Income-tax Act,1961
Act No : 43
Section :
"Distributable income", "investment company" and "statutory percentage" defined. (2)in the case of an investment company other than an investment company which falls under sub-clause (3) of this clau
2[109. "Distributable income", "investment company" and "statutory percentage" defined.-Omitted by the Finance Act, 1987, w.e.f. 1-4- 1988.] ----------------------------------------------------------------------- --> --> of his intention to make an order under section 104, within thirty days of the receipt of such notice. (3) Every application under sub-section (1) shall be accompanied by a fee of one hundred rupees. (4) If the Board is satisfied that a distribution equal to the statutory percentage of the distributable income of the company concerned would be unreasonable, it may reduce the amount of minimum distribution required of the company under this Chapter by such amount, not exceeding twenty per cent of the statutory percentage of its distributable income, as it may consider fit and further determine the period within which such distribution shall be made. (5) The Board shall not reject an application made under sub-section (1) without giving the company concerned an opportunity of being heard and its decision shall be final as respects matters concluded by it. (6) Where an application is made by the company after receipt of a notice from the Income-tax Officer under sub- section (1) of section 105 and a further distribution is made in accordance with the decision thereon of the Board, such further distribution shall not be taken into account in deciding whether the provisions of section 104 apply in respect of the previous year in which the further distribution is made. (7) Where an application is made by a company under this section, the Income-tax Officer shall not make any order under section 104 until the decision is given by the Board on that application: Provided that where a company is required to make a distribution or further distribution of its profits and gains in accordance with the decision of the Board and fails to make such distribution or further distribution within the period determined thereunder, the Income-tax Officer shall make an order under section 104 as if no reduction of the amount of minimum distribution had been made by the Board under this section. (8) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, declare that the provisions of this section shall not apply to any class of companies or in regard to the whole or any part of the profits and gains of any class of companies. (9) Notwithstanding anything contained in section 246, no appeal shall lie to the Commissioner (Appeals) against an order of the Income-tax Officer under section 104 in a case where a decision has been given by the Board. (10) The Board may, by notification in the Official Gazette, direct that, subject to such conditions, if any, as may be specified in the notification, the powers exercisable by it under this section shall also be exercisable by any Commissioner in respect of such companies or classes of companies as may be specified therein and thereupon in respect of such companies or classes of companies the provisions of this section and sections 106 and 107 shall have effect as if references in the said sections to the Board were references to such Commissioner." 1 Prior to the omission, section 108, as originally enacted, read as under: "108. savings for company in which public are substantially interested.-Nothing contained in section 104 shall apply- (a) to any company in which the public are substantially interested; or (b) to a subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous. year." 2 Prior to the omission, section 109, as amended by the Finance (No. 2) Act, 1962, w.e.f. 1-4-1962; Finance Act, 1964, w.e.f. 1-4- 1964; Finance Act, 1965, w.e.f. 1-4-1965; Finance Act, 1966, w.e.f. 1- 4-1966; Finance (No. 2) Act, 1967, w.e.f. 1-4-1968; --> --> ----------------------------------------------------------------------- 1.457 --------------------------------------------------------------------- --> --> Finance Act, 1968, w.e.f. 1-4-1969; Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976; Finance (No. 2) Act, 1977, w.e.f. 1-4-1978 and Finance Act, 1983, w.e.f. 1-4-1984, read as under: "109. 'Distributable income', 'investment company'and 'statutory percentage' defined.-For the purposes of sections 104, 105, and 107A and this section,- (i) 'distributable income' means the gross total income of a company as reduced by-- (a) the amount of income-tax payable by the company in respect of its total income, but excluding the amount of any income-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; (c) any sum with reference to which a deduction is allowable to the company under the provisions of section 80G: (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 deduction 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); (g) any expenditure actually incurred for the purposes of the business, but not deducted in computing the income chargeable 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 for the purpose of making or earning any income (other than income chargeable under the head 'Profits and gains of business or profession') 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; [(ia) * * *] (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. 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 -> -> ---------------------------------------------------------------------- 1.458 ----------------------------------------------------------------------- -> -> formula or process or similar property; (iv)the imparting of any information concerning industrial, commercial or scientific knowledge, experience or skill; (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'; (iia) 'trading company' means a company whose business consists 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 gross total income is not less than fifty-one per cent of the amount of such gross total income; (iii) 'statutory percentage' means,- (1) in the case of a consultancy service company 45
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