1[21AJAA. Determination of income of a specified fund attributable to the investment division of an offshore banking unit under sub-section (1B) of section 115AD of the Act - (1) For the purposes of sub-section (1B) of section 115AD of the act, income of a specified fund, being the investment division of an offshore banking unit shall be computed in accordance with the following formula, namely:-

A+B+C+D+E+F

 

 where,−

      A= income by way of long term capital gain referred to in clause (b) of sub-section (1) of section 115AD, accrued or arisen to, or received by   the eligible investment division , as a result of transfer of  a security referred to in section 112A of the Act and held by such investment division;

 

      B= income by way of long term capital gain referred to in clause (b) of sub-section (1) of section 115AD, accrued or arisen to, or received by the eligible investment division as a result of transfer of a security, other than that referred to in section 112A of the Act, and held by such investment division;

 

C= income by way of short term capital gain referred to in clause (b) of sub-section (1) of section 115AD, accrued or arisen to, or received by the eligible investment division as a result of transfer of security referred to in section 111A of the Act and held by such investment division;

 

D= income by way of short term capital gain referred to in clause (b) of sub-section (1) of section 115AD, accrued or arisen to, or received by   the eligible  investment division as a result of transfer of  a security, other than that referred to in section 111A of the Act, and held by such investment division;

 

E= income from securities referred to in clause (a) of sub-section (1) of section 115AD of the Act, being in the nature of interest referred to in section 194LD of the Act, held by the eligible investment division;

 

F= income from securities, held by the eligible investment division, as referred to in clause (a) of sub-section (1) of section 115AD of the Act and not included in item E above.

 

Explanation: Any expenditure incurred for the purposes of making or earning an income referred to in items A or B or C or D or E or F shall not be allowed as a deduction from income from any other activity or source, irrespective of the fact that such expenditure has been not allowed as a deduction against income referred to in items A or B or C or D or E or F, as the case may be.

 

(2) The eligible investment division shall furnish an annual statement of income, eligible for taxation under sub-section (1B) of section 115AD of the Act, in Form No. 10-IK electronically under digital signature on or before the due date, which is duly verified in the manner indicated therein.

 

Explanation.- For the purpose of this rule, the expressions,-

 

  1. “due date” shall have the same meaning as assigned to it in the Explanation 2 to sub-section (1) of section 139 of the Act;
  2. “eligible investment division” shall mean a registered investment division which fulfills the conditions as prescribed under item II of sub-clause (ii) of clause (c) of the Explanation to clause (4D) of section 10 of the Act;  
  3. “investment division of an offshore banking unit” shall have the same meaning as assigned to  it in  clause (aa) of  the  Explanation to clause (4D) of section 10 of the Act;
  4. “registered investment division” shall mean an investment division of an offshore banking unit which fulfills the condition specified under item (I) of sub-clause (ii) of clause (c) of the Explanation to clause (4D) of section 10 of the Act;
  5. "securities" shall have the same meaning as assigned to it in clause (c) of the Explanation to section 115AD of the Act;
  6. “specified fund” shall have the same meaning as assigned to it in sub-clause (i) of clause (c) of the Explanation to clause (4D) of section 10 of the Act.]

 

2[(2A) The income of an eligible investment division referred to in clause (a) and clause (b) of sub-section (1) of section 115AD shall not be eligible for tax rates specified under section 115AD unless the eligible investment division furnishes an annual statement of income, eligible for taxation under sub-section (1B) of section 115AD of the Act, in Form No. 10-IK in accordance with sub-rule (2)]

 

Notes:

 1. Inserted by the Income tax (1st Amendment), Rules, 2022 Notification No. 6/2022 dated 14.01.2022 w.e.f 01.04.2022

 

 2. Inserted by the Income tax (Seventeenth Amendment), Rules, 2022. Notification dated 16.06.2022