(1) This Act may be called the Finance Act, 1975.

(2) Save as otherwise provided in this Act, Sections 2 to 30 shall be deemed to have come into force on the 1st day of April, 1975.

RATES OF INCOME-TAX

(1) Subject to the provisions of sub-sections (2), (3) and (4), for the assessment year commencing on the 1st day of April, 1975, income-tax shall be charged at the rates specified in Part I of the First Schedule and shall be increased,

(a) in the cases to which Paragraphs A, B, C and D of that Part apply, by a surcharge for purposes of the Union; and

(b) in the cases to which Paragraphs E and F of that Part apply, by a surcharge,

calculated in each case in the manner provided therein.

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

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the net agricultural income were comprised in the total income after the first six thousand rupees of the total income but without being liable to tax), only for the purpose of charging income-tax in respect of the total income; and

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

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

(ii) the net agricultural income shall be increased by a sum of six thousand rupees and the amount of income-tax shall be determined in respect of the net agricultural income as so increased at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if the net agricultural income as so increased were the total income;

(iii) the amount by which income-tax determined in accordance with sub-clause (i) exceeds the amount of income-tax determined in accordance with sub-clause (ii) shall be the income-tax chargeable in respect of the total income.

(3) Where in the case of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), of the total income includes any profits and gains from life insurance business, the income-tax payable by it shall be the aggregate of the income-tax calculated

(i) on the amount of profits and gains from life insurance business so included, at the rate applicable in the case of the Life Insurance Corporation of India, in accordance with Paragraph E of Part I of the First Schedule, to that part of its total income which consists of profits and gains from life insurance business; and

(ii) on the remaining part of its total income; at the rate applicable to the company on its total income.

(4) In cases to which Chapter XII or Section 164 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act) applies, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter or section, as the case may be.

(5) In cases in which tax has to be deducted under Sections 193, 194, 194-A 194-B, 194-D and 195 of the Income-tax Act at the rates in force, the deduction shall be made at the rates specified in Part II of the First Schedule.

(6) Subject to the provisions of sub-section (7), in case in which income-tax has to be calculated under the first proviso to sub-section (5) of Section 132 of the Income-tax Act or charged under sub-section (4) of Section 172 or sub-section (2) of Section 174 or Section 175 or sub-section (2) of Section 176 of the said Act or deducted under Section 192 of the said Act from income chargeable under the head Salaries or deducted under sub-section (9) of Section 80-E of the said Act from any payment referred to in the said sub-section (9) or in which the advance tax payable under Chapter XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, advance tax shall be so calculated, charged, deducted or computed at the rate or rates specified in Part III of the First Schedule:

Provided that in respect of any income chargeable to tax under Section 164 of the Income-tax Act at the rate of sixty-five per cent., advance tax shall be computed at that rate.

(7) In the cases to which Sub-Paragraph I or Sub-Paragraph II of Paragraph A of Part III of the First Schedule applies, where the assessee has, in the previous year or, if by virtue of any provision of the Income-tax Act income-tax is to be charged in respect of the income of a period other than the previous year, in such other period, any net agricultural income, in addition to total income, and the total income exceeds 1[eight thousand rupees], then, in calculating income-tax under the first proviso to sub-section (5) of Section 132 of the Income-tax Act or in charging income-tax under sub-section (2) of Section 174 or Section 175 or sub-section (2) of Section 176 of the said Act or in computing the advance tax payable under Chapter XVII-C of the said Act, at the rate or rates in force,

(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) (that is to say, as if the net agricultural income were comprised in the total income after the first 2[eight thousand rupees] of the total income but without being liable to tax), only for the purpose of calculating, charging or computing such income-tax or, as the case may be, advance tax in respect of the total income; and

(b) such income-tax or, as the case may be, advance tax shall be so calculated, charged or computed as follows:

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

(ii) the net agricultural income shall be increased by a sum of 3[eight thousand rupees] and the amount of income-tax or advance tax shall be determined in respect of the net agricultural income as so increased at the rates specified in Sub-Paragraph I or, as the case may be, Sub-Paragraph II of the said Paragraph A, as if the net agricultural income as so increased were the total income;

(iii) the amount by which income-tax or, as the case may be, advance tax determined in accordance with sub-clause (i) exceeds the amount of income-tax or advance tax determined in accordance with sub-clause (ii) shall be the income-tax or advance tax in respect of the total income.

(8) For the purposes of this sections and the First Schedule,

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

(b) domestic company means an Indian company, or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 1975, 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 in accordance with the provisions of Section 194 of that Act;

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

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

(d) insurance commission means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance);

(e) net agricultural income , in relation to a person, means the total amount of agricultural income, from whatever source derived, of that person computed in accordance with the rules contained in Part IV of the First Schedule;

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

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

DIRECT TAXES

In Section 10 of the Income-tax Act,

(a) in sub-clause (ii) of clause (5),

(i) in item (a) and item (b), for the words himself, his spouse and children, , the words himself and his family, shall be substituted;

(ii) in the proviso, for the words shall in no case exceed , the words shall not, except in such cases and under such circumstances as may be prescribed having regard to the travel concession or assistance granted to the employees of the Central Government, exceed shall be substituted;

(iii) the following Explanation shall be inserted at the end, namely:

Explanation. For the purposes of this sub-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) after clause (10-A), the following clause shall be inserted with effect from the 1st day of April, 1976, namely:

(10-B) 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, to the extent such compensation does not exceed

(i) an amount calculated in accordance with the provisions of clause (b) of Section 25-F of the Industrial Disputes Act, 1947 (14 of 1947); or

(ii) twenty thousand rupees,

whichever is less.

Explanation. For the purpose 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 and workman shall have the same meanings as in the Industrial Disputes Act, 1947 (14 of 1947); ;

(c) in clause (13-A), for the words three hundred rupees , the words four hundred rupees shall be substituted;

(d) in clause (14), the following Explanation shall be inserted, and shall be deemed always to have been inserted, at the end, namely:

Explanation. For the removal of doubts, it is hereby declared that any allowance granted to the assessee 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 shall not be regarded, for the purposes of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties; ;

(e) clause (27) shall be omitted with effect from the 1st day of April, 1976.

In Section 32 of the Income-tax Act, in clause (ii) of sub-section (1), after the proviso, the following proviso shall be inserted, namely:

Provided further that no deduction shall be allowed under this clause or clause (iii) in respect of any motor car manufactured outside India, where such motor car is acquired by the assessee after the 28th day of February, 1975 and is used otherwise than in a business of running it on hire for tourist; .

In Section 33-A of the Income-tax Act, the following Explanation shall be inserted, and shall be deemed always to have been inserted, at the end, namely:

Explanation. For the purposes of this section, an assessee having a leasehold or other right of occupancy in any land shall be deemed to own such land and where the assessee transfers such right, he shall be deemed to have sold or otherwise transferred such land. .

In Section 40-A of the Income-tax Act,

(a) after sub-section (6), the following sub-section shall be inserted, and shall be deemed to have been inserted, with effect from the 1st day of April, 1973, namely:

(7)(a) Subject to the provisions of clause (b), no deduction shall be allowed in respect of any provision (whether called as such or by any other name) made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason.

(b) Nothing in clause (a) shall apply in relation to

(i) any provision made by the assessee for the purpose of payment of a sum by way of any contribution towards an approved gratuity fund, or for the purpose of payment of any gratuity, that has become payable during the previous year;

(ii) any provision made by the assessee for the previous year relevant to any assessment year commencing on or after the 1st day of April, 1973 but before the 1st day of April, 1976, to the extent the amount of such provision does not exceed the admissible amount, if the following conditions are fulfilled, namely:

(1) the provision is made in accordance with an actuarial valuation of the ascertainable liability of the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason;

(2) the assessee creates an approved gratuity fund for the exclusive benefit of his employees under an irrevocable trust, the application for the approval of the fund having been made before the 1st day of January, 1976; and

(3) a sum equal to at least fifty per cent of the admissible amount, or where any amount has been utilised out of such provision for the purpose of payment of any gratuity before the creation of the approved gratuity fund, a sum equal to at least fifty per cent of the admissible amount as reduced by the amount so utilised, is paid by the assessee by way of contribution to the approved gratuity fund before the 1st day of April, 1976 and the balance of the admissible amount or, as the case may be, the balance of the admissible amount as reduced by the amount so utilised, is paid by the assessee by way of such contribution before the 1st day of April, 1977.

Explanation 1. For the purpose of sub-clause (ii) of clause (b) of this sub-section, admissible amount means the amount of the provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason, to the extent such amount does not exceed an amount calculated at the rate of eight and one-third per cent of the salary [as defined in clause (h) of Rule 2 of Part A of the Fourth Schedule] of each employee entitled to the payment of such gratuity for each year of his service in respect of which such provision is made.

Explanation 2. For the removal of doubts, it is hereby declared that where any provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason has been allowed as a deduction in computing the income of the assessee for any assessment year, any sum paid out of such provision by way of contribution towards an approved gratuity fund or by way of gratuity to any employee shall not be allowed as a deduction in computing the income of the assessee of the previous year in which the sum is so paid. ;

(b) after sub-section (7) as so inserted, the following sub-section shall be inserted, with effect from the 1st day April, 1976, namely:

(8) Where the assessee, being a company (other than a banking company or a financial company), incurs any expenditure by way of interest in respect of any deposit received by it, fifteen per cent of such expenditure shall be allowed as a deduction.

Explanation. In this sub-section,

(a) banking company means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in Section 51 of that Act;

(b) deposit means any deposit of money with, and includes any money borrowed by, a company, but does not include any amount received by the company

(i) from the Central Government or any State Government or any local authority, or from any other source where the repayment of the amount is guaranteed by the Central Government or a State Government;

(ii) from the Government of a foreign State, or from a citizen of a foreign State, or from any institution, association or body (whether incorporated or not) established outside India;

(iii) as a loan from a banking company or from a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank);

(iv) as a loan from any institution or body specified in the list in the Tenth Schedule or such other institution or body as the Central Government may, having regard to the nature and objects of the institution or body, by notification in the Official Gazette, specify in this behalf;

(v) from any other company;

(vi) from an employee of the company by way of security deposit;

(vii) by way of security or as an advance from any purchasing agent, selling agent or other agent in the curse of, or for the purpose of, the business of the company or as advance against orders for the supply of goods or for the rendering of any service;

(viii) by way of subscription to any share, stock, bond or debenture (such bond or debenture being secured by a charge or a lien on the assets of the company) pending the allotment of the said share, stock, bond or debenture, or by way of advance payment of any moneys uncalled and unpaid upon any shares in the company, if such moneys are not repayable in accordance with the articles of association of the company;

(ix) as a loan from any person where the loan is secured by the creation of a mortgage, charge or pledge of any assets of the company (such loan being hereafter in this sub-clause referred to as the relevant loan) and the amount of the relevant loan, together with the amount of any other prior debt or loan secured by the creation of a mortgage, charge or pledge of such assets, is not more than seventy-five per cent of the price that such assets would ordinarily fetch on sale in the open market on the date of creation of the mortgage, charge or pledge for the relevant loan;

(c) financial company means

(i) a hire-purchase finance company, that is to say, a company which carries on, as its principal business, hire-purchase transactions or the financing of such transactions; or

(ii) an investment company, that is to say, a company which carries on, as its principal business, the acquisition of shares, stock, bonds, debentures, debenture stock, or securities issued by the Government or a local authority, or other marketable securities of a like nature; or

(iii) a housing finance company, that is to say, a company which carries on, as its principal business, the business of financing of acquisition or construction of houses, including acquisition or development of land in connection therewith;

(iv) a loan company, that it to say, a company [not being a company referred to in sub-clauses (i) to (iii)] which carries on, as its principal business, the business of providing finance, whether by making loans or advances or otherwise;

(v) 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 620-A of the Companies Act, 1956 (1 of 1956) to be a Nidhi or Mutual Benefit Society;

(vi) a miscellaneous finance company, that is to say, a company which carries on exclusively, or almost exclusively, two or more classes of business referred to in the preceding sub-clauses. .

In Section 43 of the Income-tax Act, in the proviso to clause (1), after the words, figures and letters the 31st day of March, 1967 , the words, figures and letters , but before the 1st day of March, 1975, shall be inserted.

