Section 93 of Income Tax Act "Avoidance of income-tax by transactions resulting in transfer of income to non-residents"
93. (1) Where there is a transfer of assets by virtue or
in consequence whereof, either alone or in conjunction with
associated operations, any income becomes payable to a
non-resident, the following provisions shall apply-
(a) where any person has, by means of any such transfer,
either alone or in conjunction with associated operations,
acquired any rights by virtue of which he has, within the
meaning of this section, power to enjoy, whether forthwith
or in the future, any income of a non-resident person which,
if it were income of the first-mentioned person, would be
chargeable to income-tax, that income shall, whether it
would or would not have been chargeable to income-tax apart
from the provisions of this section, be deemed to be income
of the first-mentioned person for all the purposes of this
Act;
(b) where, whether before or after any such
transfer, any such first-mentioned person receives or is
entitled to receive any capital sum the payment whereof is
in any way connected with the transfer or any associated
operations, then any income which, by virtue or in
consequence of the transfer, either alone or in conjunction
with associated operations, has become the income of a
non-resident shall, whether it would or would not have been
chargeable to income-tax apart from the provisions of this
section, be deemed to be the income of the first-mentioned
person for all the purposes of this Act.
Explanation.-The provisions of this sub-section shall apply
also in relation to transfers of assets and associated
operations carried out before the commencement of this Act.
(2) Where any person has been charged to income-tax on any
income deemed to be his under the provisions of this section
and that income is subsequently received by him, whether as
income or in any other form, it shall not again be deemed to
form part of his income for the purposes of this Act.
(3) The provisions of this section shall not apply if the
first-mentioned person in sub-section (1) shows to the
satisfaction of the Assessing Officer that-
(a) neither the transfer nor any associated operation had
for its purpose or for one of its purposes the avoidance of
liability to taxation; or
(b) the transfer and all associated operations were bona
fide commercial transactions and were not designed for the
purpose of avoiding liability to taxation.
Explanation.-For the purposes of this section,-
(a) references to assets representing any assets, income or
accumulations of income include references to shares in or
obligation of any company to which, or obligation of any
other person to whom, those assets, that income or those
accumulations are or have been transferred;
(b) any body corporate incorporated outside India shall be
treated as if it were a non-resident;
(c) a person shall be deemed to have power to enjoy the
income of a non-resident if-
(i) the income is in fact so dealt with by any person as to
be calculated at some point of time and, whether in the form
of income or not, to enure for the benefit of the
first-mentioned person in sub-section (1), or
(ii) the receipt or accrual of the income operates to
increase the value to such first-mentioned person of any
assets held by him or for his benefit, or
(iii) such first-mentioned person receives or is entitled to
receive at any time any benefit provided or to be provided
out of that income or out of moneys which are or will be
available for the purpose by reason of the effect or
successive effects of the associated operations on that
income and assets which represent that income, or
(iv) such first-mentioned person has power by means of the
exercise of any power of appointment or power of revocation
or otherwise to obtain for himself, whether with or without
the consent of any other person, the beneficial enjoyment of
the income, or
(v) such first-mentioned person is able, in any manner
whatsoever and whether directly or indirectly, to control
the application of the income;
(d) in determining whether a person has power to enjoy
income, regard shall be had to the substantial result and
effect of the transfer and any associated operations, and
all benefits which may at any time accrue to such person as
a result of the transfer and any associated operations shall
be taken into account irrespective of the nature or form of
the benefits.
(4) (a) "Assets" includes property or rights of any kind and
"transfer" in relation to rights includes the creation of
those rights ;
(b) "associated operation", in relation to any transfer,
means an operation of any kind effected by any person in
relation to-
(i) any of the assets transferred, or
(ii) any assets representing, whether directly or
indirectly, any of the assets transferred, or
(iii) the income arising from any such assets, or
(iv) any assets representing, whether directly or
indirectly, the accumulations of income arising from any
such assets ;
(c) "benefit" includes a payment of any kind ;
(d) "capital sum" means-
(i) any sum paid or payable by way of a loan or repayment of
a loan ; and
(ii) any other sum paid or payable otherwise than as income,
being a sum which is not paid or payable for full
consideration in money or money's worth.
What is the Meaning of associated enterprise? Section 92A of Income Tax Act 1961
What is the Meaning of international transaction? Section 92B of Income Tax Act 1961
What is the Meaning of specified domestic transaction? Section 92BA of Income Tax Act 1961
What is Computation of arm's length price? Section 92C of Income Tax Act 1961
What is Reference to Transfer Pricing Officer? Section 92CA of Income Tax Act 1961
What is the Effect to advance pricing agreement? Section 92CD of Income Tax Act 1961