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Facts
The assessee company engaged in marketing, IT-enabled services, and trading of electronic components filed an updated return for AY 2021-22, opting for concessional tax under section 115BAA. The CPC denied this benefit, treating it as a procedural non-compliance regarding Form 10-IC filing. The CIT(A) upheld this denial.
Held
The Tribunal held that the option to be taxed under section 115BAA, once exercised and Form 10-IC filed (even if belatedly for the initial year), applies perpetually and does not need to be refiled annually. The form filed for AY 2020-21 was deemed valid for AY 2021-22 and subsequent years.
Key Issues
Whether the benefit of concessional tax under Section 115BAA is available when Form 10-IC was filed belatedly for the initial year but before the due date for subsequent years, and if the option needs to be re-exercised annually.
Sections Cited
143(1), 250, 139(1), 115BAA, 115BAA(1), 115BAA(5), 139(8A), 140B(3)(ii), 80LA, 234A, 234B, 234C, 154
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
These appeals at the instance of the assessee are directed against the orders of the ld. ADDL/JCIT(A)-2, Noida dated 12.03.2025 vide DIN & Order No. ITBA/APL/S/250/2024- 25/1074415168(1) for the AY 2022-23 and dated 14.2.2025 vide DIN & Order No. ITBA/APL/S/250/2024-25/1073276653(1) for the AY 2021-22 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). Since the issue in both these appeals is common in nature, these are clubbed together, heard together and disposed of by this common order. for the AY 2021-22, wherein the assessee has raised the following grounds of appeal:
3. The brief facts of the case are that the assessee company was engaged in the business of providing marketing and related services, as well as IT-enabled services to the Arrow group of Companies. The assessee company was also involved in the trading of electronic components and semiconductors. For the financial year 2020 – 21, relevant for the assessment year 2021-22, the assessee company filed its updated return of income under section 139(8A) of the Act on 31 August 2023 by declaring a total income of ₹ 26,88,41,440/- under the normal provisions of the Act and paid the tax liability thereon amounting to Rs.89,97,350/- (normal tax liability) amounting to Rs.59,99,900/- computed @ 22% as per the provisions of section 115BAA of the Act after considering credit of prepaid taxes and additional tax liability of Rs.29,97,450/-, 50% of normal tax liability as per section 140B(3)(ii) of the Act. It is submitted that the assessee had exercised an option under sub-section (5) of section 115BAA of the Act for the AY 2020-21 on 1.4.2021 by filing form No.10IC vide e-filing acknowledgement no.336475821010421 as detailed below:
3.1 Thereafter, the return of income for the Assessment year 2021- 22 was processed by the CPC, and accordingly, an intimation u/s 143(1) of the Act was passed on 27.3.2024, wherein the total income as declared by the assessee, amounting to Rs.26,88,41,440/- was accepted by the CPC. However, the deemed total income u/s 115JBA of the Act was determined at Rs.22,14,00,000/-, consequent to the denial of the benefit of the concessional tax rate of 22% as per Section 115BAA of the Act. The tax liability being higher under the normal provisions of the Act was computed at Rs.11,21,39,965/- (including the additional tax liability at 50% as per the provisions of section 140B of the Act) and a net demand of Rs.6,59,53,600/- was determined as payable by the assessee after providing credit for advance tax of Rs.6,20,00,000/- TDS of Rs.6,54,750/- and TCS of Rs.93,401/-.
Aggrieved by the intimation passed u/s 143(1) of the Act dated 27.3.2024, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
The ld. CIT(A)/NFAC dismissed the appeal of the assessee by holding that the option to avail the concessional rate may be exercised in the prescribed manner on or before the due date of filing the return u/s 139(1) of the Act. Further, the ld. CIT(A)/NFAC observed that the record indicates that the assessee filed its updated return u/s 139(8A) of the Act on 31.8.2023, which is well beyond the due date u/s 139 of the Act and accordingly as per the provisions of section 115BAA(5) of the Act, once the dead line u/s 139(1) passes, the benefit of concessional rate cannot be availed.
