TaxTMI 
TaxTMI 
2026 (5) TMI 300
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....gime u/s. 115BAA of the Act and has selected the appropriate option in ITR-6 form. It was also submitted that the assessee-company satisfies all the conditions for availing the concessional tax regime u/s. 115BAA of the Act. It was submitted that being the first year of opting for section 115BAA, and due to Covid-pandemic, filing of Form-10IC was inadvertently missed. It was also submitted that the IT portal accepted the ITR form, without acknowledgment of Form-10IC. It was submitted that the CPC thereafter processed the return of income in terms of intimation u/s. 143(1) of the Act, dt. 24-12-2021, wherein the assessee-company has been denied the claim of lower tax rate u/s. 115BAA of the Act. However, before making such an adjustment, no opportunity has been given by the CPC to the assessee and thus, the principle of natural justice has been violated in absence of notice in terms of section 143(1)(a) of the Act and adjustment was made directly in the intimation u/s. 143(1) of the Act, issued to the assessee. It was submitted that upon receipt of the intimation, the assessee filed its submissions on e-filing portal confirming that the return was filed u/s. 115BAA of the Act. Howev....
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....0IC, which already forms part of record and allow the assessee the concessional tax rate as prescribed u/s. 115BAA of the Act. 6. Per contra, the Ld.DR is heard, who has submitted that the assessee has firstly failed to file Form-10IC within the prescribed due date as so laid down in the statute and Form-10IC filed subsequently was not available to the CPC, Bengaluru at the time of processing of return of income. It was further submitted that the assessee also does not satisfy the conditions laid down by the Board for condonation of delay in respect of filing of Form-10IC and in this regard, our reference was drawn to the findings of the Ld.CIT(A), wherein it has been held that there is a delay in filing the condonation application. Therefore, the assessee does not satisfy the condition laid down for condonation of delay with respect to filing of Form- 10IC. It was further submitted that the assessee has separately moved a condonation petition before the Ld.CCIT, Mumbai-2, who vide order dt. 30- 06-2025 has rejected the condonation application, wherein it has been held that the assessee has filed application for condonation on 06-01- 2025, which is beyond the stipulated time fra....
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....tained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BA and section 115BAB, the income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall, at the option of such person, be computed at the rate of twenty-two per cent., if the conditions contained in sub- section (2) are satisfied: Provided that where the person fails to satisfy the conditions contained in sub- section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and subsequent assessment years and other provisions of the Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years. (2) For the purposes of sub-section (1), the total income of the company shall be computed, - (i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or ....
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....efore the due date specified under subsection (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2020 and such option once exercised shall apply to subsequent assessment years: Provided that in case of a person, where the option exercised by it under section 115BAB has been rendered invalid due to violation of conditions contained in sub- clause (ii) or sub-clause (iii) of clause (a), or clause (b) of sub-section (2) of said section, such person may exercise option under this section: Provided further that once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year." 6.1.1. Sub-section (5) of section 115BAA prescribes the time and manner for exercising the option to be taxed at the concessional rate. It requires that the option be exercised on or before the due date under section 139(1) and in the prescribed form, namely Form 10 IC. The provision thus contains two components - the substantive act of opting for the new regime and the procedural requirement of furnishing the form as....
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....escribed form on or before the due date specified u/s 139(1) of the Act results in denial of concessional rate of tax of twenty rate of tax of twenty-two per cent to such person. 2. Representations have been received by the Board stating that Form 10IC could not be filed along with the return of income for AY 2020-21, which was the first year of filing of this form. It has been requested that the delay in filing of Form 10IC may be condoned. 3. On consideration of the matter, with a view to avoid genuine hardship to the domestic companies in exercising the option u/s 115BAA of the Act, the Central Board of Direct Taxes, in exercise of the powers conferred under section 119(2)(b) of the Act, hereby directs that:- The delay in filing of Form 10IC as per Rule 21AE of the Rules for the previous year relevant to AY 2020-21 is condoned in cases where the following conditions are satisfied: (i) The return of income for AY 2020-21 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 (e) of "Filing Status" in "Part A-GEN" of the Form of Return....
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.... is therefore on the substantive exercise of the option in the return, treating the filing of Form 10- IC as a procedural requirement capable of relaxation. The Circular does not contemplate any relaxation where the option itself was not exercised in the return, thereby drawing a clear distinction between a substantive defect and a procedural lapse. 6.2.4. Thus, Clause 3 supports the proposition that once the option is duly exercised in the return and the assessee has complied with all the conditions of section 115BAA, a delay in filing Form 10IC does not invalidate the claim and is liable to be condoned. This administrative clarification reinforces the view that the requirement of filing Form 10IC within the prescribed time is directory in nature and cannot be used to deny a substantive statutory benefit. 6.3. This Tribunal is therefore unable to concur with the contention of the Ld. DR that the delay in filing Form 10IC is fatal to the assessee's claim for the concessional rate of tax. The requirement of filing the prescribed form within the due date is thus procedural in nature and is intended to regulate the manner of exercising the option, and not to defeat a....
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....tutory bar against adjudication in the present proceedings. 6.4.3. Further, the principle against parallel proceedings is intended to prevent conflicting decisions in respect of identical proceedings between the same parties. In the present case, the subject matter of the appeal before the Ld.CIT(A) is the intimation under section 143(1), whereas the present appeal concerns the assessment order passed under section 143(3). These are distinct proceedings governed by separate statutory provisions. There is no prohibition in the Act preventing an assessee from pursuing statutory remedies available against separate orders. 6.4.4. In any event, the Tribunal's determination of the correct rate of tax applicable in the assessment order will effectively settle the issue for the year, rendering the parallel proceedings academic. The existence of another pending appeal cannot restrict this Tribunal's duty to adjudicate grounds validly raised before it, particularly where the issue goes to the root of computation of tax. 6.4.5. Accordingly, the objection raised by the Ld. DR on the ground of alleged parallel proceedings is without merit and does not preclude this Tr....
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.... statutory benefit. 6.5.4. It is a settled principle that procedural prescriptions are intended to advance the cause of justice and not to defeat substantive rights, especially where there is no prejudice to the Revenue and the intention of the assessee is manifest from the return of income. The maxim that "procedure is the handmaid of justice" squarely applies. The requirement of filing Form 10IC within time is a procedural mechanism to evidence the exercise of option and cannot be elevated to the status of a mandatory substantive condition so as to deny the benefit of section 115BAA where all other conditions stand satisfied. 6.5.5. This position stands further fortified by Circular No. 17/2024 dated 18.11.2024 issued by the Board, whereby the power to condone delay in filing Form 10IC has been delegated to the Pr. CIT. The very issuance of such a circular demonstrates that the time limit for filing the form is treated as directory and procedural, and that the legislative intent is to ensure that bona fide and technical delays do not defeat a substantive benefit. 6.5.6. Accordingly, the objection that relief can be granted only upon condonation under se....
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....lly distinguishable. In the said decision, this Tribunal examined the limited question whether, an addition made in an intimation issued under section 143(1), which was neither scrutinized nor adjudicated upon in the subsequent assessment framed under section 143(3), could be challenged in an appeal against the assessment order. This Tribunal held that in the absence of examination of that specific issue in the scrutiny assessment, there is no automatic merger of the intimation with the assessment order. 6.7.1. However, the present case stands on a materially different footing. The ground raised herein does not seek to independently challenge an adjustment made under section 143(1). Rather, the grievance pertains to the rate of tax applied while computing the final tax liability in the assessment order itself. Once an assessment under section 143(3) is framed and tax is computed therein, the rate adopted forms an integral part of the assessment order and is therefore subject to appellate scrutiny. 6.7.2. The doctrine of merger, as understood in law, is issue specific and applies only to matters actually considered and decided in the subsequent proceedings. It cann....
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....Revenue. The option under section 115BAA results in a lower tax rate but simultaneously entails the forfeiture of specified deductions and incentives. Once the assessee has computed its income in accordance with the provisions of section 115BAA and has not claimed any ineligible deductions, the tax liability stands crystallised strictly in terms of the statutory scheme. There is therefore neither any loss of revenue beyond what the statute itself permits nor any possibility of misuse. The doctrine that procedural lapses which cause no prejudice to the Revenue should not defeat substantive rights squarely applies to the present facts of the case. 6.10.1. In these circumstances, the delay in filing Form 10IC being purely procedural, the option having been exercised in the return of income, and there being no prejudice to the Revenue, the assessee cannot be denied the benefit of section 115BAA. 6.10.2. It is also relevant to note that the return of income itself was filed on 31.03.2021, which was beyond the due date of 15.02.2021 as extended by the CBDT vide notification dated 31.12.2020. However, this period is squarely covered by the orders of the Hon'ble Supreme C....