1. Short title, extent and commencement.—(1) This Act may be called the Income-tax Act, 1961.
(2) It extends to the whole of India.
(3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1962.

2. Definitions.—In this Act, unless the context otherwise requires,—
1
[(1) “advance tax” means the advance tax payable in accordance with the provisions of 
Chapter XVII-C;]
2
[(1A)] “agricultural income” means—
3
[(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—
(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-in-kind 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 paragraph (ii) of this sub-clause ;
(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 process mentioned in paragraphs (ii) and (iii) 
of sub-clause (b) is carried on:
4
[Provided that—
(i) 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 rent-in-kind, by reason of 
his connection with the land, requires as a dwelling house, or as a store-house, or other outbuilding, and
(ii) the land is either assessed to land revenue in India or is subject to a local rate assessed 
and collected by officers of the Government as such or where the land is not so assessed to 
land revenue or subject to a local rate, it is not situated (A) in any area which is comprised within the jurisdiction of a municipality 
(whether known as a municipality, municipal corporation, notified area committee, 
town area committee, town committee or by any other name) or a cantonment board 
and which has a population of not less than ten thousand 1
***; or
2
[(B) in any area within the distance, measured aerially,—
(I) not being more than two kilometres, from the local limits of any 
municipality or cantonment board referred to in item (A) and which has a 
population of more than ten thousand but not exceeding one lakh; or
(II) not being more than six kilometres, from the local limits of any 
municipality or cantonment board referred to in item (A) and which has a 
population of more than one lakh but not exceeding ten lakh; or
(III) not being more than eight kilometres, from the local limits of any 
municipality or cantonment board referred to in item (A) and which has a 
population of more than ten lakh.]
3
[Explanation 4
[1.]—For the removal of doubts, it is hereby declared that revenue derived 
from land shall not include and shall be deemed never to have included any income arising from 
the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of this 
section.]
5
[Explanation 2.—For the removal of doubts, it is hereby declared that income derived from 
any building or land referred to in sub-clause (c) arising from the use of such building or land for 
any purpose (including letting for residential purpose or for the purpose of any business or 
profession) other than agriculture falling under sub-clause (a) or sub-clause (b) shall not be 
agricultural income.]
6
[Explanation 3.—For the purposes of this clause, any income derived from saplings or 
seedlings grown in a nursery shall be deemed to be agricultural income.]
7
[Explanation 4.—For the purposes of clause (ii) of the proviso to sub-clause (c), 
“population” means the population according to the last preceding census of which the relevant 
figures have been published before the first day of the previous year;]
8
[
9
[(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 1
[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;]
2
[(1C) “Additional Commissioner” means a person appointed to be an Additional Commissioner 
of Income-tax under sub-section (1) of section 117;
(1D) “Additional Director” means a person appointed to be an Additional Director of Income-tax 
under sub-section (1) of section 117;]
(2) “annual value”, in relation to any property, means its annual value as determined 
under section 23 ;
3
* * * * *
(4) “Appellate Tribunal” means the Appellate Tribunal constituted under section 252;
(5) “approved gratuity fund” means a gratuity fund which has been and continues to be approved 
by the 4
[
5
[Principal Chief Commissioner or Chief Commissioner] or 6
[Principal Commissioner or 
Commissioner]] in accordance with the rules contained in Part C of the Fourth Schedule ;
(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 4
[
5
[Principal Chief Commissioner or Chief 
Commissioner] or 6
[Principal Commissioner or Commissioner]] in accordance with the rules 
contained in Part B of the Fourth Schedule;
(7) “assesse” means a person by whom 7
[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 
8
[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;
9
[(7A) “Assessing Officer” means the 10[
11[Assistant Commissioner or Deputy Commissioner] or
12[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) orsub-section (2) of 
section 120 or any other provision of this Act, and the 2
[Additional Commissioner or]1
[Additional Director or] 2
[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;]
(8) “assessment” includes reassessment;
(9) “assessment year” means the period of twelve months commencing on the 1st day of April 
every year;
3
[(9A) “Assistant Commissioner” means a person appointed to be an Assistant Commissioner of 
Income-tax 4
[or a Deputy Commissioner of Income-tax] under sub-section (1) of section 117;]
5
[(9B) “Assistant Director” means a person appointed to be an Assistant Director of Income-tax 
under sub-section (1) of section 117;]
(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;
6
[(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,
in respect of which the same percentage of depreciation is prescribed;]
(12) “Board” means the 7
[Central Board of Direct Taxes constituted under the Central Boards of 
Revenue Act, 1963 (54 of 1963)];
8
[(12A) “books or books of account” includes ledgers, day-books, cash books, account-books and 
other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or 
any other form of electro-magnetic data storage device;]
(13) “business” includes any trade, commerce or manufacture or any adventure or concern in the 
nature of trade, commerce or manufacture;
9
[(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), and
the units of which are required to be listed on recognised stock exchange in accordance with the 
aforesaid regulations;](14)
1
[“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),
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;
2
[(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 dependant on him, 
but excludes—
(a) jewellery;
(b) archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures; or
(f) any work of art.
Explanation 3
[1].—For the purposes of this sub-clause, “jewellery” includes—
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy 
containing one or more of such precious metals, whether or not containing any precious 
or semi-precious stone, and whether or not worked or sewn into any wearing apparel;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil or 
other article or worked or sewn into any wearing apparel.]
4
[Explanation 2.—For the purposes of this clause—
(a) the expression “Foreign Institutional Investor” shall have the meaning assigned to 
it in clause (a) of the Explanation to section 115AD;
(b) the expression “securities” shall have the meaning assigned to it in clause (h) of 
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);]
5
[(iii) agricultural land in India, not being land situate—
(a) in any area which is comprised within the jurisdiction of a municipality (whether 
known as a municipality, municipal corporation, notified area committee, town area 
committee, town committee, or by any other name) or a cantonment board and which has a 
population of not less than ten thousand 6
*** ; or 1
[(b) in any area within the distance, measured aerially,—
(I) not being more than two kilometres, from the local limits of any municipality or 
cantonment board referred to in item (a) and which has a population of more than ten 
thousand but not exceeding one lakh; or
(II) not being more than six kilometres, from the local limits of any municipality or 
cantonment board referred to in item (a) and which has a population of more than one 
lakh but not exceeding ten lakh; or
(III) not being more than eight kilometres, from the local limits of any municipality 
or cantonment board referred to in item (a) and which has a population of more than ten 
lakh.
Explanation.—For the purposes of this sub-clause, “population” means the population 
according to the last preceding census of which the relevant figures have been published before 
the first day of the previous year;]]
2
[(iv) 6½ per cent.. Gold Bonds, 1977, 3
[or 7 per cent.. Gold Bonds, 1980], 4
[or National Defence 
Gold Bonds, 1980], issued by the Central Government;]
5
[(v) Special Bearer Bonds, 1991, issued by the Central Government;]
6
[(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 7
[or deposit certificates 
issued under the Gold Monetisation Scheme, 2015] notified by the Central Government.]
8
[Explanation.—For the removal of doubts, it is hereby clarified that “property” includes and 
shall be deemed to have always included any rights in or in relation to an Indian company, 
including rights of management or control or any other rights whatsoever;]
9
[(15) “charitable purpose”includes relief of the poor, education, 10[yoga,] medical relief, 
11[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:
12[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;]] [(15A) “Chief Commissioner” means a person appointed to be a Chief Commissioner of Incometax or a Principal Chief Commissioner of Income-tax under sub-section (1) of section 117;]
2
[
3
[(15B)] “child”, in relation to an individual, includes a step-child and an adopted child of that 
individual;]
4
[(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;]
5
[(16A) “Commissioner (Appeals)” means a person appointed to be a Commissioner of Incometax (Appeals) under sub-section (1) of section 117;]
6
[(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;]
(18) “company in which the public are substantially interested”—a company is said to be a 
company in which the public are substantially interested—
7
[(a) if it is a company owned by the Government or the Reserve Bank of India or in which 
not less than forty per cent.. of the shares are held (whether singly or taken together) by the 
Government or the Reserve Bank of India or a corporation owned by that bank; or]
8
[(aa) if it is a company which is registered under section 25 of the Companies 
Act, 1956 (1 of 1956); or]
(ab) if it is a company having no share capital and if, having regard to its objects, the nature 
and composition of its membership and other relevant considerations, it is declared by order of 
the Board to be a company in which the public are substantially interested:
Provided that such company shall be deemed to be a company in which the public are 
substantially interested 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; 
or] 1
[(ac) if it is a mutual benefit finance company, that is to say, a company which carries on, as 
its principal business, the business of acceptance of deposits from its members and which is 
declared by the Central Government under section 620A of the Companies Act, 1956 (1 of 1956), 
to be a Nidhi or Mutual Benefit Society; or]
2
[(ad) if it is a company, wherein shares (not being shares entitled to a fixed rate of dividend 
whether with or without a further right to participate in profits) carrying not less than fifty per 
cent.. of the voting power have been allotted unconditionally to, or acquired unconditionally by, 
and were throughout the relevant previous year beneficially held by, one or more co-operative 
societies;]
3
[(b) if it is a company which is not a private company as defined in the Companies Act, 
1956 (1 of 1956), and the conditions specified either in item (A) or in item (B) are fulfilled, 
namely:—
(A) shares in the company (not being shares entitled to a fixed rate of dividend whether 
with or without a further right to participate in profits) were, as on the last day of the relevant 
previous year, listed in a recognised stock exchange in India in accordance with the Securities 
Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made thereunder;
4
[(B) shares in the company (not being shares entitled to a fixed rate of dividend whether 
with or without a further right to participate in profits) carrying not less than fifty per cent.. of 
the voting power have been allotted unconditionally to, or acquired unconditionally by, and 
were throughout the relevant previous year beneficially held by—
(a) the Government, or
(b) a corporation established by a Central, State or Provincial Act, or
(c) any company to which this clause applies or any subsidiary company of such 
company 5
[if the whole of the share capital of such subsidiary company has been held by 
the parent company or by its nominees throughout the previous year].
Explanation.—In its application to an Indian company whose business consists mainly in the 
construction of ships or in the manufacture or processing of goods or in mining or in the generation or 
distribution of electricity or any other form of power, item (B) shall have effect as if for the words 
“not less than fifty per cent.”, the words “not less than forty per cent.” had been substituted;]]
(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;
6
[(19A) “Deputy Commissioner” means a person appointed to be a Deputy Commissioner of 
Income-tax 7
*** under sub-section (1) of section 117;
8
[(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—
(i) all the property of the undertaking, being transferred by the demerged company, 
immediately before the demerger, becomes the property of the resulting company by virtue of the 
demerger;(ii) all the liabilities relatable to the undertaking, being transferred by the demerged company, 
immediately before the demerger, become the liabilities of the resulting company by virtue of the 
demerger;
(iii) the property and the liabilities of the undertaking or undertakings being transferred by the 
demerged company are transferred at values appearing in its books of account immediately before 
the demerger;
(iv) the resulting company issues, in consideration of the demerger, its shares to the 
shareholders of the demerged company on a 1
[proportionate basis except where the resulting 
company itself is a shareholder of the demerged company];
(v) the shareholders holding not less than three-fourths in value of the shares in the demerged 
company (other than shares already held therein immediately before the demerger, or by a 
nominee for, the resulting company or, its subsidiary) become share-holders of the resulting 
company or companies by virtue of the demerger,
otherwise than as a result of the acquisition of the property or assets of the demerged company or any 
undertaking thereof by the resulting company;
(vi) the transfer of the undertaking is on a going concern basis;
(vii) the demerger is in accordance with the conditions, if any, notified under sub-section (5) 
of section 72A by the Central Government in this behalf.
Explanation 1.—For the purposes of this clause, “undertaking” shall include any part of an 
undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does 
not include individual assets or liabilities or any combination thereof not constituting a business 
activity.
Explanation 2.—For the purposes of this clause, the liabilities referred to in sub-clause (ii), shall 
include—
(a) the liabilities which arise out of the activities or operations of the undertaking;
(b) the specific loans or borrowings (including debentures) raised, incurred and utilised solely 
for the activities or operations of the undertaking; and
(c) in cases, other than those referred to in clause (a) or clause (b), so much of the amounts of 
general or multipurpose borrowings, if any, of the demerged company as stand in the same 
proportion which the value of the assets transferred in a demerger bears to the total value of the 
assets of such demerged company immediately before the demerger.
Explanation 3.—For determining the value of the property referred to in sub-clause (iii), any 
change in the value of assets consequent to their revaluation shall be ignored.
Explanation 4.—For the purposes of this clause, the splitting up or the reconstruction of any 
authority or a body constituted or established under a Central, State or Provincial Act, or a local 
authority or a public sector company, into separate authorities or bodies or local authorities or companies, as the case may be, shall be deemed to be a demerger if such split up or reconstruction 
fulfils 1
[such conditions as may be notified in the Official Gazette, by the Central Government;]
2
[Explanation 5.—For the purposes of this clause, the reconstruction or splitting up of a company, 
which ceased to be a public sector company as a result of transfer of its shares by the Central 
Government, into separate companies, shall be deemed to be a demerger, if such reconstruction or 
splitting up has been made to give effect to any condition attached to the said transfer of shares and 
also fulfils such other conditions as may be notified by the Central Government in the Official 
Gazette.]
(19AAA) “demerged company” means the company whose undertaking is transferred, pursuant to 
a demerger, to a resulting company;]
(19B) “Deputy Commissioner (Appeals)” means a person appointed to be a Deputy 
Commissioner of Income-tax (Appeals) 3
[or an Additional Commissioner of Income-tax (Appeals)]
under sub-section (1) of section 117;]
3
[(19C) “Deputy Director” means a person appointed to be a Deputy Director of Income-tax 4
*** 
under sub-section (1) of section 117;]
(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);
5
[(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;]
(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) 
1
[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—
(i) a distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any 
share issued for full cash consideration, where the holder of the share is not entitled in the event 
of liquidation to participate in the surplus assets;
2
[(ia) a distribution made in accordance with sub-clause (c) or sub-clause (d) in so far as such 
distribution is attributable to the capitalised profits of the company representing bonus shares 
allotted to its equity shareholders after the 31st day of March, 1964 3
[and before the 1st day of 
April, 1965];]
(ii) any advance or loan made to a shareholder 4
[or the said concern] by a company in the 
ordinary course of its business, where the lending of money is a substantial part of the business of 
the company;
(iii) any dividend paid by a company which is set off by the company against the whole or 
any part of any sum previously paid by it and treated as a dividend within the meaning of subclause (e), to the extent to which it is so set off;
5
[(iv) any payment made by a company on purchase of its own shares from a shareholder in 
accordance with the provisions of section 77A of the Companies Act, 1956 (1 of 1956);
(v) any distribution of shares pursuant to a demerger by the resulting company to the 
shareholders of the demerged company (whether or not there is a reduction of capital in the 
demerged company).]
Explanation 1.—The expression “accumulated profits”, wherever it occurs in this clause, shall 
not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 
1948, and before the 1st day of April, 1956.
Explanation 2.—The expression “accumulated profits” in sub-clauses (a), (b), (d) and (e), shall 
include all profits of the company up to the date of distribution or payment referred to in those subclauses, and in sub-clause (c) shall include all profits of the company up to the date of 
liquidation,6
[but shall not, where the liquidation is consequent on the compulsory acquisition of its 
undertaking by the Government or a corporation owned or controlled by the Government under any 
law for the time being in force, include any profits of the company prior to three successive previous 
years immediately preceding the previous year in which such acquisition took place].
7
[Explanation 2A.––In the case of an amalgamated company, the accumulated profits, whether 
capitalised or not, or loss, as the case may be, shall be increased by the accumulated profits, whether 
capitalised or not, of the amalgamating company on the date of amalgamation.] 1
[Explanation 3.—For the purposes of this clause,—
(a) “concern” means a Hindu undivided family, or a firm or an association of persons or a 
body of individuals or a company;
(b) a person shall be deemed to have a substantial interest in a concern, other than a company, 
if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent.
of the income of such concern;]
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;]
3
[(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);]
4
[(22AAA) “electoral trust” means a trust so approved by the Board in accordance with the 
scheme made in this regard by the Central Government;]
5
[
6
[(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;
7
[(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);
2
[(23A) “foreign company” means a company which is not a domestic company;]
8
[(23B) “fringe benefits” means any fringe benefits referred to in section 115WB;] 1
[(23C) “hearing” includes communication of data and documents through electronic mode;]
(24) “income” includes—
(i) profits and gains;
(ii) dividend;
2
[(iia) voluntary contributions received by a trust created wholly or partly for charitable or 
religious purposes or by an institution established wholly or partly for such purposes 3
[or by an 
association or institution referred to in clause (21) or clause (23), or by a fund or trust or 
institution referred to in sub-clause (iv) or sub-clause (v) 4
[or by any university or other 
educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or 
other institution referred to in sub-clause (iiiae) or sub-clause (via)] of clause (23C), of 
section 10]
5
[or by an electoral trust].]
Explanation.—For the purposes of this sub-clause, “trust” includes any other legal obligation;]
(iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) 
of section 17;
6
[(iiia) any special allowance or benefit, other than perquisite included under sub-clause (iii), 
specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the 
performance of the duties of an office or employment of profit;
(iiib) any allowance granted to the assessee either to meet his personal expenses at the place 
where the duties of his office or employment of profit are ordinarily performed by him or at a 
place where he ordinarily resides or to compensate him for the increased cost of living;]
(iv) the value of any benefit or perquisite, whether convertible into money or not, obtained 
from a company either by a director or by a person who has a substantial interest in the company, 
or by a relative of the director or such person, and any sum paid by any such company in respect 
of any obligation which, but for such payment, would have been payable by the director or other 
person aforesaid;
7
[(iva) the value of any benefit or perquisite, whether convertible into money or not, obtained 
by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 
160 or by any person on whose behalf or for whose benefit any income is receivable by the 
representative assessee (such person being hereafter in this sub-clause referred to as the 
“beneficiary”) and any sum paid by the representative assessee in respect of any obligation 
which, but for such payment, would have been payable by the beneficiary;]
(v) any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or 
section 41 or section 59;
8
[(va) any sum chargeable to income-tax under clause (iiia) of section 28;] 1
[(vb) any sum chargeable to income-tax under clause (iiib) of section 28;]
2
[(vc) any sum chargeable to income-tax under clause (iiic) of section 28;]
3
[(vd)] the value of any benefit or perquisite taxable under clause (iv) of section 28;
4
[(ve) any sum chargeable to income-tax under clause (v) of section 28;]
(vi) any capital gains chargeable under section 45;
(vii) the profits and gains of any business of insurance carried on by a mutual insurance 
company or by a co-operative society, computed in accordance with section 44 or any surplus 
taken to be such profits and gains by virtue of provisions contained in the First Schedule;
5
[(viia) the profits and gains of any business of banking (including providing credit facilities) 
carried on by a co-operative society with its members;]
6
* * * * *
7
[(ix) any winnings from lotteries, crossword puzzles, races including horse races, card games 
and other games of any sort or from gambling or betting of any form or nature whatsoever.]
8
[Explanation.—For the purposes of this sub-clause,—
(i) “lottery” includes winnings from prizes awarded to any person by draw of lots or by 
chance or in any other manner whatsoever, under any scheme or arrangement by whatever 
name called;
(ii) “card game and other game of any sort” includes any game show, an entertainment 
programme on television or electronic mode, in which people compete to win prizes or any 
other similar game;]
9
[(x) any sum received by the assessee from his employees as contributions to any provident 
fund or superannuation fund or any fund set up under the provisions of the Employees’ State 
Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees;]
10[(xi) any sum received under a Keyman insurance policy including the sum allocated by 
way of bonus on such policy.
Explanation.—For the purposes of this clause, the expression “Keyman insurance policy” 
shall have the meaning assigned to it in the Explanation to clause (10D) ofsection 10;]
11[(xii) any sum referred to in 12[clause (va) of section 28;]
13[(xiia) the fair market value of inventory referred to in clause (via) of section 28;]
14[(xiii) any sum referred to in clause (v) of sub-section (2) of section 56;] 1
[(xiv) any sum referred to in clause (vi) of sub-section (2) of section 56;]
2
[(xv) any sum of money or value of property referred to in clause (vii) 3
[or clause (viia)] of 
sub-section (2) of section 56;]
4
[(xvi) any consideration received for issue of shares as exceeds the fair market value of the 
shares referred to in clause (viib) of sub-section (2) of section 56;]
5
[(xvii) any sum of money referred to in clause (ix) of sub-section (2) of section 56;]
6
[(xviia) any sum of money or value of property referred to in clause (x) of sub-section (2) 
section 56;]
7
[(xviib) any compensation or other payment referred to in clause (xi) of sub-section (2) of 
section 56;]
8
[(xviii) assistance in the form of a subsidy or grant or cash incentive or duty drawback or 
waiver or concession or reimbursement (by whatever name called) by the Central Government or 
a State Government or any authority or body or agency in cash or kind to the assessee 9
[other 
than,—
(a) the subsidy or grant or reimbursement which is taken into account for determination 
of the actual cost of the asset in accordance with the provisions of Explanation 10 to 
clause (1) of section 43; or
(b) the subsidy or grant by the Central Government for the purpose of the corpus of a 
trust or institution established by the Central Government or a State Government, as the 
case may be];]
(25) “Income-tax Officer” means a person appointed to be an Income-tax Officer under
10*** section 117;
11[(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;]
(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 12[other than the State of Jammu and Kashmir and the Union territories 
specified in sub-clause (iii) of this clause];
13[(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;
1
[(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 2
[registered or, as the case may be, principal office of the company, 
corporation, institution, association or body] in all cases is in India;
3
[(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;
(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;]
4
* * * * *
(28) “Inspector of Income-tax” means a person appointed to be an Inspector of Income-tax under 
5
[sub-section (1)] of section 117;
6
[(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;
7
[(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;] 1
[(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;]
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;
(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;]
(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);
3
[(29A) “long-term capital asset” means a capital asset which is not a short-term capital asset;
(29B) “long-term capital gain” means capital gain arising from the transfer of a long-term capital 
asset;]
4
[(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;]
5
[(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 
6
[, association of persons or, as the case may be, body of individuals] as specified in the Finance 
Act of the relevant year;]
7
[(29D) “National Tax Tribunal” means the National Tax Tribunal established under section 3 
of the National Tax Tribunal Act, 2005;]
(30) “non-resident” means a person who is not a “resident” 8
[, and for the purposes of 
sections 92, 93 9
*** and 168, includes a person who is not ordinarily resident within the meaning of 
clause (6) of section 6;
(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.
1
[Explanation.—For the purposes of this clause, an association of persons or a body of 
individuals or a local authority or an artificial juridical person shall be deemed to be a person, 
whether or not such person or body or authority or juridical person was formed or established or 
incorporated with the object of deriving income, profits or gains;]
(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 ;
(33) “prescribed” means prescribed by rules made under this Act;
(34) “previous year” means the previous year as defined in section 3;
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;
(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;
(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;
(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;]
(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 3
[Assessing Officer] has served a notice of his 
intention of treating him as the principal officer thereof;
(36) “profession” includes vocation;
4
[(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);] (37) “public servant” has the same meaning as in section 21 of the Indian Penal Code (45 of 
1860);
1
[(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” 2
*** or 
3
[computation of the “advance tax” payable under Chapter XVIIC
4
[in a case not 
falling under section 115A or 5
[section 115B 6
[or section 115BB or section 115BBB or section 
115E] or section 164 or section 164A 7
*** 8
[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 9
[in a case falling under section 
115A or 10[section 115B 6
[or section 115BB or section 115BBB or section 115E] or 
section 164 or section 164A 7
*** 8
[or section 167B]], the rate or rates specified in section 
115A or 5
[section 115B 6
[or section 115BB or section 115BBB or section 115E] or section 164
or section 164A 7
*** 8
[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,
11[194A,
12[194B, 194BB]
13[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 14[section 194LBA or]
15[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 16[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];]
(38) “recognised provident fund” means a provident fund which has been and continues to be 
recognised by the 17[
18[Principal Chief Commissioner or Chief Commissioner] or 18[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); (40) “regular assessment” means the assessment made under 2
[sub-section (3) of 
section 143] or section 144;
(41) “relative”, in relation to an individual, means the husband, wife, brother or sister or any 
lineal ascendant or descendant of that individual;
3
[(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;]
(42) “resident” means a person who is resident in India within the meaning of section 6;
4
[(42A) 5
[“short-term capital asset” means a capital asset held by an assessee for not more than 
6
[thirty-sixmonths] immediately preceding the date of its transfer:]]
7
[Provided that in the case of 8
[a security (other than a unit) listed in a recognised stock exchange 
in India] 9
[or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 
of 1963) or 10[a unit of an equity oriented fund]] 11[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:]
12[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:]
13[Provided also that in the case of a share of a company (not being a share listed in a recognised 
stock exchange in India), 14[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.]
15[Explanation 1].—(i) In determining the period for which any capital asset is held by the 
assessee—
(a) in the case of a share held in a company in liquidation, there shall be excluded the period 
subsequent to the date on which the company goes into liquidation;(b) in the case of a capital asset which becomes the property of the assessee in the 
circumstances mentioned in 1
[sub-section (1)] of section 49, there shall be included the period for 
which the asset was held by the previous owner referred to in the said section;
2
[(ba) in the case of a capital asset referred to in clause (via) of section 28, the period shall be 
reckoned from the date of its conversion or treatment;]
3
[(c) in the case of a capital asset being a share or shares in an Indian company, which 
becomes the property of the assessee in consideration of a transfer referred to in clause (vii) 
of section 47, there shall be included the period for which the share or shares in the amalgamating 
company were held by the assessee;]
4
[(d) in the case of a capital asset, being a share or any other security (hereafter in this clause 
referred to as the financial asset) subscribed to by the assessee on the basis of his right to 
subscribe to such financial asset or subscribed to by the person in whose favour the assessee has 
renounced his right to subscribe to such financial asset, the period shall be reckoned from the date 
of allotment of such financial asset;
(e) in the case of a capital asset, being the right to subscribe to any financial asset, which is 
renounced in favour of any other person, the period shall be reckoned from the date of the offer of 
such right by the company or institution, as the case may be, making such offer;]
5
[(f) in the case of a capital asset, being a financial asset, allotted without any payment and on 
the basis of holding of any other financial asset, the period shall be reckoned from the date of the 
allotment of such financial asset;]
6
[(g) in the case of a capital asset, being a share or shares in an Indian company, which 
becomes the property of the assessee in consideration of a demerger, there shall be included the 
period for which the share or shares held in the demerged company were held by the assessee;]
7
[(h) in the case of a capital asset, being trading or clearing rights of a recognised stock 
exchange in India acquired by a person pursuant to demutualisation or corporatisation of the 
recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be 
included the period for which the person was a member of the recognised stock exchange in India 
immediately prior to such demutualisation or corporatisation;
(ha) in the case of a capital asset, being equity share or shares in a company allotted pursuant 
to demutualisation or corporatisation of a recognised stock exchange in India as referred to in 
clause (xiii) of section 47, there shall be included the period for which the person was a member 
of the recognised stock exchange in India immediately prior to such demutualisation or 
corporatisation;] 1
[(hb) in the case of a capital asset, being any specified security or sweat equity shares 
allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate 
to his employees (including former employee or employees), the period shall be reckoned from 
the date of allotment or transfer of such specified security or sweat equity shares;]
2
[(hc) in the case of a capital asset, being a unit of a business trust, allotted pursuant to 
transfer of share or shares as referred to in clause (xvii) of section 47, there shall be included the 
period for which the share or shares were held by the assessee;]
3
[(hd) in the case of a capital asset, being a unit or units, which becomes the property of the 
assessee in consideration of a transfer referred to in clause (xviii) of section 47, there shall be 
included the period for which the unit or units in the consolidating scheme of the mutual fund 
were held by the assessee;
(he) in the case of a capital asset, being share or shares of a company, which is acquired by 
the non-resident assessee on redemption of Global Depository Receipts referred to in clause (b) 
of sub-section (1) of section 115AC held by such assessee, the period shall be reckoned from the 
date on which a request for such redemption was made;]
4
[(hf) in the case of a capital asset, being equity shares in a company, which becomes the 
property of the assessee in consideration of a transfer referred to in clause (xb) of section 47, there 
shall be included the period for which the preference shares were held by the assessee;]
5
[(hg) in the case of a capital asset, being a unit or units, which becomes the property of the 
assessee in consideration of a transfer referred to in clause (xix) of section 47, there shall be included 
the period for which the unit or units in the consolidating plan of a mutual fund scheme were held by 
the assessee;]
(ii) In respect of capital assets other than those mentioned in clause (i), the period for which any 
capital asset is held by the assessee shall be determined subject to any ruleswhich the Board may 
make in this behalf.
6
[Explanation 2.—For the purposes of this clause, the expression “security” shall have the 
meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 
(42 of 1956).]
1
[Explanation 3.—For the purposes of this clause, the expressions “specified security” and “sweat 
equity shares” shall have the meanings respectively assigned to them in the Explanation to clause (d) 
of sub-section (1) of section 115WB.] 1
[Explanation 4.—For the purposes of this clause, the expression “equity oriented fund” shall 
have the meaning assigned to it in 2
[clause (a) of the Explanation to section 112A];]
3
[(42B) “short-term capital gain” means capital gain arising from the transfer of a short-term 
capital asset;]
4
[(42C) “slump sale” means the transfer of one or more undertakings as a result of the sale for a 
lump sum consideration without values being assigned to the individual assets and liabilities in such 
sales.
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;]
5
[(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 6
[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];
(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;]
7
* * * * *
8
[(44) “Tax Recovery Officer” means any Income-tax Officer who may be authorised by the 
9
[Principal Chief Commissioner or Chief Commissioner] or 10[Principal Commissioner or 
Commissioner], by general or special order in writing, to exercise the powers of a Tax Recovery 
Officer 11[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];] (45) “total income” means the total amount of income referred to in section 5, computed in the 
manner laid down in this Act;
1
* * * * *
2
[(47) “transfer”, in relation to a capital asset, includes,—
(i) the sale, exchange or relinquishme nt 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;] 3
[or]
4
[(iva) the maturity or redemption of a zero coupon bond; or]
3
[(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.
5
[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.]
6
[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;]
7
[(48) “zero coupon bond” means a bond—
(a) issued by any infrastructure capital company or infrastructure capital fund or public sector 
company 8
[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 public sector 
company 8
[or scheduled bank]; and
(c) which the Central Government may, by notification in the Official Gazette, specify in this 
behalf. 1
[Explanation.—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.]]

[3. “Previous year” defined.—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.]

4. Charge of income-tax.—(1) Where any Central Act enacts that income-tax shall be charged for 
any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that 
year in accordance with, and 3
[subject to the provisions (including provisions for the levy of additional 
income-tax) of, this Act] in respect of the total income of the previous year 4
***of every person:
Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of 
the income of a period other than the previous year, income-tax shall be charged accordingly.
(2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source 
or paid in advance, where it is so deductible or payable under any provision of this Act.

5. Scope of total income.—(1) Subject to the provisions of this Act, the total income of any previous 
year of a person who is a resident includes all income from whatever source derived which—
(a) is received or is deemed to be received in India in such year by or on behalf of such person; 
or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year; or
(c) accrues or arises to him outside India during such year:
Provided that, in the case of a person not ordinarily resident in India within the meaning of 
sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so 
included unless it is derived from a business controlled in or a profession set up in India.
(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a 
non-resident includes all income from whatever source derived which—
(a) is received or is deemed to be received in India in such year by or on behalf of such 
person; or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year.
Explanation 1.—Income accruing or arising outside India shall not be deemed to be received in India 
within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet 
prepared in India.
Explanation 2.—For the removal of doubts, it is hereby declared that income which has been 
included in the total income of a person on the basis that it has accrued or arisen or is deemed to have 
accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be 
received by him in India.

1. Ins. by Act 33 of 2009, s. 3 (w.e.f. 1-4-2009).
2. Subs. by Act 27 of 1999, s. 4 (w.e.f. 1-4-2000).
3. Subs. by Act 4 of 1988, s. 5, for “subject to the provisions of this Act” (w.e.f. 1-4-1989).
4. The words “or previous years, as the case may be” omitted by s. 5, ibid. (w.e.f. 1-4-1989).
 

5A. Apportionment of income between spouses governed by Portuguese Civil Code.—(1) 
Where the husband and wife are governed by the system of community of property (known under the 
Portuguese Civil Code of 1860 as “COMMUNIAO DOS BENS”) in force in the State of Goa and in the 
Union territories of Dadra and Nagar Haveli and Daman and Diu, the income of the husband and of the 
wife under any head of income shall not be assessed as that of such community of property (whether 
treated as an association of persons or a body of individuals), but such income of the husband and of the 
wife under each head of income (other than under the head “Salaries”) shall be apportioned equally 
between the husband and the wife and the income so apportioned shall be included separately in the total 
income of the husband and of the wife respectively, and the remaining provisions of this Act shall apply 
accordingly.
(2) Where the husband or, as the case may be, the wife governed by the aforesaid system of 
community of property has any income under the head “Salaries”, such income shall be included in the 
total income of the spouse who has actually earned it.

6. Residence in India.—For the purposes of this Act,—
(1) An individual is said to be resident in India in any previous year, if he—
(a) is in India in that year for a period or periods amounting in all to one hundred and eightytwo days or more; or
(c) having within the four years preceding that year been in India for a period or periods 
amounting in all to three hundred and sixty-five days or more, is in India for a period or periods 
amounting in all to sixty days or more in that year.
3
[Explanation 4
[1].—In the case of an individual,—
(a) being a citizen of India, who leaves India in any previous year 5
[as a member of the crew 
of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 
1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall 
apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one 
hundred and eighty-two days” had been substituted;
(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to 
clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous 
year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty 
days”, occurring therein, the words “one hundred and 6
[eighty-two] days” had been substituted.]
7
[Explanation 2.—For the purposes of this clause, in the case of an individual, being a citizen of 
India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in 
India shall, in respect of such voyage, be determined in the manner and subject to such conditions as 
may be prescribed.]
(2) A Hindu undivided family, firm or other association of persons is said to be resident in India 
in any previous year in every case except where during that year the control and management of its 
affairs is situated wholly outside India.
1
[(3) A company is said to be a resident in India in any previous year, if—
(i) it is an Indian company; or
(ii) its place of effective management, in that year, is in India.
Explanation.—For the purposes of this clause “place of effective management” means a place 
where key management and commercial decisions that are necessary for the conduct of business of an 
entity as a whole are, in substance made.]
(4) Every other person is said to be resident in India in any previous year in every case, except 
where during that year the control and management of his affairs is situated wholly outside India.
(5) If a person is resident in India in a previous year relevant to an assessment year in respect of 
any source of income, he shall be deemed to be resident in India in the previous year relevant to the 
assessment year in respect of each of his other sources of income.
2
[(6) A person is said to be “not ordinarily resident” in India in any previous year if such person 
is—
(a) an individual who has been a non-resident in India in nine out of the ten previous years 
preceding that year, or has during the seven previous years preceding that year been in India for a 
period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
(b) a Hindu undivided family whose manager has been a non-resident in India in nine out of 
the ten previous years preceding that year, or has during the seven previous years preceding that 
year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine 
days or less.]

1. Ins. by Act 32 of 1994, s. 4 (w.e.f. 1-4-1963).
2. Sub-clause (b) omitted by Act 14 of 1982, s. 3 (w.e.f. 1-4-1983).
3. Subs. by Act 36 of 1989, s. 3, for the “Explanation” (w.e.f. 1-4-1990).
4. Explanation renumbered as Explanation1 thereof by Act 20 of 2015, s. 4 (w.e.f. 1-4-2015).
5. Ins. by Act 12 of 1990, s. 4 (w.e.f. 1-4-1990).
6. Subs. by Act 32 of 1994, s. 5 (w.e.f. 1-4-1995).
7. Ins. by Act 20 of 2015, s. 4 (w.e.f. 1-4-2015).
 

7. Income deemed to be received.—The following incomes shall be deemed to be received in the 
previous year:—
(i) the annual accretion in the previous year to the balance at the credit of an employee 
participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth 
Schedule;
(ii) the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) 
of rule 11 of Part A of the Fourth Schedule;
3
[(iii) the contribution made, by the Central Government 4
[or any other employer] in the previous 
year, to the account of an employee under a pension scheme referred to in section 80CCD.]

8. Dividend income.—5
[For the purposes of inclusion in the total income of an assessee,—
(a) any dividend] declared by a company or distributed or paid by it within the meaning of 
sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) 
of section 2 shall be deemed to be the income of the previous year in which it is so declared, 
distributed or paid, as the case may be;
6
[(b) any interim dividend shall be deemed to be the income of the previous year in which the 
amount of such dividend is unconditionally made available by the company to the member who is 
entitled to it.]

9. Income deemed to accrue or arise in India.—(1) The following incomes shall be deemed to 
accrue or arise in India:—
(i) all income accruing or arising, whether directly or indirectly, through or from any business 
connection in India, or through or from any property in India, or through or from any asset or source 
of income in India, 1
*** or through the transfer of a capital asset situate in India.
Explanation 2
[1].—For the purposes of this clause—
(a) in the case of a business of which all the operations are not carried out in India, the 
income of the business deemed under this clause to accrue or arise in India shall be only such part 
of the income as is reasonably attributable to the operations carried out in India;
(b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him 
through or from operations which are confined to the purchase of goods in India for the purpose 
of export;
3
* * * * *
4
[(c) in the case of a non-resident, being a person engaged in the business of running a news 
agency or of publishing newspapers, magazines or journals, no income shall be deemed to accrue 
or arise in India to him through or from activities which are confined to the collection of news 
and views in India for transmission out of India;]
5
[(d) in the case of a non-resident, being—
(1) an individual who is not a citizen of India; or
(2) a firm which does not have any partner who is a citizen of India or who is resident in 
India; or
(3) a company which does not have any shareholder who is a citizen of India or who is 
resident in India,
no income shall be deemed to accrue or arise in India to such individual, firm or company 
through or from operations which are confined to the shooting of any cinematograph film in 
India;]
6
[(e) in the case of a foreign company engaged in the business of mining of diamonds, no 
income shall be deemed to accrue or arise in India to it through or from the activities which are 
confined to the display of uncut and unassorted diamond in any special zone notified by the 
Central Government in the Official Gazette in this behalf.]
7
[Explanation 2.—For the removal of doubts, it is hereby declared that “business connection”
shall include any business activity carried out through a person who, acting on behalf of the nonresident,—
1
[(a) has and habitually exercises in India, an authority to conclude contracts on behalf of the 
non-resident or habitually concludes contracts or habitually plays the principal role leading to 
conclusion of contracts by that non-resident and the contracts are––
(i) in the name of the non-resident; or
(ii) for the transfer of the ownership of, or for the granting of the right to use, property 
owned by that non-resident or that non-resident has the right to use; or
(iii) for the provision of services by the non-resident; or]
(b) has no such authority, but habitually maintains in India a stock of goods or merchandise 
from which he regularly delivers goods or merchandise on behalf of the non-resident; or
(c) habitually secures orders in India, mainly or wholly for the non-resident or for that 
non-resident and other non-residents controlling, controlled by, or subject to the same common 
control, as that non-resident:
Provided that such business connection shall not include any business activity carried out 
through a broker, general commission agent or any other agent having an independent status, if 
such broker, general commission agent or any other agent having an independent status is acting 
in the ordinary course of his business:
Provided further that where such broker, general commission agent or any other agent works 
mainly or wholly on behalf of a non-resident (hereafter in this proviso referred to as the principal 
non-resident) or on behalf of such non-resident and other non-residents which are controlled by 
the principal non-resident or have a controlling interest in the principal non-resident or are subject 
to the same common control as the principal non-resident, he shall not be deemed to be a broker, 
general commission agent or an agent of an independent status.
2
[Explanation 2A.––For the removal of doubts, it is hereby clarified that the significant economic 
presence of a non-resident in India shall constitute “business connection” in India and “significant 
economic presence” for this purpose, shall mean––
(a) transaction in respect of any goods, services or property carried out by a non-resident in 
India including provision of download of data or software in India, if the aggregate of payments 
arising from such transaction or transactions during the previous year exceeds such amount as 
may be prescribed; or
(b) systematic and continuous soliciting of business activities or engaging in interaction with 
such number of users as may be prescribed, in India through digital means:
Provided that the transactions or activities shall constitute significant economic presence in 
India, whether or not,—
(i) the agreement for such transactions or activities is entered in India;
(ii) the non-resident has a residence or place of business in India; or
(iii) the non-resident renders services in India:
Provided further that only so much of income as is attributable to the transactions or 
activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise in India.]
Explanation 3.—Where a business is carried on in India through a person referred to in clause (a) 
or clause (b) or clause (c) of Explanation 2, only so much of income as is attributable to the 
operations carried out in India shall be deemed to accrue or arise in India.]
1
[Explanation 4.—For the removal of doubts, it is hereby clarified that the expression “through” 
shall mean and include and shall be deemed to have always meant and included “by means of”, “in 
consequence of” or “by reason of”.
Explanation 5.—For the removal of doubts, it is hereby clarified that an asset or a capital asset 
being any share or interest in a company or entity registered or incorporated outside India shall be 
deemed to be and shall always be deemed to have been situated in India, if the share or interest 
derives, directly or indirectly, its value substantially from the assets located in India:]
2
[Provided that nothing contained in this Explanation shall apply to an asset or capital asset, which is 
held by a non-resident by way of investment, directly or indirectly, in a Foreign Institutional Investor as 
referred to in clause (a) of the Explanation to section 115AD for an assessment year commencing on or 
after the 1st day of April, 2012 but before the 1st day of April, 2015:]
3
[Provided further that nothing contained in this Explanation shall apply to an asset or capital asset, 
which is held by a non-resident by way of investment, directly or indirectly, in Category-I or Category-II 
foreign portfolio investor under the Securities and Exchange Board of India (Foreign Portfolio Investors) 
Regulations, 2014, made under the Securities and Exchange Board of India Act, 1992.]
4
[Explanation 6.—For the purposes of this clause, it is hereby declared that—
(a) the share or interest, referred to in Explanation 5, shall be deemed to derive its value 
substantially from the assets (whether tangible or intangible) located in India, if, on the specified 
date, the value of such assets—
(i) exceeds the amount of ten crore rupees; and
(ii) represents at least fifty per cent. of the value of all the assets owned by the company 
or entity, as the case may be;
(b) the value of an asset shall be the fair market value as on the specified date, of such asset 
without reduction of liabilities, if any, in respect of the asset, determined in such manner as may
be prescribed;
(c) “accounting period” means each period of twelve months ending with the 31st day of 
March:
Provided that where a company or an entity, referred to in Explanation 5, regularly adopts a 
period of twelve months ending on a day other than the 31st day of March for the purpose of—
(i) complying with the provisions of the tax laws of the territory, of which it is a 
resident, for tax purposes; or 
(ii) reporting to persons holding the share or interest,
then, the period of twelve months ending with the other day shall be the accounting period of the 
company or, as the case may be, the entity:
Provided further that the first accounting period of the company or, as the case may be, the 
entity shall begin from the date of its registration or incorporation and end with the 31st day of 
March or such other day, as the case may be, following the date of such registration or 
incorporation, and the later accounting period shall be the successive periods of twelve months:
Provided also that if the company or the entity ceases to exist before the end of accounting 
period, as aforesaid, then, the accounting period shall end immediately before the company or, as 
the case may be, the entity, ceases to exist;
(d) “specified date” means the—
(i) date on which the accounting period of the company or, as the case may be, the entity 
ends preceding the date of transfer of a share or an interest; or
(ii) date of transfer, if the book value of the assets of the company or, as the case may be, 
the entity on the date of transfer exceeds the book value of the assets as on the date referred to 
in sub-clause (i), by fifteen per cent.
Explanation 7.—For the purposes of this clause,—
(a) no income shall be deemed to accrue or arise to a non-resident from transfer, outside 
India, of any share of, or interest in, a company or an entity, registered or incorporated outside 
India, referred to in the Explanation 5,—
(i) if such company or entity directly owns the assets situated in India and the transferor 
(whether individually or along with its associated enterprises), at any time in the twelve 
months preceding the date of transfer, neither holds the right of management or control in 
relation to such company or entity, nor holds voting power or share capital or interest 
exceeding five per cent. of the total voting power or total share capital or total interest, as the 
case may be, of such company or entity; or
(ii) if such company or entity indirectly owns the assets situated in India and the 
transferor (whether individually or along with its associated enterprises), at any time in the 
twelve months preceding the date of transfer, neither holds the right of management or 
control in relation to such company or entity, nor holds any right in, or in relation to, such 
company or entity which would entitle him to the right of management or control in the 
company or entity that directly owns the assets situated in India, nor holds such percentage of 
voting power or share capital or interest in such company or entity which results in holding of 
(either individually or along with associated enterprises) a voting power or share capital or 
interest exceeding five per cent. of the total voting power or total share capital or total 
interest, as the case may be, of the company or entity that directly owns the assets situated in 
India;
(b) in a case where all the assets owned, directly or indirectly, by a company or, as the case 
may be, an entity referred to in the Explanation 5, are not located in India, the income of the 
non-resident transferor, from transfer outside India of a share of, or interest in, such company or 
entity, deemed to accrue or arise in India under this clause, shall be only such part of the income 
as is reasonably attributable to assets located in India and determined in such manner as may be 
prescribed;
(c) “associated enterprise” shall have the meaning assigned to it in section 92A;]
(ii) income which falls under the head “Salaries”, if it is earned in India.
1
[Explanation.—For the removal of doubts, it is hereby declared that the income of the nature 
referred to in this clause payable for—
(a) service rendered in India; and(b) the rest period or leave period which is preceded and succeeded by services rendered in 
India and forms part of the service contract of employment,
shall be regarded as income earned in India;]
(iii) income chargeable under the head “Salaries” payable by the Government to a citizen of India 
for service outside India;
(iv) a dividend paid by an Indian company outside India;
1
[(v) income by way of interest payable by—
(a) the Government; or
(b) a person who is a resident, except where the interest is payable in respect of any debt 
incurred, or moneys borrowed and used, for the purposes of a business or profession carried on 
by such person outside India or for the purposes of making or earning any income from any 
source outside India; or
(c) a person who is a non-resident, where the interest is payable in respect of any debt 
incurred, or moneys borrowed and used, for the purposes of a business or profession carried on 
by such person in India ;
2
[Explanation.—For the purposes of this clause,—
(a) it is hereby declared that in the case of a non-resident, being a person engaged in the 
business of banking, any interest payable by the permanent establishment in India of such 
non-resident to the head office or any permanent establishment or any other part of such 
non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to 
tax in addition to any income attributable to the permanent establishment in India and the 
permanent establishment in India shall be deemed to be a person separate and independent of the 
non-resident person of which it is a permanent establishment and the provisions of the Act 
relating to computation of total income, determination of tax and collection and recovery shall 
apply accordingly;
(b) “permanent establishment” shall have the meaning assigned to it in clause (iiia) of 
section 92F;]
(vi) income by way of royalty payable by—
(a) the Government; or
(b) a person who is a resident, except where the royalty is payable in respect of any right, 
property or information used or services utilised for the purposes of a business or profession 
carried on by such person outside India or for the purposes of making or earning any income from 
any source outside India; or
(c) a person who is a non-resident, where the royalty is payable in respect of any right, 
property or information used or services utilised for the purposes of a business or profession 
carried on by such person in India or for the purposes of making or earning any income from any 
source in India:
Provided that nothing contained in this clause shall apply in relation to so much of the income 
by way of royalty as consists of lump sum consideration for the transfer outside India of, or the 
imparting of information outside India in respect of, any data, documentation, drawing or 
specification relating to any patent, invention, model, design, secret formula or process or trade 
mark or similar property, if such income is payable in pursuance of an agreement made before the 
1st day of April, 1976, and the agreement is approved by the Central Government:
1
[Provided further that nothing contained in this clause shall apply in relation to so much of the 
income by way of royalty as consists of lump sum payment made by a person, who is a resident, for 
the transfer of all or any rights (including the granting of a licence) in respect of computer software 
supplied by a non-resident manufacturer along with a computer or computer-based equipment under 
any scheme approved under the Policy on Computer Software Export, Software Development and 
Training, 1986 of the Government of India.]
Explanation 1.—For the purposes of the 2
[first proviso], an agreement made on or after the 1st 
day of April, 1976, shall be deemed to have been made before that date if the agreement is made in 
accordance with proposals approved by the Central Government before that date; so, however, that, 
where the recipient of the income by way of royalty is a foreign company, the agreement shall not be 
deemed to have been made before that date unless, before the expiry of the time allowed under subsection (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing 
the return of income for the assessment year commencing on the 1st day of April, 1977, or the 
assessment year in respect of which such income first becomes chargeable to tax under this Act, 
whichever assessment year is later, the company exercises an option by furnishing a declaration in 
writing to the 3
[Assessing Officer] (such option being final for that assessment year and for every 
subsequent assessment year) that the agreement may be regarded as an agreement made before the 1st 
day of April, 1976.
Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any 
lump sum consideration but excluding any consideration which would be the income of the recipient 
chargeable under the head “Capital gains”) for—
(i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, 
invention, model, design, secret formula or process or trade mark or similar property;
(ii) the imparting of any information concerning the working of, or the use of, a patent, 
invention, model, design, secret formula or process or trade mark or similar property;
(iii) the use of any patent, invention, model, design, secret formula or process or trade mark 
or similar property;
(iv) the imparting of any information concerning technical, industrial, commercial or 
scientific knowledge, experience or skill;
4
[(iva) the use or right to use any industrial, commercial or scientific equipment but not 
including the amounts referred to in section 44BB;]
(v) the transfer of all or any rights (including the granting of a licence) in respect of any 
copyright, literary, artistic or scientific work including films or video tapes for use in connection 
with television or tapes for use in connection with radio broadcasting, but not including 
consideration for the sale, distribution or exhibition of cinematographic films; or
(vi) the rendering of any services in connection with the activities referred to in sub-clauses 
(i) to (iv), (iva) and (v).
5
[Explanation 3.—For the purposes of this clause, “computer software” means any computer 
programme recorded on any disc, tape, perforated media or other information storage device and 
includes any such programme or any customized electronic data.]
6
[Explanation 4.—For the removal of doubts, it is hereby clarified that the transfer of all or any 
rights in respect of any right, property or information includes and has always included transfer of all
or any right for use or right to use a computer software (including granting of a licence) irrespective 
of the medium through which such right is transferred.
Explanation 5.—For the removal of doubts, it is hereby clarified that the royalty includes and has 
always included consideration in respect of any right, property or information, whether or not—
(a) the possession or control of such right, property or information is with the payer;
(b) such right, property or information is used directly by the payer;
(c) the location of such right, property or information is in India.]
Explanation 6.—For the removal of doubts, it is hereby clarified that the expression “process”
includes and shall be deemed to have always included transmission by satellite (including up-linking, 
amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar 
technology, whether or not such process is secret;]
(vii) income by way of fees for technical services payable by—
(a) the Government; or
(b) a person who is a resident, except where the fees are payable in respect of services 
utilised in a business or profession carried on by such person outside India or for the purposes of 
making or earning any income from any source outside India; or
(c) a person who is a non-resident, where the fees are payable in respect of services utilised in 
a business or profession carried on by such person in India or for the purposes of making or 
earning any income from any source in India:
1
[Provided that nothing contained in this clause shall apply in relation to any incomebyway of 
fees for technical services payable in pursuance of an agreement made before the 1st day of April, 
1976, and approved by the Central Government.]
2
[Explanation 1.—For the purposes of the foregoing proviso, an agreement made on or after the 
1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made 
in accordance with proposals approved by the Central Government before that date.]
Explanation 3
[2].—For the purposes of this clause, “fees for technical services” means any 
consideration (including any lump sum consideration) for the rendering of any managerial, technical 
or consultancy services (including the provision of services of technical or other personnel) but does 
not include consideration for any construction, assembly, mining or like project undertaken by the 
recipient or consideration which would be income of the recipient chargeable under the head 
“Salaries”.
(2) Notwithstanding anything contained in sub-section (1), any pension payable outside India to a 
person residing permanently outside India shall not be deemed to accrue or arise in India, if the 
pension is payable to a person referred to in article 314 of the Constitution or to a person who, having 
been appointed before the 15th day of August, 1947, to be a Judge of the Federal Court or of a High 
Court within the meaning of the Government of India Act, 1935, continues to serve on or after the 
commencement of the Constitution as a Judge in India.
Explanation.—For the removal of doubts, it is hereby declared that for the purposes of this 
section, income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause 
(vi) or clause (vii) of sub-section (1) and shall be included in the total income of the non-resident, 
whether or not,—
(i) the non-resident has a residence or place of business or business connection in India; or
(ii) the non-resident has rendered services in India.

9A. Certain activities not to constitute business connection in India.—(1) Notwithstanding 
anything contained in sub-section (1) of section 9 and subject to the provisions of this section, in the case 
of an eligible investment fund, the fund management activity carried out through an eligible fund 
manager acting on behalf of such fund shall not constitute business connection in India of the said fund.
(2) Notwithstanding anything contained insection 6, an eligible investment fund shall not be said to 
be resident in India for the purpose of that section merely because the eligible fund manager, undertaking 
fund management activities on its behalf, is situated in India.
(3) The eligible investment fund referred to in sub-section (1), means a fund established or 
incorporated or registered outside India, which collects funds from its members for investing it for their 
benefit and fulfils the following conditions, namely:—
(a) the fund is not a person resident in India;
(b) the fund is a resident of a country or a specified territory with which an agreement referred to 
in sub-section (1) of section 90 or sub-section (1) ofsection 90A has been entered into 2
[or is 
established or incorporated or registered in a country or a specified territory notified by the Central 
Government in this behalf];
(c) the aggregate participation or investment in the fund, directly or indirectly, by persons 
resident in India does not exceed five per cent. of the corpus of the fund;
(d) the fund and its activities are subject to applicable investor protection regulations in the 
country or specified territory where it is established or incorporated or is a resident;
(e) the fund has a minimum of twenty-five members who are, directly or indirectly, not connected 
persons;
(f) any member of the fund along with connected persons shall not have any participation interest, 
directly or indirectly, in the fund exceeding ten per cent.;
(g) the aggregate participation interest, directly or indirectly, of ten or less members along with 
their connected persons in the fund, shall be less than fifty per cent.;
(h) the fund shall not invest more than twenty per cent. of its corpus in any entity;
(i) the fund shall not make any investment in its associate entity;
(j) the monthly average of the corpus of the fund shall not be less than one hundred crore rupees:
Provided that if the fund has been established or incorporated in the previous year, the corpus of 
fund shall not be less than one hundred crore rupees at the end of such previous year:
3
[Provided further that nothing contained in this clause shall apply to a fund which has been 
wound up in the previous year;]
(k) the fund shall not carry on or control and manage, directly or indirectly, any business in 
India 4***;
(l) the fund is neither engaged in any activity which constitutes a business connection in India nor 
has any person acting on its behalf whose activities constitute a business connection in India other 
than the activities undertaken by the eligible fund manager on its behalf;
(m) the remuneration paid by the fund to an eligible fund manager in respect of fund management 
activity undertaken by him on its behalf is not less than the arm’s length price of the said activity:
Provided that the conditions specified in clauses (e), (f) and (g) shall not apply in case of an 
investment fund set up by the Government or the Central Bank of a foreign State or a sovereign fund, or 
such other fund as the Central Government may subject to conditions, if any, by notification in the 
Official Gazette, specify in this behalf.
(4) The eligible fund manager, in respect of an eligible investment fund, means any person who is 
engaged in the activity of fund management and fulfils the following conditions, namely:—
(a) the person is not an employee of the eligible investment fund or a connected person of the 
fund;
(b) the person is registered as a fund manager or an investment advisor in accordance with the 
specified regulations;
(c) the person is acting in the ordinary course of his business as a fund manager;
(d) the person along with his connected persons shall not be entitled, directly or indirectly, to 
more than twenty per cent. of the profits accruing or arising to the eligible investment fund from the 
transactions carried out by the fund through the fund manager.
(5) Every eligible investment fund shall, in respect of its activities in a financial year, furnish within 
ninety days from the end of the financial year, a statement in the prescribed form, to the prescribed 
income-tax authority containing information relating to the fulfilment of the conditions specified in this 
section and also provide such other relevant information or documents as may be prescribed.
(6) Nothing contained in this section shall apply to exclude any income from the total income of the 
eligible investment fund, which would have been so included irrespective of whether the activity of the 
eligible fund manager constituted the business connection in India of such fund or not.
(7) Nothing contained in this section shall have any effect on the scope of total income or 
determination of total income in the case of the eligible fund manager.
(8) The provisions of this section shall be applied in accordance with such guidelines and in such 
manner as the Board may prescribe in this behalf.
(9) For the purposes of this section,—
(a) “associate” means an entity in which a director or a trustee or a partner or a member or a fund 
manager of the investment fund or a director or a trustee or a partner or a member of the fund 
manager of such fund, holds, either individually or collectively, share or interest, being more than 
fifteen per cent. of its share capital or interest, as the case may be;
(b) “connected person” shall have the meaning assigned to it in clause (4) of section 102;
(c) “corpus” means the total amount of funds raised for the purpose of investment by the eligible 
investment fund as on a particular date;
(d) “entity” means any entity in which an eligible investment fund makes an investment;
(e) “specified regulations” means the Securities and Exchange Board of India (Portfolio 
Managers) Regulations, 1993 or the Securities and Exchange Board of India (Investment Advisers) 
Regulations, 2013, or such other regulations made under the Securities and Exchange Board of India 
Act, 1992 (15 of 1992), which may be notified by the Central Government under this clause.]

10. Incomes not included in total income.—In computing the total income of a previous year of any 
person, any income falling within any of the following clauses shall not be included—
(1) agricultural income;
(2) 1
[subject to the provisions of sub-section (2) of section 64,] any sum received by an individual 
as a member of a Hindu undivided family, where such sum has been paid out of the income of the 
family, or, in the case of any impartible estate, where such sum has been paid out of the income of the 
estate belonging to the family;
2
[(2A) in the case of a person being a partner of a firm which is separately assessed as such, his 
share in the total income of the firm.
Explanation.—For the purposes of this clause, the share of a partner in the total income of a firm 
separately assessed as such shall, notwithstanding anything contained in any other law, be an amount 
which bears to the total income of the firm the same proportion as the amount of his share in the 
profits of the firm in accordance with the partnership deed bears to such profits;]
3
* * * * *
4
[(4) (i) in the case of a non-resident, any income by way of interest on such securities or bonds as 
the Central Government may, by notification in the Official Gazette, specify in this behalf, including 
income by way of premium on the redemption of such bonds:
5
[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such 
securities or bonds on or after the 1st day of June, 2002;]
6
[(ii) in the case of an individual, any income by way of interest on moneys standing to his credit 
in a Non-Resident (External) Account in any bank in India in accordance with 7
[the Foreign 
Exchange Management Act, 1999 (42 of 1999)], and the rules made thereunder:
Provided that such individual is a person resident outside India as defined in 8
[clause (w)]
ofsection 2of the said Act or is a person who has been permitted by the Reserve Bank of India to 
maintain the aforesaid Account;]]
10[(4B) in the case of an individual, being a citizen of India or a person of Indian origin, who is a 
non-resident, any income from interest on such 11[savings certificates issued before the 1st day of 
June, 2002] by the Central Government as that Government may, by notification in the Official 
Gazette, specify in this behalf:
Provided that the individual has subscribed to such certificates in convertible foreign exchange 
remitted from a country outside India in accordance with the provisions of 7
[the Foreign Exchange 
Management Act, 1999 (42 of 1999)], and any rules made thereunder.
Explanation.—For the purposes of this clause,—
(a) a person shall be deemed to be of Indian origin if he, or either of his parents or any of his 
grandparents, was born in undivided India;
(b) “convertible foreign exchange” means foreign exchange which is for the time being 
treated by the Reserve Bank of India as convertible foreign exchange for the purposes of 1
[the 
Foreign Exchange Management Act, 1999 (42 of 1999)], and any rules made thereunder;]
2
[(5) in the case of an individual, the value of any travel concession or assistance received by, or 
due to, him,—
(a) from his employer for himself and his family, in connection with his proceeding on leave 
to any place in India;
(b) from his employer or former employer for himself and his family, in connection with his 
proceeding to any place in India after retirement from service or after the termination of his 
service,
subject to such conditions as may be prescribed(including conditions as to number of journeys and 
the amount which shall be exempt per head) having regard to the travel concession or assistance 
granted to the employees of the Central Government:
Provided that the amount exempt under this clause shall in no case exceed the amount of 
expenses actually incurred for the purpose of such travel.
Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—
(i) the spouse and children of the individual ; and
(ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly 
dependent on the individual;]
3
* * * * *
4
* * * * *
(6) in the case of an individual who is not a citizen of India,—
5
* * * * *
6
[(ii) the remuneration received by him as an official, by whatever name called, of an 
embassy, high commission, legation, commission, consulate or the trade representation of a 
foreign State, or as a member of the staff of any of these officials, for service in such capacity:
Provided that the remuneration received by him as a trade commissioner or other official 
representative in India of the Government of a foreign State (not holding office as such in an 
honorary capacity), or as a member of the staff of any of those officials, shall be exempt only if 
the remuneration of the corresponding officials or, as the case may be, members of the staff, if 
any, of the Government resident for similar purposes in the country concerned enjoys a similar 
exemption in that country:
Provided further that such members of the staff are subjects of the country represented and are 
not engaged in any business or profession or employment in India otherwise than as members of such 
staff;]
(vi) the remuneration received by him as an employee of a foreign enterprise for services 
rendered by him during his stay in India, provided the following conditions are fulfilled—
(a) the foreign enterprise is not engaged in any trade or business in India;
(b) his stay in India does not exceed in the aggregate a period of ninety days in such 
previous year ; and
(c) such remuneration is not liable to be deducted from the income of the employer 
chargeable under this Act;
1
* * * * *
2
* * * * *
3
* * * * *
(viii) any income chargeable under the head “Salaries” received by or due to any such 
individual being a non-resident as remuneration for services rendered in connection with his 
employment on a foreign ship where his total stay in India does not exceed in the aggregate a 
period of ninety days in the previous year;
4
* * * * *
5
[(xi) the remuneration received by him as an employee of the Government of a foreign State 
during his stay in India in connection with his training in any establishment or office of, or in any 
undertaking owned by,—
(i) the Government ; or
(ii) any company in which the entire paid-up share capital is held by the Central 
Government, or any State Government or Governments, or partly by the Central Government 
and partly by one or more State Governments; or
(iii) any company which is a subsidiary of a company referred to in item (ii); or
(iv) any corporation established by or under a Central, State or Provincial Act; or
(v) any society registered under the Societies Registration Act, 1860 (14 of 1860), or 
under any other corresponding law for the time being in force and wholly financed by the 
Central Government, or any State Government or State Governments, or partly by the Central 
Government and partly by one or more State Governments;]
6
[(6A) where in the case of a foreign company deriving income by way of royalty or fees for 
technical services received from Government or an Indian concern in pursuance of an agreement
made by the foreign company with Government or the Indian concern after the 31st day of March, 
1976 1
[but before the 1st day of June, 2002] 2
[and,—
(a) where the agreement relates to a matter included in the industrial policy, for the time 
being in force, of the Government of India, such agreement is in accordance with that policy; and
(b) in any other case, the agreement is approved by the Central Government,
the tax on such income is payable, under the terms of the agreement, by Government or the Indian 
concern to the Central Government, the tax so paid].
Explanation.—3
[For the purposes of this clause and clause (6B)],—
(a) “fees for technical services” shall have the same meaning as in Explanation 2 to clause 
(vii) of sub-section (1) of section 9;
(b) “foreign company” shall have the same meaning as in section 80B;
(c) “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) 
of section 9;]
4
[(6B) where in the case of a non-resident (not being a company) or of a foreign company 
deriving income (not being salary, royalty or fees for technical services) from Government or an 
Indian concern in pursuance of an 5
[agreement entered into before the 1st day of June, 2002by the 
Central Government] with the Government of a foreign State or an international organisation, the tax 
on such income is payable by Government or the Indian concern to the Central Government under the 
terms of that agreement or any other 6
[related agreement approved before that date] by the Central 
Government, the tax so paid;]
7
[(6BB) where in the case of the Government of a foreign State or a foreign enterprise deriving 
income from an Indian company engaged in the business of operation of aircraft, as a consideration of 
acquiring an aircraft or an aircraft engine (other than payment for providing spares, facilities or 
services in connection with the operation of leased aircraft) on lease under 8
[an agreement entered 
into after the 31st day of March, 1997 but before the 1st day of April, 1999, 9
[or entered into after the 
31st day of March, 2007and approved by the Central Government in this behalf]] and the tax on such 
income is payable by such Indian company under the terms of that agreement to the Central 
Government, the tax so paid.
Explanation.—For the purposes of this clause, the expression “foreign enterprise” means a person 
who is a non-resident;]
1
[(6C) any income arising to such foreign company, as the Central Government may, by 
notification in the Official Gazette, specify in this behalf, 2
[by way of royalty or fees] for technical 
services received in pursuance of an agreement entered into with that Government for providing 
services in or outside India in projects connected with security of India;]
3
[(6D) any income arising to a non-resident, not being a company, or a foreign company, by way 
of royalty from, or fees for technical services rendered in or outside India to, the National Technical 
Research Organisation;]
(7) any allowances or perquisites paid or allowed as such outside India by the Government to a 
citizen of India for rendering service outside India;
(8) in the case of an individual who is assigned to duties in India in connection with any 
co-operative technical assistance programmes and projects in accordance with an agreement entered 
into by the Central Government and the Government of a foreign State (the terms whereof provide for 
the exemption given by this clause)—
(a) the remuneration received by him directly or indirectly from the Government of that 
foreign State for such duties, and
(b) any other income of such individual which accrues or arises outside India, and is not 
deemed to accrue or arise in India, in respect of which such individual is required to pay any 
income or social security tax to the Government of that foreign State;
4
[(8A) in the case of a consultant—
(a) any remuneration or fee received by him or it, directly or indirectly, out of the funds made 
available to an international organisation [hereafter referred to in this clause and clause (8B) as 
the agency] under a technical assistance grant agreement between the agency and the Government 
of a foreign State; and
(b) any other income which accrues or arises to him or it outside India, and is not deemed to 
accrue or arise in India, in respect of which such consultant is required to pay any income or 
social security tax to the Government of the country of his or its origin.
Explanation.—In this clause, “consultant” means—
(i) any individual, who is either not a citizen of India or, being a citizen of India, is not 
ordinarily resident in India; or
(ii) any other person, being a non-resident,
engaged by the agency for rendering technical services in India in connection with any technical 
assistance programme or project, provided the following conditions are fulfilled, namely:—
(1) the technical assistance is in accordance with an agreement entered into by the Central 
Government and the agency; and
(2) the agreement relating to the engagement of the consultant is approved by the prescribed 
authorityfor the purposes of this clause;
(8B) in the case of an individual who is assigned to duties in India in connection with any 
technical assistance programme and project in accordance with an agreement entered into by the 
Central Government and the agency—
(a) the remuneration received by him, directly or indirectly, for such duties from any 
consultant referred to in clause (8A); and
(b) any other income of such individual which accrues or arises outside India, and is not 
deemed to accrue or arise in India, in respect of which such individual is required to pay any 
income or social security tax to the country of his origin, provided the following conditions are 
fulfilled, namely :—
(i) the individual is an employee of the consultant referred to in clause (8A) and is either 
not a citizen of India or, being a citizen of India, is not ordinarily resident in India ; and
(ii) the contract of service of such individual is approved by the prescribed 
authority before the commencement of his service;]
(9) the income of any member of the family of any such individual as is referred to in clause (8) 
1
[or clause (8A) or, as the case may be, clause (8B)] accompanying him to India, which accrues or 
arises outside India, and is not deemed to accrue or arise in India, in respect of which such member is 
required to pay any income or social security tax to the Government of that foreign State 1
[or, as the 
case may be, country of origin of such member];
2
[(10) (i) any death-cum-retirement gratuity received under the revised Pension Rules of the 
Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or 
under any similar scheme applicable to the members of the civil services of the Union or holders of 
posts connected with defence or of civil posts under the Union (such members or holders being 
persons not governed by the said Rules) or to the members of the all-India services or to the members 
of the civil services of a State or holders of civil posts under a State or to the employees of a local 
authority or any payment of retiring gratuity received under the Pension Code or Regulations 
applicable to the members of the defence services;
(ii) any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to the extent it 
does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of
section 4 of that Act;
(iii) any other gratuity received by an employee on his retirement or on his becoming 
incapacitated prior to such retirement or on termination of his employment, or any gratuity received 
by his widow, children or dependants on his death, to the extent it does not, in either case, exceed 
one-half month’s salary for each year of completed service, 3
[calculated on the basis of the average 
salary for the ten months immediately preceding the month in which any such event occurs, subject to 
such limit as the Central Government may, by notification in the Official Gazette, specify in this 
behalf having regard to the limit applicable in this behalf to the employees of that Government]:
Provided that where any gratuities referred to in this clause are received by an employee from 
more than one employer in the same previous year, the aggregate amount exempt from income-tax 
under this clause 4
[shall not exceed the limit so specified]:
Provided further that where any such gratuity or gratuities was or were received in any one or 
more earlier previous years also and the whole or any part of the amount of such gratuity or gratuities 
was not included in the total income of the assessee of such previous year or years, the amount 
exempt from income-tax under this clause 1
[shall not exceed the limit so specified] as reduced by the 
amount or, as the case may be, the aggregate amount not included in the total income of any such 
previous year or years.
2
* * * * *
Explanation.—3
[In this clause, and in clause (10AA)], “salary” shall have the meaning assigned to 
it in clause (h) of rule 2 of Part A of the Fourth Schedule;]
4
[(10A) (i) any payment in commutation of pension received under the Civil Pensions 
(Commutation) Rules of the Central Government 5
[or under any similar scheme applicable to the 
members of the civil services of the Union or holders of posts connected with defence or of civil posts 
under the Union (such members or holders being persons not governed by the said Rules) or to the 
members of the all-India services or to the members of the defence services or to the members of the 
civil services of a State or holders of civil posts under a State or to the employees of a local authority] 
or a corporation established by a Central, State or Provincial Act;
(ii) any payment in commutation of pension received under any scheme of any other employer, to 
the extent it does not exceed—
(a) in a case where the employee receives any gratuity, the commuted value of one-third of 
the pension which he is normally entitled to receive, and
(b) in any other case, the commuted value of one-half of such pension,
such commuted value being determined having regard to the age of the recipient, the state of his 
health, the rate of interest and officially recognised tables of mortality;
6
* * * * *
7
[(iii) any payment in commutation of pension received from a fund under clause (23AAB);]
8
[(10AA) (i) any payment received by an employee of the Central Government or a State 
Government as the cash equivalent of the leave salary in respect of the period of earned leave at his 
credit at the time of his retirement 9
[whether on superannuation] or otherwise;
(ii) any payment of the nature referred to in sub-clause (i) received by an employee, other than an 
employee of the Central Government or a State Government, in respect of so much of the period of earned 
leave at his credit at the time of his retirement 9
[whether on superannuation] or otherwise as does not 
exceed 10[ten months], calculated on the basis of the average salary drawn by the employee during
the period of ten months immediately preceding his retirement 1
[whether on superannuation] or 
otherwise, 2
[subject to such limit as the Central Government may, by notification in the Official 
Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of 
that Government]:
Provided that where any such payments are received by an employee from more than one 
employer in the same previous year, the aggregate amount exempt from income-tax under this subclause 3
[shall not exceed the limit so specified]:
Provided further that where any such payment or payments was or were received in any one or 
more earlier previous years also and the whole or any part of the amount of such payment or 
payments was or were not included in the total income of the assessee of such previous year or years, 
the amount exempt from income-tax under this sub-clause 3
[shall not exceed the limit so specified], 
as reduced by the amount or, as the case may be, the aggregate amount not included in the total 
income of any such previous year or years.
4
* * * * *
Explanation.—For the purposes of sub-clause (ii),—
5
*** the entitlement to earned leave of an employee shall not exceed thirty days for every year of 
actual service rendered by him as an employee of the employer from whose service he has retired;
6
* * * * *
7
[(10B) any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 
1947), or under any other Act or Rules, orders or notifications issued thereunder or under any 
standing orders or under any award, contract of service or otherwise, 8
[at the time of his 
retrenchment:
Provided that the amount exempt under this clause shall not exceed—
(i) an amount calculated in accordance with the provisions of clause (b) of section 25F of the 
Industrial Disputes Act, 1947 (14 of 1947); or
9
[(ii) such amount, not being less than fifty thousand rupees, as the Central Government may, 
by notification in the Official Gazette, specify in this behalf,]
whichever is less:
Provided further that the preceding proviso shall not apply in respect of any compensation 
received by a workman in accordance with any scheme which the Central Government may, having 
regard to the need for extending special protection to the workmen in the undertaking to which such 
scheme applies and other relevant circumstances, approve in this behalf.]
Explanation.—For the purposes of this clause—
(a) compensation received by a workman at the time of the closing down of the undertaking 
in which he is employed shall be deemed to be compensation received at the time of his 
retrenchment;
(b) compensation received by a workman, at the time of the transfer (whether by agreement 
or by operation of law) of the ownership or management of the undertaking in which he is 
employed from the employer in relation to that undertaking to a new employer, shall be deemed 
to be compensation received at the time of his retrenchment if—
(i) the service of the workman has been interrupted by such transfer; or
(ii) the terms and conditions of service applicable to the workman after such transfer are 
in any way less favourable to the workman than those applicable to him immediately before 
the transfer; or
(iii) the new employer is, under the terms of such transfer or otherwise, legally not liable 
to pay to the workman, in the event of his retrenchment, compensation on the basis that his 
service has been continuous and has not been interrupted by the transfer;
(c) the expressions “employer” and “workman” shall have the same meanings as in the 
Industrial Disputes Act, 1947 (14 of 1947);]
1
[(10BB) any payments made under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 
1985 (21 of 1985), and any scheme framed thereunder except payment made to any assessee in 
connection with the Bhopal Gas Leak Disaster to the extent such assessee has been allowed a
deduction under this Act on account of any loss or damage caused to him by such disaster;]
2
[(10BC) any amount received or receivable from the Central Government or a State Government 
or a local authority by an individual or his legal heir by way of compensation on account of any 
disaster, except the amount received or receivable to the extent such individual or his legal heir has 
been allowed a deduction under this Act on account of any loss or damage caused by such disaster.
Explanation.—For the purposes of this clause, the expression “disaster” shall have the meaning 
assigned to it under clause (d) of section 2 of the Disaster Management Act, 2005 (53 of 2005);]
3
[(10C) 4
[any amount received or receivable by an employee of]—
(i) a public sector company; or
(ii) any other company; or
(iii) an authority established under a Central, State or Provincial Act; or
(iv) a local 5
[authority; or]
6
[(v) a co-operative society; or 
(vi) a University established or incorporated by or under a Central, State or Provincial Act 
and an institution declared to be a University under section 3 of the University Grants 
Commission Act, 1956(3 of 1956); or
(vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the 
Institutes of Technology Act, 1961 (59 of 1961); or
1
[(viia) any State Government; or]
2
[(viib) the Central Government; or]
3
[(viic) an institution, having importance throughout India or in any State or States, as the 
Central Government may, by notification in the Official Gazette, specify in this behalf; or]
(viii) such institute of management as the Central Government may, by notification in the 
Official Gazette, specify in this behalf,]
4
{on his 5
[voluntary retirement} or termination of his service, in accordance with any scheme or 
schemes of voluntary retirement or in the case of a public sector company referred to in 
sub-clause (i), a scheme of voluntary separation, to the extent such amount does not exceed five lakh 
rupees]:
Provided that the schemes of the said companies or authorities 6
[or societies or Universities or the 
Institutes referred to in sub-clauses (vii) and (viii)], as the case may be, governing the payment of 
such amount are framed in accordance with such guidelines (including inter alia criteria of economic 
viability) as may be prescribed 7
***:
Provided further that where exemption has been allowed to an employee under this clause for any 
assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment 
year:]
8
[Provided also that where any relief has been allowed to an assessee under section 89 for any 
assessment year in respect of any amount received or receivable on his voluntary retirement or
termination of service or voluntary separation, no exemption under this clause shall be allowed to him 
in relation to such, or any other, assessment year;]
9
[(10CC) in the case of an employee, being an individual deriving income in the nature of a 
perquisite, not provided for by way of monetary payment, within the meaning of clause (2) of section 
17, the tax on such income actually paid by his employer, at the option of the employer, on behalf of 
such employee, notwithstanding anything contained in section 200 of the Companies Act, 1956 
(1 of 1956);]
1
[(10D) any sum received under a life insurance policy, including the sum allocated by way of 
bonus on such policy, other than—
(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of 
section 80DDA; or
(b) any sum received under a Keyman insurance policy; or
(c) any sum received under an insurance policy issued on or after the 1st day of April, 2003 
2
[but on or before the 31st day of March, 2012] in respect of which the premium payable for any 
of the years during the term of the policy exceeds twenty per cent. of the actual capital sum 
3
[assured; or]
4
[(d) any sum received under an insurance policy issued on or after the 1st day of April, 2012 
in respect of which the premium payable for any of the years during the term of the policy 
exceeds ten per cent. of the actual capital sum assured:]
Provided that the provisions of 5
[sub-clauses (c) and (d)] shall not apply to any sum received 
on the death of a person:
Provided further that for the purpose of calculating the actual capital sum assured under 
5
[sub-clause(c)], effect shall be given to the 6
[Explanation to sub-section (3) of section 80C or 
the Explanation to sub-section (2A) of section 88, as the case may be:]
7
[Provided also that where the policy, issued on or after the 1st day of April, 2013, is for 
insurance on life of any person, who is—
(i) a person with disability or a person with severe disability as referred to in section 80U; 
or
(ii) suffering from disease or ailment as specified in the rules made under 
section 80DDB,
the provisions of this sub-clause shall have effect as if for the words “ten per cent.”, the words 
“fifteen per cent.” had been substituted.]
8
[Explanation 1].—For the purposes of this clause, “Keyman insurance policy” means a life 
insurance policy taken by a person on the life of another person who is or was the employee of the 
first-mentioned person or is or was connected in any manner whatsoever with the business of the 
first-mentioned person] 7
[and includes such policy which has been assigned to a person, at any time 
during the term of the policy, with or without any consideration;]
9
[Explanation 2.—For the purposes of sub-clause (d), the expression “actual capital sum assured” 
shall have the meaning assigned to it in the Explanation to sub-section (3A) of section 80C;]
(11) any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925), 
applies 1
[or from any other provident fund set up by the Central Government and notified by it in this 
behalf in the Official Gazette];
2
[(11A) any payment from an account, opened in accordance with the Sukanya Samriddhi 
Account Rules, 2014 made under the Government Savings Bank Act, 1873 (5 of 1873);]
(12) the accumulated balance due and becoming payable to an employee participating in a 
recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule ;
3
[(12A) any payment from the National Pension System Trust to an 4
[assessee] on closure of his 
account or on his opting out of the pension scheme referred to in section 80CCD, to the extent it does 
not exceed forty per cent. of the total amount payable to him at the time of such closure or his opting 
out of the scheme;]
5
[(12B) any payment from the National Pension System Trust to an employee under the pension 
scheme referred to in section 80CCD, on partial withdrawal made out of his account in accordance with 
the terms and conditions, specified under the Pension Fund Regulatory and Development AuthorityAct, 
2013 (23 of 2013) and the regulations made thereunder, to the extent it does not exceed 
twenty-five per cent. of the amount of contributions made by him;]
6
[(13) any payment from an approved superannuation fund made—
(i) on the death of a beneficiary; or
(ii) to an employee in lieu of or in commutation of an annuity on his retirement at or after a 
specified age or on his becoming incapacitated prior to such retirement; or
(iii) by way of refund of contributions on the death of a beneficiary ; or
(iv) by way of refund of contributions to an employee on his leaving the service in connection 
with which the fund is established otherwise than by retirement at or after a specified age or on 
his becoming incapacitated prior to such retirement, to the extent to which such payment does not 
exceed the contributions made prior to the commencement of this Act and any interest 
7
[thereon; or]
3
[(v) by way of transfer to the account of the employee under a pension scheme referred to in 
section 80CCD and notified by the Central Government;]
8
[(13A) any special allowance specifically granted to an assessee by his employer to meet 
expenditure actually incurred on payment of rent (by whatever name called) in respect of residential 
accommodation occupied by the assessee, to such extent 9
*** as may be prescribed having regard to 
the area or place in which such accommodation is situate and other relevant considerations.]
10[Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this 
clause shall apply in a case where—
(a) the residential accommodation occupied by the assessee is owned by him ; or
(b) the assessee has not actually incurred expenditure on payment of rent (by whatever name 
called) in respect of the residential accommodation occupied by him;]
11[(14) (i) any such special allowance or benefit, not being in the nature of a perquisite within the 
meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and 
exclusively incurred in the performance of the duties of an office or employment of profit, 1
[as may 
be prescribed], to the extent to which such expenses are actually incurred for that purpose;
(ii) any such allowance granted to the assessee either to meet his personal expenses at the place 
where the duties of his office or employment of profit are ordinarily performed by him or at the place 
where he ordinarily resides, or to compensate him for the increased cost of living, 2
[as may be 
prescribed and to the extent as may be prescribed]:]
3
[Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal 
allowance granted to the assessee to remunerate or compensate him for performing duties of a special 
nature relating to his office or employment unless such allowance is related to the place of his posting 
or residence;]
4
* * * * *
(15) 5
[(i) income by way of interest, premium on redemption or other payment on such securities, 
bonds, annuity certificates, savings certificates, other certificates issued by the Central Government 
and deposits as the Central Government may, by notification in the Official Gazette, specify in this 
behalf, subject to such conditions and limits as may be specified in the said notification;
6
[(iib) 7
[in the case of an individual or a Hindu undivided family,] interest on such Capital 
Investment Bonds as the Central Government may, by notification in the Official Gazette, specify in 
this behalf:]
8
[Provided that the Central Government shall not specify, for the purposes of this sub-clause, such 
Capital Investment Bonds on or after the 1st day of June, 2002;]
9
[(iic) in the case of an individual or a Hindu undivided family, interest on such Relief Bonds as 
the Central Government may, by notification in the Official Gazette, specify in this behalf;]
10[(iid) interest on such bonds, as the Central Government may, by notification in the Official 
Gazette, specify, arising to—
(a) a non-resident Indian, being an individual owning the bonds; or
(b) any individual owning the bonds by virtue of being a nominee or survivor of the nonresident Indian; or
(c) any individual to whom the bonds have been gifted by the non-resident Indian:
Provided that the aforesaid bonds are purchased by a non-resident Indian in foreign exchange and 
the interest and principal received in respect of such bonds, whether on their maturity or otherwise, is 
not allowable to be taken out of India:
Provided further that where an individual, who is a non-resident Indian in any previous year in 
which the bonds are acquired, becomes a resident in India in any subsequent year, the provisions of 
this sub-clause shall continue to apply in relation to such individual:
Provided also that in a case where the bonds are encashed in a previous year prior to their 
maturity by an individual who is so entitled, the provisions of this sub-clause shall not apply to such 
individual in relation to the assessment year relevant to such previous year:
1
[Provided also that the Central Government shall not specify, for the purposes of this sub-clause, 
such bonds on or after the 1st day of June, 2002.]
Explanation.—For the purposes of this sub-clause, the expression “non-resident Indian” shall 
have the meaning assigned to it in clause (e) of section 115C;]
(iii) interest on securities held by the Issue Department of the Central Bank of Ceylon constituted 
under the Ceylon Monetary Law Act, 1949;
2
[(iiia) interest payable to any bank incorporated in a country outside India and authorised to 
perform central banking functions in that country on any deposits made by it, with the approval of the 
Reserve Bank of India, with any scheduled bank.
Explanation.—For the purposes of this sub-clause, “scheduled bank” shall have the meaning 
assigned to it in 3
[clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36];]
4
[(iiib) interest payable to the Nordic Investment Bank, being a multilateral financial institution 
constituted by the Governments of Denmark, Finland, Iceland, Norway and Sweden, on a loan 
advanced by it to a project approved by the Central Government in terms of the Memorandum of 
Understanding entered into by the Central Government with that Bank on the 25th day of November, 
1986;]
5
[(iiic) interest payable to the European Investment Bank, on a loan granted by it in pursuance of 
the framework-agreement for financial co-operation entered into on the 25th day of November, 1993 
by the Central Government with that Bank;]
(iv) interest payable—
6
[(a) by Government or a local authority on moneys borrowed by it before the 1st day of 
June, 2001 from, or debts owed by it before the 1st day of June, 2001 to, sources outside India;]
(b) by an industrial undertaking in India on moneys borrowed by it under 7
[a loan agreement 
entered into before the 1st day of June, 2001 with any such financial institution] in a foreign 
country as may be approved in this behalf by the Central Government by general or special 
order;
(c) by an industrial undertaking in India on any moneys borrowed or debt incurred by it 
8
[before the 1st day of June, 2001] in a foreign country in respect of the purchase outside India of 
raw materials 9
[or components] or capital plant and machinery, 10[to the extent to which such 
interest does not exceed the amount of interest calculated at the rate approved by the Central 
Government in this behalf, having regard to the terms of the loan or debt and its repayment.]
9
[
11[Explanation 1.]—For the purposes of this item, “purchase of capital plant and machinery” 
includes the purchase of such capital plant and machinery under a hire-purchase agreement or a lease 
agreement with an option to purchase such plant and machinery.]
1
[Explanation 2.—For the removal of doubts, it is hereby declared that the usance interest payable 
outside India by an undertaking engaged in the business of ship-breaking in respect of purchase of a 
ship from outside India shall be deemed to be the interest payable on a debt incurred in a foreign 
country in respect of the purchase outside India;]
2
[(d) by the Industrial Finance Corporation of India established by the Industrial Finance 
Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India established 
under the Industrial Development Bank of India Act, 1964 (18 of 1964), 3
[or the Export-Import 
Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981),] 4
[or the 
National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 
of 1987),] 5
[or the Small Industries Development Bank of India established under section 3 of the 
Small Industries Development Bank of India Act, 1989 (39 of 1989),] or the Industrial Credit and 
Investment Corporation of India [a company formed and registered under the Indian Companies 
Act, 1913 (7 of 1913)], on 6
[any moneys borrowed by it from sources outside Indiabefore the 1st 
day of June, 2001], to the extent to which such interest does not exceed the amount of interest 
calculated at the rate approved by the Central Government in this behalf, having regard to the 
terms of the loan and its repayment;]
(e) by any other financial institution established in India or a banking company to which the 
Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution 
referred to in section 51 of that Act), on 6
[any moneys borrowed by it from sources outside India 
before the 1st day of June, 2001] under a loan agreement approved by the Central Government 
where the moneys are borrowed either for the purpose of advancing loans to industrial 
undertakings in India for purchase outside India of raw materials or capital plant and machinery 
or for the purpose of importing any goods which the Central Government may consider necessary 
to import in the public interest, to the extent to which such interest does not exceed the amount of 
interest calculated at the rate approved by the Central Government in this behalf, having regard to 
the terms of the loan and its repayment;]
7
[(f) by an industrial undertaking in India on any moneys borrowed by it in foreign currency 
from sources outside India under 8
[a loan agreement approved by the Central Government before 
the 1st day of June, 2001] having regard to the need for industrial development in India, to the 
extent to which such interest does not exceed the amount of interest calculated at the rate 
approved by the Central Government in this behalf, having regard to the terms of the loan and its 
repayment;
9
[(fa) by a scheduled bank 10*** 11[to a non-resident or to a person who is not ordinarily 
resident within the meaning of sub-section (6) of section 6] on deposits in foreign currency where 
the acceptance of such deposits by the bank is approved by the Reserve Bank of India.
12[Explanation.—For the purposes of this item, the expression “scheduled bank” means the State 
Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as 
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new 
bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of 
Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and 
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the 
Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a 
co-operative bank;
1
[(g) by a public company formed and registered in India with the main object of carrying on 
the business of providing long-term finance for construction or purchase of houses in India for 
residential purposes, 2
[being a company eligible for deduction under clause (viii) of sub-section 
(1) of section 36 on any moneys borrowed by it in foreign currency from sources outside India 
under 3
[a loan agreement approved by the Central Government before the 1st day of June, 2003], 
to the extent to which such interest does not exceed the amount of interest calculated at the rate 
approved by the Central Government in this behalf, having regard to the terms of the loan and its 
repayment.]
Explanation.—For the purposes of 4
[items (f), (fa) and (g)], the expression “foreign currency” 
shall have the meaning assigned to it in the 5
[Foreign Exchange Management Act, 1999 
(42 of 1999)];]
6
[(h) by any public sector company in respect of such bonds or debentures and subject to such 
conditions, including the condition that the holder of such bonds or debentures registers his name 
and the holding with that company, as the Central Government may, by notification in the 
Official Gazette, specify in this behalf;]
7
[(i) by Government on deposits made by an employee of the Central Government or a State 
Government 8
[or a public sector company], in accordance with such scheme as the Central 
Government may, by notification in the Official Gazette, frame in this behalf, out of the moneys 
due to him on account of his retirement, whether on superannuation or otherwise.]
9
[
10[Explanation 1].—For the purposes of this sub-clause, the expression “industrial undertaking” 
means any undertaking which is engaged in—
(a) the manufacture or processing of goods; or
11[(aa) the manufacture of computer software or recording of programme on any disc, tape, 
perforated media or other information device; or]
(b) the business of generation or distribution of electricity or any other form of power; or
12[(ba) the business of providing telecommunication services; or]
(c) mining; or
(d) the construction of ships; or
13[(da) the business of ship-breaking; or]
14[(e) the operation of ships or aircrafts or construction or operation of rail systems.]]
15[Explanation 1A.—For the purposes of this sub-clause, the expression “interest” shall not 
include interest paid on delayed payment of loan or on default if it is in excess of two per cent.
per annum over the rate of interest payable in terms of such loan.]
16[Explanation 2.—For the purposes of this clause, the expression “interest” includes hedging 
transaction charges on account of currency fluctuation;]
1
[(v) interest on—
(a) securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal, in the 
Reserve Bank's SGL Account No. SL/DH 048;
(b) deposits for the benefit of the victims of the Bhopal gas leak disaster held in such 
account, with the Reserve Bank of India or with a public sector bank, as the Central Government 
may, by notification in the Official Gazette, specify, whether prospectively or retrospectively but 
in no case earlier than the 1st day of April, 1994 in this behalf.
Explanation.—For the purposes of this sub-clause, the expression “public sector bank” shall have 
the meaning assigned to it in the Explanation to clause (23D);]
2
[(vi) interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 3
[or deposit 
certificates issued under the Gold Monetisation Scheme, 2015] notified by the Central Government;
4
[(vii) interest on bonds—
(a) issued by a local authority or by a State Pooled Finance Entity; and
(b) specified by the Central Government by notification in the Official Gazette.
Explanation.—For the purposes of this sub-clause, the expression “State Pooled Finance Entity” 
shall mean such entity which is set up in accordance with the guidelines for the Pooled Finance 
Development Scheme notified by the Central Government in the Ministry of Urban Development;]
5
[(viii) any income by way of interest received by a non-resident or a person who is not ordinarily 
resident, in India on a deposit made on or after the 1st day of April, 2005, in an Offshore Banking 
Unit referred to in clause (u) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);]
6
[(15A) any payment made, by an Indian company engaged in the business of operation of 
aircraft, to acquire an aircraft or an aircraft engine (other than a payment for providing spares, 
facilities or services in connection with the operation of leased aircraft) on lease from the 
Government of a foreign State or a foreign enterprise under an agreement 7
[ 8
[, not being an 
agreement entered into between the 1st day of April, 1997 and the 31st day of March, 1999,] and] 
approved by the Central Government in this behalf:
9
[Provided that nothing contained in this clause shall apply to any such agreement entered into on 
or after the 10[1st day of April, [2007].]
Explanation.—For the purposes of this clause, the expression “foreign enterprise” means a person 
who is a non-resident;]
(16) scholarships granted to meet the cost of education;
11[(17) any income by way of—
(i) daily allowance received by any person by reason of his membership of Parliament or of 
any State Legislature or of any Committee thereof; 12***
13[(ii) any allowance received by any person by reason of his membership of Parliament 
under the Members of Parliament (Constituency Allowance) Rules, 1986;
14[(iii) any constituency allowance received by any person by reason of his membership of any 
State Legislature under any Act or rules made by that State Legislature;]]]
1
[(17A) any payment made, whether in cash or in kind,—
(i) in pursuance of any award instituted in the public interest by the Central Government or 
any State Government or instituted by any other body and approved by the Central Government 
in this behalf; or
(ii) as a reward by the Central Government or any State Government for such purposes as 
may be approved by the Central Government in this behalf in the public interest;]
2
[(18) any income by way of—
(i) pension received by an individual who has been in the service of the Central Government 
or State Government and has been awarded “Param Vir Chakra” or “Maha Vir Chakra” or “Vir 
Chakra” or such other gallantry award as the Central Government may, by notification in the 
Official Gazette, specify in this behalf;
(ii) family pension received by any member of the family of an individual referred to in 
sub-clause (i).
Explanation.—For the purposes of this clause, the expression “family” shall have the meaning 
assigned to it in the Explanation to clause (5);]
3
* * * * *
4
[(19) family pension received by the widow or children or nominated heirs, as the case may be, 
of a member of the armed forces (including para-military forces) of the Union, where the death of 
such member has occurred in the course of operational duties, in such circumstances and subject to 
such conditions, as may be prescribed;]
5
[(19A) the annual value of any one palace in the occupation of a Ruler, being a palace, the annual 
value whereof was exempt from income-tax before the commencement of the Constitution 
(Twenty-sixth Amendment) Act, 1971, by virtue of the provisions of the Merged States (Taxation 
Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case 
may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958:
Provided that for the assessment year commencing on the 1st day of April, 1972, the annual value 
of every such palace in the occupation of such Ruler during the relevant previous year shall be 
exempt from income-tax;]
(20) the income of a local authority which is chargeable under the head 6
*** “Income from house 
property”, “Capital gains” or “Income from other sources” or from a trade or business carried on by it 
7
[which accrues or arises from the supply of a commodity or service (not being water or electricity) 
within its own jurisdictional area or from the supply of water or electricity within or outside its own 
jurisdictional area].
8
[Explanation.—For the purposes of this clause, the expression “local authority” means—
(i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or
(iii) Municipal Committee and District Board,
legally entitled to, or entrusted by the Government with, the control or management of a 
Municipal or local fund; or
(iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924);]
1
* * * * *
2
[(21) any income of a 3
[research association] for the time being approved for the purpose of 
clause (ii) 4
[or clause (iii)] of sub-section (1) of section 35:
Provided that the 3
[research association]—
(a) applies its income, or accumulates it for application, wholly and exclusively to the objects 
for which it is established, and the provisions of sub-section (2) and sub-section (3) of section 
11 shall apply in relation to such accumulation subject to the following modifications, namely:—
(i) in sub-section (2),—
(1) the words, brackets, letters and figure “referred to in clause (a) or clause (b) of 
sub-section (1) read with the Explanation to that sub-section” shall be omitted;
(2) for the words “to charitable or religious purposes”, the words “for the purposes of 
5
[scientific research or research in social science or statistical research]” shall be 
substituted;
(3) the reference to “Assessing Officer” in clause (a) thereof shall be construed as a 
reference to the “prescribed authority” referred to in clause (ii) 4
[or clause (iii)] of 
sub-section (1) of section 35;
(ii) in sub-section (3), in clause (a), for the words “charitable or religious purposes”, the 
words “the purposes of 5
[scientific research or research in social science or statistical 
research]” shall be substituted; and
6
[(b) does not invest or deposit its funds, other than—
(i) any assets held by the 3
[research association] where such assets form part of the 
corpus of the fund of the association as on the 1st day of June, 1973;
(ii) any assets (being debentures issued by, or on behalf of, any company or corporation), 
acquired by the 3
[research association] before the 1st day of March, 1983;
(iii) any accretion to the shares, forming part of the corpus of the fund mentioned in 
sub-clause (i), by way of bonus shares allotted to the 3
[research association];
(iv) voluntary contributions received and maintained in the form of jewellery, furniture or 
any other article as the Board may, by notification in the Official Gazette, specify,
for any period during the previous year otherwise than in any one or more of the forms or modes 
specified in sub-section (5) of section 11:]
7
[Provided further that the exemption under this clause shall not be denied in relation to voluntary 
contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred
to in clause (b) of the first proviso to this clause, subject to the condition that such voluntary 
contribution is not held by the 1
[research association], otherwise than in any one or more of the forms 
or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the 
previous year in which such asset is acquired or the 31st day of March, 1992, whichever is later:
Provided also] that nothing contained in this clause shall apply in relation to any income of the 
1
[research association], bei ng profits and gains of business, unless the business is incidental to the 
attainment of its objectives and separate books of account are maintained by it in respect of such 
business:]
2
[Provided also that where the 1
[research association] is approved by the Central Government and 
subsequently that Government is satisfied that—
(i) the 1
[research association] has not applied its income in accordance with the provisions 
contained in clause (a) of the first proviso; or
(ii) the 1
[research association] has not invested or deposited its funds in accordance with the 
provisions contained in clause (b) of the first proviso; or
(iii) the activities of the 1
[research association] are not genuine; or
(iv) the activities of the 1
[research association] are not being carried out in accordance with all 
or any of the conditions subject to which such association was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed 
withdrawal to the concerned association, by order, withdraw the approval and forward a copy of 
the order withdrawing the approval to such association and to the Assessing Officer;]
3
* * * * *
4
[(22B) any income of such news agency set up in India solely for collection and distribution of 
news as the Central Government may, by notification in the Official Gazette, specify in this behalf:
Provided that the news agency applies its income or accumulates it for application solely for 
collection and distribution of news and does not distribute its income in any manner to its members:
Provided further that any notification issued by the Central Government under this clause shall, at 
any one time, have effect for such assessment year or years, not exceeding three assessment years 
(including an assessment year or years commencing before the date on which such notification is 
issued) as may be specified in the notification:]
2
[Provided also that where the news agency has been specified, by notification, by the Central 
Government and subsequently that Government is satisfied that such news agency has not applied or 
accumulated or distributed its income in accordance with the provisions contained in the first proviso, 
it may, at any time after giving a reasonable opportunity of showing cause, rescind the notification 
and forward a copy of the order rescinding the notification to such agency and to the Assessing 
Officer;]
1
[(23A) any income (other than income chargeable under the head2
***“Income from house 
property” or any income received for rendering any specific services or income by way of interest or 
dividends derived from its investments) of an association or institution established in India having as 
its object the control, supervision, regulation or encouragement of the profession of law, medicine, 
accountancy, engineering or architecture or such other profession as the Central Government may 
specify in this behalf, from time to time, by notification in the Official Gazette:
Provided that—
(i) the association or institution applies its income, or accumulates it for application, solely 
to the objects for which it is established; and
(ii) the association or institution is for the time being approved for the purpose of this clause 
by the Central Government by general or special order:]
3
[Provided further that where the association or institution has been approved by the Central 
Government and subsequently that Government is satisfied that—
(i) such association or institution has not applied or accumulated its income in accordance 
with the provisions contained in the first proviso; or
(ii) the activities of the association or institution are not being carried out in accordance with 
all or any of the conditions subject to which such association or institution was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed 
withdrawal to the concerned association or institution, by order, withdraw the approval and forward a 
copy of the order withdrawing the approval to such association or institution and to the Assessing 
Officer;]
4
[(23AA) any income received by any person on behalf of any Regimental Fund or Non-Public 
Fund established by the armed forces of the Union for the welfare of the past and present members of 
such forces or their dependants;]
5
[(23AAA) any income received by any person on behalf of a fund established, for such purposes 
as may be notified by the Board in the Official Gazette, for the welfare of employees or their 
dependants and of which fund such employees are members if such fund fulfils the following 
conditions, namely:—
(a) the fund—
(i) applies its income or accumulates it for application, wholly and exclusively to the 
objects for which it is established; and
(ii) invests its funds and contributions and other sums received by it in the forms or 
modes specified in sub-section (5) of section 11;
(b) the fund is approved by the 6
[Principal Commissioner or Commissioner] in accordance 
with the rules made in this behalf:
Provided that any such approval shall at any one time have effect for such assessment year or 
years not exceeding three assessment years as may be specified in the order of approval;]
1
[(23AAB) any income of a fund, by whatever name called, set up by the Life Insurance 
Corporation of India on or after the 1st day of August, 1996 2
[or any other insurer under a pension 
scheme],—
(i) to which contribution is made by any person for the purpose of receiving pension from 
such fund;
(ii) which is approved by the Controller of Insurance 3
[or the Insurance Regulatory and 
Development Authority established under sub-section (1) of section 3 of the Insurance 
Regulatory and Development Authority Act, 1999 (41 of 1999), as the case may be].
Explanation.—For the purposes of this clause, the expression “Controller of Insurance” shall 
have the meaning assigned to it in clause (5B) of section 2 of the Insurance Act, 1938 
(4 of 1938);]
4
[(23B) any income of an institution constituted as a public charitable trust or registered under 
the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force 
in any part of India, and existing solely for the development of khadi or village industries or both, and 
not for purposes of profit, to the extent such income is attributable to the business of production, sale, 
or marketing, of khadi or products of village industries:
Provided that—
(i) the institution applies its income, or accumulates it for application, solely for the 
development of khadi or village industries or both; and
(ii) the institution is, for the time being, approved for the purpose of this clause by the Khadi 
and Village Industries Commission:
Provided further that the Commission shall not, at any one time, grant such approval for more 
than three assessment years beginning with the assessment year next following the financial year in 
which it is granted:
5
[Provided also that where the institution has been approved by the Khadi and Village Industries 
Commission and subsequently that Commission is satisfied that—
(i) the institution has not applied or accumulated its income in accordance with the provisions 
contained in the first proviso; or
(ii) the activities of the institution are not being carried out in accordance with all or any of 
the conditions subject to which such institution was approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed 
withdrawal to the concerned institution, by order, withdraw the approval and forward a copy of the 
order withdrawing the approval to such institution and to the Assessing Officer.]
Explanation.—For the purposes of this clause,—
(i) “Khadi and Village Industries Commission” means the Khadi and Village 
Industries Commission established under the Khadi and Village Industries Commission 
Act, 1956 (61 of 1956);
(ii) “khadi” and “village industries” have the meanings respectively assigned to them in that 
Act;]
6
[(23BB) any income of an authority (whether known as the Khadi and Village Industries Board 
or by any other name) established in a State by or under a State or Provincial Act for the development 
of khadi or village industries in the State
Explanation.—For the purposes of this clause, “khadi” and “village industries” have the 
meanings respectively assigned to them in the Khadi and Village Industries Commission Act, 1956 
(61 of 1956);
(23BBA) any income of any body or authority (whether or not a body corporate or corporation 
sole) established, constituted or appointed by or under any Central, State or Provincial Act which 
provides for the administration of any one or more of the following, that is to say, public religious or 
charitable trusts or endowments (including maths, temples, gurdwaras, wakfs, churches, synagogues, 
agiaries or other places of public religious worship) or societies for religious or charitable purposes 
registered as such under the Societies Registration Act, 1860 (21 of 1860), or any other law for the 
time being in force:
Provided that nothing in this clause shall be construed to exempt from tax the income of any trust, 
endowment or society referred to therein;]
1
[(23BBB) any income of the European Economic Community derived in India by way of 
interest, dividends or capital gains from investments made out of its funds under such scheme as the 
Central Government may, by notification in the Official Gazette, specify in this behalf.
Explanation.—For the purposes of this clause, “European Economic Community” means the 
European Economic Community established by the Treaty of Rome of 25th March, 1957;]
2
[(23BBC) any income of the SAARC Fund for Regional Projects set up by Colombo Declaration 
issued on the 21st day of December, 1991 by the Heads of State or Government of the Member 
Countries of South Asian Association for Regional Cooperation established on the 8th day of 
December, 1985 by the Charter of the South Asian Association for Regional Cooperation;]
3
[(23BBD) any income of the Secretariat of the Asian Organisation of the Supreme 
Audit Institutions registered as “ASOSAI-SECRETARIAT” under the Societies Registration 
Act, 1860 (21 of 1860) for 4
[ten previous years relevant to the assessment years beginning on the 
1st day of April, 2001 and ending on the 31st day of March, 2011];
(23BBE) any income of the Insurance Regulatory and Development Authority established under 
sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 
(41 of 1999);]
5
[(23BBF) any income of the North-Eastern Development Finance Corporation Limited, being a 
company formed and registered under the Companies Act, 1956 (1 of 1956):
Provided that in computing the total income of the North-Eastern Development Finance 
Corporation Limited, the amount to the extent of—
(i) twenty per cent. of the total income for assessment year beginning on the 1st day of 
April, 2006;
(ii) forty per cent. of the total income for assessment year beginning on the 1st day of 
April, 2007;
(iii) sixty per cent. of the total income for assessment year beginning on the 1st day of 
April, 2008;
(iv) eighty per cent. of the total income for assessment year beginning on the 1st day of 
April, 2009;
(v) one hundred per cent. of the total income for assessment year beginning on the 1st day of 
April, 2010 and any subsequent assessment year or years,
shall be included in such total income;]
1
[(23BBG) any income of the Central Electricity Regulatory Commission constituted under 
sub-section (1) of section 76 of the Electricity Act, 2003 (36 of 2003);]
2
[(23BBH) any income of the Prasar Bharati (Broadcasting Corporation of India) established 
under sub-section (1) of section 3 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990
(25 of 1990);]
3
[(23C) any income received by any person on behalf of—
(i) the Prime Minister's National Relief Fund; or
(ii) the Prime Minister's Fund (Promotion of Folk Art); or
(iii) the Prime Minister's Aid to Students Fund; or
4
[(iiia) the National Foundation for Communal Harmony; or]
5
[(iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or
(iiiaaa) the Clean Ganga Fund, set up by the Central Government; or]
6
[(iiiaaaa) the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in 
respect of any State or Union territory as referred to in sub-clause (iiihf) of clause (a) of 
sub-section (2) of section 80G; or
7
[(iiiab) any university or other educational institution existing solely for educational 
purposes and not for purposes of profit, and which is wholly or substantially financed by the 
Government; or
(iiiac) any hospital or other institution for the reception and treatment of persons suffering 
from illness or mental defectiveness or for the reception and treatment of persons during 
convalescence or of persons requiring medical attention or rehabilitation, existing solely for 
philanthropic purposes and not for purposes of profit, and which is wholly or substantially 
financed by the Government.
8
[Explanation.—For the purposes of sub-clauses (iiiab) and (iiiac), any university or other 
educational institution, hospital or other institution referred therein, shall be considered as being 
substantially financed by the Government for any previous year, if the Government grant to such 
university or other educational institution, hospital or other institution exceeds such percentage of 
the total receipts including any voluntary contributions, as may be prescribed, of such university 
or other educational institution, hospital or other institution, as the case may be, during the 
relevant previous year;] or
(iiiad) any university or other educational institution existing solely for educational purposes 
and not for purposes of profit if the aggregate annual receipts of such university or educational 
institution do not exceed the amount of annual receipts as may be prescribed; or
(iiiae) any hospital or other institution for the reception and treatment of persons suffering 
from illness or mental defectiveness or for the reception and treatment of persons during 
convalescence or of persons requiring medical attention or rehabilitation, existing solely for 
philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such 
hospital or institution do not exceed the amount of annual receipts as may be prescribed; or]
1
[(iv) any other fund or institution established for charitable purposes 2
[which may be 
approved by the prescribed authority], having regard to the objects of the fund or institution and 
its importance throughout India or throughout any State or States; or
(v) any trust (including any other legal obligation) or institution wholly for public religious 
purposes or wholly for public religious and charitable purposes, 2
[which may be approved by the 
prescribed authority], having regard to the manner in which the affairs of the trust or institution 
are administered and supervised for ensuring that the income accruing thereto is properly applied 
for the objects thereof;
3
[(vi) any university or other educational institution existing solely for educational purposes 
and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or 
sub-clause (iiiad) and which may be approved by the prescribed authority; or
(via) any hospital or other institution for the reception and treatment of persons suffering 
from illness or mental defectiveness or for the reception and treatment of persons during 
convalescence or of persons requiring medical attention or rehabilitation, existing solely for 
philanthropic purposes and not for purposes of profit, other than those mentioned in 
sub-clause (iiiac) or sub-clause (iiiae) and which may be approved by the prescribed authority:]
Provided that the fund or trust or institution 3
[or any university or other educational institution or 
any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v) 3
[or 
sub-clause (vi) or sub-clause (via)] shall make an application in the prescribed form and manner to the 
prescribed authority for the purpose of grant of the exemption, or continuance thereof, under 
sub-clause (iv) or sub-clause (v) 3
[or sub-clause (vi) or sub-clause (via)]:
4
[Provided further that the prescribed authority, before approving any fund or trust or institution 
or any university or other educational institution or any hospital or other medical institution, under 
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), may call for such documents 
(including audited annual accounts) or information from the fund or trust or institution or any 
university or other educational institution or any hospital or other medical institution, as the case may 
be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund 
or trust or institution or any university or other educational institution or any hospital or other medical 
institution, as the case may be, and the prescribed authority may also make such inquiries as it deems 
necessary in this behalf:]
Provided also that the fund or trust or institution 3
[or any university or other educational 
institution or any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v) 
3
[or sub-clause (vi) or sub-clause (via)]—
5
[(a) applies its income, or accumulates it for application, wholly and exclusively to the 
objects for which it is established and in a case where more than fifteen per cent. of its income is 
accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount 
exceeding fifteen per cent. of its income shall in no case exceed five years; and]
1
[(b) does not invest or deposit its funds, other than—
(i) any assets held by the fund, trust or institution 2
[or any university or other educational 
institution or any hospital or other medical institution] where such assets form part of the 
corpus of the fund, trust or institution 2
[or any university or other educational institution or 
any hospital or other medical institution] as on the 1st day of June, 1973;
3
[(ia) any asset, being equity shares of a public company, held by any university or other 
educational institution or any hospital or other medical institution where such assets form part 
of the corpus of any university or other educational institution or any hospital or other 
medical institution as on the 1st day of June, 1998;]
(ii) any assets (being debentures issued by, or on behalf of, any company or corporation), 
acquired by the fund, trust or institution 2
[or any university or other educational institution or any 
hospital or other medical institution] before the 1st day of March, 1983;
(iii) any accretion to the shares, forming part of the corpus mentioned in sub-clause (i)
3
[and 
sub-clause (ia)], by way of bonus shares allotted to the fund, trust or institution 2
[or any 
university or other educational institution or any hospital or other medical institution];
(iv) voluntary contributions received and maintained in the form of jewellery, furniture or any 
other article as the Board may, by notification in the Official Gazette, specify,
for any period during the previous year otherwise than in any one or more of the forms or modes 
specified in sub-section (5) of section 11:]
Provided also that the exemption under sub-clause (iv) or sub-clause (v) shall not be denied in 
relation to any funds invested or deposited before the 1st day of April, 1989, otherwise than in any 
one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not 
continue to remain so invested or deposited after the 4
[30th day of March, 5
[1993]]:
2
[Provided also that the exemption under sub-clause (vi) or sub-clause (via) shall not be denied in 
relation to any funds invested or deposited before the 1st day of June, 1998, otherwise than in any 
one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not 
continue to remain so invested or deposited after the 30th day of March, 2001:] 
6
[Provided also that the exemption under sub-clause (iv) or sub-clause (v)
2
[or sub-clause (vi) 
or sub-clause (via)] shall not be denied in relation to voluntary contribution, other than voluntary 
contribution in cash or voluntary contribution of the nature referred to in clause (b) of the third 
proviso to this sub-clause, subject to the condition that such voluntary contribution is not held by the 
trust or institution 2
[or any university or other educational institution or any hospital or other medical 
institution], otherwise than in any one or more of the forms or modes specified in sub-section (5) 
of section 11, after the expiry of one year from the end of the previous year in which such asset is 
acquired or the 31st day of March, 1992, whichever is later:]
Provided also that nothing contained in sub-clause (iv) or sub-clause (v) 2
[or sub-clause (vi) or 
sub-clause (via)] shall apply in relation to any income of the fund or trust or institution 2
[or any 
university or other educational institution or any hospital or other medical institution], being profits 
and gains of business, unless the business is incidental to the attainment of its objectives and separate 
books of account are maintained by it in respect of such business:
Provided also that any 1
[notification issued by the Central Government under sub-clause (iv) or 
sub-clause (v), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the 
assent of the President, shall, at any one time, have effect for such assessment year or years], not 
exceeding three assessment years (including an assessment year or years commencing before the date 
on which such notification is issued) as may be specified in the notification:]
2
[Provided also that where an application under the first proviso is made on or after the date on 
which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, every 
notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under 3
[sub-clause (iv) 
or sub-clause (v) or] sub-clause (vi) or sub-clause (via) shall be granted or an order rejecting the 
application shall be passed within the period of twelve months from the end of the month in which 
such application was received:
Provided also that where the total income, of the fund or trust or institution or any university or 
other educational institution or any hospital or other medical institution referred to in sub-clause (iv) 
or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving effect to the provisions of the 
said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, 
such trust or institution or any university or other educational institution or any hospital or other 
medical institution shall get its accounts audited in respect of that year by an accountant as defined in 
the Explanation below sub-section (2) of section 288 and furnish along with the return of income for 
the relevant assessment year, the report of such audit in the prescribed form duly signed and verified 
by such accountant and setting forth such particulars as may be prescribed:]
4
[Provided also that any amount of donation received by the fund or institution in terms of 
clause (d) of sub-section (2) of section 80G 5
[in respect of which accounts of income and expenditure 
have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, 
in the manner specified in that clause, or] which has been utilised for purposes other than providing 
relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) 
of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st 
day of March, 6
[2004] shall be deemed to be the income of the previous year and shall accordingly be 
charged to tax:]
7
[Provided also that any amount credited or paid out of income of any fund or trust or institution 
or any university or other educational institution or any hospital or other medical institution referred 
to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), to any trust or institution 
registered under section 12AA, being voluntary contribution made with a specific direction that they 
shall form part of the corpus of the trust or institution, shall not be treated as application of income to 
the objects for which such fund or trust or institution or university or educational institution or 
hospital or other medical institution, as the case may be, is established:]
8
[Provided also that for the purposes of determining the amount of application under item (a) of 
the third proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and 
(3A) of section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable 
under the head “Profits and gains of business or profession.]
1
[Provided also that where the fund or trust or institution or any university or other educational 
institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) 
or sub-clause (vi) or sub-clause (via) does not apply its income during the year of receipt and 
accumulates it, any payment or credit out of such accumulation to any trust or institution registered 
under section 12AA or to any fund or trust or institution or any university or other educational 
institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) 
or sub-clause (vi) or sub-clause (via) shall not be treated as application of income to the objects for 
which such fund or trust or institution or university or educational institution or hospital or other 
medical institution, as the case may be, is established:
Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution 
referred to in sub-clause (v) is notified by the Central Government 2
[or is approved by the prescribed 
authority, as the case may be,] or any university or other educational institution referred to in subclause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by 
the prescribed authority and subsequently that Government or the prescribed authority is satisfied 
that—
(i) such fund or institution or trust or any university or other educational institution or any 
hospital or other medical institution has not—
(A) applied its income in accordance with the provisions contained in clause (a) of the 
third proviso; or
(B) invested or deposited its funds in accordance with the provisions contained in clause 
(b) of the third proviso; or
(ii) the activities of such fund or institution or trust or any university or other educational 
institution or any hospital or other medical institution—
(A) are not genuine; or
(B) are not being carried out in accordance with all or any of the conditions subject to 
which it was notified or approved,
it may, at any time after giving a reasonable opportunity of showing cause against the proposed action 
to the concerned fund or institution or trust or any university or other educational institution or any 
hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as 
the case may be, and forward a copy of the order rescinding the notification or withdrawing the 
approval to such fund or institution or trust or any university or other educational institution or any 
hospital or other medical institution and to the Assessing Officer:]
3
[Provided also that in case the fund or trust or institution or any university or other educational 
institution or any hospital or other medical institution referred to in the first proviso makes an application 
on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such 
application shall be 4
[made on or before the 30th day of September of the relevant assessment year] from 
which the exemption is sought:]
5
[Provided also that any anonymous donation referred to in section 115BBC on which tax is payable 
in accordance with the provisions of the said section shall be included in the total income:]
2
[Provided also that all pending applications, on which no notification has been issued under subclause (iv) or sub-clause (v) before the 1st day of June, 2007, shall stand transferred on that day to the 
prescribed authority and the prescribed authority may proceed with such applications under those subclauses from the stage at which they were on that day:]
1
[Provided also that the income of a trust or institution referred to in sub-clause (iv) or sub-clause (v) 
shall be included in its total income of the previous year if the provisions of the first proviso to clause 
(15) of section 2 become applicable to such trust or institution in the said previous year, whether or not 
any approval granted or notification issued in respect of such trust or institution has been withdrawn or 
rescinded:]
2
[Provided also that where the fund or institution referred to in sub-clause (iv) or the trust or 
institution referred to in sub-clause (v) has been notified by the Central Government or approved by the 
prescribed authority, as the case may be, or any university or other educational institution referred to in 
sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), has been 
approved by the prescribed authority, and the notification or the approval is in force for any previous 
year, then, nothing contained in any other provision of this section [other than clause (1) thereof] shall 
operate to exclude any income received on behalf of such fund or trust or institution or university or other 
educational institution or hospital or other medical institution, as the case may be, from the total income 
of the person in receipt thereof for that previous year.
Explanation.—In this clause, where any income is required to be applied or accumulated, then, 
for such purpose the income shall be determined without any deduction or allowance by way of 
depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application 
of income under this clause in the same or any other previous year;]
3
[(23D) 4
[
5
[ 6
*** 7
[subject to the provisions of Chapter XII-E, any income of]—]
(i) a Mutual Fund registered under the Securities and Exchange Board of India 
Act, 1992 (15 of 1992) or regulations made thereunder;
(ii) such other Mutual Fund set up by a public sector bank or a public financial institution or 
authorised by the Reserve Bank of India and subject to such conditions as the Central 
Government may, by notification in the Official Gazette, specify in this behalf.]
Explanation.—For the purposes of this clause,—
(a) the expression “public sector bank” means the State Bank of India constituted under the 
State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of 
India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new Bank constituted under 
section 3 of the Banking Companies (Acquisition and Transfer of Under-takings) Act, 1970 (5 of 
1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) 
Act, 1980 (40 of 1980) 8
[and a bank included in the category “other public sector banks” by the 
Reserve Bank of India;]
(b) the expression “public financial institution” shall have the meaning assigned to it in 
section 4A of the Companies Act, 1956 (1 of 1956);]
9
[(c) the expression “Securities and Exchange Board of India” shall have the meaning 
assigned to it in clause (a) of sub-section (1) of section 2 of the Securities and Exchange Board of 
India Act, 1992 (15 of 1992);]
1
[(23DA) any income of a securitisation trust from the activity of securitisation.
Explanation.—For the purposes of this clause,—
(a) “securitisation” shall have the same meaning as assigned to it,—
(i) in clause (r) of sub-regulation (1) of regulation 2 of the Securities and Exchange 
Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 
made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the 
Securities Contracts (Regulation) Act, 1956 (42 of 1956); or
2
[(ia) in clause (z) of sub-section (1) of section 2 of the Securitisation and Reconstruction 
of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); or]
(ii) under the guidelines on securitisation of standard assets issued by the Reserve Bank 
of India;
(b) “securitisation trust” shall have the meaning assigned to it in 
the Explanation below 3
[section 115TCA];]
4
* * * * *
5
[(23EA) 6
[any income, by way of contributions received from recognised stock exchanges and 
the members thereof,] of such Investor Protection Fund set up by recognised stock exchanges in 
India, either jointly or separately, as the Central Government may, by notification in the Official 
Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the Fund and not charged to income-tax 
during any previous year is shared, either wholly or in part, with a recognised stock exchange, the 
whole of the amount so shared shall be deemed to be the income of the previous year in which such 
amount is so shared and shall accordingly be chargeable to income-tax;]
7
[(23EB) any income of the 8
[Credit Guarantee Fund Trust for Small Industries], being a trust 
created by the Government of India and the Small Industries Development Bank of India established 
under sub-section (1) of section 3 of the Small Industries Development Bank of India 
Act, 1989 (39 of 1989), for five previous years relevant to the assessment years beginning on the 
1st day of April, 2002 and ending on the 31st day of March, 2007;]
9
[(23EC) any income, by way of contributions received from commodity exchanges and the 
members thereof, of such Investor Protection Fund set up by commodity exchanges in India, either 
jointly or separately, as the Central Government may, by notification in the Official Gazette, specify 
in this behalf:
Provided that where any amount standing to the credit of the said Fund and not charged to 
income-tax during any previous year is shared, either wholly or in part, with a commodity exchange, 
the whole of the amount so shared shall be deemed to be the income of the previous year in which 
such amount is so shared and shall accordingly be chargeable to income-tax.
Explanation.—For the purposes of this clause, “commodity exchange” shall mean a “registered 
association” as defined in clause (jj) of section 2 of the Forward Contracts (Regulation) 
Act, 1952 (74 of 1952);]
1
[(23ED) any income, by way of contributions received from a depository, of such Investor 
Protection Fund set up in accordance with the regulations by a depository as the Central Government 
may, by notification in the Official Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the Fund and not charged to income-tax 
during any previous year is shared, either wholly or in part with a depository, the whole of the amount 
so shared shall be deemed to be the income of the previous year in which such amount is so shared 
and shall, accordingly, be chargeable to income-tax.
Explanation.—For the purposes of this clause,—
(i) “depository” shall have the same meaning as assigned to it in clause (e) of sub-section (1) 
of section 2 of the Depositories Act, 1996 (22 of 1996);
(ii) “regulations” means the regulations made under the Securities and Exchange Board of 
India Act, 1992 (15 of 1992) and the Depositories Act, 1996 (22 of 1996);]
2
[(23EE) any specified income of such Core Settlement Guarantee Fund, set up by a recognised 
clearing corporation in accordance with the regulations, as the Central Government may, by 
notification in the Official Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the Fund and not charged to income-tax 
during any previous year is shared, either wholly or in part with the specified person, the whole of the 
amount so shared shall be deemed to be the income of the previous year in which such amount is so 
shared and shall, accordingly, be chargeable to income-tax.
Explanation.—For the purposes of this clause,—
(i) “recognised clearing corporation” shall have the same meaning as assigned to it in 
clause (o) of sub-regulation (1) of regulation 2 of the Securities Contracts (Regulation) (Stock 
Exchanges and Clearing Corporations) Regulations, 2012 made under the Securities and 
Exchange Board of India Act, 1992 (15 of 1992) and the Securities Contracts (Regulation) 
Act, 1956 (42 of 1956);
(ii) “regulations” means the Securities Contracts (Regulation) (Stock Exchanges and Clearing 
Corporations) Regulations, 2012 made under the Securities and Exchange Board of India 
Act, 1992 (15 of 1992) and the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(iii) “specified income” shall mean,—
(a) the income by way of contribution received from specified persons;
(b) the income by way of penalties imposed by the recognised clearing corporation and 
credited to the Core Settlement Guarantee Fund; or
(c) the income from investment made by the Fund;
(iv) “specified person” shall mean,—
(a) any recognised clearing corporation which establishes and maintains the Core 
Settlement Guarantee Fund;
(b) any recognised stock exchange, being a shareholder in such recognised clearing 
corporation, or a contributor to the Core Settlement Guarantee Fund; and
(c) any clearing member contributing to the Core Settlement Guarantee Fund;]
1
[(23F) any income by way of dividends or long-term capital gains of a venture capital fund or a 
venture capital company from investments made by way of equity shares in a venture capital 
undertaking:
Provided that such venture capital fund or venture capital company is approved for the purposes 
of this clause by the prescribed authority in accordance with the rules made in this behalf and satisfies 
the prescribed conditions :
Provided further that any approval by the prescribed authority shall, at any one time, have effect 
for such assessment year or years, not exceeding three assessment years, as may be specified in the 
order of approval:
2
[Provided also that nothing contained in this clause shall apply in respect of any investment 
made after the 31st day of March, 1999.]
3
* * * * *
Explanation.—For the purposes of this clause,—
(a) “venture 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 investments mainly by way of acquiring equity shares of a venture capital undertaking in 
accordance with the prescribed guidelines;
(b) “venture capital company” means such company as has made investments by way of 
acquiring equity shares of venture capital undertakings in accordance with the prescribed 
guidelines;
4
[(c) “venture capital undertaking” means such domestic company whose shares are not listed 
in a recognised stock exchange in India and which is engaged in the business of generation or 
generation and distribution of electricity or any other form of power or engaged in the business of 
providing telecommunication services or in the business of developing, maintaining and 
operating any infrastructure facility or engaged in the manufacture or production of such articles 
or things (including computer software) as may be notified by the Central Government in this 
behalf;and
(d) “infrastructure facility” means a road, highway, bridge, airport, port, rail system, a water 
supply project, irrigation project, sanitation and sewerage system or any other public facility of a 
similar nature as may be notified by the Board in this behalf in the Official Gazette and which 
fulfils the conditions specified in sub-section (4A) of section 80-IA;]]
2
[(23FA) any income by way of 5
[dividends, other than dividends referred to in section 115-O], or 
long-term capital gains of a venture capital fund or a venture capital company from investments made 
by way of equity shares in a venture capital undertaking:
Provided that such venture capital fund or venture capital company is approved, for the purposes 
of this clause, by the Central Government on an application made to it in accordance with the 
rules made in this behalf and which satisfies the prescribed conditions:
Provided further that any approval by the Central Government shall, at any one time, have effect 
for such assessment year or years, not exceeding three assessment years, as may be specified in the 
order of approval:
1
[Provided also that nothing contained in this clause shall apply in respect of any investment 
made after the 31st day of March, 2000.]
Explanation.—For the purposes of this clause,—
(a) “venture 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 investments mainly by way of acquiring equity shares of a venture capital undertaking in 
accordance with the prescribed guidelines;
(b) “venture capital company” means such company as has made investments by way of 
acquiring equity shares of venture capital undertakings in accordance with the prescribed 
guidelines; and
(c) “venture capital undertaking” means such domestic company whose shares are not listed 
in a recognised stock exchange in India and which is engaged in the—
(i) business of—
(A) software;
(B) information technology;
(C) production of basic drugs in the pharmaceutical sector;
(D) bio-technology;
(E) agriculture and allied sectors; or
(F) such other sectors as may be notified by the Central Government in this behalf; or
(ii) production or manufacture of any article or substance for which patent has been 
granted to the National Research Laboratory or any other scientific research institution 
approved by the Department of Science and Technology;]
1
[(23FB) any income of a venture capital company or venture capital fund 2
[from investment] in a 
venture capital undertaking:
3
[Provided that nothing contained in this clause shall apply in respect of any income of a venture 
capital company or venture capital fund, being an investment fund specified in clause (a) of 
the Explanation 1 to section 115UB, of the previous year relevant to the assessment year beginning 
on or after the 1st day of April, 2016.]
4
[Explanation.—For the purposes of this clause,—
(a) “venture capital company” means a company which—
(A) has been granted a certificate of registration, before the 21st day of May, 2012, as a 
Venture Capital Fund and is regulated under the Securities and Exchange Board of India 
(Venture Capital Funds) Regulations, 1996 (hereinafter referred to as the Venture Capital 
Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 
1992); or (B) has been granted a certificate of registration as Venture Capital Fund as a subcategory of Category I Alternative Investment Fund and is regulated under the Securities and 
Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (hereinafter 
referred to as the Alternative Investment Funds Regulations) made under the Securities and 
Exchange Board of India Act, 1992 (15 of 1992), and which fulfils the following conditions, 
namely:—
(i) it is not listed on a recognised stock exchange;
(ii) it has invested not less than two-thirds of its investible funds in unlisted equity 
shares or equity linked instruments of venture capital undertaking; and
(iii) it has not invested in any venture capital undertaking in which its director or a 
substantial shareholder (being a beneficial owner of equity shares exceeding ten per cent.
of its equity share capital) holds, either individually or collectively, equity shares in 
excess of fifteen per cent. of the paid-up equity share capital of such venture capital 
undertaking;
(b) “venture capital fund” means a fund—
(A) operating under a trust deed registered under the provisions of the Registration 
Act, 1908 (16 of 1908), which—
(I) has been granted a certificate of registration, before the 21st day of May, 2012, as 
a Venture Capital Fund and is regulated under the Venture Capital Funds Regulations; or
(II) has been granted a certificate of registration as Venture Capital Fund as a subcategory of Category I Alternative Investment Fund under the Alternative Investment 
Funds Regulations and which fulfils the following conditions, namely:—
(i) it has invested not less than two-thirds of its investible funds in unlisted equity 
shares or equity linked instruments of venture capital undertaking;
(ii) it has not invested in any venture capital undertaking in which its trustee or 
the settler holds, either individually or collectively, equity shares in excess of fifteen 
per cent. of the paid-up equity share capital of such venture capital undertaking; and
(iii) the units, if any, issued by it are not listed in any recognised stock 
exchange; or
(B) operating as a venture capital scheme made by the Unit Trust of India established 
under the Unit Trust of India Act, 1963 (52 of 1963);
(c) “venture capital undertaking” means—
(i) a venture capital undertaking as defined in clause (n) of regulation 2 of the Venture 
Capital Funds Regulations; or
(ii) a venture capital undertaking as defined in clause (aa) of sub-regulation (1) of 
regulation 2 of the Alternative Investment Funds Regulations;]]
1
[(23FBA) any income of an investment fund other than the income chargeable under the head 
“Profits and gains of business or profession”;
(23FBB) any income referred to in section 115UB, accruing or arising to, or received by, a unit
holder of an investment fund, being that proportion of income which is of the same nature as income 
chargeable under the head “Profits and gains of business or profession”.
Explanation.—For the purposes of clauses (23FBA) and (23FBB), the expression “investment 
fund” shall have the meaning assigned to it in clause (a) of the Explanation 1 to section 115UB;]
2
[(23FC) any income of a business trust 3
[by way of—
(a) interest received or receivable from a special purpose vehicle; or
(b) divided referred to in sub-section (7) of section 115-O].
Explanation.—For the purposes of this clause, the expression "special purpose vehicle" means an 
Indian company in which the business trust holds controlling interest and any specific percentage of 
shareholding or interest, as may be required by the regulations under which such trust is granted 
registration;
1
[(23FCA) any income of a business trust, being a real estate investment trust, by way of renting 
or leasing or letting out any real estate asset owned directly by such business trust.
Explanation.—For the purposes of this clause, the expression "real estate asset" shall have the 
same meaning as assigned to it in clause (zj) of sub-regulation (1) of regulation 2 of 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);]
(23FD) any distributed income, referred to in section 115UA, received by a unit holder from the 
business trust, not being that proportion of the income which is of the same nature as the income 
referred to4
[in sub-clause (a) of clause (23FC)]
3
[or clause (23FCA)];]
5
* * * * *
6
[(24) any income chargeable under the heads “Income from house property” and “Income from 
other sources” of—
(a) a registered union within the meaning of the Trade Unions Act, 1926 (16 of 1926), 
formed primarily for the purpose of regulating the relations between workmen and employers or 
between workmen and workmen;
(b) an association of registered unions referred to in sub-clause (a);]
(25) (i) interest on securities which are held by, or are the property of, any provident fund to 
which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising 
from the sale, exchange or transfer of such securities;
(ii) any income received by the trustees on behalf of a recognised provident fund;
(iii) any income received by the trustees on behalf of an approved superannuation fund;
1
[(iv) any income received by the trustees on behalf of an approved gratuity fund;]
2
[(v) any income received—
(a) by the Board of Trustees constituted under the Coal Mines Provident Funds and 
Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the Deposit-linked Insurance Fund 
established under section 3G of that Act; or
(b) by the Board of Trustees constituted under the Employees' Provident Funds and 
Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the Deposit-linked Insurance Fund 
established under section 6C of that Act;]
3
[(25A) any income of the Employees’ State Insurance Fund set up under the provisions of the 
Employees' State Insurance Act, 1948 (34 of 1948);]
4
[(26) in the case of a member of a Scheduled Tribe as defined in clause (25) of article 366 of the 
Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 
of the Sixth Schedule to the Constitution or in the 5
[States of Arunachal Pradesh, Manipur, Mizoram, 
Nagaland and Tripura] or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd 
February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said 
paragraph 20 [as it stood immediately before the commencement of the North-Eastern Areas 
(Reorganisation) Act, 1971 (81 of 1971)] 6
[or in the Ladakh region of the State of Jammu and 
Kashmir], any income which accrues or arises to him,—
(a) from any source in the areas 7
[or States aforesaid], or
(b) by way of dividend or interest on securities;]
8
[(26A) any income accruing or arising to any person9
*** from any source in the district of 
Ladakh or outside India in any previous year relevant to any assessment year commencing before the 
10[1st day of April, 1989], where such person is resident in the said district in that previous year:
Provided that this clause shall not apply in the case of any such person unless he was resident in 
that district in the previous year relevant to the assessment year commencing on the 1st day of April, 
1962.
1
[Explanation 1].—For the purposes of this clause, a person shall be deemed to be resident in the 
district of Ladakh if he fulfils the requirements of sub-section (1)or sub-section (2) or 
sub-section (3) or sub-section (4) of section 6, as the case may be, subject to the modifications that—
(i) references in those sub-sections to India shall be construed as references to the said 
district; and
(ii) in clause (i) of sub-section (3), reference to Indian company shall be construed as 
reference to a company formed and registered under any law for the time being in force in the 
State of Jammu and Kashmir and having its registered office in that district in that year.]
2
[Explanation 2.—In this clause, references to the district of Ladakh shall be construed as 
references to the areas comprised in the said district on the 30th day of June, 1979;]
3
* * * * *
4
[(26AAA) in case of an individual, being a Sikkimese, any income which accrues or arises to 
him—
(a) from any source in the State of Sikkim; or
(b) by way of dividend or interest on securities:
Provided that nothing contained in this clause shall apply to a Sikkimese woman who, on or 
after the 1st day of April, 2008, marries an individual who is not a Sikkimese.
Explanation.—For the purposes of this clause, “Sikkimese” shall mean—
(i) an individual, whose name is recorded in the register maintained under the Sikkim 
Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961 (hereinafter referred to as 
the “Register of Sikkim Subjects”), immediately before the 26th day of April, 1975; or
(ii) an individual, whose name is included in the Register of Sikkim Subjects by virtue of the 
Government of India Order No. 26030/36/90-I.C.I., dated the 7th August, 1990 and Order of even 
number dated the 8th April, 1991; or
(iii) any other individual, whose name does not appear in the Register of Sikkim Subjects, but 
it is established beyond doubt that the name of such individual’s father or husband or paternal 
grand-father or brother from the same father has been recorded in that register;]
5
[(26AAB) any income of an agricultural produce market committee or board constituted under 
any law for the time being in force for the purpose of regulating the marketing of agricultural 
produce;]
6
[(26B) any income of a corporation established by a Central, State or Provincial Act or of any 
other body, institution or association (being a body, institution or association wholly financed by 
Government) where such corporation or other body or institution or association has been established 
or formed for promoting the interests of the 7
[members of the Scheduled Castes or the Scheduled 
Tribes or backward classes or of any two or all of them].
1
[Explanation.—For the purposes of this clause,—
(a) “Scheduled Castes” and “Scheduled Tribes” shall have the meanings respectively assigned to 
them in clauses (24) and (25) of article 366 of the Constitution;
(b) “backward classes” means such classes of citizens, other than the Scheduled Castes and the 
Scheduled Tribes, as may be notified—
(i) by the Central Government; or
(ii) by any State Government,
as the case may be, from time to time;]]
2
[(26BB) any income of a corporation established by the Central Government or any State 
Government for promoting the interests of the members of a minority community.
Explanation.—For the purposes of this clause, “minority community” means a community 
notified as such by the Central Government in the Official Gazette in this behalf;]
3
[(26BBB) any income of a corporation established by a Central, State or Provincial Act for the 
welfare and economic upliftment of ex-servicemen being the citizens of India.
Explanation.—For the purposes of this clause, “ex-serviceman” means a person who has served 
in any rank, whether as combatant or non-combatant, in the armed forces of the Union or armed 
forces of the Indian States before the commencement of the Constitution (but excluding the Assam 
Rifles, Defence Security Corps, General Reserve Engineering Force, Lok Sahayak Sena, Jammu and 
Kashmir Militia and Territorial Army) for a continuous period of not less than six months after 
attestation and has been released, otherwise than by way of dismissal or discharge on account of 
misconduct or inefficiency, and in the case of a deceased or incapacitated ex-serviceman includes his 
wife, children, father, mother, minor brother, widowed daughter and widowed sister, wholly 
dependant upon such ex-serviceman immediately before his death or incapacitation;]
4
[(27) any income of a co-operative society formed for promoting the interests of the members of 
either the Scheduled Castes or Scheduled Tribes or both referred to in clause (26B):
Provided that the membership of the co-operative society consists of only other co-operative 
societies formed for similar purposes and the finances of the society are provided by the Government 
and such other societies;]
5
* * * * *
6
* * * * *
7
[(29A) any income accruing or arising to—
(a) the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of 1942) in any 
previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 
or the previous year in which such Board was constituted, whichever is later;
(b) the Rubber Board constituted under sub-section (1) of section 4 of the Rubber Board 
Act, 1947 (24 of 1947) in any previous year relevant to any assessment year commencing on or 
after the 1st day of April, 1962 or the previous year in which such Board was constituted, 
whichever is later;
(c) the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953) in any 
previous year relevant to any assessment year commencing on or after the 1st day of April, 1962 
or the previous year in which such Board was constituted, whichever is later;
(d) the Tobacco Board constituted under the Tobacco Board Act, 1975 (4 of 1975) in any 
previous year relevant to any assessment year commencing on or after the 1st day of April, 1975 
or the previous year in which such Board was constituted, whichever is later;
(e) the Marine Products Export Development Authority established under section 4 of the 
Marine Products Export Development Authority Act, 1972 (13 of 1972) in any previous year 
relevant to any assessment year commencing on or after the 1st day of April, 1972 or the previous 
year in which such Authority was constituted, whichever is later;
(f) the Agricultural and Processed Food Products Export Development Authority established 
under section 4 of the Agricultural and Processed Food Products Export Development Act, 1985 
(2 of 1986) in any previous year relevant to any assessment year commencing on or after the 1st 
day of April, 1985 or the previous year in which such Authority was constituted, whichever is 
later;
(g) the Spices Board constituted under sub-section (1) of section 3 of the Spices Board Act, 
1986 (10 of 1986) in any previous year relevant to any assessment year commencing on or after 
the 1st day of April, 1986 or the previous year in which such Board was constituted, whichever is 
later;]
1
[(h) the Coir Board established under section 4 of the Coir Industry Act, 1953 (45 of 1953);]
2
[(30) in the case of an assessee who carries on the business of growing and manufacturing tea in 
India, the amount of any subsidy received from or through the Tea Board under any such scheme for 
replantation or replacement of tea bushes 3
[or for rejuvenation or consolidation of areas used for 
cultivation of tea] as the Central Government may, by notification in the Official Gazette, specify:
Provided that the assessee furnishes to the 4
[Assessing Officer], along with his return of 
incomefor the assessment year concerned or within such further time as the 4
[Assessing Officer] may 
allow, a certificate from the Tea Board as to the amount of such subsidy paid to the assessee during 
the previous year.
Explanation.—In this clause, “Tea Board” means the Tea Board established under section 4 of 
the Tea Act, 1953 (29 of 1953);]
5
[(31) in the case of an assessee who carries on the business of growing and manufacturing 
rubber, coffee, cardamom or such other commodity in India, as the Central Government may, by 
notification in the Official Gazette, specify in this behalf, the amount of any subsidy received from or 
through the concerned Board under any such scheme for replantation or replacement of rubber plants, 
coffee plants, cardamom plants or plants for the growing of such other commodity or for rejuvenation 
or consolidation of areas used for cultivation of rubber, coffee, cardamom or such other commodity 
as the Central Government may, by notification in the Official Gazette, specify:
Provided that the assessee furnishes to the Assessing Officer, along with his return of income for 
the assessment year concerned or within such further time as the Assessing Officer may allow, a 
certificate from the concerned Board, as to the amount of such subsidy paid to the assessee during the 
previous year.
Explanation.—In this clause, “concerned Board” means,—
(i) in relation to rubber, the Rubber Board constituted under section 4 of the Rubber Act, 
1947 (24 of 1947),
(ii) in relation to coffee, the Coffee Board constituted under section 4 of the Coffee Act, 1942 
(7 of 1942),
(iii) in relation to cardamom, the Spices Board constituted under section 3 of the Spices 
Board Act, 1986 (10 of 1986),
(iv) in relation to any other commodity specified under this clause, any Board or other 
authority established under any law for the time being in force which the Central Government 
may, by notification in the Official Gazette, specify in this behalf;]
1
[(32) in the case of an assessee referred to in sub-section (1A) of section 64, any income 
includible in his total income under that sub-section, to the extent such income does not exceed one 
thousand five hundred rupees in respect of each minor child whose income is so includible;]
2
[(33) any income arising from the transfer of a capital asset, being a unit of the Unit 
Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and 
Repeal) Act, 2002 (58 of 2002) and where the transfer of such asset takes place on or after the 1st day 
of April, 2002;]
2
[(34) any income by way of dividends referred to in section 115-O;
3
[Provided that nothing in this clause shall apply to any income by way of dividend chargeable to 
tax in accordance with the provisions of section 115BBDA;]
4
* * * * *
5
[(34A) any income arising to an assessee, being a shareholder, on account of buy back of shares 
(not being listed on a recognised stock exchange) by the company as referred to in section 115QA;]
(35) any income by way of,—
(a) income received in respect of the units of a Mutual Fund specified under clause (23D); or
(b) income received in respect of units from the Administrator of the specified 
undertaking; or
(c) income received in respect of units from the specified company:
Provided that this clause shall not apply to any income arising from transfer of units of the 
Administrator of the specified undertaking or of the specified company or of a mutual fund, as the 
case may be.
Explanation.—For the purposes of this clause,—
(a) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the 
Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
(b) “specified company” means a company as referred to in clause (h) of section 2 of the Unit 
Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
1
[(35A) any income by way of distributed income referred to in section 115TA received from a 
securitisation trust by any person being an investor of the said trust.
2
[Provided that nothing contained in this clause shall apply to any income by way of distributed 
income referred to in the said section, received on or after the 1st day of June, 2016.]
Explanation.—For the purposes of this clause, the expressions “investor” and “securitisation 
trust” shall have the meanings respectively assigned to them in the Explanation below3
[section 
115TCA];
(36) any income arising from the transfer of a long-term capital asset, being an eligible equity 
share in a company purchased on or after the 1st day of March, 2003 and before the 1st day of March, 
2004 and held for a period of twelve months or more.
Explanation.—For the purposes of this clause, “eligible equity share” means,—
(i) any equity share in a company being a constituent of BSE-500 Index of the Stock 
Exchange, Mumbai as on the 1st day of March, 2003 and the transactions of purchase and sale of 
such equity share are entered into on a recognised stock exchange in India;
(ii) any equity share in a company allotted through a public issue on or after the 1st day of 
March, 2003 and listed in a recognised stock exchange in India before the 1st day of March, 2004 
and the transaction of sale of such share is entered into on a recognised stock exchange in India;]
4
[(37) in the case of an assessee, being an individual or a Hindu undivided family, any income 
chargeable under the head “Capital gains” arising from the transfer of agricultural land, where—
(i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of 
clause (14) of section 2;
(ii) such land, during the period of two years immediately preceding the date of transfer, was 
being used for agricultural purposes by such Hindu undivided family or individual or a parent of 
his;
(iii) such transfer is by way of compulsory acquisition under any law, or a transfer the 
consideration for which is determined or approved by the Central Government or the Reserve 
Bank of India;
(iv) such income has arisen from the compensation or consideration for such transfer received 
by such assessee on or after the 1st day of April, 2004.
Explanation.—For the purposes of this clause, the expression “compensation or 
consideration” includes the compensation or consideration enhanced or further enhanced by any 
court, Tribunal or other authority;
5
[(37A) any income chargeable under the head “Capital gains” in respect of transfer of a specified 
capital asset arising to an assessee, being an individual or a Hindu undivided family, who was the 
owner of such specified capital asset as on the 2nd day of June, 2014 and transfers that specified 
capital asset under the Land Pooling Scheme (herein referred to as “the scheme”) covered under the 
Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules, 2015 
made under the provisions of the Andhra Pradesh Capital Region Development Authority Act, 2014
(Andhra Pradesh 11 of 2014) and the rules, regulations and Schemes made under the said Act.
Explanation.—For the purposes of this clause, “specified capital asset” means,—
(a) the land or building or both owned by the assessee as on the 2nd day of June, 2014 and 
which has been transferred under the scheme; or

(b) the land pooling ownership certificate issued under the scheme to the assessee in 
respect of land or building or both referred to in clause (a); or
(c) the reconstituted plot or land, as the case may be, received by the assessee in lieu of land 
or building or both referred to in clause (a) in accordance with the scheme, if such plot or land, as 
the case may be, so received is transferred within two years from the end of the financial year in 
which the possession of such plot or land was handed over to him;]
(38) any income arising from the transfer of a long-term capital asset, being an equity share in a 
company or a unit of an equity oriented fund 1
[or a unit of a business trust] where—
(a) the transaction of sale of such equity share or unit is entered into on or after the date on 
which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and
(b) such transaction is chargeable to securities transaction tax under that Chapter:
2
[Provided that the income by way of long-term capital gain of a company shall be taken into 
account in computing the book profit and income-tax payable under section 115JB:]
3
* * * * *
4
[Provided also that nothing contained in sub-clause (b) shall apply to a transaction 
undertaken on a recognised stock exchange located in any International Financial Services Centre 
and where the consideration for such transaction is paid or payable in foreign currency.]
5
[Provided also that nothing contained in this clause shall apply to any income arising from 
the transfer of a long-term capital asset, being an equity share in a company, if the transaction of 
acquisition, other than the acquisition notified by the Central Government in this behalf, of such 
equity share is entered into on or after the 1st day of October, 2004 and such transaction is not 
chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 
(23 of 2004).]
6
[Provided also that nothing contained in this clause shall apply to any income arising from 
the transfer of long-term capital asset, being an equity share in a company or a unit of an equity 
oriented fund or a unit of a business trust, made on or after the 1st day of April, 2018.]
7
[Explanation.—For the purposes of this clause,—
(a) “equity oriented fund” means a fund—
(i) where the investible funds are invested by way of equity shares in domestic companies 
to the extent of more than sixty-five per cent.. of the total proceeds of such fund; and
(ii) which has been set up under a scheme of a Mutual Fund specified under 
clause (23D):
Provided that the percentage of equity share holding of the fund shall be computed with 
reference to the annual average of the monthly averages of the opening and closing figures;]
(b) “International Financial Services Centre” shall have the same meaning as assigned to it in 
clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(c) “recognised stock exchange” shall have the meaning assigned to it in clause (ii) of 
the Explanation 1 to sub-section (5) of section 43;]
1
[(39) any specified income, arising from any international sporting event held in India, to the 
person or persons notified by the Central Government in the Official Gazette, if such international 
sporting event—
(a) is approved by the international body regulating the international sport relating to such 
event;
(b) has participation by more than two countries;
(c) is notified by the Central Government in the Official Gazette for the purposes of this 
clause.
Explanation.—For the purposes of this clause, “the specified income” means the income, of the 
nature and to the extent, arising from the international sporting event, which the Central Government 
may notify in this behalf;
(40) any income of any subsidiary company by way of grant or otherwise received from an Indian 
company, being its holding company engaged in the business of generation or transmission or 
distribution of power if receipt of such income is for settlement of dues in connection with 
reconstruction or revival of an existing business of power generation:
Provided that the provisions of this clause shall apply if reconstruction or revival of any existing 
business of power generation is by way of transfer of such business to the Indian company notified 
under sub-clause (a) of clause (v) of sub-section (4) of section 80-IA;
(41) any income arising from transfer of a capital asset, being an asset of an undertaking engaged 
in the business of generation or transmission or distribution of power where such transfer is effected 
on or before the 31st day of March, 2006, to the Indian company notified under sub-clause (a) of 
clause (v) of sub-section (4) of section 80-IA;]
2
[(42) any specified income arising to a body or authority which—
(a) has been established or constituted or appointed under a treaty or an agreement entered 
into by the Central Government with two or more countries or a convention signed by the Central 
Government;
(b) is established or constituted or appointed not for the purposes of profit;
(c) is notified by the Central Government in the Official Gazette for the purposes of this 
clause.
Explanation.—For the purposes of this clause, “specified income” means the income, of the 
nature and to the extent, arising to the body or authority referred to in this clause, which the 
Central Government may notify in this behalf;]
3
[(43) any amount received by an individual as a loan, either in lump sum or in instalment, in a 
transaction of reverse mortgage referred to in clause (xvi) of section 47;]
4
[(44) any income received by any person for, or on behalf of, the New Pension System Trust 
established on the 27th day of February, 2008 under the provisions of the Indian Trusts Act, 1882 (2 
of 1882);]
5
[(45) any allowance or perquisite, as may be notified by the Central Government in the Official 
Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired 
member of the Union Public Service Commission;]
1
[(46) any specified income arising to a body or authority or Board or Trust or Commission (by 
whatever name called) 2
[, or a class thereof] which—
(a) has been established or constituted by or under a Central, State or Provincial Act, or 
constituted by the Central Government or a State Government, with the object of regulating or 
administering any activity for the benefit of the general public;
(b) is not engaged in any commercial activity; and
(c) is notified by the Central Government in the Official Gazette for the purposes of this 
clause.
Explanation.—For the purposes of this clause, “specified income” means the income, of the 
nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever 
name called) 2
[, or a class thereof] referred to in this clause, which the Central Government may, by 
notification in the Official Gazette, specify in this behalf;
(47) any income of an infrastructure debt fund, set up in accordance with the guidelines as may 
be prescribed, which is notified by the Central Government in the Official Gazette for the purposes of 
this clause;]
3
[(48) any income received in India in Indian currency by a foreign company on account of 4
[sale 
of crude oil, any other goods or rendering of services, as may be notified by the Central Government 
in this behalf, to any person] in India:
Provided that—
(i) receipt of such income in India by the foreign company is pursuant to an agreement or an 
arrangement entered into by the Central Government or approved by the Central Government;
(ii) having regard to the national interest, the foreign company and the agreement or 
arrangement are notified by the Central Government in this behalf; and
(iii) the foreign company is not engaged in any activity, other than receipt of such income, in 
India;]
5
[(48A) any income accruing or arising to a foreign company on account of storage of crude oil in 
a facility in India and sale of crude oil therefrom to any person resident in India:
Provided that—
(i) the storage and sale by the foreign company is pursuant to an agreement or an arrangement 
entered into by the Central Government or approved by the Central Government; and
(ii) having regard to the national interest, the foreign company and the agreement or 
arrangement are notified by the Central Government in this behalf;]
6
[(48B) any income accruing or arising to a foreign company on account of sale of leftover stock of 
crude oil, if any, from the facility in India after the expiry of the agreement or the arrangement referred to 
in clause (48A)
7
[or on termination of the said agreement or the arrangement, in accordance with the 
terms mentioned therein, as the case may be,] subject to such conditions as may be notified by the 
Central Government in this behalf;]
8
[(49) any income of the National Financial Holdings Company Limited, being a company set up 
by the Central Government, of any previous year relevant to any assessment year commencing on or 
before the 1st day of April, 2014;]
1
[(50) any income arising from any specified service provided on or after the date on which the 
provisions of Chapter VIII of the Finance Act, 2016 comes into force and chargeable to equalisation 
levy under that Chapter.
Explanation.—For the purposes of this clause, “specified service” shall have the meaning 
assigned to it in clause (i) of section 164 of Chapter VIII of the Finance Act, 2016.]

10A. Special provision in respect of newly established undertakings in free trade zone, etc.—
(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an 
undertaking from the export of articles or things or computer software for a period of ten consecutive 
assessment years beginning with the assessment year relevant to the previous year in which the 
undertaking begins to manufacture or produce such articles or things or computer software, as the case 
may be, shall be allowed from the total income of the assessee:
Provided that where in computing the total income of the undertaking for any assessment year, its 
profits and gains had not been included by application of the provisions of this section as it stood 
immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to 
deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive 
assessment years:
Provided further that where an undertaking initially located in any free trade zone or export 
processing zone is subsequently located in a special economic zone by reason of conversion of such free 
trade zone or export processing zone into a special economic zone, the period of ten consecutive 
assessment years referred to in this sub-section shall be reckoned from the assessment year relevant to the 
previous year in which the 3
[undertaking began to manufacture or produce such articles or things or 
computer software] in such free trade zone or export processing zone:
4
* * * * *
5
[Provided also that for the assessment year beginning on the 1st day of April, 2003, the deduction 
under this sub-section shall be ninety per cent. of the profits and gains derived by an undertaking from the 
export of such articles or things or computer software:]
Provided also that no deduction under this section shall be allowed to any undertaking for the 
assessment year beginning on the 6
[1st day of April, 2012] and subsequent years.
7
[(1A) Notwithstanding anything contained in sub-section (1), the deduction, in computing the total 
income of an undertaking, which begins to manufacture or produce articles or things or computer 
software during the previous year relevant to any assessment year commencing on or after the 1st day of 
April, 2003, in any special economic zone, shall be,—
(i) hundred per cent. of profits and gains derived from the export of such articles or things or 
computer software for a period of five consecutive assessment years beginning with the assessment 
year relevant to the previous year in which the undertaking begins to manufacture or produce such 
articles or things or computer software, as the case may be, and thereafter, fifty per cent. of such 
profits and gains for further two consecutive assessment years, and thereafter;
(ii) for the next three consecutive assessment years, so much of the amount not exceeding fifty 
per cent. of the profit as is debited to the profit and loss account of the previous year in respect of 
which the deduction is to be allowed and credited to a reserve account (to be called the “Special 
Economic Zone Re-investment Allowance Reserve Account”) to be created and utilised for the 
purposes of the business of the assessee in the manner laid down in sub-section (1B):
1
[Provided that no deduction under this section shall be allowed to an assessee who does not 
furnish a return of his income on or before the due date specified under sub-section (1) of section 
139.]
(1B) The deduction under clause (ii) of sub-section (1A) shall be allowed only if the following 
conditions are fulfilled, namely:—
(a) the amount credited to the Special Economic Zone Re-investment Allowance Reserve 
Account is to be utilised—
(i) for the purposes of acquiring new machinery or plant which is first put to use before the 
expiry of a period of three years next following the previous year in which the reserve was 
created; and
(ii) until the acquisition of new machinery or plant as aforesaid, for the purposes of the 
business of the undertaking other than for distribution by way of dividends or profits or for 
remittance outside India as profits or for the creation of any asset outside India;
(b) the particulars, as may be prescribed in this behalf, have been furnished by the assessee in 
respect of new machinery or plant along with the return of income for the assessment year relevant to 
the previous year in which such plant or machinery was first put to use.
(1C) Where any amount credited to the Special Economic Zone Re-investment Allowance Reserve 
Account under clause (ii) of sub-section (1A),—
(a) has been utilised for any purpose other than those referred to in sub-section (1B), the amount 
so utilised; or
(b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of 
sub-section (1B), the amount not so utilised,
shall be deemed to be the profits,—
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of three years 
specified in sub-clause (i) of clause (a) of sub-section (1B),
and shall be charged to tax accordingly.]
(2) This section applies to any undertaking which fulfils all the following conditions, namely :—
(i) it has begun or begins to manufacture or produce articles or things or computer software 
during the previous year relevant to the assessment year—
(a) commencing on or after the 1st day of April, 1981, in any free trade zone; or
(b) commencing on or after the 1st day of April, 1994, in any electronic hardware technology 
park, or, as the case may be, software technology park;
(c) commencing on or after the 1st day of April, 2001 in any special economic zone;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking which is formed as a 
result of the re-establishment, reconstruction or revival by the assessee of the business of any such 
undertakings as is referred to in section 33B, in the circumstances and within the period specified in 
that section;
(iii) it is not formed by the transfer to a new business of machinery or plant previously used for 
any purpose. 
Explanation.—The provisions of Explanation 1 and Explanation 2 to sub-section (2) of 
section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of 
clause (ii) of that sub-section.
(3) This section applies to the undertaking, if the sale proceeds of articles or things or computer 
software exported out of India are received in, or brought into, India by the assessee in convertible foreign 
exchange, within a period of six months from the end of the previous year or, within such further period 
as the competent authority may allow in this behalf.
Explanation 1.—For the purposes of this sub-section, the expression “competent authority” means the 
Reserve Bank of India or such other authority as is authorised under any law for the time being in force 
for regulating payments and dealings in foreign exchange.
Explanation 2.—The sale proceeds referred to in this sub-section shall be deemed to have been 
received in India where such sale proceeds are credited to a separate account maintained for the purpose 
by the assessee with any bank outside India with the approval of the Reserve Bank of India.
1
[(4) For the purposes of 2
[sub-sections (1) and (1A)], the profits derived from export of articles or 
things or computer software shall be the amount which bears to the profits of the business of the 
undertaking, the same proportion as the export turnover in respect of such articles or things or computer 
software bears to the total turnover of the business carried on by the undertaking.]
(5) The deduction under 3
[this section] shall not be admissible for any assessment year beginning on 
or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form, along with the 
return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of 
section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of 
this section.
(6) Notwithstanding anything contained in any other provision of this Act, in computing the total 
income of the assessee of the previous year relevant to the assessment year immediately succeeding the 
last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment 
year,—
(i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 
36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for 
any of the relevant assessment years 4
[ending before the 1st day of April, 2001], in relation to any 
building, machinery, plant or furniture used for the purposes of the business of the undertaking in the 
previous year relevant to such assessment year or any expenditure incurred for the purposes of such 
business in such previous year had been given full effect to for that assessment year itself and 
accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of 
sub-section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of subsection (1) of section 36, as the case may be, shall not apply in relation to any such allowance or 
deduction;
(ii) no loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of 
section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward or 
set off where such loss relates to any of the relevant assessment years 4
[ending before the 1st day of 
April, 2001];
(iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or 
section 80-IA or section 80-IB in relation to the profits and gains of the undertaking; and
(iv) in computing the depreciation allowance under section 32, the written down value of any 
asset used for the purposes of the business of the undertaking shall be computed as if the assessee had 
claimed and been actually allowed the deduction in respect of depreciation for each of the relevant 
assessment year.
(7) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply in relation to the undertaking referred to in this section as they apply for the purposes of the 
undertaking referred to in section 80-IA.
1
[(7A) Where any undertaking of an Indian company which is entitled to the deduction under this 
section is transferred, before the expiry of the period specified in this section, to another Indian company 
in a scheme of amalgamation or demerger,—
(a) no deduction shall be admissible under this section to the amalgamating or the demerged 
company for the previous year in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting 
company as they would have applied to the amalgamating or the demerged company if the 
amalgamation or demerger had not taken place.]
2
[(7B) The provisions of this section shall not apply to any undertaking, being a Unit referred to in 
clause (zc) of section 2 of the Special Economic Zones Act, 2005, which has begun or begins to 
manufacture or produce articles or things or computer software during the previous year relevant to the 
assessment year commencing on or after the 1st day of April, 2006 in any Special Economic Zone.
(8) Notwithstanding anything contained in the foregoing provisions of this section, where the 
assessee, before the due date for furnishing the return of income under sub-section (1) of section 
139,furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not 
be made applicable to him, the provisions of this section shall not apply to him for any of the relevant 
assessment years.
3
* * * * *
4
* * * * *
Explanation 2.—For the purposes of this section,—
(i) “computer software” means—
(a) any computer programme recorded on any disc, tape, perforated media or other 
information storage device; or
(b) any customized electronic data or any product or service of similar nature, as may be 
notified by the Board,
which is transmitted or exported from India to any place outside India by any means;
(ii) “convertible foreign exchange” means foreign exchange which is for the time being treated by 
the Reserve Bank of India as convertible foreign exchange for the purposes of 5
[the Foreign Exchange 
Management Act, 1999 (42 of 1999), and any rules made thereunder or any other corresponding law 
for the time being in force;
(iii) “electronic hardware technology park” means any park set up in accordance with the 
Electronic Hardware Technology Park (EHTP) Scheme notified by the Government of India in the 
Ministry of Commerce and Industry;
(iv) “export turnover” means the consideration 6
[in respect of export by the undertaking] of 
articles or things or computer software received in, or brought into, India by the assessee in 
convertible foreign exchange in accordance with sub-section (3), but does not include freight, 
telecommunication charges or insurance attributable to the delivery of the articles or things or 
computer software outside India or expenses, if any, incurred in foreign exchange in providing the 
technical services outside India;
(v) “free trade zone” means the Kandla Free Trade Zone and the Santacruz Electronics Export 
Processing Zone and includes any other free trade zone which the Central Government may, by 
notification in the Official Gazette, specify for the purposes of this section;
(vi) “relevant assessment year” means any assessment year falling within a period of ten 
consecutive assessment years referred to in this section;
(vii) “software technology park” means any park set up in accordance with the Software 
Technology Park Scheme notified by the Government of India in the Ministry of Commerce and 
Industry;
(viii) “special economic zone” means a zone which the Central Government may, by notification 
in the Official Gazette, specify as a special economic zone for the purposes of this section.]
1
[Explanation 3.—For the removal of doubts, it is hereby declared that the profits and gains derived 
from on site development of computer software (including services for development of software) outside 
India shall be deemed to be the profits and gains derived from the export of computer software outside 
India.]
2
[Explanation 4.—For the purposes of this section, “manufacture or produce” shall include the cutting 
and polishing of precious and semi-precious stones.

10AA. Special provisions in respect of newly established Units in Special Economic Zones.—(1) 
Subject to the provisions of this section, in computing the total income of an assessee, being an 
entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, from his 
Unit, who begins to manufacture or produce articles or things or provide any services during the previous 
year relevant to any assessment year commencing on or after the 1st day of 4
[April, 2006, a deduction 
of]—
(i) hundred per cent. of profits and gains derived from the export, of such articles or things or 
from services for a period of five consecutive assessment years beginning with the assessment year 
relevant to the previous year in which the Unit begins to manufacture or produce such articles or 
things or provide services, as the case may be, and fifty per cent. of such profits and gains for further 
five assessment years and thereafter;
(ii) for the next five consecutive assessment years, so much of the amount not exceeding fifty per 
cent. of the profit as is debited to the profit and loss account of the previous year in respect of which 
the deduction is to be allowed and credited to a reserve account (to be called the “Special Economic 
Zone Re-investment Reserve Account”) to be created and utilized for the purposes of the business of 
the assessee in the manner laid down in sub-section (2).
5
[Explanation.––For the removal of doubts, it is hereby declared that the amount of deduction 
under this section shall be allowed from the total income of the assessee computed in accordance with 
the provisions of this Act, before giving effect to the provisions of this section and the deduction 
under this section shall not exceed such total income of the assessee.]
(2) The deduction under clause (ii) of sub-section (1) shall be allowed only if the following conditions 
are fulfilled, namely:—
(a) the amount credited to the Special Economic Zone Re-investment Reserve Account is to be 
utilised (i) for the purposes of acquiring machinery or plant which is first put to use before the expiry 
of a period of three years following the previous year in which the reserve was created; and
(ii) until the acquisition of the machinery or plant as aforesaid, for the purposes of the 
business of the undertaking other than for distribution by way of dividends or profits or for 
remittance outside India as profits or for the creation of any asset outside India;
(b) the particulars, as may be specified by the Central Board of Direct Taxes in this behalf, under 
clause (b) of sub-section (1B) of section 10A have been furnished by the assessee in respect of 
machinery or plant along with the return of income for the assessment year relevant to the previous 
year in which such plant or machinery was first put to use.
(3) Where any amount credited to the Special Economic Zone Re-investment Reserve Account under 
clause (ii) of sub-section (1),—
(a) has been utilised for any purpose other than those referred to in sub-section (2), the amount so 
utilised; or
(b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of 
sub-section (2), the amount not so utilised,
shall be deemed to be the profits,—
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of three years 
specified in sub-clause (i) of clause (a) of sub-section (2),
and shall be charged to tax accordingly:
Provided that where in computing the total income of the Unit for any assessment year, its profits 
and gains had not been included by application of the provisions of sub-section (7B) of section 10A, 
the undertaking, being the Unit shall be entitled to deduction referred to in this sub-section only for 
the unexpired period of ten consecutive assessment years and thereafter it shall be eligible for 
deduction from income as provided in clause (ii) of sub-section (1).
Explanation.—For the removal of doubts, it is hereby declared that an undertaking, being the 
Unit, which had already availed, before the commencement of the Special Economic Zones Act, 
2005, the deductions referred to in section 10A for ten consecutive assessment years, such Unit shall 
not be eligible for deduction from income under this section:
Provided further that where a Unit initially located in any free trade zone or export processing 
zone is subsequently located in a Special Economic Zone by reason of conversion of such free trade 
zone or export processing zone into a Special Economic Zone, the period of ten consecutive 
assessment years referred to above shall be reckoned from the assessment year relevant to the 
previous year in which the Unit began to manufacture, or produce or process such articles or things or 
services in such free trade zone or export processing zone:
Provided also that where a Unit initially located in any free trade zone or export processing zone 
is subsequently located in a Special Economic Zone by reason of conversion of such free trade zone 
or export processing zone into a Special Economic Zone and has completed the period of ten 
consecutive assessment years referred to above, it shall not be eligible for deduction from income as 
provided in clause (ii) of sub-section (1) with effect from the 1st day of April, 2006.
1
[(4) This section applies to any undertaking, being the Unit, which fulfils all the following 
conditions, namely:—
(i) it has begun or begins to manufacture or produce articles or things or provide services during 
the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006 
in any Special Economic Zone;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is 
formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of 
any such undertaking as is referred to in section 33B, in the circumstances and within the period 
specified in that section;
(iii) it is not formed by the transfer to a new business, of machinery or plant previously used for 
any purpose.
Explanation.—The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply 
for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that subsection.]
(5) Where any undertaking being the Unit which is entitled to the deduction under this section is 
transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit 
in a scheme of amalgamation or demerger,—
(a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit, 
being the company for the previous year in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as they would have applied to the amalgamating or the 
demerged Unit being the company as if the amalgamation or demerger had not taken place.
(6) Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, 
in so far as such loss relates to the business of the undertaking, being the Unit shall be allowed to be 
carried forward or set off.
(7) For the purposes of sub-section (1), the profits derived from the export of articles or things or 
services (including computer software) shall be the amount which bears to the profits of the business of 
the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or 
things or services bears to the total turnover of the business carried on 2
[by the undertaking]:
3
[Provided that the provisions of this sub-section [as amended by section 6 of the Finance (No. 2) 
Act, 2009 (33 of 2009)] shall have effect for the assessment year beginning on the 1st day of April, 2006 
and subsequent assessment years.]
(8) The provisions of sub-sections (5) and (6) of section 10A shall apply to the articles or things or 
services referred to in sub-section (1) as if—
(a) for the figures, letters and word “1st April, 2001”, the figures, letters and word “1st April, 
2006” had been substituted;
(b) for the word “undertaking”, the words “undertaking, being the Unit” had been substituted.
(9) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply in relation to the undertaking referred to in this section as they apply for the purposes of the 
undertaking referred to in section 80-IA.
1
[(10) Where a deduction under this section is claimed and allowed in respect of profits of any of the 
specified business, referred to in clause (c) of sub-section (8) of section 35AD, for any assessment year, 
no deduction shall be allowed under the provisions of section 35AD in relation to such specified business
for the same or any other assessment year.]
Explanation 1.—For the purposes of this section,—
(i) “export turnover” means the consideration in respect of export by the undertaking, being the 
Unit of articles or things or services received in, or brought into, India by the assessee but does not 
include freight, telecommunication charges or insurance attributable to the delivery of the articles or 
things outside India or expenses, if any, incurred in foreign exchange in rendering of services 
(including computer software) outside India;
(ii) “export in relation to the Special Economic Zones” means taking goods or providing services 
out of India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical 
or otherwise;
(iii) “manufacture” shall have the same meaning as assigned to it in clause (r) of section 2 of the 
Special Economic Zones Act, 2005;
(iv) “relevant assessment year” means any assessment year falling within a period of fifteen 
consecutive assessment years referred to in this section;
(v) “Special Economic Zone” and “Unit” shall have the same meanings as assigned to them 
under clauses (za) and (zc) of section 2 of the Special Economic Zones Act, 2005.
Explanation 2.—For the removal of doubts, it is hereby declared that the profits and gains derived 
from on site development of computer software (including services for development of software) outside 
India shall be deemed to be the profits and gains derived from the export of computer software outside 
India.]

10B. Special provisions in respect of newly established hundred per cent. export-oriented 
undertakings.— (1) Subject to the provisions of this section, a deduction of such profits and gains as are 
derived by a hundred per cent. export-oriented undertaking from the export of articles or things or 
computer software for a period of ten consecutive assessment years beginning with the assessment year 
relevant to the previous year in which the undertaking begins to manufacture or produce articles or things 
or computer software, as the case may be, shall be allowed from the total income of the assessee:
Provided that where in computing the total income of the undertaking for any assessment year, its 
profits and gains had not been included by application of the provisions of this section as it stood 
immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to the 
deduction referred to in this sub-section only for the unexpired period of aforesaid ten consecutive 
assessment years:
3
[Provided
4
[further] that for the assessment year beginning on the 1st day of April, 2003, the 
deduction under this sub-section shall be ninety per cent. of the profits and gains derived by an 
undertaking from the export of such articles or things or computer software:]
Provided also that no deduction under this section shall be allowed to any undertaking for the 
assessment year beginning on the 5
[1st day of April, 2012] and subsequent years:
6
[Provided also that no deduction under this section shall be allowed to an assessee who does not 
furnish a return of his income on or before the due date specified under sub-section (1) of section 139.]
(2) This section applies to any undertaking which fulfils all the following conditions, namely:—
(i) it manufactures or produces any articles or things or computer software;
(ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking which is formed as a 
result of the re-establishment, reconstruction or revival by the assessee of the business of any such 
undertaking as is referred to in section 33B, in the circumstances and within the period specified in 
that section;
(iii) it is not formed by the transfer to a new business of machinery or plant previously used for 
any purpose.
Explanation.—The provisions of Explanation 1 and Explanation 2 to sub-section (2) of 
section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of 
clause (ii) of that sub-section.
(3) This section applies to the undertaking, if the sale proceeds of articles or things or computer 
software exported out of India are received in, or brought into, India by the assessee in convertible foreign 
exchange, within a period of six months from the end of the previous year or, within such further period 
as the competent authority may allow in this behalf.
Explanation 1.—For the purposes of this sub-section, the expression “competent authority” means the 
Reserve Bank of India or such other authority as is authorised under any law for the time being in force 
for regulating payments and dealings in foreign exchange.
Explanation 2.—The sale proceeds referred to in this sub-section shall be deemed to have been 
received in India where such sale proceeds are credited to a separate account maintained for the purpose 
by the assessee with any bank outside India with the approval of the Reserve Bank of India.
1
[(4) For the purposes of sub-section (1), the profits derived from export of articles or things or 
computer software shall be the amount which bears to the profits of the business of the undertaking, the 
same proportion as the export turnover in respect of such articles or things or computer software bears to 
the total turnover of the business carried on by the undertaking.]
(5) The deduction under sub-section (1) shall not be admissible for any assessment year beginning on 
or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form, along with the 
return of income, the report of an accountant, as defined in the Explanation below sub-section (2) 
of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions 
of this section.
(6) Notwithstanding anything contained in any other provision of this Act, in computing the total 
income of the assessee of the previous year relevant to the assessment year immediately succeeding the 
last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment 
year,—
(i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of 
section 35 shall apply as if every allowance or deduction referred to therein and relating to or 
allowable for any of the relevant assessment years 2
[ending before the 1st day of April, 2001], in 
relation to any building, machinery, plant or furniture used for the purposes of the business of the 
undertaking in the previous year relevant to such assessment year or any expenditure incurred for the 
purposes of such business in such previous year had been given full effect to for that assessment year 
itself and accordingly sub-section (2) of section 32, clause (ii) of sub-section (3) of section 32A, 
clause (ii) of sub-section (2) of section 33, , sub-section (4) of section 35 or the second proviso to 
clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such 
allowance or deduction;
(ii) no loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) 
of section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward 
or set-off where such loss relates to any of the relevant assessment years 1
[ending before the 1st day 
of April, 2001;]
(iii) no deduction shall be allowed under section 80HH or section 80HHA or 
section 80-I or section 80IA or section 80-IB in relation to the profits and gains of the undertaking; 
and
(iv) in computing the depreciation allowance under section 32, the written down value of any 
asset used for the purposes of the business of the undertaking shall be computed as if the assessee had 
claimed and been actually allowed the deduction in respect of depreciation for each of the relevant 
assessment year.
(7) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply in relation to the undertaking referred to in this section as they apply for the purposes of the 
undertaking referred to in section 80-IA.
2
[(7A) Where any undertaking of an Indian company which is entitled to the deduction under this 
section is transferred, before the expiry of the period specified in this section, to another Indian company 
in a scheme of amalgamation or demerger—
(a) no deduction shall be admissible under this section to the amalgamating or the demerged 
company for the previous year in which the amalgamation or the demerger takes place; and
(b) the provisions of this section shall, as far as may be, apply to the amalgamated or resulting 
company as they would have applied to the amalgamating or the demerged company if the 
amalgamation or the demerger had not taken place.]
(8) Notwithstanding anything contained in the foregoing provisions of this section, where the 
assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, 
furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be 
made applicable to him, the provisions of this section shall not apply to him for any of the relevant 
assessment year.
3
* * * * *
4
* * * * *
5
* * * * *
Explanation 2.—For the purposes of this section,—
(i) “computer software” means—
(a) any computer programme recorded on any disc, tape, perforated media or other 
information storage device; or
(b) any customized electronic data or any product or service of similar nature as may be 
notified by the Board,
which is transmitted or exported from India to any place outside India by any means;
(ii) “convertible foreign exchange” means foreign exchange which is for the time being treated by 
the Reserve Bank of India as convertible foreign exchange for the purposes of 1
[the Foreign Exchange 
Management Act, 1999 (42 of 1999)], and any rules made thereunder or any other corresponding law 
for the time being in force;
(iii) “export turnover” means the consideration 2
[in respect of export by the undertaking] of 
articles or things or computer software received in, or brought into, India by the assessee in 
convertible foreign exchange in accordance with sub-section (3), but does not include freight, 
telecommunication charges or insurance attributable to the delivery of the articles or things or 
computer software outside India or expenses, if any, incurred in foreign exchange in providing the 
technical services outside India;
(iv) “hundred per cent. export-oriented undertaking” means an undertaking which has been 
approved as a hundred per cent. export-oriented undertaking by the Board appointed in this behalf by 
the Central Government in exercise of the powers conferred by section 14 of the Industries 
(Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act;
(v) “relevant assessment years” means any assessment years falling within a period of ten 
consecutive assessment years, referred to in this section.]
3
[Explanation 3.—For the removal of doubts, it is hereby declared that the profits and gains derived 
from on site development of computer software (including services for development of software) outside 
India shall be deemed to be the profits and gains derived from the export of computer software outside 
India.]
4
[Explanation 4.—For the purposes of this section, “manufacture or produce” shall include the cutting 
and polishing of precious and semi-precious stones.]

[10BA. Special provisions in respect of export of certain articles or things.— (1) Subject to the 
provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the 
export out of India of eligible articles or things, shall be allowed from the total income of the assessee:
Provided that where in computing the total income of the undertaking for any assessment year,
deduction under section 10A or section 10B has been claimed, the undertaking shall not be entitled to the 
deduction under this section:
Provided further that no deduction under this section shall be allowed to any undertaking for the 
assessment year beginning on the 1st day of April, 2010 and subsequent years.
(2) This section applies to any undertaking which fulfils the following conditions, namely:—
(a) it manufactures or produces the eligible articles or things without the use of imported raw 
materials;
(b) it is not formed by the splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of any undertaking which is formed as a 
result of the re-establishment, reconstruction or revival by the assessee of the business of any such 
undertaking as is referred to in section 33B, in the circumstances and within the period specified in 
that section;
(c) it is not formed by the transfer to a new business of machinery or plant previously used for
any purpose. 
Explanation.—The provisions of Explanation 1 and Explanation 2 to sub-section (2) of 
section 80-I shall apply for the purposes of this clause as they apply for the purposes of clause (ii) of 
sub-section (2) of that section;
(d) ninety per cent. or more of its sales during the previous year relevant to the assessment year 
are by way of exports of the eligible articles or things;
(e) it employs twenty or more workers during the previous year in the process of manufacture or 
production.
(3) This section applies to the undertaking, if the sale proceeds of the eligible articles or things 
exported out of India are received in or brought into, India by the assessee in convertible foreign 
exchange, within a period of six months from the end of the previous year or, within such further period 
as the competent authority may allow in this behalf.
Explanation.—For the purposes of this sub-section, the expression “competent authority” means the 
Reserve Bank of India or such other authority as is authorised under any law for the time being in force 
for regulating payments and dealings in foreign exchange.
(4) For the purposes of sub-section (1), the profits derived from export out of India of the eligible 
articles or things shall be the amount which bears to the profits of the business of the undertaking, the 
same proportion as the export turnover in respect of such articles or things bears to the total turnover of 
the business carried on by the undertaking.
(5) The deduction under sub-section (1) shall not be admissible, unless the assessee furnishes in the 
prescribed form, along with the return of income, the report of an accountant, as defined in 
the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly 
claimed in accordance with the provisions of this section.
(6) Notwithstanding anything contained in any other provision of this Act, where a deduction is 
allowed under this section in computing the total income of the assessee, no deduction shall be allowed 
under any other section in respect of its export profits.
(7) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply in relation to the undertaking referred to in this section as they apply for the purposes of the 
undertaking referred to in section 80-IA.
Explanation.—For the purposes of this section,—
(a) “convertible foreign exchange” means foreign exchange which is for the time being treated by 
the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange 
Management Act, 1999 (42 of 1999), and any rules made thereunder or any other corresponding law 
for the time being in force;
(b) “eligible articles or things” means all hand-made articles or things, which are of artistic value 
and which requires the use of wood as the main raw material;
(c) “export turnover” means the consideration in respect of export by the undertaking of eligible 
articles or things received in, or brought into, India by the assessee in convertible foreign exchange in 
accordance with sub-section (3), but does not include freight, telecommunication charges or insurance 
attributable to the delivery of the articles or things outside India;
(d) “export out of India” shall not include any transaction by way of sale or otherwise, in a shop, 
emporium or any other establishment situate in India, not involving clearance of any customs station 
as defined in the Customs Act, 1962 (52 of 1962).]

10BB. Meaning of computer programmes in certain cases.—The profits and gains derived by an 
undertaking from the production of computer programmes under section 10B, as it stood prior to its 
substitution by section 7 of the Finance Act, 2000 (10 of 2000), shall be construed as if for the words 
“computer programmes”, the words “computer programmes or processing or management of electronic 
data” had been substituted in that section.

10C. Special provision in respect of certain industrial undertakings in North-Eastern 
Region.—(1) Subject to the provisions of this section, any profits and gains derived by an assessee from 
an industrial undertaking, which has begun or begins to manufacture or produce any article or thing on or 
after the 1st day of April, 1998 in any Integrated Infrastructure Development Centre or Industrial Growth 
Centre located in the North-Eastern Region (hereafter in this section referred to as the industrial 
undertaking) shall not be included in the total income of the assessee.
(2) This section applies to any industrial undertaking which fulfils all the following conditions, 
namely:—
(i) it is not formed by the splitting up, or the reconstruction of, a business already in existence:
Provided that this condition shall not apply in respect of any industrial undertaking which is 
formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of 
any such industrial undertaking as is referred to in section 33B, in the circumstances and within the 
period specified in that section;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for 
any purpose.
Explanation.—The provisions of Explanation 1 and Explanation 2 to sub-section (3) of 
section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes 
of clause (ii) of that sub-section.
(3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the 
assessee in respect of ten consecutive assessment years beginning with the assessment year relevant to the 
previous year in which the industrial undertaking begins to manufacture or produce articles or things.
(4) Notwithstanding anything contained in any other provision of this Act, in computing the total 
income of the assessee of any previous year relevant to any subsequent assessment year,—
(i) section 32, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if 
deduction referred to therein and relating to or allowable for any of the relevant assessment years, in 
relation to any building, machinery, plant or furniture used for the purposes of the business of the 
industrial undertaking in the previous year relevant to such assessment year or any expenditure 
incurred for the purposes of such business in such previous year had been given full effect to for that 
assessment year itself and, accordingly, sub-section (2) of section 32, sub-section (4) of section 35 or 
the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply 
in relation to any such deduction;
(ii) no loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) 
of section 74, in so far as such loss relates to the business of the industrial undertaking, shall be 
carried forward or set off where such loss relates to any of the relevant assessment years;
(iii) no deduction shall be allowed under section 80HH or section 80HHA or 
section 80-I or section 80-IA or section 80-IB or section 80JJA in relation to the profits and gains of 
the industrial undertakings; and
(iv) in computing the depreciation allowance under section 32, the written down value of any 
asset used for the purposes of the business of the industrial undertaking shall be computed as if the 
assessee had claimed and been actually allowed the deduction in respect of depreciation for each of 
the relevant assessment years.
(5) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply in relation to the industrial undertaking referred to in this section as they apply for the purposes of 
the industrial undertaking referred to in section 80-IA or section 80IB, as the case may be.
(6) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee 
before the due date for furnishing the return of his income under sub-section (1) of section 139, furnishes 
to the Assessing Officer a declaration in writing that the provisions of this section may not be made 
applicable to him, the provisions of this section shall not apply to him in any of the relevant assessment 
years:
1
[Provided that no deduction under this section shall be allowed to any undertaking for the assessment 
year beginning on the 1st day of April, 2004 and subsequent years.]
Explanation.—For the purposes of this section,—
(i) “Integrated Infrastructure Development Centre” means such centres located in the States of the 
North-Eastern Region, which the Central Government, may, by notification in the Official Gazette, 
specify for the purposes of this section;
(ii) “Industrial Growth Centre” means such centres located in the States of the North-Eastern 
Region, which the Central Government may, by notification in the Official Gazette, specify for the 
purposes of this section;
(iii) “North-Eastern Region” means the region comprising the States of Arunachal Pradesh, 
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;
(iv) “relevant assessment years” means the ten consecutive years beginning with the year in 
which the industrial undertaking begins to manufacture or produce articles or things.]

11. Income from property held for charitable or religious purposes.—(1) Subject to the 
provisions of sections 60 to 63, the following income shall not be included in the total income of the 
previous year of the person in receipt of the income
[(a) income derived from property held under trust wholly for charitable or religious purposes, to 
the extent to which such income is applied to such purposes in India; and, where any such income is 
accumulated or set apart for application to such purposes in India, to the extent to which the income 
so accumulated or set apart is not in excess of 4
[fifteen per cent.] of the income from such property;
(b) income derived from property held under trust in part only for such purposes, the trust having 
been created before the commencement of this Act, to the extent to which such income is applied to 
such purposes in India; and, where any such income is finally set apart for application to such 
purposes in India, to the extent to which the income so set apart is not in excess of 4
[fifteen per cent.] 
of the income from such property;
(c) income 5
[derived from property held under trust]—
(i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to 
promote international welfare in which India is interested, to the extent to which such income is 
applied to such purposes outside India, and
(ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent 
to which such income is applied to such purposes outside India:
Provided that the Board, by general or special order, has directed in either case that it shall not be 
included in the total income of the person in receipt of such income;
1
[(d) income in the form of voluntary contributions made with a specific direction that they shall 
form part of the corpus of the trust or institution.
2
[Explanation 3
[1].—For the purposes of clauses (a) and (b),—
(1) in computing the 4
[fifteen per cent.] of the income which may be accumulated or set apart, 
any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the 
income;
(2) if, in the previous year, the income applied to charitable or religious purposes in India falls 
short of 5
[eighty-five per cent.] of the income derived during that year from property held under trust, 
or, as the case may be, held under trust in part, by any amount—
 (i) for the reason that the whole or any part of the income has not been received during that 
year, or
(ii) for any other reason,
then—
(a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in 
India during the previous year in which the income is received or during the previous year 
immediately following as does not exceed the said amount, and
(b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes 
in India during the previous year immediately following the previous year in which the income 
was derived as does not exceed the said amount,
may, at the option of the person in receipt of the income 6
[(such option to be exercised before the expiry 
of the time allowed under sub-section (1) of section 139 for furnishing the return of income, in such form 
and manner as may be prescribed)] be deemed to be income applied to such purposes during the previous 
year in which the income was derived; and the income so deemed to have been applied shall not be taken 
into account in calculating the amount of income applied to such purposes, in the case referred to in subclause (i), during the previous year in which the income is received or during the previous year 
immediately following, as the case may be, and, in the case referred to in sub-clause (ii), during the 
previous year immediately following the previous year in which the income was derived.]
7
[Explanation 2.—Any amount credited or paid, out of income referred to in clause (a) or clause (b) 
read with Explanation 1, to any other trust or institution registered under section 12AA, being 
contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall 
not be treated as application of income for charitable or religious purposes.]
8
[Explanation 3.—For the purposes of determining the amount of application under clause (a) or 
clause (b), the provisions of sub-clause (ia) of clause (a) of section 40 and sub-sections (3) and (3A) of 
section 40A, shall, mutatis mutandis, apply as they apply in computing the income chargeable under the 
head “Profits and gains of business or profession.]
9
[(1A) For the purposes of sub-section (1),—
(a) where a capital asset, being property held under trust wholly for charitable or religious 
purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring 
another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to 
have been applied to charitable or religious purposes to the extent specified hereunder, namely:—
(i) where the whole of the net consideration is utilised in acquiring the new capital asset, the 
whole of such capital gain;
(ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so 
much of such capital gain as is equal to the amount, if any, by which the amount so utilised 
exceeds the cost of the transferred asset;
(b) where a capital asset, being property held under trust in part only for such purposes, is 
transferred and the whole or any part of the net consideration is utilised for acquiring another capital 
asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be 
deemed to have been applied to charitable or religious purposes to the extent specified hereunder, 
namely:—
(i) where the whole of the net consideration is utilised in acquiring the new capital asset, the 
whole of the appropriate fraction of such capital gain;
(ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the 
amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new 
asset exceeds the appropriate fraction of the cost of the transferred asset.
Explanation.—In this sub-section,—
(i) “appropriate fraction” means the fraction which represents the extent to which the income 
derived from the capital asset transferred was immediately before such transfer applicable to 
charitable or religious purposes;
(ii) “cost of the transferred asset” means the aggregate of the cost of acquisition (as 
ascertained for the purposes of section 48 and 49) of the capital asset which is the subject of the 
transfer and the cost of any improvement thereto within the meaning assigned to that expression 
in sub-clause (b) of clause (1) of section 55;
(iii) “net consideration” means the full value of the consideration received or accruing as a 
result of the transfer of the capital asset as reduced by any expenditure incurred wholly and 
exclusively in connection with such transfer.]
1
[(1B) Where any income in respect of which an option is exercised under clause (2) of 
the Explanation to sub-section (1) is not applied to charitable or religious purposes in India during the 
period referred to in sub-clause (a) or, as the case may be, sub-clause (b), of the said clause, then, such 
income shall be deemed to be the income of the person in receipt thereof—
(a) in the case referred to in sub-clause (i) of the said clause, of the previous year immediately 
following the previous year in which the income was received; or
(b) in the case referred to in sub-clause (ii) of the said clause, of the previous year immediately 
following the previous year in which the income was derived.
2
[(2) 3
[Where 4
[eighty-five per cent.] of the income referred to in clause (a) or clause (b) of 
sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been 
applied, to charitable or religious purposes in India during the previous year but is accumulated or set 
apart, either in whole or in part, for application to such purposes in India, such income so accumulated or 
set apart shall not be included in the total income of the previous year of the person in receipt of the 
income, provided the following conditions are complied with, namely:—]
5
[(a) such person furnishes a statement in the prescribed form and in the prescribed3 manner to 
the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and 
the period for which the income is to be accumulated or set apart, which shall in no case exceed five 
years;
(b) the money so accumulated or set apart is invested or deposited in the forms or modes 
specified in sub-section (5);
(c) the statement referred to in clause (a) is furnished on or before the due date specified under 
sub-section (1) of section 139 for furnishing the return of income for the previous year:
Provided that in computing the period of five years referred to in clause (a), the period during 
which the income could not be applied for the purpose for which it is so accumulated or set apart, due 
to an order or injunction of any court, shall be excluded.]]
1
[Explanation.—Any amount credited or paid, out of income referred to in clause (a) or clause (b) of 
sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or 
set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or 
any university or other educational institution or any hospital or other medical institution referred to in 
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall 
not be treated as application of income for charitable or religious purposes, either during the period of 
accumulation or thereafter.]
2
[(3) Any income referred to in sub-section (2) which—
(a) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be 
accumulated or set apart for application thereto, or
3
[(b) ceases to remain invested or deposited in any of the forms or modes specified in 
sub-section (5), or]
(c) is not utilised for the purpose for which it is so accumulated or set apart during the period 
referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof,
1
[(d) is credited or paid to any trust or institution registered under section 12AA or to any fund or 
institution or trust or any university or other educational institution or any hospital or other medical 
institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of 
clause (23C) of section 10,]
shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to 
be so accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the 
case may be, of the previous year immediately following the expiry of the period aforesaid.
4
[(3A) Notwithstanding anything contained in sub-section (3), where due to circumstances beyond the 
control of the person in receipt of the income, any income invested or deposited in accordance with the 
provisions of clause (b) of sub-section (2) cannot be applied for the purpose for which it was accumulated 
or set apart, the 5
[Assessing Officer ]may, on an application made to him in this behalf, allow such person 
to apply such income for such other charitable or religious purpose in India as is specified in the 
application by such person and as is in conformity with the objects of the trust; and thereupon the 
provisions of sub-section (3) shall apply as if the purpose specified by such person in the application 
under this sub-section were a purpose specified in the notice given to the 5
[Assessing Officer] under 
clause (a) ofsub-section (2):
1
[Provided that the 2
[Assessing Officer] shall not allow application of such income by way of 
payment or credit made for the purposes referred to in clause (d) of sub-section (3) of section 11:]
3
[Provided further that in case the trust or institution, which has invested or deposited its income in 
accordance with the provisions of clause (b) of sub-section (2), is dissolved, the 2
[Assessing Officer] may 
allow application of such income for the purposes referred to in clause (d) of sub-section (3) in the year in 
which such trust or institution was dissolved.]
(4) For the purposes of this section “property held under trust” includes a business undertaking so 
held, and where a claim is made that the income of any such undertaking shall not be included in the total 
income of the persons in receipt thereof, the 2
[Assessing Officer] shall have power to determine the 
income of such undertaking in accordance with the provisions of this Act relating to assessment; and 
where any income so determined is in excess of the income as shown in the accounts of the undertaking, 
such excess shall be deemed to be applied to purposes other than charitable or religious purposes 4
***.
5
[(4A) Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in 
relation to any income of a trust or an institution, being profits and gains of business, unless the business 
is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate 
books of account are maintained by such trust or institution in respect of such business.]
6
[(5) The forms and modes of investing or depositing the money referred to in clause (b) of subsection (2) shall be the following, namely:—
(i) investment in savings certificates as defined in clause (c) of section 2 of the Government 
Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the 
Central Government under the Small Savings Schemes of that Government;
(ii) deposit in any account with the Post Office Savings Bank;
(iii) deposit in any account with a scheduled bank or a co-operative society engaged in carrying 
on the business of banking (including a co-operative land mortgage bank or a co-operative land 
development bank).
Explanation.—In this clause, “scheduled bank” means the State Bank of India constituted under 
the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of 
India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 
3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or 
under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 
of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of 
India Act, 1934 (2 of 1934);
(iv) investment in units of the Unit Trust of India established under the Unit Trust of India Act, 
1963 (52 of 1963);
(v) investment in any security for money created and issued by the Central Government or a 
State Government
(vi) investment in debentures issued by, or on behalf of, any company or corporation both the 
principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central 
Government or by a State Government;
(vii) investment or deposit in any 1
[public sector company]:
2
[Provided that where an investment or deposit in any public sector company has been made and 
such public sector company ceases to be a public sector company,—
(A) such investment made in the shares of such company shall be deemed to be an investment 
made under this clause for a period of three years from the date on which such public sector 
company ceases to be a public sector company;
(B) such other investment or deposit shall be deemed to be an investment or deposit made 
under this clause for the period up to the date on which such investment or deposit becomes 
repayable by such company;]
(viii) deposits with or investment in any bonds issued by a financial corporation which is engaged 
in providing long-term finance for industrial development in India and 3
[which is eligible for 
deduction under clause (viii) of sub-section (1) of section 36];
(ix) deposits with or investment in any bonds issued by a public company formed and registered 
in India with the main object of carrying on the business of providing long-term finance for 
construction or purchase of houses in India for residential purposes and 3
[which is eligible for 
deduction under clause (viii) of sub-section (1) of section 36];
4
[(ixa) deposits with or investment in any bonds issued by a public company formed and 
registered in India with the main object of carrying on the business of providing long-term finance for 
urban infrastructure in India.
Explanation.—For the purposes of this clause,—
(a) “long-term finance” means any loan or advance where the terms under which moneys are 
loaned or advanced provide for repayment along with interest thereof during a period of not less 
than five years;
(b) “public company” shall have the meaning assigned to it in section 3 of the Companies 
Act, 1956 (1 of 1956);
(c) “urban infrastructure” means a project for providing potable water supply, sanitation and 
sewerage, drainage, solid waste management, roads, bridges and flyovers or urban transport;]
(x) investment in immovable property.
Explanation.—”Immovable property” does not include any machinery or plant (other than 
machinery or plant installed in a building for the convenient occupation of the building) even though 
attached to, or permanently fastened to, anything attached to the earth;]
[(xi) deposits with the Industrial Development Bank of India established under the Industrial 
Development Bank of India Act, 1964 (18 of 1964);]
2
[(xii) any other form or mode of investment or deposit as may be prescribed.]
3
[(6) In this section where any income is required to be applied or accumulated or set apart for 
application, then, for such purposes the income shall be determined without any deduction or allowance 
by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an 
application of income under this section in the same or any other previous year.
(7) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) of 
section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment 
by the Finance (No. 2) Act, 1996 (33 of 1996)] and the said registration is in force for any previous year, 
then, nothing contained in section 10 [other than clause (1) and clause (23C) thereof] shall operate to 
exclude any income derived from the property held under trust from the total income of the person in 
receipt thereof for that previous year.]

12. Income of trusts or institutions from contributions.—5
[(1)] Any voluntary contributions 
received by a trust created wholly for charitable or religious purposes or by an institution established 
wholly for such purposes (not being contributions made with a specific direction that they shall form part 
of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income 
derived from property held under trust wholly for charitable or religious purposes and the provisions of 
that section and section 13 shall apply accordingly.]
6
[(2) The value of any services, being medical or educational services, made available by any 
charitable or religious trust running a hospital or medical institution or an educational institution, to any 
person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) 
of section 13, shall be deemed to be income of such trust or institution derived from property held under 
trust wholly for charitable or religious purposes during the previous year in which such services are so 
provided and shall be chargeable to income-tax notwithstanding the provisions of sub-section (1) 
of section 11.
Explanation.—For the purposes of this sub-section, the expression “value” shall be the value of any 
benefit or facility granted or provided free of cost or at concessional rate to any person referred to in 
clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13.]
7
[(3) Notwithstanding anything contained in section 11, any amount of donation received by the trust 
or institution in terms of clause (d) of sub-section (2) of section 80G 8
[in respect of which accounts of 
income and expenditure have not been rendered to the authority prescribed under clause (v) of 
sub-section (5C) of that section, in the manner specified in that clause, or] which has been utilised for 
purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in 
terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund 
on or before the 31st day of March, 9
[2004] shall be deemed to be the income of the previous year and 
shall accordingly be charged to tax.

12A. Conditions for applicability of sections 11 and 12.
[(1)] The provisions of section 
11 and section 12 shall not apply in relation to the income of any trust or institution unless the following 
conditions are fulfilled, namely:—
(a) the person in receipt of the income has made an application for registration of the trust or 
institution in the prescribed form and in the prescribed manner to the 3
*** 4
[Principal Commissioner 
or Commissioner] before the 1st day of July, 1973, or before the expiry of a period of one year from 
the date of the creation of the trust or the establishment of the institution, 5
[whichever is later and 
such trust or institution is registered under section 12AA]:
6
[Provided that where an application for registration of the trust or institution is made after the 
expiry of the period aforesaid, the provisions of section 11 and 12 shall apply in relation to the 
income of such trust or institution,—
 (i) from the date of the creation of the trust or the establishment of the institution if the 3
***
4
[Principal Commissioner or Commissioner] is, for reasons to be recorded in writing, satisfied 
that the person in receipt of the income was prevented from making the application before the 
expiry of the period aforesaid for sufficient reasons;
(ii) from the 1st day of the financial year in which the application is made, if the
3
*** 4
[Principal Commissioner or Commissioner] is not so satisfied:]
7
[Provided further that the provisions of this clause shall not apply in relation to any application 
made on or after the 1st day of June, 2007;]
7
[(aa) the person in receipt of the income has made an application for registration of the trust or 
institution on or after the 1st day of June, 2007 in the prescribed form and manner to the 4
[Principal 
Commissioner or Commissioner] and such trust or institution is registered under section 12AA;]
8
[(ab) the person in receipt of the income has made an application for registration of the trust or 
institution, in a case where a trust or an institution has been granted registration under section 12AA or 
has obtained registration at any time under section 12A [as it stood before its amendment by the Finance 
(No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the 
objects which do not conform to the conditions of registration, in the prescribed form and manner, 
within a period of thirty days from the date of said adoption or modification, to the Principal 
Commissioner or Commissioner and such trust or institution is registered under section 12AA;]
(b) where the total income of the trust or institution as computed under this Act without giving 
effect to the 9
[provisions of section 11 and section 12 exceeds the maximum amount which is not 
chargeable to income-tax in any previous year], the accounts of the trust or institution for that year 
have been audited by an accountant as defined in the Explanation below sub-section (2) of section 
288 and the person in receipt of the income furnishes along with the return of income for the relevant 
assessment year the report of such audit in the prescribed form duly signed and verified by such 
accountant and setting forth such particulars as may be prescribed.
1
[(ba) the person in receipt of the income has furnished the return of income for the previous year 
in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under 
that section;]
2
* * * * *
3
[(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of 
sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment 
year immediately following the financial year in which such application is made:]
4
[Provided that where registration has been granted to the trust or institution under section 12AA, 
then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held 
under trust of any assessment year preceding the aforesaid assessment year, for which assessment 
proceedings are pending before the Assessing Officer as on the date of such registration and the objects 
and activities of such trust or institution remain the same for such preceding assessment year:
Provided further that no action under section 147 shall be taken by the Assessing Officer in case of 
such trust or institution for any assessment year preceding the aforesaid assessment year only for nonregistration of such trust or institution for the said assessment year:
Provided also that provisions contained in the first and second proviso shall not apply in case of any 
trust or institution which was refused registration or the registration granted to it was cancelled at any 
time under section 12AA.]

12AA. Procedure for registration.— (1) The 6
*** 7
[Principal Commissioner or Commissioner], 
on receipt of an application for registration of a trust or institution made under clause (a) 8
[or clause (aa) 
9
[or clause (ab)] of sub-section (1)] of section 12A, shall—
(a) call for such documents or information from the trust or institution as he thinks necessary in 
order to satisfy himself about the genuineness of activities of the trust or institution and may also 
make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its 
activities, he—
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or 
institution,
and a copy of such order shall be sent to the applicant:
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a 
reasonable opportunity of being heard.
1
[(1A) All applications, pending before the 2
[Principal Chief Commissioner or Chief Commissioner]
on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, 
shall stand transferred on that day to the 3
[Principal Commissioner or Commissioner] and the 3
[Principal 
Commissioner or Commissioner] may proceed with such applications under that sub-section from the 
stage at which they were on that day.]
(2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed 
before the expiry of six months from the end of the month in which the application was received under 
clause (a) 4
[or clause (aa) 5
[or clause (ab)] of sub-section (1)] of section 12A.]
6
[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 
7
[or has obtained registration at any time under section 12A. [as it stood before its amendment by the 
Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the 3
[Principal Commissioner or 
Commissioner] is satisfied that the activities of such trust or institution are not genuine or are not being 
carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an 
order in writing cancelling the registration of such trust or institution:
Provided that no order under this sub-section shall be passed unless such trust or institution has been 
given a reasonable opportunity of being heard.]
8
[(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been 
granted registration under clause (b) of sub-section (1) or has obtained registration at any time under 
section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and 
subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner 
that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of 
such trust or institution due to operation of sub-section (1) of section 13, then, the Principal 
Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or 
institution:
Provided that the registration shall not be cancelled under this sub-section, if the trust or institution 
proves that there was a reasonable cause for the activities to be carried out in the said manner.

13. Section 11 not to apply in certain cases.—(1) 2
[Nothing contained in section 11 or 
section 12] shall operate so as to exclude from the total income of the previous year of the person in 
receipt thereof—
(a) any part of the income from the property held under a trust for private religious purposes 
which does not enure for the benefit of the public;
(b) in the case of a trust for charitable purposes or a charitable institution created or established 
after the commencement of this Act, any income thereof if the trust or institution is created or 
established for the benefit of any particular religious community or caste;
3
* * * * * 
(c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, 
any income thereof—
(i) if such trust or institution has been created or established after the commencement of this 
Act and under the terms of the trust or the rules governing the institution, any part of such income 
enures, or
(ii) if any part of such income or any property of the trust or the institution (whenever created 
or established) is during the previous year used or applied,
directly or indirectly for the benefit of any person referred to in sub-section (3):
Provided that in the case of a trust or institution created or established before the 
commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or 
application, whether directly or indirectly, of any part of such income or any property of the trust 
or institution for the benefit of any person referred to in sub-section (3), if such use or application 
is by way of compliance with a mandatory term of the trust or a mandatory rule governing the 
institution:
Provided further that in the case of a trust for religious purposes or a religious institution 
(whenever created or established) or a trust for charitable purposes or a charitable institution 
created or established before the commencement of this Act, the provisions of sub-clause (ii) 
shall not apply to any use or application, whether directly or indirectly, of any part of such 
income or any property of the trust or institution for the benefit of any person referred to in 
sub-section (3) insofar as such use or application relates to any period before the 1st day of June, 
1970;
4
[(d) in the case of a trust for charitable or religious purposes or a charitable or religious 
institution, any income thereof, if for any period during the previous year—
(i) any funds of the trust or institution are invested or deposited after the 28th day of 
February, 1983 otherwise than in any one or more of the forms or modes specified in 
sub-section (5) of section 11; or
(ii) any funds of the trust or institution invested or deposited before the 1st day of March, 
1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of
section 11 continue to remain so invested or deposited after the 30th day of November, 1983; or
1
[(iii) any shares in a company, other than—
(A) shares in a public sector company;
(B) shares prescribed as a form or mode of investment under clause (xii) of 
sub-section (5) of section 11,
are held by the trust or institution after the 30th day of November, 1983:]
Provided that nothing in this clause shall apply in relation to—
(i) any assets held by the trust or institution where such assets form part of the corpus of the trust 
or institution as on the 1st day of June, 1973 2
***;
3
[(ia) any accretion to the shares, forming part of the corpus mentioned in clause (i), by way of 
bonus shares allotted to the trust or institution;]
(ii) any assets (being debentures issued by, or on behalf of, any company or corporation) acquired 
by the trust or institution before the 1st day of March, 1983;
4
[(iia) any asset, not being an investment or deposit in any of the forms or modes specified in 
sub-section (5) of section 11, where such asset is not held by the trust or institution, otherwise than in 
any of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from 
the end of the previous year in which such asset is acquired or the 31st day of March, 5
[1993], 
whichever is later;]
(iii) any funds representing the profits and gains of business, being profits and gains of any 
previous year relevant to the assessment year commencing on the 1st day of April, 1984 or any 
subsequent assessment year.
Explanation.—Where the trust or institution has any other income in addition to profits and gains 
of business, the provisions of clause (iii) of this proviso shall not apply unless the trust or institution 
maintains separate books of account in respect of such business.]
6
[Explanation.—For the purposes of sub-clause (ii) of clause (c), in determining whether any part of 
the income or any property of any trust or institution is during the previous year used or applied, directly 
or indirectly, for the benefit of any person referred to in sub-section (3), insofar as such use or application 
relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to 
this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972.]
(2) Without prejudice to the generality of the 7
[provisions of clause (c) and clause (d)] of 
sub-section (1), the income or the property of the trust or institution or any part of such income or 
property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a 
person referred to in sub-section (3),—
(a) if any part of the income or property of the trust or institution is, or continues to be, lent to any 
person referred to in sub-section (3) for any period during the previous year without either adequate 
security or adequate interest or both;
(b) if any land, building or other property of the trust or institution is, or continues to be, made 
available for the use of any person referred to in sub-section (3), for any period during the previous 
year without charging adequate rent or other compensation;
(c) if any amount is paid by way of salary, allowance or otherwise during the previous year to any 
person referred to in sub-section (3) out of the resources of the trust or institution for services 
rendered by that person to such trust or institution and the amount so paid is in excess of what may be 
reasonably paid for such services;
(d) if the services of the trust or institution are made available to any person referred to in 
sub-section (3) during the previous year without adequate remuneration or other compensation;
(e) if any share, security or other property is purchased by or on behalf of the trust or institution 
from any person referred to in sub-section (3) during the previous year for consideration which is 
more than adequate;
(f) if any share, security or other property is sold by or on behalf of the trust or institution to any 
person referred to in sub-section (3) during the previous year for consideration which is less than 
adequate;
1
[(g) if any income or property of the trust or institution is diverted during the previous year in 
favour of any person referred to in sub-section (3):
Provided that this clause shall not apply where the income, or the value of the property or, as the 
case may be, the aggregate of the income and the value of the property, so diverted does not exceed 
one thousand rupees;]
(h) if any funds of the trust or institution are, or continue to remain, invested for any period 
during the previous year (not being a period before the 1st day of January, 1971), in any concern in 
which any person referred to in sub-section (3) has a substantial interest.
(3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, 
namely:—
(a) the author of the trust or the founder of the institution;
2
[(b) any person who has made a substantial contribution to the trust or institution, that is to say, 
any person whose total contribution up to the end of the relevant previous year exceeds 3
[fifty 
thousand] rupees];
(c) where such author, founder or person is a Hindu undivided family, a member of the family;
4
[(cc) any trustee of the trust or manager (by whatever name called) of the institution;]
(d) any relative of any such author, founder, person, 1
[member, trustee or manager] as aforesaid;
(e) any concern in which any of the persons referred to in clauses (a), (b), 2
[(c), (cc)] and (d) has a 
substantial interest.
(4) Notwithstanding anything contained in clause (c) of sub-section (1) 3
[but without prejudice to the 
provisions contained in clause (d) of that sub-section, in a case where] the aggregate of the funds of the 
trust or institution invested in a concern in which any person referred to in sub-section (3) has a 
substantial interest, does not exceed five per cent. of the capital of that concern, the exemption under
4
[section 11 or section 12] shall not be denied in relation to any income other than the income arising to 
the trust or the institution from such investment, by reason only that the 5
[funds of the trust or the 
institution] have been invested in a concern in which such person has a substantial interest.
6
[(5) Notwithstanding anything contained in clause (d) of sub-section (1), where any assets (being 
debentures issued by, or on behalf of, any company or corporation) are acquired by the trust or institution 
after the 28th day of February, 1983 but before the 25th day of July, 1991, the exemption under 
section 11 or section 12 shall not be denied in relation to any income other than the income arising to the 
trust or the institution from such assets, by reason only that the funds of the trust or the institution have 
been invested in such assets if such funds do not continue to remain so invested in such assets after the 
31st day of March, 1992.]
7
[(6) Notwithstanding anything contained in sub-section (1) or sub-section (2), but without prejudice 
to the provisions contained in sub-section (2) of section 12, in the case of a charitable or religious trust 
running an educational institution or a medical institution or a hospital, the exemption under section 11 or 
section 12 shall not be denied in relation to any income, other than the income referred to in 
sub-section (2) of section 12, by reason only that such trust has provided educational or medical facilities 
to persons referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of 
sub-section (3).]
8
[(7) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total 
income of the previous year of the person in receipt thereof, any anonymous donation referred to in 
section 115BBC on which tax is payable in accordance with the provisions of that section.]
9
[(8) Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the 
total income of the previous year of the person in receipt thereof if the provisions of the first proviso to 
clause (15) of section 2 become applicable in the case of such person in the said previous year.]
10[(9) Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any income 
from the total income of the previous year of a person in receipt thereof, if—
(i) the statement referred to in clause (a) of the said sub-section in respect of such income is not 
furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the 
return of income for the previous year; or
(ii) the return of income for the previous year is not furnished by such person on or before the due 
date specified under sub-section (1) of section 139 for furnishing the return of income for the said 
previous year.]
1
[Explanation 1.—For the purposes of sections 11, 12, 12A and this section, “trust” includes any 
other legal obligation and for the purposes of this section “relative”, in relation to an individual, means—
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) any lineal ascendant or descendant of the individual;
(v) any lineal ascendant or descendant of the spouse of the individual;
(vi) spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or 
sub-clause (v);
(vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the 
individual.]
Explanation 2.—A trust or institution created or established for the benefit of Scheduled Castes, 
backward classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution 
created or established for the benefit of a religious community or caste within the meaning of clause (b) 
of sub-section (1).
Explanation 3.—For the purposes of this section, a person shall be deemed to have a substantial 
interest in a concern,—
(i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate 
of dividend whether with or without a further right to participate in profits) carrying not less than 
twenty per cent. of the voting power are, at any time during the previous year, owned beneficially by 
such person or partly by such person and partly by one or more of the other persons referred to in 
sub-section (3);
(ii) in the case of any other concern, if such person is entitled, or such person and one or more of 
the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the 
previous year, to not less than twenty per cent. of the profits of such concern.]

13A. Special provision relating to incomes of political parties.—Any income of a political party 
which is chargeable under the head 3
*** “Income from house property” or “Income from other sources” 
or 4
[Capital gains or] any income by way of voluntary contributions received by a political party from any 
person shall not be included in the total income of the previous year of such political party:
Provided that—
(a) such political party keeps and maintains such books of account and other documents as would 
enable the 1
[Assessing Officer] to properly deduce its income therefrom;
(b) in respect of each such voluntary contribution 2
[other than contribution by way of electoral 
bond] in excess of 3
[twenty thousand rupees], such political party keeps and maintains a record of 
such contribution and the name and address of the person who has made such contribution; 4
***
(c) the accounts of such political party are audited by an accountant as defined in 
the Explanation below sub-section (2) of section 288 2
[; and]
2
[(d) no donation exceeding two thousand rupees is received by such political party otherwise 
than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic 
clearing system through a bank account or through electoral bond.
Explanation.––For the purposes of this proviso, “electoral bond” means a bond referred to in the 
Explanation to sub-section (3) of section 31 of the Reserve Bank of India Act, 1934 (2 of 1934):]
5
[Provided further that if the treasurer of such political party or any other person authorised by that 
political party in this behalf fails to submit a report under sub-section (3) of section 29C of the 
Representation of the People Act, 1951 (43 of 1951) for a financial year, no exemption under this section 
shall be available for that political party for such financial year:]
2
[Provided also that such political party furnishes a return of income for the previous year in 
accordance with the provisions of sub-section (4B) of section 139 on or before the due date under that 
section.]
6
[Explanation.—For the purposes of this section, “political party” means a political party registered 
under section 29A of the Representation of the People Act, 1951 (43 of 1951).]

13B. Special provisions relating to voluntary contributions received by electoral trust.—Any 
voluntary contributions received by an electoral trust shall not be included in the total income of the 
previous year of such electoral trust, if—
(a) such electoral trust distributes to any political party, registered under section 29A of the 
Representation of the People Act, 1951 (43 of 1951), during the said previous year, ninety-five 
per cent. of the aggregate donations received by it during the said previous year along with the 
surplus, if any, brought forward from any earlier previous year; and
(b) such electoral trust functions in accordance with the rules made by the Central Government.

14. Heads of income.—Save as otherwise provided by this Act, all income shall, for the purposes of 
charge of income-tax and computation of total income, be classified under the following heads of 
income:—
A.—Salaries.
1
* * * * *
C.—Income from house property.
D.—Profits and gains of business or profession.
E.—Capital gains.
F.—Income from other sources.

14A. Expenditure incurred in relation to income not includible in total income.—3
[(1)] For the 
purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of 
expenditure incurred by the assessee in relation to income which does not form part of the total income 
under this Act.]
4
[(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such 
income which does not form part of the total income under this Act in accordance with such method as 
may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied 
with the correctness of the claim of the assessee in respect of such expenditure in relation to income 
which does not form part of the total income under this Act.
(3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims 
that no expenditure has been incurred by him in relation to income which does not form part of the total 
income under this Act:]
5
[Provided that nothing contained in this section shall empower the Assessing Officer either to 
reassess undersection 147 or pass an order enhancing the assessment or reducing a refund already made 
or otherwise increasing the liability of the assessee undersection 154, for any assessment year beginning 
on or before the 1st day of April, 2001.

15. Salaries.—The following income shall be chargeable to income-tax under the head “Salaries”—
(a) any salary due from an employer or a former employer to an assessee in the previous year, 
whether paid or not;
(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a 
former employer though not due or before it became due to him;
(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an 
employer or a former employer, if not charged to income-tax for any earlier previous year.
Explanation 1
[1.]—For the removal of doubts, it is hereby declared that where any salary paid in 
advance is included in the total income of any person for any previous year it shall not be included again 
in the total income of the person when the salary becomes due.
2
[Explanation 2.—Any salary, bonus, commission or remuneration, by whatever name called, due to, 
or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this 
section.]

1. The letter or words “B. —Interest on securities” omitted by Act 26 of 1988, s. 8 (w.e.f. 1-4-1989).
2. Ins. by Act 14 of 2001, s. 11 (w.e.f. 1-4-1962).
3. Section 14A renumbered as sub-section (1) thereof by Act 21 of 2006, s. 7 (w.e.f. 1-4-2007).
4. Ins. by s. 7, ibid. (w.e.f. 1-4-2007).
5. Ins. by Act 20 of 2002, s. 10 (w.e.f. 11-5-2001).
 

16. Deductions from salaries.—The income chargeable under the head “Salaries” shall be computed 
after making the following deductions, namely:—
3
[
4
* * * * *
5
[(ia) a deduction of 6
[fifty thousand] rupees or the amount of the salary, whichever is less;]
(ii) a deduction in respect of any allowance in the nature of an entertainment allowance 
specifically granted by an employer to the assessee who is in receipt of a salary from the Government, 
a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five 
thousand rupees, whichever is less;]
7
[(iii) a deduction of any sum paid by the assessee on account of a tax on employment within the 
meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.]

17. “Salary”, “perquisite” and “profits in lieu of salary” defined.—For the purposes of 
sections 15 and 16 and of this section,—
(1) “salary” includes—
(i) wages;
(ii) any annuity or pension;
(iii) any gratuity;
(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or 
wages;
(v) any advance of salary;
9
[(va) any payment received by an employee in respect of any period of leave not availed of 
by him;]
(vi) the annual accretion to the balance at the credit of an employee participating in a 
recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of 
the Fourth Schedule;
(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in 
sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a 
recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) 
thereof; and 1
[(viii) the contribution made by the 2
[Central Government or any other employer] in the 
previous year, to the account of an employee under a pension scheme referred to insection 
80CCD;]
(2) “perquisite” includes—
(i) the value of rent-free accommodation provided to the assessee by his employer;
(ii) the value of any concession in the matter of rent respecting any accommodation provided 
to the assessee by his employer;
3
[Explanation 1.—For the purposes of this sub-clause, concession in the matter of rent shall 
be deemed to have been provided if,—
4
[(a) in a case where an unfurnished accommodation is provided by any employer other 
than the Central Government or any State Government and—
(i) the accommodation is owned by the employer, the value of the accommodation 
determined at the specified rate in respect of the period during which the said 
accommodation was occupied by the assessee during the previous year, exceeds the rent 
recoverable from, or payable by, the assessee;
(ii) the accommodation is taken on lease or rent by the employer, the value of the 
accommodation being the actual amount of lease rental paid or payable by the employer 
or fifteen per cent. of salary, whichever is lower, in respect of the period during which the 
said accommodation was occupied by the assessee during the previous year, exceeds the 
rent recoverable from, or payable by, the assessee;]
(b) in a case where a furnished accommodation is provided by the Central Government or 
any State Government, the licence fee determined by the Central Government or any State 
Government in respect of the accommodation in accordance with the rules framed by such 
Government as increased by the value of furniture and fixtures in respect of the period during 
which the said accommodation was occupied by the assessee during the previous year, 
exceeds the aggregate of the rent re-coverable from, or payable by, the assessee and any 
charges paid or payable for the furniture and fixtures by the assessee;
(c) in a case where a furnished accommodation is provided by an employer other than the 
Central Government or any State Government and—
(i) the accommodation is owned by the employer, the value of the accommodation 
determined under sub-clause (i) of clause (a) as increased by the value of the furniture 
and fixtures in respect of the period during which the said accommodation was occupied 
by the assessee during the previous year, exceeds the rent recoverable from, or payable 
by, the assessee;
(ii) the accommodation is taken on lease or rent by the employer, the value of the 
accommodation determined under sub-clause (ii) of clause (a) as increased by the value 
of the furniture and fixtures in respect of the period during which the said 
accommodation was occupied by the assessee during the previous year, exceeds the rent 
recoverable from, or payable by, the assessee;
(d) in a case where the accommodation is provided by the employer in a hotel (except 
where the assessee is provided such accommodation for a period not exceeding in 
aggregatefifteen days on his transfer from one place to another), the value of the 
accommodation determined at the rate of twenty-four per cent. of salary paid or payable for 
the previous year or the actual charges paid or payable to such hotel, whichever is lower, for 
the period during which such accommodation is provided, exceeds the rent recoverable from, 
or payable by, the assessee.
Explanation 2.—For the purposes of this sub-clause, value of furniture and fixture shall be 
ten per cent. per annum of the cost of furniture (including television sets, radio sets, refrigerators, 
other household appliances, air-conditioning plant or equipment or other similar appliances or 
gadgets) or if such furniture is hired from a third party, the actual hire charges payable for the 
same as reduced by any charges paid or payable for the same by the assessee during the previous 
year.
Explanation 3.—For the purposes of this sub-clause, “salary” includes the pay, allowances, 
bonus or commission payable monthly or otherwise or any monetary payment, by whatever name 
called, from one or more employers, as the case may be, but does not include the following, 
namely:—
(a) dearness allowance or dearness pay unless it enters into the computation of 
superannuation or retirement benefits of the employee concerned;
(b) employer’s contribution to the provident fund account of the employee;
(c) allowances which are exempted from the payment of tax;
(d) value of the perquisites specified in this clause;
(e) any payment or expenditure specifically excluded under the proviso to this clause.]
1
[Explanation 4.—For the purposes of this sub-clause, “specified rate” shall be—
(i) fifteen per cent. of salary in cities having population exceeding twenty-five lakhs as 
per 2001 census;
(ii) ten per cent. of salary in cities having population exceeding ten lakhs but not 
exceeding twenty-five lakhs as per 2001 census; and
(iii) seven and one-half per cent. of salary in any other place;]
(iii) the value of any benefit or amenity granted or provided free of cost or at concessional 
rate in any of the following cases—
(a) by a company to an employee who is a director thereof;
(b) by a company to an employee being a person who has a substantial interest in the 
company;
(c) by any employer (including a company) to an employee to whom the provisions of 
paragraphs (a) and (b) of this sub-clause do not apply and whose income 2
[under the head 
“Salaries” (whether due from, or paid or allowed by, one or more employers), exclusive of 
the value of all benefits or amenities not provided for by way of monetary payment, exceeds 
3
[fifty thousand rupees:]] 1
[Explanation.—For the removal of doubts, it is hereby declared that the use of any vehicle 
provided by a company or an employer for journey by the assessee from his residence to his 
office or other place of work, or from such office or place to his residence, shall not be regarded 
as a benefit or amenity granted or provided to him free of cost or at concessional rate for the 
purposes of this sub-clause;]
2
* * * * *
(iv) any sum paid by the employer in respect of any obligation which, but for such payment, 
would have been payable by the assessee;
(v) any sum payable by the employer, whether directly or through a fund, other than a 
recognised provident fund or an approved superannuation fund 3
[or a Deposit-linked Insurance 
Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous 
Provisions Act, 1948 (46 of 1948), or, as the case may be, section 6C of the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)], to effect an assurance on 
the life of the assessee or to effect a contract for an 4
[annuity;]
5
[(vi) the value of any specified security or sweat equity shares allotted or transferred, directly 
or indirectly, by the employer, or former employer, free of cost or at concessional rate to the 
assessee.
Explanation.—For the purposes of this sub-clause,—
(a) “specified security” means the securities as defined in clause (h) of section 2 of the 
Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees’ stock option 
has been granted under any plan or scheme therefor, includes the securities offered under 
such plan or scheme;
(b) “sweat equity shares” means equity shares issued by a company to its employees or 
directors at a discount or for consideration other than cash for providing know-how or 
making available rights in the nature of intellectual property rights or value additions, by 
whatever name called;
(c) the value of any specified security or sweat equity shares shall be the fair market 
value of the specified security or sweat equity shares, as the case may be, on the date on 
which the option is exercised by the assessee as reduced by the amount actually paid by, or 
recovered from, the assessee in respect of such security or shares;
(d) “fair market value” means the value determined in accordance with the method as 
may be prescribed;
(e) “option” means a right but not an obligation granted to an employee to apply for the 
specified security or sweat equity shares at a predetermined price;
(vii) the amount of any contribution to an approved superannuation fund by the employer in 
respect of the assessee, to the extent it exceeds 6
[one lakh rupees]; and
(viii) the value of any other fringe benefit or amenity as may be prescribed:]
1
[Provided that nothing in this clause shall apply to,—
(i) the value of any medical treatment provided to an employee or any member of his 
family in any hospital maintained by the employer;
2
[(ii) any sum paid by the employer in respect of any expenditure actually incurred by 
the employee on his medical treatment or treatment of any member of his family—
(a) in any hospital maintained by the Government or any local authority or any 
other hospital approved by the Government for the purposes of medical treatment of 
its employees;
(b) in respect of the prescribed diseases or ailments, in any hospital approved by 
the 3
[Principal Chief Commissioner or Chief Commissioner] having regard to the 
prescribed guidelines:
Provided that, in a case falling in sub-clause (b), the employee shall attach with his 
return of income a certificate from the hospital specifying the disease or ailment for 
which medical treatment was required and the receipt for the amount paid to the 
hospital;]
(iii) any portion of the premium paid by an employer in relation to an employee, to 
effect or to keep in force an insurance on the health of such employee under any scheme 
approved by the Central Government 4
[or the Insurance Regulatory and Development 
Authority established under sub-section (1) of section 3 of the Insurance Regulatory and 
Development Authority Act, 1999 (41 of 1999),] for the purposes of clause (ib) of 
sub-section (1) of section 36;
(iv) any sum paid by the employer in respect of any premium paid by the employee to 
effect or to keep in force an insurance on his health or the health of any member of his 
family under any scheme approved by the Central Government 4
[or the Insurance 
Regulatory and Development Authority established under sub-section (1) of section 3 of 
the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),] for the 
purposes of section 80D;
5
* * * * *
(vi) any expenditure incurred by the employer on—
(1) medical treatment of the employee, or any member of the family of such 
employee, outside India;
(2) 6
[travel and stay] abroad of the employee or any member of the family of 
such employee for medical treatment;
(3) travel and stay abroad of one attendant who accompanies the patient in 
connection with such treatment,
1
[subject to the condition that—
(A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite 
only to the extent permitted by the Reserve Bank of India; and
(B) the expenditure on travel shall be excluded from perquisite only in the case of an 
employee whose gross total income, as computed before including therein the said expenditure, 
does not exceed two lakh rupees;]
(vii) any sum paid by the employer in respect of any expenditure actually incurred by 
the employee for any of the purposes specified in clause (vi) subject to the conditions 
specified in or under that clause:
2
[Provided further that for the assessment year beginning on the 1st day of April, 
2002, nothing contained in this clause shall apply to any employee whose income under 
the head “Salaries” (whether due from, or paid or allowed by, one or more employers) 
exclusive of the value of all perquisites not provided for by way of monetary payment, 
does not exceed one lakh rupees.]
Explanation.—For the purposes of clause (2),—
(i) “hospital” includes a dispensary or a clinic 3
[or a nursing home];
(ii) “family”, in relation to an individual, shall have the same meaning as in clause (5) of
section 10; and
(iii) “gross total income” shall have the same meaning as in clause (5) of section 80B;]
4
* * * * *
(3) “profits in lieu of salary” includes—
(i) the amount of any compensation due to or received by an assessee from his employer or 
former employer at or in connection with the termination of his employment or the modification 
of the terms and conditions relating thereto;
(ii) any payment [other than any payment referred to in clause (10]
5
[, clause (10A)] 
6
[, clause (10B)], clause (11), 7
[clause (12)
8
[ , clause (13)] or clause (13A)] of section 10], due to 
or received by an assessee from an employer or a former employer or from a provident or other 
fund 9
***, to the extent to which it does not consist of contributions by the assessee or 10[interest 
on such contributions or any sum received under a Keyman insurance policy including the sum 
allocated by way of bonus on such policy.
Explanation.—For the purposes of this sub-clause, the expression “Keyman insurance policy” 
shall have the meaning assigned to it in clause (10D) of section 10;]
11[(iii) any amount due to or received, whether in lump sum or otherwise, by any assessee 
from any person—
(A) before his joining any employment with that person; or
(B) after cessation of his employment with that person.]

18. [Interest on securities.]—Omitted by the Finance Act, 1988 (26 of 1988), s. 10 (w.e.f. 1-4-1989).

19. [Deductions from interest on securities.]—Omitted by s. 10, ibid. (w.e.f. 1-4-1989).

20. [Deductions from interest on securities in the case of a banking company.]—Omitted by s. 10, 
ibid. (w.e.f. 1-4-1989)

21. [Amounts not deductible from interest on securities.]—Omitted by s. 10, ibid. (w.e.f. 1-4-1989).

22. Income from house property.—The annual value of property consisting of any buildings or 
lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as 
he may occupy for the purposes of any business or profession carried on by him the profits of which are 
chargeable to income-tax, shall be chargeable to income-tax under the head “Income from house 
property”

23. Annual value how determined.—(1) For the purposes of section 22, the annual value of any 
property shall be deemed to be—
(a) the sum for which the property might reasonably be expected to let from year to year; or
(b) where the property or any part of the property is let and the actual rent received or receivable 
by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so 
received or receivable; or
(c) where the property or any part of the property is let and was vacant during the whole or any 
part of the previous year and owing to such vacancy the actual rent received or receivable by the 
owner in respect thereof is less than the sum referred to in clause (a), the amount so received or 
receivable:
Provided that the taxes levied by any local authority in respect of the property shall be deducted 
(irrespective of the previous year in which the liability to pay such taxes was incurred by the owner 
according to the method of accounting regularly employed by him) in determining the annual value of 
the property of that previous year in which such taxes are actually paid by him.
Explanation.—For the purposes of clause (b) or clause (c) of this sub-section, the amount of 
actual rent received or receivable by the owner shall not include, subject to such rules as may be 
made in this behalf, the amount of rent which the owner cannot realise.
(2) Where the property consists of a house or part of a house which—
(a) is in the occupation of the owner for the purposes of his own residence; or
(b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, 
business or profession carried on at any other place, he has to reside at that other place in a building 
not belonging to him,
the annual value of such house or part of the house shall be taken to be nil.
(3) The provisions of sub-section (2) shall not apply if—
(a) the house or part of the house is actually let during the whole or any part of the previous 
year; or
(b) any other benefit therefrom is derived by the owner.
(4) Where the property referred to in sub-section (2) consists of more than 3
[two houses]—
(a) the provisions of that sub-section shall apply only in respect of 4
[two] of such houses, which 
the assessee may, at his option, specify in this behalf;
(b) the annual value of the house or houses, 1
[other than the house or houses] in respect of which 
the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if 
such house or houses had been let.]
2
[(5) Where the property consisting of any building or land appurtenant thereto is held as 
stock-in-trade and the property or any part of the property is not let during the whole or any part of the 
previous year, the annual value of such property or part of the property, for the period up to 3
[two years]
from the end of the financial year in which the certificate of completion of construction of the property is 
obtained from the competent authority, shall be taken to be nil.]

24. Deductions from income from house property.—Income chargeable under the head “Income 
from house property” shall be computed after making the following deductions, namely:—
(a) a sum equal to thirty per cent. of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with 
borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23, the amount of 
deduction 5
[or, as the case may be, the aggregate of the amount of deduction] shall not exceed thirty 
thousand rupees:
Provided further that where the property referred to in the first proviso is acquired or constructed 
with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is 
completed 6
[within 7
[five years] from the end of the financial year in which capital was borrowed], 
the amount of deduction 5
[or, as the case may be, the aggregate of the amounts of deduction] under 
this clause shall not exceed 8
[two lakh rupees].
Explanation.—Where the property has been acquired or constructed with borrowed capital, the 
interest, if any, payable on such capital borrowed for the period prior to the previous year in which 
the property has been acquired or constructed, as reduced by any part thereof allowed as deduction 
under any other provision of this Act, shall be deducted under this clause in equal instalments for the 
said previous year and for each of the four immediately succeeding previous years:]
9
[Provided also that no deduction shall be made under the second proviso unless the assessee 
furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, 
specifying the amount of interest payable by the assessee for the purpose of such acquisition or 
construction of the property, or, conversion of the whole or any part of the capital borrowed which 
remains to be repaid as a new loan.
Explanation.—For the purposes of this proviso, the expression “new loan” means the whole or 
any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of 
repayment of such capital.]
5
[Provided also that the aggregate of the amounts of deduction under the first and second provisos 
shall not exceed two lakh rupees.]

25. Amounts not deductible from income from house property.— Notwithstanding anything 
contained in section 24, any 10*** interest chargeable under this Act which is payable outside India (not 
being interest on a loan issued for public subscription before the 1st day of April, 1938), on which tax has 
not been paid or deducted under Chapter XVII-B and in respect of which there is no person in India who 
may be treated as an agent under section 163 shall not be deducted in computing the income chargeable 
under the head “Income from house property”.

25A. Special provision for arrears of rent and unrealised rent received subsequently.—(1) The 
amount of arrears of rent received from a tenant or the unrealised rent realised subsequently from a 
tenant, as the case may be, by an assessee shall be deemed to be the income from house property in 
respect of the financial year in which such rent is received or realised, and shall be included in the total 
income of the assessee under the head “Income from house property”, whether the assessee is the owner 
of the property or not in that financial year.
(2) A sum equal to thirty per cent. of the arrears of rent or the unrealised rent referred to in 
sub-section (1) shall be allowed as deduction.

26. Property owned by co-owners.—Where property consisting of buildings or buildings and lands 
appurtenant thereto is owned by two or more persons and their respective shares are definite and 
ascertainable, such persons shall not in respect of such property be assessed as an association of persons, 
but the share of each such person in the income from the property as computed in accordance with 
sections 22 to 25 shall be included in his total income.
2
[Explanation.—For the purposes of this section, in applying the provisions of sub-section (2) 
of section 23 for computing the share of each such person as is referred to in this section, such share shall 
be computed, as if each such person is individually entitled to the relief provided in that sub-section.

27. “Owner of house property”, “annual charge”, etc., defined.—For the purposes of 
sections 22 to 26—
(i) an individual who transfers otherwise than for adequate consideration any house property to 
his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor 
child not being a married daughter, shall be deemed to be the owner of the house property so 
transferred;
(ii) the holder of an impartible estate shall be deemed to be the individual owner of all the 
properties comprised in the estate ;
3
[(iii) a member of a co-operative society, company or other association of persons to whom a 
building or part thereof is allotted or leased under a house building scheme of the society, company or 
association, as the case may be, shall be deemed to be the owner of that building or part thereof;
(iiia) a person who is allowed to take or retain possession of any building or part thereof in part 
performance of a contract of the nature referred to in section 53A of the Transfer of Property 
Act, 1882 (4 of 1882), shall be deemed to be the owner of that building or part thereof;
(iiib) a person who acquires any rights (excluding any rights by way of a lease from month to 
month or for a period not exceeding one year) in or with respect to any building or part thereof, by 
virtue of any such transaction as is referred to in clause (f) of section 269 UA, shall be deemed to be 
the owner of that building or part thereof;]
(vi) taxes levied by a local authority in respect of any property shall be deemed to include service 
taxes levied by the local authority in respect of the property.

28. Profits and gains of business or profession.—The following income shall be chargeable to 
income-tax under the head “Profits and gains of business or profession”,—
(i) the profits and gains of any business or profession which was carried on by the assessee at any 
time during the previous year;
(ii) any compensation or other payment due to or received by,—
(a) any person, by whatever name called, managing the whole or substantially the whole of 
the affairs of an Indian company, at or in connection with the termination of his management or 
the modification of the terms and conditions relating thereto;
(b) any person, by whatever name called, managing the whole or substantially the whole of 
the affairs in India of any other company, at or in connection with the termination of his office or 
the modification of the terms and conditions relating thereto;
(c) any person, by whatever name called, holding an agency in India for any part of the 
activities relating to the business of any other person, at or in connection with the termination of 
the agency or the modification of the terms and conditions relating thereto ;
1
[(d) any person, for or in connection with the vesting in the Government, or in any 
corporation owned or controlled by the Government, under any law for the time being in force, of 
the management of any property or business;]
2
[(e) any person, by whatever name called, at or in connection with the termination or the 
modification of the terms and conditions, of any contract relating to his business;]
(iii) income derived by a trade, professional or similar association from specific services 
performed for its members ;
3
[(iiia) profits on sale of a licence granted under the Imports (Control) Order, 1955, made under 
the Imports and Exports (Control) Act, 1947 (18 of 1947);]
4
[(iiib) cash assistance (by whatever name called) received or receivable by any person against 
exports under any scheme of the Government of India;]
5
[(iiic) any duty of customs or excise re-paid or re-payable as drawback to any person against 
exports under the Customs and Central Excise Duties Drawback Rules, 1971;]
6
[(iiid) any profit on the transfer of the Duty Entitlement Pass Book Scheme, being the Duty 
Remission Scheme under the export and import policy formulated and announced under section 5 of 
the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);]
7
[(iiie) any profit on the transfer of the Duty Free Replenishment Certificate, being the Duty 
Remission Scheme under the export and import policy formulated and announced under section 5 of 
the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);]
8
[(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from 
business or the exercise of a profession;]
9
[(v) any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or 
received by, a partner of a firm from such firm:
Provided that where any interest, salary, bonus, commission or remuneration, by whatever name 
called, or any part thereof has not been allowed to be deducted under clause (b) of section 40, the 
income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted;]
10[(va) any sum, whether received or receivable, in cash or kind, under an agreement for—
(a) not carrying out any activity in relation to any business 11[or profession]; or
(b) not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other 
business or commercial right of similar nature or information or technique likely to assist in the 
manufacture or processing of goods or provision for services:
Provided that sub-clause (a) shall not apply to—
(i) any sum, whether received or receivable, in cash or kind, on account of transfer of the 
right to manufacture, produce or process any article or thing or right to carry on any 
business 1
[or profession], which is chargeable under the head “Capital gains”;
(ii) any sum received as compensation, from the multi-lateral fund of the Montreal 
Protocol on Substances that Deplete the Ozone layer under the United Nations Environment 
Programme, in accordance with the terms of agreement entered into with the Government of 
India.
Explanation.—For the purposes of this clause,—
(i) “agreement” includes any arrangement or understanding or action in concert,—
(A) whether or not such arrangement, understanding or action is formal or in writing; or
(B) whether or not such arrangement, understanding or action is intended to be 
enforceable by legal proceedings;
(ii) “service” means service of any description which is made available to potential users and 
includes the provision of services in connection with business of any industrial or commercial 
nature such as accounting, banking, communication, conveying of news or information, 
advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, 
construction, transport, storage, processing, supply of electrical or other energy, boarding and 
lodging;]
2
[(vi) any sum received under a Keyman insurance policy including the sum allocated by way of 
bonus on such policy.
3
[(via) the fair market value of inventory as on the date on which it is converted into, or treated 
as, a capital asset determined in the prescribed manner;]
Explanation.—For the purposes of this clause, the expression “Keyman insurance policy” shall 
have the meaning assigned to it in clause (10D) of section 10;]
4
[(vii) any sum, whether received or receivable, in cash or kind, on account of any capital asset 
(other than land or goodwill or financial instrument) being demolished, destroyed, discarded or 
transferred, if the whole of the expenditure on such capital asset has been allowed as a deduction 
under section 35AD.]
5
* * * * *
Explanation 2.—Where speculative transactions carried on by an assessee are of such a nature as 
to constitute a business, the business (hereinafter referred to as “speculation business”) shall be 
deemed to be distinct and separate from any other business.

29. Income from profits and gains of business or profession, how computed.—The income 
referred to in section 28 shall be computed in accordance with the provisions contained in sections
30 to 1
[43D].

30. Rent, rates, taxes, repairs and insurance for buildings.—In respect of rent, rates, taxes, repairs 
and insurance for premises, used for the purposes of the business or profession, the following deductions 
shall be allowed—
(a) where the premises are occupied by the assessee—
(i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the 
cost of repairs to the premises, the amount paid on account of such repairs;
(ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the 
premises;
(b) any sums paid on account of land revenue, local rates or municipal taxes;
(c) the amount of any premium paid in respect of insurance against risk of damage or destruction 
of the premises.
2
[Explanation.—For the removal of doubts, it is hereby declared that the amount paid on account of 
the cost of repairs referred to in sub-clause (i), and the amount paid on account of current repairs referred 
to in sub-clause (ii), of clause (a), shall not include any expenditure in the nature of capital expenditure.]

31. Repairs and insurance of machinery, plant and furniture.—In respect of repairs and insurance 
of machinery, plant or furniture used for the purposes of the business or profession, the following 
deductions shall be allowed—
(i) the amount paid on account of current repairs thereto;
(ii) the amount of any premium paid in respect of insurance against risk of damage or destruction 
thereof.
3
[Explanation.—For the removal of doubts, it is hereby declared that the amount paid on account of 
current repairs shall not include any expenditure in the nature of capital expenditure.]

32. Depreciation.—(1) 4
[In respect of depreciation of—
(i) buildings, machinery, plant or furniture, being tangible assets;
(ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or 
commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 
1998,
owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the 
following deductions shall be allowed—
5
[(i) in the case of assets of an undertaking engaged in generation or generation and distribution 
of power, such percentage on the actual cost thereof to the assessee as may be prescribed;]
(ii) 1
[in the case of any block of assets, such percentage on the written down value thereof as may 
be prescribed:]
2
* * * * *
3
[Provided 4
*** that no deduction shall be allowed under this clause in respect of—
(a) any motor car manufactured outside India, where such motor car is acquired by the assessee 
after the 28th day of February, 1975 5
[but before the 1st day of April, 2001], unless it is used—
(i) in a business of running it on hire for tourists; or
(ii) outside India in his business or profession in another country; and
(b) any machinery or plant if the actual cost thereof is allowed as a deduction in one or more 
years under an agreement entered into by the Central Government undersection 42:]
6
[Provided further that where an asset referred to in clause (i) 7
[or clause (ii) or clause (iia)] 8
[or the 
first proviso to clause (iia)], as the case may be, is acquired by the assessee during the previous year and 
is put to use for the purposes of business or profession for a period of less than one hundred and eighty 
days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted 
to fifty per cent. of the amount calculated at the percentage prescribed for an asset under clause (i) 
7
[or clause (ii) or clause (iia)], as the case may be:]
8
[Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the 
case may be, is acquired by the assessee during the previous year and is put to use for the purposes of 
business for a period of less than one hundred and eighty days in that previous year, and the deduction 
under this sub-section in respect of such asset is restricted to fifty per cent. of the amount calculated at the 
percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the 
balance fifty per cent. of the amount calculated at the percentage prescribed for such asset under 
clause (iia) shall be allowed under this sub-section in the immediately succeeding previous year in respect 
of such asset:]
9
[Provided also that where an asset being commercial vehicle is acquired by the assessee on or after 
the 1st day of October, 1998 but before the 1st day of April, 1999 and is put to use before the 1st day of 
April, 1999 for the purposes of business or profession, the deduction in respect of such asset shall be 
allowed on such percentage on the written down value thereof as may be prescribed.
Explanation.—For the purposes of this proviso,—
(a) the expression “commercial vehicle” means “heavy goods vehicle”, “heavy passenger motor 
vehicle”, “light motor vehicle”, “medium goods vehicle” and “medium passenger motor vehicle” but 
does not include “maxi-cab”, “motor-cab”, “tractor” and “road-roller”;
(b) the expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor 
vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, 
“tractor” and “road roller” shall have the meanings respectively as assigned to them in section 2 of 
the Motor Vehicles Act, 1988 (59 of 1988):]
1
[Provided also that, in respect of the previous year relevant to the assessment year commencing 
on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, 
in the case of a company, be restricted to seventy-five per cent. of the amount calculated at the 
percentage, on the written down value of such assets, prescribed under this Act immediately before 
the commencement of the Taxation Laws (Amendment) Act, 1991 (2 of 1991):]
2
[Provided also that the aggregate deduction, in respect of depreciation of buildings, machinery, 
plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, 
franchises or any other business or commercial rights of similar nature, being intangible assets 
allowable to the predecessor and the successor in the case of succession referred to in 3
[clause (xiii), 
clause (xiiib) and clause (xiv)] of section 47 or section 170 or to the amalgamating company and the 
amalgamated company in the case of amalgamation, or to the demerged company and the resulting 
company in the case of demerger, as the case may be, shall not exceed in any previous year the 
deduction calculated at the prescribed rates as if the succession or the amalgamation or the demerger, 
as the case may be, had not taken place, and such deduction shall be apportioned between the 
predecessor and the successor, or the amalgamating company and the amalgamated company, or the 
demerged company and the resulting company, as the case may be, in the ratio of the number of days 
for which the assets were used by them.]
4
[Explanation 1.—Where the business or profession of the assessee is carried on in a building not 
owned by him but in respect of which the assessee holds a lease or other right of occupancy and any 
capital expenditure is incurred by the assessee for the purposes of the business or profession on the 
construction of any structure or doing of any work in or in relation to, and by way of renovation or 
extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the 
said structure or work is a building owned by the assessee.
Explanation 2.—5
[For the purposes of this sub-section] “written down value of the block of 
assets” shall have the same meaning as in clause (c) of sub-section (6) of section 43.]
6
[Explanation 3.—For the purposes of this sub-section, 7
[the expression “assets”] shall mean—
(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.
Explanation 4.—For the purposes of this sub-section, the expression “know-how” means any 
industrial information or technique likely to assist in the manufacture or processing of goods or in 
the working of a mine, oil-well or other sources of mineral deposits (including searching for 
discovery or testing of deposits for the winning of access thereto).]
1
[Explanation 5.—For the removal of doubts, it is hereby declared that the provisions of this 
sub-section shall apply whether or not the assessee has claimed the deduction in respect of 
depreciation in computing his total income;]
2
[(iia) in the case of any new machinery or plant (other than ships and aircraft), which has been 
acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of 
manufacture or production of any article or thing 3
[
4
[or in the business of generation, transmission or 
distribution] of power], a further sum equal to twenty per cent. of the actual cost of such machinery or 
plant shall be allowed as deduction under clause (ii):
5
[Provided that where an assessee, sets up an undertaking or enterprise for manufacture or 
production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified 
by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in 
the State of Telangana or in the State of West Bengal, and acquires and installs any new machinery or 
plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the 
period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the 
said backward area, then, the provisions of clause (iia) shall have effect, as if for the words “twenty 
per cent.”, the words “thirty-five per cent.” had been substituted:]
6
[Provided further] that no deduction shall be allowed in respect of—
(A) any machinery or plant which, before its installation by the assessee, was used either 
within or outside India by any other person; or
(B) any machinery or plant installed in any office premises or any residential accommodation, 
including accommodation in the nature of a guest-house; or
(C) any office appliances or road transport vehicles; or
(D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the 
head “Profits and gains of business or profession” of any one previous year;]
7
[(iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is 
claimed and allowed under clause (i) and which is sold, discarded, demolished or destroyed in the 
previous year (other than the previous year in which it is first brought into use), the amount by whichthe moneys payable in respect of such building, machinery, plant or furniture, together with the 
amount of scrap value, if any, fall short of the written down value thereof:
Provided that such deficiency is actually written off in the books of the assessee.
Explanation.—For the purposes of this clause,—
(1) “moneys payable” in respect of any building, machinery, plant or furniture includes—
(a) any insurance, salvage or compensation moneys payable in respect thereof;
(b) where the building, machinery, plant or furniture is sold, the price for which it is sold,
so, however, that where the actual cost of a motor car is, in accordance with the proviso to 
clause (1) of section 43, taken to be twenty-five thousand rupees, the moneys payable in respect 
of such motor car shall be taken to be a sum which bears to the amount for which the motor car is 
sold or, as the case may be, the amount of any insurance, salvage or compensation moneys 
payable in respect thereof (including the amount of scrap value, if any) the same proportion as the 
amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as 
it would have been computed before applying the said proviso;
(2) “sold” includes a transfer by way of exchange or a compulsory acquisition under any law 
for the time being in force but does not include a transfer, in a scheme of amalgamation, of any 
asset by the amalgamating company to the amalgamated company where the amalgamated 
company is 1
[an Indian company or in a scheme of amalgamation of a banking company, as 
referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a 
banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and 
brought into force by the Central Government under sub-section (7) of section 45 of that Act of 
any asset by the banking company to the banking institution].]
2
* * * * *
3
* * * * *
4
[(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under 
sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous 
year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the 
provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the 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 previous year and deemed to be part of that allowance, or if 
there is no such allowance for that previous year, be deemed to be the allowance for that previous year, 
and so on for the succeeding previous years.]

32A. Investment allowance.—(1) In respect of a ship or an aircraft or machinery or plant specified 
in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business 
carried on by him, there shall, in accordance with and subject to the provisions of this section, be allowed 
a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or 
plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately 
succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance 
equal to twenty-five per cent.. of the actual cost of the ship, aircraft, machinery or plant to the assessee:
2
[Provided that in respect of a ship or an aircraft or machinery or plant specified in sub-section (8B), 
this sub-section shall have effect as if for the words “twenty-five per cent.”, the words “twenty per cent.” 
had been substituted:
Provided further that] no deduction shall be allowed under this section in respect of—
(a) any machinery or plant installed in any office premises or any residential accommodation, 
including any accommodation in the nature of a guest-house ;
(b) anyoffice appliances or road transport vehicles;
(c) any ship, machinery or plant in respect of which the deduction by way of development rebate 
is allowable under section 33; and
(d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any one previous year.
2
[Explanation.—For the purposes of this sub-section, “actual cost” means the actual cost of the 
ship, aircraft, machinery or plant to the assessee as reduced by that part of such cost which has been 
met out of the amount released to the assessee under sub-section (6) of section 32AB.]
(2) The ship or aircraft or machinery or plant referred to in sub-section (1) shall be the following, 
namely:—
(a) a new ship or new aircraft acquired after the 31st day of March, 1976, by an assessee engaged 
in the business of operation of ships or aircraft ;
(b) any new machinery or plant installed after the 31st day of March, 1976,—
(i) for the purposes of business of generation or distribution of electricity or any other form 
of power; or
3
[(ii) in a small-scale industrial undertaking for the purposes of business of manufacture or 
production of any article or thing ; or
(iii) in any other industrial undertaking for the purposes of business of construction, 
manufacture or productionof any article or thing, not being an article or thing specified in the list 
in the Eleventh Schedule:]
2
[Provided that nothing contained in clauses (a) and (b) shall apply in relation to,—
(i) a new ship or new aircraft acquired, or
(ii) any new machinery or plant installed,
after the 31st day of March, 1987 but before the 1st day of April, 1988, unless such ship or 
aircraft is acquired or such machinery or plant is installed in the circumstances specified in 
clause (a) of sub-section (8B) and the assessee furnishes evidence to the satisfaction of the 
Assessing Officer as specified in that clause;]
1
[(c) any new machinery or plant installed after the 31st day of March, 1983, but before the 2
[1st 
day of April, 1987,] for the purposes of business of repairs to ocean-going vessels or other powered 
craft if the business is carried on by an Indian company and the business so carried on is for the time 
being approved for the purposes of this clause by the Central Government.]
Explanation.—For the purposes of 3
[this sub-section and sub-sections (2B), (2C) and (4)],—
4
[(1) (a) “new ship” or “new aircraft” includes a ship or aircraft which before the date of 
acquisition by the assessee was used by any other person, if it was not at any time previous to the 
date of such acquisition owned by any person resident in India;
(b) “new machinery or plant” includes machinery or plant which before its installation by the 
assessee was used outside India by any other person, if the following conditions are fulfilled, 
namely:—
(i) such machinery or plant was not, at any time previous to the date of such installation
by the assessee, used in India;
(ii) such machinery or plant is imported into India from any country outside India; and
(iii) no deduction on account of depreciation in respect of such machinery or plant has 
been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 of 
1922), or this Act in computing the total income of any person for any period prior to the date 
of the installation of the machinery or plant by the assessee,]
(2) an industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the 
aggregate value of the machinery and plant (other than tools, jigs, dies and moulds) installed, as 
on the last day of the previous year, for the purposes of 5
[the business of the undertaking does not 
exceed,—
6
[(i) in a case where the previous year ends before the 1st day of August, 1980, ten lakh 
rupees;
(ii) in a case where the previous year ends after the 31st day of July, 1980, but before the
18th day of March, 1985, twenty lakh rupees; and
(iii) in a case where the previous year ends after the 17th day of March, 1985, thirty-five 
lakh rupees,]]
and for this purpose the value of any machinery or plant shall be,—
(a) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the 
assessee; and 
(b) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in 
the case of the owner of such machinery or plant.
1
[(2A) The deduction under sub-section (1) shall not be denied in respect of any machinery or 
plant installed and used mainly for the purposes of business of construction, manufacture or 
production of any article or thing, not being an article or thing specified in the list in the Eleventh 
Schedule, by reason only that such machinery or plant is also used for the purposes of business of 
construction, manufacture or production of any article or thing specified in the said list.
(2B) Where any new machinery or plant is installed after the 30th day of June, 1977, 2
[but 
before the 1st day of April, 1987], for the purposes of business of manufacture or production of 
any article or thing and such article or thing—
(a) is manufactured or produced by using any technology (including any process) or other 
know how developed in, or
(b) is an article or thing invented in,
a laboratory owned or financed by the Government, or a laboratory owned by a public sector 
company or a University or by an institution recognised in this behalf by the prescribed 
authority,the provisions of sub-section (1) shall have effect in relation to such machinery or plant 
as if for the words “twenty-five per cent..”, the words “thirty-five per cent..” had been substituted, 
if the following conditions are fulfilled, namely:—
(i) the right to use such technology (including any process) or other know-how or to 
manufacture or produce such article or thing has been acquired from the owner of such laboratory 
or any person deriving title from such owner ;
(ii) the assessee furnishes, along with his return of income for the assessment year for which 
the deduction is claimed, a certificate from the prescribed authority to the effect that such article 
or thing is manufactured or produced by using such technology (including any process) or other 
knowhow developed in such laboratory or is an article or thing invented in such laboratory; and
(iii) the machinery or plant is not used for the purpose of business of manufacture or 
production of any article or thing specified in the list in the Eleventh Schedule.
Explanation.—For the purposes of this sub-section,—
(a) “laboratory financed by the Government” means a laboratory owned by any body 
including a society registered under the Societies Registration Act, 1860 (21 of 1860) and 
financed wholly or mainly by the Government;
3
* * * * *
(c) “University” means a University established or incorporated by or under a Central, 
State or Provincial Act and includes an institution declared under section 3 of the University 
Grants Commission Act, 1956 (3 of 1956) to be a University for the purposes of that Act.]
4
[(2C) Where any new machinery or plant, being machinery or plant which would assist in 
control of pollution or protection of environment and which has been notified in this behalf by the 
Central Government in the Official Gazette, is installed after the 31st day of May, 1983 but 
before the 1st day of April, 1987, in any industrial undertaking referred to in sub-clause (i) or 
sub-clause (ii) or sub-clause (iii) of clause (b) of sub-section (2), the provisions of sub-section (1) 
shall have effect in relation to such machinery or plant as if for the words “twenty-five per cent.”, 
the words “thirty-five per cent..” had been substituted.]
(3) Where the total income of the assessee assessable for the assessment year relevant to the 
previous year in which the ship or aircraft was acquired or the machinery or plant was installed, 
or, as the case may be, the immediately succeeding previous year (the total income for this 
purpose being computed after deduction of the allowances under section 33 and section 33A, but 
without making any deduction under sub-section (1) of this section or any deduction under 
Chapter VI-A) is nil or is less than the full amount of the investment allowance,—
(i) the sum to be allowed by way of investment allowance for that assessment year under 
sub-section (1) shall be only such amount as is sufficient to reduce the said total income 
to nil; and
(ii) the amount of the investment allowance, to the extent to which it has not been 
allowed as aforesaid, shall be carried forward to the following assessment year, and the 
investment allowance to be allowed for the following assessment year shall be such amount 
as is sufficient to reduce the total income of the assessee assessable for that assessment year, 
computed in the manner aforesaid, to nil, and the balance of the investment allowance, if any, 
still outstanding shall be carried forward to the following assessment year and so on, so, 
however, that no portion of the investment allowance shall be carried forward for more than 
eight assessment years immediately succeeding the assessment year relevant to the previous 
year in which the ship or aircraft was acquired or the machinery or plant was installed or, as 
the case may be, the immediately succeeding previous year.
Explanation.—Where for any assessment year, investment allowance is to be allowed in 
accordance with the provisions of this sub-section in respect of any ship or aircraft acquired or 
any machinery or plant installed in more than one previous year, and the total income of the 
assessee assessable for that assessment year (the total income for this purpose being computed 
after deduction of the allowances under section 33 and section 33A, but without making any
deduction under sub-section (1) of this section or any deduction under Chapter VI-A) is less than 
the aggregate of the amounts due to be allowed in respect of the assets aforesaid for that 
assessment year, the following procedure shall be followed, namely:—
(a) the allowance under clause (ii) shall be made before any allowance under clause (i) is 
made; and
(b) where an allowance has to be made under clause (ii) in respect of amounts carried 
forward from more than one assessment year, the amount carried forward from an earlier 
assessment year shall be allowed before any amount carried forward from a later assessment 
year.
(4) The deduction under sub-section (1) shall be allowed only if the following conditions are 
fulfilled, namely:—
(i) the particulars prescribed in this behalf have been furnished by the assessee in respect 
of the ship or aircraft or machinery or plant;
(ii) an amount equal to seventy-five per cent. of the investment allowance to be actually 
allowed is debited to the profit and loss account of 1
[any previous year in respect of which the 
deduction is to be allowed under sub-section (3) or any earlier previous year (being a 
previous year not earlier than the year in which the ship or aircraft was acquired or the 
machinery or plant was installed or the ship, aircraft, machinery or plant was first put to use)] 
and credited to a reserve account (to be called the “Investment Allowance Reserve Account”) 
to be utilised—
(a) for the purposes of acquiring, before the expiry of a period of ten years next 
following the previous year in which the ship or aircraft was acquired or the machinery or 
plant was installed, a new ship or a new aircraft or new machinery or plant [other than 
machinery or plant of the nature referred to in clauses (a), (b) and (d) of 1
[the second 
proviso] to sub-section (1)] for the purposes of the business of the undertaking; and
(b) until the acquisition of a new ship or a new aircraft or new machinery or plant as 
aforesaid, for the purposes of the business of the undertaking other than for distribution 
by way of dividends or profits or for remittance outside India as profits or for the creation 
of any asset outside India:
Provided that this clause shall have effect in respect of a ship as if for the word 
“seventy-five”, the word “fifty” had been substituted.
Explanation.—Where the amount debited to the profit and loss account and credited to the 
Investment Allowance Reserve Account under this sub-section is not less than the amount 
required to be so credited on the basis of the amount of deduction in respect of investment 
allowance claimed in the return made by the assessee under section 139, but a higher deduction in 
respect of the investment allowance is admissible on the basis of the total income as proposed to 
be computed by the 2
[Assessing Officer] under section 143, the 2
[Assessing Officer] shall, by 
notice in writing in this behalf, allow the assessee an opportunity to credit within the time 
specified in the notice or within such further time as the 2
[Assessing Officer] may allow, a further 
amount to the Investment Allowance Reserve Account out of the profits and gains of the previous 
year in which such notice is served on the assessee or of the immediately preceding previous 
year, if the accounts for that year have not been made up; and, if the assessee credits any further 
amount to such account within the time aforesaid, the amount so credited shall be deemed to have 
been credited to the Investment Allowance Reserve Account of the previous year in which the 
deduction is admissible and such amount shall not be taken into account in determining the 
adequacy of the reserve required to be created by the assessee in respect of the previous year in 
which such further credit is made:
Provided that such opportunity shall not be allowed by the 2
[Assessing Officer] in a case 
where the difference in the total income as proposed to be computed by him and the total income 
as returned by the assessee arises out of the application of the proviso to sub-section (1) of 
section 145 or sub-section (2) of that section or the omission by the assessee to disclose his 
income fully and truly.
(5) Any allowance made under this section in respect of any ship, aircraft, machinery or 
plant shall be deemed to have been wrongly made for the purposes of this Act—
(a) if the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee 
to any person at any time before the expiry of eight years from the end of the previous year in 
which it was acquired or installed; or
(b) if at any time before the expiry of ten years from the end of the previous year in 
which the ship or aircraft was acquired or the machinery or plant was installed, the assessee 
does not utilise the amount credited to the reserve account under sub-section (4) for the 
purposes of acquiring a new ship or a new aircraft or new machinery or plant [other than 
machinery or plant of the nature referred to in clauses (a), (b) and (d) of 1
[the second proviso] 
to sub-section (1)] for the purposes of the business of the undertaking; or
(c) if at any time before the expiry of the ten years aforesaid, the assesseeutilises the 
amount credited to the reserve account under sub-section (4) for distribution by way of 
dividends or profits or for remittance outside India as profits or for the creation of any assets 
outside India or for any other purpose which is not a purpose of the business of the 
undertaking,
and the provisions of sub-section (4A) of section 155 shall apply accordingly:
Provided that nothing in clause (a) shall apply—
(i) where the ship, aircraft, machinery or plant is sold or otherwise transferred by the assessee 
to the Government, a local authority, a corporation established by a Central, State or Provincial 
Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); 
or
(ii) where the sale or transfer of the ship, aircraft, machinery or plant is made in connection 
with the amalgamation or succession, referred to in sub-section (6) or sub-section (7).
(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise 
transfers to the amalgamated company any ship, aircraft, machinery or plant, in respect of which 
investment allowance has been allowed to the amalgamating company under sub-section (1),—
(a) the amalgamated company shall continue to fulfil the conditions mentioned in 
sub-section (4) in respect of the reserve created by the amalgamating company and in respect 
of the period within which such ship, aircraft, machinery or plant shall not be sold or 
otherwise transferred and in default of any of these conditions, the provisions of 
sub-section (4A) of section 155 shall apply to the amalgamated company as they would have 
applied to the amalgamating company had it committed the default; and
(b) the balance of investment allowance, if any, still outstanding to the amalgamating 
company in respect of such ship, aircraft, machinery or plant, shall be allowed to the 
amalgamated company in accordance with the provisions of sub-section (3), so, however, that 
the total period for which the balance of investment allowance shall be carried forward in the 
assessments of the amalgamating company and the amalgamated company shall not exceed 
the period of eight years specified in sub-section (3) and the amalgamated company shall be 
treated as the assessee in respect of such ship, aircraft, machinery or plant for the purposes of 
this section.
(7) Where a firm is succeeded to by a company in the business carried on by it as a result of 
which the firm sells or otherwise transfers to the company any ship, aircraft, machinery or plant, 
the provisions of clauses (a) and (b) of sub-section (6) shall, so far as may be, apply to the firm 
and the company.
Explanation.—The provisions of this sub-section shall apply only where—
(i) all the property of the firm relating to the business immediately before the succession 
becomes the property of the company;
(ii) all the liabilities of the firm relating to the business immediately before the succession 
become the liabilities of the company; and
(iii) all the shareholders of the company were partners of the firm immediately before the 
succession.
(8) The Central Government, if it considers necessary or expedient so to do, may, by 
notification in the Official Gazette, direct that the deduction allowable under this section shall not 
be allowed in respect of any ship or aircraft acquired or any machinery or plant installed after 
such date
1
*** as may be specified therein.
2
[(8A) The Central Government, if it considers necessary or expedient so to do, may, by 
notification in the Official Gazette, omit any article or thing from the list of articles or things 
specified in the Eleventh Schedule.]
3
[(8B) Notwithstanding anything contained in sub-section (8) or the notification of the 
Government of India in the Ministry of Finance (Department of Revenue) No. GSR 870(E), dated 
the 12th June, 1986, issued thereunder, the provisions of this section shall apply in respect of,—
(a) (i) a new ship or new aircraft acquired after the 31st day of March, 1987 but before 
the 1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the 
Assessing Officer that he had, before the 12th day of June, 1986, entered into a contract for 
the purchase of such ship or aircraft with the builder or manu-facturer or owner thereof, as the 
case may be;
(ii) any new machinery or plant installed after the 31st day of March, 1987 but before the 
1st day of April, 1988, if the assessee furnishes evidence to the satisfaction of the Assessing 
Officer that before the 12th day of June, 1986, he had purchased such machinery or plant or 
had entered into a contract for the purchase of such machinery or plant with the manufacturer 
or owner of, or a dealer in, such machinery or plant, or had, where such machinery or plant 
has been manufactured in an undertaking owned by the assessee, taken steps for the 
manufacture of such machinery or plant:
Provided that nothing contained in sub-section (1) shall entitle the assessee to claim 
deduction in respect of a ship or aircraft or machinery or plant referred to in this clause in any 
previous year except the previous year relevant to the assessment year commencing on the 1st 
day of April, 1989;
(b) a new ship or new aircraft acquired or any new machinery or plant installed after the 
31st day of March, 1988, but before such date as the Central Government, if it considers 
necessary or expedient so to do, may, by notification in the Official Gazette, specify in this 
behalf.
(8C) Subject to the provisions of clause (ii) of sub-section (3), where a deduction has been 
allowed to an assessee under sub-section (1) in any assessment year, no deduction shall be 
allowed to the assessee under section 32AB in the said assessment year (hereinafter referred to as 
the initial assessment year) and a block of further period of four years beginning with the 
assessment year immediately succeeding the initial assessment year.]

32AB. Investment deposit account.—(1) Subject to the other provisions of this section, where an 
assessee, whose total income includes income chargeable to tax under the head “Profits and gains of 
business or profession”, has, out of such income,—
(a) deposited any amount in an account (hereafter in this section referred to as deposit account) 
maintained by him with the Development Bank before the expiry of six months from the end of the 
previous year or before furnishing the return of his income, whichever is earlier; or
(b) utilised any amount during the previous year for the purchase of any new ship, new aircraft, 
new machinery or plant, without depositing any amount in the deposit account under clause (a),
in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the 
scheme) to be framed by the Central Government, or if the assessee is carrying on the business of 
growing and manufacturing tea in India, to be approved in this behalf by the Tea Board, the assessee shall 
be allowed a 2
[deduction (such deduction being allowed before the loss, if any, brought forward from 
earlier years is set off under section 72) of]—
(i) a sum equal to the amount, or the aggregate of the amounts, so deposited and any amount so 
utilised; or
(ii) a sum equal to twenty per cent. of the profits of 3
*** business or profession as computed in 
the accounts of the assessee audited in accordance with sub-section (5),
whichever is less:
4
[Provided that where such assessee is a firm, or any association of persons or any body of 
individuals, the deduction under this section shall not be allowed in the computation of the income of any 
partner, or as the case may be, any member of such firm, association of persons or body of individuals:]
5
[Provided further that no such deduction shall be allowed in relation to the assessment year 
commencing on the 1st day of April, 1991, or any subsequent assessment year.]
(2) For the purposes of this section,—
6
* * * * *
7
[(ii) “new ship” or “new aircraft” includes a ship or aircraft which before the date of acquisition 
by the assessee was used by any other person, if it was not at any time previous to the date of such 
acquisition owned by any person resident in India;
(iii) “new machinery or plant” includes machinery or plant which before its installation by the 
assessee was used outside India by any other person, if the following conditions are fulfilled, 
namely :—
(a) such machinery or plant was not, at any time previous to the date of such installation by 
the assessee, used in India;
(b) such machinery or plant is imported into India from any country outside India; and
(c) no deduction on account of depreciation in respect of such machinery or plant has been 
allowed or is allowable under this Act in computing the total income of any person for any period 
prior to the date of the installation of the machinery or plant by the assessee;
(iv) “Tea Board” means the Tea Board established under section 4 of the Tea 
Act, 1953 (29 of 1953).]
(3) 
1
[The profits of business or profession of an assessee for the purposes of sub-section (1) shall] be 
an amount arrived at after deducting an amount equal to the depreciation computed in accordance with 
the provisions of sub-section (1) of section 32 from the amounts of profits computed in accordance with 
the requirements of Parts II and III of the 2
[Schedule VI] to the Companies Act, 1956 (1 of 1956), 
3
[as increased by the aggregate of—
(i) the amount of depreciation;
(ii) the amount of income-tax paid or payable, and provision therefor;
(iii) the amount of surtax paid or payable under the Companies (Profits) Surtax Act, 1964 (7 of 
1964);
(iv) the amounts carried to any reserves, by whatever name called;
(v) the amount or amounts set aside to provisions made for meeting liabilities, other than 
ascertained liabilities;
(vi) the amount by way of provision for losses of subsidiary companies; and
(vii) the amount or amounts of dividends paid or proposed,
if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from 
reserves or provisions, if such amounts are credited to the profit and loss account 4
***.]
5
* * * * *
(4) No deduction under sub-section (1) shall be allowed in respect of any amount utilised for the 
purchase of—
(a) any machinery or plant to be installed in any office premises or residential accommodation, 
including any accommodation in the nature of a guest-house;
(b) any office appliances (not being computers);
(c) any road transport vehicles;
(d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any one previous year;
6
[(e) any new machinery or plant to be installed in an industrial undertaking, other than a smallscale industrial undertaking, as defined in section 80HHA, for the purposes of business of 
construction, manufacture or production of any article or thing specified in the list in the Eleventh 
Schedule.]
(5) The deduction under sub-section (1) shall not be admissible unless the accounts of the business or 
profession of the assessee for the previous year relevant to the assessment year for which the deduction is 
claimed have been audited by an accountant as defined in the Explanation below sub-section (2) 
of section 288 and the assessee furnishes, along with his return of income, the report of such audit in the 
prescribed form duly signed and verified by such accountant:
Provided that in a case where the assessee is required by or under any other law to get his accounts 
audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the 
accounts of such business or profession audited under such law and furnishes the report of the audit as 
required under such other law and a further report in the form prescribed under this sub-section.
1
[(5A) Any amount standing to the credit of the assessee in the deposit account shall not be allowed to 
be withdrawn before the expiry of a period of five years from the date of deposit except for the purposes 
specified in the 2
[scheme or] in the circumstances specified below :—
(a) closure of business;
(b) death of an assessee;
(c) partition of a Hindu undivided family;
(d) dissolution of a firm;
(e) liquidation of a company.
3
[Explanation.—For the removal of doubts, it is hereby declared that nothing contained in this subsection shall affect the operation of the provisions of sub-section (5AA) or sub-section (6) in relation to 
any withdrawals made from the deposit account either before or after the expiry of a period of five years 
from the date of deposit.]
3
[(5AA) Where any amount, standing to the credit of the assessee in the deposit account, is withdrawn 
during any previous year by the assessee in the circumstance specified in clause (a) or clause (d) of 
sub-section (5A), the whole of such amount shall be deemed to be the profits and gains of business or 
profession of that previous year and shall accordingly be chargeable to income-tax as the income of that 
previous year, as if the business had not closed or, as the case may be, the firm had not been dissolved.]
(5B) Where any amount standing to the credit of the assessee in the deposit account is utilised by the 
assessee for the purposes of any expenditure in connection with the 4
*** business or profession in 
accordance with the scheme, such expenditure shall not be allowed in computing the income chargeable 
under the head “Profits and gains of business or profession”.]
(6) Where any amount, standing to the credit of the assessee in the deposit account, released during 
any previous year by the Development Bank for being utilised by the assessee for the purposes specified 
in the scheme or at the closure of the account 5
[in circumstances other than the circumstances specified in 
clauses (b), (c) and (e) of sub-section (5A)], 6
[is not utilised in accordance with and within the time 
specified in, the scheme], either wholly or in part, 7
*** the whole of such amount or, as the case may be, 
part thereof which is not so utilised shall be deemed to be the profits and gains of business or profession 
of that previous year and shall accordingly be chargeable to income-tax as the income of that previous 
year.
(7) Where any asset acquired in accordance with the scheme is sold or otherwise transferred in any 
previous year by the assessee to any person at any time before the expiry of eight years from the end of 
the previous year in which it was acquired, such part of the cost of such asset as is relatable to the 
deductions allowed under sub-section (1) shall be deemed to be the profits and gains of business or 
profession of the previous year in which the asset is sold or otherwise transferred and shall accordingly be 
chargeable to income-tax as the income of that previous year:
Provided that nothing in this sub-section shall apply—
(i) where the asset is sold or otherwise transferred by the assessee to Government, a local 
authority, a corporation established by or under a Central, State or Provincial Act or a Government 
company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(ii) where the sale or transfer of the asset is made in connection with the succession of a firm by a 
company in the business or profession carried on by the firm as a result of which the firm sells or 
otherwise transfers to the company any asset and the scheme continues to apply to the company in the 
manner applicable to the firm.
Explanation.—The provisions of clause (ii) of the proviso shall apply only where—
(i) all the properties of the firm relating to the business or profession immediately before the 
succession become the properties of the company;
(ii) all the liabilities of the firm relating to the business or profession immediately before the 
succession become the liabilities of the company; and
(iii) all the shareholders of the company were partners of the firm immediately before the 
succession.
(8) The Central Government may, if it considers it necessary or expedient so to do, by notification in 
the Official Gazette, omit any article or thing from the list of articles or things specified in the Eleventh 
Schedule.
(9) The Central Government may, after making such inquiry as it may think fit, direct, by notification 
in the Official Gazette, that the provisions of this section shall not apply to any class of assessees, with 
effect from such date as it may specify in the notification.
1
[(10) Where a deduction has been allowed to an assessee under this section in any assessment year, 
no deduction shall be allowed to the assessee under sub-section (1) of section 32A in the said assessment 
year (hereinafter referred to as the initial assessment year) and a block of further period of four years 
beginning with the assessment year immediately succeeding the initial assessment year.]
Explanation.—In this section,—
(a) “computers” does not include calculating machines and calculating devices;
(b) “Development Bank” means—
(i) in the case of an assessee carrying on business of growing and manufacturing tea in 
India, the National Bank for Agriculture and Rural Development established under section 3 of 
the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);
(ii) in the case of other assessees, the Industrial Development Bank of India established 
under the Industrial Development Bank of India Act, 1964 (18 of 1964) and includes such bank 
or institution as may be specified in the scheme in this behalf.

32AC. Investment in new plant or machinery.—(1) Where an assessee, being a company, 
engaged in the business of manufacture or production of any article or thing, acquires and installs new 
asset after the 31st day of March, 2013 but before the 1st day of April, 2015 and the aggregate amount of 
actual cost of such new assets exceeds one hundred crore rupees, then, there shall be allowed a 
deduction,—
(a) for the assessment year commencing on the 1st day of April, 2014, of a sum equal to fifteen 
per cent. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but 
before the 1st day of April, 2014, if the aggregate amount of actual cost of such new assets exceeds 
one hundred crore rupees; and
(b) for the assessment year commencing on the 1st day of April, 2015, of a sum equal to fifteen 
per cent. of the actual cost of new assets acquired and installed after the 31st day of March, 2013 but 
before the 1st day of April, 2015, as reduced by the amount of deduction allowed, if any, under 
clause (a).
2
[(1A) Where an assessee, being a company, engaged in the business of manufacture or production of 
any article or thing, acquires and installs new assets and the amount of actual cost of such new assets
3
[acquired during any previous year exceeds twenty-five crore rupees and such assets are installed on or 
before the 31st day of March, 2017], then, there shall be allowed a deduction of a sum equal to fifteen per 
cent. of the actual cost of such new assets for the assessment year relevant to that previous year:
4
[Provided that where the installation of the new assets are in a year other than the year of acquisition, 
the deduction under this sub-section shall be allowed in the year in which the new assets are installed:]
5
[Provided further that] no deduction under this sub-section shall be allowed for the assessment year 
commencing on the 1st day of April, 2015 to the assessee, which is eligible to claim deduction under 
sub-section (1) for the said assessment year.
(1B) No deduction under sub-section (1A) shall be allowed for any assessment year commencing on 
or after the 1st day of April, 2018.]
(2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in 
connection with the amalgamation or demerger, within a period of five years from the date of its 
installation, the amount of deduction allowed under sub-section (1)
6
[or sub-section (1A)] in respect of 
such new asset shall be deemed to be the income of the assessee chargeable under the head “Profits and 
gains of business or profession” of the previous year in which such new asset is sold or otherwise 
transferred, in addition to taxability of gains, arising on account of transfer of such new asset.
(3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or 
demerger within a period of five years from the date of its installation, the provisions of sub-section (2) 
shall apply to the amalgamated company or the resulting company, as the case may be, as they would 
have applied to the amalgamating company or the demerged company.
(4) For the purposes of this section, “new asset” means any new plant or machinery (other than ship 
or aircraft) but does not include—
(i) any plant or machinery which before its installation by the assessee was used either within or 
outside India by any other person;
(ii) any plant or machinery installed in any office premises or any residential accommodation, 
including accommodation in the nature of a guest house;
(iii) any office appliances including computers or computer software;
(iv) any vehicle; or
(v) any plant or machinery, the whole of the actual cost of which is allowed as deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any previous year.]

32AD. Investment in new plant or machinery in notified backward areas in certain 
States.— (1) Where an assessee, sets up an undertaking or enterprise for manufacture or production of 
any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central 
Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of 
Telangana or in the State of West Bengal, and acquires and installs any new asset for the purposes of the 
said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending 
before the 1st day of April, 2020 in the said backward area, then, there shall be allowed a deduction of a 
sum equal to fifteen per cent. of the actual cost of such new asset for the assessment year relevant to the 
previous year in which such new asset is installed.
(2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in 
connection with the amalgamation or demerger or re-organisation of business referred to in clause (xiii) or 
clause (xiiib) or clause (xiv) of section 47, within a period of five years from the date of its installation, 
the amount of deduction allowed under sub-section (1) in respect of such new asset shall be deemed to be 
the income of the assessee chargeable under the head “Profits and gains of business or profession” of the 
previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, 
arising on account of transfer of such new asset.
(3) Where the new asset is sold or otherwise transferred in connection with the amalgamation or 
demerger or re-organisation of business referred to in clause (xiii) or clause (xiiib) or clause (xiv) of 
section 47 within a period of five years from the date of its installation, the provisions of sub-section (2) 
shall apply to the amalgamated company or the resulting company or the successor referred to in 
clause (xiii) or clause (xiiib) or clause (xiv) of section 47, as the case may be, as they would have applied 
to the amalgamating company or the demerged company or the predecessor referred to in clause (xiii) or 
clause (xiiib) or clause (xiv) of section 47.
(4) For the purposes of this section, “new asset” means any new plant or machinery (other than a ship 
or aircraft) but does not include—
(a) any plant or machinery, which before its installation by the assessee, was used either within or 
outside India by any other person;
(b) any plant or machinery installed in any office premises or any residential accommodation, 
including accommodation in the nature of a guest house;
(c) any office appliances including computers or computer software;
(d) any vehicle; or
(e) any plant or machinery, the whole of the actual cost of which is allowed as deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any previous year.

33. Development rebate.—1
[(1) (a) In respect of a new ship or new machinery or plant (other than 
office appliances or road transport vehicles) which is owned by the assessee and is wholly used for the 
purposes of the business carried on by him, there shall, in accordance with and subject to the provisions 
of this section and of section 34, be allowed a deduction, in respect of the previous year in which the ship 
was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use 
in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of 
development rebate as specified in clause (b).
(b) The sum referred to in clause (a) shall be—
(A) in the case of a ship, forty per cent. of the actual cost thereof to the assessee;
(B) in the case of machinery or plant,—
(i) where the machinery or plant is installed for the purposes of business of construction, 
manufacture or production of any one or more of the articles or things specified in the list in the 
Fifth Schedule,—
(a) thirty-five per cent. of the actual cost of the machinery or plant to the assessee, where 
it is installed before the 1st day of April, 1970, and
(b) twenty-five per cent. of such cost, where it is installed after the 31st day of 
March, 1970;
(ii) where the machinery or plant is installed after the 31st day of March, 1967, by an assessee 
being an Indian company in premises used by it as a hotel and such hotel is for the time being 
approved in this behalf by the Central Government,—
(a) thirty-five per cent. of the actual cost of the machinery or plant to the assessee, where 
it is installed before the 1st day of April, 1970, and
(b) twenty-five per cent. of such cost, where it is installed after the 31st day of 
March, 1970;
(iii) where the machinery or plant is installed after the 31st day of March, 1967, being an 
asset representing expenditure of a capital nature on scientific research related to the business 
carried on by the assessee,—
(a) thirty-five per cent. of the actual cost of the machinery or plant to the assessee, where 
it is installed before the 1st day of April, 1970, and
(b) twenty-five per cent. of such cost, where it is installed after the 31st day of 
March, 1970;
(iv) in any other case,—
(a) twenty per cent. of the actual cost of the machinery or plant to the assessee, where it is 
installed before the 1st day of April, 1970, and
(b) fifteen per cent. of such cost, where it is installed after the 31st day of March, 1970.]
2
[(1A) (a) An assessee who, after the 31st day of March, 1964, acquires any ship which before the 
date of acquisition by him was used by any other person shall, subject to the provisions of section 34, also
be allowed as a deduction a sum by way of development rebate at such rate or rates as may be prescribed, 
provided that the following conditions are fulfilled, namely:—
(i) such ship was not previous to the date of such acquisition owned at any time by any person 
resident in India;
(ii) such ship is wholly used for the purposes of the business carried on by the assessee; and
(iii) such other conditions as may be prescribed.
(b) An assessee who installs any machinery or plant (other than office appliances or road transport 
vehicles) which before such installation by the assessee was used outside India by any other person shall, 
subject to the provisions of section 34, also be allowed as a deduction a sum by way of development 
rebate at such rate or rates as may be prescribed, provided that the following conditions are fulfilled, 
namely:—
(i) such machinery or plant was not used in India at any time previous to the date of such 
installation by the assessee;
(ii) it is imported in India by the assessee from any country outside India;
(iii) no deduction on account of depreciation or development rebate in respect of such machinery 
or plant has been allowed or is allowable under the provisions of the Indian Income-tax Act, 1922 (11 
of 1922), or this Act in computing the total income of any person for any period prior to the date of 
the installation of the machinery or plant by the assessee;
(iv) such machinery or plant is wholly used for the purposes of the business carried on by the 
assessee; and
(v) such other conditions as may be prescribed.
(c) The development rebate under this sub-section shall be allowed as a deduction in respect of the 
previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, 
machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that 
previous year.]
(2) In the case of a ship acquired or machinery or plant installed after the 31st day of 
December, 1957, where the total income of the assessee assessable for the assessment year relevant to the 
previous year in which the ship was acquired or the machinery or plant installed or the immediately 
succeeding previous year, as the case may be 1
[(the total income for this purpose being computed without 
making any allowance under sub-section (1) or sub-section (1A) of this section or sub-section (1) 
of section 33A or any deduction under Chapter VIA 2
***] is nil or is less than the full amount of the 
development rebate calculated 3
[at the rate applicable thereto 4
[under sub-section (1) or sub-section (1A), 
as the case may be],—
(i) the sum to be allowed by way of development rebate for that assessment year 4
[under 
sub-section (1) or sub-section (1A)] shall be only such amount as is sufficient to reduce the said total 
income to nil; and
(ii) the amount of the development rebate, to the extent to which it has not been allowed as 
aforesaid, shall be carried forward to the following assessment year, and the development rebate to be 
allowed for the following assessment year shall be such amount as is sufficient to reduce the total 
income of the assessee assessable for that assessment year, computed in the manner aforesaid, to nil, 
and the balance of the development rebate, if any, still outstanding shall be carried forward to the 
following assessment year and so on, so however, that no portion of the development rebate shall be 
carried forward for more than eight assessment years immediately succeeding the assessment year 
relevant to the previous year in which the ship was acquired or the machinery or plant installed or the 
immediately succeeding previous year, as the case may be.
Explanation.—Where for any assessment year development rebate is to be allowed in accordance 
with the provisions of sub-section (2) in respect of ships acquired or machinery or plant installed in 
more than one previous year, and the total income of the assessee assessable for that assessment year 
1
[(the total income for this purpose being computed without making any allowance under 
sub-section (1) or sub-section (1A) of this section or sub-section (1) of section 33A or any deduction 
under Chapter VI-A
2
***] is less than the aggregate of the amounts due to be allowed in respect of the 
assets aforesaid for that assessment year, the following procedure shall be followed, namely :—
(i) the allowance under clause (ii) of sub-section (2) shall be made before any allowance 
under clause (i) of that sub-section is made; and
(ii) where an allowance has to be made under clause (ii) of sub-section (2) in respect of 
amounts carried forward from more than one assessment year, the amount carried forward from 
an earlier assessment year shall be allowed before any amount carried forward from a later 
assessment year.
3
[(3) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to 
the amalgamated company any ship, machinery or plant in respect of which development rebate has been 
allowed to the amalgamating company under sub-section (1) or sub-section (1A),—
(a) the amalgamated company shall continue to fulfil the conditions mentioned in sub-section (3) 
of section 34 in respect of the reserve created by the amalgamating company and in respect of the 
period within which such ship, machinery or plant shall not be sold or otherwise transferred and in 
default of any of these conditions, the provisions of sub-section (5) of section 155 shall apply to the 
amalgamated company as they would have applied to the amalgamating company had it committed 
the default; and
(b) the balance of development rebate, if any, still outstanding to the amalgamating company in 
respect of such ship, machinery or plant shall be allowed to the amalgamated company in accordance 
with the provisions of sub-section (2), so, however, that the total period for which the balance of
development rebate shall be carried forward in the assessments of the amalgamating company and the 
amalgamated company shall not exceed the period of eight years specified in sub-section (2) and the 
amalgamated company shall be treated as the assessee in respect of such ship, machinery or plant for 
the purposes of this section and section 34.]
(4) Where a firm is succeeded to by a company in the business carried on by it as a result of which 
the firm sells or otherwise transfers to the company any ship, machinery or plant, the provisions of 
clauses (a) and (b) of sub-section (3) shall, so far as may be, apply to the firm and the company.
Explanation.—The provisions of this clause shall apply only where—
(i) all the property of the firm relating to the business immediately before the succession 
becomes the property of the company;
(ii) all the liabilities of the firm relating to the business immediately before the succession 
become the liabilities of the company; and
(iii) all the shareholders of the company were partners of the firm immediately before the 
succession.
1
[(5) The Central Government, if it considers it necessary or expedient so to do, may, by notification 
in the Official Gazette, direct that the deduction allowable under this section shall not be allowed in 
respect of a ship acquired or machinery or plant installed after such date, not being earlier than three years 
from the date of such notification, as may be specified therein.]
2
[(6) Notwithstanding anything contained in the foregoing provisions of this section, no deduction by 
way of development rebate shall be allowed in respect of any machinery or plant installed after the 31st 
day of March, 1965, in any office premises or any residential accommodation, including any 
accommodation in the nature of a guest-house:]
3
[Provided that the provisions of this sub-section shall not apply in the case of an assessee being an 
Indian company, in respect of any machinery or plant installed by it in premises used by it as a hotel, 
where the hotel is for the time being approved in this behalf by the Central Government.]

33A. Development allowance.—(1) In respect of planting of tea bushes on any land in India owned 
by an assessee who carries on business of growing and manufacturing tea in India, a sum by way of 
development allowance equivalent to—
(i) where tea bushes have been planted on any land not planted at any time with tea bushes or on 
any land which had been previously abandoned, 5
[fifty per cent..] of the actual cost of planting; and
(ii) where tea bushes are planted in replacement of tea bushes that have died or have become 
permanently useless on any land already planted, 6
[thirty per cent..] of the actual cost of planting,
shall, subject to the provisions of this section, 7
[be allowed as a deduction in the manner specified 
hereunder, namely:—
(a) the amount of the development allowance shall, in the first instance, be computed with 
reference to that portion of the actual cost of planting which is incurred during the previous year in 
which the land is prepared for planting or replanting, as the case may be, and in the previous year 
next following, and the amount so computed shall be allowed as a deduction in respect of such 
previous year next following; and (b) thereafter, the development allowance shall again be computed with reference to the actual 
cost of planting, and if the sum so computed exceeds the amount allowed as a deduction under clause 
(a), the amount of the excess shall be allowed as a deduction in respect of the third succeeding 
previous year next following the previous year in which the land has been prepared for planting or 
replanting, as the case may be:]
1
[Provided that no deduction under clause (i) shall be allowed unless the planting has commenced 
after the 31st day of March, 1965, and been completed before the 1st day of April, 1990:
Provided further that no deduction shall be allowed under clause (ii) unless the planting has 
commenced after the 31st day of March, 1965, and been completed before the 1st day of April, 1970.]
(2) Where the total income of the assessee assessable for the assessment year relevant to 
2
[the previous year in respect of which the deduction is required to be allowed under sub-section (1)]
3
[(the total income for this purpose being computed after deduction of the allowance under sub-section (1) 
or sub-section (1A) or clause (ii) of sub-section (2) of section 33, but without making any deduction under 
sub-section (1) of this section or any deduction under Chapter VI-A
4
***)] is nil or is less than the full 
amount of the development allowance 5
[calculated at the rates and in the manner specified in 
sub-section (1)]—
(i) the sum to be allowed by way of development allowance for that assessment year under 
sub-section (1) shall be only such amount as is sufficient to reduce the said total income to nil; and
(ii) the amount of the development allowance, to the extent to which it has not been allowed as 
aforesaid, shall be carried forward to the following assessment year, and the development allowance 
to be allowed for the following assessment year shall be such amount as is sufficient to reduce the 
total income of the assessee assessable for that assessment year, computed in the manner aforesaid, 
to nil, and the balance of the development allowance, if any, still outstanding shall be carried forward 
to the following assessment year and so on, so, however, that no portion of the development 
allowance shall be carried forward for more than eight assessment years immediately succeeding the 
assessment year in which the deduction was first allowable.
Explanation.—Where for any assessment year development allowance is to be allowed in 
accordance with the provisions of sub-section (2) in respect of more than one previous year, and the 
total income of the assessee assessable for that assessment year 3
[(the total income for this purpose 
being computed after deduction of the allowance under sub-section (1) or sub-section (1A) or 
clause (ii) of sub-section (2) of section 33, but without making any deduction under sub-section (1) of 
this section or any deduction under Chapter VIA 4
*** )] is less than the amount of the development 
allowance due to be made in respect of that assessment year, the following procedure shall be 
followed, namely:—
(i) the allowance under clause (ii) of sub-section (2) of this section shall be made before any 
allowance under clause (i) of that sub-section is made; and (ii) where an allowance has to be made under clause (ii) of sub-section (2) of this section in 
respect of amounts carried forward from more than one assessment year, the amount carried 
forward from an earlier assessment year shall be allowed before any amount carried forward from 
a later assessment year.
(3) The deduction under sub-section (1) shall be allowed only if the following conditions are 
fulfilled, namely:—
(i) the particulars prescribed in this behalf have been furnished by the assessee;
(ii) an amount equal to seventy-five per cent. of the development allowance to be actually 
allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve 
account to be utilised by the assessee during a period of eight years next following for the purposes of 
the business of the undertaking, other than—
(a) for distribution by way of dividends or profits; or
(b) for remittance outside India as profits or for the creation of any asset outside India; and
(iii) such other conditions as may be prescribed.
(4) If any such land is sold or otherwise transferred by the assessee to any person at any time before 
the expiry of eight years from the end of the previous year in which the deduction under sub-section (1) 
was allowed, any allowance under this section shall be deemed to have been wrongly made for the 
purposes of this Act, and the provisions of sub-section (5A) of section 155 shall apply accordingly:
Provided that this sub-section shall not apply—
(i) where the land is sold or otherwise transferred by the assessee to the Government, a local 
authority, a corporation established by a Central, State or Provincial Act, or a Government 
company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(ii) where the sale or transfer of the land is made in connection with the amalgamation or 
succession referred to in sub-section (5) or sub-section (6).
1
[(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to 
the amalgamated company any land in respect of which development allowance has been allowed to the 
amalgamating company under sub-section (1),—
(a) the amalgamated company shall continue to fulfil the conditions mentioned in sub-section (3) 
in respect of the reserve created by the amalgamating company and in respect of the period within 
which such land shall not be sold or otherwise transferred and in default of any of these conditions, 
the provisions of sub-section (5A) of section 155 shall apply to the amalgamated company as they 
would have applied to the amalgamating company had it committed the default; and
(b) the balance of development allowance, if any, still outstanding to the amalgamating company 
in respect of such land shall be allowed to the amalgamated company in accordance with the 
provisions of sub-section (2), so, however, that the total period for which the balance of development 
allowance shall be carried forward in the assessments of the amalgamating company and the 
amalgamated company shall not exceed the period of eight years specified in sub-section (2) and the 
amalgamated company shall be treated as the assessee in respect of such land for the purposes of this 
section.
(6) Where a firm is succeeded to by a company in the business carried on by it as a result of which 
the firm sells or otherwise transfers to the company any land on which development allowance has been 
allowed, the provisions of clauses (a) and (b) of sub-section (5) shall, so far as may be, apply to the firm 
and the company.
Explanation.—The provisions of this sub-section shall apply if the conditions laid down in 
the Explanation to sub-section (4) of section 33 are fulfilled.
(7) For the purposes of this section, “actual cost of planting” means the aggregate of—
(i) the cost of preparing the land;
(ii) the cost of seeds, cutting and nurseries;
(iii) the cost of planting and replanting; and
(iv) the cost of upkeep thereof for the previous year in which the land has been prepared and the 
three successive previous years next following such previous year,
reduced by that portion of the cost, if any, as has been met directly or indirectly by any other person or 
authority:
1
[Provided that where such cost exceeds—
(i) forty thousand rupees per hectare in respect of land situate in a hilly area comprised in the 
district of Darjeeling; or
(ii) thirty-five thousand rupees per hectare in respect of land situate in a hilly area comprised in 
an area other than the district of Darjeeling; or
(iii) thirty thousand rupees per hectare in any other area,
then, the excess shall be ignored.
Explanation.—For the purposes of this proviso, “district of Darjeeling” means the district of 
Darjeeling as on the 28th day of February, 1981, being the date of introduction of the Finance Bill, 1981, 
in the House of the People.]
(8) The Board may, having regard to the elevation and topography, by general or special order, 
declare any areas to be hilly areas for the purposes of this section and such order shall not be questioned 
before any court of law or any other authority.
2
[Explanation.—For the purposes of this section, an assessee having a leasehold or other right of 
occupancy in any land shall be deemed to own such land and where the assessee transfers such right, he 
shall be deemed to have sold or otherwise transferred such land.]

33AB. Tea development account
[, coffee development account and rubber development 
account].—(1) Where an assessee carrying on business of 3
[growing and manufacturing tea or coffee or 
rubber] in India has, before the expiry of six months from the end of the previous year or before 4
[the due 
date of furnishing the return of his income], 5
[whichever is earlier,—
(a) deposited with the National Bank any amount or amounts in an account (hereafter in this 
section referred to as the special account) maintained by the assessee with that Bank in accordance 
with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) 
6
[approved in this behalf by the Tea Board or the Coffee Board or the Rubber Board]; or
(b) 7
[deposited any amount in an account (hereafter in this section referred to as the Deposit 
Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme 
framed by the Tea Board or the Coffee Board or the Rubber Board, as the case may be (hereafter in 
this section referred to as the deposit scheme), with the previous approval of the Central 
Government,]
the assessee shall, subject to the provisions of this section,] be allowed a deduction (such deduction being 
allowed before the loss, if any, brought forward from earlier years is set off under section 72 ) of—
(a) a sum equal to the amount or the aggregate of the amounts so deposited; or
(b) 8
[a sum equal to forty per cent.. of the profits] of such business (computed under the head 
“Profits and gains of business or profession” before making any deduction under this section),
whichever is less:
Provided that where such assessee is a firm, or any association of persons or any body of individuals, 
the deduction under this section shall not be allowed in the computation of the income of any partner, or 
as the case may be, any member of such firm, association of persons or body of individuals:
Provided further that where any deduction, in respect of any amount deposited in the special account
9
[, or in the 10[Deposit Account], has been allowed under this sub-section in any previous year, no 
deduction shall be allowed in respect of such amount in any other previous year.
(2) The deduction under sub-section (1) shall not be admissible unless the accounts of such business 
of the assessee for the previous year relevant to the assessment year for which the deduction is claimed 
have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288
and the assessee furnishes, along with his return of income, the report of such audit in the prescribed 
formduly signed and verified by such accountant:
Provided that in a case where the assessee is required by or under any other law to get his accounts 
audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the 
accounts of such business audited under such law and furnishes the report of the audit as required under 
such other law and a further report in the form prescribed under this sub-section
(3) Any amount standing to the credit of the assessee in 1
[the special account or the 2
[Deposit 
Account] shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the 
case may be, in the deposit scheme] or in the circumstances specified below:—
(a) closure of business;
(b) death of an assessee;
(c) partition of a Hindu undivided family;
(d) dissolution of a firm;
(e) liquidation of a company.
3
[(4) Notwithstanding anything contained in sub-section (3), where any amount standing to the credit 
of the assessee in the special account or in the Deposit Account is released during any previous year by 
the National Bank or withdrawn by the assessee from the Deposit Account, and such amount is utilised 
for the purchase of—
(a) any machinery or plant to be installed in any office premises or residential accommodation, 
including any accommodation in the nature of a guest-house;
(b) any office appliances (not being computers);
(c) any machinery or plant, the whole of the actual cost of which is allowed as a deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any one previous year;
(d) any new machinery or plant to be installed in an industrial undertaking for the purposes of 
business of construction, manufacture or production of any article or thing specified in the list in the 
Eleventh Schedule,
the whole of such amount so utilised shall be deemed to be the profits and gains of business of that 
previous year and shall accordingly be chargeable to income-tax as the income of that previous year.]
(5) Where any amount, standing to the credit of the assessee in the special account 4
[or in the 
2
[Deposit Account]], is withdrawn during any previous year by the assessee in the circumstance specified 
in clause (a) or clause (d) of sub-section (3), the whole of such amount shall be deemed to be the profits 
and gains of business or profession of that previous year and shall accordingly be chargeable to incometax as the income of that previous year, as if the business had not closed or, as the case may be, the firm 
had not been dissolved.
(6) Where any amount standing to the credit of the assessee in the special account 4
[or in the 
2
[Deposit Account]] is utilised by the assessee for the purposes of any expenditure in connection with 
such business in accordance with the scheme 4
[or the deposit scheme], such expenditure shall not be 
allowed in computing the income chargeable under the head “Profits and gains of business or profession.
(7) Where any amount, standing to the credit of the assessee in the special account 4
[or in the 
2
[Deposit Account]], which is released during any previous year by the National Bank 4
[or which is 
withdrawn by the assessee from the 2
[Deposit Account]]for being utilised by the assessee for the purposes 
of such business in accordance with the scheme 4
[or the deposit scheme] is not so utilised, either wholly 
or in part, within that previous year, the whole of such amount or, as the case may be, part thereof which 
is not so utilised shall be deemed to be profits and gains of business and accordingly chargeable to 
income-tax as the income of that previous year:
Provided that this sub-section shall not apply in a case where such amount is released during any 
previous year at the closure of the account in circumstances specified in clauses (b), (c) and (e) of 
sub-section (3).
(8) Where any asset acquired in accordance with the scheme 1
[or the deposit scheme] is sold or 
otherwise transferred in any previous year by the assessee to any person at any time before the expiry of 
eight years from the end of the previous year in which it was acquired, such part of the cost of such asset 
as is relatable to the deduction allowed under sub-section (1) shall be deemed to be the profits and gains 
of business or profession of the previous year in which the asset is sold or otherwise transferred and shall 
accordingly be chargeable to income-tax as the income of that previous year:
Provided that nothing in this sub-section shall apply—
(i) where the asset is sold or otherwise transferred by the assessee to Government, a local 
authority, a corporation established by or under a Central, State or Provincial Act or a Government 
company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(ii) where the sale or transfer of the asset is made in connection with the succession of a firm by a 
company in the business or profession carried on by the firm as a result of which the firm sells or 
otherwise transfers to the company any asset and the scheme 1
[or the deposit scheme] continues to 
apply to the company in the manner applicable to the firm.
Explanation.—The provisions of clause (ii) of the proviso shall apply only where—
(i) all the properties of the firm relating to the business or profession immediately before the 
succession become the properties of the company;
(ii) all the liabilities of the firm relating to the business or profession immediately before the 
succession become the liabilities of the company ; and
(iii) all the shareholders of the company were partners of the firm immediately before the 
succession.
(9) The Central Government, if it considers necessary or expedient so to do, may, by notification in 
the Official Gazette, direct that the deduction allowable under this section shall not be allowed after such 
date as may be specified therein.
Explanation.—In this section,—
2
[(a) “Coffee Board” means the Coffee Board constituted under section 4 of the Coffee 
Act, 1942 (7 of 1942);
(aa) “National Bank” means the National Bank for Agriculture and Rural Development 
established under section 3 of the National Bank for Agriculture and Rural Development 
Act, 1981 (61 of 1981);
(ab) “Rubber Board” means the Rubber Board constituted under sub-section (1) of section 4 of 
the Rubber Act, 1947 (24 of 1947);]
(b) “Tea Board” means the Tea Board established under section 4 of the Tea Act, 1953 
(29 of 1953).]

[33ABA. Site Restoration Fund.—(1) Where an assessee is carrying on business consisting of the 
prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to 
which the Central Government has entered into an agreement with such assessee for such business, has 
before the end of the previous year—
(a) deposited with the State Bank of India any amount or amounts in an account (hereafter in this 
section referred to as the special account) maintained by the assessee with that Bank in accordance 
with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) 
approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or
(b) deposited any amount in an account (hereafter in this section referred to as the Site
Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a 
scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the 
deposit scheme),
the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being 
allowed before the loss, if any, brought forward from earlier years is set off under section 72) of—
(i) a sum equal to the amount or the aggregate of the amounts so deposited; or
(ii) a sum equal to twenty per cent. of the profits of such business (computed under the head 
“Profits and gains of business or profession” before making any deduction under this section),
whichever is less:
Provided that where such assessee is a firm, or any association of persons or any body of individuals, 
the deduction under this section shall not be allowed in the computation of the income of any partner or, 
as the case may be, any member of such firm, association of persons or body of individuals:
Provided further that where any deduction, in respect of any amount deposited in the special account, 
or in the Site Restoration Account, has been allowed under this sub-section in any previous year, no 
deduction shall be allowed in respect of such amount in any other previous year:
Provided also that any amount credited in the special account or the Site Restoration Account by way 
of interest shall be deemed to be a deposit.
(2) The deduction under sub-section (1) shall not be admissible unless the accounts of such business 
of the assessee for the previous year relevant to the assessment year for which the deduction is claimed 
have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288
and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form
duly signed and verified by such accountant:
Provided that in a case where the assessee is required by or under any other law to get his accounts 
audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the 
accounts of such business audited under such law and furnishes the report of the audit as required under 
such other law and a further report in the form prescribed under this sub-section.
(3) Any amount standing to the credit of the assessee in the special account or the Site Restoration 
Account shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the 
case may be, in the deposit scheme.
(4) Notwithstanding anything contained in sub-section (3), no deduction under sub-section (1) shall 
be allowed in respect of any amount utilised for the purchase of—
(a) any machinery or plant to be installed in any office premises or residential accommodation, 
including any accommodation in the nature of a guest-house;
(b) any office appliances (not being computers);
(c) any machinery or plant, the whole of the actual cost of which is allowed as a deduction 
(whether by way of depreciation or otherwise) in computing the income chargeable under the head 
“Profits and gains of business or profession” of any one previous year;
(d) any new machinery or plant to be installed in an industrial undertaking for the purposes of 
business of construction, manufacture or production of any article or thing specified in the list in the 
Eleventh Schedule.
(5) Where any amount standing to the credit of the assessee in the special account or in the Site 
Restoration Account is withdrawn on closure of the account during any previous year by the assessee, the 
amount so withdrawn from the account, as reduced by the amount, if any, payable to the Central 
Government by way of profit or production share as provided in the agreement referred to in section 42, 
shall be deemed to be the profits and gains of business or profession of that previous year and shall 
accordingly be chargeable to income-tax as the income of that previous year.
Explanation.—Where any amount is withdrawn on closure of the account in a previous year in which 
the business carried on by the assessee is no longer in existence, the provisions of this sub-section shall 
apply as if the business is in existence in that previous year.
(6) Where any amount standing to the credit of the assessee in the special account or in the Site 
Restoration Account is utilised by the assessee for the purposes of any expenditure in connection with 
such business in accordance with the scheme or the deposit scheme, such expenditure shall not be allowed 
in computing the income chargeable under the head “Profits and gains of business or profession”.
(7) Where any amount, standing to the credit of the assessee in the special account or in the Site 
Restoration Account, which is released during any previous year by the State Bank of India or which is 
withdrawn by the assessee from the Site Restoration Account for being utilised by the assessee for the 
purposes of such business in accordance with the scheme or the deposit scheme is not so utilised, either 
wholly or in part, within that previous year, the whole of such amount or, as the case may be, part thereof 
which is not so utilised shall be deemed to be profits and gains of business and accordingly chargeable to 
income-tax as the income of that previous year.
1
* * * * *
(8) Where any asset acquired in accordance with the scheme or the deposit scheme is sold or 
otherwise transferred in any previous year by the assessee to any person at any time before the expiry of 
eight years from the end of the previous year in which it was acquired, such part of the cost of such asset 
as is relatable to the deduction allowed under sub-section (1) shall be deemed to be the profits and gains 
of business or profession of the previous year in which the asset is sold or otherwise transferred and shall 
accordingly be chargeable to income-tax as the income of that previous year:
Provided that nothing in this sub-section shall apply—
(i) where the asset is sold or otherwise transferred by the assessee to Government, a local 
authority, a corporation established by or under a Central, State or Provincial Act or a Government 
company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(ii) where the sale or transfer of the asset is made in connection with the succession of a firm by 
a company in the business or profession carried on by the firm as a result of which the firm sells or 
otherwise transfers to the company any asset and the scheme or the deposit scheme continues to apply 
to the company in the manner applicable to the firm.
Explanation.—The provisions of clause (ii) of the proviso shall apply only where—
(i) all the properties of the firm relating to the business or profession immediately before the 
succession become the properties of the company;
(ii) all the liabilities of the firm relating to the business or profession immediately before the 
succession become the liabilities of the company; and
(iii) all the shareholders of the company were partners of the firm immediately before the 
succession.
(9) The Central Government may, if it considers necessary or expedient so to do, by notification in 
the Official Gazette, direct that the deduction allowable under this section shall not be allowed after such 
date as may be specified therein.
Explanation.—For the purposes of this section,—
(a) “State Bank of India” means the State Bank of India constituted under the State Bank of India 
Act, 1955 (23 of 1955);
(b) the expression “amount standing to the credit of the assessee in the special account or the Site 
Restoration Account” includes interest accrued to such accounts.]

33AC. Reserves for shipping business.—(1) 2
[In the case of an assessee, being a Government 
company or a public company formed and registered in India with the main object of carrying on the 
business of operation of ships, there shall, in accordance with and subject to the provisions of this section, 
be allowed a deduction of an amount not exceeding fifty per cent. of profits derived from the business of 
operation of ships (computed under the head “Profits and gains of business or profession” and before 
making any deduction under this section), as is debited to the profit and loss account of the previous year 
in respect of which the deduction is to be allowed and credited to a reserve account, to be utilised in the 
manner laid down in sub-section (2):]
3
[Provided that where the aggregate of the amounts carried to such reserve account from time to time 
exceeds twice the aggregate of the amounts of the paid-up share capital, the general reserves and amount 
credited to the share premium account of the assessee, no allowance under this sub-section shall be made 
in respect of such excess:]
4
[Provided further that for five assessment years commencing on or after the 1st day of April, 2001 
and ending before the 1st day of April, 2006, the provisions of this sub-section shall have effect as if for 
the words “an amount not exceeding fifty per cent.. of profits”, the words “an amount not exceeding the 
profits” had been substituted:]

1
[Provided also that no deduction shall be allowed under this section for any assessment year 
commencing on or after the 1st day of April, 2005.]
(2) The amount credited to the reserve account under sub-section (1) shall be utilised by the assessee 
before the expiry of a period of eight years next following the previous year in which the amount was 
credited—
(a) for acquiring a new ship for the purposes of the business of the assessee; and
(b) until the acquisition of a new ship, for the purposes of the business of the assessee other than 
for distribution by way of dividends or profits or for remittance outside India as profits or for the 
creation of any asset outside India.
(3) Where any amount credited to the reserve account under sub-section (1),—
(a) has been utilised for any purpose other than that referred to in clause (a) or clause (b) of 
sub-section (2), the amount so utilised; or
(b) has not been utilised for the purpose specified in clause (a) of sub-section (2), the amount not 
so utilised; or
(c) has been utilised for the purpose of acquiring a new ship as specified in clause (a) of 
sub-section (2), but such ship is 2
[sold or otherwise transferred, other than in any scheme of 
demerger] by the assessee to any person at any time before the expiry of 3
[three years] from the end 
of the previous year in which it was acquired, the amount so utilised in acquiring the ship,
shall be deemed to be the profits,—
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of eight years 
specified in sub-section (2); or
(iii) in a case referred to in clause (c), in the year in which the sale or transfer took place,
and shall be charged to tax accordingly.
4
[(4) Where the ship is sold or otherwise transferred (other than in any scheme of demerger) after the 
expiry of the period specified in clause (c) of sub-section (3) and the sale proceeds are not utilised for the 
purpose of acquiring a new ship within a period of one year from the end of the previous year in which 
such sale or transfer took place, 5
[so much of such sale proceeds which represent the amount credited to 
the reserve account and utilised for the purposes mentioned in clause (c) of sub-section (3)] shall be 
deemed to be the profits of the assessment year immediately following the previous year in which the ship 
is sold or transferred.]
Explanation.—For the purposes of this section,—
(a) “public company” shall have the meaning assigned to it in section 3 of the Companies 
Act, 1956 (1 of 1956);
[(aa) “Government company” shall have the meaning assigned to it in section 617 of the 
Companies Act, 1956 (1 of 1956);]
(b) “new ship” shall have the same meaning as in clause (ii) of sub-section (2) of section 32AB.]

33B. Rehabilitation allowance.—Where the business of any industrial undertaking carried on in 
India is discontinued in any previous year by reason of extensive damage to, or destruction of, any 
building, machinery, plant or furniture owned by the assessee and used for the purposes of such business 
as a direct result of—
(i) flood, typhoon, hurricane, cyclone, earthquake or other convulsion of nature; or
(ii) riot or civil disturbance; or
(iii) accidental fire or explosion; or
(iv) action by an enemy or action taken in combating an enemy (whether with or without a 
declaration of war),
and, thereafter, at any time before the expiry of three years from the end of such previous year, the 
business is re-established, reconstructed or revived by the assessee, he shall, in respect of the previous 
year in which the business is so re-established, reconstructed or revived, be allowed a deduction of a sum 
by way of rehabilitation allowance equivalent to sixty per cent.. of the amount of the deduction allowable 
to him under clause (iii) of sub-section (1) of section 32in respect of the building, machinery, plant or 
furniture so damaged or destroyed:
3
[Provided that no deduction under this section shall be allowed in relation to the assessment year 
commencing on the 1st day of April, 1985, or any subsequent assessment year.]
Explanation.—In this section, “industrial undertaking” means any undertaking which is mainly 
engaged in the business of generation or distribution of electricity or any other form of power or in the 
construction of ships or in the manufacture or processing of goods or in mining.]

34. Conditions for depreciation allowance and development rebate.—4
* * * * *
(3) (a) The deduction referred to in section 33 shall not be allowed unless an amount equal to 
seventy-five per cent.. of the development rebate to be actually allowed is debited to the profit and loss 
account of 5
[any previous year in respect of which the deduction is to be allowed under sub-section (2) of 
that section or any earlier previous year (being a previous year not earlier than the year in which the ship 
was acquired or the machinery or plant was installed or the ship, machinery or plant was first put to use)] 
and credited to a reserve account to be utilised by the assessee during a period of eight years next 
following for the purposes of the business of the undertaking, other than—
(i) for distribution by way of dividends or profits; or
(ii) for remittance outside India as profits or for the creation of any asset outside India:
Provided that this clause shall not apply where the assessee is a company, being a licensee within 
the meaning of the Electricity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired 
or the machinery or plant has been installed before the 1st day of January, 1958:
6
[Provided further that where a ship has been acquired after the 28th day of February, 1966, this 
clause shall have effect in respect of such ship as if for the words “seventy-five”, the word “fifty” had 
been substituted.]
(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at 
any time before the expiry of eight years from the end of the previous year in which it was acquired or 
installed, any allowance made under section 33or under the corresponding provisions of the Indian 
Income-tax Act, 1922 (11 of 1922), in respect of that ship, machinery or plant shall be deemed to have 
been wrongly made for the purposes of this Act, and the provisions of sub-section (5) of section 155shall 
apply accordingly:
Provided that this clause shall not apply—
(i) where the ship has been acquired or the machinery or plant has been installed before the 1st 
day of January, 1958; or
(ii) where the ship, machinery or plant is sold or otherwise transferred by the assessee to the 
Government, a local authority, a corporation established by a Central, State or Provincial Act or a 
Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or
(iii) where the sale or transfer of the ship, machinery or plant is made in connection with the 
amalgamation or succession, referred to in sub-section (3) or sub-section (4) of section 33.

34A. Restriction on unabsorbed depreciation and unabsorbed investment allowance for 
limited period in case of certain domestic companies.—(1) In computing the profits and gains of the 
business of a domestic company in relation to the previous year relevant to the assessment year 
commencing on the 1st day of April, 1992, where effect is to be given to the unabsorbed depreciation 
allowance or unabsorbed investment allowance or both in relation to any previous year relevant to the 
assessment year commencing on or before the 1st day of April, 1991, the deduction shall be restricted to 
two-third of such allowance or allowances and the balance,—
(a) where it relates to depreciation allowance, be added to the depreciation allowance for the 
previous year relevant to the assessment year commencing on the 1st day of April, 1993 and be 
deemed to be part of that allowance or if there is no such allowance for that previous year, be deemed 
to be the allowance for that previous year and so on for the succeeding previous years;
(b) where it relates to investment allowance, be carried forward to the assessment year 
commencing on the 1st day of April, 1993 and the balance of the investment allowance, if any, still 
outstanding shall be carried forward to the following assessment year and where the period of eight 
years has expired before the portion of such balance is adjusted, the said period shall be extended 
beyond eight years till such time the portion of the said balance is absorbed in the profits and gains of 
the business of the domestic company.
(2) For the assessment year commencing on the 1st day of April, 1992, the provisions of 
sub-section (2) of section 32 and sub-section (3) of section 32Ashall apply to the extent such provisions 
are not inconsistent with the provisions of sub-section (1) of this section.
(3) Nothing contained in sub-section (1) shall apply where the amount of unabsorbed depreciation 
allowance or of the unabsorbed investment allowance, as the case may be, or the aggregate amount of 
such allowances in the case of a domestic company is less than one lakh rupees.
(4) Nothing contained in sections 234B and 234Cshall apply to any shortfall in the payment of any 
tax due on the assessed tax or, as the case may be, returned income where such shortfall is on account of 
restricting the amount of depreciation allowance or investment allowance under this section and the 
assessee has paid the amount of shortfall before furnishing the return of income under sub-section (1) of
section 139.]

35. Expenditure on scientific research.—(1) In respect of expenditure on scientific research, the 
following deductions shall be allowed—
(i) any expenditure (not being in the nature of capital expenditure) laid out or expended on 
scientific research related to the business.
2
[Explanation.—Where any such expenditure has been laid out or expended before the 
commencement of the business (not being expenditure laid out or expended before the 1st day of 
April, 1973) on payment of any salary [as defined in Explanation 2 below sub-section (5) of
section 40A] to an employee engaged in such scientific research or on the purchase of materials used 
in such scientific research, the aggregate of the expenditure so laid out or expended within the three 
years immediately preceding the commencement of the business shall, to the extent it is certified by 
the prescribed authorityto have been laid out or expended on such scientific research, be deemed to 
have been laid out or expended in the previous year in which the business is commenced;]
(ii) 3
[an amount equal to 4
[one and one half] times of any sum paid] to a 5
[research association] 
which has as its object the undertaking of scientific research or to a university, college or other 
institution to be used for scientific research:
6
[Provided that such association, university, college or other institution for the purposes of this 
clause—
(A) is for the time being approved, in accordance with the guidelines, in the manner and 
subject to such conditions as may be prescribed; and
(B) such association, university, college or other institution is specified as such, by 
notification in the Official Gazette, by the Central Government;]
7
[Provided further that where any sum is paid to such association, university, college or 
other institution in a previous year relevant to the assessment year beginning on or after the 1st day of 
April, 2021, the deduction under this clause shall be equal to the sum so paid;]
8
[(iia) 9
*** any sum paid to a company to be used by it for scientific research:
Provided that such company—
(A) is registered in India,
(B) has as its main object the scientific research and development,
(C) is, for the purposes of this clause, for the time being approved by the prescribed authority 
in the prescribed manner, and
(D) fulfils such other conditions as may be prescribed;]1
[(iii) 2
[
3
*** 4
[any sum paid] to a research association which has as its object the undertaking of 
research in social science or statistical research or to a university], college or other institution to be used 
for research in social science or statistical research:
5
[Provided that 6
[such association, university], college or other institution for the purposes of this 
clause—
(A) is for the time being approved, in accordance with the guidelines, in the manner and subject 
to such conditions as may be prescribed; and
(B)
6
[such association, university], college or other institution is specified as such, by notification 
in the Official Gazette, by the Central Government.]]
7
[Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a 
8
[research association], university, college or other institution to which clause (ii) or clause (iii) 
applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the 
assessee, the approval granted to the association, university, college or other institution referred to in 
clause (ii) or clause (iii) has been withdrawn;]
(iv) in respect of any expenditure of a capital nature on scientific research related to the business 
carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2):
9
[Provided that the 8
[research association], university, college or other institution referred to in 
clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the 10[Central 
Government] for the purpose of grant of approval, or continuance thereof, under 
clause (ii) or, as the case may be, clause (iii):
Provided further that the 10[Central Government] may, before granting approval under clause (ii) or 
clause (iii), call for such documents (including audited annual accounts) or information from the 
8
[research association], university, college or other institution as it thinks necessary in order to satisfy 
itself about the genuineness of the activities of the 8
[research association], university, college or other 
institution and that 11[Government] may also make such inquiries as it may deem necessary in this behalf:
Provided also that any 12[notification issued, by the Central Government under clause (ii) or 
clause (iii), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of 
the President, shall, at any one time, have effect for such assessment year or years, not exceeding three 
assessment years] (including an assessment year or years commencing before the date on which such 
notification is issued) as may be specified in the notification:]
1
[Provided also that where an application under the first proviso is made on or after the date on which 
the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, every notification under 
clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the 
period of twelve months from the end of the month in which such application was received by the Central 
Government.]
(2) For the purposes of clause (iv) of sub-section (1),—
2
[(i) in a case where such capital expenditure is incurred before the 1st day of April, 1967, 
one-fifth of the capital expenditure incurred in any previous year shall be deducted for that previous 
year; and the balance of the expenditure shall be deducted in equal instalments for each of the four 
immediately succeeding previous years;
(ia) in a case where such capital expenditure is incurred after the 31st day of March, 1967, the 
whole of such capital expenditure incurred in any previous year shall be deducted for that previous 
year:]
3
[Provided that no deduction shall be admissible under this clause in respect of any expenditure 
incurred on the acquisition of any land, whether the land is acquired as such or as part of any 
property, after the 29th day of February, 1984.]
4
[Explanation 1].—Where any capital expenditure has been incurred before the commencement 
of the business, the aggregate of the expenditure so incurred within the three years immediately 
preceding the commencement of the business shall be deemed to have been incurred in the previous 
year in which the business is commenced.
3
[Explanation 2.—For the purposes of this clause,—
(a) “land” includes any interest in land ; and
(b) the acquisition of any land shall be deemed to have been made by the assessee on the date 
on which the instrument of transfer of such land to him has been registered under the Registration 
Act, 1908 (16 of 1908), or where he has taken or retained the possession of such land or any part 
thereof in part performance of a contract of the nature referred to in section 53A of the Transfer 
of Property Act, 1882 (4 of 1882), the date on which he has so taken or retained possession of 
such land or part;]
(ii) notwithstanding anything contained in clause (i), where an asset representing expenditure of a 
capital nature 5
[incurred before the 1st day of April, 1967], ceases to be used in a previous year for 
scientific research related to the business and the value of the asset at the time of the cessation, 
together with the aggregate of deductions already allowed under clause (i) falls short of the said 
expenditure, then—
(a) there shall be allowed a deduction for that previous year of an amount equal to such 
deficiency, and(b) no deduction shall be allowed under that clause for that previous year or for any 
subsequent previous year;
(iii) if the asset mentioned in clause (ii) is sold, without having been used for other purposes, in 
the year of cessation, the sale price shall be taken to be the value of the asset at the time of the 
cessation ; and if the asset is sold, without having been used for other purposes, in a previous year 
subsequent to the year of cessation, and the sale price falls short of the value of the asset taken into 
account at the time of cessation, an amount equal to the deficiency shall be allowed as a deduction for 
the previous year in which the sale took place;
(iv) where a deduction is allowed for any previous year under this section in respect of 
expenditure represented wholly or partly by an asset, no deduction shall be allowed under 1
[clause (ii) 
of sub-section (1)] of section 32 2
[for the same or any other previous year] in respect of that asset;
(v) 3
[where the asset mentioned in clause (ii)is used] in the business after it ceases to be used for 
scientific research related to that business, depreciation shall be admissible under 4
[clause (ii) of 
sub-section (1)] of section 32.
5
[(2A) 6
[Where, before the 1st day of March, 1984,the assessee pays any sum] 7
[(being any sum paid 
with a specific direction that the sum shall not be used for the acquisition of any land or building or 
construction of any building)] to a scientific research association or university or college or other 
institution referred to in clause (ii) of sub-section (1) 8
[or to a public sector company] to be used for 
scientific research undertaken under a programme approved in this behalf by the prescribed authority
having regard to the social, economic and industrial needs of India, then,—
(a) there shall be allowed a deduction of a sum equal to one and one-third times the sum so paid; 
and
(b) no deduction in respect of such sum shall be allowed under clause (ii) of sub-section (1) for 
the same or any other assessment year.]
8
[Explanation.—For the purposes of this sub-section, “public sector company” shall have the same 
meaning as in clause (b) of the Explanation below sub-section (2B) of section 32A.]
9
[(2AA) Where the assessee pays any sum to a National Laboratory 10[or a 11[University or an Indian 
Institute of Technology or a specified person] with a specific direction that the said sum shall be used for 
scientific research undertaken under a programme approved in this behalf by the prescribed authority, 
then—
(a) there shall be allowed a deduction of a sum equal to 12[one and one-half times] the sum so 
paid; and
(b) no deduction in respect of such sum shall be allowed under any other provision of this Act:
1
[Provided that the prescribed authority shall, before granting approval, satisfy itself about the 
feasibility of carrying out the scientific research and shall submit its report to the 2
[Principal Chief 
Commissioner or Chief Commissioner or]
3
[Principal Director General or Director General] in such form 
as may be prescribed.]
4
[Provided further that where any sum is paid to such National Laboratory or university or Indian 
Institute of Technology or specified person in a previous year relevant to the assessment year beginning 
on or after the 1st day of April, 2021, the deduction under this sub-section shall be equal to the sum so 
paid.]
5
[Explanation 1.—The deduction, to which the assessee is entitled in respect of any sum paid to a 
National Laboratory, University, Indian Institute of Technology or a specified person for the approved 
programme referred to in this sub-section, shall not be denied merely on the ground that, subsequent to 
the payment of such sum by the assessee, the approval granted to,—
(a) such Laboratory, or specified person has been withdrawn; or
(b) the programme, undertaken by the National Laboratory, University, Indian Institute of 
Technology or specified person, has been withdrawn.]
6
[
7
[Explanation 2].—For the purposes of this section,—
(a) “National Laboratory” means a scientific laboratory functioning at the national level under 
the aegis of the Indian Council of Agricultural Research, the Indian Council of Medical Research, the 
Council of Scientific and Industrial Research, the Defence Research and Development Organisation, 
the Department of Electronics, the Department of Bio-Technology or the Department of Atomic 
Energy and which is approved as a National Laboratory by the prescribed authority in such manner as 
may be prescribed;
(b) “University” shall have the same meaning as in Explanation to clause (ix) of section 47;
(c) “Indian Institute of Technology” shall have the same meaning as that of “Institute” in 
clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961);]
8
[(d) “specified person” means such person as is approved by the prescribed authority.]
9
[(2AB) (1) Where a company 10[engaged in the business of bio-technology or in 11[any business of 
manufacture or production of any article or thing, not being an article or thing specified in the list of the 
Eleventh Schedule]] incurs any expenditure on scientific research (not being expenditure in the nature of 
cost of any land or building) on in-house research and development facility as approved by the prescribed 
authority, then, there shall be allowed a deduction of 1
[a sum equal to 2
[one and one-half times] of the 
expenditure] so incurred.
3
[Provided that where such expenditure on scientific research (not being expenditure in the nature of 
cost of any land or building) on in-house research and development facility is incurred in a previous year 
relevant to the assessment year beginning on or after the 1st day of April, 2021, the deduction under this 
clause shall be equal to the expenditure so incurred.]
4
[Explanation.—For the purposes of this clause, “expenditure on scientific research”, in relation to 
drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval 
from any regulatory authority under any Central, State or Provincial Act and filing an application for a 
patent under the Patents Act, 1970 (39 of 1970).]
(2) No deduction shall be allowed in respect of the expenditure mentioned in clause (1) under any 
other provision of this Act.
(3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement 
with the prescribed authority for co-operation in such research and development facility and 5
[fulfils such 
conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such 
manner as may be prescribed].
(4) The prescribed authority shall submit its report in relation to the approval of the said facility to 
the 6
[Principal Chief Commissioner or Chief Commissioner or]
7
[Principal Director General or Director 
General] in such form and within such time as may be prescribed.]
8
* * * * *
9
[(6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of 
sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day 
of March, 2008.]
10[(2B) (a) 11[Where, before the 1st day of March, 1984, an assessee has incurred any expenditure] 
(not being in the nature of capital expenditure incurred on the acquisition of any land or building or 
construction of any building) on scientific research undertaken under a programme approved in this 
behalf by the prescribed authority having regard to the social, economic and industrial needs of India, he 
shall, subject to the provisions of this sub-section, be allowed a deduction of a sum equal to one and 
one-fourth times the amount of the expenditure certified by the prescribed authority to have been so 
incurred during the previous year.
(b) Where a deduction has been allowed under clause (a) for any previous year in respect of any 
expenditure, no deduction in respect of such expenditure shall be allowed under clause (i) of 
sub-section (1) or clause (ia) of sub-section (2) for the same or any other previous year.
(c) Where a deduction is allowed for any previous year under this sub-section in respect of 
expenditure represented wholly or partly by an asset, no deduction shall be allowed in respect of that asset 
under 1
[clause (ii) of sub-section (1)] of section 32 for the same or any subsequent previous year.
(d) Any deduction made under this sub-section in respect of any expenditure on scientific research in 
excess of the expenditure actually incurred shall be deemed to have been wrongly made for the purposes 
of this Act if the assessee fails to furnish within one year of the period allowed by the prescribed authority 
for completion of the programme, a certificate of its completion obtained from that authority, and the 
provisions of sub-section (5B) of section 155 shall apply accordingly.]
2
[(3) If any question arises under this section as to whether, and if so, to what extent, any activity 
constitutes or constituted, or any asset is or was being used for, scientific research, the Board shall refer 
the question to—
(a) the Central Government, when such question relates to any activity under clauses (ii) and (iii) 
of sub-section (1), and its decision shall be final;
(b) the prescribed authority, when such question relates to any activity other than the activity 
specified in clause (a), whose decision shall be final.]
(4) The provisions of sub-section (2) of section 32shall apply in relation to deductions allowable 
under clause (iv) of sub-section (1) as they apply in relation to deductions allowable in respect of 
depreciation.
3
[(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to 
the amalgamated company (being an Indian company) any asset representing expenditure of a capital 
nature on scientific research,—
(i) the amalgamating company shall not be allowed the deduction under clause (ii) or clause (iii) 
of sub-section (2); and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as 
they would have applied to the amalgamating company if the latter had not so sold or otherwise 
transferred the asset.]

35A. Expenditure on acquisition of patent rights or copyrights.— (1) In respect of any 
expenditure of a capital nature incurred after the 28th day of February, 1966 2
[but before the 1st day of 
April, 1998], on the acquisition of patent rights or copyrights (hereafter, in this section, referred to as 
rights) used for the purposes of the business, there shall, subject to and in accordance with the provisions 
of this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate 
fraction of the amount of such expenditure.
Explanation.—For the purposes of this section,—
(i) “relevant previous years” means the fourteen previous years beginning with the previous year 
in which such expenditure is incurred or, where such expenditure is incurred before the 
commencement of the business, the fourteen previous years beginning with the previous year in 
which the business commenced :
Provided that where the rights commenced, that is to say, became effective, in any year prior to 
the previous year in which expenditure on the acquisition thereof was incurred by the assessee, this 
clause shall have effect with the substitution for the reference to fourteen years of a reference to 
fourteen years less the number of complete years which, when the rights are acquired by the assessee, 
have elapsed since the commencement thereof, and if fourteen years have elapsed as aforesaid, of a 
reference to one year;
(ii) “appropriate fraction” means the fraction the numerator of which is one and the denominator 
of which is the number of the relevant previous years.
(2) Where the rights come to an end without being subsequently revived or where the whole or any 
part of the rights is sold and the proceeds of the sale (so far as they consist of capital sums) are not less 
than the cost of acquisition thereof remaining unallowed, no deduction under sub-section (1) shall be 
allowed in respect of the previous year in which the rights come to an end or, as the case may be, the 
whole or any part of the rights is sold or in respect of any subsequent previous year.
(3) Where the rights either come to an end without being subsequently revived or are sold in their 
entirety and the proceeds of the sale (so far as they consist of capital sums) are less than the cost of 
acquisition thereof remaining unallowed, a deduction equal to such cost remaining unallowed or, as the 
case may be, such cost remaining unallowed as reduced by the proceeds of the sale, shall be allowed in 
respect of the previous year in which the rights come to an end, or, as the case may be, are sold.]
(4) Where the whole or any part of the rights is sold and the proceeds of the sale (so far as they 
consist of capital sums) exceed the amount of the cost of acquisition thereof remaining unallowed, so 
much of the excess as does not exceed the difference between the cost of acquisition of the rights and the 
amount of such cost remaining unallowed shall be chargeable to income-tax as income of the business of 
the previous year in which the whole or any part of the rights is sold.
Explanation.—Where the whole or any part of the rights is sold in a previous year in which the 
business is no longer in existence, the provisions of this sub-section shall apply as if the business is in 
existence in that previous year.
(5) Where a part of the rights is sold and sub-section (4) does not apply, the amount of the deduction 
to be allowed under sub-section (1) shall be arrived at by—
(a) subtracting the proceeds of the sale (so far as they consist of capital sums) from the amount 
of the cost of acquisition of the rights remaining unallowed; and
(b) dividing the remainder by the number of relevant previous years which have not expired at 
the beginning of the previous year during which the rights are sold.]
1
[(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers 
the rights to the amalgamated company (being an Indian company),—
(i) the provisions of sub-sections (3) and (4) shall not apply in the case of the amalgamating 
company; and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as 
they would have applied to the amalgamating company if the latter had not so sold or otherwise 
transferred the rights.]
2
[(7) Where in a scheme of demerger, the demerged company sells or otherwise transfers the rights to 
the resulting company (being an Indian company),—
(i) the provisions of sub-sections (3) and (4) shall not apply in the case of the demerged 
company; and
(ii) the provisions of this section shall, as far as may be, apply to the resulting company as they 
would have applied to the demerged company, if the latter had not sold or otherwise transferred the 
rights.]

35AB. Expenditure on know-how.—(1) Subject to the provisions of sub-section (2), where the 
assessee has paid 4
[in any previous year relevant to the assessment year commencing on or before the 
1st day of April, 1998] any lump sum consideration for acquiring any know-how for use for the purposes 
of his business, one-sixth of the amount so paid shall be deducted in computing the profits and gains of 
the business for that previous year, and the balance amount shall be deducted in equal instalments for 
each of the five immediately succeeding previous years.
(2) Where the know-how referred to in sub-section (1) is developed in a laboratory, university or 
institution referred to in sub-section (2B) of section 32A, one-third of the said lump sum consideration 
paid in the previous year by the assessee shall be deducted in computing the profits and gains of the 
business for that year, and the balance amount shall be deducted in equal instalments for each of the two 
immediately succeeding previous years.
5
[(3) Where there is a transfer of an undertaking under a scheme of amalgamation or demerger and 
the amalgamating or the demerged company is entitled to a deduction under this section, then, the 
amalgamated company or the resulting company, as the case may be, shall be entitled to claim deduction 
under this section in respect of such undertaking to the same extent and in respect of the residual period as 
it would have been allowable to the amalgamating company or the demerged company, as the case may 
be, had such amalgamation or demerger not taken place.]
Explanation.—For the purposes of this section, “know-how” means any industrial information or 
technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil well 
or other sources of mineral deposits (including the searching for, discovery or testing of deposits or the 
winning of access thereto).]

35ABA. Expenditure for obtaining right to use spectrum for telecommunication services.—(1) 
In respect of any expenditure, being in the nature of capital expenditure, incurred for acquiring any right 
to use spectrum for telecommunication services either before the commencement of the business or 
thereafter at any time during any previous year and for which payment has actually been made to obtain a 
right to use spectrum, there shall, subject to and in accordance with the provisions of this section, be
allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the 
amount of such expenditure.
(2) The provisions contained in sub-sections (2) to (8) of section 35 ABB, shall apply as if for the 
word “licence”, the word “spectrum” had been substituted.
(3) Where, in a previous year, any deduction has been claimed and granted to the assessee under 
sub-section (1), and, subsequently, there is failure to comply with any of the provisions of this section, 
then,—
(a) the deduction shall be deemed to have been wrongly allowed;
(b) the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the 
total income of the assessee for the said previous year and make the necessary rectification;
(c) the provisions of section 154 shall, so far as may be, apply and the period of four years 
specified in sub-section (7) of that section being reckoned from the end of the previous year in which 
the failure to comply with the provisions of this section takes place.
Explanation.—For the purposes of this section,—
(i) “relevant previous years” means,—
(A) in a case where the spectrum fee is actually paid before the commencement of the business to 
operate telecommunication services, the previous years beginning with the previous year in which 
such business commenced;
(B) in any other case, the previous years beginning with the previous year in which the spectrum 
fee is actually paid,
and the subsequent previous year or years during which the spectrum, for which the fee is paid, 
shall be in force;
(ii) “appropriate fraction” means the fraction, the numerator of which is one and the denominator of 
which is the total number of the relevant previous years;
(iii) “payment has actually been made” means the actual payment of expenditure irrespective of the 
previous year in which the liability for the expenditure was incurred according to the method of 
accounting regularly employed by the assessee or payable in such manner as may be prescribed.]

35ABB. Expenditure for obtaining licence to operate telecommunication services.—(1) In 
respect of any expenditure, being in the nature of capital expenditure, incurred 2
[for acquiring any right to 
operate telecommunication services either before the commencement of the business to operate 
telecommunication services or thereafter at any time during any previous year] and for which payment 
has actually been made to obtain a licence, there shall, subject to and in accordance with the provisions of 
this section, be allowed for each of the relevant previous years, a deduction equal to the appropriate 
fraction of the amount of such expenditure.
Explanation.—For the purposes of this section,—
3
[(i) “relevant previous years” means,—
(A) in a case where the licence fee is actually paid before the commencement of the business 
to operate telecommunication services, the previous years beginning with the previous year in 
which such business commenced;
(B) in any other case, the previous years beginning with the previous year in which the 
licence fee is actually paid,
and the subsequent previous year or years during which the licence, for which the fee is paid, shall be in 
force;]
(ii) “appropriate fraction” means the fraction the numerator of which is one and the denominator 
of which is the total number of the relevant previous years;
(iii) “payment has actually been made” means the actual payment of expenditure irrespective of 
the previous year in which the liability for the expenditure was incurred according to the method of 
accounting regularly employed by the assessee.
(2) Where the licence is transferred and the proceeds of the transfer (so far as they consist of capital 
sums) are less than the expenditure incurred remaining unallowed, a deduction equal to such expenditure 
remaining unallowed, as reduced by the proceeds of the transfer, shall be allowed in respect of the 
previous year in which the licence is transferred.
(3) Where the whole or any part of the licence is transferred and the proceeds of the transfer (so far as 
they consist of capital sums) exceed the amount of the expenditure incurred remaining unallowed, so 
much of the excess as does not exceed the difference between the expenditure incurred to obtain the 
licence and the amount of such expenditure remaining unallowed shall be chargeable to income-tax as 
profits and gains of the business in the previous year in which the licence has been transferred.
Explanation.—Where the licence is transferred in a previous year in which the business is no longer 
in existence, the provisions of this sub-section shall apply as if the business is in existence in that previous 
year.
(4) Where the whole or any part of the licence is transferred and the proceeds of the transfer (so far as 
they consist of capital sums) are not less than the amount of expenditure incurred remaining unallowed, 
no deduction for such expenditure shall be allowed under sub-section (1) in respect of the previous year in 
which the licence is transferred or in respect of any subsequent previous year or years.
(5) Where a part of the licence is transferred in a previous year and sub-section (3) does not apply, the 
deduction to be allowed under sub-section (1) for expenditure incurred remaining unallowed shall be 
arrived at by—
(a) subtracting the proceeds of transfer (so far as they consist of capital sums) from the 
expenditure remaining unallowed; and
(b) dividing the remainder by the number of relevant previous years which have not expired at 
the beginning of the previous year during which the licence is transferred.
(6) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers the 
licence to the amalgamated company (being an Indian company),—
(i) the provisions of sub-sections (2), (3) and (4) shall not apply in the case of the amalgamating 
company; and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as 
they would have applied to the amalgamating company if the latter had not transferred the licence.]
1
[(7) Where, in a scheme of demerger, the demerged company sells or otherwise transfers the licence 
to the resulting company (being an Indian company),—
(i) the provisions of sub-sections (2), (3) and (4) shall not apply in the case of the demerged 
company; and
(ii) the provisions of this section shall, as far as may be, apply to the resulting company as they 
would have applied to the demerged company if the latter had not transferred the licence.]
1
[(8) Where a deduction for any previous year under sub-section (1) is claimed and allowed in respect 
of any expenditure referred to in that sub-section, no deduction shall be allowed under sub-section (1) of 
section 32 for the same previous year or any subsequent previous year.]

35AC. Expenditure on eligible projects or schemes.— (1) Where an assessee incurs any 
expenditure by way of payment of any sum to a public sector company or a local authority or to an 
association or institution approved by the National Committee for carrying out any eligible project or 
scheme, the assessee shall, subject to the provisions of this section, be allowed a deduction of the amount 
of such expenditure incurred during the previous year :
Provided that a company may, for claiming the deduction under this sub-section, incur expenditure 
either by way of payment of any sum as aforesaid or directly on the eligible project or scheme.
(2) The deduction under sub-section (1) shall not be allowed unless the assessee furnishes along with 
his return of income a certificate—
(a) where the payment is to a public sector company or a local authority or an association or 
institution referred to in sub-section (1), from such public sector company or local authority or, as the 
case may be, association or institution;
(b) in any other case, from an accountant, as defined in the Explanation below sub-section (2) of
section 288,
in such form, manner and containing such particulars (including particulars relating to the progress in 
the work relating to the eligible project or scheme during the previous year) as may be prescribed.
3
[Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a 
public sector company or a local authority or to an association or institution for carrying out the eligible 
project or scheme referred to in this section applies, shall not be denied merely on the ground that 
subsequent to the payment of such sum by the assessee,—
(a) the approval granted to such association or institution has been withdrawn; or
(b) the notification notifying the eligible project or scheme carried out by the public sector 
company or local authority or association or institution has been withdrawn.]
(3) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such 
expenditure under any other provision of this Act for the same or any other assessment year.
4
[(4) Where an association or institution is approved by the National Committee under 
sub-section (1), and subsequently—
(i) that Committee is satisfied that the project or the scheme is not being carried on in accordance 
with all or any of the conditions subject to which approval was granted; or
(ii) such association or institution, to which approval has been granted, has not furnished to the 
National Committee, after the end of each financial year, a report in such form and setting forth such 
particulars and within such time as may be prescribed
the National Committee may, at any time, after giving a reasonable opportunity of showing cause against 
the proposed withdrawal to the concerned association or institution, withdraw the approval:
Provided that a copy of the order withdrawing the approval shall be forwarded by the National 
Committee to the Assessing Officer having jurisdiction over the concerned association or institution.
5) Where any project or scheme has been notified as an eligible project or scheme under clause (b) of 
the Explanation, and subsequently—
(i) the National Committee is satisfied that the project or the scheme is not being carried on in 
accordance with all or any of the conditions subject to which such project or scheme was notified; or
(ii) a report in respect of such eligible project or scheme has not been furnished after the end of 
each financial year, in such form and setting forth such particulars and within such time as may be 
prescribed,
such notification may be withdrawn in the same manner in which it was issued:
Provided that a reasonable opportunity of showing cause against the proposed withdrawal shall be 
given by the National Committee to the concerned association, institution, public sector company or local 
authority, as the case may be:
Provided further that a copy of the notification by which the notification of the eligible project or 
scheme is withdrawn shall be forwarded to the Assessing Officer having jurisdiction over the concerned 
association, institution, public sector company or local authority, as the case may be, carrying on such 
eligible project or scheme.]
1
[(6) Notwithstanding anything contained in any other provision of this Act, where—
(i) the approval of the National Committee, granted to an association or institution, is withdrawn 
under sub-section (4) or the notification in respect of eligible project or scheme is withdrawn in the 
case of a public sector company or local authority or an association or institution under 
sub-section (5); or
(ii) a company has claimed deduction under the proviso to sub-section (1) in respect of any 
expenditure incurred directly on the eligible project or scheme and the approval for such project or 
scheme is withdrawn by the National Committee under sub-section (5),
the total amount of the payment received by the public sector company or the local authority or the 
association or the institution, as the case may be, in respect of which such company or authority or 
association or institution has furnished a certificate referred to in clause (a) of sub-section (2) or the 
deduction claimed by a company under the proviso to sub-section (1) shall be deemed to be the income of 
such company or authority or association or institution, as the case may be, for the previous year in which 
such approval or notification is withdrawn and tax shall be charged on such income at the maximum 
marginal rate in force for that year.]
2
[(7) No deduction under this section shall be allowed in respect of any assessment year commencing 
on or after the 1st day of April, 2018.]
Explanation.—For the purposes of this section,—
(a) “National Committee” means the Committee constituted by the Central Government, from 
amongst persons of eminence in public life, in accordance with the rules made under this Act;
(b) “eligible project or scheme” means such project or scheme for promoting the social and 
economic welfare of, or the uplift of, the public as the Central Government may, by notification in the 
Official Gazette, specify in this behalf on the recommendations of the National Committee.]

35AD. Deduction in respect of expenditure on specified business.— (1) An assessee shall be 
allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and 
exclusively, for the purposes of any specified business carried on by him during the previous year in 
which such expenditure is incurred by him:
Provided that the expenditure incurred, wholly and exclusively, for the purposes of any specified 
business, shall be allowed as deduction during the previous year in which he commences operations of his 
specified business, if—
(a) the expenditure is incurred prior to the commencement of its operations; and
(b) the amount is capitalised in the books of account of the assessee on the date of 
commencement of its operations.]
1
* * * * * 
(2) This section applies to the specified business which fulfils all the following conditions, 
namely:—
(i) it is not set up by splitting up, or the reconstruction, of a business already in existence;
(ii) it is not set up by the transfer to the specified business of machinery or plant previously used 
for any purpose;
(iii) where the business is of the nature referred to in sub-clause (iii) of clause (c) of 
sub-section (8), such business,—
(a) is owned by a company formed and registered in India under the Companies 
Act, 1956 (1 of 1956) or by a consortium of such companies or by an authority or a board or a 
corporation established or constituted under any Central or State Act;
(b) has been approved by the Petroleum and Natural Gas Regulatory Board established 
under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board 
Act, 2006 (19 of 2006) and notified by the Central Government in the Official Gazette in this 
behalf;
(c) has made not less than 2
[such proportion of its total pipeline capacity as specified by 
regulations made by the Petroleum and Natural Gas Regulatory Board established under subsection (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 
2006)] available for use on common carrier basis by any person other than the assessee or an 
associated person; and
(d) fulfils any other condition as may be prescribed.
3
[(iv) where the business is of the nature referred to in sub-clause (xiv) of clause (c) of 
sub-section (8), such business,—
(A) is owned by a company registered in India or by a consortium of such companies or by an 
authority or a board or corporation or any other body established or constituted under any Central 
or State Act;
(B) entity referred to in sub-clause (A) has entered into an agreement with the Central 
Government or a State Government or a local authority or any other statutory body for 
developing or operating and maintaining or developing, operating and maintaining, a new 
infrastructure facility.]
4
[(3) Where a deduction under this section is claimed and allowed in respect of the specified business 
for any assessment year, no deduction shall be allowed under the provisions of 5
[section 10AA and]
Chapter VIA under the heading” C.—Deductions in respect of certain incomes” in relation to such 
specified business for the same or any other assessment year.]
(4) No deduction in respect of the expenditure referred to in sub-section (1) shall be allowed to the 
assessee under any other section in any previous year or under this section in any other previous year.
(5) The provisions of this section shall apply to the specified business referred to in sub-section (2) if 
it commences its operations,—
(a) on or after the 1st day of April, 2007, where the specified business is in the nature of laying 
and operating a cross-country natural gas pipeline network for distribution, including storage facilities 
being an integral part of such network; 1
***
2
[(aa) on or after the 1st day of April, 2010, where the specified business is in the nature of 
building and operating a new hotel of two-star or above category as classified by the Central 
Government;
(ab) on or after the 1st day of April, 2010, where the specified business is in the nature of 
building and operating a new hospital with at least one hundred beds for patients;
(ac) on or after the 1st day of April, 2010, where the specified business is in the nature of 
developing and building a housing project under a scheme for slum redevelopment or rehabilitation 
framed by the Central Government or a State Government, as the case may be, and which is notified 
by the Board in this behalf in accordance with the guidelines as may be prescribed; 3
***]
4
[(ad) on or after the 1st day of April, 2011, where the specified business is in the nature of 
developing and building a housing project under a scheme for affordable housing framed by the 
Central Government or a State Government, as the case may be, and notified by the Board in this 
behalf in accordance with the guidelines as may be prescribed;
(ae) on or after the 1st day of April, 2011, in a new plant or in a newly installed capacity in an 
existing plant for production of fertilizer; 5
***]
6
(af) on or after the 1st day of April, 2012, where the specified business is in the nature of setting 
up and operating an inland container depot or a container freight station notified or approved under 
the Customs Act, 1962 (52 of 1962);
(ag) on or after the 1st day of April, 2012, where the specified business is in the nature of beekeeping and production of honey and beeswax;
(ah) on or after the 1st day of April, 2012, where the specified business is in the nature of setting 
up and operating a warehousing facility for storage of sugar; 7
***]
8
[(ai) on or after the 1st day of April, 2014, where the specified business is in the nature of laying 
and operating a slurry pipeline for the transportation of iron ore;
(aj) on or after the 1st day of April, 2014, where the specified business is in the nature of setting 
up and operating a semi-conductor wafer fabrication manufacturing unit, and which is notified by the 
Board in accordance with such guidelines as may be prescribed; 9
***]
1
[(ak) on or after the 1st day of April, 2017, where the specified business is in the nature of 
developing or operating and maintaining or developing, operating and maintaining, any infrastructure 
facility; and]
(b) on or after the 1st day of April, 2009, in all other cases not falling under 2
[any of the above 
clauses.]
(6) The assessee carrying on the business of the nature referred to in clause (a) of sub-section (5) shall 
be allowed, in addition to deduction under sub-section (1), a further deduction in the previous year
relevant to the assessment year beginning on the 1st day of April, 2010, of an amount in respect of 
expenditure of capital nature incurred during any earlier previous year, if—
(a) the business referred to in clause (a) of sub-section (5) has commenced its operation at any 
time during the period beginning on or after the 1st day of April, 2007 and ending on the 31st day of 
March, 2009; and
(b) no deduction for such amount has been allowed or is allowable to the assessee in any earlier 
previous year.
3
[(6A) Where the assessee builds a hotel of two-star or above category as classified by the Central 
Government and subsequently, while continuing to own the hotel, transfers the operation thereof to 
another person, the assessee shall be deemed to be carrying on the specified business referred to in subclause (iv) of clause (c) of sub-section (8).]
(7) The provisions contained in sub-section (6) of section 80A and the provisions of sub-sections (7) 
and (10) of section 80-IA shall, so far as may be, apply to this section in respect of goods or services or 
assets held for the purposes of the specified business.
4
[(7A) Any asset in respect of which a deduction is claimed and allowed under this section shall be 
used only for the specified business, for a period of eight years beginning with the previous year in which 
such asset is acquired or constructed.
(7B) Where any asset, in respect of which a deduction is claimed and allowed under this section, is 
used for a purpose other than the specified business during the period specified in sub-section (7A), 
otherwise than by way of a mode referred to in clause (vii) of section 28, the total amount of deduction so 
claimed and allowed in one or more previous years, as reduced by the amount of depreciation allowable 
in accordance with the provisions of section 32, as if no deduction under this section was allowed, shall 
be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or 
profession” of the previous year in which the asset is so used.
(7C) Nothing contained in sub-section (7B) shall apply to a company which has become a sick 
industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special 
Provisions) Act, 1985 (1 of 1986), during the period specified in sub-section (7A).]
(8) For the purposes of this section,—
(a) an“associated person”, in relation to the assessee, means a person,—
(i) who participates, directly or indirectly, or through one or more intermediaries in the 
management or control or capital of the assessee;
(ii) who holds, directly or indirectly, shares carrying not less than twenty-six per cent of the 
voting power in the capital of the assessee;
(iii) who appoints more than half of the Board of directors or members of the governing 
board, or one or more executive directors or executive members of the governing board of the 
assessee; or
(iv) who guarantees not less than ten per cent of the total borrowings of the assessee;
(b) “cold chain facility” means a chain of facilities for storage or transportation of agricultural 
and forest produce, meat and meat products, poultry, marine and dairy products, products of 
horticulture, floriculture and apiculture and processed food items under scientifically controlled 
conditions including refrigeration and other facilities necessary for the preservation of such produce;
1
[(ba) “infrastructure facility” means—
(i) a road including toll road, a bridge or a rail system;
(ii) a highway project including housing or other activities being an integral part of the 
highway project;
(iii) a water supply project, water treatment system, irrigation project, sanitation and 
sewerage system or solid waste management system;
(iv) a port, airport, inland waterway, inland port or navigational channel in the sea;]
(c) “specified business” means any one or more of the following business, namely :—
(i) setting up and operating a cold chain facility;
(ii) setting up and operating a warehousing facility for storage of agricultural produce;
(iii) laying and operating a cross-country natural gas or crude or petroleum oil pipeline 
network for distribution, including storage facilities being an integral part of such network;
2
[(iv) building and operating, anywhere in India, a 3
[hotel] of two-star or above category as 
classified by the Central Government;
(v) building and operating, anywhere in India, a 4
[hospital] with at least one hundred beds for 
patients;
(vi) developing and building a housing project under a scheme for slum redevelopment or 
rehabilitation framed by the Central Government or a State Government, as the case may be, and 
notified by the Board in this behalf in accordance with the guidelines as may be prescribed;
1
[(vii) developing and building a housing project under a scheme for affordable housing 
framed by the Central Government or a State Government, as the case may be, and notified by the 
Board in this behalf in accordance with the guidelines as may be prescribed;
(viii) production of fertilizer in India;]
2
[(ix) setting up and operating an inland container depot or a container freight station notified 
or approved under the Customs Act, 1962 (52 of 1962);
(x) bee-keeping and production of honey and beeswax;
(xi) setting up and operating a warehousing facility for storage of sugar;]
3
[(xii) laying and operating a slurry pipeline for the transportation of iron ore;
(xiii) setting up and operating a semi-conductor wafer fabrication manufacturing unit notified 
by the Board in accordance with such guidelines as may be prescribed;]
4
[(xiv) developing or maintaining and operating or developing, maintaining and operating a 
new infrastructure facility;]
(d) any machinery or plant which was used outside India by any person other than the assessee 
shall not be regarded as machinery or plant previously used for any purpose, if—
(i) such machinery or plant was not, at any time prior to the date of the installation by the 
assessee, used in India;
(ii) such machinery or plant is imported into India from any country outside India; and
(iii) no deduction on account of depreciation in respect of such machinery or plant has been 
allowed or is allowable under the provisions of this Act in computing the total income of any 
person for any period prior to the date of installation of the machinery or plant by the assessee;
(e) where in the case of a specified business, any machinery or plant or any part thereof 
previously used for any purpose is transferred to the specified business and the total value of the 
machinery or plant or part so transferred does not exceed twenty per cent of the total value of the 
machinery or plant used in such business, then, for the purposes of clause (ii) of sub-section (2), the 
condition specified therein shall be deemed to have been complied with;
(f) any expenditure of capital nature shall not include 5
[any expenditure in respect of which the 
payment or aggregate of payments made to a person in a day, otherwise than by an account payee 
cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a 
bank account, exceeds ten thousand rupees or] any expenditure incurred on the acquisition of any land 
or goodwill or financial instrument.]

35B. [Export markets development allowance.]—Omitted by the Direct Tax Laws (Amendment) 
Act, 1987 (4 of 1988), s. 10 as amended by Act 3 of 1989, s. 95 (w.e.f.1-4-1989). Earlier inserted by Act
19 of 1968, s. 5 (w.e.f. 1-4-1968).

35C. [Agricultural development allowance.]—Omitted by s. 10, ibid. (w.e.f. 1-4-1988) as amended 
by s. 95, ibid. (w.e.f.1-4-1989). Earlier inserted s. 5, ibid. (w.e.f. 1-4-1968).

35CC. [Rural development allowance.]—Omitted by s. 10, ibid. (w.e.f. 1-4-1988) as amended by 
s. 95, ibid. (w.e.f.1-4-1989). Earlier inserted s. 5, ibid. (w.e.f. 1-4-1968).

35CCA.Expenditure by way of payment to associations and institutions for carrying out rural 
development programmes.—2
[(1) Where an assessee incurs any expenditure by way of payment of any 
sum—
(a) to an association or institution, which has as its object the undertaking of any programme of 
rural development, to be used for carrying out any programme of rural development approved by the 
prescribed authority; or
(b) to an association or institution, which has as its object the training of persons for 
implementing programmes of rural development; 3
[or]
4
[(c) to a rural development fund set up and notified by the Central Government in this 5
[behalf; 
or]
6
[(d) to the National Urban Poverty Eradication Fund set up and notified by the Central 
Government in this behalf,]
the assessee shall, subject to the provisions of sub-section (2), be allowed a deduction of the amount of 
such expenditure incurred during the previous year.]
7
[(2) The deduction under clause (a) of sub-section (1) shall not be allowed in respect of expenditure 
by way of payment of any sum to any association or institution referred to in the said clause unless the 
assessee furnishes a certificate from such association or institution to the effect that—
(a) the programme of rural development had been approved by the prescribed authority before 
the 1st day of March, 1983; and
(b) where such payment is made after the 28th day of February, 1983, such programme involves 
work by way of construction of any building or other structure (whether for use as a dispensary, 
school, training or welfare centre, workshop or for any other purpose) or the laying of any road or the 
construction or boring of a well or tube-well or the installation of any plant or machinery, and such 
work has commenced before the 1st day of March, 1983.]
(2A) The deduction under clause (b) of sub-section (1) shall not be allowed in respect of expenditure 
by way of payment of any sum to any association or institution unless the assessee furnishes a certificate 
from such association or institution to the effect that—
(a) the prescribed authority had approved the association or institution before the 1st day of 
March, 1983; and (b) the training of persons for implementing any programme of rural development had been 
started by the association or institution before the 1st day of March, 1983.]
1
[Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to an 
association or institution for carrying out the programme of rural development referred to in subsection (1), shall not be denied merely on the ground that subsequent to the payment of such sum by 
the assessee, the approval granted to such programme of rural development, or as the case may be, to 
the association or institution has been withdrawn.]
(2B) No certificate of the nature referred to in sub-section (2) or sub-section (2A) shall be issued by 
any association or institution unless such association or institution has obtained from the prescribed 
authority authorisation in writing to issue certificates of such nature.]
Explanation.—For the purposes of this section, “programme of rural development” shall have the 
meaning assigned to it in the Explanation to sub-section (1) of section 35CC.
(3) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such 
expenditure under section 35C or section 35CC or section 80G or any other provision of this Act for the 
same or any other assessment year.]

35CCB. Expenditure by way of payment to associations and institutions for carrying out 
programmes of conservation of natural resources.—3
[(1) 4
[Where an assessee incurs any expenditure 
on or before the 31st day of March, 2002] by way of payment of any sum—
(a) to an association or institution, which has as its object the undertaking of any programme of 
conservation of natural resources or of afforestation, to be used for carrying out any programme of 
conservation of natural resources or afforestation approved by the prescribed authority; or
(b) to such fund for afforestation as may be notified by the Central Government,
the assessee shall, subject to the provisions of sub-section (2), be allowed a deduction of the amount of 
such expenditure incurred during the previous year.]
(2) The deduction under 5
[clause (a) of] sub-section (1) shall not be allowed with respect to 
expenditure by way of payment of any sum to any association or institution, unless such association or 
institution is for the time being approved in this behalf by the prescribed authority:
Provided that the prescribed authority shall not grant such approval for more than three years at a 
time.
(3) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such 
expenditure under any other provision of this Act for the same or any other assessment year.

35CCC. Expenditure on agricultural extension project.— (1) Where an assessee incurs any 
expenditure on agricultural extension project notified by the Board in this behalf in accordance with 
theguidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and 
one-half times of such expenditure.
[Provided that for the assessment year beginning on or after the 1st day of April, 2021, the provisions 
of this sub-section shall have effect as if for the words “a sum equal to one and one-half times of”, the 
words “a sum equal to” had been substituted.]
(2) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such 
expenditure under any other provisions of this Act for the same or any other assessment year.]

35CCD. Expenditure on skill development project.— (1) Where a company incurs any 
expenditure (not being expenditure in the nature of cost of any land or building) on any skill development 
project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, 
there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure.]
3
[Provided that for the assessment year beginning on or after the 1st day of April, 2021, the provisions 
of this sub-section shall have effect, as if for the words “an amount equal to one and one-half times of”, 
the words “a sum equal to” had been substituted.]
(2) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such 
expenditure under any other provisions of this Act for the same or any other assessment year.]

35D. Amortisation of certain preliminary expenses.— (1) Where an assessee, being an Indian 
company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 
1970, any expenditure specified in sub-section (2),—
(i) before the commencement of his business, or
(ii) after the commencement of his business, in connection with the extension of his 
5
[undertaking] or in connection with his setting up a new 6
[unit],
the assessee shall, in accordance with and subject to the provisions of this section, be allowed a 
deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous 
years beginning with the previous year in which the business commences or, as the case may be, the 
previous year in which the extension of the 5
[undertaking] is completed or the new 6
[unit] commences 
production or operation:
7
[Provided that where an assessee incurs after the 31st day of March, 1998, any expenditure specified 
in sub-section (2), the provisions of this sub-section shall have effect as if for the words “an amount equal 
to one-tenth of such expenditure for each of the ten successive previous years”, the words “an amount 
equal to one-fifth of such expenditure for each of the five successive previous years” had been 
substituted.]
(2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or 
more of the following clauses, namely :—
(a) expenditure in connection with—
(i) preparation of feasibility report;
(ii) preparation of project report;

35DD. Amortisation of expenditure in case of amalgamation or demerger.—(1) Where an 
assessee, being an Indian company, incurs any expenditure, on or after the 1st day of April, 1999, wholly 
and exclusively for the purposes of amalgamation or demerger of an undertaking, the assessee shall be 
allowed a deduction of an amount equal to one-fifth of such expenditure for each of the five successive 
previous years beginning with the previous year in which the amalgamation or demerger takes place.
(2) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under 
any other provision of this Act.

35DDA. Amortisation of expenditure incurred under voluntary retirement scheme.—(1) 
Where an assessee incurs any expenditure in any previous year by way of payment of any sum to an 
employee 3
[in connection with his voluntary retirement], in accordance with any scheme or schemes of 
voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the profits and gains 
of the business for that previous year, and the balance shall be deducted in equal instalments for each of 
the four immediately succeeding previous years.]
4
[(2) Where the assessee, being an Indian company, is entitled to the deduction under sub-section (1) 
and the undertaking of such Indian company entitled to the deduction under sub-section (1) is transferred, 
before the expiry of the period specified in that sub-section, to another Indian company in a scheme of 
amalgamation, the provisions of this section shall, as far as may be, apply to the amalgamated company 
as they would have applied to the amalgamating company if the amalgamation had not taken place.
(3) Where the undertaking of an Indian company entitled to the deduction under sub-section (1) is 
transferred, before the expiry of the period specified in that sub-section, to another company in a scheme 
of demerger, the provisions of this section shall, as far as may be, apply to the resulting company, as they 
would have applied to the demerged company, if the demerger had not taken place.
(4) Where there has been reorganisation of business, whereby a firm is succeeded by a company 
fulfilling the conditions laid down in clause (xiii) of section 47 or a proprietary concern is succeeded by a 
company fulfilling the conditions laid down in clause (xiv) of section 47, the provisions of this section 
shall, as far as may be, apply to the successor company, as they would have applied to the firm or the 
proprietary concern, if reorganisation of business had not taken place.
5
[(4A) Where there has been reorganisation ofbusiness, whereby a private company or unlisted public 
company is succeeded by a limited liability partnership fulfilling the conditions laid down in the proviso 
to clause (xiiib) of section 47, the provisions of this section shall, as far as may be, apply to the successor 
limited liability partnership, as they would have applied to the said company, if reorganisation of business 
had not taken place.
(5) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) in the 
case of the amalgamating company referred to in sub-section (2), in the case of demerged company 
referred to in 6
[sub-section (3), in the case of a firm or proprietary concern referred to in sub-section (4)
and in the case of a company referred to in sub-section (4A)] of this section, for the previous year in 
which amalgamation, demerger or succession, as the case may be, takes place.
(6) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under 
any other provision of this Act.]

35E. Deduction for expenditure on prospecting, etc., for certain minerals.—(1) Where an 
assessee, being an Indian company or a person (other than a company) who is resident in India, is 
engaged in any operations relating to prospecting for, or extraction or production of, any mineral and 
incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2), the assessee shall, 
in accordance with and subject to the provisions of this section, be allowed for each one of the relevant 
previous years a deduction of an amount equal to one-tenth of the amount of such expenditure.
(2) The expenditure referred to in sub-section (1) is that incurred by the assessee after the date 
specified in that sub-section at any time during the year of commercial production and any one or more of 
the four years immediately preceding that year, wholly and exclusively on any operations relating to 
prospecting for any mineral or group of associated minerals specified in Part A or Part B, respectively, of 
the Seventh Schedule or on the development of a mine or other natural deposit of any such mineral or 
group of associated minerals :
Provided that there shall be excluded from such expenditure any portion thereof which is met directly 
or indirectly by any other person or authority and any sale, salvage, compensation or insurance moneys 
realised by the assessee in respect of any property or rights brought into existence as a result of the 
expenditure.
(3) Any expenditure—
(i) on the acquisition of the site of the source of any mineral or group of associated minerals 
referred to in sub-section (2) or of any rights in or over such site;
(ii) on the acquisition of the deposits of such mineral or group of associated minerals or of any 
rights in or over such deposits; or
(iii) of a capital nature in respect of any building, machinery, plant or furniture for which 
allowance by way of depreciation is admissible under section 32,
shall not be deemed to be expenditure incurred by the assessee for any of the purposes specified in 
sub-section (2).
(4) The deduction to be allowed under sub-section (1) for any relevant previous year shall be—
(a) an amount equal to one-tenth of the expenditure specified in sub-section (2) (such one-tenth 
being hereafter in this sub-section referred to as the instalment); or
(b) such amount as is sufficient to reduce to nil the income (as computed before making the 
deduction under this section) of that previous year arising from the commercial exploitation [whether 
or not such commercial exploitation is as a result of the operations or development referred to in subsection (2)] of any mine or other natural deposit of the mineral or any one or more of the minerals in a 
group of associated minerals as aforesaid in respect of which the expenditure was incurred,
whichever amount is less:
Provided that the amount of the instalment relating to any relevant previous year, to the extent to 
which it remains unallowed, shall be carried forward and added to the instalment relating to the previous 
year next following and deemed to be part of that instalment, and so on, for succeeding previous years, 
so, however, that no part of any instalment shall be carried forward beyond the tenth previous year as 
reckoned from the year of commercial production.
(5) For the purposes of this section,—
(a) “operation relating to prospecting” means any operation undertaken for the purposes of 
exploring, locating or proving deposits of any mineral, and includes any such operation which proves 
to be infructuous or abortive;
(b) “year of commercial production” means the previous year in which as a result of any 
operation relating to prospecting, commercial production of any mineral or any one or more of the 
minerals in a group of associated minerals specified in Part A or Part B, respectively, of the Seventh 
Schedule, commences;
(c) “relevant previous years” means the ten previous years beginning with the year of commercial 
production.
(6) Where the assessee is a person other than a company or a co-operative society, no deduction shall 
be admissible under sub-section (1) unless the accounts of the assessee for the year or years in which the 
expenditure specified in sub-section (2) is incurred have been audited by an accountant as defined in 
the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of 
income for the first year in which the deduction under this section is claimed, the report of such audit in 
the prescribed form duly signed and verified by such accountant and setting forth such particulars as may 
be prescribed.
(7) Where the undertaking of an Indian company which is entitled to the deduction under 
sub-section (1) is transferred, before the expiry of the period of ten years specified in sub-section (1), to 
another Indian company in a scheme of amalgamation—
(i) no deduction shall be admissible under sub-section (1) in the case of the amalgamating 
company for the previous year in which the amalgamation takes place; and
(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as 
they would have applied to the amalgamating company if the amalgamation had not taken place.
1
[(7A) Where the undertaking of an Indian company which is entitled to the deduction under 
sub-section (1) is transferred, before the expiry of the period of ten years specified in sub-section (1), to 
another Indian company in a scheme of demerger,—
(i) no deduction shall be admissible under sub-section (1) in the case of the demerged company 
for the previous year in which the demerger takes place; and
(ii) the provisions of this section shall, as far as may be, apply to the resulting company as they 
would have applied to the demerged company, if the demerger had not taken place.]
(8) Where a deduction under this section is claimed and allowed for any assessment year in respect of 
any expenditure specified in sub-section (2), the expenditure in respect of which deduction is so allowed 
shall not qualify for deduction under any other provision of this Act for the same or any other assessment 
year.]