Section 288 — Other Amendments | ITA 2025

Section 288 — - OTHER AMENDMENTS

Section 288 is the substantive equivalent of 1961 s. 155 -- the COMPREHENSIVE CONSEQUENTIAL AMENDMENT PROVISION authorising AO to amend completed assessments to give effect to subsequent orders / determinations affecting related-party computations. The provision is one of the LARGEST procedural sections (~19.6K bytes) -- a comprehensive Table covering 13+ scenarios with corresponding actions / conditions / time-windows. The provision works in tandem with s. 287 (rectification under s. 154) but addresses CROSS-ASSESSEE consequential effects (firm-partner / AOP-member / trust-beneficiary / cross-year matters) that traditional rectification cannot cover. PRACTITIONER ESSENTIAL: every firm-assessment / AOP-assessment / TP / trust-assessment / etc. has cross-effect on related parties; s. 288 enables AO to flow the changes through. Time-window: 4 years from prescribed trigger event.

Statutory text — Income-tax Act, 2025

Marginal note -- Other amendments

(1) The Assessing Officer, may carry out such actions as are specified in column B of the Table below for reasons mentioned therein, subject to the conditions as specified in column C, within four years referred to in section 287(8) which shall be reckoned from the time as specified in column D, and the provisions of section 287 shall, so far as may be, apply to such amendment:—

TABLE Sl. Actions Conditions Time No.

A B C D

1. Amendment of Where any remuneration to any From the end of the order of assess- partner determined in completed financial year in ment of the part- assessment of the firm is sub- which the subsequent ner of a firm so sequently found not deductible order was passed in as to adjust the under section 35(e) in terms of— the case of the firm. income of the part- (a) assessment or reassess- ner corresponding ment of the firm; or to the amount not (b) any reduction or enhance- deductible under ment made in the income of section 35(e). the firm under this section or section 287 or 359 or 363 or 365 or 368 or 377 or 378; or

(c) any order passed under section 245D(4) of the Income-tax Act, 1961 (43 of 1961) on the appli- cation made by the firm.

2. Amendment of Where the share of the member From the end of the order of assess- in the income of the association financial year in ment of the mem- of persons or body of individuals which the subsequent ber of an associ- determined in completed assess- order was passed in ation of persons ment is subsequently found not the case of the asso- or of a body of in- included in the assessment of ciation or body. dividuals; so as to the member or, if included, is not include the share correct in terms of— of the member in (a) assessment or reassess- the assessment or ment of the association or the corrections body; thereof.

(b) any reduction or enhance- ment made in the income of the association or body under this section or sec- tion 287 or 359 or 363 or 365 or 368 or 377 or 378; or

(c) any order passed under section 245D(4) of the Income-tax Act, 1961 (43 Sl. Actions Conditions Time No.

A B C D of 1961) on the application made by the association or body.

3. Total income of the Where there is recomputation of From the end of the fi- assessee in respect loss or depreciation for any tax nancial year in which of succeeding year year, and in consequence to such the order under sec- or years referred recomputation, the total income tion 279 was passed. to in column C, of the assessee for the succeeding to be recomput- year or years to which the loss or ed and necessary depreciation allowance has been amendment made carried forward and set off under consequent to pro- the provisions of section 111(1) ceedings initiated or 112(1) or 113(2) or 115(1) is under section 279 required to be recomputed. for any tax year.

4. The total income Where in the assessment for any From the end of the of the transferor tax year,— year— company for the (a) the capital gain arising (i) in which the tax year referred from the transfer of a cap- capital asset to in column C, to ital asset is not charged was converted be recomputed and under section 6717 in terms or treated as necessary amend- of section 70(1)(c) or (d); stock-in-trade; ment made. (b) such gains are deemed or under section 71(1)19 as (ii) in which the “Capital gains” of the tax parent compa- year in which the transfer ny or its nom- took place at any time be- inees or, the fore the expiry of the period holding com- of eight years from the date pany ceased of such transfer by reason to hold the of— whole of the

(i) such capital asset be- share capital of ing converted by the the subsidiary transferee company company. into, or being treated by it, as stock-in- trade of its business; or

(ii) the parent company or its nominees or, the holding company ceasing to hold the Sl. Actions Conditions Time No.

A B C D whole of the share capital of the subsid- iary company.

5. The order of as- Where in the assessment for any From the end of the fi- sessment to be tax year, a capital gain on transfer nancial year in which amended; so as to of original asset, referred to in the compensation exclude the capital section 89 is charged to tax and was received by the gain not charge- within the period extended under assessee. able to tax under that section— any of the sections (a) the assessee acquires the referred to in sec- new asset referred to in tion 89. that section; or

(b) deposits or invests such capital gain.

6. The order of as- Where in the assessment for From the end of the fi- sessment to be any year, any deduction under nancial year in which amended to allow section 144 has not been allowedsuch income is so re- deduction in re- on the ground that— ceived in, or brought spect of such in- (a) such income has not been into, India. come or part there- received in convertible of as is so received foreign exchange in India; in, or brought into, or India.

