Union Budget 2021 has extended the due date for filing return of income in some cases from the existing due dates. The extension of due dates of filing of return has been given to the spouses governed by Portuguese Civil Code as per section 5A of the Income Tax Act, 1961 (“Act”).
Further partner of a firm which is subject to Transfer Pricing Audit under section 92E of the Act also gets the benefit of extension of due date in furnishing the return of income under section 139.
Finance Bill, 2021 has amended section 139 to this extent.
Extending Due Date for filing return of income under section 139 in some cases
Section 139 of the Act contains provisions in respect of the filing of return of income for different persons or class of persons. The said section also provides the due dates for filing of original, belated and revised returns of income for different classes of assessee.
Sub-section (1) of the section provides for the filing of original return of income for an assessment year. The Explanation 2 of the said section specifies the due-dates for filing of original return for different class of persons. The sub-clause (iii) of clause (a) of the said Explanation 2 provides that the due date for filing of original return of income for the partner of a firm whose accounts are required to be audited under the said Act or under any other law for the time being in force shall be 31st day of October of the assessment year.
Section 5A of the Act provides for taxation of spouses governed by Portuguese Civil Code. On account of this provision any income earned by a partner of a firm whose accounts are required to be audited shall be apportioned between the spouses and included in their total income, if the section 5A applies to them.
Since the total income of a partner can be determined after the books of accounts of such firm have been finalised, the due dates of partners are already aligned with the due date of the firm. Thus, the due date for filing of original return of income of such partner is 31st October of the assessment year. However, this relaxation is not there for spouse of such partner to whom section 5A of the Act applies. Therefore, it is proposed that the due date for the filing of original return of income be extended to 31st October of the assessment year in case of spouse of a partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force, if the provisions of section 5A apply to them.
Further, in the case of a firm which is required to furnish a report from an accountant for entering into an international transaction or specified domestic transaction, as per Section 92E of the Act, the due date for filing of original return of income is the 30th November of the assessment year. Since the total income of such partner can be determined after the books of accounts of such firm have been finalised, it is proposed that the due date of such partner be extended to 30th November of the assessment year.
These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years.
For this purpose, Clause 32 of the Finance Bill, 2021 has amended Section 139 as follows-
Amendment of section 139.
32. In section 139 of the Income-tax Act,––
(a) in sub-section (1), in Explanation 2,–
(i) in clause (a), in sub-clause (iii), after the words “any other law for the time being in force”, the words, figure and letter “or the spouse of such partner if the provisions of section 5A applies to such spouse” shall be inserted;
(ii) in clause (aa), after the words “an assessee”, the words “, including the partners of the firm being such assessee,” shall be inserted;
Amended Provisions of Section 139 Explained
Clause 32 of the Bill seeks to amend section 139 of the Income-tax Act relating to return of income.
The said section provides for the filing of return of income for different persons or class of persons and time-limits for doing so.
It is proposed to amend sub-clause (iii), in clause (a), in Explanation 2, in sub-section (1) of the said section so as to provide that the due date for filing return of income for the spouse of the partner of a firm, if the governed by the provisions of section 5A of the said Act, shall be 31st October of the assessment year.
It is further proposed to amend clause (aa) of the said Explanation so as to provide that the due date for filing of return of income for partners of a firm, which is required to furnish report referred to in section 92E, shall be 30th November of the assessment year.
These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.
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