TaxTMI 
TaxTMI 
Finance Act, 1995 - Explanatory Notes on provisions relating to Direct Taxes
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....961. Provisions in brief 3. The provisions of the Finance Act, 1995, in the sphere of direct taxes, relate to the following matters :_ (i) Prescribing the rates of income-tax on incomes liable to tax for the assessment year 1995-96 ; the rates at which tax will be deductible at source in the financial year 1995-96 from interest (including interest on securities), dividends, winnings from lotteries or crossword puzzles, winnings from horse races, commission and other categories of income liable for tax deduction at source under the Income-tax Act ; rates for computing "advance tax", deduction of income-tax from "Salaries" and charging of income-tax on current incomes in certain cases for the financial year 1995-96. (ii) Amendment of the Income-tax Act, 1961, with a view to _ _listing of exempt allowances under section 10(14) in the Income-tax Rules ; _enlarging scope of income-tax exemption on interest on deposits for benefit of victims of the Bhopal gas leak disaster ; _removing condition of specification for purposes of section 10(23D) in case of Mutual Funds registered with SEBI ; _granting income-tax exemption to funds established for welfare of employees....
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.... _granting power to call for information when no proceeding is pending ; _enlarging power of authorisation for conducting survey ; _enlarging the scope of the provisions relating to permanent account numbers ; _introducing methods of accounting and accounting standards for computing income ; Enlarging scope of deduction of tax at source by way of_ (a) deduction of tax at source from interest on time deposits with banks ; (b) enlarging scope of provision regarding deduction of tax at source from payments to contractors and sub-contractors ; (c) reducing rate of deduction of tax at source from rent in certain cases ; (d) introducing deduction of tax at source from payments by way of fees for professional services or fees for technical services ; (e) introducing deduction of tax at source from income in respect of units of specified Mutual Funds or of the Unit Trust of India ; _introducing simplification in the working of the Settlement Commission ; _modifications of provisions for pre-emptive purchase of immovable properties under Chapter XX-C ; _introducing provisions for modification of the status of persons engaged in the business of prospectin....
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....ial year 1995-96 and also for computation of "advance tax" payable during that year in the case of all categories of taxpayers, have been specified in Part III of the First Schedule to the Act. These rates are also applicable for charging income-tax during the financial year 1995-96 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax or where an order has to be passed in a search and seizure case where search was initiated before the 1st day of July, 1995, for calculating the amount of tax on the estimated undisclosed income, etc. The salient features of the rates prescribed in the said Part III are indicated in the following paragraphs. A. Individuals, Hindu undivided families, etc. 7.1. Sub-paragraph I of Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of individuals, Hindu undivided families (other than those with one or more members having independent total income exceeding the exem....
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.... have been specified in Paragraph E of Part III of the First Schedule to the Act. These rates are the same as those specified in the corresponding Paragraph of Part I of the First Schedule to the Act. F. Surcharge 12. In the case of domestic companies, surcharge will continue to be levied at the rate of 15 per cent. of the amount of income-tax where the total income exceeds seventy-five thousand rupees. Effect of changes in the exemption limit 13. The impact of increase in the exemption limit in the case of individuals, non-specified Hindu undivided families, etc., referred to in Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Act, at different income levels, is as under : Table Total Income (Rs.) Existing Tax Liability (Rs.) New Tax Liability (Rs.) Relief Amount (Rs.) Percentage of relief 36,000 200 Nil 200 100 37,000 400 Nil 400 100 38,000 600 Nil 600 100 39,000 800 Nil 800 100 40,000 1,000 Nil 1,000 100 50,000 3,000 2,000 1,000 33.3 60,000 5,000 4,000 1,000 20.0 75,000 9,500 ....
