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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 domestic manufacturing company exercised the option under section 201 of the Income-tax Act, 2025 for the tax year when it filed its first return. Which statement about withdrawing the option is correct?

Under section 201(2)(c), once the option has been exercised for any tax year it cannot be withdrawn for that year or any later year. The company is bound by it, and it ceases only if the conditions are not fulfilled.

  1. AIt can be withdrawn for any later year by filing a revised return
  2. BIt can be withdrawn only for the same tax year in which it was exercised
  3. CIt cannot be withdrawn for the same or any other tax year once exercisedCorrect
  4. DIt lapses automatically after five tax years

Explanation

Section 201(2)(c) states that once the option has been exercised for any tax year, it shall not be subsequently withdrawn for the same or any other tax year. Withdrawal through a revised return is not provided. The option becomes invalid only if the conditions are failed, not by choice.

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