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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 3] NEW DELHI, TUESDAY, FEBRUARY 38, 1978/PHALGUNA 10, 1899

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

LOK SABHA

The following Bill was introduced in Lok Sabha on the 28th February. 1978: —

BILL NO. 15 OF 1978

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

for the financial year 1978-79.

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

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Finance Act, 1978.

Short title end com- mence- ment.

(2) Save as otherwise provided in this Act, sections 2 to 33 and sec- tion 40 shall be deemed to have come into force on the 1st day of April, 1978.

CHAPTER II

RATES OF INCOME-TAX

Income- tax.

2. (1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 1978, income-tax shall be charged at the rates specified in Part I of the 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

(31)

(b) in the cases to which Paragraph E of that Part applies, by

p. surcharge,

calculated in each case in the manner provided therein.

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

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the net agri- cultural 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 in respect of the total income; and

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

(i) the total income and the net agricultural income shall be aggregated and the amount of income-tax shall be deter- mined in respect of the aggregate income at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if such aggregate income were the total income:

Provided that for the purposes of determining the amount of income-tax in accordance with this sub-clause, the provisions of clause (ii) of the proviso below Sub-Paragraph I 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 said Sub- Paragraphs shall not apply;

(ii) the not agricultural income shall be increased by a sum of eight thousand rupees and the amount of income-tax shall be determined in respect of the net agricultural 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, as if the net agricultural income as so increased were the total income:

Provided that for the purposes of determining the amount of income-tax in accordance with this sub-clause, the provisions of clause (i) and clause (ii) of the proviso below Sub-Para- graph I 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 said Sub-Paragraphs shall not apply;

(iii) the amount of income-tax determined in accordance with sub-clause (i) shall be reduced by the amount of income- 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;

(iv) the amount of income-tax determined in accordance with sub-clauso (iu) shall be increased by a surcharge for pur- poses of the Union calculated at the rate of fifteen per cent, of such income-tax and the sum so arrived at shall be the income- tax in respect of the total income.

4S 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 (2) or the rates as specified m 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, 194BB, 194D 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 Schedule.

(5) Subject to the provisions of sub-section (6), in cases in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the Income-tax Act or charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section 175 or sub- section (2) of section 176 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 XVII-C of the said Act has to be computed, at the rate or xates in force, such income-tax or, as the case may be, "advance tax" shall be so calculated, charged, deducted or computed at the rate or rates specified in Part III of the Schedule:

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

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

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the net agri- cultural 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 calculating, charging or computing such income-tax or, as the case may be, "advance tax" in respect of the total income; and

(b) such income-tax or, as the case may be, "advance tax" shall

be so calculated, charged or computed as follows: —

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

Provided that for the purposes of determining the amount of income-tax or "advance tax" in accordance with this sub- clause, the provisions of clause (ii) of the proviso below Sub- Paragraph I 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 said Sub-Paragraphs shall not apply;

(ii) the net agricultural income shall be increased by a sum of eight thousand rupees and the amount in income-tax or "advance tax" shall be determined in respect of the net agricul- tural income as so increased at the rates specified in Sub-Para- graph 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:

Provided that for the purposes 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 I or, as the case may be, Sub-Paragraph II of the said Paragraph A and the provisions relating to sur- charge on income-tax in the said Sub-Paragraphs shall not apply;

(Hi) the amount of income-tax or "advance tax" determin- ed 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;

(iv) the amount of income-tax or "advance tax" determined in accordance with sub-clause (in) shall be increased by a sur- charge 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, as the case may be, "advance tax" in respect of the total income.

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

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

(b) "domestic company" means an Indian company, or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 1978, has made the prescribed arrangements for the declaration and payment within India of the dividends (includ- ing dividends on preference shares) payable out of such income in accordance with the provisions of section 194 of that Act;

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

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

(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 of policies of insurance);

(e) "net agricultural income", in relation to a person, means the total amount of agricultural income, from whatever source de- rived, of that person computed in accordance with the rules con- tained in Part IV of the Schedule;

(f) "tax-free security" means any security of the Central Gov- ernment issued or declared to be income-tax free, or any security of a State Government issued income-tax free, the income-tax where- on is payable by the State Government;

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

CHAPTER III

DIRECT TAXES

Income-tax

Amend- ment of sfectiori 9.

3. In section 6 of the Income-tax Act, in clause (2), the following Explanation shall be inserted at the end with effect from the 1st day of April, 1979, namely: —

Explanation.—In the case of an individual, being a citizen of India, who is rendering service outside India and who is or has been in India on leave or vacation in the previous year, the provisions of sub-clauses (b) and (c) shall apply in relation to that year as if for the words "thirty days" and "sixty days", respectively occurring in the said sub-clauses, the words "ninety days" had been substi- tuted:

Provided that such service outside India has been sponsored by the Central Government or the terms and conditions of such service have been approved by the Central Government or the prescribed authority'.

4. In section 23 of the Income-tax Act, in the second proviso to sub- section (1), with effect from the 1st day of April, 1979,—

Amend- ment of section 23.

(a) in clause (bi), for the words, figures and letters "completed after the 31st day of March, 1970", the words, figures and letters "completed after the 31st day of March, 1970 but before the 1st day of April, 1978" shall be substituted;

(b) for the words, brackets and letters "so, however, that the income in respect of any residential unit referred to in clause (a) or clause (b) is in no case a loss.", the following shall be substituted, namely: —

"(c) in the case of a building comprising one or more resi- dential units, the erection of which is completed after the 31st day of March, 1978, for a period of five years from the date of completion of the building, be reduced by a sum equal to the aggregate of—

(i) in respect of any residential unit whose annual value as so determined does not exceed two thousand four hundred rupees, the amount of such annual value;

(ii) in respect of any residential unit whose annual value as so determined exceeds two thousand four hundred rupees, an amount of two thousand four hundred rupees,

so, however, that the income in respect of any residential unit referred to in clause (a) or clause (b) or clause (c) is in no case a loss.".

Amend- ment of section 32.

5 In section 32 of the Income-tax Act, in sub-section (1), in clause (iw) 'for the words "twenty per cent.", the words "forty per cent." shall be substituted with effect from the 1st day of Apnl, 1979.

6. In section 35B of the Income-tax Act, in sub-section (1) in clause Amend- ment of section 35".

(a) after the words, figures and letters "after the 29th day °f February, 1968", the words, figures and letters "but before the Jpt day of April, 1970" shall be inserted;

(b) In the proviso, after the words, figures and letters ''after the 23th day of February, 1973", the words, figures and letters "but before the 1st day of April. 1978" shall be inserted.

7. In the Income-tax Act, after section 35CC, the following section

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

Insertion oX new sectiqn, 35CCA.

'35CCA. (1) Where an assessee incurs any expenditure by way of payment of any sum, to an association or institution to which this section applies, to be used for carrying out any programme of rural development approved by the prescribed authority, the as- sessee shall be allowed a deduction of' the amount of such expendi- ture incurred during the previous year.

ExpendJ. ture by way of payment to associa- tions and institu- tions for carrying out rural develop- ment pro- grammes.

(2) This section applies to any association or institution-

fa) which has as its object the undertaking of any pro-

gramme of rural development; and

(b) which is for the time being approved in this behalf by

the prescribed authority:

Provided that the prescribed authority shall not grant such

approval for more than three years at a time.

Explanation.—For the purposes of this section, "programme of rural development" shall have the meaning assigned to it in the Explanation to sub-section (1) of section 35CC.

(3) where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under section 35C or section 35CC or section 80G or any other provision of this Act for the same or any other assessment year.'.

Amend- ment of section 37.

8. In section 37 of the Income-tax Act, after sub-section (3), the fol- lowing sub-sections shall be inserted with effect from the 1st day of April, 1979, namely: —

'(3.4) Notwithstanding anything contained in sub-section (1) but without prejudice to the provisions of sub-section (3) where the aggregate expenditure incurred by an assessee on advertisement, publicity and sales promotion in India exceeds twenty thousand

rupees, so much of such aggiegate expenditure as is equal to an amount calculated as provided hereundei shall not be allowed as a deduction, namely: —

(i) where such aggregate ex- 10 per cent, of the adjusted penditure does not exceed i per expenditure; cent, of the turnover or, as the case may be, gross receipts of the business or profession

(ii) where such aggregate ex- 121 p er cent, of the adjusted penditure exceeds i per cent, but expenditure- does not exceed i per cent, of the turnover or, as the case may be, gross receipts of the business or profession

(Hi) where such aggtegate ex- 15 p er c e nt of t he adjusted penditure exceeds k per cent, of expenditure, the turnover or, as the case may be, gross receipts of the business or profession

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

(a) "adjusted expenditure" means the aggregate expendi- ture incurred by the assessee on advertisement, publicity and sales promotion in India as reduced by so much of such expendi- ture as is not allowed under sub-section (1) and as further re- duced by so much of such expenditure as is not allowed under sub-section (3);

(b) "turnover" and "gross receipts" mean turnover or gross receipts, as the case may be as reduced by any discount or rebate allowed by the a&sessee.

(3B) In a case where an assessee has set up an industrial under- taking for the manufacture or production of any articles, nothing in sub-section (3A) shall apply in respect of any expenditure on advertisement, publicity or sales promotion incuned by the assessee, for the purposes of the business of such undertaking, in the pre- vious year in which such undertaking begins to manufacture or produce such articles and each of the two previous years imme- diately succeeding that previous year.'.

Amend- ment of section 52,

9. In section 52 of the Income-tax Act, in sub-section (3), in clause (b) of the proviso, the words "and the adequacy of the full value of the consideration so determined or approved is not questioned by the assessee" shall be omitted and shall be deemed always to have been omitted.

Amend- ment of section 54.

