CPC has processed our return under s.143(1), rejected the s.115BAA option because Form 10-IC was late, and raised a demand by computing book profit under s.115JB. Can it do both?
No. Sub-section (5A) of s.115JB says in terms that the section shall not apply to a person who has exercised the option under s.115BAA or s.115BAB. Once the option is held good, the MAT provisions cease to apply and the tax liability must be computed under s.115BAA without invoking s.115JB — and here the option was held good because it had been accepted for three earlier years on a Form 10-IC filed in March 2021.
Decided by the ITAT (Yogesh Kumar US, Judicial Member and Sanjay Awasthi, Accountant Member (ITAT Delhi 'A' Bench)) on 2026-05-06, reported as I.T.A. No.648/Del/2026, Assessment Year 2024-25; heard 23 April 2026, pronounced 6 May 2026. It bears on section 115JB, section 115JB(5A), section 115BAA, section 115BAA(1), section 115BAA(2), section 115JAA, section 143(1), section 139(1), section 250 of the Income Tax Act 1961, in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters.
This is the mechanism practitioners most often see running the wrong way: CPC disallows the concessional-regime option in processing under s.143(1), and having disallowed it, computes MAT on book profit. The statutory answer is one sentence — s.115JB(5A)(ii) — and it disposes of the s.115JB half of the adjustment entirely once the option survives. Two things to carry with it. The consequence works both ways: the price of the option is s.115JAA(8), which says the whole of s.115JAA shall not apply to a person who has exercised the option under s.115BAA, so brought-forward MAT credit is lost, which is what CBDT Circular 29/2019 records. Before advising a company to opt in, quantify the credit that will be extinguished. And the reason the option survived here was consistency — the same Form 10-IC filed on 2 March 2021 had been acted on for AY 2020-21 to 2022-23 — so the argument is fact-specific and does not by itself cure a Form 10-IC that was never filed.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee company filed Form 10-IC on 2 March 2021 and was taxed under s.115BAA at 22 per cent for AY 2020-21, 2021-22 and 2022-23, the option having been accepted by CPC in processing for each of those years. For AY 2024-25 the return was processed under s.143(1) by intimation dated 22 January 2025 in which CPC disallowed the option claimed under s.115BAA and computed book profit under s.115JB at Rs.36,67,21,158, raising a demand. On appeal the Addl./JCIT(Appeals)-5, Mumbai, by order dated 27 November 2025, held that s.115BAA itself contains no clause about the lapsing of MAT credit but achieves that result by making s.115JB inapplicable to a company opting for s.115BAA, that the relevant change is the amendment to s.115JB by the Taxation Laws (Amendment) Ordinance 2019 and that CBDT Circular No.29/2019 clarified that MAT credit would not be available after exercising the s.115BAA option, and reproduced s.115JB(5A). He held that as the appellant had opted for s.115BAA the provisions of s.115JB ceased to apply by virtue of sub-section (5A), and directed the Assessing Officer to compute the tax liability under s.115BAA without invoking s.115JB. The Revenue appealed, contending that Form 10-IC had been filed after the due date under s.139(1), that the assessee had accepted a similar CPC adjustment for AY 2023-24, and that a fresh Form 10-IC had been filed for AY 2025-26.
The Department's appeal was dismissed. The first appellate authority had interpreted the law correctly and the Tribunal declined to interfere; in the interest of consistency also the assessee deserved to succeed, the processing having been done under s.115BAA for at least three previous years (paragraphs 3 and 4). The direction stands that the tax liability be computed under s.115BAA without invoking s.115JB.
The Departmental Representative's case was that Form 10-IC had not been filed within the due date under s.139(1), so that no relief was available. The assessee's answer was that the Form 10-IC filed on 2 March 2021 had been taken into consideration and acted upon for AY 2020-21, 2021-22 and 2022-23, in each of which CPC had accepted taxability under s.115BAA, and that there was no ground to render an option once exercised under s.115BAA(1) invalid or in violation of the conditions in s.115BAA(2). The Tribunal, having considered the rival submissions and the documents, held that the first appellate authority had interpreted the law correctly and that there was no reason to interfere with that finding; it added the independent ground of consistency, the processing having been done under s.115BAA for at least three previous years (paragraph 3). The legal analysis adopted is that set out in the first appellate order: s.115JB(5A) provides that the provisions of that section shall not apply to any income accruing or arising to a company from life insurance business referred to in s.115B, or to a person who has exercised the option under s.115BAA or s.115BAB; where the option has been exercised, s.115JB expressly ceases to apply and MAT cannot be levied.
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.
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Handle my notice → Ask a CA on WhatsAppNo. Sub-section (5A) of s.115JB says in terms that the section shall not apply to a person who has exercised the option under s.115BAA or s.115BAB. Once the option is held good, the MAT provisions cease to apply and the tax liability must be computed under s.115BAA without invoking s.115JB — and here the option was held good because it had been accepted for three earlier years on a Form 10-IC filed in March 2021. This was decided by the ITAT (Yogesh Kumar US, Judicial Member and Sanjay Awasthi, Accountant Member (ITAT Delhi 'A' Bench)) and bears on section 115JB, section 115JB(5A), section 115BAA, section 115BAA(1), section 115BAA(2), section 115JAA, section 143(1), section 139(1), section 250 of the Income Tax Act 1961. It is reported as I.T.A. No.648/Del/2026, Assessment Year 2024-25; heard 23 April 2026, pronounced 6 May 2026. This is the mechanism practitioners most often see running the wrong way: CPC disallows the concessional-regime option in processing under s.143(1), and having disallowed it, computes MAT on book profit. The statutory answer is one sentence — s.115JB(5A)(ii) — and it disposes of the s.115JB half of the adjustment entirely once the option survives. Two things to carry with it. The consequence works both ways: the price of the option is s.115JAA(8), which says the whole of s.115JAA shall not apply to a person who has exercised the option under s.115BAA, so brought-forward MAT credit is lost, which is what CBDT Circular 29/2019 records. Before advising a company to opt in, quantify the credit that will be extinguished. And the reason the option survived here was consistency — the same Form 10-IC filed on 2 March 2021 had been acted on for AY 2020-21 to 2022-23 — so the argument is fact-specific and does not by itself cure a Form 10-IC that was never filed. If it applies to you, the first step is this: If the intimation both rejects the s.115BAA option and computes book profit, take the s.115JB(5A) point as a separate and self-contained ground: it succeeds the moment the option stands.
The assessee company filed Form 10-IC on 2 March 2021 and was taxed under s.115BAA at 22 per cent for AY 2020-21, 2021-22 and 2022-23, the option having been accepted by CPC in processing for each of those years. For AY 2024-25 the return was processed under s.143(1) by intimation dated 22 January 2025 in which CPC disallowed the option claimed under s.115BAA and computed book profit under s.115JB at Rs.36,67,21,158, raising a demand. On appeal the Addl./JCIT(Appeals)-5, Mumbai, by order dated 27 November 2025, held that s.115BAA itself contains no clause about the lapsing of MAT credit but achieves that result by making s.115JB inapplicable to a company opting for s.115BAA, that the relevant change is the amendment to s.115JB by the Taxation Laws (Amendment) Ordinance 2019 and that CBDT Circular No.29/2019 clarified that MAT credit would not be available after exercising the s.115BAA option, and reproduced s.115JB(5A). He held that as the appellant had opted for s.115BAA the provisions of s.115JB ceased to apply by virtue of sub-section (5A), and directed the Assessing Officer to compute the tax liability under s.115BAA without invoking s.115JB. The Revenue appealed, contending that Form 10-IC had been filed after the due date under s.139(1), that the assessee had accepted a similar CPC adjustment for AY 2023-24, and that a fresh Form 10-IC had been filed for AY 2025-26. The matter was decided on 2026-05-06 by the ITAT (Yogesh Kumar US, Judicial Member and Sanjay Awasthi, Accountant Member (ITAT Delhi 'A' Bench)). On those facts the ITAT held as follows. The Department's appeal was dismissed. The first appellate authority had interpreted the law correctly and the Tribunal declined to interfere; in the interest of consistency also the assessee deserved to succeed, the processing having been done under s.115BAA for at least three previous years (paragraphs 3 and 4). The direction stands that the tax liability be computed under s.115BAA without invoking s.115JB.
The Departmental Representative's case was that Form 10-IC had not been filed within the due date under s.139(1), so that no relief was available. The assessee's answer was that the Form 10-IC filed on 2 March 2021 had been taken into consideration and acted upon for AY 2020-21, 2021-22 and 2022-23, in each of which CPC had accepted taxability under s.115BAA, and that there was no ground to render an option once exercised under s.115BAA(1) invalid or in violation of the conditions in s.115BAA(2). The Tribunal, having considered the rival submissions and the documents, held that the first appellate authority had interpreted the law correctly and that there was no reason to interfere with that finding; it added the independent ground of consistency, the processing having been done under s.115BAA for at least three previous years (paragraph 3). The legal analysis adopted is that set out in the first appellate order: s.115JB(5A) provides that the provisions of that section shall not apply to any income accruing or arising to a company from life insurance business referred to in s.115B, or to a person who has exercised the option under s.115BAA or s.115BAB; where the option has been exercised, s.115JB expressly ceases to apply and MAT cannot be levied. In the words reproduced by the source cited on this page: "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." The decision followed or applied CBDT Circular No.29/2019 dated 2 October 2019 — relied on in the first appellate order for the proposition that MAT credit is not available after exercising the s.115BAA option.
It was decided by the ITAT on 2026-05-06 and is reported as I.T.A. No.648/Del/2026, Assessment Year 2024-25; heard 23 April 2026, pronounced 6 May 2026. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 115JB, section 115JB(5A), section 115BAA, section 115BAA(1), section 115BAA(2), section 115JAA, section 143(1), section 139(1), section 250, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Department's appeal was dismissed. The first appellate authority had interpreted the law correctly and the Tribunal declined to interfere; in the interest of consistency also the assessee deserved to succeed, the processing having been done under s.115BAA for at least three previous years (paragraphs 3 and 4). The direction stands that the tax liability be computed under s.115BAA without invoking s.115JB. It arises in Assessment & Scrutiny, Appeals and How Tax Law Is Read matters, on section 115JB, section 115JB(5A), section 115BAA, section 115BAA(1), section 115BAA(2), section 115JAA, section 143(1), section 139(1), section 250 of the Income Tax Act 1961, and was decided by Yogesh Kumar US, Judicial Member and Sanjay Awasthi, Accountant Member (ITAT Delhi 'A' Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Evidence the option: the acknowledgment and date of Form 10-IC, and the assessment or processing history for every year in which the Department has already taxed the company at the concessional rate. Where the option has been acted upon for earlier years, plead consistency squarely — that was the Tribunal's second and independent reason here. Before opting into s.115BAA for any company, compute the unutilised MAT credit under s.115JAA that will lapse under s.115JAA(8) and put the comparison in writing to the client. Do not confuse the carry-forward rule with the lapse rule: the fifteen-year limit on carrying MAT credit forward is in s.115JAA(3A), while s.115JAA(8) is the provision that switches the whole section off on exercise of the s.115BAA option.
Validity check could not be completed. Validity check could not be completed. The order was pronounced on 6 May 2026 and no later treatment was located; the Revenue's time to appeal under s.260A may be open. Note a live tension in the Tribunal case law that this order does not address: Brahmos Realty Private Limited v ITO (ITAT Mumbai, 19 August 2025), already in the library, proceeds on the footing that a claim to MAT credit is inconsistent with a valid s.115BAA option, whereas ACIT v Lahari Holiday Homes (P) Ltd (ITAT Hyderabad, 8 October 2025) treats the option as valid and simply denies the MAT credit for that year. The two lines have not been reconciled. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The electronic text of this order carries several OCR corruptions that a reader must not reproduce: "115BBA" appears repeatedly where the section is 115BAA, "1158AA" and "1158" appear for 115BAA and 115B, and "Form 101C" appears for Form 10-IC. The header prints the assessment year as "2024" while the grounds and the intimation date of 22 January 2025 show the year in dispute to be AY 2024-25. The demand figure differs between the two places it appears — Rs.6,91,94,590 in the JCIT(A)'s extract and Rs.6,40,73,523 in the assessee's submission quoted within it. The Tribunal's own reasoning occupies a single paragraph; the legal analysis is the Addl./JCIT(Appeals)'s, reproduced at paragraph 1.2 and adopted. The text of s.115JB(5A) reproduced in that extract was independently checked against the department's live section page for s.115JB (Year stamp: 2025) and matches, save for the OCR corruption of "section 115B". This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Department's appeal was dismissed. The first appellate authority had interpreted the law correctly and the Tribunal declined to interfere; in the interest of consistency also the assessee deserved to succeed, the processing having been done under s.115BAA for at least three previous years (paragraphs 3 and 4). The direction stands that the tax liability be computed under s.115BAA without invoking s.115JB.
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