| Section |
Effective date of amendment |
Nature of amendment |
Effect of amendment |
| 1 |
2 |
3 |
4 |
|
|
Income-tax Act |
|
| 92 |
1-4-2002 |
Sections 92 to 92F shall be substituted for section 92 |
Section 92, relating to income from transactions with non-residents,
how computed in certain cases, shall be substituted by new sections
92, 92A, 92B, 92C, 92D, 92E and 92F relating to computation of income
from international transactions having regard to the arm’s length price,
meaning of associated enterprise, meaning of international transaction,
computation of arm’s length price, maintenance of information and documents
by persons entering into international transactions, furnishing of a report
from an accountant by persons entering into international transaction and
definitions of certain expressions occurring in the new sections. |
|
|
|
Section 92 shall be substituted to provide that any income arising from an international transaction shall be computed having regard to arm’s length price. It further provides that the cost or expenses allocated or apportioned between two or more associated enterprises shall be at arm’s length price. |
|
|
|
Sections 92A and 92B provide meanings of the expressions “associated enterprise” and “international transaction” with reference to which the income is to be computed under section 92. |
|
|
|
Section 92C provides for computation of arm’s length price. The section provides that the arm’s length price in relation to an international transaction shall be determined by (a) comparable uncontrolled price method; or (b) resale price method; or (c) cost plus method; or (d) profit split method; or (e) transactional net margin method; or (f) any other method which may be prescribed by the Central Board of Direct Taxes. One of these methods shall be the most appropriate method which shall be applied for computation of arm’s length price in the manner as may be specified by the rules to be made by the Central Board of Direct Taxes in this behalf. In a case where more than one price can be determined by the most appropriate method, in such case the arm’s length price shall be the arithmetical mean of such two or more prices. The new section further provides that where during the course of any proceeding for the assessment of income the Assessing Officer is, on the basis of material or information or document in his possession, of the opinion that the price charged in the international transaction has not been determined in accordance with sub-sections (1) and (2) or information and documents relating to the international transaction have not been kept and maintained by the assessee in accordance with the provisions contained in sub-section (1) of section 92D, and the rules made in this behalf or the information or data used in computation of the arm’s length price is not reliable or correct or the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice issued under sub-section (3) of section 92D, the Assessing Officer may proceed to determine, after giving an opportunity of being heard to the assessee, the arm’s length price in relation to the said transaction in accordance with sub-sections (1) and (2) of this section, on the basis of such material or information or documents available with him. |
|
|
|
Section 92D provides that every person who has entered into an international transaction shall keep and maintain such information and documents as may be specified by rules made by the Central Board of Direct Taxes. The Central Board of Direct Taxes may also specify by the rules the period for which the information and documents are required to be retained. During the course of any proceedings under the Act, an Assessing Officer or Commissioner (Appeals) may require any person who has entered into an international transaction to furnish any of the information and documents specified under the rules within a period of thirty days from the date of receipt of a notice issued in this regard, and such period may be extended by a further period not exceeding thirty days. |
|
|
|
Section 92E provides that every person who has entered into an international transaction during a previous year shall obtain a report of an accountant and furnish such report on or before the specified date in the prescribed form and manner. |
|
|
|
Section 92F defines the expressions “accountant”, “arm’s length price”, “enterprise”, “specified date” and “transaction” used in the proposed new sections 92, 92A, 92B, 92C, 92D and 92E. |
| 271(1) |
1-4-2002 |
Explanation 7 shall be inserted |
Section 92 is substituted by sections 92, 92A, 92B, 92C, 92D, 92E and 92F relating to computation of income arising from an international transaction. |
|
|
|
Explanation 7 shall be inserted in sub-section (1) of section 271 to provide that where in the case of an assessee who has entered into an international transaction defined in section 92B, any amount is added or disallowed in computing the total income under sub-section (4) of section 92C, then, the amount so added or disallowed shall be deemed to represent income in respect of which particulars have been concealed or inaccurate particular have been furnished. However, the provisions of this Explanation shall not apply where the assessee proves to the satisfaction of the Assessing Officer or the Commissioner (Appeals) that the price charged or paid in such transaction has been determined in accordance with section 92C in good faith and with due diligence. |
| 271AA |
1-4-2002 |
Shall be inserted |
Section 271AA, relating to penalty for failure to keep and maintain information and documents, in respect of each international transaction, shall be inserted. |
|
|
|
Section 271AA provides that if any person who has entered into an international transaction as defined in section 92B fails to keep and maintain any such information and documents as required by sub-section (1) or sub-section (2) of section 92D, the Assessing Officer or Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the international transaction entered into by such person. |
| 271BA |
1-4-2002 |
Shall be inserted |
Section 271BA, relating to penalty for failure to furnish a report from an accountant under section 92E, shall be inserted. |
|
|
|
Section 271BA provides that if any person fails to furnish a report from an accountant as required by section 92E, the Assessing Officer may direct that such person shall pay by way of penalty, a sum of one hundred thousand rupees. |
| 271G |
1-4-2002 |
Shall be inserted |
Section 271G relating to penalty for failure to furnish certain information or document, under section 92D, shall be inserted. |
|
|
|
Section 271G provides that if any person who has entered into an international transaction fails to furnish any such information or document under sub-section (3) of section 92D, the Assessing Officer or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the international transaction, for each such failure. |
| 273B |
1-4-2002 |
Certain words shall be inserted |
The existing provision of section 273B provides that no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in certain sections specified in the said section, if he proves that there was reasonable cause for such failure. |
|
|
|
Section 273B shall be amended to provide that no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in sections 271AA, 271BA and 271G, if he proves that there was reasonable cause for such failure. The amendment is of consequential nature. |