Finance Bill, 2022 proposes to amend the marginal heading of section 179 of the Income-tax Act, 1961 (‘Act’) to omit the words ‘in liquidation’ to align with the provisions of the section which does not only deal with private companies under liquidation but cover all private companies, whether in liquidation or not.
Further, the word “fees” is added to the scope of the expression “tax due” in the Explanation to the said section.
Amendment in the provisions of section 179 of the Act
Section 179 of the Act contains provisions which enables Income-tax authorities to recover tax due from a private company from its directors, under certain circumstances where such tax cannot be recovered from the company itself. The section makes each director of the private company jointly and severally liable for the payment of such tax with certain conditions. However, the title of the section inadvertently refers to the liability of directors of private company in liquidation.
The liability of directors of a private company under this section is not conditional upon the company being in liquidation and the section makes no reference to liquidation. Therefore, to make the title of the section uniform with its provisions, it is proposed to amend the title of the section to “Liability of directors of private company”.
Further, the Explanation to the section clarifies that the expression “tax due” in the section includes penalty, interest of any other sum payable under the Act. In order to avoid unnecessary litigation and to provide further clarity, it is also proposed to insert the word “fees” in the scope of the expression “tax due” under Explanation to the section.
For this purpose, Clause 55 of the Finance Bill, 2022 proposes to amend section 179 of the Act as below-
Amendment of section 179.
55. In section 179 of the Income-tax Act,––
(a) in the marginal heading, the words “in liquidation” shall be omitted;
(b) in the Explanation, after the word “interest”, the word “, fees” shall be inserted.
Explaining the proposed amendment to section 179
Clause 55 seeks to amend section 179 of the Act relating to liability of directors of private company in liquidation. It provides for the recovery of tax dues of a private company from its directors, in cases where such tax dues cannot be recovered from the company itself.
The marginal heading of the said section reads as a liability of directors of private company in liquidation. However, the provisions of the section do not deal with companies in liquidation. Therefore, it is proposed to omit the words “in liquidation” from the marginal heading of the said section.
It is further proposed to include “fees” within the scope of the expression “tax due” in the Explanation to the said section.
These amendments will take effect from 1st April, 2022 and shall apply from the assessment year 2022-23.
Other related articles on Budget 2022
Finance Minister Presents Finance Bill 2022 after Union Budget 2022 in Loksabha
Download Finance Bill, 2022 (PDF) as introduced in Loksabha
Download Memorandum Explaining the Provisions in the Financial Bill 2022
Income Tax announcements in Budget Speech: Union Budget 2022
New Income Tax Slab Rates after Union Budget 2022
Changes in Personal Taxation by Union Budget 2022
Section 139(8A): Filing of Updated Return - Budget 2022
Corporate Tax Proposals: Union Budget 2022
Changes in TDS and TCS Provisions by Finance Bill, 2022
Tax Exemption on Amount Received for COVID-19: Budget 2022
Health & Education 'cess' Not Deductible as Business Expenditure: Budget 2022
Section 80DD Tax Relief to Persons with Disability: Budget 2022
Conversion of Interest into Debenture Does Not amount to Payment under Section 43B: Budget 2022
Source of Source for Loans and Borrowings Under Section 68: Budget 2022
Amendment to Section 14A to Disallow Expenses if No Exempt Income: Budget 2022
Reduced Alternate Minimum Tax u/s 115JC and Surcharge for Cooperative Societies: Budget 2022
Extension of Sunset Manufacturing Date under section 115BAB
Extension of Sunset Date of Incorporation for Start-ups Section 80-IAC
Withdrawal of Special Tax Rate on Dividend Under Section 115BBD
Drafting Error for Deduction under Section 35 Corrected
Surcharge on Long Term Capital Gains and Income Tax Reduced by Budget 2022
Definition of ‘Slump Sale’ Amended to Cover all Transfers: Budget 2022
Clarification on Transfer of Goodwill on Reduction from Block of Assets
Bonus Stripping under Section 94(8) to Cover Shares and Units
Disallowance of Expenses for Offence under section 37 further Clarified: Budget 2022
Set off of Loss with Undisclosed Income found during Search and Survey: Section 79A
Section 119 amended Empowering CBDT to Issue Orders for Late Fees under section 234F: Budget 2022
Scope of Section 285B widened to cover Specified Activities: Budget 2022
Section 179 Amended to Align with Provisions and to Covers Fees
0 Comments