Amendments – FA 2017 CA Final 2018 · 2019-12-15 · Amendments – FA 2017 CA Final 2018 CA.JustinRaj.S JUSTIN’S INSTITUTE OF TAXATION 12. thScope of section 35AD expanded to

Amendments – FA 2017 CA Final 2018

CA.JustinRaj.S JUSTIN’S INSTITUTE OF TAXATION

AMENDMENTS AT A GLANCE

Basics

1. Section 9 – Income deem to accrue or arise in India

Explanation 5 of section 9(1)(i) provides that an asset or capital asset being any share or

interest in a company or entity registered or incorporated 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.

New provisos are inserted to explanation 5, so as to clarify that above deemed provision not

applicable to,

a) An asset or capital asset, which is held by non-resident by way of investment,

directly or indirectly, in a FII for an assessment year beginning on or after 01-04-

2012 but before 01-04-2015; and

b) An asset or capital asset, which is held by a non-resident by way of investment,

directly or indirectly, in category I or category II foreign portfolio investor under the

SEBI (Foreign Portfolio Investors) Regulations,2014.

2. Section 9A – Certain activities not to constitute business connection in India.

Section 9A(3) provides for the conditions to be fulfilled for being an eligible investment fund

so that its income not deemed to accrue/arise in India. The condition says that the monthly

average of the corpus of the fund shall not be less than 100 crore rupees except where the

fund has been established or incorporated in the previous year, in which case, the Corpus of

the fund shall not be less than 100 crore rupees at the end of such previous year.

Second proviso is inserted to provide that the provisions of the said clause shall not be

applicable to a fund which has been wound up in the previous year.

3. Section 10(4) – Interest from NRE Account exempted

Certain words substituted. That is the word FERA has been replaced with FEMA since the

FERA being repealed.

4. Section 10(12B) – Exemption to partial withdrawal from NPS

Section 10(12A) provides that payment from National Pension Scheme(NPS) trust to an

employee on closure of his account or opting out shall be exempt upto 40% of total amount

payable to him.

In order to provide further relief to an employee subscriber of NPS, section 10(12B) has been

inserted with effect from AY-2018-19 to provide exemption to partial withdrawal by an



employee in accordance with the terms and conditions specified under Pension Fund

Regulatory and Development Authority Act,2013. The exemption is restricted to 25% of the

amount of contribution made by the assessee.

5. Section 10(23C) and Section 11 – Exemption for certain Fund or institution /Trust

1. Inclusion of CMRF/LGRF u/s 10(23C)

Section 10(23C) provide exemption in respect of income of certain funds which

includes PMNRF. However the Chief Minister’s Relief Fund or the Lieutenant

Governor’s Relief Fund u/s 80G are not exempt u/s 10(23C). New provision

10(23C)(iiiaaaa) inserted to provide the benefit of exemption to Chief Minister’s

Relief Fund or the Lieutenant Governor’s Relief Fund.

2. Restriction for corpus donation claimed as application of income

As per the existing provisions of the Act, donations made by a Trust to any other

trust or institution registered u/s 12AA or to any fund or institution or trust or

hospital etc u/s 10(23C) is considered as application of income. Similarly donations

made by 10(23C) institutions to section 12AA registered trust is also treated as

application of income. However donations given by these exempt entities to another

exempt entities with specific direction that it shall form part of the corpus (ie, corpus

donations) is though considered as application of income in the hands of the donor

trust/institution but not considered as income of the recipient trust. Thus

trusts/institutions engage in giving corpus donations without actual applications.

Therefore a new explanation is inserted u/s 11 and proviso inserted u/s 10(23C), so

as to provide that any amount credited or paid as corpus contributions shall not be

treated as application of income.

6. Section 10(48B) – exemption to Income of foreign company from left over crude oil stock

Any income accruing or arising to a foreign company on account of sale of leftover stock of

crude oil, if any, from the facility in India after the expiry of the agreement or arrangement

u/s 10(48A), exempted subject to such conditions as may be notified by the Central Govt.

7. Section 10AA- Stage of claiming SEZ exemption

New explanation inserted after section 10AA(1), so as to provide that the amount of

deduction referred u/s 10AA shall be allowed from the total income of the assessee

computed under the provisions of income tax before giving effect to section 10AA deduction

and section 10AA deduction shall not exceed such total income of the assessee.



8. Section12A/12AA – Registration of Charitable Trust

Section 12A is amended so as to provide that where a trust or an institution has been

granted registration u/s 12AA or has obtained registration at any time u/s12A and

subsequently it has adopted or undertaken modifications of the objects which do not

conform to the conditions of registration, it shall be required to obtain fresh registration by

making an application within a period of 30 days from the date of such adoption or

modifications of the objects in the prescribed form and manner.

9. Section 13A –Exemption for income of Political Party.

Section 13A provides that any income of a political party which is chargeable under the head

HP/CG/IFOS or any income by way of voluntary contributions received by a political party

shall be exempted. The conditions of exemptions are, it should maintain books, record of

voluntary contributions in excess of 20,000 rupees and audit the books by CA and furnish

report to Election Commission.

Section 13A amended to provide for exemption;

1) No donation exceeding 2,000 rupees is received otherwise by an A/c payee cheque

or A/c payee bank draft or use of ECS or through electoral bond.;

2) It furnishes a return of income for the previous year in accordance with section

139(4B) on or before the due date as per section 139.

Income from House Property

10. Section 23 – Deemed Let-out property – Property held as stock-in-trade

New sub section (5) inserted in section 23 to provide that where the property consisting of

any building and land appurtenant thereto is held as stock-in-trade and the property or any

part of the property is not let-out during the whole or any part of the previous year, the

annual value of such property (NAV) or part of the property, for the period up to one year

from the end of the financial year in which the certificate of completion of construction of

the property is obtained from the competent authority, shall be taken to be nil.

Profits and gains of business or profession

Amendment made by Finance Act 2016 w.e.f.AY2018-19

11. Phasing out incentives under PGBP

1) 175% deduction allowed for Donation to approved research institutions / colleges

reduced to 150% under section 35(1)(ii)

2) 125% deduction u/s 35(1)(iia)/35(1)(iii) reduced to 100%

3) 200% u/s 35(2AA) or u/s 35(2AB) reduced to 150%

4) Section 35AC – expense on eligible project or scheme abolished

5) Section 35AD – Deduction for specified business – 150% weighted deduction

reduced to 100%.



12. Scope of section 35AD expanded to include 14th

Specified business

Scope of section 35AD expanded to include the business of developing, maintaining and

operating a new infrastructure facility on or after 01/04/2017.

Amendments made by Finance Act 2017

13. Section 35AD – Deduction for specified business

Section35AD(8) amended to provide that any expenditure in respect of which a payment or

aggregate of payments made to a person in a day, otherwise than by an A/c Payee Cheque

drawn on a bank or an A/c payee bank draft or use of electronic clearance system through a

bank account, exceeds 10,000, then no deduction shall be allowed in respect of such

expenditure.

14. Section 36(1)(viia) – Provision for bad and doubtful debts - Banks in India

Amended to enhance the limit of provision for bad debts allowable @7.5% of GTI to 8.5% of

GTI (total income computed before making any deduction under this section and Chapter

VIA). [ Scheduled /non-scheduled banks in India and Co-operative banks]

15. Section 40A(2)(b) and Section 92BA– Related party payments excluded from Domestic

Transfer Pricing

In-order to reduce the compliance burden of taxpayers, section 92BA is amended to provide

that expenditure in respect of which payment has been made by the assessee to a person

referred to in section 40A(2)(b) are to be excluded from the scope of section 92BA (

specified domestic transactions or domestic transfer pricing )

16. Section 40A(3)/(3A) – Payment of expenditure exceeding 20,000 in a day

Amended to provide that where the payments or aggregate of payments in a day to a

person otherwise than by an A/c payee cheque or A/c payee bank draft or use of electronic

clearance system through a bank account, exceeds 10,000 in a day then such expenditure

shall be disallowed. Similarly once a provision created and subsequent payment of such

liability is also shall be disallowed if it exceeds 10,000 in a day and made otherwise than A/c

payee cheque or A/c payee bank draft or electronic clearance system.

17. Section 43 – Actual cost of depreciable assets

New proviso before explanation1 of section 43 inserted

Provide that where the assessee incurs any expenditure for acquisition of any asset in

respect of which a payment or aggregate of payments made to a person in a day, otherwise

than by an A/c payee cheque or A/c payee bank draft or use of electronic clearance system



through a bank account, exceeds 10,000, then such expenditure shall be ignored for the

purposes of determination of actual cost.

Proviso to explanation 13

Provide that where any capital asset in respect of which deduction or part of deduction

allowed under section 35AD is deemed to be the income of the assessee in accordance with

section 35AD(7B) ( ie, inter-unit transfer of 35AD asset to non-specified business within 8

years and accordingly deemed income taxable ), the actual cost of the asset to the assessee

shall be the actual cost to the assessee as reduced by depreciation that would have been

allowable had the asset been used for the purposes of business since date of its acquisition.

18. Section 43B – Interest on loan

Amended to provide that any sum payable by an assessee as interest on any loan or advance

from a Co-operative bank other than a primary agricultural credit society or a primary co-

operative agricultural and rural development bank shall be allowed as deduction only if it is

actually paid on or before the due date of furnishing the return of income of the relevant

previous year.

19. Section43D – Interest income taxability on due or receipt whichever is earlier

Section 43D provides that interest income in relation to certain categories of bad or doubtful

debts received by certain institutions or banks or corporations or companies, shall be

chargeable to tax in the previous year in which it is credited to its P/L A/c for that year or the

previous year in which it is actually received, whichever is earlier. The benefit of this

provision is available to scheduled banks , public financial institutions, state financial

corporations , state industrial investment corporations and certain public companies like

Housing Finance Companies. Section 43D has now been amended to include Co-operative

banks other than a primary agricultural credit society or a primary Co-operative agricultural

and rural development bank.

20. Section 44AA – Compulsory maintenance of books

In-order to reduce compliance burden in case of individual and HUF carrying on business and

profession, monetary limits for maintaining books of account and other documents is

increased ( income limit of 1,20,000 increased to 2,50,000 and turnover limit of 10 lacs

increased to 25 lacs ).

21. Section 44AB – Exemption from Audit of Accounts in case of presumptive taxation.

Eligible assessee under section 44AD need not get his books of account audited under this

section;

a) If he declares profits and gains for the previous year in accordance with the

provision of section 44AD; and



b) His total sales, turnover or gross receipts do not exceed 2 crore in such previous

year.

However it may be noted that the obligations for audit under section 44AB will remain

unchanged irrespective of specified limit of total sales, turnover or gross receipts in case

of the following;

� If lower profits are declared under section 44AD and the total income exceeds

the maximum amount not chargeable to tax;

� On account of opting out of the scheme of section 44AD and the total income

exceeds the maximum amount not chargeable to tax as provided in section

44AD(5).

In other words, the audit in aforesaid situations is applicable even if total sales,

turnover or gross receipt is less than 2 crore.

22. Section 44AD – Concessional rate for presumptive income in certain cases

A proviso inserted in section 44AD(1) so as to reduce the existing rate of 8% to 6%, in

respect of the amount of total turnover or gross receipts which is received by an Account

payee cheque or an account payee bank draft or use of electronic clearing system through a

bank account during the previous year or before the due date u/s139(1) in respect of that

previous year. However, the existing rate of 8% shall continue to apply in respect of total

turnover or gross receipts received in any other mode.

23. Rate of depreciation –Reduced to 40% [ Notification 103/2016 ]

The highest rate of depreciation has been restricted to 40% for all assets, which were eligible

for depreciation at a rate higher than 40%.

a) Building - Purely temporary erections such as wooden structures -40%

b) Specified air, water pollution control equipments, solid waste control equipment

and solid waste recycling and resource recovery systems – 40%

c) Computers including computer software – 40%

d) Annual publications owned by assessees carrying on a profession – 40%

e) Books owned by assessees carrying on business in running lending libraries – 40%

f) Books, other than annual publications, owned by assessees carrying on a profession

– 40%

g) Life saving medical equipments – 40%

h) Windmills and any specially designed devices which run on windmills installed on or

after 1.4.2014 – 40%

Capital Gains

24. Section 45(5A) newly inserted – Special provision for computation of capital gains in case

of joint development agreement

In case of an assessee being individual or Hindu undivided family, who enters into a specified

agreement for development of a project, the capital gain arises from such transfer shall be



chargeable to income-tax as income of the previous year in which the certificate of

completion for the whole or part of the project is issued by the competent authority.

Specified agreement means the registered agreement in which a person owing land or

building or both, agrees to allow another person to develop a real estate project on such

land or building or both, in consideration of a share, being land or building or both in such

project, whether with or without payment of part of the consideration in cash.

For the purpose of section 48, the stamp duty value of his share, being land or building or

both, in the project on the date of issuing of said certificate of completion as increased by

any consideration received in cash, if any, shall be deemed to be the full value of the

consideration received or accruing as a result of the transfer of the capital asset.

25. Section 47 – Transaction not treated as transfer and section 49(2AE)

� New clause (viiaa) inserted in section 47 so as to provide that any transfer made

outside India of a Capital Asset being rupee denominated bond of Indian Company

issued outside India, by a non-resident to another non-resident shall not be

regarded as transfer.

� New clause (xb) inserted in section 47 so as to provide that the conversion of

preference shares of a company into equity shares of that company shall not be

regarded as transfer. Consequential amendments are made in section 49 by

insertion of section49(2AE) to provide that where the capital asset, being the equity

share becomes the property of the assessee by virtue of a transfer covered in

section 47(xb), the cost of acquisition of equity share shall be deemed to be that

part of the cost of preference share in lieu of which the equity share is acquired by

the assessee.