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....e aforesaid proposal. [Section 4] Enlarging scope of income-tax exemption on interest on deposits for benefit of victims of the Bhopal gas leak disaster 15.1. Sub-clause (v) of clause (15) of section 10 of the Income-tax Act, provides income-tax exemption in respect of interest on securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in Reserve Bank's SGL Account No. SL/DH 048. Recently, in terms of an order of the Supreme Court to finance the construction of a hospital at Bhopal to serve the victims of the gas leak, the shares of the Union Carbide India Limited have been sold. The sale consideration reserved for construction has been deposited with State Bank of India, Main Branch, Parliament Street, New Delhi, in Account Number 807/787. The interest on the aforesaid deposit and similar deposits which may be made in future, needs to be exempted from the levy of income-tax. 15.2. The Act, therefore, substitutes sub-clause (v) of clause (15) of section 10, in order to enlarge the scope of the income-tax exemption by providing such exemption to interest on deposits for the benefit of the victims of the Bhopal gas leak disaster held in such account, with....
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....nk of India, the condition of specification by the Central Government for the purposes of clause (23D) of section 10 will continue to operate. 16.3. The amendment will take effect from 1st July, 1995. [Section 4] Income-tax exemption to funds established for welfare of employees of which such employees are members 17.1. A number of funds have been established for the welfare of employees or their dependants in which such employees themselves are members. The funds are expended to provide cash benefits to a member on his superannuation or in the event of his illness or illness of any member of his family, etc., or to the dependants of a member on his death. As these organisations are in the nature of mutual benefit funds, their income does not qualify for exemption under section 10(23C)(iv) or section 11. Representations have been received to the effect that income-tax exemption should be provided to these funds as the liability to pay income-tax reduces the availability of funds with them for utilisation towards their objects. There is merit in these representations. 17.2. The Act, therefore, inserts a new clause (23AAA) in section 10 so as to provide for exemption f....
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....e transferred (other than in the event of listing of the shares in a recognised stock exchange in India) by a venture capital fund or a venture capital company at any time within a period of three years from the date of their acquisition, the aggregate amount of the income by way of dividends on such equity shares which has not been included in the total income of the previous year or years preceding the previous year in which such transfer has taken place shall be deemed to be the income of the venture capital fund or of the venture capital company for the assessment year relevant to the previous year in which such transfer has taken place. The exemption will also not be allowed in respect of the long-term capital gains, if any, arising on the aforesaid transfer of equity shares. 18.3. The expression "venture capital fund" is being defined to mean a fund, operating under a trust deed registered under the provisions of the Registration Act, 1908, established to raise monies by the trustees for investments mainly by way of acquiring equity shares of a venture capital undertaking in accordance with the prescribed guidelines. The expression "venture capital company" is being define....
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....ster in his Independence Day Speech on 15th August, 1993. The main object of this corporation is to promote economic and developmental activities for the benefit of minority communities. Corporations, at the State level, for the development of minority communities already exist in some States. There is a need to provide income-tax exemption on the income of these corporations and also tax relief on the donations made to them. 20.2. The Act, therefore, inserts a new clause (26BB) in section 10 of the Income-tax Act. This clause provides that any income of a corporation established by the Central Government or any State Government for promoting the interests of the members of a minority community, will be exempt from income-tax. The expression "minority community" is defined to mean a community notified as such by the Central Government in the Official Gazette in this behalf. 20.3. The Act also amends section 80G of the Income-tax Act to allow deduction, at the rate of fifty per cent., in respect of donations to the corporations referred to in clause (26BB) of section 10 of the Income-tax Act. The deduction in respect of donations to the aforesaid corporations will be subject t....
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....r after 1st April, 1995. 21.5. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 5] Amendment of section 17(3) of the Income-tax Act_removal of anomaly 22.1. Under section 10(13) of the Income-tax Act, any payment from an approved superannuation fund on the death of a beneficiary or any payment to an employee on commutation of pension on retirement is exempt from tax. Part B of the Fourth Schedule to the Act contains rules relating to approval, etc., of the superannuation funds. Rule 6 thereof provides for deduction of tax at source where employees' contributions to the approved superannuation fund are paid to an employee in circumstances other than those referred to in section 10(13). 22.2. Although tax is deducted at source on payments which are not covered by the exemption under section 10(13), the tax so deducted is being refunded because under the existing section 17(3) relating to profits in lieu of salary, payments from an approved superannuation fund are not treated as income. This is an unintended benefit and creates an anomalous situation where tax is ....
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..... Section 33AC of the Income-tax Act, 1961, was inserted by the Direct Tax Laws (Second Amendment) Act, 1989, with effect from 1st April, 1990, with a view to provide a tax incentive to public/Government companies engaged in the business of operation of ships. This deduction is available to the extent of the total income provided the amount is credited to a reserve account and is utilised for the purchase of a new ship within the specified period. 24.2. It was noticed that shipping companies have diversified into trading, real estate business, etc., and are claiming deduction under this section even in respect of their income from activities other than shipping. There is no justification for allowing 100 per cent. deduction with reference to income from activities other than operation of ships. 24.3. Section 33AC has been amended to restrict the deduction to 50 per cent. of the income derived from the business of operation of ships only. This takes outside the purview of the deduction any income arising from businesses other than shipping business, or from sources other than business. 24.4. The amendment will take effect from 1st April, 1996, and will, accordingly, apply i....
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....of these approved financial corporations/approved public companies had diversified their activities and were claiming deduction under this section even in respect of their income derived from activities other than those specified in this section. As there was no justification for allowing the deduction with reference to income from other activities or from sources other than business, the Finance Act, 1995, has amended section 36(1)(viii) to limit the deduction to 40 per cent. only in respect of income derived from providing long-term finance for the activities specified in section 36(1)(viii). Now, income arising from other business activities or from sources other than business will not be taken into account for computing deduction under section 36(1)(viii). 26.3. Section 36(1)(viii) has also been amended to extend the ambit of deduction up to 40 per cent. of the income credited to a special reserve account to approved financial corporations providing long-term finance for development of infrastructure facilities in India. 26.4. The amendments will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years.....
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....n allowance. 28.3. With a view to setting at rest the aforesaid controversy, section 43(3) has been amended to provide that the expression "plant" will not include tea bushes and livestock. 28.4. The amendment will take effect, retrospectively, from 1st April, 1962, and will, accordingly, apply in relation to the assessment year 1962-63 and subsequent years. [Section 12] Furnishing of tax audit report 29.1. Section 44AB of the Income-tax Act, 1961, requires every person carrying on business or profession with gross receipts exceeding the prescribed limits to get his accounts audited by an accountant before 31st October, or 30th November, as the case may be. Section 139(6A) states that the return forms for sub-sections (1) and (3) of section 139 and clause (i) of sub-section (1) of section 142 shall, in the case of an assessee engaged in business or profession, require him to furnish, inter alia, the report of audit obtained under section 44AB. Section 271B prescribes levy of penalty for any of the following failures : (1) Failure to get the accounts audited as required under section 44AB ; (2) Failure to obtain a report of such audit ; (3) Failure to furnish....
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.... of complexity, a simple method has been laid down for computing the cost of acquisition of bonus shares. For the sake of clarity and simplicity, the cost of bonus shares is to be taken as nil while the cost of original shares is to be taken as the amount paid to acquire them. This procedure will also be applicable to any other security where a bonus issue has been made. Here the expression "security" will take its meaning from the definition in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956. 30.3. The period of holding of the bonus asset will be reckoned from the date of allotment of such an asset. 30.4. These amendments will take effect from 1st April, 1996, and will, accordingly, apply to the securities transferred on or after 1st April, 1995. [Section 14] Income-tax relief to a guardian for providing for maintenance of handicapped persons on the guardian's death 31.1. Section 80DD of the Income-tax Act allows deduction of a sum of Rs. 15,000 from the income of a taxpayer who incurs any expenditure on medical treatment, nursing, training and rehabilitation of a handicapped dependant. However, this deduction, by its very nature, is avail....
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.... 100 per cent. deduction for donations to Zila Saksharta Samitis constituted in the districts under the chairmanship of the district collectors for the purpose of improvement of primary education in villages and towns in such districts and for literacy and post-literacy efforts. 32.4. For this purpose, the term "town" has been defined to mean a town which has a population up to 1 lakh as per the last preceding census for which the relevant figures have been published before the first day of the relevant previous year. 32.5. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 16] Making the deduction in respect of profits from export of computer software under section 80HHE open-ended 33.1. Under the provisions of section 80HHE, 100 per cent. deduction is allowed on profits derived from export of computer software provided the sale consideration is received in or brought into India in convertible foreign exchange. 33.2. The provisions of section 80HHE were introduced by the Finance (No. 2) Act, 1991, for the assessment years 1991-92 to 1993-94. The Finance Act, ....
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....il systems or any other public facility of similar nature as may be notified by the Board on BOT or BOOT or similar other basis (where there is an ultimate transfer of the facility to a Government or public authority). The enterprise has to enter into an agreement with the Central or the State Government or a local authority or any other statutory authority for this purpose. The period within which the infrastructure facility has to be transferred needs to be stipulated in the agreement between the undertaking and the Government concerned. The enterprise has to be owned by a company registered in India or a consortium of such companies. The tax holiday will be in respect of income derived from the use of the infrastructure facilities developed by them. 34.4. It will apply in respect of infrastructure facilities becoming operational on or after 1st April, 1995. 34.5. The five-year period will be counted from the initial year. The enterprise will be allowed to choose the initial year from which it wants to avail itself of the five-year tax holiday. The concession has to be availed of within a span of the 12 years beginning with the year of operation. This means that an enterpri....
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....ll-scale units commencing production between 1st April, 1995, and 31st March, 2000. These units will be allowed a deduction of 25 per cent. of the profits (30 per cent. for companies) for a period of ten years (12 years for co-operatives) as at present. 35.4. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 19] Incentive for savings 36.1. Under section 80L of the Income-tax Act, a deduction of up to Rs. 10,000 from total income is allowed in respect of income by way of dividend and interest, etc., income from certain specified savings instruments. 36.2. With a view to giving a fillip to savings, the deduction allowed to individuals and Hindu undivided families under section 80L has been raised from the present Rs. 10,000 to Rs. 13,000. 36.3. This amendment will take effect from 1st April, 1996, and will, accordingly, apply in relation to the assessment year 1996-97 and subsequent years. [Section 20] Relief to handicapped persons suffering from permanent physical disability, blindness or mental retardation 37.1. Under the provisions of section 80U of....
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....by the Income-tax Department are important means for unearthing black money. However, under the present scheme, valuable time is lost in trying to relate the undisclosed incomes to the different years. Tax-evaders generally manage to divert the focus to procedural and legal issues and often invent new evidence to explain undisclosed income. By the time search-related assessments are completed, the effect of the search is considerably diluted. Legal battles continue for many years to decide which income is assessable in which assessment year. No finality is reached and the seized assets remain with the Department for a long time. 39.2. In order to make the procedure of assessment of search cases cost-effective, efficient and meaningful, a new scheme has been introduced for the assessment of undisclosed income determined as a result of search under section 132 or requisition under section 132A. Under this scheme, the undisclosed income detected as a result of any search initiated, or requisition made, after 30th June, 1995, shall be assessed separately as income of a block of years. Where the previous year has not ended or the due date for filing a return of income for any previou....
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....urn of income has been filed there will be no reduction of any amount for determining the undisclosed income stated above. (vi) Where the previous year has not ended or the date of filing the return of income under section 139(1) for any previous year has not expired, the income determined on the basis of transactions recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous years shall be reduced. (vii) However, in a case where undisclosed income has been determined in any earlier block assessment, the same will be reduced from the total income for determining the undisclosed income. (viii) Where any order of settlement under section 245D has been passed by the Settlement Commission, the income determined in such order shall be reduced accordingly. (ix) It may again be emphasised that the use of the words "such previous years" shows that the exercise shall be restricted to years in respect of the undisclosed income has been found and need not be undertaken for all the ten years comprised in the block period. (c) Applicability of the provisions : (i) The special procedure for assessme....