(b) such income having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, has not been brought into India, by or on behalf of the assessee with the approval of the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulat- ing payments and dealings in foreign exchange, Sl. Actions Conditions Time No.

A B C D and subsequently such income or part thereof has been or is re- ceived in, or brought into, India as required for the deduction.

7. The order of assess- Where in the assessment for any From the end of the ment or any inti- tax year or in any intimation or financial year in mation or deemed deemed intimation under section which such dispute intimation under 270(1) for any tax year,— is settled. section 270(1), to (a) credit for income-tax paid be amended, to in any country outside In- give credit for in- dia or a specified territory come-tax for the outside India referred to in year in which such Chapter IX-B has not been income is offered given on the ground that to tax or assessed the payment of such tax to tax in India. was under dispute; and

(b) subsequently such dispute is settled; and the assessee, within six months from the end of the month in which the dispute is settled, furnishes to the Assessing Officer—

(i) evidence of settle- ment of dispute and evidence of payment of such tax; and

(ii) an undertaking that no credit in respect of such amount has directly or indirectly been claimed or shall be claimed for any other tax year.

8. The order of as- Where, in the assessment for any From the end of the fi- sessment to be year, a capital gain arising from nancial year in which amended to com- the transfer of a capital asset, the order revising the pute the capital being land or building or both, value was passed in gain by taking the is computed— appeal or revision or full value of the reference. Sl. Actions Conditions Time No.

A B C D consideration to (a) by taking the full value of be the value as so the consideration received revised in appeal or accruing as a result of or revision or ref- the transfer to be the value erence. adopted or assessed by any authority of a State Gov- ernment for the purpose of payment of stamp duty as per section 78(1); and

(b) subsequently such value is revised in any appeal or re- vision or reference referred to in section 78(2)(b).

9. The order of as- (a) Where in the assessment From the end of the sessment to be for any year, a capital gain financial year in amended to com- arising from the transfer which the order re- pute the capital of a capital asset being ducing the compen- gain by taking the a transfer referred to in sation was passed by compensation or clause (b) is computed— the court, Tribunal or consideration as (i) by taking the com- other authority. so reduced by the pensation or consid- court, Tribunal or eration as referred to any other authority in section 67(12)(a) to be the full value or, as the case may of consideration. be, the compensa- tion or consideration enhanced or further enhanced as referred to in section 67(12) (b), to be the full val- ue of consideration deemed to be re- ceived or accruing as a result of the transfer of the asset; and

(ii) subsequently such compensation or consideration is re- duced by any court, Tribunal or other authority. Sl. Actions Conditions Time No.

A B C D

(b) The transfer and consider- ation referred to in clause

(a) shall be,—

(i) transfer by way of compulsory acquisi- tion under any law;

(ii) consideration that was determined or approved by the Cen- tral Government or the Reserve Bank of India.

10. Recomputation of Where a deduction has been From the end of the the total income allowed to an assessee in any tax financial year in to disallow the de- year under section 152 in respect which the order of duction allowed of any patent, and subsequently the Controller under under section 152. by an order of the Controller or section 2(1)(b), or the High Court under the Patents the High Court under Act, 1970 (39 of 1970),— section 2(1)(i), of the

(a) the patent was revoked, or Patents Act, 1970 (39 of 1970), was passed.

(b) the name of the assessee was excluded from the patents register as patentee in respect of that patent, the deduction from the income by way of royalty attributable to the period during which the patent had been revoked or the period for which name of the as- sessee was excluded as patentee in respect of that patent, shall be deemed to have been wrongly allowed.

11. Amendment of the (a) Where any income has From the end of the fi- order of assess- been included in the return nancial year in which ment or any inti- of income furnished by an such tax has been mation to allow assessee under section 263 deducted. credit of such tax for any tax year, and tax deducted at source on such income has been in the tax year re- deducted at source and ferred to in column paid to the credit of the C, and the credit of Central Government as per such tax deducted the provisions of Chapter Sl. Actions Conditions Time No.

A B C D at source not to XIX-B in a subsequent tax year; be allowed in any and other tax year. (b) an application is made by an assessee in such form, as may be prescribed, within two years from the end of the tax year in which such tax was deducted at source. (2)(a) Where the arm’s length price is determined in relation to an international transaction or a specified domestic transaction under section 166(6) for any tax year and the Transfer Pricing Officer has declared that an option exercised by the assessee is valid under section 166(9) in respect of such transaction for two consecutive tax years immediately following such tax year, the Assessing Officer shall proceed to recompute the total income of the assessee for the said two consecutive tax years, by amending the order of assessment or any intimation or deemed intimation under section 270(1)31, as the case may be,—

(i) in conformity with the arm’s length price so determined by the Transfer Pricing Officer under section 166(12) in respect of such transaction; and

(ii) taking into account the directions issued under section 275(5), if any, for such tax year, within three months from the end of the month in which the assessment is com- pleted in the case of the assessee for such tax year, and the provisions of sections 165(7) and (8) shall apply thereto.

