CHAPTER XII-C — SPECIAL PROVISIONS RELATING TO RETAIL TRADE, ETC. (HISTORIC)
CHAPTER XII-C — SPECIAL PROVISIONS RELATING TO RETAIL TRADE, ETC. (HISTORIC)
SECTION 115M — SPECIAL PROVISION FOR DISALLOWANCE OF DEDUCTIONS AND REBATE OF INCOME-TAX
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · Historic / Omitted Provision
Status: OMITTED (HISTORIC). Section 115M was the ‘price’ side of the Chapter XII-C bargain — it withdrew Chapter VI-A deductions and Chapter VIII rebates from an assessee who had opted into the estimated-income scheme by filing a statement under section 115K. Inserted by the Finance Act, 1992 w.e.f. 1 April 1993; omitted by the Finance Act, 1997 w.e.f. 1 April 1998. Operative for AYs 1993-94 to 1997-98 only.
Finance Act, 2026 impact: None. The Finance Act, 2026 does not (and cannot) amend section 115M or Chapter XII-C, the entire Chapter having been omitted with effect from 1 April 1998. The provision is reproduced and discussed here for the completeness of the Treatise and because assessments, rectifications and appeals for the assessment years 1993-94 to 1997-98 in which the Chapter was operative may still arise for historical or precedential reference.
Candour note on case law: There is no reported decision of the Supreme Court, any High Court or the ITAT directly interpreting section 115M. The authorities in Part C are cognate / principle authorities on the strict construction of deduction provisions, the rule against double benefit, and the quid-pro-quo logic of presumptive regimes — each expressly identified as such.
A. SECTION COMMENTARY
A.1 The logic of the disallowance — a fair bargain, not a penalty
Section 115M completed the bargain that section 115K offered. The estimated figure under section 115K was a net, all-inclusive measure of the small trader’s income: it already reflected, in a rough-and-ready way, the expenses, allowances and reliefs that a full computation would have separately allowed. To then permit the assessee to claim, on top of that already-discounted figure, the deductions under Chapter VI-A or the rebates under Chapter VIII would have been to give the relief twice over. Section 115M therefore disallowed those deductions and rebates for one who came within the scheme. It was the counterpart of the convenience, not an additional levy.
A.2 What was withdrawn
Chapter VI-A deductions (the ‘sections 80’ deductions in computing total income) were, broadly, not available to a statement-filer in respect of the scheme income — contemporary materials indicate a narrow saving (e.g. the then section 80L deduction on certain interest/dividend income) but the principal Chapter VI-A reliefs tied to the business were withdrawn.
Chapter VIII rebates (rebates of income-tax then available, e.g. under the section 88 family) were similarly not allowed against the tax on the estimated income.
Caution. The precise list of what was withdrawn and what (if anything) was saved was a matter for the now-repealed words; the description above is an editorial summary from contemporary commentary and must be checked against the gazetted Finance Act, 1992 for any matter turning on the exact scope.
A.3 The anti-double-benefit principle that animates the section
Section 115M is an early statutory expression of a principle the courts apply generally: a taxing statute is not to be read so as to confer the same relief twice. Where the law has already granted an allowance once — here, by building it into the estimated figure — it will not be construed to grant it again under another head (Escorts Ltd v. Union of India). The presumptive successor provisions carried the same logic forward: section 44AF expressly provided that the deemed income was after all deductions under sections 30 to 38, and section 44AD does likewise.
A.4 Construction — strict, because it both gives and takes
A provision that withdraws deductions in exchange for a concession occupies a dual character. The eligibility for the concession is construed strictly against the claimant (Dilip Kumar); but the withdrawal itself, being a fiscal disadvantage attached to an option the assessee freely chose, is given effect according to its plain terms — neither expanded to deny reliefs the section did not touch, nor narrowed to restore reliefs it plainly withdrew. The section thus has to be read as an integrated part of the s.115K bargain, not as a free-standing disallowance.
B. STATUTORY POSITION (verbatim, as it now stands in the Bare Act)
Reproduced verbatim from the Income-tax Act, 1961 (Bare Act, as amended up to the Finance Act, 2025; the position is unchanged by the Finance Act, 2026). The operative text enacted by the Finance Act, 1992 was deleted on omission and is not carried in the current Bare Act; what now appears is the heading and the omission note only:
Special provision for disallowance of deductions and rebate of income-tax.
115M. [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
Chapter-level note carried in the Bare Act: “[Chapter XII-C, consisting of sections 115K to 115N, omitted by the Finance Act, 1997, w.e.f. 1-4-1998. Earlier Chapter XII-C was inserted by the Finance Act, 1992, w.e.f. 1-4-1993.]”
