CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 2
3. In section 2 of the Income-tax Act,—
(I) after clause (13), the following clause shall be inserted with effect from the 1st day of October, 2014, namely:––
‘(13A) “business trust” means a trust registered as an Infrastructure Investment Trust or a Real Estate Investment Trust, the units of which are required to be listed on a recognised stock exchange, in accordance with the regulations made under the Securities Exchange Board of India Act, 1992 [15 of 1992] and notified by the Central Government in this behalf;’;
(II) in clause (14), with effect from the 1st day of April, 2015,––
(A) for the words in the opening portion ‘ “capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include––
(i) any stock-in-trade’, the following shall be substituted, namely:––
‘ “capital asset” means––
(a) property of any kind held by an assessee, whether or not connected with his business or profession;
Amendment of section 2. 15 of 1992.
(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, [15 of 1992]but does not include––
(i) any stock-in-trade [other than the securities referred to in sub-clause (b)],’;
(B) the Explanation occurring at the end shall be numbered as “Explanation 1” thereof and after the Explanation as so numbered, the following Explanation shall be inserted, namely:––
‘Explanation 2.––For the purposes of this clause––
(a) the expression “Foreign Institutional Investor” shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD;
(b) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956[42 of 1956];’;
(III) for clause (15A), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2013,––
‘(15A) “Chief Commissioner” means a person appointed to be a Chief Commissioner of Income-tax or a Principal Chief Commissioner of Income-tax under sub-section (1) of section 117;’;
(IV) for clause (16), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2013,––
‘(16) “Commissioner” means a person appointed to be a Commissioner of Income-tax or a Director of Income-tax or a Principal Commissioner of Income-tax or a Principal Director of Income-tax under sub-section (1) of section 117;’;
(V) for clause (21), the following clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June, 2013,––
‘(21) “Director General or Director” means a person appointed to be a Director General of Income-tax or a Principal Director General of Income-tax or, as the case may be, a Director of Income-tax or a Principal Director of Income-tax, under sub-section (1) of section 117, and includes a person appointed under that sub-section to be an Additional Director of Income-tax or a Joint Director of Income-tax or an Assistant Director or Deputy Director of Income-tax;’;
(VI) in clause (24), after sub-clause (xvi), the following sub-clause shall be inserted with effect from the 1st day of April, 2015, namely:––
“(xvii) any sum of money referred to in clause (ix) of sub-section (2) of section 56;”;
(VII) after clause (34), the following clauses shall be inserted and shall be deemed to have been inserted with effect from the 1st day of June, 2013,––
‘(34A) “Principal Chief Commissioner of Income-tax” means a person appointed to be a Principal Chief Commissioner of Income-tax under sub-section (1) of section 117;
(34B) “Principal Commissioner of Income-tax” means a person appointed to be a Principal Commissioner of Income-tax under sub-section (1) of section 117;
(34C) “Principal Director of Income-tax” means a person appointed to be a Principal Director of Income-tax under sub-section (1) of section 117;
(34D) “Principal Director General of Income-tax” means a person appointed to be a Principal Director General of Income-tax under sub-section (1) of section 117;’; (VIII) in clause (42A),––
(A) in the proviso, with effect from the 1st day of April, 2015,––
(i) for the words “a share held in a company or any other security listed in a recognised stock exchange in India”, the words and brackets “a security (other than a unit) listed in a recognised stock exchange in India” shall be substituted;
(ii) for the words, brackets, figures and letter “a unit of a Mutual Fund specified under clause (23D) of section 10”, the words “a unit of an equity oriented fund” shall be substituted;
(B) in the Explanation 1, in clause (i), after sub-clause (hb), the following sub-clause shall be inserted with effect from the 1st day of October, 2014, namely:––
“(hc) in the case of a capital asset, being a unit of a business trust, allotted pursuant to transfer of share or shares as referred to in clause (xvii) of section 47, there shall be included the period for which the share or shares were held by the assessee;”;
(C) after Explanation 3, the following Explanation shall be inserted with effect from the 1st day of April, 2015, namely:––
‘Explanation 4.––For the purposes of this clause, the expression “equity oriented fund” shall have the meaning assigned to it in the Explanation to clause (38) of section 10;
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 amend the said section so as to insert a new clause (13A) to define “business trust” to mean a trust registered as an Infrastructure Investment Trust or a Real Estate Investment Trust, the units of which are required to be listed on a recognised stock exchange, in accordance with the regulations made under the Securities Exchange Board of India Act, 1992 and notified by the Central Government in this behalf.
This amendment will take effect from 1st October, 2014.
The existing provisions of clause (14) of section 2 defines the term “capital asset”. The term is defined to include property of any kind held by an assessee whether or not connected with his business or profession but does not include any stock-in-trade or personal assets as provided in the definition.
It is further proposed to amend the said clause (14) so as to provide that the term “capital asset” shall include any security held by a Foreign Institutional Investor which has invested in such security in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
It is also proposed to amend section 2 so as to substitute the definitions of clause (15A), clause (16) and clause (21) relating to “Chief Commissioner”, “Commissioner” and “Director General” or “Director”. It is further proposed to insert clauses (34A), (34B), (34C) and (34D) so as to define the terms “Principal Chief Commissioner of Income-tax”, “Principal Commissioner of Income-tax”, “Principal Director General of Income-tax” and “Principal Director of Income-tax” to mean a person appointed to be an income-tax authority under section 117 of the Act.
These amendments will take effect retrospectively from 1st June, 2013.
The existing provisions contained in clause (24) of section 2 defines the term “income”. It is proposed to amend the said clause (24) so as to include any sum of money referred to in clause (ix) of sub-section (2) of section 56 in the definition of income.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
The existing provisions contained in clause (42A) of section 2 provide that short-term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer. However, in the case of a share held in a company or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India or a unit of a Mutual Fund or a zero coupon bond, the period of holding for qualifying it as short-term capital asset is twelve months.
It is proposed to amend the aforesaid clause so as to provide that in case of a share held in a company which is not listed in a recognised stock exchange, the period of holding for the purpose of its qualification as a short-term capital asset, shall not be more than thirty-six months and for that purpose the words “a share held in a company or any other security listed in a recognised stock exchange in India” shall be substituted with the words “a security (other than a unit) listed in a recognised stock exchange in India”. Further, in the case of a unit corresponding period of holding of twelve months, shall be limited to a unit of an equity oriented fund.
It is further proposed to insert an Explanation to define the expression “equity oriented fund”.
This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.
It is also proposed to provide in clause (42A) of section 2 that in the case of capital asset being units of a business trust, allotted pursuant to transfer of share or shares as referred to in clause (xvii) of section 47, there shall be included the period for which such share or shares were held by the assessee.
This amendment will take effect from 1st October, 2014.
