Income tax 9th amendment rule about nature of business relationship

Income tax 9th amendment rule about nature of business relationship

CBDT issued a notification no. 50/2015 dated 24 June 2015 and amend in income tax rules which is amendment no. 9 this year. This notification is about nature of business relationship. Full notification is as under.

In exercise of the powers conferred by section 295 read with subclause (viii) of Explanation to sub-section (2) of section 288 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend

the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (Ninth Amendment) Rules, 2015.

(2) They shall come into force on the date of its publication in the Official Gazette.

2. In the Income-tax Rules, 1962, after rule 51, the following rule shall be inserted, namely:-

“51A. Nature of business relationship.— For the purposes of sub-clause (viii) of Explanation
below sub-section (2) of section 288, the term “business relationship” shall be construed as any
transaction entered into for a commercial purpose, other than, –

(i) commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm under the Act and the Chartered Accountants Act, 1949 (38 of 1949) and the rules or the regulations made under those Acts;

(ii) commercial transactions which are in the ordinary course of business of the company at arm’s length price – like sale of products or services to the auditor, as customer, in the ordinary course of business, by companies engaged in  the business of telecommunications, airlines, hospitals,
hotels and such other similar businesses.”
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Incorporation section code 192A and 194LBB:
“192A” & “194LBB” have been added for below forms which will be applicable for statements pertain to FY 2015-16 & Q1 onwards.

o Section code 192A will be applicable for Form 26Q.

o Section code 194LBB will be applicable only for Form 26Q and 27Q.

o For section code “192A”, select “92D” from the dropdown of section code column in Annexure I sheet.

o For section code “194LBB”, select “LBB” from the dropdown of section code column in Annexure I sheet.

Total Tax deducted amount should be equal to Total Tax Deposited under Deductee details (i.e. Annexure I).

Quoting of lower/non deduction certificate number under Deductee details (Annexure I) will be applicable only for below mentioned Section codes:-

192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194LA, 195 and 206C for the statements pertaining to FY 2013-14 onwards.

Validations with respect to remark C under deductee details (Annexure I) has been relaxed for section 194LC for the statements pertains to FY 2012-13 onwards (said validation will be applicable only for Form 27Q).

This version of FVU will be applicable with effect from June 20, 2015.
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Changes in ITR for AY 2015-16and new rule 12

Changes in ITR for AY 2015-16and new rule 12

The Rule 12 of the Income-tax Rules was amended vide Notification No. 41/2015, Dated 15-04-2015. The new ITR Forms 1, 2 and 4S were notified for the assessment year 2015-16 vide said notification.

In view of various representations received it was announced that these ITR forms will be reviewed. Having considered the responses received from various stakeholders, new ITR forms have been notified vide Notification No. SO 1660, dated June 22, 2015.

At present individuals and HUFs having income from more than one house property or capital gains are required to file Form ITR 2. It was observed that majority of taxpayers who file Form ITR 2 do not have capital gains. With a view to provide a simplified version of this form for these individuals and HUFs, a new Form ITR 2A is notified which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income.

Further, it shall not be mandatory to furnish details of foreign trips in new Form ITR 2. Only Passport Number, if available, would be required to be furnished in the Form 2.

As regards furnishing of details of the bank accounts in ITR forms, only the IFS Code, account number of all current/savings accounts which are held at any time during the previous year have to be furnished. The balance in accounts will not be required to be furnished. Details of dormant accounts which have not been operational during the last three years are not required to be furnished.

It is further provided in Rule 12 that individuals having exempt income without any ceiling (other than agricultural income exceeding Rs. 5,000) can also file return in Form ITR 1. If taxpayer has agricultural income the return shall be filed in ITR 2 or ITR 2A, as the case may be.

Till assessment year 2014-15, individuals or HUFs, who were otherwise not liable to file return of income electronically, could claim tax refund by filing return of income in physical form. However, Rule 12 as notified on 15-04-2015, has made it mandatory for every taxpayer to file return of income electronically so as to claim refund of tax from the department.

Under the extant Rules all taxpayers including super senior citizen (being an individual of 80 years or more) are required to file return of income electronically, if their total income exceeds five lakh rupees. Now an option has been given to the super senior citizens whose total income exceeds five lakh rupees or who is claiming income-tax refund, to file return of income in physical form, provided return is furnished in ITR- 1 or ITR- 2.

As per the new provision (as notified on 15-04-2015) every individual or HUF whose total income exceeds five lakh rupees or who is required to file return in Form ITR-3 or ITR-4 shall have to file return of income electronically.

If an individual (not being a citizen of India) is in India on a business, employment or student visa purposes and he acquires any asset during the previous year in which he was a non-resident, such asset shall not be required to be reported in Schedule FA – Details of foreign assets and income if no income is derived from that asset during the current previous year.

II. Key changes in new ITR Forms
1. Introduction of ITR 2A
[ITR 2A]
At present individuals/HUFs having income from more than one house property or capital gains are required to file Form ITR-2. It is, however, noticed that majority of individuals/HUFs who file return in Form ITR 2 do not have capital gains. With a view to provide a simplified form for these individuals/HUFs, a new Form ITR 2A has been introduced which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income or have not claimed relief under section 90/90A/91.

ITR 2A includes almost all fields as were contained in ITR 2, except information relating to capital gains, foreign asset/foreign income and relief under section 90/90A/91.

2. Details of all bank accounts held by assessee
[ITRs 1, 2, 2A, 4S]
Under new ITR form, an assessee is required to furnish details of all bank accounts held by him in India at any time during the previous year. However, the new ITR forms notified on June 22, 2015 provide immunity to the taxpayer from furnishing details about the bank accounts which have become dormant.

The 'dormant' account shall be those current and saving bank accounts which have not been operational for more than 3 years.

Following details shall be reported in respect of each bank account held by assessee in India:
  a) IFSC Code of the Bank
  b) Name of the Bank
  c) Name of joint holders (if any) (withdrawn)
  d) Account Number
  e) Account Balance as on 31st March of the previous year (withdrawn)
  f) Nature of the bank account, i.e., current account or saving account

3. Details of foreign travelling shall not be reported, except Passport No.
[ITRs 2, 2A]
If assessee has travelled overseas, the details about such travelling is not required to be furnished in the new return forms. However, the individual should furnish his Passport number, if available.

4. Reporting of Aadhaar Number
[ITRs 1, 2, 2A, 4S]
The ITR forms require assessee to provide his Aadhaar Number (if assessee has obtained the same).

5. Date of Formation by HUF
[ITR 2, 2A, 4S]
In ITR forms, an HUF is required to report date of its formation.

6. Reporting of amount that has remained unutilized in capital gains account
[ITR 2]
If assessee is unable to roll over the investment in new capital asset within the specified time period so as to avail of the exemptions under section 54, 54B, etc., he can deposit the sum in capital gains account scheme.

In that case, exemption to be granted to assessee shall be aggregate of actual investment in new capital asset and amount deposited in capital gains account scheme before due date of filing of return of income.

The amount so deposited in the capital gains account scheme should be utilized for investment in specified asset within specified time-limit, otherwise the unutilized amount shall be chargeable to tax in the previous year in which the time-limit expires. The unutilized amount would be taxable as short-term capital gain/long-term capital gain, depending upon the nature of original capital gain.
In ITR forms, requisite details are required to be provided in respect of amount so deposited in capital gains account scheme.

The details which are required to be provided if amount is deposited in capital gains account scheme are as follows:
  a) Previous year in which asset is transferred
  b) Section under which exemption is claimed
  c) Year in which new asset is acquired
  d) Amount utilized out of capital gains account scheme to acquire new asset
  e) Amount that has remained unutilized in capital gains account scheme or amount which is not used for making investment in specified new asset

7. Return filed pursuant to order of CBDT under Section 119
[ITR 1, 2, 2A, 4S]
For avoiding genuine hardship, by general or special order, the Board may authorize any tax authority other than CIT (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief after the expiry of the period specified under the Act.

If assessee is filing return of income pursuant to an order of CBDT under Section 119(2)(b), it shall tick the check-box [ under Section 119(2)(b)] introduced in the ITR form.
Generally CBDT extends date of filing of return under Section 119 in cases of natural calamities or when taxpayer faces genuine hardship in certain circumstances. Recently, the due date of filing of return for J&K taxpayers was extended by the CBDT due to devastation caused by flood in J&K.

8. Details of income taxable under DTAA
[ITR 2, 2A]
If capital gain or residuary income of assessee is taxable as per provisions of the DTAA entered into between India and a foreign country, of which the assessee is a resident, following details shall be furnished in the return:
  a) Name of the Country
  b) Relevant Article of the DTAA
  c) Rate of tax under DTAA (applicable in case of residuary income)
  d) Confirmation if TRC has been obtained
  e) Corresponding section of the Act which prescribe the rate of tax (applicable in case of residuary income)
  f) Amount of income
Further, the special tax rate on capital gain or residuary income and tax on such income as per DTAA shall be disclosed separately in Schedule SI.

9. Advance Pricing Agreement – Code for filing modified return withdrawn
[ITR 2]
As per provisions of Section 92CD – Effect of Advance Pricing Agreement ('APA'), where any person has entered into an APA and prior to the date of entering into the agreement any return of income has been furnished under section 139 for any previous year to which such agreement applies, such person shall furnish, within a period of three months from the end of the month in which the said agreement was entered into, a modified return in accordance with the APA.

In the ITR forms notified earlier on April 15, 2015, the taxpayer was required to select the relevant check-box in Part A – Gen [Modified Return - Section 92CD] if modified return was being filed pursuant to an Advance Pricing Agreement.

The check-box for selecting the option of 'Modified Return – Section 92CD' has been withdrawn from ITR 2 as notified on June 22, 2015. Such an option is withdrawn from ITR 2 for the reasons that the taxpayer who enters into an APA will have the business income and in that case, he shall file return of income in ITR 4 only. Similarly, the additional verification clause introduced in the ITR form notified earlier has also been withdrawn.

10. Details about the foreign assets and foreign income
[ITR 2]
If an individual (not being a citizen of India) is in India on a business, employment or student visa purposes and he acquires any asset during the previous year in which he was a non-resident, such an asset shall not be required to be reported in return if no income has been derived from that asset during the current previous year.

The ITR forms seek more details about the foreign assets and income from any source outside India. Schedule FA is substituted which requires assessee to provide detailed information about such foreign assets and income. The additional disclosures in the new ITR form shall be as under:
1) Foreign Bank Account:
  a) Status of account holder (i.e., Owner/Beneficial Owner/Beneficiary)
  b) Date of opening of such bank account;
  c) Interest accrued in the account; and
  d) Details about the interest offered to tax in the return.

2) Financial Interest in a foreign entity:
  a) Nature of financial interest (direct, beneficial ownership or beneficiary) in such entity;
  b) Date since such interest is held;
  c) Income accrued from such interest;
  d) Nature of income; and
  e) Details about the income offered to tax in this return.

3) Foreign Immovable Property or any other capital asset
  a) Whether ownership in such asset is direct or beneficial or as beneficiary;
  b) Date of acquisition of such asset;
  c) Income derived from such asset;
  d) Nature of income; and
  e) Details about the income offered to tax in this return

4) Signing authority in any foreign account
  a) Whether income accrued in such account is taxable in assessee's hands; and
  b) If yes then furnish details about the income offered to tax in this return

5) Trustee or Beneficiary or Settlor in a foreign trust
  a) Date since the position of trustee or beneficiary or settlor held in foreign trust;
  b) Whether income derived from the trust is taxable in assessee's hands; and
  c) If yes, details about the income offered to tax in this return

6) Any other income derived from any source outside India
  a) Country Name and Code;
  b) Name and address of the person from whom income is derived;
  c) Amount of income derived;
  d) Nature of income;
  e) Whether income is taxable in assessee's hands; and
  f) If yes, details about the income offered to tax in this return.

11. Agricultural income
[ITR 2, 2A]
The Schedule EI in ITR forms requires assessee to provide following figures separately:
  a) Gross agricultural receipts
  b) Expenditure incurred on agriculture
  c) Unabsorbed agricultural loss of previous eight assessment years
  d) Net agricultural income for the year.

12. Distinction between heavy and light good carriages removed
[ITR- 4S]
The Finance (No. 2) Act, 2014 amended Section 44AE to remove the distinction between heavy goods carriages and light good carriages. From Assessment Year 2015-16, presumptive income in respect of goods carriages is computed at a uniform rate of Rs. 7,500 per month for any goods carriages.

