The
Income Tax Act is a self-contained Act. Sections 2 and 3 define the
terms/expressions used in the Income Tax Act. The word ‘means’, ‘includes’ are
used in the definitions and the significance of these terms needs to be
understood.
When
a definition uses the word ‘means’
When
a definition uses the word ‘means’, the definition is self-explanatory,
restrictive and in a sense, exhaustive. It implies that the term or expression
so defined means only as to what it is defined as and nothing else. For
example, the terms ‘Agricultural Income’, “Assessment year”, ‘Capital Asset’ is
exhaustively defined.
When
a definition uses the word ‘includes’ in the definition
When
the legislature wants to widen the scope of the term or expression and where an
exhaustive definition cannot be given, it uses the word ‘includes’
in the definition. Hence, the inclusive definition provides an illustrative
meaning and not an exhaustive meaning. In practical application, the definition
could include what is not specifically stated or mentioned in the definition as
long as the stipulated criteria are satisfied. To illustrate, reference is
drawn to the definition of the terms ‘Inclines,’ ‘Person’, ‘Transfer’.
When
a definition uses both the words ‘means’ as well as ‘includes’ in the definition
When
the legislature intends to define a term or expression to mean something and
also intends to specify certain items to be included, both
the words ‘means’ as well as ‘includes’ are used. Such a definition is not
only exhaustive but also illustrative. Example: the terms ‘assessee’, ‘Indian
company’, “Recognised Provident Fund”.
There are two forms of interpretation clause
There are two
forms of interpretation clause. In one, where the word defined is declared to
'mean' so and so, the definition is explanatory and prima facie restrictive. In
the other, where the word defined is declared to 'include' so and so, the
definition is extensive (Craies on Statute Law, 7th edn., p. 213).
How to understand the provisions of the Act
·
In order to understand the provisions of the Act, one must have a
thorough knowledge of the meanings of certain terms like person, assessee.,
income., etc.
·
To understand the meanings of
these terms we have to first check whether they are defined in the Act itself.
·
If a particular definition is
given in the Act itself, we have to be guided by that definition.
·
If a particular definition is
not given in the Act, reference can be made to the General Clauses Act or
dictionaries.
The
General Clauses Act, 1897
·
The
General Clauses Act, 1897, contains definitions, which are applicable to all
common laws including tax laws, unless and until any repugnant or different
definition is contained in the definition section of the tax laws.
·
It
also contains general rules of construction, which are applied on common law as
well as tax laws.
·
Provisions
of Civil Law, Criminal Law, Hindu Law, Evidence Act, Transfer of Property Act,
Partnership Act, Companies Act and other specific, relevant and ancillary laws
equally apply unless until a different provision is enacted in tax statute and
such laws expressly excluded.
·
As
analysed, about 108 Acts other than tax statutes need be read, referred and
relied upon to make an effective representation, knowledge whereof is
imperative.
In the absence of any definition of the word ‘month’ in the Act, the
definition of the General Clauses Act, 1897 will be applicable
In terms of
General Clauses Act, 1897, period of six month mentioned in section 54EC has to
be regarded as six British calender months. The Special Bench of ITAT in the
case of Alkaben B. Patel v. ITO adopting the reasoning which found favour with
ITAT Mumbai Bench in the case of Yahya E. Dhariwala v. DCIT (2012) 49 SOT 458 :
17 taxmann.com 159 (ITAT Mumbai) that in the absence of
any definition of the word 'month' in the Act, the definition of the General Clauses
Act,1897 will be applicable, held that time limit of ‘six months’ in sec
54EC of the Act means ‘six British Calendar months’ in view of the General
Clauses Act, 1897. The Special Bench also observed that “Legislature in its
wisdom has chosen to use the word 'month' and this was done keeping in view the
definition in section 3(35) of the General Clauses Act, 1897.” The Special
Bench rejected the Revenue’s interpretation that 'month' should be understood
in the ordinary sense-i.e., the month is a period from a specified date in a
month to the date numerically corresponding date in the following month. - [Alkaben
B. Patel v. ITO (2014) 161 TTJ 417 : 148 ITD 31 : 43 taxmann.com 333 (ITAT Ahmedabad)
(SB)]
Words not defined in the Income-tax Act
•
The word not defined in the Income-tax Act, would
certainly be permissible to look to the meaning of the word as given in the
dictionary.
•
The words and expressions not defined, but defined in
the specified Act, the Central Excise Act,1944, the Customs Act, 1962, the
Customs Tariff Act,1975 or the Finance Act,1994, as the case may be, shall have
the same meaning respectively assigned to them in that Act.
•
The word “plant” has not been defined in the
Income-tax Act, though, it is provided in section 10(5) that it includes
certain items. Since the word is not defined, would certainly be permissible to
look to the meaning of the word as given in the dictionary.
The word “consideration”
The word “consideration” is not defined in Section
56(2)(x). It is not defined even in the General Clauses Act, 1897. Indian
Contract Act, 1872 defines consideration in Section 2(d) as follows:
“when at the desire of the promisor, the promisee or
any other person has done or abstained from doing or does or abstains from
doing or promises to do or to abstain from doing something, such act or
abstinence or promise is called a consideration for the promise.”
In the absence of the definition of consideration in
Income Tax Act, it must carry the meaning assigned to it in the Indian Contract
Act. - [CGT v. Smt. C.K. Nirmala 215 ITR 156 (Ker – FB) & Chandrakant H.
Shah v. ITO 121 TTJ 145 (ITAT Mumbai)]
It is well-settled that where the definition of a word
has not been given, it must be construed in its popular sense if it is a word
of every day use. Popular sense means ‘that sense which people conversant with
the subject-matter with which the statute is dealing, would attribute to it’. -
[CIT v. Taj Mahal Hotel (1971) 82 ITR 44 (SC)]
Types of Definition under the Income Tax Act, 1961
1. Inclusive definitions
Inclusive
definitions can be identified by the word ‘includes’ in the definition. An
inclusive definition allows including, within its ambit, anything which is
similar to the term defined.
Examples of this
category are :
Ø Section 2(8) “assessment” includes reassessment.
Ø Section 2(24) “income” includes - (i) profits &
gains; (ii) dividend..”
2. Exhaustive/Restrictive definitions
Exhaustive/Restrictive definitions can be identified by the word ‘means’ in the
definition.
It does not
allow including anything from outside to the scope of the definition.
Examples of this
category are :
Ø Section 2 (33) “prescribed” means prescribed by rules
made under this Act,
Ø Section 2 (42B) “short-term capital gain” means
capital gain arising from the transfer of a short-term capital asset.
3. Adoptive definitions
Adoptive
definitions in this category instead of defining the term afresh, the
definitions are adopted from other Acts.
Examples of this
category are :
Ø Section 2(20) “director”, “manager” & “managing
agent”, in relation to a company, have the meanings respectively assigned to
them in the Companies Act, 2013.
Ø Section 2(37) “public servant” has the same meaning as
in section 21 of the Indian Penal Code, 1860.
4. Exclusive definitions
Exclusive
definitions can be identified by the phrase ‘does not include’. In this
category something is expressly excluded from the definition.
Example of this
category is
Ø Section 2(14) “capital asset” means property of any kind
held by an assessee, whether or not connected with his business or profession,
but does not include - (i) any
stock-in-trade, consumable stores or raw materials held for the purposes of his
business or profession…”
5. Combined definitions
Combined
definitions both the words i.e ‘means’ & ‘includes’ are
present in the definition. In this category, on one hand it restricts
inclusion, & on the other, it allows inclusion.
Example of this category is: –
Ø Section 2(7)
“assessee” means a person by whom any tax or any other sum of money is payable
under this Act, & includes —
(a) every person in respect of whom any
proceeding under this Act has been taken…
(b) every person who is deemed to be an assessee
under any provision of this Act;
(c) every person who is deemed to be an assessee
in default under any provisions of this
act;
In the Income Tax Act, 1961 ‘definitions’ are not only
provided in section 2, but also in various other sections like 3, 17, 27, 43,
55.
Text of Section 3
“Previous year” defined.
3. For the purposes of this Act, “previous year”
means the financial year immediately preceding the assessment year :
PROVIDED that, in the case of a business or
profession newly set up, or a source of income newly coming into existence, in
the said financial year, the previous year shall be the period beginning with
the date of setting up of the business or profession or, as the case may be,
the date on which the source of income newly comes into existence and ending
with the said financial year.
Text of Section 17
“Salary”,
“perquisite” and “profits in lieu of salary” defined.
17. For the
purposes of sections 15 and 16 and of this section,—
(1)
“salary” includes -
(2) “perquisite” includes -
(3)
“profits in lieu of salary” includes -
Text of Section 27
“Owner of
house property”, “annual charge”, etc., defined.
27. For the purposes
of sections 22 to 26 –
Text of Section 43
Definitions
of certain terms relevant to income from profits and gains of business or
profession.
43. In sections 28 to 41 and in this section, unless the context otherwise
requires -
(1)
“actual cost” means ………
Text of Section 55
Meaning of “adjusted”, “cost
of improvement” and “cost of acquisition”.
55. (1) For the purposes of sections 48 and 49, -
These parts are
independent of each other & also are not co-related to project a whole
provision therefore these are clauses. Similar is the case with sections 6, 43,
47 & so on
Definitions [Section 2]
[1] “advance tax” [clause (1) to section 2]
(1) “advance tax” means the advance tax payable in
accordance with the provisions of Chapter
XVII-C;
Text of Chapter XVII-C
C – Advance payment of tax
Section 207 to 219
[2] “agricultural income” means [clause (1A) to section 2]
(1A) “agricultural income” means -
As per section 2(1A), agricultural income generally
means:
(a) Any rent or revenue derived from land which is
situated in India and is used for
agricultural purposes.
(b) Any income derived from such land by agriculture
operations including processing of
agricultural produce so as to render it fit for the market or sale of
such produce.
(c) Any income attributable to a farm house subject to
satisfaction of certain conditions
specified
in this regard in section 2(1A).
[3] “amalgamation”, in relation to companies, means [clause (1B) to
section 2]
(1B) “amalgamation”, in relation to companies, means
the merger of one or more companies with another company or the merger of two
or more companies to form one company (the company or companies which so merge
being referred to as the amalgamating company or companies and the company with
which they merge or which is formed as a result of the merger, as the
amalgamated company) in such a manner that—
(i) all the property of the amalgamating company or
companies immediately before the amalgamation becomes the property of the
amalgamated company by virtue of the amalgamation;
(ii) all the liabilities of the amalgamating company
or companies immediately before the amalgamation become the liabilities of the
amalgamated company by virtue of the amalgamation;
(iii) shareholders holding not less than three-fourths
in value of the shares in the amalgamating company or companies (other than
shares already held therein immediately before the amalgamation by, or by a
nominee for, the amalgamated company or its subsidiary) become shareholders of
the amalgamated company by virtue of the amalgamation,
otherwise than as a result of the acquisition of the
property of one company by another company pursuant to the purchase of such
property by the other company or as a result of the distribution of such
property to the other company after the winding up of the first-mentioned
company;
[4] “Additional Commissioner” means [clause (1C) to section 2]
(1C) “Additional Commissioner” means a person
appointed to be an Additional Commissioner of Income-tax under sub-section (1)
of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as
it thinks fit to be income-tax authorities.
[5] “Additional Director” means [clause (1D) to section 2]
(1D) “Additional Director” means a person appointed to
be an Additional Director of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as
it thinks fit to be income-tax authorities.
[6] “annual value”, in relation to any property, means [clause (2) to
section 2]
(2) “annual value”, in relation to any property, means
its annual value as determined under section 23;
Text of Section 23
Annual value how determined.
23. (1) For the purposes of section 22, the annual
value of any property shall be deemed to be - ………
Clause (3) to section 2 omitted by the Direct Tax Laws
(Amendment) Act, 1987, with effect from 01.04.1988.
[7] “Appellate Tribunal” means [clause (4) to section 2]
(4) “Appellate Tribunal” means the Appellate Tribunal constituted under
section 252;
Text of section 252
Appellate Tribunal.
252. (1) The Central Government shall constitute an Appellate Tribunal
consisting of as many judicial and accountant members as it thinks fit to
exercise the powers and discharge the functions conferred on the Appellate
Tribunal by this Act.
(2) A judicial member shall be a person who has for at least ten years
held a judicial office in the territory of India or who has been a member of
the Indian Legal Service and has held a post in Grade II of that Service or any
equivalent or higher post for at least three years or who has been an advocate
for at least ten years.
……………………………………………………….
[8] “approved gratuity fund” means [clause (5) to section 2]
(5) “approved gratuity fund” means a gratuity fund which has been and
continues to be approved by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner in accordance with the
rules contained in Part C of the Fourth Schedule ;
PART C of the Fourth Schedule
Approved gratuity funds
[See sections 2(5), 17(1)(iii), 36(1) (v)]
[9] “approved superannuation fund” means [clause (6) to section 2]
(6) “approved superannuation fund” means a
superannuation fund or any part of a superannuation fund which has been and
continues to be approved by the Principal Chief Commissioner or Chief
Commissioner or Principal Commissioner or Commissioner in accordance with the
rules contained in Part B of the Fourth Schedule ;
PART B of the Fourth Schedule
Approved Superannuation Funds
[See Sections 2(6), 10(13), 10(25)(iii), 36(1)(iv),
87(1)(e), 192(5), 206(2)]
[10] “assessee” means [clause (7) to section 2]
(7) “assessee” means a person by whom any tax or any other sum of money
is payable under this Act, and includes—
(a) every person in respect of whom any proceeding under this Act has
been taken for the assessment of his income or assessment of fringe benefits or
of the income of any other person in respect of which he is assessable, or of
the loss sustained by him or by such other person, or of the amount of refund
due to him or to such other person ;
(b) every person who is deemed to be an assessee under any provision of
this Act ;
(c) every person who is deemed to be an assessee in default under any
provision of this Act ;
………………….
[11] “Assessing Officer” means [clause
(7A) to section 2]
(7A) “Assessing Officer” means the Assistant Commissioner or Deputy
Commissioner or Assistant Director or Deputy Director or the Income-tax Officer
who is vested with the relevant jurisdiction by virtue of directions or orders
issued under sub-section (1) or sub-section (2) of section 120 or any
other provision of this Act, and the Additional Commissioner or Additional
Director or Joint Commissioner or Joint Director who is directed under clause
(b) of sub-section (4) of that section to exercise or perform all or any of the
powers and functions conferred on, or assigned to, an Assessing Officer under
this Act;
[12] “assessment” includes [clause (8) to section 2]
(8) “assessment” includes
reassessment;
[13] “assessment year” means [clause (9) to section 2]
(9) “assessment year” means the period of twelve
months commencing on the 1st day of April every year;
[14] “Assistant Commissioner” means [clause (9A) to section 2]
(9A) “Assistant Commissioner” means a person appointed to be an
Assistant Commissioner of Income-tax or a Deputy Commissioner of Income-tax
under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[15] “Assistant Director” means [clause (9B) to section 2]
(9B) “Assistant Director” means a person appointed to be an Assistant
Director of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to be
income-tax authorities.
[16] “average rate of income-tax” means [clause (10) to section 2]
(10) “average rate of income-tax” means the rate arrived at by dividing
the amount of income-tax calculated on the total income, by such total income;
[17] “block of assets” means [clause (11) to section 2]
(11) “block of assets” means a group of assets falling
within a class of assets comprising -
(a) tangible assets, being buildings, machinery, plant
or furniture;
(b) intangible assets, being know-how, patents,
copyrights, trade-marks, licences, franchises or any other business or
commercial rights of similar nature, not being goodwill of a business or
profession,
in respect of which the same percentage of depreciation
is prescribed;
Where income from letting out of buildings is already
assessed as income from house property, such let out buildings cannot be part
of block of assets as defined under section 2(11)
Assessee owned
several buildings, i.e., factory building, building used for business purposes
(called building ‘D’) and buildings let out on rent and these were grouped to
be part of block of assets. Depreciation on factory building and building ‘D’
was duly claimed. During assessment year 2011-12 assessee sold building ‘D’ and
did not claim depreciation on it. It adjusted sale value of building ‘D’
against value of block of assets in accordance with section 32. Assessing
Officer held that sale value of building ‘D’ could not be adjusted against
value of block of assets. Commissioner (Appeals) held that building ‘D’ sold
was no longer part of block of assets as no depreciation was claimed on it and
hence gain arising out of sale of asset was taxable as short-term capital gain
under section 50. Fact that no depreciation was claimed during year
for building ‘D’ did not remove it from block of assets. Since Value of block
of assets under class of assets ‘building’ was more than sale value of building
‘D’, assessee was right in reducing sale value of building ‘D’ from value of
block of assets under section 32 and thus, no short-term capital gain
arose on sale under section 50. Further from the definition it
is clear that all the assets falling under the same class and for which the
same rate of depreciation is prescribed, constitute one block of asset. In
assessee’s case, the let out building against which no depreciation is claimed
i.e. the building with NIL depreciation is grouped under the block. The income
from letting out of these buildings is already assessed as income from house
property against which statutory deduction under section 24 of the Act is
already allowed. Hence in our considered view buildings that are let out cannot
be part of the block of assets as defined under section 2(11) of the Act. [In favour of assessee] (Related Assessment year :
2011-12) – [Kemwell (P) Ltd. v. DCIT (2022) 139
taxmann.com 544 (ITAT Bangalore)]
[18] “Board” means [clause (12) to section 2]
(12) “Board” means the Central Board of Direct Taxes constituted under
the Central Boards of Revenue Act, 1963 (54 of 1963);
[19] “books or books of account” includes [clause (12A) to section 2]
(12A) “books or books of account” includes ledgers,
day-books, cash books, account-books and other books, whether kept in the
written form or in electronic form or in digital form or as print-outs of data
stored in such electronic form or in digital form or in a floppy, disc,
tape or any other form of electro-magnetic data storage device;
[20] “business” includes [clause (13) to section 2]
(13) “business” includes any trade, commerce or manufacture or any
adventure or concern in the nature of trade, commerce or manufacture;
[21] “business trust” means [clause (13A) to section 2]
(13A) “business trust” means a trust registered as, -
(i) an Infrastructure Investment Trust under the Securities and Exchange
Board of India (Infrastructure Investment Trusts) Regulations, 2014 made under
the Securities and Exchange Board of India Act, 1992 (15 of 1992); or
(ii) a Real Estate Investment Trust under the Securities and Exchange
Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992),
[22] “capital asset” means [clause (14) to section 2]
(14) "capital asset" means —
(a) property of any kind held by an assessee, whether or not connected
with his business or profession;
(b) any securities held by a Foreign Institutional Investor which has
invested in such securities in accordance with the regulations made under the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(c) any unit linked insurance policy to which exemption under clause
(10D) of section 10 does not apply on account of the applicability of
the fourth and fifth provisos thereof,
but does not include—
(i) any stock-in-trade [other than the securities referred to in
sub-clause (b)], consumable stores or raw materials held for the purposes of
his business or profession ;
(ii) personal effects, that is to say, movable property (including
wearing apparel and furniture) held for personal use by the assessee or any
member of his family dependent on him, but excludes—
……….
[23] “charitable purpose” includes [clause (15) to section 2]
(15) “charitable purpose” includes relief of the poor, education, yoga,
medical relief, preservation of environment (including watersheds, forests and
wildlife) and preservation of monuments or places or objects of artistic or
historic interest, and the advancement of any other object of general public
utility:
PROVIDED that the advancement of any other object of general public
utility shall not be a charitable purpose, if it involves the carrying on of
any activity in the nature of trade, commerce or business, or any activity of
rendering any service in relation to any trade, commerce or business, for a
cess or fee or any other consideration, irrespective of the nature of use or
application, or retention, of the income from such activity, unless—
(i) such activity is undertaken in the course of actual carrying out of
such advancement of any other object of general public utility; and
(ii) the aggregate receipts from such activity or activities during the
previous year, do not exceed twenty per cent of the total receipts, of the
trust or institution undertaking such activity or activities, of that previous
year;
[24] “Chief Commissioner” means [clause (15A) to section 2]
(15A) “Chief Commissioner” means a person appointed to be a Chief
Commissioner of Income-tax or a Director General of Income-tax or a
Principal Chief Commissioner of Income-tax or a Principal Director General
of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[25] “child”, in relation to an individual [clause (15B) to section 2]
(15B) “child”, in relation to an individual, includes a step-child and
an adopted child of that individual;
[26] “Commissioner” means [clause (16) to section 2]
(16) “Commissioner” means a person appointed to be a Commissioner of
Income-tax or a Director of Income-tax or a Principal Commissioner of
Income-tax or a Principal Director of Income-tax under sub-section (1)
of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to be
income-tax authorities.
[27] “Commissioner (Appeals)” means [clause (16A) to section 2]
(16A) “Commissioner (Appeals)” means a person appointed to be a
Commissioner of Income-tax (Appeals) under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to be
income-tax authorities.
[28] “company” means [clause (17) to section 2]
(17) “company” means —
(i) any Indian company, or
(ii) any body corporate incorporated by or under the laws of a
country outside India, or
(iii) any institution, association or body which is or was assessable or
was assessed as a company for any assessment year under the Indian Income-tax
Act, 1922 (11 of 1922) or which is or was assessable or was assessed under this
Act as a company for any assessment year commencing on or before the 1st day of
April, 1970, or
(iv) any institution, association or body, whether incorporated or not
and whether Indian or non-Indian, which is declared by general or special order
of the Board to be a company :
PROVIDED that such institution, association or body shall be deemed
to be a company only for such assessment year or assessment years (whether
commencing before the 1st day of April, 1971 or on or after that date) as may
be specified in the declaration ;
[29] “company in which the public
are substantially interested” [clause (18) to section 2]
(18) “company in which the public are substantially interested” — a
company is said to be a company in which the public are substantially
interested —
Following companies are said to be a company in which public are
substantially interested:
1. Government Company;
2. A company under section 8 of the Companies Act, 2013;
3. Mutual benefit finance company;
4. Listed company;
5. Company in which shares are held by co-operative societies;
6. Company which is prescribed by CBDT
[30] “co-operative society” means [clause (19) to section 2]
(19) “co-operative society” means a co-operative society registered
under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law
for the time being in force in any State for the registration of co-operative
societies;
[31] “Deputy Commissioner” means [clause (19A) to section 2]
(19A) “Deputy Commissioner” means a person appointed to be a Deputy
Commissioner of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[32] “demerger”, in relation to companies, means [clause (19AA) to
section 2]
(19AA) “demerger”, in relation to companies, means the transfer,
pursuant to a scheme of arrangement under sections 391 to 394 of the Companies
Act, 1956 (1 of 1956), by a demerged company of its one or more undertakings to
any resulting company in such a manner that -
Demerger is an arrangement whereby some part /undertaking of one
company is transferred to another company which operates completely separate
from the original company. Shareholders of the original company are usually
given an equivalent stake of ownership in the new company.
[33] “demerged company” means [clause (19AAA) to section 2]
(19AAA) “demerged company” means the company whose undertaking is
transferred, pursuant to a demerger, to a resulting company;
[34] “Deputy Commissioner (Appeals)” means [clause (19B) to section 2]
(19B) “Deputy Commissioner (Appeals)” means a person appointed to be a
Deputy Commissioner of Income-tax (Appeals) or an Additional Commissioner of
Income-tax (Appeals) under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[35] “Deputy Director” means [clause (19C) to section 2]
(19C) “Deputy Director” means a person appointed to be a Deputy Director
of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[36] “director”, “manager” and “managing agent”, [clause (20) to section
2]
(20) “director”, “manager” and “managing agent”, in relation to a
company, have the meanings respectively assigned to them in the Companies Act,
1956 (1 of 1956);
[37] “Director General or Director” means [clause (21) to section 2]
(21) “Director General or Director” means a person appointed to be a
Director General of Income-tax or a Principal Director General of Income-tax
or, as the case may be, a Director of Income-tax or a Principal Director of
Income-tax, under sub-section (1) of section 117, and includes a person
appointed under that sub-section to be an Additional Director of Income-tax or
a Joint Director of Income-tax or an Assistant Director or Deputy Director of
Income-tax;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[38] “dividend” includes [clause (22) to section 2]
(22) “dividend” includes -
(a) any distribution by a company of accumulated profits, whether
capitalised or not, if such distribution entails the release by the company to
its shareholders of all or any part of the assets of the company ;
(b) any distribution to its shareholders by a company of debentures,
debenture-stock, or deposit certificates in any form, whether with or without
interest, and any distribution to its preference shareholders of shares by way
of bonus, to the extent to which the company possesses accumulated profits,
whether capitalised or not ;
(c) any distribution made to the shareholders of a company on its
liquidation, to the extent to which the distribution is attributable to the
accumulated profits of the company immediately before its liquidation, whether
capitalised or not ;
(d) any distribution to its shareholders by a company on the reduction
of its capital, to the extent to which the company possesses accumulated
profits which arose after the end of the previous year ending next before the
1st day of April, 1933, whether such accumulated profits have been capitalised
or not ;
(e) any payment by a company, not being a company in which the public
are substantially interested, of any sum (whether as representing a part of the
assets of the company or otherwise) made after the 31st day of May, 1987, by
way of advance or loan to a shareholder, being a person who is the beneficial owner
of shares (not being shares entitled to a fixed rate of dividend whether with
or without a right to participate in profits) holding not less than ten per
cent of the voting power, or to any concern in which such shareholder is a
member or a partner and in which he has a substantial interest (hereafter in
this clause referred to as the said concern) or any payment by any such company
on behalf, or for the individual benefit, of any such shareholder, to the
extent to which the company in either case possesses accumulated profits;
but "dividend" does not include –
…………………………
[39] “domestic company” means [clause (22A) to section 2]
(22A) “domestic company” means an Indian company, or any other company
which, in respect of its income liable to tax under this Act, has made the
prescribed arrangements for the declaration and payment, within India, of the
dividends (including dividends on preference shares) payable out of such
income;
Domestic Company
Domestic Companies are those which are registered under the Companies
Act of India. A company can be a Public Company or a Private Company.
Also include those companies which are situated or registered outside
India but having control and management completely in India.
[40] “document” includes [clause (22AA) to section 2]
(22AA) “document” includes an electronic record as defined in clause (t)
of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of
2000);
Text of Section 2(1)(t) of the Information Technology
Act, 2000
(t) “electronic record” means data, record or data generated, image or
sound stored, received or sent in an electronic form or micro film or computer
generated micro fiche;
[41] “electoral trust” means [clause (22AAA) to section 2]
(22AAA) “electoral trust” means a trust so approved by the Board in
accordance with the scheme made in this regard by the Central Government;
[42] “fair market value”, in relation to a capital asset, means [clause
(22B) to section 2]
(22B) “fair market value”, in relation to a capital
asset, means -
(i) the price that the capital asset would ordinarily
fetch on sale in the open market on the relevant date ; and
(ii) where the price referred to in sub-clause (i) is
not ascertainable, such price as may be determined in accordance with the rules
made under this Act;
[43] “firm”; “partner”; “partnership” [clause (23) to section 2]
(23) (i) “firm” shall have the meaning assigned to it in the Indian
Partnership Act, 1932 (9 of 1932), and shall include a limited liability
partnership as defined in the Limited Liability Partnership Act, 2008 (6 of
2009);
(ii) “partner” shall have the meaning assigned to it in the Indian
Partnership Act, 1932 (9 of 1932), and shall include, -
(a) any person who, being a minor, has been admitted to the benefits of
partnership; and
(b) a partner of a limited liability partnership as defined in the
Limited Liability Partnership Act, 2008 (6 of 2009);
(iii) “partnership” shall have the meaning assigned to it in the Indian
Partnership Act, 1932 (9 of 1932), and shall include a limited liability
partnership as defined in the Limited Liability Partnership Act, 2008 (6 of 2009);
[44] “foreign company” means [clause (23A) to section 2]
(23A) “foreign company” means a company which is not a domestic company;
“Foreign Company” is defined under Section 2 (42) of the Companies Act,
2013 as any company or body corporate incorporated outside India which, -
(a) has a place of business in India whether by itself or through an
agent, physically or through electronic
mode; and
(b) conducts any business activity in India in any other manner.
Foreign Companies
·
Foreign Companies are those
which are not registered under the Companies Act of India and having control
and management completely outside India.
·
Under Corporate Income Tax
these both companies are liable to pay taxes.
·
In the case of Domestic
Company, tax is levied on universal income but for Foreign companies, only that
income is taxable which is earned within India.
[45] “fringe benefits” means [clause (23B) to section 2]
(23B) “fringe benefits” means any fringe benefits referred to
in section 115WB;
Chapter XII-H not to apply after a certain date.
115WM. Nothing contained in this Chapter shall apply, in respect of
any assessment for the assessment year commencing on the 1st day of April, 2010
or any subsequent assessment year.
[46] “hearing” includes [clause (23C) to section 2]
(23C) “hearing” includes communication of data and documents through
electronic mode;
[47] “income” includes [clause
(24) to section 2]
(24) “income” includes -
The Income Tax Act does not define the term Income but
section 2(24) of the Act describes the various receipts which are included
under the ambit of income.
(i)
Profits and gains.
(ii)
Dividends
(iii)
Voluntary contributions
received by a charitable trusts
(iv)
The value of any perquisite or
profit in lieu of salary.
(v)
Any capital gains.
(vi)
Any winnings from
lotteries,
(vii)
Crossword puzzles etc.
Term “income” as defined in section 2(24) does
not include “interest” referred to in section 56(2)(viii) or interest
received in MACT award - Not taxable under the Income-tax Act, 1961, at all
there is no question of deducting tax on the same under section 194A
The writ applicant submitted that the Finance Act,
2015 has inserted new section 194A(3)(ixa) with effect from 01.06.2015 and
effect of the amendment is that no liability for TDS shall be attracted in
respect of any income credited by way of interest on the compensation amount
awarded by the MACT. In spite of the aforesaid amendment, the Insurance
Companies are being compelled to deposit the amount with the Tribunal itself.
The writ applicant accordingly prayed this Court to clarify the issue by
explaining the correct position of law as regards the liability of the
Insurance Company to deduct the TDS and deposit the same with the Tribunal; or
with the Income-tax Department.
Compensation under the award of the MACT is not
income. The expression “income” used in the Entry 82 of List I of Seventh
Schedule to the Constitution can be given widest meaning. Under section
2(24), the definition is inclusive and not exhaustive. In the absence of any
express provision to the contrary, income can be held to refer to something
earned. What is received as compensation for loss in one or the other form may
not be income.
Term “income” as defined in section 2(24) does not
include “interest” referred to in section 56(2)(viii) or interest received in
MACT award. Thus, interest awarded in motor accident claim cases from date of
Claim Petition till passing of award, or in case of Appeal, till judgment of
High Court in such appeal, would not be exigible to tax, not being an income.
Therefore, the interest awarded by the Motor Accident Claim Tribunal under
section 171 of the Motor Vehicles Act, 1988 is not taxable under the Income-tax
Act, 1961 at all there is no question of deducting tax on the same under
section 194A. [In favour of assessee] (Related Assessment year : 2017-18) – [Oriental
Insurance Co. Ltd. v. Chief Commissioner of Income-tax (TDS) [2022] 138
taxmann.com 88 (Guj.)]
Definition of the word ‘income’ given in Section 2(24)
of the Income Tax Act, 1961 is not exhaustive but, inclusive in nature
The definition of Income under Section 2(24) is
inclusive in nature. In the Income Tax Act, 1961 Section 2(24) includes the
word ‘income’ from the clause (i) to (xviii). The Hon’ble Supreme Court in the
case of E. D. Sasson & Co. Ltd. v. CIT (has said “
“Now what is income? The term is nowhere defined in
the Act…… In the absence of a statutory definition, we must take its ordinary
dictionary meaning that which comes in as the periodical produce of one’s work,
business, lands or investments (considered in reference to its amount and
commonly expressed in terms of money)” annual or periodical receipts accruing
to a person or corporation (Oxford Dictionary). – [E. D. Sasson & Co. Ltd. v. CIT (1954) 26 ITR 27 (SC)]
[48] “Income-tax Officer” means [clause (25) to section 2]
(25) “Income-tax Officer” means a person appointed to be an Income-tax
Officer under section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[49] “India” means [clause (25A) to section 2]
(25A) “India” means the territory of India as referred to in article 1
of the Constitution, its territorial waters, seabed and subsoil underlying such
waters, continental shelf, exclusive economic zone or any other maritime zone
as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above
its territory and territorial waters;
Text of Article 1 of Constitution of India 1950
1. Name and territory of the Union
(1) India, that is Bharat, shall be a Union of States
(2) The States and the territories thereof shall be as specified in the
First Schedule
(3) The territory of India shall comprise
[50] “Indian company” means [clause (26) to section 2]
(26) “Indian company” means a company formed and registered under the
Companies Act, 1956 (1 of 1956), and includes -
(i) a company formed and registered under any law relating to
companies formerly in force in any part of India (other than the State of Jammu
and Kashmir and the Union territories specified in sub-clause (iii) of this
clause);
(ia) a corporation established by or under a Central, State or
Provincial Act ;
(ib) any institution, association or body which is declared by the Board
to be a company under clause (17);
(ii) in the case of the State of Jammu and Kashmir, a company formed and
registered under any law for the time being in force in that State;
(iii) in the case of any of the Union territories of Dadra and Nagar
Haveli, Goa, Daman and Diu, and Pondicherry, a company formed and registered
under any law for the time being in force in that Union territory :
PROVIDED that the registered or, as the case may be, principal
office of the company, corporation, institution, association or body in all
cases is in India;
[51] “infrastructure capital company” means [clause (26A) to section 2]
(26A) “infrastructure capital company” means such company which makes
investments by way of acquiring shares or providing long-term finance to any
enterprise or undertaking wholly engaged in the business referred to in
sub-section (4) of section 80-IA or sub-section (1) of section
80-IAB or an undertaking developing and building a housing project
referred to in sub-section (10) of section 80-IB or a project for
constructing a hotel of not less than three-star category as classified by the
Central Government or a project for constructing a hospital with at least one
hundred beds for patients;
[52] “infrastructure capital fund” means [clause (26B) to section 2]
(26B) “infrastructure capital fund” means such fund operating under a
trust deed registered under the provisions of the Registration Act, 1908 (16 of
1908) established to raise monies by the trustees for investment by way of
acquiring shares or providing long-term finance to any enterprise or
undertaking wholly engaged in the business referred to in sub-section (4) of
section 80-IA or sub-section (1) of section 80-IAB or an undertaking developing
and building a housing project referred to in sub-section (10) of section 80-IB
or a project for constructing a hotel of not less than three-star category as
classified by the Central Government or a project for constructing a hospital
with at least one hundred beds for patients;
clause (27) to section 2 Omitted by the Direct Tax
Laws (Amendment) Act, 1987, with effect from 01.04.1988.
[53] “Inspector of Income-tax”
means [clause (28) to section 2]
(28) “Inspector of Income-tax” means a person appointed to be an
Inspector of Income-tax under sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to be
income-tax authorities.
[54] “interest” means [clause (28A) to section 2]
(28A) “interest” means interest payable in any manner in respect of any
moneys borrowed or debt incurred (including a deposit, claim or other similar
right or obligation) and includes any service fee or other charge in respect of
the moneys borrowed or debt incurred or in respect of any credit facility which
has not been utilised;
Interest paid by a builder on failure to construct a
flat is compensatory in nature which is out of the preview of Section 194A
In the instant case, the assessee had not given the money to the builder
by way of deposit, nor had the builder borrowed the amount from the assessee.
The sum paid to the assessee was a refund of the advance given to the builder.
The interest was paid for damages suffered by the assessee on failure in
delivering the flats. Provision of interest by way of compensation falls
outside purview of section 194A and section 2(28A). Assessee entered into an
agreement with a builder for purchase of two residential flats. Flats booked
were not delivered in committed period. Thus, Real Estate Regulatory Authority
directed builder to refund advance amount paid by assessee with compensatory
interest. Builder deducted TDS on amount of compensatory interest paid to
assessee. It was noted that amount payable to assessee was in nature of a
judgment debt or akin to a judgment debt, payment of which could not establish
a debtor-creditor relationship between parties; nor was payment made by builder
to assessee one in discharge of any pre-existing obligation, so as to attract
section 2(28A). It was held that the term ‘interest’ is defined under Section 2(28A)
of the Income-tax Act. From such definition, it appears that the term
‘interest’ has been made entirely relatable to money borrowed or debt incurred
and various gradations of rights and obligations arising from either of the
two. Since the payment could not establish a debtor-creditor relationship
between the assessee and the builder, the said sum or any part thereof cannot
be liable for tax deduction under the relevant provisions of the Act.
Therefore, the provisions of Section 194A were not applicable, and the builder
was wrong in deducting the TDS from the interest payable to the assessee. [In
favour of assessee] (Related Assessment year : 2021-22) – [Sainath Rajkumar
Sarode v. State of Maharashtra (2021) 131 taxmann.com 332 (Bom.)]
[55] “interest on securities” means, [clause (28B) to section 2]
(28B) “interest on securities” means, -
(i) interest on
any security of the Central Government or a State Government;
(ii) interest on debentures or other securities for
money issued by or on behalf of a local authority or a company or a corporation
established by a Central, State or Provincial Act;
[56] “insurer” means [clause (28BB) to section 2]
(28BB) “insurer” means an insurer, being an Indian insurance company, as
defined under clause (7A) of section 2 of the Insurance Act, 1938 (4 of 1938),
which has been granted a certificate of registration under section 3 of that
Act;
Text of Section 2(7A) the Insurance Act, 1938
(7A) “Indian insurance company” means any insurer being a company —
(a) which is formed and registered under the Companies Act, 1956 (1 of
1956);
(b) in which the aggregate holdings of equity shares by a foreign
company, either by itself or through its subsidiary companies or its nominees,
do not exceed twenty-six per cent. paid-up equity capital of such Indian
insurance company;
(c) whose sole purpose is to carry on life insurance business or general
insurance business or re-insurance business.
