CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 2
3. In section 2 of the Income-tax Act, with effect from the 1st day of April, 2016,-
(a) for clause (13A), the following clause shall be substituted, namely:-
‘(13A) “business trust” means a trust registered as,-
(i) an Infrastructure Investment Trust under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992; ( 15 of 1992) or
(ii) a Real Estate Investment Trust under the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992,( 15 of 1992) and the units of which are required to be listed on recognised stock exchange in accordance with the aforesaid regulations;’; (b) in clause (15),-
(i) after the word “education,”, the word “yoga,” shall be inserted;
(ii) for the first and the second provisos, the following proviso shall be substituted, namely:-
“Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless-
(i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and
(ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;”;
(c) in clause (37A), in sub-clause (iii), after the words “for the purposes of deduction of tax under”, the words, figures and letters “section 194LBA or” shall be inserted;
(d) in clause (42A), in the Explanation 1, in clause (i), after sub-clause (hc), the following sub-clause shall be inserted, namely:-
“(hd) in the case of a capital asset, being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in clause (xviii) of section 47, there shall be included the period for which the unit or units in the consolidating scheme of the mutual fund were held by the assesse;”.
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 substitute clause (13A) of the said section in order to define a “business trust” to mean a trust registered as,-
(i) an Infrastructure Investment Trust under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992; or
(ii) a Real Estate Investment Trust under the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992, and
the units of which are required to be listed on a recognised stock exchange in accordance with the aforesaid regulations.
It is proposed to amend clause (15) of the aforesaid section to provide that the definition of charitable purpose shall include “yoga” as a separate category on the lines of education and medical relief.
It is further proposed to amend the said clause (15) to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless--
(i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and
(ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year.
It is also proposed to amend clause (37A) of the said section to provide that for the purposes of deduction of tax under section 194LBA, the “rates in force”, in relation to an assessment year or financial year shall mean the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year.
The existing provisions contained in clause (42A) of the said section provides the definition of the term “short-term capital asset”. Explanation 1 of the said clause provides for determining the period for which the capital asset is held by the assessee.
It is proposed to amend the clause (i) of the said Explanation to provide that in the case of a capital asset, being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in clause (xviii) of section 47, there shall be included the period for which the unit or units in the consolidating scheme of the mutual fund were held by the assessee.
These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-17 and subsequent assessment years.
