Section 2

Definitions.

2.   In this Act, unless the context otherwise requires,—

        ³[( 1)  "advance tax" means the advance tax payable in accord­ance with the provisions of Chapter XVII-C;]

    ⁴[ ⁵ (1A)]   ⁶ "agricultural income" ⁷ means ⁸—

    ⁹[( a)  any rent ¹⁰ or revenue derived from land ¹⁰ which is situated in India and is used for agricultural purposes;]

     (b)  any income derived from such land ¹⁰ by—

      (i)  agriculture ¹⁰ ; or

     (ii)  the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market¹⁰ ; or

    (iii)  the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ;

      (c)  any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on :

             ⁹ [Provided that—

      (i)  the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building, and

     (ii)  the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated—

     (A)  in any area which is comprised within the jurisdiction  of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area commit­tee, town committee or by any other name) or a cantonment board and which has a population of not less 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 ; or

     (B)  in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A), as the Central Govern­ment may, having regard to the extent of, and scope for, urbani­sation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette ¹¹.]

                       ¹² [ ¹³[ Explanation 1.]—For the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the trans­fer of any land referred to in item (a ) or item (b) of sub-clause (iii) of clause ( 14) of this section ;]

                 ¹⁴ [Explanation 2.—For the removal of doubts, it is hereby declared that income derived from any building or land referred to in sub-clause (c) arising from the use of such building or land for any purpose (including letting for residential purpose or for the purpose of any business or profession) other than agriculture falling under sub-clause (a) or sub-clause (b) shall not be agricultural income;]

¹⁵ [ ¹⁶[( 1B)]        "amalgamation",  in relation to companies, means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or  companies and the company with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that—

      (i)  all the property of the amalgamating company or compa­nies immediately before the amalgamation becomes the property of the amalgamated company by virtue of the amalgamation ;

     (ii)  all the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgama­tion ;

    (iii)  shareholders holding not less than ¹⁷[three-fourths] in value of the shares in the amalgamating company or companies (other than shares already held therein immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation,

                otherwise than as a result of the acquisition of the property of one company by another company pursuant to the purchase of such property by the other company or as a result of the distribution of such property to the other company after the winding up of the first-mentioned company ;]

         (2 )  "annual value", in relation to any property, means its annual value as determined under section 23 ;

         (3 )   ¹⁸[* * *]

         (4 )  "Appellate Tribunal" means the Appellate Tribunal con­stituted under section 252 ;

         (5 )  "approved gratuity fund" means a gratuity fund which has been and continues to be approved by the ¹⁹[Chief Commission­er or Commissioner] in accordance with the rules contained in Part C of the Fourth Schedule ;

         (6 )  "approved superannuation fund" means a superannuation fund or any part of a superannuation fund which has been and continues to be approved by the ¹⁹ [Chief Commissioner or Commis­sioner] in accordance with the rules contained in Part B of the Fourth Schedule ;

          ²⁰ (7)  "assessee" ²¹ means a person by whom ²²[any tax] or any other sum of money is payable under this Act, and includes—

     (a)  every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ;

     (b)  every person who is deemed to be an assessee under any provision of this Act ;

      (c)  every person who is deemed to be an assessee in default under any provision of this Act ;

     ²³[( 7A)  "Assessing Officer" means the Assistant Commissioner ²⁴[or Deputy Commissioner]  ²⁵[or Assistant Director] ²⁴[or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the ²⁶[Joint Commis­sioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;]

         (8 )  "assessment" ²⁷ includes reassessment ;

         (9 )  "assessment year" means the period of twelve months commencing on the 1st day of April every year ;

    ²⁸[( 9A)  "Assistant Commissioner" means a person appointed to be an Assistant Commissioner of Income-tax ²⁹[or a Deputy Commissioner of  Income-tax] under sub-section (1) of section 117 ;]

       (10)  "average rate of income-tax" means the rate arrived at by dividing the amount of income-tax calculated on the total income, by such total income ;

     ³⁰[( 11)  "block of assets" means a group of assets falling within a class of assets comprising—

     ( a)  tangible assets, being buildings, machinery, plant or furniture;

     ( b)  intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature,

                in respect of which the same percentage of depreciation is prescribed ;]

       (12)  "Board" means the ³¹[Central Board of Direct Taxes constituted  under the Central Boards of Revenue Act, 1963 (54 of 1963)] ;

  ³²[( 12A)  "books or books of account" includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device;]

      ³³( 13)  "business" ³⁴ includes any trade ³⁴, commerce or manufacture or any adventure ³⁴ or concern in the nature of trade ³⁴, commerce or manufacture ;

      ³³( 14)  "capital asset" means property ^35-36 of any kind held by an assessee, whether or not connected with his business or profes­sion, but does not include—

      (i)  any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession ;

  ³⁷[( ii)  personal effects ³⁸, that is to say, movable property (including wearing apparel and furniture, but excluding jewel­lery) held for personal use ³⁸ by the assessee or any member of his family dependent on him.

             Explanation.—For the purposes of this sub-clause, "jewellery" includes—

     (a)  ornaments made of gold, silver, platinum or any other  precious metal or any alloy containing one or more of such pre­cious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn  into any wear­ing apparel ;

     (b)  precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel ;]

 ³⁹ [(iii)  agricultural land⁴⁰ in India, not being land situate—

     (a)  in any area which is comprised within the jurisdiction of a municipality ⁴⁰ (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population ⁴⁰ of not less 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 ; or

     (b)  in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette ⁴¹;]

  ⁴²[( iv)  6½ per cent Gold Bonds, 1977, ⁴³[or 7 per cent Gold Bonds, 1980,] ⁴⁴[or National Defence Gold Bonds, 1980,] issued by the Central Government ;]

   ⁴⁵[( v)  Special Bearer Bonds, 1991, issued by the Central Government ;]

  ⁴⁶[( vi)   Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government ;]

      ⁴⁷( 15)   ⁴⁸"charitable purpose" ⁴⁹ includes relief of the poor, education ⁴⁹,  medical relief, and the advancement of any other ⁴⁹object of general public utility ⁵⁰[* * *] ;

  ⁵¹[( 15A)  "Chief Commissioner" means a person appointed to be a Chief Commissioner of Income-tax under sub-section (1) of section 117 ;]

⁵²[ ⁵³ [(15B)]      "child", in relation to an individual, in­cludes a step-child and an adopted child of that individual ;]

     ⁵⁴[( 16)  "Commissioner" means a person appointed to be a Commissioner of Income-tax under sub-section (1) of section 117 ⁵⁵ [* * *] ;]

  ⁵⁶[( 16A)  "Commissioner (Appeals)" means a person appointed to be a Commissioner of Income-tax (Appeals) under sub-section (1) of section 117 ;]

     ⁵⁷[( 17)  "company" means—

      (i)  any Indian company, or

     (ii)  any body corporate incorporated by or under the laws of a country outside India, or

    (iii)  any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the Indian Income-tax Act, 1922 (11 of 1922), or which is or was assessable or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970, or

     (iv)  any institution, association or body, whether incorpo­rated or not and whether Indian or non-Indian, which is declared by general or special order of the Board to be a company :

             Provided that such institution, association or body shall be deemed to be a company only for such assessment year or assess­ment years (whether commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration ;]

       (18)  "company in which the public are substantially inter­ested"—a company is said to be a company in which the public ⁵⁸ are substantially interested—

   ⁵⁹[( a)  if it is a company owned by the Government or the Reserve Bank of India or in which not less than forty per cent of the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a corporation owned by that bank ; or]

⁶⁰[( aa)  if it is a company which is registered under section 25 of the Companies Act, 1956 (1 of 1956) ⁶¹ ; or

   (ab)  if it is a company having no share capital and if, having regard to its objects, the nature and composition of its membership and other relevant considerations, it is declared by order of the Board to be a company in which the public are sub­stantially interested :

             Provided that such company shall be deemed to be a company in which the public are substantially interested only for such assessment year or assessment years (whether commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration ; or]

⁶²[( ac)  if it is a mutual benefit finance company, that is to say, a company which carries on, as its principal business, the business of  acceptance of deposits from its members and which is declared by the Central Government under section 620A ⁶³ of the Companies Act, 1956 (1 of 1956), to be a Nidhi or Mutual Benefit Society ; or]

⁶⁴[( ad)  if it is a company, wherein shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by, one or more co-operative societies ;]

   ⁶⁵[( b)  if it is a company which is not a ⁶⁶private compa­ny as defined in the Companies Act, 1956 (1 of 1956), and the conditions specified either in item (A) or in item ( B) are ful­filled, namely :—

     (A)  shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) were, as on the last day of the relevant previous year, listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made thereunder ;

  ⁶⁷ [(B)  shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent of the voting power have been allotted unconditionally to, or ac­quired unconditionally by, and were throughout the relevant previous year beneficially held by—

     (a)  the Government, or

     (b)  a corporation established by a Central, State or Pro­vincial Act, or

      (c)  any company to which this clause applies or any  subsid­iary company of such company ⁶⁸[if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year.]

            Explanation.—In its application to an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the genera­tion or distribution of electricity or any other form of power, item (B) shall have effect as if for the words "not less than fifty per cent", the words "not less than forty per cent" had been substituted ;]]

       (19)  "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies ;

  ⁶⁹[( 19A)  "Deputy Commissioner" means a person appointed to be a Deputy Commissioner of Income-tax ⁷⁰[* * *] under sub-section (1) of section 117 ;

⁷¹[( 19AA) "demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 ⁷² of the Companies Act, 1956 (1 of 1956), by a demerged company of its one or more undertakings to any resulting company in such a manner that—

      (i)  all the property of the undertaking, being transferred by the demerged company, immediately before the demerger, becomes the property of the resulting company by virtue of the demerger;

     (ii)  all the liabilities relatable to the undertaking, being transferred by the demerged company, immediately before the demerger,  become the liabilities of the resulting company by virtue of the demerger;

    (iii)  the property and the liabilities of the undertaking or undertakings being transferred by the demerged company are transferred at values appearing in its books of account immediately before the demerger;

     (iv)  the resulting company issues, in consideration of the demerger, its shares to the shareholders of the demerged company on a proportionate basis;

      (v)  the shareholders holding not less than three-fourths in value of the shares in the demerged company (other than shares already held therein immediately before the demerger, or by a nominee for, the resulting company or, its subsidiary) become shareholders of the resulting company or companies by virtue of the demerger,

                otherwise than as a result of the acquisition of the property or assets of the demerged company or any undertaking thereof by the resulting company;

     (vi)  the transfer of the undertaking is on a going concern basis;

   (vii)  the demerger is in accordance with the conditions, if any, notified under sub-section (5) of section 72A by the Central Government in this behalf.

                Explanation 1.—For the purposes of this clause, "undertaking" shall include any part of an undertaking, or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combina­tion thereof not constituting a business activity.

                 Explanation 2.—For the purposes of this clause, the liabilities referred to in sub-clause (ii), shall include—

     (a)  the liabilities which arise out of the activities or operations of the undertaking;

     (b)  the specific loans or borrowings (including debentures) raised, incurred and utilised solely for the activities or opera­tions of the undertaking; and

      (c)  in cases, other than those referred to in clause (a) or clause (b), so much of the amounts of general or multipurpose borrowings, if any, of the demerged company as stand in the same proportion which the value of the assets transferred in a demerger bears to the total value of the assets of such demerged company immediately before the demerger.

                Explanation 3.—For determining the value of the property re­ferred to in sub-clause (iii), any change in the value of assets consequent to their revaluation shall be ignored.

                Explanation 4.—For the purposes of this clause, the splitting up or the reconstruction of any authority or a body constituted or established under a Central, State or Provincial Act, or a local authority or a public sector company, into separate authorities or bodies or local authorities or companies, as the case may be, shall be deemed to be a demerger if such split up or reconstruc­tion fulfils ⁷³[such conditions as may be notified in the Official Gazette ⁷⁴, by the Central Government];

(19AAA)   "demerged company" means the company whose undertaking is transferred, pursuant to a demerger, to a resulting company;]

     (19B)  "Deputy Commissioner (Appeals)" means a person appointed to be a Deputy Commissioner of Income-tax (Appeals) ⁷⁵[or an Additional Commissioner of Income-tax (Appeals)] under sub-section (1) of section 117 ;]

  ⁷⁶[( 19C)  "Deputy Director" means a person appointed to be a Deputy Director of Income-tax ⁷⁷[* * *] under sub-section (1) of section 117 ;]

       (20)   ⁷⁸ "director", "manager" and "managing agent", in rela­tion to a company, have the meanings respectively assigned to them in the Companies Act, 1956 (1 of 1956) ;

     ⁷⁹[( 21)  "Director General or Director" means a person appointed to be a Director General of Income-tax or, as the case may be, a Director of Income-tax, under sub-section (1) of section 117, and includes a person appointed under that sub-section to be ⁸⁰[an Additional  Director of Income-tax or] a ⁸¹[Joint] Director of In­come-tax or an Assistant Director ⁸²[or Deputy Director] of Income-tax ;]

       (22)   ^83-84 "dividend" ⁸⁵ includes—

     (a)  any distribution ⁸⁵ by a company of accumulated profits ⁸⁵, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company ;

     (b)  any distribution ⁸⁵ to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, whether with or without interest, and any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits ⁸⁶, whether capitalised or not ;

      (c)  any distribution ⁸⁶ made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediate­ly before its liquidation, whether capitalised or not ;

     (d)  any distribution ⁸⁷ to its shareholders by a company on the reduction of its capital, to the extent to which the company possesses accumulated profits ⁸⁷ which arose after the end of the previous year ending next before the 1st day of April, 1933, whether such accumulated profits have been capitalised or not ;

      (e)  any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) ⁸⁸[made after the 31st day of May, 1987, by way of advance or loan to a shareholder ⁸⁹, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits ⁸⁷ ;

                but "dividend" does not include—

      (i)  a distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any share issued for full cash consideration, where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets ;

  ⁹⁰[( ia)  a distribution made in accordance with sub-clause (c) or sub-clause ( d) in so far as such distribution is attributable to the capitalised profits of the company representing bonus shares allotted to its equity shareholders after the 31st day of March, 1964, ⁹¹[and before the 1st day of April, 1965] ;]

     (ii)  any advance or loan made to a shareholder ⁹²[or the said concern] by a company in the ordinary course of its busi­ness, where the lending of money is a substantial part of the business of the company ;

    (iii)  any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e), to the extent to which it is so set off;

  ⁹³[( iv)   any payment made by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 77A ⁹⁴ of the Companies Act, 1956 (1 of 1956);

      ( v)  any distribution of shares pursuant to a demerger by the resulting company to the shareholders of the demerged company (whether or not there is a reduction of capital in the demerged company).]

                Explanation 1.—The expression "accumulated profits", wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948, and before the 1st day of April, 1956.

                 Explanation 2.—The expression "accumulated profits" in sub-clauses (a), (b), (d) and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all prof­its of the company up to the date of liquidation, ⁹⁵[but shall not, where the liquidation is consequent on the compulsory acqui­sition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place].

                 ⁹⁶ [Explanation 3.—For the purposes of this clause,—

     (a)  "concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company ;

     (b)  a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern ;]

  ⁹⁷ [(22A)  "domestic company" means an Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income ;]

⁹⁸[( 22AA) "document" includes an electronic record as defined in clause (t) ⁹⁹   of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);]

¹[ ² [(22B)] "fair market value", in relation to a capital asset, means—

      (i)  the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date ; and

     (ii)  where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with the rules made under this Act ;]

       (23)   ³ "firm", "partner" and "partnership" have the meanings respectively assigned to them in the Indian Partnership Act, 1932 (9 of 1932) ; but the expression "partner" shall also include any person who, being a minor, has been admitted to the benefits of partnership ;

   ⁴[( 23A)  "foreign company" means a company which is not a domestic company ;]

⁵( 24)"income" ⁶ includes ⁶—

      (i)  profits and gains ⁶ ;

     (ii)  dividend ;

  ⁷[( iia)  voluntary contributions received by a trust creat­ed wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes ⁸[or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) of clause (23C ), of section 10].

             Explanation.—For the purposes of this sub-clause, "trust" includes any other legal obligation ;]

    (iii)  the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3 ) of section 17 ;

^9-13[( iiia) any special allowance or benefit, other than perquisite included under sub-clause (iii), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit ;

  (iiib)  any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living ;]

     (iv)  the value of any benefit or perquisite ¹⁴, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid ;

¹⁵ [(iva) the value of any benefit or perquisite ¹⁴, whether convertible into money or not, obtained by any representative assessee mentioned in clause (iii) or clause (iv) of sub-section (1) of section 160 or by any person on whose behalf or for whose benefit any income is receivable by the representative asses­see (such person being hereafter in this sub-clause referred to as the "beneficiary") and any sum paid by the representative assessee in respect of any obligation which, but for such pay­ment, would have been payable by the beneficiary ;]

      (v)  any sum chargeable to income-tax under clauses (ii) and (iii) of section 28 or section 41 or section 59 ;

¹⁶ [(va)  any sum chargeable to income-tax under clause (iiia) of section 28;]

¹⁷[( vb)  any sum chargeable to income-tax under clause (iiib) of section 28;]

¹⁸[( vc)  any sum chargeable to income-tax under clause (iiic) of section 28;]

¹⁹[( vd)]the value of any benefit or perquisite taxable under clause (iv) of section 28;

²⁰[( ve)  any sum chargeable to income-tax under clause (v) of section 28;]

     (vi)  any capital gains chargeable under section 45;

   (vii)  the profits and gains of any business of insurance carried on by a mutual insurance company or by a co-operative society, computed in accordance with section 44 or any surplus taken to be such profits and gains by virtue of provisions con­tained in the First Schedule ;

  (viii)   ²¹ [Omitted by the Finance Act, 1988, w.e.f. 1-4-1988. Original sub-clause (viii) was inserted by the Finance Act, 1964, w.e.f. 1-4-1964.]

  ²²[( ix)  any winnings from lotteries ²³, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.]

             ²⁴ [Explanation.—For the purposes of this sub-clause,—

      (i)  "lottery" includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner what­soever, under any scheme or arrangement by whatever name called;

     (ii)  "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game ;]

   ²⁵[( x)  any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees ;]

  ²⁶[( xi)  any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.

             Explanation.—For the purposes of this clause * , the expression "Keyman insurance policy" shall have the meaning assigned to it in the Explanation to clause (10D) of section 10 ;]

²⁷ [(xii)  any sum referred to in ^27a[clause (va)] of section 28;]

            (xiii)    any sum referred to in clause (v) of sub-section (2) of section 56;

       (25)  "Income-tax Officer" means a person appointed to be an Income-tax Officer under ²⁸[* * *] section 117 ;

  ²⁹[( 25A)  "India" shall be deemed to include the Union territories of Dadra and Nagar Haveli, Goa †, Daman and Diu, and Pondicherry,—

     (a)  as respects any period, for the purposes of section 6 ; and

     (b)  as respects any period included in the previous year, for the purposes of making any assessment for the assessment year commencing on the 1st day of April, 1963, or for any subsequent year ;]

       (26)  "Indian company" means a company formed and registered under  the Companies Act, 1956 (1 of 1956), and includes—

      (i)  a company formed and registered under any law relating to companies formerly in force in any part of India (other than the State of Jammu and Kashmir ³⁰[and the Union territories  specified in sub-clause (iii) of this clause]) ;

  ³¹[( ia)  a corporation established by or under a Central, State or  Provincial Act ;

    (ib)  any institution, association or body which is declared by the Board to be a company under clause (17) ;]

     (ii)  in the case of the State of Jammu and Kashmir, a company formed and registered under any law for the time being in force in that State ;

³²[( iii)  in the case of any of the Union territories of Dadra and Nagar Haveli, Goa †, Daman and Diu, and Pondicherry, a company formed and registered under any law for the time being in force in that Union territory :]

                Provided that the  ³³[registered or, as the case may be, principal office of the company, corporation, institution, association or body] in all cases is in India ;

       (27)   ³⁴ [* * *]

       (28)  "Inspector of Income-tax" means a person appointed to be an  Inspector of Income-tax under sub-section ³⁵[(1)] of section 117 ;

³⁶[ ³⁷ (28A) "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (in­cluding a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised ;]

  ³⁸[( 28B)  "interest on securities" means,—

      (i)  interest on any security of the Central Government or a State Government ;

     (ii)  interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act ;]

³⁹[( 28BB) "insurer" means an insurer, being an Indian insurance company, as defined under clause (7A) of section 2 ⁴⁰ of the Insur­ance Act, 1938 (4 of 1938), which has been granted a certificate of registration under section 3 of that Act;]

  ⁴¹[( 28C)  "Joint Commissioner" means a person appointed to be a Joint Commissioner of Income-tax or an Additional Commissioner of Income-tax under sub-section (1) of section 117;

     (28D)  "Joint Director" means a person appointed to be a Joint Director of Income-tax or an Additional Director of Income-tax under sub-section (1) of section 117;]

       (29)  "legal representative" has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908 (5 of 1908) ⁴² ;

  ⁴³[( 29A)  "long-term capital asset" means a capital asset which is not a short-term capital asset ;

     (29B)  "long-term capital gain" means capital gain aris­ing from the transfer of a long-term capital asset ;]

  ⁴⁴[( 29C)  "maximum marginal rate" means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individ­ual ^45-46[, association of persons or, as the case may be, body of individuals] as specified in the Finance Act of the relevant year ;]

       (30)  "non-resident" means a person who is not a "resident" ⁴⁷[, and for the purposes of sections 92, 93 ⁴⁸[* * *] and 168, in­cludes a person who is not ordinarily resident within the meaning of clause (6) of section 6] ;

      ⁴⁹( 31)  "person" includes—

      (i)  an individual ⁵⁰,

     (ii)  a Hindu undivided family ⁵⁰,

    (iii)  a company,

     (iv)  a firm⁵¹ ,

      (v)  an association of persons ⁵¹ or a body of individuals ⁵¹, whether incorporated or not,

     (vi)  a local authority, and

   (vii)  every artificial juridical person, not falling within any of the preceding sub-clauses.

                 ⁵² [Explanation.—For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains;]

       (32)  "person who has a substantial interest in the company", in relation to a company, means a person who is the beneficial owner of shares, not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits, carrying not less than twenty per cent of the voting power ;

       (33)  "prescribed" means prescribed by rules made under this Act ;

       (34)  "previous year" means the previous year as defined in section 3 ;

      ⁵³( 35)  "principal officer", used with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means—

     (a)  the secretary, treasurer, manager or agent of the authority, company, association or body, or

     (b)  any person connected with the management or administration of the local authority, company, association or body upon whom the ⁵⁴[Assessing] Officer has served a notice of his intention of treating him as the principal officer thereof ;

      ⁵⁵( 36)  "profession" includes vocation ⁵⁶ ;

  ⁵⁷[( 36A)  "public sector company" means any corporation established by or under any Central, State or Provincial Act or a Government com-pa­ny ⁵⁸ as defined in section 617 of the Companies Act, 1956  (1 of 1956) ;]

       (37)   ⁵⁹ "public servant" has the same meaning as in section 21 of the Indian Penal Code (45 of 1860) ;

  ⁶⁰[( 37A)  "rate or rates in force" or "rates in force", in relation to an assessment year or financial year, means—

      (i)  for the purposes of calculating income-tax under the first proviso to sub-section (5) of section 132, or computing the income-tax chargeable under sub-section (4) of section 172 or sub-section (2) of section 174 or section 175 or sub-section (2) of section 176 or deducting income-tax under section 192 from income charge-able under the head "Salaries" ⁶¹[* * *] or ⁶² [computation of the "advance tax" payable under Chapter XVII-C in a case not falling under ⁶³[ section 115A or section 115B ⁶⁴ [or section 115BB ⁶⁵ [or section 115BBB] or section 115E] or] section 164 ⁶⁴ [or section 164A ⁶⁶ [* * *]] ⁶⁷[or section 167B], the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, and for the purposes of computation of the "advance tax" payable under Chap­ter XVII-C ⁶⁸[in a case falling under section 115A or section 115B ⁶⁹ [or section 115BB ⁷⁰ [or section 115BBB] or section 115E] or section 164 ⁶⁹ [or section 164A ⁷¹ [* * *]] ⁷² [or section 167B], the rate or rates specified in section 115A or ⁷³ [ section 115B or section 115BB ⁷⁴ [or section 115BBB] or section 115E or section 164 or section 164A ⁷¹ [* * *] ⁷²[or section 167B ], as the case may be,] or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, whichever is applicable ;]

     (ii)  for the purposes of deduction of tax under sections 193, 194 , 194A ⁷⁵ [, 194B] ⁷⁶ [, 194BB] ⁷⁷ [and 194D], the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year ;]

⁷⁸[( iii)  for the purposes of deduction of tax under section 195 , the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year or the rate or rates of income-tax specified in an agreement entered into by the Central Government under section 90, whichever is applicable by virtue of the provisions of section 90 ;]

      ⁷⁹( 38)  "recognised provident fund" means a provident fund which has been and continues to be recognised by the ⁸⁰[Chief Commissioner or Commissioner] in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees’ Provident Funds Act, 1952 (19 of 1952) ;

       (39)   ⁸¹ [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993;]

       (40)  "regular assessment" means the assessment made under ⁸²[sub- section (3) of] section 143 or section 144 ;

       (41)  "relative", in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual ;

  ⁸³[( 41A)   "resulting company" means one or more companies (including a wholly owned subsidiary thereof) to which the undertaking of the demerged company is transferred in a demerger and, the resulting company in consideration of such transfer of undertak­ing, issues shares to the shareholders of the demerged company and includes any authority or body or local authority or public sector company or a company established, constituted or formed as a result of demerger;]

       (42)  "resident" means a person who is resident in India within the meaning of section 6 ;

⁸⁴[ ⁸⁵ (42A)  ⁸⁶ ["short-term capital asset" means a capital asset held by an assessee for not more than ⁸⁷[thirty-six] months immediately preceding the date of its transfer :]

                 ⁸⁸ [Provided that in the case of a share held in a company ⁸⁹[or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963) or a unit of a Mutual Fund specified under clause (23D) of section 10], the provisions of this clause shall have effect as if for the words "thirty-six months", the words "twelve months" had been substituted.]

                 ⁹⁰ [Explanation 1].—(i) In determining the period for which any capital asset is held by the assessee—

     (a)  in the case of a share held in a company in liquida­tion, there shall be excluded the period subsequent to the date on which the company goes into liquidation ;

     (b)  in the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in ⁹¹[sub-section (1)] of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section ;

   ⁹²[( c)  in the case of a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in  consideration of a transfer referred to in clause (vii) of section 47, there shall be included the period for which the share or shares in the amalgamating company were held by the assessee ;]

   ⁹³[( d)  in the case of a capital asset, being a share or any other security (hereafter in this clause referred to as the financial asset) subscribed to by the assessee on the basis of his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to such financial asset, the period shall be reckoned from the date of allotment of such financial asset ;

      (e)  in the case of a capital asset, being the right to subscribe to any financial asset, which is renounced in favour of any other person, the period shall be reckoned from the date of the offer of such right by the company or institution, as the case may be, making such offer ;]

    ⁹⁴[( f)  in the case of a capital asset, being a financial asset, allotted without any payment and on the basis of holding of any other financial asset, the period shall be reckoned from the date of the allotment of such financial asset ;]

   ⁹⁵[( g)  in the case of a capital asset, being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a demerger, there shall be included the period for which the share or shares held in the demerged company were held by the assessee ;]

   ⁹⁶[ (h)  in the case of a capital asset, being trading or clearing rights of a recognised stock exchange in India acquired by a person pursuant to demutualisation or corporatisation of the recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation;

    (ha )  in the case of a capital asset, being equity share or shares in a company allotted pursuant to demutualisation or corporatisation of a recognised stock exchange in India as re­ferred to in clause (xiii ) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation;]

                ( ii) In respect of capital assets other than those mentioned in  clause (i), the period for which any capital asset is held by the assessee shall be determined subject to any rules which the Board may make in this behalf ;]

                 ⁹⁷ [Explanation 2.—For the purposes of this clause, the expression "security" ⁹⁸ shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;]

  ⁹⁹[( 42B)  "short-term capital gain" means capital gain arising from the transfer of a short-term capital asset ;]

   ¹[( 42C)   "slump sale" means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and li­abilities in such sales.

                 Explanation 1.—For the purposes of this clause, "undertaking" shall have the meaning assigned to it in Explanation 1 to clause (19AA).

                Explanation 2.—For the removal of doubts, it is hereby declared that the determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar taxes or fees shall not be regarded as assignment of values to individual assets or liabilities ;]

      ²[( 43)  "tax" in relation to the assessment year commenc­ing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date ;]

   ³[( 43A)  "tax credit certificate" means a tax credit cer­tificate granted to any person in accordance with the provisions of Chapter XXII-B ⁴ and any scheme made thereunder ;]

     (43B)   ⁵ [* * *]

      ⁶[( 44)  "Tax Recovery Officer" means any Income-tax Offi­cer who may be authorised by the Chief Commissioner or Commis­sioner, by general or special order in writing, to exercise the powers of a Tax Recovery Officer ;]

       (45)  "total income" means the total amount of income re­ferred to in section 5, computed in the manner laid down in this Act ;

       (46)   ⁷ [* * *]

       ⁸( 47)   ⁹["transfer" ¹⁰ , in relation to a capital asset, includes,—

      (i)  the sale¹⁰ , exchange ¹⁰ or relinquishment ¹⁰ of the asset ; or

     (ii)  the extinguishment of any rights therein ¹⁰ ; or

    (iii)  the compulsory acquisition thereof under any law ; or

     (iv)  in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a busi­ness carried on by him, such conversion or treatment ;] ¹¹[or]

   ¹¹[( v)  any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A ¹² of the Transfer of Property Act, 1882 (4 of 1882) ; or

     (vi)  any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immov-a­ble property.

                 Explanation.—For the purposes of sub-clauses (v) and (vi),  "immovable property" shall have the same meaning as in clause (d) of section 269UA.]

       (48)   ¹³ [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]