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Special Provision in respect of transaction with person located in Notified Jurisdictional Area - Section 94A - International Taxation - Income TaxExtract Special Provision in respect of transaction with person located in Notified Jurisdictional Area (NJA) - Section 94A Purpose - The Central Government may, having regard to the lack of effective exchange of information with any country or territory outside India, specify by notification in the Official Gazette such country or territory as a notified jurisdictional area in relation to transactions entered into by any assessee. Note - Clarification on removal of Cyprus from the list of notified jurisdictional areas under section 94A. [ Circular no. 15/2017 , dated 21.04.2017 ] If an Assessee enters into transaction with any person located in NJA then: all the parties to the transaction shall be deemed to be associated enterprises within the meaning of section 92A ; Such transaction may be in the nature of purchase, sale or lease of tangible or intangible property or provision of service or lending or borrowing money or any other transaction having a bearing on the profits, income, losses or assets of the assessee including a mutual agreement or arrangement for allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided by or to the assessee shall be deemed to be an international transaction within the meaning of section 92B , Person Includes: Person located in NJA shall include a person who is a resident of NJA and a person not being an Individual, which is established in the NJA, it would also include a permanent establishment of any other person in NJA. Authorisation: Payments made to any financial institution located in NJA would not be allowed as deduction unless the assessee authorizes the CBDT or any other Income-Tax authority acting in behalf seeking relevant information from financial institution on behalf of the assessee. Maintenances of Documents : No deduction in respect of any other expenditure or allowance (including depreciation) arising from the transaction with a person located in a NJA shall be allowed under any other provision of this Act, unless the assessee maintains such other documents and furnishes such information as may be prescribed, in this behalf. Proper Explanation required: Where, in any previous year, the assessee has received or credited any sum from any person located in a NJA area and the assessee does not offer any explanation about the source of the said sum in the hands of such person or in the hands of the beneficial owner (if such person is not the beneficial owner of the said sum) or the explanation offered by the assessee, in the opinion of the AO, is not satisfactory, then, such sum shall be deemed to be the income of the assessee for that previous year. Rate of TDS: If any payment made to person located in NJA the TDS to be deducted from such payments at the rate or rates in force; at the rate specified in the relevant provisions of this Act; at the rate of 30%.
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