5.1 Further, the ld. CIT(A)/NFAC held that as per Rule 21AE of the I.T. Rules, 1962, Form 10IC must be filed before the due date & 989/Bang/2025 Arrow Electronics India Private Limited, Bangalore Page 7 of 16 prescribed u/s 139(1) of the Act, which was not adhered to by the assessee. Since the return was filed after the due date, the benefit of section 115BAA is not available, and accordingly, the CPC had correctly recomputed the tax @ 30% under the normal provisions.
Again being aggrieved by the order of the ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 198 pages containing various returns, reports, forms, notices, screenshots, written submissions, and additional submissions along with the case laws relied upon by the assessee.
Before us, the ld. A.R. of the assessee vehemently submitted that the Form No.10IC was filed within the due date prescribed u/s 139 of the Act for the year under consideration. Further, the ld. A.R. submitted that merely filing an updated return does not imply that the Form No.10IC was filed beyond the due date. Further, he submitted that the assessee had exercised the option to be taxed u/s 115BAA of the Act for the assessment year 2020-21 and subsequent assessment years vide Form No.10IC filed on 1.4.2021 and accordingly, the option was exercised prior to the due date provided u/s 139(1) of the Act for filing the return for the assessment year 2021-22. Lastly, the ld. A.R. of the assessee submitted that the option for being taxed u/s 115BAA of the Act, once exercised shall be applicable perpetually unless there is an alleged non-compliance of the conditions laid down in sub-section (2) of section 115BAA of the Act and there is no requirement to file Form 10IC for each assessment year separately.
Ld. D.R., on the other hand, supported the order of the authorities below and vehemently submitted that, as the assessee had filed the updated return u/s 139(8A) of the Act, the concessional & 989/Bang/2025 Arrow Electronics India Private Limited, Bangalore Page 8 of 16 tax rate as per provisions of section 115BAA of the Act is not allowable to the assessee. Further, the ld. DR submitted that the assessee had also not filed any Form 10IC for the assessment year 2021-22 & therefore, the question of concessional tax rate does not arise in the case of the assessee company.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the assessee, being a domestic company, had filed the Form 10IC for the assessment year 2020-21 belatedly on 1.4.2021 vide e-filing acknowledgement No. 336475821010421. Further, there is not even a whisper about any violation of conditions contained in subsection (2) of section 115BAA of the Act. It is also an undisputed fact that for the assessment year 2021-22, the assessee had exercised its option by opting for tax u/s 115BAA of the Act in its updated return of income filed vide acknowledgement No.219912001310823 as detailed below:
9.1 Before proceeding further, it is apposite here to mention the provisions of section 115BAA(5) of the Act as well as Rule 21AE of the I.T. Rules, along with Form No.10IC filed by the assessee, as follows: Section 115BAA(5): “Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under subsection (1) of section 139 of furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the first day of April, 2020 and such option once exercised shall apply to subsequent assessment years: ------------ Provided further that once the option has been exercised or any previous year, it cannot be subsequently withdrawn for the same or any other previous year.”
Rule 21 AE of the Income Tax Rules, 1962 provides as under:
Rule 21 AE – Form for exercising option under sub-section (5) of section 115BAA (1) the option to be exercised under sub-section (5) of section 115BAA by a person, being a domestic company, shall be in Form No. 10– IC. (2) The form No. 10 – IC shall be furnished electronically either under digital signature or through electronic verification code. (3) The option in form No. 10 – IC shall be furnished on or before the due date specified under sub-section(1) of section 139 for furnishing the return of income for the assessment year relevant to the previous year in which the option is exercised.
