10. Incomes not included in total income.

In computing the total income of a previous year of any person, any

income falling within any of the following clauses shall not be
included-

(1) agricultural income;

(2) subject to the provisions of sub-section (2) of section 64, any

sum received by an individual as a member of a Hindu
undivided family, where such sum has been paid out of the
income of the family, or, in the case of any impartible estate,
where such sum has been paid out of the income of the estate
belonging to the family;

(2A) in the case of a person being a partner of a firm which is

separately assessed as such, his share in the total income of the
firm.

Explanation. For the purposes of this clause, the share of

a partner in the total income of a firm separately
assessed as such shall, notwithstanding anything
contained in any other law, be an amount which bears to
the total income of the firm the same proportion as the
amount of his share in the profits of the firm in
accordance with the partnership deed bears to such
profits;

(3) Omitted by the Finance Act, 2002, w.e.f. 1-4-2003.

(4)

(i) in the case of a non-resident, any income by way of

interest on such securities or bonds as the Central
Government may, by notification in the Official Gazette,
specify in this behalf, including income by way of
premium on the redemption of such bonds;

Provided that the Central Government shall not specify,

for the purposes of this sub-clause, such securities or
bonds on or after the 1st day of June, 2002;

(ii) in the case of an individual, any income by way of

interest on moneys standing to his credit in a Non-
Resident (External) Account in any bank in India in
accordance with the Foreign Exchange Regulation Act,
 1973 (46 of 1973), and the rules made thereunder:

Provided that such individual is a person resident outside

India as defined in clause (q) of section 2 of the said Act
or is a person who has been permitted by the Reserve
Bank of India to maintain the aforesaid Account;

(4B) in the case of an individual, being a citizen of India or a

person of Indian origin, who is a non-resident, any income from
interest on such savings certificates issued before the 1st day of
June, 2002 by the Central Government as that Government may,
by notification in the Official Gazette, specify in this behalf:

Provided that the individual has subscribed to such

certificates in convertible foreign exchange remitted
from a country outside India in accordance with the
provisions of the Foreign Exchange Regulation Act,
1973 (46 of 1973), and any rules made thereunder.

Explanation.-For the purposes of this clause,-

(a) a person shall be deemed to be of Indian

origin if he, or either of his parents or any of his
grand-parents, was born in undivided India;

(b) " convertible foreign exchange " means

foreign exchange which is for the time being
treated by the Reserve Bank of India as
convertible foreign exchange for the purposes of
the Foreign Exchange Regulation Act, 1973 (46
of 1973), and any rules made thereunder;

(5) in the case of an individual, the value of any travel

concession or assistance received by, or due to, him, -

(a) from his employer for himself and his family, in

connection with his proceeding on leave to any place in
India;

(b) from his employer or former employer for himself

and his family, in connection with his proceeding to any
place in India after retirement from service or after the
termination of his service,

subject to such conditions as may be prescribed (including

conditions as to number of journeys and the amount which shall
be exempt per head) having regard to the travel concession or
assistance granted to the employees of the Central Government:

Provided that the amount exempt under this clause shall

in no case exceed the amount of expenses actually
incurred for the purpose of such travel.

Explanation. For the purposes of this clause, "family", in

relation to an individual, means-

(i) the spouse and children of the individual; and

(ii) the parents, brothers and sisters of the

individual or any of them, wholly or mainly
dependent on the individual;

(5B) omitted by the Finance Act, 2002, w.e.f. 1-4-2003.

(6) in the case of an individual who is not a citizen of India,-

(i) omitted by the Finance Act, 2002, w.e.f. 1-4-2003.

(ii) the remuneration received by him as an official, by

whatever name called, of an embassy, high commission,
legation, commission, consulate or the trade
representation of a foreign State, or as a member of the
staff of any of these officials, for service in such
capacity:

Provided that the remuneration received by him

as trade commissioner or other official
representative in India of the Government of a
foreign State (not holding office as such in an
honorary capacity), or as a member of the staff of
any of those officials, shall be exempt only if the
remuneration of the corresponding officials or, as
the case may be, members of the staff, if any, of
the Government resident for similar purposes in
the country concerned enjoys a similar
exemption in that country:

Provided further that such members of the staff

are subjects of the country represented and are
not engaged in any business or profession or
employment in India otherwise than as members
of such staff;

(vi) the remuneration received by him as an employee of

a foreign enterprise for services rendered by him during
his stay in India, provided the following conditions are
fulfilled-

(a) the foreign enterprise is not engaged in any

trade or business in India;

(b) his stay in India does not exceed in the

aggregate a period of ninety days in such
previous year; and

(c) such remuneration is not liable to be deducted

from the income of the employer chargeable
under this Act;

(viii) any income chargeable under the head "Salaries"

received by or due to any such individual being a non-
resident as remuneration for services rendered in
connection with his employment on a foreign ship where
his total stay in India does not exceed in the aggregate a
period of ninety days in the previous year;

(xi) the remuneration received by him as an employee of

the Government of a foreign State during his stay in
India in connection with his training in any
establishment or office of, or in any undertaking owned
by,-

(i) the Government; or

(ii) any company in which the entire paid-up

share capital is held by the Central Government,
or any State Government or Governments, or
partly by the Central Government and partly by
one or more State Governments; or

(iii) any company which is a subsidiary of a

company referred to in item (ii); or

(iv) any corporation established by or under a

Central, State or Provincial Act; or

(v) any society registered under the Societies

Registration Act, 1860 (14 of 1860), or under any
other corresponding law for the time being in
force and wholly financed by the Central
Government, or any State Government or State
Governments, or partly by the Central
Government and partly by one or more State
 Governments;

(6A) where in the case of a foreign company deriving income

by way of royalty or fees for technical services received from
Government or an Indian concern in pursuance of an agreement
made by the foreign company with Government or the Indian
concern after the 31st day of March, 1976 but before the 1st day
of June, 2002 and,-

(a) where the agreement relates to a matter included in

the industrial policy, for the time being in force, of the
Government of India, such agreement is in accordance
with that policy; and

(b) in any other case, the agreement is approved by the

Central Government,

the tax on such income is payable, under the terms of the

agreement, by Government or the Indian concern to the Central
Government, the tax so paid.

Explanation. For the purposes of this clause and clause

(6B),-

(a) " fees for technical services " shall have the
same meaning as in Explanation 2 to clause (vii)
of sub-section (1) of section 9;

(b) " foreign company " shall have the same

meaning as in section 80B;

(c) " royalty " shall have the same meaning as in

Explanation 2 to clause (vi) of sub-section (1) of
section 9;

(6B) where in the case of a non-resident (not being a company)

or of a foreign company deriving income (not being salary,
royalty or fees for technical services) from Government or an
Indian concern in pursuance of an agreement entered into before
the 1st day of June, 2002 by the Central Government with the
Government of a foreign State or an international organisation,
the tax on such income is payable by Government or the Indian
concern to the Central Government under the terms of that
agreement or any other related agreement approved before that
date by the Central Government, the tax so paid;

(6BB) where in the case of the Government of a foreign State or

a foreign enterprise deriving income from an Indian company
engaged in the business of operation of aircraft, as a
consideration of acquiring an aircraft or an aircraft engine (other
than payment for providing spares, facilities or services in
connection with the operation of leased aircraft) on lease under
an agreement entered into after the 31st day of March, 1997 but
before the 1st day of April, 1999 and approved by the Central
Government in this behalf and the tax on such income is
payable by such Indian company under the terms of that
agreement to the Central Government, the tax so paid.

Explanation. For the purposes of this clause, the

expression "foreign enterprise" means a person who is a
non-resident;

(6C) any income arising to such foreign company, as the Central

Government may, by notification in the Official Gazette, specify
in this behalf, by way of royalty or fees for technical services
received in pursuance of an agreement entered into with that
Government for providing services in or outside India in
projects connected with security of India;

(7) any allowances or perquisites paid or allowed as such

outside India by the Government to a citizen of India for
rendering service outside India;

(8) in the case of an individual who is assigned to duties in India

in connection with any co-operative technical assistance
programmes and projects in accordance with an agreement
entered into by the Central Government and the Government of
foreign State (the terms whereof provide for the exemption
given by this clause)

(a) the remuneration received by him directly or

indierectly from the Government of that foreign State for
such duties, and

(b) any other income of such individual which accrues or

arises outside India, and is not deemed to accrue or arise
in India, in respect of which such individual is required
to pay any income or social security tax to the
Government of that foreign State;

(8A) in the case of a consultant-

(a) any remuneration or fee received by him or it,

directly or indirectly, out of the funds made available to
an international Organisation (hereafter referred to in
this clause and clause (8B) as the agency) under a
 technical assistance grant agreement between the agency
and the Government of a foreign State; and

(b) any other income which accrues or arises to him or it

outside India, and is not deemed to accrue or arise in
India, in respect of which such consultant is required to
pay any income or social security tax to the Government
of the country of his or its origin.

Explanation. In this clause, "consultant" means -

(i) any individual, who is either not a citizen of

India or, being a citizen of India, is not ordinarily
resident in India; or

(ii) any other person, being a non-resident,

engaged by the agency for rendering technical services

in India in connection with any technical assistance
programme or project, provided the following conditions
are fulfilled, namely:-

(1) the technical assistance is in accordance with

an agreement entered into by the Central
Government and the agency; and

(2) the agreement relating to the engagement of

the consultant is approved by the prescribed
authority for the purposes of this clause;

(8B) in the case of an individual who is assigned to duties in

India in connection with any technical assistance programme
and project in accordance with an agreement entered into by the
Central Government and the agency-

(a) the remuneration received by him, directly or

indirectly, for such duties from any consultant referred to
in clause (8A); and

(b) any other income of such individual which accrues or

arises outside India, and is not deemed to accrue or arise
in India, in respect of which such individual is required
to pay any income or social security tax to the country of
his origin, provided the following conditions are
fulfilled, namely:-

(i) the individual is an employee of the consultant

referred to in clause (8A) and is either not a
 citizen of India or, being a citizen of India, is not
ordinarily resident in India; and

(ii) the contract of service of such individual is

approved by the prescribed authority before the
commencement of his service;

(9) the income of any member of the family of any such

individual as is referred to in clause (8) or clause (8A) or, as the
case may be, clause (8B) accompanying him to India, which
accrues or arises outside India, and is not deemed to accrue or
arise in India, in respect of which such member is required to
pay any income or social security tax to the Government of that
foreign State or, as the case may be, country of origin of such
member;

(10)

(i) any death-cum-retirement gratuity received under the

revised Pension Rules of the Central Government or, as
the case may be, the Central Civil Services (Pension)
Rules, 1972, or under any similar scheme applicable to
the members of the civil services of the Union or holders
of posts connected with defence or of civil posts under
the Union (such members or holders being persons not
governed by the said Rules) or to the members of the all-
India services or to the members of the civil services of a
State or holders of civil posts under a State or to the
employees of a local authority or any payment of retiring
gratuity received under the Pension Code or Regulations
applicable to the members of the defence services;

(ii) any gratuity received under the Payment of Gratuity

Act, 1972 (39 of 1972), to the extent it does not exceed
an amount calculated in accordance with the provisions
of sub-sections (2) and (3) of section 4 of that Act;

(iii) any other gratuity received by an employee on his

retirement or on his becoming incapacitated prior to such
retirement or on termination of his employment, or any
gratuity received by his widow, children or dependants
on his death, to the extent it does not, in either case,
exceed one-half month's salary for each year of
completed service, calculated on the basis of the average
salary for the ten months immediately preceding the
month in which any such event occurs, subject to such
limit as the Central Government may, by notification in
the Official Gazette, specify in this behalf having regard
to the limit applicable in this behalf to the employees of
 that Government:

Provided that where any gratuities referred to in this

clause are received by an employee from more than one
employer in the same previous year, the aggregate
amount exempt from income-tax under this clause shall
not exceed the limit so specified:

Provided further that where any such gratuity or

gratuities was or were received in any one or more
earlier previous years also and the whole or any part of
the amount of such gratuity or gratuities was not
included in the total income of the assessee of such
previous year or years, the amount exempt from income-
tax under this clause shall not exceed the limit so
specified as reduced by the amount or, as the case may
be, the aggregate amount not included in the total
income of any such previous year or years.

Explanation. In this clause, and in clause (10AA), "

salary " shall have the meaning assigned to it in clause
(h) of rule 2 of Part A of the Fourth Schedule;

(10A)

(i) any payment in commutation of pension received

under the Civil Pensions (Commutation) Rules of the
Central Government or under any similar scheme
applicable to the members of the civil services of the
Union or holders of posts connected with defence or of
civil posts under the Union (such members or holders
being persons not governed by the said Rules) or to the
members of the all-India services or to the members of
the defence services or to the members of the civil
services of a State or holders of civil posts under a State
or to the employees of a local authority or a corporation
established by a Central, State or Provincial Act;

(ii) any payment in commutation of pension received

under any scheme of any other employer, to the extent it
does not exceed-

(a) in a case where the employee receives any

gratuity, the commuted value of one-third of the
pension which he is normally entitled to receive,
and

(b) in any other case, the commuted value of one-

 half of such pension,

such commuted value being determined having regard to

the age of the recipient, the state of his health, the rate of
interest and officially recognised tables of mortality;

(iii) any payment in commutation of pension received

from a fund under clause (23AAB);

(10AA)

(i) any payment received by an employee of the Central

Government or a State Government as the cash
equivalent of the leave salary in respect of the period of
earned leave at his credit at the time of his retirement
whether on superannuation or otherwise;

(ii) any payment of the nature referred to in sub-clause

(i) received by an employee, other than an employee of
the Central Government or a State Government, in
respect of so much of the period of earned leave at his
credit at the time of his retirement whether on
superannuation or otherwise as does not exceed ten
months, calculated on the basis of the average salary
drawn by the employee during the period of ten months
immediately preceding his retirement whether on
superannuation or otherwise, subject to such limit as the
Central Government may, by notification in the Official
Gazette, specify in this behalf having regard to the limit
applicable in this behalf to the employees of that
Government:

Provided that where any such payments are

received by an employee from more than one
employer in the same previous year, the
aggregate amount exempt from income-tax under
this sub-clause shall not exceed the limit so
specified:

Provided further that where any such payment or

payments was or were received in any one or
more earlier previous years also and the whole or
any part of the amount of such payment or
payments was or were not included in the total
income of the assessee of such previous year or
years, the amount exempt from income-tax under
this sub-clause shall not exceed the limit so
specified, as reduced by the amount or, as the
 case may be, the aggregate amount not included
in the total income of any such previous year or
years.

Explanation.-For the purposes of sub-clause (ii),-

the entitlement to earned leave of an employee
shall not exceed thirty days for every year of
actual service rendered by him as an employee of
the employer from whose service he has retired;

(10B) any compensation received by a workman under the

Industrial Disputes Act, 1947 (14 of 1947), or under any other
Act or Rules, orders or notifications issued thereunder or under
any standing orders or under any award, contract of service or
otherwise, at the time of his retrenchment:

Provided that the amount exempt under this clause shall

not exceed-

(i) an amount calculated in accordance with the

provisions of clause (b) of section 25F of the
Industrial Disputes Act, 1947 (14 of 1947); or

(ii) such amount, not being less than fifty

thousand rupees, as the Central Government may,
by notification in the Official Gazette, specify in
this behalf,

whichever is less:

Provided further that the preceding proviso shall not

apply in respect of any compensation received by a
workman in accordance with any scheme which the
Central Government may, having regard to the need for
extending special protection to the workmen in the
undertaking to which such scheme applies and other
relevant circumstances, approve in this behalf.

Explanation.-For the purposes of this clause-

(a) compensation received by a workman at the

time of the closing down of the undertaking in
which he is employed shall be deemed to be
compensation received at the time of his
retrenchment;

(b) compensation received by a workman, at the

time of the transfer (whether by agreement or by
 operation of law) of the ownership or
management of the undertaking in which he is
employed from the employer in relation to that
undertaking to a new employer, shall be deemed
to be compensation received at the time of his
retrenchment if-

(i) the service of the workman has been

interrupted by such transfer; or

(ii) the terms and conditions of service

applicable to the workman after such
transfer are in any way less favourable to
the workman than those applicable to him
immediately before the transfer; or

(iii) the new employer is, under the terms

of such transfer or otherwise, legally not
liable to pay to the workman, in the event
of his retrenchment, compensation on the
basis that his service has been continuous
and has not been interrupted by the
transfer;

(c) the expressions " employer " and " workman "
shall have the same meanings as in the Industrial
Disputes Act, 1947 (14 of 1947);

(10BB) any payments made under the Bhopal Gas Leak

Disaster (Processing of Claims) Act, 1985 (21 of 1985), and any
scheme framed thereunder except payment made to any assessee
in connection with the Bhopal Gas Leak Disaster to the extent
such assessee has been allowed a deduction under this Act on
account of any loss or damage caused to him by such disaster;

(10C) any amount received or receivable by an employee of -

(i) a public sector company; or

(ii) any other company; or

(iii) an authority established under a Central, State or

Provincial Act; or

(iv) a local authority; or

(v) a co-operative society; or

 (vi) a University established or incorporated by or under
a Central, State or Provincial Act and an institution
declared to be a University under section 3 of the
University Grants Commission Act, 1956 (3 of 1956); or

(vii) an Indian Institute of Technology within the

meaning of clause (g) of section 3 of the Institutes of
Technology Act, 1961 (59 of 1961); or

(viia) any State Goverment; or

(viii) such institute of management as the Central

Government may, by notification in the Official Gazette,
specify in this behalf,

at the time of his voluntary retirement or termination of his

service, in accordance with any scheme or schemes of voluntary
retirement or in the case of a public sector company referred to
in sub-clause (i), a scheme of voluntary separation, to the extent
such amount does not exceed five lakh rupees

Provided that the schemes of the said companies or

authorities or societies or Universities or the Institutes
referred to in sub-clauses(vii) and (viii), as the case may
be, governing the payment of such amount are framed in
accordance with such guidelines (including inter alia
criteria of economic viability) as may be prescribed

Provided further that where exemption has been allowed

to an employee under this clause for any assessment
year, no exemption thereunder shall be allowed to him in
relation to any other assessment year;

(10CC) in the case of an employee, being an individual deriving

income in the nature of a perquisite, not provided for by way of
monetary payment within the meaning of clause (2) of section
17, the tax on such income actually paid by his employer, at the
option of the employer, on behalf of such employee,
notwithstanding anything contained in section 200 of the
Companies Act, 1956 (1 of 1956);

(10D) any sum received under a life insurance policy, including

the sum allocated by way of bonus on such policy other than
any sum received under sub-section (3) of section 80DDA or
under a Keyman insurance policy.

Explanation. For the purposes of this clause, "Keyman

insurance policy" means a life insurance policy taken by
 a person on the life of another person who is or was the
employee of the first mentioned person or is or was
connected in any manner whatsoever with the business
of the first mentioned person;

The Following clause 10(D) of section 10 by the Finance Act,

2003, w.e.f. 1-4-2004:

(10D) any sum received under a life insurance policy, including

the sum allocated by way of bonus on such policy, other than-

(a) any sum received under sub-section (3) of section

80DD or sub-section (3) of section 80DDA; or

(b) any sim received under a Keyman insurance

policy;or

(c) any sum received under an insurance policy issued

on or after the 1st day of April, 2003 in respect of which
the premium payable for any of the years during the
term of the policy exceeds twenty per cent of the actual
capital sum assured:

Provided that the provisions of this sub-clause shall not

apply to any sum received on the death of a person:

Provided further that for the purpose of calculating the

actual capital sum assured under this sub-clause, effect
shall be given to the Explanation to sub-section (2A) of
section 88.

Explanation.-For the purposes of this clause, "Keyman

insurance policy" means a life insurance policy taken by a
person on the life of another person who is or was the employee
of the first-mentioned person or is or was connected in any
manner whatsoever with the business of the first-mentioned
person;

(11) any payment from a provident fund to which the Provident

Funds Act, 1925 (19 of 1925), applies or from any other
provident fund set up by the Central Government and notified
by it in this behalf in the Official Gazette;

(12) the accumulated balance due and becoming payable to an

employee participating in a recognised provident fund, to the
extent provided in rule 8 of Part A of the Fourth Schedule;
(13) any payment from an approved superannuation fund made-

(i) on the death of a beneficiary; or

(ii) to an employee in lieu of or in commutation of an

annuity on his retirement at or after a specified age or on
his becoming incapacitated prior to such retirement; or

(iii) by way of refund of contributions on the death of a

beneficiary; or

(iv) by way of refund of contributions to an employee on

his leaving the service in connection with which the fund
is established otherwise than by retirement at or after a
specified age or on his becoming incapacitated prior to
such retirement, to the extent to which such payment
does not exceed the contributions made prior to the
commencement of this Act and any interest thereon;

(13A) any special allowance specifically granted to an assessee

by his employer to meet expenditure actually incurred on
payment of rent (by whatever name called) in respect of
residential accommodation occupied by the assessee, to such
extent as may be prescribed having regard to the area or place in
which such accommodation is situate and other relevant
considerations.

Explanation.-For the removal of doubts, it is hereby

declared that nothing contained in this clause shall apply
in a case where-

(a) the residential accommodation occupied by

the assessee is owned by him; or

(b) the assessee has not actually incurred

expenditure on payment of rent (by whatever
name called) in respect of the residential
accommodation occupied by him;

(14)

(i) any such special allowance or benefit, not being in

the nature of a perquisite within the meaning of clause
(2) of section 17, specifically granted to meet expenses
wholly, necessarily and exclusively incurred in the
performance of the duties of an office or employment of
profit, as may be prescribed, to the extent to which such
 expenses are actually incurred for that purpose;

(ii) any such allowance granted to the assessee either to

meet his personal expenses at the place where the duties
of his office or employment of profit are ordinarily
performed by him or at the place where he ordinarily
resides, or to compensate him for the increased cost of
living, as may be prescribed and to the extent as may be
prescribed:

Provided that nothing in sub-clause (ii) shall

apply to any allowance in the nature of personal
allowance granted to the assessee to remunerate
or compensate him for performing duties of a
special nature relating to his office or
employment unless such allowance is related to
the place of his posting or residence;

omitted by the Finance Act, 2002, w.e.f. 1.4.2003.

(15)

(i) income by way of interest, premium on redemption or

other payment on such securities, bonds, annuity
certificates, savings certificates, other certificates issued
by the Central Government and deposits as the Central
Government may, by notification in the Official Gazette,
specify in this behalf, subject to such conditions and
limits as may be specified in the said notification;

(iib) in the case of an individual or a Hindu undivided

family, interest on such Capital Investment Bonds as the
Central Government may, by notification in the Official
Gazette, specify in this behalf;

Provided that the Central Government shall not specify,

for the purposes of this sub-clause, such Capital
Investment Bonds on or after the 1st day of June, 2002;

(iic) in the case of an individual or a Hindu undivided

family, interest on such Relief Bonds as the Central
Government may, by notification in the Official Gazette,
specify in this behalf;

(iid) interest on such bonds, as the Central Government

may, by notification in the Official Gazette, specify,
arising to
 (a) a non-resident Indian, being an individual
owning the bonds ; or

(b) any individual owning the bonds by virtue of

being a nominee or survivor of the non-resident
Indian; or

(c) any individual to whom the bonds have been

gifted by the non-resident Indian:

Provided that the aforesaid bonds are purchased

by a non-resident Indian in foreign exchange and
the interest and principal received in respect of
such bonds, whether on their maturity or
otherwise, is not allowable to be taken out of
India:

Provided further that where an individual, who is

a non-resident Indian in any previous year in
which the bonds are acquired, becomes a resident
in India in any subsequent year, the provisions of
this sub-clause shall continue to apply in relation
to such individual:

Provided also that in a case where the bonds are

encashed in a previous year prior to their
maturity by an individual who is so entitled, the
provisions of this sub-clause shall not apply to
such individual in relation to the assessment year
relevant to such previous year.

Provided also that the Central Government shall

not specify, for the purposes of this sub-clause,
such bonds on or after the 1st day of June, 2002;

Explanation.-For the purposes of this sub-clause,

the expression " non- resident Indian" shall have
the meaning assigned to it in clause (e) of section
115C;

(iii) interest on securities held by the Issue Department

of the Central Bank of Ceylon constituted under the
Ceylon Monetary Law Act, 1949;

(iiia) interest payable to any bank incorporated in a

country outside India and authorised to perform central
banking functions in that country on any deposits made
by it, with the approval of the Reserve Bank of India,
with any scheduled bank.

Explanation.-For the purposes of this sub-clause,

"scheduled bank" shall have the meaning
assigned to it in clause (ii) of the Explanation to
clause (viia) of sub-section (1) of section 36;

(iv) interest payable-

(a) by Government or a local authority on

moneys borrowed by it before the 1st day of
June, 2001 from, or debts owed by it before the
1st day of June, 2001 to, sources outside India;

(b) by an industrial undertaking in India on

moneys borrowed by it under a loan agreement
entered into before the 1st day of June, 2001 with
any such financial institution in a foreign country
as may be approved in this behalf by the Central
Government by general or special order;

(c) by an industrial undertaking in India on any

moneys borrowed or debt incurred by it before
the 1st day of June, 2001 in a foreign country in
respect of the purchase outside India of raw
materials or components or capital plant and
machinery, to the extent to which such interest
does not exceed the amount of interest calculated
at the rate approved by the Central Government
in this behalf, having regard to the terms of the
loan or debt and its repayment.

Explanation. For the purposes of this

item, " purchase of capital plant and
machinery " includes the purchase of
such capital plant and machinery under a
hire-purchase agreement or a lease
agreement with an option to purchase
such plant and machinery;

(d) by the Industrial Finance Corporation of India

established by the Industrial Finance Corporation
Act, 1948 (15 of 1948), or the Industrial
Development Bank of India established under the
Industrial Development Bank of India Act, 1964
(18 of 1964) or the Export-Import Bank of India
established under the Export-Import Bank of
India Act, 1981 (28 of 1981), or the National
Housing Bank established under section 3 of the
National Housing Bank Act, 1987 (53 of 1987),
or the Small Industries Development Bank of
India established under section 3 of the Small
Industries Development Bank of India Act, 1989
(39 of 1989), or the Industrial Credit and
Investment Corporation of India (a company
formed and registered under the Indian
Companies Act, 1913 (7 of 1913), on any
moneys borrowed by it from sources outside
India before the 1st day of June, 2001, to the
extent to which such interest does not exceed the
amount of interest calculated at the rate approved
by the Central Government in this behalf, having
regard to the terms of the loan and its repayment;

(e) by any other financial institution established

in India or a banking company to which the
Banking Regulation Act, 1949 (10 of 1949),
applies (including any bank or banking
institution referred to in section 51 of that Act),
on any moneys borrowed by it from sources
outside India under a loan agreement approved
by the Central Government where the moneys
are borrowed either for the purpose of advancing
loans to industrial undertakings in India for
purchase outside India of raw materials or capital
plant and machinery or for the purpose of
importing any goods which the Central
Government may consider necessary to import in
the public interest, to the extent to which such
interest does not exceed the amount of interest
calculated at the rate approved by the Central
Government in this behalf, having regard to the
terms of the loan and its repayment;

(f) by an industrial undertaking in India on any

moneys borrowed by it in foreign currency from
sources outside India under a loan agreement
approved by the Central Government before the
1st day of June, 2001, having regard to the need
for industrial development in India, to the extent
to which such interest does not exceed the
amount of interest calculated at the rate approved
by the Central Government in this behalf, having
regard to the terms of the loan and its repayment;

(fa) by a scheduled bank to a non-resident or to a

person who is not ordinarily resident within the
meaning of sub-section (6) of section 6 on
deposits in foreign currency where the
acceptance of such deposits by the bank is
approved by the Reserve Bank of India.

Explanation.-For the purposes of this

item, the expression "scheduled bank"
shall have the meaning assigned to it in
clause (ii) of the Explanation to clause
(viia) of sub-section (1) of section 36;

(g) by a public company formed and registered in

India with the main object of carrying on the
business of providing long-term finance for
construction or purchase of houses in India for
residential purposes, being a company eligible
for deduction under clause (viii) of sub-section
(1) of section 36 on any moneys borrowed by it
in foreign currency from sources outside India
under a loan agreement approved by the Central
Government, before the 1st day of June, 2003,to
the extent to which such interest does not exceed
the amount of interest calculated at the rate
approved by the Central Government in this
behalf, having regard to the terms of the loan and
its repayment.

Explanation.-For the purposes of items (f), (fa)

and (g) , the expression "foreign currency" shall
have the meaning assigned to it in the Foreign
Exchange Regulation Act, 1973 (46 of 1973);

(h) by any public sector company in respect of

such bonds or debentures and subject to such
conditions, including the condition that the
holder of such bonds or debentures registers his
name and the holding with that company, as the
Central Government may, by notification in the
Official Gazette, specify in this behalf;

(i) by Government on deposits made by an

employee of the Central Government or a State
Government or a public sector company, in
accordance with such scheme as the Central
Government may, by notification in the Official
Gazette, frame in this behalf, out of the moneys
due to him on account of his retirement, whether
on superannuation or otherwise.
 Explanation. 1. For the purposes of this sub-
clause, the expression "industrial undertaking"
means any undertaking which is engaged in

(a) the manufacture or processing of

goods; or

(aa) the manufacture of computer

software or recording of programme on
any disc,tape, perforated media or other
information device; or

(b) the business of generation or

distribution of electricity or any other
form of power; or

(ba) the business of providing

telecommunication services; or

(c) mining; or

(d) the construction of ships; or

(e) the operation of ships or aircrafts or

construction or operation of rail systems;

Explanation 1A. For the purpose of this sub-clause the

expression "interest" shall not include interest paid on
delayed payment of loan or on default if it is in excess of
two per cent per annum over the rate of interest payable
in terms of such loan.

Explanation 2. For the purpose of this clause, the

expression "interest" includes hedging transaction
charges on account of currency fluctuation;

(v) interest on

(a) securities held by the Welfare Commissioner,

Bhopal Gas Victims, Bhopal, in the Reserve
Bank's SGL Account No. SL/DH048;

(b) deposits for the benefit of the victims of the

Bhopal gas leak disaster held in such account,
with the Reserve Bank of India or with a public
sector bank, as the Central Government may, by
notification in the Official Gazette, specify,
whether prospectively or retrospectively but in
 no case earlier than the 1st day of April, 1994 in
this behalf.

Explanation.-For the purposes of this sub-clause,

the expression "public sector bank" shall have the
meaning assigned to it in the Explanation to
clause (23D);

(vi) interest on Gold Deposit Bonds issued under the

Gold Deposit Scheme, 1999 notified by the Central
Government;

(vii) interest on bonds

(a) issued by a local authority; and

(b) specified by the Central Government by

notification in the Official Gazette;

(15A) any payment made, by an Indian company engaged in the

business of operation of aircraft, to acquire an aircraft or an
aircraft engine (other than a payment for providing spares,
facilities or services in connection with the operation of leased
aircraft) on lease from the Government of a foreign State or a
foreign enterprise under an agreement, not being an agreement
entered into between the 1st day of April, 1997 and the 31st day
of March, 1999, and approved by the Central Government in
this behalf.

Explanation.-For the purposes of this clause, the

expression "foreign enterprise" means a person who is a
non-resident;

(16) scholarships granted to meet the cost of education;

(17) any income by way of

(i) daily allowance received by any person by reason of

his membership of Parliament or of any State Legislature
or of any Committee thereof;

(ii) any allowance received by any person by reason of

his membership of Parliament under the Members of
Parliament (Constituency Allowance) Rules, 1986;

(iii) all other allowances not exceeding two thousand

rupees per month in the aggregate received by any
person by reason of his membership of any State
 Legislature or of any Committee thereof, which the
Central Government may, by notification in the Official
Gazette, specify in this behalf;

(17A) any payment made, whether in cash or in kind, -

(i) in pursuance of any award instituted in the public

interest by the Central Government or any State
Government or instituted by any other body and
approved by the Central Government in this behalf; or

(ii) as a reward by the Central Government or any State

Government for such purposes as may be approved by
the Central Government in this behalf in the public
interest;

(18). any income by way of

(i) pension received by an individual who has been in the

service of the Central or State Government and has been
awarded "Param Vir Chakra" or "Maha Vir Chakra" or
"Vir Chakra" or such other gallantry award as the
Central Government may, by notification in the Official
Gazette, specify in this behalf;

(ii) family pension received by any member of the

family of an individual referred to in sub-clause (i).

Explanation.---For the purposes of this clause, the

expression "family" shall have the meaning assigned to
it in the Explanation to clause (5).

(19A) the annual value of any one palace in the occupation of a

Ruler, being a palace, the annual value whereof was exempt
from income-tax before the commencement of the Constitution
(Twenty-sixth Amendment) Act, 1971, by virtue of the
provisions of the Merged States (Taxation Concessions) Order,
1949, or the Part B States (Taxation Concessions) Order, 1950,
or, as the case may be, the Jammu and Kashmir(Taxation
Concessions) Order, 1958:

Provided that for the assessment year commencing on

the 1st day of April, 1972, the annual value of every
such palace in the occupation of such Ruler during the
relevant previous year shall be exempt from income-tax;

(20) the income of a local authority which is chargeable under

the head "Income from house property", "Capital gains" or
"Income from other sources" or from a trade or business carried
on by it which accrues or arises from the supply of a commodity
or service (not being water or electricity) within its own
jurisdictional area or from the supply of water or electricity
within or outside its own jurisdictional area;

Explanation.- For the purposes of this clause, the

expression "local authority" means-

(i) Panchayat as referred to in clause (d) of article

243 of the Constution; or

(ii) Municipality as referred to in clause (e) of

article 243P of the Consitution; or

(iii) Municipal Committee and District Board,

legally entitled to, or entrusted by the
Government with, the control or management of
a Municipal or local fund; or

(iv) Cantonment Board as defined in section 3 of

the Cantonments Act, 1924 (2 of 1924);

(20A)Omitted by the Finance Act, 2002, w.e.f. 1-4-2003.

(21) any income of a scientific research association for the time

being approved for the purpose of clause (ii) of sub-section (1)
of section 35:

Provided that the scientific research association -

(a) applies its income, or accumulates it for

application, wholly and exclusively to the objects
for which it is established, and the provisions of
sub-section (2) and sub-section (3) of section 11
shall apply in relation to such accumulation
subject to the following modifications, namely:-

(i) in sub-section (2),-

(1) the words, brackets, letters and

figure "referred to in clause (a) or
clause (b) of sub-section (1) read
with the Explanation to that sub-
section" shall be omitted;

(2) for the words "to charitable or

religious purposes", the words
 "for the purposes of scientific
research"shall be substitued;

(3) the reference to "Assessing

Officer" in clause (a) thereof shall
be construed as a reference to the
"prescribed authority" referred to
in clause (ii) of sub-section (1) of
section 35;

(ii) in sub-section (3), in clause (a), for

the words "charitable or religious
purposes", the words "the purposes of
scientific research" shall be substituted;
and

(b) does not invest or deposit its funds, other

than-

(i) any assets held by the scientific

research association where such assets
form part of the corpus of the fund of the
association as on the 1st day of June,
1973 ;

(ii) any assets (being debentures issued

by, or on behalf of, any company or
corporation), acquired by the scientific
research association before the 1st day of
March, 1983;

(iii) any accretion to the shares, forming

part of the corpus of the fund mentioned
in sub-clause (i), by way of bonus shares
allotted to the scientific research
association;

(iv) voluntary contributions received and

maintained in the form of jewellery,
furniture or any other article as the Board
may, by notification in the Official
Gazette, specify,

for any period during the previous year otherwise

than in any one or more of the forms or modes
specified in sub-section (5) of section 11:

Provided further that the exemption under this clause

 shall not be denied in relation to voluntary contribution,
other than voluntary contribution in cash or voluntary
contribution of the nature referred to in clause (b) of the
first proviso to this clause, subject to the condition that
such voluntary contribution is not held by the scientific
research association, otherwise than in any one or more
of the forms or modes specified in sub-section (5) of
section 11, after the expiry of one year from the end of
the previous year in which such asset is acquired or the
31st day of March, 1992, whichever is later:

Provided also that nothing contained in this clause shall

apply in relation to any income of the scientific research
association, being profits and gains of business, unless
the business is incidental to the attainment of its
objectives and separate books of accounts are
maintained by it in respect of such business;

Provided also that where the scientific research

association is approved by the Central Government and
subsequently that Government is satisifed that-

(i) the scientific research association has not

applied its income in accordance with the
provisions contained in clause (a) of the first
proviso; or

(ii) the scientific research association has not

invested or deposited its funds in accordance
with the provisions contained in clause (b) of the
first proviso; or

(iii) the activities of the scientific research

association are not genuine; or

(iv) the activities of the scientific research

association are not being carried out in
accordance with all or any of the conditions
subject to which such association was approved,

it may, at any time after giving a resonable opportunity

of showing cause against the proposed withdrawal to the
concerned association, by order, withdraw the approval
and forward a copy of the order withdrawing the
approval to such association and to the Assessing
Officer;

(22B) any income of such news agency set up in India solely for
collection and distribution of news as the Central Government
may, by notification in the Official Gazette, specify in this
behalf:

Provided that the news agency applies its income or

accumulates it for application solely for collection and
distribution of news and does not distribute its income in
any manner to its members:

Provided further that any notification issued by the

Central Government under this clause shall, at any one
time, have effect for such assessment year or years, not
exceeding three assessment years (including an
assessment year or years commencing before the date on
which such notification is issued) as may be specified in
the notification;

The following third proviso shall be instered after the

second proviso to clause (22B) of section 10 of the
Finance Act, 2002, w.e.f. 1.4.2003:

Provided also that where the news agency has been

specified, by notification, by the Central Government
and subsequently that Government is satisfied that such
news agency has not applied or accumulated or
distributed its income in accordance with the provisions
contained in the first proviso, it may, at any time after
giving a reasonable opportunity of showing cause,
rescind the notification and forward a copy of the order
rescinding the notification to such agency and to the
Assessing Officer;

omitted by the Finance Act, 2002, w.e.f 1.4.2003.

