NOTIFICATION NO. 93/2006, DATED 30-3-2006
In exercise of the powers conferred by section 295 read with clause (48) of section 2 and clause (iiia) of sub-section (1) of section 36 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:‑
1. (1) These rules may be called the Income-tax (3rd Amendment) Rules, 2006.
(2) They shall come into force from the 1st day of April, 2006.
2. In the Income-tax Rules, 1962,‑
(a) after rule 8A, the following rules shall be inserted, namely:‑
‘8B. (1) Guidelines for notification of zero coupon bond. ‑ An application by an infrastructure capital company or infrastructure capital fund or a public sector company for notification under clause (48) of section 2 of any zero coupon bond proposed to be issued by it shall be made in Form No. 5B at least three months before the date of issue of such bond:
Provided that an application shall not be made for notification of a bond to be issued after two financial years following the financial year in which the application is made.
(2) Every application, under sub-rule (1), shall be accompanied by the following documents, namely:‑
(i) where the application is made by any infrastructural capital company or a public sector company, being a government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), a copy of certificate of incorporation under the Companies Act, 1956 (1 of 1956);
(ii) where the application is made by any infrastructure capital fund, a copy of the trust deed registered under the provisions of the Registration Act, 1908 (16 of 1908);
(iii) where the application is made by a public sector company, being any corporation, established by or under any Central or State or Provincial Act, a copy of the relevant Act;
(3) The Central Government, while specifying a zero coupon bond by notification in the Official Gazette shall satisfy itself that the following conditions are fulfilled, namely:‑
(i) the period of life of the bond is not less than ten years and not more than twenty years;
(ii) the infrastructure capital company or infrastructure capital fund or public sector company proposing to issue a zero coupon bond has an investment grade rating from at least two credit rating agencies registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(iii) necessary arrangement has been made by the infrastructure capital company or infrastructure capital fund or public sector company for listing the zero coupon bond in a recognised stock exchange in India;
(iv) where the application is made by the infrastructural capital company or infrastructure capital fund, such company or fund shall furnish along with the application an undertaking that the money realised on issue of the zero coupon bond shall be invested by it in the following manner, namely:‑
(i) twenty-five per cent, or more of such realisation before the end of the financial year immediately following the financial year in which the bond is issued;
(ii) the balance of such realization within a period of four financial years immediately following the financial year in which the bond is issued;
(v) where the application is made by a pubic sector company, such company shall furnish along with the application an undertaking that the money realised on issue of the zero coupon bond shall be invested or utilised by it in the following manner, namely:‑
(i) fifteen per cent, or more of such realisation before the end of the financial year immediately following the financial year in which the bond is issued;
(ii) the balance of such realisation within a period of six financial years immediately following the financial year in which the bond is issued;
(4) The Central Government, after having satisfied itself about fulfilling of the conditions referred to in sub-rule (1), sub-rule (2), and sub-rule (3) shall specify the bond, by notification in the Official Gazette, giving therein, inter alia, the following particulars, namely:‑
(a) name of the bond;
(b) period of life of the bond;
(c) the time schedule of the issue of the bond;
(d) the amount to be paid on maturity or redemption of the bond;
(e) the discount;
(f) the number of bonds to be issued;
(5) The Central Government may, if the applicant fails to fulfil the conditions referred to in sub-rule (1) or sub-rule (2) or sub-rule (3), reject the application for notification after giving an opportunity of being heard to the infrastructure capital company or infrastructure capital fund or public sector company, as the case may be.
(6) Every infrastructure capital company or infrastructure capital fund or public sector company shall submit within two months from the end of each financial year referred to in sub-clause (i) or sub-clause (ii) of clause (iv) of sub-rule (3), or as the case may be, in sub-clause (i) or sub-clause (ii) of clause (v) of sub-rule (3), a certificate from an accountant as defined in the Explanation to sub-section (2) of section 288, specifying the amount invested in each year.
(7) The Central Government shall have the power to withdraw the notification if the applicant fails to fulfil any of the conditions referred to in sub-rule (3) or sub-rule (6).
Explanation. – For the purpose of this rule, the expressions “discount” and “period of life of the bond” shall have the same meanings respectively assigned to them in clause (i) and clause (ii) of the Explanation to clause (iiia) of sub-section (1) of section 36.
Computation of pro rata amount of discount on a zero coupon bond for the purpose of clause (iiia) of sub-section (1) of section 36.
8C. For the purposes of clause (iiia) of sub-section (1) of section 36, the pro rata amount of discount on a zero coupon bond shall be computed in the following manner, namely:‑
(a) the period of the life of the bond shall be converted into number of calendar months and, for this purpose, where the calendar month in which the bond is issued or the bond matures or is redeemed contains a part of a calendar month then, if such part is fifteen days or more than fifteen days, it shall be increased to one calendar month and if such part is less than fifteen days it shall be ignored;
(b) the amount of discount shall be divided by the number of calendar months determined in accordance with clause (a);
(c) where one or more than one calendar month out of calendar months determined in accordance with clause (a) is or are included in a previous year, the amount determined in accordance with clause (b) shall be multiplied by the number of calendar months so included and the amount so arrived at shall be taken to be the pro rata amount of discount for that previous year.’
(b) In Appendix-II, after Form No. 5A, the following Form shall be inserted, namely:
‘FORM NO. 5B
[See rule 8B]
Application for notification of a zero coupon bond under clause (48) of section 2 of the Income-tax Act, 1961
1. Name of the applicant
2. Category (Please tick one): Infrastructure capital company/Infrastructure capital fund/ Public sector company
3. Address of the applicant
4. Permanent Account Number of the applicant
5. Assessing Officer under whose jurisdiction the applicant is assessed/ assessable to income-tax
6. Date of incorporation/ registration (Please enclose copy of certificate of incorporation/registration
7. Objects of the applicant (Please enclose copy of Memorandum/ Trust deed, etc.)
(a) main objects
(b) ancillary objects
8. The total number of bonds proposed to be issued
9. Amount for which the bond is proposed to be issued
10. Amount payable on maturity/ redemption of the bond
11. Discount [(10)-(9)]
12. Period of life of the bond
13. The period during which the bonds are to be issued.
14. The objects of issue of the bonds
15. In case of infrastructure capital company or infrastructure capital fund –
(a) the name of enterprise or enterprises or undertaking or undertakings in which investment is proposed to be made;
(b) nature of business carried on by the enterprise or enterprises or undertaking or undertakings referred to in (a);
(c) whether the enterprise or enterprisesor undertaking or undertakings referred to in (a) is, for the time being, approved under clause (23G) of section 10, if yes, please attach copy of the approval;
(d) whether approval referred to in (c) is for any particular amount of investment/ cost of project, if yes, furnish the details thereof.
16. In case of public sector company-
(a) the nature of business;
(b) in case investment is proposed to be made in the business of the company, please furnish details thereof;
(c) in case investment is proposed to be made with another public sector company or public sector companies or enterprise or enterprises or undertaking or undertakings, please furnish the details thereof;
(d) nature of business carried on by the public sector company or public sector companies or the enterprise or enterprises or undertaking or undertakings referred to in (c);
(e) whether the enterprise or enterprises or undertaking or undertakings referred to in (c) is, for the time being, approved under clause (23G) of section 10, if yes, please attach copy of the approval;
(f) Whether approval referred to in (e) is for any particular amount of investment/ cost of project, if yes, furnish the details thereof.
17. Location of project/projects in which investment is proposed to be made
18. Approximate year wise investment required to be made
19. Sources of investment (other than the bonds), if any.
20. Schedule of development of project/ projects
(a) planned date of commencement.
(b) planned date of commencement of operations of the project
21. Details of management responsible for execution of project:
(a) name of directors, trustees, etc., with/their experience, qualifications and performance,
(b) name of other key personnel with their qualification and experience,
(c) organisational structure,
(d) particulars of Asset Management Company in case of a fund.
22. Copy of the project report, if any.
(Write “not applicable” against the column or columns which are not relevant to the applicant).
I certify that the information furnished above is true to the best of my knowledge and belief. I undertake on behalf of____________________(write the name of the applicant) that the money realised on issue of such bond shall be invested in accordance with clause (iv) or clause (v) of sub-rule (3) of rule 8B of the Income-tax Rules, 1962.
……………………………..
Signature of the authorised signatory
Note: The application form (in duplicate) should be sent to the Board by the applicant alongwith the documents as required in the application form.’
[F. No. 142/28/2005-TPL]
