(1) This Act may be called the Indian Income-tax Act, 1918;

(2) It extends to the whole of British India, including the Sonthal Parganas, and applies also within the dominions of Princes and Chiefs in India in alliance with His Majesty to British subjects in those dominions who are in the service of the Government of India or of a local authority established in the exercise of the powers of the Governor-General in Council in that behalf, and to all other servants of His Majesty in those dominions; and

(3) It shall come into force on the first day of April, 1918.

In this Act, unless there is anything repugnant in the subject or context,

(1) Agricultural income means

(a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land-revenue or subject to a local rate assessed and collected by officers of Government as such;

(b) any income derived from

(i) agriculture, or

(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or

(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, when he does not keep a shop or stall for the sale of such produce, or

(iv) any building owned and occupied by the receiver of the rent or revenue of any such land as is referred to in clause (a), or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which or the produce of which, any operation mentioned in sub-clauses (ii) and (iii) is carried on:

Provided that that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue, or the cultivator or the receiver of the rent-in-kind, by reason of his connexion with the land, requires as a dwelling-house, or as a store-house, or other out-building;

(2) Assessee means a person by whom income-tax is payable, and includes a firm and a Hindu undivided family;

(3) Business includes any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;

(4) Chief Revenue-authority means the Board of Revenue or the Financial Commissioner in Provinces where those authorities exist, and in any other case such authority as the Local Government may declare to be the Chief Revenue authority for the purposes of this Act;

(5) Collector includes any officer whom the Local Government may appoint to exercise or perform all or any of the powers or duties conferred by this Act on a Collector, and means in relation to any assessee carrying on business, the Collector of the place where the principal place of business of such assessee is situate, and in relation to any other assessee the Collector of the place where such assessee resides;

(6) Commissioner includes any officer whom the Local Government may appoint to exercise or perform all or any of the powers or duties conferred by this Act on a Commissioner;

(7) Company means a company as defined in the Indian Companies Act, 1913, or formed in pursuance of an Act of Parliament or of Royal Charter or Letters Patent, or of an Act of the legislature of a British possession, and includes any foreign association carrying on business in British India, whether incorporated or not, and whether its principal place of business is situate in British India or not, which the Governor-General in Council may, by general or special order, declare to be a company for the purposes of this Act;

(8) Local authority includes any person legally entitled to the control or management of any municipal or local fund;

(9) Magistrate means a Presidency Magistrate or a Magistrate of the first class, or a Magistrate, of the second class specially empowered by the Local Government to try offences against this Act;

(10) Prescribed means prescribed by rules made under this Act;

(11) Previous year means the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee the year ending on the day on which his accounts have so been made up:

Provided that, if this option has once been exercised by the assessee, it shall not again be exercised so as to vary the meaning of the expression previous year as then applicable to such assessee, except with the consent of the Collector and upon such conditions as he may think fit;

(12) Principal officer, used with reference to a local authority or a company or any other public body or association not being a local authority or company, means

(a) the secretary, treasurer, manager or agent of the authority, company, body or association, or

(b) any person connected with the authority, company, body or association upon whom the Collector has served a notice of his intention of treating him as the principal officer thereof; and

(13) Total income means total income from all sources to which this Act applies.

TAXABLE INCOME

(1) Save as hereinafter provided, this Act shall apply to all income from whatever source it is derived if it accrues or arises or is received in British India, or is, under the provisions of this Act, deemed to accrue or arise or to be received in British India.

(2) This Act shall not apply to the following classes of income:

(i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and, in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto.

(ii) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes.

(iii) The income of local authorities.

(iv) Interest on securities which are held by, or are the property of, any Provident Fund to which the Provident Funds Act, 9 of 1897, applies, or any Provident Insurance Society to which the Provident Insurance Societies Act, 5 of 1912, is, or, but for an exemption under that Act, would be, applicable.

(v) Any capital sum received in commutation of the whole or a portion of a pension, or in the nature of consolidated compensation for death or injuries, or in payment of any insurance policy, or as the accumulated balance at the credit of a subscriber to any such Provident Fund.

(vi) Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit.

(vii) Legacies.

(viii) Any receipts not being receipts arising from business or the exercise of a profession, vocation, or occupation, which are of a casual and non-recurring nature or are not by way of addition to the remuneration of an employee.

