Section 7 - Amendment of section 10. - Finance Act, 2020

Amendment of section 10. 7. In section 10 of the Income-tax Act, (I) in clause (23C), (A) for the first and second provisos, the following provisos shall be substituted with effect from the 1st day of June, 2020, namely:- Provided that the exemption to the fund or trust or institution or university or other educational institution or hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) under the respective sub-clauses shall not be available to it unless such fund or trust or institution or university or other educational institution or hospital or other medical institution makes an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval, (i) where such fund or trust or institution or university or other educational institution or hospital or other medical institution is approved under the second proviso [as it stood immediately before its amendment by the Finance Act, 2020], within three months from the date on which this clause has come into force; (ii) where such fund or trust or institution or university or other educational institution or hospital or other medical institution is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where such fund or trust or institution or university or other educational institution or hospital or other medical institution has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; (iv) in any other case, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought, and the said fund or trust or institution or university or other educational institution or hospital or other medical institution is approved under the second proviso: Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall,- (i) where the application is made under clause (i) of the said proviso, pass an order in writing granting approval to it for a period of five years; (ii) where the application is made under clause (ii) or clause (iii) of the said proviso, (a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about- (A) the genuineness of activities of such fund or trust or institution or university or other educational institution or hospital or other medical institution; and (B) the compliance of such requirements of any other law for the time being in force by it as are material for the purpose of achieving its objects; and (b) after satisfying himself about the objects and the genuineness of its activities under item (A), and compliance of the requirements under item (B), of sub-clause (a), (A) pass an order in writing granting approval to it for a period of five years; (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its approval after affording it a reasonable opportunity of being heard; (iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting approval to it provisionally for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the fund or trust or institution or university or other educational institution or hospital or other medical institution: ; (B) after the third proviso, the following Explanation shall be inserted, namely:- Explanation .-For the removal of doubts, it is hereby clarified that for the purposes of this proviso, the income of the funds or trust or institution or any university or other educational institution or any hospital or other medical institution, shall not include income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution: ; (C) for the eighth and ninth provisos, the following provisos shall be substituted with effect from the 1st day of June, 2020 namely:- Provided also that any approval granted under the second proviso shall apply in relation to the income of the fund or trust or institution or university or other educational institution or hospital or other medical institution, (i) where the application is made under clause (i) of the first proviso, from the assessment year from which approval was earlier granted to it; (ii) where the application is made under clause (iii) of the first proviso, from the first of the assessment years for which it was provisionally approved; (iii) in any other case, from the assessment year immediately following the financial year in which such application is made: Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the second proviso shall be passed, in such form and manner as may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received: ; (D) in the tenth proviso, for the words and figures section 288 and furnish along with the return of income for the relevant assessment year , the words, figures and letters section 288 before the specified date referred to in section 44AB and furnish by that date shall be substituted; (E) in the twelfth proviso, for the words, brackets, figures and letters in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), to any trust or institution registered under section 12AA, being voluntary contribution made with a specific direction that they shall form part of the corpus of the trust or institution, the words, brackets, figures and letters in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), to any other fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) or trust or institution registered under section 12AA, being voluntary contribution made with a specific direction that they shall form part of the corpus, shall be substituted; (F) with effect from the 1st day of June, 2020,- (a) the sixteenth proviso shall be omitted; (b) for the eighteenth proviso, the following proviso shall be substituted, namely: Provided also that all applications made under the first proviso [as it stood before its amendment by the Finance Act, 2020] pending before the Principal Commissioner or Commissioner, on which no order has been passed before the date on which the first proviso has come into force, shall be deemed to be an application made under clause (iv) of the first proviso on that date: ; (II) with effect from the 1st day of April, 2021, (a) in clause (23D), in the opening portion, the words, figures and letter subject to the provisions of Chapter XII-E, shall be omitted; (b) in clause (23FC), in sub-clause (b), for the words, brackets, figures and letter referred to in sub-section (7) of section 115-O , the words received or receivable from a special purpose vehicle shall be substituted; (c) in clause (23FD), for the words, brackets, letters and figures in sub-clause (a) of clause (23FC) , the words, brackets, letters and figures in sub-clause (a) of clause (23FC) or sub-clause (b) of said clause (in a case where the special purpose vehicle has exercised the option under section 115BAA) shall be substituted; (d) after clause (23FD), the following clause shall be inserted, namely: (23FE) any income of a specified person in the nature of dividend, interest or long-term capital gains arising from an investment made by it in India, whether in the form of debt or share capital or unit, if the investment (i) is made on or after the 1st day of April, 2020 but on or before the 31st day of March, 2024; (ii) is held for at least three years; and (iii) is in- (a) a business trust referred to in sub-clause (i) of clause (13A) of section 2; or (b) a company or enterprise or an entity carrying on the business of developing, or operating and maintaining, or developing, operating and maintaining any infrastructure facility as defined in the Explanation to clause (i) of sub-section (4) of section 80-IA or such other business as the Central Government may, by notification in the Official Gazette, specify in this behalf; or (c) a Category-I or Category-II Alternative Investment Fund regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992,(15 of 1992.) having hundred per cent. investment in one or more of the company or enterprise or entity referred to in item (b): Provided that if any difficulty arises regarding interpretation or implementation of the provisions of this clause, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty: Provided further that every guideline issued under the first proviso, shall be laid before each House of Parliament and shall be binding on the income-tax authority and the specified person: Provided also that where any income has not been included in the total income of the specified person due to the provisions of this clause, and subsequently during any previous year the specified person fails to satisfy any of the conditions of this clause so that the said income would not have been eligible for such non-inclusion, such income shall be chargeable to income-tax as the income of the specified person of that previous year. Explanation .-For the purposes of this clause, specified person means (a) a wholly owned subsidiary of the Abu Dhabi Investment Authority which (i) is a resident of the United Arab Emirates; and (ii) makes investment, directly or indirectly, out of the fund owned by the Government of the United Arab Emirates; (b) a sovereign wealth fund which satisfies the following conditions, namely: (i) it is wholly owned and controlled, directly or indirectly, by the Government of a foreign country; (ii) it is set up and regulated under the law of such foreign country; (iii) the earnings of the said fund are credited either to the account of the Government of that foreign country or to any other account designated by that Government so that no portion of the earnings inures any benefit to any private person; (iv) the asset of the said fund vests in the Government of such foreign country upon dissolution; (v) it does not undertake any commercial activity whether within or outside India; and (vi) it is specified by the Central Government, by notification in the Official Gazette, for this purpose; (c) a pension fund, which- (i) is created or established under the law of a foreign country including the laws made by any of its political constituents being a province, state or local body, by whatever name called; (ii) is not liable to tax in such foreign country; (iii) satisfies such other conditions as may be prescribed; and (iv) is specified by the Central Government, by notification in the Official Gazette, for this purpose; ; (e) in clause (34), after the proviso, the following proviso shall be inserted, namely: Provided further that nothing contained in this clause shall apply to any income by way of dividend received on or after the 1st day of April, 2020 other than the dividend on which tax under section 115-O and section 115BBDA, wherever applicable, has been paid; ; (f) in clause (35), after the proviso, the following proviso shall be inserted, namely: Provided further that nothing contained in this clause shall apply to any income in respect of units received on or after the 1st day of April, 2020; ; (g) clause (45) shall be omitted; (III) after clause (48B), the following clause shall be inserted, namely: (48C) any income accruing or arising to the Indian Strategic Petroleum Reserves Limited, being a wholly owned subsidiary of the Oil Industry Development Board under the Ministry of Petroleum and Natural Gas, as a result of arrangement for replenishment of crude oil stored in its storage facility in pursuance of directions of the Central Government in this behalf: Provided that nothing contained in this clause shall apply to an arrangement, if the crude oil is not replenished in the storage facility within three years from the end of the financial year in which the crude oil was removed from the storage facility for the first time; ; (IV) in clause (50), with effect from the 1st day of April, 2021, for the words comes into force , the words, figures and letters comes into force or arising from any e-commerce supply or services made or provided or facilitated on or after the 1st day of April, 2021 shall be substituted.