Amendment of section 80-IA.
29. In section 80-IA of the Income-tax Act, with effect from the 1st day of April, 2013,—
(a) in sub-section (4), in clause (iv), for the words, figures and letters “the 31st day of March, 2012”, wherever they occur, the words, figures and letters “the 31st day of March, 2013” shall respectively be substituted;
(b) in sub-section (8), for the Explanation, the following Explanation shall be substituted, namely:—
‘Explanation.—For the purposes of this sub-section, “market value”, in relation to any goods or services, means—
(i) the price that such goods or services would ordinarily fetch in the open market; or
(ii) the arm’s length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92BA.’;
(c) in sub-section (10), the following proviso shall be inserted, namely:—
“Provided that in case the aforesaid arrangement involves a specified domestic transaction referred to in section 92BA, the amount of profits from such transaction shall be determined having regard to arm’s length price as defined in clause (ii) of section 92F.”.
Notes on Clauses:
Clause 29 of the Bill seeks to amend section 80-IA of the Income-tax Act relating to deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.
The existing provisions contained in clause (iv) of sub-section (4) of the aforesaid section 80-IA provide that, a deduction shall be allowed to an undertaking which,-
(a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on 1st April, 1993 and ending on 31st March, 2012;
(b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on 1st April, 1999 and ending on 31st March, 2012;
(c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on 1st April, 2004 and ending on 31st March, 2012.
It is proposed to amend the aforesaid clause so as to extend the time limit from 31st March, 2012 to 31st March, 2013.
The existing Explanation to sub-section (8) of the aforesaid section 80-IA provides for the definition of “market value” in relation to goods or services.
It is proposed to substitute the aforesaid Explanation so as to include the arm’s length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is “specified domestic transaction” referred to in section 92BA within the definition of “market value” in relation to any goods or services.
The existing provisions of sub-section (10) of the aforesaid section provide that where it appears to the Assessing Officer, owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom.
It is proposed to insert a new proviso to the aforesaid sub-section so as to provide that in case the arrangement mentioned in the sub-section involves a specified domestic transaction referred to in section 92BA, and the amount of profits from such transaction shall be determined having regard to arm’s length price as defined in clause (ii) of section 92F.
These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years.