Explanation. - For the purposes of this clause, the expression “foreign
company” shall have the meaning assigned to it under clause (23A) of section 2
of the Income-tax Act, 1961 (43 of 1961)
[57] “Joint Commissioner” means [clause (28C) to section 2]
(28C) “Joint Commissioner” means a person appointed to be a Joint
Commissioner of Income-tax or an Additional Commissioner of Income-tax under
sub-section (1) of section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[58] “Joint Director” means [clause (28D) to section 2]
(28D) “Joint Director” means a person appointed to be a Joint Director
of Income-tax or an Additional Director of Income-tax under sub-section (1) of
section 117;
Text of sub-section (1) of section 117
Appointment of income-tax authorities.
(1) The Central Government may appoint such persons as it thinks fit to
be income-tax authorities.
[59] “legal representative” [clause (29) to section 2]
(29) “legal representative” has the meaning assigned to it in clause
(11) of section 2 of the Code of Civil Procedure, 1908 (5 of 1908);
Text of clause (11) of section 2 of the Code of Civil
Procedure, 1908
(11) “legal representative” means a person who in law represents the
estate of a deceased person, and includes any person who intermeddles with the
estate of the deceased and where a party sues or issued in a representative
character the person on whom the estate devolves on the death of the party so
suing or sued;
[60] “liable to tax”, in
relation to a person and with reference to a country, means [clause (29A) to
section 2]
(29A) “liable to tax”, in relation to a person and with reference to a
country, means that there is an income-tax liability on such person under the
law of that country for the time being in force and shall include a person who
has subsequently been exempted from such liability under the law of that
country;
[61] “long-term capital asset” means [clause (29AA) to section 2]
(29AA) “long-term capital asset” means a capital asset which is not a
short-term capital asset;
[62] “long-term capital gain”
means [clause (29B) to section 2]
(29B) “long-term capital gain” means capital gain arising from the
transfer of a long-term capital asset;
[63] “manufacture”, with its grammatical variations, means
[clause (29BA) to section 2]
Initially there is no definition
for the term ‘manufacture’ in the Income Tax Act, 1961. During 2004 the FICCI
in a letter to the Central Board of Direct Taxes (CBDT), has said, “One is
surprised to note that the term ‘manufacture’ has not been defined in the
Income-Tax Act, even though the word has been used in several sections of the
Act, which provide for either exemption from tax or deduction from taxable
income."
Section 2(29BA) of Income Tax Act,
1961 (which has been inserted vide Finance Act, 2009, with effect from
01.04.2009) defines the term ‘manufacture’ as with its grammatical variations,
means a change in a non-living physical object or article or thing.
Text of clause (29BA) to section 2
(29BA) “manufacture”, with its
grammatical variations, means a change in a non-living physical object or
article or thing,—
(a) resulting in transformation of
the object or article or thing into a new and distinct object or article or
thing having a different name, character and use; or
(b) bringing into existence of a
new and distinct object or article or thing with a different chemical
composition or integral structure;
[64] “maximum marginal rate” means [clause (29C)
to section 2]
(29C)
“maximum marginal rate” means the rate of income-tax (including surcharge on
income-tax, if any) applicable in relation to the highest slab of income in the
case of an individual, association of persons or, as the case may be, body of
individuals as specified in the Finance Act of the relevant year;
[65]
“National Tax Tribunal” means [clause (29D) to section 2]
(29D)
“National Tax Tribunal” means the National Tax Tribunal established under
section 3 of the National Tax Tribunal Act, 2005;
Text
of Section 3 of National Tax Tribunal Act, 2005
3.
Establishment of National Tax Tribunal. - The Central Government shall, by
notification in the Official Gazette, establish with effect from such date as
may be specified therein, a Tax Tribunal to be known as the National Tax
Tribunal to exercise the jurisdiction, powers and authority conferred on such
Tribunal by or under this Act.
National
Tax Tribunal Act under which a national tribunal was set up to decide
tax-related cases by taking away the jurisdiction of High Courts in such
matters, declared as unconstitutional
It
was the Hon’ble Supreme Court came to the rescue of the tax-payers when there
was move to take away the powers of the High Courts and constitute the National
Tax Tribunal to decide the substantial question of law as the provisions of the
said Act was not in accordance with the basic structure of the Constitution.
The substantial provisions of the Act were struck down as unconstitutional. - [Madras
Bar Association v. UOI (2014) 368 ITR 42 :271 CTR 257 : 227 Taxman 151 : 109
DTR 273 (SC)]
[66]
“non-resident” means [clause (30) to section 2]
(30)
“non-resident” means a person who is not a “resident”, and for the purposes
of sections 92, 93 and 168, includes a person who is not
ordinarily resident within the meaning of clause (6) of section 6 ;
Section 92 : Computation of income from international
transaction having regard to arm's length price.
Section 93 : Avoidance of income-tax by transactions
resulting in transfer of income to non-residents.
Section
168 : Executors.
Section
6(6) : A person is said to be “not ordinarily resident” in India in any
previous
year if such person is
…….
[67]
“person” includes [clause (31) to section 2]
(31)
“person” includes -
(i) an
individual,
(ii) a Hindu
undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of
individuals, whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling
within any of the preceding sub-clauses.
[68] “person who has a substantial
interest in the company”, in relation to a company, means
[clause (32) to section 2]
(32)
“person who has a substantial interest in the company”, in relation to a
company, means a person who is the beneficial owner of shares, not being shares
entitled to a fixed rate of dividend whether with or without a right to
participate in profits, carrying not less than twenty per cent of the voting
power;
[69] “prescribed” means [clause (33) to section 2]
(33) “prescribed” means prescribed by
rules made under this Act;
[70]
“previous year” means [clause (34) to section 2]
(34) “previous year” means the
previous year as defined in section 3;
Text of Section 3
“Previous year” defined.
3. For the purposes of this Act, “previous
year” means the financial year immediately preceding
the assessment year :
PROVIDED
that, in the case of a business or profession newly set up, or a source of
income newly coming into existence, in the said financial year, the previous
year shall be the period beginning with the date of setting up of the business
or profession or, as the case may be, the date on which the source of income
newly comes into existence and ending with the said financial year.
[71]
“Principal Chief Commissioner of Income-tax” means [clause (34A) to section 2]
(34A)
“Principal Chief Commissioner of Income-tax” means a person appointed to be a
Principal Chief Commissioner of Income-tax under sub-section (1) of section
117;
Text
of sub-section (1) of section 117
Appointment
of income-tax authorities.
(1)
The Central Government may appoint such persons as it thinks fit to be
income-tax authorities.
[72]
“Principal Commissioner of Income-tax” means [clause (34B) to section 2]
(34B)
“Principal Commissioner of Income-tax” means a person appointed to be a
Principal Commissioner of Income-tax under sub-section (1) of section 117;
Text
of sub-section (1) of section 117
Appointment
of income-tax authorities.
(1)
The
Central Government may appoint such persons as it thinks fit to be income-tax
authorities.
[73]
“Principal Director of Income-tax” means [clause (34C) to section 2]
(34C)
“Principal Director of Income-tax” means a person appointed to be a Principal
Director of Income-tax under sub-section (1) of section 117;
Text
of sub-section (1) of section 117
Appointment
of income-tax authorities.
(1)
The
Central Government may appoint such persons as it thinks fit to be income-tax
authorities.
[74]
“Principal Director General of Income-tax” means [clause (34D) to section 2]
(34D)
“Principal Director General of Income-tax” means a person appointed to be a
Principal Director General of Income-tax under sub-section (1) of section
117;
Text
of sub-section (1) of section 117
Appointment
of income-tax authorities.
(1)
The
Central Government may appoint such persons as it thinks fit to be income-tax
authorities.
[75]
“principal officer”, [clause (35) to section 2]
(35)
“principal officer”, used with reference to a local authority or a company or
any other public body or any association of persons or any body of individuals,
means -
(a)
the secretary, treasurer, manager or agent of the authority, company,
association or body, or
(b)
any person connected with the management or administration of the local
authority, company, association or body upon whom the Assessing Officer has
served a notice of his intention of treating him as the principal officer
thereof;
[76]
“profession” includes [clause (36) to section 2]
(36)
“profession” includes vocation;
[77]
“public sector company” means [clause (36A) to section 2]
(36A)
“public sector company” means any corporation established by or under any Central,
State or Provincial Act or a Government company as defined in section
617 of the Companies Act, 1956 (1 of 1956);
Text
of Section 617 of the Companies Act, 1956
617.
Definition of “Government company”. For the purposes of 3 this Act Government
company means any company in which not less than fifty- one per cent. of the 4
paid up share capital] is held by the Central Government, or by any State
Government or Governments, or partly by the Central Government and partly by
one or more State Governments 5 and includes a company which is a subsidiary of
a Government company as thus defined.
[78]
“public servant” [clause (37) to section 2]
(37) “public servant” has the same
meaning as in section 21 of the Indian Penal Code (45 of
1860);
Text of Section 21 of the Indian Penal
Code, 1860
21.
“Public servant”. - The words “public
servant” denote a person falling under any of the descriptions hereinafter
following; namely : -
[79] “rate or rates in force” or
“rates in force”, in relation to an assessment year or financial year, means [clause
(37A) to section 2]
The
rate or rates in force is defined under section 2(37A) mean :- the rate or
rates of income-tax
specified
in this behalf in the Finance Act of the relevant year or the rate or rates of
income-tax
specified
in an agreement entered into by the Central Government under section 90 or an
agreement notified
Text
of section 2(37A)
(37A)
“rate or rates in force” or “rates in force”, in relation to an assessment year
or financial year, means -
(i)
for the purposes of calculating income-tax under the first proviso to
sub-section (5) of section 132, or computing the income-tax chargeable
under sub-section (4) of section 172 or sub-section (2)
of section 174 or section 175 or sub-section (2)
of section 176 or deducting income-tax under section
192 from income chargeable under the head "Salaries" or
computation of the "advance tax" payable under Chapter XVII-C in a
case not falling under section 115A or section
115B or section 115BB or section 115BBB or section
115E or section 164 or section 164A or section 167B,
the rate or rates of income-tax specified in this behalf in the Finance Act of
the relevant year, and for the purposes of computation of the "advance
tax" payable under Chapter XVII-C in a case falling under section
115A or section 115B or section 115BB or section
115BBB or section 115E or section 164 or section
164A or section 167B, the rate or rates specified in section
115A or section 115B or section 115BB or section
115BBB or section 115E or section 164 or section
164A or section 167B, as the case may be, or the rate or rates of
income-tax specified in this behalf in the Finance Act of the relevant year,
whichever is applicable ;
(ii)
for the purposes of deduction of tax under sections
193, 194, 194A, 194B, 194BB and 194D, the rate or
rates of income-tax specified in this behalf in the Finance Act of the relevant
year ;
(iii)
for the purposes of deduction of tax under section
194LBA or section 194LBB or section
194LBC or section 195, the rate or rates of income-tax specified in
this behalf in the Finance Act of the relevant year or the rate or rates of
income-tax specified in an agreement entered into by the Central Government
under section 90, or an agreement notified by the Central Government
under section 90A, whichever is applicable by virtue of the provisions
of section 90, or section 90A, as the case may be;
[80]
“recognised provident fund” means [clause (38) to section 2]
(38)
“recognised provident fund” means a provident fund which has been and continues
to be recognised by the Principal Chief Commissioner or Chief Commissioner or
Principal Commissioner or Commissioner in accordance with the rules contained
in Part A of the Fourth Schedule, and includes a provident fund established
under a scheme framed under the Employees' Provident Funds Act, 1952 (19 of
1952);
clause
(39) to section 2 [Omitted by the Finance Act, 1992, with effect from
01.04.1993;]
[81]
“regular assessment” means [clause (40) to section 2]
(40)
“regular assessment” means the assessment made under sub-section (3)
of section 143 or section 144;
Scrutiny
Assessment. [Section 143(3)]
(3)
On the day specified in the notice issued under sub-section (2), or as soon
afterwards as may be, after hearing such evidence as the assessee may produce
and such other evidence as the Assessing Officer may require on specified
points, and after taking into account all relevant material which he has
gathered, the Assessing Officer shall, by an order in writing, make an
assessment of the total income or loss of the assessee, and determine the sum
payable by him or refund of any amount due to him on the basis of such
assessment:
Best
judgment assessment [Section 144]
144.
(1) If any person -
(a) fails to make the return required under
sub-section (1) of section 139 and has not made a return or a revised return
under sub-section (4) or sub-section (5) or an updated return under sub-section
(8A) of that section, or
(b) fails to comply with all the terms of a
notice issued under sub-section (1) of section 142 or fails to comply with a
direction issued under sub-section (2A) of that section, or
(c) having made a return, fails to comply with
all the terms of a notice issued under sub-section (2) of section 143,
the
Assessing Officer, after taking into account all relevant material which the
Assessing Officer has gathered, shall, after giving the assessee an opportunity
of being heard, make the assessment of the total income or loss to the best of
his judgment and determine the sum payable by the assessee on the basis of such
assessment:
[82] “relative”, in relation to an individual,
means [clause (41) to section 2]
(41)
“relative”, in relation to an individual, means the husband, wife, brother or
sister or any lineal ascendant or descendant of that individual;
Assessing Officer cannot import the
definition of ‘Relative’ from Section 56 to invoke Section 40A(2) - Sister-in-law
of an individual does not fall under definition of relative under section
2(41); thus, rental payment on account of godowns/shop made to sisters-in-law
could not be disallowed
It held that the definition of the term
‘relative’ provided under section 2(41) does not cover the sister-in-law of the
assessee. However, the sister-in-law of the assessee is covered within the
definition of the term ‘relative’ as provided under Section 56(2). Since the
said definition is only for the relevant clause provided under Section 56(2),
therefore, the same couldn’t be applied in respect of provisions of Section
40A(2) when a general definition of the term ‘relative’ is provided under
Section 2(41). Hence, the provisions of Section 40A(2) could not be
invoked in respect of a transaction of payment of rent to persons who are not
falling in the definition in term of ‘relative’ provided under Section 2(41).
[In favour of assessee] (Related Assessment years : 2013-14 and 2014-15) – [Rajesh Bajaj v. DCIT (2021) 187 ITD
230 : 124 taxmann.com 69 (ITAT Allahabad)]
[83] “resulting company” means [clause (41A) to
section 2]
(41A) “resulting
company” means one or more companies (including a wholly owned subsidiary
thereof) to which the undertaking of the demerged company is transferred in a
demerger and, the resulting company in consideration of such transfer of
undertaking, issues shares to the shareholders of the demerged company and
includes any authority or body or local authority or public sector company or a
company established, constituted or formed as a result of demerger;
[84] “resident” means [clause (42) to section 2]
(42)
“resident” means a person who is resident in India within the meaning
of section 6;
Text
of Section 6
Residence
in India.
6. For
the purposes of this Act, -
(1)
An individual is said to be resident in India in any previous year, if he –
……………………..
[85]
“short-term capital asset” means [clause (42A) to section 2]
(42A)
“short-term capital asset” means a capital asset held by an assessee for not
more than thirty-six months immediately preceding the date of its transfer :
PROVIDED that
in the case of a security (other than a unit) listed in a recognized stock
exchange in India or a unit of the Unit Trust of India established under the
Unit Trust of India Act, 1963 (52 of 1963) or a unit of an equity oriented fund
or a zero coupon bond, the provisions of this clause shall have effect as if
for the words “thirty-six months”, the words “twelve months” had been
substituted:
PROVIDED
FURTHER that in case of a share of a company (not being a share listed in
a recognised stock exchange) or a unit of a Mutual Fund specified under clause
(23D) of section 10, which is transferred during the period beginning on
the 1st day of April, 2014 and ending on the 10th day of July, 2014, the
provisions of this clause shall have effect as if for the words “thirty-six
months”, the words "twelve months" had been substituted:
PROVIDED
ALSO that in the case of a share of a company (not being a share listed in
a recognised stock exchange in India), or an immovable property, being land or
building or both, the provisions of this clause shall have effect as if for the
words “thirty-six months”, the words “twenty-four months” had been substituted.
[86]
“short-term capital gain” means [clause (42B) to section 2]
(42B)
“short-term capital gain” means capital gain arising from the transfer of a
short-term capital asset;
[87]
“slump sale” means [clause (42C) to section 2]
(42C)
“slump sale” means the transfer of one or more undertaking, by any means, for a
lump sum consideration without values being assigned to the individual assets
and liabilities in such transfer.
Explanation
1. - For the purposes of this clause, “undertaking” shall have the meaning
assigned to it in Explanation 1 to clause (19AA).
Explanation
2. - For the removal of doubts, it is hereby declared that the determination of
the value of an asset or liability for the sole purpose of payment of stamp duty,
registration fees or other similar taxes or fees shall not be regarded as
assignment of values to individual assets or liabilities.
Explanation
3. - For the purposes of this clause, “transfer” shall have the meaning
assigned to it in clause (47);
[88] “tax” [clause (43) to section 2]
(43)
“tax” in relation to the assessment year commencing on the 1st day of April,
1965, and any subsequent assessment year means income-tax chargeable under the
provisions of this Act, and in relation to any other assessment year income-tax
and super-tax chargeable under the provisions of this Act prior to the
aforesaid date and in relation to the assessment year commencing on the 1st day
of April, 2006, and any subsequent assessment year includes the fringe benefit
tax payable under section 115WA;
[89] “tax credit certificate” means [clause (43A)
to section 2]
(43A)
“tax credit certificate” means a tax credit certificate granted to any person
in accordance
with
the provisions of Chapter XXII-B and any scheme made thereunder;
Text
of Chapter XXII-B
CHAPTER
XXII-B
TAX
CREDIT CERTIFICATES
280Y. [Omitted by The Finance Act, 1990, with
effect from 01.04.1990]
280Z. [Omitted by the Finance Act, 1990, with
effect from 01.04.1990]
280ZA.
[Omitted by the Finance Act, 1987, with effect from 01.04.1988]
280ZB.
[Omitted by the Finance Act, 1990, with effect from 01.04.1990]
280ZC.
[Omitted by the Finance Act, 1990, with effect from 01.04.1990]
280ZD.
[Omitted by the Finance Act, 1990, with effect from 01.04.1990]
280ZE.
[Omitted by The Finance Act, 1990, with effect from 01.04.1990]
clause
(43B) to section 2
Omitted
by the Direct Tax Laws (Amendment) Act, 1987, with effect from 01.04.1989.
Original
clause (43B) was inserted by the Finance (No. 2) Act, 1971, with effect from
01.01.1972.
[90]
“Tax Recovery Officer” means [clause (44) to section 2]
(44)
“Tax Recovery Officer” means any Income-tax Officer who may be authorised by
the Principal Chief Commissioner or Chief Commissioner or Principal
Commissioner or Commissioner, by general or special order in writing, to
exercise the powers of a Tax Recovery Officer and also to exercise or perform
such powers and functions which are conferred on, or assigned to, an Assessing
Officer under this Act and which may be prescribed;
[91]
“total income” [clause (45) to section 2]
(45)
“total income” means the total amount of income referred to in section 5,
computed in the manner laid down in this Act;
Text
of Section 5
Scope
of Total Income
clause
(46)
Omitted
by the Finance Act, 1965, with effect from 01.04.1965.
[92]
“transfer”, in relation to a capital asset, includes, [clause (47) to section
2]
(47)
"transfer", in relation to a capital asset, includes, -
(i)
the sale, exchange or relinquishment of the asset ; or
(ii)
the extinguishment of any rights therein ; or
(iii)
the compulsory acquisition thereof under any law ; or
(iv)
in a case where the asset is converted by the owner thereof into, or is treated
by him as, stock-in-trade of a business carried on by him, such conversion or
treatment ; or
(iva)
the maturity or redemption of a zero coupon bond; or
(v)
any transaction involving the allowing of the possession of any immovable
property to be taken or retained in part performance of a contract of the
nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of
1882) ; or
(vi)
any transaction (whether by way of becoming a member of, or acquiring shares
in, a co-operative society, company or other association of persons or by way
of any agreement or any arrangement or in any other manner whatsoever) which has
the effect of transferring, or enabling the enjoyment of, any immovable
property.
Explanation
1.—For the purposes of sub-clauses (v) and (vi), "immovable property"
shall have the same meaning as in clause (d) of section 269UA.
Explanation
2.—For the removal of doubts, it is hereby clarified that "transfer"
includes and shall be deemed to have always included disposing of or parting
with an asset or any interest therein, or creating any interest in any asset in
any manner whatsoever, directly or indirectly, absolutely or conditionally,
voluntarily or involuntarily, by way of an agreement (whether entered into in
India or outside India) or otherwise, notwithstanding that such transfer of
rights has been characterised as being effected or dependent upon or flowing
from the transfer of a share or shares of a company registered or incorporated
outside India;
[93]
“virtual digital asset” means [clause (47A) to section 2]
[Inserted by the Finance Act, 2022,
with effect from 01.04.2022]
(47A) “virtual digital asset” means
-
(a) any information or code or
number or token (not being Indian currency or foreign currency), generated
through cryptographic means or otherwise, by whatever name called, providing a
digital representation of value exchanged with or without consideration, with
the promise or representation of having inherent value, or functions as a store
of value or a unit of account including its use in any financial transaction or
investment, but not limited to investment scheme; and can be transferred,
stored or traded electronically;
(b) a non-fungible token or any
other token of similar nature, by whatever name called;
(c) any other digital asset, as the
Central Government may, by notification in the Official Gazette specify:
PROVIDED that the Central
Government may, by notification in the Official Gazette, exclude any digital
asset from the definition of virtual digital asset subject to such conditions
as may be specified therein.
Explanation. - For the purposes of
this clause, -
(a)
“non-fungible
token” means such digital asset as the Central Government may, by notification
in the Official Gazette, specify;
(b)
the
expressions “currency”, “foreign currency” and “Indian currency” shall have the
same meanings as respectively assigned to them in clauses (h), (m) and (q) of
section 2 of the Foreign Exchange Management Act, 1999.
[94]
“zero coupon bond” means a bond [clause (1A) to section 2]
(48) “zero coupon bond” means a bond
-
(a)
issued by any infrastructure capital company or infrastructure capital fund or infrastructure
debt fund or public sector company or scheduled bank on or after the 1st day of
June, 2005;
(b)
in respect of which no payment and benefit is received or receivable before
maturity or redemption from infrastructure capital company or infrastructure
capital fund or infrastructure debt fund or] public sector company or scheduled
bank; and
(c)
which the Central Government may, by notification in the Official Gazette,
specify in this behalf.
Explanation
1. - For the purposes of this clause,
the expression “scheduled bank” shall have the meaning assigned to it in clause
(ii) of the Explanation to sub-clause (c) of clause (viia) of sub-section (1)
of section 36.
Explanation
2. - For the purposes of this clause,
the expression “infrastructure debt fund” shall mean the infrastructure debt
fund notified by the Central Government in the Official Gazette under clause
(47) of section 10.
