Income Tax Act, 1967.

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Deduction as expenses of certain sums, etc.

219.—(1) It is hereby declared that in computing, for the purposes of Case I of Schedule D or of section 78, the profits or gains of a society there are to be deducted as expenses any sums which—

(a) represent a discount, rebate, dividend, or bonus granted by the society to members thereof or other persons in respect of amounts paid or payable by or to them on account of their transactions with the society being transactions which are taken into account in the said computation, and

(b) are calculated by reference to the said amounts or to the magnitude of the said transactions and not by reference to the amount of any share or interest in the capital of the society.

(2) A society whose business consists mainly in the making of investments, and the principal part of whose income is derived therefrom, shall be entitled to relief under section 214, in the same manner and to the same extent as if the business of the society were the business of a company.

(3) Where any profits or gains of a society which, but for the repeal of section 39 (4) of the Income Tax Act, 1918, would not be chargeable to tax are so chargeable by virtue of that repeal and the computation of profits or gains is required to be made by reference to any year or period other than the year of assessment, the computation for that year or period shall be made in accordance with the provisions of this Part notwithstanding that those provisions were not in force in that year or period or some part thereof.

(4) (a) Where for the year 1962-63 a society was entitled to exemption from tax in respect of the profits of a trade carried on by it—

(i) no capital allowance in respect of any property used for the purposes of the trade shall be carried forward from the year 1962-63, and

(ii) no loss, or portion of a loss, which was sustained before the 6th day of April, 1963, shall be carried forward under section 309.

(b) Where for the year 1962-63 or any previous year of assessment an annual allowance, balancing allowance or balancing charge in respect of capital expenditure on the construction of a building or structure might have been made to or on a society under Part V of the Finance Act, 1959 , but for the circumstance that the society was exempt from tax under Schedule D, any annual allowance, balancing allowance or balancing charge falling to be made in respect of the expenditure under Part XVI for any year of assessment shall be computed as if every annual allowance, balancing allowance and balancing charge which might have been made as aforesaid had been made:

Provided that nothing in this paragraph shall affect the provisions of section 265 (5).

(c) Where for the year 1962-63 or any previous year of assessment an annual allowance in respect of capital expenditure on the purchase of patent rights might have been made to or on a society under Part V of the Finance Act, 1959 , but for the circumstance that the society was exempt from tax under Schedule D, the amount of the expenditure remaining unallowed (within the meaning of section 286) shall, in relation to any balancing allowance or balancing charge under Part XVI falling to be made to or on the society in respect of the expenditure for any year of assessment, be computed as if every annual allowance which might have been made as aforesaid had been made.