(ix) Any perquisite or benefit which is neither money nor reasonably capable of being converted into money.

In this sub-section charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility.

Agricultural income shall not be chargeable to income-tax.

Save as otherwise provided by this Act, the following classes of income shall be chargeable to income-tax in the manner hereinafter appearing, namely

(i) Salaries.

(ii) Interest on securities.

(iii) Income derived from house property.

(iv) Income derived from business.

(v) Professional earnings.

(vi) Income derived from other sources.

(1) The tax shall be payable by an assessee under the head Salaries in respect of any salary or wages, any annuity, pension or gratuity, and any fees, commissions, perquisites or profits received by him in lieu of or in addition to, any salary or wages, which are paid by or on behalf of Government, a local authority, a company, or any other public body or association not being a local authority or company, or by or on behalf of any private employer where such employer has entered into an agreement with the Collector in accordance with the prescribed conditions to recover the tax on behalf of Government, provided that the tax shall not be payable in respect of

(i) any salary not exceeding five hundred rupees per mensem received by any member of His Majesty's Forces, or of His Majesty's Indian Forces, as the pay of an appointment which is ordinarily reserved exclusively for members of those Forces; or

(ii) any sum deducted under the authority of Government from the salary of any individual for the purpose of securing to him a deferred annuity or of making provision for his wife or children, provided that the sum so deducted shall not exceed one-sixth of the salary.

(2) Any income which would be chargeable under this head if paid in British India shall be deemed to be so chargeable if paid to a British subject or any servant of His Majesty in any part of India by Government or by a local authority established by the Governor-General in Council.

The tax shall be payable by an assessee under the head Interest on securities in respect of the interest receivable by him on any security of the Government of India or on debentures or other securities for money issued by or on behalf of a local authority or a company:

Provided that no tax shall be payable on the interest receivable on any security of the Government of India issued or declared to be income-tax free.

The tax shall be payable by an assessee under the head Income derived from house property in respect of the bona fide annual value of any house property of which he is the owner, subject to the following allowances, namely:

(i) where the property is in the occupation of the owner, or where it is let to a tenant and the owner has undertaken to bear the cost of repairs, a sum equal to one-sixth of such value;

(ii) where the property is in occupation of a tenant who has undertaken to bear the cost of repairs, the difference between such value and the rent paid by the tenant up to but not exceeding one-sixth of such value;

(iii) the amount of any annual premium paid to insure the property against risk of damage or destruction;

(iv) where the property is subject to a mortgage or charge or to a ground rent, the amount of any interest on such mortgage or charge or of any such ground rent;

(v) any sums paid on account of land-revenue in respect of the property;

(vi) in respect of collection charges, a sum not exceeding the prescribed maximum;

(vii) in respect of vacancies, such sum as the Collector may determine having regard to the circumstances of the case.

For the purpose of this section and Section 9 the expression annual value shall be deemed to mean the sum for which the property might reasonably be expected to let from year to year:

Provided that, where house property is in the occupation of the owner, such sum shall for the purposes of this section be deemed not to exceed ten per cent. of the aggregate income of the owner.

(1) The tax shall be payable by an assessee under the head Income derived from business in respect of the profits of any business carried on by him.

(2) Such profits shall be computed after making the following allowances, in respect of sums paid, or, in the case of depreciation, debited, namely:

(i) any rent paid for the premises in which such business is carried on, or where the premises are owned by the assessee the bona fide annual value thereof, provided that when any substantial part of the premises is used as a dwelling-house by the assessee, the allowance under this clause shall be such sum as the Collector may determine having regard to the proportional part so used;

(ii) in respect of repairs, where the assessee is the tenant only of the premises, and has undertaken to bear the cost of such repairs, the amount actually expended thereon, provided that if any substantial part of the premises is used by the assessee as a dwelling-house, a proportional part only of such amount shall be allowed;

(iii) in respect of capital borrowed for the purposes of the business, where the payment of interest thereon is not in any way dependent on the earning of profits, the amount of the interest paid;

(iv) in respect of insurance against risk of damage or destruction of buildings, machinery or plant, used for the purposes of the business the amount of any premium paid;

(v) in respect of current repairs to buildings, machinery or plant, the amount actually expended thereon;

(vi) in respect of depreciation of such buildings, machinery or plant being the property of the assessee, a sum not exceeding a percentage on the original cost thereof to the assessee to be fixed, subject to the approval of the Governor-General in Council, by the Local Government for different classes of buildings, machinery or plant having regard to the estimated life thereof, in determining which it shall be assumed that current repairs are executed from time to time:

Provided that

(a) no such allowance shall be made unless the amount claimed has actually been debited in the ordinary accounts of the business for the previous year, and the prescribed particulars have been duly furnihsed;

(b) when in any year the full allowance admissible has not been claimed, the balance may be added to the allowance made for the following year or years;

(c) the aggregate of the allowances made under this sub-head either under this Act or any Act repealed thereby shall, in no case, exceed the original cost to the assessee of the buildings, machinery or plant, as the case may be;

(vii) in respect of any machinery or plant which has been sold or discarded as obsolete, the difference between the original cost to the assessee of the machinery or plant as reduced by the aggregate of the allowances made in respect of depreciation under clause (vi), and the amount for which the machinery or plant is actually sold, or its scrap value;

(viii) any sums paid on account of land-revenue, local rates or municipal taxes in respect of the premises;

(ix) in respect of any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of earning such profits.

(1) The tax shall be payable by an assessee under the head Professional earnings in respect of the profits of any profession, or vocation, followed by him.

(2) Such profits shall be computed after making allowance for any expenditure (not being in the nature of capital expenditure) incurred solely for the purposes of such profession or vocation, provided that no allowance shall be made on account of any personal expenses of the assessee.

(3) Professional fees paid in any part of India to a person ordinarily resident in British India shall be deemed to be income chargeable under this head.

(1) The tax shall be payable by an assessee under the head Income derived from other sources in respect of income and profits of every kind and from every source to which this Act applies (if not included under any of the preceding heads) with the exception of agricultural income.

(2) Such income and profits shall be computed after making allowance for any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making such income or earning such profits, provided that no allowance shall be made on account of any personal expenses of the assessee.

(1) In computing the amount of the income chargeable to income-tax in the case of an assessee under any of the foregoing heads, no account shall be taken of any income which the assessee enjoys as a member of a company or of a firm or of an undivided Hindu family where the company, the firm or the family is liable to the tax.

(2) There shall also be excluded from the computation any sum paid by the assessee to effect an insurance on his own life or on the life of his wife or in respect of a contract for a deferred annuity on his own life or on the life of his wife or as a contribution to any provident fund to which the Provident Funds Act, 9 of 1897, applies, or to any provident fund which complies with the provisions of the Provident Insurance Societies Act, 5 of 1912, or has been exempted from the provisions of that Act:

Provided that the aggregate of any sums so excluded shall not, after taking into account any exemptions allowed in respect of like provision under the head Salaries, exceed one-sixth of the income of the assessee which would, apart from such exclusion and exemption, be chargeable to income-tax.

In computing the total income of an assessee for the purposes of Schedule I, salaries and deductions exempted under the proviso to Section 6(1), income mentioned in Section 12(1), and sums excluded under Section 12(2) shall be taken into account.

(1) The aggregate amount of an assessee's income chargeable under each of the heads mentioned in Sections 6 to 11 shall be the taxable income of the assessee.

(2) Subject to the conditions hereinbefore set out, there shall be levied in respect of the year beginning with the first day of April, 1918, and in respect of each subsequent year, by collection in that year and subsequent adjustment as hereinafter provided, income-tax upon every assessee in respect of his taxable income in that year at the rate specified in Schedule I:

Provided that, where the assessee is a company or a firm constituted under a registered instrument of partnership specifying the individual shares of the partners and the taxable income of such company or firm is one thousand rupees per annum or upwards, income-tax shall be levied at the maximum rate specified in Schedule I.

DEDUCTIONS AND ASSESSMENT

(1) Income-tax shall, unless otherwise prescribed in the case of any security of the Government of India, be deducted at the time of payment in respect of income chargeable under the following heads:

(i) Salaries ; and

(ii) Interest on securities.

(2) An employer or other person responsible for paying any income chargeable under the head Salaries shall at the time of payment deduct income-tax on the amount, payable at the rate specified in Schedule I in respect of such amount, provided that if the payment is a recurring one and in respect of any period less than a year, the rate shall be determined with reference to the amount which would be proportionately payable in a year. The deduction so made shall be treated as a payment of income-tax on behalf of the persons from whose earnings the deduction was made, and credit shall be given to him therefor in the next adjustment under Section 19.

(3) The person responsible for paying any income chargeable under the head Interest on securities shall, at the time of payment deduct income-tax on the amount of the interest payable at the maximum rate specified in Schedule I. The deduction so made shall be treated as payment of income-tax on behalf of the owner of the security, and credit shall be given to him therefor in the next adjustment under Section 19:

Provided that, if the owner of the security obtains a refund of any portion of the tax so deducted in accordance with the provisions of this Act, no credit shall be given for the amount of such refund.

(4) All sums deducted in accordance with the provisions of sub-section (2) or (3) shall be paid within the prescribed time by the person making the deduction to the credit of the Government of India or as the Governor-General in council directs.

(5) If any such person does not deduct and pay the tax as required by this section, he shall, without prejudice to any other consequences which he may incur, be deemed to be personally in default in respect of the tax.

(6) The power to deduct under this section shall be without prejudice to any other mode of recovery.

(7) In the case of income chargeable under any other head than those abovementioned the tax shall be payable by the assessee direct, and shall be the amount assessed under this Act, subject to such adjustment as aforesaid.

The prescribed person in the case of every Government office, and the principal officer of every local authority, and of every company, and of every other public body or association not being a local authority or company, and every private employer who has agreed to recover income-tax on behalf of Government shall prepare, and within fifteen days from the 31st day of March in each year, deliver or cause to be delivered to the Collector, in the prescribed form, a return in writing showing

(a) the name and so far as it is known the address, of every person who was receiving on the said 31st day of March, or has received during the year ending on that date, from the authority, company, body, association or private employer as the case may be, any income chargeable under the head Salaries of such amount as may be prescribed not being less than six hundred rupees per annum;

(b) the amount of the income so received by such each person, and the time or times at which the same was paid;

(c) the amount deducted in respect of income-tax from each such person.

(1) The principal officer of every company shall prepare, and, on or before the fifteenth day of June in each year, deliver or cause to be delivered to the Collector a return in the prescribed form and verified in the prescribed manner of the total income of the company during the previous year:

Provided that the Collector may, in his discretion, extend the date for the delivery of the return in the case of any company or class of companies.

(2) In the case of any person other than a company whose taxable income is, in the Collector's opinion, not less than two thousand rupees, the Collector shall serve a notice upon him requiring him to furnish, within such period as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income during the previous year.

(3) In the case of any person other than a company whose taxable income is in the Collector's opinion one thousand rupees or upwards, but less than two thousand rupees, the Collector may, if he thinks fit, serve upon him a notice in accordance with the provisions of sub-section (2), but if he does not do so, shall proceed in the manner hereinafter provided in Chapter III for the summary assessment of such incomes.

(1) If the Collector is satisfied that a return made under Section 17 is correct and complete, he shall assess the sum payable by the assessee for the year in which the return is made on the basis of such return.

(2) If the Collector has reason to believe that a return made under Section 17 is incorrect or incomplete, he shall serve on the person who made the return a notice requiring him, on a date to be therein mentioned, either to attend at the Collector's office and produce, or to cause to be there produced for the inspection of the Collector, such accounts and documents as the Collector may require and any evidence on which the assessee may rely in support of the return.

(3) On the day specified in the notice, or as soon afterwards as may be, the Collector, after examining such accounts and documents, and hearing any evidence which the assessee may produce and such other evidence as the Collector may require, shall, by an order in writing, determine the total income of the assessee for the previous year and assess the sum payable by the assessee for the year in which the return is made on the basis of such determination.

(4) If the principal officer of any Company or any other person fails to make a return under Section 17(1), (2) or (3) as the case may be, or having made a return, fails to attend or fails to comply substantially with all the terms of a notice issued under Section 18, sub-section (2), the Collector shall make the assessment to the best of his judgment.

(5) The sum to be assessed in every case shall be a sum calculated on the aggregate of the assessee's income in the previous year chargeable under each of the heads mentioned in Sections 8 to 11 at the rate applicable to his total income in that year.

