Tax credit certificates to certain equity shareholders
Tax credit certificates to certain equity shareholders.
280Z. (1) An individual shall be granted a tax credit certificate if he by himself or some other person on his behalf has subscribed to, and made payments in respect of, any eligible issue of capital.
(2) A Hindu undivided family shall also be granted a tax credit certificate if any person has subscribed to, and made payments in respect of, any eligible issue of capital on behalf of that Hindu undivided family.
(3) A tax credit certificate granted under the provisions of this section shall be for the amount or the aggregate of the amounts computed as hereunder with reference to the capital so subscribed and paid—
| (i) On the first Rs. 15,000 of the amount paid in the financial year | at the rate of 5 per cent ; |
| (ii) On the next Rs. 10,000 of the amount paid in the financial year | at the rate of 3 per cent ; |
| (iii) On the next Rs. 10,000 of the amount paid in the financial year | at the rate of 2 per cent ; |
| (iv) On the balance of the amount paid in the financial year | nil. |
Explanation : For the purposes of this section—
(i) "subscribed" includes acquisition of the shares forming part of an eligible issue of capital from a person who is specified as an underwriter in pursuance of clause 11 of Part I of Schedule II to the Companies Act, 1956 (1 of 1956) (hereinafter in this section referred to as the underwriter) ;
(ii) a payment shall be treated as having been made to the extent to which and on the date on which the amount of the said payment has been credited to the share capital account of the company.
(4) A tax credit certificate for the amount specified in sub-section (3) shall be granted to an individual or Hindu undivided family —
(a) where payment by way of subscription has been made to the company, in respect of the financial year in which payment has been made and each of the three financial years following that year ; and
(b) where the acquisition has been made from the underwriter, in respectof the financial year in which the capital was so acquired and each one,if any, of the following financial years not falling beyond the thirdfinancial year from the end of the financial year in which the paymentby way of subscription has been made to the company by the under-writer:
Provided that, in either case the capital is held by or on behalf of the individual or on behalf of the Hindu undivided family, as the case may be, at the end of the relevant financial year :
Provided further that where any part of the capital in respect of which a tax credit certificate had been granted in a financial year (hereinafter referred to as the earlier financial year) is sold, transferred or otherwise disposed of in a subsequent financial year, the tax credit certificate to be granted with reference to the remaining capital in respect of the said subsequent financial year or any financial year following that year shall be for such amount as bears to the amount for which the tax credit certificate was granted in the earlier financial year the same proportion as the amount of the remaining capital as on the 31st day of March of the subsequent financial year bears to the total amount of the capital with reference to which the tax credit certificate was granted in the earlier financial year.
(5) If any individual by himself or on behalf of any other individual or on behalf of any Hindu undivided family has acquired any shares forming part of an eligible issue of capital from the underwriter, he shall not be entitled to a tax credit certificate under this section, unless his name is entered as a sharehoder in respect of such shares in the register of shareholders of the company.
(6) The amount shown on a tax credit certificate granted to an individual or Hindu undivided family shall, on the certificate being produced before the Income-tax Officer, be adjusted against any liability of such individual or Hindu undivided family under the Indian Income-tax Act, 1922 (11 of 1922), or this "Act, existing on the date on which the certificate was produced before the Income-tax Officer and where the amount of such certificate exceeds such liability, or where there is no such liability, the excess or the whole of such amount, as the case may be, shall, notwithstanding anything contained in Chapter XIX, be deemed, on the said date, to be refund due to such individual or Hindu undivided family, as the case may be, under that Chapter and the provisions of this Act shall apply accordingly.
(7) The Central Government may specify in a scheme any issue of ordinary shares by a public company as eligible issue of capital.
(8) In specifying any issue of ordinary shares as eligible issue of capital, the Central Government shall have regard to the following factors, namely :—
(a) the total amount of the capital issued ;
(b) the terms and conditions subject to which the capital is issued ;
(c) the trade or business in which the company concerned is engaged ;
(d) the purposes for which the issue is being made ;
(e) any other relevant factor.
[As amended by the Finance Act, 1974]