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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI GAGAN GOYAL, AM
PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/(NFAC), Delhi dated 14.06.2023 for the assessment year 2020-21. 2. The grounds of appeal raised by the assessee are as under: -
1) “In the facts of the case and under the circumstances, the Hon'ble NFAC erred in upholding the order dated January 24, 2023 passed by the Ld. CPC, Bengaluru u/s 154 r.w.s 143(1) of the Act.
2) In the facts of the case and under the circumstances, the Hon'ble NFAC erred in not appreciating the fact that once the impugned Form 10IC was not filed before filing the income-tax return form, there presently is and earlier was no option to fie the said Form 10IC belatedly, as per
2 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. the extant schema prepared and implemented by the Ld. Income-tax Department for e-filing of the income-tax forms.
3) Without prejudice to the above, in the facts of the case and under the circumstances, the Hon'ble NFAC erred in upholding that the application of normal income-tax rate of 25% could not be considered even though the turnover of your appellant for FY 2017-18 did not exceed INR 400 crores.
4) The Hon'ble NFAC failed to appreciate the trite law that a benefit, if available, to a taxpayer needs to be granted, even if the taxpayer fails to opt for it since what can be charged is only the legitimate taxes.
5) In the facts of the case and under the circumstances, the Hon'ble NFAC erred in not admitting the additional grounds nor passing the speaking order in that regard.”
Ground no. 1 & 2 raised by assessee is against the action of the Ld. CIT(A) upholding the tax computed @ 30% by CPC, instead @ 22% u/s 115BAA of the Income Tax Act, 1961 (hereinafter “the Act”).
Brief facts are that the assessee company, which is engaged in the business of providing engineering service, had e-filed its income tax return (ITR) for AY. 2020-21 on Feb 10,2021 (within the extended time) declaring a total income of Rs.3,94,72,200/- and offered tax on it of Rs.75,02,413/-. The ITR was filed by calculating taxes @ of 22% since assessee opted for concessional rate of taxation as per section 3 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. 115BAA of the Act, since according to it, it fulfilled the conditions stipulated therein by not claiming any deduction as per sub-section (2) of section 115BAA of the Act. However, the tax @ 22% was denied by the CPC while processing the ITR u/s 143(1) of the Act and instead calculated taxes @ 30% due to omission on the part of assessee in non- filing Form 10-IC of the Act before the ITR was uploaded. According to assessee, even though, it had opted for the concessional rate of tax @ 22% u/s 115BAA of the Act by marking the tick in relevant column of ITR i.e. item no. (e) of Part-A- General-Filing Status, but, due to inadvertent omission on the part of employee of assessee in not uploading of Form 10-IC, the option made in relevant column of ITR, was not accepted by the CPC; and it computed the tax liability of the assessee @ 30%. Aggrieved, the assessee preferred a rectification application before the CPC u/s 154 of the Act, which elicited no response. Aggrieved, assessee preferred an appeal before the Ld. CIT(A), which was dismissed. Aggrieved, assessee is before us.
We have heard both the parties and perused the records. The Ld. DR pointed out that this issue is no longer res-integra, and the Tribunal has decided the issue against the assessee by holding in a similar case in Bholanath Precision Engineering Pvt. Ltd. Vs. CIT (ITA. No. 1997/Mum/2022 for AY. 2020-21) vide order dated 23.11.2022 which reads as under: -
“8. We have considered the rival submissions and perused the material available on record. Section 115BAA was introduced in the Act by the Taxation Laws (Amendment) Act, 2019, with 4 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. effect from 01/04/2020, for the purpose of granting benefit of reduced corporate tax rate for the domestic companies. In order to avail the benefit, such companies will have to exercise the option in the prescribed manner on or before the due date specified under section 139(1) for furnishing the return of income for any previous year relevant to the assessment year commencing on or after 1st day of April 2020. As per Rule 21AE of the Income Tax Rules, 1962, such option can be exercised by the domestic company in Form 10-IC in the manner prescribed under the said Rules. It is undisputed that for the relevant assessment year the due date for filing the return of income was extended to 15/02/2021, and the return of income was filed by the assessee on 15/01/2021. However, the assessee did not file Form 10–IC before the due date of filing the return of income, i.e. 15/02/2021, in the present case, which is mandatory condition for claiming the option available under section 115BAA of the Act.
In support of its plea that Form 10-IC can be filed even after the due date prescribed for furnishing the return of income, the learned AR placed as upon the decision of coordinate bench of Tribunal in Suminter India Organics Private Ltd vs DCIT, in ITA No. 889/Mum/2022, vide order dated 26/07/2022 for the assessment year 2020–21. From the careful perusal of the aforesaid decision we find that the coordinate bench of the Tribunal held that the time permitted for filing Form 10-IC by virtue of section 3(1)(b) of Taxation and Other Laws (Relaxations and Amendment of Certain Provisions) Act, 2020, must be treated as 31/03/2021, even as the time permitted for filing the income tax return under aforesaid section, in light of 5 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. the 3rd proviso to section 3(1) of said Act and read with subsequent notification, was only up to 15/02/2021. The learned AR, during the hearing, fairly submitted that in the present case Form 10-IC has not been filed by the assessee till date. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. We may, however, clarify that our findings on this issue shall not affect any other alternative remedy available/pursued by the assessee. Accordingly, ground No.1 raised in the assessee’s appeal is dismissed.”
