Section 115BAA

Section 115BAA — the law in short

What the courts have decided on section 115BAA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sarla Holdings P Ltd v PCIT Supreme CourtHelps department
  I did not tick s.115BAA in the return and filed Form 10-IC late. Can I still get the concessional rate?
  No, if the return itself did not opt. Section 115BAA(5) requires the option to be exercised in the prescribed manner on or before the s.139(1) due date, and Circular 6/2022 condones only a late Form 10-IC where the option was in fact exercised in the return. A company that marked 'None of the above' cannot claim the benefit later, and s.115JB applies.
• M/s Kanoria Energy and Infrastructure Ltd v CCIT High CourtHelps taxpayerHigh Courts differ
  The Commissioner rejected my Form 10-IC condonation application as time-barred under Circular 17/2024, counting from the date of my application and ignoring that I had actually filed the Form years earlier. Is that right?
  No. The Rajasthan High Court set aside the rejection, holding that it was legally unsustainable because it conflated the date of filing of Form 10-IC with the date of the formal condonation application. The Form having been filed on 30 January 2023, within three years of the end of AY 2020-21, and the s.115BAA option having been unambiguously exercised in the return itself, the delay was condoned and the matter remanded with a direction that the authority not consider delay or limitation again.
• Mentaura Technologies Pvt Ltd v PCIT Delhi High CourtHelps departmentHigh Courts differ
  I never filed Form 10-IC for AY 2020-21 and only applied for condonation in January 2025. The Commissioner says I am out of time. Is he right?
  Yes. The Delhi High Court dismissed the writ petition because para 5 of CBDT Circular No. 17/2024 bars any application for condonation of delay in filing Form 10-IC or Form 10-ID made more than three years from the end of the assessment year, which for AY 2020-21 meant 31 March 2024. The application having been made on 20 January 2025, it was not maintainable however good the explanation for the original delay.
• Diebold Nixdorf India Pvt. Ltd. v CBDT High CourtHelps taxpayerNo later treatment found
  I opted for s.115BAA in my return but filed Form 10-IC late, and my return itself was belated. CBDT has refused to condone the delay because Circular No. 6/2022 requires the return to have been filed within the s.139(1) due date. Is that a good reason?
  No. The Bombay High Court held that filing the return within the s.139(1) due date is not a condition precedent for claiming the benefit of s.115BAA — s.115BAA(5) requires the declaration in Form 10-IC to be filed within that time, not the return — so the first condition in the Board's circular cannot by itself defeat a condonation application. And even where the circular's conditions are not met, the Board retains its independent power under s.119(2)(b) to condone the delay dehors the circular. The delay of 23 days was condoned and the assessment directed to be modified to tax the company under s.115BAA.
• Herald Global Ventures Private Limited v CCIT-1, Ahmedabad High CourtHelps taxpayerNo later treatment found
  My start-up's Inter-Ministerial Board certificate for s.80-IAC was refused, so I switched to s.115BAA and filed Form 10-IC 53 days late for AY 2022-23. There is no blanket circular for that year. Can the delay be condoned?
  Yes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve.
• Bax India Ventures v CPC High CourtHelps taxpayer
  CPC made a section 143(1)(a) adjustment without first putting the proposed adjustment to me. The department says my reply could not have changed anything. Does that save the intimation?
  No. The Bombay High Court held that the first proviso to section 143(1)(a) is mandatory, so no intimation making an adjustment to the return can be passed unless the proposed adjustment is first intimated to the assessee and he is given a chance to respond. The Court rejected the department's argument that giving the intimation would have been an exercise in futility, pointing out that the assessee could, for example, have obtained an order condoning the delay in filing Form 10-IC. The intimation of 1 December 2025 was quashed and set aside, and the department was left free to issue the notice, consider the response and pass a fresh intimation.
• Rama Industries Ltd v PCIT Mumbai-3 High CourtHelps taxpayer
  The portal would not accept Form 10-IC for FY 2019-20 before the Circular 6/2022 cut-off of 30 June 2022, and I filed it physically eleven days late. Is the s.115BAA benefit lost?
  No. The Bombay High Court quashed the rejection under s.119(2)(b) and condoned the delay where the assessee had selected s.115BAA in the return, had saved a draft Form 10-IC on the portal before the cut-off but could not submit it because the Financial Year 2019-20 option was not available, and filed a physical Form with the Jurisdictional Assessing Officer eleven days after the extended date.
• Cell Com Teleservices Private Limited v Union of India High CourtHelps taxpayer
  I opted for the 22 per cent rate in my return but missed filing Form 10-IC by the due date. The Commissioner refused to condone the delay. Can the High Court help?
  Yes. The Allahabad High Court quashed the Principal Commissioner's order refusing condonation under section 119(2)(b) and directed him to condone the delay, accept Form 10-IC for assessment year 2020-21 and recompute the tax liability under section 115BAA. Filing Form 10-IC before the return is not mandatory; where genuine hardship is shown the delay may be condoned, and section 119(2)(b) is to be read as beneficial legislation. The Commissioner had taken an excessively strict view, ignored his own Assessing Officer's favourable report, and exercised his discretion arbitrarily.
• Mirae Asset Venture Investments India Pvt Ltd v PCIT-6 High CourtHelps taxpayer
  I filed my return in time and ticked s.115BAA in the ITR-6, but Form 10-IC went in late and the CPC has already processed the return and raised a demand. Can the delay still be condoned?
  Yes, for AY 2021-22, if the three conditions in CBDT Circular No. 19/2023 dated 23 October 2023 are met. The Bombay High Court held that the Circular imposes no fourth condition — neither the fact that the return was already processed under s.143(1) and a demand raised, nor the fact that the shortfall was detected by the Assessing Officer rather than volunteered, takes the case outside it.
• Royal LED Equipments Pvt. Ltd. v CCIT High CourtHelps taxpayer
  I claimed the 15 per cent rate under s.115BAB in my return but the portal would not accept Form 10-ID before the due date. My s.119(2)(b) application was rejected before Circular No. 17/2024 came out, so the Department says it can do nothing. Where does that leave me?
  The Gujarat High Court set the rejection aside and directed the authorities to accept the Form 10-ID filed on 12 September 2022 as legal and valid. Once the benefit is claimed in the return, the filing of the separate form is merely procedural and should not be denied where the assessee shows sufficient cause; and the very fact that the Board had to issue Circulars 6/2022, 19/2023 and 17/2024 established that assessees had faced a real problem in filing Forms 10-IC and 10-ID in time.
• ITO v Western Developers Private Limited — once the s.115BAA option stands, s.115JB has no application at all ITATHelps taxpayerNo later treatment found
  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.
• Electronfab Engineering Pvt Ltd v ITO ITATHelps taxpayerNo later treatment found
  You forgot to opt for s.115BAA in the original return and then filed Form 10-IC and a corrected return in answer to a s.139(9) notice. Does the option hold?
  The Tribunal held that it does. Form 10-IC filed on 2 December 2024 and the corrected return filed on 6 December 2024 in answer to the defect notice sufficiently demonstrated the intention to opt for the concessional regime, and the procedural lapse in not exercising the option in the original return could not defeat the substantive claim where the statutory conditions were otherwise met.
• Getinge Medical India Private Limited v DCIT 2(2)(1), Mumbai ITATHelps taxpayerNo later treatment found
  Can the Tribunal itself give me the s.115BAA rate where Form 10-IC was late, or must I go to the Commissioner under s.119(2)(b)?
  The Mumbai Tribunal held that where the option was clearly exercised in the return itself and the tax computed accordingly, the substantive requirement of s.115BAA(5) is satisfied and the later filing of Form 10-IC is procedural, so the time limit for the Form is directory. It condoned a delay of about 45 days and directed the Assessing Officer to accept the option and recompute the tax at the concessional rate, without sending the assessee to the Commissioner.
• ACIT v Lahari Holiday Homes (P) Ltd — the s.115BAA option can be exercised in a revised return, and the MAT credit then goes ITATHelps taxpayer
  We filed the original return under MAT claiming MAT credit, then filed a revised return within the due date opting for s.115BAA. The Assessing Officer says that is a prohibited withdrawal of the option. Is it, and what happens to the MAT credit and our brought-forward losses?
  It is not a withdrawal. A revised return under s.139(5) substitutes the original return and assumes the character of a return under s.139(1), so an option exercised for the first time in a revised return filed within the due date is a valid first exercise — there was no earlier exercise capable of being withdrawn. But once the concessional regime is allowed, no MAT credit can be claimed for that year; and s.115BAA(2) bars set-off only of losses attributable to the deductions it specifies, not of ordinary brought-forward business and capital losses.
• Brahmos Realty Private Limited v ITO ITATHelps taxpayerNo later treatment found
  My staff filed Form 10-IC by mistake, then I filed the return under the normal provisions and set off my brought-forward MAT credit. CPC has taxed me under s.115BAA and wiped the credit out. Section 115BAA says the option cannot be withdrawn. Am I stuck?
  Not necessarily. The Tribunal held that the option cannot be WITHDRAWN, but it can FAIL: because s.115JAA(8) bars MAT credit to a company that has exercised the s.115BAA option, a company that claims MAT credit in its return has not satisfied the conditions in s.115BAA(2), and the proviso to s.115BAA(1) then makes the option invalid as if it had never been exercised. The Form 10-IC was construed as invalidated and the matter was restored to the CIT(A) to compute the tax under the old regime and allow the legitimate MAT credit.
• Statutory position — s.10(23FC): the business trust's own exemption for interest and for dividend from a special purpose vehicle, and what a "special purpose vehicle" is CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client is a registered InvIT. It receives interest and dividend from the project companies it controls. Is that income taxed in the trust's hands, and if not, where does the charge go?
  Neither is taxed in the trust's hands. Clause (23FC) of section 10 keeps out of the trust's total income (a) interest received or receivable from a special purpose vehicle and (b) dividend received or receivable from a special purpose vehicle. The charge does not disappear: section 115UA(3) moves income of the nature described in clause (23FC) to the unit holder, and section 10(23FD) — which exempts the rest of a distribution in the unit holder's hands — expressly does not cover the interest limb, and does not cover the dividend limb where the special purpose vehicle has exercised the option under section 115BAA. A "special purpose vehicle" is defined inside the clause itself as an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest required by the regulations under which the trust is registered.
• Statutory position — s.10(23FD): the unit holder's exemption for the rest of a business trust distribution, and the s.115BAA switch that decides whether SPV dividend is taxed in his hands CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client holds units in a listed REIT. The Form 64B shows several components. Which of them does he actually pay tax on, and on what basis is the rest exempt?
  Clause (23FD) of section 10 exempts, in the unit holder's hands, any distributed income referred to in section 115UA received by him from the business trust — but not the proportion of it that is of the same nature as the income referred to in sub-clause (a) of clause (23FC), or clause (23FCA), or sub-clause (b) of clause (23FC) in a case where the special purpose vehicle has exercised the option under section 115BAA. So the interest component and the direct-rent component are always taxable to him; the special purpose vehicle dividend component is taxable to him only if that vehicle is on the concessional corporate rate in section 115BAA, and is otherwise exempt; and everything else the trust distributes out of income that has already borne tax at trust level under section 115UA(2) is exempt. The words carrying the section 115BAA condition were put into the clause by section 7(II)(c) of the Finance Act, 2020 with effect from 1 April 2021.
• Statutory position — s.35AD: the fourteen specified businesses and the commencement date each must satisfy under s.35AD(5), the hundred per cent capital deduction, the 150 per cent window that ran from AY 2013-14 to AY 2017-18, and the day the deduction became optional CBDT Circulars & InstructionsCuts both ways
  My client is setting up a cold storage and wants the section 35AD deduction. Which businesses are actually within the section, from what date does each qualify, is the deduction still a hundred per cent, and can we choose not to claim it?
  Section 35AD allows a deduction of the WHOLE of any capital expenditure incurred wholly and exclusively for a specified business in the previous year in which it is incurred, with a proviso pulling pre-commencement capital expenditure into the year operations commence if it was capitalised in the books on that date. Since the Finance Act, 2020 (Act 12 of 2020) amended sub-section (1) with effect from 1 April 2020, the words are "An assessee shall, if he opts, be allowed a deduction" — the deduction became OPTIONAL from AY 2020-21, which is what makes the section 115BAA and 115BAB concessional regimes workable. There are fourteen specified businesses in section 35AD(8)(c), and each qualifies only if it commences operations on or after the date given for it in section 35AD(5). These are the dates the business must have COMMENCED OPERATIONS on or after; they are not the dates on which each business was added to the list by amendment, and the two do not coincide. The dates are as follows: cross-country natural gas pipeline networks from 1 April 2007; a two-star-or-above hotel, a hospital with at least a hundred beds, and a slum redevelopment or rehabilitation housing project from 1 April 2010; an affordable housing project and a new or newly installed fertiliser plant from 1 April 2011; an inland container depot or container freight station, bee-keeping and honey and beeswax production, and a sugar warehousing facility from 1 April 2012; a slurry pipeline for transporting iron ore and a semi-conductor wafer fabrication unit from 1 April 2014; a new infrastructure facility from 1 April 2017; and everything else falling within the list — cold chain facilities, agricultural produce warehousing and crude or petroleum oil pipelines — from 1 April 2009. A weighted deduction of one and one-half times ran alongside for five businesses under sub-section (1A), inserted by the Finance Act, 2012 with effect from 1 April 2013 and OMITTED by the Finance Act, 2016 (Act 28 of 2016) with effect from 1 April 2018; so 150 per cent is available for AY 2013-14 to AY 2017-18 and a hundred per cent before and after.
• CBDT Circular No. 29/2019 — MAT credit on opting into s.115BAA CBDT Circulars & InstructionsHelps department
  My client company has a large MAT credit and wants the 22 per cent rate under s.115BAA. Does the credit survive the switch?
  No. The Board has clarified that because s.115JB itself ceases to apply to a domestic company that exercises the s.115BAA option, 'the tax credit of MAT paid by the domestic company exercising option under section 115BAA of the Act shall not be available consequent to exercising of such option'. The same circular carries the answer to the problem: since there is no time limit for exercising the option, a company holding MAT credit may exercise it after utilising the credit against regular tax under the pre-Ordinance regime.
• Statutory position — section 194LBA: the three withholding rates on a business trust distribution, and the section 115BAA switch in sub-section (2A) CBDT Circulars & InstructionsCuts both ways
  Our InvIT is about to distribute. At what rate do we deduct for a resident unit holder, and does it change for a foreign investor or where the SPV is on the concessional corporate rate?
  Section 194LBA sets three different obligations. For a resident unit holder the rate is ten per cent on distributed income of the nature referred to in clause (23FC) or clause (23FCA) of section 10; for a non-resident (not being a company) or a foreign company the rate on clause (23FC) income is five per cent for sub-clause (a) income and ten per cent for sub-clause (b) income, and on clause (23FCA) income it is the rates in force; and sub-section (2A) disapplies sub-sections (1) and (2) altogether in respect of sub-clause (b) income where the special purpose vehicle has not exercised the option under section 115BAA.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.