When the Collector has, in any year after the commencement of this Act for which income-tax is leviable under Section 14(2), ascertained, either from the return made by an assessee or after further inquiry, the total income actually received by or accrued to the assessee in the previous year, he shall compute the income-tax which would have been payable in respect thereof if it had been levied in such previous year with reference to the amount of the income so ascertained and the law then in force; and the difference between them sum so computed and the aggregate of the sums already paid by or on behalf of the assessee in respect of income-tax for such previous year shall be paid by or refunded to the assessee as the case may be:

Provided that no adjustment shall be made under the section in respect of any income-tax assessed or paid before the passing of this Act:

Provided also that it shall be competent to

(a) an assessee; or

(b) in the case of the death or insolvency of an assessee, his representative in interest; or

(c) with reference to any year for which income-tax is leviable under Section 14(2), the Collector:

in any year to claim an immediate adjustment to date of the sums already paid by or on behalf of an assessee in that year, upon the basis of the total income actually received by or accrued to him in that year; and upon such claim being made, all the provisions of this chapter shall apply so far as may be necessary for the determination of the proper sum to be paid by or refunded to the assessee or his representative in interest in respect of income-tax down to the date of such determination, and the same shall be paid or refunded accordingly.

When the Collector has determined a sum to be payable by an assessee under either Section 18 or Section 19, he shall serve on the assessee a notice of demand in the prescribed form specifying the sum so payable.

(1) Any assessee objecting to the amount or rate at which he is assessed under Section 18 or to an adjustment made under Section 19, or denying his liability to be assessed under this Act may, unless he or, in the case of a company, the principal officer thereof, has knowingly and wilfully failed to make a return under Section 17 or substantially to comply with all the terms of a notice served on him under Section 18, apply by petition to the Commissioner for relief against any order of the Collector in respect of such assessment or adjustment.

(2) The petition shall ordinarily be presented within thirty days of receipt of the notice of demand; but the Commissioner may receive a petition after the expiration of that period if he is satisfied that the objector had sufficient cause for not presenting it within that period.

(3) The petition shall be in the prescribed form and verified in the prescribed manner.

The Commissioner shall fix a day and place for the hearing of the petition, and on the day and at the place so fixed, or on the day and at the place, if any, to which he has adjourned the hearing, shall hear the petition and pass such order thereon, whether by way of confirmation, reduction, enhancement or cancellation of the assessment, or adjustment or otherwise and fixing such time for payment, as he thinks fit.

The Chief Revenue-authority may, of its own motion, call for the record of any assessment proceeding which has been taken by any officer subordinate to it, and make such inquiry and pass such orders thereon as it thinks fit:

Provided that it shall not pass any order enhancing the sum payable by an assessee without hearing him or giving him a reasonable opportunity of being heard either in person or by pleader.

If the Collector or the Commissioner in making any assessment or adjustment under this chapter is satisfied that the assessee has concealed the particulars of his income, or has deliberately furnished inaccurate particulars of such income and has thereby returned it below its real amount, the Collector or the Commissioner may direct that the assessee shall pay on the difference between his income as finally ascertained and the amount originally returned by him income-tax at a rate not exceeding double the rate which would otherwise have been payable:

Provided that no such order shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard:

Provided further that no prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penal assessment is made under this section.

If for any reason income chargeable under this Act has escaped assessment in any year, or has been assessed at too low a rate, the Collector may at any time in the year next following, assess or re-assess such income, and all the provisions of this Act shall apply accordingly.

The Collector may, at any time within one year from the date of any demand made upon an assessee, rectify any mistake in connexion therewith which has been brought to his notice by such assessee, and make a refund to such assessee in respect thereof.

27. Power to take evidence on oath, etc. The Collector or Commissioner shall, for the purposes of any inquiry under this Chapter, have the same powers as are vested in a Court under the Code of Civil Procedure V of 1908, when trying a suit in respect of the following matters:

(a) enforcing the attendance of any person and examining him on oath or affirmation;

(b) compelling the production of documents; and

(c) issuing commissions for the examination of witness;

and any proceeding before a Collector or Commissioner under this Chapter shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code, 45 of 1860.

