Everything about Form ITR-A by a successor company

Form ITR-A

On 19-09-2022, the Ministry of Finance has notified the Income-tax (31st Amendment) Rules, 2022 in order to amend Income-Tax Rules 1962 which will come into force from 01-11-2022. The amendment inserts a new Rule 12AD providing return of income under Section 170A and a new form ITR-A for ‘successor entities’ to furnish their return of income u/s 170A of the Income Tax Act, 1961 consequent to business reorganisation.

What is Form ITR-A?

ITR-A is a form provided to furnish a modified return by a successor company to a business reorganization for an assessment year.

How is the form required to be filed?

It is verified and furnished electronically by digitally signature certificate.

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What is the use of Form ITR-A?

Where businesses go through a reorganization the successor entity, is required to file modified returns for the period between the date of effectivity of the order and the date of issuance of the final order of the competent authority. Form ITR-A is the prescribed form by the Income Tax Department for filing such a return.

What is a successor entity?

When two or more business goes under remodeling, reconstruction, amalgamation, or merger the resulting business or entity is known as the successor entity, and the businesses going under reorganization are known as the predecessor entity.

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What is the deadline for filing Form ITR-A?

The prescribed form should be furnished within six months from the end of the month in which said order was issued.

Why did Form ITR-A come into existence and what was the need for it?

Earlier under section 170A of the Income Tax Act, in the case of reorganized businesses the successor was required to file any return under section 139 (filing of income tax return) in the assessment year of the relevant financial year before the date of order of a High Court or tribunal or an Adjudicating Authority as per the Insolvency and Bankruptcy Code, 2016. Later on, the CBDT notifies the modified ITR Form for exercising the power of section 170A.

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Under which notification was Form ITR-A came in?

In exercise of the powers conferred by section, 170A read with section 295 of the Income-tax Act, 1961 (43 of 1961), Central Board of Direct Taxation (CBDT) vide Notification No. 110/2022 dated 19.09.2022 notified the Income-tax (31st Amendment) Rules, 2022. With this, CBDT notified new Rule 12AD and modified income return Form ITR-A.

When will the rule come into existence?

The new rule 12AD shall come into force from 1st November 2022 as written in the rule.

What are the changes after Form ITR-A?

  • The ITR-6 (applicable for companies) has been modified to include information contained in FORM ITR-A.
  • In Appendix II, in Form ITR-6- PART A-GEN, entries of the serial number (A19)(a)(i), have been substituted, for every assessment year commencing on April 01, 2022, or any, earlier assessment year,
  • In AppendixII, after the ITR – Ack, Form ITR-A (ITR under section 170A) has been inserted.
  • Further,  If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the order of the business reorganization applies have been completed or are pending on the date of furnishing of the modified return in accordance with the provisions of section 170A, the Assessing Officer shall, pass an order modifying the total income of the relevant assessment year determined in such assessment or reassessment, or proceed to complete the assessment or reassessment proceedings, as the case may be, in accordance with the order of the business reorganization and the modified return so furnished. 
  • Lastly, The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats, and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival, and retrieval policies in relation to furnishing the return in the manner specified in sub-rule (2).’
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