CBDT allows filing of modified ITR for business reorganization from June 2016 to March 2022 until June 30, 2024

The CBDT has allowed successor companies to file modified ITRs in cases where the order of business reorganization of the competent authority was issued after 01.06.2016 but before 01.04.2022. The deadline to file modified ITR is 30.06.2024.

Section 170A of the Income-tax Act, 1961 provides that the entities going through business reorganization may furnish modified return of income for any assessment year to which such order of business reorganization is applicable within six months from the end of the month of issuance of order of competent authority.

Section 170A was inserted vide the Finance Act, 2022 with effect from April 1, 2022, to make provisions for giving effect to the order of business reorganization issued by a tribunal, court or an Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016.

Further, the Board, through its order u/s 119 dated 26.09.2022, permitted successor companies, if the business reorganization order was issued between 01.04.2022 to 30.09.2022, to submit modified returns under section 170A of the Act by March 31 2023.

Later, the Board received applications from entities requesting approval to submit income returns following business reorganization through amalgamation, merger, or demerger, sanctioned by a competent authority under the Insolvency and Bankruptcy Code, 2016, before 01.04.2022.

In respect of such entities, the Apex Court, in the case of Dalmia Power Ltd. v. ACIT [2019] 112 252 (SC), held that the Department was to consider revised returns filed beyond the prescribed timeline after taking into account the scheme of amalgamation as sanctioned by NCLT.

Therefore, the entities whose scheme of business reorganization was sanctioned by the competent authority vide orders dated prior to 01.04.2022 were outside the purview of section 170A. Consequently, these entities could not file modified returns of income under section 170A of the Act.

To address the challenges faced by these entities and ease their genuine difficulties, the CBDT issued an order allowing successor companies to submit modified returns for the relevant assessment year. This can be done through the e-filing portal functionality "u/s 119(2)(b) - after condonation of delay/Court Order or Sanction Order of Business reorganization of the Competent authority issued prior to 01.04.2022".

A three-step approach has been laid down in the order which is as follows:

Step 1: The assessee will communicate with the Jurisdictional Assessing Officer (JAO) as per the proforma to enable electronic filing of the return. This can be done up to 30.04.2024.

Step 2: The JAO will verify whether the return is resulting from and limited to the order of the competent authority & enablement through ITBA. The taxpayer will receive such information on its e-filing portal within 30 days of the taxpayer's receipt of communication.

Step 3: Upon receiving such information, the taxpayer can furnish return for the relevant assessment year on the e-filing portal up to 30.06.2024.

Further, it is clarified that successor companies are not required to file a separate application under section 119(2)(b) for condonation of delay before the Board in cases where the order of business reorganization of the competent authority was issued after 01.06.2016 but prior to 01.04.2022.