Section 115JG of Income Tax Act "Conversion of an Indian branch of foreign company into subsidiary Indian company"
115JG. (1) Where a foreign company is engaged in the
business of banking in India through its branch situate in
India and such branch is converted into a subsidiary company
thereof, being an Indian company (hereafter referred to as
an Indian subsidiary company) in accordance with the scheme
framed by the Reserve Bank of India, then, notwithstanding
anything contained in the Act and subject to the conditions
as may be notified by the Central Government in this
behalf,-
(i) the capital gains arising from such conversion shall not
be chargeable to tax in the assessment year relevant to the
previous year in which such conversion takes place;
(ii) the provisions of this Act relating to treatment of
unabsorbed depreciation, set off or carry forward and set
off of losses, tax credit in respect of tax paid on deemed
income relating to certain companies and the computation of
income in the case of the foreign company and Indian
subsidiary company shall apply with such exceptions,
modifications and adaptations as may be specified in that
notification.
(2) In case of failure to comply with any of the
conditions specified in the scheme or in the notification
issued under sub-section (1), all the provisions of this Act
shall apply to the foreign company and the said Indian
subsidiary company without any benefit, exemption or relief
under sub-section (1).
(3) Where, in a previous year, any benefit, exemption or
relief has been claimed and granted to the foreign company
or the Indian subsidiary 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 scheme or 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; 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.
(4) Every notification issued under this section shall be
laid before each House of Parliament.