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Facts
The assessee, a domestic company engaged in pharmaceuticals and chemicals, opted for taxation under Section 115BAA of the Income-tax Act, 1961. They filed their return of income within the due date but belatedly filed Form 10-IC for availing the concessional tax rate. The AO and CIT(A) rejected the claim, computing tax at a higher rate.
Held
The Tribunal noted that CBDT Circular No. 19/2023 dated 23/10/2023 allowed condonation of delay in filing Form 10-IC for AY 2021-22 under certain conditions. Since the appeal order was passed after the issuance of this circular, and the assessee fulfilled the conditions, the delay was condoned.
Key Issues
Whether the assessee is entitled to the benefit of Section 115BAA of the Income-tax Act, 1961, despite belatedly filing Form 10-IC, considering the CBDT's circular on condonation of delay.
Sections Cited
115BAA, 154, 143(1), 250, 139(1), 234B, 2134C, 119(2)(b), 21AE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI ANIKESH BANERJEE
Instant appeal of the Assessee is preferred against the order of the National Faceless Appeal Centre, Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2021-22, date of order 30.10.2023.The impugned order was emanated from the order of the CPC, Bangaluru (in short, ‘the A.O.’) passed under section154 / 143(1)of the Act date of order12/08/2023.
“1. Grouned 1. On facts and circumstances of the case, the learned COMMISSIONER OF INCOME-TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE erred in law and in fact, in confirming the tax liability of the Appellant as shown in the rectification order under section 154 of the Income-tax Act, 1961. Learned CIT(A) did not take cognizance of the circular issued by the Central Board of Direct Taxes (CBDT), Circular No.19/2023 dated 23 October, 2023, pursuant to which tax liability of the Appellant would be calculated under section 115BAA of the Act.
2. Ground 2. Without prejudice to the above, the learned CIT(A) has not taken any action against the rectification application filed by the Appellant under section 154 on 7 November 2023 to give effect of the aforesaid CBDT Circular 19/2023 issues on 23 October 2023 i.e. before date of passing of the order (which is 30 October 2023) under section 250 of the Act.
Ground 3. Without prejudice to the above, CPC erred in computing tax liability @30% (excluding applicable surcharge and cess) in accordance with the Rates in force as specified paragraph E of the First Schedule of the Act which is applicable to companies having turnover of less than 400 crores. The said demand is not acceptable to the appellant.”
Brief facts of the case are that the assessee is a domestic company and professionally managed pharmaceuticals, intermediates and chemical services and also engaged in merchant exports, trading, providing technical support, indenting, strategic sourcing and facilitating contract manufacturing solutions and the turnover is below Rs.400 crores in the impugned assessment year. The assessee filed its return under section 139(1) within the due date and availed the tax payment under section 115 BAA of the Act. Accordingly, the tax was paid amount to Rs. 67,27,381/-. The return was processed under section 143(1), but 3 /Mum/2024 Synergy Health Science Pvt Ltd the Ld.AO calculated the tax payable on that at effective rate of 33.34% (including surcharge and cess) which amount to Rs.93,95,871/-(including interest under section 234B and 2134C) resulting in the demand amount of Rs.26,68,490/-(Rs. 93,95,871/- - 67,27,381/-). The assesee filed rectification petition under section 154 but the petition was rejected, and the demand stands. Being aggrieved, assessee filed an appeal before the ld. CIT(A). The Ld.CIT(A) has passed the order and upheld the action of the Ld.Assessing Officer. Being aggrieved, assessee filed an appeal before us.
3. The Ld.AR filed a written submission (in short APB) which is kept in the record. The Ld.AR first argued that the assessee availed the provisions of section 115BAA during calculation of tax. The assessee filed the Form 10-IC for availing the benefit under section 115BAA. The assessee’s turnover is below Rs.400 crores and the effective tax rate is 27.28%. The assessee belatedly filed the Form 10-IC. For that reason the Ld. AO and the Ld.CIT(A) rejected the assessee’s claim for calculation of tax under section 115BAA and calculated the tax at the effective rat4e of 33.34%. The Ld.AR invited our attention in CBDT circular bearing No.19/2023 F.No.173/32/2022 – ITA-1 dated 23/10/2023 where the CBDT allowed the condonation of delay in availing the tax under section 115BAA. The Ld.AR placed that the appeal order was passed on 30/10/2023 but the Ld.CIT(A), without considering the CBDT circular dated 23/10/2023 has passed the order and rejected the condonation of delay for filing the form, as per direction of the CBDT.
4 /Mum/2024 Synergy Health Science Pvt Ltd 4. The Ld.DR argued and fully relied on the orders of the revenue authorities. The Ld.DR invited our attention in appeal order para 4.4 which is reproduced as below: - “4.4 On perusal of records, it is noticed that appellant has fulfilled some conditions of this section by not claiming any deductions/exemptions. The turnover reported by the appellant is also found to be less that 400 crores and necessary application for exercise of option under sub-section 5 of section 115BAA of the Act read with rule 21AE has been filed by the appellant. But it is also found that ITR in the case has been filed on 11.01.2022 (before the due date) and Form 10-IC has been filed on 23.03.2022 (after thedue date). The due date for the year as per section 139 of the Act was 31.10.2021, which wasextended to 15.03.2022. In this case, appellant filed its return before the due date i.e. before 15.03.2022 but failed to file Form No. 10-IC on or before due date i.e. 15.03.2022. Hence, appellant has not completely complied with all the conditions as envisaged in section 115BAA of the Act read with rule 21AE of the Rules. Therefore, appellant is not entitled to avail the benefit of reduced tax rate as per section 115BAA of the Act.” In view of the above, the demand is upheld, and grounds of appeal are accordingly, dismissed.”
5. We heard the rival submission, considered the documents available in the record. Here we are reproducing the CBDT Circular bearing No.19/2023 dated 23/10/2023:-