Rule 142 — Conditions referred to in Schedule VI [Note…

Rule 142 lists the conditions an investment division of an offshore banking unit must meet — separate accounts, an audit report in Form No. 71 before the specified date, and documentation of remittances, bank statements, contract notes and custodian statements — and makes the exemption depend on them.

Conditions (sub-rule 1).

(a) Separate accounts for the registered investment division reflecting the true and fair accounts of all its transactions, with direct and indirect expenses relating to the rule 141 income and other income properly recorded and apportioned.
(b) The accounts are audited by an accountant before the specified date, and the audit report is furnished by that date in Form No. 71, electronically under digital signature, verified as the form indicates.
(c) Proper documentation of inbound remittance for buying and selling the investments and of the use of inward remittance made to India.
(d) Bank statements of all accounts of the registered investment division.
(e) Contract notes for purchase and sale of securities.
(f) A statement of securities issued by the custodian.

Consequence (sub-rule 2). The income of a specified fund attributable to an eligible investment division is not exempt under section 11(1) read with Schedule VI [Table: Sl. Nos. 1 to 4] unless the division complies with sub-rule (1)(b) and rule 141(3).

Definitions (sub-rule 3). "Accountant" is as in section 515(3)(b); "registered investment division" is an investment division of an offshore banking unit that fulfils the condition in Schedule VI [Note 1(g)(ii)(A)]; "specified date" is one month before the section 263(1)(c) due date for the tax year.

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Conditions referred to in Schedule VI [Note 1(g)(ii)(B)] to Act required to be fulfilled by an investment division of an offshore banking unit