Skip to content

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Business Restructuring

Vihaan & Co, a proprietary business, is succeeded by Vihaan Pvt Ltd. The Assessing Officer records a finding that tax payable by the predecessor on income up to the date of succession cannot be recovered from him. Which statement follows under the Income-tax Act, 2025?

Once the Assessing Officer records a finding that the tax cannot be recovered from the predecessor, the sum becomes payable by and recoverable from the successor. The successor is entitled to recover any amount so paid from the predecessor.

  1. AThe sum becomes payable by and recoverable from the successor, who may recover it from the predecessorCorrect
  2. BThe sum is written off since the predecessor has ceased the business
  3. CThe sum is recoverable from the successor, who has no right to recover it from the predecessor
  4. DThe sum becomes recoverable only from the directors of the successor in their personal capacity

Explanation

After a finding of non-recoverability, the sum is payable by the successor, who is entitled to recover it from the predecessor. The option denying recovery rights ignores that entitlement.

Did you get it right without looking?

One question tells you little. A timed set on Tax Planning and Business Restructuring shows your real accuracy, how long you take and where you lose marks.

Practise Tax Planning and Business RestructuringFree diagnostic mock

More Tax Planning and Business Restructuring questions