ITAT Upholds Tax Rate of 22% Under Section 115BAA for AY 2021-22
The Income Tax Appellate Tribunal (ITAT), Delhi, has recently upheld the decision of CIT(A), saying that the applicable rate under section 115BAA of the Income Tax Act is 22% on the LTCG.
The assessee, Maharishi Education Corporation P. Ltd, is a domestic company that filed its Income Tax Return (ITR) for the assessment year 2021-22, reporting an income of Rs 14,98,150. The income included a loss of Rs 20,263, and long-term capital gain of Rs 15,18,414 on the sale of land.
The assessee computed the tax at the rate of 20% as per section 112 of the Income Tax Act. However, when the return was processed under section 143(1) of the Act, the Income Tax Officer recalculated the tax at the rate of 22% and raised an additional tax demand of Rs 59,073.
The assessee argued that the tax rate applicable to the Long Term Capital Gain is 20% based on the provisions under section 112 of the Act and not 22%. While the Revenue argued that as the assessee has opted for taxation under section 115BAA of the Act, the applicable rate for the impugned assessment year is 22%. The assessee filed an appeal before the CIT(A), which upheld the decision of the Revenue. Aggrieved by this order, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT) Delhi to challenge the order of CIT(A).
The ITAT observed that the assessee opted for taxation under section 115BAA of the Income Tax Act, so the tax rate applicable for the assessee company is 22%. Therefore, the Income Tax Officer had correctly calculated the tax at the rate of 22%. Accordingly, the tribunal rejected the appeal filed by the assessee and refused to interfere with the order of the CIT(A).
Case Citation: Maharishi Education Corporation P. Ltd Vs Income Tax Officer, Ward-16(1), (ITAT Delhi); ITA No.2639/DEL/2025; 24/10/2025; 2021-22
