Section 27 - Amendment of section 164 - Finance (No. 2) Act, 1980

27. Amendment of section 164 In section 164 of the Income-tax Act, - (a) in sub-section (1), - (i) for the portion beginning with the words tax shall be charged - and ending with the words more beneficial to the revenue : , the following shall be substituted, namely :- tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate : ; (ii) in the proviso, - (1) for clause (i), the following clause shall be substituted, namely :- (i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or ; (2) in clause (ii), for the words under a trust declared by will , the words under a trust declared by any person by will and such trust is the only trust so declared by him shall be substituted; (3) in the concluding portion, for the words as if the relevant income or part of relevant income , the words on the relevant income or part of relevant income as if it shall be substituted; (b) in sub-section (3), - (i) for the portion beginning with the words is not specifically receivable and ending with the words whichever course would be more beneficial to the revenue : , the following shall be substituted, namely :- is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of - (a) the tax which would be chargeable on that part of the relevant income which is applicable to charitable or religious purposes (as reduced by the income, if any, which is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and (b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate : ; (ii) in the proviso, - (1) for clause (i), the following clause shall be substituted, namely :- (i) none of the beneficiaries in respect of the part of the relevant income which is not applicable to charitable or religious purposes has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or ; (2) in clause (ii), for the words under a trust declared by will , the words under a trust declared by any person by will and such trust is the only trust so declared by him shall be substituted; (3) in the concluding portion, for the words as if the relevant income , the words on the relevant income as if the relevant income shall be substituted; (c) after sub-section (3), the following Explanations shall be inserted, namely :- Explanation 1 : For the purposes of this section, - (i) any income in respect of which the persons mentioned in clause (iii) and clause (iv) of sub-section (1) of section 160 are liable as representative assessee or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed; (ii) the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and are ascertainable as such on the date of such order, instrument or deed. Explanation 2 : In this section, maximum marginal rate means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an association of persons as specified in the Finance Act of the relevant year. .