We find that despite assessee opting for tax payable @ 22% u/s 115BAA of the Act by making it clear in ITR, but has not uploaded Form 10-IC before 31.03.2021 (extended time to file return). Therefore, respectfully following the order of Tribunal in Bholanath Precision Engineering Pvt. Ltd. (supra), we do not find any infirmity in the impugned action of Ld. CIT(A) and dismiss this ground of appeal of assessee.
The assessee by raising ground no. 3 & 4 has raised an alternate claim [without prejudice to ground no. 1 & 2 discussed (supra)] that instead of computing rate of tax @ 30%, rate of tax @ 25% be applied. Drawing our attention to the decision of this Tribunal in Bholanath Precision Engineering Pvt. Ltd. (supra) wherein in similar facts and law, even though the Tribunal didn’t allow tax rate payable @ 22% u/s 115BAA of the Act (for non-uploading of Form 10-IC before the due date of filing of return) supra, but allowed similar alternate ground/plea for considering tax payable @ 25%; and pointed out that 6 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. since assessee opted in the ITR by conveying his intention by marking Item number (e) of Part A- General Filing Status for tax payable @ 22% u/s 115BAA of the Act, the assessee could not mark/answer in the other column meant for opting for taxation @ 25% Item Number (d) of Part A-General – Filing Status, wherein response to the point as to “whether total turn-over/gross receipts in the previous year 2018-19 exceeds Rs.400 crore.? Therefore, according to Ld AR, the Ld. CIT(A)’s action of rejecting the aforesaid alternate plea merely on technicality or on the ground of assessee not opting for such a taxation while filing ITR is erroneous because the software does not accept assessee to opt/mark twice, (Item No. (d) & (e) of Part A- General Filing Status), assessee cannot be faulted for not opting for taxation @ 25%, and relied on the decision of Tribunal in Bholanath Precision Engineering Pvt. Ltd. (supra).
We have heard both the parties and perused the records. We note that the assessee while filing the return of income had opted for concessional rate of tax @ 22% u/s 115BAA of the Act by filing ITR- 6 for AY. 2020-21, by marking tick at column Item No. (e) of Part A – General – Filing Status. However, since the assessee did not upload Form 10-IC, as per Rule 21AE of the Rules, the same was disallowed and the CPC directed the assessee to pay tax @ 30% which action of the CPC has been upheld by the Ld. CIT(A) and we have also confirmed the action of the Ld. CIT(A) while disposing of ground no. 1 & 2 (supra). However, assessee by raising the alternate ground, the assessee prays for concessional rate of tax @ 25% since the total turn-
7 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. over of the assessee company in the financial year 2017-18 did not exceed Rs.400 crore. And according to the assessee in the said year, assessee had only Rs 90 crore turn-over and is an eligible assessee for the concessional rate of tax @ 25% and merely because assessee did not opt for it while filing the ITR by marking tick in column [Item no. (d)] of Part A – General- Filing Status, the same ought not be rejected because the software would not accept the assessee to make both the claims i.e. at the same time assessee could not have claimed concessional rate of tax @ 22% u/s 115BAA as well as 25% tax payable. We find that similar alternate plea was raised before this Tribunal in the case of Bholanath Precision Engineering Pvt. Ltd. v CIT (supra) wherein similar alternate plea was raised, and the Tribunal remanded the matter back to AO to decide the rate of tax as per the applicable provision of law after hearing the assessee by holding as under:
“10. The issue arising in ground No. 2, raised in the assessee’s appeal, is pertaining to applying the rate of tax @ 25% since the total turnover of the company in financial year 2018–19 is less than Rs. 400 crore.
The assessee, vide ground No.2, has raised without prejudice ground that instead of computing the rate of tax @ 30, rate of tax @ 25% be applied. In this regard, the learned AR referred to the relevant provisions of Finance Act 2019, which is applicable to the Financial Year commencing on 01/04/2019. The learned AR by referring to Paragraph E of Part I of Finance Act, 2019 submitted that where the total turnover or the gross receipt in the 8 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd. previous year 2016–17 does not exceed Rs. 250 crore, the rate of income tax shall be 25% of the total income. The learned AR by referring to the profit and loss account for the year ending 31/03/2017 submitted that the gross revenue from operations of the assessee was Rs. 10.82 crore and thus in view of the aforesaid provision the rate of tax applicable in case of assessee should be 25%. On the other hand, learned DR submitted that this aspect, now raised by the assessee, be remanded to the AO for factual verification.
In view of the submissions made by both sides and having perused the material available on record, we deem it appropriate to remand this issue to the file of AO for necessary verification. We further direct that the tax liability of the assessee be computed by applying the rate of tax as per the applicable provisions of law. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. Accordingly, ground No. 2 raised in the assessee’s appeal is allowed for statistical purposes.
In the result, the appeal by the assessee is partly allowed for statistical purposes.”
Respectfully following the decision of the Tribunal, we direct that the alternate claim be restored back to the file of the AO for considering claim of rate of tax @ 25% after verification, and direct that the tax liability of assessee be computed by applying the rate of tax as per the applicable provision of law after giving proper opportunity of hearing.
9 A.Y. 2020-21 Neptunus Power Plant Services Pvt. Ltd.
In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on this 18/12/2023. (GAGAN GOYAL) JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 18/12/2023. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //// उि/सहधयक िंजीकधर /(Dy./Asstt.