115BAB APPLICABILTY NORMAL PROVISION AND 115BAA

[Fahiyaz Ahmmed]

RTP Ltd. is described as a domestic company incorporated in May 2020 and taxed at 30% under normal provisions. However, the question allows additional depreciation under Section 32(1)(iia), which is available only to manufacturing companies, thereby implicitly classifying RTP Ltd. as a domestic manufacturing company.

Given this implicit assumption, is it correct to evaluate the option of Section 115BAB (concessional tax regime for domestic manufacturing companies) even though the question does not expressly state that RTP Ltd. is engaged in manufacturing?

For academic and examination purposes, should students:

• Treat the allowance of additional depreciation as sufficient evidence of manufacturing activity, and

• Accordingly, compare tax liability under normal provisions vs Section 115BAB, or

• Require an explicit statement in the question that the company is engaged in manufacturing?

Kindly share your views on how such implicit assumptions should be handled in professional exams like CA Final.

AI Summary

Assuming manufacturing from additional depreciation u/s 32(1)(iia) to apply Section 115BAB concessional corporate tax regime The discussion concerns whether eligibility for the concessional corporate tax regime under section 115BAB may be assumed in an exam problem where the company is allowed additional depreciation under section 32(1)(iia) but manufacturing activity is not expressly stated. It notes that section 32(1)(iia) additional depreciation is statutorily linked to manufacturing/production, and therefore treating the allowance as implying a domestic manufacturing company would permit computation and comparison of tax liability under normal provisions versus section 115BAB (and by extension section 115BAA). Conversely, requiring an explicit factual assertion of manufacturing would preclude applying section 115BAB and limit comparison to regimes not contingent on manufacturing status, affecting the available rate/conditions and resulting tax computation.