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Annual information return (air)

meabhijit (Project Manager) (172 Points)

02 February 2013

Hi All,

Annual Information Return (AIR) of 'high value financial transactions' is required to be furnished under section 285BA.

Fixed deposits and recurring deposits (Rs. 10 lakh and above) to be reported for AIR.

Assuming FY 2012-2013...
1. The above would mean fixed deposits worth 10Lakh or more created in one financial year? Apr 2012--March 2013?
2. Is this applicable for one bank accepting deposits worth 10Lakh OR for all deposits in various banks aggregatng to 10Lakh or more against the PAN in financial yr Apr 2012--March 2013?
3. If deposits are spread across 2 financial years..say Apr 2011-June 2012. In this case is this deposit amount counted towards 10Lakh in FY Apr2012-Mar2013?

Please let me know your views for the above 3 questions.

Thanks in advance.

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4 Replies

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Person depositing Only Cash aggregating to Rs. 10 Lakhs or more in a year in any savings account of a person maintained in a bank.

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meabhijit (Project Manager) (172 Points)
Replied 04 February 2013

Thanks for the information related to cash deposits.

For case related to bonds/debentures:

Receipts from any person of an amount of Rs. 5 lakhs or more for acquiring bonds or debentures issued by the company or institution.

Assuming FY 2012-2013...
1. The above would mean bonds/debentures worth 5Lakh or more created in one financial year? Apr 2012--March 2013?
2. Is this applicable for one company/institution's bonds/debentures worth 5Lakh OR for all bonds/debentures in companies aggregatng to 5Lakh or more against the PAN in financial yr Apr 2012--March 2013?
3. If bonds/debentures are spread across 2 financial years..say Apr 2011-June 2012. In this case is this deposit amount counted towards 5Lakh in FY Apr2012-Mar2013?

Thanks in advance

CA Ishaan (Chartered Accountant) (453 Points)
Replied 04 February 2013

As Regards Cash deposits

1. Section 285BA relates to Annual Information Return. Certain transactions have to be reported by certain persons in the AIR and the that frame-work has been formulated in Rule 114E.

2. Rule 114E of the Income Tax Rules states that “A Banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act)” has to report “Cash deposits aggregating to ten lakh rupees or more in a year in any savings account of a person maintained in that bank”.

3. I am of the considered view that these transactions or aggregate of transactions relate to only one year. If there has/have been a single transaction or multiple transactions during one financial year and due to these transaction(s), minimum Rs. 10,00,000 have been deposited in a savings bank account maintained in that bank, then only it has to be reported in the AIR.

4. If Rs. 10,00,000/- are deposited during the course of two years, the same is not liable to be reported. Section 285BA uses the words ‘specified transaction in a financial year’. This cannot be extended to include transactions spanning more than one financial year. If it were so, then an account would have appeared in the AIR for multiple years only because the balance has gone above Rs. 10,00,000/-, which is an absurdity.

5. Also the transaction specified is ‘Cash deposit in a savings bank account’. Fixed deposits, hence, stand excluded.

6. A bank should only report the transactions relating to itself and not those transactions with other banks. Rule 114E says ‘in a savings bank account…. maintained in that bank”. This means that only those transactions relating to the bank who is supposed to file the AIR.

As Regards Bonds/Debentures

1. As per Rule 114E of Income Tax Rules, 1962, “A company or institution issuing bonds or debentures” has to report “Receipt from any person of an amount of five lakh rupees or more for acquiring bonds or debentures issued by the company or institution.”

2. Receipts of Rs. 5,00,000/- or more during one financial year are to be reported. Receipts spread over two financial years are not covered.

3. If you are a company or an institution and you have issued debentures, then only you are supposed to report receipts of/above Rs. 5 lakhs. The company/institution who as issued these bonds/debentures has to report with respect to transactions relating to its own bonds/debentures and not with respect to other company’s/institution’s bonds/debentures.

Thanks and Regards

CA Ishaan Patkar

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