Exemption under section 54, when cannot be denied

THE FINANCE (NO.2) BILL, 2009

Amendments Incorporated at the Time of Passing of Finance (No. 2) Bill, 2009 by Lok Sabha on 27-7-2009

The Lok Sabha passed the Finance (No. 2) Bill, 2009 on 27-7-2009. We are presenting below the amendments incorporated at the time of passing of Finance (No. 2) Bill, 2009 by Lok Sabha alongwith the corresponding provisions of the original Bill for the sake of comparison and proper comprehension.

1. Amendment of clause (24) of section 2

(i) Original clause 3(d) of the Finance (No. 2) Bill, 2009

In section 2 of the Income Tax Act,"

(d) in clause (24), in sub-clause (iia), after the word and figures "section 10", the words "or by an electoral trust" shall be inserted with effect from the 1st day of April, 2010;

(ii) New clause 3(d)

In section 2 of the Income Tax Act,"

(d) in clause (24),"

(i) in sub-clause (iia), after the word and figures "section 10", the words "or by an electoral trust" shall be inserted with effect from the 1st day of April, 2010;

(ii) after sub-clause (xiv), the following sub-clause shall be inserted with effect from the 1st day of October, 2009, namely:"

"(xv) any sum of money or value of property referred to in clause (vii) of sub-section 2 of section 56;"

(iii) Amended section 2(24)(iia)

(24) "income" includes"

(iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub clause (v) or by any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or sub clause (via) of clause (23C) of section 10 or by an electoral trust.

Explanation."For the purposes of this sub-clause, "trust" includes any other legal obligation .

2. Amendment of section 17

(i) Original clause 9 of the Finance (No. 2) Bill, 2009

In section 17 of the Income Tax Act, in clause (2), for sub-clause (vi), the following sub-clauses shall be substituted with effect from the 1st day of April, 2010, namely:

"(vi) the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee.

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

(a) "specified security" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees" stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;

(b) "sweat equity shares" means equity shares issued by a company 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;

(c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares;

(d) "fair market value" means the value determined in accordance with the method as may be prescribed;

(e) "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;

(vii) the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees;

(viii) the value of any other fringe benefit or amenity as may be prescribed:"

(ii) New clause 9

In section 17 of the Income Tax Act, in clause (2), with effect from the 1st day of April, 2010,"

(a) in sub-clause (v), for the words "annuity; and", the word "annuity;" shall be substituted;

(b) for sub-clause (vi), the following sub-clauses shall be substituted, namely:"

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

(d) "fair market value" means the value determined in accordance with the method as may be prescribed;

(e) "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;

(vii) the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and

(viii) the value of any other fringe benefit or amenity as may be prescribed:"

3. Insertion of new section 35AD

(i) Original clause 13 of the Finance (No. 2) Bill, 2009

After section 35AC of the Income Tax Act, the following section shall be inserted with effect from the 1st day of April, 2010, namely:

"35AD. Deduction in respect of expenditure on specified business"(1) An assessee shall be allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the previous year in which such expenditure is incurred by him.

(2) This section applies to the specified business which fulfils all the following conditions, namely:

(i) it is not set up by splitting up, or the reconstruction, of a business already in existence;

(ii) it is not set up by the transfer to the specified business of machinery or plant previously used for any purpose;

(iii) where the business is of the nature referred to in sub-clause (iii) of clause (c) of sub-section (8), such business,"

(a) is owned by a company formed and registered in India under the Companies Act, 1956 (1 of 1956) 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) 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 in this behalf;

(c) has made not less than one-third of its total pipeline capacity available for use on common carrier basis by any person other than the assessee or an associated person; and

(d) fulfils any other condition as may be prescribed.

(3) The assessee shall not be allowed any deduction in respect of the specified business under the provisions of Chapter VIA under the heading "C."Deductions in respect of certain incomes".

(4) No deduction in respect of the expenditure referred to in sub-section (1) shall be allowed to the assessee under any other section in any previous year or under this section in any other previous year.

(5) The provisions of this section shall apply to the specified business referred to in sub-section (2) if it commences its operations,"

(a) on or after the 1st day of April, 2007, where the specified business is in the nature of laying and operating a cross-country natural gas pipeline network for distribution, including storage facilities being an integral part of such network; and

(b) on or after the 1st day of April, 2009, in all other cases not falling under clause (a).

(6) The assessee carrying on the business of the nature referred to in clause (a) of sub-section (5) shall be allowed, in addition to deduction under sub-section (1), a further deduction in the previous year relevant to the assessment year beginning on the 1st day of April, 2010, of an amount in respect of expenditure of capital nature incurred during any earlier previous year, if"

(a) the business referred to in clause (a) of sub-section (5) has commenced its operation at any time during the period beginning on or after the 1st day of April, 2007 and ending on the 31^st day of March, 2009; and

(b) no deduction for such amount has been allowed or is allowable to the assessee in any earlier previous year.

(7) The provisions contained in sub-section (6) of section 80A and the provisions of sub-sections (7) and (10) of section 80-IA shall, so far as may be, apply to this section in respect of goods or services or assets held for the purposes of the specified business.

(8) For the purposes of this section,"

(a) 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 capital of 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;

(b) "cold chain facility" means a chain of facilities for storage or transportation of agricultural and forest produce, meat and meat products, poultry, marine and dairy products, products of horticulture, floriculture and apiculture and processed food items under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce;

(i) setting up and operating a cold chain facility;

(ii) setting up and operating a warehousing facility for storage of agricultural produce;

(iii) laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.

(d) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if"

(i) such machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India;

(ii) such machinery or plant is imported into India from any country outside India; and

(iii) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee;

(e) where in the case of a specified business, any machinery or plant or any part thereof previously used for any purpose is transferred to the specified business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in such business, then, for the purposes of clause (ii) of sub-section (2), the condition specified therein shall be deemed to have been complied with;

(f) any expenditure of capital nature shall not include any expenditure incurred on the acquisition of any land or goodwill or financial instrument."

(ii) Amended clause 13

After section 35AC of the Income Tax Act, the following section shall be inserted with effect from the 1st day of April, 2010, namely:

Provided that the expenditure incurred, wholly and exclusively, for the purposes of any specified business, shall be allowed as deduction during the previous year in which he commences operations of his specified business, if"

(a) the expenditure is incurred prior to the commencement of its operations; and

(b) the amount is capitalised in the books of account of the assessee on the date of commencement of its operations.

(2) This section applies to the specified business which fulfils all the following conditions, namely:

(i) it is not set up by splitting up, or the reconstruction, of a business already in existence;

(ii) it is not set up by the transfer to the specified business of machinery or plant previously used for any purpose;

(iii) where the business is of the nature referred to in sub-clause (iii) of clause (c) of sub-section (8), such business,"

(c) has made not less than one-third of its total pipeline capacity available for use on common carrier basis by any person other than the assessee or an associated person; and

(d) fulfils any other condition as may be prescribed.

(3) The assessee shall not be allowed any deduction in respect of the specified business under the provisions of Chapter VIA under the heading "C."Deductions in respect of certain incomes".

(5) The provisions of this section shall apply to the specified business referred to in sub-section (2) if it commences its operations,"

(b) on or after the 1st day of April, 2009, in all other cases not falling under clause (a).

(b) no deduction for such amount has been allowed or is allowable to the assessee in any earlier previous year.

(8) For the purposes of this section,"

(a) 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 capital of 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;

(i) setting up and operating a cold chain facility;

(ii) setting up and operating a warehousing facility for storage of agricultural produce;

(iii) laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.

(d) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if"

(i) such machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India;

(ii) such machinery or plant is imported into India from any country outside India; and

(f) any expenditure of capital nature shall not include any expenditure incurred on the acquisition of any land or goodwill or financial instrument."

4. Amendment of section 49

(i) Original clause 23 of the Finance (No. 2) Bill, 2009

In section 49 of the Income Tax Act, for sub-section (2AA), the following sub-section shall be substituted with effect from the 1st day of April, 2010, namely:

"(2AA) Where the capital gain arises from the transfer of specified security or sweat equity shares referred to in sub-clause (vi) of clause (2) of section 17, the cost of acquisition of such security or shares shall be the fair market value which has been taken into account for the purposes of the said sub-clause."

(ii) New clause 23

In section 49 of the Income Tax Act,"

(a) for sub-section (2AA) the following sub-section shall be substituted with effect from the 1st day of April, 2010, namely:"

(b) after sub-section (3), the following sub-section shall be inserted with effect from the 1st day of October, 2009, namely:"

"(4) Where the capital gain arises from the transfer of a property, the value of which has been subject to income-tax under clause (vii) of sub-section (2) of section 56, the cost of acquisition of such property shall be deemed to be the value which has been taken into account for the purposes of the said clause (vii)."

