9911796707
TMI BlogNotes on clauses, Schedules, MemorandumX X X X Extracts X X X X X X X X Extracts X X X X ..... other than the financial year, the income-tax shall be charged accordingly. Such income-tax shall be charged at the rate specified in the First Schedule in the manner provided therein. The income-tax shall be deducted or collected at source or paid in advance in respect of the income chargeable to tax in accordance with the provisions of the Code. The chargeability of income-tax for any financial year shall be determined in accordance with the provisions of this Code as they stand on the 1st April of that financial year. Clause 3 deals with the scope of total income. It provides that subject to the provisions of the Code, the total income of any financial year of a person, who is a resident, shall include all income from whatever source derived which— (a) accrues, or is deemed to accrue, to him in India during the year; (b) accrues to him outside India during the year; (c) is received, or is deemed to be received, by him, or on his behalf, in India during the year; or (d) is received by him, or on his behalf, outside India during the year. The said clause also provides that subject to the provisions of the Code, the total income of any financial year of a person, who is a non-resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Government; or the rest or leave period preceding or succeeding the period of service rendered in India and forms part of the service contract of employment; (b) any dividend paid by a domestic company outside India; (c) any insurance premium including re-insurance premium accrued from or payable by any resident or non-resident in respect of insurance covering any risk in India; (d) interest accrued from or payable by any resident or the Government; (e) interest accrued from or payable by any non-resident, if the interest is in respect of any debt incurred and used for the purposes of a business carried on by the non-resident in India or for earning any income from any source in India; (f) royalty accrued from or payable by any resident or the Government; (g) royalty accrued from or payable by a non-resident, if the royalty is for the purposes of a business carried on by the non-resident in India; or for earning any income from any source in India; (h) fees for technical services accrued from or payable by any resident or the Government; (i) fees for technical services accrued from or payable by any non-resident, in respect of services utilised for the purposes of a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (2), if such interest has not been claimed by the nonresident as a deduction from his tax base chargeable in India. The clause also provides that in the case of a business of which all the operations are not carried out in India, the income of the business deemed to accrue in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. The clause also provides that income (other than income from employment and any dividend paid by an Indian company outside India) shall be deemed to accrue in India, whether or not,— (a) the payment is made in India; (b) the services are rendered in India; (c) the non-resident has a residence or place of business or any business connection in India; or (d) the income has accrued in India. The clause further provides that where the income of a non-resident, in respect of transfer, outside India, of any share or interest in a foreign company, is deemed to accrue in India under clause (d) of sub-section (1), it shall be computed in accordance with the formula 'A*B/C', where A denotes income from the transfer computed in accordance with provisions of this Code as if the transfer was effected in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement, trust, covenant, agreement or arrangement. Clause 9 provides that the total income of any individual shall, inter alia, include all income accruing directly or indirectly— (i) to the spouse, by way of salary, commission, fees or any other form of remuneration, whether in cash or in kind, from a concern in which the individual has a substantial interest; (ii) from assets transferred, directly or indirectly, to the spouse by the individual, otherwise than for adequate consideration, or in connection with an agreement to live apart; (iii) from assets transferred, directly or indirectly, to the son's wife by the individual, otherwise than for adequate consideration; or (iv) from assets transferred, directly or indirectly, to any other person by the individual otherwise than for adequate consideration, to the extent to which the income from such assets is for the immediate or deferred benefit of the spouse or son's wife. The income referred to in sub-clause (i) above shall be included in the total income of the spouse whose total income is higher. The said clause also provides that the total income of any individual will not include any income accruing to the spouse where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. Sub-chapter I relates to general provisions. Clause 12 provides that the total income shall be computed in accordance with the provisions of the Chapter. It also clarifies that unless otherwise provided in the Code, reference to any accrual, receipt, expenditure, withdrawal, asset or liability shall be construed to be in relation to the financial year in respect of which, and the person in respect of whom, the income is computed. Clause 13 relates to classification of sources of income. It provides that for the purposes of computation of total income of any person for any financial year, income from all sources shall be classified as follows: A.— Income from ordinary sources. B.— Income from special sources. Clause 14 deals with computation of income from ordinary sources. It provides that the income from any source, other than a special source, shall be computed under the class "income from ordinary sources" and such income shall be classified under the following heads of income, namely:— A.— Income from employment. B.— Income from house property. C.— Income from business. D.— Capital gains. E.— Income from residuary sources. Clause 15 deals with computation of income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year; (d) any expenditure incurred for an activity which is an offence or which is not permissible by law; (e) any provision made for any liability, if it remains unascertained by the end of the financial year; and (f) any unexplained expenditure referred to in item (q) of sub-clause (2) of clause 58. The said clause also provides that any amount allowed as a deduction under any provision of the Code shall not be allowed as a deduction under any other provision of the Code. The provisions of this clause shall apply notwithstanding anything contained in any other provisions of Chapter III. Clause 19 provides that any amount on which tax is deductible at source under Chapter XIII during the financial year shall not be allowed as a deduction in computing the total income if,— (a) the tax has not been deducted during the financial year; or (b) the tax, after such deduction, has not been paid on or before the due date specified in sub-clause (1) of clause 144. The said clause also provides that a deduction shall be allowed to the person in respect of such amount in any subsequent financial year, if— (a) tax has been deducted during the financial year, but paid in such subsequent year af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employee in an approved provident fund to the extent it does not exceed twelve per cent. of the salary of the employee; (g) any amount of interest credited, in the financial year, on the balance to the credit of an employee in an approved fund to the extent it does not exceed the amount of interest payable at the rate notified by the Central Government; (h) any allowance provided by an employer to meet the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the employee, to such extent as may be prescribed. The said clause provides that for the purposes of (d), (f) and (h) above, salary means basic salary and includes dearness allowance, if the terms of employment so provide. Part B of sub-chapter II relates to income from house property. Clause 24 provides that the income from letting of any house property owned by any person shall be computed under the head "income from house property". The said clause further provides that the income from any house property shall be computed under this head notwithstanding that the letting, if any, of the property is in the nature of trade, commerce or business. Where the house property is owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. Such interest shall be reduced by any part thereof which has been allowed as deduction under any other provision of the Code. Clause 28 provides that the amount of rent received in advance shall be included in the gross rent of the financial year to which the rent relates. Clause 29 provides that income in respect of the rent received in arrears in a financial year shall be computed under the head "Income from house property", whether or not the person continues to be owner of the property in that year. The said clause also provides that the amount of rent referred to above shall be included in the gross rent under clause 26 for that financial year Clause 14 of the Code seeks to provide that the "income from the ordinary sources" shall be computed under following heads of income: A.— Income from employment B.—Income from house property C.—Income from business D.—Capital gains E.—Income from residuary source. Accordingly, Clause 30 seeks to provide that income from any business carried on by the person at any time during a financial year shall be computed under the head "Income from business". The income of distinct and separate business which is specified in clause 31 shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Thirteenth Schedule. The profits from any business not referred to above shall be the gross earnings from the business as reduced by the amount of business expenditure incurred by the person. Clause 33 seeks to provide that the gross earnings from the business not covered by the Eighth, Tenth, Eleventh, Twelfth and the Thirteenth Schedule, shall be the aggregate of the following, namely:— (i) the amount of any accrual or receipt from, or in connection with, the business; (ii) the value of any benefit or perquisite, whether convertible into money or not, accrued or received from, or in connection with, the business; (iii) the value of the inventory of the business, as on the close of the financial year; and (iv) any amount received from a business after its discontinuance. (i) any consideration, accrued or received under a non-compete agreement; (ii) any amount or value of any benefit, whether convertible into money or not, accrued to, or received by a person, being a trade, professional or similar association, in respect of specific services performed for its members; The said clause provides that the accruals or receipts referred to above shall, inter-alia, include— (iii) any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fills specified conditions; (b) the value of inventory of the business, as at the beginning of the financial year; (c) loss of inventory, or money, on account of theft, robbery, fraud or embezzlement, occurring in the course of the business, if the inventory, or the money, is written off in the books of account; (d) any amount credited to the provision for bad and doubtful debts account, not exceeding one per cent. of the aggregate average advances computed in the prescribed manner, if the person is a financial institution, the amount is charged to the profit and loss account for the financial year in accordance with the prudential norms of the Reserve Bank of India in this regard, and the amount of trade debt or part thereof written off as irrecoverable in the books of the person is debited to the provision for bad and doubtful debts account; (e) the debit balance, if any, on the last day of the financial year, in the provision for bad and doubtful debts account made under clause (c), if the balance has been transferred to the profit and loss account of the financial year; (f) trade debt or part thereof, if the person is not a financial institution, and the amount is written off a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the amount of interest paid to trade creditors; (c) the amount of interest paid to any participant to the extent prescribed which is in acordance with the agreement of formation of unincorporated body and relates to the period following year the date of such agreement; (d) the amount of any charge or fee paid in respect of any credit facility which has not been utilised; (e) the amount of any incidental financial charges; (f) the proportionate amount of discount or premium payable on any bond or debenture issued by the person, calculated in the manner as may be prescribed. Sub-clause (2) of clause 36, inter alia, provides that the amount of finance charges shall not include any amount paid in respect of capital borrowed or debt incurred for acquisition of a capital asset, incidental financial charges for issue of convertible debentures, bonds or share capital and any amount of interest referred to in section 23 of the Micro, Small and Medium Enterprises Development Act, 2006. Sub-clause (3) of the said clause provides that the amount of interest on any capital borrowed or debt incurred, which is payable to any financial institution, shall be allowed as a deduction in the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in clause 45 read with the Fifteenth Schedule, in respect of all the business capital assets forming part of the relevant block of assets specified therein; and (b) nil, in respect of any other business capital asset not forming part of any block of assets specified in the Fifteenth Schedule. The said clause further provides that the deduction under this clause in respect of such asset shall be restricted to fifty per cent. if the asset is acquired by the person during the financial year, and is used for the purposes of business for a period of less than one hundred and eighty days in the relevant financial year. Clause 38 provides that the depreciation in respect of any business capital asset shall, notwithstanding anything contained in any other provisions of the Code, not be deemed to have been actually allowed, if the asset does not form part of any block of assets specified in the Fifteenth Schedule or the expenditure incurred for acquiring the asset has been allowed as a deduction under any provision of this Code. Clause 39 seeks to provide that in addition to depreciation, an initial depreciation of business capital assets shall be allowed to the person if he is eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific research and development, the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority and the company enters into an agreement with the prescribed authority for co-operation in the research and development facility and for audit of the accounts of such facility. The said clause further provides that in case of business re-organisation the approval granted to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor. The said clause also provides that the deduction under this clause shall not be allowed to a company, if the expenditure is incurred in the course of its business which is in the nature of scientific research and development. The Board may for the purposes of this clause, prescribe the nature of business, conditions and manner as may be considered necessary for grant of approval. Clause 42 provides for the method of computation of profit on transfer of a business capital asset in case of amount, which forms part of a block of assets specified in the fifteenth schedule. It provides that the amount of profit where such capital asset is transferred, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of excise, in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944; C = the amount of subsidy, grant or reimbursement (by whatever name called) received by the assessee, directly or indirectly, from the Central Government, State Government, any authority established under any law for the time being inforce or by any other person in respect of, or with reference to, any asset including the relevant asset; D = cost of all the assets in respect of or with reference to which the amount 'C' is so received. The said clause further provides that irrespective of the methodology provided above, the Assessing Officer may determine, with the prior approval of the Joint Commissioner, the actual cost if the assets were, at any time before the date of acquisition by the person, business assets and the Assessing Officer is satisfied that the main purpose of the transfer of the assets to the person was to reduce the income-tax liability by claiming depreciation with reference to an enhanced cost. The said clause also provides that the actual cost of the business asset to the person shall be the deemed written down value, if the asset is acquired by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermining the actual cost and the method of determining the actual cost in the circumstances which are not provided for under the said clause. It is provided that in the said clause, deemed written down value of a business asset shall be the actual cost to the person or the previous owner, as the case may be, when he first acquired the asset as reduced by the aggregate amount of depreciation that would have been allowable to the person or the previous owner, as the case may be, for the preceding financial years as if the asset was the only asset in the relevant block of assets. Clause 45 relates to the meaning of the written down value and adjusted value of assets. The said clause, inter alia, provides that the written down value of any block of assets at the beginning of the financial year shall be the written down value of the block of assets at the close of the immediately preceding financial year. The written down value of the block of assets at the close of the immediately preceding financial year shall be the adjusted value of the block of assets in the immediately preceding financial year as reduced by the amount of capital allowance, if any, allowed under clause 37 during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year, the method of determining the allocation of the written down value or the adjusted written down value of the assets between the different businesses carried on by the person and the method of determining the written down value or the adjusted written down value of the block of assets in the circumstances which are not provided for in the said clause. Accordingly, Clause 46 provides that the income from the transfer of any investment asset shall be computed under the head "Capital gains". In addition to such income, the income under the head "Capital gains" shall also include— (a) income from the transfer referred to in item (d) or item (e) of sub-clause (1) of clause 47, if the parent company or its nominee ceases to hold the whole of the share capital of the subsidiary company or the investment asset is converted by the transferee into, or treated by it as, its business trading asset, before the expiry of a period of eight years from the date of such transfer; (b) the income from the transfer referred to in item (f) of sub-clause (1) of clause 47, if any of the conditions laid down in sub-clause (16) or sub-clause (74) of clause 314 is not complied with; (c) the income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholder of shares in the successor co-operative bank; (i) transfer of any investment asset by a sole proprietary concern to a company, subject to the fulfillment of the conditions specified therein; (j) transfer of any work of art, archaeological, scientific or art collection, book, manuscript, drawing, painting, photograph or print, to the Government or a University or any public museum or institution of national importance or of renown throughout any State or States and notified by the Central Government; (k) transfer of any investment asset by a company to its shareholders on its liquidation; (l) transfer of any investment asset in a transaction of reverse mortgage under a scheme notified by the Central Government; (m) transfer of any beneficial interest in a security by a depository. The said clause also defines "banking company", "banking institution", "private company", "public unlisted company" "depository" and "security". Clause 48 provides that the financial year of taxability of the income from the transfer of an investment asset shall be the financial year in which the transfer takes place and income shall be taxable in the hands of the transferor. However, such income s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e full value of the consideration shall be the amount received by, or accruing to, the transferor or the recipient, as the case may be, directly or indirectly, as a result of the transfer of the investment asset. The said clause also specifies as to what amount would constitute the full value of consideration in respect of transfers made under certain specific circumstances. Clause 51 relates to deduction for cost of acquisition of an investment asset. Sub-clause (1) of the said clause provides that for the purpose of computation of income from transfer of an investment asset, the cost of acquisition of an investment asset, the cost of improvement of such asset and the amount of expenditure incurred wholly and exclusively in connection with the transfer of such asset, shall be allowed as deduction. Sub-clause (2) of the said clause provides that in the case of an equity share in a company or a unit of an equity oriented fund, transferred at any time after one year from the end of the financial year in which such asset is acquired and such transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004, if the income computed after giving ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition, shall be the cost at which the asset was acquired by the previous owner or at the option of the person, the fair market value of the asset on the 1st day of April, 2000, if the asset was acquired by the previous owner or the person before such date. The said clause also provides that the cost of acquisition of an investment asset referred to in items (h), (i) or (j) of sub-clause (2) of clause 58 shall be the fair market value or the stamp duty value, as the case may be, which has been taken into account for the purposes of the said clauses. The said clause further provides that the cost of acquisition of an investment asset being an undertaking or division of a business transferred by way of a slump sale referred to in sub-clause (267) of clause 314 shall be the net worth of such undertaking or division. The said clause also provides that the cost of acquisition of an investment asset forming part of a bundle of investment assets acquired by any participant, on distribution of the asset to him on account of his retirement from any unincorporated body, shall be the amount determined in accordance with the formula specified therein. Further the cost of acquisition of an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of original investment asset; C = the amount invested for purchase or construction of the new asset referred to in sub-clause (6) by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later; D = the amount deposited in an account in any bank by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later, in accordance with the Capital Gains Deposit Scheme framed by the Central Government in this behalf; E = the net consideration received as a result of the transfer of the original investment asset. The said clause further provides that such deduction shall not exceed the amount of capital gains arising from the transfer of the investment asset. Further, any amount withdrawn from an account under the Capital Gains Deposit Scheme shall be utilised within one month from the end of the month in which the amount is withdrawn, for the purposes of purchase or construction of the new asset. Also, the amount deposited in the account under the Capital Gains Deposit Scheme shall be utilise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) interest (other than interest accrued to or received by financial institutions); (c) interest received on compensation or on enhanced compensation; (d) income from the activity of owning and maintaining horses for the purpose of horse race; (e) any amount received from employees as contributions to any fund set up for their welfare, if not included under the head "Income from business"; (f) income from machinery, plant or furniture belonging to the person and let on hire, if not included under the head "Income from business"; (g) any amount received under a Keyman insurance policy (including the sum allocated by way of bonus on such policy) if not included under the heads "Income from employment" or "Income from business"; (h) the aggregate of any moneys and the value of any specified property, other than immovable property, received for inadequate consideration or without consideration by an individual or a Hindu undivided family; (i) the value of any immovable property received without consideration by an individual or a Hindu undivided family; (j) the value of any investment made by the person in the financial year to the extent for which he offers no explanation about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in sub-clause (3) subject to the fulfilment of the conditions specified therein. (c) any amount received during the year as divident from a controlled foreign company as referred to in clause (u) of sub-section (2) of section 58, to the extend such amount has been included in the total income of the person in any preceding financial year in accordance with provisions of the said clause. The said clause further provides certain monetary limits for allowable deduction in respect of certain income from residuary sources. It also inter alia provides that any amount relating to personal expenses and any amount of tax, interest or penalty paid under this Code or the Income-tax Act, 1961 or the Wealth Tax Act, 1957 as it stood before the commencement of this Code and any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft subject to the conditions specified in the said clause shall not be allowed as a deduction. The said clause also defines the term "capital sum assured'' in relation to a life insurance policy. Sub-chapter III of Chapter III deals with aggregation of income computed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrived at is negative then it shall be treated as nil and the absolute value of the negative income shall be the unabsorbed current loss from the special source for the financial year. The said clause further provides that the gross total income from special source in respect of each special source shall be aggregated and the net result of the aggregation shall be the total income from special sources for the financial year. Clause 63 seeks to provide the manner in which the total income of any person in a financial year is to be determined. For the sake of simplicity, the clause provides for the determination of total income by means of a mathematical formula. The clause provides that the total income of a person for a financial year is to be determined by adding the total income from ordinary sources with the total income from the special sources. The total income from ordinary sources shall, however, be reduced by the amount of deductions available to the person under sub-chapter IV of Chapter III before it is aggregated with the total income from special sources. Clause 64 seeks to provide the manner in which income is to be aggregated in case of a business reorganisation or wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al year in which the business reorganisation or conversion took place. Clause 65 provides that in the event of a change in the constitution of an unincorporated body, due to death or retirement of a participant, the unabsorbed current loss from ordinary or special sources shall be reduced in proportion to the percentage of share holding of such deceased or retired participant for the financial year ending on the date of death or retirement of the participant. The said clause further provides that such reduced loss shall be the unabsorbed preceding year loss of the unincorporated body for the financial year beginning on the date immediately following the date on which the death or retirement of the participant took place. Clause 66 seeks to provide that a closely held company shall not be allowed to aggregate the unabsorbed preceding year loss from ordinary or special sources with the income of the current financial year unless it satisfies the test of continuity of ownership. The said clause further provides that the closely-held company shall satisfy the test of continuity of ownership if the shares of the company beneficially held by persons, carrying not less than fifty-one per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during a financial year to effect, or keep in force, an insurance on the life of certain specified persons. The persons specified are the individual, his spouse and children and the members of a Hindu undivided family. The said clause further provides that the insurance policy, to be eligible for this deduction, should be one where the amount of the annual premium payable should not exceed five per cent. of the capital sum assured in any year during the term of the policy. Clause 71 seeks to provide that a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid during a financial year to effect, or to keep in force, an insurance on the health of certain specified persons. The persons specified are the individual, his spouse, dependant children and parents, and the members of a Hindu undivided family. The said clause further provides that in the case of an individual, an additional deduction shall be allowed in respect of any contribution made to the Central Government Health Scheme. The said clause also provides that the health insurance scheme should be framed by an insurer which is approved by the Insurance Regulatory an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars starting from the year in which the house property is acquired or constructed. Sub-clause (4) of the said clause provides that the interest for such prior period shall be reduced by any part thereof which has been already allowed as a deduction under any other provision of this Code. Sub-clause (5) lays down the maximum limit of deduction that can be claimed under this clause. This limit has been specified as one lakh and fifty thousand rupees. Clause 75 provides that a person being an individual, would be allowed a deduction of any amount of interest paid on a loan taken by him from any financial institution for financing the higher education of himself or of his relatives. Sub-clause (2) of the said clause provides that the deduction shall be allowed for eight years beginning from the initial year of repayment of interest or till the interest is repaid in full, whichever is earlier. Sub-clause (3) of the said clause provides the definitions of certain expressions used in the clause like, "financial institution", "higher education", etc. It clarifies that the term relative means the spouse and the child of the individual and also a student for whom the individual is the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me referred to in sub-clause (1) shall be allowed only if the scheme referred to therein provides for payment of an annuity or a lump sum amount for the benefit of the dependant person with disability, in the event of the death of the individual or the member of the Hindu undivided family who subscribes to such scheme. Sub-clause (4) of the said clause provides that the deduction under this clause shall be allowed only if the person claiming the deduction obtains a certificate from a medical authority in the prescribed form and manner and the certificate remains valid during the relevant financial year or part thereof. Sub-clause (5) of the said clause provides that in the event of the dependant person with disability predeceasing the individual or the member of the Hindu undivided family who has subscribed to the insurance scheme referred to in sub-clause (1), any amount received by such individual or Hindu undivided family shall be deemed to be his or its income for the financial year in which the amount is received. Sub-clause (6) of the said clause defines the term "dependant". Clause 79 seeks to provide that a person shall be allowed a deduction of — (a) one hundred and sevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in excess of ten per cent. of his gross total income from ordinary sources towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for his own residence. The said clause further provides that the deduction shall be allowed up to a maximum limit of two thousand rupees per month and shall be subject to such other conditions as may be prescribed having regard to the area in which the accommodation is situated. The said clause also provides that deduction under this clause shall not be available to a person if any residential accommodation is owned by him or by his spouse or minor child in the same place where he ordinarily resides or performs duties of his office or employment or carries on his business. Clause 81 seeks to provide that a person shall be allowed a deduction in respect of any contribution made by him in a financial year to a political party or electoral trust. The said clause further provides that the deduction shall not exceed five per cent. of the average of the net profit determined in accordance with the provisions of sections 349 and 350 of the Companies Act, 1956 during the three immediately preceding financial years, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members. The said clause further provides that a primary cooperative society means a "primary agricultural credit society" within the meaning of Part V of the Banking Regulation Act, 1949 or a "primary co-operative agricultural and rural development bank" having its area of operation confined to a taluk and being mainly engaged in providing long-term credit for agricultural and rural development activities. Clause 86 seeks to provide that a primary co-operative society shall be eligible for a deduction of the entire amount of its income from agriculture or agriculture-related activities. It shall also be eligible for a deduction of a maximum of one lakh rupees in respect of income derived by it from any other activity. The said clause further provides the meaning of the terms "agriculture-related activities" and "primary co-operative society". Clause 87 seeks to provide for the system and procedure of maintenance of accounts. Accordingly, the said clause provides that every person shall keep and maintain such books of account and other documents which would enable the Assessing Officer to compute his total income in accordance with the provisions of this Code. Any person carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head "Income from business" or "Income from residuary sources" shall, except as otherwise provided in the clause, be computed in accordance with either cash or mercantile system of accounting regularly employed by the person. Sub-clause (2) of the said clause provides that the Central Government may from time to time notify the accounting standards to be followed by any class of persons or in respect of any class of income. Sub-clause (3) of the said clause provides that the valuation of purchase of goods and inventory for the purposes of determining the income chargeable under the head "Income from business" shall be in accordance with the method of accounting regularly employed by the person and further adjusted to include the amount of any tax, duty, cess or fee actually paid or incurred by the person to bring the goods to the place of its location and condition as on the date of its valuation. Sub-clause (4) of the said clause provides that the value of sale of goods for the purposes of determining the income chargeable under the head "Income from business" shall be determined in accordance with the method of accounting regularly employed by the person and further adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anisation in relation to any charitable activity during the financial year shall be the gross receipts as reduced by the amount of outgoings, computed in accordance with the cash system of accounting. The said clause also provides that where the non-profit organisation is a company registered under section 25 of the Companies Act, 1956, such total income shall be computed in accordance with the mercantile system of accounting. Clause 93 provides that the gross receipts of the non-profit organisation from any charitable activity shall be the aggregate of the following, namely:— (a) the amount of voluntary contributions received; (b) any rent received in respect of a property held by it consisting of any building or landappurtenant thereto; (c) the amount of income derived from any business carried on by it, if the business is incidental to any charitable activity so carried on; (d) income from transfer of any capital asset computed in accordance with the provisions of sections 46 to 54 (both inclusive) where the asset is not used for the purposes of any charitable activity or any business incidental to such charitable activity; (e) full value of the consideration received from the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganisation (other than any assets forming part of its corpus as on the 1st day of June, 1973) shall be invested or held, at any time during the financial year, in any of the said modes. Clause 96 provides that any amount referred to in sub-clause (f) of clause 94 shall be deemed to be the income of the non-profit organisation, if the amount is not utilised for the purpose for which it was accumulated or set apart during the period specified therein or the amount ceases to remain invested or deposited in any of the modes specified in clause 95. The said clause further provides that for the purposes of this clause, the amount shall be deemed to be the income of the financial year immediately following the expiry of the specified period if the amount is not utilised during the financial year for the purpose for which it was accumulated or set apart, or in which the amount ceases to remain so invested or deposited in any of the specified modes. Clause 97 relates to use or application of funds or assets for the benefit of an interested person. It provides that the funds or the assets of the non-profit organisation shall not be used or applied, directly or indirectly, for the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The said clause also provides that on receipt of such application, the Commissioner shall call for such documents or information as he considers necessary in order to satisfy himself about the objects and genuineness of its activities and may make such further inquiries as may be required. Thereafter, the Commissioner shall, within a period of six months from the end of the month in which such application was received, pass an order in writing registering the non-profit organisation if he is satisfied about its objects and the genuineness of its activities or refusing to register it, if he is not so satisfied, after giving the organisation an opportunity of being heard. The said clause further provides that the registration so granted shall be valid from the financial year in which the said application was made. However, where the Commissioner is satisfied that the activities of the non-profit organisation are not genuine or are not being carried out in accordance with its objects or are not being carried out in accordance with the any other law which is applicable to it or under which it is registered or approved, he shall pass an order in writing cancelling the registration o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-profit organisation shall be computed as on the date of conversion or merger in a case falling under (a) or (b) above and the date of dissolution in a case falling under (c) above. "Net worth" has been defined in the said clause to mean the aggregate value of its total assets as reduced by its liabilities computed in accordance with such rules of valuation as may be prescribed. Clause 102 provides that the provisions of Chapter IV shall not apply to any person who— (a) holds any business under trust, notwithstanding any specific direction that the business shall form part of the corpus of such person or that the income from the business shall be applied only for charitable activity; (b) fails to comply with the conditions specified in clause 96; (c) ceases to be a non-profit organisation at any time during the financial year, irrespective of registration granted under clause 97; or (d) carries on any business which is not incidental to charitable activity. The said clause further provides that the non-profit organisation which ceases to be a non-profit organisation on account of conversion, merger or dissolution as referred to in sub-clause (1) of clause 101 shall be liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to determine the book profit. The adjustments have the effect of both increasing and decreasing the net profit. The book profit would be higher than the net profit if the adjustments have a net positive impact and vice versa. The said clause also provides that every company, to which this clause applies, shall obtain a report in the prescribed form from an accountant certifying that the book profit has been computed in accordance with the provisions of this clause. Clause 105 relates to preparation of profit and loss account for computing book profit. The said clause seeks to provide the manner in which a company has to prepare its profit and loss account for the purposes of computation of its book profit under clause 104. Accordingly, the clause provides that the profit and loss account of the company for a financial year shall be in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. For the purposes of this clause, the accounting policies, the accounting standards adopted for preparing such accounts (including profit and loss account) and the method and rates adopted for calculating the depreciation shall be the same as have been adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce amount of sixty thousand rupees shall be carried forward for the remaining period. The clause also provides that the tax credit determined under this clause shall be carried forward and allowed not beyond the fifteenth financial year immediately succeeding the financial year for which the tax credit becomes allowable. Clause 107 provides that apart from the specific exclusions provided in this Chapter from the application of certain provisions of the Code, all other provisions of the Code shall apply to a company referred to in this Chapter. Clause 108 seeks to provide that notwithstanding anything in this Code, any income received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income received by such person had he made investments directly in the venture capital undertaking. In other words, this clause provides a pass through status to venture capital companies and funds and they would have no income-tax liability on any income received on account of investments made by them in any venture capital undertaking. The said clause further provides that the venture capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, no deduction on the amount of dividend charged to tax or the tax paid shall be allowed either to the company or to the shareholder. The clause further provides that if the domestic company or the principal officer of such company fails to pay the whole or any part of the dividend distribution tax within a period of fourteen days then, it or he shall be deemed to be an assessee in default and also be liable to pay simple interest at the rate of one per cent. for every month or part thereof on the amount of such tax for the period of default. The clause also defines the terms "subsidiary company" and "dividend". Clause 110 is the only clause of Part C and Chapter VIII of the Bill and deals with tax on distributed income of mutual funds and insurance company. The said clause provides that every mutual fund shall be liable to pay tax on any amount of income distributed or paid to the unit holders of an equity oriented fund and every life insurer shall be liable to pay tax on any amount of income distributed or paid to the policy holders of an approved equity oriented life insurance scheme. The tax shall be charged on the distributed income at the rate specified in Paragraph C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat every person, other than a non-profit organisation, shall be liable to pay wealth-tax on his net wealth as on the valuation date of a financial year and such wealth-tax shall be charged at the rate specified in Paragraph V of the Second Schedule in the manner provided therein. The said clause further provides that the liability to wealth-tax shall be discharged by payment of pre-paid taxes and the wealth-tax charged under this clause shall be collected after allowing credit for such pre-paid taxes, if any, in accordance with the provisions of this Code. Clause 113 provides the manner in which the net wealth is to be computed. For the sake of simplicity, the manner has been expressed as a formula. The formula provides that the net wealth shall be the aggregate value of all the specified assets of the person on the date of valuation as reduced by the aggregate value of all the debts owed by the person, which have been incurred in relation to the specified assets. The said clause further provides a detailed list of all the specified assets and also lists out certain assets that shall not be treated as specified assets for the purposes of this clause. It also lists the categories o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided to any one or more associated enterprises involves an international transaction. The clause also provides that its provisions shall not apply in a case where the determination of any income or allocation of any expense has the effect of reducing the income chargeable to tax, or increasing the loss computed, on the basis of entries made in the books of account for the financial year in which the international transaction was entered. Clause 117 relates to determination of arm's length price. The said clause seeks to provide that the arm's length price in relation to an international transaction shall be determined in accordance with the most appropriate method out of all the prescribed methods. The most appropriate method shall be determined having regard to the nature of transaction, class of transaction, class of associated enterprises or functions performed by such enterprises or such other relevant factors as may be prescribed. The said clause further provides that the arm's length price shall be the price determined by the most appropriate method if only one price is determined by such method or the arithmetical mean of the prices determined by the most appropriate met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by virtue of which he has power to enjoy such income or is entitled to receive, or has received, any capital sum, the payment of which is in any way connected with the transfer; and (c) the income would have been included in the total income of the person, had the transfer not taken place. The said clause further provides that to determine whether a person has power to enjoy the income, the substantial result and effect of the transfer and all benefits which may at any time accrue to such person as a result of the transfer shall be taken into account. The said clause also provides that this clause shall not apply if the person referred herein shows to the satisfaction of the Assessing Officer that the transfer and all associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding any tax liability. Clause 120 relates to avoidance of tax by sale and buy-back transaction in a security and provides that the total income of any person shall include any interest accruing from any security owned by any other person if the transaction relating to sale and buy back of the security has been undertaken by the other person, if the interest ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lternative for, or in addition to, any other basis for determination of tax liability and they shall apply in accordance with such guidelines as may be prescribed. Clause 124 seeks to define various terms used in Chapter XI such as "accommodating party", "arm's length price", "asset", "associated enterprise", "impermissible avoidance arrangement", "international transaction", "round trip financing", "safe harbour", "tax benefit", etc. Clause 125 relates to presumption of the purpose for which an arrangement is entered into and seeks to provide that an arrangement shall be presumed to have been entered into, or carried out, for the main purpose of obtaining a tax benefit unless the person obtaining the tax benefit proves that obtaining such benefit was not the main purpose of the arrangement. The term "arrangement" has been defined in clause 124. Clause 126 seeks to provide for the classes of income-tax authorities for the purpose of the Code. The income-tax authorities provided in the clause are— (a) The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963, (b) Chief Commissioners of Income-tax or Directors-General of Income-tax, (c) Commissioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principles, specifying the guidelines or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue including charging of interest or the initiation of proceedings for the imposition of penalties; (b) any case or class of cases, for avoiding genuine hardship, authorising any income-tax authority (other than Commissioner of Income-tax (Appeals)) to admit any application or claim for any exemption, deduction, refund or any other relief under the Code after the expiry of the period specified by or under the Code for making the application or claim and deal with the same on merits in accordance with law; (c) any case or class of cases, relaxing any requirement or conditions contained in the Code in relation to grant of any relief , on fulfillment of certain conditions. The said clause also provides that the orders, instructions, directions and circulars issued by the Board under this clause shall be binding on all other income-tax authorities and other persons employed in the execution of the provisions of the Code. Clause 130 relates to the jurisdiction of income-tax authorities. The said clause seeks to provide that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with such transfer. However, if both the Chief Commissioners are not in agreement with a transfer, the Board, or the Chief Commissioner as may be authorised by the Board, may transfer the case in certain circumstances. The said clause also provides that the transfer of a case may be made at any stage of the proceedings, and it shall not be necessary to re-issue any notice already issued by the transferor Assessing Officer. The said clause also seeks to define the expression "case" for the purposes of Chapter XII relating to Tax Administration and procedure. Clause 133 relating to change of incumbent seeks to provide that the income-tax authority who succeeds another authority as a result of change in jurisdiction or for any other reason, shall continue the proceeding from the stage at which it was left by his predecessor. The assessee in such a case may be given, if so requested, an opportunity of being heard before passing any order under this Code in his case. Clause 134 relating to powers regarding discovery and production of evidence, etc., seeks to provide that the prescribed income-tax authorities and the Dispute Resolution Panel shall, for the purposes of the Code, have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re he has reason to suspect that any material are kept, or break open the lock of any door, box, locker, safe, almirah etc., or search any person and seize any such material, not being stock-in-trade, found as a result of such search. He may also place marks of identification on any books of account or other documents and make a note or an inventory of any such material including stock in trade. Sub-clause (3) of the said clause provides that the Competent Investigating Authority may exercise the powers of search and seizure over a person on whom he exercises jurisdiction. The said clause also provides that the Authorised Officer may requisition the services of any police officer or of any officer of the Central Government to assist him and it shall be the duty of every such officer to comply with such requisition. The said clause also provides that the Authorised Officer may serve an order on the owner or the person, who is in immediate possession or control of any material, that he shall not remove or part with it except with his prior permission, if the Authorised Officer considers that it is not possible or practicable to take physical possession of such material, not being sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his making an application. It is further provided that the assessing officers may retain the books of account or documents, seized or requisitioned, up to a period of thirty days from the date of assessment and beyond this period after obtaining the approval of the Chief Commissioner or the Commissioner. The retention, however, cannot be allowed beyond a period of thirty days from the date on which the proceedings under the Code are completed. Clause 138 relating to delivery of material belonging to other persons, seeks to provide that the Assessing Officer, having jurisdiction over the person in whose case search and seizure was carried out under section 135, or requisition was made under section 136, shall hand over any material to the Assessing Officer having jurisdiction over another person, if he is satisfied that the material seized, or requisitioned, belongs to the other person. Clause 139 relates to retention and application of seized or requisitioned assets. The said clause seeks to provide that the Assessing Officer may recover the amount of any liability existing till the date of search or requisition or determined after such date till the release of assets out of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person if his statement would be useful for, or relevant to, any proceeding under the Code. The said clause also provides that the prescribed income-tax authority, for the purpose of verifying the expenditure made by the person in connection with any function, ceremony or event, after such function, ceremony or event, may require the person by whom such expenditure has been incurred or any other person who is likely to posess the information regarding such expenditure, to furnish such information which may be useful for, or relevant to, any proceeding under this Code and record the statements of the person or any other person in this behalf. While exercising the power under this clause, the income-tax authority shall not remove any cash, stock or other valuable article or thing from such place. Clause 142 relates to power to disclose information in respect of any person. This clause seeks to provide that the Board, or any person specified by it by an order in this behalf, may furnish any information in respect of an assessee to other person who is performing any functions under any law relating to the imposition of any tax, duty or cess, or dealings in foreign currency or a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of tax bases shall also be a return of tax bases of any other person of which such person is a representative assessee. The return of tax bases shall be furnished in the prescribed form and manner. The said clause also specifies the person who is required to sign and verify such return. The said clause provides that if a person discovers any omission or any wrong statement in the return of tax bases furnished by him, he may revise such return at any time before the expiry of one year from the end of the financial year in which the return was due or before the completion of the assessment, whichever is earlier. The said clause provides that any person who is otherwise not required to furnish a return of tax bases under the Code may furnish such return before the expiry of one year from the end of the financial year to which it pertains. It also provides that a person may furnish the return for any financial year at any time before the expiry of one year from the end of the financial year in which the return was due or before the completion of the assessment, whichever is earlier, if he has not furnished a return by the due date and no notice under clause 146 has been served on him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the processing authority shall send intimation to the assessee specifying the sum payable by, or refundable, to him. The processing authority shall also send an intimation to the assessee where the loss declared in the return is adjusted, but no tax or interest is payable or refundable. The said clause also provides that the processing authority shall not send any intimation in respect of any sum payable, if the return is processed after the expiry of twelve months from the end of the financial year in which the return is furnished. It provides that the acknowledgement of the return shall be deemed to be the intimation where no sum is payable or refundable and where no adjustment has been made. The said clause provides that the Board may make a scheme for centralised processing of returns for expeditious determination of the tax payable or refundable. For this purpose, "return of tax bases" and "due date" have been defined in clause 314. In relation to adjustments, clause 149 defines "an incorrect claim apparent from the existence of any information in the return". Clause 150 relates to notice for inquiry before assessment. It provides that the Assessing Officer may make an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may produce and the material in his possession or gathered by him, the valuation officer shall estimate the value of the asset, property, investment or expenditure, after giving an opportunity of being heard to the assessee, or to the best of his judgment if the assessee does not co-operate or comply with his direction. The said clause further provides that the valuation officer shall furnish a copy of such estimate to the Assessing Officer and the assessee within a period of six months from the end of the month in which the reference was made. Clause 153 deals with the determination of arm's length price. It, inter alia, provides that the Assessing Officer may, with the prior approval of the Commissioner, refer to the Transfer Pricing Officer, the computation of arm's length price under clause 117 in relation to any international transaction entered into by the assessee in any financial year. The said clause further provides that upon such reference, the Transfer Pricing Officer shall determine the arm's length price in relation to the international transaction in accordance with the provisions of clause 117 and shall send a report of his determination to the Assessing Officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interests of such assessee, who may within thirty days of receipt of the draft order, file his acceptance to the Assessing Officer or file his objections to such variations to the Dispute Resolution Panel and the Assessing Officer. Thereafter, the Assessing Officer shall complete the assessment on the basis of the draft order, if the assessee accepts it, or in conformity with the direction of the Dispute Resolution Panel within a period of one month from the end of the month in which such direction is received. The said clause also defines the term "eligible assessee". Clause 156 relates to best judgment assessment. It, inter alia, provides that the Assessing Officer shall make the assessment of the tax bases to the best of his judgment, if— (a) the assessee fails to furnish the return required under clause 144 or clause 146 or to comply with all the terms of a notice issued under sub-clause (1) of clause 150 or to comply with a direction issued under clause 151 or to make the return in response to notice under clause 159; (b) the assessee fails to regularly follow the accounting standards or the method of accounting laid down in clause 89; or (c) he is not satisfied a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use also provides that the notice for reopening of assessment shall be issued for the seven financial years immediately preceding the financial year in which the search and seizure has been carried out or the material has been requisitioned, and within a period of seven financial years from the end of the relevant financial year in any other case. The said clause also provides that where an assessment has been made under clause 155 or clause 156 or under this clause, no such notice shall be issued by an Assessing Officer below the rank of Joint Commissioner— (i) within a period of four years from the end of the relevant financial year, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice; (ii) after the expiry of a period of four years from the end of the relevant financial year, unless the Commissioner is so satisfied; The said clause further provides that in any other case, no such notice shall be issued by an Assessing Officer below the rank of Joint Commissioner after the expiry of a period of four years from the end of the relevant financial year, unless the Joint Commissioner is satisfied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issued under sub-clause (2) of clause 149 shall be deemed to be the notice of demand for this purpose. Clause 163 provides time limits for completion of assessment or re-assessment. It also provides that such time limit shall not apply in respect of assessment, re-assessment or recomputation to be made in consequence of, or to give effect to, any finding or direction contained in any order of specified appellate authorities or of any court in a proceeding otherwise than by way of appeal or reference under this Code. The said clause also provides that in computing such period of limitation, certain specified time periods shall be excluded. It provides that the period of limitation available to the Assessing Officer for making an order of assessment, re-assessment or recomputation shall be extended to sixty days, if the period immediately after the exclusion of the specified time periods is less than sixty days. Clause 164 seeks to provide that for the purposes of this Code, "representative assessee" in respect of an assessee means— (a) the agent of a non-resident, if the assessee is a non-resident; (b) the guardian, or manager, of a minor, lunatic or idiot, if the assessee is a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the income for the period beginning with the first day of the financial year and ending on the day immediately preceding the date of business reorganisation and the successor shall be assessed in respect of the income for the period beginning with the date of business reorganisation and ending on the last day of the financial year. The said clause further provides that any proceeding taken against the predecessor shall be deemed to have been taken against the successor and may be continued against the successor from the stage at which it stood on the date of the business reorganisation. Clause 169 relates to assessment of a Hindu undivided family after its partition and provides that such a family shall be deemed to continue as such except where a finding of partition has been given under this clause in respect of the Hindu undivided family. The said clause provides that the Assessing Officer, after making necessary inquiries, shall record a finding as to whether there has been a total, or partial, partition of the joint family property and, if there has been such a partition, the date on which it has taken place. The clause clarifies that no claim of partial partitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be readily determined in accordance with the Code. Further, the tax payable on the tax bases computed under this clause shall be in addition to the tax, if any, payable under any other provision of the Code. Clause 172 provides that where it appears to the Assessing Officer that an unincorporated body formed for a particular event or purpose in a financial year is likely to be dissolved in the financial year or shortly thereafter, then he may charge to tax in that financial year the tax bases of the unincorporated body for the period beginning from the first day of the financial year to the likely date of its dissolution. Further, the provisions of clause 171 shall apply to any proceeding under this clause as they apply in the case of a person leaving India. Clause 173 provides that where it appears to the Assessing Officer that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets, in any financial year, with a view to avoiding payment of any liability under this Code, then he may charge to tax in that financial year the tax bases of such person for the period beginning from the first day of the financial year to the date when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the successor and the unincorporated body being succeeded is the predecessor. Clause 177 provides that the Assessing Officer shall assess every return filed by a deductor or collector as if it were a return of tax bases. Further, where a person has failed to file such return, the Assessing Officer shall issue a notice to the person requiring him to furnish the return within the time specified therein. All the other provisions of this Code shall apply as if the return referred to herein were a return of tax bases. Clause 178 relates to appeals before the Commissioner (Appeals) and provides that an assessee may prefer an appeal to the Commissioner (Appeals) where he is aggrieved by an order passed by any income-tax authority below the rank of the Commissioner as specified in the Twenty-first Schedule to the Code or by an intimation issued under clause 149. The said clause further provides that the assessee may also prefer an appeal where an application filed by him under clause 161 has not been disposed of by the Assessing Officer within a period of six months from the date of filing of the application or where he is required to bear the liability in respect of the tax deductible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the Appellate Tribunal against such order. The said clause further provides that no appeal shall lie to the Appellate Tribunal against the order of the Commissioner (Appeals) or Commissioner in the case of a public sector company. The clause also provides that every appeal shall be preferred within the time period specified therein and allows the respondent to file a memorandum of cross-objection against any part of the order of the Commissioner (Appeals). The Appellate Tribunal may admit an appeal, or a memorandum of cross-objection, after the expiry of the period specified if it is satisfied that the appellant had sufficient