Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    The Legal Contours of Input Tax Credit Eligibility: Procedural Aspects of GST and ITC
    Case LawsService Tax
    Reverse Charge Mechanism (RCM): Service Tax Implications for Exporters: A Legal Perspective on Forei...
    Case LawsIndian Laws
    Cheque Dishonour and Corporate Responsibility: Analyzing the Supreme Court's Latest Judgment
    Case LawsIncome Tax
    Validity of Notices / orders without DIN. The Critical Role of Procedural Compliance in Tax Administ...
    Case LawsIncome Tax
    Tax Exemptions: Capitation Fees in Educational Institutions: A Legal Quagmire
    Case LawsIncome Tax
    Procedural Technicalities vs. Substantive Justice in Tax Administration: A High Court Perspective
    Case LawsIncome Tax
    Revision u/s 263 and denial of deduction u/s 80IA: A Critical Analysis of the Delhi High Court's Jud...
    Case LawsIncome Tax
    Condonation of Delay and Jurisdictional Challenges: A Case Analysis of ITAT Kolkata's Decision
    Case LawsIncome Tax
    Legal Analysis: Scrutiny of Share Capital and Premium Under Section 68 of the Income Tax Act
    Case LawsIncome Tax
    Judicial Scrutiny of Retrospective Cancellation of Charitable Trust Registration: A Case Analysis of...
    Case LawsIncome Tax
    Office and Prosecution under Income Tax Act: Jurisdiction of Trial Court - Decision in a High Profil...
    Case LawsIncome Tax
    Taxation of Unexplained Income at Higher Rate of tax u/s 115BBE : A Comprehensive Analysis of the IT...
    Case LawsIncome Tax
    Analysis of ITAT Mumbai Judgment - Transfer Pricing Adjustment Dispute: Period of limitation u/s 144...
    Case LawsIncome Tax
    In-Depth Analysis of Key Issues in the ITAT Chennai Judgement
    Case LawsIncome Tax
    Doctrine of Merger in Income Tax Assessment: An Analysis of ITAT Chennai's Recent Judgment
    Case LawsIncome Tax
    Delay in refund processing, the petitioner's entitlement to interest, and the court's decision to gr...
    Case LawsIncome Tax
    Rejection of revision application u/s 264 in favor of assessee: A beneficial provision of Income Tax...
    Case LawsIncome Tax
    An Analysis of ITAT Decision on International Taxation, Capital Gains, and DTAA
    Case LawsIncome Tax
    Taxability of CSR fund: Treatment of certain funds received by an entity, particularly focusing on w...
    Case LawsIncome Tax
    Legal Analysis of ESOP Deduction and allowability in the Revised Return of income: An ITAT decision.
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    Case LawsGST
    Show AI Summary
    Input Tax Credit eligibility: procedural limits on reversing claims without supplier inquiry and GSTR-2A non-reflection not dispositive.
    Section 16(2) sets the statutory conditions for Input Tax Credit-tax invoice, receipt, tax payment, and return filing-and GSTR-2A serves only as a facilitator; non-reflection there does not automatically negate eligibility. Tax authorities must inquire into supplier conduct and observe procedural safeguards before reversing ITC or recovering tax from the recipient, with judicial precedents and CBIC clarifications shaping when exceptions may apply.
    Case LawsService Tax
    Show AI Summary
    Reverse charge mechanism: exporter not liable for foreign bank charges when Indian bank is the direct service recipient.
    The core issue is whether an exporter is liable under the Reverse Charge Mechanism for foreign bank charges deducted from export proceeds when those charges are imposed on and paid by an Indian intermediary bank. The Tribunal's analysis focuses on the definition of service recipient and territorial scope, concluding that the direct recipient-the Indian bank-is the party liable to discharge service tax while the exporter, as an indirect beneficiary without direct dealings with the foreign bank, is not subject to reverse charge.
    Case LawsIndian Laws
    Show AI Summary
    Directorial liability: strict averment requirement prevents presuming directors' responsibility without specific allegation, leading to quashing.
    The Court held that directorial liability requires specific averment that the director was in charge of and responsible for the conduct of the business at the time of the offence; mere titular position or awareness of cheque issuance is insufficient. It emphasized the necessity of serving the statutory notice prerequisite and rejected liberal construction to cure absent statutory averments, quashing proceedings against directors for non-compliance.
    Case LawsIncome Tax
    Show AI Summary
    DIN requirement in tax administration: absence of mandatory DIN can invalidate assessment orders unless exceptional circumstances apply.
    Failure to quote the mandatory computer-generated Document Identification Number (DIN) in assessment orders, as required by the CBDT Circular from 1 October 2019, constitutes a procedural defect that can render the order invalid unless the revenue demonstrates that the issuance fell within the Circular's narrowly drawn exceptional circumstances; the Tribunal found such non-compliance in the order dated 15 October 2019 and the High Court affirmed, while the Supreme Court granted interim stay for further consideration.
    Case LawsIncome Tax
    Show AI Summary
