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Introduction

The Central Board of Direct Taxes (CBDT) has further amended Income Tax Rules, 1962, under vide Notification No. 40/2020 dated 29th June, 2020. The Provision of Section 56(2)(x) of Income Tax Rules states certain class of assesses to whom the provision does not apply. The said Rule 11UAC has been replaced by the aforesaid Notification. Moreover CBDT vide Notification NO. 42/2020 dated 30th June, 2020 has inserted a new Rule 11UAD with respect to Section 50CA.

Section 56(2)(x) - Income from Other Sources

The prescribed class of person for the purpose of Clause XI of the proviso to clause (x) sub-section (2) of Section 56 shall not apply to:-

1. Any immovable property, being land, building or both, received by a resident of an unauthorised colony of National Capital Territory of Delhi, where the Central Government has regularised the transactions of such immovable property based on prescribed documents including the documents evidencing payment of consideration for conferring or recognising the right of ownership or transfer or mortgage in favour of the resident. 

Amendments with respect to Section 56(2)(x) and 50CA

2. Any movable property, being unquoted shares of a company and its subsidiary or subsidiary of such subsidiary received by a shareholder, . where;

  • The National Company Law Tribunal (NCLT), on an application moved by the Central Government under section 241 of the Companies Act, 2015, has suspended Board of Director of such company and has appointed new directors nominated by Central Government under section 242 of the said Act; and
  • Shares of Company and its subsidiary or subsidiary of such subsidiary has been received pursuant to a resolution plan approved by the Tribunal under section 242 of the said Act after affording a reasonable opportunity of being heard to the Jurisdictional Principal Commissioner or Commissioner.

3. Any moveable property, being equity shares of the Reconstructed Bank received by the investor or investor bank, where the said shares has been allotted by the Yes Bank Limited Reconstruction Scheme, 2020, at a price specified under the said scheme.

The revised rule shall become effective from the 1st day of April, 2020 and shall be applicable for the assessment year 2020-21 and subsequent assessment years.

Section 50CA- Special Provision for Full value of consideration for transfer of shares other than quoted shares

The new rule has been inserted after Rule 11UAC that is Rule 11UAD states namely:-

The provision of Section 50CA of the Act, shall not apply to the transfer of any movable property, being unquoted shares of a company and its subsidiary or subsidiary of such subsidiary received by a shareholder, where;

  • The National Company Law Tribunal (NCLT), on an application moved by the Central Government under section 241 of the Companies Act, 2015, has suspended Board of Director of such company and has appointed new directors nominated by Central Government under section 242 of the said Act; and
  • Shares of Company and its subsidiary or subsidiary of such subsidiary has been received pursuant to a resolution plan approved by the Tribunal under section 242 of the said Act after affording a reasonable opportunity of being heard to the Jurisdictional Principal Commissioner or Commissioner.
 

The revised rule shall become effective from the 1st day of April, 2020 and shall be applicable for the assessment year 2020-21 and subsequent assessment years.

Conclusion

Any Corporate planning to opt the amended sections must read the sections, rules and notifications carefully to avoid unwanted difficulties and litigations before going forward. 

Disclaimer- The contents of this document are solely for informational purpose. It does not constitute professional advice or formal recommendation. While due care has been taken in preparing this document. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information nor any other action taken in reliance thereon. 

 

Reference: http://www.incometaxindia.gov.in

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Category Income Tax, Other Articles by - CMA Damini Agarwal 



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