Maharishi Education Corporation P. Ltd. Vs ITO (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in Maharishi Education Corporation Pvt. Ltd. vs ITO addressed the dispute regarding the applicable rate of tax on Long Term Capital Gains (LTCG) under the Income Tax Act, 1961, for the Assessment Year 2021–22. The assessee, a domestic company, had appealed against the order of the Additional/Joint Commissioner of Income Tax (Appeals)-1, Nashik, dated 7 March 2025.
The core issue raised was whether the LTCG arising from the sale of land should be taxed at 20% under Section 112 or at 22% as per Section 115BAA of the Act. The assessee contended that LTCG is specifically governed by Section 112, which prescribes a 20% tax rate. The assessee had exercised the option under Section 115BAA by filing Form 10IC for the financial year 2019–20 and continued under the same regime for the relevant year. In its return, the assessee declared total income of ₹14,98,150, comprising a loss of ₹20,263 and LTCG of ₹15,18,414, and paid tax at 20%. However, upon processing the return under Section 143(1), the Assessing Officer recomputed the tax at 22%, raising an additional demand of ₹59,973.
The CIT(A) upheld the Assessing Officer’s computation, holding that once the assessee opted for the concessional tax regime under Section 115BAA, the entire income, including LTCG, was taxable at the uniform rate of 22%. After hearing both sides, the ITAT agreed with the Revenue’s view, observing that the company had voluntarily chosen the Section 115BAA regime. Consequently, the Tribunal found no reason to interfere with the CIT(A)’s order and dismissed the appeal, confirming that the applicable tax rate under Section 115BAA was 22%.
