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TMI BlogClarifications on the Income Declaration Scheme, 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... e, following clarifications are issued.- Question No.1: In certain cases, the undisclosed income might be reflected in creditors or other liability which may be fictitious. Whether in such cases, the assessee can disclose only such fictitious liability as it may not be possible to link it to any specific asset or investment? Answer: In a situation where loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance sheet but are fictitious in nature, and such liabilities cannot be directly linked to acquisition of a particular asset in the balance sheet, then such fictitious liabilities can be disclosed under the Scheme as such without linking the same with the investment in any specific ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue as on 1st June, 2016 is taxed under IDS, and such amount will be treated as cost of acquisition at the time of future sale of concerned asset, whether such treatment shall affect the character of the asset as long term or short term? Answer: The issue was earlier considered and it was clarified vide Circular No.17 dated 20.05.2016 that in such cases period of holding shall be deemed to begin from 01.06.2016 as the asset has been revalued on such date. However, considering the representation received from various stakeholders and the fact that this may lead to complications in calculation of capital gain at the time of sale of asset which was partly funded from undisclosed income now declared under the Scheme, the matter has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the remaining part the fair market value of the property shall be determined based on the provisions of rule 3(1)(d) of the Rules without taking into effect the proviso to the said rule. The said situation is illustrated as below:- Suppose, Mr. X purchased a piece of land in year 2004-05 for ₹ 10 lakh, however the stamp duty value was ₹ 15 lakh. Thereafter, in the period 2005-06 to 2007-08, Mr. X constructed a two storeyed house on the said land. The amount to be declared in respect of the said property shall be (A + B) where A= Value of land (if the assessee opts for valuation on the basis of indexation) shall be Rs.15 lakh X cost inflation index of 2016-17 / cost inflation index of 2004-05 B= ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e information of cash deposits made in bank as a consequent to declaration made under the Scheme shall be picked up by FIU or reported to the income-tax department? Answer : It is clarified that no adverse action shall be taken against the declarant by FIU or the income-tax department solely on the basis of the information regarding cash deposit made consequent to the declaration under the Scheme. Question No.9: In case a trust or institution registered under section 12A of the Income-tax Act files declaration under the Scheme, whether the registration under section 12A shall be cancelled on the basis of such declaration? Answer: No, the registration under section 12A of the Income-tax Act shall not be cancelled s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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