C. AUTHORITIES — COGNATE AND PRINCIPLE MATERIALS
Important. No decision directly interprets section 115M. The following are cited on principle — on double benefit, on the inclusive nature of a presumptive figure, and on the construction of deduction provisions.
Cluster C-1 : The rule against double benefit
Escorts Ltd v. Union of India (1993) 199 ITR 43 (SC)
Principle: The same expenditure or outgoing cannot be allowed twice; once a deduction or allowance has been granted under one provision, a second deduction for the same thing under another provision is not permissible unless the statute clearly so provides.
Application to s.115M: Supplies the rationale of the disallowance: because the s.115K estimate already absorbed the trader’s expenses and reliefs, allowing Chapter VI-A/VIII benefits on top would be a second bite at the same cherry; s.115M codified the bar.
Status: Supreme Court. Principle authority only — not a decision on s.115M.
Cluster C-2 : A presumptive figure is an inclusive, net figure
Principle: When income is estimated by a flat rate, the rate is taken to be inclusive of the deductions and allowances ordinarily available; separate deductions for items already absorbed in the rate are not to be granted again.
Application to s.115M: Directly explains why deductions had to be withdrawn under a presumptive scheme: the estimate is a net figure, so the Chapter VI-A/VIII reliefs were already, in substance, accounted for.
Nature: Both provide that the deemed income is computed after giving effect to the deductions allowable under sections 30 to 38, so no further such deductions are allowed.
Relevance to s.115M: Carry forward the identical anti-double-benefit logic; the strongest statutory analogue for how a presumptive figure interacts with the deduction provisions.
Status: Statutory (44AF omitted; 44AD live). Cited for analogy.
Cluster C-3 : Strict construction of deduction / concession provisions
Commissioner of Customs v. Dilip Kumar & Co. (2018) 9 SCC 1 (SC, Constitution Bench)
Principle: Provisions granting deductions/exemptions are strictly construed; the assessee must establish a clear entitlement and ambiguity is resolved against the claim.
Application to s.115M: An assessee within the Chapter could not claim, by a liberal reading, deductions that the scheme withdrew; equally, the Revenue could not enlarge the disallowance beyond the reliefs the section named.
Principle: Even a beneficial deduction provision must be read according to its plain words; the court will not rewrite the conditions of, or the limits on, a deduction to give relief the section does not allow.
Application to s.115M: Supports giving the withdrawal full effect on its terms — the disallowance is to be applied as written, neither read down nor expanded.
CHAPTER XII-C — SPECIAL PROVISIONS RELATING TO RETAIL TRADE, ETC. (HISTORIC)
SECTION 115M — SPECIAL PROVISION FOR DISALLOWANCE OF DEDUCTIONS AND REBATE OF INCOME-TAX
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · Historic / Omitted Provision
Status: OMITTED (HISTORIC). Section 115M was the ‘price’ side of the Chapter XII-C bargain — it withdrew Chapter VI-A deductions and Chapter VIII rebates from an assessee who had opted into the estimated-income scheme by filing a statement under section 115K. Inserted by the Finance Act, 1992 w.e.f. 1 April 1993; omitted by the Finance Act, 1997 w.e.f. 1 April 1998. Operative for AYs 1993-94 to 1997-98 only.
Finance Act, 2026 impact: None. The Finance Act, 2026 does not (and cannot) amend section 115M or Chapter XII-C, the entire Chapter having been omitted with effect from 1 April 1998. The provision is reproduced and discussed here for the completeness of the Treatise and because assessments, rectifications and appeals for the assessment years 1993-94 to 1997-98 in which the Chapter was operative may still arise for historical or precedential reference.
Candour note on case law: There is no reported decision of the Supreme Court, any High Court or the ITAT directly interpreting section 115M. The authorities in Part C are cognate / principle authorities on the strict construction of deduction provisions, the rule against double benefit, and the quid-pro-quo logic of presumptive regimes — each expressly identified as such.
A. SECTION COMMENTARY
A.1 The logic of the disallowance — a fair bargain, not a penalty
Section 115M completed the bargain that section 115K offered. The estimated figure under section 115K was a net, all-inclusive measure of the small trader’s income: it already reflected, in a rough-and-ready way, the expenses, allowances and reliefs that a full computation would have separately allowed. To then permit the assessee to claim, on top of that already-discounted figure, the deductions under Chapter VI-A or the rebates under Chapter VIII would have been to give the relief twice over. Section 115M therefore disallowed those deductions and rebates for one who came within the scheme. It was the counterpart of the convenience, not an additional levy.
A.2 What was withdrawn
Caution. The precise list of what was withdrawn and what (if anything) was saved was a matter for the now-repealed words; the description above is an editorial summary from contemporary commentary and must be checked against the gazetted Finance Act, 1992 for any matter turning on the exact scope.
