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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Returns of various Entities excluding Companies

A co-operative society has exercised the section 204 option in an earlier tax year. In a later year it wishes to go back to the normal provisions because the regular deductions would now help it. Under section 204(2), what is the position?

The society cannot withdraw. Section 204(2)(c) provides that once the option is exercised for any tax year it cannot be withdrawn for the same or any other tax year. It ceases only if the eligibility conditions fail, which makes it invalid for that and later years.

  1. AIt may withdraw the option for that year by informing the Assessing Officer before the due date of return
  2. BIt may withdraw the option only once in its life, and only after five years
  3. CIt may withdraw the option only with the approval of the Principal Commissioner
  4. DIt cannot withdraw the option for the same or any other tax year once exercisedCorrect

Explanation

Section 204(2)(c) states that once the option has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year. The option lapses only if the conditions are not fulfilled, under sub-section (2)(d). No withdrawal window or approval route exists.

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