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REGISTERED No. D. 221.

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 12] NEW DELHI, THURSDAY, MAY 25, 1967/JAISTHA 4, 1889

Separate Paging is given to this Part in order that it may be filed

as a separate compilation.

LOK SABHA

The following Bill was introduced in Lok Sabha on the 25th May, 1967: —

*BILL No. 61 OF 1967

A Bill to give effect to the financial proposals of the Central Gov-

ernment for the financial year 1967-68.

BE it enacted by Parliament in the Eighteenth Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Finance (No. 2) Act, 1967.

abort

title and

commence-

ment.

(2) Save as otherwise provided in this Act, sections 2 to 36 and 44 to 46 shall be deemed to have come into force on the 1st day of April. 1967. __

*The President has, in pursuance of Clauses (1) and (3) of article 117 and clause (1) of article 274 of the Constitution of India, recommended to Lok Sabha the introduction and consideration of the Bill.

(189)

CHAPTER II

INCOME-TAX AND ANNUITY DEPOSITS FOR THE FINANCIAL YEAR 1967-68

I n c o me tax.

2. (I) Subject to the provisions of sub-sections (2), (3) and (4), for the assessment year commencing on the 1st day of April, 1967, income-tax shall be charged at the rates specified in Part I of the First Schedule and, in the cases to which Paragraphs A, B, C and D of that Part apply, shall be increased by a surcharge for purposes of the Union and a special surcharge for purposes of the Union cal- culated in either case in the manner provided therein.

31

(2) In making any assessment for the assessment year commenc- ing on the 1st day of April, 1967, where the total income of a com- pany, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, includes any profits and gains from life insurance business, the income-tax payable by it shall be the aggregate of the income-tax calculated—

(1) on the amount of profits and gains from life insurance business so included, at the rate applicable in the case of the Life Insurance Corporation of India, in accordance with Para- graph E of Part I of the First Schedule, to that part of its total income which consists of profits and gains from life insurance business; and

(ii) on the remaining part of its total income, at the rate applicable to the company on its total income.

43 of 1961.

(3) In cases to which Chapter XII of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) applies, the tax chargeable shall be determined as provided in that Chapter, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter, as the case may be.

(4) (a) In respect of any assessment for the assessment year commencing on the 1st day of April, 1967, in the case of an assessee being a domestic company or an assessee other than a company,—

(i) where his total income includes any profits and gains derived from the export (made before the sixth day of June, 1966) of any goods or merchandise out of India, he shall be entitled to a deduction, from the amount of income-tax with which he is chargeable, of an amount equal to the income-tax calculated at one-tenth of the average rate of income-tax on the amount of such profits and gains included in his total income,

(ii) where he is engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, and has, during the

65 of 1951.

previous year, exported before the sixth day of June, 1966 such articles out of India, he shall be entitled, in addition to the deduction of income-tax referred to in sub-clause (1), to a further deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on an amount equal to two per cent, of the sale proceeds receivable by him in respect of such export made before the date aforesaid.

52 of 1062.

Explanation.—In this sub-clause, the expression "sale proceeds" does not include freight or insurance attributable to the transport of the articles beyond the customs station as defined in the Customs Act, 1962;

(Hi) where he is engaged in the manufacture of any articles in an industry specified in the said First Schedule and has, during the previous year, sold before the sixth day of June, 1966 such articles to any other person in India who himself has exported them out of India, and evidence is produced before the Income-tax Officer of such articles having been so exported, the assessee shall be entitled to a deduction, from the amount of income-tax with which he is chargeable for the assessment year, of an amount equal to the income-tax calculated at the average rate of income-tax on a sum equal to two per cent, of the sale proceeds receivable by him from the exporter in respect of such articles sold to the exporter before the date aforesaid.

(b) The aggregate amount of the deductions under this sub- section shall in no case exceed the amount of income-tax otherwise payable by the assessee.

(c) Nothing contained in sub-clause (ii) or sub-clause (Hi) of clause (a) shall apply in relation to—

(1) fuels, (2) fertilisers, (3) photographic raw film and paper, (4) textiles (including those dyed, printed or otherwise processed) made wholly or in part of jute, including jute twine and rope,

(5) newsprint, (6) pulp—wood pulp, mechanical, chemical, including dissolving pulp,

(7) sugar, (8) vegetable oils and vanaspathi, (9) cement and gypsum products.

(10) arms and ammunition, and (11) cigarettes,

85 of 1951.

respectively, specified in items 2, 18, 20, 23(2), 24(2), 24(5), £5, 28, 35, 37 and 38 of the First Schedule to the Industries (Development and Regulation) Act, 1951.

(d) The amount of any profits and gains derived from the export of any goods or merchandise out of India in respect of which deduc- tion of income-tax is admissible under sub-clause (i) of clause (a) shall be computed in accordance with the rules made by the Board in this behalf.

(5) In cases in which tax has to be deducted under sections 193, 194, 194A and 195 of the Income-tax Act at the rates in force, the deduction shall be made at the rates specified in Part II of the First Schedule.

(6) In cases in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the Income-tax Act or charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section 175 or sub-section (2) of section 176 or deducted under section 192 of the said Act from income chargeable under the head "Salaries" 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" shall be so calculated, charged, deducted or computed at the rate or rates specified in Part III of the First Schedule.

(7) For the purposes of this section and the First Schedule,—

(a) "company in which the public are substantially interested" means a company which is such a company as is referred to in section 108 of the Income-tax Act;

(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 commenc- ing on the 1st day of April, 1967, 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 that Act;

(c) "earned income" means any income of an assessee who is an individual, or a Hindu undivided family, or an unregistered firm [not being an unregistered firm assessed under clause (b) of section 183 of the Income-tax Act] or an association of persons or body of individuals, whether incorporated or not, not belnij—

(A) a company, or

(B) a local authority, or (C) a legistered firm, or

(D) an unregistered firm assessed under clause (b) of th" said section 183—

(i) which is chargeable under the head "Salaries":

or

(ii) which is chargeable under the head "Profits and gains of business or profession" where the business or profession is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engager* in the conduct of the business or profession; or

(in) which is chargeable under the head "Income from other sources" if it is immediately derived fron? personal exertion or represents a pension or superannua- tion or other allowance given to the assessee in respect of the past services of any deceased person, or which is chargeable under that head under clause (ia) of sub- section (2) of section 56 of the Income-tax Act, and

11 of 11)22.

includes any such income which, though it is the income of another person, is included in the assessee's total income under the provisions of the Income-tax Act, but does not include any such income on which income-tax is not payable under clause (Hi) or clause (v) of section 86 of that Act or which is exempted from tax under a notification issued under section 60 or section 60A of the Indian Income-tax Act, 1922, as continued in force by clause (I) of sub-section (2) of section 297 of the Income-tax Act;

(d) "industrial company" means a company which is mainly engaged in the business of generation or distribution of electri- city or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.

Explanation.—For the purposes of this clause, a company shall be deemed to be mainly engaged in the business of gene- ration or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or proces- sing of goods or in mining, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VIA of the Income-tax Act) is not less than fifty- one per cent of such total income;

(e) "tax free security" means any security of the Central Government issued or declared to be income-tax free, or any

security of a State Government issued income-tax free, the income-tax whereon is payable by the State Government;

(f) "unearned income" means income which is not "earned income";

(g) all other words and expressions used in this section and the First Schedule but not denned in this sub-section and denned in the Income-tax Act, shall have the meanings respectively assigned to them in that Act.

Annuity dopoiil

3. (1) Save as otherwise provided in Chapter XXIIA of the Income-tax Act, annuity deposit for the assessment year commencing on the 1st day of April, 1967 and annuity deposit to be made during the financial year commencing on the 1st day of April, 1967, shall be made by every person to whom the provisions of that Chapter apply, at the rate or rates specified in the Second Schedule.

(2) For the purposes of this section and the Second Schedule, the expressions "adjusted total income", "annuity deposit" and "deposi- tor" have the meanings respectively assigned to them under clauses (1), (5) and (C) of section 280B of the Income-tax Act.

CHAPTER III

AMENDMENTS IN THE INCOME-TAX ACT

4. In section 2 of the Income-tax Act,—

(a) after clause (i), the following clause shall be inserted, Amend- ment of section 2.

namely:—

'(1A) "amalgamation", in relation to companies, means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the com- pany with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that—

(i) all the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of the amalgamation;

(ii) all the liabilities of the amalgamating company or companies immediately before the amalgamation

become the liabilities of the amalgamated company by virtue of the amalgamation;

(Hi) shareholders W d i ng not less than nine-tenth* in value of the charrq in t^ amalgamating company cr companies (other lhan shares alreadv h^ld therein im- mediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation,

otherwise than as a result of the acquisition of the property of one company by another company pursuant to the pur- chase of such property by the other company or as a result of the distribution of such property to the other company after the winding up of the first mentioned company;';

(b) after clause (37), the following clause shall be inserted, namely:—

'(37A) "rate or rates in force" or "rates in force", in rela- tion to an assessment vear 196 THE GAZETTE OF INDIA EXTRAORDINARY [PART II

perty of the assessee •" consideration of a transfer re- ferred to in clause (vii) of section 47, there shall be in- cluded the period for which the share or shares in the amalgamating company were held by the assessee;",

&.mf""d- pnent of lection 10.

5. In section 10 of the Income-tax Act, in clause (27), the words, figures and letters "which is assessable for the assessment year com- mencing on the 1st day of April, 1965, 1966 or 1967" shall be omitted.

Amend- ment of lection 23.

6. In section 23 of the Income-tax Act, in the proviso to sub-sec- tion (2), for the words "total income of the owner,", the following shall be substituted, namely:—

"total income of the owner (the total income for this purpose being computed without including therein any income from such property and before making any deduction under Chapter VIA or section 280O)".

\merd- ment of lection 29.

7. In section 29 of the Income-tax Act, for the words and figures "sections 30 to 43", the words, figures and letter "sections 30 to 43A" shall be substituted-

Amend- ment of section 32.

8. In section 32 of the Income-tax Act, in clause (2) of the Expla- n&rion to clause (til) of sub-section (7), after the words "for the time being in force", the following words 'iball be added, namely:—

"but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is an Indian com- pany".

9. In section 33 of the Income-tax Act, for sub-section (3), the fol- lowing sub-section shall be substituted, namely:—

Amend- ment of MCtlon 33.

"(3) Where, in a scheme of amalgamation, the amalgamat- ing company sells or otherwise transfers to the amalgamated company any ship, machinery or plant in respect of which development rebate has been allowed to the amalgamating com- pany under sub-section (1) or sub-section (1A),—

(a) the amalgamated company shall continue to fulfil the conditions mentioned in sub-section (3) of section 34 in respect of the reserve created by the amalgamating company and in respect of the period within which such ship, machin- ery or plant shall not be sold or otherwise transferred and in default of any of these conditions, the provisions of sub- section (5^ of section 155 shall apply to the amalgamated

company as they would have applied to the amalgamating company had it committed the default; and

(b) the balance of development rebate, if any, still out- standing to the amalgamating company in respect of such ship, machinery or plant shall be allowed to the amalgamat- ed company in accordance with the provisions of sub-sec- tion (2), so, however, that the total period for which the balance of development rebate shall be carried forward in the assessments of the amalgamating company and the amal- gamated company shall not exceed the period of eight years specified in sub-section (2) and the amalgamated company shall be treated as the assessee in respect of such ship, machinery or plant for the purposes of this section and section 34.".

10. In section 33A of the Income-tax Act, for sub-section (5), the following sub-section shall be substituted, namely: —

Amend- ment of section 33A.

"(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated com- pany any land in respect of which development allowance has been allowed to the amalgamating company under sub-section (Il-

ia) the amalgamated company shall continue to fulfil the conditions mentioned in sub-section (3) in respect of the reserve created by the amalgamating company and in respect of the period within which such land shall not be sold or otherwise transferred and in default of any of these condi- tions, the provisions of sub-section (5A) of section 155 shall apply to the amalgamated company as they would have applied to the amalgamating company had it committed the default; and

(b) the balance of development allowance, if any, still outstanding to the amalgamating company in respect of such land shall be allowed to the amalgamated company in accordance with the provisions of sub-section (2), so, how- ever, that the total period for which the balance of develop- ment allowance shall be carried forward in the assessments of the amalgamating company and the amalgamated com- pany shall not exceed the period of eight years specified In sub-section (2) and the amalgamated company shall be treated as the assesspe in respect of such land for the pur- poses of this section.,".

H. After section 33A of the Income-tax Act, the following section shall be inserted, namely: —

Insertion of new section 33B.

Rehabili- tation allowance.

'33B. Where the business of any industrial undertaking carried on in India is discontinued in any previous year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee and used for the purposes of such business as a direct result of—

(i) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature; or

(ii) riot or civil disturbance; or

(Hi) accidental fire or explosion; or

(iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war),

and, thereafter, at any time before the expiry of three years from the end of such previous year, the business is re-established, reconstructed or revived by the assesseo. he shall, in respect of the previous year in which the business is so re-established, reconstructed or revived, be allowed a deduction of a sum by way of rehabilitation allowance equivalent to sixty per cent, of the amount of the deduction allowable to him under clause (Hi) of sub-section (1) of section 32 in respect of the building, machinery, plant or furniture so damaged or destroyed

Explanation,—In this section, "industrial undertaking" means any undertaking which manufactures or produces articles.'.

Amend- ment of section 34.

12. In section 34 of the Income-tax Act, for the Explanation to clause (i) of sub-section (2), the following Explanation shall be substituted, namely: —

"Exvlanation.—Where a capital asset Is transferred—

(i) by a holding company to its subsidiary company or by a subsidiary company to its holding company, or

(li) by a company to another company in a scheme of amalgamation.

and the conditions specified in clause (iv), or clause (v), or. as the case may be, clause (iv) of section 47 are satisfied, then, in determining the aggregate of all deductions in respect of depre- ciation under this clause, account shall also be taken of The deductions in respect of depreciation allowed in the case of the company from which the asset has been transferred;".

13. In section 35 of the Income-tax Act, after sub-section (4), the Amend- ment of section 3S.

following sub-section shall be inserted, namely: —

"(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated com- pany (being an Indian company) any asset representing expendi- ture of a capital nature on scientific research,—

(i) the amalgamating company shall not be allowed the deduction under clause (n) or clause (Hi) of sub-section (2); and

(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the asset.".

14. In section 35A of the Income-tax Act, after sub-section (5), the following sub-section shall be inserted, namely: —

Amend- ment of section 3 5 A. "(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers the rights to the amalga- mated company (being an Indian company),—

(i) the provisions of sub-sections (3) and (4) shall not apply in the case of the amalgamating company; and

(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not so sold or otherwise transferred the rights.".

15. In section 36 of the Income-tax Act, in clause (ix) of sub-

Amend-

ment of

section 36

section (1), in the third proviso, for the words, brackets and figures "sub-section (2) of section 35", the words, brackets and figures "sub- section (2) and sub-section (5) of section 35" shall be substituted.

16. Tn section 43 of the Income-tax Act,—

Amend-

ment of

section 43.

(i) in clause (i), after Explanation 6, the following Explanation shall be inserted, namely:—

"Explanation 7.—Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating com- pany to the amalgamated company and the amalgamated company is an Indian company, the actual cost of the trans- ferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamat- ing company had continued to hold the capital asset for the purposes of its own business"'

(ii) in clause (6), after Explanation 2, the following Explanation shall be inserted, namely: —

".Explanation 2A.—Where, in a scheme of amalgamation, any capital asset is transierred by the amalgamating company to the amalgamated company and the amalgamated company is an Indian company, the written down value of the trans- ferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalga- mating company had continued to hold the capital asset for the purposes of its business.".

17. After section 43 of the Income-tax Act, the following section shall be inserted, namely:—.

In"ertlon of new section 43A. Special provisions conse- quential to changes in rat)t of exchange of cur- rency.

'43A. (1) Notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset from a country outside India for the purposes of his business or profession and, in consequence of a change in the rate of ex- change at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payment towards the whole or a part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability aforesaid is so increased or reduced during the previous year shall be added to, or, as the case may be, deducted from, the actual cost of the asset as defined in clause (1) of section 43 or the amount of expenditure of a capital nature referred to in clause (iv) of sub-sectio'n (1) of section 35 or in section 35A or in clause (ix) of sub-section (1) of section 36 or, in the case of a capital asset (not being a capital asset referred to in section 50), the cost of acquisition thereof for the purposes of section 48, and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset as aforesaid.

Explanation 1.—In this sub-section, unless the context other- wise requires,—

(a) "rate of exchange" means the rate of exchange determined or recognised by the Central Government for the

conversion of Indian currency into foreign currency o foreign currency into Indian currency;

7 of 1947.

(b) "foreign currency" and "Indian currency" have thi meanings respectively assigned to them in section 2 of tfr Foreign Exchange Regulation Act, 1947.

Explanation 2.~Where the whole or any part of the liability aforesaid is met, not by the assessee, but, directly or indirectly by any other person or authority, the liability so met shall not b( taken into account for the purposes of this sub-section.

7 of 1947.

Explanation 3.—Where the assessee has entered into a con- tract with an authorised dealer as defined in section 2 of th< Foreign Exchange Regulation Act, 1947 for providing him with £ specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract to enable him to meet the whole or any part of the liability aforesaid, the amount, if any, to be added to, or deducted from, the actual cosi of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital assei under this sub-section shall, in respect of so much of the sum specified in the contract as is available for discharging the liabil- ity aforesaid, be computed with reference to the rate of exchange specified therein.

(2) The provisions of sub-section (I) shall not be taken Into ac- count in computing the actual cost of an asset for the purpose of the deduction on account of development rebate undei section 33,'.

Amend- ment of section 44.

18. In section 44 of the Income-tax Act, for the words and figures "sections 28 to 43", the words, figures and letter "sections 28 to 43A" shall be substituted,

19. In section 47 of the Income-tax Act, after clause (v), the follow- ing clauses shall be added, namely:—

Arnend- ment of section 47.

"(vi) any transfer, in a scheme of amalgamation, of a capital asset by the amalgamating company to the amalgamated com- pany if the amalgamated company is an Indian company;

(vii) any transfer by a shareholder, in a scheme of amalgama- tion, of a capital asset being a share or shares held by him in the amalgamating company if—

(a) the transfer is made in consideration uf the allotment to him of any share or shares in the amalgamated company, and

(b) the amalgamated company is an Indian company.".

20. Section 49 of the Income-tax Act shall be re-numbered as sub- section (1) thereof, and—

Amend- ment of •ection 49.

(i) in sub-section (1) as so re-numbered,—

(a) in sub-clause (e) of clause (iii), after the word, brackets and figure "clause (v)'\ the words, brackets and figures "or clause (ui)" shall be inserted;

(b) in the Explanation, for the word "section", wherever it occurs, the word "sub-section" shall be substituted; and

(") after sub-section (1) as so re-numbered, the following sub-section shall be added, namely:—

"(2) Where the capital asset being a share or shares in an amalgamated company which is an Indian company became the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share or shares in the amalgamating company.".

21. In section 55 of the Income-tax Act,—

Amend- ment of section 35.

(a) in sub-clause (b)(ii) of clause (1), for the word and figures "section 49", the words, brackets and figures "sub-sec- tion (1) of section 49" shall be substituted;

(b) in sub-clause (ii) of clause (2), for the word and figures "section 49", the words, brackets and figures "sub-section (2) ol section 49" shall be substituted.

22. Tn section 72 of the Income-tax Act,—

(i) in sub-section (I), the following proviso shall be added Amend, ment of section 72

at the end, namely: —

"Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such busi- ness shall be carried forward to the assessment year relevant

to the previous year in which the business is so re-established, reconstructed or revived, and •—

(a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year; and

(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re- established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assess- ment years immediately succeeding.";

(ii) in sub-section (3), after the words "No loss", the brackets, words and figure "[other than the loss referred to in the proviso to sub-section (1) of this section]" shall be inserted.

Insertion of new section 80F.

23. In Chapter VIA of the Income-tax Act, after section 80E, the following section shall be, and shall be deemed to have been, inserted with effect from the 1st day of April, 1966, namely: —

Deduction in respect of remu- neration from certain foreign sources In the case of professors, teachers, etc. "80F. Where, in the case of an individual who is a citizen of India, the total income (as computed before making any deduc- tion under this Chapter and before deduction of any amount of annuity deposit under section 280O) includes any remuneration received by him outside India from any University or other educational institution established outside India or such other association or body established outside India as may be notified in this behalf by the Central Government in the Official Gazette, for any service rendered by him during his stay outside India in his capacity as a professor, teacher, or research worker in such University, institution, association or body, there shall be allowed a deduction from such remuneration of an amount equal to fifty per cent, thereof, in computing the total income of Che individual:

Provided that where the individual renders continuous ser- vice outside India in such University, institution, association or body for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remunera- tion for such service relating to any period after the expiry of the thirty-six months aforesaid.".

24. In section 84 of the Income-tax Act,—

Amend- ment of section 84.

(a) for sub-section (1), the following sub-section shall be, and shall be deemed always to have been, substituted, namely: —

"(i) Save as otherwise hereinafter provided, income-tax shall not be payable by an assessee on so much of the profits

and gains derived from any industrial undertaking or busi- ness of a hotel or from any ship, to which this section applies, as does not exceed six per cent, per annum on the capital employed in such undertaking or business or ship, computed in the prescribed manner.";

(b) in sub-section (2),—

(i) for clause (in), the following clause shall be, and shall be deemed always to have been, substituted, namely: —

"(Hi) it manufactures or produces articles or ope- rates one or more cold storage plants, in any part of India, and has begun or begins to manufacture or pro- duce articles or to operate such plant or plants, at any time within the period of twenty-three years next fol- lowing the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;";

(ii) in clause (iv), before the words "it employs ten or more workers", the words "in a case where the industrial undertaking manufactures or produces articles," shall be, and shall be deemed always to have been, inserted;

(Hi) the following proviso shall be inserted at the end, namely: —

"Provided that the condition in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruc- tion or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section.";

(c) for sub-section (3) and the Explanation occurring at the end, the following sub-section and Explanation shall, respectively, be substituted, namely : —

"(3) This section applies to the business of any hotel where all the fol]owing conditions are fulfilled, namely: —

(o) the business of the hotel starts functioning on or after the 1st day of April, 1961, and is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer, to a new busi- ness, of a building previously used as a hotel, or of any machinery or plant previously used for any purpose;

(b) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees;

(c) the hotel has such number and types of guest rooms and provides such amenities as may be prescribed, having regard to the population and the tourist impor- tance of the place in which the hotel is located; and

(d) the hotel is, for the time being, approved for the purposes of this sub-section, by the Central Government.

Explanation.—Where—

(a) in the case of an industrial undertaking, any building, machinery or plant, or any part thereof, pre- viously used for any purpose, or

(b) in the case of the business of a hotel, any build- ing, or any part thereof, previously used as a hotel, or any machinery or plant, or any part thereof, previously used for any purpose,

is, in either case, transferred to a new business, and the total value of the building, machinery or plant or part so transfer- red does not exceed twenty per cent, of the total value of the building, machinery or plant used in the business, then, for the purposes of clause (li) of sub-section (2) and clause (a) of sub-section (3), the condition specified therein shall be deemed to have been complied with and the total value of the building, machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking or the business of the hotel.";

(d) after sub-section {3), the following sub-section shall be, and shall be deemed always to have been, inserted, namely: —

"(3A) This section applies to any ship where all the following conditions are fulfilled, namely: —

(i) it is owned by an Indian company and is wholly used for the purposes of the business carried on by it;

(ii) it was not, previous to the date of its acquisition by the Indian company, owned and used in Indian terri- torial waters by a person resident in India; and

{Hi) it is brought into use by the Indian company at any time within a period of twenty-three years next following the 1st day of April, 1948.";

(e) in sub-section (5) and sub-section (6), for the words "profits or gains of an industrial undertaking or hotel", the

words profits and gains derived from an industrial undertaking or business of a hotel or from a ship" shall be, and shall be deemed always to have been, substituted;

(/) in sub-section (7), in clause (i), after the words "manu- facture or produce articles", the words "or, as the case may be, operate the cold storage plant or plants" shall be, and shall be deemed always to have been, inserted;

(g) in sub-section (8), for the words "a hotel" and "the hotel", the words "the business of a hotel" and "the business of the hotel" shall be, and shall be deemed always to have been, respectively, substituted.

(h.) after sub-section (8), the following sub-section shall be, and shall be deemed always to have been, inserted, namely; —

"(9) The provisions of this section shall, in relation to a ship, apply to the assessment for the assessment year rele- vant to the previous year in which the ship is brougnt into use by the Indian company and for the four assessment years immediately succeeding.".

25. For section 85 of the income-tax Act, the following section shall be, and shall bt deemed always to have been, substituted, namely: —

Substitu- lion of new sec- tion for section 85. Dividend from new industrial under- taking or hotel busi- ness or ship.

"85. Subject to any rules that may be made by the Board in this behalf, income-tax shall not be payable by a shareholder in respecl of so much of any dividend paid or deemed to be paid to him out of the profits and gains derived by a company from an industrial undertaking or the business of a hotel or a ship to which section 6'4 applies as is attributable to that part of such profits and gains on which income-tax is not payable by the company under section 84.".

26. In section 88 of the Income-tax Act,—

Amend- ment of section 88.

(a) in sub-section (1), after clause (ia), the following clause shall be inserted, namely: —

"(ib) as donations to the Prime Minister's Drought Relief Fund;";

(b) in sub-section (3), in the third proviso, after the word, brackets, figure and letter "clause (ia)", the words, brackets, figure and letter '"or clause (ib)" shall be inserted.

27. In Chapter XIII of the Income-tax Act, under the sub-heading "B —Jurisdiction",—

Amend- ment of Chapter XIII, (J) in section 121, for sub-section (2), the following sub- section shall be substituted, namely:—

"(2) Where any directions issued under sub-section (1) have assigned to two or more Commissioner¹', the same area or the same persons or classes of persons or I he same incomes or classes of Income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or Incomes or classes of income or cases or classes of cases as the Board may, by general or special order in writing:, specify, for the distribution and allocation of the work to be performed.";

(2) for section 123, the following section shall be substituted, namely:—

Jurisdic- tion of Inspecting Assistant Commis- sioners "123. (2) Inspecting Assistant Commissioners shall per- form their functions in respect of such areas or of such per- sons or classes of persons or of such Incomes or classes of Income or of such cases or classes of cases as the Commis- sioner may direct.

(2) Where any directions issued under sub-section (1) have assigned to two or more Inspecting Assistant Commis- sioners, the same area or the same persons or classes of per- sons or the same incomes or classes of Income or the same cases or classes of cases, they shall have concurrent jurisdic- tion and shall perform such functions in relation to the said area or persons or classes of persons or Incomes or classes of income or cases or classes of cases as the Commissioner may. by general or special order in writing, specify, for the dis- tribution and allocation of the work to be performed.";

(3) In section 124 —

(i) for sub-sections (7) and (2), the following sub-sec tions shall be substituted, namely:—

"(I) Income-tax Officers shall perform their functions in respect of such areas or of such persons or classes of persons or of such Incomes or classes of income or of such cases or classes of cases as the Commissioner may direct.

(2) Where any directions issued under sub section (1) have assigned to two or more Income-tax Officers, th*" same area or the same persons or classes of persons or

the same Incomes or classes of Income or the same cases

or classes of cases, they shall have concurrent jurisdiction

and shall perform such functions In relation to the said

area or persons or classes of persons or Incomes or classes

of Income or cases or classes of cases as the Commissioner,

or the Inspecting Assistant Commissioner authorised by

him in this behalf, ma\\ by general or special order in

writing-, specify, for the distribution and allocation of

the work to be performed.";

(it) In sub-section (7), after the words "this section", the

words, figures and letter "or in section 130A" shall be In-

serted;

(4) for section 125, the following section shall be substituted,

namely:—

"125. (1) The Commissioner may, by general or special

order Jn writing, direct that—

Powers of Commis- sioner res- pecting specified areas, cases, persona, etc.

(a) the powers conferred on the Income tax Officer

and the Appellate Assistant Commissioner hv or under

this Act shall, in respect of any specified case or class of

cases or of any specified person or class of

persons, be exercised by the Inspecting Assistant Com-

missioner and the Commissioner respectively;

(b) such of the functions assigned to the Income-

tax Officer bv or under this Act. as are specified in any

such order may, In respect of any specified area, case or

class of cases, person or class of person* or class of In-

comes, be performed by an Inspector of Income-tax or

any member of the ministerial staff, subordinate to the

Commissioner or any other Income-tax authority sub-

ordinate to him, and specified In such order, subject to

such conditions, restrictions or limitations as may be

specified therein:

Provided that the Commissioner shall not unless he is

authorised in this behalf bv the Board by general or special

order In writing, make an order under clause (b) in relation

to the functions of an Income-tax Officer mentioned In the

following provisions nt this Act, namely, sections 131. 132,

132A. 140A. 143. 144, 14G, 147, 148. 162. 163. 171, 172. 174. 175,

176, 177. 178, 183, 1R4. 185. 189, 231. 222, 226. 228. 253, and 271

to 274 (both inclusive),

(2) For the purposes of any case or person or proceeding under this Act in respect of which or whom an order under sub-section (1) applies,—

(a) where such order Is made under clause (a) of the said sub-section (1), references in this Act or In any rule made hereunder, to the Income-tax Officer and the Appellate Assistant Commissioner shall be deemed to be references to the Inspecting Assistant Commissioner and the Commissioner, respectively, and,—

(i) any provision of this Act requiring an ap- proval or sanction of the Inspecting Assistant Com- missioner shall not apply;

(ii) any appeal which would otherwise have lain to the Appellate Assistant Commissioner shall He to the Commissioner;

(Hi) any appeal which would have Iain from an order of the Appellate Assistant Commissioner to the Appellate Tribunal shall lie from the order of the Commissioner;

(b) where such order is made under clause (b) of the said sub-section (1), references in this Act or in any rule made hereunder to the Income-tax Officer shall be deemed to include references to the Inspector of Income-tax or the member of the ministerial staff specified In such order.";

(5) for section 127, the following section shall be substituted, namely:—

Power to transfer cases.

'127. (1) The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Income- tax Officer or Income-tax Officers subordinate to him to any other Income-tax Officer or Income-tax Officers also subor- dinate to him and the Board may similarly transfer any case from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income-tax Officers:

Provided that nothing in this sub-section shall be deem- ed to require any such opportunity to be given where the transfer is from any Income-tax Officer or Income-tax Offi- cers to any other Income-tax Officer or Income-tax Officers and the offices of all such Income-tax Officers are situated in the same city, locality or place:

Provided further that where any case has been trans- ferred from any Income-tax Officer or Income-tax Officers to two or more Income-tax Officers, the Income-tax Officers to whom the case Is so transferred shall have concurrent juris- diction over the case and shall perform such functions In relation to the said case as the Board or the Commissioner (or any Inspecting Assistant Commissioner authorised by the Commissioner In this behalf) may, by general or special order In writing, specify, for the distribu- tion and allocation of the work to be performed.

(2) The transfer of a case under sub-section (1) may be

made at any stage of the proceedings, and shall not render

necessary the re-Issue of any notice already issued by the

Income-tax Officer or Income-tax Officers from whom the case

Is transferred.

Explanation.—In this section and In sections 121, 123,124 and 125, the word "case", In relation to any person whose name Is specified in any order or direction Issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and In- cludes also all proceedings under this Act which may be commenced after the date of such order or direction in res- pect of any year.';

(6) for section 128, the following section shall be substituted,

namely:—

Functions of Inspec- tors of Income- tax.

"128. Inspectors of Income-tax shall perform such func-

tions In the execution of this Act as are assigned to them by

the Commissioner by an order, whether made under clause

(b) of sub-section (1) of section 125 or otherwise, or by any

other Income-tax authority under whom they are appointed

to work.";

(7) after section 130, the following section shall be inserted,

namely:—

"130A. In respect of any function to be performed by an

Income-tax Officer under any provision of this Act in rela-

tion to an assessee, the Income-tax Officer referred to therein

•hall,—

Income- tax Officer competent to perform any func- tion or functions.

(a) In a case where only one Income-tax Officer has

jurisdiction over such assessee, be such Income-tax officer;

(b) in a case where two or more Income-tax Officers bave concurrent jurisdiction over such assessee, be the Income-tax Officer empowered to perform such function by the Board or, as the case may be, the Income-tax Offi- cer to whom such function has been assigned by an ordei of the Commissioner or of the Inspecting Assistant Com- missioner authorised by the Commissioner in thjj behalf.".

28. In section 138 of the Income-tax Act, for sub-section (2), the following sub-section shall be substituted, namely:—

Amend- ment of section 138.

"(1) (a) The Board or any other Income-tax authority speci- fied by it by a general or special order in this behalf may furnish or cause to be furnished to—

(i) any officer, authority or body performing any func- tions under any law relating to the imposition of any tax, duty or cess, or to dealings in foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947; or

7 of 1947.

(ii) such officer, authority or body performing function! under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify by notification in the Official Gazette in this behalf,

11 of 1022.

any such information relating to any assessee in respect of any assessment made under this Act or the Indian Income-tax Act, 1922 as may, in the opinion of the Board or other Income-tax authority, be necessary for the purpose of enabling the officer, authority or body to perform his or its functions under that law,

11 of 1922

(b) Where a person makes an application to the Commis- sioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act or the Indian Income-tax Act, 1922, on or after the 1st day of April, 1960, the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law.".

29. In section 172 of the Income-tax Act, in sub-section (4), for Amend- ment of section 172.

the words "rate or rates for the time being", the words "rate or rates in force" shall be substituted.

30. In Chapter XVII of the Income-tax Act, under the sub-heading "B.—Deduction at source",—

Amend- ment of Chapter XVII.

(1) in section 193, the Explanation shall be omitted.

(2) after section 194, the following section shall be inserted, namely:—

Brokerage, Commis- sion. fe"s. etc

'194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of—

(i) brokerage or commission, or

(ii) fees or other remuneration for professional ser- vices (not being income chargeable under the head "Salaries"), or

(in) interest other than "Interest on securities",

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 issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :

Provided that no such deduction shall be made in a case where the person (not being a company or a registered firm) entitled to receive such income furnishes to the person res- ponsible for making the payment an affidavit declaring that his total income assessable for the assessment year next fol- lowing the financial year in which the income is credited or paid will be less than the minimum liable to income-tax

(2) The provisions of sub-section (I) shall not apply—

(i) in a case where the Income referred to in clause ({) of that sub-section credited or paid at any one time does not exceed five hundred rupees or where the income referred to in clause (ii) or clause (in) of that sub-section credited or paid at any one time does not exceed two hundred rupees;

(ii) In respect of any such credit or payment of such income made before the 1st day of October, 1967.';

(3) for section 196, the following section shall be substituted,

namely;—

"196- Notwithstanding anything contained in the forego- ing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to—

(i) the Government, or

(ii) the Reserve Bank of India, or

Interest or dividend or other Bums pay- able to Govern- ment. Reserve Bank or certain corpora- tions.

(in) a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income,

where such sum is payable to it by way of interest or divi- dend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.";

(4) in section 197, in sub-section (i), for clause (a), the fol- lowing clause shall be substituted, namely:—

"(a) income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194A and 195.";

(5) in sections 198, 199, 200, 202 and 205, for the words and figures "sections 192 to 195", the words, figures and letter "sec- tions 192 to 194, section 194A and section 195" shall be substituted;

(6) for section 203, the following section shall be substituted, namely:—

"203. Every person deducting tax in accordance with the Certificate (or tax deducted.

provisions of sections 192 to 194, section 194A and section 195 shall, at the time of credit or payment of the sum, or, as the case may be, at the time of issue of a cheque or warrant for payment of any dividend to a shareholder, furnish to the person to whose account such credit Is given or to whom

such payment is made or the cheque or warrant is issued,

a certificate to the effect that tax has been deducted, and

specifying the amount so deducted, the rate at which the

tax has been deducted and such other particulars as may be

prescribed.";

(7) in section 204,—

(i) for the words and figures "sections 192 to 203

and section 285", the words, figures and letter "sections

192 to 194, section 194A, sections 195 to 203 and section

285" shall be substituted;

(ii) in clause (iii), for the words "in the case of. pay-

ment", the words "in the case of credit, or, as the case

may be, payment" shall be substituted;

(8) after section 206, the following section shall be in-

serted, namely:—

"20 6A. Any person responsible for paying any in-

come referred to in section 194A shall prepare, and within

thirty days from the 31st day of March in each year,

deliver or cause to be delivered to the Income-tax Officer

in the prescribed form and verified in the prescribed

manner a return in writing showing—

Person paying interest, etc., to residents without deduction of tax, to furnish prescribed return.

(o) the name and address of every person who has furnished to him an affidavit under the proviso to sub-section (1) of section 194A;

(b) the amount of the income credited or paid during the financial year to each such person and the time or times at which the same was credited or paid, as the case may be; and

(c) such other particulars as may be prescribed".

31. In sections 209 and 215 of the Income-tax Act, for the words

and figures "sections 192 to 195", the words, figures and letter "sec-

tions 192 to 194, section 194A and section 195" shall be substituted.

Amend- ment of sections 209 and 213.

32. In the First Schedule to the Income-tax Act, for the words and

figures "sections 30 to 43", wherever they occur, the words, figures Amend- ment of First Schedule. and letter "sections 30 to 43A" shall be substituted.

33. The amendments directed in the Third Schedule shall be made

in the Income-tax Act with effect from the 1st day of April, 1968.

Certain amend- ments to Income- tax Act to take effect from 1st April, 1968.

CHAPTER IV

OTHER DIRECT TAXES

34. In the Wealth-tax Act, 1957 —

(a) in section 2, in clause (h) —

Amend- ment of Act 27 of 1957.

(i) in sub-clause (i), the word "and" occurring at the end

shall be omitted;

(ii) in sub-clause (ii), the word "and" shall be inserted

at the end;

(Hi) after sub-clause (ii), the following sub-clause shall be, and shall be deemed always to have been, inserted, namely: —

"(iia) a corporation established by or under a Cen- tral, Provincial or State Act, which is declared by the Central Government, by general or special order, to be a company for the purposes of this Act.".

(b) in section 8, for the Explanation, the following proviso

and Explanation shall be substituted, namely:—

"Provided that where two or more Income-tax Officers have jurisdiction or exercise powers under the Income-tax Act In respect of any Individual, Hindu undivided family or company, they shall have concurrent jurisdiction and per- form such functions of a Wealth-tax Officer under this Act in respect of such Individual, Hindu undivided family or company, as the case may be, as the Commissioner or the Inspecting Assistant Commissioner of Wealth-tax authorised by him in this behalf may, by general or special order In writing, specify, for the distribution and allocation of the work to be performed.

Explanation.—For the purposes of this section, the In-

come-tax Officer or the Income-tax Officers having jurisdic-

tion in relation to a person who Is not an assessee within the

meaning of the Income-tax Act, shall be the Income-tax Offi- cer or Income-tax Officers In respect of the area In which that person resides."; (c) for section 8A, the following sections shall be substitut- ed, namely:—

Power of Commis- sioner respecting specified areas, cases or persons.

"8A. (1) The Commissioner may, by general or special order In writing, direct that such of the functions assigned to the Wealth-tax Officer by or under this Act as are specifi- ed in any such order may, In respect of any specified area or specified cases or classes of cases or specified persons or classes of persons, be performed by an Inspector of Wealth- tax or any member of the ministerial staff, appointed to work under the Commissioner or any other Wealth-tax authority subordinate to him, and specified In such order, subject to such conditions, restrictions or limitations as may be specified therein:

Provided that the Commissioner shall not, unless he Is authorised in this behalf by the Board by general or special order In writing-, make an order under this sub-section In relation to the functions of a Wealth-tax Officer mentioned in the following provisions of this Act, namely, sections 15B, 16, 17, 18, 20, 22, 24, 32, 37 and 37A.

(2) For the purposes of any case or person or proceed- ing under this Act in respect of which or whom any order under sub-section (1) applies, references In this Act or In any rule made hereunder to the Wealth-tax Officer shall be deemed to Include references to the Inspector of Wealth-tax or the member of the ministerial staff specified in such order.

Power to transfer cases.

8B. (I) Notwithstanding anything contained In section 8, the Commissioner may, after giving the assessee a reason- able opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any rase from any Wealth-tax Officer or Wealth- tax Officers subordinate to him to any other Wealth-tax Offi- cer or Wealth-tax Officers also subordinate to him and the Board may similarly transfer any case from any Wealth-tax Officer or Wealth-tax Officers to any other Wealth-tax Officer or Wealth-tax Officers:

Provided that nothing In this sub-section shall be deemed to require any such opportunity to be given where the trans- fer Is from any Wealth-tax Officer or Wealth-tax Officers to any other Wealth-tax Officer or Wealth-tax Officers and the offices of all such Wealth-tax Officers are situated In the same city, locality or place:

Provided further that where any case has been trans- ferred from any Wealth-tax Officer or Wealth-tax Officers to two or more Wealth-tax Officers, the Wealth-tax Officers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions in relation to the said case as the Board or the Commissioner (or any Inspecting Assistant Commis- sioner of Wealth-tax authorised by the Commissioner In this behalf) may, by general or special order In writing, specify, for the distribution and allocation of the work to be perfor- med.

(2) The transfer of a case under sub-section (1) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Wealth-tax Officer or Wealth-tax Officers from whom the case is transferred.

Explanation.—In this section and in section 8A, the word "case", in relation to any person whose name is specified in any order made thereunder, means all proceedings under this Act In respect of any year which may be pending on the date of such order, or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order In respect of any year.';

(d) in section 10, for the words "subject to such orders, If any, as the Board may make for the distribution and allocation of the work to be performed", the following words shall be sub- stituted, namely:—

"and shall perform such functions in relation to the said area or persons or classes of persons as the Board may, by general or special order in writing, specify, for the distribu- tion and allocation of the work to be performed";

(e) In section 11, for the words "they shall, perform their functions In accordance with such orders as the Commissioner may make for the distribution and allocation of the work to be performed" the following words shall foe substituted, namely:—

"they shall have concurrent jurisdiction and shall perform such functions in respect of the said areas or persons or classes of persons as the Commissioner may. by general or special order in writing, specify, for the distribution and allocation of the work to be performed";

75 M of Fin—5.

(j) for section 11A, the following section shall be substituted, namely:—

Inspector of WMlth- Ux

"HA. A Commissioner may empower any Inspector of Income-tax within the meaning of the Income-tax Act to work as an Inspector of Wealth-tax under any other Wealth- tax authority subordinate to him; and when he Is so em- powered, he shall perform such functions in the execution of this Act as are assigned to him by the Commissioner by an order, whether made under sub-section (I) of section 8A or otherwise, or by any other Wealth-tax authority under whom he Is appointed to work.";

(g) after section HA, the following section shall be Inserted, namely:—

"11B. In respect of any function to be performed by a Wealth-tax Officer under any provision of this Act, In rela- tion to any assessee, the Wealth-tax Officer referred to there- in shall,—

Weulth- tax Officer competent to perform any func- tion or functions.

(a) In a case where only one Wealth-tax Officer has jurisdiction over such assessee, be such Wealth-tax Officer;

(b) in a case where two or more Wealth-tax Officers have concurrent jurisdiction over such assessee, be the Wealth-tax Officer empowered to perform such function by the Board, or, as the case may be, the Wealth-tax Officer to whom such function has been assigned by an oider of the Commissioner or of the Inspecting Assistant Commissioner of Wealth-tax authorised by the Commis- sioner In this behalf.".

35. In the Gift-tax Act, 1958,—

(a) in section 7, for the Explanation, the following proviso and Explanation shall be substituted, namely:—

Amend- ment of Act 18 of 1958

"Provided that where two or more Income-tax Officers have jurisdiction or exercise powers under the Income-tax Act In respect of any person, they shall have concurrent jurisdiction and perform such functions of a Gift-tax Officer under this Act in respect of such person, as the Commissioner or the Inspecting Assistant Commissioner of Gift-tax autho- rised by him in this behalf may, by general or special order In writing, specify, for the distribution and allocation of the work to be performed.

Explanation.—For the purposes of this section, the Income-tax Officer or Income-tax Officers having jurisdic- tion in relation to a person who has no income assessable to income-tax under the Income-tax Act, shall be the Income- tax Officer or Income-tax Officers In respect of the area in which that person resides.";

(b) for section 7A, the following sections shall be substituted, namely:—

Fovvei (>r Commis- sioner

respecting

.specified ureas, caie'i '->' '7A. (1) The Commissioner may, by general or special order in writing, direct that such of the functions assigned to the Gift-tax Officer by or under this Act as are specified in any such order may, in respect of any specified area or specified cases or classes of cases or specified persons or classes of persons, be performed by an Inspector of Gift- tax or any member of the ministerial staff, appointed to work under the Commissioner or any other Gift-tax authority subordinate to him, and specified in such order, subject to such conditions, restrictions or limitations as may be specified therein:

Provided that the Commissioner shall not, unless he is authorised in this behalf by the Board by general or special order in writing, make an order under this sub-section in relation to the functions of a Gift-tax Officer mentioned in the following provisions of this Act, namely, sections 15, lfi, 17, 19A, 20, 21, 21A, 23, 32, 33 and 36.

(2) For the purposes of any case or person or proceed- ing under this Act, in respect of which or whom any order under sub-section (1) applies, references in this Act or In any rule made hereunder to the Gift-tax Officer shall be deemed to include references to the Inspector of Gift-tax or the member of the ministerial staff specified in such order.

Power t( transfer cases 7B. (1) Notwithstanding anything contained in section 7, the Commissioner may, after giving the assessee a reason- able opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Gift-tax Officer or Gift-tax Officers subordinate to him to any other Gift-tax Officer or Gift-tax Officers also subordinate to him and the Board may similarly transfer any case from any Gift-tax Officer or Gift- tax Officers to any other Gift-tax Officer or Gift-tax Officers

Provided that nothing In this subsection shall be deemed lo require any such opportunity to bo given where the trans- fer is from any Gift-tax Officer or Gift-tax Officers to any other Gift-tax Officer or Gift-tax Officers and the offices of all such Gift-tax Officers are situated in the same city, loca- lity or place:

Provided further that where any case has been transfer- red from any Gift-tax Officer or Gift-tax Officers to two or more Gift-tax Officer;,, the Gift-tax Officers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions In relation to the said case as the Board or the Commissioner (or any Inspecting Assistant Commissioner of Gift-tax authorised by the Commissioner In this behalf) may, by general or special order in writing, specify, for the distribu- tion and allocation of the work to be performed.

(2) The transfer of a case under sub-section (1) may be made at any stage of the proceedings, and shall not render necessary the re-Issue of any notice already Issued by the Gift-tax Officer or Gift-tax Officers from whom the case is transferred.

Explanation.—In this section and In section 7A, the word "case", In relation to any person whose name Is specified in any order made thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order, or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order In respect of any year.*;

(c) In section 9, for the words "subject to such orders, if any, as the Board may make for the distribution and allocation of the work to be performed", the following words shall be substi- tuted, namely:—

"and shall perform such functions in relation to the said area or persons or classes of persons as the Board may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed":

(d in section 10, for the words "they shall perform their 'inctlons in accordance with such orders as the Commissioner

may make for the distribution and allocation of the work to be performed", the following words shall be substituted, namely:—

"they shall have concurrent jurisdiction and shall perform such functions in respect of the said areas or persons or classes of persons as the Commissioner may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed";

(e) for section 11, the following- section shall be substituted, namely:—

Inspector of Gtlt- tax "11. A Commissioner may empower any Inspector of In- come-tax within the meaning of the Income-tax Act to work as an Inspector of Gift-tax under any other Gift-tax autho- rity subordinate to him; and when he is so empowered, he shall perform such functions in the execution of this Act as are assigned to him by the Commissioner by an order, whether made under sub-section (1) of section 7A or other- wise, or by any other Gift-tax authority under whom he is appointed to work,";

(/) section 11A shall be re-numbered as section 11B and before section 11B as so re-niimhered. the following section shall be inserted, namely:—

"11A. In respect of any function to be performed by a Gift-tax Officer under any provision of this Act, In relation to any assessee, the Gift-tax Officer referred to therein shall,—

(a) In a case where only one Gift-tax Officer has jurisdiction over such assessee, be such Gift-tax Officer;

Gift-tax Officer competent ti> perform any func- tion or functions.

(b) in a case where two or more Gift-tax Officers have concurrent jurisdiction over such assessee, be the Gift-tax Officer empowered to perform such function by the Board, or, as the case may be, the Gift-tax Officer to whom such function has been assigned by an order of the Commissioner or of the Inspecting Assistant Cem- missloner of Gift-tax authorised by the Commissioner in this behalf.";

(.qf) in section 45,—

(i) after clause (d), the following clause shall be Insert- ed, namely:

"(do) any company [other than a company to which clause (c) or clause (d) applies] to an Indian company in a scheme of amalgamation;";

(ii) the existing Explanation shall be re-numbered a" Explanation 1 and after Explanation 1 as so re-numbered, the following Explanation shall be inserted, namely: —

'Explanation 2.—For the purpose of clause (do), the term "amalgamation" shall have the meaning assigned to it in clause (1A) of section 2 of the Income-tax Act.'

36. In the Companies (Profits) Surtax Act, 1964 —

(a) In section 3, in sub-section (1),—

Amend- ment of Act 7 of 1964

(i) for the words "and Income-tax Officer", the words "Income-tax Officer and Inspector of Income-tax" shall be substituted;

(ii) for the words "same as that he has", the words "same as he has" shall be substituted;

(b) In section 18,—

(i) for the figures, words and brackets "131 to 136 (both inclusive)", the figures, letters, words and brackets "118, 125. 129, 130, 130A, 131, 132, 132A. 133 to 13R (both inclusive)' shall be substituted;

(ii) for the figures, words and brackets "287 to 293 (both inclusive)", the figures, letters, words and brackets "287, 288. 288A, 288B, 289 to 293 (both inclusive)" shall be substituted.

CHAPTER V

INDIRECT TAXES

Amend- ment of Act 82 of 1934.

37. In the First Schedule to the Indian Tariff Act, 1934 (herein- after referred to as the ariff Act), in column 3, against each of the items Nos. 1, 6, 6(1), 12(3), 13(5), 13(7), 15(3), 25(2), 25(6), 26. 26(1), 46(2), 53(1), 64(1), 64(2), 65(1), 67(3), 68(1), 88(3), 69, 69(1), 70(7), 70(8), 72(8), 72(9), 72(29), 72(31) (a). 72(31)(b), 72(32) (a), 72(32) (b), 76(2) and 84 (a) (ii), the word "Revenue" shall be inserted.

Spacial duties of customs

38. (1) In the case of goods chargeable with a duty of customs which is specified in the First Schedule to the Tariff Act, or in that Schedule as amended by a subsequent Central Act, if any, or in that Schedule read with any notification of the Central Government for the time being in force, there shall be levied and collected as an addition to, and in the same manner as, the total amount so charge- able, a special duty of customs equal to 10 per cent, of such amount:

Provided that in computing the total amount so chargeable, any duty chargeable under section 2A of the Tariff Act or section 29 of this Act shall not be included.

10 or 18SY

(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1968, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

Regulator? duties of customs 39. (J) With a view to regulating or bringing greater economy in imports, there shall be levied and collected, with effect from such date, and at such rate, as may be specified in this behalf by the Central Government by notification in the Official Gazette, on all or any of the goods mentioned in the First Schedule to the Tariff Act or in that Schedule as amended by a subsequent Central Act, ]f any, a regulatory duty of customs not exceeding—

(a) 25 per cent, of the rate, if any, specified in the said First Schedule read with any notification issued under section 3A or sub-section (I) of section 4 of the Tariff Act; or

(b) 10 per cent, of the value of the goods as determined in accordance with the provisions of section 14 of the Customs Act, 32 of 1S#2

whichever is higher:

Provided that different dates and different rates may be specified by the Central Government for different kinds of goods.

10 of 1197

(2) Sub-section (1) shall cease to have effect after the 15th day of May, 1968, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The regulatory duty of customs leviable under this section in respect of any goods referred to in sub-section (1) shall be In addition to any other duty of customs chargeable on such goods under the Customs Act, 1962.

Y2 ol 1982

V2 of 1982

(4) The provisions of the Customs Act, 1962 and the rules and regulations made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in rela- tion to the levy and collection of the regulatory duty of customs leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of customs on such goods under that Act or those rules and regulations.

(5) Every notification issued under sub-section (I) shall, as soon as may be after it is issued, be placed before each House of Parliament.

40. In the Central Excises and Salt Act, 1944 (hereinafter referred to as the Central Excises Act), in the First Schedule,—

Amend- ment of \ct I of 1944.

(a) in Item No. 2, for the entry In the third column, the entry "Eighty-five rupees per quintal." shall be substituted;

(b) in Item No. 4, under "II. Manufactured tobacco--", for the entries In the third column against eub-items (1) (i), (1) (ii), (1) (Hi) and (1) (to), the entries "Twenty-one rupees.", "Twelve rupees and seventy-five paise.", "Four rupees and fifty paise," and "One rupee and twenty paise." shall, respec- tively, be substituted;

(c) in Item No. 6, for the entry in the third column, the entry "Five hundred and fifty rupees per kilolitre at fifteen degrees of Centigrade thermometer." shall be substituted;

(d) in Item No. HA, for the entry in the third column, the entry "Twenty per cent, ad valorem."

(e) in Item No. 15A, for the entry in the third column, the entry "Thirty per cent, ad valorem." shall be substituted;

(f) for Item No. 16A, the following item shall b" substi- tuted, n*m"ly:—

i6A—RUBBER PRODUCTS, THE FOLLOW

TNG, NAMELY :—

Latex foarn sponge (0

u)

Twenty per cent, ad vaUrtm.

Twenty per cent, ad valortm.

Plates, iheets apd "tnps un- hardened, whether vulcanised or not, and whether combined with any textile material ot other- wise

VJ)

Fifteen per tent, ad volorc /,.

Pipinft and tubing, of unhar.tencd vulcanised rubber

(4'

Fifteen per cent, ad vilorsm,";

Transmission, conveyor or ele- vator belt) or belting, ot' vul- canised rubber

{q\ in Item No. 18, for the entry in the third column, the pntrv "Forty-five rupees per kilogTam." shall be substituted;

(h) in Item No. 18A, for the entries in the third column, against sub-items (1) and (2), the entries "Six rupees and fifty paise per kilogram." and "One rupee per kilogram." shall, respectively, be substituted;

(i) in Item No. 22A, for the entries in the third column, against sub-items (i) and (ii), the entries "Three hundred and seventy-five rupees per metric tonne." and "One hundred and seventy-five rupees per metric tonne." shall, respectively, Be substituted;

(j) in Item No. 27, for the entries in the third column against sub-items (a), (b), (bb), (c) and (d), the entries "Nine hundred and fifty rupees per metric tonne.", "One thousand four hundred and fifty rupees per metric tonne.", "Two thousand rupees pi'C motile tonne", "Twenty per cent, ad valorem." and "Twenty per cent, ad nulcrpm." shall, respectively, be substituted.

Special duties of excise on certain goods.

41. (1) When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act (as amended by this Act or any subsequent Central Act) read with any notification for the time being in force issued by the Central Govern- ment in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected—

(a) as respects goods comprised in Items Nos. 6, 8, 9, 14D, 22A, 23A except sub-item (1) thereof, 23B, 28, 29, sub-Items (2) and (3) of Item No. 31 and Item No. 32 of the First Schedule to the Central Excises Act, a special duty of excise equal to 10 per cent, of the total amount so chargeable on such goods;

(b) as respects goods comprised in Items Nos. 2, 3(1), sub- items I, II (2) and II (3) of Item No. 4, Items Nos. 13, 14, 14F, 15, 15A, 15B, Hi, 16A, 17, 18A(2), 21, 22, 23, 23A(I), 27, 30,31(1), 33, sub-items (1), (3a) and (4) of Item No. 34 and Item No. 37 of that Schedule, a special duty of excise equal to 20 per cent, of the total amount so chargeable on such goods; and

(c) as respects goods comprised in Items Nos. 4 11(1), 18, 18A(1), 18B, 20, 29A, 33A, sub-items (2) and (3) of Item No. 34 and radiograms comprised in Item No. 37A of that Schedule, a special duty of excise equal to 33J per cent, of the tota¹ amount so chargeable on such goods.

(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1968, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force and such special duties shall be levied for purposes of the Union and the proceeds thereof shall not be distributed among the States.

(4) The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemp- tions from duties, shall, as far as may be, apply in relation to the levy and collection of the duties of excise leviable under this sec- tion in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules.

Regula- tory duties of excise.

42. (2) With a view to regulating or bringing greater economy in consumption, there shall be levied and collected, with effect from such date, and at such rate as may be specified in this behalf by the Central Government by notification in the Official Gazette, on all or any of the goods mentioned in the First Schedule to the Central Excises Act as amended by this Act or any subsequent Central Act, a regulatory duty of excise which shall not exceed 15 per cent, of the value of the goods as determined in accordance with the provisions of section 4 of the Central Excises Act:

Provided that different dates and different rates may be specified by the Central Government for different kinds of goods.

10 of 1UH7 (2) Sub-section (1) shall cease to have effect after the 15th day of May, 1968, except as respects things done or omitted to be done before such cesser; and section 6 of the General Clauses Act, 1897, shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force and such regulatory duties shall be levied for purposes of the Union and the proceeds thereof shall not be distributed among the States.

(4) The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemp- tions from duties, shall, as far as may be, apply in relation to the levy and collection of the regulatory duties of excise leviable under this section jn respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules.

(5) Every notification issued under sub-section (1) shall, as soon as may be after it is issued, be placed before each House of Parliament.

CHAPTER VI

MISCELLANEOUS

43. In the Firf.t Schedule to the Indian Post Office Act, 1098,— Amend- ment ol Act 0 oi 1808.

(a) for the sub-heading "Registered Newspapers" and entries thereunder, the following shall be substituted, namely: —

"Registered Newspapers

For a weight not exceeding one hundred grams

5 paise

For a weight exceeding one hundred grams and not exceeding two hundred and fifty grams

10 paise

For every two hundred and fifty grams, or fraction thereof, exceeding two hundred and fifty grams

5 paise

In the case of more than one copy of the same issue of a registered newspaper being carried in the same packet

For a weight not exceeding one hundred grams

5 paise

For every additional one hundred and fifty grams, or fraction thereof, in excess of one hundred grams:

5 paise

Provided that such packet shall not be delivered at any addressee's residence but shall be given to a recognised agent at the Post Office.";

(b) for the sub-heading "Parcels" and entries thereunder,

the following shall be substituted, namely: —

"Parcels

65 paise For a weight not exceeding four hundred grams

65 paise.".

For every four hundred grams, or fraction thereof, exceeding four hundred grams

44. In the Deposit Insurance Corporation Act, 1961, for section 30,

the following section shall be substituted, namely: —

Amend- ment of Act 47 of 1961. Income- tax,

43 of 1961.

"30. Notwithstanding anything contained In the Income-tax Act, 1961, the Corporation shall not be liable to pay any tax under that Act on any of its income, profits or gains for the accounting year during which the Corporation is established and for nine accounting years following that year.".

52 oi 1963.

17 of 1966.

45. Notwithstanding anything contained in any law for the time being in force or any notification issued thereunder, the amend- ments made in section 32 of the Unit Trust of India Act, 1963 by section 10 of the Unit Trust of India (Amendment) Act, 1966 shall be deemed to have been made with effect from the 1st day of April, 1964.

Certain amend- ments made In Act 52 of 1963 by Act 17 of 1966 to bo given re- trospec- tive effect

46. Notwithstanding anything contained in section 68 of the

10 of 1965.

Finance Act, 1965—

Recovery of tax on income voluntarily disclosed.

(a) any income-tax which is payable by a person on the amount of income declared by him under the provisions of sub- section (7) of that section but has not been paid within the period referred to therein (such tax being hereafter in this section referred to as the outstanding tax) shall be deemed to be tax due from the declarant on the date next following the expiry of the said period under a notice of demand issued under section 156 of the Income-tax Act, and the provisions of Chapter XV and Chapter XVII-D of, and the Second Schedule and the Third Schedule to, that Act shall, so far as may be, apply accordingly, subject to the modification that in section 231 of the said Act, references to one year shall be construed as refer- ences to two years; and

(b) the outstanding tax which is paid at any time after the expiry of the period referred to in sub-section (1) of the said section 68 or is recovered under the provisions of clause (a) shall, for the purposes of sub-section (6) of the said sec- tion 68, be deemed to be tax paid by the declarant under that section.

Ki'Pi'al, 12 o< 1067.

47. Section 2 and section 3 of the Finance Act, 1967 arc hereby

repealed and shall be deemed never to have been enacted.

Declaration under the Provisional Collection of Tares Act. 1931

It is hereby declared that it is expedient in the public interest

16 of 1931.

that the provisions of clauses 38, 40 and 41 of this Bill shall have immediate effect under the Provisional Collection of Taxes Act, 1.031.

THE FIRST SCHEDULE

(See section 2)

PART I

INCOME-TAX AND SURCHARGES ON INCOME-TAX

Paragraph A

In the case of every individual or Hindu undivided family nr un- registered firm nr other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person re- ferred to in sub-clause (vii) of clause (31) of section 2 of the In- come-tax Act, not being a case to which any other Paragraph of this Part applies,—

Rates of income-tax

( t)

5 per cent, of the total income,

where ihe total income Joes not exceed Rs. 5,000

0) where the total income exceeds Rs. 5,000 but docs not exceed Rs. jOjOoo

Rs. 250 plus 10 per cent, of the amount by which the total income exccedN Rs. 5,000;

(3)

Rs. 750 plus 15 per cent, of the umount by which the total income exceeds where the total income exceeds Rs. 10,000 but doea not exceed Rs. 15,000

Rs. 10,000;

(4) where the total income exceeds RB. 15,000 but doe!) not exceed Rs. 20,000

Rs. 1,500 plus 20 per cent, of the amount by which the total income exceeds Rs. 15,000;

(5) where the total income exceeds Rs. 20,000 but does not exceed Rs. 25,000

Rs. 2,500 plus 30 ner cent, of the amount hy which the total income exceeds Rs. 20,000;

09 where the total Income exceed? Rs. 25,000 but does not exceed Rs. 30,000

Rs. 4,000 plus 40 per cent, of the amount by which the total income exceeds R8. 25,000;

(7) where the total income exceeds RB. 30,000 but does not exceed Rs. 50,000

Rs. 6,000 plus 50 per cent, of the amount by which the total income exceeds Rs. 30,000;

(8) where the total income exceeds Rs, 50,000 but does nor exceed Rs. 70,000]

RB. 16,000 plut 60 per cent, of the amount by which the total income exceeds Rs. 50,000;

(9)' where the total income [exceeds Rs. 70,000

Rs. 28,000 plus 65 per cent, of the amount by which the total income exceeds Rs. 70,0001

Provided that for the purposes of this Paragraph, in the case of a

person, not being a non-resident—

(i) no income-tax shall be payable on a total income not

exceeding the following limit, namely: —

(a) Rs. 7,000 in the case of every Hindu undivided family which as at the end of the previous year satisfies either of the following two conditions, namely: —

(2) that it has at least two members entitled to claim partition who are not less than eighteen years of age; or

(2) that it has at least two members entitled to claim partition who are not lineally descended one from the other and who are not lineally descended from any other living member of the family;

(b) Rs. 4,000 in every other case;

(ii) where such person is an individual or a Hindu undivid- ed family, the income-tax computed at the rate hereinbefore specified shall be reduced by so much of the amount specified hereunder, as does not exceed the amount of income-tax so com- puted:—

Ra. 125 .

. in the case of an unmarried individual ;

. . .. in the case of a married individual who has

Rs. 200 .

(*)

no child mainly dependent on him or a Hindu undivided family which has no minor coparcener ;

Rs. 220 f

<<>

, , , . in the case of a married Individual who has one child mainly dependent on him or a Hindu undivided family which has one minor coparcener mainly supported from the income of luch family j

(d) Ra. 240 in the case of a married Individual who has more than one child mainly dependent on him or a Hindu undivided family which has more than one minor coparcener mainly supported from the income of such family ;

(Hi) where the total income is twenty tnousana rupees or less, the Income-tax payable shall not exceed forty per cent, of the amount by which the total income exceeds the limit specifi- ed in sub-clause (a) or, as the case may be, sub-clause (b) of clause (i) of this proviso.

Surcharges on income-tax

The amount of income-tax computed in accordance with the pre- ceding provisions of this Paragraph shall be increased by the aggre- gate of surcharges for purposes of the Union calculated as specified hereunder: —

(a) where—

(i) in the case of an Individual or a Hindu undivided family, the amount of unearned income, not being income by way of Interest on any security of the Central or State Gov- ernment or income received in respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included in the total income, or

52 of 1963.

(ii) in any other case, the amount of unearned Income Included in the total income,

exceeds Rs. 15,000,

a surcharge calculated on the difference between the amount of income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the amount of Income-tax computed in respect of an income of Rs. 15,000 if It had been the total income, at the following rate, namely: —

( I) where the amount of the difference 20 per cent, of the amount of such difference;

does not exceed Rs. 14,500. where the amount of the difference exceeds Rs. 14,500

Rs. 2,900 plus 25 per cent, of the amount by which the difference aforesaid exceeds Ra. 14,500 ;

(b) where—

82 of 10"3.

(i) in the case of an individual or a Hindu undivided family, the earned Income and income by way of interest on any security of the Central or State Government and income received in respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included In the total income, or

(ii) in any other case, the earned income included in

the total income,

exceeds Rs. 1 lakh,

a surcharge calculated on the amount of the difference between the income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the income-tax computed in respect of a total income of Rs. 1 lakh, at the following rate, namely: —

(l) where the amount of tho difference 5 per cent, of the amount of such difference j does not exceed Rs. 65,000

Rs. 3,250 plus 10 per cent, of the amount by which thei difference aforesaid exceeds Rs. 65,000 ;

(2) where the amount of the difference exceeds Rs. 65,000 but does not exceed Rs. 1,30,000

(3) where the amount of the difference

exceeds Rs. 1,30,000

Rs. 9,750 plus 15 per cent, of the amount by which the difference aforesaid exceeds Rs. 1,30,000 ; and

(c) a special surcharge calculated at the rate of ten

per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed in accordance

with the preceding provisions of this Paragraph; and

(ii) the aggregate of the amounts of the surcharges calculated in accordance with clause (a) and clause (b) of this sub-paragraph.

Paragraph B

In the case of every co-operative society,--

Hates of income-tax

5 per cent, of the totnl income',

(1)1

where the total income does not exceed Rs. 5,000

(2)'

Rs. 250 plus 10 per cent, of the amount by which the total income exceeds Rs. 5,000;

where the total income exceeds Rs. 5,000 but does not exceed Rs. 10,000

(3)

Rs, 7jo plus 15 per cent, of the amount by which the total income exceeds Rs. 10,000;

where tha total income exceeds Rs. 10,000 but docs not exceed R?. 15,000

(4)

Rs. 1,500 plus 20 per cent, of the amount by which the total income exceeds Rs. 15,000 ;

where thcAtotal income exceeds Rs. 15,000 but does not exceed Rs. 20,000

(5)

Rs. 2,500 plus 25 per cent, of the amount by which the total income exceeds Rs. 20,000;

where the total income exceeds Rs. 20,000 but does not exceed Rs, 25,000

(6) where the lotal income exceeds Rs. 25,oorj

Rs. 3:>75° Pto* 4i Pcr cent, of the amount by which the total income exceeds Rs. 25,000:

Provided that—

(i) no income-tax shall be payable on a total Income not exceeding Rs. 4,000; and

(ii) where the total income is twenty thousand rupees or less, the income-tax payable shall not exceed forty per cent, of the amount by which the total income exceeds Rs. 4,000.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder: —

(a) where the total inrome exceeds Rs. 25,000, a surcharge calculated at the rate of 6} per cent, of the amount of the differ- ence between the income-tax computed at the rates hereinbefore Rppcified and the income-tax computed in respect of a total in- come of Rs. 25,000; and

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph.

Paragraph C

In the case of every registered firm,—

Rates of income-tax

where the total income docs not ( I)

Nil;

exceed Rs. 25,000'

where the total income exceeds Rs. 25,000 but does not exceed Rs. 50,000

(3) where the total income exceeds Rs. 50,000 but does not exceed Rs, 1,00,000'

U) where the total income'"exccede Rs. 1,00,000

6 per cent, of the amount by which the total Income exceeds Rs, 75,000;

Rs. 1,500 /•///( 8 per cent, of the- amount S hy which the total income exceeds Rs. 50,000 j

Ml

IP?

Rs. 5,500 plus 12 per cent, of the amount by which the total income exceeds Rs. 1,00,000.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur-

poses of the Union calculated as specified hereunder: —

(a) in the case of a registered firm whose total income in- cludes 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, a surcharge calculated at the rate of ten per cent, of the amount of income-tax computed at the rate hereinbefore specified;

(b) in the case of any other registered firm, a surcharge calculated at the rate of twenty per cent, of the amount of income-tax computed at the rate hereinbefore specified; and

(c) a special surcharge calculated at the rate of ten per rent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(it) the amount of the surcharge calculated in accord- ance with clause (a), or, as the case may be, claupo (b) of tbi3 sub-paragraph.

Paragraph D

In the case of every local authority,—

Rate of income-tax

On the whole of the total income .. 45 per cent.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder: —

(a) a surcharge calculated at the rate of ten per cent, of the amount of income-tax computed at the rate hereinbefore speci- fied; and

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph,

Paragraph E

In the case of the Life Insurance Corporation of India established

31 of 1956. under the Life Insurance Corporation Act, 1956,—

Rates of income-tax

52-5 per cent. ;

(0 on that part of its total income which consists of profits and gains from life insurance business

on the balance, if any, of the total income

the rate of income-tax applicable, in accordance- with Earagraph JLof_jhjs_ -Ftnrrto the total income~~oT a domesTic" company whiduis—a-company in which the public are substantially interested.

Paragraph F

In the case of a company, other than the Life Insurance Corpora- tion of India established under the Life Insurance Corporation Act, 1956,—

3 of 1956

Rates of income-tax

I. In the case_of JLdomestic company— -{A) (1) where the company is a company in which the public are substantially interested,—

45 per cent, of the total income;

(i) in a case where the total income does not exceed Rs. 25,000

55 per cent, of the total income;

(ii) in a case where the total income exceeds Rs. 25,000

(2) where the company is not a company in which the public are substantially interested,—

(0 in the case of an in- dustrial company—

55 per cent. ;

(1) on so much of the total income as does not exceed Rs. 10,00,000

Go per cent. ;

(,2) on the balance, if any, of the total income

65 per cem. of ihr total incoin; ; rnd {if) in any other case

(B) in addition, where the company

IS—

(i) .1 company in which the public are substantial'¹' interested, yr

(it) a company as is referred to in clause (Hi) of sub- section (2) or clause (a) or clause (b) of sub- section (4) of section 104 of the Income-tax Act, or

(tit) such a company as 13 exempt from the opera- tion of section 104 of the s,aid Act by a notification issued under the provi- sions of sub-section (3) of that section^ _ —

7.5 per cent.:

on so much of the total in- come-as

Provided that the income-tax payable by a domestic company, being a company in which the public are substantially interested, the total income of which exceeds Rs. 25,000, shall not exceed the aggre- gate of—

{a) the income-tax which would have been payable by the company if its total income had been Rs. 25,000 (the income ef Rs. 25,000 for this purpose being computed as if such income included income from various sources in the same proportion as the total income of the company); and

(b) 80 per cent, of the amount by which its total income exceeds Rs. 25,000.

Explanation 1.—In clause (B), the expression "the relevant amount of distributions of dividends" means the aggregate of the following amounts, namely: —

13 of 1906 (a) the amount, if any, by which the "relevant amount of distributions of dividends" by the company as computed in accordance with Explanation 1 to item I of Paragraph F of Part I of the First Schedule to the Finance Act, 1966 exceeds its total income (reduced by the amount of capital gains, if any, relating to capital assets other than short-term capital assets included therein) assessable for the assessment year commencing on the 1st day of April, 1966; and

(b) so much of the amount of the dividends, other than dividends on preference shares, declared or distributed by the company during the previous year as exceeds ten per cent, of its paid-up equity share capital as on the 1st day of the previous year.

Explanation 2.—For the purposes of clause (B), where a part of the Income of a company is not included in its total income because it is agricultural income, the amount declared or distributed as dividends (other than dividends on preference shares) shall be deemed to be such proportion thereof as the sum specified in clause (a) bears to the sum specified in clause (b), such sums being—

(a) the average amount of the total income of the company of the five previous years in which it has been in receipt ol' tax- able income immediately preceding the relevant previous year; and

(b) the average amount of the total profits and gains (ex- cluding capital receipts) of the company of the five previous years referred to in clause (a) reduced by such allowances as may be admissible under the Income-tax Act but which have not been taken into account by the company in its profit and loss accounts for the said five previous years.

Explanation 3.—For the removal of doubts, it Is hereby declared that where any dividends were declared by the company before the commencement of the previous year and are distributed by it during that year, the amount of such dividends shall not be included in the amount of dividends referred to in clause (b) of Explanation 1.

II. In the case of a company other than a domestic company—

(i) on BO much of the total income

as consists of—

(a) royalties received trom an Indian concern in pur- suance of an agreement made by it with the Indian concern after the 31st day of March, 1961,, or

(b) fees for rendering tech- nical services received from an Indian concern in pursuance of an agreement made by it with the Indian concern after the 29th day of February, 1964,

50 per cent.;

and where such agreement has, in either case, been approved by the Central Government

("() on the balance, if any,, of the 70 per CLiit.

total income

PART II

Rates for deduction of tax at source in certain cases

Tn every case in which under the provisions of sections 193, 194, 194A and 195 of the Income-tax Act, tax is to be deducted at the rates

in force, deduction shall be made from the income subject to deduc- tion, at the following rates: —

Income-tax

Rate of surcharge

Rate of income-tax

i. In the case of a person other than a company—

(o) where the person is resident—

CO on income by way of brokerage or com-

mission

12-5 per ceni :. 2-5 per cent.

("Y) on any other income (excluding interest

payable on a tax free security)

18 per cent. 4 per cent.

(b) where the person is not resident in India—

(1) on the whole income (excluding interest

payable on a tax free security)

Income-tax at 25 per cent, ami surcharge at 8 per cent, of the amount of the income

or

income-tax and surcharges on income-tax in respect of the income at the rates prescribed in Paragraph A of Part III of this Schedule, if such income had been the total income,

whichever is higher;

(it) on the income by way of interest payable

12-5 per cen t, 4 per cent.

on a tax free security

2. In the case of a company—

(a) where the company is a domestic company—

(i) on income by way of brokerage or com-

15 per cent. Nil

mission

(ii) on any other income (excluding interest

22 per cent. Nil

payable on a tax free security)

(6) where the company is not a domestic com-

oany—

14 per cent.

(i) on the income by way of dividends pay- able by an Indian company as is referred to in the proviso to section 85A of the Income-tax Act

Nil

28 per cent. Nil

(ji) on the income by way of dividends pay- able by any domestic company other than a company referred to in (i) herein- above

(Hi) on the income by way of royalties payable by an Indian concern in pursuance of an agreement made by it with the Indian concern after the 31st day of March, 1961, and vhich has been approved by the Cen- tral Government . . . .. 50 per cent. Nil

Income-tax

Rate of surcharge

Rate of income-tax

(iv)

on the income by way of lees payable by an I n d i an concern for r e n d e r i ng tech- nical services in p u r s u a n ce of an agree- m e nt m a de by it with t he I n d i an concern after the 29th day of F e b r u a r y, 1964, and which has been approved by the Central G o v e r n m e nt . . ..

Nil

50 per cent.

Nil

on the i n c o me by way of interest payable on a tax free security . . ..

44 per cent.

Ntt.

on any o t h er i n c o me . . ..

70 per cent.

(v>)

PART III

Rates for calculating or charging income-tax in certain cases,

deducting income-tax from income chargeable under the head

"Salaries" and computing "advance tax".

In cases in which income-tax has to be calculated under the fiist proviso to sub-section (5) of section 132 of the Income-tax Act or charged under sub-section (4) of section 172 or sub-section (2) of sec- tion 174 or section 175 or sub-section (2) of section 176 or deducted under section 192 of the said Act from income chargeable under the head "Salaries" 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, sucn income-tax or, as the case may be, "advance tax" shall be so calculated, charged, deducted or computed at the follow- ing rate or rates:—-

Paragraph A

In the case of every individual or Hindu undivided family or un- registered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person refer- red to in sub-clause (vii) of clause (31) of section 2 of the Income- tax Act, not being a case to which any other Paragraph of this Part applies,—

Rates of income-tax

(1) where the total income does not 5 per cent, of the total Income j

exceed Rs. 5,000

Ri. 250 plus 10 per cant, ot c he amoun (2) where the total income exceeds Rs. 5JOOO but does not exceed Rs. 10,000 by which the total income exceed* Ra. 5.000 ;

(3)

Rs. 750 plus 15 per cent, ot the amount by which the total income exceeds R s. lOjOOO ;

where the total income exceeds Rfi. lOjOOO but does not exceed Rs. I53ooo

(4)

Rs. 1,500 plus 20 per cent, of the amount by which the total income exceeds Rs. 15,000 ;

where the total income cxcceis Rs. 15,000 but does not exceed Rs. 20,000

(5)

Rs. 2,500 plus 30 per cent, of the amount by which the total income exceeds Rs. 20,000 ;

where the total income exceeds Rs. 20,000 but does not exceed Rs. 25,000

(6)

Rs. 4,000 plus 40 per cent, of the amount by which the totnl income exceeds Rs. 25,000 ;

where the total income exceeds Rs. 25,000 but does not exceed Rs. 30,000

(7)

Rs. 6,000 plus 50 per cent, of the amount by which the total income exceed¹; Rs. 30,000 ;

where the total income exceeds Rs. 30,000 but does not exceed Rs. 50,000

(8)

Rs. 16,000 plus 60 per cent, of the amoum by which the total income exceeds Rs. 50,000 ;

where the total income exceeis RB. 50,000 but docs not exceed R s. 7O3O00

(9) where the total income exceeds Rs. 70,000

Ri. 28,000 plus 65 per cent, of the amount by which the total income exceeds Rs. 70,000 :

Provided that for the purposes of this Paragraph, in the case of a

poison, not being a non-resident—

(i) no income-tax shall be payable on a total income not

exceeding the following limit, namely: —

(a) Rs. 7,000 in the case of every Hindu undivided family which as at the end of the previous year satisfies either of the following two conditions, namely: —

(1) that it has at least two members entitled to claim partition who are not less than eighteen years of age; or

(2) that it has at least two members entitled to claim partition who are not lineally descended one from the other and who are not lineally descended from any other living member of the family;

(b) Rs. 4,000 in every other case;

(ii) where such person is an individual whose total income does not exceed Rs. 10,000 and who has, during the previous year, incurred any expenditure for the maintenance of any one or more of his parents or grand-parents mainly dependent on him, the income-tax computed at the rate hereinbefore specified shall be reduced by so much of the amount specified hereunder, as does not exceed the amount of income-tax so computed: —

R ". 1 45 . . ..

In the case of an unmarried individual}

R f l. 3 20 . . ..

(*)

in the case of a married individual who has no child mainly dependent on himj

SKC i] THE 6 A 2 M 1E 6F INEHA £XTftAoftt>lKARV 2-4t

R i. 2 40 . . ..

in the case oi a married individual who has one child mainly dependent on him;

R s. 2 60 .

in the case of a married individual who has more than one child mainly dependent on him;

(Hi) where such person is an individual not falling under clause (ti) or a Hindu undivided family, the income-tax comput- ed at the rate hereinbefore specified shall be reduced by so much o{ the amount specified hereunder, as does not exceed the amount of income-tax so computed: —

Rs. 125

in the case of an unmarncd individual;

(")

Rs. 200 . . . ,

(M

in the case of a married individual who has no child mainly dependent on him or a Hindu undivided family which has no minor coparcener ;

Rs. 230

(c)

in the case of a married individual who has one child mainly dependent on him or a Hindu undivided family which has one minor coparcener mainly supported from the income of such family ;

Rs. 240

(d)

in the case of a married Individual who has more than one child mainly dependent on him or a Hindu undivided family which has more than one minor co- parcener mainly supported from the in- come of such family ;

(iv) (A) where such person is an individual whose total income exceeds Rs 10,000 but does not exceed Rs. 20,000, and who has, during the previous year, incurred any expenditure for the maintenance of any one or more of his parents or grand- parents mainly dependent on him, the income-tax payable by him in respect of .such total income shall not exceed the aggregate of—

(1) the income-tax which would have been payable hy the individual if his total income had been Rs. 10,000, and

(2) 40 per cent, of the amount by which the total income of the individual exceeds Rs. 10,000;

(B) where such person is not an individual whose case falla under sub-clause (A) and the total income of such person does not exceed Rs. 20,000, the income-tax payable thereon shall not exceed 40 por cent, of the amount by which the total income exceeds the limit specified in sub-clause (a) or. as the case may be, sub-clause (b) of clause (i) of this proviso.

Explanation.—For the purposes of clause (H) and sub-clause (A) of clause (iv) of this proviso, a parent or grand-parent of an indivi- dual shall not be treated as being mainly dependent on such indivi- dual if the income of the parent or, as the case may be, the grand- parent from all sources in respect of the previous year relevant to the assessment year exceeds one thousand rupees.

Surcharges on income-tax

The amount of income-tax computed in accordance with the pi e- ocding provisions of this Paragraph shall be increased by the aggro- gate of surcharges for purposes of the Union calculated as specified hereunder: —

(a) where—

(i) in the case of an individual or a Hindu undivided family, the amount of unearned income, not being income by way of interest on any security of the Central or State Gov- ernment or income received in respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included in the total income, or

(ii) in any other case, the amount of unearned income included in the- total income,

exceeds Rs. 30,000,

a surcharge calculated on the difference between the amount of income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the amount of income-tax computed in respect of an income of Rs. 30,000 if it had been the total income, at the following rate, namely: —

20 per cent, of the amount of such difference;

( I) where the amount of the difference does not exceed Rs. 10,000

( 2) where the amount of the difference exceeds Ra. io3ooo

Rs. 2,000 plus 25 per cent, of the amount by which the difference aforesaid ex- ceeds Rs. 10,000;

(b) where—

32 of 1963.

(i) in the case of an individual or a Hindu undivided family, the earned income and income by way of interest on any security of the Central or State Government and income received in respect of units from the Unit Trust of India, established under the Unit Trust of India Act, 1963, included in the total income, or

(n) in any other case, trie earned income included in

the total income,

exceeds Rs. 1 lakh,

a surcharge calculated on the amount of the difference between the income-tax computed in respect of the income referred to in sub- clause (i) or, as the case may be, sub-clause (ii), if such income had been the total income and the income-tax computed in respect of a total income of Rs. 1 lakh, at the following rate, namely: —

( I)

5 per cent, of the amount of such diflerencc;

where the amount of the difference does not exceed RB. 65,000

( 2)

Rs. 3,250 plus 10 per cent, of the amount by which the difference aforesaid exceeds Rs. 65,000;

where the amount of the difference exceeds Ra. 65,000 but does not exceed Rs. 1,30,000

(3) where the amount of the difference exceeds Rs, 1,30,000

Rs. 9,750 plus 15 per cent, of the amount by which the difference aforesaid exceeds Rs. 1,30,000; and

(c) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed in accordance

with the preceding provisions of this Paragraph; and

(ii) the aggregate of the amounts of the surcharges calculated in accordance with clause (a) and clause (b) of this sub-paragraph

Paragraph B

In the case of every co-operative society,—

Rates 0/ income-tax

5 .per cent, of the total income;

( I) where the total income does not exceed Rs. 5,000

( 2)

Rs. 250 plus 10 per cent, of the amount by which/he Lotal income exceeds Rs. 5,000;

where the total income exceeds Rs. 5,000 but does not Jexceed Rs. 10,000

(3) where the total income exceeds RB. 10,000 but does not exceed Rs. 15,000

Rs. 750 plus 15 per cent, of the amount by which the total income exceeds Rs. 10,000;

(4) where the total income exceeds Ra. 15,000 but does not exceed Rs. 20,000

Rs. 1,500 plus 20 per cent, of the amount by which the total income exceeds Rs. 15,000;

(5) where the total income exceeds Rs. 20,000 but does not exceed Rs. 25,000

Rs. 2,500 plus 25 per cent, of the a mount by which the total income exceeds Rs. 20,000;

(6) where the total incom* exceeds Ra. 25,000

Rs. 3,750 plus 41 per cent, of the amount by which the total income exceeds Rs. 25,000 1

Provided that—

(i) no income-tax shall be payable on a total income not exceeding Rs. 4,000; and

(ii) where the total income is twenty thousand rupees or less, the income-tax payable shall not exceed forty per cent, of the amount by which the total income exceeds Rs. 4,000.

Surcharges on income-tax

The amount of income-tax computed at the rate hereinbefore specified Khali be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder:—•

(a) where the total income exceeds Rs. 25,000, a surcharge calculated at the rate of 6i per cent, of the amount of the differ- ence between the income-tax computed at the rates hereinbefore specified and the income-tax computed in respect of a total in- come of Rs. 25,000; and

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph.

Paragraph C

In the case of evovy registered firm,—

Rates of income-tax

Nil;

( I)

where the total income docs not exceed Ri. 25,000

6 jjcr cent, of the amount by which the total ( 1)

income exceeds Ra. 15,000;

where the total income exceeds Rs. 25,000 but does not exceed Rs. 50,000

(3)

Rs. 1,500 plus 8 per cent, of the amount by which the total income exceed* RB. 50,000;

wtiere the total income exceeds Rs. 50,000 but does not exceed Rs. 1,00,000

(4) where the total Income exceeds Rs. 1,00,000

Ra. 5,500 plus 12 per "cent, of the amount by which the total Income exceed* Rs. 1,00,000.

surcharges on income-tax

The amount of income-tax computed at the rate heieinbefoo.¹ specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified heieunder:—

(a) in the case of a registered firm whose total income in- cludes 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, a surcharge calculated at the rate of ten per cent, of the amount of income-tax computed at the rate hereinbefore specified^

(b) in the case of any other registeied firm, a suicharge calculated at the rate of twenty per cent, of the amount of income-tax computed at the i ate hereinbefore specified; and

(c) a special sui charge calculated at the rate of ten per cent.

on the aggregate of the following amounts, namely: —

(0 the amount of income-tax computed at the rate hereinbefore specified; and

(ii) the amount of the surcharge calculated in accord- ance with clause (a), or, as the case may be, clause (b) of this sub-paragraph.

Paragraph D

In the case of every local authority,—

Rate of income-tax

On the whole of the total income . 45 per cent.

Surcharges on income-lax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by the aggregate of surcharges for pur- poses of the Union calculated as specified hereunder: —

(a) a surcharge calculated at the rate of ten per cent, of the amount of income-tax computed at the rate hereinbefore speci- fied; and

(b) a special surcharge calculated at the rate of ten per cent, on the aggregate of the following amounts, namely: —

(i) the amount of income-tax computed at the late hereinbefore specified; and

(it) the amount of the surcharge calculated in accord- ance with clause (a) of this sub-paragraph,

Paragraph E

In the case of the Life Insurance Corporation of India established

31 of 1958.

cinder the Life Insurance Corporation Act, 1956,—

Rates of income-tax

52 • 5 per cent.;

to on that pan ot its total income which consists of profits and gain!) trom life insurance business

(.iii on the balance, if any, of the total income

the rate of income-tax applicable, in accord- ance with Paragraph F of this Part, to the total income-of--a._dumesiic company which is a company in which the public arc substantially interested.

Paragraph F

31 ol 1956.

In the case of a crimpuny, other than the Life Insurance Coipoia- tion of India established under the Life Insurance Corporation Act, 1956 —

Rates of income-tax

I. In the case of a domestic company--

(A)(i) where the company is a company in which the public are substan- tially intereitod,—

45 per cent, of the tolal income;

(0 in a case where the total income does not exceed Rs. 50/100

55 per cent, ol the total income;

(if) in a case where the total

income exceeds Rs. 50,000

(2) where the company is not a company in which the public are substantially interested,—

(1) in the case of an industrial

company—

55 per cent.;

(1) on so much of the total income as does not exceed Rs. 10,00,000

60 per cent.;

(2*1 on the balance, if liny, of the total income

65 per cent, of the tntnl income;

("'O in any other case

and

(IJ) in uddilion, where the co'iipunv

is—

(0 a company in which the public arc substantially interested, or

(K) a company .is is reteried to in clause (HI) of sub- section (2) or clause (a) or clause (b) of sub- section (A) of section 104 of the Income-tax Act, or

(HI) such a company as is exempt from the opera- tion of section 104 of the said Act by a notification issued under the provi- sions of sub-section (3) of that section,

7-5 per cent.:

on so much of the total in- come as docs not exceed the relevant umount ot distribu- tions of dividends by the company

Provided that the income-tax payable by a domestic company, being a company in which the public are substantially interested, the total income of vvhirh exceeds Rs. 50,000, shall not exceed the aggre- gate of—

(a) the income-tax which would have been payable by the company if its total income had been Rs. 50,000 (the incmTie of R'i 50,000 for this purpose being computed as if such income included income from various sources in the same proportion as the total income of the company); and

(b) 80 p^r cent of the amount by which its total income exceeds Rs. 50,0f)C.

Explanation 1.—In clause (B), the expression "the relevant amount of distributions of dividends" means the aggregate of the following amounts, namely: —

13 ol 1966.

(a) the amount, if any, by which the "relevant amount of distributions of dividends" by the company as computed in accordance with Explanation 1 to item I of Paragraph F of Part I of the First Schedule to the Finance Act, 1966 exceeds its total income (reduced by the amount of capital gains, if any, relating to capital assets other than short-term capital assets included therein) assessable for the assessment year commencing on the 1st dav of Apiil. 1966; and

(b) so much oi the amount of the dividends, other than dividends on preference shares, declared or distributed by the company during the previous year as exceeds ten per cent, of its

paid-up equity share capital as on the 1st day of the previous year.

Explanation 2.—Foi the purposes of clause (B), where a part of the income of a company is not included in its total income because it is agricultural income, the amount declared or distributed as dividends (other than dividends on preference shares) shall be deemed to be such proportion thereof as the sum specified in clause (a) bears to the sum specified in clause (b), such sums being—

(a) the aveiagc amount of the total income of the company of the five previous years in which it has been in receipt of tax- able income immediately preceding the relevant previous year; and

(b) the avenigt amount of the total profits and gains (ex- cluding capital receipts) of the company of the five previous years referred to in clause (a) reduced by such allowances as may be admissible under the Income-tax Act but which have not been taken into account by the company in its profit and loss accounts for the said live previous years.

Explanation 3.—For the removal of doubts, it is hereby declared that where any dividend^ wcie declared by the company before the commencement of the previous year and are distributed by it during that year, the amount of such dividends, shall not be included in the amount of dividends referred to in clause (b) of Explanation 1-

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 an Indian concern in pur- suance of an agreement made by it with the Indian concern after the 31st dav of March, 1961, or

(b) fees for rendering tech- nical services received fiom an Indian concern in pur- suance of an agreement made by it with the Indian concern after the 29th day of February, 1964,

50 per cent.;

and where such agreement has, in either case, been approved by the Central Government

(,ii) on the balance, if any, of the toral 70 per cent.

income

THE SECOND SCHEDULE

(See section 3)

Rates of annuity deposits

Nil.

(0 In the cas" of any depositor whose total income doe" not exceed R". i5)00o

5 per cent, of the adjusted total income :

(••"•) In the case of any depositor whose total income exceedi Rs. 15,000 but does not exceed Rs. 30,000

Provided that the annuity deposit to be made shall in no case exceed half the amount by which the total income exceeds Rs. 15,000.

7l per cent, of the adjusted total income !

("'"'O In the case of a depositor

whose total Income exceedi

Rs. 20,000 but does not

exceed Ri. 40,000

Provided that the annuity deposit to be made shall in no case exceed the aggregate ot the following sums, namely:—

(a) an amount calculated at five per cent, on so much ol the adjusted total income as does not exceed Rs. 20,000;

(b) one-half of the amount by which the total income ex- ceeds Rs. 20,000.

(iv) In the cane of a depositor 10 per cent, of the adjusted total income:

whose total income exceeds Rs. 40,000 but does not exceed Rs. 70,000

Provided that the annuity deposit to be made ahall in no case exceed the aggregate of the following sums, namely.—

(a) an amount calculated at seven and a half per cent, on so much of the adjusted total income as does not exceed Rs. 40,000;

(b) one-half of the amount by which the total income ex- ceeds Rs. 40,000.

(v) In the case of • depositor 12J per cent, of the adhuted total Income 1 whose total income exceed* Rs. 70,000

Provided that the annuity deposit to be made shall in no case exceed the aggregate of the following sums, namely:—

(a) an amount calculated at tf>n per cent, on so much of the adjusted total income as does not exceed Rs. 70,000;

Ob) one-half of the amount by which the total i'neome ex ceeds Rs. 70,000.

Explanation.—In this Schedule, "total income" means total in- come computed in the manner laid down in the Income-tax Act with- out making any allowance under section 280O of that Act.

THE THIRD SCHEDULE

(See section 33)

AMENDMENTS IN THE INCOME-TAX ACT

1. Section 10.—After clause (28), insert—

" (29) in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commo- dities.".

2. Section 32.—

(a) in sub-section (1), after clause (iv), insert—

"(v) in the case of any new building, the erection of whicrt is completed after the 31st day of March, 1967, where the building is owned by an Indian company and used by such company as a hotel and such hotel is for the time being approved in this behalf by the Central Government, a sum equal to twenty-five per cent, of the actual cost of erection of the building to the assessee, in respect of the previous year in which the erection of the building is completed or, it such building is first brought into use as a hotel in the immediately succeeding previous year, then in respect of that previous year; but any such sum shnll not be deduc- tible in determining the written down value for the pur- poses Of clause (ii).";

(b) in sub-section (2), after "clause (iv)", Insert "or clause

3. Section 33.—

(a) for sub-section (1), substitute—

" (1) (a) In respect of a new ship or new machinery or plant (other than office appliances or road tra'nsport

vehicles) which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction, In respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use In the Immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b).

(b) The sum referred to In clause (a) shall be—

(A) in the case of a ship, forty per cent, of th" actual cost thereof to the assessee;

(B) in the case of machinery or plant,—

(i) where the machinery or plant is installed for the purposes of business of construction, manu- facture or production of any one or more of the articles or things specified in the list in the Fifth Schedule,—

(a) thirty-five per cent, of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) twenty-five per cent, of such cost where it is installed after the 31st day of March, 1970;

(ii) where the machinery or plant Is installed after the 31st day of March, 1967, by an assesses bei'ng an Indian company in premises used by it as a hotel and such hotel is for the time being approved in this behalf by the Central Government—

(a) thirty-five per cent, of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) twenty-five per cent, of such cost where it is installed after the 31st day of March, 1970;

(iii) where the machinery or plant is installed after the 31st day of March, 1967, being an asset

representing expenditure of a capital nature on scientific research related to the business carried on by the assessee, •—

(a) thirty-five per cent, of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) twenty-five per cent of such cost, where it is installed after the 31st day of March, 1970;

(iu) in any other case,—

(a) twenty per cent, of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) fifteen per cent, of such cost where it is installed after the 31st day of March, 1970.";

(b) in sub-section (2), for "[tha total income for this pur- pose being computed without making any allowance under sub- section (i) or sub-section (1A) of this section or sub-section (I) of section 33A]'¹, in both places, substitute—

"[the total income for this purpose being computed without making any allowance under sub-section (1) or sub-section (1A) of this section or sub-section (1) of sec- tion 33A or any deduction under Chapter VIA or section 280O]".

(c) in sub-section (6), add at the end—

"Provided that the provisions of this sub-section shall not apply in the case of an assessee being an Indian com- pany, in respect of any machinery or plant installed by it in premises used by it as a hotel, where the hotel is for the time being approved in this behalf by the Central Govern- ment.".

4. Section 33A.—In sub-section (2), for "[the total income for this purpose being computed after making the allowance under sub- section (1) or sub-section (1A) or clause (ii) of sub-section (2) of section 33 but without making a'ny allowance under sub-section (2) of this section]", in both places, substitute—

"[ the total income for this purpose being computed after deduction of the allowance under sub-section (1) or sub-section

(1A) or clause (ii) of sub-section (2) of section 33, but with- out making any deduction under sub-section (1) of this section or any deduction under Chapter VIA or section 280O]".

5. Section 35.—In sub-section (2),—

(i) for clause (i), substitute—

"(i) in a case where such capital expenditure is in- curred before the 1st day of April, 1967, one-fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted hi equal instalments for each of the four immediately succeeding previous years;

(ia) in a case where such capital expenditure is in- curred after the 31st day of March, 1967, the whole of such capital expenditure incurred In any previous year shall be deducted for that previous year.";

(ii) in clause (ii), after "an asset representing expendi- ture of a capital nature", insert "incurred before the 1st day of April, 1967";

(Hi) in clause (v), for "where the asset is used", substitute "where the asset mentioned in clause (ii) is used".

6. Section 36.—In clause (viii) of sub-section (I), for "of the total income carried to such reserve account", substitute "of the total income (computed before making any deduction under Chapter VIA) carried to such reserve account".

7. Section 41.—In sub-section (3), after "the total amount of the deductions made under clause (1)", insert "or, as the case may be, the amount of the deduction under clause (ia)".

8. Section 43.—For the proviso to clause (1), substitute—

"Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967 and is used otherwise than in a business of running it on hire for tourists, exceeds twenty-five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty- five thousand rupees.".

9. Section 66.—Omit "and any amount in respect of which the assessee is entitled to a deduction from the amount of income-tax on his total income with which he is chargeable for any assessment year In accordance with, and to the extent provided in sections 87. 87A and 88".

10. Section 71.—For sub-section (2), substitute—

'(2) Where in respect of any assessment year the net result of the computation under any head of income other than "Capital gains" is a loss and the assessee has income assessable under the head "Capital gains", such loss may, subject to the provisions of this Chapter, be set off—

(i) against the income, if any, of the assessee assessable for that assessment year under any head including income assessable under the head "Capital gains" (whether relating to short-term capital assets or any other capital assets), or

(ii) if the assessee so desires, only against his income, if any, under the head "Capital gains", in so far as such income relates to 3hort-term capital assets, and income under any other head.

(3) Where in respect of any assessment year the net result of the computation under sections 48 to 55 in respect of capital gains relating to short-term capital assets is a loss and the assessee has income assessable under any head of income other than "Capital gains", the assessee shall, subject to the provisions of this Chapter, be entitled to have such loss set off against the income aforesaid.'.

11. Section 72.—In sub-section (1), after "Capital gains", Insert "relating to capital assets other than short-term capital assets".

12. Section 74.—In sub-clause (i) of clause (a) of sub-section (I), for "as relates to short-term capital assets", substitute "relating to short-term capital assets as cannot be or is not wholly set off againsK Income under any head in accordance with the provisions of section 71".

13. For Chapter VIA, substitute—

'CHAPTER VIA

DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME

A.—General

80A. (I) In computing the total income of an ass"SBet, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deduct- ions specified in sections 80C tn 80T.

Deduc- tions to be made in computing total income.

(2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee.

(3) Where, in computing the total income of a firm, associa- tion of persons or body of individuals, any deduction is admis- sible under section BOG or section BOH or section 80J or section 80K or section 80L or section BOS or section ROT, no deduction under the same section shall be made in computing the total income cf a partner of the firm or, as thr case may be, of a member of the association of persons or body of individuals m relation to the share of such partner in the income of the firm or the share of such member in the income of the association of persons or body of individuals.

Doflnitionj.

SOB. In this Chapter--

(1) "displaced person" means a person who, on account of the setting up of the Dominions of India and Pakistan, or on account of civil disturbances or the fear of such disturbances in any area now forming part of East Pakistan, has—

(a) in the case of a person having a place of residence in the district of Noakhali or of Comilla, on or after the 1st day of October, 1946, and

(b) in the case of a person having a place of resi- dence in any other area now forming part of East Pakistan, on or after the 1st day of June, 1947,

left, or been displaced from, his place of residence in such area and who has been subsequently residing in India;

(2) "domestic company" means an Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrange- ments for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income;

(3) "earned income" and "unearned income" shall have thp meanings respectively assigned to them In the Finance Act of the relevant year;

(4) "foreign company" means a company which is not a domestic company as dpfinud in clause (2);

(5) "gross total income" means the total income computed in accordance with the provisions of this Act,

before making any deduction under this Chapter or under section 280O and without applying the provisions of section 64;

(6) "income", in relation to a handicapped dependant, means the aggregate income of such person from all sources;

(7) "priority industry" means the business of genera- tion or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or thinga specified In the list In the Fifth Schedule or the business of any hotel where such business is carried on by an Indian company and the hotel is for the time being approved in this behalf by the Central Government;

(8) "relative", in relation to an Individual, means—

(a) the mother, father, husband or wife of the individual, or

(b) a son, daughter, brother, sister, nephew or niece of the individual, or

(c) a grand-son or grand-daughter of the individual, or

(d) the spouse of any person referred to in sub- clause (b);

(9) "repatriate" means a person of Indian origin who was ordinarily residing in a foreign Country and who, on leaving, or being forced to leave, such country, has—

(a) In the case of a person leaving Mozambique, on or after the 25th day of June, 1962, or

(b) In the case of a person leaving Burma, on or after the 1st day of June, 1963, or

(c) in the case of a person leaving Ceylon, on or after the 1st day of November, 1964, or

(d) In the case of a person leaving any other country, on or after such date or dates as may be notified in this behalf by the Central Government in the Official Gazette,

returned to India with the intention of permanently residing therein.

Explanation—A person shall be deemed to be of Indian origin ii he, or either of his parents or any of his grand- parents, was born in undivided India.

B.—Deductions in respect of certain payments.

80C. (1) In computing the total income of an assessee there shall be deducted, in accordance with and subject to the provi- sions of this section, an amount equal to sixty per cent, of the first five thousand rupees of the aggregate of the sums specified in sub-section (2) and fifty per cent, of the balance, if any, of such aggregate.

Deduc- tion in respect at life insur- ance premia, contribu- tions to provident fund, etc. (2) The sums referred to in sub-section (1) shall be the following, namely:-—

(a) where the assessee is an individual, any sums paid in the previous year by the assessee out of his income chargeable to tax—

(i) to effect or to keep in force an insurance on the life of the assessee or on the life of the wife or husband of the assessee; or

(ii) to effect or to keep in force a contract for a deferred annuity on the life of the assessee or on the life of the wife or husband of the assessee, notwith- standing that such contract contains a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; or

(ili) as a contribution to any provident fund to i9 o* 1025.

which the Provident Funds Act, 1925 applies;

(b) where the assessee is a Hindu undivided family, any sums paid in the previous year by the assessee out of its income chargeable to tax, to effect or to keep in force an insurance on the life of any male member of the family or of the wife of any such member.

Explanation.—For tnc purposes of sub-clause (i) of clause (a) and clause (b) of this sub-section, an insurance on the life of any person referred to therein shall include—

(i) a policy of insurance on the life of such person securing the payment of a specified sum on the stipu- lated date of maturity of the policy, if such person is alive on such date, notwithstanding that the policy of insurance provides only for the return of premiums paid (with or without any interest thereon) in the

event of such person dying before the said stipulated date;

(ii) a policy of insurance effected by a person for the benefit of a minor (being the assessee, or a male member of a Hindu undivided family where such family is the assessee) with the object of enabling the minor, after he has attained majority, to secure an insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf;

(c) any sum deducted in the previous year from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his wife or children, in so far as the sum so deducted does not exceed one-fifth of the salary;

(d) if the assessee is an employee participating in a recognised provident fund, his own contributions to his Individual account in the fund in the previous year, in so far as the aggregate of such contributions does not exceed one-fifth of his salary in that previous year or eight thousand rupees, whichever is less.

Explanation.—In clause (d) of this sub-section, "salary" shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule;

(e) if the assessee is an employee participating in an approved superannuation fund, any sum paid in the pre- vious year by him by way of contribution towards the superannuation fund;

(/) wheie the assessee is an individual, any sums deposited, in the previous year by the assessee out of hia income chargeable to tax, in a ten-year account or a fifteen- year account under the Post Office Savings Bank (Cumula- tive Time Deposits) Rules, 1959, as amended from time to time.

(3) The provisions of clauses (a) and (b) of sub-section (2) shall apply only to so much of any premium or other pay- annuity as is not in excess of ten per cent, of the actual capital ment made on a policy other than a contract for a deferred gum assured.

Explanation.—In calculating any such capital sum, no

account shall be taken—

(i) of the value of any premiums agreed to be returned,

or

(ii) of any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.

(4) The aggregate of the sums referred to in sub-section (.?), which qualifies for the purposes of computing the deduction under sub-section (1), shall not exceed—

(i) in the case of an individual being an author, play- wright, artist, musician or actor, such percentage of his gross total income, or such amount, as may be prescribed:

Provided that such individual has effected an insurance

referred to in sub-clause (i) of clause (a) of sub-section (2) prior to the 1st day of March, 1964 and has paid any sum in the previous year to keep in force such insurance;

(ii) in the case of any other individual [including an author, playwright, artist, musician or actor, to whom the provisions of clause (i) do not apply], thirty per cent, of his gross total income, or fifteen thousand rupees, whichever is less;

(iii) in the case of a Hindu undivided family, thirty per cent. 01 its gross total income, or thirty thousand rupees, whichever is less.

(5) If the gross total income of the assessee includes earned income chargeable under any head, the deduction under sub- section (1) shall, to the extent possible, be made in computing such earned income and, as to the balance, if any, in computing any other income; and if there is no earned income, the deduction shall be made in computing any other income under any head.

80D. (1) Where an assessee who is resident in India, being an individual or Hindu undivided family, who has, during the previous year, incurred out of his or its income chargeable to income-tax, any expenditure for the medical treatment (includ- ing nursing) of a person who—

Deduc- tion in respeqt of medical treatment, etc., of handi- capped depend- dants.

(a) is a relative of the individual, or, as the case may be, is a member of the Hindu undivided family and is not dependent on any person other than such individual er Hindu undivided family for his support or maintenance, axtf

(b) is suffering from a physical or mental disability which is certified by a registered medical practitioner to have the effect of reducing considerably such person's capa- city for normal work or engaging in a gainful employment (hereinafter in this section referred to as handicapped dependant),

trie assessce shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount specified in sub-section {2) in the computation of his total income in respect of the previous year.

(P.) The deduction under sub-section (1) shall be—

(i) In a case where the handicapped dependant has, for a period of one hundred and eighty-two days or more during the previous year, been admitted in a hospital or a nursing home or a medical institution or in such other institution as may be notified by the Central Government in the Official Gazette to be an institution for the care of handicapped persons, and fees and charges for his medical treatment (including nursing) are payable to such hospital or nursing home or medical or other institution, as the case may be, a sum of two thousand four hundred rupees, or

(ii) in any other case, a sum of six hundred rupees, a? reduced, in either case, by an amount equal to the income, if any, of the handicapped dependant in respect of the previous year:

Provided that where the assessce has, during the previous year, incurred expenditure on more than one handicapped depen- dant, the deduction under sub-section (1) shall be allowed only with reference to one such handicapped dependant as may be chosen by the assessee.

(3) If the gross total income of the assessee includes earned income chargeable under any head, the deduction under sub- section (1) shall, to the extent possible, be made in computing such earned income and, as to the balance, if any, in computing any other income; and if there is no earned income, the deduc- tion shall be made in computing any other income under any head.

80E. (1) Where, in the case of an a&^csscc, being an indi- vidual who is a citizen of India and is resident in India, his share in the income of a registered firm which renders pro- fessional service as chartered accountant, solicitor, lawyer, architect, or such other professional service as may be notified in Deduc- tion In respect of payment for secur- ing retire- ment annuities

this behalf by the Central Government in the Official Gazette, is chargeable to tax and he has paid out of his income chargeable to tax a premium (by whatever name called) in any previous year under an annuity contract for the time being approved by the Commissioner as having for its main object the provision for the individual of a life annuity in old age (hereinafter in this section referred to as qualifying premium), then the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount of the qualifying premium in the computation of his total income in respect of the previous year:

Provided that the amount which may be so deducted shall not exceed the sum of five thousand rupees, or one-tenth of his gross total income, whichever is less:

Provided further that any annuity payable to the individual shpll be deemed to be his earned income to the extent to which it is attributable to the amount in respect of which deduction has been allowed under this section and chargeable to tax accordingly.

(2) Subject to sub-section (3) and any rules made by the Board in this behalf, the Commissioner shall not approve a contract unless he is satisfied that it does not—

(a) provide for the payment during the life of the individual of any sums except sums payable by way of an- nuity to the individual; or

(b) provide for the annuity payable to the individual to commence before he attains the age of fifty-eight or after he attains the age of sixty-eight; or

(c) provide for the payment of any other sums except sums payable by way of annuity to the individual's widow or widower and any sums which, in the event of no annuity becoming payable either to the individual or to a widow or widower of the individual, are payable to the individual's legal representative by way of return of premiums, by way of reasonable interest on premiums and by way of bonus out of profits; or

(d) provide for the payment of annuity, if any, pay- able to a widow or widower of the individual to be of a greater annual amount than that paid or payable to the individual; or

(e) provide for the payment of any annuity otherwise than for the life of the annuitant,

and that It does include a provision that no annuity payable under it shill be capable in whole or in part of surrender, commutation or assignment.

(3) The Commissioner may, if he thinks fit, and subject to any conditions the Board may, by rules, prescribe and sub- ject to any conditions he thinks proper to impose, approve a contract, notwithstanding that the contract provides for one or more of the following matters, that is to say,—

(a) for the payment after the individual's death of an annuity to a dependant other than the widow or widower of the Individual;

(b) for the payment to the individual of an annuity commencing before he attains the age of fifty-eight, if the annuity is payable on his becoming incapable through infirmity of mind or body of being actively engaged in his profession or any profession of a similar nature for which he is trained or fitted;

(c) for the annuity payable to any person to continue for a specified term (not exceeding ten years), notwltn- standlng his death within that term;

(d) In the case of an annuity which is to continue for such specified term, for the annuity to be assignable by will.

(4) The foregoing provisions of this section shall apply in relation to a contribution (by whatever name called) to a fund approved by the Commissioner as they apply in relation to any premium under an annuity contract so approved, provided the fund satisfies also the conditions sot out below and any other conditions which the Board may, by rules, prescribe, namely:—

(a) the fund shall be a fund established in India under an irrevocable trust for the benefit of individuals engaged in any profession referred to in sub-section (/);

(b) the fund shall have for its sole purpose the provi- sion of annuities for individuals engaged in such profession on attaining a specified age or on their becoming Incapa- citated prior to attaining such age, or for the widow, child- ren or dependants of such persons on their death;

(c) all annuities, pensions and other benefits granted from the fund shall be payable only In India.

(5) The Commissioner may, at any time, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the persons by and to whom premiums are pay- able under any contract for the time being approved under this section, or to the trustees of any fund so approved, withdraw the approval.

(6) Notwithstanding anything contained in sub-sections (1) and (4), no deduction under this section shall be allowed In the case of any individual—

(i) whose gross total income includes unearned income of more than ten thousand rupees; or

(ii) who is entitled to any pension or is participating in any pension or superannuation scheme.

(7) The deduction under this section shall be made in com- puting the earned income of the assessee included in his gross total income, so, however, that the amount of deduction shall not in any case exceed the amount of the income computed under the head "Profits and gains of business or profession", included in the gross total income.

(8) Any annuity payable under an approved contract referred to in sub-section (1) or from any fund referred to in sub-section (4), to a person other than the individual who pays the premiunti or makes the contribution and any interest on premiums or bonus out of profits payable to such person, shall be deemed to be his unearned income to the extent it is attri- butable to the amount of deduction allowed under sub-section (1) and chargeable to tax accordingly.

(9) Where any payment by way of annuity or otherwise is made by a person to whom premiums or contributions are payable under sub-section (1) or sub-section (4), such person shall, subject to any rules made by the Board in this behalf, deduct from the total amount so paid during any financial year, tax at such rate or rates in force in that year as would be applicable to such amount, if it were the total income and shall pay the amount so deducted to the credit of the Central Gov- ernment within the prescribed time and in such manner as the Board may direct and the provisions of section 201 shall, so far as may be, apply to such person if he does not deduct, or after deducting fails to pay, such tax.

{10) Where a deduction under this section is claimed and allowed for any assessment year in respect of any payment,

relief shall not be given in respect of It under any other provi- sion of this Act for the same or a later assessment year nor (in the case of a payment under an annuity contract) in respect of any other premium or consideration for an annuity under the same contract.

(11) (a) The Board may, by notification in the Official Gazette, make rules for carrying out the purposes of this section.

(b) In particular and without prejudice to the generality of the foregoing power, such rules may—

(i) prescribe the statements and other information to be submitted along with an application for approval;

(ii) prescribe the returns, statements, particulars or information which the Income-tax Officer may require from a person by and to whom premiums or contributions are payable under this section;

(in) provide for the assessment by way of penalty of any consideration received by an individual for an assign- ment of, or creation of a charge upon, any annuity or other sum receivable by him under any contract or from any fund approved for the time being under this section; and

(iv) provide for securing such further control over the approval granted under this section and administration of funds approved under this section as it may deem requisite.

Deduc- tion In respect of educational expenses in certain cases.

80F. (1) Where an individual, being a resident, who Is not a citizen of India, has expended any sum in the previous year out of his income chargeable to tax for the full time education of his child wholly or mainly dependent on him and who is not more than twenty-one years of age, at any University, college, school or other educational institution situate in a country out- side India, he shall, in accordance with and subject to the pro- visions of this section, be allowed a deduction of the amount specified in sub-section (2) in the computation of his total income.

(2) The amount referred to in sub-section (1) shall be—

(i) in the case of an individual who has one such child, one thousand five hundred rupees; and

(ii) in the case of an individual who has more than one such child, three thousand rupees.

(") If the gross total income of the assessee includes earn- ed income chargeable under any head, the deduction under sub- section (1) shall, to the extent possible, be made in computing such earned income and, as to the balance, If any, in computing any other income; and if there is no earned income, the deduction shall be made in computing any other income under any head.

80G. (2) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, an amount equal to fifty per cent, of the aggregate of the sums specified in sub-section (2).

(2) The sums referred to in sub-section (1) shall be the

Deduc- tion In respect ot donations to certain funds, charitable institu- tions, etc. following, namely:—

(a) any sums paid by the assessee in the previous year as donations to—

^i) the National Defence Fund set up by the Central Government; or

(ii) the Jawaharlal Nehru Memorial Fund refer- red to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th day of August, 1964; or

(iii) the Prime Minister's Drought Relief Fund; or

(iv) any other fund or any Institution to which this section applies; or

(u) the Government or any local authority, to be uti- lised for any charitable purpose;

(b) any sums paid by the asse&see in the previous year as donations for the renovation or repair of any such tem- ple, mosque, gurdwira, church or other place aa is notified by the Central Government in the Official Gazette to De ot historic, archaeological or artistic importance Or to be a place of public worship of renown throughout any State or States.

(3) No deduction shall be allowed under sub-section (1) 11 the aggregate of the sums referred to in sub-section (2) is lefts than two hundred and fifty rupees.

(4) The deduction under sub-section (1) shall not oe allowed in respect of such part of the aggregate of the sums referred to in sub-clauses (iv) and (v) of clause (a) ana in clause (b) of sub-section (2) as exceeds ten per rent, of the

gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), or two hundred thousand rupees, whichever is less;

Provided that where such aggregate includes any sums referred to in clause (b) of sub-section (2) and such aggregate exceeds the limit of two hundred thousand rupees specified in this sub-section, then such limit shall be raised to cover that portion of tho donation which is equal to the difference between such aggregate and the said limit, so, however, that the limit so raised shall not exceed ten per cent, of the assessee's gross total income as reduced as aforesaid, or five hundred thousand rupees, whichever is less.

(5) This section applies to donations to any institution or Lund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely:—

(i) where the institution or fund derives any income, such income would nut be liable to inclusion in its total income under th^ provisions of sections 11 and 12 or clause (22) of section 10;

'

(ii) the instrument under which the institution or fund i3 constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the in- come or assets of the institution or fund for any purpose other than a charitable purpose;

(iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste;

(iv) the institution or fund maintains regular accounts of its receipts and expenditure; and

31 of i860.

1 of 1956.

(v) the Institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860, or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956, or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law or is an insti- tution financed wholly or In part by the Government or a local authority.

Explanation 1.—An institution or fund established for the benefit of Scheduled Castes, backward classes, Scheduled Tribes or of women and children shall not be deemed to be an institution or fund expressed to be for the benefit of a religious community or caste within the meaning of clause liii) of sub-section (5).

Explanation 2.—For the removal of doubts, it is hereby de- clared that a deduction to which the assessee is entitled in res- pect of any donation made to an institution or fund to which sub- section (5) applies shall not be affected merely by reason of the fact that subsequent to the donation any pait of the income of the institution or fund has become chargeable to tax due to non- compliance with any of the provisions of section 11.

Explanation 3.—In this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature

(6) If the gross total income of the assessee includes earned income chargeable under any head, the deduction under sub- section (1) shall, to the extent possible, be made in computing such earned income and, as to the balance, if any, in computing any other income; and if there is no earned income, the deduc- tion shall be made in computing any other income under any head.

C.—Deductions in respect of certain incomes

Deduc- tion In case of new Industrial under- takings employing displaced persona, etc. 80H. (1) Where the gross total income of any assessee inclu- des any profits and gains derived from any industrial undertak- ing to which this section applies, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such profits and gains of an amount equal to fifty per cent, thereof in computing the total income of the assessee, so, however, that the amount of the deduction under this section shall not. in any case, exceed one hundred thousand rupees.

(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:—

'(i) it is not formed by the splitting up, or reconstruction, of a business already in existence;

(ii) it is not formed by the transfer to a new business of a building, machinery or plant previously used for nnv purpose;

nh) it has begun or begins to manufacture or produce articles in any part of India at any time within a period of three years next following the 1st day of April, 1967;

(iv) it employs, on every working day throughout the previous year, fifty or more workers in a manufacturing process (whether carried on with or without the aid of power); and

(v) it employs displaced persons or repatriates or members of the families of displaced persons or repatriates (all such employees being, hereinafter, referred to as rehabi- litated employees) and the daily average number of rehabi- litated employees, as certified by the prescribed authority, is not less than sixty per cent, of the daily average number of all the persons employed in the undertaking, throughout the previous year:

Provided that, in computing the daily average number of rehabilitated employees for the purposes of this clause, any such employee who had, at the time of his first employ- ment in the undertaking, completed the age of 40 years shall not be taken into account.

Explanation 1.—"Member of the family", in relation to any person who is a displaced person or repatriate, means any member of thp family of such person if such member was, before his employment in the undertaking, dependent on such person.

Explanation 2.—"Daily average number", in relation to rehabilitated employees or, as the case may be, all the per- sons employed in the undertaking, shall be taken to be the number arrived at by dividing the aggregate of the number of rehabilitated employees or, as the case may be, the total number of persons employed in the undertaking on each working day of a month by the total number of working days in that month.

(3) The provisions of this section shall, in relation to an industrial undertaking, apply to the assessment for the assess- ment year relevant to the previous year in which the under- taking begins to manufacture or produce articles, and the nine assessment years Immediately succeeding.

Deduc- tion in respect of profits and gains from priority industries in the case of certain companies 801. (i) In the case of a company to which this section applies, w h e re the gross total income includes any profits a nd gains attributable to any priority industry, there shall be al- lowed, in accordance with and subject to t he provisions of this section, a deduction from such profits and gains of an amount equal to eight per cent, thereof, in computing t he total Income of the company

(2) This : > ction applies to a domestic company, save In a

case where si'.-h company is a company which is referred to in section 108 and has a gross total income of fifty thousand rupees or less.

(3) Where a company to which this section applies is entitled also to the deduction under section 80H, t he deduction under sub-section (1) of this section shall be allowed with reference to the amount of t he profits and gains attributable to the priority industry or industries as reduced by the deduc- tion und'^r section 80H in relation to such profits and gains.

80J. (1) Where t he gross total income of an assessee in- cludes any profits and gains derived from an industrial under- taking or a ship or the business of a hotel, to which tKis section 1 applies, there shall, in accordance with and subject to the p r o' visions of this section, be allowed, in computing the total in- come of the assessee, a deduction from such profits and gains Of—

' --,..— ,t • fpm-w

Deduc- tion in respect of profits and gains from newly establish- ed Indus- trial under- taking! or ships or hotel busi- ness In certain cases.

(i) an amount equal to such profits and gains as re- duced by the aggregate of the deductions, if any, admissi- ble to the assessee under section 80H and section 801, or

(n) the amount specified in sub-section (2),

whichever is less, so, however, that w h e re the amount referred to in clause (ii) is equal to t he amount referred to in clause ( 0, t he amount to be deducted under this section shall be the amount referred to in clause (ii).

(2) The amount referred to in clause (ii) of sub-section

(1) shall be—

(A) in respect of the assessment year relevant to the previous year in which the undertaking begins to manu- facture or produce articles or to operate the cold storage plant or plants or t he ship is first brought into use or t he business of the hotel starts functioning (such assessment year beinf hereafter, in this section, referred to as the initial assessment y e a r ), the amount calculated at the rate of six per cent, per annum on the capital employed in t he

undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner:

(B) in respect of each of the four assessment years im- mediately succeeding the initial assessment year, the aggre- gate of the following amounts, namely:—

(i) the amount calculated at the rate of six per cent, per annum on the capital employed in the under- taking or ship or business of the hotel, as the case may be, computed in the prescribed manner: and

(ii) the amount of the deficiency, if any, in relation to the assessment year, referred to and computed in accordance with the Explanation to this sub-section;

(C) In respect of each of the assessment years imme- diately succeeding the last one of the assessment years referred to in clause (B), not being an assessment year subsequent to the seventh assessment year as reckoned from the end of the Initial assessment year, the amount of the deficiency, if any, In relation to such assessment year, referred to and computed in accordance with the Explana- tion to this sub-section.

Explanation.—The amount of the deficiency in rela- tion to an assessment year (not being the Initial assess- ment year) shall be taken to be the amount, if any, by which the sum specified in clause (a) falls short of the sum specified in clause (b), such sums being—

(a) the aggregate of the amounts of the profits and gains derived from the industrial undertaking or ship or business of the hotel, as the case may be, included in the total Income (as computed without applying the provisions of section 64 and before making any deduction under Chapter VTA or section 280O) of the previous years relevant to each of the assessment years (not being an assessment year prior to the initial assessment year or an assessment year prior to the assessment year commencing on the 1st day of April, 1967) immediately preceding the assessment year aforesaid; and

(b) the aggregate of the amounts calculated at the rate of six per cent, per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner In respect of the previous years relevant to

each of the assessment years (not being an assessment year prior to the initial assessment year or an assess- ment year prior to the assessment year commencing on the 1st day of April, 19t>7 or an assessment year subse- quent to the fourth assessment year as reckoned from the end of the initial assessment year) immediately preceding the assessment year aforesaid.

(3) In the case of an assessee being a co-operative society,—

(i) the provisions of sub-section (2) shall have effect as if in clause (B) thereof, for the words "four assessment years", the words "six assessment years" had been substi- tuted; and

(ii) the provisions of the Explanation to sul>section (2) shall have effect as if in clause (b) for the words "fourth assessment year", the words "sixth assessment year" had been substituted.

(4) This section applies to any Industrial undertaking whi"h fulfils all the following conditions, namely:—

(i) it is not formed by the splitting up, or the recons- truction, of a business already in existence;

({{) it Is not formed by the transfer to a new business of a building, machinery or plant previously used for any purpose;

(Hi) It manufactures or produces articles, or operates one or more cold storage plant or plants, In any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of twenty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial under- taking;

(fo) in a case where the industrial undertaking manu- factures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers In a manufacturing process carried on without the aid of power:

Provided that the condition in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by

the assessee of the business ot any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section.

(5) This section applies to any ship, where all the follow- ing conditions are fulfilled, namely: —

(i) it is owned by an Indian company and is wholly used for the purposes of the business carried on by it;

(it) it was not, previous to the date of its acquisition by the Indian company, owned and used in Indian terri- torial waters by a person resident in India; and

(Hi) it is brought into use by the Indian company at any time within a period of twenty-three years next fol- lowing the 1st day of April, 1948.

(6) This section applies to the business of any hotel, where all the following conditions are fulfilled, namely: —

(a) the business of the hotel starts functioning on or after the 1st day of April, 1961, and is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose;

(b) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees;

(c) the hotel has such number and types of guest rooms and provides such amenities as may be prescribed, having regard to the population and the tourist importance of the place in which the hotel is located; and

(d) the hotel is for the time being approved for the purposes of this sub-section by the Central Government.

Eocplanation.—Where—

(a) in the case of an industrial undertaking, any build- ing, machinery or plant, or any part thereof previously used for any purpose, or

(b) in the case of the business of a hotel, any build- ing, or any part thereof, previously used as a hotel, or any machinery or plant, or any part thereof, previously used for any purpose.

is, in either case, transferred to a new business, and the total value of the building, machinery or plant or part so transferred does not exceed twenty per cent, of the total value of the build- ing, machinery or plant used in the business, then, for the purposes of clause (ii) of sub-section (4) and clause (a) of sub-section (6), the condition specified therein shall be deemed to have been complied with and the total value of the build- ing, machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking or the business of the hotel.

(7) The Central Government may, after making such in- quiry as it may think fit, direct, by notification In the Official Gazette, that the exemption conferred by this section shall not apply to any class of industrial undertakings with effect from such date as it may specify in the notification.

Deduc- tion In respect of dividend! attribut- able to profit* and gains from new industrial under- takings 01 ships or hotel business 80K. Where the gross total income of an assessee, being the holder of any share or shares in a company, Includes any income by way of dividends paid or deemed to have been paid to him by the company in respect of such share or shares, there shall, subject to any rules that may be made by the Board in this behalf, be allowed, in computing his total Income, a deduction from such income by way of dividends of an amount equal to such part thereof as is attributable to the profits and gains derived by the company from an industrial undertaking or ship or the business of a hotel, on which no tax is payable by the company under this Act for any assess- ment year commencing prior to the 1st day of April, 1968, or in respect of which the company is entitled to a deduction under section 80J.

Deduc- tion in respect of dividends in certain cases.

80L. (1) Where, In the case of any assessee, che amount of his income by way of dividends included in his gross total Income does not exceed five hundred rupees, there shall, in accordance with and subject to the provisions of this section, be deducted, in computing the total income of the assessee, the whole of the Income by way of dividends from an Indian company or Indian companies included In the gross total in- come.

(2) In a case where the assessee is entitled also to the deduction under section 80K, in relation to the whole or any part of the income by way of dividends referred to in sub- section (I), the deduction under sub-section (1) shall be al- lowed in respect of such Income as reduced by the deduction under section 80K.

Deduc- tion in rr^pect of certain ir.iet- corporate dividends.

80M. (1) Where the gross total income of an assessee being a company includes any income by way of dividends received by it from a domestic company, there shall, in accor- dance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduc- tion from such inrome by way of dividends of an amount equal to—

(") where the asscssce is a foteign company—

CO in respect of such income by way of dividends received by it from an Indian company which 19 not such a company as i* referred to in section :o8 and which is mainly en- gaged in a priority industry

80 per cent, of such income;

60 per cent, of ouch income;

{it) in respect of such income by way of dividends other than the dividend* refer- red to in sub-clause (0 . ..

(" where the asscsSee is a domestic company—

in respect of any such income by way of J'V dends

60 per cent, of such income.

Explanation.—For the purposes of this section, a company shall be deemed to be mainly engaged in a priority industry if the income attributable to any such industry or industries included in its gross total income for the previous year is not less than fifty-one per cent, of such gross total income.

(2) Where a company to which this section applies is entitl- ed also to the deduction under section 80K or section 80L, the deduction under sub-section (1) of this section shall be allowed in respect of income by way of dividends referred to therein as reduced by any such income in relation to which the com- pany is entitled to a deduction under section 80K or section 80L.

80N. Where shares in a foreign company have been allot- ted to an assessee being an Indian company in consideration of any patent, invention, model, design, secret formula or pro- cess, or similar property right, or information concerning in- dustrial, com™"rcial or scientific knowledge, experience or skill Deduction in respect ol divi- dends received from certain foreign companies

made available or provided or agreed to be made available OJ provided to the foreign company by the assessee, or in consi- deration ox technical services rendered or agreed to be ren- dered to the foreign company by the assessee, under an agree- ment approved by the Central Government in this behalf before the 1st day of October of the relevant assessment year, and any income by way of dividend on such shares is included in the gross total income of the assessee, there shall be allowed a deduction from such Income of an amount equal to sixty per cent, thereof, in computing the total income of the assessee.

DeduC' lion in respect of royalties, etc., receiv- ed from certain foreipn rompnnles 80O. Where the gross total income of an assessee being an Indian company includes any income by way of royalty, com- mission, fees or any similar payment received by it from a foreign company in consideration for the use of any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commer- cial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to the foreign company by the assessee, or in consideration of techni- cal services rendered or agreed to be rendered to the foreign company by the assessee, under an agreement approved by the Central Government in this behalf before the 1st day of Octo- Der of the relevant assessment year, triers shall be allowed a deduction from such income of an amount equal to sixty per cent, thereof, in computing the total Income of the assessee.

Deduc- tion In respect of income of co-opera- tive .societies 80P. (i) Where, in the case of an assessee being a co-opera- tive society, the gross total income includes any income refer- red to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.

(2) The sums referred to in sub-section (2) shall be the following, namely: —

(a) in the case of a co-operative society engaged in—

(i) carrying on the business of banking or providing credit facilities to its members, or

(ii) a cottage industry, or

(Hi) the marketing of the agricultural produce of its members, or

(iv) the purchase of agricultural implements, seeds, live-stock or other article¹; intended for agriculture for the purpose of supplying them I--, its members, or

(v) the processing, without the aid of power, of th" agricultural produce of its members,

the whole of the amount of profits and gains of business attributable to any one or more of such activities;

(b) in the case of a co-operative society, being a pri- mary society engaged in supplying milk raised by its mem- bers to a federal milk co-operative society, the whole of the amount of profits and gains of such business;

(c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) [either independently of, or in addition to, all or any of the activities so specified], so much of its profits and gains attributable to such activities as does not exceed fifteen thousand rupees;

(d) in respect of any income by way of interest or dividends derived by the co-operative society from Its in- vestments with any other co-operative society, the whole of such Income;

(c) in respect of any income derived by the co-opera- tive society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of com- modities, the whole of such income;

(/) in the case of a co-operative society, not being B housing society or an urban consumers' society or a society carrying on transport business or a society engaged In the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any Income by way of interest on securities chargeable under section 18 or any income from house property chargeable under section 22.

Explanation.—For the purposes of this section, an "urban consumers' co-operative society" means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment.

(3) In a case where the asseasee is entitled also to the aeduction under section 80H or section 80J, the deduction under sub-section (1) of this section, In relation to the sums

specified in clause (a) or clause (b) or clause (c) 01 sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the deductions under section 80H and section 80J-

(4) Nothing contained in this section shall apply to a co- operative society carrying on insurance business in respect of the profits and gains of that business computed in accordance with section 44.

80Q. Where the gross total income of an assessee who is a member of a co-operative society includes any income by way of dividends received by him from the society, the whole of such income shall be allowed as a deduction in computing his total income.

Deduc- tion In respect of dividends from co- operative society

HOR Where the grosb total income of an individual who i*>

Deduc- tion in respect of remunera- tion from certain foreign sources in the case of professors teachers.

et<-

a citizen of India includes any remuneration received by him outside India from any University or other educational insti- tution established outside India or such other association or body established outside India as may be notified in this behalf by the Central Government in the Official Gazette, for any service rendered by him during his stay outside India in his capacity as a professor, teacher or research worker in such University, institution, association or body, there shall be allowed a deduction from such remuneration of an amount equal to fifty per cent, thereof, in computing the total income of the individual:

Provided that where the Individual renders continuous service outside India in such University, institution, association or body for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remunera- tion for such service relating to any period after the expiry of the thirty-six monthi aforecaid.

Deu no- tion in re.spei't of compen- sation lor termina- tion of managing agency,

etc, in ther'ase of

JstGsseea other than com- paniea.

80S. Where the gross total income of an assessee not being a company includes any income by way of compensation or other payment which is chargeable as the profits and gains of business or profession in accordance with the provisions of clause (ii) oL section 23, there shall be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to twenty-five per cent, thereof, so, how- ever, that the amount of the deduction under this section shall not, in any case, exceed one hundred thousand rupees.

Deduc- tion in re.'p.rl -A long-term capital gains in the ensu

SOT. Where the gross total income of an assessee not being a company includes any income chargeable under the head "Capital gains" relating to capital assets other than short-term capital assets (such income being, hereinafter, referred to as long-term capital gains), there shall be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to,

asaeasees Other than ronipan!t;5.

(a) in a case where the gross total income does not exceed ten thousand rupees or where the long-term capital gains do not exceed five thousand rupees, the whole of such long-term capital gains;

(b) in any other case, five thousand rupees as increas- ed by a sum equal to—

(i) forty per cent, of the amount by which the long-term capital gains relating to capital assets, being buildings or lands, or any rights in buildings or lands, exceed five thousand rupees;

(ii) sixty per cent, of the amount by which the long-term capital gains relating to any other capital assets exceed five thousand rupees:

Provided that in a case where the long-term capital gains relate to buildings or lands, or any rights in buildings or lands, as well as to other assets, the sum referred to in sub-clause (ii) of clause (b) shall be taken to be—

(A) where the amount of the long-term capital gains relating to the capital assets mentioned in sub- clause (0 is less than five thousand rupees, sixty per cent, of the amount by which the long-term capital gains relating to any other capital assets exceed the difference between five thousand rupees and the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i); and

(B) where the amount of the long-term capital gaina relating to the capital assets mentioned in sub-clause (i) is equal to or more than five thousand rupees, sixty per cent, of the long-term capital gains relating to any other capital assets.'.

14. Omit sections 81, 82, 83, 84, 85, 85A, 85B and 85C.

15. Chapter VIIL—

(a) For "REBATES AND RELIEIS", substitute "RELIEF IN RESPECT OF INCOME-TAX";

(b) Omit "A.—Rebate of income-tax", sections 87, 87A and 88, and "B.—Relief for income-tax".

16. Section 104.—In the Explanation to sub-section (4), for "in- cluded in its total income for the relevant previous year", substitute "included in its gross total income for the relevant previous year".

17. Section 109.—

(a) For "For tho purposes o[ sections 104, 105 and 107A", substitute "For the purposes of sections 104, 105 and 107A and this section";

(b) in clause (i),—

(i) for "total income of a company", substitute "gross total income of a company";

(H) for pub-clause (c), substitute—

"(c) any sum with reference to which a deduction is allowable to the company under the provisions of section 80G;";

(Hi) for sub-clause (d), substitute—

'(d) losses under the head "Capital gains" relating to capital assets other tha'n short-term capital assets;';

(iv) in sub-clause (h), for "included in the total income'*, substitute "included in the gross total income";

(c) in clause (ii), for "total income", substitute "gross t^ial income";

(d) in clause {Ha), for "total income", in both places, substi- tute "gross total income";

(e) in clause (Hi), for "total income", in all places, substitute "gross total income";

(f) after clause (Hi), insert—

'(iv) "gross total income" means the total income com- puted in accordance with the provisions of this Act before making any deduction under Chapter VIA.'.

18. Chapter XII.—

(a) Omit section 112;

(b) in section 112Ar—

(i) in clause (b), omit "plus";

(ii) omit clause (c);

(Hi) in Explanation 2, for "sections 112, 114 and 193".

substitute "section 193";

(c) omit section 114.

19. Section 197.—For sub-section (3), substitute—

"(3) Where the principal officer of a compa'ny considers that, by reason of the provisions of section 80K, the whole or any portion of the dividend referred to in section 194 will be deduc- tible in computing the total income of the recipient, he may. before paying the dividend to the shareholder or issuing any cheque or warrant in respect thereof, make an application to the Income-tax Officer to determine the appropriate proportion of the dividend to be deducted under the provisions of section 80K; and on such determination by the Income-tax Officer no tax shall be deducted on such proportionate amount.".

20. Section 236.—In Explanation 2,—

(a) for "the total income assessed for that year", substitute 'the total income (as computed before making any deduction under Chapter VIA) assessed for that year";

(b) in clause (f), for "the said total income", substitute "its total income'';

(c) for clause (in), substitute—

"(ui) an> sum with reference to which a deduction is allowable to the company under the provisions of section 80G; and";

(d) in clause (a), for "total income", substitute "total income (as computed before making any deduction under Chapter VIA)".

21. Section 280B.—In clause (1),—

(a) in sub-clause (b)(v), omit "and";

(b) after sub-clause (b) (vi), insert—

"{vii) any income arising outside India in a country the laws of which prohibit or restrict the remittance of money to India;".

22. Section 280X.—In the proviso to sub-section (J),—

(i) in clause (a), for "seventy years", substitute "sixty years";

(ti) in clause (b). for 'rupees", substitute "rupees; or";

(ni) aEtt.T clause ("), insert—

"(c) the annuity deposit required to be made does not exceed one hundred rupees; or

(d) the deficiency does not exceed an amount equal to ten per cent, of the annuity deposit required to be made or one hundred rupees, whichever is higher.".

23. Section 295.—In clause (e) of sub-section (2), for "under clause (1) of sub-section (3) of section 87 or clause (i) of sub-section (4) of section 80A, as the case may be", substitute "under clause (i) of sub- section (4) of section 80C".

24. Fourth Schedule.—In rule 7 of Part A, for "section 80A or as the case may be, to a deduction from the amount of income-tax with which he is chargeable on his total income of an amount of income-tax determined in accordance with section 87", substitute "section 80C".

25. Fifth Schedule.—For "[See sections 33(7) (iii) (c), 80E and 85A]", substitute "[See sections 33(I)(b)(B)(i) and 80B(7)J".

STATEMENT OF OBJECTS AND REASONS

The object of this Bill is to give effect to the financial proposals of the Central Government for the financial year 1967-68 and to provide for certain connected matters. Opportunity has been taken to simplify and rationalise the provisions of the Income-tax Act and other enactment^ with respect to direct taxes. The notes on clauses explain the various provisions contained in the Bill.

NEW DELHI; MORARJI DESAI.

The 25th May, 1967.

PRESIDENT'S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THE CONSTITUTION OF INDIA

[Copy of letter No. F.4(2)-B/67, dated the 25th May, 1967 from Shri Morarji Desai, Deputy Prime Minister and Minister of Finance to the Secretary, Lok Sabha.]

The President having been informed of the subject matter of the proposed Bill, recommends under article 117 (1) and (3) read with article 274(1) of the Constitution of India, the introduction of the Finance (No. 2) Bill, 1967 to the Lok Sabha and also recommends to the Lok Sabha the consideration of the Bill.

2. The Bill will be introduced in the Lok Sabha immediately after the presentation of the Budget on the 25th May, 1967.

Notes on clauses

Clause 2 prescribes the rates at which income-tax (including sur- charges, where applicable) is to be charged on income liable to tax for the current assessment year 1967-68. It also prescribes the rates at which income-tax is to be deducted at source during the current financial year on incomes liable to such deduction under the Income- tax Act, and the rates at which 'advance tax' is to be computed in relation to incomes on which such tax is to be paid during the current financial year.

Rates of income-tax for the assessment year 1967-68.— In respect of incomes of all categories of assessees (corporate as well as non-corporate) liable to tax for the current assessment year 1967- bci, the rates of income-tax in clause 2 read with Part I of the First Schedule to the Bill are the same as provided in the Finance Act, 19t)D, subject to certain modiiications. The main modification in the rates of income-tax in the Finance Act, 1966, in relation to the cur- rent assessment year 1967-68, is in respect of the rebates of income-tax granted with reference to exports. In consequence of the devaluation ot the rupee with efiect from the 6th June, 1966, the Bill provides that these rebates would be available only with reference to exports or sales to exporters made before the date of the devaluation, and not in relation to exports or sales to exporters made during the post- devaluation period.

The Finance Acts of earlier years, up to and inclusive of the Fin- ance Act of 1966, provided for the levy of tax on 'Salary' incomes at the rates prescribed by the Finance Act of the preceding assessment year. Such provision was made to secure that in cases where the assessee had only salary income and had paid income-tax thereon by deduction at source during the relevant financial year at the current rates of income-tax, no further demand of tax or a refund of tax might be necessitated on applying the higher or lower rates of tax prescribed by the Finance Act of the year in which such income fell due for assessment. The Bill provides for the levy of tax o'n the salary as well as non-salary income liable to tax for the assessment year 1967-68, at the same rates of tax.

Part II of the First Schedule prescribes the rates for deduction of tax at source during the financial year 1967-68 from interest on securities, other interest, dividends, fees or other remuneration for

professional services, brokerage and commission, etc. In the case of brokerage and commission payments to residents, the tax is to be deducted t*t source at the rate of 15 per cent. In respect of dividends paid to a foreign company by a closely-held Indian company mainly engaged in a priority industry, the rate of tax to be deducted at source is 14 per cent, of the dividend, and in respect of dividends paid to a foreign company by any other domestic company, the rate is 28 per cent. These rates represent the effective rates of tax, under the rate schedule in P a rt III of the First Schedule, on such inter- corporate dividends after allowance of the deduction under the new section 80M in Chapter VIA of the Income-tax Act, as sought to be replaced with effect from 1st April, 1968 by clause 33 of the Bill read with item 13 of the Third Schedule. In respect of all other payments, including payments to residents by way of interest other t h an interest on securities, or fees and other remuneration for professional services (which together with brokerage and commission payments, are pro- posed to be brought within the scope of the provisions fur deduction, of tax at source by section 194A proposed to be inserted in the Income-tax Act by clause 30 of the Bill), the rates for deduction of tax at source in the Bill are the same as in Part II of the First Schedule to the Finance- Act, 1966.

As a step towards rationalising our tax system, the principle fol- lowed in the Bill in regard to the rates of taxes is that any changes in the rates should apply prospectively on]y to current incomes which are liable to tax in the succeeding assessment year, and not retros- pectively to incomes which arose in the past year. Part III of the First Schedule prescribes the rates for deduction of tax at source from 'Salaries" and for the computation of 'advance tax' payable during the current financial year. These rates are basically the same as are applicable for the levy of tax on income liable to tax for the assess- ment year 1967-68, subject to the under-mentioned provisions for granting certain reliefs.

(a) A resident individual (whether unmarried or married) whose total income does not exceed Rs. 10,000 and who incurs any expenditure towards maintenance of one or more of his parents or grand-parents mainly dependent on him will be entitled to a fixed allowance of Rs. 400 for the year; tax relief will be calcu- lated on this amount at the rate of 5 per cent, applicable to the initial slab of income.

(b) At present, unearned Incomes (exclusive of interest on securities and dividends on units of the Unit Trust of India, in the case of individuals and Hindu undivided families) up to Rs. 15.000 do not bear the unearned income surcharge. The Bill

proposes to increase the limit up to which such unearned income: do not bear surcharge irom Kb. 15,000 to Rs. 30,000. Unearnec income in the slab of Rs. 30,001 to 50,000 and in the slab ovei Rs. 50,000 will continue to bear surcharge at the existing rale oJ 20 per cent, and 25 per cent., respectively, of the income-tax thereon.

(c) At prcbent, widely-held domestic companies whose total income does not exceed Rs. 25,000 are chargeable to tax at the concessional rate of 45 per cent, ol their total income as against 55 per cent, in the case of widely-held domestic companies whose total income exceeds Rs. 25,000. The Bill proposes to extend the concessional rate of 45 per cent, to such companies whose total income does not exceed Rs. 50,000.

Clause 3 prescribes the rates at which annuity deposits in respect of incomes liable to tax for the current assessment year 1967-G8 and also in relation to current incomes liable to tax for the succeeding assessment year 1968-69 will be required to bo made by individuals and Hindu undivided families, unregistered firms and associations of persons under the provisions of Chapter XXIIA o£ the Income-tax Act. These rates are Ihe same as those under the Finance Act, 1966.

Clause 4 seeks to make certain amendments to section 2 of the Income-tax Act.

Sub-clavse (a) seeks to inseit a new clause (1A) in sec- tion 2 of the Income-tax Act. The new clause defines the term 'amalgamation'. The proposed definition, is broadly 011 the lines of the existing definition of the term 'amalgamation' contained in the Explanation to section 33 (3) of the Income- tax Act, with certain modifications. The proposed definition makes it clear that the term 'amalgamation' means the merger of one or more companies with an existing company as well as the merger of two or more companies to form a new company. One of the conditions laid down in the existing definition, in the Explanation to section 33 (3) is that shareholders holding not less than nine-tenths in value of the shares in the amalga- mating company immediately before the amalgamation should be- come shareholders of the amalgamated company by virtue of the amalgamation. This condition had the effect of excluding from the scope of the definition a case of amalgamation where a company A holds more than 10 per cent, of the shares in ano- ther company B, and company B amalgamates with company A.. The proposed new definition, makes it clear that in compu- ting the 9/10ths in value of the shares for the purposes of this

provision, shares held immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsi- diary will be excluded. Consequently, the specific provision in the existing definition in the Explanation to section 33(3) that amalgamation would include the merger of a subsidiary com- pany in the holding company where the whole of the share capital of the subsidiary company is held by the holding com- pany or its nominee, which has become superfluous, has been omitted in the new definition.

Sub-clause (b) seeks to insert a new clause (37A) in sec- tion 2 of the Income-tax Act. Clause (37A) delines the expres- sion 'rate or rates in force' and 'rates in force' in relation to an assessment year or financial year for the purposes of calcu- lating or computing income-tax to be charged, or deducted at source or paid as 'advance tax', under the different provisions of the Income-tax Act, lo mean the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year.

•Sub-clause (c) seeks to amend clause (42A) of section 2 of the Income-tax Act. The amendment proposed to be made by sub-clause (c)(i) is consequential to the amendment of section 49 by clause 20 of the Bill.

Sub-clause (c)(u) seeks to insert a new sub-clause ^c) in clause (i'lA) of section 2. The ellect oi this new sub-clause will be that in determining the period ior which the assessee has held a capital asset being a share or shares in an Indian company which became his property, in a scheme of amalgama- tion, the period for which the share or shares in the amalgama- ting company were held by him will also be included.

Clause 5 seeks to amend clause (2r<) of section 10 of the Income- tax Act. The eilect of this amendment will be that the exemption irom tax in inspect of income derived from a business of live-stock breeding or poultry or dairy farming, which was hitherto available in relation to the assessment years 1965-66, 19Ct)-67 and 1967-68, will now continue on an indefinite basis.

Clause 6 seeks to amend sub-section (2) of section 23 of the income-tax Act. The effect of this amendment will be that the annual value of a property which is in the occupation of the owner for the purposes of his own residence will be limited to ten per cent, of the assessee's other income (i.e., all his Income other than the income attributable to such self-occupied property) as compu- ted before allowing the deductions under Chapter VIA of the In- come-tax Act and the deduction for annuity deposit.

Clause 7 seeks to amend section 29 of the Income-tax Act. This amendment is consequential to the proposed insertion of new sec- tion 43 A in the Income-tax Act by clause 17 of the Bill.

Clause 8 sp^ks to amend clause (2) of the Explanation to clause (iii) of <3ub-™"iion (\) of section 32 of the Income-tax Act. The effect of thi" amendment will be that the transfer in a scheme of amal garni tin • of any capital asset by the amalgamating company to the aimljtimated company which is •an Indian eomnqnv will not be regarded as a sale for the mi-pose of spction 32(l)(iii') rela- ting to the grant of a 'terminal allowance', or the provisions of sub- section (2) or subjection (3) of section 41 of the Income-tax Act relating to the l ew of a 'balancing charge*.

Clause 9 seeks to substitute sub-section (3) of section 33 of the Income-tax Art bv a new sub-section The substituted sub-sertlon U substantially the same as the existing sub-section, except for a *ew verbal and drafting changes which are consequential to the insertion of a new definition of 'amalgamation' in section 2 of thfc Income-tax Act bv clause 4(a1 of the Bill

Clause 10 seeks to substitute sub-sec+ion (5) of section 33A of the Tncomo-tax Act by a new sub-section. The substituted sub- section makes only a few verbal a*H d^aftinc changes in the exis- ting nrovisions nf sub-spction (f>), which are consequential to the insertion of a new definition of 'amalgamation' in section 2 of the Income-tax Act bv clause A(s~\ of thr" Pill

Clause 11 seeks to insert a new section 33B in the Income-tax Act The effect of the proposed new section will be that where the business of any industrial undertaking (which manufactures or pro- duces articles) carried on by the assesses in India is discontinued in any previous vear because of evtrrHvp damige to or destruc- tion of, anv building, machinery p⁷nnt or furniture owned by the as^essee and used for the purposes of such business, as a direct re- sult of anv of the specified rjvrumstances, and within a period of three veers from the end of that previous year the business is re- established, reconstructed or revived by the assessee, he shall be- come eligible for a deduction by wav of 'rehabilitation allow- ance' of an amount equal to sixty per cent, of the amount of the 'terminal allowance' due to him urrW section 32(l)0ii) of the Tncome-tax A t, in respect of the building, machinery, plant or fur- niture which is so damaged or destroyed. The deduction will be sliowpd in computing his profits and pains of the previous year In

which the business is re-established, reconstructed or revived. The specified circumstances referred to above are—

(i) flood, typhoon, hurricane, cyclone, earth-quake or other convulsion of nature; or

(ii) riot or civil disturbance; or (Hi) accidents] fire or explosion; or (iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war).

Clause 12 seeks to substitute the Explanation to clause (i) of sub-section (2) of section 34 by a new Explanation. This amend- ment is consequential to the amendment proposed to be made in section 47 of the Income-tax Act by clause 19 of the Bill. The effect of this amendment will be that where a capital asset is trans- ferred by a company to another company (which is an Indian com- pany) in a scheme of amalgamation, then, in determining whether the aggregate of all deductions in respect of depreciation exceeds the actual cost of the capital asset to the assessee, depreciation allowed in respect of the transferred asset to the amalgamating company will also be taken into account.

Clause 13 seeks to insert a new sub-section (5) in section 35 of the Income-tax Act. The effect of this amendment will be that where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the amalgamated company (which is an Indian company) any asset representing expenditure of a capital nature on scientific research, the amalgamating company will not be allowed any deduction under section 35(2)(ii) or 35(2)(iii) of the Income-tax Act on account of any deficiency arising on the transfer. The provisions of section 35 will, however, continue to apply to the amalgamated company as they would have applied to the amalga- mating company if the latter had not so sold or otherwise transferred the asset.

Clause U seeks to insert a new sub-section (6) in section 35A of the Income-tax Act. The effect of this amendment will be that where, in a scheme of amalgamation, patent rights or copyrights referred to in section 35A are sold or otherwise transferred by the amalgamating company to the amalgamated company which is an Indian company, the provisions of section 35A (3) relating to the grant of 'terminal allowance' and the provisions of section 35A(4) relating to the 'balancing charge' will not apply to the amalgamating company. The provisions of the said section 35A will, however, continue to apply to the amalgamated company as they would have applied to the amalgamating company if the latter had not sold or otherwise transferred the rights.

Clause lb seeks to amend clause (ix) of sub-section (1) of section 36 of the Income-tax Act. This amendment is consequential to the amendment proposed to be made in section 35 of the Income-tax Act by clause 13 of the Bill

Clause 16 seeks to amend section 43 of the Income-tax Act.

Sub-clause (i) seeks to insert a new Explanation 7 in clause (1) of section 43. The effect of this Explanation will be that where, in a scheme of amalgamation, any capital asset is trans- ferred by the amalgamating company to the amalgamated com- pany which is an Indian company, the 'actual cost' of the transfeired capital asset to the amalgamated company will be taken at the same amount as would have been taken in the case of the amalgamating company had it continued to hold the capital asset for the purposes of its business.

Sub-elause (ii) seeks to insert a new Explanation 2A in clause (fi) of section 43. The effect of this Explanation will be that where, in a scheme of amalgamation, any capital asset is trans- ferred by the amalgamating company to the amalgamated company which is an Indian company, the 'written down value' of the transferred capita] asset to the amalgamated company will be taken at the same amount as would have been taken in the case of the amalgamating company had It continued to hold the asset for the purposes of its own business.

Clause 17 seeks to insert a new section 43A in the Income-tax Act. The proposed section 43A, in substance secures that where an assessee had acquired any capital assert; from a country outside India for the purposes of his business or profession on deferred payment terms or against a foreign loan, beforo the date of devaluation of the rupee, the additional rupee liabilitv incurred by him in meeting the instalments of the cost of the asset or of the foreign loan, as the case may be, falling due for payment after the date of devaluation, will be allowed to be added to the original actual cost of the asset for the purpose of calculating the allowance on account of depre- ciation in computing the profits for the assessment year 1967-68 and subsequent assessment years. Similar increase in the original actual cost will be allowed to be made in respect of capital assets acquired by the assessee to be used in scientific research related to the class of business carried on by him or patent rights or copyrights acquired from abroad or any capital asset acquired by a company for the purpose of promoting family planning amongst its employees. Further, in computing the capital gains arising to the assessee on the sale or transfer of a capital asset acquired by him from abroad

on deferred payment terms or against a foreign loan, the additional rupee liability incurred by him in repaying the instalments of the cost or the foreign loan, as the case may be, after the date of devaluation of the rupee, will be added to the original actual cost of the asset. The proposed section also scnirrs that where there is a decrease* in the rupee liability nf the asso r.ec in respect of assets acquired by him from abroad, due to a change In the exchange value of the rupee, the original actual coat of tho asset will be corres- pondingly reduced.

The additional rupee liability incurred on imported capital assets or, as the case may be, any decrease in such liability, in the circumstances stated in tho earlier paragraph will not. how- ever, be taken into account in computing the actual cost of the asset for the purpose of deduction on account of development rebate.

Clause 18 seeks to amend section 44 of the Tncome-tax Act. This amendment is consequential to the proposed insertion of new section 43A in the Tncome-tax Act by clause 17 of the Bill.

Clavsc 19 seeks to amend section 47 of the Tncomp-tax Act by the insertion of two new clauses, namely, clause (vi) and clause fvii). The effect of the new clause (vi) will be that no capital gain or loss will be computed with reference to the transfer of a capital asset, in a scheme of amalgamation, by the amalgamating company to the amalgamated companv which is an Indian company. Clause (vll) similarly seeks to secure that no capital gain or loss will be com- puted with reference to the transfer, by a shareholder, in a scheme of amalgamation, of a share or shares held by him in the amalga- mating company, in consideration of the allotment to him of any share or shares in the amalgamated company which is an Indian company.

Clause 20 seeks to amend section 40 of the Tncome-tax Act. These amendments are consequential to the amendment proposed to be made in section 47 of the Income-tax Act by clause 19 of the Bill The amendment made by sub-clause (i")fa) seeks to secure that where, in a scheme of amalgamation, anv capital asset is trans- ferred bv the amalgamating company to the amalgamated company which is an Tndian companv, the cost nf acquisition to the amalga- mated company of the assets so transferred shall be deemed to be the cost for which these assets were acquired by the amalgamating company.

The amendment made by sub-clause (i) (b) is nf a consequential nature.

The amendment made by sub-clause fill seeks to secure that where the capital asset, being a share or shares in an amalgamated company which is an Tndian company, became the propertv of the

assessee in consideration of the transfer oi a share or shares held by him in the amalgamating company, in a scheme of amalgamation, the cost oi acquisition to him oi the shares in the amalgamated company shall be taken to be the cost of acquisition to him of the share or shares in the amalgamating company.

Clause 21 seeks to amend section 55 of the Income-tax Act. These amendments aie consequential to the amendments proposed to be made in section 49 by clause 20 of the Bill.

Clause 22 seeks to amend section 72 of the Income-tax Act.

Sub-clause {1) seeks to add a proviso to sub-section (1) of section 72. This enables the carry-forward and set off of any loss sustained in the business of an industrial undertaking carried on by the assessee in, India, which after its discontinuance in the circumstances speciiied in section 33B (proposed to be inserted m the Income-tax Act by clause 11 of the Bill) is re- established, reconstructed or revived by the assessee within the three-year period referred to in that section. Such loss will be earned forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and set oil against the profits and gains of the assessee from that business or any other business carried on by him in that yeaj and so on lor a period of seven years next following, subject to the condition that the re-established, reconstructed or revived business continues to be carried on by the assessee.

Sub-clause (n) seeks to amend sub-section (3) of section 72. This amendment is consequential to the amendment proposed to be made by sub-clause (i) above.

Clause 23 seeks to intioduce, with effect from 1st April, 1966, a new section 80F in Chapter VIA of the Income-tax Act. The effect of the proposed section 80F will be that in the case of a resident In- dividual, who is a citizen of India, and who receives remuneration from any foreign university or other educational institution or such other foreign association or body as may be notified in thi,", behalf by the Central Government in the Official Gazette, for rendering service outside India as a professor, teacher or research worker In such university, institution, association or body, a deduction will be allowed in an amount equal to fifty per cent, of such remuneration in computing his total income. However, if the individual renders continuous service outside India in such university, institution, association or body for a period exceeding 36 months, he will not be entitled to the above-mentioned deduction in respect of his foreign remuneration for such service relating to any period after the expiry of the aforesaid 36 months.

Clause 24 seeks to amend section 84 of the Income-tax Act.

Sub-clause (a) seeks to substitute, with retrospective effect, sub-section (1) of that section. The effect of the substituted sub-section will be that the 'tax holiday' under section 84 of the Income-tax Act, in the cese of newly established industrial undertakings and hotels (owned by companies), on the profits and gains up to six per cent per annum of the average capital employed m the undertaking or the hotel, will be extended to profits and gams derived by an Indian company from the plying of ships.

•Sub-clause (b)(x) seeks to substitute, retrospectively, clause (in) of sub-section (2) of section 84 of the Income-tax Act. The effect of the substituted provision will be that an industrial undertaking operating a cold storage plant m India will also be entitled to the 'tax holiday' under section 84

The amendment pioposed to be made by sub-clause (b)(ii) is consequential to the amendment proposed to be made by sub-clause (b)(i).

Sub-clause (b)(iit) seeks to insert a proviso to sub-section (2) of section 84 The effect of the proviso will be that an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in the proposed section 33B, in the circumstances and within the period specified in that section, will not be disentitled to the 'tax holiday' under section 84 by reason merely of the fact that such undertaking is formed by the splitting up, or reconstruction of a business, which was formerly in existence.

Sub-clause (f) seeks to substitute sub-section (3) of section 84 by a new sub-section The sub-section as substituted omits the existing condition that the hotel building should be owned Dy the Indian company in order to be eligible for the 'tax holiday' concession. Further, an Indian company running the business of a hotel will be eligible tor the 'tax holiday' even in a case where the hotel premises were, before their transfer to the rompany, used for any purpose other than as premises for run- ning a hotel.

Sub-clause (d) seeks to insert a new sub-section (3A) in section 84. The proposed sub-section lays down various condi- tion^ which have to be fulfilled before the profits and gains dtiived by an Indian company from the plying of a ship or ships

can qualify for the tax concession under this section. These conditions are that—

(a) the ship should be owned by an Indian company and wholly used by it for the purposes of its business;

(b) the ship, previous to the date of its acquisition by the Indian company, should not have been owned and used in Indian territorial waters by a person resident in India; and

(c) the ship should have been brought into use by the Indian company at any time within a period of twenty- three years next following 1st April, 1948. The amendment proposed to be made by sub-clause (e) is consequential to the amendment proposed to be made by sub- clause (a) of this clause.

The amendment proposed to be made by sub-clause (f) is consequential to the amendment proposed to be made by sub- clause (b)(i) of this clause.

The amendment proposed to be made by sub-clause (g) i" of a drafting nature.

Sub-clause (h) seeks to insert a new sub-section, namely, sub-section (9) in section 84. The proposed sub-section seeks to provide that m relation to a ship, the provisions of section 84 shall apply to the assessment for the assessment year relevant to the previous year in which the ship is brought into use by the Indian company and the four assessment years next following. Clause 25 seeks to amend section 85 of the Income-tax Act with retrospective effect. This amendment is consequential to the exten- sion of the 'tax holiday' provision^ of section 84 of the Income-tax Act to profits and gains derived from the plying of a ship, by clause 24 of the Bill. The effect of this amendment will be that dividends from an Indian company which are attributable to itg profits and gains derived from the plying of a ship, which are exempt from tax under the provisions ol section 84, will be exempt from tax in the hands of the shareholders.

Clause 26 seeks 10 amend section 88 of the Income-tax Act. The dfect of this amendment will be that donations to the Prime Minister's Drought Relief Fund will be eligible for rebate of tax without the operation of the ordinary ceiling limit over the quali- fying amount, applicable to other charitable donations, namely, ten per cent, of the total income of the donor or Rs. 2 lakhs, whichever is less.

Clause 27 seeks to make certain amendments in Chapter XIII of the Income-tax Act with a view to facilitating the organisation of work in the Income-tax Department on functional basis.

Sub-clause (1) seeks to substitute a new sub-section for the existing sub-section (2) of section 121 of the Income-tax Act. The new sub-section (2) empowers the Board, by general or special order in writing, to distribute and allocate the work on functional basis among two or more Commissioners of Income- tax having concurrent jurisdiction over the same area or the same persons or classes of persons or the same incomes or classes of income or the same cases or classes of casea.

Sub-clause (2) seeks to substitute a new section for section 123 of the Income-tax Act. Under section 123 as substituted, It will be open to the Commissioner, by general or special order in writing, to distribute and allocate the work on functional basis among two or more Inspecting Assistant Commissioners having concurrent jurisdiction over the same area or the same persons or classes of persons or the same incomes or classes of income or the same cases or classes of cases.

Sub-clause (3) seeks to amend section 124 of the Income-tax Act. Sub-clause {3)(i) seeks to substitute new sub-sections for the existing sub-sections (1) and (2) of section 124. Under sub- jections (1) and (2), as substituted, it will be open to the Com- misbioner or the Inspecting Assistant Commissioner authorised by him in this behalf, by general or special order in writing, to distribute and allocate the work on functional basis amongst two or more Income-tax Officers having concurrent jurisdiction over the same area or the same persons or classes of persons or the same incomes or classes of Income or the same cases or clashes of cases, The amendment made by sub-clause (3)(ii) is consequential to the proposed insertion of new section 130A in the Income-tax Act by sub-clause (7).

Sub-clause (4) seeks to substitute a new section for section 125 of the Income-tax Act. Under section 125, as substituted, it will be open to the Commissioner of Income-tax to direct, by general or special order, that specific functions vested in the Income-tax Officer by or under the Income-tax Act shall be performed by an Inspector of Income-tax or any member of the ministerial staff subordinate to the Commissioner or other lower Income-tax authorities, in respect of any specified area, case or class of cases, person or class of persons or class of incomes, subject to such conditions, restrictions! or limitations as may be specified by him in the order. However, the Commissioner may not assign to the Inspector of Income-tax or any member of the ministerial staff certain important functions of the Income-tax

Officer such as the function of summoning and examining wit- nesses, making searches and seizures, making of assessments, re-opening of assessments in cases of escapement of income, issue of recovery certificates, distress warrants or garnishen orders, levy of penalty, etc., unless the Board, by penpal or special order, authorises him to do so.

Sub-clause (5) seeks to substitute a new section for section 127 of the Income-tax Act, Under section 127, m substituted, the Commissioner or the Board may transfer anv case from any Income-tax Officer or Income-tax Officers to any other Income- tax Officer or Income-tax Officers after following the procedure laid down in this behalf under the existing law The section further provides that where any case has been so transferred to two or more Income-tax Officers, the Board or the Commissioner or any Inspecting Assistant Commissioner authorised by him in this behalf, may, by general or special order in writing, distribute and allocate the work in such a case on functional basis among the Income-tax Officers to whom the case has been transferred.

Sub-clause (6) seeks to substitute a new section for section 128 of the Income-tax Act Section 123, as substituted, provides that Inspectors of Income-tax shall perform such functions in the execution of the Income-tax Act as are assigned to them bv the Commissioner by an order made under section 125(1) (b) fas proposed to be substituted by sub-clause (4)] or otherwise or by any other Income-tax authority under whom they are appointed to work.

Sub-clause (7) seeks to insert a new section 130 A at the end of Chapter XIII-B of the Income-tax Act. The new section 130A provides lhat in n case where two or more Tncome-tflv Officers have concurrent jurisdiction over an assessee, th^¹ Tncome-tax Officer to whom a particular function or functions have been assigned bv the Board or, as the case inav bf\ the Commissioner or Inspecting Assistant Commissioner, shall be the Income-tax Officer empowered to perform such function or functions in relation to that assessee.

Clause 28 seeks to amend sub-section (1) of section 13R nf the Income-tax Act, Under sub-section (1), as amended, it will bo open to the Board or any other Income-tax authority specified by it by a general or special order in this behalf to furnish or cause to be fur- nished information relating to anv assessee in respect of any assess- ment made under the Income-tax Act (or the Indian Income-tax Act, 1922) to any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty or cess or to deal •

ings in foreign exchange where the Board or other Income-tax author- ity considers such information necessary for the purpose of enabling the officer, authority or body to perform his or its functions under that law. It will also be open to the Central Government to notify any officer, authority or body performing functions under any other law, and on such notification, the Board or any other Income-tax authority may furnish or cause to be furnished similar information relating to any asseseee to the officer, authority or body so notified.

Clause 29 seeks to amend sub-section (4) of section 172 of the Income-tax Act, This amendment is consequential to the proposed insertion of new clause (37A) in section 2 of the Income-tax Act by clause 4(b) of the Bill.

Clause 30 seeks to make certain amendments in Chapter XVII of the Income-tax Act.

Sub-clause (1) seeks to omit the Explanation to section 193 of the Income-tax Act. This amendment is consequential to the proposed insertion of new clause (37A) in section 2 of the Income-tax Act by clause 4(b) of the Bill.

Sub-clause (2) seeks to insert a new section 194A in the Income-tax Act. Under the proposed section 194A, every person, other than an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of broke- rage or commission, or fees or other remuneration for profes- sional services, or interest, other than 'Interest on securities' will be required to deduct therefrom income-tax at the 'rates in force'. The deduction of tax will have to be made at the time of the credit of such income to the account of, or the payment thereof (by whatever mode) to, the person entitled to peceivc such income, whichever is earlier. However, deduction of tax will not be required to be made In a case where the person (not being a company or a registered firm) entitled to receive such income furnishes an affidavit (to the person responsible for pay- ing the income) declaring that hij total Income for the assess- ment year next following the financial year in which the income is credited or paid will be less than the minimum amount liable to tax in his case. Further, no deduction of tax will be required to be made under the provisions of this section if the income is credited or paid before 1st October, 1967 or If the amount of income credited or paid at any one time does not exceed, in the case of income by way of brokerage or commission, the sum of five hundred rupees, and in any other case, the sum of two hundred rupees.

Sub-clause (3) seeks to replace section 198 of the Income-tax Act by a new section. Under the section as replaced, no deduc-

tlcm of tax will be required to be made by any person from any sums by way of interest on securities or dividends on shares or any other income payable to a corporation estab- lished by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, where such corporation is the owner of the securities or shares or has full beneficial interest therein. Under the existing section 196, similar exemption from deduction of tax at source opera- tes in respect of sums payable to the Government or the Reserve Bank of India.

Sub-clause (4) seeks to amend section 197 of the Income-tax Act. This amendment is consequential to the amendment sought to be made bv sub-clause (2).

Sub-clause (51 seeks to amend sections 198, 199, 200, 202 and 205 of the Income-tax Act. These amendments are consequential to the amendment sought to be made by sub-clause (2).

Sub-clause (6) seeks to substitute section 203 of the Income- tax Act by a new section. This amendment is consequential to the amendment sought to be made by sub-clause (2).

Sub-clause (7) seeks to amend section 204 of the Income-tax Act, This amendment is consequential to the amendment sought to be made by sub-clause (2).

The effect of the amendments made by sub-clauses (4), (5), (6) and (V) will be that the existing provisions of the law relat- ing to the duties and liabilities of persons responsible for deduct- ing tax at source from payments by way of interest on securities, dividends, etc., as well as the penalties attaching for default in these duties and liabilities, will be made applicable mutatis mutandis to persons responsible for deducting tax at source from payments by way of brokerage or commission, fees or remunera- tion for professional services or interest other than interest on securities, under the new section 194A proposed to be inserted in the Income-tax Act by sub-clause (2).

Sub-clause (R) seeks to insert a new section 206A in the Income-tax Act. The proposed section 206A seeks to provide that every person responsible for paying any income referred to in section 194A, sought to be inserted in the Income-tax Act by sub- clause (2), shall, within thirty days of the end of each financia> year, furnish in the prescribed form and verified in the prescribed manner a return showing the name and address of every person who has furnished to him an affidavit under the proviso to the aforesaid sod inn 194A(l)i the amount of the income credited or

paid during the financial year to each such person, the time or times at which the same was paid or credited, and such other particulars as may be prescribed.

Clause 31 seeks to amend sections 209 and 215 of the Income-tax Act. These amendments are consequential to the proposed insertion of section 194A in the Tncome-tax Act by clause 30(2) of the Bill.

Clause 3Z seeks to amend the First Schedule to the Income-tax Act. This amendment is consequential to the proposed insertion of new section 43A in the Income-tax Act by clause 17 of the Bill.

Clause 33 seeks to make some further amendments, specified in the Third Schedule, in the Income-tax Act with effect from the 1st April, 1968.

Item 7 of the Third Schedule seeks to insert a new clause (29) in section 10 of the Income-tax Act. The new clause seeks to ex- empt from tax an authority constituted under any law for the time being in force for the marketing of commodities in respect of any income derived by such authority from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. This provision replaces the existing provision in sec- tion 03 of the Income-tax Act which, in consequence, is sought to be omitted from the Income-tax Act by Item 14 of this Schedule.

Item 2 of the Third Schedule seeks to amend section 32 of the Income-tax Act.

Clause (a) seeks to insert a new clause (v) in sub-section (1) of section 32. The new clause provides for the grant of an 'initial' depreciation allowance, in a sum equal to twenty-five per cent, of the actual cost of construction of a new building (the erection of which is completed after 31st March, 1967) to an Indian company, in a case where such building is used by the company as premises for running a hotel, and the hotel is for the time being approved in this behalf by the Central Government. The deduction will be allowed in respect of the previous year in which the erection of the building is completed or, if the building is first put to use in the immediately succeeding previous year, then, in respect of that pre- vious year. The 'initial' depreciation will not be deducted in deter- mining the written down value of the building for the grant of the normal depreciation allowance under section 32(1) (ii); the Initial depreciation will, however, bp taken into account for the purposes of thr other provisions of the Income-tax Act,

Clausp (b) seeks to amend sub-section (2) of section \Y1 of tho Income-tax Act, This amendment ia consequential to the amend- ment proposed to be made by clause (a) of this Item,

Item 3 of the Third Schedule seeks to amend section 33 of the Income-tax Act.

Clause (a) seeks to substitute sub-section (1) of section 33 by a new sub-section The new sub-section (1) omits references to certain dates of acquisition of a ship or the installation of any machinery or plant, which have no relevance for the assessment year 1968-69 and subsequent assessment years; the provisions of the substituted sub-section have also been re-drafted so as to make them more easily comprehensible. The substantive change in the new sub-section consists in the grant of development rebate at the higher rates applicable to machinery or plant installed in a priority industry, to machineiy or plant installed after 31st March, 1967 by an Indian company in premises used by it as a hotel, where the hotel is for the time being approved in this behalf by the Cen- tral Government, and to machinery or plant installed by any as- sessee after the aforesaid date, being an asset representing expen- diture of a capital nature on scientific research related to the busi- ness carried on by the assessee. The higher rates of development rebate in respect of the machinery or plant mentioned above are ihirtv-five per cent, of the actual cost of the machinery or plant to the assessee, where it is installed before 1st April, 1970 and twenty- five per cent, of such cost, where it is installed after 31st March, 1970.

Clause (b) seeks to amend sub-section (2) of section 33 of the Income-tax Act. This amendment is consequential to the proposed substitution of the existing Chapter VIA of the Income-tax Act by a new Chapter VIA by Item 13.

Clause (c) seeks to amend sub-sedion (6) of section 33. The effect of this amendment will be thnt the prohibition against the %frant of development rebate in rcspprt of machinerv or plant ins- talled after 31st March, 1965 in any office premises or in any resi- dential accommodation, including guest houses, will not operate in respect of any machinery or plant installed after 31st March, 1967 bv an Indian company carrying on business as a hotelier in premises used by it as a hotel, where the hotel is for the time being approved in this behalf by the Central Government.

Item 4 of the Third Schedule seeks to amend sub-section (2) of section 33A of the Income-tax Act. This amendment is conse- quential to the substitution of the existing Chapter VIA of the In- come-tax Act by a new Chapter VIA by item 13.

Item 5 of the Third Schedule seeks to make certain amendments in sub-section (2¹) of section 35 of the Income-tax Act

Clause (i) seeks to substitute the existing clause (i) of the said sub-section (2) by two new clauses, namely, clause (i) and clause (ia). Under the new clause (i), capital expenditure on scientific research related to the class of business carried on by the assessee which is incurred before the 1st April, 1967 will be allowed to be deducted over a period of five years, as under the existing law. The new clause (ia) provides that where such expenditure is incurred after the 31st March, 1967, the whole of such expenditure will be allowed as a deduction in the previous year in which such expen- diture has been incurred.

The amendments made by clauses (ii) and (iii) are consequential to the amendment made by clause (i).

Hem 6 of the Third Schedule seeks to amend clause (viii) of sub-section (1) of section 36 of the Income-tax Act. This amend- ment Is consequential to the substitution of the existing Chapter VI k of the Act by a new Chapter VIA by item 13.

Item 7 of the Third Schedule seeks to amend sub-section (3) of section 41 of the Income-tax Act. This amendment is consequential to the amendment proposed to be made in section 35 of the Income- tax Act by item 5.

Item 8 of the Third Schedule seeks to substitute a new proviso for the existing proviso to clause (1) of section 43 of the Income- tax Act. Under the proviso as substituted, the 'actual cost' of a motor car, for the purpose of calculating depreciation allowance, will not be limited to Rs. 25,000, as under the existing law, where the motor car is acquired after 31st March, 1967, and is used in a business of running it on hire as a tourist-taxi.

Item 9 of the Third Schedule seeks to amend section 66 of the Income-tax Act. This amendment is consequential to the proposed omission of sections 87, 87A and 88 of the Act by item 15.

Item 10 of the Third Schedule seeks to substitute sub-section (2) of section 71 of the Income-tax Act by two new sub-sections.

The effect of the new sub-section (2) will be that any loss sus- tained by the assessee under any head of income other than 'Capital gains', which under the existing provisions of the Act cannot be set off against his income chargeable under the head 'Capital gains' except if the assessee so desires, will be set off against his income relating to capital gains from short-term capital assets.

The effect of the new sub-section (3) will be that any loss sus- tained by the assessee from the transfer of any short-term capital asset, which under the existing provisions of the law cannot be set

otl against his oidinary income, will be set off against such income. The effect of these two provisions will be that, for the purposes of set off of loss under one head against income under another, capital gams relating to short-term capital assets will be treated on par with ordinary income.

Item 11 of the Third Schedule seeks to amend section 72 of the Income-tax Act. This amendment is consequential to the amend- ment proposed to be made in section 71 of the Act by item 10.

Item 12 0/ th" Third Schedule seeks to amend section 74 of the Income-tax Act. This amendment is consequential to the amend- ment proposed to be made in section 71 of the Income-tax Act by item 10,

Item 13 of the Third Schedule seeks to substitute a new Chapter fur Chapter VIA of the Income-tax Act. The new Chapter VIA seeks, inter alia, to replace the existing provisions for grant of full or partial tebate of tax at the average rate of tax or charging of tax at a concessional rate on certain items of income or payments, contained in Chapter VII, Chapter VIII and Chapter XII of the Income-tax Act, by provisions for allowing a straight deduction of the whole or a specified percentage of the amount qualifying for the rebate or concessional rate of tax, in computing the total in- come. The provisions of sections 80A to 80E of the existing Chap- ter VIA also find a place in the new Chapter with certain modifica- tions. The new Chapter VIA also incorporates certain new provi- sions.

New section 80A lays down certain general principles which are relevant for the purposes of the deductions to be allowed in computing the total income under new sections 80C to 80T. In particular, section 80A(2) limits the aggregate of these deductions to the gross total income of the assessee, i.e., the total income as computed under the provisions of the Income-tax Act before making any deduction under Chapter VIA or for annuity deposit under section 280O of that Act and without applying the provisions of section 64 of that Act. Section 80A(3) provides that where a deduction has been allowed under new section 80G or 80H or 80J or 80K or 80L or BOS or 80T in computing the total income of a firm, association of persons or body of individuals, no deduction under the same section shall be allowed in computing the total income of a partner of the firm or a member of the association or body, in relation to his share in the income of the firm, association or body.

New section 80B contains definitions of certain terms used in this Chapter.

New section 80C, relating to deductions in respect of life insu- rance premia, contributions to provident fund, etc., corresponds to the existing section 80A of the Income-tax Act, except for certain verbal or drafting changes and an increase in the limits of the amount qualifying for the deduction under that section. The new limits will be 30 per cent, of the gross total income or Rs. 15,000, whichever is less, in the case of an individual, and 30 per cent, of the gross total income or Rs. 30,000, whichever is less, in the case of a Hindu undivided family.

New section 80D, relating to deduction in respect of medical treatment of handicapped dependants, corresponds to the existing section 80B of the Income-tax Act, except for certain verbal or drafting changes.

New section 80E, relating to deduction in respect of payments for securing retirement annuities, corresponds to the existing sec- tion 80C of the Income-tax Act, except for certain verbal or drafting changes.

New section 80F provides for the deduction of a specified amount in the computation of the total income in the case of a resident individual who is not a citizen of India, where such individual has incurred out of his income chargeable to tax any expenditure on the full time education of a child of 21 years or under, dependent on him, in a university, college or school or other educational institu- tion outside India. The specified amounts are Rs. 1,500 for each such child subject to a maximum amount of Rs. 3,000 in respect of two or more such children. This provision replaces the existing provision in section 87A of the Income-tax Act which, in conse quence, is sought to be omitted by item 15.

New section 80G seeks to replace the existing section 88 of the Income-tax Act. The new section provides for a straight deduc- tion of 50 per cent, of the qualifying amount of donations in com- puting the total income of all categories of tax payers. In other respects, the provisions of the new section correspond to the pro- visions of the existing section 88 (as sought to be amended by clause 26 of the Bill), which, in consequence, is sought to be omitted by item 15.

New section 80H provides that in computing the total Income of any assessee whose 'gross total income' includes any profits and gains derived from a new industrial undertaking which satisfies all the conditions laid down in that section, a deduction will be allowed of a sum equal to fifty per cent, of the amount of such profits and gains, subject to a monetary ceiling over the deduction, of Rs. 1 lakh. This

deduction will be allowed in respect of the assessment year relevant to the previous year in which the undertaking begins to manufac- ture or produce articles, and the nine assessment years immediately succeeding. The deduction under this section will be available in respect of the profits and gains of a new industrial undertaking which fulfils all the following conditions, namely: —

(i) it is not formed by the splitting up or reconstruction of a business already in existence;

(ii) it is not formed by the transfer to a new business of a building, machinery or plant previously used for any pur- pose;

(in) it has begun or begins to manufacture or produce articles in any part of India at any time within the period of three years next following the 1st April, 1967;

(in) it employs, on every working day throughout the previous year, fifty or more workers in a manufacturing process (whether carried on with or without the aid of power);

(v) it employs displaced persons or repatriates or members of the families of displaced persons or repatriates, and the daily average number of such employees, as certified by the pros- cribed authority, is not less than sixty per cent, of the daily average of all the persons employed in the undertaking through- out the previous year. In computing the daily average number of employees who are displaced persons or repatriates or mem- bers of the families of displaced persons or repatriates, any such employee who had completed the age of forty years at the time of his first employment in the undertaking will not be taken into account.

The expressions 'displaced person' and 'repatriate' have been defined in clause (1) and clause (9), respectively, of new section 80B.

The expression 'member of the family' in this section means any member of the family of a person who, before his employment in the undertaking, was dependent on such person.

New section 801 relating to deduction in respect of profits and gains from priority industries in the case of Certain companies seeks to replace the existing section 80E of the Income-tax Act. The only change of a substantive character which has been made in the new section consists in the extension of the concession available under the existing section 80E to profits and gains derived from the

business of a hotel carried on by an Indian company in a case where such hotel is for the time being appioved in this behalf by the Central Government.

New section 80J seeks to replace section 84 of the Income-tax Act as proposed to be amended by clause 24 of the Bill. Under section 80J, where the gross total income of an assessee includes any profits and gains from an industrial undertaking or ship or the business of a hotel to which this section applies, the profits and gains of such industrial undertaking or ship or the business of the hotel up to 6 per cent, per annum of the capital employed therein will be allowed as a straight deduction in computing the total income of the assessee. Under the provisions of section 84, such income qualifies for a rebate of tax at the average rate of tax applicable to the total income of the assessee.

Section 80.1 further provides for the carty-forward of any defi- ciency in the 'tax holiday' bonefit from the assessment year 1967-68 onwaids 1 benefit is the amount by which the profits and gains derived from the industrial undertaking or ship or business of the hotel in each year falls short of six per cent, of the capital employed in the business. While the carry-forward and allowance of deficiency is, as stated above, permissible up to the 8th assessment year from the year of commence- ment of the business, the deduction on account of profits and gains up to 6 per cent, of the capital employed is to be allowed, as under the present law, for a total period of 7 years from the year of commencement of the business in the case of a co-operative society, or 5 years in the case of any other assessee.

In other respects, the provisions of section 80J are, in substance, the same as those of section 84, as proposed to be amended by clause 24 of the Bill,

Where the industrial undertaking which is entitled to the deduction on account of 'tax holiday' under section 80J is entitled also to the deduction under section 80H or section 801, the deductions under sections 80H and 801 will first be allowed from the profits of the industrial undertaking

and the deduction under section 80J will be allowed with reference to the balance ol such profits remaining alter the deductions under sections 80H and 801-

Section 84 is, in consequence, proposed to be omitted by item 14.

New section 80K seeks to replace the existing section 85 of the Income-tax Act, whereundcr dividends attributable to the 'tax holiday' profits of a company qualify for rebate of tax in the hands ot the shareholder of the company. Instead of the rebate of tax allowed on such dividends under section 85 of the Income-tax Act, new section 80K provides that the entire amount of such dividends included in the 'gross total income' of the shareholder will be allowed as a deduction in computing his total income. Section 85 of the Income-tax Act is, in consequence, proposed to be omitted by item 14.

New section 80L provides that where in the caae of any assessee, the income by way of dividends included in his gross total income does not exceed five hundred rupees, the entire amount of the income by way of dividends from an Indian company or companies will be allowed as a deduction in computing his total i'neome.

New section 80M seeks to replace section 85A of the Income-lax Act relating to grant of a partial rebate of tax on inter-corporate dividends in the hands of the company receiving the dividends. Under section 80M, where the gross total income of a company includes income by way of dividends received by it from a domestic company, a specified percentage of such dividends will be allowed as a straight deduction in computing its total income. In the case of a foreign company receiving dividends from a closely-held Indian company which is mainly engaged in a priority industry, the deduc- tion will be of an amount equal to 80 per cent, of such dividends, and 60 per cent, in respect of dividends received by it from any other domestic company or companies. In the case of a domestic company, the deduction will be an amount equal to 60 per cent- of the dividends received by it from any other domestic company or companiea.

Where the company receiving the inter-corporate dividends is entitled also to the deduction under section 80K (relating to dividends attributable to 'tax holiday' profits of the company paying the dividends) or under section 80L (relating to deduction of divi- dends from Indian companies in cases where the total amount of dividends does not exceed Rs. 500), the deduction under section fiOM will be allowed with reference to the amount of the dividends as reduced by the deductions under sections 80K and SOL.

Section 85 A. of the Income-tax Act is, in consequence, proposed to be omitted by item 14.

New section 80N seeks to replace section 85B of the Income-tax Art relating to grunt of a partial rebate of tax on dividends received by an Indian company from a foreign company on shares in the foreign company allotted to it in consideration for the supply of technical know-how or technical services under approved agree- ments. Under section 80N, 60 per cent, of such dividends will be allowed as a straight deduction in computing the total income of the Indian company.

Sec don 85B of the Income-tax Act is, in consequence, sought to be omitted by item 14.

New section 80O seeks to replace section 85C of the Income-tax Act relating to grant of a partial rebate of tax on income by way oi royalties, commission or tees received by an Indian company from a foreign company in consideration for the supply of technical know- how or technical sci vices under approved agreements. Under section 80O, 60 per cent, of such income will be allowed as a straight deduction in computing the total income of the Indian company.

Section 85C of the Income-tax Act is, in consequence, sought to be omitted by item 14.

New section 80P seeks to replace section 81 of the Income-tax Act i elating to the grant of a rebate of tax on certain categories of incomes of co-operative societies. Under section SOP, the amount of income which at present qualifies for rebate of tax will be allowed as a straight deduction in computing the total income of the co- operative society. The details of the income qualifying for this concession as well as the conditions under which it so qualifies, under the now section 80P remain the same as under the existing section 81.

Section 81 of the Income-tax Act is, in consequence, sought to be omitted by item 14.

New section 80Q seeks to replace section 82 of the Income-tax Act relating to grant of rebate of tax to a member of a co-operative society in respect of dividends received by him from the society. Under section 80Q, the whole of such dividends will be allowed as a straight deduction in computing the total income of the member of the co-operative society.

Section 82 of the Income-tax Act is, in consequence, sought to be omitted by item 14.

New section 80R replaces section 80F proposed to be inserted in the Income-tax Act, by clause 23 of the Bill. The provisions of section 80F, as explained in the note on clause 23, remain unchanged.

New section SOS seeks to replace section 112 of the Income-tax Act 1 elating to the charging ol tax at a concessional rate on income by way of compensation for the termination of a managing agency, etc., in the case of non-corporate assessees. Under section 80S, 25 per cent, of such income will be allowed as a straight deduction in compiling the total income of such assessee, subject to a ceiling limit of Rs 1 lakh over the amount of the deduction.

Section 112 of the Income-tax Act is, in consequence, sought to be omitted by item 18.

Nc .v section SOT seeks to replace section 114 of the Income-tax Act relating to the charging of tax at a concessional rate on income chargeable under the head 'Capital gains' in the case of nun- coipoiate assessees. Under section SOT, a straight deduction will be allowed of a specified piuportion of the long-term capital gains (i.e. capital gains relating to capital assets other than short-term capital assets) included in the gross total income of the assessee in computing his total income. The amount of the deduction will be Rs 5,000 plus 40 pei tent. oL the amount by which the long-teim rapHal gains exceed Rs- 5,000, where thev relate to buildings or lands or any rights in buildings or lands. The deduction will be Rs. 5,000 plus 60 per cent, of the amount by which the long-term capital gains exceed Rs. 5,000, where these 1 elate to any other assets. In a case where the capital gains relate to both categories of capital assets, namely, buildings or lands or any rights therein as well as any other capital assets, the initial amount of Rs. 5,000 will be deducted in the first instance from the long-term capital gains relating to buildings or lands or rights therein; and where such long-term capital gains are less than Rs. 5,000, the balance will be deducted from the long-term capital gains relating to other capital assets, before applying the percentage of 60 to the latter.

In a case where the gross total income including the long-term capital gains does not exceed Rs. 10,000, or where the long-term capital gains do not exceed Rs. 5,000, the whole of the long-term capital gains will be allowed as a straight deduction in computing the total income. The provision for charging a minimum tax at the rate of 15 per cent, of the long-term capital gains in excess of Rs. 5,000, which exists under the present law, will no longer be operative.

Capital gains 1 elating to short-term capital assets, which under the existing section 114, are subjected to tax at the average rate of

lax applicable to the aggregate of the ordinary income and the short- u rm capital gains, will henceforth be treated on par with ordinary income.

Section 114 of the Income-tax Act is, in consequence, sought to be omitted by item 18.

Item 14 of the Third Schedule seeks to omit sections 81, 82, 83, 84, 85, 85A, 85B and 85C of the Income-tax Act. These amendments are consequential to the new provisions proposed to be made in Chapter VIA of the Act by item 13.

Item 15 of the Third Schedule seeks to make certain amendments to Chapter VIII of the Income-tax Act. These amendments are consequential to the new provisions proposed to be made in Chapter VIA by item 13.

Item If? of the Third Schedule seeks to amend section 104 of the Income-ta-; Act. This amendment is consequential to the substi- tution of the existing Chapter VIA of the Act by a new Chapter by item 13.

Hem, 11 of the Third Schedule seeks to make certain amendments in section 100 ot tlv Income-tax Act, These amendments are either ot a drafting nature or are consequential to the substitution of the existing Chapter VIA of the Act by a new Chapter by item 13.

Item IS of the Third Schedule seeks to make certain amendments

in Chapter XII of the Income-tax Act.

Clause (a) seeks to emit section 112 of the Income-tax Act. This amendment is consequential to the replacement of the existing section 112 by section 80S in the new Chapter VIA proposed to be substituted for the existing Chapter VIA by item 13-

Clause (b) seeks to amend section 112A. of the Income-tax Act.

These amendments are consequential to the amendments proposed to be made by clause (a) and clause (c).

Clause (c) seeks to omit section 114 of the Income-tax Act. This amendment is consequential to the replacement of the existing section 114 of the Income-tax Act by section 80T in the new Chapter VIA, proposed under item 13.

Item 19 of the Third Schedule seeks to amend sub-section (3) of section 197. This amendment is consequential to the replacement of the existing sections 84 and 85 oC the Income-tax Act by sections COJ and 80K, respectively, in the new Chapter VIA, under item 13

Item 20 of the Third Schedule seeks to amend section 236 of the Income-tax Act. The amendment proposed to be made by clauses (a) and (c) are consequential to the .substitution of the existing Chapter VIA of the Act by a new Chapter by item 13.

The amendment proposed to be made by clause (b) is conse- quential to the replacement of the existing section 88 of the Income- tax Act by the proposed section 80G in new Chapter VIA, under item 13.

Item 21 of the Third Schedule seeks to amend the definition of 'adjusted total income' in section 280B(l) of the Income-tax Act. Under the amended definition, no annuity deposit will be required to be made in respect of the depositor's income arising in a foreign country the laws of which prohibit or restrict the remittance of money to India. This provision will apply for the purpose of com- puting the annuity deposit to be made during the financial year 1967-68 in relation to income assessable for the assessment year 1968-69, and for the following years.

Item 22 of the Third ScheAule seeks to amend section 280X of Income-ta< Act. The amendment proposed to be made by clauses (a) the annuity deposit will not be chargeable in a case where (a) the depositor is more than sixty years of age on the last day of the relevant previous year, as against seventy years under the present law: (b) the annuity deposit required to be made does not exceed Rs. 100; or (c) the deficiency in the deposit actually made is not more than ten per cent, of the deposit required to be made, or one hundred rupees, whichever is higher. These provisions will apply in relation to annuity deposit to be made during the financial year 1967-68 in respect of income assessable for the assessment year 1968-69.

Item 23 of the Third Schedule seeks to amend section 295 of the Income-tax Act. This amendment is consequential to the omission of section 87 of the Act by item 15 and the replacement of section 80A by section 80C in the new Chapter VIA by item 13.

Item 24 of the Third Schedule seeks to amend rule 7 of Part A of the Fourth Schedule to the Income-tax Act. This amendment is consequential to the replacement of section 80A by new section 80C by item 13, and the omission of section 87 by item 15.

Item 25 of the Tltird Schedule seeks to amend the Fifth Schedule to the Income-tax Act. The amendment is consequential to the pro- posed amendment of section 33(1) of the Income-tax Act by item 3, and the insertion of a definition of 'priority industry' in the new section 80B(7) of the proposed Chapter VIA under item 13.

Clause 34 serks to make certain amendments in the Wealth-tax Act, 1957.

Sub-clause (,a) seeks to insert, retrospectively, a new bub- clause (iia) in clause (h) ol" section 2 of the Wealth-tax Act. The effect of the new sub-clause (iia) is to empower the Central Gov- ernment to declare, by general or special order, any corporation established by or under a Central, State or Provincial Act as a 'company' for the purposes of the Wealth-tax Act. The object of the proposed amendment is to secure that any statutory cor- poration which is declared by the Central Government to be a company will be subjected to wealth-tax for assessment years up to and including the assessment year 1959-60 at the lower rate of wealth-tax applicable to companies, and exempted from wealth-tax for subsequent assessment years, in the same manner as companies formed and registered under the Companies Act, 1956.

Sub-clauses (b) to (y) seek to amend certain provisions of the Wealth-lax Act relating to jurisdiction of Wealth-tax authori- ties, to bring these in. line with the provisions of the Income-tax Act relating to jurisdiction of Income-tax authorities as proposed to be amended by clause 27 of the Bill, with a view to facilitat- ing the organisation of work in relation to wealth-tax assess- ments on functional basis.

Sub-clause (fa) seeks to insert a proviso in section 8 of the Wealth-tax Act. Under the proviso, it will be open to the Com- missioner of Wealth-tax or the Inspecting Assistant Commis- sioner of Wealth-tax authorised by him in this behalf, by general or special or^der in writing, to distribute and allocate the work on functional basis among two or more Wealth-tax Officers hav- ing concurrent jurisdiction in respect of any individual, Hindu undivided family or company.

Sub-clause (c) seeks to inseii two new sections 8A and SB jn replacement of the existing section 8A of the Wealth-tax Act. Under new section 8A, it will be open to the Commissioner of Wealth-tax to direct, by general or special order, that specific functions vested in the Wealth-tax Officer by or under the Wealth-tax Act shall be performed by an Inspector of Wealth- tax or any member o£ the ministerial staff subordinate to the Commissioner or other lower Wealth-tax authorities, in reaped of any specified area or cases or classes of cases or pensons or classes of persons, subject to such conditions, restrictions or limitations as may be specified by him in the order. However, the Commissioner may not assign to the Inspector of Wealth-tax

or any member of the ministerial staff certain important func- tions of the Wealth-tax OMicer such as making of assessments, re- opening oi assessments in cases of escapement of wealth, levy of penalty, etc. unless the Board, by general or special order in writing, authorises him to do so.

The new section 8B authorises the Commissioner or the Board to transfer any case from any Wealth-tax Officer or .Wealth-tax Officers to any other Wealth-tax Officer or Wealth- lax Officers after following the procedure laid down in this behalf under the exibting law. The section further provides that where any such case has been transferred to two or more Wealth-tax Officers, the Board or the Commissioner or the Inspecting Assistant Commissioner authorised by him in this behalf may, by general or special order in writing, distribute and allocate the work in such case on functional basis among the Wealth-tax 0,'Jcers to whom the case has been transferred.

Sub-clause (d) seeks to amend section 10 of the Wealth-tax Act. Under section 10, as amended, it will be open to the Board to distribute and allocate the woik on functional basis to two or more Commissioners of Wealth-tax having concurrent jurisdic- tion over the same area or persons or classes of persons.

Svb-clause (e) seeks to amend section 11 of the Wealth-tax Act. Under section 11, as amended, it will be open to the Com- missioner of Wealth-tax, by general or special order in writing, to distribute and allocate the work on functional basis among two or more Inspecting Assistant Commissioners of Wealth-tax having concurrent jurisdiction over the same area or persons or classes of persons

Sub-clause (/) seeks to substitute a new section for seel ion HA of the Wealth-tax Act. The new section 11A provides that an Inspector of Wealth-tax shall perform such functions in the execution of the Wealth-tax Act as are assigned to him by the Commissioner by an order made under section 8A(1) [as pro- posed to be inserted by sub-clause (c)] or otherwise or by any other Wealth-tax authority under whom he is appointed to work.

Sub-clause (g) seeks to insert a new section 11B after sec- tion 1]A of the Wealth-1ax Act. The new section 11B provides, in substnncp, that in a case where two or more Wealth-tax Offi- cers have concurrent jurisdiction over an assessee, the Wenlih- tax Officer to wlvim a particular function or functions have been

assigned by the Board or, as the case may be, the Commissioner or the Inspecting Assistant Commissioner of Wealth-tax shall be the -Wealth-tax Officer empowered to perform such function or functions in relation to that asscssee.

Clause 35 seeks to make certain amendments in the Gift-tax Act, 1958.

Sub-clauses (a) to (f) seek to amend the provisions in the Gift-tax Act relating to jurisdiction of Gift-tax Officers, with a view to bringing thorn in lino with the provisions in the Income- tax Act in the matter relating to jurisdiction of Income-tax authorities as proposed to be amended by clause 27 of the Bill, for the purpose of facilitating the organisation of work under the Gift-tax Act on functional basis.

Sub-clause (a) seeks to insert a proviso in section 7 of the Gift-tax Act, Under the proviso, it will be open to the Commis- sioner of Gift-tax or the Inspecting Assistant Commissioner of Gift-tax authorised by him in this behalf, by general or special order in writing, to distribute and allocate the work on func- tional basis amongst two or more Gift-tax Officers having concur- rent jurisdiction over the same person.

Sub-clause (b) seeks to substitute two new sections 7A and 7B in replacement of the existing section 7A of the Gift-tax Act. Under the new section 7A, it will be open to the Commissioner of Gift-tax to direct, by general or special order, that specific func- tions vested in the Gift-tax Officer by or under the Gift-tax Act shall be performed by an Inspector of Gift-tax or any member of the ministerial staff subordinate to the Commissioner or other lower Gift-tax authorities, in respect of any specified area or cases or class of cases or persons or class of persons, subject to such conditions, restrictions or limitations as may be specified by him in the order. However, the Commissioner may not assign to the Inspector of Gift-tax or any member of the ministerial staff certain important functions of the Gift-tax Officer such as making of assessments, reopening of assessments in cases of fscapement, levy of penalty, etc., unless the Board, by general or special order, authorises him to do so.

The new section 7B authorises the Commissioner or the Board to transfer any case from any Gift-tax Officer or Gift-tax Officers to any other Gift-tax Officer or Gift-tax Officers after following the procedure laid down in this behalf under the existing law. The section further provides that where any case

nas been so transferred to two or more Gift-tax Officers, the Board or the Commissioner or any Inspecting Assistant Com- missioner of Gift-tax authorised by him in this behalf may, by general or special order in writing, distribute and allocate the work in such case on functional basis among the Gift-tax Offi- cers to whom the case has been transferred.

Sub-clause (c) seeks to amend section 9 of the Gift-tax Act. Under section 9, as amended, it will be open to the Board to distribute and allocate the work on functional basis amongst two or more Commissioners of Gift-tax having concurrent jurisdic- tion over the same area or persons or classes of persons.

Sub-Clause (d) se^ks to amend section 10 of the Gift-tax Act. Under section 10, as amended, it will be open to the Commis- sioner, by general or special order in writing, to distribute and allocate the work on functional basis among two or more Ins- pecting Assistant Commissioners of Gift-tax having concurrent jurisdiction over the same area or persons or classes of persons.

Sub-clause (e) seeks to substitute a new section 11 for the existing section 11 of the Gift-tax Act. Section 11, as substi- tuted, provides that any Inspector of Gift-tax shall perform such functions in the execution of the Gift-tax Act as are assign- ed to him by the Commissioner by an order made under new section 7A(1) [proposed to be inserted by sub-clause (b)] or otherwise or by any other Gift-tax authority under whom he is appointed to work.

Sub-clause (f) seeks to re-number the existing section 11A as section 11B and to insert a new section 11A in the Gift-tax Act. The new section 11A provides, in substance, that in a case where two or more Gift-tax Officers have concurrent jurisdic- tion over an assessee, the Gift-tax Officer to whom a particular function or functions have been assigned by the Board or, as the case may be, the Commissioner or the Inspecting Assistant Commissioner of Gift-tax, shall be the Gift-tax Officer empower- ed to perform such function or functions in relation to that asaessee.

Sub-clause (g) seeks to amend section 45 of the Gift-tax Act by inserting a new clause (da) in that section. The effect of this amendment will be that no gift-tax will be chargeable on the transfer of assets, in a scheme of amalgamation, by a closely- held company to any Indian company. For the purposes of thii provision, the term 'amalgamation' shall have the same mean- ing as in clause (1A) of section 2 of the Income-tax Act, pro- posed to be inserted by clause 4(a) of the Bill.

Clause 36 seeks to make certain amendments, in the Companies .(Profits) Surtax Act, 1964.

Sub-clause (a) seeks to amend .action 3(1) of the said Act so as to include an Inspector of Income-tax in the category of Income-tax authorities authorised to pertorm functions under the said Act.

Sub-clause (b) seeks to amend section 18 of the Companies (Profits) Surtax Act which seeks to apply, for the purposes of that Act, certain provisions of the Income-tax Act. Under the amended section 18, the provisions of the Income-tax Act relat- ing to jurisdiction of Income-tax authorities, as proposed to be amended by clause 27 of the Bill, as well as the provisions of that Act relating to rounding off of income and tax, will be made applicable for the purposes of the Companies (Profits) Surtax Act.

Clause 37 t>eeks to indicate the nature of duty against specified items of the first Schedule to the Indian Tariff Act, 1934.

Clause 38 seeks to levy up to the 31st March, 1908 a special duty of customs.

Clause 3J seeks to provide ior levy oi regulatory duties of customs "p to the 15th May, 1U68, on a flexible basis within the specified ceiling rates, lor regulating or bringing greater economy in imports.

Clause 40—

Sub-clause (a) seeks to raise the rate of duty on coffee;

Sub~tlzv.se (b) seeks to raibe the rates of duty on cigars and cneroots,

Sub-clatwe (c) seeks to raise the rate of duty on motor spirit;

Sub-clause (d) seeks to raise the rate of duty on petroleum products, not otherwise specified;

Sub-clause (e) seeks to raise the rate of duty on artificial or synthetic resins and plastic materials, and articles thereof;

Sub-clause (f) seeks to levy excise duty on rubber piping, tubing RLZ belting,

S?tb-ctause (g) seeks to raise the rate of duty on rayon and ">nihetic fibres and yarn;

Sub-clause (ft) seeks to raise the rates of duty on cotton twist, yarn and thread, all sorts;

nvh-rlm,F(, (i) wrf^ to raise the rates of duty on jut* manufacture:

Siib-clnii** (j) seeks to raise the rates of duty on aluminium tn various forma

Clause 41 seelrs to continue up to the ^t?t Mnrrh IQfiK the existing special duties nf excise

Clans? 4? s^ei's to provide for l ew of r^eulntrrv duties of excise iin +0 the I^th ATw 1⁰RS, on a fWihip b ^ is "M+'itn tva •sn^dflec' ceiling rate, for r e f l a t i ng or bringing greater economy In consumption.

C/air^p 4"i "pits to Pive rptro^rT+'v offer* +0 cort?fn srpendment'! made In +V Unit T n i^ of "India Art IQR^ hv tho Unit Trust nf India CAmpndmenti Act I^fin¹ The effect of this provision will be that the Unit Tmit will not he liable to 9iirtnv o-p it? infnmp ?"rid, liVe- wise, institutions contributing to the initinl ronital of the Trust will not be liable to surtax on the income d°rivp^ by them from the Trust, for the assessment vea^t ]pfi4-P5 onwards

Clause 48 se^kp to mpke r" provision for resolving certain dlffl- cultJps arising in thp operation of the voluntary disclosure scheme under section 68 of the Finance Act, 1965.

Snb-cinttae (a) seek¹: to secure that where the whole or a part of the tax due from a declarant under section 68 of the Finance A ft, 1P65 has not been paid by him within the specified period of six months from the date of the declaration, the tax so outstardinp will be treated as tax due from the declarant under the provisions of the Tncome-tax Act on the date follow- ing the expiry of the asid period, and all the provisions of that Act relating to collectton and recovery of taxes will applv accordingly The time-limit for the purpose of initiating pro- ceedings for the recovery of the outstanding tax will be extended Jn such cases by one vear beyond the existing time-limit

Sub-clause (b) seeks to provide that where the tax due under section 68 of the Finance Act, 1865 has been paid by the declarant in full after the expiry of the above-mentioned six- month period or has been recovered from him under the provi- sions of sub-clause (a) mentioned above, the tax so paid or re- covered shall be deemed to be 'tax paid' for the purpose of sec- tion 68 of the Finance Act, 1965, and, accordingly, the declarant will be entitled to immunity from being assessed to tax, on th" income declared by him, under the provisions of the Income-tax Act.

Clause 47 seeks lo repeal sections 2 and 3 of the Finance Act, 19fl?

FINANCIAL MEMORANDUM

INCOME-TAX AND OTHER DIRECT TAXES

The provisions contained in clauses 27, 34, 35 and 36 of the Fin- ance (No. 2) Bill, 1967 are designed to facilitate reorganisation of the work in the Income-tax Department on the functional basis with a view to speeding up assessments and expediting collection of revenue and generally increasing the efficiency of the Depart- ment. It is proposed to introduce the functional sj sttm of working, during the financial year 1967-68, in Income-tax ranges accounting for 50-60 per cent, of the total income-tax revenue. While the re-organi- sation is not, for the present, expected to entail any increase in the strength of officers and staff in tb" field offices, it is considered necessary to set up a small unit at headquarters for assisting the field officers in the introduction of he functional system of working. This unit will also devise schemes for introducing simplified pro- cedures in other Income-tax Offices and will further function as a planning cell for the Department. Some expenditure will also be incurred on the hiring of office buildings where necessary, and also on acquiring furniture, including steel almirahs and racks, for cen- tralised record rooms in the Income-tax ranges organised on the functional system.

The expenditure on the setting up of the unit at headquarters as stated above and on hiring of office buildings, acquiring furniture, etc.. for the field offices for the financial year 1967-68 is estimated at Rs. 2,30,000 as indicated hereinbelow.

AnntM]

tmohuMfiti

Coit during

I"67-6"

(for 9 moflthi)

A. RMOTAV BxptnUttir*

R*.

R".

\.Offkm-

Coaunlwlofwra of Income-tu . 1

Aittsttnt CommlMlOfMn . . . 1

Socdoa Oflktr . . . . 1

a x 29,700

" x 19,330

1 x 6,fio6

44.550

>9^"5

4.955

n. Staff—

4 x 4,430

A t t b t i nt . . .. t

L o w tr D i T t i l on C t a rk . .. 1

1 x ajjo

iM*o

3.313

1.913

Annual

emoluments

Cost during

IS>67-68

(for 9 monttai)

III. Incidental txptnui—

*-^ Incidental expenses including Class tV

j

jjjooo

staff

tV. Hiring of btalSngt

r50"ooot

I,77.OI8

B. Non-rtcurring ExpmSturf

Furniture including tteel tlmiiahtjtnd

nek* . • 4 i

TOTAL

3^7.018

oc My Rs.

3,3(VX>0

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 2(4)(d), clause 24, clause 25, clause 30(6), clause 30(8) and clause 33 read with item 13 of the Third Schedule empower the Board to make rules in relation to the matters specified therein. The matters in respect of which such rules may be made include, inter alia, the computation of the amount of any profits and gains derived by an assessee from the export of any goods or merchandise out of India in respect of which he may claim deduction frqm tax, the computation of capital for the purposes of the 'tax holiday' concession, the particulars to be furnished in the certificate given by the person responsible for deducting tax at source from brokerage, commission, etc., the form of return to be filed by any such person who does not deduct tax at source from brokerage, commission, etc., and the authority for the purpose of certifying the percentage of displaced persons and repatriates employed in an industrial undertaking for the purposes of the deduction under the proposed section 80H under item 13 of the Third Schedule, etc. The matters in respect of which rules may be made are those of procedure and detail. Therefore, the delegation of legislative power Is of a normal character.

S. L. SHAKDHER,

Secretary.

PRINTED IN INDIA. BY THE GENERAL M A N A Q B R, GOVERNMENT OF INDIA FKKM, MINTO ROAD, NEW DELHI AND PUBLISHED BY THE MANACUBt OF PUBLICATIONS, DXLKL 1887.