The Collector or Commissioner may for the purposes of this Act

(1) require any person to furnish a return, in the prescribed form, containing, to the best of his belief, the name and address of every person employed in his service who is receiving in virtue of such employment any income not chargeable under the head Salaries, of such amount as may be prescribed, not being less than six hundred rupees per annum;

(2) require any firm or Hindu undivided family to furnish him with a return of the partners in the firm or the adult male members of the family, as the case may be, and of their addresses;

(3) require any person whom he has reason to believe to be a trustee, guardian, or agent to furnish him with a return of the names of the persons for or of whom he is trustee, guardian, or agent and of their addresses.

The Collector or Commissioner or any person authorized in writing in this behalf by the Collector or Commissioner, may inspect and, if necessary, take copies or cause copies to be taken of the register of members of any company or of any entry in such register.

Summary Assessment

(1) In the case of persons whose taxable income is in the Collector's opinion one thousand rupees or upwards, but less than two thousand rupees, the Collector shall, save in cases in which he has served a notice under Section 17(3), make a summary assessment on the income of such persons to the best of his judgment.

(2) Notice of such summary assessment and of the amount of the tax payable thereunder and of the time and the place at which, and the person to whom, such tax is to be paid shall be given either by local publication in the prescribed manner of a list of such assessments, or in such other way as may be prescribed:

Provided that due publicity shall be given to the assessee's right to apply to the Collector in the manner provided for in the next sub-section within the prescribed period, and that reasonable notice shall be given of the place at which, and the person from whom, the assessee can obtain a form of return should be wish to submit one.

(3) Any assessee in respect of whom a summary assessment has been made under this section may, within the prescribed period, apply to the Collector for the cancellation or revision of the assessment, and the Collector shall, after examining any accounts and documents and hearing any evidence which the assessee may produce, and such other evidence as the Collector may require, determine, by order in writing, the amount of the tax, if any, payable by the assessee, and such determination shall be final:

Provided that, if the person making the application files therewith a return of his income in the prescribed form and verified in the prescribed manner, the application shall be deemed to be a return under Section 17, and shall be dealt with accordingly.

Liability in Special Cases

In the case of any guardian, trustee or agent of any person being a minor, lunatic or idiot or residing out of British India (all of which persons are hereinafter in this section included in the term beneficiary) being in receipt on behalf of such beneficiary of any income chargeable under this Act, the tax shall be levied upon and recoverable from such guardian, trustee or agent, as the case may be, in like manner and to the same amount as it would be leviable upon and recoverable from any such beneficiary if of full age, sound mind, or resident in British India, and in direct receipt of such income, and all the provisions of this Act shall apply accordingly.

In the case of income chargeable under this Act which is received by the Courts of Wards, the Administrators-General, the Official Trustees or by any receiver or manager (including any person whatever his designation who in fact manages property on behalf of another) appointed by or under any order of a Court, the tax shall be levied upon and recoverable from such Court of Wards, Administrator-General, Official Trustee, receiver or manager in the like manner and to the same amount as it would be leviable upon and recoverable from any person on whose behalf such income is received, and all the provisions of this Act shall apply accordingly.

(1) In the case any person residing out of British India all profits on gains accruing or arising to such person, whether directly or indirectly, through or from any business connexion in British India, shall be deemed to be income accruing or arising within British India, and shall be chargeable to income-tax in the name of the agent of any such person, and such agent shall be deemed to be for all the purposes of this Act the assessee in respect of such income-tax:

Provided that any arrears of tax may be recovered also in accordance with the provisions of this Act from any assets of the non-resident person which are, or may at any time come, within British India.

(2) Where a person not resident in British India, and not being a British subject or a firm or company constituted within His Majesty's dominions or a branch thereof, carries on business with a person resident in British India, and it appears to the Collector or the Commissioner, as the case may be, that, owing to the close connexion between the resident and the non-resident person and to the substantial control exercised by the non-resident over the resident, the course of business between those persons is so arranged, that the business done by the resident in pursuance of his connexion with the non-resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom or which may reasonably by deemed to have been derived therefrom, shall be chargeable to income-tax in the name of the resident person who shall be deemed to be for all the purposes of this Act the assessee in respect of such income-tax.

