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Timestamp: 2019-04-25 00:46:08+00:00

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Section 9 .INCOME DEEMED TO ACCRUE OR ARISE IN INDIA.
Explanation : For the removal of doubts, it is hereby declared that income of the nature referred to in this clause payable for service rendered in India shall be regarded as income earned in India.
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 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 sub-section (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 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.
Provided that nothing contained in this clause shall apply in relation to any income by way 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.
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 approvedby the Central Government before that date.
Explanation 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 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.
T.C. No. 823, 824 of 1992, decided on April 25, 1999.
The question referred to us is "Whether, on the facts and circumstances of the case and having regard to the provisions of section 49 of the IT Act, the Tribunal is right in law in holding that the value of shares as mentioned in the family settlement deed and not the cost to the previous owner, should be taken as the cost of acquisition of share obtained by the assessee in the family settlement ?
2. The assessee while they were minors and unmarried, being the daughters of one Jagadish Chandran, received certain shares from Premier Cotton Spinning Mills Ltd., under the settlement effected by their father on 2nd March, 1977. In that settlement the value of the shares mentioned was higher than the amount for which the said Jagadish Chandran had acquired the shares. Subsequently in the asst. yr. 1982-83, the assessees sold those shares and derived a capital gain therefrom.
3. The assessees contended before the assessing authority that the cost of acquisition of the shares which they were entitled to deduct under section 48 (ii) of the Act should be taken as the amount mentioned in the settlement deed. The ITO did not accept their contention and hold that under section 49 of the Act, it was the cost to the previous owner that was required to be regarded as a cost of acquisition. The CIT(A) having held otherwise in appeal, the ITO appealed to the Tribunal which confirmed the order of the appellate authority. The Tribunal held that the shares had been obtained by the two daughters for a consideration and the consideration was in the view of the Tribunal their right to receive their marriage expenses.
4. Sec. 9 of the Act deals with the cost with reference to certain modes of acquisition and provides that where the capital asset became the property of the assessee in any of the modes mentioned in sub-cls. (i) to (vi), the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee as the case may be.
5. The sub-clauses of section 49 (1) of the Act refer to the distribution of assets on the total or partial partition of an HUF; the assets received under a gift or will; the assets received by way of succession; inheritance or devolution, the assets received on the distribution of assets on the dissolution of a firm; BOI or other AOP; the assets received on the distribution of assets on the liquidation of a company; and to the assets under a transfer to a revocable or an irrevocable trust, etc.
6. In a partition, the consideration for the partition is the mutual relinquishment the rights of the parties in the joint family properties in which each has share, the fact that the daughters have a right to maintenance and marriage expenses and would have been entitled to a share at a partition does not render the value of the shares allotted to them under a settlement deed, the price for which they had sold or relinquished their rights over the properties of the family. The family settlement in this context is analogus to a partition. It is the cost to the previous owner that is to be taken into account as the cost of acquisition of shares and not the amounts mentioned in the family settlement deed by the settlor.
7. The question referred to us is, therefore, answered in favour of the Revenue and against the assessee.
COMMISSIONER OF INCOME-TAX v. SMT. P. ANDAL AMMAL. (CIT v. SMT. P.
Tax Case Nos. 106 & 107, 1209 of 1987, decided on November 23, 1998.
The common question of law that expects our answer in the above batch of tax cases in short is whether the income derived by the assessee by way of rent in respect of the lodging house is assessable under the head, 'income from house property' or under the head, 'income from other sources'.
"Income from other sources : (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head 'income from other sources', if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E.
(ii) income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income-tax under the head, 'profits and gains of business or profession'.
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding and had valid materials to hold that the rental income in respect of the house property situate at No. 9, Kennet Lane, Egmore, Madras, should also be assessed under the head, 'income from other sources' and not under the head, 'income from property' ?"
4. The submission of the learned counsel for the Revenue was that the Tribunal was not justified in treating the income derived from letting out the property as income from other sources, as the assessee was the owner of the property and derived the income by letting the same. He submitted that the agreement for providing amenities is a distinct and separate agreement and, therefore, it cannot be said that the letting out of the building is itself referable to the letting out of the machineries, plant and furniture. According to the learned counsel for the Revenue, the proper head of income insofar as it relates to the income derived from letting out of the property would be 'income from house property'.
5. Learned counsel for the assessee, on the other hand, submitted that the letting but of the building and furniture with fittings is inseparable and therefore, the income was properly held to be chargeable under the head 'income from other sources'.
consideration, and the intention of the parties was to let out the building and the furnitures and amenities as a single indivisible transaction. The finding of the Tribunal has not been challenged in the present reference, and the relevant deeds of tenancy agreement and the copy of partnership deed were also not produced to establish that the conclusion of the Tribunal was in anyway erroneous or arrived at without any material. Though the question challenges the finding of the Tribunal that it had no valid materials for such a finding, the relevant documents are not part of the statement of the case to prove that the finding of the Tribunal was rendered without any material on record.
7. We have seen that the Tribunal took into consideration the construction, structure of the building and other related aspects of the building to come to the conclusion that both the lettings were single and indivisible transaction. The Tribunal has also recorded a plausible reason for entering into two separate agreements, the reason being the apprehension of the assessee that he may have to shoulder higher burden of property-tax to be imposed on the building by the Corporation of Chennai if the transaction was reduced in a single document. Though the assessee had entered into two separate agreements, one for building and another for furnitures and other amenities, we are of the opinion that the letting of furnitures and building was a single indivisible transaction. We are of the opinion that so long as that finding of the Tribunal remains, the conclusion of the Tribunal that the income should be assessed under the head, 'income from other sources' is sustainable on the facts of the case.
"It seems to us that the inseparability referred to in sub-section (4) is an inseparability arising from the intention of the parties. That intention may be ascertained by framing the following questions : Was it the intention in making the lease - and it matters not whether there is one lease or two, that is, separate leases in respect of the furniture and the building-that the two should be enjoyed together ? Was it the intention to make the letting of the two practically one letting ? Would one have been let alone and a lease of its accepted without the other ? If the answers to the first two questions are in the affirmative, and the last in the negative then, in our view, it has to be held that it was intended that the lettings would be inseparable. This view also provides a justification for taking the case of the income from the lease of a building out of section 9 and putting it under section 12 as a residuary head of income. It then becomes a new kind of income, not covered by section 9, that is, income not from the ownership of the building alone but an income which though arising from a building would not have arisen if the plant, machinery and furniture had not also been let along with it."
had let out the plant and machinery along with the building inseparably and the question whether the income is assessable under the head 'income from property' or 'income from other sources' would depend upon the facts of each case and the true intention of the parties.
amenities and the rent for the building would not come within the purview of section 56 (2) of the Act. The decision of the Karnataka High Court in the case of CIT vs. Shankaranarayana Hotels (P) Ltd. (1993) 109 CTR (Kar) 196 : (1993) 201 ITR 138 (Kar) : TC 41R.518 is also distinguishable from the facts of the case, as there were two lettings with reference to two separate entities. The decision of the Calcutta High Court in CIT vs. Kanak Investments (P) Ltd. (1974) 95 ITR 419 (Cal) : TC 40R.243 is also not applicable to the facts of the case, as the issues posed before the Calcutta High Court are entirely different, as the Court held that the question referred was limited one, whether the income from the building and the income attributable to the amenities provided by the assessee should be assessed under the head, 'income from other sources'. According to us, it is clear from the facts of the cases that the letting out of the premises with fittings was a single and indivisible transaction and therefore, the entire rent received by the assessee from such a composite letting was liable to be and it was rightly held to be assessable under the head, 'income from other sources'. The order of the Tribunal taking this view, in our view, is quite justified and sustainable on the facts of the case.
10. Accordingly, we answer the common question of law referred in all the tax cases in the affirmative, against the Revenue and in favour of the assessee. However, in the circumstances of the case, there will be no order as to costs.
Section 9(1)(vii)(b) cannot be said to be unconstitutional - Section 9(1)(vii)(b) cannot be said to be unconstitutional for want of legislative competence and violation of article 14 of the Constitution - G.V.K. Industries Ltd. v. ITO  228 ITR 564 (AP).
General principles - Mere existence of business connection may not result in income to non-resident assessee from transaction with such a business connection accruing or arising in India.
It would be wrong to equate permanent establishment with a business connection, since former is for purpose of assessment of income of a non-resident under a Double Taxation Avoidance Agreement, and latter is for application of section 9.
Income arising out of turnkey project executed in India would not be assessable in India, only because a non-resident has a permanent establishment.
For attracting taxing statute, there has to be some activity through permanent establishment and, if income arises without any activity of permanent establishment, even under DTAA, taxation liability in respect of overseas services would not arise in India.
In cases where different severable parts of a composite contract are performed at different places, principle of apportionment as recognised by Explanation 1(a) of section 9(1)(i), can be applied, to determine which fiscal jurisdiction can tax that particular part of transaction.
Location of source of income within India would not render sufficient nexus to tax income from that source.
For section 9(1)(vii) to be applicable, it is necessary that services provided by a non-resident assessee under a contract should not only be utilized within India, but should also be rendered in India or should have such a live link with India that entire income from fees, etc., becomes taxable in India; thus, for a non-resident to be taxed on income for services, such a service needs to be rendered within India, and has to be a part of a business or profession carried on by such person in India. Whatever is payable by a resident to a non-resident by way of fees for technical services would not always come within purview of section 9(1)(vii) but it must have sufficient territorial nexus with India so as to furnish a basis for imposition of tax - Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax  158 Taxman 259 (SC).
Note : See also Explanation to section 9 inserted by Finance Act, 2007, with retrospective effect from 1-6-1970.
Income actually received is outside the scope of deeming fiction - Where the income, profits and gains are actually received in India, it is no longer necessary for the revenue authorities to have recourse to the fiction - Turner Morrison & Co. Ltd. v. CIT  23 ITR 152 (SC).
Actual accrual is different from deemed accrual - The concept of actual accrual or arising of income in the taxable territories, although not dependent upon the receipt of the income in the taxable territories, is quite distinct and apart from the notion of deemed accrual or arising of the income - Carborandum Co. v. CIT 108 ITR 335 (SC).
‘Deemed’ involves a number of concepts, like place, person and year - The term ‘deemed’ brings within the net of chargeability income not actually accruing but which is supposed notionally to have accrued. It involves a number of concepts. By statutory fiction income which can in no sense be said to accrue at all may be considered as so accruing. Similarly, the fiction may relate to the place, the person or be in respect of the year of taxability - CIT/CEPT v. Bhogilal Laherchand 25 ITR 50 (SC).
Conditions precedent - It is not necessary that income falling in one category under any one of the clauses of section 9(1) should also satisfy the requirements of the other clauses to bring it within the ambit of the expression ‘income deemed to accrue or arise in India’ - G.V.K. Industries Ltd. v. ITO  228 ITR 564 (AP).
Profits of PE must be computed as independent units - It is clear that under the Act, a taxable unit is a foreign company and not its branch or PE in India. A non-resident assessee may have several incomes accruing or arising to it in India or outside India but so far as taxability under section 5(2) is concerned, it is restricted to income which accrues or arises or is deemed to accrue or arise in India. The scope of this deeming fiction is mentioned in section 9. Therefore, as far as the income accruing or arising in India is concerned, an income which accrues or arises to a foreign enterprise in India can be only such portion of income accruing or arising to such a foreign enterprise as is attributable to its business carried out in India. This business could be carried out through its branch(es) or through some other form of its presence in India such as office, project site, factory, sales outlet, etc. [PE]. It is, therefore, important to note that under the Act, while the taxable subject is the foreign General Enterprise (GE), it is taxable only in respect of the income including business profits which accrue or arise to that foreign GE in India. The Act does not provide for taxation of PE of a foreign enterprise, except taxation on presumptive basis for certain types of income such as those mentioned under sections 44BB, 44BBA, 44BBB, etc. Therefore, since there is no specific provision under the Act to compute profits accruing in India in the hands of the foreign entities, the profits attributable to the Indian PE of foreign enterprise are required to be computed under normal accounting principles and in terms of the general provisions of the Act. Therefore, ascertainment of a foreign enterprise’s taxable business profits in India involves an artificial division between profits earned in India and profits earned outside India. The Act is concerned only with the profits earned in India and, therefore, a method is to be found out to ascertain the profits arising in India and the only way to do so is by treating the Indian PE as a separate profit centre vis-a-vis the foreign enterprise. This demarcation is necessary in order to earmark the tax jurisdiction over the operation of a company. Unless the PE is treated as a separate profit centre, it is not possible to ascertain the profits of the PE which, in turn, constitute prof­its arising to the foreign GE in India. The computation of prof­its in each PE (taxable jurisdiction) decides the quantum of income on which the source country can levy the tax. Therefore, it is necessary that the profits of the PE are computed as inde­pendent units - CIT v. Hyundai Heavy Industries Co. Ltd.  161 Taxman 191/291 ITR 482 (SC).
There must be element of continuity as well as real and intimate connection - The expression ‘business connection’ undoubtedly means something more than ‘business’. A business connection involves a relation between a business carried on by a non-resident which yields profits or gains and some activity in the taxable territories which contributes directly or indirectly to the earning of those profits or gains. It predicates an element of continuity between the business of the non-resident and the activity in the taxable territories. The expression ‘business connection’ postulates a real and intimate relation between trading activity carried on outside the taxable territories and trading activity within the territories, the relation between the two contributing to the earning of income by the non-resident in his trading activity - CIT v. R.D. Aggarwal & Co.  56 ITR 20 (SC).
‘Business’ include profession, vocation and callings - The expression ‘business’ does not necessarily mean trade or manufacture only. It is being used as including within its scope profession, vocations and calling from a fairly long-time.
In the context in which the expression ‘business connection’ is used in section 9(1), there is no warrant for giving a restricted meaning to it excluding ‘professional’ connection, from its scope - Barendra Prasad Ray v. ITO  129 ITR 295 (SC).
Mere purchase abroad and use in India is not ‘continuing business’ - The term ‘business connection’ postulates a continuity of business relationship between the foreigner and the Indian. There is no question of continuing business relation when a person purchase the machinery or other goods abroad and uses them in Indiaand earns profit. - CIT v. Fried Krupp Industries  128 ITR 27 (Mad.).
Isolated transactions are not covered - An isolated transaction between a non-resident and a resident in British India without any course of dealings such as might fairly be described as a business connection, does not attract the application of section 9, but when there is a continuity of business relationship between the person in British India who helps to make the profits and the person outside British India who receives or realises the profits, such relationship does constitute a business connection - Anglo-French Textile Co. Ltd. v. CIT (No. 2)  23 ITR 101 (SC).
Capital gains derived outside India is excluded - If the words ‘business connection in India’ were wide enough to cover all transactions including transactions in capital assets, there was no reason for Parliament to specifically include income (a) through or from any property in India, (b) through or from any asset or source of income from India, and (c) through or from sale of a capital asset situate in India. From the very fact that the transfer of a capital asset situate in India has been brought within the purview of section 9 and rule 10(2), the intention of Parliament was not to bring within its purview any income derived out of sale or purchase of a capital asset effected outside India - CIT v. Quantas Airways Ltd.  256 ITR 84/122 Taxman 935 (Delhi).
General business operations - General business operations, which have no nexus to income under consideration, would not satisfy requirements of section 9(1)(i); rights and obligations under agreement cannot be taken as proof of existence of business connection; business connection must exist between a non-resident and an Indian resident, which is responsible for giving rise to activities which yield income or profit to non-resident - ABC Ltd., In re  159 Taxman 344/289 ITR 438 (AAR - New Delhi).
‘Source’ is a practical and not legal concept - All income accruing or arising from any ‘source of income in India’ is deemed to accrue or arise in India. The word ‘source’ does not mean any legal concept, but refers to that which a practical man would regard as a real source of income - Performing Right Society Ltd. v. CIT 93 ITR 44 (Cal.).
‘Property’ must be tangible, but not confined to immovables - The word ‘property’ used in sub-section (1) of section 42 of 1922 Act means something tangible; though it is not confined to immovable property or to buildings or lands appurtenant thereto - CIT v. Currimbhoy Ebrahim & Sons Ltd.  3 ITR 395 (PC).
Capital asset situated in India - Even if transaction relating to a capital asset takes place outside India but if capital asset is situated in India, profits or gains thereon, will accrue or arise in India in consonance with provisions of section 9(1)(i) and be assessable under head ‘Capital gains’ - Triniti Corpn., In re  165 Taxman 272/295 ITR 258 (AAR - New Delhi).
Onus is on revenue to prove existence of operations in India - In order to rope in the income of a non-resident under the deeming provision it must be shown by the department that some of the operations were carried out in India in respect of which the income is sought to be assessed - Carborandum Co. v. CIT  108 ITR 335 (SC).
If no operations are carried in India, deeming concept cannot apply - If no operations of business are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India - CIT v. Toshoku Ltd.  125 ITR 525 (SC)/CIT v. Fried Krupp Industries  128 ITR 27 (Mad.).
Transactions must be systematic and well-defined - It is not every business activity of a manufacturer that comes within the expression ‘operation’ to which the provisions of section 42(3) of the 1922 Act [corresponding to section 9 of the 1961 Act] are attracted. Activities which are not well defined or are of a casual or isolated character would not ordinarily fall within the ambit of this rule. In a case where all that may be known is that a few transactions of purchase of raw materials have taken place in British India, it could not ordinarily be said that the isolated acts were in their nature ‘operations’ within the meaning of that expression - Anglo-French Textile Co. Ltd. v. CIT (No. 2)  23 ITR 101 (SC).
Explanation - Explanation to section 9(1)(ii) added by the Finance Act, 1983 with retrospective effect from 1-4-1979 cannot be considered to be declaratory nor can it apply to a period anterior to April 1, 1979 - CIT v. I.G. Belline  102 Taxman 339 (Guj.).
Explanation added to section 9(1)(ii) with retrospective effect from 1-4-1979 was not procedural in nature - CIT v. Goslino Mario  241 ITR 312 (SC).
From Explanation to section 9(1)(ii) it is not possible to infer corollary, that in all cases where services are rendered outside India, salary cannot be deemed to accrue in India ipso facto. In certain cases, even if the services are rendered outside India, the income can still accrue or arise in India. It would depend on the facts of each case - CIT v. Halliburton Offshore Services Inc.  140 Taxman 405/271 ITR 395 (Uttaranchal).
Explanation to section 9(1)(ii), substituted with effect from 1-4-2000, was not retrospective in nature; therefore in case of employees of appellant non-resident company working on rigs of Indian company, salary paid for field breaks in U.K. was not for service rendered in India within meaning of Explanation added to section 9 by Finance Act, 1983 and it could not be subjected to tax under section 9(1)(ii) for assessment years 1992-93 and 1993-94- Sedco Forex International Drills Inc. v. CIT  149 Taxman 352/279 ITR 310 (SC).
Payment to non-citizens are not covered under clause (iii) - If income is earned by a person who is not a citizen of India by rendering services outside India, then section 9(1)(iii) will have no application. Similar will be the case if salary is payable to a person by a private organisation for rendering services outside India -Grindlays Bank Ltd. v. CIT  56 Taxman 213 (Cal.).
Others - Where liability to pay salaries to assessees arose outside India in terms of contract between their employer - Italian company and Indian company and salary was payable outside India, section 9(1)(ii) would not apply - CIT v. Goslino Mario  241 ITR 312 (SC).
Dividend income paid to a non-resident by Indian company is deemed to accrue in India only on payment and not on declaration - Under section 9(1)(iv), it is clearly stipulated that a dividend paid by an Indian company outside India will constitute income deemed to accrue in India on effecting such payment. In section 9(1)(iv), the words used are ‘a dividend paid by an Indian company outside India’. This is in contradistinction to section 8 which refers to a dividend declared, distributed or paid by a company. The words ‘declared or distributed’ occurring in section 8 do not find place in section 9(1)(iv). Therefore, it is clear that dividend income paid to a non-resident is deemed to accrue in India only on payment and not on declaration - Pfizer Corporation v. CIT  259 ITR 391/129 Taxman 459 (Bom.).
Deeming concept applies whether there is business connection or not - Whether there is a business connection or not, any income by way of fees for technical services should be taken to have been covered by the provision in section 9(1)(vii) - CIT v. Copes Vulcan Inc.  167 ITR 884 (Mad.).
Cases falling under clause (vi) cannot be brought under clause (vii) - If the case falls under clause (vi) of section 9(1) and is exempted from the operation of clause (vi) by virtue of the proviso, then one cannot refer to clause (vii) which is a general clause - Meteor Satellite Ltd. v. ITO  121 ITR 311 (Guj.).
Definition of royalty in Explanation 2 applies to clause (vi) only - The definition of the term ‘royalty’ in Explanation 2 to section 9(1)(vi) is not a general definition applicable wherever that term occurs but is applicable to section 9(1)(vi) only - Citizen Watch Co. Ltd. v. IAC  148 ITR 774 (Kar.).
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.
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.
(b) accrues or arises51 or is 51deemed 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 received51 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 accrued52 or arisen52 or is deemed to have accrued52 or arisen52 to him shall not again be so included on the basis that it is received or deemed to be received by him in India.
(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 management60 of its affairs60 is situated wholly60 outside India.
(ii) during that year, the control and management60 of its affairs60 is situated wholly60 in India.
Provided also that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 6 and subsequent years.
(b) the particulars, as may be prescribed9 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.
(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.
(5) The deduction under 11[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 form12, alongwith 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.
(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.
(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.
Special provisions in respect of newly established Units in Special Economic Zones.
(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).
(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 income29 for the assessment year relevant to the previous year in which such plant or machinery was first put to use.
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).
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.
(iii) it is not formed by the transfer to a new business, of machinery or plant previously used for any purpose.
(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.
(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.
(v) "Special Economic Zone" and "Unit" shall have the same meanings as assigned to them under clauses (za) and (zc)33 of section 2 of the Special Economic Zones Act, 2005.
[Special provisions in respect of newly established hundred per cent export-oriented undertakings35.
(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 form41, 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.
(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.
Special provisions in respect of export of certain articles or things.
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.
(c) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
(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 form54, 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.
60Income61 from property held for charitable or religious purposes.
(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.
(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 94[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 95[* * *].
(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).
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.
(x) investment in immovable property.
Income of trusts or institutions from contributions.
13[(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.

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