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    The Interplay of Special and General Provisions : Clause 206(12) of Income Tax Bill, 2025 Vs. Sectio...
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    Act RulesBills
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    Application clause ensures general tax provisions apply to MAT/AMT assessees unless expressly overridden by section rules.
    Clause 206(12) provides that, save as otherwise provided in this section, all other provisions of the Income Tax Act apply to assessees covered by Clause 206, so that specific MAT/AMT rules within the clause override general provisions only to the extent of inconsistency and otherwise preserve the operation of assessment, appeal, penalty, interest, set-off, carry forward and credit mechanisms under the Act.
    Act RulesBills
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    MAT/AMT credit mechanism permits excess minimum tax paid to be carried forward and set off against later regular tax liabilities.
    MAT/AMT credit under Clause 206(13) is the excess of minimum tax paid over regular tax payable, available automatically to assessees covered by the provision. The credit carries two limitations: no interest on the credit and disregard of any foreign tax credit that is excessive relative to regular tax. Set off of the credit is permitted only when regular tax exceeds MAT/AMT, limited to that excess, with unused credit carried forward for a defined period, and any credit must be adjusted to reflect changes from reassessment or appellate orders.
    Act RulesBills
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    MAT/AMT credit mechanism clarified - excess alternate-tax paid is a carry-forward entitlement usable against future regular tax liability.
    MAT/AMT credit is the difference between tax paid under Clause 206(1) and tax payable under normal provisions, carried forward as a non-refundable, non-interest-bearing entitlement to be set off in future years when regular tax exceeds MAT/AMT; credits are adjusted for excess foreign tax credits and for any changes in tax liability resulting from assessment or appellate orders, and lapse after the prescribed carry-forward period.
    Act RulesBills
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    Minimum tax harmonization: unified book profit computation and aligned accounting rules for MAT and AMT compliance.
    Clause 206(2)-(5) defines book profit by B = P + (I - R), lists items to be added and reduced in computing book profit, mandates preparation of profit and loss statements as per applicable enactments or Schedule III, consolidates special adjustments for varied assessees (including Ind AS transition treatments), requires consistency in accounting policies and depreciation for MAT/AMT purposes, and preserves recomputation and relief mechanisms akin to existing procedures.
    Act RulesBills
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    Minimum Alternate Tax expansion ensures broader taxpayer coverage, detailed book profit computation, and a structured carryforward credit regime.
    Clause 206(1) creates a non-obstante regime imposing Minimum Alternate Tax and Alternate Minimum Tax across companies, co-operative societies and other persons by deeming book profit or adjusted total income as taxable where regular tax is below prescribed minima; it prescribes detailed additions and reductions to compute book profit, special rules for varied taxpayer classes (including Ind AS transition, insolvency and IFSC units), procedural certification, a structured MAT/AMT credit mechanism with carry forward, and specified exemptions and carve-outs.
    Act RulesBills
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    Place of Effective Management residency reclassification brings foreign companies within domestic tax regime subject to notified transitional exceptions.
    Clause 220 subjects foreign companies that become Indian residents under the Place of Effective Management test to the domestic tax code while allowing the Central Government, by notification, to prescribe exceptions, modifications and adaptations to computation of income, treatment of unabsorbed depreciation, carry forward and set off of losses, collection and anti-avoidance provisions; notifications may apply to succeeding years during assessment, benefits may be withdrawn for non-compliance with prescribed conditions with recomputation and a specified limitation period, and every notification must be laid before Parliament.
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    Tax neutrality for branch-to-subsidiary conversions preserves carryforward attributes but is conditional on regulatory compliance and allows retrospective clawback.
    Clause 219 provides conditional tax neutrality for conversions of Indian branches of foreign banking companies into subsidiary Indian companies under an RBI scheme: capital gains on conversion are not taxable in the tax year of conversion and unabsorbed depreciation, carry forward losses and tax credits continue subject to notified exceptions and adaptations. Non compliance with RBI or Central Government conditions results in forfeiture of benefits and application of general tax provisions; previously allowed reliefs may be treated as wrongly allowed and reassessed, and notifications must be laid before Parliament.
    Act RulesBills
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    Opt-out of special NRI tax regime permits annual election to be taxed under the general provisions by declaration in the return.
    Clause 218 allows a Non-resident Indian to elect, by declaration in the return of income for the tax year, not to be governed by sections 212-217; upon such annual opt-out those sections do not apply and the taxpayer's total income is computed and taxed under the general provisions of the Act, with the election binding for that year and raising practical issues about declaration format and interaction with other tax provisions.
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    Grandfathering of concessional tax treatment for NRIs continues for qualifying foreign-exchange assets after becoming residents.
    Grandfathering of concessional tax treatment allows NRIs who become residents to continue concessional taxation on investment income from qualifying foreign-exchange assets if they furnish a contemporaneous written declaration with their return; the benefit endures until the asset is transferred or converted into money. Clause 217 excludes shares in Indian companies and cross-references sections 212-218, while Section 115H refers to Chapter XIIA and includes broader asset coverage. The declaration requirement and the conversion/transfer termination trigger are operative compliance and continuity mechanisms.
    Act RulesBills
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    Exemption from return filing for NRIs when income is only investment income or long term gains and tax is deducted at source.
    Clause 216 exempts a Non-Resident Indian from furnishing a return where the taxpayer's Indian income consists solely of investment income and/or long-term capital gains and the tax on that income has been deducted at source under the restructured TDS chapter; absence of either condition renders the exemption inapplicable and return filing mandatory.
    Act RulesBills
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    Capital gains exemption for NRI reinvestment: exemption hinges on timely reinvestment and a lock in that can trigger taxability.
    Capital gains on transfer of foreign exchange assets by non-resident Indians are exempt under Clause 215 if the net consideration, whole or part, is invested in a specified asset within the reinvestment window; full exemption obtains where the new asset's cost is not less than the net consideration and a proportionate exemption otherwise, with defined meanings for net consideration and cost, and a claw-back that renders the exemption taxable if the new asset is disposed of or converted into money within the lock-in period.
    Act RulesBills
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    Concessional taxation for nonresident investment income and capital gains restructured, standardizing rates and raising scope and transitional questions.
    Clause 214 restructures tax treatment for non-resident investment income and long-term capital gains by prescribing concessional flat rates for gains on specified assets and other investment income, retaining an aggregation mechanism that segregates concessional categories from remaining total income taxed at normal rates, while leaving key terms such as specified asset, investment income, and long-term capital gain to be defined by cross-reference, which creates potential scope and transitional ambiguities.
    Act RulesBills
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    Investment income taxation: new rule bars deductions and segregates capital gains, altering deduction eligibility for non-residents.
    Clause 213 bars any deduction or allowance in computing the investment income of a non-resident Indian and provides that where gross total income consists only of investment income and/or long-term capital gains no deductions under Chapter VIII are permitted; where such income coexists with other income, the investment/long-term capital gains component must be excluded from gross total income before computing allowable deductions under Chapter VIII.
    Act RulesBills
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    Foreign exchange asset definition narrows concessional tax eligibility for non-residents, affecting documentation and asset scope.
    Clause 212 defines key terms for the concessional tax regime applicable to non-residents and foreign companies: foreign exchange asset (assets acquired with convertible foreign exchange), investment income (income from such assets), long-term capital gains (capital gains on foreign exchange assets not short-term), non-resident Indian (citizen or person of Indian origin who is not resident) and specified asset (shares, certain debentures and deposits, government securities, and notified assets). The clause updates cross-references to current company law and retains notification powers, while omitting an explicit explanation of person of Indian origin and an in-text definition of convertible foreign exchange, creating potential interpretive need for rules or guidance.
    Act RulesBills
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    Taxation of specified income tightened for non-profit organisations, expanding taxable triggers and clarifying timing of taxability.
    Clause 337 creates an event based tax regime for specified income of registered non profit organisations by enumerating eleven triggers (including anonymous donations above a threshold, related party benefits, prohibited overseas application, investment contraventions, corpus condition breaches, misapplication or non utilisation of accumulated income, transfers to other NPOs, application to non charitable purposes, and assessing officer determined business income) and linking each trigger to the tax year in which the taxable event occurs, thereby prioritising disclosure, accountability, and timing clarity while leaving rate and deduction rules to other provisions.
    Act RulesBills
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    Taxation of online gaming winnings: a ring fenced flat rate regime with prescribed computation and enhanced reporting obligations.
    Clause 194 creates a distinct tax regime for net winnings from any online game, applying to any person and defining online games broadly. Net winnings must be computed as prescribed, with gaming receipts ring fenced and taxed at a specified flat rate while remaining income is taxed ordinarily. The provision emphasizes definitions aligned with technology statutes and anticipates detailed subordinate rules for aggregation, timing, promotional credits, and interaction with TDS, with limited scope for deductions unless the computation rules provide otherwise.
    Act RulesBills
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    Taxation of virtual digital assets: flat rate plus denial of loss relief reshapes compliance and reporting obligations.
    Clause 194 (Table: S. No. 4) creates a dedicated tax regime for income from transfer of virtual digital assets, applying to any person and taxing such income at a flat rate while allowing only the cost of acquisition as a deduction. All other expenses, allowances, set offs and carry forwards of losses from VDA transfers are disallowed. The statutory definition of "transfer" applies to VDAs irrespective of capital asset status, requiring segregation of VDA income in tax computation and imposing enhanced record keeping and compliance obligations.
    Act RulesBills
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    Taxation of carbon credit transfers: concessional flat tax with prohibition on deductions simplifies compliance and defines eligible credits.
    Clause 194 of the Income Tax Bill, 2025 subjects income from transfer of carbon credits to a self contained regime: any person is taxable on such income at a flat 10% rate, computed by taxing the carbon credit income at 10% and taxing remaining income under normal provisions. The provision defines carbon credit as a UNFCCC validated reduction of one tonne of CO2 or equivalent gases tradable at market price, contains an overriding clause over other Act provisions, and expressly disallows any deduction or allowance in computing such income, resulting in taxation of gross consideration.
    Act RulesBills
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    Concessional patent royalty regime offers lower tax for resident patentees subject to option, no deductions, and lockout on noncompliance.
    A concessional regime taxes royalty from patents developed and registered in India for resident patentees as gross income at a concessional rate, disallowing any deduction; assessees must exercise a prescribed option within the prescribed time, and non compliance for any of five succeeding years triggers a five year ineligibility. Definitions require substantial in country development expenditure and exclude sale proceeds and capital gains from royalty.
    Act RulesBills
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    Tax on unexplained income: punitive flat rate and denial of deductions for incomes classified under specified provisions.
    Clause 195 targets income referred to in sections 102-106, applying whether self declared or determined by the Assessing Officer, and mandates taxation of those amounts at a punitive flat rate while the balance income is taxed normally. It further provides an overriding rule that no deduction, allowance, or set off of losses is permitted against the income so classified, thereby preventing taxpayers from reducing liability on such unexplained or unaccounted sums.

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      Amendments to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      9 June, 2022

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      2002 (10) TMI 796 - Supreme Court

      Amendments  to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 upheld by the Supreme Court.

      Certain writ petitions have been filed seeking to challenge Amendments made to the Code of Civil Procedure, by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002.

      Writ Petition (civil) 496 of 2002 was filed by Salem Advocate Bar Association and after notice was issued the petitioner sought leave of this Court to withdraw the writ petition. The court declined the request to withdraw the writ petition. The petition had been filed in public interest.


      The amendments sought to be made by the above amendment acts (Amendment Act 46 of 1999 and Amendment Act 22 of 2002) have been challenged but the hon'ble apex court refused to strike down the aforesaid amendments on the ground that there was no infirmity in the same.

      Summons to the Defendant within 30 days.

      A clarification was sought on an amendment made to Section 27 dealing with summons to the defendant. It has to be done within 30 days from the date of the institution of the suit. The hon'ble court clarified that object of this section is to avoid long delay in issue of summons for want of steps by the plaintiff. If all that is required to be done by a party is duly performed then compliance has been done by the party and no fault can be attributed to the party. The objective being, if a party concerned has taken steps to file the process fee along with completing the other formalities which are required to enable the court to issue the summons then such a party is not at fault.

      Arbitration, Conciliation, Judicial Settlement and Mediation.

      Section 89 introduced in the Code of civil procedure, 1908:

      It speaks of settlement of disputes outside the court through arbitration,conciliation, judicial settlement including settlement through Lok Adalat and mediation. Held that it being imperative that resort should be had to Alternative Dispute Resolution Mechanism with a view to bring to an end litigation between the parties at an early date. The parties shall follow the procedures as provided by the mechanism and accordingly appropriate rules be framed with regard to mediation.

      The ADR mechanism is successful in most of the countries but if a matter is not settled through conciliation or mediation or judicial settlement despite efforts being made, the case will ultimately go to trial.

      Section 89 is a new provision and even though arbitration or conciliation has been in place as a mode for setting the disputes, this has not really reduced the burden on the courts. Thus the court suggested that certain modalities have to be framed to make this amendment work. It being suggested to form a Committee to ensure that the amendments made become effective and result in quicker dispensation of justice.
      Any creases which require to be ironed out can be identified and apprehensions which may exist in the minds of the litigating public or the lawyer's clarified.

      A model case management formula as well as rules and regulations which should be followed while taking recourse to the ADR (Alternative Dispute Resolution) is referred to in Section 89. The model rules, with or without modification, which are formulated may be adopted by the High Courts concerned for giving effect to Section 89(2)(d).

      Intra Court Appeal.

      Section 100A which deals with intra-court appeals was absolutely fine as opined by the hon'ble court. No prejudice would be caused to the litigants by not providing for intra-court appeal, even where the value involved is large. The High Court by Rules, can provide that the Division Bench will hear the regular first appeal. A further right of appeal where the amount involved is nominal to a Division Bench will be increasing the workload of courts unnecessarily.

