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[Section 40] [Complete Act]
Central Government Act
Section 40(a) in The Income- Tax Act, 1995
(a) in the case of any assessee-
(i) 5 any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938 ), royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India, on which tax has not been paid or deducted under Chapter XVII- B: Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII- B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted. Explanation.- For the purposes of this sub- clause,-
(A) " royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub- section (1) of section 9;
(B) " fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub- section (1) of section 9;]
1. Substituted for' Income- tax' by the Direct Tax Laws (Amendment) Act, 1987, w. e. f. 1- 4- 1988.
2. Prior to the omission, section 39 read as under:" 39. Managing agency commission.- Where a managing agent of a company is liable under an agreement in writing made for adequate consideration to share managing agency commission with a third party or third parties, the said agent and the said party or parties shall file a declaration showing the proportion in which such commission is shared between them under the agreement, and on proof to the satisfaction of the Income- tax Officer of the facts contained in such declaration, such agent and each such party shall be chargeable only on the share to which such agent or party is entitled under the agreement".
4. Substituted for" 39" by the Direct Tax Laws (Amendment) Act, 1987, w. e. f. 1- 4- 1989.
5. Substituted by the Finance Act, 1988, w. e. f. 1- 4- 1989. Prior to the substitution, subclause (i) read as under:" (i) any interest chargeable under this Act which is payable outside India (not being interest on a loan issued for public subscription before the 1st day of April, 1938 ) on which tax has not been paid or deducted under Chapter XVII- B and in respect of which there is no person in India who may be treated as an agent under section 163;"
(ii) any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains;
(iia) 1 any sum paid on account of wealth- tax. Explanation.- For the purposes of this sub- clause," wealth- tax" means wealth- tax chargeable under the Wealth- tax Act, 1957 (27 of 1957 ), or any tax of a similar character chargeable under any law in force in any country outside India or any tax chargeable under such law with reference to the value of the assets of, or the capital employed in, a business or profession carried on by the assessee, whether or not the debts of the business or profession are allowed as a deduction in computing the amount with reference to which such tax is charged, but does not include any tax chargeable with reference to the value of any particular asset of the business or profession;]
(iii) any payment which is chargeable under the head" Salaries", if it is payable outside India and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII- B;
(iv) any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are chargeable to tax under the head" Salaries";
(v) 2 ]
1. Inserted by the Income- tax (Amendment) Act, 1972, w. r. e. f. 1- 4- 1962. Section 4 of the Amendment Act extended the prohibition to assessment years governed by the 1922 Act and section 5 saved certain cases. These sections read as under:" 4. Wealth- tax not deductible in computing the total income for certain assessment years.- Nothing contained in the Indian Income- tax Act, 1922 (11 of 1922 ), shall be deemed to authorise, or shall be deemed ever to have authorised, any deduction in the computation of the income of any assessee chargeable under the head' Profits and gains of business, profession or vocation' or' Income from other sources' for the assessment year commencing on the 1st day of April, 1957, or any subsequent assessment year, of any sum paid on account of wealth- tax. Explanation.- For the purposes of this section,' wealth- tax' shall have the same meaning as is assigned to it in the Explanation to sub- clause (iia) of clause (a) of section 40 of the principal Act.'" 5. Saving in certain cases.- Where, before the 15th day of July, 1972 being the date on which the Income- tax (Amendment) Ordinance, 1972 (7 of 1972 ), came into force], the Supreme Court has, on an appeal in respect of the assessment of an assessee for any particular assessment year, held that wealth- tax paid by the assessee is deductible in computing the total income of that year, then, nothing contained in subclause (ii- a) of clause (a) of, section 40, or sub- section (1A) of section 58, of the principal Act, as amended by this Act, or, as the case may be, section 4 of this Act, shall apply to the assessment of such assessee for that particular year.'
2. Omitted by the Finance (No. 2) Act, 1971, w. e. f. 1- 4- 1972. Earlier, it was inserted by the Finance Act, 1968, w. e. f. 1- 4- 1969 and amended by the Taxation Laws (Amendment) Act, 1970, w. e. f. 1- 4- 1971