9911796707
TMI BlogThe Finance Act, 1987X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 if such aggregate income were the total income ; (ii) the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (2) of section 176 of the said Act or in computing the "advance tax" pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income, from whatever source derived, of that person computed in accordance with the rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 shall be inserted with effect from the 1st day of April, 1988, namely :-- 'Provided that in the case of a share held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Members of Parliament (Constituency Allowance) Rules, 1986 ; (iii) all other allowances not exceeding six hundred rupees per month in the aggregate received by any person by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation 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 person for any period prior to the date of the installation of the machinery or plant by the assessee ; (iv) "Tea Board" means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953) ;'; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt 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, or under any standing order, award, contract of service or otherwise.'. 10. Amendment of section 43B.--In section 43B of the Income-tax Act, before the Explanation, the following provisos shall be inserted with effect from the 1st da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of aircraft, a sum equal to five per cent. of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration 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 received by the assessee. Explanation. --For the purposes of this sub-section,-- (i) in relation to the amount referred to in clause (b), the cost of acquisition and the cost of improvement shall be taken to be nil ; (ii) the provisions of this sub-section shall apply also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, in relation to the amount referred to in clause (b) of sub-section (5) of section 45, the initial deduction of ten thousand rupees under clause (a) of this sub-section shall be reduced by the deduction already allowed under clause (a) of section 80T in the assessment for the assessment year commencing on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited 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 section shall not be admissible.". 21. Amendment of section 54D.--In section 54D of the Income-tax Act, with effect from the 1st day of April, 1988,-- (a) in sub-section (1), for the words "Where the capital gain arises", the words, brackets and figure "Subject to the provisions of sub-section (2), where the capital gain arises" shall be substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-section (2), for the words "one year", the words "two years" shall be substituted ; (c) after sub-section (3), the following sub-section shall be inserted, namely :-- "(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 purposes of business of the industrial undertaking in the area to which the said undertaking is shifted ; (b) acquired building or land or constructed building for the purposes of his business in the said area ; (c) shifted the original asset and transferred the establishment of such undertaking to such area ; and (d) incurred expenses on such other purpose as may be specified in a scheme f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-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 utilised shall be charged under section 45 as the income of the previous year in which the period of three 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, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-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, 1988. 31. Substitution of new section for section 74.--For section 74 of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April, 1988, namely :-- '74. Losses under the head "Capital gains". -- (1) Where in respect of any assessment year, the net result of the computation under the head "Capital gains" is a loss to the assessee and such loss cannot be or is not wholly set off against income under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (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 other authority engaged in the construction and sale of house property on ownership basis ; or (b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him ; or (c) repayment of the amount borrowed by the assessee from-- (1) the Central Government or any State Government, or (2) any bank, including a co-operative bank, or (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 obtained by him, 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 previous year in which the transfer is so made ; and (ii) the aggregate amount of the deductions allowed under sub-section (1) with reference to the sums specified in that sub-clause in respect of the previous year or previous years preceding the previous year referred to in sub-clause (i) of this clause shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 shall not be chargeable to tax except in the manner and to the extent specified in sub-section (2). ". 35. Amendment of section 80G.--In section 80G of the Income-tax Act, in sub-section (5), in clause (i), for the words, brackets, figures and letter "or clause (23C)", the words, brackets, figures and letters "or clause (23AA) or clause (23C)" shall be substituted with effect from the 1st day of April, 1988. 36. Amendment of section 80-O.--In section 80-O of the Income-tax Act, with effect from the 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 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 assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent. of such book profit. Explanation.--For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared in accordance with the provisions of Parts II and III of the Sixth Schedule to the Companies Act, 1956 (1 of 1956), as increased by-- (a) the amount of income-tax paid or payable, and the provision therefor ; or (b) the amounts carried to any reserves, by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars, 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 the person responsible as aforesaid shall compute the relief on the basis of such particulars and take it into account in making the deduction under sub-section (1). (2B) Where an assessee who receives any income chargeable under the head "Salaries" has, in addition, any income chargeable under any other head of income (not being a loss under any such head) for the same financial year, he may send to the person responsible for making the payment referred to in sub-section (1) the particulars of such other income and of any tax deducted thereon under any other provision of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect 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, whichever is earlier, deduct income-tax thereon at the rates in force. Explanation.--For the purposes of this section, where any interest or other sum as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.'; (b) in sub-section (2),-- (i) for the words "by general or special order", the words "in the prescribed manner" shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 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 dividend to a shareholder". 55. Insertion of new section 203A.--In the Income-tax Act, after section 203, the following section shall be inserted with effect from the 1st day of June, 1987, namely :-- " 203A. Tax deduction account number. -- (1) Every person deducting tax in accordance with the provisions of sections 192 to 194, section 194A, section 194B, section 194BB, section 194C, section 194D and section 195, if he has not been allotted any tax deduction account number, shall, within such time as may be prescribed, apply to the Income-tax Officer for the allotment of a tax deduction account number. (2) Where a tax deduction ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man" 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 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. 59. Insertion of new sections 245BA to 245BD.--After section 245B of the Income-tax Act, the following sections shall be inserted with effect from the 1st day of June, 1987, namely : -- "245BA. 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-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 after hearing such of them as he 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. 245BD. 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceeding for assessment under section 143 or section 144 or section 147.". 61. Amendment of section 245D.--In section 245D of the Income-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 245BA, 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 245BD shall apply." ; (b) in sub-section (6), for the words "tax or penalty", the words "tax, penalty or interest" shall be substituted ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provisions of this Act as if no application under section 245C had been made. (2) For the purposes of sub-section (1), the Income-tax Officer shall be entitled to use all the 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 Income-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 149, 153, 154, 155 and 231 and for the purposes of payment of interest under sections 243 and 244, in a case refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 words ", for data processing and for transmission and reception of messages", the words, brackets, figures and letters "and for data processing (not being computers within the meaning of section 32AB)" shall be substituted. 74. Consequential amendments.--The following amendments (being amendments of a consequential nature) shall be made in the Income-tax Act,-- (a)(i) in section 32A, in the Explanation below sub-section (2B), clause (b) shall be omitted ; (ii) in section 54E, in Explanation 1 below sub-section (1), in clause (d), the Explanation shall be omitted ; (iii) in section 80L, in sub-section (1), in clause (ii), the Explanation shall be omitted ; (iv) in section 193, in the proviso, in clause (iib), the Explanation shall be omitted ; (b) with ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 company" shall be substituted ; (vii) in section 246, in sub-section (2), in clause (a), the words and figures "or an order under section 104, made against the assessee, being a company" shall be omitted ; (viii) in section 280ZB, in Explanation 2, clause (a) shall be omitted. Wealth-tax 75. Amendment of section 2.--In section 2 of the Wealth-tax Act, 1957 (27 of 1957) (hereinafter referred to as the Wealth-tax Act), in clause (m), the following Explanation shall be inserted at the end, with effect from the 1st day of April, 1988, namely :-- "Explanation.--A building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act shall be includible in the net wealth of the person who is deemed under the said clause to be the owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion. -- (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 Chairman is the Presiding Officer shall be the principal Bench and the other Benches shall be known as additional Benches. (4) Notwithstanding anything contained in sub-sections (1) and (2), the Chairman may authorise the Vice-Chairman or other Member appointed to one Bench to discharge also the functions of the Vice-Chairman or, as the case may be, other Member of another Bench. (5) Notwithstanding anything contained in the foregoing provisions of this section, and subject to any rules that may be made in this behalf, when one of the persons constituting a Bench (whether such person be the Presiding Officer or other Member of the Bench) is unable to discharge his functions owing to absence, illness or any other cause or in the event of the occurrence of any vacancy either in the office of the Presiding Officer or in the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Members of the Settlement Commission who have heard the case, including those who first heard it.". 80. Amendment of section 22C.--In section 22C of the Wealth-tax Act, with effect from the 1st day of June, 1987,-- (i) in sub-section (1), the following proviso shall be inserted at the end, namely :-- "Provided that no such application shall be made unless the assessee has furnished the return of wealth which he is or was required to furnish under any of the provisions of this Act." ; (ii) for sub-sections (1B) and (1C), the following sub-sections shall be substituted, namely :-- "(1B) Where the wealth disclosed in the application relates to only one previous year,-- (i) if the applicant has not furnished a return in respect of the net wealth of that year (whether or not an assessment has been made in respect of the net wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceeding shall be reopened by the Settlement Commission under this section if the period between the end of the assessment year to which such a proceeding relates and the date of application for settlement under section 22C exceeds nine years." 83. Amendment of section 22F. -- In section 22F of the Wealth-tax Act, sub-sections (5) and (6) shall be omitted with effect from the 1st day of June, 1987. 84. Amendment of section 22H. -- In section 22H of the Wealth-tax Act, with effect from the 1st day of June, 1987,-- (a) in sub-section (1), the following proviso shall be inserted at the end, namely :-- "Provided that no such immunity shall be granted by the Settlement Commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under section 22C." ; (b) after sub-section (1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 the Settlement Commission under section 22HA.". 87. Omission of section 22M. -- Section 22M of the Wealth-tax Act shall be omitted with effect from the 1st day of June, 1987. 88. Amendment of section 31.--In section 31 of the Wealth-tax Act, in sub-section (2A),-- (a) in the opening portion,-- (i) for the words "the Board may", the words "the Commissioner may" shall be substituted ; (ii) for the words "interest payable by an assessee", the words "interest paid or payable by an assessee" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of October, 1984 ; (iii) for the words ", on the recommendation made by the Commissioner in this behalf, it is satisfied that", the words "he is satisfied that" shall be substituted ; (b) for clauses (i) and (ii), the following clauses shall be substituted and shall be deemed to have been substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 relevant to the assessment year commencing on the 1st day of April, 1987, exceeds Rs. 18,000,--- Rates of income-tax (1) Where the total income Nil; does not exceed Rs. 12,000 (2) Where the total income 25 per cent. of the amount by exceeds Rs. 12,000 but does not which the total income exceeds exceed Rs. 20,000 Rs. 12,000; (3) Where the total income Rs. 2,000 plus 30 per cent. of the exceeds Rs. 20,000 but does not amount by which the total income exceed Rs. 40,000 exceeds Rs. 20,000; (4) Where the total income Rs. 8,000 plus 40 per cent. of the exceeds Rs. 40,000 but does not amount by which the total income exceed Rs. 60,000 exceeds Rs. 40,000; (5) Where the total income Rs. 16,000 plus 50 per cent. of the exceeds Rs. 60,000 but does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Rs. 8,850 plus 22 per cent. of the exceeds Rs. 1,00,000 amount by which the total income exceeds Rs. 1,00,000. Explanation. ---For the purposes of this Paragraph, " registered firm " includes an unregistered firm assessed as a registered firm under clause (b) of section 183 of the Income-tax Act. Paragraph D In the case of every local authority,--- Rate of income-tax On the whole of the total income 50 per cent. Paragraph E In the case of a company, --- Rates of income-tax I. In the case of a domestic company,--- (1) Where the company is a company 50 per cent. of the total income; in which 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 Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) on income by way of interest 15 per cent.; payable on a tax free security (B) 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; 2. In the case of a company --- (a) where the company is a domestic company--- (i) on income by way of interest 20 per cent.; other than "Interest on securities" (ii) on any other income 21.5 per cent.; (excluding interest payable on tax-free security) (b) where the company is not a domestic company--- (i) on income by way of dividends 25 per cent.; payable by any domestic company (ii) on income by way of interest 25 per cent.; payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (iii) on income by way of 30 per cent.; royalty payable by Government or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment referred to in the said sub-section (9) or in which the "advance tax" payable under Chapter XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, "advance tax" [not being "advance tax" in respect of any income chargeable to tax under 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 at the rates as specified in that Chapter or section], shall be so calculated, charged, deducted or computed at the following rate or rates : 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 inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 included is not less than fifty-one per cent. of such total income, --- Rates of income-tax (1) Where the total income Nil; does not exceed Rs. 10,000 (2) Where the total income 4 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. 600 plus 7 per cent. of the exceeds Rs. 25,000 but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, apply accordingly: Provided that sub-section (2) of section 58 shall apply subject to the modification that the reference to section 40A therein shall be construed as not including a reference to sub-sections (3) and (4) of section 40A. Rule 2. ---Agricultural income of the nature referred to in sub-clause (b) or sub-clause (c) of clause (1) of section 2 of the Income-tax Act [other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed as if it were income chargeable to income-tax under that Act under the head "Profits and gains of business or profession" and the provisions of sections 30, 31, 32, 34, 36, 37, 38, 40, 40A [other than sub-sections (3) and (4) thereof], 41, 43 and 43A of the Income-tax Act shall, so far as may be, apply accordingly. Rule 3. --- Agricultural income of the nature referred to in sub-clause (c) of clause (1) of section 2 of the Income-tax Act, being income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has any agricultural income, then, the agricultural income or loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee. Rule 7. ----Where the result of the computation for the previous year in respect of any source of agricultural income is a loss, such loss shall be set off against the income of the assessee, if any, for that previous year from any other source of agricultural income; Provided that where the assessee is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of section 183 of the Income-tax Act or is a member of an association of persons or a body of individuals and the share of the assessee in the agricultural income of the firm, association or body, as the case may be, is a loss, such loss shall not be set off against any income of the assessee from any other source of agricultural income. Rule 8. ----Any sum payable by the assessee on account of any tax levied by the State Government on the agricultural income shall be deducted in computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or the 1st day of April, 1985, or the 1st day of April, 1986, (v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1983, 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, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, (vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1984, 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, 1985, or the 1st day of April, 1986, (vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1985, 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, 1986, and (viii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the previous year relevant to the assessment year commencing on the 1st day of April, 1983, 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, 1984, or the 1st day of April, 1985, or the 1st day of April, 1986, or the 1st day of April, 1987, (v) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1984, 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, 1985, or the 1st day of April, 1986, or the 1st day of April, 1987, (vi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1985, 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, 1986, or the 1st day of April, 1987, (vii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1986, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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