Foreign company said to be resident in India.

1. (1) Where a foreign company is said to be resident in India in any previ- ous year and such foreign company has not been resident in India in any of the previous years preceding the said previous year, then, notwithstanding anything contained in this Act and subject to the conditions as may be notified by the Central Government in this behalf, the provisions of this Act relating to the computation of total income, treatment of unabsorbed depreciation, set off or carry forward and set off of losses, collection and recovery and special provisions relating to avoidance of tax shall apply with such exceptions, modifications and adaptations as may be specified in that notification for the said previous year: Provided that where the determination regarding foreign company to be resident in India has been made in the assessment proceedings relevant to any previous year, then, the provisions of this sub-section shall also apply in respect of any other previous year, succeeding such previous year, if the foreign company is resident in India in that previous year and the previous year ends on or before the date on which such assessment proceeding is completed.
2. (2) Where, in a previous year, any benefit, exemption or relief has been claimed and granted to the foreign company in accordance with the provisions of sub-section (1), and, subsequently, there is failure to comply with any of the conditions specified in the notification issued under sub-section (1), then,—
   • (i) such benefit, exemption or relief shall be deemed to have been wrongly allowed; (ii) the Assessing Officer may, notwithstanding anything contained in this Act, re-compute the total income of the assessee for the said previous year and make the necessary amendment as if the exceptions, modifications and adaptations referred to in sub-section (1) did not apply; and
   • (iii) the provisions of section 154 shall, so far as may be, apply thereto and the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the failure to comply with the condition referred to in sub-section (1) takes place.
3. (3) Every notification issued under this section shall be laid before each House of Parliament.] 1* 115K. [Special provision for computation of income in certain cases.]—Omitted by the Finance Act 1997 (26 of 1997), s. 39 (w.e.f. 1-4-1998). 115L. [Return of income not to be filed in certain cases.]—Omitted by the Finance Act, 1997 (26 of 1997), s. 39 (w.e.f. 1-4-1998). 115M. [Special provision for disallowance of deductions and rebate of income-tax.]—Omitted by the Finance Act, 1997 (26 of 1997), s. 39, (w.e.f. 1-4-1998). 115N. [Bar of proceedings in certain cases.]—Omitted by the Finance Act, 1997 (26 of 1997), s. 39, (w.e.f. 1-4-1998). 2[CHAPTER XIID SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED PROFITS OF DOMESTIC COMPANIES 115-O. Tax on distributed profits of domestic companies.—3[(1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003, whether out of current or accumulated profits shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) 4[at the rate of fifteen per cent.]] 5[Provided that in respect of dividend referred to in sub-clause (e) of clause (22) of section 2, this sub-section shall have effect as if for the words “fifteen per cent.”, the words “thirty per cent.” had been substituted;] 1. Chapter XIIC consisting of sections 115K to 115N omitted by Act 26 of 1997, s. 39 (w.e.f. 1-4-1998). Earlier Chapter XIIC was inserted by the Act 18 of 1992, s. 58 (w.e.f. 1-4-1993). 1[(1A) The amount referred to in sub-section (1) shall be reduced by,— 2[(i) the amount of dividend, if any, received by the domestic company during the financial year, if such dividend is received from its subsidiary and,—
   • (a) where such subsidiary is a domestic company, the subsidiary has paid the tax which is payable under this section on such dividend; or
   • (b) where such subsidiary is a foreign company, the tax is payable by the domestic company under section 115BBD on such dividend: Provided that the same amount of dividend shall not be taken into account for reduction more than once;] (ii) the amount of dividend, if any, paid to any person for, or on behalf of, the New Pension System Trust referred to in clause (44) of section 10. Explanation.—For the purposes of this sub-section, a company shall be a subsidiary of another company, if such other company, holds more than half in nominal value of the equity share capital of the company.] 3[(1B) For the purposes of determining the tax on distributed profits payable in accordance with this section, any amount by way of dividends referred to in sub-section (1) as reduced by the amount referred to in sub-section (1A) [hereafter referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits.] 4[Provided that this sub-section shall not apply in respect of dividend referred to in sub-clause (e) of clause (22) of section 2.]
4. (2) Notwithstanding that no income-tax is payable by a domestic company on its total income computed in accordance with the provisions of this Act, the tax on distributed profits under sub-section (1) shall be payable by such company.
5. (3) The principal officer of the domestic company and the company shall be liable to pay the tax on distributed profits to the credit of the Central Government within fourteen days from the date of—
   • (a) declaration of any dividend; or
   • (b) distribution of any dividend; or
   • (c) payment of any dividend, whichever is earliest.
6. (4) The tax on distributed profits so paid by the company shall be treated as the final payment of tax in respect of the amount declared, distributed or paid as dividends and no further credit therefor shall be claimed by the company or by any other person in respect of the amount of tax so paid.
7. (5) No deduction under any other provision of this Act shall be allowed to the company or a shareholder in respect of the amount which has been charged to tax under sub-section (1) or the tax thereon. 5[(6) Notwithstanding anything contained in this section, no tax on distributed profits shall be chargeable in respect of the total income of an undertaking or enterprise engaged in developing or developing and operating or developing, operating and maintaining a Special Economic Zone for any assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income either in the hands of the Developer or enterprise or the person receiving such dividend 6*** ]: 6. The words “not falling under clause (23G)” omitted by Act 21 of 2006, s. 25 (w.e.f. 1-4-2007). 1[Provided that the provisions of this sub-section shall cease to have effect from the 1st day of June, 2011.] 2[(7) No tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company by way of dividends (whether interim or otherwise) to a business trust out of its current income on or after the specified date: Provided that nothing contained in this sub-section shall apply in respect of any amount declared, distributed or paid, at any time, by the specified domestic company by way of dividends (whether interim or otherwise) out of its accumulated profits and current profits up to the specified date. Explanation.—For the purposes of this sub-section,—
   • (a) “specified domestic company” means a domestic company in which a business trust has become the holder of whole of the nominal value of equity share capital of the company (excluding the equity share capital required to be held mandatorily by any other person in accordance with any law for the time being in force or any directions of Government or any regulatory authority, or equity share capital held by any Government or Government body);
   • (b) “specified date” means the date of acquisition by the business trust of such holding as is referred to in clause (a).] 3[(8) Notwithstanding anything contained in this section, no tax on distributed profits shall be chargeable in respect of the total income of a company, being a unit of an International Financial Services Centre, deriving income solely in convertible foreign exchange, for any assessment year on any amount declared, distributed or paid by such company, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2017, out of its current income, either in the hands of the company or the person receiving such dividend. Explanation.—For the purposes of this sub-section,—
   • (a) “International Financial Services Centre” shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
   • (b) “unit” means a unit established in an International Financial Services Centre, on or after the 1st day of April, 2016;
   • (c) “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder.]

¹ Subs. by Act 23 of 2012, s. 54, for “a limited liability partnership on its total income” (w.e.f. 1-4-2013).

² Ins. by Act 13 of 2018, s. 39 (w.e.f. 1-4-2018).

³ Ins. by Act 23 of 2012, s. 55 (w.e.f. 1-4-2013).

⁴ Ins. by Act 28 of 2016, s. 56 (w.e.f. 1-4-2017).

² Ins. by s. 40, ibid. (w.e.f. 1-6-1997).

³ Subs. by Act 32 of 2003, s. 55, for sub-section (1) (w.e.f. 1-4-2003). Earlier sub-section (1) was amended by Act 10 of 2000, s. 53 (w.e.f. 1-6-2000), Act 14 of 2001, s. 55 (w.e.f. 1-6-2001), and Act 20 of 2002, s. 53 (w.e.f. 1-4-2003).

⁴ Subs. by Act 22 of 2007, s. 35, for “at the rate of twelve and one-half per cent.” (w.e.f. 1-4-2007).

⁵ Ins. by Act 13 of 2018, s. 40 (w.e.f. 1-4-2018).

¹ Subs. by Act 33 of 2009, s. 47, for sub-section (1A) (w.r.e.f. (1-4-2009). Earlier sub-section (1A) was inserted by Act 18 of 2008, s. 24 (w.e.f. 1-4-2008).

² Subs. by Act 17 of 2013, s. 30, for clause (i) (w.e.f. 1-6-2013).

³ Ins. by Act 25 of 2014, s. 41 (w.e.f. 1-10-2014).

⁴ Ins. by Act 13 of 2018, s. 40 (w.e.f. 1-4-2018).

⁵ Ins. by Act 28 of 2005, s. 27 and the Second Schedule (w.e.f. 10-2-2006).