(1) The total income of a person shall be computed in accordance with the provisions of this Chapter.

(2) Unless otherwise provided in this Code, reference to any accrual, receipt, expenditure, withdrawal, asset or liability shall be construed to be in relation to the financial year in respect of which, and the person in respect of whom, the income is computed.

Clause 12 provides that the total income shall be computed in accordance with the provisions of the Chapter. It also clarifies that unless otherwise provided in the Code, reference to any accrual, receipt, expenditure, withdrawal, asset or liability shall be construed to be in relation to the financial year in respect of which, and the person in respect of whom, the income is computed.

For the purposes of computation of total income of any person for any financial year, income from all sources shall be classified as follows:

Clause 13 relates to classification of sources of income. It provides that for the purposes of computation of total income of any person for any financial year, income from all sources shall be classified as follows:

The income from any source, other than a special source, shall be computed under the class 'income from ordinary sources' and such income shall be classified under the following heads of income, namely:--

Clause 14 deals with computation of income from ordinary sources. It provides that the income from any source, other than a special source, shall be computed under the class 'income from ordinary sources' and such income shall be classified under the following heads of income, namely:--

(1) Every income listed in column (3) of the Table in Part III of the First Schedule shall be the income from a special source of the person specified in column (2) of the said Table.

(2) The income from any special source shall be computed under the class 'income from special sources' in accordance with the provisions of the Ninth Schedule.

(3) Notwithstanding anything in sub-section (1), the income referred to therein shall not be considered as income from a special source, if such income is attributable to the permanent establishment of a non-resident in India.

Clause 15 deals with computation of income from special sources. It provides that every income listed in column (3) of the Table in Part III of the First Schedule shall be the income from a special source of the person specified in column (2) of the said Table. It further provides that the income from any special source shall be computed under the class 'income from special sources' in accordance with the provisions of the Ninth Schedule. It also provides that in case the income is attributable to the permanent establishment of a non-resident in India, the income shall not be considered as income from a special source.

(1) The income of the husband and wife, governed by the communiao dos bens, from ordinary sources under each head of income (other than the head 'Income from employment') and from special sources shall be apportioned equally between the spouses.

(2) The income so apportioned under sub-section (1) shall be included separately in the total income of the spouses.

(3) The income under the head 'Income from employment' shall be included in the total income of the spouse who has actually earned it.

(4) In this section, communiao dos bens refers to the system of community of property under the Portuguese Civil Code of 1860 as in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu.

Clause 16 deals with the apportionment of income between spouses governed by the system of community of property under the Portuguese Civil Code of 1860 as in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu. The said clause provides that the income of the husband and wife, governed by the communiao dos bens, from ordinary sources under each head of income (other than the head 'Income from employment') and from special sources shall be apportioned equally between the spouses. The income so apportioned shall be included separately in the total income of the spouses. The clause further provides that the income under the head 'Income from employment' shall be included in the total income of the spouse who has actually earned it.

Subject to the provisions of this Code,--

except where for the purposes of protecting the interests of revenue, it is necessary to do so.

Clause 17 deals with avoidance of double taxation. It provides that subject to the provisions of the Code, any income which is included in the total income of a person for any financial year shall not be so included again in the total income of such person for the same or any other financial year. It also provides that any income which is includible in the total income of any person shall not be included in the total income of any other person, except where for the purpose of protecting the interest of the revenue, it is necessary to do so.

(1) In computing the total income of a person for any financial year, the following shall not be allowed as a deduction, namely:--

(2) Any amount allowed as a deduction under any provision of this Code shall not be allowed as a deduction under any other provision of this Code.

(3) The provisions of this section shall apply notwithstanding anything in any other provisions of this Chapter.

Clause 18 provides that in computing the total income of a person for any financial year, the following expenditure shall not be allowed as a deduction, namely:--

The said clause also provides that any amount allowed as a deduction under any provision of the Code shall not be allowed as a deduction under any other provision of the Code. The provisions of this clause shall apply notwithstanding anything contained in any other provisions of Chapter III.

Clause 18 of the Bill provides that in computing the total income of a person for any financial year, any expenditure attributable to income which is not included in the total income under the Sixth Schedule, and determined in accordance with such method as may be prescribed, shall not be allowed as a deduction.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) Any amount on which tax is deductible at source under Chapter XIII during the financial year shall not be allowed as a deduction in computing the total income if,--

Clause 19 provides that any amount on which tax is deductible at source under Chapter XIII during the financial year shall not be allowed as a deduction in computing the total income if,--

The said clause also provides that a deduction shall be allowed to the person in respect of such amount in any subsequent financial year, if--

The income of a person from employment shall be computed under the head 'Income from employment'.

Clause 20 provides that the income of a person from employment shall be computed under the head 'Income from employment'.

The income computed under the head 'Income from employment' shall be the gross salary as reduced by the aggregate amount of the deductions referred to in section 23.

Clause 21 provides for computation of income from employment. The income computed under the head 'Income from employment' shall be the gross salary as reduced by the aggregate amount of the deductions referred to in clause 23.

The gross salary shall be the amount of salary due, paid, or allowed, whichever is earlier, to a person in the financial year by or on behalf of his employer or former employer.

Clause 22 deals with the scope of gross salary. The gross salary shall be the amount of salary due, paid, or allowed, whichever is earlier, to a person in the financial year by or on behalf of his employer or former employer. 'Salary' has been defined in clause 314. It inter alia includes 'perquisites' and 'profits in lieu of, or in addition to, salary', which have also been defined in clause 314.

(1) The deductions from the gross salary for computation of income from employment, to the extent included in the gross salary, shall be the following, namely:--

(2) For the purposes of clauses (d), (f) and (h) of sub-section (1), salary means basic salary and includes dearness allowance, if the terms of employment so provide.

Clause 23 provides that the deductions from the gross salary for computation of income from employment to the extent included in the gross salary shall be the following, namely:--

The said clause provides that for the purposes of (d), (f) and (h) above, salary means basic salary and includes dearness allowance, if the terms of employment so provide.

Clause 23 of the Bill provides for the deductions from the gross salary for computation of income from employment. These deductions include - any allowance or benefit granted by an employer for journey by an employee between his residence and office or any other place of work, to such extent as may be prescribed; any allowance or benefit granted by an employer to an employee to meet expenses wholly, necessarily and exclusively in the performance of the duties of an office or employment of profit, as may be prescribed, to the extent such expenses are actually incurred for that purpose, and to meet personal expenses, considering the place of posting or nature of duties or place of residence, subject to such conditions and limits as may be prescribed; any amount of interest credited, in the financial year, on the balance to the credit of an employee in an approved fund to the extent it does not exceed the amount of interest payable at the rate notified by the Central Government; any allowance provided by an employer to meet the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the employee, to such extent as may be prescribed.

(1) The income from letting of any house property owned by any person shall be computed under the head 'Income from house property'.

(2) The income from any house property shall be computed under this head notwithstanding that the letting, if any, of the property is in the nature of trade, commerce or business.

(3) The income from any house property owned by two or more persons having definite and ascertainable shares shall be computed separately for each such person in respect of his share.

(4) In a case where the shares of the owners of the house property referred to in sub-section (3) are not definite and ascertainable, such persons shall be assessed as an association of persons in respect of such property.

(5) The provisions of this section shall not apply,-

Clause 24 provides that the income from letting of any house property owned by any person shall be computed under the head 'income from house property'. The said clause further provides that the income from any house property shall be computed under this head notwithstanding that the letting, if any, of the property is in the nature of trade, commerce or business. Where the house property is owned by two or more persons having definite and ascertainable shares, the clause provides that the income from such house property shall be computed separately for each such person. Accordingly, in a case where the shares of the owners of such house property are not definite and ascertainable, such persons shall be assessed as an association of persons in respect of such property. The clause also provides that the above provisions shall not apply,--

For this purpose, 'house property' and 'owner' have been defined in clause 314.

The income from house property shall be the gross rent as reduced by the aggregate amount of the deductions referred to in section 27.

Clause 25 provides for computation of income from house property. The income from house property shall be the gross rent as reduced by the aggregate amount of the deductions referred to in clause 27.

The gross rent in respect of a house property or any part of the property shall be the amount of rent received or receivable, directly or indirectly, for the financial year or part thereof, for which such property is let out.

Clause 26 deals with the scope of gross rent. The gross rent in respect of a house property or any part of the property shall be the amount of rent received or receivable, directly or indirectly, for the financial year or part thereof, for which such property is let out. The said clause also provides that where such property was vacant during any part of the financial year, the gross rent shall be the amount of rent received or receivable for such part of the financial year for which the house was not vacant.

(1) The deductions for the purposes of computation of income from house property shall be the following, namely:--

(2) The interest referred to in clause (c) of sub-section (1) which pertains to the period prior to the financial year in which the house property has been acquired or constructed shall be allowed as deduction in five equal instalments beginning from such financial year.

(3) The interest deductible under sub-section (2) shall be reduced by any part thereof which has been allowed as deduction under any other provision of this Code.

Clause 27 provides that the deductions from gross rent for computation of income from house property shall be the following, namely:--

The amount of rent received in advance shall be included in the gross rent of the financial year to which the rent relates.

Clause 28 provides that the amount of rent received in advance shall be included in the gross rent of the financial year to which the rent relates.

(1) The amount of rent received in arrears shall be deemed to be the income from house property of the financial year in which such rent is received.

(2) The arrears of rent referred to in sub-section (1) shall be included in the total income of the person under the head income from house property, whether the person is the owner of the property in that year or not.

Clause 29 provides that income in respect of the rent received in arrears in a financial year shall be computed under the head 'Income from house property', whether or not the person continues to be owner of the property in that year. The said clause also provides that the amount of rent referred to above shall be included in the gross rent under clause 26 for that financial year

(1) The income from any business carried on by the assessee at any time during a financial year shall be computed under the head 'Income from business'.

(2) The income of distinct and separate business referred to in section 31 shall be computed separately for the purposes of sub-section (1).

(3) Any income from a business after its discontinuance shall be deemed to be the income of the recipient in the year of receipt and shall, accordingly, be computed under the head 'Income from business'.

Clause 14 of the Code seeks to provide that the 'income from the ordinary sources' shall be computed under following heads of income:

Accordingly, Clause 30 seeks to provide that income from any business carried on by the person at any time during a financial year shall be computed under the head 'Income from business'. The income of distinct and separate business which is specified in clause 31 shall be computed separately. The said clause also provides that any income from a business after its discontinuance shall be deemed to be the income of the recipient in the year of receipt and shall, accordingly, be computed under the head 'Income from business'.

(1) A business shall be distinct and separate from another business if there is no interlacing or inter-dependence between the businesses.

(2) A business shall be deemed to be distinct and separate from another business, if--

(3) A speculative business shall be deemed to be distinct and separate from any other business including other speculative business.

Clause 31 seeks to provide that a business shall be distinct and separate from another business if there is no interlacing or inter-dependence between the businesses. It further provides that a business shall be deemed to be distinct and separate from another business, if--

The said clause also provides that a speculative business shall also be deemed to be distinct and separate from any other business or any other speculative business.

(1) The income computed under the head 'Income from business' shall be the profits from the business.

(2) The profits from the business of the nature specified in column (2) of the Table given below shall be computed in accordance with the provisions contained in the Schedule specified in the corresponding entry in column (3) of the said Table.

(3) The profits from any business not referred to in sub-section (2) shall be the gross earnings from the business as reduced by the amount of business expenditure incurred by the assessee.

Clause 32 provides that the income computed under the head 'Income from business' shall be the profits from the business. The profits from the business of insurance shall be computed in accordance with the Eighth Schedule. The profits from the business of operating a qualifying ship shall be computed in accordance with the Tenth Schedule. The profits from the business of mineral oil or natural gas shall be computed in accordance with the Eleventh Schedule. The profits from the business of developing or aporating from a special economic zone or profits from the business of manufacture or production, or providing of services, by a unit in special economic zone shall be computed in accordance with the Twelfth Schedule. The profits from the business of generation and distribution of power, development of infrastructure facility, cold chain facility, running a hospital, laying and operating a cross country natural gas or crude or petroleum oil pipeline network shall be computed in accordance with the Thirteenth Schedule.

The profits from any business not referred to above shall be the gross earnings from the business as reduced by the amount of business expenditure incurred by the person.

(1) The gross earnings referred to in sub-section (3) of section 32 shall be the aggregate of the following, namely:--

(2) The accruals or receipts referred to in sub-section (1) shall, without prejudice to the generality of the provisions of that sub-section, include the following, namely:--

(3) The gross earnings from business shall not include the following, namely:--

Clause 33 seeks to provide that the gross earnings from the business not covered by the Eighth, Tenth, Eleventh, Twelfth and the Thirteenth Schedule, shall be the aggregate of the following, namely:--

The said clause provides that the accruals or receipts referred to above shall, inter alia, include--

However, the gross earnings from business shall not include any dividend, any interest other than interest accrued to, or received by, a person being a financial institution, any income from letting of house property which is included under the head 'income from house property' and any income from the transfer of an investment asset.

Clause 33 of the Bill provides that the gross earnings referred to in clause 32 shall also include any payment or aggregate of payments made to a person in a day, in respect of an expenditure incurred during the financial year or in respect of a liability incurred and allowed as a deduction in any preceding financial year, which has been made otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft; exceeds a sum of thirty-five thousand rupees if the payment is made to transporter for carriage of goods by road, or a sum of twenty thousand rupees in any other case; and has not been made in such cases and in such circumstances as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make the rules in this regard for the purposes of this clause.

(1) The amount of business expenditure referred to in sub-section (3) of section 32 shall be the aggregate of the following amounts, namely:--

(2) The provisions for deduction of capital allowances referred to in sub-section (1) shall apply, whether or not the person has claimed the deduction in computing the total income.

(3) The Assessing Officer may restrict the amount of deduction under this section to such amount as he considers appropriate having regard to the use of a business asset if such asset is not exclusively used for the purposes of the business.

Clause 34, inter alia, provides that the amount of business expenditure shall be aggregate of the operating expenditure, finance charges and capital allowances.

(1) The amount of operating expenditure referred to in clause (a) of sub-section (1) of section 34 shall be the aggregate of--

Clause 35, inter alia, provides that the amount of operating expenditure for the purposes of clause 34 shall be the aggregate of--

Clause 35 of the Bill specifies the operating expenditure with respect to business expenditure and includes remuneration to any working participant or partner to the extent prescribed which it is in accordance with the agreement of the unincorporated body or the Limited Liability Partnership, as the case may be, association and relates to the period falling after the date of such agreement; contribution by a person, being an employer, to an approved fund subject to such limits and conditions, as may be prescribed and to the extent the amount is actually paid;

Clause 35 further specifies the deductions for the purpose of determination of operating expenditure, which include contribution by the person, being an employer, to an approved fund subject to such limits and conditions, as may be prescribed and to the extent the amount is actually paid; as well as, any amount credited to the provision for bad and doubtful debts account, no exceeding one per cent. of the aggregate average advances computed in the prescribed manner if the person is a financial institution or a non-banking finance company as may be notified.

(1) The amount of finance charges referred to in clause (b) of sub-section (1) of section 34 shall be--

(2) The amount of finance charges referred to in sub-section (1) shall not include--

(3) The amount of interest on any capital borrowed or debt incurred, which is payable to any financial institution, shall be allowed as a deduction, notwithstanding anything in sub-section (1), in the financial year in which the amount is actually paid or in the financial year in which the liability has accrued, whichever is later.

(4) Any interest referred to in sub-section (3) which has been converted into a loan or borrowing shall not be deemed to have been actually paid for the purposes of that sub-section.

(5) In this section, 'capital borrowed' shall include recurring subscriptions received periodically from shareholders, or subscribers, in a mutual benefit finance company, which fulfils such conditions as may be prescribed.

Clause 36 provides the determination of finance charges in relation to business expenditure which shall be aggregate of the operating expenditure, permitted finance charges and capital allowances.

Clause 36 provides that the amount of finance charges for the purposes of clause 34 shall be--

Clause 36 of the Bill specifies the finance charges with respect to business expenditure and includes the amount of interest paid to any participant to the extent prescribed which it is in accordance with the agreement of formation of unincorporated body and relates to the period falling after the date of such agreement; the proportionate amount of discount or premium payable on any bond or debenture issued by the person, calculated in the manner as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) The amount of capital allowances referred to in clause (c) of sub-section (1) of section 34 shall be the aggregate of the amount in respect of,--

(2) The depreciation, initial depreciation or terminal allowance, referred to in sub-section (1), shall be allowed in respect of any business capital asset if the asset is,--

(3) The condition referred to in clause (a) of sub-section (2) shall not apply in the case of a business capital asset being a capital expenditure on any building which is held by the person under a lease or other right of occupancy.

(4) A business capital asset shall be deemed to be owned by the person if he is a lessee in terms of a financial lease.

(5) The amount of deferred revenue expenditure allowance referred to in clause (e) of sub-section (1) shall be such amount as computed in accordance with the Twenty-second Schedule.

Clause 34 provides that the amount of business expenditure shall be aggregate of the operating expenditure, finance charges and capital allowances. Clause 37 seeks to provide that the amount of capital allowances shall be the aggregate of the amount in respect of depreciation of business capital assets, initial depreciation of business capital assets, terminal allowance, scientific research and development allowance and deferred revenue expenditure allowance.

The said clause further provides that the depreciation, initial depreciation or terminal allowance shall be allowed in respect of any business capital asset if the asset is owned, wholly or partly, by the person, and used for the purposes of the business of the person. However, the condition of ownership, whether whole or in part, shall not apply in the case of a business capital asset being a capital expenditure on any building which is held by the person under a lease or other right of occupancy. A business capital asset shall be deemed to be owned by the person if he is a lessee in terms of a financial lease.

Clause 37 provides that the amount of capital allowances shall be the aggregate of the amount in respect of depreciation of business capital assets, initial depreciation of business capital assets, terminal allowance, scientific research and development allowance and deferred revenue expenditure allowance.

Clause 37 of the Bill provides deduction of an amount in accordance with such deposit scheme in respect of the person carrying on business of growing and manufacturing tea or coffee or rubber in India, as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make the rules in this regard.

(1) The amount of depreciation of business capital assets referred to in section 37 shall be the aggregate of the following, namely:--

(2) The depreciation allowance on assets referred to in section 37 shall, notwithstanding the fact that all business capital assets in any block of assets have ceased to exist by reason of being demolished, destroyed, discarded or transferred, be allowed to the person in respect of the block of assets, if the adjusted value of the block of assets is greater than zero.

(3) The deduction under this section in respect of an asset shall be restricted to fifty per cent. of the sum referred to in sub-section (1) if--

(4) The depreciation in respect of any business capital asset, notwithstanding anything contained in any other provision of this Code, shall not be allowed if,--

Clause 38, inter alia, seeks to provide that the amount of depreciation of business capital assets shall be the aggregate of the following, namely:--

The said clause further provides that the deduction under this clause in respect of such asset shall be restricted to fifty per cent. if the asset is acquired by the person during the financial year, and is used for the purposes of business for a period of less than one hundred and eighty days in the relevant financial year.

Clause 38 provides that the depreciation in respect of any business capital asset shall, notwithstanding anything contained in any other provisions of the Code, not be deemed to have been actually allowed, if the asset does not form part of any block of assets specified in the Fifteenth Schedule or the expenditure incurred for acquiring the asset has been allowed as a deduction under any provision of this Code.

(1) A person shall be allowed, in addition to depreciation, an initial depreciation of business capital assets if,--

(2) The initial depreciation referred to in sub-section (1),--

(3) The deduction under this section in respect of such asset shall be restricted to fifty per cent. of the sum referred to in sub-section (2), if the asset is used for the purposes of business for a period of less than one hundred and eighty days in the relevant financial year.

Clause 39 seeks to provide that in addition to depreciation, an initial depreciation of business capital assets shall be allowed to the person if he is engaged in the business of manufacture or production of any article or thing, the asset is a new asset (other than any office appliance) not used either within or outside India by any other person before its installation by the person and the whole of the actual cost of the asset is not allowed as a deduction (whether by way of depreciation or otherwise) in computing the income under the head 'Income from business' of any other financial year.

The said clause further provides that the initial depreciation referred shall be an amount equal to twenty per cent. of the actual cost of the asset and it shall be allowed in the financial year in which the asset is used for the first time for the purposes of the business of the person. The deduction under this clause shall be restricted to fifty per cent of the allowable sum, if the asset is used for the purposes of business for a period of less than one hundred and eighty days in the relevant financial year.

(1) A person shall be allowed a terminal allowance in respect of a block of assets, if,--

(2) The terminal allowance referred to in sub-section (1) shall be computed in accordance with the formula--

Clause 40 seeks to provide that terminal allowance shall be allowed in respect of a block of asset, if the block of assets has ceased to exist by reason of being demolished, destroyed, discarded or transferred during the financial year and the percentage specified in the Fifteenth Schedule for computing depreciation in respect of the block of assets is zero.

The terminal allowance shall be aggregate of the written down value of the block of asset at the beginning of the financial year and the actual cost of any asset falling within that block, acquired during the financial year, as reduced by the amount accrued or received in respect of the assets which are demolished, destroyed, discarded or transferred during the financial year together with the value of the carcass or the scrap, if any.

The said clause further provides that the terminal allowance shall be treated as 'nil', if the net result of the computation is negative.

(1) A company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on,--

(2) The deduction under sub-section (1) shall be allowed if,--

(3) The approval granted to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor as a result of a business reorganisation.

(4) The deduction under this section shall not be allowed to a company in respect of the expenditure referred to in sub-section (1), if the expenditure is incurred in the course of its business in the nature of scientific research and development.

(5) The Board may for the purposes of this section, prescribe the nature of business, conditions and manner as may be considered necessary for grant of approval.

Clause 41 seeks to provide that a company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on creating and maintaining an in-house facility for scientific research and development and carrying out scientific research and development in the in-house facility.

The deduction under this clause shall be allowed, if the company creates and maintains an in-house facility for carrying out scientific research and development, the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority and the company enters into an agreement with the prescribed authority for co-operation in the research and development facility and for audit of the accounts of such facility.

The said clause further provides that in case of business re-organisation the approval granted to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor.

The said clause also provides that the deduction under this clause shall not be allowed to a company, if the expenditure is incurred in the course of its business which is in the nature of scientific research and development.

Clause 41 of the Bill provides that a company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on creating and maintaining an in-house facility for scientific research and development; and carrying out scientific research and development in the in-house facility, if--

Clause 41 of the Bill further provides that for the purposes of granting approval to a research facility for claiming deduction for scientific research and development allowance, the Board may prescribe the nature of business, conditions and manner as may be considered necessary for grant of such approval.

Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause.

(1) The amount of profit, where a business capital asset, which forms part of a block of assets specified in the Fifteenth Schedule, is transferred discarded, destroyed or destructed shall be computed in accordance with the formula--

(2) The profit referred to in sub-section (1) shall be treated as nil, if the net result of the computation, thereunder, is negative.

(3) The amount of profit, where a business capital asset other than that referred to in sub-section (1) is transferred, discarded, destroyed or destructed, shall be computed in accordance with the formula--

Clause 42 provides for the method of computation of profit on transfer of a business capital asset in case of amount, which forms part of a block of assets specified in the fifteenth schedule. It provides that the amount of profit where such capital asset is transferred, discarded, destroyed or destructed shall, be the amount accrued or received in respect of such asset together with the amount of scrap value, if any, as reduced by the amount of written down value of the block of assets at the beginning of the financial year together with the actual cost of any asset falling within that block of assets and acquired during the financial year and in case of any asset not falling in the block of assets the consideration received on transfer less actual cost will be the profit.

The said clause further provides that if the net result of the computation is negative, the profit shall be treated as 'nil'.

(1) The deduction for any capital allowance referred to in section 37 shall, in a case where business reorganisation has taken place during the financial year, be allowed in accordance with the provisions of this section.

(2) The amount of deduction allowable to the predecessor shall be determined in accordance with the formula--

(3) The amount of deduction to the successor shall be determined in accordance with the formula--

Clause 43 provides for computation of deduction on account of capital allowance in a case where business reorganisation has taken place during the financial year. The amount of deduction allowable to the predecessor shall be determined in accordance with the formula--

(1) The actual cost of a business capital asset to the person shall be computed in accordance with the formula-

(2) The Assessing Officer may, notwithstanding anything contained in sub-section (1), determine, with the prior approval of the Joint Commissioner, the actual cost if--

(3) The actual cost of the business capital asset to the person shall be the deemed written down value, if--

(4) The actual cost of a business capital asset to the person shall, in a case of sale and buy back transaction of the asset, be the lower of the following, namely:--

(5) Where a business capital asset is acquired by the person and subsequently it is transferred back to the transferor by way of lease, hire or otherwise, the actual cost of the asset in the hands of the person shall be the written down value of the asset in the hands of the transferor at the beginning of the financial year in which the acquisition of the asset by the person has taken place.

(6) Where the person is a non-resident and a business capital asset, having been acquired by him outside India, is brought by him to India, the actual cost of the asset for the person shall be the cost of acquisition of the asset by him, as reduced by an amount equal to the amount of depreciation which would have been allowable, had the asset been used in India for the purpose of the business of the person since the date of such acquisition.

(7) The actual cost of an asset shall be treated as 'nil', if--

(8) The Board may, for the purposes of determining the actual cost of a business capital asset, prescribe--

Clause 44 seeks to provide the meaning of actual cost for the purposes of computation of income under the head income from business. The said clause, inter alia, provides that the actual cost of a business asset to the person shall be computed in accordance with the formula--

Clause 44 of the Bill provides that the Board may, for the purposes of determining the actual cost of a business Capital asset, prescribe- (a) any other cost which may be included in determining the actual cost; and (b) the method of determining the actual cost in the circumstances which are not provided for in this section.

Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause.

(1) The written down value of any block of assets at the beginning of the financial year shall be the written down value of the block of assets at the close of the immediately preceding financial year.

(2) The written down value of the block of assets at the close of the immediately preceding financial year shall be the adjusted value of the block of assets in the immediately preceding financial year as reduced by,--

(3) The adjusted value of any block of assets for any financial year shall be computed in accordance with the formula--

(4) The adjusted value of any block of assets under sub-section (3) shall be 'nil' if the amount (C+D+E) exceeds the amount (A+B).

(5) The adjusted value of the block of assets, acquired by a successor in a business reorganisation, for the financial year in which the business reorganisation has taken place shall be the amount which would have been taken as the adjusted value of the block of assets as if the business reorganisation had not taken place.

(6) The written down value of the block of assets, acquired by a successor in a business reorganization, on the last day of the financial year in which the business reorganisation has taken place shall be determined in accordance with the formula--

(7) Where a block of assets comprises of any asset acquired in any financial year from a country outside India for the purposes of business and there is variation in liability in respect of acquisition of the asset after the date of such acquisition, the adjusted value of the block of assets shall be computed in accordance with the formula--

(8) The amount of liability of the person, expressed in Indian rupees at the time of making payment as referred to in sub-section (7), shall, in a case where the person has entered into a forward contract, be computed with reference to the rate of exchange specified in such forward contract.

(9) The Board may prescribe

(10) In this section, the deemed written down value shall have the meaning assigned to it in sub-section (10) of section 44.

Clause 45 relates to the meaning of the written down value and adjusted value of assets. The said clause, inter alia, provides that the written down value of any block of assets at the beginning of the financial year shall be the written down value of the block of assets at the close of the immediately preceding financial year.

The written down value of the block of assets at the close of the immediately preceding financial year shall be the adjusted value of the block of assets in the immediately preceding financial year as reduced by the amount of capital allowance, if any, allowed under clause 37 during that year together with any expenditure incurred for acquiring the asset to the extent allowed as a deduction in the financial year under any provision of the Code.

The adjusted value of any block of assets for any financial year shall be computed in accordance with the formula--

Clause 45 of the Bill provides that the Board may prescribe-(a) the method of determining the allocation of the written down value or the adjusted written down value of the assets between the different businesses carried on by the person; and (b) the method of determining the written down value or the adjusted written down value of the block of assets in the circumstances which are not provided for in this section.

Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause.

(1) The income from the transfer of any investment asset shall be computed under the head 'Capital gains'.

(2) The income under the head 'Capital gains' shall, without prejudice to the generality of the foregoing provisions, include the following, namely:--

Accordingly, Clause 46 provides that the income from the transfer of any investment asset shall be computed under the head 'Capital gains'. In addition to such income, the income under the head 'Capital gains' shall also include--

(1) The income from the following transfers shall not be included in the computation of income under the head 'Capital gains', namely:--

Clause 47 provides that the income from certain transfers shall not be treated as capital gains. It, inter alia, provides that the following transfers shall not be included in the computation of income under the head 'Capital gains', namely:--

The said clause also defines 'banking company', 'banking institution', 'private company', 'public unlisted company' 'depository' and 'security'.

Clause 47 of the Bill provides that the income from the transfer of any work of art, archaeological, scientific or art collection, book, manuscript, drawing, painting, photograph or print, to the Government or a University or any public museum or institution of national importance or of renown throughout any State or States and notified by the Central Government, shall not be included in the computation of income under the head 'Capital gains'.

Accordingly, it is proposed to empower the Central Government to issue notification(s) in this regard for the purposes of this clause.

Clause 47 further provides that the transfer of any investment asset in a transaction of reverse mortgage under a scheme notified by the Central Government shall not be included in the computation of income under the head 'Capital gains'.

Accordingly, it is proposed to empower the Central Government to frame the scheme in this regard for the purposes of this clause.

(1) The income from the transfer of an investment asset specified in column (2) of the Table given below shall be the income of the transferor in the financial year specified in column (3) of the said Table:

(2) Notwithstanding anything in sub-section (1),--

(3) In clause (d) of sub-section (2), 'beneficial owner' shall have the same meaning as assigned to it in clause (a) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996) .

Clause 48 provides that the financial year of taxability of the income from the transfer of an investment asset shall be the financial year in which the transfer takes place and income shall be taxable in the hands of the transferor. However, such income shall be deemed to be the income of the recipient in the following cases for the financial year specified below--

The said clause also provides that any consideration from transfer made by the depository or participant of any beneficial interest in a security shall be deemed to be the income of the beneficial owner of the financial year in which such transfer took place.

The said clause further provides that the amount referred to in item (d) of sub-clause (2) of clause 46 shall be the income of the financial year in which such amount is withdrawn and the amount referred to in item (e) of sub-clause (2) of clause 46 shall be the income of the third financial year immediately following the financial year in which the transfer of the original asset is effected. The amount referred to in item (f) of sub-clause (2) of clause 46 shall be the income of the financial year in which any condtions referred to in sub-clause (6) of clause 55 is not complied with.

The said clause also defines the term 'beneficial owner'.

(1) The income from the transfer of any investment asset during the financial year shall be the full value of the consideration accrued or received as a result of the transfer, as reduced by the aggregate amount of the deductions referred to in section 51.

(2) For the purpose of computation of income from the transfer of an investment asset, being any beneficial interest in respect of securities referred to in clause (d) of sub-section (2) of section 48, the cost of acquisition and the period of holding of such securities shall be determined on the basis of first-in-first-out method.

Clause 49 relates to the computation of income from transfer of any investment asset. The income from the transfer of any investment asset during the financial year shall be the full value of the consideration accrued or received as a result of the transfer, as reduced by the aggregate amount of the deductions referred to in clause 51. The said clause further provides that for the purpose of such computation, where the investment asset is any beneficial interest in respect of securities referred to in item (d) of sub-clause (2) of clause 48, the cost of acquisition and the period of holding of such securities shall be determined on the basis of first-in-first-out method.

(1) The full value of the consideration shall be the amount received by, or accruing to, the transferor, or a person referred to in sub-section (2) of section 48, as the case may be, directly or indirectly, as a result of the transfer of the investment asset.

(2) Notwithstanding anything in sub-section (1), the full value of the consideration, in the following circumstances, shall be--

(3) Where the amount of compensation or consideration referred to in clause (a) of sub-section (2) is subsequently reduced by any court, Tribunal or other authority, the compensation or consideration as so reduced shall be taken to be the full value of consideration.

(4) Where the enhanced compensation or consideration referred to in clause (a) of sub-section (2) is received by any person other than the transferor, the said amount shall be deemed to be the income of such other person and the provisions of sections 46 to 55 (both inclusive) shall accordingly apply.

Clause 50 provides that the full value of the consideration shall be the amount received by, or accruing to, the transferor or the recipient, as the case may be, directly or indirectly, as a result of the transfer of the investment asset. The said clause also specifies as to what amount would constitute the full value of consideration in respect of transfers made under certain specific circumstances.

(1) The deductions for the purposes of computation of income from the transfer of an investment asset shall be the following, namely :

(2) In the case of transfer of an investment asset, being an equity share in a company or a unit of an equity oriented fund and such transfer is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004,--

(3) If an investment asset, other than that referred to in sub-section (2) of the section or sub-section (5) of section 53, is transferred at any time after one year from the end of the financial year in which the asset is acquired by the person, the deductions for the purposes of computation of income from the transfer of such asset shall be the following, namely:--

Clause 51 relates to deduction for cost of acquisition of an investment asset. Sub-clause (1) of the said clause provides that for the purpose of computation of income from transfer of an investment asset, the cost of acquisition of an investment asset, the cost of improvement of such asset and the amount of expenditure incurred wholly and exclusively in connection with the transfer of such asset, shall be allowed as deduction.

Sub-clause (2) of the said clause provides that in the case of an equity share in a company or a unit of an equity oriented fund, transferred at any time after one year from the end of the financial year in which such asset is acquired and such transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004, if the income computed after giving effect to sub-clause (1) is a positive income, a deduction amounting to hundred per cent. of the income so arrived at shall be allowed and if the income computed after giving effect to sub-clause (1) is a negative income, hundred per cent. of the income so arrived at shall be reduced from such income.

Sub-clause (3) of the said clause provides that if an investment asset, not being an equity share or a unit of an equity oriented fund referred to in sub-clause (2) or referred to in sub-clause (5) of clause (53) is transferred at any time after one year from the end of the financial year in which the asset is acquired by the persons, the following deductions shall be allowed for the purposes of computation of income from the transfer of such asset :--

(1) The indexed cost of acquisition of an investment asset referred to in clause (i) of sub-section (3) of section 51 shall be the amount determined in accordance with the formula--

Clause 52 relates to indexed cost of acquisition or improvement. The indexed cost of acquisition of an investment asset referred to in sub-clause (3) of clause 51 for the purposes of computation of income from transfer of such asset shall be the amount determined in accordance with the formula specified in sub-clause (1) of the said clause.

The said clause further provides that the indexed cost of improvement of an investment asset referred to in sub-clause (3) of clause 51 shall be in accordance with the formula specified in sub-clause (2) of the said clause.

(1) Unless otherwise provided, the cost of acquisition of an investment asset, shall be--

(2) The cost of acquisition of an investment asset specified in column (2) of the Seventeenth Schedule, acquired by the mode specified in column (3) of the said Schedule, shall be the cost specified in column (4) thereof.

(3) The cost of acquisition of an investment asset acquired by a person by any of the special modes of acquisition, shall be--

(4) The cost of acquisition of an investment asset referred to in clause (h) or clause (i) or clause (j) of sub-section (2) of section 58 shall be the fair market value or the stamp duty values as the case may be, which has been taken into account for the purposes of the said clauses.

(5) The cost of acquisition of an investment asset being an undertaking or division of a business transferred by way of a slump sale referred to in sub-clause (l) of clause (267) of section 314 shall be the net worth of such undertaking or division.

(6) The cost of acquisition of an investment asset forming part of a bundle of investment assets acquired by any participant, on distribution of the asset to him on account of his retirement from any unincorporated body, shall be the amount determined in accordance with the formula--

Clause 53 relates to cost of acquisition of an investment asset. It, inter alia, provides that the cost of acquisition of an investment asset, shall be--

Sub-clause (2) of the said provides that the cost of acquisition of an investment asset specified in column (2) of the Seventeenth Schedule, acquired by the mode specified in column (3) of the said Schedule, shall be the cost specified in column (4) therein.

The said clause further provides that the cost of acquisition of an investment asset acquired by a person by any of the special modes of acquisition, shall be the cost at which the asset was acquired by the previous owner or at the option of the person, the fair market value of the asset on the 1st day of April, 2000, if the asset was acquired by the previous owner or the person before such date.

The said clause also provides that the cost of acquisition of an investment asset referred to in items (h), (i) or (j) of sub-clause (2) of clause 58 shall be the fair market value or the stamp duty value, as the case may be, which has been taken into account for the purposes of the said clauses.

The said clause further provides that the cost of acquisition of an investment asset being an undertaking or division of a business transferred by way of a slump sale referred to in sub-clause (267) of clause 314 shall be the net worth of such undertaking or division.

The said clause also provides that the cost of acquisition of an investment asset forming part of a bundle of investment assets acquired by any participant, on distribution of the asset to him on account of his retirement from any unincorporated body, shall be the amount determined in accordance with the formula specified therein.

Further the cost of acquisition of an investment asset shall be 'nil', in relation to,--

The said clause also defines the terms 'previous owner' and 'net worth'.

(1) The cost of improvement of an investment asset shall be any expenditure of a capital nature incurred in making any additions or alterations to the asset,--

Clause 54 provides that the cost of improvement of an investment asset shall be any expenditure of a capital nature incurred in making any additions or alterations to the asset by the person or by the previous owner, if the asset is acquired by any special mode of acquisition referred to in sub-clause (237) of clause 314.

The said clause also provides that the cost of improvement of the investment asset, in a case where the asset became the property of the person or the previous owner before the first day of April, 2000, shall be any capital expenditure incurred for any addition or alteration to such asset on or after the first day of April, 2000.

The said clause further provides that the cost of improvement of an investment asset shall be 'nil ' in relation to--

The said clause also provides that any expenditure deductible in computing the income under any other head of income shall not be taken into account while computing the cost of improvement.

(1) An individual or a Hindu undivided family shall be allowed a deduction, in respect of rollover of any original investment asset referred to in sub-section (3) of section 51, from the capital gain arising from the transfer of the asset in accordance with the provisions of this section.

(2) The deduction referred to in sub-section (1) shall be computed in accordance with the formula--

(7) In this section, 'net consideration' means the full value of consideration received or accruing as a result of the transfer of an investment asset as reduced by any expenditure incurred wholly or exclusively in connection with such transfer.

Clause 55 relates to relief for rollover of investment asset. It provides that an individual or a Hindu undivided family shall be allowed a deduction, in respect of rollover of any original investment asset referred to in sub-clause (3) of clause 51, from the capital gain arising from the transfer of the asset. Such deduction shall be computed in accordance with the formula--

The income of every kind falling under the class Income from ordinary sources, shall be computed under the head 'Income from residuary sources', if it is required to be included in computing the income includible under any of the heads of income specified in items A to D of section 14.

