Direct Taxes Code 2013 - Income Tax Department

343 Pages·2014·2.93 MB·English

THE DIRECT TAXES CODE, 2013
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ARRANGEMENT OF CLAUSES
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CHAPTER I
PRELIMINARY
CLAUSES
1. Short title, extent and commencement.
PART A
INCOME-TAX
CHAPTER II
BASIS OF CHARGE
2. Liability to pay, and charge of, income-tax.
3. Scope of total income.
4. Residence in India.
5. Income deemed to accrue in India.
6. Income deemed to be received in the financial year.
7. Dividend income.
8. Total income to include income of any other person.
9. Income of individual to include income of spouse, minor child and others.
10. Income not included in the total income.
11. Persons not liable to income-tax.
CHAPTER III
COMPUTATION OF TOTAL INCOME
I.—GENERAL
12. Computation of total income.
13. Classification of sources of income.
14. Computation of income from ordinary sources.
15 Computation of income from special sources.
16. Apportionment of income between spouses governed by Portuguese Civil Code.
17. Avoidance of double taxation.
18. Expenditure not to be allowed as deduction.
19. Amount not deductible where tax is not deducted at source.

II.—HEADS OF INCOME
A.—Income from employment
20. Income from employment.
21. Computation of income from employment.
22. Scope of gross salary.
23. Deductions from gross salary.

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B.—Income from house property
24. Income from house property.
25. Computation of income from house property.
26. Scope of gross rent.
27. Deductions from gross rent.
28. Advance rent received.
29. Arrears of rent received.
C.—Income from business
30. Income from business.
31. Business when treated distinct and separate.
32. Computation of income from business.
33. Gross earnings.
34. Determination of business expenditure.
35. Determination of operating expenditure.
36. Determination of finance charges.
37. Determination of capital allowances.
38. Determination of depreciation.
39. Determination of initial depreciation.
40. Deduction for terminal allowance.
41. Deduction for scientific research and development allowance.
42. Computation of profit on transfer of a business capital asset.
43. Special provisions relating to business re-organisation.
44. Meaning of actual cost.
45. Meaning of written down value and adjusted value of assets.
D.—Capital gains
46. Capital gains.
47. Income from certain transfers not to be treated as capital gains.
48. Financial year of taxability.
49. Computation of income from transfer of any investment asset.
50. Full value of consideration.
51. Deduction for cost of acquisition, etc.
52. Indexed cost of acquisition or improvement.
53. Cost of acquisition of an investment asset.
54. Cost of improvement of an investment asset.
55. Relief for rollover of investment asset.
E.—Income from residuary sources
56. Income from residuary sources.
57. Computation of income from residuary sources.
58. Gross residuary income.
59. Deductions from gross residuary income.

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III.—AGGREGATION OF INCOME
60. Aggregation of income under a head of income.
61. Aggregation of income from ordinary sources.
62. Aggregation of income from special sources.
63. Determination of total income.
64. Special provisions relating to business re-organisation or conversion.
65. Aggregation of losses in case of change in constitution of unincorporated body.
66. Aggregation of losses in the case of certain companies.
67. Aggregation of loss not to be allowed in the case of filing of return after due date.
IV.—TAX INCENTIVES
68. Deductions from gross total income from ordinary sources.
69. Deduction for savings.
70. Deduction for life insurance.
71. Deduction for health insurance.
72. Deduction for education of children.
73. Limit on deductions under sections 70, 71 and 72.
74. Deduction of investment made under an equity saving scheme
75. Deduction of interest on loan taken for higher education.
76. Deduction for medical treatment, etc.
77. Deduction to a person with disability.
78. Deduction for medical treatment and maintenance of a dependant person with disability.
79. Deduction of contribution or donation to certain funds or non-profit organisations.
80. Deduction for rent paid.
81. Deduction for political contributions.
82. Deduction of income of Investor Protection Fund.
83. Deduction of royalty income of authors.
84. Deduction of royalty on patents.
85. Deduction of income of co-operative society from banking activities.
86. Deduction of income of primary co-operative societies.
V.—MAINTENANCE OF ACCOUNTS AND OTHER RELATED MATTERS
87. Maintenance of accounts.
88. Audit of accounts and reporting of international transaction.
89. Method of accounting.
CHAPTER IV
SPECIAL PROVISIONS RELATING TO THE COMPUTATION OF TOTAL INCOME OF
NON-PROFIT ORGANISATIONS
90. Applicability of this Chapter.
91. Total income of a non-profit organisation.
92. Computation of total income of a non-profit organisation.
93. Gross receipts of a non-profit organisation.
94. Outgoings of a non-profit organisation.
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95. Prohibited forms and modes of investment.
96. Use or application of funds or assets for the benefit of interested person.
97. Registration of a non-profit organisation.
98. Maintenance of accounts and tax audit.
99. Anonymous donations.
100. Consequences of conversion of a non-profit organisation.
101. Provisions of this Chapter not to apply in certain cases.
102. Interpretations in this chapter.
CHAPTER V
MINIMUM ALTERNATE TAX
A. COMPUTATION OF BOOK PROFIT
103. Computation of book profit.
104. Preparation of profit and loss account for computing book profit.
105. Tax credit for tax paid on book profit.

B. COMPUTATION OF ADJUSTED TOTAL INCOME
106. Computation of adjusted total income.
107. Tax credit for tax paid on adjusted total income.
C. MISCELLANEOUS
108. Interpretations in this chapter
109. Application of other provisions of this Code.

CHAPTER VI
PROVISIONS RELATING TO TAX ON INCOME RECEIVED FROM VENTURE CAPITAL COMPANY
AND VENTURE CAPITAL FUND
110. Tax on income received from venture capital company and venture capital fund.

CHAPTER VII
SPECIAL PROVISIONS RELATING TO CONVERSION OF INDIAN BRANCH OF A FOREIGN BANK INTO A
SUBSIDIARY COMPANY
111. Conversion of an Indian branch of foreign company into subsidiary company.

PART B
DIVIDEND DISTRIBUTUION TAX
CHAPTER VIII
SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED PROFITS OF DOMESTICE COMPANIES
112. Tax on distributed profits of domestic companies.
PART C
TAX ON DISTRIBUTED INCOME
CHAPTER IX
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SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED INCOME
113. Tax on income distributed by mutual fund or life insurer.

PART D
BRANCH PROFITS TAX
CHAPTER X
CHARGE OF BRANCH PROFITS TAX
114. Tax on branch profits.
PART E
WEALTH-TAX
CHAPTER XI
CHARGE OF WEALTH TAX
115. Tax on net wealth.
116. Computation of net wealth.
117. Net wealth to include certain assets.

PART F
PREVENTION OF ABUSE OF THE CODE
CHAPTER XII
SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX
118. Disallowance of expenditure having regard to fair market value.
119. Determination of income from international transaction having regard to arm’s length price.
120. Determination of arm’s length price.
121. Advance pricing agreement.
122. Avoidance of income-tax by transactions resulting in transfer of income to non-residents.
123. Avoidance of tax by sale and buy-back transaction in security.
124. Avoidance of tax by buy and sale-back transaction in security.
125. Broken period income accruing from a debt instrument.
126. Special measures in respect of transactions with persons located in notified jurisdictional area.
127. Interpretations in this chapter.

CHAPTER XIII
GENERAL ANTI-AVOIDANCE RULE
128. Applicability of General Anti-Avoidance Rule.
129. Impermissible avoidance arrangement.
130. Arrangement to lack commercial substance.
131. Consequences of impermissible avoidance arrangement.
132. Treatment of connected person and accommodating party.
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133. Application of this chapter.
134. Framing of guidelines.
135. Interpretations in this chapter.

