CA Final · Direct Tax Laws & International Taxation · Provisions to Counteract Unethical Tax Practices
Three group companies in India, A Ltd, B Ltd and C Ltd, are constituent entities of one group. A Ltd has been designated in writing by the group to furnish information on behalf of all Indian concerns of the group, and the Assessing Officer has been informed of this in writing. A Ltd then fails to furnish Form No. 163 as required by Rule 235 of the Income-tax Rules, 2026. What is the consequence under Rule 235(5)?
If the designated Indian concern fails to furnish the information in accordance with the rule, the facility of one concern furnishing for the whole group has no effect. The other constituent entities cannot rely on the designation as compliance.
- AB Ltd and C Ltd are automatically treated as having complied
- BThe designation becomes ineffective, and the rule's relief of one concern furnishing for all has no effectCorrect
- CThe Form is deemed furnished after ninety days
- DOnly A Ltd remains liable and the others are released
Explanation
Rule 235(4) allows one designated concern to furnish for the group if designated and the Assessing Officer has been told in writing. Rule 235(5) says nothing in the rule has effect if the designated concern fails to furnish the information as required. So the group relief fails and the others are not treated as complied. The option releasing the others is therefore wrong.
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