BHOLANATH PRECISION ENGINEERING PVT LTD,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI

In this appeal, the assessee has raised the following grounds:

The issue arising in ground No. 1, raised in the assessee’s appeal, is pertaining to applying the concessional rate of tax @ 22% under section 115BAA of the Act.

The brief facts of the case pertaining to this issue are: The Assessee is a domestic company. For the year under consideration, the assessee filed its return of income on 15/01/2021 declaring a total income of Rs. 20,71,870. The Assessing Officer (‘AO‟) vide intimation dated 18/12/2021 issued under section 143(1) of the Act determined the total income of the assessee at Rs. 23,01,890, inter-alia, after making certain adjustments. Further, the AO computed the tax liability of the assessee @ 30%.

In its appeal before the learned CIT(A), the assessee, inter-alia, challenged the computation of tax liability @ 30% instead of 22% as available under section 115BAA of the Act. However, the learned CIT(A) vide impugned order, inter-alia, dismissed the appeal filed by the assessee on this issue on the basis that the mandatory requirement as prescribed under section 115BAA (5) r/w Rule 21AE, i.e. of filing the Form 10-IC before the due date of Bholanath Precision Engineering Pvt. Ltd. ITA No.1997/Mum./2022 furnishing the return of income, has not been fulfilled by the assessee. Being aggrieved, the assessee is in appeal before us.

During the hearing, the learned Authorised Representative (‘learned AR’) submitted that due to the intervening Covid period the assessee could not file Form 10–IC before the due date of filing the return of income. The learned AR further submitted that subsequently due to delay, Form 10–IC was not getting submitted on the Department website for reasons beyond assessee’s control. Learned AR also submitted that the assessee has approached CBDT for condonation of delay in filing Form 10–IC in order to claim the beneficial rate of tax provided under section 115BAA of the Act.

On the other hand, the learned Departmental Representative (‘learned DR’) vehemently relied upon the order passed by the lower authorities.

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 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 Page | 3

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 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 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.

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 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. Page | 5

In the result, the appeal by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 23/11/2022