Our REIT's income is all exempt at trust level and our Category II AIF's income is all passed through to investors. Neither has any taxable income. Do they still have to file returns?
Yes, both, every year. Section 139(4E) requires every business trust which is not required to furnish a return of income or loss under any other provision of section 139 to furnish the return of its income in respect of its income or loss in every previous year, and section 139(4F) imposes the identical obligation on every investment fund referred to in section 115UB. In each case all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Sub-section (4E) was inserted by section 49(b) of the Finance (No. 2) Act, 2014 with effect from 1 April 2015; sub-section (4F) by section 35(III) of the Finance Act, 2015 with effect from 1 April 2016.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2016-04-01, reported as Section 139(4E) and section 139(4F) of the Income-tax Act, 1961, as amended up to 2024; as inserted by s.49(b) of the Finance (No. 2) Act, 2014 and s.35(III) of the Finance Act, 2015. It bears on section 139(4E), section 139(4F), section 139(1), section 115UA, section 115UB, section 2(13A), section 10(23FBA), section 10(23FBB) of the Income Tax Act 1961, in Charitable Trusts & Exemption, Assessment & Scrutiny and How Tax Law Is Read matters.
These two sub-sections are the reason a pass-through vehicle cannot go quiet. Because the deeming words make the return one "required to be furnished under sub-section (1)", everything that hangs off a section 139(1) return hangs off these returns too — the due date machinery, the consequences of a belated or defective return, and the department's power to process, scrutinise and reassess. A trust or fund that reasons that it has no taxable income and therefore no filing obligation exposes itself to the whole of that apparatus without having engaged with it. Two further points are worth noticing. First, the obligation is on the vehicle, and it exists independently of the statements under rule 12CA and rule 12CB: the Form 64A or Form 64D filing does not discharge it, and neither does the fact that the investors have returned their shares. Second, the two sub-sections are the clearest textual signal in the Act that a business trust and an investment fund are assessees in their own right and not transparent entities. That matters when the argument is run the other way — for instance where an Assessing Officer treats a fund as having no separate existence, or where a fund seeks credit in its own hands for tax paid under its investors' permanent account numbers, which is the question the ITAT Mumbai dealt with in Investcorp Real Estate Yield Fund. Note also, on the drafting, that a marginal note against sub-section (4E) records that the word "as" is to be inserted after the word "apply"; the enacted 2014 text reads "shall, so far as may be, apply if it were a return", while sub-section (4F) as enacted in 2015 reads "apply as if it were a return". Nothing turns on it, but a reader comparing the two sub-sections will see the difference.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 49 of the Finance (No. 2) Act, 2014 amended section 139 of the Income-tax Act with effect from 1 April 2015. Its clause (b) inserted sub-section (4E) after sub-section (4D), in the words set out below. Section 35 of the Finance Act, 2015 amended section 139 with effect from 1 April 2016; its Part (III) inserted sub-section (4F) after sub-section (4E). Every consolidation of section 139 consulted prints both sub-sections in identical terms. One of them additionally carries a marginal note against sub-section (4E) that the word "as" shall be inserted after the word "apply"; the source of that note is not printed with it and is not established here.
Statutory position — no holding is asserted; this entry reproduces statutory text. Every business trust which is not required to furnish a return of income or loss under any other provision of section 139 must furnish the return of its income in respect of its income or loss in every previous year, and all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Every investment fund referred to in section 115UB which is not required to furnish a return of income or loss under any other provision of section 139 must do the same. The obligation does not depend on there being any income chargeable in the vehicle's own hands.
Not applicable — statutory text.
Every investment fund referred to in section 115UB, which is not required to furnish return of income or loss under any other provisions of this section, shall furnish the return of income in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).
