2024 (3) TMI 466 - AT - Income Tax

Benefit of the option of lower rate of tax exercised by the assessee u/s 115BA - claim was denied by the CPC/CIT(A) for the simple reason that the assessee has not filed form 10IB for the assessment year under consideration - HELD THAT - As per the instructions issued by the CBDT it was clarified that Form 10IB is required to be filed only in the first year when opting for the concessional tax rate for the first time. - In the light of the instructions for filing out form ITR-6 is explained by the CBDT, we do not find any merit in the orders of the authorities below. We according direct the AO to levy tax rate @ 25% as applicable in the case of the assessee. The appeal is accordingly allowed.

Summary

Issues involved:
The issues involved in this case are:
1. Rejection of application u/s 154 for rectification of intimation order passed u/s 143(1) of the Income Tax Act.
2. Denial of benefit of lower tax rate exercised u/s 115BA of the Income Tax Act.
3. Compliance with conditions specified u/s 115BA of the Income Tax Act.
4. Requirement of filing form 10IB for assessment year under consideration.

1. Rejection of application u/s 154:
The appellant challenged the order passed by the Commissioner of Income Tax (Appeals), alleging it was bad in law and on facts. The CIT(A) was criticized for confirming the action of the ADIT, CPC in rejecting the application filed u/s 154 for rectification of the intimation order u/s 143(1) of the Income Tax Act. Despite compliance with conditions specified u/s 115BA, the CIT(A) was faulted for denying the benefit of the lower tax rate exercised by the assessee. The appellant contended that the option was exercised in the prescribed manner before the due date specified u/s 139(1) for filing the first return of income, as per section 115BA(4) of the Act.

2. Denial of benefit of lower tax rate u/s 115BA:
The assessee's grievance centered on the denial of the tax rate of 25% under section 115BA of the Act. The CPC/CIT(A) rejected this claim due to the non-filing of form 10IB for the assessment year in question. The assessee argued that form 10IB was required only in the first year and not subsequently, as it had been filed in the initial year. The CBDT's instructions clarified that the form is necessary only in the first year when opting for concessional tax rates. The Tribunal found no merit in the authorities' decisions and directed the AO to apply the tax rate of 25% applicable to the assessee, ultimately allowing the appeal.

Conclusion:
The Appellate Tribunal ITAT DELHI ruled in favor of the assessee, setting aside the lower authorities' decisions regarding the rejection of the application u/s 154 and denial of the lower tax rate under section 115BA. The Tribunal emphasized the importance of complying with the specified forms for concessional tax rates and directed the AO to apply the appropriate tax rate of 25% as per section 115BA.