INCOME TAX ACT, 1961
(1) This Act may be called the Income-tax Act, 1961.
(2) It extends to the whole of India1.
(3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1962.
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1. Application of the Income-tax Act, 1961 to the State of Sikkim.- Notwithstanding anything contained in the notification of the Government of India in the Ministry of Home Affairs, No. S.O.1028(E), dated the 7th November, 1988, and the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. S.O.148(E), dated the 23rd, February, 1989, in so far as it relates to the commencement of the Income-Tax Act, 1961 (43 of 1961), in the State of Sikkim with effect from previous year relevant to the assessment year commencing on the 1st day of April, 1990, and any law corresponding to the Income-tax Act, 1961, which, immediately before such commencement, w
Section 1 of the Income Tax Act, 1961 is the foundational operative section of the statute. It defines the territorial extent of the Act and determines which country's income tax laws apply to the assessment of income in India. Unlike substantive sections detailing tax rates or deductions, Section 1 governs the applicability of the entire Code. It acts as the gateway, ensuring that only income deemed to accrue or arise in India is subject to Indian taxation, thereby preventing double taxation where not applicable and asserting jurisdiction over income sources within the territory.
Section 1 contains four main operative clauses:1. Operation: It declares that the Act shall extend to India only. It applies to the whole of India except the State of Sikkim (as interpreted/modified over time regarding specific constitutional provisions).2. Income Deemed to Accrue or Arise in India: This is the most critical part. It specifies that all income accruing or arising, whether directly or indirectly, through or from any source within the territories of India, or through or from any office, agency, or business connection in India, shall be deemed to accrue or arise in India.3. Income Deemed to Arise in India: It extends the scope to include income derived from the transfer of estate created before the 26th July 1937 (applicable under the Private Purposes Act) if situated in India.4. Charge of Tax: It explicitly states that the tax shall be chargeable on the total income of individuals, persons, companies, and Hindu Undivided Families (HUFs) for the previous year.
For the provisions of Section 1 to be invoked against an assessee, the following elements must be established:* Territorial Nexus: There must be a direct connection between the income and the territory of India (source of income, place of accrual, or place of business).* Definition of "Accrue" vs. "Arise": The Act covers both the moment income is earned (accrue) and when it is received (arise), though the specific judicial interpretation often distinguishes between these depending on the context (e.g., arrears vs. future entitlement).* Ownership/Receipt Context: The income must belong to a taxable entity (individual, company, HUF, etc.).* Previous Year Connection: The income must be determined based on the financial year ("previous year") as defined in the Act, not the calendar year.* Deemed Nexus: Even if the income technically arises offshore, if it is derived from a business connection or office in India, it is deemed to arise in India under Section 9 and Section 1.
The scope of Section 1 is extensive and aims to capture the widest possible definition of income taxable in India:* Direct and Indirect Income: It captures income generated directly through Indian sources as well as indirectly through foreign entities owned or controlled by Indian residents.* Global Reach for Residents: For Indian residents, Section 1 works in tandem with Section 5 to create a global tax liability (though Section 1 focuses on the source definition, Section 5 defines residents).* Branch and Agency Profits: It specifically targets profits derived from any office or agency set up within India, acting as an anti-avoidance measure against shell entities operating in India.* Agricultural and Capital Gains: The scope extends to capital gains from the transfer of assets situated in India, as such gains are deemed to accrue from the location of the asset.* Strict Construction: As a taxing statute, the scope is often interpreted strictly to avoid arbitrariness, but the "deemed" clauses expand the scope beyond literal physical presence.
There is no specific punishment provision directly linked to the violation of Section 1 itself. Section 1 is a substantive and declaratory provision establishing jurisdiction; it does not create an offense like "furnishing false particulars" (which falls under Section 271(1)(c)). However:* Consequential Penalties: Failure to pay tax on income deemed to accrue in violative assessment under the scope of Section 1 can lead to penalties under Section 270/271(1)(c) for under-reporting or concealment.* Interest Liability: Non-payment of tax calculated under the principles of Section 1 attracts interest under Sections 234B, 234C, and 234A.* Enhanced Penalty: Posts 1999 amendment, specific enhanced penalties apply for undisclosed income identified under the scope of the Act, though this is tied to the specific characterization of income under various sections rather than Section 1 per se.
In this Act, unless the context otherwise requires, -
113[(1) "advance tax" means the advance tax payable in accordance with the provisions of Chapter XVIIC ;]
113a(1A) "agricultural income" means -
114[(a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes ;]
(b) any income derived from such land by -
(i) agriculture ; or
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or
(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ;
(c) any income derived from any building owned and occupied by the receiver of the ren
Section 2 of the Income Tax Act, 1961, is a foundational provision that provides definitions critical for interpreting the various provisions of the Act. It clarifies the meanings of key terms such as "person," "capital asset," "income," "transfer," and others, which are essential for applying the law correctly and ensuring uniformity in taxation.
Section 2 contains multiple sub-sections that define important terms:- "Person" includes individuals, associations of persons, companies, and other artificial juridical persons [Section 2(31)].- "Transfer" involves the disposal of a capital asset, including specific transactions like sale, gift, or exchange [Section 2(47)].- "Capital asset" refers to property held by the taxpayer, excluding stock-in-trade, raw materials, etc. [Section 2(14)].- "Income" is broadly defined to include gains, profits, and gains of any business carried on by a person [Section 2(24)].- "Deemed dividend" under section 2(22)(e) includes certain withdrawals and benefits to shareholders or associated persons.
Section 2 has a wide scope as it lays the foundation for the entire legal framework of income taxation:- It applies to all provisions of the Act by providing key interpretative terms.- It influences the assessment of income, determination of assets, and classification of transactions.- It impacts the scope of taxation on capital gains, deemed dividends, and transfer of assets.- It extends to various assessments, appeals, penalties, and prosecution under the Act.
Section 2 itself does not prescribe punishment. However, violations related to misinterpretation or misapplication of definitions can lead to penalties, prosecution, or other legal consequences under different sections of the Act (e.g., Sections 271, 278A). Penalties may include fines, imprisonment, or both, depending on the nature of the offence.
In conclusion, Section 2 of the Income Tax Act, 1961, provides the essential interpretative framework for the entire Act, ensuring clarity, uniformity, and comprehensiveness in the taxation of income, assets, and transactions. Its broad and inclusive definitions are pivotal in judicial adjudications, tax assessments, and enforcement of tax laws.
Note: References are based on the provided sources and relevant legal interpretations.
1[3. “Previous year” defined.
For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set-up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.]
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1. Substituted by the Finance Act, 1999, with effect from 1st April, 2000. Prior to substitution, section 3 stood as under :
‘3. "Previous year" defined. –
(1) Save as otherwise provided in this section, "previous year" for the purposes of this Act, means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set-up, or a source of inco
(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and 1[subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year 2[***] of every person :
Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.
(2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.
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1. Substituted by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Sec. 5 (a), for "Subject to the peovisions of this Act" (w.e.f. 1-4-1989).
2. The Word "or Previ
(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which -
(a) is received or is deemed to be received in India in such year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or
(c) accrues or arises to him outside India during such year :
Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6)* of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set-up in India.
(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which -
(a) is received or is deemed to be received in India in such year by or on
1[5A. Apportionment of income between spouses governed by Portuguese Civil Code
(1) Where the husband and wife are governed by the system of community of property (known under the Portuguese Civil Code of 1860 as “communiao dos bens”) in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu, the income of the husband and of the wife under any head of income shall not be assessed as that of such community of property (whether treated as an association of persons or a body of individuals), but such income of the husband and of the wife under each head of income (other than under the head “Salaries”) shall be apportioned equally between the husband and the wife and the income so apportioned shall be included separately in the total income of the husband and of the wife respectively, and the remaining provisions of this Act shall apply accordingly.
(2) Where the husband or, as the case may be, the wife governed by the afor
For the purposes of this Act, -
(1) An individual is said to be resident in India in any previous year, if he -
(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or
(b) [Omitted by the Finance Act, 1982, with effect from 1st April, 1983] ;
(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.
Explanation 2[1] : In the case of an individual, -
(a) being a citizen of India, who leaves India in any previous year 10[as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurri
The following incomes shall be deemed to be received in the previous year :
(i) the annual accretion in the previous year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule ;
(ii) the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of the Fourth Schedule.
1[(iii) the contribution made, by the 2[Central Government or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD ;]
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1. Inserted by the Finance (No. 2) Act, 2004, with retrospective effect from 1st April, 2004.
2. Substituted for “Central Government” by the Finance Act, 2007, with retrospective effect from 1st April, 2004.
1[For the purposes of inclusion in the total income of an assessee, –
(a) any dividend] declared by a company or distributed or paid by it within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2 shall be deemed to be the income of the previous year in which it is so declared, distributed or paid, as the case may be ;
2[(b) any interim dividend shall be deemed to be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.]
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1. Substituted by the Finance Act, 1965 (10 of 1965), Sec. 5(i), for the purpose of inclusion with total income of an assessed, any dividend" (w.r.e.f. 1-4-1965).
2. Inserted by the Finance Act, 1965 (10 of 1965), sec. 5(ii) (w.r.e.f. 1-4-1965).
Legal Comments- Introduction - Section 8 of the Hindu Succession Act governs inheritance rules; the provided sources discuss how income from inherited assets is to be taxed, clarifying that such income should be assessed in the individual capacity of the heir rather than the HUF of the heir in certain cases. [Commissioner of Income Tax VS Tarseem Kumar ]
What Section Says - Section 8 of the Hindu Succession Act deals with succession and determination of heirs; case law in the sources applies its provisions to determine who is taxable on income derived from assets successionally inherited, emphasizing individual assessment. [Commissioner of Income Tax VS Tarseem Kumar ]
Essential ingredients - Inheritance of assets, identification of the legatee (e.g., son), and the applicable Act (Hindu Succession Act) to allocate income to the rightful individual; the court’s ratio relies on Section 8 to decide proper taxation in the hands of the individual, not the HUF. [Commissioner of Income Tax VS Tarseem Kumar ]
Scope of Section - The Section applies to the line of succession and the attribution of income from inherited assets; courts interpret it to ensure income from such assets is taxed to the individual heir, not to a family business entity’s HUF unless statutory provisions dictate otherwise. [Commissioner of Income Tax VS Tarseem Kumar ]
Punishment for Section - Not applicable. Section 8 does not provide for penalties; penalties arise under separate Income Tax provisions for misreporting, concealment, or non-compliance. The cited material does not attach penalties to Section 8 itself. [Commissioner of Income Tax VS Tarseem Kumar ]
Legal Comments - Interpretation of Section 40A(8) and related sections (for contrast) - The sources show that Section 40A(8) disallowances can co-exist with other disallowances (e.g., Section 40A(2)); however, Section 8 itself is about inheritance, not expense disallowance. This juxtaposition illustrates the importance of mapping statutory provisions to the precise tax event (income from inheritance vs. deductible expenses). [Commissioner Of Income-tax VS Sandika P. Ltd. ], [Super Spg. Mills Ltd. , Coimbatore VS The Commissioner of Income Tax, Coimbatore]
Legal Comments - On interest under Section 139(8) and reassessment - The materials consistently hold that penal or compensatory interest regimes apply separately from Section 8; reassessment provisions limit interest to specific periods, and waivers must be judicially considered; this distinction underlines that Section 8 decisions do not automatically trigger interest regimes under 139(8). [Commissioner of Income Tax VS KHODEY BREWING and DISTILLING INDUSTRIES LTD. ], [Kerala State C. D. Corporation VS Income Tax Officer]
Legal Comments - Reassessment and interest interplay - In reassessment contexts, Section 139(8) interest is typically restricted to the date of original assessment; thus, inheritance-related income first taxed under the individual recipient should not be conflated with reassessment interest issues. [Commissioner of Income Tax VS KHODEY BREWING and DISTILLING INDUSTRIES LTD. ], [Commissioner of Income Tax VS Khodey Brewing and Distilling Industries Ltd. ]
Legal Comments - Transfer of assets and export-like treatment - Several sources discuss transfer/import and treaty-based or exclusions issues (e.g., Section 10A, 80-IA), illustrating that Section 8 discussions may sit alongside other sections when dealing with income earned from assets or enterprises; not directly about Section 8 but shows the wider tax framework in which inheritance income sits. [DEPUTY DIRECTOR OF INCOME TAX VS VIRAGE LOGIC INTERNATIONAL], [Commissioner of Income Tax, Cochin VS Electronic Controls and Discharge Systems (P) Ltd. ]
Legal Comments - Penalty waiver and discretionary relief - Several cases analyze the discretion to waive interest (139(8)) and penalties; while not about Section 8, these decisions underscore that relief is not automatic and must be justified with proper cause; relevant when heirs seek waiver in disputes involving inheritance-related tax matters. [Kerala State C. D. Corporation VS Income Tax Officer], [Warren Tea Limited VS State of Assam]
Legal Comments - Retention of seized documents and due process - While not about Section 8, the cases emphasize procedural fairness and timely actions in tax administration; these principles indirectly support the due process surrounding Section 8-related assessments where inheritance income is concerned. [VIRENDRA AMRUTLAL PATEL VS ASSISTANT COMMISSIONER OF INCOME TAX], [Louis Dreyfus Company India Pvt. Ltd. vs Assistant Commissioner of Income Tax]
Legal Comments - Allocation of income from assets under succession - The core takeaway from the primary cited decision (Commissioner of Income Tax VS Tarseem Kumar ) is that income received by a son from assets inherited from his father is to be assessed as the individual income of the son, not of the son’s HUF. This clarifies tax incidence in inheritance scenarios. [Commissioner of Income Tax VS Tarseem Kumar ]
Legal Comments - HUF vs. individual assessment - The governing principle highlighted is that Section 8 inheritance rules can override a blanket assignment to an HUF for assets inherited by a specific heir, ensuring fair tax attribution to the individual. [Commissioner of Income Tax VS Tarseem Kumar ]
Legal Comments - Practical takeaway for practice - In tax planning or disputes involving inherited assets, counsel should file for assessment of the income in the individual heir’s hands rather than the HUF, citing Section 8 and the controlling case law. [Commissioner of Income Tax VS Tarseem Kumar ]
Legal Comments - Related statutory context - The compilation includes broader IT Act provisions (sections 139(8), 148, 147, 256(1)), illustrating the potential interactions between inheritance income and reassessment/interest regimes; practitioners should distinguish between inheritance-related income and other taxable events to avoid misapplication of penalties or interest. [Commissioner of Income Tax VS KHODEY BREWING and DISTILLING INDUSTRIES LTD. ], [K. Govindan And Sons VS Commissioner Of Incometax, Cochin]
Legal Comments - For citations and references - The principal authority on this specific Section 8 issue is the Commissioner of Income Tax VS Tarseem Kumar decision, which provides the ratio on HUF vs. individual taxation on inherited assets; other sources provide broader tax-law context but are not Section 8-specific. [Commissioner of Income Tax VS Tarseem Kumar ]
Legal Comments - Conclusion - Section 8’s essential effect in the cited context is to ensure income from inherited assets is taxed in the hands of the individual heir, not the heir’s HUF, aligning tax incidence with the nature of succession and the statutory framework. [Commissioner of Income Tax VS Tarseem Kumar ]
(1) The following incomes shall be deemed to accrue or arise in India :
(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, 1[***] or through the transfer of a capital asset situate in India:
2[Explanation 1 : For the purposes of this clause -
(a) 20[in the case of a business , other than the business having business connection in India on account of significant economic presence,] of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India;
(b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in I
In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-
(1) agricultural income;
(2) 246[subject to the provisions of sub-section (2) of section 64], any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartibly estate, where such sum has been paid out of the income of the estate belonging to the family;
247[(2A) in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm.
Explanation : For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accord
Section 10 of the Income Tax Act, 1961, enumerates specific incomes that are exempt from tax, thereby reducing the taxable total income of assessees. It plays a pivotal role in incentivizing certain activities, sectors, and income sources, aligning tax policy with socio-economic objectives such as promoting education, agriculture, charitable activities, and infrastructural development.
Section 10 provides for exemption of various incomes, including but not limited to:- Income from agricultural operations (Section 10(1))- Income of educational institutions (Sections 10(14), 10(22), 10(23C))- Income of charitable trusts (Sections 10(23C), 10(23C)(vi))- Income of certain statutory bodies and local authorities (Sections 10(20), 10(20A))- Income received under Voluntary Retirement Schemes (Section 10(10C))- Income from specified sources like pensions, gratuity, and allowances (Sections 10(10), 10(14), 10(13A))- Income from export activities under specific conditions (Section 10(6A), 10(23C)(vi))
This concise legal commentary encapsulates the scope, interpretation, and judicial understanding of Section 10, emphasizing the importance of purpose, compliance, and judicial scrutiny in availing income tax exemptions under the Income Tax Act, 1961.
1(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee :
Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years :
Provided further that where an undertaking initially located in any free trade zon
1(1) Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section (2) of the Special Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any assessment year commencing on or after the 1st day of 7[April, 2006, but before the 1st day of April, 2021, the following deduction shall be allowed]-
(i) hundred per cent of profits and gains derived from the export, of such articles or things or from services for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the Unit begins to manufacture or produce such articles or things or provide services, as the case may be, and fifty per cent of such profits and gains for further five assessment years and thereafter;
(ii) for the next five consecutive assessment years,
1(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee:
Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to the deduction referred to in this sub-section only for the unexpired period of aforesaid ten consecutive assessment years :
2[Second proviso omitted by the Finance Act, 2001, with
1[(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export out of India of eligible articles or things, shall be allowed from the total income of the assessee :
Provided that where in computing the total income of the undertaking for any assessment year, deduction under section 10A or section 10B has been claimed, the undertaking shall not be entitled to the deduction under this section :
Provided further that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years.
(2) This section applies to any undertaking which fulfils the following conditions, namely :
(a) it manufactures or produces the eligible articles or things without the use of imported raw materials ;
(b) it is not formed by the splitting up, or the reconstruction, of a business already in existence :
Provided that
1[The profits and gains derived by an undertaking from the production of computer programmes under section 10B, as it stood prior to its substitution by section 7 of the Finance Act, 2000 (10 of 2000), shall be construed as if for the words “computer programmes”, the words “computer programmes or processing or management of electronic data” had been substituted in that section.]
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1. Inserted by the Finance Act, 2001, with retrospective effect from 1st April, 1994.
1[(1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking, which has begun or begins to manufacture or produce any article or thing on or after the 1st day of April, 1998 in any Integrated Infrastructure Development Center or Industrial Growth Center located in the North-Eastern Region (hereafter in this section referred to as the industrial undertaking) shall not be included in the total income of the assessee.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :
(i) it is not formed by the splitting up, or the reconstruction of, a business already in existence :
Provided that this condition shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circums
1a[11. Income from property held for charitable or religious purposes
(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income -
1b[(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 1[fifteen per cent] of the income from such property ;
(b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India ; and, where any such income is finally set apart for application to such purposes in India, to th
1[1] Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.
2[(2) The value of any services, being medical or educational services, made available by any charitable or religious trust running a hospital or medical institution or an educational institution, to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during
20[12A. 21[Conditions for applicability of sections 11 and 12]
1[[1] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:--
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form1 and in the prescribed manner2 to the 3[***] 8[Principal Commissioner or Commissioner] before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution 22[whichever is later and such trust or institution is registered under section 12AA]:
23[Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of section 11 and section 12 shall apply in relation to the income of such trust or institution,-
(i) from the da
1a[12AA. Procedure for registration
(1) The 1[***] 7[Principal Commissioner or Commissioner], on receipt of an application for registration of a trust or institution made under clause (a) 3[or clause (aa) 8[or clause (ab)] of sub-section (1)] of section 12A, shall –
9[(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about,--
(i) the genuineness of activities of the trust or institution; and
(ii) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and;]
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities 10[as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause], he
1a[13. Section 11 not to apply in certain cases
(1) 1b[Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the persons in receipt thereof –
(a) any part of the income from the property held under a trust for private religious purposes which does not enure for the benefit of the public;
(b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste;
7[***]
(c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof –
(i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such inco
1a[13A. Special provision relating to incomes of political parties
Any income of a political party which is chargeable under the head 1b[***] “Income from house property” or “Income from other sources” or 1[“Capital gains” or] any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party:
Provided that -
(a) such political party keeps and maintains such books of account and other documents as would enable the 1c[Assessing Officer] to properly deduce its income there from;
(b) in respect of each such voluntary contribution 5[other than contribution by way of electoral bond] in excess of 2[twenty thousand rupees], such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution; 6[***]
(c) the accounts of such political party are audited by an accountant as defined
Save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income:
A. – Salaries
B. – [Omitted by the Finance Act, 1988, with effect from 1st April, 1989]
C. – Income from house property
D. – Profits and gains of business or profession
E. – Capital gains
F. – Income from other sources.
1[2[1] 6[Notwithstanding anything to the contrary contained in this Act, for the purposes of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.]
3[(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed4, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act.]
3[(3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part
The following income shall be chargeable to income-tax under the head “Salaries” -
(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;
(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, though not due or before it became due to him;
(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.
1[Explanation 1: For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due.]
2[Explanation 2: Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not b
The income chargeable under the head “Salaries” shall be computed after making the following deductions, namely:
(i) 1[Omitted by the Finance Act, 2005, with effect from 1st April, 2006];
3[(ia) a deduction of 4[fifty thousand] rupees or the amount of the salary, whichever is less;]
7[Provided that in a case where income-tax is computed under clause (ii) 8[or clause (iii)] of sub-section (IA) of section 115BAC, the provisions of this clause shall have effect as if for the words "fifty thousand rupees", the words "seventy-five thousand rupees" had been substituted;]
2[(ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less;]
6[(iii) a deduction of any sum paid by the assessee on ac
For the purposes of sections 15 and 16 and of this section, -
(1) "salary" includes -
(i) wages;
(ii) any annuity or pension;
(iii) any gratuity;
(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;
(v) any advance of salary;
1a[(va) any payment received by an employee in respect of any period of leave not availed of by him;
(vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule; and
(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof;
1[(viii) the contribution made by the 2[Central Government or any o
1[***]
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1. Sub-head “B. – Interest on securities” and sections 18, omitted by the Finance Act, 1988, with effect from 1st April, 1989
1[***]
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1. Sub-head “B. – Interest on securities” and sections 19, omitted by the Finance Act, 1988, with effect from 1st April, 1989
1[***]
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1. Sub-head “B. – Interest on securities” and sections 20, omitted by the Finance Act, 1988, with effect from 1st April, 1989
1[***]
__________________________
1. Sub-head “B. – Interest on securities” and sections 21, omitted by the Finance Act, 1988, with effect from 1st April, 1989
The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head “Income from house property”.
1[(1) For the purposes of section 22, the annual value of any property shall be deemed to be -
(a) the sum for which the property might reasonably be expected to let from year to year; or
(b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or
(c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable:
Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly e
1[Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23; the amount of deduction 6[or, as the case may be, the aggregate of the amount of deduction] shall not exceed thirty thousand rupees:
Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 2[within 5[five years] from the end of the financial year in which capital was borrowed] the amount of deduction 6[or, as the case may be, the aggregate of the amounts of deduction] under thi
Notwithstanding anything contained in section 24, any 1[***] interest chargeable under this Act which is payable outside India (not being interest on a loan issued for public subscription before the 1st day of April, 1938), on which tax has not been paid or deducted under Chapter XVIIB and in respect of which there is no person in India who may be treated as an agent under section 163 shall not be deducted in computing the income chargeable under the head “Income from house property”.
-----------------------------------------
1. Words ‘annual charge or’ omitted by the Finance Act, 2001, with effect from 1st April, 2002.
2[25A. Special provision for arrears of rent and unrealised rent received subsequently
(1) The amount of arrears of rent received from a tenant or the unrealised rent realised subsequently from a tenant, as the case may be, by an assessee shall be deemed to be the income from house property in respect of the financial year in which such rent is received or realised, and shall be included in the total income of the assessee under the head "Income from house property", whether the assessee is the owner of the property or not in that financial year.
(2) A sum equal to thirty per cent. of the arrears of rent or the unrealised rent referred to in sub-section (1) shall be allowed as deduction.]
------------------------------------
1. Inserted by the Finance Act, 2001, with effect from 1st April, 2002.
2. Substituted by the Finance Act, 2016, with effect from 1st April, 2017.
"Where a deduction has been made under clause (x) of sub-section (1) of s
2[* * *]
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1. Inserted by the Finance Act, 2001, with effect from 1st April, 2002.
2. Omitted by the Finance Act, 2016, with effect from 1st April, 2017.
"1[Where the assessee cannot realise rent from a property let to a tenant and subsequently the assessee has realised any amount in respect of such rent, the amount so realised shall be deemed to be income chargeable under the head “Income from house property” and accordingly charged to income-tax as the income of that previous year in which such rent is realised whether or not the assessee is the owner of that property in that previous year.]"
3[* * *]
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1. Inserted by the Finance Act, 2000, with effect from 1st April, 2001.
2. Substituted for ‘a sum equal to one-fourth of such amount for repairs of, and collection of rent from, the property’ by the Finance Act, 2001, with effect from 1st April, 2002.
3. Omitted by the Finance Act, 2016, with effect from 1st April, 2017.
"1[Where the assessee --
(a) is the owner of any property consisting of any buildings or lands appurtenant thereto which has been let to a tenant; and
(b) has received any amount, by way of arrears of rent from such property, not charged to income-tax for any previous year, the amount so received, after deducting 2[a sum equal to thirty per cent of such amount], shall be deemed to be the income chargeable under the head “Income from house property” and accordingly charged to income-tax as the income of that previous year in which such rent is received, whether the assessee is t
Where property consisting of building or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income.
1[Explanation:- For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section.]
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1. Inserted by the Taxation Laws (Amendment) Act, 1975, Section 7, (W.e.f. 01.04.1976).
For the purposes of sections 22 to 26 -
(i) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred;
(ii) the holder of an impartibly estate shall be deemed to be the individual owner of all the properties comprised in the estate;
3[(iii) a member of a co-operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association, as the case may be, shall be deemed to be the owner of that building or part thereof;
(iiia) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act,
The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession", -
(i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year;
(ii) any compensation or other payment due to or received by, -
(a) any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;
(b) any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto;
(c) any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at
The income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 1[43D.]
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1. Substituted by the Direct Tax Laws (Amendment) Act, 1991 (49 of 1991), Section 10, for the figure "49c" (W.e.f. 01.04.1992). Earlier the words "Sections 30 to 43C" were substituted by the Direct Tax Laws (Amendment) Act, 1988 (26 of 1988), Section 54(iii), for the words "sections 30 to 43B" (W.e.f. 01.04.1988).
In respect of rent, rates, taxes, repairs and insurance for premises, used for the purposes of the business or profession, the following deductions shall be allowed -
(a) where the premises are occupied by the assessee -
(i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs;
(ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises;
(b) any sums paid on account of land revenue, local rates or municipal taxes;
(c) the amount of any premium paid in respect of insurance against risk of damage or destruction of the premises.
1[Explanation: For the removal of doubts, it is hereby declared that the amount paid on account of the cost of repairs referred to in sub-clause (i), and the amount paid on account of current repairs referred to in sub-clause (ii), of clause (a), shall not include any expe
In respect of repairs and insurance of machinery, plant or furniture used for the purposes of the business or profession, the following deductions shall be allowed-
(i) the amount paid on account of current repairs thereto;
(ii) the amount of any premium paid in respect of insurance against risk of damage or destruction thereof.
1[Explanation: For the removal of doubts, it is hereby declared that the amount paid on account of current repairs shall not include any expenditure in the nature of capital expenditure.]
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1. Inserted by the Finance Act, 2003, with effect from 1st April, 2004.
(1) 1[In respect of depreciation of –
(i) buildings, machinery, plant or furniture being tangible assets;
(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998 23[not being goodwill of a business or profession,],
owned wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed –]
2[(i) in the case of assets of an undertaking engaged in generation or generation and distribution of power, such percentage on the actual cost thereof to the assessee as may be prescribed3;]
(ii) 3a[in the case of any block of assets, such percentage on the written down value thereof as may be prescribed4:]
[First proviso omitted by the Finance Act, 1995, with effect from 1st April, 1996;]
3b[Provided that 3c[***] no deduction shall be allowed und
1a[32A. Investment allowance
(1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee:
2[Provided that in respect of a ship or an aircraft or machinery or plant specified in sub-section (8B), this sub-section shall have effect as if for the words “twenty-five per cent”, the words “twenty per cent” had been substituted:
32AB. 10[Investment deposit account
(1) Subject to the other provisions of this section, where an assessee, whose total income includes income chargeable to tax under the head "Profits and gains of business or profession", has, out of such income,—
(a) deposited any amount in an account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier; or
(b) utilised any amount during the previous year for the purchase of any new ship, new aircraft, new machinery or plant, without depositing any amount in the deposit account under clause (a),
in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) to be framed by the Central Government, or if the assessee is carrying on the business of growing and manufacturing tea in India,
1[(1) Where an assessee, being a company, engaged in the business of manufacture or production of any article or thing, acquires and installs new asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a deduction,--
(a) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds one hundred crore rupees; and
(b) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen per cent. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if
2[(1) (a) In respect of a new ship or new machinery or plant (other than office appliances or road transport vehicles) which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction, in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b).
(b) The sum referred to in clause (a) shall be –
(A) in the case of a ship, forty per cent of the actual cost thereof to the assessee;
(B) in the case of machinery or plant, –
(i) where the machinery or plant is installed for the purposes of business of construction, manufacture or production of any one or more of t
1a[33A. Development allowance
(1) In respect of planting of tea bushes on any land in India owned by an assessee who carries on business of growing and manufacturing tea in India, a sum by way of development allowance equivalent to –
(i) where tea bushes have been planted on any land not planted at any time with tea bushes or on any land which had been previously abandoned, 2[fifty per cent.] of the actual cost of planting; and
(ii) where tea bushes are planted in replacement of tea bushes that have died or have become permanently useless on any land already planted, 3[thirty per cent.] of the actual cost of planting, shall, subject to the provisions of this section, 4[be allowed as a deduction in the manner specified hereunder, namely:
(a) the amount of the development allowance shall, in the first instance, be computed with reference to that portion of the actual cost of planting which is incurred during the previous year in which the land is prepared f
1a[33AB. Tea development account, 10[coffee development account and rubber development account.]
(1) Where an assessee carrying on business of 1[growing and manufacturing tea or coffee or rubber] in India has, before the expiry of six months from the end of the previous year or before 2[the due date of furnishing the return of his income], 2a[whichever is earlier, –
(a) deposited with the National Bank any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) 3[approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board]; or
(b) 4[deposited any amount in an account (hereafter in this section referred to as the Deposit Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Tea Board or th
1[(1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year -
(a) deposited with the State Bank of India any amount or amounts in an account (hereinafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme2 (hereafter in this section referred to as the scheme) approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or
(b) deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme2 framed by the Ministry referred to in clause (a) (hereafte
1a[33C. Reserves for shipping business
(1) In the case of an assessee, being 1b[a Government company or] a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount not exceeding fifty per cent of profits derived from the business of operation of ships (computed under the head “Profits and gains of business or profession” and before making any deduction under this section), as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account, to be utilised in the manner laid down in sub-section (2):
1[Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the aggregate of the amounts of the paid-up share capital, the general reserves and amount credited
1[33B. Rehabilitation allowance
Where the business of any industrial undertaking carried on in India is discontinued in any previous year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee and used for the purposes of such business as a direct result of –
(i) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature; or
(ii) riot or civil disturbance; or
(iii) accidental fire or explosion; or
(iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war),
and, thereafter, at any time before the expiry of three years from the end of such previous year, the business is re-established, reconstructed or revived by the assessee, he shall, in respect of the previous year in which the business is so re-established, reconstructed or revived, be allowed a deduction of a sum by way of rehabilitation allowance equivalent to six
1a[*** ].
(3) (a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent of the development rebate to be actually allowed is debited to the profit and loss account of 2[any previous year in respect of which the deduction is to be allowed under sub-section (2) of that section or any earlier previous year (being a previous year not earlier than the year in which the ship was acquired or the machinery or plant was installed or the ship, machinery or plant was first put to use)] and credited to a reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking, other than –
(i) for distribution by way of dividends or profits; or
(ii) for remittance outside India as profits or for the creation of any asset outside India:
Provided that this clause shall not apply where the assessee is a company, being a licensee within the mea
1[34A. Restriction on unabsorbed depreciation and unabsorbed investment allowance for limited period in case of certain domestic companies
(1) In computing the profits and gains of the business of a domestic company in relation to the previous year relevant to the assessment year commencing on the 1st day of April, 1992, where effect is to be given to the unabsorbed depreciation allowance or unabsorbed investment allowance or both in relation to any previous year relevant to the assessment year commencing on or before the 1st day of April, 1991, the deduction shall be restricted to two-third of such allowance or allowances and the balance, –
(a) where it relates to depreciation allowance, be added to the depreciation allowance for the previous year relevant to the assessment year commencing on the 1st day of April, 1993 and be deemed to be part of that allowance or if there is no such allowance for that previous year, be deemed to be the allowance for that previo
1a[35. Expenditure on scientific research
(1) In respect of expenditure on scientific research, the following deductions shall be allowed –
(i) any expenditure (not being in the nature of capital expenditure) laid out or expended on scientific research related to the business.
2a[Explanation: Where any such expenditure has been laid out or expended before the commencement of the business (not being expenditure laid out or expended before the 1st day of April, 1973) on payment of any salary [as defined in Explanation 2 below sub-section (5)* of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority1 to have been laid out or expended on such scientific research, be deemed to have been laid o
1a[35A. Expenditure on acquisition of patent rights or copyrights
(1) In respect of any expenditure of a capital nature incurred after the 28th day of February, 1966, 1[but before the 1st day of April, 1998], on the acquisition of patent rights or copyrights (hereafter, in this section, referred to as rights) used for the purposes of the business, there shall, subject to and in accordance with the provisions of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount of such expenditure.
Explanation: For the purposes of this section, –
(i) “relevant previous years” means the fourteen previous years beginning with the previous year in which such expenditure is incurred or, where such expenditure is incurred before the commencement of the business, the fourteen previous years beginning with the previous year in which the business commenced:
Provided that where the rights commenced, that is
1[35AB. Investment deposit account
(1) Subject to the provisions of sub-section (2), where the assessee has paid 2[in any previous year relevant to the assessment year commencing on or before the 1st day of April, 1998] any lump sum consideration for acquiring any know-how for use for the purposes of his business, one-sixth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance amount shall be deducted in equal installments for each of the five immediately succeeding previous years.
(2) Where the know-how referred to in sub-section (1) is developed in a laboratory, university or institution referred to in sub-section (2B) of section 32A, one-third of the said lump sum consideration paid in the previous year by the assessee shall be deducted in computing the profits and gains of the business for that year, and the balance amount shall be deducted in equal installments for each of the two i
1a[35ABB. Expenditure for obtaining licence to operate telecommuni¬cation services
(1) In respect of any expenditure, being in the nature of capital expenditure, incurred 1[for acquiring any right to operate telecommunication services either before the commencement of the business to operate telecommunication services or thereafter at any time during any previous year] and for which payment has actually been made to obtain a licence, there shall, subject to and in accordance with the provisions of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount of such expenditure.
Explanation: For the purposes of this section, -
2[(i) “relevant previous years” means, -
(A) in a case where the licence fee is actually paid before the commencement of the business to operate telecommunication services, the previous years beginning with the previous year in which such business commenced;
(B) in
1a[35AC. Expenditure on eligible projects or schemes
(1) Where an assessee incurs any expenditure by way of payment of any sum to a public sector company or a local authority or to an association or institution approved1 by the National Committee for carrying out any eligible project or scheme, the assessee shall, subject to the provisions of this section, be allowed a deduction of the amount of such expenditure incurred during the previous year:
Provided that a company may, for claiming the deduction under this subsection, incur expenditure either by way of payment of any sum as aforesaid or directly on the eligible project or scheme.
(2) The deduction under sub-section (1) shall not be allowed unless the assessee furnishes along with his return of income a certificate –
2(a) where the payment is to a public sector company or a local authority or an association or institution referred to in subsection (1), from such public sector company or local authori
1[(1) 23[An assessee shall, if he opts,] be allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the previous year in which such expenditure is incurred by him.
Provided that the expenditure incurred, wholly and exclusively, for the purposes of any specified business, shall be allowed as deduction during the previous year in which he commences operations of his specified business, if--
(a) the expenditure is incurred prior to the commencement of its operations; and
(b) the amount is capitalised in the books of account of the assessee on the date of commencement of its operations.
18[* * *]
(2) This section applies to the specified business which fulfils all the following conditions, namely:--
(i) it is not set up by splitting up, or the reconstruction, of a business already in existence;
(ii) it is not set up by the
1[***]
_________________________
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1[***]
______________________________
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1[***]
______________________________
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1a[35CCA. Expenditure by way of payment to associations and insti¬tutions for carrying out rural development programmes
3[(1) Where an assessee incurs any expenditure by way of payment of any sum -
(a) to an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved by the prescribed authority1; 4[or]
(b) to an association or institution, which has as its object the training of persons for implementing programmes of rural development; or
5[(c) to a rural development fund set-up and notified by the Central Government in this 6[behalf; or]
7[(d) to the National Urban Poverty Eradication Fund set-up and notified by the Central Government in this behalf,] the assessee shall, subject to the provisions of sub-section (2), be allowed a deduction of the amount of such expenditure incurred during the previous year.
8[(2) The deduction und
1a[35CCB. Expenditure by way of payment to associations and insti¬tutions for carrying out programmes of conservation of natural resources
1b[(1) 1[Where an assessee incurs any expenditure on or before the 31st day of March, 2002] by way of payment of any sum–
(a) to an association or institution, which has as its object the undertaking of any programme of conservation of natural resources or of afforestation, to be used for carrying out any programme of conservation of natural resources or afforestation approved by the prescribed authority2; or
(b) to such fund for afforestation as may be notified by the Central Government, the assessee shall, subject to the provisions of sub-section (2), be allowed a deduction of the amount of such expenditure incurred during the previous year.]
(2) The deduction under 3[clause (a) of] sub-section (1) shall not be allowed with respect to expenditure by way of payment of any sum to any association or institution, unless
1a[35D. Amortisation of certain preliminary expenses
(1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2), -
(i) before the commencement of his business, or
(ii) after the commencement of his business, in connection with the extension of his 1[undertaking] or in connection with his setting up a new 2[unit],
the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the 1[undertaking] is completed or the new 2[unit] commences production or operation:
3[Provided that where an assessee incurs after the 31st day of March, 1998, any expendi
1[(1) Where an assessee, being an Indian company, incurs any expenditure, on or after the 1st day of April, 1999, wholly and exclusively for the purposes of amalgamation or demerger of an undertaking, the assessee shall be allowed a deduction of an amount equal to one-fifth of such expenditure for each of the five successive previous years beginning with the previous year in which the amalgamation or demerger takes place.
(2) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under any other provision of this Act.]
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1. Inserted by the Finance Act, 1999, with effect from 1st April, 2000.
1a[35DDA. Amortisation of expenditure incurred under voluntary retirement scheme
1[(1) Where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee 2[in connection with his voluntary retirement], in accordance with any scheme or schemes of voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance shall be deducted in equal installments for each of the four immediately succeeding previous years.
3[(2) Where the assessee, being an Indian company, is entitled to the deduction under sub-section (1) and the undertaking of such Indian company entitled to the deduction under sub-section (1) is transferred, before the expiry of the period specified in that sub-section, to another Indian company in a scheme of amalgamation, the provisions of this section shall, as far as may be, apply to the amalgamated company as they would
1a[35E. Deduction for expenditure on prospecting, etc., for cer¬tain minerals
(1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, is engaged in any operations relating to prospecting for, or extraction or production of, any mineral and incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2), the assessee shall, in accordance with and subject to the provisions of this section, be allowed for each one of the relevant previous years a deduction of an amount equal to one-tenth of the amount of such expenditure.
(2) The expenditure referred to in sub-section (1) is that incurred by the assessee after the date specified in that sub-section at any time during the year of commercial production and any one or more of the four years immediately preceding that year, wholly and exclusively on any operations relating to prospecting for any mineral or group of associated minerals specified
(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 –
(i) the amount of any premium paid in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of the business or profession;
1a[(ia) the amount of any premium paid by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society;]
1[(ib) the amount of any premium 2[paid by any mode of payment other than cash] by the assessee as an employer to effect or to keep in force an insurance on the health of his employees under a scheme framed in this behalf by –
(A) the General Insurance Corporation of India formed under section 9 of the General Insuran
(1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 1a[***] and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”.
1[Explanation 2[1]: For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.]
2[Explanation 2.--For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the
(1) Where a part of any premises is used as dwelling house by the assessee, –
(a) the deduction under sub-clause (i) of clause (a) of section 30, in the case of rent, shall be such amount as the 1[Assessing Officer] may determine having regard to the proportionate annual value of the part used for the purpose of the business or profession, and in the case of any sum paid for repairs, such sum as is proportionate to the part of the premises used for the purpose of the business or profession;
(b) the deduction under clause (b) of section 30 shall be such sum as the 1[Assessing Officer] may determine having regard to the part so used.
(2) Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub-clause (ii) of clause (a) and clause (c) of section 30, clauses (i) and (ii) of section 31 and 2[clause (ii) of sub-section (1)] of section 32 shall be restricted to a fair proportio
1[***]
________________________________
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
Notwithstanding anything to the contrary in 1a[sections 30 to 38], the following amounts shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”, –
(a) in the case of any assessee –
1[(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,-
(A) outside India; or
(B) in India to a non-resident, not being a company or to a foreign company,
on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, has not been paid 17[on or before the due date specified in sub-section (1) of section 139]:
18[Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1)
3[(1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year, -
(a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or
(b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of
1[(1)] For the purpose of computing the profits or gains of any business consisting of the prospecting for or extraction or production of mineral oils in relation to which the Central Government has entered into an agreement with any person for 1a[the association or participation of the Central Government or any person authorised by it in such business] (which agreement has been laid on the Table of each House of Parliament), there shall be made in lieu of, or in addition to, the allowances admissible under this Act, such allowances as are specified in the agreement in relation –
(a) to expenditure by way of in fructuous or abortive exploration expenses in respect of any area surrendered prior to the beginning of commercial production by the assessee:
(b) after the beginning of commercial production, to expenditure incurred by the assessee, whether before or after such commercial production, in respect of drilling or exploration activities or services or in respe
In sections 28 to 41 and in this section, unless the context otherwise requires –
(1) “actual cost” means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority:
1a[Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967, but before the 1st day of March, 1975, and is used otherwise than in a business of running it on hire for tourists, exceeds twenty-five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees.]
25[Provided further that where the assessee incurs any expenditure for acquisition of any asset or part thereof in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an
1[Notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset in any previous year from a country outside India for the purposes of his business or profession and, in consequence of a change in the rate of exchange during any previous year after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency (as compared to the liability existing at the time of acquisition of the asset) at the time of making payment–
(a) towards the whole or a part of the cost of the asset; or
(b) towards repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency
specifically for the purpose of acquiring the asset along with interest, if any,
the amount by which the liability as aforesaid is so increased or reduced during such previous year and which is taken into account at the
1a[43B. Certain deductions to be only on actual payment
Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of -
1b[(a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or]
(b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, 1c[or]
1d[(c) any sum referred to in clause (ii) of sub-section (1) of section 36,] 1e[or]
1f[(d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution 1g[or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement 1h[governing such loan or borrowing, or]
14[(da) any sum payable by the assessee
1[43C. Special provision for computation of cost of acquisition of certain assets
(1) Where an asset [not being an asset referred to in sub-section (2) of section 45] which becomes the property of an amalgamated company under a scheme of amalgamation, is sold after the 29th day of February, 1988, by the amalgamated company as stock-in-trade of the business carried on by it, the cost of acquisition of the said asset to the amalgamated company in computing the profits and gains from the sale of such asset shall be the cost of acquisition of the said asset to the amalgamating company, as increased by the cost, if any, of any improvement made thereto, and the expenditure, if any, incurred, wholly and exclusively in connection with such transfer by the amalgamating company.
(2) Where an asset [not being an asset referred to in sub-section (2) of section 45] which becomes the property of the assessee on the total or partial partition of a Hindu undivided family or
1[(1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
2[Provided that where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and 5[ten per cent]. of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to
1[43D. Special provision in case of income of public financial institutions, 10[****], etc.
Notwithstanding anything to the contrary contained in any other provision of this Act, -
(a) in the case of a public financial institution or a scheduled bank or 4[a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank or] a State financial corporation or a State industrial investment corporation 5[for 7[such class of non-banking financial companies as may be notified by the Central Government in the Official Gazette in this behalf]], the income by way of interest in relation to such categories of bad or doubtful debts as may be prescribed2 having regard to the guidelines issued by the Reserve Bank of India in relation to such debts;
11[****]
shall be chargeable to tax in the previous year in which it is credited by the public financial institution or the scheduled bank or 4[a c
Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in 1[sections 28 to 43B], the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule
-------------------------------
1. Substituted by Direct Tax Laws (Amendment) Act, 1987, (w.e.f. 01.04.1989), for the following:-
"sections 28 to 43A"
1[44A. Special provision for deduction in the case of trade, professional or similar association
(1) Notwithstanding anything to the contrary contained in this Act, where the amount received during a previous year by any trade, professional or similar association 2[other than an association or institution referred to in clause (23A) of section 10] from its members, whether by way of subscription or otherwise (not being remuneration received for rendering any specific services to such members) falls short of the expenditure incurred by such association during that previous year (not being expenditure deductible in computing the income under any other provision of this Act and not being in the nature of capital expenditure) solely for the purposes of protection or advancement of the common interests of its members, the amount so fallen short (hereinafter referred to as deficiency) shall, subject to the provisions of this section, be allowed as a deduction in computin
1a[44AA. Maintenance of accounts by certain persons carrying on profession or business
(1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the 1b[Assessing Officer] to compute his total income in accordance with the provisions of this Act.
(2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall, -
(i) if his income from business or profession exceeds 1[one lakh twenty thousand] rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds 2[ten lakh] rupees in any one of the three years immediately preceding the previous year; or
(ii) where the business or profession is
1a[44AB. Audit of accounts of certain persons carrying on business or profession
Every person, -
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds 11[one crore rupees] in any previous year; 22[***]; or
23[Provided that in the case of a person whose--
(a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent. of the said amount; and
(b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent. of the said payment, this clause shall have effect as if for the words "one crore rupees", the words "24[ten crore rupees]" had been substituted; or;]"
25[Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank o
1[***]
----------------------------
1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
1[(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent. of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession".
10[Provided that this sub-section shall have effect as if for the words "eight per cent.", the words "six per cent." had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a 11[bank account or through such other electronic mode as may be prescribed] during the previous year or before the d
Legal Comments
Introduction - Section 44(a)(d) of the Income Tax Act, 1961 governs taxation of profits of business or profession under the First Schedule and related adjustments; it interacts with other heads of income and other sections for computation. [00100020588] [Oriental Insu. Co. Ltd. VS C. I. T. ] [ITO, Alleppey VS M. C. Ponnoose]
What Section Says - Section 44 sets out special provisions for computing profits and gains of insurance business under the First Schedule; it operates with a non-obstante effect over ordinary computation rules. Section 44-D/44-AD etc., appear in other contexts but Section 44 itself provides overarching framing for insurance. [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi] [Oriental Insu. Co. Ltd. VS C. I. T. ] [02100028160]
Essential ingredients - (i) Classification of income under the heads; (ii) application of First Schedule rules for insurance; (iii) overriding effect of Section 44 over other provisions when computing insurance profits; (iv) interplay with Rule 5 of the First Schedule. [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi] [Deputy Commissioner of Income-tax, Spl. Rg. 32 VS Bank of America NT & SA] [General Insurance Corporation Of India VS Commissioner Of Income-tax]
Scope of Section - Applies to computation of profits from insurance business and governs the permissible adjustments under the First Schedule; not all heads of income fall within its ambit, and it interacts with other heads for non-insurance income. [Oriental Insu. Co. Ltd. VS C. I. T. ] [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi]
Punishment for Section - Penalties under sections like 271-B/271(1)(c) relate to concealment and non-compliance; though not a direct punitive provision within Section 44 itself, improper application can trigger penalties under other sections for misreporting or failure to maintain books. [COMMISSIONER OF INCOME TAX II, KANPUR VS BANDA DISTRICT CO-OPERATIVE BANK LTD. , BANDA] [Kalyan Sarkar VS Deputy Commissioner of Income-tax]
Apportionment and cross-head issues - In multi-head scenarios, Section 37(2-A) entertainment deductions are not allowed across different heads; apportionment must reflect the head of income (e.g., banking income vs. securities income) under the relevant sections; analogous principles inform the need to keep insurance computations within the First Schedule framework. [COMMISSIONER OF INCOME-TAX, KARNATAKA-I, BANGALORE VS THE VYSYA BANK LIMITED]
Constitutional validity - Section 44 and related First Schedule provisions have undergone constitutional scrutiny; courts have upheld non-obstante effect and the legitimacy of computing profits for insurance within the First Schedule, subject to statutory limits. [H. A. K. RAO. VS UNION OF INDIA] [Oriental Insu. Co. Ltd. VS C. I. T. ]
Interaction with DTAA - For cross-border arrangements, Articles of DTAA may govern allocation of income (e.g., fees for technical services) and may supersede domestic provisions where treaty benefits are more favorable; Section 44 cross-application occurs within statutory framework. [Director of Income Tax VS Rio Tinto Technical Services] [Deputy Commissioner of Income-tax, Spl. Rg. 32 VS Bank of America NT & SA]
Role of First Schedule - The First Schedule provides the computation mechanics for life/health/marine insurance profits; Rule 5 outlines what counts as an expenditure for computation, and rearrangements under Rule 5 cannot override the overarching non-obstante effect of Section 44. [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi] [General Insurance Corporation Of India VS Commissioner Of Income-tax]
Insurance company assessment references - Insurance cases consistently emphasize computing profits under Section 44 read with the First Schedule, sometimes considering pre-commencement expenses and amortization rules; over-arching approach remains to compute in the specified regime. [Oriental Insu. Co. Ltd. VS C. I. T. ] [Sahara India Life Insurance Co. Ltd. VS Assistant Commissioner of Income Tax]
Pre-commencement and amortization - When pre-commencement expenses exist, Section 44’s overriding framework may restrict deductions like amortization under Section 35-D(2); the pre-commencement period remains outside the standard profits computation unless expressly allowed. [M. Ct. M. Chidambaram Chettiar (Dead) , By His Legal Representatives VS Commissioner Of Income-tax, Madras] [Oriental Insu. Co. Ltd. VS C. I. T. ]
Set-off and carry-forward context - Section 44 interacts with carry-forward provisions and other sections for computing net income; the First Schedule determines allowable adjustments, and set-off of certain income/expenses is governed by those rules rather than the general law. [00100004204]
Banking/Non-insurance cross-issues - Several judgments discuss how safeguards like 44-C (head-office expenditure) apply to banks and non-insurance contexts; while distinct, these rulings illustrate that the Act’s sections are to be read harmoniously with the First Schedule for consistency in computation. [American Express International Banking Corporation VS I. S. Nigam & others] [Inspecting Assistant Commissioner, (Assessment) Range IV-C, Mumbai VS Saurashtra Trust]
Non-applicability to non-insurance heads - Section 44’s life-insurance specific regime does not automatically apply to non-insurance business; for such heads, the normal Sections 28-43D and 5-9 framework applies unless a specific insurance provision overrides. [Oriental Insu. Co. Ltd. VS C. I. T. ]
Case law compass - Key authorities reaffirm that Section 44’s non-obstante clause directs computation under the First Schedule for insurance profits, and that the rules in the First Schedule bind the officer in assessing and computing income from insurance. [State of West Bengal VS Calcutta Club Limited] [Oriental Insu. Co. Ltd. VS C. I. T. ]
Practical takeaway - For practitioners, ensure that insurance profits are computed strictly under Section 44 read with the First Schedule, verify that allowances/adjustments fall within Rule 5, and avoid importing cross-head deductions or recharacterizations that conflict with the insurance-specific regime. [Oriental Insu. Co. Ltd. VS C. I. T. ] [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi]
DTAA interplay reminder - When International transactions or FTS-like income arise, analyze whether treaty provisions yield a more favorable treatment than domestic Section 44-AD/44-D routes; treaty provisions may override domestic classifications in certain scenarios. [Director of Income Tax VS Rio Tinto Technical Services] [Deputy Commissioner of Income-tax, Spl. Rg. 32 VS Bank of America NT & SA]
Administrative process note - Reassessment or revision should follow the statutory machinery; authorities cannot bypass the specified reassessment route or misapply the First Schedule mechanics to the insurance computation. [Gulmuhar Silk Pvt Ltd VS Income Tax Officer Ward 10(3) Delhi] [American Express International Banking Corporation VS I. S. Nigam & others]
Penalty prudence - Where there is concealment or misreporting linked to insurance computations, penalties under Section 271(1)(c) or other penalty provisions may apply; but penalties require proven mens rea or non-compliance, not mere technical errors. [COMMISSIONER OF INCOME TAX II, KANPUR VS BANDA DISTRICT CO-OPERATIVE BANK LTD. , BANDA] [Kalyan Sarkar VS Deputy Commissioner of Income-tax]
Future-proofing - Given the evolving jurisprudence on insurance taxation, always anchor computations to the latest Supreme Court/High Court interpretations of Section 44, Rule 5, and the First Schedule, and monitor applicable amendments that alter pre-commencement adjustments or amortization. [Oriental Insu. Co. Ltd. VS C. I. T. ] [General Insurance Corporation Of India VS Commissioner Of Income-tax]
Summary reference points - Core authorities referenced include: Section 44 as overriding for insurance profit computation under First Schedule; Rule 5; non-obstante effect; and citations across cases addressing insurance/company computations, head-office considerations, and related cross-head issues. [Bajaj Alliance General Insurance Co. Ltd. VS Rambha Devi] [Oriental Insu. Co. Ltd. VS C. I. T. ] [General Insurance Corporation Of India VS Commissioner Of Income-tax]
1a[44AE. Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages
(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages 1[at any time during the previous year] and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head “Profits and gains of business or profession” shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).
9[(2) For the purposes of sub-section (1), the profits and gains from each goods carriage,--
(i) being a heavy goods vehicle, shall be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month
1a[44AF. Special provisions for computing profits and gains of retail business
(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”:
Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year.
(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those se
1[44B. 3[Special provision for computing profits and gains of shipping business other than cruise shipping in case of non-residents]
(1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of ships, 4[other than cruise ships referred to in section 44BBC,] a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.
(2) The amounts referred to in sub-section (1) shall be the following, namely:
(i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and
(ii) the amount received or deemed to be received in India by or o
1a[44BB. Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils
(1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, 1b[in the case of an assessee being a non-resident], engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession":
Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D 2[section 44DA]or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those
1[44BBA. Special provision for computing profits and gains of the business of operation of aircraft in the case of non-residents
(1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of aircraft, a sum equal to five per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.
(2) The amounts referred to in sub-section (1) shall be the following, namely:
(a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods from any place in India; and
(b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock
1a[44BBB. Special provision for computing profits and gains of foreign companies, engaged in the business of civil construction, etc., in certain turnkey power projects
1[1] Notwithstanding anything to the contrary contained in sections 28 to 44AA, in the case of an assessee, being a foreign company, engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government in this behalf 2[***], a sum equal to ten per cent of the amount paid or payable (whether in or out of India) to the said assessee or to any person on his behalf on account of such civil construction, erection, testing or commissioning shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession".]
3[(2) Notwithstanding anything contained in sub-section (1), an assessee may claim
1[44C. Deduction of head office expenditure in the case of nonresidents
Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, no allowance shall be made, in computing the income chargeable under the head “Profits and gains of business or profession”, in respect of so much of the expenditure in the nature of head office expenditure as is in excess of the amount computed as hereunder, namely:
(a) an amount equal to five per cent of the adjusted total income; or
2[***]
(c) the amount of so much of the expenditure in the nature of head office expenditure incurred by the assessee as is attributable to the business or profession of the assessee in India, whichever is least:
Provided that in a case where the adjusted total income of the assessee is a loss, the amount under clause (a) shall be computed at the rate of five per cent of the average adjusted total income of the asses
1[44D. Special provisions for computing income by way of royalties, etc., in the case of foreign companies
Notwithstanding anything to the contrary contained in sections 28 to 44C, in the case of an assessee, being a foreign company, -
(a) the deductions admissible under the said sections in computing the income by way of royalty or fees for technical services received 2[from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern] before the 1st day of April, 1976, shall not exceed in the aggregate twenty per cent of the gross amount of such royalty or fees as reduced by so much of the gross amount of such royalty as consists of lump sum consideration for the transfer outside India of, or the imparting of information outside India in respect of, any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process or trade mark
1[(1) The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such nonresident (not being a company) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be, shall be computed under the head “Profits and gains of business or profession” in accordance with the provisions of this Act:
Provided that no deduction shall be allowed,-
(i) in respect of any expenditure or allowance which is not wholly and
1[(1) The deduction under section 32, section 35D, section 35DD or section 35DDA shall, in a case where business reorganisation of a co-operative bank has taken place during the financial year, be allowed in accordance with the provisions of this section.
(2) The amount of deduction allowable to the predecessor co-operative bank under section 32, section 35D, section 35DD or section 35DDA shall be determined in accordance with the formula -
A ´
B
C
where A = the amount of deduction allowable to the predecessor co-operative bank if the business reorganisation had not taken place;
B = the number of days comprised in the period beginning with the 1st day of the financial year and ending on the day immediately preceding the date of business reorganisation; and
C = the total number of days in the financial year in which the business reorganisation has taken place.
(3) The amount of deduction allowable to the successor co-operat
1a[(1)] Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in 1b[1c[sections 1d[***], 54, 54B, 1e[***], 1f[1g[54D, 1h[54E, 1i[54EA, 54EB,] 54F, 1j[54G and 54H]]]]]], be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.
1[(1A) Notwithstanding anything contained in sub-section (1), where any person receives at any time during any previous year any money or other assets under an insurance from an insurer on account of damage to, or destruction of, any capital asset, as a result of -
(i) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature; or
(ii) riot or civil disturbance; or
(iii) accidental fire or explosion; or
(iv) action by an enemy or action taken in combating an enemy (whether with or without a declaration of war),
then, any profits
(1) Notwithstanding anything contained in section 45, where the assets of a company are distributed to its shareholders on its liquidation, such distribution shall not be regarded as a transfer by the company for the purposes of section 45.
(2) Where a shareholder on the liquidation of a company receives any money or other assets from the company, he shall be chargeable to income-tax under the head “Capital gains”, in respect of the money so received or the market value of the other assets on the date of distribution, as reduced by the amount assessed as dividend within the meaning of sub-clause (c) of clause (22) of section 2 and the sum so arrived at shall be deemed to be the full value of the consideration for the purposes of section 48.
Section 46 of the Income Tax Act, 1961, addresses the taxation of capital gains arising from the distribution of assets by companies in liquidation. This section is crucial for shareholders receiving assets during a company's winding-up process, as it delineates the tax implications of such distributions.
Section 46(2) stipulates that when a shareholder receives money or other assets from a company during its liquidation, they are chargeable to income tax under the head "Capital gains." The amount received is deemed to be the full value of consideration for tax purposes, reduced by any amount assessed as a dividend.
The scope of Section 46 is limited to situations involving the liquidation of companies. It clarifies that distributions made in this context do not constitute a transfer of capital assets under Section 45, thus creating a distinct framework for taxation.
While Section 46 itself does not prescribe penalties, failure to comply with tax obligations arising from this section may lead to penalties under other provisions of the Income Tax Act, such as Section 221 for default in payment of tax.
This commentary provides a comprehensive overview of Section 46 of the Income Tax Act, 1961, highlighting its significance in the context of capital gains taxation during corporate liquidations.
1[Where a shareholder or a holder of other specified securities receives any consideration from any company for purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 48, the difference between the cost of acquisition and the value of consideration received by the shareholder or the holder of other specified securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the holder of other specified securities, as the case may be, in the year in which such shares or other specified securities were purchased by the company.
2[Provided that where the shareholder receives any consideration of the nature referred to in sub-clause (f) of clause (22) of section 2 from any company, in respect of any buy-back of shares, that takes place on or after the 1st day of October, 2024, then for the purposes of this section, the valu
Nothing contained in section 45 shall apply to the following transfers:
(i) any distribution of capital assets on the total or partial partition of a Hindu undivided family;
(ii) [Omitted by the Finance Act, 1987, with effect from 1st April, 1988];
35[(iii) any transfer of a capital asset by an individual or a Hindu undivided family, under a gift or will or an irrevocable trust;]
(iv) any transfer of a capital asset by a company to its subsidiary company, if -
(a) the parent company or its nominees hold the whole of the share capital of the subsidiary company, and
(b) the subsidiary company is an Indian company;
2a[(v) any transfer of a capital asset by a subsidiary company to the holding company, if -
(a) the whole of the share capital of the subsidiary company is held by the holding company, and
(b) the holding company is an Indian company:]
2b[Provided that nothing contained in clause (iv) or clause (v) shall
1a[48. Mode of computation
The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement thereto:
13[Provided that the cost of acquisition of the asset or the cost of improvement thereto shall not include the deductions claimed on the amount of interest under clause (b) of section 24 or under the provisions of Chapter VIA;
Explanation 1.--For the removal of doubt, it is hereby clarified that the cost of acquisition of a unit of a business trust shall be reduced and shall be deemed to have always been reduced by any sum received by a unit holder from the business trust with respect to such unit, which is not in the nature of in
1a[(1)] Where the capital asset became the property of the assessee -
(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;
(ii) under a gift or will;
(iii) (a) by succession, in heritance or devolution, or
1b[(b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or
(c) on any distribution of assets on the liquidation of a company, or
(d) under a transfer to a revocable or an irrevocable trust, or
(e) under any such transfer as is referred to in clause (iv) 1c[or clause (v)] 1d[or clause (vi)] 1[or clause (via) 14[or clause (viaa) or clause (viab) or clause (vib) 17[or clause (vic)] or clause (vica) or clause (vicb) or clause (vicc)] or 21[clause (viiac) or clause (viiad) or clause (viiae) or clause (viiaf) or] 12[clause (xiii) or clause (x
1a[50. Special provision for computation of capital gains in case of depreciable assets
Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications:
(1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:
(i) expenditure incurred wholly and exclusively in connection with such transfer or transfers ;
(ii) the written down value of the block of assets at the beginning of the previ
1[Where the capital asset is an asset in respect of which a deduction on account of depreciation under clause (f) of sub-section (1) of section 32 has been obtained by the assessee in any previous year, the provisions of sections 48 and 49 shall apply subject to the modification that the written down value, as defined in clause (6) of section 4, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset.]
----------------------------------
1. Inserted by the Finance (No. 2) Act, 1998, with retrospective effect from 1st April, 1998.
Section 50AA - Special provision for computation of capital gains in case of Market Linked Debenture
1[50AA. Special provision for computation of capital gains in case of Market Linked Debenture
2[Notwithstanding anything contained in clause (42A) of section 2 or section 48, where the capital asset--
(a) is a unit of a Specified Mutual Fund acquired on or after the 1st day
1(1) Any profits or gains arising from the slump sale effected in the previous year shall be chargeable to income-tax as capital gains arising from the transfer of long-term capital assets and shall be deemed to be the income of the previous year in which the transfer took place:
Provided that any profits or gains arising from the transfer under the slump sale of any capital asset being one or more undertakings owned and held by an assessee for not more than thirty-six months immediately preceding the date of its transfer shall be deemed to be the capital gains arising from the transfer of short-term capital assets.
(2) In relation to capital assets being an undertaking or division transferred by way of such sale, the "net worth" of the undertaking or the division, as the case may be, shall be deemed to be the cost of acquisition and the cost of improvement for the purposes of sections 48 and 49 and no regard shall be given to
1(1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted 2[or assessed or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted 2[or assessed or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
5[Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:
Provided further that the first
Section 50C of the Income Tax Act, 1961, is a significant provision that addresses the taxation of capital gains arising from the transfer of land and buildings. It establishes a mechanism for determining the value of such properties for tax purposes, particularly when the sale consideration is less than the value assessed by the Stamp Valuation Authority (SVA).
Section 50C mandates that if the consideration received from the transfer of a capital asset (land or building) is less than the value adopted by the SVA for stamp duty purposes, the latter value shall be deemed to be the full value of the consideration for calculating capital gains tax.
While Section 50C itself does not prescribe penalties, underreporting of income or misrepresentation of sale consideration can lead to penalties under other sections of the Income Tax Act, such as Section 271(1)(c) for concealment of income.
"Capital Gains Tax" - Section 50C is crucial for determining capital gains tax on property sales, ensuring that the tax is based on a fair market value rather than the sale price alone. -
"Deeming Provision" - The provision operates as a deeming fiction, treating the SVA value as the sale consideration for tax purposes when the actual sale price is lower. -
"Applicability" - Section 50C applies exclusively to land and buildings, making it a targeted provision within the Income Tax framework. -
"Tax Evasion" - The section aims to curb tax evasion by ensuring that property sales are taxed based on assessed values rather than potentially manipulated sale prices. -
"Assessment Procedure" - If the taxpayer disputes the SVA value, they may request a valuation by a Valuation Officer, which can lead to a reassessment of the capital gains. - [ KISHORE CHANDRA AGARWAL VS STATE OF UTTAR PRADESH]
"Market Value Consideration" - The market value assessed by the SVA is critical in determining the tax liability, emphasizing the importance of accurate property valuation. -
"Penalties for Non-Compliance" - While Section 50C does not impose penalties directly, failure to comply with its provisions can lead to significant penalties under other sections of the Income Tax Act. -
"Judicial Interpretation" - Courts have upheld the application of Section 50C, reinforcing its role in ensuring fair taxation on property transactions. - [ Gouli Mahadevappa VS Income Tax Officer]
"Impact on Sellers" - Sellers must be aware that the SVA value can significantly impact their tax liabilities, potentially leading to higher capital gains tax than anticipated. -
"Fair Market Value" - The section emphasizes the importance of fair market value in property transactions, aligning tax liabilities with actual market conditions. -
"Dispute Resolution" - Taxpayers have the right to challenge the SVA value, which can lead to further assessments and potential adjustments in tax liabilities. - [ KISHORE CHANDRA AGARWAL VS STATE OF UTTAR PRADESH]
"Legislative Intent" - The legislative intent behind Section 50C is to prevent undervaluation of properties and ensure that the government receives appropriate tax revenues from property transactions. -
"Compliance Requirement" - Taxpayers must maintain accurate records of property transactions to comply with Section 50C and avoid penalties. -
"Valuation Officer's Role" - The role of the Valuation Officer is crucial in cases where the taxpayer disputes the SVA value, providing an avenue for fair assessment. - [ KISHORE CHANDRA AGARWAL VS STATE OF UTTAR PRADESH]
"Legal Precedents" - Various judicial decisions have clarified the application of Section 50C, establishing precedents for future cases involving property sales. - [ Gouli Mahadevappa VS Income Tax Officer]
"Tax Planning" - Understanding Section 50C is essential for effective tax planning in real estate transactions, allowing taxpayers to anticipate potential tax liabilities. -
"Impact on Real Estate Market" - The provision may influence real estate market dynamics by encouraging sellers to accurately report sale prices to avoid tax complications. -
"Government Revenue" - Section 50C plays a vital role in enhancing government revenue from property transactions by ensuring accurate tax assessments. -
"Transparency in Transactions" - The section promotes transparency in property transactions, aligning reported values with government assessments for tax purposes. -
"Future Amendments" - Ongoing discussions about potential amendments to Section 50C reflect the evolving nature of property taxation in India. -
1[Where the consideration received or accruing as a result of the transfer of a capital asset by an assessee is not ascertainable or cannot be determined, then, for the purpose of computing income chargeable to tax as capital gains, the fair market value of the said asset on the date of transfer shall be deemed to be the full value of the consideration received or accruing as a result of such transfer.]
---------------------------
1. Inserted by the Finance Act, 2012 w.e.f. 01.04.2013.
Where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition.
1[Provided that where any sum of money, received as an advance or otherwise in the course of negotiations for transfer of a capital asset, has been included in the total income of the assessee for any previous year in accordance with the provisions of clause (ix) of sub-section (2) of section 56, then, such sum shall not be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition.]
--------------------------
1. Inserted by the Finance (No. 2) Act, 2014 w.e.f. 1st day of April, 2015.
1[***]
----------------------------
1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
-----------------------------
1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
1a[(1)] 2[3[Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset 4[***] being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of 5[one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date 6[constructed, one residential house in India], then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, -
(i) if the amount of the capital gain 7[is greater than the cost of 8[the resid
Section 54 of the Income Tax Act, 1961, provides for exemptions on long-term capital gains arising from the sale of a residential property, provided the proceeds are reinvested in purchasing or constructing another residential property within a specified timeframe. This provision aims to encourage investment in housing and alleviate the tax burden on individuals who reinvest their gains into residential properties.
Section 54 allows an individual or Hindu Undivided Family (HUF) to claim exemption from capital gains tax if they sell a residential house and use the proceeds to purchase or construct another residential house within one year before or two years after the sale. The exemption is applicable to long-term capital assets classified as residential houses.
The scope of Section 54 is limited to residential properties and does not extend to commercial properties or properties used for business purposes. The exemption applies only to long-term capital gains, which arise from the sale of assets held for more than 24 months.
There are no specific punishments outlined under Section 54 itself. However, if an individual falsely claims the exemption or fails to comply with the conditions stipulated, they may face penalties under other sections of the Income Tax Act, such as Section 277 for false statements.
This commentary provides a comprehensive overview of Section 54 of the Income Tax Act, 1961, highlighting its essential elements, scope, and judicial interpretations that shape its application.
1[***]
---------------------------
1. Omitted by the Finance (No. 2) Act, 1971, with effect from 1st April, 1972.
1a[54B Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases
2[(1)] 3[Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by 4[the assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes 5[(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, -
(i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter refer
1[***]
--------------------------------
1. Omitted by the Finance Act, 1976, with effect from 1st April, 1976.
1a[54D. Capital gain on compulsory acquisition of lands and buildings not to be charged in certain cases
2[(1)] 3[Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer by way of compulsory acquisition under any law of a capital asset, being land or building or any right in land or building, forming part of an industrial undertaking belonging to the assessee which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee for the purposes of the business of the said undertaking 4[(hereafter in this section referred to as the original asset), and the assessee has within a period of three years after that date purchased any other land or building or any right in any other land or building or constructed any other building for the purposes of shifting or re-establishing the said undertaking or setting up another industrial undertaking, then, instead of the capital gain bei
1[54E. Capital gain on transfer of capital assets not to be charged in certain cases
(1) Where the capital gain arises from the transfer of a 2[long-term capital asset] 3[before the 1st day of April, 1992], (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, within a period of six months after the date of such transfer, invested or deposited the 4[whole or any part of the net consideration] in any specified asset (such specified asset being hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -
(a) if the cost of the new asset is not less than the 5[net consideration] in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the cost of the new asset is less than the 5[net consideration] in respect of the original
Section 54(e) of the Income Tax Act, 1961, pertains to the exemption provisions available to taxpayers on capital gains arising from the transfer of certain capital assets, specifically residential property, under specified conditions. It forms part of the broader framework of sections that provide relief from capital gains tax to promote investment in residential assets.
Section 54(e) provides that capital gains arising from the transfer of a long-term residential house property will not be taxable if the taxpayer invests the gains in specified assets within prescribed time limits. The section emphasizes the importance of reinvestment in assets that are notified or recognized by the law, such as bonds or other approved securities, to avail exemption.
Section 54(e) applies to individual taxpayers and aims to promote investment in specified assets by providing relief from capital gains tax. It is part of the broader exemption clauses under Sections 54, 54F, 54EC, etc., which collectively encourage reinvestment in residential properties and notified securities. The section is specifically relevant when the transfer involves long-term assets and the taxpayer opts to invest in notified bonds or securities.
While Section 54(e) itself does not prescribe punishment, non-compliance or false declarations regarding the reinvestment can lead to the denial of exemption, resulting in the taxpayer being liable for capital gains tax and interest. Penalties may also be levied under Sections 271(1)(c) for concealment or furnishing inaccurate particulars, which can include penalties for fraudulent or wilful misstatements.
"Scope and Purpose" - Section 54(e) is designed to incentivize long-term investment in notified securities by providing exemption from capital gains tax, thereby promoting housing and financial stability. [Sources: "Baroda Cement and Chemicals Ltd. VS Commissioner of Income-Tax", "Sarala Devi VS Commissioner of Income Tax"]
"Essential Ingredients" - The section mandates that the transfer must be of a long-term residential property, and the gains must be invested in notified assets within the prescribed period, usually six months, to qualify for exemption. [Sources: "Sarala Devi VS Commissioner of Income Tax", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Time Frame and Investment" - The investment in notified assets must be completed within six months from the date of transfer, and the assets must be notified or recognized by the law, such as bonds issued by specified institutions. [Sources: "Sarala Devi VS Commissioner of Income Tax", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Notification and Recognition" - The assets eligible for exemption under Section 54(e) are notified or recognized by the government, and the taxpayer must ensure compliance with these notifications to avail the exemption. [Sources: "Sarala Devi VS Commissioner of Income Tax", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Applicability to Individuals" - Section 54(e) primarily benefits individual taxpayers and does not extend to juridical persons like companies or firms, unless explicitly specified. [Sources: "00300037000", "Commissioner of Income Tax, Karnataka-II VS C. Chandrashekar"]
"Legislative Amendments" - The section has undergone amendments, notably by the Finance Act, 1987, which extended the benefit to Hindu Undivided Families (HUF), indicating legislative intent to widen the scope of exemption. [Sources: "Kamlesh Keswani VS Assistant Commissioner Of Income Tax, Circle 49(1), Delhi", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Reinvestment Conditions" - The reinvestment must be in notified bonds or securities, and the amount invested should be not less than the capital gains amount, to claim full exemption. Failure to do so may result in partial or no exemption. [Sources: "Union of India VS Fr. Joseph Vilangatil", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Interpretation of 'In the Two Years'" - The phrase "in the two years immediately preceding" is interpreted to mean that the property must have been used for residence during that period, but continuous use is not mandatory; use at any time within the period suffices. [Sources: "SETH RAM GOPAL MOHTA VS COMMISSIONER OF INCOME TAX, DELHI AND RAJASTHAN", "TARACHAND KOYAL VS MAHESWAR CHOUDHURY"]
"Ownership and Use" - For claiming exemption, the property must have been used mainly for residence by the taxpayer or a parent, and the ownership or possession must be established within the stipulated period. [Sources: "COMMISSIONER OF INCOME TAX VS K. C. SAHNI (HUF)", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Legal Heirs and Exemptions" - Exemptions under Section 54 are also available to legal heirs of the deceased if the conditions are fulfilled within the prescribed timeline, emphasizing the continuity of ownership and use. [Sources: "C. V. Ramanathan VS Commissioner of Income Tax", "Late Gulam Ali Khan VS Commissioner of Income Tax"]
"Construction by Third Parties" - Investment in house constructed by a third party on behalf of the taxpayer is permissible under Section 54, provided the ownership and use conditions are satisfied within the statutory period. [Sources: "Kamlesh Keswani VS Assistant Commissioner Of Income Tax, Circle 49(1), Delhi", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Assessment and Reassessment" - Reassessment proceedings under Sections 147 and 148 are permissible if the conditions for exemption are not claimed or disclosed at the time of original assessment, but the exemption cannot be denied solely on procedural grounds if conditions are met subsequently. [Sources: "MAYA RASTOGI VS COMMISSIONER, INCOME TAX", "00300037000"]
"Legal Interpretation" - Courts have consistently held that the term "purchase" does not require registration or legal transfer before the stipulated period, and possession or agreement to purchase suffices for exemption purposes. [Sources: "COMMISSIONER OF INCOME TAX VS K. C. SAHNI (HUF)", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Penalty and Penalties" - Failure to comply with the conditions of reinvestment, or false declarations, may attract penalties under Sections 271(1)(c) and 274, including penalties for concealment or furnishing false information. [Sources: "Union of India VS Fr. Joseph Vilangatil", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Legislative Intent" - The amendments and judicial interpretations reflect the legislative intent to promote housing and long-term savings, balancing revenue collection with taxpayer incentives. [Sources: "Sarala Devi VS Commissioner of Income Tax", "Commissioner of Income Tax, Karnataka-II VS C. Chandrashekar"]
"Legal Position on Use of Property" - The property must have been used mainly for residence, and temporary or casual use does not disqualify, provided the primary use was residential during the relevant period. [Sources: "SETH RAM GOPAL MOHTA VS COMMISSIONER OF INCOME TAX, DELHI AND RAJASTHAN", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
"Exemption for Deceased and Legal Heirs" - The benefit of exemption extends to legal heirs if the conditions are met within the specified period, ensuring continuity in tax relief. [Sources: "C. V. Ramanathan VS Commissioner of Income Tax", "Late Gulam Ali Khan VS Commissioner of Income Tax"]
"Judicial Decisions" - Courts have consistently emphasized that the interpretation of "use" and "ownership" should favor the taxpayer where ambiguity exists, and the purpose of the exemption is to encourage investment in residential property. [Sources: "Kamlesh Keswani VS Assistant Commissioner Of Income Tax, Circle 49(1), Delhi", "ABDUL GAFFAR VS INCOME TAX OFFICER"]
This concise legal commentary encapsulates the scope, essential ingredients, and judicial interpretations of Section 54(e), emphasizing its purpose to promote investment in notified assets and residential properties, with provisions extending to legal heirs and allowing flexibility in ownership and use, subject to compliance.
1[54EA. Capital gain on transfer of long-term capital assets not to be charged in the case of investment in 2[ specified Securities]
(1) Where the capital gain arises from the transfer of a long-term capital asset 3[before the 1st day of April, 2000] (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of the net consideration in any of the 4[bonds, debentures, shares of a public company or units of any mutual fund referred to in clause (23D) of section 10], specified by the Board in this behalf by notification in the Official Gazette (such assets hereafter in this section referred to as the 2[specified securities], the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -
(a) if the cost of the 2[specified securities] is not less th
1a[54EB. Capital gain on transfer of long-term capital assets not to be charged in certain cases
(1) Where the capital gain arises from the transfer of a long-term capital asset 1[before the 1st day of April, 2000] (the capital asset so transferred being hereafter in this section referred to as the original asset), and the assessee has, at any time within a period of six months after the date of such transfer invested the whole or any part of capital gains, in any of the assets specified by the Board in this behalf by notification in the Official Gazette (such assets hereafter in this section referred to as the long-term specified asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -
(a) if the cost of long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the
1[(1) Where the capital gain arises from the transfer of a long-term capital asset 8[being land or building or both] (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, --
(a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-ter
1[(1) Where the capital gain arises 2[from the transfer before the 1st day of April, 2006, of a long-term capital asset,] being listed securities or unit (the capital asset so transferred being hereafter in this section referred to as the original asset), and the assessee has, within a period of six months after the date of such transfer, invested the whole or any part of the capital gain in acquiring equity shares forming part of an eligible issue of capital (such equity shares being hereafter in this section referred to as the specified equity shares), the said capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -
(a) if the cost of the specified equity shares is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the cost of the specified equity shares is less than the capital gain arising from the
1[54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house
(1) 2[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 3[two years after] the date on which the transfer took place purchased, or has within a period of three years after that date 4[constructed, one residential house in India] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not b
1a[54G. Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking From urban area
(1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area, effected in the course of, or in consequence of, the shifting of such industrial undertaking (hereafter in this section referred to as the original asset) to any area (other than an urban area) and the assessee has within a period of one year before or three years after the date on which the transfer took place, -
(a) purchased new machinery or plant for the purposes of business of the industrial undertaking in the area to which the said undertaking is shifted ;
(b) acquired building or land or constructed building for the purposes of his business in the sa
1[(1) Notwithstanding anything contained in section 54G, where the capital gain arises from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area, effected in the course of, or in consequence of the shifting of such industrial undertaking to any Special Economic Zone, whether developed in any urban area or any other area and the assessee has within a period of one year before or three years after the date on which the transfer took place, -
(a) purchased machinery or plant for the purposes of business of the industrial undertaking in the Special Economic Zone to which the said undertaking is shifted;
(b) acquired building or land or constructed building for the purposes of his business in the Special Economic Zone;
(c) shifted the original asset and transferred the establishment of such undertaking to the Specia
1[(1) Where,--
(i) the capital gain arises from the transfer of a long-term capital asset, being a residential property (a house or a plot of land), owned by the eligible assessee (herein referred to as the assessee); and
(ii) the assessee, before the due date of furnishing of return of income under sub-section (1) of section 139, utilises the net consideration for subscription in the equity shares of an eligible company (herein referred to as the company); and
(iii) the company has, within one year from the date of subscription in equity shares by the assessee, utilised this amount for purchase of new asset, then, instead of the capital gain being charged to income-tax as the income of the previous year in which the transfer takes place, it shall be dealt with in accordance with the following provisions of this section, that is to say,--
(a) if the amount of the net consideration is greater than the cost of the new asset, then, so much of the capital gai
Section 54(g)(b) of the Income Tax Act, 1961, pertains to the exemption provisions available to taxpayers on capital gains arising from the transfer of residential properties, with specific conditions and limits. It forms part of the broader framework of sections designed to incentivize reinvestment in residential assets and promote housing development. The section is significant for taxpayers seeking to avail exemption on long-term capital gains, subject to compliance with prescribed conditions.
Section 54(g)(b) provides that:- If a taxpayer transfers a long-term capital asset, being a residential house property,- and within a specified period, invests the capital gains in the purchase or construction of another residential house,- the capital gains to the extent of the amount invested shall be exempted from tax,- subject to the condition that the total exemption shall not exceed Rs. 10 crores (as per amendments), and- the new asset should be acquired or constructed within the prescribed time frame (generally, two years before or after the date of transfer).
The section also clarifies that if the cost of the new asset exceeds Rs. 10 crores, the excess amount shall be ignored for computing the exemption.
This concise commentary integrates statutory provisions, essential ingredients, scope, and judicial interpretations to provide a comprehensive understanding of Section 54(g)(b) in the context of capital gains exemption.
1[54H. Extension of time for acquiring new asset or depositing or investing amount of capital gain
Notwithstanding anything contained in sections 54, 54B, 54D, 2[***] 3[54EC] and 54F, where the transfer of the original asset is by way of compulsory acquisition under any law and the amount of compensation awarded for such acquisition is not received by the assessee on the date of such transfer, the period for acquiring the new asset by the assessee referred to in those sections or, as the case may be, the period available to the assessee under those sections for depositing or investing the amount of capital gain in relation to such compensation as is not received on the date of the transfer, shall be reckoned from the date of receipt of such compensation:
Provided that where the compensation in respect of transfer of the original asset by way of compulsory acquisition under any law is received before the 1st day of April, 1991, the aforesaid period or periods, if
(1) For the purposes of sections 48 and 49, -
(a) [Omitted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from 1st April, 1988] ;
(b) "cost of any improvement", -
(1) in relation to a capital asset being goodwill 10[or any other intangible asset] of a business or a right to manufacture, produce or process any article or thing 1[or right to carry on any business] 5[or profession] 10[or any other right] shall be taken to be nil; and
(2) in relation to any other capital asset, -
(i) where the capital asset became the property of the previous owner or the assessee before the 6[1st day of April, 2001], means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after the said date by the previous owner or the assessee, and
(ii) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by
With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer -
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed 2[is at variance with its fair market value];
(b) in any other case, if the Assessing Officer is of opinion -
(i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed1 in this behalf; or
(ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, cl
(1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E.
(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following income, shall be chargeable to income-tax under the head "Income from other sources", namely:
(i) dividends;
(ia) income referred to in sub-clause (viii) of clause (24) of section 2;
(ib) income referred to in sub-clause (ix) of clause (24) of section 2;
(ic) income referred to in sub-clause (x) of clause (24) of section 2, if such income is not chargeable to income-tax under the head "Profits and gains of business or profession";
(id) income by way of interest on securities, if the income is not chargeable to income-tax under the head "Profits and gains of business or profes
The income chargeable under the head “Income from other sources” shall be computed after making the following deductions, namely:
(i) 1[in the case of 3[dividends]], 5[other than that referred in sub-clause (f) of clause (22) of section 2] or interest on securities, any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend or interest on behalf of the assessee;
(ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head “Income from other sources”, deductions, so far as may be, in accordance with the provisions of clause (va) of sub-section (1) of section 36;
(ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, s
(1) Notwithstanding anything to the contrary contained in section 57, the following amounts shall not be deductible in computing the income chargeable under the head “Income from other sources”, namely:
(a) in the case of any assessee, -
(i) any personal expenses of the assessee;
(ia) any expenditure of the nature referred to in sub-section (12)* of section 40A;
(ii) any interest chargeable under this Act which is payable outside India (not being interest on a loan issued for public subscription before the 1st day of April, 1938) on which tax has not been paid or deducted under Chapter XVIIB;
(iii) any payment which is chargeable under the head “Salaries”, if it is payable outside India, unless tax has been paid thereon or deducted therefrom under Chapter XVIIB;
(b) [Omitted by the Finance Act, 1988, with effect from 1st April, 1989.]
(1A) The provisions of 1[sub-clauses (ia) and (iia)] of clause (a) of section 40 shall, so far as may be, appl
(1) The provisions of sub-section (1) of section 41 shall apply, so far as may be, in computing the income of an assessee under section 56, as they apply in computing the income of an assessee under the head “Profits and gains of business or profession”.
(2) and (3) [Omitted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from 1st April, 1988.]
All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income.
All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.
(1) The provisions of section 61 shall not apply to any income arising to any person by virtue of a transfer -
(i) by way of trust which is not revocable during the lifetime of the beneficiary, and, in the case of any other transfer, which is not revocable during the lifetime of the transferee; or
(ii) made before the 1st day of April, 1961, which is not revocable for a period exceeding six years:
Provided that the transferor derives no direct or indirect benefit from such income in either case.
(2) Notwithstanding anything contained in sub-section (1), all income arising to any person by virtue of any such transfer shall be chargeable to income-tax as the income of the transferor as and when the power to revoke the transfer arises, and shall then be included in his total income.
For the purposes of sections 60, 61 and 62 and of this section, -
(a) a transfer shall be deemed to be revocable if -
(i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or
(ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets;
(b) “transfer” includes any settlement, trust, covenant, agreement or arrangement.
(1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly -
(i) [Omitted by the Finance Act, 1992, with effect from 1st April, 1993];
(ii) to the spouse of such individual by way of salary, commission, fees or any other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest:
Provided that nothing in this clause shall apply in relation to any income arising to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of his or her technical or professional knowledge and experience;
(iii) [Omitted by the Finance Act, 1992, with effect from 1st April, 1993];
(iv) subject to the provisions of clause (i) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for a
Where, by reason of the provisions contained in this Chapter or in clause (i) of section 27, the income from any asset or from membership in a firm of a person other than the assessee is included in the total income of the assessee, the person in whose name such asset stands or who is a member of the firm shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be liable, on the service of a notice of demand by the 1[Assessing Officer] in this behalf, to pay that portion of the tax levied on the assessee which is attributable to the income so included, and the provisions of Chapter XVIID shall, so far as may be, apply accordingly:
Provided that where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay the tax which is attributable to the income from the assets so included.
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1. Substituted by the Direct Tax Laws (Amendment) Act,
In computing the total income of an assessee, there shall be included all income on which no income-tax is payable under Chapter VII.1[***]
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1. The words, figures and letters “and any amount in respect of which the assessee is entitled to a deduction from the amount of income-tax on his total income with which he is chargeable for any assessment year in accordance with, and to the extent provided in sections 87, 87A and 88” omitted by Act 20 of 1967, s. 33 and the Third Schedule (w.e.f. 1-4-1968).
1[***]
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1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
1[67A. Method of computing a member's share in income of association of persons or body of individuals
(1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely:
(a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which th
Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
2[Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless--
(a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and
(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:
Provided further that]
3[Provided also] that nothing contained in the 4[first proviso or second proviso] shall apply
Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.
1[69A. Unexplained money, etc.
Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the 2[Assessing Officer], satisfactory, the money and the value of the bullion, jewellery, or other valuable article may be deemed to be the income of the assessee for such financial year.
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1. Inserted by Finance Act, 1964, section 16 (w.e.f. 1-4-1964).
2. Substituted by Direct Tax Laws (Amwendment) Act, 1988, section 2, for “Income-tax Officer” (w.e.f. 1-4-1988)
1[69B. Amount of investments, etc., not fully disclosed in books of account
Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the 2[Assessing Officer] finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the 2[Assessing Officer], satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.
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1. Inserted by Finanec Act, 1965, section 19 (w.e.f. 1-4-1965).
2. Substituted. by Direct Tax Lwas (Amendment) Act, 1987, section 2, for “Income-tax Officer” (w.e.f. 1-4-1988).
1a[69C. Unexplained expenditure etc.
Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the 2[Assessing Officer], satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.
1[Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.]
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1a.. Inserted by Taxation Laws (Amendment) Act, 1975, Section 14 (w.e.f. 1-4-1976).
1. Inserted by the Finance (No. 2) Act, 1998, with effect from 1st April, 1999.
2. Substituted. by Direct Tax Lwas (Amendment) Act, 1987, section 2, for “Income-tax Officer
1[69D. Amount borrowed or repaid on hundi
Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be:
Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount.
Explanation: For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.]
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1.. Inserted by Taxation Laws (Amendment) Act, 1975, Section 14 (w.e.f. 1-4-1976).
1[(1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income, other than “Capital gains”, is a loss, the assessee shall be entitled to have the amount of such loss set-off against his income from any other source under the same head.
(2) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set-off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset.
(3) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall be entitled to have the amount of such loss set-off against the income, if any, as arrived at under a si
1a[71. Set off of loss from one head against income from another
(1) Where in respect of any assessment year the net result of the computation under any head of income other than “Capital gains”, is a loss and the assessee has no income under the head “Capital gains”, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set-off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has income assessable under the head “Capital gains”, such loss may, subject to the provisions of this Chapter, be set-off against his income, if any, assessable for that assessment year under any head of income including the head “Capital gains” (whether relating to short-term capital assets or any other capital assets).
1[(2A) Notwithstanding anythi
1[71A. Transitional provisions for set off of loss under the head Income from house property
Where in respect of the assessment year commencing on the 1st day of April, 1993 or the 1st day of April, 1994, the net result of the computation under the head “Income from house property” is a loss, such loss in so far as it relates to interest on borrowed capital referred to in clause (vi) of sub-section (1) of section 24 and to the extent it has not been set-off shall be carried forward and set-off in the assessment year commencing on the 1st day of April, 1995, and the balance, if any, in the assessment year commencing on the 1st day of April, 1996, against the income under any head.]
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1. Subs. by Finance Act, 1994, section 22, for section 71A (w.e.f. 1-4-1995). Earlier section 71A was inserted by the Finance Act, 1992, Section 38, (W.e.f. 01.04.1999).
1[71B. Carry forward and set off of loss from house property
Where for any assessment year the net result of computation under the head “Income from house property” is a loss to the assessee and such loss cannot be or is not wholly set-off against income from any other head of income in accordance with the provisions of section 71, so much of the loss as has not been so set-off or where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year and -
(i) be set-off against the income from house property assessable for that assessment year, and
(ii) the loss, if any, which has not been set-off wholly, the amount of loss not so set-off shall be carried forward to the following assessment year, not being more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.]
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1a[(1) Where for any assessment year, the net result of the computation under the head “Profits and gains of business or profession” is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set-off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so setoff or, 1b[***] where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and -
(i) it shall be set-off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year: and
1[***];
(ii) if the loss cannot be wholly so set-off, the amount of loss not so setoff shall be carried forward to the following assessment year and so on:]
2[Provided that where the whole or any part of such loss is sustained i
1[2[(1) Where there has been an amalgamation of -
(a) a company owning an industrial undertaking or a ship or a hotel with another company; or
(b) a banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a specified bank; or
11[(c) one or more public sector company or companies with one or more public sector company or companies; or
(d) an erstwhile public sector company with one or more company or companies, if the share purchase agreement entered into under strategic disinvestment restricted immediate amalgamation of the said public sector company and the amalgamation is carried out within five year from the end of the previous year in which the restriction on amalgamation in the share purchase agreement ends,]
then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss
72AA.2[Carry forward and set off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation in certain cases
Notwithstanding anything contained in sub-clauses (i) to (iii) of clause (1B) of section 2 or section 72A, where there has been an amalgamation of--
3[(i) one or more banking company with--
(a) any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949); or
(b) any other banking institution or a company subsequent to a strategic disinvestment, wherein the amalgamation is carried out within a period of five years from the end of the previous year during which such strategic disinvestment is carried out; or]
(ii) one or more corresponding new bank or banks with any other corresponding new bank under a scheme brought into force by the Central Government under section 9 of the Banking Companies (
1[(1) The assessee, being a successor co-operative bank, shall, in a case where the amalgamation has taken place during the previous year, be allowed to set off the accumulated loss and the unabsorbed depreciation, if any, of the predecessor co-operative bank as if the amalgamation had not taken place, and all the other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.
(2) The provisions of this section shall apply if -
(a) the predecessor co-operative bank -
(i) has been engaged in the business of banking for three or more years; and
(ii) has held at least three-fourths of the book value of fixed assets as on the date of the business reorganisation, continuously for two years prior to the date of business reorganisation;
(b) the successor co-operative bank -
(i) holds at least three-fourths of the book value of fixed assets of the predecessor co-operative bank acquired thr
(1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set-off except against profits and gains, if any, of another speculation business.
(2) Where for any assessment year any loss computed in respect of a speculation business has not been wholly set-off under sub-section (1), so much of the loss as is not so set-off or the whole loss where the assessee had no income from any other speculation business, shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and –
(i) it shall be set-off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year; and
(ii) if the loss cannot be wholly so set-off, the amount of loss not so set-off shall be carried forward to the following assessment year and so on.
(3) In respect of allowance on account of depreciation or capital expenditure on scientific research,
1a[74. Losses under the head 'Capital gains'
1[(1) Where in respect of any assessment year, the net result of the computation under the head “Capital gains” is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and -
(a) in so far as such loss relates to a short-term capital asset, it shall be set-off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset;
(b) in so far as such loss relates to a long-term capital asset, it shall be set-off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset not being a short-term capital asset;
(c) if the loss cannot be wholly so set-off, the amount of loss not so setoff shall be carried forward to the following assessment year and so on.]
(2) No loss shall be carried forwar
1[74. Losses from certain specified sources falling under the head 'Income from other sources'
2[***]
3[(3) 4[***] In the case of an assessee, being the owner of horses maintained by him for running in horse races (such horses being hereafter in this sub-section referred to as race horses), 5[the amount of loss incurred by the assessee in the activity of owning and maintaining race horses in any assessment year shall not be set-off against income, if any, from any source other than the activity of owning and maintaining race horses in that year and shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and -
(a) it shall be set-off against the income, if any, 6[from the activity of owning and maintaining race horses] assessable for that assessment year:
Provided that the activity of owning and maintaining race horses is carried on by him in the previous year relevant for that assessment year; and
(
1[75. Losses of firms
Where the assessee is a firm, any loss in relation to the assessment year commencing on or before the 1st day of April, 1992, which could not be set-off against any other income of the firm and which had been apportioned to a partner of the firm but could not be set-off by such partner prior to the assessment year commencing on the 1st day of April, 1993, then such loss shall be allowed to be set-off against the income of the firm subject to the condition that the partner continues in the said firm and to be carried forward for setoff under sections 70, 71, 72, 73, 74 and 74A.]
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1. Substituted. by the Finance Act, 1992, section 39, for sections 75, 76 and 77 (w.e.f. 1-4-1993). Earlier amended by the Finance Act, 1972, section 12 and 13 (W.e.f. 01.04.1972), by the Finance Act, 1974 20 of 1974, Section 13 (w.e.f 1-4-1975), by th Finance Act, 1987, section 74(c) (w.e.f. 1-4-1988), and these sections were omi
1[***]
--------------------------------
1. Omitted By The Finance Act, 1992, with effect from 1st April 1993.
1[***]
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1. Omitted By The Finance Act, 1992, with effect from 1st April 1993.
1[(1) Where a change has occurred in the constitution of a firm, nothing in this Chapter shall entitle the firm to have carried forward and set-off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, in the firm in respect of the previous year.]
(2) Where any person carrying on any business or profession has been succeeded in such capacity by another person otherwise than by inheritance, nothing in this Chapter shall entitle any person other than the person incurring the loss to have it carried forward and set-off against his income.
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1. Substituted by Finance Act, 1992, Section 40, for sub-section (1) (w.e.f. 1-4-1993). Earlier substituted by the Direct Tax Law (Amendment) Act, 1988, Section 20 (w.e.f. 1-4-1989) and restored by Direct Tax Law (Amendment) Act, 1989, section 95(g) (1-4-1989).
4[79. Carry forward and set off of losses in case of certain companies
(1) Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent. of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent. of the voting power on the last day of the year or years in which the loss was incurred:
Provided that even if the said condition is not satisfied in case of an eligible start up as referred to in section 80-IAC, the loss incurred in any year prior to the previous year shall be allowed to be
Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed 2[in accordance with the provisions of sub-section (3) of section 139], shall be carried forward and setoff under sub-section (1) of section 72 or sub-section (2) of section 73 1[or sub-section (2)] of section 73A] or 3[subsection (1) or sub-section (3) of section 74] 4[or sub-section (3) of section 74A].
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1. Inserted by the Finance Act, 2016.
2. Substituted by Direct Tax Laws (Amendment) Act, 1987, Section 126(10), for “within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income-tax Officer” (w.e.f. 1-4-1989). Earlier the said words were substituted by the Taxation Laws (Amendment) Act, 1984, section 18, for the words "under section 139" (W.e.f. 01.04.1985).
3. Substituted by Finance Act, 1987, section 74(c)(ii), for “sub-section (
(1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U.
(2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee.
(3) Where, in computing the total income of an association of persons or a body of individuals, any deduction is admissible under section 80G or 1[section 80GGA or section 80GGC] or section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA 2[or section 80-IB] 3[or section 80-IC] 4[or section 80-ID or section 80-IE] or section 80J* or section 80JJ, no deduction under the same section shall be made in computing the total income of a member of the association of persons or body of individuals in relation to the share of such member in the income of the association of
1[***]
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
Where any deduction is required to be made or allowed under any section included in this Chapter under the heading “C. – Deductions in respect of certain incomes” in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.
3[80AC. Deduction not to be allowed unless return furnished
Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after--
(i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE;
(ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.--
Deductions in respect of certain incomes",
no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]
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1. Inserted by the Finance Act, 2006, with effect from 1st April, 2006.
2. Inserted by the Finance Act, 2007, with effect from 1st April, 2008.
3. Substituted by the Fi
In this Chapter –
(1) 1[***] ;
(2) 2[***] ;
(3) 3[***];
(4) 2[***] ;
(5) “gross total income” means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.
(6) 2[***] ;
(7) 4[***];
(8) 2[***] ;
(9) 1[***].
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1. Omitted by the Taxation Laws (Amendment) Act, 1975, with effect from 1st April, 1976.
2. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
3. Omitted by the Finance Act, 1968, with effect from 1st April, 1969.
4. Omitted by the Finance Act, 1972 with effect from 1st April, 1973.
1[(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed 14[one hundred and fifty thousand rupees].
(2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee -
(i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);
(ii) to effect or to keep in force a contract for a deferred annuity 1a[not being an annuity plan referred to in clause (ii), of sub-section 1 of section 80CCA], not being an annuity plan referred to in clause (xii), on the life of persons specified in sub-section (4):
Provided that such contract does not contain a provision for the exercise by the insured of an opt
1[***]
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1. Omitted by the Finance (No. 2) Act, 1996, with retrospective effect from 1st April, 1993.
(1) Where an assessee, being -
(a) an individual, or
(b) a Hindu undivided family,
has in the previous year -
(i) deposited any amount in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf ; or
(ii) paid any amount to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify,
out of his income chargeable to tax, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of the whole of the amount deposited or paid (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of twenty thousand rupees in the previous year:
Provided that in relation to -
(a) the assessment years commencing on the 1st day of April, 1989 and the
(1) Where an assessee, being –
(a) an individual, or
(b) a Hindu undivided family,
has acquired in the previous year, out of his income chargeable to tax, units of any mutual fund specified under clause (23D) of section 10 or of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf (hereafter in this section referred to as the Equity Linked Savings Scheme), he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of so much of the amount invested as does not exceed the amount of ten thousand rupees in the previous year :
Provided that no deduction shall be allowed in relation to any amount invested under this sub-section on or after the 1st day of April, 1992.
(2) Where any amount inve
(1) Where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India 1[or any other insurer] for receiving pension from the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of 4[one hundred and fifty thousand rupees] in the previous year.
(2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessee's account, if any, is received by
1[(1) 8[Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer], 3[or any other assessee, being an individual] has in the previous year paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Government, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed, --
(a) in the case of an employee, ten per cent. of his salary in the previous year; and
(b) in any other case, 15[twenty per cent] of his gross total income in the previous year.
10[***]
11[(1B) An assessee referred to in sub-section (1), shall be allowed a deduction in computation of his total income, whether or not any deductions is allowed under sub-section (1), of the whole of
The aggregate amount of deductions under section 80C, section 80CCC and 1[sub-section (1) of section 80CCD] shall not, in any case, exceed 2[one hundred and fifty thousand rupees].
------------------------
1. Substituted by the Finance Act, 2011 w.e.f 01.04.2012 for the following section 80CCD"
2. Substituted by the Finance (No. 2) Act, 2014 w.e.f. 1st day of April, 2015 for the following:-
"one lakh rupees"
1[In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011 2[or to the assessment year beginning on the 1st day of April, 2012], as subscription to long-term infrastructure bonds as may, for the purposes of this section, be notified by the Central Government.]
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1. Inserted by the Finance Act, 2010 w.e.f. 01.04.2011.
2. Inserted by the Finance Act, 2011 w.e.f 01.04.2012
1[(1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity shares 2[or listed units of an equity oriented fund] in accordance with a scheme, as may be notified by the Central Government in this behalf, he shall, subject to the provisions of sub-section (3), be allowed a deduction, in the computation of his total income of the assessment year relevant to such previous year, of fifty per cent. of the amount invested in such equity shares 2[or units] to the extent such deduction does not exceed twenty-five thousand rupees.
3[(2) The deduction under sub-section (1) shall be allowed in accordance with, and subject to, the provisions of this section for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units of equity oriented fund were first acquired.]
(3) The deduction under sub-section (1) shall be subject to the following conditi
1[(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode, 4[as specified in sub-section (2B),] in the previous year out of his income chargeable to tax.
(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:
(a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family 3[or any contribution made to the 7[or such other scheme as may be notified by the Central Government in this behalf]] 5[or any payment made on account of preventive health check-up of the assessee or his family] as does not exceed in the aggregate 8[twenty-five thousand rupees]; and
(b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of t
7[(1) Where an assessee, being an individual or a Hindu undivided family, who is a resident in India, has, during the previous year,--
(a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
(b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability,
the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of a sum of seventy-five thousand rupees from his gross total income in respect of the previous year:
Provided that where such dependant is a person with severe disability, the provisions of this sub-section shall have effect as if for
1[***]
-----------------------------------
1. Stands omitted by substitution of Section 80DD for Section 80DD and 80DDA by the Finance (No. 2) Act, 1998, with effect from 1st April, 1999. Prior to omission, section 80DDA, stood as under :
‘80DDA. Deduction in respect of deposit made for maintenance of handicapped dependent. –
(1) In computing the total income of an assessee who is resident in India, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, an amount not exceeding twenty thousand rupees paid or deposited by him in the previous year, out of his income chargeable to tax, under any scheme framed in this behalf by the Life Insurance Corporation or the Unit Trust of India subject to the conditions specified in sub-section (2) and approved by the Board in this behalf.
(2) The deduction under sub-section (1) shall be allowed only if the following conditions are
1[Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified2 in the rules made in this behalf by the Board –
(a) for himself or a dependent, in case the assessee is an individual ; or
(b) for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,
the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :
6[Provided that no such deduction shall be allowed unless the assessee obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed:
Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insura
1(1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education 2[or for the purpose of higher education of his relative].
(2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to in sub-section (1) is paid by the assessee in full, whichever is earlier.
(3) For the purposes of this section, –
(a) “approved charitable institution” means an institution specified in, or, as the case may be, an institution established for charitable purposes
2[(1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property.
(2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:--
(i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017;
(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees;
(iii) the value of residential house propert
1[***]
-----------------------------------
1. Omitted by the Finance Act, 1985, with effect from 1st April, 1986.
1[***]
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1. Omitted by the Finance (No. 2) Act, 1980, with effect from 1st April, 1981.
51(1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, -
52[(i) in case where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified 1[in sub-clause (i) or in sub-clause (iiia)] 53[or in sub-clause (iiiaa)] 54[or in sub-clause (iiiab)] 36[or in sub-clause (iiib)] 55[or in sub-clause (iiie)] 56[or in sub-clause (iiif)] 57[or in sub-clause (iiig)] 2[or in sub-clause (iiiga)] 58[or sub-clause (iiih)] 59[or sub-clause (iiiha)] 60[or sub-clause (iiihb)] 61[or sub-clause (iiihc)] 62[or sub-clause (iiihd)] 63[or sub-clause (iiihe)] 64[or sub-clause (iiihf)] 3[or sub-clause (iiihg) or sub-clause (iiihh)] 4[or sub-clause (iiihi)] 5[or sub-clause (iiihj)] or 38[sub-clause (iiihk) or sub-clause (iiihl) or] 39[sub-clause (iiihm) or] in sub-clause (vii) of clause (a) 6[or in clause (c)] 2[or in clause (d)] thereof, an amount equal to the whole o
1[In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence, to the extent to which such excess expenditure does not exceed 4[five thousand rupees] per month or twenty-five per cent of his total income for the year, whichever is less and subject to such other conditions or limitations as may be prescribed2, having regard to the area or place in which such accommodation is situated and other relevant considerations :
Provided that nothing in this section shall apply to an assessee in any case where any residential accommodation is, -
(i) owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu
9[80GGA. Deduction in respect of certain donations for scientific research or rural development
(1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2).
(2) The sums referred to in sub-section (1) shall be the following, namely :
(a) any sum paid by the assessee in the previous year to a 3[research association] which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research :
Provided that such association, university, college or institution is for the time being approved for the purposes of clause (ii) of subsection (1) of section 35 ;
10[(aa) any sum paid by the assessee in the previous year 4[to a research association which has as its object the undertaking of research in social science or statistical research or to a University], college or othe
1In computing the total income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous year to any political party 2[or any electoral trust].
3[Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash.]
Explanation : For the removal of doubts, it is hereby declared that for the purposes of this section, the word “contribute”, with its grammatical variation, has the meaning assigned to it under section 293A of the Companies Act, 1956 (1 of 1956).]
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1. Inserted by the Election and Other Related Laws (Amendment) Act, 2003, with effect from 11th September, 2003.
2. Inserted by the Finance (No. 2) Act, 2009, with effect from 1st April, 2010.
3. Inserted by the Finance Act, 2013 w.e.f. 01.04.2014.
1[In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, 2[to a political party or an electoral trust].
3[Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash.]
Explanation : For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).]
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1. Inserted by the Election and Other Related Laws (Amendment) Act, 2003, with effect from 11th September, 2003.
2. Substituted by the Finance (No. 2) Act, 2009, with effect from 1st April, 2010 for the words:-
"to a political party]"
3. Inserted by the Finance Act, 2013 w.e.f. 01.04.2014.
1[***]
----------------------------------
1. Omitted by the Taxation Laws (Amendment) Act, 1975, with effect from 1st April, 1976.
3[Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas
(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :
(i) it has begun or begins to manufacture or produce articles after the 31st day of December, 1970 4[but before the 1st day of April, 1990], in any backward area ;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence in any backward area :
Provided that this cond
3[80HHA. Deduction in respect of profits and gains from newly established small-scale industrial undertakings in certain areas
(1) Where the gross total income of an assessee includes any profits and gains derived from a small-scale industrial undertaking to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof.
(2) This section applies to any small-scale industrial undertaking which fulfils all the following conditions, namely :
(i) it begins to manufacture or produce articles after the 30th day of September, 1977, 4[but before the 1st day of April, 1990], in any rural area ;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence :
Provided that this condition shall not apply in respect of any small-scale indus
9[80HHB. Deduction in respect of profits and gains from projects outside India
(1) Where the gross total income of an assessee being an Indian company or a person (other than a company) who is resident in India includes any profits and gains derived from the business of –
(a) the execution of a foreign project undertaken by the assessee in pursuance of a contract entered into by him, or
(b) the execution of any work undertaken by him and forming part of a foreign project undertaken by any other person in pursuance of a contract entered into by such other person,
with the Government of a foreign State or any statutory or other public authority or agency in a foreign State, or a foreign enterprise, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, 1[a deduction from such profits and gains of an amount equal to --
(i) forty per cent thereof for an assessment year begi
1[(1) Where the gross total income of an assessee being an Indian company or a person (other than a company) who is a resident in India includes any profits and gains derived from the execution of a housing project awarded to the assessee on the basis of global tender and such project is aided by the World Bank, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, 2[a deduction from such profits and gains of an amount equal to –
(i) forty per cent thereof for an assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) ten per cent thereof for an assessment year beginning on the 1st day of April, 2004,
and no deduction shall be allowed in respect of the assessment year beginning o
15[80HHC. Deduction in respect of profits retained for export business
16[(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, 1[a deduction to the extent of profit, referred to is sub-section (1B)] derived by the assessee from the export of such goods or merchandise:
Provided that if the assessee, being a holder of an Export House Certificate or a Trading House Certificate, (hereafter in this section referred to as an Export House or a Trading House, as the case may be,) issues a certificate referred to in clause (b) of sub-section (4A), that in respect of the amount of the export turnover specified therein, the deduction under this subsection is to be allowed to a support
16[80HHD. Deduction in respect of earnings in convertible foreign exchange
(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of a hotel or of a tour operator, approved by the prescribed authority1 in this behalf or of a travel agent, there shall, in accordance with and subject to the provisions of this section, be allowed, 2[in computing the total income of the assessee –
(a) for an assessment year beginning on the 1st day of April, 2001, a deduction of a sum equal to the aggregate of –
(i) forty per cent of the profits derived by him from services provided to foreign tourists; and
(ii) so much of the amount not exceeding forty per cent of the profits referred to in sub-clause (i) as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised for the purposes of the business of
1a[80HHE. Deduction in respect of profits from export of computer software, etc.
(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of, –
(i) export out of India of computer software or its transmission from India to a place outside India by any means;
(ii) providing technical services outside India in connection with the development or production of computer software,
there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, 1[a deduction to the extent of the profits, referred to in sub-section (1B)] derived by the assessee from such business.
1b[**]
2[Provided that if the assessee, being a company engaged in the export out of India of computer software issues a certificate referred to in clause (b) of sub-section (4A), that in respect of the amount of the export specified therein, the deduct
1[(1) Where an assessee, being an Indian company, 2[or a person (other than a company) resident in India] is engaged in the business of export or transfer by any means out of India, of any film software, television software, music software, television news software, including telecast rights (hereafter in this section referred to as the software or software rights), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, 3[a deduction to the extent of profits referred to in sub-section (1A)] derived by the assessee from such business.
4[(1A) For the purposes of sub-section (1), the extent of deduction of profits shall be an amount equal to –
(i) eighty per cent of such profits for an assessment year beginning on the 1st day of April, 2001;
5[(ii) seventy per cent thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) fifty per cent thereof for an asses
1a[80I. Deduction in respect of profits and gains from industrial undertakings after a certain date, etc.
(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel 2[or the business of repairs to ocean-going vessels or other powered craft] to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof:
Provided that in the case of an assessee, being a company, the provisions of this sub-section 3[shall have effect in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel] as if for the words “twenty per cent”, the words “twenty-five per cent” had been substituted.
4[(1A) Notwithstanding anything contained in sub-section (1),
1[2[(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of profits and gains derived from such business for ten consecutive assessment years.]
(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park 3[4[or develops a special economic zone] referred to in clause (iii) of sub-section (4)] or
1[(1) Where the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic Zones Act, 2005, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.
2[Provided that the provisions of this section shall not apply to an assessee, being a developer, where the development of Special Economic Zone begins on or after the 1st day of April, 2017.]
(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which a Special Ec
1a[80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings
(1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections 2[(3) to 3[(11), (11A) and (11B)]] (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of an industrial undertaking which is forme
1[(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3).
(2) This section applies to any undertaking or enterprise,-
(a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule, or which manufactures or produces any article or thing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the period beginning-
(i) on the 23rd day of December, 2002 and ending before the 2[1st day of April, 2007], in any Export Processing Zone or Integrated Infrastructure Development Center or Industrial Growth Cent
1[(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking from any business referred to in sub-section (2) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for five consecutive assessment years beginning from the initial assessment year.
(2) This section applies to any undertaking, -
(i) engaged in the business of hotel located in the specified area, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2007 and ending on 1a[the 31st day of March, 2010]; or
(ii) engaged in the business of building, owning and operating a convention center, located in the specified area, if su
1[(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years commencing with the initial assessment year.
(2) This section applies to any undertaking which has, during the period beginning on the 1st day of April, 2007 and ending before the 1st day of April, 2017, begun or begins, in any of the North-Eastern States, -
(i) to manufacture or produce any eligible article or thing;
(ii) to undertake substantial expansion to manufacture or produce any eligible article or thing;
(iii) to carry on any eligible business.
(3) This section applies to any undertaking which fulfils all the following conditions, namely:
(i) it
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1. Omitted by the Finance (No. 2) Act, 1996, with retrospective effect from 1st April, 1989.
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
1[Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of biodegradable waste for generating power, 2[or producing bio-fertilisers, bio-pesticides or other biological agents or for producing bio-gas or] making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, 3[a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences].]
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1. Inserted by the Finance (No. 2) Act, 1998, with effect from 1st April, 1999.
2. Substituted for ‘producing bio-gas’ by the Finance Act, 1999, with effect from 1st April, 2000.
3. Substituted for ‘a deduction from such profits and gains of an amount equal to the whole of such income, or
9[(1) Where the gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent. of additional employee cost incurred in the course of such business in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.
(2) No deduction under sub-section (1) shall be allowed,--
(a) if the business is formed by splitting up, or the reconstruction, of an existing business:
Provided that nothing contained in this clause shall apply in respect of a business which is formed as a result of re-establishment, reconstruction or revival by the assessee of the business in the circumstances and within the period specified in section 33B;
(b) if the business is acquired by the assessee by way of transfer from any
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1. Omitted by the Finance Act, 1986, with effect from 1st April, 1987.
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1. Omitted by the Finance Act, 2005, with effect from 1st April, 2006. Prior to omission, section 80L as amended by the Finance Act, 1999, with effect from 1st April, 2000; Finance Act, 2000, with effect from 1st April, 2000 and Finance Act, 2003, with effect from 1st April, 2004; Finance Act, 2001, with effect from 1st April, 2002, stood as under: “80L. Deductions in respect of interest on certain securities, dividends, etc. -
(1) Where the gross total income of an assessee, being -
(a) an individual, or
(b) a Hindu undivided family,
(c) Omitted by the Finance Act, 1994, with retrospective effect from 1st April, 1968, includes any income by way of -
(i) interest on any security of the Central Government or a State Government; (ia) interest on National Savings Certificates (VI Issue) or National Savings Certificates (VII Issue) or National Savings Certificates
3[(1) Where the gross total income of an assessee, being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to--
(a) one hundred per cent. of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949) or permission or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or any other relevant law was obtained, and thereafter;
(b) fifty per cent. of such income for five consecutive assessment years.
10[Provided that for the assessment year commencing on or after
2[80M. Deduction in respect of certain intercorporate dividends
(1) Where the gross total income of a domestic company in any previous year includes any income by way of dividends from any other domestic company or a foreign company or a business trust, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends received from such other domestic company or foreign company or business trust as does not exceed the amount of dividend distributed by it on or before the due date.
(2) Where any deduction, in respect of the amount of dividend distributed by the domestic company, has been allowed under sub-section (1) in any previous year, no deduction shall be allowed in respect of such amount in any other previous year.
Explanation.--For the purposes of this section, the expression "due date" mea
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1. Omitted by the Finance Act, 1983, with effect from 1st April, 1984.
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1. Omitted by the Finance Act, 1985 with effect from 1st April, 1986.
1a[80O. Deduction in respect of royalties, etc., from certain foreign enterprises
1b[Where the gross total income of an assessee, being an Indian company, 1c[or a person (other than a company) who is resident in India]], includes 1d[any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design or registered trade mark] 1e[***] 1f[and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, 1[a deduction of an amount equal to –
(i) forty per cent for
1a[80P. Deduction in respect of income of co-operative societies
(1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.]
(2) The sums referred to in sub-section (1) shall be the following, namely:
(a) in the case of a co-operative society engaged in –
(i) carrying on the business of banking or providing credit facilities to its members, or
(ii) a cottage industry, or
1[(iii) the marketing of agricultural produce grown by its members, or]
(iv) the purchase of the agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or
(v) the processing, without the aid of power, of the agricultural produce of its me
1[80Q. Deduction in respect of profits and gains from the business of publication of books
(1) Where in the case of an assessee the gross total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1992, or to any one of the four assessment years next following that assessment year, includes any profits and gains derived from a business carried on in India of printing and publication of books or publication of books, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof.
(2) In a case where the assessee is entitled also to the deduction under section 80HH or section 80HHA or section 80HHC or section 80-I or section 80-IA or section 80J* or section 80P, in relation to any part of the profits and gains referred to in sub-section (1), the deduction under sub
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1[80QQA. Deduction in respect of professional income of authors of text books in Indian languages
(1) Where, in the case of an individual resident in India, being an author, the gross total income of the previous year relevant to the assessment year 2[commencing on –
(a) the 1st day of April, 1980, or to any one of the nine assessment years next following that assessment year; or
(b) the 1st day of April, 1992, or to any one of the four assessment years next following that assessment year,
includes] any income derived by him in the exercise of his profession on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book, or of royalties or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction from such income of an amo
1[(1) Where, in the case of an individual resident in India, being an author, the gross total income includes any income, derived by him in the exercise of his profession, on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income, computed in the manner specified in sub-section (2).
(2) The deduction under this section shall be equal to the whole of such income referred to in sub-section (1), or an amount of three lakh rupees, whichever is less:
Provided that where the income by way of such royalty or the copyright fee, is not a lump sum consideration in lieu of all rights of the
1a[80R. Deduction in respect of remuneration from certain foreign sources in the case of professors, teachers, etc.
Where the gross total income of an individual who is a citizen of India includes any remuneration received by him outside India from any university or other educational institution established outside India or 1b[any other association or body established outside India], for any service rendered by him during his stay outside India in his capacity as a professor, teacher or research worker in such university, institution, association or body, there shall be 1c[allowed, in computing the total income of the individual, 1[a deduction from such remuneration of an amount equal to –
(i) sixty per cent of such remuneration for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent of such remuneration for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent of such remu
1a[80RR. Deduction in respect of professional income from foreign sources in certain cases
Where the gross total income of an individual resident in India, being an author, playwright, artist, 1b[musician, actor or sportsman (including an athlete)], includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India, 1c[there shall be allowed, in computing the total income of the individual, 1[a deduction from such income of an amount equal to –
(i) sixty per cent of such income for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent of such income for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent of such income for an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent of such income for an assessment year beginning on the 1st day of April, 2004,
as is brought into India by, or
1a[80RRA. Deduction in respect of remuneration received for servi¬ces rendered outside India
(1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, 1[a deduction from such remuneration of an amount equal to –
(i) sixty per cent of such remuneration for an assessment year beginning on the 1st day of April, 2001;
(ii) forty-five per cent of such remuneration for an assessment year beginning on the 1st day of April, 2002;
(iii) thirty per cent of such remuneration for an assessment year beginning on the 1st day of April, 2003;
(iv) fifteen per cent of such remuneration for an assessment year beginning on the 1st day of April
(1) Where in the case of an assessee, being an individual, who is—
(a) resident in India;
(b) a patentee;
(c) in receipt of any income by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970 (39 of 1970), and
his gross total income of the previous year includes royalty, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, from such income, of an amount equal to the whole of such income or three lakh rupees, whichever is less:
Provided that where a compulsory licence is granted in respect of any patent under the Patents Act, 1970 (39 of 1970), the income by way of royalty for the purpose of allowing deduction under this section shall not exceed the amount of royalty under the terms and conditions of a licence settled by the Controller under that Act :
Provided further that in respect of any income earned from any source outside India,
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1. Omitted by the Finance Act, 1986, with effect from 1st April, 1987.
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
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1. Omitted by the Finance Act, 1986, with effect from 1st April, 1987.
1[(1) Where the gross total income of an assessee 2[(other than the assessee referred to in section 80TTB)], being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with--
(a) a banking company to which the Banking Regulation Act, 1949(10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or
(c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898(6 Of 1898), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee a deduction as specified hereunder, namely:--
(i) in a case where the amount of such income does not exceed in the aggregate ten thou
6[(1) In computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of seventy-five thousand rupees:
Provided that where such individual is a person with severe disability, the provisions of this sub-section shall have effect as if for the words "seventy-five thousand rupees", the words "one hundred and twenty-five thousand rupees" had been substituted.]
(2) Every individual claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the form and manner, as may be prescribed3, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed:
Provided that where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction u
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1. Omitted by the Finance Act, 1994, with effect from 1st April, 1995.
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1. Omitted by the Finance Act, 1985, with effect from 1st April, 1986.
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
1[86. Share of member of an association of persons or body of individuals in the income of the association or body
Where the assessee is a member of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India), income-tax shall not be payable by the assessee in respect of his share in the income of the association or body computed in the manner provided in section 67A :
Provided that -
(a) where the association or body is chargeable to tax on its total income at the maximum marginal rate or any higher rate under any of the provisions of this Act, the share of a member computed as aforesaid shall not be included in his total income ;
(b) in any other case, the share of a member computed as aforesaid shall form part of his total income :
Provided further that where
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1. Omitted by the Finance Act, 1988, with effect from 1st April, 1989.
(1) In computing the amount of income-tax on the total income of an assessee with which he is chargeable for any assessment year, there shall be allowed from the amount of income-tax (as computed before allowing the deductions under this Chapter), in accordance with and subject to the provisions of 1[2[3[4[sections 87A,] 9[****] and 88E], the deductions specified in those sections.
(2) The aggregate amount of the deductions under 5[section 87A or ] 10[****] 8[or section 88E] shall not, in any case, exceed the amount of income-tax (as computed before allowing the deductions under this Chapter) on the total income of the assessee with which he is chargeable for any assessment year.
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1. The words "Sections 88 and 88A" Substituted by the Finance Act, 1992, section 50(a), for "Section 88 and 88A" (w.e.f. 01.04.1993).
2. The words, " 88B and 88C" was substituted by the Finance Act, 2000, section 45(a) for 'and 88B' with effect from
1a[87A. Rebate of income-tax in case of certain individuals
An assessee, being an individual resident in India, whose total income does not exceed 1b[1[five hundred thousand] rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of 2a[2[twelve thousand and five hundred] rupees, whichever is less.
3[Provided that where the total income of the assessee is chargeable to tax under sub-section (1A) of section 115BAC, and the total income--
(a) does not exceed 4[twelve hundred thousand rupees], the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred pe
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1a. Inserted by the Finance Act, 1990, Section 30(b) (w.e.f. 01.04.1991).
1aa. Inserted by Direct Taxes (Amendment) Act, 1964 (31 of 1964).
1. Substituted by the Finance Act, 2002, with effect from 1st April, 2003. Prior to substitution, sub-section (1), as amended by the Finance Act, 2001, with effect from 1st April, 2002, stood as under :
'(1) Subject to the provisions of this section, an assessee, being -
(a) an individual, or
(b) a Hindu undivided family,
shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to twenty per cent of the aggregate of the sums referred to in sub-section (2) :
Provided that in the case of an individual, whose income, derived from the exercise of his profession as an author, playwright, artist, musician
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1. Omitted by the Finance (No. 2) Act, 1996, with retrospective effect from 1st April, 1994.
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1. Omitted by the Finance Act, 2005, with effect from 1st April, 2006. Prior to omission, section 88B as amended by the Finance Act, 1997, with effect from 1st April, 1998; Finance Act, 2000, with effect from 1st April, 2001 and Finance Act, 2003, with effect from 1st April, 2004, stood as under:
“88B. Rebate of income-tax in case of individuals of sixty-five years or above – An assessee, being an individual resident in India, who is of the age of sixty-five years or more at any time during the previous year shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deduction under this Chapter) on his total income, with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of twenty thousand rupees, whichever is less.”
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1. Omitted by the Finance Act, 2005, with effect from 1st April, 2006. Prior to omission, section 88C, as inserted by the Finance Act, 2000, with effect from 1st April, 2001, stood as under:
“88C. Rebate of income-tax in case of women below sixty-five years.–
An assessee, –
(a) being a woman resident in India ; and
(b) below the age of sixty-five years, at any time during the previous year, shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on her total income, with which she is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of five thousand rupees, whichever is less.”
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1. Omitted by the Finance Act, 2005, with effect from 1st April, 2006. Prior to omission, section 88D, as inserted by the Finance (No. 2) Act, 2004, with effect from 1st April, 2005, stood as under:
“88D. Rebate of income-tax in case of certain individuals.–
An assessee, being an individual resident in India, –
(a) whose total income does not exceed one hundred thousand rupees, shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax;
(b) whose total income exceeds one hundred thousand rupees and the income-tax payable on such total income (as computed before allowing the deductions under this Chapter) exceeds the amount by which such total income is in excess of one hundred thousand rupees, shall be
1[(1) Where total income of an assessee in a previous year includes any income, chargeable under the head “Profits and gains of business or profession”, arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of income-tax on such income arising from such transactions, computed in the manner provided in sub-section (2), of an amount equal to the securities transaction tax paid by him in respect of the taxable securities transactions entered into in the course of his business during that previous year:
Provided that no deduction under this sub-section shall be allowed unless the assessee furnishes alongwith the return of income, evidence of payment of securities transaction tax in the prescribed2 form :
Provided further that the amount of deduction under this sub-section shall not exceed the amount of income-tax on such income computed in the manner provided in sub-section (2).
(2) For the purposes of sub-section (1),
1[Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed.2]
3[Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i) of clause (1
2[89A. Relief from taxation in income from retirement benefit account maintained in a notified country.-
Where a specified person has income accrued in a specified account, such income shall be taxed in such manner and in such year as may be prescribed.
Explanation.--For the purposes of this section,--
(a) “notified country” means a country as may be notified by the Central Government in the Official Gazette for the purposes of this section;
(b) “specified account” means an account maintained in a notified country by the specified person in respect of his retirement benefits and the income from such account is not taxable on accrual basis but is taxed by such country at the time of withdrawal or redemption;
(c) “specified person” means a person resident in India who opened a specified account in a notified country while being non-resident in India and resident in that country.]
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1. Omitted by the Finance Act, 19
1(1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,--
(a) for the granting of relief in respect of--
(i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or
(ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or
(b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be 8[without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any other c
1[(1) Any specified association in India may enter into an agreement with any specified association in the specified territory outside India and the Central Government may, by notification in the Official Gazette, make such provisions as may be necessary for adopting and implementing such agreement –
(a) for the granting of relief in respect of –
(i) income on which have been paid both income-tax under this Act and income-tax in any specified territory outside India; or
(ii) income-tax chargeable under this Act and under the corres-ponding law in force in that specified territory outside India to promote mutual economic relations, trade and investment, or
(b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that specified territory outside India 7[without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed
(1) If any person who is resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 90 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is the lower, or at the Indian rate of tax if both the rates are equal.
(2) If any person who is resident in India in any previous year proves that in respect of his income which accrued or arose to him during that previous year in Pakistan he has paid in that country, by deduction or otherwise, tax payable to the Government under any law for the time
1a[92. Computation of income from international transaction having regard to arm’s length price
1[(1) Any income arising from an international transaction shall be computed having regard to the arm’s length price.
Explanation : For the removal of doubts, it is hereby clarified that the allowance for any expense or interest arising from an international transaction shall also be determined having regard to the arm’s length price.
(2) Where in an 2[international transaction or specified domestic transaction], two or more associated enterprises enter into a mutual agreement or arrangement for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises, the cost or expense allocated or apportioned to, or, as the case may be, contributed by, any such enterprise shall be determined having regard to the ar
1[(1) For the purposes of this section and sections 92, 92B, 92C, 92D, 92E and 92F, “associated enterprise”, in relation to another enterprise, means an enterprise –
(a) which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise ; or
(b) in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise.
2[(2) For the purposes of sub-section (1), two enterprises shall be deemed to be associated enterprises if, at any time during the previous year, –]
(a) one enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in the other enterprise; or
(b) any person
1[(1) For the purposes of this section and sections 92, 92C, 92D and 92E, “international transaction” means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises.
(2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes of sub-section (1), be 3[deemed to be an international transaction] entered into between tw
1[For the purposes of this section and sections 92, 92C, 92D and 92E, "specified domestic transaction" in case of an assessee means any of the following transactions, not being an international transaction, namely:--
3[***]
(ii) any transaction referred to in section 80A;
(iii) any transfer of goods or services referred to in sub-section (8) of section 80-IA;
(iv) any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-IA;
(v) any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable; or
4[(va) any business transacted between the persons referred to in sub-section (6) of section 115BAB;]
5[(vb) any business transacted between the assessee and other person as referred to in sub-section (4) of section 115BAE.]
(vi) any other transaction as may be prescribed, and where th
1(1) The arm’s length price in relation to an 13[international transaction or specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe2, namely :
(a) comparable uncontrolled price method ;
(b) resale price method ;
(c) cost plus method ;
(d) profit split method ;
(e) transactional net margin method ;
(f) such other method as may be prescribed3 by the Board.
(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm’s length price, in the manner as may be prescribed4:
5[Provided that where more than one price is determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices:
Pr
1[(1) Where any person, being the assessee, has entered into an 5[international transaction or specified domestic transaction] in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the 8[Principal Commissioner or Commissioner], refer the computation of the arm's length price in relation to the said 5[international transaction or specified domestic transaction] under section 92C to the Transfer Pricing Officer.
17[Provided that no reference for computation of the arm's length price in relation to an international transaction or a specified domestic transaction shall be made, if the Transfer Pricing Officer has declared that option exercised by the assessee in sub-section (3B) in relation to such transaction is valid for such previous year:
Provided further that if any reference for an international transaction or a specified domestic transaction, in respect of a previous year, for which
2[(1) The determination of--
(a) income referred to in clause (i) of sub-section (1) of section 9; or
(b) arm's length price under section 92C or section 92CA, shall be subject to safe harbour rules.]
(2) The Board may, for the purposes of sub-section (1), make rules for safe harbour.
Explanation.--For the purposes of this section, “safe harbour” means circumstances in which the income-tax authorities shall accept 3[the transfer price or income, deemed to accrue or arise under clause (i) of sub-section (1) of section 9, as the case may be, declared by the assessee].]
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1. Inserted by the Finance (No. 2) Act, 2009, with retrospective effect from 1st April, 2009.
2. Substituted by Finance Act, 2020, w.e.f. 01.04.2020, for the following:-
"1(1) The determination of arm’s length price under section 92C or section 92CA shall be subject to safe harbour rules."
3. Substituted by Finance Act, 2020, w.e.f. 0
4[(1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the--
(a) arm's length price or specifying the manner in which the arm's length price is to be determined, in relation to an international transaction to be entered into by that person;
(b) income referred to in clause (i) of sub-section (1) of section 9, or specifying the manner in which said income is to be determined, as is reasonably attributable to the operations carried out in India by or on behalf of that person, being a non-resident.
(2) The manner of determination of the arm's length price referred to in clause (a) or the income referred to in clause (b) of sub-section (1), may include the methods referred to in sub-section (1) of section 92C or the methods provided by rules made under this Act, respectively, with such adjustments or variations, as may be necessary or expedient so to do.
(3) Notwithstanding anythi
1[(1) Notwithstanding anything to the contrary contained in section 139, where any person has entered into an agreement and prior to the date of entering into the agreement, any return of income has been furnished under the provisions of section 139 for any assessment year relevant to a previous year to which such agreement applies, such person shall furnish, within a period of three months from the end of the month in which the said agreement was entered into, a modified return in accordance with and limited to the agreement.
(2) Save as otherwise provided in this section, all other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 139.
(3) If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the agreement applies have been completed before the expiry of period allowed for furnishing of modified return under sub-section (1), the Assessing Officer shall
6[92D. Maintenance, keeping and furnishing of information and document by certain persons
(1) Every person,--
(i) who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document in respect thereof as may be prescribed;
(ii) being a constituent entity of an international group, shall keep and maintain such information and document in respect of an international group as may be prescribed.
Explanation.-- For the purposes of this clause,--
(A) "constituent entity" shall have the meaning assigned to it in clause (d) of sub-section (9) of section 286;
(B) "international group" shall have the meaning assigned to it in clause (g) of sub-section (9) of section 286.
(2) Without prejudice to the provisions contained in sub-section (1), the Board may prescribe the period for which the information and document shall be kept and maintained under the said sub-section.
(3) The Asse
1[92E. Report from an accountant to be furnished by persons entering into 3[ international transaction or specified domestic transaction]
Every person who has entered into an 3[international transaction or specified domestic transaction] during a previous year shall obtain a report from an accountant and furnish such report on or before the specified date in the prescribed form1 duly signed and verified in the prescribed manner2 by such accountant and setting forth such particulars as may be prescribed.2]
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1. Inserted by the Finance Act, 2001, with effect from 1st April, 2002.
2. See rule 10E and Form No. 3CEB. For analysis, see Mashbra’s Income-tax Rules.
3. Substituted by the Finance Act, 2012, w.e.f. 01.04.2013 for the following:-
"international transaction"
1[In sections 92, 92A, 92B, 92C, 92D and 92E, unless the context otherwise requires–
(i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288 ;
(ii) “arm’s length price” means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions ;
(iii) “enterprise” means a person (including a permanent establishment of such person) who is, or has been, or is proposed to be, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterpr
(1) Where there is a transfer of assets by virtue or in consequence whereof, either alone or in conjunction with associated operations, any income becomes payable to a non-resident, the following provisions shall apply –
(a) where any person has, by means of any such transfer, either alone or in conjunction with associated operations, acquired any rights by virtue of which he has, within the meaning of this section, power to enjoy, whether forthwith or in the future, any income of a non-resident person which, if it were income of the first-mentioned person, would be chargeable to income-tax, that income shall, whether it would or would not have been chargeable to income-tax apart from the provisions of this section, be deemed to be income of the first-mentioned person for all the purposes of this Act ;
(b) where, whether before or after any such transfer, any such first-mentioned person receives or is entitled to receive any capital sum the payment whereof is in
(1) Where the owner of any securities [in this sub-section and in sub-section (2) referred to as “the owner”] sells or transfers those securities, and buys back or re-acquires the securities, then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable otherwise than by the owner, the interest payable as aforesaid shall, whether it would or would not have been chargeable to income-tax apart from the provisions of this sub-section, be deemed, for all the purposes of this Act, to be the income of the owner and not to be the income of any other person.
Explanation : The references in this sub-section to buying back or re-acquiring the securities shall be deemed to include references to buying or acquiring similar securities, so, however, that where similar securities are bought or acquired, the owner shall be under no greater liability to income-tax than he would have been under if the original securities had be
3[4[(1)] Notwithstanding anything contained in the Act, an arrangement entered into by an assessee may be declared to be an impermissible avoidance arrangement and the consequence in relation to tax arising therefrom may be determined subject to the provisions of this Chapter.
5[(2) This Chapter shall apply in respect of any assessment year beginning on or after the 1st day of April, 2018.]
Explanation.--For the removal of doubts, it is hereby declared that the provisions of this Chapter may be applied to any step in, or a part of, the arrangement as they are applicable to the arrangement.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.04.2014.
2. Omitted by the Finance Act, 2013 w.e.f. 01.04.2014 for the following : -
"1[Notwithstanding anything contained in the Act, an arrangement entered into by an assessee may be declared to be an impermissible avoidance arrangement and the consequence in relation to tax arising
3[(1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it--
(a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length;
(b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act;
(c) lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or
(d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes.
(2) An arrangement shall be presumed, unless it is proved to the contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit.]
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3[(1) An arrangement shall be deemed to lack commercial substance, if--
(a) the substance or effect of the arrangement as a whole, is inconsistent with, or differs significantly from, the form of its individual steps or a part; or
(b) it involves or includes--
(i) round trip financing;
(ii) an accommodating party;
(iii) elements that have effect of offsetting or cancelling each other; or
(iv) a transaction which is conducted through one or more persons and disguises the value, location, source, ownership or control of funds which is the subject matter of such transaction; or
(c) it involves the location of an asset or of a transaction or of the place of residence of any party which is without any substantial commercial purpose other than obtaining a tax benefit (but for the provisions of this Chapter) for a party; or
(d) it does not have a significant effect upon the business risks or net cash flows of any party to the arrangement apart fr
3[(1) If an arrangement is declared to be an impermissible avoidance arrangement, then, the consequences, in relation to tax, of the arrangement, including denial of tax benefit or a benefit under a tax treaty, shall be determined, in such manner as is deemed appropriate, in the circumstances of the case, including by way of but not limited to the following, namely: -
(a) disregarding, combining or re-characterising any step in, or a part or whole of, the impermissible avoidance arrangement;
(b) treating the impermissible avoidance arrangement as if it had not been entered into or carried out;
(c) disregarding any accommodating party or treating any accommodating party and any other party as one and the same person;
(d) deeming persons who are connected persons in relation to each other to be one and the same person for the purposes of determining tax treatment of any amount;
(e) reallocating amongst the parties to the arrangement--
(i) any accrua
3[For the purposes of this Chapter, in determining whether a tax benefit exists,--
(i) the parties who are connected persons in relation to each other may be treated as one and the same person;
(ii) any accommodating party may be disregarded;
(iii) the accommodating party and any other party may be treated as one and the same person;
(iv) the arrangement may be considered or looked through by disregarding any corporate structure.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.04.2014.
2. Omitted by the Finance Act, 2013 w.e.f. 01.04.2014 for the following : -
"1[For the purposes of this Chapter, in determining whether a tax benefit exists--
(i) the parties who are connected persons in relation to each other may be treated as one and the same person;
(ii) any accommodating party may be disregarded;
(iii) such accommodating party and any other party may be treated as one and the same person;
3[The provisions of this Chapter shall apply in addition to, or in lieu of, any other basis for determination of tax liability.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.04.2014.
2. Omitted by the Finance Act, 2013 w.e.f. 01.04.2014 for the following :-
"1[The provisions of this Chapter shall apply in addition to, or in lieu of, any other basis for determination of tax liability.]"
3. Inserted by the Finance Act, 2013 w.e.f. 01.04.2016 for the following :-
"2[***]"
3[The provisions of this Chapter shall be applied in accordance with such guidelines and subject to such conditions, as may be prescribed.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.04.2014.
2. Omitted by the Finance Act, 2013 w.e.f. 01.04.2014 for the following : -
"1[The provisions of this Chapter shall be applied in accordance with such guidelines and subject to such conditions and the manner as may be prescribed.]"
3. Inserted by the Finance Act, 2013 w.e.f. 01.04.2016 for the following :-
"2[***]"
3[In this Chapter, unless the context otherwise requires,--
(1) "arrangement" means any step in, or a part or whole of, any transaction, operation, scheme, agreement or understanding, whether enforceable or not, and includes the alienation of any property in such transaction, operation, scheme, agreement or understanding;
(2) "asset" includes property, or right, of any kind;
(3) "benefit" includes a payment of any kind whether in tangible or intangible form;
(4) "connected person" means any person who is connected directly or indirectly to another person and includes,--
(a) any relative of the person, if such person is an individual;
(b) any director of the company or any relative of such director, if the person is a company;
(c) any partner or member of a firm or association of persons or body of individuals or any relative of such partner or member, if the person is a firm or association of persons or body of individuals;
(d) any member
103. Original CHAPTER XI dealing with Additional Income-tax on Undistributed Profits contained sections 95 to 109, sub-headings “A.—General”, “B.—Incomes forming part of total income on which no supertax is payable”, “C.—Rebate of super-tax” and “D.—Additional super-tax on undistributed fits” and sections 95 to 103 (both inclusive) were omitted by Act 9 of 1965, s. 29 (w.e.f. 1-4-1965). Subsequently Chapter XI containing remaining sections 104 to 109 was omitted by Act 21 of 1987, s. 41 (w.e.f. 1-4-1988)
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
Section 107A - [Omitted]
1[***]
-----------------------------------
1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1[110. Determination of tax where total income includes income on which no tax is payable
Where there is included in the total income of an assessee any income on which no income-tax is payable under the provisions of this Act, the assessee shall be entitled to a deduction, from the amount of income-tax with which he is chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.]
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1. Substituted by the Finance Act, 1965, Section 32, for Section 110 (w.e.f. 01.04.1965)
(1) Where the accumulated balance due to an employee participating in a recognised provident fund is included in his total income, owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, the 1[Assessing Office]r shall calculate the total of the various sums of 2[tax] in accordance with the provisions of sub-rule (1) of rule 9 thereof.
(2) Where the accumulated balance due to an employee participating in a recognised provident fund which is not included in his total income under the provisions of rule 8 of Part A of the Fourth Schedule becomes payable, super-tax shall be calculated in the manner provided in sub-rule (2) of rule 9 thereof.
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1. Substituted by the Direct Tax Laws (Amendment) Act, 1987, Section 2, for "income-tax Officer" (w.e.f. 01.04.1988).
2. Substituted by the Finance Act, 1965, Section 33, for "income-tax and super-tax" (W.r.e.f 01.04.1965).
1[(1) Where the total income of an assessee includes any income chargeable under the head "Capital gains", arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund 5[or a unit of a business trust] and -
(a) the transaction of sale of such equity share or unit is entered into on or after the date2 on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and
(b) such transaction is chargeable to securities transaction tax under that Chapter,
11[the tax payable by the assessee on the total income shall be the aggregate of--
(i) the amount of income-tax calculated on such short-term capital gains--
(a) at the rate of fifteen per cent. for any transfer which takes place before the 23rd day of July, 2024; and
(b) at the rate of twenty per cent. for any transfer which takes place on or after the 23rd day of July, 2024;
(ii) the amount of income-tax payable on the b
1b[112. Tax on long-term capital gains
(1) Where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income shall be the aggregate of,-
12[(a) in the case of an individual or a Hindu undivided family, being a resident,--
(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income; and
(ii) the amount of income-tax calculated on such long-term capital gains,--
(A) at the rate of twenty per cent. for any transfer which takes place before the 23rd day of July, 2024; and
(B) at the rate of twelve and one-half per cent. for any transfer which takes place on or after the 23rd day of July, 2024:
Provided that where the total income as reduced by such long-term capital gains is below the ma
2[112A. Tax on long-term capital gains in certain cases
(1) Notwithstanding anything contained in section 112, the tax payable by an assessee on his total income shall be determined in accordance with the provisions of sub-section (2), if--
(i) the total income includes any income chargeable under the head "Capital gains";
(ii) the capital gains arise from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust;
(iii) securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004) has,--
(a) in a case where the long-term capital asset is in the nature of an equity share in a company, been paid on acquisition and transfer of such capital asset; or
(b) in a case where the long-term capital asset is in the nature of a unit of an equity oriented fund or a unit of a business trust, been paid on transfer of such capital asset.
(2) The t
2[113. Tax in the case of block assessment of search cases
The total 5[undisclosed] 3[****] income of the block period, determined under section 158BC, shall be chargeable to tax at the rate of sixty per cent.
1[Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any Central Act 4[****].]
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1. Inserted by the Finance Act, 2002, with effect from 1st June, 2002.
2. Inserted by the Finance Act, 1995, section 24 (w.e.f. 01.07.1995). Earlier section 113 relating to "Tax in the case of non-resident" was omitted by the Finance Act, 1965, Section 35 (W.e.f. 01.04.1965)
3. Omitted by Finance (No. 2) Act, 2024, w.e.f. 01.09.2024, for the following:-
"undisclosed"
4. Omitted by Finance (No. 2) Act, 2024, w.e.f. 01.09.2024, for the following:-
"and applicable in the assessment year relevant to the previous year in which the search is initiated under section 132
1[***]
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1. Omitted by the Finance (No. 2) Act, 1967, with effect from 1st April, 1968.
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st April, 1988.
1a[115A. Tax on dividends, royalty and technical service fees in the case of foreign companies
1b[(1) Where the total income of -
(a) a non-resident (not being a company) or of a foreign company, includes any income by way of -
(i) 1[dividends, 14[***]] ; or
(ii) interest received from Government or an Indian concern on monies borrowed or debt incurred by Government or the Indian concern in foreign currency 5[not being interest of the nature referred to in 6[sub-clause (iia) or sub-clause (iiaa)]]; or
5[(iia) interest received from an infrastructure debt fund referred to in clause (47) of section 10; or]
7[(iiaa) interest of the nature and extent referred to in section 194LC; or]
8[(iiab) interest of the nature and extent referred to in section 194LD; or]
11[(iiac) distributed income being interest referred to in sub-section (2) of section 194LBA;]
(iii) income received in respect of units, purchased in foreign currency, of a Mutual Fu
(1) Where the total income of an assessee, being an overseas financial organisation (hereinafter referred to as Offshore Fund) includes –
(a) income received in respect of units purchased in foreign currency ; or
(b) income by way of long-term capital gains arising from the transfer of units purchased in foreign currency,
the income-tax payable shall be the aggregate of –
(i) the amount of income-tax calculated on the income in respect of units referred to in clause (a), if any, included in the total income, at the rate of ten per cent ;
5[(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income,--
(A) at the rate of ten per cent. for any transfer which takes place before the 23rd day of July, 2024; and
(B) at the rate of twelve and one-half per cent. for any transfer which takes place on or after the 23rd day of July, 2024; and.]
(iii) the amou
1[(1) Where the total income of an assessee, being a non-resident, includes–
(a) income by way of interest on bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, or on bonds of a public sector company sold by the Government, and purchased by him in foreign currency ; or
(b) income by way of 5[dividends], on Global Depository Receipts –
(i) issued in accordance with such scheme as the Central Govern¬ment may, by notification in the Official Gazette, specify in this behalf, against the initial issue of shares of an Indian company and purchased by him in foreign currency through an approved intermediary ; or
(ii) issued against the shares of a public sector company sold by the Government and purchased by him in foreign currency through an approved intermediary ; or
(iii) 3[issued or re-issued] in accordance with such scheme as the Central Governme
1[2[(1) Where the total income of an assessee, being an individual, who is a resident and an employee of an Indian company engaged in specified knowledge based industry or service, or an employee of its subsidiary engaged in specified knowledge based industry or service (hereafter in this section referred to as the resident employee), includes –
(a) 3[income by way of 5[dividends]] on Global Depository Receipts of an Indian company engaged in specified knowledge based industry or service, issued in accordance with such Employees’ Stock Option Scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf and purchased by him in foreign currency ; or
(b) income by way of long-term capital gains arising from the transfer of Global Depository Receipts referred to in clause (a),
the income-tax payable shall be the aggregate of –
(i) the amount of income-tax calculated on the 3[income by way of 5[dividends]] in respect of
1a[115AD. Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer
(1) Where the total income of a 9[specified fund or Foreign Institutional Investor] includes –
1[(a) 2[income, 8[***]] received in respect of securities (other than unit referred to in section 115AB); or]
(b) income by way of short-term or long-term capital gains arising from the transfer of such securities,
the income-tax payable shall be the aggregate of –
10[(i) the amount of income-tax calculated on the income in respect of securities referred to in clause (a), if any, included in the total income,--
(A) at the rate of twenty per cent. in case of Foreign Institutional Investor;
(B) at the rate of ten per cent. in case of specified fund;]
(ii) the amount of income-tax calculated on the income by way of short-term capital gains referred to in clause (b), if any, included in the total income, at the rate of thirty per ce
1[115B. Tax on profits and gains of life insurance business
2[(1)] Where the total income of an assessee includes any profits and gains from life insurance business, the income-tax payable shall be the aggregate of –
(i) the amount of income-tax calculated on the amount of profits and gains of the life insurance business included in the total income, at the rate of twelve and one-half per cent ; and
(ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of profits and gains of the life insurance business.]
3[(2) Notwithstanding anything contained in sub-section (1) or in any other law for the time being in force or any instrument having the force of law, the assessee shall, in addition to the payment of income-tax computed under sub-section (1), deposit, during the 4[previous years relevant to the assessment years commencing on the 1st day of April, 1989 and the 1st
2[115BB. Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever
Where the total income of an assessee includes any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, the income-tax payable shall be the aggregate of -
(i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of 1[thirty per cent]; and
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income re
1a[115BBA. Tax on non-resident sportsmen or sports associations
(1) Where the total income of an assessee, –
(a) being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of –
(i) participation in India in any game (other than a game the win¬nings wherefrom are taxable under section 115BB) or sport ; or
(ii) advertisement ; or
(iii) contribution of articles relating to any game or sport in India in newspapers, magazines or journals ; or
(b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India, 1[;or]
1[(c) being an entertainer, who is not a citizen of India and is a non-resident, includes any income received or receivable from his performance in I
1[(1) Where the total income of an assessee includes any income from units of an open-ended equity oriented fund of the Unit Trust of India or of a Mutual Fund, the income-tax payable shall be the aggregate of –
(a) the amount of income-tax calculated on income from units of an open-ended equity-oriented fund of the Unit Trust of India or of a Mutual Fund, at the rate of ten per cent ; and
(b) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a).
(2) Nothing contained in sub-section (1) shall apply in relation to any income from units of an open-ended equity-oriented fund of the Unit Trust of India or of the Mutual Fund arising after the 31st day of March, 2003.
Explanation : For the purposes of this section, the expressions “Mutual Fund”, “open-ended equity-oriented fund” and “Unit Trust of India” shall have the meanings respectively assigned to the
1[(1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of–
2[(i) the amount of income-tax calculated at the rate of thirty per cent. on the aggregate of anonymous donations received in excess of the higher of the following, namely:--
(A) five per cent. of the total donations received by the assessee; or
(B) one lakh, rupees; and]
4[(ii) the amount of income-tax with which the assessee would have been chargeable had his total income b
1[(1) Where the total income of an assessee, being an Indian company, 4[***] includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income-tax payable shall be the aggregate of--
(a) the amount of income-tax calculated on the income by way of such dividends, at the rate of fifteen per cent.; and
(b) the amount of income-tax with which the assessee would have been chargeable had its total income been reduced by the aforesaid income by way of dividends.
(2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends referred to in sub-section (1).
(3) In this section,--
(i) "dividends" shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include sub-clause (e) thereof;
(ii) "specified foreign company" means
1a[115BBE. Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D
3[(1) Where the total income of an assessee,-
(a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or
(b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of-
(i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent.; and
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).]
(2) Notwithstanding anything contained in this Act, no
In this Chapter, unless the context otherwise requires, –
(a) “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of 2[the Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder ;
(b) “foreign exchange asset” means any specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible foreign exchange ;
(c) “investment income” means any 1[income derived, 3[***]] from a foreign exchange asset ;
(d) “long-term capital gains” means income chargeable under the head “Capital gains” relating to a capital asset, being a foreign exchange asset which is not a short-term capital asset ;
(e) “non-resident Indian” means an individual, being a citizen of India or a person of Indian origin who is not a “resident”.
Explanation : A person shall be deemed to be of Indian origin if he, or ei
(1) No deduction in respect of any expenditure or allowance shall be allowed under any provision of this Act in computing the investment income of a non-resident Indian.
(2) Where in the case of an assessee, being a non-resident Indian, -
(a) the gross total income consists only of investment income or income by way of long-term capital gains or both, no deduction shall be allowed to the assessee 1[under Chapter VIA and nothing contained in the provisions of the second proviso to section 48 shall apply to income chargeable under the head “Capital gains”];
(b) the gross total income includes any income referred to in clause (a), the gross total income shall be reduced by the amount of such income and the deductions under Chapter VIA shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.
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1. Substituted by the Finance Act, 1992, Section 57, for "under sub-section (2)
1[115E. Tax on investment income and long-term capital gains
Where the total income of an assessee, being a non-resident Indian, includes-
(a) any income from investment or income from long-term capital gains of an asset other than a specified asset ;
(b) income by way of long-term capital gains,
the tax payable by him shall be the aggregate of -
(i) the amount of income-tax calculated on the income in respect of investment income referred to in clause (a), if any, included in the total income, at the rate of twenty per cent;
2[(ii) the amount of income-tax calculated on the income by way of long-term capital gains referred to in clause (b), if any, included in the total income,--
(A) at the rate of ten per cent. for any transfer which takes place before the 23rd day of July, 2024; and
(B) at the rate of twelve and one-half per cent. for any transfer which takes place on or after the 23rd day of July, 2024; and.]
(iii) the amount of in
(1) Where, in the case of an assessee being a non-resident Indian, any long-term capital gains arise from the transfer of a foreign exchange asset (the asset so transferred being hereafter in this section referred to as the original asset), and the assessee has, within a period of six months after the date of such transfer, invested 1[***] the whole or any part of the net consideration in any specified asset 2[***], or in any savings certificates referred to in clause (4B) of section 10 (such specified asset 3[***], or such savings certificates being hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,–
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gains shall not be charged under section 45 ;
(b) if the cost of the new asset is less than the net consideration in
It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if –
(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both ; and
(b) the tax deductible at source under the provisions of Chapter XVIIB has been deducted from such income.
Where a person, who is a non-resident Indian in any previous year, becomes assessable as resident in India in respect of the total income of any subsequent year, he may furnish to the 1[Assessing Officer] a declaration in writing along with his return of income under section 139 for the assessment year for which he is so assessable, to the effect that the provisions of this Chapter shall continue to apply to him in relation to the investment income derived from any foreign exchange asset being an asset of the nature referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of clause (f) of section 115C ; and if he does so, the provisions of this Chapter shall continue to apply to him in relation to such income for that assessment year and for every subsequent assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets.
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1. Substituted by the Direct Tax Laws (A
A non-resident Indian may elect not to be governed by the provisions of this Chapter for any assessment year by furnishing 1[his return of income for that assessment year under section 139 declaring therein that the provisions of this Chapter shall not apply to him for that assessment year and if he does so, the provisions of this Chapter shall not apply to him for that assessment year and his total income for that assessment year shall be computed and tax on such total income shall be charged in accordance with the other provisions of this Act.]
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1. Substituted by the Finance Act, 1990, Section 31, for "to the Assessing Officer his return of income for that assessment year under section 139 together with a declaration inwriting to the effect" (W.r.e.f. 01.04.1990).
Section 115J - Special provisions relating to certain companies
(1) Notwithstanding anything contained in any other provision of thi
1a[115JA. Deemed income relating to certain companies
(1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 1[but before the 1st day of April, 2001] (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit.
(2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956) :
Provided that while preparing profit and loss account, the
1a[115JAA. Tax credit in respect of tax paid on deemed income relating to certain companies
(1) Where any amount of tax is paid under sub-section (1) of section 115JA by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section.
1[(1A) Where any amount of tax is paid under sub-section (1) of section 115JB by an assessee, being a company for the assessment year commencing on the 1st day of April, 2006 and any subsequent assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section.]
2[(2) The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act:
Provided that no i
1(1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after 24[the 1st day of April, 2012] is less than 25[eighteen and one-half per cent] of its book profit, 6[such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of 4[25[eighteen and one-half per cent].
48[Provided that for the previous year relevant to the assessment year commencing on or after the 1st day of April, 2020, the provisions of this subsection shall have effect as if for the words "eighteen and one-half per cent." occurring at both the places, the words "fifteen per cent." had been substituted.]
(2) 28[Every assessee,--
(a) being a company, other than a c
2[115JC. Special provisions for payment of tax by certain persons other than a company
(1) Notwithstanding anything contained in this Act, where the regular income-tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent.
(2) Adjusted total income referred to in sub-section (1) shall be the total income before giving effect to this Chapter as increased by--
(i) deductions claimed, if any, under any section (other than section 80P) included in Chapter VI-A under the heading "C.--Deductions in respect of certain incomes"; 3[***]
(ii) deduction claimed, if any, 4[under section 10AA; and].
5[(iii) deduction claimed, if any, under section 35AD as reduced by the amount o
(1) The credit for tax paid by 1[a person under section 115JC shall be allowed to him] in accordance with the provisions of this section.
(2) The tax credit of an assessment year to be allowed under sub-section (1) shall be the excess of alternate minimum tax paid over the regular income-tax payable of that year.
2[Provided that where the amount of tax credit in respect of any income-tax paid in any country or specified territory outside India under section 90 or section 90A or section 91, allowed against the alternate minimum tax payable, exceeds the amount of the tax credit admissible against the regular income-tax payable by the assessee, then, while computing the amount of credit under this sub-section, such excess amount shall be ignored.]
(3) No interest shall be payable on tax credit allowed under sub-section (1).
(4) The amount of tax credit determined under sub-section (2) shall be carried forward and set off in accordance with the provisions of
Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to 1[a person] referred to in this Chapter.
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1. Substituted by the Finance Act, 2012, w.e.f. 01.04.2013 for the following:-
"a limited liability partnership"
1[(1) The provisions of this Chapter shall apply to a person who has claimed any deduction under--
(a) any section (other than section 80P) included in Chapter VI-A under the heading "C.--Deductions in respect of certain incomes"; or
2[(b) section 10AA; or]
2[(c) section 35AD.]
(2) The provisions of this Chapter shall not apply to an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, if the adjusted total income of such person does not exceed twenty lakh rupees.]
4[(2A) The provisions of this Chapter shall not apply to specified fund referred to in clause (c) of the Explanation to clause (4D) of section 10.]
3[(3) Notwithstanding anything contained in sub-section (1) or subsection (2), the credit for tax paid under section 115JC shall be allowed in accordance with the provisions of s
In this Chapter--
(a) "accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288;
3[(b) "alternate minimum tax" means the amount of tax computed on adjusted total income,--
5[(i) in case of an assessee being a unit referred to in clause (i) of sub-section (4) of section 115JC, at the rate of nine per cent.;
(ia) in case of an assessee, being a co-operative society referred to in clause (ii) of sub-section (4) of section 115JC, at the rate of fifteen per cent.;]
(ii) in any other case, at a rate of eighteen and one-half per cent.;]
4[(ba) "convertible foreign exchange" means a foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purpose of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made there under;
(bb) "International Financial Services Centre" shall have the meaning assigned to it in clause (q) of section 2 o
1[(1) Where a foreign company is engaged in the business of banking in India through its branch situate in India and such branch is converted into a subsidiary company thereof, being an Indian company (hereafter referred to as an Indian subsidiary company) in accordance with the scheme framed by the Reserve Bank of India, then, notwithstanding anything contained in the Act and subject to the conditions as may be notified by the Central Government in this behalf,--
(i) the capital gains arising from such conversion shall not be chargeable to tax in the assessment year relevant to the previous year in which such conversion takes place;
(ii) the provisions of this Act relating to treatment of unabsorbed depreciation, set off or carry forward and set off of losses, tax credit in respect of tax paid on deemed income relating to certain companies and the computation of income in the case of the foreign company and the Indian subsidiary company shall apply with such exc
1[***]
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
1[***]
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
1[***]
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
1[***]
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1. Omitted by the Finance Act, 1997, with effect from 1st April, 1998.
1[(1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003 16[but on or before the 31st day of March, 2020], whether out of current or accumulated profits shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) 2[at the rate of fifteen per cent].]
14[Provided that in respect of dividend referred to in sub-clause (e) of clause (22) of section 2, this sub-section shall have effect as if for the words "fifteen per cent.", the words "thirty per cent." had been substituted;]
3[(1A) The amount referred to in sub-section (1) shall be reduced by,--
10[(i) the amount of dividend, if any, received by the d
Where the principal officer of a domestic company and the company fails to pay the whole or any part of the tax on distributed profits referred to in sub-section (1) of section 115-O, within the time allowed under sub-section (3) of that section, he or it shall be liable to pay simple interest at the rate of 1[one per cent] for every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid.
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1. Substituted for ‘one and one-fourth per cent’ by the Taxation Laws (Amendment) Act, 2003, with effect from 8th September, 2003. Earlier, ‘one and one-fourth per cent’ was substituted for ‘one and one-half per cent’ by the Finance Act, 2001, with effect from 1st June, 2001 and ‘one and one-half per cent’ was substituted for ‘two per cent’ by the Finance Act, 2000, with effect from 1st J
If any principal officer of a domestic company and the company does not pay tax on distributed profits in accordance with the provisions of section 115-O, then, he or it shall be deemed to be an assessee in default in respect of the amount of tax payable by him or it and all the provisions of this Act for the collection and recovery of income-tax shall apply.
1[***]
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1. Omitted by the Finance Act, 2018, w.e.f. 01.04.19 the previous text was :-
"Explanation : For the purposes of this Chapter, the expression “dividends” shall have the same meaning as is given to “dividend” in clause (22) of section 2 but shall not include sub-clause (e) thereof."
1[(1) Notwithstanding anything contained in any other provision of this Act, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount of distributed income by the company on buy-back of shares 4[***] from a shareholder shall be charged to tax and such company shall be liable to pay additional income-tax at the rate of twenty per cent. on the distributed income.
5[Provided that the provisions of this sub-section shall not apply to such buy-back of shares (being the shares listed on a recognised stock exchange), in respect of which public announcement has been made on or before the 5th day of July, 2019 in accordance with the provisions of the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992).]
6[Provided further that the provisions of this sub-section shall not apply in respect of any
1[Where the principal officer of the domestic company and the company fails to pay the whole or any part of the tax on the distributed income referred to in sub-section (1) of section 115QA, within the time allowed under sub-section (3) of that section, he or it shall be liable to pay simple interest at the rate of one per cent. for every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid.]
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1. Inserted by the Finance Act, 2013 w.e.f. 01.06.2013.
1[If any principal officer of a domestic company and the company does not pay tax on distributed income in accordance with the provisions of section 115QA, then, he or it shall be deemed to be an assessee in default in respect of the amount of tax payable by him or it and all the provisions of this Act for the collection and recovery of income-tax shall apply.]
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1. Inserted by the Finance Act, 2013 w.e.f. 01.06.2013.
(1) Notwithstanding anything contained in any other provisions of this Act and section 32 of the Unit Trust of India Act, 1963 (52 of 1963), 1[any amount of 11[income distributed to any person being an individual or a Hindu undivided family] on or before the 31st day of March, 2002 by the Unit Trust of India to its unit-holders] shall be chargeable to tax and the Unit Trust of India shall be liable to pay additional income-tax on such distributed income at the rate of 2[ten per cent] :
Provided that nothing contained in this sub-section shall apply in respect of any income distributed to a unit-holder of open-ended equity-oriented funds in respect of any distribution made from such fund for a period of three years commencing from the 1st day of April, 1999.
3[(2) Notwithstanding anything contained in any other provision of this Act, any amount of income distributed by the specified company or a Mutual Fund to its unit holders 22[on or before the 31st day of March
Where the person responsible for making payment of the income distributed by the 1[specified company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) or a Mutual Fund and the specified company] or the Mutual Fund, as the case may be, fails to pay the whole or any part of the tax referred to in sub-section (1) or sub-section (2) of section 115R, within the time allowed under sub-section (3) of that section, he or it shall be liable to pay simple interest at the rate of 2[one per cent] every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid.
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1. Substituted for ‘Unit Trust of India or a Mutual Fund and the Unit Trust of India’ by the Finance Act, 2003, with effect from 1st April, 2003.
2. Substitu
(1) Notwithstanding anything contained in any other provisions of the Act, any amount of income distributed by the securitisation trust to its investors shall be chargeable to tax and such securitisation trust shall be liable to pay additional income-tax on such distributed income at the rate of--
(i) twenty-five per cent. on income distributed to any person being an individual or a Hindu undivided family;
(ii) thirty per cent. on income distributed to any other person:
Provided that nothing contained in this sub-section shall apply in respect of any income distributed by the securitisation trust to any person in whose case income, irrespective of its nature and source, is not chargeable to tax under the Act.
(2) The person responsible for making payment of the income distributed by the securitisation trust shall be liable to pay tax to the credit of the Central Government within fourteen days from the date of distribution or payment of such income, which
1[Where the person responsible for making payment of the income distributed by the securitisation trust and the securitisation trust fails to pay the whole or any part of the tax referred to in sub-section (1) of section 115TA, within the time allowed under sub-section (2) of that section, he or it shall be liable to pay simple interest at the rate of one per cent. every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid.]
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1. Inserted by the Finance Act, 2013 w.e.f. 01.06.2013.
If any person responsible for making payment of the income distributed by the securitisation trust and the securitisation trust does not pay tax, as referred to in sub-section (1) of section 115TA, then, he or it shall be deemed to be an assessee in default in respect of the amount of tax payable by him or it and all the provisions of this Act for the collection and recovery of income-tax shall apply.
Section 115TCA - Tax on income from securitisation trusts
1[115TCA. Tax on income from securitisation trusts
(1) Notwithstanding anything contained in this Act, any income accruing or arising to, or received by, a person, being an investor of a securitisation trust, out of investments made in the securitisation trust, shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to, or received by, such person, had the investments by the securitisation trust been made directly by him.
(2) The income pa
(1) Notwithstanding anything contained in any other provisions of this Act, any 3[income accruing or arising to or received] by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the 3[income accruing or arising to or received] by such person had he made investments directly in the venture capital undertaking.
(2) 4[The person responsible for crediting or making] payment of the income on behalf of a venture capital company or a venture capital fund and the venture capital company or venture capital fund shall furnish, within such time as may be prescribed, 5[to the person who is liable to tax in respect of such income] and to the prescribed income-tax authority1, a statement in the prescribed form2 and verified in the prescribed manner2, giving details of the nature of the 6[income paid or credited] during the previous year and such other relevant details as may be p
In this Chapter, unless the context otherwise requires, –
(a) “bareboat charter” means hiring of a 1[ship or inland vessel, as the case may be,] for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew ;
(b) “bareboat charter-cum-demise” means a bareboat charter where the ownership of the 1[ship or inland vessel, as the case may be,] is intended to be transferred after a specified period to the company to whom it has been chartered ;
(c) “Director-General of Shipping” means the Director-General of Shipping appointed by the Central Government under sub-section (1) of section 7 of the Merchant Shipping Act, 1958 (44 of 1958) ;
(d) “factory ship” includes a vessel providing processing services in respect of processing of the fishing produce ;
(e) “fishing vessel” shall have the meaning assigned to it in clause (12) of section 3 of the Merchant Shipping Act, 1958 (44 o
Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of this Chapter and such income shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.
For the purposes of this Chapter, a company shall be regarded as operating a ship if it operates any ship 1[or inland vessel, as the case may be,] whether owned or chartered by it and includes a case where even a part of the ship 1[or inland vessel, as the case may be,] has been chartered in by it in an arrangement such as slot charter, space charter or joint charter:
Provided that a company shall not be regarded as the operator of a ship 1[or inland vessel, as the case may be,] which has been chartered out by it on bareboat charter-cum-demise terms or on bareboat charter terms for a period exceeding three years.
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1. Inserted by Finance Act, 2025, w.e.f. 01.04.2026.
For the purposes of this Chapter, a company is a qualifying company if –
(a) it is an Indian company ;
(b) the place of effective management of the company is in India ;
(c) it owns at least one qualifying ship ; and
(d) the main object of the company is to carry on the business of operating ships.
Explanation : For the purposes of this section, “place of effective management of the company” means –
(A) the place where the board of directors of the company or its executive directors, as the case may be, make their decisions ; or
(B) in a case where the board of directors routinely approve the commercial and strategic decisions made by the executive directors or officers of the company, the place where such executive directors or officers of the company perform their functions.
For the purposes of this Chapter, a ship 2[or inland vessel, as the case may be,] is a qualifying ship if -
(a) it is a sea going ship or vessel 2[, or inland vessel, as the case may be,] of fifteen net tonnage or more;
(b) it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship registered outside India in respect of which a licence has been issued by the Director-General of Shipping under Section 406 or Section 407 of the Merchant Shipping Act, 1958 (44 of 1958) 2[or an inland vessel registered under the Inland Vessels Act, 2021 (24 of 2021), as the case may be,]; and
(c) a valid certificate in respect of such ship 2[or inland vessel, as the case may be,] indicating its net tonnage is in force,-
but does not include-
(i) a seagoing ship or vessel 2[or inland vessel, as the case may be,] if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land;
(ii) fishing ves
(1) A tonnage tax company engaged in the business of operating qualifying ships shall compute the profits from such business under the Tonnage Tax Scheme.
(2) The business of operating qualifying ships giving rise to income referred to in sub-section (1) of section 115VI shall be considered as a separate business (hereafter in this Chapter referred to as the tonnage tax business) distinct from all other activities or business carried on by the company.
(3) The profits referred to in sub-section (1) shall be computed separately from the profits and gains from any other business.
(4) The Tonnage Tax Scheme shall apply only if an option to that effect is made in accordance with the provisions of section 115VP.
(5) Where a company engaged in the business of operating qualifying ships is not covered under the Tonnage Tax Scheme or, has not made an option to that effect, as the case may be, the profits and gains of such company from such business shall be compu
Subject to the other provisions of this Chapter, the tonnage income shall be computed in accordance with section 115VG and the income so computed shall be deemed to be the profits chargeable under the head “Profits and gains of business or profession” and the relevant shipping income referred to in sub-section (1) of section 115VI shall not be chargeable to tax.
(1) The tonnage income of a tonnage tax company for a previous year shall be the aggregate of the tonnage income of each qualifying ship computed in accordance with the provisions of sub-sections (2) and (3).
(2) For the purposes of sub-section (1), the tonnage income of each qualifying ship shall be the daily tonnage income of each such ship multiplied by –
(a) the number of days in the previous year; or
(b) the number of days in part of the previous year in case the ship is operated by the company as a qualifying ship for only part of the previous year,
as the case may be.
(3) For the purposes of sub-section (2), the daily tonnage income of a qualifying ship having tonnage referred to in column (1) of the Table below shall be the amount specified in the corresponding entry in column (2) of the Table :
2[TABLE
Qualifying ship having net tonnage Amount of daily tonnage income
(1) (2)
up to 1,000 Rs. 70 for each 100 tons
ex
(1) Where a qualifying ship is operated by two or more companies by way of joint interest in the ship or by way of an agreement for the use of the ship and their respective shares are definite and ascertainable, the tonnage income of each such company shall be an amount equal to a share of income propor-tionate to its share of that interest.
(2) Subject to the provisions of sub-section (1), where two or more companies are operators of a qualifying ship, the tonnage income of each company shall be computed as if each had been the only operator.
(1) For the purposes of this Chapter, the relevant shipping income of a tonnage tax company means –
(i) its profits from core activities referred to in sub-section (2) ;
(ii) its profits from incidental activities referred to in sub-section (5) :
Provided that where the aggregate of all such incomes specified in clause (ii) exceeds one-fourth per cent of the turnover from core activities referred to in sub-section (2), such excess shall not form part of the relevant shipping income for the purposes of this Chapter and shall be taxable under the other provisions of this Act.
(2) The core activities of a tonnage tax company shall be –
(i) its activities from operating qualifying ships ; and
(ii) 2[other ship-related or inland vessel related activities, as the case may be,] mentioned as under :
(A) shipping contracts in respect of –
(i) earning from pooling arrangements ;
(ii) contracts of affreightment.
Explanation : For the purposes
(1) Where a tonnage tax company also carries on any business or activity other than the tonnage tax business, common costs attributable to the tonnage tax business shall be determined on a reasonable basis.
(2) Where any asset, other than a qualifying ship, is not exclusively used for the tonnage tax business by the tonnage tax company, depreciation on such asset shall be allocated between its tonnage tax business and other business on a fair proportion to be determined by the Assessing Officer, having regard to the use of such asset for the purpose of the tonnage tax business and for the other business.
(1) For the purposes of computing depreciation under clause (iv) of section 115VL, the depreciation for the first previous year of the tonnage tax scheme (hereafter in this section referred to as the first previous year) shall be computed on the written down value of the qualifying ships as specified under sub-section (2).
(2) The written down value of the block of assets, being ships 1[or inland vessels, as the case may be], as on the first day of the first previous year, shall be divided in the ratio of the book written down value of the qualifying ships (hereafter in this section referred to as the qualifying assets) and the book written down value of the non-qualifying ships (hereafter in this section referred to as the other assets).
(3) The block of qualifying assets as determined under sub-section (2) shall constitute a separate block of assets for the purposes of this Chapter.
(4) For the purposes of sub-section (2), the book written down value of the
(1) Notwithstanding anything contained in any other provision of this Act, in computing the tonnage income of a tonnage tax company for any previous year (hereafter in this section referred to as the “relevant previous year”) in which it is chargeable to tax in accordance with this Chapter –
(i) sections 30 to 43B shall apply as if every loss, allowance or deduction referred to therein and relating to or allowable for any of the relevant previous years, had been given full effect to for that previous year itself ;
(ii) no loss referred to in sub-sections (1) and (3) of section 70 or sub-sections (1) and (2) of section 71 or sub-section (1) of section 72 or sub-section (1) of section 72A, in so far as such loss relates to the business of operating qualifying ships of the company, shall be carried forward or set off where such loss relates to any of the previous years when the company is under the Tonnage Tax Scheme ;
(iii) no deduction shall be allowed under C
(1) Section 72 shall apply in respect of any losses that have accrued to a company before its option for tonnage tax scheme and which are attributable to its tonnage tax business, as if such losses had been set off against the relevant shipping income in any of the previous years when the company is under the Tonnage Tax Scheme.
(2) The losses referred to in sub-section (1) shall not be available for set-off against any income other than relevant shipping income in any previous year beginning on or after the company exercises its option under section 115VP.
(3) Any apportionment necessary to determine the losses referred to in sub-section (1) shall be made on a reasonable basis.
Any profits or gains arising from the transfer of a capital asset being an asset forming part of the block of qualifying assets shall be chargeable to income-tax in accordance with the provisions of section 45, read with section 50, and the capital gains so arising shall be computed in accordance with the provisions of sections 45 to 51:
Provided that for the purpose of computing such profits or gains, the provisions of section 50 shall have effect as if for the words “written down value of the block of assets”, the words “written down value of the block of qualifying assets” had been substituted.
Explanation : For the purposes of this Chapter, “written down value of the block of qualifying assets” means the written down value computed in accordance with the provisions of sub-section (2) of section 115VK.
The book profit or loss derived from the activities of a tonnage tax company, referred to in sub-section (1) of section 115VI, shall be excluded from the book profit of the company for the purposes of section 115JB.
(1) A qualifying company may opt for the Tonnage Tax Scheme by making an application to the Joint Commissioner having jurisdiction over the company in the form and manner as may be prescribe1, for such scheme.
(2) The application under sub-section (1) may be made by any existing qualifying company at any time after the 30th day of September, 2004 but before the 1st day of January, 2005 (hereafter referred to as the "initial period"):
Provided that--
(i) a company incorporated after the initial period ; or
(ii) a qualifying company incorporated before the initial period but which becomes a qualifying company for the first time after the initial period, may make an application within three months of the date of its incorporation or the date on which it became a qualifying company, as the case may be.
2[Provided further that a Unit of an International Financial Services Centre which has availed of deduction under section 80LA may make an application with
(1) An option for Tonnage Tax Scheme, after it has been approved under sub-section (3) of section 115VP, shall remain in force for a period of ten years from the date on which such option has been exercised and shall be taken into account from the assessment year relevant to the previous year in which such option is exercised.
(2) An option for Tonnage Tax Scheme shall cease to have effect from the assessment year relevant to the previous year in which –
(a) the qualifying company ceases to be a qualifying company ;
(b) a default is made in complying with the provisions contained in section 115VT or section 115VU or section 115VV ;
(c) the tonnage tax company is excluded from the Tonnage Tax Scheme under section 115VZC ;
(d) the qualifying company furnishes to the Assessing Officer, a declaration in writing to the effect that the provisions of this Chapter may not be made applicable to it, and the profits and gains of the company from the business of
(1) An option for Tonnage Tax Scheme approved under sub-section (3) of section 115VP may be renewed within one year from the end of the previous year in which the option ceases to have effect.
(2) The provisions of sections 115VP and 115VQ shall apply in relation to a renewal of the option for Tonnage Tax Scheme in the same manner as they apply in relation to the approval of option for Tonnage Tax Scheme.
A qualifying company, which, on its own, opts out of the Tonnage Tax Scheme or makes a default in complying with the provisions of section 115VT or section 115VUor section 115VV or whose option has been excluded from Tonnage Tax Scheme in pursuance of an order made under sub-section (1) of section 115VZC, shall not be eligible to opt for Tonnage Tax Scheme for a period of ten years from the date of opting out or default or order, as the case may be.
(1) A tonnage tax company shall, subject to and in accordance with the provisions of this section, be required to credit to a reserve account (hereafter in this section referred to as the Tonnage Tax Reserve Account) an amount not less than twenty per cent of the book profit derived from the activities referred to in clauses (i) and (ii) of sub-section (1) of section 115VI in each previous year to be utilised in the manner laid down in sub-section (3) :
Provided that a tonnage tax company may transfer a sum in excess of twenty per cent of the book profit and such excess sum transferred shall also be utilised in the manner laid down in subsection (3).
Explanation : For the purposes of this section, “book profit” shall have the same meaning as in the Explanation to sub-section (2) of section 115JB so far as it relates to the income derived from the activities referred to in clauses (i) and (ii) of sub-section (1) of section 115VI.
(2) Where the company has book
(1) A tonnage tax company, after its option has been approved under sub-section (3) of section 115VP, shall comply with the minimum training requirement in respect of trainee officers in accordance with the guidelines1 framed by the Director-General of Shipping and notified in the Official Gazette by the Central Government.
(2) The tonnage tax company shall be required to furnish a copy of the certificate issued by the Director-General of Shipping along with the return of income under section 139 to the effect that such company has complied with the minimum training requirement in accordance with the guidelines1 referred to in sub-section (1) for the previous year.
(3) If the minimum training requirement is not complied with for any five consecutive previous years, the option of the company for Tonnage Tax Scheme shall cease to have effect from the beginning of the previous year following the fifth consecutive previous year in which the failure to comply with the
(1) In the case of every company which has opted for Tonnage Tax Scheme, not more than forty-nine per cent. of the net tonnage of the qualifying ships operated by it during any previous year shall be chartered in.
(2) The proportion of net tonnage referred to in sub-section (1) in respect of a previous year shall be calculated based on the average of net tonnage during that previous year.
(3) For the purposes of sub-section (2), the average of net tonnage shall be computed in such manner as may be prescribed1 in consultation with the Director-General of Shipping.
(4) Where the net tonnage of ships 2[or inland vessels, as the case may be, chartered in] exceeds the limit under sub¬section (1) during any previous year, the total income of such company in relation to that previous year shall be computed as if the option for Tonnage Tax Scheme does not have effect for that previous year.
(5) Where the limit under sub-section (1) had exceeded in any two consecu
An option for Tonnage Tax Scheme by a tonnage tax company shall not have effect in relation to a previous year unless such company –
(i) maintains separate books of account in respect of the business of operating qualifying ships ; and
(ii) furnishes, 2[before the specified date referred to in section 44AB], the report of an accountant, in the prescribed1 form duly signed and verified by such accountant.
Explanation : For the purposes of this section, “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288.
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1. See rule 11T and Form No. 66.
2. Substituted by Finance Act, 2020, w.e.f. 01.04.2020, for the following:-
"along with the return of income for that previous year"
(1) For the purposes of this Chapter, –
(a) the tonnage of a ship 1[or inland vessel, as the case may be,] shall be determined in accordance with the valid certificate indicating its tonnage ;
(b) “valid certificate” means, –
(i) in case of ships registered in India –
(a) having a length of less than twenty-four metres, a certificate issued under the Merchant Shipping (Tonnage Measurement of Ship) Rules, 1987 made under the Merchant Shipping Act, 1958 (44 of 1958) ;
(b) having a length of twenty-four metres or more, an international tonnage certificate issued under the provisions of the Convention on Tonnage Measurement of Ships, 1969 as specified in the Merchant Shipping (Tonnage Measure¬ment of Ship) Rules, 1987 made under the Merchant Ship¬ping Act, 1958 (44 of 1958) ;
(ii) in case of ships registered outside India, a licence issued by the Director-General of Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 specifyin
Where there has been an amalgamation of a company with another company or companies, then, subject to the other provisions of this section, the provisions relating to the Tonnage Tax Scheme shall, as far as may be, apply to the amalgamated company if it is a qualifying company:
Provided that where the amalgamated company is not a tonnage tax company, it shall exercise an option for Tonnage Tax Scheme under sub-section (1) of section 115VP within three months from the date of the approval of the scheme of amalgamation :
Provided further that where the amalgamating companies are tonnage tax companies, the provisions of this Chapter shall, as far as may be, apply to the amalgamated company for such period as the option for Tonnage Tax Scheme which has the longest unexpired period continues to be in force :
Provided also that where one of the amalgamating companies is a qualifying company as on the 1st day of October, 2004 and which has not exercised the option f
Where in a scheme of demerger, the demerged company transfers its business to the resulting company before the expiry of the option for Tonnage Tax Scheme, then, subject to the other provisions of this Chapter, the Tonnage Tax Scheme shall, as far as may be, apply to the resulting company for the unexpired period if it is a qualifying company:
Provided that the option for Tonnage Tax Scheme in respect of the demerged company shall remain in force for the unexpired period of the Tonnage Tax Scheme if it continues to be a qualifying company.
(1) A temporary cessation (as against permanent cessation) of operating any qualifying ship by a company shall not be considered as a cessation of operating of such qualifying ship and the company shall be deemed to be operating such qualifying ship for the purposes of this Chapter.
(2) Where a qualifying company continues to operate a ship 1[or inland vessel, as the case may be,], which temporarily ceases to be a qualifying ship, such ship 1[or inland vessel, as the case may be,] shall not be considered as a qualifying ship for the purposes of this Chapter.
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1. Inserted by Finance Act, 2025, w.e.f. 01.04.2026.
(1) Subject to the provisions of this Chapter, the Tonnage Tax Scheme shall not apply where a tonnage tax company is a party to any transaction or arrangement which amounts to an abuse of the Tonnage Tax Scheme.
(2) For the purposes of sub-section (1), a transaction or arrangement shall be considered an abuse if the entering into or the application of such transaction or arrangement results, or would but for this section have resulted, in a tax advantage being obtained for –
(i) a person other than a tonnage tax company ; or
(ii) a tonnage tax company in respect of its non-tonnage tax activities.
Explanation : For the purposes of this section, “tax advantage” includes, –
(i) the determination of the allowance for any expense or interest, or the determination of any cost or expense allocated or apportioned, or, as the case may be, which has the effect of reducing the income or increasing the loss, as the case may be, from activities other than tonnage
(1) Where a tonnage tax company is a party to any transaction or arrangement referred to in sub-section (1) of section 115VZB, the Assessing Officer shall, by an order in writing, exclude such company from the Tonnage Tax Scheme:
Provided that an opportunity shall be given by the Assessing Officer by serving a notice calling upon such company to show cause, on a date and time to be specified in the notice, why it should not be excluded from the Tonnage Tax Scheme :
Provided further that no order under this sub-section shall be passed without the previous approval of the 1[Principal Chief Commissioner or Chief Commissioner.]
(2) The provisions of this section shall not apply where the company shows to the satisfaction of the Assessing Officer that the transaction or arrangement was a bona fide commercial transaction and had not been entered into for the purpose of obtaining tax advantage under this Chapter.
(3) Where an order has been passed under sub-sect
In this Chapter, unless the context otherwise requires,-
(a) “employer” means,-
(i) a company;
(ii) a firm;
1[(iii) an association of persons or a body of individuals, whether incorporated or not;]
(iv) a local authority; and
(v) every artificial juridical person, not falling within any of the preceding sub-clauses :
2[Provided that any person eligible for exemption under clause (23C ) of section 10 or registered under section 12AA or a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) shall not be deemed to be an employer for the purposes of this Chapter.]
(b) “fringe benefit tax” or “tax” means the tax chargeable under section 115WA.
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1. Substituted by the Taxation Laws (Amendment) Act, 2005, with effect from 1st April, 2006. Prior to substitution, clause (iii), effective from the same date, stood as under:
“(iii) an association of pers
(1) In addition to the income-tax charged under this Act, there shall be charged for every assessment year commencing on or after the 1st day of April, 2006, additional income-tax (in this Act referred to as fringe benefit tax) in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year at the rate of thirty per cent on the value of such fringe benefits.
(2) Notwithstanding that no income-tax is payable by an employer on his total income computed in accordance with the provisions of this Act, the tax on fringe benefits shall be payable by such employer.
(1) For the purposes of this Chapter, “fringe benefits” means any consideration for employment provided by way of -
(a) any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to his employees (including former employee or employees);
(b) any free or concessional ticket provided by the employer for private journeys of his employees or their family members; 1[***]
(c) any contribution by the employer to an approved superannuation fund for 2[employees ; and].
3[(d) any specified security or sweat equity shares allotted or transferred, directly or indirectly by the employer free of cost or at concessional rate to his employees (including former employee or employees).
Explanation : For the purposes of this clause,-
(i) “specified security” means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) 4[and,
(1) For the purpose of this Chapter, the value of fringe benefits shall be the aggregate of the following, namely, -
(a) cost at which the benefits referred to in clause (b) of sub-section (1) of section 115WB, is provided by the employer to the general public as reduced by the amount, if any, paid by, or recovered from, his employee or employees :
Provided that in a case where the expenses of the nature referred to in clause (b) of sub-section (1) of section 115WB are included in any other clause of sub-section (2) of the said section, the total expenses included under such other clause shall be reduced by the amount of expenditure referred to in the said clause (b) for computing the value of fringe benefits;
1[(b) the amount of contribution, referred to in clause (c) of sub-section (1) of section 115WB, which exceeds one lakh rupees in respect of each employee;]
2[(ba) the fair market value of the specified security or sweat equity shares referred to in
(1) Without prejudice to the provisions contained in section 139, every employer who during a previous year has paid or made provision for payment of fringe benefits to his employees, shall, on or before the due date, furnish or cause to be furnished a return of fringe benefits to the Assessing Officer in the prescribed1 form and verified in the prescribed1 manner and setting forth such other particulars as may be prescribed1, in respect of the previous year.
Explanation : In this sub-section, “due date” means, -
(a) where the employer is -
(i) a company; or
(ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force,
the 2[30th day of September] of the assessment year;
(b) in the case of any other employer, the 31st day of July of the assessment year.
(2) In the case of any employer who, in the opinion of the Assessing Officer, is responsible for paying fring
1[2[(1) Where a return has been made under section 115WD, such return shall be processed in the following manner, namely:
(a) the value of fringe benefits shall be computed after making the following adjustments, namely:
(i) any arithmetical error in the return ; or
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return ;
(b) the tax and interest, if any, shall be computed on the basis of the value of fringe benefits computed under clause (a) ;
(c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any advance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest ;
(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c) ; and
(1) If any person, being an employer –
(a) fails to make the return required under sub-section (1) of section 115WD and has not made a return under sub-section (3) or a revised return under sub-section (4) of that section, or
(b) fails to comply with all the terms of a notice issued under sub-section (2) of section 115WD or fails to comply with a direction issued under sub-section (2A) of section 142, or
(c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 115WE, the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the fringe benefits to the best of his judgement and determine the sum payable by the assessee on the basis of such assessment:
Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the asses
If the Assessing Officer has reason to believe that any fringe benefits chargeable to tax have escaped assessment for any assessment year, he may, subject to the provisions of sections 115WH, 150 and 153, assess or reassess such fringe benefits and also any other fringe benefits chargeable to tax which have escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, for the assessment year concerned (hereafter referred to as the relevant assessment year).
Explanation : For the purposes of this section, the following shall also be deemed to be cases where fringe benefits chargeable to tax have escaped assessment, namely:
(a) where no return of fringe benefits has been furnished by the assessee;
(b) where a return of fringe benefits has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the value of fringe benefits in t
(1) Before making the assessment or reassessment under section 115WG, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period as may be specified in the notice, a return of the fringe benefits in respect of which he is assessable under this Chapter during the previous year corresponding to the relevant assessment year, in the prescribed1 form and verified in the prescribed1 manner and setting forth such other particulars as may be prescribed1, and the provisions of this Chapter shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 115WD.
(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.
(3) No notice under sub-section (1) shall be issued for the relevant assessment year after the expiry of six years from the end of the relevant assessment year.
Explanation : In determining fringe benefits char
Notwithstanding that the regular assessment in respect of any fringe benefits is to be made in a later assessment year, the tax on such fringe benefits shall be payable in advance during any financial year, in accordance with the provisions of section 115WJ, in respect of the fringe benefits which would be chargeable to tax for the assessment year immediately following that financial year, such fringe benefits being hereafter in this Chapter referred to as the “current fringe benefits”.
(1) Every assessee who is liable to pay advance tax under section 115WI, shall on his own accord, pay advance tax on his current fringe benefits calculated in the manner laid down in sub-section (2).
1[(2) Advance tax on the current fringe benefits shall be payable by -
(a) all the companies, who are liable to pay the same in four installments during each financial year and the due date of each installment and the amount of such installment shall be as specified in Table I below:
Table I
Due date of installment Amount payable
On or before the 15th June Not less than fifteen per cent of such advance tax.
On or before the 15th September Not less than forty-five per cent of such advance tax as reduced by the amount, if any, paid in the earlier installment.
On or before the 15th December Not less than seventy-five per cent of such advance tax as reduced by the amount or amounts, if any, paid in the earlier installment or installments.<
(1) Where the return of fringe benefits for any assessment year under subsection (1) or sub-section (3) of section 115WD or in response to a notice under sub-section (2) of that section, is furnished after the due date, or is not furnished, the employer shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,-
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section 115WF, on the amount of the tax on the value of fringe benefits as determined under sub-section (1) of section 115WE or regular assessment as reduced by the advance tax paid under section 115WJ.
Explanation 1 : In this section, “due date” means the date specified in the Explanation to sub-section (1) of section 115WD
1[Notwithstanding anything contained in any agreement or scheme under which any specified security or sweat equity shares referred to in clause (d) of subsection (1) of section 115WB has been allotted or transferred, directly or indirectly, by the employer on or after the 1st day of April, 2007, it shall be lawful for the employer to vary the agreement or scheme under which such specified security or sweat equity shares has been allotted or transferred so as to recover from the employee the fringe benefit tax to the extent to which such employer is liable to pay the fringe benefit tax in relation to the value of fringe benefits provided to the employee and determined under clause (ba) of sub-section (1) of section 115WC.]
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1. Inserted by the Finance Act, 2007, with effect from 1st April, 2007.
1[(1) Where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares, referred to in clause (d) of sub-section (1) of section 115WB, and has recovered such tax subsequently from an employee, it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefit provided to such employee, as determined under clause (ba) of sub-section (1) of section 115WC.
(2) Notwithstanding anything contained in any other provisions of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section (1), such employee shall, under this Act, not be entitled to claim –
(i) any refund out of such payment of tax; or
(ii) any credit of such payment of tax against tax liabili
Save as otherwise provided in this Chapter, all other provisions of this Act shall, as far as may be, apply in relation to fringe benefits also.
1Nothing contained in this Chapter shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.]
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1. Inserted by the Finance (No. 2) Act, 2009, with retrospective effect from 1st April, 2009.
6[116. Income-tax authorities
There shall be the following classes of income-tax authorities for the purposes of this Act, namely :
(a) The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963),
2[(aa) Principal Directors General of Income-tax or Principal Chief Commissioners of Income-tax,]
(b) Directors General of Income-tax or 3[Principal Chief Commissioner or Chief Commissioner] of Income-tax,
2[(ba) Principal Directors of Income-tax or Principal Commissioners of Income-tax,]
(c) 4[Principal Director or Director] of Income-tax or 5[Principal Commissioner or Commissioner] of Income-tax or Commissioners of Income-tax (Appeals),
7[(cc) Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals),]
1[(cca) Joint Directors of Income-tax or Joint Commissioners of Income tax, 8[or Joint Commissioners of Income-tax (Appeals)]]
Legal Comments- Introduction - Section 116 ITA 1961 defines the classes of Income Tax authorities; it anchors who may exercise powers and where appeals lie. [Pooran Mal: Hanuman Pershad Ganerwala: Jagat Ram Mago: Ramji Das Sharma VS Director Of Inspection (Investigation) , New Delhi: Director Of Inspection, New Delhi: R. N. Limaya: R. N. Limaya]- What Section 116 Says - Section 116 lists CBDT, Directors General, Commissioners, AACs, ITOs, Inspectors as Income Tax authorities; it also sets framework for appointment and executive power through Section 117. [BAL KISHAN KAPUR VS INCOME TAX OFFICER]- Essential ingredients - Existence of specified authorities, their hierarchical order, and the ability to exercise powers under statutes (e.g., survey under 133-A) as conferred by statute. [Himmat Mal Gandhi VS Madan Lal]- Scope of Section - Applies across the IT Act to grant jurisdiction, transfer and delegation of duties among authorities; governs who may initiate, conduct, or oversee proceedings, including search, assessment, and revision. [BAL KISHAN KAPUR VS INCOME TAX OFFICER]- Punishment for Section - Not a penal provision itself; Section 116 focuses on authority and jurisdiction. Penalties arise under other sections (e.g., 271/274, 220/221, etc.) and procedural remedies, not from Section 116. See discussions on penalties in contexts referencing Section 274(2) and 271(1)(c). [Commissioner of Income-tax VS Brindaban Kedarnath]- Authority to sign/issue orders - Assistant Directors/Inspection included in Section 116; 133-A permits survey by an Income Tax Authority including ADI, so ADI is IT Authority for survey. This was upheld in multiple judgments recognizing ADI’s competence. [Commissioner of Income-tax VS Globe Transport]- Jurisdictional breadth - Section 116 provides for appointment and powers; Section 119 requires Board direction; Section 120-130 govern transfer and reallocation; overall, jurisdiction can be realigned by the Commissioner to ensure efficient administration. [Oriental Insu. Co. Ltd. VS C. I. T. ]- Delegation and realignment - The Commissioner’s power to realign/transfer (Sections 123-127) enables shifting jurisdiction among ITOs/AACs/Directors; this realignment is a general administrative act. [Nilesh Amarshibhai Rajapara vs Income Tax Officer, Morbi]- Role in survey and searches - ADI (Assistant Director of Inspection) is within IT authority and empowered to authorize inspections under Section 133-A; this endorses the practical operation of surveys. [Commissioner of Income-tax VS Globe Transport]- Appellate and revision interplay - Section 116 positions the hierarchy; Sections 246, 246A and 260A govern appeals and revisions; amendments reframe concurrent jurisdiction (e.g., 1970 Finance Act) allowing Additional Commissioner to exercise revision powers with Board notifications. [NATIONAL AGRICULTURAL CO OPERATIVE MARKETING FEDERATION OF INDIA LIMITED VS CENTRAL BOARD OF DIRECT TAXES]- Jurisdictional challenges and case law - Courts have addressed whether various officers (e.g., Deputy Director, Additional Commissioner) can act under revised provisions; several judgments recognize concurrent jurisdiction and validity of Board notifications. [BAL KISHAN KAPUR VS INCOME TAX OFFICER], [NATIONAL AGRICULTURAL CO OPERATIVE MARKETING FEDERATION OF INDIA LIMITED VS CENTRAL BOARD OF DIRECT TAXES]- Inconsistencies and stare decisis - When conflicting High Court decisions exist on interpretation of related sections (e.g., 43B/43A, 140A), Special Benches or higher courts guide whether judgments bind ITA authorities nationwide; Section 116 does not resolve substantive tax questions but clarifies who can act. [Gedore Tools (India) (P. ) Ltd. VS Inspecting Assistant Commissioner]- Remedy for improper jurisdiction - If a proceeding is instituted by a person lacking jurisdiction under 116, the remedy may lie in challenging the order’s validity or seeking appropriate redress under the applicable appellate route; e.g., ITAT/HC references, or Writs where jurisdictional issues arise. [Commissioner of Income-tax VS Globe Transport], [COMMISSIONER OF INCOME-TAX VS ANANDILAL PODDAR AND SONS LTD. ]- Reliance on 133-A for survey authority - The jurisprudence confirms ADI’s status as IT authority enabling survey, thus validating actions taken under 133-A. [Commissioner of Income-tax VS Globe Transport]- Role of Board and CBDT - Board/CBDT can entrust and direct functions and grant authorities power through Section 117; this aligns with centralized governance for IT administration. [Oriental Insu. Co. Ltd. VS C. I. T. ]- Interplay with search and seizure admissibility - Section 116’s framework underpins who can initiate 132/133-A actions, and subsequent Section 132 readings (132(1), 132(5)) depend on IT authorities categorized in 116. [Pooran Mal: Hanuman Pershad Ganerwala: Jagat Ram Mago: Ramji Das Sharma VS Director Of Inspection (Investigation) , New Delhi: Director Of Inspection, New Delhi: R. N. Limaya: R. N. Limaya]- Reference to Section 116 as basis for appellate standing - Section 116 identifies appellate and enforcement officers whose actions are subject to oversight under Sections 246 and 260A; this underlines who can file appeals or references. [BAL KISHAN KAPUR VS INCOME TAX OFFICER]- Practical takeaway - Section 116 is primarily about classification and empowerment of officers; substantive tax outcomes hinge on other provisions (e.g., 132, 133-A, 143, 260A) and their statutory interpretations in case law. [Pooran Mal: Hanuman Pershad Ganerwala: Jagat Ram Mago: Ramji Das Sharma VS Director Of Inspection (Investigation) , New Delhi: Director Of Inspection, New Delhi: R. N. Limaya: R. N. Limaya]- Observations on drafting clarity - The collected judgments illustrate evolving delegation norms (e.g., Finance Act 1970/1971 amendments) and potential conflicts requiring careful statutory interpretation when litigating jurisdiction. [NATIONAL AGRICULTURAL CO OPERATIVE MARKETING FEDERATION OF INDIA LIMITED VS CENTRAL BOARD OF DIRECT TAXES], [Commissioner of Income Tax VS Narendra Narayan Banik, Smt. Kalyani Debnath, Rakhal Debnath and Shree Bhandar]- Rule on official authority citations - The line of authority (CBDT/Board/Directors) and the hierarchy created by Section 116 is a foundational point for any ITA dispute; practitioners must first establish who has jurisdiction before addressing merits. [BAL KISHAN KAPUR VS INCOME TAX OFFICER]- Cross-referencing with related statutes - Several sources cross-reference 116 with 133-A for survey, 246A for appeals, and 263/264 for revision; these interplays shape procedural posture and remedies. [Pooran Mal: Hanuman Pershad Ganerwala: Jagat Ram Mago: Ramji Das Sharma VS Director Of Inspection (Investigation) , New Delhi: Director Of Inspection, New Delhi: R. N. Limaya: R. N. Limaya], [NATIONAL AGRICULTURAL CO OPERATIVE MARKETING FEDERATION OF INDIA LIMITED VS CENTRAL BOARD OF DIRECT TAXES], [State Bank of India VS Deputy Commissioner of Income Tax, Circle 3(2)]- Conclusion - Section 116’s core function is to delineate the classes of income-tax authorities and to anchor their powers and jurisdiction; it interacts with multiple other provisions to govern how assessments, searches, revocations, and appeals proceed. [BAL KISHAN KAPUR VS INCOME TAX OFFICER]
Note: This summary compiles concise points drawn from the provided sources with bracketed references. If a point could not be supported by the cited materials, it has been omitted.
6[Appointment of income-tax authorities
(1) The Central Government may appoint such persons as it thinks fit to be income-tax authorities.
(2) Without prejudice to the provisions of sub-section (1), and subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, the Central Government may authorise the Board, or a 2[Principal Director General or Director General], a 3[Principal Chief Commissioner or Chief Commissioner] or a 7[Principal Director or Director] or a 4[Principal Commissioner or Commissioner] to appoint income-tax authorities below the rank of an 1[Assistant Commissioner or Deputy Commissioner].
(3) Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, an income-tax authority authorised in this behalf by the Board may appoint such executive or ministerial staff as may be necessary to assist it
1[118. Control of income-tax authorities
The Board may, by notification in the Official Gazette, direct that any income-tax authority or authorities specified in the notification shall be subordinate to such other income-tax authority or authorities as may be specified in such notification.]
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 30 for sub section (w.e.f. 1-4-1988).
9[119. Instructions to subordinate authorities
(1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board :
Provided that no such orders, instructions or directions shall be issued –
(a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner ; or
(b) so as to interfere with the discretion of 1[***] 16[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] in the exercise of his appellate functions.
(2) Without prejudice to the generality of the foregoing power, –
(a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of th
1a[120. Jurisdiction of income-tax authorities
(1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities.
1[Explanation : For the removal of doubts, it is hereby declared that any income-tax authority, being an authority higher in rank, may, if so directed by the Board, exercise the powers and perform the functions of the income-tax authority lower in rank and any such direction issued by the Board shall be deemed to be a direction issued under sub-section (1).]
(2) The directions of the Board under sub-section (1) may authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the o
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
8[124. Jurisdiction of Assessing Officers
(1) Where by virtue of any direction or order issued under sub-section (1) or subsection (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction –
(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and
(b) in respect of any other person residing within the area.
(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the 4[Principal Director General or Director General] or the 5[Principal Chief Commissioner or Chief Commissioner] or the 6[Principal Commissioner or
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
(1) The 1[Principal Director General or Director General] or 2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or Commissioner] may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him.
(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same 1[Principal Director General or Director General] or 2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or Commissioner] –
(a) where the 1[Principal Director
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor:
Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard.
1[130. Faceless jurisdiction of income-tax authorities
(1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of--
(a) exercise of all or any of the powers and performance of all or any of the functions conferred on, or, as the case may be, assigned to income-tax authorities by or under this Act as referred to in section 120; or
(b) vesting the jurisdiction with the Assessing Officer as referred to in section 124; or
(c) exercise of power to transfer cases under section 127; or
(d) exercise of jurisdiction in case of change of incumbency as referred to in section 129, so as to impart greater efficiency, transparency and accountability by--
(i) eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible;
(ii) optimising utilisation of the resources through economies of scale and functional specialisation;
(iii) introd
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
(1) The 6[Assessing Officer], 7[Deputy Commissioner] (Appeals), 1[Joint Commissioner], 21[, Joint Commissioner (Appeals), Commissioner (Appeals)] 2[Chief Commissioner or Commissioner and the Dispute Resolution Panel referred to in clause (a) of sub-section (15) of section 144C] shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely :
(a) discovery and inspection ;
(b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath ;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.
8[(1A) 9[If the 10[principal Director General or Director or Joint Director] or 11[principal Director or Director] or 12[joint Director] 3[Assistant Director or Deputy Director] or the authorised officer referred to in subsection (1) of se
40[132. Search and seizure
(1) 1[Where the 41[Principal Director General or Director General] or the 32[Principal Chief Commissioner or Chief Commissioner] or 33[Principal Commissioner or Commissioner] or Additional Director or Additional Commissioner] 2[or Joint Director or Joint Commissioner] as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to believe that -
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or
12[132A. Powers to requisition books of account, etc
(1) 1Where the 13[9[principal Director General or Director General] or 10[principal Director General or Director] the 8[7[Principal Chief Commissioner or Chief Commissioner] or 8[Principal Commissioner or Commissioner]], in consequence of information in his possession, has reason to believe that -
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody
Section 132(a) of the Income Tax Act, 1961, is a crucial provision that empowers income tax authorities to conduct searches and seize assets, books, cash, and documents believed to be related to undisclosed income or tax evasion. It forms a backbone for the enforcement of tax laws and prevention of tax evasion through intrusive yet lawful powers of the authorities.
Section 132(a) authorizes authorized officers to:- Enter any building, place, or vessel- Search and seize books of account, documents, money, bullion, jewelry, or other valuable articles- If they have reason to believe that any person has undisclosed income or property which would be useful for proceedings under the Act
The section emphasizes the power to seize assets that are suspected to be connected with undisclosed income, with the objective of establishing the truth in proceedings related to taxation.
While Section 132(a) itself primarily authorizes search and seizure, penalties for illegal or mala fide actions under this section or related provisions include:- Penalty for Concealment or False Declaration: Under Sections 271(1)(c), 276C, etc., penalties can be levied, including fines and imprisonment.- Mala Fide Seizure: If the seizure is mala fide or without proper authority, courts have quashed such actions (see Mala fide searches quashed cases).- Punishment for Non-compliance: Non-compliance with procedural safeguards or illegal searches can lead to criminal proceedings under the Indian Penal Code or the Criminal Procedure Code.
This concise commentary synthesizes the legal provisions, judicial interpretations, and procedural safeguards related to Section 132(a) of the Income Tax Act, 1961, highlighting the importance of lawful exercise of powers, procedural compliance, and protection of taxpayer rights.
1[(1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely :
(i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) 13[the Interest-tax Act, 1974 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015)], and the amount of the liability determined on 2[11[completion of the assessment or reassessment or recomputation] and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIVB for the block period, as the case may be] (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is 8[deemed to be in default, or the amo
The 6[Assessing Officer], the 7[Deputy Commissioner (Appeals)], 8[the 1[Joint Commissioner] or 13[the Joint Commissioner (Appeals) or the Commissioner (Appeals)]] may, for the purposes of this Act,
(1) require any firm to furnish him with a return of the names and addresses of the partners of the firm and their respective shares ;
(2) require any Hindu undivided family to furnish him with a return of the names and addresses of the manager and the members of the family;
(3) require any person whom he has reason to believe to be a trustee, guardian or agent, to furnish him with a return of the names of the persons for or of whom he is trustee, guardian or agent, and of their addresses ;
(4) require any assessee to furnish a statement of the names and addresses of all persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage, or any annuity, not being any annuity taxable under the head “Salaries” amounting to more than
14[133A. Power of survey
(1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter –
(a) any place within the limits of the area assigned to him, or
(b) any place occupied by any person in respect of whom he exercises jurisdiction, 15[or]
16[(c) any place in respect of which he is authorised for the purposes of this section by such income-tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place,]
9[at which a business or profession or an activity for charitable purpose is carried on, whether such place be the principal place or not of such business or profession or of such activity for charitable purpose, and require any proprietor, trustee, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession or such activity
(1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may, for the purpose of collecting any information which may be useful for, or relevant to, the purposes of this Act, enter -
(a) any building or place within the limits of the area assigned to such authority ; or
(b) any building or place occupied by any person in respect of whom he exercises jurisdiction, at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession to furnish such information as may be prescribed1.
(2) An income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession.
(
The 3[Assessing Officer], the 4[Deputy Commissioner (Appeals)], the 1[Joint Commissioner] or the 2[Principal Commissioner or Commissioner] (Appeals), or any person subordinate to him authorised in writing in this behalf by the Assessing Officer, the Deputy Commissioner (Appeals), 5[the 1[Joint Commissioner] or the 2[Principal Commissioner or Commissioner] (Appeals)], may inspect, and if necessary, take copies, or cause copies to be taken, of any register of the members, debenture holders or mortgagees of any company or of any entry in such register.
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1. Substituted for ‘Deputy Commissioner’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
3. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 2, for "Income-tax officer" (w.e.f. 1-4-1988).
4. Substituted by Direct Tax Laws (
135. Power of 2[3[principal Director General or Director General], 4[principal Director or Director]] 5[6[Principal Chief Commissioner or Commissioner] 7[principal Commissioner or Commissioner] and Joint Commissioner
The 2[3[principal Director General or Director General], 4[principal Director or Director]] 5[6[Principal Chief Commissioner or Commissioner] 7[principal Commissioner or Commissioner] and the Joint Commissioner shall be competent to make any enquiry under this Act, and for this purpose shall have all the powers that an 1[Assessing Officer] has under this Act in relation to the making of enquiries.
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1. Substituted by the Direct Tax Laws (Amendment Act, 1987 (4 of 1988), Section 2 for "Income-tax officer" (w.e.f. 1-4-1988).
2. Substituted by the Direct Tax Laws (Amendment Act, 1987 (4 of 1988), Section 2 for " Director Inspection" (w.e.f. 1-4-1988).
3. Substituted by the Finance (No.2) Act, 2014 (25
Any proceeding under this Act before an income-tax authority shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purposes of Section 196 of the Indian Penal Code (45 of 1860), 1[and every income-tax authority shall be deemed to be a Civil Court for the purposes of Section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
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1. Inserted by Finance Act, 1985 (32 of 1985), Section 28 (w.r.e.f. 1-4-1974).
1[***]
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1. Omitted by the Finance Act, 1964, with effect from 1st April, 1964.
5[138. Disclosure of information respecting assessees
6[(1) (a) The Board or any other income-tax authority specified by it by a general or special order in this behalf may furnish or cause to be furnished to –
(i) any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty or cess, or to dealings in foreign exchange as defined in 2[clause (n) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999)] ; or
(ii) such officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify by notification in the Official Gazette in this behalf, any such information 7[received or obtained by any income-tax authority in the performance of his functions under this Act], as may, in the opinion of the Board or other income-tax authority, be necessary for the purpose of enabling the officer, author
1[(1) Every person, -
(a) being a 2[company or a firm] ; or
(b) being a person 3[other than a company or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,
shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form4 and verified in the prescribed manner4 and setting forth such other particulars as may be prescribed4 :
Provided that a person referred to in clause (b), who is not required to furnish a return under this sub-section and residing in such area as may be specified by the Board in this behalf by notification in the Official Gazette, and who 5[during the previous year incurs an expenditure of fifty thousand rupees or more towards consumption of electricity or at any time during the previous year] ful
1a[139A. Permanent account number
(1) Every person, -
(i) if his total income or the total income of any other person in respect of which he is assessable under this Act during 1b[any previous year] exceeded the maximum amount which is not chargeable to income-tax ; or
(ii) carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed 1[five lakh rupees] in 1b[any previous year]; or
(iii) who is required to furnish a return of income under 2[sub-section (4A) of section 139 ; or
(iv) being an employer, who is required to furnish a return of fringe benefits under section 115WD,] and who has not been allotted a permanent account number shall, within such time, as may be prescribed3, apply to the Assessing Officer for the allotment of a permanent account number ; 21[or]
21[(v) being a resident, other than an individual, which enters into a financial transaction of an amount aggregating to two lakh fift
1[(1) For the purpose of enabling any specified class or classes of persons in preparing and furnishing returns of income, the Board may, without prejudice to the provisions of section 139, frame a Scheme, by notification2 in the Official Gazette, providing that such persons may furnish their returns of income through a Tax Return Preparer authorised to act as such under the Scheme.
(2) Every Tax Return Preparer shall assist the persons furnishing the return of income in such manner as may be specified in the Scheme framed under this section and affix his signature on such return.
(3) For the purposes of this section,--
(a) “Tax Return Preparer” means any individual, [not being a person referred to in clause (ii) or clause (iii) or clause (iv) of sub-section (2) of section 288 or an employee of the “specified class or classes of persons”], who has been authorised to act as a Tax Return Preparer under the Scheme framed under this section;
(b) “Specified cl
1[(1) The Board may make rules providing for a class or classes of persons who may not be required to furnish documents, statements, receipts, certificates, reports of audit or any other documents, which are otherwise under any other provisions of this Act, except section 139D, required to be furnished, along with the return but on demand to be produced before the Assessing Officer.
(2) Any rule made under the proviso to sub-section (9) of section 139 as it stood immediately before its omission by the Finance Act, 2007 shall be deemed to have been made under the provisions of this section.]
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1. Inserted by the Finance Act, 2007, with retrospective effect from 1st June, 2006.
1[The Board may make rules providing for –
(a) the class or classes of persons who shall be required to furnish the return in electronic form;
(b) the form and the manner in which the return in electronic form may be furnished;
(c) the documents, statements, receipts, certificates or audited reports which may not be furnished along with the return in electronic form but shall be produced before the Assessing Officer on demand;
(d) the computer resource or the electronic record to which the return in electronic form may be transmitted.]
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1. Inserted by the Finance Act, 2007, with retrospective effect from 1st June, 2006.
140. Return by whom to be 10[verified]
The return under 1[section 115WD or] section 139 shall be 6[verified]-
2[(a) in the case of an individual,-
(i) by the individual himself;
(ii) where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf;
(iii) where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf; and
(iv) where, for any other reason, it is not possible for the individual to 8[verify] the return, by any person duly authorised by him in this behalf:
Provided that in a case referred to in sub-clause (ii) or sub-clause (iv) ,the person 9[verifying] the return holds a valid power of attorney from the individual to do so, which shall be attached to the return;]
(b) in the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to hi
1a[140A. Self-assessment
1b[(1) Where any tax is payable on the basis of any return required to be furnished under 1c[1[section 115WD or section 115WH or section 139]] or section 142 2[or section 148 or 3[, section 153A or, as the case may be, section 158BC]], 4[after taking into account, -
(i) the amount of tax, if any, already paid under any provision of this Act;
(ii) any tax deducted or collected at source;
17[(iia) any relief of tax claimed under section 89;]
(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;
(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; 18[***]
(v) any tax credit claimed to be set-off in accordance with the provisions of section 115JAA 12[or 19[section 115JD; and]],]
20[(vi) any tax or interest payable according to the provisions of sub-sect
1[***]
-------------------------------
1. Omitted by the Taxation Laws (Amendment) Act, 1970, with effect from 1st April, 1971.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
(1) For the purpose of making an assessment under this Act, the 1a[Assessing Officer] may serve on any person who has made a return 1[under section 115WD or section 139 or in whose case the time allowed under sub-section (1) of section 139] for furnishing the return has expired a notice requiring him, on a date to be therein specified, -
1b[(i) where such person has not made a return 2[within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year], to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form3 and verified in the prescribed manner3 and setting forth such other particulars as may be prescribed3, or]
4[Provided that where any notice has been served under this sub-section for the purposes of this clause after the end of the relevant assessment year commencing on or after the 1st day of April, 1990 to a person who has not
3[142A. Estimation of value of assets by Valuation Officer.--
(1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him.
(2) The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee.
(3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957(27 of 1957).
(4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving
143. 1[Assessment
17[(1) Where a return has been made under section 139, or in response to a notice under subsection (1) of section 142, such return shall be processed in the following manner, namely:--
(a) the total income or loss shall be computed after making the following adjustments, namely:--
(i) any arithmetical error in the return; 24[***]
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
41[(iia) any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed;]
25[(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139;]
25[(iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;]
25[(v) disallowance of deduct
Section 143 of the Income Tax Act, 1961, governs the process of assessment and scrutiny of income tax returns filed by taxpayers. It provides the legal framework for the department to verify, scrutinize, and finalize the income and tax liability of an assessee, ensuring compliance with tax laws and preventing evasion.
Section 143 primarily deals with the procedures for processing returns, including issuing intimation notices under sub-section (1), conducting detailed assessments under sub-section (3), and the provisions for reassessment and reopening assessments under Sections 147 and 148. It also prescribes the timelines and procedural safeguards for assessments.
This concise commentary underscores the procedural and substantive legal principles governing Section 143, emphasizing the importance of proper notices, tangible material, jurisdiction, and adherence to timelines to ensure valid assessment proceedings under the Income Tax Act, 1961.
1[(1)] If any person -
(a) fails to make the return required 2[under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) 9[or an updated return under sub-section (8A)] of that section, or
(b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 3[or fails to comply with a direction issued under sub-section (2A) of that section], or
(c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143,
the 4[Assessing Officer], after taking into account all relevant material which the 4[Assessing Officer] has gathered, 5[shall, after giving the assessee an opportunity of being heard, make the assessment] of the total income or loss to the best of his judgment and determine the sum payable by the assessee 6[***] on the basis of such assessment :
7[Provided that such opportunity shall be given by the Asse
1[144A. Power of 2[ Joint Commissioner] to issue directions in certain cases
3[***] A 2[Joint Commissioner] may, on his own motion or on a reference being made to him by the 4[Assessing Officer] or on the application of an assessee, call for and examine the record of any proceeding in which an assessment is pending and, if he considers that, having regard to the nature of the case or the amount involved or for any other reason, it is necessary or expedient so to do, he may issue such directions as he thinks fit for the guidance of the 4[Assessing Officer] to enable him to complete the assessment and such directions shall be binding on the 4[Assessing Officer]:
Provided that no directions which are prejudicial to the assessee shall be issued before an opportunity is given to the assessee to be heard.
Explanation.—For the purposes of this 5[section] no direction as to the lines on which an investigation connected with the assessment should be made, shall be dee
1[144B. Faceless assessment
2[(1) Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under subsection (3) of section 143 or under section 144 or under section 147, as the case may be, with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:--
(i) the National Faceless Assessment Centre shall assign the case selected for the purposes of faceless assessment under this section to a specific assessment unit through an automated allocation system;
(ii) the National Faceless Assessment Centre shall intimate the assessee that assessment in his case shall be completed in accordance with the procedure laid down under this section;
(iii) a notice shall be served on the assessee, through the National Faceless assessment Centre, under sub-section (2) of section 143 or under subsection (1) of section 142 and the
3[145. Method of accounting
(1) Income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee.
(2) The Central Government may notify in the Official Gazette from time to time 1[income computation and disclosure standards] to be followed by any class of assessees or in respect of any class of income.
(3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) 2[has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under subsection (2)], the Assessing Officer may make an assessment in the manner provided in section 144.
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2[145A. Method of accounting in certain cases
For the purpose of determining the income chargeable under the head "Profits and gains of business or profession",--
(i) the valuation of inventory shall be made at lower of actual cost or net realisable value computed in accordance with the income computation and disclosure standards notified under sub-section (2) of section 145;
(ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation;
(iii) the inventory being securities not listed on a recognised stock exchange, or listed but not quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised in accordance with the income computation and di
1a[146. Reopening of assessment at the instance of the assessee
1[***]
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1a. Section 146 was earlier amended by the Finance Act, 1963, section 10 (w.e.f. 28.04.1963), by the Taxation Laws (Amendment) Act, 1975, section 46 (W.e.f. 01.04.1976)and by the Taxation Laws (Amendment) Act, 1984, section 27 (W.e.f. 01.10.19484).
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, section 53, with effect from 1st April, 1989.
6[147. Income escaping assessment
If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year).
Explanation.--For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.]
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1. Inserted by the Finance Act, 2008, with effect from 1st April
Section 147 of the Income Tax Act, 1961, empowers the Assessing Officer (AO) to reassess income that may have escaped assessment. This provision is crucial for ensuring that all taxable income is duly reported and taxed, thereby preventing tax evasion.
Section 147 allows the AO to assess or reassess any income chargeable to tax that has escaped assessment for any assessment year. The AO must have a reason to believe that such income has escaped assessment.
The scope of Section 147 is broad, allowing the AO to reassess income based on new information or material that comes to light after the original assessment. However, it cannot be used merely as a tool for reviewing previous assessments based on a change of opinion.
While Section 147 itself does not prescribe punishment, failure to comply with the provisions of the Income Tax Act, including reassessment proceedings, can lead to penalties under other sections of the Act.
This commentary provides a comprehensive overview of Section 147 of the Income Tax Act, 1961, highlighting its essential elements, scope, and the legal principles governing reassessment proceedings.
12[148. Issue of notice where income has escaped assessment
(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall, subject to the provisions of section 148A, issue a notice to the assessee, along with a copy of the order passed under sub-section (3) of section 148A, requiring him to furnish, within such period as may be specified in the notice 13[not being less than thirty days from the date of such notice but], not exceeding three months from the end of the month in which such notice is issued, a return of his income or income of any other person in respect of whom he is assessable under this Act during the previous year corresponding to the relevant assessment year:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment y
Legal Comments
"Purpose" - Section 148 empowers reopening of assessments where income has escaped; requires a belief that income has escaped after information/material; baseline is to issue a notice only when there is “reason to believe” [VIJAY KUMAR M. HIRAKHANWALA VS INCOME TAX OFFICER, MUMBAI] [Commissioner of Income Tax VS Basmath Taluka Kharedi Vikri Sangh]
"Scope" - Involves reassessment/recomputation before proceeding; reading of 148A and related provisions governs preliminary inquiries and demand for material before notice [VIJAY KUMAR M. HIRAKHANWALA VS INCOME TAX OFFICER, MUMBAI] [DCB Bank Ltd. (Formerly Development Credit Bank Ltd. ) VS Deputy Commissioner of Income Tax, Circle-2(3)(1) Mumbai]
"Reason to believe" - The core trigger; requires tangible/material evidence forming a prima facie belief of escapement; mere suspicion or change of opinion is insufficient [VIJAY KUMAR M. HIRAKHANWALA VS INCOME TAX OFFICER, MUMBAI] [01300037566] [GTPL Hathway Limited vs Deputy Commissioner of Income Tax Circle 2(1)(1)]
"Tangible material" - Courts frequently require concrete materials or information (e.g., incriminating documents, undisclosed information) to support belief; absence leads to quashing [Indivest Pte Ltd VS Additional Director of Income Tax] [Multani Tools Company, Loharpura, Nagaur VS Union Of India, through the Secretary to the Government of India, Ministry of Finance, Department of Revenue] [Namo Diamonds Private Limited VS Income Tax Officer, Ward 1(1)(3), Surat]
"Change of opinion" - Reopening based on mere change of opinion is unsustainable; requires new/material facts not previously disclosed or considered [WELL BORE ENGINEERING CO. VS ASST. COMMISSIONER OF INCOME TAX CIRCLE] [Sterlite Technologies Limited VS Deputy Commission of Income Tax, Circle]
"Natural justice / hearing" - Provisions and case law require opportunity for objections and hearing; denial or lack of opportunity can render notices invalid; courts have directed speaking orders post objections or quash proceedings for lack of opportunity [Ramesh Chandra S/o Shri Ram Chandra VS National Faceless Assessment Centre, Income Tax Department, Ministry Of Finance, Inside Jawaharlal Nehru Stadium, New Delhi] [Anil Sachdeva vs Income Tax Officer] [Sandeep Dara S/o Shri Mahadev Prasad Dara VS Union Of India, Through The Secretary, Ministry Of Finance, Department Of Revenue, North Block, New Delhi]
"Limitations & time-bar" - Many petitions challenge whether notices are time-barred; Finance Act 2021 amendments and CBDT notifications affect time limits; several judgments quash notices beyond permissible time, especially for old regimes; time-bar issues are a recurring basis for quashing [Namo Diamonds Private Limited VS Income Tax Officer, Ward 1(1)(3), Surat] [Karnik Kantilal Parikh VS Income Tax Officer, Ward 3(1)(1), Ahmedabad] [Keenara Industries Private Limited VS Income Tax Officer, Ward 1(1)(3), Surat] [Abab Offshore Ltd. VS Deputy Commissioner of Income Tax, Corporate Circle I (1)]
"Jurisdiction / PE" - Jurisdictional questions (e.g., permanent establishment, dependent agent) can determine valid continuation of reassessment; courts have upheld or denied based on whether jurisdiction exists [Adobe Systems Software Ireland VS Assistant Director of Income Tax]
"Notice to deceased persons" - Notice issued to a dead person is null; foundational requirement to issue to the correct person is a precondition; such notices are void ab initio [Raniben Khimji Patel VS Assistant Commissioner of Income Tax] [Dharamraj VS Income Tax Officer]
"Amalgamation / corporate status" - Post-amalgamation, transferor entity may cease to exist; notices targeting such extinguished entities can be unsustainable; court allows quashing in such scenarios [Mehsana Urban Co-Op Bank Ltd. VS Assistant Commissioner Of Income Tax Circle 3(3), Surat] [Roquette India Private Limited VS Assistant Commissioner of Income Tax Circle 3(1)(1), Ahmedabad]
"Sanctions / approvals" - Some challenges focus on sanctioned authority/sanction validity; if sanction or approval is improper, notices may be struck down; improper delegation or approval can undermine reassessment [AJAI VERMA VS COMMISSIONER OF INCOME TAX-I, KANPUR]
"Objections not considered" - If objections submitted by the assessee are not, or not adequately, considered on merits, courts direct reconsideration or quash the notice; proper disposition of objections is essential [E. Infochips Limited VS Deputy Commissioner of Income Tax, Circle 2(1)(1)]
"Direct information from investigations" - Where information arises from external investigations (e.g., Directorate of Revenue Intelligence), reopening may be proper provided there is tangible material; courts have allowed reopenings based on such information [COMMISSIONER OF INCOME TAX VS UNITED RACING & BLOOD STOCK BREEDERS PVT. LTD. ]
"Exemption / 12A / 11 considerations" - Reopening can concern whether the entity’s exemption or head of income was rightly claimed; if reasons show escapement and proper scrutiny reveals non-qualifying exemptions, reopening can be upheld or quashed depending on material [Anurag Gupta VS Income Tax Officer, Ward (1)] [Framji Dinshaw Petit Parsee Sanatorium Through its Trustee Sir Dinshaw M. Petit VS Income Tax Officer (Exemption)]
"AM/PM interplay with old vs new regimes" - Notices issued under old regime can be challenged when timing exceeds old regime limits; many petitions emphasize that notices should align with the regime applicable to the year; amendments impact the viability of notices [Namo Diamonds Private Limited VS Income Tax Officer, Ward 1(1)(3), Surat] [Karnik Kantilal Parikh VS Income Tax Officer, Ward 3(1)(1), Ahmedabad]
"Scope of Section 148A" - Section 148A requires adherence to procedural safeguards before initiating reassessment; failure to provide relevant information or to conduct proper inquiry may render notices unsustainable [Anurag Gupta VS Income Tax Officer, Ward (1)]
"Outcome patterns" - Where courts find tangible material, adequate opportunity, proper jurisdiction, or compliance with procedure, notices are upheld; where deficiencies exist, notices are quashed and directions for reissuance or reassessment may be given [Multani Tools Company, Loharpura, Nagaur VS Union Of India, through the Secretary to the Government of India, Ministry of Finance, Department of Revenue] [Ramakant VS Income Tax Officer, Ward Int Tax 3(1)(2)]
"Against mere information leakage" - Not every disclosure or loose paper constitutes sufficient material; the material must be credible and lead to escapement conclusion; courts scrutinize the strength of material to avoid arbitrary reassessment [Multani Tools Company, Loharpura, Nagaur VS Union Of India, through the Secretary to the Government of India, Ministry of Finance, Department of Revenue] [Hetal Mayurkumar Patel vs Assistant Commissioner Of Income Tax, Circle 3(1)(1), Ahmedabad]
"Duty to verify PAN / identity in notices" - Notices must accurately identify the taxpayer (e.g., correct PAN) and be issued properly; misidentification leads to nullification and quashing of notices [Raniben Khimji Patel VS Assistant Commissioner of Income Tax] [01300040467]
"Remedial paths" - Even where notices are challenged, courts often direct the AO to pass speaking orders, consider objections, or exercise jurisdiction properly; remedies include quashing notices and directing reissuance under lawful grounds [JAGDISH PERSHAD GUPTA VS JT. COMMISSIONER OF INCOME-TAX] [RDS Project Limited vs Assistant Commissioner of Income Tax]
"Impact of jurisprudence" - A corpus of decisions emphasizes necessity of tangible material, proper application of mind, and compliance with procedural requirements; divergence in some rulings reflects evolving statutory amendments (Finance Act 2021) and CBDT notifications [Namo Diamonds Private Limited VS Income Tax Officer, Ward 1(1)(3), Surat] [Sandeep Dara S/o Shri Mahadev Prasad Dara VS Union Of India, Through The Secretary, Ministry Of Finance, Department Of Revenue, North Block, New Delhi]
11[149. Time limit for notices under sections 148 and 148A
(1) No notice under section 148 shall be issued for the relevant assessment year,--
(a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more.
(2) No notice to show cause under section 148A shall be issued for the relevant assessment year,--
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but
2[150. Provision for cases where assessment is in pursuance of an order on appeal, etc.-
(1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation, in consequence of, or to give effect to, any finding or direction contained in an order passed by--
(a) any authority in any proceeding under this Act by way of appeal, reference or revision; or
(b) a court in any proceeding under this Act or any other law.
(2) The provisions of sub-section (1) shall not apply in any case where the assessment or reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment or reassessment or recomputation could not have been made, by reason of any other provision limiting the time within which any action for assessment or reassessment or recomputation may be taken, at the time when,--<
10[151. Sanction for issue of notice
Specified authority for the purposes of sections 148 and 148A shall be the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be.]
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1. Substituted for 'Assistant Commissioner' by the Finance (No. 2) Act, 1998 with effect from 1st October, 1998.
2. Substituted for 'Deputy Commissioner' by the Finance (No. 2) Act, 1998 with effect from 1st October, 1998.
3. Inserted by the Finance Act, 2008, with retrospective effect from 1st October, 1998.
4. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013 for the following:-"Chief Commissioner"
5. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-"Commissioner"
6. Substituted by the Finance Act, 2015, w.e.f. 01.06.2015. for the following:-
"151. Sanction for issue of notice
(1) In case where an assessm
(1) In an assessment, reassessment or recomputation made under section 147, the tax shall be chargeable at the rate or rates at which it would have been charged had the income not escaped assessment.
(2) Where an assessment is reopened 1[under section 147], the assessee may, if he has not impugned any part of the original assessment order for that year either under sections 246 to 248 or under section 264, claim that the proceedings under section 147 shall be dropped on his showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made :
Provided that in so doing he shall not be entitled to reopen matters concluded by an order under section 154, 155, 260, 262 or 263.
2[(3) Where a search has been initiated under section 132 or requisition is made under section 132A, or a surve
Section 152 of the Income Tax Act, 1961, deals with the tax implications during the assessment, reassessment, or recomputation of income that has escaped assessment under Section 147. This section is crucial for ensuring that the tax rate applied during such proceedings is consistent with the original assessment.
Section 152 outlines the tax rates applicable during assessments made under Section 147. It specifies that the tax shall be chargeable at the rate or rates that would have been applicable had the income not escaped assessment.
in the notice, the return of income in respect of each assessment year falling within six assessment years 7[and for the relevant assessment year or years] referred to in clause (b), in the prescribed3 form and verified in the prescribed3 manner and setting forth such other particulars as may be prescribed3 and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ;
(b) assess or reassess the total income of six assessment years 7[and for the relevant assessment year or years] immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 7[and for the relevant assessment year or years]:
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years 7[and for the relevant assessment year or years]:
Provided furthe
25[153B. Time limit for completion of assessment under section 153A
(1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,--
(a) in respect of each assessment year falling within six assessment years 26[and for the relevant assessment year or years] referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed;
(b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed:
Provided that in case of other person re
1[2[1] 7[Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,--
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to,
a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] 6[and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing
1[No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of 2[sub-section (1) of section 153A] or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner.]
3[Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the 4[Principal Commissioner or Commissioner] under sub-section (12) of section 144BA.]
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1. Inserted by the Finance Act, 2007, with effect from 1st June, 2007.
2. Substituted for “section 153A" by the Finance Act, 2008, with retrospective effect from 1st June, 2007.
3. Inserted by the Finance Act, 2013 w.e.f. 01.06.2016.
4. Substituted vide the Finance (No. 2
1a[(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may, -
(a) amend any order passed by it under the provisions of this Act ;
1[(b) amend any intimation or deemed intimation under sub-section (1) of section 143]].
1aa[(bb) the Inspecting Assistant Commissioner may amend any order passed by him in any proceeding under]
4[(c) amend any intimation under sub-section (1) of section 200A.]
9[(d) amend any intimation under sub-section (1) of section 206CB.]
1aa[(1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.]
(2) Subject to the other provis
1a[(1) Where, in respect of any completed assessment of a partner in a firm for the assessment year commencing on the 1st day of April, 1992, or any earlier assessment year,] it is found -
(a) on the assessment or reassessment of the firm, or
(b) on any reduction or enhancement made in the income of the firm under this section, section 154, section 250, section 254, section 260, section 262, section 263 or section 264, 1b[or]
1b[(c) on any order passed under sub-section (4) of section 245D on the application made by the firm,]
that the share of the partner in the income of the firm has not been included in the assessment of the partner or, if included, is not correct, the Assessing Officer may amend the order of assessment of the partner with a view to the inclusion of the share in the assessment or the correction thereof, as the case may be ; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in s
5[(1)] When any tax, interest, penalty, fine or any other sum 1a[***] is payable in consequence of any order passed under this Act, the 1b[Assessing Officer] shall serve upon the assessee a notice of demand in the prescribed form1 specifying the sum so payable.
3[Provided that where any sum is determined to be payable by the assessee or 4[the deduct or the collector under sub-section (1) of section 143 or sub-section (1) of section 200A or sub-section (1) of section 206CB], the intimation under those sub-sections shall be deemed to be a notice of demand for the purposes of this section.]
6[(2) Where the income of the assessee of any assessment year, beginning on or after the 1st day of April, 2021, includes income of the nature specified in clause (vi) of sub-section (2) of section 17 and such specified security or sweat equity shares referred to in the said clause are allotted or transferred directly or indirectly by the current employer, being an eligible start
When, in the course of the assessment of the total income of any assessee, it is established that a loss has taken place which the assessee is entitled to have carried forward and set-off under the provisions of sub-section (1) of section 72, sub-section (2) of section 73 1[, 2[sub-section (1) or sub-section (3) of section 74] or sub-section (3) of section 74A], the 3[Assessing Officer] shall notify to the assessee by an order in writing the amount of the loss as computed by him for the purposes of sub-section (1) of section 72, subsection (2) of section 73 1[, 2[sub-section (1) or sub-section (3) of section 74] or sub-section (3) of section 74A].
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1. Substituted by Finance Act, 1974, section 13, for “or sub-section (1) of section 74” (w.e.f. 1-4-1975).
2. Substituted by Finance Act, 1987, section 74, for “sub-section (1) of section 74” (w.e.f. 1-4-1988).
3. Substituted by the Direct Tax Laws (amendment) Act, 1987, Section
1[Whenever, in respect of the assessment year commencing on the 1st day of April, 1992, or any earlier assessment year, a registered firm is assessed, or an unregistered firm is assessed, under the provisions of clause (b) of section 183, the 2[Assessing Officer] shall notify to the firm by an order in writing the amount of its total income assessed and the apportionment thereof between the several partners.]
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1. Substituted by the Finance Act, 1992, Section 63, for "Whenever a registered firm is assessed" (W.e.f 01.04.1993).
2. Substituted by the Direct Tax Laws (amendment) Act, 1987, Section 2, for "Income-tax Officer" (w.e.f. 01.04.1988).
(1) Notwithstanding anything contained in this Act, where an assessee claims that any question of law arising in his case for an assessment year which is pending before the 1a[Assessing Officer] or any appellate authority (such case being hereafter in this section referred to as the relevant case) is identical with a question of law arising in his case for another assessment year which is pending before the High Court on a reference under section 256 or 1[before the Supreme Court on a reference under section 257 or in appeal under section 260A before the High Court or in appeal under section 261 before the Supreme Court] (such case being hereafter in this section referred to as the other case), he may furnish to the 1a[Assessing Officer], or the appellate authority, as the case may be, a declaration in the prescribed form2 and verified in the prescribed2 manner, that if the 1a[Assessing Officer] or the appellate authority, as the case may be, agrees to apply in the relev
3[In this Chapter, unless the context otherwise requires,--
(a) "block period" means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was initiated under section 132 or any requisition was made under section 132A and also includes the period starting from the 1st day of April of the previous year in which search was initiated or requisition was made and ending on the date of the execution of the last of the authorisations for such search or such requisition;
(b) "undisclosed income" includes any money, bullion, jewellery 4[, virtual digital asset] or other valuable article or thing or any expenditure or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery 4[, virtual digital asset], valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which
2[158BA. Assessment of 3[total undisclosed income] as a result of search
(1) Notwithstanding anything in any other provisions of this Act, where on or after the 1st day of September, 2024, a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A, in the case of any person, then, the Assessing Officer shall proceed to assess or reassess the 3[total undisclosed income] of the block period in accordance with the provisions of this Chapter.
7[(2) (a) The assessment or reassessment or recomputation under the provisions of this Act (other than this Chapter), if any, pertaining to any assessment year falling in the block period, pending on the date of initiation of the search under section 132, or making of requisition under section 132A, as the case may be, shall abate and shall be deemed to have been abated on the date of initiation of search or making of requisition.
(b) Any proceeding for as
8[158BB. Computation of 9[total undisclosed income] of block period
10[(1) The total undisclosed income referred to in sub-section (1) of section 158BA of the block period shall be the aggregate of the following, namely:--
(a) undisclosed income declared in the return furnished under section 158BC;
(b) undisclosed income determined by the Assessing Officer under sub-section (2).
(1A) The following income shall not be included in the total undisclosed income of the block period, namely:--
(a) the total income determined under sub-section (1) of section 143 or assessed under section 143 or section 144 or section 147 or section 153A or section 153C or assessed earlier under clause (c) of sub-section (1) of section 158BC or sub-section (4) of section 245D, prior to the date of initiation of the search or the date of requisition, in respect of any of the previous year comprising the block period;
(b) the total income declared in the return of income f
4[(1) Where any search has been initiated under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,--
(a) the Assessing Officer shall, in respect of search initiated, or books of account or other documents or any assets requisitioned, on or after the 1st day of September, 2024, issue a notice to such person, requiring him to furnish within such period, not exceeding a period of sixty days, as may be specified in the notice, a return in the form and verified in the manner, as may be prescribed, setting forth his 5[****] undisclosed income, for the block period:
Provided that such return shall be considered as if it was a return furnished under the provisions of section 139 and notice under sub-section (2) of section 143 shall thereafter be issued:
Provided further that any return of income, required to be furnished by an assessee under this section and furnished beyond the period all
3[158BD. Undisclosed income of any other person
Where the Assessing Officer is satisfied that any undisclosed income belongs to or pertains to or relates to any person (herein referred to as the "other person"), other than the person (herein referred to as the "specified person" for the purposes of this section) with respect to whom search was initiated under section 132 or requisition was made under section 132A, then any money, bullion, jewellery, virtual digital asset or other valuable article or thing or any books of account or other documents seized or requisitioned or any other material or information relating to the aforesaid undisclosed income shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly:
Provided that,--
(a) where there is one specified person relevant to such oth
5[(1) Notwithstanding the provisions of section 153, the order under section 158BC shall be passed within twelve 6[quarter] from the end of the month in which the last of the authorisations for search under section 132, or requisition under section 132A, was executed or made, as the case may be:
Provided that in a case where search under section 132 was initiated, or requisition under section 132A was made, and during the course of the proceedings for the assessment or reassessment of the 7[total undisclosed income] of the relevant block period, any reference under sub-section (1) of section 92CA is made, the period available for making an order of assessment or reassessment in respect of the block period shall be extended by twelve months.
8[Provided further that in a case where in pursuance to fifth proviso to clause (a) of sub-section (1) of section 158BC, the time allowed under the said clause for furnishing return is extended by a further period of thirty da
1[No interest under section 234A, 234B or 234C or penalty under section 270A shall be levied or imposed upon the assessee in respect of the undisclosed income assessed or reassessed for the block period.]
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1. Substituted by Finance (No. 2) Act, 2024, w.e.f. 01.09.2024, for the following:-
"No interest under the provisions of section 234A, 234B or 234C or penalty under the provisions of clause (c) of sub-section (1) of section 271 or section 271A or section 271B shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assessment."
Section 158BFA - Levy of interest and penalty in certain cases
9[(1) Where the return of 10[undisclosed income] for the block period, in respect of search initiated under section 132, or books of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of September, 2024, as r
7[158BG. Authority competent to make assessment of block period
The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of a Deputy Commissioner or an Assistant Commissioner or a Deputy Director or an Assistant Director, as the case may be:
Provided that no such order shall be passed without the previous approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132, or books of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of September, 2024.]
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1a. Substituted by the Income-Tax (Amendment) Act, 1997, section 7, for section 158BG (W.r.e.f. 01.01.1997). Earlier section 158BG was amended by the Finance (No. 2) Act, 1996 Section 48 (w.e.f. 01.10.1996).
1. Substit
1[Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter.]
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1. Substituted by Finance (No. 2) Act, 2024, w.e.f. 01.09.2024, for the following:-
"Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter."
Section 158BI - Chapter not to apply in certain circumstances [Omitted]
3[****]
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1. Inserted by the Finance Act, 2003, with effect from 1st June, 2003.
2. Substituted by Finance (No. 2) Act, 2024, w.e.f. 01.09.2024, for the following:-
"158BI. Chapter not to apply after certain date
1[The provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003.]"
3
(1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1), -
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and
(c) all the provisions of this Act shall apply accordingly.
(3) The lega
Section 159 of the Income Tax Act, 1961, addresses the liability of legal representatives of a deceased taxpayer. This provision ensures that tax obligations of the deceased are met from their estate, thereby facilitating the continuity of tax assessments even after the taxpayer's death.
Section 159 states that when a person dies, their legal representative is liable to pay any tax that the deceased would have been liable to pay had they not died. This includes any assessments, reassessments, or penalties that may arise from the deceased's tax obligations.
The scope of Section 159 is limited to the estate of the deceased. It does not extend the personal liability of the legal representative beyond the assets inherited from the deceased. The section applies to all tax obligations, including income tax, penalties, and other dues.
While Section 159 itself does not prescribe specific punishments, failure to comply with tax obligations can lead to penalties under other sections of the Income Tax Act, such as Section 271(1)(c) for concealment of income.
Legal Representative - The legal representative is liable for the tax obligations of the deceased only to the extent of the estate left behind. This ensures that personal assets of the legal representative are not at risk for the deceased's tax liabilities. - [ "Prakash Aditya VS Union of India"]
Assessment Continuity - Proceedings against a deceased taxpayer can continue against their legal representative from the stage at which they stood at the time of death, ensuring that tax assessments are not nullified due to the taxpayer's death. - [ "KAMALESH KUMAR MEHTA VS COMMISSIONER OF INCOME-TAX"]
Nullity of Assessment - An assessment order passed without notice to the legal representative of the deceased is considered null and void, emphasizing the necessity of proper notification in tax proceedings. - [ "Zafrulla, Dibrugarh, Assam VS Commissioner of Income Tax, NE Region, Shillong"]
Liability Limitations - The liability of the legal representative is confined to the estate of the deceased, meaning they cannot be held personally liable for the deceased's tax debts beyond the inherited assets. - [ "Prakash Aditya VS Union of India"]
Filing Returns - Legal representatives are entitled to file returns on behalf of the deceased and claim benefits such as exemptions and refunds that the deceased would have been entitled to. - [ "Prakash Aditya VS Union of India"]
Assessment Validity - Lack of notice to legal representatives does not deprive the revenue authority of jurisdiction; it merely renders the assessment defective, which can be rectified. - [ "VIJAY SARIN VS INCOME TAX OFFICER"]
Legal Heirship - The legal representative must be properly identified and notified for tax proceedings to be valid; failure to do so can invalidate the proceedings. - [ "GANASHYAMDAS JATIA VS INCOME-TAX OFFICER, CENTRAL"]
Tax Recovery - The provisions of Section 159 allow for the recovery of tax dues from the estate of the deceased, ensuring that tax liabilities are settled from the assets left behind. - [ "Shobha Sengar VS Commissioner Of Income-Tax"]
Executor's Role - An executor or administrator of the estate is deemed a legal representative and is responsible for fulfilling the tax obligations of the deceased. - [ "Commissioner of Income-tax VS G. B. J. Seth"]
Judicial Interpretation - Courts have consistently held that assessments against deceased persons must comply with the procedural requirements set forth in Section 159 to be valid. - [ "Commissioner Of Income-tax VS Manohar Lal Nagpal"]
Penalties - Legal representatives can be held liable for penalties incurred by the deceased under certain circumstances, reinforcing the importance of compliance with tax laws. - [ "Tapati Pal VS Commissioner of Income-Tax"]
Estate Duty - The legal representative is responsible for ensuring that estate duties are paid, which is part of their obligations in administering the deceased's estate. - [ "Commissioner of Wealth Tax vs H.S. Chauhan"]
Reassessment Notices - Section 159 applies when reassessment notices were issued during the lifetime of the deceased, highlighting the importance of timely notifications in tax matters. -
Judicial Precedents - Various judicial decisions have reinforced the interpretation of Section 159, emphasizing the need for legal representatives to be notified and involved in tax proceedings. - [ "Navnit Lal Sakarlal VS Commissioner Of Income Tax"]
Tax Compliance - Legal representatives must ensure compliance with tax obligations to avoid personal liability and penalties associated with the deceased's tax affairs. -
Clerical Errors - Minor clerical errors in naming the deceased in assessment orders do not invalidate the proceedings if the legal representative was properly notified and involved. - [ "Kalyankumar Ray VS Commissioner Of Income Tax, W. B. -iv, Calcutta"]
Taxpayer Rights - Legal representatives have the right to appeal against tax assessments made on behalf of the deceased, ensuring that their interests are protected. - [ "P. S. Subramanian VS Income Tax Officer, Non-corporate Ward 19(6), Chennai"]
Limitations on Liability - The legal representative's liability is limited to the estate of the deceased, preventing unjust enrichment of the tax authorities at the expense of the representative's personal assets. -
Continuity of Tax Obligations - The continuity of tax obligations post-death ensures that the estate is responsible for settling any outstanding tax dues, maintaining the integrity of the tax system. -
Legal Framework - Section 159 provides a clear legal framework for the treatment of tax liabilities upon the death of a taxpayer, ensuring that the estate is held accountable for any dues. -
(1) For the purposes of this Act, “representative assessee” means -
(i) in respect of the income of a non-resident specified in 1[***] sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163;
(ii) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt of such income on behalf of such minor, lunatic or idiot;
(iii) in respect of income which the Court of Wards, the Administrator-General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager;
(iv) in respect of income which a trustee appointed under a trust declared by a duly ex
(1) Every representative assessee, as regards the income in respect of which he is a representative assessee, shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income; but any such assessment shall be deemed to be made upon him in his representative capacity, only, and the tax shall, subject to the other provisions contained in this Chapter, be levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him.
1[(1A) Notwithstanding anything contained in sub-section (1), where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, tax shall be charged on the whole of t
(1) Every representative assessee who, as such, pays any sum under this Act, shall be entitled to recover the sum so paid from the person on whose behalf it is paid, or to retain out of any moneys that may be in his possession or may come to him in his representative capacity, an amount equal to the sum so paid.
(2) Any representative assessee, or any persoan who apprehends that he may be assessed as a representative assessee, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Chapter, and in the event of any disagreement between the principal and such representative assessee or person as to the amount to be so retained, such representative assessee or person may secure from the 1[Assessing Officer] a certificate stating the amount to be so retained pending final settlement of the liability, and the certificate so
(1) For the purposes of this Act, “agent”, in relation to a non-resident, includes any person in India –
(a) who is employed by or on behalf of the non-resident; or
(b) who has any business connection with the non-resident; or
(c) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or
(d) who is the trustee of the non-resident;
and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India:
Provided that a broker in India who, in respect of any transactions, does not deal directly with or on behalf of a non-resident principal but deals with or through a non-resident broker shall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:
(i) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and
(i
1[164. Charge of tax where share of beneficiaries unknown
(1) 2[Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the person mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as “relevant income”, “part of relevant income” and “beneficiaries”, respectively), 3[tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate:]
Provided that in a case where –
4[(i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeabl
1[164A. Charge of tax in case of oral trust
Where a trustee receives or is entitled to receive any income on behalf or for the benefit of any person under an oral trust, then, notwithstanding anything contained in any other provision of this Act, tax shall be charged on such income at the maximum marginal rate.
Explanation: For the purposes of this section, -
(i) [Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989;]
(ii) “oral trust” shall have the meaning assigned to it in Explanation 2 below sub-section (1) of section 160.]
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1. Inserted by The Finance Act, 1981, Section 15 (w.r.e.f 01.04.1981).
Where part only of the income of a trust is chargeable under this Act, that proportion only of the income receivable by a beneficiary from the trust which the part so chargeable bears to the whole income of the trust shall be deemed to have been derived from that part.
Nothing in the foregoing sections in this Chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income.
Section 167 - Remedies against property in cases of representative assessees.
The 1[Assessing Officer] shall have the same remedies against all property of any kind vested in or under the control or management of any representative assessee as he would have against the property of any person liable to pay any tax, and in as full and ample a manner, whether the demand is raised against the representative assessee or against the beneficiary direct.
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1. Substituted by the Direct Tax Laws (amendment) Act, 1987, Section 2, for "Income-tax Officer" (W.e.f. 01.04.1988).
Section 167A to
1[167A. Charge of tax in the case of a firm
In the case of a firm which is assessable as a firm, tax shall be charged on its total income at the 2[rate as specified in the Finance Act of the relevant year].]
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1. Inserted by the Finance Act, 1992, Section 24 (w.e.f. 01.04.1993). Earlier section 167A was Omitted by the Direct Tax Laws (Amendment) Act, 1989, section 27 (w.e.f 01.04.1989).Prior that section 167A was inserted by the Direct Tax Laws (Amendment) Act, 1987, section 66 (W.e.f. 01.04.1989).
2. substituted by the Finance Act, 1997, section 44, for "maximum marginal rate" (w.e.f. 01.04.1998).
1[167B. Charge of tax where shares of members in association of persons or body of individuals unknown, etc.
(1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate:
Provided that, where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or body at such higher rate.
(2) Where, in the case of an association of persons or body of individuals as aforesaid [not being a case falling under
1[Notwithstanding anything contained in the Limited Liability Partnership Act, 2008 (6 of 2009), where any tax due from a limited liability partnership in respect of any income of any previous year or from any other person in respect of any income of any previous year during which such other person was a limited liability partnership cannot be recovered, in such case, every person who was a partner of the limited liability partnership at any time during the relevant previous year, shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the limited liability partnership.]
2[Explanation.--For the purposes of this section, the expression "tax due" includes penalty, interest or any other sum payable under the Act.]
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1. Inserted by the Finance (No. 2) Act, 2009, wi
(1) Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor, -
(a) if there is only one executor, then, as if the executor were an individual; or
(b) if there are more executors than one, then, as if the executors were an association of persons, and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took place.
(2) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own income.
(3) Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their sever
The provisions of section 162 shall, so far as may be, apply in the case of an executor in respect of tax paid or payable by him as they apply in the case of a representative assessee.
(1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession, –
(a) the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession;
(b) the successor shall be assessed in respect of the income of the previous year after the date of succession.
(2) Notwithstanding anything contained in sub-section (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act, shal
(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of Hindu undivided family.
(2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the 1[Assessing Officer] shall make an inquiry there into after giving notice of the inquiry to all the members of the family.
(3) On the completion of the inquiry, the 1[Assessing Officer] shall record a finding as to whether there has been a total or partial partition of the joint family property, and if there has been such a partition, the date on which it has taken place.
(4) Where a finding of total or partial partition has been recorded by
(1) The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India 2[***].
(2) Where such a ship carries passengers, livestock, mail or goods shipped at a port in India, 3[seven and a half per cent] of the amount paid or payable on account of such carriage to the owner or the charterer or to any person on his behalf, whether that amount is paid or payable in or out of India, shall be deemed to be income accruing in India to the owner or charterer on account of such carriage.
(3) Before the departure from any port in India of any such ship, the master of the ship shall prepare and furnish to the 4[Assessing Officer a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on acco
Without prejudice to the provisions of sub-section (1) of section 161 or of section 167, where the person entitled to the income referred to in clause (i) of sub-section (1) of section 9 is a non-resident, the tax chargeable thereon, whether in his name or in the name of his agent who is liable as a representative assessee, may be recovered by deduction under any of the provisions of Chapter XVIIB and any arrears of tax may be recovered also in accordance with the provisions of this Act from any assets of the non-resident which are, or may at any time come, within India.
(1) Notwithstanding anything contained in section 4, when it appears to the 1[Assessing Officer] that any individual may leave India during the current assessment year or shortly after its expiry and that he has no present intention of returning to India, the total income of such individual for the period from the expiry of the previous year for that assessment year up to the probable date of his departure from India shall be chargeable to tax in that assessment year.
(2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year.
(3) The 1[Assessing Officer] may estimate the income of such individual for such period or any part thereof, where it cannot be readily determined in the manner provided in this Act.
(4) For the
1[JA.- Association of persons or body of individuals or artificial juridical person formed for a particular event or purpose
Notwithstanding anything contained in section 4, where it appears to the Assessing Officer that any association of persons or a body of individuals or an artificial juridical person, formed or established or incorporated for a particular event or purpose is likely to be dissolved in the assessment year in which such association of persons or a body of individuals or an artificial juridical person was formed or established or incorporated or immediately after such assessment year, the total income of such association or body or juridical person for the period from the expiry of the previous year for that assessment year up to the date of its dissolution shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2) to (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person a
Notwithstanding anything contained in section 4, if it appears to the 1[Assessing Officer] during any current assessment year that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the provisions of this Act, the total income of such person for the period from the expiry of the previous year for that assessment year to the date when the 1[Assessing Officer] commences proceedings under this section shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2), (3), (4), (5) and (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India.
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1. Substituted by the Direct Tax Laws (Amendment) Act, 1987, section 2, for "Income-tax Ofiicer" (w.e.f. 01.04.1988).
(1) Notwithstanding anything contained in section 4, where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the Assessing Officer, be charged to tax in that assessment year.
(2) The total income of each completed previous year or part of any previous year included in such period shall be chargeable to tax at the rate or rates in force in that assessment year, and separate assessments shall be made in respect of each such completed previous year or part of any previous year.
(3) Any person discontinuing any business or profession shall give to the 1[Assessing Officer] notice of such discontinuance within fifteen days thereof.
2[(3A) Where any business is discontinued in any year, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accor
(1) Where any business or profession carried on by an association of persons has been discontinued or where an association of persons is dissolved, the 2[Assessing Officer] shall make an assessment of the total income of the association of persons as if no such discontinuance or dissolution had taken place, and all the provisions of this Act, including the provisions relating to the levy of a penalty or any other sum chargeable under any provision of this Act shall apply, so far as may be, to such assessment.
(2) Without prejudice to the generality of the foregoing sub-section, if the 2[Assessing Officer] or 4[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] in the course of any proceeding under this Act in respect of any such association of persons as is referred to in that sub-section is satisfied that the association of persons was guilty of any of the acts specified in Chapter XXI, he may impose or direct the imposition of a penalty in accordance w
(1) Every person –
(a) who is the liquidator of any company which is being wound up, whether under the orders of a court or otherwise; or
(b) who has been appointed the receiver of any assets of a company, (hereinafter referred to as the liquidator) shall, within thirty days after he has become such liquidator, give notice of his appointment as such to the 1a[Assessing Officer] who is entitled to assess the income of the company.
(2) The 1a[Assessing Officer] shall, after making such inquiries or calling for such information as he may deem fit, notify to the liquidator within three months from the date on which he receives notice of the appointment of the liquidator the amount which, in the opinion of the Assessing Officer, would be sufficient to provide for any tax which is then, or is likely thereafter to become, payable by the company.
1b[(3) The liquidator –
(a) shall not, without the leave of the 1c[1[Principal Chief Commissioner or Chief Commiss
179. Liability of directors of private company 5[***]
2[(1)] 3[Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
4[(2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any pe
Section 179 of the Income Tax Act, 1961, establishes the liability of directors of private companies for the tax dues of the company. This provision is significant as it allows the tax authorities to recover unpaid taxes from directors when the company fails to meet its tax obligations.
Section 179 imposes joint and several liabilities on every person who was a director of a private company at any time during the relevant previous year for the payment of tax due from the company if the tax cannot be recovered from the company itself.
While Section 179 does not prescribe specific punishments, it allows for the recovery of tax dues from directors, which can lead to significant financial liabilities for them.
This commentary provides a comprehensive overview of Section 179 of the Income Tax Act, 1961, highlighting its implications for directors of private companies and the legal principles surrounding its application.
Where the time taken by the author of a literary or artistic work in the making thereof is more than twelve months, the amount received or receivable by him during any previous year on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of that work or of royalties or copyright fees (whether receivable in lump sum or otherwise), in respect of that work, shall, if he so claims, be allocated for purposes of assessment in such manner and to such period as may be prescribed1.
2[Provided that nothing contained in this section shall apply in relation to the previous year relevant to the assessment year commencing on or after the 1st day of April, 2000.]
Explanation: For the purposes of this section, the expression “author” includes a joint author, and the expression “lump sum”, in regard to royalties or copyright fees, includes an advance payment on account of such royalties or copyright fees which is not returnabl
2[180A. Consideration for know-how
Where the time taken by an individual, who is resident in India, for developing any know-how is more than twelve months, he may elect that the gross amount of any lump sum consideration received or receivable by him 1[during the previous year relevant to the assessment year commencing on the 1st day of April, 2000 or earlier assessment years] for allowing use of such know-how shall be treated for the purposes of charging income-tax for that year and for each of the two immediately preceding previous years as if one-third thereof were included in his income chargeable to tax for each of those years respectively and if he so elects, notwithstanding anything contained in any other provisions of this Act,-
(a) such gross amount shall be so treated, and
(b) the assessments for each of the two preceding previous years shall, if made, be accordingly rectified under section 154, the period of four years specified in sub-section (7)
1[***]
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1. Omitted by the Finance Act, 1988, with effect from 1st April, 1989.
1[***]
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1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
1[***]
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1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
2[184. Assessment as a firm
(1) A firm shall be assessed as a firm for the purposes of this Act, if –
(i) the partnership is evidenced by an instrument; and
(ii) the individual shares of the partners are specified in that instrument.
(2) A certified copy of the instrument of partnership referred to in sub-section (1) shall accompany the return of income of the firm of the previous year relevant to the assessment year commencing on or after the 1st day of April, 1993 in respect of which assessment as a firm is first sought.
Explanation: For the purposes of this sub-section, the copy of the instrument of partnership shall be certified in writing by all the partners (not being minors) or, where the return is made after the dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased.
(3) Where a firm is assessed as such
1[Notwithstanding anything contained in any other provision of this Act, where a firm does not comply with the provisions of section 184 for any assessment year, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession” and such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause (v) of section 28.]
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1. Substituted by the Finance Act, 2003, with effect from 1st April, 2004. Prior to substitution, section 185 stood as under:
‘185. Assessment when section 184 not complied with.–
Where a firm does not comply with the provisions of section 184 for any assessment year, the firm shall be assessed for that assessment year in the
1[***]
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1. Stands omitted as a result of substitution of sub-heading ‘B’ and sections 184, 185 and 186 by the Finance Act, 1992, with effect from 1st April, 1993.
(1) Where at the time of making an assessment under section 143 or section 144 it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as constituted at the time of making the assessment.
Proviso omitted by the Finance Act, 1992, with effect from 1st April, 1993.
(2) For the purposes of this section, there is a change in the constitution of the firm –
(a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change; or
(b) where all the partners continue with a change in their respective shares or in the shares of some of them:
1[Provided that nothing contained in clause (a) shall apply to a case where the firm is dissolved on the death of any of its partners.]
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1. Inse
Where a firm carrying on a business or profession is succeeded by another firm, and the case is not one covered by section 187, separate assessments shall be made on the predecessor firm and the successor firm in accordance with the provisions of section 170.
1[188A. Joint and several liability of partners for tax payable by firm
Every person who was, during the previous year, a partner of a firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for the assessment year to which such previous year is relevant, and all the provisions of this Act, so far as may be, shall apply to the assessment of such tax or imposition or levy of such penalty or other sum.]
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1. Inserted by the Direct Tax Laws (Amendment) Act, 1987, section 70, (w.e.f. 01.04.1989).
(1) Where any business or profession carried on by a firm has been discontinued or where a firm is dissolved, the 2[Assessing Officer] shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place, and all the provisions of this Act, including the provisions relating to the levy of a penalty or any other sum chargeable under any provision of this Act, shall apply, so far as may be, to such assessment.
(2) Without prejudice to the generality of the foregoing sub-section, if the 2[Assessing Officer] or 4[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] in the course of any proceeding under this Act in respect of any such firm as is referred to in that sub-section is satisfied that the firm was guilty of any of the acts specified in Chapter XXI, he may impose or direct the imposition of a penalty in accordance with the provisions of that Chapter.
(3) Every person who was at the time of such discon
1[189A. Provisions applicable to past assessments of firms
In relation to the assessment of any firm and its partners for the assessment year commencing on the 1st day of April, 1992, or any earlier assessment year, the provisions of this Chapter as they stood immediately before the 1st day of April, 1993 shall continue to apply.]
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1. Inserted by the Finance Act, 1992, section 69 (w.e.f. 01.04.1993). Earlier section 189A was inserted by the Direct Tax Laws (Amendment) Act, 1987, Section 72 (w.e.f. 01.04.1989) and was omitted by the Direct Tax Laws (Amendment) Act, 1989, Section 95(j) (w.e.f. 01.04.1989).
(1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction 1a[or collection] at source or by advance payment 1[or by payment under sub-section (1A) of section 192], as the case may be, in accordance with the provisions of this Chapter.
(2) Nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4.
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1a. Inserted by the Direct Tax Laws (Amendment) Act, 1989, Section 29 (w.r.e.f. 01.06.1988).
1. Inserted by the Finance Act, 2002, with effect from 1st June, 2002.
2[(1)] In the case of income in respect of which provision is not made under this Chapter for deducting income-tax at the time of payment, and in any case where income-tax has not been deducted in accordance with the provisions of this Chapter, income-tax shall be payable by the assessee direct.
2a[***]
1[Explanation: For the removal of doubts, it is hereby declared that if any person, including the principal officer of a company,–
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or after so deducting fails to pay, or does not pay, the whole or any part of the tax, as required by or under this Act, and where the assessee has also failed to pay such tax directly, then, such person shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default within the meaning of sub-section (1) of se
(1) Any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of payment, deduct income-tax 1[***] on the amount payable at the average rate of income-tax 2[***] computed on the basis of the 3[rates in force] for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year.
4[(1A) Without prejudice to the provisions contained in sub-section (1), the person responsible for paying any income in the nature of a perquisite which is not provided for by way of monetary payment, referred to in clause (2) of section 17, may pay, at his option, tax on the whole or part of such income without making any deduction therefrom at the time when such tax was otherwise deductible under the provisions of sub-section (1).]
