Section 115JAA(8) — the law in short
What the courts have decided on section 115JAA(8), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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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 Section 115BAA says the option cannot be withdrawn.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 The Tribunal held that the option cannot be WITHDRAWN, but it can FAIL: because s.115JAA(8) bars MAT credit to a company that has exercised the s.115BAA option, a company that claims MAT credit in its return has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.
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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.
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.
