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Income-tax (19th Amendment), Rules, 2016 - prescribes new rule for - (i) Fair market value of assets in certain cases - (ii) Determination of Income attributable to assets in India - (iii) Information or documents to be furnished under section 285A

Income Tax - 55/2016 - Dated:- 28-6-2016 - MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION NO. 55/2016 New Delhi, the 28th June, 2016 INCOME-TAX S.O. 2226(E).-In exercise of the powers conferred by section 9 and section 285A, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: - 1. (1) These rules may be called the Income-tax .....

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eld directly or indirectly by a company or an entity registered or incorporated outside India ( hereafter referred to as foreign company or entity ), for the purposes of clause (i) of sub-section (1) of section 9, shall be computed in accordance with the provisions of this rule. (2) Where the asset is a share of an Indian company listed on a recognised stock exchange on the specified date, the fair market value of the share shall be the observable price of such share on the stock exchange: Provi .....

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n the specified date; C= the total number of outstanding shares: Provided further that where, on the specified date, the share is listed on more than one recognised stock exchange, the observable price of the share shall be computed with reference to the recognised stock exchange which records the highest volume of trading in the share during the period considered for determining the price. (3) Where the asset is a share of an Indian company not listed on a recognised stock exchange on the speci .....

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value on the specified date of such firm or association of persons,shall be determined by a merchant banker or an accountant in accordance with any internationally accepted valuation methodology as increased by the liability, if any, considered in such determination ; (ii) the portion of the value computed in clause (i) as is equal to the amount of its capital shall be allocated among its partners or members in the proportion in which capital has been contributed by them and the residue of the .....

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irm or the association of persons, as the case may be. (5) The fair market value of the asset other than those referred to in sub-rules (2), (3) and (4) shall be the price it would fetch if sold in the open market on the specified date as determined by a merchant banker or an accountant as increased by the liability, if any, considered in such determination. (6) The fair market value of all the assets of a foreign company or an entity shall be determined in the following manner, namely:- (i) whe .....

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ion for transfer of the share or interest; B = book value of the liabilities of the company or the entity as on the specified date as certified by a merchant banker or an accountant; (ii) in any other case, if, - (a) the share of the foreign company or entity is listed on a stock exchange on the specified date, the fair market value of all the assets owned by the foreign company or the entity shall be determined in accordance with the following formula, namely:- Fair market value of all the asse .....

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h records the highest volume of trading in the share during the period considered for determining the price; (b) the share in the foreign company or entity is not listed on a stock exchange on the specified date, the value of all the assets owned by the foreign company or the entity shall be determined in accordance with the following formula, namely :- Fair market value of all the assets = A+B Where; A = fair market value of the foreign company or the entity as on the specified date as determin .....

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rdance with the applicable laws and all the provisions of this rule and rules 11UC and 114DB shall apply accordingly. (8) For determining the fair market value of any asset located in India, being a share of an Indian company or interest in a partnership firm or association of persons,all the assets and business operations of the said company or partnership firm or association of persons shall be taken into account irrespective of whether the assets or business operations are located in India or .....

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vernment of the country where the foreign company or the entity is registered or incorporated or any of its agencies, who fulfils the following conditions, namely :- (a) if he is a member or partner in any entity engaged in rendering accountancy or valuation services then,- (i) the entity or its affiliates has presence in more than two countries; and (ii) the annual receipt of the entity in the year preceding the year in which valuation is undertaken exceeds ten crore rupees; (b) if he is pursui .....

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the management or policy decision exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of shareholding or management rights or shareholders agreements or voting agreements or in any other manner; (iv) telegraphic transfer buying rate shall have the meaning as assigned to it in the Explanation to rule 26; (v) observable price in respect of a share quoted on a stock exchange shall be the higher of the following:- (a) the average of the .....

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of equity shares or members interest and the general reserves and surplus and security premium related to the paid up capital . (vii) specified date shall have the meaning as assigned to it in clause (d) of Explanation 6 to clause (i) of subsection (1) of section 9; (viii) the terms merchant banker and recognised stock exchange shall have the meaning as assigned to them in rule 11U; (ix) balance sheet ,- (a) in relation to an Indian company, means the balance-sheet of such company (including th .....

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company or the entity is registered or incorporated: Provided that where the balance-sheet as on the specified date is not drawn up,pending finalisation of accounts,as mentioned in clauses (a) and (b) , the balance sheet shall mean an interim balance-sheet drawn up as on the specified date and approved by the board of directors of the company or an equivalent body in case of any other entity: Provided further that where the specified date is the date referred to in sub-clause(ii) of clause (d) o .....

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x B/C Where; A = Income from the transfer of the share of, or interest in,the company or the entity computed in accordance with the provisions of the Act, as if, such share or interest is located in India; B = Fair Market Value of assets located in India as on the specified date, from which the share or interest referred to in A derives its value substantially, computed in accordance with rule 11UB; C = Fair Market Value of all the assets of the company or the entity as on the specified date, c .....

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ubstantially from assets located in India, shall obtain and furnish along with the return of income a report in Form No.3CT duly signed and verified by an accountant providing the basis of the apportionment in accordance with the formula and certifying that the income attributable to assets located in India has been correctly computed. . 3. In the said rules, after rule 114DA, following rule shall be inserted, namely: - 114DB. Information or documents to be furnished under section 285A.-(1) Ever .....

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a (hereafter referred to as foreign company or entity ) referred to in Explanation 5 to clause (i) of sub-section (1) of section 9 has taken place: Provided that where the transaction in respect of the share or the interest has the effect of directly or indirectly transferring the rights of management or control in relation to the Indian concern, the information shall be furnished in the said Form within ninety days of the transaction. (3) The Indian concern shall maintain the following alongwit .....

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up of which the Indian concern is a constituent ; (iii) the holding structure of the shares of, or the interest in, the foreign company or entity before and after the transfer; (iv) any transfer contract or agreement entered into in respect of the share of, or interest in, any foreign company or entity that holds any asset in India through, or in, the Indian concern; (v) financial and accounting statements of the foreign company or entity which directly or indirectly holds the assets in India th .....

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share, or the interest; (viii) the asset valuation report and other supporting evidence to determine the place of location of the share or interest being transferred; (ix) the details of payment of tax outside India, which relates to the transfer of the share or interest; (x) the valuation report in respect of Indian asset and total assets duly certified by a merchant banker or accountant with supporting evidence; (xi) documents which are issued in connection with the transactions under the acco .....

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ined in this sub-rule shall have effect if the designated Indian concern fails to furnish the information in accordance with the provisions of this rule. (5) The Principal Director General of Income-tax (Systems) or Director General Income-tax (Systems), as the case may be, shall specify the procedure for electronically filing of Form No. 49D and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the information so furnish .....

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r an entity that has controlling interest in another company or entity and is itself controlled by, or is subsidiary of, another company or entity; (iv) immediate holding company or entity means the company or the entity that directly maintains the controlling interest in the Indian concern; (v) ultimate holding company or entity means a company or an entity that has ultimate control of the Indian concern directly or indirectly and such company or entity is not itself controlled by, or is subsid .....

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hellip;………. . (name of company or entity incorporated outside India) # refer red to in Explanation 5 to clause ( i ) of sub-section (1) of section 9 during the previous year ended on …………. . * I/We have obtained all the information and explanations which to the best of my/our*knowledge and belief were necessary for the purposes of as certaining the income of the said assessee at tribute able to the assets located in India . * I/We certify that in .....

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articulars given in the Annexure are true and correct. Date . Signed ‡Accountant Membership No. ______ Notes : 1. *Delete which ever is not applicable. 2. **Here given ameand address. 3. ‡This report is to be given by- an accountant as defines in the Explanation below sub-section (2) of section 288. 4. # if transfer is of shares of, or interest in, more than one company or entity in a previous year, details to be given in respect of each such company or entity. 5. Where any of the .....

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p;.. 3. Value of assets located in India from which the share or interest derives its value (company/ entity wise details): Rs……………. 4. Value of global assets of the company or the entity( company/entity wise details) : Rs…………… 5. Income attributable to assets located in India( company/ entity wise breakup and aggregate)Rs…………. 6. Details of the method employed for arriving at the value of assets in .....

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status 4. Permanent Account Number 5. Previous Year 6. Assessment Year 7. Whether the Indian concern has been designated to provide information on behalf of the group: If yes,- (i) provide details of all the Indian concerns which are constituent of the group : (a) Name (b) PAN (c) Address (ii) if the information is being furnished on behalf of any Indian concern(s) details of such concern (s) : (a) Name (b) PAN (c) Address Yes/No 8. Details of immediate holding entity, intermediate holding enti .....

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eld in, or through, the Indian concern; (b) If yes, give details of the company (ies) or entity (ies). Yes/No PART B [ To be filled into report the transaction resulting in transfer of right of management or control] 10. Whether any transaction in respect of share of, or interest in, any company or entity referred to in 9 has the effect of transferring the right of management or control over the Indian concern. Yes/No If yes give following details: - (i). Name of the company or entity (ii). Deta .....

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. Basis of determining the location of share or interest being transferred (ix). Value and breakup of assets of the Indian concern immediately before the date of transfer (x). Basis of valuation of assets of the company or entity (xi). Details of supporting documents in respect of items (viii) and (x) PART C [To be filled for reporting the information in respect of transfer of share/interest during the previous year ] 11. (a) Whether share of, or interest in, the company or entity referred to in .....

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s of transferee along with address Yes/No 12. Whether any transaction in respect of shares of, or interest in, any company or entity referred to in 9 has the effect of transferring right of management or control over the Indian concern. If yes give details. (i). Name of the company or entity (ii). Details of transactions including consideration (iii). Name of transferor alongwith address (iv). percentage share/interest transferred including holding percentage of transferor during the period of 1 .....

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of, or interest in, the company or entity (iv). Value and breakup of assets of the Indian concern immediately before the date of transfer Yes/No Yes/No 13. Value and breakup of assets of the Indian concern, - (i). at the beginning of the year (ii). at the end of the year 14. Basis of valuation of assets referred to in items 11(v), 12(b) (iii) and (iv) and 13. 15. Details of supporting documents in respect of items 11(v), 12(b)(iii) and (iv) and 13. Signature of Authorised Signatory Name … .....

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