Suggestions of ICAI in its Post Budget Memorandum-2012 considered in the amendments to Finance Bill, 2012 as passed by
the Lok Sabha
Clause in Section Proposed Amendment Suggestion Given in Post-Budget Suggestions considered
Bill Memorandum, 2012
No.11C
of 2012
as
passed
by Lok
Sabha
3 Section The Finance Bill, 2012 proposed The definition of income under section This suggestion has been
2(24)(xvi) to insert clause (viib) in section 2(24) should be amended to include considered by inserting sub-
read with 56(2) to provide that if the any sum of money referred to in clause (xvi) in section 2(24) to
section consideration for shares is in section 56(2)(viib). include, in the definition of
56(2) excess of the fair value of the income, any consideration
shares, the aggregate received for issue of shares as
consideration received in excess exceeds the fair market value.
of the fair value determined as
per method prescribed or
substantiated by the company to
the Assessing Officer based on
the value of its assets, would be
taxable as the income of a
closely held company.
However, no consequential
amendment was made in section
2(24) to include the same in the
definition of income.
Clause in Section Proposed Amendment Suggestion Given in Post-Budget Suggestions considered
Bill Memorandum, 2012
No.11C
of 2012
as
passed
by Lok
Sabha
25 Section As per para 35 of page 7 of the A clause may be incorporated in the Section 80CCG has been inserted
80CCG Speech of the Finance Minister, Finance Bill, 2012 to give effect to the to give effect to the
a new scheme called Rajiv above proposal. announcement made by the
Gandhi Equity Savings Scheme Finance Minister.
was proposed to be introduced.
New retail investors, who invest
Rs.50,000 directly in equities and
whose annual income is below
Rs.10 lakhs, would be entitled for
deduction of 50% of their
investment.
However, there was no clause in
the Finance Bill, 2012 to give
effect to this proposal.
41 Chapter X- 1.) Under the GAAR Provisions, It was suggested that: a) The Finance Bill, 2012, as
A as proposed by the Finance Bill, 1. The constitution of the passed by the Lok Sabha, has
General 2012, the onus of proof that the Approval Panel may include deleted section 96(2) which cast
Anti- transaction does not invoke members from judiciary bodies, onus onus on the assessee to
Clause in Section Proposed Amendment Suggestion Given in Post-Budget Suggestions considered
Bill Memorandum, 2012
No.11C
of 2012
as
passed
by Lok
Sabha
Avoidance GAAR was on the assessee. independent of the Income Tax prove that a particular case does
Rule Department. not invoke the provisions of
Section GAAR.
2) The Finance Bill, 2012 also 2. The initial burden of proof must
96(2) and be placed on the Revenue b) The Finance Bill, 2012, as
provided for constitution of an
section Authorities, to prima facie make passed by the Lok Sabha,
Approving Panel, comprising of
144BA
officers of rank of Commissioner out a case for invoking GAAR. provides for constitution of an
and above, by the Board to Approving Panel consisting of not
dispose of, the reference within a less than three members
period of six months from the end comprising of income tax
of the month in which the authorities not below the rank of
reference was received from the Commissioner and an officer of
Commissioner. the Indian Legal Service not
below the rank of Joint
Secretary to the Government of
India.
57 Section Sub-section (4) of section 115U Section 115U may be suitably Section 115U(4) which provided
115U providing for exemption from amended to clarify the correct for exemption from DDT and TDS
dividend distribution tax and tax intention of law as laid down in the in the hands of the VCC/VCF is
deduction at source in the hands Explanatory Memorandum i.e. proposed to be retained, which
of the Venture Capital Company taxability of income in the hands of implies that the VCC/VCF will
Clause in Section Proposed Amendment Suggestion Given in Post-Budget Suggestions considered
Bill Memorandum, 2012
No.11C
of 2012
as
passed
by Lok
Sabha
and Venture Capital Fund was the investor and deduction of tax at continue to be exempt from the
proposed to be substituted. The source from such income by the applicability of DDT. The
intention as spelt out in the VCC/VCF and non-applicability of suggestion of ICAI in this regard
Explanatory Memorandum was to dividend distribution tax in the has been accepted. In addition,
tax income on accrual basis in hands of the VCC/VCF. the VCC/VCF have also been
the hands of the investor and exempt from the responsibility of
provide for deduction of tax at deducting tax at source.
source by the VCC/VCF.
However, it is possible that the
amended language of law may
lead to an interpretation that
dividend distribution tax is
attracted on such payment, since
the specific exemption given by
sub-section (4) is proposed to be
removed, in which event there
would be no question of
deduction of tax at source since
the last proviso to section 194
specifically excludes from its
Clause in Section Proposed Amendment Suggestion Given in Post-Budget Suggestions considered
Bill Memorandum, 2012
No.11C
of 2012
as
passed
by Lok
Sabha
scope, dividends referred to in
section 115-O. This seemed to
be an inadvertent drafting error
requiring rectification.
The Finance Bill, 2012 contained The Institute has suggested in its The Finance Minister, in his
certain amendments to clarify the introductory portion that retrospective speech on 7.5.2012, clarified that
the retrospective clarificatory
intent of law which were amendments should not affect
amendments now under
proposed to be given effect to completed assessments. consideration of Parliament will
retrospectively. For example, the not be used to reopen any cases
amendments in section 2(14), 9, where assessment orders have
195 etc. to bring to tax indirect already been finalized. The
transfers of capital assets, where Central Board of Direct taxes
the underlying assets are located would issue a policy circular to
in India. clearly state this position after the
passage of the Finance Bill.
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