Section 179 of Income Tax Act for AY 2023-24

Section 179 of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules. Liability of directors of private company.

Amended and updated notes on section 179 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Liability of directors of private company.

Chapter XV (Sections 159 to 180A) of the Income Tax Act 1961 deals with the provisions related to liability in special cases. Section 179 of IT Act 1961 provides for Liability of directors of private company.

Recently, we have discussed in detail section 178 (Company in liquidation) of IT Act 1961.

Today, we learn the provisions of section 179 of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 179 is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 179 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-179: Liability of directors of private company

Section 179 (1):

Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

Section 179 (2):

Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.

Explanation: For the purposes of this section, the expression “tax due” includes penalty, interest, fees or any other sum payable under the Act.

[Explanation of section 179 amended(inserted) w.e.f. 1-April-2022 by the Finance Act 2022]


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