Recommendation For Amendment To Section 234C To Provide Relief Where A New Business Is Started During The Financial Year

Section 234C provides that no interest for deferment of advance tax shall be levied in cases where the shortfall in payment of tax is on account of under-estimate or failure to estimate capital gains or casual income which has arisen during the year and where the assessee could not have anticipated such income.

However, Section 234C requires to be suitably amended with a view to provide that liability for interest under the said section shall not apply to any case, where a taxpayer declares income from business for the first time after the first or second installment of advance tax is due and where the taxpayer has discharged his liability for payment of advance tax in the installments to follow.

Accordingly, the committee recommends that the following proviso be inserted in section 234C:

“Provided further that nothing contained in the sub-section shall apply to any shortfall in the payment of the tax due on the returned income where the assessee is assessed for the first time under the head “Profits and gains of business or profession”.

The Committee also recommends that an appropriate column or space be provided in the return of income where the assessee can disclose the information necessary for taking the benefit of the proviso.

Source- Draft Report of Justice R.V. Easwar (Retd) Committee to Simplify the provisions of Income-tax Act, 1961

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Category : Income Tax (20871)
Type : News (11071)
Tags : Section 234C (14)

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