Taxmann's Master Guide to Income Tax Rules | 2022

CONTENTS PAGE u

List of Circulars/Notifications/Press Notes, etc.

I-15

RULE

2A 2B 2BA 2BB 2BBA 2BBB

2BC 2C 2DB & 2DC 2DD 2F

House rent allowance Leave travel concession Amount received on voluntary retirement Special allowances Family pension to heirs of members of Armed Forces Percentage of Govt. grant for considering university, etc., as substantially financed

by Govt. for purposes of section 10(23C) Exemption for income of universities/ educational institutions/hospitals, etc.

Charitable or religious institutions/ Educational institutions/Hospitals Sovereign Wealth Fund/Pension Fund Computation of exempt income of Specified Fund for the purposes of section 10(23FF) Guidelines for setting up Infrastructure Debt Fund

1 9 26 37 41

42 44 45 50

52 55 58

3

Valuation of perquisites

3A

Exemption to medical benefits/perquisites

129

3B

Provident Fund, Annual Accretion referred to in section 17(2)(viia)

142

4

Unrealised rent

144

5

Depreciation

148

5AC

Tea/Coffee/Rubber development account

200

5AD

Site restoration fund

201

I-5

CONTENTS RULE

5C to 5E

I-6 PAGE

Scientific Research Associations - Guidelines, conditions, etc., in respect of approval under clauses (ii) and (iii) of section 35(1)

202

Scientific Research Associations - Intimation under fifth proviso to section 35(1)

208

Scientific Research Associations - Guidelines, conditions, etc., in respect of approval under clause (iia) of section 35(1)

211

5G

Tax on income from patent

215

6

Scientific research, expenditure on

216

6A

Expenditure for obtaining right to use spectrum for telecommunication services

221

Expenditure on conservation of natural resources

223

6AAD & 6AAE

Agricultural extension project

224

6AAF & 6AAH

Skill development project

228

6AB

Amortisation of preliminary expenses, etc.

234

6ABA

Provision for bad and doubtful debts

235

6ABAA

Conditions for being notified as infrastructural facility

236

6ABBA

Other electronic modes

238

6DD

Disallowance of cash payments

239

6DDA & 6DDB

Speculative transactions - Derivatives

265

6E

Insurance business - Reserves for unexpired risks

270

5CA 5F

6AAC

6EA & 6EB

Categories of bad or doubtful debts in case of public company

271

6F

Maintenance of books of account

275

6G

Report of audit of accounts under section 44AB

285

I-7

CONTENTS

RULE

6GA

PAGE

Computation of income by way of royalties, etc., in case of non-residents

291

Computation of capital gains in case of slump sale

293

Income which is partially agricultural and partially from business

295

7A

Income from the manufacture of rubber

303

7B

Income from the manufacture of coffee

304

8

Income from manufacture of tea

309

8AA

Capital assets

318

8AB

Capital gains, attribution of income taxable under section 45(4) to capital assets remaining with specified entity, under section 48

320

Capital gains: Computation of short-term capital gains and written down value under section 50 where depreciation on goodwill has been obtained

329

Capital gains, Computation for the purposes of section 45(1B)

331

8B & 8C

Zero Coupon Bonds

342

8D

Method for determining amount of expenditure in relation to income not includible in total income

350

Amortisation of expenditure on feature films

365

Carry forward and set off of accumulated loss and unabsorbed depreciation allowance in case of amalgamation

376

9D

Provident Fund/Recognised Provident Fund

378

10

Determination of income in case of nonresidents

380

Transfer Pricing

389

6H 7

8AC

8AD

9A & 9B 9C

10A to 10THD

CONTENTS RULE

10DB

I-8 PAGE

Furnishing of report in respect of International Group

562

10RB

Minimum Alternate Tax

565

10U to

General Anti-Avoidance Rules

567

10V to 10VB

Certain activities not to constitute business connection in India

575

11A

Deductions to persons with disability or severe disability

588

Donation to charitable trusts, etc. requirement for approval of institution of fund under section 80G(5)(vi)

676

11B

Deduction in respect of rents paid

681

11DD

Deduction in respect of medical treatment for specified diseases

682

Deduction to industrial undertakings located in industrially backward districts

684

11F to 11-O

National committee for promotion of social and economic welfare

690

11-OA

Guidelines for notification of affordable housing project as specified business under section 35AD

697

Guidelines for notification of a semiconductor wafer fabrication manufacturing unit as specified business under section 35AD

701

10UF

11AA

11EA

11-OB

11P to 11T

Tonnage Tax Scheme for Shipping Companies 704

11U & 11UA(1)

Valuation of gifts

708

11UA(2)

Start-ups

716

11UAA

Special provision for full value of consideration for transfer of share other than quoted share

738

I-9

CONTENTS

RULE

11UAB

PAGE

Determination of fair market value of inventory

739

Prescribed class of persons for the purpose of clause (XI) of the proviso to clause (x) of sub-section (2) of section 56

740

Prescribed class of persons for the purpose of section 50CA

747

11UAE

Slump Sale

748

11UB & 11UC

Indirect transfer - Manner of determination of Fair Market Value & reporting requirement for Indian concern

751

11UAC

11UAD

11UD

Income deemed to accrue or arise in India Threshold for purpose of significant economic presence 764

11UE & 11UF

Income deemed to accrue or arise in India Specified conditions under Explanation to fifth/sixth proviso to Explanation 5 to section 9(1)(i)

766

12

Return of income

778

12A

Preparation of return by authorised representative

806

12AA

Return of income, signing of

808

12C

Tax on income received from Venture Capital Companies/Funds

809

12CA

Business Trust

810

12CB

Investment Fund

811

12CC

Securitization Trust

813

12D

Power to call for information by prescribed Income-tax Authority

814

12E

Prescribed authority under section 143(2)

819

12F

Prescribed Income-tax Authority under second proviso to section 142(1)(i)

821

Inquiry before assessment - Form of verification

822

14

CONTENTS RULE

I-10 PAGE

14A

Inquiry before assessment - Special Audit

823

14B

Guidelines for purposes of determining expenses for Special Audit

831

Faceless assessment: Prescribed manner of authentication of an electronic record under electronic verification code under section 144B(7)(i)(b)

833

15

Notice of demand

834

16

Avoidance of repetitive appeals

835

16B

Exemption in respect of remuneration to consultants, etc.

837

16C

Exemption to Employees’ Welfare Funds

838

16CC

Audit report to be furnished by certain entities referred to in section 10(23C)

839

16DD

Free Trade Zones, industrial undertakings in

841

17

Exercise of option under section 11

842

17A & 17B

Application for Registration of Charitable or religious trust etc.

849

17C

Modes of investment by charitable/religious trusts

855

17CA

Electoral Trust

859

17CB

Tax on accreted income of a trust

870

18AAA

Donations to universities/educational institutions

875

14C

18AAAAA Deduction on donations to games/sports associations/institutions 18AB

18BBB 18BBE 18C

Furnishing of statement of particulars and certificate under section 80G(5)(viii)/(ix) or under section 35(1A) Deductions to undertakings, hotels, etc.

Deduction from profits of certain activities forming part of a Highway Project Deduction to undertakings operating notified industrial parks

876

878 880 884 888

I-11

CONTENTS

RULE

PAGE

19AB

Deduction in respect of employment of new workmen 19AC Deduction in respect of royalty income, etc., of authors of certain books other than text books 19AD Deduction in respect of royalty on patents 19AE Deduction in respect of certain incomes of Offshore Banking Units 20 & 20A Deduction under section 80C(2)(xix) and (xx) 21A Relief when salary is received in arrears or in advance 21AA 21AB 21AC 21AD 21AE & 21AF

Relief on salary in the case of specified employees Tax Residency Certificate for claiming double taxation relief Transactions with persons located in notified jurisdictional areas Tax on income of certain manufacturing domestic companies Tax on income of certain domestic companies/new manufacturing domestic companies

898

899 900 901 902 904 910 911 913 916

917

21AG

Tax on income of Individuals & HUFs

921

21AH

Tax on income of certain resident Co-operative societies

923

Computation of exempt income of specified fund under section 10(4D)

924

Foreign institutional investor: Determination of income of specified fund attributable to units held by non-residents under section 115AD(1A)

927

21AI 21AJ

21AJA & 21AJAA

Computation of exempt income of specified fund attributable to the investment banking division of an offshore banking unit for purposes of section 10(4D)/Determination of

CONTENTS RULE

I-12 PAGE

income of specified fund attributable to investment division of an offshore banking unit under section 115AD(1B)

930

Non-deliverable Forward Contracts/offshore derivative instruments or counter derivatives

936

26 to 37BC

Deduction of tax at source

937

37C to 37J

Collection of tax at source

1057

29A

Deduction in respect of certain items of receipts from foreign sources

1080

38

Notice of demand for advance tax

1081

39

Estimate of advance tax

1082

40B

Minimum alternate tax for companies

1083

40BA

Alternate Minimum Tax for Limited Liability Partnerships 1084

40BB

Tax on distributed income of domestic company for buy-back of shares

1085

Tax clearance certificate

1088

21AK

42 to 44

44C, 44CA Settlement Commission & 44D 44DA

1093

Settlement Commission: Exercise of option to withdraw application pending before Settlement Commission 1098

44E & 44F Advance rulings

1101

44G

1106

Mutual Agreement Procedure

45 to 46A Appeal to Commissioner (Appeals)

1138

47

Appeal to Appellate Tribunal

1147

49 to 66

Authorised representative

1150

67 to 81

Recognised provident funds

1162

82 to 97

Approved superannuation funds

1180

98 to 111

Approved gratuity funds

1194

111AA & 111AB

Conditions for reference to Valuation Officer

1202

I-13

CONTENTS

RULE

111B

PAGE

Publication and circulation of Board’s order

1209

112 to 112C

Search and seizure

1211

112D

Requisition of books of account, etc.

1222

112E

Collection of information

1224

112F

Search cases where compulsory reopening of past six years not required

1225

Disclosure of information respecting assessees

1228

113 114 114A 114AA 114AAA 114AAB

114B to 114D 114DA 114DB 114E to 114H 114-I 115 115A 117B & 117C 119A

Permanent Account Number Tax Deduction and Collection Account Number Tax Collection Account Number Aadhaar Number, Quoting of Permanent Account Number - Class or classes of persons to whom PAN provisions not applicable Quoting of Permanent Account Number or Aadhaar number in documents pertaining to certain prescribed transactions Furnishing of annual statement by a nonresident having liaison office in India Furnishing of information or documents by Indian concern in certain cases Obligation to furnish/statement of financial transaction or reportable account Annual Information Statement Rate of exchange for conversion of income in foreign currency Computation of capital gains on transfer of shares/debentures by non-residents Certificate to Tax Recovery Officer

1229

Procedure for calculation of interest

1401

1258 1261 1263

1265

1268 1279 1280

1283 1391 1394 1398 1399

CONTENTS RULE

119AA 121A 125 126 127 127A 128 129 131

I-14 PAGE

Acceptance of payment through prescribed electronic modes Statement by producers of cinematograph films Electronic payment of tax Residential status Service of notice Authentication of notices and other documents Foreign Tax Credit Immunity from prosecution under section 270AA Electronic furnishing of returns, etc.

1402 1405 1406 1409 1410 1420 1421 1425 1426

RULE 12*

Return of income The statutory background 12.1 Under section 139 of the Act, the following persons shall, on or before the prescribed due date, furnish a return of their income in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Section

Different situations

139(1)(a)

A company/firm is required to submit its return of income (regardless of the quantum of income or loss).

139(1)(b)

A person (other than an individual/HUF/AOP/BOI/artificial juridical person/company/firm) is required to submit his/its return of income, if income exceeds exemption limit.

139(1)(b), read with sixth proviso

Individual/HUF/AOP/BOI/artificial juridical person is required to submit his/its return of income, if income [without claiming deduction under sections 10(38), 10A, 10B, 10BA, 54, 54B, 54D, 54EC, 54F, 54G, 54GA, 54GB, 80C to 80U] exceeds the amount of exemption limit.

139(1)(b), read with seventh proviso

Any person (other than a company or a firm) who is not required to furnish the return of income under any other provision of section 139(1) and who during the previous year – a. has deposited an amount (or aggregate of the amounts) exceeding ` 1 crore in one (or more) current account(s) in a bank/co-operative bank; or b. has incurred expenditure of an amount (or aggregate of the amounts) exceeding ` 2 lakh for himself (or any other person) for travel to a foreign country; or c. has incurred expenditure of an amount (or aggregate of the amounts) exceeding ` 1 lakh towards consumption of electricity; or d. fulfils such other conditions as may be prescribed.

139(4A)

A person in receipt of income derived from property held under a trust for charitable or religious purposes is required to submit return of income if its income (without giving exemption under section 11 or 12) exceeds exemption limit.

139(4B)

Chief executive officer of every political party is required to submit income-tax return if income of the political party (without giving exemption under section 13A) exceeds exemption limit.

*SECTION 139.

778

779

STATUTORY BACKGROUND

Section

Rule 12

Different situations

139(4C)

If total income (without claiming any exemption given below) of the assessee (who is qualified to claim exemption under the following sections) exceeds the exemption limit – - Section 10(21)

- Section 10(23D)

- Section 10(23FB)

- Section 10(22B)

- Section 10(23DA)

- Section 10(24)(a)/(b)

- Section 10(23A)

- Section 10(23EC)

- Section 10(29A)

- Section 10(23AAA)

- Section 10(23ED)

- Section 10(46)

- Section 10(23B)

- Section 10(23EE)

- Section 10(47)

- Section 10(23C)(iiiab)/ (iiiac)/ (iiiad)/(iiiae)/ (iv)/(v)/(vi)/(via)

139(4D)

Any university/college/other institution referred to in section 35(1)(ii)/(iii) is required to submit return of income (return has to be submitted whether there is income or loss. Such return has to be submitted even if it is not required by any other provision).

139(4E)/(4F)

These sub-sections cover submission of return by business trust/ investment fund.

u Compulsory filing of income-tax return in relation to assets located outside India

- In the case of a resident person (but other than not ordinarily resident), it is mandatory to furnish return of income if he/it at any time during the previous year, – a. holds (as a beneficial owner or otherwise) any asset (including financial interest in any entity) located outside India or has signing authority in any account located outside India, or b. is a beneficiary in any asset (including any financial interest in any entity) located outside India.

For any person (may be individual or a person other than individual) who satisfies the above two conditions, furnishing of return has become mandatory, irrespective of the fact whether the person has taxable income or not.

Exception - The above provisions shall not apply to an individual, being a beneficiary of any asset (including any financial interest in any entity) located outside India where, income, if any, arising from such asset is includible in the income of the person referred to in (a) (supra).

Beneficial owner - In respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person.

Beneficiary - In respect of an asset means an individual who derives benefit from the asset during the previous year and the consideration for such asset has been provided by any person other than such beneficiary. u Resident or non-resident - Section 139(1) applies to all persons whether they are

resident or non-resident—Pannalal Nandlal Bhandari v. CIT [1961] 41 ITR 76 (SC).

Obligation to file return under section 139 cannot simply disappear merely because a person may be entitled to claim benefit of a DTAA—Castleton Investment Ltd., In re [2012] 211 Taxman 282 (AAR - New Delhi).

Rule 12

RETURN OF INCOME

780

u Political parties - Political parties are under a statutory obligation to file return

of income in respect of each assessment year in accordance with the provisions of the Income-tax Act and the total income for this purpose has to be computed without giving effect to provisions of section 13A—Common Cause A Registered Society v. Union of India [1996] 85 Taxman 600 (SC). u Liquidator - Under the Companies Act, a liquidator is not exempt from making

an income-tax return on business managed by him for the beneficial winding up of the company—CIT v. Official Liquidator of the Agra Spg. & Wvg. Mills Co. Ltd. [1934] 2 ITR 79 (All.). u Charitable trust - Submission of return by charitable trust is essential even if its

income is exempt—Lala Gopi Mal Kuthiala Trust v. ITO [1962] 46 ITR 436 (Punj.).

If the total income of a charitable trust (without claiming exemption under sections 11, 12 and 13A) exceeds the maximum amount not chargeable to tax, then submission of return by the trust is essential.

Rule 12 prescribes the forms in which the returns must be furnished.

12.1-2 Exemption from filing return u/s 139(1C) - See Annex 12.5.

12.1-3 Effect of filing return of income - In State of Karnataka v. Selvi J. Jayalalitha [2017] 78 taxmann.com 161 (SC) it was held that income-tax returns and orders would not ipso facto either conclusively prove or disprove charge of disproportionate assets (acquisition of assets disproportionate to known sources of income) and can at best be pieces of evidences which have to be evaluated along with other materials on record.

In the said case it was held that where income tax returns relied upon by defence as well as orders passed in proceedings pertaining thereto had been filed/passed after charge-sheet had been submitted, neither income tax returns nor orders passed in proceedings relatable thereto, either definitively attested lawfulness of sources of income of accused persons or were of any avail to them to satisfactorily account disproportionateness of their pecuniary resources and properties as mandated by section 13(1)(e) of the Prevention of Corruption Act, 1988.

It was further held that submission of income tax returns and assessments orders passed thereon, would not constitute a complete defence against a charge of acquisition of assets disproportionate to known lawful sources of income as contemplated under Prevention of Corruption Act and that further scrutiny/analysis thereof was imperative to determine as to whether offence as contemplated by Prevention of Corruption Act was made out or not.

12.1-4 Obligation to file return and DTAAs - In Castleton Investment Ltd., In re [2012] 24 taxmann.com 150/211 Taxman 282 (AAR - New Delhi) it was held that section 139 insists that every person, being a company, firm or a person other than a company or firm if its or his total income exceeds the maximum amount, which is not chargeable to income-tax, has to file a return of income. A company, which is entitled to claim the benefit of a DTAC, might have an income exceeding the maximum amount which is not chargeable to tax under the Act. On the language of section 139, such a person is bound to file a return of income. When a person claims the benefit of a DTAC, that person is invoking section 90(2) to do so. In other words, a person, earning an income that is chargeable to tax under the Act, has to make a claim by invoking section 90(2) for getting the benefit of a DTAC. So, even

781

E-FILING OF RETURN

Rule 12

if he would be entitled to seek relief under the DTAC, he has to seek it and that would be during the consideration of his return of income or at best while filing his return. If so, the obligation under section 139 cannot simply disappear merely because a person may be entitled to claim the benefit of a DTAC. 12.1-5 In case of firms - In Sasi Enterprises v. Asstt. CIT [2014] 41 taxmann.com 500/222 Taxman 78 (SC), it was held that a firm is independently required to file return of income; merely because partners of firm in their individual returns disclosed that no return had been filed by firm due to non-finalisation of books of account, would not nullify liability of firm to file its return as per section 139(1).

Validity of Return Forms 12.2 In Om Prakash Tewari v. UOI [2007] 163 Taxman 199 (All.), it was held that new return Forms for assessment year 2007-08, introduced by Government, are applicable for year in question only and, therefore, as an interim measure, if returns were filed by petitioners and assessees in Saral 2D Form, same shall be entertained by authorities and shall not be rejected on ground that same were not in prescribed Forms ITR-1 to ITR-8.

In All Gujarat Federation of Tax Consultants v. UOI [2007] 163 Taxman 196 (Guj.), it was held that Notification No. SO 762(E), dated 14-5-2007 introducing new return Forms could not be quashed on ground that new tax return Forms introduced by said notification are so complicated that it is impossible for a genuine taxpayer to file returns with supporting details.

In Jodhpur Chartered Accountant Society v. Union of India [2007] 212 CTR (Raj.) 373, it was held that no prejudice was going to be caused to the Department if the assessees were allowed to submit return in Saral 2D Forms. If the returns were filed by the assessees of the State by submitting Saral 2D Forms, the same shall be entertained by the authorities and the same shall not be rejected on the ground that the same were not in the prescribed new Forms.

In Union of India v. Income-tax Bar Association, Lucknow [2008] 169 Taxman 38 the Supreme Court held that whether the return should be filed in a particular Form is not the business of the Court. It is for the statutory authority to decide the same. In that case the Supreme Court observed that though the High Court had permitted the assessees to file income-tax returns in Form Saral 2D, instead of Forms ITR-1 to ITR-8, due to paucity of time and non-availability of adequate number of forms, since time for filing return in prescribed Form had been extended, impugned order was to be set aside and all the assessees, who had already filed return in Form Saral 2D pursuant to the impugned order, were to be directed to file return in the prescribed Form till the extended date.

In Sujata Grover v. CIT [2014] 45 taxmann.com 36/223 Taxman 44 (Mag.)(Punj. & Har.) it was held that filing of income-tax return with an office which has no concern or connection with assessment of income of the assessee, in law, would amount to no filing of return under section 147, read with section 148. e-filing of return 12.3 In Crawford Bayley & Co. v. Union of India [2011] 16 taxmann.com 323/[2012] 204 Taxman 598 (Bom.) for relevant assessment year, the assessee-firm uploaded its return of income on official website of Department. It received an electronically

Rule 12

RETURN OF INCOME

782

generated mail from Department acknowledging e-filing of return of income.

Subsequently, in accordance with instructions of Department, the assessee posted a copy of ITR-V Form duly signed by one of its partners. Said Form was remitted by ordinary post since instructions of Department specifically stipulated that ITRV Form should only be sent by ordinary post. The assessee received a communication stating that said Form had not been received at Centralized Processing Centre. Hence, once again the assessee submitted a copy of Form which was transmitted by ordinary post. Finally, by impugned communication, the assessee was informed that return of income filed in electronic format had been treated as invalid on ground that ITR-V Form had not been received by Central Processing Centre of Department. It was held that since assessee had furnished adequate material before Court in support of its contention that having filed return electronically, it had also submitted ITR-V Form by ordinary post, impugned communication was to be set aside by permitting assessee to file a verification of return before Assessing Officer within a period of one week from date of order.

In Elecon Packpet v. ITO [2011] 15 taxmann.com 351/[2012] 49 SOT 402 (Chd. Trib.) the assessee had e-filed its original return of income in which no deduction under section 80-IC was claimed. However, the said deduction was claimed in the revised return. The explanation of the assessee in this regard was that it had claimed the deduction under section 80-IC in the original return of income but due to computer system error, the same was not reflected in the return. The Assessing Officer, however, rejected the explanation and refused to allow deduction under section 80-IC. It was held that the Assessing Officer had not pointed out any default in furnishing of the audit report under section 44AB. No reference was made to non-fulfilment of conditions for claiming deduction under section 80-IC by nonfurnishing of details of the audit report. Further, the assessee had within the prescribed period revised its return of income and had corrected the error in the original return of income. Therefore, the assessee could not be said to have not fulfilled the provisions of section 80-IC in furnishing the return of income prescribed under section 139(1), keeping in mind that this was first year of e-filing of return of income by the assessee. In view of the above, the appeal of the assessee was to be allowed.

In Court On Its Own Motion v. CIT [2013] 31 taxmann.com 31 (Delhi) a public interest litigation was filed alleging numerous difficulties faced by income-tax assessees after implementation of computerization and central processing of returns. To remove such difficulties, mandamus were issued by the Delhi High Court regarding (i) maintenance of register for receipt and disposal of rectification applications under section 154; (ii) procedure prescribed under section 245 to be followed by CPC before making adjustment of refund payable with existing demand; (iii) past adjustments, where procedure under section 245 had not been followed; (iv) interest under section 244A to be allowed when assessee is not at fault; (v) uncommunicated intimation under section 143(1); (vi) verification and correction of unverified TDS in Form 26AS and unmatched challans, within a time period to be fixed; (vii) credit of TDS to an assessee when tax deducted has been deposited with revenue but incorrect particulars have been uploaded by deductor.

Samir Narain Bhojwani v. Dy. CIT [2020] 115 taxmann.com 70 (Bom.) it was held that procedure of filing electronic return as per section 139D read with rule 12 cannot bar assessee from making claim which he was entitled to; assessee was

783

E-FILING OF RETURN

Rule 12

directed to make representation before CBDT where he was not able to reflect set off of loss available in terms of section 72 in prescribed return of income in electronic form.

In Shapoorji Pallonji & Co. (P.) Ltd. v. Dy. CIT [2016] 76 taxmann.com 92 (Bom.) it was held that where the Assessing Officer was unable to process return due to system failure, the senior most officers of department would address issue on war-footing to ensure that the system runs efficiently so that the return could be processed and, refund, if any, could be granted.

In Tata Projects Ltd. v. Dy. CIT [2017] 88 taxmann.com 325 (Bom.) it was held that whenever returns are transferred by Central Processing Centre to the Assessing Officer for processing, if returns cannot be processed immediately because of lack of availability of proper software, or because of technical difficulties in functioning of software, the Commissioner ought to permit the Assessing Officer to process returns manually. Where software is not provided to deal with returns of a particular year, there is no embargo imposed by law which prevents the Assessing Officer from processing returns manually.

In Sumanchandra G. Mehta v. ITO [2013] 33 taxmann.com 25/60 SOT 21 (URO) (Mum. - Trib.) it was held that where there was clerical mistake in e-return, Assessing Officer should rectify such mistake.

In E.K.K. & Co. v. Asstt. CIT [2012] 27 taxmann.com 111/[2013] 144 ITD 636 (Cochin - Trib.) the assessee uploaded return of income electronically on 25-9-2009 and claimed to have posted acknowledgement Form ITR-V on 5-10-2009. However, said acknowledgement was received at CPC, Bangalore on 29-11-2010, i.e., beyond period of 120 days as stipulated in scheme of e-filing. However, for relevant assessment year 2009-10, specified period was extended up to 31-12-2010. It was held that since acknowledgement was received by CPC within extended period, for all practical purposes, date of filing return would relate back to date on which return was electronically uploaded, i.e., 25-9-2009, and it could not be contended that date of receipt of Form ITR-V by CPC would be date of receipt of return.

In Dwarkadas G. Panchmatiya v. Asstt. CIT [2015] 57 taxmann.com 2/153 ITD 625 (Mum. - Trib.) it was held that in terms of Electronic Furnishing of Return of Income Scheme 2007, assessee would be deemed to have furnished valid return of income if duly verified form ITR-V is filed within 15 days after e-filing of return; if ITR-V is filed thereafter, no deduction for section 80-IB, etc. would be allowed.

In Himanshu Nalin Kaji v. Dy. CIT [2015] 60 taxmann.com 70/155 ITD 41 (Mum.Trib.) it was held that inadvertent mistake of not mentioning short-term capital gain in a column of ITR 4 is not fatal to assessee’s claim for concessional rate of tax under section 111A. In Fibres & Fabrics International (P.) Ltd. v. Dy. CIT [2016] 72 taxmann.com 87/160 ITD 102 (Bang. - Trib.) it was held that return of income could not be declared as invalid for belated receipt of Form ITR-V. In Luxury Goods Retail (P.) Ltd. v. Dy. CIT [2017] 83 taxmann.com 186/165 ITD 490 (Mum. - Trib.) it was held that when assessee could not file return electronically within due date due to technical reasons but manual return was filed within due date as specified under section 139(1), benefit of set off and carry forward of losses could not be denied.

Rule 12

784

RETURN OF INCOME

Due dates for filing returns under section 139(1) 12.4 The due dates prescribed for filing returns under section 139(1) for various categories of persons/situations are as follows: Situations

Due date for filing of return

If assessee is required to furnish a report of transfer pricing (TP) Audit in Form No. 3CEB

30th November

If assessee is a partner in a firm who is required to furnish a report of Transfer Pricing (TP) Audit in Form No. 3CEB

30th November

If an Individual is a spouse of a person, being a partner in a firm required to furnish a report of Transfer Pricing (TP) Audit in Form No. 3CEB, and the provisions of section 5A applies to such spouse.

30th November

Company assessee not required to furnish transfer pricing audit report in Form No. 3CEB

31st October

If assessee is required to get its accounts audited under Income-tax Act or any other law

31st October

If assessee is a partner in a firm whose accounts are required to be audited

31st October

If an Individual is spouse of a person, being a partner in a firm whose accounts are required to be audited, and the provisions of section 5A applies to such spouse.

31st October

In any other case

31st July

The prescribing of different dates for companies and other categories of assessees was held as not violative of article 14 of the Constitution - N. Vinodkumar & Co. v.

Union of India [1999] 237 ITR 502 (Kar.).

12.4-1 When due date falls on a holiday - Where the due date falls on a day on which the income-tax office is closed, it has been clarified that the return can be filed on the next day afterwards on which the office is open, and that the return so filed will be treated as a return filed in time for all purposes. - CBDT Circular No. 639, dated 13-11-1992 [Annex 12.1].

12.4-2 Extending the due date in special circumstances - Under section 119(2)(a) of the Act, the CBDT is empowered to relax the provisions of section 139 under certain specified special circumstances, and also correspondingly relax the requirement of levy of interest under section 234A/234B/234C. Form of return of income (as amended up to 28-3-2022) 12.5 Form of return of income, as per rule 12(1), shall be as under : (a) in the case of a person being an individual who is a resident other than not ordinarily resident and where the total income includes income chargeable to income-tax, under the head,— (i) “Salaries” or income in the nature of family pension as defined in the Explanation to clause (iia) of section 57; or (ii) “Income from house property”, where assessee does not own more than one house property and does not have any brought forward loss or loss to be carried forward under the head; or (iii) “Income from other sources”, except winnings from lottery or income from race horses and does not have any loss under the head,

785

FORM OF RETURN OF INCOME

Rule 12

be in Form SAHAJ (ITR-1) and be verified in the manner indicated therein: The provisions of (a) shall not apply to a person who,— (I) has assets (including financial interest in any entity) located outside India; (IA) has signing authority in any account located outside India; (IB) has income from any source outside India; (IC) has income to be apportioned in accordance with provisions of section 5A; (ID) has claimed deduction under section 57, other than deduction claimed under clause (iia) thereof; (IE) is a director in any company; (IF) has held any unlisted equity share at any time during the previous year; (IG) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee; (II) has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91; (III) has agricultural income, exceeding five thousand rupees; (IV) has total income, exceeding fifty lakh rupees; (V) has income taxable under section 115BBDA; (VI) has income of the nature referred to in section 115BBE; (VII) is a person in whose case tax has been deducted under section 194N; or (VIII) is a person in whose case payment or deduction of tax has been deferred under sub-section (2) of section 191 or sub-section (1C) of section 192; (b) in the case of a person being an individual [not being an individual to whom clause (a) applies] or a Hindu undivided family where the total income does not include income under the head business or profession, be in Form No. ITR-2 and be verified in the manner indicated therein; (c) in the case of a person being an individual or a Hindu undivided family, who is a resident other than not ordinarily resident, or a firm, other than limited liability partnership firm, which is a resident deriving income under the head “Profits or gains of business or profession” and such income is computed in accordance with special provisions referred to in section 44AD, section 44ADA and section 44AE of the Act for computation of such income, be in Form SUGAM (ITR-4) and be verified in the manner indicated therein: The provisions of (c) shall not apply to a person who,— (I) has assets (including financial interest in any entity) located outside India; (IA) has signing authority in any account located outside India; (IB) has income from any source outside India; (IC) has income to be apportioned in accordance with provisions of section 5A;

