Section 88A - Omitted - Income-tax Act, 1961

Rebate in respect of investment in certain new shares or units. 88A. 1 [****] ---------------------- Notes :- 1. Omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1994 . Prior to its omission, section 88A, as amended by the Finance Act, 1990, w.e.f. 1-4-1991 and Finance Act, 1994, w.r.e.f. 1-4-1991, read as under : '88A. Rebate in respect of investment in certain new shares or units. -(1) Where an assessee being- ( a ) an individual; or ( b ) a Hindu undivided family; ( c ) [***] has acquired, in the previous year, out of his income chargeable to tax,- ( i ) equity shares forming part of any eligible issue of capital; or ( ii ) units issued under any scheme of any Mutual Fund specified under clause ( 23D ) of section 10 or of the Unit Trust of India, established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963), if the amount of subscription to such units is subscribed, within a period of six months from the close of subscription under such scheme, only to eligible issue of capital, he shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to twenty per cent of the cost of such shares or units to such assessee : Provided that the amount of subscription to such units may be subscribed, for a period not exceeding six months from the close of subscription under any scheme referred to in clause ( ii ) in such securities of the Central Government, as may be approved by the Board in this behalf : Provided further that no deduction shall be allowed in respect of units issued under any scheme referred to in clause ( ii ) where the subscription under such scheme closes after the 30th day of September, 1990. Explanation . -Where in any previous year, the assessee has acquired any shares or units referred to in this sub-section and has, within a period of six months from the end of that previous year paid the whole or a part of the amount, if any, remaining unpaid on such shares or units, the amount so paid shall be deemed to have been paid by the assessee towards the cost of such shares or units in the previous year. (2) Where the aggregate cost to the assessee of the shares or units referred to in sub-section (1) which are acquired by him in the previous year exceeds twenty-five thousand rupees, the deduction under that sub-section shall be allowed only with reference to such of those shares or units (being shares or units the aggregate cost whereof to the assessee does not exceed twenty-five thousand rupees) as are specified by him in this behalf. (3) For the purposes of this section, eligible issue of capital means an issue of equity shares which satisfies the following conditions, namely :- ( a ) the issue is made by a public company formed and registered in India and the issue is wholly and exclusively for the purposes of carrying on the business of- ( i ) construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule; or ( ii ) providing long-term finance for construction or purchase of houses in India for residential purposes : Provided that in the case of a public company carrying on the business referred to in this sub-clause, such company is approved by the Central Government for the purposes of this section; or ( iii ) a hospital; or ( iv ) a hotel approved by the prescribed authority; or ( v ) operation of ships; ( b ) the issue is an issue of capital made by the company for the first time : Provided that this clause shall not apply in the case of an issue of equity shares made by a public company formed and registered in India with the main object of carrying on the business of operation of ships; ( c ) the shares forming part of the issue are offered for subscription to the public and such offer for subscription is made by the company before the 1st day of April, 1991; ( d ) such other conditions as may be prescribed : Provided that in the case of a company which had originally been incorporated as a private company but has become a public company under the provisions of the Companies Act, 1956 (1 of 1956), an issue of equity shares made by it for the first time after it has become a public company shall not be regarded as an eligible issue of capital, if- ( i ) such company had declared, distributed or paid any dividend when it was a private company; or ( ii ) any of the shares forming part of such issue is offered for subscription at a premium. Explanation 1. - If any question arises as to whether any issue of equity shares would constitute an eligible issue of capital for the purposes of this section, the question shall be referred to the Central Government whose decision thereon shall be final. Explanation 2 .- In this sub-section and sub-section (4), public company shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956). (4) The deduction under sub-section (1) shall not be allowed unless the assessee has- ( i ) subscribed to the shares in pursuance of an offer for subscription to the public made by the public company or in pursuance of a reservation or an option in his favour by reason of his being a promoter of the company; or ( ii ) purchased the shares from a person who is specified as an underwriter in respect of the issue of such shares in pursuance of clause 11 of Part I of Schedule II to the Companies Act, 1956 (1 of 1956) and who has acquired such shares by virtue of his obligation as such underwriter. (5) If any equity shares or units, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income-tax so allowed in respect of such equity shares or units in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be tax payable by the assessee for the assessment year relevant to such previous year and shall be added to the amount of income-tax on the total income of the assessee with which he is chargeable for such assessment year. Explanation . -A person shall be treated as having acquired any shares or units on the date on which his name is entered in relation to those shares or units in the register of members of the company or in the relevant records of any Mutual Fund or Unit Trust of India, referred to in sub-section (1). (6) Where a deduction is claimed and allowed under sub-section (1) with reference to the cost of any equity shares, the cost of such shares shall not be taken into account for the purposes of section 54E.'