10. Section 54 of the Income-tax Act shall be renumbered and shall be deemed to have been renumbered with efrect from the 1st day of April, 1974, as sub-section (1) thereof and,—

(a) in sub-section (i) as so renumbered,—

(2) after the words "for the purpose of his own or the parent's own residence", the brackets and words "(hereafter in

this s'c^on referred to as the oiigimal asset)" shall be inserted and shall be deemed to have been inserted with effect from the 1st dav of April, 1974-

(u) in clau'c (i). lor the words "is greater than the cost of the new asset", the wotds ard bracket- "is greater than the cost of the house property so purchased or constructed (hereafter in this section Referred 1o as the new asset)" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1974;

(b) after sub-section (1) as so renumbered, the following sub- section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1974, namely: -

'(2) Where the transfer ot the original asset is by way of compulsory acquisition undn any law and the compensation awarded for such acquisition is enhanced by any court, tribunal or other authority, then,

(a) so much of the capital pain, computed under section 4R by taking the compensation as so enhanced as the full value of the consideration received or accruing as a result of such transfer, as is not excluded under sub-section (1) from being charged to tax under section 45, or

(b) the capital gain attributable to the enhancement of the compensation,

whichever is less (that which is less being hereafter in this sub- section referred to as the unadjusted capital gain), shall, if the assessee has within a period of one year before or after the date of receipt of the additional compensation purchased, or has within a period of two years after that date constructed, a house pro- perty for the purposes of his own residence (hereafter in this sub-section referred to as the relevant asset\ be dealt within the following manner, that is to say,—•

(1) if the amount of 1he unadjusted capital gain is greater than the cost of the relevant asset, the difference between the amount of the unadjusted capital pain and the cost of the relevant asset shall be charged under section 45 as the income of the previous year in which the transfer took place; and for the purpose of compu+ing in respect of the relevant asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or

(ii) if the amount of the unadjusted capital gain is equal to or less than the cost of the relevant asset, the unadjusted capital gam shall not be charged under section 45; and for the purpose of computing in respect of the relevant asset any capital gain arising from its transfer within a period of three yeprs, of its purchase or construction as the case may be, the cost shall be reduced by the amount of the unadjusted capital gain.

ExpJavalion—For the purposes of this sub-section, sub- section (2) of section 54B and sub-section (2) of section 54D,—

(I) "additional compensation", in relation to the transfer of any capital asset by ^ay of compulsory acquisition under any law, means the difference between the compensation for the acquisition of such asset as enhanced by any court, t r i- bunal or other authority and the compensation which would have been payable if such enhancement had not been made.

(21 the capital gain attributable to the enhancement by any court, tribunal oi oiher authority of the compensation for the compulsory acquisition of any capital asset shall be--

(a) where the computation of the capital gain under section 48 by taking the compensation which would have been payable if such enhancement had not beem made as the full value of the consideration received or accru- ing as a result of the transfer results in a loss or does not result in any profits or gains chargeable to income- tax under the head "Capital gains", the capital gain computed under section 48 by taking the compensation as so enhanced as the full value of the consideration received or accruing as a result of the transfer; and

(b) in any other case, the difference between—

(i) the capital pain computed under section 48 by taking the compensation as so enhanced as the full value of the consideration so received or accru- ing, and

(ii) the capital gain computed under section 48 by taking the compensation which would have been payable if such enhancement had not been made as the full value of the consideration so received or accruing.'.

11. Section 54B of the Income-tax Act shall bo renumbered and shall be deeined to have been renumbered with effect from the 1st day of April, 1974, as sub-section (1) thereof and,—

Amend- ment oi section D4B.

(a) in sub-section (1) as so renumbered, after the words "used by the assessec or a parent of his for agricultural purposes", the brackets and words "(hereinafter rcfeircd to as the original asset)" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1974,

(b) after sub-section (1) as so renumbered, the following sub- section shall be inserted and shall be deemed to have been insetted with effect from the 1st day of April, 1974, namely: —

"(I¹) Where the transfer of the original asset is by way of compulsory acquisition under any law and the compensation awarded for such acquisition is enhanced by any court, tribunal or other authority, then,

(a) so much of the capital gain, computed under section 48 by taking the compensation as so enhanced as the tull value of the consideration received or accruing as a result of such transfer, as is not excluded under sub-section {D from being charged to tax under section 45, or

(b) the capital ga'n attributable to the enhancement of the compensation,

whichever is less (that which is less being hereinafter referred to as the unadjusted capital gain), shall, if the assessee has within a peiiod of two years after the date of receipt of the additional compensation purchased any land for being used for agricultural purposes, (hereinafter referred to a.s the relevant asset), be dealt with in the following manner, that is to say,—

(i) if the amount of the unadjusted capital gain is greater than the cost ot the relevant asset, the difference between the amount of the unadjusted capital fain and the cost of the relevant asset shall be charged under section 45 as the income of the previous year in which the transfer took place; and for the purpose of computing in respect of the relevant asset any capital gain aiising from its transfer within a period of three years 01 its purchase, the cost shall be nil; or

(ii) if the amount of the unadjusted capital gain is equal to or less than the cost of the relevant asset, the unadjusted capital gain shall not be charged under section 45; and for the purpose of computing in respect of the relevant asset any capital gain arising tiom its transfer within a period of three years of its purchase, the cost shall be reduced by the amount of the unadjusted capital gain.".

12. Section 54D of the Income-tax shall be renumbered and shall be deemed to have been renumbered with effect from the 1st day of April, 1974, as sub-section (1) thereof and,—•

Amend- ment of section 54D.

(a) in sub-section (1) a& HO lenumbered, after the words "for the purposes of the business oL the said undertaking", the brackets and words "(hereafter in this section refened to as the original asset)" shall be inserted and shall be deemed to have been inserted with eliect from the 1st day ot April, 1974;

(b) after sub section (1) as so renumbered, the following sub- section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of Apiil, 1974, namely.—

"(2) Where the compensation awarded for the compulsory acquisition of the 01 iginal asset is enhanced by any court, tribunal or other authority, then,

(a) so much of the capital gain, computed under sec- tion 48 by taking the compensation as so enhanced as the full value of the consideration received or accruing as a result of such transfer, as is not excluded under sub-section (1) from being charged to tax under section 45, or

(b) the capital gain attributable to the enhancement of the compensation,

whichever is U";s (that which is less being hereafter in this sub- secLion referred to as the unadjusted capital gain), shall, if the

assessee has within a period of three years after the date of receipt of the additional compensation purchased any land or building or any right in any land or building or constructed any building for the purposes of shifting or re-establishing the under- taking referred to in sub-section (1) or setting up another indus- trial undertaking (such land, building or right being hereafter in this sub-section referred to as the relevant asset.), be dealt with in the following manner, that is to say,—-

(i) il the amount of the unadjusted capital gain is greater than the cost of the relevant asset, the difference between the amount of the unadjusted capital gain and the cost of the relevant asset shall be charged under section 45 as the income of the previous year in which the transfer took place; and for the purpose oi computing in respect of the relevant asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or

(ii) if the amount of Ihe unadjusted capital gain is equal to or less than the cost of the relevant asset, the unadjusted capital gain shall not be charged under section 45; and for the purpose of computing in respect of the relevant asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the unadjusted capital gain.".

13. In section 54E [as directed to be inserted by section 13 of the

Finance (No. 2) Act, 1977] of the Income-tax Act,—

29 Of 1977.

Amend- ment of section 54E.

(a) in sub-section (1),—

(i) in Explanation I,—

(i) in the opening portion, after the words "For the purposes of this sub-section", the words, brackets and figure "and sub-section (3)" shall be inserted;

(2) in clause (v), the words, figures and letters "where the investment in such shares is made before the 1st day of March, 1978" shall be inserted at the end;

(3) after clause (v), the following clause shall be inserted, namely:—•

"(va) equity shares forming part of any eligible issue of capital, where the investment in such shares is made after the 28th day of February, 1978;";

(4) in clause (vi), the words, figures and letters ", where such deposits are made before the 1st day of March, 1978" shall be inserted at the end;

(ii) Explanation 2, shall b_j renumbered as Explanation 4 and before the Explavatx n as HO renumbered, the following Explanations shall be inserted, namely: —

'Explanation 2. -'"Eligible issue of capital" shall have the meaning assigned to it in sub-section (3) of section 80CC

Explanation 3.—An assessee shall not be deemed to have invested the full value ol the consideration or any part thereof in any equity shares referred to in. clause (va) of Explanation 1 unless the as.-.( ssee has subscribed to or pur- chased the shares m the mannoi specified in sub-section 14) of section 80CC;

(b) after sub-section (2), the following sub-sections shall be

inserted, namely: - -

'(."?) Where the transfer ol the original asset is by way of compulsory acquisition undei any law or where thp lull value of the consideration foi the transCei ol the capital asset is deter- mined or approved by the Central Government or the Receive Bank of India, and the compensation awarded for such acquisi- tion or, ay the case may be, the lull value oi the consideration so deteimined 01 appiovod is enhanced by airy court, tribunal or other authority, then, so much oi the capital gain, computed under section 411 by takmg the compensation or consideration as so enhanced as the luJl value of the consideration received or accruing as a result ol such Liatisfer, as is attributable to ihe enhancement of the compensation or consideration (hereafter in this subsection referred to as the unadjusted capital gain) shall, if the assessee has, within a period. 01 six months after the date of receipt of the additional compensation or, as the case may be, the additional consideration, invested or deposited the whole <>i any part of such additional compensation or consideration in any specified asset (hereafter in this section referred to as the relevant asset), be dealt with in tho lollowing manner, that is to say,--

(a) if the cost of the relevant asset is not less than the additional compensation or consideration, the whole of the unadjusted capital gain shall not be charged under section 45;

(b) if the cost of the relevant asset is less than the addi- tional compensation or consideration, so much of the un- adjusted capital gain as bears to the whole of the unadjusted capital gain the Lame proportion as the cost of acquisition of the relevant asset bears to the additional compensation or consideration shall not be charged under section 45.

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

(i) "additional compensation" shall have tho meaning assigned to it in clause (1) of the Explanation to sub- section (2) of section 54;

(ii) "additional consideration", in relation to the transfer of any capital asset the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, means the difference bet- ween the amount of consideration for such transfer as enhanced by any court, tribunal or other authority and the amount of consideration which would have been payable if such enhancement had not been made;

(lit) "cost", in relation to any relevant asset, being a deposit referred to in clause (vi) of Explanation 1 below sub-sec Won (1\ means the amount of such deposit,

(iv) the capital gain attributable to the enhancement by any court, tribunal or other authority of the com- pensation for the compulsory acquisition of any capital asset or of the consideration for the transfer of any capital asset as determined or approved by the Central Govern- ment or the Reserve Bank of India shall be deemed to be so much of the capital gain arising from the tramslei of the capital asset as bears to the whole of the capital gain as computed under section 48 by taking the com- pensation or consideration as so enhanced as the full value of the consideration received or accruing as a result of the transfer, the same proportion as the amount ot additional compensation or consideration bears to the compensation or consideration as so enhanced.

(4) Where the relevant asset is tiansieircd, or converted (otherwise than by transfer) into money, within a period ot thiee years from the date of its acquisition, the amount of capital gain arising fiom the transfer of the original asset not charged under section 45 on the basis of the cost of such relevant asset as pro- vided in clause (a) or, as the case may be, clause (b), of sub-sec- tion (3) shall be deemed to be income chargeable under the head "Capital gains" relating to capital assets other than short-term capital assets of the previous yeai in whieh the relevant asset is transferred oi convex ted (otherwise than by transfer) into money.

(5) Where the cost of the equity shares referred to in clause (va) of Explanation 1 is taken into account for the purposes of clause (a) or clause (b) of sub-section (1) or clause (a) or clause (b) of sub-section (3), a deduction with reference to such cost shall not be allowed under section 80CC.

29 of 1977.

Amend- ment of section 72A,

14. In section 72A [as directed to be inserted by section 15 of the Fin- ance (No. 2) Act, 1977] of the Income-tax Act, after sub-section (2) and before the Explanation, the following sub-section shall be inserted, namely: —

"(3) Where a company owning an industrial undertaking or a ship proposes to amalgamate with any other company and such other company submits the proposed scheme of amalgamation to the speci- fied authority and that authority is satisfied, after examining the scheme and taking into account all relevant facts, that the conditions referred to in sub-section (1) would be fulfilled if such amalgamation

is effected in accordance with such scheme or, as the case may be, in accordance with such scheme as modified in such manner as that authority may specify, it shall intimate such other company that, after the amalgamation is effected in accordance with such scheme or, as the case may be, such scheme as so modified, it would make (unless there is any material change in the relevant facts) a recommendation to the Central Government under subsection (1).".

1.5. In section 80A of the Income-tax Act, sub-section (4) shall be

omitted with cfleet from the 1st day of April, 1979.

Amend- ment of section BOA.

1.6. In section 80C of the Income-tax Act, with effect from the 1st day

of April, 1979,- -

Amend- ment of section 80C.

(a) for sub-section (•/), the following sub-section shall be substi-

tuted, namely: —

"(I) In computing the total income pf an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, an amount calculated, with reference to the aggre- gate of the sums specified in sub-section (2), at the following rates, namely: —

(a) where such aggregate does The whole of such aggregate;

not exceed Rs. 5,000

(b) where such aggregate Rs. 5,000 plus 50 per cent, of the exceeds Rs. 5,000 but does not amount by which such aggregate exceeds Rs. 10,000 exceeds Rs. 5,000;

(c) where such aggregate Rs. 7,500 plus 40 per cent, of the exceeds Rs. 10,000 amount by which such aggregate

exceeds Rs. 10,000.";

(b) in sub-section (4), in clauses (ii) and (iv), for the words "twenty thousand rupees", the words "thirty thousand rupees" shall be substituted.

17. In the Income-tax Act, after section 80C, the following section

shall be inserted, namely: —

Insertion of new section 80CC.

'80CC. (1) Where an assessee, being—

(0) an individual, or

(b) a Hindu undivided family, or

(c) an association of persons or a body of individuals con-

Deduction in respect of invest- ment in certain new- shares.

sisting only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and diu,

has purchased in the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1979 or any subsequent assessment year), out of his income chargeable to tax, equity shares forming part of any eligible issue of capital, he shall, in accordance with and subject to the provision^ of this section, be

allowed a deduction in the computation of his total income of an amount equal to fifty per cent, of the cost of such shares 1o him.

(2) Where the aggregate cost to the assossee of the shares re- ferred to in sub-section (1) which are purchased by him in the pre- vious year exceeds ten thousand rupees, the deduction under that sub-section shall bo allowed only with reference to such of those shares (being shares the ae"i fixate cost whereof to the a'lessee does not exceed ten thousand rupees) as are specified by him in this behalf

(S) For the purposes of thir section "eligible issue of capital" means an issue of enuity shares which satisfies the following; condi- tions, namely: —

fa) the issue is made by a public company formed and regis- tered in India with the main object of carrying on the business of co'tisiruction, manufacture or production of any article or thing, not beinc an article or thing specified in the list in the Eleventh Schedule:

(b) the issue is an issue of capital made by the company for the first time:

(c) the shares forming part of the issue are offered for sub- scription to the public,

(d) such other conditions as may be prescribed:

1 of 1956.

P'ovided that in the case of a comoany which had originally been incorporated as a private company but has become a public company under the orovisions of the Companies Act, 1956, an issue of equity shares made bv it for the first time after it has become a public com- pany shall not be regarded as an eligible issue of capital, if—•

(i) such corrroanv had declared, distributed or paid any divi- dend when it was a private company; or

(ii) any of the shares formim^ nart of such issue is offered for subscription at a premium.

Explanation 1 •—It inv ourstion arises as to whether any issue of equity shares would constitute an eligible issue of capital for the purposes of this sod ion, the question ^hall be referred to the Central Government whose Socisiou thereon shall be final.

X of 1958, Explanation 2—In this sub-section and sub-section (4), "public company" shall hr.ve the meaning assigned to it in section 3 of the Companies Act, 1956.

(4) The deduction under sub-section (1) shall not be allowed unless the assesses has—

(i) subscribed to th'j shares in pursuance of an offer for sub- scription to the public made bv the public company or in pur- suance of a reservation or an option im his favour by reason of his being a promoter of the company; or

1 of 195Q.

(ii) purchased the shares from a person who is specified as an underwriter in respect of the issue of such shares in pursuance of clause 11 of Part I of Schedule II to the Companies Act, 1956 and who has acquired such shares by virtue of his obligation as such underwriter.

(5) If any equity shares, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of five years from the date of their purchase, an amount equal to fifty per cent, of the cost to the assessee of the shares so sold or otherwise transferred shall be deemed to be the income of the assessee of the previous year in which the shares are so sold or transferred and shall be chargeable to tax accordingly.

Explanation.—A person shall be treated as having purchased any shares on the date on which his name is entered in relation to those shares in the register of members of the company.

(6) Where a deduction is claimed and allowed under sub-section (2) with reference to the cost of any equity shares, the cost of such shares shall not be taken into account for the purposes of section 54E.'.

18. In section 80P of the Income-tax Act, in sub-section (2), for clause (b), the following clause shall be substituted with effect from the 1st day of April, 1979, namely: —

Amend- ment of section 80P.

"(b) in the case of a co-operative society, being a primary society engaged in supplying milk raised by its members to—

(i) a federal milk co-operative society; or

(ii) the Government or a local authority; or

1 of 1956.

(Hi) a Government company as defined in section 617 of the Companies Act, 1956 or a corporation established by or under a Central, State or Provincial Act (beincr a company or corporation engaged in supplying milk to the public),

the whole of the amount of profits and gains of such business;".

19. In section 155 of the Income-tax Act,— Amend- ment of section 155.

(a) after sub-section (7), the following sub-section shall be in- serted and shall be deemed to havp been inserted with effect from the 1st day of April, 1974, namely: —

"(7A) Where, in the assessment for any year, the capital gain arising from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of Indn"a, is computed under section 48 and the compensation for such acquisition or the consideration for such transfer is enhanced or further enhanced by any court, tribunal or other authority, the computation or, as

the case may be, computations made earlier shall be deemed to have been wrongly made and the Income-tax Officer shall, not- withstanding anything contained in this Act, recompute in ac- cordance with section 48 the capital gain arising from such trans- fer by taking the compensation or the consideration as enhanced or further enhanced, a& the case may be, to be the full value of the consideration received or accruing as a result of such transfer and shall make the (necessary amendment; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the addi- tional compensation or consideration was received by the assessee.";

(b) in sub-seciion (8), for the words and figures "under the pro- visions of section 54", the words, brackets and figures "under the provisions of sub-section (1) of section 54" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1974;

(c) after sub-section (8), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1974, namely: —

"(8A) Where in the assessment for any year, a capital gain arising from the transfer by way of compulsory acquisition under any law of any such capital as^et as is referred to in section '54 is charged to tax and if the compensation for such acquisition is enhanced or further enhanced, as the case may be, by any court, tribunal or other authority, and the assessee purchases, within a period of one year after the date of receipt of the additional compensation, or constructs, within a period of two years after that date, a house property for the purposes of his own residence, the Tncome-tax Officer shall amend the order of assessment so as to exclude the amount of capital gain not chargeable to tax under the provisions of sub-section (2) of section 54; and the provisions of section 154 shall, so far as may be, apply thereto, the period of foui years, specified in sub-section (7) of that section being reckoned from the end of the previous year in which the addi- tional compensation was received by the assessee.";

(d) in sub-section (.9), for thr wordj, figures and letter "under the provisions of section S4B", the words, brackets figures and letter "under the provisions of sub-section (1) of section 54B" shall be sub* stitu'ted and chall be deemed to have been substituted with effect from the 1st day oi April, 1974;

(e) after sub-section (9), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the lat day of April, 1974, namely: —

"(9A) "Where in the assessment for any year, a capital gain arising from the transfer bv way of compulsory accmisition under any law of anv such capital asset as is referred to in section 54B is charged to tax and if the compensation for such acquisition is enhanced or further enhanced, as the case may be, by any court,

tribunal or other authority, and within a period of two years after the receipt of the additional compensation, the assessee purchases any land for being used for agricultural purposes, the Income-tax Officer shall amend the order of assessment so as to exclude the amount of capital gain not chargeable to tax under the provisions of sub-section (2) of section 54B; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (?) of that section being reckoned from the end of the previous year in which the additional compensa- tion, was received by the assessee.".

(/) in sub-section (10), for the words, figures and letter "undef the provisions of section 54D", the words, brackets, figures- and letter "under the provisions of sub-section (1) of section 54D" shall be sub- stituted and shall be deemed to have been substituted with effect from the 1st day of April, 1974;

(g) sub-section (10) shall be renumbered and shall be deemed to have been renumbered with effect fro_rn the 1st day of April, 1974 as clause (a) of that sub-section and after clause (a) as so renumbered, the following clause shall be inserted and shall be deemed to have been inserted with effect from that date, namely:-^

"(b) Where in the assessment for any year, a capital gain arising from the transfer by way of compulsory acquisition of any such capital asset as is referred to in section 54D is charged to tax and if the compensation for such acquisition is enhanced or further enhanced, as the case may be, by any court, tribunal or other authority, and within a period of three years after the date of receipt of the additional compensation, the assessee pur- chases any land or building or any right in any land or building or constructs any building for the purpose of shifting or re- establishing the undertaking referred to in sub-section (1) of that section or setting up any other industrial undertaking, the Income-tax Officer shall amend the order of assessment so as to exclude the amount of capital gain not chargeable to tax under the provisions of sub-section (2) of section 54D; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the additional compensation was received by the assessee.";

2J of 1077.

(h) in. sub-section (10A), [as directed to be inserted by section 23 of the Finance (No. 2) Act, 1977] for the words, figures and letter "under the provisions of section 54E", the words, brackets, figures and letter "under the provisions of sub-section (1) of section 54E" shall be substituted;

(i) after the said sub-section (U)A), the following sub-section shall

be inserted, namely: —

"(10B) Where in the assessment for any year, a capital gain arising from the transfer, being a transfer by way of compulsory acquisition or a transfer the consideration for which was deter- mined or approved by the Central Government or the Reserve

Bank of India, of any capital asset, not being a short-term capital asset, is charged to tax and if the compensation or, as the case may be, consideration for such transfer is enhanced or further enhanced, as the case may be, by any court, tribunal or other authority, and within a period of six months after the receipt of the additional compensation or consideration, the assessee invests or deposits the whole or any part of the additional compensation or consideration in any specified asset referred to in Explanation I of su'o-scetion (2) of section 54E, /the Income-tax Officer shall amend the order of assessment so as to exclude the amount of capital gain not chargeable to tax under the provisions of sub-section (3) of section 54E; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the additional compensation or consideration was received by the assessee.".

(j) the following Explanation shall be inserted at the end and shall be deemed to have been so inserted with effect from the 1st day of April, 1974, namely: —

'Explanation,—For the purposes of this section,—

(a) "additional compensation" shall have the meaning assigned to it in clause (1) of the Explanation to sub-section (2) of section 54;

(b) "additional consideration", in relation to the transfer of any capital asset the consideration for which was deter- mined or approved by the Central Government or the Reserve Bank of India, means the difference between the amount of consideration for such transfer as enhanced by any court, tribunal or other authority and the amount of consideration which would have been payable if such enhancement had not been made.'.

20. In section 193 of the Income-tax Act, in the proviso, after clause (ia), the following clause shall be inserted, namely: —

Amend- ment of section 193.

"(ib) any interest payable on National Development Bonds; or".

21. After section 194B of the Income-tax Act, the following section shall be inserted, namely: —

Insertion of new section 194BB.

Winnings from horse race.

"194BB. Any person, being a bookmaker or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course or for arrang- ing for wagering or betting in any race course, who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding two thousand five hundred rupees shall, at the time otf payment thereof, deduct income-tax thereon at the rates in force:

Provided that no deduction shall be made under,this section from any payment made before the 1st day of June, 1978.".

Amend- ment of section 208.

22. In section 208 of the Income-tax Act, in sub-section (1), in clause (fa;), for the words, brackets and figures '"sub-section (3) of section 212", the word, figures and letters ''section 209A" shall be substituted with effect from the 1st day of June, 1978.

23- In section 209 ol the Income-tax Act, with effect from the 1st day

of June, 1978,—

Amend- ment of section 209.

(a) in sub-section (2), for clause (c), the following clause shall be

substituted, namely: —

"(e) in cases wher an estimate (including a revised estimate) is sent by the assessee under section 209A or section 212, the total income so estimated shall, for the purposes of calculation of tax under this section, be substituted for the total income referred to in clause (a,);'";

(b) in sub-section (2),—

(i) in clause (a), in the opening portion, after the words "in cases", the words, brackets, figures and letter ''where the assessee sends a statement under sub-section (1) of section 209A or" shall be inserted;

(ii) in clause (b), for the words, brackets, figures and letter "in cases where an estimate is sent by the assessee under sub-sec- tion (2) or sub-section (2) or sub-section (3) or sub-section (3A)oi section 212", the words, brackets, figures and letter "in cases where am estimate (including a revised estimate) is sent by the assessee under section 209A or section 212" shall be substituted.

24. In the Income-tax Act, alter section 209, the following section shall

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

Insertion oZ new section 209A.

'209A. (1) Every person shall, in each financial year, before the date on which the first instalment of advance tax is due in his case under sub-section (1) of section 211, if his current income is likely to exceed the amount specified in sub-section (2) of section 208, send to the Income-tax Officer—

Computa- tion and payment of advance tax by assessee.

(a) where he has been previously assessed by way of regular- assessment under this Act, a statement of advance tax payable by him computed in the manner laid down in clause (0) or, as the case may be, sub-clause (i) of clause (d) of sub-section (1) of section 209, or

(b) where he has not previously been assessed by way of

regular assessment under this Act, an estimate of—•

(i) the current income, and

(n) the advance tax payable by him on the current income

calculated in the manner laid down is section 209,

and, shall pay such amount of advance tax as accords with the state- ment or, as the case may be, estimate in equal instalments on the dates applicable in his case under section 211.

(2) "Where an assessee who is required to send a statement under clause (a) of sub-section (1) estimates at any time before the date on which the first instalment of advance tax is due in his case- under sub-section (1) of section 211 that, by reason of his current income being likely to be less than the income on which advance tax is pay- able by him under sub-section (1) or for any other reason, the amount of advance tax computed in the manner laid down in section 209 on the current income would be less than the amount of advance tax payable by him under sub-section (1), he may send to the Income-tax Officer, im lieu of such statement, an estimate of—

(i) the current income, and

(ii) the advance tax payable by him on the current income calculated in the manner laid down in section 209,

and shall pay such amount of advance tax as accords with his esti- mate in equal instalments on the dates applicable in his case under section 211.

(3) Where an assessee who has sent a statement under clause (a) of sub-section (1) estimates at any time before the last instalment of advance tax is due in his case that, by reason of his current income being likely to be less than the income on which advance tax is payable by him under sub-section (1) or for any other reason, the amount of advance tax computed in the manner laid down in section 209 on the current income would be less than the amount of advance tax payable by him under sub-section (1) he may, at his option, send to the Income-tax Officer an estimate of—

(i) the current income, and

(ii) the advance tax payable by him on the current income calculated in the manner laid down in section 209,

and shall pay such amount of advance tax as accords with his esti- mate in equal instalments on such of the dates applicable in his case under section 211 as have not expired, or in one sum if only the last of such dates has not expired.

(4) In the case of any assessee who is liable to pay advance tax under sub-sectiom (I) or sub-section (2) or, as the case may be, sub- section (3), if, by reason of the current income being likely to be greater than the income on which the advance tax so payable by him has been computed or for any other reason, the amount of advance tax computed in the manner laid down in section 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax so payable by him by more than 33-1/3 per cent, of the latter amount, he shall, at any time before the date on which the last instalment of advance tax is payable by him, send to the Income-tax Officer an estimate of—

(i) the current income, and

(ii) the advance tax payable by him on the current income

calculated in the manner laid down in section 209,

and shall pay such amount oJE advance tax as accords with his esti- mate on such of the dates applicable in his case under section 211 as have not expired, by instalments which may be revised according to sub-section (5):

Provided that in a case where the Commissioner is satisfied that, having regard to the nature of the business carried on by the assessee and the date of expiry of the previous year in respect of such busi- ness, it will be difficult for the assessee to furnish the estimate re- quired to be furnished by him in accordance with the provisions of this sub-section before the date on which the last instalment of advance tax is due in his case, he may, if the assessee pays the advance tax which he is liable to pay under sub-section (1) or sub- section (2) or, as the case may be, sub-section (3) before such date, extend the date for furnishing such estimate up to a period of thirty days immediately following the last date of the previous year in respect of that business and, where the date is so extended, the asses- see shall pay, on or before the date as so extended, the amount by which the advance tax already paid by him falls short of the advance tax payable in accordance with his estimate.

(5) The assessee may send a revised estimate of the advance tax payable by him before any one of the dates specified in section 211 and adjust any excess or deficiency In respect of any instalment already paid in a subsequent instalment or in subsequent instalments.

(6) Every statement or estimate under this section shall be sent

in the prescribed form and verified in the prescribed manner.

Explanation.—For the purposes of this section and section 212, "current income'", in relation to the advance ttix payable by an asses- see during any financial year, means the total income of the assessee [exclusive of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2, if any] of the period which would be the pre- vious year for the assessment year immediately following that finan- cial vear.'.

