INCOME TAX

Guidelines for companies and mutual funds in respect of approved investments, for purposes of section 54EA and section 54EB of the Income-tax Act

Circular 750

Dated 13/1/1997

Circular No. 748, dated 19th December, 1996*, laid down guidelines in respect of approved investments for purposes of section 54EA and section 54EB of the Income-tax Act. Subsequent to the issue of those guidelines, the Income-tax (Second Amendment) Ordinance, 1996**, has been promulgated on December 31, 1996. By virtue of section 2 of the Ordinance, shares issued by a public company have been included in the investment instruments which would qualify for exemption from capital gains tax under section 54EA and section 54EB.

The guidelines laid down for bonds and debentures in Circular No. 748, will also apply to the shares issued by public companies with regard to the procedure for application to the Board as well as with regard to the manner in which the investible capital is to be utilised.

For the purposes of sections 54EA and 54EB shares of a public company shall mean primary issue of share capital and "public company" shall have the same meaning as defined in section 3 of the Companies Act, 1956.

(Sd.) Krishna Saini,

Secretary,

Central Board of Direct Taxes.

[F. No. 142/58/96-TPL]