722/CBDT. - Income Tax - 722/CBDT

INSTRUCTION NO. 722/CBDT Dated : July 23, 1974 Section(s) Referred: 183(b) Statute: Income - Tax Act, 1961 Attention is invited to the provisions of section 183(b) of the I.T.Act, 1961 which authorises the ITO to treat an unregistered firm as a registered firm if, in his opinion, the aggregate amount of tax payable by the firm as a registered firm and its partners taken together is more than the tax payable by the firm and the partners if it were to be treated as unregistered firm. Prior to substitution of section 183(b) by a new clause by Taxations Laws (Amendment) Act, 1970, the firm as such was not liable to tax if it were registered u/s 183(b), whereas now, with effect from assessment year 1971-72 firm as well as partners both will be liable to tax as in the case of an unregistered firm, even if the registration is granted u/s.183 (b). 2. Necessary instructions may be issued to the Income-tax Officers working in the charge to examine the applicability of provisions of section 183(b) before finalizing the cases of unregistered firms.