blli no 181 , lho  the taxation laws (amendment) bill, 1990 a billfurther to amend the finance act, 1990 and the lncome-taz act, 1981 be it enacted by parliament in the forty-first year of the republic of india as follows:-1 this act may be called the taxation laws (amendment) act, short title 1990 5 ~ in section 2 of the finance act, 1990 (hereinafter referred to as amend· the principal act) ,-_ • :  ft mntot aeetion 2 (a) in sub-section (5) ,-(i) for the words "eight per cent", wherever they occur, the words "twelve per cent" shall be substituted; 10 (ii) the following· proviso shall be inserted and shall be deemed to have been inserted with eft'ect from the 15th day of october, 1990, namely:-is 'provided that in the case of a contractor, being a domestic company, the provisions of this sub·section shall have e1fect, as if for the words "eight per cent:', the words "fifteen per cent" had been substituted'j (b) in subo-section (6) ,-(i) for the words "eight per cent", wherever they o~ur, the words "twelve per cent" shall be substituted; (ii) the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 15th day of 5 october, 1990, namely:-'provided that in the case of a buyer, being a domestic company, the provisions of this sub-section shall have effect, as if for the words "eight per cent", the words "fifteen per cent" had been substituted'; (c) in sub-section (7), in the second proviso, for the words "eight per cent", the words "fifteen per cent:' shall be substituted and shall be deemed to have been substituted with effect from the 15th day of october, 1990; (d) in sub-section (8), in the proviso, for the words "eight per 15 cent" the words "twelve per cent" shall be substituted  3 in the first schedule to the principal act,-amend ir!entof first schedule (a) in part ii, under the heading "surcharge on income-tax" and the entries relating thereto, as they existed immediately before their amendment by the finance (second amendment) ordinance 1990, 20 ord 8 of the following proviso shall be inserted, namely: -1990 "provided that the income-tax deducted in accordance with the provisions of-(i) sub-item (a) of item 1 of this part shall be increased by a surcharge for purposes of the union calculated at the 25 rate of twelve per cent of such income-tax on and from the date the taxation laws (amendment) act, 1990 receives assent of the president; (ii) sub-item (a) of item 2 of this part shall be increased by a surcharge calculated at the rate of fifteen per cent of 30 such income-tax with effect from the 15th day of october, 1990'" i  ';  -~ , : '~ ~ (b) in part fli-(i) in paragraph a,-(1) in sub-paragraph i under the heading "s'urcharge 35 on income-tar' for the words "eight per cent", the words "twelve per cent" shall be substituted; (2) in sub-paragraph ii, under the heading "surcharge on income-tax" for the words "eight per cent"; the words "twelve per cent" shall be substituted; 40 (ii) in paragraph b, under the heading "suflcharge on in come-ta:r" for the words "eight per cent", the words "twelve per cent" _hall be subltttuted;  to 'hie taxation laws (al-1endment) bill, 1990 (to be/as introduced in 10k sabha)1  page 1 , against line 5, inser t the mar"'inal c1 tati:jn,-"12 of 1990" 2 page 2, line 27,-§fter "receive s" idsert "the" 3 page 3,in the marginal he ading to clause 5,-for "anendij:janet" ~ "amend l'isnt " 4 page 7, line 7,-omi t "21 ii 5 page 7, line 15,-for "de due tion" ~ "collec t1on" t, page 7, line 1';,-!:2r "e ase" ~ lie ase s " 7 page (), line 3 from bottom,-for "sub-tern" £!u¥! "sub-1 tem" 8 page 11, line 7 from bottom,-u r "inelu(~ed" 1:~ liincludes" 9 page 12, line 22,-fo£ ''eighty per cent" read '~ight per cent" 1 o page 13, line 10,-for "purpose" £~ad "purpose s" new delhi; ,p:!cember 24 1 0 90 ,fausa 3, 1912 (saka) (iii), in paragraph c,-(1) in, sub-paragraph i, under the heading "surcharge on ,income-tax", for the words "eight per cent", the words "twelve per cent" shall be substituted; 5 (2) in sub-paragraph ii, under the heading "surcharge on income-tax", for the words "eight per cent", the words "twelve per cent"' shall be substituted; 10 (iv) in paragraph d, under the heading "surcharge on income-ta;r", for the words "eight per cent" the words "twelve per cent" shell be substituted; (v) in paragraph e, under the heading "surcharge on income-tax", for the words "eight per cent", the words "fifteen per cent'· shall be substituted and shall be deemed to have been substituted with effect from the 15th day of october 1990 ~3 of 1961 ] 5 4 in sect:on 32 of the income-tax act 1961 (hereinafter referred to amend as the income-tax act) in sub-section (1), in clause (ii), after the second ment at proviso and before explanation i, the following proviso shan be inserted section 32 namely:-20 25 "provided also that the deduction in the case of any block of assets under this clause in respect of the previous year relevant to the assessment year commencing on the 1st day of april, 1991 shall be restricted to seventy-five per cent of the amount calculated at the percentage on the written dtwn value of such assets, prescribed under this act immediately 'before the commencement of the taxation laws (amendment) act, 1990" 5 in section 234c of the income-tax act in sub-section (1), after amend the first proviso and before the explanatwn, the following proviso shall menet of be inserted, namely: -section 234<: 30 "provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of-(a) restricting the amount of deduction under the third' proviso to clause (ii)·· of, sub-section (1) of section 32; 12 of 1990, 35 (b) increase in the rate of surcharge under section 2 of the finance act 1990 as amended by the taxation laws (amendment) act, 1990 and the assessee ha!l paid the amount of shortfall-(i) where it is a domestic company and-(1) the case falls under clause (a), as part of the instalment of advance tax which is immediately due: 4'0 (2) the case 'falls under clause (b), on or before the 15th day of noverrher 1990 in respect of the instalment of ad~ vance tax due on the 15t,lot day of september 1990j (ii) where it is not a domestic company and-(1) the case falls under clause (a), as part of the intalment of advance tax which is immediately due; (2) the case falls under clause (b), as part of the instalment of advance tax due on or before the imh day of march, 5 1991  6 notwithstanding anything contained in the income-tax aet,-payment of surcharge (a) the surcharge payable under section 2 of, and part til or the first schedule to, the principal act, as amended by this act,-(i) in the case of an assessee being a domestic company, shall, in respect of the instalment of "advance tax" paid or pay- 10 able on or before the 15th day of september, 1990, be payable on or before the 15'th day of november, 1990; (ii) in the case of an assessee not being a domestic company, shall, in respect of the instalment of "advance tax" paid or payable on or be'fore the 15th day of september, 1990 and the 15th is day of december, 1990, be payable on or before the 15th day of march, 1991; (iii) in any case in which income-tax has to be calculated under the first proviso to sub-section (5) of section 132 of the __  income-tax act or charged under sub-section (4) of section 172 20 or sub-section (2) of section 174 ot' section 175 or sub-:section (2) of secti-on 176 of the saw act shall be payable only where such income-tax is so calculated or charged-(1) in respect of a domestic company, after the 15th day of october, 1990; 25 (2) in respect of any other assessee, after the date on which this act receives the assent of the president, (b) in the case of surcharge deductible under section 2 of, and part iii of the first schedule to the principal act, as amended by this act, the person responsible for making the payment referred 30 to in sub-::ection (1) or sub-section (2) or sub-section (2a) or subsection (2b) of section 192 of the income-tax act shall at the time of making such payment after the date on which this act receives the assent of the president adjust any deficiency arising out of any previous deduction resulting on account of the mcreale in the rate 3s of surcharge '1 (1) the finance (second amendment) ordinance, 1990 is hereby 0rcl8 repealed of 1980 ~l and "vin, (2) notwithstanding such repeal, anything done or any action taken 40 under the principal act as amended by the said ordinance, shall be deemed to have been done or taken under the principal act, as amended by this act  statement of objects and reasonsin order to mobilise additional resources to meet the financial cost of evacuating indians from the gulf and providing relief to them the government decided to increase the surcharge on income-tax payable by domestic companies since parliament was not in session a:11 it was necessary to take immediate action to rais? the said resources, the finance (second amendment) ordinance, 1900 (ord 8 of 1990) was promulgated by the president on 15th october 1990 by this ordinance, the surcharge of 8 per cent payable by