Amendment in Sec. 80-IA
(1) Amendment in Sec. 80-IA(4)
Existing provisions
As per Clause (iv) of sub section (4) of Section 80-IA any undertaking set up in any part of India for
1. generation or generation and distribution of power
2. transmission or distribution of power
3. undertaking substantial renovation and modernization of the existing network of transmission
a deduction was available to the assessee for 100% of the profits derived from the specified undertaking for a period of 10 consecutive years out a block of 15 years where the assessee undertook the aforesaid activities till 31 March 2012.
Proposed amendment
Finance Bill 2012 proposes for the words, figures and letters "the 31st day of March, 2012" in section 80-IA(4)(iv) the words, figures and letters "the 31st day of March, 2013" shall be substituted.
Analysis/Conclusion
As per the proposed amendment, the eligibility cut-off for carrying out the aforesaid activities has been extended by a period of one year i.e., up to 31 March 2013. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-14 and subsequent assessment years.
(2) Explanation to sub-section (8) to Section 80-IA
Existing provision
As per the existing provisions, the transactions (sale of goods or provision of services) between the eligible undertaking and other undertakings of the assessee should be carried out at market value. The market value in relation to any goods or services was defined to mean the price that such goods or services would ordinarily fetch in the open market.
Amendment
For the purposes of this sub-section, "market value", in relation to any goods or services, has now been proposed to mean: -
• the price that such goods or services would ordinarily fetch in the open market; or
• the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or provision of services is a specified domestic transaction referred to in newly proposed section 92BA
Analysis/Conclusion
With effect from assessment year commencing 1 April 2013, a new section 92BA has been inserted which defines "specified domestic transaction".
This section has been inserted to ensure that where an eligible undertaking enters into any "specified transaction" with any other undertaking, then for the purpose of availing benefit under section 80-IA, the transaction recorded in the books of accounts should correspond to the market value of such goods or services.
In this regard, the market value of such goods and services in relation to such "specified domestic transaction" shall be computed as discussed above.
This amendment will take effect from 1st April 2013 and will, accordingly, apply in relation to the Assessment Year 2013-14 and subsequent assessment years.
(3) Sub-section (10) to Section 80-IA
Existing
In cases where owing to the close connection between the assessee carrying on the eligible business and any other person, the business is so transacted that the eligible undertaking under section 80-IA earns more than the ordinary profits which might be expected to arise in such eligible business, the Assessing Officer is empowered to compute the profits and gains of such eligible business for the purposes of the deduction under this section.
Amendment
A proviso to this sub-section (10) is proposed to be inserted where aforesaid arrangement involves a specified domestic transaction referred to in section 92BA, the amount of profits from such transaction shall be determined having regard to arm's length price as defined in clause (ii) of section 92F.
Analysis/Conclusion
With effect from assessment year commencing 1 April 2013 a new section 92BA has been inserted which defines "specified domestic transaction".
This section has been inserted to ensure that where an undertaking enters into any "specified transaction" with any other person, where owing to close connection the transaction results in more than ordinary profits to the eligible undertaking, the same should be valued in the manner provided in clause (ii) of section 92F.
This amendment will take effect from 1st April 2013 and will, accordingly, apply in relation to the Assessment Year 2013-14 and subsequent assessment years.
0 comments:
Post a Comment