Section 2. Where a company owns any assets the income from which in accordance with clause (iii) or clause

2. Where a company owns any assets the income from which in accordance with clause (iii) or clause (vi) or clause (viii) of rule 1 of the First Schedule is required to be excluded from its total income in computing its chargeable profits, the amount of its capital as computed under rule 1 of this Schedule shall be diminished by the cost to it of the said assets as on the first day of the previous year relevant to the assessment year in so far as such cost exceeds the aggregate of― 1. Subs. by Act 66 of 1976, s. 29, for "(ii) any expenditure" (w.e.f. 1-4-1977). 2. Subs. by Act 4 of 1988, s. 187, for "Income-tax Officer" (w.e.f. 1-4-1988). 3. Subs. by s. 187, ibid ., for "Inspecting Assistant Commissioner" (w.e.f. 1-4-1988). 4. Subs. by Act 66 of 1976, s. 29, for "sub-section (3) of section 34" (w.e.f. 1-4-1977). 2. The balance of the total income arrived at after making the exclusions mentioned in rule 1 shall be reduced by― (i) the amount of income-tax[1] * payable by the company in respect of its total income under the provisions of the Income-tax Act after making allowance for any relief, rebate or deduction in respect of income-tax[1] * to which the company may be entitled under the provisions of the said Act or the annual Finance Act, and after excluding from such amount― (a) the amount of income-tax[1] * if any, payable by the company in respect of any income referred to in clause (i) or clause (ii) or clause (iii) or clause (viii) of rule,1 included in the total income; 3[(b) the amount of income-tax, if any, payable by the company under the provisions of the annual Finance Act with reference to the relevant amount of distributions of dividends by it. Explanation .―In this sub-clause, the expression "the relevant amount of distributions of dividends" has the meaning assigned to it in the Finance Act of the relevant year;] 4 [(c) the amount of income-tax, if any, payable by the company under section 104 of the Income-tax Act. Explanation .― In relation to the assessment year commencing on the 1st day of April, 1964, the reference in this sub-clause to "income-tax" shall be construed as a reference to "super-tax";] (8) "statutory deduction" means an amount equal to[3] [fifteen per cent.] of the capital of the company as computed in accordance with the provisions of the Second Schedule, or an amount of two hundred thousand rupees, whichever is greater: Provided that where the previous year is longer or shorter than a period of twelve months, the aforesaid amount of[3] [fifteen per cent.] or, as the case may be, of two hundred thousand rupees shall be increased or decreased proportionately: Provided further that where a company has different previous years in respect of its income, profits and gains, the aforesaid increase or decrease, as the case may be, shall be calculated with reference to the length of the previous year of the longest duration; and (9) all other words and expressions used herein but not defined and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act. 1. Ins. by Act 16 of 1981, s. 35 (w.e.f. 1-4-1981). 2. Clause (1) re-numbered as clause (1A) thereof by s. 35, ibid . (w.e.f. 1-4-1981). 3. Subs. by Act 66 of 1976, s. 29, for "ten per cent." (w.e.f. 1-4-1977) . (ii) in the case of a company which has been charged to tax in a country outside India on any portion of its income, profits and gains included in its total income as computed under the Income-tax Act, the tax actually paid in respect of such income, profits and gains in the said country in accordance with the laws in force in that country after allowance of every relief due under the said laws: 1. The words "and super-tax" omitted by Act 10 of 1965, s. 74 (w.e.f. 1-4-1965). 2. Ins. by Act 16 of 1981, s. 43 (w.e.f. 1-4-1981). 3. Subs. by Act 13 of 1966, s. 43, for sub-clause (b) (w.e.f. 1-4-1966). 4. Ins. by s. 43, ibid . (retrospectively). Provided that the aforesaid reduction shall not be allowed unless the assessee produces evidence of the fact of the payment of the aforesaid tax in that country. [1] [3. Tax authorities .―(1) The income-tax authorities specified in section 116 of the Income-tax Act shall be the authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a tax authority under this Act in respect of any company, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of that Act. (2) The Board may, from time to time, issue such orders, instructions and directions to other tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued― (a) so as to require any tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions.]