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Section 10 – Income Tax Act, 1961

Income Tax Act, 1961

 

Section 10 . INCOMES NOT INCLUDED IN TOTAL INCOME.

 

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) 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 impartible estate, where such sum has been paid out of the income of the estate belonging to the family;

 

(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 accordance with the partnership deed bears to such profits;

 

(3) 145 any receipts which are of a casual and non-recurring nature, to the extent such receipts do not exceed five thousand rupees in the aggregate : 

Provided that where such receipts relate to winnings from races including horse races, the provisions of this clause shall have effect as if for the words “five thousand rupees”, the words “two thousand five hundred rupees” had been substituted :

 

Provided further that this clause shall not apply to – (i) Capital gains chargeable under the provisions of section 45; or

 

(ii) Receipts arising from business or the exercise of a profession or occupation; or

 

(iii) Receipts by way of addition to the remuneration of an employee;

(4)(i) In the case of a non-resident, any income by way of interest on such securities or bonds as the Central Government may, by notification in the Official Gazette, specify 148 in this behalf, including income by way of premium on the redemption of such bonds; 

 

(ii) In the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the rules made thereunder : 

 

Provided that such individual is a person resident outside India as defined in clause 149a (q) of section 2 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account;

(4B) In the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income from interest on such savings certificates issued by the Central Government as that Government may, by notification in the Official Gazette, 151 specify in this behalf :

 

Provided that the individual has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder.

 

Explanation : For the purposes of this clause, – (a) A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India;

 

(b) “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 the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder;

 

(5) In the case of an individual, the value of any travel concession or assistance received by, or due to, him, – (a) From his employer for himself and his family, in connection with his proceeding on leave to any place in India;

 

(b) From his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, subject to such conditions as may be prescribed 153 (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :

 

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

 

Explanation : For the purposes of this clause, “family”, in relation to an individual, means – (i) The spouse and children of the individual; and 

 

(ii) The parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;

 

(5B) In the case of an individual who renders services as a technician in the employment (commencing from a date after the 31st day of March, 1993) of the Government or of a local authority or of any corporation set up under any special law or of any such institution or body established in India for carrying on scientific research as is approved for the purposes of this clause by the prescribed authority or in any business carried on in India and the individual was not resident in India in any of the four financial years immediately preceding the financial year in which he arrived in India and the tax on his income for such services chargeable under the head “Salaries” is paid to the Central Government by the employer (which tax, in the case of an employer, being a company, may be paid notwithstanding anything contained in section 200 of the Companies Act, 1956) (1 of 1956), the tax so paid by the employer for a period not exceeding forty-eight months commencing from the date of his arrival in India :

 

Provided that the Central Government may, if it considers it necessary or expedient in the public interest so to do, waive the condition relating to non-residence in India as specified in this clause in the case of any individual who is employed in India for designing, erection or commissioning of machinery or plant or supervising activities connected with such designing, erection or commissioning.

 

Explanation : For the purposes of this clause, “technician” means a person having specialised knowledge and experience in – (i) Constructional or manufacturing operations, or in mining or in the generation of electricity or any other form of power, or

 

(ii) Agriculture, animal husbandry, dairy farming, deep sea fishing or ship building, or

 

(iii) Such other field as the Central Government may, having regard to availability of Indians having specialised knowledge and experience therein, the needs of the country and other relevant circumstances, by notification in the Official Gazette, specify, who is employed in India in a capacity in which such specialised knowledge and experience are actually utilised;

 

(6) In the case of an individual who is not a citizen of India, – (i) Subject to such conditions 156 as the Central Government may prescribe, passage moneys or the value of any free or concessional passage received by or due to such individual – (a) From his employer, for himself, his spouse and children, in connection with his proceeding on home leave out of India;

 

(b) From his employer or former employer for himself, his spouse and children, in connection with his proceeding to his home country out of India after retirement from service in India or after the termination of such service;

 

(ii) The remuneration received by him as an official, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State, or as a member of the staff of any of these officials, for service in such capacity : 

 

Provided that the remuneration received by him as a trade commissioner or other official representative in India of the Government of a foreign State (not holding office as such in an honorary capacity), or as a member of the staff of any of those officials, shall be exempt only if the remuneration of the corresponding officials or, as the case may be, members of the staff, if any, of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country :

 

Provided further that such members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff;

 

(vi) The remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled – (a) The foreign enterprise is not engaged in any trade or business in India;

 

(b) His stay in India does not exceed in the aggregate a period of ninety days in such previous year; and

 

(c) Such remuneration is not liable to be deducted from the income of the employer chargeable under this Act;

 

(viii) Any income chargeable under the head “Salaries” received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year;

 

(xi) The remuneration received by him as an employee of the Government of a foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by, – (i) The Government; or

 

(ii) Any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments; or

 

(iii) Any company which is a subsidiary of a company referred to in item (ii); or

 

(iv) Any corporation established by or under a Central, State or Provincial Act; or

 

(v) Any society registered under the Societies Registration Act, 1860 (14 of 1860), or under any other corresponding law for the time being in force and wholly financed by the Central Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments; 

 

(6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 and, –

 

(a) Where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy; and

 

(b) In any other case, the agreement is approved by the Central Government, the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid;

 

Explanation : For the purposes of this clause and clause (6B), – (a) “Fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

 

(b) “Foreign company” shall have the same meaning as in section 80B;

 

(c) “Royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;

 

(6B) Where in the case of a non-resident (not being a company) or of a foreign company deriving income (not being salary, royalty or fees for technical services) from Government or an Indian concern in pursuance of an agreement entered into by the Central Government with the Government of a foreign State or an international organisation, the tax on such income is payable by Government or the Indian concern to the Central Government under the terms of that agreement or any other related agreement approved by the Central Government, the tax so paid;

(6BB) Where in the case of the Government of a foreign State or a foreign enterprise deriving income from an Indian company engaged in the business of operation of aircraft, as a consideration of acquiring an aircraft or an aircraft engine (other than payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease under an agreement entered into “after the 31st day of March, 1997 but before the 1st day of April, 1999 and approved by the Central Government in this behalf and the tax on such income is payable by such Indian company under the terms of that agreement to the Central Government, the tax so paid. 

 

Explanation : For the purposes of this clause, the expression “foreign enterprise” means a person who is a non-resident.;

 

(6C) Any income arising to such foreign company, as the Central Government may, by notification in the Official Gazette, specify in this behalf, by way of fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India;

 

(7) Any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India;

 

(8) In the case of an individual who is assigned to duties in India in connection with any co-operative technical assistance programmes and projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause) – (a) The remuneration received by him directly or indirectly from the Government of that foreign State for such duties, and

 

(b) Any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State;

 

(8A) In the case of a consultant – (a) Any remuneration or fee received by him or it, directly or indirectly, out of the funds made available to an international organisation [hereafter referred to in this clause and clause (8B) as the agency] under a technical assistance grant agreement between the agency and the Government of a foreign State; and

 

(b) Any other income which accrues or arises to him or it outside India, and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay any income or social security tax to the Government of the country of his or its origin.

 

Explanation : In this clause, “consultant” means – (i) Any individual, who is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India; or

 

(ii) Any other person, being a non-resident, engaged by the agency for rendering technical services in India in connection with any technical assistance programme or project, provided the following conditions are fulfilled, namely :- (1) The technical assistance is in accordance with an agreement entered into by the Central Government and the agency; and

 

(2) The agreement relating to the engagement of the consultant is approved by the prescribed authority for the purposes of this clause;

(8B) In the case of an individual who is assigned to duties in India in connection with any technical assistance programme and project in accordance with an agreement entered into by the Central Government and the agency – (a) The remuneration received by him, directly or indirectly, for such duties from any consultant referred to in clause (8A); and

(b) Any other income of such individual which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the country of his origin, provided the following conditions are fulfilled, namely :-

(i) The individual is an employee of the consultant referred to in clause (8A) and is either not a citizen of India or, being a citizen of India, is not ordinarily resident in India; and

 

(ii) The contract of service of such individual is approved by the prescribed authority before the commencement of his service;

 

(9) The income of any member of the family of any such individual as is referred to in clause (8) or clause (8A) or, as the case may be, clause (8B) accompanying him to India, which accrues or arises outside India, and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State or, as the case may be, country of origin of such member;

 

(10)(i) Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services;

 

(ii) Any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of that Act 185 ;

 

(iii) Any other gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month’s salary for each year of completed service, calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit 188 as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government:

 

Provided that where any gratuities referred to in this clause are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this clause shall not exceed the limit so specified:

 

Provided further that where any such gratuity or gratuities was or were received in any one or more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities was not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this clause shall not exceed the limit so specified as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years : 

 

Explanation : In this clause, and in clause (10AA), “salary” shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule; 

 

(10A)(i) Any payment in commutation 193 of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority 194 ] or a corporation established by a Central, State or Provincial Act;

 

(ii) Any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed – (a) In a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

 

(b) In any other case, the commuted value of one-half of such pension, such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality : 

 

(iii) Any payment in commutation of pension received from a fund under clause (23AAB);

 

(10AA)(i) Any payment received by an employee of the Central Government or a State Government, as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise;

 

(ii) Any payment of the nature referred to in sub-clause (i) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise as does not exceed ten months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement whether on superannuation or otherwise, subject to such limit 200 as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government :

 

Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause shall not exceed the limit so specified:

 

Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause shall not exceed the limit so specified, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years :

 

Explanation : For the purposes of sub-clause (ii), – The entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired;

 

(10B) Any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, at the time of his retrenchment :

Provided that the amount exempt under this clause shall not exceed – (i) An amount calculated in accordance with the provisions of 206 clause (b) of section 25F of the Industrial Disputes Act, 1947 (14 of 1947); or

 

(ii) Such amount, not being less than fifty thousand rupees, as the Central Government may, by notification in the Official Gazette, specify in this behalf, 

 

whichever is less : Provided further that the preceding proviso shall not apply in respect of any compensation received by a workman in accordance with any scheme which the Central Government may, having regard to the need for extending special protection to the workmen in the undertaking to which such scheme applies and other relevant circumstances, approve in this behalf.

 

Explanation : For the purposes of this clause – (a) Compensation received by a workman at the time of the closing down of the undertaking in which he is employed shall be deemed to be compensation received at the time of his retrenchment;

 

(b) Compensation received by a workman, at the time of the transfer (whether by agreement or by operation of law) of the ownership or management of the undertaking in which he is employed from the employer in relation to that undertaking to a new employer, shall be deemed to be compensation received at the time of his retrenchment if – (i) The service of the workman has been interrupted by such transfer; or

 

(ii) The terms and conditions of service applicable to the workman after such transfer are in any way less favourable to the workman than those applicable to him immediately before the transfer; or

 

(iii) The new employer is, under the terms of such transfer or otherwise, legally not liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer;

 

(c) The expressions “employer” 208 and “workman” 208 shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947);

 

(10BB) Any payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (21 of 1985), and any scheme framed thereunder except payment made to any assessee in connection with the Bhopal Gas Leak Disaster to the extent such assessee has been allowed a deduction under this Act on account of any loss or damage caused to him by such disaster;

 

(10C) Any amount received by an employee of – (i) A public sector company; or

 

(ii) Any other company; or

 

(iii) An authority established under a Central, State or Provincial Act; or

 

(iv) A local authority; or

 

(v) A co-operative society; or

 

(vi) A University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or

(vii) An Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961); or

 

(viii) Such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf, at the time of his voluntary retirement in accordance with any scheme or schemes of voluntary retirement, to the extent such amount does not exceed five lakh rupees :

 

Provided that the schemes of the said companies or authorities, or societies or Universities or the Institutes referred to in sub-clauses (vii) and (viii) as the case may be, governing the payment of such amount are framed in accordance with such guidelines (including, inter alia, criteria of economic viability) as may be prescribed and such schemes in relation to companies referred to in sub-clause (ii) or co-operative societies referred to in sub-clause (v) are approved by the Chief Commissioner or, as the case may be, Director-General in this behalf :

 

Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year;

 

(10D) Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy other than any sum received under sub-section (3) of section 80DDA or under a Keyman insurance policy. 

 

Explanation : For the purposes of this clause, “Keyman insurance policy” means a life insurance policy taken by a person on the life of another person who is or was the employee of the first mentioned person or is or was connected in any manner whatsoever with the business of the first mentioned person; 

 

(11) Any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies or from any other provident fund set up by the Central Government and notified 211 by it in this behalf in the Official Gazette;

(12) the accumulated balance due and becoming payable to an employee participating in a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule;

 

(13) Any payment from an approved superannuation fund made – (i) On the death of a beneficiary; or

 

(ii) To an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement; or

 

(iii) By way of refund of contributions on the death of a beneficiary; or

(iv) By way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon;

 

(13A) 213 any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations;

 

Explanation : For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where – (a) The residential accommodation occupied by the assessee is owned by him; or

 

(b) The assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him;

 

(14)(i) Any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed, to the extent to which such expenses are actually incurred for that purpose;

 

(ii) Any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, as may be prescribed and to the extent as may be prescribed.

 

Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence; 

 

(14A) Any income received by a public financial institution as exchange risk premium from any person borrowing foreign currency from such institution, provided the amount of such premium is credited by such institution to a fund specified under clause (23E). 

 

Explanation : For the purposes of this clause, – (i) The expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

 

(ii) The expression “exchange risk premium” means a premium paid by a person borrowing foreign currency from a public financial institution to cover the risk which may be borne by such institution on account of fluctuations in exchange rate of foreign currencies borrowed by such institution;

 

(15)(i) Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification 221 in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification;

 

(iib) In the case of an individual or a Hindu undivided family, interest on such Capital Investment Bonds as the Central Government may, by notification in the Official Gazette, specify 224 in this behalf;

 

(iic) In the case of an individual or a Hindu undivided family, interest on such Relief Bonds as the Central Government may, by notification in the Official Gazette, specify 226 in this behalf;

 

(iid) Interest on such bonds, as the Central Government may, by notification in the Official Gazette, specify, 228 arising to – (a) A non-resident Indian, being an individual owning the bonds; or

 

(b) Any individual owning the bonds by virtue of being a nominee or survivor of the non-resident Indian; or

 

(c) Any individual to whom the bonds have been gifted by the non-resident Indian :

 

Provided that the aforesaid bonds are purchased by a non-resident Indian in foreign exchange and the interest and principal received in respect of such bonds, whether on their maturity or otherwise, is not allowable to be taken out of India :

 

Provided further that where an individual, who is a non-resident Indian in any previous year in which the bonds are acquired, becomes a resident in India in any subsequent year, the provisions of this sub-clause shall continue to apply in relation to such individual : 

 

Provided also that in a case where the bonds are encashed in a previous year prior to their maturity by an individual who is so entitled, the provisions of this sub-clause shall not apply to such individual in relation to the assessment year relevant to such previous year.

 

Explanation : For the purposes of this sub-clause, theexpression “non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C; 

 

(iii) Interest on securities held by the Issue Department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949;

 

(iiia) Interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country on any deposits made by it, with the approval of the Reserve Bank of India, with any scheduled bank.

 

Explanation : For the purposes of this sub-clause, “scheduled bank” shall have the meaning assigned to it in 230 clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36;

 

(iv) Interest payable – (a) By Government or a local authority on moneys borrowed by it from, or debts owed by it to, sources outside India;

 

(b) By an industrial undertaking in India on moneys borrowed by it under a loan agreement entered into with any such financial institution in a foreign country as may be approved 232 in this behalf by the Central Government by general or special order;

 

(ba) The business of providing telecommunication services; or;

 

(c) By an industrial undertaking in India on any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India of raw materials or components or capital plant and machinery, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved 235 by the Central Government in this behalf, having regard to the terms of the loan or debt and its repayment.

 

Explanation – : For the purposes of this item, “purchase of capital plant and machinery” includes the purchase of such capital plant and machinery under a hire-purchase agreement or a lease agreement with an option to purchase such plant and machinery;

 

(d) By the Industrial Finance Corporation of India established by the Industrial Finance Corporation Act, 1948 (15 of 1948) or the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964), or the Export-Import Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981) or the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987), or the Small Industries Development Bank of India established under section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989), or the Industrial Credit and Investment Corporation of India [a company formed and registered under the Indian Companies Act, 1913 (7 of 1913)], on any moneys borrowed by it from sources outside India, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;

 

(e) By any other financial institution established in India or 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), on any moneys borrowed by it from sources outside India under a loan agreement approved by the Central Government where the moneys are borrowed either for the purpose of advancing loans to industrial undertakings in India for purchase outside India of raw materials or capital plant and machinery or for the purpose of importing any goods which the Central Government may consider necessary to import in the public interest to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;

 

(f) By an industrial undertaking in India on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government having regard to the need for industrial development in India, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment;

 

(fa) By a scheduled bank, to a non-resident or to a person who is not ordinarily resident within the meaning of sub-section (6) 239c of section 6, on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the Reserve Bank of India.

