Delhi High Court Sets Aside Declaration of Law on Tax Rate After AO Confirms LTCG Was Taxed at 20%, Not 22%

Case Overview: Maharishi Education Corporation Pvt Ltd Vs ITO (Delhi High Court)

The Delhi High Court recently examined a significant tax dispute involving the applicable rate of tax on long-term capital gains, where the Assessing Officer's own comments ultimately clarified that tax had been computed at 20% — a fact that had been misrepresented in earlier proceedings before the appellate authorities. The case reveals a critical instance where erroneous factual inputs by the Department led both the CIT(A) and the Income Tax Appellate Tribunal to reach legally flawed conclusions under Section 115BAA of the Income Tax Act, 1961.

Background of the Dispute

The central controversy in this matter arose from the demand of Rs. 59,970/- reflected in the intimation issued under Section 143(1) dated 30.12.2023. The assessee — Maharishi Education Corporation Pvt Ltd — had contested this demand, raising multiple questions of law before the Delhi High Court.

The core grievance of the assessee was that the tax on its long-term capital gain income of Rs. 14,98,151/- had allegedly been levied at 22% as applicable under Section 115BAA(1) of the Income Tax Act, 1961, whereas the assessee maintained that the correct rate should have been 20%.

What made this case particularly consequential was not merely the tax differential, but the fact that the appellate forums — including the Commissioner of Income Tax (Appeals) and the Tribunal — had relied on incorrect factual submissions by the Department and had proceeded to hold, erroneously, that a 22% rate was rightly applied.

AO's Clarificatory Comments Dated 05.12.2025

When the matter came before the Delhi High Court, the respondents placed on record the comments furnished by the Assessing Officer dated 05.12.2025. These comments were pivotal in resolving the factual confusion that had pervaded the earlier proceedings.

The AO's statement categorically clarified the following:

"On verification of the fact, it is observed that the reason for determination of demand of Rs. 59,970/- in intimation u/s 143(1) of the Act dated 30.12.2023 is due to difference in interest u/s 234B claimed by assessee in its ITR and actually determined by CPC in passing intimation order u/s 143(1). The actual tax without interest is Rs. 3,42,777/- which is 20 per cent of the offered income of Rs.14,98,151/- by the assessee."

In plain terms, the AO confirmed that: