2023 (12) TMI 1460 - AT - Income Tax

Taxpayer denied concessional 22% rate under Section 115BAA for failing to file Form 10-IC by extended deadline

Neptunus Power Plant Services Pvt. Ltd Versus ADIT, CPC Bangalore.

ITAT MUMBAI dismissed the taxpayer's plea for concessional taxation at 22% under u/s 115BAA, holding that although the taxpayer opted for the 22% rate in ... Concessional rate of tax u/s 115BAA - Tax computed @ 30% by CPC, instead @ 22% u/s 115BAA - HELD THAT:-We find that despite assessee opting for tax payable @ 22% u/s 115BAA of the Act by making it clear in ITR, but has not uploaded Form 10-IC before 31.03.2021 (extended time to file return). Therefore, respectfully following the order of Tribunal in Bholanath Precision Engineering Pvt. Ltd. [2022 (11) TMI 1202 - ITAT MUMBAI], we do not find any infirmity in the impugned action of Ld. CIT(A) and dismiss this ground of appeal of assessee. ISSUES PRESENTED AND CONSIDERED 1. Whether the option under section 115BAA can be availed where Form 10-IC was not uploaded before the due date for filing the return, and whether the assessing machinery (CPC/CIT(A)) was justified in denying taxation at 22% on that ground. 2. Whether Form 10-IC may be filed belatedly (after the extended return due date) pursuant to applicable statutory scheme or relaxations, and if so, whether the assessee's failure to upload the form before the return due date can be cured. 3. Whether, in the alternative, the assessee is entitled to have tax computed at the lower corporate rate (25% / relevant concessional rate) applicable by reference to turnover thresholds, despite not having specifically selected that option in the ITR due to software constraints when an attempt was made to select section 115BAA. 4. Whether the appellate authority was required to admit additional grounds and pass a speaking order thereon. ISSUE-WISE DETAILED ANALYSIS - Denial of section 115BAA option for non-filing of Form 10-IC Legal framework: Section 115BAA grants a concessional corporate tax rate subject to exercise of option in the prescribed manner on or before the due date under section 139(1); Rule 21AE prescribes Form 10-IC for exercising the option. Precedent Treatment: The Tribunal followed its coordinate bench decisions holding that timely filing of Form 10-IC is mandatory to avail section 115BAA where Form 10-IC was not filed before the due date; the issue was not treated as res integra and existing Tribunal jurisprudence was followed. Interpretation and reasoning: The Tribunal accepted that marking the option in the ITR alone is insufficient under the statute and rules; Rule 21AE requires exercise of option by filing Form 10-IC within the statutory time. The absence of Form 10-IC by the extended due date (as applicable) meant the statutory condition precedent for section 115BAA was not satisfied, permitting CPC to process tax at the normal rate. Ratio vs. Obiter: Ratio - timely filing of Form 10-IC is a mandatory condition to avail section 115BAA and omission cannot be remedied by merely marking the ITR. Obiter - any other alternative remedies remain unaffected (expressly noted without deciding). Conclusions: The Tribunal upheld denial of taxation under section 115BAA where Form 10-IC was not uploaded before the due date; the appellate order dismissing that ground was affirmed. ISSUE-WISE DETAILED ANALYSIS - Belated filing of Form 10-IC / effect of statutory relaxations Legal framework: Interaction of section 115BAA/Rule 21AE with temporary relaxations enacted by pandemic-era amendments (including relevant provisos and notifications) that altered timelines for filing returns and related forms. Precedent Treatment: Coordinate-bench decisions were considered: one line of Tribunal authority held that statutory relaxation extended the permissible date for filing Form 10-IC; counter decisions held the prescribed Form 10-IC remained required to be filed by the due date for returns. The Tribunal followed the decision holding Form 10-IC must be filed within the prescribed period where it was not filed by the extended date applicable in that case. Interpretation and reasoning: The Tribunal examined the timeline and concluded that for the assessment year in question the extended date for filing the return/Form 10-IC remained the operative cut-off; since the Form 10-IC was not filed by that date, the option could not be treated as validly exercised. The Tribunal declined to expand the return-timeline relaxation to permit a belated cure in the factual matrix before it. Ratio vs. Obiter: Ratio - statutory relaxation did not, on facts before the Tribunal, validate belated filing of Form 10-IC where it remained unfiled by the operative extended date. Obiter - recognition that alternate remedies (if any) were not adjudicated and remain open. Conclusions: Belated filing of Form 10-IC after the operative extended due date was not allowed to validate the section 115BAA option in the facts; the Tribunal refused to permit retrospective curing of the omission. ISSUE-WISE DETAILED ANALYSIS - Alternate claim for 25% rate where software prevented dual selection Legal framework: Finance Act amendments and provisions prescribing alternative lower corporate tax rates (25% or other concessional rates) linked to turnover/gross receipts thresholds; requirement of determining applicable rate by reference to statutory conditions (turnover in specified prior year). Precedent Treatment: The Tribunal referred to prior coordinate-bench authority which, faced with similar software-induced inability to select both options in the ITR, remanded the matter to the assessing officer for factual verification and application of the correct statutory rate after hearing the assessee. Interpretation and reasoning: The Tribunal recognized the practical constraint that the ITR software did not permit selecting both the section 115BAA option and the alternative turnover-based option; where an assessee had indicated intention (by the ITR selection) and where factual eligibility for the lower turnover-based rate was asserted, the Tribunal treated the alternate plea as meriting factual verification rather than outright technical rejection. Remand was appropriate so the assessing officer could verify relevant turnover figures and compute tax under the correctly applicable provision after affording opportunity to be heard. Ratio vs. Obiter: Ratio - when an alternate statutory rate may apply based on verifiable turnover thresholds, the matter should be remanded to the assessing officer for factual verification and computation rather than being rejected on a technicality caused by software limitations. Obiter - the Tribunal's direction is procedural (remand for verification) and does not pre-determine the outcome of the factual enquiry. Conclusions: The Tribunal restored the alternate plea to the file of the assessing officer, directing computation of tax at the applicable rate (including 25% if facts support) after verification and opportunity of hearing; the appeal was partly allowed for statistical purposes on this ground. ISSUE-WISE DETAILED ANALYSIS - Admission of additional grounds / speaking order requirement Legal framework: Appellate principles requiring that additional grounds, if raised, be considered or that a speaking order be passed when such grounds are not admitted, to enable effective appellate challenge. Precedent Treatment: The impugned order raised a grievance that additional grounds were not admitted and no speaking order was passed; the Tribunal's decision does not explicitly elaborate on this point beyond disposing the substantive grounds. Interpretation and reasoning: The Tribunal did not find cause to overturn the impugned order on the basis of non-admission of additional grounds where the substantive issues before it were determinative and disposed by application of governing law and precedent. There is an implicit finding that the resolution of the principal issues rendered the admission question non-determinative of the outcome. Ratio vs. Obiter: Obiter - absence of a detailed ruling on admission of additional grounds; not a ratio for broader principle but the Tribunal proceeded to decide merits where necessary. Conclusions: No separate relief was granted on the procedural ground concerning admission of additional grounds; the substantive disposition addressed the material issues. OVERALL CONCLUSION The Tribunal affirmed denial of the section 115BAA concession where Form 10-IC was not filed by the operative due date; it declined to permit belated curing of that omission on the facts. However, the Tribunal remanded the alternate claim for taxation at the lower turnover-linked rate for verification and recomputation by the assessing officer after giving the assessee an opportunity to be heard. The appeal was partly allowed for statistical purposes accordingly.