Finance Act, 2008

(1) This Act may be called the Finance Act, 2008.

(2) Save as otherwise provided in this Act, sections 2 to 67 shall be deemed to have come into force on the 1st day of April, 2008.

1*[(1) Subject to the provisions of sub-sections (2) and (3), for the assessment year commencing on the 1st day of April, 2009, income-tax shall be charged at the rates specified in Part 1 of the First Schedule and such tax 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 ten thousand 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 agricultural income were comprised in the total income after the first 2*[one lakh fifty  thousand 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 2*[one lakh fifty  thousand 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 3*[one lakh fifty thousand rupees], the words 4*[one lakh eighty 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 5*[one lakh fifty thousand rupees], the words 6*[two lakh twenty-five thousand rupees] had been substituted: Provided also that the amount of income-tax so arrived at, 7[***] 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 8*[the Income-tax Act, 1961 (hereinafter referred to as 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 sub-section (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 the case may be, of Part I of the First Schedule:-

In section 2 of the Income-tax Act,-

(a) In clause (1A), after Explanation 2, the following Explanation shall be inserted with effect from the 1st day of April, 2009, namely:-

"Explanation 3.-For the purposes of this clause, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income;";

(b) For clause (15), the following clause shall be substituted with effect from the 1st day of April, 2009, namely:-

(15) Charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity;.

In section 10 of the Income-tax Act,-

(a) After clause (26AA) as omitted by the Finance Act, 1997(26 of 1997), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1990, namely:-

(26AAA) In case of an individual, being a Sikkimese, any income which accrues or arises to him-

(a) From any source in the State of Sikkim; or

(b) By way of dividend or interest on securities:

Provided that nothing contained in this clause shall apply to a Sikkimese woman who, on or after the 1st day of April, 2008, marries an individual who is not a Sikkimese.

Explanation.-For the purposes of this clause, Sikkimese shall mean-

(i) An individual, whose name is recorded in the register maintained under the Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961 (hereinafter referred to as the Register of Sikkim Subjects), immediately before the 26th day of April, 1975; or

(ii) An individual, whose name is included in the Register of Sikkim Subjects by virtue of the Government of India Order No. 26030/36/90-I.C.I., dated the 7th August, 1990 and Order of even number dated the 8th April, 1991; or

(iii) Any other individual, whose name does not appear in the Register of Sikkim Subjects, but it is established beyond doubt that the name of such individuals father or husband or paternal grandfather or brother from the same father has been recorded in that register;

(b) After clause (26AAA) as so inserted, the following clause shall be inserted with effect from the 1st day of April, 2009 namely:

(26AAB) Any income of an agricultural produce market committee or board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce;

(c) In clause (29A), after sub-clause (g), the following sub-clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2002, namely:

(h) The Coir Board established under section 4 of the Coir Industry Act, 1953(45 of 1953);

(d) After clause (42), the following clause shall be inserted, namely:-

(43) any amount received by an individual as a loan, either in lump sum or in installment, in a transaction of reverse mortgage referred to in clause (xvi) of section 47.

In section 10A of the Income -tax Act, in sub-section (1), in the fourth proviso, for the figures "2010", the figures "2011" shall be substituted.

In section 10B of the Income -tax Act, in sub-section (1), in the third proviso, for the figures "2010", the figures "2011" shall be substituted.

In section 35 of the Income-tax Act, with effect from the 1st day of April, 2009,-

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

(iia) An amount equal to one and one-fourth times of any sum paid to a company to be used by it for scientific research:

Provided that such company

(a) Is registered in India,

(b) Has as its main object the scientific research and development,

(c) Is, for the purposes of this clause, for the time being approved by the prescribed authority in the prescribed manner, and

(d) Fulfills such other conditions as may be prescribed;

(b) In sub-section (2AB), after clause (5), the following clause shall be inserted, namely:-

(6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 2008.

In section 35D of the Income-tax Act, with effect from the 1st day of April, 2009,-

(a) For the words industrial undertaking, wherever they occur, the word undertaking shall be substituted;

(b) For the words industrial unit, wherever they occur, the word unit shall be substituted.

In section 36 of the Income-tax Act, in sub-section (1), after clause (xiv), the following clauses shall be inserted with effect from the 1st day of April, 2009, namely:-

(xv) An amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and gains of business or profession.

Explanation.-For the purposes of this clause, the expressions securities transaction tax and taxable securities transaction shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004(23 of 2004);

(xvi) An amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such taxable commodities transactions is included in the income computed under the head Profits and gains of business or profession.

Explanation.-For the purposes of this clause, the expressions commodities transaction tax and taxable commodities transaction shall have the meanings respectively assigned to them under Chapter VII of the Finance Act, 2008.

In section 40 of the Income-tax Act, in clause (a),-

(a) In sub-clause (ia), with effect from the 1st day of April, 2005,

(i) For the words, brackets and figures has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200, the following words, brackets and figures shall be substituted and shall be deemed to have been substituted, namely:-

Has not been paid,

(a) In a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or

(b) In any other case, on or before the last day of the previous year;

(ii) For the proviso, the following proviso shall be substituted and shall be deemed to have been substituted, namely:-

Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted

(a) During the last month of the previous year but paid after the said due date; or

(b) During any other month of the previous year but paid after the end of the said previous year,such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid;

(b) Sub-clause (ib) shall be omitted with effect from the 1st day of April, 2009.

In section 40A of the Income-tax Act, for sub-section (3), the following sub-sections shall be substituted, with effect from the 1st day of April, 2009, namely:-

(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.

(3A) 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 payment or aggregate of payments made to a person in a day, 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 sub-section (3) and this sub-section where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, 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.

In section 43 of the Income-tax Act, in clause (6), after Explanation 5, the following Explanation shall be inserted and shall be deemed to have been inserted, with effect from the 1st day of April, 2003, namely:-

Explanation 6.-Where an assessee was not required to compute his total income for the purposes of this Act for any previous year or years preceding the previous year relevant to the assessment year under consideration,-

(a) The actual cost of an asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account;

(b) The total amount of depreciation on such asset, provided in the books of account of the assessee in respect of such previous year or years preceding the previous year relevant to the assessment year under consideration shall be deemed to be the depreciation actually allowed under this Act for the purposes of this clause; and

(c) The depreciation actually allowed under clause (b) shall be adjusted by the amount of depreciation attributable to such revaluation of the asset.

In section 44AB of the Income -tax Act, in the Explanation, in clause (if), for the figures, letters and words "31st day of October", the figures, letters and words "30th day of September" shall be substituted.

In section 47 of the Income-tax Act,-

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

(xa) Any transfer by way of conversion of bonds referred to in clause (a) of sub-section (1) of section 115AC into shares or debentures of any company;

(b) After clause (xv), the following clause shall be inserted, namely:-

(xvi) Any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government.

In section 49 of the Income-tax Act, for sub-section (2A), the following sub-section shall be substituted, namely:-

(2A) Where the capital asset, being a share or debenture of a company, became the property of the assessee in consideration of a transfer referred to in clause (x) or clause (xa) of section 47, the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture, debenture-stock, bond or deposit certificate in relation to which such asset is acquired by the assessee.

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

(a) In sub-section (2), after clause (xxii), the following clauses shall be inserted, namely:-

(xxiii) In an account under the Senior Citizens Savings Scheme Rules, 2004;

(xxiv) As five year time deposit in an account under the Post Office Time Deposit Rules, 1981.;

(b) After sub-section (6), the following sub-section shall be inserted, namely:-

(6A) If any amount, including interest accrued thereon, is withdrawn by the assessee from his account referred to in clause

(xxiii) Or clause (xxiv) of sub-section (2), before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year:-

For section 80D of the Income-tax Act, the following section shall be substituted with effect from the 1st day of April, 2009,-

80D. Deduction in respect of health insurance premia.-

(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode, other than cash, in the previous year out of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:-

(a) The whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family as does not exceed in the aggregate fifteen thousand rupees; and

(b) The whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee as does not exceed in the aggregate fifteen thousand rupees.

Explanation.-For the purposes of clause (a), family means the spouse and dependant children of the assessee.

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1) shall be the whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate fifteen thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or in sub-section (3) is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, the provisions of this section shall have effect as if for the words fifteen thousand rupees, the words twenty thousand rupees had been substituted. Explanation.- For the purposes of this sub-section,senior citizen means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by-

(a) The General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972(57 of 1972) and approved by the Central Government in this behalf; or

(b) Any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999(41 of 1999).