25. In section 211 of the Income-tax Act, in sub-section (1), with effect

from the 1st day of June, 1978,—

Amend- ment of section 211 (a) in the opening portion, for the words and figures "Subject to the provisions of this section and of section 212", the words, figures and letter "Subject to the provisions of this section and of sections 209A and 212" shall be substituted;

(tO for the Explanation, the following Explanation shall be

substituted, namely: —

'Explanation.—In this sub-section, "total income" means,—

(a) in a case where the advance tax is paid by the asses- see in accordance with the statement sent by him under sub- section (1) of section 209A or in accordance with an order of the Income-tax Officer under section 210, the total income

with reference to which the advance tax payable has been calculated in such statement or order;

(b) in a case where the advance tax is paid in accor- dance with an estimate (including a revised estimate) made by the assessee under section 209A or section 212, the total income with reference to which the advance tax is so esti- mated,

as reduced, in either case, by the amount of capital gain and income referred to in sub-clause (ix) of clause (24) of section 2, if any, included therein.'.

2

Amend- ment of section 212.

(a) in sub-section (1) for the words, brackets and figures "by reason of his total income [exclusive of capital gains and income referred to in. sub-clause (ix) of clause (24) of section 2, if any] of the period which would be the previous year for the immediately follow- ing assessment year (such total income being, hereafter in this sec- tion, referred to as current income)", the words "by reason of his current income" shall be substituted;

(b) sub-section (3) shall be omitted.

Amend- ment oi section 215.

37. In section 215 of the Income-tax Act, in sub-section (1), for the words and figures "advance tax under section 212 on the basis of his own estimate'¹, the words, figures, letter and brackets "advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate)" shall be substituted with effect from the 1st day of June, 1978.

2&. In section 216 of the Income-tax Act, in clause (a), for the words, Amend- ment of section 216

brackets, figures and letter "under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 212", the words figures and letter "under section 209A or section 212" shall be substituted with effect frcm the 1st day of June, 1978.

29. In section 217 of the Income-tax Act, with effect from the 1st day of June, ]978 —

Amend- ment of section 21V.

(a) in sub-section (1),—

(i) for the portion beginning with the words "the Income- tax Officer find;, that any such person" and ending with the words "twelve per cent, per annum", the following shall be substituted, namely: —

"the Income-tax Officer finds—•

(a) that any ^uch person as is referred to in clause (a)

of sub-section (1) of section 209A has not sent the state- ment leferred to in that clause or the estimate in lieu of such statement reiened to in sub-section (2) of that section; or

(b) that any such person as is referred to in clause

(b) of sub-section (1) of section 209A has not sent the estimate referred to in that clause,

simple interest at the rate of twelve per cent, per annum";

(h) for the words "the said sub-section", the words, brackets and figures "the said sub-section (1) or sub-section (2)" shall be substituted:

(b) in sub-section (1A),-—

(i) after the words "the Income-tax Officer finds that", the words, brackets, figures and letter "any person who is required to send an estimate under sub-section (4) of section 209A or" shall be inserted;

(H) for the words "the said sub-section", the words, brackets, figures and letter "the said sub-section (4) or, as the case may be, sub-section (3A)" shall be substituted.

30. For section 218 of the Income-tax Act, the following section shall be .substituted with effect from the 1st day of June, 1978, namely: —

Substitu- tion of new sec- tion for section 218.

"218. (1) If any assessee has sent,—

(a) under sub-section (i) of section 209A, a statement, or

(b) under section 20PA or section 212, an estimate or a revised

When assessee deemed to be in default.

estimate,

of the advance t"x payable by him, but does not pay any instalment in accordance therewith on the date or dates specified in section 211, he shall be deemed to be an assessee in default in respect of such instalment or instalments.

(2) If any assessee does not pay on the arjecifi^d date any instal- ment of advance tax that he is required to pay under section 210 and does not, before the date on which any such instalment as is not paid becomes duo, send under sUb-section (1) or sUb-section (2) of section 212 an estimate or a revised estimate of the advance tax payable by him, he shall be deemed to be an assessee in default in respect of such instalment or instalments.

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), an assessee shall not be deemed to be in default in respect of any amount of which the paymeni is deferred under section 213 until after the date communicated by him to the Income-tax Officer under that section.".

31. In the Income-tax Act, with < (feet from the 1st day of June, 1978, section 273 shall be renumbered as rub-section (2) thereof and^—

Amend- ment of section 273.

(I) before sub-section (2) as so renumbered, the following sub- section shall be inserted, namely: —-

"(1) If the Income-tax Officer, in the c'ourse of any pro- ceedings in connection with the regular assessment' for any assessment year, is satisfied that any assessee—•

(a) har furnished under clause (a) of sub-section (1) of section 209A a statement of ihe advance tax payable by him which he know or had reason to believe to be untrue, or

(b) has without reasonable cause failed to furnish a statement of the advance tax payable by him in accordance with the provisions of clause (a) of sub-section (1) of sec- tion 209A,

he may direct that such person shall, in addition to the amount of tax, if any, payable by him, pay by way of penalty a sum—

(i) which, in the case referred to in clause (a), 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 preceding the assessment year under the provisions of Chapter XVII-C falls short of—

(1) seventy-five per cent, of the assessed tax as de-

fined in sub-section (5) of section 215, or

(2) the amount which would have been payable by way of advance tax if the assessee had furnished a correct and complete statement in accordance with the provisions of clause (a) of sub-section (1) of section 209A,

whichever is less:

(ii) which, in the case referred to in clause (b), shall not be less than ten per cent, but shall not exceed one and a half times of seventy-five per cent, of the assessed tax as defined in sub-section (5) of section 215.";

(2) in sub-section (2) as so renumbered,—

fa) for clause (a), the following clause shall be substituted, namely: —

"(a) has furnished under sub-section (I) or sub-section (2) or sub-section (3) or sub-section (5) of section 209A, or under sub-section (1) or sub-section (2) of section 212, an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue, or";

(b) in clause (aa), after the words "has furnished", the words, brackets, figures and letter "under sub-section (4) of section 209A or" shall be inserted;

(c) in clause (b). for the words, brackets and figures "sub- section (3) of section 212", the words, brackets, letters and figure "clause (b) of sub-section (1) of section 209A" shall be substituted;

(d) in clause (c), for the words, brackets, figures and letter "sub-section (3A) of section 212", the words, brackets, figures and letters "sub-section (4) of section 209A or sub-section (3A) of section 212" shall be substituted;

(e) for sub-clause (2) of clause (i), the following sub-clause shall be substituted, namely: —

"(2) where a statement under clause (a) of sub-section (I) of section 209A was furnished by the assessee or where a

notice under section 210 was issued to the assessee, the amount payable under such statement or, as the case may be, such notice,";

(f) for clause (iii), the following clause shall be substituted, namely: —

''(iii) which, in the case referred to in clause (c),

shall not be less than ten per cent, but shall not exceed one and a half times the amount by which—

(a) where the assessee has sent a statement under clause (a), or an estimate under clause (b), of sub-section (1) of section 209A, or an estimate in lieu of a statement under sub-section (2) of that section, the tax payable in accordance with such statement or estimate; or

(b) where the assessee was required to pay advance tax in accordance with the notice issued to him under section 210, the tax payable under such notice,

falls short of seventy-five per cent, of the assessed tax as denned in sub-section (5) of section 215.";

(g) in the Explanation, for the words, brackets, figures and letter "proviso to sub-section (3A) of section 212", the words, brackets, figures and letters "proviso to sub-section (4) of section 209A or, as the case- may be, proviso to sub-section (3A) of section 212" shall be substituted.

32. The following amendments (being amendments of a consequential nature) shall be made in the Income-tax Act, namely: —

Conse- quential amend- ments to certain sections.

(a) in sub-clause (ii) of clause (37A) of section 2 and in clause (a) of sub-section (1) of section 197, for the figures and letter "194B,", the figures and letters "194B, 194BB," shall be substituted;

(b) in sections 198, 199, 200, 202, 203, 204 and 205, for the word, figures and letter "section 194B, ", the words, figures and letters "section 194B, section 194BB," shall be substituted.

Interest-tax

33. In the Interest-tax Act, 1974, in sub-section (2) of section 6, for the Amend- words, figures and letters "before the 1st day of August, 1974", the words, nient of figures and letters "before the 1st day of August, 1974 or after the 28th Act 45 of day of February, 1978" shall be substituted with effect from the 1st day m*- of April, 1979.

CHAPTER IV

INDIRECT TAXES

3$, In the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act),—

Amend- ment of Act 51 of 1S75.

(z) after the existing entry in column (3), against sub-heading No. (2)' of Heading No. 37.01/OB, the following Explanation shall be inserted, namely: —

"Explanation.—For the purposes of this sub-heading, where a film is designed with a view to dillerent vertical sections thereof being exposed separately, its length shall be deemed to be the aggregate of the lengths of ail such sections.";

(ii) in Heading No. 51.01/03, for the entry in column (3t), the entry "2007O plus Rs. 30 per kilogram" shall be substituted.

Auxiliary duties of customs.

20 of 1962. 35*. (I) In the case of goods mentioned in the First Schedule to the Customs Tariff Act, or in that Schedule as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal to twenty per cent, of the value of the goods as determined in accordance with the provisions of section 14 of the Customs Act, 1962 (hereinafter referred to as the Customs Act).

(2) Sub-section (1) shall cease to have effect after the 31st day of ftl&rch, 1979, except as respects things done or omitted to be done before such'cesser; and section 6 of the General Clauses Act, 1897, shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The auxiliary duties of customs referred to in sub-section (1) shall be in addition to any. duties of customs chargeable on such goods under the Customs Act, or any other law for the time being in force.

(4) The provisions of the Customs Act, and the rules and regulations made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collection of the auxiliary duties of customs leviable under this section in respect of Jany gbods els they apply in relation to the levy and collection of the duties of customs 6n such goods under that Act or those rules and regula- tions, as the case may be.

36, Iriithe Central Excises and Salt Act, 1944 (hereinafter referred to as the Central Excises Act), in the First Schedule,—

Amend- ment of Act 1 of 1944.

(i) in Item No. 8, the Explanation shall be numbered as Explana- tion I and after the Explanation as so numbered, the following Explanation shall be inserted, namely: —

"Explanation II.—This Item does not include—

(a) base mineral oils (suitable for use in the manufacture of lubricating oils and greases) including mineral oils com- monly known as Transformer oil base stock or Transformer oil feed stock; and

(h) lubricating oils including spindle oils; flushing oils

and jute batching oils.";

(it) in Item No. 10, the Explanation shall be numbered as Ex- planation I and alter the Explanation as so numbered, the following Explanation shall be inserted, namely: —

"Explanation II.—This Item does not include—

(a) base mineral oils suitable for use in the manufacture

of lubricating oils and greases; and

(b) lubricating oils including axle oil.";

(in) in Item No. 11A, sub-item (4) shall be renumbered as sub- item (5) and before sub-item (5) as so renumbered^ the following sub-item shall be inserted, namely: —

"(4*) (a) Base mineral oils (suit- Three thousand and five hundred

able for use in the manufacture of rupees per metric tonne. lubricating¹ oils ,and greases) in- cluding mineral oils commonly known as Transformer oil base stock or Transformer oil feed stock;

(b) Lubricating oils (including Three thousand and five hundred

spindle oils, flushing oils, jute rupees per metric tonne."; batching oils and axle oil) and lubricating greases.

(iv) after Item No. 11C, the following Items shall be inserted,

namely: —

"11D. COAL (EXCLUDING LIG- Ten rupees per metric tonne.

NITE), AND COKE NOT ELSEWHERE SPECIFIED.

HE. ELECTRICITY. Two paise per kilowatt-hour.";.

(u) in Item No. 18, after sub-item III, the following 'sub-item

shall be inserted, namely: —

"IV. NON-CELLULOSIC Nine rupees per kilogram/';

WASTES, ALL SORTS.

Explanation.—This item includes only wastes arising in, or in relation to, the manufacture of man-made fibres (other than mineral fibres) and man-made filament yarns.

(vi) in Item No. 19 III, for the entry in the third column, the .entry "The duty for the time being leviable on the base fabrics, if not already paidr plus thirty per cent, ad valorem," shall be substi- tuted;

(vii) in Item No. 22(3), for the entry in the third column, the entry "The duty for the time being leviable on the base fabrics, if not already paid, plus thirty per cent, ad valorem".shall, be substin luted;

(vni) in Item No, 22B, for the entry in the third column, the entry "Thirty per cent, ad valorem." shall be substituted;

(ix) in Item No. 34,—

(a) for the words "MOTOR VEHICLES AND TRAC- TORS-", the words "MOTOR VEHICLES AND TRACTORS, INCLUDING TRAILERS-" shall be substituted;

(b) after sub-item II, the following sub-item shall be inser- ted, namely: —

"III. Trailers. Twelve and half per cent, ad

valorem.";

(c) for Explanation 1, the following Explanation shall be substituted, namely: —

'Explanation 1.—"Motor vehicle", "Tractor, including agricultural tractor" and "Trailer" shall include a chassis; but shall not include a vehicle running upon fixed rails.';

(x) for Item No. 34A, the following Item shall be substituted, namely: —

'34A. PARTS AND ACCESSO- Twenty per cent, ad valorem.';

RIES, NOT ELSEWHERE SPECIFIED, OF MOTOR VEHICLES AND TRAC- TORS, INCLUDING TRAI- LERS.

Explanation 1.—The expression "Motor vehicles" has the meaning assigned to it in Item No. 34.

Explanation II.—The expression "Tractors" shall include agricultural tractors.

(xi) in Item No. 68, for the entry in the third column, the entry "Five per cent, ad valorem." shall be substituted.

Special duties of excise.

37. (2) In the case of goods chargeable with a duty of excise under the Central Excises Act as amended from time to time, read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, there shall be levied and collected a special duty of excise equal to five per cent, of the amount so charge- able on such goods.

10 of 1897.

(2) Sub-section (1) shall cease to have effect after the 31st day of March, 1979, except as respects things done or omitted to be done before such cesser, and section 6 of the General Clauses Act, 1897, shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

(3) The special duties of excise referred to in sub-section (1) shall be in addition -to any duties of excise chargeable on such goods under the Central Excises Act or any other law for the time being in force.

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

Disconti- nuance of salt duty. 38- For the year beginning on the 1st day of April, 1978, no duty under the Central Excises Act or the Customs Tariff Act shall be levied in respect of salt manufactured in, or imported into, India.

CHAPTER V

MISCELLANEOUS

39. In the First Schedule to the Indian Post Office Act, 1898,—

Amend- ment of Act 6 of 1898.

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

"Letters

For a weight not exceeding ten 25 paise.

grams

For every ten grams or fraction 15 paise.";

thereof, exceeding ten grams

(b) for the sub-headings "Post cards", "Book, Pattern and Sample packets" and "Registered Newspapers" and the entries under those sub-headings, the following shall be substituted, namely: —

"Post cards (not being Post cards containing printed com-

munication)

Single

15 paise.

Reply

30 paise.

Post cards containing printed communication

For a post card 20 paise.

Explanation.—A post card shall be deemed to contain a printed communication, if any matter (except the name and address of. and nther particulars relating to, the sender and the place and date of despatch) is recorded by printing or by cyclo- styling or by any other mechanical process, not being typewrit- ing, on any part of the post card except the right hand half of the address-side thereof.

Book, Pattern and Sample packets

For the first fifty grams or frac- 25 paise.

tion thereof

For every ndditional twentv-fiye 15 paise,

grama or fraction thereof, in excess of fifty grama

Registered Newspapers

¹ 'For a weight not exceeding fifty 2 paise. grains

For a weight exceeding fifty 5 paise.

grams but not exceeding one hundred grams

For every additional one 10 paise

hundred grams or fraction there-

, of, exceeding one hundred grams

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

for a weight not exceeding one 5 paise;

hundred grams

for every additional one hundred 10 paise:

grams or fraction thereof, in excess of one hundred grams

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

40. In the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974,—

Amend- ment of Act 38 of 1974.

(a) in sub-section (1) of section 4,—•

(1) in clause (i), the word "and", occurring at the end, 'shall be omitted;

(2) for clause (ii), the following clauses shall be substituted, namely: —

"(ii) for the assessment year commencing on the 1st day of April, 1977 and the assessment year commencing on the 1st day of April, 1978, at the rates specified in Paragraph B of the Schedule; and

(ii?) for the assessment year commencing on tho 1st day of April, 1979, at the rat^s specified in Paragraph C of the Schedule,";

(b) in the Schedule, for the proviso, the following shall be substituted, namely: —

"Paragraph C

(i) where the current income 4.5 per cent, of the current exceeds Rs. 15 000 but does not ^ncome; exceed Rs. 25,000

(ii) where the current income IN. 1,]?5 plus 11 per cent.,,of the exceeds Rs 25.000 but does not amount bv which the current in- exceed Rs. 35,000 come exceeds Rs. 25,000;

(lii) where the current income Rs. 2,225 plus 12.5 per cent, of the exceeds Rs. 35,000 but does not amount by which the current in exceed Rs. 70,000 come exceeds Rs. 35,000;

(iv) where the current income Rs. 6,600 plus 15 per cent, of the exceeds Rs. 70,000 amount by which the current in-

come exceeds Rs. 70,000:

Provided that—

(a) in a case falling under Paragraph A or Paragraph B, where the current income exceeds Rs. 15,000 but does not exceed Rs. 15,620. the compulsory deposit shall in no case exceed the amount by which the current income exceeds Rs. 15,000;

(b) in a case falling under Paragraph C, where the current income exceeds Rs. 15,000 but does not exceed Rs. 15,710, the compulsory deposit shall in no case exceed the amount by which the current income exceeds Rs. 15,000;

(c) where the amount of compulsory deposit calculated in accordance with the foregoing provisions is less than Rs. 100, it shall not be necessary for the taxpayer concerned to make such deposit.".

Declaration under the Provisional Collection of Taxes Act, 1931.

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

the provisions of clauses 34, 35, 36 and 37 of this Bill shall have imme- diate effect under the Provisional Collection of Taxes Act, 1931. id ^1931

THE SCHEDULE

(See section 2)

PART I

INCOME-TAX AND SURCHARGE ON INCOME-TAX

Paragraph A

Sub-Paragraph I

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

Rates of income-tax

(1) where the total income does Nil;

not exceed Rs. 8,000

(2) where the total income ex- 15 per cent of the amount by ceeds Rs. 8 000 but does not ex- which the total income exceeds ceed Rs, 15,000 Rs. 8,000;

'(a) where the total income ex- Rs. 1,050 plus 18 per cent of the ceeds Rs. 15,000 but does not ex- amount by which the total income ceed Rs. 20,000 exceeds Rs. 15,000;

(4) where the total income ex- Rs. 1,950 plus 25 per cent of the ceeds Rs. 20,000 but does not ex- amount by which the total income ceed Rs. 25,000 exceeds Rs. 20,000;

(5) where the total income Rs. 3,200 plus 30 per cent- of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 30,000 exceeds Rs. 25,000

(6) where the total income Rs. 4,700 plui. 40 per cent, of the exceeds Rs. 30,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 30,000;

(7) where the total income Rs. 12,700 plus 50 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 70,000 exceeds Rs. 50,000;

(8) where the total income ' Rs. 22,700 pltis 55 per cent, of the exceeds Rs. 70,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 70,000;

(9) where the total income Rs, 39,200 plus 60 per cent, of the exceeds Rs. 1,00,000 amount by which the total Income

exceeds Rs. 1,00,000:

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

(i) no income-tax shall be payable on a total income not exceed- ing Rs. 10,000;

(ii) 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 m accordance with the preced- ing 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.