A.3 The anti-double-benefit principle that animates the section
Section 115M is an early statutory expression of a principle the courts apply generally: a taxing statute is not to be read so as to confer the same relief twice. Where the law has already granted an allowance once — here, by building it into the estimated figure — it will not be construed to grant it again under another head (Escorts Ltd v. Union of India). The presumptive successor provisions carried the same logic forward: section 44AF expressly provided that the deemed income was after all deductions under sections 30 to 38, and section 44AD does likewise.
A.4 Construction — strict, because it both gives and takes
A provision that withdraws deductions in exchange for a concession occupies a dual character. The eligibility for the concession is construed strictly against the claimant (Dilip Kumar); but the withdrawal itself, being a fiscal disadvantage attached to an option the assessee freely chose, is given effect according to its plain terms — neither expanded to deny reliefs the section did not touch, nor narrowed to restore reliefs it plainly withdrew. The section thus has to be read as an integrated part of the s.115K bargain, not as a free-standing disallowance.
B. STATUTORY POSITION (verbatim, as it now stands in the Bare Act)
Reproduced verbatim from the Income-tax Act, 1961 (Bare Act, as amended up to the Finance Act, 2025; the position is unchanged by the Finance Act, 2026). The operative text enacted by the Finance Act, 1992 was deleted on omission and is not carried in the current Bare Act; what now appears is the heading and the omission note only:
Special provision for disallowance of deductions and rebate of income-tax.
115M. [Omitted by the Finance Act, 1997, w.e.f. 1-4-1998.]
Chapter-level note carried in the Bare Act: “[Chapter XII-C, consisting of sections 115K to 115N, omitted by the Finance Act, 1997, w.e.f. 1-4-1998. Earlier Chapter XII-C was inserted by the Finance Act, 1992, w.e.f. 1-4-1993.]”
C. AUTHORITIES — COGNATE AND PRINCIPLE MATERIALS
Important. No decision directly interprets section 115M. The following are cited on principle — on double benefit, on the inclusive nature of a presumptive figure, and on the construction of deduction provisions.
Cluster C-1 : The rule against double benefit
Escorts Ltd v. Union of India (1993) 199 ITR 43 (SC)
Principle: The same expenditure or outgoing cannot be allowed twice; once a deduction or allowance has been granted under one provision, a second deduction for the same thing under another provision is not permissible unless the statute clearly so provides.
Application to s.115M: Supplies the rationale of the disallowance: because the s.115K estimate already absorbed the trader’s expenses and reliefs, allowing Chapter VI-A/VIII benefits on top would be a second bite at the same cherry; s.115M codified the bar.
Status: Supreme Court. Principle authority only — not a decision on s.115M.
Cluster C-2 : A presumptive figure is an inclusive, net figure
Brij Bhushan Lal Praduman Kumar v. CIT (1978) 115 ITR 524 (SC)
Principle: When income is estimated by a flat rate, the rate is taken to be inclusive of the deductions and allowances ordinarily available; separate deductions for items already absorbed in the rate are not to be granted again.
Application to s.115M: Directly explains why deductions had to be withdrawn under a presumptive scheme: the estimate is a net figure, so the Chapter VI-A/VIII reliefs were already, in substance, accounted for.
Status: Supreme Court. Principle authority only.
Section 44AF / Section 44AD, Income-tax Act, 1961 (successor presumptive provisions)
Nature: Both provide that the deemed income is computed after giving effect to the deductions allowable under sections 30 to 38, so no further such deductions are allowed.
Relevance to s.115M: Carry forward the identical anti-double-benefit logic; the strongest statutory analogue for how a presumptive figure interacts with the deduction provisions.
Status: Statutory (44AF omitted; 44AD live). Cited for analogy.
Cluster C-3 : Strict construction of deduction / concession provisions
Commissioner of Customs v. Dilip Kumar & Co. (2018) 9 SCC 1 (SC, Constitution Bench)
Principle: Provisions granting deductions/exemptions are strictly construed; the assessee must establish a clear entitlement and ambiguity is resolved against the claim.
Application to s.115M: An assessee within the Chapter could not claim, by a liberal reading, deductions that the scheme withdrew; equally, the Revenue could not enlarge the disallowance beyond the reliefs the section named.
Status: Supreme Court, Constitution Bench. Principle authority only.
IPCA Laboratory Ltd v. Deputy CIT (2004) 266 ITR 521 (SC)
Principle: Even a beneficial deduction provision must be read according to its plain words; the court will not rewrite the conditions of, or the limits on, a deduction to give relief the section does not allow.
Application to s.115M: Supports giving the withdrawal full effect on its terms — the disallowance is to be applied as written, neither read down nor expanded.
Status: Supreme Court. Principle authority only.