Background

REITs originated in the United States to give investors an opportunity to invest in income-generating real estate assets. After its introduction in the States, several countries such as Singapore, Australia and Hong Kong have implemented REITs.

REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets. REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate properties (which could be offices, residential apartments, shopping centers, hotels and warehouses).

The trusts are listed in stock exchanges so that investors can buy units in the trust. REITs are structured as trusts. Thus, the assets of an REIT are held by an independent trustee on behalf of unit holders.

Significance of REIT in Indian context

REITs, as a concept, have been on the horizon for a while now. India’s regulations in 2014 for the sector have not been able to attract investor interest. REITs obtained exemption from dividend distribution tax in the Budget, a step towards making them attractive for the investors. A report by real estate consultancy firm estimates that Indian commercial real estate (like office, retail assets) offers investment opportunities for REITs worth $43 billion – $54 billion (Rs. 2.88 lakh crore – Rs. 3.60 lakh crore) across top cities.

REIT’s Investment Objective

The investment objective of REITs is to provide unit holders with dividends, usually generated from rental income and capital gains from the profitable sale of real estate assets. Typically, the trust distributes 90 per cent of its income among its investors by issuing dividends.

Characteristics of REIT Structure

Typically, money is raised from unit holders through an Initial Public Offer (IPO) and used by the company to purchase a pool of real estate properties. These properties are leased out to tenants and the income generated via rent flows back to unit holders (investors) in return as income distributions (dividends).

Real Estate Investment Trust and infrastructure investment trust invites tax regimes have been introduced to allow these infrastructures to be set up in accordance with SEBI regulations. The investment model for REIT’s and allows business trusts to raise capital through an issue of listed units and to raise debts from residents and nonresident investors.

Significance of Investing in REITs, Tax and Other Issues

Investors can buy and sell units of REIT on the stock exchange as and when required, making investment easier to liquidate compared to physical property transaction. Investors who are averse to investing in physical purchase of property due to the risks involved, REIT is an alternative.

REIT could provide an opportunity for investors who, otherwise, do not get the opportunity to invest in commercial real estate because of high capital values. The minimum required to be put into an REIT is Rs2 lakh.90 per cent of the profit generated needs to be distributed as dividend in REIT, it could provide a stable income for unit holders.

Short-term capital gain tax is applicable for unit holders at the rate of 15 per cent. While interest is tax-exempt for REITs, it is taxable for unit holders. The registration charges for every purchase and sale of property is still applicable therefore such factors can impact the profitability and attractiveness of REITs in India.

Potential Investment Risks

REITs units are listed on, and are subject to the vagaries of the stock exchanges, resulting in negative or lower returns than expected. As in mutual funds, retail investors in REITs have no control over investments and exits being made by the trust. Investing in REITs can be a passive, income-producing alternative to buying property directly. Strongly consider publicly-traded REITs over non-traded REITs. It’s essential to pay attention to interest rates.

REIT Enterprise Risk Management Framework

Five-step risk management process comprising Risk identification, Risk assessment, Formulation of risk mitigating measures, Communication and Implementation, as well as Monitoring and review.

The risk assessment takes into account both the impact and likelihood of occurrence and covers the investment, financial, operational and reputational aspects of REIT’s business. Tools such as a risk rating matrix, key risk indicators and risk register assist the Management in its risk management process.

The Board is responsible for governing risks and ensuring that the Management maintains a sound risk management system and internal controls to safeguard Unitholders' interests and Company’s REIT's assets. Assisted by the Audit and Risk Committee (ARC), the Board shall provide valuable advice to management in formulating various risk policies and guidelines.

The Board and Management shall meet on a quarterly basis or more frequently, when necessary, to review Company’s REIT’s financial performance, assess its current and future operating, financial and investment risks, as well as respond to feedback from the compliance Management and auditors.

Operational Risk

All operations are aligned with Company’s REIT’s strategies to ensure income sustainability and maximize distributable income growth. Measures include prompt lease renewals to reduce rental voids, monitoring of rental payments to minimize rental arrears and bad debts, as well as controlling property expenses to maximize net property income.

Standard operating procedures are reviewed regularly and good industry practices are incorporated into daily operations.

