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The Central Board of Direct Taxes amends the Income-tax Rules, 1962 to provide rules for the attribution of income taxable under sub-section (4) of section 45 to capital assets and for the classification of short-term and long-term capital gains. Specified entities must furnish the details of the amount attributed to capital assets remaining with the entity in Form No. 5C. The specified entity submits Form No. 5C electronically on or before the due date referred to in the Explanation 2 below sub-section (1) of section 139 for the relevant assessment year. The form requires verification using a digital signature or an electronic verification code.
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MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 2nd July, 2021
G.S.R. 470(E).—In exercise of the powers conferred by section 48 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:─
Short title:- (1)These rules may be called the Income tax Amendment (18th Amendment), Rules,
In the Income-tax Rules, 1962, (hereinafter referred to as the principal rules) in rule 8AA, after sub-rule (4), the following sub-rule shall be inserted, namely:-
―(5). In case of the amount which is chargeable to income-tax as income of specified entity under sub- section (4) of section 45 under the head ―Capital gains‖,-
“8AB. Attribution of income taxable under sub-section (4) of section 45 to the capital assets remaining with the specified entity, under section 48.-
(1) For the purposes of clause (iii) of section 48, where the amount is chargeable to income-tax as income of specified entity under sub-section (4) of section 45, the specified entity shall attribute such amount to capital asset remaining with the specified entity in a manner provided in this rule.
(2) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of the balance in his capital account, chargeable to tax under sub-section (4) of section 45,relates to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, the amount attributable to the capital asset remaining with the specified entity for purpose of clause (iii) of section 48 shall be the amount which bears to the amount charged under sub-section (4) of section 45 the same proportion as the increase in, or recognition of, value of that asset because of revaluation or valuation bears to the aggregate of increase in, or recognition of, value of all assets because of the revaluation or valuation.
(3) Where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of the balance in his capital account, charged to tax under sub-section (4) of section 45 does not relate to revaluation of any capital asset or valuation of self- generated asset or self-generated goodwill, of the specified entity, the amount charged to tax under sub-section (4) of section 45 shall not be attributed to any capital asset for the purposes of clause (iii) of section 48.
(4) Notwithstanding anything contained in sub-rules (2) or (3), where the aggregate of the value of money and the fair market value of the capital asset received by the specified person from the specified entity, in excess of the balance in his capital account, charged to tax under sub-section (4) of section 45 relate only to the capital asset received by the specified person from the specified entity, the amount charged to tax under sub-section (4) of section 45 shall not be attributed to any capital asset for the purposes of clause (iii) of section 48.
(5) The specified entity shall furnish the details of amount attributed to capital asset remaining with the specified entity in Form No. 5C.
(6) Form No. 5C shall be furnished electronically either under digital signature or through electronic verification code and shall be verified by the person who is authorised to verify the return of income of the specified entity under section 140.
(7) Form No. 5C shall be furnished on or before the due date referred to in the Explanation 2 below sub- section (1) of section 139 for the assessment year in which the amount is chargeable to tax under sub- section (4) of section 45.
(8) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall -
Explanation 1: For the purposes of this rule, the amount chargeable to tax under sub-section (4) of section 45 shall relate to revaluation of any capital asset or valuation of self-generated asset or self-generated goodwill, of the specified entity, if the revaluation is based on a valuation report obtained from a registered valuer as defined in clause (g) of rule 11U.
Explanation 2: For the removal of doubt it is clarified that revaluation of an asset or valuation of self- generated asset or self-generated goodwill does not entitle the specified entity for the depreciation on the increase in value of that asset on account of its revaluation or recognition of the value of self-generated asset or self-generated goodwill due to its valuation.
Explanation 3: For the purposes of this rule, the expressions ―self-generated asset‖ and ―self-generated goodwill‖ shall have the same meaning as assigned to them in clause (ii) of Explanation 1 to sub-section (4) of section 45.‖.
“Form No. 5C (See rule 8AB) Details of amount attributed to capital asset remaining with the specified entity
| Sr.No. | Capital Asset | Book Value | Revalued amount/valued amount for self-generated asset | Amount attributed | Short term/ long term | |
|---|---|---|---|---|---|---|
| name | Whether self generated yes/no | |||||
| Total | ||||||
