Section 32 - Amendment of section 80C - Finance Act, 1987

32. Amendment of section 80C In section 80C of the Income-tax Act, with effect from the 1st day of April, 1988, - (a) in sub-section (2), for clause (h), the following clause shall be substituted, namely :- (h) where the assessee is an individual or a Hindu undivided family or where the assessee is an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu, any sums paid in the previous year by such assessee out of his or its income chargeable to tax, - (i) as subscription to any such security of the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf; or (ii) for the purposes of purchase or construction of a residential house property the construction of which is completed after the 31st day of March, 1987, and the income from which is chargeable to tax under the head Income from house property (or which would, if it had not been used for the assessee s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of - (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or (b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or (c) repayment of the amount borrowed by the assessee from - (1) the Central Government or any State Government, or (2) any bank, including a co-operative bank, or (3) the Life Insurance Corporation, or (4) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is approved for the purposes of clause (viii) of sub-section (1) of section 36, or (5) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or (6) the assessee s employer where such employer is a public company; (d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee, but shall not include any payment towards or by way of - (A) the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or (B) the cost of the land, except where the consideration for the purchase of the house property is a composite amount and the cost of the land alone cannot be separately ascertained; or (C) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or (D) any expenditure in respect of which deduction is allowable under the provisions of section 24; ; (b) in sub-section (4), in clause (ii), for the words, brackets, letter and figure referred to in clause (g) of sub-section (2) , the words, brackets, letters and figure referred to in clause (g) or clause (h) of sub-section (2) shall be substituted; (c) after sub-section (6) and the Explanations below that sub-section, the following sub-sections shall be inserted, namely :- (7) In the case of an assessee referred to in clause (h) of sub-section (2), - (a) where any sums specified in sub-clause (ii) of that clause, with reference to which the deduction under sub-section (1) has been allowed are refunded to or received back by the assessee in any previous year (hereinafter referred to as the relevant previous year), then, - (i) no deduction shall be allowed to the assessee under sub-section (1) with reference to any of the sums, specified in that sub-clause, paid in the relevant previous year; and (ii) the aggregate amount of the deductions so allowed in respect of the previous year or previous years preceding the relevant previous year shall be deemed to be the income of the assessee of the relevant previous year and shall be chargeable to tax under the head Income from other sources ; (b) where the house property referred to in sub-clause (ii) of that clause is transferred by the assessee before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, then, - (i) no deduction shall be allowed to the assessee under sub-section (1) with reference to any of the sums, specified in that sub-clause, paid in the previous year in which the transfer is so made; and (ii) the aggregate amount of the deductions allowed under sub-section (1) with reference to the sums specified in that sub-clause in respect of the previous year or previous years preceding the previous year referred to in sub-clause (i) of this clause shall be deemed to be the income of the assessee of the previous year in which the transfer is made and shall be chargeable to tax under the head Income from other sources ; (c) where the aggregate of any sums specified in sub-clause (ii) of that clause exceeds an amount of ten thousand rupees, a deduction under sub-section (1) shall be allowed with reference to so much of the aggregate as does not exceed an amount of ten thousand rupees. (8) In this section, - (a) Life Insurance Corporation means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956); (b) public company shall have the same meaning as in section 3 of the Companies Act, 1956 (1 of 1956); (c) transfer shall be deemed to include also the transactions referred to in clause (f) of section 269UA. .