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2024 (11) TMI 1434 - HC - Income TaxDisallowance of the option u/s 115BAA for non-filing of Form 10-IC - genuine hardship of the petitioner -Rejection of the petition u/s 119(2)(b) to permit the petitioner to file Form 10-IC - HELD THAT - Respondent Authority/Board has completely mis-directed itself in not-examining if the failure to consider the claim of option to discharge tax u/s 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated u/s 115BAA would cause genuine hardship to the petitioner/assessee and thus it is desirable as expedient to permit the petitioner to file Form 10-IC in support of its option under Section 115BAA and deal with the same on merit. Rejection of the petition under Section 119(2)(b) to permit the petitioner to file Form 10-IC in support of its exercise of option under Section 115BAA of the Act would cause genuine hardship and it is desirable and expedient to permit the petitioner to file Form 10-IC in support of its claim / option under Section 115BAA of the Act and deal with such claim on merits in accordance with law. The impugned order is set-aside the respondent shall keep the portal open to enable the petitioner to upload the Form 10-IC and the petitioner shall file the Form 10-IC within a period of four weeks from the date of receipt of a copy of this order thereafter the respondent shall proceed to deal with the claim of the petitioner under Section 115BAA on merit.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Requirement to File Form 10-IC under Section 115BAA Legal Framework and Precedents: Section 115BAA of the Income Tax Act provides an option for domestic companies to be taxed at a concessional rate of 22% instead of the standard 30%, subject to certain conditions, including the filing of Form 10-IC by the due date specified under Section 139(1). Court's Interpretation and Reasoning: The Court noted that the petitioner had indicated in its tax return its intention to opt for the 22% tax rate under Section 115BAA and had paid taxes accordingly. However, the failure to file Form 10-IC resulted in the denial of this option. Key Evidence and Findings: The petitioner filed its tax return on time, indicating the choice of the 22% tax rate, and paid taxes at this rate. However, the failure to file Form 10-IC led to the imposition of the standard 30% tax rate. Application of Law to Facts: The Court highlighted the procedural lapse of not filing Form 10-IC but also noted the petitioner's consistent assertion of its intention to opt for the concessional rate. Treatment of Competing Arguments: The respondent argued that the filing of Form 10-IC is mandatory, and failure to do so justifies the denial of the concessional rate. The petitioner argued that the denial caused genuine hardship and that the delay should be condoned. Conclusions: The Court found that while the procedural requirement was not met, the petitioner's consistent intention and payment at the concessional rate warranted consideration under Section 119(2)(b). 2. Condonation of Delay under Section 119(2)(b) Legal Framework and Precedents: Section 119(2)(b) allows the Board to condone delays in filing applications or claims if it is desirable or expedient to avoid genuine hardship. Court's Interpretation and Reasoning: The Court emphasized that the power under Section 119(2)(b) is discretionary but coupled with a duty to exercise it when genuine hardship is evident. The Court referenced precedents suggesting a liberal interpretation of "genuine hardship". Key Evidence and Findings: The Court found that the petitioner acted in good faith, as evidenced by the consistent assertion of the concessional rate and payment at 22%. The pandemic-related extensions and lack of explicit notice regarding Form 10-IC filing were also considered. Application of Law to Facts: The Court reasoned that the petitioner's failure to file Form 10-IC, if not condoned, would result in genuine hardship due to the higher tax rate imposed. Treatment of Competing Arguments: The respondent maintained that statutory timelines must be adhered to unless compelling reasons are provided. The petitioner argued that the circumstances justified the delay and that the denial of the concessional rate constituted genuine hardship. Conclusions: The Court concluded that the Board misdirected itself by not considering the genuine hardship that the petitioner would face and that the delay should be condoned. SIGNIFICANT HOLDINGS The Court held that the rejection of the petitioner's application under Section 119(2)(b) was a misdirection in law. The Court emphasized that:
The final determination was that the impugned order was set aside, and the respondent was directed to allow the petitioner to file Form 10-IC within four weeks and to consider the claim under Section 115BAA on its merits.
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