cause for not preferring it within that time and the delay in filing the appeal does not exceed a period of one year. Clause 184 relates to an order of stay of demand by the Appellate Tribunal. The said clause inter alia provides that the Tribunal may grant a stay of demand to the assessee for a period of one hundred and eighty days in the first instance and extended up to a maximum period of three hundred and sixty-five days and endeavour to dispose of the appeal in such time. Clause 185 deals with the orders of the Appellate Tribunal and, inter alia, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als to the High Court shall apply in the case of appeals under this clause. Clause 188 provides that an appeal filed before the High Court to be heard by a Bench of not less than two Judges of the High Court and shall be decided in accordance with the opinion of such Judges or of the majority of such Judges. Clause 189 deals with appeals before the Supreme Court and provides that an appeal shall lie to the Supreme Court from any judgment of the High Court delivered under clause 187 which the High Court certifities to be a fit case for appeal to the Supreme Court. Clause 190 relates to hearing before the Supreme Court and seeks to provide that the provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court shall apply in the case of appeals under section 189 as they apply in the case of appeals from decrees of a High Court. The said clause also provides that where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the order of the Supreme Court in the manner provided in section 187. Clause 191 deals with revision of orders prejudicial to revenue and, inter alia, seeks to provide that the Commissioner may revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or collection of tax at source or advance payment. The clause seeks to provide that the tax on any income shall be payable by deduction or collection at source or by advance payment, as the case may be, in accordance with the provisions of this Chapter, notwithstanding that the regular assessment in respect of such income is to be made in a later financial year. Sub-clause (2) of the said clause is an overriding provision stipulating that nothing in this clause shall prejudice the charge of tax on such income under the provisions of sub-clause (2) of clause 2. Clause 194 relating to direct payment seeks to provide that the tax on income has to be paid directly by the person if there is no provision under this Chapter for deduction or collection of income-tax at the time of payment or income-tax has not been deducted or collected in accordance with the provisions of this Chapter. Sub-clause (2) of the said clause provides that any person who is required to deduct or collect any sum in accordance with the provisions of the Code does not deduct or collect, or after so deducting or collecting fails to pay the whole or any part of the tax required to be collected or deducted under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deductor in pursuance of an agreement or arrangement, the payment has to be grossed up to such amount as would, after deduction of tax thereon at the appropriate rate, be equal to the net amount payable under such agreement or arrangement. Clause 197 seeks to empower the Assessing Officer to give a certificate for lower or no deduction of tax to the deductee where the deductee is a resident or to the deductor where the deductee is a non-resident, if the Assessing Officer is satisfied that the total income of the deductee justifies deduction of tax at a lower or nil rate. Accordingly, the clause provides that deduction shall be made in accordance with the certificate, until such certificate is cancelled by the Assessing Officer or the expiry of the validity of the certificate, whichever is earlier. Clause 198 relating to obligations of deductor, seeks to provide that every deductor shall pay the sum deducted to the credit of the Central Government within the prescribed time and manner, furnish a certificate to the deductee and also deliver a return of tax deduction in the manner provided in clause 199. Clause 199 relates to payments to resident without deduction of tax. The said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enty-five thousand rupees; (j) any payment of rent, if the aggregate amount of the payments during the financial year does not exceed one lakh eighty thousand rupees; (k) any payment of compensation on compulsory acquisition of immovable property, if the aggregate amount of the payments during the financial year does not exceed two lakh rupees; Further, in the case of a non-resident deductee, being a foreign institutional investor, deduction shall not be made on any payment made to it as a consideration for sale of securities listed on a recognised stock exchange. Clause 201 relating to credit for tax deducted, seeks to provide that for the purposes of computing total income of a deductee, the sum deducted on payments made to him shall be deemed to be his income received. Further the clause seeks to provide that the sums which have been deducted and paid to the Central Government, shall be treated as a payment of tax on behalf of the deductee. The clause further seeks to empower the Board to prescribe the procedure for giving credit to the deductee, the financial year for which such credit may be given and any other matter connected therewith. Clause 202, seeks to inter alia provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax credit available under clause 207. The said clause further provides that persons other than companies are liable to pay advance income-tax, in three instalments i.e. on or before 15th September, 15th December and 15th March. Amount payable by these three dates should amount to 30 per cent., 60 per cent. and 100 per cent of the advance-tax payable. Similarly for a company, there are four instalments, the dates being on or before 15th June, 15th September, 15th December and 15th March. The corresponding percentages in the case of a company are 15 per cent., 45 per cent, 75 per cent and 100 per cent. It is further provided that any amount of advance income-tax paid after 15th March but before the expiry of the financial year shall be treated as advance income-tax paid during the financial year. The said clause also empowers the Assessing Officer to issue an order to an assessee (not after last date of February of the financial year) to pay advance income-tax in such instalments as specified in the order, if in the opinion of the Officer, the assessee is liable to pay such amounts as advance income-tax. However, the assessee may still pay the advance tax in accordance with his est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he advance income-tax paid by such assessee is less than ninety per cent. of the assessed tax. This clause further provides the method of computation of the period for, and the amount on, which the interest is chargeable. The interest is payable at the rate of one per cent. per month. The interest shall be increased or reduced, in accordance with the variation in the amount of tax on which interest was payable under this clause. Clause 211 relates to interest for deferment of advance income-tax. The clause seeks to provide that where an assessee who is liable to pay advance income-tax has failed to pay such tax or has paid lesser advance tax before the due dates as specified, he shall be liable to pay simple interest at the rate of one per cent. per month for a period of three months. The said clause also specifies the manner in which the interest has to be calculated. The interest shall not be payable on any shortfall in the advance income-tax payable on account of under-estimation or failure to estimate the amount of capital gains and income of the nature listed at serial number 4 in the Table in Part III of the First Schedule. Clause 212 relating to interest on excess refund, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of one-half per cent. per month on the amount of interest receivable by him under this clause for the period from the date of grant of refund to the date of actual payment of such interest, if such interest is not paid to him along with the refund. Clause 217 seeks to provide for persons who shall be entitled to claim refund in certain special cases like on account of death, incapacity, insolvency, liquidation, etc., of the person entitled to claim the refund in first place. Clause 218 relating to recovery by Assessing Officer seeks to provide that any amount specified as payable in a notice of demand, otherwise than by way of advance tax, shall be paid within thirty days of the service of the notice, to the credit of the Central Government. This period, however, can be reduced with the previous approval of the Joint Commissioner if the Assessing Officer has reason to believe that full period shall be detrimental to the interest of revenue. The said clause further provides that the Assessing Officer can extend the time for payment, or allow payment by instalments during the pendency of appeal with the Commissioner (Appeals) on such conditions as he thinks fit. On default in paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax arrears or any amount which is likely to become payable thereafter by the company. The liquidator shall not part with any of the assets of the company, or the properties, in his custody until he has been intimated by the Assessing Officer. The amount so intimated shall be the first charge on the assets of the company remaining after payment of the workmen's dues and debts due to secured creditors to the extent specified. Clause 224 relating to liability of manager of a company, seeks to provide that every person being a manager at any time during the financial year shall be jointly and severally liable for the payment of any amount due under the Code in respect of the company for the financial year, if the amount cannot be recovered from the company. These provisions shall not apply, if the manager proves that non-recovery cannot be attributed to any neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. The provisions of this section shall prevail over anything to the contrary contained in the Companies Act, 1956. Clause 225 relates to joint and several liability of participants. It seeks to hold every person, being a participant in an uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate. Clause 229 relates to recovery by suit not with any other law. The said clause seeks to provide that the several modes of recovery specified in this Chapter shall not affect in any way any other law for the time being in force relating to the recovery of debts due to Government, or the right of the Government to institute a suit for the recovery of the tax arrears from the assessee. Clause 230 deals with penalty for under-reporting of tax bases. It provides that a person shall be liable to a penalty, if he has under reported the tax bases for any financial year, of a sum which shall not be less than, but which shall not exceed two times, the amount of tax payable in respect of the amount of tax bases under reported for the financial year. The said clause provides that the amount of tax bases under reported shall be the aggregate amount of the addition or disallowance made by the Assessing Officer, the Commissioner or the Commissioner (Appeals), as the case may be. It lists the circumstances under which a person shall be considered to have under reported the tax bases as well as the circumstances under which he shall not be so considered. The said clause, inter alia, provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the necessary facility to inspect the books of account or other documents under item (d) of sub- clause (2) of clause 135, fails to afford such facility, he shall be punishable with rigorous imprisonment and with fine. The said clause also provides the term and quantum of such punishment. Clause 238 deals with removal, concealment, transfer or delivery of property to thwart tax recovery. It provides that whoever fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, with the intention of preventing such property or interest therein from being taken in execution of a certificate under the provisions of the Fifth Schedule shall be punishable with rigorous imprisonment and with fine. The said clause also provides the term and quantum of such punishment. Clause 239 provides that if a person fails to give information as required by sub-clause (1) of clause 223 or fails to set aside the amount as required by sub-clause (3) of that clause or parts with any of the assets of the company or the properties in his custody in contravention of the provisions of the said sub-clause (3), he shall be punishable with rigorous imprisonment and with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o proceeded against for failure to furnish in due time the return of tax bases under certain specified circumstances. Clause 243 provides that if a person wilfully fails to produce, or cause to be produced, the accounts and documents on or before the specified date as required by any notice served on him under sub-clause (2) of clause 150, he shall be punishable with rigorous imprisonment or with fine or with both. The said clause provides the term and quantum of such punishment. Clause 244 provides that if a person wilfully fails to comply with a direction issued to him under sub-clause (1) of clause 151, he shall be punishable with rigorous imprisonment or with fine or with both. The said clause provides the term and quantum of such punishment. Clause 245 provides that if a person makes a statement in any verification under this Code or under any rule made thereunder or delivers an account or statement which is false and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with rigorous imprisonment and with fine. The said clause also provides for separate term and quantum of such punishment in respect of a case where the amount so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every person referred to in the preceding paragraphs shall be liable to be proceeded against and punished in accordance with the provisions of this Code. The said clause defines the terms "company" and "director". Clause 249 deals with proof of entries in records or documents. It provides that entries in the records or other documents which are in the custody of an income-tax authority shall be admitted in evidence in any proceeding for the prosecution of any person for an offence under this Chapter. The said clause further provides that the entries may be proved by the production of the records or other documents (containing such entries) which are in the custody of the income-tax authority or by the production of a copy of the entries certified by that authority under its signature as true copy of the original entries. Clause 250 deals with presumption as to assets, books of account, etc., in certain cases. It provides that where during the course of any search made under clause 135, any material has been found in the possession or control of any person and such material is tendered by the prosecution in evidence against such person, or against such person and the person referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said clause provides the term of such punishment. Clause 254 provides that any offence punishable under this Chapter shall be deemed to be non-cognizable within the meaning of the Code of Criminal Procedure, 1973, notwithstanding anything contained in that Code. Clause 255 deals with disclosure of information by public servants. It provides that if a public servant furnishes any information or produces any document in contravention of the provisions of clause 142, he shall be punishable with imprisonment and with fine. It also provides the term of such punishment. The said clause provides that no prosecution shall be instituted under this clause except with the previous sanction of the Central Government. It also provides that such sanction may be accorded only after giving the public servant an opportunity of being heard. Chapter XVI of the Code deals with advanced rulings and disputes resolutions. Clause 256 relates to the scope of ruling and dispute resolution available with the Authority for Advance Rulings and Dispute Resolution. The said clause provides that an applicant or an appellant may seek a ruling or, as the case may be, a resolution of dispute on matters specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said clause further provides that the advance ruling shall not be binding if there is a change in law, or fact, on the basis of which the advance ruling has been pronounced. Clause 261 seeks to provide that the Authority may declare an advance ruling to be void ab initio if it finds that the ruling has been obtained by the applicant by fraud or misrepresentation of facts and in such case, all the provisions of the Code shall apply to the applicant as if such advance ruling had never been made. Clause 262 relates to the procedure for dispute resolution. The said clause, inter alia, provides that a public sector company or Commissioner may file an appeal against the orders referred to in clause 256 for seeking resolution of a dispute and such appeal shall be preferred within the specified period. Further, it allows the respondent to file a memorandum of cross-objection against any part of the order of the Commissioner (Appeals). The said clause also provides that the Authority may admit an appeal, or a memorandum of cross-objection, after the expiry of the period specified in specified circumstances. The clause further provides that the orders passed by the Authority shall be final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members. However, if third member is unable to discharge his functions or in case of vacancy, the Bench may function with only two members. The Bench headed by the Chairperson will be the principal Bench and other Benches will be called Additional Benches. The Chairperson may, for the disposal of any particular case, constitute a Special Bench consisting of more than three Members. These Benches would sit at the notified places except a Special Bench which will sit at a place to be fixed by the Chairperson. Clause 270 seeks to provide that if there is vacancy in the office of Chairperson or if he is not in a position to discharge his duties, the notified Vice-Chairperson shall act as the Chairperson. Clause 271 seeks to provides for power of Chairperson to transfer cases from one Bench to another which can be done on the application of the assessee or the Chief Commissioner or Commissioner or on his own motion, after recording the reasons. Clause 272 seeks to provide that the Benches shall take decision by majority and on equal division, will make a reference to the Chairperson. The clause further seeks to provide the procedure to be adopted subsequently. Clause 273 relates to appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt of the order of Settlement Commission under clause 277. Clause 279 relates to power of Settlement Commission to order provisional attachment to protect revenue and, inter alia, provides for time limits for which such attachments shall be effective. Clause 280 relates to revival of proceedings before Assessing Officer. The said clause provides that if the order passed by the Settlement Commission becomes void in the circumstances where it was obtained by fraud or misrepresentation, the proceedings before the Assessing Officer with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was admitted by the Settlement Commission and the Assessing Officer will get twenty-one months from the end of the financial year in which the order becomes void, to frame the assessment. Clause 281 relates to powers of Settlement Commission after admission. The said clause seeks to provide that the Commission would have powers as are vested in an income-tax authority. It also provides the time period up to which the Settlement Commission will have current jurisdiction with the assessing officer and thereafter exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 196 of the Indian Penal Code. Clause 290 seeks to provide certain interpretations relevant for Chapter XV. Part—H and Chapter XVIII of the Code deal with general provisions. Clause 291 relates to agreement with specified territory or foreign countries. The said clause seeks to provide that the Central Government may enter into an agreement with the Government of any country or specified territory for the granting of relief or avoidance of double taxation, for exchange of information for the prevention of evasion or avoidance of income-tax or wealth-tax, for tax recovery, etc. Where for such agreements, the other country has designated certain associations, the clause provides that any specified association in India may enter into such agreement with the specified association of the specified territory outside India and the Central Government will notify the agreement for adopting it. The said clause further provides that where such an agreement has been entered into, then the provisions of this Code will apply to the assessee to whom the agreement is applicable, if such provisions are more beneficial to him except for provisions regarding General Anti Avoidance Rule, levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to be void. The said clause seeks to provide that a transfer of asset or creation of charge on it during the pendency of any proceeding under the Code or after completion shall be void as against any claim in respect of any sum payable unless made for adequate consideration and without knowledge of the pendency of such proceeding or of any such sum payable by the person or with the previous permission of the Assessing Officer. However, the provisions of this clause shall not apply to transfer of any business trading asset. Clause 297 relates to provisional attachment to protect revenue in certain cases. The said clause seeks to provide that the Assessing Officer can provisionally attach any property belonging to the assessee to protect interest of revenue, with prior approval of the Chief Commissioner or Commissioner. The said clause further provides for time limits for which such attachments would be effective. Clause 298 relates to service of notice generally. The said clause seeks to provide for the manner of service of any notice, summons, requisition, order, etc., made under the Code. Clause 299 relates to authentication of notices and other documents. The said clause seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er person is indemnified for the deduction, retention, or payment thereof. Clause 307 relates to power to tender immunity from prosecution. The said clause seeks to empower the Central Government to tender immunity to any person from prosecution and the imposition of penalty on fulfilment of certain conditions. The immunity can also be withdrawn also in specified circumstances like concealment of particulars for obtaining immunity, giving of false evidence, etc. Clause 308 relates to cognizance of offences. The said clause seeks to provide that no court inferior to that of a metropolitan magistrate or a magistrate of the First Class will try any offence under the Code. Clause 309 seeks to provide that the provisions of section 360 of the Code of Criminal Procedure, 1973, or the Probation of Offenders Act, 1958, shall apply to a person convicted of an offence under this Code, unless the person is of eighteen years of age or more. Clause 310 relates to return of tax bases, etc., not to be invalid on certain grounds. The said clause seeks to provide that no return of tax-bases, assessment, notice, summons, etc., shall be invalid merely by reason of any mistake, defect or omission if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make rules and seeks to empower the Board to notify rules for the purposes of the Code subject to the control of the Central Government. The said clause seeks to provide power in general terms as well as in specific matters mentioned therein like the ascertainment and determination of any class of income, the manner of arriving at the income in case of agriculture, a person residing outside India, the form and manner in which any document, application, claim, return or information may be made or furnished, the fee that may be payable, the authority to be prescribed for any of the purposes of the Code, the procedure of giving effect to the terms of any agreement for avoidance of double taxation etc. The clause further seeks to provide that the power to make rules will include the power to give retrospective effect, from a date not earlier than the date of commencement of the Code. However, no retrospective effect will be given to any rule so as to prejudicially affect the interests of the assessees. Clause 317 relates to rules, scheme and certain notifications to be placed before Parliament. The said clause seeks to provide that every rule and scheme made and notification issued und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit. Part III seeks to provide rates of taxation if the person has income from any special source. The rates listed pertain to a non-resident or where the person, whether resident or non-resident, has income by way of lottery, crossword puzzle, race, including horse race or card game or any other game or gambling or betting. The Second Schedule seeks to provide rates of other taxes, namely, tax on book profit, tax on distributed profits (dividend) of a domestic company tax on distributed income-tax on branch profits and tax on net wealth. The Third Schedule seeks to provide a list of specified payments and the appropriate rates on which deduction of tax at source is required to be made in the case of a resident deductee. The Fourth Schedule seeks to provide a list of specified payments and the appropriate rates on which deduction of tax at source is required to be made in the case of a nonresident deductee. Clause 219, inter alia, provides that the Tax Recovery Officer shall proceed to recover from the defaulter, the amount specified in the certificate of tax arrears by the modes referred to in the Fifth Schedule. Accordingly, the Fifth Schedule provides the procedure for recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cases, the entity shall be completely exempt from tax without any conditions. Sub-clause (2) of clause 32 of this Code, inter alia, provides that the income from the business of insurance is to be computed in accordance with the Eighth Schedule. Accordingly, the Eighth Schedule seeks to provide that the profits of the business of life insurance shall be the profit determined in the Shareholders' Account (Non-Technical Account) in accordance with the Insurance Act, 1938 as increased and reduced by items specified in the said Schedule. Similarly, it is provided that the profits of the business of insurance other than life insurance shall be the profits disclosed in the annual accounts, copies of which are required to be furnished under the Insurance Act, 1938, to the Controller of Insurance as increased and reduced by items specified in the said Schedule. The profits of business of insurance will be the aggregate of the aforesaid amounts. The said Schedule further provides that the loss from any business of insurance shall be allowed to be set off from the profits of the same business of the succeeding years. The Schedule also seeks to define certain terms relevant to the Schedule. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the provisions of this Schedule shall apply have also been specified therein. It also defines various terms for the purpose of computation of such profits. Sub-clause (2) of clause 32, inter alia, provides that the profits from the business of developing a Special Economic Zone or manufacture or production of article or things or providing of any service by a unit established in a Special Economic Zone shall be computed in accordance with the provisions contained in the Twelfth Schedule. Accordingly, the Twelfth Schedule provides that the profits of the business of developing or operating from a Special Economic Zone or manufacture or production of article or things or providing of any service by a unit established in a Special Economic Zone for a financial year shall be the gross income from such business as reduced by the amount of the business expenditure incurred by the assessee wholly and exclusively for the purpose of such business. It further provides that the computation of such profits shall be presumed to have been made after giving effect to loss, allowance or deduction under this Code. It also provides that the amount of common costs attributable to such business s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed under clause 37 of the Code. The manner of calculation of depreciation of business capital assets is provided in clause 38 of the Code. The said clause makes a reference to Fifteenth Schedule. In respect of any block of assets , the depreciation is to be allowed at the percentages specified against such block of assets in the Table given in the said Schedule on the adjusted value or written down value of such block of assets, as the case may be, as are used for the purposes of the business of the person at any time during the financial year. The said Table broadly divides business capital assets, into twelve classes of assets. These are building, furniture and fittings, vehicles, aeroplanes, rails, ships, books, machinery and plant, scientific research assets, family planning asset, animals and intangible assets. Depreciation shall not be allowed, in respect of any other business capital asset not forming part of any block of assets specified in the Fifteenth Schedule. The said Schedule further provides that no depreciation shall be allowed in respect of any machinery or plant, if the actual cost thereof is allowed as a deduction in one or more years. It is also provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds established under a scheme of other specified Acts will be deemed to be approved if notified in this behalf. The said Part also provides that contribution by an employer in excess of twelve per cent. of the salary or one lakh rupees, whichever is less, and interest credited in excess of the rate of interest prescribed by the Central Government for this purpose, shall be deemed to be the income of the concerned employee and shall be liable to income-tax. Besides, an employee will be entitled to a deduction in computation of his income in respect of his contribution to his account, subject to a specified limit. Part II of the Schedule relates to approved superannuation funds. As in case of provident funds, the Commissioner shall accord or withdraw approval to a superannuation fund. The conditions, upon the satisfaction of which an approval shall be accorded by the Commissioner, have also been specified. The said Part further provides as to when the contribution by an employer shall be deemed to be the income of an employer and also for deduction of tax on contributions paid to an employee. It also provides that deduction from the pay of, and contributions on behalf of, employees i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s viz. deferred revenue expenditure allowance shall be such proportion of the expenditure as specified and computed in accordance with the Twenty-second Schedule. Accordingly, the said Schedule seeks to provide the items of deferred revenue expenditure on which deferred revenue expenditure allowance would be available for a financial year. The items provided, inter alia, are non-compete fee, premium for obtaining any asset on lease or rent, amount paid to an employee in connection with his voluntary retirement, expenditure incurred by an Indian company, any loss on account of forfeiture of any agreement entered in the course of the business and prescribed preliminary expenditure incurred before the commencement of the business, or in connection with the extension of the business, or in connection with the setting up of new business. FINANCIAL MEMORANDUM This Bill seeks to replace the Indian Income-tax Act, 1961 and the Wealth Tax Act, 1957 and thus no additional expenditure of significance, apart from what is being spent on the administration of these Acts, is contemplated by reason merely of the passing of this Bill. MEMORANDUM REGARDING DELEGATED LEGISLATION 1. Clause 6 of the Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the place of posting or nature of duties or place of residence, subject to such conditions and limits as may be prescribed; any amount of interest credited, in the financial year, on the balance to the credit of an employee in an approved fund to the extent it does not exceed the amount of interest payable at the rate notified by the Central Government; any allowance provided by an employer to meet the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the employee, to such extent as may be prescribed. Accordingly, it is proposed to empower the Central Government to make the rules and notify the "rate of interest" in this regard for the purposes of this clause. 5. Clause 33 of the Bill provides that the gross earnings referred to in clause 32 shall also include any payment or aggregate of payments made to a person in a day, in respect of an expenditure incurred during the financial year or in respect of a liability incurred and allowed as a deduction in any preceding financial year, which has been made otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft; exceeds a sum of thirty-fiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing tea or coffee or rubber in India, as may be prescribed. Accordingly, it is proposed to empower the Central Government to make the rules in this regard. 