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TMI BlogNotes on clauses - Income-taxX X X X Extracts X X X X X X X X Extracts X X X X ..... ates for deduction of tax at source during the financial year 2012-2013 from income other than Salaries Part II of the First Schedule to the Bill specifies the rates at which income-tax is to be deducted at source during the financial year 2012-2013 from income other than Salaries . The rates are the same, as those specified in Part II of the First Schedule to the Finance Act, 2011 for the purposes of deduction of income-tax at source during the financial year 2011-2012. In view of the proposed insertion of new section 194LC, prescribing special rate of tax deduction at five per cent. in case of certain interest payments to non-residents by a specified Indian company engaged in prescribed business of infrastructure development, such income shall not be subject to deduction of tax at source at the rate of twenty per cent. which would otherwise have applied. The amount of tax so deducted shall be increased by a surcharge in the case of every company other than a domestic company at the rate of two per cent. No surcharge will be levied in any other case. Rates for deduction of tax at source from Salaries , computation of advance tax and charging of income tax in special cases during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rates of income-tax in the case of companies. In both the cases of domestic companies and companies other than domestic companies, the rate of tax will continue to be the same as that specified for the assessment year 2012-2013. Surcharge in the case of domestic companies having income above one crore rupees shall continue to be levied at the rate of five per cent. In case of companies other than domestic companies, the surcharge shall continue to be levied at the rate of two per cent. Marginal relief will be provided. In all other cases (including sections 115JB, 115-O, 115R, etc.) the surcharge will continue to be applicable at the rate of five per cent. Education Cess at the rate of two per cent. and Secondary and Higher Education Cess at the rate of one per cent. Shall continue to be levied in all cases covered under Part III of the First Schedule. In the cases covered under Part II of the First Schedule, there will be no levy of Education Cess and Secondary and Higher Education Cess on tax deducted or collected at source in the case of domestic company and any other person who is resident in India. Both the cesses would continue to apply on tax deducted at source in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. These amendments will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to the assessment year 1962-1963 and subsequent assessment years. It is also proposed to insert a new Explanation 4 in clause (vi) of the aforesaid sub-section so as to clarify that the transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred. It is also proposed to insert a new Explanation 5 in the aforesaid clause so as to clarify that the royalty includes and has always included consideration in respect of any right, property or information, whether or not (a) the possession or control of such right, property or information is with the payer; (b) such right, property or information is used directly by the payer; (c) the location ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital company or venture capital fund from investment in a venture capital undertaking does not form part of its total income. The definitions of venture capital company , venture capital fund and venture capital undertaking are provided in Explanation 1 to clause (23FB). Venture capital undertaking has been defined in clause (c) of the said Explanation to mean such domestic company whose shares are not listed in a recognised stock exchange in India and which is engaged in certain businesses or industries specified in said clause (c). It is proposed to amend clause (c) of Explanation 1 to the aforesaid clause so as to define the venture capital undertaking as the venture capital undertaking referred to in the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992. This amendment will take effect from 1st April, 2013, and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. It is proposed to insert a new clause (48) in the aforesaid section so as to provide that any income of a foreign company received in India in Indian currency on account of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not being an article or thing specified in the list of Eleventh Schedule, incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to two times of the expenditure so incurred. However, no deduction is allowable under the said sub-section in respect of such expenditure incurred after 31st March, 2012. It is proposed to amend clause (5) of the aforesaid sub-section (2AB) so as to allow deduction in respect of expenditure incurred up to 31st March, 2017. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years up to assessment year 2017-2018. Clause 9 of the Bill seeks to amend section 35AD of the Income-tax Act relating to deduction in respect of expenditure on specified business. The provisions of sub-section (1) of the aforesaid section 35AD, inter alia, allow one hundred per cent. deduction in respect of any capital expenditure incurred, other than expenditure incurred on the acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tension project and expenditure on skill development project, respectively. Sub-section (1) of the proposed new section 35CCC provides that where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the aforesaid section provides that where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provisions of the Income-tax Act for the same or any other assessment year. Sub-section (1) of the proposed new section 35CCD provides that where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any skill development project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Sub-section (2) of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm s length price as defined in clause (ii) of section 92F. The existing provisions of clause (b) of the aforesaid sub-section defines the persons referred to in clause (a). Sub-clause (iv) of the said clause defines the persons in a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, relative of such director, partner or member. It is proposed to amend the aforesaid clause (b) so as to include therein any other company carrying on a business or profession in which the company referred to in the aforesaid sub-clause has substantial interest. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 13 of the Bill seeks to amend section 44AB of the Income-tax Act relating to audit of accounts of certain persons carrying on business or profession. The existing provisions in clause (a) of the aforesaid section 44AB mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provisions in clause (b) of the Explanation to the aforesaid section 44AD defines the term eligible business to mean any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE and whose total turnover or gross receipts in the previous year does not exceed sixty lakh rupees for the purpose of computing profits and gains of business on presumptive basis. It is proposed to amend the aforesaid Explanation so as to enhance the said limit from sixty lakh rupees to one crore rupees. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 15 of the Bill seeks to amend section 47 of the Income-tax Act relating to transactions not regarded as transfer. Under the existing provisions contained in sub-clause (a) of clause (vii) of the aforesaid section 47, in case of a merger, any transfer of capital asset being shares, held by a shareholder in the amalgamating company, shall not be regarded as transfer, if (a) such transfer is made in consideration of the allotment to him of any share or shares in the amalgamated company, and (b) the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of the consideration received or accruing as a result of such transfer. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 18 of the Bill seeks to amend section 54B of the Income tax Act relating to capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. The existing provisions contained in sub-section (1) of the aforesaid section 54B provide that if an assessee transfers land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, giving rise to capital gain and purchases any other land for being used for agricultural purposes, within two years after the date of such transfer, the capital gain is exempt to the extent such gain has been utilised for the aforesaid purpose. It is proposed to amend the aforesaid sub-section so as to extend the benefit of exemption to the assessee being a Hindu undivided family. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , already utilised by the company for the purchase of the new asset together with the amount deposited under sub-section (2) shall be deemed to be the cost of the new asset. However, if the amount so deposited is not utilised, wholly or partly, for the purchase of the new asset within the period specified in sub-section (1), then, the amount by which the amount of capital gain arising from the transfer of the residential property not charged under section 45 on the basis of the cost of the new asset, exceeds the amount that would not have been so charged had the amount actually utilisesd for the purchase of the new asset within the period specified in sub-section (1), been the cost of the new asset, shall be charged under section 45 as income of the assessee of the previous year in which the period of one year from the date of the subscription in equity shares by the assessee expires and the company shall be entitled to withdraw such amount in accordance with the scheme. It is also proposed to provide that if the equity shares of the company or the new asset acquired by the company are sold or otherwise transferred within a period of five years from the date of their acquisition, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources . The second proviso to the said clause provides that the provisions of this clause shall not apply to any sum of money or any property received from any relative. Clause (e) of Explanation to second proviso of the said clause provides that the definition of relative shall have the same meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of the said section. It is proposed to substitute the aforesaid clause (e) so as to provide that the definition of relative shall also include any sum or property received by a Hindu undivided family from its members apart from the persons referred to in the Explanation to clause (vi) of sub-section (2) of the said section. This amendment will take effect retrospectively from 1st October, 2009. It is proposed to insert a new clause (viib) in the aforesaid sub-section so as to provide that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in computing total income. The existing provision of the Explanation to sub-section (6) of the aforesaid section 80A provides the definition of expression market value in relation to any goods or services sold or supplied and in relation to goods or services acquired. It is proposed to amend the aforesaid Explanation so as to provide that market value in relation to any goods or services sold, supplied or acquired, in case of a transaction being a domestic transaction referred to in section 92BA shall be the arm s length price as defined in clause (ii) of section 92F. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 24 of the Bill seeks to amend section 80C of the Income-tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. The existing provisions of sub-section (3) of the aforesaid section 80C provide that sub-section (2) shall apply only to so much of any premium or other payment made on an insurance policy other than a contract for a deferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years. Clause 26 of the Bill seeks to amend section 80DDB of the Income-tax Act relating to deduction in respect of medical treatment, etc. The existing provisions of the aforesaid section 80DDB provide for a deduction up to forty thousand rupees for medical treatment of a specified disease or ailment in case of an individual or his dependant. In case where the amount actually paid is in respect of any person who is a senior citizen, the deduction is allowed up to sixty thousand rupees in place of forty thousand rupees. Clause (iv) of the Explanation to the aforesaid section provides that a senior citizen means an individual resident in India who is of the age of sixty five years or more at any time during the relevant previous year. It is proposed to amend the aforesaid Explanation so as to reduce the age from sixty-five years to sixty years for qualifying as a senior citizen. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 27 of the Bill seeks to amend section 80G of the Income-tax Act relating to deduction in respect of donations to certain funds, charitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in clause (ii) of section 92F, where the transfer of such goods or services is specified domestic transaction referred to in section 92BA within the definition of market value in relation to any goods or services. The existing provisions of sub-section (10) of the aforesaid section provide that where it appears to the Assessing Officer, owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer shall, in computing the profits and gains of such eligible business for the purposes of the deduction under this section, take the amount of profits as may be reasonably deemed to have been derived therefrom. It is proposed to insert a new proviso to the aforesaid sub-section so as to provide that in case the arrangement mentioned in the sub-section involves a specified domestic transaction referred to in section 92BA, and the amount of profits from such trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of that country or specified territory. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. The existing sub-section (3) of the aforesaid section provides that any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf. It is proposed to insert an Explanation after Explanation 2 in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined in the agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and such notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force. This amendment will take effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise requires and it is not inconsistent with the provisions of the Income-tax Act or the said agreement. It is proposed to insert an Explanation in the aforesaid section so as to provide that for the removal of doubts, it is hereby declared that any term used in any agreement, where such agreement is entered into under sub-section (1) and not defined under the agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force. This amendment will take effect retrospectively from 1st June, 2006. Clause 33 of the Bill seeks to amend section 92 of the Income-tax Act relating to computation of income from international transaction having regard to arm s length price. The existing provisions of the aforesaid section 92 provide that income arising from an international transaction shall be computed having regard to arm s length price. It is proposed to amend the aforesaid section to insert a new sub-section (2A) so as to provide that any allowance for an expenditure or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be notified by the Central Government in this behalf, the price at which the international transaction has actually been undertaken shall be deemed to be the arm s length price. The provisions contained in the first proviso to sub-section (2) of section 92C, as it stood before its amendment by the Finance (No. 2) Act, 2009 provides that where more than one price is determined by the most appropriate method, the arm s length price shall be taken to be the arithmetical mean of such prices, or, at the option of the assessee, a price which may vary from the arithmetical mean by an amount not exceeding five per cent. of such arithmetical mean. The existing provisions of second proviso to sub-section (2) of the aforesaid section 92C provides that the variation between the arm s length price so determined and price at which the international transaction has actually been undertaken does not exceed such percentage of latter as may be notified by the Central Government in the Official Gazette in this behalf, the price at which the international transaction has actually been undertaken shall be deemed to be the arm s length price. It is proposed to amend the aforesaid second proviso so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2C, 92D and 92E under the aforesaid Chapter provide for meaning of international transaction, maintenance and keeping of information and document by persons entering into an international transaction and report from an accountant to be furnished by person entering into international transaction. It is proposed to amend the aforesaid sections to substitute the words international transaction or specified domestic transaction , for the words international transaction wherever they occur so as to extend the provisions of the aforesaid sections to the specified domestic transaction. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 38 of the Bill seeks to amend section 92CA of the Income-tax Act relating to reference to Transfer Pricing Officer. The existing provisions of the aforesaid section 92CA provide for reference to Transfer Pricing Officer for computation of arm s length price in relation to an international transaction. It is proposed to amend sub-sections (1), (2) and (3) of the aforesaid section to substitute the expression international transaction or speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance pricing agreement has been entered into, notwithstanding anything contained in section 92C or section 92CA, shall be determined in accordance with the advance pricing agreement so entered. It is also proposed to provide that the agreement referred to in sub-section (1) shall be valid for such period as specified in the agreement which in no case shall exceed five consecutive previous years. It is also proposed to provide that the advance pricing agreement entered into shall be binding on the person in whose case, and in respect of the transaction in relation to which, the agreement has been entered into and on the Commissioner, and the income-tax authorities subordinate to him, in respect of the said person and the said transaction. However, the agreement shall not be binding if there is a change in law or facts having bearing on the agreement so entered. It is also proposed to provide that the Board may with the approval of the Central Government, by an order, declare an agreement to be void ab initio, if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts. It is also proposed to provide that upon declaring the agreement void a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant assessment year having regard to and in accordance with the agreement. It is also proposed to provide that the where the assessment or reassessment proceedings for an assessment year relevant to the previous year to which the agreement applies are pending on the date of filing of modified return in accordance with the provision of sub-section (1), the Assessing Officer shall proceed to complete the assessment or reassessment proceedings in accordance with the agreement taking into consideration the modified return so furnished. It is also proposed to provide that notwithstanding anything contained in section 153 or section 153B or section 144C the order of assessment, reassessment or re-computation of total income under sub-section (2) shall be passed within a period of one year from the end of the financial year in which the modified return under sub-section (1) is furnished and the period of limitation as provided in section 153 or section 153B or section 144C, for completion of pending assessment or reassessment proceedings referred to in sub-section (3) shall be extended by a period of twelve months. It is also proposed to define the expressions agreement and the deemed pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in sub-section (1) of the aforesaid section 111A, a special rate of tax of fifteen per cent. is provided on short-term capital gain arising from the transfer of a certain capital asset, being an equity share in a company or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax. The proviso to the aforesaid sub-section provides that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of ten per cent. It is proposed to amend the aforesaid proviso of the said sub-section so as to increase the tax on the balance of such short-term capital gains to fifteen per cent. instead of ten per cent. This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable under section 115BB) or sport played in India, the income-tax payable by the assessee on such income shall be the aggregate of the amount of income tax calculated on income at the rate of ten per cent. It is proposed to insert a new clause (c) in sub-section (1) of the aforesaid section so as to include any income received or receivable by an entertainer, who is not a citizen of India and is a non-resident, from his performance in India and also to increase the tax on income referred to in this section from ten per cent. To twenty per cent. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 44 of the Bill seeks to amend section 115BBD of the Income-tax Act relating to tax on certain dividends received from foreign companies. The existing provisions of aforesaid section 115BBD provide that where the total income of an assessee, being an Indian company, for the previous year relevant to the assessment year beginning on the 1st day of April, 2012, includes any income by way of dividends declared, distributed or paid by a subsidiary foreign company, the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Part-II and Part-III of Schedule VI to the Companies Act. It is proposed to amend the aforesaid sub-section so as to provide that every assessee, (a) being a company, other than a company to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956 is applicable, shall, for the purposes of the aforesaid section, prepare its profits and loss account for the relevant previous year in accordance with the provisions of Part II of Schedule VI to the Companies Act, 1956; or (b) being a company, to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956 is applicable, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of the Act governing such company. Explanation 1 to the aforesaid section provides book profit means the net profit as shown in the profit and loss account for the relevant previous year under sub-section (2) of the aforesaid section as increased by the amount specified in clause (a) to clause (i). It is proposed to amend the aforesaid Explanation to insert a new clause after clause (i) so as to provide that the book profit shall be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid provision, the adjusted total income shall be the total income before giving effect to the Chapter XII-BA as increased by deductions claimed under any section (other than section 80P) included in Chapter VI-A under the heading C. Deductions in respect of certain incomes and deduction claimed under section 10AA. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 49 of the Bill seeks to amend section 115JD of the Income-tax Act relating to tax credit for alternate minimum tax. The existing provisions of sub-section (1) of the aforesaid section 115JD provide that the credit for tax paid by limited liability partnership under section 115JC shall be the excess of the alternate minimum tax paid over the regular income-tax payable. It is proposed to substitute a person under section 115JC shall be allowed to him in place of a limited liability partnership under section 115JC shall be allowed to it used in the aforesaid section so as to provide that the credit for tax paid by a person under section 115JC shall be allowed to him in accordance with the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in place of a limited liability partnership on its total income used in clause (d) thereof. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 53 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies. The existing provisions in sub-section (1A) of the aforesaid section 115-O provide that the amount of dividends referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if (a) such amount of dividend is received from its subsidiary; (b) the subsidiary has paid tax under this section on such dividend; and (c) the domestic company is not a subsidiary of any other company. The said sub-section also provides that the same amount of dividend shall not be reduced more than once. It is proposed to amend clause (i) of aforesaid sub-section (1A) so as to provide that in case domestic company receives during the year any dividend from any of its subsidiary and the subsidiary has paid dividend distribution tax, which is pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and to the prescribed income-tax authority. The existing provisions of sub-section (3) of the aforesaid section provide that the income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by, or had accrued to, the venture capital company or the venture capital fund, as the case may be, during the previous year. It is proposed to amend the aforesaid sub-section (3) so as to provide that the income paid or credited by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person referred to in sub-section (1) as it had been received by, or had accrued or arisen to, the venture capital company or the venture capital fund, as the case may be, during the previous year. The existing provisions of sub-section (4) of the aforesaid section provide that the provisions of Chapter XII-D or Chapter XII-E or Chapter XVII-B shall not apply to the income paid by a venture capital company or venture capital fund under the Chapter Special Provisions R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d verified in the prescribed manner and setting forth such other particulars as may be prescribed. It is proposed to amend the aforesaid sub-section by inserting a proviso after the third proviso so as to provide that a person, being a resident, who is not required to furnish a return under this sub-section and who during the previous year has any asset (including any financial interest in any entity) located outside India or signing authority in any account located outside India, shall furnish, on or before the due date, a return in respect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed. The existing provisions of clause (a) of Explanation 2 to sub-section (1) of the aforesaid section 139 provides the due date for filing return of income, in the case of company other than a company referred to in clause (aa); or a person other than a company whose accounts are required to be audited under the Income-tax Act or under any other law for the time being in force; or a working partner of a firm whose accounts are required to be audited under the Income-tax Act or under any other law for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary, where a notice has been issued to the assessee under sub-section (2). This amendment will take effect from 1st July, 2012. It is further proposed to insert a new proviso to sub-section (3) of the aforesaid section so as to provide that notwithstanding anything contained in the first and the second proviso, no effect shall be given by the Assessing Officer to the provisions of clause (23C) of section 10 in case of a trust or institution for a previous year, if the provisions of first proviso to clause (15) of section 2 become applicable in the case of such person in such previous year whether or not the approval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded. This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-2010 and subsequent assessment years. Clause 59 of the Bill seeks to insert a new section 144BA in the Income-tax Act relating to reference to Commissioner in certain cases. The proposed sub-section (1) of the aforesaid new section 144BA provides that the Assessing Officer, if at any stage of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall be issued according to majority opinion. The proposed sub-section (10) of the aforesaid new section provides that every direction issued by Approving Panel or Commissioner shall be binding on Assessing Officer and Assessing Officer shall complete the proceeding in accordance with such directions and provisions of newly inserted Chapter X-A. The proposed sub-section (11) of the aforesaid new section provides that if direction is applicable to any other previous year other than in respect of which reference was made, then, while completing assessment or reassessment proceedings for such other previous years, Assessing Officer shall be bound by directions and provisions of Chapter X-A and fresh reference on the issue would not be required. The proposed sub-section (12) of the aforesaid new section provides that assessment or reassessment order where provisions of Chapter X-A are invoked shall be passed by the Assessing Officer only with prior approval of the Commissioner. The proposed sub-section (13) of the aforesaid new section provides the limitation of six months from end of month of receipt of reference, by approving panel for issue of directions. The proposed sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. It is proposed to amend the aforesaid sub-section so as to give the reference of section 153B also in the said sub-section. This amendment will take effect retrospectively from 1st October, 2009. It is proposed to insert a new sub-section (14A) in the aforesaid section 144C so as to provide that provisions of section144C shall not apply to an assessment or reassessment order passed by the Assessing Officer with the approval of the Commissioner in accordance with sub-section (12) of newly inserted section 144BA. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. Clause 61 of the Bill seeks to amend section 147 of the Income-tax Act relating to income escaping assessment. The existing provisions of the aforesaid section 147 enable the Assessing Officer to assess or re-assess income which has escaped assessment for any assessment year, after recording reasons for doing so. It is further provided that once an assessment is reopened, any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of income escaping assessment is six years where the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. It is proposed to insert a new clause (c) to the aforesaid sub-section so as to provide that if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. The existing provisions of sub-section (3) of the aforesaid section 149 provide that if the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or re-computation to be made in pursuance of the notice is to be made by him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year. It is proposed to amend the aforesaid sub-section to substitute the words two years with the words six years so as to provide that the notice shall not be issued after the expi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt may by rules made by it and published in the Official Gazette, (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. This amendment will take effect from 1st July, 2012. Clause 65 of the Bill seeks to amend section 153B of the Income-tax Act relating to time limit for completion of assessment under section 153A. The existing provisions of sub-section (1) of section 153B provide for time limit for completion of assessment and reassessment by the Assessing Officer. It is proposed to amend the aforesaid sub-section so as to revise the time limits specified in the aforesaid section for completion of assessments or reassessment in case of search or requisition. The revised time limits shall be the time limits wherever specified under the aforesaid section, as respectively increased by three months. The existing provisions contained in the Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the words the assessee or the deductor . The existing provisions of sub-section (5) of the aforesaid section provide that subject to the provisions of section 241, where any such amendment has the effect of reducing the assessment, the Assessing Officer shall make any refund which may be due to such assessee. It is proposed to substitute the aforesaid sub-section so as to provide that where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor, the Assessing Officer shall make any refund which may be due to such assessee or the deductor. It is further proposed to amend sub-section (6) of the aforesaid section so as to provide that where any amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor, the Assessing Officer shall serve on the assessee or the deductor, as the case may be, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly. It is also proposed to amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to non-resident sportsmen or sports associations. The existing provisions in section 194E provide that where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) who is a non-citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. It is proposed to amend the aforesaid section to make it also applicable to a non-resident entertainer who is a non-citizen and to increase the tax deduction at source on income referred to in the section from ten per cent. to twenty per cent. This amendment will take effect from 1st July, 2012. Clause 71 of the Bill seeks to amend section 194J of the Income-tax Act relating to fees for professional or technical services. The existing provisions in sub-section (1) of the aforesaid section 194J provide that a person, not being a individual or a Hindu undivided family, who is responsible for paying to a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land) shall deduct an amount equal to one per cent. of such sum as income-tax at the time of credit of such sum to the account of transferor or at the time of payment of such sum in cash or by issue of cheque or by draft or by any other mode, whichever is earlier. It is further proposed to provide that no deduction shall be made where the consideration paid or payable for the transfer of such property is less than fifty lakh rupees in case such property is situated in a specified area or is less than twenty lakh rupees in case such property is situated in any area other than the specified area. It is also proposed to provide that if the consideration paid or payable for the transfer of such property is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of transfer of such property, the value so adopted or assessed or assessable shall, for the purposes of the aforesaid sub-section (1) or sub-section (2) be deemed to be the consideration paid or payable for the transfer of such property. It is also proposed to provide that where any document required to be registered under claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act relating to other sums. It is proposed to provide that sub-section (1) of the aforesaid section 195 providing the rate of deduction in respect of interest payment shall not apply to interest referred to in sections 194LB and 194LC for which separate rate of deduction is provided. This amendment will take effect retrospectively from 1st April, 2012. It is further proposed to insert a new Explanation in sub-section (1) of the aforesaid section 195 so as to clarify that the obligation to comply with sub-section (1) and make deduction thereunder applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident whether or not the non-resident person has a residence or place of business or business connection in India or any other presence in any manner whatsoever in India. This amendment will take effect retrospectively from 1st April, 1962 and will, accordingly, apply in relation to assessment year 1962-1963 and subsequent