      Rejection of the Plaint.

      Order 7 Rule 11 to which Clauses (e) and (f) have been added which enable the court to reject the plaint where it is not filed in duplicate or where the plaintiff fails to comply with the provisions of Rule 9 of Order 7. There may not be an automatic rejection of the plaint at the first instance. The court should give an opportunity to rectify the defect and if the same not being done the court will have the liberty or the right to reject the plaint.

      Examination of Chief of the Witnesses.

      Order 18, Rule 4 has been substituted and Sub-rule (1) provides that in every case examination-in-chief of the witnesses shall be on affidavits and copies thereof shall be supplied to the opposite parties by the party who calls them for evidence.

      It being contended that it may not be possible for the party calling the witness to compel the witness to file an affidavit. It often happens that the witness may not be under the control of the party who wants to rely upon his evidence and that witness may have to be summoned through court.

      Order 16 Rule 1 provides for list of witnesses being filed and summons being issued to them for being present in court for recording their evidence. Rule 1A, on the other hand, refers to production of witnesses without summons where any party to the suit may bring any witness to give any evidence or to produce documents.

      Held by the apex court, reading the provisions of Order 16 and Order 18 together it appears to us that Order 18 Rule 4(1) will necessarily apply to a case contemplated by Order 16 Rule 1A, i.e. where any party to a suit, without applying for summoning under Rule 1 brings any witness to give evidence or produce any document. In such a case, examination-in-chief is not to be recorded in court but shall be in the form of an affidavit.

      Held that whether a witness shall be directed to file affidavit or be required to be present in court for recording of his evidence is a matter to be decided by the court in its discretion having regard to the facts of each case.

      Evidence of a witness to be taken by the Court or by the Commissioner.

      Order 18 Rule 4(2) gives the court the power to decide as to whether evidence of a witness shall be taken either by the court or by the Commissioner.

      An apprehension was raised to the effect that the court has no discretion and once it decides that the evidence will recorded by the Commissioner then evidence of other witnesses cannot be recorded in court.

      The hon'ble bench did not agree to the above contention. The Court has a discretion to either record the evidence in Court or through Commissioner or either of them.

      Order 18 Rule 4(3) provides that the evidence may be recorded either in writing or mechanically in the presence of the Judge or the Commissioner. The use of the word 'mechanically' indicates that the evidence can be recorded even with the help of the electronic media, audio or audio-visual, and whenever the evidence is recorded by the Commissioner it will be advisable that it should be done simultaneously,at least an audio recording of the statement of the witnesses so as to obviate any controversy at a later stage.

      Held by the court that Rule 17A has been deleted by the Amendment Act, 2002 with a view that unnecessarily applications are not filed primarily with a view to prolong the trial. The contention of the counsel as to deletion may cause hardship to the litigants was not accepted by the hon'ble court.

      Memorandum of Appeal.

      Rule 9 which was inserted in Order 41 states of "Registry of memorandum of appeal". The court from whose decree an appeal lies shall entertain the memorandum of appeal and shall endorse thereon the date of presentation and shall register the appeal in a book of appeal kept for that purpose. This book be called the register of appeal.
      It being a clear proposition of law that an appeal is to be filed under Order 41 Rule 1 in the court in which it is maintainable.

      Order 41 Rule 9 contemplates that a copy of memorandum of appeal which has been filed in the Appellate Court should also be presented before the court against whose decree the appeal has been filed and endorsement thereof shall be made by the decreeing court in a book called the Register of Appeals.

      The intention of the Legislature being that the court against whose decree an appeal has been filed should be made aware of the factum of the filing of the appeal which may or may not be relevant at a future date.

      Now just because a memorandum of appeal is not filed under Order 41 Rule 9 will not, to our mind, make the appeal filed in the appellate court as a defective one.

      The hon'ble court  hoped that the amendments made in the Code of Civil Procedure would help in expeditious disposal of cases in the trial courts and the appellate courts.

      The hon'ble apex court further held, that a copy of the judgment of the present matter/writ petition be sent to the Registrars of all the High Court’s so that necessary action can be taken by the respective High Courts and any writ petition pending in those High Courts can be formally disposed of.

      Thus the amendments made to the Code of Civil Procedure, 1908 by the Amendment Act 46 of 1999 and Amendment Act 22 of 2002 were upheld/guarded by the hon'ble apex court in the present Writ Petition (civil) 496 of 2002.

      Procedure is an enabling tool to achieve the objectives of equity and justice. It may not be easy to challenge the same by way of invoking the writ jurisdiction/s.

       

       


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      2002 (10) TMI 796 - Supreme Court

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