Finance (Miscellaneous Provisions) Act, 1968

Amendment of Chapter VI of Part IV of Income Tax Act, 1967.

7.—(1) Chapter VI of Part IV of the Income Tax Act, 1967 , is hereby amended, with effect as from the commencement of that Act,—

(a) by the insertion in section 81 (4), after paragraph (e), of the following paragraph:

“(f) interest on borrowed money employed in the purchase, improvement or repair of the premises,” and

(b) by the insertion after section 89 of the following section:

“89A.—Where for any year of assessment a person—

(a) is (or would but for an insufficiency of profits or gains be) chargeable to tax under Case IV of Schedule D by virtue of section 81, and

(b) is assessed to tax under section 434 in respect of a payment of interest, being interest in respect of which a deduction would have fallen to be made, by reference to paragraph (f) of section 81 (4), in computing the profits or gains but for the application (by that subsection) of the provisions applicable to Case I of Schedule D under which a deduction in respect of interest paid or payable wholly and exclusively for the purpose of a trade may not be made in computing the profits or gains of the trade,

the amount on which tax is paid under that assessment shall be treated as if it were such a loss as is mentioned in section 310 and the provisions of that section shall apply accordingly.”

(2) Where, in respect of interest for any of the years 1963-64 to 1966-67, any relief from tax would be allowable by virtue of subsection (1) if it were interest for the year 1967-68, the like relief shall be granted in respect thereof as if provisions to the same effect as those inserted in Chapter VI of Part IV of the Income Tax Act, 1967 , by subsection (1) had been included in Part IX of the Finance Act, 1963 .