CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 43.
13. In section 43 of the Income-tax Act, with effect from the 1st day of April, 2011,—
(a) in clause (1), in Explanation 13, in clause (b), in sub-clause (iii), for the brackets, figures and word "(xiii) and (xiv)", the brackets, figures, letter and word "(xiii), (xiiib) and (xiv)" shall be substituted;
(b) in clause (6), after Explanation 2B, the following Explanation shall be inserted, namely:—
"Explanation 2C.—Where in any previous year, any block of assets is transferred by a private company or unlisted public company to a limited liability partnership and the conditions specified in the proviso to clause (xiiib) of section 47 are satisfied, then, notwithstanding anything contained in clause (1), the actual cost of the block of assets in the case of the limited liability partnership shall be the written down value of the block of assets as in the case of the said company on the date of conversion of the company into the limited liability partnership.".
Notes on Clauses:
Clause 13 of the Bill seeks to amend section 43 of the Income tax Act relating to definitions of certain terms relevant to income from profits and gains of business or profession.
The existing provisions contained in Explanation 13 to clause (1) of the aforesaid section provide that the actual cost of any capital asset on which deduction has been allowed or is allowable under section 35AD shall be treated as 'nil' in specified circumstances.
Sub-clause (a) proposes to make a reference of clause (xiiib) of section 47 in sub-clause (iii) of clause (b) of the said Explanation, to provide that in case of succession of a private company or unlisted public company by a limited liability partnership, the actual cost of capital assets on which deduction has been allowed under section 35AD to the predecessor company shall be taken as 'nil' in case of the successor limited liability partnership.
Clause (6) of the aforesaid section defines the expression 'written down value'.
Sub-clause (b) proposes to amend clause (6) of the aforesaid section by inserting a new Explanation 2C to the said clause (6) so as to provide that in case of succession of private company or unlisted public company by limited liability partnership, the actual cost of the block of assets in case of successor limited liability partnership shall be the written down value of the block of assets as in the case of the predecessor company on the date of conversion.
These amendments will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
