Currently, an application can be filed before the Settlement Commission under the provisions of section 245C of the Income-tax Act
The definition of related person which is currently being used is “…the substantial interest is found to exist, where a person holds more than 20% shares or 20% share in profits, at any time during the previous year”. It is proposed to provide that the substantial interest should exist as on the “date of the search” in place of “at any time during the previous year” as the proceedings before the Commission are filed for many previous years.
It is accordingly proposed to amend the provisions of section 245C of the Income-tax Act so as to provide that a person shall be deemed to have a substantial interest in a business or profession if such person is a beneficial owner of not less than 20% of shares or of 20% share in profits on the date of search.
This amendment will take effect from the 1st day of July, 2012.