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....rn under clause (i) of sub-section (1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. The Assessing Officer shall not be required to issue any notice under section 148 for the purpose of proceedings under this Chapter. Though the block period can be extended up to ten years in a case where the assessee has not disclosed undisclosed income in any one or more of the previous years in the block periods and the Assessing Officer also does not find any material indicating undisclosed income in any one or more of the previous years comprised in the block period, it will not be necessary to do the exercise of computing the undisclosed income for the relevant years and the exercise may be limited to the years in respect of which the undisclosed income has been found. On determination of the undisclosed income of the block period, the Assessing Officer shall issue an order of assessment and determine the demand payable by him on the basis of such ....
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....k period shall be taxed at a flat rate of 60 per cent. plus surcharge at the rate of 15 per cent. in the case of a domestic company. No penalty under section 271(1)(c), 271A or 271B or interest under section 234A, 234B or 234C shall be leviable. Penalties under all other sections wherever applicable and interest on delayed payment under section 220 shall, however, be leviable. Wherever considered necessary, the prosecution proceedings can also be initiated against the persons searched. Besides, all other provisions of this Act shall apply to the assessments to be made under this Chapter. In other words, provisions relating to regular income-tax proceedings, obligation for payment of self-assessment tax under section 140A before filing return showing undisclosed income, recovery proceedings, appellate proceedings, etc., shall be applicable. [Sections 24, 26, 32 and 45] Raising the qualifying limits for the purposes of the simplified procedure for small businessmen 40.1. A simplified procedure for small businessmen, carrying on certain specified businesses or vocations, was introduced in the Income-tax Act by the Finance Act, 1992. 40.2. A person is eligible to opt for th....
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....ion which will be useful for or relevant to any enquiry or proceedings under the Income-tax Act in the case of any person. The Assessing Officer would, however, continue to have the power to requisition information in specific cases in respect of which any proceeding is pending as at present. However, an income-tax authority below the rank of Director or Commissioner can exercise this power in respect of an inquiry in a case where no proceeding is pending, only with the prior approval of the Director or the Commissioner. 41.4. The proposed amendment takes effect from 1st July, 1995. [Section 37] Authorisation for conducting survey 42.1. Section 133A of the Income-tax Act, 1961, empowers an income-tax authority to conduct survey. The term "income-tax authority" for the purpose of conducting survey has been defined in the Explanation, appearing at the end of section 133A, to mean a Deputy Commissioner, an Assistant Director or an Assessing Officer and for some specific purposes, if authorised, an Inspector of Income-tax. The powers of these authorities are restricted to their territorial jurisdiction resulting in operational difficulties whenever any of the specified auth....
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....nt number has been extended to professionals whose gross receipts are, or are likely to exceed, fifty thousand rupees in any previous year. Any person who is not specifically required to apply, may also apply for a permanent account number and the Assessing Officer shall make the allotment. The persons who have already been allotted permanent account number under the new series need not apply for such a number again. After allotment under the new series, any number allotted earlier shall cease to have effect. 43.4. Enabling powers have been provided to the Board for switching over to the new series of permanent account numbers. The Board has also been given powers to notify the places to be covered from time to time, the classes of persons and the period within which the application for allotment of a permanent account number under the new series has to be made. 43.5. It has been provided that every person will have to quote the permanent account number in his returns or correspondence with income-tax authorities, in challans for payment of any sum and in the documents pertaining to prescribed transactions. The Board may prescribe dates from which different classes of persons....
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....tion with expert bodies like the Institute of Chartered Accountants. 44.3. The amendment will take effect from 1st April, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. [Section 31] Enlarging the scope of deduction of tax at source 45. An effective method of widening the tax base is to enlarge the scope of deduction of income-tax at source. Apart from bringing in more persons in the tax net, it also improves correct reporting of incomes. The Act, therefore, subjects, _ (a) interest on time deposits with banks, (b) payments by way of fees for professional services or fees for technical services, and (c) income in respect of units of the Mutual Funds specified under clause (23D) of section 10 or of the Unit Trust of India, to the requirement of deduction of tax at source. It also enlarges the scope of deduction of tax at source under section 194C relating to payments made to contractors and sub-contractors. The details of the provisions are as under : Deduction of tax at source from interest on time deposits with banks 46.1. On account of the provisions contained in clause (vii) of sub-section (3) of s....
