of the employer; or (b) any security issued by a company to its employee or director, at a discount or for consideration other than cash; (255) "tax" means any tax chargeable under the provisions of this Code and includes surcharge or cess, if any; (256) "tax account number" means a number allotted under this Code to a person who is liable to deduct tax at source or collect tax at source under Sub-chapter A or Sub-chapter B of Chapter XIII; (257) "tax arrear" means any amount of tax, interest, penalty, fine or any other sum, due from an assessee under this Code; (258) "tax bases" means— (a) income or total income, as the case may be, in relation to income-tax; (b) net wealth in relation to wealth-tax; (c) dividend distributed in relation to dividend distribution tax or income distributed in relation to tax on distributed income; (d) branch profits in relation to branch profits tax; (e) the income or total income, net wealth, or dividend or income distributed referred to in sub-clauses (a) to (c) of any other person in respect of which the assessee is assessable under this Code; (259) "Tax Recovery Officer" means any Income-tax Officer who may be authorised by the Chief Commissioner or the Commissioner, by general or special order in writing— (a) to exercise the powers of a Tax Recovery Officer; and (b) to exercise or perform such powers and functions, which are conferred on or assigned to an Assessing Officer, as may be prescribed; (260) "test of continuity of business" stands satisfied, in case of a successor, if he— (a) holds at least three-fourths of the book value of fixed assets of the predecessor acquired through business reorganisation, continuously for a minimum period of five financial years immediately succeeding the financial year in which the business reorganisation takes place; (b) continues the business of the predecessor for a minimum period of five financial years immediately succeeding the financial year in which the business reorganisation takes place; and (c) fulfils such other conditions as may be prescribed to ensure the revival of the business of the predecessor or to ensure that the business reorganisation is for genuine business purpose; (261) "threshold limit" means the maximum amount which is not liable to income-tax; (262) "tonnage income scheme" means a scheme for computation of profits of business of operating qualifying ships under the provisions of the Tenth Schedule; (263) "total income" of a financial year means the total income computed under section 63 for that financial year; (264) "total income from special sources" of a financial year means the net result of the aggregation under sub-section (4) of section 62 for that financial year; (265) "total turnover" in relation to a business means the gross sum received or receivable by the assessee, directly or indirectly, in respect of his world-wide sale of goods or supply of services, as the case may be, of the business including any tax, duty, cess or fee (by whatever name called) collected or collectible in respect of the sale or supply; (266) "trade debt" means a debt— (a) which has been taken into account in computing the income of the assessee in any financial year; or (b) which is money lent in the ordinary course of banking or money lending which is carried on by the assessee; (267) "transfer", in relation to a capital asset, includes— (a) the sale, exchange or relinquishment of the asset; (b) the extinguishment of any rights in it; (c) its compulsory acquisition under any law for the time being in force; (d) its conversion into, or its treatment as, stock-in-trade of a business; (e) the buy-back of any shares or other specified securities referred to in clause (a) of the Explanation to section 77A of the Companies Act, 1956, by the issuer of such shares or securities; (f) any contribution of the asset, whether by way of capital or otherwise, to a company or an unincorporated body, in which the transferor is, or becomes, a shareholder or participant, as the case may be; (g) the distribution of the asset on account of dissolution of an unincorporated body; (h) the distribution of the asset on account of liquidation or dissolution of a company; (i) any transaction allowing the possession of an immovable property, to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882; (j) any transaction which enables the enjoyment of the asset, being any immovable property, whether by way of becoming a participant in an unincorporated body or acquiring shares in a company or by way of any agreement, arrangement or in any other manner; (k) the maturity or redemption of a zero coupon bond; (l) slump sale; (m) any damage to the insured asset or its destruction as a result of— (i) flood, typhoon, hurricane, cyclone, earthquake or any other convulsion of nature; (ii) riot or civil disturbance; (iii) accidental fire or explosion; or (iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war); (n) transfer of securities by a person having beneficial interest in the securities held by a depository as registered owner; (o) distribution of money or the asset to a participant in an unincorporated body on account of his retirement from the body; and (p) any disposition, settlement, trust, covenent, agreement or arrangement. (268) "Transfer Pricing Officer" means an Additional Commissioner, Joint Commissioner, Deputy Commissioner or Assistant Commissioner, authorised by the Board to perform all or any of the functions for determining the arm's length price in respect of an international transaction and for levying any penalty connected thereto, in respect of any person or class of persons; (269) "transportation charge" includes— (a) any amount paid whether in or out of India to the assessee, or to any person on his behalf, on account of the carriage of passengers, livestock, mail (including courier) or goods from any place or any port in India; (b) any amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail (including courier) or goods, from any place or any port outside India; (c) any amount paid to, or received or deemed to be received in India by, the assessee or any person on his behalf by way of demurrage charges or handling charges or such other charges; or (d) any amount paid to, or received or deemed to be received by, the assessee or any person on his behalf for charter, whether or not with crew, including an arrangement as slot charter, space charter, joint charter or any similar arrangement, of ships, aircraft or any other mode of transport, in relation to sub-clauses (a) and (b) above; (270) "trust" shall have the meaning assigned to it in clause (e) of section 103; (271) "unabsorbed current capital loss" means the amount determined under sub-section (4) of section 60. (272) "unabsorbed current horse race loss" means the amount determined under sub-section (10) of section 60; (273) "unabsorbed current loss from ordinary sources" means the amount determined under sub-section (3) of section 61; (274) "unabsorbed current loss from the special source" means the amount determined under sub-section (3) of section 62; (275) "unabsorbed current speculative loss" means the amount determined under sub-section (8) of section 60; (276) "unabsorbed preceeding year capital loss" means the unabsorbed current capital loss, for the financial year immediately preceeding the relevant financial year; (277 ) "unabsorbed preceeding year horse race loss" means the unabsorbed current horse race loss for the financial year immediately preceeding the relevant financial year; (278) "unabsorbed preceeding year loss from ordinary sources" means the unabsorbed current loss from ordinary sources, for the financial year immediately preceeding the relevant financial year; (279) "unabsorbed preceeding year loss from the special source" means the unabsorbed current loss from the special source, of the financial year immediately preceeding the relevant financial year; (280) "unabsorbed preceeding year speculative loss" means the unabsorbed current speculative loss for the financial year immediately preceeding the relevant financial year; (281) "undertaking" in relation to demerger includes— (a) any part of an undertaking; (b) a unit or division of an undertaking; (c) a business activity taken as a whole; or (d) individual assets or liabilities or any combination thereof which constitutes a business activity; (282) "unincorporated body" means— (a) a firm; (b) an association of persons; or (c) a body of individuals; (283) "university" means a university established or incorporated by or under a Central, State or Provincial Act and includes an institution deemed to be a University under section 3 of the University Grants Commission Act, 1956; (284) "urban area" means— (a) an area within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the financial year; or (b) an area within such distance from the local limits of any municipality or cantonment board referred to in sub-clause (a), as the Central Government may having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification; (285) "urban development authority" means any authority constituted in India by, or under, any law enacted for the purpose of— (a) dealing with and satisfying the need for housing accommodation; or (b) planning, development or improvement of cities, towns and villages; (286) "valuation date" in relation to wealth-tax means the 31st day of March of the relevant financial year; (287) "valuation officer" means a person appointed as a Valuation Officer by the Central Government and includes a regional valuation officer, a district valuation officer and an assistant valuation officer; (288) "value of inventory of the business" as on the— (a) close of the financial year means the value of stock of finished goods, work-in-progress, raw material, stores and spares or any other inventory remaining in stock, as on the close of the said financial year and the value is computed in accordance with the method of accounting regularly employed by the assessee; and (b) beginning of the financial year shall be— (i) nil, if the business has commenced during the financial year; and (ii) the value of inventory of the business, as on the close of the immediately preceding financial year, in any other case; (289) "value of sweat equity shares" shall be the value of the sweat equity shares on the date on which the option is exercised by the assessee, determined in accordance with the method as may be prescribed, as reduced by the amount actually paid by, or recovered from, the assessee in respect of such shares; (290) "venture capital company" means a company— (a) which has been granted a certificate of registration as a venture capital company under the Securities and Exchange Board of India Act, 1992; and (b) which fulfils all other conditions as may be prescribed in this behalf; (291) "venture capital fund" means a fund— (a) which has been granted a certificate of registration as a venture capital fund under the Securities and Exchange Board of India Act, 1992; and (b) which fulfils all other conditions as may be prescribed in this behalf; (292) "venture capital undertaking" means a domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the business of— (a) nano-technology; (b) information technology relating to hardware and software development; (c) seed research and development; (d) bio-technology; (e) research and development of new chemical entities in the pharmaceutical sector; (f) production of bio-fuels; (g) dairy and poultry; (h) building and operating composite hotel cum convention centre with seating capacity of more than three thousand; (i) development of infrastructural facility; or (j) any other business as may be prescribed; (293) "widely held company" means— (a) a company owned by the Government or the Reserve Bank of India; (b) a company in which not less than forty per cent. of the paid-up share capital is held (whether alone or taken together) by the Government or the Reserve Bank of India or a corporation owned by that bank; (c) a company registered under section 25 of the Companies Act, 1956; (d) a mutual benefit finance company; (e) a co-operative sector company; (f) a public company; (g) a corporation established by or under a Central, State or Provincial Act; (h) a company in which not less than fifty per cent. of the paid up equity share capital is held throughout the relevant financial year, by the companies (whether alone or taken together) to which this clause applies; or (i) a company which is not a private company as defined in section 3 of the Companies Act, 1956 and the shares in such company, carrying not less than fifty per cent. of the voting power, have been allotted and were throughout the relevant financial year held— (I) by the companies referred to in clauses (a) to (h) (whether alone or taken together); or (II)by a subsidiary of a company referred to in clauses (a) to (h), if the whole of the paid-up share capital of such subsidiary company has been held by the parent company or by its nominees throughout the financial year; (294) "working participant" means an individual who is actively engaged in conducting the affairs of the business or profession of the unincorporated body of which he is a participant; (295) "written down value" shall have the meaning assigned to it in section 45; (296) "written off" in relation to a debt means recording an appropriate entry in the account of the debtor so as to reduce the amount of the debt without any recovery thereof; (297) "zero coupon bond" means a bond— (a) issued by any company, fund or scheduled bank in accordance with a scheme notified by the Central Government; (b) in respect of which no payment and benefit is received or receivable before maturity or redemption from the company, fund or scheduled bank; and (c) which the Central Government may, by notification, specify in this behalf.