Rule 12

RETURN OF INCOME

786

(ID) is a director in any company; (IE) has held any unlisted equity share at any time during the previous year; (IF) has total income, exceeding fifty lakh rupees; (IG) owns more than one house property, the income of which is chargeable under the head “Income from house property”; (IH) has any brought forward loss or loss to be carried forward under any head of income; (IJ) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee; (II) has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91; (III) has agricultural income, exceeding five thousand rupees; (IV) has income taxable under section 115BBDA; (V) has income of the nature referred to in section 115BBE; or (VI) has income of the nature specified in clause (vi) of sub-section (2) of section 17 on which tax is payable or deductible, as the case may be, under sub-section (2) of section 191 or sub-section (1C) of section 192; (d) in the case of a person being an individual or a Hindu undivided family other than the individual or Hindu undivided family referred to in clause (a) or clause (c) or clause (ca) and having income under the head business or profession, be in Form No. ITR-3 and be verified in the manner indicated therein; (e) in the case of a person not being an individual or a Hindu undivided family or a company or a person to which clause (g) applies, be in Form No. ITR5 and be verified in the manner indicated therein; (f) in the case of a company not being a company to which clause (g) applies, be in Form No. ITR-6 and be verified in the manner indicated therein; (g) in the case of a person including a company whether or not registered under section 25 of the Companies Act, 1956 (1 of 1956), required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139, be in Form No. ITR-7 and be verified in the manner indicated therein.

Filing of audit report with return of income 12.6 Rule 12(2) provides that returns shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act. Proviso to rule 12(2) provides that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, section 10AA, clause (b) of sub-section (1) of section 12A, section 44AB, section 44DA, section 50B, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E, section 115JB, section 115JC or section 115VW or to give a notice under section 11(2)(a) of the Act, he shall furnish the same electronically.

787

Rule 12

MANNER OF FURNISHING RETURN OF INCOME

Thus, following forms shall be submitted electronically : Section

Form No.

10(23C)(iv)

10BB

10(23C)(v)

10BB

10(23)(vi)

10BB

10(23C)(via)

10BB

10A

56F

10AA

56F

11(2)(a)

10

12A(1)(b)

10B

44AB

3CA, 3CB, 3CD

44DA

3CE

50B

3CEA

80-IA

10CCB

80-IB

10CCB, 10CCBA, 10CCBB, 10CCBC, 10CCBD

80-IC

10CCB

80-ID

10CCBBA

80JJAA

10DA

80LA

10CCF

92E

3CEB

115JB

29B

115JC

29C

115VW

66

Manner of furnishing return of income (as amended up to 28-3-2022) 12.7 Rule 12(3) provides that the return of income shall be furnished by a person mentioned in column (ii) of the Table below to whom the conditions specified in column (iii) apply, in the manner specified in column (iv) thereof:— TABLE Sl. No.

Person

Condition

Manner of furnishing return of income

(i)

(ii)

(iii)

(iv)

1

Individual or Hindu undivided family

(a) Accounts are required to be audited under section 44AB of the Act;

Electronically under digital signature;

(b) Where total income assessable under the Act during the previous year of a person,

(A) Electronically under digital signature; or (B) Transmitting the data electronically in the

Master Guide To Income Tax Rules AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE

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Description This unique book provides an in-depth Rule-wise commentary on the Income Tax Rules, 1962.

The Present Publication is the 29th Edition, incorporating all the amendments till the Income-tax (Second Amendment) Rules, 2022.

Taxmann’s Editorial Board authors this book with the following coverage: u

[Detailed Analysis] on every Rule of Income Tax Rules, 1962

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[Statutory Background of the Section] which delegates the power to the Central Board of Direct Taxes to notify the Rule

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[Simplified Language] to explain each provision of the Rules

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[Gist of All Circulars and Notifications] issued by the Department in each Rule, which are still in force

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[Income-tax Compliances] to be done in each Rule

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