The Central Board of Direct Taxes (CBDT) vide its Notification No 83/2023 Dated 29th September 2023 notified about insertion of a new Rule 21AHA in the Income Tax Rules 1962. This new Rule 21AHA pertains to various provisions about “Exercise of option under sub-section 5 of section 115BAE” by some specified Co-operative societies in India. Eligibility of Co-operative societies to exercise the option under sub-section 5 of Section 115BAE is prescribed under sub-section (2) of Section 115BAE.
Let us delve in to the details of Rule 21AHA notified by CBDT vide its Notification 83/2023, dated-29th September 2023.
CBDT NOTIFICATION NO. 83/2023 DT.29 SEPTEMBER 2023: INSERTION OF RULE 21AHA
1. In the Income Tax Rules 1962, Rule 21AHA (Exercise of option under sub-section 5 of Section 115BAE) will be inserted after the Rule 21AH.
(i) The option to be exercised in accordance with the provisions of sub-section (5) of section 115BAE by a person, being a co-operative society resident in India, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be in Form No. 10-IFA.
(ii) The option in Form No. 10-IFA shall be furnished electronically either under digital signature or electronic verification code.
(iii) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall, –
(a) specify the procedure for filing of Form No. 10-IFA;
(b) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (2), for verification of the person furnishing the said Form; and
(c) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form so furnished.
These rules may be called the Income-tax (Twenty-Third Amendment) Rules, 2023 and they shall come into force from the date of their publication in the Official Gazette.
The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide Notification Number S.O. 969 (E) dated the 26th March 1962 and were last amended vide Notification Number G.S.R 697(E) dated 27th September, 2023.
For the sake of easy understanding of the above rule 21aha, it will be better to read this with section 115BAE which was introduced in the Budget 2023. Reason is Rule 21AHA and Section 115BAE are related. So please read the provisions under Section 115BAE given below:
SECTION 115 BAE: TAXATION OF CERTAIN NEW MANUFACTURING CO-OPERATIVE SOCIETIES IN INDIA
(New Section introduced in Budget 2023)
(1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BAD, the income-tax payable in respect of the total income of an assessee, being a co-operative society resident in India, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall, at the option of such assessee, be computed at the rate of fifteen per cent. if the conditions contained in sub-section (2) are satisfied.
Provided further that the income-tax payable in respect of the income, of the assessee deemed so under the second proviso to sub-section (4) shall be computed at the rate of thirty per cent.
Provided also that the income-tax payable in respect of income, being short term capital gains derived from transfer of a capital asset on which no depreciation is allowable under the Act shall be computed at the rate of twenty-two per cent.
Provided also that where the assessee fails to satisfy the conditions contained in sub-section (2) in any previous year, 54 the option shall become invalid in respect of the assessment year relevant to that previous year and subsequent assessment years and other provisions of the Act shall apply to the assessee as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years.
(2) For the purposes of sub-section (1), the following conditions shall apply, namely:—
(a) the cooperative society has been set-up and registered on or after the 1st day of April, 2023, and has commenced manufacturing or production of an article or thing on or before the 31st day of March, 2024 and,—
(i) the business is not formed by splitting up, or the reconstruction, of a business already in existence;
(ii) does not use any machinery or plant previously used for any purpose.
Explanation 1.—For the purposes of sub-clause (ii), any machinery or plant which was used outside India by any other person shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:—
(A) such machinery or plant was not, at any time previous to the date of the installation, used in India;
(B) such machinery or plant is imported into India from any country outside India; and
(C) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of installation of machinery or plant by the person.
Explanation 2.—Where any machinery or plant or any part thereof previously used for any purpose is put to use by the assessee and the total value of such machinery or plant or part thereof does not exceed twenty per cent. of the total value of the machinery or plant used by the assessee, then, for the purposes of subclause (ii), the condition specified therein shall be deemed to have been complied with;
(b) the assessee is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it.
Explanation.—For the removal of doubts, it is hereby clarified that the business of manufacture or production of any article or thing shall include the business of generation of electricity, but not include a business of,— (i) development of computer software in any form or in any media; (ii) mining; (iii) conversion of marble blocks or similar items into slabs; (iv) bottling of gas into cylinder; (v) printing of books or production of cinematograph film; or (vi) any other business as may be notified by the Central Government in this behalf;
(c) the total income of the assessee has been computed,—
(i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of subsection (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or under any of the provisions of Chapter VI-A other than the provisions of section 80JJAA;
(ii) without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); and
(iii) by claiming the depreciation, if any, under section 32, other than clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed.
(3) The loss and depreciation referred to in sub-clause (ii) of clause (c) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss shall be allowed for any subsequent year.
(4) Where it appears to the Assessing Officer that, owing to the close connection between the assessee to which this section applies and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such business, the Assessing Officer shall, in computing the profits and gains of such business for the purposes of this section, take the amount of profits as may be reasonably deemed to have been derived therefrom:
Provided that in case the aforesaid arrangement involves a specified domestic transaction referred to in section 92BA, the amount of profits from such transaction shall be determined having regard to arm’s length price as defined in clause (ii) of section 92F:
Provided further that the amount, being profits in excess of the amount of the profits determined by the Assessing Officer, shall be deemed to be the income of the assessee.
(5) Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the first of the returns of income for any previous year relevant to the assessment year commencing on or after 1st day of April, 2024, and such option once exercised shall apply to subsequent assessment years:
Provided that once the option has been exercised for any previous year shall not be allowed to be withdrawn for the same or any other previous year.
Download the CBDT Notification-83-2023
You may also Follow the Link to access the Notification from ITD portal-https://incometaxindia.gov.in/communications/notification/notification-83-2023.pdf
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Persons Required to File Income Tax Return (ITR) as per I-T Act 1961