- The Taxation Laws (Amendment) Act, 2019 has introduced two new sections -Section 115BAA and Section 115BAB. These sections provide that a company can opt for concessional tax rate regime subject to fulfilment of various conditions. On similar lines, the Finance Act, 2020, inserted Section 115BAC and Section 115BAD to introduce the concessional tax regimes for Individuals, HUFs and Co-operative
society. The option to pay tax at lower rates under these sections shall be available only if the total income of the assessee is computed without claiming specified exemptions/ deductions and assessee satisfies prescribed conditions.+
One of the conditions provides that additional depreciation from an earlier assessment year shall be deemed to have been given full effect to and no further deduction for such depreciation shall be allowed for any subsequent year to the assessee.
To provide relief to such assessees, it has been provided that if there is an additional depreciation allowance in respect of a block of asset which has not been fully adjusted beforethe Assessment Year 2020-21 (for Section 115BAA and 115BAB) or 2021-22 (for Section 115BAA and 115BAB), as the case may be, then such additional depreciation shall be adjusted to the written down value (WDV) of the respective block of the asset in the prescribed manner. Income-tax (22nd Amendment) Rules, 2020
- The Income-tax (22ndAmendment) Rules, 20201 inserted Rules 21AGand 21AH and amended Rule 5.Rule 21AG prescribes Form 10-IE and Rule 21AH prescribes Form 10-IF for opting concessional tax regimes under Section 115BAC and Section
115BAD, respectively. Rule 5 deals with the allowability of deprecation under the Income-tax Act.
A new proviso has been added to Rule 5to provide that a person opting for concessional tax regimes shall be entitled to claim normal depreciation not exceeding 40% in respect of depreciation of any block of assets. Another proviso added to Rule 5 provides that the opening WDV of the respective block of the asset shall be increased by such additional depreciation which was available to the assessee but not allowed as he opted for concessional tax regime.
It must be noted that the above adjustment is a one-time relief and is available only
to the assessee who has opted for the concessional tax regime for the:
(a) Assessment Year 2020-21underSection 115BAA;
(b) Assessment Year 2021-22under Sections 115BAC and 115BAD.
The one-time relief is allowed asProviso to Section 115BAA(3)provides that
corresponding adjustment to the WDV of the block of assets to be made as on the 01-04-2019 if the option is exercised for the assessment year 2020-21.With respect to sections 115BAC and 115BAD, the adjustment is to be made as on 01-04-2020 if the option exercised for the assessment year 2021-22.
The concessional tax regime is optional and the assessee has been given a choice to pay tax at normal rates or opt for concessional tax regimes in any subsequent Assessment Year as per his convenience. Where an assessee opts for concessional tax
regime in subsequent years and not in the first year in which these provisions have been introduced, the unabsorbed deprecation, if any, would lapse. Amendment in Form 3CD
- Concessional tax regimes under Sections 115BAA and 115BAB are applicable from the Assessment Year 2020-21 whereas sections 115BAC and 115BAD are applicable from the Assessment Year 2021-22.Form 3CD has been amended to incorporate the changes relating to Section 115BAA and 115BAD only.
Clause 18 of Form 3CD seeks various information in respect of depreciation. Said clause has been amended by the CBDT to include reporting of information relating to:
(a) Adjustment made to WDV under section 115BAA for Assessment
Year 2020-21; and
(b) Adjusted WDV.
Further, Clause 32(a) of Form 3CD which seeks details of brought forward loss or depreciation allowance, has been substituted to incorporate reporting of:
(a) Losses or allowance not allowed under Section 115BAA; and
(b) Amount as adjusted by the withdrawal of additional depreciation on
account of opting for Section 115BAA.
Consequential changes have been done in the ITR-6 wherein following schedules
have been amended to incorporate reporting of the amount of adjustment on account of Section 115BAA:
(a) Schedule DPM: Depreciation on Plant and Machinery;
(b) Schedule CFL: Details of Losses to be carried forward to future
(c) Schedule UD: Unabsorbed depreciation and allowance under
Amendment in Form 3CEB
- Section 115BAB(6) provides that if the Assessing Officer is satisfied that due to close connection between the company and any other person, the course of business is so arranged that the company produces more than the ordinary profits then he shall compute reasonable profits and gains of such company.
For this purpose, AO may invoke the provisions of Section 92BA pertaining to the specified domestic transaction.
Form 3CEB has been amended to insert a new Clause 24 to seek particulars in respect of the specified domestic transaction in the nature of any business transacted between the persons referred to in Section 115BAB(6).
In case the assessee has entered into any specified domestic transactions with any other person which has resulted in more than ordinary profits expected to arise in such business then following details shall be furnished:
(a) Name of the person with whom the specified domestic transaction
has been entered into;
(b) Description of the transaction including quantitative details, if any
(c) Total amount received/receivable or paid/ payable in the
transactionas per books of account, as computed by the assessee
having regard to the ALP and the method used for determining the
■Notified vide G.S.R. 610(E), dated 01-10-2020
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