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CA Final · Direct Tax Laws & International Taxation · Provisions to Counteract Unethical Tax Practices

Kaveri Industries Ltd, an Indian concern, furnished Form No. 163 for an indirect transfer. The Assessing Officer later calls for documents in a proceeding. Under Rule 235 of the Income-tax Rules, 2026, which of the following is NOT among the items the Indian concern must maintain and produce?

Personal income-tax returns of the directors for ten years are not required. Rule 235(3) requires items such as the foreign entity's two-year financial statements, certified valuation of Indian and total assets, and details of tax paid outside India on the transfer.

  1. AFinancial and accounting statements of the foreign entity for two years prior to the date of transfer
  2. BValuation report of Indian assets and total assets certified by a merchant banker or accountant
  3. CDetails of payment of tax outside India relating to the transfer
  4. DPersonal income-tax returns of every director of the Indian concern for ten yearsCorrect

Explanation

Rule 235(3) lists accounts of the foreign entity for two years before transfer, the certified valuation report, and details of tax paid outside India. Directors' personal returns for ten years are not listed, so that option is the one not required.

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