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CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies

The assessment for a tax year was completed before the successor furnished a modified return following a High Court order on a demerger. Under section 314 of the Income-tax Act, 2025, what must the Assessing Officer do?

The Assessing Officer must pass an order modifying the total income determined in the completed assessment, in accordance with the business reorganisation order and taking the modified return into account. Assessing afresh applies only where proceedings are pending when the modified return is furnished.

  1. APass an order modifying the total income determined in the completed assessment, in accordance with the order and the modified returnCorrect
  2. BIgnore the modified return as the assessment is already complete
  3. CPass an order assessing the total income afresh as if the proceedings were pending
  4. DCancel the earlier assessment and refund all tax paid

Explanation

Section 314(2)(a) covers assessments already completed on the date of the modified return: the Assessing Officer passes an order modifying the total income already determined, in line with the business reorganisation order and the modified return. The wording of assessing afresh belongs to clause (b), for pending proceedings.

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