Loading judgment…
Facts
The assessee filed their return for AY 2023-24, claiming relief under section 89A for income from a retirement benefit account maintained in the USA. The assessee had previously filed Form 10EE in AY 2022-23 to exercise this option. However, the AO disallowed the relief, stating Form 10EE was not filed for the current assessment year.
Held
The Tribunal held that filing Form 10EE is a procedural requirement. Once the option under Rule 21AAA is exercised in a previous year, it continues to apply to all subsequent years, making fresh filing mandatory only if the assessee becomes non-resident. Denial of relief on procedural grounds when Form 10EE was filed in the prior year is not sustainable.
Key Issues
Whether denial of relief under section 89A is justified solely on the ground of not filing Form 10EE for the current assessment year, when the option was exercised and Form 10EE was filed in a prior year?
Sections Cited
89A, 250, 143(1), 143(1)(a)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA & SHRI ANIKESH BANERJEE
The instant appeal of the assessee was filed against the order of the Ld. Commissioner of Income-tax, Appeal / Addl / JCIT(A), Ranchi, [for brevity, ‘Ld. CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in shot, ‘the Act) for the Assessment Year 2023-24, date of order 16/06/2025. The impugned order emanated from the order of the CPC, Bengaluru (for brevity the “Ld. AO”), passed under section 143(1) of the Act, date of order 22/04/2024.
Jignesh Naresh Jariwala 2. The assessee has taken the following grounds of appeal: -
1. The Learned Commissioner of Income Tax (Appeals) has erred in confirming denial of relief u/s 89A of the Income Tax Act, 1961 of Rs. 4,34,659 by Deputy Director of Income Tax, CPC, Bengaluru in the Intimation u/s 143(1) in respect of income accrued on retirement benefit account maintained in USA
The Learned Commissioner of Income Tax (Appeals) failed to appreciate that having exercised the option regarding taxation of income from retirement benefit maintained in the USA in one year by filing form 10EE, there is no further requirement of filing Form 10EE in subsequent years for continuation of exercise of the option in such subsequent years.
3. The Learned Commissioner of Income Tax (Appeals) has erred in dismissing the appeal ex-parte on the due date of submission (16.6.2025) without considering reply uploaded on the due date of submission (16.6.2025) around 3 pm, four hours after the stipulated time of 11 am.
4. The Learned Commissioner of Income Tax (Appeals) has erred in stating that the appellant failed to comply with three opportunities as the appellant applied for adjournment in response to notice dated 19.03.2025 and the appellant uploaded response to notice dated 11.06.2025 around 3 pm on stipulated date of 16.06.2025, four hours after the stipulated time of 11am.”
The brief facts of the case are that the assessee is a resident individual, filed his return of income for AY 2023-24 on 28.07.2023 declaring total income of Rs. 1,20,50,709/-. The assesse is an employee at LTIMindtree. The assesse has earned salary of Rs. 85,49,995/- and TDS of Rs. 26,32,520/- has been deducted on the same. The assesse has a retirement benefit account maintained in a notified country. The assesse exercised the option in AY 2022-23 for taxation of income accrued from such retirement benefit account in the assessment year in which income from said account is taxed at time of withdrawal or redemption, as the case may be, in the notified country. The assesse filed Form 10EE on 29.06.2022 to Jignesh Naresh Jariwala exercise the option for AY 2022-23. In his return of income, the assesse,on page 4 of ITR in Schedule ‘Salary’ has reported Rs. 4,34,659/- as Income from retirement benefit account maintained in a notified country u/s 89A. The assesse claimed relief u/s 89A of Rs. 4,34,659/- in the ITR of AY 2023-24 towards income accrued on retirement benefit account, as detailed hereunder:
Sr.No. Name of Account Income (Rs.) 1 Vanguard SEP-IRA account 3,36,518 2 Vanguard TraditionaL IRA 32,339 3 Avenir 401K 26,319 4 Fidelity Roth IRA 39,483 Total 4,34,660 As per the provisions of section 89A of the Act read with Rule 21AAA of Income Tax Rules 1962, (in short, the “Rule”) the assesse has an option to pay the tax on the income earned from the specified retirement accounts in the year of withdrawal or redemption. Further, as per sub-rule 6 of Rule 21AAA, once the option is exercised for a specified retirement account in any previous year in Form 10EE it shall apply to all the subsequent previous years and cannot be subsequently withdrawn for the previous year in which the option is exercised or any previous year subsequent to that previous year. The assesse received a communication for proposed adjustment u/s 143(1)(a) on 01/08/2023 wherein an amount of Rs. 4,34,659/- was disallowed on the ground that the assesse has not filed Form 10EE for the impugned assessment year. The assesse vide its response dated 09/08/2023, to the proposed adjustment u/s 143(1)(a) stated that Form 10EE has already been filed on 30/07/2022 for AY 2022-23 vide acknowledgement No. 291669690300722 and as per Clause 6 of Rule 21AAA, option once exercised for a specified account in Jignesh Naresh Jariwala respect of a previous year shall apply to all subsequent previous years. The Ld. AO passed an intimation u/s 143(1) of the Act on 22.04.2024 wherein relief claimed u/s 89A of Rs. 4,34,659 has not been granted on the ground that Form 10EE has not been filed. The Ld. AO has applied provisions of section 143(1)(a)(ii) for rejecting relief u/s 89A. Aggrieved by non-grant of relief u/s 89A in the intimation dated 22.04.2024 passed by the Ld. AO, u/s 143(1) of the Act the assessee has preferred this appeal before the Ld. CIT(A). The Ld.CIT(A) upheld the action of the Ld.AO. Being aggrieved assessee filed an appeal before us.
The Ld. AR submitted that Form No. 10EE had already been filed on 30/07/2022 for AY 2022-23. It was further contended that, in terms of Clause (6) of Rule 21AAA of the Rules once the option is exercised for a specified amount in respect of a particular previous year, the said option shall continue to apply to all subsequent previous years. Accordingly, the Ld. AR argued that the filing of Form No. 10EE is not mandatory for the impugned assessment year. In support of this contention, the Ld. AR drew our attention to the provisions of Rule 21AAA of the Rules, the relevant portion of which is reproduced below for ready reference: “(1) Where a specified person has income accrued in a specified account or accounts, during a previous year relevant to any assessment year beginning on or after the 1st day of April, 2022, such income shall, at the option of the specified person, be included in his total income of the previous year relevant to the assessment year in which income from the said specified account or accounts is taxed at the time of withdrawal or redemption, as the case may be, in the notified country. (2) to (3) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (4) In a case where the specified person becomes a non-resident during any relevant previous year, then- Jignesh Naresh Jariwala (i) the option exercised under sub-rule (1) shall be deemed to have never been exercised with effect from the relevant previous year; and (ii) the income which has accrued in the specified account or accounts during the period, beginning with the previous year in respect of which the option under sub-rule (1) was exercised and ending with the previous year immediately preceding the relevant previous year, shall be taxable during the previous year immediately preceding the relevant previous year and tax shall be paid on or before the due date for furnishing the return of income for the relevant previous year. (5) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (6) Subject to the provisions of sub-rule (4), the option once exercised for a specified account or accounts in respect of a previous year under sub-rule (1) in Form No. 10- EE shall apply to all subsequent previous years and cannot be subsequently withdrawn for the previous year for which the option was exercised or any previous year subsequent to that previous year.”
The Ld.DR argued and relied on the order of the revenue authorities.
We have heard the rival submissions and perused the documents available on record. The assessee is a resident individual who filed his return of income for the impugned assessment year without furnishing Form No. 10EE. It is an admitted position that the said form had already been filed for A.Y. 2022-23. On a careful reading of Rule 21AAA, particularly sub-rules (1), (4) and (6), we find that once Form No. 10EE has been filed in respect of a previous year, the option exercised therein continues to apply to all subsequent previous years. Consequently, it is not mandatory for the assessee to file the form afresh for every assessment year. Where relief under section 89A of the Act has been granted on the basis of Form No. 10EE already furnished, the same relief cannot be denied merely for the reason that the form has not been filed again in subsequent years. The filing of Form No. Jignesh Naresh Jariwala 10EE is a procedural requirement and, by virtue of Rule 21AAA(6) of the Rules, once exercised in any previous year, it continues to hold good for all subsequent years. Therefore, the assessee is not obliged to furnish the form afresh every year, and denial of relief under section 89A of the Act on such procedural grounds is not sustainable in law. In our considered view, the finding of the Ld. CIT(A) is contrary to the clear mandate of Rule 21AAA of the Rules. Accordingly, we set aside the impugned appellate order and direct that the relief claimed under section 89A amounting to Rs. 4,34,661/- be allowed to the assessee.