Skip to content

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

Under the Income-tax Act, 2025, the assessment of a tax year is still pending when the successor files the modified return required after a High Court order on a demerger. What must the Assessing Officer do?

The Assessing Officer must pass an order assessing or reassessing total income as per the business reorganisation order, taking into account the modified return. This is the rule for pending proceedings under section 314. Modification of an order applies only to completed assessments.

  1. APass an order assessing or reassessing total income as per the order and the modified returnCorrect
  2. BDrop the pending proceedings and wait for a fresh return
  3. CPass an order modifying the completed assessment only
  4. DApply the tax rates of the year in which the order was issued

Explanation

Section 314(2)(b) covers proceedings pending on the date of the modified return. The Assessing Officer then assesses or reassesses total income in line with the reorganisation order, taking the modified return into account. Modifying a completed assessment applies under clause (a), when proceedings are already completed. Section 314(3) applies the rates of the relevant tax year, not the year of the order.

Did you get it right without looking?

One question tells you little. A timed set on Assessment of Companies shows your real accuracy, how long you take and where you lose marks.

Practise Assessment of CompaniesFree diagnostic mock

More Assessment of Companies questions