Section 314 — Tribunal Court Order Effect | ITA 2025

Section 314 — - EFFECT OF TRIBUNAL / COURT ORDER

Section 314 is the substantive equivalent of 1961 s. 170A -- introduced FA 2022 to address SUBSEQUENT TRIBUNAL / COURT ORDERS affecting business reorganisations / amalgamations / mergers. Where NCLT / Court order modifies business reorganisation effective date or terms, the provision allows AO to RECOMPUTE assessment to give effect. Practical for: (a) NCLT scheme-modifications post initial-approval; (b) appellate orders affecting amalgamation effective date; (c) IBC resolutions impacting prior assessments. Time-window: 6 months from order receipt for AO to recompute.

Statutory text — Income-tax Act, 2025

Marginal note -- Effect of tribunal / court order

(1) Irrespective of anything to the contrary contained in section 263, if prior to the date of order in respect of business reorganisation, any return of income has been furnished under the provisions of the said section by an entity for any tax year to which such order applies, the successor shall furnish, within six months from the end of the month in which the order was issued, a modified return in such form and manner, as may be prescribed, in accordance with and limited to the said order.

(2) Where the assessment or reassessment proceedings for a tax year to which the order in respect of the business reorganisation applies,—

(a) have been completed on the date of furnishing of the modified return as per the provisions of sub-section (1), the Assessing Officer shall pass an order modifying the total income of the relevant tax year determined in such assessment or reassessment, in accordance with such order in respect of business reorganisation and taking into account the modified return so furnished;

(b) are pending on the date of furnishing of the modified return as per sub-section (1), the Assessing Officer shall pass an order assessing or reassessing the total income of the relevant tax year as per the order in respect of the business reorganisation and taking into account the modified return so furnished.

(3) Subject to any other provisions of this section, in an assessment or reassessment made in respect of a tax year under this section, all other provisions of this Act shall apply and the tax shall be chargeable at the rate or rates as applicable to such tax year.

(4) For the purposes of this section,—

(a) “business reorganisation” means the reorganisation of business involving the amalgamation or demerger or merger of business of one or more persons;

(b) “order in respect of business reorganisation” means an order of a High Court or tribunal or an Adjudicating Authority as defined in section 5(1) of the Insolvency and Bankruptcy Code, 2016 (31 of 2016); and

(c) “successor” means all resulting companies in a business reorganisation, whether or not the company was in existence prior to such business reorganisation. 7. —Partition Assessment after partition of Hindu undivided family.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 314	INCOME-TAX ACT, 1961 -- s. 170A [FA 2022]
Tribunal / court order recomputation framework	1961 s. 170A(1)
Successor's modified return filing	1961 s. 170A(2)
AO recomputation within 6 months	1961 s. 170A(3)

FA 2022 introduced s. 170A specifically to address business reorganisation cases where SUBSEQUENT NCLT / court orders MODIFY the original scheme. Common scenarios: (a) NCLT-approved scheme later modified due to objections / re-hearing; (b) Higher court appellate orders modifying amalgamation effective date; (c) IBC resolution-plan modifications; (d) Post-implementation valuation disputes resolved by court. MECHANISM: (I) SUCCESSOR / RESULTING entity files MODIFIED RETURN within prescribed time of order receipt; (II) AO recomputes assessment within 6 MONTHS of receiving modified return; (III) Recomputation gives effect to court order; (IV) Tax adjustments / refunds processed accordingly. PRACTITIONER: M&A practitioners must monitor post-NCLT order events; modified returns under s. 314 available; coordinate with tax advisors.

CROSS-REFERENCES

Section 70(1)(e)/(j) -- Tax-neutral M&A.
Section 313 -- Business succession.
Section 270 -- Assessment.
Section 286 -- Time-limits.
Companies Act 2013 -- NCLT scheme framework.
IBC 2016 -- Resolution plans.

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