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CMA Final · Direct Tax Laws and International Taxation · Return of Income

Anita Rao, a resident and ordinarily resident individual, has total income below the basic exemption limit for the tax year but held a bank account outside India during the year as a beneficial owner. Under section 263, what is her filing position?

She must file a return regardless of income or loss. A resident other than not ordinarily resident who holds a foreign asset or account as beneficial owner falls under section 263(1)(a)(ix), and clause (b) makes filing mandatory irrespective of income level or interest earned.

  1. AShe need not file, because her income does not exceed the maximum amount not chargeable to tax
  2. BShe must file a return regardless of the level of income or lossCorrect
  3. CShe must file only if the foreign account earned interest
  4. DShe may file only a updated return, not an original return

Explanation

Clause (a)(ix) covers a resident, other than not ordinarily resident, who holds any asset located outside India as beneficial owner or has signing authority in a foreign account. Clause (b) requires such persons to file regardless of income or loss. Option A is wrong because the income threshold does not apply to this category.

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