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CA Final · Direct Tax Laws & International Taxation · Provisions to Counteract Unethical Tax Practices

Three Indian concerns, P Ltd, Q Ltd and R Ltd, are constituent entities of the Sundaram Group. The group designates P Ltd to furnish information under Rule 235 of the Income-tax Rules, 2026 for all three, and conveys this in writing to the Assessing Officer. P Ltd fails to furnish the information in accordance with the rule. Which statement is correct?

The group-filing relief fails. Rule 235(5) provides that nothing in the rule has effect if the designated Indian concern does not furnish the information as required, so Q Ltd and R Ltd cannot claim compliance through P Ltd's designation even though the written designation was made.

  1. AThe designation remains valid and Q Ltd and R Ltd are treated as having complied
  2. BQ Ltd alone must file within a further 90 days
  3. CThe relaxation under sub-rule (4) has no effect, so the group's Indian concerns cannot rely on the designationCorrect
  4. DOnly the immediate holding company is liable to furnish

Explanation

Rule 235(4) allows one designated Indian concern to furnish information for the group if the group designated it and conveyed this in writing to the Assessing Officer. Rule 235(5) says nothing in the rule has effect if the designated concern fails to furnish information in accordance with the rule. So the group-filing relief fails and the other concerns cannot rely on P Ltd's designation. Option A ignores sub-rule (5).

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