CBDT amends the Income-tax Rules, 1962 to introduce safe harbour...

CBDT amends the Income-tax Rules, 1962 to introduce safe harbour rules for determining income referred to in clause (i) of sub-section (1) of section 9 of the Income-tax Act, 1961, chargeable to tax under the head "Profits and gains of business or profession". The key provisions are: For an eligible foreign company engaged in diamond mining business selling raw diamonds in a notified special zone, the income chargeable under this head shall be accepted as 4% or more of the gross receipts from such business, if the company exercises this safe harbour option. An "eligible assessee" has been defined as a foreign company engaged in diamond mining which opts for these safe harbour rules. "Raw diamonds" have been specifically defined. If the safe harbour option is exercised, no further deductions u/ss 30-38 shall be allowed, depreciation shall be deemed allowed, and no set-off of unabsorbed depreciation, carried forward losses or losses from other sources shall be permitted for this business income. The assessee must furnish Form 3CEFC to opt for safe harbour before filing the return. The Assessing Officer can invalidate the option if incorrect facts were furnished or facts were concealed. An assessee opting for safe harbour cannot invoke Mutual Agreement Procedure under tax treaties for avoidance of double taxation for this.