Clause 56 provides that the income of every kind falling under the clause 'Income from ordinary sources', shall be computed under the head 'Income from residuary sources'. if it is not required to be included in computing the Income under any of the heads of Income specified in items A to D of section 14.

The income computed under the head 'Income from residuary sources' shall be the gross residuary income as reduced by the amount of deductions referred to in section 59.

Clause 57 deals with computation of income from residuary sources. It provides that the income computed under the head 'Income from residuary sources' shall be the gross residuary income as reduced by the amount of deductions referred to in clause 59.

(1) The gross residuary income shall include all accruals, or receipts, in the nature of income, which do not form part of--

Clause 58 deals with scope of gross residuary income. It provides that the gross residuary income shall include all accruals or receipts in the nature of income, which do not form part of income from special sources and income under any of the heads specified in items A to D of section 14. In addition to such income, gross residuary income shall, inter alia, include--

The said clause provides that the value of any property referred to in (h) or (i) above shall be the stamp duty value in the case of an immovable property as reduced by the amount of consideration, if any, paid by the person and the fair market value in the case of any other property as reduced by the amount of consideration, if any, paid by the person.

The said clause further provides that the amount referred to in (h) above shall not include any amount received--

Clause 58 of the Bill provides that the gross residuary income shall inter alia include any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, if it has not been incurred in such cases and under such circumstances, as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) The deductions for the purposes of computation of income from residuary sources shall be the aggregate of--

(2) The amount of expenditure referred to in clause (a) of sub-section (1) shall be the following, namely:--

(3) The amount of deduction referred to in clause (b) of sub-section (1) shall be the following, namely:--

(4) In the case of the income referred to in clause (c) of sub-section (2) of section 58, the amount of deduction shall be a sum equal to fifty per cent. of such income and no deduction shall be allowed under any other clause of this section.

(5) The following amounts shall not be allowed as a deduction, namely:--

(6) In this chapter 'capital sum assured' in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy not taking into account--

Clause 59 provides for deductions from gross residuary income. The deductions for the purposes of computation of income from residuary sources shall be the aggregate of--

The said clause further provides certain monetary limits for allowable deduction in respect of certain income from residuary sources. It also inter alia provides that any amount relating to personal expenses and any amount of tax, interest or penalty paid under this Code or the Income Tax Act, 1961 or the Wealth Tax Act, 1957 as it stood before the commencement of this Code and any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft subject to the conditions specified in the said clause shall not be allowed as a deduction. The said clause also defines the term 'capital sum assured in relation to a life insurance policy.

Clause 59 of the Bill provides that for the purposes of computation of income from residuary sources, any payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, if it has not been incurred in such cases and under such circumstances, as may be prescribed, shall not be allowed as a deduction.

(1) Subject to other provisions of this section, the income from each source falling under a head of income for a financial year shall be aggregated and the income so aggregated shall be the income from that head for the financial year.

(2) The income from the transfer of each investment asset during the financial year, as computed under section 49, shall be aggregated and the net result of such aggregation shall be the income from the capital gains, for the financial year.

(3) The income from capital gains shall be aggregated with the unabsorbed preceding year capital loss, if any, and the net result of such aggregation shall be the current income under the head 'Capital gains'.

(4) The income under the head 'Capital gains' shall be treated as nil if the net result of aggregation under sub-section (3) is negative and the absolute value of the net result shall be the amount of unabsorbed current capital loss, for the financial year.

(5) The income from each business other than speculative business referred to in sub-section (3) of section 31 shall be aggregated and the income so aggregated shall be the income from the non-speculative business.

(6) The income from each speculative business shall be aggregated and the income so aggregated shall be the gross income from the speculative business.

(7) The gross income from the speculative business shall be aggregated with unabsorbed preceding year speculative loss, if any, and the net result of such aggregation shall be the income from the speculative business.

(8) The aggregate of from the speculative business shall be treated as nil, if the nil result of aggregation in sub-section (7) is negative and the absolute value of the net result of aggregation shall be the amount of unabsorbed current speculative loss for the financial year.

(9) The aggregate of income from the speculative business and income from the non-speculative business shall be the income under the head 'income from business'.

(10) The income from the activity of owning and maintaining horses for the purpose of horse race shall be aggregated with unabsorbed preceding year horse race loss, and the net result of such aggregation shall be the income from activity of owning and maintaining horse race and it shall be taken to be nil, if the net result of such aggregation is negative and the absolute value of net result shall be the amount of unabsorbed current horse race loss for the financial year.

(11) The income of every kind referred to in section 58, other than income from the activity of owning and maintaining horses for the purpose of horse race, shall be aggregated with income from the activity of owning and maintaining horse race and the income so aggregated shall be the income under the head ' income from residuary sources'.

Clause 60 seeks to provide the manner in which the income under each head of income is to be aggregated for a financial year so as to result in the income from any particular head of income for that financial year. Thus, the income for a financial year under each of the five heads of income would be determined in accordance with the provisions of this clause.

The said clause further provides for the computation of the income from capital gains, speculative business and income from the activity of owning and maintaining horses for the purpose of horse race in such a manner that any loss from such sources shall be set off only against positive income from such sources.

(1) The current income from ordinary sources shall be the aggregate of--

(2) The current income from ordinary sources shall be aggregated with the unabsorbed preceding year loss from the ordinary sources, if any; and the net result of the aggregation shall be the gross total income from ordinary sources, for the financial year.

(3) The gross total income from ordinary sources, for the financial year, shall be treated as nil if the net result of the aggregation under sub-section (2) is negative; and the absolute value of the net result shall be the amount of unabsorbed current loss from ordinary sources, for the financial year.

Clause 61 seeks to provide the manner in which the current income from ordinary sources for a year is to be computed. The classification of income as 'Income from ordinary sources' and 'Income from special sources' has been provided in clause 13 of the Code.

The said clause further provides that the current income of a financial year under each head of income is to be aggregated to arrive at the current income from ordinary sources.

This current income is to be further aggregated with the unabsorbed preceding year loss from ordinary sources to arrive at the gross total income from ordinary sources.

The said clause also provides that if the gross total income from ordinary sources so arrived at is negative then it shall be treated as nil and the absolute value of the negative income shall be the unabsorbed current loss from ordinary sources.

(1) The income from a special source referred to in Part III of the First Schedule shall be the current income from the special source for the financial year.

(2) The current income from the special source referred to in sub-section (1) shall be aggregated with the unabsorbed preceding year loss from the special source, if any; and the income so aggregated shall be the gross total income from the special source, for the financial year.

(3) Where the gross total income from the special source referred to in sub-section (2) is negative, such income shall be treated as nil and the absolute value of the net result shall be the amount of unabsorbed current loss from the special source for the financial year.

(4) The gross total income from special source in respect of each special source computed under sub-sections (2) and (3) shall be aggregated and the net result of the aggregation shall be the total income from special sources for the financial year.

Clause 62 seeks to provide for the aggregation of income from special sources. The aggregate income from a special source in a financial year would be the current income from the special source for that financial year. The incomes from special sources are enumerated in Part III of the First Schedule to the Code.

The said clause further provides that the current income from the special source in a financial year shall be aggregated with the unabsorbed preceding year loss from the special source to arrive at the gross total income from the special source for that financial year.

The said clause also provides that if the gross total income from the special source so arrived at is negative then it shall be treated as nil and the absolute value of the negative income shall be the unabsorbed current loss from the special source for the financial year.

The said clause further provides that the gross total income from special source in respect of each special source shall be aggregated and the net result of the aggregation shall be the total income from special sources for the financial year.

The total income of a person for any financial year shall be computed in accordance with the formula--

Clause 63 seeks to provide the manner in which the total income of any person in a financial year is to be determined. For the sake of simplicity, the clause provides for the determination of total income by means of a mathematical formula. The clause provides that the total income of a person for a financial year is to be determined by adding the total income from ordinary sources with the total income from the special sources. The total income from ordinary sources shall, however, be reduced by the amount of deductions available to the person under sub-chapter IV of Chapter III before it is aggregated with the total income from special sources.

(1) In a business reorganisation, or on conversion of a company into a limited liability partnership as referred to in clause (j) of sub-section (1) of section 47--

(2) The provisions of sub-section (1) shall not apply in case of a business reorganisation if the successor in a business reorganisation does not satisfy the test of continuity of business, and--

(3) In case of the conversion, the provisions of sub-section (1) shall not apply if any of the conditions, specified in clause (j) of sub-section (1) of section 47 are not fulfilled.

(4) The total income of the financial year in which, the business reorganisation or the conversion referred to in sub-section (1) took place, and of all the subsequent financial years shall, notwithstanding anything in this Code, be rectified as if the provisions of this section had never been given effect to in those financial years, if conditions specified in sub-section (2) of this section or clause (j) of sub-section (1) of section 47 are not fulfilled at any time during five financial years immediately succeeding the financial year in which re-organisation or conversion took place.

Clause 64 seeks to provide the manner in which income is to be aggregated in case of a business reorganisation or where a company is converted into a limited liability partnership. In such cases, the unabsorbed current loss from ordinary sources of the predecessor in the financial year in which the business reorganisation takes place, shall be treated as the unabsorbed preceding year loss from ordinary sources of the successor in business in that year and the provisions of clause 61 shall apply. Similarly, the unabsorbed current loss from special sources of the predecessor in the financial year in which the business reorganisation takes place, shall be treated as the unabsorbed preceding year loss from special sources of the successor in business in that year and the provisions of clause 62 shall apply.

Sub-clause (2) of the said clause provides that the benefit of taking over the loss of the predecessor by the successor shall not be available to the latter in a case of business reorganisation if it does not satisfy the test of continuity of business. Test of continuity of business has been defined in clause 314 of the Code as a set of conditions which the successor must fulfill to satisfy the test.

