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Facts
The assessee, engaged in software development and ITES, filed its return for AY 2023-24 declaring income taxable at 25.17% u/s 115BAA. However, the CPC denied the concessional rate, leading to a higher tax demand. The denial stemmed from the perceived invalidity of the option exercised for concessional tax due to delays in filing Form 10-IC in prior years (AY 2020-21).
Held
The Tribunal held that the relaxation provisions under the Taxation and Other Laws (Relaxations and Amendments of Certain Provisions) Act, 2020 (TOLA) extended the due dates for filing returns and other compliances during the COVID-19 pandemic. It was noted that the assessee had consistently availed the concessional rate in previous years, which were accepted by the revenue authorities. Therefore, the denial of the concessional rate for AY 2023-24 was not justified.
Key Issues
Whether the assessee is eligible for the concessional tax rate under section 115BAA for AY 2023-24, despite alleged delays in filing Form 10-IC in prior assessment years, considering the relaxations provided by TOLA and consistent acceptance by revenue authorities in earlier years.
Sections Cited
115BAA, 139, 250, 143(1), 119(2)(b), 234B, 234C, 244A, 3(1), 3(2)(b)(ii), 21AE
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. Addl./JCIT(A)-4 Kolkata dated 16.8.2024 vide DIN & Order No.ITBA/APL/S/250/2024-25/1067697822(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2023-24.
2. The assessee has raised the following grounds of appeal:
The brief facts of the case are that the assessee is engaged in the business of providing software development services (‘SWD’), information technology enabled services (‘ITeS’) and marketing support services(‘MSS’) to its associated enterprises (‘AE’). For the assessment year 2023-24, the assessee company filed its return of income u/s 139(1) of the Act on 28.11.2023 by declaring total income of Rs.367,27,32,210/-. As the income of the company is taxable @ 25.17% u/s 115BAA of the Act amounting to Rs.92,43,53,243/- and the total tax paid by the company in the form of advance tax, TDS and TCS amounting to Rs.101,02,90,762/- and accordingly the assessee company claimed a refund of Rs.8,59,37,520/- along with interest u/s 244A thereon in its return of income. Thereafter, the return of income was processed by the ld. Deputy Director of Income Tax, CPC, Bengaluru and accordingly the intimation u/s 143(1) of the Act dated 10/01/2024 was passed. As per the said intimation the tax rate as per provisions of section 115BAA of the Act as claimed by the assessee company has not been applied thereby leading to a total tax payable of Rs.31,50,16,640/- (including interest u/s 234B & 234C of the Act) as against a refund of Rs.8,59,37,520/- claimed in the return of income filed by the assessee company.
4. Aggrieved by the intimation passed u/s 143(1) of the Act dated 10.1.2024, the assessee company preferred an appeal before the ld. CIT(A)/Addl/JCIT(A).
The ld. Addl/JCIT(A)-4 Kolkata dismissed the appeal of the assessee with the following observations/grounds: 1. The option has been filed for the first time for assessment year 2020-21 on 30.3.2021 and as such the assessee has filed the form 10IC after the due date of filing ITR u/s 139(1)
Sandisk India Device Design Centre Pvt. Ltd., Bangalore Page 4 of 12 of the Act for the AY 2020-21 which was within 15.2.2021. Hence, as per the sub section (5) of section 115BAA of the Act, the option for new tax regime is invalid. Further, as per the proviso in section 115BAA of the Act, the option is invalid for subsequent years also, if it is invalid for any assessment year due to non-fulfillment of the conditions.
The CBDT vide circular no.6/2022 dated 17/03/2022 had condoned the delay u/s 119(2)(b) of the Act in filing the Form 10IC for the assessment year 2020-21 if all the following conditions are satisfied. i. The return of income for assessment year 2020-21 has been filed on or before the due date specified u/s 139(1) of the Act; ii. The assessee company has opted for taxation u/s 115BAA of the Act in (e) of “filing status” in “Part A- GEN” of the form of return of income ITR-6 and; iii. Form 10IC is filed electronically on or before 30.6.2022 or 3 months from the end of the month in which this circular is issued, whichever is later.
The ld. CIT(A) observed that in this case the due date for filing the ITR u/s 139(1) was within 15.2.2021 whereas the assessee has filed the ITR belatedly on 31.3.2021. Hence, all the conditions required as per the above circular are not fulfilled and as such the delay in filing the ITR for claiming the concessional rate of taxes are not condoned by the above circular also.
3. Lastly, ld. Addl/JCIT(A)-4 Kolkata observed that although assessee’s case is for AY 2023-24, but the issue is totally dependent on the facts of AY 2020-21. Further, he observed that this office is not empowered to condone the delay in filing
With regard to grounds of appeal related to surcharge and interest, ld. Addl/JCIT(A) observed that all these grounds are consequential in nature.
6. Aggrieved by the order of ld. Addl./JCIT(A),-4 Kolkata the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising 195 pages enclosing therein copy of return of income, statement of computation of income and copy of Form 10IC as well as copy of statement/submissions/orders as submitted before the ld. Addl/JCIT(A).
7. Before us, the ld. A.R. of the assessee vehemently submitted that the form No.10IC has been filed for the assessment year 2020-21 for the first time on 30.3.2021, which is accepted by the AO during the assessment proceedingsfor the assessment years 2020-21 and 2021-22. Further, the concessional tax rate was also accepted by the AO/CPC for the Asst. year 2022-23 and accordingly CPC, Bengaluru erred in rejecting the concessional tax rates for assessment year 2023-24 i.e. after a gap of so many years. Further, ld. A.R. of the assessee submitted that the requirement to furnish form 10IC along with the return of income is only directory and not mandatory in nature. Lastly, ld. A.R. submitted that ld. Addl/JCIT(A) has erred in placing a reliance on the circular No.6/2022 without appreciating that the said circular is not applicable in the instant case as the due dates for filing of any forms, returns, application, appeal, report etc. has been extended by the TOLA.
Sandisk India Device Design Centre Pvt. Ltd., Bangalore Page 6 of 12 8. The ld. D.R. on the other hand vehemently submitted that as all the conditions mentioned in circular No.06/2022 have not been fulfilled, the delay in filing form No. 10IC can not be condoned. Further the ld. Addl/JCIT(A) had also no power to condone the delay in filing the ITR for 44 days in order to allow the concessional rate as per the Form no.10IC submitted by the assessee. Further, ld. D.R. submitted that as the ITR for assessment year 2020-21 was filed on 31.3.2021, whereas the due date for filing the ITR was 15.2.2021, therefore, as per sub-section (5) of section 115BAA of the Act, the option for new tax regime is invalid for subsequent year also if it is invalid for any assessment year due to non-fulfillment of the conditions.
The solitary issue that is raised is whether ld. Addl/JCIT(A) erred in upholding the levy of income tax on the assessee company @ 30% whereas in the light of the option exercised by the assessee for the concessional tax regime u/s 115BAA of the Act, the income tax ought to have been levied @ 22%.
We have heard the rival submissions and perused the materials available on record. It is undisputed fact that the income as declared by the assessee company in its return of income has been accepted by the CPC Bengaluru while passing the intimation u/s 143(1) of the Act. The only disputeregarding the tax rate as per the provisions of section 115BAA of the Act has not been applied by the CPC as claimed by the assessee in its return of income, thereby leading to a demand of Rs.31,50,16,640/- as against a refund of Rs.8,59,37,520/- claimed in the return of income. It is also an undisputed fact that form no.10IC has been filed for the assessment year 2020-21 for the first time on 30.3.2021 vide acknowledgement no.319158521300321 (placed at page 112-114 of Sandisk India Device Design Centre Pvt. Ltd., Bangalore Page 7 of 12 the paper book). For the Asst. year 2023-24, the assessee has claimed in the ITR-6 the tax rate @ 22% u/s 115BAA of the Act whereas the CPC has computed @ 30% by ignoring the form No.10IC filed as above. We take note of the fact that for the assessment year 2020-21, an assessment order has been passed by the AO u/s 143(3) r.w.s. 144B of the Act on 26.9.2022 by accepting the concessional tax rate under new regime based onthe form 10IC filed on 30.3.2021. Further, ongoing through the assessment order passed u/s 143(3) r.w.s. 144B of the Act dated 22.12.2022 for the AY 2021-22, again the AO has accepted the concessional tax rate under new regime as per form 10IC filed on 30.3.2021. We also take note of the fact that for the AY 2022-23, the CPC Bangalore has also accepted the Form 10IC filed on 30.3.2021 and allowed the concessional tax rate of 22% u/s 115BAA of the Act.
