Consolidated circular for assessment of start-ups

Income Tax vide circular no.22/2019 dated 30thAugust, 2019 consolidates all circulars regarding Assessment of startups.

Assessment of Start-ups:


Companies recognized by  Department for promotion of  industry and  international trade(DPIIT) which have filed  FORM No.2 and  whose cases are under “Limited Scrutiny” on the  single issue of applicability of section56(2)(viib) of income tax Act, 1961(the act), the contention of the assesse will summarily be accepted.


companies recognized by DPIIT which havefiled Form No. 2 and whose cases have been selected underscrutiny to examine multiple issues including the issue of section56(2)(viib)of the Act, this issue will not be pursued during theassessment proceedings and inquiry on other issues will becarried out by the Assessing Officer only afterobtaining approvalof the supervisory authority.


Companies recognized by the DPIIT, whichhave not filed Form No.2, but have been selected for scrutiny,the inquiry in such cases also will be carried out by the AssessingOfficer only after obtaining approval of the supervisoryauthorities.

Time limit for Completion of pending assessments of theStartups:

Assessments referred above should preferably be completed by the AOs in case-1 by 30th September 2019, in case-2&3 by  31st October 2019.

Income Tax Demand:

The outstanding income-tax demand relating toadditions made under section 56(2)(viib) shall not be pursued and nocommunication with the assessee in respect of outstanding demand shallbe made for this purpose. In respect of other income-tax demand, it isdecided that the income-tax demand shall not be pursued unless thedemand is confirmed by the ITAT.

Constitution of Start-up Cell:

To redress greviences and to address various tax related issues a start-up cell constituted on 30thAugust, 2019 with Ex-officio members.