Section 2(42A) to provide that in calculating the period of holding of the equity

shares, the period for which the preference shares were held by the assessee will

also be included.

26. Section 48 – fifth proviso to section 48

The proviso, provides that in case of an assessee being a non-resident, any gains arising on

account of appreciation of rupee against a foreign currency at the time of redemption of

rupee denominated bond of an Indian Company subscribed by him, shall be ignored for the

purpose of computation of full value of consideration.

The said proviso has been amended by substituting the word “held” in place of the word

“subscribed” . Thus the benefit of the said proviso shall be available to any person who holds

the bonds, that is, even a secondary holder also.



27. Section 49(1)(iii)(e) –Cost of acquisition in tax neutral demerger of a foreign company

As per section 47(vic), the transfer of shares of an Indian Company by a demerged foreign

company to a resulting foreign company is not regarded as transfer. So far, there was no

express provision in the Act regarding cost of acquisition of the shares of Indian Company in

the hands of the resulting foreign company. Section 49 provides that in certain situations the

cost of acquisition of the asset for the assessee shall be deemed to be the cost for which the

previous owner of the property acquired it ( ie, cost of previous owner shall be cost of

assessee).

Section 49(1)(iii)(e) has been amended to provide that cost of acquisition of the shares of

Indian company received by foreign resulting company under demerger shall be the same as

it was in the hands of demerged foreign company.

28. Section 49(2AF) and Section 2(42A) – Consolidation of mutual fund

Section 47(xix) was inserted with effect from AY2017-18 to provide that transfer of units

from one plan to another pursuant to consolidation of plans within a scheme of mutual

funds was exempt from tax. However no corresponding amendment was made in section 49

to the effect that for the purposes of computation of capital gains upon sale of the new units

obtained, the cost of acquisition shall be the cost of acquisition of old units. Further no

amendment had been made in section 2(42A)(definition of STCA) to provide that in

determining the period for which the unit is held by the assessee, there shall be included the

period for which the old asset was also held. To remove the anomalies these sections has

been amended as above.

29. Section 10(37A) and section 49 – Exemption to capital gains for transfer of asset for

development of Capital of Andrapradesh

1. Individual or HUF transferred land / building or both owned as on 2.6.2014 under

the Land Pooling Scheme of Andhra Pradesh, the capital gain from such transfer

exempted u/s 10(37A),

2. The Land Pooling Ownership Certificate (LPOC) issued under the scheme to the

assessee in respect of land or building or both, if transferred, capital gain from

transfer of such LPOC exempted from tax u/s 10(37A),

3. Reconstituted land or plot will be allotted to the land owners and if such

reconstituted land or plot is transferred within 2 years from the end of the previous

year in which he receives possession, capital gain from such transfer is also

exempted u/s 10(37A).

4. However if the reconstituted plot or land transferred after 2 years from the end of

the previous year in which he receives possession the capital gain chargeable to tax.

In such cases, as per section 49(6) the cost of acquisition of such land or plot shall be

deemed to be its stamp duty value on the last day of the second financial year after



the end of the financial year in which the possession of such asset was handed over

to the assessee.

30. Section 49(8) – Asset of a Trust in which accreted income computed

Where the capital gain arises from the transfer of an asset, being the asset held by a trust or

an institution in respect of which accreted income has been computed, and the tax has been

paid thereon in accordance with the provisions of Chapter XIIEB, the cost of acquisition of

such asset shall be deemed to be the FMV of the asset which has been taken into account

for computation of accreted income as on the specified date referred to in section 115TD.

31. Exemption for LTCG u/s 10(38)

Section 10(38) has been amended with effect from Assessment Year 2018-19 by inserting a

third proviso to provide that exemption under this section shall not be available if the

following conditions are satisfied;

a) Income from transfer of Long term equity shares acquired on or after 01-10-2004;

b) Such transaction of acquisition of equity share is not chargeable to STT and

c) The transaction of acquisition is not notified by the Central Govt. In this behalf.

Thus essentially, the exemption u/s 10(38) is denied to transactions of acquisition of equity

shares without payment of STT.

32. Section 50CA – FMV deemed to be Full Value of Consideration

In order to rationalise the provisions relating to deeming of full value of consideration for

computation of capital gains, new section 50CA inserted to provide that where consideration

for transfer of share of a company (other than quoted share) is less than the FMV of such

share determined in accordance with the prescribed manner, the FMV shall be deemed to

be the full value of consideration for the purposes of computing income under the head

capital gains.

33. Section 54EC – Bonds Notified by Central Government also eligible.

Section 54EC has been amended with effect from AY2018-19 to provide that investment in

any other bond (other than NHAI/RECL) notified by the Central Government in this behalf

shall also be eligible for exemption. Thus Central Govt. notified bonds of Power Finance

Corporation and Indian Railway Finance Corporation.

34. Section 55 – Assets acquired prior to 01/04/1981 and improvement prior to 01/04/1981

The cut off date to be taken is 01/04/2001 instead of 01/04/1981 for substituting FMV since

the base year changed to 01/04/2001.



35. Section 2(42A) – Period to determine Short term capital asset

Third proviso to section 2(42A) amended to provide that in the case of an immovable

property being land or building or both the period of holding shall be less than 24 months

(earlier 36 months) for it to be treated as short term capital asset.

Income from Other Sources

36. Section 56 – Gift – section 56(2)(x)inserted

Presently the gift of money or property (movable or immovable) applicable only in case of

individual or HUF and in certain specified cases for firm and company. From assessment

year 2018-19 onwards these provisions widened to made applicable for all assesses.

37. Section 58 – Disallowance in IFOS widened

Amended to provide that section 40(a)(ia) shall also apply in computing the income

chargeable under the head” Income from other sources” as they apply in computing the

income chargeable under the head PGBP.

Carry forward and set-off of losses

38. Section 71 – Restriction for inter head setoff of house property loss

As per section 71(3A) set-off of loss under the head “Income from house property” against

any other head of income shall be restricted to 2 lacs rupees for any assessment year.

39. Section 79 – liberalised for a company being start-up (loss set-off of closely held company )

Section 79(b) inserted;

1) There is a change in shareholding in a company,

2) The company is a company in which public are not substantially interested,

3) The company is an eligible start-up as referred to in section 80IAC;

If the above conditions are satisfied then the losses incurred in any year prior to the

previous year shall not be carried forward and set-off against the income of the

previous year unless;

a) All the shareholders of the company who held shares carrying voting power on

the last day of the year, in which the loss was incurred, continue to hold those

shares on the last day of the previous year to which the loss is sought to be

carried forward and set-off against the income of the said year. And

b) Such loss has been incurred during the period of 7 years beginning from the

year, in which such company is incorporated.



Chapter VIA – Deductions / Relief

40. Section 80CCD – Increase in deduction to self employed assesses – NPS contribution

In order to provide parity between an Individual who is an employee and an individual who

is self employed, section 80CCD is amended so as to increase the upper limit of 10% of Gross

Total Income to 20% of GTI in case of Individual other than employee.

