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CS Executive · Tax Laws and Practice · Deductions

Aarav Traders Ltd has an eligible business that qualifies for a Part C deduction under the Income-tax Act, 2025. The company files its return of income after the due date under section 263(1). Which is the correct position on the Part C deduction?

The Part C deduction is denied. The Act disallows Part C deductions to an assessee who does not furnish the return of income by the due date under section 263(1), or who does not claim the deduction in that return. There is no partial allowance for late filing.

  1. ADeduction is allowed in full if the return is filed before assessment
  2. BDeduction is allowed at 50% as a penalty for delay
  3. CDeduction is allowed only if the company pays interest for the delay
  4. DDeduction under Part C is not allowed because the return was not furnished by the due dateCorrect

Explanation

Under section 122(5), Part C deductions are not allowed to an assessee who fails to furnish the return on or before the due date under section 263(1), or fails to claim the deduction in that return. No partial relief or interest-based condonation exists in the provision.

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