Direct Tax Laws

Amendments made by Finance Act, 2017

(Relevant for May/Nov. 2018 CA Final Examinations)

By Prof. Amit Rajpurohit

(Faculty of WIRC of ICAI)
DT- CA Final & Inter
Mob- 8209910727
 Tax rates and Basic exemption limits
➢ For individuals, HUF, AOP, BOI & AJP:

Total Income Till Rs. 2,50,000 above RS. above RS. Above Rs.
(TI) 2,50,000 but upto 5,00,000 but upto 10,00,000
Rs. 5,00,000 Rs. 10,00,000

Rate of tax Nil 5% 20% 30%

➢ For senior citizens i.e., resident individuals having age of 60 years or more in PY:
Total Income Till Rs. 3,00,000 above RS. above RS. Above Rs.
(TI) 3,00,000 but upto 5,00,000 but upto 10,00,000
Rs. 5,00,000 Rs. 10,00,000

Rate of tax Nil 5% 20% 30%

➢ Firm : 30 %
➢ For Domestic companies in which turnover or Gross receipts are < or = to Rs. 50
Crore in PY 2015-16, tax rate shall be 25%.
➢ For Domestic companies :- Other cases - 30%
Foreign - 40%
➢ Domestic companies which are set up on or after 1st March 2016, can pay tax @
25% after complying with the conditions stated u/s 115BA.

➢ Surcharge applicable @10% of income tax computed, if Total income of individual/HUF/

AOP/ BOI/ AJP exceeds Rs. 50 Lacs. (If income exceeds Rs. 1 crores Surcharge
applicable@15%).
➢ Resident individuals are eligible to claim relief u/s 87A if TI between 2,50,000 and
3,50,000, relief of lower of the two shall be available:-
- 2500
- Tax liability
➢ As per section 115BBDA Dividend received in excess of Rs. 10 Lakhs is taxable in hands of
resident shareholder @ 10%. Such dividend is exempt if receiver is Domestic co.,
institution registered u/s 10(23C) or 12 AA.
➢ As per section 115BBG income by way of transfer of carbon credit is taxable @10%.
➢ Unexplained income where advance tax is paid u/s 115BBE is taxable @77.25%. That is
rate of tax is 60%, surcharge @25% and education cess @3%. (In case of self declaration)
➢ In case advance tax not paid unexplained income is taxable @77.25% and penalty u/s
271AAC @10% of basic tax . This is the case where unexplained income declared by AO.
 Assessment Procedure
➢ Section 139(4A-4B) It may be noted that, if the return u/s.139(4B) / 139(4B) is not
filed upto due date, exemption under respective section shall not be available.
➢ section 139(4C) Apart from the cases given; where, if the total income of
assessees’,exceeds the maximum amount NOT chargeable to tax, a return of income
shall be filed, following further cases have been added u/s 139(4C):-
(a)Employees’ Pension fund u/s 10(23AAA)
(b) Investors’ Protection fund u/s 10(23EC)/ 10(23ED)
(c) Core settlement Guarantee fund u/s 10(23EE)
(d)Board or authority u/s 10(29A)
The law will apply as if it was a return required to be filed u/s. 139(1)
➢ According to section 139(5) Return of income can be revised before expiry of relevant
AY or before completion of assessment, Whichever is earlier.
➢ As per section 139AA linking of PAN with Aadhar card is mandatory:
1. Person eligible to obtain Aadhar no. shall quote the same in application of PAN
and in Return of Income.
2. If a person has not obtained aadhar no., he shall obtain Enrollment ID of
Aadhar no..
3. In case of existing assessee, he is require to intimate the aadhar no. to notified
authority in prescribed form within time specified. Failure to do so shall
invalidate the PAN.
4. Non applicability of this section – Person or class of persons
i) residing in states of Assam, Jammu and Kashmir and Meghalaya
ii) non-resident as per Income tax Act
iii) of the age of 80 years or more during P.Y
iv) non- citizen of India.

➢ As per section 140A While paying self-assessment tax, Fees is also required to be paid
under provisions of this Act.
➢ Section 143(1) :- (a) Every return shall be processed.However,in case the return is
selected for scrutiny u/s .143(2) the return shall NOT be processed u/s.143(1).
(b)While processing ROI, Tax, interest & fees shall be recomputed thereafter, &
adjusted.
(c) While show cause notice u/s.143(1) is issued.
 ➢ If assessment is to be conducted u/s 143(3) and grant of refund u/s 143(1) can
adversely affect the interest of revenue, AO with the prior approval of PCIT/CIT can
withhold the refund till completion of assessment.
Proceedings Time limit
Original Proceeding u/s 143(3)/ 144 21 months from the end of Relevant
A.Y
Original Proceeding U/s 147 9 Months from the end of F.Y in
which notice u/s 148 was served.
Set aside proceedings 9 Months from the end of F.Y in
which order u/s 254 is received by
CCIT/CIT
Consequential order 3 Months from end of month in
which order is received by
CCIT/CIT
Remarks
From A.Y 2018-19 time limit
reduced from 21 months to 18
months
From A.Y 2019-20 time limit
reduced to 12 Months
From A.Y 2019-20 time limit shall
be 12 Months
From A.Y 2019-20 time limit shall
be 12 Months.
i) set aside by ITAT is only covered.
ii) set aside by CIT(A) not
permitted.
iii)For Set aside by HC/SC there is
no time limit.
In case time beyond 3 months is
required by AO, AO has to seek
permission from CIT in writing along
with reasons beyond his control.
Additional time of 6 months can be
granted.

Searchres to be conducted u/s
153A
Searchres to be conducted u/s
153C
In case of consequential order
vs. set aside order where
principle of natural justice is to
be provided time limit under set
aside shall prevail.
21 months from the end of From A.Y 2018-19 time limit
Relevant A.Y reduced from 21 months to 18
months
From A.Y 2019-20 time limit
reduced to 12 Months
21 months from the end of From A.Y 2018-19 time limit
Relevant A.Y reduced from 21 months to 18
months
From A.Y 2019-20 time limit
reduced to 12 Months
 Search, Seizure and Survey
➢ The reasons to believe recorded u/s 132A for initiation of search of any other premises
shall not be required to disclose to any person/ authority/ITAT.
➢ Search Party may make reference to valuation officer during course of search or within
60 days of conclusion of search. Valuation officer shall estimate the FMV of property
and submit the report within 60 days of receipt of reference.
➢ Search party may provisionally attach any property of the assessee within the duration
of search or within six months of conclusion of search if:
➢ Reasons are recorded in writing
➢ Provisional attachment is in interest of revenue
➢ Such attachment shall be operational for months after which it shall be automatically vacated.
➢ As per section 133A Survey can be conducted at a place where activity is conducted for
charitable purpose.
➢ Power to call information u/s 133(6) can also be exercised by JDIT/ADIT/ DDIT without
the approval of DIT/CIT.
➢ According to section 133C the Board may make a Scheme for Centralised issuance of
notice and for processing of information or documents and making available the
outcome of the processing to AO
 ➢ As per section 153A, Once search is conducted /requisition is done, AO shall issue
notice to the assessee requiring him to furnish returns of six A.Ys. immediately
preceding the A.Y. relevant to the P.Y. in which such search is initiated
/requisition is made. However, if following conditions are satisfied, AYs prior to 6
AYs (called relevant AYs) can be assessed u/s.153A (but not beyond 10 AYs):-
(a)AO has in his possession, books of accounts/documents/evidence which
reveal
that income represented in form of assets/movable or immovable, shares or
securities, loans and advances, deposits in Bank etc. which has escaped
assessment, amounts to or is likely to amount to Rs.50 lakhs or more in the
relevant AY or aggregate in relevant AYs.
(b)Income above has escaped assessment; and
Search is initiated/requisition is made on or after 01.04.2017.
➢ As per section 153C AO will issue notice to file return for 6 A.Ys. immediately
preceding the A.Y. relevant to the P.Y. in which such search is
conducted/requisition is made and for “relevant AYs” (Prior to 6 years upto 10
years, if conditions are satisfied)
➢ As per section 155(14A) :
-> Foreign Tax Credit not allowed in intimation u/s 143(1)/Assessment order on
the ground that the payment of such tax was under dispute.
-> Subsequently the dispute is settled
-> AO shall amend the Assessment Order/intimation u/s 143(1)
The credit shall be allowed in the F.Y. in which income is offered.
-> Assessee shall apply to AO within 6 months from the end of the month in
Which dispute is settled.
➢ Section 271 AAB For searches conducted on or after 15.12.2016, the rate of 10%
penalty shall be replaced by 30%; and there shall be no category of 20%.
Thus,there will be only two categories of penalties - 30% and 60%.
➢ section 269ST, 271DA Any transaction of Rs.2 lacs or more in contravention of
section 269ST shall be liable for penalty.
➢ Section 271J For, Furnishing of incorrect information in any report or certificate
by CA/ Merchant Banker /Registered Valuer, penalty shall be levied as under:
- Rs.10,000/- per failure
- Penalty can be levied by AO,CIT(A)