Business continuity plans are reviewed and improved periodically to minimize operational disruptions. These plans are tested regularly to ensure the responses developed are feasible and effective. Regular external audits are conducted to ensure that safety standards and procedures are implemented and up-to-date

For assets that are co-owned, the Management works closely with the property Management and co-owners to optimize asset performance and control property expenses. The Management and co-owners also jointly assess and approve all new, renewal, review and restructured leases, as well as capital expenditures.

Financing Risk

Liquidity and financing risks shall be managed in accordance with established guidelines and policies. The Management shall closely monitor its cash flow, debt maturity profile, gearing and liquidity positions. The Management diversifies its funding sources and lengthens the tenure of borrowings to ensure a well-staggered debt maturity profile.

Borrowings are refinanced early to reduce refinancing risk and lengthen the overall debt maturity.

The Managementshall maintain a robust cash flow position and ensures that there are sufficient working capital lines to meet its financial obligations.

Credit Risk

Tenants' credit worthiness is assessed prior to signing of lease agreements. They are also required to place security deposits upon confirmation of their leases.

Systematic rental collection procedures are implemented to ensure regular collection of rents, thereby preventing potential rental arrears.

Investment Risk

Comprehensive due diligence procedures to assess and evaluate potential investment risks are conducted prior to any transaction.

All investment proposals are evaluated objectively based on the investment criteria, as well as the target asset’s specifications, location, expected returns, yield accretion, growth potential and performance sustainability, taking into account the prevailing economic climate and market conditions.

Compliance Risk

The Investment Manager shall update with the changes in legislations and regulations, as well as new developments in its operating environment.

Organisations shall undergo periodic internal and external audits to ensure that it adhere to relevant policies and processes.

The Investment Manager shall ensure organisation complies with applicable laws and regulations, including the Listing Rules.

To foster entrepreneurship and promoting innovation, the “Startup India” initiative was launched by the Prime Minister of India, Shri Narendra Modi on January 16, 2016 at Vigyan Bhavan, New Delhi. As part of the event, a Startup India Action Plan was released. Subsequently many steps were taken by various ministries/ regulators in this direction to implement the plan. The Action Plan proposes a 19-point action list which will enable setting up of incubation centres, easier patent filing, tax exemption on profits, setting up a Rs.10,000 crore corpus fund, ease of setting-up of business, a faster exit mechanism, among others.

The initiative of the Government of India is to build a strong eco-system for nurturing innovation in order to accelerate economic growth and generate employment opportunities.

In this article the author has made an attempt to summarise the concept, benefits under various laws and way forward for the Start Up entities in India

1.1      Legal Framework:

The DIPP¹ has issued Notification² to define the concept of Startup entities. The criteria fixed by this notification (including its amendments from time to time) are adopted by all the government department(s)/ regulator(s) etc., for various purposes.

1.2      Criteria for Startup entities

An entity³  shall be considered as a ‘startup’-

1. Up to five years from the date of its incorporation/registration,
2. If its turnover⁴ for any of the financial years has not exceeded Rupees 25 crore , and

1. It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property;⁶

Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘startup’;

Provided further that in order to obtain tax benefits a startup so identified under the above definition shall be required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification (“IMB) ⁷

Present IMB consists of:

1. Shri Shailendra Singh, Joint Secretary, DIPP
   1. Alka Sharma, Director/Scientist ‘F’, Department of Biotechnology, an

c)Shri H.K. Mittal, Head, Innovation/Entrepreneurship& National Science& Technology Entrepreneurship Development Board, Department of Science & Technology

1.3 The process of recognition as a ‘startup’

Through mobile app/portal of the DIPP ⁸. Startups will be required to submit a simple application with any of following documents:

1. a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from any Incubator established in a postgraduate college in India; or

1. a letter of support by any incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation; or
2. a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India; or

1. a letter of funding of not less than 20 per cent in equity by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with SEBI that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit; or

1. a letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation; or

1. a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted.

1.4  Penalty in case of false information:

If on subsequent verification, such recognition is found to be obtained without uploading the document or uploading any other document or a forged document, the concerned applicant shall be liable to a fine which shall be fifty per cent of paid up capital of the startup but shall not be less than Rupees 25,000.

