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CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies

A High Court order in respect of a merger was issued on 14 August 2026. Under section 314 of the Income-tax Act, 2025, by what date must the successor furnish the modified return, and at what rate is tax chargeable in the resulting assessment for a tax year to which the order applies?

The modified return is due by 28 February 2027, and tax is charged at the rates applicable to the relevant tax year. Section 314 counts six months from the end of the month of the order, August 2026, and applies that tax year's rates.

  1. ABy 13 February 2027; at the rates applicable to that tax year
  2. BBy 28 February 2027; at the rates applicable to that tax yearCorrect
  3. CBy 28 February 2027; at the rates applicable to the year the order was issued
  4. DBy 14 November 2026; at the rates applicable to that tax year

Explanation

Six months run from the end of the month in which the order was issued. The order was in August 2026, so the month ends on 31 August 2026 and six months from then is 28 February 2027. Section 314(3) says tax is chargeable at the rates applicable to the tax year in question, not the year of the order. Counting from 14 August gives 13 February, which is wrong.

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