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Facts
The assessee company opted for the concessional tax regime under Section 115BAA but failed to file Form 10-IC along with its Income Tax Return for Assessment Year 2020-21. The CPC processed the return under the normal tax regime, raising a demand. A rectification petition and an appeal to the CIT(A) were rejected.
Held
The Tribunal held that the assessee had exercised the option for the lower tax rate as evident from the ITR-6 and computation of income. The denial of the benefit was due to an inadvertent error in not filing Form 10-IC on time.
Key Issues
Whether the benefit of the concessional tax regime under Section 115BAA can be denied solely on the ground of delayed filing of Form 10-IC, especially when the option was otherwise exercised.
Sections Cited
154, 115BAA, 139, 119(2)(b), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha
RD Dynamech Infra The DCIT, Private Limited Circle-2(1)(1), 227-230, Abhishek Vs Vadodara Complex, Akshar Chowk, Old Padra Road Vadodara-390020 PAN: AADCR0384C (Appellant) (Respondent) Assessee Represented: Shri Sunil Talati, A.R. Revenue Represented: Shri Hargovind Singh, Sr.D.R. Date of hearing : 25-06-2025 Date of pronouncement : 30-06-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the appellate order dated 26.03.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the rectification order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2020-21.
Brief facts of the case is that the assessee is a company filed its Return of Income on 27-01-2021 declaring total income of Rs.10,28,59,040/- opting new tax regime u/s. 115BAA of the Act which was introduced for the purpose of granting benefit of reduced Corporate Tax rate for the domestic companies. The return was processed by CPC however calculated the tax under the normal Tax regime and raised a demand of Rs.1,33,68,760/- for the reason that Form No. 10-IC was not filed along with the return. The assessee filed a rectification petition the same was rejected.
Aggrieved against the same, assessee filed Form 10-IC manually on 29.02.2024 explaining though in the statement of total income claiming the new provisions of section 115BAA of the Act but being the first year failed to file Form. The assessee also filed an application u/s.119(2)(b) to condone the delay in filing Form No. 10-IC before Principal Commissioner of Income Tax on 03-01-2025, the same is pending adjudication. The assessee also filed an appeal before Ld. CIT(A) against the rectification order denying the benefit. Ld. CIT(A) dismissed the appeal by holding that the assessee failed to file Form 10-IC along with the Return of Income u/s.139[1] of the Act.
Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal:
The Ld. CIT(A) has erred in confirming the order u/s. 154 of the Income Tax Act, 1961 ("the Act) passed by the CPC by denying the benefit of the lower tax regime to tax at 22% opted by the appellant u/s. 115BAA(5) of the Act. Hence, the incorrect levy of tax rate at 25% on the income needs to be reduced to the lower tax rate as opted by the Appellant. The same be held now.
2. The order passed by the Ld. CIT(A) is bad in law and contrary to the provisions of law and facts, it is submitted that the same be held so now.
3. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing.
Heard rival submissions and perused the materials available on record including the Paper Book filed by the assessee. By Taxation (Amendment) Ordinance, 2019, Section 115BAA was inserted in the Act wherein, existing as well as newly formed companies were given liberty to opt for concessional rate of tax at the base rate of 22% with caveat that such assessee-company shall forego all deductions available to it as stated under section 115BAA of the Act and also file Form 10-IC electronically under sub-section 5 of section 115BAA of the Act on or before the due date for furnishing the return of income as per Rule 21AE of the IT Rules.
5.1. In this case, though the assessee in its computation of income claimed that the assessee is availing concession rate of tax u/s.115BAA of the Act, but failed to file Form 10-IC along with the Return of Income. However, the assessee filed Form 10-IC on 29- 02-2024 and also application to condone the delay u/s.119(2)(b) of the Act before PCIT, the same is pending. Further it is seen from ITR Form No.6, the assessee categorically mentioned that it is opting to pay tax under section 115BAA of the Act. However, the CPC rejected the claim on the sole ground that Form No. 10-IC was not filed along with the return. In the instant case, the CPC as well as the Ld. CIT(A) denied the benefit of concession rate u/s.115BAA of the Act on account of inadvertent error being the first year of option by the assessee in not filing Form No.10-IC within the due date as prescribed under Act. There is no material objective to be achieved by the assessee in not filing Form 10-IC which was A.Y. 2020-21 Page No 4 RD Dynamech Infra Pvt. Ltd. vs. DCIT otherwise declared ITR Form No.6 and computation of income. on identical grounds the Hon’ble Gujarat High Court in the case of M/s. V M Procon Pvt. Ltd. Vs. ADIT reported in (2024) 168 taxmann.com 517 elaborately discussed this issue and remanded the matter back to the file of Assessing Officer to pass appropriate order and assess lower rate of tax u/s. 115BAA of the Act by observing as follows:
“ …. the CBDT has issued Circular No. 6/2022 in exercise of powers conferred under section 119(2)(b) of the Act for Assessment Year 2020-21 and after considering that representation, the Form 10-IC could not have been filed for Assessment Year 2021-22 within the due date or extended due date and to avoid genuine hardship to the domestic companies in exercising option under section 115BAA of the Act, the CBDT issued Circular No. 19/2023 in exercise of powers conferred under section 119(2)(b) of the Act.
Considering the above facts, respondent No.2 ought to have condoned the delay in filing Form 10-IC by the petitioner instead of rejecting the review application filed by the petitioner on technical ground as in substance, the petitioner has exercised the option for lower rate of tax under section 115BAA of the Act which is clear from the computation of income available on record. Even in Form ITR-6, the petitioner has filled in the details by computing the tax as provision for current tax in Column 54 at Rs.49,58,000/- by applying lower rate of tax meaning thereby, the petitioner has exercised option merely because in absence of any provision for exercising the option in Column (e) as per the Circular No. 19/2023, the petitioner cannot be deprived of lower rate of tax and the delay in filing Form 10-IC ought to have been condoned by respondent No.2 so as to fulfill the condition prescribed in subsection (5) of section 115BAA of the Act read with section 21AE of the Rules providing for procedure for filing Form 10-IC.
In view of the foregoing reasons, the impugned order dated 13.10.2023 passed under section 119(3)(b) of the Act and intimation under section 143(1) of the Act dated 13.11.2022 are hereby quashed and set aside and the mater is remanded back to the respondent No.2 to pass appropriate order condoning delay in filing Form 10-IC by the petitioner for exercising the option of lower rate of tax under section 115BAA of the Act as per the return of income filed by the petitioner in Form of Return of Income i.e. ITR-6 so as to enable the Assessing Officer or the Central Processing Center (CPC) to reprocess the Return of Income filed by the petitioner applying provision of section 115BAA of the Act for lower rate of tax at 22% instead of regular rate of tax applicable to the domestic company. Such exercise shall be completed within twelve weeks from the date of receipt of copy of this order by the respondent No.2.
In this case Hon’ble High Court considered both the provisions of law and Circular issued by the CBDT and directed the Assessing Authorities to grant the benefit of section 115BAA to the assessee. Respectfully following the above judicial precedent, we have no hesitation in setting aside the orders passed by the lower authorities and direct the Jurisdictional Assessing Officer to rework the tax computation as per section 115BAA of the Act. Thus the Grounds raised by the assessee are hereby allowed.
In the result the appeal filed by the assessee is hereby allowed.