CHAPTER III
DIRECT TAXES
Income-tax
Amendment of First Schedule.
52. In the First Schedule to the Income-tax Act, in rule 5, for clause (b) [as inserted by clause (ii) of section 80 of the Finance (No.2) Act, 2009][ 33 of 2009.] , the following clause shall be substituted with effect from the 1st day of April, 2011, namely:—
"(b) (i) any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the profit and loss account;
(ii) any provision for diminution in the value of investment debited to the profit and loss account, shall be added back;".
Notes on Clauses:
Clause 52 of the Bill seeks to amend rule 5 of the First Schedule to the Income-tax Act relating to computation of profits and gains of other insurance business.
Under the provisions contained in clause (b) of rule 5 of the said Schedule, as inserted by clause (ii) of section 80 of the Finance (No. 2) Act, 2009, adjustment shall be made by way of deduction in respect of any amount either written off or provided in the accounts to meet diminution in or loss on realisation of investments
in accordance with the regulations made by the Insurance Regulatory and Development Authority. Adjustment shall also be made by way of increase in respect of any amount taken credit for in the accounts on account of appreciation of or gains on realization of investments in accordance with the regulations made by the Insurance Regulatory and Development Authority.
It is proposed to substitute the aforesaid clause (b) so as to provide that any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the profit and loss account and any provision for diminution in the value of investment debited to the profit and loss account shall be added back.
This amendment will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