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....o apply its provisions to the payments made in pursuance of a contract between a contractor and any firm. 47.2. In order to subject payments in respect of advertising contracts, broadcasting contracts, telecasting contracts, transport contracts and catering contracts to the requirement of deduction of income-tax at source, the Act amends section 194C by providing that the expression "work", used therein, shall also include : (a) advertising, (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting, (c) carriage of goods and passengers by any mode of transport other than by railways, and (d) catering. While the deduction of tax shall be at the rate of two per cent. of the amount in regard to items (b), (c) and (d) above, it shall be at the rate of one per cent. in the case of an advertising contract. The deduction in regard to item at (a) above shall apply when a client (i.e., an advertiser) makes payment to an advertising agent. When an advertising agency makes payments to their models, artists, photographers, etc., tax shall be deducted by it under section 194J of the Income-tax Act at the rate of five per cent. as applicable to f....
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....come-tax, as the case may be, he shall, on an application made by such person in this behalf, give to him such certificate as may be appropriate. Where any such certificate is given, the person responsible for making the payment of the said fees to that person shall, until such certificate is cancelled, deduct income-tax at the rate specified in the certificate or deduct no tax at source, as the case may be. The expression "professional services" is being defined to mean services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section. The expression "fees for technical services" is proposed to be given the same meaning as in Explanation 2 below clause (vii) of sub-section (1) of section 9. 49.2. The Act also amends sections 198 to 200 and 202 to 205 of the Income-tax Act, containing provisions in respect of deduction of income-tax at source. These amendments are consequential to the insertion of new section 194J in the Act. 49....
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....fore the 1st day of July, 1995 ; (b) from units issued under such scheme already in operation, of the Mutual Fund or of the Unit Trust of India, as the Central Government may specify having regard to the plan of payment or income thereunder to the unitholders ; and (c) credited or paid in respect of units issued under any scheme of the Unit Trust of India to any institution or fund where such income is not liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of section 10. 50.3. The Act also substitutes a new section for section 196A of the Income-tax Act, so as to provide for deduction of income-tax at source from income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India payable to a non-resident (not being a company) or to a foreign company at the rate of twenty per cent. It is also being provided that no deduction of income-tax at source will be made from any income credited or paid to a unitholder, being a non-resident Indian or a non-resident Hindu undivided family, in respect of units of the Unit Trust....
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....eipt of communication from the Commission failing which the Settlement Commission is empowered to make the order without such report. This time-limit was provided in view of the search and seizure cases wherein order under section 132(5) is required to be passed within 120 days from the date of search. However, specific provisions of section 245C(1E) already provide for the special situation relevant to search cases where the assessee shall not be entitled to make an application before the expiry of 120 days from the date of seizure. In the rest of the cases, a much shorter period would be enough for the Commissioner to furnish his report. Hence, the period for the submission of the report by the Commissioner has been reduced to 45 days from the date of receipt of the communication from the Settlement Commission. 51.3. These amendments take effect from 1st July, 1995. [Sections 43 and 44] Modifications of provisions for pre-emptive purchase of immovable properties under Chapter XX-C 52.1. Rule 48K of the Income-tax Rules provides that the value of any immovable property for the purposes of section 269UC shall be the apparent consideration of that property exceeding 10 l....
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.... of companies is usually engaged in this business. As a result, the assessment of these persons (except the Government which is not liable to income-tax) is to be made in the status of association of persons (AOP). It has been represented that persons engaged in the business of prospecting, etc., for mineral oil should be assessed in their several capacities on their income from such business and not in the status of association of persons. Assessment in the latter status tends to create difficulties in availing of the facility of the "carry forward" of losses if the constitution of the association of persons were to change later on. Further, the non-resident persons who are members of the association of persons, would find it difficult to get credit in their own country for the tax paid in India, as the tax has been paid by the association of persons and not by the non-residents as such. There is merit in the representation made. 53.2. Under the existing provisions of section 293A of the Income-tax Act, the Central Government is empowered to make, by notification in the Official Gazette, an exemption, reduction in rate or other modification in respect of income-tax or in regard....