Amounts not deductible Notwithstanding anything to the contrary in sections 30 to 4 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession,-
a in the case of any assessee- i any interest not being interest on a loan issued for public subscription before the 1st day of April, 1938 , royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India, on which tax has not been paid or deducted under Chapter XVII- B Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII- B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted. Explanation.- For the purposes of this sub- clause,- A royalty shall have the same meaning as in Explanation 2 to clause vi of sub- section 1 of section 9 B fees for technical services shall have the same meaning as in Explanation 2 to clause vii of sub- section 1 of section 9 1. Substituted for Income- tax by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988. 2. Prior to the omission, section 39 read as under 39. Managing agency commission.- Where a managing agent of a company is liable under an agreement in writing made for adequate consideration to share managing agency commission with a third party or third parties, the said agent and the said party or parties shall file a declaration showing the proportion in which such commission is shared between them under the agreement, and on proof to the satisfaction of the Income- tax Officer of the facts contained in such declaration, such agent and each such party shall be chargeable only on the share to which such agent or party is entitled under the agreement. 4. Substituted for 39 by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 5. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, subclause i read as under i any 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 ii any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains iia any sum paid on account of wealth- tax. Explanation.- For the purposes of this sub- clause, wealth- tax means wealth- tax chargeable under the Wealth- tax Act, 1957 27 of 1957 , or any tax of a similar character chargeable under any law in force in any country outside India or any tax chargeable under such law with reference to the value of the assets of, or the capital employed in, a business or profession carried on by the assessee, whether or not the debts of the business or profession are allowed as a deduction in computing the amount with reference to which such tax is charged, but does not include any tax chargeable with reference to the value of any particular asset of the business or profession iii any payment which is chargeable under the head Salaries, if it is payable outside India and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII- B iv any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are chargeable to tax under the head Salaries v 1. Inserted by the Income- tax Amendment Act, 1972, w. r. e. f. 1- 4- 1962. Section 4 of the Amendment Act extended the prohibition to assessment years governed by the 1922 Act and section 5 saved certain cases. These sections read as under 4. Wealth- tax not deductible in computing the total income for certain assessment years.- Nothing contained in the Indian Income- tax Act, 1922 11 of 1922 , shall be deemed to authorise, or shall be deemed ever to have authorised, any deduction in the computation of the income of any assessee chargeable under the head Profits and gains of business, profession or vocation or Income from other sources for the assessment year commencing on the 1st day of April, 1957, or any subsequent assessment year, of any sum paid on account of wealth- tax. Explanation.- For the purposes of this section, wealth- tax shall have the same meaning as is assigned to it in the Explanation to sub- clause iia of clause a of section 40 of the principal Act. 5. Saving in certain cases.- Where, before the 15th day of July, 1972 being the date on which the Income- tax Amendment Ordinance, 1972 7 of 1972 , came into force, the Supreme Court has, on an appeal in respect of the assessment of an assessee for any particular assessment year, held that wealth- tax paid by the assessee is deductible in computing the total income of that year, then, nothing contained in subclause ii- a of clause a of, section 40, or sub- section 1A of section 58, of the principal Act, as amended by this Act, or, as the case may be, section 4 of this Act, shall apply to the assessment of such assessee for that particular year. 2. Omitted by the Finance No. 2 Act, 1971, w. e. f. 1- 4- 1972. Earlier, it was inserted by the Finance Act, 1968, w. e. f. 1- 4- 1969 and amended by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971
any interest not being interest on a loan issued for public subscription before the 1st day of April, 1938 , royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India, on which tax has not been paid or deducted under Chapter XVII- B Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII- B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted. Explanation.- For the purposes of this sub- clause,- A royalty shall have the same meaning as in Explanation 2 to clause vi of sub- section 1 of section 9 B fees for technical services shall have the same meaning as in Explanation 2 to clause vii of sub- section 1 of section 9 1. Substituted for Income- tax by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988. 2. Prior to the omission, section 39 read as under 39. Managing agency commission.- Where a managing agent of a company is liable under an agreement in writing made for adequate consideration to share managing agency commission with a third party or third parties, the said agent and the said party or parties shall file a declaration showing the proportion in which such commission is shared between them under the agreement, and on proof to the satisfaction of the Income- tax Officer of the facts contained in such declaration, such agent and each such party shall be chargeable only on the share to which such agent or party is entitled under the agreement. 4. Substituted for 39 by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 5. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, subclause i read as under i any 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
A royalty shall have the same meaning as in Explanation 2 to clause vi of sub- section 1 of section 9
B fees for technical services shall have the same meaning as in Explanation 2 to clause vii of sub- section 1 of section 9 1. Substituted for Income- tax by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988. 2. Prior to the omission, section 39 read as under 39. Managing agency commission.- Where a managing agent of a company is liable under an agreement in writing made for adequate consideration to share managing agency commission with a third party or third parties, the said agent and the said party or parties shall file a declaration showing the proportion in which such commission is shared between them under the agreement, and on proof to the satisfaction of the Income- tax Officer of the facts contained in such declaration, such agent and each such party shall be chargeable only on the share to which such agent or party is entitled under the agreement. 4. Substituted for 39 by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1989. 5. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, subclause i read as under i any 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
Prior to the omission, clause c , as amended by the Finance Act, 1963, w. e. f. 1- 4- 1963 the Finance Act, 1964, w. e. f. 1- 4- 1964 the Finance Act, 1968, w. e. f. 1- 4- 1969 the Finance No. 2 Act, 1971, w. e. f. 1- 4- 1972 the Finance Act, 1984, w. e. f. 1- 4- 1985 and the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988, read as under
any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains
iia any sum paid on account of wealth- tax. Explanation.- For the purposes of this sub- clause, wealth- tax means wealth- tax chargeable under the Wealth- tax Act, 1957 27 of 1957 , or any tax of a similar character chargeable under any law in force in any country outside India or any tax chargeable under such law with reference to the value of the assets of, or the capital employed in, a business or profession carried on by the assessee, whether or not the debts of the business or profession are allowed as a deduction in computing the amount with reference to which such tax is charged, but does not include any tax chargeable with reference to the value of any particular asset of the business or profession
any payment which is chargeable under the head Salaries, if it is payable outside India and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII- B
any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are chargeable to tax under the head Salaries
1. Inserted by the Income- tax Amendment Act, 1972, w. r. e. f. 1- 4- 1962. Section 4 of the Amendment Act extended the prohibition to assessment years governed by the 1922 Act and section 5 saved certain cases. These sections read as under 4. Wealth- tax not deductible in computing the total income for certain assessment years.- Nothing contained in the Indian Income- tax Act, 1922 11 of 1922 , shall be deemed to authorise, or shall be deemed ever to have authorised, any deduction in the computation of the income of any assessee chargeable under the head Profits and gains of business, profession or vocation or Income from other sources for the assessment year commencing on the 1st day of April, 1957, or any subsequent assessment year, of any sum paid on account of wealth- tax. Explanation.- For the purposes of this section, wealth- tax shall have the same meaning as is assigned to it in the Explanation to sub- clause iia of clause a of section 40 of the principal Act. 5. Saving in certain cases.- Where, before the 15th day of July, 1972 being the date on which the Income- tax Amendment Ordinance, 1972 7 of 1972 , came into force, the Supreme Court has, on an appeal in respect of the assessment of an assessee for any particular assessment year, held that wealth- tax paid by the assessee is deductible in computing the total income of that year, then, nothing contained in subclause ii- a of clause a of, section 40, or sub- section 1A of section 58, of the principal Act, as amended by this Act, or, as the case may be, section 4 of this Act, shall apply to the assessment of such assessee for that particular year. 2. Omitted by the Finance No. 2 Act, 1971, w. e. f. 1- 4- 1972. Earlier, it was inserted by the Finance Act, 1968, w. e. f. 1- 4- 1969 and amended by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971
b in the case of any firm assessable as such,- i any payment of salary, bonus, commission or remuneration, by whatever name called hereinafter referred to as remuneration to any partner who is not a working partner or ii any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is not authorised by, or is not in accordance with, the terms of the partnership deed or iii any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is authorised by, and is in accordance with, the terms of the partnership deed, but which relates to any period falling prior to the date of such partnership deed for which such payment was not authorised by, or is not in accordance with, any earlier partnership deed, so, however, that the period of authorisation for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed or iv any payment of interest to any partner which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of eighteen per cent simple interest per annum or v any payment of remuneration to any partner who is a working partner, which is authorised by, and is in accordance with, the 1. Substituted by the Finance Act, 1992, w. e. f. 1- 4- 1993. Prior to the substitution, clause b , as originally enacted and amended by the Taxation Laws Amendment Act, 1984, w. e. f. 1- 4- 1985 Direct Tax Laws Amendment Act, 1987 and Direct Tax Laws Amendment Act, 1989, both with effect from 1- 4- 1989, read as under b in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm Explanation 1-Where interest is paid by a firm to any partner of the firm who has also paid interest to the firm, the amount of interest to be disallowed under this clause shall be limited to the amount by which the payment of interest by the firm to the partner exceeds the payment of interest by the partner to the firm. Explanation 2.- Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented respectively ,- i interest paid by the fir- in to such individual or by such individual to the firm other- wise than as partner in a representative capacity, shall not be taken into account for the purposes of this clause ii interest paid by the firm to such individual or by such individual to the firm as partner in a representative capacity and interest paid by the firm to the person so represented or by the person so represented to the firm, shall be taken into account for the purposes of this clause. Explanation 3.- Where an individual is a partner in a firm other- wise than as partner in a representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder- 1 in the case of a firm carrying on a profession referred to in section 44AA or which is notified for the purpose of that section- a on the first Rs. 1, 00, 000 Rs. 50, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 1, 00, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent 2 in the case of any other firm- a on the first Rs. 75, 000 Rs. 5, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 75, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent Provided that in relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on the 1st day of April, 1993 , the terms of the partnership deed may, at any time during the said previous year, provide for such payment. Explanation 1-Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented, respectively ,- i interest paid by the firm to such individual otherwise than as partner in a representative capacity, shall not be taken into account for the purposes of this clause ii interest paid by the firm to such individual as partner in a representative capacity and interest paid by the firm to the person so represented shall be taken into account for the purposes of this clause. Explanation 2.- Where an individual is a partner in a firm otherwise than as partner in a representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person. Explanation 3.- For the purposes of this clause, book- profit means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IVD as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit. Explanation 4.- For the purposes of this clause, working partner means an individual who is actively engaged in conducting the affairs of the business or profession of the firm of which he is a partner
any payment of salary, bonus, commission or remuneration, by whatever name called hereinafter referred to as remuneration to any partner who is not a working partner or
any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is not authorised by, or is not in accordance with, the terms of the partnership deed or
any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is authorised by, and is in accordance with, the terms of the partnership deed, but which relates to any period falling prior to the date of such partnership deed for which such payment was not authorised by, or is not in accordance with, any earlier partnership deed, so, however, that the period of authorisation for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed or
any payment of interest to any partner which is authorised by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of eighteen per cent simple interest per annum or
any payment of remuneration to any partner who is a working partner, which is authorised by, and is in accordance with, the 1. Substituted by the Finance Act, 1992, w. e. f. 1- 4- 1993. Prior to the substitution, clause b , as originally enacted and amended by the Taxation Laws Amendment Act, 1984, w. e. f. 1- 4- 1985 Direct Tax Laws Amendment Act, 1987 and Direct Tax Laws Amendment Act, 1989, both with effect from 1- 4- 1989, read as under b in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm Explanation 1-Where interest is paid by a firm to any partner of the firm who has also paid interest to the firm, the amount of interest to be disallowed under this clause shall be limited to the amount by which the payment of interest by the firm to the partner exceeds the payment of interest by the partner to the firm. Explanation 2.- Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented respectively ,- i interest paid by the fir- in to such individual or by such individual to the firm other- wise than as partner in a representative capacity, shall not be taken into account for the purposes of this clause ii interest paid by the firm to such individual or by such individual to the firm as partner in a representative capacity and interest paid by the firm to the person so represented or by the person so represented to the firm, shall be taken into account for the purposes of this clause. Explanation 3.- Where an individual is a partner in a firm other- wise than as partner in a representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder- 1 in the case of a firm carrying on a profession referred to in section 44AA or which is notified for the purpose of that section- a on the first Rs. 1, 00, 000 Rs. 50, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 1, 00, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent 2 in the case of any other firm- a on the first Rs. 75, 000 Rs. 5, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 75, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent Provided that in relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on the 1st day of April, 1993 , the terms of the partnership deed may, at any time during the said previous year, provide for such payment. Explanation 1-Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented, respectively ,-
1 in the case of a firm carrying on a profession referred to in section 44AA or which is notified for the purpose of that section- a on the first Rs. 1, 00, 000 Rs. 50, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 1, 00, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent
a on the first Rs. 1, 00, 000 Rs. 50, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more
b on the next Rs. 1, 00, 000 at the rate of 60 per of the book- profit cent
c on the balance of the at the rate of 40 per bookprofit cent
2 in the case of any other firm- a on the first Rs. 75, 000 Rs. 5, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more b on the next Rs. 75, 000 at the rate of 60 per of the book- profit cent c on the balance of the at the rate of 40 per bookprofit cent Provided that in relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on the 1st day of April, 1993 , the terms of the partnership deed may, at any time during the said previous year, provide for such payment. Explanation 1-Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented, respectively ,-
a on the first Rs. 75, 000 Rs. 5, 000 or at the rate of the book- profit or in of 90 per cent of the case of a loss book- profit, whichever is more
b on the next Rs. 75, 000 at the rate of 60 per of the book- profit cent
c on the balance of the at the rate of 40 per bookprofit cent Provided that in relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on the 1st day of April, 1993 , the terms of the partnership deed may, at any time during the said previous year, provide for such payment. Explanation 1-Where an individual is a partner in a firm on behalf, or for the benefit, of any other person such partner and the other person being hereinafter referred to as partner in a representative capacity and person so represented, respectively ,-
interest paid by the firm to such individual otherwise than as partner in a representative capacity, shall not be taken into account for the purposes of this clause
interest paid by the firm to such individual as partner in a representative capacity and interest paid by the firm to the person so represented shall be taken into account for the purposes of this clause. Explanation 2.- Where an individual is a partner in a firm otherwise than as partner in a representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person. Explanation 3.- For the purposes of this clause, book- profit means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IVD as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit. Explanation 4.- For the purposes of this clause, working partner means an individual who is actively engaged in conducting the affairs of the business or profession of the firm of which he is a partner
ba in the case of an association of persons or body of individuals other than a company or a co- operative society or a society 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 , any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such association or body to a member of such association or body. Explanation 1-Where interest is paid by an association or body to any member thereof who has also paid interest to the association or body, the amount of interest to be disallowed under this clause shall be limited to the amount by which the payment of interest by the association or body to the member exceeds the payment of interest by the member to the association or body. Explanation 2.- Where an individual is a member of an association or body on behalf, or for the benefit, of any other person such member and the other person being hereinafter referred to as member in a representative capacity and person so represented, respectively ,- i interest paid by the association or body to such individual or by such individual to the association or body otherwise than as member in a representative capacity, shall not be taken into account for the purposes of this clause ii interest paid by the association or body to such individual or by such individual to the association or body as member in a representative capacity and interest paid by the association or body to the person so represented or by the person so represented to the association or body, shall be taken into account for the purposes of this clause. Explanation 3.- Where an individual is a member of an association or body otherwise than as member in a representative capacity, interest paid by the association or body to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person.
interest paid by the association or body to such individual or by such individual to the association or body otherwise than as member in a representative capacity, shall not be taken into account for the purposes of this clause
interest paid by the association or body to such individual or by such individual to the association or body as member in a representative capacity and interest paid by the association or body to the person so represented or by the person so represented to the association or body, shall be taken into account for the purposes of this clause. Explanation 3.- Where an individual is a member of an association or body otherwise than as member in a representative capacity, interest paid by the association or body to such individual shall not be taken into account for the purposes of this clause, if such interest is received by him on behalf, or for the benefit, of any other person.
Omitted by the Direct Tax Laws Amendment Act, 1987 , w. e. f. 1- 4- 1989 . 1. Inserted by the Direct Tax Laws Amendment Act, 1989, w. e. f. 1- 4- 1989. 2. Prior to the omission, clause c , as amended by the Finance Act, 1963, w. e. f. 1- 4- 1963 the Finance Act, 1964, w. e. f. 1- 4- 1964 the Finance Act, 1968, w. e. f. 1- 4- 1969 the Finance No. 2 Act, 1971, w. e. f. 1- 4- 1972 the Finance Act, 1984, w. e. f. 1- 4- 1985 and the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988, read as under
Omitted by the Finance Act, 1988 , w. e. f 1- 4- 1989 .