➢ Chapter X-A Provisions relating to General Anti-Avoidance Rules noticed.

By Prof. Amit Rajpurohit

Mob- 8209910727
 Assessment of Companies
➢ As per Section 115JB book profit for assessee whose financial statement are to be prepared
in accordance with Ind AS shall be altered as follows:
➢ Increase by the amount credited to other comprehensive income in statement of profit and
loss under the head “items that will not be reclassified to profit or loss.
➢ Decrease by the amount debited to other comprehensive income in statement of profit and
loss under the head “items that will not be reclassified to profit or loss.
➢ Increase by the amount debited on distribution of non-cash assets to shareholders on
demerger in accordance with Ind-AS 10.
➢ Decrease by the amount credited on distribution of non-cash assets to shareholders on
demerger in accordance with Ind-AS 10.
Notes:
➢ Revaluation surplus for assets as per Ind-AS 16 and 38 must be ignored.
➢ Gains or losses arising from investments in equity instruments as per Ind-AS 109 designated at
fair value must be ignored.
➢ Any difference arising on account of change in book values of resulting company as compared
to values of demerged company shall be ignored for computation of book profit of resulting
company.

The book profit of the year of convergence and succeeding four P.Y’s shall be increase/decrease
by 1/5th of the Transition Amount.
➢ Transition amount is the amount adjusted in the other equity on convergence date and
excludes capital reserve and security premium reserve. The shall exclude the following:
➢ Aggregate amount adjusted in other comprehensive income on reserve date and to be reclassified to
profit or loss.
 ➢ (Notional) Revaluation surplus on convergence date as per Ind-AS 16 and 38.
➢ (Notional) Gains or losses arising from investments in equity instruments as per Ind-AS 109
designated at fair value.
➢ (Notional) Adjustments of treating Fair value as deemed cost as per para D5 and D17 of Ind-AS
101 relating to items of property, plant and equipment and intangible assets on convergence
date.
➢ (Notional) Adjustments of treating Fair value as deemed cost as per para D15 of Ind-AS 101
relating to investments in subsidiaries, joint ventures and associates.
➢ (Notional) Adjustments as per para D13 of Ind-AS 101 related to cumulative traslation
differences of foreign operation on convergence date.
➢ In case of disposal of asset or foreign operation book profit shall be increased or
decreased by the real amount.
➢ Convergence date means first day of first Ind-AS reporting period as per Ind-AS101.
➢ As per section 115JAA From AY 2018-19 MAT credit can be carried forward till
15 years instead of 10 years.
■ No tax credit of MAT shall be allowed on account of difference between Foreign
tax credit allowed under MAT and foreign tax credit allowed under normal
provisions
Eg. say normal tax payable by VVIP Ltd.is Rs.130 lakhs. MAT payable is Rs.160 lakhs. Tax
payable is higher of two i.e Rs.160 lakhs. FTC allowable is 10% of tax. FTC allowable under
normal provisions was 13 lakhs (10% of 130). FTC allowable is 16 (10% of 160 lakhs). By 16 lakhs,
assessee has reduced his tax payable. VVIP Ltd must have paid tax Rs.160 lakhs-16 lakhs i.e 144
lakhs.
Now, as per this provision, assessee shall not be allowed carry forward of MAT credit of (16-13) 3
lakhs. MAT credit originally was Rs.30 lakhs (160-130). Now, amount which can be carried
forward is 27 lakhs (30 lakhs -3 lakhs)..
 Assessment of Political Parties
➢ For availing exemption u/s 13A ROI of a political party to be submitted on or before the
due date specified u/s 139(4B)
➢ Contributions in excess of Rs. 2,000 to be received through A/C payee cheque/ A/C
payee draft/ ECS.
➢ Records of donors contributing in excess of Rs. 20,000 to be maintained by the party.
However no record require to be maintained in case contribution received through
Electoral Bond.
 Assessment of Charitable Institutions/
Religious Institutions
➢ For availing exemption u/s 11 trust must file its ROI on or before due date u/s 139(4A).
➢ In case of modification of objects, which are not in confirmation of conditions stated at
the time of registration, fresh registration has to be applied for.
➢ If donation is paid by charitable institution to other charitable or religious institution
registered u/s 12AA as corpus donation, it shall not be treated application of income.
➢ Chapter XII-EB :-
Accreted income =Aggregate FMV of total assets (as prescribed) as on “specified date”
Less:- Amount of Income -tax Paid as TDS/TCS/Advance-tax
Add:-Refund claimed
Less:-Amount shown as assets(like deferred expenses), not representing
any value of asset
➢ Chapter XII-EB It may be noted that where tax on accreted fund has been levied under
this chapter, on subsequent transfer of such asset, cost of acquisition shall be the FMV
adopted in this chapter.
 Tax Deducted at Source &
Tax Collected at Source
➢ As per section 244A If the deductor deposits more TDS than deducted, he is entitled to
the the refund, alongwith interest u/s.244A @0.50% P.M from the date on which
- He claims refund in prescribed form; or
- Tax is paid, where refund arises due to appeal effect
till the date of grant of refund
➢ section 197A , A self-declaration for non-deduction of TDS in Form No.15G /15H can
be submitted. The same can be submitted in respect of certain specified sections.
Earlier 6 sections were notified. Now seventh section is notified as under:
- (g) Section 194D:- Declaration can be given by any person(other than Company)
➢ Section 194A, 194C, 194H, 194I,194J An individual/ HUF shall deduct TDS, if the
turnover/gross receipts exceeded the tax audit limit in immediately preceding P.Y.
➢ Section 194J Generally, the rate of TDS is 10%. However, if payee is engaged in
operation of call center, TDS shall be deducted @2%
➢ Section 206A like TDS, the collector of tax shall obtain PAN of collectee does not give
PAN / gives incorrect PAN, TCS shall be collected at:-
- Twice the rate specified in the section; or
- 5%
Whichever is higher
The provision shall not apply to a non- resident who does not have PE in india.
➢ As per section 206C :(1) Now no TCS on sale of Jewellery/bullion in cash shall be
collected.
(2) In case of TCS on motor Car, TDS shall be collected, if the buyer is:
(a) Central Govt./State Govt /Embassy / High commission / Legation/
commission /consulate/ Trade Representation of a foreign state; or
(b) Local Authority u/s.10(20); or
(C) Public sector company engaged in business of carrying passengers.

By Prof. Amit Rajpurohit

Mob- 8209910727
➢ As per section 194IB Rate of TDS for Resident Individual and HUF( not covered under
tax audit) on rent received on land and building (lease/ sub lease/ tenancy or any other
arrangement) shall be 5%.
➢ Time of deduction shall be earlier of follows:
➢ Credit of rent for last month of P.Y
➢ Last month of tenancy
➢ At the time of payment.
➢ No TDS if rent for a month or part of month does not exceeds Rs. 50,000.
➢ Deductor is not required to obtain TAN.
➢ Where TDS is required to be deducted u/s 206AA, Such deduction shall not exceed the
amount of rent of last month of the P.Y/ last moth of tenancy, as the case may be.
.
➢ As per section 194IC rate of TDS for Resident assessee for consideration received under
specified agreement u/s 45(5A) (excludes consideration received in kind) shall be 10%.
➢ Time of deduction shall be earlier of payment or credit.
➢ No TDS is required to be deducted u/s 194LA, where payment is made in respect of
award which has been exempted u/s 96 of income tax act for Right to Fair
Compensation & Transparency in land acquisition, rehabilitation and resettlement
 Miscellaneous Provisions
➢ As per section 269ST No person( including all assessee) shall receive amount exceeding
Rs. 2lac or more
➢ in aggregate from a person in a day
➢ per transaction
➢ Per event/ occasion from a person.
Other than by a/c payee cheque/ draft/ ECS.
➢ Exemption to granted to follows:
➢ Any receipt by Govt./ bank or post office
➢ Transaction covered u/s 269SS
➢ Violation of this section attracts the penalty u/s 271DA.
 Penalties and Interest
➢ Penalty u/s 271DA is 100% of the amount involved.
➢ Section 271 has been deleted.
➢ As per new section 234F following penalties would be attracted if return is not filed
within the due date specified within time limit specified u/s 139(1):
➢ Rs. 5,000 if ROI filed till 31st December of relevant A.Y
➢ Rs. 10,000 in any other case.
➢ In case of assessee having T.I less than equal to 5 Lac penalty shall be Rs. 1,000.
➢ As per section 271J penalty can be levied by AO, CIT(A) on CA, Merchant Banker or
Registered Valuer for furnishing incorrect information in any report or certificate of Rs.
10,000 per failure.
➢ Penalty may be levied u/s 271AAC @ 10% of tax payable u/s 115BBE.
➢ Interest u/s 234C abolished with levy of tax u/s 115BBDA.
➢ Interest u/s 234C attracted only on march instalment for assessee covered u/s44ADA.
 Advance Tax and Refund
➢ Advance tax to be paid in one instalment by the assessee covered u/s 44ADA i.e., 15 th
March of P.Y.
➢ section 207-219 Advance Tax :- In relation to
- Capital gains;or
- casual income;or
- income under the head “Profits and gains of business or profession” on cases
where the income accrues or arises under the said head for the first time.
- Dividend income referred u/s.115BBDA.
Tax shall be payable as part of the installment falling due after earning such
income.
➢ In case of amount due to deductor in respect of credit of Central Government amount
shall be refundable with simple interest of 0.05% p.m.
➢ Moreover interest is paid for a period commencing from the date on which claim is
made in prescribed form or tax is paid, where refund arise due to appeal affect to the
date on which refund is granted.
➢ Section 241A :- Withholding of Refund in certain cases:-
Where refund is due u/s.143(1), still Assessing Officer can withhold refund if
following conditions are fulfilled:
- Notice u/s.143(2) is issued.
- Ground of refund is likely to adversely affect revenue
- Reasons shall be recorded in writing
- Approval of CIT shall be obtained.

By Prof. Amit Rajpurohit

Mob- 8209910727
 Authority For Advance Ruling
➢ Person eligible to appointed as chairman of AAR shall be:
➢ chief justice of HC or
➢ judge of HC for at least 7 years.
➢ Person eligible to be appointed as revenue member of AAR shall be:
➢ Who is or qualified as member of board under Indian revenue service.
➢ Who is or qualified to be a member of central excise and customs board under service
of Indian customs and central excise.
➢ In case of vacancy of office of chairman due to death, resignation etc., senior most vice
chairman shall perform the duties of chairman till new chairman is not appointed.
➢ In case chairman is unable to discharge the duties due to illness, absence or any other
cause senior most vice chairman shall perform the duties to the chairman till chairman
resume his duties.
 Income From House Property
➢ As per section 23 where a property consist of building or land appurtenant thereto is
held as stock in trade and it is not let out for whole or part of year the annual value of
the property upto one year from the end of F.Y in which completion certificate was
obtained from competent authority shall be taken as Nil.
➢ For Example:- VVIP Developers completes construction of 5 flats on 01.04.2017, obtains
certificate of completion from XYZ and the flats remains unsold, then tax treatment
would be as under:

F.Y 2017-18 F.Y 2018-19 F.Y 2019-20

No tax on Notional income No tax on Notional income Tax based on Fair Rent

➢ House Property loss can be set off against other head of income only up to Rs.2 lacs in
the same year, balance loss has to be C/F to 8 A.Ys for set off against house property
income only.
 F.Y 2016-17 F.Y 2017-18

Business 5,00,000 Business 5,00,000

income income

Rental income 60,000 Rental income 60,000

Interest on HL (4,50,000) (3,90,000) Interest on HL (4,50,000) (2,00,000)

Net Income 1,10,000 Net Income 3,00,000

Loss c/f - 1,90,000

 Income From PGBP
➢ Limit of disallowance of business expenditure made in cash is reduced from Rs. 20,000
to Rs. 10,000 to a person per day. Cash limit for payment to transporters remain as Rs.
35,000.If any capital expenditure exceeding Rs.10,000 is incurred by any mode
otherwise than by account payee cheque/draft/ ECS , no deduction of depreciation
would be allowed on same.
➢ Violation of above mentioned limit attracts disallowance u/s 32 and 35AD.
➢ Deduction u/s 35AC has been removed.
➢ New industry added u/s.35AD :-(a) Deduction allowed only to:- Company regd in India,
Consortium of such companies, Authority/ board /Corporation established under any
Central or State Act.
(b) Deduction for business which commenced on or after 01.04.2017 for Developing,
operating and maintaining, Developing Operating and maintaining
A new Infrastructure facility.
➢ Where asset which was originally treated as an asset eligible u/s.35AD, but is
transferred to a business other than specified business within 8 years, then the actual
cost shall be the cost less notional depreciation as would have been allowed, had the
asset been used for the purpose of business since the date of acquisition.
➢ Section 36(1)(viia) Provision for bad debts- The entire formula for deduction
remains the same; except instead of 7.50% of GTI, it shall be 8.50% of GTI.
➢ As per Section 43D Once account becomes NPA, income shall be recognised on
actual receipt basis. The provision now also applies to Co-operative Banks(other
than Primary Agricultural credit society/Primary Co-operative Agricultural and
Rural Development Bank)
➢ Section 44AA In case of assessees other than specified Professionals, the
requirement for maintenance of books shall be there, if either:

Individual/HUF Others

Turnover >25 lakhs >10 lakhs

Profit >2.50 lakhs >1.20 lakhs

In ANY of 3 preceding P.Y.

➢ Section 44AB It is specifically provided that section 44AB shall not apply to a
person, who declares profits and gains u/s.44AD
➢ According to section 44AD Profit shall be taken 6% (instead of 8%) in respect of
the Turnover which is received by account payee cheque/ draft/ ECS.
➢ Donation made to scientific or social research is allowed to be deducted u/s 35 as
follows:
➢ Approved scientific research association, university, college or other institute used for
scientific research allowed to deducted @ 150%
➢ Approved scientific research association, university, college or other institute used for
social science or statistical research allowed to deducted @ 100%
➢ National laboratory or IIT to be used for scientific research under approved program is
allowed to be deducted @150%.
➢ A company which is registered in India and has scientific research as main objective shall
be deduction of 150% of its expenditure.
➢ In house approved research is allowed as deduction @150%.
➢ Weighted Deduction u/s 35AD to be allowed@100%.
➢ Deduction u/s 35CCC & 35CCD to be allowed @100%..
➢ Interest on loan/ borrowing from co-operative bank other than Primary
Agricultural Credit Society and Primary Co-operative for Agricultural and Rural
Development Bank also covered by section 43B.
 Income From Capital Gain
➢ As per section 2(42A) if immovable property being land or building is held for a period
exceeding 24 months, it shall be considered as Long term capital asset.

Particulars Earlier Treatment Post Amendment

Treatment

Sold on 16.04.2017 90,00,000/- 90,00,000/-

Purchased on 16.01.15 60,00,000/- 60,00,000/-

indexed cost NA 68,57,143/-

capital gain 30,00,000/-(short term) 21,42,857/-

Tax amount 7,46,750/- 4,41,428/-

Reinvestment option u/s Not Available Available

54 &54EC
➢ Transfer under land pooling scheme u/s 10(37A): this is an arrangement made by
Government of A.P for formation of capital city of Amravati.
➢ Under this scheme exemption is provided from IT to assessee being individual/HUF on:
➢ Transfer of land under above scheme
➢ Transfer of land pooling ownership certificate
➢ Sale of reconstituted plot or land by said person within 2 years from the end F.Y in which the
possession of such land or plot is handed over to such person.
➢ Under this scheme compensation is given in the form of reconstituted plot.
➢ Assessee must hold Land/ Building/ Both on 2nd June 2014.
➢ Base year changed from 01.04.1981 to 01.04.2001. COA shall be taken as FMV and COI
before 01.04.2001 shall be ignored.
➢ Index for F.Y 2017-18 shall be 272.
➢ Indexation table is given below:
➢ Taxation in case of Development agreements u/s 45(5A): this section is applicable to
individual/HUF assessee, where such assessee transfer their old land/ Building/Both under
registered agreement to another person for development under real estate project and
receives shares as consideration whether with or without part consideration in cash.
➢ Gain shall be taxable in year of issuance of completion certificate by municipal corporation.
Consideration shall SD value of shares and cash received.
➢ On subsequent transfer of shares cost shall be determined by SD value.
➢ If shares are transferred before issuance of completion certificate provisions of this section
shall not prevail.
➢ According to section 47 Rupee denominated bond transferred by a Non resident to
another Non resident outside shall be exempt.
➢ According section 50CA where non quoted shares are transferred by the company below
FMV, FMV shall be deemed as full value of consideration.
➢ Other bonds notified by Central Government shall also be eligible for exemption u/s 54EC.
➢ In case Equity shares acquired on or after 1st Oct. 2004 the exemption u/s 10(38) shall be
available only if purchase transaction done in course of STT. IPO, FPO, bonus and right
issues are exceptions. Further Equity shares does not include units of equity oriented
fund.
 Income From Other Sources
➢ Gifts for any assessee are taxable u/s 56(2)(x).
➢ In case immovable property received for inadequate consideration option regarding
adoption of SD value available to assessee. Assessee can either opt for agreement date
SD value or possession date SD value.
➢ As per section 58, For computing income under the head “other Sources”, inter-alia,
disallowable u/s.40(a)(ia) shall also be done.
➢ According to section 115BBDA Dividend on which DDT paid, is exempt in hands of
shareholder u/s.10(34). However, if this dividend exceeds Rs.10 lakhs is taxable in
hands of shareholder being Resident person (other than Domestic Co./institution
registered u/s.10(23C)/12AA)@10%

By Prof. Amit Rajpurohit

Mob- 8209910727
 Set off & carry Forward of losses
➢ u/s 71 loss from H.P can be set off against other heads of income to the extent of 2 Lac.
➢ Change in constitution u/s 79 for as 51% shareholders of Pvt. Co. should be same
shareholders of the company in previous year or years in which loss was incurred.
➢ New provision u/s 79 for eligible startups u/s 80IAC being a closely held company.
➢ All losses of such companies are covered except unabsorbed depreciation.
➢ Condition for set or C/F of losses is- all the shareholders of the company, held shares
carrying voting rights of the company on last day of year or years in which loss incurred
during the period of 7years commencing from the date company is incorporated
continues to hold shares on last day of such P.Y.
 Deductions under Chapter VI A
➢ Individual( non employees) deduction to be allowed @20% of GTI instead of 10% u/s
80CCD.
➢ section 80CCG No new retail investor shall be eligible for A.Y.2018-19, However an
assessee who has claimed deduction under this section for A.Y.2017-18 and earlier AYs
, shall be allowed deduction under this section till the A.Y.2019-20 if he is otherwise
eligible to claim deduction as per provision of this section
➢ Limit for cash donation u/s 80G to be reduced to Rs. 2,000 per donation.
➢ section 80JJAA As per the existing provision, employee shall be employed for less than
240 days during current P.Y; then only the employer shall be eligible u/s.80jjAA for such
employee.Looking to the seasonal nature of manufacture of apparel, instead of 240
days, employer could qualify as “additional employee” if he is employed for 150days in
the P.Y.
➢ Deduction u/s 80IAC available to eligible start up for 3 consecutive A.Y out of first 7
A.Ys.
➢ Deduction u/s 80IBA :
➢ Time limit of completion of Project shall be 5 years instead of 3 years from the date of
approval by the competent authority.
➢ Build area is replaced by carpet area for the purpose of limits.
➢ Section 80IA-IE :- Sun-set of following industries:-
(a)Infrastructure facility(shifted to section 35AD)
(b)Developing ect.of SEZ
(c)Power
(d)mineral oil
(e) North-Eastern states
➢ Deduction u/s.10AA shall be given from Total Income(before 10AA deduction)

By Prof. Amit Rajpurohit

Mob- 8209910727
 Transfer Pricing
Secondary Adjustment u/s 92CE
1. Whenever, the Transfer Price of an assessee is adjusted in the ROI By the AO and
accepted by the assessee according to section 92CC as per safe harbor rules u/s 92CB
changes in an assessment due to the procedure laid down in an agreement u/s 90 or
90A resulting in increase in income or reduction of loss of the assessee such an
adjustment will be known as primary adjustment.
2. In the event of a primary adjustment, the assessee shall make an adjustment in its
books of accounts and its associated enterprise to reflect that the actual allocation of
profits between the assessee and its associated enterprise are consistent with the
transfer price determined as a result of primary adjustment, thereby removing the
imbalance between the cash account and actual profit of the assessee. Such
adjustment will be known as Secondary Adjustment.
3. Further, in the event of above adjustments, the excess money, being the difference
between the arm’s length price determined and the price at which the international
transaction was undertaken, which is available with the associated enterprise, if not
repatriated to India within the prescribed time, shall be deemed to be an advance
made by the assessee to such associated enterprise and the intereston such advance
shall be computed in a prescribed manner.
4. This Section shall be applicable only if the amount of primary adjustment exceeds Rs. 1
crore for the previous year. This Section shall be applicable for A.Y. 17-18 also.

Limitation on interest deduction in cases specified u/s

94B
1. Where an Indian company, or a permanent establishment of a foreign company in India,
being the borrower, incurs any expenditure by way of interest or of similar nature exceeding
one crore rupees which is deductible in computing income chargeable under the head
"Profits and gains of business or profession" in respect of any debt issued by a non-resident,
being an associated enterprise of such borrower, theinterest shall not be deductible in
computation of income under the said head to the extent it exceeds thirty per cent of
earnings before interest, taxes, depreciation and amortisation of the borrower in the
previous year or interest paid or payable to associated enterprises for that previous year,
whichever is less Provided that where the debt is issued by a lender which is not associated
but an associated enterprise either provides an implicit or explicit guarantee to such lender
or deposits a corresponding and matching amount of funds with the lender, such debt shall
be deemed to have been issued by an associated enterprise.
2. This Section shall NOT apply to an Indian company or a permanent establishment of a
foreign company which is engaged in the business of banking or insurance.
3. The amount of interest expenditure disallowed under this provision, shall be
carried forward to the following assessment years, and it shall be allowed as a deduction
against the profits and gains, if any, of any business or profession for that assessment year
to within the limit of this section. This interest can be carried forward upto eight
assessment years immediately succeeding the assessment year for which the excess
interest expenditure was first computed.

By Prof. Amit Rajpurohit,

(Faculty of WIRC of ICAI)
DT – CA FINAL & CA INTER
Mob- 8209910727

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