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FINANCE (NO. 2) ACT 1965

Ministry of Law and Justice

Act nº 15 of 1965


  • Act nº 15 of 1965

Preamble

THE FINANCE (NO. 2) ACT, 1965

[Act No. 15 of 1965]

[11th September 1965]

PREAMBLE

An Act further to amend certain laws relating to direct taxes, to provide for voluntary disclosure of income, to increase or modify duties of customs on certain goods imported into India and to increase or modify and to impose duties of excise on certain goods produced or manufactured in India

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

Section 1. Short Title

This Act may be called the Finance (No. 2) Act, 1965.

Section 2. Amendment of 2

In section 2 of the Income-tax Act, 1961 (43 of 1961), (hereinafter referred to as the Income-tax Act), in sub-clause (iv) of clause (14), after the figures "1977", the following shall be, and shall be deemed to have been, inserted with effect from the 1st day of April, 1965, namely :-

"or 7 per cent. Gold Bonds, 1980".

Section 3. Amendment of 10

In section 10 of the Income-tax Act, -

(a) after clause (10), the following clause shall be, and shall be deemed always to have been, inserted, namely :-

"(10A)(i) any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the Defence Services or to the employees of a State Government, a local authority or a corporation established by a Central, State or Provincial Act;

(ii) any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed -

(a) in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

(b) in any other case, the commuted value of one-half of such pension, such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality :

Provided that the maximum limit of payment specified in sub-clause (ii) (a) or sub-clause (ii) (b) shall not apply in respect of any such payment made before the 19th day of August, 1965;";

(b) in sub-clause (ii) of clause (15), for the words "and interest on deposits in Post Office Savings Banks", the following shall be substituted, namely :-

"interest on deposits in Post Office Savings Banks and bonus in respect of deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959";

(c) after clause (23), the following clause shall be, and shall be deemed always to have been, inserted, namely :-

(23A) any income (other than income chargeable under the head "Interest on securities" or "Income from house property" or any income received for rendering any specific services or income by way of interest or dividends derived from its investments) of an association or institution established in India having as its object the control, supervision, regulation or encouragement of the profession of law, medicine, accountancy, engineering or architecture or such other profession as the Central Government may specify in this behalf, from time to time, by notification in the Official Gazette :

Provided that -

(i) the association or institution applies its income, or accumulates it for application, solely to the objects for which it is established; and

(ii) the association or institution is for the time being approved for the purpose of this clause by the Central Government by general or special order;

(d) after clause (26), the following clause shall be, and shall be deemed always to have been, inserted, namely :-

"(26A) any income accruing or arising to any person (not being an individual who is in the service of Government) from any source in the district of Ladakh or outside India in any previous year relevant to any assessment year commencing before the 1st day of April, 1970, where such person is resident in the said district in that previous year :

Provided that this clause shall not apply in the case of any such person unless he was resident in that district in the previous year relevant to the assessment year commencing on the 1st day of April, 1962.

Explanation : For the purposes of this clause, a person shall be deemed to be resident in the district of Ladakh if he fulfils the requirements of sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) of section 6, as the case may be, subject to the modifications that -

(i) references in those sub-sections to India shall be construed as references to the said district; and

(ii) in clause (i) of sub-section (3), reference to Indian company shall be construed as reference to a company formed and registered under any law for the time being in force in the State of Jammu and Kashmir and having its registered office in that district in that year;";

(e) for clause (28), the following clause shall be substituted, namely :-

"(28) any amount adjusted or paid in respect of a tax credit certificate under the provisions of Chapter XXIIB and any scheme made thereunder.".

Section 4. Amendment of 17

In section 17 of the Income-tax Act, in sub-clause (ii) of clause (3), after the word, brackets and figures "clause (10)", the word, brackets, figures and letter "clause (10A)", shall be, and shall be deemed always to have been, inserted.

Section 5. Amendment of 33

In section 33 of the Income-tax Act, in clause (iii) of sub-section (1), -

(i) in sub-clause (a), for the figures "1966", the figures "1965" shall be, and shall be deemed to have been, substituted with effect from the 1st day of April, 1965;

(ii) for sub-clause (c), the following sub-clause shall be, and shall be deemed to have been, substituted with effect from the 1st day of April, 1965, namely :-

"(c) where the machinery or plant is installed after the 31st day of March, 1965, -

(A) for the purposes of business of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule, -

(a) thirty-five per cent. of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) twenty-five per cent. of such cost, where it is installed after the 31st day of March, 1970, and

(B) for the purposes of any other business, -

(a) twenty per cent. of the actual cost of the machinery or plant to the assessee, where it is installed before the 1st day of April, 1970, and

(b) fifteen per cent. of such cost, where it is installed after the 31st day of March, 1970,".

Section 6. Amendment of 43

In section 43 of the Income-tax Act, in clause (6), after sub-clause (b), the following proviso shall be, and shall be deemed always to have been, inserted, namely :-

Provided that in determining the written down value in respect of buildings, machinery or plant for the purposes of clause (ii) of sub-section (1) of section 32, "depreciation actually allowed" shall not include depreciation allowed under sub-clauses (a), (b) and (c) of clause (vi) of sub-section (2) of section 10 of the Indian Income-tax Act, 1922 (11 of 1922), where such depreciation was not deductible in determining the written down value for the purposes of the said clause (vi)..

Section 7. Amendment of 44A

In section 44A of the Income-tax Act, in sub-section (1), after the words "any trade, professional or similar association", the brackets, words, figures and letter "[other than an association or institution referred to in clause (23A) of section 10]" shall be, and shall be deemed always to have been, inserted.

Section 8. Amendment of 84

In section 84 of the Income-tax Act, in clause (iii) of sub-section (2), for the words "eighteen years", the words "twenty-three years" shall be substituted.

Section 9. Amendment of 88

In section 88 of the Income-tax Act, -

(a) after sub-section (5), the following sub-sections shall be, and shall be deemed to have been, inserted with effect from the 1st day of April, 1964, namely :-

(5A) In this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature.

(5B) Nothing contained in sub-section (5A) shall affect the benefit conferred by sub-section (1), in respect of any sums paid before the 1st day of April, 1964, by way of donations referred to in clause (ii) or clause (iii) of that sub-section.;

(b) in sub-section (6), for the words, brackets and figure "in sub-section (5)", the words, brackets, figures and letter "in sub-section (5) or sub-section (5A)" shall be, and shall be deemed to have been, substituted with effect from the 1st day of April, 1964.

Section 10. Amendment of 112

In section 112 of the Income-tax Act, -

(a) in clause (i), for the words "and of the capital gains", the words and brackets "and by the amount of the interest on National Savings Certificates (First Issue) and of the capital gains" shall be substituted;

(b) in clause (iii), for the words "by the amount of capital gains", the words and brackets "by the amount of the interest on National Savings Certificates (First Issue) and of the capital gains" shall be substituted;

(c) for clause (iv), the following clause shall be substituted, namely :-

"(iv) the tax on the interest on National Savings Certificates (First Issue) and on capital gains, if any, computed in accordance with the provisions of clause (b) of section 112A and clause (b) of section 114, respectively.".

Section 11. Insertion of New 112A

After section 112 of the Income-tax Act, the following section shall be inserted, namely :-

"112A. Tax on interest on National Savings Certificates (First Issue). - Where the total income of an assessee, not being a company, includes any interest on National Savings Certificates (First Issue), the tax payable by him on his total income shall be -

(a) the amount of income-tax payable on the total income as reduced by the amount of such inclusion and by the amount of compensation or other payment referred to in clause (ii) of section 28 and of the capital gains, if any, had the total income so reduced been his total income; plus

(b) the amount of income-tax calculated on the amount of such interest included in the total income at the average rate of income-tax which would have been applicable to the total income if the amount of such interest and the amount of compensation or other payment and of the capital gains aforesaid, if any, had not formed part of it; plus

(c) income-tax on such compensation or other payment and on such capital gains, if any, computed in accordance with the provisions of clause (iii) of section 112 and of clause (b) of section 114, respectively.

Explanation : For the purposes of clause (b), the average rate of income-tax shall be calculated as if the total income as reduced in the manner specified in the said clause consisted wholly of earned income as defined in the Finance Act of the relevant year.".

Section 12. Amendment of 114

In section 114 of the Income-tax Act, -

(a) in clause (a), for the words, brackets and figures "if any, referred to in clause (ii) of section 28", the words, brackets and figures "referred to in clause (ii) of section 28 and of the interest on National Savings Certificates (First Issue), if any," shall be substituted;

(b) in sub-clause (i) of clause (b), after the words "the amount of compensation or other payment", the words and brackets "and of the interest on National Savings Certificates (First Issue)" shall be inserted;

(c) for clause (c), the following clause shall be substituted, namely :-

"(c) the tax on such compensation or other payment and on the interest on National Savings Certificates (First Issue) aforesaid, if any, computed in accordance with the provisions of clause (iii) of section 112 and of clause (b) of section 112A, respectively.".

Section 13. Amendment of 193

In section 193 of the Income-tax Act, for the proviso, the following proviso shall be substituted, namely :-

"Provided that no tax shall be deducted from -

(i) any interest payable on 4 1/4 per cent. National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident; or

(ii) any interest payable on National Savings Certificates (First Issue); or

(iii) any interest payable on 6 1/2 per cent. Gold Bonds, 1977, or 7 per cent. Gold Bonds, 1980, where the bonds are held by an individual not being a non-resident, and the holder thereof makes a declaration in writing before the person responsible for paying the interest that the total nominal value of the 6 1/2 per cent. Gold Bonds, 1977, or, as the case may be, the 7 per cent. Gold Bonds, 1980, held by him (including such bonds, if any, held on his behalf by any other personal did not in either case exceed ten thousand rupees at any time during the period to which the interest relates.".

Section 14. Amendment Of 280M

In section 280M of the Income-tax Act, for sub-section (2), the following sub-section shall be substituted, namely :-

"(2) Where any depositor has deposited any amount for any assessment year which -

(a) he is not liable to deposit under the provisions of this Chapter or which is in excess of the amount required to be deposited under the said provisions for that year; or

(b) is less than the amount required to be deposited under the said provisions for that year and an additional amount has been recovered to make up the deficiency,

then the entire amount, excess amount or additional amount, as the case may be, may be refunded, adjusted or otherwise dealt with in such manner and having regard to such factors as may be specified in a scheme framed under section 280W.".