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TMI BlogFinance (No. 2) Act, 1996--Explanatory Notes on provisions relating to Direct Taxes--IntroductionX X X X Extracts X X X X X X X X Extracts X X X X ..... . Provisions in brief 3. The provisions of the Finance (No. 2) Act, 1996, in the sphere of direct taxes relate to the following matters :-- I. Prescribing the rates of income-tax on incomes liable to tax for the assessment year 1996-97, the rates at which tax will be deductible at source in the financial year 1996-97 from interest (including interest on securities), dividends, winnings from lotteries or crossword puzzles, winnings from horse races, commission and other categories of income liable for tax deduction at source under the Income-tax Act ; rates for computing "advance tax", deduction of income-tax from "salaries" and charging of income-tax on current income ; certain cases for the financial year 1996-97. II. Amendment of the Income-tax Act, 1961, with a view to,-- --exempting the commuted value of pension received from a fund set up by the Life Insurance Corporation of India and granting of deduction in respect of contribution to such fund ; --extending income-tax exemption on account of interest payable on money borrowed abroad to facilitate expansion projects of railways ; --granting exemption to SAARC fund for regional projects ; --granting exemption infrastr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects. --raising of deduction in respect of dividends and from units of mutual funds ; --rationalising the tax concessions in respect of foreign exchange earnings from service export under sections 80R, 80RR and 80RRA ; --allowing rebate on subscription to shares and debentures offered in approved issues of public companies for infrastructure and power sectors ; --allowing rebate of income-tax in case of senior citizens. --reducing the tax rate on long-term capital gains for all resident assessees ; --providing concessional tax on income from shares, etc., in public sector companies disinvested by the Government ; --providing alternative minimum tax on companies ; --extending the due date for filing the return of income in the case of a working partner of a firm ; --modifying provisions regarding issue of notice where income has escaped assessment ; --amending time limit for completion of assessments and reassessments ; --rationalising special procedure for assessment of search cases ; --raising the limit for tax deduction at source in the case of housing finance companies under section 194A of the Income-tax Act ; --enlarging of the scope of credit for tax deducted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities, interest other than "interest on securities", dividends, insurance commission, winnings from lotteries or crossword puzzles, winnings from horse races and income of non-residents (including non-resident Indians). These rates are the same as those specified in Part II of the First Schedule to the Finance Act, 1995, for the purposes of deduction of income-tax at source during the financial year 1995-96. 5.2. The amount of income-tax, so deducted at source, shall be increased in the case of a domestic company, by a surcharge calculated at the rate of 7.5 per cent. of such income-tax. III. Rates for deduction of income-tax at source from "salaries", computation of "advance tax" and charging of income-tax in special cases during the financial year 1996-97 6. The rates for deduction of income-tax at source from "salaries" during the financial year 1996-97 and also for computation of "advance tax" payable during that year in the case of all categories of taxpayers, have been specified in Part III of the First Schedule to the Act. These rates are also applicable for charging income-tax during the financial year 1996-97 on current incomes in cases where accelerated assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 6.3 1,20,000 22,000 21,000 1,000 4.5 1,50,000 34,000 33,000 1,000 2.9 2,00,000 54,000 53,000 1,000 1.9 7.5 There will now be no distinction in the tax rates applicable to specified Hindu undivided families (i.e., those with one or more members having independent total income exceeding the exemption limit) and unspecified Hindu undivided families and the same rates, i.e., those specified in Paragraph A of Part Ill of the First Schedule to the Act, will apply to all Hindu undivided families.8. In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Act. These rates are the same as those specified in the corresponding Paragraph of Part I of the First Schedule to the Act. B. Co-operative societies : 8. In the case of a co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Act, These rates are the same as those specified in the corresponding Paragraph of Part i of the First Schedule to the Act. C. Firms : 9. In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insurance Act, 1938 (4 of 1938). 