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2024 (3) TMI 1404 - AT - Income TaxDenial of benefit of lower taxation rate u/s 115BAA - failure of the assessee to file Form No. 10IC electronically before the due date for filing the return of income u/s 139(1) - case of the assessee is that Form 10IC could not be uploaded on ITBA portal due to technical glitch and it was the first year of availing such benefit - HELD THAT - In Gujarat Paguthan Energy Corporation (P) Ltd. 2014 (7) TMI 345 - GUJARAT HIGH COURT while considering the eligibility of deduction of Section 80-IA of the Act wherein the assessee is required to furnish audit report before due date of filing return of income and such audit report was filed during assessment proceedings the assessee was held to be eligible for deduction under Section 80-IA of the Act. In Web Commerce (India) (P) Ltd. 2008 (12) TMI 13 - HIGH DELHI COURT also held that once audit report is filed before framing of assessment the provisions of Section 80-IA (7) would be complied as furnishing of such report at the time of filing of return is directory in nature and not mandatory. It is settled principles under law that appeal is a continuation of assessment proceedings and the ld. CIT(A) has co-terminus power as of AO therefore the ld. CIT(A) was required to consider the report in Form 10-IC. Ground of appeal raised by the assessee is restored back to the file of assessing officer to consider the report in Form-10IC and allow relief to the assessee if the assessee fulfil all other requisite condition as per law. Assessee appeal is allowed for statistical purposes.
ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is whether the failure of the assessee to file Form No. 10IC electronically before the due date for filing the return of income under section 139(1) of the Income Tax Act, 1961, is fatal to the assessee's claim for the benefit of the lower tax rate under section 115BAA of the Act. The Tribunal also considered whether the procedural lapse could be condoned in light of the technical difficulties faced by the assessee and the subsequent issuance of CBDT Circular No. 6/2022. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: Section 115BAA of the Income Tax Act provides a concessional tax rate for domestic companies, subject to certain conditions, including the filing of Form No. 10IC. The procedural requirement is that this form must be filed electronically before the due date for filing the return of income as specified under section 139(1). The CBDT Circular No. 6/2022 extended the time for filing Form No. 10IC due to the pandemic and technical issues with the e-filing portal. Relevant precedents cited by the assessee include decisions from various High Courts and the Supreme Court, which have held that procedural lapses in filing forms or reports should not deny substantive tax benefits if the primary conditions for such benefits are met. Court's interpretation and reasoning: The Tribunal considered the arguments and precedents presented by the assessee. It noted that the procedural requirement to file Form No. 10IC is directory and not mandatory, drawing parallels with cases where audit reports were filed after the due date but before the completion of assessment proceedings. The Tribunal emphasized that the appeal is a continuation of the assessment proceedings, and the CIT(A) has co-terminus powers with the Assessing Officer to consider such procedural lapses. Key evidence and findings: The assessee argued that the failure to file Form No. 10IC was due to technical glitches and the prevailing pandemic situation. The Tribunal found merit in these arguments, noting that the assessee had filed its return of income within the prescribed time and had intended to opt for the concessional tax rate under section 115BAA. Application of law to facts: The Tribunal applied the principles from the cited precedents to the facts of the case, determining that the failure to file Form No. 10IC due to technical issues should not preclude the assessee from availing the benefits of section 115BAA, provided all other substantive conditions were met. Treatment of competing arguments: The Revenue argued that the assessee did not fulfill the requisite conditions for the concessional tax rate, as Form No. 10IC was not filed within the stipulated time. However, the Tribunal found that the procedural lapse was not sufficient to deny the benefit, especially considering the technical difficulties and the subsequent CBDT circular extending the filing deadline. Conclusions: The Tribunal concluded that the procedural lapse of not filing Form No. 10IC on time should not be fatal to the assessee's claim for the benefit of section 115BAA. It restored the matter to the file of the Assessing Officer to consider the Form No. 10IC and allow relief to the assessee if all other conditions were met. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Tribunal observed, "It is settled principles under law that appeal is a continuation of assessment proceedings and the ld. CIT(A) has co-terminus power as of Assessing Officer, therefore, the ld. CIT(A) was required to consider the report in Form 10-IC." Core principles established: The Tribunal established that procedural requirements, such as the timely filing of forms, should not override the substantive rights of taxpayers when technical difficulties and other extenuating circumstances are present. The Tribunal emphasized the directory nature of such procedural requirements, allowing for flexibility in their application. Final determinations on each issue: The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to consider the Form No. 10IC and grant the benefit of section 115BAA if the assessee fulfilled all other requisite conditions under the law.
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