10. Clause 41 of the Bill provides that a company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on creating and maintaining an in-house facility for scientific research and development; and carrying out scientific research and development in the inhouse facility, if— (a) the company creates and maintains an in-house facility for carrying out scientific research and development; (b) the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority; and (c) the company enters into an agreement with the prescribed authority for co-operation in the research and development facility and for audit of the accounts maintained for such facility. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 11. Clause 41 of the Bill further provides that for the purposes of granting approval to a research facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, if it has not been incurred in such cases and under such circumstances, as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 18. Clause 59 of the Bill provides that for the purposes of computation of income from residuary sources, any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, if it has not been incurred in such cases and under such circumstances, as may be prescribed, shall not be allowed as a deduction. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 19. Clause 69 of the Bill provides that a person, being an individual, shall be allowed a deduction for savings in respect of the aggregate of the sums specified in the said clause as does not exceed to the extent of one lakh rupees paid or deposited by the person in a financial year. The specified sums include any sum as a contribution to any provident fund set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed if the person, claiming a deduction under this section, obtains a certificate from a medical authority in such form and manner as may be prescribed and the certificate remains valid during the relevant financial year or part thereof. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 24. Clause 79 of the Bill provides that the donation to any person specified in Part IV of the Sixteenth Schedule shall be eligible for deduction under sub-clause (1), if the donee obtains the approval of the prescribed authority in accordance with the procedure and subject to such conditions, as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the nominee of this clause. 25. Clause 80 of the Bill provides that a person, being an individual and not in receipt of any house rent allowance, shall be allowed a deduction of any expenditure incurred by him in excess of ten per cent. of his gross total income from ordinary sources towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for his own residence. This deduction s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 31. Clause 88 of the Bill provides that every person, who is required to keep and maintain books of account under clause 87 shall get his accounts for the financial year audited. The report of this audit shall be obtained in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. A person shall be deemed to have complied with the provisions of this clause if the person gets the accounts of his business audited as required by, or under, any other law for the time being in force, before the due date; and obtains by the due date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this clause. Further, a person who has entered into an international transaction shall furnish a report of the international transaction entered into during the financial year to the Transfer Pricing Officer on or before the due date. This report shall be obtained from an accountant in the prescribed form duly signed and verified in the prescribed manner by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. of the total income (before giving effect to the provisions of this clause) or ten per cent. of the gross receipts, whichever is less; and (ii) invested or deposited in the modes specified in clause 95, for a period not exceeding three years from the end of the financial year. The modes of investing or depositing the money in such activity include any other mode of investment or deposit as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of clause 95. 37. Clause 98 of the Bill provides that a non-profit organisation shall make an application for its registration in the prescribed form and manner to the Commissioner. These provisions shall not apply to any non-profit organisation which has been granted approval or registration under the Income Tax Act, 1961 before the commencement of the Code, if the organisation fulfils such conditions as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules and forms in this regard for the purposes of this clause. 38. Clause 99 of the Bill provides that the non-profit organisation shall keep and maintain such books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant details as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for th purposes of this clause. 43. Clause 110 of the Bill provides that every life insurer shall be liable to pay tax on any amount of income, computed in the manner prescribed, distributed or paid to the policy holders of an approved equity oriented life insurance scheme. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 44. Clause 110 of the Bill further to provide that in this clause "approved equity oriented life insurance scheme" means— (i) a life insurance scheme where more than sixty-five per cent. of the total premia received under such scheme are invested by way of equity shares in domestic companies; and (ii) such scheme is approved by the Board in accordance with such guidelines as may be prescribed. Accordingly, it is proposed to empower the Board to frame the guideline in this regard for the purposes of this clause. 45. Clause 113 of the Bill provide that in relation to computation of net wealth for the purposes of targeability of wealth-tax, the value of any specified ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to empower the Central Government to make rules in this regard for the purpose of this clause. 51. Clause 127 of the Bill further provides that the Board may, by notification, direct that any income-tax authority or thorities specified in the n ification shall be subordinate to such other income-tax authority or authorities as may be specified in such notification. Accordingly, it is proposed to empower the Board to issue notification in this regard for the purposes of this clause. 52. Clause 133 of the Bill provides in relation to retention and application of seized assets, the Assessing Officer shall release, within the time and subject to such conditions prescribed, to the person from whose custody the assets were seized, any asset or proceeds thereof, which remains after the liabilities referred to in the said clause are discharged. Accordingly, it proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 53. Clause 135 of the Bill provides that in relation to search and seizure, the Board may make rules — (a) to provide for the procedure to be followed by the Authorised Officer — (i) for obtaining ingress into any buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person required to furnish a return of tax bases in relation to income shall also include; besides those enumerated in the said clause, any class or classes of persons as may be prescirbed. Accordingly, it is proposed to empower the Central Government to make rules/issue notification in this regard for the purposes of this clause. 59. Clause 144 of the Bill further provides that the return of tax bases shall be furnished in such form, verified in the manner and setting forth such particulars, as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 60. Clause 145 of the Bill provides that the Board may, without prejudice to the provisions of frame a Tax Return Preparer Scheme so as to allow a Tax Return Preparer to prepare and furnish the return of tax bases of any specified class of persons, in accordance with the Scheme. Accordingly, it is proposed to empower the Board to frame the Tax Return Preparer Scheme in this regard for the purposes of this clause. 61. Clause 149 of the Bill provides that the Board may make a scheme for centralised processing of returns for expeditious determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides that every appeal under clause 178 to Commissioner (Appeals) shall be in such form and verified in such manner and accompanied by a fee as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules/forms in this regard for the purposes of this clause. 68. Clause 182 of the Bill provides that an appeal or the memorandum of cross-objection to the Appellate Tribunal shall be in such form and be verified in such manner as may be prescribed. The appeal by an assessee shall be accompanied by such fees as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules/forms in this regard for the purposes of this clause. 69. Clause 184 of the Bill provides that an assessee may make an application to the Appellate Tribunal for stay of demand in relating to the appeal preferred by him under 183 and such application shall be accompanied by such fees as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 70. Clause 192 of the Bill provides that every application by an assessee for revision of any order passed by an authority subor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor shall pay the sum deducted to the credit of the Central Government with such time and manner as may be prescribed. Further, every deductor shall furnish to the deductee a certificate to the effect that tax has been deducted within such time and containing such particulars as may be prescribed. Accordingly, it is proposed to empower the Central Goernment to make rules in this regard for the purposes of this clause. 76. Clause 199 of the Bill provides that the Central Government may, by notification in the official Gazette, require any deductor to deliver, or cause to be delivered, a return in respect of any payment without deduction of tax. Accordingly, it is proposed to empower the Central Government to issue notifications in this regard for the purposes of this clause. 77. Clause 199 of the Bill further provides that the Board shall, in respect of the return of tax-deduction and the return under this clause, prescribe the following: (a) the period in respect of which the return is to be furnished; (b) the form of the return and the particulars therein; (c) the manner of verification of the return; (d) the time by, and the medium in, which the return is to be delivered; (e) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll prescribe the following in respect of the return of tax collection:— (a) the period in respect of which the return is to be furnished; (b) the form of the return and the particulars therein; (c) the manner of verification of the return; (d) the time by, and the medium in, which the return is to be delivered; (e) the income-tax authority, or any other person, authorised to receive the return; and (f) any other matter connected therewith. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 83. Clause 203 of the Bill provides that for the purpose of giving credit in respect of tax collected, the Board may prescribe — (a) the procedure for giving credit to the collectee, or any other person; (b) the financial year for which such credit may be given; and (c) any other matter connected therewith. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 84. Clause 204 of the Bill provides that for the purposes of the Chapter on "Collection at Source", 'professional or technical services' means services rendered by a person in the course of carrying on legal, medical, enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and such notice shall be deemed to be a notice under section 168. Accordingly, it is proposed to empower the Central Government to issue the forms in this regard for the purposes of this clause. 89. Clause 210 of the Bill provides that in relation to interest for defaults in payment of advance income-tax, the Assessing Officer shall serve on the assessee a notice of demand in such form as may be prescribed specifying the sum payable on account of increase in the interest on account of any rectification, revision or appellate order under the Code and such notice shall be deemed to be a notice under section 168 and the provisions of this Code shall apply accordingly. Accordingly, it is proposed to empower the Central Government to issue the forms in this regard for the purposes of this clause. 90. Clause 215 of the Bill provides that an assessee shall be entitled to a refund of the excess of any amount paid by him or on his behalf, or treated as paid by him or on his behalf, for any financial year over the amount with which he is liable under the Code, and every claim for refund shall be made within such time and such form and manner, as may be prescribed. Accordingly, it is propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Central Government in such manner as may be prescribed within the time (not being before the debt becomes due to the assessee) specified in the notice. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 96. Clause 221 of the Bill provides that the Tax Recovery Officer, may send a certificate, in such manner as may be prescribed, specifying the tax arrear to be recovered, to another Tax Recovery Officer within whose jurisdiction the assessee resides or has property, if the first-mentioned Tax Recovery Officer is not able to recover the entire amount by sale of the property, movable or immovable, within his jurisdiction; or is of the opinion that, for the purpose of expediting, or securing, the recovery of the whole, or any part, of the amount under this chapter, it is necessary so to do. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 97. Clause 228 of the Bill provides that every person, who is domiciled in India at the time of his departure from India, shall furnish to the notified authority such particulars as may be prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service of, the Members shall be such as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 103. Clause 258 of the Bill provides that in respect of the procedure for advance ruling, the application shall be made in such form and manner as may be prescribed, and be accompanied by such fees as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 104. Clause 258 of the Bill further provides that in respect of the procedure for advance ruling, a copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in such manner as may be prescribed shall be sent to the applicant and to the Commissioner, as soon as may be, after such pronouncement. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 105. Clause 262 of the Bill provides that in respect of the procedure for dispute resolution, the appeal, or the memorandum of cross objections, shall be in such form and manner and be verified in such manner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain copies of, any reports made by any income-tax authority to the Settlement Commission; but the Settlement Commission may, in its discretion, furnish copies thereof to any such person on an application made to it in this behalf and on payment of such fee as may be prescribed. Further, for the purpose of enabling any person whose case is under consideration to rebut any evidence brought on record against him in any such report, the Settlement Commission shall, on an application made in this behalf, and on the payment of such fee as may be prescribed, furnish such person with a certified copy of any such report or part thereof relevant for the purpose. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 111. Clause 291 of the Bill provides that in respect of any agreement with foreign countries or specified territory, the Central Government may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreements. Accordingly, it is proposed to empower the Central Government to issue notifications in this regard for the purposes of this clause. 112. Clause 291 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of this clause. 115. Clause 293 of the Bill provides that any person who has been allotted a tax account number shall quote the number in the transactions, or documents, as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 116. Clause 294 of the Bill provides that no person shall accept from, or repay to, any other person any loan or deposit otherwise than by an account payee cheque or bank draft, if the aggregate amount of such loan or deposit in a financial year exceeds fifty thousand rupees. However, these provisions shall not apply to any loan or deposit taken or accepted from, or by such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify. Accordingly, it is proposed to empower the Central Government to issue notifications in this regard for the purposes of this clause. 117. Clause 295 of the Bill provides that every person responsible for registering or maintaining books of account or other documents containing a record of any specified financial transaction, under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding sixty days from the date of service of the notice and such person shall furnish the annual information return within the time specified in the notice. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 123. Clause 304 of the Bill provides that any assessee who is entitled, or required, to attend before any income-tax authority, or the Appellate Tribunal, in connection with any proceeding under this Code, may attend through an authorised representative. An "authorised representative" means a person authorised by the assessee in writing to appear on his behalf, including any person who has acquired such educational qualifications as may be prescribed for this purpose. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 124. Clause 304 of the Bill further provides that a person, not being a legal practitioner or an accountant, who is found guilty of misconduct in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (55) of clause 314 of the Bill defines "Competent Investigating Authority" to mean any income-tax authority not below the rank of Joint Commissioner prescribed as such. Accordingly, it is proposed to empower the Central Government to notify/make rules in this regard for the purposes of this clause. 131. Sub-clause (57) of clause 314 of the Bill defines "computer software" to mean any computer programme recorded on any disc, tape, perforated media or other information storage device; or any customised electronic data or any product or service of similar nature, as may be notified by the Board. Accordingly, it is proposed to empower the Board to issue notification in this regard for the purposes of this clause. 132. Sub-clause (63) of clause 314 of the Bill defines "Cost Inflation Index" in relation to a financial year as the index as the Central Government may specify by Notification, having regard to seventy-five per cent. of the average rise in the consumer price index for non-urban manual employees for the immediately preceding financial year. Accordingly, it is proposed to empower the Central Government to notify the "index" in this regard for the purposes of this clause. 133. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority as may be notified by the Central Government for this purpose. Accordingly, it is proposed to empower the Central Government to notify the "medical authority" in this regard for the purposes of this clause. 139. Sub-clause (166) of clause 314 of the Bill defines "net worth" in relation to an undertaking or division transferred under slump sale, to mean the value determined in such manner as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 140. Sub-clause (191) of clause 314 of the Bill provides that the value of the perquisites defined therein shall be computed in such manner as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in respect of the manner of computation of the value of perquisites for the purposes of this clause. 141. Sub-clause (211) of clause 314 of the Bill defines "recognised stock exchange" to mean a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 and which fulfils such conditions as may be prescribed and notified by the Central Government for this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules in this regard for the purposes of this clause. 148. Sub-clause (260) of clause 314 of the Bill provides that "test of continuity of business" stands satisfied, in case of a successor, if he, in addition to fulfiling the conditions specified therein, fulfils such other conditions as may be prescribed to ensure the revival of the business of the predecessor or to ensure that the business reorganisation is for genuine business purpose. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 149. Sub-clause (284) of clause 314 of the Bill defines "urban area" as an area within such distance from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification. Accordingly, it is proposed to empower the Central Government to issue notification in this regard for the purposes of this clause. 150. Sub-clause (289) of clause 314 of the Bill provides that "value of sweat equity shares" shall be the value of the sweat equity sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, fund or scheduled bank; and which the Central Government may, by notification, specify in this behalf. Accordingly, it is proposed to empower the Central Government to frame and notify the scheme in this regard for the purposes of this clause. 155. Sub-clause 316 of the Bill provides that the Board may, subject to the control of the Central Government, make rules for the whole or any part of India for carrying out the purposes of this Code. It has been further provided that in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters namely:— (a) the ascertainment and determination of any class of income; (b) the manner in which and the procedure by which the income shall be arrived at, in the case of— (i) agriculture income; (ii) a person residing outside India; (iii) a person whose total income includes income referred to in section 8; (c) the determination of the amount of expenditure allowable under this Code in such manner, to such extent, and on such basis and conditions, as appears to the Board to be proper and reasonable; (d) the methods by which an estimate of any income liable to tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons referred to in section 270, other than legal practitioners or accountants, practicing before income-tax authorities and for the constitution of and the procedure to be followed by the authority referred to in sub-section (4) of that section; (q) the issue of certificate verifying the payment of tax by assessees; (r) the authority to be prescribed for any of the purposes of this Code; (s) the procedure for giving effect to the terms of any agreement for the granting of relief in respect of double taxation or for the avoidance of double taxation which may be entered into by the Central Government under this Code; and (t) any other matter which by this Code is to be, or may be, prescribed. The aforesaid clause also provides that any order made, proceeding initiated or conducted, or liability or obligation discharged, in accordance with the Rules framed under this section shall be deemed to be duly made, initiated, conducted or discharged, in accordance with the provisions of the Code. It has also been provided that the power to make rules conferred by this clause shall include the power to give retrospective effect, from a date not earlier than the date of commencement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, the nature and extent, accruing to a body or authority which is notified by the Central Government in this behalf if such body or authority— (a) has been established or constituted or appointed under— (i) a treaty or an agreement entered into by the Central Government with two or more countries; or (ii) a convention signed by the Central Government; and (b) is not established, constituted or appointed for the purposes of profit. Accordingly, it is proposed to empower the Central Government to issue notification in this regard for the purposes of this clause. 161. Paragraph 12 of the Sixth Schedule of the Bill provides that income not included in the total income shall also comprise any payment from a provident fund to which the Provident Funds Act, 1925, applies or from any other provident fund set up by the Central Government and notified by it in this behalf. Accordingly, it is proposed to empower the Central Government to issue notification in this regard for the purposes of this clause. 162. Paragraph 27 item (a) of the Sixth Schedule of the Bill provides that income not included in the total income shall also comprise any amount received by way of pension by an individual, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee, to the extent the aggregate of such amount does not exceed the limit as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 167. Paragraph 43 of the Sixth Schedule of the Bill provides that income not included in the total income shall also comprise any amount received by any employee, from one or more employers, in connection with his voluntary retirement or termination of his service or voluntary separation under any scheme framed for this purpose in accordance with such rules as may be prescribed, to the extent the aggregate of such amount does not exceed the limit as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 168. Paragraph 47 of the Sixth Schedule of the Bill provides that income not included in the total income shall also comprise income of a co-operative society from such activities and to such extent as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 169. Paragraph 22 of the Seventh Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifying ship and any other business shall be determined in such manner as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 174. Paragraph 13 of the Tenth Schedule of the Bill provides that the Board may make rules for the purposes of computation of income from the business of operating a qualifying ship in respect of the following:— (a) method and time for opting into the tonnage income scheme and the period for, and circumstances under, which the option shall remain in force; (b) circumstances under which a company may be excluded from the tonnage income scheme; (c) such other conditions for applicability of tonnage income scheme having regard to the need for generating internal accruals for acquiring new ships and training of crews; (d) limits for charters of tonnage; (e) prevention of abuse of the tonnage income scheme, having regard to the need to ensure that no transaction or arrangement results, or but for the rules prescribed hereunder, would have resulted in a tax advantage being obtained for— (i) a person other than a qualifying shipping company; or (ii) a qualifying shipping compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government in the Official Gazette. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 181. Paragraphs 1, item (j) of the Thirteenth Schedule of the Bill further provides that 'specified business' for the purposes of that Schedule shall, inter alia, include the business of developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed. Accordingly, it is proposed to empower the Central Government and the State Governments to make the scheme and guidelines and the Board to issue notifications and prescribe rules in this regard for the purposes of this clause. 182. Paragraph 8 of the Thirteenth Schedule of the Bill provides that the amount of common costs including depreciation attributable to the specified business and any other business referred to in that Schedule shall be determined in such manner as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction. This includes any research association or a university, college or other institution if it is engaged in carrying on statistical research or research in social science; and such association, university, college or other institution is approved in this behalf subject to conditions and in accordance with such guidelines and as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 188. Part III of the Sixteenth Schedule of the Bill specifies the contributions or donations eligible for one hundred per cent. deduction. This includes any University or educational institution of national eminence as may be approved by the prescribed authority in this behalf; the Government or any such local authority, institution or association as may be approved in this behalf by the Central Government, to be utilised for the purpose of promoting family planning; the Indian Olympic Association or to any other association or institution established in India, as the Central Government may, having regard to the prescribed guidelines, by notification, specify in this behalf for— (a) the development of infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) contributions made by the employer in excess of twelve percent of the salary of the employee or one lakh rupees, whichever is less; and (b) interest credited on the balance to the credit of the employee in so far as it is allowed at a rate exceeding such rate as may be fixed by the Central Government in this behalf by notification, shall be deemed to have been received by the employee in that financial year and shall be included in total income for that financial year, and shall be liable to income-tax. Accordingly, it is proposed to empower the Central Government to fix the rate and issue notification in this regard for the purposes of this clause. 193. Paragraph 11 of Part-I of the Nineteenth Schedule of the Bill provides that the accounts of an approved provident fund shall be maintained by the trustees of the fund and shall be in such form and for such periods, and shall contain such particulars, as the Board may prescribe. It is further provided that the accounts shall be open to inspection at all reasonable times by income-tax authorities, and the trustees shall furnish to the Assessing Officer such abstracts thereof as the Board may prescribe. Accordingly, it is proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , are paid to any employee during his lifetime, in circumstances other than those referred to in paragraph (13 of the Sixth Schedule, tax on the amounts so paid shall be deducted at the average rate of tax at which the employee was liable to tax during the preceding three years or during the period, if less than three years, when he was a member of the fund, and shall be paid by the trustees to the credit of the central government within the prescribed time and in such manner as the Board may direct. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 198. Paragraph 8 of Part-II of the Nineteenth Schedule of the Bill provides that an employer objecting to an order of the Commissioner refusing to accord approval to a superannuation fund of an order withdrawing such approval may appeal, within sixty days of such order, to the Board. The appeal shall be in such form and shall be verified in such manner and shall be subject to the payment of such fee as may be prescribed. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 199. Paragraph 10 of Part-II of the Nineteenth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employer in the trade or undertaking shall be a contributor to the fund; and (d) all benefits granted by the fund shall be payable only in India. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 201. Paragraph 9 of Part-III of the Nineteenth Schedule of the Bill provides that an employer objecting to an order of the Commissioner refusing to accord approval to a gratuity fund or an order withdrawing such approval may appeal, within sixty days of such order, to the Board. The appeal shall be in such form and shall be verified in such manner and shall be subject to the payment of such fee as may be prescribed. Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause. 202. Paragraph 9 of Part-III of the Nineteenth Schedule of the Bill provides that in addition to any power conferred by that Part, the Board may make rules— (a) prescribing the statements and other information to be submitted along with an application for approval; (b) limiting the ordinary annual and other contributions of an employer to the fund; (c) regulating the investment or deposit of the moneys of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be prescribed, the deferred revenue expenditure allowance shall be allowable for ten consecutive financial years, the first such financial year of allowability being the year in which such amount is actually paid. Further, the deferred revenue expenditure allowance shall be allowable for six consecutive financial years, the first such financial year of allowability being the year of commencement of the business or extension of the business or setting up of new business, as the case may be, in case of any preliminary expenditure incurred— (a) before the commencement of the business; or (b) in connection with the extension of the business; or (c) in connection with the setting up of new business, which shall be such as may be prescribed having regard to capital employed in the business and cost of the project. Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause. 207. The rules and scheme made and notification issued under the proposed legislation shall be required to be laid before the Parliament. 208. The matters in respect of which rules or scheme may be made or notifications issue are matters of procedure an ..... 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