We missed the section 139(1) due date by a week and the IFSC unit's whole income is covered by section 80LA. Is the deduction still available, and does alternate minimum tax apply on top?
On the first question, no. Section 80AC provides that for an assessment year commencing on or after 1 April 2018, where any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed unless the assessee furnishes a return of his income for that assessment year on or before the due date specified under section 139(1). Section 80LA sits in that Part of Chapter VI-A, so a return filed even a day late costs the whole deduction. On the second, alternate minimum tax under section 115JC does apply to a person other than a company, and section 115JC(2)(i) adds back deductions claimed under any section in that same Part C — but section 115JC(4)(i) substitutes nine per cent for eighteen and one-half per cent where the person is a unit located in an International Financial Services Centre deriving its income solely in convertible foreign exchange.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2018-04-01, reported as Income-tax Act 1961, s.80AC, as printed on the Income-tax Department's section page carrying the year stamp 2024 (No. 2); s.115JC, as printed on the Department's section page carrying the year stamp 2025. It bears on section 80AC, section 115JC, section 115JC(2), section 115JC(4), section 115JC(5), section 80LA, section 139(1), section 44AB, section 10AA, section 35AD of the Income Tax Act 1961, in Deductions & Disallowances and Assessment & Scrutiny matters.
These are the two provisions that turn a correctly computed section 80LA claim into a demand. The section 80AC point is absolute in its terms: there is no reasonable-cause proviso in the section, and it is not a defect that section 139(9) or a condonation of delay in filing addresses, because the bar is tied to the due date under section 139(1) and not to the validity of the return. It has also widened over time — the earlier form of the section named only sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, and the current limb (ii) covers ANY deduction under Part C of Chapter VI-A for assessment years commencing on or after 1 April 2018, which is how section 80LA came within it. On the AMT point, the arithmetic is what surprises: the deduction is added back into adjusted total income by section 115JC(2)(i), so an IFSC unit with a full section 80LA claim can still have a substantial adjusted total income, taxed at nine per cent instead of eighteen and one-half per cent, and the concessional rate is conditional on the unit deriving its income SOLELY in convertible foreign exchange — a single rupee-denominated income stream can put the unit back at the full rate. Two limits on section 115JC should be kept in view: by its own opening words it applies to a person 'other than a company', and by sub-section (5) it does not apply where the person has exercised the option under section 115BAC(5), section 115BAD(5) or section 115BAE(5), or where tax is computed under section 115BAC(1A). What happens to a COMPANY that is an IFSC unit is a minimum alternate tax question under a different provision, which was not read this pass and about which nothing is said here. One qualification on the section 80AC point, which was not available when this entry was first written. In Volark Leasing IFSC Pvt. Ltd. v. ACIT (ITAT Ahmedabad "C" Bench, I.T.A. No. 357/Ahd/2025, AY 2023-24, order dated 29 October 2025) the assessee's return was filed on 31 December 2023, beyond the extended section 139(1) due date of 31 October 2023, and the Tribunal nonetheless directed the Assessing Officer to grant the section 80LA deduction — but the dispute there was framed entirely around the late filing of Form 10CCF under section 80LA(3), and SECTION 80AC WAS NEITHER ARGUED NOR CONSIDERED. The order is therefore no authority against the section 80AC bar, and should not be cited as though it were; but it does show that the bar is not always taken, and it is the only decision located on an IFSC unit's section 80LA claim.
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Not a case. Section 80AC in its present form provides that where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, or (ii) the 1st day of April, 2018, any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under section 139(1). Section 115JC(1) provides that where the regular income-tax payable for a previous year by a person other than a company is less than the alternate minimum tax payable for that previous year, the adjusted total income shall be deemed to be the total income of that person and he shall be liable to income-tax on it at eighteen and one-half per cent. Section 115JC(2) defines adjusted total income as the total income before giving effect to Chapter XII-BA as increased by (i) deductions claimed under any section other than section 80P included in Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', (ii) deduction claimed under section 10AA, and (iii) deduction claimed under section 35AD as reduced by the depreciation allowable under section 32 as if no section 35AD deduction had been allowed. Section 115JC(3) requires a report from an accountant referred to in the Explanation below section 288(2), obtained before the specified date referred to in section 44AB and furnished by that date, certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with Chapter XII-BA. Section 115JC(5) provides that the section shall not apply to a person where such person has exercised the option under section 115BAC(5) or section 115BAD(5) or section 115BAE(5), or where income-tax on the total income is computed under section 115BAC(1A).
