अन्य कटौती
Other deductions.
63 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28—
64 (i) the amount of any premium paid in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of the business or profession;
65 [(ia) the amount of any premium paid by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk raised by its members to such federal milk co-operative society;]
66 [(ib) the amount of any premium paid by cheque by the assessee as an employer to effect or to keep in force an insurance on the health of his employees under a scheme framed in this behalf by the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government;]
67 (ii) any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission;
69 [* * *]
70 [(iia) a sum equal to one and one-third times the amount of the expenditure incurred on payment of any salary 71[for any period of employment before the 1st day of March, 1984] to an employee who, as at the end of the previous year,—
( a) is totally blind, or
( b) is subject to or suffers from a permanent physical disability (other than blindness) which has the effect of reducing sub-stantially his capacity to engage in a gainful employment or occupation:
Provided that the assessee produces before the 72 [Assessing] Officer, in respect of the first assessment year for which deduction is claimed in relation to each such employee under this clause,—
( i) in a case referred to in sub-clause (a), a certificate as to his total blindness from a registered medical practitioner being an oculist; and
( ii) in a case referred to in sub-clause (b), a certificate as to the permanent physical disability referred to in the said sub-clause from a registered medical practitioner:
Provided further that nothing contained in this clause shall apply in the case of an employee whose income in the previous year chargeable under the head "Salaries" exceeds twenty thousand rupees.
Explanation 1.—In this clause, "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise.
Explanation 2. —For the removal of doubts, it is hereby declared that where a deduction under this clause is allowed for any assessment year in respect of any expenditure, deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year;]
73 (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession.
Explanation.—Recurring subscriptions paid periodically by shareholders, or subscribers in Mutual Benefit Societies which fulfil such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause;
73 (iv) 74 any sum paid by the assessee as an employer by way of contribution towards a recognised provident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognising the provident fund or approving the superannuation fund, as the case may be; and subject to such 75conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head "Salaries" or to the contributions or to the number of members of the fund;
76 (v) 77any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust;
78 [(va)any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee’s account in the relevant fund or funds on or before the due date.
Explanation.—For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee’s contribution to the employee’s account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;]
79 (vi) in respect of animals which have been used for the purposes of the business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, the difference between the actual cost to the assessee of the animals and the amount, if any, realised in respect of the carcasses or animals;
80 (vii) subject to the provisions of sub-section (2), the amount of 81[any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year]:
82[ Provided that in the case of 82a [an assessee] to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause;]
( a) a scheduled bank [not being 86[* * *] a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding 87[ten] per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner;
( b) a bank, being a bank incorporated by or under the laws of a country outside India, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VIA);]
88[( c) a public financial institution or a State financial corporation or a State industrial investment corporation, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VIA).]
Explanation. —For the purposes of this clause,—
89 [(i) "non-scheduled bank" means a 90banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank;]
91 [(ia) "rural branch" means a branch of a scheduled bank 92[or a non-scheduled bank] situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year;
93 [(ii) "scheduled bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank;]
94 [(iii) "public financial institution" shall have the meaning assigned to it in 95section 4A of the Companies Act, 1956 (1 of 1956);
( iv) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951);
( v) "State industrial investment corporation" means a 96Government company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956), engaged in the business of providing long-term finance for industrial projects and approved by the Central Government under clause (viii) of this sub-section;]
( viii) 97 [in respect of any special reserve created 97a [and maintained] by a financial corporation which is engaged in providing long-term finance for 98 [industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the profits derived from such business of providing long-term finance (computed under the head "Profits and gains of business or profession" 99 [before making any deduction under this clause]) carried to such reserve account:]
Provided that the corporation 1 [or, as the case may be, the company] is for the time being approved 2 by the Central Government for the purposes of this clause:
Provided further that where the aggregate of the amounts carried to such reserve account from time to time exceeds 3[twice the amount of] the paid-up share capital 4[ and of the general reserves] of the corporation 1 [or, as the case may be, the company], no allowance under this clause shall be made in respect of such excess.
( a) "financial corporation" shall include a public company and a Government company;
( b) 6 "public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956);
( c) 7 "Government company" shall have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956);]
The following clause (d ) shall be substituted for the existing clause (d ) of the Explanation by the Finance Act, 1997, w.e.f. 1-4-1998 :
(d) "infrastructure facility" shall have the meaning assigned to it in clause (23G) of section 10;
9 [(e) "long-term finance" means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years;]
11 [(ix) any expenditure bona fide incurred by a company for the purpose of promoting family planning amongst its employees:
Provided that where such expenditure or any part thereof is of a capital nature, one-fifth of such expenditure shall be deducted for the previous year in which it was incurred; and the balance thereof shall be deducted in equal instalments for each of the four immediately succeeding previous years:
Provided further that the provisions of sub-section (2) of section 32 and of sub-section (2) of section 72 shall apply in relation to deductions allowable under this clause as they apply in relation to deductions allowable in respect of depreciation:
Provided further that the provisions of clauses (ii), ( iii), (iv) and (v) of sub-section (2) 12[and sub-section (5)] of section 35, of sub-section (3) of section 41 and of Explanation 1 to clause (1) of section 43 shall, so far as may be, apply in relation to an asset representing expenditure of a capital nature for the purposes of promoting family planning as they apply in relation to an asset representing expenditure of a capital nature on scientific research;]
13 [(x) any sum paid by a public financial institution by way of contribution towards any fund specified under clause (23E) of section 10.
Explanation.—For the purposes of this clause, "public financial institution" shall have the meaning assigned to it in 14section 4A of the Companies Act, 1956 (1 of 1956).]
15 (2) In making any deduction for a bad debt or part thereof, the following provisions shall apply—
16 [(i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee;]
( ii) if the amount ultimately recovered on any such debt or part of debt is less than the difference between the debt or part and the amount so deducted, the deficiency shall be deductible in the previous year in which the ultimate recovery is made;
( iii) any such debt or part of debt may be deducted if it has already been written off as irrecoverable in the accounts of an earlier previous year 17 [(being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year)], but the 18[Assessing] Officer had not allowed it to be deducted on the ground that it had not been established to have become a bad debt in that year;
( iv) where any such debt or part of debt is written off as irrecoverable in the accounts of the previous year 19[(being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year)] and the 20[Assessing] Officer is satisfied that such debt or part became a bad debt in any earlier previous year not falling beyond a period of four previous years immediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply;
21 [(v) where such debt or part of debt relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause.]
63. See also Circular No. 4-P(LVIII-30), dated 25-11-1965, Circular No. 44(3)-IT/49, dated 12-2-1949, Circular No. 110, dated 13-4-1973, Letter [F. No. 44/13/64-ITJ], dated 6-9-1964, Letter [F. No. 216/6/77-IT(A-II)], dated 7-6-1978, Circular No. 403, dated 5-12-1984, Circular No. 30(XLVII-18), dated 30-11-1964, Circular No. 14, dated 23-4-1969, Extracts from Minutes (Item 31) of Ninth Meeting of DTAC held on 5-11-1966, Circular dated 6-10-1952, extracted from CIT v. Corporation Bank Ltd. [1986] 157 ITR 509 (Kar.), Circular No. 20, dated 13-6-1969, Extracts of Instruction No. 370 [F. No. 205/15/71-IT(A-II)], dated 13-1-1972 and Letter [F. No. 10/66/61-IT(A-I)], dated 16-1-1962. For details, see Taxmann’s Master Guide to Income-tax Act.
64. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
65. Inserted by the Finance Act, 1979, w.e.f. 1-4-1980.
66. Inserted by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987.
67. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
68. First proviso omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, first proviso, as inserted by the Payment of Bonus (Amendment) Act, 1976, with retrospective effect from 25-9-1975, stood as under:
" Provided that the deduction in respect of bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965 (21 of 1965), apply shall not exceed the amount of bonus payable under that Act."
69. Second proviso omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its omission, second proviso, as substituted by the Payment of Bonus (Amendment) Act, 1976, with retrospective effect from 25-9-1975, stood as under:
"Provided further that the amount of the bonus (not being bonus referred to in the first proviso) or commission is reasonable with reference to—
( a) the pay of the employee and the conditions of his service;
( b) the profits of the business or profession for the previous year in question; and
( c) the general practice in similar business or profession."
70. Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.
71. Inserted by the Finance Act, 1984, w.e.f. 1-4-1984.
72. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
73. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
75. For conditions specified by the Board, see Taxmann’s Master Guide to Income-tax Act.
76. See rules 103 and 104.
77. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
78. Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.
79. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
80. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
81. Substituted for "any debt, or part thereof, which is established to have become a bad debt in the previous year" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
82. Inserted by the Finance Act, 1985, w.e.f. 1-4-1985.
82a. Substituted for "a bank" by the Finance Act, 1997, w.r.e.f. 1-4-1992.
83. Inserted by the Finance Act, 1979, w.e.f. 1-4-1980.
84. Substituted for the following by the Income-tax (Amendment) Act, 1986, w.e.f. 1-4-1987 :
"in respect of any provision for bad and doubtful debts made by a scheduled bank (not being a bank approved by the Central Government for the purposes of clause (viiia ) or a bank incorporated by or under the laws of a country outside India) or a non-scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) or an amount not exceeding two per cent of the aggregate average advances made by the rural branches of such bank, computed in the prescribed manner, whichever is higher."
Earlier, above opening para of clause (viia) was substituted by the Finance Act, 1985, w.e.f. 1-4-1985. It was also amended by the Finance Act, 1982, w.e.f. 1-4-1983.
85. Rule 6ABA provides that the aggregate average advances made by the rural branches of a scheduled bank shall be computed in the following manner, namely:—
( a) the amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately;
( b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause (a);
( c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank.
86. Words "a bank approved by the Central Government for the purposes of clause (viiia ) or" omitted by the Finance Act, 1994, w.e.f. 1-4-1995.
87. Substituted for "four", ibid. Earlier "four" was substituted for "two" by the Finance Act, 1993, w.e.f. 1-4-1994.
89. Inserted by the Finance Act, 1982, w.e.f. 1-4-1983.
90. Section 5(c) of the Banking Regulation Act, 1949, defines "banking company" as follows :
‘( c) "banking company" means any company which transacts the business of banking in India.
Explanation.—Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause;’
91. Relettered by the Finance Act, 1982, w.e.f. 1-4-1983.
92. Inserted, ibid.
93. Substituted for the following clause (ii), [as amended by the Finance Act, 1985, w.e.f. 1-4-1985] by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 :
‘( ii) "scheduled bank" has the same meaning as in the Explanation to clause (iii) of sub-section (5) of section 11, but does not include a co-operative bank;’
94. Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992.
95. For text of section 4A of the Companies Act, 1956, and notified institutions thereunder, see Appendix One.
96. For definition of "Government company", see footnote 9 on page 1.17 ante.
97. Operative part of this clause was amended first by the Finance Act, 1966, w.e.f. 1-4-1966 and then by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and then by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972 and then by the Finance Act, 1974, w.e.f. 1-4-1975.
97a. The italicised words shall be inserted by the Finance Act, 1997, w.e.f. 1-4-1998.
98. Substituted for the portion beginning with the words "industrial or agricultural development in India" and ending with the words "such reserve account" by the Finance Act, 1995, w.e.f. 1-4-1996. Prior to its substitution, the quoted portion, as amended by the Finance Act, 1979, w.e.f. 1-4-1980 and the Finance Act, 1985, w.e.f. 1-4-1985, read as under:
"industrial or agricultural development in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) carried to such reserve account:"
99. Substituted for "before making any deduction under this section" by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1996.
1. Inserted by the Finance Act, 1979, w.e.f. 1-4-1980.
2. For approved financial corporations, see Taxmann’s Master Guide to Income-tax Act.
4. Substituted for "(excluding the amounts capitalised from reserves)" by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997.
5. Substituted by the Finance Act, 1992, w.r.e.f. 1-4-1987. Prior to substitution, Explanation as inserted by the Finance Act, 1970, w.r.e.f. 1-4-1966 and later on omitted by the Finance Act, 1974, w.e.f. 1-4-1975 and again inserted by the Finance Act, 1979, w.e.f. 1-4-1980 and further substituted by the Finance (No. 2) Act, 1991, w.r.e.f. 1-4-1987, read as under :
‘ Explanation.—In this clause,—
( a) "financial corporation" shall include a public company;
( b) "public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956).’
6. For definition of "public company", see Appendix One.
7. For definition of "Government company", see footnote 9 on page 1.17 ante.
8. Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
9. Inserted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1996.
10. Omitted by the Finance Act, 1994, w.e.f. 1-4-1995. Prior to omission clause (viiia), as inserted by the Finance Act, 1982, w.e.f. 1-4-1983 and later on amended by the Finance Act, 1985, w.e.f. 1-4-1985, read as under:
‘(viiia) in respect of any special reserve created by a scheduled bank (other than a bank incorporated by or under the laws of a country outside India) which is engaged in banking operations outside India, an amount not exceeding forty per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) carried to such reserve account:
Provided that, having regard to its capital structure, the extent of its banking operations outside India, its need for resources for such operations outside India and other relevant factors, the bank is, for the time being, approved by the Central Government for the purposes of this clause.
Explanation.—For the purposes of this clause, "scheduled bank" has the same meaning as in clause (ii) of the Explanation to clause (viia);’
For approved banks under the omitted clause (viiia), see Taxmann’s Master Guide to Income-tax Act.
11. Inserted by the Finance Act, 1965, w.e.f. 1-4-1965.
12. Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
13. Inserted by the Finance Act, 1989, w.e.f. 1-4-1989.
14. For text of section 4A of the Companies Act, 1956, and notified institutions thereunder, see Appendix One.
15. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
16. Substituted for the following clause (i) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989:
"( i) no such deduction shall be allowed unless such debt or part thereof—
( a) has been taken into account in computing the income of the assessee of that previous year or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee, and
( b) has been written off as irrecoverable in the accounts of the assessee for that previous year;"
17. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
18. Substituted for "Income-tax", ibid., w.e.f. 1-4-1988.
19. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
21. Substituted by the Finance Act, 1997, w.r.e.f. 1-4-1992. Prior to its substitution, clause (v), as inserted by the Finance Act, 1985, w.e.f. 1-4-1985, read as under :
"( v) where such debt or part of debt relates to advances made by a bank to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the bank has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause."