TMI BlogIncome-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 285AX X X X Extracts X X X X X X X X Extracts X X X X ..... income in certain cases. 11UB.Fair market value of assets in certain cases.- (1) The fair market value of asset, tangible or intangible, as on the specified date, held 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: Provided that where the share is held as part of the shareholding which confers, directly or indirectly, any right of management or control in relation to the aforesaid company, the fair market value of the share shall be determined in accordance with the following formula, namely :- Fair market value = (A+B) /C Where; A= the market capitalisation of the company on the basis of observable price of its shares quoted on the recognised stock exchange; B= the book value of liabilities of the company as on the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all the assets of a foreign company or an entity shall be determined in the following manner, namely:- (i) where the transfer of share of, or interest in, the foreign company or entity is between the persons who are not connected persons, the fair market value of all the assets owned by the foreign company or the entity as on the specified date, for the purpose of such transfer, shall be determined in accordance with the following formula, namely:- Fair market value of all assets = A+B Where; A = Market capitalisation of the foreign company or entity computed on the basis of the full value of consideration 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 assets= A+B Where; A = Market capitalisation of the foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-rule (6) includes any valuer recognised for undertaking similar valuation by the Government 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 pursuing the profession of accountancy individually or is a valuer then,- (i) his annual receipt in the year preceding the year in which valuation is undertaken, from the exercise of profession, exceeds one crore rupees ; and (ii) he has professional experience of not less than ten years. (ii) connected person shall have the meaning as assigned to it in clause (4) of section 102 ; (iii) right of management or control shall include the right to appoint majority of the directors or to control the management or policy decision exercisable by a person or persons acting individually or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is the date referred to in sub-clause(ii) of clause (d) of Explanation 6 to clause (i) of subsection (1) of section 9 , the balance sheet means the balance sheet as drawn up on the specified date and certified by an accountant. 11UC. Determination of Income attributable to assets in India. -(1)The income from transfer outside India of a share of, or interest in, a company or an entity referred to in clause (i) of subsection (1) of section 9, attributable to assets located in India,shall be determined in accordance with the following formula, namely: A 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, computed in accordance with rule 11UB: Provided that if the transfer or of the share of, or interest in, the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India of the group 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 through, or in, the Indian concern for two years prior to the date of transfer of the share or interest ; (vi) information relating to the decision or implementation process of the overall arrangement of the transfer; (vii) information in respect of the foreign company or entity and its subsidiaries, relating to, - (a) the business operation; (b) personnel; (c) finance and properties; (d) internal and external audit or the valuation report, if any, forming basis of the consideration in respect of share, or the interest; (viii) the asset valuation report and other supporting evidence to determine the place of location of the share or interest bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiary of, any other company or entity . . 4. In the said rules, in Appendix II , - (a) after Form No. 3CS, the following Form shall be inserted, namely: - FORM NO. 3CT [See rule 11UC] Income attributable to assets located in India Under section 9 of the Income-tax Act, 1961 * I/We have examined the accounts and records of M/s** (name and address of the assessee) having PAN ..being transferor of the share of , or interest in, . . (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 respect of the assessment year the income deemed to accrue or arise in India to the assessee on transfer of share/interest* in the above mentioned company/entity* isRs ... which has been worked out on the basis of the details given in the Annexure to this form. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Residential 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 entity and ultimate holding entity, - (A) Immediate holding entity: - (a) Name (b) Country of incorporation (c) Country of which it is tax resident (B) Intermediate holding entity: - (a) Name (b) Country of incorporation (c) Country of which it is tax resident (C) Ultimate holding entity: - (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st transferred including holding percentage of transferor during the period of 12 months preceding the transfer (v). Value of total assets of the company or the entity (vi). Details 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 12 months preceding the transfer (v). Details of transferee alongwith address (vi). Whether Form 49Dwas furnished in respect of the transaction If yes date of furnishing Form 49D ___/__/__ If No ,- (a) reason for not furnishing the Form 49D (b) furnish the following details: (i). Holding chart in respect of shares of, or interest in, the company or entity before and after the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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