Amendment of section 245K.
61. In section 245K of the Income-tax Act (Amendment of section 245K.), with effect from the 1st day of June, 2015,-
(A) in sub-section (1), for the words “he shall not be entitled to apply”, the words and brackets “he or any person related to such person (herein referred to as related person) shall not be entitled to apply” shall be substituted;
(B) in sub-section (2), for the words “shall not be subsequently entitled”, the words “or any related person shall not be subsequently entitled” shall be substituted;
(C) after sub-section (2), the following Explanation shall be inserted, namely:-
‘Explanation.-For the purposes of this section, “related person” with respect to a person means,-
(i) where such person is an individual, any company in which such person holds more than fifty per cent. of the shares or voting rights at any time, or any firm or association of persons or body of individuals in which such person is entitled to more than fifty per cent. of the profits at any time, or any Hindu undivided family in which such person is a karta;
(ii) where such person is a company, any individual who held more than fifty per cent. of the shares or voting rights in such company at any time before the date of application before the Settlement Commission by such person;
(iii) where such person is a firm or association of persons or body of individuals, any individual who was entitled to more than fifty per cent. of the profits in such firm, association of persons or body of individuals, at any time before the date of application before the Settlement Commission by such person;
(iv) where such person is a Hindu undivided family, the karta of that Hindu undivided family.’.
Notes on Clauses:
Clause 61 of the Bill seeks to amend section 245K of the Income-tax Act relating to bar on subsequent application for settlement.
The existing provisions contained in the aforesaid section provides that where an application of a person has been allowed to be proceeded with under sub-section (1) of section 245D, then, such person shall not be subsequently entitled to make an application before the Settlement Commission. It further provides that in certain situations the person shall not be entitled to apply for settlement before the Settlement Commission.
It is proposed to amend section 245K of the Income-tax Act to provide that any person related to the person who is barred on subsequent application for settlement also cannot make any application subsequently before the Settlement Commission. The expression “related person” with respect to a person has also been clarified to mean,: --
(i) where such person is an individual, any company in which such person holds more than fifty per cent. of the shares or voting power at any time, or any firm or association of person or body of individual in which such person is entitled to more than fifty per cent. of the profits at any time, or any Hindu undivided family in which such person is a karta;
(ii) where such person is a company, any individual who held more than fifty per cent. of the shares or voting power in such company at any time before the date of application before the Settlement Commission by such person;
(iii) where such person is a firm or association of person or body of individual, any individual who was entitled to more than fifty per cent. of the profits in such firm, association of persons or body of individuals, at any time before the date of application before the Settlement Commission by such person;
(iv) where such person is an undivided Hindu family, the karta of that Hindu undivided family.
This amendment will take effect from 1st June, 2015.