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Handle my notice → Ask a CA on WhatsAppYes, both, every year. Section 139(4E) requires every business trust which is not required to furnish a return of income or loss under any other provision of section 139 to furnish the return of its income in respect of its income or loss in every previous year, and section 139(4F) imposes the identical obligation on every investment fund referred to in section 115UB. In each case all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Sub-section (4E) was inserted by section 49(b) of the Finance (No. 2) Act, 2014 with effect from 1 April 2015; sub-section (4F) by section 35(III) of the Finance Act, 2015 with effect from 1 April 2016. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 139(4E), section 139(4F), section 139(1), section 115UA, section 115UB, section 2(13A), section 10(23FBA), section 10(23FBB) of the Income Tax Act 1961. It is reported as Section 139(4E) and section 139(4F) of the Income-tax Act, 1961, as amended up to 2024; as inserted by s.49(b) of the Finance (No. 2) Act, 2014 and s.35(III) of the Finance Act, 2015. These two sub-sections are the reason a pass-through vehicle cannot go quiet. Because the deeming words make the return one "required to be furnished under sub-section (1)", everything that hangs off a section 139(1) return hangs off these returns too — the due date machinery, the consequences of a belated or defective return, and the department's power to process, scrutinise and reassess. A trust or fund that reasons that it has no taxable income and therefore no filing obligation exposes itself to the whole of that apparatus without having engaged with it. Two further points are worth noticing. First, the obligation is on the vehicle, and it exists independently of the statements under rule 12CA and rule 12CB: the Form 64A or Form 64D filing does not discharge it, and neither does the fact that the investors have returned their shares. Second, the two sub-sections are the clearest textual signal in the Act that a business trust and an investment fund are assessees in their own right and not transparent entities. That matters when the argument is run the other way — for instance where an Assessing Officer treats a fund as having no separate existence, or where a fund seeks credit in its own hands for tax paid under its investors' permanent account numbers, which is the question the ITAT Mumbai dealt with in Investcorp Real Estate Yield Fund. Note also, on the drafting, that a marginal note against sub-section (4E) records that the word "as" is to be inserted after the word "apply"; the enacted 2014 text reads "shall, so far as may be, apply if it were a return", while sub-section (4F) as enacted in 2015 reads "apply as if it were a return". Nothing turns on it, but a reader comparing the two sub-sections will see the difference. If it applies to you, the first step is this: File a return for the business trust and for the investment fund for every previous year, whether or not there is anything to be taxed in its own hands, and treat the due date as the section 139(1) due date applicable to it.
Section 49 of the Finance (No. 2) Act, 2014 amended section 139 of the Income-tax Act with effect from 1 April 2015. Its clause (b) inserted sub-section (4E) after sub-section (4D), in the words set out below. Section 35 of the Finance Act, 2015 amended section 139 with effect from 1 April 2016; its Part (III) inserted sub-section (4F) after sub-section (4E). Every consolidation of section 139 consulted prints both sub-sections in identical terms. One of them additionally carries a marginal note against sub-section (4E) that the word "as" shall be inserted after the word "apply"; the source of that note is not printed with it and is not established here. The matter was decided on 2016-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Statutory position — no holding is asserted; this entry reproduces statutory text. Every business trust which is not required to furnish a return of income or loss under any other provision of section 139 must furnish the return of its income in respect of its income or loss in every previous year, and all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Every investment fund referred to in section 115UB which is not required to furnish a return of income or loss under any other provision of section 139 must do the same. The obligation does not depend on there being any income chargeable in the vehicle's own hands.
Not applicable — statutory text. In the words reproduced by the source cited on this page: "Every investment fund referred to in section 115UB, which is not required to furnish return of income or loss under any other provisions of this section, shall furnish the return of income in respect of its income or loss in every previous year and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1)."
It was decided by the CBDT Circulars & Instructions on 2016-04-01 and is reported as Section 139(4E) and section 139(4F) of the Income-tax Act, 1961, as amended up to 2024; as inserted by s.49(b) of the Finance (No. 2) Act, 2014 and s.35(III) of the Finance Act, 2015. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 139(4E), section 139(4F), section 139(1), section 115UA, section 115UB, section 2(13A), section 10(23FBA), section 10(23FBB), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Statutory position — no holding is asserted; this entry reproduces statutory text. Every business trust which is not required to furnish a return of income or loss under any other provision of section 139 must furnish the return of its income in respect of its income or loss in every previous year, and all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Every investment fund referred to in section 115UB which is not required to furnish a return of income or loss under any other provision of section 139 must do the same. The obligation does not depend on there being any income chargeable in the vehicle's own hands. It arises in Charitable Trusts & Exemption, Assessment & Scrutiny and How Tax Law Is Read matters, on section 139(4E), section 139(4F), section 139(1), section 115UA, section 115UB, section 2(13A), section 10(23FBA), section 10(23FBB) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not treat the Form 64A or Form 64D statement under rule 12CA or rule 12CB as a substitute. The statement is a separate obligation on the person responsible for paying or crediting the income, and it does not discharge the vehicle's own filing obligation. Where a return has been missed, remember that the deeming words make it a section 139(1) return for all purposes, so the belated and updated return machinery applies to it in the ordinary way rather than being unavailable. Use the sub-section when the department argues the vehicle is not a separate assessee: section 139(4E) and (4F) presuppose that it is, and that it computes and returns its own income or loss. Check which sub-section applies before quoting one. A business trust is on (4E), and an investment fund referred to in section 115UB — that is a Category I or Category II Alternative Investment Fund within Explanation 1(a) to that section — is on (4F). A Category III Alternative Investment Fund is not an investment fund referred to in section 115UB and so is not within (4F) at all; its filing obligation comes from its own legal form.
Still good law. Both sub-sections have been checked in three consolidations of the Income-tax Act, 1961, each printing the section heading "Return of income", and the text is identical in all three. The enacting words of both amending Acts have been read verbatim and give the commencement dates. No judicial treatment of either sub-section is recorded, and none has been looked for, so none is claimed. The obligation is a filing obligation and nothing more: neither sub-section creates a charge, and neither of them displaces the pass-through in section 115UA or section 115UB. What a practitioner should take from that is narrow and practical. The vehicle must file for every previous year, whatever the outcome of the pass-through, and because the return is deemed one required under section 139(1), a late or defective filing carries the ordinary consequences of a late or defective return under that sub-section. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Both sub-sections are set out here as a continuous run — (4D), (4E), (4F) in sequence — and the same words are printed in every consolidation of section 139 consulted, so no text has been taken from under a neighbouring label. None of those texts prints an insertion footnote for either sub-section, so the amending Acts and commencement dates are established from the enacting words instead, each read verbatim: section 49 of the Finance (No. 2) Act, 2014, whose opening words are "In section 139 of the Income-tax Act, with effect from the 1st day of April, 2015" and whose clause (b) inserts sub-section (4E); and section 35 of the Finance Act, 2015, whose opening words are "In section 139 of the Income-tax Act, with effect from the 1st day of April, 2016" and whose Part (III) inserts sub-section (4F). The commencement date carried in this entry is 1 April 2016, the date on which the pair became complete; the earlier date for sub-section (4E) alone is stated in the summary. Older consolidations of section 139 stop short of these sub-sections altogether and must not be used for this point. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Statutory position — no holding is asserted; this entry reproduces statutory text. Every business trust which is not required to furnish a return of income or loss under any other provision of section 139 must furnish the return of its income in respect of its income or loss in every previous year, and all the provisions of the Act apply as if it were a return required to be furnished under section 139(1). Every investment fund referred to in section 115UB which is not required to furnish a return of income or loss under any other provision of section 139 must do the same. The obligation does not depend on there being any income chargeable in the vehicle's own hands.
TaxSphere, “Statutory position — s.139(4E) and s.139(4F): a business trust and an investment fund must file a return every year even when the pass-through leaves them nothing to be taxed on”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-139-4e-and-139-4f-a-business-trust-and-an-investment-fund-must-file-a-return-even-with-nothing-to-tax/ (validity last checked 2026-09-09)
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The Assessing Officer has re-labelled my Category II AIF's interest and gains as business income. Which provision actually decides whether income is taxed in the fund's hands or in the investor's, because section 115UB does not say so in terms?
Our REIT has to give unit holders a statement of distributed income and file one with the department. Which form goes where, by when, and is the machinery the same for an Alternative Investment Fund?
The Assessing Officer has re-characterised my Category II AIF's interest, gains and processing fees as business income and denied the section 10(23FBA) exemption on the whole lot. What is the answer?
My client is a fund registered with SEBI as a venture capital fund. Is it still on the old section 115U pass-through, or has it been moved to section 115UB, and what turns on the answer?