41. Section 80CCG – Allowed upto 3 years

Section 80CCG provides for deduction for three consecutive assessment years. This section

now amended to provide that, an assessee who has claimed deduction under this section for

assessment Year 2017-18 and earlier assessment years shall be allowed deduction under

this section till assessment year 2019-20 if he is otherwise eligible to claim the deduction as

per the provisions of this section.

For other assessees, who have not claimed deduction as aforesaid, no deduction under

section 80CCG shall be allowed from assessment year 2018-19.

42. Section 80G – Limit of cash donation reduced

Under the existing provision, no deduction is allowed in respect of donation of any sum

exceeding 10,000 unless such sum is paid by any mode other than cash. Now it is amended

to reduce the limit to 2000.

43. Section 80IAC – Time period for deduction widened

The existing provisions of section 80IAC provide that where the GTI of an assessee, being an

eligible start-up, includes any profits and gains derived from eligible business, there shall in

accordance with and subject to the provisions of this section, be allowed a deduction of an

amount equal to 100% of the PGBP derived from such business for 3 consecutive assessment

years and at the option of the assessee the said deduction may be claimed for any three

consecutive assessment years out of 5 years beginning from the year in which the eligible

start-up is incorporated.

It is amended to provide that the deduction shall be allowed for any 3 consecutive

assessment years out of 7 years instead of 5 years beginning from the year in which eligible

start-up is incorporated.

44. Section 80IBA – Certain conditions for deduction liberalized.

Section 80IBA provides for 100% deduction of the PGBP of an assessee developing and

building housing projects subject to certain conditions which include that the upper limit for

the built-up area of residential unit comprised in the housing project does not exceed 30

square metres in the cities of Bombay/Calcutta/Delhi/Chennai and any place within the



distance of 25 kms measured aerially from the municipal limits of the said cities and 60

square metres in any other cities. Moreover the project shall be completed within a period

of 3 years.

Now this section amended so as to substitute the expression “built up area” with the words

“Carpet area” and also to do away with the restriction of aerial distance of 25 kms from the

municipal limits of the above said cities. The period of completion of housing project

extended from 3 years to 5 years for eligibility u/s 80IBA.

45. Rebate u/s 87A – Reduced

Section 87A is amended so as to reduce the maximum amount of rebate available u/s 87A

from existing Rs.5,000 to Rs.2,500. This rebate shall be available to only resident individuals

whose total income does not exceed Rs.3,50,000.

Double Taxation Avoidance Agreement

46. Section 90 / 90A – Meaning of terms used in DTAA

Section 90/90A amended to provide that where any “term” used in an agreement is defined

under the said agreement, the said term shall be assigned the meaning as provided in the

said agreement and where the term is not defined in the agreement, but is defined in the

Act, it shall be assigned the meaning as defined in the Act or explanation if any issued by the

Central Govt.

Transfer Pricing

47. Section 92CE inserted – Secondary adjustments

“Secondary adjustment” means an adjustment in the books of account of the assessee and

its associated enterprise to reflect that the actual allocation of profits between the assessee

and its associated enterprise are consistent with the transfer price determined as a result of

primary adjustment, thereby removing the imbalance between cash account and actual

profits of the assessee. As per the OECD’s Transfer Pricing Guidelines for Multinational

Enterprises and Tax Administrations (OECD’s transfer pricing guidelines), secondary

adjustment may take the form of constructive dividends, constructive equity contributions,

or constructive loans.

In order to align the transfer pricing provisions in line with OECD transfer pricing guidelines

and international best practices a new section 92CE is inserted to provide that the assessee

shall be required to carry out secondary adjustment where the primary adjustment to

transfer price, has been made;

a) suo motu by the assessee in his return of income; or

b) made by the AO has been accepted by the assessee; or

c) is determined by an Advance Pricing Agreement entered into by the assessee under

section 92CC; or

d) is made as per the safe harbour rules framed u/s 92CB; or



e) is arising as a result of resolution of an assessment by way of the mutual agreement

procedure under an agreement entered into u/s 90/90A.

It is also provided that where as a result of primary adjustment to the transfer price, there

is an increase in the total income or reduction in the loss, as the case may be, of the

assessee, the excess money which is available with its associated enterprise, if not

repatriated to India within the time as may be prescribed, shall be deemed to be an advance

made by the assessee to such associated enterprise and the interest on such advance shall

be computed as the income of the assessee, in the manner as may be prescribed.

It is also provided that such secondary adjustment shall not be carried out if, the amount of

primary adjustment made in the case of an assessee in any previous year does not exceed

one crore rupees or the primary adjustment is made in respect of an assessment year

commencing on or before 01/04/2016.

48. Limitation of interest deduction in certain cases – Section 94B

A new section inserted in line with the OECD BEPS Action plan 4, to provide that interest

expenses claimed by an entity to its associated enterprises shall be restricted to 30% of its

earnings before interest, taxes, depreciation and amortisation (EBITDA) or interest paid or

payable to associated enterprise, whichever is less.

The provision shall be applicable to an Indian Company, or a permanent establishment of a

foreign company being the borrower who pays interest in respect of any form of debt issued

to a non-resident or to a permanent establishment of a non-resident and who is an

“associated enterprise” of the borrower. Further the debt shall be deemed to be treated as

issued by an AE where it provides an implicit or explicit guarantee to the lender or deposits a

corresponding and matching amount of funds with the lender.

The provision allow for carry forward of disallowed interest expense to eight assessment

years immediately succeeding the assessment year for which the disallowance was first

made and deduction against the income computed under PGBP to the extent of maximum

allowable interest expenditure.

In-order to target only large interest payments, section 94B provides for a threshold of

interest expenditure of 1 crore rupees exceeding which the provision would be applicable.

This section excludes banks and insurance business keeping in view of special nature of

these businesses.

Taxability of dividend from Domestic Company

49. Section 115BBDA – Taxation of certain dividend income

Under the existing provisions of section 115BBDA, in case of an assessee being a resident

Individual/resident HUF/resident firm, tax is charged at the rate of 10% on income by way of

dividend exceeding 10 lac rupees.



Section 115BBDA shall be amended so as to provide that section 115BBDA shall be

applicable to all resident persons other than;

a) Domestic company;

b) Fund / institution / trust / university/ hospital u/s 10(23C)(iv),(v),(vi),(via) or

c) Trust/institution registered u/s 12A or 12AA.

Concessional tax rate for income from transfer of Carbon Credit

50. Section 115BBG – Carbon credits

New section inserted to provide that where the total income of the assessee includes any

income from transfer of carbon credit, such income shall be taxable @10%. Further the

assessee shall not be eligible for deduction in respect of any expenditure or allowance under

any provision of the Income Tax Act in computing his income from transfer of carbon credit.

Carbon credit in respect of one unit shall mean reduction of one tonne of carbon dioxide

emissions or emissions of its equivalent gases which is validated by the United Nations

Framework on Climate Change and which can be traded in market as its prevailing market

price.

