Comparative Legal Analysis of Block Period Income Computation : Clause 293 of the Income Tax Bill, 2025 Vs. Section 158BB of the Income-tax Act, 1961

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....ace and modernize the existing framework as provided u/s 158BB of the Income-tax Act, 1961, which has, for decades, governed the computation of undisclosed income discovered during search and seizure operations. The transition from Section 158BB to Clause 293 is not merely a renumbering exercise but reflects a conscious legislative intent to streamline, clarify, and update the assessment process in search cases. This commentary undertakes a detailed clause-by-clause analysis of Clause 293, followed by a comparative evaluation with Section 158BB, highlighting the similarities, differences, and the policy rationale underlying the changes. 2. Objective and Purpose The legislative objective behind Clause 293 is to provide a comprehensive, tr....

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....period. The key components are: * (a) Undisclosed income declared in the return u/s 294: This includes income voluntarily declared by the assessee in response to the search, ensuring that the process encourages disclosure and compliance. * (b) Income assessed under other provisions prior to the search: Income already assessed under specified sections (including both the new Act and corresponding sections of the 1961 Act) before the search is included, thereby preventing re-assessment of the same income. * (c) Income declared in returns furnished u/s 263 or in response to notice u/s 268(1) or 280: This ensures that income declared in compliance with notices or under specific provisions is duly considered, avoiding duplication. ....

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....ssessed under the regular assessment provisions, not under the block assessment. The rationale is to ensure that complex transfer pricing and related party transaction issues are dealt with by specialized assessment mechanisms, maintaining consistency and fairness. 3.4 Sub-section (4): Special Rules for Firms and Application of Other Provisions This sub-section provides: * (a) For firms: Income is to be determined before allowing deductions for salary, interest, etc., to non-working partners, ensuring that the block assessment captures the true economic benefit. * (b) & (c): The application of other relevant sections (102-105, 166) to the block period, with necessary modifications, ensures that the computation is aligned with the broa....

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....assessment, reducing litigation and uncertainty. The exclusion of losses and clear rules for carry-forward will impact tax planning and compliance strategies. * Tax Administration: Equips officers with a more structured framework, reducing discretionary power and potential for arbitrary assessments. * Procedural Impact: The explicit treatment of international and specified domestic transactions ensures that block assessments do not overlap with transfer pricing assessments, thus streamlining the process. * Compliance: The requirement for contemporaneous documentation and timely returns is reinforced, incentivizing proper record-keeping. 5. Comparative Analysis: Clause 293 vs. Section 158BB A clause-by-clause comparison reveals both ....

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....e computed based on evidence found in the search and any other material available to the Assessing Officer. * Clause 293(2): Mirrors this approach, emphasizing evidence and material found or coming to notice during proceedings. * Analysis: The underlying principle remains unchanged, reinforcing the evidentiary basis for block assessments. 5.4 International and Specified Domestic Transactions * Section 158BB(3): Excludes income relating to international transactions (section 92CA) for certain periods from block assessment. * Clause 293(3): Adopts a similar exclusion, now referencing section 166, and provides more detailed criteria for exclusion. * Analysis: The new provision reflects a more nuanced understanding of transfer pricin....