Income attribution to Indian assets (s. 9(10))

The formula (sub-rule 1). Income from transfer outside India of a share or interest in a company or entity referred to in section 9(10)(a), attributable to assets located in India, is determined by reference to the specified date as A × B / C, where:

• A = income from the transfer of the share or interest, computed under the Act as if the share or interest were located in India;
• B = fair market value, as on the specified date and computed under rule 11, of the assets located in India from which the share or interest derives its value substantially; and
• C = fair market value of all the assets of the company or entity on the specified date, computed under rule 11.

If information is not provided (sub-rule 2). Where the transferor fails to provide the information the formula needs, the income from the transfer is determined in such manner as the Assessing Officer may deem suitable.

Report with the return (sub-rule 3). The transferor must obtain and furnish, along with the return of income, a report in Form No. 4, signed and verified by an accountant, giving the basis of the apportionment under the formula and certifying that the income attributable to assets located in India has been correctly computed.

Where it fits. Rule 11 supplies B and C; rule 10 defines the accountant who may certify.