10.1 The assessee company accordingly while filing the return of income for the AY 2023-24 has opted for taxation u/s 115BAA of the Act in (e) of “filing status” in “Part A-GEN” of the form of return of income ITR-6. Therefore, we find no wrong in claiming a concessional tax rate for the Asst. year 2023-24 especially when the revenue authorities themselves accepted the concessional claim of tax rate for three consecutive Asst. years based on the same form 10IC filed on 30/03/2021. As rightly contended by the A.R. of the assessee, the concessional tax rates for assessment year 2020-21 and 2021-22 has already been accepted by the AO during the assessment proceedings and for the AY 2022- 23 the concessional tax rates are accepted by the CPC Bangalore. Therefore, we are of the view that rejecting the concessional tax rate for assessment year 2023-24 is not justified especially when as per the provisions of section 115BAA once the option has been exercised for any previous year, it can not be subsequently withdrawn for the same or any other previous year.
10.2 Further, we cannot brush aside the fact that the CBDT based on the representations and with a view to avoid genuine hardship to the domestic companies in exercise of the powers conferred u/s 119(2)(b) of the Act had condoned the delay in filing Form-10IC as per Rule 21AE of the rules for the previous year relevant to AY 2020-21 vide circular no. 6/2022 dated 17/03/2022 upon fulfilment of certain conditions.The ld. Addl/JCIT(A) relying upon the same,denied the concessional rate on the ground that all the three conditions have not been fulfilled as mentioned in the last para of the circular. It is not in dispute that the assessee company had fulfilledthe second & third conditions of the said circulari.e the assessee company had opted for taxation u/s 115BBA of the Act in the ITR-6 and Form 10IC was also filed electronically on or before 30/06/2022. The only contention of the ld. Addl/JCIT(A) in this case is that the first condition of filing the return of income on or before the due date specified u/s 139(1) of the Act is not fulfilled as such, the delay in filing ITR for claiming concessional rate are not condoned by the above circular.
10.3 We are of the considered opinion that the provisions of section 115BAA of the Act however was diluted under the scheme of TOLA when the relaxation, on account of the COVID pandemic when different treatment was accorded to “furnishing of return u/s 139” (See clause (i) of third proviso to section 3(1) of TOLA) and “filing of any appeal, reply, application or furnishing of any report document, return or statement or such other record, by whatever name called, under the provisions of the specified Act”. (See section (3)(b) r.w.s. 2(1)(b)(ii) of TOLA). Thus, we are of the opinion that the TOLA extended the deadlines for certain actions under specified Acts that were dueduring the COVID-19 period. Section 3(1) of TOLA uses "any" to indicate that the relaxation applies toall actions 10.4 Under the similar facts and circumstances, the coordinate Bench of Mumbai Tribunal in the case Suminter India Organics (P.) Ltd. V. Deputy Commissioner of Income Tax, reported in [2022] 140 Taxmann.com 591 (Mum. Trib.), wherein it is held as under:
10.5 We respectfully relying on the above decision of the coordinate bench and bearing in mind the entirety of the case, uphold the plea of the assessee and set aside the order of the ld. Addl/JCIT(A) and further direct the AO/CPC to accept the exercise of the option by the assessee for the concessional taxation regime u/s 115BAA of the Act. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed.