eCourtsIndia
IndiaCode Laws
Section3
The Finance Act, 1994

Amendment of section 2

In force Act 32 of 1994 As on 17 Oct 2026

Act 32 of 1994 Ministry Finance Enacted 13 May 1994 Cited by 1 provision Instruments 1

Section 3 of the Finance Act, 1994 deals with amendment of section 2. CHAPTER III Direct Taxes Income-tax Amendment of section 2. The Act was enacted on 13 May 1994.

CHAPTER III

Direct Taxes

Income-tax

Amendment of section 2.

3. In section 2 of the Income-tax Act,—

(a) in clause (19A), after the words "Deputy Commissioner of Income-tax", the words "or an Additional Commissioner of Income-tax" shall be inserted with effect from the 1st day of June, 1994;

(b) in clause (19B), after the words and brackets "Deputy Commissioner of Income-tax (Appeals)'', the words and brackets "or an Additional Commissioner of Income-tax (Appeals)" shall be inserted with effect from the 1st day of June, 1994;

(c) after clause (19B), the following clause shall be inserted with effect from the 1st day of June, 1994, namely:-

'(19C) "Deputy Director" means a person appointed to be a Deputy Director of Income-tax or an Additional Director of Income-tax under sub-section (1) of section 117;';

(d) in clause (21), after the words "that sub-section to be", the words "an Additional Director of Income-tax or" shall be inserted with effect from the 1st day of June, 1994;

(e) in clause (42A), with effect from the 1st day of April, 1995,—

(i) in the proviso, after the words "share held in a company", the words, figures, brackets and letter "or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 ( 52 of 1963 ) or a unit of a Mutual Fund specified under clause (23D) Of section 10" shall be inserted;

(ii) the existing Explanation shall be renumbered as Explanation 1 and in Explanation 1 as so renumbered, in clause (i), after sub-clause (c), the following sub-clauses shall be inserted, namely:—

"(d) in the case of a capital asset, being a share or any other security (hereafter in this clause referred to as the financial asset) subscribed to by the assessee on the basis of his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to such financial asset, the period shall be reckoned from the date of allotment of such financial asset;

(e) in the case of a capital asset, being the right to subscribe to any financial asset, which is renounced in favour of any other person, the period shall be reckoned from the date of the offer of such right by the company or institution, as the case may be, making such offer;";

(iii) after Explanation 1 as so renumbered, the following Explanation shall be inserted, namely:—

'Explanation 2.-— For the purposes of this clause, the Expression "security" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; (42 of 1956)

[Finance Act, 1994]

© Copyright. Taxmann Publications Pvt. Ltd.

Section 3, The Finance Act, 1994 (Act 32 of 1994).

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

This section refers to

  1. s. 2 Income-tax
  2. s. 10 Amendment of section 17
  3. Income-tax Act s. 2 Definitions

Referred to by 1

  1. s. 56 Amendment of section 3 of Act 45 of 1974

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

  1. Commissioner of Service Tax, Delhi-i vs Associated Chamber of Commerce and Industry of India through Its Director

    Supreme Court of India 03 Oct 2019 Binding - Supreme Court Judgment on Constitutional Law and Statutory Interpretat Reportable (2019) 10 SCC 1

    Court's Decision & Legal Precedent

    The doctrine of mutuality continues to be applicable to both incorporated and unincorporated members' clubs even after the 46th Amendment inserting Article 366(29-A) to the Constitution. Young Men's Indian Association and other judgments applying this doctrine continue to hold the field. Where members of a club are joint owners of club property and the club functions as agent of members in providing goods or services to members, there is no transfer of property or consideration flowing from one distinct person to another, and therefore no taxable sale or service. Article 366(29-A)(e) applies only to unincorporated associations or bodies of persons and does not apply to incorporated clubs. Article 366(29-A)(f) applies only to commercial supply of food and drink in hotels and restaurants, not to member supplies in clubs. Incorporated members' clubs registered under Section 25 of the Companies Act or as registered cooperative societies, where dividends are prohibited and profits are applied to the objects of the club, remain members' clubs to which the doctrine of mutuality applies, regardless of their corporate form.

    On this section: Critical provision analyzed; deeming fiction treating unincorporated associations and members as distinct persons interpreted to not apply to incorporated clubs

    Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Made under this section, and citing it

1 instrument names this provision in its title or its text without being made under it.

All subordinate legislation

Questions about Section 3

What have the courts held on Section 3 of the Finance Act?

Commissioner of Service Tax, Delhi-i vs Associated Chamber of Commerce and Industry of India through Its Director (03 Oct 2019) is the leading judgment on this section among those set out below: Critical provision analyzed; deeming fiction treating unincorporated associations and members as distinct persons interpreted to not apply to incorporated clubs.

How do I find court cases under Section 3 of the Finance Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Finance Act 1994 3, section 3 Finance Act 1994, section 3 of the Finance Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Commissioner of Service Tax, Delhi-i vs Associated Chamber of Commerce and Industry of India through Its Director (03 Oct 2019).

What should I read with Section 3 of the Finance Act, and has it changed?

Its own text turns on section 2 (Income-tax), section 10 (Amendment of section 17), Income-tax Act 2 (Definitions), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it. One instrument names it without being made under it, most recently finance_act_2017 (2017).

When was Section 3 of the Finance Act enacted?

Section 3 of the Finance Act, cited as Finance Act 1994 3, was enacted on 13 May 1994 as Act 32 of 1994. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Harvested from the Income Tax Department's own portal at incometaxindia.gov.in, which publishes the Finance Acts section by section. India Code carries none of them: its Central community holds the Acts that stand as general law, and a Finance Act is an amending and rate-fixing instrument. This page is not a substitute for legal advice.