| [Act 36 of 1989] | [20th October, 1989] |
An Act further to amend the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Gift-tax Act, 1958
Be it enacted by Parliament in the Fortieth Year of the Republic of India as follows:-
Chapter 1 - Preliminary
1. Short title and commencement.-(1) This Act may be called the Direct Tax Laws (Second Amendment) Act, 1989.
(2) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1990.
Chapter 2 - Amendments to the Income-Tax Act, 1961
2. Amendment of Section 2.-In Section 2 of the Income-tax Act, 1961 (28 of 1961) (hereinafter referred to as the Income-tax Act),-
(i) for clause (39), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989, namely:-
‘(39) "registered firm" means a firm registered under the provisions of clause (a) of sub-section (1) of Section 185 or deemed to be registered under the provisions of sub-section (6) of that section or under those provisions read with sub-section (7) of Section 184;’;
(ii) after clause (42-B), the following clause shall be inserted, namely:-
‘(42-C) "security" means a Government security as defined in clause (2) of Section 2 of the Public Debt Act, 1944 (18 of 1944);’.
3. Amendment of Section 6.-In Section 6 of the Income-tax Act, in clause (1), in sub-clause (c), for the Explanation, the following Explanation shall be substituted, namely:-
‘Explanation.-In the case of an individual,-
(a) being a citizen of India, who leaves India in any previous year for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted;
(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of Section 115-C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and fifty days" had been substituted.’.
4. Amendment of Section 10.-In Section 10 of the Income-tax Act,-
(a) for clause (5), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989, namely:-
‘(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 (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;’;
(b) in clause (14), to sub-clause (ii), the following proviso shall be added and shall be deemed to have been added with effect from the 1st day of April, 1989, namely:-
"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.".
5. Insertion of new Section 33-AC.-After Section 33-AB of the Income-tax Act, the following section shall be inserted, namely:-
"33-AC. Reserves for shipping business.-(1) In the case of an assessee, being a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount, not exceeding the total income (computed before making any deduction under this section and Chapter VI-A), as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be utilised in the manner laid down in sub-section (2):
Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid-up share capital (excluding the amounts capitalised from reserves) of the assessee, no allowance under this sub-section shall be made in respect of such excess.
(2) The amount credited to the reserve account under sub-section (1) shall be utilised by the assessee before the expiry of a period of eight years next following the previous year in which the amount was credited-
(a) for acquiring a new ship for the purposes of the business of the assessee; and
(b) until the acquisition of a new ship, for the purposes of the business of the assessee other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India.
(3) Where any amount credited to the reserve account under sub-section (1),-
(a) has been utilised for any purpose other than that referred to in clause (a) or clause (b) of sub-section (2), the amount so utilised; or
(b) has not been utilised for the purpose specified in clause (a) of sub-section (2), the amount not so utilised; or
(c) has been utilised for the purpose of acquiring a new ship as specified in clause (a) of sub-section (2), but such ship is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired, the amount so utilised in acquiring the ship,
shall be deemed to be the profits,-
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of eight years in sub-section (2); or
(iii) in a case referred to in clause (c), in the year in which the sale or transfer took place,
and shall be charged to tax accordingly.
Explanation.-For the purposes of this section,-
(a) "public company" shall have the meaning assigned to it in Section 3 of the Companies Act, 1956 (1 of 1956);
(b) "new ship" shall have the same meaning as in clause (ii) of sub-section (2) of Section 32-AB.'.
6. Amendment of Section 48.-In Section 48 of the Income-tax Act, in sub-section (1), to clause (a), the following proviso and the Explanation thereto shall be added, namely:-
‘Provided that in the case of an assessee, who is a non-resident Indian, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every re-investment thereafter in, and sale of, shares in, or debentures of, an Indian company.
Explanation.-For the purposes of this clause,-
(i) "non-resident Indian" shall have the same meaning as in clause (e) of Section 115-C;
(ii) "foreign currency" and "Indian currency" shall have the meanings respectively assigned to them in Section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(iii) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at the rate of exchange prescribed in this behalf.’.
7. Amendment of Section 80-C.-In Section 80-C of the Income-tax Act,-
(a) in sub-section (2),-
(i) in clause (a),-
(A) in sub-clause (ii), after the words "deferred annuity", the words, brackets, figures and letters ", not being an annuity plan referred to in clause (ii) of sub-section 1 of Section 80-CCA," shall be inserted;
(B) in sub-clause (v),-
(1) the brackets and words "(hereafter in this section referred to as the Unit-linked Insurance Plan)" shall be omitted;
(2) the word "or" shall be inserted at the end;
(C) after sub-clause (v), the following sub-clause shall be inserted, namely:-
"(vi) as a contribution for participation in any such unit-linked insurance plan of the LIC Mutual Fund notified under clause (23-D) of Section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf;";
(ii) in clause (h), after sub-clause (ia) [as inserted by the Finance Act, 1989 (13 of 1989)], the following sub-clause shall be inserted, namely:-
"(ib) as subscription to any such savings certificate as defined in clause (c) of Section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify in this behalf;";
(iii) in clauses (g) and (h), for the words "Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu", wherever they occur, the words "State of Goa and the Union Territories of Dadra and Nagar Haveli and Daman and Diu" shall be substituted;
(iv) after clause (h), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1984, namely:-
"(i) where the assessee is an individual or a Hindu undivided family or where the assessee is an association of persons or a body of individuals consisting, in either case, only of husband and wife governed by the system of community of property in force in the State of Goa and the Union Territories of Dadra and Nagar Haveli and Daman and Diu, any sums paid in the previous year by such assessee out of his or its income chargeable to tax as subscription to the National Savings Certificates (VI Issue) and National Savings Certificates (VII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959);";
(b) in sub-section (5),-
(i) for the words "the Unit-linked Insurance Plan", the words, brackets, figures and letters "any unit-linked insurance plan referred to in sub-clause (v) or sub-clause (vi) of clause (a) of sub-section (2)" shall be substituted;
(ii) for the words "participating in the plan, terminates his participation in the plan", the words "participating in any such plan, terminates his participation in that plan" shall be substituted;
(c) in sub-section (6), in Explanation 2, for the words "the Unit-linked Insurance Plan", the words, brackets, figures and letters "any unit-linked insurance plan referred to in sub-clause (v) or sub-clause (vi) of clause (a) of sub-section (2)" shall be substituted.
8. Amendment of Section 80-CC.-In Section 80-CC of the Income-tax Act, in sub-section (3),-
(i) in clause (a),-
(a) in sub-clause (iii), for the word "authority", the words "authority; or" shall be substituted;
(b) after sub-clause (iii), the following sub-clause shall be inserted, namely:-
"(iv) operation of ships;";
(ii) to clause (b), the following proviso shall be added, namely:-
"Provided that this clause shall not apply in the case of an issue of equity shares made by a public company formed and registered in India with the main object of carrying on the business of operation of ships;"
9. Amendment of Section 80-L.-In Section 80-L of the Income-tax Act, in sub-section (1), after clause (i), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1984, namely:-
"(ia) interest on National Savings Certificates (VI Issue) and National Savings Certificates (VII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959);".
10. Insertion of new Section 115-BBA.-After Section 115-BB of the Income-tax Act, the following section shall be inserted, namely:-
"115-BBA. Tax on non-resident sportsmen or sports associations.-(1) Where the total income of an assessee,-
(a) being a sportsman (including an athlete), who is not a citizen of India and is a non-resident, includes any income received or receivable by way of-
(i) participation in India in any game (other than a game the winnings wherefrom are taxable under Section 115-BB) or sport; or
(ii) advertisement; or
(iii) contribution of articles relating to any game or sport in India in newspapers, magazines or journals; or
(b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winnings wherefrom are taxable under Section 115-BB) or sport played in India,
the income-tax payable by the assessee shall be the aggregate of-
(i) the amount of income-tax calculated on income referred to in clause (a) or clause (b) at the rate of ten per cent.; and
(ii) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income referred to in clause (a) or clause (b):
Provided that no deduction in respect of any expenditure or allowance shall be allowed under any provision of this Act in computing the income referred to in clause (a) or clause (b).
(2) It shall not be necessary for the assessee to furnish under sub-section (1) of Section 139 a return of his income if-
(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clause (a) or clause (b) of sub-section (1); and
(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.".
11. Amendment of Section 115-D.-In Section 115-D of the Income-tax Act, in sub-section (2), in clause (a), for the words, figures and letter "under Chapter VI-A", the words, brackets, figures and letters "under sub-section (2) of Section 48 or under Chapter VI-A" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1988.
12. Amendment of Section 115-J.-In Section 115-J of the Income-tax Act, in the Explanation,-
(i) in clause (b), after the words, figures and letters "reserves specified in Section 80-HHD", the words, brackets, figures and letters "or sub-section (1) of Section 33-AC" shall be inserted;
(ii) after clause (h), the following clause shall be inserted, namely:-
"(ha) the amount deemed to be the profits under sub-section (3) of Section 33-AC;".
13. Amendment of Section 139.-In Section 139 of the Income-tax Act, in sub-section (1), in the Explanation, in clause (b), in sub-clause (i), after the words "to be auditted", the words "or in the case of a partner of a firm where the accounts of the firm are required to be so audited" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989.
14. Amendment of Section 140-A.-In Section 140-A of the Income-tax Act, after sub-section (3), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(4) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
15. Amendment of Section 142.-In Section 142 of the Income-tax Act, after sub-section (3), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(4) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988 (4 of 1988), or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
16. Amendment of Section 143.-In Section 143 of the Income-tax Act, the following amendments shall be made and shall be deemed to have been made with effect from the 1st day of April, 1989, namely:-
(a) in sub-section (1),-
(i) in clause (a),-
(1) after the first proviso, the following proviso shall be inserted, namely:-
"Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments:";
(2) in the existing second proviso, for the words "Provided further", the words "Provided also" shall be substituted;
(ii) in clause (b), after the words "an order made under", the words, brackets and figures "sub-section (3) of this section or Section 144 or" shall be inserted;
(iii) after clause (b), the following clause shall be inserted, namely:-
"(c) Where the assessee is a partner of a firm or a member of an association of persons or body of individuals and as a result of the adjustments made under the first proviso to clause (a) of sub-section (1) in the income or loss declared in the return made by the firm, association or body, as the case may be, or as a result of an order made under sub-section (3) of this section or Section 144 or Section 147 or Section 154 or Section 155 or sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5) of Section 185 or sub-section (1) or sub-section (2) of Section 186 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264, or any order of settlement made under sub-section (4) of Section 245-D, passed subsequent to the filing of the return referred to in clause (a), there is any variation in his share in the income or loss of the firm, association or body, as the case may be, or in the manner of inclusion of his share in the returned income, then,-
(i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under Section 156 and all the provisions of this Act shall apply accordingly, and
(ii) if any refund is due, it shall be granted to the assessee:
Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such adjustments were made or any such order was passed.";
(b) in sub-section (1-A),-
(i) in clause (a), for the words "the proviso", the words "the first proviso" shall be substituted;
(ii) in the Explanation, in clause (i), for the words "the proviso", the words "the first proviso" shall be substituted;
(c) in sub-section (2),-
(i) in the opening portion, for the words, brackets and figure "In a case referred to in sub-section (1), if the Assessing Officer", the words, figures and brackets "Where a return has been made under Section 139, or in response to a notice under sub-section (1) of Section 142, the Assessing Officer shall, if he" shall be substituted;
(ii) for the words "he shall serve on the assessee", the words "serve on the assessee" shall be substituted;
(d) after sub-section (3), the following sub-sections shall be inserted, namely:-
"(4) Where a regular assessment under sub-section (3) of this section or Section 144 is made,-
(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment;
(b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.
(5) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
17. Amendment of Section 144.-Section 144 of the Income-tax Act shall be renumbered as sub-section (1) thereof and after sub-section (1) as so renumbered, the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
18. Amendment of Section 149.-In Section 149 of the Income-tax Act, in sub-section (1), in clause (a), in sub-clause (iii), for the words "more than rupees one lakh", the words "rupees one lakh" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989.
19. Amendment of Section 184.-In Section 184 of the Income-tax Act, in sub-section (7), after the words "is granted", the words "or is deemed to have been granted" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989.
20. Amendment of Section 185.-In Section 185 of the Income-tax Act, after sub-section (5), the following sub-sections shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(6) Notwithstanding anything contained in sub-sections (1) to (4), where a firm has made an application for registration in relation to an assessment year and has furnished the return for that assessment year, such firm shall be deemed to have been registered under this section on the expiry of the period for serving notice as specified in the proviso to sub-section (2) of Section 143 in respect of such return:
Provided that nothing in this sub-section shall affect the power of the Assessing Officer to intimate the defect to the firm under sub-section (2) and where any such intimation is sent, all the provisions of sub-section (2) shall apply.
(7) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Second Amendment) Act, 1989 shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
21. Amendment of Section 186.-In Section 186 of the Income-tax Act, the following amendments shall be made and shall be deemed to have been made with effect from the 1st day of April, 1989, namely:-
(a) in sub-section (1),-
(i) after the words "firm has been registered", the words "or is deemed to have been registered" shall be inserted;
(ii) the words "and with the previous approval of the Deputy Commissioner," shall be omitted;
(iii) in the proviso, after the words "registration has been granted", the words "or is deemed to have been granted" shall be inserted;
(iv) after the existing proviso, the following proviso shall be inserted, namely:-
"Provided further that the Assessing Officer shall not cancel the registration granted under sub-section (1) of Section 185 except with the previous approval of the Deputy Commissioner.";
(b) in sub-section (2), after the words "firm has been registered", the words "or is deemed to have been registered" shall be inserted.
22. Insertion of new Section 194-E.-After Section 194-D of the Income-tax Act, the following section shall be inserted with effect from the 1st day of November, 1989, namely:-
"194-E. Payments to non-resident sportsmen or sports associations.-Where any income referred to in Section 115-BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.".
23. Amendment of Section 195.-In Section 195 of the Income-tax Act, in sub-section (1), before the Explanation, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1987, namely:-
"Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23-D) of Section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode.".
24. Amendment of Sections 198 to 200 and 202 to 205.-In Sections 198, 199, 200, 202, 203, 203-A, 204 and 205 of the Income-tax Act, after the word, figures and letter "Section 194-D,", the word, figures and letter "Section 194-E," shall be inserted with effect from the 1st day of November, 1989.
25. Substitution of new section for Section 241.-For Section 241 of the Income-tax Act, the following section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989, namely:-
"241. Power to withhold refund in certain cases.-Where refund of any amount becomes due to the assessee as a result of an order under this Act or under the provisions of sub-section (1) of Section 143 after a return has been made under Section 139 or in response to a notice under sub-section (1) of Section 142 and the Assessing Officer is of the opinion, having regard to the fact that-
(i) a notice has been issued, or is likely to be issued, under sub-section (2) of Section 143 in respect of the said return; or
(ii) the order is the subject-matter of an appeal or further proceeding; or
(iii) any other proceeding under this Act is pending,
that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine.".
26. Amendment of Section 275.-Section 275 of the Income-tax Act shall be renumbered as sub-section (1) thereof and after sub-section (1) as so renumbered, the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March, 1989.".
Chapter 3 - Amendments to the Wealth-Tax Act, 1957
27. Amendment of Section 15-B.-In Section 15-B of the Wealth-tax Act, 1957 (27 of 1957) (hereinafter referred to as the Wealth-tax Act), after sub-section (3), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(4) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
28. Amendment of Section 16.-In Section 16 of the Wealth-tax Act, the following amendments shall be made and shall be deemed to have been made with effect from the 1st day of April, 1989, namely:-
(a) in sub-section (1),-
(i) in clause (a),-
(1) after the first proviso, the following proviso shall be inserted, namely:-
"Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments:";
(2) in the existing second proviso, for the words "Provided further", the words "Provided also" shall be substituted;
(ii) in clause (b), after the words "an order made under", the words, brackets and figures "sub-section (3) or sub-section (5) of this section or" shall be inserted;
(b) in sub-section (1-A), in clause (a), for the words "the proviso", the words "the first proviso" shall be substituted;
(c) in sub-section (2),-
(i) in the opening portion, for the words, brackets and figure "In a case referred to in sub-section (1), if the Assessing Officer", the words, figures and brackets "Where a return has been made under Section 14 or Section 15, or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he" shall be substituted;
(ii) for the words "he shall serve or the assessee", the words "serve on the assessee" shall be substituted;
(d) after sub-section (5), the following sub-sections shall be inserted, namely:-
"(6) Where a regular assessment under sub-section (3) or sub-section (5) is made,-
(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment;
(b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.
(7) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions for the time being in force and applicable to the relevant assessment year.".
29. Amendment of Section 34-A.-In Section 34-A of the Wealth-tax Act, for sub-section (2), the following sub-section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989, namely:-
"(2) Where refund of any amount becomes due to the assessee as a result of an order under this Act or under the provisions of sub-section (1) of Section 16 after a return has been made under Section 14 or Section 15 or in response to a notice under clause (i) of sub-section (4) of Section 16 and the Assessing Officer is of the opinion, having regard to the fact that-
(i) a notice has been issued, or is likely to be issued, under sub-section (2) of Section 16 in respect of the said return; or
(ii) the order is the subject-matter of an appeal or further proceeding; or
(iii) any other proceeding under this Act is pending,
that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine.".
30. Amendment of Schedule III.-In Schedule III to the Wealth-tax Act,-
(a) after Rule 9, the following rule shall be inserted, namely:-
‘9-A. Special provision for quoted shares of companies.-Notwithstanding anything in Rule 9, the value of an equity share in any company which is a quoted share may, at the option of the assessee, be taken on the basis of the average of the value quoted on the 31st day of March immediately preceding the assessment year and the values quoted in respect of such share on the said dates in relation to each of the immediately preceding four assessment years, or where there is no such quotation on any of the aforesaid dates, the quotation on the date closest to the said date and immediately preceding such date:
Provided that where for any reason the value of such share is quoted in relation to lesser number of assessment years than the said four assessment years, then the value or values so quoted shall be taken into account for the purposes of the aforesaid average:
Provided further that where the assessee opts for the average of the values so quoted, he shall get such values certified by an accountant and attach the certificate to the return of wealth in respect of the relevant assessment year.
Explanation.-For the purposes of this rule, "accountant" shall have the same meaning as in the Explanation below sub-section (2) of Section 288 of the Income-tax Act.’;
(b) in Rule 12, sub-rules (3) and (5) shall be omitted and shall be deemed to have been omitted with effect from the 1st day of April, 1989.
Chapter 4 - Amendments to the Gift-Tax Act, 1958
31. Amendment of Section 14-B.- In Section 14-B of the Gift-tax Act, 1958 (18 of 1958) (hereinafter referred to as the Gift-tax Act), after sub-section (3), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1989, namely:-
"(4) The provisions of this section shall apply in respect of assessment for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.".
32. Amendment of Section 15.-In Section 15 of the Gift-tax Act, the following amendments shall be made and shall be deemed to have been made with effect from the 1st day of April, 1989, namely:-
(a) in sub-clause (1),-
(i) in clause (a),-
(1) after the first proviso, the following proviso shall be inserted, namely:-
"Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments:";
(2) in the existing second proviso, for the words "Provided further", the words "Provided also" shall be substituted;
(ii) in clause (b), after the words "an order made under", the words, brackets and figures "sub-section (3) or sub-section (5) of this section or" shall be inserted;
(b) in sub-section (1-A), in clause (a), for the words "the proviso", the words "the first proviso" shall be substituted;
(c) in sub-section (2),-
(i) in the opening portion, for the words, brackets and figure "in a case referred to in sub-section (1), if the Assessing Officer", the words, figures and brackets "Where a return has been made under Section 13 or Section 14 or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he" shall be substituted;
(ii) for the words "he shall serve on the assessee", the words "serve on the assessee" shall be substituted;
(d) after sub-section (6), the following sub-sections shall be inserted, namely:-
"(7) Where a regular assessment under sub-section (3) or sub-section (5) is made,-
(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment;
(b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.
(8) The provisions of this section, except those of sub-section (6), as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.".
33. Amendment of Section 33-A.-In Section 33-A of the Gift-tax Act, for sub-section (2), the following sub-section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1989, namely:-
"(2) Where refund of any amount becomes due to the assessee as a result of an order under this Act or under the provisions of sub-section (1) of Section 15 after a return has been made under Section 13 or Section 14 or in response to a notice under clause (i) of sub-section (4) of Section 15 and the Assessing Officer is of the opinion, having regard to the fact that,-
(i) a notice has been issued, or is likely to be issued, under sub-section (2) of Section 15 in respect of the said return; or
(ii) the order is the subject-matter of an appeal or further proceeding; or
(iii) any other proceeding under this Act is pending,
that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine.".