TaxTMI 
TaxTMI 
TaxTMI 
Third Schedule
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in determining the written down value for the purposes of clause (ii)."; (b) in sub-section (2), after "clause (iv)", insert "or clause (v)". 3. Section 33 (a) for sub-section (1), substitute - "(1)(a) In respect of a new ship or new machinery or plant (other than office appliances or road transport vehicles) which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction, in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b). (b) The sum referred to in clause (a) shall be - (A) in the case of a ship, forty per cent. of the actual cost thereof to the assessee; (B) in the case of machinery or plant, - (i) where the machinery or plant is installed for the purpose of business of construction, manufacture or production of any one or more ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Section 33A- In sub-section (2), for "[the total income for this purpose being computed after making the allowance under sub-section (1) or sub-section (1A) or clause (ii) of sub-section (2) of section 33 but without making any allowance under sub-section (1) of this section]", in both places, substitute - "[the total income for this purpose being computed after deduction of the allowance under sub-section (1) or sub-section (1A) or clause (ii) of sub-section (2) of section 33, but without making any deduction under sub-section (1) of this section or any deduction under Chapter VIA or section 280-O]". 5. Section 35- In sub-section (2), - (i) for clause (i), substitute - "(i) in a case where such capital expenditure is incurred before the 1st day of April, 1967, one-fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal installments for each of the four immediately succeeding previous years; (ia) in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole of such capital expenditure incurred in any pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of any assessment year the net result of the computation under section 48 to 55 in respect of capital gains relating to short-term capital assets is a loss and the assessee has income assessable under any head of income other than "Capital gains", the assessee shall, subject to the provisions of this Chapter, be entitled to have such loss set off against the income aforesaid. 11. Section 72- In sub-section (1), after "Capital gains", insert "relating to capital assets other than short-term capital assets". 12. Section 74- In sub-clause (i) of clause (a) of sub-section (1), for "as relates to short-term capital assets", substitute "relating to short-term capital assets as cannot be or is not wholly set off against income under any head in accordance with the provisions of section 71". 13. For Chapter VIA, Substitute - Chapter VIA Deductions to be Made in Computing total Income A. - General 80A. Deductions to be made in computing total income. - (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sources; (7) "priority industry" means the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule or the business of any hotel where such business is carried on by an Indian company and the hotel is for the time being approved in this behalf by the Central Government; (8) "relative", in relation to an individual, means - (a) the mother, father, husband or wife of the individual, or (b) a son, daughter, brother, sister, nephew or niece of the individual, or (c) a grand-son or grand-daughter of the individual, or (d) the spouse of any person referred to in sub-clause (b); (9) "repatriate" means a person of Indian origin who was ordinarily residing in a foreign country and who, on leaving, or being forced to leave, such country, has - (a) in the case of a person leaving Mozambique, on or after the 25th day of June, 1962, or (b) in the case of a person leaving Burma, on or after the 1st day of June, 1963, or (c) in the case of a person leaving Ceylon, on or after the 1st day of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any interest thereon) in the event of such person dying before the said stipulated date; (ii) a policy of insurance effected by a person for the benefit of a minor (being the assessee, or a male member of a Hindu undivided family where such family is the assessee) with the object of enabling the minor, after he has attained majority, to secure an insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf; (c) any sum deducted in the previous year from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his wife or children, in so far as the sum so deducted does not exceed one-fifth of the salary; (d) if the assessee is an employee participating in a recognised provident fund, his own contributions to his individual account in the fund in the previous year, in so far as the aggregate of such contributions does not exceed one-fifth of his salary in that previous year or eight thousand rupees, whichever is less. Explanation : In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome; and if there is no earned income, the deduction shall be made in computing any other income under any head. 80D. Deduction in respect of medical treatment, etc., of handicapped dependants. - (1) Where an assessee who is resident in India, being an individual or Hindu undivided family, who has, during the previous year, incurred out of his or its income chargeable to income-tax, any expenditure for the medical treatment (including nursing) of a person who - (a) is a relative of the individual, or, as the case may be, is a member of the Hindu undivided family and is not dependent on any person other than such individual or Hindu undivided family for his support or maintenance, and (b) is suffering from a physical or mental disability which is certified by a registered medical practitioner to have the effect of reducing considerably such persons capacity for normal work or engaging in a gainful employment (hereinafter in this section referred to as handicapped dependant), the assessee 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 in respect....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the amount of the qualifying premium in the computation of his total income in respect of the previous year : Provided that the amount which may be so deducted shall not exceed the sum of five thousand rupees, or one-tenth of his gross total income, whichever is less : Provided further that any annuity payable to the individual shall be deemed to be his earned income to the extent to which it is attributable to the amount in respect of which deduction has been allowed under this section and chargeable to tax accordingly. (2) Subject to sub-section (3) and any rules made by the Board in this behalf, the Commissioner shall not approve a contract unless he is satisfied that it does not - (a) provide for the payment during the life of the individual of any sums except sums payable by way of annuity to the individual; or (b) provide for the annuity payable to the individual to commence before he attains the age of fifty-eight or after he attains the age of sixty-eight; or (c) provide for the payment of any other sums except sums payable by way of annuity to the individuals widow or widower and any sums which, in the event of no annuity becoming payable either to the individ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....children or dependants of such persons on their death; (c) all annuities, pensions and other benefits granted from the fund shall be payable only in India. (5) The Commissioner may, at any time, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the persons by and to whom premiums are payable under any contract for the time being approved under this section, or to the trustees of any fund so approved, withdraw the approval. (6) Notwithstanding anything contained in sub-sections (1) and (4), no deduction under this section shall be allowed in the case of any individual - (i) whose gross total income includes unearned income of more than ten thousand rupees; or (ii) who is entitled to any person or is participating in any pension or superannuation scheme. (7) The deduction under this section shall be made in computing the earned income of the assessee included in his gross total income, so, however, that the amount of deduction shall not in any case exceed the amount of the income computed under the head "Profits and gains of business or profession", included in the gross total income. (8) Any annuity payable under an app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....granted under this section and administration of funds approved under this section as it may deem requisite. 80F. Deduction in respect of educational expenses in certain cases. - (1) Where an individual, being a resident, who is not a citizen of India, has expended any sum in the previous year out of his income chargeable to tax for the full time education of his child wholly or mainly dependent on him and who is not more than twenty-one years of age, at any University, college, school or other educational institution situate in a country outside India, 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 the case of an individual who has one such child, one thousand five hundred rupees; and (ii) in the case of an individual who has more than one such child, three thousand rupees. (3) If the gross total income of the assessee includes earned income chargeable under any head, the deduction under sub-section (1) shall, to the extent possible, be made in computing such earned income an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds the limit of two hundred thousand rupees specified in this sub-section, then such limit shall be raised to cover that portion of the donation which is equal to the difference between such aggregate and the said limit, so, however, that the limit so raised shall not exceed ten per cent. of the assessees gross total income as reduced as aforesaid, or five hundred thousand rupees, whichever is less. (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely :- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (22) of section 10; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct to the provisions of this section, a deduction from such profits and gains of an amount equal to fifty per cent. thereof in computing the total income of the assessee, so, however, that the amount of the deduction under this section shall not, in any case, exceed one hundred thousand rupees. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :- (i) it is not formed by the splitting up, or reconstruction, of a business already in existence; (ii) it is not formed by the transfer to a new business of a building, machinery or plant previously used for any purpose; (iii) it has begun or begins to manufacture or produce articles in any part of India at any time within a period of three years next following the 1st day of April, 1967; (iv) it employs, on every working day throughout the previous year, forty or more workers in a manufacturing process (where carried on with or without the aid of power); and (v) it employs displaced persons or repatriates or members of the families of displaced persons or repatriates (all such employees being, hereinafter, referred to as rehabilitated employees) and the daily average numbe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the aggregate of the deductions, if any, admissible to the assessee under section 80H and section 80-I) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year). (2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or to operate its cold stora....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ii) where there is more than one deficiency and each such deficiency relates to a different assessment year, the deficiency which relates to an earlier assessment year shall be set off under this sub-section before setting off the deficiency in relation to a later assessment year : Provided further that in the case of an assessee being a co-operative society, the provisions of this sub-section shall have effect as if for the words "fourth assessment year", the words "sixth assessment year" had been substituted. (4) This section applies to any industrial undertaking which fulfils all the following conditions, namely :- (i) it is not formed by the splitting up, or the reconstruction, of a business already in existence; (ii) it is not formed by the transfer to a new business of a building (not being a building taken on rent or lease), machinery or plant previously used for any purpose; (iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any party of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of twenty-three years next f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... thereof previously used for any purpose, or (b) 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, in either case, 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 (ii) of sub-section (4) and clause (a) of sub-section (6), 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 industrial undertaking or the business of the hotel. (7) The Central Government may, after making such inquiry as it may think fit, direct, by notification in the Official Gazette, that the exemption conferred by this section shall not apply to any class of industrial undertakings with effect from such date as it may specify in the notification. 80K. Deduction in respect of dividends attributable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uch income by way of dividends other than the dividends referred to in sub-clause (i) . . . . . . 65 per cent. of such income; (b) where the assessee is a domestic company - in respect of any such income by way of dividends . . . . . . . . 60 pr cent. of such income. Explanation : For the purposes of this section, a company shall be deemed to be mainly engaged in a priority industry if the income attributable to any such industry or industries included in its gross total income for the previous year is not less than fifty-one per cent. of such gross total income. (2) Where a company to which this section applies is entitled also to the deduction under section 80K or section 80L, the deduction under sub-section (1) of this section shall be allowed in respect of income by way of dividends referred to therein as reduced by any such income in relation to which the company is entitled to a deduction under section 80K or section 80L. 80N. Deduction in respect of dividends received from certain foreign companies. - Where shares in a foreign company have been allotted to an assessee being an Indian company in consideration of any patent, invention, model, design, secret formula ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rketing of the agricultural produce of its members, or (iv) the purchase of agricultural implements, seeds, live-stock or other articles intended for agricultural for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities; (b) in the case of a co-operative society, being a primary society engaged in supplying milk raised by its members to a federal milk co-operative society, the whole of the amount of profits and gains of such business; (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) [either independently of, or in addition to, all or any of the activities so specified], so much of its profits and gains attributable to such activities as does not exceed fifteen thousand rupees; (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; (e) in respect of any income derived by the co-operativ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofessor, teacher or research worker in such University, institution, association or body, there shall be allowed a deduction from such remuneration of an amount equal to fifty per cent. thereof, in computing the total income of the individual : Provided that where the individual renders continuous service outside India in such University, institution, association or body for a period exceeding thirty-six months, no deduction under this section shall be allowed in respect of the remuneration for such service relating to any period after the expiry of the thirty-six months aforesaid. 80S. Deduction in respect of compensation for termination of managing agency, etc., in the case of assessees other than companies. - Where the gross total income of an assessee not being a company includes any income by way of compensation or other payment which is chargeable as the profits and gains of business or profession in accordance with the provisions of clause (ii) of section 28, there shall be allowed, in computing the total income of the assessee, a deduction from such income of an amount equal to twenty-five per cent. thereof, so, however, that the amount of the deduction under this sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Explanation to sub-section (4), for "included in its total income for the relevant previous year", substitute "included in its gross total income for the relevant previous year". 17. Section 109- (a) For "For the purposes of sections 104, 105 and 107A", substitute "For the purposes of section 104, 105 and 107A and this section"; (b) in clause (i), - (i) for "total income of a company", substitute "gross total income of a company"; (ii) for sub-clause (c), substitute - "(c) any sum with reference to which a deduction is allowable to the company under the provisions of section 80G;"; (iii) for sub-clause (d), substitute - (d) losses under the head "Capital gains" relating to capital assets other than short-term capital assets;; (iv) in sub-clause (h), for "included in the total income", substitute "included in the gross total income"; (c) in clause (ii), for "total income", substitute "gross total income"; (d) in clause (iia), for "total income", in both places, substitute "gross total income"; (e) in clause (iii), for....