TMI BlogNotes on Clauses - Income Tax, Wealth TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... during the financial year 2008-2009. Rates of deduction of tax at source during the financial year 2009-2010 from income other than "Salaries" Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2009-2010 from income other than "Salaries". The rates are the same for persons not resident in India, as those specified in Part II of the First Schedule to the Finance Act, 2008, for the purposes of deduction of income-tax at source during the financial year 2008-2009. However, for the resident taxpayers, the number of rates have been reduced with the objective of rationalising the scheme of tax deducted at source. The amount of tax so deducted shall be increased by a surcharge at the rate of two and one-half per cent. in the case of a company other than a domestic company. In all other cases, no surcharge would be levied on the tax deducted at source. Rates for deduction of tax at source from "Salaries", computation of "advance tax" and charging of income-tax in special cases during the financial year 2009-2010 Part III of the First Schedule to the Bill specifies the rates at which income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm. In such cases, the rate of tax will continue to be the same as that specified for assessment year 2009-2010. No surcharge shall now be levied in the case of a firm. Paragraph D of this Part specifies the rate of income-tax in the case of every local authority. In such cases, the rate of tax will continue to be the same as that specified for the assessment year 2009-2010. No surcharge will be levied. Paragraph E of this Part specifies the rates of income-tax in the case of companies. In the case of companies, the rate of tax will continue to be the same as that specified for assessment year 2009-2010. Surcharge shall continue to be levied in case of a company at the same rate and subject to the same conditions as were applicable for the assessment year 2009-2010. "Education Cess" at the rate of two per cent. and "Secondary and Higher Education cess" at the rate of one per cent. shall continue to be levied in all cases covered under Part III of the First Schedule. In the cases covered under Part-II of the First Schedule, the Education Cess and Secondary and Higher Education Cess will not be levied on tax deducted or collected at source in the case of a domestic company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also to retain the definitions of "firm", "partner" and "partnership" in the context of a partnership formed under the Indian Partnership Act, 1932. This amendment will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Sub-clause (iia) of clause (24) of the said section provides that voluntary contributions received by a trust or institution or association or university or educational institutions or any hospital or other institutions referred therein will be regarded as income. It is proposed to amend sub-clause (iia) of clause (24) of the said section so as to include therein the voluntary contribution received by electoral trusts within the definition of income. The proposed amendment is consequential in nature. This amendment will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. It is proposed to insert a new clause (29BA) to the said section so as to define the expression "manufacture". The term "manufacture" with its gramatical variations would mean a change in a non-living physical object or article or thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de at any time during the financial year immediately preceding the assessment year from which the exemption is sought. It is proposed to amend the said proviso so as to allow the filing of the application on or before the 30th September of the relevant assessment year. This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-2010 and subsequent years. Clause (a) of Explanation to clause (23D) of the said section provides for exemption of the income of Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India. The Explanation to said clause (23D), inter alia, defines the expression "public sector bank" to mean the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new Bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to assessment year 2010-2011 and subsequent years. Clause 7 of the Bill seeks to amend section 10B of the Incometax Act relating to special provisions in respect of newly established hundred per cent. export oriented undertakings. The existing provisions provides that no deduction shall be allowed to any undertaking for the assessment year beginning on the 1st day of April, 2011 and subsequent years. It is proposed to amend the third proviso to sub-section (1) of the said section so as to allow the deduction for the previous year 2010-2011 relevant to assessment year 2011-2012. This amendment will take effect retrospectively from 1st April, 2009. Clause 8 of the Bill seeks to insert new section 13B relating to voluntary contributions received by electoral trusts. The proposed new section provides that any voluntary contribution received by an electoral trusts shall not be included in the total income of the previous year of such electoral trusts if (a) such electoral trust distributes to any political party registered under section 29 of the Representation of the People Act, 1951 (43 of 1951) during the said previous year ninety-five per cent. of the aggregate donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hole of the expenditure on such capital asset has been allowed as a deduction under section 35AD which contains provisions relating to deduction in respect of expenditure on specified busines and proposed to be inserted as a new section in the Income-tax Act, 1961. This amendment will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. The proposed amendment is consequential in nature. Clause 11 of the Bill seeks to amend section 32 of the Incometax Act, relating to depreciation. It is proposed to amend Explanation 3 to sub-section (1) of section 32 of the Income-tax Act which defines "assets" and "block of assets" for the purpose of depreciation under sub-section (1) of section 32. It is proposed to omit reference to "block of assets" from Explanation 3 to sub-section (1) of section 32. Consequent to proposed amendments, the expression "block of assets" shall have the same meaning as assigned to it in clause (11) of section 2 of the said Act. This amendment will take effect from the 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to other deductions. The existing provisions contained in clause (i) of the Explanation to clause (iiia) of sub-section (1) of the said section provides for the definition of the expression "discount" as the difference between the amount received or receivable by the infrastructure capital company or infrastructure capital fund or public sector company issuing the bond and the amount payable by such company or fund or public sector company on maturity or redemption of such bond. It is proposed to amend the said clause so as to include "scheduled bank" after public sector company. The proposed amendment is consequential in nature. This amendment will take effect retrospectively from 1st April, 2009. Clause (viii) of the said sub-section relates to deduction in respect of any special reserve created and maintained by eligible entities carrying out eligible businesses for an amount not exceeding twenty per cent. of profits derived from eligible business activities, carried to such reserve. The Explanation to clause (viii) of said sub-section (1) defines the expressions 'specified entity' and 'eligible business' for the purposes of availing deductions under the aforesaid sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit or in case of a loss Rs. 1,50,000 or at the rate of 90 per cent. of the book-profit, whichever is more; (b) on the balance of the book-profit at the rate of 60 per cent. The proposed amendment will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 16 of the Bill seeks to amend section 40A of the Incometax Act relating to expenses or payments not deductible in certain circumstances. The existing provisions contained in sub-section (3) of the said section provide that where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. The existing provisions contained in sub-section (3A) provides that where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes payment in respect thereof, oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head "Profits and gains of business or profession" and the depreciation so computed shall be deemed to be the depreciation actually allowed during the previous year under the Income-tax Act, 1961. These amendments will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 18 of the Bill seeks to amend section 44AA of the Incometax Act relating to maintenance of accounts by certain persons carrying on profession or business. Under the existing provisions contained in the said section it is obligatory for every person carrying on business or profession other than the professions mentioned in sub-section (1) of the said section, if his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year or where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s his accounts audited under such other law before the specified date and also obtains before the said date the report of audit in the prescribed form, in addition to the report of audit required under such other law. The expression "accountant", for the purposes of this provision, will have the same meaning as in the Explanation below sub-section (2) of section 288 of the Incometax Act. The expression "specified date", in relation to the accounts of the assessee of the previous year means the 30 th day of September of the assessment year. The proposed amendment seeks to provide that in the case of an assessee, who is covered under the new proposed section 44AD vide clause 20, the audit of books of account is required if he claims that the profits and gains from the business are lower than the profits and gains computed in accordance with the provisions of sub-section (1) of section 44AD and if his income exceeds the maximum amount which is not chargeable to income-tax. This amendment will take effect from 1 st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years. Clause 20 of the Bill seeks to substitute section 44AD of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain books of account under section 44AA and get the accounts audited under section 44AB in respect of such income unless the assessee claims that the profits and gains from the aforesaid business are lower than the profits and gains deemed to be his income under sub-section (1) of section 44AD and his income exceeds the maximum amount which is not chargeable to incometax. The proposed section also defines the expressions eligible assessee and eligible business. This amendment will take effect from 1 st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years. Clause 21 of the Bill seeks to amend section 44AE of the Incometax Act, relating to special provision for computing profits and gains of business of plying, hiring or leasing goods carriages. Under the existing provisions contained in sub-section (1) of the said section, in the case of an assessee, who owns not more than ten goods carriages and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head "Profits and gains of business or profession" is deemed to be the aggregate of the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said section provide that where the capital gain arises from the transfer of a share, debenture or warrant, which has been taken into account while computing the value of perquisite under clause (2) of section 17, the cost of acquisition of such share, debenture or warrant shall be the value taken into account for computation of such perquisite under that sub-section. It is proposed to substitute the said sub-section so as to provide that where the capital gain arises from the transfer of specified security or sweat equity shares referred to in sub-clause (vi) of clause (2) of section 17, the cost of acquisition of such security or shares shall be the fair market value which has been taken into