CLAUSE 1.—(Amendment of the provisions as to taxes on income and corporation lax.) (Hansard, 24 January 1940)

§ The Under-Secretary of State for India (Sir Hugh O'Neill)

I beg to move, in page 1, line 12, to leave out from "means," to the end of line 15, and to insert: any tax on income, so far as that tax is payable by companies and is a. This Clause substitutes for the definition of "corporation tax" in Section 311 of the Government of India Act, 1935, a new definition of corporation tax by reference to super-tax in relation to companies. The reason for this Amendment is that since the amendment of the definition of "corporation tax" as it appears in this Bill was framed, it has been felt that that definition is, perhaps, rather too narrow. The original defect in the definition of corporation tax, which 630 was discovered very soon after the principal Act of 1935 was passed, was referred to at the time that the Distribution of Revenues Order was being passed. Since this Bill was introduced it has been realised that the Amendment as originally proposed introduced perhaps a rather restricting factor. The definition in the Act refers to taxes on the income of companies; that in the Bill refers in terms to Indian super-tax payable by companies. The result is that certain forms of tax which would have fallen, quite properly, within the original definition may now be excluded from its scope. This would specially affect any kind of excess profits tax which could not be described as super-tax but might well satisfy all the essential requirements of a corporation tax. As the Committee know, we in this country have recently introduced an Excess Profits Tax as a war measure, and this Amendment is required in case the Government of India should by any chance desire to do the same.