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Report No. 12

Notes to clause 311

The words "in the previous year" have been added for the sake of precision, and the place of the first Proviso to existing Section 58R, is, in the draft, taken by the words at the end "in so far as such sum is an ordinary annual contribution".

The general scheme of existing section 58R has already been dealt with1.

1. See notes to clause 309.

Notes to clause 312

Existing section 58S(1) provides that where any contributions are "repaid", to an employee, the amounts so repaid shall be deemed, for the purpose of income-tax, the income of the employee for that year. The words "repaid" would, at first sight, seem to suggest that it is only the employee's contributions that are intended to be covered by these words. But it seems that the employer's contributions should also be covered, because there does not appear to be any reason for excluding employer's contributions; the word "repaid" was probably used in a wider sense.

The sub-section does not make any exception for contributions repaid on death or termination of employment. Existing section 58S(2) however shows that payment of contributions to an employee on death or termination of employment does not come within the scope of this section. The two sub-sections should run in harmony with each other.

The language of the provision has, therefore, been altered on these lines.

The words "of that year" have been replaced by the words "of the previous year in which it is so paid to him", for precision.

Notes to clause 313

As pointed out in the notes to the clause corresponding to existing section 58S(1), section 58S is intended to apply to contributions both of the employees and of the employer1. The necessary change has been made in this clause also.

1. See notes to clause 312.

Notes to clause 314

No comments are needed.

Notes to clause 315

No comments are needed.

Notes to clause 316

Existing section 58V has been embodied here with the following changes:-

(1) It has been made clear that the information is to be supplied by the trustee to the Income-tax Officer within "not less than twenty-one days". This will avoid the raising of any question as to what is meant by the words "within twenty-one days".

(2) Clauses (a), (b) and (c) of this section, which elaborate the particulars that will be required by the Income-tax Officer, have been omitted, as the rule-making power now conferred1 enables rules to be made on these matters.

Notes to clause 317

1. Vide draft clause 317.


This is a new clause and is intended to give effect to the following recommendations of the Income-tax Investigation Commission1:-

1. ITIC Report, 1948, p. 219, for detailed discussion, see para. 170-171 of that Report.

"70. If all the requirements of section 58P are satisfied, it is doubtful if the Central Board of Revenue can refuse to recognise a superannuation fund. The power to impose conditions would probably have reference only to the three eventualities mentioned in the proviso and not in other circumstances independent of these contingencies.

The provisions of the Income-tax Law in respect of superannuation funds should, as far as possible, be brought into line with those relating to Provident Funds. It is difficult to see why the power given, to the Central Government to make rules as in section 58L(2) should not be repeated in the case of Superannuation Funds. This lack of power to make rules is a serious drawback in the scheme of Superannuation Funds under the Income-tax Act, of which unfair use can be made".

"72. Suitable amendments may be made in the Indian Income-tax Act restricting the maximum limit to which the contributions by the employee and employer may be made to 25 per cent. of the employee's salary.

Sub-clause (l).- Cf. existing section 58L(1) relating to recognised provident funds. Sub-clause (2).-Para (a)-Cf. section 58L(2)(a),

Para (b)- relates to the returns etc. referred to in section 58R as embodied in the draft.

Pam (c)- See para. 72 of the report of the Income-tax.

Investigation Commission quoted above. The maximum has been left to be prescribed by the rules, in order to secure elasticity.

Para (d)- Cf. section 58L(2)(c). Para (e)-Cf. section 58L(2)(d).

Para (f)- is intended to enable withdrawal of recognition. This power will be in addition to that enjoyed under section 58-0(1) latter part.

Para (g)- Cf. section 58L(2)(e).

Notes to clause 318

Sub-clause (c)- The word "earnings" has been replaced by the words "income chargeable under the head salaries", which are more appropriate1.

1. Cf. Report of the Income-tax Investigation Commission, par. 171, observation beginning with "Secondly....", p. 74.

Income-Tax Act, 1922 Back

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