In the Income-tax Act, Section 44-A, the following section shall be inserted with effect from the 1st day of April, 1976, namely:

44-B. Special provision for computing profits and gains of shipping business in the case of non-residents. (1) Notwithstanding anything to the contrary contained in Sections 28 to 43-A, in the case of an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession .

(2) The amounts referred to in sub-section (1) shall be the following, namely:

(i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, live-stock, mail or goods shipped at any port in India; and

(ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, live-stock, mail or goods shipped at any port outside India. .

In Section 52 of the Income-tax Act, in sub-section (2), the following proviso shall be inserted, and shall be deemed to have been inserted, with effect from the 1st day of April, 1974, namely:

Provided that this sub-section shall not apply in any case

(a) where the capital asset is transferred to the Government, or

(b) where the full value of the consideration for the transfer of the capital asset is determined or approved by the Central Government or the Reserve Bank of India and the adequacy of the full value of the consideration so determined or approved is not questioned by the assessee. .

In Section 80-C of the Income-tax Act, for the sub-section (1), the following sub-section shall be substituted with effect from the 1st day of April, 1976, namely:

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

In the Income-tax Act, after Section 80-F, the following section shall be inserted, with effect from the 1st day of April, 1976, namely:

80-FF. Deduction in respect of expenses on higher education in certain cases. (1) Where an individual, who is a citizen of India and whose gross total income does not exceed twelve thousand rupees, has expended any sum during the previous year out of his income chargeable to tax for the full time education of a dependent, he shall, in accordance with and subject to the provisions of this section, be allowed a deduction of the amount specified in sub-section (2) in the computation of his total income.

(2) The amount referred to in sub-section (1) shall be

(i) in a case where the individual has a dependent undergoing a degree or post-graduate course in medicine (including surgery and obstetrics) or architecture or engineering or technology or business management, one thousand rupees in respect of each such dependent; and

(ii) in a case where the individual has a dependent under going a diploma course in medicine (including surgery and obstetrics) or architecture or engineering or technology or business management, or undergoing any degree or post-graduate course, other than a degree or post-graduate course referred to in clause (i), five hundred rupees in respect of each such dependent;

Provided that where the individual has, during the previous year, incurred expenditure on the education of more than two dependents as aforesaid, the deduction under sub-section (1) shall be allowed only with reference to two such dependents as may be chosen by him.

Explanation. For the purposes of this sub-section,

(a) dependent , in relation to an individual, means a child, brother or sister of the individual, wholly or mainly dependent on the individual;

(b) degree course , post-graduate course and diploma course include respectively any course of study for obtaining a qualification, which, though not described as a degree or post-graduate qualification or diploma, is recognised for purposes of employment under the Central Government as equivalent to a degree, post-graduate qualification or diploma. .

In Section 80-J of the Income-tax Act,

(a) in sub-section (1), the following proviso shall be inserted at the end with effect from the 1st day of April, 1976, namely:

Provided that in relation to the profits and gains derived by an assessee, being a company, from a industrial undertaking which begins to manufacture or produce articles or to operate its cold storage plant or plants after the 31st day of March, 1976, or from a ship which is first brought into use after that date, or from the business of a hotel which starts functioning after that date, the provisions of this sub-section shall have effect as if for the words six per cent. , the words seven and a half per cent. had been substituted. ;

(b) in sub-section (4),

(i) in clause (ii), the words and brackets a building (not being a building taken on rent or leases), shall be omitted with effect from the 1st day of April, 1976;

(ii) in clause (iii), for the words twenty-eight years , the words thirty-three years shall be substituted;

(iii) the following proviso and Explanation shall be inserted at the end with effect from the 1st April, 1976, namely:

Provided further that, where any building or any part thereof previously used for any purpose is transferred to the business of the industrial undertaking, the value of the building or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking.

Explanation 1. For the purposes of clause (ii) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:

(a) such machinery or plant was not, at any time, previous to the date of the installation by the assessee used in India;

(b) such machinery or plant is imported into India from any country outside India; and

(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 of 1922) or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.

Explanation 2. Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with and the total value of the machinery or plant or part so transferred shall be taken into account in computing the capital employed in the industrial undertaking. ;

(c) in sub-section (5), in clause (iii), for the words twenty-eight years , the words thirty-three years shall be substituted;

(d) in sub-section (6),

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

(a) the business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose; ;

(ii) after clause (d), the following clause shall be inserted, namely:

(e) the business of the hotel starts functioning on or after the 1st day of April, 1961, but before the 1st day of April, 1981; ;

(iii) for the Explanation, the following Explanation shall be substituted, with effect from the 1st day of April, 1976, namely:

Explanation. Where in the case of the business of a hotel, any building, or any part thereof, previously used as a hotel, or any machinery or plant, or any part thereof, previously used for any purpose, is transferred to a new business and the total value of the building, machinery or plant or part so transferred does not exceed twenty per cent of the total value of the building, machinery or plant used in the business, then, for the purposes of clause (a) of this sub-section, the condition specified therein shall be deemed to have been complied with and the total value of the building, machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the business of the hotel. ;

(e) after sub-section (6), the following sub-sections shall be inserted with effect from the 1st day of April, 1976, namely:

(6-A) Where the assessee is a person other than a company or a co-operative society, the deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of Section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.

(6-B) Where any goods held for the purposes of the business of the industrial undertaking or the hotel or the operation of the ship are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the business of the industrial undertaking or the hotel or the operation of the ship and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the business of the industrial undertaking or the hotel or the operation of the ship does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship shall be computed as if the transfer, in either case, had made at the market value of such goods as on that date;

Provided that where, in the opinion of the Income-tax Officer, the computation of the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship in the manner hereinbefore specified presents exceptional difficulties, the Income-tax Officer may compute such profits and gains on such reasonable basis as he may deem fit.

Explanation. In this sub-section, market value , in relation to any goods, means the price that such goods would ordinarily fetch on sale in the open market.

(6-C) Where it appears to the Income-tax Officer that, owing to the close connection between the assessee carrying on the business of the industrial undertaking or the hotel or the operation of the ship to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise is the business of the industrial undertaking or the hotel or the operation of the ship, the Income-tax Officer shall, in computing the profits and gains of the industrial undertaking or the hotel or the ship for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom. .

