ACIT Vs Lahari Holiday Homes (P) Ltd. (ITAT Hyderabad)
Overview
The case concerns the tax treatment of Lahari Holiday Homes Pvt. Ltd. regarding its exercise of the option under section 115BAA of the Income Tax Act, 1961, for the Assessment Year 2021-22. The core issues debated were whether a revised return exercising the section 115BAA option after initial filing under the Minimum Alternate Tax (MAT) regime was permissible and whether losses and depreciation could be carried forward and set off under the restrictions of section 115BAA(2).
Background
The petitioner, Lahari Holiday Homes Pvt. Ltd., initially filed its original income tax return under the provisions applicable to MAT, claiming credit accordingly. Subsequently, within the statutory due date, the company filed a revised return, opting for the concessional tax regime introduced under section 115BAA, which offers lower tax rates for domestic companies provided certain conditions are met.
The assessing officer (AO) rejected this revised claim, asserting that exercising the section 115BAA option through a revised return amounted to a withdrawal of the earlier exercise under MAT, which was prohibited by the CBDT Circular No. 29/2019. The AO further disallowed the set-off of carried-forward business losses and unabsorbed depreciation, arguing that section 115BAA(2) restricts such set-offs.
