(1) For the purposes of sections 199(1)(c)(i)(C), 200(1)(a)(iii), 201(3)(a)(iii), 203(1)(a)(ii) and 204(3)(a)(ii), the total income shall be computed without any deduction or exemption, under the following provisions:–– (a) section 33(8), determined in such manner, as may be prescribed; (b) section 45(3)(a) or (b) or (c); (c) section 46; (d) section 47(1)(a); (e) section 48; (f) section 49; and (g) section 144. (2) For the purposes of section 201 or 204, the following conditions shall apply to the assessee:— (a) its business is not formed by splitting up, or the reconstruction, of a business already in existence, unless it is formed as a result of the re-establishment, reconstruction or revival of the business of any such undertaking as is referred to in section 140(4) in the circumstances and within the period specified in the said section; (b) it does not use any machinery or plant, previously used for any purpose, other than— (i) permitted machinery or plant used outside India; (ii) machinery or plant or any part thereof previously used for any Direct Taxes Committee 2 91
purpose and the total value of such machinery or plant or any part thereof put to use by the assessee does not exceed 20% of the total value of the machinery or plant used by such assessee; (c) in case of a domestic company, it does not use any building previously used as a hotel or a convention centre, in respect of which deduction under section 80-ID of the Income-tax Act, 1961 has been claimed and allowed; (d) it is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it, and, if any difficulty arises in fulfilling any of the conditions contained in clause (b) or (c) or (d), the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty and to promote manufacturing or production of article or thing using new plant and machinery. (3) Every guideline issued by the Board under sub-section (2) shall be laid before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in such guideline or both Houses agree that the guideline, should not be issued, the guideline shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that guideline. (4) For the purposes of sections 201 and 204,–– (a) where it appears to the Assessing Officer that, owing to the close connection between the person to which the said section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such business, then the Assessing Officer shall, in computing the profits and gains of such business for the purposes of this section, take profits as may be reasonably deemed to have been derived therefrom, and where the said arrangement involves a specified domestic transaction referred to in section 164, profits from such transaction shall be determined having regard to the arm’s length price as defined in section 173(a); and (b) the amount, being profits in excess of the profits determined by the Assessing Officer under clause (a), shall be deemed to be the income of the Direct Taxes Committee 2 92
person and shall be chargeable at the rates specified in section 201(1) [Table: Sl. No. 1.C(d)] or 204 (1)[Table: Sl. No. 1.A(d)], as the case may be.