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TMI BlogThe Finance Act, 1987X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the previous year, any net agricultural income exceeding six hundred rupees, in addition to total income, and the total income exceeds,-- (i) in a case to which the said Sub-Paragraph I applies, eighteen thousand rupees, and (ii) in a case to which the said Sub-Paragraph II applies, twelve thousand rupees, then,-- (a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after,-- (i) in a case to which the said Sub-Paragraph I applies, the first eighteen thousand rupees, and (ii) in a case to which the said Sub-Paragraph II applies, the first twelve thousand rupees, of the total income but without being liable to tax], only for the purpose of charging income-tax in respect of the total income ; and (b) the income-tax chargeable shall be calculated as follows :-- (i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be determined in respect of the aggregate income at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or sub-section (1A) of section 161 or section 164 or section 164A or section 167A of the Income-tax Act apply, "advance tax" shall be computed with reference to the rates imposed by this sub-section or the rates as specified in that Chapter or section, as the case may be. (6) In the cases to which Sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part III of the First Schedule applies, where the assessee has, in the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than the previous year, in such other period, any net agricultural income exceeding six hundred rupees, in addition to total income and the total income exceeds,-- (i) in a case to which the said Sub-Paragraph I applies, eighteen thousand rupees, and (ii) in a case to which the said Sub-Paragraph II applies, twelve thousand rupees, then, in calculating income-tax under the first proviso to sub-section (5) of section 132 of the Income-tax Act or in charging income-tax under sub-section (2) of section 174 or section 175 or sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of such subsidiary company has been held by the parent company or by its nominees throughout the previous year ; (b) "domestic company" means an Indian company, or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 1987, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income in accordance with the provisions of section 194 of the Act ; (c) "insurance commission" means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance) ; (d) "investment company" means a company whose gross total income (as defined in section 80B of the Income-tax Act) consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources" ; (e) "net agricultural income", in relation to a person, means the total amount of agricultural i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficially entitled to not less than twenty per cent. of the income of such concern ;'; (b) in clause (24), after sub-clause (ix), the following sub-clause shall be inserted with effect from the 1st day of April, 1988, namely :-- "(x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees ;"; (c) after clause (29), the following clauses shall be inserted with effect from the 1st day of April, 1988, namely :-- '(29A) "long-term capital asset" means a capital asset which is not a short-term capital asset ; (29B) "long-term capital gain" means capital gain arising from the transfer of a long-term capital asset ;'; (d) after clause (36), the following clause shall be inserted, namely :-- '(36A) "public sector company" means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;'; (e) in clause (42A), before the Explanation, the following proviso sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem (3) in the Table below rule 3 of the Post Office Savings Banks Rules, 1965", the words and figures "in item 6 in the Table below rule 4 of the Post Office Savings Account Rules, 1981" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1983 ; (ii) in sub-clause (iv), after item (g) and the Explanation thereto, the following item shall be inserted, namely :-- "(h) by any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification in the Official Gazette, specify in this behalf ;"; (c) in clause (17),-- (i) in sub-clause (i), the word "and" shall be omitted and shall be deemed to have been omitted with effect from the 1st day of April, 1986 ; (ii) for sub-clause (ii), the following sub-clauses shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1986, namely :-- "(ii) any allowance received by any person by reason of his membership of Parliament under the Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or, as the case may be, any member, of such firm, association of persons or body of individuals." ; (b) in sub-section (2), for clause (ii), the following clauses shall be substituted, namely :-- '(ii) "new ship" or "new aircraft," includes a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India ; (iii) "new machinery or plant" includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely :-- (a) such machinery or plant was not, at any time previous to the date of such installation by the assessee, used in India ; (b) such machinery or plant is imported into India from any country outside India ; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under this Act in computing the total income of any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted. 8. Amendment of section 33AB. -- In section 33AB of the Income-tax Act, in sub-section (5), for the words, figures and letters "assessment year commencing on the 1st day of April, 1986, and the four assessment years next following that assessment year", the words, figures and letters "assessment years commencing on the 1st day of April, 1986, and the 1st day of April, 1987" shall be substituted with effect from the 1st day of April, 1988. 9. Amendment of section 36. -- In section 36 of the Income-tax Act, in sub-section (1), after clause (v), the following clause shall be inserted with effect from the 1st day of April, 1988, namely :-- '(va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation.-- For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction of production of, mineral oils in India ; and (b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. Explanation.-- For the purposes of this section,-- (i) "plant" includes ships, aircraft, vehicles, drilling unit scientific apparatus and equipment, used for the purposes of the said business ; (ii) "mineral oil" includes petroleum and natural gas.' 12. Insertion of new section 44BBA. -- In the Income-tax Act, after section 44BB (as directed to be inserted by section 11), the following section shall be inserted with effect from the 1st day of April, 1988, namely :-- '44BBA. -- Special provision for computing profits and gains of the business of operation of aircraft in the case of non-residents. -- (1) Notwithstanding anything to the contrary contained in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion received or accruing as a result of the transfer. (5) Notwithstanding anything contained in sub-section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, tribunal or other authority, the capital gain shall be dealt with in the following manner, namely :-- (a) the capital gain computed with reference to the compensation awarded in the first instance or, as the case may be, the consideration determined or approved in the first instance by the Central Government or the Reserve Bank of India shall be chargeable as income under the head "Capital gains" of the previous year in which the transfer took place ; and (b) the amount by which the compensation or consideration is enhanced or further enhanced by the court, tribunal or other authority shall be deemed to be income chargeable under the head "Capital gains" of the previous year in which such amount is receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of any other assessee, fifty per cent. of the amount of such gain in excess of ten thousand rupees ; (ii) in respect of long-term capital gain so arrived at relating to other capital assets,-- (A) in the case of a company, thirty per cent. of the amount of such gain in excess of ten thousand rupees ; (B) in any other case, sixty per cent. of the amount of such gain in excess of ten thousand rupees : Provided that where the long-term capital gain relates to both categories of capital assets referred to in sub-clauses (i) and (ii), the deduction of ten thousand rupees shall be allowed in the following order, namely :-- (1) the deduction shall first be allowed against long-term capital gain relating to the assets mentioned in sub-clause (i) ; (2) thereafter, the balance, if any, of the said ten thousand rupees shall be allowed as deduction against long-term capital gain relating to the assets mentioned in sub-clause (ii), and the provisions of sub-clause (ii) shall apply as if references to ten thousand rupees therein were references to the amount of deduction allowed in accordance with clauses (1) and (2) of this proviso : Provided further that, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of capital gain as computed under clause (a) of sub-section (1) of section 48.". 19. Amendment of section 54.-- In section 54 of the Income-tax Act, with effect from the 1st day of April, 1988,-- (a) in sub-section (1),-- (i) for the words "Where, in the case of an assessee being an individual", the words, brackets and figure "Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family" shall be substituted ; (ii) the Explanation at the end shall be omitted ; (b) for sub-section (2), the following sub-section shall be substituted, namely :-- "(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new assets made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,-- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires ; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. Explanation.-- Where any amount becomes chargeable under section 45 in accordance with the proviso to this sub-section, then, for the purposes of the deductions to be made under clause (b) of sub-section (1) of section 48, the initial deduction of ten thousand rupees under sub-section (2) of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al asset, not being a short-term capital asset", the words "long-term capital asset" shall be substituted ; (b) in sub-section (2), for the words "capital assets other than short-term capital assets", the words "long-term capital assets" shall be substituted ; (c) sub-sections (3), (4) and (5) shall be omitted ; (d) sub-section (6) shall be renumbered as sub-section (3), and in that sub-section as so renumbered, the words, brackets, letters and figure "or clause (a) or clause (b) of sub-section (3)" shall be omitted. 23. Amendment of section 54F.-- In section 54F of the Income-tax Act, with effect from the 1st day of April, 1988,-- (a) in sub-section (1),-- (i) for the words "Where, in the case of an assessee being an individual" the words, brackets and figure "Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family" shall be substituted ; (ii) after the words "period of one year before or", the words "two years" shall be inserted ; (iii) in the Explanation,-- (A) clause (i) shall be omitted ; (B) in clause (ii), the brackets and figures "(ii)" shall be omitted ; (b) in sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to this sub-section, then, for the purposes of the deductions to be made under clause (b) of sub-section (1) of section 48, the initial deduction of ten thousand rupees under sub-section (2) of that section shall not be admissible.". 