domestic companieq on income exceeding rs 75,000, during the financial year 1990-91 has been increased to 1& per ;;ent  ':'  'f', ~ j 2 in order to meet the stringent financial situation arising out of the gulf crisis, the government has also decided to increase the surcharge on income-tax hitherto payable by assessees, other than companies the depreciation allowable on written down value of block of assets is also proposed to be restricted to 75 per cent of the amount calculated at the percentage prescribed under the income-tax act 3 the bill seeks to replace the finance (second amendment) ordinance, 199() and to give effect to the proposals mentioned in paragraph 2 new' delhi; yashw ant sinha t17e 20th december, 1990  memorandum explaining the modifications contained in the bm to replal~e the finance (second amendment) ordinance, 1990the taxation laws (amendment) bill, 1990 which seeks to repeal and replace the finance (second amendment) ordinance, 1990, proposes to make the following modifications in the provisions contained in the said ordinance:-(i) sub-sect~on (2) of section 1 of the ordinance has been dropped as the provisions-of sub-clauses (a) (u), (b) (ii) and (c) of clause 2 and a portion of sub-clause (a) and sub-clause \b) (v) of clause 3 of the bill will come into force retrospectively from the 15th day of october, 1990 the remaining provisions of the bill will come into force from the date of assent of the president; (ii) sub-clauses (a) (i), (b) (i) and (d) c,f clause 2 and a portion of sub-clause (a) and sub-clause (b) (i) to (h·) of clause 3 seek to amend section 2' of the finance act, 1990 and part ii and paragraphs a to d of part iii of the first schedule to ~hat act so as to increase the surcharge on income-tax presently payable by assessees, other than companies the said surcharge is being increlsed from eight per cent to twelve per cent; (iii) clause 4 seeks to amend clause (ii) of sub-section (1) af section 32 of the income-tax act so as to restrict the depreciation allowable on written down value of block of assets in respect of the previous year relevant to the assessment year commencing on the 1st day of april, 1991, to seventy-five per cent of the amount calculated at the percentage prescribed in the income-tax rules, 196% immediately before the commencemen1 of this amendment; (iv) clause 5 seeks to amend sub-section (1) of section 234c of the income-tax act so as to provide that the interest speclfted !n that sub-section shall not be payahle in rei(j<:ct of any shortfall in the payment of the tax due on the returned income where such shortfall is on account of restrict:ng the amount of deduction under the third proviso to section 32 (1) (ii) or increase in the rate of surcharge under section 2 of the finance act 1990 as amended by this legislation subject to the condition that the:' payment of tax ii made by the due date; (v) clause 6 seeks to specify the date~ ifr paylnent of additional tax liability  (12 of 1990)  - - - chapter ii  rates in' income-tax2, (1)  - - 21 income - (5) in cases in which tax has to be deducted under section 194c of tax the income-tax act, the deduction shall be made at the rates specified in that section and shall be increased by a surcharge for purposes of the union calculated at the rate of eight per cent of such deduction (6) in cases in which tax has to be collected under section 206c of the income-tax act, the collection shall be made at the rate specified in that section and shall be increased by a surcharge for purposes of the union calculated at the rate of eight per cent of such deduction (7) subject to the provisions of sub-section (8), in case in which ldeome-tax has to be calculated under the first proviso to sub-section (5)\ of secti'on 132, of the income-tax act or charged under sub-section (4) of section 172 or sub-section (2) of section 174 or secdon 175 or sub-section (2) of section 176 of the said act or deducted under section 192 of the said act from income chargeable under the head "salaries" or in which tht "advance tax" payable under chapter xvii-c of the said act has to be computed at the rate or rates in force, such income-tax or, as the case may be "advance tax" shall be so calculated, charged, deducted or computed'at th~ rate or rates specified in part iii of the first schedule and such tax as reduced by the rebate of income-tax calculated under chapter viu-a shall be increased,-(a) in the cases to whicl1 paragraphs a b, c and d of that part apply, by a surcharge for purposes of the union; and (b) in the cases to which paragraph e of that part appli_, by' a surcharge,  (;alculatep in each case in the manner provided therein: provided that in cases to which the provisions of chapter xii or chapter xii-a or sub-section (la) of section 161 or section 164 or section 164a or section 167b of the income-tax act apply "advance tax" shall be computed with reference to the rates imposed by this sub-sertion or the rates as specified in that chapt~ or section, as the case may be: provided further that in respect of any income chargeable to tax under section 11ab of the income-tax act, the "advance tax" computed under the first proviso shall be increased by a surcharge for purpose of 1jbe union calculated at the rate of eight per cent of such "advance tax",   (8) in the cases to which sub-paragraph 1 or sub-paragraph n of paragraph a of part iii of the first schedule applies, where the a  has, in the previous year or, if by virtue of any provision of the incometax act, income-tax is to be charged 1n respect of the income of a period other than the previous year, in such other period, any net agricultural income exceeding six hundred rupees, in addition to total income and the total income exceeds,-(i) in a case to which the said sub-paragraph i applies, twentytwo thousand rupees, and (ii) in a case to which the said sub-paragraph ii applies, twelve \ thgusand rupees, then, in calculating income-tax under the first proviso to sub-section (5) of section 132 of the income-tax act or in charging inco~e-tax under sub-section (2) of section 174 or section 175 or sub-section (2) of section 176 of the said act or in computing the "advance tax" payable under chapter xvii-c of the said act, at the rate or rates in force,-(a) the net agricultural income shall be taken into account, in the manner provided in clause (b) [that is to say, as if the net agricultural income were comprised in the total income after,-(i) in a case to which the said sub·paragraph i applies, the first twenty-two thousand rupees, and (ii) in a case to which the said sub-paragraph ii applies, the!) first twelve thousand rupees, of the total income but without being liable to tax] - only for the purpose of calculating, charging or computing such income-tax or as the case may be, "advance tax" in respect of the total incom~; and (b) such income-tax or, as the case may be, "advance tax" shall be so calculated, charged or computed as follows:-(i) the total income and the net agricultural income shall be aggregated and the amount of income-tax or "advance tax" shall be determined in respect of the aggregate income at the rates specified in sub-paragraph lor, as the case may be, sub-paragraph ii of the said paragraph a, as if such aureate income were the total income; (ii) the net agricultural income shall be increased,-(a) in a case to which the said sub-paragraph i applies, by a sum of twenty-two thousand rupees; and (b) in a case to which the said sub-;paragraph' n applies, by a sum of twelve thousand rupees, and the amount of income-tax or "advance tax" shan be dtar~ mined in respect of the net agricultural income as so increued at the rates specified in the said paragraph i  , as the case may be, the said sub-paragraph ii as if the net agricultural income as so ii1creased were the total income; (iii)· the amount of income-tax or "advance tax" determined in accordance with sub-clause (i) shall be reduced by the amount of income-tax as the case may be, "advance tax" determined in accordance with sub-clause (ti) and the sum so arrived at shall be the income-tax or, as the case may be, "advance tax" in respect of the total income: 1'1 provided that the amount of income-tax or "advance tax" so arrived at shall in the case of every person having a total income exceeding seventy-five thousand rupees, be increased by a surcharge for purposes of the union calculated at the rate of eight per cent of such income-tax or, as the case may be, "advance tax" and the sum so arrived at shall be the income-tax or as the case may be "advance-tax" in respect of the total income1l - - - - - the first schedule (see section 2) - - - - - part ii  rates for deduction o~' tax at source in certain cases~ every case in which under the provisions of sections 193, 194 194a, 194b, 194bb, 1940 and 195 of the income-tax act, tax is to be deducted at the rates in force, deduction shall be made from the income subjeet to deduction at the following rates:----- _---__----rate of income to: - __  - __---- -------_-------__----__-  1 in the case of a person other than a company-- (a) where the person is resident in india-- - - 2 in the case of a company-- - (a) where the company is a domestic company--- - - surcharge on income-tax the amount of income-tax ded\jcted in accordance with the provisions of-(a) sub-item (a) of item 1 of this part shall be increased by a surcharge for purposes of tl:te union and (b) sub-tem (a) of item 2 of this part shall be increased by a surcharge, calculated at the rate of eight per cent of such income-tax  rates 1'oit cajj,:ulatufg oil wl\rgin(l df(:om~tax 1n cu'l'aui cases ddjuct- !ng tjll'comb-tax nom incol\(1! ch~ tljfbwl 1111 ~ "salajtms" and computing "advancb ta&"in cases in which income--t&x has to be calculated wlder the first proviso to sub-sectioa (5) of section 132 of the income-tax act or charged uader sub-section (4) of section 172 or sub-section (z) of section 174 or section 175 or sub-section (2) of section 176 of the said act or deducted under section 192 ·of the said act from income chargeable under the head "salaries" or in which ·the "advance tax" payable under chapter j{vji-c ~f the said act has to be computed at the rate or rates in force, s~ch income-ta~ or  as ~e case may be, "advance tax" [not being ''advance tax" in respect of any income chargeable to tax under chapter xii er chapter xi!-a or sub-section (la) of section 161 f6 seetion 184 or ieetion 1641\ or section 167b of the income-tax act at the rates as specified in that chapter or section op surcharge on such "advance tax" in respect of any income cltargeable to tax under section u5b], shall be calculated, charged, deducted or computed at the following rate or rates:- patograr-h a sub-paragraph 1in the case of every individual or hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the income-tax act, not being a case to which sub-paragraph ii of this paragraph or any other paragraph of this part applies-- surcharge on income-tazthe amount of income-ta'k computed in accordance with the preceding provisions of this sub-paragraph shall,-(i\ in the case of every individual, hindu undivided family or association of persons or body of individuals referred to in sections 88 and 88a having a total jneome exceeding !'eventy-five thousand rupees, be reduced by the amount of rebate of inc-orne-tax cajculrted under chapter wi-a at'd the income-tax all so reduced, (ii) in the case of every person other than those mentioned in item (i): having a total income exceeding seventy-five thousand rupees be increased by a surehar'te for purposes of the union calculate:i at the rate of eight per cent of buch income-tax: provided that no such surcharge shall be payable by a non-residentin the case of every hindu undivided family which at any time during t~e previous year has at least one member whose total income oc the pre-'vigus yev "levant to the 'aseel8li1ent year oommencing em the hit day of april, 1991 exceeds rs 22,000,-' - - - - - surcharge on in;ome-'tcp; the amount of income-tax computed in accordance with the preceding provisions of this sub-paragraph shall, in the case of ever; person havlng a total income exceeding seventy-five thdusand rupees, be reduced by the amount of rebate' of income-tax calculated under chapter vm-a and the income-tax as so reduced be increased by a surcharge fl)r purposes of tbe union calculated at the rat~ of eight per cent of such income-tax: provided that no such sureharge shall be payable by a non-re"iden,t  par4graph bin the case of every co-operative society,-- - - surcharge on income-tax - - the amount of income-tax computed in accordance with the preceding provisions of this paragraph, sh!lll, in the cue of every person having a total income exceeding seventy-five thousand rupees, be increased by a surcharge for purposes of t,he union calculated at the rate of eight per 'cent of suth income-tax'  " , paraaraph c " sub-paragraph 1in the case of every reii&tered finn, not being a case to which sub-paragrapb ii of this paragraph app1ies,-- - - - -  ~'u:"cmrge on if't,cofneotl11:the amount of income-tax computed in accordance with the prececl  ing provisions of this sub-paragraph shall, in the case of every person having a total income exceeding seventy-ftve thousand rupees, be in-<'!'eased by a surcharge for purposes of the union calculated at the rate of eight per cent of such income-tax  sub-prlragraph iiin the case of every registered firm whose total income included income derived from a profession carried on by it and the income so included is not less than fifty-one per cent of such total income,--$\bullet$$\bullet$$\bullet$$\bullet$ surchaf', on fflt'ome-tilt:the amount of income~tax computed ,in accordance with the preceding provisions of this sub-paragraph shad, in the case of every penon having a total income exceeding seventy-five thousand rupees, be increased by a surcharge for purposes of the union calculated at the rate of eight per cent of such income-tax exp14nation-for the purposes of this paragraph, "registered finn" idcludes an unregistered firm assessed as a registered firm under clause (b) of section 183 of the income-tax act ~  paragraph din the case of every local authority,-- - - - (surcharge on income-tax - the ~unt of income-tax computed at the rate hereinbefore· specifled shall, in the case of every person having a total income exceeding seventy-five thousand rupees, be increased by a surcharge for purposes of the union calculated at, the rate of eight per cent of such income-tax  paragraph ein the case of a company,-- - - - ~urcharge on inc07neta:r - the amount of income-tax computed in accordance with the provisions of item i of this paragraph shan, in the case of every person having a total income exceeding seventy-five thousand rupees, be increased by a surcharge calculated at the rate of ~ighty per cent of such incotnetax i - - - - - d('plc-ciatkm extracts from tile income-tax act, 1961  (43 of 1961) - - - - - 32 (1) in respect of depreciation of buildings, machinery, plant or furni ture owned by the bssessee and used for the purposes of the business or profession, the following deductions shall subject to the provisions of section 34, be a1lowed-- - - -  (ii) in the case of any block of assets, such percentage on the written down value thereof as may be prescribed: provided that where the actual cost of any machinery or plant does not exceed five thousand rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such t:julchinery or plant is first put to use by the assessee for the purposes of his business or profession: provided further that no deduction shall be allowed under this clause in respect of any motor car manufactured outside india, where slowh motor car is acquired by the assessee after the 28th day of  februal')\ 1975, and is ulledotherwble than in a business of running it on hire for tourists   explanation i-where the business or profession of the assessee 18 carried on a building not owned by him but in respect at which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work in or in relation t,o, and by way of renovation or exte~ion of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee interest for deferment of sdvance tax expianation 2-for the purpose of this clause "written down value of the block of assets" shall have the same meaning as in clause (c) of sub-section (6) of section 43; - - - - - 234c (1) where in any financial year, the advance tax paid by the assessee on his current income on or before the 15th day of september is less than twenty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 151th day of december is less than fifty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and onehalf per cent per month of the shortfall from for a period of three months on the amount of the shortfall from twenty per cent or as the -ase may be, fifty per cent of the tax d!le on the returned income: provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where 8ueh shortfall is on account of under-estimate of failure to estimate- ! r ja)  the, a~oun~ ?ccapital gains: ,pr" ', " (b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2, and the assessee has paid the whole of the amount of tax payable in res-pect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the instalment of advance tax which is immediately due or where no such instalment is so due, by the 31st day of march of the financial year explanation-in this section, "tax due 00 the returned income" means the tax chargeable on the total income declared in the return of meome furnished by the assessee for the assessment year commencing on the 1st da of april immediately following the financial year in which the advance ~ is paid, as reduced by the amount of tax deductible or collec~ible at source in accordance with the provi!llions· of chapter xvi,i o~ any mc?me which is subject to such deduction or collection and whlch 18 taken mto account in computing such total income - - - - - bill furtber to arnen4 the j'idance act, 1990 and the income-tax act, 1181 