Rule 58 — Prescribed class of persons for the purpose of section 92(3)(i) and section 79. Made under s.92, s.79, s.116, s.70 of the Income-tax Act, 2025.
Rule 58 gives effect to Section 92, Section 79, Section 116 and Section 70 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) disapplies section 92(2)(m) for the five classes of person set out in column B of the Table, where they receive an asset of the nature in column C and the conditions in column D are satisfied.
The Table has five entries. Entry 1 covers a resident of an unauthorised colony in the National Capital Territory of Delhi receiving any immovable property being land or building or both, where the Central Government has by notification regularised the transactions in that property on the basis of the latest power of attorney, agreement to sale, will, possession letter and other documents including documents evidencing payment of consideration, conferring or recognising ownership, transfer or mortgage in his favour. Entry 2 covers a shareholder receiving unquoted shares of a company or its subsidiary or the subsidiary of that subsidiary, where the Tribunal, on an application by the Central Government under section 241 of the Companies Act, 2013, has suspended the Board of Directors and appointed new directors nominated by the Central Government under section 242, and the shares are received pursuant to a resolution plan approved by the Tribunal under section 242 after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner. Entry 3 covers an investor or investor bank receiving equity shares of the reconstructed bank allotted under the Scheme at a price specified in paragraph 3(3) of the Scheme. Entry 4 covers any person receiving equity shares of a public sector company or a company from a public sector company or the Central Government or a State Government under strategic disinvestment. Entry 5 covers the fund management entity of the resultant fund receiving shares, units or interest in the resultant fund in lieu of shares, units or interest held by the investment manager entity in the original fund pursuant to the relocation, subject to two holding tests — not less than 90% of shares, units or interest in the fund management entity of the resultant fund being held by the same entities or persons in the same proportion as in the investment manager entity of the original fund, and not less than 90% of the aggregate of shares, units or interest in the investment manager entity of the original fund having been held by such entities or persons.
Sub-rule (2) extends the relief: section 79 also does not apply to the transfer of movable property of the nature at Table Sl. No. 2 where the conditions there are satisfied.
Sub-rule (3) supplies the definitions each entry depends on — "resident" and "unauthorised colony" for entry 1; the subsidiary test (more than half in nominal value of the equity share capital) and "Tribunal" for entry 2; "investor", "investor bank", "reconstructed bank" and "Scheme", the Scheme being the Yes Bank Limited Reconstruction Scheme, 2020, for entry 3; "strategic disinvestment" as in section 116(3)(c) for entry 4; and "relocation", "original fund", "resultant fund", "fund management entity" and "investment manager entity" for entry 5.
Section 92(2)(m) charges the recipient where property is received for no or inadequate consideration, and section 79 deals with the transfer side. Both are aimed at disguised transfers, and both would otherwise bite on receipts that are the product of a statutory or court-supervised process rather than of any bargain — a regularisation notification, a Tribunal-approved resolution plan, a bank reconstruction scheme, a strategic disinvestment, or a fund relocation. The section leaves the excluded classes to be prescribed; this rule prescribes them, and pins each one to the specific instrument or order that makes the receipt involuntary in substance.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Holding continuity in the fund management entity of the resultant fund | Not less than 90% of shares or units or interest | Held by the same entities or persons, in the same proportion as held by them in the investment manager entity of the original fund | Sub-rule (1), Table Sl. No. 5, condition (a) |
| Holding concentration in the investment manager entity of the original fund | Not less than 90% of the aggregate of shares or units or interest | Was held by such entities or persons | Sub-rule (1), Table Sl. No. 5, condition (b) |
| Subsidiary test for Table Sl. No. 2 | More than half in nominal value of the equity share capital | Held by the other company, for a company to be its subsidiary | Sub-rule (3)(b)(i) |
Relief is by entry, not by class of asset — each row must be matched on all three columns, and the conditions in column D are the operative part. A shareholder in a company whose Board has been superseded gets nothing from entry 2 unless the shares came to him under a resolution plan approved by the Tribunal under section 242 and the jurisdictional Principal Commissioner or Commissioner was heard before that approval. Note the asymmetry the rule creates deliberately: section 92(2)(m) is disapplied for all five entries, but section 79 is disapplied only for the movable property in entry 2, so the transferor's side remains chargeable in the other four situations. The two 90% tests in entry 5 are both floors and both must hold; failing either brings the relocation receipt back within section 92(2)(m).
A shareholder of a company whose Board was suspended by the Tribunal on the Central Government's application under section 241 of the Companies Act, 2013 receives unquoted shares of that company's subsidiary under a resolution plan approved by the Tribunal under section 242, the jurisdictional Commissioner having been heard. Section 92(2)(m) does not apply to his receipt under Table Sl. No. 2, and by sub-rule (2) section 79 does not apply to the transfer either. Had the shares instead been received under a private settlement among shareholders, neither limb of the relief would be available.
A reader meets this rule when a receipt of property without consideration or at a stated price is questioned in an assessment and the answer is that the receipt fell within one of the five Table entries; the supporting document is the regularisation notification, the Tribunal's order and resolution plan, the allotment under the Scheme, the disinvestment record or the relocation documents.
The provisions of section 92(2)(m) shall not apply to class of persons referred to in column B of the following Table, where such persons receive assets in the nature referred to in column C, subject to satisfaction of the conditions specified in column D thereof
The provisions of section 79 shall also not apply to the transfer of any movable property of the nature mentioned in sub-rule (1) [Table: Sl. No. 2] where the conditions mentioned therein are satisfied.
