Amendment of section 88

Section 34 of the Finance Act, 1996 deals with amendment of section 88. Amendment of section 88. 34. In section 88 of the Income-tax Act, with effect from the 1st day of April, 1997,— (a) in sub-section (2).

Amendment of section 88.

34. In section 88 of the Income-tax Act, with effect from the 1st day of April, 1997,—

(a) in sub-section (2). after clause (xv), the following clauses shall be inserted, namely:—.

'(xvi) as subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company in the prescribed form:

Provided that where a deduction is claimed and allowed under this clause with reference to the cost of any equity shares or debentures, the cost of such shares or debentures shall not be taken into account for the purposes of sections 54EA and 54EB.

Explanation.—For the purpose clause,—

(i)"eligible issue of capital" means an issue made by a public company formed and ??? in India and the issue is wholly and exclusively for the purposes of developing, maintaining and operating an infrastructure facility or for generating, or for generating and distributing, power;

(ii) "infrastructure facility" shall have the meaning assigned to it in clause (ca) of sub-section (12) of section 80-IA;

(iii) "public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956(l of 1956.);

(xvii) as subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board on an application made by such mutual fund in the prescribed form:

Provided that where a deduction is claimed and allowed under this clause with reference to the cost of units, the cost of such units shall not be taken into account for the purposes of sections 54EA and 54EB:

Provided further that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company.

Explanation.—For the purposes of this clause "eligible issue of capital" means an issue referred to in clause (0 of Explanation to clause (xvi) of sub-section (2) of section 88.';

(b) after sub-section (5), the following sub-section shall be inserted, namely:—

'(5A) Where the aggregate of any sums specified in clause (i) to clause (xv) of sub-section (2) exceeds an amount of sixty thousand rupees, a deduction under sub-section (1) shall be allowed with reference to so much of the aggregate as does not exceed an amount of sixty thousand rupees:

Provided that, in the case of an individual referred to in the proviso to sub-section (1), the provisions of this sub-section shall have effect as if for the words "sixty thousand rupees", the words "seventy thousand rupees" had been substituted.';

(c) in sub-section (6), in clause (ii), for the words "twelve thousand rupees", the words "fourteen thousand rupees" shall be substituted;

(d) after sub-section (7), the following sub-section shall be inserted, namely:—

"(7A) If any equity shares or debentures, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income-tax so allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be tax payable by the assessee for the assessment year relevant to such previous year and shall be added to the amount of income-tax on the total income of the assessee with which he is chargeable for such assessment year.

Explanation.—A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.".

[Finance (No.

2) Act, 1996]

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Section 34, The Finance Act, 1996 (Act 33 of 1996).