 the direct tax laws (secon])-,al,wn~}~, wet arrangement of clauses,too ·~1·  clauses1 short title and commencement  chapter ii amendments to' 'htt fiqe6l<t£;:tax aet, 19612 amendmedtt efilewoh 2,' 3 amendment of section 6 ,,'  4 amendment of section 10 5 insertion of new section 33ac 6 amendment of section 48 7 amendment of section soc 8 amendment of section socc 9 amendment of section sol 10 insertion of new seotion 115bba 11 amendment of section 115d 12 amendment of section 115j 13 amendment of section 139 14 amendment of section 140a ht amendment of section 142 16 amendment of section 14' 17 amendment of section 144 18 amendment of section 149 19 amendment of section 184 20 amendment of section 185 21 amendment of section 186  clausib22 inaertion of new laction 194e 23 amendment of section 195 24 amendment of 'sections 19a to 200 and 202 to 206 26 substitution of new section for section w 28 amendment of section 27s  chapter iii ami:ndments to th& wiw4'il-tax acr, 195727 amendment of section 1sb 28 amendment of section 16 ~ amendment of section 34a 30 amendment of schedule ill  chapter iv amendments to thb gii"1'-tax act, 195831 amendment of section 14b 32 amendment of section 15 33 amendment of section 33a  billfurther to amend the lnoome·t~ act, 1961, the wealtrrt~ act, 1957 and the glft-tax act, 1958 bs it enacted by parliament in the fortieth year of the republic of india as follows:- chapter i prl:liminarys 1 (1) this act may be called the direct tax lawi (second amend-sbon ment) act, 1989 title add commeuce (2) save as otherwise provided in this act, it shall come into fnrce ment on the 1st day of april, 1990  chap1'er ii a:mi:immi:!n's to the 1nc0mll-tax acr, 196110 43 of 1961  z in ection 2 of the income·tax act, 1961 (hereinatter referred to amend- as the income-tax act) ,-ment of aectton 2 (i) for clause (39), the following clause shall be substituted and shall be deemed to have been substituted witb ~ frarn the lit ~  of april, 1989, nllldely:-'(39) "registered firm" means a firm registered under the provisions of clause (a) of sulmlection (1) of section 185 or deemed to be registered under the provisions of sub-section (6) of that section or under those provisions read with sub-section (1) of s section 184j'j (ii) after clause (42b) , the following clause shall be inserted, namely:-'(42c) "security" means a government security as defined in clause (2) of section 2 of the public debt act, 1944j' 10 18 of 1944 amendment of section 6 3 in section 6 of the income-tax act, in clause (1), in sub-clause (c) for the explanation, the following explanation shall be substituted, namely:-'expla1l,4tion-in the case of an individual,-(a) being a citizen of india, who leaves india in any pre- is vious year for the purposes of employment outside india, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words i)~" , ;ffpj;la·p'-ed and eighty-two days" had been substituted; tb' ~ga clttzen of lftdia, t1r a person of !ltdfan ,,"-gin 20 within the meaning of explar-'£iti;on to clause (e) of section u5c, who, being outside india, 6:>~es on a visit to india in any previous year, the provisions of 'sub-clause (c) shall apply in relati(!~ ~9, t~~ ~r a, it jar  tbe ""(oz:~ "spq;y 400i'" ~ therein, the wo~ "one hun<ked ~ fifty days" had been sub- 2s stituted' 4 in section 10 of the income-tax act,-amendment of section 10 (a) for clause (i), the ftqliewias clause shall be: substituted &nd shall be deemed to have been substituted with effect from the lst oay of april, 1989, namelr-30 '0 ~,  tie et'st'  t aa'indmduai; ~ viiiiile ·fit q travel; concession or assistance received by, or due to, _,-,!-, ~), ,fj;gm his emplo~ fqt hi~ apd 4ia f-liw,; in connection with his proceeding ~~~,t~ ~y;,~""iij jpl;ijaj (b) from his emp~o~er or former employer for himself 3s and his family, ill ~~ with his proceeding to any plaf~)~}~di~a af~r ret!r~ment;~r~i?l ~rv}ce or after the, termmauon dt h1s servit!e,;  , ,   ,j"1·,nt;\ibject tb'siibh ~o~dit1ohs us &tay be :p~e~be<f·(ttlt:tu'4in, conditions as to number of journeys and the 'aiylouiw '~htci\· sh~il 40 " ' '" ul ~,·'mlll~tip~ qea~ 4~ving, ~i'¥p ~ ~~, 4""'v~ ,c~ession or ¥bl'-~c~ • ~i}kld ~;tn~ ,~~w~e~ of; ~~ c;:~~ ~~ent: ~eduai use amount exempt under  shall in no case exceed the amount of expenlies actually incun;ad for the purpose of such travel i ~l""""tiof&-i'qf: the purposes of thia dau8e:, "family", in relation to an individual, mean5---1  (i) the spouae and children of the individual; and (fi) the pareatll, brothers and siscer& c!if the individual or any of them, wholly or mainly dependent on the indivitlual;"; (b) in clause (14) to sub-clause (ii), the following proviso shall be addad and shau be deemed to have, beeu added with eileet from t_he 1st day of april, 1989, bamel'y: -'i 15 "provided that nothing in sub-clause (ii) , ihau apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or oompel'l'sate hfm ft1r pet to'tllling duties of a special nature relating to his office or employment u1f}ess such almwance is related to the place of his posting or residence"  $, 4f~ sectwn 33ab of the itu:ome-ta act, fibe- fobowing section 20 abau bl: _~ namely:-t iasertiod of new section 3sac reaerv for shippin" businell 25 '33ac u)· in tqe case of an asssssee, being a pwllic company focmed and registered in inciia with the- maid object oj carrying on the business of operation of ships, there shall, iii accordance with and subject to the provisioil$! of this sectiom, be allowed a dwction of an amount, not exceeding the total income (computed before making any d~n wm_ tjaill section and chapter v'fa), as is debited to the profit and loss account of the previous year in respavt: f1f' which the deduction is to be allowed' and credited to a reserve account to be utilised i'lll the manner laid down in sub-secfion (2): 30 pl'cj\tifilred· that where the aggregate of the amount5 carried to such reserve account from time to time exceeds twice the amount of the paio-up share capital (excluding the amounts capitalised bom ft!'iierves~ of' the assessee, no allowance under this sub-section tlialt be made in' respect of \!uch excess, 35 (2) the amount credited to the reserve account under sub-secm tftm (1)- shall be utilised by the assessee before the e~ qf l j1eriod  'e~elght years next fonowing the previo11s"'year in, whicb'the,:udount was eredited-(a) for acquiring a new ship for the purpea&s-of'~ basiness of' the assessee; and 40 (b) untu the acquisition of a new ship, fj)r the purposes of the business of the assessee other than for distrlbtrttbb by way of dividends or profits or for remittance outsi'de ihdla as profits or_ fqr ula cteatiou- of any auet outside, bkuii, (3) where any amount credited to the reserve account under sub sectioil (1) ,-(a) has been utilised for any purpose other than that relerred to in clause (a) or clause (b) of sub-6ection (2), the amount 80 s utilised; or (b) has not been utilised for the purpose specified in clause (a) of eub-eection (2), the amount not so utilised; or (c) has been utilised for the purpose of acquiring a new ship as specified in clause (a) of sub-section (2), but such ship is sold or otherwise transferred by the assessee to any person at any to time before the expiry of eight years from the end of the previous year in which it was acquired,· the amount so utilised in acquiring the ship, shall be deemed to be the profits,-(i) in a case referred to in clause (a), in the year in which is the am01:ldt was so utilised; or (ti) in a case; referred to in clause (b), in the year immedi· ately following the period of eight years specified in cluse (a) of' sub-section (2); or i : (iii) in a case referred tb in clause (c), in the year in which 20 the sale or transfer took place, and &ball be charged to tax accordingly ez'pja~uon-for the purposes of this section,-(a) "public company" shall have the meaning assigned to it 1 of 1956 in section 3 of the companies act, 1956; 25' (b) "new ship" shall have the same meaning as in clause (ii) of sub-section (2) of section 32ab' 6 ir section 48 of the income-tax act, in sulhection (i), to clause (a), the following proviso and the explanation thereto shall be added, namely:-30 'providea that in the case of an assessee, who is a non-resident indian, capital gains arising from the transfer of a capital asset being shares in an indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration 35 received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in· the purchase of the shares, and the capital gains so computed in such foreign ~ency s~all be reconverted into lnchan currency, so however, that the aforesaid manner of computation of capital gains shall be appli 40 ~ble in respect of capital gains accruing or arising £rom every ramvestment thereafter in p , ale of, shares in an indian company ~on-for the purposes of ,this clause,-(i) "ndn-resident indian" shall have the same me8iling as in clause (e) of section 115c; 5 (ii) "foreign currency" and "indian currency" shall have the meanings respectively assigned to them in seetion 2 of the foreign exchange regulation act, 1973; 46 of 1973 (iii) the conversion of indian currency into foreign currency and the reconversion of foreign currency into indian currency shall be at the rate of exchange prescribed in this 10 bebalf~'  7 in section soc of the incom~ tax act,-(a) in sub-section (2),-(i) in clause (a),-15 (a) in sub-clause (ii) after the words udeferred annuity", the words, brackets, figures and letters ", not being an annuity plan referred to in clause (ii) of aub-seetion (1) of section aocca," shall be inserted; (b) in sub-clause (v),-20 (1) the brackets and words "(hereafter tn thi8 section referred to as the unit-linked insurance plan)" shall be omitted; (2) the word "or" shall be inserted at the end; (c) after sub-clause (v), the following sub-clause shall be inserttld namely:-25 "(vi) as a contribution for participation in any such unit-linked insurance plan of the life insurance corporation mutual fund notified under clause (23d) of section 10, as the central government may, by -notifies· tion in the official gazette, specify in this behalf;"; 30 130l1989 (ii) in clause (h), after sub-clause (ia) [as inserted by the finance act 1989], the following sub·clause shall be :inserted namely:-46~ 1959 3s "(ib) as sub9cription to any such savings certificate  defined in clause (c) of section 2 of the government saving's certificates act, 1959 as the central government may, by notification in thtl official gazette specify in this behalf;"; 40 (iii) in clauses (g) and (h), for the words "union territories of dadra and nagar haveli and gos, daman and diu", wherever they occur, the words "state of goa and the union territories of dadra and nagar haveli and daman and diu" shall be substituted; (iv) after elause (h), the followi!lgclau~ frltitt~ lnserteci and shall be deemed to have been inserted with effect from the 1st day of april, 1984, namely:-"(i) where the assessee is an individual or a hindu undivided family or where the assessee is an association of 5 persons or a body of individuals consisting, ill either case, only of husband and wife governed by the system of community of property in farce in the state of goa and the union territories of dadra and nagar haveli and daman and diu, any sums paid in the previous year by such asses- 10 see out of his or its income chargeable to tax &$ subscription to the national savings certificates (vi issue) and national savings certificates (vii issue) issued under the government savings certificates act, 1959;"; 46 of 1959 (b) in sub-section (5) ,-15 (i) for the words "the unit-linked insuraace plan", the words, brackets, figures and letters "any unit-linked insurance )lea 1edlened to _ sub-dautje 4") or 8ll'b-clause (vi) of clause ~) of aubsec:tion (2)" shall be substitliteci; 00 ff1r the wttrds "pat'tidl'ating in the pie, t!enninates his 20 participation in the plan", the words "pil'rtfietpattng in any such plan, terminates his participation in that plan" shall be substituted; ~) ih 8u:b~ection (6), in e:cplmtation z,· for the words "the  wblt&kai ins1s'8llce plim", the wol'ds, brae1aebt" figures and letters 26-"any unit-linked insurance plan referred to· in' iftlb-clause (v) or subclause (vi) of clause (a) of sub-section (2) 'i shall be substituted    8 i aeati0lm: sgec of the income-tax act in sub-section (3) ,-(i) in clause (a) ,-amendment of aeetion socc (a~ in sud-clause ~iii) tor the word "authority", the words 3e---authority; or" shall be wbstitu4lld; ("l after sub-clause (iii), the following sub-clause shall be inserted; namely:--- (iv) operation of ships;"; (lin' tb clause (b) tt\e touowjng proviso shall be added, 36 111ltnely- "-"provided that this clause shall not apply in the case of an ~  of· equity shares made by a public company formed and l'egii~red in india with the main object of carryina on the busi-  ness of operation of ships;~' ~ 9: in section sol of the income:tax act, in sub-section (1), after claute (a)" the~ following clause shan be inserted and shall be deemed to'bime bean in&artad·withefiect from the 1st day of april, 1964, name1y:-amead mentof section 80l --('ill) interest on national savings certificates (v1' r!sue) and nattcnml savings certificatt!s (vl! issue) issued undl!r' t~ govcm- 46· ment savings certificates act, 1959;" i 46 of 1959 ; ft~ ilbersection 11588 at the incometax act, the fduowbtg aecti~n ,hit be 4 namely··- i ~   ---£-0, i of ~;; sectbl 11 abba "u5bba (1) where the total income ot an asseuee,-5 (4) being a sportsmen (including an athlete), who is not a clttien ot india and is a non-resident, includes any income received or receivable by way of,-tax on aoa resideat spadllllen orspona aasocia tions  (i) participation in india in any game (other than a game  the winnings whereft'otn are taxable under section i15bb) or sport; or (ii) advertisement; or 10 (iii) contribution of articles relating to any game or sport in india in newspapers, magazines or journals; or 15 (b) being a non-resident sports association or institution, includes any amount guaranteed to be paid or payable to such association or institution in relation to any game (other than a game the winninga wherefrom are taxable under section 115bb) or sport played in india, i ' the income-tax payable by the assessee shall be the agregate of-20 (i) the amount of income-tax ealcula~ on inoame refezred to in clause (a) or clause (b) at t~ rate of ten per eat; and (ii) the amount of income-tax with wkich the  e - e would have been chargeable bad the total income of the , de been reduced by the amount of income referred to in clause (a) or e1aur (b) ' 25 (1) it sjwl not be qlecetisary for the assfi9sfie to furliilb uftdcsu~on (i) of section 139 , return of his income ~ (4) his total income in respect of which he is assessable under this act during the previous year consiited only of income referred to in clause (a) or clause (b) of su1heetfon (1); add 30 (b) the tax deductible at source under the provisions of chapter xvll-b has been deducted from such income  a mend-11 in s8c:tion 11150 of the income--tax act, in mb-eection (2)  in claae (4), for the 'fiords, figures and letter ''under chapter vi-a", the wordt,bracltets figures alid letteri "under lnihection fl) of eection 48 or 35 under chapter vi-a" ihall be substituted and shall be deemed to have been 8ubltftuted with effect from the bt day of april, 1_ i , 12 in section l1sj of the income-tax act, in the !,%pio~ amend-(i) in clause (b), after the words, figures and letters flr!l rft!ll :not apedfted in section 8ohhiy', the wo~, brackets, &ruree add letter!5 , '5 1 "or sub~tion (1) of section 33ac" shall be inserted; (ii) after clause (h) the following clause shall~  inserted namely:- "(ita) the amount deemed to be the proftts under sub-seouon (3) of section 33ac;"  amead· medt at sedlou 139 13 in section 139 of the income-tax act, in sub-actton c 1), in tha ezplan4ti«m in clause (b), in 6ub-clause (i), after the words "to be audited", the words "or in the case of a partner of a firm where the account of the firm are required to be so audited" shan be inierted and shall be 5 deemed to have been inserted with effect from the lit day of april, 1989 14 in section 140a of the income-tax act, after aub-section (3), the following eu~~tion shall be inserted and shall be deemed to have been inserted with effect from the lit day of april 1989, namely:-"(4) '!'be provisions of this section u they stood immediately before ~~ amep'~ent by the direct xax laws (amendment) act 10 1987, shall apply to and in relation to any assessment for the asseu-4r of 1988-ment year commencing on the 1st day of april, 1988 or any earlier assessment year and references in this section to the other provisiod8 of th1!1 adt shall be construed as refe'enees to those provisions as for the time being in force and applicable to 1he relevant assessment 15 year" 15 in sectioh 142 of the income-tax act, after sub-section (3), the following sub-sectio!f shall be inserted and shall be deemed to have been inserted with effect from the 1st day of april 1989, namely:-amendment at eeet10n 142, "(4) the provisions of this section as they stood immediately 20 t>efore their· amendment by the direct tax laws  (amendment) act, 1987, shall apply to and in relation to ~y ~~ent for the " of 1888 useslqilant year commenciag on the 1st day of april, 1 or any earlier assessment year and references in this section to the other 'provisions of this act shall be construed as references to those pro- 25 visions as for the time being in force and applicable to the relevant assessment year fl amendmentot section 143 c;' ii in -ction 143 of the income-tax ¥, the following amendments shall be made and shau be deemed to have been made with etrect from the 1st day of april, 1989, namely: -30 "ij, 1""',  ' -- , , (0) in sub-section (1) ,-', ,-~:' (i) in· clause (~) ,-(1) after the first proviso, the following proviso shall be inserted namely:-, c'provided further that where adjustments are made 35 utlder the first proviso an intimationaball be seht to the iislee, liiotwithstanding that no tax or interest - 1«tnd due from him after making the mid adjuatmentl:"; (!,)in the existtngsecond provilo, for the \1pwds "provtdetf :fbrther", the words "provided also" shall be 'uhlu- 40 ,tuted; , (ii) in clause (b), after the words "an order made under", , the 'words, brackets and figures '''sub-section '(8) of this section or  ,"  ,  ~ sect1~ 1441 orf;shall be iilserted;  : ' (ijt)after clause (b), the following clause shall be inserted, 45 namely:-"(e) where the assessee is a partner of a firm or a member of an isiociation of persons or body of individuals and - a result of the adjustments made unger theftrst proviso to clause (a) of lub-tlection (1) in the ineome or loss declared in the return made by the firm, association or body, as the cue may be, or as a result ot an order made under sub-section 5 (3) of ~ section or section 1441 or sec::tion 14:7 or 'section 154 or section 155 or sub-section (1) or sub-6ection (z) or subsection (3) or sub-section (5) of section 1 or sub-section (1) or sub-section (z) of section 186 or sectic?a 250 or section 254 or section 260 or lection 262 or &ectiod 263 or section 2m, 10 u·  "'i6r' any order at settlement made unde~ su~uon (4) of section 24:sd passed subsequent to the flling of the return reterred to in clause (a), there is any variation in his share in the income or loss of the firm, association or body,  the case may be, or in the manner ot inclusion of his abare in the 15 returned income, then,-(i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum 10 payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provistonj 20 ot this act shall apply aecordingly, and (ii) it any refund is due, it shall be granted to the assessee: provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry  25 of four years from the end of the financial year in which any such adjustments were made or any such order was passed!'; (b) in sub-section (1a) ,-(i) in clause (a), for the words "the proviso", the words "the 30 first proviso'" shall be substituted; , (ii) in the explanation, in clause (i), tor the words "the proviso", the words "the first proviso" shall be substituted; (c) in sub-section (2) ,-35 (i) in the opening portion tor the words, brackets and figure "in a case referred to in sub-section (1), it the assessing ofrcer", the words, figures and brackets "where a ret1jrn has been made under section 139, or in response to a notice wider su~tion (1) ot section 142 the assessing oftlcer shall, if he" shall be substituted; (ii> for the words "he shall serve on the assessee", the words "serve on the assessee" shall be substituted; (d) after sub-section (3) the following sub-sections shall be tnserted, namely:-" (4) where a regular· assessm-ent udder sub-$ectlon (3) ot this section or section 144: is made,-(a) any tax or interest paid by the assessee under !lubsection  (l) shall be deemed to have ,been paiei towards suell regular aaeument; i (b)  if no refund is duq em regular &ii_ent or the &mout refunded unckr sub-eecuon (1) exceeds the amount refujldable on regular anellmedt, the whole or the excess amount 10 refunded ,hall be deemed to be tax pgj'able by the assessee and the provisions qf this act shall apply accordingly 5  (5} thepz'ovisions of this section as they stood immediately before· tbeir amendment by the direct tax laws (amendment) ' i  act, 1887, ahall apply to and in relation to any assessment for the 4 of 1988 _iament year commencing on the 1st day of april 1988, or any eatlier all8ssment year and references in this section to the other 10 prov:isions of this act shall be construed as references to thole provisions as for the time being in force and applicable to the relevant assessment year "  1'7 section 144 of the income-tax act shall be renumbered as subsection (1) thereof and after sub-section (1) as so renumbered, the follow- 15 ing su1h;ec~on shall be inserted and shall be deemed to have been amendment 01 aedidn 144 in~ertedwith effect from the 1st day of april, 1989, namely:- (2) the provisions of this section as they stood immediately before their amendment by the direct tax: laws (amendment) act, 1987, shall apply to and in relation to any assessment for the assess- 20 4 of 1988 ment year commencing on the 1st day of april, 1988, or any earlier ~~ent year and references in this section to the other provisions ~f this act shall be construed as references to those provisions as 101" the time being in force ~nd applicable to the relevant assessment  year i 25 amendment of secti'on 149 18 in section 149 of th81 income-tax act, in sub-section (1), in clause (4), in sub-clause (iii), for the words "more than rupees one lakh'· the woro,s "l'ijpeel one lakb" shall be substituted and shall be deemed to have be",n substituted with effect from t):le 1st day of april, 1989 amendment of eeethm 184 19 in section 184 of th~ income-tax act, in sub-section (7) after the 30 words "is granted", the words "or is deemed to have been granted" shall be inserted and shall be d~emed to have been inserted with effect from the 1st day of april, 1989 " ~n_tion 186 qf the income-tax act, after sub-sect,ion (5), the following sub-~tiodf shall be inserted and shall be deemed to have been 35 inrted with eftect q-om the 1st day of april, 1989 namely:-amendment of section ]85 "(6) notwithstanding anything contained in sub-section (1) to (4), where a firm has made an appuca'tion for registration in relation  ~ an auessd)e11t year and bas fu~~ed the return for that asnssment 40 year, such ftrm shall be deemed to have been registered under tpis ~o~ op the expuy of the pe~<>4 for serving jlptice ~ specifted in the proviso to sub-section (!) of ~on 143 in respect of such return: provided that nothtdg in thla sub-sectkrl shall afteet the power 45 of the assessing oftleer to intimate the defect to the ftrm under subscction (z) iuld whent any such intimation is sent all the provisions of sub-sectiop (2) sball apply jo (7) the provh;ions of this section as they stood immediately before their amendment by the direct ']lax laws (second amendment) act, 1989 shall apply to and in relation to any assessment for, the assessment year commencing on the 1st day of april 1988, or any earlier assessment year and references in this section tc the other provisions of this act shall be construed as references to those provisions as for the time being in force an~ applicable to the relevant assessment year" ' 21 in section 186 of the income-tax act, the following amendments shall be made and shall be deemed to have been made with effect from the lbt day of april, 1989, namely:-amend ment of section 186 (a) in sub-section (1)-, , 15 (i) after the words "firm has been registered", the words "or is deemed to have been registered" shall be mened; (ii) the words "and with the previous approval of the deputy commissioner," shall be omitted; 20 (iii) in the proviso, after the words "registration has been granted", the words "or is deemed to have been granted" shall be insert€d; (iv) after the existing proviso the following proviso shall be, inserted namely:-25 "provided further that the assessing otbcer shall not cancel the registration granted under sub-section (1) of section 185 except with the previous approval of the deputy commissioner" ; (b) in sub-section (2), after the words "firm has been registered" the words "or is de~med to have been registered" shall be inserted 30 22 after section 1940 of the income-tax act, the following section shall qe inse~ed w~th effect from the 1st day of september 1989 namely:-insertion of new section 194e 35 payments to nonresident sportsmen or sports associations "194e where any income referred to in section 115-bba is payable to a non-resident sportsman or sports association or institution, the person responsible for making the payment shall, at the· time of credit of such ucome to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any othtu' mode, whiclu~ver is earlier, deduct income-tax thereon at the rate of ten per cent:'  mendment of section 195 40 23 in section 195 of the income-tax act, in su,b-section (1), before, the ezplanation, the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of june 1987 namely:-''provided that in the cas~ of interest paytlble by the government or a public sector bank within the meaning of clause (23d) of section 10 or a public financial idlttutioil within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by th eo issue of a cheque or draft or by any other mode" u in section 193, 199, 200, 202 203, 203a 204 and 205 of the income-tax act, after the word, figures and lehar "section 1940,", the word, figures s and letter "section 194e," shall be inserted with effect from the 1st day of september 1989 amendment ot sectiolll 198 to 200 and 202 to 205 25 for section2-i1, ot the income-tax act, the following section shall 1)e substituted and shall be deemed to have been substituted with ef!ect n-om the 1st day of april, 1989, namely: -10 substitution of new section tot section 241 "241 where refund of any amount becomes due to tne al!llll8sllee l£i a result of an order under this act or under the provlslons of subsection (1) of section 143 after a return has been made under section 139 or in response to a notice under sub-sectlon (1) of section 142 and the assessing oftlcer is of the opinion, having 1"8gard to the fact that·- 1 s power to withhold refund in certain c_ (i) a notice has been issued, or is likely to be issued, under sub-section (2) of section 143 in respect of the said return; or (ii) the order is the subject-matter of an· appeal or further proceeding; or (iii) any other proceeding under this act is pending, 20 that the grant of the refund is likely to adversely affect the revenue, the assessing oftlcer may, with the previous approval of the ch:ef commissioner or commissioner, withholcj the refund till such time as the chief commissioner or commissioner may determine" z6 section 275 of the income-tax act shall be renumbered as sub- 2s section (1) thereof and after sub-section (1) as so renumbered, the following sub-section shall be inserted and shall be deemed tq have been inserted with effect from the 1st day of april 1989 namely:-amendment of section 275 4 of 18 "(2) the provisions of this section as they stood immediately before their amendment by the direct tax laws (amendment) act, 30 1987 shall apply to, and in relation to, any action initiated for the imposition of penalty on or before the 31st day of march, 1989"  chapi'er iii ~ts '00 'the widal'l"h-tax acr" 1957amend_ ment of ~ect1oa 1513 27 in section 1sb of the wealth-tax act, 1957 (hereinafter referred to 3s 27 of 1957 as the wealth-tax act), after sub-'section (3), the following sllb-section shall be inserted and shall be deemed to have been inserted with et'rect from the 1st day of a:pril, 1969, namely:- (4) 'lbi! provisions of this section as they stood immediately before their amendment by the direct tax laws (amendment) act co 1987, shall appty to amdt in relation to any assessment for the atlses8-ment year commencing on the 1st day of april, ·1988, or any earlier 4 ot 1111 assessment year and references in this section to the other provisions of this act shall be constnled, a references to those provisions as for , 'i ' the time being in fo~ and applieat le to ~ relevant assessment year " 5 28 in section 16 of the wealth-tax act, the following :amendmants amendment of section 16 shall be made and shall be deemed to have been made with effect from the 1st day of april; 1989, namely:-(a) in sub-section (1) ,-(i) in clause (a) ,-10 (1) after the first proviso, the ~li6~~ proviso shall be inserted, namely: - ' "provided further that where adjustments are made under' the first proviso, an int:mation shan be'sent to the assessee, liotwithstanding that do tajr or idterest is found due from him after making the said ~justment8: if; 15 (2) in the existing second proviso; for the words "provide~ further", 'the' words '''pro~ded also" shall be substituted;' i (ii) in clause (b) , after the: words' "an order "made under", 20 the words, brackets and igui'e8 "sub-section(8) or sub-section (5) of th's section or" shall be inserted; (b) in sub-stctlon (la), in clause' (~), for the words "the pr~ vim", the words "the first proviso" shall be substituted; (c) in sumection (2) ,-25 (it) in the opening portion, for the words, brackets and figure "in a case referred to in sub-section (1) if the assessing officer", the words, iftgures and' brackets "where a retun\' has bee~,made under section 14 or section 15, 'or in -response to a notice under clause (i) of sub~ection (4) of this section, the 30 assessing ~ershall if he" shall be substituted; (ii) for the words "he shall sene on the asseee", the words ~'l8rveon "the aaeessee" shall be substituted; (d) after subsection (5), the following sub-sections shall be inserted, na,mely:- , '5 "(6) where a regular assessment under sub-section (8) or sub-section (5) is made,-' :(a)  any tax or interest paid by tile aues&ee under subsection (1 ) shall be deemed to hal'e been paid llowartis such regular assessment; 40 (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) e~ceeds the amount , refundable on regular assessment, the' whole or the excess :amotint8ci retundedshau be deerriedto'be tax"payable by the asaee88e ilnd the provisiolll' of this act· shall apply accordinly: l' ' 45 (1) 'the provision of this lectionaa they stood immediately before th~r am~ndment by the t>1reet tax laws (amendment) act, 1981, shan lipply to and in retattonto any asiesatnent for the 4 of 1m3 assessment year commencing on the 1st day of april,l988, or any earlier assessment year and references in this section to the other 5 provlsi~ns of this act shall he conatru~ as references to thole provisions for the time being in force and applicable to the relevant assessment year" i 29 in section 34a of the wealth-tax act, for sub-section (2), the following sub-section ~l be substituted and shall be deemed to have 10 been substituted ';lib elteet from the 1st day of april, 1989, namely: - amend ment of 8ection 34oa "(2) where refund of any amount becomes due to the assessee as a result of an order under1this act or under the provisions of subsection (1) at section 16 afte~ a return has been made under o;ection is 14 or section 15 or in respcmse to a notice under clause (i) of subseetioo (4) of 8ection 16 and the abseisldg ot1lcer h' of the opinion, having regard to the fact that--' (i) a notice has been issued, 01', is lijtely to be issued, under sub-section (2) of section 18 in respect of the said retum~ or (ti) the order i~ the subject matter of an appeal or further 20 proeeedtng; or i  (iii) any other proceeding under this act is pending, that the grant of the refund is likely to adwnely affect the teftnue, the asansldg 0ftjcer may, with the previous approval of the chief commissioner or coljullissioner, withholcl the refund till such time 25 as the chief commiasioner or commilsioner may determine" 31 in schedule m to the wealth-tax act,-amend ment of sehedu1e (it) after rule 9, the followng me shall be iruiertecl namely:-special provwon for quated sharea of companies 9a notwithstanding anything in rule 9, the value of an equity share in any company which is a quoted share may, at the 30 180t 1158 1!iption of the 1 !wce be taken on the basis df the average of the value quoted on the 31st day of march immediately predeling the assessment year and, the values quoted in respect of such share on the said dates in relation to each of the immediately preceding four assessment years, or where there is noi such quo- 35 date closest to' the said date and immediately preceding such date: provided that where for any reason ~'alue of such share is quoted in relation to lesser number of 8bsessmmlt years than the slid four assessiaent years, then the val~ at' values so quo- 40 ted shall be taken into account for the purposes of the aforesaid average: provtded turther that where the assessee opts for the average of'die 'values so quoted, he shan ~t  ueh values eertifled by an aceoui1tant and attach the ~te to the retum at 45 wealth in reapeet of the relevant assessment year e:cpla:nation-for the purposes of this rule "accountant" shall have the same meaning as in the explwtation below subsection (2) of section 288 of the income-tax act?; (b) in rule 12, sub-rule (3) and (5) shall be omitted and shall be deemed to have be'en omitted with effect from the 1st day of april, led \  chapter iv ame;ndm'lants '1'0 the gift-tax act, 19&8amend_ ment of section 14b 18 of 1951 31 in section 14b of the gift·tax act, 1958 (hereinafter referred to 10 as the gift-tax act), after sub-section (31), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of april, 1989, namely:-" (4) the provisions of this section shall apply in respect of assessment for the assessment year commencing on the 1st day of 15 april, 1989 and subsequent assessment years"  amendment ot section 15 32 in section 15 of the gift-tax act, the following amendments shall be made and shall be deemed to have been made with effect from the 1st day of april, 1989, namely:-(a) in sub-section (1),-(i) in clause (a) ,-20 (1) after the first proviso, the following proviso shall be inserted, namely:-25 "provided further that where adjustments are made udcier the ftrst proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adj ustments: "; (2) in the existing second proviso, for the words "provided further", the words "provided also" shall be substituted; 30 (ii) in clause (b), after the words "an order made under", the words, brackets and figures "sub-section (3) or sub-section (5) of this section or" shall be inserted; (b) in sub-section (la), in clause (a), for the words "the proviso", the words "the first proviso" shall be substituted; 35 (c) in sub-section (2) ,-(i) in the opening portion, for the words, brackets and figure "in a case referred to in sub-seetion (1), if the ~ing officer", the words, figures and brackets "where a return has been made under section 13 or section 14 or in response to a 40 notice under clause (i) of' sub-section (4) of this section, the assessing officer shall, if he" shall be substituted; (ii) for the words "he shall serve on the assessee", the words "serve on the assessee" shall be substituted; (d) after sub-section (6), the following sub-sec1;io,xls shall be inserted, namely:-"(7) where a regular assessment under stib-eeetion (3) or sub-section (5) hi made,-(4) any tax or interest paid by the auessee under sub-5 section (1) shall be deemed to have been pitt! toward" such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under bub4c!ction '(1) exceeds the' amount refundable on regular assessment, the whole or the excess 1'0 amount so refunded shall be deemed to j)e tax payable by the assessee and the provisions of this act shall 'lpply accordingly , (8) the provisions of this section, except those of sub-section (6), as they stood immediately before their ~li11endment by 15 the direct tax i,aws (amendment) act, 1987, ilulu apply to 40t 1988 and in relation to any assessment for the assessment year commencing on the lit day of april, 1988 or any earuer assesunent year and referenceji in this section to the other 'provisions of thi$ act shall be construed as references to thole provisipjls as for 20 the time being in force and applicable to the relevant assessment year"  33, in section 33a of the gift-tax act, for sub-section (2), the fouowing subosection ~hall be li'ubatituted an4 shall be deemed to have been substituted with effect from the 1st day of april, 1189, namely: -25 amendmentof section 33a " (z) where reftmd 'of any amount becomes due to the assessee asa rewlt of an order under t1;is aetoi1filt!~,::(ohe provisions of sub-section (1) of section 15 after a return has been made under section 13 or section 14 or in response to a notice under clause (i) of subsectiqll (4) of section 15 and the assessing ofticer is of the opinion, 30 having regard ta the fact that,-(i) a notice has been issued, or is likely to be issued, under sob;section (2) of section 151 in respect of the said return; or (ii) the order is the sudject-maiter of an app4!al or further proceeding; or ' 35 (iii) any other proceeding under this act is pending, ,that the grant of the refund is likely to adverely ajfect the revem:ae, the assessing officer may, with the previous approval of the chief commissioner or commissioner, withhold thei-efund till such time  the chief commissioner or commissioner may determine"  , ,~ amendments in tax laws is ai1 on-going process because the tax laws are no longer mere ins~men~ of tax collectipp but are inten~_ to achieve various other socio-economic objectives since the passing of the direct t~ ~wj (axrumclment) act, 19a9 and the p~tation of the finance bill, 1969 a jlumber of sugg_tions re~i f,impu4,cathm and rationalisation of the act as also for giving certain tax ~~iq~ fql' the benefit of the taxpayers, were received by the government the prime urgency for the introduction of this bill is to help"'the taxpayers ]:\y removing certain anomalies 'and difficulties relating to the new al!l6essment procedure which has already come into force from 1st april 1989 as also to grant certain tax ccmcessions so that the taxpayers can avail of them during th~ current financial y~ar 2- one of the prime ~d& of the country is to eil$ure proper '-lance of payment and encourage inflow of foreign exchange in 'tjje oqj1litry with a view to achieve this, it is proposed to amend section 48 of the income-tax act in order to provide for computation of the e«pital gains in the case of non-resident indians by calculating the cost price and the sale price in the foreign currency ,in which the investment was made ;mt(>3d of taking the value in indian currency as at p~ent tp~ will makf' investments in shares by non-r~sjqent indians more attractive and ther~by encourage inflow of foreign exchange in the country 3 section (i of the act is also being amended with the same objective it will liberalise the criterion for determining the residential status so as to facilitate non-resident indians to stay in india for a longer period in order to look after their investments without losing their 'non-rcsidept' "tatus besides, section 195 of the act is also p~qsqd to be :lmended to provide for deduction of tax at source on payment of :lltel'est to non-residents by the government, publie sector banks and public financial institutions only at the time of payment instead of at the time of credit of such income 4 development of shipping industry is extremely important for our country this is a capital-intensive industry and faces considerable competition from foreign shipping lines therefore, it needs govern ment flssistancf' for further promotion in the shape of incentives under the tax system _ such concessions woulq help the industry to augment its fleet and mfike investments in their shares attractive _ 'ro achieve this, necessary ame~9ments have been proppsed ~ the income-tax act by inserting a new section 33ac for providing benefits on the same lines as are available under section 36 (1) (viii) of the income-tax act, in tbecase of shipping compani<:-a also further section bocc which permits 50 per cent deduction for the cost of acquisition of shares forming part of the eligible issue of capital from the total income, is proposed to be extended 1;0 'he irsue of share capital by existtng ithfpping ,companies also 5 during the debate on the finance bill, 1989, a statemellt was made on behalf of the government that the present method of valuation ot unquoted equity shares in the case of investment companies, which is causing hardship, would be examined and appropriate action would b taken to remove the hardship accordingly, schedule iii of the wealthtilx act dealing with such matters is proposed to be amended t in addition, it is also proposed, inter alial to: (i) provide for taxation of the income earned in india by nonresident sportsmen and sports associations at a concessional tax rate af h) per cent ; (ii) extend tax concessions under section 80c in respect of such unit-linked insurance plan of the life insurance corporation mutual l"und as may be notified by the central government in this behalf; (iii) provide concession under section soc in respect of such savings certificates issued under the government savings certificates act, 1959, as may be notified by the central government in this behalf; and  (iv) provide for valuation of quoted shares for wealth-tax purposes by taking average of the five-years' quoted price 7 opportunity is also being availed of to remove certain anomalies and difficulties relating to the assessment procedure by providing amendments in the income-tax act, 1961, wealth-tax act, 1957 and the gift-tax act, 19!58 ' i 8 the bill seeks to achieve the aforesaid objects new dblhr; s b chavan the 15th august, 1989  prfs!dent's recommendation under articles 117 and 274 of the constitution of india[copy of letter dated the 16th august, 1989 from shri s b chavan, minister of finance to the secretaryaeneral lok sabha] the president having ~n informed of the subject matter of the direct tax laws,,(second amendment) bill, 1989, recommends under clause (1) of article 117 and clause (1) of article 274 of the constitution th,> introduction of the bill in lok sabha  memorandum regarding delroated legislationclause 4 of the bill seeks to lubstitute clause (5) of section 10 of the income-tax act relating to exemption of value of leae travel concelsion the said exemption will be subject to conditions to be prescribed by the central board of direct taxes, baving regard toeertain factors, by rules made in that behalf , ', (  2· clause 6 of the bill seeks to insert ;a proviso to cla~ (a) of subsection (1) of section 48· of the income-tax act clause (iii) of the ez planation to the said proviso empowers the central board of direct taxes to make rules for prescribing·rates of exchange for conversion of indian currency into foreign currency and the reconversion of foreign currency into indian currency 3 the matters in respect of which rules will be mad, by the central board of direct taxes are matters of administrative detail and it is not practicable to specify the same in the relevant sections the delegation of jeg:slative power is, therefore, of a normal character ;  ,  ,' a bill further to amend the income-tax act, 1961, the wealth-taz act 19g7 and the gift-tax act 1958 (shri s b ch4van, minister 01 finance) 