CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 2.
03. In section 2 of the Income-tax Act,—
(i) in clause (14), at the end, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:—
‘Explanation.—For the removal of doubts, it is hereby clarified that “property” includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever;’;
(ii) in clause (16), after the words, “Commissioner of Income-tax”, the words “or a Director of Income-tax” shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1988;
(iii) in clause (19AA), in sub-clause (iv), for the words “proportionate basis”, the words “proportionate basis except where the resulting company itself is a shareholder of the demerged company” shall be substituted with effect from the 1st day of April, 2013;
(iv) in clause (47), the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:—
‘Explanation 2.—For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;’.
Notes on Clauses:
Clause 3 of the Bill seeks to amend section 2 of the Income-tax Act relating to definitions.
It is proposed to insert a new Explanation in clause (14) of the aforesaid section 2 so as to clarify the expression “property”.
This amendment will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to the assessment year 1962-1963 and subsequent assessment years.
It is further proposed to amend clause (16) of the aforesaid section 2 so as to include the Director of Income-tax in the definition of the Commissioner.
This amendment will take effect retrospectively from 1st April, 1988.
It is also proposed to amend sub-clause (iv) of clause (19AA) of the aforesaid section 2 so as to exclude the requirement of issue of shares to the shareholders of the demerged company where resulting company itself in a scheme of demerger is a shareholder of the demerged company.
This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.
It is also proposed to insert a new Explanation in clause (47) of the aforesaid section so as to clarify the expression “transfer”.
This amendment will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to the assessment year 1962-1963 and subsequent assessment years.