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

(a) In sub-section (9), after the second proviso, the following proviso shall be inserted, namely:-

Provided also that where such undertaking begins refining of mineral oil on or after the 1st day of April, 2009, no deduction under this section shall be allowed in respect of such undertaking unless such undertaking fulfills all the following conditions, namely:-

(i) it is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least forty-nine per cent of the voting right;

(ii) It is notified by the Central Government in this behalf on or before the 31st day of Mat, 2008; and

(iii) It begins refining not later than the 31st day of March, 2012.";

(b) After sub-section (11B), the following sub-section shall be inserted with effect from the 1st day of April, 2009, namely:-

(11C) The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be hundred per cent. of the profits and gains derived from such business for a period of five consecutive assessment years, beginning with the initial assessment year, if

(i) The hospital is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013;

(ii) The hospital has at least one hundred beds for patients;

(iii) The construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and

(iv) The assessee furnishes along with the return of income, a report of 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 to sub-section (2) of section 288, certifying that the deduction has been correctly claimed.

Explanation.- For the purposes of this sub-section,-

(a) A hospital shall be deemed to have been constructed on the date on which a completion certificate in respect of such construction is issued by the local authority concerned;

(b) Initial assessment year means the assessment year relevant to the previous year in which the business of the hospital starts functioning;

(c) Excluded area shall mean an area comprising

(i) Greater Mumbai urban agglomeration;

(ii) Delhi urban agglomeration;

(iii) Kolkata urban agglomeration;

(iv) Chennai urban agglomeration;

(v) Hyderabad urban agglomeration;

(vi) Bangalore urban agglomeration;

(vii) Ahmedabad urban agglomeration;

(viii) District of Faridabad;

(ix) District of Gurgaon;

(x) District of Gautam Budh Nagar;

(xi) District of Ghaziabad;

(xii) District of Gandhinagar; and

(xiii) City of Secunderabad;

(d) The area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census.

In section 80-ID of the Income-tax Act, with effect from the 1st day of April, 2009,-

(a) In sub-section (2), after clause (ii), the following clause shall be inserted, namely:-

(iii) Engaged in the business of hotel located in the specified district having a World Heritage Site, if such hotel is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013;

(b) In sub-section (6), after clause (d), the following shall be inserted, namely: -

(e) Specified district having a World Heritage Site means districts, specified in column (2) of the Table below, of the States, specified in the corresponding entry in column (3) of the said Table:

Table

---------------------------------------------------------------------------- S. No.    Name of district    Name of State ---------------------------------------------------------------------------- (1)       (2)                         (3) ----------------------------------------------------------------------------

1.      Agra                      Uttar Pradesh

In section 88E of the Income-tax Act, after sub-section (2), the following sub-section shall be inserted, namely:-

(3) No deduction under this section shall be allowed in, or after, the assessment year beginning on the 1st day of April, 2009.

In section 111A of the Income-tax Act, in sub-section (1), in clause (i), for the words ten per cent., the words fifteen per cent. shall be substituted with effect from the 1st day of April, 2009.

In section 115AD of the Income-tax Act, in sub-section (1), in the proviso, for the words ten per cent., the words fifteen per cent. shall be substituted with effect from the 1st day of April, 2009.

In section 115JB of the Income-tax Act, after sub-section (2),-

(a) The Explanation shall be numbered as Explanation 1 and in Explanation 1 as so numbered, after clause (g), for the portion beginning with the words if any amount referred and ending with the words as reduced by-, the following shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2001, namely:-

(h) The amount of deferred tax and the provision there for, if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by-;

(b) In Explanation 1 as so numbered, after clause (vii), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:

(viii) The amount of deferred tax, if any such amount is credited to the profit and loss account.

(c) After Explanation 1 as so numbered, the following shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:-

Explanation 2.- For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include-

(i) Any tax on distributed profits under section 115-O or on distributed income under section 115R;

(ii) Any interest charged under this Act;

(iii) Surcharge, if any, as levied by the Central Acts from time to time;

(iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and

(v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time.

In section 115-O of the Income-tax Act, after sub-section (1), the following sub-section shall be inserted, namely:-

(1A) The amount referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if

(a) Such dividend is received from its subsidiary;

(b) The subsidiary has paid tax under this section on such dividend; and

(c) The domestic company is not a subsidiary of any other company:

Provided that the same amount of dividend shall not be taken into account for reduction more than once.

Explanation.-For the purposes of this sub-section, a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company".

In section 115WB of the Income-tax Act,-

(a) In sub-section (1), in the Explanation to clause (d), in clause (i), for the words "and includes employees' stock option", the words "and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme" shall be substituted;

(b) In sub-section (2), with effect from the 1st day of April, 2009,-

(I) In clause (B), after sub-clause (ii), the following sub-clause shall be inserted, namely:-

(iii) Any expenditure on or payment through non-transferable prepaid electronic meal card usable only at eating joints or outlets and which fulfills such other conditions as may be prescribed;

(II) In clause (E), for the Explanation, the following Explanation shall be substituted, namely:-

"Explanation.-For the purposes of this clause, any expenditure incurred or payment made to-

(i) Fulfill any statutory obligation; or

(ii) Mitigate occupational hazards; or

(iii) Provide first aid facilities in the hospital or dispensary run by the employer; or

(iv) Provide crche facility for the children of the employee; or

(v) Sponsor a sportsman, being an employee; or

(vi) Organise sports events for employees, shall not be considered as expenditure for employees' welfare;";

(III) Clause (K) shall be omitted.

In section 115WC of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2009 -

(i) In clause (c), for the words, brackets and letters "clauses (A) to (K)", the words, brackets and letters "clauses (A) to (L)" shall be substituted;

(ii) In clause (d), for the words, brackets and letters "clauses (L) to (P)", the words, brackets and letters "clauses (M) to (P)" shall be substituted.

In section 115WD of the Income-tax Act, in sub-section (1), in the Explanation, in clause (a), for the figures, letters and words "31st day of October", the figures, letters and words "30th day of September" shall be substituted.

In section 115WE of the Income-tax Act,-

(A) For sub-section (1), the following sub-sections shall be substituted, namely:-

(1) Where a return has been made under section 115WD, such return shall be processed in the following manner, namely:-

(a) The value of fringe benefits shall be computed after making the following adjustments, namely:-

(i) Any arithmetical error in the return; or

(ii) An incorrect claim, if such incorrect claim is apparent from any information in the return;

(b) The tax and interest, if any, shall be computed on the basis of the value of fringe benefits computed under clause (a);

(c) The sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any advance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest;

(d) An intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and

(e) The amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:

Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made.

Explanation.-For the purposes of this sub-section,-

(a) An incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,

(i) Of an item, which is inconsistent with another entry of the same or some other item in such return;

(ii) In respect of which the information required to be furnished to substantiate such entry has not been so furnished under this Act; or

(iii) In respect of a deduction or value of fringe benefits, where such deduction or value exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) The acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).

(1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under that sub-section.

(1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub-section (1A), the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March, 2009.

(1C) Every notification issued under sub-section (1B), along with the scheme made under subsection (1A), shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

(B) In sub-section (2) in the proviso, for the words twelve months from the end of the month, the words six months from the end of the financial year, shall be substituted.

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

115WKB. Deemed payment of tax by employee.

(1) Where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares, referred to in clause (d) of sub-section (1) of section 115WB, and has recovered such tax subsequently from an employee, it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefit provided to such employee, as determined under clause (ba) of sub-section (1) of section 115WC.

(2) Notwithstanding anything contained in any other provisions of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section (1), such employee shall, under this Act, not be entitled to claim-

(i) Any refund out of such payment of tax; or

(ii) Any credit of such payment of tax against tax liability on other income or against any other tax liability.

In section 139 of the Income-tax Act,-

(a) In sub-section (1), in Explanation 2, in clause (a), for the figures, letters and words 31st day of October, the figures, letters and words 30th day of September shall be substituted;

(b) In sub-section (9), in the Explanation, in clause (c), in sub-clause (i), the words, figures and letters before the 1st day of April, 2008 shall be omitted.

In section 142 of the Income-tax Act, in sub-section (2C), in the proviso, for the words on an application, the words suo motu, or on an application shall be substituted.

In section 143 of the Income-tax Act,-

(a) For sub-section (1), the following sub-sections shall be substituted, namely:-

(1) Where a return has been made under section 139, or in response to a notice under subsection (1) of section 142, such return shall be processed in the following manner, namely:-

(a) The total income or loss shall be computed after making the following adjustments, namely:-

(i) Any arithmetical error in the return; or

(ii) An incorrect claim, if such incorrect claim is apparent from any information in the return;

(b) The tax and interest, if any, shall be computed on the basis of the total income computed under clause (a);

(c) The sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest;

(d) An intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and

(e) The amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is reduced but no tax or interest is payable by, or no refund is due to, him:

Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. Explanation.-For the purposes of this sub-section,-

(a) An incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,-

(i) Of an item, which is inconsistent with another entry of the same or some other item in such return;

(ii) In respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

(iii) In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) The acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).

(1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section.

(1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub-section (1A), the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March, 2009.

(1C) Every notification issued under sub-section (1B), along with the scheme made under sub-section (1A), shall, as soon as may be after the notification is issued, be laid before each House of Parliament;

(b) In sub-section (2), in clause (ii), for the proviso, the following proviso shall be substituted, namely:-

Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.

In section 147 of the Income-tax Act, after the proviso, the following proviso shall be inserted, namely:-

Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.

In section 151 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 October, 1998, namely:- Explanation.-For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.

In section 153 of the Income-tax Act, after sub-section (3),-

(a) The following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2003, namely:-

(4) Notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A and sub-section (1) of section 153B, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later;

(b) In Explanation 1, after the proviso, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2007, namely:-

Provided further that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for making an order of assessment, reassessment or re-computation, as the case may be, shall, after the exclusion of the period under sub-section

(4) of section 245HA, be not less than one year; and where such period of limitation is less than one year, it shall be deemed to have been extended to one year; and for the purposes of determining the period of limitation under sections 149, 153B, 154, 155, 158BE and 231 and for the purposes of payment of interest under section 243 or section 244 or, as the case may be, section 244A, this proviso shall also apply accordingly.

Section 153A of the Income-tax Act shall be renumbered as sub-section (1) thereof and,-

(a) In sub-section (1) as so renumbered, in the second proviso, for the words referred to in this section, the words referred to in this sub-section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2003;

(b) After sub-section (1) as so renumbered and before the Explanation, the following shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2003, namely:-

(2) If any proceeding initiated or any order of assessment or reassessment made under subsection (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner:

Provided that such revival shall cease to have effect, if such order of annulment is set aside.

In section 153B of the Income-tax Act, in sub-section (1), with effect from the 1st day of June, 2003,-

(i) In clause (a), for the word, figures and letter section 153A, the words, brackets, figures and letter sub-section (1) of section 153A shall be substituted and shall be deemed to have been substituted;

(ii) In the Explanation,-

(A) After clause (vi) and before the words shall be excluded, the following clause shall be inserted and shall be deemed to have been inserted, namely:-

(vii) The period commencing from the date of annulment of a proceeding or order of assessment or reassessment referred to in sub-section (2) of section 153A till the date of the receipt of the order setting aside the order of such annulment, by the Commissioner,;

(B) In the proviso, for the words, brackets and letters clause (a) or clause (b) of this section, the words, brackets and letters clause (a) or clause (b) of this sub-section shall be substituted and shall be deemed to have been substituted.

In section 153C of the Income-tax Act, in sub-section (1), in the proviso, for the word, figures and letter section 153A, the words, brackets, figures and letter sub-section (1) of section 153A shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2003.

In section 153D of the Income-tax Act, for the word, figures and letter section 153A, the words, brackets, figures and letter sub-section (1) of section 153A shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2003.

In section 156 of the Income-tax Act, the following proviso shall be inserted, namely:-

Provided that where any sum is determined to be payable by the assessee under sub-section (1) of section 143, the intimation under that sub-section shall be deemed to be a notice of demand for the purposes of this section.

In section 191 of the Income-tax Act, for the Explanation, the following Explanation shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2003, namely:-

Explanation.-For the removal of doubts, it is hereby declared that if any person, including the principal officer of a company,-

(a) Who is required to deduct any sum in accordance with the provisions of this Act; or

(b) Referred to in sub-section (1A) of section 192, being an employer, does not deduct, or after so deducting fails to pay, or does not pay, the whole or any part of the tax, as required by or under this Act, and where the assessee has also failed to pay such tax directly, then, such person shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default within the meaning of sub-section (1) of section 201, in respect of such tax.

In section 193 of the Income-tax Act, in the proviso, after clause (viii) and before the Explanation, the following clause shall be inserted with effect from the 1st day of June, 2008, namely:-

(ix) Any interest payable on any security issued by a company, where such security is in dematerialised form and is listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956(42 of 1956) and the rules made thereunder.

In section 194C of the Income-tax Act, in sub-section (1), after clause(K), after the words "Hindu undivided family", the words "or an association of persons of a body of individuals, whether incorporated or not, other than those falling under any of the proceeding clauses" shall be inserted with effect from the 1st day of June, 2008.

In section 195 of the Income-tax Act, after sub-section (5), the following sub-section shall be inserted, namely:-

(6) The person referred to in sub-section (1) shall furnish the information relating to payment of any sum in such form and manner as may be prescribed by the Board.

For section 199 of the Income-tax Act, the following section shall be substituted, namely:-

199.Credit for tax deducted.-

(1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be.

(2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.

(3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.