Tax on accreted income
(1)
Every specified person shall, in addition to the income-tax chargeable in respect of his total income, be liable to pay additional income-tax on accreted income at the maximum marginal rate in any of the cases specified in column B of the Table in sub-section (5).
(2)
The Assessing Officer shall compute the accreted income on the date, specified in column C of the Table in sub-section (5) and after affording a reasonable opportunity of being heard to the assessee, pass on order that such income shall be charged to tax under sub-section (1).
(3)
The accreted income referred to in sub-section (1) shall be computed using the following formula:–– A = B-C where,–– A = Accreted income; B = Aggregate fair market value of the total assets of the specified person, as on the date specified, in column C of the Table in sub-section (5), computed in accordance with such method of valuation, as prescribed; C = Total liability of such specified person, as on the date specified in column C of the said Table, computed in accordance with such method of valuation, as prescribed.
(4)
The accreted income, computed as per the provisions of sub-section (3) shall be reduced by such amount of accreted income as is attributable to specified assets, and liabilities, if any, related to such assets.
(5)
The specified person and the principal officer or trustee of such specified person shall be liable to pay the tax on accreted income to the credit 5 of the Central Government within fourteen days from the due date specified in column D of the Table below, or the date of order passed under sub-section (2). Table Sl. Case Specified date Due date for No. the payment of tax on accreted income A B C D
(i)
(ii)
1. The registration The date of Date of granted to the specified the order receipt of the specified person person has cancelling the order in any under any specified preferred an registration. appeal, provision has been appeal against confirming the cancelled or the order of cancellation of withdrawn. cancellation. the registration, by the specified person. 2. The registration The date of The date on granted to the specified the order which the specified person person has not cancelling the period for under any specified preferred an registration. filing appeal provision has been appeal against under cancelled or such order of section 362section 362 withdrawn. cancellation. against the order cancelling the registration expires. 3. (a) The date of The end of specified adoption or such tax year. specified person person has not modification of has adopted or applied for undertaken any object. modification of its fresh objects during any registration tax year; and under any specified (b) such provision in modified objects such tax year. do not conform to the conditions of registration. A B C D
(i)
(ii)
4. (a) The date of The date of specified person specified adoption or receipt of the has adopted or person has modification of order in any undertaken applied for any object. appeal, modification of its fresh confirming the objects during any registration cancellation of tax year; and under any the registration specified by the (b) such provision in specified modified objects such tax year person. do not conform to and where the conditions of such registration. application has been rejected and appeal has been preferred against such order of rejection. 5. (a) The date of The date on specified person specified adoption or which the has adopted or person has modification of period for undertaken applied for any object. filing appeal modification of its fresh under section objects during any registration 362 against the tax year; and under any order specified cancelling the (b) such provision in registration modified objects the said tax expires. do not conform to year and where the conditions of such registration. application has been rejected and no appeal has been preferred against such order of rejection. 6. The specified The period The last date The end of person fails to make specified in the for making an such tax year. an application as application for respective per the provisions registration. clause or of–– sub-clauses or Table, as the case may be, expires in the tax year in which the said application is to be made. A B C D
(i)
(ii)
(a)
sub-clause (i) or (ii) or (iii) of the first proviso to section 10section 10 (23C) of the Income-tax Act, 1961 (43 of 1961); or (b) sub-clause (i) or (ii) or (iii) of section 12section 12(1)(ac) of the Income-tax Act, 1961 (43 of 1961); or (c) as specified in section 332section 332(3) (Table: Sl. No. 3, 4, 5 or 7). 7. Where a The date of The end of specified person such such tax year. conversion. converts itself into a form which is not eligible for grant of registration during any tax year. 8. The specified The date of The date of merger. merger. person has merged with any other entity other than a registered non-profit organisation having the same or similar objects and the said merger does not fulfil such [ conditions, as prescribed. 9. The specified The date of The date on which such person has failed to dissolution. transfer upon period of dissolution, all its twelve months expires. assets to any other registered non-profit organisation within twelve months from the end of the month in which the dissolution takes place.
(6)
The payment of tax on the accreted income by the specified person under this section shall be deemed as the final payment of tax in respect of the said income and no further credit therefor shall be claimed by, or any deduction be allowed to, the specified person or any other person in respect of the amount of tax so paid under any other provision of this Act.
(7)
Where the specified person, or the principal officer or trustee of such specified person, fails to pay the whole or any part of the tax on the accreted income within the time allowed under sub-section (5), such specified person, principal officer or trustee shall be liable to pay simple interest, computed as per the following formula:–– I = 1% of (T*P) where,–– I = interest; T = tax on accreted income; and P = number of months beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid including part thereof.
(8)
All the provisions of this Act shall apply for the collection and recovery of income-tax in respect of the amount of tax payable by the specified person, principal officer or trustee and the following persons shall be deemed to be assessee in default:––
(b)
the person to whom any asset forming part of the computation of accreted income under sub-section (3) has been transferred, where the tax on accreted income is payable under the cases specified in sub-section (5) (Table: Sl. No. 9).
(9)
Subject to the provisions of sub-section (8), the liability of the person referred to in clause (b) of the said sub-section shall be limited to the extent to which the asset received by him is capable of meeting the liability.