Assessment of Company

51. Section 115JAA – MAT Credit

� If a company is entitled to foreign tax credit and it is allowed against tax payable

under section 115JB of the Act ( MAT Credit), then if the foreign tax credit exceeds

Foreign tax credit admissible against tax payable by the company on its total income

as per the normal provisions of the income tax subsequently while computing the

MAT credit the excess Foreign tax credit should be ignored.

That is the excess foreign tax credit over the normal income payable shall be

reduced from MAT Credit.

� Further the period for carry forward of MAT Credit extended from tenth assessment

year to 15th

Assessment year.

A similar amendment made in Section 115JD AMT Credit also.

52. Section 115JB – MAT

Section 115JB is amended so as to align the provisions of section 115JB for the company

preparing financial statements in accordance with the provisions of IAS and to update the

provisions of the Companies Act,1956 referred in section 115JB in accordance with the

provisions of the new Companies Act ,2013.

Adjustment in the book profit due to adoption of Ind AS

Annual Adjustment – Section 115JB (2A) and (2B)



Section 115JB(2A)

In case of a company whose financial statements are drawn up in compliance with the Indian

Accounting Standards (Ind ASs) specified in Annexure to the Companies (Indian Accounting

Standards) Rules, 2015, the following additional adjustments shall be done to the book

profit as computed above in point no. (iii) as per section 115JB(2) read with Explanation 1-

a) increased by all amounts credited to other comprehensive income in the statement of

profit and loss under the head "Items that will not be re-classified to profit or loss";

b) decreased by all amounts debited to other comprehensive income in the statement of

profit and loss under the head "Items that will not be re-classified to profit or loss";

However, no adjustment shall be made where the amount credited or debited to other

comprehensive income under the head "Items that will not be re-classified to profit or

loss", in respect of —

I. Revaluation surplus for assets in accordance with the Indian Accounting

Standards 16 and Indian Accounting Standards 38; or

II. Gains or losses from investments in equity instruments designated at fair value

through other comprehensive income in accordance with the Indian Accounting

Standards 109. [First proviso to section 115JB(2A)]

However, the book profit of the previous year, in which such asset or investment is

retired, disposed, realised or otherwise transferred, shall be increased or decreased,

as the case may be, by the amount or the aggregate of the amounts as referred to in

the first proviso for the previous year or any of the preceding previous years and

relatable to such asset or investment [Second proviso to section 115JB(2A)]

c) Increased by amounts or aggregate of the amounts debited to the statement of profit

and loss on distribution of non-cash assets to shareholders in a demerger in accordance

with Appendix A of the Indian Accounting Standards 10;

d) Decreased by all amounts or aggregate of the amounts credited to the statement of

profit and loss on distribution of non-cash assets to shareholders in a demerger in

accordance with Appendix A of the Indian Accounting Standards 10;

Section 115JB (2B) – Demerger – No adjustment for resulting company

Sub-section (2B) states that in demerger, in the case of a resulting company, the property

and the liabilities of the undertaking or undertakings being received by it are recorded at

values different from values appearing in the books of account of the demerged company

immediately before the demerger, any change in such value shall be ignored for the purpose

of computation of book profit of the resulting company under this section.



MAT on first time adoption [Section 115JB(2C)]:

In case of Ind AS compliant company, the book profit of the year of convergence and each of

the following four previous years, shall be further increased or decreased, as the case may

be, by one fifth of the transition amount.

However, the book profit of the previous year in which the asset or investment referred to in

sub clauses (B) to (E) of clause (iii) of the Explanation is retired, disposed, realised or

otherwise transferred shall be increased or decreased, as the case may be, by the amount of

the aggregate of the amounts referred to in the said sub-clause relatable to such asset or

investment: [First proviso to section 115JB(2C)]

Further, the book profit of the previous year in which the foreign operation referred to in

sub clause (F) of clause (iii) of the Explanation is disposed or otherwise transferred, shall be

increased or decreased, as the case may be, by the amount of the aggregate of the amounts

referred to in the said sub-clause relatable to such foreign operations. [Second proviso to

sub-section (2C)]

Brief analysis of section 115JB(2A)

The other comprehensive income (OCI) includes certain items that will permanently be

recorded in reserves and hence, never be reclassified to the statement of profit and loss

included in the computation of book profits. These items shall be included in book profit for

MAT purposes at the point of time as specified below-

1 Changes in revaluation surplus of

Property, Plant or Equipment (PPE)

and Intangible assets (Ind AS 16 and

Ind AS 38)

To be included in book profits at the time

of realisation/ disposal/ retirement or

otherwise transferred

2 Gains and losses from investments in

equity instruments designated at fair

value through other comprehensive

income (Ind AS 109)

To be included in book profits at the time

of realisation/ disposal/ retirement or

otherwise transferred

3 Remeasurements of defined benefit

plans (Ind AS 19)

To be included in book profits every year as

the re-measurements gains and losses arise

4 Any other item To be included in book profits every year as

the gains and losses arise

Income Tax Authorities

53. Section 119 – Empowering CBDT to issue directions in respect of any penalty for failure to

deduct or collect tax at source.

Section 119(2)(a) empowers the CBDT to issue orders setting forth directions or instructions

( not being prejudicial to assessee) to be followed by subordinate authorities in the work



relating to assessment or collection of revenue or the initiation of proceedings for the

imposition of penalties.

The said section which lists down various sections in respect of which orders could be issued

by the CBDT has been amended with effect from 01-04-2017 by inserting reference to

Sections 271C and 271CA, so as to empower the CBDT to issue directions or instructions in

respect of the said sections also.

Section 271C - Penalty for failure to deduct tax at source

Section 271CA - Penalty for failure to collect tax at source

Search and Seizure

54. Section 132 – Search and Seizure / Section 132A – Powers to requisition books of account

etc.

Section 132(1) & (1A) provide that where an authority mentioned therein, based on the

information in his possession, has `reason to believe’ or` reason to suspect’ of circumstances

referred there, he may authorise an authority specified therein to carry out search and

seizure. Similarly section 132A (1) provides that the specified income tax authority based on

`reason to believe’ can authorise other income tax authority mentioned therein to

requisition from some other officer or authority to deliver books of account, documents or

assets of the assessee to the income tax authority so authorised.

Confidentiality and sensitivity are the hallmarks of proceedings under section 132 and

section 132A. However, certain judicial pronouncements have created ambiguity in respect

of the disclosure of `reason to believe’ or `reason to suspect’ recorded by the income tax

authority to conduct a search under section 132 or to make requisition u/s 132A.

An explanation is inserted in section 132(1),(1A) and Section 132A(1) to declare that the

reason to believe or reason to suspect as the case may be, shall not be disclosed to any

person or any authority or the Appellate Tribunal.

Provisional attachment of property of assessee

Sub section (9B) is inserted in section 132 to provide that in a search case, where the

authorised officer is satisfied that for the purpose of protecting the interest of revenue and

for reasons to be recorded in writing it is necessary so to do he may, by order in writing,

attach provisionally any property belonging to the assessee with the prior approval of

Principal Director General or Director General or Principal Director or Director. Sub section

(9C) is inserted so as to provide that such provisional attachment shall cease to have effect

after the expiry of six months from the date of order of provisional attachment.



Reference to valuation Officer

Sub section (9D) is inserted to provide that in a search case, the authorised officer for

estimation of fair market value of a property, may make a reference to a valuation officer

u/s 142A, for valuation in the manner provided in that section. The valuation officer shall

furnish the valuation report within 60 days of receipt of such reference.

Explanation 1 to section 132, is substituted so as to provide that for the purposes of

132(9A),(9B),(9D), with respect to “execution of an authorisation for search” the provisions

of section 153B(2) shall apply.

55. Section 133 – Power to call for information

Section 133 empowers certain income tax authorities to call for information for the purpose

of any inquiry or proceeding under the Act. The first proviso of section 133 is amended so as

to provide that the power in respect of inquiry or proceeding under the Act may also be

exercised by the Joint Director, Deputy Director or Assistant Director.

Second proviso of section 133 is amended, so as to provide that the Joint Director, Deputy

Director or Assistant Director, in a case where no proceeding is pending, may exercise the

powers in respect of inquiry without seeking prior approval of the authorities as specified in

the second proviso.

56. Extension of the power to survey under section 133A

Section 133A empowers an Income tax authority to enter any place, at which a business or

profession is carried on, or at which any books of account or other documents or any part of

cash or stock or other valuable article or thing relating to the business or profession are kept

for the purposes of conducting a survey.

Section 133A has been amended w.e.f.01/04/2017 to provide as follows;

1) An income tax authority may now enter any place where an activity for charitable

purpose is carried on, whether such place to be the principal place of such activity

for charitable purpose or not.

For the above purpose, a place where an activity for charitable purpose is carried on

shall include any other place in which the person carrying on the activity for

charitable purpose states that his books of account or other documents etc..,

relating to the activity for charitable purpose are kept ( explanation to section 133A)

2) The income tax authority may require any trustee, employee or any other person

who may at that time and place be attending in any manner to, or helping in, the

carrying on such activity for charitable purpose, to afford him the necessary facility



to inspect books of account and to carry out other tasks as mentioned in section

133A(1).

57. Section 133C – Power to call for information by prescribed income tax authority

Section 133C(1) provides that a prescribed income tax authority may issue a notice to any

person, requiring him to submit information or documents for the purposes of verification of

the information in the possession of such income tax authority. Section 133C(2) provides

that the prescribed income tax authority may process any information or document that has

been received in response to a notice issued u/s 133C(1) and provide the outcome of such

processing to the Assessing Officer.

Newly inserted section 133C(3) provides that the CBDT may make a scheme for enabling the

Centralised issuance of notice, processing of information or documents and for making

available the outcome of the said processing to the Assessing officer.

Return of Income and assessment

58. Section 139(4C)- Mandatory furnishing of return by certain exempt entities

The following persons are also required to file a return of income if their income without

giving effect to the provisions of section 10 exceeds the maximum amount which is not

chargeable to income tax;

a) A fund specified in section10(23AAA);

b) Investor Protector Fund referred to in section 10(23EC)/(23ED);

c) Core Settlement Guarantee Fund u/s 10(23EE); and

d) Any Board or Authority referred u/s 10(29A).

59. Section 139(5) – Revised return

Amended to provide that the time limit for furnishing of revised return shall be available up

to the end of the relevant assessment year or before the completion of assessment,

whichever is earlier.

60. Section 139AA – Quoting of Aadhaar

Every person who is eligible to obtain Aadhaar number shall, on or after 01/04/2017, quote

it in application form for allotment of PAN and in return of income.

61. Section 140A – Self assessment

Amended with effect from AY2018-19 to provide as follows;

In case of delay in furnishing of return of income, along with the tax and interest payable as

aforesaid, fee for delay in furnishing of return of income shall also be payable. This



amendment is in consequential to the insertion of section 234F late fee for delay in

furnishing of return.

Where the amount paid falls short of the aggregate of tax, interest and fee, the amount so

paid shall be adjusted in the following order;

a) Fee payable;

b) Interest payable;

c) Tax payable.

If the assessee fails to pay the fee, he shall be deemed to be an assessee in default in respect

of the fee.

62. Section 143 – Intimation

Section 143 provides the manner of processing of a return furnished u/s 139/142(1). Section

143(1) shall be amended to provide that in computation of amount payable or refund due,

as the case may be, on account of processing of return, the fee payable under section 234F

shall also be considered.

Section 143(1D) – Processing of return where notice u/s 143(2) issued

For assessment year prior to assessment year 2016-17;

Processing of a return u/s 143(1) is not necessary if a notice has been issued u/s 143(2).

However, the tax department is not barred from issuing intimation, even after a notice is

issued u/s 143(2).

From assessment year 2017-18 onwards;

Section 143(1D) is not applicable at all. Hence, the intimation u/s 143(1) may be sent at any

time before or after issue of notice u/s 143(2). However, the time limit for issue of

intimation under second proviso to section 143(1) continues.

63. Section 155 – Re-computation of Income

New sub section (14A) inserted to section 155

Where credit of income tax paid in any country outside India or a specified territory outside

India, referred to in section 90/90A/91, has not been given in the order of assessment for

the relevant assessment year on the grounds that the payment of such tax was in dispute,

then, the assessing officer shall rectify the order of assessment or an intimation u/s 143(1), if

the assessee, within 6 months from the end of the month in which the dispute is settled,

furnishes proof of settlement of such dispute and evidence of payment of such tax along

with an undertaking that no credit of such amount of tax has been directly or indirectly

claimed or shall be claimed for any other assessment year.



It is also provided that credit of tax which was under dispute would be allowed for the year

in which such income is offered to tax or assessed to tax in India.

TDS /TCS and Advance Tax

64. Section 194IB – Deduction of tax at source upon payment of rent by certain Individual or

HUF

Any Individual or HUF ( other than covered in section 194I ) responsible for paying to a

resident any income by way of rent exceeding 50,000 rupees for a month or part of a month

during the previous year, shall deduct an amount equal to 5% of such income as income tax

thereon.

This section also provides that, tax should be deducted on such income at the time of credit

of rent, for the last month of the previous year or the last month of tenancy, if the property

is vacated during the year, as the case may be, to the account of the payee or at the time of

payment thereof in cash or by issue of a cheque or draft or by any other mode, whicheveris

earlier.

Further section 203A(TAN No.) not applicable to this section. Section 194IB also provides

that where the tax is required to be deducted as per the provisions of section 206AA(

without PAN No. Higher rate of 20%) such deduction shall not exceed the amount of rent

payable for the last month of the previous year or the last month of the tenancy, as the case

may be.

The term “rent” is defined to mean any payment, by whatever name called, under any lease,

sub-lease, tenancy or any other agreement or arrangement for the use of any land or

building or both.

