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Income Tax Act, 1922 Complete Act - Bare Act

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INCOME TAX ACT, 1922

INCOME TAX ACT, 1922

11 of 1922

An Act to consolidate and amend the law relating to Income-tax and Super-tax. WHEREAS it is expedient to consolidate and amend the law relating to Income-tax and Super-tax; It is hereby enacted as follows:"

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT

(1) This Act may be called the Indian Income-tax Act, 1922.

(2) It extends to the whole of British India, including P.1 British Baluchistan and the Sonthal Parganas, and applies also, within the dominions of Princes and Chiefs in India in alliance with His Majesty, to British subjects in those dominions who are in the service of the Government of India or of a local -authority established in the exercise of the powers of the Governor General in Council in that behalf, and to all other servants of His Majesty in those dominions. -

(3) It shall come into force on the first day of April, 1922.

SECTION 02: DEFINETIONS

In this Act, unless there is anything repugnant in the Subject Or context,"

(1) " agricultural income " means"

(a) any rent or revenue derived from land which is used for agricultural

purposes, and is either assessed to land-revenue in British India or subject to a local rate assessed and collected by officers of Government as such;

(b) any income derived from such land by"

(i) agriculture, or

(ii) the performance by a cultivator or receiver" of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or

(iii) the sale by a cultivator or receiver of rent-inkind of the produce raised or received by him. in respect of which no process has been performed other than a process of the nature described in sub-clause (ii)-,

(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in sub-clauses (ii) and (iii) of clause (b) is carried on :

Provided that the building is on or in the immediate vicinity of the land, and is a

building which the receiver of the rent or revenue or the cultivator or the receiver of

the rent-in-kind by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building;

(2) " assessee " means a person by whom Income-tax is payable;

(3) " Assistant Commissioner " means a person appointed to be an Assistant Commissioner of Income-tax under section 5-;

(4) " business " includes any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;

(5) " Commissioner " means a person appointed to be a Commissioner of Income-tax under section 5-;

(6) " company " means a company as defined in theIndian Companies Act, 1913(7 of 1913), or formed in pursuance of an Act 7 of 1913 of Parliament or of Royal Charter or Letters Patent, or of an Act of the Legislature of a British possession, and includes any foreign association carrying on business in British India whether incorporated or not, and whether its principal place of business is situate in British India or not, which the Board of Inland Revenue may, bygeneral or special order, declare to be a company for the purposes of this Act;

(7) " Income-tax Officer " means a person appointed to be ian Income-tax Officer under section 5-;

(8) " Magistrate " means a Presidency Magistrate or a Magistrate of the first class, or a Magistrate of the second class specially empowered by the Local Government to try offences against this Act;

(9) '' person '' includes a Hindu undivided family;

(10) " prescribed " means prescribed by rules made under this Act,

(11) "previous year" means"

(a) the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee the year ending on the day to which his accounts have so been made up; Provided that, if this option has once been exercised by the assessee, it shall not again be exercised so as to vary the meaning of the expression " previous year " as then applicable to such assessee except with the consent of the Income-tax Officer and upon such conditions as he may think fit; or

(b) in the case of any person, business or company or class of person, business or company, such period as may be determined by the Board of Inland Revenue or by such authority as the Board may authorise in this behalf;

(12) " principal officer, " used with reference to a local authority or a company or any other public body or association, means"

(a) the secretary, treasurer, manager or agent of the authority, company, body or association, or

(b) any person connected with the authority, company, body or association upon whom the Income-tax Officer has served a notice of his intention of treating him as the principal officer thereof,

(13) " public servant " has the same meaning as in theIndian Penal Code, 1860-;

(14) " registered firm " means a firm constituted under an Instrument of partnership specifying the individual shares of life-partners of which the prescribed particulars have been registered with the Income-tax Officer in the prescribed manner;

(15) " total income " means total amount of income, profits and gains from all sources to which this Act applies computed in the manner laid down in section 16 -; and

(16) "unregistered firm " means a firm which is not a registered firm

SECTION 03: CHARGE OF INCOME TAX

Where any Act of the Indian Legislature enacts that income- tax shall be charged for any year at any rate or rates applicable to the total income of an assessee, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of all income, profits and gains of the previous year of every individual, company, firm and Hindu undivided family.

SECTION 04: APPLICATION OF ACT

(1) Save as hereinafter provided, this Act shall apply to all income, profits or gains, as described or comprised in section 6-, from whatever source derived, accruing, or arising, or received in British India, or deemed under the provisions of this Act to accrue, or arise, or to be received in British India.

(2) Profits and gains of a business accruing or arising without British India to a person resident in British India shall be deemed to be profits and gains of the year in which they are received or brought into British India, notwithstanding the fact that they did not so accrue or arise in that year, provided that they are so received or brought in within three years of the end of the year in which they accrued or arose.

Explanation."-Profits or gains accruing or arising without British India shall not be deemed to be received or brought into British India within the meaning of this sub-section by reason only of the fact that they are taken into account in the balance sheet prepared in British India.

(3) This Act shall not apply to the following classes of income:"

(i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto.

(ii) Any income of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes.

(iii) The income of local authorities-

(iv) Interest on securities which are held by, or are the property of, any Provident Fund to which the Provident Funds Act, 1897, applies, or any Provident Insurance Society to which the Provident Insurance Societies Act, 1912, is, or, but for an exemption under that Act, would be, applicable.

(v) Any capital sum received in commutation of the whole or a portion of a pension, or in the nature of consolidated compensation for death or injuries, or in payment of any insurance policy, or as the accumulated balance at the credit of a subscriber to any such Provident Fund.

(vi) Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit.

(vii) Any receipts not being receipts arising from business or the exercise of a profession, vocation or occupation, which are of a casual and non-recurring nature, or are not by way of addition to the remuneration of an employee.

(viii) Agricultural income. In this sub-section "charitable purpose " includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.

SECTION 05: INCOME TAX AUTHORITIES

(1) There shall be the following classes of Income-tax authorities for the purposes of this Act. namely:"

(a) a Board of Inland Revenue,

(b) Commissioners of Income-tax,

(c) Assistant Commissioners of Income-tax, and

(d) Income-tax Officers.

(2) The Board of Inland Revenue shall consist of one or re persons appointed by the Governor General in Council.

(3) There shall be a Commissioner of Income-tax for each province who shall be appointed by the Governor General in Council after consideration of any recommendation made by the Local Government in this behalf.

(4) Assistant Commissioners of Income-tax and Income-tax Officers shall, subject to the control of the Governor General in Council, be appointed by the Commissioner of Income-tax by order in writing. They shall perform their functions in respect of such classes of persons and such classes of income and in respect of such areas as the Commissioner of Income-tax may direct. The Commissioner may, by general or special order in writing, direct that the powers conferred on the Income-tax Officer and the Assistant Commissioner by or under this Act shall) in respect of any specified case or class of cases, be exercised by the Assistant Commissioner and the Commissioner, respectively, and, for the purposes of any case in respect of which such order applies, references in this Act or in any rules made here under to the Income-tax Officer and" the Assistant Commissioner shall be deemed to be references to the Assistant Commissioner and the Commissioner, respectively.

(5) The Board of Inland Revenue may, by notification in the Gazette of India, appoint Commissioners of Income-tax, Assistant Commissioners of Income-tax and Income-tax Officers to perform such functions in respect of such classes of persons or such classes of income, and for such area, as may be specified in the notification, and thereupon the functions so specified shall cease, within the specified area, to be performed, in respect of the specified classes of persons or classes of income, by the authorities appointed under sub-sections (3) and (4).

(6) Assistant Commissioners of Income-tax and Income-tax Officers appointed under sub-section (4) shall, for the purposes of this Act, be subordinate to the Commissioner of Income-tax appointed under subsection (3) for the province in which they perform their functions.

SECTION 06: HEAD OF INCOME CHARGEABLE TO INCOME TAX

- Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax in the manner hereinafter appearing namely:"

(i) Salaries.

(ii) Interest on securities. (iii) Property. (iv) Business. (v) Professional earnings. (vi) Other sources.

SECTION 07: SALARIES

(1) The tax shall be payable by an assessee under the head "Salaries" in respect of any salary or wages any annuity, pension or gratuity, and any fees, commissions, perquisites or profits received by him in lieu of, or in addition to, any salary or wages, which are paid by or on behalf of Government, a local authority, a company, or any other public body or association, or by or on behalf of any private employer:

Provided that the tax shall not be payable in respect of any sum deducted under the authority of Government from the salary of any individual for the purpose of securing to him a deferred annuity or of making provision for his wife or children, provided that the sum so deducted shall not exceed one-sixth of the salary.

(2) Any income which-would be chargeable under this head if paid in British India shall be deemed to be so chargeable if paid to a British subject or any servant of His Majesty in any part of India by Government or by a local authority established by the Governor General in Council.

SECTION 08: INTEREST OF SEQURITIES

The tax shall be payable by an assessee under the head "Interest on securities" in respect of the interest receivable by him on any security of the 'Government of India or of a Local Government, or on debentures or other securities for money issued by or on behalf of a local authority or a company :

Provided that no income-tax shall be payable on the interest receivable on any security of the Government of India issued or declared to be income-tax free:

Provided, further, that the income-tax payable on the interest receivable on any security of a Local Government issued inncome-tax free shall be payable by that Local Government.

SECTION 09: PROPERTY :-

(1) The tax shall be payable by an assessee under the head "Property" in respect of the bond fade annual value of property consisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of his business, subject to the following allowances, namely:"

(i) where the property is in the occupation of the owner, or where it is let to a tenant and the owner has undertaken to bear the cost of repairs, a sum equal to one-sixth of such value;

(ii) where the property is in the occupation of a tenant who has undertaken to bear the cost of repairs, the difference between such value and the rent paid by the tenant up to but not exceeding one-sixth of such value;

(iii) the amount of any annual premium paid to insure the property against risk of damage or destruction;

(iv) where the property is subject to a mortgage or charge or to a ground rent, the amount of any interest on such mortgage or charge or of any such ground rent;

(v) any sums paid on account of land-revenue in respect of the property;

(vi) in respect of collection charges, a sum not exceeding the prescribed maximum;

(vii) in respect of vacancies, such sum as the Income-tax Officer may determine having regard to the circumstances of the case:

Provided that the aggregate of the allowances made under this sub-section shall in no case exceed the annual value.

(2) For the purposes- of this section, the expression "annual value" shall be deemed to mean the sum for which the property might reasonably be expected to let from year to year :

Provided that, where the property is in the occupation of the owner for the purposes of his own residence, such sum shall, for the purposes of this section, be deemed not to exceed ten per cent of the total income of the owner.

SECTION 10: BUSINESS
:-

(1) The tax shall be payable by an assessee under the head "Business" in respect of the profits or gains of any business carried on by him.

(2) Such profits or gains shall be computed after making the following allowances, namely :"

(i) any rent paid for the premises in which such business is carried on, provided that, when any substantial part of the premises is used as a dwelling-house by the assessee, the allowance under this clause shall be such sum as the Income-tax Officer may determine having regard to the proportional part so used;

(ii) in respect of repairs, where the assessee is the tenant only of the premises, and has undertaken to bear the cost of such repairs, the amount paid or account thereof, provided that, if any substantial part of the premises is used by the assessee as a dwelling-house, a proportional part only of such amount shall be allowed;

(iii) in respect of capital borrowed for the purposes of the business, where the payment of interest thereon is not in any way dependent on the earning of profits, the amount of the interest paid;

Explanation." Recurring subscriptions paid periodically by shareholders or subscribers in such Mutual Benefit Societies as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause;

(iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, the amount of any premium paid;

(v) in respect -of current repairs to such buildings, machinery, plant, or furniture, the amount paid on account thereof;

(vi) in respect of depreciation of such buildings machinery, plant, or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed :

Provided that"

(a) the prescribed particulars have been duly furnished;

(b) where full effect cannot be given to any such allowance in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year and deemed to be part of that allowance, or, if there is no such allowance for that year, be deemed to be the allowance for that year, and so on for succeeding years; and

(c) the aggregate of all such allowances made under this Act or any Act repealed hereby, or under the Indian Income-tax Act, 1886, shall, in no case, exceed the original cost to the assessee of the buildings, machinery, plant, or furniture, as the case may be;

(vii) in respect of any machinery or plant which, in consequence of its having become obsolete, has been sold or discarded, the difference between the original cost to the assessee of the machinery or plant as reduced by the aggregate of the allowances made in respect of depreciation under clause (vi), or any Act repealed hereby, or the Indian Income-tax Act, 1886, and the amount, for which the machinery or plant is actually sold, or its scrap value;

(viii) any sums paid on account of land-revenue, local rates or municipal taxes in respect of such part of the premises as is used for the purposes of the business;

(ix) any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of earning such profits or gains.

(3) In sub-section (2), the word "paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section.

SECTION 11: PROFESSIONAL EARNINGS:-

(1) The tax shall be payable by an assessee under the head "Professional earnings" in respect of the profits or gains of any profession or vocation followed by him.

(2) Such profits or gains shall be computed after making allowance for any expenditure (not being in the nature of capital expenditure) incurred solely for the purposes of such profession or vocation, provided that no allowance shall be made on account of any personal expenses of the assessee.

(3) Professional fees paid in any part of India to a person ordinarily resident in British India shall be deemed to be profits or gains chargeable under this head.

SECTION 12: OTHER SOURCES

(1) The tax shall be payable by an assessee under the head "Other sources" in respect of income, profits and gains of every kind and from every source to which this Act applies (if not included under any of the preceding heads).

(2) Such income, profits and gains shall be computed after making allowance for any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making or earning such income, profits or gains, provided that no allowance shall be made on account of any personal expenses of the assessee.

SECTION 13: METHOD OF ACCOUNTING

:- Income, profits and gains shall be computed, for the purposes of sections 10-,11-and12-, in accordance the method of accounting regularly employed by the assessee:

Provided that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Income-tax Officer may determine.

SECTION 14: EXEMPTIONS OF A GENERAL NATURAL :

(1) The tax shall not be payable by an assessee in respect Exemptions of a ' of any sum which he receives as a member of a Hindu undivided family.

(2) The tax shall not be payable by an assessee in respect of"

(a) any sum which he receives by way of dividend as a shareholder in a

company where the profits or gains of the company have been assessed to income-tax; or

(b) such an amount of the profits or gains of any firm which have been assessed to income-tax as is proportionate to his share in the firm.

SECTION 15: EXEMPTION IN CASE OF LIFE INSURANCES :-

(1) The tax shall not be payable by an assessee in respect of any sums paid by him to effect an insurance life or on the life of his wife, or in respect of a contract for a deferred annuity on his own life or on the life of his wife, or as a contribution to any Provident Fund to which the Provident Funds Act, 1897, applies or to-any Provident Fund which complies with the provisions of the Provident Insurance Societies Act, 1912, or has been exempted from the provisions of that Act.

(2) Where the assessee is a Hindu undivided family, there shall be exempted under sub-section (1) any sums paid to effect an insurance on the life of any male member of the family or of the wife of any such member.

(3) The aggregate of any sums exempted under this section shall not, together with any sums exempted under the proviso to Sub-section (1) of section 7-, exceed one-sixth of the total income of the assessee.

SECTION 16: ESEMPTIONS AND EXCLUSIONS IN DETERMINING THE TOTAL INCOME

(1) In computing the total income of an assessee sums exempted under the proviso to sub-section (1) of section 7-, the provisos to section 8-, Sub- section (2) of section 14-andsection 15-, shall be included.

(2) For the purposes of sub-section (1), any sum mentioned in clause (a) of sub-section (8) of section 14-shall be increased by the amount of income-tax payable by the company in respect of the dividend received.

SECTION 17: REDUCTION OF TAX WHEN MARGIN ABOVE A CERTAIN LIMIT IS SMALL

:- Where owing to the fact that the total income of any assessee has reached or exceeded a certain limit he is liable to pay income-tax or to- pay income-tax at a higher rate, the amount of income-tax payable by him shall, where necessary, be reduced so as not to exceed the aggregate of the following amounts, namely:"

(a) the amount which would have been payable if his total income had been a sum less by one rupee than that limit, and.

(b) the amount by which his total income exceeds that sum.

SECTION 18: PAYMENT BY DEDUCTION AT SOURCE :-

(1) Income-tax shall, unless otherwise prescribed in the case of any security of the Government of India, be leviable in advance by deduction at the time of payment in respect of income chargeable under the following heads:"

(i) "Salaries"; and

(ii) "Interest on securities."

(2) Any person responsible for paying any income chargeable under the head " Salaries " shall, at the time of payment, deduct income-tax on the amount payable at the rate applicable to the estimated income of the assessee under this head :

Provided that such person may, at the time of making any deduction, increase or reduce the amount to be deducted under this sub-section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct.

(3) The person responsible for paying any income chargeable under the head "Interest on securities " shall, at the time of payment, deduct income-tax on the amount of the interest payable at the maximum rate.

(4) All sums deducted in accordance with the provisions of this section shall, for the purpose of computing the income of an assessee, be deemed to be income received.

(5) Any deduction made in accordance with the provisions of this section shall be treated as a payment of income-tax on behalf of the person from whose income the deduction was made, or of the owner of the security, as the case may be, and credit shall be given to him therefor in the assessment, if any, made for the following year under this Act:

Provided that, if such person or such owner obtains, in accordance with the provisions of this Act, a refund of any portion of the tax so deducted, no credit shall be given for the amount of such refund.

(6) All sums deducted in accordance with the provisions of this section shall be paid within the prescribed time by the person making the deduction to the credit of the Government of India, or as the Board of Inland Revenue directs.

(7) If any such person does not deduct and pay the tax as required by this section, he shall, without prejudice to any other consequences which he may incur, be deemed to be personally in default in respect of the tax.

(8) The power to levy by deduction under this section shall be without prejudice to any other mode of recovery.

(9) Every person deducting income-tax in accordance with the provisions of sub-section (3) shall, at the time of payment of interest, furnish to the person to whom the interest is paid a certificate to the effect that income-tax has been deducted, and specifying the amount so deducted, the rate at which the tax has been deducted, and such other particulars as may be prescribed.

SECTION 19: PAYMENT IN OTHER CASES

In the case of income chargeable under any other heads than those mentioned in sub-section (1) of section 18-, and in any case where income-tax has not been deducted in accordance with the provisions of that section, the tax shall be payable by the assessee direct.

SECTION 20: CERTIFICATE BY COMPANY TO SHAREHOLDERS RECEIVING DIVIDENDS

The principal officer of every company shall, at the time distribution of dividends, furnish to every person receiving a dividend a certificate to effect that the company has paid or will pay income-tax on the profits which are being distributed, and specifying such other particulars as may be prescribed.

SECTION 21: ANNUAL RETURN

The prescribed person in the case of every Government office, and the principal officer or the prescribed person in the case of every local authority, company or other public body or association, and every private employer shall prepare, and, within thirty days from the 31st day of March in each year, deliver or cause to be delivered to the Income-tax Officer in the prescribed form, a return in writing showing"

(a) the name and, so far as it is known; the address, of every person who was receiving on the said 31st day of March, or has received during the year ending on that date, from the authority, company, body, association or private employer, as the case may be, any income chargeable under the head " Salaries " of such amount as may be prescribed;

(b) the amount of the income so received' by each such person, and the time or times at which the same was paid;

(c) the amount deducted in respect of income-tax from the income of ea.ch such person.

SECTION 22: RETURN OF INCOME

(1) The principal officer of every company shall prepare, and, on or before the fifteenth day of June in each year, furnish to the Income-tax Officer a return, in the prescribed form and verified in the prescribed manner, of the total income of the company during the previous year:

Provided that the Income-tax Officer may, in his discretion) extend the date for the delivery of the return in the case of any company or class of companies.

(2) In the case of any person other than a company whose total income is, in the Income-tax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income-tax Officer shall serve a notice upon him requiring him to furnish, within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income during the previous year.

(3) If any person has not furnished a return within the time allowed by or under sub-section (1) or sub-section (2); or having furnished a return under either of those sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made, and any return so made shall be deemed to be a return made in due time under this section.

(4) The Income-tax Officer may serve on the principal officer of any company or on any person upon whom a notice has been served under sub-section (2) a notice requiring him, on a date to be therein specified, to produce, or cause to be produced, such accounts or documents as the Income-tax Officer require:

Provided that the Income-tax Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.

SECTION 23: ASSESSMENT

(1) If the Income-tax Officer is satisfied that a return made under section 22-is correct and complete, he shall assess the total income of the assessee, and shall determine the sum payable by him on the basis of such return.

(2) If the Income-tax Officer has reason to believe that a return made under section 22-is incorrect or incomplete he shall serve on the person who made the return a notice requiring him, on a date to be therein specified, either to attend at the Income-tax Officer's office or to produce, or to cause to be there produced, any evidence on which such person may rely in support of the return.

(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, the Income-tax Officer, after hearing such evidence as such person may produce and such other evidence as the Income-tax Officer may require, on specified points, shall, by an order in writing, assess the total income of the assessee) and determine the sum payable by him on the basis of such assessment.

(4) If the principal officer of any company or any other person fails to. make a return under sub-section (1) or sub-section (2) of section 22-, as the case may be, or fails to comply with all the terms of a notice issued under sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of this section, the Income-tax Officer shall make the assessment to the best of his judgment.

SECTION 24: SET-OFF OF LOSS IN COMPUTING AGGREGATE INCOME

(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6-, he shall be entitled to have the amount of the loss set-off against his income, profits or gains under any other head in that year.

(2) Where the assessee is a registered firm, and the-loss sustained cannot wholly be set-off under sub-section (1), any member of such firm shall be entitled to have set-off against any income, profits or gains of the year in which the loss was sustained in respect of which the tax is payable by him such amount of the loss not already set-off a.s is proportionate to his share in the firm.

SECTION 25: ASSESSMENT IN CASE OF DISCONTINUED BUSINESS

:- (1) Where any business, profession or vocation commenced after the 31st day of March, 1922, is discontinued in any year, an assessment may be made in that year on the basis of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the income, profits or gains of the previous year.

(2) Any person discontinuing any such business, profession or vocation shall give to the Income-tax Officer notice of such discontinuance within fifteen days thereof, and; where any person fails to give the notice required by this sub-section, the Income- tax Officer may direct that a sum shall be recovered from him by way of penalty not exceeding the amount of tax subsequently assessed on him in respect of any income, profits or gains of the business, profession or vocation up to the date of its discontinuance.

(3) Where any business, profession or vocation which was in existence at the commencement of this Act, and on which, tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is discontinued, no tax shall be payable VI of 1918 in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given Of the difference.

(4) Where an assessment is to be made under sub-section, (1) or subsection (3), the Income-tax Officer may serve on the person whose income, profits and gains are to be assessed, or, in the case of a firm, on any person who was a member of such firm at the time of its discontinuance, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22-, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.

SECTION 26: CHANGE IN OWNERSHIP OF BNSINESS

:- Where any change occurs in the constitution of a firm or where any person has succeeded to any business, profession or vocation, the assessment shall be made on the firm as constituted, or on the person engaged in the business, profession or vocation, as the case may be, at the time of the making of the assessment.

SECTION 27: CANCELLATION OF ASSESSMENT WHEN CAUSE IS SHOWN

:- Where an assessee or, in the case of a company, the principal officer thereof, within one month from the service of a notice of demand issued as hereinafter provided, satisfies the Income-tax Officer that he was prevented by sufficient cause from making the return required by section 22-, or that he did not receive the notice issued under sub-section (4) of section 22-, or sub-section (2) of section 23-, or that he had not a reasonable opportunity to comply, or was prevented by sufficient cause from complying; with the terms of the last-mentioned notices, the Income-tax Officer shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of section 23-

SECTION 28: PENAITY FOR CONCEALMENT OF INCOME

(1) If the Income-tax Officer, the Assistant Commissioner or the Commissioner in the course of any proceedings under this Act, is satisfied that an assessee has concealed the particulars of his income, or has deliberately furnished inaccurate particulars of such income, and has thereby returned it below its real amount, he may direct that the assessee shall; in addition to the income-tax payable by him, pay by way of penalty a sum not exceeding the amount of income-tax which would have been avoided if the income so returned by the assessee had been accepted as the correct income :

Provided that no such order shall be made, unless the assessee has been heard, or has been given a reasonable opportunity of being heard:

Provided, further, that no prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penalty has been imposed under this section.

(2) An Assistant Commissioner or a Commissioner who has made an order under sub-section (1) shall forthwith send a copy of the same to the Income-tax Officer.

SECTION 29: NOTICE OF DEMAND

:- When the Income-tax Officer has determined a sum to be payable by an assessee under section 23-, or when an order has been passed under sub-section (2) of section 25-or section 28-for the payment of a penalty, the Income-tax Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum so payable.

SECTION 30: APPEAL AGAINST ASSESSMENT UNDER THIS ACT

:- (1) Any assessee objecting to the amount of rate at which he is assessed under section 23-or section 27-, or denying his liability to be assessed under this Act, or objecting to a refusal of an Income-tax Officer to make a fresh assessment under section 27-, or to any order against him under sub-section (2) of section 25-or section 28-, made by an Income-tax Officer, may appeal to the Assistant Commissioner against the assessment or against such refusal or order :

Provided that no appeal shall lie in respect of an assessment made under subsection (4) of section 23-, or under that sub-section read with section 27-.

(2) The appeal shall ordinarily be presented within thirty days of receipt of the notice of demand relating to the assessment or penalty objected to, or of the date of the refusal to make a fresh assessment under section 27-, as the case may be; but the Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

(3) The appeal shall be in the prescribed form, and shall be verified in the prescribed manner.

SECTION 31: HEARING OF APPEAL

(1) The Assistant Commissioner shall fix a day and place for the hearing of the appeal, and may from time to time adjourn the hearing.

(2) The Assistant Commissioner may, before disposing of any appeal, make such further inquiry as he thinks fit. or cause further inquiry to be made by the Income-tax Officer.

(3) In disposing of an appeal the Assistant Commissioner may, in the case of an order of assessment,"

(a) confirm, reduce, enhance or annul the assessment, or

(b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fit or the Assistant Commissioner may direct, and the Income-tax Officer shall thereupon proceed to make such fresh assessment. or, in the cases of an order under sub-section (2) of section 25-or section 28-,

(c) confirm, cancel or vary such order : Provided that the Assistant Commissioner shall not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement.

SECTION 32: APPEALS AGAINST ORDERS OF ASSISTANT COMMISSIONER

:- (1) Any assessee objecting to an order passed by an Assistant Commissioner under section 28-or to an order enhancing his assessment under sub-section (3) of section 31-, may appeal to the Commissioner within thirty days of the making of such order.

(2) The appeal shall be in the prescribed farm, and shall be verified in the prescribed manner.

(3) In disposing of the appeal the Commissioner may, after giving the appellant an opportunity of being heard, pass such orders thereon as he thinks fit.

SECTION 33: POWER OF REVIEW

:- (1) The Commissioner may of his own motion call for the record of any proceeding under this Act which has been taken by any authority subordinate to him or by himself when exercising the powers of an Assistant Commissioner under sub-section (4) of section 5-.

(2) On receipt of the record the Commissioner may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such orders thereon as be thinks fit:

Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard.

SECTION 34: INCOME ESCAPING ASSESSMENT

:-- If for any reason income, profits or gains chargeable to income-tax has escaped assessment in any year or has been assessed at too low a rate, the Income-tax Officer may, at any time within one year of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22-, and may proceed to assess or re-assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section :

Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits ordains not escaped assessment or full assessment, as the case may be.

SECTION 35: RECTIFICATION OF MISTAKE

:- (1) The Income-tax Officer may, at any time within one year from the date of any demand made upon an assessee, on his own motion rectify any mistake apparent from the record of the assessment, and shall within the like period rectify any such mistake which has been brought to his notice by such assessee :

Provided that no such rectification shall be made, having the effect of enhancing an assessment unless the Income-tax Officer has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard.

(2) Where any such rectification has the effect of reducing the assessment, the Income-tax Officer shall make any refund which may be due to such assessee.

(3) Where any such rectification has the effect of enhancing the assessment, the Income-tax Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 29-, and the provisions of this Act shall apply accordingly.

SECTION 36: TAX TO BE CALCULATED TO NEAREST ANNA

:- In the determination of the amount of tax or of a refund payable under this Act, fractions of an anna less than six pies shall be disregarded, and fractions of an anna equal to or exceeding six pies shall be regarded as one anna.

SECTION 37: POWER TO TAKE EVIDENCE ON OATH, ETC.

The Income-tax Officer, Assistant Commissioner and Commissioner shall, for the purposes of this Chapter, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908)-, when trying a suit in respect of the following matters, namely: "

(a) enforcing the attendance of any person and examining him on oath or affirmation;

(b) compelling the production of documents; and

(c) issuing commissions for the examination of witnesses; and any proceeding before an Income-tax Officer, Assistant Commissioner or Commissioner under this Chapter shall be deemed to be a "judicial proceeding" within the meaning of sections 193-and228 of the Indian Penal Code-.

SECTION 38: POWER TO CALL FOR INFORMATION

:- The Income-tax Officer or Assistant Commissioner may, for the purposes of this Act " (1) require any firm, or Hindu undivided family to furnish him with a return of the members of the firm, or of the manager or adult male members of the family, as the case may be, and of their addresses;

(2) require any person whom he has reason to believe to be a trustee, guardian, or agent, to furnish him with a return of the names of the persons for or of whom he is trustee, guardian, or agent, and of their addresses.

SECTION 39: POWER TO INSPECT THE REGISTER OF MEMBERS OF ANY COMPANY

The Income-tax Officer or Assistant Commissioner, or any person authorised in writing in this behalf by the Income-tax Officer or Assistant Commissioner, may inspect and, if necessary, take copies, or cause copies to be taken, of any register of the members, debenture-holders or mortgagees of any company or of any entry in such register.

SECTION 40: GUARDIANS, TRUSTEES AND AGENTS

In the case of any guardian, trustee or agent of any person being a minor, lunatic or idiot or residing out of British India (all of which persons are hereinafter in this section included in the term beneficiary) being in receipt on behalf of such beneficiary of any income, profits or gains chargeable under this Act, the tax shall be levied upon and recoverable from such guardian, trustee or agent, as the case may be, in like manner and to the same amount as it would be leviable upon and recoverable from any such beneficiary if of full age, sound mind, or resident in British India, and in direct receipt of such income, profits or gains, and all the provisions of this Act shall apply accordingly.

SECTION 41: COURT OF WORDS, ETC

In the case of income, profits or gains chargeable under received by the Courts of Wards, the Administrators-General, the Official Trustees or by any receiver or manager (including any person whatever his designation who in fact manages property on behalf of another) appointed by or under any order of a Court, the tax shall be levied upon and recoverable from such Court of Wards, Administrator-General, Official Trustee, receiver or manager in the like manner and to the same amounts as it would be leviable upon and recoverable from any person on whose behalf such income, profits or gains are received, and all the provisions of this Act shall apply accordingly.

SECTION 42: NON-RECIDENTS

(1) In the case of any person residing out of British India, all profits or gains accruing or arising to such person, whether directly or indirectly, through or from any business connection or property in British India, shall be deemed to be income accruing or arising within British India, and shall be chargeable to income-tax in the name of the agent of any such person, and such agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income-tax:

Provided that any arrears of tax may be recovered also in accordance with the provisions of this Act from any assets of the non-resident person which are, or may at any time come, within British India.

(2) Where a person not resident in British India, and not being a British subject or a firm or company constituted within His Majesty's dominions or a branch thereof, carries on business with a person resident in British India, and it appears to the Income-tax Officer or the Assistant Commissioner, as the case may be, that owing to the close connection between the resident and the non -resident person and to the substantial control exercised by the non-resident over the resident, the course of business between those persons is so arranged, that the business done by the resident in pursuance of his connection with the non-resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom or which may reasonably be deemed to have been derived therefrom, shall be chargeable to income-tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income-tax.

SECTION 43: AGENT TO INCLUDE PERSONS TREATED AS SUCH

Any person employed by or on behalf of a person residing out of British India, or having any business connection with such person, or through whom such person is in the receipt of any income, profits or gains upon whom the Income-tax Officer has caused a notice to be served of his intention of treating him as the agent of the non-resident person shall, for all the purposes of this Act, be deemed to be such agent :

Provided that no person shall be deemed to be the agent of a non-resident person, unless he has had an opportunity of being heard by the Income-tax Officer as to his liability.

SECTION 44: LIABILITY IN CASE OF A DISCONTINUED FIRM OR PARTNERSHIP

:- Where any business, profession or vocation carried on by a firm has been discontinued, every person who was at the time of such discontinuance a member of such firm shall be jointly and severally liable for the amount of the tax payable in respect of the income, profits and gains of the firm.

SECTION 45: TAX WHEN PAYABLE

Any amount specified as payable in a notice of demand under section 29-or an order under section 31-or section 32-or section 33-, shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the service of the notice or order, and any assessee failing so to pay shall be deemed to be in default, provided that, when an assessee has presented an appeal under section 30-, the Income-tax Officer may in his discretion treat the assessee as not being in default as long as such appeal is undisposed of.

SECTION 46: MODE AND TIME OF RECOVERY

(1) When an assessee is in default in making a payment of income-tax, the Income-tax Officer may in his discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty.

(2) The Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land-revenue.

(3) In any area, with respect to which the Commissioner has directed that any arrears may be recovered by any process enforceable for the recovery of an arrear of any municipal tax or local rate imposed under any enactment for the time being in force in any part of the province, the Income-tax Officer may proceed to recover the amount due by such process.

(4) The Commissioner may direct by what authority any powers or duties incident under any such enactment as aforesaid to the enforcement of any process for the recovery of a municipal tax or local rate shall be exercised or performed when that process is employed under sub-section (3).

(5) If any assessee is in receipt of any income chargeable under the head " Salaries," the Income-tax Officer may require any person paying the same to deduct from any payment sub-sequent to the date of such requisition any arrears due from such assessee, and such person shall comply with any such requisition, and shall pay the sums so deducted to the credit of the Government of India, or as the Board of Inland Revenue directs.

(6) The Local Government may direct with respect to any specified area, that income-tax shall be recovered therein, with, and as an addition to, any municipal tax or local rate by the same person and in the same manner as the municipal tax or local rate is recovered.

(7) Save in accordance with the provisions of sub-section (1) of section 42-, no proceedings for the recovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the year in which any demand is made under this Act.

SECTION 47: RECOVERY OF PENALTIES

:- Any sum imposed by way of penalty under the provisions of sub-section (2) of section 25-,section 28-or sub-section (1) of section 46-, shall be recoverable in the manner provided in this Chapter for the recovery of arrear of tax.

SECTION 48: REFUND

(1) If a shareholder in a company who has received any dividend therefrom satisfies the Income-tax Officer that the rate of income-tax applicable to the profits or gains of the company at the time of the declaration of such dividend is greater than the rate applicable to his total income of the year in which such dividend was declared, he shall, on production of the certificate received by him under the provisions of section 20-, be entitled to a refund on the amount of such dividend (including the amount of the tax thereon) calculated at the difference between those rates.

(2) If a member of a registered firm satisfies the Income-tax Officer that the rate of income-tax applicable to his total income of the previous year was less than the rate at which income-tax has been levied on the profits or gains of the firm of that year, he shall be entitled to a refund on his share of those profits or gains calculated at the difference between those rates.

(3) If the owner of a security from the interest on which, or any person from whose salary, income-tax has been deducted in accordance with the provisions of section 18-, satisfies the Income-tax Officer that the rate of income-tax applicable to his total income of the previous year was less than the rate at which income-tax has been charged in making such deduction in that year, he shall be entitled to a refund on the amount of interest or 'salary from which such deduction has been made calculated at the difference between those rates.

SECTION 49: RELIEF IN RESPECT OF UNITED KINGDOM INCOME-TAX

(1) If any person who has paid Indian income-tax for any year on any part of his income proves to the satisfaction of the Income-tax Officer that he has paid United Kingdom income-tax for that year in respect of the same part of his income, and that the rate at which he was entitled to, and has obtained, relief under the provisions of section 27 of the Finance Act, 1920, is less than the Indian rate of tax charged in respect of that part of his income, he shall be entitled to a refund of a sum calculated on that part of his income at a rate equal to the difference between the Indian rate of tax and the rate at which he was entitled to, and obtained, relief under that section :

Provided that the rate at which the refund is to be given shall not exceed one-half of the Indian rate of tax.

(2) In sub-section (1)"

(a) the expression " Indian income-tax " means income- tax and super-tax charged in accordance with the provisions of this Act;

(b) the expression " Indian rate of tax " means the amount of the Indian income-tax divided by the income on which it was charged;

(c) the expression "United Kingdom income-tax" means income-tax and super-tax chargeable in accordance with the provisions of the Income-tax Acts.

SECTION 50: LIMITATION OF CLAIMS FOR REFUND

No claim to any refund of income-tax under this Chapter shall be allowed, unless it is made within one year from the last day of the year in which the tax was recovered.

SECTION 51: FAILURE TO MAKE PAYMENTS OR DELIVER RETURNS OR STATEMENTS OR ALLOW INSPECTION

If a person fails without reasonable cause or excuse-

(a) to deduct and pay any tax as required by section 18-or under subsection (5) of section 46-;

(b) to furnish a certificate required by sub-section (9) of section 18-or by section 20-to be furnished;

(c) to furnish in due time' any of the returns mentioned in section 21-,section 22-, or section 38-;

(d) to produce, or cause to be produced, on or before the date mentioned in any notice under sub-section (4) of section 22-, such accounts and documents as are referred to in. the notice;

(e) to grant inspection or allow copies to be taken in accordance with the provisions of section 39-, he shall, on conviction before a Magistrate, be punishable with fine which may extend to ten rupees for every day during which the default continues.

SECTION 52: FALSE STATEMENT IN DECLARATION

:- If a person makes a statement in a verification mentioned in section 22-, or sub-section (3) of section 30-, or sub-section {2) of section 32-which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be deemed to have committed the offence described in section 177 of the Indian Penal Code-

SECTION 53: PROSECUTION TO BE AT INSTANT OF ASSISTANT COMMISSIONER

(1) A person shall not be proceeded against for an offence under section 51-or section 52-except at the instance of the Assistant Commissioner.

(2) The Assistant Commissioner may stay any such proceeding or compound any such offence.

SECTION 54: DISCLOSURE OF INFORMATION BY A PUBLIC SERVANT

(1) All particulars contained in any statement' made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and, notwithstanding anything contained in theIndian Evidence Act, 1872(1 of 1872)-, no Court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof.

(2) If a public servant discloses any particulars contained in any such statement, return, accounts, documents) evidence, affidavit, deposition or record, he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine:

Provided that nothing in this section shall apply to the disclosure"

(a) of any such particulars for the purposes of a prosecution under section 193 of the

Indian Penal Code-in respect of any such statement, return, accounts documents) evidence, affidavit or deposition, or for the purposes of a prosecution under this Act, or

(b) of any such particulars to any person acting in the execution of this Act where it is necessary to disclose the same to him for the purposes of this Act, or

(c) of any such particulars occasioned by the lawful employment under this Act of any process for the service of any notice or the recovery of any demand, or

(d) of such facts to an authorised officer of the United Kingdom, as may be necessary

to enable relief to be given under section 27 of the Finance Act, 1920, or a refund to be given under section 49-of this Act :

Provided, further, that no prosecution shall be instituted under this section except with the previous sanction of the Commissioner.

SECTION 55: CHARGE OF SUPER-TAX

:- In addition to the income-tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the previous year of any individual, unregistered firm, Hindu undivided family or company, an additional duty of income-tax (in this Act referred to as super-tax) at the rate or rates laid down for that year by Act of the Indian Legislature:

Provided that, where the profits and gains of an unregistered firm have been assessed to super-tax, super-tax shall not be payable by an individual having a share in the firm in respect of the amount of such profits and gains which is proportionate to his share.

SECTION 56: TOTAL INCOME FOR PURPOSES OF SUPER-TAX

:- Subject to the provisions of this Chapter, the total income of any individual, unregistered firm, Hindu undivided family or company shall, for the purposes of super-tax, be the total income as assessed for the purposes of income-tax, and where an assessment of total income has become final and conclusive for the purposes of income-tax for any year, the assessment shall also be final and conclusive for the purposes of super-tax for the same year.

SECTION 57: NON-RESIDENT PARTNER AND SHAREHOLDERS

:- (1) In the case of any assessee residing out of British India who is a member of a registered firm, and whose share of the profits from such firm is liable to super-tax, the remaining members of such firm who are resident in British India shall be jointly and severally liable to pay the super-tax due from the non-resident member in respect of such share.

(2) Where any assessee who is liable to pay super-tax on the amount of the dividends receivable by him from any company is to the knowledge of the principal officer of the company, residing out of British India, the principal officer shall be liable to pay the super-tax due by such nonresident person in respect of the dividends received by him from the company, and shall have power to deduct the amount of such super-tax from the amount payable by the company to such assessee.

(3) Where any person pays any tax under the provisions of this section on account of an assessee who is residing out of British India, credit shall be given therefor in determining the amount of the tax to be payable by any agent of such non-resident assessee under the provisions of sections 42-and43-.

SECTION 58: APPLICATION OF ACT TO SUPER-TAX

(1) All the provisions of this Act, except section 3-, the proviso to sub-section (1) of section 7-, the provisos to section 8-, sub-section (2) of section 14-, andsections 15-,17-,18-,19-,20-,21-and48-shall apply, so far as may be, to the charge, assessment, collection and recovery of super-tax.

(2) Save as provided in section 57-, super-tax shall be payable by the assessee direct.

SECTION 59: POWER TO MAKE RULES

(1) The Board of Inland Revenue may, subject to the control of the Governor General in Council, make rules for carrying out the purposes of this Act and for the ascertainment and determination of any class of income. Such rules may be made for the whole of British India or for such part thereof as may be specified.

(2) Without prejudice to the generality of the foregoing power, such rules may"

(a) prescribe the manner in which, and the procedure by which, the income, profits and gains shall be arrived at in the case of"

(i) incomes derived in. part from agriculture and in part from business; (ii) insurance companies; (iii) persons residing out of British India; (b) prescribe the procedure to be followed on applications for refunds;

(c) provide for such arrangements with His Majesty's Government as may be necessary to enable the appropriate relief to be granted under section 27 of the Finance Act, 1920, or under section 49 of this Act;

(d) prescribe the year which, for the purpose of relief under section 49-, is to be taken as corresponding to the year of assessment for the purposes of section 27 of the Finance Act, 1920; and

(e) provide for any matter which by this Act is to be prescribed.

(3) The power to make rules conferred by this section shall, except on the first occasion of the exercise thereof, be subject to the condition of previous publication.

(4) Rules made under this section shall be published in the Gazette of India, and shall thereupon have effect as if enacted in this Act.

SECTION 60: POWER TO MAKE EXEMPTIONS, ETC

: The Governor General in Council may, by notification in the Gazette of India, make an exemption, reduction in rate or other modification, in respect of income-tax in favour of any class of income, or in regard to the whole or any part of the income of any class of persons.

SECTION 61: APPEARANCE BY AUTHORISED REPRESENTATIVE

Any assessee, who is entitled or required to attend before any Income-tax authority in connection with any proceedings, under this Act, may attend either in person or by any person authorised by him in writing in this behalf.

SECTION 62: RECEIPTS TO BE GIVEN

A receipt shall be given for any money paid or recovered under this Act.

SECTION 63: SECRVICE OF NOTICE

(1) A notice or requisition under this Act may be served on the person therein-named either by post or, as if it were a summons issued by a Court, under the Code of Civil Procedure, 1908-.

(2) Any such notice or requisition may, in the case of a firm or a Hindu undivided family, be addressed to any member of the firm or to the manager, or any adult male member of the family.

SECTION 64: PLACE OF ASSESSMENT

:- (1) Where an assessee carries on business at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate or, where the business is carried on in more places than one, by the Income-tax Officer of the -area in which his principal place of business is situate.

(2) In all other cases an assessee shall be assessed by the Income-tax Officer of the area in which he resides.

(3) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner, or, where the question is between places in more provinces than one, by the Commissioners concerned, or, if they are not in agreement, by the Board of Inland Revenue :

Provided that, before any such question is determined, the assessee shall have had an opportunity of representing his views.

(4) Notwithstanding anything contained in this section, every Income-tax Officer shall have all the powers conferred by or under this Act on an Income-tax Officer in respect of any income, profits or gains accruing, or arising or received within the area for which he is appointed.

SECTION 65: INDEMNITY

Every person deducting, retaining or paying any tax in pursuance of this Act in respect of income belonging to another person is hereby indemnified for the deduction, retention or payment thereof.

SECTION 66: STATEMENT OF CASE BY COMMISSIONER TO HIGH COURT

(1) If, in the course of any assessment under this Act or any proceeding in connection therewith other than a proceeding under Chapter VIII, a question of law arises, the Commissioner may, either on his own motion or on reference from any Income-tax authority subordinate to him, draw up a statement of the case and refer it with his own opinion thereon to the High Court.

(2) Within one month of the passing of an order under section 31-or section 32-, the assessee in respect of whom the order was passed may, by application accompanied by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such order, and the Commissions shall, within one month of the receipt of such application, draw up a statement of the case and refer it with his own opinion thereon to the High Court:

Provided that if in exercise of his power of review under section 33-, the

Commissioner decides the question, the assessee may withdraw his application, and if he does so, the fee paid shall be refunded.

(3) If, on any application being made under sub-section (8), the Commissioner refuses to state the case on the ground that no question of law arises, the assessee may apply to the High Court, and the High Court if it is not satisfied of the correctness of the Commissioner's decision, may require the Commissioner to state the case and to refer it, and, on receipt of any such requisition, the Commissioner shall state and refer the case accordingly.

(4) If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the Court may refer the case back to the Commissioner by whom it was stated to make such additions thereto or alterations therein as the Court may direct in that behalf.

(5) The High Court upon the hearing of any such case shall decide the questions of law raised hereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and shall send to the Commissioner by whom the case was stated a copy of such judgment under the seal of the Court and the signature of the Registrar, and the Commissioner shall dispose of the case accordingly, or, if the case arose on a reference from any Income-tax authority subordinate to him, shall forward a copy of such judgment to such authority who shall dispose of the case conformably to such judgment.

(6) Where a reference is made to the High Court on the application of an assessee, the costs shall be in the discretion of the Court.

(7) Notwithstanding that a reference has been made under this section to the High Court, income-tax shall be payable in accordance with the assessment made in the case:

Provided that, if the amount of an assessment is reduced as a result of such reference, the amount overpaid shall be refunded with such interest as the Commissioner may allow.

SECTION 67: BAR OF SUITE IN CIVIL COURT

:- No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any Government officer for anything in good faith done or intended to be done under this Act.

SECTION 68: REPEALS

The enactments mentioned in the Schedule are hereby repealed to the extent specified in the fourth column thereof:

Provided that such repeal shall not affect the liability of any person to pay any sum due from him or any existing right of refund under any of the said enactments :

Provided, further, that the provisions of section 19 of the Indian Income-tax Act, 1918, shall apply, so far as may be, to VII of 1918. all assessments made under that Act in the year ending on the 31st day of March, 1922, and where an adjustment shall be made under the provisions of section 19 of the said Act, the provisions of this Act regarding the procedure for the assessment and

recovery of income-tax shall apply as if such adjustment were an assessment made under this Act.

INCOME TAX RULES, 1922

1st April 1922

In exercise of the powers conferred by

section 59 of the Indian Income-tax Act, 1922 (11 of 1922), the Board of Inland Revenue has made the following rules, namely :"

RULE 1 .

These rules may be called the Indian Income-tax Rules. 1922.

RULE 2 .

Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, for the purposes of clause (14) of section 2 of the Indian Income-tax Act, 1922-(hereinafter in these rules referred to as the Act), register with the Income-tax Officer the particulars contained in the said instrument on application in this behalf made by the partners or by any of them on or before the date on which a return is due under sub-section (2 ) of section 22-of the Act.

RULE 3 .

The application referred to in rule 2-shall be made in the form annexed to this rule and shall be accompanied by the original instrument of partnership under which the firm is constituted together with a copy thereof: provided that if the Income-tax Officer is satisfied that for some sufficient reason the original instrument cannot conveniently be produced, he may accept a copy of it certified in writing by one of the partners to be a correct copy, and in such a case the application shall be accompanied by a duplicate copy.

RULE 4 .

(1) On the production of the original instrument of partnership or on the acceptance by the Incomee-tax Officer of a certified copy thereof the Income-tax Officer shall enter in writing at the foot of the instrument or copy, as the case may be, the following certificate, namely - "This instrument of partnership (or this certified copy of an instrument of partnership) has this day been registered with me, the Income-tax Officer for in the province of under clause (14) of section 2 of the Indian Income-tax Act, 1922-. This certificate of registration has effect from the day of April 19 ."

(2) The certificate shall be signed and dated by the Income-tax Officer who shall thereupon return to the applicant the instrument of partnership or the certified copy thereof, as the case may be, and shall retain the copy or duplicate copy thereof.

RULE 5 .

The certificate of registration granted under rule 4-shall have effect from the date of registration.

RULE 6 .

A certificate of registration granted under rule 4-shall have effect up to the end of the financial year in which it is granted, but shall be renewed by the Income-tax Officer from year to year on application made to him in that behalf on or before the date on which the return under sub-section (2) of section 22-of the Act is due, -and accompanied by a certificate signed by one of the partners of the firm that the constitution of the firm as specified in the instrument of partnership remains unaltered.

RULE 7 .

Under section 9(1)(vi)-of the Act, the sum to be allowed in respect of collection charges shall not exceed 6 percent of the annual value of the property.

RULE 10 .

All sums deducted in accordance with the provisions of section 18-of the Act shall be paid by the person making the deduction to the credit of the Government of India on the same day as the deduction is made in the case of deduction by or on behalf of Government, and within one week from the date of such deduction in all other cases :

Provided that the Income-tax Officer may, in special cases; and with the approval of the Assistant Commissioner, permit a local authority, company, public body or association, or a private employer to pay the income-tax deducted from salaries quarterly on June 15th, September 15th, December 15th, and March 15th.

RULE 11 .

In the case of income chargeable under the head 'Salaries,' where deduction is not made by or on behalf of Government, the person paying the salary shall pay to the credit of the Government of India by remitting the amount to the Income-tax Officer concerned or to such officer as he may direct and shall send therewith a statement showing the name of the employe from whose salary the tax has been deducted, the period for which the salary has been paid, the gross amount. of the salary, the deduction for a provident fund or insurance premia, and the amount of tax deducted.

RULE 12 .

In the case of income chargeable under the head 'Interest on securities,' where the deduction is not made by or on behalf of Government, the person responsible for paying the interest shall pay to the credit of the Government of India by remitting the amount to the Income-tax Officer concerned or to such officer as be may direct with a statement showing the following particulars:"

(i) Description of securities. (ii) Numbers of securities. (iii) Dates of securities. (iv) Amounts of securities.

(v) Period for which interest is drawn. (vi) Amount of interest, and (vii) Amount of tax.

RULE 13 .

The certificate to be furnished under section 18(9)-of the Act shall be in the following form:" Draft No. (1)---------------------------------------------- Certified that Rs"----------------------being income-tax at the rate of"pies per rupee has been deducted by draft of this date from Rs."------------------being the amount of interest for Rs.""------ on(2)" for Rs.""------ standing in the name for Rs."------- of------------------------------------------------------- """"192 . Superintendent or Principal Officer. To be signed by claimant. I hereby declare that the securities on which interest as above specified has been received were my own property and were in the possession of""""------------------------------ ----------------------------------------------------------- at the time when income-tax was deducted. Signature"""""""----- Date"""""------------ (N.B."The securities to be produced when required in support of any claim.)

RULE 14 .

The certificate to be furnished by the principal officer of a company under section 20-shall be in the following form :" (Name of Company)"""""""--------- (Address of Company)"""""""---------- Date"""""""- WARRANT -for Rs.-----------, being dividend (1) of per cent. for the (2)--------------- ending on the -------day of ------ 19-- , (3)------------ on (4)------------------- shares in this company, registered in the name of------------------------------- ---------. This dividend was declared at the ------------------------------------ (5)------------------- meeting held on the (6)- --------------192 .I/We here by certify that income-tax on the profits ana gains enter date. of the company, of which this dividend forms a part, has been, or will be, duly paid by me/us to the Government of India. Signature"------ Office"--------- (To be signed by the claimant.) I hereby certify that the dividend above mentioned relates to shares which were my own property at the time when the dividend was declared and were in the possession of Signature""""---------- Date""""---------------

RULE 15 .

The returns for Government officers under section 21-of the Act shall be prepared and submitted to the Income-tax Officer by:"

(a) Civil Audit Officers for all gazetted officers and others who draw their pay from audit offices on separate bills; and also for all pensioners who draw their pensions from audit offices.

(b) Treasury Officers for all gazetted officers and others who draw their pay from treasuries on separate bills; and also for all pensioners who draw their pensions from treasuries.

(c) Heads of Civil or Military offices for all non-gazetted officers whose pay is drawn on establishment bills.

(d) Forest disbursing officers and Public Works Department disbursing officers in cases where direct payment from treasuries is not made, for themselves and their establishments.

(e) Head post masters for themselves and their establishments; Heads of telegraph offices (other than combined post and telegra..ph offices) for themselves and their establishments; Superintendents of Telegraphs for themselves and their establishments.

(f) Controllers of Military Accounts (including Divisional Military Supply, Marine, Field and War Controllers) for all Gazetted military officers under their audit.

(g) Disbursing officers in the Military Works Department for themselves a.nd their establishments.

(h) Chief Examiners of Accounts or Chief Auditors of Railways concerned for all railway employes under their audit.

RULE 16 .

The minimum income under the bead "Salaries" referred to in section 21 (a)-, shall be Rs. 1,600 per annum.

RULE 18 .

The return of total income of companies required under section 22 {1)-shall be in the following-form and shall be accompanied by a copy of the profit and loss account referred to therein:" R As. P. Income, profits or gains as per profit and loss account for the year ended 192,.........

Add any amount debited in the accounts in respect of"1. Reserve for bad debts .......

2. Sums carried to reserve for provident or other funds 3, Expenditure of the nature of charity or presents 4. Expenditure of the nature of capital. 5. Income-tax or Super-tax..... 6. Rental value of property owned and occupie .....

7. Cost of additions to, of alterations, extensions, improvements of any of the assets of the business .. 8. Interest on reserve or other funds ....... 9, Losses sustained in former years . . . ....

10. Losses recoverable under an insurance or contract of indemnity . 11. Depreciation of any of the assets of the business ....

12. Expenses not incurred solely for the purpose fo earning the profits TOTAL

Deduct." Any profits included in the accounts already charged to Indian income-tax and the interest on securities of the Government of India or of local Governments declared to be income-tax free . . . .

BALANCE

If the company owns any property not occupied for the purposes of the business a statement in the form prescribed in Schedule A to rule 19-should be attached with particulars of the credit and debit on account of such property entered in the accounts. Declaration. I, the""--------------------------------[Secretary. etc. (seesection 2 (12)-of the Act)] of the--------------- ---------------"""(name of Company) declare that the information against each head in this return is correctly given as shown in the books of the Company as also in the accounts which have been duly audited by the auditors of the Company and which have been adopted by the shareholders of the Company. (Signature)"------------- (Designation)"----------- Dated"------------19

RULE 21 .

An appeal under section 30 (3)-shall be in the following form:" Form of appeal. To The Assistant Commissioner of The------------------------day of------------------------19 . The petition of------------------------of------------------------ sheweth as follows :"-

1. Under theIndian Income-tax Act, 1922-, your petitioner has been assessed on the sum of Rs. for the year commencing the 1st day of April 19 . The notice of demand attached hereto was served upon him on

2. Your petitioner's income accruing and arising or received for the year ending the day of 19 amounted to Rs.

3. Such income and profits actually accrued or arose or were received during the period of months and days.

4. During the said year your petitioner had no other income or profits.

5. Your petitioner has made a return of his income to the Income-tax Officer"under section 22-, sub-section (2) of the Act and has complied with all the terms of the notice served on him by the Income-tax Officer under section 23 (2)-and [or section 22 (4)-].

Your petitioner therefore prays that he may be assessed accordingly (or that he may be declared not to be chargeable under the Act). (Signed) Grounds of appeal. Form of verification. I,------------------------------------------------, the petitioner, named in the above petition, do declare that what is stated therein is true to the best of my information and belief.

RULE 22 .

An a,ppeal under section 32 (2)-shall be in the following form:" To The Commissioner of Income-tax, ------------------------ The------------------------day of------------------------19 . The petition of"------------------------sheweth as follows:

1. Under section 31 (3) of the Indian Income-tax Act, 1922-, the Assistant Commissioner of-"has increased the tax payable by your petitioner from Rs."to Rs.------------------------

2. Your petitioner prays that the enhancement may be set aside or reduced to Rs.------------------------for the reasons stated below: Sign------------------------ Grounds of appeal. I------------------------ the petitioner named in the above petition, do declare that what is stated therein is true to the best of my information and belief. Signed""""------------------------

RULE 23 .

In the case of income derived in part from agriculture and in part from business an assessee shall be entitled to deduct from such income the market value of any agricultural produce raised by him or received by him as rent in kind which he has utilized as raw material for the purposes of his business or the sale receipt of which are included in the accounts of his business. The balance of such income shall be deemed to be income derived from the business and no further deduction shall be made therefrom in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent in kind.

RULE 24 .

For the purposes ofrule 23-" market value " shall be deemed to be :"

(a) where agricultural produce is ordinarily sold in the market in its raw state, or after application to it of any process ordinarily employed by a cultivator or receiver of rent in kind to render it fit to be taken to market, the value calculated according to the average price at which it has been so sold during the year previous to that in which the assessment is made.

(b) where agricultural produce is not ordinarily sold in the market in its raw state, the aggregate of"

(1) the expenses of cultivation;

(2) the land revenue or rent paid for the area in which it was grown; and

(3) such percentage of the aggregate of (1) and (2) as the Board of Inland Revenue may from time to time fix for the class of produce concerned.

RULE 25 .

In the case of Life Assurance Companies incorporated in British India whose profits are periodically ascertained by actuarial valuation, the income, profits and gains of the Life Assurance Business shall be the average annual net profits disclosed by the last preceding valuation, provided that any deductions made from the gross income in arriving at the actuarial valuation which are not admissible for the purpose of income-tax assessment, and any Indian income-tax deducted from or paid on income derived from investments before such income is received, shall be added to the net profits disclosed by the valuation.

RULE 26 .

Rule 25-shall apply also to the determination of the income, profits and gains derived from the annuity and capital redemption business of life assurance companies, the profits of which can be ascertained from the results of an actuarial valuation.

RULE 27 .

If the Indian income-tax deducted from interest on the investments of a company exceeds the tax on the income, profits and gains thus calculated, a refund may be permitted of the amount by which the deduction from interest on investments exceeds the tax payable on such income, profits, and gains.

RULE 28 .

In the case of other classes of insurance business (fire, marine, motor car, burglary, etc.) of a company incorporated in British India, the income, profits or gains shall be determined in accordance with the provisions of the Act, subject to the allowance specified in the rule next following.

RULE 29 .

If in the ordinary accounts of any insurance business other than Life Assurance, Annuity, or Capital Redemption Business carried on by an Insurance Company any amount is actually charged against the receipts for the sole purpose of forming a reserve to meet outstanding liabilities or unexpired risk in respect of policies which have been issued (including risk of exceptional losses) and is not used for any other purpose such amount may be treated as expenditure incurred solely for the purpose of earning the profits of the business.

RULE 30 .

Any amount either written-off in the accounts or through the Actuarial Valuation Balance Sheet to meet depreciation of, or loss on, securities or other assets, or which is carried to a reserve fund formed for that sole purpose and not used for any other purpose, may be treated as expenditure incurred solely for the purpose of earning the profits of the business. Any sums taken credit for in the accounts or Actuarial Valuation Balance Sheet on account of appreciation of or gains on the securities or other assets shall be deemed to be income chargeable to tax, subject always to deduction of such portion thereof as has been otherwise taken into account in calculating the income, profits or gains.

RULE 31 .

The income, profits and gains of companies carrying on Dividing Society or Assessment business shall be taken at 15 per cent. of the premium income in the previous year and, in the case of non-resident companies, at 15 per cent. of the Indian premium income in the previous year.

RULE 32 .

Notwithstanding anything contained in rule 25-,26-,27-,28-,29-,30-,31-, the total income, however, of an insurance company carrying on more than one class of business shall be determined by its aggregate income from all classes of businesses.

RULE 33 .

In any case in which the Income-tax Officer is of opinion that the actual amount of the income, profits or gains accruing or arising to any person residing out of British India whether directly or indirectly through or from any business connection in British India cannot be ascertained, the amount of such income, profits or gains for the purposes of assessment to income- tax may be calculated on such percentage of the turnover so accruing or arising as the Income-tax Officer may consider to be reasonable, or on an amount which bears the same proportion to the total profits of the business of such person (such profits being computed in accordance with the provisions of the Indian Income-tax Act) as the receipts so accruing or arising bear to the total receipts of the business, or in such other manner as the Income-tax Officer may deem suitable.

RULE 34 .

The profits derived from any business carried on in the manner referred to in section 42 (g)-of the Act may be determined for the purposes of assessment to income-tax according to the preceding rule.

RULE 35 .

The total income of the Indian branches of non-resident insurance companies (Life, Marine, Fire, Accident, Burglary, Fidelity Guarantee, etc.), in the absence of more reliable data, may be deemed to be the proportion of the total income, profits or gains, of the companies, corresponding to the proportion which their Indian premium income bears to their total premium income.

RULE 36 .

An application for a refund of income-tax under section 48-of the Act shall be made in the following form :" Application for refund of Income-tax. I------------------------of------------------------ ------------------------------------------------------------------------ do hereby state that my income from all sources to which the Act applies during the year ending on the 31st March 19 , amounted to Rs.------------------------only. I therefore pray for a refund of Rs"------------------------ under " Salaries " Rs------------------------- under " Securities " Rs------------------------- under "Dividends from Companies " Rs------------------------ under " Share of profits of the registered firm " known as------------------------"-"of which I am a partner. Signature-""-------------------------- I hereby declare that what is stated herein is correct. Dated"------------------------19 . Signature"------------------------

RULE 37 .

The application under rule 36-shall be accompanied by a return of total income in the form prescribed under section 22-unless the applicant has already made such a return to the Income-tax Officer.

RULE 38 .

Where the application under rule 36-is made in respect of interest on securities or dividends from companies, the application shall be accompanied by the certificate prescribed under section 18 (9)-or section 20-, as the case may be.

RULE 39 .

The application under rule 36-shall be made to the Income-tax Officer for the district in which the applicant is chargeable directly to income-tax or, if be is not chargeable directly to income-tax, to the Income-tax Officer for the district in which the applicant ordinarily resides.

RULE 40 .

The application under rule 36-may be presented by the applicant in person or through a duly authorized agent or may be sent by post.

Central Bare Acts


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