 the finance (no 3) bill, 1956(nm introduced in look sabra)  the finance (no3) bill, 1956 (as introduced in lok sabra) a blllfurther to amend the indian income-tax act, 1922, for the purpose of imposing a tax on capital gains and for certain other purposes and to prescribe the rate of super-tax on companies for the financial year 1957-58 be it enacted by parliament in the seventh year of the republic of india as follows:-1 (1) this act may be called the finance (no3) act, 1956 short title and commencement (2) it shall come into force on the 1st day of april, 1957 s 2 in section 2 of the indian income-tax act, 1922 (hereinafter amed~nt referred to as the principal act), in the explanation to clause (6a) , of section 2 the following shall be inserted at the end, namely:-"and before the 1st day of april, 1956" 3 after sub-section (2a) of section 10 of the principal act, the amendment 10 following sub-sections shall be inserted, namely:-of lection 10-"(2b) where for the purpose of computing under this section the profits or gains of, a company for any previous year an allowance is made under clause (vi), clause (via), clause (vib) is or clause (vii) of sub-section (2) an amount equal to the sum of all the allowances so made shall be included in the total income of the previous year as "profits and gains" unless the company deposits with the central government before the 30th day of june of the year succeeding the previous yearsuch percentage, not exceeding twenty-five, as may, from time to time, be notified by the central government, of the accumulated profits and reserves of the company as at the end of the year preceding the previous year, to the extent to which such profits and reserves are not represented by the fixed ,assets of the company, plus such percentage, not exceeding seventy-five, as may, from time to time, be notified by the central government, of the amount by which the sum of the following amounts, namely:-(a) the total income of the company for the previous year, as reduced by the amount of income-tax and super-tax payable in respect thereof and by the dividends, if any declared during the previous year, and (b) the sum of the allowances made under the· clauses aforesaid exceeds the sum of rupees one lalm (2c) the central government may make rules providing for the manner in which the deposits referred to in sub-section , (2b) may be made, the time when and the manner in which refunds of any such deposit shall be made whether with or without interest, and in particular the r~fund at any time of any such deposit or part thereof where the refund is claimed for carrying out any such purpose connected with the business of 10 the company as is approved by the central government" 4 for section 12b of the principal act, the following shall be substituted, namely:-"12b (1) the tax shall be payable by an assessee under the head "capital gains" in respect of any profits or gains arising is from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of march, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place: i ,  ,20 provided that any distribution of capital assets on the total or partial partition of a hindu undivided family or under a deed of gift, bequest or will shall not for the purposes of this section be treated as a sale, exchange, relinquishment or transfer of the capital assets: 2s provided further that the transfer of a capital asset by a company to a subsidiary company, the whole of the share capital of which is held by the parent company or by the nominees ther!,?of, shall not be treated as a sale, exchange or transfer within the meaning of this section where the subsidiary company 30 is resident in the taxable territories and is registered under the indian companies act, 1956, so howev~r that for the purposes of clause (vi) or clause (vii) of sub-section (2) of section 10, the cost or the written down value, as the case may be, of the transferred capital asset shall be taken to be the same as it 35 would have been if the parent company had· continued to hold the capital asset for the purposes of its business (2) the amount of a capital gain shall be computed after making the following deductions from the full value of the consideration for which the sale, exchange, relinquishment or 40 transfer of the capital asset is made, namely:-"ci) expenditure incurred solely in conne~tion with such sale, exchange, relinquishment or transfer; (ii) the actual cost to the assessee of the capital asset, including any expenditure of a capital nature incurred and 4s borne by him in making an): additions or alterations thereto, but e~cluding any expenditure in respect of which any allowance is admissible under any provision of seotions 8, 9, 10 and 12:  provided that where a person who acquires 8 capital asset so from the assessee, whether by sale, exchange, relinquishment or 5 10 is 20 tt:ansfer is a person with whom the assessee is directly or indirectly connected, and the income-tax officer has reason to believe that the sale, exchange, relinquishment or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this section, the full value of the consi- - deration for which the sale, exchange, relinquishment or transfer is made shall, with the prior approval of the inspecting assistant commissioner of income-tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange, relinquishment or transfer took place: provided further that where the capital asset is an asset in respect of which the assessee has obtained depreciation allowance in any year, the actual cost of the asset to the assessee shall be its written down