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

Under Rule 235(3), an Indian concern must be able to substantiate its Form No. 163 information. Which of the following is among the items required by that sub-rule to be maintained, together with English translation where required?

The Indian concern must maintain financial and accounting statements of the foreign entity that directly or indirectly holds the Indian assets, covering two years before the transfer date. Directors' personal returns, the transferee's later bank statements and unrelated companies' minutes are not required by the sub-rule.

  1. AFinancial and accounting statements of the foreign entity holding the Indian assets for two years before the date of transferCorrect
  2. BPersonal income-tax returns of all directors of the Indian concern for five years
  3. CBank statements of the transferee for the following year
  4. DBoard minutes of every unrelated Indian company in the same industry

Explanation

Rule 235(3)(e) lists the financial and accounting statements of the foreign company or entity that directly or indirectly holds assets in India through the Indian concern, for two years prior to the date of transfer. The other options are not listed in the sub-rule.

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