chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 41 : Disposal along with retention of property or liability
If any person disposes of any property or liability in any manner referred to in clauses (c), (d), (e) and (f) of sub-section (3) of Section 40, the following provisions shall apply:-
(a) In respect of property,-
(1) That person shall be deemed to have received the amount equal to the market value of that property at the time of disposal for the disposal, and
(2) When that property is re-disposed, the net outgoings made for that property until the time of disposal pursuant to this Section shall be deemed to be equal to the amount receivable.
(b) In respect of liability,-
(1) That person shall be deemed to have spent the amount equal to the market value of that liability at the time of disposal for the disposal and
(2) When that liability is re-disposed, the incomings derived for that liability pursuant to clause (1) until that time shall be deemed to be equal to the amount of expenses.

Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 42 : Disposal through instalment sale or financial lease
If any person disposes of any property by way of instalment sale or lease under a financial lease to any other person, the following provisions shall apply:-
(a) The person who has disposed of the property shall be deemed to have received the amount equal to the market value of that property at the time of disposal for the disposal, and
(b) The person who has acquired the property through disposal shall be deemed to have incurred cost in a sum equal to clause (a).
Provided that this provision shall not be applicable where the provision of Section 45 applies.

Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 43 : Transfer of property to husband, wife or former husband, wife
If any natural person who is a divorcee or lives apart upon having partition share disposes of property by transferring it to her husband, his wife or former husband, wife, and that husband, wife or former husband, wife makes a choice in writing to have this Section enforced, the following provisions shall apply:
(a) That person shall be deemed to have obtained, for disposal, the amount equal to the net expenses incurred immediately before the disposal and
(b) The person who has acquired the property through transfer shall be deemed to have incurred cost in a sum equal to clause (a).

Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 44 : Transfer of property after death
If the ownership of any property is disposed of through transfer to any other person because of the death of any natural person, the following provisions shall apply:
(a) That person shall be deemed to have obtained, for disposal, the amount equal to the market value of that property prevailing at the time of disposal and
(b) The person who has acquired the property through transfer shall be deemed to have incurred cost in a sum equal to clause (a).
Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 46 : Involuntary disposal of property or liability with substitution
1) If any person, no later than one year of the involuntary disposal of any property in any mode out of the modes mentioned in sub-section (1) of Section 40, acquires ownership over other property of similar type in lieu of that property and makes a request in writing to have this Section applied, it shall be as follows:-
a) That person shall be deemed to have received, for the disposal, an amount equal to the sum of the following amounts:
(1) Net expenses for that property immediately before the disposal and
(2) If the amount derived from the disposal exceeds the expenses incurred in acquiring the substituted property, the amount of such excess and
b) The person shall be deemed to have incurred expenses in a sum equal to the sum of the following amounts in acquiring the substituted property.
(1) Net expenses for the disposed of property immediately before the disposal, and
(2) If the expenses incurred in acquiring the substituted property exceed the amount derived from the disposal, the amount of such excess.
2) If any person, no later than one year of the involuntary disposal of any liability in any mode out of the modes mentioned in sub-section (2) of Section 40, bears other liability of similar type in lieu of that liability and makes a request in writing to have this Section applied, it shall be as follows:-
a) That person shall be deemed to have incurred expenses, for the disposal in a sum to be set by subtracting the amount mentioned in clause (2) from the amount mentioned in clause (1):
(1) Amount for net incomes for that liability immediately before the disposal and
(2) If the expenses incurred in making that disposal exceed the amount in assuming the substituted liability, the amount of such excess expenses and
b) The person shall be deemed to have received a sum equal to the sum of the following amounts in acquiring the substituted liability:
(1) Net incomes for the disposed liability immediately before the disposal, and
(2) If the amount derived in assuming the substituted liability exceeds the expenses incurred in making the disposal, the amount of such excess.
(3) The circumstances where involuntary disposal is created after substitution of one security of any entity for another security as a result of a change in the security of the interest in the entity or restructuring of the entity shall be as prescribed.
Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 47 : Disposal upon amalgamation of property and liability
1) If, as a result of the acquisition of any property or bearing of any liability by any person, any other property under the ownership of, or any other liability is borne by, that person ceases or is amalgamated, and thus disposal takes place, then the following provisions shall apply:
(a) Where net expenses were incurred for the amalgamated property or liability immediately before disposal, that person:
(1) shall be deemed to have received an amount equal to the net expenses in respect of the disposal of the amalgamated property or liability,
Provided that such amount shall not exceed the amount received by that person for the amalgamated liability.
(2) shall be deemed to have incurred expenses in a sum equal to that amount in holding ownership or bearing liability of the amalgamated property.
(b) Where net incomes were earned for the amalgamated liability in respect of the amalgamated liability, immediately before the disposal of the liability, that person:
(1) shall be deemed to have incurred expenses in a sum equal to net incomes for the disposal of the amalgamated liability,
Provided that in the case of the amalgamated property, that amount shall not exceed the amount spent by that person in acquiring that property.
(2) shall be deemed to have received an amount equal to that amount in holding ownership of or bearing liability of the amalgamated property.
2) Without prejudice to the matters contained in subsection (1), that sub-section shall also apply to the following circumstances:
(a) If that person carries out an act of acquisition or sale of any property,
(b) If that person acquires the property leased, and
(c) If the guaranteed liability is transferred by the transferee.
Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 48 : Disposal of property and liability through division
If the rights related to any property owned by or the burdens related to any liability borne by any person devolve on any other person also by way of lease of any property or any part thereof, the following provisions shall apply:-
(a) Where the rights or burdens are permanent, that first person shall be deemed to have disposed of any part of that property or liability but not to have acquired any new property or liability, and
(b) Where the rights or burdens are temporary or contingent, that first person shall be deemed not to have disposed of any part of that property or liability.
Provided that such person shall be deemed to have acquired a new property or assumed a new liability, as the case may be.

Income Tax Act 2058

Chapter 8 Assessment of Net Profit from Property and Liability

Section 49 : Disposal through allocation of incomes and expenses
1) Any person shall, in the following circumstances, allocate the expenses or incomes made in acquiring, bearing or disposing of any property or liability between properties and liabilities on the basis of the market value at the time of acquisition, bearing or disposal, as the case may be:-
a) Where one or more properties are acquired, or one or more liabilities are assumed at the same time,
b) Where one or more properties or liabilities are disposed of at the same time.
2) If any person who holds ownership of any property or bears any liability disposes of any part of that property or liability, the net expenses or net incomes of that property or liability immediately before the disposal has to be allocated in the portion of the disposed property or liability and in the remaining portion, as the case may be, on the basis of the market value thereof immediately after the disposal.

Income Tax Act 2058

Chapter 9 Special Provisions Relating to Natural Person

Section 50 : Spouse
1) Both a resident natural person and his/her resident husband or wife may, by giving a notice in writing, choose to be treated as one natural person in any specific income year for tax purposes.
2) The husband or wife out of the spouses who choose the provision contained in sub-section (1) in respect of any income year shall be jointly and severally responsible between each other for the tax payable by them in that year.
3) Notwithstanding anything contained in sub-sections (1) and (2), a resident widow or widower responsible for bearing the dependent shall be deemed as a couple.
Income Tax Act 2058

Chapter 9 Special Provisions Relating to Natural Person

Section 51 : Tax adjustment for medical treatment
1) Any resident natural person may make a claim for adjustment of tax for medical treatment in any income year for the approved medical expenditure incurred by him/herself or through any other person for him/herself.
2) The tax adjustment amount for medical treatment of a natural person in any income year shall also be computed by adding any amount, if any, referred to in sub-section (4) to the amount to be set by fifteen percent of the approved medical treatment expenditure referred to in sub-section (1).
3) Notwithstanding anything contained in sub-section (2), the amount of tax adjustment for medical treatment claimed by a natural person in any income year shall not exceed the prescribed limit.
4) In the case of any natural person in any income year, the excess amounts as mentioned in clauses (a) and (b), up to the following limit, may be carried forward and be included in the amount referred to in Sub-section (2) in the forthcoming years:-
a) Where the amount referred to in Sub-section (2) exceeds the limit referred to in Sub-section (3), the amount of such excess and
b) The amount to the extent that the person referred to in clause (a) of Section 3 is not allowed to use tax adjustment for medical treatment because of being less the amount of tax payable by that person in that year.
Explanation
: For purposes of this Section, “approved medical treatment expenditure” means the approved medical treatment expenditure as prescribed.

Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 52 : Principles of taxation applicable in respect of entities
1) For purposes of payment of tax, any entity shall be responsible distinctly from its beneficiaries.
2) Distributions to be made by an entity shall be as mentioned in Section 53, and in distribution to be so made, tax shall be imposed on its beneficiaries pursuant to Section 54.
3) The amounts derived by and expenses borne by an entity shall be deemed to have been received or borne by the entity irrespective of whether or not the entity has derived the same or borne expenses for another person.
4) A property under the ownership of an entity and the liability borne by it shall be deemed to be under the ownership or burden of the entity. Such property under ownership and liability borne shall not be deemed to be under the ownership or burden of any other person.
5) Foreign income tax paid by the manager, the beneficiary of an entity or the entity, whosoever, for the income of the entity shall be deemed to have been paid by the entity.
6) Transactions between any entity and its managers and beneficiaries shall be recognised subject to Chapter 7 and Section 45
Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 53 : Distribution by entity
1) The following matters have to be included in the distribution to be made by an entity:-
a) Payment made by the entity to any of its beneficiaries in any capacity or
b) Capitalisation of profits.
2) Notwithstanding anything contained in sub-section (1), any payment referred to in clause (a) of that sub-section shall be deemed to have been distributed only in the following circumstances:-
a) Where the payment exceeds the amount paid by a beneficiary to the entity in exchange for a consideration likely to be obtained from the entity, and
b) Where the following amounts are not included in the payment:-
(1) The amounts included in computing the income of the beneficiary,
(2) The payments from which tax has been deducted finally except for reason of distribution.
3) Only if the distribution of any entity reduces the value of property or liability of that entity, such distribution shall be deemed to be a distribution of profits or return of capital.
4) In any of the following circumstances, a distribution of any entity shall be deemed to be a distribution of profits, subject to Section 55:-
a) Where the distribution is of a type referred to in sub-section (3) and the amount as per the market value of the property exceeds the total amount of capital contribution consisting of the market value of the liability of the entity at the time of distribution and of capitalised profits, as well,
b) Where profits are capitalised.
5) The distribution referred to in sub-section (3) shall be deemed to be a return of capital to the extent of non-distribution of profits.
6) The distribution of any entity shall be deemed to be a dividend of that entity to the extent of non-return of capital.
Explanation:
For purposes of this Section, “capitalisation of profits” means and includes any capitalisation made by issuing bonus shares or similar other interest increasing the paid-up sum of the interest of that entity or crediting the profits to the premium and capital account of that entity.

Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 54 : Tax in dividend
1) On the dividend distributed by a resident body, it shall be as follows:-
a) If the dividend is distributed to the shareholder of any company or partner of any partnership firm, tax shall be imposed on a shareholder of any company as per the mode of final tax deduction and
b) No tax shall be imposed on distribution, if any, made by other entities.
2) The dividend distributed by any non-resident person to any resident beneficiary shall be included in the income of the beneficiary and tax imposed accordingly.
3) Notwithstanding anything contained in sub-section (1), no tax shall be levied on the dividend received after tax deduction if it is distributed.
1
4) …………..
5) The incomes referred to in Chapter 8 receivable for the interest of a beneficiary of an entity have to include the amount for capital return made by any entity for that interest.
Provided that the dividend distributed by the entity is not required to be included.
1 Removed by the Financial Act, 2075.
Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 55 : Dissolution of entity
1) A distribution made in proportion to the portion of profit earned by and that of capital contributed by any beneficiary in disposing of the interests in the course of the dissolution of any entity shall be deemed to be the payment of partial dividend and partial capital of that entity if all of the following conditions are fulfilled:-
a) Where any distribution has been made by such entity in respect of cancellation, release or acceptance of the interest in that entity because of,
inter alia
, purchase by the entity of its interest or dissolution of the entity by following the process of law in force,
b) Where, except in cases of full dissolution, the rights of the beneficiaries in the portion of profits of that entity have not been computed in proper portion or could not be computed reasonably, and
c) Where the beneficiary who gets that distribution is not an associated person with the entity after the disposal.
2) Notwithstanding anything contained in sub-section (1), the provisions contained in that sub-section and Section 53 shall not be applicable in cases where any entity purchases the interest of any beneficiary in the entity through the securities market recognised under the law in force and make distribution to that beneficiary.

Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 56 : Transaction between entity and beneficiary
1) If a property is disposed of through transfer of ownership over the property in any manner of distribution between an entity and its beneficiary or in any other manner subject to Section 45, it shall be as follows:-
a) The transferor of the property shall be deemed to have received, from the disposal, an amount equal to the market value of the property immediately before the disposal and
b) The transferee of the property shall be deemed to have incurred cost in a sum equal to that mentioned in clause (a) in acquiring the property.
2) If any liability is disposed of through transfer of the liability between any entity and its beneficiary subject to Section 45, it shall be as follows:-
a) The transferor of the liability shall be deemed to have incurred cost in disposing of the liability in a sum equal to the market value of the liability immediately before the disposal and
b) The transferee of the liability shall be deemed to have received an amount equal to that mentioned in clause (a) in assuming the liability.
3) If any entity distributes dividends except profits as dividends to any beneficiary, the amount of such dividends shall be included in computing the income of the entity.
Provided that provisions may be made to exclude the matters contained in this sub-section in any circumstance as prescribed
Income Tax Act 2058

Chapter 10 Special Provisions for Entities

Section 57 : Change in control
1) If the ownership of any entity changes by fifty percent or more as compared to its ownership until before the last three years, the entity shall be deemed to have disposed the property under its ownership or the liability borne by it.
1
1A) For the purpose of computing change in ownership of fifty percent or more than fifty percent of any entity referred to in sub-section (1), only the following ownership of such entity shall be included:
a) Ownership held by a shareholder holding one percent or more than one percent of the total ownership, and
b) Ownership held by the associated person of a shareholder holding more than one percent of the total ownership of such entity, among shareholders holding less than one percent of the total ownership.
2) If the ownership of an entity is changed, as mentioned in sub-section (1), the entity shall not be allowed to carry out the following acts after such change:-
a) To deduct interest incurred by that entity prior to the change in ownership and carried forward pursuant to sub-section (3) of Section 14,
b) To deduct the loss suffered by that entity prior to the change in ownership, pursuant to Section 20,
c) To carry back a loss suffered after the change in ownership in any income year before such change, pursuant to sub-section (4) of Section 20,
d) To make adjustments pursuant to sub-section (4) of Section 24, if it has been calculated for any amount or expenses pursuant to clause (a) of sub-section (4) of Section 24 prior to the change in ownership, and correction has been made on that amount or expenses pursuant to  sub-section (4) of Section 24 after the change in ownership,
e) To make adjustments pursuant to sub-section (1) of Section 25 if any amount has been calculated pursuant to clause (b) of sub-section (1) of Section 25 prior to the change in ownership, and the right to receive that amount has been relinquished, or in the event of that being a debt claim, such person has written off such amount as a bad debt, after the change in ownership,
f) To subtract, pursuant to Section 36, the loss suffered in disposing any property or liability prior to the change in ownership from the income earned from the disposal of the property or liability after the change in ownership,
g) If the premium has been calculated pursuant to sub-clause (1) of clause (b) of sub-section (4) of Section 60 prior to the change in ownership and such premium has been returned to the insured after the change in ownership to claim for credit accordingly, or
h) To carry forward in the forthcoming year the tax paid in respect of a foreign income prior to the change in ownership, pursuant to sub-section (3) of Section 71.
3) In cases where the ownership of any entity changes in any manner mentioned in sub-section (1) in any income year, the parts before and after the change in ownership in that income year shall be treated as separate income years.
1 Inserted by the Financial Act, 2075.