account for the purposes of the said sub-clause. This amendment will take effect from 1 st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 24 of the Bill seeks to amend section 50B of the Incometax Act relating to special provision for cost of computation of capital gains in case of slump sale. Under the existing provisions any profits or gains arising from the slump sale effected in the previous year shall be cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a result of such transfer. It is proposed to amend the said section so as to substitute the words "or assessed" wherever they occur in the said section by the words "or assessed or assessable". It is also proposed to insert an Explanation after the existing Explanation so as to define the expression "assessable" as the price which the stamp valuation authority would have adopted or assessed, if it were referred to such authority for the payment of stamp duty notwithstanding anything to the contrary contained in any other law for the time being in force. This amendment will take effect from the 1st October, 2009. Clause 26 of the Bill seeks to amend section 56 of the Incometax Act relating to income from other sources. The existing provision of clause (vi) of sub-section (2) of the said section brings any sum of money, the aggregate value of which exceeds fifty thousand rupees, which is received without consideration by an individual or a Hindu undivided family from persons other than relatives as defined under that section within the purview of income-tax. Certain exceptions have also been provided under the proviso to the said clause. The proposed amendment seeks to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following assessment year, and - (i) it shall be set off against the profits and gains, if any, of any specified business carried on by him assessable for that assessment year; and (ii) if the loss can not be wholly so set-off, the amout of loss not so set-off shall be carried forward to the following assessment year and so on. The proposed amendment is consequential in nature. This amendment will take effect from the 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 29 of the Bill seeks to amend section 80A of the Incometax Act relating to deductions to be made from the gross total income in computing total income. The existing provision contained in the said section provides that in computing the total income of an assessee, there shall be allowed from his gross total income, the deductions specified in sections 80C to 80U of the Act. The said section further provides that the aggregate amount of deductions in computing the total income shall not, in any case, exceed the gross total income of the assessee. The proposed sub-section (4) of the said section provides that notwithstanding anything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to any goods or services sold or supplied, market value means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any; (ii) in relation to any goods or services acquired, market value means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any. The said Explanation is clarificatory in nature. This amendment will take effect retrospectively from 1st April, 2009. Clause 30 of the Bill seeks to amend section 80CCD of the Income-tax Act relating to deduction in respect of contribution to pension scheme notified by the Central Government. The existing provisions contained in the sub-section (1) of said section provides that where an assessee being an individual, employed by the Central Government or any other employer on or after 1 st January, 2004, who has paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est on loan taken for higher education. Under the existing provisions a deduction is allowed to an individual under the said section in respect of interest on loan taken from any financial institution or any approved charitable institution for the purposes of pursuing his higher education or that of his relative. As per clause (c) of sub-section (3) of said section, "higher education" means full time studies for any graduate or postgraduate course in engineering, medicine, management or for postgraduate course in applied sciences or pure sciences including mathematics and statistics. It is proposed to substitute clause (c) so as to provide that "higher education" will mean any course of study pursued after passing the senior secondary examination or its equivalent from any school, board or university recogised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority. The proposed amendment will take effect from the 1 st day of April, 2010 and will, accordingly, apply in relation to assessment year 2010-2011 and subsequent years. Clause 33 of the Bill seeks to amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-2010 only. Clause 34 of the Bill seeks to amend section 80GGB which relates to deduction in respect of contributions given by companies to political parties. The existing provisions of the said section provides for deduction of any sum contributed by an Indian Company to any political party in the previous year while computing the total income of such Indian company. It is proposed to amend the aforesaid section so as to bring "electoral trust" within the scope of the above said section so that contribution made by an Indian company to electoral trusts would also be eligible for deduction under that section. This amendment will take effect from the 1st day of April, 2010, and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 35 of the Bill seeks to amend section 88GGC which relates to deduction in respect of contributions given by any person to political parties. The existing provisions of the said section provides for deduction of any sum contributed by any person, except local authority and every artificial juridical person wholly or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (4) of said section which provides for deduction to any undertaking carrying on the business of laying and operating a cross-country natural gas distribution network, including pipelines and storage facilities being an integral part of such