Section 96 of the Income Tax Act, 1961 (hereinafter referred to as Act) deals with any arrangement which is made only for obtaining any tax benefit which shall be treated as impermissible avoidance arrangement if it creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length or results, directly or indirectly, in the misuse, or abuse, of the provisions of the Act or lacks commercial substance or is deemed to lack commercial substance or is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes.
In reference to the above said provision of section 96 of the Act, under clause 30C of the Tax Audit report, the information regarding nature and amount of any such impermissible avoidance agreement entered by the assessee is required to be filled.
Also, under clause 44 of the Tax Audit Report in Form 3CD, information regarding the Break-up of total expenditure of entities registered or not registered under the GST relating to payment made for supplies exempt from GST, composition scheme, etc.., is required to be filled.
Earlier the applicability of filling the information in above said clause 30C and clause 44 of the Tax Audit Report was extended till 31-03-2021 vide Circular No. 10/2020 dated 24-04-2020.
In view of the prevailing situation of COVID-19, applicability of (i) clause 30C- ‘impermissible avoidance arrangement, as referred to in section 96’ and (ii) clause 44- ‘Break-up of total expenditure of entities registered or not registered under the GST’ of Tax Audit Report in Form 3CD, has now been further extended till 31-03-2022 from the previous extension till 31-03-2021, vide CBDT Circular No. 05/2021 dated 25-03-2021.
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