Finance Act, 2007

(1) This Act may be called the Finance Act, 2007.

(2) Save as otherwise provided in this Act, sections 2 to 93 shall be deemed to have come into force on the 1st day of April, 2007.

(1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 2007, income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax as reduced by the rebate of income-tax calculated under Chapter VIII-A of the Income-tax Act, 1961(43 of 1961) (hereinafter referred to as the Income-tax Act) shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided therein.

(2) In the cases to which Paragraph A of Part I of the First Schedule applies, where the assessee has, in the previous year, any net agricultural income exceeding five thousand rupees, in addition to total income, and the total income exceeds one lakh rupees, then,-

(a) The net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricul -tural income were comprised in the total income after the first one lakh rupees of the total income but without being liable to tax], only for the purpose of charging income-tax in respect of the total income; and

(b) The income-tax chargeable shall be calculated as follows:-

(i) The total income and the net agricultural income shall be aggregated and the amount of income-tax shall be determined in respect of the aggregate income at the rates specified in the said Paragraph A, as if such aggregate income were the total income;

(ii) The net agricultural income shall be increased by a sum of one lakh rupees, and the amount of income-tax shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income as so increased were the total income;

(iii) The amount of income-tax determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax in respect of the total income:

Provided that in the case of every woman, resident in India and below the age of sixty-five years at any time during the previous year, referred to in item (II) of Paragraph A of Part I of the First Schedule, the provisions of this sub-section shall have effect as if for the words "one lakh rupees", the words "one lakh thirty-five thousand rupees" had been substituted:

Provided further that in the case of every individual, being a resident in India, who is of the age of sixty-five years or more at any time during the previous year, referred to in item (III) of Paragraph A of Part I of the First Schedule, the provisions of this sub-section shall have effect as if for the words "one lakh rupees", the words "one lakh eighty-five thousand rupees" had been Substituted:

Provided also that the amount of income-tax so arrived at, as reduced by the amount of rebate of income-tax calculated under Chapter VIII-A of the Income-tax Act, shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided in that Paragraph and the sum so arrived at shall be the income-tax in respect of the total income.

(3) In cases to which the provisions of Chapter XII or Chapter XII-A or Chapter XII-H or section 115JB or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income- tax Act apply, the tax chargeable shall be determined as provided in that Chapter or that section, and with reference to the rates imposed by subsection (1) or the rates as specified in that Chapter or section, as the case may be:

Provided that the amount of income-tax computed in accordance with the provisions of section 111A or section 112 shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as he case may be, of Part I of the First Schedule:

Provided further that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and 115JB or fringe benefits chargeable to tax under section 115 WA of the Income-tax Act, the amount of income-tax computed under this sub-section shall be increased by a surcharge for purposes of the Union, calculated,-

(a) In the case of every individual, Hindu undivided family, associ -ation of persons and body of individuals, whether incorporated or not, at the rate of ten per cent. of such income-tax where the total income or fringe benefits, as the case may be, exceeds ten lakh rupees;

(b) In the case of every firm, artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, and domestic company at the rate of ten per cent. of such income-tax;

(c) In the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such income-tax.

(4) In cases in which tax has to be charged and paid under section 115-O or subsection (2) of section 115R of the Income-tax Act, the tax shall be charged and paid at the rate as specified in those sections and shall be increased by a surcharge for purposes of the Union, calculated at the rate of ten per cent. of such tax.

(5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates specified in Part II of the First Schedule and shall be increased, by a surcharge for purposes of the Union, calculated in each case, in the manner provided therein.

(6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194LA, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge for purposes of the Union, calculated,-

(a) In the case of every individual, Hindu undivided family, associa -tion of persons and body of individuals, whether incorporated or not, at the rate of ten per cent. of such tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten lakh rupees;

(b) In the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent. of such tax;

(c) In the case of every firm and domestic company, at the rate of ten per cent. of such tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

(d) In the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.

(7) In cases in which tax has to be collected under the proviso to section 194B of the " Income-tax Act, the collection shall be made at the rates specified in Part II of the First Schedule, and shall be increased, by a surcharge for purposes of the Union, calculated in the manner provided therein.

(8) In cases in which tax has to be collected under section 206C of the Income-tax Act, the collection shall be made at the rates specified in that section and shall be increased by a surcharge for purposes of the Union, calculated,-

(a) In the case of every individual, Hindu undivided family, associa -tion of persons and body of individuals, whether incorporated or not, at the rate of ten per cent. of such tax where the amount or the aggregate of such amounts collected, and subject to the collection, exceeds ten lakh rupees;

(b) In the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent. of such tax;

(c) In the case of every firm and domestic company at the rate of ten per cent. of such tax where the amount or the aggregate of such amounts collected, and subject to the collection, exceeds one crore rupees;

(d) In the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such tax where the amount or the aggregate of such amounts collected, and subject to the collection, exceeds one crore rupees.

(9) Subject to the provisions of sub-section (10), in cases in which income-tax has to be charged under sub-section (4) of section 172 or sub-section (2) of section 174 or section. 174A or section 175 or sub-section (2) of section 176 of the Income-tax Act or I deducted from, or paid on, income chargeable under the head "Salaries" under section 192 of the said Act or in which the "advance tax" payable under Chapter XVII-C of the said Act has to be computed at the rate or rates in force, such income-tax or, as the case may be, "advance tax" shall be so charged, deducted or computed at the rate or rates specified in Part III of the First Schedule and such tax as reduced by the rebate of income-tax calculated under Chapter , VIII-A of the said Act shall be increased by a surcharge for purposes of the Union, calculated in each case in the manner provided therein:

Provided that in cases to which the provisions of Chapter XII or Chapter XII-A or Chapter XII-H or section 115 JB or sub-section (1A) of section 161 or section 164 or section 164A or section 167B of the Income-tax Act apply, "advance tax" shall be computed with reference to the rates imposed by this sub-section or the rates as specified in that Chapter or section, as the case may be: Provided further that the amount of "advance tax" computed in accordance with the provisions of section 111 A or section 112 of the Income-tax Act shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as the case may , be, of Part III of the First Schedule:

Provided also that in respect of any income chargeable to tax under sections 115A, 115AB, 115AC, 115ACA, 115AD, 115B, 115BB, 115BBA, 115BBC, 115E and 115JB of the Income-tax Act, "advance tax" computed under the first proviso shall be increased by a surcharge for purposes of the Union, calculated,-

(a) In the case of every individual, Hindu undivided family, associa -tion of persons and body of individuals, whether incorporated or not, at the rate of ten per cent. of "advance tax" where the total income exceeds ten lakh rupees;

(b) In the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent. of such "advance tax";

(c) In the case of every firm and domestic company, at the rate of ten per cent. of such "advance tax" where the total income exceeds one crore rupees;

(d) In the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such "advance tax" where the total income exceeds one crore rupees:

Provided also that in the case of every company having total income chargeable to tax under section 115JB of the Income-tax Act, and such income exceeds one crore rupees, the total amount payable as "advance tax" and surcharge on such income shall not exceed the total amount payable as "advance tax" on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

Provided also that in respect of any fringe benefits chargeable to tax under section 115WA of the Income-tax Act, "advance tax" computed under the first proviso shall be increased by a surcharge for purposes of the Union, calculated,-

(a) In the case of every association of persons and body of individuals, whether incorporated or not, at the rate of ten per cent. of "advance tax" where the fringe benefits exceed ten lakh rupees;

(b) In the case of every firm, artificial juridical person referred to in sub-clause (v) of clause (a) of section 115 W of the Income-tax Act, and domestic company, at the rate of ten per cent. of such "advance tax";

(c) In the case of every company, other than a domestic company, at the rate of two and one-half per cent. of such "advance tax".

(10) In cases to which Paragraph A of Part III of the First Schedule applies, where the assessee has, in the previous year or, if by virtue of any provision of the Income-tax Act, income-tax is to be charged in respect of the income of a period other than the previous year, in such other period, any net agricultural income exceeding five thousand rupees, in addition to total income and the total income exceeds one lakh ten thousand rupees, then, in charging income-tax under sub-section (2) of section 174 or section 174A or section 175 or subsection (2) of section 176 of the said Act or in computing the "advance tax" payable under Chapter XVII-C of the said Act, at the rate or rates in force,-

(a) The net agricultural income-shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after the first one lakh ten thousand rupees of the total income but without being liable to tax], only for the purpose of charging or computing such income-tax or, as the case may be, "advance tax" in respect of the total income; and

(b) Such income-tax or, as the case may be, "advance tax" shall be so charged or computed as follows:-

(i) The total income and the net agricultural income shall be aggregated and the amount of income-tax or "advance tax" shall be determined in respect of the aggregate income at the rates specified in the said Paragraph A, as if such aggregate income were the total income;

(ii) The net agricultural income shall be increased by a sum of one lakh ten thousand rupees, and the amount of income-tax or "advance tax" shall be determined in respect of the net agricultural income as so increased at the rates specified in the said Paragraph A, as if the net agricultural income were the total income;

(iii) The amount of income-tax or "advance tax" determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax or, as the case may be, "advance tax" determined in accordance with sub-clause (ii) and the sum so arrived at shall be the income-tax or, as the case may be, "advance tax" in respect of the total income:

Provided that in the case of every woman, resident in India and below the age of sixty-five years at any time during the previous year, referred to in item (II) of Paragraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if for the words "one lakh ten thousand rupees", the words "one lakh forty-five thousand rupees" had been substituted:

Provided further that in the case of every individual, being a resident in India, who is of the age of sixty-five years or more at any time during the previous year, referred to in item (III) of Paragraph A of Part III of the First Schedule, the provisions of this sub-section shall have effect as if for the words "one lakh ten thousand rupees", the words "one lakh ninety-five thousand rupees" had been substituted:

Provided also that the amount of income-tax or "advance tax" so arrived at, as reduced by the rebate of income-tax calculated under Chapter VIII-A of the said Act, shall be increased by a surcharge for purposes of the Union calculated in each case, in the manner provided therein.

(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be further increased by an additional surcharge for purposes of the Union, to be called the "Education Cess on income-tax", calculated at the rate of two per cent. of such income-tax and surcharge, so as to fulfil the commitment of the Government to provide and finance universalised quality basic education.

(12) The amount of income-tax as specified in sub-sections (4) to (10) and as increased by a surcharge for purposes of the Union calculated in the manner provided therein, shall be also increased by an additional surcharge for purposes of the Union, to be called the "Secondary and Higher Education Cess on income-tax", calculated at the rate of one per cent. of such income-tax and surcharge, so as to fulfil the commitment of the Government to provide and finance secondary and higher education.

(13) For the purposes of this section and the First Schedule,-

(a) "Domestic company" means an Indian company or any other company which, in respect of its income liable to income-tax under the Income-tax Act for the assessment year commencing on the 1st day of April, 2007, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income;

(b) "Insurance commission" means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance);

(c) "Net agricultural income", in relation to a person, means the total amount of agricultural income, from whatever source derived, of that person computed in accordance with the rules contained in Part IV of the First Schedule;

(d) All other words and expressions used in this section and the First Schedule but not defined in this sub-section and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act.

In section 2 of the Income-tax Act,-

(a) After clause (1B), the following clauses shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1994, namely:-

(1C) "Additional Commissioner" means a person appointed to be an Additional Commissioner of Income-tax under sub-section (1) of section 117;

(1D) "Additional Director" means a person appointed to be an Additional Director of Income-tax under sub-section (1) of section 117;

(b) In clause (7A),-

(i) After the words "any other provision of this Act, and the", the words "Additional Commissioner or" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1994;

(ii) After the words "Additional Commissioner or", as so inserted, the words "Additional Director or," shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1996;

(c) After clause (9A), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1988, namely:-

(9B) "Assistant Director" means a person appointed to be an Assistant Director of Income-tax under sub-section (1) of section 117;';

(d) In clause (14), for sub-clause (ii), the following shall be substituted with effect from the 1st day of April, 2008, namely:-

(ii) Personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes-

(a) Jewellery;

(b) Archaeological collections;

(c) Drawings;

(d) Paintings;

(e) Sculptures; or

(f) Any work of art.

Explanation.-For the purposes of this sub-clause, "jewellery" includes-

(a) Ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;

(b) Precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel;

(e) In clause (24), after sub-clause (xiii) the following sub-clause shall be inserted, namely:-

(xiv) Any sum referred to in clause (vi) of sub-section (2) of section 56;";

(f) For clause (25A), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 25th day of August, 1976, namely:-

(25A) "India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976, and the air space above its territory and territorial waters;'.

(g) In clause (42A), with effect from the 1st day of April, 2008 -

(i) In Explanation 1, in clause (i), after sub-clause (ha), insert-

(hb) In the case of a capital asset, being any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees), the period shall be reckoned from the date of allotment or transfer of such specified security or sweat equity shares;";

(ii) after Explanation 2, insert-

Explanation 3.-For the purposes of this clause, the expressions "specified security" and "sweat equity shares" shall have the meaning respectively assigned to them in the Explanation to clause (d) of subsection (1) of section 115WB;.

In section 7 of the Income-tax Act, in clause (iii), for the words "Central Government", the words "Central Government or any other employer" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2004.

In section 9 of the Income-tax Act, after sub-section (2), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1976, namely:-

Explanation.-For the removal of doubts, it is hereby declared that for the purposes of this section, where income is deemed to accrue or arise in India under clauses (v), (vi) and (vii) of sub-section (1), such income shall be included in the total income of the non -resident, whether or not the non-resident has a residence or place of business or business connection in India.

In section 10 of the Income-tax Act,-

(a) After clause (10BB), the following shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2005, namely:-

(10BC) Any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under this Act on account of any loss or damage caused by such disaster.

Explanation.-For the purposes of this clause, the expression "disaster" shall have the meaning assigned to it under clause (d) of section 2 of the Disaster Management Act, 2005(53 of 2005);';

(b) In clause (15),-

(A) In sub-clause (iv), in item (fa), for the Explanation, the following Explanation shall be substituted, namely:--

Explanation.--For the purposes of this item, the expression "scheduled bank" means the State Bank of India constituted under the State Bank of India Act, 1955(23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959(38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970(5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980(40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934(2 of 1934), but does not include a co-operative bank;';

(B) For sub-clause (vii), the following shall be substituted with effect from the 1st day of April, 2008, namely:-

(vii) Interest on bonds-

(a) Issued by a local authority or by a State Pooled Finance Entity; and

(b) Specified by the Central Government by notification in the Official Gazette.

Explanation.-For the purposes of this sub-clause, the expression "State Pooled Finance Entity" shall mean such entity which is set up in accordance with the guidelines for the Pooled Finance Development Scheme notified by the Central Government in the Ministry of Urban Development;';

(c) In clause (23BBD), for the words, figures and letters "seven previous years relevant to the assessment years beginning on the 1st day of April, 2001 and ending on the 31st day of March, 2008", the words, figures and letters "ten previous years relevant to the assessment years beginning on the 1st day of April, 2001 and ending on the 31st day of March, 2011" shall be substituted with effect from the 1st day of April, 2008;

(d) After clause (23BBF), the following clause shall be inserted with effect from the 1st day of April, 2008, namely:-

(23BBG) any income of the Central Electricity Regulatory Commission constituted under sub-section (1) of section 76 of the Electricity Act, 2003(36 of 2003);

(e) In clause (23C) with effect from the 1st day of June, 2007,-

(A) In sub-clause (iv), for the words "which may be notified by the Central Government in the Official Gazette", the words "which may be approved by the prescribed authority" shall be substituted;

(B) In sub-clause (v), for the words "which may be notified by the Central Government in the Official Gazette", the words "which may be approved by the prescribed authority" shall be substituted;

(C) For the second proviso, the following proviso shall be substituted, namely:-

Provided further that the prescribed authority, before approving any fund or trust or institution or any university or other educational institution or any hospital or other medical institution, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or subclause (via), may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and the prescribed authority may also make such inquiries as it deems necessary in this behalf:";

(D) In the ninth proviso, for the words, brackets, figures and letter "every notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under sub-clause (vi) or sub-clause (via)", the words, brackets, figures and letter "every notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via)" shall be substituted;

(E) In the thirteenth proviso, after the words "Central Government", the words "or is approved by the prescribed authority, as the case may be," shall be inserted;

(F) After the fifteenth proviso, the following proviso shall be inserted, namely:-

Provided also that all pending applications, on which no notification has been issued under sub-clause (iv) or sub-clause (v) before the 1st day of June, 2007, shall stand transferred on that day to the prescribed authority and the prescribed authority may proceed with such applications under those sub-clauses from the stage at which they were on that day;

(f) After clause (23EB), the following shall be inserted with effect from the 1st day of April, 2008, namely:-

(23EC) Any income, by way of contributions received from commodity exchanges and the members thereof, of such Investor Protection Fund set up by commodity exchanges in India, either jointly or separately, as the Central Government may, by notification in the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of the said Fund and not charged to income-tax during any previous year is shared, either wholly or in part, with a commodity exchange, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall accordingly be chargeable to income-tax.

Explanation.-For the purposes of this clause, "commodity exchange" shall mean a "registered association" as defined in clause (jj) of section 2 of the Forward Contracts (Regulation) Act, 1952(74 of 1952);

(g) In clause (23FB), with effect from the 1st day of April, 2008

(i) For the words "set up to raise funds for investment", the words "from investment" shall be substituted;

(ii) In Explanation 1, for clause (c), the following clause shall be substituted, namely:-

(c) "Venture capital undertaking" means such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in the-

(i) Business of-

(A) Nanotechnology;

(B) Information technology relating to hardware and software development;

(C) Seed research and development;

(D) Bio-technology;

(E) Research and development of new chemical entities in the pharmaceutical sector;

(F) Production of bio-fuels;

(G) Building and operating composite hotel-cum-convention centre with seating capacity of more than three thousand; or

(H) Developing or operating and maintaining or developing, operating and maintaining any infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA; or".

(ii) Dairy or poultry industry;.

In section 10AA of the Income-tax Act, for sub-section (4), the following subsection shall be substituted and shall be deemed to have been substituted with effect from the 10th day of February, 2006, namely:-

(4) This section applies to any undertaking, being the Unit, which fulfills all the following conditions, namely:-

(i) It has begun or begins to manufacture or produce articles or things or provide services during the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006 in any Special Economic Zone;

(ii) It is not formed by the splitting up, or the reconstruction, of a business already in existence:

Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business, of machinery or plant previously used for any purpose.

Explanation.-The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section.

In section 12A of the Income-tax Act, with effect from the 1st day of June, 2007,-

(a) For the marginal heading, the following marginal heading shall be substituted, namely:-

Conditions for applicability of sections 11 and 12.

(b) The existing section 12A shall be renumbered as sub-section (1) thereof, and in sub-section (1) as so renumbered,-

(i) In clause (a), after the proviso, the following proviso shall be inserted, namely:-

Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007;

(ii) After clause (a), the following clause shall be inserted, namely:-

(aa) The person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Commis -sioner and such trust or institution is registered under section 12AA;

(c) After sub-section (1) as so renumbered, the following sub-section shall be inserted, namely:-

(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made.

In section 12AA of the Income-tax Act, with effect from the 1st day of June, 2007,-

(a) In sub-section (1), after the word, brackets and letter "clause (a)", the words, brackets, letters and figure "or clause (aa) of sub-section (1)" shall be inserted;

(b) In sub-section (2), after the word, brackets and letter "clause (a)", the words, brackets, letters and figure "or clause (aa) of sub-section (1)" shall be inserted.

In section 13 of the Income-tax Act, in sub-section (1), in clause (d), for sub-clause (iii), the following sub-clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1999, namely:-

(iii) Any shares in a company, other than-

(A) Shares in a public sector company;

(B) Shares prescribed as a form or mode of investment under clause (xii) of sub-section (5) of section 11,are held  by the trust or institution after the 30th day of November, 1983:

In section 17 of the Income-tax Act,-

(a) In clause (1), in sub-clause (viii), for the words "Central Government", the words "Central Government or any other employer" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2004;

(b) In clause (2),-

(A) After sub-clause (ii'),-

(i) The following Explanations shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2002, namely:-

Explanation 1.-For the purposes of this sub-clause, concession in the matter of rent shall be deemed to have been provided if,-

(a) In a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and-

(i) The accommodation is owned by the employer, the value of the accommodation determined at the rate of ten per cent. of salary in cities having population exceeding four lakhs as per 1991 census and seven and one-half per cent. of salary in other cities, in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recover -able from, or payable by, the assessee;

(ii) The accommodation is taken on lease or rent by the employer, the value of the accommodation being the actual amount of lease rental paid or payable by the employer or ten per cent. of salary, whichever is lower, in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(b) In a case where a furnished accommodation is provided by the Central Government or any State Government, the licence fee determined by the Central Government or any State Government in respect of the accommodation in accordance with the rules framed by such Government as increased by the value of furniture and fixtures in respect of the period during which the said accom -modation was occupied by the assessee during the previous year, exceeds the aggregate of the rent recoverable from, or payable by, the assessee and any charges paid or payable for the furniture and fixtures by the assessee;

(c) In a case where a furnished accommodation is provided by an employer other than the Central Government or any State Government and-

(i) The accommodation is owned by the employer, the value of the accommodation determined under subclause (i) of clause (a) as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(ii) The accommodation is taken on lease or rent by the employer, the value of the accommodation determined under sub-clause (ii) of clause (a) as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(d) In a case where the accommodation is provided by the employer in a hotel (except where the assessee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another), the value of the accommodation determined at the rate of twenty-four per cent. of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, whichever is lower, for the period during which such accommodation is provided, exceeds the rent recoverable from, or payable by, the assessee.

Explanation 2.-For the purposes of this sub-clause, value of furniture and fixtures shall be ten per cent. per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the assessee during the previous year.

Explanation 3.-For the purposes of this sub-clause, "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called, from one or more employers, as the case may be, but does not include the following, namely:-

(a) Dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) Employer's contribution to the provident fund account of the employee;

(c) Allowances which are exempted from the payment of tax;

(d) Value of the perquisites specified in this clause;

(g) Any payment or expenditure specifically excluded under the proviso to this clause;.

(ii) In Explanation 1 as so inserted, for clause (a), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2006, namely:-

(a) In a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and-

(i) The accommodation is owned by the employer, the value of the accommodation determined at the specified rate in respect of the period during which the said accommodation was occupied by the assessee during the previous year exceeds the rent recoverable from, or payable by, the assessee;

(ii) The accommodation is taken on lease or rent by the employer, the value of the accommodation being the actual amount of lease rental paid or payable by the employer or fifteen per cent of salary, whichever is lower, in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(iii) After Explanation 3 as so inserted, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2006, namely:-

Explanation 4.-For the purposes of this sub-clause, "specified rate" shall be-

(i) Fifteen per cent. of salary in cities having population exceeding twenty-five lakhs as per 2001 census;

(ii) Ten per cent. of salary in cities having population exceeding ten lakhs but not exceeding twenty-five lakhs as per 2001 census; and

(iii) Seven and one-half per cent of salary in any other place. (B) in sub-clause (iii), the proviso shall be omitted with effect from the 1st day of April, 2008.

In section 35 of the Income-tax Act, in sub-section (2AB), in clause (5), for the figures, letters and words "31st day of March, 2007", the figures, letters and words "31st day of March, 2012" shall be substituted with effect from the 1st day of April, 2008.

In section 36 of the Income-tax Act, in sub-section (1),-

(A) In clause (ib), for the words "paid by cheque", the words "paid by any mode of payment other than cash" shall be substituted with effect from the 1st day of April, 2008;

(B) In clause (viia),-

(a) In sub-clause (a), after the words "or a non-scheduled bank", the words "or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank" shall be inserted;

(b) In the Explanation,-

(i) In clause (ii) at the end, the words ", but does not include a cooperative bank" shall be omitted;

(ii) After clause (v), the following clause shall be inserted, namely:-

(vi) "Co-operative bank", "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" shall have the meanings respectively assigned to them in the Explanation to sub-section (4) of section 80P;

(C) For clause (viii), the following shall be substituted with effect from the 1st day of April, 2008, namely:-

(viii) In respect of any special reserve created and maintained by a specified entity, an amount not exceeding twenty per cent. of the profits derived from eligible business computed under the head "Profits and gains of business or profession" (before making any deduction under this clause) carried to such reserve account:

Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the amount of the paid up share capital and of the general reserves of the specified entity, no allowance under this clause shall be made in respect of such excess.

Explanation.-In this clause,-

(a) "Specified entity" means,-

(i) A financial corporation specified in section 4A of the Companies Act, 1956(1 of 1956);

(ii) A financial corporation which is a public sector company;

(iii) A banking company;

(iv) A co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank;

(v) A housing finance company; and

(vi) Any other financial corporation including a public company;

(b) "Eligible business" means,-

(i) In respect of the specified entity referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii) or sub-clause (iv) of clause (a), the business of providing long-term finance for industrial or agricultural development or development of infrastructure facility in India or construction or purchase of houses in India for residential purposes;

(ii) In respect of the specified entity referred to in sub-clause (v) of clause (a), the business of providing long-term finance for the construction or purchase of houses in India for residential purposes; and

(iii) In respect of the specified entity referred to in sub-clause (vi) of clause (a), the business of providing long-term finance for development of infrastructure facility in India;

(c) "Banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act;

(d) "Co-operative bank", "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" shall have the meanings respectively assigned to them in the Explanation to subsection (4) of section 80P;

(e) "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;

(f) "Public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956(1 of 1956);

(g) "Infrastructure facility" means-

(i) An infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA, or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette and which fulfills the conditions as may be prescribed;

(ii) An undertaking referred to in clause (ii) or clause (iii) or clause (iv) or clause (vi) of sub-section (4) of section 80-IA; and

(iii) An undertaking referred to in sub-section (10) of section 80-IB;

(h) 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;

(D) Clause (x) shall be omitted with effect from the 1st day of April, 2008;

(E) For clause (xii), the following clause shall be substituted with effect from the 1st day of April, 2008, namely:-

(xii) Any expenditure (not being in the nature of capital expend -iture) incurred by a corporation or a body corporate, by whatever name called, if,-

(a) It is constituted or established by a Central, State or Provincial Act;

(b) Such corporation or body corporate, having regard to the objects and purposes of the Act referred to in sub-clause (a), is notified by the Central Government in the Official Gazette for the purposes of this clause; and

(c) The expenditure is incurred for the objects and purposes authorised by the Act under which it is constituted or established;

(F) After clause (xiii), the following clause shall be inserted with effect from the 1st day of April, 2008, namely:-

(xiv) Any sum paid by a public financial institution by way of contribution to such credit guarantee fund trust for small industries as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Explanation.-For the purposes of this clause, "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956(1 of 1956);

In section 40A of the Income-tax Act, for sub-section (3), the following shall be substituted with effect from the 1st day of April, 2008, namely:-

(3) (a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure;

(b) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the amount of payment exceeds twenty thousand rupees:

Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under this sub-section where any payment in a sum exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or account payee bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.

After section 44DA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2008, namely:-- '44DB. Special Provision for computing deductions in the case of business reorganisation of co-operative banks.-

(1) The deduction under section 32, section 35D, section 35DD or section 35DDA shall, in a case where business reorganisation of a co-operative bank has taken place during the financial year, be allowed in accordance with the provisions of this section.

(2) The amount of deduction allowable to the predecessor co-operative bank under section 32, section 35D, section 35DD or section 35DDA shall be determined in accordance with the formula-

A x B C Where

A = The amount of deduction allowable to the predecessor co- operative bank if the business reorganisation had not taken place;

B = The number of days comprised in the period beginning with the 1st day of the financial year and ending on the day immediately preceding the date of business reorganisation; and

C = The total number of days in the financial year in which the business reorganisation has taken place.

(3) The amount of deduction allowable to the successor co-operative bank under section 32, section 35D, section 35DD or section 35DDA shall be determined in accordance with the formula-

A x B C Where

A = The amount of deduction allowable to the predecessor co-operative bank if the business reorganisation had not taken place;

B = The number of days comprised in the period beginning with the date of business reorganisation and ending on the last day of the financial year; and

C = The total number of days in the financial year in which the business reorganisation has taken place.

(4) The provisions of section 35D, section 35DD or section 35DDA shall, in a case where an undertaking of the predecessor co-operative bank entitled to the deduction under the said section is transferred before the expiry of the period specified therein to a successor co-operative bank on account of business reorganisation, apply to the successor co-operative bank in the financial years subsequent to the year of business reorganisation as they would have applied to the predecessor co-operative bank, as if the business reorganisation had not taken place.

(5) For the purposes of this section,-

(a) "Amalgamated co-operative bank" means-

(i) A co-operative bank with which one or more amalgamating co-operative banks merge; or

(ii) A co-operative bank formed as a result of merger of two or more amalgamating co-operative banks;

(b) "Amalgamating co-operative bank" means-

(i) A co-operative bank which merges with another co-operative bank; or

(ii) Every co-operative bank merging to form a new co-operative bank;

(c) "Amalgamation" means the merger of an amalgamating co-operative bank or banks with an amalgamated co-operative bank, in such manner that-

(i) All the assets and liabilities of the amalgamating co-operative bank or banks immediately before the merger (other than the assets transferred, by sale or distribution on winding up, to the amalgamated co-operative bank) become the assets and liabilities of the amalgamated co-operative bank;

(ii) The members holding seventy-five per cent. or more voting rights in the amalgamating co-operative bank become members of the amalgamated co-operative bank; and

(iii) The shareholders holding seventy-five per cent. or more in value of the shares in the amalgamating co-operative bank (other than the shares held by the amalgamated co-operative bank or its nominee or its subsidiary, immediately before the merger) become shareholders of the amalgamated co-operative bank;

(d) "Business reorganisation" means the reorganisation of business involving the amalgamation or demerger of a co-operative bank;

(e) "Co-operative bank" shall have the meaning assigned to it in clause (cci) of section 5 of the Banking Regulation Act, 1949(10 of 1949);

(f) "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 cooperative 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 transfer, its membership to the members of the demerged co-operative bank on a proportionate basis;

(iv) The shareholders holding seventy-five per cent. 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 in accordance with the conditions specified by the Central Government, by notification in the Official Gazette, having regard to the necessity to ensure that the transfer is for genuine business purposes;

(g) "Demerged co-operative bank" means the co-operative bank whose undertaking is transferred, pursuant to a demerger, to a resulting bank;

(h) "Predecessor co-operative bank" means the amalgamating co-operative bank or the demerged co-operative bank, as the case may be;

(i) "Successor co-operative bank" means the amalgamated co-operative bank or the resulting bank, as the case may be;

(j) "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.

In section 47 of the Income-tax Act, after clause (vic), the following shall be inserted with effect from the 1st day of April, 2008, namely:-

(vica) Any transfer in a business reorganisation, of a captial asset by the predecessor co-operative bank to the successor co-operative bank;

(vicb) Any transfer by a shareholder, in a business reorganisation, of a capital asset being a share or shares held by him in the predecessor co-operative bank if the transfer is made in consideration of the allotment to him of any share or shares in the successor co-operative bank.

Explanation.-For the purposes of clauses (vica) and (vicb), the expressions "business reorganisation", "predecessor co-operative bank" and "successor co-operative bank" shall have the meanings respectively assigned to them in section 44DB;

In section 49 of the Income-tax Act, with effect from the 1st day of April, 2008,-

(i) In sub-section (1), in clause (iii), in sub-clause (e), for the word, brackets, figures and letters "clause (viaa)", the words, brackets, figures and letters "clause (viaa) or clause (vica) or clause (vicb)" shall be substituted;

(ii) After sub-section (2AA), the following sub-section shall be inserted, namely:-

(2AB) Where the capital gain arises from the transfer of specified security or sweat equity shares, the cost of acquisition of such security or shares shall be the fair market value which has been taken into account while computing the value of fringe benefits under clause (ba) of sub-section (1) of section 115 WC";

(iii) After sub-section (2D), and before the Explanation, the following subsection shall be inserted, namely:-

(2E) The provisions of sub-section (2), sub-section (2C) and sub-section (2D) shall, as far as may be, also apply in relation to business reorganisation of a co-operative bank as referred to in section 44DB.

In section 54EC of the Income-tax Act,-

(a) In sub-section (1), the following proviso shall be inserted, namely:-

Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.";

(b) After sub-section (3), in the Explanation,-

(i) For clause (b), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2006, namely:-

(b) "Long-term specified asset" for making any investment under this section during the period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007, means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, but on or before the 31st day of March, 2007 -

(i) By the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988(68 1988); or

(ii) By the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956(1 of 1956), and notified by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of investment by an assessee in such bond) as it thinks fit;

(ii) In clause (b) as so substituted, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2006, namely:-

Provided that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause;

(iii) After the proviso as so inserted, the following clause shall be inserted, namely:-

(ba) "Long-term specified asset" for making any investment under this section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988(68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956(1 of 1956).

In section 56 of the Income-tax Act, in sub-section (2), in clause (v), in the proviso, the following sub-clauses shall be deemed to have been inserted with effect from the 1st day of April, 2005, namely:-

(e) From any local authority as defined in the Explanation to clause (20) of section 10; or

(f) From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(g) From any trust or institution registered under section 12AA.

In section 72A of the Income-tax Act, for sub-section (1), the following subsection shall be substituted with effect from the 1st day of April, 2008, namely:-

(1) Where there has been an amalgamation of-

(a) A company owning an industrial undertaking or a ship or a hotel with another company; or

(b) A banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949(10 of 1949) with a specified bank; or

(c) One or more public sector company or companies engaged in the business of operation of aircraft with one or more public sector company or companies engaged in similar business, then, notwith -standing anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amal -gamating company shall be deemed to be the loss or, as the case may be, allowance for unabsorbed depreciation of the amal -gamated company for the previous year in which the amal -gamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.

After section 72AA of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2008, namely:-

72AB. Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in business re-organi -sation of co-operative banks.-

(1) The assessee, being a successor co-operative bank, shall, in a case where the amalgamation has taken place during the previous year, be allowed to set off the accumulated loss and the unabsorbed depreciation, if any, of the predecessor cooperative bank as if the amalgamation had not taken place, and all the other provisions of this Act relating to set-off and carry forward of loss and allowance for depreciation shall apply accordingly.

(2) The provisions of this section shall apply if-

(a) The predecessor co-operative bank-

(i) Has been engaged in the business of banking for three or more years; and

(ii) Has held at least three-fourths of the book value of fixed assets as on the date of the business reorganisation, continuously for two years prior to the date of business reorganisation;

(b) The successor co-operative bank-

(i) Holds at least three-fourths of the book value of fixed assets of the predecessor co-operative bank acquired through business reorganisation, continuously for a minimum period of five years immediately succeeding the date of business reorganisation;

(ii) Continues the business of the predecessor co-operative bank for a minimum period of five years from the date of business reorganisation; and

(iii) fulfills such other conditions as may be prescribed to ensure the revival of the business of the predecessor co-operative bank or to ensure that the business reorganisation is for genuine business purpose.