Benefits/ supportive measures taken under various laws:

2.1      Foreign Exchange Management Act, 1999 (“FEMA”)

1. Opening of FC/EEFC Account

1. RBI⁹ has permitted Indian Startups:

1. having an overseas subsidiary, to open a foreign currency account with a bank outside India for the purpose of crediting to the account the foreign exchange earnings out of exports/sales made by the said startup or its overseas subsidiary. The balances held in such accounts, to the extent they represent exports from India, shall be repatriated to India within the period prescribed for realization of exports

2. to open EEFC¹⁰ account maintained in India with the Authorised Dealers for crediting the payments received in foreign exchange arising out of sales/ export made by the startup or its overseas subsidiaries

1. RBI has expressed to carry slew of following measures to support the Startup initiatives of GOI

1. Enabling start-up enterprises, irrespective of the sector in which they are engaged, to receive foreign venture capital investment and also explicitly enabling transfer of shares from Foreign Venture Capital Investors to other residents or non-residents;

2. Permitting, in case of transfer of ownership of a start-up enterprises, receipt of the consideration amount on a deferred basis as also enabling escrow arrangement or indemnity arrangement up to a period of 18 months;

3. Enabling online submission of A2 forms for outward remittances on the basis of the form alone or with document(s) upload/submission, depending on the nature of remittance; and

4. Simplifying the process for dealing with delayed reporting of FDI related transaction by building a penalty structure into the regulations itself.

5. Issue of shares without cash payment through sweat equity or against any legitimate payment owed by the company remittance of which does not require any permission under FEMA

2.2     Income Tax Laws:

1. Insertion of new section 54EE for exempting Capital Gain on long term capital asset and invested in eligible units of AIF

1. A new section has been inserted to permit the exemption of long term capital gain arising out of transfer of capital asset if the investment is made in specified units of Alternative Investment Funds (AIF) on or after 1^st April, 2016, within 6 months of transfer of capital asset.

2. The exemption is restricted on proportion basis of investment Vs Sale proceeds received
3. The maximum amount that can be invested is restricted to Rs. 50 Lakhs
4. The benefits is restricted for investment made upto 31/03/2019

1. Insertion of new sub-section 5 under section 54GB

1. A new sub-section has been inserted to permit exemption of long-term capital gain arising out of transfer of capital asset if the investment is made in specified units of Alternative Investment Funds (AIF) on or after 1st April, 2016, within 6 months of transfer of capital asset.
2. In both the cases the word “Specified Units” means investment into equity shares of eligible startup unit as defined herein above.

• Exemption of tax on difference between the allotment price and FMV under section 56 (2) (viib) of the Act

1. A new explanation has been added under section 56 (2) (viib) of Act, to exempt the difference between Issue price and Fair Market Value, from being considered as taxable income under Other Sources. Due to this amendment the Startup entity can issue shares to residents at premium than the Fair Market Value, without any tax burden¹¹

1. Exemption of tax on Profits of the entity for 3 years u/s 80-IAC of the Act

1. A new section has been added after section 80-IAB of Act, to exempt the tax on 100% profits of Startup entity
2. The benefit is applicable for profits earned from the fiscal year 2016-17
3. The maximum period of tax benefit is given for 3 consecutive financial years out of 5 years of incorporation/ registration of startup entity. The entity has option to choose the beginning period of exemption

4. Exemption is subject to non- distribution of dividend by the Startup.
5. The startup entity shall fulfill the eligibility criteria listed by DIPP, and should have been incorporated between 01-04-2016 and 31-03-2019

6. However the startup entity has to pay MAT/AMT¹² under section 115JB/115JC, as the case may be, of the Act.

6. Further, existing capital gains exemption for investment in newly formed manufacturing Micro, Small and Medium Enterprises (MSMEs) by individuals shall be extended to all Startups.

7. For Startups, investment in computer or computer software (used in core business activity) to qualify as purchase of “new assets”.

2.3      Labour laws:

The Union Government has simplified the legal compliance under various labour laws, as detailed below:

1. Engaging Apprentices ¹³

The entity is permitted to recruit apprentices in a band of 2.5% - 10% of total strength (including contractual workers). The Startup entity is eased from inspection based on the following criteria:

1. Relaxation under various other Labour Laws

Compliance pertaining to 6 labour and 3 environmental laws will be allowed to be self-certified through the Startup mobile app.

