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TMI BlogFinance Act, 1995 - Explanatory Notes on provisions relating to Direct TaxesX X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 1995-96 ; the rates at which tax will be deductible at source in the financial year 1995-96 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 incomes in certain cases for the financial year 1995-96. (ii) Amendment of the Income-tax Act, 1961, with a view to _ _listing of exempt allowances under section 10(14) in the Income-tax Rules ; _enlarging scope of income-tax exemption on interest on deposits for benefit of victims of the Bhopal gas leak disaster ; _removing condition of specification for purposes of section 10(23D) in case of Mutual Funds registered with SEBI ; _granting income-tax exemption to funds established for welfare of employees of which such employees are members ; _granting income-tax exemption on income by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... _enlarging the scope of the provisions relating to permanent account numbers ; _introducing methods of accounting and accounting standards for computing income ; Enlarging scope of deduction of tax at source by way of_ (a) deduction of tax at source from interest on time deposits with banks ; (b) enlarging scope of provision regarding deduction of tax at source from payments to contractors and sub-contractors ; (c) reducing rate of deduction of tax at source from rent in certain cases ; (d) introducing deduction of tax at source from payments by way of fees for professional services or fees for technical services ; (e) introducing deduction of tax at source from income in respect of units of specified Mutual Funds or of the Unit Trust of India ; _introducing simplification in the working of the Settlement Commission ; _modifications of provisions for pre-emptive purchase of immovable properties under Chapter XX-C ; _introducing provisions for modification of the status of persons engaged in the business of prospecting, etc., of mineral oils ; _Repealing of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. INCOME-TAX Rate structure I. Rates of income-tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule to the Act. These rates are also applicable for charging income-tax during the financial year 1995-96 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax or where an order has to be passed in a search and seizure case where search was initiated before the 1st day of July, 1995, for calculating the amount of tax on the estimated undisclosed income, etc. The salient features of the rates prescribed in the said Part III are indicated in the following paragraphs. A. Individuals, Hindu undivided families, etc. 7.1. Sub-paragraph I of Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of individuals, Hindu undivided families (other than those with one or more members having independent total income exceeding the exemption limit), association of persons, etc. Raising of exemption limit : 7.2. The exemption limit in the case of the aforesaid persons is raised from Rs. 35,000 to Rs. 40,000. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies, surcharge will continue to be levied at the rate of 15 per cent. of the amount of income-tax where the total income exceeds seventy-five thousand rupees. Effect of changes in the exemption limit 13. The impact of increase in the exemption limit in the case of individuals, non-specified Hindu undivided families, etc., referred to in Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Act, at different income levels, is as under : Table Total Income (Rs.) Existing Tax Liability (Rs.) New Tax Liability (Rs.) Relief Amount (Rs.) Percentage of relief 36,000 200 Nil 200 100 37,000 400 Nil 400 100 38,000 600 Nil 600 100 39,000 800 Nil 800 100 40,000 1,000 Nil 1,000 100 50,000 3,000 2,000 1,000 33.3 60,000 5,000 4,000 1,000 20.0 75,000 9,500 8,500 1,000 10.5 1,00,000 17,000 16,000 1,000 5.9 1,20,000 23,000 22,000 1,000 4.3 1,50,000 35,000 34,000 1,000 2.9 2,00,000 55,000 54,000 1,000 1.8 [Section 2] Listing of exempt allowances under section 10(14) in the Income-tax Rules 14.1. Under the existing provisions of section 10(14)(i), income-tax exemption is provided, to the extent mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court to finance the construction of a hospital at Bhopal to serve the victims of the gas leak, the shares of the Union Carbide India Limited have been sold. The sale consideration reserved for construction has been deposited with State Bank of India, Main Branch, Parliament Street, New Delhi, in Account Number 807/787. The interest on the aforesaid deposit and similar deposits which may be made in future, needs to be exempted from the levy of income-tax. 15.2. The Act, therefore, substitutes sub-clause (v) of clause (15) of section 10, in order to enlarge the scope of the income-tax exemption by providing such exemption to interest on deposits for the benefit of the victims of the Bhopal gas leak disaster held in such account, with the Reserve Bank of India or with a public sector bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf. It is also being provided that such notification may be made either prospectively or retrospectively, but no retrospective effect may be given from a date earlier than 1st April, 1994. The expression "public sector bank" is proposed to be given the meaning assigned to it in the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members. The funds are expended to provide cash benefits to a member on his superannuation or in the event of his illness or illness of any member of his family, etc., or to the dependants of a member on his death. As these organisations are in the nature of mutual benefit funds, their income does not qualify for exemption under section 10(23C)(iv) or section 11. Representations have been received to the effect that income-tax exemption should be provided to these funds as the liability to pay income-tax reduces the availability of funds with them for utilisation towards their objects. There is merit in these representations. 17.2. The Act, therefore, inserts a new clause (23AAA) in section 10 so as to provide for exemption from income-tax on any income received by any person on behalf of a fund established, for such purposes as may be notified by the Board, for the welfare of employees or their dependants, and of which fund such employees are members. The exemption will be available only if the fund applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established. The aforesaid fund shall invest its funds and contributions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be the income of the venture capital fund or of the venture capital company for the assessment year relevant to the previous year in which such transfer has taken place. The exemption will also not be allowed in respect of the long-term capital gains, if any, arising on the aforesaid transfer of equity shares. 18.3. The expression "venture capital fund" is being defined to mean a fund, operating under a trust deed registered under the provisions of the Registration Act, 1908, established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines. The expression "venture capital company" is being defined to mean a company which has made investments by way of acquiring equity shares of venture capital undertakings in accordance with the prescribed guidelines. The expression "venture capital undertaking" is being defined to mean a domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the manufacture or production of such articles or things (including computer software) as may be notified by the Central Government in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the Income-tax Act. This clause provides that any income of a corporation established by the Central Government or any State Government for promoting the interests of the members of a minority community, will be exempt from income-tax. The expression "minority community" is defined to mean a community notified as such by the Central Government in the Official Gazette in this behalf. 20.3. The Act also amends section 80G of the Income-tax Act to allow deduction, at the rate of fifty per cent., in respect of donations to the corporations referred to in clause (26BB) of section 10 of the Income-tax Act. The deduction in respect of donations to the aforesaid corporations will be subject to the overall limit of ten per cent. of the gross total income of the assessee, as provided in sub-section (4) of section 80G in respect of donations to certain funds, institutions, etc. 20.4. The amendments will take effect from 1st April, 1995, and will, accordingly, apply in relation to the assessment year 1995-96 and subsequent years. [Sections 4 and 16] Restricting five-year tax holiday under section 10A to units in FTZs exporting at least 75 per cent. of their turnover 21.1. Under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act contains rules relating to approval, etc., of the superannuation funds. Rule 6 thereof provides for deduction of tax at source where employees' contributions to the approved superannuation fund are paid to an employee in circumstances other than those referred to in section 10(13). 22.2. Although tax is deducted at source on payments which are not covered by the exemption under section 10(13), the tax so deducted is being refunded because under the existing section 17(3) relating to profits in lieu of salary, payments from an approved superannuation fund are not treated as income. This is an unintended benefit and creates an anomalous situation where tax is deducted at source but has to be refunded because payments not covered by section 10(13) have not been specifically included as income. 22.3. In order to remove this anomaly, section 17(3)(ii) of the Income-tax Act has been amended to exclude from the definition of profits in lieu of salary, only payments which are covered under section 10(13) and not other payments from the approved superannuation fund. 22.4. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, etc., and are claiming deduction under this section even in respect of their income from activities other than shipping. There is no justification for allowing 100 per cent. deduction with reference to income from activities other than operation of ships. 24.3. Section 33AC has been amended to restrict the deduction to 50 per cent. of the income derived from the business of operation of ships only. This takes outside the purview of the deduction any income arising from businesses other than shipping business, or from sources other than business. 24.4. The amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 8] Deduction for payments to National Urban Poverty Eradication Fund 25.1. The Government is setting up a fund called the "National Urban Poverty Eradication Fund" (NUPEF), on the lines similar to those on which the National Fund for Rural Development (NFRD) has been set up. This Fund will be notified on its being set up. 25.2. Under the existing provisions of section 35CCA of the Income-tax Act, sums paid by an assessee to any association or institution for carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in section 36(1)(viii). Now, income arising from other business activities or from sources other than business will not be taken into account for computing deduction under section 36(1)(viii). 26.3. Section 36(1)(viii) has also been amended to extend the ambit of deduction up to 40 per cent. of the income credited to a special reserve account to approved financial corporations providing long-term finance for development of infrastructure facilities in India. 26.4. The amendments will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 10] Amendment of section 40A(3) of the Income-tax Act, to provide for disallowance of 20 per cent. of cash expenditure 27.1. Section 40A(3) provides for disallowance of an expenditure, incurred for business or profession, in respect of which payment exceeding Rs. 10,000 is made otherwise than by a crossed cheque or a crossed bank draft. Certain cash payments have, however, been excluded under rule 6DD from the prohibition contained in this section. Sub-rule (j) of rule 6DD prescribes the mitigating circumstances with a view to relax the rigours of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an accountant before 31st October, or 30th November, as the case may be. Section 139(6A) states that the return forms for sub-sections (1) and (3) of section 139 and clause (i) of sub-section (1) of section 142 shall, in the case of an assessee engaged in business or profession, require him to furnish, inter alia, the report of audit obtained under section 44AB. Section 271B prescribes levy of penalty for any of the following failures : (1) Failure to get the accounts audited as required under section 44AB ; (2) Failure to obtain a report of such audit ; (3) Failure to furnish the said report along with the return of income filed either under section 139(1) or under section 142(1)(i). 29.2. The existing provisions under sections 139(6A) and 271B allow interpretations contrary to the legislative intent of getting the accounts audited by the specified date. With a view to set the controversies at rest, the provisions of sections 44AB, 139 and 271B have been recast so as to make them effective. The provisions of section 44AB have been amended to ensure that tax audit is completed by the specified date and the audit report is furnished by that date irrespective of the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset. 30.4. These amendments will take effect from 1st April, 1996, and will, accordingly, apply to the securities transferred on or after 1st April, 1995. [Section 14] Income-tax relief to a guardian for providing for maintenance of handicapped persons on the guardian's death 31.1. Section 80DD of the Income-tax Act allows deduction of a sum of Rs. 15,000 from the income of a taxpayer who incurs any expenditure on medical treatment, nursing, training and rehabilitation of a handicapped dependant. However, this deduction, by its very nature, is available only during the lifetime of the parents or a guardian as the case may be. 31.2. Many voluntary relief organisations have represented that the parents or guardians of children with disability have to provide for maintenance of the disabled after the death of the primary care-giver, i.e., the parent or the guardian. 31.3. Accordingly, a new section 80DDA has been inserted in order to allow a separate deduction, from the gross total income, of an amount not exceeding Rs. 20,000, deposited in a year in any scheme of LIC, UTI, etc., specifically framed for providing recurring or lump sum payment for the maintenance and upkeep of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and subsequent years. [Section 16] Making the deduction in respect of profits from export of computer software under section 80HHE open-ended 33.1. Under the provisions of section 80HHE, 100 per cent. deduction is allowed on profits derived from export of computer software provided the sale consideration is received in or brought into India in convertible foreign exchange. 33.2. The provisions of section 80HHE were introduced by the Finance (No. 2) Act, 1991, for the assessment years 1991-92 to 1993-94. The Finance Act, 1993, extended the deduction for the assessment year 1994-95. The Finance Act, 1994, further extended this for the assessment year 1995-96. 33.3. Software export has considerably increased in the last five years and is today a major foreign exchange earner. The sector deserves fiscal incentives to maintain the momentum gained. The deduction under section 80HHE has, therefore, been extended beyond the assessment year 1995-96 by omitting the proviso to sub-section (1) of section 80HHE. The deduction in respect of export profit of computer software has, thus, been made open-ended in line with the deduction under section 80HHC. 33.4. This amendment will take eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income derived from the use of the infrastructure facilities developed by them. 34.4. It will apply in respect of infrastructure facilities becoming operational on or after 1st April, 1995. 34.5. The five-year period will be counted from the initial year. The enterprise will be allowed to choose the initial year from which it wants to avail itself of the five-year tax holiday. The concession has to be availed of within a span of the 12 years beginning with the year of operation. This means that an enterprise which chooses the fourth year of operation as the initial year gets the full tax holiday for five years_from the fourth to the eighth year_and the 30 per cent. deduction for the remaining four years, the ninth to the twelfth year. Similarly, an enterprise which chooses the eighth year of operation as the initial year will avail of the full tax holiday for five years from the 8th year to the 12th year only. It will not have the advantage of claiming 30 per cent. deduction for any year within the span of 12 years. 34.6. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illip to savings, the deduction allowed to individuals and Hindu undivided families under section 80L has been raised from the present Rs. 10,000 to Rs. 13,000. 36.3. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 20] Relief to handicapped persons suffering from permanent physical disability, blindness or mental retardation 37.1. Under the provisions of section 80U of the Income-tax Act, tax relief in the form of deduction of Rs. 20,000 is allowed in computing the total income of a resident individual who is suffering from permanent physical disability, blindness or mental retardation. The nature of permanent physical disability or mental retardation is specified in the Income-tax Rules. 37.2. The cost of living aids for handicapped persons and of normal medical care has gone up substantially. The level of deduction allowed under section 80U has, therefore, been raised from Rs. 20,000 at present to Rs. 40,000. 37.3. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngful, a new scheme has been introduced for the assessment of undisclosed income determined as a result of search under section 132 or requisition under section 132A. Under this scheme, the undisclosed income detected as a result of any search initiated, or requisition made, after 30th June, 1995, shall be assessed separately as income of a block of years. Where the previous year has not ended or the due date for filing a return of income for any previous year has not expired, the income or the transactions recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course of business relating to such previous years shall not be included in the block assessment. 39.3. The salient features of this scheme are as under : (a) Block period : The undisclosed income of a person shall be assessed as the income of the block period consisting of a period of ten previous years, preceding the previous year in which the search was conducted or the books of account, assets, etc., were requisitioned. The period of the current year up to the date of the search will also form part of the block period. (b) Undisclosed income : (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement Commission, the income determined in such order shall be reduced accordingly. (ix) It may again be emphasised that the use of the words "such previous years" shows that the exercise shall be restricted to years in respect of the undisclosed income has been found and need not be undertaken for all the ten years comprised in the block period. (c) Applicability of the provisions : (i) The special procedure for assessment of search cases as prescribed in Chapter XIV-B shall apply in cases where search is initiated under section 132 or a requisition is made under section 132A after 30th June, 1995. Proceedings under section 132(5) or 132(7) will no longer be necessary for searches initiated on or after 1st July, 1995. Proceedings under section 132(5) or 132(7) will, however, be required where initial search was conducted prior to 1st July, 1995, irrespective of the last search or consequential searches which may have continued and concluded on or after that date, i.e., 1st July, 1995. (ii) The order of assessment for the block period shall be passed within one year from the end of the month in which the last of the search warrants is executed. Though the term execution has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprised in the block period, it will not be necessary to do the exercise of computing the undisclosed income for the relevant years and the exercise may be limited to the years in respect of which the undisclosed income has been found. On determination of the undisclosed income of the block period, the Assessing Officer shall issue an order of assessment and determine the demand payable by him on the basis of such assessment. The assets seized in the course of search or taken possession of as a result of requisition under section 132A shall be retained to the extent necessary and shall be dealt with in the manner laid down under section 132B. (ii) In computing the undisclosed income for the block period, the provisions of sections 68, 69, 69A, 69B and 69C shall, mutatis mutandis apply and the term "financial year" mentioned in these sections shall be taken to mean the relevant financial years falling within the block period. (iii) Before the adoption of the uniform previous year, the assessees were allowed to have any accounting period as their previous year. In working out the block period, therefore, there may be cases in which a part of a particular financial year may go bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, appellate proceedings, etc., shall be applicable. [Sections 24, 26, 32 and 45] Raising the qualifying limits for the purposes of the simplified procedure for small businessmen 40.1. A simplified procedure for small businessmen, carrying on certain specified businesses or vocations, was introduced in the Income-tax Act by the Finance Act, 1992. 40.2. A person is eligible to opt for the scheme if _ _his income from such business or vocation does not exceed Rs. 42,000 ; _in the case of retail business, his turnover does not exceed Rs. 5,00,000 ; _taxable income from any source other than the business or vocation does not exceed Rs. 5,000 ; _no deduction under Chapter VI-A (except section 80L) or rebate under Chapter VIII is allowed. 40.3. Under the scheme, the income of a person is deemed to be Rs. 42,000. The tax in respect of the deemed income of Rs. 42,000 amounts to Rs. 1,400. For income up to Rs. 5,000 from any other source (as reduced by deduction under section 80L) tax is chargeable at the appropriate rate, i.e., 20 per cent. 40.4. In view of the raising of the exemption limit for individuals and non-specified Hindu undivided families from Rs. 35,000 to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation, appearing at the end of section 133A, to mean a Deputy Commissioner, an Assistant Director or an Assessing Officer and for some specific purposes, if authorised, an Inspector of Income-tax. The powers of these authorities are restricted to their territorial jurisdiction resulting in operational difficulties whenever any of the specified authorities is not available for conducting a survey on the basis of any unexpected information from any external source warranting immediate action. Secondly, in the case of a big assessee, services of a number of officers may be required. Therefore, in order to accentuate the operational efficiency of the Department as also to cover large premises, the existing law has been amended to provide that the Deputy Director, the Director and the Commissioner will also have powers to conduct survey and an officer having jurisdiction over an assessee or within the limits of his territorial jurisdiction can authorise any other officer to conduct survey. 42.2. This amendment takes effect from 1st July, 1995. [Section 28] Enlargement of the scope of the provisions relating to permanent account numbers 43.1. "Permanent account number" has been def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be made. 43.5. It has been provided that every person will have to quote the permanent account number in his returns or correspondence with income-tax authorities, in challans for payment of any sum and in the documents pertaining to prescribed transactions. The Board may prescribe dates from which different classes of persons will have to quote the permanent account number and the transactions in respect of which such a number will have to be quoted. Any person receiving any document pertaining to prescribed transactions will ensure that the permanent account number has been quoted in the document. The Board will also make rules to provide the time within which the application for allotment of a permanent number is to be made and to specify the categories of transactions and documents in relation to which the permanent account number will have to be quoted. 43.6. A number allotted under the new series having ten alphanumeric characters and issued on a laminated card has been included within the meaning of "permanent account number". Here, the expression "Assessing Officer" includes an income-tax authority who has been assigned the job of allotting permanent account number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of tax at source under section 194C relating to payments made to contractors and sub-contractors. The details of the provisions are as under : Deduction of tax at source from interest on time deposits with banks 46.1. On account of the provisions contained in clause (vii) of sub-section (3) of section 194A, income credited or paid in respect of deposits with a banking company to which the Banking Regulation Act, 1949, applies or with a co-operative society engaged in carrying on the business of banking is exempt from the requirement of deduction of income-tax at source. 46.2. The Act amends section 194A of the Income-tax Act, relating to deduction of income-tax at source from interest other than interest on securities in the case of residents. The amendment provides for deduction of income-tax at source at the rates in force (at present, ten per cent. in the case of resident non-corporate persons and 20 per cent. plus surcharge thereon in the case of domestic companies) from payment of interest exceeding ten thousand rupees in a financial year on time deposits made on or after 1st July, 1995, with a banking company or with a co-operative society engaged in carrying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply when a client (i.e., an advertiser) makes payment to an advertising agent. When an advertising agency makes payments to their models, artists, photographers, etc., tax shall be deducted by it under section 194J of the Income-tax Act at the rate of five per cent. as applicable to fees for professional and technical services. There will, however, be no tax deduction at source when an advertising agent makes payment to the print or electronic media. 47.3. Under the existing provisions of section 194C, no deduction of income-tax at source is required to be made if the consideration for the contract or the sub-contract does not exceed ten thousand rupees. As a measure of rationalisation, the Act raises the aforesaid limit to twenty thousand rupees. 47.4. The aforesaid amendments will take effect from 1st July, 1995. [Section 34] Reduction of rate of deduction of tax at source from rent in certain cases 48.1. Under the existing provisions of section 194-I of the Income-tax Act, income-tax has to be deducted at source at the rate of twenty per cent. from payments of rent made by any person other than an individual or a Hindu undivided family, if such payments exceed one hundred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of section 9. 49.2. The Act also amends sections 198 to 200 and 202 to 205 of the Income-tax Act, containing provisions in respect of deduction of income-tax at source. These amendments are consequential to the insertion of new section 194J in the Act. 49.3 The amendments will take effect from 1st July, 1995. [Sections 36 and 40] Deduction of tax at source from income in respect of units of specified Mutual Funds or of the Unit Trust of India 50.1. On account of the existing provisions of section 196A of the Income-tax Act, the income in respect of units of a Mutual Fund specified under clause (23D) of section 10 is not liable to deduction of income-tax at source except in the case of foreign companies. On account of the existing provisions of section 32 of the Unit Trust of India Act, 1963, the income in respect of units payable to the unitholders, who are individuals, is not liable to deduction of income-tax at source. In the case of other unitholders of the Unit Trust of India, such income is liable to deduction of income-tax at source at the rate of fifteen per cent., if the amount of income payable exceeds seven thousand rupees in a financial year. Further, section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent. It is also being provided that no deduction of income-tax at source will be made from any income credited or paid to a unitholder, being a non-resident Indian or a non-resident Hindu undivided family, in respect of units of the Unit Trust of India acquired from the Unit Trust of India out of the funds in a Non-resident (External) Account, maintained with any bank in India or out of remittance of funds in foreign currency, in accordance, in either case, with the provisions of the Foreign Exchange Regulation Act, 1973, and the rules made thereunder. 50.4. The Act also amends section 197 of the Income-tax Act, relating to certificate for deduction of income-tax at lower rate or for non-deduction of income-tax in appropriate cases, to insert reference to the new section 194K therein. 50.5. The Act further amends section 197A of the Income-tax Act relating to non-deduction of income-tax at source on the basis of a declaration furnished by the payee that the tax on his estimated total income of the relevant previous year will be nil. The amendment is for inserting reference to the new section 194K therein. 50.6. The Act also amends sections 198 to 200 and 202 to 205 of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties under Chapter XX-C 52.1. Rule 48K of the Income-tax Rules provides that the value of any immovable property for the purposes of section 269UC shall be the apparent consideration of that property exceeding 10 lakhs rupees. A single monetary limit for all the notified cities has resulted in the accumulation of heavy workload in Delhi and Bombay. For better management of work and keeping the escalation in real estate prices in view, the provisions of section 269UC(1) have been amended so as to enable the Government to prescribe different monetary limits for different cities. 52.2. Many High Courts have held that the provisions of Chapter XX-C allow the Income-tax Department to either purchase the property or issue a no objection certificate in response to an application for no objection certificate in Form No. 37-I. There is no third alternative. The Supreme Court, while dismissing the Department's S. L. P. in Appropriate Authority v. Tanvi Trading and Credits Pvt. Ltd. [1991] 191 ITR 307 (SC), has upheld this view of the High Courts. However, problems arise when a defective application in Form No. 37-I is furnished before the appropriate authority. In order to overcome su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Income-tax Act, the Central Government is empowered to make, by notification in the Official Gazette, an exemption, reduction in rate or other modification in respect of income-tax or in regard to the income in favour of any class of persons engaged in the business of prospecting for, or extraction or production of, mineral oils. The Act amends section 293A to provide enabling powers to the Central Government to make a modification in regard to the status in which the aforesaid class of persons or members thereof (if such persons are association of persons themselves) are to be assessed on their income from the said business. The term "status" is explained to mean the category under which the assessee is assessed as "individual", "Hindu undivided family" and so on. It is also provided that the notification for modification of the status may be given effect from an assessment year beginning on or after 1st April, 1993. 53.3. The amendment will take effect retrospectively from 1st April, 1993, and will, accordingly, apply in relation to the assessment year 1993-94 and subsequent years. [Section 49] Repealing of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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