Income Tax Act, 2025
Section 4: Subs. by Act 46 of 1986, s. 7, for the Explanation (w.e.f. 11988).
4. Subs. by Act 46 of 1986, s. 7, for the Explanation (w.e.f. 11988).
230
the actual cost of the motor car to the assessee as it would have been computed before applying the said
proviso;
(2) “sold” includes a transfer by way of exchange or a compulsory acquisition under any law for
the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by
the amalgamating company to the amalgamated company where the amalgamated company is an
Indian company.]
1[(4A) Where a deduction has been allowed in respect of any special reserve created and maintained
under clause (viii) of sub-section (1) of section 36, any amount subsequently withdrawn from such special
reserve shall be deemed to be the profits and gains of business or profession and accordingly be
chargeable to income-tax as the income of the previous year in which such amount is withdrawn.
Explanation.—Where any amount is withdrawn from the special reserve in a previous year in which
the business is no longer in existence, the provisions of this sub-section shall apply as if the business is in
existence in that previous year.]
(5) Where the business or profession referred to in this section is no longer in existence and
there is income chargeable to tax under sub-section (1), 2*** sub-section (3) , 3[sub-section (4) or
sub-section (4A)] in respect of that business or profession, any loss, not being a loss sustained in
speculation 4*** business, which arose in that business or profession during the previous year in which it
ceased to exist and which could not be set off against any other income of that previous year shall, so far
as may be, be set off against the income chargeable to tax under the sub-sections aforesaid.
5[(6) References in sub-section (3) to any other provision of this Act which has been amended or
omitted by the Direct Tax Laws (Amendment) Act, 1987 shall, notwithstanding such amendment or
omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not
been made.]
42. Special provision for deductions in the case of business for prospecting, etc., for mineral
oil.—6[(1)] For the purpose of computing the profits or gains of any business consisting of the
prospecting for or extraction or production of mineral oils in relation to which the Central Government
has entered into an agreement with any person for the 7[association or participation of the Central
Government or any person authorised by it in such business] (which agreement has been laid on the Table
of each House of Parliament), there shall be made in lieu of, or in addition to, the allowances admissible
under this Act, such allowances as are specified in the agreement in relation—
(a) to expenditure by way of infructuous or abortive exploration expenses in respect of any area
surrendered prior to the beginning of commercial production by the assessee;
(b) after the beginning of commercial production, to expenditure incurred by the assessee,
whether before or after such commercial production, in respect of drilling or exploration activities or
services or in respect of physical assets used in that connection, except assets on which allowance for
depreciation is admissible under section 32: 8***
9[Provided that in relation to any agreement entered into after the 31st day of March, 1981, this
clause shall have effect subject to the modification that the words and figures “except assets on which
allowance for depreciation is admissible under section 32” had been omitted; and]
“sold” includes a transfer by way of exchange or a compulsory acquisition under any law for
the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by
the amalgamating company to the amalgamated company where the amalgamated company is an
Indian company.]
1[
Where a deduction has been allowed in respect of any special reserve created and maintained
under clause
of sub-section
of section 36, any amount subsequently withdrawn from such special
reserve shall be deemed to be the profits and gains of business or profession and accordingly be
chargeable to income-tax as the income of the previous year in which such amount is withdrawn.
Explanation.—Where any amount is withdrawn from the special reserve in a previous year in which
the business is no longer in existence, the provisions of this sub-section shall apply as if the business is in
existence in that previous year.]
Where the business or profession referred to in this section is no longer in existence and
there is income chargeable to tax under sub-section
, 3[sub-section
or
sub-section
References in sub-section
to any other provision of this Act which has been amended or
omitted by the Direct Tax Laws
Act, 1987 shall, notwithstanding such amendment or
omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not
been made.]
42. Special provision for deductions in the case of business for prospecting, etc., for mineral
oil.—6[
to expenditure by way of infructuous or abortive exploration expenses in respect of any area
surrendered prior to the beginning of commercial production by the assessee;
after the beginning of commercial production, to expenditure incurred by the assessee,
whether before or after such commercial production, in respect of drilling or exploration activities or
services or in respect of physical assets used in that connection, except assets on which allowance for
depreciation is admissible under section 32: 8***
9[Provided that in relation to any agreement entered into after the 31st day of March, 1981, this
clause shall have effect subject to the modification that the words and figures “except assets on which
allowance for depreciation is admissible under section 32” had been omitted; and]