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Facts
The assessee company, engaged in real estate and leasing, filed its return for AY 2021-22 opting for Section 115BAA but inadvertently marked "N.A." in ITR-6. Although Form 10-IC was subsequently filed within the extended deadline, the CPC denied the concessional tax rate, a decision upheld by the Ld. First Appellate Authority citing non-fulfillment of a CBDT Circular condition.
Held
The Tribunal determined that the omission in ITR-6 was a curable clerical error, especially since Form 10-IC clearly indicated the Section 115BAA option and was filed within the extended time. It held that the CBDT Circular's purpose for substantive relief should be interpreted liberally, not defeated by a technical defect when other material conditions were satisfied. The disallowance was deemed unsustainable, and the AO was directed to allow the Section 115BAA benefit.
Key Issues
Whether the assessee is entitled to the benefit of Section 115BAA despite a clerical error in ITR-6, given that Form 10-IC was filed and other conditions of the CBDT circular were substantially met.
Sections Cited
115BAA, 139(1), 143(1), 115JB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. :
This appeal is filed by M/s. Salasar Hanuman Agrotech Foods Pvt. Ltd. (“the assessee”), feeling aggrieved by the order passed by the ADDL/JCIT(A)-8, Mumbai (“Ld. First Appellate Authority”), dated 03.01.2025 for the A.Y. 2021-22.
The assessee has raised the following grounds of appeal:
“ 1. The order of the Ld. First Appellate Authority is erroneous both on facts and in law.
2. The Ld. CIT(A) erred in confirming the action of the Assessing Officer in holding that the provision of section 115JB are applicable particularly when applicant filed Form 10IC with in the extended period and applied for application for provision of sectin 115BAA of the I.T. Act.
The Ld. CIT(A) ought to have considered the detailed statement of facts and also the grounds of appeal subvmitted along with the circular issued by the CBDT No.19/2023 dated 23.10.2023 and allowed the appeal.
4. Any other ground / grounds that may be urged at the time of hearing.”
3. The brief facts of the case are that, the assessee is a company engaged in the business of real estate and leasing services. The assessee filed its return of income for Assessment Year 2021–22 on 28.02.2022, within the extended due date for filing return under Section 139(1) of the Income Tax Act, 1961 (“the Act”). In the said return, the assessee opted for taxation under the concessional tax regime provided under Section 115BAA of the Act. However, the assessee inadvertently failed to file Form No. 10-IC along with the return of income. Consequently, the Centralized Processing Centre (“CPC”) processed the return under Section 143(1) of the Act on 07.07.2022 and denied the benefit of concessional rate under Section 115BAA of the Act, due to non-filing of Form 10-IC. Accordingly, the CPC raised a demand of Rs.6,72,650/- on the assessee.
4. Aggrieved with the intimation of CPC, the assessee filed appeal before the Ld. First Appellate Authority. Before filing an appeal before the Ld. First Appellate Authority, the assessee submitted Form No. 10-IC on 08.07.2022. However, the Ld. First Appellate Authority dismissed the appeal on the ground that the assessee had marked “N.A.” in item (e) of “Filing Status” in “Part A – Gen” of ITR-6 instead of specifically opting for Section 115BAA of the Act, and therefore did not fulfill condition no. (ii) of para no.3 of CBDT Circular No. 19/2023 dated 23.10.2023.
Aggrieved with the order of Ld. First Appellate Authority, the assessee is in appeal before the Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that the CBDT, vide Circular No. 19/2023 dated 23.10.2023, had granted condonation of delay in filing Form 10-IC for AY 2021–22, subject to the fulfillment of three conditions enumerated in para 3 of the circular i.e. (a) that the return of income was filed on or before the due date under Section 139(1) of the Act, (b) that the assessee had opted for Section 115BAA in item (e) of “Filing Status” in “Part A – Gen” of ITR-6 and (c) that Form No. 10-IC was filed electronically on or before 31.01.2024 or within 3 months from the end of the month in which CBDT circular was issued, whichever is later. It was submitted that the assessee had filed its return of income on 28.02.2022, which was within the extended due date under Section 139(1) for AY 2021–22, thereby satisfying condition (i). Further, Form No. 10-IC was filed electronically on 08.07.2022, i.e., well before the deadline prescribed under condition (iii). As regards condition (ii), the Ld. AR candidly submitted that in item (e) of “Filing Status” in “Part A – Gen” of ITR-6, the assessee had inadvertently mentioned “N.A.” instead of selecting Section 115BAA. However, the same was a clerical and unintentional error. The Ld. AR pleaded that since the assessee had otherwise satisfied all statutory and circular conditions, a liberal view may be taken in this case.
The assessee had also raised an alternate ground regarding incorrect computation under Section 115JB by CPC in denying set-off of brought forward business loss and unabsorbed depreciation.
However, the Ld. AR submitted that since the assessee’s primary claim under Section 115BAA is being pursued, the alternate ground need not be adjudicated if the primary issue is allowed.
Per contra, the Learned Departmental Representative (“Ld. DR”) supported the order of the Ld. First Appellate Authority and submitted that the assessee had not opted for Section 115BAA in the designated field of ITR-6. Since Condition (ii) of the CBDT Circular (supra) was not fulfilled, the action of CPC and the Ld. First Appellate Authority in denying concessional tax rate was justified. The Ld. DR submitted that CBDT Circular (supra) laid down specific eligibility conditions, and as the assessee has not strictly complied with all three conditions, the benefit of section 115BAA of the Act cannot be extended to the assessee.
We have considered the rival submissions and gone through the record, including the CBDT Circular (supra) dated 23.10.2023. The issue under consideration is whether the assessee is entitled to the benefit of Section 115BAA for AY 2021–22, despite not marking the specific option in item (e) of “Filing Status” in “Part A – Gen” of ITR-6. It is undisputed that the return of income was filed on 28.02.2022, within the extended due date under Section 139(1) of the Act satisfying condition (i) of the CBDT circular (supra) and Form No. 10-IC was filed electronically on 08.07.2022 satisfying condition (iii) of the CBDT circular (supra). However, there was a bona fide clerical omission qua Condition (ii) of CBDT circular (supra) i.e., the ITR did not reflect the Section 115BAA option in the designated field. In our considered view, the omission in ticking the specific option in item (e) of “Filing Status” in “Part A – Gen” of ITR-6 is a curable clerical error, especially when the assessee has made it unequivocally clear in Form 10-IC filed well within extended time that it has opted for Section 115BAA. We find merit in the submission of the Ld. AR that the CBDT Circular (supra) is intended to provide substantive relief and should be interpreted liberally. The purpose of the circular is not defeated merely because of a technical defect, especially when the intent of the assessee is clearly demonstrated and all other material conditions are satisfied. Accordingly, we hold that the assessee has fulfilled the conditions of Section 115BAA and the CBDT Circular (supra) in substance. The disallowance of concessional tax rate under Section 115BAA is therefore not sustainable. We direct the Learned Assessing Officer to allow the benefit of concessional tax rate under Section 115BAA of the Act to the assessee.
Since the appeal of the assessee is allowed on the principal issue, we are not adjudicating on the alternate ground regarding set- off under Section 115JB.
In the result, the appeal of the assessee is allowed.