value, as defined in section 10, increased or diminished, as the case may be, by any adjustment made under clause (vii) of sub-section (2) of that section: provided further that where the capital asset became the property of the assessee, or of the previous owner where the cost of the capital asset to the previous owner is to be taken in accordance with sub-section (3), before the 1st day of january, 1954, he may, on proof of the fair market value thereof· on the said date to the satisfaction of the income-tax officer, substitute for the actual cost such fair market value which shall be deemed to be the actual cost to him of the asset, and which shall be reduced by the amount of depreciation, if any, allowed to the assessee after the said date and increased or diminished, as the case may be, by any adjustment made under clause (vii) of sub-section (2) of section 10: provided further that where the capital asset was on any previous occasion the subject of negotiations for its sale, exchange, relinquishment or transfer, any option or other money received and retained by the assessee in respect of such nego-· tiations shall be deducted in computing the actual cost to him of such asset 35 45 (3) where any capital asset became the property of the assessee by succession inheritance or devolution or on any distribution of capital assets on the total or partial partition of a hindu undivided family or on the dissolution of a firm or other association of persons or on the liquidation of a company or under a deed of gift or transfer on irrevocable trust, its actual cost allowable to him for the purposes of this section shall be its actual cost to the previous owner thereof, and the provisions of sub-section (2) shall apply accordingly; and where the actual cost to the previous owner cannot be ascertained, the fair market value at the date on which the capital asset became the property of the previous owner shall be deemed to be the actual cost thereof: provided that where the capital asset became the property of the assessee-50 (i) before the 1st day of april, 1956 under a deed of gift or on the partition of a hindu undivided family, the actual cost allowable to him shall be the fair market value of the capital asset on the date of the gift or the date of the partition, as the case may be, if such value is greaier than the actual cost to the previous owner or the fair market value thereof on the 1st day of· january, 1954, where the third proviso to sub-section (2) applies; (ii) on or after the 1st day of april, 1956, on the parti- , tion of a hindu undivided family the cost allowable to him shall be the fair market value on the date of the partition (4) notwithstandin~ anything contained in sub-section (1), where a capital gain arises from the sale, exchange, relinquishment or transfer of a capital asset being property the income 10 of which is chargeable under section 9 which in the two years immediately preceding the date on which the sale, exchange, relinquishment or transfer took place, was being used by the assessee or a ~arent of his mainly for the purposes of his own or the parent s own residence, and the assessee has within a is period of one year before or after that date purchased a new property for the purposes of his own residence, then instead of the capital gain being charged to tax as income of the previous year in which the sale, exchange, relinquishment or transfer took place, it shall, if the assessee so elects in writing before the 20 assessment is made, be dealt with in accordance with the following provisions of this sub-section, that is to say,-(a) if the amount of the capital gain is greater than the cost of the new asset, the difference between the amount of the capital gain and the cost of the new asset shall be 25 ch8lged under this section as income of the previous year, or (b) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under this section"  5 in section 17 of the principal act,-amendment of lec:tion 17 (a) for clause (ii) of sub-section (6), the following clause shall be substituted, namely:-"(ii) on the whole amount of such inclusion, income-tax equal to the amount which bears to the income-tax which would have been payable on his total income as reduced by 35 two-thirds of the amount of such inclusion the same proportion as the whole amount of such inclusion bears to such reduced total income: provided that where the amount of such inclusion does not exceed the sum of five thousand rupees or the total 40 income does not exceed the sun:t of ten thousand rupees such income-tax shall be nil and in any other case such income-tax shall not exceed one-half 'of the amount by which the amount of such inclusion exceeds the sum of five thousand rupees;" 4s (b) for sub-section (7), the following sub-section shall be substituted, namely:- "(7) where the total income of a company includes any income chargeable under the head "capital gains", the super-tax payable by it shall be calculated on its total income 50 as reduced by the amount of such inclusion"  i in section 23a of the principal act,-ca) in sub-section (1) for the words "at the rate of four :a3a annas in the rupee", the words "at the rate of six annas in the rupee" shall be substituted 10 (b) after the proviso to sub-section (1), the following further proviso shall be inserted, namely:-"provided further that in the case of a company referred to in sub-section (4), this section shall app1r as if for the words "sixty per cent of the total income' and "fifty-five per cent of its total ,income" wherever they occur, the words "fifty per cent of the total income" and "forty-five per cent of its total income" respectively had been substituted" (e) in clause <i) of sub-section (2), for the words "in clause (a> of the proviso to that sub-section", the words "in clause <a) of the first proviso to that sub-section shall be substituted  7 in section 24 of the principal act,-such shall (a) in sub-section (2b), the words "so however  loss shall be so carried forward for more than six be omitted; 20 (b) for the proviso to sub-section (2b) , proviso shall be substituted, namely:-, "provided that where the loss sustained by' not being a company, in any previous year ·exceed five thousand rupees, it shall not be carried forward" i for the year ending on the 31st day of march, 1958, the rate ra,:~f fu~ of super-tax for the purposes of section 55 ot the principal act shall, ~anic:1 0 in the case of every company, be as follows:-35 provided that-(i) a rebate at the rate of seven annas per ,rupee of the total income shall be allowed in the case of any company which-(a> in respect of its profits liable to tax under the income-tax act for the year ending on the 31st day of m~rch, 1958, has made the prescribed arrangements :for the declaration and payment within india, of the dividends payable out of such profits and for the deduction of super-tax from dividends in accordance with the proyisions of sub-section (3d) of section 18 of that act, and (b> is such a company as is referred to in sub-section (9) of section 23a of the income-tax act, with total income not exceeding rs 25,000 45 (ii) a rebate at the rate of six annas per rupee of the total income' shall be allowed in the case of any company which satisfies condition <a) but not condition (0), of the preceding clause; and (iii) a rebate at the rate of five annas and six pies per rupee on so much of the total income as consists of dividends from a subsidiary indian company and a rebate at the rate of, three annas per rupee on any other income included in the total income shah be allowed in the case of any company not entiued 5 to a rebate under either of the preceding clauses: provided further that-(i) the amount of the rebate under clause (i) or clause (ii), as the case may be, of the preceding proviso shall be reduced by the sum, if any, equal to the amount or the aggregate of the 10 amounts, as the case may be, computed as hereunder:-the whole amount of such part (a) on that part of the sum arrived at in accordance with clause (i) of the second proviso to paragraph d of part ii of the first schedule to the finance act, 1956, as has not been deemed to have been taken into account, in accordance with clause (ii) of the said pro"', for the purpose of reducing thein'bate mentioned therein to nil; at the rate of two annas per rupee ,(b) on the amount representing the face value of any bonus shares or the amount of any bonus issued to its shareholders during the prewous year with a view to increasing the paid-up capital, except to the extent to which such bonus shares or bonus have been issued out of· premiums received in cash on the issue of its shares; and at the rate of two annas per rupee ( c) in addition, in the case of a company referred to in clause (ii) of the preceding proviso which has distributed to its shareholders during the previous year dividends in excess of six per cent of its paid-up capital, not being dividends payable at a fixed rateon that part of the said dividends which exceeds 6 per cent but does not exceed 10 per cent of the paid-up capital: at the rate of four 45 annas per rupee, at the rate of six annas per rupee 50 on that part of the said dividends which exceeds 10 per cent but does not exceed 18 per cent of the paid-up capital; on that part of the said dividends which exceeds 18 per cent of the paid-up capital (ii) where the sum arrived at in accordance with clauae (i) of this proviso exceeds the amount of the rebate arrived at in accordance with clause (i) or clause (ii), as the case may be, of the preceding proviso, only so much of the amounts of 5 reduction mentioned in sub-clauses (a), (b) and (c) of clause (i) of this proviso as is sufficient, in that order, to reduce the rebate to nil shall be deemed to have been taken into account for the purpose: provided further that the super-tax payable by ,a company the 10 total income of which exceeds rupees twenty-five thousand shall not exceed the aggregate of-(a) the super-tax which would have been payable by the company if its total income had been rupees twenty-five thousand, and 15 (b) half the amount by which its total income exceeds rupees twenty-five thousand 20 expzanation-for the purposes of this section-(i) the expression "paid-up capital" means the paid-up capital (other than capital entitled to a dividend at a fixed rate) of the company as on the first day of the previous year relevant to the assessment for the year ending on the 31st day of march, 1958, increased by any premiums received in cash by the company on the issue of its shares, standing to the credit of the share premium account as on the first day of the previous year aforesaid; 35 (ii) the expression "dividend" shall be deemed to include any distribution included in the expression "dividend" as defined in clause (6a) of section 2 of the principal act; (iii) where any portion of the profits and gains of the company is not included in its total income by reason of such portion being exempt from tax under any provision of the principal act, the "paid-up capital" of, the company, the amount distributed as dividends (not being dividends payable at a fixed rate), the amount representing the face value of any bonus shares and the amount of any bonus issued to the shareholders, shall each be deemed to be such proportion thereof as the total income of the company for the previous year bears to its total profits and gains for that year other, than capital receipts, reduced by such allowances as may be admissible under the income-tax act which have not been taken into account by the company in its profit and loss account for that year  statement of objects and reasonsthe object of this bill is to revive, with effect from the financial year 1957-58, the taxation of "capital gains", to prescribe the rate of super-tax applicable to companies for the financial year 1957-58 and to provide for a few condected matters no'd&uu; the 30th november, 1956 t t krishnamachari clause 2 amends the definition of "dividends" in clause (6a) of section 2 of the income-tax act, and provides that capital gains arising on and from the 1st april, 1956 will also come within the scope of "accumulated profits" of the company clause 3 inserts a new sub-section (2b) in section 10 of the income-tax act, and provides that development rebate and depreciation allowances due to be allowed in the computation of income of companies will be added back, unless the companies deposit with the government a certain amount as prescribed sub-section (2c) empowers the central government to make rules for refund of deposits and other connected matters clause 4 re-enacts section 12b of the income-tax act with modifications and provides that capital gains arising on or after the 1st april, 1956, on the sale, exchange, relinquishment or transfer of a capital asset, will be charged to income-tax clause 5 amends section 17 of the income-tax act, and provides the basis of computation of tax on the capital gains included in the total income and on the remainder of the total income clause 6 amends section 23a of the income-tax act, and provides for the increase of the rate of additional super-tax applicable to a non-investment company which has not distributed the minimum dividends, to six anoas per rupee with effect from the financial year 1957-58 the minimum distribution in the case of an industrial company will be reduced to 50 per cent of the distributable profits, as against 60 per cent applicable to other non-investment companies clause 7 amends section 24 of the income-tax act, and provides for the carry forward of capital losses arising after 1st april, 1956 indefinitely for purposes of set off against capital gains arising in subsequent years clause b prescribes the rate of super-tax applicable to all companies for tke financial year 1957-58 clause 3 of the bill proposes to empower the central government to make rules in respect of the following matters-(i) to prescribe, from time to time, subject to certain limits, the percentaees for the calculation of the amount to be deposited (ii) to prescribe the manner in which the deposits may be made, (iii) to prescribe the time when and the manner in which refunds of deposits may be made, and (iv) to prescribe the rate of interest, if any, for the amounts deposited the delegation is of a normal character  extpacts from the indian income-tax act, 1922 (no 11 of 1922) 2 (1) - • - definitions(6a) "dividend" includes-(a) any distribution by a company of accumulated profits whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company (b) any distribution by a company of debentures debenturestock or deposit certificates in any form, whether with or without interest, to the extent to which the company possesses accumulated profits, whether capitalised or not; (c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not; (d) any distribution by a company on the reduction of its capital to the extent to which the company possesltes accumulated profits which arose after the end of the previous year ending next before the 1st day of april, 1933, whether such accumulated profits have been capitalised or not; (e) any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23a, of any sum (whether as representing a; part of the assets of the company or otherwise) by way of advance 01 loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits; but 'dividend' does not include-(i) a distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any share issued for full cash consideration where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets; (ia) any advance or loan made to a shareholder by a company in the ordinary course of its business where the lending of money is a substantial part of the business of the company; (ii) any dividend paid by a company which is set 011 by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of clause (e), to the extent to which it is so set off explanation-the expression "accumulated profits", wkerever it occurs in this clause, shall not include capital gains arising before the 1st day of april, 1946, or after the 31st day of march, 1948 - - - - - - - - - - 10(1) - • - businesl - - - - - (2) such profits or gains shall be following allowances, namely:-computed after making the - - - - - (vi) in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of eases be prescribed: - - - - - (via) in respect of depreciation of buildings newly erected, or of machinery or plant being new which has been -installed, after the 31st day of march, 1948, a further sum (which shall be deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant) in not more than five successive assessments for the financial years next following the previous year in which such buildings are erected and such machinery and plant installed and falling within the period commencing on the 1st day of april, 1949, and ending on the 31st day of march, 1959 (vib) in respect of machinery or plant being new, which has been installed after the 31st day of march, 1954, and· which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year 'of installation equivalent to twenty-five per cent of the actual cost of such machinery or plant to the assessee: provided that no allowance under this clause shall be made unless the particulars prescribed for the purpose of clause (vi) have been furnished by the assessee in respect of such machinery or plant [(vii) in respect of any such building, machinery or plant which has been sold or dijre8rded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value: provided that such amount is actually written off in the books of the assessee: - - - - - 12b (1) the tax shall be payable by an assessee under the head "capital gains" in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of march, 1946, and before the 1st day of april, 1948; and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place: provided that where the amount of capital gains in the previous year does not exceed fifteen thousand rupees, the tax shall not be payable by the assessee and such amount shall not be included in his total income: provided further that the tax shan not be payable by an assessee in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset, being property the income of which is chargeable under section 9 and which has been possessed by the assessee or a parent of his for not less than seven years before the date on which the sale, exchange or transfer took place; and the amount of such profits or gains shall not be included in his total income: provided further that any transfer of capital assets by reason of the compulsory acquisition thereof under any law for the time being in force relating to the compulsory acquisition of property for public purposes or any distribution of capital assets on the total or partial partition of a hindu undivided family, or on the dissolution of a firm or other association of persons, or on the liquidation of a company, or under a deed of gift, bequest, will or transfer on irrevocable trust mall not, for the purposes of this section, be treated as sale, exchange or transfer of the capital assets: provided further that the transfer of a capital asset by a company to a subsidiary company, the whole of the share capital of which is held by the parent company or by the nominees thereof, shall not be treated as a sale, exchange or transfer within the meaning of this section where the subsidiary company is resident in the taxable territories and is registered under the indian companies act, 1913 so however that for the purposes of clause (vi) or clause (vii) of sub-section (2) of section 10, the cost or the written down value, as the case may be, of the transferred capital asset shall be taken to be the same as it would have been if the parent company had continued to hold the capital asset for the purposes of its business (2) the amount of a capital gain shall b~ computed after making the following deductions from the full value of the consideration for which the sale, exchange or transfer of the capital asset is made, namely:-(i) expenditure incurred solely in connection with such sale, exchange or transfer; (ii) the actual cost to the assessee of the capital asset, including any expenditure of a capital nature incurred and borne by him in making any additions or alterations thereto, but excluding any expenditure in respect of which any allowance is admissible under any provision of sections 8, 9, 10 and 12: provided that where a person who acquires a capital asset from the assessee, whether by sale, exchange or transfer, is a person with whom the assessee is directly or indirectly connected, and the income-tax officer has reason to believe that the sale, exchange or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this section, the full value of the consideration for which the sale, exchange or transfer is made shall, with the prior approval of the inspecting assistant commissioner of income-tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange or transfer took place: provided further that where the capital asset is an asset in respect of which the assessee has obtained depreciation allowance in any year, the actual cost of the asset to the assessee shall be its written down value, as defined in section 10, increased or diminished, as the case may be, by any adjustment made under clause (vii) of subsection (2) of that section: provided further that where the capital asset became the property of the assessee or of the previous owner where the cost of the capital asset to the previous owner is to be taken in accordance with sub-section (3) before the 1st day of january, 1939, he may, on proof of the fair market value thereof on the said date to the satisfaction of the income-tax officer, substitute for the actual cost such fair market value which shall be deemed to be the actual cost to him of the asset, and which shall be reduced by the ambunt of the depreciation, if any, allowed to the assessee after the said date and increased or diminished, as the case may be, by any adjustment made under clause (vii) of sub-section (2) of section 10: provided further that where the capital asset was on any previous occasion the subject of negotiations for its sale, exchange or transfer, any option or other money received and retained by the assessee in respect of such negotiations shall be deducted in computing the actual cost to him of such asset (3) where any capital asset became the property of the assessee by succession, inheritance or devolution or under any of the circumstances referred to in the third proviso to sub-section (1), its actual cost allowable to him for the purposes of this section shall be its actual cost to the previous owner thereof, and the provisions of sub-section (2) shall apply accordingly; and where the actual cost to the previous owner cannot be ascertained, the fair market value at _the date on which the capital asset became the property of the previous owner shall be deemed to be the actual cost thereof: provided that where the capital asset became the property of the assessee--(i) before the 1st day of april, 1947, under a deed of gift or on the partition of a hindu uhdivided family, the actual cost allowable to him shall be the fair market value of the capital asset on the date of the gift or the date of the partition, as the case may be, if such value is greater than the actual cost to the previous owner or the fair market value thereof on the 1st day of january, 1939, where the third proviso to sub-section (2) applies; (ii) on or after the 1st day of april, 1947, on the partition of a hindu undivided family, the cost allowable to him shall be the fair market value on the date of the partition (4) notwithstanding anything contained in sub-section (1), where a capital gain arises from the sale, exchange or transfer of a capital asset which immediately before the date on which the sale, exchange or transfer took place was being used by the assessee for the purposes of his business, profession or vocation, or which in the two years immediately preceding that date was being used by him or a parent of his mainly for the purposes of his own or the parent's own residence, and the assessee has within a period of one year before or after that date purchased a new capital assetfor the same purposes of his business, profession or vocation or, as the case may be, for the purposes of his own residence, then instead of the capital gain being charged to tax as income of the previous year in which the sale, exchange or transfer took place, it shall, if the assessee so elects in writing before the assessment is made, be dealt with in accordance with the following provisions of this sub-section, that is to say,-(a) if the amount of the capital gain is greater than the cost of the new asset,-(i) the difference between the amount of the capital'gain and the cost of the new asset shall be charged under this section as income of the previous year, and (ii) for the purposes of computing in respect of the new asset any allowance under clause (vi) or clause (vii) of subsection (2) of section 10 or the amount of any capital gain arising from its sale, exchange or transfer, the cost or the written down value, as the case may be, shall be nil, or (b) if the amount of the capital gain is equal to or less than the cost of the new asset,-(i) the capital gain shall not be charged under this section, and - (ii) for the purposes of computing in respect of the new asset any allowance under the said clause (vi) or any allowance or adjustment under the said clause (vii) or the amount of any capital gain arising from its sale, exchange or transfer the cost or the written down value, as the case may be, shall be reduced by the amount of the capital gain: provided that where in respect of the purchase of a new capital asset consisting of plant or machinery the assessee satisfies the income-tax officer that despite the exercise of due diligence it has not been possible to make the purchase within the period specified in this sub-section, the income-tax offtcer may, with the prior approval of the inspecting assistant commissioner of income-tax, extend the said period to such date as he considers reasonable  - - - - • - 17 (1) - - • - of to (6) where the total income of an assessee, not being a company, rc:r~e - ~ includes any income chargeable under the head "capital gains", the cia! cues pe tax, including super-tax, payable by him on his total income shall be--- (i) income-tax and super-tax payable on his total income as reduced by the amount of such inclusion, had such reduced income been his total income plus (ii) income-tax on the whole amount of such inclusion at the following rates, namely:-where such amount exceeds rs 15,000 but does not exceed rs 50,000 --one anna in the rupee, exceeds rs 50,000 but does not exceed rs 2,00,000 -two annas in the rupee, exceeds rs 2,00,000 but does not exceed rs 5,00,000 -three annas in the rupee, exceeds rs 5,00,000 but does not exceed rs 10,00,000 -four annas in the rupee, exceeds rs 10,oo,ooo-five annas in the rupee: provided that where owing to the fact that the amount of such inclusion has exceeded a certain limit, income-tax thereon is payable or is payable at a higher rate, the amount of income-tax so payable shall be reduced so as not to exceed-(a) the amount which would have been payable if the amount of such inclusion had not exceeded that limit, plus (b) one-half of the amount by which the amount of such inclusion exceeds that limit (7) where the total income of a company includes any income chargeable under the head "capital gains", the super-tax payable by the company in any year shall be reduced by an amount computed on that part of its total income which consists of such inclusion at the rate of super-tax (excluding the rate of additional super-tax, if any) specified in the case of a company by the annual central act fixing the rate or rates of tax for that year  - - - - -  - • - • •23a (1) subject to the provisions of sub-sections (3) and (4), power to where the income-tax officer is satisfied that in respect of any pre-=: toco:: vious year the profits and gains distributed as dividends by any per-ta on company within the twelve months immediately following the expiry uddi~bu­of that previous year are less than sixty per cent of the total income f:1 :;r::e of the company of th~ previous year as reduced by-cilia (a) the amount of income-tax and super-tax payable by the company in respect of its total income, but excluding the amount of any super-tax payable under this section; (b) the amount of any other tax levied under any law for the time being in force on the company by the government or by a local authority in excess of the amount, if any, which has been allowed in computing the total income; and (c) in the case of a banking company, the am6unt actually transferred to a reserve fund under section 17 of the banking companies act, 1949 (x of 1949); the income-tax officer shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable, make an order in writing that the company shall, apart from the sum determined as payable by it on the basis 'of the assessment under section 23 be liable to pay super-tax at the rate of eight annas in the rupee in the case of a company whose business consists wholly or mainly in the dealing in or holding of investments, and at the rate of four ann,as in the rupee in the case of any otper company on the undistributed balance of the total income of the previous year, that is to say, on the total income reduced by the amounts, if any, referred to in clause (a), clause (b) or clause (c) and the dividends actually distributed, if any: provided that-(a) in the case of a company whose business consists wholly or mainly in the dealing in or holding of investments; and (b) in the case of any other company where the accumulated profits and reserves (including the amounts capitalised from the earlier reserves) representing acc·jidulations of past profits which have not been the subject of an order under this sub-section, exceed either the aggregate of-(i) the paid up capital of the company exclusive of the capital, if any, created out of its profits and gains which have not been the subject of an order under this sub-section, and (ii) any loan capital which is the property of the shareholders, or the actual cost of the fixed assets of the company, whichever of these is greater, this section shall apply as if for "the words "sixty ~r cent, of the total income," wherever they occur, the words - the whole of the total income" had been substituted (2)" no order under sub-section (1) shall be made-(i) in the case of a company referred to in clause (a) of the proviso to that sub-section, which has distributed not less than ninety per cent of its total income as reduced by the amounts, if any, referred to in clause (a), clause (b) or clause (c) of that sub-section, or (ii) in the case of any other company which has distribufed 110t less than fifty-five per cent of its total income as reduced "1y the amounts, if any, aforesaid, or (iii) in any case where according to the return made by a company under section 22, it has distributed not less than sixty per cent of its total income as reduced by the amounts if any, aforesaid, but in the assessment made by the income-tax officer under section 23 a higher total income is arrived at, and the difference in the total income does not arise out of the application of the proviso to section 13 or sub-section (4) of section 23 or the omission by the company to disclose its total income fully and truly, unless the company, on receipt of a notice from the income-tax officer that he proposes to make such an order, fails to make within three months of the receipt of s1,lch notice a further distribution of its profits and gains so that the total distribution made is not less than sixty per cent of the total income of the company of the relevant previous year as reduced by the amounts, if any, aforesaid  - - - - - 24 '( 1) where any assessee sustains a loss of profits or gains in set off of any year under any of the heads mentioned in section 6, he shall be los, in comentitled to have the amount of the loss set off against his income," pu~n:­profits or gains under any other head in that year: ga e - - - - - - (2a) notwithstanding anything contained in sub-section (1), where the loss sustained is a loss falling under the head "capital gains", such loss shall not be set off except against any profits and gains falling under that head (2b) where an assessee sustains a loss such as is referred to in sub-section (2a) and the loss cannot be wholly set off in accordance with the provisions of that sub-section, the portion not so set off shall be carried forward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof not iio set off shall be carried forward to the following year and so on, so however, that no such loss shall be so carried forward for more than six years: provided that where the loss sustained in any previous year does not exceed fifteen thousand rupees, it shall not be carried forward  a billfurther to amend the indian income-tax act, 1922, for the purpose of imposing a tax on capital gains and for certain other purposes and to prescribe the rate of super-tax on companies for the financial year 1957-58 the president has, in pursuance of clause (i) of article ii7 and clause (i) of article 274 of the constitution of india, recommended to the lok sabha, the introduction of the bill m n kaul, secretary (shri t t krishnamacha,i minister for finance) 