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Section 219

Conversion of an Indian branch of foreign company into subsidiary Indian company

(1)
Where a foreign company is engaged in the business of banking of India through its branch situated in India and such branch is converted subsidiary Indian company as per the scheme framed by the Reserve Bank of then, irrespective of anything contained in this Act and subject to the conditions notified by the Central Government,—

(a) the capital gains arising from such conversion shall not be chargeable to tax in the tax year in which such conversion takes place; and

(b) the provisions of this Act relating to––

(i) treatment of unabsorbed depreciation, set off or carry and set off of losses;

(ii)
tax credit in respect of tax paid on deemed income relating certain companies; and

(iii) computation of income of the foreign company and subsidiary Indian company, shall apply with such exceptions, modifications and adaptations as specified in notification.

(2)
In case of failure to comply with any of the conditions specified in scheme or in the notification issued under sub-section (1), all the provisions of Act shall apply to the foreign company and the said subsidiary Indian without any benefit, exemption or relief under the said sub-section.
(3)
Where, in a tax year, any benefit, exemption or relief has been claimed granted as per the provisions of sub-section (1) and, subsequently, there is failure comply with any of the conditions specified in the scheme or in the notification issued under the said sub-section then,—

(a) such benefit, exemption or relief shall be deemed to have wrongly allowed;

(b)
the Assessing Officer may, irrespective of anything in this re-compute the total income of the assessee for the said tax year and make necessary amendment; and

(c) the provisions of section 287 shall, so far as may be, apply and the period of four years specified in sub-section (8) of that section reckoned from the end of the tax year in which the failure to comply with condition referred to in sub-section (1) takes place.

(4)
Every notification issued under this section shall be laid before each of Parliament.