GENERAL INDUSTRIAL CONTROS LTD.,PUNE vs. DCIT CIRCLE 8, PUNE, PUNE

आदेश/ ORDER

PER DR. DIPAK P. RIPOTE, AM:

Brief facts of the case : 2. The facts emanating from ld.CIT(A)’s order and submission are as under : “The assessee Company engaged in the business of designing, developing, and manufacturing electronic control and timing devices that are used in the instrumentation and switchgear industry. It has filed its Return of Income (ROI) for the year under consideration on 12/03/2022 by declaring a total income of Rs.25,61,51,210/-. The return was processed by CPC Bangalore and proposed adjustment u/s 143(1)(a) of the Income-tax Act, 1961 was issued wherein the following additions were proposed to be made:

Variation et disalowance of expenditure of Rs. 6.71.649/ indicated in audit report but not taken into account in computing total income being employee's contribution to PF not paid before the due dates. In response to the said proposed adjustment w 143(1)(a), appellant duly submitted its response.

On submission of the response the return was processed and an intimation order uls 143(1) of the Income-tax Act, 1961 was passed on 13/11/2022 and duly communicated to the assessee.

Following Variations were made in the intimation order u/s 143(1):

(ii) Variation of Computation of tax liability

The assessee opted for new tax regime u/s115BAA of Income-tax Act, 1961 In the Clause 8(a) of Tax Audit Report it has been reported that the appellant opted for the new tax regime u/s 115BAA of Income- tax Act, 1961 The appellant inadvertently failed to file Form 10IC for opting for tax regime u/s 115BAA before furnishing a return of income. As such learned CPC processed the return of income and computed tax at normal rates of tax ie. 30% along with 12% surcharge and education cess, instead of computing tax at the rate of 22% along with 10% surcharge and education cess. Accordingly, CPC Bangalore passed order u/s 143(1) on 13/11/2022 by making addition of Rs.6,71,649/- (Rs.25,68,22,860 Rs. 25.61.51.210) thereby assessing total income at Rs.25.68,22.860/- and computed balance tax liability at Rs.2,73,95,728/- instead of refund declared in return of income of Rs.31.40,690/-.”

2.1 Aggrieved by the order u/sec.143(1) of the Act, assessee filed appeal before the ld.CIT(A).Ld.CIT(A) confirmed the addition.

2.2 Aggrieved by the order of the ld.CIT(A), Assessee has filed appeal before this Tribunal.

Submission of ld.AR : 3. The ld.AR filed a paper book. Ld.AR submitted that the assessee had filed Form-10-IC physically on 11.11.2022. The Return of Income was filed on 12.03.2022. Assessee claimed in the Return of Income that Assessee had opted for New Regime under section 115BAA of the Income Tax Act. The said fact was mentioned by the Assessee in the Audit Report also. These details were filed in response to the notice issued by CPC. However, CPC passed an order on 13.11.2022 ignoring the Assessee’s submission. Assessee filed a rectification application which was rejected. Assessee filed Form-10-IC electronically on 01.11.2023. Ld.AR relied on the CBDT Circular No.19/2023 and stated that CBDT had allowed the time to file Form No.10-IC up to 31.01.2024. Therefore, ld.AR pleaded that Assessee had filed Form No.10-IC within time and hence, assessee is eligible for benefit of New Regime. Ld.AR also submitted that Assessee had filed a petition before Assessing Officer on 18.12.2023 requesting to condone the delay relying on CBDT Circular No.19/2023. Similarly, assessee filed petitions before the ld.CCIT relying on circular no.19/2023. However, neither the ld.CCIT nor the Assessing Officer has decided the petition filed by the assessee. Ld.AR pleaded that appeal of the assessee may be allowed.

3.1 The ld.AR has relied on the following case laws : Rajkamal Healds And Reeds Pvt. Ltd vs Assistant Director of Income Tax [2025] 173 taxmann.com 225 (Gujarat) V M Procon Pvt. Ltd., v. Assistant Director of Income-tax [2024] 168 taxmann.com 517 (Gujarat) A.C.Surgipharma (P.) Ltd. Vs. Deputy Commissioner of Income Tax [2023] 157 taxmann.com 362 (Delhi) Aprameya Engineering Ltd., Vs. Income Tax Officer [2024] 164 tamann.com 740 (Ahmedabad Tribu) Sunpack Barrier Films (P.) Ltd., Vs. A.Director of Income Tax [2024] 162 taxmann.com 200 (Ahmedabad Tribu) Submission of ld.DR : 4. The ld.DR for the Revenue filed copy of the CBDT Circular dated 18.11.2024 and submitted that the power to condone the delay in filing Form No.10-IC is with ld.CCIT and ld.Pr.CIT.

Findings & Analysis : 5. We have heard both the parties and perused the records. In this case, vide order u/sec.143(1), Assessee’s claim for benefit of lower tax as per section 115BBA was denied on the ground that Form No.10-IC was not filed electronically. The relevant section is reproduced as under : Section 115BAA as under : “115BAA. (1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BA and section 115BAB, the income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall, at the option of such person, be computed at the rate of twenty-two per cent, if the conditions contained in sub-section (2) are satisfied: Provided that where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and subsequent assessment years and other provisions of the Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years. (2) For the purposes of sub-section (1), the total income of the company shall be computed,— (i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub- clause (iii) of sub-section (1) or sub-section (2AA) or sub-section (2AB) of section 35 or section 35AD or section 35CCC or section 35CCD or under any provisions of 31-32[Chapter VI-A other than the provisions of section 80JJAA or section 80M]; (ii) without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); (iii) without set off of any loss or allowance for unabsorbed depreciation deemed so under section 72A, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); and (iv) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed. (3) The loss and depreciation referred to in clause (ii) and clause (iii) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year: Provided that where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2020, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2019 in the prescribed manner, if the option under sub-section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020. (4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions contained in sub-section (2) shall be modified to the extent that the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in the said section. Explanation.—For the purposes of this sub-section, the term "Unit" shall have the same meaning as assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005). (5) Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner33 on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2020 and such option once exercised shall apply to subsequent assessment years: Provided that in case of a person, where the option exercised by it under section 115BAB has been rendered invalid due to violation of conditions contained in sub-clause (ii) or sub-clause (iii) of clause (a), or clause (b) of sub-section (2) of said section, such person may exercise option under this section: Provided further that once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year.” The Relevant Rule is reproduced here as under :

[Exercise of option under sub-section (5) of section 115BAA. 21AE. (1) The option to be exercised in accordance with the provisions of sub-section (5) of section 115BAA by a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall be in Form No. 10-IC. (2) The option in Form No. 10-IC shall be furnished electronically either under digital signature or electronic verification code. (3) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall— (i) specify the procedure for filing of Form No.10-IC (ii) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (2), for verification of the person furnishing the said Form; and (iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form so furnished.

10.1 The ITAT Ahmedabad Bench in the case of Aprameyha Engineering Ltd., Vs. ITO [2024] 164 taxmann.com 740 has held as under : “8.1 The Hon'ble Gujarat High Court in the case of Zenith Processing Mills v. CIT [1996] 219 ITR 721 held that provision of section 80J(6A) of the Act to extent it requires furnishing of auditor's report in prescribed form along with return, is directory in nature and not mandatory. Further, it was held that the assessee can be permitted to produce such a report at later stage when question of disallowance arises during course of assessment proceedings. In the instant case, the Ld.A.O. as well as the Ld.CIT(A) has denied benefit of concessional tax rate u/s 115BAA of the Act on account of an inadvertent error on the part of the assessee in not e-filing Form 10 IC before due date prescribed. We are, therefore, of the view that there is sufficient compliance if the Form 10 IC has been filed during the course of assessment proceeding, since there is no material objective to be achieved by the assessee in not e-filing the same, once the intent was very well declared in Form 3CD.

8.2 Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. SC ruling in the case of CIT v. G.M. Knitting Industries (P.) Ltd. [2016] 71 taxmann.com 35/[2015] 376 ITR 456 (SC) emphasized that the making of a claim of deduction is mandatory, but timing is directory. Even if the claim is made during the assessment proceedings, such a claim is to be allowed.

8.3 After considering the submissions, the judicial precedents cited and the specific facts of the case, we are of the opinion the delay in filing Form 10-IC, though a procedural requirement, should not invalidate the assessee's substantive right to the benefit of section 115BAA of the Act.

84 The CBDT's Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. These Circulars indicate a degree of administrative flexibility and a recognition that procedural lapses should not necessarily lead to the denial of substantive benefits. Moreover, denying the benefit based solely on this lapse would be against the principles of equity and justice, especially when there is no dispute regarding the assessee's eligibility for the lower tax rate.

8.5 In light of the above, the Ground Number 1 is allowed. Ground Number 2 is an alternative ground and, therefore, not adjudicated.

Ground Numbers 3 and 4 are general in nature, which are also not adjudicated. 9. In the result, the order of the CIT(A) is set aside, and the appeal of the assessee is partly allowed.” 10.2 Similarly, ITAT Ahmedabad Bench in the case of Sunpack Barrier Films (P.) Ltd., vs. A.Director of Income Tax [2024] 162 taxmann.com 200, has also allowed the appeal of the Assessee on the impugned issue.

10.3 In these facts and circumstances of the case, since Assessee has fulfilled all the Three Conditions mentioned in the CBDT Circular No.19/2023 and the Form No.10-IC was filed on 01.11.2023 electronically, which was before the date of passing the order u/s.143(1) of the Act, respectfully following the judicial precedents, Assessee’s appeal is allowed, as delay in filing Form No.10-IC has been condoned by CBDT Circular No.19/2023.