Case Law Details
ITO Vs Western Developers Private Limited (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi dismissed the Revenue’s appeal against the order of the Addl./JCIT(Appeals) concerning the applicability of Sections 115BAA and 115JB of the Income Tax Act for AY 2024-25 in the case of . The assessee’s return had originally been processed under Section 143(1), where the CPC disallowed the concessional tax regime claimed under Section 115BAA and computed book profits of Rs.36.67 crore under Section 115JB, resulting in tax demand based on Minimum Alternate Tax (MAT).
Before the appellate authority, the assessee argued that it had validly opted for taxation under Section 115BAA by filing Form 10-IC on 02.03.2021 and that the benefit had already been accepted by the department for AYs 2020-21 to 2022-23. The assessee further contended that once Section 115BAA was applicable, Section 115JB relating to MAT could not be invoked because sub-section (5A) of Section 115JB expressly excludes companies opting for Section 115BAA from MAT provisions.
The Addl./JCIT(Appeals) examined the statutory provisions and referred to the amendment introduced through the Taxation Laws (Amendment) Ordinance, 2019. It was noted that Section 115JB does not apply to domestic companies opting for Section 115BAA and that CBDT Circular No. 29/2019 clarified that MAT credit would not remain available after exercising such option. The appellate authority observed that companies choosing the concessional tax regime under Section 115BAA are excluded from the MAT mechanism under Section 115JB(5A).
The appellate authority therefore held that the assessee had correctly exercised the option under Section 115BAA and that Section 115JB had no application in the present case. The Assessing Officer was directed to recompute the tax liability under Section 115BAA without invoking MAT provisions under Section 115JB.
The Revenue challenged this relief before the ITAT. It argued that the assessee had filed Form 10-IC beyond the due date prescribed under Section 139(1) and was therefore not eligible for concessional taxation under Section 115BAA. The Revenue also contended that the assessee had accepted a similar CPC adjustment in AY 2023-24 and had filed a fresh Form 10-IC for AY 2025-26.
On the other hand, the assessee submitted before the Tribunal that the Form 10-IC filed on 02.03.2021 had already been accepted by the department for AYs 2020-21, 2021-22, and 2022-23. It was argued that there were no grounds to invalidate the option once exercised under Section 115BAA(1), nor was there any violation of the conditions prescribed under Section 115BAA(2).
After considering the rival submissions and documents on record, the ITAT held that the Addl./JCIT(Appeals) had correctly interpreted the law. The Tribunal found no reason to interfere with the appellate findings. It also observed that, in the interest of consistency, the assessee deserved relief because the department had accepted taxation under Section 115BAA for at least three preceding assessment years. Accordingly, the Tribunal dismissed the Department’s appeal. The order was pronounced on 06.05.2026.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal arises from order dated 27.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. Addl./JCIT(Appeals)-5, Mumbai.
1.1 In this case, the return of income filed by the assessee was processed u/s 143(1) of the Act. Through this processing the Ld. AO-CPC disallowed the option claimed by the assessee u/s 115BAA of the Act and thereafter made an addition of Rs.36,67,21,158/- u/s 115JB of the Act.
1.2 The assessee approached the Ld. Addl./JCIT (Appeals) where he could succeed on the basis of the following findings: –
“5.4 Ground No.4:
That on facts and in law the AO has erred in invoking provisions of Chapter XII-B and thereby determining tax payable on “Book Profits” u/s 115JB of the Act.
These grounds of the appellant are against calculating Book profit as per provisions of section 115JB which has been computed at a sum of Rs. 36,67,21,158/- determining total tax payable at Rs.6,91,94,590/-. The appellant vide letter dated 21.11.2025 submitted as under:
In continuation of my earlier submission dated 17.10.2025 where in it was submitted to your kind office/good self that CPC vide order/intimation u/s 143(1) dated 22/01/2025 for AY 2024-25, has disallowed the benefits claimed for taxation u/s 115BBA of the Income Tax Act, 1961, whereas the assessee is an eligible assessee for the same. Further, the CPC, in the intimation u/s 143(1) dated 22/01/2025, has computed the tax u/s 115JB raising demand of Rs.6,40,73,523/- whereas the provision of section 115JB of the Act are not applicable to the assessee. It is also noticed from the said impugned order dated 22/01/2025, “Book profit of Rs.36,67,21,158/- was computed by CPC which is u/s 115JB completely wrong as the assessee has fulfilled all the conditions of taxation u/s 115BBA of the Act. The Hon’ble Appellate Authority is also pay your kind attention that after filing of Form 10IC on 02/03/2021 on e-filing portal, the assessee was given the benefits of taxation u/s 115BBA of the Act and taxed the income @ 22% as per the Income Tax Act for AY 2020-21 to 2022-23.
5.4.2 Section 115BAA of the Income Tax Act, 1961 itself does not explicitly contain a clause about the lapsing of Minimum Alternate Tax (MAT) credit. Instead, the law achieves this result by making the entire Section 115JB (MAT provisions) inapplicable to companies that opt for Section 115BAA.
5.4.3 The legislative change that is relevant is the amendment to Section 115JB by the Taxation Laws (Amendment) Ordinance, 2019, which states that MAT provisions do not apply to a domestic company opting for Section 115BAA of the Income Tax Act, 1961. The Central Board of Direct Taxes (CBDT) further clarified this in Circular No. 29/2019, stating that the MAT credit would not be available after exercising the option under Section 1158AA.
5.4.4 This effectively means that a company opting for Section 115BAA cannot utilize accumulated MAT credit (governed by Section 115JAA) against their tax liability under the new regime. Companies should consider utilizing their MAT credit before opting for Section 1158AA, as the choice is irreversible.
5.4.5 The subsection 5(A) of section 115JB of the Income Tax Act, 1961 is reproduced as under:
(5A) The provisions of this section shall not apply to,-
(i) any income accruing or arising to a company from life insurance business referred to in section 1158;
(ii) a person who has exercised the option referred to under section 115BAA or section 115BAB.
5.4.6 Upon a careful examination of the facts and applicable legal provisions, it is observed that the appellant has opted for taxation under section 115BAA of the Income-tax Act, 1961 In such a circumstance, the provisions of section 115JB cease to apply, by virtue of sub-section (5A) of section 115JB, which expressly excludes the applicability of Minimum Alternate Tax (MAT) where tax is computed under section 115BAA.
5.4.7 Accordingly, as the Ground Nos. 2 and 3 are adjudicated on the applicability of section 115BAA, it is held that section 115JB has no application in the present case. In view of the above legal position, the Assessing Officer is hereby directed to compute the tax liability of the appellant in accordance with the provisions of section 115BAA, without invoking the provisions of section 115JB.”
1.3 The Revenue is aggrieved with the relief given by the First Appellate Authority and has approached the ITAT with the following grounds: –
“In the case of Mis Western Developers Private Limited, PAN- AAACW0841L AY-2024-25:
1. On the facts and circumstances of the case and in law, the Ld. Addl./JCIT(A) has erred in deleting the addition of Rs.36,67,21,158/- u/s 115JB of the Act.
2. On the facts and circumstances of the case and in law, the Ld. Addl./JCIT(A) has erred in holding that the assessee is eligible for concessional taxation u/s 115BAA.
3. On the facts and circumstances of the case and in law, the Ld. Addl./JCIT(A) has erred in ignoring the fact that the assessee has filed Form 101C after the due date u’s 139(1) of the Act.
4. On the facts and circumstances of the case and in law, the Ld. Addl./JCIT(A) has erred in not appreciating the fact that in AY 2023-24, the assessee has accepted the adjustment made by CPC on account of ineligibility u/s 115BAA of the Act.
5. On the facts and circumstances of the case and in law, the Ld. Addl./JCIT(A) has erred in ignoring the fact that the assessee has filed fresh Form 101C for AY 2025-26.
6. The appellant craved leave to add, alter, delete and/or modify any of the grounds of appeal either before or at the time of hearing of this appeal.”
2. Before us the Ld. DR pointed out that initially the Form 10-IC was filed on 02.03.2021 and thereafter a fresh Form 10-IC was filed for Ay 2025-26. It was the submission that since Form 10-IC was not filed within the due date u/s 139(1) of the Act, hence, the assessee was not entitled for any relief as had been granted by the Ld. Addl./JCIT(Appeals).
2.1 Per contra, the Ld. AR pointed out that the Form 10-IC filed on 02.03.2021 was duly taken into consideration for AY 2020-21, 2021-22 & 2022-23. For all these years the Ld. AO-CPC has accepted the taxability u/s 115BAA of the Act. It was argued that there are no grounds to render an option once exercised u/s 115BAA(1) as invalid or in violation of conditions stated in section 115BAA(2) of the Act.
3. We have carefully considered the rival submissions and have gone through the documents before us. It is seen that the Ld. Addl./JCIT(Appeals) (supra) has interpreted the law correctly and due to that reason, we do not deem it fit to interfere in the impugned finding. Furthermore, in the interest of consistency also the assessee deserves to succeed since for at least three previous years the processing has been done u/s 115BAA of the Act.
4. In the result, the Department’s appeal is dismissed.
Order pronounced in the open court on 06.05.2026
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