27 MISCELLANEOUS PROVISIONS AMENDMENTS BY THE FINANCE ACT, 2015 (a) Acceptance of Specified sum and repayment of Specified advance in relation to immovable property transactions to be effected through specified modes [Section 269SS & 269T] Related amendment in sections: 271D & 271E Effective from: 1 st June, 2015 Section 269SS provides that no person shall take from any person any loan or deposit otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account if, inter alia, the amount of such loan or deposit or the aggregate amount of loan or deposit is ` 20,000 or more. (ii) Likewise, under section 269T, any loan or deposit shall not be repaid, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, by the persons specified in the section if, inter alia, the amount of loan or deposit together with interest, if any, payable thereon is ` 20,000 or more. (iii) In order to curb generation of black money by way of dealings in cash in immovable property transactions, section 269SS has been amended to also provide that no person shall accept from any person any specified sum otherwise than by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, if the amount of such specified sum is ` 20,000 or more or the aggregate amount of loan, deposit and specified sum is ` 20,000 or more. (iv) Section 269T has also been amended so as to provide that no person shall repay any specified advance received by it, otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of specified advance, together with interest, if any, payable thereon or the aggregate amount of the specified advances received by such person either in his own name or jointly with any other person on the date of such repayment together with interest, if any, payable on such specified advances is ` 20,000 or more. 161
(v) Meaning of specified sum and specified advance : Specified sum for the purpose of section 269SS Any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. Specified advance for the purpose of section 269T Any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place. (vi) Consequently, if a person takes or accepts a specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of specified sum so taken or accepted under section 271D. (vii) Likewise, if a person repays any specified advance referred to in section 269T, otherwise than in accordance with the provisions of that section, penalty under section 271E equivalent to the amount of specified advance so repaid would be attracted. (viii) Penalty under section 271D and 271E is imposable by the Joint Commissioner. (b) CBDT empowered to notify rules for giving foreign tax credit [Section 295(2)] Effective from: 1 st June, 2015 (ii) Under section 91(1), relief is provided in respect of income-tax on the income which is taxed in India as well as in the country with which there is no Double Taxation Avoidance Agreement (DTAA). A person who is resident of India is entitled to a deduction from the Indian income-tax payable by him, of a sum calculated on such doubly taxed income, at the Indian rate of tax or the rate of tax of said country, whichever is lower. In respect of countries with which India has entered into a double taxation avoidance agreement under section 90 or section 90A, relief in respect of income-tax on doubly taxed income is available under the DTAAs with such countries. (iii) There is, however, no provision under the Income-tax Act, 1961 providing for the manner for granting credit of taxes paid in any country outside India. (iv) Under section 295(1), the CBDT is, subject to the control of the Central Government, empowered to make rules by notification in the Gazette of India, for carrying out the purposes of the Income-tax Act, 1961. Further, section 295(2) enlists the specific matters in respect of which the CBDT may make rules. (v) Clause (ha) has been inserted in section 295(2) so as to provide that CBDT may make rules to provide the procedure for granting relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90, or under section 90A, or under section 91, against the income-tax payable under the Income-tax Act, 1961. 162
(c) Definition of accountant amended to exclude specified related persons [Section 288] Effective from: 1 st June, 2015 Under the Income-tax Act, 1961, audit reports and certificates issued by an accountant are required to be furnished under section 44AB, section 92E, section 115JB, etc. to ensure correct reporting/computation of taxable income by the taxpayers. (ii) The term accountant has been defined in the Explanation below section 288(2) to mean a chartered accountant within the meaning of Chartered Accountants Act, 1949 [including, in relation to any State, any person eligible to be appointed to act as auditor of the companies registered under that State by virtue of section 226(2) of the Companies Act, 1956]. (iii) The Comptroller and Auditor General of India (C&AG) published its report on Appreciation of Third Party (Chartered Accountant) Certification in Assessment Proceedings. In para 3.9 of the Report, it has been stated that the Chartered Accountant Act, 1949 debars an auditor to express his opinion on the financial statement of any business or any enterprise in which he, his relative, his firm or partner in the firm, has substantial interest. (iv) The purpose of audit/certification under the Income-tax Act, 1961 is to protect the interests of revenue. Meaningful discharge of an auditor s function of protecting the interests of revenue would not be possible if the auditor is not independent. In this regard, it may be noted that in order to ensure the independence of auditor, section 141(3) of the Companies Act, 2013 contains a list of certain persons who are not eligible for appointment as auditor. (v) Therefore, in order to incorporate similar disqualification under the Income-tax Act, 1961, Explanation below section 288(2) has been substituted to provide that an accountant means a chartered accountant as defined in section 2(1)(b) of the Chartered Accountants Act, 1949 who holds a valid certificate of practice under section 6(1) of that Act. However, the following persons are not included in the definition of accountant - Assessee Person Company A person who is not eligible for appointment as an auditor of the said company under section 141(3) of the Companies Act, 2013, namely, (a) (b) (c) A body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008; an officer or employee of the company a person who is a partner, or who is in the employment, of an officer or employee of the company (d) a person who, or his relative or partner 163
(e) (f) (g) (h) (ii) (iii) is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company 2 is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of ` 5 lakh. has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of ` 1 lakh. a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed. a person whose relative is a director or is in the employment of the company as a director or key managerial personnel a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than 20 companies a person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction any person whose subsidiary or associate company or any other form of entity, is engaged as on the date of appointment in consulting and specialised services as provided in section 144 of the Companies Act, 2013. (ii) Individual The assessee himself or his relative (iii) Firm Partner of the firm or his relative (iv) AOP Member of the AOP or his relative (v) HUF Member of the HUF or his relative 2 However, the relative may hold security or interest in the company of face value not exceeding ` 1,000 or such sum as may be prescribed. 164
(vi) Trust or Institution (vii) Any other person (viii) Any assessee referred to in (ii) to (vii) (1) The author of the trust or founder of the institution or his relative (2) Any person who has made a substantial contribution to the trust or institution, i.e., any person whose total contribution upto the end of the relevant previous year exceeds ` 50,000, or his relative (3) Where such author, founder or person is a HUF, a member of the HUF or relative of such member (4) Any trustee of the trust or manager of the institution, or relative of the trustee or manager The person who is competent to verify the return under section 139 in accordance with the provisions of section 140 or his relative. (1) An officer or employee of the assessee (2) An individual who is a partner, or who is in the employment, of an officer or employee of the assessee. (3) An individual who, or his relative or partner - (I) is holding any security of, or interest in, the assessee 3. (II) is indebted to the assessee 4. (III) has given a guarantee or provided any security in connection with the indebtedness of any third person to the assessee 5. (4) a person who, whether directly or indirectly, has business relationship with the assessee of such nature as may be prescribed. (5) a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction. (vi) However, the ineligibility for carrying out any audit or furnishing of any report/certificate in respect of an assessee shall not make an accountant ineligible for attending incometax proceeding referred to in section 288(1) as authorised representative on behalf of that assessee. 3 However, the relative may hold security or interest in the assessee of the face value not exceeding ` 1 lakh 4 However, the relative may be indebted to the assessee for an amount not exceeding ` 1 lakh 5 However, the relative may give guarantee or provide any security in connection with the indebtedness of any third person to the assessee for an amount not exceeding ` 1 lakh 165
(vii) Further, the person convicted by a court of an offence involving fraud shall not be eligible to act as authorised representative for a period of 10 years from the date of such conviction. (viii) An Explanation has been inserted after section 288(7) to define the term relative for the purpose of section 288. (a) Spouse (g) Any lineal descendent of a brother or sister of the individual or his spouse (b) Brother/Sister (f) Spouse of the persons referred to in (b)/(c)/(d)/(e) Relative, in relation to an individual (c) Brother/Sister of spouse (e) Any lineal ascendent/ descendent of the spouse (d) Any lineal ascendent/ descendent 166