IDEAL JEWELS (INDIA) PVT LTD ,MUMBAI vs. DCIT, CIRCLE 2(1)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 1177/Mum/2026 (Assessment Year: 2020-21) Ideal Jewels (India) DCIT Circle 2(1)(1), Pvt. Ltd. Room No. 575, 301, Tower I, Seepz, Vs. Aayakar Bhavan, SEZ, Andheri (East), Maharashi Karve Mumbai-400 096 Marg, Churchgate, Mumbai-400 020 PAN/GIR No. AABFI3459A (Applicant) (Respondent) Assessee by Shri Saket Jain, Ld. AR Revenue by Shri R. A. Dhyani & Shri V. S. Mahajan Ld. DRs Date of Hearing 28.04.2026 Date of Pronouncement 20.05.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal is filed by the assessee against the order dated 06.11.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi[hereinafter referred to as "CIT(A)"], under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], for the

2 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. Assessment Year 2020–21, arising out of the intimation issued under section 143(1) of the Act dated 23.12.2021 by the Centralized Processing Centre (CPC), Bengaluru. Facts of the Case 2. The assessee is a private limited company engaged in business activities. It filed its return of income in ITR-6 on 27.12.2020 declaring total income at Nil after claiming set-off of brought forward business losses. The return was processed by CPC under section 143(1) vide intimation dated 23.12.2021, wherein the total income was computed at Rs. 3,08,97,030/- and a demand of Rs. 1,28,89,340/- was raised. The adjustment made by CPC, as borne out from the intimation, was primarily on account of non-allowance of brought forward losses and computation of tax liability under the normal provisions including application of section 115JB, instead of the concessional regime under section 115BAA. 3. Aggrieved, the assessee preferred an appeal before the CIT(A), which was filed on 15.02.2023. There was a delay of 419 days in filing the appeal, which was explained on account of technical difficulties in uploading the appeal due to PAN-related issues on the portal. The Learned CIT(A), after considering the explanation, condoned the delay and admitted the appeal. 4. Before the Learned CIT(A), the assessee contended that the CPC erred in not considering the option exercised under section

3 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. 115BAA, despite the same being selected in the return of income. It was further submitted that the non-filing of Form No. 10-IC was not deliberate but was due to technical issues arising from discrepancy in PAN details, which prevented uploading of the said form on the portal. The assessee also submitted that the provisions of section 115JB were not applicable once the option under section 115BAA was exercised and therefore computation under MAT was incorrect. It was further argued that the brought forward business losses were normal business losses under section 72, and the same were not attributable to any restricted deductions under section 115BAA(2), and therefore ought to have been allowed to be set off. 5. The Learned CIT(A), after considering the submissions, examined the provisions of Rule 21AE of the Income-tax Rules, 1962, and held that the option under section 115BAA is required to be exercised by filing Form No. 10-IC electronically.The CIT(A) recorded a categorical finding that the assessee had not filed Form No. 10-IC and therefore the option under section 115BAA was not validly exercised. The relevant finding reads as under: “From the perusal of material available on record, it is evident that the appellant has not filed Form No.10-IC in order to avail the option of new tax regime. Therefore, the system has rightly processed its ITR under old tax regime.” 6. On this basis, the CIT(A) upheld the action of CPC in computing income under normal provisions and dismissed the grounds raised by the assessee.

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applicable to a person who has exercised the option under Section 115BAA. Therefore, no tax liability can be fastened upon the Appellant under Section 115JB. 4. ILLEGAL DISALLOWANCE OF NORMAL BUSINESS LOSSES 4.1 Without prejudice to the above, the Ld. CIT(A) and CPC erred in law by disallowing the set-off of brought forward business losses of Rs. 3,09,15,922/-. 4.2 The Ld. CIT(A) failed to appreciate that the losses claimed by the Appellant are "Normal Business Losses" u/s 72, which are not attributable to any prohibited deduction. 4.3 The Ld. CIT(A) failed to appreciate that Section 115BAA(2)(ii) only restricts the set-off of losses "attributable to" specific prohibited incentives (such as Additional Depreciation). 4.4 Consequently, these losses remain eligible for set-off against the current year's income under the concessional tax regime as well normal tax regime. 5. ERRONEOUS DEMAND AND INTEREST 5.1 The Ld. CIT(A) erred in confirming the demand of Rs. 1,28,89,340/-, which is based on an assessed income of Rs. 3,08,97,030/- instead of the correct Nil income. 5.2 The levy of interest u/s 234B and 234C is consequential and ought to be deleted. 6. PRAYER The Appellant prays that the Hon'ble Tribunal be pleased to direct: (a) To treat the option u/s 115BAA as validly exercised, (b) To declare MAT provisions inapplicable and, (c) To allow set-off of normal business losses; The Appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal.

