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CMA Intermediate · Direct and Indirect Taxation · Self-Assessment and Intimation

Anil claims a deduction of ₹2,10,000 under a provision of Chapter VIII-C, while the statutory ceiling for that deduction is ₹1,50,000. Nothing else is wrong in the return, which was filed on time. At processing, what is the position?

The excess of ₹60,000 over the limit can be adjusted at processing. A deduction exceeding the specified statutory limit is deemed an incorrect claim apparent from the return under section 270(5)(a)(iii), so it is adjustable under section 270(1)(a)(ii). The permitted ₹1,50,000 stays, and the late-return ground is not needed.

  1. AThe excess ₹60,000 can be disallowed only in scrutiny assessment
  2. BThe claim is an incorrect claim apparent from the return, as the deduction exceeds the specified statutory limit, so the excess ₹60,000 can be adjustedCorrect
  3. CThe whole ₹2,10,000 must be disallowed, since the return was defective
  4. DNo adjustment is possible because Chapter VIII-C deductions are adjusted only when the return is late

Explanation

Section 270(5)(a)(iii) treats a deduction exceeding the specified statutory limit as an incorrect claim apparent from the return, adjustable under 270(1)(a)(ii). The excess is 2,10,000 - 1,50,000 = 60,000. Disallowance of the whole claim is wrong, as the allowed limit stays. The late-return rule in clause (vi) is a separate ground.

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