In the Income-tax Act, after Section 80-J, the following section shall be inserted with effect from the 1st day of April, 1976, namely:

80-JJ. Deduction in respect of profits and gains from business of live-stock breeding or poultry or dairy farming. Where the gross total income of an assessee includes any profits and gains derived from a business of live-stock breeding, or poultry or dairy farming, there shall be allowed, in computing the total income to the assessee, a deduction as specified hereunder, namely:

(a) in a case where the amount of such profit and gains does not exceed, in the aggregate, ten thousand rupees, the whole of such amount; and

(b) in any other case, one-third of the aggregate amount of such profits and gains or ten thousand rupees, whichever is higher. .

In Section 80-K of the Income-tax Act, the following proviso shall be inserted at the end, namely:

Provided that no deduction under this section shall be allowed in respect of any income by way of dividends which is attributable to the profits and gains derived by the company from an industrial undertaking which beings to manufacture or produce articles or to operate its cold storage plant or plants after the 31st day of March, 1976 or from a ship which is first brought into use after that date or from the business of a hotel which starts functioning after that date. .

In Section 80-M of the Income-tax Act, in sub-section (1), for clauses (a) and (b), the following clauses shall be substituted with effect from the 1st day of April, 1976, namely:

In Section 80-QQ of the Income-tax Act, in sub-section (1), for the words four assessment years , the words nine assessment year shall be substituted.

In the Income-tax Act, after Section 80-RR, the following section shall be inserted, namely

80-RRA. Deduction in respect of remuneration from foreign employers. (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him from any foreign employer for any service rendered by him outside India, there shall, in accordance with the subject to the provisions of this Section, be allowed, in computing the total income of the individual, a deduction from such remuneration of an amount equal to fifty per cent thereof:

Provided that where the individual renders continuous service outside India under or for the foreign employer for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remuneration for the such service relating to any period after the expiry of the thirty-six months aforesaid.

(2) The deduction under this section shall be allowed

(i) in the case of an individual who is or was, immediately before undertaking the service under or for the foreign employer, in the employment of the Central Government or any State Government, only if such service is sponsored by the Central Government; and

(ii) in the case of any other individual, only if he is a technician and the contract of service under or for the foreign employer is approved in this behalf by the Central Government or the prescribed authority.

Explanation 1. In this section, foreign employer means,

(a) the Government of a foreign State; or

(b) a foreign enterprise; or

(c) any association or body established outside India.

Explanation 2. For the purposes of this section, technician means a person having specialised knowledge and experience in

(i) constructional or manufacturing operations or mining or the generation or distribution of electricity or any other form of power; or

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

(iii) public administration or industrial or business management; or

(iv) accountancy; or

(v) any field of natural or applied science (including medical science) or social science; or

(vi) any other field which the Board may prescribe in this behalf,

who is employed by the foreign employer in a capacity in which such specialised knowledge and experience are actually untilised. .

In the Income-tax Act, for Section 106, the following Section shall be substituted, namely:

106. Period of limitation for making orders under Section 104. No order under Section 104 shall be made at any time after

(a) the expiry of

(i) four years from the end of the assessment year relevant to the previous year referred to in sub-section (1) of that section, where such assessment year is an assessment year commencing on or before the 1st day of April, 1974;

(ii) two years from the end of the assessment year relevant to the previous year referred to in sub-section (1) of that section, where such assessment year is an assessment year commencing after the 1st day of April, 1974; or

(b) the expiry of one year from the end of the financial year in which the assessment or re-assessment of the profit and gains of the previous year referred to in sub-section (1) of that section is made,

whichever is later:

Provided that the period of limitation specified in this section shall not apply in a case where the company has made an application to the Board under Section 107-A. .

In Section 172 of the Income-tax Act, with effect from the 1st day of June, 1975,

(a) in sub-section (1), the words, unless the Income-tax Officer is satisfied that there is an agent of the non-resident from whom the tax will be recoverable under the other provisions of this Act shall be omitted;

(b) in sub-section (2), for the words one-sixth , the words seven and a half per cent. shall be substituted.

(1) In Section 194-A of the Income-tax Act,

(a) in sub-section (3),

(i) for clause (i), the following clause shall be substituted namely:

(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed one thousand rupees; ;

(ii) after clause (vii), the following clause shall be inserted, namely:

(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922) or the Estate Duty Act, 1953 (34 of 1953) or the Wealth-tax Act, 1957 (27 of 1957) or the Gift-tax Act, 1958 (18 of 1958) or the Super Profits Tax Act, 1963 (14 of 1963) or the Companies (Profits) Surtax Act, 1964 (7 of 1964) or the Interest-tax Act, 1974 (45 of 1974). ;

(b) after sub-section (3), the following sub-section shall be inserted, namely:

(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduction or failure to deduct during the financial year. .

(2) Notwithstanding the substitution of clause (i) of sub-section (3) of Section 194-A of the Income-tax Act by sub-section (1) of this section, nothing in Section 201 or Section 276-B of that Act shall apply to, or in relation to, any failure to deduct income-tax under sub-section (1) of the said Section 194-A on any income by way of interest other than income chargeable under the head Interest on securities credited or paid on or after the 1st day of April, 1975 but before the 1st day of June, 1975, where the income so credited or paid at any one time does not exceed four hundred rupees.

In Section 195 of the Income-tax Act, in sub-section (1), after the proviso, the following proviso shall be inserted, namely:

Provided further that the deduction of income-tax from any sum, being income chargeable under the head Capital gains relating to capital assets other than short-term capital assets, paid to a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India, shall be of an amount equal to the amount of income-tax on such sum calculated in accordance with the provisions of clause (i) of Section 115. .

In the Income-tax Act, in the Ninth Schedule [as directed to be inserted by Section 16 of the Direct Taxes (Amendment) Act, 1974 (26 of 1974)], after item 23, the following item and Explanation shall be inserted with effect from the 1st day of April, 1976, namely:

24. Pesticides.

Explanation. The article specified in item 24 does not include any formulation of pesticides unless the formulation is prepared by the manufacturer or producer or the basic pesticidal chemicals from which such formulation has been prepared. .

In the Income-tax Act, the following Schedule shall be inserted at the end with effect from the 1st day of April, 1976, namely:

THE TENTH SCHEDULE

[See Section 40-A(8)]

1. The Industrial Finance Corporation of India, established under the Industrial Finance Corporation Act, 1948 (15 of 1948).

2. Financial Corporation or Joint Financial Corporations, established under the State Financial Corporations Act, 1951 (63 of 1951) and any institution deemed under Section 46 of that Act to be a Financial Corporation established by the State Government for the State within the meaning of that Act.

3. The Shipping Development Fund Committee, constituted under Section 15 of the Merchant Shipping Act, 1958 (44 of 1958).

4. The Unit Trust of India, established under the Unit Trust of India Act, 1963 (52 of 1963).

5. The Industrial Development Bank of India, established under the Industrial Development Bank of India Act, 1964 (18 of 1964).

6. State Electricity Boards, constituted under the Electricity (Supply) Act, 1948 (54 of 1948).

7. The Life Insurance Corporation of India, established under the Life Insurance Corporation Act, 1956 (31 of 1956).

8. The Rehabilitation Industries Corporation of India Limited.

9. The State Trading Corporation of India Limited.

10. The Minerals and Metals Trading Corporation of India Limited.

11. The Rural Electrification Corporation Limited.

12. The Agricultural Finance Corporation Limited.

13. The Industrial Reconstruction Corporation of India Limited.

14. The Industrial Credit and Investment Corporation of India Limited.

15. The National Industrial Development Corporation of India Limited.

16. The State Industrial and Investment Corporation of Maharashtra Limited. .

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

In Section 155,

(a) in sub-section (5-A), the following Explanation shall be inserted, and shall be deemed always to have been inserted, at the end, namely:

Explanation. For the purposes of this sub-section, where an assessee having any leasehold or other right of occupancy in any land transfers such right, he shall be deemed to have sold or otherwise transferred such land. ;

(b) after sub-section (12), the following sub-section shall be inserted, namely:

(13) Where in the assessment for any year, any provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason has not been allowed as a deduction in the computation of the income of the assessee under the head Profits and gains of business or profession on the ground that all the conditions specified in sub-clause (ii)(2) and sub-clause (ii)(3) of clause (b) of sub-section (7) of Section 40-A had not been complied with before the assessment was made and subsequently the assessee complies with such of those conditions as had not been complies with, the disallowance originally made shall be deemed to have been wrongly made and the Income-tax Officer shall, notwithstanding anything contained in this Act, recompute the total income of the assessee for the relevant previous year and make the necessary amendment; and the provisions of Section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the financial year ending on the 31st day of March, 1977. .

(2) The following amendments (being amendments of a consequential nature) shall be made in the Income-tax Act with effect from the 1st day of April, 1976, namely:

(a) in sub-clause (ii) of clause (3) of Section 17, after the word, brackets, figures and letter clause (10-A), , the word, brackets, figures and letter clause (10-B), , shall be inserted;

(b) in sub-section (3) of Section 80-A, after the words, figures and letter or Section 80-J , the words, figures and letters or Section 80-JJ shall be inserted;

(c) in sub-section (3) of Section 80-P,

(i) after the words, figures and letters or Section 80-J , the words, figures and letters of Section 80-JJ shall be inserted;

(ii) for the words, figures and letters Section 80-HH and Section 80-J , the words, figures and letters Section 80-HH, Section 80-J and Section 80-JJ shall be substituted.

In Section 2 of the Wealth-tax Act, 1957 (27 of 1957) (hereinafter referred to as the Wealth-tax Act), for clause (h), the following clause shall be substituted, namely:

(h) 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;

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

(iii) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which the Board may, having regard to the nature and objects of such institution, association or body, declare by general or special order 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, 1975 or on or after that date) as may be specified in the declaration;

(iv) any body corporate incorporated by or under the laws of a country outside India. .

In Section 4 of the Wealth-tax Act, for sub-section (3), the following sub-section shall be substituted, namely:

(3) Where the value of any assets is to be included in the net wealth of an assessee in accordance with clause (a) of sub-section (1),

(a) there shall be deducted from such value any debts owing on the valuation date by the transferee mentioned in that clause in so far as such debts are referable to such assets; and

(b) the provisions of Section 5 shall apply in relation to such assets as if such assets were assets belonging to the assessee. .

In Section 5 of the Wealth-tax Act,

(a) in sub-section (1),

(i) in the second proviso to clause (viii), for the words twenty-five thousand rupees , the words thirty thousand rupees shall be substituted;

(ii) after clause (viii-a), the following clause shall be inserted with effect from the 1st day of April, 1976, namely:

(viii-b) trees standing on agricultural land, not being trees in an orchard or a plantation; ;

(iii) in clauses (xx) and (xxviii), the words held by the assessee shall be omitted;

(iv) after clause (xx), the following clause shall be inserted, namely:

(xx-a) the value of any equity shares in any company of the type referred to in clause (d) of Section 45 which is established with the main object of carrying on the business of manufacture or production of any one or more of the articles or things specified in the list in the Ninth Schedule to the Income-tax Act, where such shares form part of the initial issue of equity share capital made by the company after the 28th day of February, 1975, for a period of five successive assessment years commencing with the assessment year next following the date on which such shares were first issued; ;

(v) in clause (xxiii), for the brackets, words and figures [not being shares referred to in clause (xx)] held by the assessee , the brackets, words, figures and letter [not being shares referred to in clause (xx) or clause (xx-a)] shall be substituted;

(b) in the proviso to sub-section (1-A), for the words held by the assessee , the words owned by the assessee shall be substituted;

(c) in sub-section (3),

(i) for the brackets and figures (xix) , the brackets, figures and letter (xix), (xx-a) shall be substituted;

(ii) for the words held by him , the words owned by him shall be substituted;

(iii) in the Explanation, for the words ceased to hold , the words ceased to own and for the words held such other asset , the words has owned such other asset shall be substituted.

In Section 45 of the Wealth-tax Act, after clause (g), the following clause shall be, and shall be deemed always to have been, inserted, namely:

(h) any company incorporated outside India which has no place of business in India. .

