Draft Circular – Section 234A – INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME

DRAFT CIRCULAR NO. 2/2015 [F.NO.385/03/2015-IT(B), DATED 10-2-2015

Based on the Suprement Court Ruling in case of CIT v. Prannoy Roy, 309 ITR 231 (2009), CBDT has decided that interest under Section 234A shall not be levied on the Self Assessment Tax paid by the assessee before the due date of filing return of income.

The circular can be downloaded by clicking –> Interest under Section 234A

SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION NOTIFIED

SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION NOTIFIED

INCOME-TAX (SECOND AMENDMENT) RULES, 2015 – AMENDMENT IN RULES 10D, 10TA AND INSERTION OF RULES 10TH, 10THA, 10THB, 10THC, 10THD AND FORM 3CEFB

NOTIFICATION NO. 11/2015 [F.NO.142/7/2014-TPL]/SO 350(E), DATED 4-2-2015

In exercise of the powers conferred by sections 92CB and 92D read with section 295 of the Income-tax Act, 1961(43 of 1961), CBDT inserts new rule, RULE 10TH (SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION)

Rule 10THA: (INSERTED AFTER RULE TG)

Eligible Assessee : The ‘eligible assessee’ means a person who has exercised a valid option for application of safe harbour rules in accordance with the provisions of rule 10THC, and is a Government company engaged in the business of generation, transmission or distribution of electricity.

Rule 10THB:

Eligible Specified Domestic Transaction: Eligible SDT means SDT undertaken by eligible assessee and comprises of the following

  1. Supply of electricity by generating company; or
  2. Transmission of Electricity; or
  3. Wheeling of Electricity

Rule 10THC:

(1) Safe Harbour

Where an eligible assessee has entered into eligible SDT in any previous year relevant to an assessment year and option exercised by the said eligible assessee is treated to be validly exercised under Rule 10THD, the transfer price declared by the assessee in respect of such transaction shall be accepted by the tax authorities, if it is in accordance with the circumstances as specified in Rule 10THC (2)

(2) Circumstances referred to in Rule 10THC (1) in respect of eligible SDT shall be determined as tabulated below:

Sr. No.

Eligible SDT

Circumstances

1

Supply of electricity, transmission of electricity, wheeling of electricity referred to in items (i), (ii) or (iii) of rule THB, as the case may be.

The tariff in respect of supply of electricity, transmission of electricity, wheeling of electricity, as the case may be, is determined by the Appropriate Commission in accordance with the provisions of the Electricity Act, 2003 (36 of 2003).

 (3) No comparability adjustment and allowance under the second proviso to sub-section (2) of section 92C shall be made to the transfer price declared by the eligible assessee and accepted under sub-rule (1)

(4) The provisions of sections 92D and 92E in respect of a specified domestic transaction shall apply irrespective of the fact that the assessee exercises his option for safe harbour in respect of such transaction.

Rule 10THD:

Procedure: Rule 10THD lays down the procedure in which the eligible assessee shall avail the option of safe harbour rule.

CBDT amends rule 10D for maintenance of the documents for eligible assessees entering into eligible SDT referred to in Rule 10TH:

Insertion of Rule 10D(2A) after Rule 10D(2):

“(2A) Nothing contained in sub-rule (1), insofar as it relates to an eligible specified domestic transaction referred to in rule 10 THB, shall apply in a case of an eligible assessee referred to in rule 10 THA and, the said eligible assessee, shall keep and maintain the following information and documents, namely:—

  1. a description of the ownership structure of the assessee enterprise with details of shares or other ownership interest held therein by other enterprises;
  2. a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted;
  3. the nature and terms (including prices) of specified domestic transactions entered into with each associated enterprise and the quantum and the value of each such transaction or class of such transaction;
  4. a record of proceedings if any before the regulatory commission and orders of such commission relating to the specified domestic transaction;
  5. a record of the actual working carried out for determining the transfer price of the specified domestic transaction;
  6. the assumptions, policies and price negotiations, if any, which have critically affected the determination of the transfer price;
  7. any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the transfer price.;”

 RULE 10T shall be re-termed as SAFE HARBOUR RULES FOR INTERNATIONAL TRANSACTIONS

NOTIFICATION NO. 11/2015 [F.NO.142/7/2014-TPL]/SO 350(E), DATED 4-2-2015 can be downloaded by clicking here –> SAFE HAROUR RULE FOR SDT NOTIFIED