|The Finance Act, 2012 with effect from the 1st day of April, 2013, has inserted section 90(4) which provides that a non-resident assessee shall not be entitled to claim relief under the applicable Double Taxation Avoidance Agreement unless a TRC from the Government of the contracting State of which he is a resident, containing the prescribed particulars, is submitted.
(a) The Finance Act state that the provision “shall be inserted with effect from the 1st day of April, 2013 which means the provision is applicable from April 1, 2013 i.e. assessment year 2013/14 or 2014/15? As the Notes to clauses and Memorandum to the Finance Bill, 2012 states that the Amendment will take effect from 1st April 2013 and will accordingly apply in relation to assessment year 2013-14 and subsequent years. Please clarify.
(b) Since the format/particulars has not yet been prescribed, whether A Ltd should insist on general TRC from Tax Authorities of the country in which the Foreign Company / NRI is tax resident to prove A Ltd.’s bona fide and substantially start implementing the machinery provision of TDS considering the intent and the spirit of the provision of section 90A?
(c) In the event the Foreign company / NRI, fails to provide the TRC, which rate should be applied?
|(a) Section 90(4) is applicable from assessment year 2013/14 as explained in Memorandum to the Finance Bill 2013/14 to the Finance Bill, 2012. The Supreme Court consisting of five judges in Karimtharuri Tea Estate Ltd. v. State of Kerala [60 ITR 262] has held, that:
“It is well settled that the Income tax Act as it stands amended on the first day of April of any financial year must apply to the assessment of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment of that year, even if the assessment is actually made after the amendments come into force.”
The Bombay High Court, while deciding the operation of sections 292BB& 292B has also taken the similar view in CIT v. Mr. Salman Khan bearing ITA (L) No. 2362 of 2009. The Court held that the sections are applicable from assessment year 2008-09
In CIT v. Kuber Tobacco Products P. Ltd. vide ITA No. 116/2010 dated March 05,2010, the Delhi High Court while confirming the Special Bench view in 28 SOT 292 (Delhi) held that section 292BB as well as amendment to section 143(2) are applicable from April 1, 2008 i.e. from assessment year 2008-09.
Further, section 2(9) defines “assessment year” which means the period of twelve months commencing on the 1st day of April every year.
(b) The certificate should be as per
Rule 21AB of the Income-tax Rules, 1962.
(c) The rate in force of income-tax specified under the Finance Act of the relevant year.
|CA. H. N. Motiwalla
|143(2), 29, 292B, 90(4)
|applicability, double taxation
Opinion Of Eminent Legal Luminaries On Controversial Issues
From Which Year S. 90(4) Is Applicable?
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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