65. Section 194IC – Deduction of tax at source upon payment under specified agreement

This section will over-ride section 194IA. Any person responsible for paying to a resident

individual or resident HUF any sum by way of consideration, not being consideration in kind,

under the joint development agreement in section 45(5A), shall at the time of credit of such

sum to the account of the payee or at the time of payment thereof in cash or by issue of a

cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 10%

of such sum as TDS. No threshold limit is prescribed.

66. Section 194 J – TDS on professional fee, technical fee etc.

Proviso is inserted in section 194J so as to reduce the rate of tax deduction at source to 2%

from 10% in case of payments received or credited to a payee, who is engaged only in the

business of operation of call centre.

67. Section 194LA – TDS on compensation for compulsory acquisition



Section 194LA is amended so as to insert a new second proviso to provide that no TDS shall

be made under this section, where such payment is made in respect of any award or

agreement which has been exempted from the levy of income tax under section 96 of the

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and

Resettlement Act,2013.

68. Section 194LC- TDS on certain interest to NR ( Loan or RDB )

The existing provisions of section 194LC of the Act provide that the interest payable to a

non-resident by a specified company on borrowings made by it in foreign currency from

sources outside India under a loan agreement or by way of issue of any long term bond

including long term infrastructure bond shall be eligible for concessional TDS of 5%. But the

loan agreement or bond should be before 01-07-2017.

It is amended to provide that the concessional rate of 5% TDS on interest payment under

this section will now be available in respect of borrowings made before 01-07-2020, or

Rupee Denominated Bond issued outside India before 01-07-2020.

69. Section 194LD – Interest on Govt. Securities or RDCB to NR

Amended to provide that the concessional rate of 5% TDS on interest payments in respect of

investment in Government Securities and Rupee Denominated Corporate Bonds to be made

available on interest payable before 01-07-2020.

70. Section 197A – No TDS in certain cases

Amended section 197A(IA)/197(IC) with effect from 01-06-2017 to provide that no

deduction of tax at source should be made on furnishing of self declaration (15G/15H) in

respect of payment of insurance commission specified u/s 194D.

71. Section 204 – meaning of Person responsible for paying

The scheme of tax deduction at source casts the obligation to deduct tax, make a payment

to the Government and comply with other requirements upon the “person responsible for

paying” as defined in section 204.

Section 195(6) requires the “person responsible for paying” to furnish information relating

to payment of any sum, whether chargeable to tax or not. Hitherto, section 204 did not

define the person responsible for furnishing such information. Section 204(iib) has,

therefore, been inserted with effect from 01-04-2017 to provide that in the case of

furnishing of information relating to payment to a non-resident of any sum, whether or not

chargeable under the provisions of this Act, the “person responsible for paying” shall be;

a) The payer himself; or

b) If the payer is a company, the company itself including the principal officer thereof.



72. Section 206C- Collection of Tax at Source

Hitherto, section 206C(ID) provided for tax collection at Source @1% of sale consideration

on cash of sale of bullion, jewellery or any other goods (other than bullion or jewellery) or

providing any service. Section 206C(IE) provided that the provision regarding to collection in

section 206C(ID) was not applicable to such class of buyers who fulfilled the prescribed

conditions. These sections 206C(ID) and (IE) have been omitted by the Finance Act 2017 with

effect from 01-04-2017. The provisions have been omitted possibly on account of insertion

of section 269ST prohibiting receipts in excess of 2 lac rupees.

Section 206(IF) provides that the seller who receives any amount as consideration for sale of

a motor vehicle of the value exceeding 10 lac rupees, shall at the time of receipt of such

amount, collect from the buyer a sum equal to 1% of the sale consideration as Income Tax.

Explanation to section 206C has been inserted with effect from 01-04-2017 to exempt the

following class of buyers from the provisions of section 206C(IF);

a) The Central Government, a State Government and an embassy, a High Commission,

legation, Commission, Consulate and the Trade representation of a foreign state.

b) Local authority as defined in the explanation to section 10(20),or

c) A Public Sector Company which is engaged in the business of carrying passengers.

73. Section 206CC - Requirement to furnish PAN under Tax Collection Scheme

This section inserted with effect from 01-04-2017 to provide as follows;

a) Any person paying any sum or amount on which tax is collectible at source shall

furnish his PAN to the person responsible for collecting such tax. If the collectee fails

to furnish his PAN, tax shall be collected at higher of the following rates;

a. At twice the rate mentioned in the relevant section; or

b. @5%.

b) Section 206C(IA) provides for a person to give a declaration pursuant to which no

collection of taxes is required. Now, such declaration shall not be valid unless the

person furnishes his PAN in such declaration.

However, if such declaration becomes invalid, the collector shall collect the tax at

source at the higher rate as mentioned above.

c) A person may make an application to AO requesting him to give a certificate for

collection of tax at a rate lower than the normal rate. No such certificate shall be

granted unless the application contains the PAN of the applicant.

d) The collectee shall furnish his PAN to the collector and both shall indicate the same

in all the correspondence, bills, vouchers and other documents which are sent to

each other.



e) Where the PAN provided by the collectee is invalid or it does not belong to the

collectee, then it shall be deemed that PAN has not been furnished to the collector.

In such a situation TCS shall be made at the higher rate.

f) This section not applicable to a non-resident who does not have a Permanent

establishment in India. For this purpose, the expression “permanent establishment”

includes fixed place of business through the business of the enterprise is wholly or

partly carried out.

74. Section 211 – Advance Tax

Section 211(1)(b) is amended to provide that the assessee who declares profits and gains in

accordance with section 44ADA(1) shall also be liable to pay advance tax in one instalment

on or before the 15th

March of every financial year.

Interest

75. Section 234C – Interest for short fall in payment of advance tax

Section 234C is amended to provide that in respect of an assessee u/s 44ADA, interest u/s

234C shall be levied, if the advance tax paid on or before the 15th

day of march, is less than

the tax due on the returned income.

Finance Act 2016 inserted section 115BBDA levying tax on dividend from domestic

companies if it exceeds 10 lacs rupees. However in view of the uncertain nature of

declaration and receipt of dividend incomes, an assessee liable to pay advance tax may not

be able to correctly determine such liability within the payment schedule mentioned in

section 211 and thereby levy of interest u/s 234C.

Section 234C is amended to provide that if short fall in payment of advance tax is on account

of under estimation or failure in estimation of income of the nature referred in section

115BBDA, the interest u/s 234C shall not be levied subject to fulfilment of conditions

specified therein.

76. Section 234F – Fee for default in furnishing return of income

Provides that a fee for delay in filing of return shall be paid for AY-2018-19 and onwards in a

case where the return is not filed within the due dates specified for filing of return u/s

139(1). It is provided that a fee of 5000 rupees be payable, if the return is furnished after the

due date but on or before the 31st

day of December of the assessment year. A fee of 10,000

rupees shall be payable in any other case.

However, in a case where the total income does not exceed 5 lac rupees, the fee amount

shall not exceed 1000 rupees.



77. Withholding of refund in certain cases – Section 241A

Section 241A has been inserted with effect from 01-04-2017 to provide for withholding of

refund in certain cases. The section applies if all the following conditions are fulfilled;

a) Refund of any amount becomes due to the assessee upon processing of return u/s

143(1);

b) A notice has been issued u/s 143(2) in respect of the said return,

c) The AO is of the opinion that the grant of refund is likely to adversely affect the

revenue;

d) The AO has formed such opinion having regard to the fact that the notice has been

issued u/s 143(2);

e) The AO has obtained previous approval of the Principal Commissioner or

Commissioner, as the case may be;

f) The AO has recorded the reasons for such withholding in writing.

If the aforesaid conditions are fulfilled, the Assessing Officer may withhold the refund up to

the date on which the assessment is made.

78. Section 244A - Interest on Refund due to deductor

The existing section 244A of the Act provides that an assessee is entitled to receive interest

on refund arising out of excess payment of advance tax or TDS/TCS, etc.

A new sub section (1B) is inserted in section 244A to provide that where refund of any

amounts become due to the deductor(TDS), such person shall be entitled to receive, in

addition to the refund, simple interest on such refund, calculated at the rate of 0.5% interest

for every month or part of a month comprised in the period, from the date on which claim

for refund is made in the prescribed form for giving effect to an order u/s 250/254/260/262

from the date on which the tax is paid up to the date on which refund is granted.

Section 244A(2) is also amended to give reference of the deductor in addition to the

assessee and to provide that the interest shall not be allowed for the period for which the

delay in the proceedings resulting in the refund is attributable to the deductor.

79. Section245A - Settlement of cases

Section 245A(b) provides definition of case. Section 245A(b), explanation (iv) provides unless

as otherwise specified ,in case where no assessment is made, proceedings shall be deemed

to have concluded on the expiry of two years from the end of the relevant assessment year.

This is amended so as to provide that conclusion of proceedings shall be construed in

accordance with the time specified for making an assessment u/s 153(1).

This amendment is consequential to the amendment made in section 153 and section 153B.



80. Section 245N – Authority for Advance Rulings – Definition of applicant

The definition of applicant u/s 245N(b) has been amended with effect from 01-04-2017 to

include the following classes of applicant;

a) An applicant as defined in section 28E(c) of the Customs Act,1962;

b) An applicant as defined in section 23A(c) of the Central Excise Act,1944;

c) An applicant as defined in section 96A(b) of the Finance Act, 1994.

The amendment has been made consequent to the decision of the Government to merge

the Authority for Advance Ruling (AAR) for income tax, central excise, customs duty and

service tax.

Section 245Q which refers to application for advance ruling has also been amended on the

aforesaid lines to allow applications under the indirect tax statutes.

81. Section 245-O – Authority for advance ruling-Qualifications

1) Hitherto, only a judge of the Supreme Court could have been appointed as the

Chairman of the Authority. Now, the Chief Justice of a High Court or a Judge of a

High Court for at least seven years can also be appointed as the authority.

2) So far, a revenue member from the IRS, who was the Principal Chief Commissioner

or Principal Directorate General or Chief General or Directorate General qualified for

appointment as authority. Now with effect from 01-04-2017, a person shall be

qualified for appointment as a Revenue member if he is from the IRS and is, or is

qualified to be, a member of the CBDT; or from the Indian Customs and Central

Excise Service, who is,or is qualified to be, a member of the CBEC, on the date of

occurrence of vacancy.

3) Thus, the qualification for appointment as revenue member shall be considered as

on the date of occurrence of vacancy. Similar amendment is also made in respect of

qualification for appointment as law member, which shall be considered as on the

date of occurrence of vacancy.

4) Further to provide that in the event the Chairman is unable to discharge his

functions owing to absence, illness or any other reason, or in the event that the

office of the Chairman falls vacant, the Vice chairman shall discharge the functions

of the chairman until the new chairman enters upon his office or until the

incumbent chairman resumes his duties.

82. Section 245-OA-Qualifications, terms and conditions of service of chairman, Vice-Chairman

and members [ newly inserted ]

Application of Part XIV of Chapter VI of the Finance Act 2017, governing qualifications, terms

and conditions of service of chairman etc of AAR yet to be notified.



83. Section 245Q- Application for advance ruling

This section provides that an applicant desirous of obtaining an advance ruling under the

Income Tax Act may make an application in such form and in such manner as may be

prescribed.

Section 245Q is amended so as to provide that an application for advance ruling may also be

made under chapter V of the Customs Act,1962 or Central Excise Act 1944, or Chapter VA of

the Finance Act,1994.

84. Section 252A – Qualifications, terms and conditions of service of president, Vice President

and member of ITAT [ new section inserted ]

Application of Part XIV of Chapter VI of the Finance Act 2017, governing qualifications, terms

and conditions of President etc yet to be notified.

85. Section 253 – Appeal to ITAT

So far an order passed by prescribed authority u/s 10(23C)(vi) and (via) shall be appealable

before the ITAT. It is amended so as to make an order passed u/s 10(23C)(iv)and(v) also

appealable before the ITAT.

86. Section 269ST – mode of undertaking transactions [ new section inserted ]

New section 269ST provides that no person shall receive an amount of 2 lac rupees or more,

a) in aggregate from a person in a day; or

b) in respect of a single transaction; or

c) in respect of transactions relating to one event or occasion from a person

otherwise than by an A/c Payee Cheque or an A/c payee bank draft or use of electronic

clearance system through a bank account.

It further provides that this restriction shall not apply to;

a) any receipt by Government;

b) any banking company, post office savings bank or co-operative bank;

c) any transactions of the nature referred to in section 269SS; and

d) such other persons or class of persons or receipts , as may be specified by the

Central Government by notification in the official gazette.

87. Section 271DA – Penalty for failure to comply with the provisions of section 269ST

If a person receives any sum in contravention of the provisions of section 269ST, he shall be

liable to pay, by way of penalty, a sum equal to the amount of such receipt.



Provided that no penalty shall be imposable if such person proves that there were good and

sufficient reasons for the contravention.

This penalty shall be imposed by the Joint Commissioner.

88. Section 271F – penalty for failure to furnish return of income – abolished

This penalty abolished w.e.f.AY2018-19. ( Section 234F late fee for delayed return

introduced )

89. Section 271J – Penalty for furnishing incorrect information in reports or certificates

If an accountant or a merchant banker or a registered valuer furnishes incorrect information

in a report or certificate under any provisions of the Act or the rules made there under, the

AO or the CIT(A), without prejudice to the provisions of the Income Tax Act, may direct him

to pay, by way of penalty, a sum of 10,000 rupees for each such report or certificate.

90. Section 273B – Penalty not to be imposed in certain cases

Amended to provide that penalty shall not be imposable in respect of newly inserted section

271J also, if the person proves that there was reasonable cause for the failure referred to in

the said section.

Documents

Amendments – FA 2017 CA Final 2018 · 2019-12-15 · Amendments – FA 2017 CA Final 2018 CA.JustinRaj.S JUSTIN’S INSTITUTE OF TAXATION 12. thScope of section 35AD expanded to