network. In view of the said amendment, it is also proposed to make amendments, with respect to sub-section (1) and sub-section (3) of the said section, which are consequential in nauture. This amendment is consequential in nature.This amendment will take effect from 1 st April, 2010 and will, accordingly, apply in relation to assessment year 2010-2011 and subsequent assessment years. It is also proposed to amend the Explanation to said section to clarify that nothing contained in the said section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1) of said section. This amendment will take effect retrospectively from 1st April, 2000 and will, accordingly, apply in relation to the assessment year 2000-01 and subsequent years Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of deduction under the said sub-section shall be available if the undertaking is engaged in commercial production of natural gas in blocks licensed under the VIII Round of bidding for award of exploration contracts under the New Exploration Licensing Policy announced by the Government of India Vide Resolution No.0-19018/22/95-ONG.DO.VL dated 10 th February, 1999 (hereinafter referred to as "NELP-VIII") and begins commercial production of natural gas on or after the 1 st day of April, 2009. This amendment will take effect from 1 st April, 2010 and will, accordingly, apply in relation to the assessment year 2010--2011 and subsequent years. It is further proposed to amend sub-section (10) of section 80-IB which provides for a hundred per cent deduction of the profits derived by an undertaking developing and building housing projects approved by a local authority before 31 st March, 2007 subject to the specified conditions. The proposed amendment seeks to insert two new conditions by way of two new clauses namely clause (e) which proposes to provide that not more than one residential unit is allotted to any person not being an individual and clause (f) which proposes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will take effect from 1st April, 2010, and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years. Clause 39 of the Bill proposes to substitute section 90 of the Income-tax Act, relating to agreement with foreign countries. Under the existing provision, power has been conferred upon the Central Government to enter into agreement with the Government of any country outside India for granting of relief in respect of income on which income-tax has been paid both under the said Act and income-tax in that foreign country. It is proposed to substitute the said section 90 by a new section so as to confer power upon the Central Government to enter into agreement with the Government of any specified territory outside India in addition to entering into agreement with foreign countries as provided in the said existing section 90. It is further proposed to insert an Explanation in the new section 90 to define "specified territories" which means any area outside India which may be notified as such by the Central Government for the purposes of said section. This amendment will take effect from 1st October, 2009. Clause 40 of the Bill seeks to amend sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-clause (iiiae) or subclause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income tax payable shall be the aggregate of the amount of income tax calculated on the income by way of any anonymous donation, at the rate of thirty per cent. and the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of anonymous donation. It is proposed to amend clause (i) of sub-section (1) of the said section so as to provide that anonymous donations, to the extent the aggregate of anonymous donations exceeds five per cent. of the total income of the assessee or an amount of rupees one lakh, whichever is higher, would be taken into account for the purposes of aforesaid section. This amendment will take effect from 1 st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 43 of the Bill seeks to amend section 115JA of the Income-tax, relating to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeks to amend section 115JB of the Act relating to special provision for payment of tax by certain companies. Under the existing provisions contained in the said section 115JB, in case of a company, if the tax payable on the total income as computed under the income-tax Act in respect of any previous year relevant to the assessment year commencing on or after the 1 st April, 2007, is less than ten per cent. of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be ten per cent. of such book profit. It is proposed to amend sub-section (1) of said section 115JB to provide that if the income-tax payable on the total income as computed under the Income-tax Act in respect of any previous year relevant to the assessment year commencing on or after 1 st April, 2010 is less than fifteen per cent. of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be fifteen per cent. of such book profit. This amendment will take effect from 1 st April, 2010 and will, accordingly, apply in relation to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no direction shall be issued after the 31 st day of March, 2009. It is proposed to amend sub-section (1B) of the said section so as to extend the time limit from 31 st March, 2009 to 31 st March, 2010 so that no direction shall be issued after the 31 st March, 2010. This amendment will take effect retrospectively from 1st April, 2009. Clause 48 of the Bill seeks to insert a new section 115WM relating to "Chapter XII-H not to apply after certain date". The proposed new section provides that nothing contained in Chapter XII-H shall apply in respect of any assessment for the assessment year commencing on 1 st April, 2010 or any subsequent year. This amendment will take effect from 1 st April, 2010 and will, accordingly, apply to the assessment year 2010-11 and subsequent assessment years. Clause 49 of the Bill seeks to amend section 131 of the Incometax Act which relates to power regarding discovery, production of evidence, etc. Vide clause 55 of the Bill proposes to insert new section 144C in the Income-tax Act so as to provide that the assessee shall file his objections among others to the Dispute Resolution Panel against the draft of the proposed order of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end sub-section (1) of section 132A of the Income-tax Act relating to powers to requisition books of account, etc. The existing provisions provides that the Director General or Director or the Chief Commissioner or Commissioner may authorise any Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer. It is proposed to amend sub-section (1) of the said section so as to include that Additional Director or Additional Commissioner may be authorised to exercise the powers specified in the said section. This amendment will take effect retrospectively from 1st June, 1994. Clause 52 of the Bill seeks to amend section 139A of the Incometax Act relating to Permanent Account Number (PAN). The existing provisions contained in sub-section (5B) of the said section provides that where any sum or income or amount has been paid after deducting tax under Chapter XVIIB, every person deducting tax under this Chapter shall quote the Permanent Account Number of the person to whom such sum or income or amount has been paid by him in all quarterly statements prepared and delivered or caused to be delivered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31 st day of March, 2009. It is proposed to amend sub-section (1B) of the said section to extend the time limit from 31 st March, 2009 to 31 st March, 2010 so that no direction shall be issued after the 31 st March, 2010. This amendment will take effect retrospectively from 1 st April, 2009. Clause 55 of the Bill seeks to insert a new section 144C in the Income-tax Act relating to Dispute Resolution Panel. The subjects of transfer pricing audit and the taxation of foreign company are at nascent stage in India. Often the Assessing Officers and Transfer Pricing Officers tend to take a conservative view. The correction of such view take very long time with the existing appellate structure. With a view to provide speedy disposal, it is proposed to amend the Income-tax Act so as to create an alternative dispute resolution mechanism within the income-tax department and accordingly, section 144C has been propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous year shall be jointly and severally liable for the payment of such tax unless he proves that the nonrecovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the limited liability partnership. This amendment will take effect from 1st April, 2010, and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years. Clause 59 of the Bill seeks to amend section 194A which relates to interest other than "interest on securities". The existing provisions contained in sub-section (3) of the said section provide that the provisions of sub-section (1) of the said section shall not apply in respect of certain income or receipt. Clause (x) of the said sub-section provides that provisions of subsection (1) shall not be applicable in respect of income paid or payable on zero coupon bond issued by an infrastructure capital company or infrastructure capital fund or public sector company on or after 1 st June, 2005. It is proposed to amend the said clause (x) of sub-section (3) of section 194A so as to include "scheduled bank" after "public sector company". The proposed amendment is conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The proposed sub-section (7) provides that the "payer" mentioned in sub-section (6) shall furnish to the prescribed Income Tax Authority or the person authorised by it such particulars as may be prescribed. The Explanation to the proposed section defines the expressions "specified person", "goods carriage" and "contract". Clause (iv) of the Explanation defines the expression "work" to include advertising, broadcasting and telecasting including production of programmes for such broadcasting or telecasting, carriage of goods or passengers by any mode of transport other than by railways, catering and manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. The Explanation further provides that the work shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer. This amendment will take effect from 1st October, 2009. Clause 61 of the Bill seeks to amend section 194-I of the Incometax Act, which relates to deduction of tax at source on any income payable by way of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pare such statements for such period as may be prescribed in each financial year and deliver or cause to be delivered to the prescribed incometax authority or the person authorized by such authority such statements for such period, in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. This amendment will take effect from 1st October, 2009. Clause 64 of the Bill seeks to insert new section 200A providing for processing of statements of tax deducted at source. The proposed new section 200A provides that the statement of tax deduction at source made under section 200 shall be processed and sums deductible under Chapter XVII-B shall be computed after making adjustments of any arithmetical error or apparent incorrect claim in the statement and interest, if any, shall be charged on the sum so computed. The sum payable or refundable to the deductor shall be determined after adjusting the aforesaid computed sum against any amount paid under section 200 and section 201 and any amount paid otherwise by way of tax or interest. Intimation shall be sent to the deductor specifying the amount payable or refundable to the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed. It further provides that in any other case such order shall not be made at any time after four years from the end of the financial year in which payment is made or credit is given. It further provides that such order for a financial year commencing on or before 1 st day of April, 2007 may be passed at any time on or before the 31 st day of March, 2011. The sub clause also provides that the provisions of sub-clause (ii) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may apply to the time limit prescribed in proposed sub-section (3) of section 201. This amendment will take effect from 1st April, 2010. Clause 66 of the Bill seeks to amend section 203A of the Incometax Act which relates to tax deduction and collection account number. Vide clause 63 of the Bill proposes to amend section 200, specifying that any person deducting any sum on or after the 1 st day of April, 2005 in accordance with the provisions of Chapter XVII-B, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under Chapter XVII to prepare and deliver or cause to be delivered such statements for such period as may be prescribed in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed to the prescribed income-tax authority or the person authorised by such authority on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media. It is proposed to make consequential amendment to section 272A of the Income-tax Act. This amendment will take effect from 1st October, 2009. Clause 68 seeks to insert a new section 206AA after section 206A of the Income-tax Act relating to requirement to furnish Permanent Account Number. The proposed sub-section (1) of the said section specifies that any person who is entitled to receive any sum or income or amount on which tax is deductible under Chapter XVIIB (hereinafter referred to as the deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereinafter referred as the deductor), failing which tax shall be deducted at the rate mentioned in the relevant provisions of the Act or at the rate in force or at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such tax payable by the assessee during a financial year is five thousand rupees or more. It is proposed to enhance the said limit from five thousand rupees to ten thousand rupees. This amendment will take effect retrospectively from 1st April, 2009. Clause 71 of the Bill seeks to amend section 246A of the Incometax Act relating to appeal filed before Commissioner (Appeals). The proposed amendment seeks to exclude any order passed under sub-section (3) of section 143 in pursuance of directions of the Dispute Resolution Panel as an appealable order before Commissioner (Appeals). This amendment will take effect from 1st October, 2009. Clause 72 of the Bill seeks to amend section 253 of the Incometax Act relating to appeals to the Appellate Tribunal. It is proposed to insert a new clause after clause (c) of subsection (1) so as to provide that an order passed by an Assessing Officer under sub-section (3) of section 143 in pursuance of directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order is appealable to the Appellate Tribunal under the said section. The proposed amendment is consequential in nature. This amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut deduction of tax.The proposed amendment seeks to provide that any banking company or co-operative society or public company referred to in the proviso to clause (i) of sub-section (3) of section 194A responsible for paying to a resident any income not exceeding ten thousand rupees, where the payer is a banking company or a co-operative society, and five thousand rupees in any other case by way of interest (other than interest on securities), shall prepare such statements for such period as may be prescribed in each financial year and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statements for such period, in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed, on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media. It is further provided that the Central Government may, by notification in the Official Gazette, require any person other than a person mentioned in sub-section (1) responsible for paying to a resident any income liable for deduction of tax at source under Chapter XVII to prepare and deliver or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be provided by rules made by the Board in this behalf. It is also proposed that the Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which such communication may be delivered. This amendment will take effect from 1 st October, 2009. Clause 77 of the Bill seeks to insert a new section 282B of the Income-tax Act relating to allotment of Document Identification Number. It is proposed to insert a new section 282B in the Income-tax Act so as to provide that every income tax authority shall allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any other income-tax authority or assessee or any other person and such number shall be quoted thereon. It is further proposed that where the notice, order, letter or any correspondence issued by any income-tax authority does not bear a Document Identification Number, such notice, order, letter or any correspondence shall be treated as invalid and shall be deemed never to have been issued. It is also proposed to provide that every document, letter or any correspondence, receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of deduction in respect of any amount either written off or provided in the accounts to meet diminution in or loss on realization of investments in accordance with the regulations prescribed by Insurance Regulatory and Development Authority. Adjustment shall also be made by way of increase in respect of any amount taken credit for in the accounts on account of appreciation of or gains on realization of investments in accordance with the regulations prescribed by Insurance Regulatory and Development Authority. This amendments will take effect from 1 st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years. Clause 80 of the Bill seeks to amend Part A of the Fourth Schedule to the Income-tax Act, which relates to recognised provident funds. Rule 3 in Part A of the Fourth Schedule provides that the Chief Commissioner or Commissioner may accord recognition to any provident fund which in his opinion satisfies the conditions specified under rule 4 in Part A of the said Fourth Schedule and the conditions, which the Board may specify by rules. The first proviso to sub-rule (1) of the said rule 3 provides that in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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