Startups classified as White Category as defined by the Central Pollution Control Board will be allowed self- certification under environmental laws, with only random checks proposed.

2.4       Fast Track exit under Insolvency and Bankruptcy Code, 2016¹⁴

As per Section 55 to 58, the startup entity is eligible for fast track corporation insolvency resolution process and the exit process may be completed within 90 days of commencement date of process unless otherwise sought for extension by the entity etc.

2.5      Government Support for establishing Incubation Centres

1. AIM/ATL, NITI Aayog

As per the Atal Innovation Mission/ Atal Tinkering Labs, NITI Aayog, Government of India, the Central Government has issued guidelines in May, 2016 for extending the support for establishing incubation centres/ tinkering labs at various places in India

2. NIDHI, NSTEDB

As per the NIDHI, NSTEDB, Government of India, the Central Government has issued guidelines in April, 2016 for extending the support for 20 student start up entities with a maximum amount of Rs. 10.00 Lakhs each, which will be given as ignition grant/award, subject to the conditions stated therein.

2.6     Establishment of Fund of Funds with a corpus of Rs.10,000 crore

Government to set up a Fund with an initial corpus of Rs.2,500 crore and a total corpus of Rs.10,000 crore over a period of 4 years.

Such Fund will not invest into Startups directly, but shall participate in the capital of SEBI registered Venture Funds.

The Venture Fund may obtain up to a maximum of 50% of the fund size from the Fund of Funds, provided it has already raised the balance 50% of the stated fund size. Such Fund will be managed by a Board with private professionals drawn from industry bodies, academia, and successful Startups.

2.7       Relaxation of norms for procurement from Startup entities

Ministry of Micro, Small and Medium Enterprises has issued a policy circular No. 1(2)(1)/2016-MA, dated 10th March, 2016 to all central ministries, central PSUs, departments etc., to convey that in case of procurement of goods on prior experience basis is relaxed in case of procurement of goods from startup entities subject to certain conditions stated therein.

Conclusion:

By initiating so many measures, the Union Government expects that the India becomes major player for home grown start ups and the mission of Make-in India, skill india etc., can be achieved. The Action Plan has certainly addressed key concerns, like simplifying the process to obtain certain regulatory registrations and approvals by rolling out the proposed Mobile App and Portal, enabling faster exits from a regulatory perspective, providing funding support and credit guarantee for Startups, and permitting certain specified tax benefits.

In this bulletin, we bring to our readers, certain important and significant judicial precedents pronounced by various high courts which would determine the future course of Transfer Pricing litigation. We wish the readers shall be benefited from the following judgments.

1. Pr CIT v Ameriprise India (P)Ltd –Delhi High Court

The Court upheld Tribunal’s order considering foreign exchange gain/loss arising out of revenue transactions(i.e. ITES services) as an item of operating revenue/cost.

2. Toluna India Pvt Ltd – Delhi High Court

HC upholds ITAT’s exclusion of 4 comparables viz. Infosys Technologies Ltd, KALS Information Systems Ltd, Tata Elxsi Ltd and Wipro Ltd for assessee providing software development and marketing support services to AE for AY 2008-09 and 2009-10; Notes that ITAT, while directing AO to exclude these comparables, had followed order passed in assessee’s own case for AY 2007-08 and such order did not appear to have been challenged by Revenue; On merits, HC holds that “given the scale of operations of the above entities, their exclusion from the list of comparables for the purposes of determination of ALP appears justified”; Accordingly, HC holds that no substantial question of law arises and dismisses Revenue’s appeal.

3. Yum Restaurants(India) Pvt Ltd v ITO – Delhi High Court

The Court held that the TPO was incorrect in presuming the existence of an international transaction between the assessee and its AEs, on the basis that the assessee allegedly made a contribution towards AMP expenditure to its wholly owned Indian subsidiary on behalf of its AEs and the fact that the assessee had incurred a loss in the relevant segment and therefore concluding that it was not adequately compensated by the AEs for the creation of marketing intangibles. The Court held that there would be a need for a detailed examination of the operating agreement between the assessee, its Indian subsidiary and the AEs to ascertain if any part of the AMP expenses was for the purpose of creating marketing intangibles for the AE of the assessee and only after an international transaction between the assessee and its AE in relation to AMP expenses was shown to exist, could the question of determining ALP of such international transactions arise.

