Income Tax Act, 2025
Section 12: Ins. by Act 32 of 1994, s. 25 (w.e.f. 11995).
12. Ins. by Act 32 of 1994, s. 25 (w.e.f. 11995).
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(4) The amount credited to the reserve account under clause (b) of sub-section (1), shall be utilised by
the assessee before the expiry of a period of five years next following the previous year in which the
amount was credited for the following purposes, namely:—
(a) construction of new hotels approved by the prescribed authority in this behalf or expansion of
facilities in existing hotels already so approved;
(b) purchase of new cars and new coaches by tour operators already so approved or by travel
agents;
(c) purchase of sports’ equipment for mountaineering, trekking, golf, river-rafting and other
sports in or on water;
(d) construction of conference or convention centres;
(e) provision of such new facilities for the growth of Indian tourism as the Central Government
may, by notification in the Official Gazette, specify in this behalf;
1[(f) subscription to equity shares forming part of any eligible issue of capital made by a public
company:]
Provided that where any of the activities referred to in 2[clauses (a) to (f)] would result in creation
of any asset owned by the assessee outside India, such asset should be created only after obtaining
prior approval of the prescribed authority.
(5) Where any amount credited to the reserve account under clause (b) of sub-section (1),—
(a) has been utilised for any purpose other than those referred to in sub-section (4), the amount so
utilised; or
(b) has not been utilised in the manner specified in sub-section (4), the amount not so utilised,
shall be deemed to be the profits,—
(i) in a case referred to in clause (a), in the year in which the amount was so utilised; or
(ii) in a case referred to in clause (b), in the year immediately following the period of five years
specified in sub-section (4),
and shall be charged to tax accordingly.
3[(5A) Where any amount credited to the reserve account under clause (b) of sub-section (1) has been
utilised for subscription to any equity shares referred to in clause (f) of sub-section (4) and either whole or
any part of such equity shares are transferred or converted into money by the assessee at any time within a
period of three years from the date of their acquisition, the aggregate amount so utilised in respect of such
equity shares shall be deemed to be the profits of the previous year in which the equity shares are
transferred or converted into money.
The amount credited to the reserve account under clause
of sub-section
construction of new hotels approved by the prescribed authority in this behalf or expansion of
facilities in existing hotels already so approved;
purchase of new cars and new coaches by tour operators already so approved or by travel
agents;
purchase of sports’ equipment for mountaineering, trekking, golf, river-rafting and other
sports in or on water;
construction of conference or convention centres;
provision of such new facilities for the growth of Indian tourism as the Central Government
may, by notification in the Official Gazette, specify in this behalf;
1[
subscription to equity shares forming part of any eligible issue of capital made by a public
company:]
Provided that where any of the activities referred to in 2[clauses
to
Where any amount credited to the reserve account under clause
of sub-section
has been utilised for any purpose other than those referred to in sub-section
has not been utilised in the manner specified in sub-section
in a case referred to in clause
in a case referred to in clause
Where any amount credited to the reserve account under clause
of sub-section
has been
utilised for subscription to any equity shares referred to in clause
of sub-section
and either whole or
any part of such equity shares are transferred or converted into money by the assessee at any time within a
period of three years from the date of their acquisition, the aggregate amount so utilised in respect of such
equity shares shall be deemed to be the profits of the previous year in which the equity shares are
transferred or converted into money.