Section 2 - Income-Tax - Finance (No. 2) Act, 1967

CHAPTER II INCOME-TAX AND ANNUITY DEPOSITS FOR THE FINANCIAL YEAR 1967-68 2. Income-Tax (1) Subject to the provisions of sub-sections (2), (3) and (4), for the assessment year commencing on the 1st day of April, 1967, income-tax shall be charged at the rates specified in Part I of the First Schedule and, in the cases to which Paragraphs A, B, C and D of that Part apply, shall be increased by a surcharge for purposes of the Union and a special surcharge for purposes of the Union calculated in either case in the manner provided therein. (2) In making any assessment for the assessment year commencing on the 1st day of April, 1967, where the total income of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), includes any profits and gains from life insurance business, the income-tax payable by it shall be the aggregate of the income-tax calculated - (i) on the amount of profits and gains from life insurance business so included, at the rate applicable in the case of the Life Insurance Corporation of India, in accordance with Paragraph E of Part I of the First Schedule, to that part of its total income which consists of profits and gains from life insurance business; and (ii) on the remaining part of its total income, at the rate applicable to the company on its total income. (3) In cases to which Chapter XII of the Income-tax Act, 1961 (43 of 1961) hereinafter referred to as the Income-tax Act) applies, the tax chargeable shall be determined as provided in that Chapter, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter, as the case may be. (4)(a) In respect of any assessment for the assessment year commencing on the 1st day of April, 1967, in the case of an assessee being a domestic company or an assessee other than a company, - (i) where his total income includes any profits and gains derived from the export (made before the sixth day of June, 1966) of any goods or merchandise out of India, he shall be entitled to a deduction, from the amount of income-tax with which he is chargeable, of an amount equal to the income-tax calculated at one-tenth of the average rate of income-tax on the amount of such profits and gains included in his total income; (ii) where he is engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951), and has, during the previous year, exported before the sixth day of June, 1966, such articles out of India, he shall be entitled, in addition to the deduction of income-tax referred to in sub-clause (i), to a further deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on an amount equal to two per cent. of the sale proceeds receivable by him in respect of such export made before the date aforesaid. Explanation : In this sub-clause, the expression sale proceeds does not include freight or insurance attributable to the transport of the articles beyond the customs station as defined in the Customs Act, 1962 (52 of 1962); (iii) where he is engaged in the manufacture of any articles in an industry specified in the said First Schedule and has, during the previous year, sold before the sixth day of June, 1966, such articles to any other person in India who himself has exported them out of India, and evidence is produced before the Income-tax Officer of such articles having been so exported, the assessee shall be entitled to a deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on a sum equal to two per cent. of the sale proceeds receivable by him from the exporter in respect of such articles sold to the exporter before the date aforesaid. (b) The aggregate amount of the deductions under this sub-section shall in no case exceed the amount of income-tax otherwise payable by the assessee. (c) Nothing contained in sub-clause (ii) or sub-clause (iii) of clause (a) shall apply in relation to - (1) fuels, (2) fertilisers, (3) photographic raw film and paper, (4) textiles (including those dyed, printed or otherwise processed) made wholly or in part of jute, including jute twine and rope, (5) newsprint, (6) pulp - wood pulp, mechanical, chemical, including dissolving pulp, (7) sugar, (8) vegetable oils and vanaspathi, (9) cement and gypsum products, (10) arms and ammunition, and (11) cigarettes, respectively, specified in items 2, 18, 20, 23(2), 24(2), 24(5), 25, 28, 35, 37 and 38 of the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951). (d) The amount of any profits and gains derived from the export of any goods or merchandise out of India in respect of which deduction of income-tax is admissible under sub-clause (i) of clause (a) shall be computed in accordance with the rules made by the Board in this behalf. (5) In cases in which tax has to be deducted under sections 193, 194, 194A and 195 of the Income-tax Act at the rates in force, the deduction shall be made at the rates specified in Part II of the First Schedule. (6) In cases in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the Income-tax Act or charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section 175 or sub-section (2) of section 176 or deducted under section 192 of the said Act from income chargeable under the head Salaries or in which the advance tax payable under Chapter XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, advance tax shall be so calculated, charged, deducted or computed at the rate or rates specified in Part III of the First Schedule. (7) For the purposes of this section and the First Schedule, - (a) company in which the public are substantially interested means a company which is such a company as is referred to in section 108 of the Income-tax Act; (b) domestic company means an Indian company, or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 1967, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income in accordance with the provisions of section 194 of that Act; (c) earned income means any income of an assessee who is an individual, or a Hindu undivided family, or an unregistered firm [not being an unregistered firm assessed under clause (b) of section 183 of the Income-tax Act] or an association of persons or body of individuals, whether incorporated or not, not being - (A) a company, or (B) a local authority, or (C) a registered firm, or (D) an unregistered firm assessed under clause (b) of the said section 183 - (i) which is chargeable under the head Salaries ; or (ii) which is chargeable under the head Profits and gains of business or profession where the business or profession is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engaged in the conduct of the business or profession; or (iii) which is chargeable under the head Income from other sources if it is immediately derived from personal exertion or represents a pension or superannuation or other allowance given to the assessee in respect of the past services of any deceased person, or which is chargeable under that head under clause (ia) of sub-section (2) of section 56 of the Income-tax Act, and includes any such income which, though it is the income of another person, is included in the assessees total income under the provisions of the Income-tax Act, but does not include any such income on which income-tax is not payable under clause (iii) or clause (v) of section 86 of that Act or which is exempted from tax under a notification issued under section 60 or section 60A of the Indian Income-tax Act, 1922 (11 of 1922), as continued in force by clause (l) of sub-section (2) of section 297 of the Income-tax Act; (d) industrial company means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. Explanation : For the purposes of this clause, a company shall be deemed to be mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VIA of the Income-tax Act) is not less than fifty-one per cent. of such total income; (e) tax free security means any security of the Central Government issued or declared to be income-tax free, or any security of a State Government issued income-tax free, the income-tax whereon is payable by the State Government; (f) unearned income means income which is not earned income ; (g) all other words and expressions used in this section and the First Schedule but not defined in this sub-section and defined in the Income-tax Act, shall have the meanings respectively assigned to them in that Act.