Tax on Income of newly formed Resident Co-Operative Societies - Section 115BAE - Income Tax - Ready Reckoner - Income Tax

Tax on Income of newly formed Resident Co-Operative Societies - Section 115BAE (w.e.f. 01 st April 2024) [Inserted by FA 2023] Assessee should be Resident 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 . Income taxable under section 115BAE Income under section 115BAE shall be taxable @15%, if the conditions contained in section 115BAE(2) are satisfied. The total income of the assessee includes any income , which has neither been derived from nor is incidental to, manufacturing or production of an article or thing and in respect of which no specific rate of tax has been provided separately under this Chapter Such income shall be taxed at the rate of 22% and no deduction or allowance in respect of any expenditure or allowance shall be made in computing such income. Income-tax payable in respect of the income, of the assessee deemed so under the second proviso to section 115BAE(4) shall be computed at the rate of 30%. Short term capital gains derived from transfer of a capital asset on which no depreciation is allowable under the Act income-tax payable in respect of such STCG at the rate of 22%. Surcharge rate will be 10% irrespective of total Income . Certain Conditions specified under section 115BAE(2) Clause (a) - Co-operative Society has been registered on or after 01-04-2023 . and Commencement of manufacturing or production of any article or thing on or before 31-03-2024 (i) Such business is not formed by splitting up, or the reconstruction , of a already existing business. (ii) Plant Machinery should be new except (a) Such machinery or plant was not used in India (at any time previous to the date of the installation); 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 20% of the total value of the machinery or plant used by the assessee , then, for the purposes of sub-clause (ii), the condition specified therein shall be deemed to have been complied with. (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. Clause (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. 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; Clause (c) Certain Restrictions (i) Assessee should not claim following deductions Section 10AA : Deductions from the Special Economic Zones (SEZ) unit. Section 32(1)(iia) : Additional Depreciation Section 33AB : Deduction given on rubber manufacturing, tea and coffee. Section 33ABA : Deposits made to the site restoration fund by the companies producing or extracting petroleum and natural gas in India. Section 35(1)(ii), (iia), (iii), 35(2AA) Scientific Research Section 35AD : Capital spent by any particular business. Section 35CCC : Investment in agriculture extension projects. Any deduction in respect of certain income under chapter VI-A except Section 80JJAA . (ii) In case of any transaction with any person has close connection owing to extra profit over the normal profit shall be treated as specified deemed transaction referred in section 92BA, the amount of profit shall be determined as per Arm s Length Price as per section 92F. The loss and depreciation referred to in sub-clause (ii) of clause (c) of section 115BAE(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. [ Section 115ABE(3) ] (iii) If the above conditions are not satisfied in any PY the option will be invalid for that PY and subsequent PYs and normal provisions of the Act shall apply. Section 115BAE(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. 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 . [ First Proviso ] 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. [ Second Proviso ] Section 115BAE(5) This section shall apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under section 139(1) for furnishing the first of the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2024 shall be in Form No. 10-IFA . [ Rule 21AHA(1) of Income Tax Rules ] 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 . The beneficial provisions of this section apply only if the option exercised in Form No. 10-IFA .