Section 15 - Insertion of new section 44AC - Finance Act, 1988

15. Insertion of new section 44AC After section 44AB of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 1989, namely :- 44AC. Special provision for computing profits and gains from the business of trading in certain goods. -(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, being a person other than a public sector company (hereafter in this section referred to as the buyer), obtaining in any sale by way of auction, tender or any other mode, conducted by any other person or his agent (hereafter in this section referred to as the seller), - (a) any goods in the nature of alcoholic liquor for human consumption (other than Indian made foreign liquor), a sum equal to forty per cent. of the amount paid or payable by the buyer as the purchase price in respect of such goods shall be deemed to be the profits and gains of the buyer from the business of trading in such goods chargeable to tax under the head Profits and gains of business or profession ; (b) the right to receive any goods of the nature specified in column (2) of the Table below, or such goods, as the case may be, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of the amount paid or payable by the buyer in respect of the sale of such right or as the purchase price in respect of such goods shall be deemed to be the profits and gains of the buyer from the business of trading in such goods chargeable to tax under the head Profits and gains of business or profession . TABLE S.No. Nature of goods Percentage (1) (2) (3) (i) Timber obtained under a forest lease Thirty-five per cent. (ii) Timber obtained by any mode other than under a forest lease Fifteen per cent. (iii) Any other forest produce not being Timber Thirty-five per cent. (2) For the removal of doubts, it is hereby declared that the provisions of sub-section (1) shall not apply to buyer (other than a buyer who obtains any goods from any seller which is a public sector company) in the further sale of any goods obtained under or in pursuance of the sale under sub-section (1). (3) In a case where the business carried on by the assessee does not consist exclusively of trading in goods to which this section applies and where separate accounts are not maintained or are not available, the amount of expenses attributable to such other business shall be an amount which bears to the total expenses of the business carried on by the assessee the same proportion as the turnover of such other business bears to the total turnover of the business carried on by the assessee. Explanation : For the purposes of this section, seller means the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm.