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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 11] NEW DELHI, FRIDAY, JUNE 17, 1977/JYAISTHA 27, 1899

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

as a separate compilation

LOK SABHA

The following Bills were introduced m Lok Sabha on 17th June, 1977: —

BILL NO 48 OF 1977

A Bill to give effect to the financial proposals of the Central Government

for the financial year 1977-78.

BE it enacted by Parliament in the Twenty-eighth Year of the Republic of India as follows: —

CHAPTER I

PRELIMINARY

1 (1) This Act may be called the Finance (No 2) Act 1977.

Short title and com mence- ment.

(2) Save as otherwise provided in this Act, sections 2 to 30 and sec- tions 34 to 39 shall be deemed to have come into force on the 1st day of April, 1977

CHAPTER II

RATES OF INCOME-TAX

Income -tax.

2 (1) Subject to the provisions of sub-section (2) and (3), for the assessment year commencing on the 1st day of April, 1977, income-tax shall be charged at the rates specified in Part I of the First Schedule and shall be increased.—

(a) in the cases to which Paragraphs A, B, C and D of that Part apply, by a surcharge for purposes of the Union; and

(b) in the cases to whcih Paragraph E of that Part applies, by a surcharge,

calculated in each ca.se in the manner provided therein'

Provided that where an assesses, being a company, has made, during

18 of 1964.

the financial year commencing on the 1st day of April, 1976, any deposit with the Industrial Development Bank of India established under th' Industrial Development Bank of India Act, 19G4 under the Companies Deposits (Surcharge on Income-tax) Scheme, 1976, then, the surcharge on income-tax payable by the company,—

(a) m a case where the amount of the, deposit so made is equal to or exceeds the amount of surcharge on income-tax payable by it, shall be nil; and

(b) in a case where the amount of the deposit so made falls* short of the amount of surcharge* on income-tax payable by it, shall be reduced by the amount of the deposit.

(2) In the cases to which Sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part I of the First Schedule applies, where the assessee has, in the previous year, any net agricultural income, in addition to total income, and the total income exceeds eight thousand rupees, then —

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the¹ net agricultural income were comprised in the total income after the first eight thousand rupees of the total income but without being liable to tax), only for the purpose' of charging income-tax m respect of the total income, and

(b) the income-tax chargeable shall be calculated as follows' —

(i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be* determined m respect of the aggregate income at the ratey specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A as if such aggregate income were the total income;

(ii) the not agricultural income shall be increased by a sum of eight thousand rupees and the amount of income-tax shall be determined m lespcct of the net fumouituial income as so increased at the rates specified m Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if the net agricultural income as so increased were the total income,

(hi) the amount by which income-tax determined in accoidance with sub-clause fi) exceeds the amount of income-tax deteimined m accordance with sub-clause* (n) shall be the income-tax chargeable in respect of the total income.

43 of 1961.

(3) In cases to which the provisions of Chapter XII or section 164 of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub-section (7) or the rates as specified in that Chapter or section, as the case may be.

(4) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 184D 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

(5) Subject to the provisions of sub-section (C), in cases m which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 oE 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 of the said Act or deducted under section 192 of the said Act from income chargeable under the head "Salaries" or deducted under sub-section (9) of section 30E of the said Act from any payment referred to in the said sub-section (9) or m which the "advance tax" payable under Chapter XVlI-C of the said Act has to be computed, at the rate or rates m force, such mcomo-tax or, as the case may be, "advance tax" .shall be so calculated, charged, deducted or computed at the rate or i ates specified in Part III of the First Schedule •

Provided that in cases to which the provisions of Chapter XIT or section 164 of the Income-tax Act apply, "advance tax" shall be computed with reference to the rates imposed by this sub-section or the rates as specified m that Chapter or section, as the case may be

(6) In the cases to which Sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part III of the First Schedule applies, where the assessee has in the previous year or, if by virtue ot any provision of the Income- tax'Act income-tax w to be charged in lespect of the income oi a period other than the previous year, in such other period, any net agricultural income in addition to total income, and the total income exceeds ten thousand rupees, then, in calculating income-tax under the first proviso to sub-sedion (5) of section 132 of the Income-tax Act or in charging income-lax under sub-section (2) of section 174 or srebon 175_ or sub- section (2) of section 176 of the said Act or in computing the advance tax" payable under Chapter XVII-C of the said Act, at the rate or rates in force,—

(a) Lho net agncultural income shall b- Uknn into account in the manner P1ovided m clause (b) (that is to say, as ,f the net agricultural income were comprised m the- total income aftei the fifst eight thousand rupees of ihe total income but w,thoul bemfi able to tax) only for the purpose of calculating charging or

c l p u t mg J ih income-tax or, as the case may be, "advance tax m respect of the total income; and

(h) such income-tax or, as the case may bo, "advance tax" shall be so calculated, charged or computed as follows -

(i) the total income and the net agriculural income shall be a gi aS and the amount of mcome-tax or "advance tax' shaU ££ mined m ^ e c^ 1 he aggregate mcon, . the rates

K ^ fA ^ "1 Paragraph A, a, if -u* aggregate

income were the total income'

r, A A tw for the pm poses of determining the amount Provided that for the puip > d a n ce W l th t h l8 sub-

of income-tax or **>™*J** ™ n£ t hc p r o v i so below Siab-

£ ££ -rrthe $2Z i'sub-ParaU n of the "d

Paragiaph A and the provisions relating to surcharge on income- tax in the said Sub-Paragraphs shall not apply;

(n) the net agricultural income shall be increased by a sum o{' eight thousand rupees and the amount of income-tax or "advance tax'' shall be determined in respect of the net agri- cultural income as so increased at the rates specified in Sub- Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, ay if the net agricultural income as so increased were the total income'

Provided that for the puiposes of determining the amount of income-tax or "advance tax" in accordance with this sub- clause, the provisions of clause (i) and clause (ii) of the proviso below Sub-Paragraph 1 or, as the case may be, Sub-Paragraph II of the said Paragraph A and the provisions relating to surcharge on income-tax in the t,aid Sub-Paragraphs shall not apply;

(m) the amount of income-tax or "advance tax" determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax or, as the case may be, "advance tax" determined in accordance with sub-clause (ii)-

Provided that where' the sum so arrived at exceeds seventy per cent of the amount by which the total income exceeds ten thousand rupees, the excess shall be disregarded;

(it>) the amount of incomC-tax or "advance tax" determined in accordance with sub-clause (iii) shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen per cent, of such income-tax or, as the case may be, "advance tax" and the sum so arrived at shall be the income-tax or, aa the case may be, "advance tax'¹ in respect of the total income.

(7) For the purposes of this section and the First S c h e d u l e-

fa) "company in which the public are substantially ^ r e s t e d" 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 companv which, in respect of its income liable to income-tax ^ the Income-tax Act for the assessment year commencing on the) 1st H7V of Aonl 1977 has made the prescribed arrangements for the dedarati^n and pavment within India of the dividends (including dividends on preference shares) payable out of& such income m accordance with the provision, of section 194 of that Act,

(c) 'industrial company" means a company which is mamly

manufacture or processing of goods or in mining.

jPrnJanalion-For the purposes of this clause, a company shall

or in mining, if the income attributable to any one or more

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 income¹;

(d) "insurance commission" means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival oi policies of insurance),

(0) "net agricultural income", in relation to a person, means the total amount of agricultural income, from whatever source derived, of that person computed in accordance with the rules contained in Part 'IV of the First Schedule,

(/) "tax-free security'' means any security of the! Central Govern- ment 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;

(g) all other words and expressions used m this section or in the First Schedule but not de/ined in this jub-wcction and defined in the Income-tax Act shall have tho meanings, respectively, assigned to them m that Act,

CHAPTER III

DlKECT TAXES

Income-tax

3 In sectjor 'i <>| tho Income-tax Act, in clause (42A), for the words

Amend- ment of section 2.

"sixty months', thd woids "thirty-six month?" shall be substituted with effect from the 1st day of April, 1978

4. In section 9 of the Income-tax Act, in sub-section (/),—

(a) after clause (vh) and before the Explanation, the following

Amend- ment of section 9.

proviso shall be inserted, namely: —

"Provided that nothing contained in this clause shall apply in reflation to any income by way of fees ior technical services payable m pursuance of an agreement made before the 1st day of April, 1976 and approved by the Central Government";

(b) the Explanation below clause (mi) shall be numbered as Explanation 2 and before that Explanation as so numbered, the following Explanation shall be inserted, namely.—

"Explanation 1.—For the purposes of the foregoing proviso, an agiceniont made on or after the 1st day of April, 1976 shall be deemed to have been made before that date if the agreement is made m accordance with pioposals approved by the Central Government before that date ".

5 In section 10 of the Income-tax Act,—

Amend- ment of section 10, (a) in clause (G)t m sub-clause (1) after item (a), the following item shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1972, namely: —

"(aa) from his employer, for his children having full time education in any educational institution outside India, in connection with their proceeding to India during vacation;";

(b) in clause (26A), for the figures, letters and words "1st day of April, 1975", the figures, letters and words "1st day of April, 1980"' shall be substituted and shall ba deemed to have been substituted with effect from the 1st day of April, 1975

6. In section 11 of the Income-tax Act, m clause (b) of sub-section (2), with effect fiom the 1st day of April, 1978,—

Amend- ment of section 11.

(a) for sub-clause (u), the following sub-clause shall be substi- tuted, namely: —

"(M) deposited m any account with the Post Office Savings Bank [including deposits mado under the Post Office (Time Deposits) Rules, 1970] or a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank)

10 of 1949.

Provided that the money t,o accumulated or set apart may also be deposited, or continue to remain, deposited during any previous year commencing before the 1st day of April, 1981 with any other banking company, being a banking company to which the Banking Regulation Act, 1949 applies, or";

(b) after sub-clause (m), the following Explanation shall be

inserted, namely —

23 of 195S. 38 of195B

5 of 1970.

2 of 1934.

'Explanation.—For the put poses of sub-clause (xi), "scheduled bank" moans the State Bank of India constituted under the State Bank of India Act, 1955, a subsidiary bank as denned in the State Bank of India (Subsidiaiy Banks) Act, 1959, a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfei of Undertakings) Act, 1970, or an> other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934.'

7 In section 13 of the Income-tax Act, with effect from the 1st day

of April, 1978,—

Amend- ment of section 13.

(a) in sub-section (1), in clause ( d i-

rt) for the figures, letters and words "1st day of April, 1979*\ the figures, letters and words "1st day of April, 1982" shall be substituted;

(ii) for the figures, letters and words ''1st day of! April, ]L97£, the figures, letters and words "1st day of April, 1981 shall be substituted, (b) in sub-section (5", m clause (a), for sub-clause (in), the following sub-clause shall be substituted, n a m e l y-

'(m) deposit m any account with a scheduled ^ank °r a

co-operative land development bank).

Explanation — In this sub-clauje, "scheduled bank" shall have the same meaning as in the Explanation at the end of clause (fa) of sub-section (2) of section 11'.

8, In section _>4 of tho In:omo-ta'; Act, in sub-section (7),—

Amend- ment of section 24 (a) 111 clause Or), th' "vord "and ' ocean ing at the pnd shall be omUted;

(b) after clause (ix), as so amended, the following Explanation shall be inserted, namely -

"Explanation—The deduction under this clause shall be made irrespective of whether the period during which the property or, as the case may be, pait of the property was vacant precedes or follows the period during which it is let,'',

9. In section 32A of the Inconie-ta< Act with effect from the 1st day of April, 1978,—

Amend- ment of section 32A.

(a) in sub-section (2),—

(i) in clause (b), for sub-clauses hi) and (in), the following sub-clause shall be substituied, namely:—•

'(ii) for the purposes of business of construction, manu- facture or production of any article or thing, not being an article or thing specified m the list in the Eleventh Schedule:

Provided that in relaiion to any new machinery or plant

installed before the 1st day of July, 1977 in a small-scale industrial undertaking, this sub-clause shall have effect as If the words "not being an article or thing specified in the list in the Eleventh Schedule" had been omitted;';

(ii) m the Explanation, for the words, brackets and figure "this sub-section and sub-section (4)", tho words, brackets, figures and letter "this sub-section and sub-sections (2B) and (4)" shall be substituted;

(b) after sub-section (2), the following sub-section? shall be inserted, namely: —

\2A) The deduction unnVr wub-sedion (7) shall not be denied in respect of any machinery or plant installed and used mainly for the purposes of business of construction, manufacture or production of anv ai lick¹ or thinp, not being an article or thing specified in tho list in 1he Eleventh Schedule, by reason only hat such machinery or plant is also used for the purposes of business of conduction, manufacture or production of any article or thing specified m th^ s-;iid list

(2B) Where any new machinery or plant is installed after the 30th day oE .Tune, 1977, but Lefore the 1st day of April, 1982, for the purposes of business- of manufacture or production of any article or thing and such ai tide or thing —

(a) is manufactured or produced by using any technology (including any process) 01 other know-how developed in, or

(b) is an article or thing invented in,

a laboratory owned or financed by the Government, or a laboratory owned bv a public sector company or a University,

the provisions o[ sub-section (I) t:hall have effect in relation to sn-h machinery or plant as if for the words "twenty-five per CT>t '\ 1he words "thirty-five per cent" had been substituted, if the following conditions are fulfilled, namely: —

(i) the right to use such technology (including any process-) or other know-how or to manufacture or produce such article or thing has been acquired from the owner of such laboratory or any person deriving title from such owner;

(ii) the assessee finishes, along with his return of income for the assessment year for which the deduction is claimed, a certificate from the prescribed authority to the effect that such article or thin^ is manufactured or produced by using such technology (including any process¹) or other know-how developed in such laboratory IT is an article or thing invented in such laboratory, and

(Hi) the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule

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

21 of 1801.

(a) "laboratory financed hy the Government" means a laboratory owned by any body (including a society registered under the Societies Registration Act, 1860) and financed wholly or mainly by the Government,

1 of I95t}.

(b) "public sector comnany" means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956;

3 of 1968.

10. In the Income-tax Act, after section 35C, the following sectior shall be inserted with effect from the 1st day of April, 1978, namely: —

Insertion of new section 35CC. Rural develop- ment allowances '35CC. (7) Wheie the assessee, being a company, incurs after the 30th day of June, 1977 any expenditure on any programme of rural development, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount of such expenditure incurred duung the previous year:

Provided that the approval of the prescribed authority has been obtained by the assessee in respect of such programme before incurring the expenditure.

Explanation —For the purposes of this sub-section,—

(a) "programme of rural development" includes any pro- giamrhe for promoting the social and economic welfare of, or the uplift of, the public in any rural area;

(b) "rural area" means any area, other than an area referred to m item (A) of clause (u) of the proviso to sub-clause (c) of clause (1) of section 2 or any area specified under item (B) of clause (n) of that proviso

(2) Where the expenditure referred to in sub-section (2) results in the acquisition or creation of an asset, being building, machinery, plant or furniture, and the assessee does not divest itself of the ownership of such asset before the end of the previous year, no deduction m respect of such expenditure shall be allowed under sub-section (2) but the assessee shall be entitled to the allowance for depreciation in respect of the asset so acquired or created as if such asset was used for the purposes of the business and the provisions of sections 32, 34, 41 and 43 shall, so far as may be, apply accordingly

(3) No deduction shall be allowed in respect of the expenditure referred to in sub-section^ (2) unless the assessee furnishes, along with the return of income for the assessment year for which the deduction is claimed, a statement ot such expenditure in the prescribed form duly signed and verified by an accountant as defined m the Explana- tion below sub-section (2) of section 288 and setting forth such particulars¹ as may be prescribed

(4) Where a deduction under this section is claimed and allowed for any assessment year m respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year.'.

Amend- ment of section 36.

11 In section 3tf of the Income-tax Act, in sub-section (7), for sub- clause (b) of clause (mii), the following sub-clause shall be substituted with effect from the 1st day of April, 1978, namely: —

"(b) in the case of any other financial ccnporation, twenty-five

per cent.,".

Amend- ment of section BO, 12. In section 50 of the Income-tax Act, in clause (2), for the figures, letters and words "1st day of January, 1954", the figures, letters and words "1st day of January, 1964" shall be substituted with effect from the 1st day of April, 1978.

13. In the Income-tax Act, after section 54D, the following section shall be inserted with effect from the 1st day of April, 1978, namely: —

Insertion of new section 54E.

CapiLal gain on transfer of capital assets not to be charged m c01iain cases.

'54E (/) Where the capital gain arises from the transfer of a capital asset, not being a short-term capital asset, (the capital asset so transferred being hereafter m this section referred to as the original asset) and the assessee has, within a period of six months after the date of such transfer, invested or deposited the full value of the consideration or any part thereof received or accruing as a result of buch transfer in any specified asset (such specified asset being hereafter in this section referred to as the new asset), the capital gain shall be dealt with m accordance with the following provisions of this section, that is to say,—

(a) if the cost of the new asset is not less than the full value of the consideration received or accruing in respect of the original asset, the whole of such capital gam shall not be charged under section 45,

(b) if the cost of the new asset is less than the full value of the consideration received or accruing in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the new asset bears to the full value of such consideration shall not be charged under section 45

Explanation /.—For the purposes of this sub-section, "specified asset'¹ means any of the following assets, namely: —

(i) securities of the Central Government or a State Govern- ment,

(ii) savings certificates as denned in clause (c) of section 2

46 of 1959.

of the Government Savings Certificates Act, 1959;

(tii) units in the Unit Trust of India established under the

52 of 1963.

Unit Trust of India Act, 196a;

(iv) debentures specified by the Central Government for the purposes of clause (ii) of sub-section (2) of section 80L,

42 of 1956.

(f) shares in any Indian company which are issued to the public or are listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 and any rules made thereunder;

23 of 1955. 38 of 1959.

5 of 1970.

(vi) deposits for a period of not less than three years with the State Bank of India established under the State Bank of India Act, 1955 or any subsidiary bank as denned in the State Bank of India (Subsidiary Banks) Act, 1959 or any nationalised bank, that is to say, any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land develop- ment bank).

(2) Where the new asset is transferred, or converted (otherwis* than by transfer) into money, within a period of three years frorr the date of its acquisition, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the ca3e may be, clause (b), of sub-section {1) shall be deemed to be income chargeable under the head "Capital gains" relating to capital assets other than short-teim capital assets of the previous year in which the new asset is transferred,'.

Amend- ment of section 55.

14 In section 55 of the Income-tax Act, for the figures, letters and words "1st day of January, 1954", wherever they occur, the figures, letters and words "1st day of January, 1964" shall be substituted with effect from the 1st day of April, 1978

15. In the Income-tax Act, after section 72, the following section shall

be inserted, with effect from the 1st day of April, 1978, namely: —

Insertion oi new section 72 A.

'72A (1) Where there has been an amalgamation of a company owning! an industrial undertaking with another company and the Central Government, on the recommendation of the specified authority, is satisfied that the following conditions are fulfilled, namely: —

(a) the accumulated loss of the amalgamating company as on the last day¹ of the previous year immediately preceding the previous year in which the amalgamation was effected, exceeds fifty per cent, of the aggregate of the paid-up share capital and reserves, if any, of that company as on that day;

(b) the amalgamating company was not, immediately before

such amalgamation, financially viable,

Provisions relating to carry- forward and set off of accumulat- ed loss and un- absorbed depre- ciation allowance in rertam cas-'s of amalgama- tion.

Government to enable the amalgamated company to carry on such business more economically or more efficiently;

(h) the amalgamated company furnishes, along with its return of income for the said assessment year, a certificate from the specified authority to the effect that adequate steps have been taken by that company for the rehabilitation or revival of the business of the amalgamating company. Explanation, —In this section,—

(a) "accumulated loss" means so much of the loss of the amalgamahng company under the head "Profits and gams of business or profession'' (not being a loss sustained in a specula- tion business) which )the amalgamating dompany would have been entitled to cany forward and set off under the provisions of section 72 if the amalgamation had not been effected,

(b) "specified authority" means such authority as the Central Government may, by notification in the Official Gazette, specify for the purposes of this section;

(c) "unabsorbed depreciation" means so much of the allow- ance for depreciation of the amalgamating company which remains to be allowed and which would have been allowed to the amalgamating company under the provisions of this Act if the amalgamation had not been effected '.

16. In section BOG of the Income-tax Act, in sub-section (4), with effect

from the 1st day of April, 197P,—

(a) for the words "two hundred thousand rupees", the words Amend- ment of section 80G.

"five hundred thousand rupees" shall be substituted,

(b) the proviso sh ill be omitted

17 In section 80HH of the Income-tax Act, after sub-section (9), the following sub-section shall be inserted with effect from the 1st day of April, 1978, namely: —

Amend- ment of section 80HH.

"(SA) Whero a deduction in relation to the profits and gains of a small-scale industrial undertaking to which section 80HHA applies is claimed and allowed under that section for ^ ^ f l Z ei deduction m relation to such profits and gams shall not be allowed under this section for the same or any other assessment year. .

18 !n the Income-tax Act, after secfior> 8 0 H H' ^ ^ ^m^ shall be inserted with effect from the 1st day of April, 1978, namely

Insertion of new section 80HHA

'POT-IHA (1) Whore the gross total income of an assessee includes

the total income of the assessee, a deduction from sucr, p gains of an amount equal to twenty per cent thereol

(2) This section applies to anv small-scale industrial undertaking

which fulfil*, all the following conditions, n a m e l y :-

(t) it begins to manufacture or produce articles after the 30th

day of June, 1977 in any rural area;

Deduction in respect of profits and gains from newly establish- ed small- scale industrial under- takings in curtain areas.

(u) it is not iormed by the splitting up, or the reconstruction,

of a business already m existence:

Provided that this condition shall not apply in respect of any small-scale industrial undertaking which is formed as a result of the re-establishment, reconstiuction or revival by the assessee of the business of any such industrial undertaking as is referred to m section 33B, in the circumstances and within the period specified in that section;

(iii) it is not formed by the transfer to a new business of

machinery or plant previously used for any purpose,

(iu) it 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

Explanation --Where in the case of a small-scale industrial undertaking, any machinery or plant or anv part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ni) of this sub- section, the condition specified therein shall be deemed to have been fulfilled

(3) The deduction specified in sub-section (0 shall be allowed in computing the total income in respect of each of the ten assessment years beginning with the assessment year relevant to the previous year in which the small-scale industrial undertaking begins to manufacture or produce articles.

(4) Where the assessee is n person, other than a company or a co-operative society, the deduction under sub-section (1) shall not be admissible unless the accounts of the small-scale industrial under- taking for the previous year rel vant to the assessment year for which the deduction ]s claimed have been audited by an accountant as defined m the Explanation below sub-section (2) of section 288 and the assesses furnishes, along with his return of income, the report of such audit m the prescribed form duly signed and verified by such accountant.

(5) The provisions of sub-sections (6) and (7) of section 80HH shall, so far as may be, apply m ielation to the computation of the profits and gams of a small-scale industrial undertaking for the purposes of the deduction under this section as they apply in relation to the computation of the profits and gams of an industrial under- taking for the purposes of the deduction under that section

(6) In a case where the assessee is entitled also to the deduction under section 80J m relation to the profits and gams of a small-scale industrial undertaking to which this section applies, effect shall first be given to the provisions of this section

(7) Where a deduction m relation to the profits and gains of a small-scale industrial undertaking to which section 80HH applies is claimed and allowed under that section for any assessment year, deduction m relation to such profits and gains shall not be allowed under this section for the same or any other assessment year.

(8) Nothing contained in this section shall apply in relation to any small-scale industrial undertaking engaged in mining.

Explanation — For the purposes of this section,—

(a) "iural area" shall have the same meaning as in clause (b) of the Explanation to sub-section (7) of section 35CC,

(b) an industrial undertaking shall be deemed to be a small- scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed ten lakh rupees; and for this purpose the value of any machinery or plant shall be,—

(i) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the awsessee; and

(it) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant.'

19 For section 80RRA of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April, 1978, namely: —

Substitu- tion of new sec- lion for section 80RRA.

'80RRA. (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration of an amount equal to fifty per cent thereof:

Deduction in respect of remu- neration received for services rendered outside India.

Provided that where the individual renders continuous service outside India under or for such employer for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remuneration for such service relating to any period after the expiry of the thirty-six months aforesaid.

(2) The deduction under this section shall be allowed—

(i) in the case of an individual who is or was, immediately before undertaking such service, in the employment of the Ceniral Government or any State Government, only if such service is sponsored by the Central Government;

(ii) in the case of any other individual, only if he is a technician and the terms and conditions of his service outside India are approved in this behalf by the Central Government or the prescribed authority.

Explanation.—For the purposes oi this section—

(a) "foreign currency" shall have the meaning assigned to

it in the Foreign Exchange Regulation Act, 1973; 46 of 1073.

(b) "foreign employer" means,—

(i) the Government of a foieign State; or

(n) a foreign enterprise, or

(iti) any association or body established outside India;

(c) "technician" means a person having specialised know-

ledge and experience in--

(t) constructional or manufacturing operations or mining or the generation or distribution of electricity or any other form of power; or

(n) agriculture, animal husbandry, dairy farming, deep

sea fishing or ship building; or

(111) public administration or industrial or business man-

agement; or

(iv) accountancy; or

(v) any field of natural or applied science (including

medical science) or social science; or

(in) any other field which the Board may prescribe in

this behalf,

who is employed in a capacity m which such specialised know- ledge and experience' are actually utilised '.

20 In section 104 of the Income-tax Act, for sub-section (4), the following sub-section and Explanation shall be substituted with effect from the 1st day of April, 1978, namely.—•

Amend- ment of section. 104

"(4) Without prejudice to¹ the provisions of section 108, nothing

contained in this section shall apply to—

(a) an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power,

(b) a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India.

Explanation—For the purposes of clause (a) of this sub- section, the business of a company shall be deemed to consist mainly in the construction of ships or in the manufacture or processing of goods or in mining 01 in the generation or distribu- tion of electricity or any other form of power, if the income attributable to any of the aforesaid activities included in its gross total income for the relevant previous year is not less than fifty- one per cent of such total income ".

21 In Section 109 of the Income-tax Act, with effect from the 1st

day o£ April, 1978,—

Amend- ment oJ section 109.

(o) clause (,ia) shall be omitted;

(b) in clause (in),—

(0 m sub-clause (/), for the words "an industrial compand- or a consultancy service company¹¹, the words "a consultancy service company ' shall be substituted;

(H) for sub-clause (3), the following sub-clause shall be sub- stituted, namely: —

"(3) m the case of an Indian company, not being an Indian company ref'eired to m clause (a) of sub-section (4) of section 104 or a consultancy service company, a part of whose gross total income consists of profits and gams attributable to—

0) the business of construction of ships or of manu- facture or processing of goods or of mining or of genera- tion or distribution of electricity oi any other form of power, or

(n) the business of provision ot technical know-how, or of rendering services in connection with the provision of technical know-how, to other persons—

(a) m relation to that part of its gross total income as is attributable to the business referred to in item (i) of this sub-clause Nil;

(b) in relation to that part of its gross total income as is attributable to the business referred to in item (li) of this sub-clause ,, 45%;

(c) in relation to the remaining part of its gross

total income—

(L) if it is an investment company or a company which .satisfies the conditions specified in sub-clause (4)(a) of this clause .90%;

(2) in any other case . . . .. 60%.

Explanation.—The provisions of this Chapter shall apply as if each of the aforesaid parts of the gross total income of the company weie the gross total income of the company in relation to that pait and as if the amount of dividends actually distributed and the distributable income were also similarly apportioned for the purposes of section 104 and this section,".

22 In section U5A of the Income-tax Act, with effect from the 1st

day of April, 1978,—

Amend- ment of section 115A.

(a) in sub-section (1), for the words, brackets and figure "Subject to the provisions of sub-section (2)", the woids, brackets, figures and letter " S u b l et to the provisions, of sub-sections (1A) and (2)" shall be substituted,

(b) after sub-section (1), the following sub-section shall be

inserted, namely.—

<(1A) Where the royalty referred to in clause (b) of sub- section (2) is in consideration for the transfer of all or any rights

(including the granting of a licence) in respect of copyright in any book to an Indian concern, the pro visions of sub-section (1) shall apply in relation to such royalty as if the words "and approved by the Central Government" occurring in. the said clause had been omitted:

Provided that such book is on a subject, the books on which are permitted, according to the Import Trade Control Policy of the Government of India for the period commencing from the 1st day of April, 1977 and ending with the 31st day of March, 1978, to be imported into India under an Open General Licence.

Explanation —In this sub-section, "Open General Lieende" means an Open General Licence issued by the Central Govern- ment in pursuance of the Imports (Control) Order, 1955.'.

,23 In section 155 of the Income-tax Act, atfer sub-section (10), the following sub-section shall be mseited with effect from the 1st day of April, 1978, namely: —

Amend- ment of section 155.

"(10A) Where in the assessment for any year, a capital gain arising from the transfer of a capital asset, not being a short-term capital asset, is charged to tax and within a period of six months after the date of such transfer, the assessee has made any investment or deposit in any specified asset within the meaning of Explanation 1 to sub-section (-H of secation 54E, the Income-tax Officer shall amend the order of assessment so as to exclude the amount of the capital gain not chargeable to tax under the provisions of section 54E, and the provisions of section 154 shall, BO far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the date of the assessment".

24. In section 194 of the Income-tax Act, with effect from the 1st day

of October, 1977,—

Amend- ment of section 194.

(a) in the proviso, for the words "Provided that", the words

"Provided further that" shall be substituted,

(b) before the proviso as so amended, the following proviso shall

be insei ted, namely • —

"Provided that no such deduction shall be made m the case

of any shareholder, not being a company, if—

(a) the shareholder is resident in India;

(b) the amount of such dividend does not exceed two

hundred and fifty rupees; and

(c) the shareholder furnishes to the person responsible for paying the dividend a statement in writing in the prescribed form and verified in the prescribed manner declaring that his estimated total income of the previous year in which such dividend is to be included under the provisions of section 8 will be le^s than the minimum liable to income-tax: ".

25. In the Income-tax Act, after section 206A and before the heading "C.—Advance payment of tax", the following section shall be inserted with effect from the 1st day of October, 1977, namely: —

insertion of new section 206B,

"206B. Any person responsible for paying any dividend referred to in section 194 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 m the prescribed form and verified in the prescribed manner, a return an wiiting showing—

(a) the name and address of every person who has furnished

to him a statement under the first proviso to section 194;

Person paying dividend to certain¹ residents without deduction of tax to furnish prescrib- ed return.

(b) the amount of the dividend paid or distributed during

the financial year to each such person; and

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

26 In section 208 of the Income-tax Act, in sub-section (2), for clause (c), the following clause shall be substituted with effect from the 1st day of September, 1977, namely: —

Amend- ment of section 208.

"(c) in any other case—Rs 10,000/'

27. In section ?73 of the Income-tax Act, with effect from the 1st day

of September, 1977 —

Amend- ment of section 273

(a) in clause (a), for the words and figures "has furnished under section 212", the words, brackets and figures "has furnished under sub-section (i) or sub-section (2) or sub-section (3) of section 212" shall be substituted;

(b) after clause (a), the following clause shall be inserted,

namely: —

'•(att) has iurnished under sub-section (3A) of section 212 an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue, or";

(c) after clause (0, the following clause shall be inserted,

namely: —

"(m) which in the case referred to in clause (aa), shall not be less than ten per cent but shall not exceed one and a half times the amount by which the tax actually paid during the financial year immediately pieceding the assessment year under the provisions of Chapter XVII-C falls short of seventy-five per cent of the assessed tax ab defined in sub-section (5) of section 215;";

(d) the following Explanation shall be inserted at the end,

namely: —

"Explanation.-Fo? the purposes of clause _(ia), the amount oaid by the assessee on or before the date extended by the Smmissioner under the proviso to sub-sect1On <3A) of^ section SlTshall where the date so extended falls beyond the financial feL ^mediately preceding the assessment year, also be regarded as tax actually paid during that financial year. .

28 In the Income-tax Act, after the Tenth Schedule, the following Insertion , Eleventh

Schedule.

'THE ELEVENTH SCHEDULE

(See section 32A)

List of articles or things

L, Beer, wine and other alcoholic spirits.

2. Tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, bins, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff.

3. Cosmetics and toilet preparations

4 Tooth paste, dental cream, tooth powder and soap.

5. Aerated waters in the manufacture of which blended flavouring concentrates in any foim are used

6 Confectionery and chocolates.

' Refrigerating and air-conditioning appliances and machinery 7

(including refrigerators and air-conditioners).

Gramophones, including record players, and gramophone records.

9 , Broadcast television receiver sets, radios (including transistor sets); radiograms and tape recorders (including cassette recorders and tape decks).

Cinematograph films and projectors.

10.

Photographic apparatus and goods

11.

Watches.

12.

Electric fans

13.

Domestic electrical appliances, not falling under any other item in 14, I

this list.

app usei inst

Explanation—"Domestic electrical appliances" means electrical liances normally used in the household and similar appliances i in places, such as, hotels, restaurants, hostels, offices, educational itutions and hospitals

15. Household furniture, utensils, crockery and cutlery not falling under any other item in this list.

Pressure cookers

18

Vacuum flasks and other vacuum vessels.

Tableware and sanitaryware.

Glass and glassware,

20. Chinaware and procelainware.

Mosaic tiles and glazed tiles

21.

22. Organic surface active agents; surface active preparations and washing preparations whether or not containing soap.

23. Synthetic detergents.

24. Office machines and apparatus such as typewriters, calculating machines, cash registering machines, cheque writing machines, intercom machines and teleprinters

Explanation.—The expression "Office machines and apparatus'' includes all machines and apparatus used in offices, shops, factories, workshops, educational institutions, railway stations, hotels and restaurants for doing office work, for data processing and for trans- mission and reception of messages

. Computers, including central processing units and peripheral 25

devices

Steel furniture, whether made partly or wholly of steel.

26

Safes, strong boxes, cash and deed boxes and strong room doors.

27

Motor cars, motor cycles, scooters and other mopeds.

28

Forklift trucks and platform trucks.

29

Latex foam sponge

30

31 Pigments, colours, paints, enamels, varnishes, blacks and cellulose lacquers.

32, , Crown corks, or other fittings of cork, rubber, polyethylene or any other material.

33 Pilfer-proof caps for packaging or other fittings of cork, rubber, polyethylene or any other material

34 Amplifiers or any other apparatus used for addressing the public'

29. (1) The following amendments (being amendments of a consequen- tial nature) shall be made in the Income-tax Act, namely: —

(a) in section 44D, in the Explanation,—

Consequ- ential amend- ments to certain sections.

(i) in clause (a), for the words, brackets and figures "the Explanation to clause (vu) of sub-section (1) of section 9", the words, figures and brackets "Explanation 2, to clause (vii) of sub-section (/) of section 9" shall be substituted;

(ii) in clause (c), for the words, brackets and figures "the Explanation to clause (vi) of sub-section (]) of section 9", the words, figures and brackets "Explanation 2, to clause '(vi) of sub-section (7) of section 9" shall be substituted;

(b) in section 115A, in the Explanation below sub-section (I),—

\t) in clause (a), for the words, brackets and figures "the Explanation to clause (mi) of sub-section (1) of section 9'', the words, figures and brackets "Explanation 2, to clause (mi) of sub-section (2) of section 9" shall be substituted;

(ii) in clause (c), for the words, brackets and figures "the Explanation to clause (in) of sub-section (1> of section 9", the words, brackets and figures "Explanation 2 to clause (in) of sub-section (1) of section 9" shall be mibstitutrd

(2) The following amendments (being amendments of a consequential nature) shall be made in the Income-tax Act with effect from the 1st day of April, 1978, namely —

(a) in section 4S, for the figures, letters and word "54B and 54D". the figures, letters and word "54B, 54D and 54E" shall be substituted;

(b) in sub-section (3) of section 80A, after the word, figures and letters "section 80HH", the words, figures and letters "or section 80HHA" shall be inserted;

(c) in section 80J, after the word, figures and letters "section 80HH", at both the places where they occur, the wordsi, figures and letters "or section 80HHA" shall be inserted,

(d) in sub-section (3) of section 8'0P —

(i) for the words, figures and letters "section 80HH or section 80J'\ the words, figures and letters "section 80HH or section 80HHA or section 80J" shall be substituted;

(ii) for the words, figures and letters "section 80HH, section 80.1", the words, figures and letters "section 80HH, section 80HHA, section GOJ" shall be substituted;

(e) in sub-section (2) of section 80QQ,—

(i> for the words, figures and letters "section 80HH or section 80J", the words, figures and letters "section 80HH Or section 80HHA or section 80J" shall be substituted;

(til for the Words, figures and letters "section 80HH, section 80J", the words, figures and letters ''section 80HH, section 80HHA, section 80J" shall be substituted,

(f) in the Ninth Schedule, for the brackets, words, figures and letters "[See section 32(l)(vi) and section 32A(2)(b)(ii)]*\ the brackets, words, figures and letters "[See section 32(l)(in) and section 80M(l)(a)(i)]" shall be substituted

Wealth-tax

66 of J976.

Amend- ment of Act 27 ot 1957.

30. In the Wealth-tax Act, 1957, for Part I of Schedule I [being the Part as substituted, with effect from the 1st day of April, 1977, by sub-clause (a) of clause (6) of section 27 of the Finance Act, 1976], the following Part shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1977, namely —

"PART I

(1) In the case of every individual or Hindu undivided family, not being a Hindu undivided family to which item (2) of this Part applies,—

Rate of tax

where the net wealth does not exceed

(a)

J per cent, of the net wealth;

Rs 2,50,000

(6) where the net wealth exceeds Rs.

2,50,000 but docs not exceed Rs. 5,00,000

Rs. 1,250 plus 1 per cent, of the amount by which the net wealth exceeds Rs. 2,50,000;

(<0 where the net wealth exceeds Rs 5,00,000 but does not exceed Rs TO,OO,OOO

Rs 3,750 plus 2 per cent, of the amount by which the net wealth exceeds Rs. 5,00,000;

(d)

Rs. 13,750 plus 2% per cent, of the where the net wealth exceeds Rs. TO,OO,OOO but docs not exceed Rs. 15,00,000

amount by which the net wealth exceeds Rs. 10,00,000;

where the net wealth exceeds Rs

W

15,00,000

Rs. 26,250 plus 3^ per cent, of the amount by which the net wealth exceeds Rs 15,00,000;

Provided that foi the purposes of this item,—

(i) no wealth-tax shall be payable where the net wealth does

not exceed Rs. l,O0,0iX),

(u) the wealth-tax payable shal], in no case, exceed 5 per cent of the amount by which the net wealth exceeds Rs. 1,00,000.

(2) In the case of eveiy Hindu undivided family which has at least one member whose net wealth assessable for the assessment year exceeds Rs. 1,00,000,—

Rate of tax

where the net wealth does not

(a)

1J per cent, of the net wealth;

exceed Rs. 2,50,000

(b)

Rs. 3,750plus 2 per cent, of the amount by which the net wealth exceeds Rs. 2,50,000;

where the net wealth exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000

(c) where the net wealth exceeds Rs 8,750 plus 2,1 per cent, of the amount by which the net wealth exceeds Rs. 5,00,000;

Rs 5,00,000 but does not exceed Rs. 10,00,000

where the net wealth exceeds

W

Rs. 10,00,000

Rs. 21,250 plus 3$ per cent of the amount by which the net wealth exceeds Rs. 10,00,000:

Provided that for the purposes of this item,—

(H no wealth-tax shall be payable where the net wealth

does not exceed Rs. 1,00,00*0,

(ii) the wealth-tax payable shall, in no case, exceed 5 per cent of the amount by which the net wealth exceeds Rs 1,00,000.".

CHAPTER IV

INDIRECT TAXES

31. The Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act), shall be amended m the manner specified m the Second Schedule

Amend- ment of Act 51 of 1975.

32 The Central Excises and Salt Act, 1944 (hereinafter referred to as the Central Excises Act), shall be amended in the manner specified in the Third Schedule.

Amend- ment of Act 1 of 1944.

33. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 (hereinafter referred to as the Additional Duties of Excise Act) shall be amended in the manner specified in the Fourth Schedule.

Amend- ment of Act 58 of 1957.

CHAPTER V

MISCELLANEOUS'-

Amend- ment of Act 01 of

1956 34 In the Khadi and Village Industries Commission Act, 1956, in Chapter V, before .section 25, the following section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely: —

43 of 1961.

"24A. Notwithstanding anything contained in the Income-tax Act, 1961, the Commission shall not be liable to pay any income-tax on its income, profits or gains "

35. In section 23 of the Finance Act, 1973, for the words "four previous

years", the words ''six previous years", shall be substituted.

Exemption from liability to pay inrome- tax Amend- ment of Art 21 of 1973.

36 In the Compulsory Deposit Scheme (Income-tax Payers) Act,

1974 —

Amend- ment of Act 38 of 1974.

(a) in section 3,—

(1) in sub-section (1), for the words, figures and letters "for the assessment year commencing on the 1st day of April, 1975, the assessment year commencing on the 1st day of April, 1976 and the assessment year commencing on the 1st day of April, 1977,", the words, figures, letters and brackets "for the assessment year commencing on the 1st day of April, 1975 and every subsequent assessment year (not being an assessment year commencing on or after the 1st day of April, 1980)," shall be substituted;

(%i) after sub-section (2), the following sub-section shall be

inserted with effect from the 1st day of September, 1977, namely: —

"(3) Notwithstanding anything contained in sub-section

O),~

(a) an individual specified m sub-clause (1) of

clause (a) of sub-section (2), or

(b) any person specified in clause (b) of sub-section (2) who is assessable under the Income-tax Act in respect of the total income of the individual aforesaid, shall not be liable to make any compulsory deposit for any • assessment year where, in either case, such individual is more than seventy years of age on the first day of the financial year immediately preceding that assessment year.";

(b) in section 4, in sub-section (7), for clause (n), the following clause shall be substituted, namely: —>

"(11) for the assessment year commencing on the 1st day of April, 1977 and every subsequent assessment year (not being an assessment year commencing on or after the 1st day of Apul, 1980), at the rates specified in Paragraph B of the Schedule.".

37. In the Oil Industry (Development) Act, 1974, in Chapter V, before section 23, the following section shall be inserted and shall be deemed always to have been inserted, namely. —

Amend- ment cif Act 47 of 1974.

43 of 1961.

''22A. Notwithstanding anything contained in the Income-tax Act, 1961, the Board shall not be liable to pay any income-tax on its income, profits or gains "

Exemption from liability to pay income- tax

38. In the Voluntary Disclosure of Income and Wealth Act, 1976, with effect from the 1st day of April, 1976,—

Amend- ment of Act 8 of 1976

(a) in section 14,—

(i) in sub-section (5), in the Explanation, for the words "For the purposes of this sub-section", the words, brackets, figure and letter "For the purposes of this sub-section and sub-section (5A)" shall bo deemed to have been substituted;

(zi) aftn sub-section (5), the following sub-sections shall be deemed to have been inserted, namely: —

"(5A) A declarant who has not paid, in accordance with the provisions of section 5, the tax chargeable in respect of the income of the previous year or years for which the declaration has been made shall, notwithstanding anything contained in sub-section (5), be entitled to the immunity provided under sub-section (1) if, before the 1st day of January, 1978, the declarant—

(i) pays the amount of such tax remaining unpaid,

and

(11) pays simple interest at the rate of twelve per

cent, per annum on the amount of such tax remaining unpaid on the 31st day of March, 1976, from the 1st day of April, 1976 to the date of payment of such tax.

(5B) The provisions of the Income-tax Act and any rules made thereunder shall, so far as may be, apply to the interest payable under sub-section (5A) as if such interest were interest payable under sub-section (2) of section 220 of that Act.";

(ni) in sub-section (6), foi the words, figures and brackets "in accordance with the provisions of section 5, read with sub- section (5) of this section", the words, figures, brackets and letter "in accordance with the provisions of section 5, read with sub- section (5) or, as the case may be, m accordance with the provisions of sub-section (5A)" shall be deemed to have been substituted;

(b) in section 15,—

(i) 111 sub-section (5), in the Explanation, for the words "For the purposes of tfrs sub-section", the words, brackets, figure and letter "For the purposes of this sub-section and sub-section (5A)" shall be deemed to have been substituted;

(u) after sub-section (5), the following sub-sections shall be

df-euicd U) have h°en inserted, namely.—

"(5A) A declarant—

(a) who has not paid, in accordance with the provisions of section 5, the wealth-tax chargeable in respect of the net wealth for the assessment year or yeais lor which the declaration has been made, or

(b) who has not invested in the securities referred to in sub-section (3) of section 3 within the tune speciaed in sub-section (4) of section 5 the sum specified in sub- section (6); or

(c) who has neither so paid such wealth-tax nor so

invested such sum,

shall, notwithstanding anything contained in sub-section (5), be entitled to the immunity provided under sub-section (1), if the declarant—

(i) in a case falling under clause (a), pays before the 1st day of January, 1978 (hereafter in this sub-section referred to as the said date) the amount of such wealth- tax remaining unpaid and also simple interest at the rate of twelve per cent per annum on the amount of such wealth-tex remaining unpaid on the 31st day pi March, 1976, from the 1st day of April, 1976 to the date of pay- ment of such wealth-tax;

(w) in a case falling under clause (b), invests before the said date in the securities aforesaid the sum specified in sub-section (6) or, as the case may be, the amount which falls short of the sum required to be invested,

(lit) in a case falling under clause (c), pays before the said date the amount of such wealth-tax remaining unpaid and also simple interest at the rate of twelve per cent per annum on the amount of wealth-tax remaining unpaid on the 31st day of March, 1976, from the 1st day of April, 1976 to the date of payment of such wealth-tax and invests before the said date in the

securities aforesaid the sum specified in sub-section (6) or, as the case may be, the amount which falls short of the sum required to be invested.

(5B) The provisions of the Wealth-tax Act and any rules made thereunder shall, so far as may be, apply to the interest payable under sub-section (5A) as if such interest were interest payable under sub-seotion (2) of section 31 of the Wealth-tax Act";

(in) in sub-section (7), for the words, figures and brackets "in accordance with the provisions of section 5, read with sub-section (5) of this section", the words, figures, brackets and letter "in accordance with the provisions of section 5, read with sub-section (5) or, as the case may be, in accordance with the provisions of sub-section (5A)" shall be deemed to have been substi- tuted.

39. (2) The amendments directed in the Filth Schedule, being

amendments to provide ior a new appellate authority under the

Income-tax Act, the Wealth-tax Act, 1957, the Gift-tax Act, 1958, the

Companies (Profits) Surtax Act, 1964 and the Interest-tax Act, 1974 and

for matters connected therewith, shall be made In the said Acts.

27 of 1957. 18 of 1958 7 Of 1964. 45 of 1974.

Amend- ment of Income- tax Act, etc , to provide for a new appellate authority there- under.

(2) For the removal of doubts it is hereby declared that any action required to be taken, after the commencement of this section, in relation to any appeal disposed of by an Appellate Assistant Commissioner or a Commissioner before such commencement, under any Act referred to in sub-section (1), may be taken as if the amendments directed to be made in that-Act by sub-section (1) had not been made.

(3) This section shall come into force on such date as the Central Government may, by notification m the Official Gazette, appoint

11 of 1977.

40. Sections 2 and 4 of the Finance Act, 1977 are hereby repealed Repeal.

and shall be deemed never to have been enacted.

Declaration under the Provisional Collection of Taxes Act, 1931.

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

16 of 1931, the provisions o{ clauses 31, 32 and 33 of this Bill shall have immediate effect under the Provisional Collection of Taxes. Act, 1931,

THE FIRST SCHEDULE

(See section 2)

PART I

INCOME-TAX AND SURCHARGE ON INCOME-TAX

Paragraph A

Sub-Paragraph I

In Uie case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (mx) of clause (31) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other Paragiaph of this Part applies,—

Rates 0/ income-tax

(1) where the total income docs not Nil;

exceed Rs 8,000

(2) where the total income exceeds Rs. 8,000 but docs not exceed Rs 15,000

15 per cent of the amount by which the total income exceeds Rs. 8,000;

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

Rs. 1,050 plus 18 per cent, of the amount by which the total income exceeds Rs. 15,000;

Rs. i,95Op/ws 25 per cent, of the amount by which the total income exceeds

Rs. 20,000;

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

Rs. 3,2oo^/ws3oper cent of the amount

(5) where the total income exceeds Rs. 25,004, but does not exceed Rs. 30,000 by which the total income exceeds Rs. 25,000;

(6) where the total income exceeds Rs 30,000 but does not exceed Rs. 5 0,000

Rs. 4,700 plus 40 per cent of the amount by which the total income exceeds Rs. 30,000;

(7) where the total income exceeds Rs 50,000 but does not exceed Rs 70,000

Rs. 12,700 plus 50 per cent, of the amount by which the total income exceeds Rs 50,000;

(8) where the total income exceeds Rs. 70,000 but does not exceed Rs. 1,00,000

Rs. 22,700 plus 55 per cent, of the amount by which the total income exceeds Rs 70,000,

(9) where the total income exceeds

Rs. 1,00,000

Rs. 39,200 plus 60 per cent, of the amount by which the total income exceeds Rs. 1,00,000;

Surcharge cm income-tax

The amount of income-tax computed m accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent, of such income-tax.

Sub-Paragraph II

In the case of every Hindu undivided family which at any time during the pievious year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1977 exceeds Rs 8,000,—

Rates of income-tax

(i) where the total income does not Nil;

exceed Rs. 8,000

    (2)  where  the  total  income  exceeds 18 per cent, of the amount  by which the
Rs. 8,000 but does not exceed  Rs.  15,000    total income exceeds Rs.  8,000;
    (3)  where  the  total  income  exceeds Rs. 1,260plus 25 per cent, of  the amoun t
 Rs  15,000 but does not exceed Rs. 20,000    by  which  the  total  income  exceeds
                                              Rs.  15,000;
    (4)  where  the  total  income  exceeds Rs. 2,510 plus 30 per cent, of  the amount
Rs. 20,000 but does not exceed Rs. 25,000     by  which  the  total  income  exceeds
                                              Rs.  20,000;
    (5)  where  the  total  income  exceeds Rs. 4,oioy/MJ4Opercent. of  the  amount
Rs. 25,000 but does not exceed Rs  30,000     by  which  the  total  income  exceeds
                                              Rs.  25,000;
    (6)  where the total income exceeds    Rs. 6,010 plus 50 per cent,  of the amount
Rs. 30,000 but does not exceed Rs. 50,000     by which the  total  income  exceeds
                                              Rs.  30,000;
    (7)  where  the  total  income  exceeds Rs. i6,oiopluss5  per cent,  oftheamount
Rs. 50,000 but does not exceed Rs. 70,000     by  which  the  total  income  exceeds
                                              Rs.  50,000;
   (8)  where  the  total  income  exceeds Rs  27,010/>/">• bo per cent, of  theamoimt
Rs.  70,000                                   by which  the  total  income  exceeds
                                             Rs.  70,000

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent, of such mcome-tax.

Paragraph B

In the case of every co-operative society,—

Rales of income-tax

15 per cent of the total income;

(1) where the total income does not

exceed Rs. 10,000

(2) where the total income exceeds Rs. 10,000 but does not exceed Rs. 20,000

Rs 1,500 plus 25 per cent, of the amount by which the total income exceeds Rs. 10,000;

(3) where the total income exceeds

Rs. 20,000

Rs. 4,000plus 40 per cent, of the amount by which the total income exceeds Rs, 20,000,

Surcharqe on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge for purpofces of the Union calculated at the rate of ten per cent, of such income-tax.

Paragraph C

Sub-Paragraph I

In the case of every registered firm, not being a case to which Sub-

Paragraph II of this Paragraph applies,—

Rales of income-tax

(1) where the total income does not Ntl;

exceed Rs. 10,000

(2) where the total income exceeds Rs. 10,000 but does not exceed Rs 25,000

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

(3) where the total income exceeds

Rs. 25,000 but does not exceed Rs 50,000

Rs. 750 plus 7 per cent, of the amount by which the total income exceeds Rs. 25,000;

(4) where the total income exceeds

Rs. 50,000 but does not exceed Rs. 1,00,000

Rs 2,500 plus 15 per cent, of the amount by which the total income exceeds Rs. 50,000;

(5) where the total income exceeds Rs. 10,000 plus 24 per cent, of the

Rs. 1,00,009

amount by which the total income exceeds Rs. 1,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

Sub-Paragraph II

In the case of every registered firm whose total income includes income derived from a profession earned on by it and the income so included is not less than fifty-one per cent, of such total income,—

Rates of income-tax

(1) where the total income does not Nil;

exceed Rs. 10,000

4 per cent, of the amount by which the

total income exceeds Rs. 10,000;

(2) where the total income exceeds Rs 10,000 but does not exceed Rs. 25,000

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

Rs. 600 plus 7 per cent, of the aknoun* by which the total income exceeds Rs. 25,000;

(4) where the total income exceeds

Rs. 50,000 but does not exceed Rs. 1,00,000

Rs. 2,350plus 13 per cent, of the afaiount by which the total income exceeds Rs. 50,000;

(5) where ths total income exceeds

Rs i,oo,ooo

Rs. 8,850 plus 22 per cent, of the amount by which the total income exceeds Rs. 1,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent, of such income-tax

Explanation.—For the purposes of this Paragraph, "registered firm" includes an unregistered firm assessed as a registered firm under clause (b) of section 183 o± the Income-tax Act

Paragraph D

In the case of every local authority,—

Rate 0/ income-tax

O l ths wh)L' of the total incon? 50 per cent.

Surcharge on income-tax

The amount of income-tax computed at the rate hereinbefore specified shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such me une-tax

Paragraph E

In the case of a company,—

Rates 0/ income-tax

I In the case of a domestic company,—

(1) where the company is a company in which the public are substantially interested,—

45 per cent, of the tot.il income;

(z) in a case where the total income

does not exceed Rs. 1,00,000

55 per cent, of the total income;

(ti) in a case where the total inco'me

exceeds Rs. 1,00,000

not a company in which the public (2) where the company is

are substantially interested,—

(j) in the case of an industrial company,—

55 per cent, of the total income;

(a) where the total income does not

exceed Rs. 2.00,000

(o) where the total income exceeds 60 per cent, of the total income;

Rs, 2,00,000

(") in any other case

65 per cent, of the total income :

Provided that—

(i) 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. 1,00,000, shall not exceed the aggregate of—

(0) the income-tax which would have been payable by the company if its total income had been Rs 1,00,000 (the income of Rs 1,00,000 for this purpose being computed as if such income included income from various sources m the same proportion as the total income of the company); and

(b) eighty per cent, of the amount by which its total income exceeds Rs 1,00,000;

(it) the income-tax payable by a domestic company, not being a company in which the public are substantially interested, which is an industrial company and the total income of which exceeds Rs. 2,00,000, shall not exceed the aggregate of—

(a) the income-tax which would have been payable by the company if its total income had been Rs. 2,00,000 (the income of Rs 2,00,000 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) eighty per cent of the amount by which its total income exceed: Rs 2,00,000

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 pursuance of an agreement made by it with the Indian concern after the 3ist day of March, 1961 but before the 1st day of April, 1976, or

(b) fees for rendering technical 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 but before the 1st day of April, 1976,

50 per cent.;

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

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

total income

Surcharge on income-tax

The amount of income-tax computed m accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five per cent, of such lrcome-tax.

PART II

Rates jor deduction of tax at source in certain cab's

In. every case in which under the provisions of sections 193, 194, 194A, 194B, 194D 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 deduction at the following rates'—-

come-tax

In

Rate of surcharge

Rate of income-

tax

i. In the case of a person other than a

company—

(a) where the person is resident in

India—

io per cent.

(i) on inc mie by way of interest

AW;

other than "Interest on securities"

30 per cent.

4 • 5 per cent.;

(") on income by way of winnings from lotteries and crossword puzzles

10 per cent.

Nil, '

(in) on income by way of insur-

ance commission

3 per cent.;

20 per cent.

(w) on any other income (exclud-

ing interest payable on a tax-free security)

(b) where the person is not resident

in India—

(i) on th? whole income ^excluvi-

ier cent, and surcharge of the amount of the

income-tax at 30 p at 4 5 per cent income,

ing interest payable on a tax-free security)

or

surcharge on lflcome- " the. interne* at the rates Sub-Paragraph I of fartlll of this Sche- ncome had been the

igher;

income-tax and tax in respect of prescribed in ParagraohAof j dule, if such i toial income, whichever is h

15 per cent.

2 25 per cent.

(M) on income by way of interest

payable on a tax-free security

2. In the case of a company—

(a) where the company is a domestic c :ompany—

20 per cent.

1 per cent.;

(*') on income by way of interest

other than "Interest on securities"

Incc >me-tax

Rate of surcharge

Rate of income-

tax

1 per cent.;

22 per cent.

(it) on any nther income (exclud- ing interest payable on a tax-free security)

(b) where the company is n ot a domes-

tic company—

25 per cent

(:) on income by way of dividends

JV*7;

payable by any domestic company

40 per cent

Nil;

(it) on income by way of royalty payable by an Indian concern in pursuance of an agreem ent made by it with the Indian concern after the 31st day of March, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copy-right in any book on a subject referred to in the proviso to sub- section (rA) of section H 5A of the income-tax Act, to the Indian concern.

(lit) on income by way of royalty [not being royalty of the nature referred to in sub-item b(u)] payable by an Indian concern in pursuance of an agreement made by it with t he Indian concern and which has been approved by the Central Government,—

2 5 per cent.;

50 per cent

(A) where the agreement is made after t he 31st day o f M a r c h, 1961 but before the 1st day of April, 1976

( £) where the agreement is made after the 3"st day of March, 1976-

20 per cent.

Nil,

(1) on so m u ch of the amount of such income as consists of lump sum consideration for the transfer outside India of, or the im- parting of information outside India in respect of, any data, documenta- tion, drawing or specifipation relating to any patent, invention, model, design, secret formula or process, or trade mark or similar property

40 per cent.

Nil;

(2) on t he balance, if any, of such

income

(iv) on income by way of fees for

technical servic"s payable by an Indian concern in pursuance of an agree- ment made by it with the Indian con- cern and which has been approved by the Central Government—

2 5 per cent.;

50 per cent.

(A) where the agreement is

made after t he 29th day of February, 1964 but before the 1st day of April, 1976

(B) where the agreement is 40 per cent,

Nil;

made after the 31st day of March, f976

2 2 per cent.;

(v) on income by way of interest 44 per cent,

payable on a tax-free security

3.5 per cent.;

(vi) on any other income 70 per cent.

PART III

Rates for calculating or charqing income-tax in certain cases, deducting

income-tax from income chargeable under the head "Salaries" or any

payment referred to m sub-section (9) of section 80E and computing

"advance tax"

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 of the said Act or deducted under section 192 of the said Act from income chargeable under the head "Salaries'' or deducted under sub-section (9) of section 80E of the said Act from any payment referred to in the said sub-section (9) or in which the "advance tax" payable under Chapter XV1I-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, "advance tax" (not being "advance tax" m respect of any income chargeable to tax under Chapter XII or section 164 of the Income-tax Act at the rates as specified in that Chapter or section), shall be so calculated, charged, deducted or computed at the following rate or rates:—

Paragraph A

Sub-Paragraph I

In the case of every individual or Hindu undivided family or unregistered firm 01 other association of persons or body of individuals, whether incoiporated or not, or every artificial juridical person referred to in Sul>clause (vn) of clause (31) of section 2 of the Income-tax Act not being a case to which Sub-Paragraph II of this Paragraph or any other Paragraph of this Part applies,—

Rates of income-tax

(1) where the total income does not Nil;

exceed Rtf. 8,ooo

15 per cent, of the amount by which the

total income exceeds Rs. 8,000;

(2) where the total income exceeds Rs 8,000 but docs not exceed Rs. 15,000

Rs. 1,050 plus iR per cent, of the amount by which the total income exceeds Rs. 15,000;

O3) wheic the total income exceeds Rs. is,000 bui does not exceed Rs. 20,000

Rs. 1,950 plus 25 per cent of the amount by which the total income exceeds Rs. 20,000,

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

Rs 3,200 plus 30 per cent of the amount by which the total income exceeds Rs, 25,009 j

U) where the total irr- r" exceeds Rs. 25,000 but does 1 •• exceed Rs, 30,009

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

Rs. 4J7OO plus 40 per cent, of the amount by which the total income exceeds Rs. 30,000;

(7) where the total income exceeds Rs. 50,000 but does not exceed Rs. 70,000

R-s. 12,700 plus 50 por coat of die amount by which the total moo.n: exceels Rs. 50,000;

(8) where the total income exceeds Ks 70,000 but docs not exceed Rs. 1,00,000

Rs. 22,700 plus 55 per cent, of the amount by which the total income exceeds Rs 7o,ooo>

(9) where the total income exceeds

Rs. 1,00,000

Rs 39,200 plm 60 per cent, of the amou by which the total income exceed Rs. 1,00,000.

Provided that for the purposes of ihia Sub-Paragraph,—

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

exceeding Rs 10,000;

(ti) where the total income exceeds Rs 10,000 but does not exceed Rs 10,540, the income-tax payable thereon shall not exceed seventy per cent, of the amount by which the total income exceeds Rs. 10,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge foi purposes of the Union calculated at the rate of llfteen per cent of sucb income-lax.

Sub-Paragraph II

In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1978 exceeds Rs 10,000,—

Rates of income-tax

(1) where the total income does Nil;

not exceed Rs. 8,000

18 per cent, of the amount by which the

total income exceeds Rs. g,ooo;

(2) Where the total income exceeds Rs 8,000 but does not exceed Rs. 15,000

Rs. 1,260 plus 25 per cent, of the amount by which the total income exceeds Rs. 15,000;

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

Rs. 2,510 plus 30 per cent, of the amount by which the total income exceeds Rs. 20,000;

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

Rs. 4,010 plus 40 per cent, of the amount by which the total income exceeds Rs. 25,000;

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

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

Rs. 6,010 plus 50 per cent, of the amount by which the total income exceeds Rs. 30,000;

(7) whsre the total income exceeds

Rs. 50,000 but does not exceed Rs, 70,000

Rs. 16,oioplus 55 per cent.of the amount by which the total income exceeds Rs. 50,000;

(8) where the total income exceeds

Rs. 70,000

Rs 27,010 plus 60 per cent, of the amount by which the total income exceeds Rs. 70,000:

Provided that for the purposes of this Sub-Paragraph,—

(1) no income-tax shall be payable on a total income not exceeding Rs. 10,000,

(ii) where the total mcome exceeds Rs. 10,000 but does not exceed Rfl. 10,690, the income-tax payable thereon shall not exceed seventy per cent, of the amount by which the total income exceeds Rs. 10,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragiaph .shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen per cent, of such income-tax.

Paragraph B

In the case of every co-operative society,—

Rates of income-tax

(1) where the total income does not 15 per cent, of the total income;

exceed Rs. 10,000

(2) where the total income exceeds Rs. 1,500 plus 25 per cent, of • the amount by which the total income exceeds Rs 10,000;

Rs. 10,000 but does not exceed Rs, 20,000

(3) where the total income exceeds

Rs. 20,000;

Rs. 4,000 plus 40 per cent, of the amount by which the total income exoeeds Rs. 20,000.

Surcharge on income-tax

The amount of income-tax computed m accotdance with the preceding provisions of this Paragraph shall be increased by a surcharge for purpose of the Union calculated at the rate of fifteen per cent of such Income-tax.

Paragraph C

Siib-Paragraph I

In the case of every registered firm, not being a case to whioh Sub-

Paragrflph II of this Paragraph applies,—

Rates 0/ income-tax

(1) where the total income does not Nil l

exceed Rs, 10,000

5 per cent of the amount by which the

total income exceeds Rs. 10,000;

(2) where the total income exceeds R* ID,OD3 bit do;} n >t exceed Rs. 25,000

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

Rs. 750 plus 7 per cent, of the amount by which the total income exceeds Rs. 25,000;

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

Rs. 2,500 plus 15 per cent, of the amount by which the total income exceed Rs. 50,000;

(5) where the total income exceeds

RS. 1,00,000

Rs. 10,000 plus 24 per cent of the amount by which the total income exceeds Rs. i,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen per cent, of sucb income-tax.

Sub-Paragraph. II

In the case of every registered, firm whose total income includes Income derived from a profession carried on by it and the income so included is not less than fifty-one per cent, of such total income,—

Rates of income-tax

(1) where the total income does not Nil;

exceeds Rs. 10,000

4 per cent, of the amount by which the total income exceeds Rs. 10,000 , (2) where the total incoms exceeds Rs. 10,000 but doe3 not exceed Rs. 25,000

Rs. 600 plus 7 per cent, of the amount by which the total income exceeds Rs. 25,000;

(3) where the total income esceeds Rs. 25,000 but does not exceed Rs. 50,000

Rs. 2s3$oplus 13 per cent, of the amount by which the total income exceeds Rs. 50,000;

(4) where the total income exceed Rs. 50,000 ^but does not exceed Rs. 1,00,000

(5) where the total income exceeds Rs. 8,850 plus 22 per cent, of the amount by which the total income exceeds Rs. 1,00,000

Rs. 1,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen per cent, of such income-tax

Explanation—For the purposes of this Paragraph, "registered firm" includes an unregistered firm assessed as a registered firm under clause (b) of section 183 of the Income-tax Act.

Paragraph D

In the case of every local authority,—

Rate of incnme-1ax

On the whole or the total income 50 per cent

Surcharge, on income-tax

The amount of income-tax computed at tht rale hereinbefore specified shall be increased by a surchaige for purposes oi the Union calculated at the rate of fifteen per cent of such income-tax.

Paragraph E

In the case of a company,—

Rates oj income-tax

I In the case of a domestic company.—

(I) where the company is a company in which the public are substantially interested.—

(1) in a case where the total income ] 45 pei cent, of the total income,

does not exceed Rs. 1,00,000

(ii) in a cue wh;re the total inborn; 55 per cent of the total income, exceeds Rs 1,00,000

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

(_i) in the case of an industrial

company, —

(a) where the total income 55 per (.ent of the total income;

does not exceed Rs 2,00,000

(b) where the total income 60 par cent of the total income;

exceeds Rs. 2,00,000

(11) in any other case

65 per cent, of the total income

Provided that—

(t) 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 1,00,000, shall not exceed the aggregate of—

(a) the income-tax which would have been payable by the company if its total income had been Rs 1,00,000 (the income of Rs. 1,00,000 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) eighty per cent, of the amount by which its total income

exceeds Rs 1,00,000;

(it) the income-tax payable by a domestic company, not being a company in which the public are substantially interested, which is an industrial company and the total income of which exceeds Rs. 2,00,000, shall not exceed the aggregate of—

(a) the mcome-tax which would have been payable by the company if its total income had been Rs 2,00,000 (the income of RE 2,00,000 for this purpose being computed as if such income included income from vanous sources m the same proportion a3 the total income of the company); and

(b) eighty per cent of the amount by which its total income

exceeds Rs, 2,00,000

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

(1) on so much of the total income

(a) royalties received from an Indian concern in pursuance of an agreement made by it with the Indian corcern after the 31st day of March, 1961 but beforethe 1st day of April, 1976, or

(b) fees for rendering technical services received from an Indian concern in pursuance of an agree- ment made by it with the Indian concern after the 29th day of Febru- ary, 1964 but before the 1st day of April, 1976,

• 50 per cent;

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

70 per cent.

(ii) on the balance, if any, of the

total income

Surcharge nn income-tax

The amount of income-tax computed m accordance with the preceding provisions of this Paiagtaph shall be increased by a surcharge calculated at the rate of five pei cent, of such income-tax.

PART IV

[Set section 2(7^(e>]

RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME

Rule 1 —Agricultural income of the nature referred to in sub-clause (a) of clause (1) of section 2 of the Income-tax Act shall be computed as if H were income chargeable to income-tax under that Act under the head "Income from other sources" and the provisions of sections 57 to 59 of that Act, shall, so far as may be, apply accordingly;

Provjded that sub-section (2) of section 58 shall apply subject to the modification that the reference to section 40A therein shall be construed as not including a reference to sub-sections (3) and (4) of section 40A

Rule 2.—Agricultural income of the natme referred to in sub-clause (b) or sub-clause (c) of clause (2) of section 2 of the Income-tax Act [other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed as if it were income chargeable to mcome-tax under that Act under the head "Profits and gains of business or profession" and the provisions of sections 30, 31, 32, 34, 36, 37, 38, 40, 40A [other than sub- sections (3) and (4) thereof], 41, 43 and 43A of the Income-tax Act shall, so far as may be, apply accordingly

Rule 3.—Agricultural income of the nature referred to in sub-clause (c) of clause (1) of section 2 of the Income-tax Act, being income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were income chargeable to income-tax under that Act under the head "Income from house property" and the provisions of sections 23 to 27 of that Act shall, so far as may be, apply accordingly:

Provided that sub-section (2) of the said section 23 shall apply subject to the modifications that the references to "total income" therein shall be construed as references to net agricultural income and that the words, figures and letter "and before making any deduction under Chapter VIA¹' shall be omitted.

Rule 4.—Notwithstanding anything contained in any other provisions of these rules, in a case where the assessee derives income from sale of tea grown and manufactured by him m India, such income shall be computed in accordance with rule 8 of the Income-tax Rules, 1962, and sixty per cent, of such income shall be regarded as the agricultural income ol the assessee.

Rule 5.—Where the assessee is a partner of a registered firm or an unregistered firm assessed as a registered firm under clause (b) of section 183 of the Income-tax Act, which in the previous year has any agricultural income, or is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of the said section 183 and which in the previous year has either no income charge- able to tax under the Income-tax Act or has total Income not exceeding the maximum amount not chargeable to tax in the case of an unregistered firm but has any agricultural income then, the agricultural income or loss of the firm shall be computed in accordance with these rules and his share in the agricultural income or loss of the firm shall be computed In the manner laid down in sub-section (2), sub-section (2) and sub- section (3) of section 67 of the Income-tax Act and the share so computed shall be regarded as the agricultural income or loss of the assessee.

Rule 6 —Where the assessee is a member of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case ol

an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) but has any agricultural income, "then, "the agricultural' income or loss 6f the association or' b&dy shall be computed in accordance with these lules and the share 'of the assessee in the agricultural income or loss so computed shall be "regarded-'as the agricultural income or loss of'the assessee

.Rule 7—.Where the .result of the computation for the;j previous year .iin .respect of. any source of agricultural income is a loss,'such loss shall •be> set ,iaff against,the income of the. assessee, il.anyr for that previous

. y e ar from --any. other source, of, [agricultural income:

' Frottded that'where the-assessee js.a partner, of an .um-jegistered firm

* "which has. not. been, assessed as a, registered firm under clause (b) of i.-seotiom 183 of,the Jncomertax Act or is a member of an association of .;peraon&,.Dr body of individuals and thei share of the assessee in the ^agricultural income of the firm, (association or foqdy, as the case may be, is a loss, such loss shall nob be set -off against .any .income of the assessee from a,ny other source of agricultural income

Rule 8 -r>-Any, ,sum,_. payable by the assessee on account of any tax

(levied ,by the State Government on the agricultural income shall be

."deducted in computing the agricultural income

Rule 9.—(2) Where the assessee has, m the previous, year relevant • to-the assessment, year commencing on the 1st day of April,' 1977, any [^agricultural income .and the net. result of "the computation "of the , agricultural, income of the assessee for any one or -more of the previous years.relevant to the assessment years commencing orf'the' 1st day of •April,, 1374 or. the 1st day of April, 1975 or the 1's.t day U April, 1876, ,,is a loss, then, for. the purposes of sub-se'ction (2) of section' 2 of ftus Act,— )t(z)nt4ie,loss 1 so*.computed for the previous year relevant toLlthe assessment yeau commencing on the 1st (\ay, of" April; 1975, to ' "the .-extent,,if..any; such loss has not been set off against'the agricultural .income for the, pievious year relevant io the assessment' year . .cwimnencing on the 1st day of April, 1975 of the 1st day'of'April, 1970,

(ii).±hd loss;, so. commuted for the previous year Mevant to Hhe assessment yoar. commencing on the. 1st day of '.April,''1*975,-* t d ' t he (-extent, if any, such loss has not been set oil against'the agricultural (••income for- the^ previous year Mevant to lthe --abseaaHaent year ..(commencing on the 1st day of April,"1376, and

i(ili>.-the .lossi so^oomputed for the previous year relevant-to the

' assessment''year commencing on the 1st day of April, 1976,

shall be set off against the agricultural income of the .assessee .for the previous year-relevant to I the-'assessment year commencing, on the 1st

'day'of April} 1#77.

(2) Where the assessee has, in ' t he previous<.year ^relevant to the assessment year'comm"nc*ng':(Dn the -1st day -oi April, 19,78 orvif by virtue of any provision 6f the Income-tax 1 Act,.'income-tax is ±0 be charged in respect 'of the income- of' a period other than that previous, year, in such bther period, any agricultural income and line net result of the computa- tion of'the agricultural income\tof -the. assessee for any one or more'of Firthe,/previous .years relevant to the assessment years commencing on the :21st day .of.April, 19,74 or the 1st day of April;-1975 or'the 1st day of (April, Lmi^pv -.the.lst.4ay. of AP"L 1977, is a loss,'then, for-the .purposes of

sub-section (fi) of section 2 of this Act,—

(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1975, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1975 or the 1st day of April, 1976 or the 1st day of April, 1977,

(w) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1975, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1976, or the 1st day of April, 1977,

(Hi) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1976, to the extent, if any, such loss has not been set off against the agricultural income tor the pievious year relevant to the assessment year commencing on the 1st day of April, 1977, and

(iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1977,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 1978 or the period aforesaid.

(3) Where a change has occuried in the constitution of a firm, nothing in sub-rule (2) or sub-rule (2) shall entitle the firm to set oft so much of the loss proportionate to the share of a retired or deceased partner computed in the manner laid down in sub-section (2), sub-section (2) and sub-section (3) of section 67 of the Income-tax Act as exceeds his share of profits, if any, of the previous year m the firm, or entitle any partner to the benefit of any portion of the said loss (computed in the manner aforesaid) which is not apportionable to him.

(4) Where any person deriving any (agricultural income from any source has been succeeded in such capacity by another person, otherwise than by inheritance, nothing in sub-rule (2) or sub-rule (2) shall entitle any person, other than the person incurring the loss, to have it set off under sub-rule (2) or, as the case may be, sub-rule (2).

20 of 1974.

23 of 1970.

86 of 1976.

(5) Notwithstanding anything contained in this rule, no loss which has not been determined by the Income-tax Officer under the provisions of these rules, or the rules contained in Part IV of the First Schedule to the Finance Act, 1974, or of the First Schedule to the Finance Act, 1975, or of the First Schedule to the Finance Act, 1976, shall be set off under sub-rule (2) or, as the case may be, sub-rule (2).

Rule 22.—The provisions of the Income-tax Act relating to procedure with these rules is a loss, the loss so computed shall be ignored and the net agricultural income shall be deemed to be nil.

Rule n.—The provisions of the Income-tax Act relating to procedure for assessment (including the provisions of section 288A relating to rounding off of income) shall, with the necessary modffications, apply in relation to the computation of the net agricultural income of the assessee as they apply in relation to the assessment of the total income.

Rule 12.—For the purposes of computing the net agricultural income of the assessee, the Income-tax Officer shall have the same powers as he has under the Income-tax Act for the purposes of assessment of the tptal Income.

THE SECOND SCHEDULE

(See section 31)

PART I

In the First Schedule to the Customs-Tariff Act,—

(i) in Bub-heading No (3), of Heading No 37 01/08, for the entry in column (3), the entry "40% ad valorem" shall be substituted;

(ii) in Heading No. 5101/03, for the entry in column (3), the entry "100% plus Rs. 30 per kilogram" shall be substituted;

(hi) in sub-heading No (2) of Heading No. 53.01/05, for the entry in column (3\ the entry "607

(iv) in Heading No. 56 01/04, for the entry in column (3), the entry "140%" shall be substituted;

(v) in Heading No 56 05/06, for the entry in column (3), the entry "100% plus Rs. 30 per kilogram" bhall be substituted;

(vi) in Heading No. 69 09, for the entry m column (3), the entry

"100%" shall be substituted,

(vii) in sub-heading No. (2) of Heading No. 76.03/04, for the entry

in column (3), the entry "100%" shall be substituted;

(uiii) in sub-heading No. (1) of Heading No 84 51/55, for the

entry in column (3), the entry "100%" shall be substituted;

(ix) in Heading No. 85.01 —

(1) in sub-heading No (2), for the entry in column (31, the

entry "100%" shall be substituted,

(2) in sub-heading No (3), for the entries in columns (3) and (4), the entries "100%" and "97 5%" shall, respectively, be substituted;

(x) in Heading No 85 13, for the entry in column (3), the entry

"100%" shall be substituted;

(xi) in Heading No. 8514, for the entries in columns (3) and (4),

the entries "100%" and "97 5%" shall, respectively, be substituted;

(xii) in sub-heading No (1) of Heading No. 85.15, for the entry

in column (3), the entry "100%" shall be substituted;

(xiii) in Heading No 85.18/27,—

(1) in sub-heading No. (1), for the entries in columns (3) and (4), the entries "100$" and "97.5V shall, respectively, be substituted;

(2) in sub-heading No. (2), for the entry in column (3), the

entry "100%" shall be substituted;

(xiv) in Heading No. 100 0]* in column (2), for the words "All dutiable articles imported by a passenger as baggage," the words "All dutiable articles imported by a passenger, or a member of the crew, as baggage" shall be substituted.

PART II

R ate of duty

Standard

Sub-heading No. and < description of article

VK.

Head- ing Nov

Other Preferen- tial Areas

Duration when rates of duty are protective

( i)

(4)'

(6)

(5)

the First Schedule to the C ustortls Tariff Act;—- •

Iii

for Heading No 85 • 02, the

; follwoing Hei

ading shall be substiti ited,

(0 namely

''85 02

?

1

Electro-magnets; pcrma nettt' rriagflets artd article of special materials for permanent magnets, bcin] blanks 6f such magnets electromagnetic and per manent magnet chucks cianlp^S, vices' and -simila r work'holders; • electro magnetic clutches and couplings; electromag netic brakes, electroma§ nctfic lifting hemls: •

(1) Not elsewhere specified

:e

(2) Ferrate permanent hiag nets and articles of fdrrit for permanent magnet; being blanks of sue! 1 magnets < . . . 100%

- • >

le following E

for Heading No. 90 29, tl

ill be subs

Leading sht

;titifted, namelj

"90*29

h

B

Parts or accessories suitabl for use solely 6r principal with one or mofe of thi articles falling within Heading No. 90 23, 90.: 9O'26,9O 27or9o 28. 24,

' 1) Not elsewhere specifie

d Rate of di main ar are part

ity appliCa tide of w s or acces

blet6 the hiah they sories

I- i- is-

:r'

(2) Parts or accessories, coritdfning thetmonic va. ves or transistors or simi lar semi'-conductor devic< or electronic micVocii cuits or capacitors othc than paper capacitors - 100% 97-5%

THE[ THIRD SCHEDULE

(See section 32)

PART I

In the'First .Schedule to the. Central Excises Act,—

(i) in Item No 1A, for the entry in the second column against sub-item (1), the entry "Chewing gums" shall be substituted;'

(#ui'Ifem',No..lC, for -the, entry in the second column against sub*ittm.(2),'the entry • "Butter, whether .pasteurised .or not.''" shall be substituted',!-

(iii) >in; Item No 4,—

(xih) in Item No 26, for the entry in the third column, the entry "Three hundred and fifty rupees per metric tonne." shall be substi- tuted;

(xlv) in Item No 26A, for the entries in the third column against sub-items (1), (la), (2) and (3), the entries "Five thousand six hundred rupees per metric tonne ", "Five thousand six hundred rupees per metric tonne.", "Six thousand three hundred rupees per metric tonne." and "Twenty-eight per cent, ad valorem." shall, respectively, be substituted;

(xv) in Item No. 26AA, for the entries in the third column against sub-items (i), (id), (n), (ui), (iv) and ("), the entries "Three hundred and fifty rupees per metric tonne", "Three hundred and fifty rupees per metric tonne", "One thousand three hundred and fifty rupees per metric tonne", "One thousand three hundred and fifty rupees per metric tonne", "One thousand rupees per metric tonne plus the excise duty for the time being leviable on pig iron or steel ingcts, as the case may be." and "Seven hundred and fifty rupees per metric fenne." shall, respectively, be substituted;

(xvi) in Item No. 2CI3, for the entries in the third column against sub-items (1), (2) and (3), the entries "Two thousand six hundred and twenty-five rupees per metric tonne", "Three thousand one hundred and fifty rupees per metric tonne." and "Thirty-five per cent, ad valorem." shall, respectively, be substituted-.

(xvii) tn Item No. 27,—

(a) for the entry in the second column against sub-item (b), the following entry shall be substituted, namely: —

Manufactures, the following, namely, plates, sheets, circles, strips, shapes and sections, in any form or size, not otherwise specified." (b) for each of the entries in the third column against sub- o r ns a)0) (a)(U), lU (C (d), (e) and (f), the entry 'Fifty per L'™ aTv^eJvlus two thousand rupees per metric tonne, shall be Mibstiluted;

(xviii) in Item No. 33A —

"i" asss ssss as™-?™

PLAYERS)" shall be substituted;

ad valorem." shall be substituted; (xix) Item No. 47 shall be omitted; (xx) Item No. 59 shall be omitted;

t Z T^ *>• "• ** *e m t ry ' m? ^r o l u r o n'

•Two per cent, ad valorem." shall be 8ut"fatuted.

fecc. 2] THE GAZEtTE OF ifcfDIA EXTlUC)|lil>IttA&V i?l

PART II

1

Item No.

Description of goods

Rate of duty

)

(2)

( i;

(3)

I n the First Schedule to the Central Excises Act,

shall be substituted,

(1) for Item No. ID, the following Item. 1

namely: —

•iD AERATED WATERS, WHETHBR OR NOT FLAVOURED OR SWEETENED AND WHETHER OR NOT CONTAINING VEGETABLE OR FRUIT JUICE OR FRUIT PULP—

Dtvent y-five per cent. ad valorem;

(1) Aerated waters which ar only charged with car- bon dioxide gas under pressure and which contain no other added ingredient.

(2) AH others.

Fifty-five per cent

ad valorem"

shall be substituted,

(ii) for Item No. 14, the following Item

namely: —

,S

"14 PIGMENTS, COLOURS, PAINTS, ENAMEL VARNISHES, BLACKS AND CELLULOSE LACQUERS—

(1) Pigments, colours, paints and enamels—

(i) Aluminium paste.

Ten per cent. ad valorem.

(ii) Pigments and colours, not otherwise

specified.

Five per cent. ad valorem"

(2 ) Water paints—

(i) Dry distemper including cement based water

paints.

Ten per cent. ad valorem.

(ii) Oil-bound distemper.

Fifteen per cent. ad valorem.

(lii) Water pigment finishes for leather

Ten per cent. ad valorem.

(iv) Plastic emulsion paints.

Fifteen per cent. ad valorem,

(3) Oil paints and enamels — , i

(i) Tinting paste (Blue)

Ten: per cent. ad tplormt.

(ii) Stiff paints.

Fifteen per cent. ad valorem.

(iii) Ready-mixed paints and enamels-

Fifteen per cent. ad valorem.

n Description of goods

Rate of duty

Itet No

(

(3)

0

(2)

(4) Dispersed organicpigments ordinarily used Ten per cent. ad valorwi,

for the printing of textiles, whether in the form of powder, paste> or in- emulsion

(5)- Paint* and enamels¹, not otherwise specified. Fifteen per cent. ad valorem.

Varnishes and biddies'—

XI.

(i) Varnishes.

i

Eifteen >per- cent. ad valovm.

(ii) Bituminous and coal-tar blacks.

Five p"er cCnt. ad valorem.

Cellulose lacquers —

III.

fifteen'pel⁴ cent ad valorem.

(0 Nitrocellulose lacquers, clear and plgmerited'arid* -nitroflellulose ancillaries in liquid, semisolid or

pasty form.

!•("') Cellulose lacquers, not other wise specified. Fifteen per cent. ~ ad vdloHm,

;k."

Explanation.—This Item does nnrt include carbon bait

("") for Item No, 14H, the following Item shall be s ubatituted, namely—

iH GASES, INCLUDING LIQUIFIED' OR SOLI- DIFIED GASES, THE FOLLOWING NAMELY :—

ii) OKgen.

Twelve per cent. ad valorem.

(ii) .Chtorme.

-1 7welve*per cent. ad iJaior&m.

(iii) Ammonia.

Twelve per cent. ad valorem.

(iv). Carboftie acid (Carbon dioxide).

R,Upee otte and twenty paise per kilogram.

(v> Refrigerant gases, not otherwuse specified, Twenty-four per cent.

ad valorem.

such as sulphur dioxide and for eon.

) Twelve per cent.

(vl)vAcetyIfe"e (whether in dissolved condition or not

ad valorem";

(10) f b ^ t t o m ^, 15 A, the following Item shall be substituted, namely :—

'ISA ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIALS AND CELLULOSE ^ESTERS* AND ETHERS, AND ARTICLES

THEREOF—

r-d) ThefblWwing artificial or synthetic resins and . Hftv per cent. ' plttetic irriaterials and cellulose esters and ethers, ad valorem.

in any form, whether solid, liquid or pasty or os

Item No.

Description of goods

Rate of duty

( 2)

(3)

CO

powder, granules or flakes, or in the form of mould- ing powders, namely .—

(i) Condensation, polycondensation and polyaddi- tion products, whether or not modified or poly- mcnscd, and whether or not linear such as Phcnoplasts, Aminoplasts, Alkyds, Poly- amides, Superpolyamides, Polyesters, Poly- allyl esters, Polycarbonates, Polyethers, Polyethylene imines, Polyurethanes, Epoxidc resms and Sihcones;

(it) Polymerisation and Co-polymerisation pio- ducts such as Polyethylene, Polytetrahaloe- thylencs, Polyisobutylene, Polysty- rene, Polyvinyl Chloride, Polyvinyl acetate, Polyvinyl chloroacetate and other polvyinyl derivatives, Polyacrylic and Poly- methacrylic derivatives and Coumarone— Indune Resins; and

(w) Cellulose acetate (inculding Cellulose diacc- tate or Cellulose triacetate), Cellulose acetate butyrate and Cellulose propionate, Cellulose acetate propionate, Ethylcellulo.se and Bcnzylcellulose, whether plasticiscd or not, and plasticised Cellulose nitrate.

'ifty per cent. ad valorem.

(2) Articles made of plastics, all sorts, including Y tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible, including layflat tubings, and polyvinyl chloride sheets, not otherwise specified.

(3) Polyurethane foam. S

;evcnty per cent. ad Valorem

(4) Articles made of polyurethane foam. S<

sventy per cent. ad valorem

.astics" means the trials or cellulose planation —For the purpose of sub-item (2), "pi is artificial or synthetic resins or elastic mat*

Ex; var IOU esters and ethers included in sub-item (1)';

shall be inserted, (v) after Item No. 15C, the following Item

imely • —

"en per cent. ad valorem,

POLISHES AND CREAMS FOR FOOTWEAR 1 FURNITURE,FLOORS, LEATHER, MET- ALS, MOTOR VEHICLES AND GLASS; SCOURING POWDERS AND PASTES,

L

Rate of duty

Item No.

Description of goods

(i

(3)

)

(*)

Explanation—This Item does not include French ; Polish.";

lall be substituted, (vi) for Item No 18, the following Item si

namely: —

I MAN-MADE FIBRES, OTHER THAN MIN-

CT8

ERAL FIBRES—

Eighty-five rupees (i) Non-ccllulosic.

per kilogram.

Four rupees per kilo- (") Cellulosic.

gram.

MAN-MADE FILAMENT YARNS-

II

CO Non-cellulosic—

Eighty-five rupees per (a) other than textured.

kilogram.

Ninety-five rupees per (b) textured.

kilogram.

has been processed igth of the filaments Explanation.—'Textured Yarn" means yarn that introduce crimps, coils, loons or curis along the ler d shall include bulked yam and stretch yarn.

to an

Twenty rupees per (it) Ccllulosic.

kilogram.

Eighty-five rupees per (in) Matallized.

Kilogram,

III CELLULOSIC SPUN YARN

Yarn, in which man-made fibre of celJulosic origin predominates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power -

(i) not containing, or containing not more than 5 5 paise per count one-sixth by weight of non-ccllulosic fibre cal- per kilogram, culated on the total fibre content

(ii) containing more than one-sixth by weight of Eighteen rupees per non-cellulosic fibre calculated on the total fibre kilogram, content.

Explanation I—"Count" means the size of grey yarn (excluding any

sizing material) expressed in English Count

Explanation II.—For multiple fold yarn, "count" means the count of

the basic single yarn.

Explanation III.—"Where two or more of the following fibres, that is

to say,

Description of goods

Rate of duty

Item No.

(2)

(0

(3)

(a) man-made fibre of cellulosic origin;

(b) cotton,

(c) wool or acrylic fibre, or both;

(d) silk (including silk noil),

(e) jute (including Bimlipatam jute or

mesta fibre);

(f) man-made fibre of non-cellulosic origin, other than acrylic fibre,

(flf) flax,

(h) ramie,

in any yarn are equal in weight, then, such one of those fibres, the predominance of which would render such yarn fall under that sub-Item or Item (hereafter in this Explanation referred to as the applicable sub- Item or Item), among the sub-Items and Items Nos 1BIII. 18A, 18B, 18C, 18D, 18E, 18FI and 18FII, which, read with the relevant notification, if any, for the time being m force issued under the Central Excise Rules, 1944, involves the highest amount of duty, shall be deemed to be predominant in such yarn and accordingly such yarn shall be deemed to fall under the applicable sub-Item or Item, as the case may be.';

(vii) for Item No 18A, the following Item shall be substituted namely; —

"i8A. COTTON YARN, ALL SORTS—

Yarn, in which cotton predominates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power—

5 • 5 paise per count per kilogram.

(t) not containing, or containing not more than one-sixth by weight of non-cellulosic fibre calculated on the total fibre content.

Eighteen rupees per kilogram.

(M) containing more than one-sixth by weight of non-cellulosic fibre calculated on the total fibre con- tent.

Explanation —

(1) 'Cotton yarn' shall include cotton twist and thread.

(2) Cotton yarn, twist or thread, all sorts, whether sized or unsized, in all forms including skeins, hanks, cops, cones bobbins, pirns, spools, reels, cheeses, balls or on warp beams shall be deemed to be included under this Item

(3) Explanations I, II and III under sub-Item III of Item No. 18 shall, so far as may be, apply in relation to this Item as they apply in relation to that Item.",

Description of goods

Rate of duty

Item No.

( 2)

( i)

(3)

ing Item shall be substituted (vin) for Item No 18B, the follow

lamely: — r

WOOLLEN AND ACRYLIC SPUN YARN—

"18B.

Yarn, in which wool or acrylic fibre or both predominates or predomi- nate in weight, and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power—

Twenty rupees per kilogram.

(i) not containing or containing not more than one-sixth by weight of non-cellulosic fibre (other than acrylic fibre) calcu- lated on the total fibre content.

Eighteen rupees per kilogram.

(n) containing more than one-sixth by weight of non-cellulosic fibre (other than acrylic fibre) calculated on the total fibre content.

Explanation I.—Woollen and acrylic spun yarn shall be deemed to

include woollen and acrylic knitting yarn

Explanation II—Explanation III under sub-Item III of Item No. 18

shall, so far as may be, apply in relation to this Item as they apply in relation to that Item ";

(u;) for Item No, 18C, the following Item shall be substituted,

namely: —

"18C. SILK YARN, ALL SORTS—

Yarn, in which silk (including silk noil) predominates in weight and, in or in relation to the manufact¹- ure of which any process is ordinarily carried on with the aid of power—

Twenty per cent, ad valorem.

(i) not containing or containing

more than one-sixth by weight of non-cellulosic fibre calculated on the total fibre content.

Eighteen rupees per kilogram.

(ii) containing more than one-sixth by weight of non-cellulosic fibre calculated on the total fibre content.

Explanation.—Explanation III under sub-Item III of Item No 18 shall, so far as may be, apply in relation to this Item aa they apply in relation to that Item.",

¹

Item No.

Desciiption o± goods

Rate of duty

( 2)

(3)

(x) for Item No. 18D, the following Ite

m shall be substituted, namely:—

"18D . JUTE YARN, ALL SORTS—

Rupees six hundred per metric tonne.

Yarn, in which jute (including Bimlipatam jute or mesta fibre) predominates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of pnwer

Explanation I,—'Jute yarn' shall include jute twist, thread, rope and

twine.

Explanation II.—Explanation III under sub-Item III of Item No 18 shall, so far as may be, apply in relation to this Item as it applies in relation to that Item",

(xi) fcr Item No 18E, the following Item shall be substituted,

namely: —

"18E. NON-CELLULOSIC SPUN YARN-

Twenty-four rupees per kilogram.

Spun (discontinuous) yarn, in which man-made fibres of non-cellulosic origin other than acrylic fibre, predominate in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.

Explanation —.Explanation III under Kub-Item III of Item No 18 shall,

Rate of duty

Description of goods

Item No.

(3)

( I)

RAMIE YARN—

II

Eighteen rupees per kilograni,

Yarn, m which ramie predominates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.

Explanation —Explanations I, II and III sub-Item III of Item No. 1$

shall, so far as may be, apply m relation to this Item as they apply in relation to that Item ";

(xm) in Item No 19,

(a) in column (2), for the portion beginning with the words "Cotton fabrics" means all varieties of fa-¹ brics' and ending with the words "which are embroidered or im- pregnated, coated or laminated, as the case may be—", the following shall be substituted, namely •—

' "Cotton fabrics" means all va-

rieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chadders, bed-sheets, bed-spreads, counter-panes, table-cloths, embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic mater- ials, if (i) m such fabrics cotton predominates in weight, or (11) such fabrics contain more than 40 per cent, by weight of cotton and 50 per cent, or more by weight of non-ccllulosic fibres or yarn or both:

Provided that in the case of embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials, such pre- dominance or percentages, as the case may be, shall be in relation to the base fabri cs which are embroidered or impregnated, coated or laminated, as the case may be'—;

(bj for sub-Item I, the following

sub-Item shall be substituted namely:—

Description of goods

Rate of duty

Item No.

( 2)

( 1)

(3)

"I

Twenty per cent, ad valorem¹''',

Cotton fabrics other than 0) ' embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials.

(c) for Explanation 11.—the followir. Explanation shall be substituted,

namely •—

"Explanation II —Where two or more of the following fibres, that is to say,

(a) man-made fibre of cellulosic origin;

(b) cotton,

(c) wool;

(d) silk (including silk noil),

(e) jute (including Bimilipatam jute or mesta fibre),

(f) man-made fibre of non-cellulosic origin,

(

(h) ramie,

in any fabric are equal in wei lit, then, such cine of those fibres the predominance of which would render such fabric fall under that Item (hereafter m this Explanation referred to as the applicable Item) among the Items Nos. 19, l."\ 21, 22, 22A and 22AA, which, read with the relevant notification, ii any for the time being in force issued under the Central Excise Rules, 1944, involves the highest amount of duty, shall be deemed to be predominant in such fabric and accordingly such fabric shall be deemed to fall under the applicable Item.",

(d) Explanation III shall be omitted

(xw) in Item No 20,—

(a) in column (2), for the portion beginning with the words "but docs not include any such fabric-" and ending with the words "shall be in relation to the base fabrics which are embroidered-", the following shall be substituted, namely.—

",m each of which silk (including

siJk noil) predominates in weight and which is not manufactured on handloom :

Provided that in the case of embroidery in the piece, in stiips or in motifs, such predominance shall be in relation to the case fabrics which are embroidered-";

Description of goods

Rate of duty Item No.

( i)

( 2)

(3)

(b) the Explanation shall be numbered as Explanation I and after that Explanation as s,o numbered the following Explanation shall bt inserted, namely.—

"Explanation II —Explanation II under Item No. 19 shall, so far as may be, apply in relation to this Item as it applies in relation to that Item '',

(xv) in Item No. 21,—

(a) in cloumn (2), for the poition

beginning with the words "manufact- ured wholly of wool" and ending with Che words "in relation to the base fabrics which are embroidered-¹',,the following shall be substituted, namely: — "in which wool predominates in weight or which contain more than 30 per cent, of wool and 50 per cent or more of non-cellulosic fibre or yarn or both.

Provided that in the case of embroidety in the piece, in strips or in motifs, such predominance or percentages, as the case may be, shall be in relation to the base fabrics which arc embroidered-"; (b) the Explanation sVii.ll be num- bered as Explanation I and after that Explanation as so numbered the following Explanation shall be inserted, namely —

"Explanation II —Explanation U under Item No 19 shall, so far as mav be, apply in relation to this Item as it applies in relation to that Item",

(xvi) Cor Item No 22, the following Item shall be substituted-

namely: —

'22 MAN-MADE FABRICS—

"Man-made fabrics" means all varieties- 01 fabrics manufactured cither wholly or partly from man- m'lde fibres or yarn and includes en.bnndery in the piece, in strips or in motifs anl fabrics impregnated, coated or laminated with prepar- ations of cellulose derivatives or of other arti ficial plastic materials, in each of which man-made (i) cellulosic fibre or yarn, or (11) non-ccllulosic fibre or yarn, predominates in weight

Provided that in the case of embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic mateiials, such predominance shall be in 1 elation 1o the base fabrics which are

Description of goods

Rate of duty

Item No.

( 2)

( i)

(3)

embroidered or impregnated, coated or laminated, as ihe case may be—

Twenty per cent, ad valorem plus rupees five per square metre.

(i) Man-made fabrics other than (i) embroidery in the piece, in strips or in mo its, and (n) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials.

The duty for the time being leviable on the base fabrics, if not already paid, plus twenty per cent, ad valorem.

(2) Embroidery in the piece, in ' strips or in motifs, in or m relation to the manufacture of which any process is ordinarily carried on with the aid of power

(3) Fabrics impi egnatcd, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials.

The duty for the time being leviable on the base fabrics, if not already paid, plus twenty per cent. advalorem.

Explanation I—"Base fabtics" means fabrics falling under sub-Item (1) of this Item which are subjected to the process of embroidery Or which are impregnated, coated or laminated with preparations of cellulose derivatives or of other plastic materials,

Explanation II.—This Item does not include glass fabrics or fabrics

falling under Item No. 19 or Item No 21

Explanation III.—Explanation II under Item No. 19 shall, so far as

may be, apply in relation to this Item as it applies in relation to that Item.',

(xvh) in Item No. 22A—

(") in column (2), for the words, brackets and figures

"BUT EXCLUDING ANY SUCH MANUFACTURE—

(i) if it contains 40 per cent or more by weight of wool', or, ?

(ii) if it contains no wool or less than 40 per cent by weight of wool and less than 50 per cent.by weight of jute (includ- ing Bimliputam jute or mesta fibre)—", the words and brackets,

",IN WHICH JUTE (INCLUDING BIMLIPATAM JUTE OR MESTA FIBRE) PREDOMINATES IN WEIGHT—",

shall be substituted;

(b) for the entry in the third column against sub-Item (2), the

Description of goods

Rate of duty

Item No.

( 2)

(3)

W

entry "Six hundred rupees per metric tonne,"shall be substituted:

(c) the following Explanation shall be inserted at the end, namely:—

"Explanation —Explanation II under Item No 19 shall, so far as may aDDlv in relation to this Item as it anplies in relation to that Item" ;

(xaiii) for Item No. 22AA, the following Item shall be substituted, namely:—

tf22AA. (i) FLAX FABRIC, in which flax Fifteen per cent, ad valorem.

predominates in weight.

(") RAMIE FABRIC, in which Fifteen per cent, ad valorem.

ramie predominates in weight.

"Explanation.—Explanation II under Item. No 19 shall, so far as may

be, apply in relation to this Item as it applies in relation to that Item.";

(xix) for Item No 28, the following Item shall be substituted,

namely: —

"28. TIN PLATE AND TINNED, LACQUERED OR

VARNISHED SHEETS INCLUDING TIN TAGGERS AND CUTTINGS OF SUCH PLATES, SHEETS OR TAGGER —

thousand seven hundred and rupees per metric tonne.

(1) Tin plate and tinned sheet One including tin taggers and cutting fifty of such plates, sheets of taggers

thousand two hundred and rupees per metric tohrie.";

(2) Lacquered sheets, varnished One sheets, including cuttings of lac- fifty quered sheets and varnished sheets.

(xx) for Item No. 30, the following Item shall be substituted, namely:—

; AND

"30. ELECTRIC MOTORS ALL SORTS

PARTS THEREOF, NAMELY—

A.. Motors which operate on

alternating current—

1. Single phase motors,

Twenty per cent ad valorem.

2. Three phase motors—

Fifteen per cent, ad Valorem.

(1) for rated output not exceeding ] 7 5 Kw continuous rating or, in the case of short time or intermittent rated motors, its equivalent continuous rating.

(ii) for rated output exceeding 7 5 ' Ten per cent, ad valorem-

Kw continuous rating or, in the case of short time or intermittent rated motors, its equivalent continuous rating,

Rate of duty

Description of goods

Item No.

( 2)

( i)

(3)

B. Motors which operate on direct

current—

(i) with rated output not exceeding Twenty per cent, ad valoretft.

7-5 Kw.

(ii) with rated output exceeding Ten per cent, ad valorem*

7.5 kw.

C. Parts of electric motors.

Twenty per cent ad valorem

Explanation I.—In the case of any multi-speed motor, the highest rated output of the motor shall be deemed to be the rated output of the motor.

Explanation II.—This item does not include motors specially designed for use in gramophones or record players and all parts of such motors.";

(xxi) for Item No. 33, the following Item shall be substituted,

namely: —

"33. ELECTRIC FANS INCLUDING RE GULATORS FOR ELECTRIC

FANS, ALL SORTS—

Fifteen per cent, ad valorem.

(1) Table, cabin carriage, pedestal and air circulator fans, of a dia- meter not exceeding 40 6 centi- metres and regulators therefor.

Fifteen per cent, ad valorem.

(2) Electric fans, designed for use in an industrial system as parts indispensable for its operation and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose, and regulators therefor.

Twenty per cent, ad valorem";

(3) Electric fans, not otherwise specified, and regulators therefor.

(xxn) after Item No 33E, the following Item shall be inserted,

namely: —

3IALLY KNOWN AS STEREO "33F. MUSICAL SYSTEMS COMMER< OR HI-FI SYSTEMS, NAMELY :-

(1) Stereo or hi-fi amplifiers.

Thirty-five per cent, ad valorem

Thirty-five per cent, ad valorem.¹";

(2) Speakers and speaker systems housed in acoustically designed enclosures which are ordinarily used as attachments with stereo or hi-fi systems, or with radios (including transistors sets), tuners radiograms, gramophones (in- cluding record players) and tape recorders or players (including cassette recorders or players) having in-built stereo devices.

Description of goods

Rate of duty

Item No.

( 2)

( i)

(3)

(xxm) for Item No 34, the following Item shall be substituted, namely: —

M O T OR V E H I C L ES A ND TRACT roRS—

V34-

Motor Vehicles—

I

"Motor vehicles" means all mechanically propelled vehicles, other than tractors, designed for use upon roads—

(i) Two-wheeled and three- ^

wheeled motor vehicles'.

"welvc and half per cent. adralareim.

(2) Motor vehicles of engine capacity

not exceeding 2500 cubic centi - metres—

(i) Motor vehicles with body. Seventeen und half per cent

advalorem.

Twenty per cent, ad valorem.

(ii) Other motor vehicles (in- cluding chassis whether or not with cab.)

Seventeen and half per cent.

(3) Motor vehicles of engine capacity

exceeding 2500 cubic centimetres.

advalorem.

II Tractors, including agricultural Fifteen per cent, ad valorem.

tractors.

Explanation I—"Motor vehicles" and "Tractois, including agricultural tractors" shall include a chassis' and a trailer, but shall not include a vehicle running upon fixed rails

Explanation II— For the purpose of this Item, where a motor vehicle is mounted, fitted or fixed with any weight lifting or other specialised material handling equipment, then, such equipment shall not be taken into account.',

(xxiv) in Item 34A, foi the words "PARTS AND ACCESSORIES OF MOTOR VEHICLES, NOT OTHERWISE SPECIFIED.", the words and brackets "PARTS AND ACCESSORIES OF MOTOR VEHICLES AND TRACTORS (INCLUDING AGRICULTURAL TRACTORS), NOT OTHERWISE SPECIFIED." shall be substituted;

(xxv) for Item No. 37, the following Item shall be substituted,

namely: —

"37. CINEMATOGRAPH FILMS—

I Unexposed. Two paise per metre.

II. Exposed—

(i) News-reels and shorts not Fifty paise per metre,

exceeding 500 metres.

Description of goods

Rate of duty

Item No.

( 2)

( 1)

(3)

Ten percent ad valorem.";

(ii) Feature films, advertisment shorts, and films not otherwise specified.

owing Item shall be substituted,

(xxvi) for Hem No. 37AA, the foil

namely: —

Thirty per cent, ad valorem.";

"37AA. TAPE RECORDERS ( I N C L U D- ING CASSETTE RECORDERS AND TAPE DECKS) AND TAPE PLAYERS ( I N C L U D I NG CASETTEE PLAYERS).

(xxvn) after Item No 43, the fol lowing Items shall be inserted,

namely: —

44. WATCHES, CLOCKS AND

Ten per cent, ad valorem.

TIME-PIECES, PRIMARILY DESIGNED TO SHOW T HE T I ME OF DAY.

Ten per cent, ad valorem.

45 MACHINERY AND APPLIANCES FOR DETERMINATION OF W E I G HT I N C L U D I NG PARTS OF WEIGH-BRIDGES.

Explanation —This Item does not include scales having arms of equaJ length which determine weight by belancmg the object agamst weight.";

(xxviu) for Item No. 51A, the iollowmg Item shall be substituted,

namely: —

•'51 A. TOOLS, THE FOLLOWING Pen per cent, ad valorem." ',

NAMELY :—

(0 Handtools, the following .

Pliers (including cutting pliers) spanners, wrenches, files and rasps, screw drivers (including ratchet types);

(") Tools for working in the hand pneumatic or with self con- tained non-electric or electric motor;

(nt) Tools designed to be fitted in- to hand tools, machine tools or tools falling under sub-Item (11), including dies for wire drawing extrusion dies for metals and rock drilling bits;

(iv) Industrialknives and blades for

hand or machine saws.

Item shall be Inserted, namely t—

(xxix) after Item No 60, the following

Ten per cent ad valorem".

'(6i. ELECTRIC LIGHTING FITT-

INGS, NAMELY .—

SWITCHES, PLUGS AND SOC- KETS, ALL KINDS; CHOKES AND STARTERS FOR FLUOR- ESCENT TUBES.

THE FOURTH SCHEDULE

(See Section 33)

PART I

In the Additional Duties of Excise Act,—

(a) in clause (c) of section 2, for the words 'and "rayon or artificial silk fabrics"', the words 'and "man-made fabrics" ' shall be substituted;

(b) In sub-section (2) of section 3, for the words "rayon or artificial silk fabrics", the words "man-made fabrics" shall be substituted.

PART II

In the First Schedule to the Additional Duties of Excise Act,—

(i) in Item No 4, under "II Manufactured tobacco—", for the entries in the third column against sub-Items (3)(i) and (3)(w), the entries "One rupee per thousand'¹ and "Forty paise per thousand" shall, respectively, be substituted;

(u) in item No. 19, for sub-Item. I, the following sub-Item shall be substituted, namely: —

"I. Cotton fabrics other than (i) em- Five per cent, ad valorem.";

broidery, in the piece, in strips or in motifs and (ii) fabrics impreg- nated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials.

(in) in item No. 22,—

(a) for the entry "RAYON OR ARTIFICIAL SILK FABRICS—", the entry "MAN-MADE FABRICS"—shall be substituted;

(*) in sub-Item (i), in the second column, for the words "Rayon or artificial silk fabrics", the words "Man-made fabrics" shall be substituted.

THE FIFTH SCHEDULE

(See section 39)

PART I

AMENDMENTS IN THE INCOME-TAX ACT

1. Section %—After clause (16), insert—

'(16A) "Commissioner (Appeals)" means a person appointed to be a Commissioner of Income-tax (Appeals) under sub-section (7) of section 117;'.

2. Section I07A, sub-section (9).—For "Appellate Assistant Commis- sioner", substitute "Commissioner (Appeals)".

3. Section 116, clause (c) and section 117, sub-section (1).—After "Commissioners of Income-tax", insert ", Commissioners of Income-tax (Appeals)".

4. Sections 119, 154, 177, 189, 267, 271, 271A, 275 and 295.—After "the Appellate Assistant Commissioner'', wherever it occurs, insert "or the Commissioner (Appeals)"

5. After section 121, insert—

"121A (7) Commissioners (Appeals) 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 as the Board may direct

Jurisdic- tion of Commis- sioners (Appeals), (2) Where any directions issued under sub-section (7) n a ve assigned to two or more Commissioners (Appeals), the same area or the same persons or classes of persons or the same incomes or classes of income, they shall perform their functions m accordance with any orders which the Board may make for the distribution and allocation of the work to be performed.".

6 Section 125.—

(a) in sub-section (0, in clause (a), omit "and the Appellate

Assistant Commissioner" and "and the Commissioner respectively";

(b) in sub-section (2), for clause (a), substitute—

"(a) where such order is made under clause (a) of the said sub-section (7), references in this Act or in any rule made there- under to the Income-tax Officer shall be deemed to be references to the Inspecting Assistant Commissioner and any provision of this Act requiring approval or sanction of the Inspecting Assistant Commissioner shall not apply,"

7. Section 125A — For sub-section (4), substitute—

"(4) Where an order is made under sub-section (7) and the Inspecting Assistant Commissioner exercises the powers or performs the functions of an Income-tax Officer in relation to any area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, references in this Act or in any rule made thereunder to the Income-tax Officer shall be construed as references to the Inspecting Assistant Commissioner and any provision of this Act requiring approval or sanction of the Inspecting Assistant Com- missioner shall not apply."

3 Section 126.—

(a) after "empower Commissioners,", insert "Commissioners

(Appeals),¹',

(b) after "section 121,", insert 'section 121A,'

9 Section 131, sub-section (7)—For "and Commissioner", substitute

", Commissioner (Appeals) and Commissioner"

10 Sections 133 and 134—For "or the Inspecting Assistant Commis- sioner", wherever it occurs, substitute ", the Inspecting Assistant Commissioner or the Commissioner (Appeals)".

11 Section 245.—For "or Commissioner", substitute ", Commissioner

(Appeals) or Commissioner".

12. Section 245A, clause (b) - A f t er "a Commissioner,", insert "?

Commissioner (Appeals),".

13 Chapter XX, m the sub-heading before section 246, after "Appellate Assistant Commissioner ', insert "and Commissioner (Appeals)",

14. Section 246.—

(a) renumber the section as sub-section (1) of the section and in the sub-section as so numbered,

(i) in the opening portion, for "Any assessee aggrieved by any of the following orders", substitute "Sublet to the provisions of sub-section (2), any assessee aggrieved by any of the following orders";

(u) omit clause (a) and the Explanation,

(b) after the sub-section as so numbered, insert—

'(2) Notwithstanding anything contained in sub-section (Z), any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against such order -

(a) an order against the assessee, b^mg a company, under section 104;

(b) an order specified in clauses (c) to (o) (both inclusive) of sub-section (1) where such order is made by the Inspecting Assistant Commissioner m exercise of the powers or functions conferred on or assigned to him under section 135 or section 125A;

(c) an order made by the Inspecting Assistant Commis- sioner imposing a fine under sub-section, (2) of section 131,

(d) an order against the assessee, being a foreign com- pany, where the assessee denies its liability to the assessed under this Act or any order of assessment under sub-section (3) of section 143 or section 144, and the assessee objects to amount of income assessed or to the amount of tax deter- mined or to the amount of loss computed or to the status under which it is assessed,

(e) an order against the assessee, being a domestic company, where the assessee denies its liability to be assessed under this Act or any order of assessment under sub-section (3) of section 143 or section 144, and the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which it is assessed, and the amount of income so assessed or the amount of loss so computed exceeds five lakh rupees;

(f) an order of assessment under sub-section (3) of section 143 or section 144 made on the basis of directions issued by the Inspecting Assistant Commissioner under section 144B;

(g) an order imposing a penalty under clause (c) of sub-section (7) of section 271 where such penalty has been imposed with the previous approval of the Inspecting Assistant Commissioner under the proviso to clause (iit) of sub-section {1) of that section,

(h) an order made by an Inspecting Assistant Commis-

sioner imposing a penalty under section 272A,

(i) an order made by an Income-tax Officer under the provisions of this Act in the case of such persons or classes of persons as the Board may, having regard to the nature of the cases, the complexities involved and other relevant considerations, direct.

(3) Every appeal against an order specified in sub-section (2) which is pending immediately hefoie the appointed day before an Appellate Assistant Commissioner or a Commissioner and any matter arising out ol or connected with such appeal and which is so pending shall stand transteued on that day to the Commis- sioner (Appeals) and the Commissioner (Appeals) may proceed with such appeal or matter from the stage at which it was on that day:

Piovided that the appellant may demand that before pro- ceeding further with the appeal or matter, the previous proceed- ing or any part thereof be reopened or that he be re-heard

Explanation —For the purpose of this section,—

(a) "appointed day'' means the date appointed under section

39 of the Finance (No. 2) Act, 1977,

(b) "domestic company" and "Jtmeign company" shall have

the same meanings as in section 80B,

(c) 'status" means the category under which the assessee is

assessed as "individual, Hindu undivided family" and so on.'

15 Sections 247, 248, 249, 250, 251 and 287—After "Appellate Assistant

Commissioner", wherever rt occurs, insert "or, as the case may be, the Commissioner (Appeals)".

16. Section 253 —

(a) in sub-sections (1) and (2), for "an Appellate Assistant Com- missioner", substitute "an Appellate Assistant Commissioner or, as the case may be, a Commissioner (Appeals)";

(b) in sub-section (4), for "the Appellate Assistant Commissioner" at both the places where it occurs, substitute "the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals)

17. Section 264, sub-section (4).—

(a) in clause (a), after "Appellate Assistant Commissioner", insert

"or to the Commissioner (Appeals)";

(b) in clause (b), after "Appellate Assistant Commissioner", insert

"or the Commissioner (Appeals)"

18. Section 272A —

(., in sub-section (.). a

or" at both the places where it occurs, insert

1 9. Section 274. sub-section (3>-A.ter "An AppeUate Assistant Com-

missioner", insert "or a Commissioner (Appeals) .

PART II

AMENDMENTS IN THE WEALTH-TAX ACT, 1957

1 Section 2—After clause (g), insert—

'(gg) "Commissioner (Appeals)" means a person empowered to exercise the functions of a Commissioner of Wealth-tax (Appeals) under section 9A,\

2 Section 8AA--For sub-section (4), substitute—

"(4) Where an order is made under sub-section (/) and the Inspecting Assistant Commissioner exercises the powers or performs the functions of a Wealth-tax Ofhcer in respect of any case or person or proceeding, references in this Act or m any rule made thereundei to the Wealth-tax Officer shall be constiued as references to the Inspecting Assistant Commissioner and any provision of this Act requiring approval or sanction of the Inspecting Assistant Commis- sioner shall not apply.".

3 After section 9, insert—

Commis- sioners of Wealth- tax.

(Appeals)

"9A The Board,may empower as many persons as it thinks fit to exercise under this Act the functions of a Commissioner of Wealth- tax (Appeals), and on being so empowered the Commissioners (Appeals) shall perform their functions in respect of such areas or such persons or such classes of persons as the Board may direct, and where such directions have assigned to two or more Commissioneis (Appeals) the same area or the same persons or the same classes oi persons they shall perform their functions in accordance with such orders as the Board may make for the distribution and allocation of the work to be performed.".

4 Section 13. sub-section (J).-For "the Appellate Assistant Commis- sioner of Wealth-tax", substitute "Appellate Assistant Commissioner or the Commissioner (Appeals)".

5 Section 18.—

(a) in sub-section (1)—

(t) in the opening portion, after "Appellate Assistant Com- missioner,", insert "Commissioner (Appeals), ;

(n) in Explananon 2(A) and Explanation 3, after " A ^ **

Assistant C o m m o n e r ", insert "or the Commissioner (Appeals) ,

( b) in sub-section (4), after "Appellate Assistant Commissioner,'

insert "a Commissioner (Appeals),";

,. SeCon 22*. d.-* (")-"" "• " " , ", insert "a Com-

misftioner (Appeals),".

8 Section 23 —

(a) in sub-section (2), for "Any person", substitute "Subject to the provisions of sub-section (1A), any person",

(b) after sub-section (1), insert—

'(1A) Notwithstanding anything contained in sub-section (i), any person,—

(a) objecting to the amount of net wealth determined under this Act or objecting to the amount of wealth-tax determined as payable by him under this Act or denying his liability to be assessed under this Act, where the net wealth determined on assessment made under section 16 exceeds tifteen lakh rupees, or

(fa) objecting to any penalty imposed under clause (c) of sub-section (/) of section 18 where the penalty has been imposed with the previous approval of the Inspecting Assistant Commissioner under sub-section (3) of section 18; or

(c) objecting to any assessment or order referred to in clauses (a) to (h) (both inclusive) or clause (i) of sub-section (1), where such assessment or order has been made by the Inspecting Assistant Commissioner m exercise of the powers or functions conferred on or assigned to him under section 8AA; or

(d) objecting to any penalty imposed by an Inspecting Assistant Commissioner under section 18A, or

(e) objecting to an order made by a Wealth-tax Officer in the case of such persons or classes of persons as the Board may, having regard to the nature of the cases, the complexities involved and other relevant considerations, direct,

may appeal to the Commissioner (Appeals) against the assessment or order, as the case may be, in the prescribed form and verified in the prescribed manner

(IB) Every appeal against anv assessment or order referred to m sub-section (1A) which is pending immediately before the appointed day before an Appellate Assistant Commissioner or a Commissioner and any matter arising out of or connected with such appeal and which is so pending shall stand transferred on that day to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with the appeal or matter from the statue at which it was on that d ay

Provided that the appellant may demand that before pro- ceeding further with the appeal m matter the previous proceed- ing or any part thereof be reopened or that he be re-heard

Explanation—In this sub-section, "appointed day" means the date appointed under section 39 of the Finance (No. 2) Act 1977/;

(c) m sub-sections (2), (2A), (3), (4), (5), (5A), (SB) and (6), after "Appellate Assjstant Commission*?!", wherevet it occurs, insert "or, a* the case may be, the Comrnissionei (Appeals)'¹;

(d) m sub-section (3A)—

(i) after "sub-section (1)", insert "or oi sub-section (1A)";

(ii) after "the Appellate Assistant Commissioner", insert "or, ah the case may bo, the Commissioner (Appeals!"

9 Section 24 —

(a) m sub-section (/), after "the Appellate Assistant Commis- sioner", mseit "or the Comnussionei (Appeals)",

(b) m sub-section (2), aftei "Appellate Assistant Commissioner"', inseit "or a Commissionei (Appeals)",

(c) in sub-sectjon (2A), after "Appellate Assistant Commissioner,", at both the places wheie it occurs, insert L'or the Commissioner (Appeals)⁷¹,

10 Section 25, proviso to sub-section (?)—•

(a) in clause (a), after "Appellate Assistant Commissioner", insert "or to the Commissioner (Appeals)";

(b) in clause (b), after "Appellate Assistant Commissioner", insert "or the Commissioner (Appeals)",

11 Section 34A, sub-section (5)—After "Appellate Assistant Commis- sioner", insert ", Commissioncn (Appeals)".

12 Seeiions .'J5 and 46—After "the Appellate Assistant Commissioner", wherovei it occurs, insert "en thu Commissionei (Appeals)".

13 Section 35K, sub-section (?)—For "in sections 8, 9", substitute "in sections 8, 9, 9A".

14 Section ."7, sub-section (1) — After "Appellate Assistant Commis- sioner,", insert "Commissioner (Appeals),".

15 Section 42A, sub-section (2) —After "the Appellate Assistant Commissioner", insert "or, as the case may be, the Commissioner (Appeals)",

PART III

AMENDMENTS IN THE GIFT-TAX ACT, 1958

1. Section 2—After clause (vi), insert—

'(via) "Commissioner (Appeals)" means a person empowered to exercise the powers of a Commissioner of Gift-tax (Appeals) under section 8A,'

2 Section 7AA—For sub-section (4), substitute—

"(4) Where an ordei is made under sub-section (/) and the Inspecting Assistant Commissioner exercises the powers or performs the functions of a Gift-tax Officer in respect of any case or person or proceeding undei this Act, references in this Act or in any rule made thereunder to the Gift-tax Officer shall be construed as references to the Inspecting Assistant CommiKsionei and any provision of this Act requiring appioval or sanction of the Inspecting Assistant Commissioner shall not apply."

3. After section 8, insert—

Commis- sioners of Gift-tax (Appeals) "HA The Board may empower as many persons as it thinks fit to exercise under this Act the functions of a Commissioner of Gift-tax (Appeals), and on being so empowered the Commissioners (Appeals) shall perform, their functions in respect of such areas or such persons or such classes of persons as the Board mav direct, and where such directions have assigned to two or more Commissioners (Appeals) the same areas or the same persons or the same classes of persons they shall perfoim their functions m accordance with such orders as the Board may make for the distribution and allocation of the work to be performed ".

4. Section 12, sub-section (1)—Foi "the Appellate Assistant Commis- sioner of Gift-tax", substitute "the Commissioner (Appeals) or the Appellate Assistant Commissionei",

5 Section 17 —

(a) in sub-section (/), after "Appellate Assistant Commissioner,", insert "Commissioner (Appeals),";

(b) in sub-section (4), for "Commissioner or the Appellate Tribunal", substitute "a Commissioner (Appeals), a Commissioner or the Appellate Tribunal"

6 Section 17A.—After "an Inspecting Assistant Commissioner", wherever it occurs, insert "oi a Commissioner (Appeals)"

7 Section 21, sub-section (2)—After "Appellate Assistant Commis- sioner", insert ", th'j Commissioner (Appeals)"

8 Sect-on 22 —

(a) in sub-section (/), for "Any person' , substitute "Subject to the provisions of sub-section (7/-), any person",

(b) after sub-section (7), insert—

'(1A) Notwithstanding anvthing contained in sub-section (1), any person—

(a) objecting to the value of taxable gifts determined under this Act or objecting to the amount of gift-tax deter-

mincd as payable by him or denying his liability to be assessed under this Act where the value of taxable gifts determined on assessment exceeds two lakh rupees; or

(b) objecting to any assessment or order referred to in clauses (a) to (h) (both inclusive) of sub-section (I) where such assessment or order has been made by an Inspecting Assistant Commissioner in exercise of the powers or functions conferred on or assigned to him under section 7AA, or

(c) objecting to any penalty imposed under clause (c) of sub-section (1) of section 17 where the penalty has been imposed with the previous approval of the Inspecting Assistant Commissioner under sub-section (3) of section 17; or

(d) objecting to any penalty imposed by an Inspecting Assistant Commissioner under section 17A; or

(e) objecting to any order made by a Gift-tax Officer in the case of such persons or classes of persons as the Board may, having regard to the nature of the cases, the complexi- ties involved and other relevant considerations, direct,

may appeal to the Commissioner (Appeals) against the assessment or order, as the case may be, in the prescribed form, and verified in the prescribed manner;

Provided that no appeal shall lie under clause (b) of this sub-section against any order referred to in clause (f) of sub- seeiion (1) unless the tax has been paid before the appeal is filed.

(7B) Every appeal against any assessment or order referred to in sub-section (7A) which is pending immediately before the appointed day before an Appellate Assistant Commissioner or a Commissioner and any matter arising out of or cbnnected with such appeal and which is so pending shall stand transferred on that day to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with the appeal or matter from the stage at which it was on that day:

Provided that the appellant may demand that before pro- ceeding further with the appeal or matter the previous proceeding or any part thereof be reopened or that he be re-heard

Explanation—In this sub-section, "appointed day" means the date appointed under section 39 of the Finance (No, 2) Act, 1977 ;

(c) in sub-sections (2), (3) (4), (5), (5A), (5B) and (fi), after "Appellate Assistant Commissioner", wherever it occurs, insert "cir, as the case may be, the Commissioner (Appeals)'¹.

9 Section 23 —

(a) in sub-section (1\ after "the Appellate Assistant Commis- sioner", insert "or the Commissioner (Appeals)";

(b) m sub-section (2), after "Appellate Assistant Commissioner", insert "or a Commissioner (Appeals)",

(c) in sub-section (2A), after "Appellate Assistant Commissioner," at both the places where it occurs, insert "or the Commissioner (Appeals)".

10. Section 24, proviso to sub-section (1) —

(a) in clause (a) after "Appellate Assistant Commissioner", insert ''or to the Commissioner (Appeals)",

(b) m clause (b), alter "Appellate Assistant Commissioner", insert "or the Commissioner (Appeals)".

11 Section 33A, sub-section (5).—-After "Appellate Assistant Commis- sioner", insert ", Commissioner (Appeals)".

12. Sections 34 and 46.—After "Appellate Assistant Commissioner", wherever it occurs, insert "01 the Commissioner (Appeals)"

13. Section 36, sub-section (Z).--After "Appellate Assistant Commis- sioner,", insert "the Commissioner (Appeals),".

14 Section 41A, sub-section (2).—Alter "the Appellate Assistant Com- missioner", insert "or, as the case may be, the Commissioner (Appeals)".

PART IV

AMENDMENTS IN THE COMPANIES (PROFITS) SURTAX ACT, 19C4

1. Throughout the Act [except m sub-section (/) of section 3 and section 17J, for "Appellate Assistant Commissioner" (except where it is preceded by "an"), substitute "Commissioner (Appeals)'¹ and for "an Appellate Assistant Commissioner", substitute "a Commissioner (Appeals)".

2. Section 3, sub-section (2).—For "Additional Commissioner of Income-tax, Appellate Assistant Commissioner of Income-tax", substitute "Commissioner of Income-tax (Appeals), Additional Commissioner of Income-tax".

3. After section 11, msert,—

Transfer of certain pending appeals.

'11A Every appeal under this Act which is pending immediately before the appointed day before an Appellate Assistant Commissioner or a Commissioner and any matter arising out of or connected with such appeal and which is so pending shall stand transferred on that day to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with such appeal or matter from the stage at which it was on that day:

Provided that the appellant may demand that before proceeding further with the appeal or matter the previous proceeding or any part thereof be reopened or that he be re-heard.

(b) in sub-section (4), in clauses (a) and (b), for "the Appellate Assistant Commissioner", substitute "the Commissioner (Appeals)".

(c) omit Explanation 2.

PART V

AMENDMENTS IN THE INTEREST-TAX ACT, 1974

1 Throughout the Act [except in sub-section (I) of section 3 and section 20], foi* "Appellate Assistant Commissioner" (except whore it is preceded by "an''), substitute "Commissioner (Appeals)", and for "an Appellate Assistant Commissioner", substitute "a Commissioner (Appeals)"

2 Section 3, sub-secfron (2).—For "Additional Commissioner of Income-tax, Appellate Assistant Commissioner oi' Income-tax", substitute "Commissioner of Income-tax (Appeals), Additional Commissioner of Income-tax".

3. After section 15, insert.—

Transfer Dt certain pending appeals.

'15A. Every appeal under this Act which is pending immediately before the appointed day before an Appellate Assistant Commissioner or a Commissioner and any matter arising out of or connected with such appeal and which is so pending shall stand transferred on that day to the Commissioner (Appeals) and the Commissioner (Appeals) may proceed with such appeal or matter from the stage at which it was on that day.

Provided that the appellant may demand that before proceeding further with the appeal oi matter the previous proceeding or any part thereof be reopened or that he be re-heard

Explanation.—In this section, "appointed day" means the date appointed under section 39 of the Finance (No. 2) Act, 1977.'.

4. Section 20.—

(a) in sub-section (1), omit "or Appellate Assistant Commissioner subordinate to him'';

(b) in sub-section (4), m clauses (a) and (b), for "the Appellate Assistant Commissioner", substitute "the Commissioner (Appeals)",

(c) omit Explanation 2

STATEMENT OF OBJECTS AND REASONS

The object of the Bill is to give effect to the financial proposals of the Central Government for the financial year 1977-78J The notes on clauses explain the various provisions contained in the Bill

NEW DELHI;

H. M. PATEL

The 11th June. 1977

PRESIDENT'S RECOMMENDATION UNDER ARTICLES 117 AND 274 OF THE CONSTITUTION OF INDIA

[Copy of letter No. F 3(9)-B(D)/77 dated the 17th June, 1977 from Shri H, M Patel, Minister of Finance, to the Secretary-General, Lok Sabha.]

The Vice-President acting as 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 introduc- tion of the Finance (No 2) Bill, 1977 to the Lok Sabha and also recom- mends 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 17th June, 1977-

Notes on clauses

Clause 2, read with the First Schedule to the Bill, seeks to prescribe the rates at which income-tax (including surcharge thereon) is to be levied on income chargeable to tax for the assessment year 1977-78 Fuither, it lays down the rates at which tax m to be deducted at source during the financial year 1977-78 from incomes subject to such deduction under the Income-tax Act; and the iates at which "advance tax" is to be paid and tax is to be calculated and charged in special cases for the financial year 1977-7b

Rates of income-tax for the assessment year 1977-78.—Part I of the First Schedule to the Bill specifics the rates of income-tax (including surcharge) on incomes liable to tax for the assessment year 1977-78 These rates are the same as those specified in Part III of the First Schedule to the Finance Act, 1976 for the purpose of deduction of tax at source from "Salaries' and for computation of "advance tax" payable during the financial year 1976-77

Where a company has made any deposit during the financial year 1976-77 under the Companies Deposits (Surcharge on Income-tax) Scheme, 1976 with the Industrial Development Bank of India, the amount of surcharge on income-tax payable by it for the assessment year 1977-78 will be reduced by the amount of the deposit so made.

Rates for deduction of tax at source during the financial year 1977-78 from incomes other than "Salaries"—Part II of the Fhst Schedule to the Bill specifies the rates at which income-tax (including surcharge where applicable) is to be deducted at souicc during the financial year 1977-78 from incomes other than "Salaries' and retirement annuities under section 80E(0) of the Income-tax Act. The rates specified m this Part for deduction of tax at source are the same as those specified in Part II of the First Schedule to the Finance Act, 1976 for the purposes of deduction of tax at source during the financial year 1976-77 except for certain modifications In the case of income by way of winnings from lotteries and crossword puzzles, pavable to a resident recipient (other than a company) during the financial vear 1977-78, tax will be deductible at the rate of 34 5 per cent (made up of basic income-tax of 30 per cent and surcharge of 4 5 per cent), as against 33 per cent during 1976-77 In the case of incomes by way of interest on securities (not being interest on a tax-free security) or dividends payable to a resident recipient (other than a company) during the financial year 1977-78, tax will be deductible at the rate of 23 per cent as m 1976-77, but this will be made up of basic income-tax of 20 per cent and surcharge of 3 per cent, as against basic income-tax; of 21 per cent, and surcharge of 2 per cent during 1976-77 In the case of incomes (other than interest on a tax-free security) payable to a non-resident (other than a company) during the financial year 1977-78, tax will bt deductible at the minimum rate of 34 5 per cent (made up of income-tax of 30 per cent and surcharge of 4.5 per cent) as against 33 per cent in 1976-77 In the case of interest on a tax-free security payable to a non-corporate non-resident, the rate

for deduction will be 17 25 per cent (made up of income-tax of 15 per cent and surcharge of 2.25 per cent,), as against 16.5 per cent, m 1976-77 In the case of income by way of copyright royally payable by Indian concerns to foreign companies in pursuance of agreements made after the 31st March, 1976, deduction of tax at source will be made at the lower rate of 40 per cent., irrespective of whether the agreement has been approved by the Central Government or not, if such royalty is in con- sideration for the transfer of all or any of the rights m respect of copy- right in any book on a subject, the books on wlr'ch are permitted according to the Import Trade Control Policy of the Government of India for the period from 1st April, 1977 to 31st March, 1978, to be imported into India under an Open General Licence

Rates for deduction of tax at source from "Salaries" and retirement annuities, computation of "advance tax" and charging of income-tax in special cases during the financial year 1977-78—Part III of the First Schedule to the Bill specifies the rates at which income-tax (including surcharge) is to be deducted at source from "Salaries" and retirement annuities referred to in section 80E(9) of the Income-tax Act, and also the rates at which "advance tax" is to be paid and income-tax is to be calculated or charged m special cases for the financial year 1977-78.

These rates are the same as those specified in Part I of the First Schedule to the Bill for the assessment of incomes liable to tax for the assessment year 1977-78, except for the following modifications¹ —

(i) In the case of individuals, Hindu undivided families, unregistered firms, etc, no tax will be payable if the total income of the issessee does not exceed Rs 10,000 Where the total income exceeds Rs 10 000, the income-tax (excluding surcharge) payable by the assessee will not exceed 70 per cent of the excess of the total income over Rs 10,000 In the case of individuals, Hindu undivided families with no member having independent taxable income exceed- ing Rs. 10 000, unregistered firms, e t c, this marginal Pr< ™" w lU cease to operate where the total income exceeds Rs 10,540, while in the case oT Hindu undivided families having at least one or more members with independent taxable income exceeding Rs 10 000, it will cease to operate where the total income exceeds Rs. 10,b90

(ii) The rate of surcharge on income-tax m the case of all non- corporate assessees is proposed to be increased from 10 per cent to 15 per cent of such income-tax

Rs 10,000, the following spodal provisions will apply

(0 in determining the income-tax < f ™ ^S £ ££

on the aggregate of the ^\™°™"%^hTor Sub-Paragraph the marginal provision specified in Sub-Paragrapn II oE the said Paragraph A will not apply.

(U, In determining the income-tax (excluding surcharge) on the

net agricultural income as increased by th~ sum of Rs 8,000,

income-tax will be computed as if the exemption limit was Rs. 8,000 and the marginal provision in Sub-Paragraph I or Sub-Paragraph II of the sa d Paragraph A will not apply.

(iii) The amount of income-tax determined under (ii) above will be deducted from the income-tax determined under (1) above The income-tax so determined shall, in no case, exceed 70 per cent, of the excess of the total income over Rs. 10,000.

(IV) The amount so determined shall be increased by a surcharge

equal to 15 per cent of the amount of income-tax.

In the case of companies, the rates of income-tax as also surcharge thereon, specified In Paragraph E of Part III of the First Schedule to the Bill, are the same as those specified in Paragraph E of Part I of the First Schedule to the Bill.

Clause 3 seeks to amend the definition of "short-term capital asset" contained in clause (42A) of section 2 of the Income-tax Act. Under the existing provision, a capital asset held by a person for not more than sixty months immediately preceding the date of its transfer is treated as a "short-term capital asset". The effect of the proposed amendment will be that a capital asset will be treated as a "short-term capital asset" only where the asset has been held by a person for a period not exceeding thirty-six months immediately preceding the date of its transfer.

This amendment will take effect from 1st April, 1978 and will accord- ingly apply in relation to the assessment year 1978-79 and subsequent years

Clause 4 seeks to amend clause (vh) of sub-section (1) of section 9 of

the Income-tax Act

Sub-clause (a) seeks to insert a proviso in clause (vii) • The proposed amendment seeks to provide that income by way of fees for technical services payable in pursuance of an agreement made before 1st April, 1976 and approved by the Central Government shall not be deemed to accrue or arise in India under clause (vii) of section 9 (1) if such income is not deemed to accrue or arise under any other provision of the Income- tax Act

Sub-clause (b) seeks to insert a new Explanation in clause (vii) Under this Explanation, for the purposes of the aforesaid proviso, an agreement made on or after the 1st day of April, 1976 shall be deemed to have been made before that date if the agreement is made in accordance with the proposals approved by the Central Government before that date.

These amendments take effect from 1st April, 1977, and will accordingly

apply in relation to assessment year 1977-78 and subsequent years.

Clause 5 seeks to make certain amendments in section 10 of the Income-

tax Act.

Sub-clause (a) seeks to insef t a new item in sub-clause (i) of clause (6)

of section 10 of the Income-tax Act. The proposed amendment seeks to exempt the passage moneys or the value of any free or concessional passage received by a foreign employee from his employer to meet the cost of travel of his children having full time education in any educational institution outside India in connection with their proceeding to India

during any vacation. This amendment will take effect retrospectively from 1st April, 1972 and will accordingly apply in relation to the assess- ment year 1972-73 and subsequent years,

Sub-clause (b) seeks to amend clause (26A) of section, 10 of the Income- tax Act retrospectively with effect from 1st April, 1975 so as to revive the exemption from income-tax which was available in the case of persons resident in the district of Ladakh up to and including the assessment year 1974-75, for a further period ot five years, i e., for the assessment years 1975-76 to 1979-80.

Clause 6 seeks to amend clause (b) of sub-section (2) of section 11 of

the Income-tax Act

Under the existing provisions of sub-section (2), a charitable or religious trust or institution can accumulate or set apart a specified portion of its income for purposes¹ of application to charitable or religious purposes within a specified period The amount so accumulated or set apart is required to be deposited, inter aha, with any banking company to which the Banking Regulation Act, 1949 applies The proposed amend- ments Keek to restrict such deposits with only .scheduled banks including the State Bank of India or its subsidiaries or nationalised banks. This restriction will, however, not apply in relation to amounts deposited or which continue to remain deposited during any previous year commencing before the 1st day of April, 1981.

These amendments will take effect from 1st April, 1978.

Clause 7 seeks to make certain amendments in section 13 of the

Income-tax Act

Sub clause (a) seeks to amend clause (d) of sub-section (1) of section 13 of the Act Under the existing provisions, if any funds of a charitable or relicious trust or institution are invested or deposited or remain invested or deposited in any forms or modes other than those specified in sub-section (5) of section 13 at anv time during anv previous year commencing on or after 1st Apn], 1978, the income of the said trust will lose exemption from income-tax The proposed amendment seeks to extend the date for compliance with this provision by three years The effect of this amendment will be that the* charitable or religious trusts or institutions would be required to comply with the provisions of sub- section (5) of section 13 in relation to any previous year commencing on or after 1st April, 1981

Sub-clause (b) seeks to substitute sub-clause (111) of clause (a) of sub- section (5) of section 13 of the Act Under the existing provisions of sub-clause (iii) of section 13(5)(a), a charitable or religious trust or institution has to deposit its funds with the State Bank of India or any of its subsidiaries or any nationalised bank. Under the proposed provi- sion, such funds can be deposited with any scheduled bank or a co- operative society engaged in carrying on the business of banking (includ- ing a co-operative land mortgage bank or a co-operative land development bank). For the purposes of this, sub-clan: e, the term 'scheduled bank' will have the same meaning as in sub-clause (n) of section ll(2)(b) pro- posed to be substituted by clause 6 of this Bill.

T h ^e amendments will take effect from 1st April, 1978

Clause 8 seeks to insert an Explanation in clause (IX) of sub-section (1) of section 24. The Explanation seeks to provide that the deduction in respect ot vacancy allowance under the said clause shall be made irrespective of whether the period during which the property or, as the case may be, part of the property was vacant precedes or follows the period during which it is let

This amendment will takp effect from 1st April, 1977 and will accord- ingly apply in relation to the assessment year 1977-78 and subsequent years

Clause 9 seeks to amend section 32A of the Income-tax Act.

Sub-clause (a) seeks to enlarge the scope of the existing provision and provide that investment allowance will be granted in respect of machinery and plant installed for the purposes of business of construction, manu- facture or production of all articles and things, except articles and things specified in the Ust m the Eleventh Schedule A special dispensation has been provided m respect of machinery and plant installed in small- scale industrial undertakings before 1st July, 1977 Such machinery and plant will bo eligible for investment allowance irrespective of whether it is used tor the purposes of business of construction, manufacture or production of an aiticle or thing specified in the list in the Eleventh Schedule

Sub-clause (b) seeks to insert two new sub-sections, namely, sub- sections (2A) and (SB) m section 32A

New sub-section (2A) seeks to provide that the deduction m respect of investment allowance shall not bp denied m respect of machinery or plant 'nEtnllcd and used mainly for the purposes of business of construc- tion, manufacture or production of any article or thing merely on the giound that such machinery or plant is vised in part for the purposes of business of construction, manufacture or production of an article or thing specified in the list in the Eleventh Schedule

New sub-section (2B) seeks to provide for the giant of investment allowance at the hiffher rate of thirty-five per cent in respect of machinerv and plant installed for the manufacture or production of any article or thing which is manufactured or produced by using any techno- logy or other know-how developed in. oi which is invented by, a laboratory owned or financed bv the Government or a laboratory owned by a public sector company oi a University, The deduction at the higher iate will be available only where the conditions specified in the new sub-section (2B) are fulfilled.

Sub-clau"f. (c) seeks to insert a new sub-section (8A) m section 32A The new sub-section empowers the Central Government to add, by notification m the Olhcial Gazette, any article or thing specified in the list in the Eleventh Schedule However, any addition so made shall have effect only m ielut'on to any machinery or plant installed one year after the date of publication of the notification

These amendments will take effect from 1st April, 1973, and will accordingly apply in relation to the assessment year 1978-79 and subse- quent years,

Clause 10 seeks to insert a new .section 35CC in the Income-tax Act The new section provides for the deduction, in the computation of taxable profits, of expenditure incurred by a company after 30th June, 1977 on a programme ot rural development The deduction will be admissible only in cases where¹ the pievious approval of the pi escribed authority has been obtained to the programme oi rural development. Where the expendituie mcimed by the company lesults in the acquisition or creation of an asset, being building, machinery, plant or furniture, and the company does not divest itself oi the owneiship of such asset during the relevant previous year, the company will not get deduction in respect of such expenditure, but it will be entitled to the grant of depreciation allowance m respect of such asset Companies claiming a deduction under the pioposed provision will Ue required to furnish, along with the return of income, o statement of such expendituie in the prescribed foim, duly signed and verified in the pi escribed manner by a chartered accountant and containing such other particulars as may be prescribed.

The amendment will lake eHect from. 1st April, 1978 and will accord- ingly apply in relation to the assessment year 1978-79 and subsequent years

Clause 11 seeks to substitute sub-clause (b) of clause (viii) of sub- section (1) nf section 36 of the Income-tax Act by a new sub-clause Under the existing provisions, financial corporations engaged in providing long-term finance for industrial or agricultural development in India are entitkd to a deduction in the computation of their profits, oi the amounts transferred by them out of such profits to a special reserve account, up to a specified percentage of their taxable income In the case of a Financial Corporation or a Joint Financial CoL-potation establish- ed under the State Financial Coipoiations Act, 1951 or any institution deemed under section 4G ot that Act to be a Financial Corporation established by the State Government for the State within the meaning of that Act, the deduction is admissible up to 40 per cent of such profits carried to the special reserve account. In the case of other financial corporations, the deduction is allowed at differential rates depending on the paid-up'share capital of the corporation Where the paid-up share capital of the financial corporation does not exceed rupees three crores, the deduction is admissible up to 25 per cent of the profits, whereas in the case of financial corporations having paid-up share capital exceeding rupees three crorcs, the deduction is limited to 10 per cent of such profits The proposed amendment seeks to provide a uniform rate of deduction of 25 per cent in the case of all such financial coiporations

This amendment will take eitect from 1st April, 1978 and will accord- ingly apply in relation to the assessment year 1978-79 and subsequent years

Clauses 12 and 14 seek to amend sections 50 and 55 of the Income-tax

Act Under the existing provisions, m computing the capital gains arising on the trans ier of a capital asset, an assessee is given an option to substitute the fair market value of the' asset as on 1st January, 19o4 for its cost of acquisition in cases where such asset was acquired by the assessee prior to that date This option is also available in cases where such asset became the property of the assessee by any of the modes specified in sub-section (1) of section 49 and the asset was acquired by tne "previous owner of the property" prior to the said date. Under the

proposed amendments, the assessee will have the option to substitute the fair maiket value of the asset as on 1st January, 1964 for its cost of acquisition where the asset was acquired by the assessee or, as the case may be, by the "previous owner" prior to that date

These amendments will take effect from 1st April, 1978 and will accordingly apply in relation to the assessment year 1978-79 and subse- quent years

Clause 13 seeks to msert a new section 54E in the Income-tax Act. The new section seeks to provide that where any capital asset is trans- ferred and specified assets are acquired withm six months of such transfer, the long-term capital gains arising from the transfer will not be bable to tax if the whole of the full value of the consideration for the transfer is used in acquiring the specified asset Where only a part of such consideration is used in acquiiing the specified asset, a propor- tionate part of the capital gains will not be liable 1o tax.

The taxpayer will be required to hold the new asset for a period of three years The exemption will be forfeited if the taxpayer transfers the new asset before the end of the specified period.

This amendment will take effect from the 1st April, 1978 and will accordingly apply in relation to the assessment year 1978-79 and subse- quent year3.

Clause 15 seeks to insert a new section 72A in the Income-tax Act relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in certain cases of amalgamation.

The new section seeks to provide that where a company, owning an industrial undertaking amalgamates with another company, the accumu- lated loss and the unabsorbed depreciation allowance of the amalgamating company shall be deemed to be the loss oi the depreciation allowance of the amalgamated company of the previous year in which the amalga- mation was effected This benefit will be available m cases where the Central Government is satisfied, on the recommendation of the specified authority, that the accumulated loss of the amalgamating company on the last day of the previous year preceding the year in which the amalga- mation was effected, exceeded fifty per cent, of the paid-up share capital and the reserves, the amalgamating company was not financially viable immediately before the amalgamation, thr- amalgamation was in the public interest, and the amalgamation fulfils such other conditions as may be laid down by the Central Government by notification in the Official Gazette, to ensure that the benefit under the section is restricted to amalgamations which would facilitate the rehabilitation or revival of the business of the amalgamating company.

For the purpose of carry forward and set oil of such loss or allowance for depreciation m any subsequent assessment year, the amalgamated company will have to satisfy the following conditions, namely: —

(a) during the previous year relevant to such assessment year, the amalgamated company carries on the business of ihe amalgamat- ing company without any modification or re-organisation or with such modification oi re-organisation as may be approved by the Central Government to enable the amalgamated company to carry on such business more economically or more efficiently; and

(b) the amalgamated company furnishes a certificate from the specified authority with its return of income for the said assessment year to the effect that adequate steps have been taken by that company for the rehabilitation or revival of the business of the amalgamating company.

This amendment will take effect from 1st April, 1978 and will accord- ingly apply an relation to the assessment year 1978-79 and subsequent years.

Clause 16 seeks to amend section 80G of the Income-tax Act.

Under the amendment proposed in sub-clause (a), the ceiling limit on.the amount of donation which qualifies for deduction under section 8()G is being raised from Rs 2 lakhs to Rs 5 lakhs. As a consequential amendment, the existing proviso to sub-section (4) of section 80G, which provides for raising the limit foi donations in respect of sums paid for the lenovation 01 lepair of ^notified temples, mosques, etc. to Rs. 5 lakhs, is being omitted by sub-clause (b).

These amendments will take effect from 1st April, 1978 and will accordingly apply in relation to the assessment year 1978-79 and subse- quent years.

Clause 17 seeks to insert a new sub-section (9A) in section 80HH of the Income-tax Act Under the proposed amendment, where a deduction in relation to the profits and gains of a small-scale industrial undertaking to which new section fiOHHA (proposed to be inserted by clause 18 of this Bill) applies is claimed and allowed under that section for any assessment year, deduction in relation to such profits and gains shall not be allowed under section 80HH for the same or any other assessment year

Clause 18 seeks to insert a new section ROHHA in the Income-tax Act. Under the new seehon, a taxpayer deriving profits and gains from a new small-scale industrial undertaking set up m any rural area will be entitled to a deduction, in the computation of his total income, of an amount equal to 20 per cent. o£ such profits and gains The deduction will be admissible for a period of ten assessment years beginning with the assessment year relevant to the previous year in which the small-scale industrial undertaking commt* ices production of any articles, The deduction will be allowed only if the small-scale industrial undertaking fulfils the conditions specified in the new section.

This amendment will take effect from 1st April, 1978 and will accord- ingly apply m relation to the assessment year 1978-79 and subsequent years

Clause 19 seeks to substitute section 80RRA of the Income-tax Act by

a new section.

Under the existing provisions of section 80RRA, Indian technicians, etc., rendering service outside India under or for a foreign, employer, for short duration, are entitled to a deduction in the computation of then- total income, of fifty per cent, of the remuneration received by them from the foreign employer Under the new provision, peisons rendering service outside India would be eligible for this tax concession in relation to the remuneration paid to them in foreign currency irrespective of whether such services are rendered under or for a foreign employer or an Indian concern.

The new provision will take effect from 1st April, 1978 and will accotdmgly apply in relation to the assessment year 1978-79 and subse- quent years

Clause 20 seeks to substitute sub-section (4) of section 104 of the Income-tax Act by a new sub-section and Explanation. The proposed amendment seeks to exempt closely-held companies whose business consists mainly in the construction of ships or in the manufacture or processing of goods oi in mining or in the generation or distribution of electricity or any other form of power from the requirement of compulsory distribution of dividends.

This amendment will take cftect from 1st April, 1978 and will accord- ingly apply in relation to the assessment year 1978-79 and subsequent years.

Clause 21 seeks to make certain amendmentb in section 109 of the Income-tax Act.

Sub-clause (a) seeks to omit clause (la) of section 109. The amendment is consequential to the amendment proposed under clause 20.

Sub-clause (b) seeks to make two amendments m clause (m) of section 109 of the Act The first amendment is consequential to the amendment proposed under clause 20 The second amendment seeks to exempt a closely-held Indian company a part of whose gross total income consists of profits and gains attributable to the business of conduction of ships or of manufacture or processing ofi goods or of mining or of generation or distribution of electricity or any other foim of power from the requirement of compulsory distribution of dividends up to the statutory percentage in respect of so much of its gross total income as consists of profits and gams attributable to the said business.

These amendments will take effect from 1st April, 1978 and will accordingly apply in relation to the assessment year 1978-79 and subse- quent years.

Clause 22 seeks to amend section 115A of the Income-tax Act.

The amendment in sub-clause (b) seeks to secure that royalty received by a foreign company from an Indian concern will be chargeable to tax at the concessional rate of forty pei cent, m cases where the loyalty is received in consideration foi the tiansfer of the copyright in any book on a subject the books on which are, according to the Import Trade Contiol Policy of the Government of India for Apiil, 1977 to March, 1978, permitted to be imported into India under an Open General Licence, irrespective of whether the agreement under which the loyalty is paid is approved by the Central Government or not.

The other amendment is of a consequential nature.

These amendments will take effect from 1st April, 1978 and will accordingly apply in relation to the assessment year 1978-79 and subse- quent years

Clause 23 seeks to insert a new sub-section (10A) in secLion 155 of the Income-tax Act.

The proposed amendment seeks to provide that where in relation to any a^' essment year, capital gain arising from the transfer of a long-term capita] asset is charged to tax and within a peiiod of six months from the da1\' of such transfer, the assessee makes any investment or deposit in any upecified asset within the meaning of Explanation 1, to sub-section (1) of .section 54E pioposed to be inserted by clause 13, the Income-tax Officer shall amend the order of assessment so as to exclude the amount of the capital Rain not chargeable to tax under section 54E

This amendment will take effect from 1st April, 1978 and will accord- ingly apply in relation to the assessment year 1978-79 and subsequent years.

Clause 24 seeks to insert a new proviso m section 194 of the Tncome- tax Act The new proviso seeks to piovide that no deduction of tax at source shall be made from dividends paid to any shareholder, not being a company, if the shareholder is a resident in India, the amount of such dividend dors not exceed two hundred and fifty rupees; and the share- holder furnishes to the person responsible for paying the dividend a statement in writing declaring that his estimated total income of the previous vear in which such dividend is to be included under the provi- sions of section 8 will bo less than the minimum liable to tax The statement to bo furnished in this regard will be in the prescribed form and verified m the prescribed manner

This amendment will take effect from 1st October, 1977

Clause 25 seeks to insert a new section 2f)6B in the income-" r"x Act The proposed new section se^ks to provide that the principal officer of a eomnanv who is responsible for paving anv dividend to a shareholder shall, within thirty days of the end of each financial year, furnish in the prescribed form and verified in the prescribed manner a return in writing showing the name and address of every person who has furnished to him a statement under the first proviso to section 194 proposed to be inserted under clause 24, the amount of dividend paid or distributed during the financial vear to each such person and such other particulars as may be presented.

This amendment will take effect from 1st October, 1977

Clause 26 seeks to substitute clause (c) of sub-section (2) of section 208 of the Income-tax Act

In the case of a person, other than a company, local authority or registered firm, advance tax is payable only where the income of the person subiect to advance tax exceeds Rs 5,000, where the person is a non-resident and Rs 10,000 in any other case. The proposed amendment seeks to specify a uniform limit of Rs 10,000 irrespective of whether such person is a resident or a non-resident

This amendment will take effect from 1st September, 1977,

Clause 27 seeks to make certain amendments in section 273 of the Income-tax Act with a view to remove a lacuna Under the existing provisions of section 273, no penalty can be imposed in a case where the assessee furnishes under sub-section (3A) of section 212 an estimate of the advance-tax which he knew or had reason to believe to be untrue. The proposed amendment seeks to remove this lacuna and provide that

t he penalty miposable in such cases shall not be less t h an 10 per cent, b ut shall not exceed 150 per cent, of the amount by which t he advance tax actually paid during the financial year falls short of 75 pei cent, of the assessed tax. For this purpose, any amount paid by the assessee within t he time extended by t he Commissioner under the proviso to sub-section (3A) of section 212 shall also be regarded as p a y m e nt of advance t ax during the relevant financial year.

These a m e n d m e n ts will take effect from 1st September, 1977

Clause 28 seeks to insert a new Eleventh Schedule in the Income-tax Act containing the list of atticle.s or things This a m e n d m e nt is conse- quential to the a m e n d m e nt of section 32A of the Income-tax Act by- clause 9 of the Bill

Clause 29 seeks to m a ke certain a m e n d m e n ts of a consequential n a t u re

in different provisions of the Income-tax Act.

T he a m e n d m e n ts proposed in sub-clauses (l)(a) and (11)(b) are conse- quential to the insertion of a n ew Explanation to clause (vii) of sub- section (1) of section 9 and t he r e n u m b e r i ng of the existing Explanation by clause 4 of the Bill,

T he a m e n d m e nt proposed in sub-clause (2)(a) is consequential to t he insertion of a new section 54E proposed to be m a de by clause 13 of t he Bill.

T he a m e n d m e n ts proposed in sub-clauses (2)(b), (2l(c), (2)(d) and (2)(e) are consequential to the insertion of a n ew section 80HHA proposed to be made by clause 18 of t he Bill

T he a m e n d m e nt proposed in sub-clause (2)(f) is consequential to the substitution of sub-clauses (ii) and (iii) of section 32A(2)(b) by sub-clauae (a) otf clause 9 of the Bill.

Clause 30 seeks to substitute P a rt I of Schedule I to the Wealth-tax

Act, 1957.

Under clause (a) of section 27(6) of the Finance Act, 1976, a n ew P a rt w as substituted in place of Part I, as it stood prior to the amendment, substantially reducing the rates of ordinary wealth-tax in the case of individuals and Hindu undivided families, w i th effect from the 1st day of April, 1977 Under the proposed amendment, P a rt I is to be substituted by another P a rt to prescribe the rates of ordinary wealth-tax in the case of individuals and Hindu undivided families. These rates will take effect from 1st April, 1977.

U n d er the proposed amendment, the existing first slab of net wealth in t he case of individuals and Hindu undivided families h as been broken up in two parts, namely, up to Rs 2,50,000 and Rs 2,50,001—5,00,000. T he r a te applicable to the first slab of net wealth, i e , up to Rs 2,50,000 will remain unchanged at A% in the case of individuals and Hindu undivided families not having one oi more m e m b e rs w i th independent net wealth exceeding Rs 1,00,000. In the case of Hindu undivided families having one or more m e m b e rs w i th independent net w e a l th exceeding Rs, 1 lakh the existing r a te of tax at 1J% h as been retained in respect of the first slab of net wealth up to Rs 2,50.000

Under the pmpuMjd amendment, the following rates of ordinary wealth-tax in the case of individuals and Hindu undivided families, not having one or more rrembeis With independent net wealth exceeding Rs 1 lakh have been specified —

Slab of net wealth

Rate of tax

Up to Rs. 2,50,000

Rs 2,50,001—Rs 5,00,000

Rs. 5,00,001—Rs. 10,00,000

Rs. 10,00,001—'Rs. 15,00,030

Over Rs. 15,00,000

. 1 /2 per cent, (same as at present);

. 1 per cent, (as urpinst 1/2 per cent at present)¹;

. 2 per cent, (as against 1 1/2 per cent, at present);

. 2 1/2 per cent fas against 2 per cent, at present);

31/2 per cent (us against 2 1/2 per cent at present).

In the case of Hindu undivided families having one or more meinkis with independent net wealth exceeding 11^, 1,00,000, tho following rales of wealth-tax have bten specified'—•

Slab of net wealth

Rate of tax

Up to Rs 2,50,000

Rs 2,50,001—.Rs. 5,00,000

Rs. 5,00,001—.Rs 10,00,000

Over Rs. 10,00,000

1 1/2 per cent (same as at present);

. 2 per cent (as against 1 1/2 per cent- at present);

. 2 1/2 per cent, (as against 2 per cent, at present);

. 3 i/z per cent, (as against 21/2 per cent, at present).

No wealth-tax will be payable in the case of individuals as well as Hindu undivided families if their net wealth does not exceed Rs 1,00,000. Further, the weahh-tax payable shall in no case exceed 5 per cent of the amount by which the net wealth exceeds R;-. 1.00,000.

This amendment will take effect from lf.t April, 1977 and will accord- ingly apply in relation to the assessment year 1977-78 and subsequent years.

Clause 31 iead with the Second Schedule, seeks to raise the rates o{ import duty on —

cinematograph film, exposed; yarn of man-made fibres;

(")

wool, raw and wool tops;

man-made hhies and waste;

laboratory, chemical or industrial wares of reranuc material

wrought plates, jbeets, strips and foil, of unalloyed aluminium;

(iv) (v) (vi)

ccnain electron.c efhee machines

(vii)

(viii) elpctnc motors,

(IX)

( X)

tiansfuimers tird inductor; femic petrndneni magnets dnd articles of ferrite for perma- nent magnetb,

eltcmcal Jine telephonic and telegraphic apparatus,

UD

(Xli) mia (/phones, li ud-speakers and audio-frectuency electric amplifiers;

(xiii) radic-telegraphic ard radio-telephonic transmission and

(xiv) certain elfdronic components,

(xv) electronic parrs or accessories fcr various instruments,

Clause 32 read with ihe Thhd Schedule, seeks—

(a) to raise the iates cf basic excise duty on—

(1)

(2)

Umn:iT ufactuied tobacco. Pins, Synthetic (IT^UUC product⁰,

(4) Paper board and paper other than printing and writing paper; CunPiU othfr ihan ficy porUand cement, etc ;

(V

(Pi SU-PI ingots. flJ] other geeds, mn elsewhere specified;

(71

(b) to raise the ia1es cf basic excise duty as a consequence of nei'ger of auxiliary e\cisc duties wath basic excise duties on—

{{^{{FOOTNOTE 0)}}}} Cigars and cheroots C'parottes,

(2)

Smoking mixtures for pipes and cigarettes;

(3)

Glycerine;

(4)

Synthetic organic dyestuffs;

(5)

Cosmetics and toilet preparations;

(6)

(7) Rubber products (except latex foam sponge on which duty is being reduced);

Plywood;

(8)

Copper and copper alloys;

(9)

Iron or steel products,

(10)

(31) Zinc.

(c) to change the tariff description and/or to restructure the duty rates in respect of—

(n

(2)

Synthetic rubber; Man-made fibres, man-made filament yarns and cellulosic spun yarn;

Cotton yarn;

(3)

Woollen and acrylic spun yarn;

(4)

Silk yarn, Jute yarn;

(5) (6)

(7) Nan-celluloFic spun yarn;

Cotton fabiica;

(8)

Silk fabrics,

Woollen fabrics;

(9) (10)

(11)

(12)

Man-made fabrics, Jute manufactures;

Flax fabrics and Ramie fabrics;

(13)

(14) Electric motors,

(d) to change (he tariff description o i~

(1) Item No 1A relating to confectionery and to exclude

boiled sweets, toffees, caramels, etc torn its scope;

(2) Item No 1C relating to food products and to include

butter other than pasteurised butter also within its scope,

(3) Item No ID relating to aerated waters and to modify the

basis of assessment from specific to ad valorem;

(4) Item No 14 relating to paints and varnishes and to modify

the basis of assessment from specific to ad valorem,

(5) Item No 14H relating to gases and to include acetylene within its scope and also to raise the rates of basic duty following merger of basic duty with auxiliary duty,

(f>) Item No 15A relating to plastics and to restructure the rates ot basic duty following merger of basic duty with auxiliary duty;

(7) Item No 27 relating to aluminium lor including within its scope shapes and sections in any form oi s>ze, and to raise the rates of basic duty following merger of basic duty with auxiliary duty;

(3) Item No 28 relating to tin plates and to include within its scope lacquered sheets and varnished .sheets, and also to raise the basic duty;

(9) Item No. 33 relating to electric fans and to include

tegulators for electric fans within its scope;

(10) Item No 33A relating to wireless receiving aets so as to include combination sets incorporating tape or cassette players, and to modify the basis of assessment from specific to ad valorem, and also to raise the rates under borne of the sub-items;

(11) Item No 34 relating to motor vehicles and also to restructure the rates of duties including raising of duty on two- wheeled and three-wheeled motor vehicles,

(12) Item No 34A relating to parts and accessories of motor vehicle^ not otherwise specified consequent to the change in the tax iff description of Item No. 34;

(13) Item No. 37 relating to cinematograph films and to modify the basis of assessment of exposed cinematograph films other than news-reels and shorts from specific to ad valorem;

(14) Item No 37AA relating to tape recorders and to include tape or cassette players and tape decks within its scope and also to modiiy the basis of assessment from specific to ad valorem;

(15) Item No 51A relating to cutting tools and to include other types of tools including industrial knives and blades within its scope,

(e) to include new items in t h' central excise tariff for—

a) Polishes and creams, Flax yarn and Ramie yarn;

(2)

Stereo or hi-fi-sy stems,

(3)

Watches, clocks and timepieces;

(4)

Weighing machinery and appliances;

(5)

Electric lighting fittings;

(6(

(f) to omit—

(1) Item No 47 lelating to slotted angles and channels,

(2) Item No 59 relating to electric insulating tapes.

Clause 33 road with the Fourth Schedule seeks to amend the Additional Duties of Excise (Gocds of Special Importance) Act, 1957 and the First Schedule thereto to—

(1) raise the additional excise duty on bins;

(2) do away with different rates of additional excise duty on cotton fabrics of different types and to provide for a common rate of duty on such fabrics based on their value;

(3) substitute tho expression "rayon or artificial silk fabrics" by the expression "man-made fabrics" consequent to the change in the tariff description of Item 22 of the First Schedule to the Central Excises Act

Clause 34 seeks to insert a new section 24A in the Khadi and Village Industries Commission Act, 1956 so as to exempt the Khadi and Village Industries Commission established under the said Act from payment of tax under the Income-tax Act, 1961. The proposed provision will apply retrospectively from 1st April, 1962, that is to say, the date of commence- ment of the Income-tax Act, 1961.

Clause 35 seeks to amend section 23 of the Finance Act, 1973 The effect of the amendment will be that the Credit Guarantee Corporation of India Limited (a company formed and registered under the Companies Act, 1956) which was exempted fiom income-tax and surtax up to the assessment year 1976-77 will be exempted from income-tax and surtax for the assessment years 1977-78 and 1978-79 as well.

Clause 36 seeks to make certain amendments in the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974.

Sub-clause (a)(i) seeks to amend sub-section (1) of section 3 of the Act. The amendment seeks to extend the requirement of making com- pulsory deposits for the assessment years 1978-79 and 1979-80 as well.

Sub-clause (a)(ii) seeks to insert a new sub-section (3) in section 3 of the Act The new sub-section seeks to provide that an individual, being a citizen of India, who is above seventy years of age on the first day of the financial year immediately preceding the assessment year will not be liable to make any compulsory deposit in relation to that assessment year. Any representative assessce who is assessable in respect of the total income of such an individual will also not be required to make any compulsory deposit This amendment will take effect from 1st September, 1977 and will accordingly apply in relation to compulsory deposits required to be made during the financial years 1977-78 and 1978-79 in relation to the assessment years 1978-79 and 1979-80.

Sub-clause (b) seeks to substitute clause (ii) of sub-ection (1) of section 4 of th,e Act bv a new clause The amendment seeks to secure that in relation to the assessment years 1978-79 and 1979-80 also, compul- sory depoM+j w-M bn made at the rate*, specified m Paragraph B of the Schedule to the Act

Clause 37 seeks to insert a new section 22A in the Oil Industry (Development) Act, 1974 so as to exempt the Oil Industry Development Board established under the said Act from payment of income-tax under the Income-tax Act, 1961 on its income, profits or gains The proposed provision will apply i etrospectively from the date of enactment of the Oil Industry (Develupment) Act, 1974

Clause 38 seeks to make certain amendments in the Voluntary Dis- closure of Income and Wealth Act, 1976

The proposed amendments seek to provide that m relation to declara- tions made under sub-section(l) of section 14, the immunity from penalty, etc will be available if the declarant pays before 1st January, 1978 the income-tax remaining unpaid and simple interest at twelve per cent, per annum on the amount remaining unpaid on 31st March, 1976, from 1st April, 1976 up to the date of payment In relation to declarations made under sub-section (1) of section 15, the immunity will be available if the declarant pays the wealth-tax remaining unpaid and simple interest in the manner aforesaid and also invests the required amount in the specified Government securities before 1st January, 1978

Clause 39, read with the Fifth Schedule, seeks to make certain amend- ments in the Income-tax Act, 1961, the Wealth-tax Act, 1957, the Gift-tax Act, 1958, the Companies (Profits) Surtax Act, 1964 and the Interest-tax Act, 1974 to provide for a new appellate authority, namely, Commissioners (Appeals)* for the purposes of the said Acts

Under the amendments to the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Gift-tax Act, 1958, 1he new appellate authority [Commissioners (Appeals)] will have jurisdiction in respect of certain appeals involving laige revenue implications and appeals from orders made by or under the direction or approval of the Inspecting Assistant Commissioner Pending appeals of a similar nature under these enact- ments, will stand transferred to the Commissioners (Appeals) [V?de Item 14 of Part I, item 8 of Part II and item 8 of Part III of the Fifth Schedule],

Under the amendments to the Companies, (Profits) Surtax Act, 1964, and the Interest-tax Act, 1974, the appellate jurisdiction at present exercised under these Acts by Appellate Assistant Commissioners will

stand transferred both in respect of pending appeals as also future appeals to the Commissioners (Appeals) [Vide item 1 (read with section 11) of the Companies (Profits) Surtax Act, 1964, item 3 of Part IV, item 1 (read with section 15) of the Interest-tax Act, 1974, and item 3 of Part V of the Fifth Schedule].

The other amendments, proposed in the Schedule, make provisions for matters, such as, appointment, functions, powers, etc , of the Commissioners (Appeals), the procedure to be followed by them in hearing appeals and for necessary consequential changes.

The amendments will come into force on such date as may be appointed by the Central Government by notification in the Official Gazette

Clause 40 seeks to repeal section 2 of the Finance Act, 1977. Since it is proposed to merge the auxiliary duties of excise with the basic duties of excise leviable under the First Schedule to the Central Excises and Salt Aft, 1944, it Is no loncrer necessary to have a senarate provision for the l ew of auxiliary duties of excise Hence section 4 of the Finance Act, 1977, which provides tor the levy of auxiliary duties of excise with effect from the 1st day of July, 1977 is also proposed to be repealed by that clause.

FINANCIAL MEMORANDUM

INCOME-TAX AND OTHER DIRECT TAXES

Clause 39 of the Bill read with the Fifth Schedule provides for th" appointment of Commissioners of Income-tax (Appeals) for the purposes of the Income-tax Act, 1961 Commissioners of Income-tax (Appeals) will also be the Commissioners (Appeals) for the purposes of the Wealth- tax Act, 1957, the Gift-tax Act, 1958, the Companies (Profits) Surtax Act, 1964 and the Interest-tax Act, 1974. They will have the same status as Commissioners of Income-tax.

2. For the present, it is proposed to upgrade 70 existing posts of Appellate Assistant Commissioners of Income-tax as the posts of Com- missioners of Income-tax (Appeals). The expenditure on this account is estimated at about Rs. 2 53 lakhs per annum as indicated herein below: —

(1) Difference between the average monthly emoluments of an Appellate Assistant Commissioner of Income-tax and a Commissioner of Income-tax (Appeals)- Rs 301

(ii) Annual cost of upgradahon of , Rs,3oi x 12 x 7o=Rs. 2,52,840

70 posts or say Rs. 2,53,000.

3 The non-recuriing expenditure would be negligible.

Indirect taxes

Clauses 31, 32 and 33 of the Bill, read with the Second Schedule, the Third Schedule and the Fourth Schedule, respectively, if enacted and brought into operation, will not involve any additional expenditure from the Consolidated Fund of India

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 9 of the Bill seeks to amend section 32A of the Income-tax Act. New sub-section (2B), proposed to be inserted in section 32A, seeks to provide for the grant of investment allowance at the higher rate of thirty-five per cent, in respect of machinery and plant installed for the manufacture or production of any article or thing which is manufactured or produced by using any technology or other know-how developed in, or which is invented by. a laboratory owned or financed by the Govern- ment or a laboratory owned by a public sector company or a University. One of the conditions stipulated for the deduction at the higher rate is that the assessee should furnish, along with his return of income, a certificate from the authority to be prescribed by rules to the effect that such article or thing is manufactured or produced by using such techno- logy or other know-how developed in such laboratory or is an article or thing invented in such laboratory.

Clause 10 of the Bill seeks to insert a new section 35CC in the Income- tax Act. The new section provides for deduction of expenditure incurred by a company on any programme of rural development. Under the proviso to sub-section (1) of the new section, the assessee has to obtain the approval of the authority to be prescribed by rules in respect of such programme before incurring the expenditure Under sub-section (3) of the new section, no deduction shall be allowed in respect of such expendi- ture unless the company furnishes along with the return of income for the assessment year for which the deduction is claimed, a statement of such expenditure in the form to be prescribed by rules duly signed and verified by an accountant as denned in the Explanation below sub-section (2) of section 288 and setting forth the particulars to be prescribed by rules.

Clause 18 of the Bill seeks to insert a new section 80HHA in the Income- tax Act The new section provides for deduction in respect of profits and gains from newly established small-scale industrial undertakings in certain areas. Under sub-section (4) of the new section, such deduction shall not be admissible in the case of an assessee (other than a company or co-operative society) unless the assessee furnishes, along with his return of income a report of the audit of the accounts of the undertaking m the form to be prescribed by rules, duly signed and verified by the accountant who has audited such accounts

Clause 19 of the Bill seeks to substitute a new section for section 80RRA of the Income-tax Act Under the new section, provision has been made for deduction in respect of remuneration received for services rendered outside India Under sub-section (2) of that section, in the case of an individual (not being an employee of Government), the deduction will be available only m cases where the individual is a technician and the terms and conditions of his service outside India are approved by the Central Government or such authority as may be prescribed by rules made in this behalf. In order to be a technician for the purposes of this section, a person should have specialised knowledge and experience in the fields specified in clause (c) of the Explanation. Under item SEC. 2] THE GAZETTE OF INDIA EXTRAORDINARY 211

Clause 20 of the Bill seeks to substitute a new sub-section for sub- section (4) of section 104 of the Income-tax Act. Under clause (b) of the proposed sub-section (4) the provisions of section 104 will not apply to a company which is neither an Indian company nor a company which has made the prescribed arrangements foi the declaration and payment of dividends within India. Clause (b) of sub-section (4) corresponds to the existing sub-section (4) of section 104 and, in substance, no fresh delegation of power is involved

Clause 24 of the Bill seeks to insert a proviso in section 194 of the Income-tax Act ielating to deduction of income-tax from dividends paid by companies to the shareholders Under the proviso as proposed to be inserted, no deduction of income-tax from, dividends shall be made if the shareholder furnishes to the person responsible for paying the dividends a statement in writing in the form to be prescribed by rules and verified in the manner to be prescribed by rules declaring that his estimated total income of the previous year in which such dividend is to be included under the provisions of section 8 will be less than the minimum liable to income-tax

Clause 25 of the Bill seeks to insert a new section 206B in the Income- tax Act. Under the new section any person responsible for paying any dividend referred to in section 194 shall prepare and deliver or cause to be delivered to the Income-tax Officer in the form to be prescribed by rules and verified in the manner to be prescribed by rules a return showing the particulars specified in that section.

Clause 39 of the Bill, read with the Fifth Schedule thereto, seeks to make various amendments in the Income-lax Act, 1961, the Wealth-tax Act, 1957, the Gift-tax Act, 1958, the Companies (Profits) Surtax Act, 1964 and the Interest-tax Act, 1974, to provide for a new appellate authority under these Acts. As a result of these amendments, the ambit of the power to make rules under section 295 of the Income-tax Act, section 46 of the Wealth-tax Act, section 46 of the Gift-tax Act, section 25 of the Companies (Profits) Surtax Act and section 27 of the Interest-tax Act, will become enlarged to cover inter alia the form and the manner in which anV appeal may be made to the Commissioner (Appeals), the fee payable in respect thereof, the circumstances in which, the conditions subject to which and the manner in which the Commissioner (Appeals) may permit an appellant to produce evidence which he did not produce or which he was not allowed to produce before the authority from whose orders the appeal has been preferred, and other matters relating to such appeals The provisions relating to the making of rules which will become so enlarged are existing provisions of these Acts and they will apply in relation to Commissioner (Appeals) in the same manner as they apply at present in relation to the Appellate Assistant Commissioner or other appellate authorities

The delegation of legislative power under the aforementioned provi- sions relates to matters of procedure or administrative detail or to matters in respect of which it is not practicable to make detailed provisions. Hence the delegation of legislative power is of a normal character.

BILL NO 52 OF 1977

A Bill to axiihorise payment and appropriation of certain sums from and

out of the Consolidated Fund of India for the services of the financial

year 1977-78 for the purposes of Railways.

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

of India as follows • —

1. This Act may be called the Appropriation (Railways) No. 2 Act,

1977.

Short title.

3 of 1977.

2 From and out of the Consolidated Fund of India there may be paid and applied sums not exceeding those specified in column 3 of the Schedule amounting in the aggregate [inclusive of the sums specified in column 3 of the Schedule to the Appropriation (Railways) Vote on Account Act, 1977] to the sum of three thousand seven hundred twenty- eight crores, seventy-nine lakhs and seventy thousand rupees towards defraying the several charges which will come in force of payment during the financial year 1977-78, in respect of the services relating to railways specified in column 2 of the Schedule.

Issue of Rs 3728, 79,70,000 out of the Consoli- dated Fund of India for the finan- cial year 1977-78.

Appro- priation,

3. The sums authorised to be paid and applied from and out of the Consolidated Fund of India by this Act shall be appropriated for the services and purposes expressed in the Schedule in relation to the said year.

THE SCHEDULE

(See sections 2 and 3)

I

2

3

Sums not exceeding

Services and purposes

Total

No. of Vote

Voted by Parliament

Charged on the Consoli- dated Fund

Rs.

R 8.

R;,.

1

2,51,88,000 Railway Board . . ..

3,Si,88,ooo

3,00,000

2

12,19,84,000 Miscellaneous Expenditure

12,16,84,000

3 Payments to Worked Linen and

46,68,000 Others

46,68,000

2,38,000

158,71,77,000 4 Working Expenses—Administration 158)615,39,000

5 Working Expenses—Repairs and

15,47,000

667,74,29,000 Maintenance •

667,5ft, 82,000

6

47,77,000

340,85,11,000 Working Expenses—Operating Staff 340,37,34,000

43,88,000

334)71,90,000 7 Working E xpenses—Operation (Fuel) 334,28,02,000

8

Working Expenses—Operation other

3,28,53,000

H3.39)8i,ooo than Staff and Fuel •

111,11,28,000

9 Working Expenses—Miscellaneous

13,72,000

58,89,40,000

58,75,68,000

Expenses •

10

1,37,000

57.32,96,000 Working Expenses-Staff Welfare • 57,3r, 59,000

11

Working Expenses—Appropriation

140,00,00,000

to Depreciation Reserve Fund

140,00,00,000

11-A

WorkingExpenses—Appropriation to

40,00,00,000 Pension Fund . . ..

40,00,00,000

12

225)32,34)000 Dividend to General Revenues and Contribution for Grants to States in lieu of Passenger Fare Tax

225,32,34,000

9,00,45,000

60,000

Open Line Works (Revenue^. •

8,99,85,000

13

14

5i,97)32,ooo

1 $00,000

Construction of New Lines—Capita] and Depreciation Reserve Fund • 51,82,32,000

15

1240,37,73,000

$0,00,000

Open Line Works—Capital De- preciation Reserve Fund and Deve- lopment Fund • • • • 1239,87,73,000

38,40,96,000 16

38,40,96,000

Pensionary Charges—Pension Fund,

r7

8,38,96,000 Repayment of Loans from General Revenues and Interest thereon— Development Fund

8,38,96,000

26,65,66,009 18

26,65,66,000

Appropriation to Development Fund

I

2

3

Sums not exceeding

Vote

Total

Charged on the Consoli-

Voted by Parliament

dated Fund

Rs.

Rs.

Rs.

Appropriation to Revenue Reserve

Fund . . ..

5,84,02,000

5,84,02,000

-.

Payments towards Amortisation of over-capitalisation, Repayment of Loans trom Geneial Revenues and Interest thereon—Revenue Reserve Fund

180,55,28,000

180,55,28,000

Appropriation to Accident Com-

21

9,12,84.000 pensation, Safety and Passenger Amenities Funds

9,22,84,000

Accident Compensation, Safety and

%•)•

S3,S0,ooo

6,20,50,000

5,67,00,000

Passenger Amenities Fund

TOTAL

4,75,31,000

37,28,79,70,000

37,24,04,48,000

J

STATEMENT OF OBJECTS AIsiD REASONS

This Bill is introduced m pursuance of article 114(1) of the Constitution of India, read with art'de 116 theieoi, to piovid* lor the appropriation out of the Consolidated Fund o± India of the moneys required to meet the expenditure chaiged n Railways for the iinancial year 1977-78

MADHU DANDAVATE.

RECOMMENDATION OF THE VICE-PRESIDENT ACTING AS PRESIDENT UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy of letter No 77-B-401 dated the 11th June, 1977 from Prof. Madhu Dandavate, Minister of Railways to the Secretary-General, Lok Sabha.]

The Vice-President acting as President, having been informed of the subject matter of the proponed Appropriation Bill providing for the withdrawal from and out of the Consolidated Fund of India qf the moneys required to meet the expenditure charged on the Fund and the grants made by the Lok Sabha for the financial year, 1977-78, recommends under clauses (1) and (3) of article 117 of the Constitution of India the introduc- tion m and consideration by Lnk Sabha of the Appropriation Bill

S. L SHAKDHER,

Secretary-General.

PRINTED DY IMF, GENERAL MANAGER, GOVERNMENT OF INDIA PRES"), MINTO ROAD, NEW DELHI AND PUBLISHED BY THE CON ITROLLER OF PUBLICATIONS, DELHI, 1977