I agree with Muzer. The National Rail site says the following in respect of the NRCoT:
Whilst these National Rail Conditions of Travel set out your rights and any restrictions of those rights, the Train Companies may give you more extensive rights than those set out here. However they may not give you less, unless a specific condition allows for this...
I think that is a fair, accurate and simplistic reflection of what the NRCoT say.
The condition (41) is not permissive to the extent that the TOC has discretion over whether a changeover will be processed or not. The changeover is only conditional upon the original length of the season ticket and the number of days validiy reminaing upon the application for a changeover.
If it is accepted that condition 40 applies to a changeover, that condition gives the TOC a degree of discretion only where there is a duplicate season ticket involved. If they have accepted there is no duplicate ticket involved, they MUST process the changeover and refund any balance due.
I believe you have said the new season ticket is with a different TOC to the original. Which TOC is it that you've made the application for a changeover with? If it is the new TOC that is being difficult, perhaps you could try getting getting the changeover processed at the original station of issue and see if that causes less of a fuss.