In Section 4 of the Gift-tax Act, 1958, in clause (a) of sub-section (1), the following proviso shall be inserted, and shall be deemed to have been inserted, at the end, with effect from the 1st day of April, 1974, namely:

Provided that nothing contained in this clause shall apply in any case where the property is transferred to the Government or where the value of the consideration for the transfer is determined or approved by the Central Government or the Reserve Bank of India. .

In Section 16 of the Finance Act, 1974, in clause (a), for the words, figures and letters the 1st day of June, 1975 , the words, figures and letters the 1st day of January, 1977 shall be substituted.

INDIRECT TAXES

(1) In the case of goods mentioned in the First Schedule to the Indian Tariff Act, 1934 (32 of 1934) (hereinafter referred to as the Tariff Act), or in that Schedule as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal to twenty per cent of the value of the goods as determined in accordance with the provisions of Section 14 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Customs Act).

(2) Sub-section (1) shall ceases to have effect after the 30th day of June, 1976, except as respects things done or omitted to be done before such cesser; and Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

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

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

In the Indian Tariff (Amendment) Act, 1949, in Sections 4 and 5, for the figures 1975 , the figures 1976 shall be substituted.

(1) In the Central Excises and Salt Act, 1944 (hereinafter referred to as the Central Excises Act),

(a) in Section 2, in clause (f), after sub-clause (i), the following sub-clause shall be inserted, namely:

(i-a) in relation to manufactured tobacco, includes the labelling or re-labelling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer; ;

(b) the First Schedule shall be amended in the manner specified in Parts I and II of the Second Schedule.

(2) The amendment made to Item No. 18 in the First Schedule to the Central Excises Act by paragraph (ii) of the Second Schedule to this Act shall be deemed to have had effect on and from the 1st day of March, 1975 and accordingly

(a) refunds shall be made of all duties collected which would not have been collected if the amendment had come into force on that date; and

(b) recoveries shall be made of all duties which have not been collected but which would have been collected if the amendment had so come into force.

(1) In the case of goods mentioned in the First Schedule to the Central Excises Act, or in that Schedule as amended from time to time, there shall be levied and collected as an auxiliary duty of excise an amount equal to twenty per cent of the value of the goods as determined in accordance with the provisions of Section 4 of the Central Excises Act.

(2) Sub-section (1) shall cease to have effect after the 30th day of June, 1976, except as respects things done or omitted to be done before such cesser; and Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply upon such cesser as if the said sub-section had then been repealed by a Central Act.

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

(4) The auxiliary duties of excise leviable under sub-section (1) in the financial year 1975-76 shall be for the purposes of the Union and the proceeds thereof shall not be distributed among the States and the auxiliary duties of excise leviable under sub-section (1) in the financial year 1976-77 shall, for the purposes of Section 2 of the Union Duties of Excise (Distribution) Act, 1962 (3 of 1962), be deemed to be auxiliary duties of excise levied and collected under the Finance Act of the financial year 1976-77 and the provisions of the 1962-Act aforesaid shall apply accordingly.

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

The First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 shall be amended in the manner specified in the Third Schedule.

For the year beginning on the 1st day of April, 1975, no duty under the Central Excises Act or the Tariff Act shall be levied in respect of salt manufactured in or imported into, India.

(1) Notwithstanding any judgment, decree or order of any court, in all Central laws, providing for or relating to the levy on iron or steel products of duties of excise, as in force during or at any time during the period commencing with the appointed day and ending with the 28th day of February, 1975,

(I) any reference to strips shall be construed as including and as having always included skelp as defined in Explanation 2 unless such Central law excluded, expressly or by necessary implication, skelp from strips; and

(II) any reference to skelp shall be construed as having and having always had the meaning assigned to it in Explanation 2.

and accordingly

(a) all duties of excise levied, assessed or collected or purporting to have been levied, assessed or collected on skelp, as defined in Explanation 2, under any such Central law shall be deemed to be as validly levied, assessed or collected as if the provisions of this section had been in force at all material times when such duties of excise were levied, assessed or collected;

(b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force at all material times when such duties were collected;

(c) refunds shall be made of all such duties of excise which have been collected but which would not have been collected if the provisions of this section had been in force at all material times when such duties were collected; and

(d) recoveries shall be made of all such duties of excise which have not been collected but which would have been collected if the provisions of this section had been in force as from the appointed day.

Explanation 1. In this sub-section

(a) appointed day means the 24th day of April, 1962, being the day immediately following the date of introduction of the Finance (No. 2) Bill, 1962, which, inter alia, provided for the levy of duties of excise on strips;

(b) Central law means

(i) a Central Act;

(ii) any provision in a Bill introduced in the House of the People in respect of which a declaration was made under Section 3 of the Provisional Collection of Taxes Act, 1931 (16 of 1931);

(iii) any rule or notification made or issued under such Central Act or provision;

(c) duties of excise include regulatory duties of excise and auxiliary duties of excise.

Explanation 2. For the purposes of this section, skelp means hot rolled narrow strip of width not exceeding six hundred millimetres with rolled (square, slightly round or bevelled) edge.

(2) For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this Section had not come into force.

CENTRAL SALES TAX

In the Central Sales Tax Act, 1956, with effect from the 1st day of July, 1975,

(1) in Section 6, in sub-section (2), in clause (a) of the second proviso, for the words three per cent. , the words four per cent. shall be substituted;

(2) in Section 8,

(a) in sub-section (1), for the words three per cent. , the words four per cent. shall be substituted;

(b) in sub-section (2), in clause (a), for the words at the rate, the words at twice the rate shall be substituted;

(c) in sub-section (2-A),

(i) for the words, brackets and figure or sub-section (2) , the words, brackets, letter and figure or clause (b) of sub-section (2) shall be substituted;

(ii) for the words three per cent. , the words four per cent. shall be substituted;

(3) in Section 15, in clause (a), for the words three per cent. , the words four per cent. shall be substituted.

(See Section 2)

PART I

Income-tax and surcharge on income-tax

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

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1975 exceeds Rs. 6,000,

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every co-operative society,

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every registered firm, not being a case to which Sub-Paragraph II of this Paragraph applies,

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for the purposes of the Union calculated at the rate of ten per cent of such income-tax.

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

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

Explanation. For the purposes of this Paragraph, registered firm includes an unregistered firm assessed as a registered firm under clause (b) of Section 183 of the Income-tax Act.

