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REGISTERED No. D- 28

The Gazette of India

EXTRAORDINARY

PUBLISHED BY AUTHORITY

NEW DELHI, FRIDAY, JUNE 10, 1949

GOVERNMENT OF INDIA

MINISTRY OF LAW

New Delhi, the 10th June, 1949

ORDINANCE No. IX OF 1949'

AN

ORDINANCE

farther to amend the Indian Income-tax Act, 1922, the Indian Finance Act

1942, the. Excess Profits Tax Ordinance, 1943, the Indian Finance Act, 1946, the Business Profits Tax Act, 1947 and the Taxation on Income (Investigation Commission) Act, 1947.

WHEREASandemergency has arisen which makes it necessary further to amend the Indian Income-tax Act, 1922 (XI of 1922), the Indian Finance Act, 1942 (XII of 1942), the Excess Profits Tax Ordinance, 1943 (XVI of 1948), the Indian Finance Act, 194f> (VII of 1946), the Business Profits Tax Act, 1947 (XXI of 1947) and the Taxation on Income (Investigation Com- mission) Act, 1947 (XXX of 1947). for the purposes hereinafter appearing;

Now, THEREFORE, in exercise of the powers conferred by section 42 of the Government of India Act, 1935 (26 Geo. 5, c. 2), the Governor-General is pleased to make and promulgate the following Ordinance—

CHATTER I.

PRELIMINARY

1- Short title, extent and commencement.—(1) This ordinance may be railed the Taxation Laws Amendment Ordinance. 1910.

(2) Chapter II shall be deemed to have come into force on the 31st day of March, 1949, and the remaining provisions of this Ordinance shall, unless otherwise expressly provided herein, come into force at once.

C H A P T ER II

AMENDMENT OF THE INDIAN INCOME-TAX ACT, 1022.

2. Amendment of section 5A, Act XI of 1922.—In sub-section (1) of section 5A of the Indian Income-tax Act, 1922 (hereinafter in this Chapter referred to as the Income-tax Act), for the words "not more than ten persons ' the words "as many persons as it thinks fit" shall be substituted.

(969)

3. Amenimtmt of aectlon 10, Act XI of 1922,—Tn section 10 of thf hif-'jTnc'-ln.v Act,—

(J) in sub-section (#),-—

(i) after clause (vi), the following clause shall he inset-ted, namely:—

"(via) in respect of depreciation of buildings newly erected, oi' of machinery or plrtiit being newly installed, nffcr the ftlst day of March, 1948, fi furthor Ruin (which shall bo deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of the extra allowance for double or multiple shift working of tho machinery Or plant and the initial, depreciation allowance admissible under that clause for the first year of woction of tho building or the 'installation of the machinery or plant) in the assessment for tho year com- mAnr^'ne with, the 1st dny of April, 1049:

"Pivivided that this clause shall not apply in respect of ""v building, machinery or plant which prior to the 1st dny of Anvil, 1948, had at any time been used for the purposes of busi- ""cw and had after tho said date been transferred direotly or in r)i"r^r-tlv from one business to another;" (ii) in the second proviso to clause (vii), for tho words "is sold'¹ *he, words "is sold, whether during the continuance of (be business cc* flftar tho cessation thereof," shall bo substituted;

(Z\ to clause (a) of -sub-section (/>) tho following proviso ' shall h<" added, nnmolv:—

niinifly:—

"ii*(!. I'i.ifiii[it'ton fi'oiti fa-/' of ncirly cnhihlhlu'd industrial. iiw.lortaV i'li'in,-—(?) Snyo ii.s otberwifie hereinafter ]novided, the tax shall not be pay- able by nn nsscssee on so much of the profits ov gains derived from ony industrinl undertaking to which this section applies ns do not exceeil siv nor cent, per omiurn on :-'u-' dipiiiil em[)loyiHl in tho undertaking, eo.mp'.'.fer¹ i'i ?ie.(!'.ird:'in(-,e with such l'nii-s -m may bf, inmle ip this liehnlf by til^ f.Yu'i'ft' pofird of Hi-'Vf.uufi,

{!.') This section applies to any industrial undertaking which—

(;) is riot formed by the splitting up or the reconstruction of business already in existence or by the transfer to a now business of bin.ding, iiiiiolunory or plant used hi a business which was being carried on befoir tho 1st a'n\ of April, 1048.;

(ii) baa heyun or begins to manufacture or produce articles in tiny Province oi Tiidiu tit any time. after the 31st day of March, 194H;

(i") employs more than "lii'ty persons; and (tv) involves the use of electrical energy or any other form oi: energy which is mechanically transmitted and is not directly generated oy humur agency:

• •

Provided that the Central Government may, by notification in th" official Gazette, direct Unit the exemption conferred by this section shall not apply to any particular industrial undertaking'.

, {;!) The profits or gains of an industrial undertaking to which thlb tieetion applies ahull be computed in accordance with the provisions ol section 10.

( • £) T ho t ax s h a ll n oi be p a y a b le by a s h a r e h o l d er in r e s p e ct of BO

much of any dividend paid or deemed to be paid to him by an industrial undertaking as is attributable to that part of the profits.or gains on which the tax is not payable under this section.

(-5) Nothing in tin's section shall affect the application of section 28A in relation to the profits* or gains of an industrial undertaking to which this section applies, and for the purposes of that section, the expression 'assessable income' shall be deemed to iueludo the profits or gains in respect 'if which the tax is not payable under this, section.

(6) The provisions of this section shall apply to the assessments for the years commencing on the 1st day of April, 1049.''

0. Amendment ol section 16, Act XI of 1922.— lu clause (") o£ sub-section (1) of section Id of the Ineome-t'ix Act, for the words, figures and letter, "accfiui.i 15 and section lo.U". the words, ligui-es and letters "suction 15, section J5B and sectioli 150." shall Lu: substituted.

7. Amendment oi Bectlon 17, Act XI oi 1922.-—Jn sub-section (ii) of suction .17 of thj Income-taN Act, al'tci¹ the woids-iiyutes and letter "or under section 1511" the words, figures and leitt-r ''or under section 15C' shall bo inserted.

8. Amendment of secfon 18A, Act XI o! 1922.—In "ection 18A of the fneome-tn\ Act,—

(i) in sub-section (J), after the words "from the date of payment' the following shall be inserted, namely:—-

972 THE GA'/M'HT}<] 0 1' INDIA liXTBAOEDINAEY, JUNE 10, 1049

9, Insertion of new section 23B in Act XI of 1922.—After section 2iiA of tho Incoriic-ifiN" Act, tho following section shall bo inserted, namely: —

"2<)B. l'otvcr to make provisional, assc'ssn^nt in, advance of legultu assessment.—- (?) Tlie Income-tux Officer mu\, at any time after the receipt of a return made under section 22, proceed to make in ii aura- niary manner, a provisional assessment of the tax payable by the assossee, on tlio basis of his return and the accounts and documents, if any, accompanying it, after giving due ctYoot to (7) the allowance referred to in paragraph (/>) of the proviso to clause (vi) of sub-section. (!•') of section 10, and (ii) any lews carried forward under sub-section (&) of section 24.

(2) A partner of u firm may bo provisionally assessed under aub-flectioL (1) in respect of his share in the firm's income, profits and gains, if its return has been received, flit-hough the return o,f the partner himself may not have boon received.

(Ii) A firm nmy be provisionally assessed under sub-section (1) oe if it were an unregistered Hnn, u'tiless the firm fulfils such conditions as the Oentnil Government- may. by notification in the offlciuJ Gazette, speolfy in thjit behalf.

(4) There shall bij no right of appeal -against, u, provisional aBsesamant made under sub-seotio)i. (^)-

(6) For tho avoidance i:>f doubt, it is hereby declared that the provi- sions of section 45 (except the first proviso) and soetion 40 apply in relation to any tux .payable in pursuance of a provisional assessment made under sub-section (.7) as if it wore a regular assessment made ander section 23.

(6') Income-tax paid or denned i.o have been paid under section 18 or section 18A in respect of nny income provisionally assessed under sub- section (1), shall be doomed In \w\e been paid towards tho provisional nsseSHineut.

(f) After a. regular assessment has betjn jnado uudur section 28, any amount paid 01- deemed to ha\e been'paid towards u proviaional asBeeB- lncnt uiHfle uu

IS) Nothing done or suffei'ed by reason or in consequence of any provisional assessment uiadf under this section shall prejudice the deter- mination on the merits, of any Wsur vvlnc-h may arise in the course of the regular assessmeui under section "2H.

