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CS Professional · Advanced Direct Tax Laws and Practice · Transfer Pricing and General Anti Avoidance Rules (GAAR)

Meru Pvt Ltd pays additional income-tax under section 170(5) of the Income-tax Act, 2025 on excess money not repatriated by its associated enterprise. Which statement about the consequences is correct?

Once additional tax is paid under section 170(5), the assessee is relieved of the secondary adjustment and of computing interest from the payment date. The tax is final, with no credit available, and no deduction under any other provision is allowed on the amount taxed.

  1. AMeru must still make the secondary adjustment and compute interest on the advance from the date of payment
  2. BMeru may claim credit for the tax paid against its other tax liability
  3. CMeru may claim deduction under another provision of the Act on that amount
  4. DMeru need not make the secondary adjustment or compute interest from the date of payment, and no deduction is allowed on that amountCorrect

Explanation

Under section 170(8), once the additional tax is paid the assessee need not make the secondary adjustment or compute interest from the date of payment. Section 170(6) makes the tax a final payment with no credit, and section 170(7) disallows deduction under any other provision on that amount. The other options contradict these.

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