Amended and updated notes on section 185 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 Assessment when section 184 not complied with.
Chapter XVI (Sections 184 to 189A) of the Income Tax Act 1961 deals with the provisions related to special provisions applicable to firms. Section 185 of IT Act 1961 provides for Assessment when section 184 not complied with.
Recently, we have discussed in detail section 184 (Assessment as a firm) of IT Act 1961. Today, we learn the provisions of section 185 of Income-tax Act 1961. The amended provision of section 185 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 185 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-185: Assessment when section 184 not complied with
Notwithstanding anything contained in any other provision of this Act, where a firm does not comply with the provisions of section 184 for any assessment year, the firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner of such firm shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession” and such interest, salary, bonus, commission or remuneration shall not be chargeable to income-tax under clause (v) of section 28.