Income-tax (21st Amendment) Rules, 2002 - 207/2002 - Income Tax

Income-tax (21st Amendment) Rules, 2002 NOTIFICATION NO. 207 Dated 13th August. 2002 In exercise of powers conferred by Section 295, read with Section 89 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :- 1. (1) These rules may be called the Income-tax (21st Amendment) Rules, 2002. (2) They shall be deemed to have come into force on the Ist day of April. 2002. 2. In the Income-tax Rules, 1962, in rule 21A,- (i) for Sub-rules (1) and (2), the following shall be substituted, namely :- "(I) Where, by reason of any portion of an assessee's salary being paid in arrears or in advance or, by reason of any portion of family pension received by an assessee being paid in arrears or, by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of clause (3) of Section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the relief to be granted under Sub-section (1) of Section 89 shall be â€" (a) where any portion of the assessee's salary is received in arrears or in advance or, any portion of family pension is received by an assessee in arrears, in accordance with the provisions of Sub-rule (2); (b) where the payment is in the nature of gratuity in respect of past services of the assessee extending over a period of not less than five years, in accordance with the provisions of Sub-rule (3); (c) where the payment is in the nature of compensation received by the assessee from his employer or former employer at or in connection with the termination of his employment after continuous service for not less than three years and where the unexpired portion of his term of employment is also not less than three years, in accordance with the provisions of Sub-rule (4); (d) where the payment is in commutation of pension, in accordance with the provisions of Sub-rule (5); (e) where the payment is not in the nature of salary paid in arrears or in advance or gratuity in respect of past services or compensation received at or in connection with the termination of employment or in commutation of pension, in accordance with the provisions of Sub-rule (6)." "(2) (a) In a case referred to in clause (a) of Sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the salary is received in arrears or in advance or, in which the family pension is received in arrears (such salary or family pension being hereafter in this Sub-rule referred to respectively as the additional salary or additional family pension, as the case may be, and such previous year being hereafter in this Sub-rule referred to as the relevant previous year) shall be reduced by the amount, if any. by which the tax on the additional salary or additional family pension, calculated in the manner specified in clause (b), exceeds the tax or the aggregate tax on the additional salary or additional family pension, calculated in the manner specified in clause (c) or clause (d), as the case may be. (b) Tax shall be calculated on the total income of the relevant previous year as reduced by the additional salary or additional family pension, as the case may be, as if the total income so reduced were the total income of the assessee, and the amount by which the tax so calculated falls short of the tax on the total income before such reduction shall, for the purposes of clause (a), be taken to be the tax on the additional salary or additional family pension, under this clause. (c) Where the additional salary or additional family pension, as the case may be, relates to only one previous year, tax shall be calculated on the total income of the said previous year as increased by the additional Salary or additional family pension, as if the total income so increased were the total income of the assessee, and the amount by which the tax so calculated exceeds the tax payable by the assessee in respect of the total income of the said previous year shall, for the purposes of clause (a), be taken on the additional salary or additional family pension, under this clause. (d) Where the additional salary or additional family pension, as the case may be, relates to more than one previous year,- (i)the previous years to which the additional salary or additional family pension relates and the amount relating to each such previous year shall first be ascertained; (ii) tax shall, then, be calculated on the total income of each such previous year as increased by the amount relating to such previous year ascertained under Sub-clause (i), as if the total income so increased were the total income of that previous year, and the amount by which the aggregate amount of tax in respect of the aforesaid previous years as calculated under Sub-clause (ii) exceeds the aggregate amount of tax payable by the assessee in respect of the total income of the said previous years shall, for the purposes of clause (a), be taken to be the aggregate tax on the additional salary or additional family pension, under this clause.", Sd/- (Dr. Dheeraj Bhatnagar) Director F.No.l42/29/2002-TPL Footnote:- The principal rules were published under Notification No. S.0.969 dated 26-3-1962 which has been amended from time to time, the last such amendment was made vide notification No. 198/2002 dated 5.8.2002.