 

Explanation : For the purposes of this item, the expression “scheduled bank” shall have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36;

 

(g) By a public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential purposes, being a company approved by the Central Government for the purposes of clause (viii) of sub-section (1) of section 36, on any moneys borrowed by it in foreign currency from sources outside India under a loan agreement approved by the Central Government, to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment.

 

Explanation : For the purposes of items (f), (fa) and (g), the expression “foreign currency” 242 shall have the meaning assigned to it in the Foreign Exchange Regulation Act, 1973 (46 of 1973); 

 

(h) By any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification in the Official Gazette, specify 244 in this behalf; 

 

(i) By Government on deposits made by an employee of the Central Government or a State Government or a public sector company, in accordance with such scheme 247 as the Central Government may, by notification in the Official Gazette, frame in this behalf, out of the moneys due to him on account of his retirement, whether on superannuation or otherwise;

 

Explanation : For the purposes of this sub-clause, the expression “industrial undertaking” means any undertaking which is engaged in – (a) The manufacture or processing of goods; or

 

(aa) The manufacture of computer software or recording of programme on any disc, tape, perforated media or other information device; or

 

(b) The business of generation or distribution of electricity or any other form of power; or

 

(ba) The business of providing telecommunication services; or

 

(c) Mining; or

 

(d) The construction of ships; or

 

(e) The operation of ships or aircrafts or construction or operation of rail systems;

 

Explanation 2 : For the purposes of this clause, the expression “interest” includes hedging transaction charges on account of currency fluctuation.

(v) Interest on – (a) Securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in the Reserve Bank’s SGL Account No. SL/DH048;

(b) Deposits for the benefit of the victims of the Bhopal gas leak disaster held in such account, with the Reserve Bank of India or with a public sector bank, as the Central Government may, by notification in the Official Gazette, specify, whether prospectively or retrospectively but in no case earlier than the 1st day of April, 1994 in this behalf.

 

Explanation : For the purposes of this sub-clause, the expression “public sector bank” shall have the meaning assigned to it in the Explanation to clause (23D); 

 

(vi) Interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government;

 

(15A) Any payment made, by an Indian company engaged in the business of operation of aircraft, to acquire an aircraft or an aircraft engine (other than a payment for providing spares, facilities or services in connection with the operation of leased aircraft) on lease from the Government of a foreign State or a foreign enterprise under an agreement entered into between the 1st day of April, 1997 and approved by the Central Government in this behalf.

 

Explanation : For the purposes of this clause, the expression “foreign enterprise” means a person who is a non-resident;

 

(16) Scholarships granted to meet the cost of education; 

 

(17) Any income by way of – (i) Daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof;

 

(ii) Any allowance received by any person by reason of his membership of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986;

 

(iii) All other allowances not exceeding two thousand rupees per month in the aggregate received by any person by reason of his membership of any State Legislature or of any Committee thereof, which the Central Government may, by notification 253 in the Official Gazette, specify in this behalf;

 

(17A) Any payment made, whether in cash or in kind, – (i) In pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body and approved by the Central Government in this behalf; or 

 

(ii) As a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;

 

(18) Any income by way of – (i) Pension received by an individual who has been in the service of the Central or State Government and has been awarded “Param Vir Chakra” or “Maha Vir Chakra” or “Vir Chakra” or such other gallantry award as the Central Government may, by notification in the Official Gazette, specify in this behalf;

 

(ii) Family pension received by any member of the family of an individual referred to in sub-clause (i).

 

Explanation. – For the purposes of this clause, the expression “family” shall have the meaning assigned to it in the Explanation to clause (5).’

 

(19A) The annual value of any one palace in the occupation of a Ruler, being a palace, the annual value whereof was exempt from income-tax before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the provisions of the Merged States (Taxation Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958 :

 

Provided that for the assessment year commencing on the 1st day of April, 1972, the annual value of every such palace in the occupation of such Ruler during the relevant previous year shall be exempt from income-tax;

 

(20) The income of a local authority which is chargeable under the head, “Income from house property”, “Capital gains”, or “Income from other sources” or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area;

 

(20A) Any income of an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both;

 

(21) Any income of a scientific research association for the time being approved 262 for the purpose of clause (ii) of sub-section (1) of section 35 :

Provided that the scientific research association – (a) Applies 262a its income, or accumulates it for application, wholly and exclusively to the objects for which it is established, and the provisions of sub-section (2) and sub-section (3) of section 11 shall apply in relation to such accumulation subject to the following modifications, namely :- (i) In sub-section (2), – (1) The words, brackets, letters, and figure “referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section” shall be omitted; 

 

(2) For the words “to charitable or religious purposes”, the words “for the purposes of scientific research” shall be substituted;

 

(3) The reference to “Assessing Officer” in clause (a) thereof shall be construed as a reference to the “prescribed authority” referred to in clause (ii) of sub-section (1) of section 35;

 

(ii) In sub-section (3), in clause (a), for the words “charitable or religious purposes”, the words “the purposes of scientific research” shall be substituted; and (b) does not invest or deposit its funds, other than – (i) Any assets held by the scientific research association where such assets form part of the corpus of the fund of the association as on the 1st day of June, 1973;

 

(ii) Any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the scientific research association before the 1st day of March, 1983;

 

(iii) Any accretion to the shares, forming part of the corpus of the fund mentioned in sub-clause (i), by way of bonus shares allotted to the scientific research association;

 

(iv) Voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify, for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 : 

 

Provided further that the exemption under this clause shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the first proviso to this clause, subject to the condition that such voluntary contribution is not held by the scientific research association, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later :

 

Provided also that nothing contained in this clause shall apply in relation to any income of the scientific research association, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of accounts are maintained by it in respect of such business; 

 

(22B) Any income of such news agency set up in India solely for collection and distribution of news as the Central Government may, by notification in the Official Gazette, specify in this behalf :

 

Provided that the news agency applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner to its members :

 

Provided further that any notification issued by the Central Government under this clause shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification; 

 

(23) Any income of an association or institution established in India which may be notified by the Central Government in the Official Gazette having regard to the fact that the association or institution has as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such other games or sports as the Central Government may, by notification in the Official Gazette, specify in this behalf :

 

Provided that the association or institution shall make an application in the prescribed form and manner 266 to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under this clause : 

Provided further that the Central Government may, before notifying the association or institution under this clause call for such documents (including audited annual accounts) or information from the association or institution as it thinks necessary in order to satisfy itself about the genuineness of the activities of the association or institution and that Government may also make such inquiries as it may deem necessary in this behalf :

 

Provided also that the association or institution, – (a) Applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established and the provisions of sub-section (2) and sub-section (3) of section 11 shall apply in relation to such accumulation subject to the following modifications, namely :- (i) In sub-section (2), – (1) The words, brackets, letters and figure “referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section” shall be omitted;

 

(2) For the words “to charitable or religious purposes”, the words “for the purposes of games or sports” shall be substituted;

 

(3) The reference to “Assessing Officer” in clause (a) thereof shall be construed as a reference to the “prescribed authority” referred to in the first proviso to this clause; (ii) in sub-section (3), in clause (a), for the words “charitable or religious purposes”, the words “the purposes of games or sports” shall be substituted; and 

 

(b) Does not invest or deposit its funds, other than – (i) Any assets held by the association or institution where such assets form part of the corpus of the fund of the association or institution as on the 1st day of June, 1973;

(ii) Any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the association or institution before the 1st day of March, 1983;

 

(iii) Any accretion to the shares, forming part of the corpus of the fund mentioned in sub-clause (i), by way of bonus shares allotted to the association or institution;

 

(iv) Voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify, for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; and 

 

(c) Does not distribute any part of its income in any manner to its members except as grants to any association or institution affiliated to it :

Provided also that the exemption under this clause shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after [ 267a the 30th day of March, 1993:

 

Provided also that the exemption under this clause shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third proviso to this clause, subject to the condition that such voluntary contribution is not held by the association or institution, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later :

 

Provided also that nothing contained in this clause shall apply in relation to any income of the association or institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of accounts are maintained by it in respect of such business :

 

Provided also that any notification issued by the Central Government under this clause in relation to any association or institution shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification;

 

(23A) Any income (other than income chargeable under the head “Income from house property” or any income received for rendering any specific services or income by way of interest or derived dividends from its investments) of an association or institution established in India having as its object the control, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or such other profession as the Central Government may specify 271 in this behalf, from time to time, by notification in the Official Gazette :

 

Provided that – (i) The association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and

 

(ii) The association or institution is for the time being approved 272 for the purpose of this clause by the Central Government by general or special order;

 

(23AA) Any income received by any person on behalf of any Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants;

 

(23AAA) Any income received by any person on behalf of a fund established, for such purposes as may be notified by the Board in the Official Gazette, for the welfare of employees or their dependants and of which fund such employees are members if such fund fulfils the following conditions, namely :-

 

(a) The fund – (i) Applies its income, or accumulates it for application, wholly and exclusively to the objects for which it is established; and

 

(ii) Invests its funds and contributions and other sums received by it in the forms or modes specified in sub-section (5) of section 11;

 

(b) The fund is approved by the Commissioner in accordance with the rules made in this behalf :

 

Provided that any such approval shall at any one time have effect for such assessment year or years not exceeding three assessment years as may be specified in the order of approval; 

 

(23AAB) Any income of a fund, by whatever name called, set up by the Life Insurance Corporation of India on or after the 1st day of August, 1996 under a pension scheme, – (i) To which contribution is made by any person for the purpose of receiving pension from such fund;

 

(ii) Which is approved by the Controller of Insurance. 

Explanation : For the purposes of this clause, the expression “Controller of Insurance” shall have the meaning assigned to it in clause (5B) of section 2 of the Insurance Act, 1938 (4 of 1938);

 

(23B) Any income of an institution constituted as a public charitable trust or 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, and existing solely for the development of khadi or village industries or both, and not for the purposes of profit, to the extent such income is attributable to the business of production, sale, or marketing, of khadi or products of village industries :

 

Provided that – (i) The institution applies its income, or accumulates it for application, solely for the development of khadi or village industries or both; and

 

(ii) The institution is, for the time being, approved for the purpose of this clause by the Khadi and Village Industries Commission :

 

Provided further that the Commission shall not, at any one time, grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted.

 

Explanation : For the purposes of this clause, – (i) “Khadi and Village Industries Commission” means the Khadi and Village Industries Commission established under the Khadi and Village Industries Commission Act, 1956 (61 of 1956);

 

(ii) “Khadi” and “village industries” have the meanings respectively assigned to them in that Act;

 

(23BB) Any income of an authority (whether known as the Khadi and Village Industries Board or by any other name) established in a State by or under a State or Provincial Act for the development of khadi or village industries in the State.

 

Explanation : For the purposes of this clause, “khadi” and “village industries” have the meanings respectively assigned to them in the Khadi and Village Industries Commission Act, 1956 (61 of 1956);

 

(23BBA) Any income of any body or authority (whether or not a body corporate or corporation sole) established, constituted or appointed by or under any Central, State or Provincial Act which provides for the administration of any one or more of the following, that is to say, public religious or charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or other places of public religious worship) or societies for religious or charitable purposes registered as such under the Societies Registration Act, 1860 (21 of 1860), or any other law for the time being in force :

 

Provided that nothing in this clause shall be construed to exempt from tax the income of any trust, endowment or society referred to therein;

 

(23BBB) Any income of the European Economic Community derived in India by way of interest, dividends or capital gains from investments made out of its funds under such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf. 

 

Explanation : For the purposes of this clause, “European Economic Community” means the European Economic Community established by the Treaty of Rome of 25th March, 1957;

 

(23BBC) Any income of the SAARC Fund for Regional Projects set up by Colombo Declaration issued on the 21st day of December, 1991 by the Heads of State or Government of the Member Countries of South Asian Association for Regional Cooperation established on the 8th day of December, 1985 by the Charter of the South Asian Association for Regional Cooperation;

 

(23C) Any income received by any person on behalf of – (i) The Prime Minister’s National Relief Fund; or

 

(ii) The Prime Minister’s Fund (Promotion of Folk Art); or

 

(iii) The Prime Minister’s Aid to Students Fund; or

 

(iiia) The National Foundation for Communal Harmony; or

 

(iiiab) Any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or

 

(iiiac) Any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit and which is wholly or substantially financed by the Government; or

 

(iiiad) Any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; or 

 

(iiiae) Any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed; or 

 

(iv) Any other fund or institution established for charitable purposes which may be notified by the Central Government in the Official Gazette, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or

 

(v) Any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be notified by the Central Government in the Official Gazette, having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof;

 

(vi) Any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority; or 

 

(via) Any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiac) or sub-clause (iiiae) and which may be approved by the prescribed authority :

 

Provided that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall make an application in the prescribed form and manner 278 to the prescribed authority for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) 

 

Provided further that the Central Government, before notifying the fund or trust or institution or the prescribed authority, before approving any university or other educational institution or any hospital or other medical institution 277c ] under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) 277c ], may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and that Central Government or the prescribed authority, as the case may also make such inquiries as it may deem necessary in this behalf :

 

Provided also that the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) – or sub-clause (vi) or sub-clause (via) – (a) Applies its income, or accumulates it for application 278a , wholly and exclusively to the objects for which it is established; and

 

(b) Does not invest or deposit its funds, other than – (i) Any assets held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution. where such assets form part of the corpus of the fund, trust of institution or any university or other educational institution or any hospital or other medical institution. as on the 1st day of June, 1973;

 

(ii) Any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution. before the 1st day of March, 1983;

 

(iii) Any accretion to the shares, forming part of the corpus fund, trust mentioned in sub-clause (i), by way of bonus shares allotted to the association or institution or any university or other educational institution or any hospital or other medical institution;

 

(iv) Voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify, for any period during the previous year otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11:

 

Provided also that the exemption under sub-clause (iv) or sub-clause (v) shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 1993:

Provided also that the exemption under sub-clause (vi) or sub-clause (via) shall not be denied in relation to any funds invested or deposited before the 1st day of June, 1998, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 2001 :

 

Provided also that the exemption under sub-clause (iv) or sub-clause (v) [ 279ba (or sub-clause (vi) or sub-clause (via) shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third proviso to this sub-clause, subject to the condition that such voluntary contribution is not held by the trust or institution, or any university or other educational institution or any hospital or other medical institution. otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later :

 

Provided also that nothing contained in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall apply in relation to any income of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of accounts are maintained by it in respect of such business :

 

Provided also that any notification issued by the Central Government under clause (vi) or clause (via) shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification;

 

(23D) Any income of – (i) A Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder;

 

(ii) Such other Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf.

 

Explanation : For the purposes of this clause, – (a) The expression “public sector bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);

 

(b) The expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

 

(c) The expression “Securities and Exchange Board of India” shall have the meaning assigned to it in clause (a) of sub-section (1) of section 2 of the Securities and Exchange Board of India Act, 1992. (15 of 1992);

 

(23E) Any income of such Exchange Risk Administration Fund set up by public financial institutions, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf :

 

Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a public financial institution, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax.

 

Explanation : For the purposes of this clause, the expression “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

 

(23F) Any income by way of dividends or long-term capital gains of a venture capital fund or a venture capital company from investments made by way of equity shares in a venture capital undertaking : 

 

Provided that such venture capital fund or venture capital company is approved for the purposes of this clause by the prescribed authority in accordance with the rules made in this behalf and satisfies the prescribed conditions : 

 

Provided further that any approval by the prescribed authority shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years, as may be specified in the order of approval : 

Provided also that nothing contained in this clause shall apply in respect of any investment made after the 31st day of March, 1999.

 

Explanation : For the purposes of this clause, (a) “Venture capital fund” means such fund, operating under a trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908), established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines;

 

(b) “Venture capital company” means such company as has made investments by way of acquiring equity shares of venture capital undertakings in accordance with the prescribed guidelines; and

 

(c) “Venture capital undertaking” means such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the business or generation or generation and distribution of electricity or any other form of power or engaged in the business of providing telecommunication services or in the business of developing, maintaining and operating any infrastructure facility or engaged in the manufacture or production of such articles or things (including computer software) as may be notified by the Central Government in this behalf;

 

(d) “Infrastructure facility” means road, highway, bridge, airport, port rail system, water supply project, irrigation project, sanitation and sewerage system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfils the conditions specified in sub-section (4A) of section 80-IA;

 

(23FA) Any income by way of dividends, other than dividends referred to in section 115-O, or long-term capital gains of a venture capital fund or a venture capital company from investments made by way of equity shares in a venture capital undertaking :

 

Provided that such venture capital fund or venture capital company is approved, for the purposes of this clause, by the Central Government on an application made to it in accordance with the rules made in this behalf and which satisfies the prescribed conditions : Provided further that any approval by the Central Government shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years, as may be specified in the order of approval.

 

Explanation. – For the purposes of this clause, – (a) “Venture capital fund” means such fund, operating under a trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908) established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines;

 

(b) “Venture capital company” means such company as has made investments by way of acquiring equity shares of venture capital undertakings in accordance with the prescribed guidelines; and

 

(c) “Venture capital undertaking” means such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the – (i) Business of – (A) Software;

 

(B) Information technology;

 

(C) Production of basic drugs in the pharmaceutical sector;

 

(D) Bio-technology;

 

(E) Agriculture and allied sectors; or

 

(F) Such other sectors as may be notified by the Central Government in this behalf; or

 

(ii) Production or manufacture of any article or substance for which patent has been granted to the National Research Laboratory or any other scientific research institution approved by the Department of Science and Technology;

 

(23G) Any income by way of dividends, other than dividends referred to in section 115-O, interest or long-term capital gains of an infrastructure capital fund or an infrastructure capital company from investments made on or after the 1st day of June, 1998 by way of shares or long-term finance in any enterprise wholly engaged in the business of developing, maintaining and operating, any infrastructure facility and which has been approved by the Central Government on an application made by it in accordance with the rules made in this behalf and which satisfies the prescribed conditions. 

 

Explanation : For the purposes of the clause, – (a) “Infrastructure capital company” means such company as has made investments by way of acquiring shares or providing long term finance to an enterprise wholly engaged in the business of developing, maintaining and operating infrastructure facility;

 

(b) “Infrastructure capital fund” means such fund operating under a trust deed, registered under the provisions of the Registration Act, 1908 (16 of 1908) established to raise monies by the trustees for investment by way of acquiring shares or providing long-term finance to an enterprise wholly engaged in the business of developing, maintaining and operating infrastructure facility;

 

(c) “Infrastructure facility” means – (i) A road, highway, bridge, airport, port, rail system, a water supply project, irrigation project, sanitation and sewerage system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfils the conditions specified in sub-section (4A) of section 80-IA;

 

(ii) A project for generation or generation and distribution of electricity or any other form of power where such project starts generating power on or after the 1st day of April, 1993;

 

(ii) A project for generation or generation and distribution of electricity or any other form of power where such project starts generating power on or after the 1st day of April, 1993;”

 

(iii) A project for providing telecommunication services on or after the 1st day of April, 1995;

 

(iv) A project for housing which fulfils the conditions specified in sub-section (4F) of section 80-IA;

 

(d) “Long-term finance” shall have the meaning assigned to it in clause (viii) of sub-section (1) of section 36;

 

Explanation 2. – For the removal of doubts, it is hereby declared that any income by way of dividends, interest or long-term capital gains of an infrastructure capital fund or an infrastructure capital company from invtestment made before the 1st day of June, 1998 by way of shares or long-term finance in any enterprise carrying of the business of developing, maintaining and operating any infrastructure facility shall bot be included and the provisions of this clause as it stood immediately before its amendment by the Finance (No.2) Act, 1998 (21 of 1998) shall apply to such income;

 

(24) Any income chargeable under the heads “Income from house property” and “Income from other sources” of – (a) A registered union within the meaning of the Trade Unions Act, 1926 (16 of 1926) formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen;

 

(b) An association of registered unions referred to in sub-clause (a);

(25)(i) Interest on securities which are held by, or are the property of, any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securities;

 

(ii) Any income received by the trustees on behalf of a recognised provident fund;

 

(iii) Any income received by the trustees on behalf of an approved superannuation fund;

 

(iv) Any income received by the trustees on behalf of an approved gratuity fund;

 

(v) Any income received – (a) By the Board of Trustees constituted under the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the Deposit-linked Insurance Fund established under section 3G of that Act; or

 

(b) By the Board of Trustees constituted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the Deposit-linked Insurance Fund established under section 6C of that Act;

 

(25A) Any income of the Employees’ State Insurance Fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948);

(26) In the case of a member of a Scheduled Tribe 289 as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 [as it stood immediately before the commencement of the North-Eastern Area (Reorganisation) Act, 1971 (18 of 1971) or in the Ladakh region of the State of Jammu and Kashmir, any income which accrues or arises to him, – (a) From any source in the areas or States aforesaid, or

 

(b) By way of dividend or interest on securities;

 

(26A) Any income accruing or arising to any person from any source in the district of Ladakh or outside India in any previous year relevant to any assessment year commencing before the 1st day of April, 1989, where such person is resident in the said district in that previous year :

 

Provided that this clause shall not apply in the case of any such person unless he was resident in that district in the previous year relevant to the assessment year commencing on the 1st day of April, 1962.

 

Explanation : For the purposes of this clause, a person shall be demeed to be resident in the district of Ladakh if he fulfils the requirements of sub-section 293a (1) or sub-section (2) or sub-section (3) or sub-section (4) of section 6, as the case may be, subject to the modifications that – (i) References in those sub-sections 293b to India shall be construed as references to the said district; and

 

(ii) In clause 293c (i) of sub-section (3), reference to Indian company shall be construed as reference to a company formed and registered under any law for the time being inforce in the State of Jammu and Kashmir and having its registered office in that district in that year;

 

Explanation 2 : In this clause, references to the district of Ladakh shall be construed as references to the areas comprised in the said district on the 30th day of June, 1979;

 

(26B) Any income of a corporation established by a Central, State or Provincial Act or of any other body, institution or association (being a body, institution or association wholly financed by Government) where such corporation or other body or institution or association has been established or formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them.

 

Explanation : For the purposes of this clause, – (a) “Scheduled Castes” and “Scheduled Tribes” shall have the meaning respectively assigned to them in clauses (24) and (25) of articles 366 of the Constitution;

 

(b) “Backward classes” means such classes of citizens, other than the Scheduled Castes and the Scheduled Tribes, as may be notified – (i) By the Central Government; or

 

(ii) By any State Government, as the case may be, from time to time;

 

(26BB) Any income of a corporation established by the Central Government or any State Government for promoting the interests of the members of a minority community.

 

Explanation : For the purposes of this clause, “minority community” means a community notified as such by the Central Government in the Official Gazette in this behalf; 

 

(27) Any income of co-operative society formed for promoting the interests of the members of either the Scheduled Castes or Scheduled Tribes or both referred to in clause (26B) :

 

Provided that the membership of the co-operative society consists of only other co-operative societies formed for similar purposes and the finances of the society are provided by the Government and such other societies;

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

 

(29A) Any income accruing or arising to – (a) The Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

 

(b) The Rubber Board constituted under sub-section (1) of section 4 of the Rubber Board Act, 1947 (24 of 1947) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

 

(c) The Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 or the previous year in which such Board was constituted, whichever is later;

 

(d) The Tobacco Board constituted under the Tobacco Board Act, 1975 (4 of 1975) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1975 or the previous year in which such Board was constituted, whichever is later;

(e) The Marine Products Export Development Authority established under section 4 of the Marine Products Export Development Authority Act, 1972 (13 of 1972) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1972 or the previous year in which such Authority was constituted, whichever is later;

 

(f) The Agricultural and Processed Food Products Export Development Authority established under section 4 of the Agricultural and Processed Food Products Export Development Act, 1985 (2 of 1986) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1985 or the previous year in which such Authority was constituted, whichever is later;

 

(g) The Spices Board constituted under sub-section (1) of section 3 of the Spices Board Act, 1986 (10 of 1986) in any previous year relevant to any assessment year commencing on or after the 1st day of April, 1986 or the previous year in which such Board was constituted, whichever is later;

(30) 301 in the case of an assessee who carries on the business of growing and manufacturing tea in India, the amount of any subsidy received from or through the Tea Board under any such scheme 302 for replantation or replacement 301 of tea bushes or for rejuvenation or consolidation of areas used for cultivation of tea as the Central Government may, by notification in the Official Gazette, specify :

 

Provided that the assessee furnishes to the Assessing Officer, along with his return of income for the assessment year concerned or within such further time as the Assessing Officer may allow, a certificate from the Tea Board as to the amount of such subsidy paid to the assessee during the previous year.

 

Explanation : In this clause, “Tea Board” means the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953);

 

(31) In the case of an assessee who carries on the business of growing and manufacturing rubber, coffee, cardamom or such other commodity in India, as the Central Government may, by notification in the Official Gazette, specify in this behalf, the amount of any subsidy received from or through the concerned Board under any such scheme for replantation or replacement of rubber plants, coffee plants, cardamom plants or plants for the growing of such other commodity or for rejuvenation or consolidation of areas used for cultivation of rubber, coffee, cardamom or such other commodity as the Central Government may, by notification in the Official Gazette, specify :

 

Provided that the assessee furnishes to the Assessing Officer, along with his return of income for the assessment year concerned or within such further time as the Assessing Officer may allow, a certificate from the concerned Board, as to the amount of such subsidy paid to the assessee during the previous year.

 

Explanation : In this clause, “concerned Board” means – (i) In relation to rubber, the Rubber Board constituted under section 4 of the Rubber Act, 1947 (24 of 1947),

 

(ii) In relation to coffee, the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942), 

 

(iii) In relation to cardamom, the Spices Board constituted under section 3 of the Spices Board Act, 1986 (10 of 1986),

 

(iv) In relation to any other commodity specified under this clause, any Board or other authority established under any law for the time being in force which the Central Government may, by notification in the Official Gazette, specify in this behalf;

 

(32) In the case of an assessee referred to in sub-section (1A) of section 64, any income includible in his total income under that sub-section, to the extent such income does not exceed one thousand five hundred rupees in respect of each minor child whose income is so includible;

 

(33) Any income by way of dividends referred to in section 115-O.

 

 

Related Judgements

 

P. J. EAPEN v. COMMISSIONER OF INCOME-TAX.

 

WARREN TEA LTD. & ANR. v. UNION OF INDIA & ORS.

 

ABC, (Advance Ruling)

 

COMMISSIONER OF INCOME TAX v. BHARAT RADIATORS (P) LTD.

 

COMMISSIONER OF INCOME TAX v. C. W. section (INDIA) LTD.

 

COMMISSIONER OF INCOME-TAX v. GOSLINO MARIO & OR section

 

COMMISSIONER OF INCOME-TAX v. RAJDOOT HOTEL ENTERPRISES

CORPORATION (P) LTD.

 

KIL KOTAGIRI TEA & COFFEE ESTATE CO. LTD. v. COMMISSIONER OF INCOME TAX

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Income Tax Act, 1961 

 

Indian Laws – Bare Acts

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