Income Tax Act

Official PDF pages 681–685

SOURCE PDF PAGE 681
Sl.
No.
Nature of payment   Condition for
taxation
Manner and amount of
taxation in the tax year in
which condition in column C
is fulfilled
A   B   C   D
of   which   a   de -
duction has been
allowed, together
with the amount
accrued thereon,
if any, is received
by the assessee or
his   nominee,   in
whole or in part,
in any tax year, and
if such amount is
not used for pur -
chasing an annuity
plan in the same
year—
( a )   on   account
of   closure
or   his   opt -
ing   out   of
the pension
scheme (ex -
cept   when
received   by
t h e   n o m i   -
nee   on   the
death of the
assessee); or
( b )   a s   p e n s -
ion received
from the an -
nuity   plan
p u r c h a s e d
or taken on
such closure
o r   o p t i n g
out.
which such amount is received,
and shall be liable to tax in the
said year.
Interpretation.
6.   For the purposes of this Schedule,––
( a )   “Administrator” means the Administrator as referred to in section 2( a )
of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002
(58 of 2002);

──────────

SOURCE PDF PAGE 682
( b )   “contribution” to any fund shall not include any sums in repayment of
loan;
( c )   “insurance” shall include,—
( i )   a policy of insurance on the life of an individual or the spouse or the
child of such individual or a member of a Hindu undivided family
securing the payment of specified sum on the stipulated date of
maturity, if such person is alive on such date irrespective that the
policy of insurance provides only for the return of premiums paid
(with or without any interest thereon) in the event of such person
dying before the said stipulated date;
( ii )   a policy of insurance effected by an individual or a member of a
Hindu undivided family for the benefit of a minor with the object
of enabling the minor, after he has attained majority to secure
insurance on his own life by adopting the policy and on his being
alive on a date (after such adoption) spec ified in the policy in this
behalf;
( d )   “Life Insurance Corporation” means the Life Insurance Corporation of
India established under the Life Insurance Corporation Act, 1956 (31 of
1956);
( e )   “public company” shall have the same meaning as assigned to it in section
2( 71 ) of the Companies Act, 2013 (18 of 2013);
( f )   “security” means a Government security as defined in section 2( f ) of the
Government Securities Act, 2006 (38 of 2006);
( g )   “specified company” means a company as referred to in section 2( h ) of
the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002
(58 of 2002);
( h )   “transfer” shall be deemed to include also the transactions referred to in
section 269UA( f ) of the Income-tax Act, 1961 (43 of 1961);
( i )   “eligible issue of capital” means an issue made by a public company
formed and registered in India or a public financial institution and the
entire proceeds of the issue are utilised wholly and exclusively for the
purposes of any business referred to in section 80-IA(4) of the Income-tax
Act, 1961 (43 of 1961);
( j )   “public financial institution” shall have the same meaning as assigned
to it in section 2( 72 ) of the Companies Act, 2013 (18 of 2013).
SCHEDULE XVI
[ See   section 350]
PERMITTED MODES OF INVESTMENT OR DEPOSITS
F orms or modes of investment or deposits by a registered non-profit organisation
1.   The modes of investing or depositing the money referred to in section 350 shall
be the following:—
( 1 )   investment in savings certificates as defined in section 2( c ) of the Govern -
ment Savings Certificates Act, 1959 (46 of 1959), and any other securities

──────────

SOURCE PDF PAGE 683
or certificates issued by the Central Government under the Small Savings
Schemes of that Government;
( 2 )   deposit in any account with the Post Office Savings Bank;
( 3 )   deposit in any account with a scheduled bank or a co-operative society
engaged in carrying on the business of banking (including a co-operative
land mortgage bank or a co-operative land development bank);
( 4 )   investment in units of the Unit Trust of India;
( 5 )   investment in any security for money created and issued by the Central
Government or a State Government;
( 6 )   investment in debentures issued by, or on behalf of, any company or
corporation both the principal whereof and the interest whereon are
fully and unconditionally guaranteed by the Central Government or by
a State Government;
( 7 )   investment or deposit in any public sector company subject to the con -
dition that where an investment or deposit in any public sector company
has been made and such public sector company ceases to be a public
sector company,—
( a )   such investment made in the shares of such company shall be
deemed to be an investment made under this clause for three years
from the date on which such public sector company ceases to be a
public sector company;
( b )   such other investment or deposit shall be deemed to be an invest -
ment or deposit made under this clause for the period up to the
date on which such investment or deposit becomes repayable by
such company;
( 8 )   deposits with or investment in any bonds issued by a financial corpo -
ration which is engaged in providing long-term finance for industrial
development in India and which is eligible for deduction under section
32( e );
( 9 )   deposits with or investment in any bonds issued 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 and which is eligible for deduc -
tion under section 32( e );
( 10 )   deposits with or investment in any bonds issued by a public company
formed and registered in India with the main object of carrying on the
business of providing long-term finance for urban infrastructure in India;
( 11 )   investment in immovable property;
( 12 )   deposits with the Industrial Development Bank of India established under
the Industrial Development Bank of India Act, 1964 (18 of 1964);
( 13 )   investment in the units issued under any scheme of the mutual fund
referred to in Schedule VII (Table: Sl. No. 20) or (Table: Sl. No. 21);
( 14 )   any transfer of deposits to the Public Account of India;
( 15 )   deposits made with an authority constituted in India by or under any law
enacted either for the purpose of dealing with and satisfying the need for

──────────

SOURCE PDF PAGE 684
housing accommodation or for the purpose of planning, development or
improvement of cities, towns and villages, or for both;
( 16 )   investment by way of acquiring equity shares of a depository as defined
in section 2(1)( e ) of the Depositories Act, 1996 (22 of 1996);
( 17 )   investment made by a recognised stock exchange referred to in section
2( f ) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (herein
referred to as investor) in the equity share capital of a company (herein
referred to as investee)—
( a )   which is engaged in dealing with securities or mainly associated
with the securities market;
( b )   whose   main   object   is   to   acquire   the   membership   of   another   recognised
stock exchange for the sole purpose of facilitating the members of
the investor to trade on the said stock exchange through the investee
as per the directions or guidelines issued under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) by the Securities
and Exchange Board of India established under section 3 of that
Act; and
( c )   in which at least 51% of equity shares are held by the investor and
the balance equity shares are held by members of such investor;
( 18 )   investment made by a person, authorised under section 4 of the Payment
and Settlement Systems Act, 2007 (51 of 2007), in the equity share capital
or bonds or debentures of a company—
( a )   which is engaged in operations of retail payments system or digital
payments settlement or similar activities in India and abroad and
is approved by the Reserve Bank of India for this purpose; and
( b )   in which at least 51% of equity shares are held by National Payments
Corporation of India;
( 19 )   investment made by a person, authorised under section 4 of the Payment
and Settlement Systems Act, 2007 (51 of 2007), in the equity share capital
or bonds or debentures of Open Network for Digital Commerce Ltd., being
a company incorporated under section 7(2) read with section 8(1)* of
the Companies Act, 2013 (18 of 2013), for participating in network based
open protocol models which enable digital commerce and interoperable
digital payments in India;
( 20 )   investment by way of acquiring equity shares of an incubatee by an
incubator;
( 21 )   investment by way of acquiring shares of National Skill Development
Corporation;
( 22 )   investment in debt instruments issued by any infrastructure Finance
Company registered with the Reserve Bank of India;
( 23 )   investment in “Stock Certificate” as defined in clause ( c ) of paragraph
2 of the Sovereign Gold Bonds Scheme, 2015, published in the Official
Gazette   vide   notification number G.S.R. 827(E), dated the 30th October,
2015;
( 24 )   investment by way of Acquiring Units of Powergrid Infrastructure
Investment Trust;

──────────

SOURCE PDF PAGE 685
( 25 )   shares in a public sector company;
( 26 )   any assets held by the trust or institution where such assets form part
of the corpus of the trust or institution as on the 1st June, 1973;
( 27 )   any asset, being equity shares of a public company, held by any university
or other educational institution or any hospital or other medical insti -
tution where such assets form part of the corpus of any University or
other educational institution or any hospital or other medical institution
as on the 1st June, 1998, where it was approved at that time under the
provisions of section 10( 23C ) of the Income-tax Act, 1961 (43 of 1961);
( 28 )   any accretion to the shares, forming part of the corpus mentioned in
sub-paragraph (26) or (27), by way of bonus shares allotted to the trust
or institution;
( 29 )   any assets (being debentures issued by, or on behalf of, any company or
corporation) acquired by the trust or institution before the 1st March,
1983;
( 30 )   voluntary contributions received and maintained in the form of
jewellery, furniture or any other article as the Board may, by notification
specify;
( 31 )   any asset, not being an investment or deposit in any of the forms or
modes specified in sub-paragraphs (1) to (30), where such asset is not
so held up to one year from the end of the tax year in which such asset
is acquired;
( 32 )   any funds representing the profits and gains of business, being profits
and gains of any tax year relevant to the tax year commencing on the
1st April, 1984 or any subsequent tax year so, however, where it has any
other income in addition to profits and gains of business, these provisions
shall not apply unless it maintains separate books of account in respect
of such business.
Interpretation.
2.   For the purposes of this Schedule,—
( a )   “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;
( b )   “public company” shall have the same meaning as assigned to it in section
2( 71 ) of the Companies Act, 2013 (18 of 2013);
( c )   “urban infrastructure” means a project for providing potable water sup -
ply, sanitation and sewerage, drainage, solid waste management, roads,
bridges and flyovers or urban transport;
( d )   “immovable property” does not include any machinery or plant (other
than machinery or plant installed in a building for the convenient occu -
pation of the building) even though attached to, or permanently fastened
to, anything attached to the earth;