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 JVif;

does not cx.-ecd Rs. 8,000

(?) where the total income 1R pnr cent, of the amount by exceed¹' Rs, 8,000 but does not which the total income exceeds evrred Rw. 15,000 TH 8,000;

(3) where the total income Rs. 1,260 plus 25 per cent, of the exceeds Rs. 15.000 but docs not amount by which the total income rxceed Rs. 20,000 " exceeds Rs, 15,000;

(A) wh*=re the total income Bs. 2,510 plus 30 per cent, of the exceed Rs 20,000 but does not amount bv which the total income exceed Rs. 25,000 exceeds Rs. 20,000;

(5) where the total income Rs. 4,010 plus 40 per cent of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 30,000 exceeds Rs. 25,000;

(6) where the total income Ra. 6,010 plus 50 per cent, of the exceeds Rs. 30,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 30,000;

(7) where the total income Rs. 16,010 plus 55 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 70,000 exceeds Rs. 50,000;

(8) where the total income Rs. 27,010 plus 60 per cent, of the exceeds Rs. 70,000 amount by which the total income

exceeds Rs. 70,000:

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

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

(ii) where the total income exceeds Rs. 10,000 but does not exceed Rs. 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 preced- ing 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.

Paragraph B

In the case of every co-operative society,—

Rates of income-tax

   (1)  where  the  total  income        15  per  cent,  of  the  total  income;
does  not  exceed  Rs.  10,000
   (2)  where  the  total  income        Rs.  1,500  plus  25  per  cent,  of  the
e^-eeds  Rs.  10 000  but  does  not      amount  by  which  the  total  income
exceed  Rs.  20,000                       exceeds  Rs.  10,000;
   (3)  where   the  total  income       Rs.  4,000  plus  40  per  cent  of  the
exceeds  Rs.  20,000                      amount  by  which  the  total  income
                                          exceeds  Rs.  20,000.

Surcharge on income lax

The amount of income-tax computed in accordance with the preced- ing provisions of this Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen 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,—

Rates of income-tax

(1) where the total income Nil:

doe<* not exceed Rs. 10,000

(2) where the total income 5 per cent, of the amount by exceeds Rs. 10,000 but does not which the total income exceeds exceed Rs, 25,000 Rs. 10,000;

(3) where the total income Rs. 750 plus 7 per cent, of the exceeds Rs 25,000 but does not amount by which the total income exceed RE. 50,000 exceeds Rs. 25,000;

(4) where the total income Rs. 2,500 plus 15 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000;

(5) where the total income Rs. 10,000 plus 24 per cent, of the t xreeds Rs. 1,00,000 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 preced- ing 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.

Sub-Paragraph II

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

Rates of income-tax

(1) where the total income Nil;

does not exceed Rs. 10,000

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

(3) where the total income Rs. 600 plus 7 per cent, of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000;

(4) where the total income Rs. 2,350 plus 13 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000;

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

ex-neds Rs. 1,00,000.

Surcliarge on income-tax

The amount of income-tax computed in accordance with the preced- ing 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,—

Rates 0) income-tax

On the whole ot the total income 50 per cent.

Surcharge on income-tax

The amount of income-tax computed at the rate hereinbefore specifi- ed shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen per cent, of such income-tax.

Paragraph E

In the case of a company,—

Rates of income-tax

I. In the case of it domestic company,—

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

(/) in a case where the 45 per cent, of the total income;

total Income does not exceed Rs. 1,00,000

(it) in a case where the 55 per cent, of the total income;

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 indus-

trial company,—

(a) where the total in- 55 per cent, of the total income;

come does not exceed Rs. 2,00,000

(b) where the total in- 60 per cent, of the total Income;

come exceeds Rs. 2,00,000

(it) 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 ncome of which exceeds Rs. 1.00,000, shall not exceed the' aggregate cf- -

(a) the income-tax which would have been payable by the

company if ift> total Income had been Rs. 1,00,00 (the in- come of Rs. 1,00,000 for this purpose being computed as if such income included income from various sources in the same pro- portion as the total income of the company); and

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

(ii) 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 tho 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 in- cluded 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. 2,00,000.

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

(i) on so much of the total in-

come as consists of—

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

(b) fees for rendering techni- cal services received from an Indian concern in pursuance of an agreement made by it with the Indian concern after the 29 th day of February, 1964 but before the 1st day of April, 1976,

and where such agreement has, in 50 per cent.; either case, been approved by the Central Government

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

total income

Surcharge on income-tax

The amount of income-tax computed in accordance with the preced- ing provisions of this Paragraph shall be increased by a surcharge cal- culated at the rate of five per cent, of such income-tax.

PART II

RATES FOR DEDUCTION OF TAX AT SOURCE IN CERTAIN CASES

In every case in which under the provisions of sections 193, 194, 194A, 19413, 194BB, 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: —

Income-tax

Rate of income-tax

Rate of

surcharge

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

(a) where the person is resi- dent in India—

10 per cent.

Nil;

(i) on income by way of in- terest other than "Interest on securities"

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

(Hi) on income by way of 30 per cent. 4.5 per cent.;

30 per cent.

4.5 per cent.;

winnings from horse races

(iv) on income by way of 10 per cent.

Nil;

insurance commission

(v) on any other income (excluding interest payable on a tax-free security)

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

(i) on the whole income (excluding interest payable on a tax-free security)

20 per cent. 3 per cent.;

income-tax at 30 per cent, and surcharge at 4.5 per cent, of the amount of the income,

or

income-tax and surcharge on income-tax in respect of the income at the rates prescribed in Sub-Paragraph 1 of Paragraph A oi Part III ot this Schedule, if such income had been the total income,

whichever is higher;

2.25 per cent.

(u) 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 company—

(i) on income by way of interest other than "Interest on seem Hies"

(u) on any other income (fxelucK'itf interest payable on a tax-free security)

15 per cent.

20 per cent. 1 per cent.;

1 per cent.;

22 per cent.

Income-tax

Rate of surcharge

Rate of income-tax

(b) where the company is not

a domestic company—

25 per cent.

Nil;

(i) on income by way of dividends payable by any domestic company

40 per cent

Nil;

(ii) on income by way of royalty payable by an Indian concern in pursuance of an agreement 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 copyright in any book on a subject referred to in the proviso to sub-section (1A) of section 115A of the Income-tax Act, to the Indian concern

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

50 per cent. 2.5 per cent.;

(A) where the agreement is made after the 31st day of March, 1961 but before the 1st day of April, 1976

(B) where the agreement is made after the 31st dav of March, 1976—

20 per cent,

Nil;

(1) on so much of the -amount of such income as •consists of lump sum con- sideration for the transfer outside India of, or the im- parting of information outside India in respect of, any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or pro- cess, or trade mark or similar property

(2) on the balance, if any, 40 per cent.

Nil;

vi such income

Income-tax

Rate of surcharge

Rate of income-tax

(iv) on income by way of fees for technical services pay- able by an Indian concern in pursuance of an agreement made by it with the Indian concern and which has been approved by the Central Gov- ernment—

50 per cent. 2.5 per cent;

(A) where the agreement is made after the 29th day of February, 1964 but before the 1st day of April, 1976

40 per cent.

Nil;

(B) where the agreement is made after the 31st day of March, 1976

44 per cent. 2.2 per cent;

(t?) on income by way of interest payable on a tax-free security

(vi) on any other income

70 per cent. 3.5 per cent.

PART III

Rates for calculating Or charging income-tax in certain cases, deducting

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

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

"advance tax".

In cases in which income-tax has to be calculated under the first pro- viso 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 XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, "advance tax" (not being "advance tax" in respect of any income chargeable to tax under Chapter XII or 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 as the following rate or rates:—;

Paragraph A

Sub-Paragraph I

Tn the case of every individual or Hindu undivided family or unregis- tered firm or othor association of persons or body of individuals, whether incorporated or not, or every artificial -juridical person referred to in sub-

clause (r'ii) of clause (31) of section 2 of the Imcome-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 IViJ;

does not exceed Rs. 8,000

(2) where the total income 15 per cent, of the amount by exceeds Rs. 8,000 but does not which the total income exceeds exceed Rs. 15,000 Hs. 8,000;

(3) where the total income Rs. 1,050 plus 18 per cent, of the exceeds Rs. 15,000 but does not amount by which the total income exceed Rs. 20,000 exceeds Rs. 15/000;

(4) where the total income R"- 1.950 phis 25 per cent, of the exceeds Rs. 20,000 but does not amount by which the total income exceed Rs. 25,000 exceeds Rs. 20,000;

(5) where the total income Rs. 3,200 plus 30 per cent, of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 30,000 exceeds Rs. 25,000;

(6) where the total income Rs. 4,700 plus 40 per cent, of the exceeds Rs. 30,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 30,000;

(7) where the total income Rs. 12,700 plus 50 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 70,000 exceeds Rs, 50,000;

(8) where the total income Rs. 22,700 plus 55 per cent, of the exceeds Rs. 70,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 70,000;

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

exceeds Rs. 1,00,000:

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

(i) no income-tax shall be payable on a total income not exceed- ing Rs. 10,000;

(ii) 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 i of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rote of fifteen per cent, rf such income-tax.

Sub-Paragraph II

In the case of every Hindu undivided family which at any time dur- ing the previous year hag at least one member whose total income of the

previous year relevant to the assessment year commencing on the 1st day of April, 1979 exceeds Rs. 10,000,—

Rates of miome-tax

(1) where the total income NU;

does not exceed Rs. 8,000

(2) where the total income 18 per cent, of the amount by exceeds Rs. 8,000 but does not which the total income exceeds exceed Rs. 15,000 Rb. 8,000;

(3) where the total income Rs. 1,260 plus 25 per cent, of the exceeds Rs. 15,000 but does not amount by which the total income exceed Rs. 20,000 exceeds Rs. 15,000;

(4) where the total income Rs. 2,510 plus 30 per cent, of the exceeds Rs. 20,000 but does not amount by which the total income exceed Rs. 25,000 exceeds Rs. 20,000;

(5) where the total income Rs. 4,010 plm, 40 per cent, of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 30,000 exceeds Rs. 25,000;

(6) where the total income Rs. 6,010 plus 50 per cent, of the exceeds Rs. 30,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 30,000;

(7) where the total income Rs. 16,010 plus 55 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 70,000 exceeds Rs. 50,000;

(8) where the total income Rs. 27,010 plus 60 per cent, of the exceeds Rs. 70,000 amount by which the total income

exceeds Rs. 70,000:

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

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

ceeding Rs, 10,000;

(ii) where the total income exceeds Rs. 10,000 but does not exceed Rs. 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 preced- ing 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.

Paragraph B

In the case of every co-operative society,—

Rates of income-tax

   (1)  where   the  total  income        15  per  cent,  of  the  total  income;
does  not  exceed  Rs.  10,000
   (2)  where   the  total  income        Rs.  1,500  plus  25  per  cent,  of  the
exceeds  Rs.  10,000  but  does  not      amount  by  which  the  total  income
exceed  Rs.  20,000                       exceeds  Rs.  10,000;
   (3)  where  the   total  income        Rs  4,000  plus  40  per  cent,  of  the
exceedu  Rs  20,000                       amount  by  which  the  total  income
                                          exceeds  Rs. 20,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preced- ing provisions of this Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of fifteen 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,—

Rates of income-tax

(1) where the total income Ml;

does not exceed Rs. 10,000

(2) where the total income 5 per cent, of the amount by exceeds Rs. 10,000 but does not which the total income exceeds exceed Rs. 25,000 Rs. 10,000;

(3) where the total income Rs, 750 plus 7 per cent, of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000;

(4) where the total income Rs. 2,500 plus 15 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000;

(5) where the total income Rs. 10,000 plus 24 per cent, of the exceeds Rs. 1,00,000 amount by which the total income

exceeds Rs. 1,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preced- ing 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.

Sub-Paragraph II

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

Rates of income-tax

(1) where the total Income Nil;

does not exceed Rs. 10,000

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

(3) where the total income Rs. 600 plus 7 per cent, of the exceeds Rs. 25,000 but does not amount by which the total income exceed Rs. 50,000 exceeds Rs. 25,000;

(4) where the total income Rs. 2,350 plus 13 per cent, of the exceeds Rs. 50,000 but does not amount by which the total income exceed Rs. 1,00,000 exceeds Rs. 50,000;

(5) where the total income Rs. 8,850 plus 22 per cent, of the exceeds Rs 1,00,000 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 preced- ing 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-taxi

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,—

Rates of income-tax

On, the whole of the total income 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 fifteen per cent, of such income-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,—

(i) in a case where the total 45 per cent, of the total income;

income does not exceed Rs. 1,00,000

{ii) in a case where the total 55 per cent, of the total income;

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 indus-

trial company —

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

Income does not exceed Rs. 2,00,000

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

income exceeds Rs. 2,00,000

(ii) 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—

(a) the income-tax which would have been payable by the company ii 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 oi the company); and

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

(ii) 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 in- come exceeds Rs. 2,00,000.

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

(t) an so much of the total

income as consists of—

(a) royalties received from an Indian concern in pursu- ance of an agieement mad by it with the Indian concern alter the 31st day of March, 1961 but before the 1st day of April, 1976, or

(b) fees for rendering tech- nical services received from an Indian concern in pursu- ance 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,

and where such agreement has, 50 per cent.; in either case, been approved by the Central Government

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

the total income

Surcharge on income-tax

The amount of income-tax computed in accordance with the preced- ing provisions of this Paragraph shall be increased by a surcharge cal- culated at the rate of five per cent, of such income-tax.

PART IV

[See 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 it 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:

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

Rule 2.—Agricultural income of the nature referred to in sub-clause

(b) or sub-clause (c) of clause (7) of section 2 of the Income-tax Act [other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c) ] shall be computed as if it were income chargeable to income-tax under that Act under the head "Profits and gains of business or profession" and the pro- visions of sections 30. 31, 32, 34, 36, 37, 38, 40, 40A [other than sub-sec- tions (3) and (4) thereof], 41, 43, and 43A of the Income-tax Act shall, so far as may be, apply accordingly.

Rule 3-- -Agricultural imcome of the nature referred to in sub-clause (c) of clause (1) of section 2 of the Income-tax Act, being income deriv- ed 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 re- ferred 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 sub- ject 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 Chap- ter VIA" shall be omitted.

Rule 4,—Notwithstanding anything contained in any other provisions of these rules, in a case where the assesscc derives income from sale of tea grown and manufactured by him in India, such income shall be com- puted 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 of 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 sec- tion 183 of the Income-tax Act which in the previous year has any agri- cultural 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 1R3 and 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 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 compu- ted 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 com- pany or a firm) 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 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 of the association or body shall be computed in accordance with these rules and the share of the assessee in the agri- cultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee.

Rule 7.—Where the result of the computation for the previous year in respect of any source of agricultural Income is a loss, such loss shall be set off against the income of the assessee, if any, for that previous year from any other source of agricultural income:

Provided that where the assessee is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of section 183 of the Income-tax Act or is a member of an association of persons or a body of individuals and the share of the assessee in the agricultural income of the firm, association or body, as the case may be, is a loss, such loss shall not be set off against any income of the assessee from any other source of agricultural income.

Rule 8.—Any sum payable by the assessee on account of any tax levied bv the State Government on the agricultural income shall be deducted in computing the agricultural income.

Rule 9.—(1) Where the assesses has, in the previous year relevant to the assessment year commencing on the 1st day of April, 1978, any agri- cultural income and the net result of the computation of the agricultural Income of the assessee for any one or more of the previous vears relevant to the assessment years commencing on the 1st day of April, 1974 or the 1st day of April, 1975 or the 1st dav of April. 1976 or the 1st day of April. 1977, is a loss, then, for the purposes of sub-section (2) of section 2 of this Act,—

(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st dav of April, 1974 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 COIYH mencing on the 1st day of April, 1975 or the 1st day of April, 197$ or the 1st day of Auril, 1977,

(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st dav of April, 1975. to the extent, if any, such loss hag not been set off against the agricultural

income for the previous year relevant to the assessment year com- mencing on the 1st day of April, 1976 or the 1st day of April, 1977,

(iii) 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 for the previous year relevant to the assessment year com- mencing 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 d.*y of April, 1977,

shall be set off against the agricultural income of the asscssee for the pre- vious year relevant to the assessment year commencinf! on the 1st day of April, 1978.

(2) Where the assesses has, in the previous year relevant to the assessment year commencing on the Is I day of April, 1979 or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than that previous year, in suck other period, any agricultural income and the net result of the computa- tion of the agricultural income of the assessee for any one or more of the previous years relevant to the assessment years commencing on the 1st day of April, 1974 or the 1st day of April, 1975 or the 1st day.of Apri], 1976 or the 1st day of April, 1977 or the 1st day of April, 1978, is a loss, then, for the purposes of sub-section (6) 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, 1974, 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 com- mencing on the 1st day of April, 1975 or the 1st day of April, 1976 or the 1st day of April, 1977 or the 1st day of April, 1978,

(ii) 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 com- mencing on the 1st day of April, 1976 or the 1st day of April, 1977 or the 1st day of April, 1978,

(iii) 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 for the previous year relevant to the assessment year com- mencing on the 1st day of AprjO, 1977 or the 1st day of April, 1978, (iv) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1977, 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 com- mencing on the 1st day of April, 1978, and

(v) the loss so computed for the previous year relevant to the

assessment year commencing on the 1st day of April, 1978,

shall be set off against the agricultural income of the assessee for the pre- vious year relevant to the assessment year commencing on the 1st day of April, 1979 or the period aforesaid.

(3) Where a change has occurred in the constitution of a flrmf noth- ing in sub-rule (1) or sub-rule (2) shall entitle the firm to set off so much of the loss proportionate to the share of a retired or deceased part- ner 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 in 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 (1) or sub-rule (2) shall entitle any person, other than the person incurring the loss, to have it set off under sub-rule (1) or, as the case may be, sub-rule (2).

20 of 1974.

25 of 1975.

66 of 1976.

29 of 1977.

(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, 1970, or of the First Schedule to the Finance (No. 2) Act, 1977, shall be set off under sub-rule (1) or, as the case may be, sub-rule (2).

Rule 10,—Where the net result of the computation made in accord- ance 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 ll—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 modifications, 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 total income.

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 1978-79. The notes on clauses explain the various provisions contained in the Bill.

NEW DELHI; H. M. PATEL.

The 2Sth February, 1978.

PRESIDENT'S RECOMMENDATION UNDER ARTICLES 117 AND 274

OF THE CONSTITUTION OF INDIA

[Copy of letter No. F.4(l)-B(D)/7fJ dated the 28th February, 1978 from Shrl H. M. Patel, Minister of Finance, to the Secretary, Lok Sabha].

The President, having been informed of the subject matter of the pro- posed Bill, recommends under article U7(li) read with article 274(1) ot the Constitution of India, the introduction of the Finance Bill. 1978 to the Lok Sabha.

2. The Bill will be introduced in the Lok Sabha immediately after the presentation of the Budget on the 28th February, 1978.

AVTAR SINGH RIKHY,

Secretary.

PRHrOD> BY THB GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, M I N TO ROAD, N SW DSLHI AND PUBLISHED BY THB CONTROLLER OT PUBLICATIONS, DELHI, 1 9 78