In the case of every local authority,

On the whole of the total income50 per cent.

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

In the case of the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956),

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five per cent of such income-tax.

In the case of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956),

Provided that the income-tax payable by a domestic company, being a company in which the public are substantially interested, the total income of which exceeds Rs. 1,00,000, shall not exceed the aggregate of

(a) the income-tax which would have been payable by the company if its total income had been Rs. 1,00,000 (the income of Rs. 1,00,000 for this purpose being computed as if such income included income from various sources in the same proportion as the total income of the company); and

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

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five per cent of such income-tax.

PART II

In every case in which under the provisions of Sections 193, 194, 194-A, 194-B, 194-D and 195 of the Income-tax Act, tax is to be deducted at the rates in force, deduction shall be made from the income subject to deduction at the following rates:

PART III

Rates for calculating or charging income-tax in certain cases, deducting income-tax from income chargeable under the head Salaries or any payment referred to in sub-section (9) of Section 80-E and computing advance tax

In cases in which income-tax has to be calculated under the first proviso to sub-section (5) of Section 132 of the Income-tax Act or charged under sub-section (4) of Section 172 or sub-section (2) of Section 174 or Section 175 or sub-section (2) of Section 176 of the said Act or deducted under Section 192 of the said Act from income chargeable under the head Salaries or deducted under sub-section (9) of Section 80-E of the said Act from any payment referred to in the said sub-section (9) or in which the advance tax payable under Chapter XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or, as the case may be, advance tax (not being advance tax in respect of any income chargeable to tax under Section 164 of the Income-tax Act at the rate of sixty-five per cent.) shall be so calculated, charged, deducted or computed at the following rate or rates:

4[Paragraph A

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

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for the purposes of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1976 exceeds Rs. 8,000,

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for purpose of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every co-operative society,

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge for the purposes of the Union calculated at the rate of ten per cent of such income-tax.

In the case of every registered firm, not being a case to which Sub-Paragraph II of this Paragraph applies,

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for the purposes of the Union calculated at the rate or ten per cent of such income-tax.

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

The amount of income-tax computed in accordance with the preceding provisions of this Sub-Paragraph shall be increased by a surcharge for the purposes of the Union calculated at the rate of ten per cent of such income-tax.

Explanation. For the purposes of this Paragraph, registered firm includes an unregistered firm assessed as a registered firm under clause (b) of Section 183 of the Income-tax Act.

In the case of every local authority,

On the whole of the total income50 per cent.

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

In the case of the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956),

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five per cent of such income-tax.

In the case of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956),

Provided that

(i) the income-tax payable by a domestic company, being a company in which the public are substantially interested, the total income of which exceeds Rs. 1,00,000, shall not exceed the aggregate of

(a) the income-tax which would have been payable by the company if its total income had been Rs. 1,00,000 (the income of Rs. 1,00,000 for this purpose being computed as if such income included income from various sources in the same proportion as the total income of the company); and

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

(ii) the income-tax payable by a domestic company, not being a company in which the public are substantially interested, which is an industrial company and the total income of which exceeds Rs. 2,00,000, shall not exceed the aggregate of

(a) the income-tax which would have been payable by the company if its total income had been Rs. 2,00,000 (the income of Rs. 2,00,000 for this purpose being computed as if such income included income from various sources in the same proportion as the total income of the company); and

(b) eighty per cent of the amount by which its total income exceeds Rs. 2,00,000.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge calculated at the rate of five per cent of such income-tax.

PART IV

[See Section 2(8)(e)]

Rules for computation of net Agricultural income

Rule 1. Agricultural income of the nature referred to in sub-clause (a) of clause (1) of Section 2 of the Income-tax Act shall be computed as if it were income chargeable to income-tax under that Act under the head Income from other sources and the provisions of Sections 57 to 59 of that Act shall, so far as may be, apply accordingly:

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

Rule 2. Agricultural income of the nature referred to in sub-clause (b) or sub-clause (c) of clause (1) of Section 2 of the Income-tax Act [other than income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c)] shall be computed as if it were income chargeable to income-tax under that Act under the head Profits and gains of business or profession and the provisions of Sections 30, 31, 32, 34, 36, 37, 38, 40, 40-A [other than sub-sections (3) and (4) thereof], 41, 43 and 43-A of the Income-tax Act shall, so far as may be, apply accordingly.

Rule 3. Agricultural income of the nature referred to in sub-clause (c) of clause (1) of Section 2 of the Income-tax Act, being income derived from any building required as a dwelling house by the receiver of the rent or revenue or the cultivator or the receiver of rent-in-kind referred to in the said sub-clause (c) shall be computed as if it were income chargeable to income-tax under that Act under the head Income from house property and the provisions of Sections 23 to 27 of that Act shall, so far as may be, apply accordingly:

Provided that sub-section (2) of the said Section 23 shall apply subject to the modifications that the reference to total income therein shall be construed as references to net agricultural income and that the words, figures and letter and before making any deduction under Chapter VI-A shall be omitted.

Rule 4. Notwithstanding anything contained in any other provisions of these rules, in a case where the assessee derives income from sale of tea grown and manufactured by him in India, such income shall be computed in accordance with the Rule 8 of the Income-tax Rules, 1962, and sixty per cent of such income shall be regarded as the agricultural income of the assessee.

Rule 5. Where the assessee is a partner of a registered firm or an unregistered firm assessed as a registered firm under clause (b) of Section 183 of the Income-tax Act, which in the previous year has any agricultural income, or is a partner of an unregistered firm which has not been assessed as a registered firm under clause (b) of the said Section 183 and which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an unregistered firm but has any agricultural income, then, the agricultural income or loss of the firm shall be computed in accordance with these rules and his share in the agricultural income or loss of the firm shall be computed in the manner laid down in sub-section (1), sub-section (2) and sub-section (3) of Section 67 of the Income-tax Act and the share so computed shall be regarded as the agricultural income or loss of the assessee.

Rule 6. Where the assessee is a member of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) which in the previous year has either no income chargeable to tax under the Income-tax Act or has total income not exceeding the maximum amount not chargeable to tax in the case of an association of persons or a body of individuals (other than a Hindu undivided family, a company or a firm) but has any agricultural income, then, the agricultural income or loss of the association or body shall be computed in accordance with these rules and the share of the assessee in the agricultural income or loss so computed shall be regarded as the agricultural income or loss of the assessee.

