Income Tax Current working
issues
1. DEFECTIVE RETURN U/S
139(9)
2. CHARGING OF MAXIMUM
MARGINAL RATE
DEFECTIVE RETURN U/S 139(9)
 Due to Schedule I (Details of Accumulation )
 Due to Schedule J ( investment of all funds of trusts
or institution last day of previous Year)
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Balance of Corpus fund as on 31st march
Balance of Non - Corpus fund as on 31st march
 Due to Schedule K ( name of Author/ Founder/
Trustees)
PERSON
. As per income Tax
2(31)
As per PAN Form 49A
Individual
Individual
HUF
HUF
Company
Company
Firm
Firm
AOP
AOP
Local Authority
Local Authority
AJP
AJP
Trust
BOI
LLP
Government
ITR-7
 For persons including companies required to furnish
return under section 139(4A) or section 139(4B) or
section 139(4C) or section 139(4D) or section 139(4E)
or section 139(4F)
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(Please see rule 12 of the Income-tax Rules,1962)
 Section 139 ( 4A ) :- Every NPO whose total income exceeds
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the maximum amount not chargeable to tax , without giving
to the any exemption ( u/s 11 & 12 )
Section 139 ( 4B ):- for political parties.
Section 139 (4C) :- following NPOs enjoying exemption
u/s 10 , have to necessarily file tax return
Section 139 ( 4D ):- Research Institution
section 139(4E):- Business Trust
section 139(4F): Investments funds
SECTION-WISE AUDIT UNDER NPO
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10(23)(iv):- Notified by the government for states Developments.
10(23)(v):- religious Trusts
10(23)(vi):- Education institutes turnover exceeds 1 cr.
10(23)(via):- Hospitals turnover exceeds 1 cr.
10A:- free Trade zone.
10AA:- Special Economic zone.
12A(1)(b):- trust /institution turnover exceed 2.5 lac weather registered under
section 12AA .
44 AB:- tax Audit Report.
44 AD:- presumptive basis of Taxation
50B:- Special provision for computation of capital gain in case of slump sale.
80 IA/IB/IC/ID/JJAA/LA
92E: - Transfer pricing
115JB:- MAT/AMT
115VW:- Tonnage Scheme
Others:
ITR-5
 For persons other than,- (i) Individual, (ii)
HUF, (iii) Company and (iv) person filing
Form ITR-7]
(Please see rule 12 of the Income-tax
Rules,1962)
STATUS
 If a charitable Trust Registered u/s 12 AA the status
will be AOP trust.
 If the Society Registered 1860 registered u/s 12 AA
the status will be AOP/BOI.
 If the Section 8 Company Registered u/s 12 AA the
status will be Domestic/ Foreign Company.
 When the income of a charitable trust become
taxable , it is taxed at the rate applicable to an
AOP
MAXIMUM MARGINAL RATE
 Any direct or indirect benefits transfer to the related
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person refer section 13(3).
Any part of the income applied to related person
refer section 13(3).
Income received from the investment which are not
as per section 11(5).
Anonymous donation as per section 115 BBC.
Circular no 387 dated 06.07.1984
UNREGISTERED NPO
 Un-Registered NPO:- Which is not registered u/s
10/12AA/ any other provision under Income tax Act
 ITR- 5 to be filled
 Benefit of Slab rate available
 Share to be determinate unless MMR will be charged
( Section 164 )
Rate Structure
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Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the
case of every individual, Hindu undivided family, association of persons, body of
individuals or artificial juridical person (other than a co-operative society, firm, local
authority and company) as under:-
PART I
THE FIRST SCHEDULE
(See section 2)
INCOME-TAX
Paragraph A
(I) In the case of every individual other than the individual referred to in items (II) and (III) of this
Paragraph or Hindu undivided family or association of persons or body of individuals,
whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause
(31) of section 2 of the Income-tax Act, not being a case to which any other Paragraph of this Part
applies,—
Rates of income-tax
(1) where the total income does not exceed Rs. 2,50,000
Nil
(2) where the total income exceeds Rs. 2,50,000 but does not
10 per cent
exceed Rs. 5,00,000
(3) where the total income exceeds Rs. 5,00,000 but does not
Rs. 25,000 plus 20 per cent
exceed Rs. 10,00,000
(4) where the total income exceeds Rs. 10,00,000
Rs. 1,25,000 plus 30 per cent.
Comparison chart of Rates
Status
Rate Schedule
Rates
Individual
The First Schedule, Part I
, Paragraph A
Hindu Undivided family (
HUF)
Association of Persons (
AOP)
Body of individuals (BOI)
Same as above
0-2.5 lac
0%
2.5- 5 Lac
10%
5- 10 lac
20%
Above 10 Lac 30%
Same as above
Same as above
Same as above
Same as above
Same as above
Artificial Judicial Person ( Same as above
AJP )
Same as above
What is AOP
AOP includes
Co-operative Society
Taxability in section
The First Schedule, Part I , Paragraph B
Society registered U/s 1860
Oral Trust
The First Schedule, Part I , Paragraph A
and Section 164(ii) and 164 (iii) and
also circular no 387 Dated 06.07.1984
I) The First Schedule, Part I ,
Paragraph A and Section 161/167
II) Section164.
Section 11 and 12 and 164(ii) and (iii) ,
circular no 387 Dated 06.07.1984
u/s 164
Joint Venture
167 B
Any other AOP/BOI
The First Schedule, Part I , Paragraph A
Private Trust
I) Specific
II) Discretionary
Charitable Trust(Registered u/s 12A)
AOP Taxation few Points
 Where the Individual share of the member of AOP
are
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unknown and indeterminate the Rate to be charged at MMR
(u/s 167B(1)).
When share is known and Determined then
Income of one of the member is exceed maximum basic exemption
limit then MMR u/s 167B(2)
 Income of all of the member is Below Basic Exemption limit then
normal slab rate will apply.
 Any member is Chargeable to Maximum Marginal Rate then MMR
will apply.
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Issue of Depreciation
 No depreciation is allowed when the any assets at the
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time of purchase claim as a application of income.
Asset Is purchased by corpus fund
Asset is purchased by accumulation of fund
Asset is purchased by secured loan
Payment of secured loan treated as application of
fund.
Asset by way of donation