Section 80AC denies the deduction outright, for an assessment year commencing on or after 1 April 2018, in respect of any deduction admissible under any provision of Part C of Chapter VI-A, unless the return for that assessment year is furnished on or before the due date specified under section 139(1); section 80LA falls within that Part. Section 115JC(4) provides that, notwithstanding sub-section (1), where the person referred to in that sub-section is (i) a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, sub-section (1) shall have effect as if for the words 'eighteen and one-half per cent' the words 'nine per cent' had been substituted, and (ii) a co-operative society, as if for those words the words 'fifteen per cent' had been substituted.
Not a judicial route. Section 80AC converts a filing default into a substantive disallowance, and its 2018 widening from a list of six sections to the whole of Part C of Chapter VI-A was what brought section 80LA, along with the rest of the incentive deductions, within that discipline; the design deliberately leaves no reasonable-cause escape, because the object is a timely return rather than a proved excuse. Section 115JC works in the opposite direction on the same deductions: having allowed a full deduction under Part C, the Act recovers a floor of tax by adding those very deductions back into an adjusted total income and charging it at a minimum rate. Sub-section (4)(i) then reduces that floor to nine per cent for an IFSC unit, conditional on its income being derived solely in convertible foreign exchange — the same convertible-foreign-exchange test that runs through the rest of the IFSC provisions, and the mechanism by which the incentive is confined to genuinely offshore-facing activity.
the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.
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Handle my notice → Ask a CA on WhatsAppOn the first question, no. Section 80AC provides that for an assessment year commencing on or after 1 April 2018, where any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed unless the assessee furnishes a return of his income for that assessment year on or before the due date specified under section 139(1). Section 80LA sits in that Part of Chapter VI-A, so a return filed even a day late costs the whole deduction. On the second, alternate minimum tax under section 115JC does apply to a person other than a company, and section 115JC(2)(i) adds back deductions claimed under any section in that same Part C — but section 115JC(4)(i) substitutes nine per cent for eighteen and one-half per cent where the person is a unit located in an International Financial Services Centre deriving its income solely in convertible foreign exchange. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 80AC, section 115JC, section 115JC(2), section 115JC(4), section 115JC(5), section 80LA, section 139(1), section 44AB, section 10AA, section 35AD of the Income Tax Act 1961. It is reported as Income-tax Act 1961, s.80AC, as printed on the Income-tax Department's section page carrying the year stamp 2024 (No. 2); s.115JC, as printed on the Department's section page carrying the year stamp 2025. These are the two provisions that turn a correctly computed section 80LA claim into a demand. The section 80AC point is absolute in its terms: there is no reasonable-cause proviso in the section, and it is not a defect that section 139(9) or a condonation of delay in filing addresses, because the bar is tied to the due date under section 139(1) and not to the validity of the return. It has also widened over time — the earlier form of the section named only sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, and the current limb (ii) covers ANY deduction under Part C of Chapter VI-A for assessment years commencing on or after 1 April 2018, which is how section 80LA came within it. On the AMT point, the arithmetic is what surprises: the deduction is added back into adjusted total income by section 115JC(2)(i), so an IFSC unit with a full section 80LA claim can still have a substantial adjusted total income, taxed at nine per cent instead of eighteen and one-half per cent, and the concessional rate is conditional on the unit deriving its income SOLELY in convertible foreign exchange — a single rupee-denominated income stream can put the unit back at the full rate. Two limits on section 115JC should be kept in view: by its own opening words it applies to a person 'other than a company', and by sub-section (5) it does not apply where the person has exercised the option under section 115BAC(5), section 115BAD(5) or section 115BAE(5), or where tax is computed under section 115BAC(1A). What happens to a COMPANY that is an IFSC unit is a minimum alternate tax question under a different provision, which was not read this pass and about which nothing is said here. One qualification on the section 80AC point, which was not available when this entry was first written. In Volark Leasing IFSC Pvt. Ltd. v. ACIT (ITAT Ahmedabad "C" Bench, I.T.A. No. 357/Ahd/2025, AY 2023-24, order dated 29 October 2025) the assessee's return was filed on 31 December 2023, beyond the extended section 139(1) due date of 31 October 2023, and the Tribunal nonetheless directed the Assessing Officer to grant the section 80LA deduction — but the dispute there was framed entirely around the late filing of Form 10CCF under section 80LA(3), and SECTION 80AC WAS NEITHER ARGUED NOR CONSIDERED. The order is therefore no authority against the section 80AC bar, and should not be cited as though it were; but it does show that the bar is not always taken, and it is the only decision located on an IFSC unit's section 80LA claim. If it applies to you, the first step is this: Treat the section 139(1) due date as the operative deadline for any Part C Chapter VI-A claim, including section 80LA, and diarise it independently of the audit-report deadlines.
Not a case. Section 80AC in its present form provides that where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, or (ii) the 1st day of April, 2018, any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under section 139(1). Section 115JC(1) provides that where the regular income-tax payable for a previous year by a person other than a company is less than the alternate minimum tax payable for that previous year, the adjusted total income shall be deemed to be the total income of that person and he shall be liable to income-tax on it at eighteen and one-half per cent. Section 115JC(2) defines adjusted total income as the total income before giving effect to Chapter XII-BA as increased by (i) deductions claimed under any section other than section 80P included in Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', (ii) deduction claimed under section 10AA, and (iii) deduction claimed under section 35AD as reduced by the depreciation allowable under section 32 as if no section 35AD deduction had been allowed. Section 115JC(3) requires a report from an accountant referred to in the Explanation below section 288(2), obtained before the specified date referred to in section 44AB and furnished by that date, certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with Chapter XII-BA. Section 115JC(5) provides that the section shall not apply to a person where such person has exercised the option under section 115BAC(5) or section 115BAD(5) or section 115BAE(5), or where income-tax on the total income is computed under section 115BAC(1A). The matter was decided on 2018-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Section 80AC denies the deduction outright, for an assessment year commencing on or after 1 April 2018, in respect of any deduction admissible under any provision of Part C of Chapter VI-A, unless the return for that assessment year is furnished on or before the due date specified under section 139(1); section 80LA falls within that Part. Section 115JC(4) provides that, notwithstanding sub-section (1), where the person referred to in that sub-section is (i) a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, sub-section (1) shall have effect as if for the words 'eighteen and one-half per cent' the words 'nine per cent' had been substituted, and (ii) a co-operative society, as if for those words the words 'fifteen per cent' had been substituted.
Not a judicial route. Section 80AC converts a filing default into a substantive disallowance, and its 2018 widening from a list of six sections to the whole of Part C of Chapter VI-A was what brought section 80LA, along with the rest of the incentive deductions, within that discipline; the design deliberately leaves no reasonable-cause escape, because the object is a timely return rather than a proved excuse. Section 115JC works in the opposite direction on the same deductions: having allowed a full deduction under Part C, the Act recovers a floor of tax by adding those very deductions back into an adjusted total income and charging it at a minimum rate. Sub-section (4)(i) then reduces that floor to nine per cent for an IFSC unit, conditional on its income being derived solely in convertible foreign exchange — the same convertible-foreign-exchange test that runs through the rest of the IFSC provisions, and the mechanism by which the incentive is confined to genuinely offshore-facing activity. In the words reproduced by the source cited on this page: "the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139."
It was decided by the CBDT Circulars & Instructions on 2018-04-01 and is reported as Income-tax Act 1961, s.80AC, as printed on the Income-tax Department's section page carrying the year stamp 2024 (No. 2); s.115JC, as printed on the Department's section page carrying the year stamp 2025. 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 80AC, section 115JC, section 115JC(2), section 115JC(4), section 115JC(5), section 80LA, section 139(1), section 44AB, section 10AA, section 35AD, 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. Section 80AC denies the deduction outright, for an assessment year commencing on or after 1 April 2018, in respect of any deduction admissible under any provision of Part C of Chapter VI-A, unless the return for that assessment year is furnished on or before the due date specified under section 139(1); section 80LA falls within that Part. Section 115JC(4) provides that, notwithstanding sub-section (1), where the person referred to in that sub-section is (i) a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, sub-section (1) shall have effect as if for the words 'eighteen and one-half per cent' the words 'nine per cent' had been substituted, and (ii) a co-operative society, as if for those words the words 'fifteen per cent' had been substituted. It arises in Deductions & Disallowances and Assessment & Scrutiny matters, on section 80AC, section 115JC, section 115JC(2), section 115JC(4), section 115JC(5), section 80LA, section 139(1), section 44AB, section 10AA, section 35AD 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. If the return is already late, do not assume the deduction can be restored by revising the return or by a condonation application directed at the delay in filing — section 80AC ties the allowance to furnishing the return on or before the section 139(1) due date, and states no exception. Check which limb of section 80AC applies to the year in issue: limb (i) covers assessment years from 1 April 2006 but before 1 April 2018 and names only sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, so a section 80LA claim for an assessment year before 2018-19 is not caught by the bar at all. Compute alternate minimum tax alongside the regular computation for any non-corporate IFSC unit: section 115JC(2)(i) adds back the Part C deduction, so a full section 80LA claim does not remove the exposure. Before applying the nine per cent rate in section 115JC(4)(i), verify that the unit derives its income SOLELY in convertible foreign exchange; the concession is conditional on that and the ordinary rate of eighteen and one-half per cent applies if it is not met. Obtain the accountant's report under section 115JC(3) before the specified date referred to in section 44AB and furnish it by that date — the sub-section requires both. Check section 115JC(5) before computing AMT at all: the section does not apply where the option under section 115BAC(5), 115BAD(5) or 115BAE(5) has been exercised, or where tax is computed under section 115BAC(1A).
Still good law. The text of section 80AC was read on four separate year-stamped departmental pages — 2020, 2021, 2023 and 2024 (No. 2) — and came back in identical words on all four, which is the corroboration relied on; no page with a 2025 stamp was located for this section, so I cannot exclude a later amendment, and I did not read the Department's amendment footnotes for it. Section 115JC was read on the page carrying the year stamp 2025 and again on the page carrying the year stamp 2024 (No. 1), returning identical text. Judicial treatment of section 80AC's rigour was only partially checked this pass: an indiankanoon phrase search for "Deduction not to be allowed unless return furnished" on 8 September 2026 returned 155 results, which were not worked through, so whether any High Court has read a reasonable-cause exception into the section, or considered its application to a return filed under section 139(4), remains unresolved and is a proper target for a separate entry. The current text of section 80AC was separately confirmed word-for-word against the indiankanoon bare-Act text (doc 34883764), which also records that the section was substituted by the Finance Act 2018 (Act No. 13 of 2018) dated 29 March 2018 — the amending Act the Department's page does not name. Section 115JC could NOT be confirmed on any route independent of the Department: indiankanoon's section 115JC page (doc 49425645) returned HTTP 403 on two attempts. Indirect support only: an indiankanoon search shows section 39 of the Finance Act 2018 as the source of the nine per cent rate for a unit in an International Financial Services Centre. 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.
This is a statutory entry, not a decision. 'decided_on' is 1 April 2018, the date from which limb (ii) of section 80AC — the limb that brings section 80LA within the bar — applies by its own words; it is not a decision date. I did not read the Department's footnotes for section 80AC or section 115JC this pass, so the amending Acts for those two sections are not named. The Department's page at /w/section-80ac (year stamp 2009) prints the PRE-2018 text and is listed in this project's brief as a known-stale page; the pages carrying the year stamps 2007, 2011 and 2016 likewise print the pre-2018 text. The current text was read on four separate year-stamped pages — 2020, 2021, 2023 and 2024 (No. 2) — which returned it in identical words. For section 115JC the page carrying the year stamp 2025 was used and the same text was returned on the page carrying the year stamp 2024 (No. 1); an older page carrying the year stamp 2019 (No. 2) shows sub-section (4) in an earlier form containing only the IFSC limb, without the co-operative society limb. I did NOT read section 115JB this pass, so nothing is said about the minimum alternate tax position of a company that is an IFSC unit. The tier value 'cbdt' is used because the library's fixed tier vocabulary has no value for a statutory entry. 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.
Section 80AC denies the deduction outright, for an assessment year commencing on or after 1 April 2018, in respect of any deduction admissible under any provision of Part C of Chapter VI-A, unless the return for that assessment year is furnished on or before the due date specified under section 139(1); section 80LA falls within that Part. Section 115JC(4) provides that, notwithstanding sub-section (1), where the person referred to in that sub-section is (i) a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, sub-section (1) shall have effect as if for the words 'eighteen and one-half per cent' the words 'nine per cent' had been substituted, and (ii) a co-operative society, as if for those words the words 'fifteen per cent' had been substituted.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
A declaration was required by the due date and you filed it late. Is that fatal?
You forgot to add back something your own audit report flagged. Is that concealment?
The AO ordered a special audit of my books without hearing me first. Is that direction valid?
I did not tick s.115BAA in the return and filed Form 10-IC late. Can I still get the concessional rate?