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FINANCE ACT 1969

Ministry of Law and Justice

Act nº 14 of 1969


  • Chapter 1
  • Chapter II
  • Chapter III
  • Chapter IV
  • Chapter V
  • Schedules
  • Act nº 14 of 1969

Preamble

THE FINANCE ACT, 1969

[Act No. 14 of 1969]

[13th May 1969]

PREAMBLE

An Act to give effect to the financial proposals of the Central Government for the financial year 1969-70

Be it enacted by Parliament in the Twentieth Year of the Republic of India as follows :-

Chapter 1

Section 1. Short Title and Commencement

(1) This Act may be called the Finance Act, 1969.

(2) Save as otherwise provided in this Act, sections 2 to 25 shall be deemed to have come into force on the 1st day of April, 1969.

Chapter II

Section 2. Income-Tax

(1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 1969, income-tax shall be charged at the rates specified in Part I of the First Schedule and, in the cases to which Paragraphs A, B, C and D of that Part apply, shall be increased by a surcharge for purposes of the Union and in the cases to which Paragraph C applies, also by a special surcharge for purposes of the Union, calculated in each case in the manner provided therein.

(2) In making any assessment for the assessment year commencing on the 1st day of April, 1969, where the total income of a company, other than the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), includes any profits and gains from life insurance business, the income-tax payable by it shall be the aggregate of the income-tax calculated -

(i) on the amount of profits and gains from life insurance business so included, at the rate applicable in the case of the Life Insurance Corporation of India, in accordance with Paragraph E of Part I of the First Schedule, to that part of its total income which consists of profits and gains from life insurance business; and

(ii) on the remaining part of its total income, at the rate applicable to the company on its total income.

(3) In cases to which Chapter XII of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the Income-tax Act), applies, the tax chargeable shall be determined as provided in that Chapter, and with reference to the rates imposed by sub-section (1) or the rates as specified in that Chapter, as the case may be.

(4) In cases in which tax has to be deducted under sections 193, 194, 194A and 195 of the Income-tax Act at the rates in force, the deduction shall be made at the rates specified in Part II of the First Schedule.

(5) In cases in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the Income-tax Act or charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section 175 or sub-section (2) of section 176 of the said Act or deducted under section 192 of the said Act from income chargeable under the head "Salaries" or deducted under sub-section (9) of section 80E of the said Act from any payment referred to in the said sub-section (9) or in which the "advance tax" payable under Chapter XVII-C of the said Act has to be computed, at the rate or rates in force, such income-tax or as the case may be, "advance tax" shall be so calculated, charged, deducted or computed at the rate or rates specified in Part III of the First Schedule.

(6) For the purposes of this section and the First Schedule, -

(a) "company in which the public are substantially interested" means a company which is such a company as is referred to in section 108 of the Income-tax Act :

(b) "domestic company" means an Indian company, or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 1969, 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 in accordance with the provisions of section 194 of that Act;

(c) "industrial company" means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.

Explanation : For the purposes of this clause, a company shall be deemed to be mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture of processing of goods or in mining, if the income attributable to any one or more of the aforesaid activities included in its total income of the previous year (as computed before making any deduction under Chapter VIA of the Income-tax Act) is not less than fifty-one per cent. of such total income;

(d) "tax free security" means any security of the Central Government issued or declared to be income-tax free, or any security of a State Government issued income-tax free, the income-tax whereon is payable by the State Government;

(e) all other words and expressions used in this section and the First Schedule but not defined in this sub-section and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act.

Chapter III

Section 3. Amendment of 2

In section 2 of the Income-tax Act, in clause (18) for sub-clause (b), the following sub-clause shall be substituted with effect from the 1st day of April, 1970, namely :-

(b) if it is a company which is not a private 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 divided whether with or without a further right to participate in profits) were 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;

(B)(i) shares in the company (not being shares entitled to a fixed rate 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 unconditional 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 where such subsidiary company fulfils the conditions laid down in clause (b) of section 108 (hereafter in this clause referred to as the subsidiary company), or

(d) the public (not being a director, or a company to which this clause does not apply);

(ii) the said shares were, during the relevant previous year, freely transferable by the holder to the other members of the public; and

(iii) the affairs of the company, or the shares carrying more than fifty per cent. of its total voting power were at no time, during the relevant previous year, controlled or held by five or less persons.

Explanation 1 : In computing the number of five or less persons aforesaid, -

(i) the Government or any corporation established by a Central, State or Provincial Act or a company to which this clause applies or the subsidiary company of such company shall not be taken into account, and

(ii) persons who are relatives of one another, and persons who are nominees of any other person together with that other person, shall be treated as a single person.

Explanation 2 : 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." and "more than fifty per cent.", the words "not less than forty per cent." and "more than sixty per cent." had, respectively, been substituted;.

Section 4. Amendment of 16

In section 16 of the Income-tax Act, in clause (iv), for item (1), the following item shall be substituted with effect from the 1st day of April, 1970, namely :-

"(1) where the conveyance is a motor car and amount of the salary due to the assessee in respect of the previous year -

(a) does not exceed Rs. 25,000 .............. Rs. 200;

(b) exceeds Rs. 25,000 ........... Rs. 250;".

Section 5. Amendment of 40A

In section 40A of the Income-tax Act, after sub-section (3), the following sub-section shall be inserted, namely :-

"(4) Notwithstanding anything contained in any other law for the time being in force or in any contract, where any payment in respect of any expenditure has to be made by a crossed cheque drawn on a bank or by a crossed bank draft in order that such expenditure may not be disallowed as a deduction under sub-section (3), then the payment may be made by such cheque or draft; and where the payment is so made or tendered, no person shall be allowed to raise, in any suit or other proceeding, a plea based on the ground that the payment was not made or tendered in cash or in any other manner.".

Section 6. Amendment of 80C

In section 80C of the Income-tax Act, -

(a) in sub-section (2), -

(i) in clause (a), for the words "on the life of the wife or husband of the assessee", wherever they occur, the words "on the life of the wife or husband or any child of the assessee" shall be substituted with effect from the 1st day of April, 1970;

(ii) in clause (b), for the words "on the life of any male member of the family or of the wife of any such member", the words "on the life of any member of the family" shall be substituted with effect from the 1st day of April, 1970;

(iii) in the Explanation at the end of clause (b), in clause (ii), the brackets and words "(being the assessee, or a male member of a Hindu undivided family where such family is the assessee)" shall be omitted with effect from the 1st day of April, 1970;

(b) in sub-section (4), -

(i) in clause (i), the proviso shall be omitted;

(ii) in clause (ii), the brackets, words and letter "[including an author, playwright, artist, musician or actor, to whom the provisions of clause (i) do not apply]," shall be omitted.

Section 7. Amendment of 80J

In section 80J of the Income-tax Act, -

(a) in sub-section (4), in clause (iii), for the words "twenty-three years" the words "twenty-eight years" shall be substituted;

(b) in sub-section (5), in clause (iii), for the words "twenty-three years" the words "twenty-eight years" shall be substituted.

Section 8. Amendment of 80L

In section 80L of the Income-tax Act, in sub-section (1), for the words "five hundred rupees", wherever they occur, the word "one thousand rupees" shall be substituted with effect from the 1st day of April, 1970.

Section 9. Insertion of New 80MM

After section 80M of the Income-tax Act the following section shall be inserted with effect from the 1st day of April, 1970 namely :-

80MM. Deduction in the case of an Indian company in respect of royalties, etc. received from any concern in India. - (1) Where the gross total income of an assessee being an Indian company includes any income by, way of royalty, commission fees or any other payment (not being income chargeable under the head "Capital gains") received by it from any person carrying on a business in India in consideration for -

(i) the provision of technical know-how which is likely to assist in the manufacture or processing of goods or materials, or in the installation or erection of machinery or plant for such manufacture or processing, or in the working of a mine, oil well or other source of mineral deposits, or in the search for, or discovery or testing of, mineral deposits or the winning of access to them, or in carrying on any operation relating to agriculture, animal husbandry, dairy or poultry farming, forestry or fishing, or

(ii) rendering services in connection with the provision of such technical know-how,

under an agreement entered into by the assessee with such person on or after the 1st day of April, 1969, and for which approval of the Central Government in this behalf is applied for before the 1st day of October of the relevant assessment year, there shall be allowed a deduction from such income of an amount equal to forty per cent. thereof, in computing the total income of the assessee.

(2) For the purposes of this section "provision of technical know-how means, -

(i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or similar property;

(ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or similar property;

(iii) the use of any patent, invention, model, design, secret formula or process or similar property;

(iv) the imparting of any information concerning industrial, commercial or scientific knowledge, experience or skill.

(3) The provisions of sub-section (1) shall not apply in relation to any income in respect of which the assessee is entitled to the deduction specified in section 80-O..

Section 10. Amendment of 80P

In section 80P of the Income-tax Act, -

(a) in sub-section (2), in clause (c), for the words "fifteen thousand rupees", the words "twenty thousand rupees" shall be substituted with effect from the 1st day of April, 1970;

(b) sub-section (4) shall be omitted with effect from the 1st day of April, 1970.

Section 11. Insertion of New 80RR

After section 80R of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 1970, namely :-

"80RR. Deduction in respect of professional income from foreign sources in certain cases. - Where the gross total income of an individual resident in India, being an author, playwright, artist, musician or actor, includes any income derived by him in the exercise of his profession from the Government of a foreign State or any person not resident in India, and such income is received in, or brought into, India by him or on his behalf in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and any rules made thereunder, there shall be allowed a deduction from such income of an amount equal to twenty-five per cent. of the income so received or brought, in computing the total income of the individual.".