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

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

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

Rule 9. (1) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April, 1975, any agricultural income and the net result of the computation of the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 1974 is a loss, then, for the purposes of sub-section (2) of Section 2 of this Act, the loss so computed shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 1975.

(2) Where the assessee has, in the previous year relevant to the assessment year commencing on the 1st day of April, 1976 or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than that previous year, in such other period, any agricultural income and the net result of the computation of the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 1974, or the 1st day of April, 1975, or both, is a loss, then, for the purposes of sub-section (7) of Section 2 of this Act,

(i) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1974, to the extent, if any, such loss has not been set off against the agricultural income for the previous year relevant to the assessment year commencing on the 1st day of April, 1975, and

(ii) the loss so computed for the previous year relevant to the assessment year commencing on the 1st day of April, 1975,

shall be set off against the agricultural income of the assessee for the previous year relevant to the assessment year commencing on the 1st day of April, 1976 or the period aforesaid.

(3) Where a change has occurred in the constitution of a firm, nothing in sub-rule (1) or sub-rule (2) shall entitle the firm to set off so much of the loss proportionate to the share of a retired or deceased partner computed in the manner laid down in sub-section (1), sub-section (2) and sub-section (3) of Section 67 of the Income-tax Act as exceeds his share or profits, if any, of the previous year in the firm, or entitle any partner to the benefit of any portion of the said loss (computed in the manner aforesaid) which is not apportionable to him.

(4) Where any person deriving any agricultural income from any source has been succeeded in such capacity by another person, otherwise than by inheritance, nothing in sub-rule (1) or sub-rule (2) shall entitle any person, other than the person incurring the loss, to have it set off under sub-rule (1) or, as the case may be, sub-rule (2).

(5) Notwithstanding anything contained in this rule, no loss which has not been determined by the Income-tax Officer under the provisions of these rules, or the rules contained in Part IV of the First Schedule to the Finance Act, 1974 (20 of 1974), shall be set off under sub-rule (1) or, as the case may be, sub-rule (2).

Rule 10. Where the net result of the computation made in accordance with these rules is a loss, the loss so computed shall be ignored and the net agricultural income shall be deemed to be nil.

Rule 11. The provisions of the Income-tax Act relating to procedure for assessment (including the provisions of Section 288-A relating to rounding off of income) shall, with the necessary modifications, apply in relation to the computation of the net agricultural income of the assessee as they apply in relation to the assessment of the total income.

Rule 12. For the purposes of computing the net agricultural income of the assessee, the Income-tax Officer shall have the same powers as he has under the Income-tax Act for the purposes of assessment of the total income.

[See Section 33(b)]

In the First Schedule to the Central Excises Act,

(i) in Item No. 1, for the entry in the third column against sub-item (1), the entry Thirty-seven and a half per cent ad valorem. shall be substituted;

(ii) in Item No. 4, under I. Uumanufactured tobacco , for the entry in the third column against sub-item (8), the entry One rupee and ninety paise. shall be substituted;

(iii) in Item No. 6, for the entry in the third column, the entry Two thousand and one hundred rupees per kilolitre at fifteen degrees of Centigrade thermometer. shall be substituted;

(iv) in Item No. 14-D, for the entry in the third column, the entry Twenty-five per cent ad valorem. shall be substituted;

(v) in Item No. 14-F, for the entry in the third column, the entry Forty per cent ad valorem. shall be substituted;

(vi) in Item No. 16, in the second column, after the words and includes the inner tube , the words, the tyre flap shall be inserted;

(vii) in Item No. 17, for the entry in the third column against sub-item (3), the entry Ninety paise per kilogram. shall be substituted;

(viii) in Item No. 18-A, for the entries in the third column against sub-items (1) and (2), the entries Ten rupees per kilogram. and Four rupees per kilogram. shall, respectively, be substituted;

(ix) in Item No. 23, for the entry in the third column, the entry Thirty-five per cent ad valorem. shall be substituted;

(x) in Item No. 23-A, for the entries in the third column against sub-items (1), (3) and (4), the entries Thirty per cent ad valorem. , Fifteen per cent ad valorem. and Thirty per cent ad valorem. shall, respectively, be substituted;

(xi) in Item No. 23-B, for the entries in the third column against sub-items (1), (2), (3), and (4), the entries Thirty per cent ad valorem. Forty per cent ad valorem. , Forty per cent ad valorem. and Twenty-five per cent ad valorem. shall, respectively, be substituted;

(xii) in Item No. 26-AA, in the second colomn, the following Explanation shall be inserted at the end, namely:

Explanation. skelp means hot rolled narrow strip of width not exceeding six hundred millimetres with rolled (square, slightly round or bevelled) edge. ;

(xiii) in Item No. 27, for each of the third column against sub-items (a)(i), (a)(ii), (b), (c), (d), (e) and (f), the entry Thirty per cent ad valorem plus two thousand rupees per metric tonne. shall be substituted;

(xiv) in Item No. 29-A, for the entries in the third column against sub-items (2) and (3), the entries One hundred per cent ad valorem. and One hundred and twenty-five per cent ad valorem. shall, respectively, be substituted;

(xv) in Item No. 33, for the entries in the third column against sub-items (1) and (3), the entries Fifteen per cent ad valorem. and Twenty per cent ad valorem. shall, respectively, be substituted;

(xvi) in Item No. 33-B, for the entry in the third column against sub-item (i), the entry Seventeen and a half per cent ad valorem. shall be substituted;

(xvii) in Item No. 48, for the entry in the third column, the entry Twenty per cent ad volorem. shall be substituted.

PART II

(See Section 35)

1. Substituted for six thousand rupees by Act 34 of 1975, Section 2 (w.r.e.f. 1-4-1975).

2. Substituted for six thousand rupees by Act 34 of 1975, Section 2 (w.r.e.f. 1-4-1975).

3. Substituted for six thousand rupees by Act 34 of 1975, Section 2 (w.r.e.f. 1-4-1975).

4. Substituted by Act 34 of 1975, Section 3 (w.r.e.f. 1-4-1975).