Higher Tax Rate Under Section 115BBE Applicable from April 2017: ITAT Delhi

The Income Tax Appellate Tribunal (ITAT) Delhi has recently granted relief to an assessee on whom the AO wrongly levied a higher tax rate under Section 115BBE of the Income Tax Act.

In this case, the Assessing Officer (AO) made an addition against the assessee, Babu Ram Aggarwal, of Rs 3,61,000 as unexplained expenditure under Section 69C. The AO applied Section 115BBE, which imposes a higher tax rate of 60%, on the income that is deemed to be unexplained under Section 69C. Therefore, the assessee filed an appeal before the ITAT Delhi.

The ITAT Mumbai referred to a judgement by the Madras High Court in the case of S.M.I.L.E. Microfinance Ltd., which held that the increased tax rate under section 115BBE from 30% to 60% is applicable from 01.04.2017 and not for the transactions before 01.04.2017. The Tribunal observed that in the present case, since the transaction was carried out in the Financial year 2016-17, section 115BBE cannot be applied.

Therefore, the court allowed the appeal of the assessee and ordered the Assessing Officer to freshly calculate the taxes and the addition as per the provisions of Section 115BBE of the Income Tax Act 1961.