6 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. 8. The Learned Authorised Representative (AR) reiterated the facts as borne out from the record and submitted that the assessee had intended to opt for taxation under section 115BAA, which is evident from the return of income filed in Form ITR-6 (placed at page 62 of the paper book).The AR submitted that Form No. 10-IC could not be filed due to technical difficulties. It was specifically contended that the PAN of the assessee is AABFI3459A (copy placed at page 164 of the paper book), which may have resulted in the system treating the assessee as a firm instead of a company, thereby disabling the option to file Form No. 10-IC.In support of the said contention, the AR placed on record a screenshot of the portal (dated 27.12.2020), wherein it was demonstrated that the option for filing Form No. 10-IC was not available, whereas Form No. 10-IB was available, indicating that the system had incorrectly categorised the assessee. The AR further submitted that once the option under section 115BAA was exercised in the return of income, the same ought to have been considered, and denial of the benefit on account of technical inability to file Form No. 10-IC is not justified. 9. The AR placed reliance on the decision of the co-ordinate bench in the case of Staubli Tec Systems India Private Limited (ITA No. 3968/MUM/2024)and submitted that the Co- ordinate Bench, in similar circumstances, has held that the benefit of section 115BAA cannot be denied merely on account of delay or technical failure in filing Form No. 10-IC, particularly

7 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. when the intention to opt for the said provision is evident from the return of income. 10. For the sake of completeness and in support of the contention that the assessee had exercised the option under section 115BAA, the Learned AR placed on record a copy of Form No. 10-IC for the Assessment Year 2020–21, manually filed, dated 28.01.2026. 11. The Learned Departmental Representative, on the other hand, supported the orders of the lower authorities and submitted that the claim of the assessee regarding technical difficulty in filing Form No. 10-IC requires proper verification at the end of the Department. It was further submitted that in the event the issue is decided in favour of the assessee, the Department may be granted liberty to file a Miscellaneous Application, if so warranted. 12. We have carefully considered the rival submissions and perused the material available on record. The core issue arising for adjudication is whether the assessee is entitled to the benefit of concessional taxation under section 115BAA despite non-filing of Form No. 10-IC within the prescribed time, in the peculiar facts of the present case. 13. At the outset, it is an undisputed position that the assessee, being a domestic company, had exercised the option for taxation under section 115BAA in its return of income filed in Form ITR-6.

8 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. The said fact is borne out from the return placed on record. It is also not in dispute that Form No. 10-IC, as prescribed under Rule 21AE of the Income-tax Rules, 1962, was not filed within the due date. 14. The explanation furnished by the assessee is that due to a technical anomaly arising from the PAN structure of the assessee, i.e., AABFI3459A, the system erroneously treated the assessee as a firm and consequently did not provide the option to file Form No. 10-IC, instead reflecting Form No. 10-IB. This contention is supported by screenshots placed on record. The assessee has further placed on record a manually filed Form No. 10-IC dated 28.01.2026, evidencing its continued intent to exercise the option under section 115BAA. 15. The Learned CIT(A), however, rejected the claim of the assessee solely on the ground that Form No. 10-IC was not filed electronically as mandated, without examining the explanation regarding technical impossibility. 16. In this factual backdrop, the question that arises is whether the requirement of filing Form No. 10-IC within the prescribed time is mandatory so as to disentitle the assessee from the substantive benefit under section 115BAA, or whether the same is directory, particularly where the intention to exercise such option is otherwise evident.

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10 ITA No. 1177/Mum/2026 Ideal Jewels (India) Pvt. Ltd. 18. We also find that similar view has been taken in various decisions of co-ordinate benches, wherein it has been consistently held that procedural lapses, such as delay in filing prescribed forms, cannot override substantive entitlement under the Act. 19. Applying the above judicial principles to the facts of the present case, we find that: (i) The assessee has unequivocally exercised the option under section 115BAA in the return of income; (ii) The failure to file Form No. 10-IC is explained by technical difficulty supported by evidence on record; (iii) There is no material on record to suggest that the assessee had any intention to avoid compliance or derive any undue benefit; (iv) The assessee has subsequently filed Form No. 10-IC manually, reinforcing its claim; 20. In such circumstances, denying the benefit of section 115BAA on a mere technical ground would be contrary to the settled legal position that procedural requirements are handmaid of justice and not its mistress. 21. Accordingly, respectfully following the ratio laid down by the Hon’ble Gujarat High Court in KGY Glass Industries Pvt. Ltd. (supra) and the decision of the co-ordinate bench in the case of Staubli Tec Systems India Private Limited (supra), we hold

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that the assessee cannot be denied the benefit of section 115BAA merely on account of non-filing of Form No. 10-IC within the prescribed time, particularly when such non-filing is attributable to technical reasons beyond the control of the assessee.

Order pronounced in the open court on 20.05.2026.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 20/05/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. संबंधधत आयकर आयुक्त / The CIT(A) 3.

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आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai