Income Tax Act

Official PDF pages 116–120

SOURCE PDF PAGE 116
( ii )   a co-operative bank formed as a result of merger of two or more
amalgamating co-operative banks;
( d )   “business reorganisation” means reorganisation of business involving
the amalgamation or demerger of a co-operative bank or conversion of
a primary co-operative bank;
( e )   “conversion” means transition of a primary co-operative bank to a
banking company under the scheme of the Reserve Bank of India as
may be notified   vide   its circular number DCBR. CO. LS. PCB. Cir. No.
5/07.01.000/2018-19, dated 27th September, 2018;
( f )   “converted banking company” means a banking company formed as a
result of conversion from primary co-operative bank;
( g )   “demerger” means the transfer by a demerged co-operative bank of one
or more of its undertakings to any resulting co-operative bank, in such
manner that—
( i )   all the assets and liabilities of the undertaking or undertakings
immediately before the transfer become the assets and liabilities
of the resulting co-operative bank;
( ii )   the assets and the liabilities are transferred to the resulting co-op -
erative bank at values (other than change in the value of assets
consequent to their revaluation) appearing in its books of account
immediately before the transfer;
( iii )   the resulting co-operative bank issues, in consideration of the trans -
fer, its membership to the members of the demerged co-operative
bank on a proportionate basis;
( iv )   the shareholders holding 75% or more in value of the shares in the
demerged co-operative bank (other than shares already held by the
resulting bank or its nominee or its subsidiary immediately before
the transfer), become shareholders of the resulting co-operative
bank, otherwise than as a result of the acquisition of the assets of
the demerged co-operative bank or any undertaking thereof by the
resulting co-operative bank;
( v )   the transfer of the undertaking is on a going concern basis; and
( vi )   the transfer is as per the conditions specified by the Central Gov -
ernment, by notification, having regard to the necessity to ensure
that the transfer is for genuine business purposes;
( h )   “demerged co-operative bank” means the co-operative bank whose
undertaking is transferred, pursuant to a demerger, to a resulting bank;
( i )   “predecessor co-operative bank” means the amalgamating co-operative
bank or the demerged co-operative bank, or the primary co-operative
bank, which has been succeeded as a result of conversion;
( j )   “primary co-operative bank” shall have the meaning assigned to it in
clause ( ccv ) of section 56 of the Banking Regulation Act, 1949 (10 of
1949);

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( k )   “resulting co-operative bank” means—
( i )   one or more co-operative banks to which the undertaking of the
demerged co-operative bank is transferred in a demerger; or
( ii )   any co-operative bank formed as a result of demerger;
( l )   “successor co-operative bank” means the amalgamated co-operative bank
or the resulting bank.
Interpretation.
66.   For the purposes of Part D of this Chapter,—
( 1 )   “agreement”,   for   the   purposes   of   section   26(2)( h ),   includes   any
arrangement or understanding or action in concert,—
( A )   whether or not such arrangement, understanding or action is formal
or in writing; or
( B )   whether or not such arrangement, understanding or action is
intended to be enforceable by legal proceedings;
( 2 )   “banking company” means a company to which the Banking Regulation
Act, 1949 (10 of 1949) applies and includes any bank or banking institu -
tion referred to in section 51 of that Act;
( 3 )   “commission or brokerage” shall have the meaning assigned to it in
section 402(7);
9
[ ( 4 )   “commodities transactions tax” and “commodity derivative” shall have
the same meanings as respectively assigned to them in Chapter VII of the
Finance Act, 2013 (17 of 2013); ]
( 5 )   “fees for technical services” shall have the meaning assigned to it in
section 9(7)( b );
( 6 )   “housing finance company” means a public company formed or 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;
( 7 )   “Indian Institute of Technology” shall have the same meaning as that
of “Institute” defined in section 3( g ) of the Institutes of Technology Act,
1961 (59 of 1961);
9.   Substituted by the Finance Act, 2026, w.e.f.   1-4-2026 . Prior to its substitution, clause ( 4 )
read as under :
‘( 4 )   “commodities transaction tax” shall have the same meaning as assigned to it under
Chapter VII of the Finance Act, 2013 (17 of 2013);’

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( 8 )   “Keyman insurance policy” shall have the meaning assigned to it in
Schedule II (Note 1);
( 9 )   “limited liability partnership” shall have the same meaning as assigned
to it in section 2(1)( n ) of the Limited Liability Partnership Act, 2008
(6 of 2009);
( 10 )   “long-term finance”, for the purposes of section 32( e ), 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;
( 11 )   “micro enterprise” shall be an enterprise classified as such under the
notification in this behalf by the Central Government under the Micro,
Small and Medium Enterprises Development Act, 2006 (27 of 2006);
( 12 )   “mineral oil” includes petroleum and natural gas;
( 13 )   “moneys payable” in respect of any tangible asset [as referred to in section
33(12)( a )( i )] includes—
( a )   any insurance, salvage or compensation moneys payable in respect
thereof;
( b )   where the asset is sold, the price for which it is sold;
( 14 )   “non-scheduled bank” means a banking company as defined in section
5( c ) of the Banking Regulation Act, 1949 (10 of 1949), which is not a
scheduled bank;
( 15 )   “paid” means, except for section 37, actually paid or incurred according
to the method of accounting upon the basis of which the profits or gains
are computed under the head “Profits and gains of business or profession”;
( 16 )   “permanent establishment” shall have the meaning assigned to it in
section 173( c );
( 17 )   “plant”   includes   ships,   vehicles,   books,   scientific   apparatus   and
surgical equipment used for the business or profession but does not
include tea bushes or livestock or buildings or furniture and fittings;
( 18 )   “predecessor entity” means—
( a )   the amalgamating Indian company in the case of amalgamation;
( b )   the demerged Indian company, in the case of demerger;
( c )   a firm, in the case of a succession of a firm by a company as referred
to in section 70(1)( zd );
( d )   a private company or unlisted public company, in case of conversion
as referred to in section 70(1)( ze );
( 19 )   “primary agricultural credit society” shall have the same meaning as
assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
( 20 )   “primary co-operative agricultural and rural development bank” means a
society having its area of operation confined to a   taluk   and the principal
object of which is to provide for long-term credit for agricultural and
rural development activities;

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( 21 )   “professional services” shall have the meaning assigned to it in section
402( 28 );
( 22 )   “public company” shall have the same meaning as assigned to it in section
2( 71 ) of the Companies Act, 2013 (18 of 2013);
( 23 )   “public financial institution” shall have the same meaning as assigned
to it in section 2( 72 ) of the Companies Act, 2013 (18 of 2013);
( 24 )   “rate of exchange” means the rate of exchange determined or recognised
by the Central Government for the conversion of Indian currency into
foreign currency or foreign currency into Indian currency;
( 25 )   “royalty” shall have the same meaning as assigned to it in section
9(6)( b );
( 26 )   “rural branch” means a branch of a scheduled bank or a non-scheduled
bank situated in a place which has a population of not more than ten
thousand according to the last preceding census, of which the relevant
figures have been published before the first day of the tax year;
( 27 )   “scientific research” means—
( a )   any activity for the extension of knowledge in the fields of natural
or applied science including agriculture, animal husbandry or
fisheries; and
( b )   the references to expenditure incurred on scientific research shall
include all expenditure incurred for the prosecution, or the provision
of facilities for the prosecution, of scientific research, but does not
include any expenditure incurred in the acquisition of rights in, or
arising out of, scientific research,
and the references to scientific research related to a business or class of
business shall include any scientific research—
( i )   which may lead to or facilitate an extension of that business or, all
businesses of that class;
( ii )   of a medical nature which has a special relation to the welfare of
workers employed in that business or, all businesses of that class;
( 28 )   “securities transaction tax” shall have the meaning assigned to it under
Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004);
( 29 )   “service”, for the purposes of section 26(2)( h ), means a service of any
description which is made available to potential users and includes the
provision of services in connection with business of any industrial or
commercial nature such as—
( a )   accounting;
( b )   banking;
( c )   communication;
( d )   conveying of news or information;
( e )   advertising;
( f )   entertainment;

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( g )   amusement;
( h )   education;
( i )   financing;
( j )   insurance;
( k )   chit funds;
( l )   real estate;
( m )   construction;
( n )   transport;
( o )   storage;
( p )   processing;
( q )   supply of electrical or other energy; and
( r )   boarding and lodging;
( 30 )   “small enterprise” shall be an enterprise classified as such under the
notification in this behalf by the Central Government under the Micro,
Small and Medium Enterprises Development Act, 2006 (27 of 2006);
( 31 )   “speculative transaction” means a transaction in which a contract for
the purchase or sale of any commodity, including stocks and shares,
is periodically or ultimately settled otherwise than by the actual
delivery or transfer of the commodity or scrips, other than the following
transactions:—
( a )   a specified derivative transaction as defined in clause ( 33 );
( b )   a contract in respect of raw materials or merchandise entered into
by a person in the course of his manufacturing or merchandising
business to guard against loss through future price fluctuations in
respect of his contracts for actual delivery of goods manufactured,
or merchandise sold by him;
( c )   a contract in respect of stocks and shares entered into by a dealer
or investor therein to guard against loss in his holdings of stocks
and shares through price fluctuations;
( d )   a contract entered into by a member of a forward market or a stock
exchange in the course of any transaction in the nature of jobbing
or arbitrage, to guard against loss which may arise in the ordinary
course of his business as such member;
( 32 )   “Specified Banking or Online Mode” shall mean transaction by an
account payee cheque or an account payee bank draft or use of electronic
clearing system through a bank account or through such other electronic
mode, as may be prescribed;
( 33 )   “specified derivative transaction” means any transaction in respect of
trading in derivatives referred to in section 2( ac ) of the Securities Con -
tracts (Regulation) Act, 1956 (42 of 1956); or in respect of trading in
commodity derivatives (other than agricultural commodity derivatives)