2025 (7) TMI 681 - HC - Income Tax

Revenue's denial of 247-day delay condonation for Form 10IC under section 115BAA quashed after assessee met all CBDT Circular conditions

Mirae Asset Venture Investments India Pvt. Ltd. Versus Principal Commissioner of Income Tax – 6 Mumbai & Ors.

Mirae Asset Venture Investments India Pvt. Ltd. Versus Principal Commissioner of Income Tax – 6 Mumbai & Ors. - 2025:BHC - OS:10292 - DB 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:(a) Whether the delay of 247 days (or 295 days as per the petition) in filing Form 10IC for Assessment Year (AY) 2021-22 could be condoned under Section 119(2)(b) of the Income Tax Act, 1961, despite the Form not being filed along with or before the Return of Income under Section 139(1) as mandated.(b) Whether the Circular No. 19/2023 dated 23rd October 2023 issued by the Central Board of Direct Taxes (CBDT), which condones delay in filing Form 10IC for AY 2021-22 subject to specified conditions, was applicable and binding on the Respondent authority in deciding the condonation application.(c) Whether the fact that the Return of Income was processed under Section 143(1) and a demand was raised before the condonation application was filed disentitled the Petitioner from seeking condonation of delay relying on the CBDT Circular.(d) Whether the delay in filing Form 10IC and the delay in filing the application for condonation could be justified on the facts and in law.2. ISSUE-WISE DETAILED ANALYSISIssue (a): Condonation of delay in filing Form 10IC under Section 119(2)(b) of the Income Tax ActThe legal framework governing the filing of Form 10IC is Section 115BAA of the IT Act and Rule 21AE of the Income Tax Rules, 1962, which require Form 10IC to be filed along with or before the filing of the Return of Income under Section 139(1). The failure to do so results in rejection of the claim for concessional tax rate under Section 115BAA.Section 119(2)(b) empowers the tax authorities to condone delay in filing any application or document if sufficient cause is shown. The Petitioner filed the Return of Income on 14th March 2022 (before the due date of 15th March 2022), but filed Form 10IC belatedly on 16th November 2022, with a delay of 247 days. The application for condonation of delay was filed only on 16th January 2023.The Respondent authority refused to condone the delay primarily on the ground that there was no immediate application for condonation after filing the belated Form 10IC and that the delay was inordinate and unexplained.The Court examined whether the delay was justifiable and whether the authority was correct in refusing condonation. The Court noted that the Petitioner had filed the Return on time and had opted for taxation under Section 115BAA, but failed to file Form 10IC on time.Issue (b): Applicability and binding nature of CBDT Circular No. 19/2023 dated 23rd October 2023The Petitioner relied heavily on Circular No. 19/2023 issued by the CBDT, which condoned delay in filing Form 10IC for AY 2021-22 provided three conditions were met:The Return of Income was filed on or before the due date under Section 139(1).The Assessee opted for taxation under Section 115BAA in the Return.Form 10IC was filed electronically on or before 31st January 2024 or three months from the end of the month in which the Circular was issued, whichever was later.The Court found that all these conditions were satisfied by the Petitioner: the Return was filed on 14th March 2022 (before due date), the option for Section 115BAA taxation was exercised in the Return, and Form 10IC was filed electronically on 16th November 2022 (well before the prescribed deadline).The Court noted that the impugned order refusing condonation did not refer to or consider this Circular, which was issued after the filing of the condonation application but before the impugned order.The Court held that the Circular was issued under the statutory power conferred by Section 119(2)(b) and was binding on the subordinate authorities. The Circular was intended to alleviate genuine hardship faced by domestic companies in exercising the option under Section 115BAA.Issue (c): Effect of prior processing of Return under Section 143(1) and raising of demand before condonation applicationThe Revenue contended that since the Return was processed under Section 143(1) and a demand was raised on the Petitioner before filing the condonation application, the Petitioner could not rely on the Circular to condone delay.The Court rejected this argument, holding that the Circular does not impose any such condition or limitation. The Circular does not distinguish between cases where delay is detected by the Assessing Officer before or after processing of Return. The Court emphasized that the statutory power under Section 119(2)(b) to condone delay is not curtailed by the stage of assessment or detection of delay.The Court observed that the Revenue's argument that the Circular applies only if Form 10IC is filed before detection of delay or assessment completion was misconceived and unsustainable.Issue (d): Justification and explanation of the delay in filing Form 10IC and the condonation applicationThe Respondent argued that there was no proper reason given for the delay in filing Form 10IC and that the delay in filing the condonation application itself was unexplained and inordinate.The Court noted that the Petitioner filed Form 10IC immediately after the demand was raised and filed the condonation application within a reasonable time thereafter. The Court did not find any substantive explanation from the Revenue as to why the delay should not be condoned, especially in light of the CBDT Circular which explicitly condones such delay subject to conditions fulfilled by the Petitioner.The Court found that the Petitioner had acted promptly after detection and that the delay was not wilful or in bad faith.3. SIGNIFICANT HOLDINGSThe Court held:'The delay in filing of Form No.10-IC as per Rule 21AE of the Rules for previous year relevant to AY 2021-22 is condoned in cases where the following conditions are satisfied: (i) The return of income for relevant assessment year has been filed on or before the due date specified under section 139(1) of the Act; (ii) The assessee company has opted for taxation u/s 115BAA of the Act in item (e) of 'Filing Status' in 'Part A-GEN' of the Form of Return of Income ITR-6; and (iii) Form No. 10-IC is filed electronically on or before 31-1-2024 or 3 months from the end of the month in which this Circular is issued, whichever is later.'The Court concluded that the Petitioner had complied with all these conditions and was therefore entitled to have the delay condoned.The Court further held:'Merely because the Return is processed under Section 143(1) would not dis-entitle the Assessee from seeking condonation of delay in filing Form 10IC. Similarly, we are unable to accept the submission that once the non-filing of Form 10IC within the stipulated time is on the basis of the detection by the Assessing Officer, the Circular would not apply. The Circular does not make any distinction as to who detects the delay in filing Form 10IC.'Accordingly, the Court quashed and set aside the impugned order dated 30th December 2024 refusing condonation and directed the Respondents to process the Petitioner's Return in accordance with law, giving effect to the filing of Form 10IC within time as per the Circular.