assessment years. It is also proposed to insert a new sub-section (7) in the aforesaid section so as to provide that notwithstanding anything contained in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed. It is further proposed to insert a new proviso to sub-section (1A) of the aforesaid section so as to provide that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. This amendment will take effect from 1st July, 2012. The existing provisions of sub-section (3) of the aforesaid section 201 provide that no order shall be made under sub-section (1) of the said section deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of two years from the end of the financial year in a case in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide that every person, being a seller, who receives any amount in cash as consideration for sale of bullion or jewellery, shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent. of sale consideration as income-tax, if the sale consideration exceeds two hundred thousand rupees. It is also proposed to amend sub-sections (2), (3) and (9) of the aforesaid section which are consequential in nature. It is also proposed to insert a new proviso to sub-section (6A) of the aforesaid section so as to provide that any person, other than a person referred to in sub-section (1D), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee (i) has furnished his return of income under section 139; (ii) has taken into account such amount for computing income in such return of income; and (iii) has paid the tax due on the income de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 209, inter alia, provides that where advance tax is payable, the assesse shall himself compute the advance tax payable on his current income at the rates in force in the financial year and deposit the same whether or not he has been earlier assessed to tax or not. It further provides that in all the cases the tax calculated at the rates in force in the financial year shall be reduced by the amount deductible at source or collectible at source from any income which has been taken into account in the computation of current income. It is proposed to amend clause (d) of sub-section (1) of the aforesaid section 209 so as to insert a proviso to provide that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by person responsible for collecting tax without collection of such tax. This amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of the aforesaid section so as to provide for reduction of tax credit allowed to be set off under section 115JD from the assessed tax. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-2014 and subsequent assessment years. Clause 84 of the Bill seeks to amend section 234C of the Income-tax Act relating to interest for deferment of advance tax. The existing provisions of sub-section (1) of the aforesaid section 234C provides that the assesse is liable to pay simple interest at the rate of one per cent. per month on the amount of shortfall from the specified percentages of the tax due on the returned income. The Explanation to the said section defines the tax due on the returned income to mean the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on 1st April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of any tax deductible or collectible at source; any relief of tax allowed under section 90; any relief of tax allowed under section 90A; any deduction from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be. (3) The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C. (4) The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. This amendment will take effect from 1st July, 2012. Clause 87 of the Bill seeks to amend section 245C of the Income-tax Act relating to application for settlement of cases. The existing provisions of clause (ia) of the proviso to sub-section (1) of the aforesaid section 245C provide that no application shall be made unless, in a case where the applicant is related to the person referred to in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 147, 150, etc. It is proposed to include the reference of deductor after the word assessee in sub-section (1) and in clause (a) of the said sub-section so as to enable him to file an appeal under the aforesaid section. It is further proposed to amend clause (a) of sub-section (1) so as to provide that the deductor may appeal to the Commissioner (Appeals) against an intimation issued under sub-section (1) of section 200A. These amendments will take effect from 1st July, 2012. It is proposed to amend clauses (a), (b), (ba) and (c) of sub-section (1) of the aforesaid section 246A to provide that an order of assessment or reassessment passed with approval of Commissioner under sub-section (12) of newly inserted section 144BA or any order under section 154 or section 155 passed in relation to such an order shall not be appealable before Commissioner (Appeals). These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. The existing provisions contained in clause (ba) of sub-section (1) of the aforesaid section 246A provide that any assessee aggrieved by an order of the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 154 or section 155 passed in respect of such an order against which appeal lies before the Appellate Tribunal. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years. It is also proposed to insert a new sub-section (2A) in the aforesaid section so as to provide that the Commissioner may, if he objects to any direction issued by the Dispute Resolution Panel under sub-section (5) of section 144C in respect of any objection filed on or after the 1st day of July, 2012, by the assessee under sub-section (2) of section 144C in pursuance of which the Assessing Officer has passed an order completing the assessment or reassessment, direct the Assessing Officer to appeal to the Appellate Tribunal against the order. It is also proposed to insert a new sub-section (3A) in the aforesaid section so as to provide that every appeal under sub-section (2A) shall be filed within sixty days of the date on which the order sought to be appealed against is passed by the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel under sub-section (5) of section 144C. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer or the Commissioner (Appeals) may direct such person shall pay, by way of penalty, a sum equal to two per cent. of the value of each international transaction entered into by such person. It is proposed to substitute the aforesaid section so as to provide the levy of penalty under the said section also in case where such person fails to report such transaction which he is required to do so; or maintains or furnishes an incorrect information or document. This amendment will take effect from 1st July, 2012. Clause 94 of the Bill seeks to amend section 271AA of the Income-tax Act (as substituted by clause 93 of this Bill) relating to penalty for failure to keep and maintain information and document in respect of international transaction. The existing provision of the aforesaid section 271AA provides that if any person fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of section 92D, the Assessing Officer or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent. of the value of each international transaction entered into by such person. It is proposed to am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein. It is further proposed to provide that the assessee shall pay by way of penalty, in addition to tax, if any payable by him, a sum computed at the rate of twenty per cent. of the undisclosed income of the specified previous year, if such assessee (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; (ii) on or before the specified date, (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income. It is also proposed to provide that the assessee shall pay by way of penalty, in addition to tax, if any payable by him, a sum which shall not be less than thirty per cent. but which shall not exceed ninety per cent. of the undisclosed income of the specified previous year, if it is not covered by clauses (a) and (b). It is also proposed to provide that no penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide that notwithstanding anything contained in the foregoing provisions of this section, no penalty shall be levied for the failure referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C before the expiry of one year from the time prescribed for delivering or causing to be delivered such statement. It is also proposed to provide that the provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1 st day of July, 2012. This amendment will take effect from 1st July, 2012. Clause 99 of the Bill seeks to amend section 272A of the Income-tax Act relating to penalty for failure to answer questions, sign statments, furnish information, return or statement, allow inspectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from three years to two years. The existing provisions of sub-section (2) of the aforesaid section provides that if a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of the Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in discretion of the court, also with fine. It is proposed to amend the aforesaid sub-section so as to reduce the maximum imprisonment from three years to two years. These amendments will take effect from 1st July, 2012. Clause 102 of the Bill seeks to amend section 276CC of the Income-tax Act relating to failure to furnish return of income. The existing provisions of the aforesaid section 276CC provide that if a person wilfully fails to furnish in due time the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or the return of income which he is required to furnish under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son (the second person) to evade any tax or interest or penalty chargeable and imposable under this Act, makes or causes to be made any entry or statement which is false, and which the first person either knows to be false or does not believe to be true, in any books of account or other document relevant to or useful in any proceeding against the first person or the second person, under the Act, the first person shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. It is proposed to amend the aforesaid section so as to reduce the maximum imprisonment from three years to two years. This amendment will take effect from 1st July, 2012. Clause 105 of the Bill seeks to amend section 278 of the Income-tax Act relating to abetment of false return, etc. The existing provisions of the aforesaid section 278 provide that if any person abets or induces in any manner another person to make and deliver an account or make a statement or declaration relating to any income or any fringe benefit chargeable to tax which is false and which he either knows to be false or does not believe to be true or to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he offence has been committed. However, a court competent to try offences under section 292, (i) which has been designated as a Special Court under this section, shall continue to try the offences before it or offences arising under this Act after such designation; (ii) which has not been designated as a Special Court may continue to try such offence pending before it till its disposal; or (b) a Special Court may, upon a complaint made by an authority authorised in this behalf under the Income-tax Act take cognizance of the offence for which the accused is committed for trial. The proposed new section 280C provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Special Court, shall try, an offence under Chapter-XXII punishable with imprisonment not exceeding two years or with fine or with both, as a summons case, and the provisions of the Code of Criminal Procedure, 1973 as applicable in the case of trial of summons case, shall apply accordingly. The proposed new section 280D provides that the provisions of the Code of Criminal Procedure, 1973 (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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