24. Insertion of new section 54G.-- After section 54F of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 1988, namely :-- '54G. Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area.- (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area, effected in the course of, or in consequence of, the shifting of such industrial undertaking (hereafter in this section referred to as the original asset) to any area (other than an urban area) and the assessee has within a period of one year before or three years after the date on which the transfer took place,-- (a) purchased new machinery or plant for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate on which the transfer of the original asset took place, or which is not utilised by him for all or any of the purposes aforesaid before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for all or any of the purposes aforesaid together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for all or any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within the period specified in that sub-section, then,-- (i) the amount not so util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of clause (va) of sub-section (1) of section 36 ;'. 28. Amendment of section 70.-- In section 70 of the Income-tax Act, with effect from the 1st day of April, 1988,-- (a) in sub-section (1),-- (i) the brackets and figure "(1)" shall be omitted ; (ii) the words 'other than "Capital gains" ' shall be omitted ; (b) sub-section (2) shall be omitted. 29. Substitution of new section for section 71.-- For section 71 of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April, 1988, namely :-- "71. Set off of loss from one head against income from another.-- Where in respect of any assessment year, the net result of the computation under any head of income is a loss, the assessee shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable, for that assessment year under any other head.". 30. Amendment of section 72. -- In section 72 of the Income-tax Act, in sub-section (1), the portion beginning with the words, "where the assessee" and ending with the words "of that section or" shall be omitted with effect from the 1st day of April, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause shall be substituted, namely :-- '(h) where the assessee is an individual or a Hindu undivided family or where the assessee is an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu, any sums paid in the previous year by such assessee out of his or its income chargeable to tax,-- (i) as subscription to any such security of the Central Government as that Government may, by notification in the Official Gazette, specify in this behalf ; or (ii) for the purposes of purchase or construction of a residential house property the construction of which is completed after the 31st day of March, 1987, and the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee's own residence, have been chargeable to tax under that head), where such payments are made towards or by way of-- (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstituted ; (c) after sub-section (6) and the Explanations below that sub-section, the following sub-sections shall be inserted, namely :-- '(7) In the case of an assessee referred to in clause (h) of sub-section (2),-- (a) where any sums specified in sub-clause (ii) of that clause, with reference to which the deduction under sub-section (1) has been allowed are refunded to or received back by the assessee in any previous year (hereinafter referred to as the relevant previous year), then,-- (i) no deduction shall be allowed to the assessee under sub-section (1) with reference to any of the sums, specified in that sub-clause, paid in the relevant previous year ; and (ii) the aggregate amount of the deductions so allowed in respect of the previous year or previous years preceding the relevant previous year shall be deemed to be the income of the assessee of the relevant previous year and shall be chargeable to tax under the head "Income from other sources" ; (b) where the house property referred to in sub-clause (ii) of that clause is transferred by the assessee before the expiry of five years from the end of the financial year in which possession of such property is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf (hereafter in this section referred to as the National Savings Scheme), he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of an amount equal to fifty per cent. of so much of the deposits (excluding interest accrued and credited to the assessee's account) as do not exceed the amount of twenty thousand rupees in the previous year. (2) Where any amount standing to the credit of the assessee under the National Savings Scheme in respect of which a deduction has been allowed under sub-section (1) together with the interest accrued on such amount is withdrawn in whole or in part in any previous year, an amount equal to fifty per cent. of the amount so withdrawn shall be deemed to be the income of the assessee of that previous year in which such withdrawal is made and shall, accordingly, be chargeable to tax as the income of that previous year. Explanation. -- For the removal of doubts, it is hereby declared that interest on the deposits made under the National Savings Scheme sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be substituted with effect from the 1st day of April, 1988. 40. Omission of Chapter VIB.-- Chapter VIB of the Income-tax Act shall be omitted with effect from the 1st day of April, 1988. 41. Omission of Chapter XI.-- Chapter XI of the Income-tax Act shall be omitted with effect from the 1st day of April, 1988. 42. Omission of section 115.-- Section 115 of the Income-tax Act shall be omitted with effect from the 1st day of April, 1988. 43. Insertion of new Chapter XIIB.-- In the Income-tax Act, after Chapter XII-A, the following Chapter shall be inserted with effect from the 1st day of April, 1988, namely :-- 'CHAPTER XII-B SPECIAL PROVISIONS RELATING TO CERTAIN COMPANIES 115J. Special provisions relating to certain companies. - - (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1988 (hereafter in this section referred to as the relevant previous year), is less than thirty per cent. of its book profit, the total income of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted, namely :-- '(2) Where, during the financial year, an assessee is employed simultaneously under more than one employer, or where he has held successively employment under more than one employer, he may furnish to the person responsible for making the payment referred to in sub-section (1) (being one of the said employers as the assessee may, having regard to the circumstances of his case, choose), such details of the income under the head "Salaries" due or received by him from the other employer or employers, the tax deducted at source therefrom and such other particulars, in such form and verified in such manner as may be prescribed, and thereupon the person responsible for making the payment referred to above shall take into account the details so furnished for the purposes of making the deduction under sub-section (1). (2A) Where the assessee, being a government servant or an employee in a public sector undertaking, is entitled to the relief under sub-section (1) of section 89, he may furnish to the person responsible for making the payment referred to in sub-section (1), such particulars, in such form and verified in such manner as may be prescribed, and thereupon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 48. Amendment of section 194D.- -In section 194D of the Income-tax Act, after the proviso, the following proviso shall be inserted with effect from the 1st day of June, 1987, namely :-- "Provided further that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed five thousand rupees.". 49. Amendment of section 195.-- In section 195 of the Income tax Act, with effect from the 1st day of June, 1987,-- (a) for sub-section (1), the following sub-section shall be substituted, namely :-- '(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest on securities) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" or dividends) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whicheve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.". 52. Amendment of section 199.-- In section 199 of the Income-tax Act, for the words "made for the immediately following assessment year under this Act", the words "made under this Act for the assessment year for which such income is assessable" shall be substituted with effect from the 1st day of June, 1987. 53. Amendment of section 202. -- In section 202 of the Income-tax Act, for the words " levy tax ", the words " recover tax " shall be substituted with effect from the 1st day of June, 1987. 54. Amendment of section 203.-- In section 203 of the Income-tax Act, for the portion beginning with the words "shall, at the time of credit" and ending with the words "dividend to a shareholder", the following shall be substituted with effect from the 1st day of June, 1987, namely :-- "shall, within such period as may be prescribed from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act for the assessment or reassessment of any person in respect of any year or years, or by way of appeal or revision in connection with such assessment or reassessment, which may be pending before an income-tax authority on the date on which an application under sub-section (1) of section 245C is made : Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause ; (c) "Chairman" means the Chairman of the Settlement Commission ; (d) "income-tax authority" means an income-tax authority specified in section 116 ; (e) "Member" means a Member of the Settlement Commission and includes the Chairman and a Vice-Chairman ; (f) "Settlement Commission" means the Income-tax Settlement Commission constituted under section 245B ; (g) "Vice-Chairman" means a Vice-Chairman of the Settlement Commission.'. 58. Amendment of section 245B.-- In section 245B of the Income-tax Act, in sub-section (1), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Central Government may, by notification in the Official Gazette, specify. 245BB. Vice-Chairman to act as Chairman or to discharge his functions in certain circumstances. -- (1) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the Vice-Chairman or, as the case may be, such one of the Vice-Chairmen as the Central Government may, by notification in the Official Gazette, authorise in this behalf, shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Chapter to fill such vacancy, enters upon his office. (2) When the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the Vice-Chairman or, as the case may be, such one of the Vice-Chairmen as the Central Government may, by notification in the Official Gazette, authorise in this behalf, shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties. 245BC. Power of Chairman to transfer cases from one Bench to another.