income-tax 2002-03

353 Pages·2009·1.81 MB·English

FINANCE
V 4 ACT, 2002
. WITH NOTES

G
. 49 I.T. NOTES
M GENERAL
E
H I.T. NOTES
T 68
A V. G. MEHTA'S SALARY
’
S
I.T. NOTES
IIIII NNNNNCCCCCOOOOOMMMMM EEEEE-----TTTTTAAAAA XXXXX 101
PROPERTY
IIIII
NNNNN I.T. NOTES
CCCCC RRRRREEEEEAAAAADDDDDYYYYY RRRRREEEEECCCCCKKKKKOOOOONNNNNEEEEERRRRR 107 BUSINESS
& PROFESSION
OOOOO
MMMMM ASSESSMENT YEAR I.T. NOTES
141
EEEEE 22222000000000022222-----0000033333 CAPITAL GAINS
-----
TTTTT QUOTATIONS
172
AAAAA AS ON 1-4-1981
XXXXX
I.T. NOTES

V. G. MEHTA’S RRRRR 180 ORETTHUERRN SSO, UARSCSEESSS,MENT
EEEEE WITH RATES TABLES AND EXAMPLES FOR AND LOSSES
Income-tax Ready Reckoner
AAAAA
CAPITAL GAINS • WEALTH-TAX I.T. NOTES
1939-40 to 2001-02 DDDDD 195 ASST. OF FIRMS, INT.,
PENALTIES, ETC.
YYYYY GIFT-TAX (cid:129) COMPANIES
Out of print Few copies available R R R R R GIST OF IMPORTANT CIRCULARS ON DIRECT TAXES 206 EXCLUSIONS
FROM TOTAL INCOME
EEEEE LIST OF BONUS SHARES
1939-40 to 1986-87 1993-94 Price: Rs. 160/-
CCCCC DEDUCTIONS
1987-88 to 1989-90 1998-99 Price: Rs. 260/- KKKKK 210 FINRCOOMM GEROSS TOTAL
OOOOO
1990-91 to 1992-93 1999-2000 Price: Rs. 280/- REBATE OF
NNNNN 233 (DEDUCTION FROM)
1994-95 & 1995-96 2000-01 Price: Rs. 280/- EEEEE ASSESSMENT YEAR INCOME-TAX
RRRRR 22222000000000033333-----0000044444
I.T. TABLES
1996-97 & 1997-98 2001-02 Price: Rs. 300/-
239 INDIVIDUALS & HUFs.
FOR DEDUCTION OF TAX FROM ‘‘SALARIES’’ 2002-03
22222 I.T. TABLES
AND
00000 246 FIRMS, CO-OP. SOCIETY,
LTD. COMPANIES FOR
00000 COMPUTATION OF ‘‘ADVANCE TAX’’ 2002-03
22222 WEALTH-TAX
DURING THE FINANCIAL YEAR 2002-03
----- 254 RATES, NOTES,
00000 TABLE, EXAMPLE,
FOR 2002-03
33333
QUOTATIONS
271 FOR GOLD & SILVER,
BONUS SHARES LIST,
By GIFT-TAX
(cid:129)
MONTHLY
N. V. MEHTA
274 SALARY TABLES
FOR F.Y. 2002-03
N B.COM., LL.B., F.C.A.
. ADVANCE TAX

V 281 NOTES, INTEREST,
. WITH EXAMPLES

M
I.T. TABLES
E
H 289 INDIVIDUALS, HUFs., etc.
PUBLISHERS: 2003-04
T WITH EXAMPLES
A SHRI KUBER PUBLISHING HOUSE
Published by Kishore V. Mehta for Shri Kuber Publishing House, Court House, Dhobi Talao, Mumbai-400 002. GIST OF CIRCULARS
Printed by Arun K. Mehta at Vakil & Sons Pvt. Ltd., Hague Building, 2nd Floor, 9 Sprott Road, Ballard Estate, Mumbai-400 001. COURT HOUSE, DHOBI TALAO, MUMBAI 400 002. PHONE: [phone] SEARCH & SEIZURE,
TDS CHART, PRES. FORMS
TWO MINUTES PLEASE:
Before
You proceed to go through this publication, may I draw your kind attention to the following:
This “Income-tax Ready Reckoner” is based on the Direct Tax Laws as amended by the Finance Act, 2002.
Rates of income-tax & surcharge:
In the case of individuals, HUFs, AOPs & BOIs, the exemption limit is Rs. 50,000 for assessment years
2002-03 & 2003-04 and no changes are made in the rate structure [Refer page 32 & 36]. In the case of other
categories of assessees, no changes are made in the rate structure except that in the case of foreign
companies, on income other than for which specific rate of income-tax @ 50% is prescribed in Part III, the
rate of income-tax has been reduced from 48% to 40% in relation to assessment year 2003-04
[Refer page 32 & 36].
For assessment year 2003-04, surcharge at the rate of 5% (as against 2%) on income-tax is leviable in
the case of all categories of assessees including foreign companies also. However, surcharge is not leviable
where the total (taxable) income does not exceed Rs. 60,000 in the case of resident/non-resident assessees
being individuals, HUFs, AOPs & BOIs. Income-tax payable u/s. 112 & 113 is also to be increased by
surcharge at the rate of 5%, as against 2%, on income-tax payable by resident/non-resident assessees [Refer
item (iii) on page 39].
The rates at which income-tax is required to be deducted at source during the financial year 2002-03
from income by way of interest on securities, winning from lotteries, etc. are specified in Part II of the First
Schedule to the Finance Act, 2002 [Refer pp. 34-35]. These rates are broadly the same as those specified in
Part II of the First Schedule to the Finance Act, 2001 except that the rate of income-tax to be deducted:
(1) from dividend is 10%; and (2) in the case of a foreign company, on income other than those for which
specific rates are prescribed in Part II, is reduced from 48% to 40%. The amount of income-tax deducted/
collected during the financial year 2002-03, in the case of all categories of resident/non-resident assessees
including foreign companies also, is to be increased by surcharge at the rate of 5%, as against 2%, on the
amount of income-tax so deducted/collected [Refer item (ii) on page 38].
INCOME-TAX
(i) In relation to assessment year 2003-04:
(1) Exemption withdrawn in respect of: (a) casual income; (b) tax free salaries of foreign technicians;
(c) notified sports associations; & (d) dividends/income from units of UTI/MF [Refer Para 1.1,1.4, 1.13 &
1.21 on page 40, 41 & 42, respectively].
(2) Conditions for accumulation of income of charitable/religious trusts modified [Refer Para 2.1 on
page 42].
(3) Non-monetary perquisites not to be taxed in the case of low-paid salaried employees in relation to
assessment year 2002-03 only [Refer Para 3.1 on page 43]. Tax paid by employer on non-monetary
perquisites provided to employee, tax so paid not to be added as perquisite and method of calculation of
such tax prescribed [Refer Para 3.2 on page 44]. Exemption withdrawn in respect of value of free or
concessional passage out of India paid to an employee who is not a citizen of India [Refer Para 1.5 on
page 40]. Return of income can be furnished by employees to employer, from assessment year 2002-03 and
onwards [Refer Para 11.1(A) on page 338].
(4) Provisions relating to deduction of interest on borrowed capital for the purpose of acquisition/
construction of self-occupied property amended [Refer Para 4.1 on page 45].
(5) Receipts of non-compete fees/exclusivity rights to be treated as business/professional income
[Refer Para 5.1 on page 45]. Additional depreciation @ 15% on new machinery/plant prescribed in the case
of manufacturing units [Refer Para 5.2 on page 45]. Provisions for reserves for shipping u/s. 33AC, liberalised
[Refer Para 5.3 on page 46]. Expenditure incurred on or after 1-4-2002, by way of payment to approved
association for conservation of natural resources or of afforestation or to a notified fund for afforestation, not
eligible for deduction u/s. 35CCB/80GGA [Refer Para 5.5/9.2 on page 46/336]. W.e.f. 1-6-2002, in the case of
a firm, deduction in respect of interest paid to its partners reduced from 18% p.a. to 12% p.a. [Refer Para 5.8
on page 47]. Special provisions consequent to changes in rate of exchange of currency modified for the
purposes of depreciation, etc. [Refer Para 5.9 on page 47]. ‘Book profit’ u/s. 115JB not to be increased in
respect of reserves specified u/s. 33AC (i.e., Reserves for shipping business) [Refer Para 5.10(B) on page 47].
Provisions of sections 115JB & 115JA amended retrospectively/prospectively [Refer Para 5.10 on pp. 47-48].
(6) For the purpose of computation of capital gains, full value of consideration in respect of land/
building, the value fixed by the stamp valuation authority is to be taken if the value as per sale deed is less
[Refer Para 6.2 page 48]. Loss relating to long-term capital asset can be set off and carried forward and set
[Concluded on page 349]
[For Corrigendum on page 62, 63, 149 & 214, refer page 349]
V. G. MEHTA'S
INCOME-TAX READY RECKONER
ASSESSMENT YEAR
22222000000000022222-----0000033333
WITH
RATES TABLES AND EXAMPLES FOR:
(1) CAPITAL GAINS (2) WEALTH-TAX
(3) GIFT-TAX (4) COMPANIES
(5) GIST OF IMPORTANT CIRCULARS ON DIRECT TAXES
(6) LIST OF BONUS SHARES
ALSO
ASSESSMENT YEAR
2003-04
FOR DEDUCTION OF TAX FROM “SALARIES”
&
COMPUTATION OF “ADVANCE TAX”
during the Financial year 2002-03
By
CHARTERED ACCOUNTANT
PUBLISHERS:
SHRI KUBER PUBLISHING HOUSE
COURT HOUSE, DHOBI TALAO, PRICE: Rs. 350
MUMBAI 400002.
with
©
PLASTIC JACKET
TEL.: [phone]
TELE FAX: [phone]
INDEX
Page Page
Finance Act, 2002 .. 4 (h) Provisions relating to demerger of
Salient features of the Finance Act, 2002 38 companies .. 129
(i) Amounts not deductible .. 131
Short notes on Income-tax Act, 1961: (j) Special provisions for computing
I. Definitions: profits from business in certain cases 134
(a) Assessment & assessment year .. 49 (k) Maintenance of books of account .. 138
(b) Previous year & assessee .. 49 (l) Method of accounting .. 139
(c) Resident, non-resident, etc. .. 50 (m)Compulsory audit .. 139
(d) Non-resident Indian residing outside
India .. 53 VI. Capital gains:
Deemed income with examples .. 57 (a) Definitions .. 141
Partial partition of HUF .. 60 (b) Charge of capital gain .. 143
Private discretionary trusts & Oral trusts 60 (c) Transactions not regarded as transfer 145
(d) Mode of computation and deductions 147
II. Charitable and religious trusts: (e) Notification on Cost Inflation Index 147
Extent and conditions for exemptions .. 62 (f) On depreciable assets .. 151
(g) Exemptions .. 154
III. Salaries: (h) Tax on long-term capital gains .. 164
(a) Income assessable under the head (i) Equity shares quotations as on
“Salaries” .. 68 1-4-1981 .. 172
(b) Exempt allowances u/s. 10(14) .. 69
(c) Gratuities received: VII. Income from other sources:
(i) by Government employees .. 71
(a) Dividends .. 180
(ii) under the Payment of Gratuity
(b) Winnings from lotteries, races, etc. .. 180
Act, 1972 .. 72
(c) Interest on securities .. 180
(iii) by employees of private sector .. 72
(d) Unexplained cash credits, etc. .. 183
(d) Relief u/s. 89 in respect of salary
(e) Mode of taking loans & deposits .. 183
received in arrears, etc. .. 73
(f) Permanent account number .. 184
(e) Voluntary retirement .. 75
(f) Approved superannuation fund .. 76
VIII. Returns:
(g) Encashment of earned leave .. 76
(a) Voluntary return .. 185
(h) Perquisites:
(b) Loss return, belated return,
(i) Rent-free quarters .. 79&87
revised return and defective return .. 187
(ii) Concessional rent .. 79&89
(iii)In respect of use of motor car .. 81&90
IX. Kinds of assessment:
(iv) In respect of gardener, gas, etc... 83&91
(v) Free education, etc. .. 84&92 (a) Self-assessment .. 188
(vi) Other fringe benefits or (b) Acceptance of return .. 189
amenities .. 84 (c) Regular and best judgment assessment 189
(vii)Medical expenses .. 93 (d) Time limit for completion of
(i) Non-taxable perquisites .. 92 assessment .. 190
(j) Exempt perquisites: (e) Rectification of mistake .. 191
(i) House rent allowance .. 93
(ii) Conveyance and travelling .. 95
(iii)Leave travel concession .. 95 X. Miscellaneous:
(k) Profits in lieu of salary .. 96 (a) Set off and carry forward of losses .. 192
(l) Salaries of foreign technicians .. 97 (b) Speculation loss .. 193
(m)Deductions from “Salaries” .. 97 (c) Loss under head “Capital gains” .. 193
(n) Deduction of tax @ source from (d) Assessment of firms and its partners 195
“Salaries” .. 98 (e) Interest payable for defaults .. 197
(f) Interest receivable .. 200
IV. House property: (g) Interest chart .. 201
(a) Annual value .. 101 (h) Penalty chart .. 203
(b) Self-occupied property .. 103 (i) Waiver of penalty .. 205
(c) Deductions from property income .. 105
Exclusions from total income:
V. Profits and gains of business or profession:
Summary of incomes which are wholly
(a) Deemed income .. 107 exempt from income-tax .. 206
(b) Depreciation .. 108
(c) Rates of depreciation for assessment Deductions from gross total income:
year 1988-89 & onwards .. 113 Deductions in details with limits,
(d) Unabsorbed depreciation .. 117 conditions and examples .. 210
(e) Reserves for shipping business .. 120
(f) Expenditure on scientific research .. 121 Deductions from income-tax:
(g) Bonus, commission, bad debts, (a) In respect of L.I.P., etc. u/s. 88 .. 233
travelling expenditure, etc. .. 126 (b) Additional rebate u/s. 88B/88C .. 233
INDEX — Contd.
ASSESSMENT YEARS 2002-03 & 2003-04
{ Financial year ending on 31-3-2002.
Accounting periods:
Financial year ending on 31-3-2003.
Page Page
Income-tax & surcharge tables: Advance tax
ASSESSMENT YEAR 2002-03 Main features of payment of advance tax in
respect of assessment year 1995-96 and onwards 281-288
(i) Individuals, HUFs. (specified/non-specified),
AOPs., non-residents, etc.: Income-tax & surcharge tables:
Advance tax:
Taxable income: (i) Individuals, HUFs. (specified/non-specified),
(1) BetweenRs. 50,000&Rs. 60,000 239 AOPs., non-residents, etc.:
(2) BetweenRs. 60,000&Rs. 1,00,000 240-241
Examples for deductions, aggregation
(3) Between Rs.1,00,000&Rs. 1,50,000 242-243 of agricultural income, etc., etc. for
(4) Between Rs.1,50,000 &Rs.10,00,000 244-245 assessment years 2002-03 & 2003-04 .. 289-294
Examples for deductions, etc. .. 289-294 Taxable income:
(ii) Firms: (1) Between Rs. 50,000 & Rs. 60,000 295
(2) Between Rs. 60,000 & Rs. 1,00,000 296-297
Examples .. 246
(3) Between Rs. 1,00,000 & Rs. 1,50,000 298-299
Taxable income: (4) Between Rs. 1,50,000 & Rs.10,00,000 300-301
Between Rs. 10 & Rs. 10,00,000 .. 247
(iii) Co-operative societies: (ii) Firms:
Taxable income:
Deductions, example & table .. 248-249
Between Rs. 10 & Rs. 10,00,000 .. 302
(iv) Companies:
(1) Table for income-tax & surcharge (iii) Co-operative societies
for assessment year 2002-03 .. 250 Taxable income:
(2) Examples and computation of Between Rs. 10 & Rs. 4,00,000 .. 347
income-tax/wealth-tax for domestic
companies .. 251-253 (iv) Companies:
Table for income-tax & surcharge for
Wealth-tax assessment year 2003-04 .. 303
(1) Rates of wealth-tax for assessment years Tax Savings Plan .. 280
1993-94 to 2002-03 .. 254
(2) Exemptions for assessment years 1994-95 Important Circulars
to 2002-03 .. 255 (1) On Finance Acts, etc. .. 304-305
(3) Salient features of the Act with explanatory (2) On deduction of tax @ source/collection
notes and penalties leviable .. 256-267 of tax @ source .. 305-311
(4) Exempted assets explained with example 268-269 (3) On Income-tax .. 312-328
(5) Wealth-tax table for assessment year
(4) On Wealth-tax & Gift-tax .. 328-329
2002-03 .. 270
(6) Example for company .. 253 Search and Seizure under Income-tax Act .. 330-334
(7) Market rates of gold and silver from
27-10-1981 to 31-3-2002 .. 271 TDS Chart
(8) List of bonus shares .. 272 Chart for deduction of tax @ source during
financial year 2002-03/Collection of tax @
source .. 341-343
Gift-tax
Prescribed Forms
Rates and examples .. 273
Important Prescribed Forms under the
Income-tax Rules, 1962 .. 344-346
ASSESSMENT YEAR 2003-04 Typical steps
Monthly Salary: From Rs. 50,000 to Rs. 6,00,000 taxable income
For deduction of tax during the financial year 2002-03: for the assessment years 2002-03 &
Deduction of tax @ source and example .. 274 2003-04 .. 350-351
Monthly salary tables: Obligations
From Rs. 4,167 to Rs. 13,300 per month Statutory compliances on various dates
salary .. 275-279 under the Direct Tax Laws .. 352
FINANCE ACT 4
2002
THE FINANCE ACT, 2002
AN ACT
to give effect to the financial proposals of the Central Government for the financial year 2002-2003.
BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:—
CHAPTER I : PRELIMINARY
1. Short title and commencement. (1) This Act may be called the Finance Act, 2002.
(2) Save as otherwise provided in this Act, sections 2 to 116 shall be deemed to have come into
force on the 1st day of April, 2002.
CHAPTER II : RATES OF INCOME-TAX
2. Income-tax. (1) Subject to the provisions of sub-sections (2) and (3), for the assessment year
commencing on the 1st day of April, 2002, income-tax shall be charged at the rates specified in Part I of the
First Schedule and such tax as reduced by the rebate of income-tax calculated under Chapter VIII-A of the
Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) shall be increased by a surcharge for
purposes of the Union calculated in each case in the manner provided therein.
(2) In the cases to which Paragraph A of Part I of the First Schedule applies, where the assessee has,
in the previous year, any net agricultural income exceeding five thousand rupees, in addition to total income, and
the total income exceeds fifty thousand rupees, then,–
(a) the net agricultural income shall be taken into account, in the manner provided in clause (b)
[that is to say, as if the net agricultural income were comprised in the total income after the first fifty
thousand rupees of the total income but without being liable to tax], only for the purpose of charging
income-tax in respect of the total income; and
(b) the income-tax chargeable shall be calculated as follows:–
(i) the total income and the net agricultural income shall be aggregated and the amount of
income-tax shall be determined in respect of the aggregate income at the rates specified in the
said Paragraph A, as if such aggregate income were the total income;
(ii) the net agricultural income shall be increased by a sum of fifty thousand rupees, and the
amount of income-tax shall be determined in respect of the net agricultural income as so
increased at the rates specified in the said Paragraph A, as if the net agricultural income as so
increased were the total income;
(iii) the amount of income-tax determined in accordance with sub-clause (i) shall be reduced
by the amount of income-tax determined in accordance with sub-clause (ii) and the sum so arrived
at shall be the income-tax in respect of the total income:
Provided that the amount of income-tax so arrived at, as reduced by the amount of rebate of income-
tax calculated under Chapter VIII-A, shall be increased by a surcharge for purposes of the Union calculated in
each case in the manner provided in that Paragraph and the sum so arrived at shall be the income-tax in respect
of the total income.
(3) In cases to which the provisions of Chapter XII or Chapter XII-A or sub-section (1A) of section
161 or section 164 or section 164A or section 167B of the Income-tax Act apply, the tax chargeable shall be
determined as provided in that Chapter or that section, and with reference to the rates imposed by sub-section (1)
or the rates as specified in that Chapter or section, as the case may be:
Provided that the amount of income-tax computed in accordance with the provisions of sections 112
and 113 shall be increased by a surcharge for purposes of the Union or surcharge as provided in Paragraph A, B,
C, D or E, as the case may be, of Part I of the First Schedule:
Provided further that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC,
115ACA, 115AD, 115B, 115BB, 115BBA, 115E and 115JB of the Income-tax Act, the amount of income-tax
computed under this sub-section shall be increased by a surcharge for purposes of the Union, calculated at the rate
of two per cent. of such income-tax:
Provided also that no surcharge shall be payable by a foreign company.
(4) In cases in which tax has to be charged and paid under section 115U of the Income-tax Act, the
tax shall be charged and paid at the rate as specified in the said section and shall be increased by a surcharge for
purposes of the Union, calculated at the rate of five per cent. of such tax.
(5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and
195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates specified in Part II of the
First Schedule and shall be increased, by a surcharge for purposes of the Union, calculated in each case, in the
manner provided therein.
5 FINANCE ACT
2002
(6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G,
194H,194-I, 194J, 194K, 194L, 196A, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made
at the rates specified in those sections and shall be increased by a surcharge for purposes of the Union, calculated
at the rate of five per cent. of such tax.
(7) In cases in which tax has to be collected under the proviso to section 194B or under section 206C
of the Income-tax Act, the collection shall be made at the rates specified in that section or at the rates specified in
Part II of the First Schedule, as the case may be, and shall be increased, by a surcharge for purposes of the Union,
calculated in each case, in the manner provided therein.
(8) Subject to the provisions of sub-section (9), in cases in which income-tax has to be charged under
sub-section (4) of section 172 or sub-section (2) of section 174 or section 174A or section 175 or sub-section (2) of
section 176 of the Income-tax Act or deducted from, or paid on, income chargeable under the head “Salaries”
under section 192 of the said Act or in which the “advance tax” payable under Chapter XVII-C of the said Act has
to be computed, at the rate or rates in force, such income-tax or, as the case may be, “advance tax” shall be so
charged, deducted or computed at the rate or rates specified in Part III of the First Schedule and such tax as
reduced by the rebate of income-tax calculated under Chapter VIII-A of the said Act shall be increased for
purposes of the Union, calculated in each case in the manner provided therein:
Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or section 115JB or
sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act apply,
“advance tax” shall be computed with reference to the rates imposed by this sub-section or the rates as specified in
that Chapter or section, as the case may be:
Provided further that the amount of income-tax computed in accordance with the provisions of
section 112 of the Income-tax Act shall be increased by a surcharge for purposes of the Union as provided in
Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule:
Provided also that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC,
115ACA, 115AD, 115B, 115BB, 115BBA, 115BBB, 115E and 115JB of the Income-tax Act, “advance tax”
computed under the first proviso shall be increased by a surcharge, for purposes of the Union, calculated at the
rate of five per cent. of such tax.
(9) In cases to which Paragraph A of Part III of the First Schedule applies, where the assessee has, in
the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of
the income of a period other than the previous year, in such other period, any net agricultural income exceeding
five thousand rupees, in addition to total income and the total income exceeds fifty thousand rupees, then, in
charging income-tax under sub-section (2) of section 174 or section 174A or section 175 or sub-section (2) of
section 176 of the said Act or in computing the “advance tax” payable under Chapter XVII-C of the said Act, at the
rate or rates in force,–
(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that
is to say, as if the net agricultural income were comprised in the total income after the first fifty thousand
rupees of the total income but without being liable to tax], only for the purpose of charging or computing
such income-tax or, as the case may be, “advance tax” in respect of the total income; and
(b) such income-tax or, as the case may be, “advance tax” shall be so charged or computed as follows:–
(i) the total income and the net agricultural income shall be aggregated and the amount of
income-tax or “advance tax” shall be determined in respect of the aggregate income at the rates
specified in the said Paragraph A, as if such aggregate income were the total income;
(ii) the net agricultural income shall be increased by a sum of fifty thousand rupees, and the
amount of income-tax or “advance tax” shall be determined in respect of the net agricultural income
as so increased at the rates specified in the said Paragraph A, as if the net agricultural income were the
total income;
(iii) the amount of income-tax or “advance tax” determined in accordance with sub-clause (i) shall
be reduced by the amount of income-tax or, as the case may be, “advance tax” determined in
accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as the case may be,
“advance tax” in respect of the total income:
Provided that the amount of income-tax or “advance tax” so arrived at, as reduced by the rebate of income-
tax calculated under Chapter VIII-A of the said Act, shall be increased by a surcharge for purposes of the Union
calculated in each case, in the manner provided therein.
(10)For the purposes of this section and the First Schedule,–
(a) “domestic company” means an Indian company or any other company which, in respect of its
income liable to income-tax under the Income-tax Act for the assessment year commencing on the
1st day of April, 2002, has made the prescribed arrangements for the declaration and payment within
India of the dividends (including dividends on preference shares) payable out of such income;
FINANCE ACT 6
2002
(b) “insurance commission” means any remuneration or reward, whether by way of commission
or otherwise, for soliciting or procuring insurance business (including business relating to the
continuance, renewal or revival of policies of insurance);
(c) “net agricultural income”, in relation to a person, means the total amount of agricultural
income, from whatever source derived, of that person computed in accordance with the rules
contained in Part IV of the First Schedule;
(d) all other words and expressions used in this section and the First Schedule but not defined in
this sub-section and defined in the Income-tax Act shall have the meanings respectively assigned to
them in that Act.
CHAPTER III : DIRECT TAXES
INCOME-TAX
3. Amendment of section 2. In section 2 of the Income-tax Act,—
(a) in clause (24), after sub-clause (xi), the following sub-clause shall be inserted with effect from the
1st day of April, 2003, namely:–
“(xii) any sum referred to in clause (vii)* of section 28;”;
(b) in clause (31), after sub-clause (vii), the following Explanation shall be inserted, namely:–
“Explanation.–For the purposes of this clause, an association of persons or a body of individuals or
a local authority or an artificial juridical person shall be deemed to be a person, whether or not such
person or body or authority or juridical person was formed or established or incorporated with the
object of deriving income, profits or gains;”;
(c) in clause (37A), in sub-clause (i), for the words, figures and letters “or section 115BB or
section 115E”, wherever they occur, the words, figures and letters “or section 115BB or section 115BBB or
section 115E” shall be substituted with effect from the 1st day of April, 2003.
4. Amendment of section 10. In section 10 of the Income-tax Act,–
(a) clause (3) shall be omitted with effect from the 1st day of April, 2003;
(b) in clause (4), in sub-clause (i), the following proviso shall be inserted with effect from the 1st day of
April, 2003, namely:–
“Provided that the Central Government shall not specify, for the purposes of this sub-clause, such
securities or bonds on or after the 1st day of June, 2002;”;
(c) in clause (4B), for the words “savings certificates issued”, the words, figures and letters “savings
certificates issued before the 1st day of June, 2002” shall be substituted with effect from the 1st day of
April, 2003;
(d) clause (5B) shall be omitted with effect from the 1st day of April, 2003;
(e) in clause (6), sub-clause (i) shall be omitted with effect from the 1st day of April, 2003;
(f) in clause (6A), after the words, figures and letters “Government or the Indian concern after the
31st day of March, 1976”, the words, figures and letters “but before the 1st day of June, 2002” shall be
inserted with effect from the 1st day of April, 2003;
(g) in clause (6B), with effect from the 1st day of April, 2003,–
(i) for the words “agreement entered into by the Central Government”, the words, figures and
letters “agreement entered into before the 1st day of June, 2002 by the Central Government” shall be
substituted;
(ii) for the words “related agreement approved”, the words “related agreement approved before
that date” shall be substituted;
(h) in clause (10C), after sub-clause (viib), the following sub-clause shall be inserted, namely:–
“(viic) an institution, having importance throughout India or in any State or States, as the Central
Government may, by notification in the Official Gazette, specify in this behalf; or”;
(i) after clause (10C), the following clause shall be inserted with effect from the 1st day of April, 2003,
namely:–
“(10CC) in the case of an employee, being an individual deriving income in the nature of a
perquisite, not provided for by way of monetary payment within the meaning of clause (2) of section
17, the tax on such income actually paid by his employer, at the option of the employer, on behalf of
such employee, notwithstanding anything contained in section 200 of the Companies Act, 1956;”;
(j) clause (14A) shall be omitted with effect from the 1st day of April, 2003;
* At the time of introduction of the Finance Bill, 2002, clause (vii) was proposed to be inserted in Section 28 of the
Income-tax Act vide clause 13 of the said Bill. At the time of passing the said Bill, the said clause was re-numbered as clause (va).
As such refrence of clause (vii) should have been re-numbered as clause (va).
7 FINANCE ACT
2002
(k) in clause (15), with effect from the 1st day of April, 2003,–
(i) in sub-clause (iib), the following proviso shall be inserted, namely:–
“Provided that the Central Government shall not specify, for the purposes of this sub-clause,
such Capital Investment Bonds on or after the 1st day of June, 2002;”;
(ii) in sub-clause (iid), after the third proviso and before the Explanation, the following proviso
shall be inserted, namely:–
“Provided also that the Central Government shall not specify, for the purposes of this
sub-clause, such bonds on or after the 1st day of June, 2002.”;
(l) in clause (20), the following Explanation shall be inserted with effect from the 1st day of April,
2003, namely:–
‘Explanation.–For the purposes of this clause, the expression “local authority” means–
(i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or
(iii) Municipal Committee and District Board,
legally entitled to, or entrusted by the Government with, the control or management of a Municipal or
local fund; or
(iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924.’;
(m) clause (20A) shall be omitted with effect from the 1st day of April, 2003;
(n) in clause (21), after the third proviso, the following proviso shall be inserted with effect from the
1st day of April, 2003, namely:–
“Provided also that where the scientific research association is approved by the Central
Government and subsequently that Government is satisfied that–
(i) the scientific research association has not applied its income in accordance with the
provisions contained in clause (a) of the first proviso; or
(ii) the scientific research association has not invested or deposited its funds in accordance
with the provisions contained in clause (b) of the first proviso; or
(iii) the activities of the scientific research association are not genuine; or
(iv) the activities of the scientific research association are not being carried out in accordance
with all or any of the conditions subject to which such association was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed
withdrawal to the concerned association, by order, withdraw the approval and forward a copy of the
order withdrawing the approval to such association and to the Assessing Officer;”;
(o) in clause (22B), after the second proviso, the following proviso shall be inserted with effect from
the 1st day of April, 2003, namely:–
“Provided also that where the news agency has been specified, by notification, by the Central
Government and subsequently that Government is satisfied that such news agency has not applied
or accumulated or distributed its income in accordance with the provisions contained in the first
proviso, it may, at any time after giving a reasonable opportunity of showing cause, rescind the
notification and forward a copy of the order rescinding the notification to such agency and to the
Assessing Officer;”;
(p) clause (23) shall be omitted with effect from the 1st day of April, 2003;
(q) in clause (23A), after the proviso, the following proviso shall be inserted with effect from the
1st day of April, 2003, namely:–
“Provided further that where the association or institution has been approved by the Central
Government and subsequently that Government is satisfied that–
(i) such association or institution has not applied or accumulated its income in accordance
with the provisions contained in the first proviso; or
(ii) the activities of the association or institution are not being carried out in accordance with
all or any of the conditions subject to which such association or institution was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed
withdrawal to the concerned association or institution, by order, withdraw the approval and forward a
copy of the order withdrawing the approval to such association or institution and to the Assessing
Officer;”;
FINANCE ACT 8
2002
(r) in clause (23B), after the second proviso and before the Explanation, the following proviso shall be
inserted with effect from the 1st day of April, 2003, namely:–
“Provided also that where the institution has been approved by the Khadi and Village Industries
Commission and subsequently that Commission is satisfied that–
(i) the institution has not applied or accumulated its income in accordance with the
provisions contained in the first proviso; or
(ii) the activities of the institution are not being carried out in accordance with all or any of
the conditions subject to which such institution was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed
withdrawal to the concerned institution, by order, withdraw the approval and forward a copy of the
order withdrawing the approval to such institution and to the Assessing Officer.”;
(s) in clause (23C), –
(i) in the third proviso, for clause (a), the following clause shall be substituted with effect from
the 1st day of April, 2003, namely:–
“(a) applies its income, or accumulates it for application, wholly and exclusively to the objects
for which it is established and in a case where more than fifteen per cent. of its income is
accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount
exceeding fifteen per cent. of its income shall in no case exceed five years; and”;
(ii) in the ninth proviso, with effect from the 3rd day of February, 2001,–
(a) after the words, brackets, letters and figures “in terms of clause (d) of sub-section (2) of
section 80G”, the words, brackets, figures and letter “in respect of which accounts of income and
expenditure have not been rendered to the authority prescribed under clause (v) of sub-section
(5C) of that section, in the manner specified in that clause, or” shall be inserted and shall be
deemed to have been inserted;
(b) for the words, figures and letters “or before the 31st day of March, 2002”, the words,
figures and letters “or before the 31st day of March, 2003” shall be substituted and shall be
deemed to have been substituted;
(iii) the tenth proviso shall be omitted;
(iv) after the tenth proviso, the following provisos shall be inserted with effect from the 1st day of
April, 2003, namely:–
“Provided also that where the fund or trust or institution or any university or other
educational institution or any hospital or other medical institution referred to in sub-clause (iv) or
sub-clause (v) or sub-clause (vi) or sub-clause (via) does not apply its income during the year of
receipt and accumulates it, any payment or credit out of such accumulation to any trust or
institution registered under section 12AA or to any fund or trust or institution or any university
or other educational institution or any hospital or other medical institution referred to in
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall not be treated as
application of income to the objects for which such fund or trust or institution or university or
educational institution or hospital or other medical institution, as the case may be, is established;
Provided also that where the fund or institution referred to in sub-clause (iv) or trust or
institution referred to in sub-clause (v) is notified by the Central Government or any university or
other educational institution referred to in sub-clause (vi) or any hospital or other medical
institution referred to in sub-clause (via), is approved by the prescribed authority and
subsequently that Government or the prescribed authority is satisfied that–
(i) such fund or institution or trust or any university or other educational institution or
any hospital or other medical institution has not,–
(A) applied its income in accordance with the provisions contained in clause (a) of
the third proviso; or
(B) invested or deposited its funds in accordance with the provisions contained in
clause (b) of the third proviso; or
(ii) the activities of such fund or trust or institution or any university or other educational
institution or any hospital or other medical institution,–
(A) are not genuine; or
(B) are not being carried out in accordance with all or any of the conditions subject
to which it was notified or approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed
action to the concerned fund or institution or trust or any university or other educational
institution or any hospital or other medical institution, rescind the notification or, by order,
withdraw the approval, as the case may be, and forward a copy of the order rescinding the