9.2 From the bare reading of sub-section (5) of section 115BAA of the Act, Rule 21AE of the I.T. Rules, 1962 and the Form No.10IC, it is amply clear that the assessee who is willing to opt section 115BAA of the Act for the concessional tax is required to exercise the option in the manner provided by Rule 21AE and in the form 10IC on or before the due date specified by section 139(1) of the Act for the previous year relevant to the assessment year on or after first day of April, 2020. It also provides that such an option, once exercised by the assessee, shall apply to subsequent assessment years. We are of the considered opinion that once the assessee has exercised its option u/s 115BAA of the Act for the assessment year 2020-21 even though filed beyond the due date of filing return for assessment year 2020-21, there is no such requirement under the law that the same form 10IC shall be invalid for the subsequent assessment years and the assessee has to file a fresh form 10IC in subsequent year also. In fact, in our opinion, it is categorically stated that once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year. Further, We take a note of the fact that it is also not a case that the assessee had violated any conditions contained in sub-section (2) of the Act .
9.3 The Central Board of Direct Taxes has also issued a FAQ stating therein that if the tax payer had opted for the concessional rate of tax once, that option would apply to subsequent assessment years and cannot be withdrawn. Even the instruction issued by the CBDT for filing ITR-6, it was specifically mentioned that form 10IC is & 989/Bang/2025 Arrow Electronics India Private Limited, Bangalore Page 12 of 16 required to be filed only in the first year in which the tax payer wishes to avail concessional rate of tax. Thus, in our opinion, not only the statutory provisions but also the FAQ and Form No.10IC as well as ITR 6 states that once the tax payer seeking benefit of concessional rate of tax u/s 115BAA of the Act had exercised its option in form 10IC in the initial assessment year, there was no requirement to exercise the option again in subsequent years. We are of the considered opinion that where the assessee has exercised its option by filing form no.10IC in the initial assessment year belatedly i.e. after the due date of filing return of income u/s 139(1) of the Act, there is no requirement under the law to file the Form No.10IC again during the subsequent assessment year on or before the due date of furnishing return. Therefore, we are of the firm view that the form no.10IC filed by the assessee on 1.4.2021 is valid for assessment year 2021-22 even though belatedly filed for AY 2020-21. We are also of the considered opinion that the option was exercised prior to due date provided u/s 139(1) of the Act for filing the return of income for the assessment year 2021-22 and thus, the option for being taxed u/s 115BAA of the Act once exercised shall be applicable perpetually unless there is an alleged non-compliance of conditions laid down in sub-section (2) of section 115BAA of the Act and in our view there is no requirement to file form no.10IC for each assessment year separately.
9.4 Thus, we are of the considered opinion that the form no.10IC filed on 1.4.2021 for the AY 2020-21 will also be treated as valid for AY 2021-22 and subsequent years and the assessee had rightly opted the same in its return of income filed for the assessment year 2021- 22 & therefore, the assessee is eligible for benefit provided u/s 115BAA of the Act for the AY 2021-22 and subsequent years. In the light of the above, the ground raised by the assessee is allowed. & 989/Bang/2025 Arrow Electronics India Private Limited, Bangalore Page 13 of 16
10. In the result, the appeal filed by the assessee in is allowed.
In the present appeal, the issue with regard to denial of benefit of concessional tax u/s 115BAA of the Act is already decided in in favour of the assessee and accordingly the same will apply mutatis mutandis to the present grounds of appeal raised by the assessee in this regard and accordingly, the issue on this ground is allowed.
13. Further, with regard to the ground related to adhoc addition of Rs.17,59,550/- as made by the CPC in the intimation issued u/s 143(1) of the Act for the assessment year 2022-23, we direct the AO to pass an order u/s 154 of the Act as filed by the assessee for the assessment year 2022-23 deleting the adhoc addition of Rs. 17,59,550/- as passed by the CPC for the assessment year 2020-21 as well. The CPC has no jurisdiction to make any adhoc additions while passing an intimation u/s 143(1) of the Act & accordingly it is & 989/Bang/2025 Arrow Electronics India Private Limited, Bangalore Page 16 of 16 a clear mistake apparent on the face of the record as per the provisions contained in section 154 of the Act. It is ordered accordingly.
Order pronounced in the open court on 7th Oct, 2025