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

Gupta Enterprises, an individual's proprietary business, incurred a business loss for the tax year and filed a return of loss by the due date. Later it files an updated return. Under section 263(6)(b)(i) as substituted from 1 April 2026, which updated return is permitted?

An updated return is allowed if it is a return of income or has the effect of reducing the loss. Section 263(6)(b)(i), as substituted from 1 April 2026, adds the loss-reducing case. An updated return that increases the loss remains barred.

  1. AAny updated return showing a loss, whatever the amount
  2. BAn updated return that is a return of income, or one that has the effect of reducing the lossCorrect
  3. COnly an updated return that increases the loss
  4. DNo updated return, because a return of loss cannot be updated

Explanation

Section 263(6)(b)(i) preserves the right to file an updated return where a loss was sustained and a return of loss was filed on time, provided the updated return is a return of income or reduces the loss. The substitution added the loss-reduction case. An updated return increasing the loss falls under the bar in clause (c)(i).

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