Subject NOT available

click here for IIIF manifest

REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 60] NEW DELHI, SUNDAY, SEPTEMBER 1, 1974/BHADRA to, 1896

Separate paging is given to this Part in order that it may be filed as a separate compilation

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department)

New Delhi, the 1st September, 1974/Bhadra 10, 1896 (Saka)

The following Act of Parliament received the assent of the President on the 1st September, 1974, and is hereby published for general Information: —

THE COMPULSORY DEPOSIT SCHEME (INCOME-TAX

PAYERS) ACT, 1974

No. 38 or 1974

[1st September, 1974]

An Act to provide, in the interest of national economic development, for compulsory deposit by certain classes of income-tax payers and for the framing of a scheme in relation thereto, and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-fifth Year of the Republic

of India as follows: —

1. (1) This Act may be called the Compulsory Deposit Scheme

(Income-tax Payers) Act, 1974.

(2) It extends to the whole of India.

Short title. extent and com- mence- ment.

(3) It shall be deemed to have come into force on the 17th day of

July, 1974.

(601)

2. In this Act, unless the context otherwise requires,—

Defini- tions.

(a) "compulsory deposit" means compulsory deposit under this Act;

(b) "deposit'' means a deposit of money;

(c) "depositor" means a person who is liable to make a com- pulsory deposit;

(d) "Income-tax Act" means the Income-tax Act, 1961; ⁴³ Ql ¹⁹⁶¹.

(c) all other words and expressions used herein but not defined and denned in the Income-tax Act shall have the meanings, respec- tively, assigned to them in that Act.

8. (I) Subject to the provisions of this Act, the persons specified in sub-section (2) shall be liable to make compulsory deposits for the assess- ment year commencing On the 1st day of April, 1975 and the assessment year commencing on the 1st day of April, 1976.

Persona liable to make compul- sory depo- sits.

(2) The persons referred to in sub-section (1) are the following

namely: —

(a) every person, being—

(i) an individual, who is a citizen of India;

(ii) a Hindu undivided family;

6 of 19X3.

(Hi) a trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or other- wise (including any Wakf deed which is valid under the Mussal- man Wakf Validating Adt, 1913), if the income in respect of which the trustee is liable to income-tax as a representative assessee or any part thereof is not specifically receivable on be- half or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown; and

(b) every person who is assessable under the Income-tax Aot in respect of the total income of an individual, or a Hindu undivid- ed family or a trustee specified in clause (a).

Require* meat aa to come* pulsory.

deposit.

8 of 1974.

U) Where, m the case of any person specified in sub-section (2) of section 3 a deduction is required to be made under the Additional Emo- luments (Compulsory Deposit) Ordinance, 1974, the amount of the com- pulsory deposit which such person is liable to make under this Act for any assessment year shall be reduced by the amount deducted under that Ordinance during the financial year immediately preceding that assessment year; and where such deduction is equal to or exceeds the amount of such compulsory deposit, it shall not be necessary for such person to make a compulsory deposit for that assessment year.

8 of 1974.

Explanation.—When any Central Act repeals and replaces (with or without any modification) the Additional Emoluments (Compulsory Deposit) Ordinance, 1974, the references to the said Ordinance in this sub-section shall be construed as references to such Central Act.

(3) For the purposes of this section, "current income", in relation to

an assessment year, means,— -^

(a) in a case where the Income-tax Officer has made an order under sub-section {1) or sub-section (3) of section 210 of the'Income- tax Act requiring the person to pay advance tax during the financial year immediately preceding that assessment year and the person has not sent an estimate under subjection {1) or sub-section (2) or sub- section (3A) of section 212 of that Act,—

(i) if the total income of the latest previous year in respect of which the person has been assessed by way of regular assess- ment forms the basis of computation of advance tax payable by him, such total income [exclusive of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2 o£ the Income-tax Act] as increased by the net agricultural income, if any, which has been taken into account for the purposes of charging income-tax for the assessment year relevant to that previous year; or

(ii) if the total income of the previous year on the basis of which income-lax has been paid by the person under section 140A of the Income-tax Act forms the basis of computation of advance tax, such total income [exclusive of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2 of the Income-tax Act] as increased by the net agricultural income, if any, returned by the person in the return of income for the assessment year relevant to that previous year; (b) in a case where an estimate is sent by the person under sub- section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 212 of the Income-tax Act, the total income [exclu- sive of capital gains aqjl income referred to in sub-clause {ix) of clause (24) of section 2 of the Income-tax Act] as estimated by him, of the period which would be the previous year for that assessment year, as increased by the net agricultural income, if any, of that period, as estimated by him; ^

(c) in any other case, if the total income of the person, as esti-

mated by him, of the period which, would be " * ^ ^ £ *£ that assessment year exceeds the maximum amount not chai geafafe to income-tax in his case, such total i n c o m e ; [ " " * " £ •* ^ gains and income referred to in sub-clause ( a) of dause^ 24) o section 2 of the IncoWtax Act] as increased by the net agricultural income, if any, of that period, as estimated by him.

Explanation.—In this sub-section, "net agricultural income" means the net agricultural income as defined in the Finance Act of the relevant year.

5. A depositor shall make the compulsory deposit for an assessment year referred to in sub-section (J) of section 3,—

Timt lor

making

compul-

sory depo-

sit

(a) in a case where such depositor is required to pay advance tax under the Income-tax Act in the financial year immediately pre- ceding that assessment year, at any time (in one sum or in instal- ments of his choice) before the expiry of the date on which the last instalment of advance tax is payable by him in accordance with the provisions of section 211 or, as the case may be, sub-section (3A) of section 212 of that Act;

(b) in any other case, at any time (in one sum or in instalments of his choice) before the end of the financial year immediately preceding that assessment year.

Order by Income-- tax Offi- cer for compul- sory depo- sit in cer- tala cases.

6. (1) If, in relation to an,assessment year referred to in sub-section (1) of section 3, the correct income of a person falling under clause (c" of sub-section (3) of section 4 exceeds fifteen thousand rupees and such person has failed to make the compulsory deposit for that assessment year, the ncome-tax Officer shall, by order in writing, direct that such person shall make the compulsory deposit with reference to his correct income.

(2) For the purposes of this section, "correct income" of a person, in relation to an assessment year, means—

(i) in a case where the person has furnished the return of income under section 139 of the Income-tax Act, the^otal income [exclusive of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2 of the Income-tax Act] returned by him, as increased by the net agricultural income, if any, returned by him:

(it) in a case where the person has failed to furnish the return of income under section 139 of the Income-tax Act and assessment Is made under section 144 of that Act, the total income [exclusive of capital gains and income referred to in eub-clause (ir) of clause (24) of section 2 of the Income-tax Act] determined on assessment a? increased by the net agricultural income, if any, determined or assessment.

Explanation.—In this sub-section, "net agricultural income" has the meaning assigned to it in the Explanation to sub-section (3) of section 4.

^ 1. (2) Every compulsory deposit made by or recovered from a deposi- tor shall carry simple interest at a rate equal to the bank deposit rate-

Consput-

$ory d*p"-

•it to

carry sim-

ple inter-

est

10 011846.

Explanation.—In this sub-section, "bank deposit rate" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different clauses of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949.

(2) The interest shall be calculated in such manner as may be spe- cified in the scheme framed under section 19.

id of 1&49.

(3) For the purposes of the deduction under section 80L of the Income-tax Act, interest received on a compulsory deposit shall be deemed to be interest received on a deposit within a banking company to which the Banking Regulation Act, 1949, applies.

Repay- ment ol compul- sory deposit, 8. The amount of compulsory deposit made by or recovered from a depositor in any financial year shall be repayable in five equal annual instalments commencing from the expiry of two years from the end of that financial year, together with the interest due on the wholt or, a3 the case may be, part/of the amount of the compulsory deposit which has remained unpaid:

Provided that nothing in this section "hall prevent earlier repayment of the deposit or any instalment thereof together with the interest due in any case in which the Income-tax Officer is satisfied that extreme hardship will be caused unless such repayment is made.

9. Every depositor shall send to the Income-tax Officer, along with the return of income for the assessment year for which hi? is liable to make a compulsory deposit, proof of the fact of such deposit having been made.v

Intima- tion re- garding compul- sory depo- sit.

Hi. (i) If, in relation to an assessment year referred to in sub-sec- tion (J) of section 3, any person who is liable to make a compulsory deposit [being a person falling under clause (a) or clause (b) of sub- section (3) of section 4]—

Penalty for fail- ure to make compul- sory depo- sit.

(a) has failed to make the compulsory deposit within the time

allowed under section 5. or

(b) has made the compulsory deposit within such time but the

deposit so made falls short of the requisite amount,

the income-tax Officer shall, by order in writing, direct that such person shall pay, by way of penalty, a sum—

(i) which, in the case referred to in clause (o), shall be equal to twenty-five per cent, of the compulsory deposit which he is liable to make; and

(ii) which, in the cane referred to in clause (b), shall be equal to twenty-five per cent, of the amount by which the compulsory- deposit made by him falls short of the requisite amount.

(2) If, in relation to an assessment year referred to in sub-section (i) of section 3, the correct income of a person falling under clause (c) of sub-section (3) of section 4, exceeds fifteen thousand rupees and such person—

(a) has failed to make the compulsory deposit within the time allowed under section 5, or

(b) haa made the compulsory deposit within such time on the baeis of his own estimate but the deposit BO made is les" than

seventy-five per cent, of the compulsory deposit which he would have been liable to make on the basis of his correct income,

the Income-tax Officer shall, by order in writing, direct that such person shall pay by way of penalty a sum—

(i) which, in the case referred to in clause (a), shall be equal to twenty-five per cent, of the compulsory deposit calculated with reference to his correct income; and

(ii) which, in the case referred to in clause (b), shall be equal to twenty-five per cent, of the amount by which the compulsory deposit made by him falls short of the compulsory deposit calculated with reference to his correct income.

Explanation.—In this sub-section, "correct income" has the meaning assigned to it in sub-section (2) of section 6.

(3) No order imposing a penalty under this section shall be made against any person unless such person has been heard or has been given a reasonable opportunity of being heard.

Authori- ties

11. (1) Every Director of Inspection, Commissioner of Income-tax, Additional Commissioner of Tncome-tax, Appellate Assistant Commis- sioner of Income-tax, Inspecting Assistant Commissioner of Income-tax, Income-tax Officer and Inspector of Income-tax, shall have the like powers and perform the like functions under this Act as he has and performs under the Income.tax Act, and for the exercise of his powers and the performance of his functions, his jurisdiction under this Act shall be the same as he has under the Income-tax Act and for this purpose compulsory deposit under this Act shall be deemed to be tax chargeable under that Act.

(2) All officers and persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the

Board:

Provided that no such orders, instructions or directions shall be

issued—

(a) so as to require any authority referred to in sub-section (1) to dispose of a particular case in a particular manner; or

(b) so as to interfere with the discretion of the Appellate Assis- tant Commissioner in theexercise of his appellate functions.

(3. Every Income-tax Officer employed in the execution of this Act

he performs his functions.

Appeals and. revi- sion.

.Rectifica- tion of mistakes- 13- (I) With a view to rectifying any mistake apparent from the record, the Income-tax Officer, the Appellate Assistant Commissioner, the Commissioner and the Appellate Tribunal may, of his, or its, own motion or on an application by the depositor in this behalf, amend any order passed by him or it in any proceeding under this Act, within four years of the date on which such order was passed.

(2) An amendment which has the effect of enhancing the compulsory deposit or any penalty imposed under this Act shall not be made under this section unless the authority concerned has given notice to the depositor of its intention so to do and has allowed the depositor a reason- able opportunity of being heard.

(3) Where an amendment is made under this section, the order shall

be passed in writing by the authority concerned.

(4) Where any such amendment has the effect of enhancing the com- pulsory deposit or the penalty imposed under this Act, the Income-tax Officer shall serve on the depositor a notice specifying the sum which has to be deposited or paid.

14. (1) When, in consequence of any order passed under this Act, any compulsory deposit or penalty has to be made or paid, the Income-tax Officer shall serve upon the depositor a notice specifying the sum which has to be deposited or paid.

Collection and recovery of com- pulsory deposit and penally.

(2) The sum specified in a notice under sub-section (D shall be deposited or, as the case may be, paid within thirty-five days of the service of the notice at the place and with or to the person mentioned in the notice:

Provided that on an application made by the depositor before the expiry of the said period of thirty-five days, the Income-tax Officer may extend the time for making the deposit or payment or allow the deposit or payment to be made by instalments subject to such conditions as he may think fit to impose in the circumstances of the case.

(3) If a depositor fails to make the compulsory deposit within the time allowed under section 5, or if he fails to deposit or, as the case may be, pay the amount which he is required to deposit or pay by notice under sub-section (1) within the time allowed under sub-section (2) (whether fixed originally or on extension), at the place and with or to the person mentioned in the said notice, the depositor shall be deemed to be in default.

(-4) Any arrear of compulsory deposit and any penalty imposed under this Act shall be recoverable in the manner provided in Chapter XVII-D of the Income-tax Act for recovery of arrears of tax and for this purpose the provisions of that Chapter shall apply as if references to the assessee- therein were references to the depositor.

Bound- Ing off.

15. (I) The amount of the current income, correct income and com- pulsory deposit shall be rounded off to the nearest multiple of ten runees and, for this purpose, any part of- a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, +hen, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which Is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten.

Explanation,—In this sub-section, " c u r r e nt income"' a nd "correct income" have t he m e a n i n gs respectively assigned to t h em in sab-section (3) of section 4 a nd sub-section (2) of section 6.

(2) T he a m o u nt of p e n a l ty p a y a b le u n d er t he provisions of this Act shall be r o u n d ed off to the n e a r e st r u p ee and, for this purpose, w h e re such a m o u nt contains a p a rt of a r u p ee consisting of paise, then, If such p a rt is fifty paise or more, it shall be increased to one r u p ee and if such p a rt is less t h an fifty paise, it shall be ignored.

16. T he provisions of C h a p t er XV of t he Income-tax Act relating to liability in special cases shall, so far as m ay be, apply in relation to com- pulsory deposits and penalities imposable u n d er this A ct as t h ey apply in relation to income-tax payable a nd penalties imposable Under t h at Act. Applica- bility ot Chapter XV of Income- tax Act.

17. (1) The amount of compulsory deposit and interest theveon stand- ing to the credit of any depositor shall not be liable to attachment under a decree or order of any court in respect of any debt or liability incurred by the depositor.

Protec- tion against attach- ment.

(2) The amount of compulsory deposit and interest thereon standing to the credit of a depositor at the time of his death and payable to his nominee shall vest in the nominee and shall be free from debt or other liability incurred by the deceased Or incurred by the nominee before the death of the depositor.

18. No suit, prosecution or other legal proceeding shall lie against the Government or against any officer of the Government for anything which is in good faith done or intended to be done under this Act or any scheme framed thereunder.

Protec- tion of action taken in good faith. 19 (1) The Central Government shall, by notification in the Official Gazette, frame a scheme or schemes, to be called Compulsory Deport* (Income-tax Payers) Scheme or Schemes, in relation to compulsory deposit*.

Compul- sory Depo- •tt Scht- RM), (2) A scheme framed under iub-"ection (1) may provide for-

(c) the manner In which compulsory deposit* shall be made;

(b) the document! to be issued to persons by whom deposits

have been made as evidence of such deposits;

(c) the authority or authoritiee by or through whom the depo-

sit* may be collected;

td) the nomination of any person to receive the amount standing to "L credit of a depositor in the event of his d*th or in cancella- tion or change of such nomination;

(e) the issue of duplicate of any document issued as evidence of any deposit in the event of loss or destruction of the original and the fee (not exceeding two rupees on the payment of which such dupli- cate may be issued;

(f) any other matter which may be necessary or proper for the

effective implementation of the scheme,

(3) The Central Government may, by notification in the Official Gazette, add to, amend or vary any scheme framed Jjnder sub-section (1).

(4) A scheme framed under sub-section (I) or a notification issued undei sub-section (3) may provide that all or any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the scheme or notification.

(5) Any scheme framed under sub-section (1) or any notification issued under sub-section (3) shall have effect notwithstanding anything contained in any law for the time being in force (other than this Act) or any instrument having effect by virtue of any law other than this Act.

(6") Every scheme framed under sub-section (1) and every notifica- tion issued under sub-section (3) shall be laid, as soon as may be, after it i& framed or issued before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the scheme or notification or both Houses agree that the scheme or notification should not be framed or issued, the scheme or notification shall there- after have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that scheme or notification.

30. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty:

Power to remove difficul- ties

Provided that no such order shall be made after the expiry of a period

of two years from the commencement of this Act.

21. (J) The Compulsory Deposit Scheme (Income-tax Payers) Ordi-

nance, 1974, is hereby repealed.

10 of 1974.

Repeal und saving.

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act.

THE SCHEDULE

[See section 4(1)]

RATES or COMPULSORY DEPOSIT

(1)

4 per cent, of the current income;

(2)

Where the current income exceeds Rs. 15,000 but doeg not exceed Rs. 25,000 Where the current income exceeds Rs- 25,000 but does not exceed Rs. 70,000

Rs. 1,000 plus 6 per cent of the amount by which the current income exceeds Rs. 25,000;

(3) Where the current income exceeds Rs. 70,000

Rs. 3,700 plus 8 per cent of the amount by which the current income exceeds Rs. 70,000:

Provided that where the current income exceeds Rs. 15,000 but does not exceed Rs. 15,620 the compulsory deposit shall in no case exceed the amount by which the current income exceeds Rs, 15,000:

Provided further that where in the case of any depositor the amount of compulsory deposit calculated in accordance with the foregoing pro- visions is less than Rs. 100, it shall not be necessary for him to make such deposit:

Explanation.—In this Schedule, "current income" has the meaning assigned to it in sub-section (3) of section 4.

K. K. SUNDARAM,

Secy, to the Govt. of India.

PRINTED BY THE MANAGER, GOVERNMENT OF INDIA PRES8, MINTO ROAD, NEW

DELHI AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI, 1 9 74