4. CIT v Thyssen Krupp IndustriesIndia (P)Ltd – Bombay High Court

The Court held that where a substantial part of revenue of a comparable company in execution of turnkey projects arose out of executing projects of public sector undertakings, it could not be considered to be comparable to assessee-company providing turnkey services to its AE as contracts between Public Sector undertakings were not driven by profit motive alone but other consideration also weigh in such as discharge of social obligations etc.

5. CIT v Goldstar Jewellery Design Pvt Ltd – Bombay High Court

The Court held that the TPO was unjustified in applying the base of capital employed under the TNMM method without segregating the capital employed in respect of AE and Non-AE transactions. Further, it held that where the assessee entered into both international as well as domestic transactions, the Tribunal was justified in restricting the adjustment only to international transactions.

6. CIT v ITC Infotech India Ltd – Calcutta High Court

The Court held that where in respect of marketing and administrative services provided to third party customers, the assessee adopted a revenue sharing model whereby it kept 75 percent of the revenue and paid 25 percent to its subsidiaries who provided support services for transactions where the customers directly contracted with either the assessee or its subsidiaries, the TPO was incorrect in determining the remuneration to subsidiaries at 15 percent, where the customers directly contracted with the assessee, since there was no difference in the functions performed by either the assessee or its subsidiaries as compared to cases where customers directly contracted with the subsidiaries.

7. Honda Cars India Ltd v DCIT – Delhi High Court

The Court held that where the Petitioner was not a foreign company and the TPO did not propose any variation to income returned by petitioner, neither of two conditions of section 144C of the Act were satisfied and therefore the petitioner was not an ‘eligible assessee’. Consequently, the Assessing Officer was not competent to pass draft assessment order under section 144C(1) of the Act and therefore the said draft assessment order was quashed.

8. International Air Transport Association – Bombay High Court

The Court set aside the final assessment order passed under section 143(3) of the Act without passing a draft assessment order as mandated by Section 144C(1) of the Act which applied to the assessee. It observed that the DRP did not entertain the assessee’s objections absent the draft assessment order and therefore the rights made available to the assessee under section 144C of the Act were rendered futile by directly passing final order under section 143(3) of the Act.

Concluding Remarks:

Irrespective of the fact that most of the issues in Transfer Pricing are attaining finality through the judgements of the Tribunals, there are still certain conflicting views on various issues which are being cleared by the High Courts. However, the Tribunals and the Transfer Pricing Officers have been following their respective views stating that some of these High Court Judgements are not Jurisdictional High Courts pronouncements.

Source:

Chapter X of Finance Act, 2016 provides for the scheme. The Scheme come into force on 1st July, 2016. The declaration may make declaration on or before 31st December, 2016.

The declarant (as defined in the scheme) has to file a declaration in relation to ‘tax arrear’or ‘specified tax’ in respect of which appeal is pending.

Tax Arrear means the amount of tax, interest or penalty determined under the Income Tax Act or Wealth Tax Act in respect of which appeal is pending before CIT(A) or CIT(W) as on the 29th February, 2016.

Specified Tax means tax determined in consequence of or is validated by an amendment made with retrospective effect in Income Tax Act, 1961 or Wealth Tax Act,1957 and relates to a period prior to the date on which the Act amending the Income Tax Act or Wealth Tax Act, as the case may be, received the assent of the President.

Salient Features of the Scheme:

Declaration is to be filed before the Designated Authority in Form 1 and shall be signed by the declarant or any person competent to verify the return of income on his behalf in accordance with the provisions of section 140 of the Income Tax Act, 1961. Form 2 has to be filed along with Form 1 stating that the declarant has agreed to waive his/her rights towards appeals and other related matter on opting to this scheme.

As per section 204(1) of Chapter X of the Finance Act, 2016 the designated authority shall within a period of 60 days from the date of receipt of declaration determine the amount payable by the declarant in accordance with the provisions of the schemevide Form 3.

The declarant shall pay sum determined by the designated authority within in 30 days of date of receipt of the certificate and intimate the fact of such payment to the designated authority along with the proofvide Form 4.

On verification of the payment challan and other related documents, the authorities shall issue an order vide Form 5, if disclosed amount is ‘tax arrear’and Form 6, if disclosed amount is ‘specified tax’. Such order shall be the order of full and final settlement of tax amounts and shall guard the declarant from all other prosecutions and related issues.

Every order passed under section 204(1) determining the sum payable under the scheme shall be conclusive as to the matters stated there in and no matter covered by such order shall be re- opened in any proceeding under the Income Tax Act or Wealth Tax Act or under any law for the time being in force or as the case may be under any agreement, whether for protection of investment or otherwise, entered in to by India with any other country or territory outside India.

Immunity (benefit):

In case of Tax Arrear-

1. If disputed tax up to Rs 10 Lakh– Immunity from100% penalty;

1. If disputed tax exceeds Rs10Lakh–Immunity to the extent of 75% of minimum penalty;

1. If appeal pending related penalty– Immunity to the extent of 75% of minimum penalty.

In case of Specified Tax-

1. 100% Immunity form payment of interest and penalty.

Note:

Disputed Tax means tax determined under the Income Tax Act or Wealth Tax Act which is disputed by the assessee or the declarant.

Immunity from instituting any proceedings in respect of any offence under the Income Tax Act or Wealth Tax Act as the case may be.

Any amount paid in pursuance to declaration shall not be refundable under any circumstances.

Non- applicability of Scheme:

Section 205 of the Finance Act, 2016 provides that the scheme shall not be applicable in the cases relating to:

1. Assessment made pursuant to search;
2. Assessment made pursuant to survey conducted by the department;

1. Assessment in respect of which prosecution proceedings have been instituted on or before the date of filing the declaration;

1. Tax liability relating to undisclosed income from a source located outside India or undisclosed asset located outside India;

1. Assessment or reassessment made on the basis of information received by the Government of India under the agreement for exchange of information with any other country;

1. In the case of a person in respect of whom an order of detention has been passed under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 and the order has not been revoked or set aside by the competent Court;

1. In case of a person in respect of whom prosecution has been instituted on or before filing of declaration or such person has been convicted of any offence punishable under the provisions of Indian Penal Code, The Unlawful Activities (Prevention) Act, 1967, The Narcotic Drugs and Psychotropic Substances Act, 1985, The Prevention of Corruption Act, 1988 or for enforcement of any civil liability;

1992. In case of a person notified u/s. 3 of The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.

Withdrawal of Litigation:

In accordance with Section 200(2) of the Act, where a declaration has been filed in respect of tax arrears appeal pending before CIT(A) or CWT(A), as the case may be, relating to disputed income or disputed wealth shall be deemed to have been withdrawn.

In a case relating to specified tax, the assessee is required to firstly withdraw such appeal or writ pending before any appellate authority or the court and has to furnish proof of such withdrawal along with the declaration to be filed. In a case where the assessee has initiated any proceedings for arbitration, conciliation or mediation or has given any notice thereof under any law, he has to withdraw such proceedings or notice or claim, and proof of such withdrawal has to be submitted along with the declaration to be made. The assessee has also to make a declaration waiving his right to seek or pursue any remedy or any claim in relation to the specified tax which may be available to him under any law for the time being in force.

It has also been provided in sub-section (6) of Section 200 that no Appellate Authority or Arbitrator, conciliator or mediator shall proceed to decide any issue relating to specified tax mentioned in the declaration and in respect of which an order has been passed by the Designated Authority or the sum payable under the scheme has been determined.

Effect of False Declaration:

Section 200(5) of the Act, provides that where any material particular furnished in the declaration is found to be false or the declarant violates any of the conditions of the scheme or the declarant acts in a manner which is not in accordance with the undertaking given by him under sub-section (4) of Section 200, it shall be presumed that as if the declaration was never made under the scheme and all the consequences under the Income-tax Act or Wealth-tax Act, as the case may be, will follow and appeal or other proceedings shall be deemed to have been revived.

Forms: