Once Section 115BAB is Opted, it Cannot be Withdrawn in Subsequent Years: ITAT

The Income Tax Appellate Tribunal (ITAT), Delhi, allowed a company to claim the concessional tax benefits under Section 115BAB of the Income Tax Act, as the same was already opted for in the previous assessment year.

The Income Tax Return (ITR) filed by the assessee company, Ferranza Electric Vehicle, for AY 2023-24 was treated as invalid due to incomplete information. Therefore, the company filed a revised return under section 139(5).

However, the CPC, while processing the return, denied the company’s claim for the concessional tax rate under section 115BAB. The same was upheld by the CIT(A), observing that the company did not file its ITR within the specified time, which is the required condition to claim the concessional tax rate benefits under Section 115BAB of the Income Tax Act. Therefore, the company approached the ITAT Delhi.

The assessee company argued that it had exercised the option in the previous year, and as per subsection 7 of Section 115BAB, once the option is exercised, it cannot be withdrawn for the subsequent assessment years. Therefore, the assessee was not required to file Form No. 10-ID every year to use the Section 115BAB option.

The company also contended that the initial return was filed within the due date, but the CPC treated it as invalid.

The Tribunal agreed with the contentions of the assessee, noting that once the Section 115BAB option is exercised, it stays effective for future years. Further, the revised return filed by the assessee was based on the invalid return initially filed by the assessee.

Since the assessee had already opted for the option in the previous assessment year, the tribunal ruled that the same cannot be withdrawn for the subsequent years. Therefore, the tribunal allowed the company to claim the benefit of the concessional tax rate under section 115BAB of the Income-tax Act, 1961.