Income Tax Act

Official PDF pages 181–185

SOURCE PDF PAGE 181
(5) In a case where any of the conditions referred to in sub-section (3) or notified
under sub-section (4) are not complied with, the set off of accumulated business
loss or unabsorbed depreciation made in any tax year in the hands of the successor
co-operative bank shall be deemed to be the income of the successor co-operative
bank chargeable to tax for the year in which such conditions are not complied with.
(6) The period commencing from the beginning of the tax year and ending on the
date immediately preceding the date of business reorganisation, and the period
commencing from the date of such business reorganisation and ending with the
tax year, shall be deemed to be two different tax years for the purposes of set off
and carry forward of loss and allowance for depreciation.
(7) For the purposes of this section,—
( a )   “accumulated loss” means so much of the loss of amalgamating co-op -
erative bank or demerged co-operative bank as referred to in section 112
in the hands of predecessor co-operative bank, which such predecessor
co-operative bank would have been entitled to carry forward and set off
under the said section, as if the business reorganisation had not taken
place;
( b )   “amalgamated co-operative bank”, “amalgamating co-operative bank”,
“amalgamation”, “business reorganisation”, “demerged co-operative
bank”, “demerger”, “predecessor co-operative bank”, “successor co-op -
erative bank” and “resulting co-operative bank” shall have the meanings
respectively assigned to them in section 65;
( c )   “unabsorbed depreciation” means so much of the allowance for depre -
ciation in the hands of amalgamating co-operative bank or demerged
co-operative bank, which remains to be allowed and which would have
been allowed to such banks, if the business reorganisation had not taken
place.
Carry forward and set off of losses not permissible in certain cases.
119.   (1) In case of change in constitution of a firm during a tax year, nothing in
this Chapter shall entitle the firm to have carried forward and set off so much
of the loss proportionate to the share of a retired or deceased partner as exceeds
his share of profits, if any, in the firm in respect of the tax year.
(2) If any person carrying on any business or profession has been succeeded in such
capacity by another person, otherwise than by inheritance, nothing in this Chapter
shall entitle any person other than the person incurring the loss to have it carried
forward and set off against his income.
(3) Irrespective of anything contained in this Chapter, in case of a change in share -
holding during the tax year of a company (not being a company in which the public
are substantially interested),—
( a )   no loss incurred in any year prior to the tax year shall be carried forward
and set off against the income of the tax year unless on the last day of
the tax year, the shares of the company carrying not less than 51% of the
voting power were beneficially held by the persons who beneficially held
shares of the company carrying not less than 51% of the voting power
on the last day of the year or years in which the loss was incurred; and

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( b )   regardless of the change in percentage of shareholding, where the com -
pany is an eligible start up referred to in section 140, the loss incurred
in any year prior to the tax year shall be allowed to be carried forward
and set off against the income of the tax year, if—
( i )   all the shareholders of such company who held shares carrying
voting power on the last day of the year or years in which the loss
was incurred, continue to hold those shares on the last day of such
tax year; and
( ii )   such loss has been incurred during the period of ten years beginning
from the year in which such company is incorporated.
(4) The provisions of sub-section (3) shall not apply—
( a )   where a change in the voting power and shareholding takes place in the
tax year referred to in that sub-section due to death of shareholder or
transfer of shares by way of gift to any relative of the shareholder; or
( b )   where change in shareholding of Indian company, being a subsidiary of
foreign company, takes place due to amalgamation or demerger of the
foreign company and 51% of the shareholders of amalgamating or de -
merged foreign company are shareholders of amalgamated or resulting
foreign company; or
( c )   where change in shareholding takes place in a tax year consequent to a
resolution plan approved under the Insolvency and Bankruptcy Code,
2016 (31 of 2016) and a reasonable opportunity of being heard was
afforded to the jurisdictional Principal Commissioner or Commissioner;
or
( d )   to a company, its subsidiary and subsidiary of such subsidiary, if—
( i )   the Board of Directors of such company were suspended by the
Tribunal on an application moved by the Central Government
under section 241 of the Companies Act, 2013 (18 of 2013) and new
directors were appointed by the Central Government under section
242 of the said Act; and
( ii )   the change in shareholding of such company and its subsidiary,
and subsidiary of such subsidiary has taken place consequent to a
resolution plan approved by the Tribunal under section 242 of the
Companies Act, 2013 (18 of 2013) and a reasonable opportunity of
being heard was afforded to the jurisdictional Principal Commis -
sioner or Commissioner; or
( e )   to a company to the extent that a change in the shareholding has taken
place during the tax year on account of relocation referred to in section
70(2) (Table: Sl. No. 5.C); or
( f )   to an erstwhile public sector company where ultimate holding company
of such company, immediately after the completion of strategic disinvest -
ment, continues to hold, directly or through its subsidiary or subsidiaries,
at least 51% of the voting power of such company in aggregate.

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(5) Irrespective of anything contained in sub-section (4), if the conditions specified
in sub-section (4)( f ) is not complied with in any tax year after the completion of
strategic disinvestment, the provisions of sub-section (3) shall apply for such tax
year and subsequent tax years.
(6) For the purposes of this section,—
( a )   a company shall be a subsidiary of another company, if such other com -
pany holds more than half in nominal value of the equity share capital
of the company;
( b )   the expression “erstwhile public sector company” shall have the meaning
assigned to it in section 116(3)( b );
( c )   “strategic disinvestment” shall have the meaning assigned to it in section
116(3)( c )( i );
( d )   “Tribunal” shall have the same meaning as assigned to it in section
2( 90 ) of the Companies Act, 2013 (18 of 2013).
No set off of losses against undisclosed income consequent to search, requi-
sition and survey.
120.   (1) Irrespective of anything contained in any other provision of this Act,
any loss, whether brought forward or otherwise or unabsorbed depreciation,
shall not be allowed to be set off against any undisclosed income which is included
in the total income of any tax year, consequent to a search conducted under section
247 or a requisition under section 248 or a survey conducted under section 253, not
being a survey under section 253(4).
(2) For the purposes of this section, the expression “undisclosed income” for any
tax year shall have the meaning as referred to in section 301.
Submission of return for losses.
121.   Irrespective of anything contained in this Chapter, no loss which has not been
determined in pursuance of a return filed under section 263(1), shall be
carried forward and set off under section 111(1) or 112(1) or 113(2) or 114(2) or
115(2).
CHAPTER VIII
DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME
A.—General
Deductions to be made in computing total income.
122.   (1) In computing the total income of an assessee, the deductions specified in
this Chapter shall be allowed from his gross total income, as per and subject
to the provisions of this Chapter.
(2) The aggregate amount of the deductions under this Chapter shall not, in any
case, exceed the gross total income of the assessee.
(3) If the deduction under section 133 or 135 or 137 or 138 or 141 or 142 or 143 is
admissible in computing the total income of an association of persons or a body of

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individuals, no deduction under the same section shall be made in relation to the
share of income of a member of such association of persons or body of individuals
in computing the total income of such member.
(4) Irrespective of anything to the contrary contained in any of the provisions of
Part C of this Chapter, where, in the case of an assessee, any amount of profits and
gains of an undertaking or unit or enterprise or eligible business is claimed and
allowed as a deduction under those provisions for any tax year,—
( a )   deduction in respect of, and to the extent of, such profits and gains shall
not be allowed under any other provision of this Act for such tax year;
and
( b )   shall in no case exceed the profits and gains of such undertaking or unit
or enterprise or eligible business, as the case may be.
(5) Deduction under the provisions of Part C of this Chapter shall not be allowed
to an assessee, who fails to—
( a )   furnish a return of income on or before the due date specified under
section 263(1); or
( b )   make a claim of deduction in a return furnished under section 263(1).
(6) For the purposes of any deduction under this Chapter, irrespective of anything
to the contrary contained in Part C of this Chapter, if any goods or services held
for the purposes of—
( a )   the undertaking, unit, enterprise or eligible business carried on by the
assessee are transferred to any other business carried on by the assessee;
or
( b )   any other business carried on by the assessee are transferred to the
undertaking or unit or enterprise or eligible business of the assessee,
and the consideration, if any, for such transfer as recorded in the accounts of the
undertaking or unit or enterprise or eligible business does not correspond to the
market value of such goods or services as on the date of transfer, then the profits
and gains of such undertaking or unit or enterprise or eligible business carried on
by the assessee shall be computed as if the transfer, in clause ( a ) or ( b ), had been
made at the market value of such goods or services as on that date.
(7) For the purposes of sub-section (6), “market value”,—
( a )   in relation to any goods or services sold or supplied, means the price that
such goods or services would fetch if these were sold by the undertaking
or unit or enterprise or eligible business in the open market, subject to
statutory or regulatory restrictions, if any;
( b )   in relation to any goods or services acquired, means the price that such
goods or services would cost if these were acquired by the undertaking
or unit or enterprise or eligible business from the open market, subject
to statutory or regulatory restrictions, if any; and
( c )   in relation to any goods or services sold, supplied or acquired, means the
arm’s length price of such goods or services as defined in section 173( a ),
if it is a specified domestic transaction referred to in section 164.

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(8) Where a deduction under Part C of this Chapter, is claimed and allowed in
respect of profits of a specified business as referred to in section 46(11)( d ) for any
tax year, no deduction shall be allowed for such specified business under section
46 for the same or any other tax year.
(9) Where any deduction is required to be made or allowed under Part C of this
Chapter, in respect of any income of the nature specified in that section and included
in the gross total income of the assessee, then, irrespective of anything contained
in that section, for the purpose of computing the deduction under that section,
the amount of income of that nature as computed under the provisions of this Act
(before making any deduction under this Chapter) shall alone be deemed to be the
amount of income of that nature which is derived or received by the assessee and
which is included in his gross total income.
(10) For the purposes of this Chapter, the expression “gross total income” means the
total income computed as per the provisions of this Act, before making deduction
under this Chapter.
B.—Deductions in respect of certain payments
Deduction for life insurance premia, deferred annuity, contributions to pro-
vident fund, etc.
123.   An individual or a Hindu undivided family, shall be allowed a deduction
of the whole of the amount paid or deposited in the tax year, being the aggre -
gate of the sums enumerated in Schedule XV, as does not exceed   `   150000, while
computing the total income for that year, subject to the conditions specified in that
Schedule.
Deduction in respect of employer and assessee contribution to pension
scheme of Central Government.
124.   (1) Where in the case of an assessee, being an individual employed by any
employer, if the employer makes any contribution in his account under a
pension scheme notified by the Central Government, the assessee shall be allowed
a deduction in the computation of his total income, of the whole of the amount
contributed by such employer as does not exceed—
( a )   14%, where such contribution is made by the employer being the Central
Government or the State Government; and
( b )   10%, where such contribution is made by an employer other than an
employer referred to in clause ( a ),
of his salary in the tax year.
(2) Where the total income of the assessee is chargeable to tax under section 202(1),
the provisions of sub-section (1) shall have effect as if for “10%” referred to in clause
( b ) of that sub-section, “14%” had been substituted.
(3) An assessee referred to in sub-section (1), or any other assessee, being an indi -
vidual, shall be allowed a deduction not exceeding   `   50000, in computation of his
total income of the whole of the amount paid or deposited in the tax year by such
individual in his account under a pension scheme notified or as may be notified by
the Central Government.
(4) The deduction under sub-section (3) shall also be allowed where any payment
or deposit is made to the account of a minor under the said pension scheme, by