HEMAVATHI NAYAK TALWAR ,MAHADEVAPURA BENGALURU vs. INCOME TAX OFFICER WARD 4(2)(1) BANGALORE, BENGALURU

The original return was processed by DDIT, CPC, Bengaluru, by passing the intimation u/s. 143(1) on 9.8.2022 accepting the return of income.

As there was an error in claiming the refund, the assessee filed the revised return. This revised return was processed by the AO on 23.1.2023 by denying the benefit of section 115BAC and raising a demand. The assessee requested for rectification of intimation which was passed on 10.2.2023 and self-assessment credit was not allowed to the assessee. Subsequently once again rectification application was made on 31.1.2024 wherein the benefit of section 115BAC was denied. Thus total income of assessee was assessed finally at Rs. 7,53,980.

The assessee preferred the appeal before the ld. CIT(Appeals) against the rectification order passed on 20.5.2024. The assessee submitted that in the original return filed by the assessee, the assessee opted for old regime and in the revised return she opted for new regime of taxation. The assessee was denied benefit of taxation u/s. 115BAC of the Act. The claim of assessee was also that even if the assessee is denied benefit of section 115BAC for revised return, then the assessee must be granted deduction available to her in the old regime. It was submitted that it cannot be the case that assessee is denied the benefit of provisions of section 115BAC and assessee is also denied the benefit of deductions claimed and allowable under Chapter VIA of the Act. The ld. CIT(A) did not consider this aspect and dismissed the appeal of the assessee.

The ld. AR referred to the grounds of appeal and submitted that if the assessee is denied the benefit of section 115BAC of the Act, then at least where assessee is being taxed under the old tax regime, the deduction under Chapter VIA of the Act, which was not available in the new regime, but available in the old regime, should be allowed to the assessee. He further submitted that when the assessee has filed the original return of income, what are the claims available to the assessee under the old regime are mentioned therein and same have been allowed to the assessee while processing the original return of income. But when the revised return was filed claiming deduction u/s. 115BAC of the Act, the assessee was denied the new tax regime benefit as well

The ld. DR vehemently supported the orders of ld. lower authorities.

We have carefully considered the rival contentions and perused the orders of ld. lower authorities. The simple facts in this case show that assessee originally opted for old tax regime taxation. Subsequently the assessee opted for new tax regime by filing a revised return. The original return was processed and assessee was granted benefit available to the assessee as deduction under Chapter VIA of the Act in the old regime. When the revised return was processed, the assessee was denied the benefit of new regime as well as was not allowed the deductions which assessee should have been allowed in the old tax regime. Therefore even on appeal before the ld. CIT(A), assessee submitted that if assessee is to be taxed under the old regime, then the benefit of tax/ deduction available to the assessee in the old regime should be allowed.

According to the provisions of section 115BAC(2), if income of the assessee is chargeable to tax under that section, assessee is not allowed the benefit of items specified in sub-section (2). The assessee is also deemed to have been allowed the deduction for losses and depreciation as per sub-section (3). However, if the assessee is assessed to tax in the old regime and not u/s. 115BAC, assessee is to be allowed the benefit of items specified in sub-sections (2) & (3) of section 115BAC of the Act.

In this case, assessee has been taxed not in the new regime, but in the old regime, assessee must be allowed the claim under the sub-sections (2) & (3) of section 115BAC. These details are available in the original return processed by the CPC. In view of this, we direct the ld. AO to grant the benefit of deductions available to the assessee which are denied in the new regime as mentioned in sub-sections (2) & (3) of section 115BAC of the Act. As per ground No.8, this prayer of the assessee is justified and therefore allowed.

No other grounds of appeal were pressed and therefore the same are dismissed.

In the result, the appeal of the assessee is partly allowed.