A clarification of board under Income Tax is an official statement issued by the Central Board of Direct Taxes (CBDT) to provide clarity on specific aspects of income tax law or procedure. These clarifications are typically issued in response to questions or concerns raised by taxpayers or tax professionals. They can also be issued proactively to address potential areas of confusion or uncertainty.

Clarifications of board under Income Tax are not binding law, but they are considered authoritative guidance by the Income Tax Department. They can be used by taxpayers to support their positions in tax disputes.

Here are some examples of clarifications of board under Income Tax:

• Clarification on the taxability of income from cryptocurrency
• Clarification on the deductibility of expenses incurred in working from home
• Clarification on the residency status of foreign nationals

FAQ QUESTIONS

What is clarification of the Board under the Income Tax Act?

Clarification of the Board under the Income Tax Act is a process through which taxpayers can seek clarification from the Central Board of Direct Taxes (CBDT) on any provision of the Income Tax Act or the Income Tax Rules. This process is typically used when there is doubt or uncertainty about the interpretation of a particular provision of the law.

Who can apply for clarification of the Board?

Any taxpayer who has a doubt or uncertainty about the interpretation of a provision of the Income Tax Act or the Income Tax Rules can apply for clarification of the Board. This includes individuals, companies, Hindu Undivided Families (HUFs), and any other person who is liable to pay income tax in India.

How to apply for clarification of the Board?

An application for clarification of the Board can be made online through the e-filing portal of the Income Tax Department. The application must be accompanied by a fee of Rs. 500.

What information should be included in the application?

The application for clarification of the Board should include the following information:

• The name and address of the applicant
• The PAN number of the applicant
• The provision of the Income Tax Act or the Income Tax Rules on which clarification is sought
• The facts of the case
• The questions on which clarification is sought

How long does it take to get a response from the Board?

The CBDT typically takes 3-6 months to respond to an application for clarification of the Board.

What is the effect of clarification of the Board?

A clarification of the Board is binding on the Income Tax Department and all taxpayers. This means that the Income Tax Department must follow the clarification when assessing a taxpayer’s tax liability.

In addition to the above, here are some other frequently asked questions about clarification of the Board:

Q: Can I apply for clarification of the Board if I have already filed my income tax return?

A: Yes, you can apply for clarification of the Board even if you have already filed your income tax return. However, you will need to explain why you did not apply for clarification before filing your return.

Q: Can I apply for clarification of the Board if I am under assessment by the Income Tax Department?

A: Yes, you can apply for clarification of the Board even if you are under assessment by the Income Tax Department. However, you may need to provide additional information to the Board, such as the notice of assessment that you have received.

Q: Can I apply for clarification of the Board if I am in dispute with the Income Tax Department?

A: Yes, you can apply for clarification of the Board even if you are in dispute with the Income Tax Department. However, it is important to note that a clarification of the Board will not necessarily resolve a dispute with the Income Tax Department.

CASE LAWS

• Circular No. 14 of 2023 – Circular to remove difficulty in implementation of changes relating to Tax Collection at Source (TCS) on Liberal Remittance Scheme (LRS) and on purchase of overseas tour program package.
• Circular No. 13 of 2023 – Condonation of delay under clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961 for returns of income claiming deduction u/s 80P of the Act for various assessment years from AY 2018-19 to AY 2022-23.
• Circular No. 12 of 2023 – Clarification regarding taxability of income earned by a non-resident investor from off-shore investments in investment fund routed through an Alternative Investment Fund.
• Circular No. 11 of 2023 – Corrigenda to Circular No. 10 of 2023 dated 30th June, 2023.
• Circular No. 10 of 2023 – Circular to remove difficulty in implementation of changes relating to Tax Collection at Source (TCS) on Liberal Remittance Scheme (LRS) and on purchase of overseas tour program package.

These circulars provide clarification on a variety of income tax matters, including TCS, deductions, and taxation of non-resident investors. They are an important resource for taxpayers and tax professionals alike.

In addition to the above, here are some other notable case laws of clarification from the Board under Income Tax:

• Javeri v. K.K. Sen – This case held that circulars issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act, 1961 (IT Act) are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act.
• Keshavji Ravji and Co. v. Commissioner of Income-Tax – This case held that circulars beneficial to the assesses which tone down the  of the law and are issued in exercise of the statutory powers under Section 119 of the IT Act are binding on the authorities in the administration of the Act.
• UCO Bank, Calcutta v. Commissioner of Income-Tax – This case held that the CBDT cannot pre-empt a judicial interpretation of the scope and ambit of a provision of the IT Act. Also, a circular cannot impose on the tax-payer a burden higher than what the Act itself, on a true interpretation, envisages. The task of interpretation of the laws is the exclusive domain of the courts.