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CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Ms. Tara Iyer, a resident assessee, is eligible for a Part C deduction of Rs. 5,00,000 for the tax year. She furnished her return of income after the due date prescribed under section 263(1). Her gross total income is Rs. 12,00,000. What is the position on her Part C deduction?

No Part C deduction is allowed. The Act denies Part C deductions to an assessee who does not furnish the return of income on or before the due date, so a late return forfeits the Rs. 5,00,000 deduction entirely, with no proportionate relief.

  1. ARs. 5,00,000 allowed because the return was filed
  2. BRs. 2,50,000 allowed as a proportion for the delay
  3. CRs. 5,00,000 allowed only if she pays interest
  4. DNo Part C deduction allowed because the return was not furnished by the due dateCorrect

Explanation

Section 122(5) denies deductions under Part C 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 the return. Ms. Iyer filed late, so the deduction is not allowed. There is no provision for partial allowance or for allowance on payment of interest.

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