(3) The amount of set-off of the accumulated loss and unabsorbed depreciation, if any, allowable to the assessee being a resulting co-operative bank shall be,--

(i) The accumulated loss or unabsorbed depreciation of the demerged co-operative bank if the whole of the amount of such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the resulting co-operative bank; or

(ii) The amount which bears the same proportion to the accumulated loss or unabsorbed depreciation of the demerged co-operative bank as the assets of the undertaking transferred to the resulting co-operative bank bears to the assets of the demerged co-operative bank if such accumulated loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the resulting co-operative bank.

(4) The Central Government may, for the purposes of this section, by notification in the Official Gazette, specify such other conditions as it considers necessary, other than those prescribed under sub-clause (iii) of clause (b) of sub-section (2), to ensure that the business reorganisation is for genuine business purposes.

(5) The period commencing from the beginning of the previous 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 previous year shall be deemed to be two different previous years for the purposes of set-off and carry forward of loss and allowance for depreciation.

(6) In a case where the conditions specified in sub-section (2) or notified under sub-section (4) are not complied with, the set-off of accumulated loss or unabsorbed depreciation allowed in any previous year to 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 the conditions are not complied with.

(7) For the purposes of this section,-

(a) "Accumulated loss" means so much of loss of the amalgamating co-operative bank or the demerged co-operative bank, as the case may be, under the head "Profits and gains of business or profession" (not being a loss sustained in a speculation business) which such amalgamating co-operative bank or the demerged co-operative bank, would have been entitled to carry forward and setoff under the provisions of section 72 as if the business reorganisation had not taken place;

(b) "Unabsorbed depreciation" means so much of the allowance for depreciation of the amalgamating co-operative bank or the demerged co-operative bank, as the case may be, which remains to be allowed and which would have been allowed to such bank as if the business reorganisation had not taken place;

(c) The expressions "amalgamated co-operative bank", "amalgamating co-operative bank", "amalgamation", "business reorganisation", "co-operative bank", "demerged co-operative bank", "demerger", "predecessor co-operative bank", "successor co-operative bank" and "resulting co-operative bank" shall have the meanings respectively assigned to them in section 44DB.

In section 80A of the Income-tax Act, in sub-section (3),-

(i) After the word, figures and letters "section 80-IB", the words, figures and letters "or section 80-IC" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2004;

(ii) After the words, figures and letters "or section 80-IC" as so inserted, the words, figures and letters "or section 80-ID or section 80-IE" shall be inserted with effect from the 1st day of April, 2008.".

In section 80AC of the Income-tax Act, after the word, figures and letters "section 80-IC", the words, figures and letters "or section 80-ID or section 80-IE" shall be inserted with effect from the 1st day of April, 2008.

In section 80C of the Income-tax Act, in sub-section (2), after clause (xxi), the following clause shall be inserted with effect from the 1st day of April, 2008, namely-

(xxii) As subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by notification in the Official Gazette, specify in this behalf".

In section 80CCD of the Income-tax Act,-

(a) In sub-section (1), for the words "employed by the Central Government", the words "employed by the Central Government or any other employer" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2004;

(b) In sub-section (2), for the words "Central Government" at both the places where they occur, the words "Central Government or any other employer" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2004.

In section 80D of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2008 -

(a) For the words "paid by him by cheque", the words "paid by him by any mode of payment other than cash" shall be substituted;

(b) In clause (i), for the word "ten", the word "fifteen" shall be substituted;

(c) In clause (ii), for the word "ten", the word "fifteen" shall be substituted;

(d) In the proviso,-

(i) For the word "ten", the word "fifteen" shall be substituted;

(ii) For the word "fifteen", the word "twenty" shall be substituted;

In section 80E of the Income-tax Act, with effect from the 1st day of April, 2008,-

(i) In sub-section (1), after the words "higher education", the words "or for the purpose of higher education of his relative" shall be inserted;

(ii) In sub-section (3),-

(A) In clause (a), for the words "notified by the Central Govern -ment", the words "approved by the prescribed authority" shall be substituted;

(B) After clause (d), the following clause shall be inserted, namely:-

(e) "Relative", in relation to an individual, means the spouse and children of that individual.

In section 80-IA of the Income-tax Act,-

(i) In sub-section (2), after the words "distribution lines", the words "or lays and begins to operate a cross-country natural gas distribution network" shall be inserted with effect from the 1st day of April, 2008;

(ii) In sub-section (3), for the word, brackets and figures "clause (iv)", the words, brackets and figures "clause (iv) or clause (vi)" shall be substituted with effect from the 1st day of April, 2008;

(iii) In sub-section (4), with effect from the 1st day of April, 2008,--

(A) In clause (i), in the Explanation, in clause (d), for the words "or inland port", the words ", inland port or navigational channel in the sea" shall be substituted;

(B) In clause (v), in sub-clause (b), for the figures, letters and words "31st day of March, 2007", the figures, letters and words "31st day of March, 2008" shall be substituted;

(C) After clause (v), the following clause shall be inserted, namely:--

(vi) Any undertaking carrying on the business of laying and operating a cross-country natural gas distribution network, including pipelines and storage facilities being an integral part of such network, which fulfills the following conditions, namely:-

(a) It is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation established or constituted under any Central or State Act;

(b) It has been approved by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act, 2006(19 of 2006) and notified by the Central Government in the Official Gazette;

(c) One-third of its total pipeline capacity is available for use on common carrier basis by any person other than the assessee or an associated person;

(d) It has started or starts operating on or after the 1st day of April, 2007; and

(e) Any other condition which may be prescribed.

Explanation.-For the purposes of this clause, an "associated person" in relation to the assessee means a person-

(i) Who participates directly or indirectly or through one or more intermediaries in the management or control or capital of the assessee;

(ii) Who holds, directly or indirectly, shares carrying not less than twenty-six per cent. of the voting power in the assessee;

(iii) Who appoints more than half of the Board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of the assessee; or

(iv) Who guarantees not less than ten per cent. of the total borrowings of the assessee.';

(iv) After sub-section (12), the following sub-section shall be inserted with effect from the 1st day of April, 2008, namely:-

(12A) Nothing contained in sub-section (12) shall apply to any enterprise or undertaking which is transferred in a scheme of amalgamation or demerger on or after the 1st day of April, 2007.

(v) After sub-section (13), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2000, namely:-

Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a works contract entered into with the undertaking or enterprise, as the case may be.

In section 80-IB of the Income-tax Act, in sub-section (4), in the fourth proviso, for the figures, letters and words "31st day of March, 2007", the figures, letters and words "31st day of March, 2012" shall be substituted with effect from the 1st day of April, 2008.

In section 80-IC of the Income-tax Act, in sub-section (2), with effect from the 1st day of April, 2008 --

(i) In clause (a), in sub-caluse (i), for the figures, letters and words "1st day of April, 2012", the figures, letters and words "1st day of April, 2007" shall be substituted;

(ii) In clause (b) in sub-clause (i), for the figures, letters and words "1st day of April, 2012", the figures, letters and words "1st day of April, 2007" shall be substituted.

After section 80-IC of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2008, namely:-

80-ID Deduction in respect of profits and gains from business of hotels and convention centres in specified area.-

(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking from any business referred to in sub-section (2) (such business being hereinafter referred to as the eligible business), there shall, in accordance with 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 hundred per cent. of the profits and gains derived from such business for five consecutive assessment years beginning from the initial assessment year.

(2) This section applies to any undertaking,-

(i) Engaged in the business of hotel located in the specified area, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2010; or

(ii) Engaged in the business of building, owning and operating a convention centre, located in the specified area, if such convention centre is constructed at any time during the period beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2010. (3) The deduction under sub-section (1) shall be available only if-

(i) The eligible business is not formed by the splitting up, or the reconstruction, of a business already in existence;

(ii) The eligible business is not formed by the transfer to a new business of a building previously used as a hotel or a convention centre, as the case may be;

(iii) The eligible business is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

Explanation.-The provisions of Explanations 1 and 2 to sub-section

(3) Of section 80-IA shall apply for the purposes of clause (iii) of this subsection as they apply for the purposes of clause (ii) of that sub-section;

(iv) The assessee furnishes along with the return of income, the report of an audit in such form and containing such particulars as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed.

(4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or section 10AA, in relation to the profits and gains of the undertaking.

(5) The provisions contained in sub-section (5) and sub-sections (8) to (11) of section 80-IA shall, so far as may be, apply to the eligible business under this section.

(6) For the purposes of this section,-

(a) "Convention centre" means a building of a prescribed area comprising of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed;

(b) "Hotel" means a hotel of two-star, three-star or four-star category as classified by the Central Government;

(c) "Initial assessment year"-

(i) In the case of a hotel, means the assessment year relevant to the previous year in which the business of the hotel starts functioning;

(ii) In the case of a convention centre, means the assessment year relevant to the previous year in which the convention centre starts operating on a commercial basis;

(d) "Specified area" means the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad.''

After section 80-ID as so inserted in the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2008, namely:-

80-IE. Special provisions in respect of certain undertakings in North–Eastern States.-

(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years commencing with the initial assessment year.

(2) This section applies to any undertaking which has, during the period beginning on the 1st day of April, 2007 and ending before the 1st day of April, 2017, begun or begins, in any of the North-Eastern States,-

(i) To manufacture or produce any eligible article or thing;

(ii) To undertake substantial expansion to manufacture or produce any eligible article or thing;

(iii) To carry on any eligible business.

(3) This section applies to any undertaking which fulfills all the following conditions, namely:-

(i) It is not formed by splitting up, or the reconstruction, of a business already in existence:

Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in the said section;

(ii) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose.

Explanation.-The provisions of Explanations 1 and 2 to sub-section

(3) of section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section.

(4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10A or section 10AA or section 10B or section 10BA, in relation to the profits and gains of the undertaking.

(5) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking under this section, where the total period of deduction inclusive of the period of deduction under this section, or under section 80-IC or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds ten assessment years.

(6) The provisions contained in sub-section (5) and sub-section (7) to (12) of section 80-1A shall, so far as may be, apply to the eligible undertaking under this section.

(7) For the purposes of this section,-

(i) "Initial assessment year" means the assessment year relevant to the previous year in which the undertaking begins to manu -facture or produce articles or things, or completes substantial expansion;

(ii) "North-Eastern States" means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura;

(iii) "Substantial expansion" means increase in the investment in the plant and machinery by at least twenty-five per cent of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken;

(iv) "Eligible article or thing" means the article or thing other than the following:-

(a) Goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985(5 of 1986), which pertains to tobacco and manufactured tobacco substitutes;

(b) Pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985(5 of 1986);

(c) Plastic carry bags of less than 20 microns as specified by the Ministry of Environment and Forests vide notification number S.O. 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and

(d) Goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985(5 of 1986), produced by petroleum oil or gas refineries;

(v) "Eligible business" means the business of,-

(a) Hotel (not below two star category);

(b) Adventure and leisure sports including ropeways;

(c) Providing medical and health services in the nature of nursing home with a minimum capacity of twenty-five beds;

(d) Running an old-age home;

(e) Operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and paramedical, civil aviation related training, fashion designing and industrial training;

(f) Running information technology related training centre;

(g) Manufacturing of information technology hardware; and

(h) Bio-technology.

In section 92CA of the Income-tax Act, with effect from the 1st day of June, 2007,-

(i) After sub-section (3), the following sub-section shall be inserted, namely: -

(3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub-section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires.";

(ii) For sub-section (4), the following sub-section shall be sub stituted, namely:-

(4) On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer.

In section 115JB of the Income-tax Act, after sub-section (2), in the Explanation with effect from the 1st day of April, 2008,-

(a) In clause (f), the words, figures and letters "section 10A or section 10B or" shall be omitted;

(b) In clause (ii), the words, figures and letters "section 10A or section 10B or" shall be omitted.

In section 115-O of the Income-tax Act, in sub-section (1), for the words "at the rate of twelve and one-half per cent.", the words "at the rate of fifteen per cent." shall be substituted.

In section 115R of the Income-tax Act, in sub-section (2), for clauses (i) and (ii), the following clauses shall be substituted, namely:-

(i) Twenty-five per cent. on income distributed by a money market mutual fund or a liquid fund;

(ii) Twelve and one-half per cent. on income distributed to any person being an individual or a Hindu undivided family by a fund other than a money market mutual fund or a liquid fund; and

(iii) Twenty per cent. on income distributed to any other person by a fund other than a money market mutual fund or a liquid fund:".

In Chapter XII-E of the Income-tax Act, after section 115T, in the Explanation, after clause (c), the following clauses shall be inserted, namely: -

(d) "Money market mutual fund" means a money market mutual fund as defined in sub-clause (p) of clause 2 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996;

(e) "Liquid fund" means a scheme or plan of a mutual fund which is classified by the Securities and Exchange Board of India as a liquid fund in accordance with the guidelines issued by it in this behalf under the Securities and Exchange Board of India Act, 1992(15 of 1992) or regulations made there under.

In section 115WB of the Income-tax Act, with effect from the 1st day of April, 2008--

(A) in sub-section (1),-

(i) In clause (b), the word "and" occurring at the end shall be omitted;

(ii) In clause (c), for the word "employees", the words "employees; and" shall be substituted;

(iii) After clause (c), the following clause shall be inserted, namely:

(d) Any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of Cost or at concessional rate to his employees (including former employee or employees).

Explanation.-For the purposes of this clause,-

(i) "Specified security" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956(42 of 1956) and includes employees' stock option;

(ii) "Sweat equity shares" means equity shares issued by a comp -any to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.';

(B) In sub-section (2), in the proviso,-

(a) In clause (v), for the words "bill boards", the words "bill boards, display of products" shall be substituted;

(b) For clause (vii), the following clause shall be substituted, namely:-

(vii) Being the expenditure on distribution of samples either free of cost or at concessional rate; and".

In section 115WC of the Income-tax Act, in sub-section (1), after clause (b), the following shall be inserted with effect from the 1st day of April, 2008, namely:-

(ba) The fair market value of the specified security or sweat equity shares referred to in clause (d) of sub-section (1) of section 115 WB, on the date on which the option vests with the employee as reduced by the amount actually paid by, or recovered from, the employee in respect of such security or shares.

Explanation.-For the purposes of this clause,-

(i) "Fair market value" means the value determined in accordance with the method as may be prescribed by the Board;

(ii) "Option" means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price.'.

In section 115 WJ of the Income-tax Act, for sub-sections (2) and

(5), the following sub-sections shall be substituted with effect from the 1st day of June, 2007, namely:-

(2) Advance tax on the current fringe benefits shall be payable by-

(a) All the companies, who are liable to pay the same in four installments during each financial year and the due date of each installment and the amount of such installment shall be as specified in Table I below:

Table I

----------------------------------------------------------------------------------------

Due date of installment

----------------------------------------------------------------------------------------

Amount payable

----------------------------------------------------------------------------------------

On or before the 15th June    Not less than fifteen per cent. of such advance tax.

On or before the 15th September    Not less than forty-five per cent. of such advance tax as reduced by the amount, if any, paid in the earlier installment.

On or before the 15th December    Not less than seventy-five per cent. of such advance tax as reduced by the amount or amounts, if any, paid in the earlier installment or installments.

On or before the 15th March    The whole amount of such advance tax as reduced by the amount or amounts, if any, paid in the earlier installment or installments;

(b) All the assessees (other than companies), who are liable to pay the same in three installments during each financial year and the due date of each installment and the amount of such installment shall be as specified in Table II below:

Table II

----------------------------------------------------------------------------------------

Due date of installiment

---------------------------------------------------------------------------------------- Amount payable

----------------------------------------------------------------------------------------

On or before the 15th September    Not less than thirty per cent. of such advance tax.

On or before the 15th December    Not less than sixty per cent. of such advance tax as reduced by the amount, if any, paid in the earlier installment.

On or before the 15th March    The whole amount of such advance tax as reduced by the amount or amounts, if any, paid in the earlier installment or installments.

(3) Where an assessee, being a company, has failed to pay the advance tax payable by him on or before the due date for any instalment or where the advance tax paid by him is less than the amount payable by the due date, he shall be liable to pay simple interest calculated at the rate of-

(i) One per cent. per month, for three months on an amount by which the advance tax paid on or before the 15th June of the financial year falls short of fifteen per cent. of the advance tax payable;

(ii) One per cent. per month, for three months on an amount by which the advance tax paid on or before the 15th September of the financial year falls short of forty-five per cent. of the advance tax payable;

(iii) One per cent. per month, for three months on an amount by which the advance tax paid on or before the 15th December of the financial year falls short of seventy-five per cent. of the advance tax payable; and

(iv) One per cent. on an amount by which the advance tax paid on or before the 15th March of the financial year falls short of the hundred per cent. of the advance tax payable.

(4) Where an assessee, being a person other than a company, has failed to pay the advance tax payable by him on or before the due date for any instalment or where the advance tax paid by him is less than the amount payable by the due date, he shall be liable to pay simple interest calculated at the rate of-

(i) One per cent. per month, for three months on an amount by which the advance tax paid on or before the 15th September of the financial year falls short of thirty per cent. of the advance tax payable;

(ii) One per cent, per month, for three months on an amount by which the advance tax paid on or before the 15th December of the financial year falls short of sixty per cent. of the advance tax payable; and

(iii) One per cent. on an amount by which the advance tax paid on or before the 15th March of the financial year falls short of hundred per cent. of the advance tax payable.

(5) Where an assessee has failed to pay the advance tax payable by him during a financial year or where the advance tax paid by him is less than ninety per cent. of the tax assessed under section 115 WE or section 115 WF or section 115 WG, the assessee shall be liable to pay simple interest at the rate of one per cent. per month, for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of assessment of tax under section 115 WE or section 115 WF or section 115 WG".

After section 115WK of the Income-tax Act, the following section shall be inserted, namely:-

115WKA. Recovery of fringe benefit tax by the employer from the employee.-

Notwithstanding anything contained in any agreement or scheme under which any specified security or sweat equity shares referred to in clause (d) of sub-section (1) of section 115 WB has been allotted or transferred, directly or indirectly, by the employer on or after the 1st day of April, 2007, it shall be lawful for the employer to vary the agreement or scheme under which such specified security or sweat equity shares has been allotted or transferred so as to recover from the employee the fringe benefit tax to the extent to which such employer is liable to pay the fringe benefit tax in relation to the value of fringe benefits provided to the employee and determined under clause (ba) of sub-section (1) of section 115WC".

In section 120 of the Income-tax Act, in sub-section (4), in clause (b) -

(i) After the words "shall be exercised or performed by", the words "an Additional Commissioner or" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1994;

(ii) After the words "an Additional Commissioner or", as so inserted, the words "an Additional Director or" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1996;

(iii) After the words "deemed to be references to such", the words "Additional Commissioner or" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 1994;

(iv) After the words "Additional Commissioner or" as so inserted, the words "Additional Director or" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1996.

In section 132B of the Income-tax Act, in sub-section (4), in clause (a), for the words "six per cent. per annum", the words "one-half per cent. for every month or part of a month" shall be substituted with effect from the 1st day of April, 2008.

In section 139 of the Income-tax Act, in sub-section (9), the proviso occurring at the end shall be omitted and shall be deemed to have been omitted with effect from the 1st day of June, 2006.

After section 139B of the Income-tax Act, the following sections shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2006, namely:-

139C. Power of Board to dispense with furnishing documents, etc., with return.-

(1) The Board may make rules providing for a class or classes of persons who may not be required to furnish documents, statements, receipts, certificates, reports of audit or any other documents, which are otherwise under any other provisions of this Act, except section 139D, required to be furnished, along with the return but on demand to be produced before the Assessing Officer.

(2) Any rule made under the proviso to sub-section (9) of section 139 as it stood immediately before its omission by the Finance Act, 2007 shall be deemed to have been made under the provisions of this section.

139D. Filing of return in electonic from.-

The Board may make rules providing for-

(a) The class or classes of persons who shall be required to furnish the return in electronic form;

(b) The form and the manner in which the return in electronic form may be furnished;

(c) The documents, statements, receipts, certificates or audited reports which may not be furnished along with the return in electronic form but shall be produced before the Assessing Officer on demand;

(d) The computer resourceor the electronic record to which the return in electronic form may be transmitted.".

In section 142 of the Income-tax Act,-

(a) In sub-section (2A), the following proviso shall be inserted with effect from the 1st day of June, 2007, namely:-

Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard.";

(b) In sub-section (2D), the following proviso shall be inserted with effect from the 1st day of June, 2007, namely:--

Provided that where any direction for audit under sub-section (2A) is issued by the Assessing Officer on or after the 1st day of June, 2007, the expenses of, and incidental to, such audit (including the remuneration of the Accountant) shall be determined by the Chief Commissioner or Commissioner in accordance with such guidelines as may be prescribed and the expenses so determined shall be paid by the Central Government."