Section 139(1)

Section 139(1) — the law in short

What the courts have decided on section 139(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sarla Holdings P Ltd v PCIT Supreme CourtHelps department
  I did not tick s.115BAA in the return and filed Form 10-IC late. Can I still get the concessional rate?
  No, if the return itself did not opt. Section 115BAA(5) requires the option to be exercised in the prescribed manner on or before the s.139(1) due date, and Circular 6/2022 condones only a late Form 10-IC where the option was in fact exercised in the return. A company that marked 'None of the above' cannot claim the benefit later, and s.115JB applies.
• Vinubhai Mohanlal Dobaria v CCIT Supreme CourtHelps taxpayer
  I filed my return late. When is the 276CC offence committed, and is it still a first offence?
  The offence is committed on the day immediately following the s.139(1) due date, not on the day you eventually file. Both defaults here therefore preceded the first show-cause notice, both qualified as a 'first offence' under the 2014 compounding guidelines, and compounding could not be refused on that ground.
• PCIT v Wipro Ltd Supreme CourtHelps department
  A declaration was required by the due date and you filed it late. Is that fatal?
  Yes. Both limbs — furnishing the declaration, and doing so before the due date for the original return — are mandatory, not directory. A claim made only in a belated revised return does not qualify.
• CIT v Calcutta Export Co Supreme CourtHelps taxpayer
  I deducted TDS during the year but paid it after 31 March, though before I filed my return — can the expense still be disallowed under section 40(a)(ia)?
  No. The Supreme Court held on 24 April 2018 that the amendment to section 40(a)(ia) by the Finance Act 2010 is curative and operates retrospectively from 1 April 2005, when the clause was first inserted. So for any year from assessment year 2005-06 onwards, tax deducted at any time in the previous year and paid on or before the due date for filing the return under section 139(1) attracts no disallowance. The memorandum to the Finance Bill 2010 had said the amendment would apply from assessment year 2010-11; the Court held that a proviso supplying an obvious omission must be read back into the section.
• Sasi Enterprises v ACIT Supreme CourtHelps department
  The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
  No. The Supreme Court held that the s.276CC offence is complete on the failure to furnish the return in due time and is unrelated to the pendency of the assessment. The proviso does not help unless the return was furnished before the end of the assessment year or the tax payable on the total income determined on regular assessment, less advance tax and TDS, is within the statutory figure — and by s.278E the court presumes the culpable mental state, leaving it to the accused to displace it beyond reasonable doubt.
• ACIT v A.R. Enterprises Supreme CourtHelps department
  I paid advance tax for the year but had not filed my return when the search took place. Can the department still call that income undisclosed?
  Yes. The Supreme Court held that payment of advance tax is not disclosure of income. Advance tax is paid on an estimate of current income; disclosure of total income happens only in a return. Where the due date under section 139(1) had passed and no return had been filed by the date of search, section 158BB(1)(c) requires the returned income to be taken as nil, and the officer was right to conclude the assessee would not have disclosed the income. Tax deducted at source is no different, being computed on the same estimated basis. The Revenue's six appeals were allowed with costs.
• CIT v McDowell & Co Ltd Supreme CourtCuts both ways
  I have given the excise authorities a bank guarantee for unpaid bottling fee. Does that count as actual payment under section 43B - and is bottling fee even covered by section 43B?
  A bank guarantee is not payment, but bottling fee is outside section 43B altogether, so the deduction stood. The Supreme Court held that section 43B requires actual payment, meaning money must flow from the assessee to the public exchequer, and a guarantee of payment on a future event is not that. But it also held that tax, duty, cess or fee, by whatever name called, must be read ejusdem generis: the sum must belong to the genus of taxation, a compulsory exaction under the State's taxing power. Bottling fee under the Rajasthan Excise Act is the consideration for parting with an exclusive privilege - contractual, not an impost - so section 43B did not apply. The Revenue's appeal was dismissed.
• Prakash Nath Khanna v CIT Supreme CourtHelps department
  I missed the due date but I did file the return under s.139(4) before the assessment. Doesn't that mean I filed 'in due time' and cannot be prosecuted under s.276CC?
  No. The only place the Act fixes a time for furnishing the return is s.139(1); s.139(4) merely permits a belated return, and filing one does not wipe out the infraction of having missed the s.139(1) date. Whether the failure was wilful is a question for the trial court, where s.278E requires the court to presume a culpable mental state and leaves it to you to prove its absence.
• Rajesh Somandas Sachdev v ITO High CourtHelps taxpayer
  I filed my return very late, only after a section 148 notice and after the complaint was filed, but my TDS exceeded my tax and I am owed a refund. Can the prosecution for not filing continue?
  No. The Bombay High Court quashed the complaint. Clause (ii)(b) of the proviso to section 276CC bars prosecution where the tax payable on the total income determined on regular assessment, reduced by advance tax and tax deducted at source, does not exceed the prescribed threshold. Here tax deducted at source was Rs 2,54,788 and the return, accepted by the assessment order of 26 December 2018, showed a refund of Rs 1,64,340 due, which the Department admitted. Following Guru Nanak Enterprises, the Court held the prosecution wholly unwarranted and an abuse of the process of law, and noted that the sanctioning Commissioner had not considered the tax already deducted.
• Bharat Electronics Employees Co-op Credit Society v CCIT High CourtHelps taxpayer
  Our co-operative credit society filed its return late and lost the section 80P deduction under section 80AC. The Chief Commissioner has rejected our section 119(2)(b) condonation application for want of sufficient cause. Is that rejection sustainable?
  No, not on these facts. The Andhra Pradesh High Court set aside the Chief Commissioner's order refusing to condone the delay and directed that the return be treated as filed within time. The Court held that co-operative societies became liable to file returns only on the Finance Act, 2018 amendment, that a society run with minimal staff and unaware of the provisions is itself in genuine difficulty, and that the authorities must take a liberal approach towards co-operative societies in the teeth of CBDT Circular No. 13/2023. It did not decide the section 80P claim; that was left to be dealt with in assessment.
• Hosur Bata Employees Union v Principal Chief Commissioner of Income Tax High CourtCuts both waysNo later treatment found
  My clients settled a wage dispute and took VRS and compensation for loss of future salary in two instalments. The company deducted TDS on the whole amount without giving s.89 relief. Can we make the employer refund it?
  No — not from the employer. The Madras High Court held that the employer cannot be found at fault for deducting tax at source in the absence of an application in Form 10E under Rule 21A, because s.192(2A) is what obliges the employer to compute and give s.89 relief and it operates only on the particulars the employee furnishes. The Court's remedy was to direct the employees to file returns under s.139(1) within thirty days and the Income Tax Officer to process them under s.143(1) and refund within two months.
• M/s Kanoria Energy and Infrastructure Ltd v CCIT High CourtHelps taxpayerHigh Courts differ
  The Commissioner rejected my Form 10-IC condonation application as time-barred under Circular 17/2024, counting from the date of my application and ignoring that I had actually filed the Form years earlier. Is that right?
  No. The Rajasthan High Court set aside the rejection, holding that it was legally unsustainable because it conflated the date of filing of Form 10-IC with the date of the formal condonation application. The Form having been filed on 30 January 2023, within three years of the end of AY 2020-21, and the s.115BAA option having been unambiguously exercised in the return itself, the delay was condoned and the matter remanded with a direction that the authority not consider delay or limitation again.
• Mentaura Technologies Pvt Ltd v PCIT Delhi High CourtHelps departmentHigh Courts differ
  I never filed Form 10-IC for AY 2020-21 and only applied for condonation in January 2025. The Commissioner says I am out of time. Is he right?
  Yes. The Delhi High Court dismissed the writ petition because para 5 of CBDT Circular No. 17/2024 bars any application for condonation of delay in filing Form 10-IC or Form 10-ID made more than three years from the end of the assessment year, which for AY 2020-21 meant 31 March 2024. The application having been made on 20 January 2025, it was not maintainable however good the explanation for the original delay.
• Diebold Nixdorf India Pvt. Ltd. v CBDT High CourtHelps taxpayerNo later treatment found
  I opted for s.115BAA in my return but filed Form 10-IC late, and my return itself was belated. CBDT has refused to condone the delay because Circular No. 6/2022 requires the return to have been filed within the s.139(1) due date. Is that a good reason?
  No. The Bombay High Court held that filing the return within the s.139(1) due date is not a condition precedent for claiming the benefit of s.115BAA — s.115BAA(5) requires the declaration in Form 10-IC to be filed within that time, not the return — so the first condition in the Board's circular cannot by itself defeat a condonation application. And even where the circular's conditions are not met, the Board retains its independent power under s.119(2)(b) to condone the delay dehors the circular. The delay of 23 days was condoned and the assessment directed to be modified to tax the company under s.115BAA.
• Herald Global Ventures Private Limited v CCIT-1, Ahmedabad High CourtHelps taxpayerNo later treatment found
  My start-up's Inter-Ministerial Board certificate for s.80-IAC was refused, so I switched to s.115BAA and filed Form 10-IC 53 days late for AY 2022-23. There is no blanket circular for that year. Can the delay be condoned?
  Yes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve.
• Rama Industries Ltd v PCIT Mumbai-3 High CourtHelps taxpayer
  The portal would not accept Form 10-IC for FY 2019-20 before the Circular 6/2022 cut-off of 30 June 2022, and I filed it physically eleven days late. Is the s.115BAA benefit lost?
  No. The Bombay High Court quashed the rejection under s.119(2)(b) and condoned the delay where the assessee had selected s.115BAA in the return, had saved a draft Form 10-IC on the portal before the cut-off but could not submit it because the Financial Year 2019-20 option was not available, and filed a physical Form with the Jurisdictional Assessing Officer eleven days after the extended date.
• Swasth Foundation v CIT (Exemptions) High CourtHelps taxpayerNo later treatment found
  The Commissioner rejected my condonation application for late Form 9A for an old year. Was Form 9A even required then?
  Not before AY 2016-17. The Bombay High Court held that the requirement to file Form No. 9A to exercise the option under clause (2) of the Explanation to s.11(1) was introduced by the Finance Act 2015 with effect from 1 April 2016, so for AY 2015-16 there was no prescribed format and no delay capable of being condoned. Where the option had been exercised in time by stating it in the Form 10B audit report and in the return, the substantive requirement was met and the s.119(2)(b) rejection was quashed.
• Balaji Landmarks LLP v CBDT High CourtHelps taxpayerNo later treatment found
  I filed my loss return late on my CA's advice and lost the carry-forward. Will the delay be condoned?
  The Board could not refuse to condone the delay. A delay caused by acting on a professional's opinion is bona fide and not negligence, especially where the issue is fairly complex and unsettled, and refusing condonation would have permanently extinguished the carry forward of losses under s.139(3) read with s.80. The department loses nothing, because s.153(1B) gives the Assessing Officer twelve months from the end of the financial year of the return to assess. The delay was condoned and the assessment directed - but all contentions were kept open, so the losses themselves remain open to examination.
• Columbia Global Center in India v ITO (Exemptions), Ward-1(2), Mumbai High CourtHelps taxpayer
  My trust filed Form 10 only after the scrutiny notice came — 338 days after the due date. The Commissioner refused to condone under s.119(2)(b). Is that the end of the accumulation claim?
  No. Where the substantive conditions of s.11(2) are met — the accumulation is disclosed in the return, the Board resolution and the Form 10B audit report before the s.139(1) due date, the money is invested in a s.11(5) mode and is actually applied within the permitted period — the Bombay High Court held that a liberal view must be taken and the delay in filing Form 10 condoned. The refusal order under s.119(2)(b) was quashed and the delay condoned by the Court itself.
• People's Mobile Hospitals v CIT (Exemption) High CourtHelps taxpayer
  Form 10 was 51 days late because our accountant left mid-year, but it was on the file before the return was processed. The Commissioner still refused to condone. What now?
  The Bombay High Court quashed the refusal and condoned the delay itself. Where the delay is short, unexplained by any wilful default, and the Form was on record when the return was processed, refusing condonation is a pedantic rather than a justice-oriented approach and produces genuine hardship within the meaning of s.119(2)(b).
• Cell Com Teleservices Private Limited v Union of India High CourtHelps taxpayer
  I opted for the 22 per cent rate in my return but missed filing Form 10-IC by the due date. The Commissioner refused to condone the delay. Can the High Court help?
  Yes. The Allahabad High Court quashed the Principal Commissioner's order refusing condonation under section 119(2)(b) and directed him to condone the delay, accept Form 10-IC for assessment year 2020-21 and recompute the tax liability under section 115BAA. Filing Form 10-IC before the return is not mandatory; where genuine hardship is shown the delay may be condoned, and section 119(2)(b) is to be read as beneficial legislation. The Commissioner had taken an excessively strict view, ignored his own Assessing Officer's favourable report, and exercised his discretion arbitrarily.
• Mirae Asset Venture Investments India Pvt Ltd v PCIT-6 High CourtHelps taxpayer
  I filed my return in time and ticked s.115BAA in the ITR-6, but Form 10-IC went in late and the CPC has already processed the return and raised a demand. Can the delay still be condoned?
  Yes, for AY 2021-22, if the three conditions in CBDT Circular No. 19/2023 dated 23 October 2023 are met. The Bombay High Court held that the Circular imposes no fourth condition — neither the fact that the return was already processed under s.143(1) and a demand raised, nor the fact that the shortfall was detected by the Assessing Officer rather than volunteered, takes the case outside it.
• Coromondel Cabeles P Ltd v ACIT High CourtCuts both ways
  The Department has taxed my housing project income as business profit. Can I claim the section 80-IB(10) deduction now, in appeal, when I never claimed it in my return?
  Not for years governed by section 80AC. The Madras High Court held that where section 80AC applies, the deduction cannot be allowed unless the return was filed by the due date and the claim was made in it. The assessee had made no claim under section 80-IB in its return, so for assessment years 2007-08 to 2011-12 the benefit was refused, section 80AC having been inserted by the Finance Act 2006 with effect from 1 April 2006. For assessment year 2006-07 the question was answered in the assessee's favour. The Court recorded a prima facie view that the requirement may be directory, but held it could say so only under Article 226 and not in a section 260A appeal.
• PCIT-1, Chennai v M/s. British Agro Products (India) Pvt. Ltd. High CourtHelps departmentNo later treatment found
  I grow button mushrooms in trays under controlled temperature in a shed and claim the income as agricultural income under s.10(1). The Assessing Officer says it is business income. Where does that stand?
  Against you, in the Madras High Court. The Court held that income from the sale of white button mushrooms grown in a factory under controlled conditions does not fall within any of the three limbs of s.2(1A) and so is not exempt under s.10(1), allowed the Revenue's appeals and answered both substantial questions against the assessee. That result is squarely opposed to the Hyderabad Special Bench in DCIT v. Inventaa Industries Pvt. Ltd., which the Tribunal below had followed, and appeals against Inventaa were recorded as still pending before the Telangana High Court.
• Technovaa Plastic Industries Private Limited v Central Board of Direct Taxes High CourtHelps taxpayerNo later treatment found
  The resolution professional never filed the company's returns during the insolvency process. The new management filed them late and the carry forward of losses has gone. Will the Board condone the delay?
  It must, on these facts. The Gujarat High Court quashed the Board's order refusing condonation under s.119(2)(b) for Assessment Years 2018-19 and 2019-20 and condoned the delay itself, holding that where the suspended management had lost all powers from the date of admission under the Insolvency and Bankruptcy Code and the resolution professional had neither had the accounts audited nor filed the returns, and the new management filed them promptly after the resolution plan was approved, refusing condonation would frustrate the very purpose of the approved resolution plan and would amount to genuine hardship.
• Raj Kumar Bothra v DCIT High CourtHelps taxpayer
  CPC disallowed my late-deposited PF and ESI under 143(1)(a). Was a summary adjustment even open to them?
  No, not for an intimation issued in December 2021. The Chhattisgarh High Court held the issue was genuinely debatable on that date, with conflicting High Court authority and the matter pending in the Supreme Court, so the officer had to take scrutiny under s.143(3) rather than adjust summarily.
• Royal LED Equipments Pvt. Ltd. v CCIT High CourtHelps taxpayer
  I claimed the 15 per cent rate under s.115BAB in my return but the portal would not accept Form 10-ID before the due date. My s.119(2)(b) application was rejected before Circular No. 17/2024 came out, so the Department says it can do nothing. Where does that leave me?
  The Gujarat High Court set the rejection aside and directed the authorities to accept the Form 10-ID filed on 12 September 2022 as legal and valid. Once the benefit is claimed in the return, the filing of the separate form is merely procedural and should not be denied where the assessee shows sufficient cause; and the very fact that the Board had to issue Circulars 6/2022, 19/2023 and 17/2024 established that assessees had faced a real problem in filing Forms 10-IC and 10-ID in time.
• Rajkumar Agarwal v Income Tax Department High CourtHelps departmentNo later treatment found
  I filed my returns late but only after a notice, and I paid the penalty for the delay. Does the proviso to s.276CC save me, and can I get the prosecution quashed by explaining the delay?
  No on both counts. The proviso to s.276CC refers only to a return under s.139(1); s.142(1)(i) and s.148 are conspicuously absent from it, so the benefit is available only to voluntary filing and not to a return filed after the failure has been detected and a notice issued. Payment of penalty under Chapter XXI does not exonerate the assessee from prosecution under Chapter XXII, and because s.278E requires the court to presume the culpable mental state, the explanation for the delay must be led as evidence before the Magistrate and cannot be accepted at the quashing stage.
• PCIT v Wellman Coke India Ltd High CourtHelps taxpayer
  My client's auditor could not upload Form 3CEA with the return and the Assessing Officer has disallowed the whole slump sale loss for that reason alone. Is the report a condition precedent?
  No. The Calcutta High Court dismissed the Revenue's appeal and answered the question against it: furnishing Form 3CEA within the due date for the return is not a mandatory condition, and a report produced during the assessment proceedings before the final order is sufficient compliance. It applied the Supreme Court's decision in CIT v. G.M. Knitting Industries Private Limited.
• Kanyakaparameshwari Co-operative Society Ltd v CCIT High CourtHelps taxpayerNo later treatment found
  My co-operative society filed its return late and lost section 80P because of section 80AC. If the delay is condoned under section 119(2)(b), does the deduction come back?
  On this Karnataka view, yes. The Court held that section 80AC does not say in express terms that the deduction becomes inadmissible if the delay in filing the return is condoned, so an order under section 119(2)(b) condoning the delay clears the way for the claim. It adopted its earlier decision in Sullia Taluk Womens Multi Purpose Co-operative Society and read the Central Board's circular of 26 July 2023, which directs the authorities to admit and decide condonation applications from audited co-operative societies for assessment years 2018-19 to 2022-23 on the merits. The rejection of the society's application was quashed and the delay condoned, and the Court went on to quash the completed assessment as well and remit the claim for fresh consideration.
• Income Tax Officer v Rajendra Prasad Vaish High CourtHelps taxpayerNo later treatment found
  The Department has appealed against my acquittal on a s.276CC charge. Given the presumption in s.278E, how much has the Department still to prove?
  It still has to prove the wilfulness. The Rajasthan High Court dismissed the Department's appeal against an acquittal for a 28-month delay in filing a return, holding that even with the presumption in s.278E the complainant must bring home the mens rea, that the accused's explanation together with payment of the tax and penalty rebutted it, and that in an appeal against acquittal, where two views are plausible, the view favouring innocence prevails.
• Manav Menon v Deputy Commissioner of Income Tax High CourtHelps taxpayer
  I never filed my return for the year and the department has launched a prosecution, but my TDS and advance tax more than covered the tax and I am actually due a refund. Can the criminal case go on?
  No. The Madras High Court quashed the prosecution under section 276CC. Clause (ii)(b) of the proviso says a person shall not be proceeded against for failure to furnish the return under section 139(1) if the tax payable on the total income determined on regular assessment, as reduced by advance tax paid and tax deducted at source, does not exceed Rs 3,000. Here the petitioner's advance tax, TDS, TCS and self-assessment tax came to Rs 23,75,066 against total tax and interest of Rs 23,74,610, leaving a refund of Rs 460 claimed. The proviso came to his rescue and the complaint in EOCC No. 168 of 2016 was quashed.
• Sada Kesava Reddy v Dy CIT High CourtHelps departmentNo later treatment found
  My belated return showed a refund due, so no tax was payable on regular assessment and the proviso to s.276CC protects me. Can I be discharged on that ground before trial?
  Not on this authority. The Telangana High Court held that whether the accused was entitled to a refund, whether there was wilful failure to furnish the return in due time, and whether the notice was validly served are all matters to be decided only after a full trial, and refused to interfere with the dismissal of the discharge application. It also applied the settled position that the benefit of the proviso is available only to a voluntary return under s.139(1) filed before the failure is detected, and not once a notice under s.142(1)(i) or s.148 has been issued.
• Amalgamated Plantations Pvt. Ltd. v. Union of India (Calcutta High Court) — the challenge to section 194N as beyond Entry 82 because a cash withdrawal is not income, and the interim stay that has followed it High CourtHelps taxpayerUnder appeal
  My company withdraws crores in cash every month to pay plantation wages. The bank is deducting under section 194N even though the withdrawal is my own money and not income. Is there a challenge to the section, and where does it stand?
  There is, and it is live rather than decided. Md. Nizamuddin J of the Calcutta High Court, holding that the grounds 'have some substance and requires consideration for final adjudication', admitted the writ petition and granted an interim order restraining the authorities from deducting tax at source under section 194N, following a line of unreported Kerala High Court orders beginning with Kanan Devan Hills Plantations Company Pvt. Ltd. v. Union of India, WP(C) No. 1658 of 2020, order dated 13 August 2020. No decision on the merits is given here: none has been established.
• Kunal Structure (India) Pvt Ltd v Dy CIT High CourtHelps taxpayer
  My return was defective and I cured the defect ten months later. Does the s.143(2) clock run from the original filing or from the day I removed the defect?
  From the original filing. Where the defect is removed within the time the Assessing Officer allowed, the return relates back to the date on which it was originally furnished, and the six-month limitation for a s.143(2) notice is counted from the end of the financial year in which that original return was filed. On the facts the scrutiny notice was issued nearly a year after that period had run out and was held barred. The Revenue's special leave petition was dismissed.
• R. Banumathy v Commissioner of Income Tax-I High CourtHelps taxpayer
  My client missed the s.10(10C) exemption in the original return, filed a revised return that the officer lodged as invalid, and the Commissioner rejected the s.264 revision. Is there anything left?
  Yes. The Madras High Court set aside the s.264 order and directed refund of the excess tax, holding that the exemption under s.10(10C) up to five lakh rupees was available to the employee of a bank under an early retirement option scheme and that Rule 2BA cannot cut down the section. It added that where an assessee pays excess tax it is the Department's bounden duty to tell him of the reliefs he is entitled to and to refund the excess.
• Humayun Suleman Merchant v CCIT High CourtHelps departmentNo later treatment found
  I never deposited the unspent sale proceeds in a capital gains account. Can I still claim 54F?
  No, not for the unspent part. Section 54F(4) requires the amount not utilised towards the new house to be deposited in the notified account before the due date under section 139(1), and failure to do so confines the exemption to what was actually spent.
• CIT v K. Ramachandra Rao High CourtHelps taxpayer
  I put the whole sale consideration into building a house within the section 54F time limit but never opened a Capital Gains Account. Can the officer deny me the exemption on that ground alone?
  No. The Karnataka High Court held that section 54F(4) is attracted only where the net consideration is not used to purchase or construct the house. If the assessee actually invests within the periods in section 54F(1), the deposit requirement never comes into play and exemption cannot be refused for want of a Capital Gains Account Scheme deposit. The Court also held there is no bar on constructing the new house on a site the assessee already owns; investments in that construction within one year before and three years after the transfer qualify. All four Revenue appeals were dismissed.
• CIT v Jagriti Aggarwal High CourtHelps taxpayer
  I sold my house, bought the new one after 31 July but before the end of the assessment year, and never opened a Capital Gains Account — do I lose the section 54 exemption?
  No. The Punjab and Haryana High Court held on 3 October 2011 that the due date in section 54(2) for furnishing the return under section 139(1) is subject to the extended period allowed by section 139(4). Sub-section (4) is not an independent provision; it operates on the time allowed by sub-section (1) and must be read with it, functioning in effect as a proviso to it. So an assessee who buys or constructs the new house, or deposits the gain, before the section 139(4) date keeps the exemption. Here the sale was on 13 January 2006, the purchase on 2 January 2007, and the return filed on 28 March 2007.
• CIT v Mahendra C. Shah High CourtHelps taxpayer
  I declared the seized assets in my section 132(4) statement but nobody asked me how I earned the money, and I paid the tax only with a revised return. Do I lose the Explanation 5 immunity?
  No. The Gujarat High Court held that the assessee had complied with the second exception to Explanation 5 and cancelled the penalty. Where the authorised officer does not ask how the undisclosed income was derived, the assessee cannot be denied immunity because the statement does not say so; the officer is bound to explain Explanation 5 in full and cannot stop short so that the Revenue may take advantage of the lapse. As for payment, the provision fixes no time for paying the tax and interest, and it is enough that payment is shown before the assessment is completed. Disclosure in the return itself is not what the exception turns on.
• Dr. Prannoy Roy v CIT High CourtHelps taxpayer
  I paid the whole tax before the due date but filed the return eleven months late. The Assessing Officer has still charged interest under s.234A. Can he?
  No, not on tax already in the Revenue's hands before the due date. The Delhi High Court held that s.234A creates a compensatory levy, not a penalty, so where the tax was deposited before the due date of filing the return the Revenue has suffered no loss and no interest under s.234A is payable; interest runs only on tax not deposited before that date.