PART G
TAX MANAGEMENT
CHAPTER XIV
TAX ADMINISTRATION AND PROCEDURE
A.—TAX ADMINISTRATION
136. Income-tax authorities.
137. Appointment and control of income-tax authorities.
138. Power of higher authorities.
139. Powers of Board to issue instructions.
140. Jurisdiction of income-tax authorities.
141. Jurisdiction of Assessing Officers.
142. Power to transfer cases.
143. Change of incumbent.
144. Powers regarding discovery and production of evidence.
145. Search and seizure.
146. Power to requisition material taken into custody.
147. Retention and release of books of account or documents seized or requisitioned.
148. Delivery of material belonging to other persons.
149. Retention and application of seized or requisitioned assets.
150. Power to call for information.
151. Power to inspect registers of companies.
152. Power of survey.
153. Power to disclose information in respect of assessee.
154. Proceedings before income-tax authorities to be judicial proceedings.
B.—ASSESSMENT PROCEDURE
155. Self-reporting of tax bases.
156. Tax return preparer.
157. Issue of notice to furnish return.
158. Self-assessment tax.
159. Acknowledgment of return.
160. Processing of return.
161. Notice for inquiry before assessment.
162. Special audit.
163. Determination of value of assets.
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164. Determination of arm’s length price.
165. Assessment.
166. Best judgment assessment.
167. Effect to adavnce pricing agreement.
168. Directions by Joint Commissioner for assessment.
169. Reference to Commissioner in certain cases.
170. Direction by Dispute Resolution Panel for assessment.
171. Reopening of assessment.
172. Approval for search assessment.
173. Rectification of mistake.
174. Notice of demand.
175. Time limits for completion of assessment or re-assessments.

C.—PROCEDURE FOR ASSESSMENT IN SPECIAL CASES
176. Representative assessee.
177. Rights and obligations of a representative assessee.
178. Direct assessment or recovery not barred.
179. Remedy against property in case of representative assessee.
180. Assessment upon business reorgainsation.
181. Assessment after partition of a Hindu undivided family.
182. Assessment of non-resident in respect of occasional shipping business.
183. Assessment of persons leaving India.
184. Assessment of an unincorporated body formed for a particular event or purpose.
185. Assessment of persons likely to transfer property to avoid tax.
186. Discontinued business.
187. Assessment of unincorporated body in case of change in its constitution.
188. Assessment on retirement or death of participant.
189. Assessment of a deductor or collector.
D.— APPEALS AND REVISION
190. Appeal to Commissioner (Appeals).
191. Form of appeal and limitation.
192. Procedure in appeal.
193. Powers of Commissioner (Appeals).
194. Appellate Tribunal.
195. Appeals to Appellate Tribunal.
196. Stay of demand by Appellate Tribunal.
197. Orders of Appellate Tribunal.
198. Constitution of Benches and procedure of Appellate Tribunal.
199. Appeal to High Court.
200. Case before High Court to be heard by not less than two Judges.
201. Appeal to Supreme Court.
202. Hearing before Supreme Court.
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203. Revision of orders prejudicial to revenue.
204. Revision of other orders.
E. SPECIAL PROVISIONS FOR AVOIDING REPETITIVE APPEALS

205. Procedure when assessee claims identical question of law pending before High Court or Supreme Court

F. MISCELLANEOUS

206. Tax to be paid notwithstanding appeal
207. Execution for costs awarded by Supreme Court
208. Amendment of assessment on appeal
209. Exclusion of time taken for copy
210. Filing of appeal by income-tax authority

CHAPTER XV
COLLECTION AND RECOVERY OF TAX
A.— DEDUCTION OF TAX AT SOURCE
211. Deduction or collection of tax at source and advance payment.
212. Direct payment.
213. Liability to deduct tax at source.
214. Specified payment and deduction of tax.
215. Certificate for lower or no deduction of tax.
216. Declaration for no deduction of tax.
217. Obligation of deductor.
218. Reporting of payments without deduction of tax.
219. No deduction of tax in certain cases.
220. Credit for tax deducted.
B.—COLLECTION OF TAX AT SOURCE
221. Tax collection at source.
222. Credit for tax collected.
223. Furnishing of statement of tax deducted or collected.
224. Processing of return of tax deduction or collection.
225. Interpretations under Sub-Chapters A and B.
C.—ADVANCE TAX
226. Liability to pay advance tax.
D. — TAX RELIEF IN RESPECT OF ARREARS OR ADVANCE RECEIPTS
227. Tax relief for arrears or advance receipts.
E.—FOREIGN TAX CREDIT
228. Foreign tax credit.
F.—PAYMENT OF WEALTH-TAX
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229. Payment of wealth-tax.
G.—INTEREST PAYABLE TO THE CENTRAL GOVERNMENT
230. Interest for default in furnishing return of tax bases.
231. Interest for default in payment of advance tax.
232. Interest for deferment of advance tax.
233. Interest on excess refund.
234. Interest payable on demand raised.
235. Interest for failure to deduct or collect or pay tax.
H.—REFUNDS
236. Refunds.
237. Interest on refund.
238. Person entitled to claim refund in certain special cases.

I.- LEVY OF FEE IN CERTAIN CASES
239.Fee for default in furnishing returns

J.—RECOVERY
240. Recovery by Assessing Officer.
241. Recovery by Tax Recovery Officer.
242. Modes of recovery.
243. Tax Recovery Officer by whom recovery is to be effected.
244. Recovery of tax arrear in respect of non-resident from his assets.
245. Recovery in case of a company in liquidation.
246. Liability of manager of a company.
247. Joint and several liability of participants.
248. Recovery through State Government.
249. Recovery of tax in pursuance of agreements with foreign countries or specified territory.
250. Tax clearance certificate in certain cases.
251. Recovery by suit or under other law not affected.
CHAPTER XVI
PENALTIES
252. Penalty for underreporting of tax bases.
253. Penalty where search has been initiated.
254. Penalty for default in payment of tax arrear
255. Penalty for other defaults.
256. Procedure.
257. Bar of limitation for imposing penalty.
CHAPTER XVII
PROSECUTION
258. Chapter not in derogation of any other law.
259. Contravention of any restraint order.
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260. Failure to comply with the provisions of clause (d) of sub-section (2) of section 145.
261. Removal, concealment, transfer or delivery of property to thwart tax recovery.
262. Failure to comply with the provisions of sub-sections (1) and (3) of section 245.
263. Failure to pay tax deducted or collected at source or to pay dividend or income distribution tax.
264. Wilful attempt to evade tax.
265. Failure to furnish returns of tax bases.
266. Failure to furnish statements,reports, etc.
267. Failure to comply with direction under this Code.
268. False statement in verification.
269. Falsification of books of account or documents.
270. Abetment of false return.
271. Offences by companies, etc.
272. Proof of entries in records or documents.
273. Presumption as to assets and books of account in certain cases.
274. Presumption as to culpable mental state.
275. Prosecution to be at instance of Chief Commissioner or Commissioner.
276. Punishment for second and subsequent offences.
277. Offences to be non-cognizable.
278. Disclosure of information by public servants.
279. Special Courts.
280. Offences traible by Special Courts.
281. Trial of offences as summons case.
282. Application of Code of Criminal Procedure, 1973 to proceedings before Special Court.

CHAPTER XVIII
ADVANCE RULINGS AND DISPUTE RESOULTION
283. Scope of ruling and dispute resolution.
284. Authority for Advance Rulings and Dispute Resolution.
285. Procedure for advance ruling.
286. Income-tax authority or Appellate Tribunal not to proceed in certain cases.
287. Applicability of advance ruling.
288. Advance Ruling to be void in certain circumstances.
289. Procedure for dispute resolution.
290. Stay of demand by the Authority.
291. Power to rectify a mistake.
292. Powers of Authority.
293. Procedure of Authority.
294. Interpretations in this Chapter.

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