TMI BlogNotes on clauses - Income-taxX X X X Extracts X X X X X X X X Extracts X X X X ..... he financial year 2011-2012. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2012-2013. No surcharge 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 4 in the aforesaid clause so as to clarify the expression through used in the said sub-section. It is further proposed to insert a new Explanation 5 in the aforesaid clause (i) so as to clarify that an asset or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or institution has been withdrawn or rescinded. This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year2009-2010 and subsequent assessment years. The existing 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 and subsequent assessment years. Clause 8 of the Bill seeks to amend section 35 of the Income-tax Act relating to expenditure on scientific research. The existing provisions contained in sub-section (2AB) of the aforesaid section 35 provide that where 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the assessee shall be deemed to be carrying on the specified business of building and operating hotel. This amendment will take effect retrospectively from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business or profession of the assesse or the benefit derived by or accruing to him therefrom, so much of expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as deduction. It is proposed to amend the aforesaid clause so as to provide that no disallowance 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 refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otwithstanding anything contained in the foregoing provisions, shall not apply to (i) a person carrying on profession as referred to in sub-section (1) of section 44AA; (ii) a person earning income in the nature of commission or brokerage; or (iii) a person carrying on any agency business. This amendment will 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 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of a capital asset, capital gains are calculated as the difference between the sale consideration and the cost of acquisition. It is proposed to insert a new section 50D so as to provide that where the consideration received or accruing as a result of the transfer of a capital asset by an assessee, is not ascertainable 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the return of income by the assessee under section 139, shall be deposited by the company, before the due date of furnishing, in an account in any such bank or institution as may be specified and shall be utilised in accordance with any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf 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 specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 21 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources. The existing provisions of clause (vii) of sub-section (2) of the aforesaid section 56, inter alia, provide that where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or 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 ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation in the opinion of Assessing Officer aforesaid has been found to be satisfactory. The second proviso seeks to provide that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 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 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 sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty thousand rupees in the case of senior citizen. It is proposed to amend the Explanation to sub-section (4) of the aforesaid section so as to reduce the age for defining a senior citizen from sixty-five years to sixty years for the purposes of the said deduction. It is also proposed that for the purposes of the aforesaid deduction, payment shall be made by (i) any mode, including cash, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transmission or distribution lines at any time during the period beginning on 1st April, 1999 and ending on 31st March, 2012; (c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on 1st April, 2004 and ending on 31st March, 2012. It is proposed to amend the aforesaid clause so as to extend the time limit from 31st 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory outside India in addition to entering into agreement with foreign countries. It is proposed to insert a new sub-section (2A) in the aforesaid section 90 so as to provide that the provisions of newly inserted Chapter X-A shall apply even if such provisions are not beneficial to the assessee. It is further proposed to insert a new sub-section (4) in the aforesaid section so as to provide that an assessee, not being a resident, to whom 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 inconsisten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee, not being a resident, to whom the 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 specified territory outside India is obtained by him from the Government of that 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome is computed under section 92 having regard to arm s length price. 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 36 of the Bill seeks to amend section 92C of the Income-tax Act relating to computation of arm s length price. The existing provisions of sub-section (2) of the aforesaid section 92C provide that where more than one price is determined by 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in relation to the assessment year 2002-2003 and subsequent assessment years. It is also proposed to insert new sub-section (2B) to the aforesaid section so as to provide that nothing contained in sub-section (2A) shall empower the Assessing Officer either to assess or reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154 for any assessment year the proceedings of 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 92CC and 92CD in the Income-tax Act relating to advance pricing agreement and effect to advance pricing agreement. The aforesaid new section 92CC is proposed to provide that the Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the arm s length price, specifying the manner in which arm s length price is to be determined, in relation to an international transaction, to be entered into by that person. It is further proposed to provide 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich such agreement applies, such person shall furnish, within a period of three months from the end of the month in which the said agreement was entered into, a modified return in accordance with and limited to the agreement. It is further proposed to provide that save as otherwise provided in this section, all the other provisions of this Act shall apply accordingly as if the modified return is a return furnished under section 139. It is also proposed to provide that if the assessment or reassessment proceedings for 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 filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as one and same person, accommodating party may be disregarded; any accommodating or other party to an arrangement may be treated as one and the same person; and an arrangement may be looked through. The proposed section 100 provides that provisions of newly inserted Chapter X-A can be applied in alternative to or in addition to any other basis of determination of tax liability. The proposed section 101 provides for power to prescribe guidelines for application of provisions of newly inserted Chapter X-A. The proposed section 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 eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make reference of the said sub-clause (iiaa). This amendment will take effect from 1st July, 2012. Clause 43 of the Bill seeks to amend section 115BBA of the Income-tax Act relating to tax on non-resident sportsmen or sports associations. The existing provisions of section 115BBA provides for imposition of ten per cent. tax where the total income of an assessee being a sportsman (including an athlete) who is not citizen of India and is a non-resident, includes any income received or receivable by way of participation in India in any game (other 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 propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thirty per cent.; and (b) the amount of income-tax with which the assesse would have been chargeable had his total income being reduced by the amount of income referred to in clause (a) of the said sub-section. Sub-section (2) of the aforesaid new section provides that notwithstanding anything contained in the Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provisions of this Act in computing his income referred to in clause (a) of sub-section (1). 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility partnership 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 limited liability partnership and it shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent. It further provides that 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 included in Chapter VI-A under the heading C. Deductions in respect of certain incomes and deduction claimed under section 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 dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deductions in respect of certain incomes ; or section 10AA. Sub-section (2) of the aforesaid new section provides that the provisions of Chapter XII-BA shall not apply to an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, if the adjusted total income of such person does not exceed twenty lakh rupees. 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 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if it were income accrued, arisen to or received by such person from investment directly in the venture capital undertaking. The existing provisions of sub-section (2) of the aforesaid section provide that the person responsible for making payment of the income on behalf of a venture capital company or a venture capital fund and the venture capital company or venture capital fund shall furnish, within such time as may be prescribed, to the person receiving such income and to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving details of the nature of the income paid during 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund or venture capital company. This amendment will take effect from 1st July, 2012. Clause 55 of the Bill seeks to amend section 115VG of the Income-tax Act relating to computation of tonnage income. The existing Table in sub-section (3) of the aforesaid section provides for the amount of daily tonnage income of a qualifying ship. It is proposed to substitute the aforesaid Table so as to increase the amount of daily tonnage income of a qualifying ship. 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 56 of the Bill seeks to 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. It is proposed to insert or section 115JD after section115JAA in clause (v) of sub-section (1); sub-clause (e) of clause (i) of sub-section (1A) and clause (iv) of the Explanation to sub-section (1B) of the aforesaid section so as to provide that credit available to be set off in accordance with the provisions of section 115JD will also be taken into account under section 140A for the purposes of computing tax payable, and interest chargeable under sections 234A and 234B, before furnishing the return of income. 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 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), proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anel. The proposed sub-section (5) of the aforesaid new section provides that if, after hearing the assessee, the Commissioner is satisfied that it is not a fit case for invoking provisions of Chapter X-A, he may pass an order in writing with copy to the Assessing Officer and the assessee. The proposed sub-section (6) of the aforesaid new section provides that Approving Panel on receipt of reference from Commissioner shall issue such directions as it deems fit in respect of declaration of an arrangement as an impermissible avoidance arrangement. It may also provide in direction the previous year or years to which such direction shall apply. The proposed sub-section (7) of the aforesaid 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reference of section 153B also in the said sub-section. This amendment will take effect retrospectively from 1st October, 2009. The existing provisions of sub-section (8) of the aforesaid section 144C provide that the Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. It is proposed to insert an Explanation in the aforesaid sub-section so as to clarify that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the 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, notwithstandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. It is further proposed to insert a new sub-clause (ba) to the aforesaid Explanation, so as to include therein the case where the assessee has failed to furnish a report in respect of any international transaction which he was required under section 92E for the purposes of deemed cases where income chargeable to tax has escaped assessment under the aforesaid section. It is also proposed to insert a new clause (d) to Explanation 2 so as to provide that income shall be deemed to have escaped assessment where a person is found to have any asset (including financial interest in any entity) located outside India. The provisions 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid section, as respectively increased by three months. The existing provisions contained in Explanation 1 to the aforesaid section 153 provide that certain periods specified therein are to be excluded while computing the period of limitation laid down in the said section for completion of assessments and reassessments. It is proposed to amend clause (viii) of the aforesaid Explanation so as to extend the period specified therein from six months to one year. These amendments will take effect from 1st July, 2012. It is proposed to insert a new clause (ix) in Explanation 1 of the aforesaid section 153 so as to provide for exclusion of time period starting from receipt of reference by the Commissioner under sub-section (1) of newly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years. Clause 66 of the Bill seeks to amend section 153C of the Income-tax Act relating to assessment of income of any other person. It is proposed to insert a second proviso to the aforesaid section 153C so as to provide that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, 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 except in cases where any assessment or reassessment has abated. This amendment will take effect from 1st July, 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 word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take effect from 1st July, 2012. Clause 69 of the Bill seeks to amend section 193 of the Income-tax Act relating to interest on securities. Under the existing provisions contained in clause (v) of the aforesaid section 193, no tax is required to be deducted from any interest payable to an individual who is resident in India, on debentures issued by a company in which the public are substantially interested, if such debentures are listed on a recognised stock exchange in India; the interest is paid by the company by an account payee cheque; and the aggregate amount of interest payable by the company to such individual does not exceed two thousand and five hundred rupees. It is proposed to substitute the aforesaid clause so as to provide that no deduction of income tax shall be made 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The existing provisions contained in the aforesaid section 194LA provide that any person responsible for paying to a resident any sum being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land) shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent. of such sum as income-tax. However, the proviso to the aforesaid section provides that no tax will be required to be deducted where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified area . This amendment will take effect from 1st October, 2012. Clause 74 of the Bill seeks to insert a new section 194LC in the Income-tax Act, relating to income by way of interest from Indian company engaged in certain business. The proposed new section 194LC provides that where any income by way of interest is payable to a non-resident, not being a company or to a foreign company by a specified company, the person responsible for making the payment shall deduct income-tax thereon at the rate of five per cent. 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 a cheque or draft or by any other mode, whichever is earlier. It further provides that the interest shall be income by way of interest payable by the specified company 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 Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 194 or section 194A or section 194EE or section 194K in the case of an individual resident in India, who is of the age of sixty-five years or more at any time during the previous year, if such individual furnishes to the person responsible for paying any income of the nature referred to in the aforesaid sections, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. It is proposed to amend the aforesaid sub-section so as to reduce the qualifying age for an individual resident from sixty-five years to sixty years. This amendment will take effect from 1st July, 2012. Clause 77 of the Bill seeks to amend section 201 of the 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny sum chargeable under the provisions of this Act made by or on behalf of the Central Government or the Government of a State, the drawing and disbursing officer or any other person, by whatever name called, responsible for crediting, or as the case may be, paying such sum shall be the person responsible for paying within the meaning of definition under this section. This amendment will take effect from 1st July, 2012. Clause 79 of the Bill seeks to amend section 206C of the Income-tax Act relating to the profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. The existing provisions of sub-section (1) of the aforesaid section 206C provide that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income by such buyer or licensee or lessee. It is also proposed to amend the Explanation to the aforesaid section so as to provide the meaning of buyer with respect to sub-section (1) and sub-section (1D) of the said section and meaning of jewellery. It is also proposed to insert a new clause in the aforesaid Explanation so as to define the expression accountant . It is also proposed to insert sub-section (1D) in clause (c) of the aforesaid Explanation. These amendments will take effect from 1st July, 2012. Clause 80 of the Bill seeks to amend section 207 of the Income-tax Act relating to liability for payment of advance tax. The existing provisions contained in the aforesaid section 207 provide that the tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deduction, from the Indian income-tax payable, allowed under section 91; and any 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 (vi) of 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 tax on total income. 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 83 of the Bill seeks to amend section 234B of the Income-tax Act relating to interest for defaults in payment of advance tax. The existing provisions of sub-section (1) of the aforesaid section 234B provides that the assessee is liable to pay simple interest at the rate of one per cent. for every month or part of the month on 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 deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing provisions of sub-section (1) of the aforesaid section 234D provides that where any refund is granted to the assessee under sub-section (1) of section 143 and no refund is due on regular assessment, or the amount refunded under sub-section (1) of section 143 exceeds the amount refundable on regular assessment, then, the assessee shall be liable to pay simple interest at the rate of one-half per cent. on the whole or the excess amount so refunded for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The Explanation to the aforesaid section provides that where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of the said section. It is proposed to insert a new Explanation so as to clarify 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 Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a person shall be deemed to have a substantial interest in a business or profession, if (A) in a case where the business or profession is carried on by a company, such person is at any time during the previous year, the beneficial owner of shares (not being share entitled to a fixed rate of dividend, whether with or without a right to participate in profits) carrying not less than twenty per cent. Of the voting power; and (B) in any other case, such person is, at any time during the previous year beneficially entitled to not less than twenty per cent. of the profits of such business or profession. It is proposed to amend the aforesaid clause (b) so as to provide that the person shall be deemed to have substantial interest, if such person is beneficial owner on the date of search. This amendment will take effect from 1st July, 2012. Clause 88 of the Bill seeks to amend section 245Q of the Income-tax Act relating to 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal to the Commissioner (Appeals). The proposed amendment is of consequential nature. The existing provisions contained in sub-section (1) of the aforesaid section 246A provide that an appeal shall lie to the Commissioner (Appeals) against the orders specified in said sub-section (1). It is proposed to amend sub-clause (B) of clause (j) of aforesaid sub-section (1) so as to provide that an appeal against the order of penalty passed under section 271AAB shall also lie before the Commissioner (Appeals). This amendment will take effect from 1st July, 2012. Clause 90 of the Bill seeks to amend section 253 of the Income-tax Act relating to appeals to the Appellate Tribunal. The existing provisions contained in clause (ba) of sub-section (1) of the aforesaid section 253 provide that any assessee aggrieved by an order passed by an Assessing Officer under sub-section (3) of section 143 or section 147 in pursuance of the directions of the Dispute Resolution 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment to section 253. This amendment will take effect from 1st July, 2012. Clause 92 of the Bill seeks to amend section 271 of the Income-tax Act relating to failure to furnish return, comply with notice, concealment of income, etc. The existing provision of Explanation 7 of the aforesaid section 271 provides that where in the case of an assessee who has entered into an international transaction, any amount is added or disallowed in computing the total income under sub-section (4) of section 92C, the amount so added or disallowed shall be deemed to represent the income in respect of which particulars have been concealed or inaccurate particulars have been furnished unless the assessee proves to the satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner that the price charged or paid in such transaction was computed in good faith and with due diligence in accordance with the provisions contained in section 92C and the manner prescribed 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 ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the assessment year 2013-2014 and subsequent assessment years. Clause 95 of the Bill seeks to amend section 271AAA of the Income-tax Act relating to penalty where search has been initiated. The existing provision contained in sub-section (1) of the aforesaid section 271AAA provides that in a case where the search has been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall be liable to 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. It is proposed to amend sub-section (1) of the aforesaid section so as to provide that the provisions of the said section shall be applicable in respect of cases where a search has been initiated under section 132 on or after the 1st day of June, 2007 but before 1st day of July, 2012. This amendment will take effect retrospectively from 1st April, 2012. Clause 96 of the Bill seeks to insert a new 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act relating to penalty for failure to furnish information or document under section 92D. The existing provision of the aforesaid section 271G provides that if any person who has entered into an international transaction fails to furnish any such information or document as required by sub-section (3) of section 92D, the Assessing Officer or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent. of the value of the international transaction for each such failure. It is proposed to amend the aforesaid section to include therein the reference of specified domestic transaction so as to provide in the cases where the assessee fails to furnish any document or information as required by section 92D, a penalty of two per cent. of the value of the specified domestic transaction shall be levied in such cases. 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 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 propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. This amendment will take effect from 1st July, 2012. Clause 100 of the Bill seeks to amend section 273B of the Income-tax Act relating to penalty not to be imposed in certain cases. The existing provisions of the aforesaid section provide that no penalty shall be imposable on the person or the assessee, for failure referred to in sections mentioned therein if he proves that there was reasonable cause for the said failure. It is proposed to amend the aforesaid section so as to insert there the reference of newly inserted section 271H. The proposed amendment is consequential in nature. This amendment will take effect from 1st July, 2012. Clause 101 of the Bill seeks to amend section 276C of the Income-tax Act relating to wilful attempt to evade tax, etc. The existing provisions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r case, with 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 if the failure had not been discovered, 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 103 of the Bill seeks to amend section 277 of the Income-tax Act relating to false statement in verification, etc. The existing provisions of the aforesaid section 277 provide that if a person makes a statement in any verification under the Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable in a case where the amount of tax which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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, penalty or interest 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 106 of the Bill seeks to insert new sections 280A, 280B, 280C and section 280D in the Income-tax Act relating to Special Courts, offences triable by Special Court, trial of offences as summons case and application of the Code of Criminal Procedure, 1973 to proceedings before Special Court. The proposed new section 280A provides that the Central Government, in consultation with the Chief Justice of the High Court, may, for trial of offences punishable under Chapter-XXII, by notification, designate one or more courts of Magistrates of the first class as Special Court for such area or areas or for such cases or class or group of cases as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that every person appointed as a Public Prosecutor or a Special Public Prosecutor shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 and the provisions of that Code shall have effect accordingly. These amendments will take effect from 1st July, 2012. Clause 107 of the Bill seeks to insert section 292CC in the Income-tax Act relating to authorisation and assessment in case of search or requisition. It is proposed to insert aforesaid new section 292CC so as to provide that notwithstanding anything contained in this Act, it shall not be necessary to issue an authorisation under section 132 or make a requisition under section 132A separately in the name of each person. It is further proposed that where 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 mention of such names of more than one person on such authorisation or requisition shall not be deemed to construe that it was issued in the name of an association of persons or body of individuals consisting of such persons. It is also proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