-- On the application of the assessee or the Commissioner and after notice to them, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of the applicant under section 147 or by way of appeal or revision in connection with such reassessment, and the applicant has not furnished a return in respect of the total income of that year in the course of such proceeding for reassessment, tax shall be calculated on the aggregate of the total income as assessed in the earlier proceeding for assessment under section 143 or section 144 or section 147 and the income disclosed in the application as if such aggregate were the total income. (1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub-section (1B) shall be,-- (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause ; (b) in a case referred to in clause (ii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year ; (c) in a case referred to in clause (iii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income assessed in the earlier procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h person fails to pay any sum specified in the order of settlement passed under sub-section (4) of section 245D within the time specified in such order or within such further time as may be allowed by the Settlement Commission, or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted." ; (c) in sub-section (2), the words "has not complied with the conditions subject to which the immunity was granted or that such person" shall be omitted. 65. Insertion of new section 245HA. -- After section 245H of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June, 1987, namely :-- "245HA. (1) Power of Settlement Commission to send a case back to the Income-tax Officer if the assessee does not co-operate. -- (1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 245C has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the Income-tax Officer who shall thereupon dispose of the case in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter." 69. Amendment of section 273B.- -In section 273B of the Income-tax Act, for the words, figures and letter "section 272B or", the words, figures, letters and brackets "section 272B or sub-section (1) of section 272BB or" shall be substituted with effect from the 1st day of June, 1987. 70. Omission of section 280ZA. -- Section 280ZA of the Income-tax Act shall be omitted with effect from the 1st day of April, 1988. 71. Omission of sections 285 and 286.-- Sections 285 and 286 of the Income-tax Act shall be omitted with effect from the 1st day of June, 1987. 72. Amendment of section 293.-- In section 293 of the Income-tax Act, the word "assessment" shall be omitted and shall be deemed to have been omitted with effect from the 1st day of March, 1987. 73. Amendment of Eleventh Schedule.-- In the Eleventh Schedule to the Income-tax Act, with effect from the 1st day of April, 1988,-- (a) in item 5, the following Explanation shall be inserted at the end, namely :-- Explanation.-- "Blended flavouring concentrates" shall include, and shall be deemed always to have included, synthetic essences in any form :' ; (b) in item 22, in the Explanation, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head "Capital gains" 'shall be omitted ; (iv) in section 73, in the Explanation occurring at the end, for the words, brackets and figures "other than an investment company, as defined in clause (ii) of section 109", the words 'other than a company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources" ' shall be substituted ; (v) in section 155, in sub-section (10A), for the words "capital asset, not being a short-term capital asset", the words "long-term capital asset" shall be substituted ; (vi) in section 236A,-- (1) for the words, brackets and figures "In the case of an institution or fund referred to in clause (iii) of sub-section (2) of section 104", the words "Where seventy-five per cent. of the share capital of any company is throughout the previous year beneficially held by an institution or fund established in India for a charitable purpose the income from dividend whereof is exempt under section 11" shall be substituted ; (2) for the words "by such a company as is referred to in the said clause", the words "by such co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans the Income-tax Settlement Commission constituted under section 245B of the Income-tax Act ; (f) "Vice-Chairman" means a Vice-Chairman of the Settlement Commission ; (g) "wealth-tax authority" means an income-tax authority specified in section 116 of the Income-tax Act who is treated as a wealth-tax authority under section 8.'. 78. Amendment of section 22B.-- In section 22B of the Wealth-tax Act, in sub-section (1), the brackets and words '(hereafter in this Chapter referred to as "the Settlement Commission")' shall be omitted with effect from the 1st day of June, 1987. 79. Insertion of new sections 22BA to 22BD.-- After section 22B of the Wealth-tax Act, the following sections shall be inserted with effect from the 1st day of June, 1987, namely :-- " 22BA. Jurisdiction and powers of Settlement Commission. -- (1) Subject to the other provisions of this Chapter, the jurisdiction, powers and authority of the Settlement Commission may be exercised by Benches thereof. (2) Subject to the other provisions of this section, a Bench shall be presided over by the Chairman or a Vice-Chairman and shall consist of two other Members. (3) The Bench for which the Chair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Chairman or, as the case may be, such one of the Vice-Chairmen as the Central Government may, by notification in the Official Gazette, authorise in this behalf, shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties. 22BC. Power of Chairman to transfer cases from one Bench to another.