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Draft notification under section 115JG (1) of the Income-tax Act, 1961 in respect of conversion of Indian branch of foreign bank into Indian subsidiary company

News and Press Release - Dated:- 17-11-2017 - F. No. 370133/34/2017-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ******* New Delhi, Dated 17th November, 2017 Sub: -reg. Finance Act, 2012 inserted a new Chapter XII-BB consisting of section 115JG in the Income-tax Act, 1961 (the Act) which contains Special provisions relating to conversion of Indian Branch of a foreign bank into a subsidiary company . Section 115JG of the Act inter-alia provides t .....

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ption etc. as may be specified in the notification. Accordingly, it is proposed to issue notification under section 115JG (1) of the Act specifying the conditions to be fulfilled by the conversion and also specifying modifications, exceptions, in applicability of certain provisions of the Act to such conversion. The Draft of the said notification is given below. The stakeholders are requested to send their comments/suggestions on the draft notification by 30-11-2017 to the email address (dirtpl2 .....

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rred to in sub-section (1) of section 115JG of the Act, the provisions of clause (i) and clause (ii) of sub-section (1) of section 115JG of the Act shall be applicable to such conversion, if following conditions are fulfilled,- (a) all the assets and liabilities of the Indian branch immediately before conversion become the assets and liabilities of the Indian subsidiary company; (b) the foreign company referred to in sub-section (1) of section 115JG of the Act or its nominees hold the whole of t .....

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computation of income in the cases of foreign company and Indian subsidiary company shall apply with following exceptions, modifications and adaptation,- (a) for the purposes of allowance of depreciation under section 32 of the Act, the aggregate deduction, in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, being intangible as .....

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depreciation of the Indian subsidiary company for the purpose of previous year in which conversion was effected and provisions of the Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. Explanation.- For the purposes of this clause,- (I) accumulated loss means so much of the loss of the Indian branch before conversion into Indian subsidiary company under the head Profits and gains of business or profession (not being a loss sustained in a spe .....

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urposes of clause (1) of section 43, the actual cost of the block of assets in the case of the Indian subsidiary company shall be the written down value of the block of assets as in the case of the Indian branch on the date of conversion of the Indian branch into the Indian subsidiary company; (d) the actual cost of any capital asset on which deduction has been allowed or is allowable to the assessee under section 35AD of the Act, shall be treated as 'nil' for the purposes of clause (1) .....

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f the Indian branch before conversion into Indian subsidiary company which such Indian branch would have been entitled to carry forward and set off under the provisions of section 115JAA of the Act, if the conversion had not taken place; (f) where the capital asset became the property of the Indian subsidiary company as a result of conversion of Indian branch, the cost of acquisition of the asset for the purposes of computation of capital gains shall be deemed to be the cost for which the Indian .....

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