    Capitation fee allegations challenge admissibility and attribution of seized evidence in charitable trust tax exemption inquiries.
    Alleged collection of capitation fees by a registered charitable trust threatens its exemption under Section 11; most evidence was seized from employees' residences, invoking the presumption under Section 132(4A) and raising attribution issues. Employee admissions later retracted, similar statement drafting, declarations under the Income Declaration Scheme 2016, and trustees' acknowledgments create contradictory evidentiary threads that complicate admissibility, credibility, and whether the seized funds can be treated as trust income.
    Case LawsIncome Tax
    Show AI Summary
    Condonation of delay in tax compliance: liberal interpretation protects bona fide taxpayers from technical disqualification.
    The court analysed whether delay in filing Form 10 could be condoned, considering the petitioner's unawareness of post 2016 amendments, CBDT circulars and precedent, and applying principles that each case be judged on its facts; it stressed that failure to claim accumulation does not by itself show absence of intent to comply and urged a liberal approach to mitigate genuine hardship and prevent procedural technicalities from defeating substantive justice.
    Case LawsIncome Tax
    Show AI Summary
    Section 263 limited to substantial legal errors; mere differences of opinion don't justify revisional tax action.
    Scope of Section 263 is confined to instances where an assessment order is erroneous and prejudicial to revenue in a substantial way, not mere differences of opinion. Migration of licences from IP VPN to NLD ILD does not, by itself, create a new undertaking defeating entitlement to deduction under Section 80IA(4)(ii), particularly where identical deductions were previously allowed; administrative migration requires clear proof of substantive change before re characterising eligibility.
    Case LawsIncome Tax
    Show AI Summary
    Delay condonation based on sufficient cause upheld where illness, relocation and pandemic disruption justified late filing and jurisdictional challenge.
    The tribunal applied a purposive construction of sufficient cause to condone substantial delay where cumulative factors-serious illness, change of residence and pandemic disruption-made filing untimely. It also found the assessment infirm for want of territorial and pecuniary jurisdiction because the taxpayer had established residence and filing history in a different territorial unit and administrative guidance allocated jurisdiction accordingly, underscoring that proper vesting of authority is a condition precedent to valid assessment.
    Case LawsIncome Tax
    Show AI Summary
    Unexplained cash credits under Section 68 require taxpayers to prove investor identity and genuineness; authorities must rebut with evidence.
    Applicability of Section 68 requires the assessee to establish investor identity, creditworthiness and transaction genuineness-via PAN, tax returns, audited accounts and bank statements-and once this initial burden is satisfied, the burden shifts to the revenue to rebut with concrete evidence; mere suspicion or inability to trace an ultimate source does not alone justify additions if investments are reasonable relative to investors' net worth and effected through banking channels.
    Case LawsIncome Tax
    Show AI Summary
    Retrospective cancellation of charitable trust registration invalidated due to lack of competent jurisdiction and procedural non compliance.
    The Tribunal invalidated the cancellation of a charitable trust's registration because the regional authority lacked competence to cancel under the statutory scheme and the transfer used to reassign the matter was improper; it further held that applying the newer cancellation provision retrospectively to deprive the trust of its recognized status was not legally tenable, emphasizing required notice, hearing and adherence to principled statutory interpretation.
    Case LawsIncome Tax
    Show AI Summary
    Jurisdiction in multi locational offences governs venue determination; magistrate discretion and supervisory thresholds shape tax prosecution forums under criminal procedure.
    The judgment analyses Cr.P.C. place of offence principles in multi locational tax prosecutions, assessing whether procedural acts like recording statements under the Income Tax Act determine venue. It evaluates the magistrate's discretion in taking cognizance where alleged offences span jurisdictions and outlines the threshold for superior court supervisory intervention, emphasising that extraordinary petitions require demonstration of abuse of process or exceptional circumstances before altering magistrate venue determinations.
    Case LawsIncome Tax
    Show AI Summary
    Taxation of unexplained income: higher-rate treatment applies, and deductions including partner salary are disallowed.
    The tribunal held that excess unrecorded stock and cash found on survey were assessable as unexplained investment and unexplained money, and that the special higher-rate taxation provision applies to such income, taxing it at a higher fixed rate and disallowing any deduction; consequently the claimed partner's salary relating to the unexplained investment was disallowed.
    Case LawsIncome Tax
    Show AI Summary