5. Amendment of Explanation 2 to section 50B

(i) Original clause 24 of the Finance (No. 2) Bill, 2009

In section 50B of the Income Tax Act, in Explanation 2, for clause (b), the following clauses shall be substituted with effect from the 1st day of April, 2010, namely:

"(b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and

(ii) Amended clause 24

In section 50B of the Income Tax Act, in Explanation 2 with effect from the 1st day of April, 2010,"

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

(ii) for clause (b), the following clauses shall be substituted, namely:"

"(b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and

(iii) Amended Explanation 2 to section 50B

Explanation 2."For computing the net worth, the aggregate value of total assets shall be,"

(a) in the case of depreciable assets, the written down value of the block of assets determined in accordance with the provisions contained in sub-item (C) of item (i) of sub-clause (c) of clause (6) of section 43;

(b) in the case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD, nil; and

(c) in the case of other assets, the book value of such assets.

6. Amendment of sub-section (2) section 56

(i) Original clause 26 of the Finance (No. 2) Bill, 2009

In section 56 of the Income Tax Act, in sub-section (2),"

(a) with effect from the 1st day of October, 2009,"

(i) in clause (vi), after the words, figures and letters "on or after the 1st day of April, 2006", the words, figures and letters "but before the 1st day of October, 2009" shall be inserted;

(ii) after clause (vi), the following clause shall be inserted, namely:"

"(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,"

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,"

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration;

(i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:

Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under that section:

Provided further that this clause shall not apply to any sum of money or any property received"

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(d) in contemplation of death of the payer or donor, as the case may be; or

(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.

Explanation."For the purposes of this clause,"

(a) "assessable" shall have the meaning assigned to it in the Explanation 2 to sub" section (2) of section 50C;

(b) "fair market value" of a property, other than an immovable property, means the 10 value determined in accordance with the method as may be prescribed;

(d) "property" means"

(i) immovable property being land or building or both;

(ii) shares and securities;

(iii) jewellery;

(iv) archaeological collections;

(v) drawings;

(vi) paintings;

(vii) sculptures; or

(viii) any work of art;

(e) "relative" shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;

(f) "stamp duty value" means the value adopted or assessed or assessable by any 25 authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property;

(b) after clause (vii) as so inserted, the following clause shall be inserted with effect from the 1st day of April, 2010, namely:"

"(viii) income by way of interest received on compensation or on enhanced compensation referred to in sub-section (2) of section 145A.".

(ii) Amended clause 26

In section 56 of the Income Tax Act, in sub-section (2),"

(a) with effect from the 1st day of October, 2009,"

(i) in clause (vi), after the words, figures and letters "on or after the 1st day of April, 2006", the words, figures and letters "but before the 1st day of October, 2009" shall be inserted;

(ii) after clause (vi), the following clause shall be inserted, namely:"

"(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,"

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,"

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration;

(i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

Provided further that this clause shall not apply to any sum of money or any property received"

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(d) in contemplation of death of the payer or donor, as the case may be; or

(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.

Explanation."For the purposes of this clause,"

(a) "assessable" shall have the meaning assigned to it in the Explanation 2 to sub" section (2) of section 50C;

(b) "fair market value" of a property, other than an immovable property, means the 10 value determined in accordance with the method as may be prescribed;

(d) "property" means"

(i) immovable property being land or building or both; 15 (ii) shares and securities;

(iii) jewellery;

(iv) archaeological collections;

(v) drawings;

(vi) paintings;

(vii) sculptures; or

(viii) any work of art;

(e) "relative" shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;

(f) "stamp duty value" means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property;

(b) after clause (vii) as so inserted, the following clause shall be inserted with effect from the 1st day of April, 2010, namely:"

"(viii) income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A."

7. Amendment of sub-section (1) of section 80CCD

(i) Original Clause 30(a) of the Finance (No. 2) Bill, 2009

In section 80CCD of the Income Tax Act,"

(a) in sub-section (1), in the opening portion, after the words, figures and letters "Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004,", the words "or any other assessee, being an individual" shall be inserted;

(ii) Amended clause 30(a)

In section 80CCD of the Income Tax Act,"

(a) in sub-section (1),"

(i) in the opening portion, after the words, figures and letters "Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004,", the words "or any other assessee, being an individual" shall be inserted;

(ii) for the words "as does not exceed ten per cent, of his salary in the previous year", the following words shall be substituted, namely:"

"as does not exceed,"

(a) in the case of an employee, ten per cent of his salary in the previous year; and

(b) in any other case, ten per cent of his gross total income in the previous year".

(iii) Amended sub-section (1) of section 80CCD

(1) Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004, or any other assessee, being an individual has in the previous year paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Government, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed,"

(a) in the case of an employee, ten per cent of his salary in the previous year; and

(b) in any other case, ten per cent of his gross total income in the previous year.

8. Amendment of sub-section (3) of section 80E

(i) Original Clause 32 of the Finance (No. 2) Bill, 2009

In section 80E of the Income Tax Act, in sub-section (3), for clause (c), the following clause shall be substituted with effect from the 1st day of April, 2010, namely:"

"(c) "higher education" means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;".

(ii) Amended clause 32

In section 80E of the Income Tax Act, in sub-section (3), with effect from the 1st day of April, 2010,"

(i) for clause (c), the following clause shall be substituted, namely:"

(ii) for clause (e), the following clause shall be substituted, namely:"

(e) "relative", in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.

9. Amendment of section 80-IA

(i) Original Clause 36(a)/(b)/(c) of the Finance (No. 2) Bill, 2009

In section 80-IA of the Income Tax Act,"

(a) in sub-section (1), the words "or lays and begins to operate a cross-country natural gas distribution network" shall be omitted with effect from the 1st day of April, 2010;

(b) in sub-section (3), the words, brackets and letters "or clause (vi)" shall be omitted with effect from the 1st day of April, 2010;

(A) in clause (iv), for the words, figures and letters "the 31st day of March, 2010" wherever they occur, the words, figures and letters "31st day of March, 2011" shall respectively be substituted;

(B) in clause (v), in sub-clause (b), for the figures, letters and words "31st day of March, 2008", the figures, letters and words "31st day of March, 2011" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2008;

(ii) Amended clause 36(a)/(b)/(c)

In section 80-IA of the Income Tax Act,"

(a) in sub-section (2), the words "or lays and begins to operate a cross-country natural gas distribution network" shall be omitted with effect from the 1st day of April, 2010;

(b) in sub-section (3), the words, brackets and letters "or clause (vi)" shall be omitted with effect from the 1st day of April, 2010;

(c) in sub-section (4),"

(A) in clause (iii), in the second proviso, for the words, figures and letters "the 31st day of March, 2009", the words, figures and letters "the 31st day of March, 2011" shall be substituted.

(B) in clause (iv), for the words, figures and letters "the 31st day of March, 2010" wherever they occur, the words, figures and letters "31st day of March, 2011" shall respectively be substituted;

(C) in clause (v), in sub-clause (b), for the figures, letters and words "31st day of March, 2008", the figures, letters and words "31st day of March, 2011" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2008;

(D) Clause (vi) shall be omitted with effect from the 1st day of April, 2010;

(iii) Amended section 80-IA(4) [Relevant portion only]

(4) This section applies to"

(iii) any undertaking which develops, develops and operates or maintains and operates an industrial park or special economic zone notified by the Central Government in accordance with the scheme framed and notified by that Government for the period beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2006 :

Provided that in a case where an undertaking develops an industrial park on or after the 1st day of April, 1999 or a special economic zone on or after the 1st day of April, 2001 and transfers the operation and maintenance of such industrial park or such special economic zone, as the case may be, to another undertaking (hereafter in this section referred to as the transferee undertaking), the deduction under sub‑section (1) shall be allowed to such transferee undertaking for the remaining period in the ten consecutive assessment years as if the operation and maintenance were not so transferred to the transferee undertaking;

Provided further that in the case of any undertaking which develops, develops and operates or maintains and operates an industrial park, the provisions of this clause shall have effect as if for the figures, letters and words "31st day of March, 2006", the figures, letters and words "31st day of March, 2011" had been substituted;

(iv) an undertaking which,"

(a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on 31st day of March, 2011;

(b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on 31st day of March, 2011:

Provided that the deduction under this section to an undertaking under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution;

(c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on 31st day of March, 2011.

Explanation."For the purposes of this sub-clause, "substantial renovation and modernisation" means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004;

(v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if"

(a) such Indian company is formed before the 30th day of November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified before the 31st day of December, 2005 by the Central Government for the purposes of this clause;

(b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 2011;

10. Amendment of sub-section (9) of section 80-IB

(i) Original Clause 37(a)/(b) of the Finance (No. 2) Bill, 2009

In section 80-IB of the Income Tax Act,"

(a) for sub-section (9), the following sub-section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2000, namely:

"(9) The amount of deduction to an undertaking shall be hundred per cent. of the profits for a period of seven consecutive assessment years, including the initial assessment year, if such undertaking fulfils any of the following, namely:

(i) is located in North-Eastern Region and has begun or begins commercial production of mineral oil before the 1st day of April, 1997;

(ii) is located in any part of India and has begun or begins commercial production of mineral oil on or after the 1st day of April, 1997;

(iii) is engaged in refining of mineral oil and begins such refining on or after the 1st day of October, 1998.

Explanation."For the purposes of claiming deduction under this sub-section, all blocks licensed under a single contract, which has been awarded under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated 40 10th February, 1999 or has been awarded in pursuance of any law for the time being in force or has been awarded by Central or a State Government in any other manner, shall be treated as a single "undertaking".

(b) in sub-section (9), as so substituted,"

(A) in clause (iii), after the words, figures and letters "the 1st day of October, 1998", the words, figures and letters "but not later than the 31st day of March, 2012" shall be inserted;

(B) after clause (iii), the following clause shall be inserted with effect from the 1st day of April, 2010, namely:

"(iv) is engaged in commercial production of natural gas in blocks licensed under the VIII Round of bidding for award of exploration contracts (hereafter referred to as "NELP-VIII") under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated 10th February, 1999 and begins commercial production of natural gas on or after the 1st day of April, 2009."

(ii) Amended clause 37(a)/(b)

In section 80-IB of the Income Tax Act,"

(a) for sub-section (9), the following sub-section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2000, namely:

(i) is located in North-Eastern Region and has begun or begins commercial production of mineral oil before the 1st day of April, 1997;

(ii) is located in any part of India and has begun or begins commercial production of mineral oil on or after the 1st day of April, 1997;

(iii) is engaged in refining of mineral oil and begins such refining on or after the 1st day of October, 1998.

(b) in sub-section (9), as so substituted,"

(A) in clause (iii), after the words, figures and letters "the 1st day of October, 1998", the words, figures and letters "but not later than the 31st day of March, 2012" shall be inserted;

(B) after clause (iii), the following clauses shall be inserted with effect from the 1st day of April, 2010, namely:

"(iv) is engaged in commercial production of natural gas in blocks licensed under the VIII Round of bidding for award of exploration contracts (hereafter referred to as "NELP-VIII") under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated 10th February, 1999 and begins commercial production of natural gas on or after the 1st day of April, 2009."

(v) is engaged in commercial production of natural gas in blocks licensed under the IV Round of bidding for award of exploration contracts for Coal Bed Methane blocks and begins commercial production of natural gas on or after the 1st day of April, 2009;

(iii) New section 80-IB(9) [Effective from assessment year 2000-01]

(9) The amount of deduction to an undertaking shall be hundred per cent of the profits for a period of seven consecutive assessment years, including the initial assessment year, if such undertaking fulfils any of the following, namely:

(i) is located in North-Eastern Region and has begun or begins commercial production of mineral oil before the 1st day of April, 1997;

(ii) is located in any part of India and has begun or begins commercial production of mineral oil on or after the 1st day of April, 1997;

(iii) is engaged in refining of mineral oil and begins such refining on or after the 1st day of October, 1998 [but not later than the 31^st day of March 2012];

[(iv) is engaged in commercial production of natural gas in blocks licensed under the VIII Round of bidding for award of exploration contracts (hereafter referred to as "NELP-VIII") under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated 10th February, 1999 and begins commercial production of natural gas on or after the 1st day of April, 2009];

[(v) is engaged in commercial production of natural gas in blocks licensed under the IV Round of bidding for award of exploration contracts for Coal Bed Methane blocks and begins commercial production of natural gas on or after the 1st day of April, 2009];

[Explanation."For the purposes of claiming deduction under this sub-section, all blocks licensed under a single contract, which has been awarded under the New Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95-ONG.DO.VL, dated 10-2-1999 or has been awarded in pursuance of any law for the time being in force or has been awarded by Central or a State Government in any other manner, shall be treated as a single "undertaking"].

11. Amendment of sub-section (10) of section 80-IB

(i) Original Clause 37(c) of the Finance (No. 2) Bill, 2009

In section 80-IB of the Income Tax Act,"

(i) after clause (d), the following clauses shall be inserted with effect from the 1st day of April, 2010, namely:

"(e) not more than one residential unit in the housing project is allotted to any person not being an individual; and

(f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:"

(i) the spouse or the minor children of such individual,

(ii) the Hindu undivided family in which such individual is the karta,

(iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta;"

(ii) the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:"

"Explanation."For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government)."

(i) Amended clause 37(c)

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

"(c) in sub-section (10),"

(i) in the opening portion, for the figures, letters and words "31st day of March, 2007", the figures, letters and words " 31st day of March, 2008" shall be substituted;

(ii) in clause (c), for the words "any other place; and", the words "any other place;" shall be substituted with effect from the 1st day of April, 2010;

(iii) after clause (d), the following clauses shall be inserted with effect from the 1st day of April, 2010, namely:""

"(e) not more than one residential unit in the housing project is allotted to any person not being an individual; and

(i) the individual or the spouse or the minor children of such individual,

(ii) the Hindu undivided family in which such individual is the karta,

(iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta;"

(iv) the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:

(iii) Amended sub-section (10) of 80-IB

(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,"

(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,"

(i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008;

(ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, within four years from the end of the financial year in which the housing project is approved by the local authority.

Explanation."For the purposes of this clause,"

(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;

(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;

(b) the project is on the size of a plot of land which has a minimum area of one acre:

Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf;

(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place;

(d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less;

(e) not more than one residential unit in the housing project is allotted to any person not being an individual; and

(i) the individual or the spouse or the minor children of such individual,

(ii) the Hindu undivided family in which such individual is the karta,

(iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta;

Explanation."For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government).

12. Amendment of sub-section (11A) of section 80-IB

(i) New clause 37(d)

In section 80-IB of the Income Tax Act,"

(d) in sub-section (11A), with effect from the 1st day of April, 2010,"

(i) after the words "vegetables or", the following words shall be inserted, namely:"

"meat and meat products or poultry or marine or dairy products or"."

(ii) the following proviso shall be inserted, namely:"

"Provided that the provisions of this section shall not apply to an undertaking engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products if it begins to operate such business"before the 1st day of April, 2009."

(ii) Amended sub-section (11A) of section 80-IB

(11A) The amount of deduction in a case of an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy products or from the integrated business of handling, storage and transportation of foodgrains, shall be hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the operation of such business in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001.

Provided that the provisions of this section shall not apply to an undertaking engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products if it begins to operate such business"before the 1st day of April, 2009.

13. Amendment of sub-section (1) of section 80U

(i) New Clause 37A

Amendment of section 80U."In section 80U of the Income Tax Act, in sub-section (1), after the proviso, the following proviso shall be inserted with effect from the 1st day of April, 2010, namely:

"Provided further that for the assessment years beginning on or after the 1st day of April, 2010, the provisions of the first proviso shall have effect as if for the words "seventy-five thousand rupees", the words "one lakh rupees" had been substituted."

(ii) Amended sub-section (1) of section 80U

(1) In computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees :

Provided that where such individual is a person with severe disability, the provisions of this sub"-section shall have effect as if for the words "fifty thousand rupees", the words "seventy‑five thousand rupees" had been substituted.

Provided further that for the assessment years beginning on or after the 1st day of April, 2010, the provisions of the first proviso shall have effect as if for the words "seventy-five thousand rupees", the words "one lakh rupees" had been substituted.

14. Amendment of sub-section (1) of section 115BBC

(i) Original clause 42 of the Finance (No. 2) Bill, 2009

In section 115BBC of the Income Tax Act, in sub-section (1), with effect from the 1st day of April, 2010,"

(a) for clause (i), the following clause shall be substituted, namely:

"(i) the amount of income-tax calculated at the rate of thirty per cent of the aggregate of anonymous donation, as exceeds five per cent of the total income of the assessee or an amount of rupees one lakh, whichever is higher; and";

(b) for clause (ii), the following clause shall be substituted, namely:

"(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income subject to tax under clause (i)."

(ii) Amended clause 42

In section 115BBC of the Income Tax Act, in sub-section (1), with effect from the 1st day of April, 2010,"

(a) for clause (i), the following clause shall be substituted, namely:

(i) the amount of income-tax calculated at the rate of thirty per cent, on the aggregate of anonymous donations received in excess of the higher of the following, namely:"

(A) five per cent, of the total donations received by the assessee; or

(B) one lakh, rupees; and";

(b) for clause (ii), the following clause shall be substituted, namely:"

"(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received."

(iii) Amended sub-section (1) of section 115BBC

(1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of"

(i) the amount of income-tax calculated at the rate of thirty per cent, on the aggregate of anonymous donations received in excess of the higher of the following, namely:"

(A) five per cent, of the total donations received by the assessee; or

(B) one lakh, rupees; and

(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received.

15. Amendment of sub-section (1) of section 246A

(i) Original clause 71 of the Finance (No. 2) Bill, 2009

In section 246A of the Income Tax Act, in sub-section (1), in clause (a), for the words brackets and figures "under sub-section (3) of section 143", the words, brackets and figures "under sub-section (3) of section 143 except an order passed in pursuance of directions of Dispute Resolution Panel" shall be substituted with effect from the 1st day of October, 2009.

(ii) New clause 71

In section 246A of the Income Tax Act, in sub-section (1), with effect from the 1st day of October, 2009,"

(i) in clause (a), for the words, brackets and figures "under sub-section (3) of section 143", the words, brackets and figures "under sub-section (3) of section 143 except an order passed in pursuance of directions of the Dispute Resolution Panel" shall be substituted;

(ii) in clause (b), after the words and figures "under section 147", the words "except an order passed in pursuance of directions of the Dispute Resolution Panel" shall be inserted.

(iii) Amended clause (a) and (b) of sub-section (1) of section 246A

(1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against"

(a) an order passed by a Joint Commissioner under clause (ii) of sub-section (3) of section 115VP or an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation under sub-section (1) or sub-section (1B) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 except an order passed in pursuance of directions of Dispute Resolution Panel or section 144, to the income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;

(b) an order of assessment, re-assessment or re-computation under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel or section 150;

16. Amendment of sub-section (1) of section 253

(i) Original clause 72 of the Finance (No. 2) Bill, 2009

In section 253 of the Income Tax Act, in sub-section (1), after clause (c), the following clause shall be inserted with effect from the 1st day of October, 2009, namely:

"(d) an order passed by an Assessing Officer under sub-section (3) of section 143 in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order.".

(ii) Amended clause 72

In section 253 of the Income Tax Act, in sub-section (1) with effect from the 1 st day of October, 2009,"

(a) in clause (c), for the words, figures and letter "Director under section 272A.", the words, figures and letter "Director under section 272A; or" shall be substituted;

(b) after clause (c), the following clause shall be inserted, namely:""

"(d) an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order.".

(iii) Amended sub-section (1) of section 253

(1) Any assessee aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order"

(a) an order passed by a Deputy Commissioner (Appeals) before the 1st day of October, 1998 or, as the case may be, a Commissioner (Appeals) under section 154,section 250, section 271, section 271A or section 272A; or

(b) an order passed by an assessing officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997; or

(ba) an order passed by an Assessing Officer under sub-section (1) of section 115VZC; or

(c) an order passed by a Commissioner under section 12AA or under clause (vi) of sub-section (5) of section 80G or under section 263 or under section 271 or under section 272A or an order passed by him under section 154 amending his order under section 263 or an order passed by a Chief Commissioner or a Director General or a Director under section 272A; or

(d) an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order.

17. Insertion of new section 293C

(i) Original clause 78 of the Finance (No. 2) Bill, 2009

After section 293B of the Income Tax Act, the following section shall be inserted with effect from the 1st day of October, 2009, namely :

"293C. Power to withdraw approval"Where an income-tax authority, who has been conferred upon the power under any provision of this Act to grant any approval to any assessee, such authority may, notwithstanding that a provision to withdraw such approval has not been specifically provided for in such provision, withdraw such approval at any time :

Provided that the income-tax authority shall, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the assessee concerned, at any time, withdraw the approval after recording the reasons for doing so."

(ii) Amended clause 78

After section 293B of the Income Tax Act, the following section shall be inserted with effect from the 1st day of October, 2009, namely :

"293C. Power to withdraw approval."Where the Central Government or the Board or an income-tax authority, who has been conferred upon the power under any provision of this Act to grant any approval to any assessee, the Central Government or the Board or such authority may, notwithstanding, that a provision to withdraw such approval has not been specifically provided for in such provision, withdraw such approval at any time:

Provided that the Central Government or Board or income-tax authority shall, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the assessee concerned, at any time, withdraw the approval after recording the reasons for doing so." .