13.5 The amendment will take effect from April 1, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. [Sections 4 and 23] Taxation of a sum received under the keyman insurance policy 14.1 A Keyman Insurance Policy of the Life Insurance Corporation of India, etc., provides for an insurance policy taken by a business organisation or a professional organisation on the life of an employee, in order to protect the business against the financial loss, which may occur from the employee's premature death. The "Keyman" is an employee or a director, whose services are perceived to have a significant effect on the profitability of the business. The premium is paid by the employer. 14.2 There were some doubts on the taxability of the income including bonus, etc., from such policy and also regarding the treatment of the premium paid--whether it should be allowed as a capital expenditure or as a revenue expenditure. The Act, therefore, lays down the tax treatment of the Keyman Insurance Policy. 14.3 Clause (10D) of section 10 of the Income-tax Act exempts certain income from tax. The Act amends clause (10D) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RC) with a view to making available credit on easy terms for the identification and development of projects having a regional character in the fields of industry, energy, agriculture and service sectors. Respective national contributions to the fund are held by the Nodal Development Financing Institutions (DFIs) of SAARC member-countries. India's contribution is held by the Industrial Development Bank of India (IDBI) which earns income out of investment of these funds. 16.2 Keeping in view the objectives of the fund, income of the SAARC Fund for regional projects has been exempted from income-tax so as to ensure that the resources at the disposal of the fund and particularly, income earned on India's contribution is used only for the purposes for which the fund has been set up. 16.3 The Act, therefore, inserts a new clause (23BBC) in section 10 of the Income-tax Act so as to allow income-tax exemption to any income of the SAARC Fund for regional projects. 16.4 The amendment will take effect retrospectively from 1st April, 1992, and will, accordingly, apply in relation to the assessment year 1992-93 and subsequent years. [Section 4] Income-tax exemption to infrastructure develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of registered trade unions 18.1 Under the existing provisions of clause (24) of section 10, any income of a registered union within the meaning of the Trade Unions Act, 1926 (16 of 1926), under the heads "Income from house property" and "Income from other sources" is exempt from income-tax if such trade union is formed primarily for the purpose of regulating the relations between workmen and employer or between workmen and workmen. 18.2 The Act, in line with the above, provides similar exemption to an association of trade unions of the nature specified under the existing provisions of clause (24) of section 10. 18.3 The amendment will take effect from the 1st day of April, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. [Section 4] Registration of charitable and religious trusts 19.1 Under the existing provisions of the Income-tax Act, exemption from income-tax in respect of the income of a charitable or religious trust or institution is available only if the conditions specified in that section are satisfied. One of these conditions is that the person in receipt of the income shall make an application for registration of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1997-98 and subsequent assessment years. [Section 7] Increase in the limit of deduction allowable for interest payable on borrowed capital in respect of self-occupied house property 21.1 Income under the head "Income from house property" is calculated after allowing certain specified deductions from the annual value of house property. One of the deductions is the amount of interest payable on borrowed capital used for acquisition, construction, repair, renewal or reconstruction of the house property. In respect of self-occupied house property, the annual value is taken at nil. As no notional income is taken into account in respect of such property, none of the deductions, except on account of interest, is allowed. Interest on borrowed capital in respect of such property is allowed only up to Rs. 10,000. 21.2 It has been felt that the deduction of Rs. 10,000 is not adequate to meet the cost of finance. Therefore, in order to provide relief to many middle class taxpayers, the Act enhances the limit of deduction on account of interest payable on borrowed capital in respect of self-occupied house property from Rs. 10,000 to Rs. 15,000. 21.3 The amendment will tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the statute to maintain a separate value of a portion of the asset to work out depreciation. A large number of big projects are currently being undertaken in which cost of the assets are financed by a number of companies without the intention of holding the assets jointly as an association of persons and, therefore, each of the participating company owns a fraction of the asset. The asset is subject to wear and tear on use. However, the aforesaid decision of the Supreme Court comes in the way of allowing the depreciation allowance. An amendment has therefore been made to supersede the ratio of this decision. Deduction on account of depreciation in the case of fractional ownership of an asset shall consequently now be available. 