    Limitation under section 144C: assessment issued beyond statutory period, leaving transfer pricing adjustment unresolved on procedural grounds.
    The tribunal focused on the statutory time limit under Section 144C(13) for passing assessment orders after DRP directions, treated the order as barred by limitation and therefore did not adjudicate substantive transfer pricing challenges raised under Section 92CA. Consequently, technical disputes over comparability, exclusion/inclusion of comparables, and the profit level indicator computation were left unexamined.
    Case LawsIncome Tax
    Show AI Summary
    Capitalization of interest: tribunal scrutinised whether interest and forex on capital projects form capital cost or permit revenue deduction.
    The tribunal analyzed four core taxation questions: whether interest and foreign exchange fluctuations written off from Capital Work in Progress are capital or revenue in nature and their nexus to business operations; whether write off of a DG set component should be treated within the block of assets for depreciation or as a revenue repair; the applicability of Section 36(1)(iii) to proportionate interest on interest free advances to related concerns and the presumption from mixed funds; and the evidentiary requirements to establish that inter corporate deposits were funded from own funds rather than borrowed monies for interest deduction purposes.
    Case LawsIncome Tax
    Show AI Summary
    Doctrine of merger limits revisional jurisdiction under appeals, preventing collateral review of identical legal issues.
    The Doctrine of Merger operates to treat legal issues from an assessment as merged into appeal proceedings before the Commissioner of Income Tax (Appeals), thereby constraining subsequent revisional jurisdiction over those same issues; applied where initial assessment, reassessment notices and search-related assessment steps overlap, and supported by judicial precedent limiting collateral revision.
    Case LawsIncome Tax
    Show AI Summary
    Interest on delayed tax refunds where delay is not attributable to the taxpayer under Section 244A.
    Entitlement to interest under Section 244A arises when refund payment is delayed for reasons not attributable to the assessee. The petitioner, a foreign company, faced delays caused by technical issues and incorrect guidance regarding banking details; the court treated the delay as the respondents' responsibility and applied Section 244A to award interest for the period of delay, directing payment according to the statutory rate.
    Case LawsIncome Tax
    Show AI Summary
    Revision application under Section 264: remand for fresh merits review when alternative remedies were improperly relied upon.
    Whether a revision under Section 264 may be denied solely because alternative remedies existed and whether appeal provisions applied to DDT-related treaty claims; the court found that rejecting revision on the mere availability of other remedies was untenable and that the appealed provision was inapplicable, directing fresh merits consideration of treaty relief and related tax computation by the Principal Commissioner.
    Case LawsIncome Tax
    Show AI Summary
    DTAA interpretation clarifies capital gains tax treatment for cross-border share sales under residency and grandfathering conditions.
    Taxation of capital gains from a Mauritius-based entity's sale of Indian company shares is analysed against the India-Mauritius Double Taxation Avoidance Agreement, focusing on DTAA allocation of taxing rights, timing of acquisition and transfer, and applicability of grandfathering provisions. The Tribunal assessed tax residency and treaty entitlement by examining corporate structure and commercial substance, applying the substance over form principle to determine whether treaty benefits were appropriate.
    Case LawsIncome Tax
    Show AI Summary
    Fiduciary funds not treated as taxable income when entity acts as facilitator; earmarked project funds excluded from income.
    The Tribunal examined whether earmarked receipts should be included in taxable income or treated on the balance sheet, focusing on jurisdictional validity of scrutiny notices, whether amounts were routed through the income and expenditure account or retained as earmarked funds, and whether receipts held in a fiduciary capacity for disaster relief were excluded from the entity's income because the entity acted only as facilitator without beneficial ownership.
    Case LawsIncome Tax
    Show AI Summary
    ESOP deduction in revised returns - tribunal permits claim within revision window, stressing valuation, timing and documentary consistency.
    Deductibility of ESOP-related costs in a revised return hinges on compliance with the statutory time limit for revision and on accounting and evidentiary consistency: correct year of recognition, reliable grant date valuation (e.g., Black Scholes), concordant employee records, and disclosure in audited accounts. The tribunal found the claim allowable within the revision window but emphasised documentary proof, valuation method and timing of liability as central to acceptability.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Comparison of section 327 "Change in constitution of a firm." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

      11 September, 2025

      Contents
      Acts
      Rules & Regulations
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Section 327 Change in constitution of a firm.

      Income-tax Act, 2025

        At a Glance

        Clause 327 of the Income Tax Bill, 2025 (Old Version) - provision dealing with change in constitution of a firm. It prescribes how an assessing officer should treat a partnership firm for purposes of assessment u/ss 270 or 271 when the firm's constitution changes. It affects taxpayers in partnership form and the tax department. Effective date/decision date: Not stated in the document.

        Background & Scope

        Statutory hooks: The provision is placed as Clause 327 under the Bill heading "Change in constitution, succession and dissolution" and references assessments u/ss 270 and 271 (these sections are cited as the assessment provisions triggering the rule). The scope covers the treatment of a partnership firm for assessment purposes "where at the time of making an assessment u/s 270 or 271, it is found that a change has occurred in the constitution of a firm." Definitions: The clause sets out, for the purposes of the provision, what constitutes a "change in the constitution" of a firm by enumerating three circumstances. No separate definitions of "firm", "partner", "admitted", or "ceased" are provided in the clause itself. The clause does not supply definitions of "assessment" beyond reference to sections 270 and 271.

        Statutory Provision Mode

        Text & Scope

        The provision contains three operative parts: (1) an overarching rule that the assessment shall be made on the firm as constituted at the time of making the assessment; (2) an enumerated list defining "change in the constitution" comprising (a) one or more partners ceasing to be partners, (b) admission of one or more new partners subject to a continuity condition that at least one pre-existing partner remains after change, and (c) where all partners continue but there is a change in their respective shares (or the shares of some); and (3) a proviso that sub-section 2(a) shall not apply to a case where the firm is dissolved on the death of any of its partners. The clause is expressly tied to assessment proceedings u/ss 270 and 271 only.

        Interpretation

        The clause reflects a legislative intent to fix the taxable entity for assessment at the point of assessment-making rather than retrospectively when the facts prompting assessment occurred. The operative instruction - "assessment shall be made on the firm as constituted at the time of making the assessment" - indicates that the constitution existing at the assessment time determines who is assessed as the firm. The enumerated circumstances illustrate the types of changes that will trigger application of this rule. The continuity condition that requires at least one continuing pre-change partner when a new partner is admitted signals the legislature's concern to distinguish reorganisations that preserve firm continuity from complete transfers of business or successor entities. The death-dissolution exception indicates that a firm's dissolution by reason of a partner's death should not be treated as a partner-cessation under clause (a) for assessment allocation purposes.

        Exceptions/Provisos

        The only proviso is that sub-section 2(a) does not apply where the firm is dissolved on the death of a partner. There are no other carve-outs, thresholds, temporal rules, or conditions in the clause. The clause does not state whether other forms of succession, amalgamation, or assignment fall within its scope; nor does it address issues of liability of outgoing partners, successor liability, or the tax treatment of unrealised gains on change.

        Illustrations

        • Example 1: Partners A, B, C are assessed u/s 270. Before the assessment is made, partner C ceases to be a partner and leaves; the assessment will be made on the firm constituted at the assessment time (i.e., A and B where they remain partners). This is consistent with clause (a). (The document supplies no numerical example; this is a schematic illustration consistent with the text.)
        • Example 2: Partners A and B admit D as a new partner but A continues in the firm. Because at least one pre-existing partner (A) continues, clause (b) applies and the assessment will be made on the firm as constituted when the assessment is made (A, B, D). Note: The document does not address tax consequences for outgoing or incoming partners. Not stated in the document.
        • Example 3: Partners A, B, C keep the same personnel but reallocate profit shares between them; such a change is expressly a change in constitution under clause (c) and the assessment will be on the firm as constituted at assessment time. The clause does not indicate if share changes affecting only profit distribution are to be treated differently for tax attribution between partners. Not stated in the document.

        Interplay

        The clause explicitly references assessment u/ss 270 and 271, but it does not identify any rules, notifications, or circulars that further explain or implement the provision. It does not reference other provisions dealing with succession, transfer of business, or partner liability. Potential interpretive issues may arise in relation to:

        • Determination of the "time of making the assessment" - the clause does not define when assessment is "made" for these sections (for example, original assessment versus reassessment), so interplay with procedural provisions in sections 270/271 and their rules may be required to fix the temporal point.
        • Whether cessation by retirement, retirement by agreement, insolvency of a partner, or transfer of a partner's interest outside formal dissolution falls within clause (a) - the clause lists cessation generically; further statutory or case law guidance would be required.
        • Interaction with provisions concerning transfer of assets, successor liability, or clubbing of income is not addressed in the clause and remains to be read across other parts of the Code. Not stated in the document.

        Comparison of Differences and Practical Impact

        Clause 327 of the Income-tax Act, 2025 (labelled "Section 327") and Clause 327 of the Income Tax Bill, 2025 (Old Version) (labelled "Clause 327"). The two provisions are substantively similar but differ in the drafting and ordering of sub-clauses describing what constitutes a "change in the constitution" of a firm.

        • Difference in sub-clause structure: The Bill version (Clause 327) lists three distinct circumstances (partners ceasing to be partners; admission of new partners subject to a continuity condition; change in partners' shares) as separate paragraphs (a), (b), (c). The Act version (Section 327) consolidates the first two situations into paragraph (a) - "if one or more of the partners cease to be partners or one or more new partners are admitted, subject to the condition..." - and keeps change in shares as paragraph (b).
          • Practical impact: The consolidation in the Act text signals no substantive narrowing or broadening of coverage; rather it appears to be a drafting reorganisation. Both texts require at least one continuing partner when a new partner is admitted (continuity condition) and both treat changes in partners' shares as a change in constitution. The only practical effect likely to arise is on interpretive clarity: the Bill's separate enumeration may be marginally clearer when construing whether ceasing and admission are distinct events; the consolidated Act version ties cessation and admission together in the same limb. There is no express change to scope, exceptions (other than the death dissolution carve-out), or the operative assessment rule.
        • Other textual elements: Both texts contain identical provisions for assessment timing (assessment to be made on the firm as constituted at the time of making assessment) and identical proviso excluding dissolution on death from the operation of the partner-cessation limb. No additional conditions, thresholds, or procedural rules are present in either text.

        Practical Implications

        • Compliance and risk areas: Taxpayers in partnership form should ensure that changes in partner composition or profit-sharing ratios are documented and that the constitution of the firm at the time of assessment is clearly ascertainable. The clause places emphasis on the constitution at the point of assessment rather than at the time of the underlying income; this may affect who is assessed and for what periods.
        • Record-keeping/evidence points: Partnerships should maintain contemporaneous records of partnership deeds, minutes evidencing admission/retirement of partners, dates of effect of share changes, and notices to tax authorities, so that the firm composition at assessment time can be proven. The clause does not specify particular documents or forms to be produced. Not stated in the document.

        Key Takeaways

        • Clause 327 instructs that where a change in constitution of a firm is found at the time of assessment u/ss 270 or 271, the assessment is to be made on the firm as it exists at the time of assessment.
        • "Change in constitution" is defined to include partner cessation, admission of new partners (subject to at least one continuing partner), and changes in partners' shares.
        • The clause excludes dissolution on account of a partner's death from the operation of the partner-cessation limb.
        • The Bill version and the subsequently presented Act text differ only in the drafting arrangement of the enumerated circumstances; there is no substantive change to scope in the texts considered.
        • The clause is silent on detailed procedural implementation, timing nuances for assessment, successor liability, and treatment of outgoing partners' tax obligations - those matters would require reference to other statutory provisions or interpretive guidance. Not stated in the document.
        • Practical compliance requires careful documentation of partner changes and share allocations to establish the constitution at assessment time.

        Full Text:

        Section 327 Change in constitution of a firm.

        Topics

        ActsIncome Tax