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

A non-resident sports association guaranteed Rs 25,00,000 for a game played in India, and it has no other Indian income. Tax was deducted at source under Chapter XIX-B from the amount. Which statement is correct under section 211 of the Income-tax Act, 2025?

The guaranteed amount is taxed at 20% with no deduction for expenses. Because the association's total income consists only of this amount and tax was deducted at source, section 211(3) means it need not file a return under section 263(1). Options allowing deductions or requiring a return are wrong.

  1. AThe amount is taxed at 20% with no deductions, and no return is needed under section 263(1) if its total income is only this amount and tax was deducted at sourceCorrect
  2. BThe amount is taxed at rates in force after deducting expenses, and a return is mandatory
  3. CThe amount is taxed at 20% after deducting expenses, and no return is needed
  4. DThe amount is taxed at 20%, but a return is mandatory since it is an association

Explanation

Section 211(1)(b) covers guaranteed amounts and taxes them at 20%. Section 211(2) bars deductions. Section 211(3) removes the need for a return if the total income consists only of such income and tax was deducted at source. Options that allow deductions or require a return contradict this.

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