Income-tax Act : Definitions of certain terms relevant to income from profits and gains of business or

Income-tax Act,1961

Act No : 43

Section : Definitions of certain terms relevant to income from profits and gains of business or profession

43. Definitions of certain terms relevant to income from profits and gains of business or profession In sections 28 to 41 and in this section, unless the context otherwise requires- 5(1) "actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority: ---------------------------------------------------------------------- 1 Substituted for "in such business of the Central Government" by the Finance Act, 1981, w.e.f. 1-4-1981. 2 The word "and" omitted by the Finance Act, 1981, w.e.f. 1-4-1981. 3 Inserted by the Finance Act, 1981, w.e.f. 1-4-1981. 4 Ibid. 1.253 1[Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967, 2[but before the 1st day of March, 1975,] and is used otherwise than in a business of running it on hire for tourists, exceeds twenty- five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees.] Explanation 1.-Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under 3[clause (ii) of sub-section (1)] of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub-section (1) of section 35 or under any corresponding provision of the Indian Income-tax Act, 1922 (11 of 1922). 4 [Explanation 2.-Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the actual cost to the previous owner, as reduced by- (a) the amount of depreciation actually allowed under this Act and the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after-the 1st day of April, 1988, as if the asset was the only asset in the relevant block of assets.] Explanation 3.-Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the 5[Assessing] Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost), the actual cost to the assessee shall be such an amount as the 6[Assessing] Officer may, with the previous approval of the 7 [Deputy] Commissioner, determine having regard to all the circumstances of the case. --------------------------------------------------------------------- 1 Substituted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Earlier, the proviso was inserted by the Finance Act, 1966, w.e.f. 1-4-1966. 2 Inserted by the Finance Act, 1975, w.e.f. 1-4-1975. 3 Substituted for "clause (i), clause (ii) or clause (iii) of sub- section (1) or sub-section (IA)" by the 'Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. The italicised words were inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971. 4 Substituted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to the substitution, Explanation 2 read as under: "Explanation 2.-Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the written down value thereof as in the case of the previous owner for the previous year in which the asset is so acquired or the market value thereof on the date of such acquisition, which is the less." 5 Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 6 ]bid. 7 Substituted for "Inspecting Assistant", ibid. ------------------------------------------------------------------------ 1.254 1[Explanation 4.-Where any asset which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, is re-acquired by him, the actual cost to the assessee shall be- (i) the actual cost to him when he first acquired the asset as reduced by- (a) the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988, as if the asset was the only asset in the relevant block of assets; or (ii) the actual price for which the asset is re-acquired by him, whichever is less.] Explanation 5.-Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946, the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisition by the assessee. 2[Explanation 6.-When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee-company shall be taken to be the same as it would have been if the transferor- company had continued to hold the capital asset for the purposes of its business.] 3[Explanation 7.-Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated ---------------------------------------------------------------------- 1 Substituted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to the substitution, Explanation 4, as amended by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971, read as under: "Explanation 4.-Where assets which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, are re-acquired by him, the actual cost to the assessee shall be the actual cost to him when he first acquired the assets less the depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), diminished by any loss deducted, or as the case may be, increased by any profit assessed, under the provisions of clause (iii) of sub-section (1) or clause (ii) of sub-section (1A) of section 32 or subsection (2) or sub-section (2A) of section 41 of this Act, or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), or the actual price for which the asset is re-acquired by him, whichever is the less." 2 Substituted by the Finance Act, 1965, w.e.f. 1-4-1965. 3 Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. --------------------------------------------------------------------- 1.255 company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business.] 1[Explanation 8.-For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset;] (2)"paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head "Profits and gains of business or profession"; (3)"plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession 2 [but does not include tea bushes or livestock]; (4) 3[(i) "scientific research" means any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries;] (ii) references to expenditure incurred on scientific research include all expenditure incurred for the prosecution, or the provision of facilities for the prosecution, of scientific research, but do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research; (iii) references to scientific research related to a business or class of business include- ---------------------------------------------------------------------- 1 Inserted by the Finance Act, 1986, w.r.e.f. 1-4-1974, 2 Inserted by the Finance Act, 1995, w.r.e.f. 1-4-1962. ---------------------------------------------------------------------- 1.256 (a) any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class; (b) any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, all businesses of that class; 1(5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided that for the purposes of this clause- (a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or (b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; shall not be deemed to be a speculative transaction; (6) "written down value" means- (a) in the case of assets acquired in the previous year, the actual cost to the assessee; (b) in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Act, or under the Indian Income-tax Act, 1922 (11 of 1922), or any Act repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886 (2 of 1886), was in force: 2 [Provided that in determining the written down value in respect of buildings, machinery or plant for the purposes of clause (ii) of sub-section (1) of section 32, "depreciation actually allowed" shall not include depreciation allowed under sub-clauses (a), (b) and (c) of clause (vi) of sub- section (2) of section 10 of the Indian Income-tax Act, 1922 (11 of 1922), where such depreciation was not deductible in determining the written down value for the purposes of the said clause (vi);] 3[(c) in the case of any block of assets,- --------------------------------------------------------------------- 2 Inserted by the Finance (No. 2) Act, 1965, w.r.e.f. 1-4-1962. 3 Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. ----------------------------------------------------------------------- 1.257 (i) in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988, the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,- (A) by the increase by the actual cost of any asset falling within that block, acquired during the previous year; and (B) by the reduction of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased; and (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i).] Explanation 1.-When in a case of succession in business or profession, an assessment is made on the successor under sub-section (2) of section 170 the written down value of 1[any asset or any block of assets] shall be the amount which would have been taken as its written down value if the assessment had been made directly on the person succeeded to. 2 [Explanation 2.-Where in any previous year, any block of assets is transferred,- (a) by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied; or ----------------------------------------------------------------------- 1 Substituted for "any asset" by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 2 Substituted for Explanations 2 and 2A by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w.e.f. 1-4-1965 and Explanation 2A, as inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967, read as under: "Explanation 2.-When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.-Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business.' ---------------------------------------------------------------------- 1.258 (b) by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause (1), the actual cost of the block of assets in the case of the transferee-company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor-company or the amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year.) Explanation 3.-Any allowance in respect of any depreciation carried forward under sub-section (2) of section 32 shall be deemed to be depreciation "actually allowed". 1[Explanation 4.-For the purposes of this clause, the expressions "moneys payable" and "sold" shall have the same meanings as in the Explanation below sub-section (4) of section 41.] 2[43A. Special provisions consequential to changes in rate of exchange of currency3 (1) Notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset from a country outside India for the purposes of his business or profession and, in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payment towards the whole or a part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability aforesaid is so increased or reduced during the previous year shall be added to, or, as the case may be, deducted from, the actual cost of the asset as defined in clause (1) of section 43 or the amount of expenditure of a capital nature refer-red to 4[in clause (iv) of sub-section (1) of section 35 or in section 35A] or in clause (ix) of sub-section (1) of section 36, or, in the case of a capital asset (not being a capital asset referred to in section 50), the cost of acquisition thereof for the purposes of section 48, and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset as aforesaid. ---------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 2 Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 4 Restored by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, it was amended by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. ----------------------------------------------------------------------- 1.259 Explanation 1.-In this sub-section, unless the context otherwise requires,- (a) "rate of exchange" means the rate of exchange determined or recognised by the Central Government for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in section 2 of the Foreign Exchange Regulation Act, 1947 1 (7 of 1947). Explanation 2.-Where the whole or any part of the liability aforesaid is met, not by the assessee, but, directly or indirectly, by any other person or authority, the liability so met shall not be taken into account for the purposes of this sub-section. Explanation 3.-Where the assessee has entered into a contract with an authorised dealer as defined in section 2 of the Foreign Exchange Regulation Act, 19472 (7 of 1947), for providing him with a specified sum in a foreign currency on or after a stipulated future date at the rate of exchange specified in the contract to enable him to meet the whole or any part of the liability aforesaid, the amount, if any, to be added to, or deducted from, the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset under this sub- section shall, in respect of so much of the sum specified in the contract as is available for discharging the liability aforesaid, be computed with reference to the rate of exchange specified therein. (2) The provisions of sub-section (1) shall not be taken into account in computing the actual cost of an asset for the purpose of the deduction on account of development rebate under section 33. 3 [43B. Certain deductions to be only on actual payment4 Notwithstanding anything contained in any other provision of this Act, a deduction other-wise allowable under this Act in respect of- --------------------------------------------------------------------- 3 Inserted by the Finance Act, 1983, w.e.f. 1-4-1987. ---------------------------------------------------------------------- 1.260 1[(a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or] (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, 2[or] 3[(c) any sum referred to in clause (ii) of sub-section (1) of section 36,] 4 [or] 5[(d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution 6[or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement governing such loan or borrowing,] shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: 7 [Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) 8[or clause (c)] 9[or clause (d)] which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return:] 10[Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or ,before the due date as defined in the Explanation below clause (va) of subsection (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date.]] --------------------------------------------------------------------- 1 Substituted by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to the substitution, clause (a) read as under: '(a) any sum payable by the assessee by way of tax or duty under any law for the time being in force, or" 2 Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1- 4-1989. 3 Ibid. 4 Inserted by the Finance Act, 1988, w.e.f. 1-4-1989. 5 Ibid. 6 Inserted by the Finance Act, 1990, w.e.f. 1-4-1991. 7 Inserted by the Finance Act, 1987, w.e.f. 1-4-1988. 8 Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 9 Inserted by the Finance Act, 1988, w.e.f. 1-4-1989. 10 Substituted by the Finance Act, 1989, w.e.f. 1-4-1989. Prior to the substitution, the second proviso, as inserted by the Finance Act, 1987, w.e.f. 1-4-1988, read as under: `" Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36." ----------------------------------------------------------------------- 1.261 Explanation 1[1].-For the removal of doubts, it is hereby declared that where a deduction in respect of any sum refer-red to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983 or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.] 2 [Explanation 2.-For the purposes of clause (a), as in force at all material times, "any sum payable" means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.] 6[Explanation 4 [3].-For the removal of doubts it is hereby declared that where a deduction in respect of any sum referred to in clause (c) 5[or clause (d)] of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him.] 6 [Explanation 4.-For the purposes of this section,- (a) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 19567 (1 of 1956); (b) "State financial corporation" means a financial corporation established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 1951 8 (63 of 1951); (c) "State industrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956 9 (1 of 1956), engaged in the business of providing long-term finance for industrial projects and approved by the Central Government under clause (viii) of sub-section (1) of section 36.] ---------------------------------------------------------------------- 1 Inserted by the Direct Act Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 2 Inserted by the Finance Act, 1989, w.r.e.f. 1-4-1984. 3 Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 4 Renumbered by the Finance Act, 1989, w.e.f. 1-4-1989. Explanations 3 and 4, since substituted should also have been renumbered w.r.e.f. 1-4-1984 as Explanation 2 was inserted with retrospective effect but section 9(c) of the Finance Act, 1989 provides otherwise. 5 Inserted by the Finance Act, 1988, w.e.f. 1-4-1989. 6 Substituted by the Finance Act, 1990, w.e.f. 1-4-1991. Prior to the substitution, Explanation 4, as inserted by the Finance Act, 1989, w.e.f. 1-4-1988 and amended by the Finance Act, 1989, w.e.f. 1-4-1989, read as under: "Explanation 4.-For the purposes of this section, the expression "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956)." 8 Ibid. 9 Ibid. ----------------------------------------------------------------------- 1.262 1[43C. Special provision for computation of cost of acquisition of certain assets (1) Where an asset [not being an asset referred to in sub- section (2) of section 45] which becomes the property of an amalgamated company under a scheme of amalgamation, is sold after the 29th day of February, 1988, by the amalgamated company as stock-in- trade of the business carried on by it, the cost of acquisition of the said asset to the amalgamated company in computing the profits and gains from the sale of such asset shall be the cost of acquisition of the said asset to the amalgamating company, as increased by the cost, if any, of any improvement made thereto, and the expenditure, if any, incurred, wholly and exclusively in connection with such transfer by the amalgamating company. (2) Where an asset [not being an asset refer-red to in sub- section (2) of section 45] which becomes the property of the assessee on the total or partial partition of a Hindu undivided family or under a gift or will or an irrevocable trust, is sold after the 29th day of February, 1988, by the assessee as stock-in-trade of the business carried on by him, the cost of acquisition of the said asset to the assessee in computing the profits and gains from the sale of such asset shall be the cost of acquisition of the said asset to the transferor or the donor, as the case may be, as increased by the cost, if any, of any improvement made thereto, and the expenditure, if any, incurred, wholly and exclusively in connection with such transfer (by way of effecting the partition, acceptance of the gift, obtaining probate in respect of the will or the creation of the trust), including the payment of gift-tax, if any, incurred by the transferor or the donor, as the case may be.] 2[43D. Special provision in case of income of public financial institutions, etc.3 Notwithstanding anything to the contrary contained in any other provision of this Act, in the case of a public financial institution or a scheduled bank or a State financial corporation or a State industrial investment corporation, the income by way of interest in relation to such ---------------------------------------------------------------------- 1 Inserted by the Finance Act, 1988, w.e.f. 1-4-1988. 2 Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991. ---------------------------------------------------------------------- 1.263 categories of bad or doubtful debts as may be prescribed having regard to the guidelines issued by the Reserve Bank of India in relation to such debts, shall be chargeable to tax in the previous year in which it is credited by the public financial institution or the scheduled bank or the State financial corporation or the State industrial investment corporation to its profit and loss account for that year or, as the case may be, in which it is actually received by that institution or bank or corporation, whichever is earlier. Explanation.-For the purposes of this section,- (a) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 1 (1 of 1956); (b) "scheduled bank" shall have the meaning assigned to it in clause (ii)of the Explanation to clause (viia) of sub-section (1) of section 36; (c) "State financial corporation" means a financial corporation. established under section 3 or section 3A or an institution notified under section 46 of the State Financial Corporations Act, 19512 (63 of 1951); (d) "State industrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956 3 (1 of 1956), engaged in the business of providing long-term finance for industrial projects and approved- by the Central Government under clause (viii) of sub-section (1) of section 36.]