Insertion of new Chapter XII-BC.
54. After Chapter XII-BB of the Income-tax Act, the following Chapter shall be inserted with effect from the 1st day of April, 2017, namely:-
“CHAPTER XII-BC
SPECIAL PROVISIONS RELATING TO FOREIGN COMPANY
SAID TO BE RESIDENT IN INDIA
Foreign company said to be resident in India
115JH. (1) Where a foreign company is said to be resident in India in any previous year and such foreign company has not been resident in India in any of the previous years preceding the said previous year, then, notwithstanding anything contained in this Act and subject to the conditions as may be notified by the Central Government in this behalf, the provisions of this Act relating to the computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, collection and recovery and special provisions relating to avoidance of tax shall apply with such exceptions, modifications and adaptations as may be specified in that notification for the said previous year:
Provided that where the determination regarding foreign company to be resident in India has been made in the assessment proceedings relevant to any previous year, then, the provisions of this sub-section shall also apply in respect of any other previous year, succeeding such previous year, if the foreign company is resident in India in that previous year and the previous year ends on or before the date on which such assessment proceeding is completed.
(2) Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the foreign company in accordance with the provisions of sub-section (1), and, subsequently, there is failure to comply with any of the conditions specified in the notification issued under sub-section (1), then,-
(i) such benefit, exemption or relief shall be deemed to have been wrongly allowed;
(ii) the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the total income of the assessee for the said previous year and make the necessary amendment as if the exceptions, modifications and adaptations referred to in sub-section (1) did not apply; and
(iii) the provisions of section 154 shall, so far as may be, apply thereto and the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the failure to comply with the condition referred to in sub-section (1) takes place.
(3) Every notification issued under this section shall be laid before each House of Parliament.”.
Notes on Clauses:
Clause 54 of the Bill seeks to insert a new Chapter XII-BC in the Income-tax Act on special provisions relating to foreign company said to be resident in India.
Sub-section (1) of the proposed new section 115JH provides that where a foreign company is said to be resident in any previous year and such foreign company has not been resident in India in any of the preceding previous year, then, the provisions of the Income-tax Act relating to computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, special provisions relating to avoidance of tax and the collection and recovery shall apply with such exceptions, modifications and adaptations on fulfilment of such conditions as may be notified by the Central Government in this behalf.
Proviso to sub-section (1) of the proposed section provides that in case determination regarding residence of foreign company has been done in the assessment proceedings relevant to any previous year, then, the provisions of the proposed new Chapter shall also apply in respect of previous years succeeding the relevant previous year which ends on or before the date on which the determination has been made.
Sub-section (2) of the proposed section provides that on failure to comply with the conditions provided in the notification issued under sub-section (1), the provisions of the Income-tax Act shall apply without any modification and the necessary rectification may be undertaken by the Assessing Officer and the period of four years shall be available for such rectification from the date of failure.
Sub-section (3) of the proposed section provides that every notification issued under the proposed new section 115JH shall be laid before each House of Parliament.
This amendment will take effect from 1st April 2017 and will, accordingly, apply to the assessment year 2017-2018 and subsequent years.
