Satara Engineering Projects And Equipments Private Limited Vs DCIT (ITAT Pune)
Section 115BAB Concessional Tax @15% Cannot Be Denied in Subsequent Year Once Option Validly Exercised
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeal for AY 2024-25, holding that the CPC and CIT(A) erred in taxing the assessee at 22% under section 115BAA instead of the concessional 15% rate under section 115BAB, despite the assessee having validly exercised the option in an earlier year.
The assessee, a new manufacturing company, had opted for section 115BAB for the first time in AY 2023-24 by filing Form 10-ID within the due date under section 139(1). This option was accepted by the Revenue, including by a detailed order of the CIT(A) for AY 2023-24. For AY 2024-25, although the return was filed belatedly, the CPC processed it under section 143(1) and mechanically applied tax @22% under section 115BAA, which was upheld by the CIT(A).
The Tribunal held that section 115BAB(7) clearly provides that once the option is exercised in the prescribed manner for the first eligible year, it automatically applies to subsequent assessment years. There is no statutory requirement to re-exercise the option or re-file Form 10-ID every year, nor is filing the return within section 139(1) a condition for continuing the benefit once the option has been validly exercised.
