WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM ...

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WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM u/s 45 and if the cost of the long term capital asset is less than the capital gains arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long term capital asset bears to the whole of the capital gain, shall not be charged u/s 45. Provided that the investment made on or after the 1 st day of April 2007, in the Long Term Specified Asset by an assessee during any financial year does not exceed fifty lakh rupees. Where the Long Term Specified Asset is transferred or converted (otherwise than by transfer) into money at any time within a period of three years from the date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such Long Term Specified Asset shall be deemed to be the income chargeable under the head “Capital gains” relating to long-term capital asset of the previous year in which the Long Term Specified Asset is transferred or converted (otherwise than by transfer) into money. 5. As per section 54F of the IT Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family (HUF) will be exempt from capital gains tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years. Such benefit will not be available if the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”. If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost of the new residential house bears to the net consideration, will be exempt. If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred. 6. As per section 74, Where in respect of any assessment year, the net result of the computation under the head “Capital gains” is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and in so far as such loss relates to a short-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset; in so far as such loss relates to a long-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset not being a short-term capital asset; if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on. No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. 7. As per section 111A of the IT Act, where the total income of an assessee includes any income chargeable under the head “capital gains” arising from the transfer of a short term capital asset, being an equity share in a Company or a unit of an equity oriented fund and the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance Act, 2004 comes into force and such transaction is chargeable to securities transaction tax under that chapter, then the tax payable by the assessee shall be the amount of income tax calculated on such short term capital gains at the rate of 15%. Page 24 of 95
WABCO-TVS (INDIA) LIMITED INFORMATION MEMORANDUM 8. As per section 115E of the IT Act, in the case of a shareholder being a nonresident Indian, and subscribing to the shares of the Company in convertible foreign exchange, in accordance with and subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not covered under section 10(38) of the IT Act) will be subject to tax at the rate of 10% (plus applicable surcharge and education cess), 9. As per section 115F of the IT Act and subject to the conditions specified therein, in the case of a shareholder being a non-resident Indian, gains arising on transfer of a long term capital asset being shares of the Company will not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset or savings certificates referred to in section 10(4B) of the IT Act. If part of such net consideration is invested within the prescribed period of six months in any specified asset or savings certificates referred to in section 10(4B) of the IT Act then such gains would not be chargeable to tax on a proportionate basis. Further, if the specified asset or savings certificate in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred. 10. As per section 115G of the IT Act, Non-Resident Indians are not obliged to file a return of income under section 139(1) of the IT Act, if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the IT Act. 11. As per section 115H of the IT Act, where Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the IT Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. 12. As per section 115I of the IT Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his return of income for that assessment year under section 139 of the IT Act, that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the IT Act. Provisions of the Act vis-à-vis provisions of the Tax Treaty: In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to any benefits available under the Tax Treaty, if any, between India and the country in which the non-resident has fiscal domicile. As per the provisions of section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non resident. IV. Benefits available to FII’s: 1. As per section 10(34) of the IT Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 st April Page 25 of 95
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