2. Definitions.-
In this Act, unless the context otherwise requires,—
(1) “advance tax” means the advance tax payable
in accordance with the provisions of Chapter XVII-C;
(1A) “agricultural income” means—
(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 rent or revenue of any such land, or
occupied by the cultivator or the receiver of rent-in-kind,
of any land with respect to which, or the produce of which,
any process mentioned in paragraphs (ii) and (iii) of sub-clause
(b) is carried on :
Provided that—
(i) the building is on or in the immediate vicinity of the
land, and is a building which the receiver of the rent or
revenue or the cultivator, or the receiver of rent-in-kind,
by reason of his connection with the land, requires as a dwelling
house, or as a store-house, or other out-building, and
(ii) the land is either assessed to land revenue in India
or is subject to a local rate assessed and collected by officers
of the Government as such or where the land is not so assessed
to land revenue or subject to a local rate, it is not situated—
(A) in any area which is comprised within the jurisdiction
of a municipality (whether known as a municipality, municipal
corporation, notified area committee, town area committee,
town committee or by any other name) or a cantonment board
and which has a population of not less than ten thousand according
to the last preceding census of which the relevant figures
have been published before the first day of the previous year
; or
(B) in any area within such distance, not being more than
eight kilometres, from the local limits of any municipality
or cantonment board referred to in item (A), as the Central
Government may, having regard to the extent of, and scope
for, urbanisation of that area and other relevant considerations,
specify in this behalf by notification in the Official Gazette.
Explanation 1.—For the removal of doubts, it is hereby
declared that revenue derived from land shall not include
and shall be deemed never to have included any income arising
from the transfer of any land referred to in item (a) or item
(b) of sub-clause (iii) of clause (14) of this section.
Explanation 2.—For the removal of doubts, it is hereby
declared that income derived from any building or land referred
to in sub-clause (c) arising from the use of such building
or land for any purpose (including letting for residential
purpose or for the purpose of any business or profession)
other than agriculture falling under sub-clause (a) or sub-clause
(b) shall not be agricultural income.
Explanation 3.—For the purposes of this clause, any
income derived from saplings or seedlings grown in a nursery
shall be deemed to be agricultural income;
(1B) “amalgamation”, in relation to companies,
means the merger of one or more companies with another company
or the merger of two or more companies to form one company
(the company or companies which so merge being referred to
as the amalgamating company or companies and the company with
which they merge or which is formed as a result of the merger,
as the amalgamated company) in such a manner that—
(i) all the property of the amalgamating company or companies
immediately before the amalgamation becomes the property of
the amalgamated company by virtue of the amalgamation ;
(ii) all the liabilities of the amalgamating company or
companies immediately before the amalgamation become the liabilities
of the amalgamated company by virtue of the amalgamation ;
(iii) shareholders holding not less than three-fourths in
value of the shares in the amalgamating company or companies
(other than shares already held therein immediately before
the amalgamation by, or by a nominee for, the amalgamated
company or its subsidiary) become shareholders of the amalgamated
company by virtue of the amalgamation, otherwise than as a
result of the acquisition of the property of one company by
another company pursuant to the purchase of such property
by the other company or as a result of the distribution of
such property to the other company after the winding up of
the first-mentioned company ;
(1C) “Additional Commissioner” means a person
appointed to be an Additional Commissioner of Income-tax under
sub-section (1) of section 117;
(1D) “Additional Director” means a person appointed
to be an Additional Director of Income-tax under sub-section
(1) of section 117 ;
(2) “annual value”, in relation to any property,
means its annual value as determined under section 23 ;
(3) omitted
(4) “Appellate Tribunal” means the Appellate
Tribunal constituted under section 252 ;
(5) “approved gratuity fund” means a gratuity
fund which has been and continues to be approved by the Chief
Commissioner or Commissioner in accordance with the rules
contained in Part C of the Fourth Schedule ;
(6) “approved superannuation fund” means a superannuation
fund or any part of a superannuation fund which has been and
continues to be approved by the Chief Commissioner or Commissioner
in accordance with the rules contained in Part B of the Fourth
Schedule ;
(7) “assessee” means a person by whom any tax
or any other sum of money is payable under this Act, and includes—
(a) every person in respect of whom any proceeding under
this Act has been taken for the assessment of his income or
assessment of fringe benefits] or of the income of any other
person in respect of which he is assessable, or of the loss
sustained by him or by such other person, or of the amount
of refund due to him or to such other person ;
(b) every person who is deemed to be an assessee under any
provision of this Act ;
(c) every person who is deemed to be an assessee in default
under any provision of this Act ;
(7A) “Assessing Officer” means the Assistant
Commissioner or Deputy Commissioner or Assistant Director
or Deputy Director or the Income-tax Officer who is vested
with the relevant jurisdiction by virtue of directions or
orders issued under sub-section (1) or sub-section (2) of
section 120 or any other provision of this Act, and the Additional
Commissioner or Additional Director or Joint Commissioner
or Joint Director who is directed under clause (b) of sub-section
(4) of that section to exercise or perform all or any of the
powers and functions conferred on, or assigned to, an Assessing
Officer under this Act ;
(8) “assessment” includes reassessment ;
(9) “assessment year” means the period of twelve
months commencing on the 1st day of April every year ;
(9A) “Assistant Commissioner” means a person
appointed to be an Assistant Commissioner of Income-tax or
a Deputy Commissioner of Income-tax under sub-section (1)
of section 117 ;
(9B) “Assistant Director” means a person appointed
to be an Assistant Director of Income-tax under sub-section
(1) of section 117;
(10) “average rate of income-tax” means the rate
arrived at by dividing the amount of income-tax calculated
on the total income, by such total income ;
(11) “block of assets” means a group of assets
falling within a class of assets comprising—
(a) tangible assets, being buildings, machinery, plant or
furniture;
(b) intangible assets, being know-how, patents, copyrights,
trade-marks, licences, franchises or any other business or
commercial rights of similar nature, in respect of which the
same percentage of depreciation is prescribed ;
(12) “Board” means the Central Board of Direct
Taxes constituted under the Central Boards of Revenue Act,
1963 (54 of 1963) ;
(12A) “books or books of account” includes ledgers,
day-books, cash books, account-books and other books, whether
kept in the written form or as print-outs of data stored in
a floppy, disc, tape or any other form of electro-magnetic
data storage device;
(13) “business” includes any trade, commerce or
manufacture or any adventure or concern in the nature of trade,
commerce or manufacture ;
(14) “capital asset” means property of any kind
held by an assessee, whether or not connected with his business
or profession, but does not include—
(i) any stock-in-trade, consumable stores or raw materials
held for the purposes of his business or profession ;
(ii) personal effects, that is to say, movable property (including
wearing apparel and furniture) held for personal use by the
assessee or any member of his family dependent on him, but
excludes—
(a) jewellery;
(b) archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures; or
(f) any work of art.
Explanation.—For the purposes of this sub-clause,
“jewellery” includes—
(a) ornaments made of gold, silver, platinum or any other
precious metal or any alloy containing one or more of such
precious metals, whether or not containing any precious or
semi-precious stone, and whether or not worked or sewn into
any wearing apparel;
(b) precious or semi-precious stones, whether or not set
in any furniture, utensil or other article or worked or sewn
into any wearing apparel;
(iii) agricultural land in India, not being land situate—
(a) in any area which is comprised within the jurisdiction
of a municipality (whether known as a municipality, municipal
corporation, notified area committee, town area committee,
town committee, or by any other name) or a cantonment board
and which has a population of not less than ten thousand according
to the last preceding census of which the relevant figures
have been published before the first day of the previous year
; or
(b) in any area within such distance, not being more than
eight kilometres, from the local limits of any municipality
or cantonment board referred to in item (a), as the Central
Government may, having regard to the extent of, and scope
for, urbanisation of that area and other relevant considerations,
specify in this behalf by notification in the Official Gazette;
(iv) per cent Gold Bonds, 1977,or 7 per cent Gold Bonds,
1980, or National Defence Gold Bonds, 1980, issued by the
Central Government ;
(v) Special Bearer Bonds, 1991, issued by the Central Government
;
(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme,
1999 notified by the Central Government ;
(15) “charitable purpose” includes relief of
the poor, education, medical relief, preservation of environment
(including watersheds, forests and wildlife) and preservation
of monuments or places or objects of artistic or historic
interest, and the advancement of any other object of general
public utility:
Provided that the advancement of any other object of general
public utility shall not be a charitable purpose, if it involves
the carrying on of any activity in the nature of trade, commerce
or business, or any activity of rendering any service in relation
to any trade, commerce or business, for a cess or fee or any
other consideration, irrespective of the nature of use or
application, or retention, of the income from such activity:
Provided further that the first proviso shall not apply if
the aggregate value of the receipts from the activities referred
to therein is ten lakh rupees or less in the previous year;
(15A) “Chief Commissioner” means a person appointed
to be a Chief Commissioner of Income-tax under sub-section
(1) of section 117 ;
(15B) “child”, in relation to an individual, includes
a step-child and an adopted child of that individual ;
(16) “Commissioner” means a person appointed to
be a Commissioner of Income-tax under sub-section (1) of section
117 ;
(16A) “Commissioner (Appeals)” means a person
appointed to be a Commissioner of Income-tax (Appeals) under
sub-section (1) of section 117 ;
(17) “company” means—
(i) any Indian company, or
(ii) any body corporate incorporated by or under the laws
of a country outside India, or
(iii) any institution, association or body which is or was
assessable or was assessed as a company for any assessment
year under the Indian Income-tax Act, 1922 (11 of 1922), or
which is or was assessable or was assessed under this Act
as a company for any assessment year commencing on or before
the 1st day of April, 1970, or
(iv) any institution, association or body, whether incorporated
or not and whether Indian or non-Indian, which is declared
by general or special order of the Board to be a company :
Provided that such institution, association or body shall
be deemed to be a company only for such assessment year or
assessment years (whether commencing before the 1st day of
April, 1971, or on or after that date) as may be specified
in the declaration ;
(18) “company in which the public are substantially
interested”—a company is said to be a company
in which the public are substantially interested—
(a) if it is a company owned by the Government or the Reserve
Bank of India or in which not less than forty per cent of
the shares are held (whether singly or taken together) by
the Government or the Reserve Bank of India or a corporation
owned by that bank ; or
(aa) if it is a company which is registered under section
25 of the Companies Act, 1956 (1 of 1956) ; or
(ab) if it is a company having no share capital and if, having
regard to its objects, the nature and composition of its membership
and other relevant considerations, it is declared by order
of the Board to be a company in which the public are substantially
interested :
Provided that such company shall be deemed to be a company
in which the public are substantially interested only for
such assessment year or assessment years (whether commencing
before the 1st day of April, 1971, or on or after that date)
as may be specified in the declaration ; or
(ac) if it is a mutual benefit finance company, that is
to say, a company which carries on, as its principal business,
the business of acceptance of deposits from its members and
which is declared by the Central Government under section
620A of the Companies Act, 1956 (1 of 1956), to be a Nidhi
or Mutual Benefit Society ; or
(ad) if it is a company, wherein shares (not being shares
entitled to a fixed rate of dividend whether with or without
a further right to participate in profits) carrying not less
than fifty per cent of the voting power have been allotted
unconditionally to, or acquired unconditionally by, and were
throughout the relevant previous year beneficially held by,
one or more co-operative societies ;
(b) if it is a company which is not a private company as defined
in the Companies Act, 1956 (1 of 1956), and the conditions
specified either in item (A) or in item (B) are fulfilled,
namely :—
(A) shares in the company (not being shares entitled to
a fixed rate of dividend whether with or without a further
right to participate in profits) were, as on the last day
of the relevant previous year, listed in a recognised stock
exchange in India in accordance with the Securities Contracts
(Regulation) Act, 1956 (42 of 1956), and any rules made thereunder
;
(B) shares in the company (not being shares entitled to a
fixed rate of dividend whether with or without a further right
to participate in profits) carrying not less than fifty per
cent of the voting power have been allotted unconditionally
to, or acquired unconditionally by, and were throughout the
relevant previous year beneficially held by—
(a) the Government, or
(b) a corporation established by a Central, State or Provincial
Act, or
(c) any company to which this clause applies or any subsidiary
company of such company if the whole of the share capital
of such subsidiary company has been held by the parent company
or by its nominees throughout the previous year.
Explanation.—In its application to an Indian company
whose business consists mainly in the construction of ships
or in the manufacture or processing of goods or in mining
or in the generation or distribution of electricity or any
other form of power, item (B) shall have effect as if for
the words “not less than fifty per cent”, the
words “not less than forty per cent” had been
substituted ;
(19) “co-operative society” means a co-operative
society registered under the Co-operative Societies Act, 1912
(2 of 1912), or under any other law for the time being in
force in any State for the registration of co-operative societies
;
(19A) “Deputy Commissioner” means a person appointed
to be a Deputy Commissioner of Income-tax under sub-section
(1) of section 117 ;
(19AA) “demerger”, in relation to companies,
means the transfer, pursuant to a scheme of arrangement under
sections 391 to 394 of the Companies Act, 1956 (1 of 1956),
by a demerged company of its one or more undertakings to any
resulting company in such a manner that—
(i) all the property of the undertaking, being transferred
by the demerged company, immediately before the demerger,
becomes the property of the resulting company by virtue of
the demerger;
(ii) all the liabilities relatable to the undertaking, being
transferred by the demerged company, immediately before the
demerger, become the liabilities of the resulting company
by virtue of the demerger;
(iii) the property and the liabilities of the undertaking
or undertakings being transferred by the demerged company
are transferred at values appearing in its books of account
immediately before the demerger;
(iv) the resulting company issues, in consideration of the
demerger, its shares to the shareholders of the demerged company
on a proportionate basis;
(v) the shareholders holding not less than three-fourths
in value of the shares in the demerged company (other than
shares already held therein immediately before the demerger,
or by a nominee for, the resulting company or, its subsidiary)
become share-holders of the resulting company or companies
by virtue of the demerger,
otherwise than as a result of the acquisition of the property
or assets of the demerged company or any undertaking thereof
by the resulting company;
(vi) the transfer of the undertaking is on a going concern
basis;
(vii) the demerger is in accordance with the conditions,
if any, notified under sub-section (5) of section 72A by the
Central Government in this behalf.
Explanation 1.—For the purposes of this clause, “undertaking”
shall include any part of an undertaking, or a unit or division
of an undertaking or a business activity taken as a whole,
but does not include individual assets or liabilities or any
combination thereof not constituting a business activity.
Explanation 2.—For the purposes of this clause, the
liabilities referred to in sub-clause (ii), shall include—
(a) the liabilities which arise out of the activities or
operations of the undertaking;
(b) the specific loans or borrowings (including debentures)
raised, incurred and utilised solely for the activities or
operations of the undertaking; and
(c) in cases, other than those referred to in clause (a)
or clause (b), so much of the amounts of general or multipurpose
borrowings, if any, of the demerged company as stand in the
same proportion which the value of the assets transferred
in a demerger bears to the total value of the assets of such
demerged company immediately before the demerger.
Explanation 3.—For determining the value of the property
referred to in sub-clause (iii), any change in the value of
assets consequent to their revaluation shall be ignored.
Explanation 4.—For the purposes of this clause, the
splitting up or the reconstruction of any authority or a body
constituted or established under a Central, State or Provincial
Act, or a local authority or a public sector company, into
separate authorities or bodies or local authorities or companies,
as the case may be, shall be deemed to be a demerger if such
split up or reconstruction fulfils such conditions as may
be notified in the Official Gazette, by the Central Government;
(19AAA) “demerged company” means the company whose
undertaking is transferred, pursuant to a demerger, to a resulting
company;
(19B) “Deputy Commissioner (Appeals)” means a
person appointed to be a Deputy Commissioner of Income-tax
(Appeals) or an Additional Commissioner of Income-tax (Appeals)]
under sub-section (1) of section 117 ;
(19C) “Deputy Director” means a person appointed
to be a Deputy Director of Income-tax under sub-section (1)
of section 117 ;
(20)“director”, “manager” and “managing
agent”, in relation to a company, have the meanings
respectively assigned to them in the Companies Act, 1956 (1
of 1956) ;
(21) “Director General or Director” means a person
appointed to be a Director General of Income-tax or, as the
case may be, a Director of Income-tax, under sub-section (1)
of section 117, and includes a person appointed under that
sub-section to be an Additional Director of Income-tax or
a Joint Director of Income-tax or an Assistant Director or
Deputy Director of Income-tax ;
(22) “dividend” includes—
(a) any distribution by a company of accumulated profits,
whether capitalised or not, if such distribution entails the
release by the company to its shareholders of all or any part
of the assets of the company ;
(b) any distribution to its shareholders by a company of
debentures, debenture-stock, or deposit certificates in any
form, whether with or without interest, and any distribution
to its preference shareholders of shares by way of bonus,
to the extent to which the company possesses accumulated profits,
whether capitalised or not ;
(c) any distribution made to the shareholders of a company
on its liquidation, to the extent to which the distribution
is attributable to the accumulated profits of the company
immediately before its liquidation, whether capitalised or
not ;
(d) any distribution to its shareholders by a company on
the reduction of its capital, to the extent to which the company
possesses accumulated profits which arose after the end of
the previous year ending next before the 1st day of April,
1933, whether such accumulated profits have been capitalised
or not ;
(e) any payment by a company, not being a company in which
the public are substantially interested, of any sum (whether
as representing a part of the assets of the company or otherwise)
made after the 31st day of May, 1987, by way of advance or
loan to a shareholder, being a person who is the beneficial
owner of shares (not being shares entitled to a fixed rate
of dividend whether with or without a right to participate
in profits) holding not less than ten per cent of the voting
power, or to any concern in which such shareholder is a member
or a partner and in which he has a substantial interest (hereafter
in this clause referred to as the said concern)] or any payment
by any such company on behalf, or for the individual benefit,
of any such shareholder, to the extent to which the company
in either case possesses accumulated profits ;
but “dividend” does not include—
(i) a distribution made in accordance with sub-clause (c)
or sub-clause (d) in respect of any share issued for full
cash consideration, where the holder of the share is not entitled
in the event of liquidation to participate in the surplus
assets ;
(ia) a distribution made in accordance with sub-clause (c)
or sub-clause (d) in so far as such distribution is attributable
to the capitalised profits of the company representing bonus
shares allotted to its equity shareholders after the 31st
day of March, 1964, and before the 1st day of April, 1965
;
(ii) any advance or loan made to a shareholder or the said
concern by a company in the ordinary course of its business,
where the lending of money is a substantial part of the business
of the company ;
(iii) any dividend paid by a company which is set off by
the company against the whole or any part of any sum previously
paid by it and treated as a dividend within the meaning of
sub-clause (e), to the extent to which it is so set off;
(iv) any payment made by a company on purchase of its own
shares from a shareholder in accordance with the provisions
of section 77A of the Companies Act, 1956 (1 of 1956);
(v) any distribution of shares pursuant to a demerger by
the resulting company to the shareholders of the demerged
company (whether or not there is a reduction of capital in
the demerged company).
Explanation 1.—The expression “accumulated profits”,
wherever it occurs in this clause, shall not include capital
gains arising before the 1st day of April, 1946, or after
the 31st day of March, 1948, and before the 1st day of April,
1956.
Explanation 2.—The expression “accumulated profits”
in sub-clauses (a), (b), (d) and (e), shall include all profits
of the company up to the date of distribution or payment referred
to in those sub-clauses, and in sub-clause (c) shall include
all profits of the company up to the date of liquidation,
but shall not, where the liquidation is consequent on the
compulsory acquisition of its undertaking by the Government
or a corporation owned or controlled by the Government under
any law for the time being in force, include any profits of
the company prior to three successive previous years immediately
preceding the previous year in which such acquisition took
place.
Explanation 3.—For the purposes of this clause,—
(a) “concern” means a Hindu undivided family,
or a firm or an association of persons or a body of individuals
or a company ;
(b) a person shall be deemed to have a substantial interest
in a concern, other than a company, if he is, at any time
during the previous year, beneficially entitled to not less
than twenty per cent of the income of such concern ;
(22A) “domestic company” means an Indian company,
or any other company which, in respect of its income liable
to tax under this Act, has made the prescribed arrangements
for the declaration and payment, within India, of the dividends
(including dividends on preference shares) payable out of
such income ;
(22AA) “document” includes an electronic record
as defined in clause (t) of sub-section (1) of section 2 of
the Information Technology Act, 2000 (21 of 2000);
(22AAA) “electoral trust” means a trust so approved
by the Board in accordance with the scheme made in this regard
by the Central Government;
(22B) “fair market value”, in relation to a capital
asset, means—
(i) the price that the capital asset would ordinarily fetch
on sale in the open market on the relevant date ; and
(ii) where the price referred to in sub-clause (i) is not
ascertainable, such price as may be determined in accordance
with the rules made under this Act ;
(23) (i) “firm” shall have the meaning assigned
to it in the Indian Partnership Act, 1932 (9 of 1932), and
shall include a limited liability partnership as defined in
the Limited Liability Partnership Act, 2008 (6 of 2009);
(ii) “partner” shall have the meaning assigned
to it in the Indian Partnership Act, 1932 (9 of 1932), and
shall include,—
(a) any person who, being a minor, has been admitted to
the benefits of partnership; and
(b) a partner of a limited liability partnership as defined
in the Limited Liability Partnership Act, 2008 (6 of 2009);
(iii) “partnership” shall have the meaning assigned
to it in the Indian Partnership Act, 1932 (9 of 1932), and
shall include a limited liability partnership as defined in
the Limited Liability Partnership Act, 2008 (6 of 2009);
(23A) “foreign company” means a company which
is not a domestic company ;
(23B) “fringe benefits” means any fringe benefits
referred to in section 115WB;
(24) “income” includes—
(i) profits and gains ;
(ii) dividend ;
(iia) voluntary contributions received by a trust created
wholly or partly for charitable or religious purposes or by
an institution established wholly or partly for such purposes
or by an association or institution referred to in clause
(21) or clause (23), or by a fund or trust or institution
referred to in sub-clause (iv) or sub-clause (v) or by any
university or other educational institution referred to in
sub-clause (iiiad) or sub-clause (vi) or by any hospital or
other institution referred to in sub-clause (iiiae) or sub-clause
(via) of clause (23C) of section 10 or by an electoral trust.
Explanation.—For the purposes of this sub-clause, “trust”
includes any other legal obligation ;
(iii) the value of any perquisite or profit in lieu of salary
taxable under clauses (2) and (3) of section 17 ;
(iiia) any special allowance or benefit, other than perquisite
included under sub-clause (iii), specifically granted to the
assessee to meet expenses wholly, necessarily and exclusively
for the performance of the duties of an office or employment
of profit ;
(iiib) any 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 a place where he ordinarily resides or to compensate
him for the increased cost of living ;
(iv) the value of any benefit or perquisite, whether convertible
into money or not, obtained from a company either by a director
or by a person who has a substantial interest in the company,
or by a relative of the director or such person, and any sum
paid by any such company in respect of any obligation which,
but for such payment, would have been payable by the director
or other person aforesaid ;
(iva) the value of any benefit or perquisite, whether convertible
into money or not, obtained by any representative assessee
mentioned in clause (iii) or clause (iv) of sub-section (1)
of section 160 or by any person on whose behalf or for whose
benefit any income is receivable by the representative assessee
(such person being hereafter in this sub-clause referred to
as the “beneficiary”) and any sum paid by the
representative assessee in respect of any obligation which,
but for such payment, would have been payable by the beneficiary
;
(v) any sum chargeable to income-tax under clauses (ii)
and (iii) of section 28 or section 41 or section 59 ;
(va) any sum chargeable to income-tax under clause (iiia)
of section 28 ;
(vb) any sum chargeable to income-tax under clause (iiib)
of section 28 ;
(vc) any sum chargeable to income-tax under clause (iiic)
of section 28 ;
(vd) the value of any benefit or perquisite taxable under
clause (iv) of section 28 ;
(ve) any sum chargeable to income-tax under clause (v) of
section 28 ;
(vi) any capital gains chargeable under section 45 ;
(vii) the profits and gains of any business of insurance
carried on by a mutual insurance company or by a co-operative
society, computed in accordance with section 44 or any surplus
taken to be such profits and gains by virtue of provisions
contained in the First Schedule ;
(viia) the profits and gains of any business of banking
(including providing credit facilities) carried on by a co-operative
society with its members;
(viii) [Omitted by the Finance Act, 1988, w.e.f. 1-4-1988.
Original sub-clause (viii) was inserted by the Finance Act,
1964, w.e.f. 1-4-1964;]
(ix) any winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any sort
or from gambling or betting of any form or nature whatsoever.
Explanation.—For the purposes of this sub-clause,—
(i) “lottery” includes winnings from prizes
awarded to any person by draw of lots or by chance or in any
other manner whatsoever, under any scheme or arrangement by
whatever name called;
(ii) “card game and other game of any sort”
includes any game show, an entertainment programme on television
or electronic mode, in which people compete to win prizes
or any other similar game ;
(x) any sum received by the assessee from his employees
as contributions to any provident fund or superannuation fund
or any fund set up under the provisions of the Employees’
State Insurance Act, 1948 (34 of 1948), or any other fund
for the welfare of such employees ;
(xi) any sum received under a Keyman insurance policy including
the sum allocated by way of bonus on such policy.
Explanation.—For the purposes of this clause*, the expression
“Keyman insurance policy” shall have the meaning
assigned to it in the Explanation to clause (10D) of section
10 ;
(xii) any sum referred to in clause (va) of section 28;
(xiii) any sum referred to in clause (v) of sub-section (2)
of section 56;
(xiv) any sum referred to in clause (vi) of sub-section (2)
of section 56;
(xv) any sum of money or value of property referred to in
clause (vii) or clause (viia) of sub-section (2) of section
56;
(25) “Income-tax Officer” means a person appointed
to be an Income-tax Officer under section 117 ;
(25A) “India” means the territory of India as
referred to in article 1 of the Constitution, its territorial
waters, seabed and subsoil underlying such waters, continental
shelf, exclusive economic zone or any other maritime zone
as referred to in the Territorial Waters, Continental Shelf,
Exclusive Economic Zone and other Maritime Zones Act, 1976
(80 of 1976), and the air space above its territory and territorial
waters;
(26) “Indian company” means a company formed and
registered under the Companies Act, 1956 (1 of 1956), and
includes—
(i) a company formed and registered under any law relating
to companies formerly in force in any part of India (other
than the State of Jammu and Kashmir and the Union territories
specified in sub-clause (iii) of this clause) ;
(ia) a corporation established by or under a Central, State
or Provincial Act ;
(ib) any institution, association or body which is declared
by the Board to be a company under clause (17) ;
(ii) in the case of the State of Jammu and Kashmir, a company
formed and registered under any law for the time being in
force in that State ;
(iii) in the case of any of the Union territories of Dadra
and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, a company
formed and registered under any law for the time being in
force in that Union territory :
Provided that the registered or, as the case may be, principal
office of the company, corporation, institution, association
or body in all cases is in India ;
(26A) “infrastructure capital company” means such
company which makes investments by way of acquiring shares
or providing long-term finance to any enterprise or undertaking
wholly engaged in the business referred to in sub-section
(4) of section 80-IA or sub-section (1) of section 80-IAB
or an undertaking developing and building a housing project
referred to in sub-section (10) of section 80-IB or a project
for constructing a hotel of not less than three-star category
as classified by the Central Government or a project for constructing
a hospital with at least one hundred beds for patients;
(26B) “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 any enterprise or
undertaking wholly engaged in the business referred to in
sub-section (4) of section 80-IA or sub-section (1) of section
80-IAB or an undertaking developing and building a housing
project referred to in sub-section (10) of section 80-IB or
a project for constructing a hotel of not less than three-star
category as classified by the Central Government or a project
for constructing a hospital with at least one hundred beds
for patients;
(27) omitted
(28) “Inspector of Income-tax” means a person
appointed to be an Inspector of Income-tax under sub-section
(1) of section 117 ;
(28A) “interest” means interest payable in any
manner in respect of any moneys borrowed or debt incurred
(including a deposit, claim or other similar right or obligation)
and includes any service fee or other charge in respect of
the moneys borrowed or debt incurred or in respect of any
credit facility which has not been utilised ;
(28B) “interest on securities” means,—
(i) interest on any security of the Central Government or
a State Government ;
(ii) interest on debentures or other securities for money
issued by or on behalf of a local authority or a company or
a corporation established by a Central, State or Provincial
Act ;
(28BB) “insurer” means an insurer, being an Indian
insurance company, as defined under clause (7A) of section
2 of the Insurance Act, 1938 (4 of 1938), which has been granted
a certificate of registration under section 3 of that Act;
(28C) “Joint Commissioner” means a person appointed
to be a Joint Commissioner of Income-tax or an Additional
Commissioner of Income-tax under sub-section (1) of section
117;
(28D) “Joint Director” means a person appointed
to be a Joint Director of Income-tax or an Additional Director
of Income-tax under sub-section (1) of section 117;
(29) “legal representative” has the meaning assigned
to it in clause (11) of section 2 of the Code of Civil Procedure,
1908 (5 of 1908);
(29A) “long-term capital asset” means a capital
asset which is not a short-term capital asset ;
(29B) “long-term capital gain” means capital gain
arising from the transfer of a long-term capital asset ;
(29BA) “manufacture”, with its grammatical variations,
means a change in a non-living physical object or article
or thing,—
(a) resulting in transformation of the object or article
or thing into a new and distinct object or article or thing
having a different name, character and use; or
(b) bringing into existence of a new and distinct object
or article or thing with a different chemical composition
or integral structure;
(29C) “maximum marginal rate” means the rate of
income-tax (including surcharge on income-tax, if any) applicable
in relation to the highest slab of income in the case of an
individual , association of persons or, as the case may be,
body of individuals as specified in the Finance Act of the
relevant year ;
(29D) “National Tax Tribunal” means the National
Tax Tribunal established under section 3 of the National Tax
Tribunal Act, 2005;
(30) “non-resident” means a person who is not
a “resident” , and for the purposes of sections
92, 93 and 168, includes a person who is not ordinarily resident
within the meaning of clause (6) of section 6 ;
(31) “person” includes—
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals,
whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling within
any of the preceding sub-clauses.
Explanation.—For the purposes of this clause, an association
of persons or a body of individuals or a local authority or
an artificial juridical person shall be deemed to be a person,
whether or not such person or body or authority or juridical
person was formed or established or incorporated with the
object of deriving income, profits or gains;
(32) “person who has a substantial interest in the
company”, in relation to a company, means a person who
is the beneficial owner of shares, not being shares entitled
to a fixed rate of dividend whether with or without a right
to participate in profits, carrying not less than twenty per
cent of the voting power ;
(33) “prescribed” means prescribed by rules made
under this Act ;
(34) “previous year” means the previous year as
defined in section 3 ;
(35) “principal officer”, used with reference
to a local authority or a company or any other public body
or any association of persons or any body of individuals,
means—
(a) the secretary, treasurer, manager or agent of the authority,
company, association or body, or
(b) any person connected with the management or administration
of the local authority, company, association or body upon
whom the Assessing Officer has served a notice of his intention
of treating him as the principal officer thereof ;
(36) “profession” includes vocation ;
(36A) “public sector company” means any corporation
established by or under any Central, State or Provincial Act
or a Government company as defined in section 617 of the Companies
Act, 1956 (1 of 1956) ;
(37) “public servant” has the same meaning as
in section 21 of the Indian Penal Code (45 of 1860) ;
(37A) “rate or rates in force” or “rates
in force”, in relation to an assessment year or financial
year, means—
(i) for the purposes of calculating income-tax under the
first proviso to sub-section (5) of section 132, or computing
the income-tax chargeable under sub-section (4) of section
172 or sub-section (2) of section 174 or section 175 or sub-section
(2) of section 176 or deducting income-tax under section 192
from income chargeable under the head “Salaries”
or computation of the “advance tax” payable under
Chapter XVII-C in a case not falling under section 115A or
section 115B or section 115BB or section 115BBB or section
115E or section 164 or section 164A or section 167B, the rate
or rates of income-tax specified in this behalf in the Finance
Act of the relevant year, and for the purposes of computation
of the “advance tax” payable under Chapter XVII-C
in a case falling under section 115A or section 115B or section
115BB or section 115BBB or section 115E or section 164 or
section 164A or section 167B, the rate or rates specified
in section 115A or section 115B or section 115BB or section
115BBB or section 115E or section 164 or section 164A or section
167B, as the case may be, or the rate or rates of income-tax
specified in this behalf in the Finance Act of the relevant
year, whichever is applicable ;
(ii) for the purposes of deduction of tax under sections
193, 194, 194A , 194B , 194BB and 194D, the rate or rates
of income-tax specified in this behalf in the Finance Act
of the relevant year ;
(iii) for the purposes of deduction of tax under section
195, the rate or rates of income-tax specified in this behalf
in the Finance Act of the relevant year or the rate or rates
of income-tax specified in an agreement entered into by the
Central Government under section 90, or an agreement notified
by the Central Government under section 90A, whichever is
applicable by virtue of the provisions of section 90, or section
90A, as the case may be;
(38) “recognised provident fund” means a provident
fund which has been and continues to be recognised by the
Chief Commissioner or Commissioner] in accordance with the
rules contained in Part A of the Fourth Schedule, and includes
a provident fund established under a scheme framed under the
Employees’ Provident Funds Act, 1952 (19 of 1952) ;
(39) [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993;]
(40) “regular assessment” means the assessment
made under sub-section (3) of] section 143 or section 144
;
(41) “relative”, in relation to an individual,
means the husband, wife, brother or sister or any lineal ascendant
or descendant of that individual ;
(41A) “resulting company” means one or more companies
(including a wholly owned subsidiary thereof) to which the
undertaking of the demerged company is transferred in a demerger
and, the resulting company in consideration of such transfer
of undertaking, issues shares to the shareholders of the demerged
company and includes any authority or body or local authority
or public sector company or a company established, constituted
or formed as a result of demerger;
(42) “resident” means a person who is resident
in India within the meaning of section 6 ;
(42A)“short-term capital asset” means a capital
asset held by an assessee for not more than thirty-six months
immediately preceding the date of its transfer :
Provided that in the case of a share held in a company or
any other security listed in a recognised stock exchange in
India or a unit of the Unit Trust of India established under
the Unit Trust of India Act, 1963 (52 of 1963) or a unit of
a Mutual Fund specified under clause (23D) of section 10 or
a zero coupon bond, the provisions of this clause shall have
effect as if for the words “thirty-six months”,
the words “twelve months” had been substituted.
Explanation 1.—(i) In determining the period for which
any capital asset is held by the assessee—
(a) in the case of a share held in a company in liquidation,
there shall be excluded the period subsequent to the date
on which the company goes into liquidation ;
(b) in the case of a capital asset which becomes the property
of the assessee in the circumstances mentioned in sub-section
(1) of section 49, there shall be included the period for
which the asset was held by the previous owner referred to
in the said section ;
(c) in the case of a capital asset being a share or shares
in an Indian company, which becomes the property of the assessee
in consideration of a transfer referred to in clause (vii)
of section 47, there shall be included the period for which
the share or shares in the amalgamating company were held
by the assessee ;
(d) in the case of a capital asset, being a share or any
other security (hereafter in this clause referred to as the
financial asset) subscribed to by the assessee on the basis
of his right to subscribe to such financial asset or subscribed
to by the person in whose favour the assessee has renounced
his right to subscribe to such financial asset, the period
shall be reckoned from the date of allotment of such financial
asset ;
(e) in the case of a capital asset, being the right to subscribe
to any financial asset, which is renounced in favour of any
other person, the period shall be reckoned from the date of
the offer of such right by the company or institution, as
the case may be, making such offer ;
(f) in the case of a capital asset, being a financial asset,
allotted without any payment and on the basis of holding of
any other financial asset, the period shall be reckoned from
the date of the allotment of such financial asset ;
(g) in the case of a capital asset, being a share or shares
in an Indian company, which becomes the property of the assessee
in consideration of a demerger, there shall be included the
period for which the share or shares held in the demerged
company were held by the assessee ;
(h) in the case of a capital asset, being trading or clearing
rights of a recognised stock exchange in India acquired by
a person pursuant to demutualisation or corporatisation of
the recognised stock exchange in India as referred to in clause
(xiii) of section 47, there shall be included the period for
which the person was a member of the recognised stock exchange
in India immediately prior to such demutualisation or corporatisation;
(ha) in the case of a capital asset, being equity share
or shares in a company allotted pursuant to demutualisation
or corporatisation of a recognised stock exchange in India
as referred to in clause (xiii) of section 47, there shall
be included the period for which the person was a member of
the recognised stock exchange in India immediately prior to
such demutualisation or corporatisation;
(hb) in the case of a capital asset, being 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),
the period shall be reckoned from the date of allotment or
transfer of such specified security or sweat equity shares;
(ii) In respect of capital assets other than those mentioned
in clause (i), the period for which any capital asset is held
by the assessee shall be determined subject to any rules which
the Board may make in this behalf.
Explanation 2.—For the purposes of this clause, the
expression “security” shall have the meaning assigned
to it in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956).
Explanation 3.—For the purposes of this clause, the
expressions “specified security” and “sweat
equity shares” shall have the meanings respectively
assigned to them in the Explanation to clause (d) of sub-section
(1) of section 115WB;
(42B) “short-term capital gain” means capital
gain arising from the transfer of a short-term capital asset
;
(42C) “slump sale” means the transfer of one
or more undertakings as a result of the sale for a lump sum
consideration without values being assigned to the individual
assets and liabilities in such sales.
Explanation 1.—For the purposes of this clause, “undertaking”
shall have the meaning assigned to it in Explanation 1 to
clause (19AA).
Explanation 2.—For the removal of doubts, it is hereby
declared that the determination of the value of an asset or
liability for the sole purpose of payment of stamp duty, registration
fees or other similar taxes or fees shall not be regarded
as assignment of values to individual assets or liabilities
;
(43) “tax” in relation to the assessment year
commencing on the 1st day of April, 1965, and any subsequent
assessment year means income-tax chargeable under the provisions
of this Act, and in relation to any other assessment year
income-tax and super-tax chargeable under the provisions of
this Act prior to the aforesaid date and in relation to the
assessment year commencing on the 1st day of April, 2006,
and any subsequent assessment year includes the fringe benefit
tax payable under section 115WA ;
(43A) “tax credit certificate” means a tax credit
certificate granted to any person in accordance with the provisions
of Chapter XXII-B24 and any scheme made thereunder ;
(43B) omitted
(44) “Tax Recovery Officer” means any Income-tax
Officer who may be authorised by the Chief Commissioner or
Commissioner, by general or special order in writing, to exercise
the powers of a Tax Recovery Officer and also to exercise
or perform such powers and functions which are conferred on,
or assigned to, an Assessing Officer under this Act and which
may be prescribed;
(45) “total income” means the total amount of
income referred to in section 5, computed in the manner laid
down in this Act ;
(46) omitted
(47) “transfer”, in relation to a capital asset,
includes,—
(i) the sale, exchange or relinquishment of the asset ; or
(ii) the extinguishment of any rights therein ; or
(iii) the compulsory acquisition thereof under any law ;
or
(iv) in a case where the asset is converted by the owner
thereof into, or is treated by him as, stock-in-trade of a
business carried on by him, such conversion or treatment ;or
(iva) the maturity or redemption of a zero coupon bond; or
(v) any 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) ; or
(vi) any 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 or in any other manner whatsoever) which
has the effect of transferring, or enabling the enjoyment
of, any immovable property.
Explanation.—For the purposes of sub-clauses (v) and
(vi), “immovable property” shall have the same
meaning as in clause (d) of section 269UA;
(48) “zero coupon bond” means a bond—
(a) issued by any infrastructure capital company or infrastructure
capital fund or public sector company or scheduled bank on
or after the 1st day of June, 2005;
(b) in respect of which no payment and benefit is received
or receivable before maturity or redemption from infrastructure
capital company or infrastructure capital fund or public sector
company or scheduled bank; and
(c) which the Central Government may, by notification in
the Official Gazette, specify in this behalf.
Explanation.—For the purposes of this clause, the expression
“scheduled bank” shall have the meaning assigned
to it in clause (ii) of the Explanation to sub-clause (c)
of clause (viia) of sub-section (1) of section 36.
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