Section 115BAA Benefit Allowed Despite Belated Return | ITAT

Case Details: Vashishtha Luxury Fashion Ltd. vs. Deputy Director of Income-tax/Income-tax Officer - [2026] 182 taxmann.com 396 (Mumbai-Trib.)

Judiciary and Counsel Details

• Ms Kavitha Rajagopal, Judicial Member & Om Prakash Kant, Accountant Member
• Manish Agarwal for the Appellant.
• Annavaram Kosuri, Sr. DR for the Respondent.

Facts of the Case

The assessee company was engaged in designing and manufacturing a distinctive collection of hand-embroidered apparel. The assessee filed its return of income, applying the tax rate under Section 115BAA. However, the Centralized Processing Centre (CPC) computed the assessee’s tax liability under the normal provisions without considering the assessee’s option to be taxed under Section 115BAA.

The matter reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that Section 115BAA applies to a domestic company where the assessee opts to be computed at 22%, subject to the satisfaction of the conditions specified in sub-section (2). It prescribes that the assessee exercises the said option only when it is in the prescribed manner on or before the due date specified in section 139 for furnishing the return of income. The third proviso to the said section states that the option exercised by the assessee becomes invalid when there is a violation of the condition prescribed in sub-clause (ii) or (iii) or clause (a) or clause (b) of sub-section (2).

There has been no express bar for the assessee to claim the benefit of the provision if there is a delay in filing the return, i.e. return filed under section 139(4), though it says in sub-section (5) that the assessee has to exercise the option in the prescribed manner on or before the due date specified under section 139(1).

In the instant case, the assessee had filed Form 10IC within the prescribed time limit specified in section 115BAA. The assessee shall exercise the option in the prescribed manner on or before the due date specified under section 139(1) for furnishing the return of income for any previous year relevant to the assessment year on or after the first day of April 2020. The assessee has also filed the tax audit report well within the time, which establishes the fact that the assessee intended to opt for the concessional tax regime under Section 115BAA.

Therefore, the assessee was entitled to a concessional tax regime even if the return was filed belatedly.

List of Cases Reviewed

• Aprameya Engineering Ltd. v. ITO [2024] 164 taxmann.com 740 (Ahmedabad – Trib.) (para 15) followed

List of Cases Referred to

• Aprameya Engineering Ltd. v. ITO [2024] 164 taxmann.com 740 (Ahmedabad – Trib.) (para 15)
• Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223 (SC)/[2022] 288 Taxman 491 (SC)/[2022] 446 ITR 1 (SC) (para 15).