Company entitled to Section 115BAA lower tax rates without filing fresh Form 10IC for subsequent years

The ITAT Ahmedabad held that a domestic company was entitled to lower tax rates under Section 115BAA despite failing to file Form 10IC for AY 2022-23. The tribunal ruled that once an assessee validly opts for Section 115BAA benefits and revenue authorities accept it, no fresh claim is required for subsequent years unless the original option becomes invalid due to violation of specified conditions under Section 115BAB(2). The AO's disallowance of the concessional tax rate was overturned, and the assessee's appeal was allowed.

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Issues Involved:

1. Whether the filing of Form 10-IC is mandatory for each assessment year to avail the concessional tax rate under Section 115BAA.
2. Whether the assessee is entitled to the concessional tax rate under Section 115BAA despite failing to file Form 10-IC for the assessment year 2022-23.
3. Whether the tax rate applicable should be 25% instead of 30% based on the assessee's turnover.

Issue-wise Detailed Analysis:

1. Mandatory Filing of Form 10-IC:

The core issue revolves around whether Form 10-IC must be filed every assessment year to claim the concessional tax rate under Section 115BAA. The statutory provisions under Section 115BAA(5) clearly state that once the option for the concessional tax regime is exercised, it applies to subsequent assessment years and cannot be withdrawn. The Tribunal observed that the requirement to file Form 10-IC is only necessary in the first year of opting for the concessional rate. This interpretation is supported by judicial precedents, including the ITAT rulings in the cases of Narayani Laxmi Viniyog (P.) Ltd. and Concentrix Daksh Services India, which confirm that once the option is exercised, there is no need for re-filing the form in subsequent years unless the initial option is rendered invalid due to specific violations.

2. Entitlement to Concessional Tax Rate Despite Non-filing:

The assessee argued that the failure to file Form 10-IC for the assessment year 2022-23 should not disqualify it from availing the concessional tax rate of 22% under Section 115BAA, as the form is directory and not mandatory. The Tribunal agreed with this position, emphasizing that the intent to avail the concessional rate was evident from the Tax Audit Report and the income tax return filed for the previous year. The Tribunal noted that the assessee had already exercised the option in the first year (2021-22) and had complied with the requisite filing requirements at that time. Therefore, the Tribunal concluded that the assessee should not be denied the benefit of the concessional rate due to the non-filing of Form 10-IC for the subsequent year.

3. Applicable Tax Rate Based on Turnover:

The assessee also contended that the applicable tax rate should be 25% instead of 30% due to its turnover being below Rs. 250 crores. The CIT(A) recognized that the assessee's turnover indeed fell below the stipulated threshold, and thus, the correct tax rate should be 25%. Consequently, the assessing officer was directed to compute the tax at the rate of 25%, and the appeal was partly allowed for statistical purposes. The Tribunal upheld this finding, ensuring that the tax computation aligned with the turnover criteria.

Conclusion:

The Tribunal allowed the appeal of the assessee, affirming that the filing of Form 10-IC is not required for each subsequent assessment year once the option for the concessional tax rate under Section 115BAA is exercised. The Tribunal also confirmed the applicability of the 25% tax rate based on the assessee's turnover, thus providing relief to the assessee. The order was pronounced in open court on 09/10/2024.

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