Section 174A — Assessment of AOP/BOI or Artificial Juridical Person Formed for a Particular Event or Purpose
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live and untested. Part K of Chapter XV. Inserted by the Finance Act, 2002 (w.e.f. 1-4-2003).
Subject: Where it appears to the Assessing Officer that an AOP/BOI or an artificial juridical person, formed or established for a particular event or purpose, is likely to be dissolved in the assessment year in which it was formed or immediately afterwards, the total income up to the date of dissolution may be charged to tax in that assessment year at once, the section 174(2)–(6) machinery applying.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. The transient-association counterpart of section 174
Section 174A, inserted by the Finance Act 2002, plugs a gap for transient associations. An AOP/BOI or artificial juridical person is often formed for a single event or purpose — a fair, an exhibition, a one-off project — and dissolves once the event is over, frequently before a normal year-end assessment can be made. Section 174A allows the Assessing Officer, on forming the opinion that such an entity is likely to be dissolved in the year of its formation or soon after, to charge its income up to the date of dissolution to tax at once, borrowing the section 174(2)–(6) machinery. It is the forward-looking, accelerated counterpart of the dissolution provisions in sections 176 and 177.
2. No reported jurisprudence; cognate provision
Section 174A is new in practical terms and untested: focused searching discloses no reported decision construing it on the merits. It is properly treated as protective machinery. The only legitimately cognate body of law is the dissolution machinery for associations in section 177 (and the general AOP-assessment principles), to which section 174A is the accelerated, pre-dissolution analogue. No section 174A authority is asserted (candour rule).
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
174A. Notwithstanding anything contained in section 4, where it appears to the Assessing Officer that any association of persons or a body of individuals or an artificial juridical person, formed or established or incorporated for a particular event or purpose is likely to be dissolved in the assessment year in which such association of persons or a body of individuals or an artificial juridical person was formed or established or incorporated or immediately after such assessment year, the total income of such association or body or juridical person for the period from the expiry of the previous year for that assessment year up to the date of its dissolution shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2) to (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India.
C. AUTHORITIES
Candour rule (new provision). No reported decision construes section 174A on the merits. It is the accelerated counterpart of section 177 (dissolution of an association); the cognate authorities are the AOP-assessment line.
Cluster A — Cognate provision (no direct authority)
Cross-reference: section 177 (association dissolved or business discontinued) embodies the same dissolution logic for which section 174A provides an accelerated pre-dissolution charge; the AOP-definition authorities (Indira Balkrishna 39 ITR 546 SC; Meera & Co. 224 ITR 635 SC) are set out under section 167B. No section 174A authority is invented.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XV — LIABILITY IN SPECIAL CASES
Section 174A — Assessment of AOP/BOI or Artificial Juridical Person Formed for a Particular Event or Purpose
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live and untested. Part K of Chapter XV. Inserted by the Finance Act, 2002 (w.e.f. 1-4-2003).
Subject: Where it appears to the Assessing Officer that an AOP/BOI or an artificial juridical person, formed or established for a particular event or purpose, is likely to be dissolved in the assessment year in which it was formed or immediately afterwards, the total income up to the date of dissolution may be charged to tax in that assessment year at once, the section 174(2)–(6) machinery applying.
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. The transient-association counterpart of section 174
Section 174A, inserted by the Finance Act 2002, plugs a gap for transient associations. An AOP/BOI or artificial juridical person is often formed for a single event or purpose — a fair, an exhibition, a one-off project — and dissolves once the event is over, frequently before a normal year-end assessment can be made. Section 174A allows the Assessing Officer, on forming the opinion that such an entity is likely to be dissolved in the year of its formation or soon after, to charge its income up to the date of dissolution to tax at once, borrowing the section 174(2)–(6) machinery. It is the forward-looking, accelerated counterpart of the dissolution provisions in sections 176 and 177.
2. No reported jurisprudence; cognate provision
Section 174A is new in practical terms and untested: focused searching discloses no reported decision construing it on the merits. It is properly treated as protective machinery. The only legitimately cognate body of law is the dissolution machinery for associations in section 177 (and the general AOP-assessment principles), to which section 174A is the accelerated, pre-dissolution analogue. No section 174A authority is asserted (candour rule).
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
174A. Notwithstanding anything contained in section 4, where it appears to the Assessing Officer that any association of persons or a body of individuals or an artificial juridical person, formed or established or incorporated for a particular event or purpose is likely to be dissolved in the assessment year in which such association of persons or a body of individuals or an artificial juridical person was formed or established or incorporated or immediately after such assessment year, the total income of such association or body or juridical person for the period from the expiry of the previous year for that assessment year up to the date of its dissolution shall be chargeable to tax in that assessment year, and the provisions of sub-sections (2) to (6) of section 174 shall, so far as may be, apply to any proceedings in the case of any such person as they apply in the case of persons leaving India.
C. AUTHORITIES
Candour rule (new provision). No reported decision construes section 174A on the merits. It is the accelerated counterpart of section 177 (dissolution of an association); the cognate authorities are the AOP-assessment line.
Cluster A — Cognate provision (no direct authority)
Cross-reference: section 177 (association dissolved or business discontinued) embodies the same dissolution logic for which section 174A provides an accelerated pre-dissolution charge; the AOP-definition authorities (Indira Balkrishna 39 ITR 546 SC; Meera & Co. 224 ITR 635 SC) are set out under section 167B. No section 174A authority is invented.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.