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Finance Bill 2020- proposed amendment of meaning of ‘business trust” – seems to rectify drafting error having no significance and suggestion to make proper correction.

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Finance Bill 2020- proposed amendment of meaning of ‘business trust” – seems to rectify drafting error having no significance and suggestion to make proper correction.
By: CA DEV KUMAR KOTHARI
February 3, 2020
All Articles by: CA DEV KUMAR KOTHARI       View Profile
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Section 2 (13A) – meaning of business trust at present is as follows:

2. In this Act, unless the context otherwise requires,-

54[(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;]

History  and old clause

54. Substituted vide THE FINANCE ACT, 2015 w.e.f. 1st day of April, 2016, before it was read as,          

49[(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;]”

Proposal for amendment  vide clause 3 of Finance Bill 2020

3. In section 2 of the Income-tax Act,–– 

  (i) in clause (13A), with effect from the 1st day of April, 2021,–– 

  (a) in sub-clause (ii), the word “and” occurring at the end shall be omitted;

   (b) the long line shall be omitted;

After incorporation of proposed  amendment the clause shall read as follows:

2. In this Act, unless the context otherwise requires,-

54[(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), the units of which are required to be listed on recognised stock exchange in accordance with the aforesaid regulations;]

Observation of author:

Author checked existing provision on this website (reproduced above) and Taxmann’s IT Act,and found that there is no long line after the word “and”. Therefore, there seems a mistake in clause in Finance Bill  or on the website and Taxmann’s IT Act).

On conjoint reading of the existing provisions, and after amendment, it seems that there was no need of long line after word “and” in existing provision. May be a case that copy of IT Act, in hands of draftsman for Budget 2020, there is a mistake.

 The amendment seems simply  for correction in drafting error. There seems no other significance. Any explanatory note is also not found on this proposal.

Or  there seems a mistake in budget proposal , and in better way there should be insertion of a long line after omission of word  “and” .

A long line should be inserted. In that case the clause shall read as follows:

After incorporation of proposed amendment with above suggestion the clause shall read as follows:

2. In this Act, unless the context otherwise requires,-

54[(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),--

 the units of which are required to be listed on recognised stock exchange in accordance with the aforesaid regulations;]

 

By: CA DEV KUMAR KOTHARI - February 3, 2020

 

 

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