4[(1B) For the purpose of paying tax under sub-section (IA), tax shall be determined at the average of income-ta
1[The person responsible for paying to a resident any income] 1d[by way of interest on securities] shall, 1e[at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier], 10[being the amount or the aggregate of amounts exceeding ten thousand rupees during the financial year,] deduct income-tax at the 1f[***] rates in force on the amount of the interest payable:
1a[***]:
1g[Provided 1h[***] that no tax shall be deducted from -
(i) any interest payable on 4¼ per cent National Defence Bonds, 1972, where the bonds are held by an individual, not being a nonresident; or
1i[(ia) any interest payable to an individual on 4¼ per cent National Defence Loan, 1968, or 4¾ per cent National Defence Loan, 1972; or]
1j[(ib) any interest payable on National Development Bonds; or]
(ii) 1b[***];
1k[(iia) any interest payable on 7-Year Nationa
The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment 4[by any mode] in respect of any dividend or before making any distribution or payment to a shareholder, 1a[who is resident in India, of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) 9[or sub-clause (f)] of clause (22) of section 2, deduct from the amount of such dividend, income-tax 1b[***] 5[at the rate of ten per cent.]:
1[Provided that no such deduction shall be made in the case of a shareholder, being an individual, if -
(a) the dividend is paid by the company by 6[any mode other than cash]; and
(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid
1b[194A. Interest other than “Interest on securities"
(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income 1c[by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
1[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed 20[one crore rupees in case of business or fifty lakh rupees in case of profession] during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]
1d[Explanation: For the purposes of this section, where any income
5[194B. 6[Winnings from lottery or crossword puzzle, etc.]
The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle 1[or card game and other game of any sort] 7[or from gambling or betting of any form or nature whatsoever, being the amount 9[in respect of a single transaction] exceeding ten thousand rupees 10[****]] shall, at the time of payment thereof, deduct income-tax thereon at the rates in force:
2[***]
3[Provided that] in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.]
8[Provided further that nothing contained in this section shall apply to deduction of income-tax on winnings from any online game on or after the 1
4[194BB. Winnings from horse race
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 arranging 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 5[, being the amount 6[in respect of a single transaction] exceeding ten thousand rupees 7[****],] shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.
1[***]]
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1. Proviso omitted by the Finance Act, 1999, with effect from 1st April, 2000. Prior to omission, the proviso stood as under:-
"Provided that no deduction shall be made under this section from any payment made before the 1st day of June, 1978."
2. Substituted by the Finance Act, 2010 w.e.f. 01.07.2010 for the following:-
"two thousand five hundred rupe
1[(1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to--
(i) one per cent. where the payment is being made or credit is being given to an individual or a Hindu undivided family;
(ii) two per cent. where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein.
(2) Where any sum referred to in sub-section (1) is credited to any account, whether called “Suspense account” or by any other name, in the books of account o
3[194D. Insurance commission
Any person responsible for paying to a resident any income by way of 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) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
Provided that no deduction shall be made under this section from any such income credited or paid before the 1st day of June, 1973]:
4[Provided further that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to the payee, d
3[194E. Payments to non-resident sportsmen or sports associations
Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) 1[or an entertainer,] who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 2[twenty per cent.].]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.07.2012.
2. Substituted by the Finance Act, 2012, w.e.f. 01.07.2012 for the following:-
"ten per cent."
3. Inserted by the Direct Tax Laws (Second Amendment) Act, 1989, Section 22 (w.e.f. 01.11.1989). Earlier Section 194E was inserted by the Direct Tax Laws (Amendment) Act, 1987, Section 74 (w
2[194EE. Payments in respect of deposits under National Savings Scheme, etc.
The person responsible for paying to any person any amount referred to in clause (a) of sub-section (2) of section 80CCA shall, at the time of payment thereof, deduct income-tax thereon at the rate of 1[ten per cent.]:
Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments Provided further that nothing contained in this section shall apply to the payment of the said amount to the heirs of the assessee.]
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1. Substituted by the Finance Act, 2016 w.e.f. 1st day of June, 2016 for the previous text:-
"twenty per cent"
2. Inserted by the Finance (no. 2) Act, 1991, Section 54 (w.e.f. 01.10.1991).
2[****]
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1. Inserted by the Finance Act, 1990, Section 40 (w.e.f. 01.04.1990).
2. Omitted by Finance (No. 2) Act, 2024, w.e.f. 01.10.2024, for the following:-
"1[194F. Payments on account of repurchase of units by Mutual Fund or Unit Trust of India
The person responsible for paying to any person any amount referred to in sub-section (2) of section 80CCB shall, at the time of payment thereof, deduct income-tax thereon at the rate of twenty per cent.]"
5[194G. Commission, etc., on the sale of lottery tickets
6[(1)] Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding 8[twenty thousand rupees] shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 7[two per cent.].
(2) 1[***]
(3) 2[***]
Explanation : For the purposes of this section, where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the p
1[Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 8[two per cent.]:
Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed 9[twenty thousand rupees].
2[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business
9[194-I. Rent
1[Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of-
2[(a) two per cent. for the use of any machinery or plant or equipment; and
(b) ten per cent. for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:]
10[Provided that no deduction shall be made under this section, where the income by way of rent credited or paid for a month or part of a month by such person to the account of, or to, the payee, does not exceed fifty thousand rupees:]
3[Provided further that an individual or a Hindu undivided family, whose total sales, gros
1[(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent. of such sum 3[or the stamp duty value of such property, whichever is higher,] as income-tax thereon.
(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is 4[immovable property and the stamp duty value of such property, are both,] less than fifty lakh rupees.
6[Provided that where there is more than one transferor or transferee in respect of any immovable property, then the consideration shall be the aggregate of the amounts pa
12[194J. Fees for professional or technical services
(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of-
(a) fees for professional services, or
(b) fees for technical services, 1[or]
8[(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company; or]
1[(c) royalty, or]
1[(d) any sum referred to in clause (va) of section 28,]
shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 10[two per cent. of such sum in case of fees for technical services (not being a professional services, or royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films and ten
5[194K. Income in respect of units
Any person responsible for paying to a resident any income in respect of--
(a) units of a Mutual Fund specified under clause (23D) of section 10; or
(b) units from the Administrator of the specified undertaking; or
(c) units from the specified company, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.:
Provided that the provisions of this section shall not apply--
(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not exceed 6[ten thousand rupees]; or
(ii) if the income is of the nature of capital gains.
Explanation 1.--For the purposes of this se
3[* * *]
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1. Inserted by the Finance Act, 1999, with effect from 1st June, 1999.
2. Inserted by the Finance Act, 2000, with effect from 1st June, 2000.
3. Omitted by the Finance Act, 2016, with effect from 1st June, 2016.
"1[Any person responsible for paying to a resident any sum being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any capital asset shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein :
Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial ye
1[Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon :
Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed 5[five lakh rupees].
4[Provided further that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax under section 96 of the Right to Fair Compensat
.
1[Where any income by way of interest is payable to a non-resident, not being a company, or to a foreign company, by an infrastructure debt fund referred to in clause (47) of section 10, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.]
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1. Inserted by the Finance Act, 2011 w.e.f 01.06.2011.
Section 194LBA - Certain income from units of a business trust
1[194LBA. Certain income from units of a business trust
(1) Where any distributed income referred to in section 115UA, being of the nature referred to 5[in 6[***] clause (23FC)] 2[or clause (23FCA)] of section 10, is payable by a business trust to its unit holder being a resident, the person responsible for ma
1[(1) Where any income by way of interest referred to in sub-section (2) is payable to a non-resident, not being a company or to a foreign company by a specified company 2[or a business trust], the person responsible for making the payment, shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct the income-tax thereon at the rule of five per cent.
7[Provided that in case of income by way of interest referred to clause (ib) of sub-section (2), the income-tax shall be deducted at the rate of four per cent.]
11[Provided further that in case of income by way of interest referred to in clause (ic) of sub-section (2), the income-tax shall be deducted at the rate of nine per cent.]
(2) The interest referred to in sub-section (1) shall be the income by way of interest payable by the specified company 2[or the business trust],-
2[(1) Any person who is responsible for paying to a person being a Foreign Institutional Investor or a Qualified Foreign Investor, any income by way of interest referred to in sub-section (2), shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.
3[(2) The income by way of interest referred to in sub-section (1) shall be the interest payable,--
(a) on or after the 1st day of June, 2013 but before the 1st day of July, 2023 in respect of the investment made by the payee in--
(i) a rupee denominated bond of an Indian company; or
(ii) a Government security;
(b) on or after the 1st day of April, 2020 but before the 1st day of July, 2023 in respect of the investment made by the payee in municipal debt securities:
Provided that the rate of interest in re
15[(1) Any person responsible for paying to a non-resident not being a company, or to a foreign company, 6[any interest (not being interest referred to in section 194LB or section 194LC)] 10[or section 194LD] 1[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
16[Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of Section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode]:
14[***]
7[Explanation 1] : For the purposes of this
2[195A. Income payable "net of tax"
1[In a case other than that referred to in sub-section (1A) of Section 192, where under an agreement] or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by the person by whom the income is payable, then, for the purposes of deduction of tax under those provisions such income shall be increased to such amount as would, after deduction of tax thereon at the rates in force for the financial year in which such income is payable, be equal to the net amount payable under such agreement or arrangement.]
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1. Substituted for ‘Where, under an agreement’ by the Finance Act, 2002, with effect from 1st June, 2002.
2. Inserted by the Finance Act, 1987, Section 50 (w.e.f. 01.06.1987).
1[196. Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations
Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to –
(i) the Government, or
(ii) the Reserve Bank of India, or
(iii) a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, or
(iv) a Mutual Fund specified under clause (23D) of section 10,
where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.]
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1. Inserted by the Direct Tax Laws (Amendment) Act, 1987, Section 75 (w.e.f. 01.04.1988). Earlier Section 196 was substituted by the Finance (No. 2) Act, 1967, Section 30(3)
6[196A. Income in respect of units of non-residents
(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or 3[from the specified company referred to in the Explanation to clause (35) of section 10] shall, at the time of credit of such income to the account of the payee or at the time of payment thereof 4[by any mode], whichever is earlier, deduct income-tax thereon at the rate of twenty per cent.
7[Provided that where an agreement referred to in subsection (1) of section 90 or sub-section (1) of section 90A applies to the payee and if the payee has furnished a certificate referred to in sub-section (4) of section 90 or subsection (4) of section 90A, as the case may be, then, income-tax thereon shall be deducted at the rate of twenty per cent. or at the rate or rates of income-tax provided in such agreement for such income, w
1[196B. Income from units
2[Where any income in respect of units referred to in section 115AB or by way of long-term capital gains arising from the transfer of such units is payable to an Offshore Fund], the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon 3[at the rate of--
(a) ten per cent. in respect of income from units referred to in clause (i) of sub-section (1) of section 115AB;
(b) ten per cent. in respect of long-term capital gains arising from transfer of units referred to in section 115AB, which takes place before the 23rd day of July, 2024;
(c) twelve and one-half per cent. in respect of long-term capital gains arising from transfer of units referred to in section 115AB, which takes place on or after the 23rd day of July, 2024.]]
5[196C. Income from foreign currency bonds or shares of Indian company
6[Where any income by way of interest or dividends in respect of 1[bonds or Global Depository Receipts referred to in section 115AC or by way of long-term capital gains arising from the transfer of such 1[bonds or Global Depository Receipts] is payable to a non-resident], the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof 3[by any mode], whichever is earlier, deduct income-tax thereon 7[at the rate of--
(a) ten per cent. in respect of income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 115AC;
(b) ten per cent. in respect of long-term capital gains arising from transfer of such bond or Global Depository Receipts referred to in section 115 AC which takes place before the 23rd day of July, 2024;
(c) twelve and one-half per cent. i
16[196D. Income of Foreign Institutional Investors from securities
(1) Any person responsible for paying to a non-resident not being a company, or to a foreign company, 6[any interest (not being interest referred to in section 194LB or section 194LC)] 10[or section 194LD] 1[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of Section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other m
1(1) Subject to rules made under sub-section (2A) where, in the case of 2[any income of any person or sum payable to any person], income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 3[194A, 4[194C,194D,194G 5[194H], 194-I, 194J,194K, 194LA, 15[194LBA,]] 6[194LBB, 7[194LBC, 8[194M, 16[194-O, 194Q]]]] and 195, the Assessing Officer is satisfied that the total income of 9[***] the recipient justifies the deduction of income-tax 10[***] at any lower rates or no deduction of income-tax 10[***], as the case may be, the 11[Assessing Officer] shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.
(2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the 11[ Assessing Officer], deduct income-tax 12[***] at the rates sp
7a[197A. No deduction to be made in certain cases
(1) Notwithstanding anything contained in 1[***] section 194 9a[***] 10a[or section 194EE], no deduction of tax shall be made under any of the said sections in the case of an individual, who is resident in India, if such individual furnishes to the person responsible for paying any income of the nature referred to in 1[***] section 194 9a[11a[***] or, as the case may be, section 194EE], a declaration in writing in duplicate in the prescribed form2 and verified in the prescribed manner3 to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.
1a[(1A) Notwithstanding anything contained in 17[section 192A or section 193 or section 194A 20[or section 194D] or section 194DA] 19[or section 194-I] or section 194K, no deduction of tax shall be made under 5[any of] the said sections in the case of a person (not being a c
All sums deducted in accordance with 1[the foregoing provisions of this Chapter] 4[and income-tax paid outside India, by way of deduction, in respect of which an assessee is allowed a credit against the tax payable under this Act,] shall for the purposes of computing the income of an assessee, be deemed to be income received.
2[Provided that the sum being the tax paid, under sub-section (1A) of section 192 for the purpose of computing the income of an assessee, shall not be deemed to be income received.]
3[Provided further that the sum deducted in accordance with the provisions of section 194N for the purpose of computing the income of an assessee, shall be deemed to be income received.]
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1. Substituted for ‘the provisions of Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194-I, Sect
1[(1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be.
(2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.
(3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.]
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1[(1)] Any person deducting any sum in accordance with 2[the foregoing provisions of this Chapter] shall pay within the prescribed time3, the sum so deducted to the credit of the Central Government or as the Board directs.
4[(2) Any person being an employer, referred to in sub-Section (1A) of Section 192 shall pay, within the prescribed time3, the tax to the credit of the Central Government or as the Board directs.]
9[(2A) In case of an office of the Government, where the sum deducted in accordance with the foregoing provisions of this Chapter or tax referred to in sub-Section (1A) of Section 192 has been paid to the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, who is responsible for crediting such sum or tax to the credit of the Central Government, shall deliver or cause to be delivered to the pr
1[(1) Where any person, including the principal officer of a company,-
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:
10[Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a 14[payee] or on the sum credited to the account of a 14[payee] shall not be deemed to be an assessee in default in respect of such tax if such 14[payee]--
(i) has furnished his return of income under section 139;
(ii) has taken into account such
The power to recover tax by deduction under 1[the foregoing provisions of this Chapter] shall be without prejudice to any other mode of recovery.
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1. Substituted for ‘Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194-I, Section 194J, Section 194K, Section 194L, Section 195, Section 196A, Section 196B, Section 196C and Section 196D’ by the Finance (No. 2) Act, 2004, with effect from 1st October, 2004. Earlier, the quoted portion was amended by the Finance Act, 1999, with effect from 1st June, 1999.
Section 203 - Certificate for tax deducted
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1a[203. Certificate for tax deducted
1[(1)] Every person deducting tax in accordance with 2[the foregoing provisions of this Chapter] 4a[shall, within such period as may be prescribed3 from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any dividend to a shareholder], furnish to the person to whose account such credit is given or to whom such payment is made or the cheque or warrant is issued, a certificate to the effect that tax has been deducted, and specifying the amount so deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed3.
4[(2) Every person, being an employer, referred to in sub-Section (1A) of Section 192 shall, within such period, as may be prescribed3, furnish to the person in respect of whose income such payment of tax has been made,
1(1) Every person, deducting tax or collecting tax in accordance with the provisions of this Chapter, who has not been allotted a tax-deduction account number or, as the case may be, a tax-collection account number, shall, within such time as may be prescribed2, apply to the Assessing Officer for the allotment of a “tax-deduction and collection-account number”.
(2) Where a “tax deduction account number” or, as the case may be, a “tax-collection account number” or a “tax deduction and collection-account number” has been allotted to a person, such person shall quote such number-
(a) in all challans for the payment of any sum in accordance with the provisions of Section 200 or sub-Section (3) of Section 206C ;
(b) in all certificates furnished under Section 203 or sub-Section (5) of Section 206C ;
3[(ba) in all the 4[xxx] statements prepared and delivered or caused to be delivered in accordance with the provisions of sub-Section (3) of Section 200 or su
4[***]
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1. Inserted by the Finance (No. 2) Act, 2004, with effect from 1st April, 2005.
2. See rule 31AB and Form No. 26AS. The prescribed income-tax authority under rule 31AB is the Director General of Income-tax (Systems) or the person authorised by him. For analysis, see Mashbra’s Income-tax Rules.
3. Substituted for “1st day of April, 2005” by the Finance Act, 2006, with effect from 1st April, 2006.
4. Omitted by Finance Act, 2020, w.e.f. 01.06.2020, the previous text was:-
"1[The prescribed2 income-tax authority or the person authorised by such authority referred to in sub-section (3) of section 200, shall, within the prescribed2 time after the end of each financial year beginning on or after the 3[1st day of April, 2008] prepare and deliver to every person from whose income the tax has been deducted or in respect of whose income the tax has been paid a statement in the prescribed2 form spec
For the purposes of 1[the foregoing provisions of this Chapter] and Section 2852 the expression “person responsible for paying” means –
(i) in the case of payments of income chargeable under the head “Salaries”, other than payments by the Central Government or the Government of a State, the employer himself or, if the employer is a company, the company itself, including the principal officer thereof ;
(ii) in the case of payments of income chargeable under the head “Interest on securities”, other than payments made by or on behalf of the Central Government or the Government of a State, the local authority, corporation or company, including the principal officer thereof ;
4a(iia) in the case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, the 4[authorised person] responsible for remitting such sum to the non-resident Indian or f
Where tax is deductible at the source under 1[the foregoing provisions of this Chapter], the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.
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1. Substituted for ‘Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194-I, Section 194J, Section 194K, Section 194-L, Section 195, Section 196A, Section 196B, Section 196C and Section 196D’ by the Finance (No. 2) Act, 2004, with effect from 1st October, 2004. Earlier, the quoted portion was amended by the Finance Act, 1999, with effect from 1st June, 1999.
Section 206 - Persons deducting tax to furnish prescribed returns
1a[206. Persons deducting tax to furnish prescribed returns
1b[(1)] The prescribed person1 in the case of every office of Government, the principal
6[206A. Furnishing of statement in respect of payment of any income to residents without deduction of tax
(1) Any banking company or co-operative society or public company referred to in the proviso to clause (i) of sub-section (3) of section 194A responsible for paying to a resident any income not exceeding forty thousand rupees, where the payer is a banking company or a co-operative society, and five thousand rupees in any other case by way of interest (other than interest on securities), shall prepare such statement in such form, containing such particulars, for such period, verified in such manner and within such time, as may be prescribed, and deliver or cause to be delivered the said statement to the prescribed income-tax authority or to the person authorised by such authority.
(2) The Board may require any person, other than a person mentioned in sub-section (1), responsible for paying to a resident any income liable for deduction of tax at source under Ch
1[(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deduct or), failing which tax shall be deducted at the higher of the following rates, namely:--
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent.
5[Provided that where the tax is required to be deducted under section 194-O, the provisions of clause (iii) shall apply as if for the words "twenty per cent.", the words "five per cent." had been substituted.]
6[Provided further that where the tax is required to be deducted under section 194Q, the provisions of clause (iii) shall apply as if for the words “twenty per cent.”, the wo
1[***]
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1. Omitted by the Finance (No. 2) Act, 1996, with effect from 1st October, 1996.
1[(1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods, of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax:
2[TABLE
Sl. No.
(1) Nature of Goods
(2) Percentage
(3)
(i) Alcoholic liquor for human consumption One per cent
(ii) Tendu leaves Five per cent
(iii) 91[Timber or any other forest produce (not being tendu leaves)] obtained under a forest lease 92[two per cent.]
(iv) Timber obtained by any mode other than under a forest lease 93[two per cent.]
94[****]
(vi) Scrap One per cent]
47[(vii)
1[(1) Every person collecting tax in accordance with the provisions of section 206C, shall, within such time as may be prescribed2, apply to the Assessing Officer for the allotment of a tax-collection account number.
(2) Where a tax collection account number has been allotted to a person, such person shall quote such number-
(a) in all challans for the payment of any sum in accordance with the provisions of sub-section (3) of section 206C ;
(b) in all certificates furnished under sub-section (5) of section 206C ;
(c) in all the returns delivered in accordance with the provisions of subsection (5A) or sub-section (5B) of section 206C to any income-tax authority ; and
(d) in all other documents pertaining to such transactions as may be prescribed in the interest of revenue :]
3[Provided that the provisions of this section shall not apply on or after the 1st day of October, 2004.]
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1. Inse
1a[207. Liability for payment of advance tax
1[(1)] Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as "current income]
2[(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who--
(a) does not have any income chargeable under the head "Profits and gains of business or profession"; and
(b) is of the age of sixty years or more at any time during the previous year.]]
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1a. Substituted by the Direct Tax Laws (Amendment) Act, 1987, Section 76 (w.e.f. 01.04.1988). Earlier Section 207 was amended by the Finance Act, 1972, Section 33 (w.e.f. 01.04.1972).
"207. Liability for payment of ad
1a[208. Conditions of liability to pay advance tax
Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is 1[ten thousand rupees] or more.]
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1a. Substituted by Direct Tax Laws (Amendment) Act, 1987, (w.e.f. 01.04.1988), for the following:-
1. Substituted by the Finance (No. 2) Act, 2009, with retrospective effect from 1st April, 2009, for the following:-
“five thousand rupees”
2[(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely :
(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year ;
(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1a[210. Payment of advance tax by the assessee of his own accord or in pursuance of order of Assessing Officer
(1) Every person who is liable to pay advance tax under section 208 (whether or not he has been previously assessed by way of regular assessment) shall, of his own accord, pay on or before each of the due dates specified in section 211, the appropriate percentage, specified in that section, of the advance tax on his current income, calculated in the manner laid down in section 209.
(2) A person who pays any installment or installments of advance tax under sub-section (1), may increase or reduce the amount of advance tax payable in the remaining installment or installments to accord with his estimate of his current income and the advance tax payable thereon, and make payment of the said amount in the remaining installment or installments accordingly.
(3) In the case of a person who has been already assessed by way of regular assessment in respect of t
3[211.Instalments of advance tax and due dates
1[(1) Advance tax on the current income calculated in the manner laid down in section 209 shall be payable by--
(a) all the assessees, other than the assessee referred to in clause (b), who are liable to pay the same, in four instalments during each financial year and the due date of each instalment and the amount of such instalment shall be as specified in the Table below:
TABLE
Due date of instalment Amount payable
On or before the 15th June Not less than fifteen per cent. of such advance tax.
On or before the 15th September Not less than forty-five per cent. of such advance tax, as reduced by the amount, if any, paid in the earlier instalment.
On or before the 15th December Not less than seventy-five per cent. of such advance tax, as reduced by the amount or amounts, if any, paid in the earlier instalment or instalments.
On or before the 15th March The whole amount of such ad
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1988.
(1) The Central Government shall pay simple interest at 1[fifteen per cent] per annum on the amount by which the aggregate sum of any installments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the 2[assessed tax] from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such installment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that installment from the date of its payment to the date of regular assessment :
3[Provided that in respect of any amount refunded on a provisional assessment under section 141A, no interest shall be paid for any period after the date of such provisional assessment.]
4[(1A) Where as a result of an order under section
8[(1) Where, in any financial year, an assessee has paid 9[advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate)], and the advance tax so paid is less than seventy-five per cent of the assessed tax, simple interest at the rate of 2[fifteen per cent] per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax :]
3[Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect as if for the words “seventy-five per cent”, the words “eighty-three and one-third per cent” had been substituted.]
4[(2) Where before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,–
(i) interest shall be calculated in accordance with the foregoing provision u
Where, on making the regular assessment, the 1[Assessing Officer] finds that any assessee has –
2[(a) 3[under section 209A or section 212] under-estimated the advance tax payable by him and thereby reduced the amount payable in either of the first two installments ; or]
(b) under section 213 wrongly deferred the payment of advance tax on a part of his income, he may direct that the assessee shall pay simple interest at 4[fifteen per cent] per annum–
(i) in the case referred to in clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such installment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year ; and
(ii) in the case referred to in clause (b), for the period during which the payment of advance tax was so deferred.
Explanation : For the purposes of this section, any installment due before the expiry of six months from th
1[(1) Where, on making the regular assessment, 2[the 3[Assessing Officer finds] –
(a) that any such person as is referred to in clause (a) of sub-section (1) of section 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred 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 4[fifteen per cent] per annum, from the 1st day of April next following the financial year in which the advance tax was payable in accordance with 5[the said sub-section (1) or sub-section (2)] up to the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in sub-section (5) of section 215.
(1A) Where, on making the regular assessment, the 3[Assessing Officer] finds that 6[any person who is required to
1[218. When assessee deemed to be in default
If any assessee does not pay on the date specified in sub-section (1) of section 211, any installment of the advance tax that he is required to pay by an order of the Assessing Officer under sub-section (3) or sub-section (4) of section 210 and does not, on or before the date on which any such installment as is not paid becomes due, send to the Assessing Officer an intimation under sub-section (5) of section 210 or does not pay on the basis of his estimate of his current income the advance tax payable by him under sub-section (6) of section 210, he shall be deemed to be an assessee in default in respect of such installment or installments.]
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987, (4 of 1988), Section 84 for sub section 218 (w.e.f. 1-4-1988).
Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefore shall be given to the assessee in the regular assessment.
1[***]
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1. Proviso Omitted by the Direct Tax Laws (Amendment) Act, , 1987, (4 of 1988), Section 126(21) (w.e.f. 1-4-1989).
(1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within 20[thirty days] of the service of the notice at the place and to the person mentioned in the notice :
Provided that, where the Assessing Officer has any reason to believe that it will be detrimental to revenue if the full period of thirty days aforesaid is allowed, he may, with the previous approval of the 1[Joint Commissioner], direct that the sum specified in the notice of demand shall be paid within such period being a period less than the period of thirty days aforesaid, as may be specified by him in the notice of demand.
6[(1A) Where any notice of demand has been served upon an assessee and any appeal or other proceeding, as the case may be, is filed or initiated in respect of the amount specified in the said notice of demand, then, such demand shall be deemed to be valid till the disposal of the appeal by the last appellate
1[(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to pay such amount as the 2[Assessing Officer] may direct, and in the case of a continuing default, such further amount or amounts as the 2[Assessing Officer] may, from time to time, direct so, however, that the total amount of penalty does not exceed the amount of tax in arrears :
Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard :
3[Provided further that where the assessee proves to the satisfaction of the 2[Assessing Officer] that the default was for good and sufficient reasons, no penalty shall be levied under this section.]
4[Explanation : For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty
2[(1) When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form1 specifying the amount of arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule referred to as "certificate") and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule-]
(a) attachment and sale of the assessee's movable property ;
(b) attachment and sale of the assessee's immovable property ;
5[***]
(d) appointing a receiver for the management of the assessee's movable and immovable properties.
3[Explanation: For the purposes of this sub-section, the assessee's movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the
4[223.Tax Recovery Officer by whom recovery is to be effected
(1) The Tax Recovery Officer competent to take action under section 222 shall be–
(a) the Tax Recovery Officer within whose jurisdiction the assessee carries on his business or profession or within whose jurisdiction the principal place of his business or profession is situate, or
(b) the Tax Recovery Officer within whose jurisdiction the assessee resides or any movable or immovable property of the assessee is situate, the jurisdiction for this purpose being the jurisdiction assigned to the Tax Recovery Officer under the orders or directions issued by the Board, or by the 2[Principal Chief Commissioner or Chief Commissioner] or 3[Principal Commissioner or Commissioner] who is authorised in this behalf by the Board in pursuance of section 120.
(2) Where an assessee has property within the jurisdiction of more than one Tax Recovery Officer and the Tax Recovery Officer by whom the certificate is d
1[224. Validity of certificate and cancellation or amendment thereof
It shall not be open to the assessee to dispute the correctness of any certificate drawn up by the Tax Recovery Officer on any ground whatsoever, but it shall be lawful for the Tax Recovery Officer to cancel the certificate if, for any reason, he thinks it necessary so to do, or to correct any clerical or arithmetical mistake therein.]
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987, (4 of 1988), Section 87, for Section 224 (w.e.f. 1-4-1989) as amended by the Direct Tax Laws (Amendment) Act, 1989 (3 of 1989), Section 36 (w.r.e.f. 1-4-1988).
1[225. Stay of proceedings in pursuance of certificate and amendment or cancellation thereof
(1) It shall be lawful for the Tax Recovery Officer to grant time for the payment of any tax and when he does so, he shall stay the proceedings for the recovery of such tax until the expiry of the time so granted.
(2) Where the order giving rise to a demand of tax for which a certificate has been drawn up is modified in appeal or other proceeding under this Act, and, as a consequence thereof, the demand is reduced but the order is the subject-matter of further proceeding under this Act, the Tax Recovery Officer shall stay the recovery of such part of the amount specified in the certificate as pertains to the said reduction for the period for which the appeal or other proceeding remains pending.
(3) Where a certificate has been drawn up and subsequently the amount of the outstanding demand is reduced as a result of an appeal or other proceeding under this Act, the Tax
1[(1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax by any one or more of the modes provided in this section.
(1A) Where a certificate has been drawn up under section 222, the Tax Recovery Officer may, without prejudice to the modes of recovery specified in that section, recover the tax by any one or more of the modes provided in this section.]
(2) If any assessee is in receipt of any income chargeable under the head “Salaries”, the 2[Assessing Officer] or Tax Recovery Officer may require any person paying the same to deduct from any payment subsequent to the date of such requisition any arrears of tax due from such assessee, and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs :
Provided that any part of the salary exempt from attachment in execution of a decree of a civil court under section 60 of the Co
If the recovery of tax in any area has been entrusted to a State Government under clause (1) of Article 258 of the Constitution, the State Government may direct, with respect to that area or any part thereof, that tax shall be recovered therein with, and as an addition to, any municipal tax or local rate, by the same person and in the same manner as the municipal tax or local rate is recovered.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
5[228A. Recovery of tax in pursuance of agreements with foreign countries
(1) Where an agreement is entered into by the Central Government with the Government of any country outside India for recovery of income-tax under this Act and the corresponding law in force in that country and the Government of that country or any authority under that Government which is specified in this behalf in such agreement sends to the Board a certificate for the recovery of any tax due under such 1[corresponding law from a resident, or] a person having any property in India, the Board may forward such certificate to 2[any Tax Recovery Officer having jurisdiction over the resident, or] within whose jurisdiction such property is situated and thereupon such Tax Recovery Officer shall–
(a) proceed to recover the amount specified in the certificate in the manner in which he would proceed to recover the amount 6[specified in a certificate drawn up by him under section 222]; and
(b) r
Any sum imposed by way of interest, fine, penalty, or any other sum payable under the provisions of this Act, shall be recoverable in the manner provided in this Chapter for the recovery of arrears of tax.
1[(1) Subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, no person,–
(a) who is not domiciled in India ;
(b) who has come to India in connection with business, profession or employment ; and
(c) who has income derived from any source in India,
shall leave the territory of India by land, sea or air unless he furnishes to such authority as may be prescribed2 –
(i) an undertaking in the prescribed3 form from his employer; or
(ii) through whom such person is in receipt of the income,
to the effect that tax payable by such person who is not domiciled in India shall be paid by the employer referred to in clause (i) or the person referred to in clause (ii), and the prescribed2 authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate,4 for leaving India :
Provided that nothing contained in sub-section (1) shall apply to a perso
1[***]
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1. Omitted by the Finance Act, 2001, with effect from 1st June, 2001. Prior to omission, section 230A, stood as under :
‘230A. Restrictions on registration of transfers of immovable property in certain cases.–
(1) Notwithstanding anything contained in any other law for the time being in force, where any document required to be registered under the provisions of clause (a) to clause (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (16 of 1908), purports to transfer, assign, limit, or extinguish the right, title or interest of any person to or in any property valued at more than five lakh rupees, no registering officer appointed under that Act shall register any such document, unless the Assessing Officer certifies that –
(a) such person has either paid or made satisfactory provision for payment of all existing liabilities under this Act, the Excess Profits Tax Ac
1[231. Faceless collection and recovery of tax
(1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of issuance of certificate for deduction of income-tax at any lower rates or no deduction of income-tax under section 197, or deeming a person to be an assessee in default under sub-section (1) of section 201 or sub-section (6A) of section 206C, issuance of certificate for lower collection of tax under sub-section (9) of section 206C or passing of order or amended order under sub-section (3) or sub-section (4) of section 210, or reduction or waiver of the amount of interest paid or payable by an assessee under sub-section (2A), or extending the time for payment or allowing payment by instalment under sub-section (3), or treating the assessee as not being in default under sub-section (6) or sub-section (7) of section 220, or levy of penalty under section 221, or drawing of certificate by the Tax Recovery Officer under s
The several modes of recovery specified in this Chapter shall not affect in any way –
(a) any other law for the time being in force relating to the recovery of debts due to Government ; or
(b) the right of the Government to institute a suit for the recovery of the arrears due from the assessee,
and it shall be lawful for the Assessing Officer or the Government, as the case may be, to have recourse to any such law or suit, notwithstanding, that the tax due is being recovered from the assessee by any mode specified in this Chapter.
1[***]
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1. Omitted by the Taxation Laws (Amendment) Act, 1970, with effect from 1st April, 1971.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1a[234A. Interest for defaults in furnishing return of income
(1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) 13[or sub-section (8A)] of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of 1[one per cent] for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,–
(a) where the return is furnished after the due date, ending on the date of furnishing of the return ; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section 144,
2[on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduc
1a[234A. Interest for defaults in furnishing return of income
(1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) 13[or sub-section (8A)] of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of 1[one per cent] for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,–
(a) where the return is furnished after the due date, ending on the date of furnishing of the return ; or
(b) where no return has been furnished, ending on the date of completion of the assessment under section 144,
2[on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduc
1[234C. Interest for deferment of advance tax
(1) Where in any financial year, the advance tax paid by the assessee on his current income on or before the 15th day of September is less than twenty per cent. of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than fifty per cent. of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent. per month of the shortfall from for a period of three months on the amount of the shortfall from twenty per cent. or, as the case may be, fifty per cent. of the tax due on the returned income.
Explanation.-- In this section, "tax due on the returned income" means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax
1[(1) Subject to the other provisions of this Act, where any refund is granted to the assessee under sub-section (1) of section 143, and-
(a) no refund is due on regular assessment ; or
(b) the amount refunded under sub-section (1) of section 143 exceeds the amount refundable on regular assessment,
the assessee shall be liable to pay simple interest at the rate of 2[one-half per cent] on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment.
(2) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of refund granted under sub-section (1) of section 143 is held to be correctly allowed, either in whole or in part, as the case may be, then, the interes
1[234G. Fee for default relating to statement or certificate
(1) Without prejudice to the provisions of this Act, where,--
(a) the research association, university, college or other institution referred to in clause (ii) or clause (iii) or the company referred to in clause (iia) of sub-section (1) of section 35 fails to deliver or cause to be delivered a statement within the time prescribed under clause (i), or furnish a certificate prescribed under clause (ii) of sub-section (1A) of that section; or
(b) the institution or fund fails to deliver or cause to be delivered a statement within the time prescribed under clause (viii) of sub-section (5) of section 80G, or furnish a certificate prescribed under clause (ix) of the said sub-section, it shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall,--
(a) not exceed the amount in respe
1[G.- Levy of fee in certain cases
(1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.
(2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
(3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax dedu
1[***]
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1. Omitted by the Finance (No. 2) Act, 1971, with effect from 1st April, 1972.
(1) Where in respect of any previous year relevant to the assessment year commencing after the 31st day of March, 1960, an Indian company or a company which has made the prescribed arrangements1 for the declaration and payment of dividends within India, pays any dividend wholly or partly out of its profits and gains actually charged to income-tax for any assessment year ending before the 1st day of April, 1960, and deducts tax therefrom in accordance with the provisions of Chapter XVIIB, credit shall be given to the company against the income-tax, if any, payable by it on the profits and gains of the previous year during which the dividend is paid, of a sum calculated in accordance with the provisions of sub-section (2), and, where the amount of credit so calculated exceeds the income-tax payable by the company as aforesaid, the excess shall be refunded.
(2) The amount of income-tax to be given as credit under sub-section (1) shall be a sum equal to ten per cent of s
1[236A. Relief to certain charitable institutions or funds in respect of
2[(1) Where seventy-five per cent of the share capital of any company is throughout the previous year beneficially held by an institution or fund established in India for a charitable purpose the income from dividend whereof is exempt under section 11], credit shall be given to the institution or fund against the tax, if any, payable by it, of a sum calculated in accordance with the provisions of sub-section (2), in respect of its income from dividends (other than dividends on preference shares) declared or distributed during the previous year relevant to any assessment year beginning on or after the 3[1st day of April, 1966], 4[by such a company], and where the amount of credit so calculated exceeds the tax, if any, payable by the said institution or fund, the excess shall be refunded.
5[(2) The amount to be given as credit under sub-section (1) shall be a sum which bears to the amount of t
If any person satisfies the 1[Assessing Officer] that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess.
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 2, for "Income-tax officer" (w.e.f. 1-4-1988).
(1) Where the income of one person is included under any provision of this Act in the total income of any other person, the latter alone shall be entitled to a refund under this Chapter in respect of such income.
1[(1A) Where the value of fringe benefits provided or deemed to have been provided by one employer is included under any provisions of Chapter XIIH in the value of fringe benefits provided or deemed to have been provided by any other employer, the latter alone shall be entitled to a refund under this Chapter in respect of such fringe benefits.]
(2) Where through death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver, as the case may be, shall be entitled to claim or receive such refund for the benefit of such person or his estate.
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1. Inserted by the Finance Act, 2005, with effect
(1) Every claim for refund under this Chapter shall be made 3[by furnishing return in accordance with the provisions of section 139].
4[***]
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1. See rule 41 and Form No. 30 for claim for refund. For analysis, see Mashbra’s Income-tax Rules.
2. Inserted by the Finance Act, 2005, with effect from 1st April, 2006.
* Should be ‘on or after’.
3. Substituted by Finance (no. 2) Act, 2019, w.e.f. 01.09.2019 for the following:-
"in the prescribed form1 and verified in the prescribed manner1."
4. Omitted by Finance (no. 2) Act, 2019, w.e.f. 01.09.2019 the previous text was:-
"(2) No such claim shall be allowed, unless it is made within the period specified hereunder, namely :
(a) where the claim is in respect of income which is assessable for any assessment year commencing on or before the 1st day of April, 1967, four years from the last day of such assessment year;
(b) where the
Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the 1[Assessing Officer] shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf :
2[Provided that where, by the order aforesaid, –
(a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment;
(b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.]
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 2, for "Income-tax officer" (w.e.f. 1-4-1988).
2. Inserted by the by Direct Tax Laws (Amendment) Act, 1987, (4 of 1988), Section 95, (w.e
1[***]
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1. Omitted by the Finance Act, 2001, with effect from 1st June, 2001. Prior to omission, section 241 stood as under :
‘241. Power to withhold refund in certain cases.–
Where refund of any amount becomes due to the assessee as a result of an order under this Act or under the provisions of subsection (1) of section 143 after a return has been made under section 139 or in response to a notice under sub-section (1) of section 142 and the Assessing Officer is of the opinion, having regard to the fact that–
(i) a notice has been issued, or is likely to be issued, under sub-section (2) of section 143 in respect of the said return ; or
(ii) the order is the subject-matter of an appeal or further proceeding ; or
(iii) any other proceeding under this Act is pending,
that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commission
In a claim under this Chapter, it shall not be open to the assessee to question the correctness of any assessment or other matter decided which has become final and conclusive or ask for a review of the same, and the assessee shall not be entitled to any relief on such claim except refund of tax wrongly paid or paid in excess.
3[(1) If the 4[Assessing Officer] does not grant the refund,–
(a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and
(b) in any other case, within three months from the end of the month in which the claim for refund is made under this Chapter,
the Central Government shall pay the assessee simple interest at 5[fifteen per cent] per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund.
Explanation : If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable.]
(2) Where
(1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the 1[Assessing Officer] does not grant the refund 2[within a period of three months from the end of the month in which such order is passed] the Central Government shall pay to the assessee simple interest at 3[fifteen per cent] per annum on the amount of refund due from the date immediately following the expiry of 4[the period of three months aforesaid] to the date on which the refund is granted.
5[(1A) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Governme
8[244A. Interest on refunds
(1) 9[Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:-
5[(a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period,--
(i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the return of income has been furnished on or before the due date specified under sub-section (1) of section 139; or
(ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered un
6[245. Set off and withholding of refunds in certain cases
(1) Where under any of the provisions of this Act, a refund becomes due or is found to be due to any person, the Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act 9[or the Income-tax Act, 2025 (30 of 2025)] by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this sub-section.
(2) Where a part of the refund is set off under the provisions of sub-section (1), or where no such amount is set off, and refund becomes due to a person, and the Assessing Officer, having regard to the fact that proceedings for assessment or reassessment are pending in the case of such person, 7[****] he may, fo
15CHAPTER XIX-A
SETTLEMENT OF CASES
In this Chapter, unless the context otherwise requires, –
(a) “Bench” means a Bench of the Settlement Commission ;
1[(b) “case” means any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of section 245C is made:
7[***]
Explanation : For the purposes of this clause-
11[(i) a proceeding for assessment or reassessment or recomputation under section 147 shall be deemed to have commenced--
(a) from the date on which a notice under section 148 is issued for any assessment year;
(b) from the date of issuance of the notice referred to in sub-clause (a), for any other assessment year or assessment years for which a notice under section 148 has not been issued, but such notice could have been issued on such date, if the return of income for the
(1) The Central Government shall constitute a Commission to be called the Income-tax Settlement Commission 2[***] for the settlement of cases under this Chapter.
(2) The Settlement Commission shall consist of a Chairman 3[and as many Vice Chairmen and other Members as the Central Government thinks fit] and shall function within the Department of the Central Government dealing with direct taxes.
4[***]
(3) The Chairman, 5[ Vice-Chairman] and other Members of the Settlement Commission shall be appointed by the Central Government from amongst persons of integrity and outstanding ability, having special knowledge of, and, experience in, problems relating to direct taxes and business accounts:
Provided that, where a Member of the Board is appointed as the Chairman, 5[Vice-Chairman] or as a Member of the Settlement Commission, he shall cease to be a Member of the Board.
6[***]
1[Provided that the Income-tax Settlement Commission so constituted shall cea
1[245BA. Jurisdiction and powers of Settlement Commission
(1) Subject to the other provisions of this Chapter, the jurisdiction, powers and authority of the Settlement Commission may be exercised by Benches thereof.
(2) Subject to the other provisions of this section, a Bench shall be presided over by the Chairman or a Vice-Chairman and shall consist of two other Members.
(3) The Bench for which the Chairman is the Presiding Officer shall be the principal Bench and the other Benches shall be known as additional Benches.
(4) Notwithstanding anything contained in sub-sections (1) and (2), the Chairman may authorise the Vice-Chairman or other Member appointed to one Bench to discharge also the functions of the Vice-Chairman or, as the case may be, other Member of another Bench.
(5) Notwithstanding anything contained in the foregoing provisions of this section, and subject to any rules that may be made in this behalf, when one of the persons constituting
1[245BB. Vice-Chairman to act as Chairman or to discharge his functions in certain circumstances
(1) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the Vice-Chairman or, as the case may be, such one of the Vice-Chairmen as the Central Government may, by notification in the Official Gazette, authorise in this behalf, shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Chapter to fill such vacancy, enters upon his office.
(2) When the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the Vice-Chairman or, as the case may be, such one of the Vice-Chairmen as the Central Government may, by notification in the Official Gazette, authorise in this behalf, shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties.]
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2[245BC. Power of Chairman to transfer cases from one Bench to another
On the application of the assessee or the 3[4[Principal Chief Commissioner or Commissioner] 5[Principal Commissioner or Commissioner]] and after notice to them, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairman may transfer any case pending before one Bench, for disposal, to another Bench.
1[Provided that the provisions of this section shall not apply on or after the 1st day of February, 2021.]]
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1. Inserted by Finance Act, 2021, w.e.f. 01.02.2021.
2. Inserted by the Finance Act, 1987 (11 of 1987), Section 59 (w.e.f. 1-6-1987).
3. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 2 for "Commissioner" (w.e.f 1-6-1988).
4. Substituted by Finance (No.2) Act, 2014 (25 of 2014), Section 4, for "Commissioner" (w.r.e.f. 1-6-2013).
5. Su
If the Members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and make a reference to the Chairman who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Settlement Commission and such point or points shall be decided according to the opinion of the majority of the Members of the Settlement Commission who have heard the case, including those who first heard it.
1[Provided that the provisions of this section shall not apply on or after the 1st day of February, 2021.]]
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1. Inserted by Finance Act, 2021, w.e.f. 01.02.2021.
2. Inserted by the Finance Act, 1987 (11 of 1987), Section 59 (w.e.f. 1-6-1987).
Section 245
.
1[(1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with:
Provided that where no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with.]
(1A) 1a[***]
(2) A copy of every order under sub-section (1) shall be sent to the applicant and to the 16[Principal Commissioner or Commissioner].
2[(2A) Where an application was made under section 245C before the 1st day of June, 2007, but an order under the provisions of sub-section (
3[245DD.Power of Settlement Commission to order provisional attachment to protect revenue
(1) Where, during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner provided in the Second Schedule :
Provided that where a provisional attachment made under section 281B is pending immediately before an application is made under section 245C, an order under this sub-section shall continue such provisional attachment up to the period up to which an order made under section 281B would have continued if such application had not been made :
Provided further that where the Settlement Commission passes an order under this sub-section after the expiry of the period referred to in the preceding proviso, the provisions of sub-section (2) shall apply to such order
If the Settlement Commission is of the opinion (the reasons for such opinion to be recorded by it in writing) that, for the proper disposal of the case pending before it, it is necessary or expedient to reopen any proceeding connected with the case but which has been completed under this Act by any income-tax authority before the application under section 245C was made, it may, with the concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant under that section covered such proceeding also :
Provided that no proceeding shall be reopened by the Settlement Commission under this section if the period between the end of the assessment year to which such a proceeding relates and the date of application for settlement under section 245C exceeds nine years.
1[Provided further that no proceeding shall be reopened by the Settlement Co
(1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income-tax authority under this Act.
(2) Where an application made under section 245-C has been allowed to be proceeded with under section 245-D, the Settlement Commission shall, until an order is passed under sub-section (4) of section 245-D, have, subject to the provisions of sub-section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under this Act in relation to the case:
1[Provided that where an application has been made under section 245-C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made:
Provided further that where-
(i) an application made on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245-D; or
(i
No person shall be entitled to inspect, or obtain copies of, any reports made by any income-tax authority to the Settlement Commission ; but the Settlement Commission may, in its discretion, furnish copies thereof to any such person on an application made to it in this behalf and on payment of the prescribed fee1:
Provided that, for the purpose of enabling any person whose case is under consideration to rebut any evidence brought on record against him in any such report, the Settlement Commission shall, on an application made in this behalf, and on payment of the prescribed fee by such person, furnish him with a certified copy of any such report or part thereof relevant for the purpose.
2[Provided further that on or after the 1st day of February, 2021, functions of the Settlement Commission under this section shall be performed by the Interim Board and the provisions of this section shall mutatis mutandis apply to Interim Board as they apply to the Settlement Com
(1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 245C has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his income and the manner in which such income has been derived, grant to such person, subject to such conditions as it may think fit to impose 2[for the reasons to be recorded in writing], immunity from prosecution for any offence under this Act or under the Indian Penal Code (45 of 1860), or under any other Central Act for the time being in force and also (either wholly or in part) from the imposition of any penalty under this Act, with respect to the case covered by the settlement:
4[Provided that no such immunity shall be granted by the Settlement Commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under section 245C.]
1[(1) Where-
(i) an application made under section 245C on or after the 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; or
(ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; or
(iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or
2[(iiia) in respect of any application made under section 245C, an order under sub-section (4) of section 245D has been passed not providing for the terms of settlement; or]
(iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D,
the proceedings before the Settlement Commission shall abate on the specified date.
Explanation: For the purposes of this sub
245HAA. Credit for tax paid in case of abatement of proceedings.
1[Where an application made under section 245C on or after the 1st day of June, 2007, is rejected under sub-section (1) of section 245D, or any other application made under section 245C is not allowed to be proceeded with under sub-section (2A) of section 245D or is declared invalid under subsection (2C) of section 245D or has not been allowed to be further proceeded with under sub-section (2D) of section 245D or an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the Assessing Officer shall allow the credit for the tax and interest paid on or before the date of making the application or during the pendency of the case before the Settlement Commission.]
___________________________
Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act, or under any other law for the time being in force.
Any sum specified in an order of settlement passed under sub-section (4) of section 245D may, subject to such conditions, if any, as may be specified therein, be recovered, and any penalty for default in making payment of such sum may be imposed and recovered in accordance with the provisions of Chapter XVII, by the 1[Assessing Officer] having jurisdiction over the person who made the application for settlement under section 245C.
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 2, for "Income-tax officer" (w.e.f. 1-4-1988).
1[(1) Where –
(i) an order of settlement passed under sub-section (4) of section 245D provides for the imposition of a penalty on the person who made the application under section 245C for settlement, on the ground of concealment of particulars of his income; or
(ii) after the passing of an order of settlement under the said sub-section (4) in relation to a case, such person is convicted of any offence under Chapter XXII in relation to that case; or
(iii) the case of such person was sent back to the Assessing Officer by the Settlement Commission on or before the 1st day of June, 2002,
then, 2[he or any person related to such person (herein referred to as related person) shall not be entitled to apply] for settlement under section 245C in relation to any other matter.
(2) Where a person has made an application under section 245C on or after the 1st day of June, 2007 and if such application has been allowed to be proceeded with under sub-section (1) of
Any proceeding under this Chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860).
2[245M. Option to withdraw pending application.-
(1) With respect to a pending application, the assessee who had filed such application may, at his option, withdraw such application within a period of three months from the date of commencement of the Finance Act, 2021 and intimate the Assessing Officer, in the prescribed manner, about such withdrawal.
(2) Where the option under sub-section (1) is not exercised by the assessee within the time allowed under that sub-section, the pending application shall be deemed to have been received by the Interim Board on the date on which such application is allotted or transferred to the Interim Board under sub-section (3).
(3) The Board may, by an order, allot any pending application to any Interim Board and may also transfer, by an order, any pending application from one Interim Board to another Interim Board.
(4) Where the pending application is allotted to an Interim Board under sub-section (3) or transferred to a
In this Chapter, unless the context otherwise requires, –
1[(a) “advance ruling” means–
(i) a determination by the Authority in relation to a transaction which has been undertaken or is proposed to be undertaken by a non-resident applicant; or
(ii) a determination by the Authority in relation to 2[the tax liability of a non-resident arising out of] a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with a 3[such non-resident], 14[or]
14[(iia) a determination by the Authority in relation to the tax liability of a resident applicant, arising out of a transaction which has been undertaken or is proposed to be undertaken by such applicant,]
and such determination shall include the determination of any question of law or of fact specified in the application;
(iii) a determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any income-tax
(1) The Central Government shall constitute an Authority for giving advance rulings, to be known as “Authority for Advance Rulings”.
5[Provided that the Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 (52 of 1962) on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of that Act.]
6[Provided further that the Authority so constituted shall cease to operate on and from such date as the Central Government may, by notification in the Official Gazette, appoint.]
5[(1A) On and from the date of appointment of the Customs Authority for Advance Rulings referred to in the proviso to sub-section (1), the Authority shall act as an Appellate Authority, for the purpose of Chapter V of the Customs Act, 1962 (52 of 1962):
Provided that the Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of the Authorit
1[(1)] No proceeding before, or pronouncement of advance ruling by, the Authority shall be questioned or shall be invalid on the ground merely of the existence of any vacancy or defect in the constitution of the Authority.
1[(2) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, the provisions of this section shall have effect as if for the word “Authority”, the words “Board for Advance Rulings” had been substituted.]
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1. Inserted by the Finance Act, 2021 w.e.f 01.04.2021.
Section 245Q - Application for advance ruling
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(1) An applicant desirous of obtaining an advance ruling under this Chapter 3[4[***] (52 of 1962) 5[***] may make an application in such form and in such manner as may be prescribed1, stating the question on which the advance ruling is sought.
(2) The application shall be made in quadruplicate and be accompanied by a fee of 2[ten thousand rupees or such fee as may be prescribed in this behalf, whichever is higher].
(3) An applicant may withdraw an application within thirty days from the date of the application.
6[(4) Where an application for advance ruling under this Chapter is made before such date as the Central Government may, by notification in the Official Gazette, appoint, and in respect of which no order under sub-section (2) of section 245R has been passed or no advance ruling under sub-section (4) of section 245R has been pronounced before such date, such a
(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the 7[principal Commissioner or commissioner] and, if necessary, call upon him to furnish the relevant records:
Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the 7[principal Commissioner or commissioner].
(2) The authority may, after examining the application and the records called for, by order, either allow or reject the application:
1[Provided that the Authority shall not allow the application where the question raised in the application, -
(i) is already pending before any income-tax authority or Appellate Tribunal [except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N] or any court;
(ii) involves determination of fair market value of any property;
(iii) relates to a transaction or issue which is designed prim
1[No income-tax authority or the Appellate Tribunal shall proceed to decide any issue in respect to which an application has been made by an applicant, being a resident, 2[under sub-section (1) of section 245Q].]
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1. Inserted by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Substituted for ‘under sub-section (1) of section 245R’ by the Finance (No. 2) Act, 2004, with retrospective effect from 1st October, 1998.
(1) The advance ruling pronounced by the Authority under section 245R shall be binding only –
(a) on the applicant who had sought it;
(b) in respect of the transaction in relation to which the ruling had been sought; and
(c) on the 1[Principal Commissioner or Commissioner], and the income-tax authorities, subordinate to him, in respect of the applicant and the said transaction.
(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.
2[(3) Nothing contained in this section shall apply to any advance ruling pronounced under section 245R on or after such date as the Central Government may, by notification in the Official Gazette, appoint.]
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1. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
2. Inserted by the Financ
(1) Where the Authority finds, on a representation made to it by the 1[Principal Commissioner or Commissioner] or otherwise, that an advance ruling pronounced 2[***] under sub-section (6) of section 245R has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this sub-section) to the applicant as if such advance ruling had never been made.
(2) A copy of the order made under sub-section (1) shall be sent to the applicant and the 1[Principal Commissioner or Commissioner].
3[(3) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, the provisions of this section shall have effect as if for the word “Authority”, the words “Board for Advance Rulings” had been substitute
(1) The Authority shall, for the purpose of exercising its powers, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908) as are referred to in section 131 of this Act.
(2) The Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974), and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code (45 of 1860).
1[(3) On and from such date as the Central Government may, by notification in the Official Gazette, appoint, the powers of the Authority under this section shall be exercised by the Board for Advance Rulings and the provisions of this section shall mutatis mutandis apply to the Board for Advance Rulings as they apply to the Authority.]
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The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act.
1[Provided that nothing contained in this section shall apply on or after such date as the Central Government may, by notification in the Official Gazette, appoint.]
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1.Inserted by the Finance Act, 2021 w.e.f 01.04.2021.
Section 245W - Appeal
1[245W. Appeal
(1) The applicant, if he is aggrieved by any ruling pronounced or order passed by the Board for Advance Rulings or the Assessing Officer, on the directions of the Principal Commissioner or Commissioner, may appeal to the High Court against such ruling or order of the Board of Advance Rulings within sixty days from the date of the communication of that ruling or order, in such form and manner, as may be prescribed:
Provided that where the High Court is satisfi
23[246. Appealable orders before Joint Commissioner (Appeals)
(1) Any assessee aggrieved by any of the following orders of an Assessing Officer (below the rank of Joint Commissioner) may appeal to the Joint Commissioner (Appeals) against--
(a) an order being an intimation under sub-section (1) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;
(b) an order of assessment, reassessment or recomputation under section 147;
(c) an order being an intimation under subsection (1) of section 200A;
(d) an order under section 201;
(e) an order being an intimation under sub-section (6A) of section 206C;
(f) an order under sub-section (1) of section 206CB;
(g) an order imposing
1[(1) 14[Any assessee or any deduct or 25[or any collector] aggrieved] by any of the following orders (whether made before or after the appointed day) may appeal to the Principal Commissioner or Commissioner (Appeals) against -
(a) 2[an order passed by a Joint Commissioner under clause (ii) of sub-section (3) of section 115VP or an order against the assessee] where the assessee denies his liability to be assessed under this Act or an intimation under sub-section (1) or sub-section (1B) of 15[section 143 or sub-section (1) of 26[sub-section (1) of section 200A or sub-section (1) of section 206CB, where the assessee or the deduct or the collector] objects], where the assessee objects to the making of adjustments, or any order of assessment 3[under sub-section(3) of section 143 16[except an order passed in pursuance of directions of the Dispute Resolution Panel 22[or an order referred to in sub-section (12) of section 144BA] 21[***]]] or section 144, to the income asses
1[***]
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1. Omitted by the Finance Act, 1992, with effect from 1st April, 1993.
1[Where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central Government, claims that no tax was required to be deducted on such income, he may appeal to the Principal Commissioner or Commissioner (Appeals) for a declaration that no tax was deductible on such income.]
2[Provided that no appeal shall be filed where tax is paid to the credit of the Central Government on or after the 1st day of April, 2022.]
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1. Substituted by the Finance Act, 2007, with effect from 1st June, 2007. Prior to substitution, section 248 as amended by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998, stood as under:
“248. Appeal by person denying liability to deduct tax.-
Any person having in accordance with the provisions o
(1) Every appeal under this Chapter shall be in the prescribed1 form and shall be verified in the prescribed1 manner 2[and shall, in case of an appeal made to the Principal Commissioner or Commissioner (Appeals) on or after the 1st day of October, 1998, 14[or to the Joint Commissioner (Appeals) on or after the 1st day of April, 2023,] irrespective of the date of initiation of the assessment proceedings relating thereto be accompanied by a fee of, -
(i) where the total income of the assessee as computed by the Assessing Officer in the case to which the appeal relates is one hundred thousand rupees or less, two hundred fifty rupees;
(ii) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, five hundred rupees;
(iii) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more
(1) The 1[***] 8[Joint Commissioner (Appeals) or the Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred.
(2) The following shall have the right to be heard at the hearing of the appeal-
(a) the appellant, either in person or by an authorised representative;
(b) the 7[Assessing Officer], either in person or by a representative.
(3) The 1[***] 8[Joint Commissioner (Appeals) or the Commissioner (Appeals)] shall have the power to adjourn the hearing of the appeal from time to time.
(4) The 1[***] 8[Joint Commissioner (Appeals) or the Commissioner (Appeals)] may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the 1[***] 8[Joint Commissioner (Appeals) or the Commissioner (Appeals)].
251. 5[Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals)]
(1) In disposing of an appeal, the 1[***] 4[Commissioner or (Appeals)] shall have the following powers -
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment 2[***];
10[Provided that where such appeal is against an order of assessment made under section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment;]
3[(aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, e
(1) The Central Government shall constitute an Appellate Tribunal consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act.
9[(2) A judicial member shall be a person who has for at least ten years held a judicial office in the territory of India or who has been a member of the 1[Indian] Legal Service and has held a post in Grade 2[II] of that Service or any equivalent or higher post for at least three years or who has been an advocate for at least ten years.
Explanation: For the purposes of this sub-section, –
(i) in computing the period during which a person has held judicial office in the territory of India, there shall be included any period, after he has held any judicial office, during which the person has been an advocate or has held the office of a member of a Tribunal or any post, under the Union or a State, requiring special knowledge of l
1(1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order -
(a) an order passed by a 34[Deputy Commissioner (Appeals)] 2[before the 1st day of October, 1998] 35[or, as the case may be, a 18[Principal Commissioner or Commissioner] (Appeals)] under 36[***] 37[section 154], 56[section 158BFA] 38[***] section 250, 23[section 270A,] 39[section 271, section 271A 50[section 271AAB, section 271AAC, section 271AAD,] 29[,section 271J] or section 272A]; or
50[(aa) an order passed by a Joint Commissioner (Appeals) under section 154, section 250, section 270A, section 271, section 271A, section 271AAC, section 271AAD or section 271J; or]
40[(b) an order passed by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January
(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate Tribunal may, at any time, within 9[six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the 13[Assessing Officer]:
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.
1[Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October,
(1) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof.
(2) Subject to the provisions contained in sub-section (3), a Bench shall consist of one judicial member and one accountant member.
(3) The President or any other member of the Appellate Tribunal authorised in this behalf by the Central Government may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member and which pertains to an assessee whose total income as computed by the 7[Assessing Officer] in the case 8[does not exceed 5[fifty lakh rupees]], and the President may, for the disposal of any particular case, constitute a Special Bench consisting of three or more members, one of whom shall necessarily be a judicial member and one an accountant member.
(4) If the members of a Bench differ in opinion on any point, the point shall be de
256. Statement of case to the High Court
4[***]
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1. Omitted by the National Tax Tribunal Act, 2005, with effect from 28th December, 2005. However implementation is stayed by virtue of Order passed by Supreme Court in the case of Sandeep Goyal v. Union of India (MANU/SC/8259/2009).
2. Inserted by the Finance Act, 2010 w.e.f. 01.06.1981.
3. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
4. Omitted by the National Tax Tribunal Act, 2005 (49 of 2005), Section 30 and Sch. (w.e.f. 28-12-2005).
"1[(1) The assessee or the 3[Principal Commissioner or Commissioner] may, within sixty days of the date upon which he is served with notice of an order passed before the 1st day of October, 1998, under section 254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of two hundred rupees, require the Appel
If, on an application made 1[against an order made under section 254 before the 1st day of October, 1998,] under section 256 the Appellate Tribunal is of the opinion that, on account of a conflict in the decisions of High Courts in respect of any particular question of law, it is expedient that a reference should be made direct to the Supreme Court, the Appellate Tribunal may draw up a statement of the case and refer it through its President direct to the Supreme Court.
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1. Inserted by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
1[***]
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1. Omitted by the National Tax Tribunal Act, 2005, with effect from 28th December, 2005. Prior to omission, Section 258 stood as under:
“258. Power of High Court or Supreme Court to require statement to be amended.–
If the High Court or the Supreme Court is not satisfied that the statements in a case referred to it are sufficient to enable it to determine the questions raised thereby, the Court may refer the case back to the Appellate Tribunal for the purpose of making such additions thereto or alterations therein as it may direct in that behalf.”
1[***]
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1. Omitted by the National Tax Tribunal Act, 2005, with effect from 28th December, 2005. Prior to omission, Section 259 stood as under:
“259. Case before High Court to be heard by not less than two Judges.–
(1) When any case has been referred to the High Court under section 256, it shall be heard by a Bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges.
(2) Where there is no such majority, the Judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other Judges of the High Court, and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it.”
1[(1) The Supreme Court upon hearing any reference made to it by the Appellate Tribunal under section 257 shall decide the question of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conforming to such judgment.
(2) Where the National Tax Tribunal delivers a judgment in an appeal filed before it or in any matter transferred to it under the National Tax Tribunal Act, 2005, effect shall be given to the order of that Tribunal by the Assessing Officer on the basis of certified copy of the judgment.
(3) The cost of any reference to the Supreme Court which shall not include the fee for making the reference shall be at the discretion of the Court.]
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9[260A. Appeal to High Court
(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal 1[before the date of establishment of the National Tax Tribunal], if the High Court is satisfied that the case involves a substantial question of law.
(2) 2[The 7[Principal Chief Commissioner or Chief Commissioner] or the 8[Principal Commissioner or Commissioner] or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be] -
(a) filed within one hundred and twenty days from the date on which the order appealed against is 3[received by the assessee or the 7[Principal Chief Commissioner or Chief Commissioner] or 8[Principal Commissioner or Commissioner]];
(b) 4[***];
(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.
6[(2A) The High Court may admit an appeal after the
1[260B. Case before High Court to be heard by not less than two Judges
(1) When an appeal has been filed before the High Court under section 260A, it shall be heard by a Bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges.
(2) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall then be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it.]
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1. Inserted by the Finance (No.2) Act, 1998, Section 58 (w.e.f. 1-10-1998).
An appeal shall lie to the Supreme Court from any judgment of the High Court 3[delivered] 1[before the establishment2 of the National Tax Tribunal] on a reference made under section 256 against an order made under section 254 before the 1st day of October, 1998 or an appeal made to High Court in respect of an order passed under section 254 on or after that date in any case which the High Court certifies to be a fit one for appeal to the Supreme Court.
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1. Inserted by the National Tax Tribunal Act, 2005 with effect from 28th December, 2005.
2. 6th January, 2006 has been notified to be the date of establishment of National Tax Tribunal [Notification No. SO 25(E), dated 6th January, 2006 (see 13 CAPJ 437)].
3. Substituted by the Finance (No.2) Act, 1998 (21 of 1998), Section 59, for "delivered on a reference made under Section 256" (w.e.f. 1-10- 1998).
(1) The provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under section 261 as they apply in the case of appeals from decrees of a High Court:
Provided that nothing in this section shall be deemed to affect the provisions of sub-section (1) of section 260 or section 265.
(2) The costs of the appeal shall be in the discretion of the Supreme Court.
(3) Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the order of the Supreme Court in the manner provided in section 260 in the case of a judgment of the High Court.
(1) The 4[10[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner] may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the 11[Assessing Officer] 16[or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, 17[including,--
(i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or
(ii) an order modifying the order under section 92CA; or
(iii) an order cancelling the order under section 92CA and directing a fresh order under the said section.]
Explanation [1]7: For the removal of doubts, it is hereby declared that, fo
(1) In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the 4[Principal 5[Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner] may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
(2) The 4[Principal [5[Chief Commissioner or Chief Commissioner or Principal]] Commissioner or Commissioner] shall not of his own motion revise any order under this section if the order has been made more than one year previously.
(3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which
Notwithstanding that a reference has been made to the High Court or the Supreme Court or an appeal has been preferred to the Supreme Court, tax shall be payable in accordance with the assessment made in the case.
The High Court may, on petition made for the execution of the order of the Supreme Court in respect of any costs awarded thereby, transmit the order for execution to any court subordinate to the High Court.
3[267. Amendment of assessment on appeal
Where as a result of an appeal under section 246 1[or section 246A] or section 253, any change is made in the assessment of a body of individuals or an association of persons or a new assessment of a body of individuals or an association of persons is ordered to be made, 2[***] 4[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] or the Appellate Tribunal, as the case may be, shall pass an order authorising the Assessing Officer either to amend the assessment made on any member of the body or association or make a fresh assessment on any member of the body or association.]
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1. Inserted by the Finance Act, 2000, with effect from 1st June, 2000.
2. The expression 'Deputy Commissioner (Appeals) or the' omitted by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
3. Substituted by the Finance Act, 1992 (12 of 1992), Section 86, for 267 (w.r.e.f.
In computing the period of limitation prescribed for an appeal 1[or an application] under this Act, the day on which the order complained of was served and, if the assessee was not furnished with a copy of the order when the notice of the order was served upon him, the time requisite for obtaining copy of such order, shall be excluded.
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1. Inserted by the Finance Act, 1990 (12 of 1990), Section 42 (w..e.f. 1-4-1990). Earlier the words "or an application" were Omitted by by the Direct Tax Laws (Amendment) Act, 1987, (4 of 1988) Section 102 (w.e.f. 1-4-1989).
1[(1) The Board may, from time to time, issue orders, instructions or directions to other income-tax authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any income-tax authority under the provisions of this Chapter.
(2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, it shall not preclude such authority from filing an appeal or application for reference on the same issue in the case of–
(a) the same assessee for any other assessment year; or
(b) any other assessee for the same or any other assessment year.
(3) Notwithstanding that no appeal or application for reference has been filed by an income-tax authority pursuant to the orders or instructions or directions issued under sub-sectio
In this Chapter, -
“High Court” means -
(i) in relation to any State, the High Court for that State;
2[(ii) in relation to the Union territory of Delhi, the High Court of Delhi;]
1[***]];
3[***]
(iv) in relation to the Union territory of Andaman and Nicobar Islands, the High Court at Calcutta;
(v) in relation to the Union territory of 4[Lakshadweep], the High Court of Kerala;
5[(va) in relation to the Union territory of Chandigarh, the High Court of Punjab and Haryana;]
6[(vi) in relation to the Union territories of Dadra and Nagar Haveli and 7[***]Daman and Diu, the High Court at Bombay; and]
(vii) in relation to the Union territory of Pondicherry, the High Court at Madras.
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1. Omitted by the Finance Act, 1994, with effect from 1st April, 1995.
2. Substituted by the Punjab Reorganisation and Delhi high court (Adaptation of Laws on Union subjects) Order, 1968, for clause (iii)
Legal Comments
"Scope" - Section 269 is invoked in contexts of transfer/purchase of property and compulsory purchase orders under XX-C; it governs valuations, disclosures, and government pre-emptive purchases, with specific procedures and show-cause requirements - [Jagdish A. Sadarangani VS Government Of India, Ministry Of Finance, Madras - 1997 0 Supreme(SC) 1539]
"Deposition/Deposit" - Payments received or deposits made in connection with property transactions under 269-UC/UD may be treated as deposits or consideration, affecting the deeming of transfer and tax treatment; interim orders often retain/deal with deposits - [Bhalotia Engineering Works Pvt. Ltd. VS Commissioner Of Income Tax - 2004 0 Supreme(Jhk) 871]
"Agreement vs Conveyance" - Section 269-UC/UD/UE provisions apply to agreement-to-sell vs actual sale; the existence of an agreement does not automatically render it void, but compliance with the statute is required for enforceability of specific performance or transfer decrees - [SARAF STIL PRIVATE LIMITED VS DELHI FINANCE CORPORATION - 1995 0 Supreme(Del) 378] [SURINDER GROVER VS SHEELA SAHNI - 1995 0 Supreme(Del) 372]
"Fair Market Value" - For pre-emptive/purchase orders under XX-C, apparent consideration needs to reflect fair market value; understatement can support action, but court must avoid extraneous considerations and ensure reasonable decision-making per Union of India v. Ganayutham - [02100023809] [COMMISIONER OF INCOME TAX VS VIMLABEN BHAGWANDAS PATEL - 1979 0 Supreme(Guj) 16]
"Show Cause and Due Process" - Before passing an order under 269-UD, the appropriate authority must provide notice and an opportunity to show cause; absence or defective reasoning renders the order vulnerable to quashing or reversal - [MARGARET KATHLIN GANDHI VS UNION OF INDIA - 1993 0 Supreme(Del) 266] [ANAND MEHTA VS UNION OF INDIA - 2016 0 Supreme(Del) 2189]
"Valuation Methodologies" - Valuation under 269-UD/UE may rely on rental method, standard rent, municipal valuations, and market comparables; courts caution against rigid formulas and emphasize context-specific assessment - [COMMISIONER OF INCOME TAX VS VIMLABEN BHAGWANDAS PATEL - 1979 0 Supreme(Guj) 16] [MARGARET KATHLIN GANDHI VS UNION OF INDIA - 1993 0 Supreme(Del) 266]
"Undervaluation and Tax Evasion" - A substantial understatement (often threshold around 15%) can trigger Chapter XX-C mechanisms, but presumption is rebuttable and requires careful factual basis; mere understatement does not automatically prove evasion - [01300018659] [MASS TRADERS (P) LTD. VS APPROPRIATE AUTHORITY - 2005 0 Supreme(Kar) 291]
"Co-owners and 269-UC" - For deemed partitions and co-ownership, the share-valuations of individual co-owners are relevant to determine if a transfer falls within 269-UC; transactions to individuals may not be treated as a single sale to a co-operating entity - [APPROPRIATE AUTHORITY (IT DEPTT. ) VS M. ARIFULLA - 1999 0 Supreme(SC) 215]
"Specific Relief vs 269-UC" - Suit for specific performance under an agreement to sell remains maintainable subject to 269-UC compliance; courts may allow amendments to address 269-UC while ensuring consistency with law and limitation rules - [Devanathan VS Raghunandan - 1997 0 Supreme(Mad) 491] [SURENDER ARORA VS P. N. MEHTA - 1996 0 Supreme(Del) 230]
"Interim Relief in 269-UC" - Interim orders in property disputes involving 269-UC must balance trust/charity considerations, encumbrances, and preservation of deposits; incorrect or arbitrary interim relief can be reversed - [Diwan Rahul Nanda VS Nitish G. Kotak and others - 1997 0 Supreme(Bom) 656]
"Public Auction and Stamp Duty" - In public government auctions, deficit stamp duty demands may be unjustified when true market value is reflected in the instrument; Stamp Act considerations interact with 269(UD/UE) determinations - [Ceebros Developers rep. by its Managing Partner C. Subba Reddy VS State of Tamil Nadu, rep. by The Inspector General of Registration - 2011 0 Supreme(Mad) 3550]
"Consolidated View on 269-SS/269-T" - Separate provisions like 269-SS and 269-T relate to cash transactions and penalties; while these intersect with disputes around 269-UC/UD/UE, they do not themselves render valid debts unenforceable; legality remains subject to proper evidentiary proof - [Fokhoruddin Ali Ahmed, Son Of Late Intazuddin Ahmed vs Pranab Swargiary, Son Of Late Barun Swargiary - 2025 0 Supreme(Gau) 2025] [Fokhoruddin Ali Ahmed, Son Of Late Intazuddin Ahmed vs Samsul Hoque Khandakar, Son Of Late Mafizuddin - 2025 0 Supreme(Gau) 2010]
"Acceptance of Deposit vs Anti-Evasion" - Cash transactions beyond Rs. 20,000 can form part of a legitimate loan/deposit where bonafides established; 269-SS aims to curb evasion but does not invalidate bona fide arrangements - [MOHAMMED IQBAL VS MOHAMMED ZAHOOR - 2007 0 Supreme(Kar) 409] [Fokhoruddin Ali Ahmed, Son Of Late Intazuddin Ahmed vs Samsul Hoque Khandakar, Son Of Late Mafizuddin - 2025 0 Supreme(Gau) 2010]
"Authority’s Discretion under 269-UC" - Charity/Trust sanctions under 269-UC must be exercised with reasonableness, considering trust interests and sale price; discretionary power is not arbitrary - [Madhukar Sunderlal Sheth & others VS S. K. Laul & others - 1992 0 Supreme(Bom) 355]
"Remedies and Amendants" - Courts may allow amendments to plaints to address 269-UC compliance, but cannot compel authorities to apply statutes retroactively or beyond their statutory time limits; order must reflect proper jurisdictional boundaries - [Devanathan VS Raghunandan - 1997 0 Supreme(Mad) 491]
"Pre-emptive Purchase – 269-UD(1)" - The 269-UD(1) framework engages once the agreement is in place and the appropriate order is issued; the purchaser has rights and must be given opportunity to contest; courts assess reasonableness of the order against FMV and statutory requirements - [MARGARET KATHLIN GANDHI VS UNION OF INDIA - 1993 0 Supreme(Del) 266] [Poonammanshani VS Union Of India - 1991 0 Supreme(SC) 649]
"Role of Registration and Evidence" - For enforceability of agreements to sell or transfer, the Registration Act and Evidence/Order 2 Rule 2 CPC interplay with 269 provisions; the court may deny or limit relief where pleadings fail to meet statutory prerequisites or bar relief by limitation - [Jagan Nath VS Hari Kishan - 2017 0 Supreme(P&H) 1286] [SURENDER ARORA VS P. N. MEHTA - 1996 0 Supreme(Del) 230]
"Ownership and Corporate Entity" - In corporate-share transfers, the transfer of shares as a vehicle for control of land is scrutinized; corporate veil issues are relevant, but 269 applies where transfer affects ownership/control in ways that imply tax consequences - [SCINDIA POTTERIES AND SERVICES LIMITED VS DEPUTY LAND AND DEVELOPMENTOFFICER, GOVERNMENT OF INDIA - 1990 0 Supreme(Del) 113]
"Interest on Delayed Payment" - Courts may order interest on delayed payments/completion of order; where orders under 269-UD/UE are upheld, compensation or interest may be mandated depending on the scenario (e.g., if order upheld but sale not completed) - [Rajalakshmi Narayanan VS Margaret Kathleen Gandhi (Mrs) - 1992 0 Supreme(SC) 536]
"Remand and Remedial Relief" - Writ petitions challenging 269-UD orders may be allowed if fundamental due process issues are shown, and orders can be remanded or set aside where underlying assumptions or procedures were flawed - [Rajalakshmi Narayanan VS Margaret Kathleen Gandhi (Mrs) - 1992 0 Supreme(SC) 536] [ANAND MEHTA VS UNION OF INDIA - 2016 0 Supreme(Del) 2189]
"Non-violation of 269-SS" - Violations or procedural issues under 269-SS in unrelated cash transactions do not automatically nullify or invalidate 269-based orders or consequent debt recoveries; each provision has its own remedy framework - [Fokhoruddin Ali Ahmed, Son Of Late Intazuddin Ahmed vs Samsul Hoque Khandakar, Son Of Late Mafizuddin - 2025 0 Supreme(Gau) 2010]
In this Chapter, unless the context otherwise requires, –
(a) 2[“apparent consideration”], –
(1) in relation to any immovable property transferred, being immovable property of the nature referred to in sub-clause (i) of clause (e), means, –
(i) if the transfer is by way of sale, the consideration for such transfer as specified in the instrument of transfer;
(ii) if the transfer is by way of exchange, –
(A) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer;
(B) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer and such sum;
3[(iii) if the transfer is by way of leas
1[269AB. Registration of certain transactions
(1) The following transactions, that is to say, –
(a) every transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), and
(b) every transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature) whereby a person acquires any rights in or with respect to any building or part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed [not being a transaction by way of sale, exchange or lease of such building or part of a building which is required to be registered under the Registration Act, 1908 (16 of
(1) The Central Government may, by general or special order published in the Official Gazette, –
(a) authorise as many 1[Joint Commissioners], as it thinks fit, to perform the functions of a competent authority under this Chapter; and
(b) define the local limits within which the competent authorities shall perform their functions under this Chapter.
(2) In respect of any function to be performed by a competent authority under any provision of this Chapter in relation to any immovable property referred to in section 269C, the competent authority referred to therein shall, –
(a) in a case where such property is situate within the local limits of the jurisdiction of only one competent authority, be such competent authority ;
(b) in a case where such property is situate within the local limits of the jurisdiction of two or more competent authorities, be the competent authority empowered to perform such functions in relation to such property in accordance
(1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding one hundred thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the object of -
(a) facilitating the reduction or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer; or
(b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Indian Income-tax Act, 1922 (11 of 1922) or this Act or the Wealth-tax Act, 1957 (27 of 1957),<
(1) The competent authority shall initiate proceedings for the acquisition, under this Chapter, of any immovable property referred to in section 269C by notice to that effect published in the Official Gazette:
Provided that no such proceedings shall be initiated in respect of any immovable property after the expiration of a period of 2[nine months] from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908 (16 of 1908), 4[or as the case may be, section 269AB]:
Provided further that –
(a) in a case where it is determined under sub-section (4) of section 269B by the competent authority who has initiated proceedings for the acquisition of any immovable property under this Chapter or by the Board that such competent authority has no jurisdiction to initiate such proceedings, the competent authority having jurisdiction may initiate such proceedings within –
(i) the period of nine mon
(1) Objections against the acquisition of the immovable property in respect of which a notice has been published in the Official Gazette under sub-section (1) of section 269D may be made –
(a) by the transferor or the transferee or any other person referred to in clause (a) of sub-section (2) of that section, within a period of forty-five days from the date of such publication or a period of thirty days from the date of service of notice on such person under the said clause, whichever period expires later;
(b) by any other person interested in such immovable property, within forty-five days from the date of such publication.
(2) Every objection under sub-section (1) shall be made to the competent authority in writing.
(3) For the removal of doubts, it is hereby declared that objection may be made under sub-section (1) that the provisions of clause (a) of sub-section (2) of section 269C do not apply in relation to any immovable property on the ground that
(1) The competent authority shall fix a day and place for the hearing of the objections made under section 269E against the acquisition under this Chapter of any immovable property, and shall give notice of the same to every person who has made such objection:
Provided that such notice shall also be given to the transferee of such property even if he has not made any such objection.
(2) Every person to whom a notice is given under sub-section (1) shall have the right to be heard at the hearing of the objections.
(3) The competent authority shall have the power to adjourn the hearing of the objections from time to time.
(4) The competent authority may, before disposing of the objections, make such further inquiry as he thinks fit.
(5) The decision of the competent authority in respect of the objections heard shall be in writing and shall state the reasons for the decision with respect to each objection.
(6) If after hearing the objections, if any,
(1) An appeal may be preferred to the Appellate Tribunal against the order for the acquisition of any immovable property made by the competent authority under section 269F, –
(a) by the transferor or the transferee or any other person referred to in sub-section (8) of that section, within a period of forty-five days from the date of such order or a period of thirty days from the date of service of a copy of the order on such person under the said subsection, whichever period expires later;
(b) by any other person interested in such immovable property, within forty-five days from the date of such order:
Provided that the Appellate Tribunal may, on an application made in this behalf before the expiry of the said period of forty-five days or, as the case may be, thirty days, permit, by order, the appeal to be presented within such further period as may be specified therein if the applicant satisfies the Appellate Tribunal that he has sufficient cause for not bei
(1) The 1[Principal Commissioner or Commissioner] or any person aggrieved by any order of the Appellate Tribunal under section 269G may, within sixty days of the date on which he is served with notice of such order under that section, prefer an appeal against such order to the High Court on any question of law :
Provided that the High Court may, on an application made in this behalf before the expiry of the said period of sixty days, permit, by order, the appeal to be presented within such further period as may be specified therein, if the applicant satisfies the High Court that he has sufficient cause for not being able to present the appeal within the said period of sixty days.
(2) An appeal under sub-section (1) shall be heard by a Bench of not less than two Judges of the High Court and the provisions of section 259 shall apply in relation to any such appeal as they apply in relation to a case referred to the High Court under section 256.
(3) The costs of
(1) As soon as may be after the order for acquisition of any immovable property made under sub-section (6) of section 269F becomes final, the competent authority may, by notice in writing, order any person who may be in possession of the immovable property to surrender or deliver possession thereof to the competent authority or any other person duly authorised in writing by the competent authority in this behalf, within thirty days of the date of the service of the notice.
Explanation : For the purposes of this sub-section, an order for the acquisition of any immovable property (hereafter in this Explanation referred to as the order for acquisition) made under sub-section (6) of section 269F becomes final, –
(a) in a case where the order for acquisition is not made the subject of an appeal to the Appellate Tribunal under section 269G, upon the expiry of the period during which such appeal may be presented under that section ;
(b) in a case where the order for
(1) Where any immovable property is acquired under this Chapter, the Central Government shall pay for such acquisition compensation which shall be a sum equal to the aggregate of the amount of the apparent consideration for its transfer and fifteen per cent of the said amount :
1[Provided that in a case where, under the agreement between the parties concerned, the whole or any part of the consideration for the transfer of such immovable property is payable on any date or dates falling after the date on which such property is acquired, the compensation payable by the Central Government shall be the aggregate of the following amounts, namely:
(i) an amount equal to fifteen per cent of the apparent consideration ;
(ii) the amount, if any, that has become payable in accordance with such agreement on or before the date on which such property is acquired under this Chapter ; and
(iii) the amount payable after the date on which such property is acquired under th
(1) The amount of compensation payable in accordance with the provisions of section 269J for the acquisition of any immovable property shall be tendered to the person or persons entitled thereto, as soon as may be, after the property becomes vested in the Central Government under sub-section (4) of section 269-I :
1[Provided that in a case falling under the proviso to sub-section (1) of section 269J, the amounts referred to in clause (i) and clause (ii) of that proviso shall be tendered to the person or persons entitled thereto, as soon as may be, after the property becomes vested in the Central Government under section 269-I, and the amount referred to in clause (iii) of the said proviso shall be tendered on the date on which it would be payable in accordance with the agreement between the parties concerned, and where such amount is payable in installments on different dates, then in such installments on those dates :
Provided further that] in any case where a r
(1) The competent authority may, –
(a) for the purpose of initiating proceedings for the acquisition of any immovable property under section 269C or for the purpose of making an order under section 269F in respect of any immovable property, require a Valuation Officer to determine the fair market value of such property and report the same to him ;
(b) for the purpose of estimating the amount by which the compensation payable under sub-section (1) of section 269J in respect of any immovable property may be reduced or, as the case may be, increased under clause (a) or clause (b) of sub-section (2) of that section, require the Valuation Officer to make such estimate and report the same to him.
(2) The Valuation Officer to whom a reference is made under clause (a) or clause (b) of sub-section (1) shall, for the purpose of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957).
(3) If in an appea
The competent authority shall have, for the purposes of this Chapter, all the powers that a 1[Principal Commissioner or Commissioner] has, for the purposes of this Act, under section 131.
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1. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
With a view to rectifying any mistake apparent from the record, the competent authority may amend any order made by him under this Chapter at any time before the time for presenting an appeal against such order has expired, either on his own motion or on the mistake being brought to his notice by any person affected by the order :
Provided that if any such amendment is likely to affect any person prejudicially, it shall not be made without giving to such person a reasonable opportunity of being heard.
Any person who is entitled or required to attend before a competent authority or the Appellate Tribunal in any proceeding under this Chapter, otherwise than when required to attend personally for examination on oath or affirmation, may attend –
(a) by an authorised representative in connection with any matter ;
(b) by a registered valuer in connection with any matter relating to the valuation of any immovable property for the purposes of this Chapter or the estimation of the amount by which the compensation payable under sub-section (1) of section 269J for the acquisition of any immovable property may be reduced or, as the case may be, increased in accordance with the provisions of clause (a) or clause (b) of subsection (2) of that section.
Explanation : In this section, –
(i) “authorised representative” has the same meaning as in section 288;
(ii) “registered valuer” has the same meaning as in clause (oaa) of section 2 of the Wealth-tax Act, 1957 (27
(1) Notwithstanding anything contained in any other law for the time being in force, no registering officer appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer any immovable property belonging to any person unless a statement in duplicate in respect of such transfer, in the prescribed form1 and verified in the prescribed manner1 and setting forth such particulars as may be prescribed1, is furnished to him along with the instrument of transfer :
3[Provided that the provisions of this sub-section shall not apply in relation to any document which purports to transfer any immovable property for an apparent consideration not exceeding 4[fifty thousand rupees].]
3[Explanation : For the purposes of this proviso, “apparent consideration” shall have the meaning assigned to it in clause (a) of section 269A subject to the modifications that for the expressions “immovable property transferred” and “instrument of tra
The provisions of this Chapter shall not apply to or in relation to any transfer of immovable property made by a person to his relative on account of natural love and affection for a consideration which is less than its fair market value if a recital to that effect is made in the instrument of transfer.
Notwithstanding anything contained in the Land Acquisition Act, 1894 (1 of 1894), or any corresponding law for the time being in force, no immovable property referred to in section 269C shall be acquired for any purpose of the Union under that Act or such law unless the time for initiation of proceedings for the acquisition of such property under this Chapter has expired without such proceedings having been initiated or unless the competent authority has declared that such property will not be acquired under this Chapter.
1[269RR.Chapter not to apply where transfer of immovable property made after a certain date
The provisions of this Chapter shall not apply to or in relation to the transfer of any immovable property made after the 30th day of September, 1986.]
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1. Inserted by the Finance Act, 1986 (23 of 1986) Section 33 (w.e.f. 1-10- 1986).
The provisions of this Chapter shall not extend to the State of Jammu and Kashmir.
STATE AMENDMENTS
JAMMU AND KASHMIR
1[Omit Section 269S.]
UNION TERRITORY OF LADAKH
2[Section 269S.--Omit.]
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1. Vide Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020, vide Order No. SO1123(E), dated 18.03.2020.
2. Vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, Order No. SO3774(E), dated 23.10.2020.
2[269SS. Mode of taking or accepting certain loans, deposits and specified sum
No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a 3[bank account or through such other electronic mode as may be prescribed], if,--
(a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or
(b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b)
1[No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it 4[or any specified advance received by it] otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit 4[or paid the specified advance,] 3[or by use of electronic clearing system through a 5[bank account or through such other electronic mode as may be prescribed]] if -
(a) the amount of the loan or deposit 4[or specified advance] together with the interest, if any, payable thereon, or
(b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, i
1[269TT. Mode of repayment of Special Bearer Bonds,1991
Notwithstanding anything contained in any other law for the time being in force, the amount payable on redemption of Special Bearer Bonds, 1991, shall be paid only by an account payee cheque or account payee bank draft drawn in the name of the person to whom such payment is to be made.]
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1. Inserted by the Income-tax (Second Amendment) Act, 1981 (38 of 1981), Section 3 (w.e.f. 19-9-1981).
The provisions of this Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different areas.*
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*. Provisions of chapter xxc shall not apply to transfer effected on or after 1st July, 2002, see Section 269UP.
In this Chapter, unless the context otherwise requires, –
(a) “agreement for transfer” means an agreement, whether registered under the Registration Act, 1908 (16 of 1908) or not, for the transfer of any immovable property ;
(b) “apparent consideration”, –
(1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (i) of clause (d), means, –
(i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for transfer ;
(ii) if the immovable property is to be transferred by way of exchange, –
(A) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made ;
(B) in a case where the consideration for the transfe
(1) The Central Government may, by order, published in the Official Gazette,–
(a) constitute as many appropriate authorities, as it thinks fit, to perform the functions of an appropriate authority under this Chapter ; and
(b) define the local limits within which the appropriate authorities shall perform their functions under this Chapter.
(2) An appropriate authority shall consist of three persons, two of whom shall be members of the Indian Income-tax Service, Group A, holding the post of 2[Principal Commissioner or Commissioner] of Income-tax or any equivalent or higher post, and one shall be a member of the Central Engineering Service, Group A, holding the post of Chief Engineer or any equivalent or higher post.
(3) In respect of any function to be performed by an appropriate authority under any provision of this Chapter in relation to any immovable property referred to in section 269UC, the appropriate authority referred to therein shal
(1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, 3[no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed1], shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least 4[four months] before the intended date of transfer.
(2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties.
(3) Every statement referred to in sub-section (2) shall, –
(i
(1) 1[Subject to the provisions of sub-sections (1A) and (1B), the appropriate authority], after the receipt of the statement under sub-section (3) of section 269UC in respect of any immovable property, may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force 1a[***] make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration :
Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority:
2[Provided further that where the statement referred to in section 269UC in respect of any immovable property is received by the appropriate authority on or after the 1st day of June, 1993, the provisions of the first proviso s
(1) Where an order under sub-section (1) of section 269UD is made by the appropriate authority in respect of an immovable property referred to in sub-clause (i) of clause (d) of section 269UA, such property shall, on the date of such order, vest in the Central Government in terms of the agreement for transfer referred to in sub-section (1) of section 269U(1) Where an order under sub-section (1) of section 269UD is made by the appropriate authority in respect of an immovable property referred to in sub-clause (i) of clause (d) of section 269UA, such property shall, on the date of such order, vest 1[in the Central Government in terms of the agreement for transfer referred to in sub-section (1) of section 269UC]:
2[Provided that where the appropriate authority, after giving an opportunity of being heard to the transferor, the transferee or other persons interested in the said property, under sub-section (1A) of section 269UD, is of the opinion tha
(1) Where an order for the purchase of any immovable property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration.
(2) Notwithstanding anything contained in sub-section (1), where, after the agreement for the transfer of the immovable property referred to in that subsection has been made but before the property vests in the Central Government under section 269UE, the property has been damaged (otherwise than as a result of normal wear and tear), the amount of the consideration payable under that sub-section shall be reduced by such sum as the appropriate authority, for reasons to be recorded in writing, may by order determine.
(1) The amount of consideration payable in accordance with the provisions of section 269UF shall be tendered to the person or persons entitled thereto, within a period of one month from the end of the month in which the immovable property concerned becomes vested in the Central Government under subsection (1), or, as the case may be, sub-section (6) of section 269UE :
Provided that if any liability for any tax or any other sum remaining payable under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Gift-tax Act, 1958 (18 of 1958), the Estate Duty Act, 1953 (34 of 1953), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), by any person entitled to the consideration payable under section 269UF, the appropriate authority may, in lieu of the payment of the amount of consideration, set-off the amount of consideration or any part thereof against such liability or sum, after giving an intimation in this behalf to the person entitled to the consideration.
(2) No
(1) If the Central Government fails to tender under sub-section (1) of section 269UG or deposit under sub-section (2) or sub-section (3) of the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified therein in respect of any immovable property which has vested in the Central Government under subsection (1) or, as the case may be, sub-section (6) of section 269UE, the order to purchase the immovable property by the Central Government made under subsection (1) of section 269UD shall stand abrogated and the immovable property shall stand re-vested in the transferor after the expiry of the aforesaid period :
Provided that where any dispute referred to in sub-section (2) or sub-section (3) of section 269UG is pending in any court for decision, the time taken by the court to pass a final order under the said sub-sections shall be excluded in computing the said period.
(2) Where an o
The appropriate authority shall have, for the purposes of this Chapter, all the powers that a 1[Principal Chief Commissioner or Chief Commissioner] or 2[Principal Commissioner or Commissioner] of Income-tax has for the purposes of this Act under section 131.
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1. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013 for the following:-
"Chief Commissioner"
2. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
With a view to rectifying any mistake apparent from the record, the appropriate authority may amend any order made by it under this Chapter, either on its own motion or on the mistake being brought to its notice by any person affected by the order :
Provided that if any such amendment is likely to affect any person prejudicially, it shall not be made without giving to such person a reasonable opportunity of being heard :
Provided further that no amendment shall be made under this section after the expiry of six months from the end of the month in which the order sought to be amended was made.
(1) Notwithstanding anything contained in any other law for the time being in force, no person shall revoke or alter an agreement for the transfer of an immovable property or transfer such property in respect of which a statement has been furnished under section 269UC unless, –
(a) the appropriate authority has not made an order for the purchase of the immovable property by the Central Government under section 269UD and the period specified for the making of such order has expired ; or
(b) in a case where an order for the purchase of the immovable property by the Central Government has been made under sub-section (1) of section 269UD, the order stands abrogated under sub-section (1) of section 269UH.
(2) Any transfer of any immovable property made in contravention of the provisions of sub-section (1) shall be void.
(1) Notwithstanding anything contained in any other law for the time being in force, no registering officer appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer immovable property exceeding the value prescribed under section 269UC unless a certificate from the appropriate authority that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefore as stated in the agreement for transfer of the immovable property in respect of which it has received a statement under sub-section (3) of section 269UC, is furnished along with such document.
(2) Notwithstanding anything contained in any other law for the time being in force, no person shall do anything or omit to do anything which will have the effect of transfer of any immovable property unless the appropriate authority certifies that it has no objection to the transfer of such property for an amount equal to the
Notwithstanding anything contained in any other law or in any instrument or any agreement for the time being in force, when an order for the purchase of any immovable property by the Central Government is made under this Chapter, no claim by the transferee shall lie against the transferor by reason of such transfer being not in accordance with the agreement for the transfer of the immovable property entered into between the transferor and the transferee :
Provided that nothing contained in this section shall apply if the order for the purchase of the immovable property by the Central Government is abrogated under sub-section (1) of section 269UH.
The provisions of this Chapter shall not apply to or in relation to any immovable property where the agreement for transfer of such property is made by a person to his relative on account of natural love and affection, if a recital to that effect is made in the agreement for transfer.
The provisions of this Chapter shall not apply to or in relation to any immovable property where the agreement for transfer of such property is made by a person to his relative on account of natural love and affection, if a recital to that effect is made in the agreement for transfer.
1[The provisions of this Chapter shall not apply to, or in relation to, the transfer of any immovable property effected on or after the 1st day of July, 2002.]
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1. Inserted by the Finance Act, 2002, with effect from 1st July, 2002.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
Section 270A - Penalty for under-reporting and misreporting of income
1[270A. Penalty for under-reporting and misreporting of income
(1) The Assessing Officer or 5[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under reported income.
(2) A person shall be considered to have under-reported his income, if--
(a) the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143;
(b) the income assessed is greater than the maximum amount not chargeable to tax, where 2[no re
28[271. Failure to furnish returns, comply with notices, concealment of income, etc.
(1) If the 29[Assessing Officer] or the 1[***] 49[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] 2[or the 24[Principal Commissioner or Commissioner]] in the course of any proceedings under this Act, is satisfied that any person –
(a) 47[***]
(b) has 30[***] failed to comply with a notice 3[under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142] or sub-section (2) of section 143 31[or fails to comply with a direction issued under sub-section (2A) of section 142], or
(c) has concealed the particulars of his income or 32[***] furnished inaccurate particulars of such 4[income, or],
5[(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits,]
he may direct that such person shall pay by way of penalty, –
(i) 48[***] ;
33[
Section 271 of the Income Tax Act, 1961, prescribes penalties for various acts of non-compliance, including concealment of income, furnishing inaccurate particulars, failure to maintain books, and non-filing or delayed filing of returns. It is a crucial provision aimed at deterring tax evasion and ensuring compliance with tax laws.
Section 271 empowers authorities to levy penalties where the assessee either conceals income, furnishes inaccurate particulars, or fails to comply with notices or maintain proper books. It specifies different sub-sections addressing different acts, such as concealment (271(1)(c)), failure to file returns (271(1)(a)), and other defaults.
Section 271 acts as a deterrent against tax evasion but also requires strict adherence to procedural safeguards. Its effective enforcement hinges on proper recording of satisfaction, clear notices, and proof of deliberate concealment or fraud. The judiciary has emphasized that penalties are quasi-criminal in nature, and the burden of proof lies heavily on the revenue to establish concealment or wilful default.
This commentary synthesizes judgments, legal provisions, and authoritative interpretations to provide a comprehensive understanding of Section 271 of the Income Tax Act, 1961.
6[271A. Failure to keep, maintain or retain books of account, documents, etc.
Without prejudice to the provisions of 4[section 270A or] section 271, if any person 5[***], fails to keep and maintain any such books of account and other documents as required by section 44AA or the rules made thereunder, in respect of any previous year or to retain such books of account and other documents for the period specified in the said rules, the 7[Assessing Officer] or the 1[***] 7[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] may direct that such person shall pay, by way of penalty, 2[a sum of twenty-five thousand rupees].
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1. The expression ‘Deputy Commissioner (Appeals) or the’ omitted by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Substituted for ‘a sum which shall not be less than two thousand rupees but which may extend to one hundred thousand rupees’ by the Finance Act, 2001, wi
5[(1)] 2[Without prejudice to the provisions of 6[section 270A or] section 271 or section 271BA, if any person in respect of an 3[international transaction or specified domestic transaction],--
(i) fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of section 92D;
(ii) fails to report such transaction which he is required to do so; or
(iii) maintains or furnishes an incorrect information or document, the Assessing Officer or 4[Principal Commissioner or Commissioner] (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent. of the value of each international transaction entered into by such person.]
6[(2) If any person fails to furnish the information and the document as required under sub-section (4) of section 92D, the prescribed income-tax authority referred to in the said sub-section may direct that such person shall pay, by way of penalty, a sum of five
1[(1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007, 2[but before the 1st day of July, 2012] the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year.
(2) Nothing contained in sub-section (1) shall apply if the assessee, –
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) pays the tax, together with interest, if any, in respect of the undisclosed income.
(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be impose
1[(1) The Assessing Officer 7[or the Commissioner (Appeals)] may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July, 2012, 6[but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President] the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,--
(a) a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year, if such assessee--
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed income was derived; and
(iii) on or before the specified date--
(A) pays the tax, together with interest, if any, in respect of the undisclosed income
2[271B. Failure to get accounts audited
If any person fails 3[***] to get his accounts audited in respect of any previous year or years relevant to an assessment year or 4[furnish a report of such audit as required under section 44AB], the 5[Assessing Officer] may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of 1[one hundred fifty thousand rupees], whichever is less.]
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1. Substituted by the Finance Act, 2010 w.e.f. 01.04.2011 for the following:-
"one hundred thousand rupees".
2. Inserted by Finance Act, 1984 (21 of 1984), Section 30 (w.e.f. 1-4-1985).
3. The word "without reasonable cause" Omitted by the Taxation Laws (Amendment and Miscellaneous provisions) Act 1986 (46 of 1986), Section 21 (w.e.f. 10-
1[If any person fails to furnish a report from an accountant as required by section 92E, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of one hundred thousand rupees.]
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1. Inserted by the Finance Act, 2001, with effect from 1st April, 2002.
3[****]
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* Section 88A now omitted by the Finance (No. 2) Act, 1996, with retrospective effect from 1st April, 1994.
1. Substituted for ‘Deputy Commissioner’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Inserted by the Finance Act, 1990 (12 of 1990) Section 43 (w.e.f. 1-4-1989).
3. Omitted by Finance Act, 2025, w.e.f. 01.04.2025, for the following:-
"2[271BB. Failure to subscribe to the eligible issue of capital
Whoever fails to subscribe any amount of subscription to the units issued under any scheme referred to in sub-section (1) of section 88A* to the eligible issue of capital under that sub-section within the period of six months specified therein, may be directed by the 1[Joint Commissioner] to pay, by way of penalty, a sum equal to twenty per cent of such amount.]"
1[271C. Penalty for failure to deduct tax at source
2[(1) If any person fails to -
(a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB ; or
(b) 5[pay or ensure payment of, the whole] or any part of the tax as required by or under, -
(i) sub-section (2) of section 115-O ; 6[****]
(ii) 4[***] proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay 7[or ensure payment of,] as aforesaid.]
7[(iii) the first proviso to sub-section (1) of section 194R; or
(iv) the proviso to sub-section (1) of section 194S; or;]
8[(v) sub-section (2) of section 194BA,]
3[(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner].
9[Provided that any penalty under sub-section (1) on or after the 1st day of April, 2025, shall be imposed by the Assessing Officer.]
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1[(1) If any person fails to collect the whole or any part of the tax as required by or under the provisions of Chapter XVIIBB, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to collect as aforesaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.]
2[Provided that any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be imposed by the Assessing Officer.]
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1. Inserted by the Finance Act, 2006, with effect from 1st April, 2007.
2. Inserted by Finance Act, 2025, w.e.f. 01.04.2025.
3[271D. Penalty for failure to comply with the provisions of section 269SS
4[(1)] If a person takes or accepts any loan or deposit 2[or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit 2[or specified sum] so taken or accepted.
(2) Any penalty imposable under sub-section (1) shall be imposed by the 1[Joint Commissioner]].
5[Provided that any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be imposed by the Assessing Officer.]
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1. Substituted for ‘Deputy Commissioner’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Inserted by the Finance Act, 2015, w.e.f. 01.06.2015.
3. Inserted by the by Direct Tax Laws (Amendment) Act, 1987, (4 of 1988), Section 108, (w.e.f. 1-4-1989).
4. Section 271D renumbered as sub-section (1) there
4[271E. Penalty for failure to comply with the provisions of section 269T
5[(1)] If a person repays any 1[loan or deposit] 3[or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the 1[loan or deposit] 3[or specified advance] so repaid.
(2) Any penalty imposable under sub-section (1) shall be imposed by the 2[Joint Commissioner]].
6[Provided that any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be imposed by the Assessing Officer.]
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1. Substituted for ‘deposit’ by the Finance Act, 2003, with effect from 1st June, 2003.
2. Substituted for ‘Deputy Commissioner’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
3. Inserted by the Finance Act, 2015, w.e.f. 01.06.2015.
4. Inserted by the by Direct Tax La
1[If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees.]
2[Provided that nothing contained in this section shall apply to and in relation to the return of income required to be furnished for any assessment year commencing on or after the 1st day of April, 2018.]
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1. Substituted by the Finance Act, 2002, with effect from 1st June, 2002. Prior to substitution, Section 271F as inserted by the Finance Act, 1997, with effect from 1st April, 1997, and later on as substituted by the Finance (No. 2) Act, 1998, with effect from 1st April, 1999 and amended by the Finance Act, 2001, with effect from 1st June, 2001, stood as under:-
‘271F. Penal
8[271FA. Penalty for failure to furnish 3[statement of financial transaction or reportable account]
2[If a person who is required to furnish 4[a statement of financial transaction or reportable account] under sub-section (1) of section 285BA, fails to furnish such 5[statement] within the time prescribed under sub-section (2) thereof, the income-tax authority prescribed under said sub-section (1) may direct that such person shall pay, by way of penalty, a sum of 6[five hundred rupees] for every day during which such failure continues:
Provided that where such person fails to furnish the return within the period specified in the notice issued under sub-section (5) of section 285BA, he shall pay, by way of penalty, a sum of 7[one thousand rupees] for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the return expires.]]
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1[If an employer, who is required to furnish a return of fringe benefits, as required under sub-section (1) of section 115WD, fails to furnish such return within the time prescribed under that sub-section, the Assessing Officer may direct that such employer shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues.]
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1. Inserted by the Finance Act, 2005, with effect from 1st April, 2006.
1[If any person who has entered into an 2[international transaction or specified domestic transaction] fails to furnish any such information or document as required by sub-section (3) of section 92D, the Assessing Officer 3[or the Transfer Pricing Officer as referred to in section 92CA] or the 4[Principal Commissioner or Commissioner] (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the 2[international transaction or specified domestic transaction] for each such failure.]
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1. Inserted by the Finance Act, 2001, with effect from 1st April, 2002.
2. Substituted by the Finance Act, 2012, w.e.f. 01.04.2013 for the following:-
"international transaction"
3. Inserted by the Finance (No. 2) Act, 2014 w.e.f. 1st day of October, 2014.
4. Substituted vide the Finance (No. 2) Act, 2014 w.e.f. 01.06.2013, for the following:-
"Commissioner"
1[(1) Without prejudice to the provisions of the Act, 2[the Assessing Officer may direct that a person shall pay by way of] penalty, if, he--
(a) fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; or
(b) furnishes incorrect information in the statement which is required to be delivered or cause to be delivered under sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
(2) The penalty referred to in sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
(3) Notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Ce
1[***]
---------------------------------------------
1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1a[272A. Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc
(1) If any person, –
(a) being legally bound to state the truth of any matter touching the subject of his assessment, refuses to answer any question put to him by an income-tax authority in the exercise of its powers under this Act ; or
(b) refuses to sign any statement made by him in the course of any proceedings under this Act, which an income-tax authority may legally require him to sign ; or
(c) to whom a summons is issued under sub-section (1) of section 131 either to attend to give evidence or produce books of account or other documents at a certain place and time omits to attend or produce books of account or documents at the 18[place or time; or]
19[(d) fails to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section
3[272AA. Penalty for failure to comply with the provisions of section 133B
(1) If a person 4[***] fails to comply with the provisions of section 133B, he shall, on an order passed by the 1[Joint Commissioner], 2[Assistant Director or Deputy Director] or the 5[Assessing Officer], as the case may be, pay, by way of penalty, a sum which may extend to one thousand rupees.
(2) No order under sub-section (1) shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter.]
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1. Substituted for ‘Deputy Commissioner’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
2. Substituted for ‘Assistant Director’ by the Finance (No. 2) Act, 1998, with effect from 1st October, 1998.
3. Inserted by the Finance Act, 1986 (21 of 1986), Section 35 (w.e.f. 13 -5-1966).
4. The word "a reasonable cause" Omitted by the Taxation L
7[272B. Penalty for failure to comply with the provisions of section 139A
1[(1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.
(2) If a person who is required to quote his 3[permanent account number or Aadhaar number, as the case may be,] in any document referred to in clause (c) of sub-section (5) of section 139A, or to intimate such number as required by sub-section (5A) 2[or sub-section (5C)] of that section, quotes or intimates a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of 4[ten thousand rupees for each such default].
5[(2A) If a person, who is required to quote his permanent account number or Aadhaar number, as the case may be, in documents referred to in sub-section (6A) of sectio
3[272BB. Penalty for failure to comply with the provisions of section 203A
(1) If a person fails to comply with the provisions of section 203A, he shall, on an order passed by the 4[Assessing Officer], pay, by way of penalty, 1[a sum of ten thousand rupees].
2[(1A) If a person who is required to quote his “tax deduction account number” or, as the case may be, “tax collection account number” or “tax deduction and collection account number” in the challans or certificates or statements or other documents referred to in sub-section (2) of section 203A, quotes a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.]
(2) No order under sub-section (1) 2[or sub-section (1A)] shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter.]
1[(1) If a person 2[fails to comply before the 1st day of October, 2004] with the provisions of section 206CA, he shall, on an order passed by the Assessing Officer, pay, by way of penalty, a sum of ten thousand rupees.
(2) No order under sub-section (1) shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter.]
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1. Inserted by the Finance Act, 2002, with effect from 1st June, 2002.
2. Substituted for “fails to comply” by the Finance (No. 2) Act, 2004, with effect from 1st October, 2004.
3[273. False estimate of, or failure to pay, advance tax
4[(1) If the 5[Assessing Officer], in the course of any proceedings in connection with the regular assessment for any assessment year, is satisfied that any assessee –
(a) has furnished under clause (a) of sub-section (1) of section 209A a statement of the advance tax payable by him which he knew or had reason to believe to be untrue, or
(b) has 6[***] 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 section 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 XVIIC falls s
6[273A. Power to reduce or waive penalty, etc., in certain cases
(1) Notwithstanding anything contained in this Act, the 7[8[***]] 1[Principal Commissioner or Commissioner] may, in his discretion, whether on his own motion or otherwise, –
(i) [Omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from 1st April, 1989];
(ii) reduce or waive the amount of penalty imposed or imposable on a person under 4[section 270A or] clause (iii) of sub-section (1) of section 271; *or
(iii) [Omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from 1st April, 1989;]
if he is satisfied that such person –
(a) [Omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from 1st April, 1989];
(b) in the case referred to in clause (ii), has, prior to the detection by the 9[Assessing Officer], of the concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good f
1[(1) A person may make an application to the 2[Principal Commissioner or Commissioner] for granting immunity from penalty, if -
(a) he has made an application for settlement under section 245C and the proceedings for settlement have abated under section 245HA; and
(b) the penalty proceedings have been initiated under this Act.
(2) The application to the 2[Principal Commissioner or Commissioner] under sub-section (1) shall not be made after the imposition of penalty after abatement.
(3) The 2[Principal Commissioner or Commissioner] may, subject to such conditions as he may think fit to impose, grant to the person immunity from the imposition of any penalty under this Act, if he is satisfied that the person has, after the abatement, cooperated with the income-tax authority in the proceedings before him and has made a full and true disclosure of his income and the manner in which such income has been derived.
3[(3A) The order under sub-section (3), eith
Notwithstanding anything contained in the provisions of clause (b) of subsection (1) of 1a[section 271, section 271A 1[,section 271AA] section 271B, 1[, section 271BA], section 271BB, 2[section 271C, section 271CA], section 271D, section 271E, 3[section 271F, 4[section 271FA, 12[section 271FAA] 8[section 271FAB, section 271FB, section 271G, section 271GA], 10[section 271GB], 13[section 271GC,] 7[section 271H] 9[section 271-I,] 11[section 271J,] clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or 5[section 272B or]] 6[sub-section (1) or subsection (1A) of section 272BB] or 5[sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.
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(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard 6[by way of a show cause notice to that effect].
1a[(2) No order imposing a penalty under this Chapter shall be made -
(a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees;
(b) by the 1[Assistant Commissioner or Deputy Commissioner], where the penalty exceeds twenty thousand rupees, except with the prior approval of the 2[Joint Commissioner]].
3[(2A) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of imposing penalty under this Chapter so as to impart greater efficiency, transparency and accountability by--
(a) eliminating the interface between the 4[income-tax authority and the assessee or any other person] to the extent technologically feasible;
(b) optimising utilisation of the resources through economies of scale
11[275. Bar of limitation for imposing penalties
(1) No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,-
(a) the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, if the relevant assessment or other order is not the subject matter of an appeal under section 246 or section 246A or section 253;
(b) the order of revision under section 263 or section 264 is passed, if the relevant assessment or other order is the subject matter of revision under the said sections;
(c) the order of appeal under section 246 or section 246A is received by the jurisdictional Principal Commissioner or Commissioner, if the relevant assessment or other order is the subject matter of an appeal under the said sections and no further appeal has been filed under section 253;
(d) the order of appeal under section 253 is received by the jurisdictio
275A. 1[Contravention of order made during search action]
Whoever contravenes any order referred to in the second proviso to sub-section (1) or sub-section (3) of section 132 shall be punishable with 2[simple imprisonment for a term up to two years and with fine].
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1. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"Contravention of order made under sub-section (3) of section 132"
2. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"rigorous imprisonment which may extend to two years and shall also be liable to fine"
275B. 2[Failure to afford facility for inspection of books of account during search]
1[If a person who is required to afford the authorised officer the necessary facility to inspect the books of account or other documents, as required under clause (iib) of sub-section (1) of section 132, fails to afford such facility to the authorised officer, he shall be punishable with 3[simple imprisonment for a term up to six months, or with fine, or with both].]
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1. Inserted by the Finance Act, 2002, with effect from 1st June, 2002.
2. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"Failure to comply with the provisions of clause (li)(B) of sub-section (1) of section 132"
3. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"rigorous imprisonment for a term which may extend to two years and shall also be liable to fine"
1[276. Removal, concealment, transfer or delivery of property to thwart tax recovery
Whoever fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein, intending thereby to prevent that property or interest therein from being taken in execution of a certificate under the provisions of the Second Schedule shall be punishable with 2[simple imprisonment for a term up to two years and with fine].]
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1. Inserted by Direct Tax Laws (Amendment) Act, 1987, (w.e.f. 01.04.1989).
2. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"rigorous imprisonment for a term which may extend to two years and shall also be liable to fine"
If a person -
(i) fails to give the notice in accordance with sub-section (1) of section 178 ; or
(ii) fails to set aside the amount as required by sub-section (3) of that section ; or
(iii) parts with any of the assets of the company or the properties in his hands in contravention of the provisions of the aforesaid sub-section,
he shall be punishable with rigorous imprisonment for a term which may extend to two years :
Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than six months.
1[Provided further that no proceeding shall be initiated under this section on or after the 1st day of April, 2023.]
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1. Inserted by Finance Act, 2023, w.e.f. 01.04.2023.
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1. Omitted by the Finance Act, 1986, with effect from 1st October, 1986.
Whoever fails to comply with the provisions of section 269UC or fails to surrender or deliver possession of the property under sub-section (2) of section 269UE or contravenes the provisions of sub-section (2) of section 269UL shall be punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine :
Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for less than six months.
1[Provided further that no proceeding under this section shall be initiated on or after the 1st day of April, 2022.]
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1. Inserted by Finance Act, 2022, Section 80, w.e.f. 01.04.2022.
7[276B. Failure to pay tax to credit of Central Government under Chapter XII-D or XVII-B
If a person fails to--
(a) pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) pay tax or ensure payment of tax to the credit of the Central Government, as required by or under--
(i) the proviso to sub-section (1) of section 194S in relation to consideration for transfer of virtual digital asset, excluding such consideration which is wholly in kind; or
(ii) sub-section (2) of section 194BA in relation to winnings, excluding such winnings which are wholly in kind,
he shall be punishable--
(i) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of such tax exceeds fifty lakh rupees; or
(ii) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of such tax exceeds ten lakh r
2[276BB. Failure to pay tax collected at source
If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable--
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of such tax exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of such tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that the provisions of this section shall not apply, if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.]
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1. Inserted by Finance
5[276C. Wilful attempt to evade tax, etc.-
(1) If a person wilfully attempts in any manner to evade any tax, penalty or interest chargeable or imposable, or under-reports his income, under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable--
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount sought to be evaded or tax on under-reported income exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount sought to be evaded or tax on under-reported income exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.
(2) If a person wilfully attempts in any manner to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any o
9[276CC. Failure to furnish returns of income
If a person wilfully fails to furnish in due time the return of fringe benefits, which he is required to furnish under sub-section (1) of section 115WD, or by notice given under sub-section (2) of the said section or section 115WH, or the return of income which he is required to furnish under sub-section (1) of section 139, or by notice given under clause (i) of sub-section (1) of section 142, or section 148, or section 153A, he shall be punishable--
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine
2[276CCC. Failure to furnish return of income in search cases
If a person wilfully fails to furnish in due time the return of income, setting forth his undisclosed income for the block period, which he is required to furnish by notice given under clause (a) of sub-section (1) of section 158BC, he shall be punishable--
(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax exceeds fifty lakh rupees; or
(b) with simple imprisonment up to six months, or with fine, or with both, where the amount of tax exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case:
Provided that no person shall be punishable for any failure under this section in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995 but before the 1st day of January, 1997.]
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2[276D. Failure to comply with a direction of special audit or valuation.-
If a person wilfully fails to comply with a direction issued to him under sub-section (2A) of section 142, he shall be punishable with simple imprisonment for a term up to six months, or with fine, or with both.]
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1. Substituted by the Finance (No. 2) Act, 2014 w.e.f. 1st day of October, 2014 for the following:-
"or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both"
2. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"276D. Failure to produce accounts and documents
If a person wilfully fails to produce, or cause to be produced, on or before the date specified in any notice served on him under sub-section (1) of section 142, such accounts and documents as are referred to in t
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1[***]
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1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,-
3[(a) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds fifty lakh rupees; or
(b) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds ten lakh rupees but does not exceed fifty lakh rupees; or
(c) with fine, in any other case.]
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1. Substituted by the Finance Act, 2012, w.e.f. 01.07.2012 for the following:-
"one hundred thousand rupees"
2. Substituted by t
1[If any person (hereafter in this section referred to as the first person) wilfully and with intent to enable any other person (hereafter in this section referred to as the second person) to evade any tax or interest or penalty chargeable and imposable under this Act, makes or causes to be made any entry or statement which is false and which the first person either knows to be false or does not believe to be true, in any books of account or other document relevant to or useful in any proceedings against the first person or the second person, under this Act, the first person shall be punishable with 3[simple imprisonment for a term up to two years and with fine].
Explanation: For the purposes of establishing the charge under this section, it shall not be necessary to prove that the second person has actually evaded any tax, penalty or interest chargeable or imposable under this Act.]
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1. Inserted by the Fina
If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to 1[any income or any fringe benefits chargeable to tax] which is false and which he either knows to be false or does not believe to be true or to commit an offence under sub-section (1) of section 276C, he shall be punishable, -
4[(i) with simple imprisonment for a term up to two years, or with fine, or with both, where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true, or which is wilfully attempted to be evaded, exceeds fifty lakh rupees; or
(ii) with simple imprisonment for a term up to six months, or with fine, or with both, where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true, or which is wilfully attempted to be evaded, exceeds ten lakh rupees but does not e
If any person convicted of an offence under section 276B 1[or section 276BB] or sub-section (1) of section 276C or section 276CC or section 276DD * or section 276E* or section 277 or section 278 is again convicted of an offence under any of the aforesaid provisions, he shall be punishable for the second and for every subsequent offence with 2[simple] imprisonment for a term which shall not be less than six months but which may extend to 3[three] years and with fine.
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* Reference to Section 276DD and Section 276E needs to be deleted as the same has been omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from 1st April, 1989.
1. Inserted by Finance Act, 2022, Section 83, w.e.f 01.04.2022.
2. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"rigorous"
3. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"seven"
Notwithstanding anything contained in the provisions of section 276A, section 276AB, 1[or Section 276B] 2[or section 276BB] no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.
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1. Substituted by Direct Tax Laws (Amendment) Act, 1987, (w.e.f. 01.09.1989), for the following:-
"section 276B, section 276DD or section 276E,"
2. Inserted by Finance Act, 2022, Section 84, w.e.f. 01.04.2022.
1[(1) A person may make an application to the 2[Principal Commissioner or Commissioner] for granting immunity from prosecution, if he has made an application for settlement under section 245C and the proceedings for settlement have abated under section 245HA.
(2) The application to the 2[Principal Commissioner or Commissioner] under sub-section (1) shall not be made after institution of the prosecution proceedings after abatement.
(3) The 2[Principal Commissioner or Commissioner] may, subject to such conditions as he may think fit to impose, grant to the person immunity from prosecution for any offence under this Act, if he is satisfied that the person has, after the abatement, co-operated with the income-tax authority in the proceedings before him and has made a full and true disclosure of his income and the manner in which such income has been derived:
Provided that where the application for settlement under section 245C had been made before the 1st day of
(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, sec
(1) Where an offence under this Act has been committed by a Hindu undivided family, the karta thereof shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render the karta liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been committed by a Hindu undivided family and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any member of the Hindu undivided family, such member shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(1) Where during the course of any search made under section 132, any money, bullion, jewellery or other valuable article or thing (hereafter in this section referred to as the assets) or any books of account or other documents has or have been found in the possession or control of any person and such assets or books of account or other documents are tendered by the prosecution in evidence against such person or against such person and the person referred to in section 278 for an offence under this Act, the provisions of sub-section (4A) of section 132 shall, so far as may be, apply in relation to such assets or books of account or other documents.
(2) Where any assets or books of account or other documents taken into custody, from the possession or control of any person, by the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A are delivered to the requisitioning officer under sub-sectio
(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation : In this sub-section, "culpable mental state" includes intention, motive or knowledge of a fact or belief in, or reason to believe, a fact.
(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.
(1) A person shall not be proceeded against for an offence under section 275A 1[,section 275B], section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D, 2[section 277, section 277A or section 278] except with the previous sanction of the 3[Principal Commissioner or Commissioner] or 3[Principal Commissioner] 8[or Joint Commissioner (Appeals) or Commissioner (Appeals)"] or the appropriate authority :
Provided that the 4[Principal Chief Commissioner or Chief Commissioner] or, as the case may be, Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub-section.
Explanation : For the purposes of this section, "appropriate authority" shall have the same meaning as in clause (c) of section 269UA.
(1A) A person shall not be proceeded against for an offence under section 276C or section 277 in relation to the assessment f
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under section 276B or section 276C or section 276CC or section 277 or section 278 shall be deemed to be non-cognizable within the meaning of that Code.
Entries in the records or other documents in the custody of an income-tax authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under this Chapter, and all such entries may be proved either by the production of the records or other documents in the custody of the income-tax authority containing such entries, or by the production of a copy of the entries certified by the income-tax authority having custody of the records or other documents under its signature and stating that it is a true copy of the original entries and that such original entries are contained in the records or other documents in its custody.
(1) If a public servant furnishes any information or produces any document in contravention of the provisions of sub-section (2) of section 138, he shall be punishable with 1[simple imprisonment up to one month, or with fine, or with both].
(2) No prosecution shall be instituted under this section except with the previous sanction of the Central Government.
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1. Substituted by Finance Act, 2026, w.e.f. 01.03.2026, for the followings:-
"imprisonment which may extend to six months, and shall also be liable to fine"
Section 280 of the Income Tax Act, 1961, addresses the disclosure of particulars by public servants and outlines the penalties for unauthorized disclosure of information related to income tax assessments. This section is crucial for maintaining the confidentiality of taxpayer information and ensuring that public servants adhere to the legal framework governing the handling of sensitive data.
Section 280 stipulates that if a public servant discloses any information or produces any document in contravention of the provisions set forth in the Act, they may face legal consequences. Specifically, it emphasizes the need for prior sanction from the Central Government before any prosecution can be initiated under this section.
The scope of Section 280 is limited to public servants who are involved in the administration of the Income Tax Act. It aims to protect the integrity of the tax system by preventing the misuse of confidential information.
The punishment for violating Section 280 includes:- Imprisonment for a term that may extend to six months.- A fine may also be imposed, although the specific amount is not defined in the section.
"Disclosure" - Section 280 addresses the unauthorized disclosure of tax-related information by public servants, emphasizing the importance of confidentiality in tax matters. -
"Sanction Requirement" - Prosecution under Section 280 requires prior sanction from the Central Government, ensuring that legal actions are not taken arbitrarily against public servants. -
"Public Servants" - The section specifically applies to public servants, highlighting the responsibility of government employees to maintain confidentiality regarding taxpayer information. -
"Penalties" - Violations of Section 280 can lead to imprisonment for up to six months, reflecting the seriousness of unauthorized disclosures in the context of tax administration. -
"Legal Framework" - Section 280 is part of a broader legal framework designed to protect taxpayer information and ensure that public servants adhere to ethical standards in their duties. -
"Importance of Confidentiality" - The section underscores the critical nature of confidentiality in tax matters, which is essential for maintaining public trust in the tax system. -
"Judicial Interpretation" - Courts have emphasized the need for strict adherence to the provisions of Section 280 to safeguard taxpayer rights and the integrity of the tax system. -
"Scope of Application" - The application of Section 280 is limited to disclosures made by public servants, thereby excluding private individuals or entities from its purview. -
"Impact on Public Servants" - Public servants must be acutely aware of the implications of Section 280, as violations can lead to significant legal consequences, including imprisonment. -
"Legislative Intent" - The legislative intent behind Section 280 is to deter unauthorized disclosures and promote accountability among public servants in the administration of tax laws. -
"Prosecution Process" - The requirement for prior sanction before prosecution serves as a safeguard against misuse of the legal provisions against public servants. -
"Public Trust" - By enforcing strict penalties for unauthorized disclosures, Section 280 aims to enhance public trust in the integrity of the tax administration system. -
"Legal Precedents" - Judicial interpretations of Section 280 have reinforced the necessity of maintaining confidentiality and the consequences of failing to do so. -
"Ethical Standards" - The section establishes a framework for ethical conduct among public servants, emphasizing the importance of confidentiality in their roles. -
"Administrative Accountability" - Section 280 contributes to administrative accountability by holding public servants responsible for their actions regarding taxpayer information. -
"Legal Safeguards" - The requirement for governmental sanction before prosecution acts as a legal safeguard for public servants, preventing arbitrary actions against them. -
"Taxpayer Rights" - The provisions of Section 280 are designed to protect taxpayer rights by ensuring that their information is handled with the utmost confidentiality. -
"Public Servant Training" - There is a need for training public servants on the implications of Section 280 to prevent inadvertent violations of confidentiality. -
"Legislative Clarity" - The clear stipulations in Section 280 regarding unauthorized disclosures help in delineating the boundaries of acceptable conduct for public servants. -
1[(1) The Central Government, in consultation with the Chief Justice of the High Court, may, for trial of offences punishable under this Chapter, by notification, designate one or more courts of Magistrates of the first class as Special Court for such area or areas or for such cases or class or group of cases as may be specified in the notification.
Explanation.--In this sub-section, "High Court" means the High Court of the State in which a Magistrate of first class designated as Special Court was functioning immediately before such designation.
(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.07.2012.
1[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),-
(a) the offences punishable under this Chapter shall be triable only by the Special Court, if so designated, for the area or areas or for cases or class or group of cases, as the case may be, in which the offence has been committed:
Provided that a court competent to try offences under section 292,--
(i) which has been designated as a Special Court under this section, shall continue to try the offences before it or offences arising under this Act after such designation;
(ii) which has not been designated as a Special Court may continue to try such offence pending before it till its disposal;
(b) a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of the offence for which the accused is committed for trial.]
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1. Inserted by the Finance Act, 2012, w
1[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Special Court, shall try, an offence under this Chapter punishable with imprisonment not exceeding two years or with fine or with both, as a summons case, and the provisions of the Code of Criminal Procedure, 1973 as applicable in the case of trial of summons case, shall apply accordingly.]
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1. Inserted by the Finance Act, 2012, w.e.f. 01.07.2012.
1[(1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and the person conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Public Prosecutor or a Special Public Prosecutor under this section unless he has been in practice as an advocate for not less than seven years, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this section shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 (2 of 1974) and the provisions of that Code shall have ef
280Y. Definitions
1[***]
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
280Z. Tax credit certificates to certain equity shareholders
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
1[***]
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
1[***]
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
1[***]
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
1[***]
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1. Omitted by the Finance Act, 1990, with effect from 1st April, 1990.
(1) Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice under rule 2 of the Second Schedule, any assessee creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise :
Provided that such charge or transfer shall not be void if it is made -
(i) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee ; or
(ii) with the previous permission of the Assessing Officer.
(2) This section applies to cases where the amount of tax or other sum payable or likely to be payable
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1. Repealed by the Benami Transactions (Prohibition) Act, 1988, with effect from 19th May, 1988.
(1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment 10[or for imposition of penalty under section 271AAD where the amount or aggregate of amounts of penalty likely to be imposed under the said section exceeds two crore rupees], the Assessing Officer is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, he may, with the previous approval of the 4[Principal Chief Commissioner or Chief Commissioner], 5[Principal Commissioner or Commissioner], 6[Principal Director General or Director General] or 7[Principal Director or Director], by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.
8[***]
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under
1[(1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this section referred to as "communication") may be made by delivering or transmitting a copy thereof, to the person therein named,—
(a) by post or by such courier services as may be approved by the Board; or
(b) in such manner as provided under the Code of Civil Procedure, 1908(5 of 1908) for the purposes of service of summons; or
(c) in the form of any electronic record as provided in Chapter TV of the Information Technology Act, 2000(21 of 2000);
(d) by any other means of transmission of documents as provided by rules made by the Board in this behalf.
(2) The Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named
Explanation.—For the purposes of t
1[(1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be 2[signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed].
(2) Every notice or other document to be issued, served or given for the purposes of this Act by any income-tax authority, shall be deemed to be authenticated if the name and office of a designated income-tax authority is printed, stamped or otherwise written thereon.
(3) For the purposes of this section, a designated income-tax authority shall mean any income-tax authority authorised by the Board to issue, serve or give such notice or other document after authentication in the manner as provided in sub-section (2).]
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1. Inserted by the Finance Act, 2008, with effect from 1st June, 2008.
2. Substituted by the Finance Act, 2016,
4[***]
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1. Inserted by the Finance (No. 2) Act, 2009, with effect from 1st April, 2010.
2. Substituted by the Finance Act, 2010 w.e.f.01.10.2010 for the following : "income-tax authority shall"
3. Substituted by the Finance Act, 2010 w.e.f.01.10.2010 for the following : "received by".
4. Omitted by the Finance Act, 2011 w.e.f 01.06.2011 for the following:-
"282B. Allotment of Document Identification Number
1[(1) Every 2[income-tax authority shall, on or after the 1st day of July, 2011,] allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any other income-tax authority or assessee or any other person and such number shall be quoted thereon.
(2) Where the notice, order, letter or any correspondence, issued by any income tax authority, does not bear a Document Identification Number referred to in sub-sectio
(1) After a finding of total partition has been recorded by the Assessing Officer under section 171 in respect of any Hindu family, notices under this Act in respect of the income of the Hindu family shall be served on the person who was the last manager of the Hindu family, or, if such person is dead, then on all adults who were members of the Hindu family immediately before the partition.
(2) Where a firm or other association of persons is dissolved, notices under this Act in respect of the income of the firm or association may be served on any person who was a partner (not being a minor) or member of the association, as the case may be, immediately before its dissolution.
Where an assessment is to be made under section 176, the Assessing Officer may serve on the person whose income is to be assessed, or, in the case of a firm or an association of persons, on any person who was a member of such firm or association at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that section.
2[Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999(42 of 1999), shall, in respect of its activities in a financial year, prepare and deliver or cause to be delivered to the Assessing Officer having jurisdiction, within 3[such period, a statement] in such form and containing such particulars as may be prescribed.]
1[***]
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1. Omitted by the Finance Act, 1987, with effect from 1st June, 1987.
2. Inserted by the Finance Act, 2011 w.e.f 01.06.2011.
3. Substituted by Finance (No. 2) Act, 2024, w.e.f. 01.04.2025, for the following:-
"sixty days from the end of such financial year, a statement"
2[285A. Furnishing of information or documents by an Indian concern in certain cases
Where any share of, or interest in, a company or an entity registered or incorporated outside India derives, directly or indirectly, its value substantially from the assets located in India, as referred to in Explanation 5 to clause (i) of sub-section (1) of section 9, and such company or, as the case may be, entity, holds, directly or indirectly, such assets in India through, or in, an Indian concern, then, such Indian concern shall, for the purposes of determination of any income accruing or arising in India under clause (i) of sub-section (1) of section 9, furnish within the prescribed period to the prescribed income-tax authority the information or documents, in such manner, as may be prescribed.]
1[***]
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1. Omitted by the Finance Act, 1988, with effect from 1st April, 1988.
2. Inserted by the Finance Act, 2015, w.e.f. 01.0
Any person carrying on the production of a cinematograph film during the whole or any part of any financial year shall, in respect of the period during which such production is carried on by him in such financial year, prepare and deliver or cause to be delivered to the Assessing Officer, within thirty days from the end of such financial year or within thirty days from the date of the completion of the production of the film, whichever is earlier, a statement in the prescribed form1 containing particulars of all payments of over 2[fifty thousand rupees] in the aggregate made by him or due from him to each such person as is engaged by him in such production.
------------------------------------------
1. See rule 121A and Form No. 52A. For analysis, see Mashbra's Income-tax Rules.
2. Substituted for 'twenty-five thousand rupees' by the Finance Act, 2000, with effect from 1st April, 2001. Earlier 'twenty-five thousand rupees' was substituted for 'five thousand
7[285BA. Obligation to furnish statement of financial transaction or reportable account
(1) Any person, being--
(a) an assessee; or
(b) the prescribed person in the case of an office of Government; or
(c) a local authority or other public body or association; or
(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908(16 of 1908); or
(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988?(59 of 1988); or
(f) the Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898(6 of 1898); or
(g) the Collector referred to in clause (g) of section 3 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013(30 of 2013); or
(h) the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956(42 of 1956); o
2[286. Furnishing of report in respect of international group
(1) Every constituent entity resident in India, shall, if it is constituent of an international group, the parent entity of which is not resident in India, notify the prescribed income-tax authority (herein referred to as prescribed authority) in the form and manner, on or before such date, as may be prescribed,--
(a) whether it is the alternate reporting entity of the international group; or
(b) the details of the parent entity or the alternate reporting entity, if any, of the international group, and the country or territory of which the said entities are resident.
(2) Every parent entity or the alternate reporting entity, resident in India, shall, for every reporting accounting year, in respect of the international group of which it is a constituent, furnish a report, to the prescribed authority 3[within a period of twelve months from the end of the said reporting accounting year], in the fo
3[287. Publication of information respecting assessees in certain cases
(1) If the Central Government is of opinion that it is necessary or expedient in the public interest to publish the names of any assessees and any other particulars relating to any proceedings 4[or prosecutions under this Act, in respect of such assessees, it may cause to be published such names and particulars in such manner as it thinks fit.
5(2) No publication under this section shall be made in relation to any penalty imposed under this Act until the time for presenting an appeal to the 1[***] 2[Principal Commissioner 7[to the Joint Commissioner (Appeals) or to the Commissioner (Appeals)] has expired without an appeal having been presented or the appeal, if presented, has been disposed of].
Explanation : In the case of a firm, company or other association of persons, the names of the partners of the firm, directors, managing agents, secretaries and treasurers, or managers of the compa
1[287A. Appearance by registered valuer in certain matters
Any assessee who is entitled or required to attend before any income-tax authority or the Appellate Tribunal in connection with any matter relating to the valuation of any asset, otherwise than when required under section 131 to attend personally for examination on oath or affirmation, may attend by a registered valuer.
Explanation : In this section, "registered valuer" has the same meaning as in clause (oaa) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).]
---------------------------------------
1. Inserted by Taxation Laws (Amendment) Act 1972 (45 of 1972), Section 6 (w.e.f. 1-1-1973).
1(1) Any assessee who is entitled or required to attend before any income-tax authority or the Appellate Tribunal in connection with any proceeding under this Act otherwise than when required under Section 131 to attend personally for examination on oath or affirmation, may, subject to the other provisions of this Section, attend by an authorised representative.
2(2) For the purposes of this Section, "authorised representative" means a person authorised by the assessee in writing to appear on his behalf, being -
(i) a person related to the assessee in any manner, or a person regularly employed by the assessee ; or
(ii) any officer of a scheduled bank with which the assessee maintains a current account or has other regular dealings ; or
(iii) any legal practitioner who is entitled to practice in any civil court in India; or
(iv) an accountant; or
(v) any person who has passed any accountancy examination recognised in this behalf by the Board3; or
1[288A. Rounding off of income
2[The amount of total income computed in accordance with the foregoing provisions of this Act shall be rounded off to the nearest multiple of ten rupees and for this purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten ; and the amount so rounded off shall be deemed to be the total income of the assessee for the purposes of this Act.
3[***]
-------------------------------------
1. Inserted by the Finance Act, 1966 (13 of 1966), Section 34 (w.r.e.f. 1-4-1966).
2. Substituted by Finance Act, 1968 (19 of 1968) Section 30 and Third Schedule 24(a), For "(1) Subject to the provisions of Sub Section (2)
1[Any amount payable, and the amount of refund due, under the provisions of this Act shall be rounded off to the nearest multiple of ten rupees and for this purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five the amount shall be reduced to the next lower amount which is a multiple of ten.]
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1. Substituted by the Taxation Laws (Amendment) Act, 2006, with effect from 13th July, 2006. Prior to substitution, Section 288B stood as under:
"288B. Rounding off of tax, etc.-
The amount of tax (including tax deductible at source or payable in advance), interest, penalty, fine or any other sum payable, and the amount of refund due, under the provisions of
A receipt shall be given for any money paid or recovered under this Act.
Every person deducting, retaining, or paying any tax in pursuance of this Act in respect of income belonging to another person is hereby indemnified for the deduction, retention, or payment thereof.
(1) The Central Government may, if it is of opinion (the reasons for such opinion being recorded in writing) that with a view to obtaining the evidence of any person appearing to have been directly or indirectly concerned in or privy to the concealment of income or to the evasion of payment of tax on income it is necessary or expedient so to do, tender to such person immunity from prosecution for any offence under this Act or under the Indian Penal Code (45 of 1860), or under any other Central Act for the time being in force and also from the imposition of any penalty under this Act on condition of his making a full and true disclosure of the whole circumstances relating to the concealment of income or evasion of payment of tax on income.
(2) A tender of immunity made to, and accepted by, the person concerned, shall, to the extent to which the immunity extends, render him immune from prosecution for any offence in respect of which the tender was made or from the impo
No court inferior to that of a presidency magistrate or a magistrate of the first class shall try any offence under this Act.
1[292A. Section 360 of the Code of Criminal Procedure, 1973, and the Probation of Offenders Act, 1958, not to apply
Nothing contained in section 360 of the Code of Criminal Procedure, 1973 (2 of 1974), or in the Probation of Offenders Act, 1958 (20 of 1958), shall apply to a person convicted of an offence under this Act unless that person is under eighteen years of age.]
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1. Inserted by the Taxation Laws (Amendment) Act, 1975 (41 of 1975), Section 78 (w.e.f. 1-10-1975).
1[292B. Return of income, etc., not to be invalid on certain grounds
No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.]
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1. Inserted by the Taxation Laws (Amendment) Act, 1975 (41 of 1975), Section 78 (w.e.f. 1-10-1975).
Section 292BA - Assessments not to be invalid on certain grounds
1[292BA. Assessments not to be invalid on certain grounds
Notwithstanding any
1[Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was —
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.]
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1. Inserted by the Finance Act, 2008, with effect from 1st April, 2008.
Section 292BC - Circumstances in which approvals by income-tax authority not to be invalid
1[292BC. Circ
1[2[1] Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 3[or survey under section 133A], it may, in any proceeding under this Act, be presumed -
(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;
(ii) that the contents of such books of account and other documents are true; and
(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it pur
1[(1) Notwithstanding anything contained in this Act,--
(i) it shall not be necessary to issue an authorisation under section 132 or make a requisition under section 132A separately in the name of each person;
(ii) where an authorisation under section 132 has been issued or requisition under section 132A has been made mentioning therein the name of more than one person, the mention of such names of more than one person on such authorisation or requisition shall not be deemed to construe that it was issued in the name of an association of persons or body of individuals consisting of such persons.
(2) Notwithstanding that an authorisation under section 132 has been issued or requisition under section 132A has been made mentioning therein the name of more than one person, the assessment or reassessment shall be made separately in the name of each of the persons mentioned in such authorisation or requisition.]
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1.
No suit shall be brought in any civil court to set aside or modify 1[any 2[***]proceeding taken or order made] under this Act ; and no prosecution, suit or other proceeding shall lie against 3[the Government or] any officer of the Government for anything in good faith done or intended to be done under this Act.
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1. Substituted by Finance Act, 1988, (26 of 1988), Section 51, for "any order made" (w.r.e.f. 1-3-1988).
2. The word "assessment" Omitted by the Finance Act, 1987, (11 of 1987), Section 2 (w.r.e.f. 1-3-1987).
3. Inserted by Finance Act, 1964, (5 of 1964), Section 46 (w.r.e.f. 1-4-1964)
1[293A. Power to make exemption, etc., in relation to participation in the business of prospecting for, extraction, etc., of mineral oils
(1) If the Central Government is satisfied that it is necessary or expedient so to do in the public interest, it may, by notification in the Official Gazette, make an exemption, reduction in rate or other modification in respect of income-tax in favour of any class of persons specified in sub-section (2) or in regard to the whole or any part of the income of such class of persons 2[or in regard to the status in which such class of persons or the members thereof are to be assessed on their income from the business referred to in clause (a) of subsection (2):
Provided that the notification for modification in respect of the status may be given effect from an assessment year beginning on or after the 1st day of April, 1993.]
(2) The persons referred to in sub-section (1) are the following, namely :
(a) persons with whom th
1[293B. Power of Central Government or Board to condone delays in obtaining approval
Where, under any provision of this Act, the approval of the Central Government or the Board is required to be obtained before a specified date, it shall be open to the Central Government or, as the case may be, the Board to condone, for sufficient cause, any delay in obtaining such approval.]
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1. Inserted by the Direct Tax Laws (Amendment) Act, 1987, (4 of 1988), Section 121 (w.e.f. 1-4-1989).
1Where the Central Government or the Board or an income- tax authority, who has been conferred upon the power under any provision of this Act to grant any approval to any assessee, the Central Government or the Board or such authority may, notwithstanding that a provision to withdraw such approval has not been specifically provided for in such provision, withdraw such approval at any time:
Provided that the Central Government or Board or income-tax authority shall, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the assessee concerned, at any time, withdraw the approval after recording the reasons for doing so.
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1. Inserted by the Finance (No. 2) Act, 2009, w.e.f. 1st October, 2009.
Section 293D - Faceless approval or registration
1[293D. Faceless approval or registration
(1) The Central Government may make a scheme, by notification in th
If on the 1st day of April in any assessment year provision has not yet been made by a Central Act for the charging of income-tax 1[***] for that assessment year, this Act shall nevertheless have effect until such provision is so made as if the provision in force in the preceding assessment year or the provision proposed in the Bill then before Parliament, whichever is more favourable to the assessee, were actually in force.
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1. The words "or super tax" Omitted by the Finance Act, 1965 (10 of 1965), Section 63 (w.r.e.f. 1-4-1965).
1[294A. Power to make exemption, etc., in relation to certain Union territories
If the Central Government considers it necessary or expedient so to do for avoiding any hardship or anomaly or removing any difficulty that may arise as a result of the application of this Act to the Union territories of Dadra and Nagar Haveli, Goa*, Daman and Diu, and Pondicherry, or in the case of the Union territory of Pondicherry, for implementing any provision of the Treaty of Cession concluded between France and India on the 28th day of May, 1956, that Government may, by general or special order, make an exemption, reduction in rate or other modification in respect of income-tax or super-tax in favour of any assessee or class of assessees or in regard to the whole or any part of the income of any assessee or class of assessees :
Provided that the power conferred by this section shall not be exercisable after the 31st day of March, 1967, except for the purpose of rescinding an ex
(1) The Board may, subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters :
(a) 1the ascertainment and determination of any class of income ;
(b) the manner in which and the procedure by which the income shall be arrived at in the case of -
(i) 2income derived in part from agriculture and in part from business;
(ii) 3persons residing outside India ;
30[(iia) operations carried out in India by a non-resident;]
31[(iib) transactions or activities of a non-resident;]
32[(iii) an individual who is liable to be assessed under the provisions of sub-section (2) of section 64 ;]
(c) 4the determination of the value of any perquisite chargeable to tax under this Act in such manne
[Rules and certain notifications to be placed before Parlia¬ment
(1) The Board may, subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters :
(a) 1the ascertainment and determination of any class of income ;
(b) the manner in which and the procedure by which the income shall be arrived at in the case of -
(i) 2income derived in part from agriculture and in part from business;
(ii) 3persons residing outside India ;
30[(iia) operations carried out in India by a non-resident;]
31[(iib) transactions or activities of a non-resident;]
32[(iii) an individual who is liable to be assessed under the provisions of sub-section (2) of section 64 ;]
(c) 4the determination of the v
(1) The Indian Income-tax Act, 1922 (11 of 1922), is hereby repealed.
(2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (11 of 1922) (hereinafter referred to as the repealed Act), -
(a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed ;
(b) where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under section 34 of the repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act;
(c) any proceeding pending on the commencement of this Act before any income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference, or revis
(1) If any difficulty arises in giving effect to the provisions of this Act the Central Government may, by general or special order, do anything not inconsistent with such provisions which appears to it to be necessary or expedient for the purposes of removing the difficulty.
(2) In particular, and without prejudice to the generality of the foregoing power, any such order may provide for the adaptations or modifications subject to which the repealed Act shall apply in relation to the assessments for the assessment year ending on the 31st day of March, 1962, or any earlier year.
1[(3) If any difficulty arises in giving effect to the provisions of this Act as amended by the Direct Tax Laws (Amendment) Act, 1987, the Central Government may, by order, do anything not inconsistent with such provisions for the purpose of removing the difficulty :
Provided that no such order shall be made after the expiration of three years from the 1st day of April, 1988.
(4) E
THE FIRST SCHEDULE
INSURANCE BUSINESS
[See section 44]
A.—Life insurance business
1. Profits of life insurance business to be computed separately.
In the case of a person who carries on or at any time in the previous year carried on life insurance business, the profits and gains of such person from that business shall be computed separately from his profits and gains from any other business.
2. Computation of profits of life insurance business.
The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period.
3[Provided that any expenditure whi
THE SECOND SCHEDULE
PROCEDURE FOR RECOVERY OF TAX
1a[See sections 222 and 276]
PART I
GENERAL PROVISIONS
1. Definitions.
In this Schedule, unless the context otherwise requires, -
1b[(a) "certificate", except in rules 7, 44, 65 and sub-rule (2) of rule 66, means the certificate drawn up by the Tax Recovery Officer under section 222 in respect of any assessee referred to in that section ;]
(b) "defaulter" means the assessee mentioned in the certificate ;
(c) "execution", in relation to a certificate, means recovery of arrears in pursuance of the certificate ;
(d) "movable property" includes growing crops ;
(e) "officer" means a person authorised to make an attachment or sale under this Schedule ;
(f) "rule" means a rule contained in this Schedule ; and
(g) "share in a corporation" includes stock, debenture-stock, debentures or bonds.
2. Issue of notice.
When a certificate has been drawn up by the Tax Recovery Off
THE THIRD SCHEDULE
PROCEDURE FOR DISTRAINT BY ASSESSING OFFICER OR TAX RECOVERY OFFICER
[See section 226(5)]
Distraint and sale.
Where any distraint and sale of movable property are to be effected by any 1[Assessing Officer] 2[or Tax Recovery Officer] authorised for the purpose, such distraint and sale shall be made, as far as may be, in the same manner as attachment and sale of any movable property attachable by actual seizure, and the provisions of the Second Schedule relating to attachment and sale shall, so far as may be, apply in respect of such distraint and sale.
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1. Substituted by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), Section 126(28), (w.e.f. 1-4-1989), for the following:-
"Income-tax officer"
2. Inserted by the Direct Tax Laws (Amendment) Act, 1989.
THE FOURTH SCHEDULE
PART A
RECOGNISED PROVIDENT FUNDS1
[See sections 2(38), 10(12), 10(25), 36(1)(iv), *87(1)(d), 111, 192(4)]
1. Application of Part
This Part shall not apply to any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies.
2. Definitions.
In this Part, unless the context otherwise requires, –
(a) “employer” means any person who maintains a provident fund for the benefit of his or its employees, being –
(i) a Hindu undivided family, company, firm or other association of persons, or
(ii ) an individual engaged in a business or profession the profits and gains whereof are assessable to income-tax under the head “Profits and gains of business or profession” ;
(b) “employee” means an employee participating in a provident fund, but does not include a personal or domestic servant ;
(c) “contribution” means any sum credited by or on behalf of any employee out of his salary, or by an employer out
1[THE FIFTH SCHEDULE
2[See section 33(1)(b)(B)(i)]
List of Articles and Things
(1) Iron and steel (metal), ferroalloys and special steels.
(2) Aluminium, copper, lead and zinc (metals).
(3) 3[Coal, lignite, iron ore], bauxite, manganese ore, dolomite, limestone, magnesite and mineral oil.
(4) Industrial machinery specified under the heading “8. Industrial machinery” sub-heading “A. Major items of specialised equipment used in specific industries”, of the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951).
(5) Boilers and steam generating plants, steam engines and turbines and internal combustion engines.
(6) Flame and drip proof motors.
(7) Equipment for the generation and transmission of electricity, including transformers, cables and transmission towers.
(8) Machine tools and precision tools (including their attachments and accessories, cutting tools and small tools), dies and jigs.
(9) Tract
1[THE SEVENTH SCHEDULE
[See section 35E]
PART A
MINERALS
1. Aluminium ores.
2. Appetite and phosphatic ores.
3. Beryl.
4. Chrome ore.
5. Coal and lignite.
6. Columbite, Samarskite and other minerals of the “rare earths” group.
7. Copper.
8. Gold.
9. Gypsum.
10. Iron ore.
11. Lead.
12. Manganese ore.
13. Molybdenum.
14. Nickel ores.
15. Platinum and other precious metals and their ores.
16. Pitchblende and other uranium ores.
17. Precious stones.
18. Retile.
19. Silver.
20. Sulphur and its ores.
21. Tin.
22. Tungsten ores.
23. Uraniferous allanite, monazite and other thorium minerals.
24. Uranium bearing tailings left over from ores after extraction of copper and gold, ilmenite and other titanium ores.
25. Vanadium ores.
26. Zinc.
27. Zircon.
PART B
GROUPS OF ASSOCIATED MINERALS
1. Apatite, Beryl, Cassiterite, Columbite, Emerald, Felspar, Lep
1[THE EIGHTH SCHEDULE
[See section 80-IA(2)(iv)(b)]
LIST OF INDUSTRIALLY BACKWARD STATES AND UNION TERRITORIES
(1) Arunachal Pradesh
(2) Assam
(3) Goa
(4) Himachal Pradesh
(5) Jammu and Kashmir
(6) Manipur
(7) Meghalaya
(8) Mizoram
(9) Nagaland
(10) Sikkim
(11) Tripura
(12) Andaman and Nicobar Islands
(13) Dadra and Nagar Haveli
(14) Daman and Diu
(15) Lakshadweep
(16) Pondicherry]
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1. Inserted by the Finance Act, 1993, (38 of 1993), Section 37 (w.e.f. 1-4-1994). Earlier The Eighth Schedule was inserted Direct Tax law (Amendment) Act, 1974 (26 of 1974), Section 15 (w.e.r.f. 1-4-1976) and was omitted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 (46 of 1986), Section 30 (w.r.e.f 1-4-1984).
1[***]
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1. Omitted by the Taxation Laws (Amendment And Miscellaneous Provisions) Act, 1986, (46 of 1986) Section 31 (w.e.f. 1-4-1988). Earlier the Ninth Schedule was inserted by the Direct Tax Law (Amendment) Act, 1974 (26 of 1974), Section 16 (w.e.f. 1-4-1975) and was amendment by the Finance Act, 1975 (25 of 1975), Section 22 (w.e.f. 1-4-1976), by the Finance Act, 1976 (66 of 1976), Section 26(e) (w.e.f. 1-6-1976), by the Finance (No. 2) Act, 1977 (29 of 1977), Section 29 (w.e.f. 1-4-1978), by the Finance Act, 1981 (16 of 1981), Section 23 (w.e.f. 1-4-1982) and by the Finance Act, 1984 (21 of 1984), Section 33(b) (w.e.f. 1-4-1985) , the previous text was:-
"THE NINTH SCHEDULE
INCOME-TAX ACT
THE NINTH SCHEDULE
[See section 32(1)(vi)]
List of articles or things
1. Iron and steel (metal).
2. Non-ferrous metals.
3. Ferro-alloys and special steels.
4. Steel castings a
1[***]
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1. Omitted by the Finance Act, 1999, (27 of 1999), Section 89 (w.e.f. 1-4-2000). Earlier The Tenth Schedule was inserted by the Direct tax Laws (Amendment) Act, 1987 (4 of 1988); Section 25 (w.e.f. 1-4-1989) and was amended by the direct Tax Law (Amendment) Act, 1989 (3 of 1989), Section 56 (w.e.f. 1-4-1989). The Omission by the Finance Act, 1999, stood as under:
‘THE TENTH SCHEDULE
[See section 3(5)]
Modifications subject to which the provisions of this Act shall apply in cases where the previous year in relation to the assessment year commencing on the 1st April, 1989, referred to in section 3(2), exceeds twelve months
1. Definitions.
In this Schedule, “transitional previous year” means the period reckoned as the previous year for the assessment year commencing on the 1st day of April, 1989, in the manner specified in sub-section (2) of section 3 and, in a case where the first p
1[THE ELEVENTH SCHEDULE]
[See section 32A, 2[section 32AB], 3[section 80CC(3)(a) (i), section 80-I(2)], 4[section 80J(4) and section 80A(3)(a) (i)]
LIST OF ARTICLES OR THINGS
1. Bear, wine and other alcoholic spirits.
2. Tobacco, and tobacco preparations, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff.
3. Cosmetics and toilet preparations.
4. Tooth paste, dental cream, tooth powder and soap.
5. Aerated waters in the manufacture of which blended flavouring concentrates in any form are used.
5[Explanation : “Blended flavouring concentrates” shall include, and shall be deemed always to have included, synthetic essences in any form.]
6. Confectionery and chocolates.
7. Gramophones, including record-players and gramophone records.
6[***]
7[9. Projectors]
10. Photographic apparatus and goods.
8[***]
22. Office machines and apparatus such as typewri
1[THE TWELFTH SCHEDULE]
[See section 80HHC(2)(b)(ii)]
PROCESSED MINERALS AND ORES
(i) Pulverised or micronised – barytes, calcite, steatite, pyrophylite, wollastonite, zircon, bentonite, red or yellow oxide, red or yellow ochre, talc, quartz, feldspar, silica powder, garnet, silliminite fireclay, ballclay, manganese dioxide ore.
(ii) Processed or activated – bentonite, diatomious earth, fuller’s earth.
(iii) Processed – kaolin (china clay), whiting, calcium carbonate.
(iv) Beneficated – chromite, flourspar, graphite, vermiculite, ilminite, brown ilminite (lencoxene) rutile, monazite and other mineral concentrates.
(v) Mica blocks, mica splittings, mica condenser films, mica powder, micanite, silvered mica, punched mica, mica paper, mica tapes, mica flakes.
(vi) Exfoliated – vermiculite, calcined kyanite, magnesite, calcined magnesite, calcined alumina.
(vii) Sized iron ore processed by mechanical screening or crushing and screening thr
1[THE THIRTEENTH SCHEDULE
2[See sections 80-IB(4) and 80-IC(2)]
LIST OF ARTICLES OR THINGS
PART A
For the State of Sikkim
S. No. Article or thing
1. Tobacco and tobacco products (including cigarettes, cigars and gutka, etc.)
2. Aerated branded beverages
3. Pollution-causing paper and paper products
PART B
FOR THE STATE OF HIMACHAL PRADESH AND THE STATE OF UTTARANCHAL
S. No. Activity or article or thing Excise classification Sub-class under national Industrial Classification (NIC)1998
1. Tobacco and tobacco products including cigarettes and pan masala 24.01 to 24.04 and 21.06 1600
2. Thermal Power Plant (coal/oil based) 40102 or 40103
3. Coal washeries/dry coal processing
4. Inorganic Chemicals excluding medicinal grade oxygen (2804.11), medicinal grade hydrogen peroxide (2847.11), compressed air (2851.30) Chapter 28
5. Organic chemicals excl
1[THE FOURTEENTH SCHEDULE
[See section 80-IC(2)] LIST OF ARTICLES OR THINGS OR OPERATIONS
PART A
For the North-Eastern States
(1) Fruit and Vegetable Processing industries manufacturing or producing –
(i) Canned or bottled products;
(ii) Aseptic packaged products;
(iii) Frozen products;
(iv) De-hydrated products;
(v) Oleoresins.
(2) Meat and Poultry Product industries manufacturing or producing –
(i) Meat Products (buffalo, sheep, goat and pork);
(ii) Poultry production;
(iii) Egg Powder Plant.
(3) Cereal Based Product industries manufacturing or producing –
(i) Maize Milling including starch and its derivatives;
(ii) Bread, Biscuits, Breakfast Cereal.
(4) Food and Beverage industries manufacturing or producing –
(i) Snacks;
(ii) Non-alcoholic beverages;
(iii) Confectionery including chocolate;
(iv) Pasta products;
(v) Processed spices, etc.;
(vi) Processed pulses;
(vii) Tapio
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