New Section 115BAE - Tax on income of certain new manufacturing co-operative societies.

As per New Section 115BAE of Income Tax Act introduced by Finance Minister in Budget 2023 for Financial Year 2023-24 (Assessment Year 2024-25)

Tax on income of certain new manufacturing co-operative societies.

( 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 1 ^st 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 that where 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 twenty-two per cent. and no deduction or allowance in respect of any expenditure or allowance shall be made in computing such income:

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,

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 subclause ( 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.