Income Tax Act, 2025
Section 3: Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 11988).
3. Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 11988).
451
Explanation.—For the purposes of this section,—
(a) references to assets representing any assets, income or accumulations of income include
references to shares in or obligation of any company to which, or obligation of any other person to
whom, those assets, that income or those accumulations are or have been transferred;
(b) any body corporate incorporated outside India shall be treated as if it were a non-resident;
(c) a person shall be deemed to have power to enjoy the income of a non-resident if—
(i) the income is in fact so dealt with by any person as to be calculated at some point of time
and, whether in the form of income or not, to ensure for the benefit of the first-mentioned person
in sub-section (1), or
(ii) the receipt or accrual of the income operates to increase the value to such first-mentioned
person of any assets held by him or for his benefit, or
(iii) such first-mentioned person receives or is entitled to receive at any time any benefit
provided or to be provided out of that income or out of moneys which are or will be available for
the purpose by reason of the effect or successive effects of the associated operations on that
income and assets which represent that income, or
(iv) such first-mentioned person has power by means of the exercise of any power of
appointment or power of revocation or otherwise to obtain for himself, whether with or without
the consent of any other person, the beneficial enjoyment of the income, or
(v) such first-mentioned person is able, in any manner whatsoever and whether directly or
indirectly, to control the application of the income;
(d) in determining whether a person has power to enjoy income, regard shall be had to the
substantial result and effect of the transfer and any associated operations, and all benefits which may
at any time accrue to such person as a result of the transfer and any associated operations shall be
taken into account irrespective of the nature or form of the benefits.
(4) (a) “Assets” includes property or rights of any kind and “transfer” in relation to rights includes the
creation of those rights;
(b) “associated operation”, in relation to any transfer, means an operation of any kind effected by any
person in relation to—
(i) any of the assets transferred, or
(ii) any assets representing, whether directly or indirectly, any of the assets transferred, or
(iii) the income arising from any such assets, or
(iv) any assets representing, whether directly or indirectly, the accumulations of income arising
from any such assets;
(c) “benefit” includes a payment of any kind;
(d) “capital sum” means—
(i) any sum paid or payable by way of a loan or repayment of a loan; and
(ii) any other sum paid or payable otherwise than as income, being a sum which is not paid or
payable for full consideration in money or money’s worth.
94. Avoidance of tax by certain transactions in securities.—(1) Where the owner of any securities
[in this sub-section and in sub-section (2) referred to as “the owner”] sells or transfers those securities,
and buys back or reacquires the securities, then, if the result of the transaction is that any interest
becoming payable in respect of the securities is receivable otherwise than by the owner, the interest
payable as aforesaid shall, whether it would or would not have been chargeable to income-tax apart from
the provisions of this sub-section, be deemed, for all the purposes of this Act, to be the income of the
owner and not to be the income of any other person.
452
Explanation.—The references in this sub-section to buying back or reacquiring the securities shall be
deemed to include references to buying or acquiring similar securities, so, however, that where similar
securities are bought or acquired, the owner shall be under no greater liability to income-tax than he
would have been under if the original securities had been bought back or reacquired.
(2) Where any person has had at any time during any previous year any beneficial interest in any
securities, and the result of any transaction relating to such securities or the income thereof is that, in
respect of such securities within such year, either no income is received by him or the income received by
him is less than the sum to which the income would have amounted if the income from such securities
had accrued from day to day and been apportioned accordingly, then the income from such securities for
such year shall be deemed to be the income of such person.
(3) The provisions of sub-section (1) or sub-section (2) shall not apply if the owner, or the person
who has had a beneficial interest in the securities, as the case may be, proves to the satisfaction of the
1[Assessing Officer]—
(a) that there has been no avoidance of income-tax, or
(b) that the avoidance of income-tax was exceptional and not systematic and that there was not in
his case in any of the three preceding years any avoidance of income-tax by a transaction of the
nature referred to in sub-section (1) or sub-section (2).
(4) Where any person carrying on a business which consists wholly or partly in dealing in securities,
buys or acquires any securities and sells back or retransfers the securities, then, if the result of the
transaction is that interest becoming payable in respect of the securities is receivable by him but is not
deemed to be his income by reason of the provisions contained in sub-section (1), no account shall be
taken of the transaction in computing for any of the purposes of this Act the profits arising from or loss
sustained in the business.
(5) Sub-section (4) shall have effect, subject to any necessary modifications, as if references to selling
back or retransferring the securities included references to selling or transferring similar securities.
(6) The 1[Assessing Officer] may, by notice in writing, require any person to furnish him within such
time as he may direct (not being less than twenty-eight days), in respect of all securities of which such
person was the owner or in which he had a beneficial interest at any time during the period specified in
the notice, such particulars as he considers necessary for the purposes of this section and for the purpose
of discovering whether income-tax has been borne in respect of the interest on all those securities.
2[(7) Where—
(a) any person buys or acquires any securities or unit within a period of three months prior to the
record date;
3[(b) such person sells or transfers—
(i) such securities within a period of three months after such date; or
(ii) such unit within a period of nine months after such date;]
(c) the dividend or income on such securities or unit received or receivable by such person is
exempt,
then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the
extent such loss does not exceed the amount of dividend or income received or receivable on such
securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.]
references to assets representing any assets, income or accumulations of income include
references to shares in or obligation of any company to which, or obligation of any other person to
whom, those assets, that income or those accumulations are or have been transferred;
any body corporate incorporated outside India shall be treated as if it were a non-resident;
a person shall be deemed to have power to enjoy the income of a non-resident if—
the income is in fact so dealt with by any person as to be calculated at some point of time
and, whether in the form of income or not, to ensure for the benefit of the first-mentioned person
in sub-section
the receipt or accrual of the income operates to increase the value to such first-mentioned
person of any assets held by him or for his benefit, or
such first-mentioned person receives or is entitled to receive at any time any benefit
provided or to be provided out of that income or out of moneys which are or will be available for
the purpose by reason of the effect or successive effects of the associated operations on that
income and assets which represent that income, or
such first-mentioned person has power by means of the exercise of any power of
appointment or power of revocation or otherwise to obtain for himself, whether with or without
the consent of any other person, the beneficial enjoyment of the income, or
such first-mentioned person is able, in any manner whatsoever and whether directly or
indirectly, to control the application of the income;
in determining whether a person has power to enjoy income, regard shall be had to the
substantial result and effect of the transfer and any associated operations, and all benefits which may
at any time accrue to such person as a result of the transfer and any associated operations shall be
taken into account irrespective of the nature or form of the benefits.
(a) “Assets” includes property or rights of any kind and “transfer” in relation to rights includes the
creation of those rights;
“associated operation”, in relation to any transfer, means an operation of any kind effected by any
person in relation to—
any of the assets transferred, or
any assets representing, whether directly or indirectly, any of the assets transferred, or
the income arising from any such assets, or
any assets representing, whether directly or indirectly, the accumulations of income arising
from any such assets;
“benefit” includes a payment of any kind;
“capital sum” means—
any sum paid or payable by way of a loan or repayment of a loan; and
any other sum paid or payable otherwise than as income, being a sum which is not paid or
payable for full consideration in money or money’s worth.
94. Avoidance of tax by certain transactions in securities.—
Where the owner of any securities
[in this sub-section and in sub-section
referred to as “the owner”] sells or transfers those securities,
and buys back or reacquires the securities, then, if the result of the transaction is that any interest
becoming payable in respect of the securities is receivable otherwise than by the owner, the interest
payable as aforesaid shall, whether it would or would not have been chargeable to income-tax apart from
the provisions of this sub-section, be deemed, for all the purposes of this Act, to be the income of the
owner and not to be the income of any other person.
452
Explanation.—The references in this sub-section to buying back or reacquiring the securities shall be
deemed to include references to buying or acquiring similar securities, so, however, that where similar
securities are bought or acquired, the owner shall be under no greater liability to income-tax than he
would have been under if the original securities had been bought back or reacquired.
Where any person has had at any time during any previous year any beneficial interest in any
securities, and the result of any transaction relating to such securities or the income thereof is that, in
respect of such securities within such year, either no income is received by him or the income received by
him is less than the sum to which the income would have amounted if the income from such securities
had accrued from day to day and been apportioned accordingly, then the income from such securities for
such year shall be deemed to be the income of such person.
The provisions of sub-section
or sub-section
shall not apply if the owner, or the person
who has had a beneficial interest in the securities, as the case may be, proves to the satisfaction of the
1[Assessing Officer]—
that there has been no avoidance of income-tax, or
that the avoidance of income-tax was exceptional and not systematic and that there was not in
his case in any of the three preceding years any avoidance of income-tax by a transaction of the
nature referred to in sub-section
or sub-section
Where any person carrying on a business which consists wholly or partly in dealing in securities,
buys or acquires any securities and sells back or retransfers the securities, then, if the result of the
transaction is that interest becoming payable in respect of the securities is receivable by him but is not
deemed to be his income by reason of the provisions contained in sub-section
Sub-section
shall have effect, subject to any necessary modifications, as if references to selling
back or retransferring the securities included references to selling or transferring similar securities.
The 1[Assessing Officer] may, by notice in writing, require any person to furnish him within such
time as he may direct (not being less than twenty-eight days), in respect of all securities of which such
person was the owner or in which he had a beneficial interest at any time during the period specified in
the notice, such particulars as he considers necessary for the purposes of this section and for the purpose
of discovering whether income-tax has been borne in respect of the interest on all those securities.
2[
Where—
any person buys or acquires any securities or unit within a period of three months prior to the
record date;
3[
such person sells or transfers—
such securities within a period of three months after such date; or
such unit within a period of nine months after such date;]
the dividend or income on such securities or unit received or receivable by such person is
exempt,
then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the
extent such loss does not exceed the amount of dividend or income received or receivable on such
securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.]