ITAT Delhi Clarifies: No MAT Under Section 115JB Where Company Validly Opts for Section 115BAA Regime

Background of the Dispute

The Delhi Bench of the Income Tax Appellate Tribunal in ITO Vs Western Developers Private Limited has reaffirmed an important principle: once a domestic company has validly opted for the concessional corporate tax regime under Section 115BAA of the Income Tax Act 1961, the provisions of Section 115JB relating to Minimum Alternate Tax (MAT) are rendered inapplicable by virtue of Section 115JB(5A).

The appeal before the Tribunal arose from an order dated 27.11.2025 passed under Section 250 by the Addl./JCIT(Appeals)-5, Mumbai concerning Assessment Year (AY) 2024-25. The Revenue challenged the relief granted to the assessee, a domestic company, regarding:

  • Denial of MAT computation under Section 115JB, and
  • Acceptance of the concessional tax regime under Section 115BAA.

CPC Processing and Initial Adjustment

For AY 2024-25, the assessee’s return of income was processed under Section 143(1). During this processing:

  • The Centralized Processing Centre (CPC) ignored the assessee’s claim for the concessional tax regime under Section 115BAA.
  • CPC proceeded to compute book profit at Rs.36,67,21,158/- under Section 115JB.
  • Based on such book profit, MAT demand was raised, leading to a tax liability of Rs.6,91,94,590/-.

The assessee contested this adjustment before the first appellate authority, asserting that it had already exercised a valid and continuing option under Section 115BAA.

Assessee’s Case Before the First Appellate Authority

Exercise of Option Under Section 115BAA

The assessee submitted that it had opted for the concessional corporate tax regime under Section 115BAA by electronically filing Form 10-IC on 02.03.2021. This option, once exercised, was:

  • Recognized by the Department, and
  • Acted upon while processing returns for AYs 2020-21, 2021-22, and 2022-23, where the assessee’s income was taxed at the concessional rate of 22%.

The assessee emphasised that:

  • The option under Section 115BAA(1) is intended to be a one-time, continuing choice.
  • There was no violation of any condition prescribed in Section 115BAA(2).
  • Therefore, CPC could not arbitrarily disregard the option in a subsequent year.

Challenge to MAT Computation Under Section 115JB

In written submissions dated 21.11.2025, the assessee contended that:

  1. Once the company opts for Section 115BAA, the machinery provisions of Section 115JB cease to operate in its case due to Section 115JB(5A).
  2. The CPC’s computation of book profit of Rs.36,67,21,158/- and consequential MAT demand of Rs.6,40,73,523/- (as per intimation under Section 143(1) dated 22.01.2025) was legally untenable.
  3. The impugned intimation ignored the statutory exclusion available to companies covered by Section 115BAA.

The assessee also highlighted that the Department had consistently granted the benefit of Section 115BAA for three earlier assessment years based on the very same Form 10-IC filed on 02.03.2021.

Concessional Tax Regime Under Section 115BAA

Section 115BAA provides a reduced corporate tax rate for domestic companies subject to specific conditions. Crucially:

  • Once a company opts for this regime, the option is generally irreversible.
  • The assessee must forego certain deductions and incentives specified in Section 115BAA(2).

Non-Applicability of MAT Under Section 115JB(5A)

The key statutory provision considered in this case is Section 115JB(5A), which reads as under: