Extension of due date for filing of the return and some major consequential relief - and analysis of recent two circulars.

[C.A. DEV KUMAR KOTHARI]

Due date of filing of return (regular course):

Due date (rather say the last date) for filing of return of income (as well as return of loss) is specified in section 139 of Income Tax Act, 1961. The assessee is required to file the return by the due date to avail certain benefits conferred as well as to avoid certain disadvantages which are attracted in case of delayed filing of return.

Extension of due date for assessment year 2010-11:

We find the following orders for extension of due date the first one (Left column) is for the area of state of Jammu & Kashmir and the second one (right column) is for entire India.

For J & K	For all India.	Remarks
Order-Instruction - Income Tax Due date for filing of Income-tax returns for A.Y. 2010-11Order [F.No.225/72/2010/ITA-II]Government of IndiaMinistry of FinanceDepartment of Revenue Central Board of Direct Taxes Dated 23-9-2010	Order-Instruction - Income Tax Due date of filing of Income-tax returns for A.Y. 2010-11 F.No. 225/72/2010-ITA.II Government of India Ministry of FinanceDepartment of Revenue Central Board of Direct Taxes Dated : September 27, 2010	The second circular is just after four days from the first one.
On consideration of the reports of disturbance of general life caused due to the law and order problem in the State of Jammu and Kashmir,	On consideration of the reports of disturbance of general life caused due to floods and heavy rains,	The reasons for extension are given
the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961,	the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961,	The reference of enabling provisions are given
hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 for all category of cases in the State of Jammu & Kashmir to 30th November 2010.	hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010.	In the first circular dt. 23.09.2010 for J & K extension is "for all category of cases" that means it is for all type of assesses including those who were required to file return of income (or loss) by 31.07.2010. This will also cover those cases in which due date is 31.10.2010. Thus in case of assesses in the state of Jammu & Kashmir the due date is 30.11.2010. Considering  the reason for extension it  sound logical also. Therefore, we find that an extension is granted  even after lapse of the due date on 31.07.2010. In case of second  circular dated 27.09.10 (for rest of India) the extension is only for assesses in whose case due date was 30.09.2010. Therefore, there is no extension for assesses for whom due date lapsed on 31.07.2010.
Accordingly the date for obtaining and furnishing Tax Audit report u/s 44AB of the Income Tax Act is also extended to 30th November 2010.	Accordingly the due date for Tax Audit report u/s 44AB of the Income Tax Act is also extended to 15th October, 2010.	The specified date for obtaining and furnishing the Tax Audit Report is also extended.

Relevant enabling provision and some other provisions:

We find provisions empowering the CBDT to issue such instruction in section 119 of the Income Tax Act. We find some other provisions which are affected as a consequence of extension of due date.The relevant portion of which is reproduced below with highlights for analysis:

[Instructions to subordinate authorities.

119. (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board :

xxxxx

(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize any income-tax authority, not being a  Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;

Comment: the authority to extend the due date is derived fromt eh above provisions.

Amounts not deductible.

40. Notwithstanding anything to the contrary in sections 30 to ¹[38], the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",—

 (ia) any interest, commission or brokerage, ³[rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139],—

 

Comment:

Disallowance for non-deposit of TDS can be avoided as extra time is available to deposit the TDS which has not been deposited within original due date.

Audit of accounts of certain persons carrying on business or profession.

44AB. Every person,—

(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds ¹⁹[sixty lakh rupees] in any previous year ²[***]; or

…….get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :

[(ii) "specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the 30th day of September] of the assessment year.

 

For this purpose the circulars specifically extend the specified date. This means that Tax audit report is to be filed even when e-return is filed.

[Certain deductions to be only on actual payment.

43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of—

Xxxxx   shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him :

[Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. 

 

Comment:

Assessee get further time to deposit sums covered by section 43B within extended due date to get a deduction of sums which he could not deposit / pay be the due date.  There can be major sums in different circumstances. However, excise duty in case of seasonal industry like sugar industry, Gratuity fund in case of a newly set-up fund, interest to banks and FI's in case of defaults or disputes can be major areas in which efforts can be made to pay the sums to get deductions.

Consequential advantages:

As discussed above as a consequence of extension of 'due date' for filing of return,  besides advantage of no interest payable till extended date for delay in filing of return, getting interest u/s 244A without break of period in case of delayed filing of return  assessee can also  take advantage of allowable deductions by depositing amount of TDS latest by the extended due date and by depositing specified sums covered u/s 43B  by such extended date. There are some other procedural provisions for filing of reports, declarations , evidences etc. by due date, the assessee can make compliance within extended date, if not made by original due date.