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TMI BlogNotes on clauses - Income-taxX X X X Extracts X X X X X X X X Extracts X X X X ..... -2012. Rates for deduction of tax at source during the financial year 2012-2013 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 2012-2013 from income other than "Salaries". The rates are the same, as those specified in Part II of the First Schedule to the Finance Act, 2011 for the purposes of deduction of income-tax at source during the financial year 2011-2012. In view of the proposed insertion of new section 194LC, prescribing special rate of tax deduction at five per cent. in case of certain interest payments to non-residents by a specified Indian company engaged in prescribed business of infrastructure development, such income shall not be subject to deduction of tax at source at the rate of twenty per cent. which would otherwise have applied. The amount of tax so deducted shall be increased by a surcharge in the case of every company other than a domestic company at the rate of two per cent. No surcharge will be levied in any other case. Rates for deduction of tax at source from "Salaries", computation of "advance tax" and charging of income tax in spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcharge will be levied. Paragraph E of this Part specifies the rates of income-tax in the case of companies. In both the cases of domestic companies and companies other than domestic companies, the rate of tax will continue to be the same as that specified for the assessment year 2012-2013. Surcharge in the case of domestic companies having income above one crore rupees shall continue to be levied at the rate of five per cent. In case of companies other than domestic companies, the surcharge shall continue to be levied at the rate of two per cent. Marginal relief will be provided. In all other cases (including sections 115JB, 115-O, 115R, etc.) the surcharge will continue to be applicable at the rate of five per cent." "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, there will be no levy of Education Cess and Secondary and Higher Education Cess on tax deducted or collected at source in the case of domestic company and any other person who is resident in India. Both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. These amendments will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to the assessment year 1962-1963 and subsequent assessment years. It is also proposed to insert a new Explanation 4 in clause (vi) of the aforesaid sub-section so as to clarify that the transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred. It is also proposed to insert a new Explanation 5 in the aforesaid clause so as to clarify that the royalty includes and has always included consideration in respect of any right, property or information, whether or not -- (a) the possession or control of such right, property or information is with the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng provisions contained in clause (23FB) of the aforesaid section provide that any income of a venture capital company or venture capital fund from investment in a venture capital undertaking does not form part of its total income. The definitions of "venture capital company", "venture capital fund" and "venture capital undertaking" are provided in Explanation 1 to clause (23FB). "Venture capital undertaking" has been defined in clause (c) of the said Explanation to mean such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in certain businesses or industries specified in said clause (c). It is proposed to amend clause (c) of Explanation 1 to the aforesaid clause so as to define the venture capital undertaking as the venture capital undertaking referred to in the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992. This amendment will take effect from 1st April, 2013, and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. It is proposed to insert a new clause (48) in the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a company engaged in the business of bio-technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of Eleventh Schedule, incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to two times of the expenditure so incurred. However, no deduction is allowable under the said sub-section in respect of such expenditure incurred after 31st March, 2012. It is proposed to amend clause (5) of the aforesaid sub-section (2AB) so as to allow deduction in respect of expenditure incurred up to 31st March, 2017. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years up to assessment year 2017-2018. Clause 9 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business. The provisions of sub-section (1) of the aforesaid section 35AD, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years. Clause 10 of the Bill seeks to insert new sections 35CCC and 35CCD in the Income-tax Act relating to expenditure on agricultural extension project and expenditure on skill development project, respectively. Sub-section (1) of the proposed new section 35CCC provides that where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the aforesaid section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year. Sub-section (1) of the proposed new section 35CCD provides that where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance under this clause, on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm's length price as defined in clause (ii) of section 92F. The existing provisions of clause (b) of the aforesaid sub-section defines the persons referred to in clause (a). Sub-clause (iv) of the said clause defines the persons in a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, relative of such director, partner or member. It is proposed to amend the aforesaid clause (b) so as to include therein any other company carrying on a business or profession in which the company referred to in the aforesaid sub-clause has substantial interest. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 13 of the Bill seeks to amend section 44AB of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill take effect retrospectively from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent assessment years. The existing provisions in clause (b) of the Explanation to the aforesaid section 44AD defines the term "eligible business" to mean any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE and whose total turnover or gross receipts in the previous year does not exceed sixty lakh rupees for the purpose of computing profits and gains of business on presumptive basis. It is proposed to amend the aforesaid Explanation so as to enhance the said limit from sixty lakh rupees to one crore rupees. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 15 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer. Under the existing provisions contained in sub-clause (a) of clause (vii) of the aforesaid section 47, in case of a merger, any transfer of capital asset being shares, held by a shareholder in the amalgamating c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or cannot be determined, then, for the purpose of computing income chargeable to tax as capital gains, the fair market value of the said asset on the date of transfer shall be deemed to be the full value of the consideration received or accruing as a result of such transfer. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 18 of the Bill seeks to amend section 54B of the Income tax Act relating to capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. The existing provisions contained in sub-section (1) of the aforesaid section 54B provide that if an assessee transfers land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, giving rise to capital gain and purchases any other land for being used for agricultural purposes, within two years after the date of such transfer, the capital gain is exempt to the extent such gain has been utilised for the aforesaid purpose. It is proposed to amend the aforesaid sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf and the return furnished by the assessee shall be accompanied by proof of such deposit having been made. It is also proposed to provide that for the purposes of sub-section (1), the amount, if any, already utilised by the company for the purchase of the new asset together with the amount deposited under sub-section (2) shall be deemed to be the cost of the new asset. However, if the amount so deposited is not utilised, wholly or partly, for the purchase of the new asset within the period specified in sub-section (1), then, the amount by which the amount of capital gain arising from the transfer of the residential property not charged under section 45 on the basis of the cost of the new asset, exceeds the amount that would not have been so charged had the amount actually utilisesd for the purchase of the new asset within the period specified in sub-section (1), been the cost of the new asset, shall be charged under section 45 as income of the assessee of the previous year in which the period of one year from the date of the subscription in equity shares by the assessee expires and the company shall be entitled to withdraw such amount in accordance with the scheme. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu undivided family, in any previous year from any person on or after the 1st day of October, 2009, the whole of the aggregate value of such money shall be chargeable to income-tax under the head "Income from other sources". The second proviso to the said clause provides that the provisions of this clause shall not apply to any sum of money or any property received from any relative. Clause (e) of Explanation to second proviso of the said clause provides that the definition of "relative" shall have the same meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of the said section. It is proposed to substitute the aforesaid clause (e) so as to provide that the definition of "relative" shall also include any sum or property received by a Hindu undivided family from its members apart from the persons referred to in the Explanation to clause (vi) of sub-section (2) of the said section. This amendment will take effect retrospectively from 1st October, 2009. It is proposed to insert a new clause (viib) in the aforesaid sub-section so as to provide that where a company, not being a company in which the public are substantially interested, receives, in any pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 23 of the Bill seeks to amend section 80A of the Income-tax Act relating to deduction to be made in computing total income. The existing provision of the Explanation to sub-section (6) of the aforesaid section 80A provides the definition of expression "market value" in relation to any goods or services sold or supplied and in relation to goods or services acquired. It is proposed to amend the aforesaid Explanation so as to provide that "market value" in relation to any goods or services sold, supplied or acquired, in case of a transaction being a domestic transaction referred to in section 92BA shall be the arm's length price as defined in clause (ii) of section 92F. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 24 of the Bill seeks to amend section 80C of the Income-tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of any sum paid on account of preventive health check-up; (ii) any mode other than cash in all other cases. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 26 of the Bill seeks to amend section 80DDB of the Income-tax Act relating to deduction in respect of medical treatment, etc. The existing provisions of the aforesaid section 80DDB provide for a deduction up to forty thousand rupees for medical treatment of a specified disease or ailment in case of an individual or his dependant. In case where the amount actually paid is in respect of any person who is a senior citizen, the deduction is allowed up to sixty thousand rupees in place of forty thousand rupees. Clause (iv) of the Explanation to the aforesaid section provides that a senior citizen means an individual resident in India who is of the age of sixty five years or more at any time during the relevant previous year. It is proposed to amend the aforesaid Explanation so as to reduce the age from sixty-five years to sixty years for qualifying as a senior citizen. This amendment will take ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2012 to 31st March, 2013. The existing Explanation to sub-section (8) of the aforesaid section 80-IA provides for the definition of "market value" in relation to goods or services. It is proposed to substitute the aforesaid Explanation so as to include the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is "specified domestic transaction" referred to in section 92BA within the definition of "market value" in relation to any goods or services. The existing provisions of sub-section (10) of the aforesaid section provide that where it appears to the Assessing Officer, owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate, containing prescribed particulars, of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. The existing sub-section (3) of the aforesaid section provides that any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf. It is proposed to insert an Explanation after Explanation 2 in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2013-2014 and subsequent assessment years. The existing sub-section (3) of the aforesaid section provides that any term used but not defined in the Income-tax Act or in the said agreement shall have the same meaning as assigned to it in the notification issued by the Central Government, unless the context otherwise requires and it is not inconsistent with the provisions of the Income-tax Act or the said agreement. It is proposed to insert an Explanation in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that any term used in any agreement, where such agreement is entered into under sub-section (1) and not defined under the agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force. This amendment will take effect retrospectively from 1st June, 2006. Clause 33 of the Bill seeks to amend section 92 of the Income-tax Act relating to computation of income from international transaction having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the most appropriate method, then, the arm's length price shall be taken to be arithmetical mean of such price. Further, the second proviso to the said sub-section provides that if the variation between the arm's length price as determined and price at which the international transaction has actually been undertaken does not exceed such percentage as may be notified by the Central Government in this behalf, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price. The provisions contained in the first proviso to sub-section (2) of section 92C, as it stood before its amendment by the Finance (No. 2) Act, 2009 provides that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices, or, at the option of the assessee, a price which may vary from the arithmetical mean by an amount not exceeding five per cent. of such arithmetical mean. The existing provisions of second proviso to sub-section (2) of the aforesaid section 92C provides that the variation between the arm's length price so determined and price at which the internat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been completed before the 1st day of October, 2009. This amendment will take effect from 1st July, 2012. Clause 37 of the Bill seeks to amend Chapter X of the Income-tax Act relating to special provisions relating avoidance of tax. The existing provisions of the aforesaid Chapter X makes special provisions relating to avoidance of tax. Sections 92C, 92D and 92E under the aforesaid Chapter provide for meaning of international transaction, maintenance and keeping of information and document by persons entering into an international transaction and report from an accountant to be furnished by person entering into international transaction. It is proposed to amend the aforesaid sections to substitute the words "international transaction or specified domestic transaction", for the words "international transaction" wherever they occur so as to extend the provisions of the aforesaid sections to the specified domestic transaction. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 38 of the Bill seeks to amend section 92CA of the Income-tax Act relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide that the manner of determination of arm's length price referred to in sub-section (1) may include the methods, as referred to in sub-section (1) of section 92C or any other method, with such adjustments or variations, as may be necessary or expedient so to do. It is also proposed to provide that the arm's length price of any international transaction, in respect of which the advance pricing agreement has been entered into, notwithstanding anything contained in section 92C or section 92CA, shall be determined in accordance with the advance pricing agreement so entered. It is also proposed to provide that the agreement referred to in sub-section (1) shall be valid for such period as specified in the agreement which in no case shall exceed five consecutive previous years. It is also proposed to provide that the advance pricing agreement entered into shall be binding on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into and on the Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction. However, the agreement shall not be binding if there is a chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an assessment year relevant to a previous year to which the agreement applies have been completed before the expiry of period allowed for furnishing of modified return under sub-section (1) and the Assessing Officer shall, in a case where modified return is filed in accordance with the provisions of sub-section (1), proceed to assess or reassess or re-compute the total income of the relevant assessment year having regard to and in accordance with the agreement. It is also proposed to provide that the where the assessment or reassessment proceedings for an assessment year relevant to the previous year to which the agreement applies are pending on the date of filing of modified return in accordance with the provision of sub-section (1), the Assessing Officer shall proceed to complete the assessment or reassessment proceedings in accordance with the agreement taking into consideration the modified return so furnished. It is also proposed to provide that notwithstanding anything contained in section 153 or section 153B or section 144C the order of assessment, reassessment or re-computation of total income under sub-section (2) shall be passed within a period of one year from the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 102 provides definition of certain terms relevant for newly inserted Chapter X-A. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 41 of the Bill seeks to amend section 111A of the Income-tax Act relating to tax on short-term capital gains in certain cases. Under the existing provisions contained in sub-section (1) of the aforesaid section 111A, a special rate of tax of fifteen per cent. is provided on short-term capital gain arising from the transfer of a certain capital asset, being an equity share in a company or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax. The proviso to the aforesaid sub-section provides that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than a game the winnings wherefrom are taxable under section 115BB) or sport or advertisement or contribution of articles relating to any game or sport in India in newspapers, magazines or journals or being a non-resident sports association or institution includes any amount guaranteed to be paid or payable to such associations or institutions in relation to any games (other than a game the winnings wherefrom are taxable under section 115BB) or sport played in India, the income-tax payable by the assessee on such income shall be the aggregate of the amount of income tax calculated on income at the rate of ten per cent. It is proposed to insert a new clause (c) in sub-section (1) of the aforesaid section so as to include any income received or receivable by an entertainer, who is not a citizen of India and is a non-resident, from his performance in India and also to increase the tax on income referred to in this section from ten per cent. To twenty per cent. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 44 of the Bill seeks to amend section 115BBD of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 46 of the Bill seeks to amend section 115JB of the Income-tax Act relating to special provision for payment of tax by certain companies. The existing provisions of sub-section (2) of aforesaid section 115JB provide that every assessee being a company shall prepare its profit and loss account in accordance with the provisions of Part-II and Part-III of Schedule VI to the Companies Act. It is proposed to amend the aforesaid sub-section so as to provide that every assessee, (a) being a company, other than a company to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956 is applicable, shall, for the purposes of the aforesaid section, prepare its profits and loss account for the relevant previous year in accordance with the provisions of Part II of Schedule VI to the Companies Act, 1956; or (b) being a company, to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956 is applicable, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10AA. It is proposed to substitute the aforesaid section so as to provide that where the regular income-tax payable for a previous year by any person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of such person and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent. For the purpose of the aforesaid provision, the adjusted total income shall be the total income before giving effect to the Chapter XII-BA as increased by deductions claimed under any section (other than section 80P) included in Chapter VI-A under the heading "C.--Deductions in respect of certain incomes" and deduction claimed under section 10AA. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 49 of the Bill seeks to amend section 115JD of the Income-tax Act relating to tax credit for alternate minimum tax. The existing provisions of sub-section (1) of the aforesaid section 115JD provide that the credit for tax paid by limited li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years. Clause 52 of the Bill seeks to amend section 115JF of the Income-tax Act relating to interpretation in Chapter XII-BA. The existing provisions of the aforesaid section 115JF define the expressions "accountant", "alternate minimum tax", "limited liability partnership" and "regular income-tax" for the purposes of Chapter XII-BA. It is proposed to omit clause (c) relating to the definition of "limited liability partnership". It is further proposed to substitute "a person on his total income" in place of "a limited liability partnership on its total income" used in clause (d) thereof. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 53 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. The existing provisions in sub-section (1A) of the aforesaid section 115-O provide that the amount of dividends referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if (a) such amount of dividend is received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year and such other relevant details as may be prescribed. It is proposed to amend the aforesaid sub-section (2) so as to provide that the person responsible for crediting or making payment of the income on behalf of a venture capital company or venture capital fund and the venture capital company or venture capital fund shall furnish a statement in the prescribed form, giving details of the nature of the income paid or credited during the period, to the person who is liable to tax in respect of such income and to the prescribed income-tax authority. The existing provisions of sub-section (3) of the aforesaid section provide that the income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by, or had accrued to, the venture capital company or the venture capital fund, as the case may be, during the previous year. It is proposed to amend the aforesaid sub-section (3) so as to provide that the income paid or credited by the venture capital company and the venture capital fund shall be deemed to be of the same natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amend section 139 of the Income-tax Act relating to return of income. The existing provisions of sub-section (1) of the aforesaid section 139 provide that every person, if his total income or the total income of any other person in respect of which he is assessable under the Income-tax Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. It is proposed to amend the aforesaid sub-section by inserting a proviso after the third proviso so as to provide that a person, being a resident, who is not required to furnish a return under this sub-section and who during the previous year has any asset (including any financial interest in any entity) located outside India or signing authority in any account located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years. Clause 58 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment. The existing provision of aforesaid section 143, inter alia, provides that where a return has been made in section 139 or in response to a notice under sub-section (1) of section 142, such return shall be processed in the manner provided therein. It is proposed to insert a new sub-section (1D) in the aforesaid section so as to provide that notwithstanding anything contained in sub-section (1), processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2). This amendment will take effect from 1st July, 2012. It is further proposed to insert a new proviso to sub-section (3) of the aforesaid section so as to provide that notwithstanding anything contained in the first and the second proviso, no effect shall be given by the Assessing Officer to the provisions of clause (23C) of section 10 in case of a trust or institution for a previous year, if the provisions of first proviso to clause (15) of section 2 become applicable in the case of such person in such previous year whether or not the approval granted to such trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid new section provides that a direction prejudicial either to assessee or revenue shall not be issued unless opportunity of being heard has been granted to assessee or the Assessing Officer, as the case may be. The proposed sub-section (8) of the aforesaid new section provides that Approving Panel may before issuing directions can call for records or evidences and direct Commissioner to carry out further inquiry and submit report. The proposed sub-section (9) of the aforesaid new section provides that in case of difference in opinion on an issue the direction shall be issued according to majority opinion. The proposed sub-section (10) of the aforesaid new section provides that every direction issued by Approving Panel or Commissioner shall be binding on Assessing Officer and Assessing Officer shall complete the proceeding in accordance with such directions and provisions of newly inserted Chapter X-A. The proposed sub-section (11) of the aforesaid new section provides that if direction is applicable to any other previous year other than in respect of which reference was made, then, while completing assessment or reassessment proceedings for such other previous years, Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee. This amendment will take effect retrospectively from 1st April, 2009. The existing provisions of sub-section (13) of the aforesaid section 144C provide that upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in aforesaid section 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. It is proposed to amend the aforesaid sub-section so as to give the reference of section 153B also in the said sub-section. This amendment will take effect retrospectively from 1st October, 2009. It is proposed to insert a new sub-section (14A) in the aforesaid section 144C so as to provide that provisions of section144C shall not apply to an assessment or reassessment order passed by the Assessing Officer with the approval of the Commissioner in accordance with sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 147 are procedural in nature. However, it is clarified by inserting a new Explanation 4 to the aforesaid section that the above amendments shall also be applicable to the proceedings initiated under this section for any assessment year beginning on or before 1st April, 2012. These amendments will take effect from 1st July, 2012. Clause 62 of the Bill seeks to amend section 149 of the Income-tax Act relating to time-limit for notice. The existing provisions of sub-section (1) of the aforesaid section 149 provide that the time limit for reopening an assessment on account of income escaping assessment is six years where the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. It is proposed to insert a new clause (c) to the aforesaid sub-section so as to provide that if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. The existing provisions of sub-section (3) of the aforesaid se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly inserted section 144BA and ending on date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of newly inserted section144BA is received by the Assessing Officer. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 64 of the Bill seeks to amend section 153A of the Income-tax Act relating to assessment in case of search or requisition. It is proposed to insert a third proviso to the aforesaid sub-section so as to provide that the Central Government may by rules made by it and published in the Official Gazette, (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. This amendment will take effect from 1st July, 2012. Clause 65 of the Bill seeks to amend section 153B of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012. Clause 67 of the Bill seeks to amend section 154 of the Income-tax Act relating to rectification of mistake. It is proposed to insert a new clause (c) in sub-section (1) of the aforesaid section so as to provide that an income-tax authority may amend any intimation issued under sub-section (1) of section 200A. It is further proposed to amend sub-section (2) of the aforesaid section so as to substitute the words "by the assessee" with the words "by the assessee or by the deductor". It is also proposed to amend sub-section (3) of the aforesaid section so as to substitute the words "the assessee", wherever they occur, with the words "the assessee or the deductor". The existing provisions of sub-section (5) of the aforesaid section provide that subject to the provisions of section 241, where any such amendment has the effect of reducing the assessment, the Assessing Officer shall make any refund which may be due to such assessee. It is proposed to substitute the aforesaid sub-section so as to provide that where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor, the Assessing Officer shall make an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade on any interest payable to an individual or a Hindu undivided family, who is resident in India, on any debenture issued by a company in which the public are substantially interested, if the interest is paid by the company by an account payee cheque and the amount of such interest or, as the case may be, the aggregate of the amounts of such interest paid or likely to be paid during the financial year by the company to such individual or a Hindu undivided family does not exceed five thousand rupees. This amendment will take effect from 1st July, 2012. Clause 70 of the Bill seeks to amend section 194E of the Income-tax Act relating to payments to non-resident sportsmen or sports associations. The existing provisions in section 194E provide that where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) who is a non-citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year does not exceed one hundred thousand rupees. It is proposed to enhance the said limit from one hundred thousand rupees to two hundred thousand rupees. This amendment will take effect from 1st July, 2012. Clause 73 of the Bill seeks to insert a new section 194LAA in the Income-tax Act relating to payment on transfer of certain immovable property other than agricultural land. It is proposed to insert a new section 194LAA to provide that any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent. of such sum as income-tax at the time of credit of such sum to the account of transferor or at the time of payment of such sum in cash or by issue of cheque or by draft or by any other mode, whichever is earlier. It is further proposed to provide that no deduction shall be made where the consideration paid or payable for the transfer of such property is less than fifty lakh rupees in case such property is situated in a specified area or is less than twenty lakh rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of any monies borrowed by it at any time on or after the 1st day of July, 2012 but before the 1st day of July, 2015; in foreign currency, from a source outside India under a loan agreement approved by the Central Government in this behalf; to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan and its repayment. It also defines the expressions "foreign currency" and "specified company" for the purpose of the aforesaid section. This amendment will take effect from 1st July, 2012. Clause 75 of the Bill seeks to amend section 195 of the Income-tax Act relating to other sums. It is proposed to provide that sub-section (1) of the aforesaid section 195 providing the rate of deduction in respect of interest payment shall not apply to interest referred to in sections 194LB and 194LC for which separate rate of deduction is provided. This amendment will take effect retrospectively from 1st April, 2012. It is further proposed to insert a new Explanation in sub-section (1) of the aforesaid section 195 so as to clarify that the obligation to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act relating to consequences of failure to deduct or pay. It is proposed to insert a new proviso in sub-section (1) of the aforesaid section 201 so as to provide that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident -- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. It is further proposed to insert a new proviso to sub-section (1A) of the aforesaid section so as to provide that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax. It is proposed to amend the aforesaid sub-section so as to insert a new serial number (vii) relating to minerals, being coal or lignite or iron ore in the Table in said sub-section to provide for collection of tax at source at the rate of one per cent. in case of minerals, being coal or lignite or iron ore. It is further proposed to insert a new sub-section (1D) in the aforesaid section to provide that every person, being a seller, who receives any amount in cash as consideration for sale of bullion or jewellery, shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent. of sale consideration as income-tax, if the sale consideration exceeds two hundred thousand rupees. It is also proposed to amend sub-sections (2), (3) and (9) of the aforesaid section which are consequential in nature. It is also proposed to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the assesses which would be chargeable to tax for the assessment year immediately following that financial year. It is proposed to amend the aforesaid section so as to insert a new sub-section (2) to provide that the provisions of the aforesaid section shall not apply to an individual resident in India who does not have any income chargeable under the head "Profits and gains of business or profession" and is of the age of sixty years or more at any time during the previous year. This amendment will take effect retrospectively from 1st April, 2012. Clause 81 of the Bill seeks to amend section 209 of the Income-tax Act relating to computation of advance tax. The existing provisions contained in the aforesaid section 209, inter alia, provides that where advance tax is payable, the assesse shall himself compute the advance tax payable on his current income at the rates in force in the financial year and deposit the same whether or not he has been earlier assessed to tax or not. It further provides that in all the cases the tax calculated at the rates in force in the financial year shall be reduced by the amount deductible at source or collectible at source from any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the amount of advance tax which falls short of assessed tax. Explanation 1 to the said sub-section defines the "assessed tax" which means the tax on the total income determined under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of any tax deducted or collected at source; any relief of tax allowed under section 90; any relief of tax allowed under section 90A; any deduction from the Indian income-tax payable, allowed under section 91; and any tax credit allowed to be set off in accordance with the provisions of section 115JAA. It is proposed to insert "or section 115JD", after "section115JAA" in clause (v) of Explanation 1 to sub-section (1) of the aforesaid section so as to provide for reduction of tax credit allowed to be set off under section 115JD from the assessed tax. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 84 of the Bill seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax. The existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larify that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date. This amendment will take effect retrospectively from 1st June, 2003. Clause 86 of the Bill seeks to insert a new sub-heading "G.--Levy of fee in certain cases" and a new section 234E in the Income-tax Act relating to fee for defaults in furnishing statements. It is proposed to insert a new section 243E so as to provide that-- (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for advance ruling. The provisions contained in sub-section (2) of the aforesaid section 245Q provide that the application for an advance ruling shall be made in quadruplicate and be accompanied by a fee of two thousand five hundred rupees. It is proposed to amend the aforesaid sub-section so as to enhance the fee from two thousand five hundred rupees to ten thousand rupees or such fee as may be prescribed in this behalf, whichever is higher. This amendment will take effect from 1st July, 2012. Clause 89 of the Bill seeks to amend section 246A of the Income-tax Act relating to appealable orders before Commissioner (Appeals). The existing provisions of the aforesaid section 246A provide for appeal by an assessee to the Commissioner (Appeals) against an order under sections 143(3), 147, 150, etc. It is proposed to include the reference of "deductor" after the word "assessee" in sub-section (1) and in clause (a) of the said sub-section so as to enable him to file an appeal under the aforesaid section. It is further proposed to amend clause (a) of sub-section (1) so as to provide that the deductor may appeal to the Commissioner (Appeals) against an intimation issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Panel or an order passed under section 154 in respect of such order may appeal to the Appellate Tribunal. It is proposed to amend clause (d) of the aforesaid sub-section (1) so as to provide that any assessee aggrieved by an order passed by an Assessing Officer under section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order may also appeal to the Appellate Tribunal. This amendment will take effect retrospectively from 1st October, 2009. It is further proposed to amend the aforesaid sub-section (1) to insert clause (e) in the said sub-section to provide that an order of assessment or reassessment passed with approval of the Commissioner under sub-section (12) of newly inserted section 144BA or an order under section 154 or section 155 passed in respect of such an order against which appeal lies before the Appellate Tribunal. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. It is also proposed to insert a new sub-section (2A) in the aforesaid section so as to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed thereunder. It is proposed to amend the aforesaid Explanation so as to include therein the reference of a specified domestic transaction for the purposes of said Explanation. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 93 of the Bill seeks to substitute section 271AA of the Income-tax Act relating to penalty for failure to keep and maintain information and document, etc., in respect of certain transactions. The existing provisions of the aforesaid section 271AA provide that if a person, who has entered into international transaction as defined in section 92B, fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of section 92D, the Assessing Officer or the Commissioner (Appeals) may direct such person shall pay, by way of penalty, a sum equal to two per cent. of the value of each international transaction entered into by such person. It is proposed to substitute the aforesaid section so as to provide the levy of penalty under the said section also in case where such person fails to report such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w section 271AAB in the Income-tax Act relating to penalty where search has been initiated. It is proposed to provide in the aforesaid new section 271AAB that in a case where search has been initiated under section 132 on or after the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent. of the undisclosed income of the specified previous year, if such assessee - (i) in the course of the search, in a statement under sub-section (4) of section 132 admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date,- (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein. It is further proposed to provide that the assessee shall pay by way of penalty, in addition to tax, if any payable by him, a sum computed at the rate of twenty per cent. of the undisclosed income of the specified previous year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years. Clause 98 of the Bill seeks to insert a new section 271H in the Income-tax Act relating to penalty for failure to furnish statements, etc. It is proposed to insert a new section 271H so as to provide that without prejudice to the provisions of the Act, a person shall be liable to pay penalty if he fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C; or furnishes incorrect information in the statement which is required to be delivered or cause to be delivered under sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. It is further proposed to provide that the penalty referred to in sub-section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. It is also proposed to provide that notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (1) of the aforesaid section 276C provide that if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of the Act, be punishable in case where the amount sought to be evaded exceeds one hundred thousand rupees with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. It is proposed to amend the aforesaid sub-section so as to increase the limit of amount sought to be evaded from one hundred thousand rupees to twenty-five hundred thousand rupees and to reduce the maximum imprisonment from three years to two years. The existing provisions of sub-section (2) of the aforesaid section provides that if a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act, he shall, without prejudice to any penalty that may be imposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. It is proposed to amend the aforesaid section so as to increase the limit of amount of tax which would have been evaded from one hundred thousand rupees to twenty-five hundred thousand rupees and to reduce the maximum imprisonment from three years to two years. These amendments will take effect from 1st July, 2012. Clause 104 of the Bill seeks to amend section 277A of the Income-tax Act relating to falsification of books of account or document, etc. The existing provisions of the aforesaid section 277A provide that if any person (the first person) wilfully and with intent to enable any other person (the second person) to evade any tax or interest or penalty chargeable and imposable under this Act, makes or causes to be made any entry or statement which is false, and which the first person either knows to be false or does not believe to be true, in any books of account or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first class as Special Court for such area or areas or for such cases or class or group of cases as may be specified in the notification. It further explains that "High Court" means the High Court of the State in which a Magistrate of first class designated as Special Court was functioning immediately before such designation. It also provides that while trying an offence under the Income-tax Act, a Special Court shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may, under the Code of Criminal Procedure, 1973, be charged at the same trial. The proposed new section 280B provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, (a) the offences punishable under Chapter-XXII shall be triable only by the Special Court if so designated for the area or areas or for cases or class or group of cases, as the case may be, in which the offence has been committed. However, a court competent to try offences under section 292, (i) which has been designated as a Special Court under this section, shall continue to try the offences before it or offences arising under this Act after such designation; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation of persons or body of individuals consisting of such persons.
It is also proposed to provide that notwithstanding that an authorisation under section 132 has been issued or requisition under section 132A has been made mentioning therein the name of more than one person, the assessment or reassessment shall be made separately in the name of each of the persons mentioned in such authorisation or requisition.
These amendments will take effect retrospectively from 1st April, 1976 and will, accordingly, apply to the assessment year 1976-1977 and subsequent assessment years.
Clause 108 of the Bill seeks to amend section 296 of the Income-tax Act relating to rules and certain notifications to be placed before Parliament.
The existing provisions of the aforesaid section 296 provide for laying of rules and certain notifications before Parliament.
It is proposed to amend the aforesaid section so as to provide that the rules made by the Central Government under the third proviso to sub-section (1) of section 153A or under the second proviso to sub-section (1) of section 153C are laid before Parliament.
This amendment will take effect from 1st July, 2012.
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