Body corporate u/s 2(17) - Income Tax - 606/CBDT

INSTRUCTION NO. 606/CBDT Dated : August 31, 1973 Section(s) Referred: 2(17)(iv) Statute: Income - Tax Act, 1961 Section 2(17) of the I.T.Act was amended by the finance (No.2) Act, 1971 w.e.f 1-4-71. The scope of the amendment has been explained in paragraphs 29 and 30 of the Board's Circular No.72 of 1971. In this connection, the following further points should be noted. 2(a) U/s. 2(17)(ii), any body corporate incorporated by or under the laws of a country outside India is to be treated as a company for any assessment year commencing on or after 1-4-71 and no declaration from the Board to that effect is required. b) A declaration by a general or special order of the Board will be required in the following types of cases:- i) a body corporate incorporated by or under the laws of a country outside India, if it seeks to be assessed as a company for any assessment year prior to the assessment year 1971-72; and ii) an institution, association or body, whether incorporated or not and whether Indian or non-Indian, if it seeks to be assessed as a company for any assessment year whether commencing before 1-4-71 or on or after that date. 3. The requests from persons specified in sub-para 2(b) above for being declared as 'company' should be examined by the ITOs in the light of the criteria laid down in Board's Circular No.50 dated 28-11-70 and reports sent to the Board through the CsIT. Such reports should specify, inter alia, the earliest assessment year from which the applicant-assessee has become liable to tax in India and the various sources of income. Sometimes, applications are made for declaration as a company only for a few specified assessment years. In such cases, it has to be ensured that the status of company sought only for some years is not used as a means of avoiding the payment of higher tax that would otherwise be payable for the other years in the status of a company. If some assessments have already been completed in the status of a non-company, details should be given of the tax demand already raised and the variation which will result therein if the assessee is declared as a company. 4. Copies of the Memorandum and Articles of Association and the certificate of incorporation in the case of a company and similar documents in the case of other institutions. etc should also be obtained from the assessee-applicant and forwarded to the Board along with the report. 5. The proviso to sec.2(17) authorises the Board to declare an institution, association or body to be a company even retrospectively in respect of the assessment years commencing before 1st April,1971. The Board has been advised that this power can be exercised by it only in respect of the assessment year 1962-63 and the subsequent assessment years. A retrospective declaration as a company cannot be made u/s.2(17) of the I.T.Act in respect of any assessment year prior to the assessment year 1962-63.