9911796707
TMI BlogTax avoidance through distribution by business trusts to its unit holdersX X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure Investment Trust (InVIT) [commonly referred to as business trusts]. The special regime was introduced in order to address the challenges of financing and investment in infrastructure. The business trusts invest in special purpose vehicles (SPV) through equity or debt instruments. 2. Keeping in mind the business structure, the special taxation regime under section 115UA of the Act, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (23FC) or clause (23FCA) of section 10 of the Act i.e., is either rental income of the REIT or interest or dividend received by the business trust from the SPV, then, such distributed income or part thereof shall be deemed to be income of such unit holder. 5. It has been noticed in certain cases that business trusts distribute sums to their unit holders which are categorised in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 8. In view of the above, it is proposed to make such sum received by unit holder taxable in his hands. However, provision is also proposed for a situation when the sum received by unit holder represents redemption of unit held by him. Hence it is proposed to amend the Act by way of,- (i) insertion of clause (xii) in sub-section (2) of section 56 of the Act to provide that income chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, shall not apply in respect of any sum, as referred to in clause (xii) of sub-section (2) of section 56 of the Act, received by a unit holder from a business trust; (iv) insertion of sub-clause (xviic) in clause (24) of section 2 of the Act to provide that income shall include any sum referred to in clause (xii) of sub-section (2) of section 56 of the Act. 9. These amendments will take effec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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