Need for proper co-ordination between various departments of Ministry of Finance in the matter of scrutiny of claims. - Income Tax - 1013/CBDT

INSTRUCTION NO. 1013/CBDT Dated : September 30, 1976 The Public Accounts Committee, in Chapter VII of their 176th Report, has stressed the need for proper co-ordination between the various departments of Ministry of Finance in the matter of scrutiny of claims towards head office expenses by the foreign concerns. In their 187th Report, the Public Accounts Committee, in para 3.37, have stated that the Reserve Bank of India, as the guardian of country's foreign exchange resources could and should play a more responsible and dynamic role in this regard. The Committee have further observed as under:- "The Committee, therefore, desire that the adequacy of the existing procedures should be reviewed immediately and necessary measures taken to plug all loopholes in relation to operation by unscrupulous foreign investors." 2. The matter has since been discussed in an inter-departmental meeting. It has been decided that the Reserve Bank of India would undertake independent scrutiny of the claims regarding head office expenses irrespective of the fact whether the Income-tax Department have accepted the claim or not. If the scrutiny by the Reserve Bank of India shows that certain head office expenses had been allowed by the Department which should not have been allowed, necessary remedial action should be taken. The Board further desire that wherever the view of the Reserve Bank are available in a case where the assessment is still pending, the views of the Reserve Bank of India should be taken into consideration while framing the income-tax assessments.