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2024 (4) TMI 1026 - AT - Income TaxDenial of benefit u/s 115BAA - while filing its return of income as it was unable to upload Form 10-IC due to technical glitches - scope of circulars or directions amending provisions of the Act - DR has argued that the appellant company has not exercised its option for taxation u/s 115BAA of the Act at the time of submitting ROI electronically in accordance with condition 3(ii) of the above CBDT circular - whether the appellant company being a domestic company is entitled to get its tax liability computed in accordance with the provisions of section 115BBA(1) of the Act? HELD THAT - In view of rule 21AE the appellant assessee domestic company was to exercise its option for the benefit of computation of its tax liability u/s 115BAA(1) in accordance with the provision of sub-section 5 of section 115BAA for the relevant assessment year 2020-21 by furnishing prescribed form No. 10-IC electronically. It is not disputed that there was a technical problem in uploading the form 10-IC. This fact is substantiated by the referred CBDT circular dated 17.03.2022. CBDT circular condoned the delay in filing form 10-IC for the relevant A.Y. 2020-21. According to Para 2 of the circular it is understood that the delay was condoned upon receiving representations stating that form 10-IC could not be filed along with the ROI for A.Y. 2020-21 which was the first year of filing the form. As far as the compliance of condition No. (ii) of CBDT circular by the appellant domestic company is concerned the option by the appellant could be exercised only by uploading from 10-IC prescribed under Rule 21AE of the rules on 02.05.2021 the delay in uploading this form 10-IC was already condoned by the CBDT. It is well established precedent that a circular of CBDT no doubt has the force of law can even supplant the law in cases where it is beneficial to the assessee and can mitigate or relax the rigors of the law. The powers of the CBDT in issuing circular for general guidance are subject to two important conditions. One is that it does not entitle the income tax authority including the Board to issue instructions or circulars contrary to the substantive provision of law or curtailing the relief to which the assessee is otherwise entitled under law. It is also settled law that circulars are not binding on assessee. The circular cannot therefore curtail the benefit conferred on assessee or be contradictory to the Act. Hon ble Apex Court in Union of India V/s Wood Paper Ltd. 1990 (4) TMI 55 - SUPREME COURT has held that the condition regulating the computation of benefit should be interpreted liberally. We are of the consistent view that the appellant assessee as a domestic company was free to opt for the beneficial part of the relevant law. The appellant company having exercised its option in consonance with aforesaid provision of law and having opted as per the procedure prescribed under the aforestated rule is entitled to the benefit of section 115BAA(1) for the purpose of computation of income at the rate mentioned thereunder. The condition No. (ii) of CBDT dated 17.03.2022 thus cannot be interpreted to take away the statutory right vested in the appellant assessee under the Act. CIT(A) has failed to rationally appreciate and diligently apply the relevant law on the facts of the present cast. We therefore set aside the order passed by CIT(A) along with assessment order to the aforestated extent. The aforesaid point related to the grounds of appeal is accordingly determined positively in favour of the appellant assessee. AO is thus directed to compute the tax liability of the appellant assessee a domestic company in accordance with the mandate of Section 115BAA(1) of the Act. The matter is restored to the file of AO for the statistical purposes.
Issues Involved:
The appeal concerns the entitlement of a domestic company to compute its tax liability u/s 115BAA of the Income-tax Act, 1961 for the Assessment Year 2020-21. Issue 1 - Entitlement to Compute Tax Liability u/s 115BAA: The appellant company filed its return of income for A.Y. 2020-21 but was denied the benefit u/s 115BAA by the Ld. CIT(A), leading to the appeal. The appellant argued that technical glitches prevented the uploading of Form 10-IC, necessary to exercise the option u/s 115BAA. The Ld. DR contended that the option was not exercised as per the prescribed manner. The Tribunal found that the appellant was entitled to the benefit of section 115BAA(1) as per the provisions of the Act and directed the AO to compute the tax liability accordingly. Key Points: - The appellant company's total income was not disputed by the Assessment Unit. - The relevant provision u/s 115BAA allows for the computation of tax liability at a specified rate for domestic companies. - Rule 21AE mandates the electronic filing of Form 10-IC to exercise the option u/s 115BAA. - A CBDT circular condoned the delay in filing Form 10-IC subject to specific conditions. - The Tribunal held that the appellant's compliance with the CBDT circular's conditions entitled them to the benefit of section 115BAA(1). - Circulars cannot curtail statutory rights or be contradictory to the Act. - The Tribunal set aside the CIT(A)'s order and directed the AO to compute the tax liability as per section 115BAA(1) for the appellant company.
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