2022 (7) TMI 1219 - AT - Income Tax

Tribunal grants appeal for concessional tax rate under section 115BAA, extends Form 10-IC deadline.

The tribunal allowed the appeal in favor of the assessee, directing the Assessing Officer to accept the assessee's exercise of the option for the ... Concessional tax regime under section 115BAA - exercise of option by filing Form 10-IC - time-limit for furnishing return under section 139(1) - relaxation under the Taxation and Other Laws (Relaxations and Amendments of Certain Provisions) Act 2020 - third proviso to Section 3(1) of TOLA - exception for furnishing returns - segregation of time-limits for returns and other filings - liberal interpretation of statutory relaxationsConcessional tax regime under section 115BAA - exercise of option by filing Form 10-IC - time-limit for furnishing return under section 139(1) - relaxation under the Taxation and Other Laws (Relaxations and Amendments of Certain Provisions) Act 2020 - third proviso to Section 3(1) of TOLA - exception for furnishing returns - segregation of time-limits for returns and other filings - liberal interpretation of statutory relaxations - Validity of exercise of option under section 115BAA by filing Form 10-IC on 31st March 2021 despite the income-tax return being filed after the extended due date for section 139(1). - HELD THAT: - The statutory scheme of section 115BAA requires the option for the concessional rate to be exercised in the prescribed manner on or before the due date specified under section 139(1). However, the Taxation and Other Laws (Relaxations and Amendments of Certain Provisions) Act, 2020 (TOLA) extended specified filing time-limits that fell between 20 March 2020 and 31 December 2020 to 31 March 2021 under section 3(1)(b). The third proviso to section 3(1) of TOLA carves out a specific exception only in respect of furnishing of returns under section 139 for certain assessment years, thereby segregating the time-limit applicable to filing returns from the time-limits applicable to other filings and documents. Given that Form 10-IC is the prescribed manner for exercising the option under Rule 21AE, and is not the filing of the return itself, the extended deadline under section 3(1)(b) of TOLA applies to it. The proviso does not negate the general extension for other statutory filings; it merely narrows the extension for returns. In the context of pandemic relief, the relaxation provisions must be interpreted liberally to give effect to the legislature's intent to extend compliance timelines. Applying these principles, filing Form 10-IC on 31 March 2021 was within the extended time permitted by TOLA and sufficed for exercising the option under section 115BAA for AY 2020-21. [Paras 6, 7, 8, 9]Form 10-IC filed on 31st March 2021 validly constituted exercise of option under section 115BAA; Assessing Officer directed to accept the option and apply the concessional tax regime as admissible.Final Conclusion: Appeal allowed; the exercise of option for taxation under section 115BAA by filing Form 10-IC on 31st March 2021 is upheld for assessment year 2020-21 and the Assessing Officer is directed to give effect to the concessional rate as admissible. Issues Involved:1. Levy of income tax at 30% instead of 22% under the concessional tax regime of section 115BAA.2. Interpretation of the provisions of the Taxation and Other Laws (Relaxations and Amendments of Certain Provisions) Act 2020 (TOLA) concerning the filing of Form 10-IC.3. The linkage between the time permissible for furnishing a return under section 139(1) and filing the intimation of exercising the option for the concessional regime of taxation under section 115BAA(5).Detailed Analysis:1. Levy of Income Tax at 30% Instead of 22%:The core grievance of the assessee was that the CIT(A) upheld the levy of income tax at 30%, whereas the assessee had opted for the concessional tax regime under section 115BAA, which prescribes a tax rate of 22%. The assessee argued that they had exercised the option for the concessional tax regime by filing Form 10-IC on 31st March 2021, along with a belated income tax return. However, the CIT(A) rejected this claim on the grounds that the option was not exercised within the time prescribed under section 139(1), which is a prerequisite for availing the concessional tax regime under section 115BAA.2. Interpretation of TOLA Provisions:The assessee's counsel contended that under section 3(1)(b) of TOLA, the time limit for filing Form 10-IC for the assessment year 2020-21 was extended to 31st March 2021. This extension superseded the statutory linkage between the time permissible for furnishing the return under section 139(1) and filing the intimation for the concessional regime of taxation under section 115BAA(5). The counsel argued that the exceptions carved out in the third proviso to section 3(1) of TOLA pertained only to the income tax returns filed under section 139, and not to other filings such as Form 10-IC.3. Linkage Between Section 139(1) and Section 115BAA(5):The revenue's representative argued that section 115BAA(5) explicitly requires the option to be exercised within the time permitted for filing the income tax return under section 139(1). Since the extended time limit for filing the return under section 139(1) was only up to 15th February 2021, the filing of Form 10-IC on 31st March 2021 was not within the permissible time frame. Therefore, the assessee could not claim the concessional tax rate of 22%.Tribunal's Findings:The tribunal found merit in the assessee's argument. It noted that the scheme of section 115BAA requires the option for the concessional tax rate to be exercised within the time permissible for filing the income tax return under section 139(1). However, this scheme was modified by the relaxation provisions under TOLA, which extended the time limit for various statutory filings, including the filing of Form 10-IC, to 31st March 2021. The tribunal emphasized that the relaxation provisions under TOLA must be interpreted liberally to mitigate the hardships caused during the Covid pandemic period. Consequently, the tribunal held that the assessee had properly exercised the option for the concessional tax regime under section 115BAA by filing Form 10-IC on 31st March 2021.Conclusion:The tribunal directed the Assessing Officer to accept the assessee's exercise of the option for the concessional taxation regime under section 115BAA and to levy tax at the rate of 22%. The tribunal did not find it necessary to address other legal issues raised by the assessee, as the primary issue was resolved in the assessee's favor.Result:The appeal was allowed in favor of the assessee, with the direction to apply the concessional tax rate of 22% as per section 115BAA. The judgment was pronounced on 26th July 2022.