Taxation Laws (Amendment) Act, 2003

In section 10 of the Income-tax Act, 1961 (43 of 1961) (hereafter in this Chapter referred to as the Income-tax Act), in clause (15),-

(A) After sub-clause (iiia), the following sub-clause shall be inserted

and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:-

(iiib) Interest payable to the Nordic Investment Bank, being a mul -tilateral financial institution constituted by the Governments of Den -mark, Finland, Iceland, Norway and Sweden, on a loan advanced by it to a project approved by the Central Government in terms of the Memorandum of Understanding entered into by the Central Government with that Bank on the 25th day of November, 1986;

(B) In sub-clause (iv),-

(a) In item (c), the existing Explanation shall be numbered as

Explanation 1:- thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:-

Explanation 2:-For the removal of doubts, it is hereby declared that the us ance interest payable outside India by an undertaking eng -aged in the business of ship-breaking in respect of purchase of a ship from outside India shall be deemed to be the interest payable on a debt incurred in a foreign country in respect of the purchase outside India;";

(b) In the Explanation 1 occurring below item (i), after clause (d), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1991, namely:-

(da) The business of ship-breaking; or".

After section 10B of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2004, namely:-

10BA. Special provisions in respect of export of certain articles or things.-

(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export out of India of eligible articles or things, shall be allowed from the total income of the assessee:

Provided that where in computing the total income of the under -taking for any assessment year, deduction under section 10A or section 10B has been claimed, the undertaking shall not be entitled to the deduction under this section:

Provided further that no deduction under this section shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2010 and subsequent years.

(2) This section applies to any undertaking which fulfills the follo -wing conditions, namely:-

(a) It manufactures or produces the eligible articles or things with out the use of imported raw materials;

(b) 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 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 circum -stances and within the period specified in that section;

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

Explanation.-The provisions of Explanation 1 and Explanation 2 to subsection (2) of section 80-I shall apply for the purposes of this clause as they apply for the purposes of clause (ii) of sub-section (2) of that section;

(d) Ninety per cent. or more of its sales during the previous year relevant to the assessment year are by way of exports of the eligible articles or things;

(e) It employs twenty or more workers during the previous year in the process of manufacture or production.

(3) This section applies to the undertaking, if the sale proceeds of the eligible articles or things exported out of India are received in or brought into, India by the assessee in convertible foreign ex change, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf.

Explanation.-For the purposes of this sub-section, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.

(4) For the purposes of sub-section (1), the profits derived from export out of India of the eligible articles or things shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things bears to the total turnover of the business carried on by the undertaking.

(5) The deduction under sub-section (1) shall not be admissible, unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.

(6) Notwithstanding anything contained in any other provision of this Act, where a deduction is allowed under this section in computing the total income of the assessee, no deduction shall be allowed under any other section in respect of its export profits.

(7) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the undertaking referred to in section 80-IA.

Explanation.-For the purposes of this section,-

(a) "Convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999), and any rules made there under or any other corresponding law for the time being in force;

(b) "Eligible articles or things" means all hand-made articles or things, which are of artistic value and which requires the use of wood as the main raw material;

(c) "Export turnover" means the consideration in respect of export by the undertaking of eligible articles or things received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India;

(d) "Export out of India shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance of any customs station as defined in the Customs Act, 1962 (52 of 1962)..

In section 115P of the Income-tax Act, for the words "one and one-fourth per cent.", the words "one per cent." shall be substitu -ted.

In section 115S of the Income-tax Act, for the words "one and one-fourth per cent.", the words "one percent." shall be substituted.

In section 132B of the Income-tax Act, in sub-section (4), in clause (a), for the words "eight per cent.", the words "six per cent." shall be substituted.

In section 158BFA of the Income-tax Act, in sub-section (1), for the words "one and one-fourth per cent.",the words "one per cent." shall be substituted.

In section 201 of the Income-tax Act, in sub-section (1A), for the words "fifteen per cent.", the words "twelve per cent." shall be substituted.

In section 206C of the Income-tax Act,-

(a) In sub-section (1),-

(i) For the Table, the following Table shall be substituted, namely:-

"TABLE Sl. No. Nature of goods Percentage

(1) (2) (3)

(i) Alcoholic liquor for human consumption One per cent.

(ii) Tendu leaves Five per cent.

(iii) Timber obtained under a forest lease Two and one-half per cent.

(iv) Timber obtained by any mode other than Two and one-half per cent. under a forest lease

(v) Any other forest produce not being timber Two and one-half per cent. or tendu leaves

(vi) Scrap One per cent. : ";

(ii) For the proviso below the Table, the following proviso shall be substituted, namely:-

Provided that every person, being a seller shall at the time, during the period beginning on the 1st day of June, 2003 and ending on the day immediately preceding the date on which the Taxation Laws (Amendment) Act, 2003 comes into force, of debiting of the amount payable by the buyer to the account of the buyer or of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table as it stood immediately before the 1st day of June, 2003, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax in accordance with the provisions of this section as they stood immediately before the 1st day of June, 2003.";

(b) After sub-section (1), the following sub-sections shall be inser -ted, namely:-

(1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescri -bed form and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes.

(1B) The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Chief Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him.";

(c) In sub-section (3), for the words "seven days", the words "the prescribed time" shall be substituted;

(d) In sub-section (5), for the words "ten days from the date of debit", the words "such period as may be prescribed from the time of debit" shall be substituted;

(e) In sub-section (7), for the words "one and one-fourth per cent.", the words "one per cent." shall be substituted;

(f) In the Explanation occurring at the end, in clause (a), for sub clauses (i) and (ii), the following sub-clauses shall be substituted, namely:-

"(i) A public sector company, the Central Government, a State Government, and an embassy, a high commission, legation, commission, consulate and the trade representation, of a foreign State and a club; or

(ii) A buyer in the retail sale of such goods purchased by him for personal consumption;".

In section 220 of the Income-tax Act, in sub-section (2), for the words "one and one-fourth per cent.", the words "one per cent." shall be substituted.

In section 230 of the Income-tax Act, in sub-section (2), after the word, brackets and figure "sub-section (1)",the words, brackets, figure and letter "or the first proviso to sub-section (1A)" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2003.

In section 234A of the Income-tax Act, in sub-sections (1) and (3), for the words "one and one-fourth per cent.", the words "one per cent." shall be substituted.

In section 234B of the Income-tax Act, in sub-sections (1) and (3), for the words "one and one-fourth per cent.", the words "one per cent." shall be substituted.

In section 234C of the Income-tax Act, in sub-section (1),-

(i) In clause (a), in sub-clauses (i) and (ii), for the words "one and one-fourth per cent.", the words "one per cent." shall be substituted;

(ii) In clause (b), in sub-clauses (i) and (ii), for the words "one and one-fourth per cent.", the words "one per cent." shall be substitu -ted.

In section 234D of the Income-tax Act, in sub-section (1), for the words "two-third per cent.", the words "one-half per cent." shall be substituted.

In section 244A of the Income-tax Act,

in sub-section (1), in clauses (a) and (b), for the words "two-third per cent.", the words "one-half per cent." shall be substituted.

In section 272A of the Income-tax Act,in sub-section (2), after clause (i), the following clause shall be inserted, namely:-

"(j) To deliver or cause to be delivered in due time a copy of the declaration referred to in sub-section (1A) of section 206C,".

In the Second Schedule to the Income tax Act, in rule 68A, in sub-rule (3), for the words "eight per cent.", the words "six per cent."shall be substituted.