Income Tax Act

Official PDF pages 196–200

SOURCE PDF PAGE 196
( i )   the Prime Minister’s Drought Relief Fund;
( ii )   any fund or any institution to which this section applies, if:—
( A )   it is established in India for a charitable purpose; and
( B )   it is a registered non-profit organisation or an institution or
fund mentioned in Schedule VII (Table: Sl. No. 1) and approved
under section 354;
( iii )   the Government or any local authority, to be utilised for any chari -
table purpose other than the purpose of promoting family planning;
( iv )   an authority constituted in India by or under any law enacted either
for the purpose of dealing with and satisfying the need for housing
accommodation or for the purpose of planning, development or
improvement of cities, towns and villages, or for both;
( v )   a corporation established by the Central Government or any State
Government for promoting the interests of the members of such
minority community, as may be notified by the Central Government;
( vi )   any entity, for the renovation or repair of any temple, mosque,
gurudwara, church or other place which is notified by the Central
Government to be of historic, archaeological or artistic importance
or to be a place of public worship of renown throughout any State
or States.
(2) Where the aggregate of the sums referred to in sub-section (1)( a )( xxiii ) and ( xxiv ),
and sub-section (1)( b )( ii ) to ( vi ) exceeds 10% of the adjusted gross total income, then
the amount in excess of 10% of the adjusted gross total income shall be ignored for
the purpose of computing the aggregate of the sums in respect of which deduction
is to be allowed under sub-section (1).
(3) Where deduction under this section is claimed and allowed for any tax year in
respect of any sum specified in sub-section (1), the sum in respect of which deduc -
tion is so allowed shall not qualify for deduction under any other provision of this
Act for the same or any other tax year.
(4) The deduction under this section shall be allowed only for donation made as a
sum of money.
(5) Any deduction for a donation over   `   2000 shall be allowed only if the payment
is made by a mode other than cash.
(6) Any claim of deduction by the assessee in his return of income filed for any tax
year in case of a donation made to an institution or fund referred in sub-section
(1)( b )( ii ), shall be allowed—
( a )   only on the basis of the information relating to such donation furnished
by such institution or fund to the prescribed authority or person author -
ised by such authority; and
( b )   subject to verification as per the risk management strategy formulated
by the Board from time to time.

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(7) For the purposes of this section,—
( a )   “adjusted gross total income” means gross total income as reduced by any
portion thereof on which income-tax is not payable under any provision
of this Act and by any amount in respect of which the assessee is entitled
to a deduction under any other provision of this Chapter;
( b )   “charitable purpose” does not include any purpose the whole or substan -
tially the whole of which is of a religious nature;
( c )   “National Blood Transfusion Council” means a society registered under
the Societies Registration Act, 1860 (21 of 1860) and has an officer of the
rank of an Additional Secretary to the Government of India or higher to
deal with the AIDS Control Project as its Chairman;
( d )   “State Blood Transfusion Council” means a society registered, in consul -
tation with the National Blood Transfusion Council, under the Societies
Registration Act, 1860 (21 of 1860) or under any law corresponding to that
Act in force in any part of India and has a Secretary to the Government
of that State dealing with the Department of Health, as its Chairman;
( e )   an association or institution having as its object the control, supervision,
regulation or encouragement in India of such games or sports as may be
notified by the Central Government, shall be deemed to be an institution
established in India for a charitable purpose.
Deductions in respect of rents paid.
134.   (1) In computing the total income of an assessee, subject to other provisions
of this section, there shall be deducted any expenditure incurred by him
towards payment of rent (by whatever name called) in respect of any furnished or
unfurnished accommodation occupied by him for the purposes of his own residence.
(2) The deduction under sub-section (1) shall be allowable on payment of such rent
exceeding 10% of his total income, subject to a maximum of   `   5000 per month, or
25% of total income for tax year, whichever is less.
(3) For the purposes of deduction under sub-section (1), such other conditions
or limitations having regard to the area or place in which such accommodation
is situated and other relevant consideration, as may be prescribed, shall be taken
into account.
(4) No deduction under this section shall be allowed to an assessee in any case,
where—
( a )   any residential accommodation is—
( i )   owned by the assessee or by his spouse or minor child or, where
such assessee is a member of a Hindu undivided family, by such
family at the place where he ordinarily resides or performs duties
of his office or employment or carries on his business or profession;
or
( ii )   owned by the assessee at any other place, being accommodation
in the occupation of the assessee, the value of which is to be deter -
mined under section 21(6) or (7)( a ); or

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( b )   the assessee has any income falling in Schedule III (Table: Sl. No. 11).
(5) For the purposes of this section, the expressions “10% of his total income” and
“25% of his total income” shall mean 10% or 25%, as the case may be, of the total
income of the assessee before allowing deduction for any expenditure under this
section.
Deduction in respect of certain donations for scientific research or rural
development.
135.   (1) In computing the total income of an assessee, there shall be deducted,
as per the provisions of this section, any sum paid by the assessee in the tax
year to,—
( a )   a research association which has as its object the undertaking of scientific
research, or a University, college or other institution approved for the
purposes of section 45(3)( a )( i ) to be used for scientific research;
( b )   a research association which has as its object the undertaking of research
in social science or statistical research, or a University, college or other
institution approved for the purposes of section 45(3)( a )( ii ) to be used
for research in social science or statistical research.
(2) Deduction for contributions made as per sub-section (1) shall not be allowed, if—
( a )   the gross total income of the assessee includes income which is charge -
able under the head “Profits and gains of business or profession”; or
( b )   the contribution is made in cash exceeding   `   2000.
(3) Deduction under sub-section (1)( a ) and ( b ) shall not be denied merely on the
ground that subsequent to the payment of such sum by the assessee, approval to
such association, University, college, other institution referred therein has been
withdrawn.
(4) The claim of the assessee for a deduction in respect of any sum referred to
in sub-section (1) in the return of income for any tax year filed by him, shall be
allowed on the basis of information relating to such sum furnished by the payee
to the prescribed income-tax authority or the person authorised by such author -
ity, subject to verification as per the risk management strategy formulated by the
Board from time to time.
(5) Where a deduction for any tax year has been claimed and allowed in respect of
any payment of the nature referred to in this section, no deduction in respect of
such payment shall be allowed under any other provision of this Act in any tax year.
Deduction in respect of contributions given by companies to political parties.
136.   (1) An assessee, being an Indian company, shall be allowed a deduction for
the amount contributed by it, other than by way of cash, during a tax year to
a political party registered under section 29A of the Representation of the People
Act, 1951 (43 of 1951) or an electoral trust.
(2) For the purposes of this section, the term “contribute”, with its grammatical
variations and cognate expressions shall have the same meaning as assigned to it
in section 182 of the Companies Act, 2013 (18 of 2013).

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Deduction in respect of contributions given by any person to political parties.
137.   An assessee, (other than a local authority and an artificial juridical person
wholly or partly funded by the Government), shall be allowed a deduction for
the amount contributed by him, other than by way of cash, during a tax year to a
political party registered under section 29A of the Representation of the People Act,
1951 (43 of 1951), or an electoral trust.
C.—Deductions in respect of certain incomes
Deductions in respect of profits and gains from industrial undertakings or
enterprises engaged in infrastructure development, etc.
138.   In respect of any tax year, where—
( a )   the gross total income of an assessee includes any profits and gains
derived by an undertaking or an enterprise from any business referred
to in section 80-IA of the Income-tax Act, 1961 (43 of 1961); and
( b )   such assessee is eligible to claim a deduction from the profits and gains
derived from such business for such tax year under the provisions of the
said section, as if the said Act had not been repealed,
there shall be allowed, in computing the total income of the assessee, a deduction
from the profits and gains derived from such business, subject to the conditions that—
( i )   the amount of deduction is calculated as per the provisions of section
80-IA of the Income-tax Act, 1961 (43 of 1961); and
( ii )   the deduction under this Act shall be allowed only for such tax years,
as would have been allowed under section 80-IA of the Income-tax Act,
1961 (43 of 1961), as if the said Act had not been repealed.
Deductions in respect of profits and gains by an undertaking or enterprise
engaged in development of Special Economic Zone.
139.   In respect of any tax year, where—
( a )   the gross total income of an assessee, being a Developer, includes any
profits and gains derived by an undertaking or an enterprise from any
business of developing a Special Economic Zone, notified on or after the
1st April, 2005 under the Special Economic Zones Act, 2005 (28 of 2005)
referred to in section 80-IAB of the Income-tax Act, 1961 (43 of 1961);
and
( b )   such assessee is eligible to claim a deduction from the profits and gains
derived from such business for such tax year under the provisions of the
said section, as if the said Act had not been repealed,
there shall be allowed, in computing the total income of the assessee, a deduction
from the profits and gains derived from such business, subject to the conditions
that—
( i )   the amount of deduction is calculated as per the provisions of section
80-IAB of the Income-tax Act, 1961 (43 of 1961); and
( ii )   the deduction under this Act shall be allowed only for such tax years, as
would have been allowed under section 80-IAB of the Income-tax Act,
1961 (43 of 1961), as if the said Act had not been repealed.

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Special provision in respect of specified business.
140.   (1) Where the gross total income of an assessee, being an eligible start-up,
includes any profits and gains derived from eligible business, there shall, as
per and subject to the provisions of this section, be allowed, in computing the total
income of the assessee, a deduction of an amount equal to 100% of the profits and
gains derived from such business for three consecutive tax years.
(2) The deduction specified in sub-section (1) may, at the option of the assessee, be
claimed by him for any three consecutive tax years out of ten years beginning from
the year in which the eligible start-up is incorporated.
(3) This section applies to a start-up which fulfils the following conditions:—
( a )   it is not formed by splitting up, or the reconstruction, of a business
already in existence;
( b )   it is not formed by the transfer to a new business of machinery or plant
previously used for any purpose.
(4) Where the business of any undertaking carried on in India is discontinued in
any tax year by reason of extensive damage to, or destruction of, any building,
machinery, plant or furniture owned by the assessee and used for the purposes of
such business as a direct result of—
( a )   flood, typhoon, hurricane, cyclone, earthquake or other convulsion of
nature; or
( b )   riot or civil disturbance; or
( c )   accidental fire or explosion; or
( d )   action by an enemy or action taken in combating an enemy (whether
with or without a declaration of war),
and thereafter, at any time before the expiry of three years from the end of such tax
year, the business of such undertaking is re-established, reconstructed or revived by
the assessee, the condition referred to in sub-section (3)( a ) shall not apply to such
undertaking which is so re-established, reconstructed or revived.
(5) For the purposes of sub-section (3)( b ), any machinery or plant which was
used outside India by any person other than the assessee shall not be regarded as
machinery or plant previously used for any purpose, if all the following conditions
are fulfilled:—
( a )   such machinery or plant was not, at any time previous to the date of the
installation by the assessee, used in India;
( b )   such machinery or plant is imported into India; and
( c )   no deduction on account of depreciation in respect of such machinery
or plant has been allowed or is allowable under the provisions of this
Act in computing the total income of any person for any period prior to
the date of the installation of the machinery or plant by the assessee.
(6) Where in the case of a start-up, any machinery or plant or any part thereof pre -
viously used for any purpose is transferred to a new business and the total value of
the machinery or plant or part so transferred does not exceed 20% of the total value