Changes in Form 3CEB as notified by CBDT


The CBDT has notified changes to the Form 3CEB vide Notification No. 27/2024 /F. No. 370142/3/2024-TPL, dated 05-03-2024. These changes came into force shall apply to all Form 3CEB signed on or after 05-03-2024, irrespective of the assessment year to which they relates.

In Part C (Specified domestic transaction), serial number 25 shall be re-numbered as serial number 26 thereof and before serial number 26 as so renumbered, serial number 25 shall be inserted.

The changes made to serial number 25 are:

Particulars in respect of specified domestic transaction in the nature of any business transacted between the persons referred to in sub-section (4) of section 115BAE:

Has the assessee entered into any specified domestic transaction with any person referred to in sub-section (4) of section 115BAE which has resulted in more than ordinary profits expected to arise in such business?

If ‘yes’, provide the following details:

  1. Name of the person with whom the specified domestic transaction has been entered into.
  2. Description of the transaction including quantitative details, if any.
  3. Total amount received or receivable or paid or payable in the transaction–
    1. as per books of account;
    1. as computed by the assessee having regard to the arm’s length price.
  4. Method used for determining the arm’s length price [See sub-section (1) of section 92C].

About the changes:
The above changes are consequential to the insertion by the Finance Act, 2023, of Section 115BAE (dealing with Tax on certain new manufacturing co-operative societies) of the Income-Tax Act, 1961 (“the Act”) with effect from the Assessment Year 2024-25.

The changes refer to sub-section (4) of section 115BAE which relate to the adjustment of business profits if business arrangements between closely connected parties generate excessive profits. Such adjustments ensure the computation of profits aligns with ordinary expectations for the business.

SW Point of View:  SW Remarks: Since the provisions of Section 115BAE of the Act provides for a reduced rate of taxation for eligible manufacturing entities, the additional reporting in Form 3CEB will ensure that such manufacturing entities are not used as a tool to shift profit and reduce the taxable profits of the other party. Such disclosure imposes a statutory requirement on accountant to report whether the transaction has been entered at arm’s length or not.

Udit Maheshwari, Audit Associate, SW