March 26, 2026 : The Ahmedabad Bench of the Income Tax Appellate Tribunal, comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member), dismissed the Revenue’s appeal in Income Tax Officer v. Udayan Mandavia (I.T.A. No.154/Ahd/2026), holding that the enhanced tax rate of 60% under Section 115BBE is prospective and not applicable to Assessment Year 2017–18.
The Tribunal further held that the increased rate cannot be imposed through rectification proceedings under Section 154, as the issue involves interpretation of law and is therefore debatable in nature. It observed that rectification jurisdiction is limited to mistakes apparent on the face of the record and cannot be invoked where two views are possible.
In reaching this conclusion, the Tribunal noted that the amendment raising the tax rate from 30% to 60% applies only from 01.04.2017 onwards and cannot be retrospectively applied to AY 2017–18. It also relied on precedents, including S.M.I.L.E. Microfinance Ltd. v. ACIT, which affirm that the amendment operates prospectively.
Accordingly, the rectification order enhancing the tax rate to 60% was set aside, the pre-amended rate of 30% was restored, and the Revenue’s appeal was dismissed.