• Gluhend India Private Limited v DCIT ITATHelps taxpayerNo later treatment found
  I filed this year's return late under section 139(4). The Assessing Officer has now refused to carry forward a capital loss and unabsorbed depreciation that both came from the earlier year, whose return was on time. Can he do that?
  No, on the Tribunal's reasoning. Section 80 read with s.139(3) attaches to the year in which the loss arises: if the return for the loss year was filed within the s.139(1) time, the loss has already become eligible for carry forward, and a belated return for a later year does not extinguish it. Unabsorbed depreciation stands on a stronger footing still — it is governed by s.32(2), and the s.80 restriction does not apply to it at all.
• Adit Nilesh Shah v Deputy Commissioner of Income Tax ITATHelps taxpayerNo later treatment found
  My consultant filed Form 10-IEA opting me out of the new regime by mistake, but my return was computed under s.115BAC(1A). The CPC has processed me under the old regime. Can the return prevail over the form?
  Yes, on these facts. The Bangalore Tribunal directed the CPC to process the return for AY 2025-26 under the new regime under s.115BAC(1A) as opted in the return, holding that a bona fide procedural mistake in filing Form 10-IEA should not subject the assessee to a regime contrary to the choice clearly reflected in the return filed afterwards. It rejected the Commissioner (Appeals)' view that digital verification of the Form made it conclusive.
• Muniswamappa Ananda v. ITO, Ward 6(1)(1), Bengaluru (ITAT Bangalore) — population and aerial-distance certificates admitted as additional evidence under Rule 29, and the section 2(14)(iii) exclusion applied to delete a Rs 1.28 crore addition ITATHelps taxpayerNo later treatment found
  My client sold inherited farm land, filed no return because he thought it was exempt, and an ex parte assessment has taxed the whole sale consideration. He now has the population and distance certificates. Can he still produce them?
  Yes, and it worked. The Tribunal admitted the population certificate and the distance certificate as additional evidence under Rule 29 of the ITAT Rules because they related to the core issue contested and had not been available before the revenue authorities, condoned a 180-day delay, and held on those documents that the land sold was agricultural land situated beyond the prescribed municipal limits and distance in section 2(14)(iii), so that it did not constitute a "capital asset" and the gain was not chargeable as capital gains under section 45. The addition of Rs 1,28,00,000 made ex parte under section 144 as undisclosed short-term capital gain, and sustained by the Commissioner (Appeals), was deleted and the appeal allowed.
• Tanisha Chaudhary v Income-tax Officer, Ward 5(2)(4), Noida ITATHelps departmentNo later treatment found
  My AY 2020-21 return was 72 days late because of Covid and the short-term capital loss was refused. Four years on I want to set that loss off against this year's gains. Can I argue the delay in the current year's appeal?
  No. The Delhi Tribunal dismissed the appeal, holding that s.80 makes it mandatory to file the return of loss in terms of s.139(3), and that where the carry forward was denied when the loss year's return was processed under s.143(1), the remedy against that denial does not lie in an appeal for the later set-off year. Kulu Valley Transport was distinguished on its facts.
• Pascal Postel v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  The officer has charged interest under s.40 of the Black Money Act on top of the tax. Is there any machinery for it, and can I still fight the quantum in the appeal against the rectification order?
  Interest under s.40(2) was held unworkable, because the advance-tax machinery on which ss.234B and 234C of the Income-tax Act operate is absent from the Black Money Act, so there is no statutory liability to pay advance tax on which the interest can bite. Interest under s.40(1) was held not to arise where the foreign source itself was disclosed, the expression 'not disclosed' meaning complete suppression of the source and not a difference in the quantum assessed. On the procedural point, where an assessment order under s.10 is altered by a rectification order under s.12, the two are read together as one composite order, so the appeal against the rectified order carries the underlying quantum with it.
• Humanitarian Hands v ITO (Exemptions) Ward-1, Bengaluru ITATCuts both waysNo later treatment found
  Our auditor filed Form 10BB when Form 10B was required for AY 2023-24, and CPC has taxed us under s.13(10). We filed the right form only in 2025 and the condonation application is still pending. What can the Tribunal do?
  The Tribunal remitted the matter to the Assessing Officer to pass an order in accordance with the outcome of the pending s.119(2)(b) condonation application before the CIT (Exemptions). It recorded that this was not a case of no audit report at all but of a report filed both belatedly and in the incorrect form, and that CBDT Circular No. 2/2024 did not rescue the trust because that circular only covered wrong-form reports furnished on or before 31 October 2023.
• Kassia Credit Co-operative Society v DCIT ITATHelps departmentJudgment not reachable
  My society filed its return only in response to a 148 notice. Can it still claim 80P?
  No. Section 80AC(ii) makes filing by the s.139(1) due date a condition precedent for deductions under Part C of Chapter VI-A, which includes s.80P, and a return filed pursuant to a s.148 notice does not cure the default.
• ITO v Western Developers Private Limited — once the s.115BAA option stands, s.115JB has no application at all ITATHelps taxpayerNo later treatment found
  CPC has processed our return under s.143(1), rejected the s.115BAA option because Form 10-IC was late, and raised a demand by computing book profit under s.115JB. Can it do both?
  No. Sub-section (5A) of s.115JB says in terms that the section shall not apply to a person who has exercised the option under s.115BAA or s.115BAB. Once the option is held good, the MAT provisions cease to apply and the tax liability must be computed under s.115BAA without invoking s.115JB — and here the option was held good because it had been accepted for three earlier years on a Form 10-IC filed in March 2021.
• Saguna Rural Foundation v Exemption Ward 2(3), Mumbai ITATHelps taxpayerNo later treatment found
  CPC denied my s.11(2) accumulation because Form 10 was filed after the s.139(1) due date, and the CIT(A) said s.13(9) settles it. Can the Tribunal still help me?
  Yes. Following the jurisdictional High Court in CIT v Sakal Relief Fund, the Mumbai Tribunal held that filing Form No. 10 before completion of assessment satisfies s.11(2), so a s.143(1) denial founded only on the s.139(1) due date cannot stand. The matter was restored to the Assessing Officer for the limited purpose of checking that the stated purpose of accumulation matches the objects and is backed by a trustees' resolution, with an express direction not to deny exemption on merely technical grounds.
• Khalsae-Vehicles Pvt. Ltd. v DCIT, Circle-3(1)(1) ITATHelps taxpayerNo later treatment found
  I filed Form 10-ID and my first return under s.115BAB after the s.139(1) due date but within the s.139(4) time. The CPC has now denied me the 15 per cent rate in a later year. Is the option gone for good?
  Not on these facts. The Delhi Tribunal held that where the substantive conditions of s.115BAB are undisputedly satisfied, the failure to file Form 10-ID on or before the s.139(1) due date is a procedural lapse and is not a fatal flaw, and allowed the appeal for AY 2023-24. The Form there had been filed in the very first year, along with a first return that was belated but within the s.139(4) window.
• Electronfab Engineering Pvt Ltd v ITO ITATHelps taxpayerNo later treatment found
  You forgot to opt for s.115BAA in the original return and then filed Form 10-IC and a corrected return in answer to a s.139(9) notice. Does the option hold?
  The Tribunal held that it does. Form 10-IC filed on 2 December 2024 and the corrected return filed on 6 December 2024 in answer to the defect notice sufficiently demonstrated the intention to opt for the concessional regime, and the procedural lapse in not exercising the option in the original return could not defeat the substantive claim where the statutory conditions were otherwise met.
• Getinge Medical India Private Limited v DCIT 2(2)(1), Mumbai ITATHelps taxpayerNo later treatment found
  Can the Tribunal itself give me the s.115BAA rate where Form 10-IC was late, or must I go to the Commissioner under s.119(2)(b)?
  The Mumbai Tribunal held that where the option was clearly exercised in the return itself and the tax computed accordingly, the substantive requirement of s.115BAA(5) is satisfied and the later filing of Form 10-IC is procedural, so the time limit for the Form is directory. It condoned a delay of about 45 days and directed the Assessing Officer to accept the option and recompute the tax at the concessional rate, without sending the assessee to the Commissioner.
• ACIT v Lahari Holiday Homes (P) Ltd — the s.115BAA option can be exercised in a revised return, and the MAT credit then goes ITATHelps taxpayer
  We filed the original return under MAT claiming MAT credit, then filed a revised return within the due date opting for s.115BAA. The Assessing Officer says that is a prohibited withdrawal of the option. Is it, and what happens to the MAT credit and our brought-forward losses?
  It is not a withdrawal. A revised return under s.139(5) substitutes the original return and assumes the character of a return under s.139(1), so an option exercised for the first time in a revised return filed within the due date is a valid first exercise — there was no earlier exercise capable of being withdrawn. But once the concessional regime is allowed, no MAT credit can be claimed for that year; and s.115BAA(2) bars set-off only of losses attributable to the deductions it specifies, not of ordinary brought-forward business and capital losses.
• ManpowerGroup Services India v ACIT — staffing company's deputed employees qualify for s.80JJAA, and a one-day Form 10DA delay was condoned ITATHelps taxpayer
  My client is a staffing company. The Assessing Officer says the people it hires and deputes to clients are not its employees, and separately that Form 10DA was a day late. Both grounds together have killed the whole s.80JJAA claim.
  The Delhi Tribunal held for the assessee on both grounds for AY 2020-21. On the substantive point it held that the assessee is the employer of the personnel it employs and deputes, and that the employer-employee relationship is not to be intertwined with the service arrangement that gives the customer a mechanical and temporary right to supervise the work; it therefore held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction. On the procedural point it condoned a one-day delay in filing Form 10DA, which was due on 15 January 2021 against the extended return due date of 15 February 2021 and was filed on 16 January 2021. The claim spanning the first, second and third years was remitted to the Assessing Officer to verify the second and third year components.
• VVF (India) Limited v NFAC — the secondary adjustment on a corporate guarantee deleted in the same order that sent the guarantee fee itself back to the TPO, and Rule 10CB's interest clock identified as running from the s.139(1) due date ITATHelps taxpayerNo later treatment found
  The TPO has fixed a guarantee commission rate I dispute AND imputed interest on the delay as a secondary adjustment. Can the secondary adjustment stand while the underlying rate is still being fought over?
  The ITAT Mumbai deleted it. On 14 February 2025, for assessment year 2020-21, the Tribunal remitted the corporate guarantee adjustment itself to the Assessing Officer and Transfer Pricing Officer for fresh adjudication in the light of the OECD's February 2020 report on the transfer pricing of financial transactions, holding that the Transfer Pricing Officer's use of external bank guarantee rates with a discount was "not in accordance with the transfer pricing principles". In the very next paragraph it dealt with the secondary adjustment separately and allowed the ground, noting "that as per rule 10CB computation of interest commences from the due date of filing the return of income" and that for the year under consideration that due date was 15 February 2021, and concluding that it did "not find any basis for making the secondary adjustment for the year under consideration". The appeal was partly allowed for statistical purposes.
• Shree Dhamel Seva Sahkari v ADIT (CPC) ITATCuts both waysNo later treatment found
  CPC denied my society's 80P in a 143(1) intimation because the return was late. Can it?
  Not outright. The Tribunal accepted the submission that a debatable issue cannot be adjusted under s.143(1)(a), and said that a co-operative society whose s.80P claim is valid and substantiated should not be denied it merely because the return was late - but it did not quash the intimations and did not decide the s.80AC(ii) question. It remitted all three appeals to the Assessing Officer to examine the claims, allowing them for statistical purposes, and expressly directed that the decision is confined to its own facts and is not to be treated as a precedent.
• Paramsukh Infradevelopers LLP v Income-tax Officer, Ward 1(1)(1), Agra ITATHelps taxpayerNo later treatment found
  My LLP was not required to be audited, but the partners had the accounts audited anyway. The CPC treated the return as belated and refused the carry forward of the business loss. Was the return late?
  No. The Agra Tribunal held that where the partners of an LLP that is exempt from audit under the first proviso to Rule 24(8) of the LLP Rules 2009 decide to have the accounts audited, the second proviso requires the audit to be carried out in accordance with those Rules, and the LLP then becomes a person whose accounts are 'required to be audited ... under any other law for the time being in force' within Explanation 2(a)(ii) to s.139(1). The due date accordingly moved to 30 September, the return filed on 17 September was in time, and the business loss was allowed to be carried forward.
• DCIT v ANI Integrated Services Ltd ITATHelps taxpayer
  My Tribunal order on employees' contributions became final before Checkmate and no appeal was filed. The department now wants it recalled under section 254(2). Is finality any answer?
  On this bench's view it is a complete answer. Once the order has attained finality between the parties and no lis is pending, a subsequent decision of a superior court cannot be a ground to recall or review it under section 254(2), and the Revenue's remedy was to have appealed to the High Court. The Revenue's miscellaneous application was dismissed.
• Aark Infosoft Pvt Ltd v ACIT ITATHelps taxpayerNo later treatment found
  You cured a s.139(9) defect months after filing. Does the six-month clock for the s.143(2) notice run from the original return or from the corrected one?
  From the original return - on the authority of the jurisdictional High Court, which the Tribunal reproduced and adopted. The Gujarat High Court in Kunal Structure (India) (P.) Ltd. v DCIT held that there is no concept of a corrected return under the Act, that s.139(9) calls for removal of the defects in the return already filed and not for a fresh return, and that the removal of the defects relates back to the filing of the original return, so that it is the original filing date that governs the limitation under s.143(2). The Tribunal set that judgment out at para 16 and then held, in its own words at para 17, that the s.143(2) notice having been issued beyond the limit prescribed under the Act, the assessment framed was without jurisdiction and was directed to be quashed.
• Bangiya Gramin Vikash Bank v ACIT ITATHelps taxpayerNo later treatment found
  Five regional rural banks were merged into our bank by a Central Government notification. The officer says s.72AA is only for banking companies and that s.72AB for cooperative societies only came in from assessment year 2008-09, so the merged banks' accumulated losses die. Is there any authority the other way?
  Yes, at Tribunal level. The Kolkata Bench held that the case fell under s.72AA because the assessee is a banking company doing the business of banking and the amalgamation of the five rural banks was brought into force under the directions of the Central Government by gazette notification, and allowed the set-off of the accumulated losses of the merged banks. The set-offs allowed were Rs. 352,68,36,000 for assessment year 2007-08 and Rs. 205,51,01,000 for assessment year 2008-09.
• Prashant Vijay Kale v CPC, Bengaluru ITATHelps taxpayerNo later treatment found
  I filed my return on time and then revised it. CPC has ignored the original, treated the revised return as my first return, and charged s.234F fee and s.234A interest. Can that be undone?
  Yes. The Mumbai Bench found that the original return had been filed within the s.139(1) due date and that CPC and the CIT(A) had simply ignored it, and deleted both the Rs 5,000 fee under s.234F and the interest under s.234A charged on the footing that the revised return's date was the date of filing. Revising a return does not make a timely return late.
• M/s DFE Pharma India LLP v DCIT — AMT is charged on total income, so brought-forward losses are set off first ITATHelps taxpayerNo later treatment found
  The Assessing Officer accepted nil income under the normal computation after setting off brought-forward losses, but then charged AMT at 18.5 per cent on the net profit without allowing that set-off. Can he compute total income one way for the normal provisions and another way for AMT?
  No. Section 115JC charges the minimum tax on adjusted total income, and adjusted total income starts from the total income, which by s.2(45) is computed after giving effect to the provisions of the Act — including the set-off of brought-forward losses under s.72. The Assessing Officer's contrary interpretation, treating total income as net profit for AMT purposes only, was rejected.
• Brinda Ramakrishna v ITO ITATHelps taxpayer
  I filed Form 67 late and my foreign tax credit was disallowed. Does missing the deadline kill the claim?
  No, on this decision. The Bangalore Tribunal held that Rule 128(9) does not provide for disallowance of foreign tax credit where Form 67 is filed late; filing Form 67 is directory, not mandatory; and the treaty overrides the Act, with the Rules unable to run contrary to the Act. The assessee had claimed credit of Rs 4,73,779 for Australian tax under section 90 read with Article 24 of the India-Australia treaty, filed Form 67 only on 18 April 2020, and had the credit refused. The Tribunal allowed the appeal, and also held the point could be taken in rectification proceedings under section 154.
• Harminder Kaur v ITO ITATHelps taxpayer
  I filed a belated return and only invested after 31 July. Can the AO deny my 54 exemption?
  Not on that ground, if the investment came before the belated return was filed. The Tribunal read sub-section (4) of section 139 as in substance a proviso to sub-section (1), so the section 54 reinvestment period runs to the extended filing date, and booking a flat with a builder counts as purchase even without possession or a registered deed.
• ACIT v Monarch Innovative Technologies Pvt Ltd ITATHelps taxpayer
  I filed my return on time but only claimed the section 80-IC deduction in a revised return. Does section 80AC kill the claim, and can the officer reopen an assessment in which he already allowed it?
  No on both counts, on these facts. The Mumbai Tribunal held that section 80AC requires only that the return be furnished on or before the due date under section 139(1); it does not say the deduction must itself be claimed in that return, and words cannot be read into a taxing statute that the legislature has not used. A revised return under section 139(5) filed in time is an extension of the original return. The reopening was also bad: all the material, including the revised return, the revised tax audit report and Form 10CCB, was before the officer when he allowed the deduction after detailed discussion, so this was a change of opinion. The Revenue's appeal was dismissed.
• Luxury Goods Retail Pvt Ltd v DCIT ITATHelps taxpayerNo later treatment found
  You filed a loss return on paper within the due date because the portal would not let you in. Has the carry-forward gone?
  No. The Tribunal held that a return filed manually within the due date under s.139(1) is a valid return, and that filing it on paper rather than electronically makes it at best a defective return and not an invalid one. Section 292B protects a return that substantially complies with the intent of the statute, and the carry-forward of the loss could not be refused on that ground.
• Statutory position — s.80-IAC: the start-up deduction, the incorporation cut-off, and the s.80AC bar on a late return CBDT Circulars & InstructionsCuts both ways
  Until when must a start-up be incorporated to claim s.80-IAC, and what happens to the claim if the return is filed late?
  As the section currently reads, an eligible start-up must be incorporated on or after 1 April 2016 but before 1 April 2030 — the date was substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025, which is the extension relied on here. The deduction is one hundred per cent of the profits of the eligible business for three consecutive assessment years, claimable at the assessee's option out of ten years beginning with the year of incorporation, and it is lost entirely if the return is filed after the due date under s.139(1), because s.80AC bars every deduction under the Chapter VI-A heading 'C.—Deductions in respect of certain incomes' in that event.
• Statutory position — ss.41 and 43 of the Black Money Act and s.72(c): the penalty of three times the tax computed under s.10, the Rs 10 lakh penalty for not reporting a foreign asset in the return with its twenty lakh rupee proviso from 1 October 2024, and the deemed year of acquisition for an asset acquired before commencement CBDT Circulars & InstructionsCuts both ways
  My client's Black Money assessment covers a foreign account opened in 2009 and not declared under the one-time compliance window. The department has charged tax and a penalty of three times the tax, and says the year is fixed by s.72(c). What do those provisions actually say?
  Section 41 provides that the Assessing Officer may direct that, in a case where tax has been computed under s.10 in respect of undisclosed foreign income and asset, the assessee shall pay by way of penalty, in addition to tax if any payable by him, "a sum equal to three times the tax computed under that section". It is therefore a multiple of the tax computed under s.10, and it follows the s.10 computation — if the computation goes, the base of the penalty goes with it. Section 43 is a different and smaller penalty: where a resident other than not ordinarily resident within s.6(6) of the Income-tax Act has furnished a return under s.139(1), (4) or (5) of that Act and fails to furnish any information, or furnishes inaccurate particulars, in that return relating to any asset (including financial interest in any entity) located outside India held by him as beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, the Assessing Officer "may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees". Its proviso, as substituted by the Finance (No. 2) Act, 2024 with effect from 1 October 2024, reads: "Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees." The footnote on the departmental page records that before that substitution the proviso excluded only "an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year". Section 72(c), in the removal-of-doubts provision at the end of the declaration chapter, is the hinge of the retrospectivity argument and reads: "where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly".
• Statutory position — s.115BAC(1A): the default personal regime from AY 2024-25 and the single Form 10-IEA opt-out CBDT Circulars & InstructionsCuts both ways
  Is s.115BAC still an option my client has to choose, and which form does he file now?
  No. From the assessment year beginning 1 April 2024, s.115BAC(1A) is the default: an individual, Hindu undivided family, association of persons other than a co-operative society, body of individuals or artificial juridical person is taxed under it unless he exercises the option in s.115BAC(6) to be taxed outside it. Opting out is what now requires a form, and that form is Form 10-IEA under Rule 21AGA; Form 10-IE governed the earlier position, for AY 2021-22 to AY 2023-24, when the regime was an option to be opted into.
• Statutory position — s.115BAE: the 15 per cent regime for new manufacturing co-operative societies, and the absence of case law CBDT Circulars & InstructionsCuts both waysNo later treatment found
  A new manufacturing co-operative society wants the 15 per cent rate. What does s.115BAE require, and is there any decided case on it?
  Section 115BAE, inserted by the Finance Act 2023 with effect from 1 April 2024, taxes a resident co-operative society at 15 per cent from AY 2024-25 if it was set up and registered on or after 1 April 2023 and commenced manufacturing or production of an article or thing on or before 31 March 2024, and if the other conditions in sub-section (2) are met. No judicial decision on the section is recorded — no High Court, Tribunal or Supreme Court authority on s.115BAE — and this entry states the statute, not case law.
• Statutory position — s.44AD(1) and (2): the eight and six per cent rates, the Rs 2 crore / Rs 3 crore ceiling, and the partner's-salary proviso that was omitted CBDT Circulars & InstructionsCuts both ways
  My client wants to file under s.44AD. What turnover can he have, what rate must he declare, and can the firm still deduct partners' salary and interest from the presumptive figure?
  Eight per cent of turnover, or six per cent of so much of the turnover as is received by account payee cheque, account payee bank draft, electronic clearing system or other prescribed electronic mode during the previous year or before the s.139(1) due date. The eligible-business ceiling is two crore rupees, replaced by three crore rupees where cash receipts do not exceed five per cent of turnover (Finance Act 2023, from AY 2024-25) — and the proviso that once let a firm deduct partners' salary and interest from the s.44AD figure was omitted by the Finance Act 2016 with effect from 1 April 2017, so it is not available for AY 2017-18 or any later year.
• Statutory position — s.194N: the two and five per cent structure, the one crore, three crore and twenty lakh thresholds, and who is outside the section altogether CBDT Circulars & InstructionsCuts both ways
  My bank has deducted under section 194N on my cash withdrawals. What are the thresholds and rates as the section now stands, and is there anything that takes me out of it?
  Section 194N obliges a banking company, a co-operative society carrying on the business of banking, or a post office to deduct two per cent from any sum paid in cash exceeding one crore rupees during the previous year, from one or more accounts maintained by the recipient with it, computed on the aggregate of amounts paid in the year. Where the recipient is a co-operative society, a proviso substitutes 'three crore rupees' for 'one crore rupees' with effect from 1 April 2023; and where the recipient has not filed returns for all of the three assessment years whose section 139(1) time limit has expired immediately preceding the previous year, the threshold falls to twenty lakh rupees with deduction at two per cent between twenty lakh and one crore and five per cent above one crore.
• Statutory position — Rule 8AB and section 48(iii): how the section 45(4) amount is set off when the firm later sells the asset CBDT Circulars & InstructionsCuts both ways
  My firm paid capital gains tax under the substituted section 45(4) on the money we paid a partner on reconstitution. When the firm later sells the land that was revalued, can it deduct that already-taxed amount from the sale consideration?
  Only if the section 45(4) charge arose out of a revaluation of a capital asset or the valuation of a self-generated asset or self-generated goodwill, and only through Rule 8AB. Section 48(iii) allows the firm to deduct so much of the section 45(4) amount as is attributable to the capital asset being transferred, 'calculated in the prescribed manner', and the prescribed manner is Rule 8AB: the amount is spread over the assets in the same proportion as the increase in the value of each asset on revaluation bears to the total increase, and the attribution must be reported in Form 5C by the section 139(1) due date.
• Statutory position — the substituted section 45(4): the firm is taxed on what a partner takes out above his capital account CBDT Circulars & InstructionsCuts both ways
  A partner retired and we paid him Rs 2 crore, most of it out of a revaluation of the firm's land. He says it is his own capital. Is the FIRM taxable?
  Yes, on the excess. The substituted s.45(4) charges the FIRM to capital gains on money or a capital asset (or both) received by a partner in connection with a reconstitution, to the extent it exceeds the balance in his capital account — and that balance must be computed WITHOUT the increase caused by revaluation of any asset or by self-generated goodwill or any other self-generated asset. The formula is A = B + C − D, and if A is negative it is deemed to be zero, so a loss cannot be thrown up. Substituted by the Finance Act 2021 with effect from 1 April 2021, i.e. AY 2021-22.
• Statutory position — s.115BAB(2) conditions, the Form 10-ID option and the s.115BAB(6) more-than-ordinary-profit adjustment CBDT Circulars & InstructionsCuts both ways
  My client wants the 15 per cent rate for a new manufacturing company. What exactly must it satisfy, and what is the exposure once it is in?
  Section 115BAB requires that the company was set up and registered on or after 1 October 2019 and commenced manufacturing or production of an article or thing on or before 31 March 2024, that it is not formed by splitting up or reconstruction, that it uses no previously used machinery or plant and no building previously used as a hotel or convention centre in respect of which s.80-ID was claimed, that it carries on no business other than manufacture or production and research in relation to, or distribution of, what it makes, and that its total income is computed without the excluded deductions. The option is exercised under s.115BAB(7) in Form 10-ID on or before the s.139(1) due date for the first return, and once exercised it cannot be withdrawn for that or any other previous year.
• Statutory position — s.33AB: the tea, coffee and rubber development account — the deposit deadline, the forty per cent ceiling, the Form 3AC audit, and which assessment years each figure governs CBDT Circulars & InstructionsCuts both ways
  My client grows and manufactures tea. It put money into the NABARD account after the year had closed and now wants the section 33AB deduction. By when did the deposit have to be made, how much can be claimed, and what has to be filed by the specified date under s.44AB?
  Section 33AB(1) allows a deduction to an assessee carrying on the business of growing and manufacturing tea or coffee or rubber in India which has, "before the expiry of six months from the end of the previous year or before the due date of furnishing the return of his income, whichever is earlier", either deposited with the National Bank (NABARD) in a special account under a scheme approved by the Tea Board, Coffee Board or Rubber Board, or deposited in a Deposit Account under a scheme framed by that Board with the previous approval of the Central Government. The deduction is the LOWER of the amount deposited and forty per cent of the profits of that business computed under "Profits and gains of business or profession" before any deduction under section 33AB itself, and it is expressly given before brought-forward losses are set off under section 72. The forty per cent figure is not original: "forty" was substituted for "twenty" by the Finance Act, 2001 with effect from 1 April 2002, so twenty per cent governs assessment years up to AY 2001-02 and forty per cent AY 2002-03 onwards. Coffee and rubber were not in the section at all until the Finance Act, 2003 brought them in with effect from 1 April 2004 — that is, from AY 2004-05; for AY 2003-04 and earlier the section is a tea provision only.
• Statutory position — s.80JJAA: thirty per cent of additional employee cost for three years, and every condition that defeats it CBDT Circulars & InstructionsCuts both ways
  My client wants to claim s.80JJAA for new hires. What exactly is the deduction, and which conditions actually cause claims to fail?
  Section 80JJAA gives an assessee to whom s.44AB applies, whose gross total income includes profits and gains derived from business, a deduction of thirty per cent of the additional employee cost incurred in the course of that business in the previous year, for three assessment years including the assessment year relevant to the previous year in which the employment is provided. The conditions that defeat claims in practice are in the Explanation, not in the operative sub-section: an employee earning more than twenty-five thousand rupees a month is not an "additional employee", nor is one employed for less than two hundred and forty days in the previous year (one hundred and fifty days for a manufacturer of apparel, footwear or leather products), nor one who does not participate in a recognised provident fund, nor one whose entire Employees' Pension Scheme contribution is paid by the Government. And the additional employee cost is nil for an existing business if there is no increase in the total number of employees over the last day of the preceding year, or if the emoluments are paid otherwise than by account payee cheque, account payee bank draft, electronic clearing system through a bank account, or such other prescribed electronic mode.
• Statutory position — s.92D(1)(ii) and s.92D(4) with Rule 10DA: the master file — PART A OF FORM 3CEAA IS FILED BY EVERY CONSTITUENT ENTITY EVEN IF NEITHER THRESHOLD IS CROSSED, and the two thresholds that both have to be crossed before Part B is due CBDT Circulars & InstructionsCuts both waysNo later treatment found
  Our group is nowhere near the master file thresholds. Do we still have to file anything under Rule 10DA?
  Yes. This is the most-missed compliance in Indian transfer pricing. Rule 10DA(3) says in terms: "The constituent entity shall furnish Part A of Form No. 3CEAA even if the conditions specified under sub-rule (1) are not satisfied." Every constituent entity of an international group files Part A, regardless of any threshold. Part B — the substantive master file information in clauses (a) to (n) of Rule 10DA(1) — is due only where BOTH conditions in sub-rule (1) are satisfied: (i) the consolidated group revenue of the international group for the accounting year, as reflected in its consolidated financial statement, exceeds FIVE HUNDRED CRORE RUPEES; AND (ii) the aggregate value of international transactions during the accounting year, as per the books of account, exceeds FIFTY CRORE RUPEES, or, in respect of purchase, sale, transfer, lease or use of intangible property, exceeds TEN CRORE RUPEES. The obligation itself comes from s.92D(1)(ii), which requires every person being a constituent entity of an international group to keep and maintain such information and document in respect of an international group as may be prescribed, and from s.92D(4), which requires the person referred to in that clause to furnish it to the authority prescribed under s.286(1) in the prescribed manner and by the prescribed date. Section 92D was substituted in this form by Act No. 23 of 2019 with effect from 1 April 2020; for assessment years 2018-19 and 2019-20 the same obligation sat in a proviso to s.92D(1), and s.92D(4) then referred to "the person referred to in the proviso to sub-section (1)". Rule 10DA(2) fixes that date as the s.139(1) due date for the return of income, and Rule 10DA(4) allows one designated constituent entity to file for all of them, provided the designation is conveyed in Form No. 3CEAB to the Joint Director referred to in Rule 10DB(1) THIRTY DAYS BEFORE the due date for furnishing Form No. 3CEAA.
• Statutory position — the Explanation to s.10AA(1): the SEZ deduction is capped at total income, and a late return kills it CBDT Circulars & InstructionsCuts both ways
  My client has an SEZ unit in profit and other units in loss. Does the s.10AA deduction come off the unit's own profit before the other units' losses, or only after? And does a late return matter?
  The Explanation to s.10AA(1) now settles the arithmetic against the taxpayer at the outer limit: the deduction "shall be allowed from the total income of the assessee computed in accordance with the provisions of this Act, before giving effect to the provisions of this section and the deduction under this section shall not exceed such total income of the assessee". So whatever the unit-wise computation produces, the allowance cannot exceed the assessee's total income computed after every other provision of the Act — including the set-off provisions — has been applied. Separately, the proviso to s.10AA(1) denies the deduction outright to an assessee who does not furnish a return of income on or before the due date under s.139(1).
• Statutory position — section 80AC and section 115JC: a late return destroys the section 80LA claim, and AMT still bites at nine per cent CBDT Circulars & InstructionsCuts both ways
  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.
• Statutory position — Rule 10CB: the five different starting points for the ninety-day repatriation clock, and the two SEPARATE interest rate bases — SBI one-year MCLR plus 325 basis points for a rupee transaction, six-month LIBOR plus 300 basis points for a foreign-currency one CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My primary adjustment stands and the money is still with my overseas associated enterprise. When exactly do my ninety days start, and at what rate is the deemed advance to be charged interest?
  Rule 10CB(1) gives the repatriation window as "on or before ninety days" from a starting point that differs with the source of the primary adjustment: from the s.139(1) due date where the adjustment was made suo motu in the return; from the date of the order of the Assessing Officer or the appellate authority where the adjustment in that order was accepted; where the adjustment is determined by an APA, from the date of filing the s.139(1) return if the APA was entered into on or before the due date, and from the END OF THE MONTH in which the APA was entered into if it came later; from the s.139(1) due date where the safe harbour option was exercised; and from the date the Assessing Officer gives effect under rule 44H to a mutual agreement procedure resolution. Rule 10CB(2) then fixes two different rate bases, and they are not interchangeable: for a transaction denominated in INDIAN RUPEES the imputed per annum interest is "at the one year marginal cost of fund lending rate of State Bank of India as on 1st of April of the relevant previous year plus three hundred twenty five basis points"; for a transaction denominated in FOREIGN CURRENCY it is "at six month London Interbank Offered Rate as on 30th September of the relevant previous year plus three hundred basis points". Clause (ii) still names LIBOR. LIBOR settings have been permanently discontinued and no replacement benchmark has been substituted into this rule, so for recent previous years the foreign-currency limb prescribes a rate that may not exist for 30 September of the relevant year.
• Statutory position — s.10AA: the SEZ deduction, its fifteen-year run, and the commencement sunset CBDT Circulars & InstructionsCuts both ways
  A client wants to set up a new SEZ unit. Can it still claim s.10AA, and what exactly does an existing unit get in years eleven to fifteen?
  No new unit can get into s.10AA. The section applies only where the Unit begins to manufacture or produce articles or things or provide services "during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, but before the first day of April, 2021", so the gate is shut on anyone commencing now. The last previous year in which a Unit could commence and qualify is FY 2019-20, that is, commencement by 31 March 2020. For a Unit that got in before the cut-off the deduction runs for fifteen assessment years: hundred per cent of the profits derived from export for the first five, fifty per cent for the next five, and for the last five so much of the profit, not exceeding fifty per cent, as is debited to the profit and loss account and credited to a Special Economic Zone Re-investment Reserve Account.
• Statutory position — s.124: how an Assessing Officer gets jurisdiction over you, who decides a dispute about it, and the three deadlines in s.124(3) after which you cannot object at all CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The notice has come from an officer in a place I have nothing to do with. Can I say he has no jurisdiction, who decides that, and have I already lost the point by filing my return and answering him?
  Jurisdiction reaches an Assessing Officer through section 120: the Board issues directions, those directions may authorise another authority to issue written orders, and section 124(1) then gives the officer vested with an area jurisdiction over a business whose place or principal place is in that area and over every other person residing in it. A dispute about whether he has jurisdiction is not for him and not for the Tribunal in the first instance: section 124(2) sends it to the Principal Director General, Director General, Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, and to the Board if two of them disagree. The provision that decides cases is section 124(3), which fixes three deadlines — one for a person who has filed a return, one for a person who has not, one where there has been a search or requisition — after which no person shall be entitled to call the jurisdiction in question at all. Section 124(4) then obliges the officer, on a timely objection he does not accept, to refer the matter for determination before he makes the assessment. Whether the section 124(3) bar is absolute is genuinely disputed: the Delhi and Karnataka High Courts have applied it against assessees, and the Gujarat High Court has held it no answer where no order under section 127 transferred the case at all. For a tax year beginning on or after 1 April 2026 the provision is section 242 of the Income-tax Act, 2025, where the bar sits in sub-section (4).
• 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 CBDT Circulars & InstructionsCuts both ways
  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.
• Statutory position — s.3 of the Black Money Act: the charge at thirty per cent, the proviso to s.3(1) that fixes the year of charge for an undisclosed foreign asset, and what ss.4 and 5 bring in and refuse to take out CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  The department has issued a Black Money Act notice for a foreign bank account opened in 2007. The Act only came into force in 2015. On what does the charge on that asset actually rest, and in which year is it charged?
  On s.3(1) and its proviso. The Act came into force on 1 July 2015 (s.1(3): "Save as otherwise provided in this Act, it shall come into force on the 1st day of July, 2015"). Section 3(1) charges tax "on every assessee for every assessment year commencing on or after the 1st day of April, 2016 ... in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent of such undisclosed income and asset". The proviso to s.3(1) is the provision that matters for an old asset: "Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer." So the year of charge for an asset is not the year of acquisition but the year of coming to notice, and s.3(2) defines the "value of an undisclosed asset" as its fair market value determined in the prescribed manner. Section 4(1) puts three things into the total: (a) undisclosed income from a source outside India, (b) income from a source outside India where a return was required under s.139 of the Income-tax Act and none was furnished in time, and (c) the value of an undisclosed asset located outside India. Section 4(2) keeps out of the total any variation made under ss.29 to 43C, ss.57 to 59 or s.92C of the Income-tax Act, and s.4(3) keeps what is charged here out of total income under that Act. Section 5(1)(i) forbids any deduction for expenditure or allowance and any set off of loss, "whether or not it is allowable in accordance with the provisions of the Income-tax Act"; s.5(1)(ii) allows one reduction only — income already assessed or assessable under the Income-tax Act or under this Act is reduced from the value of the undisclosed asset if the assessee furnishes evidence to the Assessing Officer's satisfaction that the asset was acquired from that income — and s.5(2) prorates that reduction for immovable property.
• CBDT Circular No. 10/2015 — APA rollback CBDT Circulars & InstructionsCuts both waysNo later treatment found
  I want the four rollback years with my APA. Can I pick only the years that help me, and what will knock rollback out before I start?
  You cannot pick and choose: the applicant has to either apply for all the four years or not apply at all, subject only to the transaction not existing in a year or the rollback conditions failing in a year. Rollback is not available for a year in which the return was filed under s.139(4), nor where the Tribunal has finally disposed of the appeal on the arm's length price of that transaction, and it can never reduce the total income or increase the loss declared in the return.
• Statutory position — s.194E with s.115BBA: withholding on payments to a non-resident sportsman, sports association or entertainer CBDT Circulars & InstructionsCuts both ways
  We are paying a foreign player, a foreign federation and a foreign performer for an event in India. Who is caught by s.194E, at what rate, and does the treaty stop the deduction?
  Section 194E as printed on the live departmental page requires the payer to deduct twenty per cent where any income referred to in s.115BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India, to an entertainer who is not a citizen of India, or to a non-resident sports association or institution — at credit or payment, whichever is earlier. The section is entirely parasitic on s.115BBA: if the income is not income referred to in that section, there is no s.194E duty at all, which is how payments to umpires and match referees were held to fall outside it.
• Statutory position — s.115G: no return need be furnished where the only income is investment income or long-term capital gains and tax has been deducted at source CBDT Circulars & InstructionsCuts both ways
  My NRI client's only Indian income for the year was interest on debentures of an Indian public company subscribed to in foreign exchange, and the company deducted tax at source. He did not file a return and has now had a notice. Was he obliged to file?
  If both conditions in section 115G are satisfied, no. It is not necessary for a non-resident Indian to furnish a return under section 139(1) if his total income assessable under the Act during the previous year consisted ONLY of investment income or long-term capital gains or both, AND the tax deductible at source under Chapter XVII-B has been deducted from that income.
• Statutory position — s.40(a)(ib): the whole payment is disallowed where equalisation levy was deductible on it and was not deducted or not paid by the s.139(1) due date, and the proviso that gives it back CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has disallowed the entire online advertising spend because equalisation levy was not deducted. Is that right, and can the deduction be recovered in a later year?
  It is right in principle, and the disallowance is of the whole consideration, not of the six per cent. Section 40(a)(ib) of the Income-tax Act disallows 'any consideration paid or payable to a non-resident for a specified service on which equalisation levy is deductible under the provisions of Chapter VIII of the Finance Act, 2016, and such levy has not been deducted or after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139'. Note where the levy itself lives: Chapter VIII of the Finance Act, 2016, not the Income-tax Act. The proviso restores the deduction — 'where in respect of any such consideration, the equalisation levy has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such levy has been paid'.
• Statutory position — s.10(23FE): the sovereign wealth fund and pension fund exemption, the window that closes on 31 March 2030, the three-year holding and the two forms that keep it alive CBDT Circulars & InstructionsCuts both waysNo later treatment found
  A foreign pension fund wants to put money into our infrastructure company and says its Indian income will be exempt. What does it actually have to do to get and keep that exemption, and by when must the money come in?
  The exemption is for a 'specified person' — broadly a notified sovereign wealth fund or a notified pension fund, together with the funds named in the provision itself — on income of the nature of dividend, interest and long-term capital gains from an investment made in India in one of the eligible vehicles. Three things govern it. The investment must be made within a window that now closes on 31 March 2030; the investment must be held for at least three years; and the fund must satisfy the conditions in the provision and in any notification specifying it. For a notified pension fund, rule 2DB of the Income-tax Rules, 1962 adds conditions of its own: the fund must be regulated under the law of a foreign country, must be responsible for administering or investing assets for meeting statutory obligations and defined contributions of participants or beneficiaries, must apply its earnings and assets only to those obligations, must intimate the particulars of each investment in Form No. 10BBB within one month from the end of the quarter in which the investment is made, and must file its return of income by the due date under section 139(1) together with a certificate in Form No. 10BBC from an accountant. Under the Income-tax Act, 2025 the same exemption is at Schedule V, Table serial number 7.
• Ranchi Club Ltd v CIT (Patna) High CourtHelps taxpayerOverruled
  I filed my return on time and paid the self-assessment tax; the officer then added a disputed item in a best-judgment assessment and charged s.234A interest because I did not comply with a s.142(1) notice. Is that right?
  The Patna High Court said no. Where the return was filed within time with proof of payment, the mere issue of a s.142(1) notice calling for accounts or information does not attract s.234A, because the s.142(1) notice that s.234A speaks of is the notice to FURNISH A RETURN issued to a person who has not filed one — not the notice under clauses (ii) and (iii) calling for accounts or particulars.
• Kalpesh Synthetics Pvt Ltd v DCIT, CPC ITATHelps taxpayerOverruled
  The CPC disallowed my late PF under section 143(1)(a) purely because my auditor filled in clause 20(b) of Form 3CD. Is the auditor's entry enough to found the adjustment?
  This order held it was not, and read down section 143(1)(a)(iv) so that an adjustment cannot be made where the audit report takes a stand contrary to the law laid down by the courts above. It is set out here because it is the most fully reasoned statement of that argument, but the reader must know at once that it no longer stands: it was recalled by the Tribunal itself under section 254(2) on 13 April 2023 and the appeals were re-decided against the assessee on 20 June 2023, following Checkmate Services.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.