(b) Where the order of assessment or any intimation or deemed intimation under section 270(1) as referred to in sub-section (1), for the said two consecutive tax years is not made within the said three months, such recomputation shall be made within three months from the end of the month in which such order of assessment or any intimation or deemed intimation under section 270(1)31, as the case may be, is made. Notice of demand.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 288	INCOME-TAX ACT, 1961 -- s. 155
Sub-s. (1) -- Master Table 13 amendment scenarios	1961 s. 155(1)-(15)
Sl. 1 -- Partner's assessment post-firm s. 35(e) adjustment	1961 s. 155(1)/(1A)
Sl. 2 -- AOP/BOI member share adjustment	1961 s. 155(2)
Sl. 3+ -- Trust beneficiary / cross-assessee adjustments	1961 s. 155(3)-(15)
4-year time-window from trigger	1961 s. 155(15) read with s. 154(7)
s. 287 rectification framework applies	1961 s. 154 read across

STATUTORY ARCHITECTURE -- THE 13-ROW TABLE

Sub-s. (1) provides comprehensive TABLE listing 13+ specific consequential-amendment scenarios. Each row specifies: (B) Action; (C) Conditions; (D) Time-trigger from which 4-year window runs. KEY ENTRIES: Sl. 1 -- PARTNER OF FIRM: where remuneration to partner determined in firm's completed assessment subsequently found NOT DEDUCTIBLE under s. 35(e) (1961 s. 40(b)) due to: (a) firm reassessment; (b) reduction / enhancement in firm income under s. 287/288 / appellate orders; (c) Settlement Commission order. AO amends partner's assessment to adjust income corresponding to non-deductible amount. Time: from end of FY firm subsequent-order passed. Sl. 2 -- AOP/BOI MEMBER: similar mechanic for AOP/BOI member's share where AOP/BOI's income subsequently varied; member's share adjusted accordingly. Sl. 3-13 -- Various: trust-beneficiary share adjustments / Settlement Commission cascades / appellate-order consequential adjustments / TP-determined ALP cascades / etc. MASTER PRINCIPLE: any change in upstream entity's assessment (firm/AOP/trust/etc.) cascades down to related party's assessment via s. 288, even if related party's original assessment was time-barred under s. 286 (s. 153). TIME-WINDOW: 4 YEARS from PRESCRIBED TRIGGER (typically end of FY trigger order passed). The 4-year window allows reasonable time for cascade implementation.

RELATIONSHIP TO s. 287 RECTIFICATION

Section 287 (1961 s. 154) covers within-assessment-mistakes that are 'apparent from record' -- AO can rectify own order. Section 288 covers CROSS-ASSESSEE consequential adjustments that arise from changes in OTHER party's assessment. Both have similar 4-year windows but distinct scopes: (i) s. 287 -- mistake apparent from record OF SAME ASSESSMENT (intra-order); (ii) s. 288 -- cross-effect from another assessee's modified assessment / appellate order / SetCom order (inter-party). Sub-s. (1) opening: 'AO may carry out actions in column B... within 4 years referred in s. 287(8), which shall be reckoned from time in column D, and provisions of s. 287 shall apply'. So PROCEDURAL machinery of s. 287 (notice / opportunity / order / appeal route) is imported.

PRACTITIONER NOTES

(i) FIRM-ASSESSMENT MONITORING -- partners must track firm's assessment / appellate orders; cascade impact often delayed. (ii) AOP/BOI MEMBER COMPLIANCE -- member's individual assessment may be re-opened up to 4 years after AOP/BOI re-assessment. (iii) TP CASCADE -- TP-determined ALP variation in one party cascades to other; cross-border counterpart MAP coordination critical. (iv) TIME-WINDOW DEFENCE -- if AO invokes s. 288 beyond 4 years, jurisdictional challenge available. (v) APPELLATE STRATEGY -- s. 288 amendments appealable under s. 357 / 358 (CIT(A) / NFAC); ITAT subsequent. (vi) NATURAL JUSTICE -- s. 287 procedural protections apply (notice / show-cause / opportunity); failures = grounds for challenge. (vii) COORDINATED FILINGS -- where firm-partner / AOP-member / trust-beneficiary positions interlinked, coordinate revision strategy.

CROSS-REFERENCES

Section 287 -- Rectification of mistake (procedural framework imported).
Section 286 -- Time-limit for assessments (s. 288 carves cross-assessee cascade).
Section 35(e) -- Partner remuneration disallowance (Sl. 1 trigger).
Sections 270 / 271 / 273 -- Assessment / faceless framework.
Sections 357-378 -- Appellate / revision orders (cascade triggers).
Section 161-166 -- TP regime (TP-cascade).
Section 332 -- Trust registration.

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