Sub-clause (2) further provides that the said benefit shall not be available to a successor in case of a business reorganisation if the predecessor is a sole proprietary concern or an incorporated body and the share holding of the sole proprietor ceases to be less than fifty per cent. of the total value of the shares of the successor company at any time during the period of five years immediately succeeding the financial year in which the business reorganisation takes place.

(1) The amount of unabsorbed current loss from ordinary sources calculated under sub-section (3) of section 61, for the financial year ending on the date of the retirement, or death, of a participant, shall be reduced by the amount in proportion of the share of the retired, or deceased, participant.

(2) The amount so reduced under sub-section (1) shall be the unabsorbed preceding year loss from ordinary sources, for the financial year beginning on the date immediately following the date of retirement, or death, of a participant for the purposes of sub-section (2) of section 61.

(3) The amount of unabsorbed current loss from the special source calculated under sub-section (3) of section 62, for the financial year ending on the date of the retirement, or death, of a participant, shall be reduced by the amount in proportion of the share of the retired, or deceased, participant.

(4) The amount so reduced under sub-section (3) shall be the unabsorbed preceding year loss from the special source, for the financial year beginning on the date immediately following the date of retirement, or death, of a participant for the purposes of sub-section (2) of section 62.

(5) The provisions of this section shall apply notwithstanding anything in any other provision of this Code.

(6) In this Code, any reference to the unabsorbed preceding year loss from ordinary sources and unabsorbed preceding year loss from the special source in respect of an unincorporated body where a change has occurred in its constitution due to death, or retirement, of its participant, shall be construed as a reference to the amount so reduced under sub-section (1) and sub-section (3) respectively.

Clause 65 provides that in the event of a change in the constitution of an unincorporated body, due to death or retirement of a participant, the unabsorbed current loss from ordinary or special sources shall be reduced in proportion to the percentage of share holding of such deceased or retired participant for the financial year ending on the date of death or retirement of the participant.

The said clause further provides that such reduced loss shall be the unabsorbed preceding year loss of the unincorporated body for the financial year beginning on the date immediately following the date on which the death or retirement of the participant took place.

(1) Notwithstanding anything in this Chapter a closely-held company shall not be allowed to aggregate any unabsorbed preceding year loss from ordinary sources or unabsorbed preceding year loss from the special source with the income of the financial year unless it satisfies the test of continuity of ownership.

(2) The closely held company shall satisfy the test of continuity of ownership referred to in sub-section (1), if the shares of the company beneficially held by persons, carrying not less than fifty-one per cent. of the voting power on the last day of the financial year immediately preceding the relevant financial year, are held by the same persons on the last day of the relevant financial year.

Clause 66 seeks to provide that a closely held company shall not be allowed to aggregate the unabsorbed preceding year loss from ordinary or special sources with the income of the current financial year unless it satisfies the test of continuity of ownership.

The said clause further provides that the closely-held company shall satisfy the test of continuity of ownership if the shares of the company beneficially held by persons, carrying not less than fifty-one per cent. of the voting power on the last day of the financial year immediately preceding the relevant financial year, are held by the same persons on the last day of the relevant financial year.

The said clause also provides that while calculating the percentage of voting power--

Notwithstanding anything in this Code, if the return of tax bases for a financial year is not furnished by the due date and if the amount of unabsorbed current loss from ordinary sources, unabsorbed current capital loss, unabsorbed current speculative loss, unabsorbed current horse race loss and unabsorbed current loss from special source of the said financial year exceeds the corresponding amount of the immediately preceding financial year then, such respective excess in that year shall not be taken into account for any of the purposes of this Code for any subsequent financial years.

Clause 67 seeks to provide that aggregation of losses generated in a financial year shall not be allowed if the return of tax bases for the said year is not furnished by the due date. Thus, the losses generated in the current year shall not be taken into consideration for any purposes of the Code.

(1) A person shall be allowed the deductions specified in this Sub-chapter from his gross total income from ordinary sources, for the financial year.

(2) The aggregate amount of the deductions under this Sub-chapter shall not exceed the gross total income from ordinary sources, for the financial year.

(3) Any sum, which qualifies for a deduction under this Sub-chapter in any financial year, shall not qualify for deduction--

(4) The provisions of sub-section (3) (19 of 1925) shall apply whether full deduction of the sum referred to therein has been allowed or not.

Clause 68 provides that the deductions under this sub-chapter are available only in respect of 'gross total income from ordinary sources' and the aggregate amount of such deductions shall not exceed the gross total income from ordinary sources.

(1) A person, being an individual, shall be allowed a deduction for savings in respect of the aggregate of the sum referred to in sub-section (2) to the extent of one lakh rupees.

(2) The sum referred to in sub-section (1) shall be the amount paid or deposited by the person in a financial year as his contribution of any approved fund to an account of the individual, spouse or any child of such individual.--

Clause 69 seeks to provide that a person, being an individual, shall be allowed a deduction of a maximum of one lakh rupees for savings made by him in respect of the amount paid or deposited by the person in a financial year, as his contribution to any approved fund to an account of the individual, spouse or any child of such individual.

Clause 69 of the Bill provides that a person, being an individual, shall be allowed a deduction for savings in respect of the aggregate of the sums specified in the said clause as does not exceed to the extent of one lakh rupees paid or deposited by the person in a financial year. The specified sums include any sum as a contribution to any provident fund set up and notified by the Central Government where such contribution is to an account of the individual, spouse or any child of such individual; any sum to effect or keep in force a contract for any annuity plan of any insurer as approved by the Board in accordance with the prescribed guidelines; any sum as a contribution to a pension scheme, approved and notified by the Board in accordance with the prescribed guidelines.

Accordingly, it is proposed to empower the Board to issue notification in this regard for the purposes of this clause.

(1) A person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid or deposited to effect or keep in force an insurance on the life of persons specified in sub-section (3).

(2) The insurance referred to in sub-section (1) shall be an insurance where the premium payable for any of the years during the term of the policy shall not exceed five per cent. of the capital sum assured.

(3) The person referred to in sub-section (1) shall be--

Clause 70 seeks to provide that a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid or deposited during a financial year to effect, or keep in force, an insurance on the life of certain specified persons. The persons specified are the individual, his spouse and children and the members of a Hindu undivided family.

The said clause further provides that the insurance policy, to be eligible for this deduction, should be one where the amount of the annual premium payable should not exceed five per cent. of the capital sum assured in any year during the term of the policy.

(1) A person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid during the financial year to effect, or to keep in force, an insurance on the health of persons specified in sub-section (2) and in addition, in the case of an individual, any contribution made to the Central Government Health Scheme.

(2) The person referred to in sub-section (1) shall be--

(3) The insurance under this section refers to a health insurance scheme framed by any insurer which is approved by the Insurance Regulatory and Development Authority.

Clause 71 seeks to provide that a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid during a financial year to effect, or to keep in force, an insurance on the health of certain specified persons. The persons specified are the individual, his spouse, dependant children and parents, and the members of a Hindu undivided family.

The said clause further provides that in the case of an individual, an additional deduction shall be allowed in respect of any contribution made to the Central Government Health Scheme.

The said clause also provides that the health insurance scheme should be framed by an insurer which is approved by the Insurance Regulatory and Development Authority.

(1) A person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid during the financial year, if the sum is paid--

(2) In this section--

Clause 72 seeks to provide a deduction to a person, being an individual or a Hindu undivided family, in respect of any sum paid during the financial year as tuition fee to any school, college, university or other educational institution situated within India for the purpose of full-time education of any two children of such individual or Hindu undivided family.

The said clause further provides that tuition fee shall not include any payment towards any development fee or donation or any payment of similar nature. It also clarifies that fulltime education shall include education in a play school or pre-school.

The aggregate amount of deductions under sections 70, 71 and 72 shall not exceed fifty thousand rupees.

Clause 73 seeks to provide a maximum limit on the amount of deduction available under clauses 70, 71 and 72. It lays down a ceiling of fifty thousand rupees on the amount of deduction available in respect of payments made for a life insurance policy, health insurance policy and education of children.

(1) A person, being an individual or a Hindu undivided family, shall be allowed a deduction, in respect of any amount paid or payable by way of interest on loan taken for the purpose of acquisition, construction, repair or renovation of a house property in the financial year in which such property is acquired or constructed or any subsequent financial year, subject to the conditions specified in sub-section (2).

(2) The deduction referred to in sub-section (1) shall be allowed if--

(3) The interest referred to in sub-section (1) which pertains to the period prior to the financial year in which the house property has been acquired or constructed shall be allowed as deduction in five equal instalments beginning from such financial year.

Clause 74 seeks to provide that a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of an amount paid or payable by way of interest on loan taken for the purpose of acquisition, construction, repair or renovation of a house property in the financial year in which such property is acquired or constructed or any subsequent financial year, subject to certain conditions specified therein.

Sub-clause (2) of the said clause specifies the conditions by providing that the deduction shall be available if--

Sub-clause (3) of the said clause provides that the interest, which pertains to the period prior to the financial year in which the house property has been acquired or constructed, shall be allowed as deduction in five equal installments beginning from such financial year. For example, if the total amount of interest paid prior to the financial year in which the house property has been acquired or constructed is one lakh rupees, then, the person would be eligible for a deduction of twenty thousand rupees every year for five years starting from the year in which the house property is acquired or constructed.

Sub-clause (4) of the said clause provides that the interest for such prior period shall be reduced by any part thereof which has been already allowed as a deduction under any other provision of this Code.

Sub-clause (5) lays down the maximum limit of deduction that can be claimed under this clause. This limit has been specified as one lakh and fifty thousand rupees.

(1) A person, being an individual, shall be allowed a deduction in respect of any amount paid by him in the financial year by way of interest on loan taken by him from any financial institution for the purpose of--

(2) The deduction specified in sub-section (1) shall be allowed in the initial financial year and seven financial years immediately succeeding the initial financial year or until the interest referred to in sub-section (1) is paid by the person in full, whichever is earlier.

(3) In this section--

Clause 75 provides that a person being an individual, would be allowed a deduction of any amount of interest paid on a loan taken by him from any financial institution for financing the higher education of himself or of his relatives.

Clause 75 of the Bill provides that a person, being an individual, shall be allowed a deduction in respect of any amount paid by him in the financial year by way of interest on loan taken by him from any financial institution for the purpose of- (a) pursuing his higher education; or (b) higher education of his relatives. For the purposes of this clause, 'financial institution' means a banking company or any other financial institution which the Central Government may, by notification, specify in this behalf.

Accordingly, it is proposed to empower the Central Government to issue notification in this regard for the purposes of this clause.

(1) A person, being resident individual or Hindu undivided family, shall be allowed a deduction in respect of any amount paid during the financial year for medical treatment of the prescribed disease or ailment of any specified person.

(2) The amount of deduction under sub-section (1) shall not exceed--

(3) The deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the specified person.

(4) The deduction under this section shall not be allowed unless the person obtains a certificate in such form as may be prescribed from a specialist working in a Government hospital.

(5) In this section,--

Clause 76 provides that a person, being a resident individual or Hindu undivided family, shall be allowed a deduction in respect of any amount paid during the financial year for medical treatment of the prescribed disease or ailment of any specified person.

Sub-clause (2) of the said clause provides that the deduction available shall be a maximum of sixty thousand rupees in case the payment is made for a senior citizen and forty thousand rupees if the payment is made for any other person.

Sub-clause (3) of the said clause provides that the deduction allowable shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the specified person.

Sub-clause (4) of the said clause provides that the deduction shall not be allowed unless the person obtains a certificate from a prescribed specialist working in a Government hospital.

Clause 76 of the Bill provides that a person, being resident individual of Hindu undivided family, shall be allowed a deduction in respect of any amount paid during the financial year for medical treatment of the prescribed disease or ailment of any specified person. This deduction shall not be allowed unless the person obtains a certificate in the prescribed form from a prescribed specialist working in a Government hospital.

According, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) A person, being resident individual, shall be allowed a deduction of an amount specified in sub-section (2), subject to the conditions specified in sub-section (3).

(2) The amount of deduction under sub-section (1) shall not exceed--

(3) The deduction under sub-section (1) shall be allowed if the person obtains a certificate from a medical authority in such form and manner as may be prescribed and the certificate remains valid during the relevant financial year or part thereof.

Clause 77 seeks to provide a deduction to a person, being a resident individual and having a disability, subject to certain conditions. The deduction shall be allowed if the person obtains a certificate from a medical authority in the prescribed form and manner and the certificate remains valid during the relevant financial year or part thereof.

The said clause further provides that the amount of deduction shall not exceed--

Clause 77 of the Bill provides that a person, being resident individual, shall be allowed a deduction of one lakh rupees, if he is a person with severe disability; and of fifty thousand rupees, if he is a person with disability. This deduduction shall be allowed if the person obtains a certificate from a medical authority in the prescribed form and manner and the certificate remains valid during the relevant financial year or part thereof.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) A person, being resident individual or Hindu undivided family, shall be allowed a deduction in respect of--

(2) The amount of deduction under sub-section (1) shall not exceed-

(3) The deduction in respect of the amount referred to in clause (b) of sub-section (1) shall be allowed, if the scheme referred to therein provides for payment of annuity or lump sum amount for the benefit of a dependant person with disability, in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made.

(4) The deduction under this section shall be allowed if the person, claiming a deduction under this section, obtains a certificate from a medical authority in such form and manner as may be prescribed and the certificate remains valid during the relevant financial year or part thereof.

Clause 78 seeks to provide a deduction to a person, being a resident individual or Hindu undivided family, in respect of--

Sub-clause (2) of the said clause provides that the deduction available shall be one lakh rupees in case the dependant person is a person with severe disability and fifty thousand rupees if he is a person with disability.

Sub-clause (3) of the said clause provides that the deduction in respect of the payment under the insurance scheme referred to in sub-clause (1) shall be allowed only if the scheme referred to therein provides for payment of an annuity or a lump sum amount for the benefit of the dependant person with disability, in the event of the death of the individual or the member of the Hindu undivided family who subscribes to such scheme.

Sub-clause (4) of the said clause provides that the deduction under this clause shall be allowed only if the person claiming the deduction obtains a certificate from a medical authority in the prescribed form and manner and the certificate remains valid during the relevant financial year or part thereof.

Sub-clause (5) of the said clause provides that in the event of the dependant person with disability predeceasing the individual or the member of the Hindu undivided family who has subscribed to the insurance scheme referred to in sub-clause (1), any amount received by such individual or Hindu undivided family shall be deemed to be his or its income for the financial year in which the amount is received.

Sub-clause (6) of the said clause defines the term 'dependant'.

Clause 78 of the Bill provides that the deduction under this clause shall be allowed if the person, claiming a deduction under this section, obtains a certificate from a medical authority in such form and manner as may be prescribed and the certificate remains valid during the relevant financial year or part thereof.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) A person shall be allowed a deduction of--

(2) The aggregate of the amount of money referred to in clause (d) of sub-section (1) shall be limited to ten per cent. of the gross total income from ordinary sources, if the aggregate exceeds ten per cent. of the gross total income from ordinary sources.

Clause 79 seeks to provide that a person shall be allowed a deduction of--

Parts I, II, III and IV of the Sixteenth Schedule to the Bill contain the names of the organisations/institutions/funds to which such contribution or donation is to be made so as to be eligible for the deduction under this clause.

Sub-clause (2) of the said clause provides that the aggregate of the amount of money paid to persons specified in Part IV of the Sixteenth Schedule shall be limited to ten per cent. of the gross total income from ordinary sources, if the aggregate exceeds ten per cent. of such gross total income from ordinary sources.

Sub-clause (3) of the said clause provides that the deduction under this clause shall not be allowed in respect of any amount of money paid to any person referred to in sub-clause (1) if the amount is utilized by such person (the donee) for any religious activity or for the benefit of any particular caste other than the Scheduled Castes or the Scheduled Tribes.

Sub-clause (4) of the said clause provides that the donation to any organisation/institution/fund specified in Part IV of the Sixteenth Schedule shall be eligible for deduction under sub-clause (1) only if such organisation/institution/fund obtains the approval of the prescribed authority.

Sub-clause (5) of the said clause provides that deduction to a donor shall not be denied merely on the ground that, subsequent to the donation, the donee has ceased to be a non-profit organisation. Thus, this provision protects the donor in a situation where the donee may lose its status of being a non-profit organisation for any reason whatsoever.

Clause 79 of the Bill provides that the donation to any person specified in Part IV of the Sixteenth Schedule shall be eligible for deduction under sub-clause (1), if the donee obtains the approval of the prescribed authority in accordance with the procedure and subject to such conditions, as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the nominee of this clause.

(1) A person, being an individual and not in receipt of any house rent allowance, shall be allowed a deduction of any expenditure incurred by him in excess of ten per cent. of his gross total income from ordinary sources towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for his own residence.

Clause 80 seeks to provide that a person, being an individual and not in receipt of any house rent allowance, shall be allowed a deduction of any expenditure incurred by him in excess of ten per cent. of his gross total income from ordinary sources towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for his own residence.

The said clause further provides that the deduction shall be allowed up to a maximum limit of two thousand rupees per month and shall be subject to such other conditions as may be prescribed having regard to the area in which the accommodation is situated.

The said clause also provides that deduction under this clause shall not be available to a person if any residential accommodation is owned by him or by his spouse or minor child in the same place where he ordinarily resides or performs duties of his office or employment or carries on his business.

Clause 80 of the Bill provides that a person, being an individual and not in receipt of any house rent allowance, shall be allowed a deduction of any expenditure incurred by him in excess of ten per cent. of his gross total income from ordinary sources towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for his own residence. This deduction shall be allowed up to a maximum of two thousand rupees per month and shall be subject to such other conditions as may be prescribed having regard to the area or place in which the accommodation is situated.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

(1) A person shall be allowed a deduction in respect of any contribution made by him in the financial year to a political party or electoral trust.

(2) The deduction under sub-section (1) shall not exceed five per cent. of--

(3) In this section, the word 'contribution', with its grammatical variation, shall have the same meaning as assigned to it under section 293A of the Companies Act, 1956 (1 of 1956).

Clause 81 seeks to provide that a person shall be allowed a deduction in respect of any contribution made by him in a financial year to a political party or electoral trust.

The said clause further provides that the deduction shall not exceed five per cent. of the average of the net profit determined in accordance with the provisions of sections 349 and 350 of the Companies Act, 1956 during the three immediately preceding financial years, in the case of a company and five per cent. of the gross total income from ordinary sources, in any other case.

The clause also defines the term 'contribution'.

(1) A person shall be allowed in the financial year a deduction of the amount specified in sub-section (2), if such amount is included in the gross total income from ordinary sources.

(2) The amount referred to in sub-section (1) shall be the contribution received from any recognised stock exchange, or recognised commodity exchange, and the members thereof.

Clause 82 seeks to provide that a person, being an Investor Protection Fund, shall be allowed a deduction of the amount of contribution received from any recognised stock exchange, or recognised commodity exchange, and the members thereof if such amount is included in its gross total income from ordinary sources.

The said clause further provides that the deduction shall be allowed if the Investor Protection Fund is set up, either jointly or separately, by recognised stock exchanges or recognised commodity exchanges and such Investor Protection Fund is notified by the Central Government.

Clause 82 of the Bill provides for a deduction of income of Investor Protection Fund, if the Fund is notified by the Central Government.

Accordingly, it is proposed to empower the Central Government to issue notification in this regard for the purposes of this clause.

(1) A person, being resident individual, shall be allowed a deduction of an amount specified in sub-section (4) in respect of any income referred to in sub-section (3), if such income is included in his gross total income from ordinary sources.

(2) The deduction under sub-section (1) shall be allowed to a person, if he is an author of any book which is a work of literary, artistic or scientific nature.

(3) The income referred to in sub-section (1) shall be any income derived by the author by way of--

(4) The amount of deduction under sub-section (1) shall be the amount of income referred to in sub-section (3) to the extent it does not exceed three lakh rupees.

(5) In this section, books' shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, tracts and other publications of similar nature by whatever name called.

Clause 83 seeks to provide a deduction of up to three lakh rupees to a resident individual, who is an author, in respect of income earned by him as a lump sum consideration for the assignment or grant of any of his interest in the copyright of the book written by him or as a royalty or copyright fee in respect of the said book, if such income is included in his gross total income from ordinary sources.

The said clause further provides that the book should be of literary, artistic or scientific nature.

The said clause also provides that brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets and tracts, etc., shall not be eligible for deduction under this clause.

(1) A person, being resident individual and a patentee, shall be allowed a deduction of an amount specified in sub-section (3) in respect of any income referred to in sub-section (2), if such income is included in his gross total income from ordinary sources.

(2) The income referred to in sub-section (1) shall be any income received by the person by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970 (39 of 1970).

(3) The amount of deduction under sub-section (1) shall be the amount of income referred to in sub-section (2) to the extent it does not exceed the amount of royalty allowable under the terms and conditions of a licence settled by the Controller under the Patents Act, 1970 (39 of 1970), if a compulsory licence is granted in respect of any patent under that Act or three lakh rupees, whichever is lower.

Clause 84 seeks to provide a deduction to a resident individual, who is a patentee, in respect of income earned by him by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970, if such income is included in his gross total income from ordinary sources.

The said clause further provides that the deduction under this clause shall be equal to the amount of royalty allowable under the terms and conditions of a licence settled by the Controller under the Patents Act, 1970, if a compulsory licence is granted in respect of any patent under that Act or three lakh rupees, whichever is lower.

The terms like, 'patent', 'patentee', 'royalty', etc., have also been defined in the said clause.

(1) A person, being a primary co-operative society, shall be allowed a deduction to the extent of profits derived from the business of providing banking, or credit, facility to its members.

(2) In this section 'primary co-operative society' means--

Clause 85 seeks to provide that a primary co-operative society shall be eligible for a deduction of the entire amount of its income from the business of providing banking, or credit, facility to its members.

The said clause further provides that a primary co-operative society means a 'primary agricultural credit society' within the meaning of Part V of the Banking Regulation Act, 1949 or a 'primary co-operative agricultural and rural development bank' having its area of operation confined to a taluk and being mainly engaged in providing long-term credit for agricultural and rural development activities.

(1) A person, being a primary co-operative society, shall be allowed a deduction in respect of the aggregate of the amounts referred to in sub-section (2).

(2) The amount referred to in sub-section (1) shall be--

(3) In this section,--

Clause 86 seeks to provide that a primary co-operative society shall be eligible for a deduction of the entire amount of its income from agriculture or agriculture-related activities. It shall also be eligible for a deduction of a maximum of one lakh rupees in respect of income derived by it from any other activity.

The said clause further provides the meaning of the terms 'agriculture-related activities' and 'primary co-operative society'.

(1) Every person shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Code.

(2) Every person who has entered into an international transaction shall keep and maintain such information and document in respect thereof, as may be prescribed.

(3) The person referred to in sub-section (1) shall be the following, namely:--

(4) The books of account referred to in sub-section (1) shall be the following, namely:--

(5) The bills or receipts issued to any person shall contain the name, address and such other particulars as may be prescribed.

(6) The Board may, having regard to the nature of the business carried on by any class of persons, prescribe--

(7) The Board may prescribe the period for which the books of account and other documents required to be kept and maintained under this section shall be retained.

(8) The expression 'international transaction' referred to in sub-section (2) shall have the meaning assigned ot it in clause (17) of section 124.

Clause 87 seeks to provide for the system and procedure of maintenance of accounts. Accordingly, the said clause provides that every person shall keep and maintain such books of account and other documents which would enable the Assessing Officer to compute his total income in accordance with the provisions of this Code. Any person carrying on legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration or any other notified profession or carrying on business shall keep and maintain such books of account if--

The said clause further provides that every person who has entered into an international transaction shall keep and maintain such information and documents in respect of such transactions, as may be prescribed.

The said clause also provides that the Board may prescribe the books of account other than those enumerated in the clause and also the period for which the books of account and other documents required to be kept and maintained under this clause shall be retained.

Clause 87 of the Bill provides that every person who has entered into an international transaction shall keep and maintain such information and document in respect thereof, as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

Clause 87 of the Bill further provides that any person carrying on legal, medical, engineering, architectural profession or profession of accountancy, technical consultancy, interior decoration or any other profession as is notified by the Board, shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Code.

Clause 87 of the Bill further provides that in respect of the maintenance of accounts, the bills or receipts issued to any person shall contain the name, address and such other particulars as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.

Clause 87 of the Bill further provide that the Board may, having regard to the nature of the business carried on by any class of persons, prescribe- (a) any other books of account and documents to be kept and maintained; (b) the particulars to be contained in thebooks of account and documents; and (c) the form and the manner in, and the place at,which the books of account and other documents shall be kept and maintained. The Boardmay, also prescribe the period for which the books of account and other documents requiredto be kept and maintained under this section shall be retained.

Accordingly, it is proposed to empower the Board to make rules in this regard for the purposes of this clause.

(1) Every person, who is required to keep and maintain books of account under section 87 shall get his accounts for the financial year audited--

(2) The audit of the accounts referred to in sub-section (1) shall be carried out by an accountant and the report of audit obtained before the due date.

(3) The report of audit referred to in sub-section (2) shall be obtained in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

(4) The provisions of sub-section (1) shall not apply to the business where the income therefrom is determined under paragraph 1 of the Fourteenth Schedule.

(5) A person shall be deemed to have complied with the provisions of sub-section (1), if the person--

(6) A person referred to in sub-section (2) of section 87 shall furnish a report of the international transaction entered into during the financial year to the Transfer Pricing Officer on or before the due date specified in sub-clause (c) of clause (86) of section 314.

(7) The report referred in sub-section (6) shall be obtained from an accountant in such form, duly signed and verified in such manner as may be prescribed.

Clause 88 seeks to provide the method, manner and mechanism for audit of accounts and reporting of international transactions.

Accordingly, the said clause provides that every person, who is required to keep and maintain books of account under clause 87, shall get his accounts for the financial year audited if the gross receipts from the profession exceed twenty-five lakh rupees in the financial year or the total turnover or gross receipts of the business exceed one crore rupees in the financial year. The audit of the accounts shall be carried out by an accountant and the report of the audit should be obtained by the person before the due date in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

The said clause further provides that a person who has entered into an international transaction during a financial year shall furnish a report of such transaction to the Transfer Pricing Officer, on or before the due date, obtained from an accountant in the prescribed form duly signed and verified in the prescribed manner by such accountant.

Clause 88 of the Bill provides that every person, who is required to keep and maintain books of account under clause 87 shall get his accounts for the financial year audited. The report of this audit shall be obtained in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. A person shall be deemed to have complied with the provisions of this clause if the person gets the accounts of his business audited as required by, or under, any other law for the time being in force, before the due date; and obtains by the due date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this clause. Further, a person who has entered into an international transaction shall furnish a report of the international transaction entered into during the financial year to the Transfer Pricing Officer on or before the due date. This report shall be obtained from an accountant in the prescribed form duly signed and verified in the prescribed manner by such accountant.

Accordingly, it is proposed to empower the Central Government to make rules and forms in this regard for the purposes of this clause.

(1) The income chargeable under the head 'Income from business' or 'Income from residuary sources' shall, except as otherwise provided in this section, be computed in accordance with either cash or mercantile system of accounting regularly employed by the person.

(2) The Central Government may from time to time notify accounting standards to be followed by any class of persons or in respect of any class of income.

(3) The valuation of purchase of goods and inventory for the purposes of determining the income chargeable under the head 'Income from business' shall be--

(4) The value of sale of goods for the purposes of determining the income chargeable under the head 'Income from business' shall be determined--

(5) The interest on bad or doubtful debts of any financial institution shall be included in the total income of the financial year in which the interest is credited to the profit and loss account of, or is actually received by, the financial institution, whichever is earlier.

(6) The interest received by a person on compensation or an enhanced compensation shall be included in the total income of the financial year in which it is received.

(7) In this section,--

Clause 89 relates to the method of accounting.

Sub-clause (1) of the said clause provides that the income chargeable under the head 'Income from business' or 'Income from residuary sources' shall, except as otherwise provided in the clause, be computed in accordance with either cash or mercantile system of accounting regularly employed by the person.

Sub-clause (2) of the said clause provides that the Central Government may from time to time notify the accounting standards to be followed by any class of persons or in respect of any class of income.

Clause 89 of the Bill provides that the income chargeable under the head 'Income from business' or 'Income from residuary sources' shall, except as otherwise provided in this section, be computed in accordance with either cash or mercantile system of accounting regularly employed by the person. The Central Government may from time to time notify accounting standards to be followed by any class of persons or in respect of any class of income.

Accordingly, it is proposed to empower the Central Government to make rules and issue notifications in this regard for the purposes of this clause.

Clause 89 of the Bill further specifies that for the purposes of this clause, 'bad or doubtful debts' shall be such debts as may be prescribed, having regard to the guidelines issued by the Reserve Bank of India or the National Housing Bank, as the case may be, in relation to such debts.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for the purposes of this clause.