The Finance Bill 2022 (Bill No.18 of 2022) dt.1st February, 2022 proposed several amendments as like every years made in the Income – tax Act, 1961. This year also the Finance Minister brought certain amendments pertaining to miscellaneous provisions. with respects to income do not a part of total income, income of certain trust, funds or institutions, taxation of dividends, special provisions for payments of tax, Disputes Resolutions Panel, limitation periods for assessment, reassessment and re- computations, refunds, appeals and revisions etc. and more so.

Let’s see which are the miscellaneous provisions newly inserted as well as amended in the Income – tax Act,1961.

• Amendment in section 10 – Relating to incomes which do not included in total incomes. (Clause 4)

  1. Sub section (4E) is proposed to amend to extend the exemption to the income accrued or arisen to or received by a non-resident as a result of transfer of offshore derivative instruments or over-the- counter derivatives entered into with an Offshore Banking Unit of an International Financial Services Centre, referred to in subsection (1A) of section 80LA.

     The reasons behind this amendment is that exemption was available only in respect of income from transfer of non-deliverable forwards contract of non-resident which is proposed to be extended to the income of transfer of off shore derivatives instruments as well as over the counter entered in to offshore banking unit with an object to make IFSC a Global hub of Financial Service Sector.

     The assessee will get benefit of this amendments from the 1st April, 2023 and will be applicable in relation to Assessment Year 2023 – 2024 and subsequently.

  2. Sub section (4F) is the exemption to any income of a non-resident by way of royalty or interest, on account of lease of an aircraft in a previous year, paid by a unit of an IFSC as referred to in sub-section (1A) of section 80LA, if the unit has commenced its operations on or before 31st March, 2024.

     Now it is proposed to amend the exemption to extend the to any income of a non-resident by way of royalty or interest, on account of lease of a “ship” paid by a unit of an International Financial Services Centre also.

     Further proposed to substitute the Explanation to the said clause to include the definition of the term “ship” therein.

     However there is a need to make this amendment for, as shipping and airlines industries are capital intensive and require huge investments. Most of the time these industries borrowed funds from multinational companies or financial agencies in to huge lease or interest payments. Therefore in order to make India as global hub location for shipping companies, it is necessary to extend the exemptions.

     The benefit of such amendment will take effect from the 1st April, 2023 and will be applicable in relation to Assessment Year 2023 – 2024 and subsequently.

  3. Sub section (4G) is a new provision is proposed to insert to provide exemption to any income received by a non-resident from portfolio of securities or financial products or funds, managed or administered by any portfolio manager on behalf of such non- resident, in an account maintained with an Offshore Banking Unit, in any International Financial Services Centre, referred to in subsection (1A) of section 80LA, to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India. Further proposed the expression “portfolio manager” to have the same meaning as assigned to it in clause (z) of sub-regulation (1) of regulation
     (2) of the International Financial

     Services Centres Authority (Capital Market Intermediaries) Regulations, 2021 made under the International Financial Services Centres Authority Act, 2019.

     The said amendment will be applicable from the 1st April, 2023 and also will applicable in relation to Assessment Year 2023 – 2024 and subsequently.

  4. Sub section (8), (8A), (8B) & 10(9) are relates to Remunerations / Fees / Other income of the Individuals / consultants whose duties are assigns in accordance with an agreement entered by the Central Government and the Government of a foreign state (the terms thereof provide for the exemption given by this clause).

     As far as the amendment in sub section 8 is said that the remuneration received by the individual from the foreign state and any other income accruing or arising outside India, and is not deemed to accrue or arise in India, are exempt under the said clause in certain cases.

     Whereas sub section 8, 8B & 10(9) provides exemption to any income accruing or arising outside India (which does not accrue or arise in India) in respect of which the consultant is required to pay income or social security tax to the Government of the country or the country of his or its origin.

     These amendments will come in to effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.

  5. Sub section 23(c) is Exemption to the income of certain entities such as trust or institution or university or other educational institutions or hospital or other institutions.

     This amendment is proposed in sub-clause is with respect to the authority so as to substitute the reference of “prescribed authority” with the “Principal Commissioner or Commissioner”.

     This amendment will be effective from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.

     Further third proviso of clause (23C), inter-alia, provides that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution, as is referred to in sub-clauses (iv), (v), (vi) and (via) of the said clause, shall apply at least 85% of its income, wholly and exclusively to the objects for which it is established and in a case where more than 15% its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding 15% of its income shall in no case exceed 5 years. It also provides that it shall invest or deposit its funds in specified modes.

     It is proposed to insert a new Explanation 1A to the said third proviso so as to provide that where the property held under a trust or institution referred to in sub-clause (v) includes any temple, mosque, gurdwara, church or other place notified under clause (b) of sub-section (2) of section 80G, any sum received by such trust or institution as a voluntary contribution for the purpose of renovation or repair of such temple, mosque, gurdwara, church or other place, may, at its option, be treated by such trust or institution as forming part of corpus of that trust or institution, subject to the conditions.

     Further proposed to insert Explanation 1B to the said third proviso to provide that for the purposes of the proposed Explanation 1A where any trust or institution referred to in sub- clause (v) has treated any sum received by it as forming part of the corpus, under Explanation 1A, and subsequently any of the conditions specified in clause (a) or clause (b) or clause (c) or clause (d) thereof are violated, such sum shall be deemed to be the income of such fund or trust or institution or university or other educational institution or hospital or other medical institution of the previous year during which the violation takes place.

     These amendments will applicable retrospectively from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

     The motto behind these amendments is to proposed to bring taxation of institutions approved u/s.10(23C)at par with taxation u/s.11 & 12.

• Amendment in section 115BBD – Relating to tax on certain dividends received from foreign companies. (Clause 27)

  The present scenario of section 115BBD is provides that, in case of an Indian company whose total income includes any income by way of dividends declared, distributed or paid by a foreign company, in which the said Indian company holds 26% or more in nominal value of the equity share capital, such dividend income shall be taxed at the rate of 15%.

  Finance Act, 2020 abolished the dividend distribution tax provided in section 115- O to, inter-alia, provide that dividend shall be taxed in the hands of the shareholder at applicable rates plus surcharge and cess. In order to provide equality in the tax treatment in case of dividends received by Indian companies from specified foreign companies vis a vis dividend received from domestic companies. Therefore said amendment is brought in the present finance bills. The said amendment is proposed as to insert a new sub-section (4) to provide that the provisions of this section shall not apply to any assessment year beginning on or after the 1st day of April, 2023.

  This amendment will applicable from 1st April, 2023 and will, accordingly, apply to Assessment Years 2023 – 2024 and subsequent assessment years.

• Amendment to section 115JC – Rationalization of provisions to promote the growth of co-operative societies – Special provisions for payment of tax (Clause 29)

  The provisions of section 115JC inter alia, provides that where the regular income tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income tax on such total income at the rate of 18.5%. Sub-section (4) provides that notwithstanding anything contained in sub-section (1) thereof, where the person referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, it shall be liable to pay income-tax on such total income at the rate of 9%.

  The Finance Bill, 2022 is proposed to substitute the said sub-section (4), to provide it shall be liable to pay income- tax on such total income at the rate of 9% and where the person referred to therein, is a co-operative society, it shall be liable to pay income-tax on such total income at the rate of 15%.

  This amendment will be effective from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.

• Amendments to section 115JF relating to interpretation in the Chapter XII-BA (Clause 30)

  The section 115JF provides for definitions of earlier terms and expressions used in Chapter.

  Sub section (b) provides for the definition of “alternate minimum tax”. It is proposed to substitute the sub-clause
  (i) to provide that the rate of alternate minimum tax, in case of an assessee, being a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, shall be 9%., and in case of an assessee, being a co-operative society, 15%.

  As this amendment is in context with S.115JC, hence this consequentially will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.

• Amendment to section 144C – Relating to Reference to dispute resolution panel – Faceless Scheme (Clause 43)

  The Central Government has undertaken a number of measures to make the

  Processes under the Act, electronic, by eliminating person to person interface between the taxpayer and the Department to the extent technologically feasible, and provide for optimal utilisation of resources and a team-based assessment with dynamic jurisdiction. A series of futuristic reforms have been introduced in the domain of Direct Tax administration for the benefit of taxpayers and economy. This started with faceless assessment in electronic mode involving no human interface between taxpayers and tax officials. The faceless procedures are being introduced in a phased manner in the Act.

  The section 144C, inter alia, empowers the Central Government to notify a scheme for the purposes of issuance of directions by the dispute resolution panel so as to impart greater efficiency, transparency and accountability by

  1. eliminatingthe interface between the dispute resolution panel and the eligible assessee or any other person to the extent technologically feasible;

  2. optimisingutilisation of the resources through economies of scale and functional specialisation;

  3. introducinga mechanism with dynamic jurisdiction for issuance of directions by dispute resolution panel.

  Sub-section (14C) of section 144C further provides that for the purposes of giving effect to the aforesaid scheme, the Central Government may by notification in the Official Gazette direct that any of the provisions of the Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified.

  The reason behind this amendment is that, Section 144C is related to the transfer pricing and international taxation which are presently out of regime of Faceless assessment.

  So it is proposed to amend the proviso to the said sub-section (14C), extending the date for issuing directions for the purposes of the said sub-section from 31st day of March, 2022 to 31st day of March, 2024.

  This amendment will take effect from 1st April, 2022.

• Amendment to section 153 – Relating to time limit for completion of assessment, reassessment and re- computation. (Clause 48)

  Any person fails to make the return of income required u/s.139, the Assessing officer after taking in to consideration all relevant material and after giving opportunity to the assessee complete the Assessment.

  Now it is proposed to insert a new sub-section (1A) in section 139 to provide that where an updated return is furnished under sub-section (8A) of section 139, an order of assessment under section 143 or section 144 may be made at any time before the expiry of 9 months from the end of the financial year in which such return was furnished.

  It is further proposed to amend sub- section (3) to provide that fresh order under section 92CA, in pursuance of an order, setting aside or cancelling an order under section 92CA shall also come within the provision of the said sub-section.

  It is also proposed to amend sub-section (5) to provide that an order passed by the Transfer Pricing Officer under section 92CA of the Act, in consequence to an order under section 263 of the Act shall also come within the purview of the said Act.

  It is also proposed to insert a new sub- section (5A) to provide that where the

  Transfer Pricing Officer gives effect to an order or direction under section 263 by means of an order under section 92CA and forwards such order to the Assessing Officer, the Assessing Officer shall proceed to modify the order of assessment or reassessment or re-computation, in conformity with such order of the Transfer pricing Officer, within 2 months from the end of the month in which such order of the Transfer Pricing Officer is received by him.

  Further proposed to amend sub-section (6) to make a reference of the newly inserted sub-section (5A) therein. These amendments are proposed consequent to the amendments made in section 263.

  Explanation 1 to section provides the time limit in certain cases which are required to be excluded while computing the period of limitation under the said section. It is also proposed to amend clause (iii) of the said Explanation so as to omit the reference of “sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub- clause (via) of clause (23C) of section 10”.

  This will take effect from lst April, 2022.

  It is also proposed to insert a new clause (xii) to provide for exclusion of the period commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion , jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,––

  1. in whose case such search is initiated under section 132 or such requisition is made under section 132A; or

  2. to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or

  3. to whom any books of account or documents seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, or one hundred and eighty days, whichever is less, in computing the period of limitation for the purpose of assessment, reassessment or re-computation.

  This amendment will take retrospectively effect from 1st April, 2021.

  It is also proposed to insert a new clause (xiii) in the Explanation to provide that the period commencing from the date, on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under third second proviso to sub-section (3) of section 143 or is deemed to have been made under Explanation 3 of the fifteenth proviso to clause (23C) of section 10, and ending with the date on which the copy of the order under clause (ii) or clause (iii) of fifteenth proviso to clause (23C) of section 10 or clause (ii) or clause (iii) of sub-section (4) of section 12AB, as the case may be, is received by the Assessing Officer, shall be excluded while computing the period of limitation under the said section.

  This amendment will take effect from lst April, 2022.

• New section 239A is Inserted – Relating to refund for denying liability to deduct tax in certain cases. (Clause 66)

  The proposed new section provides that where under an agreement or other arrangement, in writing, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central

  Government claims that no tax was required to be deducted on such income, he may file an application before the Assessing Officer for refund of such tax deducted and such application shall be filed by such person only after within a period of thirty days from the date of payment of such tax, in such form and manner as may be provided by rules.

  Further, it is proposed that the Assessing Officer shall dispose of the abovementioned application for refund within a period of six months from the end of the month in which such application has been received, after making any such enquiry as he may consider necessary. The Assessing Officer may allow or reject such application by an order in writing; however, no such application shall be rejected unless an opportunity of being heard is given to the applicant.

  The reason behind this proposed amendment is to obtained refund, where it was deducted as per the provisions of 248, a taxpayer has no recourse to approach to the Assessing Officer with such request.

  This amendment will take effect from lst April, 2022.

Conclusions

The Governments has made some of these proposed amendment is part of policy in making contexts in ways to promote behaviour of the Assessee. However, it shows the approach of the government in making an effort to identify hardships faced by the tax- payers and resolve the same.