23.2 The third proviso to sub-section (1) of section 32 provides that the depreciation allowance will be restricted to fifty per cent. of the amount calculated at the prescribed rates in cases where assets acquired by an assessee during the previous year are put to use for the purpose of business or profession for a period of less than one hundred and eighty days in that previous year. Thus, in the cases of succession in business and amalgamation of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the allowance for depreciation of the following previous year and deemed to be part of that allowance. Therefore, the unabsorbed depreciation allowance, if any, of the assessment year 1996-97 shall be added to the amount of the allowance for depreciation of assessment year 1997-98 and deemed to be part of the allowance for this year. In other words, the unabsorbed depreciation allowance of assessment year 1996-97 shall be added to the allowance of 1997-98 and will be deemed to be the allowance of that year. The limitation of eight years shall start from the assessment year 1997-98. 23.6 These amendments take effect from the 1st day of April, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. [Section 11] Modification of provisions relating to allowance of weighted deduction in respect of any sum paid for scientific research undertaken under a programme 24.1 Under the existing provisions of sub-section (2AA) of section 35, one of the pre-condition for allowance of weighted deduction to an assessee is that the sum paid to a National Laboratory or a University or an Indian Institute of Technology shall be used for scientific rese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [Section 13] Modification of the provisions relating to deduction from profits derived from the business of providing long-term finance 26.1 Under the existing provisions of section 36(1)(viii), subject to certain conditions deduction is allowable from the total income, in respect of any special reserve created by a financial corporation or a public company engaged in providing long-term finance to certain specified sectors. The expression "long-term finance" was not earlier defined. By the amendment in the Finance Act, the expression "long-term finance" has been defined to mean any loan or advance where the terms under which monies are loaned or advanced provide for repayment along with interest thereon during a period of not less than five years. 26.2 The second proviso to clause (viii) of sub-section (1) of section 36 restricts the aggregate of amounts which can be carried to the special reserve account from time to time by a financial corporation etc. to twice the amount of the paid-up share capital. In order to give further incentive to such financial corporations and companies, which satisfy the other criteria laid down in this clause, an amendment has been made to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not. Clause (b) of this sub-section makes similar provision in the case of a successor in business in regard to any amount in respect of which loss or expenditure etc. was incurred by the predecessor. 28.2 It was found that a number of assessees were escaping tax liability under this sub-section in regard to the credit of trading liabilities to profit and loss account, even when the recovery of the debt had become barred by limitation or when there was no likelihood of the liability being enforced against them. This was on account of the fact that some courts held that the liability can remit or cease only by a bilateral or a multilateral act between the creditor(s) on the one side and the debtor on the other and not by a unilateral act. By an amendment the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof", occurring in this sub-section, has been defined to include the remission or cessation of any liability by a unilateral act by the first mentioned person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996. [Section 17] Modification of provisions regarding certain deductions to be allowed on actual payment 30.1 Existing provisions of section 43B allow the deduction of any sum payable by an assessee as interest on any loan or borrowing from any public financial institution, or a state financial corporation or a state industrial investment corporation in the year in which such interest is actually paid irrespective of the year in which the liability to pay such sum was incurred by the assessee. By an amendment, the scope of this section has been expanded to cover interest on any term loan from a schedule bank. In order to avoid deduction of the same liability twice, it has been provided that in a case where interest on such a loan had been provided on due basis and already allowed in any assessment, the deduction for such interest shall not be subsequently allowed on the ground that it has been paid in a subsequent year. 30.2. This amendment will take effect from the 1st day of April, 1997, and, accordingly, will apply in relation to the assessment year 1997-98 and subsequent years. [Section 18] Exemption of long-term capital gains in the case of investment in specified ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn. 31.5 The amendments will take effect from 1st October, 1996, and will apply in the cases where transfer takes place on or after the 1st day of October, 1996. [Sections 19 and 20] Omission of redundant sections of the Income-tax Act, 1961 32. The Finance Act has omitted sections 80CC, 80J and 88A from the Income-tax Act with effect from April 4, 1993, April 1, 1989, and April 1, 1994, respectively, as they have become redundant. [Sections 22, 29 and 35] Enhancement of deduction in respect of medical insurance premia 33.1 Section 80D of Income-tax Act, 1961, provides for a deduction up to Rs. 6,000 from the total income of an assessee, being an individual or a Hindu undivided family, in respect of any sum paid by cheque, to effect or keep in force an insurance on the health of the individual and his family members (including dependent parents). 33.2 The Act has raised the monetary limit of deduction under section 80D from its present level of Rs. 6,000 to Rs. 10,000. 33.3 This amendment shall be effective from April 1, 1997, and shall apply to the assessment year 1997-98 and subsequent assessment years. [Section 24] Deduction in respect of medical treatment of chronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction for donations made to these funds. 35.4 This amendment will be effective from April 1, 1997, i.e., in respect of the assessment year 1997-98 and subsequent years. Thus, persons making donations during the financial year ended on March 31, 1997, will be eligible to obtain the deduction as above. [Section 26] 100 per cent. deduction to donations made to National or State Blood Transfusion Councils and also to funds set up by the Armed Forces 36.1 The Supreme Court had directed the Union Government in the case of Common Cause v. Union of India, to take steps to establish a National Council of Blood Transfusion, as a society registered under the Societies Registration Act, 1860. In consultation with the National Council, the State Governments shall establish State Councils. The National and the State Councils shall frame programmes covering the entire range of services related to operation and requirement of blood banks and shall be empowered to collect funds from trade, industry and individuals. 36.2 In order to facilitate the collection of funds for the National and the State Blood Transfusion Councils, the court directed the Government of India (Ministry of Health and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and distribution of power or to an industrial undertaking set up in specified backward States/districts, a five-year full tax holiday is allowed, while normal deduction 25 per cent. (30 per cent. for companies) is allowed for the balance period after the five-year holiday. 38.2 The five-year tax holiday for the power sector and for industries in backward States is applicable for industries which commence production between April 1, 1993, and March 31, 1998. For industries in notified backward districts, the tax holiday is applicable for units which commence production between October 1, 1994, and March 31, 1999. The backward districts have not so far been notified. For all other industries, the tax holiday is applicable for units commencing production between April 1, 1991, and March 31, 1995. However, the tax holiday is available even after March 31, 1995, for small scale units commencing production between April 1, 1995, and March 31, 2000. 38.3 The Finance Act, 1995, provided for five-year tax holiday and a deduction of 30 per cent. in the subsequent five years to an enterprise operating and maintaining an infrastructure facility on Build-Operate-Transfer (BOT) or on Bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from units of mutual funds 40.1 Section 80-L of the Income-tax Act, 1961, provides for deduction up to Rs. 13,000 from the gross total income of an individual or a Hindu undivided family in respect of income earned by way of interest from the Government securities, National Savings Certificate, deposits, etc. and dividends from any Indian company or income from the units of the mutual fund specified under clause (23D) of section 10. The Finance Act provides for a further deduction of Rs. 3,000 in respect of dividends from any Indian company and income from units of mutual funds within an overall ceiling of Rs. 15,000. 40.2 The amendment takes effect from the assessment year 1997-98. [Section 30] Rationalisation of the tax concessions in respect of foreign exchange earnings from service export under sections 80R, 80RR and 80RRA 41.1 Under section 80R of the Income-tax Act, a professor, teacher or a research worker rendering service abroad, is entitled for a deduction from the remuneration received from a foreign university, institution, etc., while computing his income chargeable to tax in India. This deduction is available to a resident, being an Indian citizen. 41.2 Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or units of mutual fund shall form part of the public issue, which is approved by the Central Board of Direct Taxes on an application made by the company in the prescribed form, in the prescribed manner, setting forth the prescribed particulars. (ii) The proceeds of the issue are wholly and exclusively utilised for the purpose of developing, maintaining and operating a new "infrastructure facility", as defined under clause (ca) of sub-section (12) of section 80-IA of the Income-tax Act, or for generating or for generating and distributing power. (iii) A lock-in-period of three years is to be provided in respect of such equity shares/debentures or units of the mutual fund. In the case of any transfer of shares or debentures before three years of acquisition, the entire amount of rebate of tax allowed earlier in any previous year, shall be treated as tax payable in the hands of the subscriber, in the year in which it is transferred. (iv) Where a deduction is claimed and allowed under this clause, the cost of such shares/debentures or units of the mutual fund shall not be taken into account for the purposes of sections 54E and 54EB. (v) The amendment provides that in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Government 45.1 Under the existing provisions of section 115AC of the Income-tax Act, concessional treatment is available to non-resident taxpayers in respect of income arising by way of interest, dividends or long-term capital gains from such bonds or shares of an Indian company which are issued in accordance with a scheme notified by the Central Government and which are purchased in foreign currency. Such income is charged to tax at a rate of 10 per cent. only. 45.2 The Act has extended this concessional treatment to income by way of interest, dividends or long-term capital gains, on such bonds or shares of a public sector company which are sold either by the Central Government or by a State Government to a non-resident assessee in foreign currency. 45.3 The amendment will take effect from 1st April, 1997, and will, accordingly, apply in realtion to the assessment year 1997-98 and subsequent years. [Section 38] Alternative minimum tax on companies 46.1 In recent times, the number of zero-tax companies and companies paying marginal tax has grown. Studies have shown that inspite of the fact that companies have earned substantial book profits and have paid handsome dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In the case of a firm carrying on business or profession whose accounts are required to be audited, the due date for filing of the return is the 31st October. In the case of a working partner of the firm, he would be obliged to furnish his return of income by the 31st day of August. The payment of remuneration to a working partner is to be worked out with reference to the book profits of the firm in accordance with the provisions of section 40(b)(v). The working partner is, therefore, not in a position to know his actual income by way of remuneration from the firm till its accounts are audited. 47.2 In order to remove this hardship Explanation 1 to sub-section (1) of section 139 has been amended to provide that the due date for filing of return of income by working partners of firms whose accounts are required to be audited shall be the 31st day of October of the assessment year, i.e., the due date for filing of the return will be the same in the case of a firm and its working partners. 47.3 The amendment will take effect from 1st April, 1997, and will, accordingly apply in relation to the assessment year 1997-98 and subsequent years. [Section 42] Modification of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such cases, the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under section 142(2A) and ending with the date on which the assessee furnishes a report of such audit is excluded while reckoning the period of limitation for completion of the assessment. As per the existing provisions, the special audit report is to be submitted within the time allowed by the Assessing Officer subject to a maximum of 180 days. 49.3 It has been the experience of the Department that in a few cases where special audit is ordered, the assessees do not co-operate with the accountant as a result of which the report is not prepared and, therefore, not furnished. In such cases the normal time limit of two years is operative and the Assessing Officer does not get any additional time for the purpose of making an assessment because the time taken for furnishing the audit report is excluded only if the report of such audit is furnished. In order to overcome this problem, the Act provides that the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited and ending on the date on which the repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the partners. (iii) The amendment will take effect retrospectively from 1st July, 1995. (b) Assessment procedure : (i) The authority competent to make the block assessment has been laid down in section 158BG of the Income-tax Act. As per this section, the order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner. (ii) The time limit for completion of block assessment is prescribed in section 158BE of the Income-tax Act. As per this section, the order under section 158BC shall be passed within one year from the end of the month in which the last of the authorisation for search under section 132 or for requisition under section 132A, as the case may be, was executed. (iii) In order to facilitate the assessment process, and to ensure that the investigation is carried to its logical conclusion in a focused manner under section 2(7A) of the Act has been amended to include the Assistant Director of Income-tax within the meaning of "Assessing Officer", enabling him to discharge the assessment functions also. As a corollary to this, section 158BG has also been amended to provide that the block assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e day on which the assessee is required to furnish the report of such audit. (iv) The amendment will take effect retrospectively from 1st July, 1995. (e) Stay granted by courts : (i) Item (ii) of Explanation 1 of section 153 provides for exclusion from the period of limitation of the period during which a stay or injunction has been granted by a court in respect of any assessment proceedings. This enables the Assessing Officer to complete the assessment on vacation of the stay, even after the expiry of the normal period of limitation. There is no such specific provision in Chapter XIV-B of the Act in respect of the block assessments. In view of the non obstante clause, the exclusion provided in section 153 would not be available in such block assessment cases. Situations may arise where a stay is granted by a court in respect of block assessment cases. In such a situation, it is possible that the assessment may get barred by limitation due to operation of the non- obstante clause. (ii) In order to preclude such an eventuality the Act amends section 158BE to provide for exclusion from the period of limitation of the period during which stay granted by a court is in operation. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing provision to allow credit for tax deducted at source is extended in cases of income derived from any jointly owned property or jointly owned deposits or jointly owned units apart from jointly owned securities or shares in a company. 52.3 The amendment will take effect from the 1st day of April, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. [Section 50] Omission of sections 206A and 206B of the Income-tax Act 53.1 Sections 206A and 206B of the Income-tax Act deal with furnishing of prescribed returns in respect of interest and dividend paid without deduction of tax at source in accordance with the provisions of the proviso to sub-section (1) of section 194A and the first proviso to section 194 respectively. However, sections 194A and 194 have been amended in the past and the said provisos have been omitted. Consequently, sections 206A and 206B have been rendered redundant. Section 197A now contains the procedure for obtaining payment of, inter alia, dividend and interest without deduction of tax at source. 53.2 The Act, therefore, has omitted sections 206A and 206B from the Income-tax Act. 53.3 The Act also omits the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id on a short notice. In many cases even the sale proceeds of the capital asset were not received before the advance tax payment became due. 56.3 The Act, therefore, allows the assessees to pay the tax relatable to the capital gains or to income from winnings from lottery, horse races, etc., as part of the remaining instalments of advance tax which are due in the financial year. 56.4 The amendment will take effect from 1st April, 1997, and accordingly, apply in relation to the assessment year 1997-98 and subsequent years. 56.5 The second proviso to sub-section (1) of section 234C(1) has also been omitted as it was applicable only to the assessment year 1991-92. [Section 54] Wealth-tax Amendment of the term "assets" 57.1 The term "assets", on which tax is to be levied, is defined in clause (ea) of section 2. This definition includes any guest house and any residential house (including a farm house situated within 25 kms of the local limits of any municipality) except the assets mentioned in sub-clauses (1) and (2) of this clause. If residential houses have been taken as assets, there seems to be no reason why commercial properties, other than those used by the assessees wholl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This provision will come into force with effect from the 1st day of April, 1997, and, accordingly, will apply in relation to the assessment year 1997-98 and subsequent years. [Section 57] Clarificatory amendment regarding assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes 59.1 Under the provisions of clause (i) of section 5, wealth-tax shall not be payable by an assessee in respect of any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India. Section 21A provides three exceptions to this general rule of non-payment of wealth-tax, in the following circumstances, namely :-- (i) where any part of such property or any income of such trust is used or applied, directly or indirectly, for the benefit of any person referred to in sub-section (3) of section 13 of the Income-tax Act, or (ii) where any part of the income of such trust enures, directly or indirectly, for the benefit of any person referred to in sub-section (3) of section 13 of the Income-tax Act, or (iii) where any funds of the trust or investment or deposit, or any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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