10. Amendment of section 54, Act XI of 1922.—In .sub-seotion (3) of section 51 of the Income-ta:-; Act-.—

(i) in clause (d), after the word "suit" the words ''or proceeding'¹ shall he inserted;

CKAT'Tim III. AsfHNiiMUNT OK TIIH 1.\()IAN' KI\A\('.K ACT, 1042.

sum. HO repayable, the sum repaid in 'excess may be, recovered in the same manner an excess profits tnx may be recovered under the Excess Profits Tax Act, 1940 (XV of 1940), and notwithstanding anything contained in sub-section (7) of section 46 of the Tudirni Income-tax Act, 1922 (XI of 1022), as made applionble by section 21 e Excess Profits Tax Act. 1940, such recovery may be made at any w n c ,"

fJIAPTEi; IV.

AMENDMENT OK rl'FE ExCJSKK J.'riOKl'I'S T.\.\ O K D I N A N U U, 1UJ.-!.

13. Amendment of section 2, Ordinance XVI of 1943.—"For sub-section ',•>') of section 2 <>f the Exoorcs Profit Tn\ Ordinance., 1943, tho following sub - nx'tinn shall be substituted Tumiely:---

*'(.?) Any further sum, such ;is IN referred to in sub-section (1), deposited in accordance \rith the provisions of that sub-see-tion, whether before or niter the commencement of tho Taxation Laws Amendment Ordinance, 3.9d.9, nhn]] not be repaid by the Central Government unless five years have expired from tho date on which the deposit was mo.de:

Provided that the Control (iovarmnent may repay any such deposit before the expiry of the period specified herein if it is satisfied that such repayment in. in the public interest."

CHAPTER V. AMENDMENT OF TIIK 'INDTAX lHlr.vA,\(;K Ad'r. lOdO.

14. Amendment of flection 11, Act VII of 1940.—To sub-section (18) of wection 11 of the Indian Finm.u'.e \ot, 1.0d6, the following proviso shall, be ndde'd, i . - i m t ly —

"Provided that when?, tiubBw^ue'nt to any repayment made under the provisions of weotiou 10 of the Indian Fimmco Act, 1942 (VII of 1943) or Faction -2 of [\u Excewb Profits Tax Ordiuance, 194fl (XVI of 1943), a reduc- tion in the excess pro/i^; 1:,'\ i^ effected wliother by relief given in i-eepoot of n dencienoy of profits., oi- by relief given iu respect of a, double excess pi.ofils '*^- or by au order passed in any appeal, or otherwise, the sum. to be refunded to the asspssce on account of suoh reducition shall be decreased by such proportion thereof us the amount already repaid bore to the excess profits tax before the reduction ae aforesaid."

0HAPTKI1 VI.

AMMNDMJ3NT Oil' THK BUSINESS PltOFl I y T]LA\ ACT, 1947.

15. Amendment of section 4, Act XXI of 1947.—Iu section 4 of the Busi- ness Profits Tnx Act, 1947 (hereinafter in this Chapter referred to na the 'JJusiinOHS Profits Tnx Act), nflcr the first proviso, the following further pro- vih,-> shall bo inserted, namely; —

"'Provided further that where t-he profits include any profits from an industrial undertaking which are exempt from income-tax under section 15C of tho Indian Income-tax Act. 1922 (XI of 1022), the "business profits tax tjiherwise payable on the whole of the taxable profits shall bo reduced by an amount which bears to that business profits tax the sonic proportion tm the amount of such inclusion bearo to the whole profits."

16. Amendment of Schedule II, Act XXI of 1947,—(1) To rule 2 of Schedule¹ IT t o' the Business Profits Tax Act, the following Explanation 'hull be added, namely:—

"Explanation.—A reserve or paid-up share capital brought iuto e\isience by floating or iucre.-ising (by re-valuation or otherwise) any book asset is not capital for the purposes of aKcertainiug the, abatement under (his Act in respect of any chargeable accounting period."

\:Jj 'HID amendment nindu i>\ sub-section (L) shall "be deemed to have liaci •ri'i et I'i mi 11.c dair i.m which Oio Ijusinoss PioHts Tax Act cume into force.

CHAPTEK VII

\ MK.N1'MEN 1 UK XlIJi TAXATION on IXCOMK ( i x\ E b i l G A T l ON COMMISSION) ACT, l l k T.

17. Amendment of section 3, Act XXX of 1947.—For clause (b) of section ' of tlu' Taxation on Income (Investigation Commission) Act, 194.7 (herein.- ifter in.this (.'halter referred 1 J as tbt. Investigation Commission Act), the follow- )•(; clause' shall lie substituted, namely:—

" (1>) to investigate in accordance with the provisions of this Act :MJY case or points in a i.i-o rol'eired to it under section 5 and make a .•upon thereon (including such interim reports as the Commission may think fit) to the Cetrhal Government in respect of all or any ot the assessments made in n iat'on to the case before the date ol its report 04- interim rejjorl, as U'e cusc, may be;".

18. Amer-dment of section 6, Act XXX of 1947.—Jn section. 0 of the In- ,esuigaticu Commission Act,—

• (/) for sub-section {1), the- following sub'-sectioai shall be substituted, immeiy:—

"{•i) The Gominisoion shall have power to' require any person or banking or other compam to prepare and furnish on or before a specified date written statements of accounts and affairs verified in such manner us m i> be piesci'ibed by the Commission and, if so required by the Commissioi', also duly verified by a qualified auditor, giving information on -vuch ^ ointe or .matters as in the opinion of the Commission may, directly or indirectly, be useful for, or relevant to, any ease reierred to it, and any person or banking or other company so rr(|unreal shall lit- hound. notwithstRnding .jmj law to the contrary, lo comply with such 'reijuitement.";

((/) after Mib-Hcction \-?), the following sub-section shall be inserted, namely: —

"(;v'lj l-'or ihe j)urpf>se of any imestigation, the Commission ma) impound and fetu'.'i ui iis custc".ly; lar such period as it thinks lit, any document produced before i t . "; (///) in Mib-section (4), for tlm brackets, iigures nnd word "(2) 'dad (!>)' , flu- Inackets, figure^, woi'd and lotier "(I), (2) and {2A)" shall in.', substituted:

\iv) for Mili-sectiou (/), the following sub-st-C-tiou shall be substituted, namely:—

"(?) Where iii the opinion of the Commission any person or banking ov other edinpan^ is likely to be in possession of any informa- tion or do.-ument which nw\, directly or indiiectly, be useful for, or relevant io, any jase referred to it or any case likely to be reported i)v the i'onuuission io ihe Centr;il (.lovernment under the "provisions of sub->ec1ion (J') ol' >eclion 5, the Connnission, and, subject to the direction of the. Commission, any authorised official, may make en- quiries in ;uch maimei :ji- it or he i.n;i\ deem lit and obtain from eucb person or banking or other (Jbmpany statements, on oath or other- wise, on such points or mutters as may be specified; and for the purpose of am such enquiry, the Commission and the authorised official shall have all the powers conferred on them by sub-sections (?), (2). (2A), (3) and (4)."; {/:) F or Mil>-seoti'>u {'•'). i''(. f i t l u w i ng suh-&(>otiou alml¹ be sul)&iitnf.';d.

n a m e l y :—

THE GAZETTE OF INDIA . A T R U )E DINGHY, JUNE It), VM<) <)7r>

''(9) Subject to arty m [w made iu this l.eliftlf under thi* Act. any authorised official shall have power—

(0 to examine at all reasonable times any books of acoouni or other documents which in his opinion will be useful for or relevant to the proceedings in am ease under this "Act;

(u) if specially authorised in this behalf by the Commits- siou, to enter any building or place whore he has reason to be- lieve that airs sueli books of account or documents may be found;

{Hi) to* seiz'j any siub books ol account or documents or place marks of ideutitv-ation thereon and- make extracts or copies therefrom;

(iv) in tlit course of any search under this section, to make a note or an inventory of am other article or thing found in the course of such seaieh whiet) in bis opinion may bo useful for or .elcvant to the disposal of any easo under this Act:

;>nd the provisions of tho Code uL Criminal Procedure, 1898 (Act V of 1898). relating to searches, so far as can be made applicable, shall upph to searches made undei tl'u¹ nutborit) of this section."

19. Insertion of new sections 6A and 6B in Act XXX of 1947.—After sec- tion fi of the Invustii^itioii Commission Act, the following sections shall be in- serted, namely: —

"6A. Power of Commission to tender immunitii from prosecution, etc.-

{1) At any stage of the in\ estimation into a case referred to it undei: sec- tion 5. the Commission may. with'a view; to obtaining the evidence of any person appearing to have been, directly or indirectly, concerned in or privy to the evasion of.payment of taxation on -income in such case and after recording its reasffns for so doing, tender to such person immunity from prosecution for any offence under the Indian Income-tax Act,- 1922 (XT of 1922), the Indian Benal Code (Act XLV of I860) or any other law for the time being in, force, and also from'the imposition of um penalty under the Tndian tncome-iax Act. 1922, on condition of MR making a fuli and true disclosure, of the whole of the circumstances relative, to the eva- sion of payment of taxation on income and to every other person concerned, whether as principal, agent or abettor, in such evasion

{2) Nothing contained in. sub-section (7) shall ren;l"r ati\- person immune from liability to taxation on so much of his income n •• may be found to have, been concealed or to have escaped taxation,

(3) Kvery person accepting a tender of immunity under this '•eeiion shall be examined aj a witness before the Commission.

6 B. Withdraical of tender of immunity in certain rrtsts.—(7) Tf at any

• "7G THE GAZETTE OT-¹ INDIA l-XTiUORDTNAEY, JUNE 10, 1949

20. Insertion of new section 8A In Act X XX of 1947.—After section 8 of t he Investigation C'ommisaion Act, t he following section shall bo inserted, namdv:—* "8A Settlement of oases under investigation.—(1) Where a ny person concerned in any ease referred to or pending before t he Commission for investigation applies to the Commission at any time during such investi- gation to have t he case or a ny parti thei'eof Bottled in so far as it relates to him, the CumniisNion shall, if it is of opinion t h at t he terms of t he settlement contained in the application m ay ho approved, refer t he m a t- ter to the Centra] Government, and if the Contral Government accepts* the t e r ms of such settlement, t he Commission shall have tho terms, therectf recorded and t h e r e u p o n ' t he -investigation, in ao far as it relates to m a t t er covered by such settlement, shall he defined to be closed.

(8) F or t he purpose ot uuloicing t he terms of any settlement arrived at in pursuanco of sub-section (1), t he Central Government m ay direct) that such proceedings ns m ay be appropriate under t ho Indian Income-tax Aot, 1922 ( XI of 1022), the W o o es Profits Tax Aot. 1940 (XV. of 1940) or any other law inny he taken against t he person to whom t he settlement re- lates, and, in particular, t he provisions of tho second proviso to clause (a) of sub-section (ft) of section 23, section 24B, t he proviso to sub-section (5) of section 25A, the proviso t<> sub-section (2) of section 20 and sections 44 and 40 of t he Tndian Income-tax Act, 1922, shall he applicable to the recovery of a ny s um specified in such settlement by tho Income-tax offi- cer having jurisdiction to assess the person by whom such sura is payable as if it were income-tax-- or an mrear of income-tax within tho meaning of those provisions.

(3) Subject to the provisions of sub-section (6) of section 8, any set- tlement arrived at Tinder this section shall he conclusive as to +he matters stn

(4) Nothing contained in this section shall, unless otherwise expressly specified in t he settlement, be n bar to t he initiation of proceedings under section Hi of tho Indian Income-tax- Aot, 1922."

C H A P T ER V i l l. • JVfTSOKTJ,A\TEO'DH. 21. Reneal a nd saving.—(7) The Indian Income-tax (Amendment) Ordin- ••moo. W4fl fXXXVTTT of 1948). is hereby repealed.

(2} Rot-withstand in &• the expiry of t he Excess Profit* Tux (Amendment) Ordinance. 1948 ( X X V II of 194ft), and t he Taxation on Income (Investigation Commission) (Amendment) Ordinance, 1948 (XXXV of 1948"), or t he repeal by this Ordinance of t he Indian Income-tax (Amendment) Ordinance, 1#48. a n y- thing done or any action token in t he exercise' of any power conferred by any of the Ordinances referred to in this section shall for all purposes he deemed to have been done or taken in t he exercise of t he powers conferred by this Ordinance OB if this Ordinance had been in force on tho day such thing w as done oi" such action was taken.

RA.TA.aOPALAOTTART,

(rovfirnar-Geneml.

Seftrptary.

T'UBKrflTiicn uv THI<; MANAGEH. OF PUBT-KWHUNS. DMLIU, TWDIA iPnmTPD TIV TTTR MvWfHm, OoYimwiwT °T TVTIM T'TMIR, N TW T W F I -, TNPT.V