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CMA Final · Direct Tax Laws and International Taxation · Assessment of Mutual Associations

A foreign sports association, a non-resident, is guaranteed Rs 50,00,000 for a tournament played in India and incurs Rs 12,00,000 of expenses connected with it. It has no other income, and tax has been deducted at source under Chapter XIX-B on the guaranteed amount. Which statement is correct under the Income-tax Act, 2025?

Tax is 20% of the full Rs 50,00,000, i.e. Rs 10,00,000, because expenses are not deductible. Since the total income consists only of this income and tax has been deducted at source, the association need not furnish a return under section 263(1).

  1. ATax is 20% of Rs 38,00,000 and a return is mandatory
  2. BTax is 20% of Rs 50,00,000 and no return need be furnished under section 263(1)Correct
  3. CTax is at rates in force on Rs 38,00,000 and no return is needed
  4. DTax is 20% of Rs 50,00,000 and a return is mandatory

Explanation

Under section 211, the guaranteed amount is taxed at 20% with no expense deduction, so tax is Rs 10,00,000. As total income consists only of such income and tax was deducted at source, the return under section 263(1) is not necessary.

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