(23A) any income (other than income chargeable under the head
"Income from house property" or any income received for
rendering any specific services or income by way of interest or
dividends derived from its investments) of an association or
institution established in India having as its object the control,
supervision, regulation or encouragement of the profession of
law, medicine, accountancy, engineering or architecture or such
other profession as the Central Government may specify in this
behalf, from time to time, by notification in the Official Gazette:

Provided that-

(i) the association or institution applies its

income, or accumulates it for application, solely
 to the objects for which it is established; and

(ii) the association or institution is for the time

being approved for the purpose of this clause by
the Central Government by general or special
order;

Provided further that where the association or

institution has been approved by the Central
Government and subsequently that Government
is satisified that-

(i) such assoication or institution has not

applied or accumulated its income in
accordance with the provisions contained
in the first proviso; or

the activities of the association or

institution are not being carried out in
accordance with all or any of the
conditions subject to which such
association or institution was approved,

it may, at any time after giving a reasonable

opportunity of showing cause against the
proposed withdrawal to the concerned
association or institution, by order, withdraw the
approval and forward a copy of the order
withdrawing the approval to such association or
institution and to the Assessing Officer;

(23AA) any income received by any person on behalf of any

Regimental Fund or Non-Public Fund established by the armed
forces of the Union for the welfare of the past and present
members of such forces or their dependants;

(23AAA) any income received by any person on behalf of a

fund established, for such purposes as may be notified by the
Board in the Official Gazette, for the welfare of employees or
their dependants and of which fund such employees are also
members if such fund fulfils the following conditions, namely:-

(a) the fund-

(i) applies its income, or accumulates it for

application, wholly and exclusively to the objects
for which it is established; and
 (ii) invests its funds and contributions and other
sums received by it in the forms or modes
specified in sub-section (5) of section 11;

(b) the fund is approved by the Commissioner in

accordance with the rules made in this behalf;

Provided that any such approval shall at any one time

have effect for such assessment year or years not
exceeding three assessment years as may be specified in
the order of approval;

(23AAB) any income of a fund, by whatever name called, set up

by the Life Insurance Corporation of India on or after the 1st
day of August, 1996 under a pension scheme,-

(i) to which contribution is made by any person for the

purpose of receiving pension from such fund;

(ii) which is approved by the Controller of Insurance.

Explanation.--For the purposes of this clause, the

expression "Controller of Insurance" shall have the
meaning assigned to it in clause (5B) of section 2 of the
Insurance Act, 1938(4 of 1938);

(23B) any income of an institution constituted as a public

charitable trust or registered under the Societies Registration
Act, 1860 (21 of 1860), or under any law corresponding to that
Act in force in any part of India, and existing solely for the
development of khadi or village industries or both, and not for
purposes of profit, to the extent such income is attributable to
the business of production, sale, or marketing, of khadi or
products of village industries:

Provided that-

(i) the institution applies its income, or

accumulates it for application, solely for the
development of khadi or village industries or
both; and

(ii) the institution is, for the time being, approved

for the purpose of this clause by the Khadi and
Village Industries Commission:

Provided further that the Commission shall not, at any

one time, grant such approval for more than three
 assessment years beginning with the assessment year
next following the financial year in which it is granted.

Provided also that where the institution has been

approved by the Khadi and Village Industries
Commission and subsequently that Commission is
satisfied that-

(i) the institution has not applied or accunulated

its income in accordance with the provisions
contained in the first proviso; or

(ii) the activities of the institution are not being

carried out in accordance with all or any of the
conditions subject to which such institution was
approved,

it may, at any time after giving a reasonable opportunity

of showing cause against the proposed withdrawal to the
concerned institution, by order, withdraw the approval
and forward a copy of the order withdrawing the
approval to such institution and to the Assessing Officer.

Explanation.-For the purposes of this clause,-

(i) " Khadi and Village Industries Commission "

means the Khadi and Village Industries
Commission established under the Khadi and
Village Industries Commission Act, 1956 (61 of
1956);

(ii) " khadi " and " village industries " have the
meanings respectively assigned to them in that
Act;

(23BB) any income of an authority (whether known as the

Khadi and Village Industries Board or by any other name)
established in a State by or under a State or Provincial Act for
the development of khadi or village industries in the State.

Explanation. For the purposes of this clause, "khadi" and

"village industries" have the meanings respectively
assigned to them in the Khadi and Village Industries
Commission Act, 1956 (61 of 1956);

(23BBA) any income of any body or authority (whether or not a

body corporate or corporation sole) established, constituted or
appointed by or under any Central, State or Provincial Act
which provides for the administration of any one or more of the
following, that is to say, public religious or charitable trusts or
endowments (including maths, temples, gurdwaras, wakfs,
churches, synagogues, agiaries or other places of public
religious worship) or societies for religious or charitable
purposes registered as such under the Societies Registration Act,
1860 (21 of 1860), or any other law for the time being in force:

Provided that nothing in this clause shall be construed to

exempt from tax the income of any trust, endowment or
society referred to therein;

(23BBB) any income of the European Economic Community

derived in India by way of interest, dividends or capital gains
from investments made out of its funds under such scheme as
the Central Government may, by notification in the Official
Gazette, specify in this behalf.

Explanation.-For the purposes of this clause, " European

Economic Community " means the European Economic
Community established by the Treaty of Rome of 25th
March, 1957:

(23BBC) any income of the SAARC Fund for Regional Projects

set up by Colombo Declaration issued on the 21st day of
December, 1991 by the Heads of State or Government of the
Member Countries of South Asian Association for Regional Co-
operation established on the 8th day of December, 1985 by the
Charter of the South Asian Association for Regional
Cooperation;

(23BBD) any income of the Secretariat of the Asian

Organisation of the Supreme Audit Institutions registered as
"ASOSAI-SECRETARIAT" under the Societies Registration
Act, 1860 (21 of 1860) for three previous years relevant to the
assessment years beginning on the 1st day of April, 2001 and
ending on the 31st day of March, 2004;

(23BBE) any income of the Insurance Regulatory and

Development Authority established under sub-section (1)
section 3 of Insurance Regulatory and Development Authority
Act, 1999 (41 of 1999)

(23C) any income received by any person on behalf of-

(i) the Prime Minister's National Relief Fund; or

(ii) the Prime Minister's Fund (Promotion of Folk Art);

or

(iii) the Prime Minister's Aid to Students Fund;or

(iiia) the National Foundation for Communal Harmony;

or

( iiiab) any university or other educational institution

existing solely for educational purposes and not for
purposes of profit , which is wholly or substantially
financed by the Government; or

(iiiac) any hospital or other institution for the reception

and treatment of persons suffering from illness or mental
defectiveness or for the reception and treatment of
persons during convalescence or of persons requiring
medical attention or rehabilitation, existing solely for
philanthropic purposes and not for purposes of profit and
which is wholly or sustantially financed by the
Government; or

(iiiad) any university or other educational institution

exisiting solely for educational purposes and not for
purposes of profit if the aggregate annual receipts of
such university or educational institution do not exceed
the amount of annual receipts as may be prescribed; or

(iiiae) any hospital or other institution for the reception

and treatment of persons suffering from illness or mental
defectiveness or for the reception and treatment of
persons during convalescence or of persons requiring
medical attention or rehabilitation, existing solely for
philanthropic purposes and not for purposes of profit, if
the aggregate annual recepits of such hospital or
institution do not exceed the amount of annual recepits
as may be prescribed; or

(iv) any other fund or institution established for

charitable purposes which may be notified by the Central
Government in the Official Gazette, having regard to the
objects of the fund or institution and its importance
throughout India or throughout any State or States; or

(v) any trust (including any other legal obligation) or

institution wholly for public religious purposes or
wholly for public religious and charitable purposes,
which may be notified by the Central Government in the
Official Gazette, having regard to the manner in which
the affairs of the trust or institution are administered and
supervised for ensuring that the income accruing thereto
is properly applied for the objects thereof:

(vi) any university or other educational institution

exisiting solely for educational purposes and not for
purposes of profit,other than those mentioned in sub-
clause(iiiab) of sub-clause(iiiad) and which may be
approved by the prescribed authority; or

(via) any hospital or other institution for the reception

and treatment of persons suffering from illness or mental
defectiveness or for the reception and treatment of
persons during convalescence or of persons requiring
medical attention or rehabilitation, existing solely for
philanthropic purposes and not for purposes of profit,
other than those mentioned in sub-clause (iiiac) or sub-
clause (iiiae) and which may be approved by the
prescribed authority:

Provided that the fund or trust or institution or any

university or other educational institution or any hospital
or other medical institution referred to in sub- clause (iv)
or sub-clause (v) or sub-clause (vi) or sub-clause (via)
shall make an application in the prescribed form and
manner to the prescribed authority for the purpose of
grant of the exemption, or continuance thereof, under
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or
sub-clause (via):

Provided further that the Central Government, before

notifying the fund or trust or institution, or the
prescribed authority, before approving any university or
other educational institution or any hospital or other
medical institution, under sub-clause (iv) or sub-clause
(v) or sub-clause (vi) or, sub-clause (via), may call for
such documents (including audited annual accounts) or
information from the fund or trust or institution or any
university or other educational institution or any hospital
or other medical institution, as the case may be, as it
thinks necessary in order to satisfy itself about the
genuineness of the activities of the fund or trust or
institution or any university or other educational
institution or any hospital or other medical institution, as
the case may be, and the Central Government or the
prescribed authority, as the case may be, may also make
such inquiries as it deems necessary in this behalf:

Provided also that the fund or trust or institution or any

university or other educational institution or any hospital
or other medical institution referred to in sub-clause (iv)
or sub-clause (v) or sub-clause (vi) or sub-clause (via)-

(a) applies its income, or accumulates it for

application, wholly and exclusively to the objects
for which it is established and in a case where
more than twenty-five per cent of the its income
is accumulated on or after the 1st day of April,
2001, the period of the accumulation of the
amount exceeding twenty-five per cent of its
income shall in no case exceed five years; and

(a) applies its income, or accumulates it for

application, wholly and exclusively to the objects
for which it is established and in a case where
more than fifteen per cent of the its income is
accumulated on or after the 1st day of April,
2002, the period of the accumulation of the
amount exceeding fifteen per cent of its income
shall in no case exceed five years; and

(b) does not invest or deposit its funds, other

than-

(i) any assets held by the fund, trust or

institution or any university or other
educational institution or any hospital or
other medical institution where such
assets form part of the corpus of the fund,
trust or institution or any university or
other educational institution or any
hospital or other medical institution as on
the 1st day of June, 1973;

(ia) any asset, being equity shares of a

public company, held by any university or
other educational institution or any
hospital or other medical institution
where such assets form part of the corpus
of any university or other educational
institution or any hospital or other
medical institution as on the 1st day of
June, 1998;

(ii) any assets (being debentures issued

by, or on behalf of, any company or
corporation), acquired by the fund, trust
or institution or any university or other
 educational institution or any hospital or
other medical institution before the 1st
day of March, 1983;

(iii) any accretion to the shares, forming

part of the corpus mentioned in sub-
clause (i) and sub-clause(ia), by way of
bonus shares allotted to the fund, trust or
institution or any university or other
educational institution or any hospital or
other medical institution;

(iv) voluntary contributions received and

maintained in the form of jewellery,
furniture or any other article as the Board
may, by notification in the Official
Gazette, specify,

for any period during the previous year otherwise

than in any one or more of the forms or modes
specified in sub-section (5) of section 11;

Provided also that the exemption under sub-clause (iv)

or sub-clause (v) shall not be denied in relation to any
funds invested or deposited before the 1st day of April,
1989, otherwise than in any one or more of the forms or
modes specified in sub-section (5) of section 11 if such
funds do not continue to remain so invested or deposited
after the 30th day of March, 1993:

Provided also that the exemption under sub-clause (vi)

or sub-clause (via)shall not be denied in relation to any
funds invested or deposited before the 1st day of June,
1998, otherwise than in any one or more of the forms or
modes specified in sub-section (5) of section 11 if such
funds do not continue to remain so invested or deposited
after the 30th day of March, 2001:

Provided also that the exemption under sub-clause (iv)

or sub-clause (v) or sub-clause (vi) or sub-clause (via)
shall not be denied in relation to voluntary contribution,
other than voluntary contribution in cash or voluntary
contribution of the nature referred to in clause (b) of the
third proviso to this sub-clause, subject to the condition
that such voluntary contribution is not held by the trust
or institution or any university or other educational
institution or any hospital or other medical institution,
otherwise than in any one or more of the forms or modes
specified in sub-section (5) of section 11, after the expiry
of one year from the end of the previous year in which
such asset is acquired or the 31st day of March, 1992,
whichever is later:

Provided also that nothing contained in sub-

clause (iv) or sub-clause (v) or sub-clause (vi) or
sub-clause (via) shall apply in relation to any
income of the fund or trust or institution or any
university or other educational institution or any
hospital or other medical institution, being profits
and gains of business, unless the business is
incidental to the attainment of its objectives and
separate books of account are maintained by it in
respect of such business:

Provided also that any notification issued by the

Central Government under sub-clause (iv) or
sub-clause (v) shall, at any one time, have effect
for such assessment year or years, not exceeding
three assessment years (including an assessment
year or years commencing before the date on
which such notification is issued) as may be
specified in the notification;

Provided also that any amount of donation received by

the fund or institution in terms of clause (d) of section
(2) of section 80G in respect of which accounts of
income and expenditure have not been rendered to the
authority prescribed under clause (v) of sub-section (5C)
of that section, in the manner specified in that clause, or
which has been utilised for purposes other than
providing relief to the victims to the earthquake in
Gujarat or which remain unutilised in terms of sub-
section (5C) of section 80G and not transferred to the
Prime Ministers National relief Fund on or before the
31st day of march, 2003 shall be deemed to be the
income of the previous year and shall accordingly be
charged to tax;

Provided also that where the fund or trust or institution

or any university or other educational institution or any
hospital or other medical institution referred to in sub-
clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via) does not apply its income during the year of
receipt and accumulates it, any payment or credit out of
such accumulation to any trust or institution registered
under section 12AA or to any fund or trust or institution
or any university or other educational institution or any
hospital or other medical institution referred to in sub-
clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via) shall not be treated as application of income
to the objects for which such fund or trust or institution
or university or educational institution or hospital or
other medical institution, as the case may be, is
established:

Provided also that where the fund or institution referred

to in sub-clause (iv) or trust or institution referred to in
sub-clause (v) is notified by the Central Government or
any university or other educational institution referred to
in sub-clause (vi) or any hospital or other medical
institution referred to in sub-clause (via), is approved by
the prescribed authority and subsequently that
Government or the prescribed authority is satisfied that

(i) such fund or institution or trust or any

university or other educational institution or any
hospital or other medical institution has not,

(A) applied its income in accordance with

the provisions contained in clause (a) of
the third proviso; or

(B) invested or deposited its funds in

accordance with the provisions contained
in clause (b) of the third proviso; or

(ii) the activities of such fund or trust or

institution or any university or other educational
institution or any hospital or other medical
institution,

(A) are not genuine; or

(B) are not being carried out in

accordance with all or any of the
conditions subject to which it was
notified or approved,

it may, at any time after giving a reasonable opportunity

of showing cause against the proposed action to the
concerned fund or institution or trust or any university or
other educational institution or any hospital or other
medical institution, rescind the notification or, by order,
withdraw the approval, as the case may be, and forward
a copy of the order rescinding the notification or
withdrawing the approval to such fund or institution or
 trust or any university or other educational institution or
any hospital or other medical institution and to the
Assessing Officer;

(23D) subject to the provisions of Chapter XII-E, any income

of-

(i) a Mutual Fund registered under the Securities and

Exchange Board of India Act, 1992 (15 of 1992) or
regulations made thereunder;

(ii) such other Mutual Fund set up by a public sector

bank or a public financial institution or authorised by the
Reserve Bank of India and subject to such conditions as
the Central Government may, by notification in the
Official Gazette, specify in this behalf

Explanation. -For the purposes of this clause, -

(a) the expression "public sector bank" means the

State Bank of India constituted under the State
Bank of India Act, 1955 (23 of 1955), a
subsidiary bank as defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959),
a corresponding new bank constituted under
section 3 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 (5 of
1970), or under section 3 of the Banking
Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980);

(b) the expression "public financial institution"

shall have the meaning assigned to it in section
4A of the Companies Act, 1956 (1 of 1956);

(c) the expression "Securities and Exchange

Board of India" shall have the meaning assigned
to it in clause (a) of sub-section (1) of section 2
of the Securities and Exchange Board of India
Act, 1992 (15 of 1992);

Clause (23E) shall be omitted by the Finance Act, 2002,

w.e.f. 1.4.2003.

(23E) any income of such Exchange Risk Administration Fund

set up by public financial institutions, either jointly or
separately, as the Central Government may, by notification in
the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of

the Fund and not charged to income-tax during any
previous year is shared, either wholly or in part, with a
public financial institution, the whole of the amount so
shared shall be deemed to be the income of the previous
year in which such amount is so shared and shall
accordingly be chargeable to income-tax.

Explanation. For the purposes of this clause, the

expression "public financial institution" shall have the
meaning assigned to it in section 4A of the Companies
Act, 1956 (1 of 1956);

(23EA) any income of such Investor Protection Fund set up by

recognised stock exchanges in India, either jointly or separately,
as the Central Government may, by notification in the Official
Gazette, specify in this behalf:

Provided that where any amount standing to the credit of

the Fund and not charged to income-tax during any
previous year is shared, either wholly or in part, with a
recognised stock exchange, the whole of the amount so
shared shall be deemed to be the income of the previous
year in which such amount is so shared and shall
accordingly be chargeable to income-tax;

(23EB) any income of the Credit Guarantee Fund Trust for

Small Industries, being a trust created by the Government of
India and the Small Industries Development Bank of India
established under sub-section (1) of section 3 of the Small
Industries Development Bank of India Act, 1989 (39 of 1989),
for five previous years relevant to the assessment years
beginning on the 1st day of April, 2002 and ending on the 31st
day of March, 2007;

(23F) any income by way of dividends or long-term capital

gains of a venture capital fund or a venture capital company
from investments made by way of equity shares in a venture
capital undertaking:

Provided that such venture capital fund or venture

capital company is approved for the purposes of this
clause by the prescribed authority in accordance with the
rules made in this behalf and satisfies the prescribed
conditions:
Provided further that any approval by the prescribed
authority shall, at any one time, have effect for such
assessment year or years, not exceeding three assessment
years, as may be specified in the order of approval:

Provided also that nothing contained in this clause shall

apply in respect of any investment made after the 31st
day of March, 1999.

Explanation.-For the purposes of this clause,-

(a) "venture capital fund" means such fund,

operating under a trust deed registered under the
provisions of the Registration Act, 1908(16 of
1908), established to raise monies by the trustees
for investments mainly by way of acquiring
equity shares of a venture capital undertaking in
accordance with the prescribed guidelines;

(b) " venture capital company" means such

company as has made investments by way of
acquiring equity shares of venture capital
undertakings in accordance with the prescribed
guidelines; and

(c) "venture capital undertaking" means such

domestic company whose shares are not listed in
a recognised stock exchnge in India and which is
engaged in the business or generation or
generation and distribution of electricity or any
other form of power or engaged in the business
of providing telecommunication services or in
the business of developing, maintaining and
operating any infrastructure facility or engaged in
the manufacture or production of such articles or
things (including computer software) as may be
notified by the Central Government in this
behalf;

(d)"infrastructure facility" means road, highway,

bridge, airport, port, rail system, water supply
project, irrigation project, sanitation and
sewerage system or any other public facility of a
similar nature as may be notified by the Board in
this behalf in the Official Gazette and which
fulfils the conditions specified in sub-section
(4A) of section 80-IA;
(23FA) any income by way of dividends, other than dividends
referred to in section 115-O, or long-term capital gains of a
venture capital fund or a venture capital company from
investments made by way of equity shares in a venture capital
undertaking:

Provided that such venture capital fund or venture

capital company is approved, for the purposes of this
clause, by the Central Government on an application
made to it in accordance with the rules made in this
behalf and which satisfies the prescribed conditions:

Provided further that any approval by the Central

Government shall, at any one time, have effect for such
assessment year or years, not exceeding three assessment
years, as may be specified in the order of approval.

Provided also that nothing contained in this clause shall

apply in respect of any investment made after the 31st
day of March, 2000.

Explanation. For the purposes of this clause,

(a) "venture capital fund" means such fund,

operating under a trust deed registered under the
provisions of the Registration Act, 1908,
established to raise monies by the trustees for
investments mainly by way of acquiring equity
shares of a venture capital undertaking in
accordance with the proscribed guidelines;

(b) "venture capital company" means such

company as has made investments by way of
acquiring equity shares of venture capital
undertakings in accordance with the prescribed
guidelines; and

(c) "venture capital undertaking" means such

domestic company whose shares are not listed in
a recognised stock exchange in India and which
is engaged in the

(i) business of

(A) software;

(B) information technology;

 (C) production of basic drugs in
the pharmaceutical sector;

(D) biotechnology;

(E) agriculture and allied sectors;

or

(F) such other sectors as may be

notified by the Central
Government in this behalf;

or

(ii) production or manufacture of any

article or substance for which patent has
been granted to the National Research
Laboratory or any other scientific
research institution approved by the
Department of Science and Technology;

(23FB) any income of a venture capital company or venture

capital fund set up to raise funds for investment in a venture
capital undertaking.

Explanation1. For the purposes of this clause,-

(a) "venture capital company" means such

company-

(i) which has been granted a certificate of

registration under the Securities and
Exchange Board of India Act, 1992 (15 of
1992), and regulations made thereunder;

(ii) which fulfils the conditions as may be

specified, with the approval of the Central
Government, by the Securities and
Exchange Board of India, by notification
in the Official Gazette, in this behalf;

(b) "venture capital fund" means such fund-

(i) operating under a trust deed registered

under the provisions of the Registration
Act, 1908 (16 of 1908);

(ii) which has been granted a certificate

 of registration under the Securities and
Exchange Board of India Act, 1992 (15 of
1992), and regulations made thereunder;

(iii) which fulfils the conditions as may

be specified, with the approval of the
Central Government, by the Securities
and Exchange Board of India, by
notification in the Official Gazette, in this
behalf; and

(c) "venture capital undertaking" means a

domestic company-

(i) whose shares are not listed in a

recognised stock exchange in India;

(ii) which is engaged in the business for

providing services, production or
manufacture of an article or thing but
does not include such activities or sectors
which are specified, with the approval of
the Central Government, by the Securities
and Exchange Board of India, by
notification in the Official Gazette, in this
behalf;

Explanation 2.-For the removal of doubts, it is hereby

declared that the income of a venture capital company or
venture capital fund shall continue to be exempt if the
shares of the venture capital undertaking, in which the
venture capital company or venture capital fund has
made the initial investment, are subsequently listed in a
recognised stock exchange in India;

(23G) any income by way of dividends, other than dividends

referred to in section 115-O ,interest or long-term captial gains
of an infrastructure capital fund or an infrastructure capital
company or a coperative bank from investments made on or
after the 1st day of June, 1998 by way of shares or long-term
finance in any enterprise or undertaking wholly engaged in the
business referred to in sub-section (4) of section 80-IA or a
housing project referred to in sub-section (10) of section 80-IB
or a hotel project or a hospital projectand which has been
approved by the Central Government on an application made by
it in accordance with the rules made in this behalf and which
satisfies the prescribed conditions.
Explanation [Link] the purposes of this clause,-

(a) "infrastructure capital company" means such

company as has made investments by way of
acquiring shares or providing long-term finance
to an enterprise wholly engaged in the business
referred to in this clause;

(b) "infrastructure capital fund" means such fund

operating under a trust deed, registered under the
provisions of the Registration Act, 1908(16 of
1908), established to raise monies by the trustees
for investment by way of acquiring shares or
providing long-term finance to an enterprise
wholly engaged in the business referred to in this
clause;

(d) "long-term finance" shall have the meaning

assigned to it in clause (viii) of sub-section (1) of
section 36;

(e) "co-operative bank" shall have the meaning

assigned to it in clause (dd) of section 2 of the
Deposit Insurance and Credit Guarantee
Corporation Act, 1961 (47 of 1961);

(f) "interest" includes any fee or commission

received by a financial institution for giving any
guarantee to, or enhancing credit in respect of, an
exterprise which has been approved by the
Central Government for the purposes of this
clause.

The following clauses (g) and (h) shall be

inserted after clause (f) in Explanation 1 to
clasue (23G) of section 10 by the Finance Act,
2003, w.e.f. 1-4-2004:

(g) "hotel project" means a project for

constructing a hotel of not less than three-star
category as classified by the Central
Government;

(h) "hospital project" means a project for

contructing a hospital with at least one hunderd
beds for patients.

Explanation 2.- For the removal of doubts, it is

 hereby declared that any income by way of
dividends, interest or long-term capital gains of
an infrastructure capital fund or an infrastructure
capital company from investments made before
the 1st day of June, 1998 by way of shares or
long-term finance in any enterprise carrying on
the business of developing, maintaining and
operating any infrastructure facility shall not be
included and the provisions of this clause as it
stood immediately before its amendments by the
Finance (No. 2) Act, 1998 (21 of 1998) shall
apply to such income.

(24) any income chargeable under the heads "Income from

house property" and "Income from other sources" of-

(a) a registered union within the meaning of the Trade

Unions Act, 1926 (16 of 1926) formed primarily for the
purpose of regulating the relations between workmen
and employers or between workmen and workmen;

(b) an association of registered unions referred to in sub-

clause (a);

(25)

(i) interest on securities which are held by, or are the

property of, any provident fund to which the Provident
Funds Act, 1925(19 of 1925), applies, and any capital
gains of the fund arising from the sale, exchange or
transfer of such securities;

(ii) any income received by the trustees on behalf of a

recognised provident fund;

(iii) any income received by the trustees on behalf of an

approved superannuation fund;

(iv) any income received by the trustees on behalf of an

approved gratuity fund;

(v) any income received-

(a) by the Board of Trustees constituted under the

Coal Mines Provident Fund and Miscellaneous
Provisions Act, 1948 (46 of 1948), on behalf of
the Deposit-linked Insurance Fund established
 under section 3G of that Act; or

(b) by the Board of Trustees constituted under the

Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 (19 of 1952), on behalf of
the Deposit-linked Insurance Fund established
under section 6C of that Act;

(25A) any income of the Employees' State Insurance Fund set

up under the provisions of the Employees' State Insurance Act,
1948 (34 of 1948);

(26) in the case of a member of a Scheduled Tribe as defined in

clause (25) of article 366 of the Constitution, residing in any
area specified in Part I or Part II of the Table appended to
paragraph 20 of the Sixth Schedule to the Constitution or in the
States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and
Tripura or in the areas covered by notification No.
TAD/R/35/50/109, dated the 23rd February, 1951, issued by the
Governor of Assam under the proviso to sub-paragraph (3) of
the said paragraph 20 [as it stood immediately before the
commencement of the North-Eastern Areas (Reorganisation)
Act, 1971 (18 of 1971)], or in the Ladakh region of the State of
Jammu and Kashmirany income which accrues or arises to him,-

(a) from any source in the areas or States aforesaid, or

(b) by way of dividend or interest on securities;

(26A) any income accruing or arising to any person from any

source in the district of Ladakh or outside India in any previous
year relevant to any assessment year commencing before the 1st
day of April, 1989 , where such person is resident in the said
district in that previous year:

Provided that this clause shall not apply in the case of

any such person unless he was resident in that district in
the previous year relevant to the assessment year
commencing on the 1st day of April, 1962.

Explanation 1.-For the purposes of this clause, a person

shall be deemed to be resident in the district of Ladakh if
he fulfils the requirements of sub-section (1) or sub-
section(2) or sub-section(3) or sub-section(4) of section
6, as the case may be, subject to the modifications that-

(i) references in those sub-sections to India shall

 be construed as references to the said district; and

(ii) in clause (i) of sub-section (3), reference to

Indian company shall be construed as reference
to a company formed and registered under any
law for the time being in force in the State of
Jammu and Kashmir and having its registered
office in that district in that year.

Explanation 2.-In this clause, references to the district of

Ladakh shall be construed as references to the areas
comprised in the said district on the 30th day of June,
1979;

(26B) any income of a corporation established by a Central,

State or Provincial Act or of any other body, institution or
association (being a body, institution or association wholly
financed by Government) where such corporation or other body
or institution or association has been established or formed for
promoting the interests of the members of the Scheduled Castes
or the Scheduled Tribes or backward classes or of any two or all
of them.

Explanation.-For the purposes of this clause,-

(a) "Scheduled Castes" and "Scheduled Tribes"

shall have the meanings respectively assigned to
them in clauses (24) and (25) of article 366 of the
Constitution;

(b) "backward classes" means such classes of

citizens, other than the Scheduled Castes and the
Scheduled Tribes, as may be notified-

(i) by the Central Government; or

(ii) by any State Government,

as the case may be, from time to time;

(26BB) any income of a corporation established by the Central

Government or any State Government for promoting the
interests of the members of a minority community.

Explanation.-For the purposes of this clause, "minority

community" means a community notified as such by the
Central Government in the Official Gazette in this
 behalf;

The following clause (26BBB) shall be inserted after clause

(26BB) of section 10 by the Finance Act, 2003, w.e.f. 1-4-
2004:

(26BBB) any income of a corporation established by a Central,

State of Provincial Act for the welfare and economic upliftment
of ex-servicemen being the citizens of India.

Explanation.-For the purposes of this clause, "ex-serviceman"

means a person who has served in any rank, whether as
combatant or non-combatant, in the armed forces of the Union
or armed forces of the Indian States before the commencement
of the Constitution (but excluding the Assam Rifles, Defence
Security Corps, General Reserve Engineering Force, Lok
Sahayak Sena, Jammu and Kashmir Militia and Territorial
Army) for a continuous period of not less than six months after
attestation and has been released, otherwise than by way of
dismissal or discharge on account of misconduct or inefficiency,
and in the case of a deceased or incapacitated ex-serviceman
includedes his wife, children, father, mother, minor brother,
widowed daughter and widowed sister, wholly dependant upon
such ex-serviceman immediately before his death or
incapacitation;

(27) any income of a co-operative society formed for promoting

the interests of the members of either the Scheduled Castes or
Scheduled Tribes or both referred to in clause (26B):

Provided that the membership of the co-operative

society consists of only other co-operative societies
formed for similar purposes and the finances of the
society are provided by the Government and such other
societies;

(29) omitted by the Finance Act, 2002, w.e.f. 1.4.2003.

(29A) any income accruing or arising to-

(a) the Coffee Board constituted under section 4 of the

Coffee Act, 1942 in any previous year relevant to any
assessment year commencing on or after the 1st day of
April, 1962 or the previous year in which such Board
was constituted, whichever is later;

(b) the Rubber Board constituted under sub-section (1)

of section 4 of the Rubber Board Act, 1947 in any
 previous year relevant to any assessment year
commencing on or after the 1st day of April, 1962 or the
previous year in which such Board was constituted,
whichever is later;

(c) the Tea Board established under section 4 of the Tea

Act, 1953 in any previous year relevant to any
assessment year commencing on or after the 1st day of
April, 1962 or the previous year in which such Board
was constituted, whichever is later;

(d) the Tobacco Board constituted under the Tobacco

Board Act, 1975 in any previous year relevant to any
assessment year commencing on or after the 1st day of
April, 1975 or the previous year in which such Board
was constituted, whichever is later;

(e) the Marine Products Export Development Authority

established under section 4 of the Marine Products
Export Development Authority Act, 1972 in any
previous year relevant to any assessment year
commencing on or after the 1st day of April, 1972 or the
previous year in which such Authority was constituted,
whichever is later;

(f) the Agricultural and Processed Food Products Export

Development Authority established under section 4 of
the Agricultural and Processed Food Products Export
Development Act, 1985 in any previous year relevant to
any assessment year commencing on or after the 1st day
of April, 1985 or the previous year in which such
Authority was constituted, whichever is later;

(g) the Spices Board constituted under sub-section (1) of

section 3 of the Spices Board Act, 1986 in any previous
year relevant to any assessment year commencing on or
after the 1st day of April, 1986 or the previous year in
which such Board was constituted, whichever is later;

(30) in the case of an assessee who carries on the business of

growing and manufacturing tea in India, the amount of any
subsidy received from or through the Tea Board under any such
scheme for replantation or replacement of tea bushes or for
rejuvenation or consolidation of areas used for cultivation of tea
as the Central Government may, by notification in the Official
Gazette, specify:

Provided that the assessee furnishes to the Assessing

 Officer, along with his return of income for the
assessment year concerned or within such further time as
the Assessing Officer may allow, a certificate from the
Tea Board as to the amount of such subsidy paid to the
assessee during the previous year.

Explanation.-In this clause, " Tea Board " means the Tea
Board established under section 4 of the Tea Act, 1953
(29 of 1953);

(31) in the case of an assessee who carries on the business of

growing and manufacturing rubber, coffee, cardamom or such
other commodity in India, as the Central Government may, by
notification in the Official Gazette, specify in this behalf the
amount of any subsidy received from or through the concerned
Board under any such scheme for replantation or replacement of
rubber plants, coffee plants, cardamom plants or plants for the
growing of such other commodity or for rejuvenation or
consolidation of areas used for cultivation of rubber, coffee,
cardmom or such other commodity as the Central Government
may, by notification in the Official Gazette, specify:

Provided that the assessee furnishes to the Assessing

Officer, along with his return of income for the
assessment year concerned or within such further time as
the Assessing Officer may allow, a certificate from the
concerned Board, as to the amount of such subsidy paid
to the assessee during the previous year.

Explanation.-In this clause, " concerned Board " means,

-

(i) in relation to rubber, the Rubber Board

constituted under section 4 of the Rubber Act,
1947 (24 of 1947),

(ii) in relation to coffee, the Coffee Board

constituted under section 4 of the Coffee Act,
1942 (7 of 1942),

(iii) in relation to cardamom, the Spices Board

constituted under section 3 of the Spices Board
Act, 1986 ( 10 of 1986),

(iv) in relation to any other commodity specified

under this clause, any Board or other authority
established under any law for the time being in
force which the Central Government may, by
 notification in the Official Gazette, specify in this
behalf.

(32) in the case of an assessee referred to in sub-section (1A) of

section 64, any income includible in his total income under that
sub-section, to the extent such income does not exceed one
thousand five hundred rupees in respect of each minor child
whose income is so includible.

(33) any income arising from the transfer of a capital asset,

being a unit of the Unit Scheme, 1964 referred to in Schedule I
of the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002 (58 of 2002) and where the transfer of such asset
takes place on or after the 1st day of April, 2002.

The following clauses (34),(35) and (36) shall be inserted

after clause (33) of section 10 by the Finance Act, 2003, w.e.f.
1-4-2004:

(34) any income by way of dividends referred to in section 115-

O;

(35) any income by way of,-

(a) income received in respect of the units of a Mutual

Fund specified under clasue (23D); or

(b) income received in respect of units from the

Administrator of the specified undertaking; or

(c) income received in respect of units from the specified

company:

Provided that this clause shall not apply to any income arising
from transfer of units of the Administrator of the specified
undertaking or of the specified company or of a mutual fund, as
the case may be.

Explanation.- For the purpose of this clause,-

(a) "Administrator" means the Administrator as referred

to in clause (a) of section 2 of the Unit Trust of India
(Transfer of undertaking and Repeal) Act, 2002 (58 of
2002);

(b) "Specified company" means a company as referred

to in clause (h) of section 2 of the Unit Trust of India
(Transfer of Undertaking and Repeal) Act, 2002 (58 of
 2002);

(36) any income arising from the transfer of a long-term capital

asset, being an eligible equity share in a company purchased on
or after the 1st day of March, 2003 and before the 1st day of
March, 2004 and held for a period of twelve months or more.

Explanation.- For the purposes of this clause, "eligible equity

share" means,-

(i) any equity share in a company being a constituent of

BSE-500 Index of the Stock Exchange, Mumbai as on
the 1st day of March, 2003 and the transactions of
purchase and sale of such equity share are entered into
on a recognised stock exchange in India;

(ii) any equity share in a company allotted through a

public issue on or after the 1st day of March, 2003 and
listed in a recognised stock exchange in India before the
1st day of March, 2004 and the transaction of sale of
such share is entered into on a recognised stock
exchange in India.