Therefore, the ITR forms remove the concept of type of goods carriages and to provide for uniform rate of Rs. 7,500 per month for computation of presumptive income of goods carriages.

13. Acknowledgment of details relating to exempt income in ITR-V
[ITRs- 1, 2, 2A, 4S]
Relevant columns have been provided under ITR-V to acknowledge exempt income, inter-alia, agricultural income and other exempt incomes.

14. Concessional tax rate in case of sale of listed securities (other than unit)
[ITR 2]
As per the existing proviso to Section 112, if tax payable on long-term capital gains arising on transfer of a capital asset, being listed securities or units or zero coupon bonds, exceeds 10% per cent of the amount of capital gains before allowing for indexation adjustment, then such excess shall be ignored.

The Finance (No. 2) Act, 2014 amended the said proviso to provide that the concessional rate of tax of ten per cent shall be available only for long-term capital gain arising from transfer of listed securities (other than unit) and zero coupon bonds.

Therefore, consequential amendment is made to ITR forms in accordance with the amendment.

15. Sale of units of business trust
[ITR- 2]
The Finance (No. 2) Act, 2014 introduced a new Chapter XII-FA in the I-T Act to provide for special provisions relating to business trust. The special taxation regime contains provisions for taxability of income in the hands of business trusts and the income distributed to its unit holders.
Consequential amendment is made to Section 10(38) to provide that long-term capital gain arising from transfer of unit of a business trust on which securities transaction tax (STT) is paid shall be exempt from tax.

Similarly, Section 111A has been amended to provide that short-term capital gain arising from transfer of unit of a business trust on which STT is paid shall be chargeable to tax at reduced rate of 15%.

Necessary changes have been made in this regard in the ITR forms.

16. Securities held by FIIs
[ITR 2]
Section 2(14) of the Act was amended by the Finance (No. 2) Act, 2014 to provide that securities held by FIIs shall be deemed as 'Capital Assets'. The amendment was made to end the controversy of categorization of income of FIIs as business income or capital gains.
Consequential changes have been made in ITR forms in this regard.

17. Reshuffling of Schedules
[ITRs 1, 2, 2A, 4S]
The information required to be filed in the following Schedules has been reshuffled:
  a) Schedule BA – Details of Bank Accounts [ITRs 1, 2, 2A, 4S]
  b) Schedule IT – Details of payments of Advance Tax and Self-Assessment Tax [ITR 2]
  c) Schedule TDS1 – Details of Tax Deducted at Source from Salary [ITR 2]
  d) Schedule TDS2 – Details of Tax Deducted at Source on Income [ ITR 2]
  e) Schedule FT – Passport Number. No need to furnish details of foreign travel and expenses incurred during the year. [ITRs 2, 2A]

ITR 1 SAHAJ and ITR 4S SUGAM form for assessment year 2015-16

Income tax department made changes in income tax forms for the assessment year 2015-16 and notified new ITR 1 SAHAJ and ITR 4S SUGAM forms for the assessment year 2015-16. These forms are notified both in excel based utility and java platform.

ITR-1 SAHAJ- For individuals having income from salary and interest.

ITR-4S SUGAM- For individuals/HUF having income from presumptive business.


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 Incorporation section code 192A and 194LBB:

“192A” & “194LBB” have been added for below forms which will be applicable for statements pertain to FY 2015-16 & Q1 onwards.

Section code 192A will be applicable for Form 26Q.
Section code 194LBB will be applicable only for Form 26Q and 27Q.
For section code “192A”, select “92D” from the dropdown of section code column in Annexure I sheet.
For section code “194LBB”, select “LBB” from the dropdown of section code column in Annexure I sheet.

Remark “T” (i.e. for transporter transaction and valid PAN is provided) under deductee details (Annexure I) will be applicable from Q3 of FY 2009-10 onwards.

Said validation will be applicable only for Form 26Q.

Remarks for higher deduction (in deductee details):
In case of 'C' (i.e. for higher deduction) remark in Deductee details (Annexure I), in addition to existing fields, below details will also be allowed to be updated in correction statements:

Name of deductee (Applicable to all Forms)
Section code (For statements pertains to FY 2013-14 onwards and to all Forms)

Nature of remittance (Applicable only for Form 27Q)
Unique acknowledgement of the corresponding form no. 15CA (if available) (Applicable only for Form 27Q)

Country of Residence of the deductee (Applicable only for Form 27Q)
Grossing up indicator (Applicable only for Form 27Q)
Date of deduction (Applicable to all Forms)

Incorporation of latest File Validation Utility (FVU) version 4.7 (applicable for TDS/TCS statements pertaining to FY 2010-11 onwards) and FVU version 2.143 (applicable for TDS/TCS statements from FY 2007-08 upto FY 2009-10)
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Tin.nsdl has launched latest return preparation utility RPU version 1.2 in java platform for regular and correction statement of e-TDS/TCS return.This is the latest version in java platform which is launched on June 22 2015. There are many new features added in RPU version 1.2 which are as under.

Preparation of Regular and Correction TDS/TCS Statement(s) for Form 24Q, 26Q, 27Q & 27EQ pertaining to Financial Year 2007-08 onwards (for all quarters).

Incorporation section code 192A and 194LBB:
“192A” & “194LBB” have been added for below forms which will be applicable for statements pertain to FY 2015-16 & Q1 onwards.

Section code 192A will be applicable for Form 26Q.

Section code 194LBB will be applicable only for Form 26Q and 27Q.

For section code “192A”, select “92D” from the dropdown of section code column in Annexure I sheet.

For section code “194LBB”, select “LBB” from the dropdown of section code column in Annexure I sheet.

Remark “T” (i.e. for transporter transaction and valid PAN is provided) under deductee details (Annexure I) will be applicable from Q3 of FY 2009-10 onwards.

Said validation will be applicable only for Form 26Q.

Remarks for higher deduction (in deductee details):
In case of 'C' (i.e. for higher deduction) remark in Deductee details (Annexure I), in addition to existing fields, below details will also be allowed to be updated in correction statements:

Name of deductee (Applicable to all Forms)

Section code (For statements pertains to FY 2013-14 onwards and to all Forms)

Nature of remittance (Applicable only for Form 27Q)

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CBDT clarification on rollback provisions of Advance Price Agreement Scheme

CBDT clarification on rollback provisions of Advance Price Agreement Scheme

CBDT issued a circular no. 10/2015 dated 10 June 2015 regarding clarification on rollback provisions of advance price agreement scheme. Full circular is as under.

The Advance Pricing Agreement provisions were introduced in 2012 through insertion of sections 92CC and 92CD in the Income-tax Act, 1961 by the Finance Act, 2012. Subsequently, the Advance Pricing Agreement Scheme was notified vide S.O. 2005 (E), dated 30/8/2012, thereby inserting Rules 10F to 10T and Rule 44GA in the Income-tax Rules, 1962.

2. Rollback provisions in the APA Scheme were introduced through sub-section (9A) inserted in section 92CC by the Finance (No. 2) Act, 2014 and the relevant rules, namely, Rules 10MA and 10RA, have been notified recently vide S.O. 758(E) dated 14th March, 2015 and S.O. 915(E) dated 1st April, 2015. Subsequent to the notification of the rules, requests for clarification regarding certain issues have been received in the Central Board of Direct Taxes. In order to clarify such issues, the Board has decided to adopt a Question and Answer format and the clarifications are hereby provided as below:

Q.1 Under rule 10 MA(2)(ii) there is a condition that the return of income for the relevant roll back year has been or is furnished by the applicant before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Income-tax Act (hereinafter referred to as the ‘Act’). It is not clear as to whether applicants who have filed returns under section 139(4) or 139(5) of the Act would be eligible for roll back.

Answer:
The return of income under section 139(5) of the Act can be filed only when a return under section 139(1) has already been filed. Therefore, the return of income filed under section 139(5) of the Act, replaces the original return of income filed under section 139(1) of the Act. Hence, if there is a return which is filed under section 139(5) of the Act to revise the original return filed before the due date specified in Explanation 2 to sub-section (1) of section 139, the applicant would be entitled for rollback on this revised return of income.

However, rollback provisions will not be available in case of a return of income filed under section 139(4) because it is a return which is not filed before the due date.

Q.2 Rule 10MA (2)(i) mandates that the rollback provision shall apply in respect of an international transaction that is same as the international transaction to which the agreement (other than the rollback provision) applies. It is not clear what is the meaning of the word “same”. Further, it is not clear whether this restriction also applies to the Functions, Assets, Risks (FAR) analysis.

Answer:
The international transaction for which a rollback provision is to be allowed should be the same as the one proposed to be undertaken in the future years and in respect of which the agreement has been reached. There cannot be a situation where rollback is finalised for a transaction which is not covered in the agreement for future years. The term same international transaction implies that the transaction in the rollback year has to be of same nature and undertaken with the same associated enterprise(s), as proposed to be undertaken in the future years and in respect of which agreement has been reached. In the context of FAR analysis, the restriction would operate to ensure that rollback provisions would apply only if the FAR analysis of the rollback year does not differ materially from the FAR validated for the purpose of reaching an agreement in respect of international transactions to be undertaken in the future years for which the agreement applies.

The word “materially” is generally being defined in the Advance Pricing Agreements being entered into by CBDT. According to this definition, the word “materially” will be interpreted consistently with its ordinary definition and in a manner that a material change of facts and circumstances would be understood as a change which could reasonably have resulted in an agreement with significantly different terms and conditions.

Q.3 Rule 10MA (2)(iv) requires that the application for rollback provision, in respect of an international transaction, has to be made by the applicant for all the rollback years in which the said international transaction has been undertaken by the applicant. Clarification is required as to whether rollback has to be requested for all four years or applicant can choose the years out of the block of four years.

Answer:
The applicant does not have the option to choose the years for which it wants to apply for rollback. The applicant has to either apply for all the four years or not apply at all. However, if the covered international transaction(s) did not exist in a rollback year or there is some disqualification in a rollback year, then the applicant can apply for rollback for less than four years. Accordingly, if the covered international transaction(s) were not in existence during any of the rollback years, the applicant can apply for rollback for the remaining years. Similarly, if in any of the rollback years for the covered international transaction(s), the applicant fails the test of the rollback conditions contained in various provisions, then it would be denied the benefit of rollback for that rollback year.
However, for other rollback years, it can still apply for rollback.

Q.4 Rule 10 MA(3) states that the rollback provision shall not be provided in respect of an international transaction for a rollback year if the determination of arm’s length price of the said international transaction for the said year has been the subject matter of an appeal before the Appellate Tribunal and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement. Further, Rule 10 RA(4) provides that if any appeal filed by the applicant is pending before the Commissioner (Appeals), Appellate Tribunal or the High Court for a rollback year, on the issue which is subject matter of the rollback provision for that year, the said appeal to the extent of the subject covered under the agreement shall be withdrawn by the
applicant. There is a need to clarify the phrase “Tribunal has passed an order disposing of such
appeal” and on the mismatch, if any, between Rule 10MA(3) and Rule 10RA(4).

Answer:
 The reason for not allowing rollback for the international transaction for which Appellate
Tribunal has passed an order disposing of an appeal is that the ITAT is the final fact
finding authority and hence, on factual issues, the matter has already reached finality in
that year. However, if the ITAT has not decided the matter and has only set aside the
order for fresh consideration of the matter by the lower authorities with full discretion at
their disposal, the matter shall not be treated as one having reached finality and hence,
benefit of rollback can still be given. There is no mismatch between Rule 10MA(3) and Rule 10RA(4).

Q.5 Rule 10MA(3)(ii) provides that rollback provision shall not be provided in respect of an international transaction for a rollback year if the application of rollback provision has the effect of reducing the total income or increasing the loss, as the case may be, of the applicant as declared in the return of income of the said year. It may be clarified whether the rollback provisions in such ituations can be applied in a manner so as to ensure Page 3 of 8 that the returned income or loss is accepted as the final income or loss after applying the rollback provisions.
Answer:
It is clarified that in case the terms of rollback provisions contain specific agreement between the Board and the applicant that the agreed determination of ALP or the agreed manner of determination of ALP is subject to the condition that the ALP would get modified to the extent that it does not result in reducing the total income or increasing the total loss, as the case may be, of the applicant as declared in the return of income of the said year, the rollback provisions could be applied. For example, if the declared income is Rs. 100, the income as adjusted by the TPO is Rs. 120, and the
application of the rollback provisions results in reducing the income to Rs. 90, then the rollback for that year would be determined in a manner that the declared income Rs.100 would be treated as the final income for that year.

Q.6 Rule 10RA(7) states that in case effect cannot be given to the rollback provision of an agreement in accordance with this rule, for any rollback year to which it applies, on account of failure on the part of applicant, the agreement shall be cancelled. It is to be clarified as to whether the entire agreement is to be cancelled or only that year for which roll back fails.

Answer:
The procedure for giving effect to a rollback provision is laid down in Rule 10RA. Subrules (2), (3), (4) and (6) of the Rule specify the actions to be taken by the applicant in order that effect may be given to the rollback provision. If the applicant does not carry out such actions for any of the rollback years, the entire agreement shall be cancelled. This is because the rollback provision has been introduced for the benefit of the applicant and is applicable at its option. Accordingly, if the rollback provision cannot be given effect to for any of the rollback years on account of the applicant not taking the actions specified in sub-rules (2), (3), (4) or (6), the entire agreement gets vitiated and
will have to be cancelled.

Q.7 If there is a Mutual Agreement Procedure (MAP) application already pending for a rollback year, what would be the stand of the APA authorities? Further, what would be the view of the APA Authorities if MAP has already been concluded for a rollback year?

Answer:
If MAP has been already concluded for any of the international transactions in any of the rollback year under APA, rollback provisions would not be allowed for those international transactions for that year but could be allowed for other years or for other international transactions for that year, subject to fulfilment of specified conditions in Page 4 of 8R ules 10MA and 10RA. However, if MAP request is pending for any of the rollback year under APA, upon the option exercised by the applicant, either MAP or application for roll back shall be proceeded with for such year.

Q.8 Rule 10MA(1) provides that the agreement may provide for determining ALP or manner of determination of ALP. However, Rule 10MA(4) only specifies that the manner of determination of ALP should be the same as in the APA term. Does that mean the ALP could be different?

Answer:
Yes, the ALP could be different for different years. However, the manner of determination of ALP (including choice of Method, comparability analysis and Tested Party) would be same.

Q.9 Will there be compliance audit for roll back? Would critical assumptions have to be validated during compliance audit?
Answer:
Since rollback provisions are for past years, ALP for the rollback years would be agreed after full examination of all the facts, including validation of critical assumptions. Hence, compliance audit for the rollback years would primarily be to check if the agreed price or methodology has been applied in the modified return.

Q.10 Whether applicant has an option to withdraw its rollback application? Can the applicant accept the rollback results without accepting the APA for the future years?

Answer:
The applicant has an option to withdraw its roll back application even while maintaining the APA application for the future years. However, it is not possible to accept the rollback results without accepting the APA for the future years. It may also be noted that the fee specified in Rule 10MA(5) shall not be refunded even where a rollback application is withdrawn.

Q.11 For already concluded APAs, will new APAs be signed for rollback or earlier APAs could be revised?

Answer:Page 5 of 8 The second proviso to Rule 10MA(5) provides for revision of APAs already concluded to include rollback provisions.

Q.12 For already concluded APAs, where the modified return has already been filed for the first year of the APA term, how will the time-limit for filing modified return for rollback years be determined?

Answer:
The time to file modified return for rollback years will start from the date of signing the revised APA incorporating the rollback provisions.
Q.13 In case of merger of companies, where one or more of those companies are APA applicants, how would the rollback provisions be allowed and to which company or companies would it be allowed?

Answer:
The agreement is between the Board and a person. The principle to be followed in case of merger is that the person (company) who makes the APA application would only be entitled to enter into the agreement and be entitled for the rollback provisions in respect of international transactions undertaken by it in rollback years. Other persons (companies) who have merged with this person (company) would not be eligible for the rollback provisions. To illustrate, if A, B and C merge to form C and C is the APA applicant, then the agreement can only be entered into with C and only C would be eligible for the rollback provisions. A and B would not be eligible for the rollback provisions. To illustrate further, if A and B merge to form a new company C and C is the APA applicant, then nobody would be eligible for rollback provisions.

Q.14 In case of a demerger of an APA applicant or signatory into two or more companies (persons), who would be eligible for the rollback provisions?

Answer:
The same principle as mentioned in the previous answer, i.e., the person (company) who makes an APA application or enters into an APA would only be entitled for the rollback provisions, would continue to apply. To illustrate, if A has applied for or entered into an APA and, subsequently, demerges into A and B, then only A will be eligible for rollback for international transactions covered under the APA. As B was not in existencein rollback years, availing or grant of rollback to B does not arise.
Indian post office saving account holder will get personalised debit cards

Indian post office saving account holder will get personalised debit cards

Department of Post has signed a deal with CMS Info Systems to personalise over 15 million debit cards for India Post savings account holders. The deal, valued at Rs 30 crores, is estimated to be completed in the next three years. These debit cards will be Rupay enabled.

The postal department currently covers a base of approximately 100 million account holders in India, and is in the midst of a phased deployment of ATMs across the country, to better its service.

The cards will be issued on the NPCI platform and their usage would initially be limited only to ATMs installed at post office branches, as a closed loop environment. The cards can later be used on other ATMs with Rupay affiliation. These cards will initially be of the magstripe variant, with the option of EMV being available to the account holders after a set period of time.
TDS on Recurring Deposit RD

TDS on Recurring Deposit RD

The Union Budget presented by Finance Minister Arun Jaitley proposes to bring recurring deposits under the provisions of TDS (tax deducted at source). As a result, if interest earned on recurring deposits exceeds Rs. 10,000 a year, TDS at the rate of 10 per cent would be deducted by the bank.

Recurring deposit is a special kind of deposit offered by banks and post offices in which investors deposit a fixed amount every month into their accounts. Some banks offer recurring deposits for tenures of up to 10 years.

Particulars
Tax on interest of Fixed Deposit
Tax on interest of RD
Tax on interest of Saving A/c
TDS applicability
TDS @10% on interest
TDS @10% on interest
No TDS
Income tax deduction allowed
Full interest taxable
Full interest taxable
Rs. 10000 deduction
Income tax rate
As per income tax slabs
As per income tax slabs
As per income tax slabs

The proposal to tax recurring deposits, a favourite saving instrument for salaried and middle class Indians, will come into effect from June 1.

Earlier, only fixed deposits in banks or post offices came under the ambit of TDS.

Investors with no taxable income will have to submit Form 15G to avoid TDS on both recurring deposits and fixed deposits. For senior citizens, the requisite form for avoiding TDS is 15H.

No paper slip from HDFC ATMs now

No paper slip from HDFC ATMs now

The second largest private sector lender HDFC BankBSE -2.62 % has decided to discontinue issuing slips after cash withdrawals at ATMs and will alert the customer through SMSes. 

"We have decided to discontinue issuing receipts after cash withdrawals. The SMS which will be sent will have detailed information on the withdrawn amount and the balance in account," a senior bank official told PTI. 

The bank is piloting the initiative at a few ATMs at present and will roll out the same across its network of over 11,700 ATMs by the end of June, the official added. 

Cash withdrawals account for the bulk of transactions at ATMs and the bank witnesses an average of 2 crore cash withdrawals every month at its ATMs. 

When asked about the benefits for the bank, the official said the switch to paperless mode will help it save under Rs 10 crore a year spent on paper. 

At present, customers are given a choice on whether they want a printed receipt or not. 

However, much of the receipts get discarded as soon as they come out and if not disposed off in the right way, also pose a security risk as they contain private information. 


This is a part of the digital initiative for the bank, under which it had last year launched the 'Green PIN' scheme wherein card-users were given the PIN numbers electronically rather than in a printed kit, the official said. 

The official pointed out that customers of other banks who use HDFC Bank's ATMs will also not get the receipt as sending the SMS is mandatory for any bank. 

The bank is not doing away with using paper at the ATMs completely and customers   wanting to get the receipts can do a separate transaction to get either a mini statement or balance enquiry to get a receipt, the official said. 

HDFC Bank added around 500 machines last year and will continue to add machines to complement its branch expansion, the official said. 
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