2025 (9) TMI 448 - AT - Income Tax

Assessee entitled to s.89A relief when Form 10EE filed earlier remains effective under Rule 21AAA(1), (4), (6)

ITAT MUMBAI - AT allowed the assessee relief under s.89A, holding that once Form No.10EE is filed for a previous year it remains effective for subsequent ... Relief claimed u/s 89A - income accrued on retirement benefit account maintained in USA -Filing of Form No. 10EE for earlier assessment year, but not filed for current year - HELD THAT:- It is an admitted position that the said form had already been filed for A.Y. 2022-23. On a careful reading of Rule 21AAA, particularly sub-rules (1), (4) and (6), we find that once Form No. 10EE has been filed in respect of a previous year, the option exercised therein continues to apply to all subsequent previous years. Consequently, it is not mandatory for the assessee to file the form afresh for every assessment year. Where relief under section 89A of the Act has been granted on the basis of Form No. 10EE already furnished, the same relief cannot be denied merely for the reason that the form has not been filed again in subsequent years. The filing of Form No. 10EE is a procedural requirement and, by virtue of Rule 21AAA(6) of the Rules, once exercised in any previous year, it continues to hold good for all subsequent years. Therefore, the assessee is not obliged to furnish the form afresh every year, and denial of relief under section 89A of the Act on such procedural grounds is not sustainable in law. In our considered view, the finding of the Ld. CIT(A) is contrary to the clear mandate of Rule 21AAA of the Rules. Relief claimed under section 89A allowed to the assessee. ISSUES PRESENTED AND CONSIDERED 1. Whether Form No.10EE must be furnished in each subsequent previous year/assessment year to claim relief under section 89A for income accrued in a specified retirement account maintained in a notified country, despite having filed Form No.10EE in an earlier previous year. 2. Whether denial of relief under section 89A in an intimation under section 143(1) on the ground that Form No.10EE was not filed for the impugned year is sustainable where Form No.10EE was furnished in an earlier year and Rule 21AAA(6) is invoked. 3. Whether procedural non-compliance by the assessee (failure to re-file Form No.10EE for the impugned year and timing of filing of replies before the CIT(A)) can justify dismissal of the assessee's claim where Rule 21AAA(6) provides continuity of the option once exercised. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Necessity of filing Form No.10EE in each subsequent year Legal framework: Section 89A provides relief in respect of income accrued in specified retirement accounts maintained in notified countries; Rule 21AAA(1)-(6) prescribes the option procedure and filing of Form No.10EE, expressly providing in sub-rule (6) that, subject to sub-rule (4), the option once exercised in Form No.10EE for a previous year 'shall apply to all subsequent previous years and cannot be subsequently withdrawn'. Sub-rule (4) creates the exception where the specified person becomes a non-resident. Precedent treatment: No judicial precedents were cited by the authorities or parties and none were relied upon by the Tribunal in its reasoning. Interpretation and reasoning: The Tribunal construed Rule 21AAA as creating a continuing statutory option once Form No.10EE is validly furnished for any previous year. The plain language of sub-rule (6) was held to mean that the option is not required to be exercised afresh for each subsequent previous year, subject only to the statutory exception in sub-rule (4). The Tribunal characterized the requirement to file Form No.10EE as procedural once the option has been validly exercised for an earlier year. Ratio vs. Obiter: The holding that sub-rule (6) makes the option continuing and that no fresh filing is necessary in subsequent years is ratio decidendi of the Tribunal; characterization of the filing as a 'procedural requirement' subordinate to the statutory continuity in sub-rule (6) forms part of the operative ratio. Observations on the plain language of sub-rule (4) as the only exception are also core reasoning. Conclusions: Filing Form No.10EE in an earlier previous year sufficiently exercises the option under Rule 21AAA for all subsequent previous years; therefore, it is not mandatory to file Form No.10EE afresh for each assessment year to claim relief under section 89A, subject to sub-rule (4) (change to non-resident status). Issue 2 - Validity of denial of section 89A relief in section 143(1) intimation for non-filing of Form No.10EE in the impugned year Legal framework: The intimation under section 143(1) reflected a proposed adjustment disallowing s.89A relief on the ground that Form No.10EE had not been filed for the impugned year; assessment authorities applied section 143(1)(a)(ii) reasoning to reject the claim. Precedent treatment: No authority was invoked by the revenue; the Tribunal relied on statutory interpretation of Rule 21AAA. Interpretation and reasoning: Applying the legal framework established under Issue 1, the Tribunal held that denial of relief in the intimation solely because Form No.10EE was not filed in the impugned year is not legally sustainable where Form No.10EE had earlier been filed and sub-rule (6) applies. The Tribunal treated the AO's and appellate authority's reliance on non-filing in the impugned year as ignoring the continuity conferred by Rule 21AAA(6). The Tribunal concluded that the intimation's disallowance on procedural grounds conflicted with the substantive entitlement created by the Rule. Ratio vs. Obiter: The conclusion that a s.143(1) intimation cannot deny s.89A relief merely because Form No.10EE was not re-filed in the impugned year (where a valid earlier filing existed) is ratio; remarks criticizing the AO's application of s.143(1)(a)(ii) without regard to Rule 21AAA are part of the operative holding. Conclusions: The denial of s.89A relief in the section 143(1) intimation on the ground of non-filing of Form No.10EE for the impugned year was unsustainable; the relief must be allowed where Form No.10EE had been filed earlier and no disqualifying event under Rule 21AAA(4) occurred. Issue 3 - Treatment of procedural non-compliance and late submissions before appellate authority Legal framework: Rule 21AAA(6) governs continuity of the option; procedural interactions before the CIT(A) and timings for filing replies relate to departmental practice and appellate procedure rather than the substantive rule creating the option. Precedent treatment: No authorities regarding procedural default or appellate filing timelines were cited or applied by the Tribunal. Interpretation and reasoning: The Tribunal did not base its decision on technicalities of timeliness of submissions to the CIT(A) or on the fact that the assessee had applied for adjournment; rather, the Tribunal resolved the appeal on the statutory interpretation of Rule 21AAA and the assessee's substantive entitlement to relief. Implicitly, where a statutory entitlement exists (continuing option), procedural non-compliance that contradicts the statutory provision cannot justify denial of substantive relief. The Tribunal expressly characterized the filing of Form No.10EE as procedural in the sense that once validly filed in an earlier year it cannot be used as a ground to deny the statutory option in subsequent years. Ratio vs. Obiter: The Tribunal's decision to allow relief despite the departmental actions and the particulars of appellate filing/timings is ratio insofar as it follows from the statutory continuity under Rule 21AAA(6); any observations on departmental opportunity counts or the exact procedural history are incidental to the main holding. Conclusions: Procedural irregularities relating to non-refiling of Form No.10EE for the impugned year or timing of replies before the CIT(A) do not sustain denial of the section 89A relief where Rule 21AAA(6) confers a continuing option once Form No.10EE has been filed in an earlier year and no disqualifying event under sub-rule (4) exists; accordingly, relief must be granted. Disposition and operative result The Tribunal set aside the appellate order that upheld the denial and directed allowance of the relief under section 89A in respect of the income accrued in the specified retirement accounts for the impugned assessment year, on the ground that Rule 21AAA(6) renders a single valid filing of Form No.10EE effective for subsequent years and the denial on procedural non-filing grounds was unsustainable.