Section 109 - Omitted - Income-tax Act, 1961

109. 38 [****] ***************** NOTES:- 1. Substituted vide Section 10 of the Finance (No. 2) Act, 1962 w.e.f. 01-04-1962 before it was read as, 50% 2. Substituted vide Section 10 of the Finance (No. 2) Act, 1962 w.e.f. 01-04-1962 before it was read as, 50% 3. Substituted vide Section 10 of the Finance (No. 2) Act, 1962 w.e.f. 01-04-1962 before it was read as, 65% 4. Substituted vide Section 27 of the Finance Act, 1964 w.e.f. 01-04-1964 before it was read as, For the purposes of sections 104 and 105 5. Substituted vide Section 27 of the Finance Act, 1964 w.e.f. 01-04-1964 before it was read as, (2) in the case of an Indian company whose business consists wholly in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power............................... 1 [ 45% ] 6. Substituted vide Section 27 of the Finance Act, 1964 w.e.f. 01-04-1964 before it was read as, in any of the activities specified in the preceding clause 7. Omitted vide Section 31 of the Finance Act, 1965 w.e.f. 01-04-1965 before it was read as, and super-tax 8. Inserted vide Section 31 of the Finance Act, 1965 w.e.f. 01-04-1965 9. Inserted vide Section 31 of the Finance Act, 1965 w.e.f. 01-04-1965 10. Inserted vide Section 21 of the Finance Act, 1966 w.e.f. 01-04-1966 11. Substituted vide Section 21 of the Finance Act, 1966 w.e.f. 01-04-1966 before it was read as, (ii) investment company means a company whose business consists wholly or mainly in the dealing in or holding of investments; 12. Omitted vide Section 21 of the Finance Act, 1966 w.e.f. 01-04-1966 before it was read as, wholly or 13. Inserted vide Section 21 of the Finance Act, 1966 w.e.f. 01-04-1966 14. Substituted vide Section 21 of the Finance Act, 1966 w.e.f. 01-04-1966 before it was read as, (3) in the case of an Indian company, a part only of whose business consists 6 [ in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power ] (a) in relation to the said part of the company s business ................................................. 2 [ 45% ] (b) in relation to the remaining part of the company s business (1) if it is a company which satisfies the conditions specified in sub-clause (a) of clause (4) .... 90% (2) in any other case .............................................. 3 [ 60% ] the said percentages being applied separately with reference to the amounts of profits and gains attributable to the two parts of the company s business aforesaid as if the said amounts were respectively the total income of the company in relation to each of its parts, the amount of dividends and taxes also being similarly apportioned, for the purposes of section 104 and this section; 15. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, 4 [ For the purposes of sections 104, 105 and 107A ] 16. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income of a company 17. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, (c) any sum in respect of which a deduction of income-tax is allowed under the provisions of section 88; 18. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, (d) losses under the head Capital gains ; 19. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, included in the total income 20. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 21. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 22. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 23. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 24. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 25. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 26. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 27. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, total income 28. Inserted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 29. Substituted vide Third Schedule of the Finance Act, 1968 w.e.f. 01-04-1969 before it was read as, 11 [ (ii), investment company means a company whose 20 [ gross total income ] consists mainly of income which, if it had been the income of an individual, would have been regarded as unearned income. Explanation.-In this clause, the expression unearned income has the meaning assigned to it in the Finance Act of the relevant year; ] 30. Inserted vide Section 28 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1976 31. Substituted vide Section 28 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1976 before it was read as, (1) in the case of an investment company 13 [ other than an investment company which falls under sub-clause (3) of this clause ] ........................ 90% 32. Substituted vide Section 28 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1976 before it was read as, in the case of an Indian company [not being an Indian company which falls under the provisions of clause (a) of sub-section (4) of section 104], a part only of whose 23 [ gross total income ] consists of profits and gains attributable to the business of construction of ships or of manufacture or processing of goods or of mining or of generation or distribution of electricity or any other form of power- (a) in: relation to the profits and gains attributable to such business Nil; 33. Substituted vide Section 28 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 01-04-1976 before it was read as, Explanation.-The provisions of this Chapter shall, in relation to the remaining part of the 25 [ gross total income ] aforesaid, apply as if such part were the 26 [ gross total income ] of the company; and, for the purposes of section 104, the amount of dividends actually distributed shall be deemed to be such proportion thereof as the part aforesaid bears to the 27 [ gross total income ] of the company; ] 34. Omitted vide Section 21 of the Finance (No. 2) Act, 1977 w.e.f. 01-04-1978 before it was read as, (ia) industrial company means an Indian company whose business consists wholly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power; 35. Substituted vide Section 21 of the Finance (No. 2) Act, 1977 w.e.f. 01-04-1978 before it was read as, an industrial company or a consultancy service company 36. Substituted vide Section 21 of the Finance (No. 2) Act, 1977 w.e.f. 01-04-1978 before it was read as, 14 [ (3) 32 [ in the case of an Indian company, not being an industrial company or a consultancy service company, a part of whose gross total income consists of profits and gains attributable to the business of provision of technical know-how, or of rendering services in connection with the provision of technical know-how, to other persons, or of construction of ships or of manufacture or processing of goods or of mining or of generation or distribution of electricity or any other form of power (a) in relation to the said part of its gross total income 45%; ] (b) in relation to the remaining part of its 24 [ gross total income ] - (1) if it is an investment company or a company which satisfies the conditions specified in sub-clause (4) (a) of this clause 90%; (2) in any other case 60%. 33 [ Explanation. The provisions of this Chapter shall apply at if the aforesaid two parts of the gross total income of the company were respectively the gross total income of the company in relation to each such part and as if the amount of dividends actually distributed and the distributable income were also similarly apportioned for the purposes of section 104 and this section; ] 37. Substituted vide Section 34 of the Finance Act, 1983 w.e.f. 01-04-1984 before it was read as, Explanation. In this clause and in sub-clause (3) of clause (iii), the expression provision of technical know-how has the meaning assigned to it in sub-section (2) of section 80MM; 38. Omitted vide Section 41 of the Finance Act, 1987 w.e.f. 01-04-1988 before it was read as, Distributable income , Investment company and statutory percentage defined 109. 15 [ For the purposes of section 104, 105 and 107A and this section ] , (i) distributable income means the 16 [ gross total income of a company ] as reduced by (a) the amount of income-tax 7 [****] payable by the company in respect of its total income, but excluding the amount of any super-tax payable under section 104; (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; 17 [ (c) any sum with reference to which a deduction is allowable to the company under the provisions of section 80G; ] 18 [ (d) losses under the head Capital gains relating to capital assets other than short-term capital assets; ] (e) income arising outside India in a country the laws of which prohibit or restrict the remittance of money to India: Provided that, when the prohibition or restriction is subsequently removed, any reduction allowed under this provision shall be deemed to be a part of the distributable income of the previous year in which the prohibition or restriction is removed; (f) in the case of a banking company, the amount actually transferred to a reserve fund under section 17 of the Banking Companies Act, 1949 (10 of 1949). 10 [ (g) any expenditure actually incurred for the purposes of the business, but not deducted in computing the income changeable under the head Profits and gains of business or profession being- (1) a bonus or gratuity paid to an employee, (2) legal charges, (3) any such expenditure as is referred to in clause (c) of section 40, (4) any expenditure claimed as a revenue expenditure but not allowed to be deducted as such and not resulting in the creation of an asset or enhancement in the value of an existing asset; (h) any expenditure wholly and exclusively incurred far the purpose of making or earning any income (other than income chargeable under the head Profits and gains of business or profession ) 19 [ included in the gross total income ] but not allowed to be deducted in computing such income and not resulting in the creation of an asset or enhancement in the value of an existing asset; ] 30 [ (ia) 34 [****] (ib) consultancy service company means an Indian company whose business consists wholly in the provision of technical know-how, or in the rendering of services in connection with the provision of technical know-how, to other persons. 37 [ Explanation : In this clause and in sub-clause (3) of clause (iii), the expression provision of technical know-how means, - (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design secret formula or process or similar property; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or similar property; (iii) the use of any patent, invention, model, design, secret formula or process or similar property; (iv) the imparting of any information concerning industrial, commercial or scientific knowledge, experience or skill; ]] 29 [ (ii) investment company means a company whose gross total income consists mainly of income which is chargeable under the heads Interest on securities , Income from house property , Capital gains and Income from other sources ] 8 [ (iia) trading company means a company whose business consists 12 [****] mainly in dealing in goods or merchandise manufactured, produced or processed by a person other than that company and whose income attributable to such business included in its 21 [ gross total income ] is not less than fifty one per cent. of the amount of such 22 [ gross total income ] ; ] (iii) statutory percentage means, 31 [ (1) in the case of 35 [ a consultancy service company ] ..... 45%; (2) in the case of an investment company other than an investment company which falls Under sub-clause (3) of this clause ..... 90%; ] 5 [****] 36 [ (3) in the case of an Indian company, not being an Indian company referred to in clause (a) of sub-section (4) of section 104 or a consultancy service company, a part of whose gross total income consists of profits and gains attributable to - (i) the business of construction of ships or of manufacture or processing of goods of mining or of generation or distribution of electricity or any other form of power; or (ii) the business of provision of technical know-how, or of rendering services in connection with the provision of technical know-how, to other persons - (a) in relation to that part of its gross total income as is attributable to the business referred to in item (i) of this sub-clause ....... Nil; (b) in relation to that part of its gross total income as is attributable to the business referred to in item (ii) of this sub-clause ......... 45%; (c) in relation to the remaining part of its gross total income - (1) if it is an investment company or a company which satisfies the conditions specified in sub-clause (4)(a) of this clause ....... 90%; (2) in any other case ........ 60%. Explanation : The provisions of this Chapter shall apply as if each of the aforesaid parts of the gross total income of the company were the gross total income of the company in relation to that part and as if the amount of dividends actually distributed and the distributable income were also similarly apportioned for the purposes of section 104 and this section; ] (4) in the case of any other company not referred to in the preceding clauses, (a) where the accumulated profits and reserves (including depreciation reserves and any amounts capitalised from the earlier reserves) representing accumulations of past profits which have not been the subject of an order under section 104 or the corresponding provision of the Indian Income-tax Act, 1922 (11 of 1922), exceed either I. 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 section 104, and (ii) any loan capital which is the property of the shareholders; or II. the value of the fixed assets as shown in the books of the company, whichever of these is greater ........................................................................... 90% 9 [ Provided that in the case of such company, not being a trading company, sub clause (a) shall have effect as if for the word exceed , the words exceed twice the amount of were substituted. ] (b) where sub-clause (a) does not apply ............................................................. 65% 28 [ (iv) gross total income means the total income computed in accordance with the provisions of this Act before making any deduction under Chapter VIA. ]