Rule 21AJA - Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Act - Income-tax Rules, 1962

1 [ 21AJA. Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Act- (1) For the purposes of clause (4D) of section 10 of the Act, income of specified fund attributable to the investment division of an offshore banking unit shall be computed in accordance with the following formula, namely:- A+B+C+D where , A = any income accrued or arisen to, or received by the eligible investment division as a result of transfer of a capital asset referred to in clause (viiab) of section 47 of the Act held by it, on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in convertible foreign exchange; B= any income accrued or arisen to, or received by the eligible investment division as a result of transfer of securities held by it (other than shares in a company resident in India); C= any income accrued or arisen to, or received by the eligible investment division from securities held by it and issued by a non-resident (not being a permanent establishment of a non-resident in India) and where such income otherwise does not accrue or arise in India; D = any income accrued or arisen to, or received by the eligible investment division from a securitization trust which is chargeable under the head profits and gains of business or profession . Explanation: Any expenditure incurred for the purposes of making or earning income referred to in items A or B or C or D shall not be allowed as deduction from income from any other activity or source under any provision of the Act, irrespective of the fact that such expenditure has not been allowed as deduction against income referred to in items A or B or C or D, as the case may be. (2) The eligible investment division shall furnish an annual statement of exempt income in Form No. 10-IK electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein. (3) For the purposes of item (II) of sub-clause (ii) of clause (c) of the Explanation to clause (4D) of section 10 of the Act, an investment division of an offshore banking unit shall fulfill the following conditions, namely:- (a) it shall maintain separate accounts for the registered investment division reflecting the true and fair accounts of all transactions relating to the investment division and which shall ensure that direct and indirect expenses relating to the incomes referred to in sub-rule (1) and other incomes are properly recorded, accounted for, and apportioned to these activities; (b) it shall get the accounts, referred to in clause (a), audited by an accountant before the specified date and such accountant shall furnish by that date the report of such audit in Form No. 10-IL electronically under digital signature, which is duly verified in the manner indicated therein; (c) it shall maintain proper documentation in respect of,- (i) inbound remittance for buying and selling the investments; and (ii) the use of inward remittance made to India; (d) it shall maintain bank statement of all accounts of the registered investment division,; (e) it shall maintain contract notes relating to purchase and sale of securities by the registered investment division; and (f) it shall maintain a statement of securities issued by the custodian. 2 [ (3A) The income of a specified fund attributable to an eligible investment division shall not be exempt under clause (4D) of section 10 unless it furnishes the annual statement of exempt income in Form No. 10-IK and the report of audit in Form 10-IL in accordance with the provisions of sub-rule (2). ] (4) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems), as the case may be, shall,- (i) specify the procedures, formats and standards for ensuring secure capture and transmission of data; and (ii) be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to Form No 10-IK and Form No 10-IL. Explanation. - For the purpose of this rule, the expressions,- (a) accountant shall have the same meaning as assigned to it in the Explanation below subsection (2) of section 288 of the Act; (b) due date shall have the same meaning as assigned to it in the Explanation 2 to sub-section (1) of section 139 of the Act; (c) eligible investment division shall mean a registered investment division which fulfills the conditions as prescribed under item II of sub-clause (ii) of clause (c) of the Explanation to clause (4D) of section 10 of the Act; (d) investment division of an offshore banking unit shall have the same meaning as assigned to it in clause (aa) of the Explanation to clause (4D) of section 10 of the Act; (e) registered investment division shall mean an investment division of an offshore banking unit which fulfills the condition specified under item (I) of sub-clause (ii) of clause (c) of the Explanation to clause (4D) of section 10 of the Act; (f) securities shall have the same meaning as assigned to it in clause (bb) of the Explanation to clause (4D) of section 10 of the Act; (g) specified date , in relation to the accounts of the registered investment division of the previous year relevant to an assessment year, means a date one month prior to the due date. (h) specified fund shall have the same meaning as assigned to it in clause (c) of the Explanation to clause (4D) of section 10 of the Act. ] *************** NOTES:- 1. Inserted vide NOTIFICATION NO. 6/2022 dated 14-01-2022 w.e.f. 01-04-2022 2. Inserted vide NOTIFICATION NO. 64/2022 dated 16-06-2022