-- On the application of the assessee or the Commissioner and after notice to them, and after hearing such of them as may desire to be heard, or on his own motion without such notice, the Chairman may transfer any case pending before one Bench, for disposal, to another Bench. 22BD. Decision to be by majority.- -If the Members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and make a reference to the Chairman who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Settlement Commission and such point or points shall be decided according to the opinion of the majority of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of wealth-tax calculated on the net wealth returned for that year ; (c) in a case referred to in clause (iii) of that sub-section, the amount of wealth-tax calculated under that clause as reduced by the amount of wealth-tax calculated on the net wealth assessed in the earlier proceeding for assessment under section 16 or section 17.". 81. Amendment of section 22D.-- In section 22D of the Wealth-tax Act, with effect from the 1st day of June, 1987,-- (a) after sub-section (4), the following sub-section shall be inserted, namely :-- "(5) Subject to the provisions of section 22BA, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under sub-section (4) and, in relation to the passing of such order, the provisions of section 22BD shall apply. " ; (b) in sub-section (6), for the words "tax or penalty", the words "tax, penalty or interest" shall be substituted. 82. Amendment of section 22E.-- In section 22E of the wealth-tax Act, for the proviso, the following proviso shall be substituted with effect from the 1st day of June, 1987, namely :-- "Provided that no proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before the Wealth-tax Officer or held or recorded by him in the course of the proceedings before him. (3) For the purposes of the time-limit under sections 17A, 32 and 35 and for the purposes of payment of interest under section 34A, in a case referred to in sub-section (1), the period commencing on and from the date of the application to the Settlement Commission under section 22C and ending with the date of receipt by the Wealth-tax Officer of the order of the Settlement Commission sending the case back to the Wealth-tax Officer, shall be excluded." 86. Amendment of section 22K.- -In section 22K of the Wealth-tax Act, with effect from the 1st day of June, 1987,-- (a) at the end of clause (ii), the word "or" shall be inserted ; (b) after clause (ii), the following clause shall be inserted, namely :-- "(iii) the case of any such person is sent back to the Wealth-tax Officer by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2) PART I INCOME-TAX Paragraph A Sub-Paragraph I In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other Paragraph of this Part applies, --- Rates of income-tax (1) Where the total income Nil; does not exceed Rs. 18,000 (2) Where the total income 25 per cent. of the amount by exceeds Rs. 18,000 but does not which the total income exceeds exceed Rs. 25,000 Rs. 18,000; (3) Where the total income Rs. 1,750 plus 30 per cent. of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000; (4) Where the total income Rs. 9,250 plus 40 per cent. of the exceeds Rs. 50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income does not exceed Rs. 20,000 exceeds Rs. 10,000; (3) Where the total income Rs. 4,000 plus 40 per cent. of the exceeds Rs. 20,000 amount by which the total income exceeds Rs. 20,000; Paragraph C Sub-Paragraph I In the case of every registered firm, not being a case to which Sub-Paragraph II of this Paragraph applies, ---- Rates of income-tax (1) Where the total income Nil; does not exceed Rs. 10,000 (2) Where the total income 5 per cent. of the amount by exceeds Rs. 10,000 but does not which the total income exceeds exceed Rs. 25,000 Rs. 10,000; (3) Where the total income Rs. 750 plus 7 per cent. of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000; (4) Where the total income Rs. 2,500 plus 15 per cent. of the excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the public are substantially interested (2) Where the company is not a company in which the public are substantially interested--- (i) in the case of a trading 60 per cent. of the total income; company or an investment company (ii) in any other case 55 per cent. of the total income. II. In the case of a company other than a domestic company,---- (i) on so much of the total income as consists of--- (a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961, but before the 1st day of April, 1976, or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of interest 15 per cent.; payable on a tax-free security (C) on the whole of the other income-tax at 30 per cent. of the income amount of the income, or income-tax in respect of the income at the rates prescribed in Sub-Para- graph I of Paragraph A of Part III of this Schedule, if such income had been the total income, whichever is higher; (ii) in the case of any other person---- (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook on a subject referred to in the proviso to sub-section (1A) of section 115A of the Income-tax Act, to the Indian concern (iv) on income by way of royalty [not being royalty of the nature referred to in sub-item (b) (iii) payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and which has been approved by the Central Government,--- (A) where the agreement is 50 per cent.; made after the 31st day of March, 1961, but before the 1st day of April, 1976 (B) where the agreement is 30 per cent.; made after the 31st day of March, 1976 (v) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and which has been approved by the Central Government,--- (A) where the agreement is 50 per cent.; made after the 29th day of Februa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income Nil; does not exceed Rs. 18,000 (2) Where the total income 25 per cent. of the amount by exceeds Rs. 18,000 but does not which the total income exceeds exceed Rs. 25,000 Rs. 18,000; (3) Where the total income Rs. 1,750 plus 30 per cent. of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000; (4) Where the total income Rs. 9,250 plus 40 per cent. of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000; (5) Where the total income Rs. 29,250 plus 50 per cent. of the exceeds Rs. 1,00,000 amount by which the total income exceeds Rs. 1,00,000. Sub-Paragraph II In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Where the total income Nil; does not exceed Rs. 10,000 (2) Where the total income 5 per cent. of the amount by exceeds Rs. 10,000 but does not which the total income exceeds exceed Rs. 25,000 Rs. 10,000; (3) Where the total income Rs. 750 plus 7 per cent. of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000; (4) Where the total income Rs. 2,500 plus 15 per cent. of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000; (5) Where the total income Rs. 10,000 plus 24 per cent. of the exceeds Rs. 1,00,000 amount by which the total income exceeds Rs. 1,00,000. Sub-Paragraph II In the case of every registered firm whose total income includes income derived from a profession carried on by it and the income so in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961, but before the 1st day of April, 1976, or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964, but before the 1st day of April, 1976, and where such agreement has, 50 per cent.; in either case, been approved by the Central Government. (ii) on the balance, if any, of the 65 per cent. total income PART IV [See section 2(7)(e)] RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME Rule 1. --- Agricultural income of the nature referred to in sub-clause (a) of clause (1) of section 2 of the Income-tax Act shall be computed as if it were income chargeable to income-tax under that Act under the head "Income from other sources" and the provisions of sections 57 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year has any agricultural income, or is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of the said section 183 and which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an unregistered firm but has any agricultural income, then, the agricultural income or loss of the firm shall be computed in accordance with these rules and his share in the agricultural income or loss of the firm shall be computed in the manner laid down in sub-section (1), sub-section (2) and sub-section (3) of section 67 of the Income-tax Act and the share so computed shall be regarded as the agricultural income or loss of the assessee. Rule 6. --- Where the assessee is a member of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) which in the previous year has either no income chargeable to tax under the Income-tax Act, or has total income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body of individuals (other than a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the 1st day of April, 1986, (ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1980, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, or the 1st day of April, 1982, or the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, (iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1982, or the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, (iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1982, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, or the 1st day of April, 1982, or the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, or the 1st day of April, 1987, (ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1981, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1982, or the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, or the 1st day of April, 1987, (iii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1982, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1983, or the 1st day of April, 1984, or the 1st day of April, 1985, or the 1st day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y source has been succeeded in such capacity by another person, otherwise than by inheritance, nothing in sub-rule (1) or sub-rule (2) shall entitle any person, other than the person incurring the loss, to have it set off under sub-rule (1) or, as the case may be, sub-rule (2). (5) Notwithstanding anything contained in this rule, no loss which has not been determined by the Income-tax Officer under the provisions of these rules or the rules contained in Part IV of the First Schedule to the Finance Act, 1979 (21 of 1979), or of the First Schedule to the Finance (No. 2) Act, 1980 (44 of 1980), or of the First Schedule to the Finance Act, 1981 (16 of 1981), or of the First Schedule to the Finance Act, 1982 (14 of 1982), or of the First Schedule to the Finance Act, 1983 (11 of 1983), or of the First Schedule to the Finance Act, 1984 (21 of 1984), or of the First Schedule to the Finance Act, 1985 (32 of 1985), or of the First Schedule to the Finance Act, 1986 (23 of 1986), shall be set off under sub-rule (1) or, as the case may be, sub-rule (2). Rule 10. --- Where the net result of the computation made in accordance with these rules is a loss, the loss so computed shall be ignore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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