Any person employed by or on behalf of a person residing out of British India or having any business connexion with such person, upon whom the Collector has caused a notice to be served of his intention of treating him as the agent of the non-resident person shall, for the purposes of this Act, be deemed to be such agent:

Provided that no person shall be deemed to be the agent of a non-resident person unless he has had an opportunity of being heard by the Collector as to his liability.

RECOVERY OF TAX

The amount of income-tax specified as payable in a notice of demand under Section 20 or an order under Section 22, Section 23 or Section 24 or in a notice or order under Section 30, shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the notice or order, and any assessee failing so to pay shall be deemed to be in default, provided that when an assessee has presented a petition under Section 21 the Collector may in his discretion treat the assessee as not being in default as long as such petition is undisposed of.

(1) When an assessee is in default in making a payment of income-tax, the Collector, in his discretion, may recover from him a sum not exceeding double the amount of the tax either as if it were an arrear of land revenue or by any process enforceable for the recovery of an arrear of any municipal tax or local rate imposed under any enactment for the time being in force in any part of the territories administered by the Local Government to which the Collector is subordinate.

(2) If any assessee is in receipt of any income chargeable under the head Salaries, the Collector may require any person paying the same to deduct from any payment subsequent to the date of such requisition any sum recoverable under sub-section (1), and such person shall comply with any such requisition and shall pay the sums so deducted to the credit of the Government of India or as the Governor-General in Council directs.

(3) The Local Government may direct by what authority any powers or duties incident under any such enactment as aforesaid to the enforcement of any process for the recovery of a municipal tax or local rate shall be exercised or performed when that process is employed under sub-section (1) for the recovery of income-tax.

(4) The Local Government may direct, with respect to any specified area, that income-tax shall be recovered therein, with, and as an addition to, any municipal tax or local rate by the same person and in the same manner as the municipal tax or local rate is recovered.

(5) Save in accordance with the provisions of Section 33(1), no proceedings for the recovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the year in which any demand is made under this Act.

REFUNDS TO SHAREHOLDERS AND OTHERS

If

(a) a shareholder in a company who has received any dividend from the company; or

(b) a partner in a firm on which income-tax has been levied at the maximum rate, in accordance with the proviso to Section 14, who has received a share of the profits of the firm; or

(c) the owner of a security from the interest on which income-tax has been deducted in accordance with the provisions of Section 15;

satisfies the Collector that his total income in the previous year was less than any one, as the case may be, of the amounts specified in Schedule II, he shall be entitled to a refund of a sum calculated on such dividend, share of profits or interest at the rates specified in the same Schedule against each such amount.

No claim to any refund under Section 37 shall be allowed, unless it is made within one year from the last day of the year to which the claim relates.

OFFENCES AND PENALTIES

If a person fails without reasonable cause or excuse

(a) to deduct and pay any tax as required by Section 15 or under Section 36(2);

(b) to deliver or cause to be delivered to the Collector in due time any of the returns mentioned in Section 16, Section 17, or Section 28;

(c) to grant inspection or allow copies to be taken in accordance with the provisions of Section 29;

(d) to attend or to produce, or cause to be produced, on or before the date mentioned in a notice under Section 18, such accounts and documents as are referred to in the notice,

he shall, on conviction before a Magistrate, be punishable with fine which may extend to ten rupees for every day during which the default continues.

If a person makes a statement in a verification mentioned in Section 17 or Section 21(3) which is false, and which he either knows or believes to be false or does not believe to be true, he shall be deemed to have committed the offence described in Section 177 of the Indian Penal Code.

(1) A person shall not be proceeded against for an offence under Section 39 or Section 40 except at the instance of the Collector.

(2) The Collector may stay any such proceeding or compound any such offence.

All particulars contained in any statement or return made or furnished under the provisions of this Act shall be treated as confidential and if a public servant discloses any particulars contained in any statement or return made or furnished under this Act, he shall be punishable with imprisonment which may extend to six months and shall also be liable to fine:

Provided that no prosecution shall be instituted under this section, except with the previous sanction of the Local Government.

MISCELLANEOUS

(1) The Governor-General in Council may make rules for carrying out the purposes of this Act and for the ascertainment and determination of any class of income, and may, subject to such restrictions and conditions as he may impose, delegate to a Local Government the power to make such rules so far as regards the territories subject to that Government.

(2) Without prejudice to the generality of the foregoing power such rules may

(a) when income is derived in part from agriculture and in part from business, prescribe the manner, whether with reference to a class or in particular cases, by which the taxable income shall be arrived at;

(b) prescribe the manner in which and the procedure by which taxable income of Insurance Companies shall be arrived at;

(c) prescribe the manner in which and the procedure by which the taxable income of persons not resident in British India or of persons deemed to be assessees in respect thereof, shall be arrived at;

(d) provide for a system of composition of assessments and prescribe the conditions under which the Collector may enter into composition with assessees as to their assessment;

(e) prescribe the procedure to be followed on applications for refunds;

(f) provide for any matter which by this Act is to be prescribed.

(3) Rules made under this section shall be published in the Gazette of India or the local Official Gazette, as the case may be, and shall thereupon have effect as if enacted in this Act.

The Governor-General in Council may, by notification in the Gazette of India, make an exemption, reduction in rate or other modification, in respect of income-tax in favour of any class of income or in regard to the whole or any part of the income of any class of persons.

When any money is paid under this Act to the Collector or is recovered thereunder by him, he shall give a receipt for the same, specifying the prescribed particulars.

A notice or requisition under this Act may be served on the person therein named either by post, or by the delivery or tender to him of a copy of the notice or requisition in the manner provided by the Code of Civil Procedure, 5 of 1908, for the service of summons.

(1) When an assessee has several places of business in territories subject to different Local Governments, the Governor-General in Council may declare which of those places shall, for the purposes of this Act, be deemed to be his principal place of business.

(2) When an assessee has several places of business in the territories subject to a single Local Government, that Government may declare which of them shall, for the purposes of this Act, be deemed to be his principal place of business.

(3) The powers given by this section may be delegated to and exercised by, such officers as the Governor-General in Council or the Local Government, as the case may be, may appoint in the behalf.

Every person deducting, retaining or paying any tax in pursuance of this Act in respect of income belonging to another person is hereby indemnified for the deduction, retention or payment thereof.

All powers conferred by, or conferable under, this Act may be exercised from time to time as occasion requires.

The Local Government may, by notification in the local Official Gazette, delegate to the Chief Revenue-authority all or any of the powers conferred on it by this Act for the appointment of officers to exercise or perform the powers or duties of Collectors or Commissioners and all or any of the powers conferred on it by Section 36 and the proviso to Section 42.

(1) If in the course of any assessment under this Act or any proceeding in connection therewith other than a proceeding under Chapter VII, a question has arisen with reference to the interpretation of any of the provisions of this Act or of any rule thereunder, the Chief Revenue-authority may, either on its own motion or on reference from any Revenue-officer subordinate to it, draw up a statement of the case, and refer it, with its own opinion thereon, to the High Court, and shall so refer any such question on the application of the assessee unless it is satisfied that the application is frivolous or that a reference is unnecessary.

(2) If the High Court is not satisfied that the statements contained in the case are sufficient to enable it to determine the questions raised thereby, the Court may refer the case back to the Revenue-authority by which it was stated, to make such additions thereto or alterations therein as the Court may direct in that behalf.

(3) The High Court upon the hearing of any such case shall decide the questions raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send to the Revenue-authority by which the case was stated a copy of such judgment under the seal of the Court and the signature of the Registrar; and the Revenue-authority shall dispose of the case accordingly, or if the case arose on reference from any Revenue-officer subordinate to it, shall forward a copy of such judgment to such officer who shall dispose of the case conformably to such judgment.

(4) Where a reference is made to the High Court on the application of an assessee, costs shall be in the discretion of the Court.

No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act and no prosecution, suit or other proceeding shall lie against any Government officer for anything in good faith done or intended to be done under this Act.

The enactments mentioned in Schedule III are hereby repealed to the extent specified in the fourth column thereof:

Provided that such repeal shall not affect the liability of any person to pay any sum due from him or any existing right of refund under any of the said enactments:

Provided, further, that such repeal shall not affect the Super-tax Act, 1917, and any provisions of the said enactments which have been applied or incorporated by reference in the said Act shall, for the purposes of that Act, continue to be in force.

Schedule 1

(See Section 14)

Schedule 2

(See Section 37)

Schedule 3

(See Section 53)