2024 (8) TMI 535 - AT - Income Tax

Denial of benefit of lower tax as per section 115BAC - form 10IE was not filed before the due date of filing of return u/s 139(1). i.e. 31.12.2021 - whether the filing of Form 10-IE, before the time allowed for filing of return u/s 139(1) in order to opt for the new scheme of taxation u/s 115BAC is directory or mandatory? - if the said option is not allowable to the assessee, in the instant case, whether it is incumbent on the part of the AO to allow the claim for deduction under Chapter VIA, as claimed in the original return? HELD THAT - In the instant case we find that the original return of income is within time u/s 139(1) filed on a returned income which was subsequently revised u/s 139(5), at a higher figure which is the finally assessed figure u/s 143(1) dated 28/10/2022, meaning thereby, the revised return has been considered and accepted by CPC, ignoring the claim of the assessee in Form 10-IE, which was also on record before the AO, on the date of assessment. We find that an identical issue has been decided in the case of Akshay Devendra Birari 2024 (6) TMI 272 - ITAT PUNE where as held on the facts case that filing of Form 10-IE is not a mandatory requiredment but only directory in nature and CPC ought to have considered the same allowing the benefit of new tax regime. One of the requirements of Rule 128 for claiming FTC is that form 67 is to be submitted by assessee before due date prescribed u/s 139(1) of the Act , but this requirement cannot be treated as mandatory, rather it is directory in nature , because Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form 67. Regarding the issue of technical glitch raised by the assessee , that Form 10- IE could not be uploaded in the portal within the time allowed u/s 139(1), due to technical incompatibility in the portal we refer to a judgment of KGY Glass Industries P Ltd, 2024 (7) TMI 92 - GUJARAT HIGH COURT where Form 10-1C was required to be filed by the domestic company within time allowed u/s 139(1) of the Act ,opting to be taxed as per provisions of section 115BBA , was not practically possible due to technical glitches in the portal, the Hon ble court held that in absence of any fault on the part of the assessee, the assessee cannot be deprived of benefit under section 115BBA of the Act . Thus, we are in agreement with the decision of Akshay Devendra Birani 2024 (6) TMI 272 - ITAT PUNE hold that requirement of filing form 10-IE is directory in nature and not mandatory and it is sufficient compliance if the said form is before the AO at the time of assessment. As such we direct the CPC to take into consideration the form 10-IE filed by the assessee and pass appropriate orders. Appeal of the assessee allowed for statistical purposes.

Summary

Issues:
1. Whether filing Form 10-IE before the due date of filing of return under section 139(1) to opt for the new tax scheme under section 115BAC is mandatory or directory.
2. If the option under section 115BAC is not allowed, is the Assessing Officer obligated to permit the claim for deduction under Chapter VIA.

Issue 1: Filing of Form 10-IE - Mandatory or Directory:
The appeal concerns the denial of the benefit of lower tax rates under section 115BAC due to the late filing of Form 10-IE. The appellant argued that the filing of Form 10-IE before the assessing officer at the time of assessment should suffice, as it was done in this case. The appellant contended that the form's filing is directory, not mandatory, citing legal precedents. The tribunal agreed, emphasizing that the requirement is directory, not mandatory, based on judgments from various courts and tribunals. The tribunal directed the CPC to consider the Form 10-IE filed by the assessee and make appropriate orders, ultimately allowing the appeal for statistical purposes.

Issue 2: Claim for Deduction under Chapter VIA:
The second issue revolves around whether the Assessing Officer should allow the claim for deduction under Chapter VIA if the option under section 115BAC is not permitted. The appellant argued that even if the benefit of lower tax rates is denied, the assessee should be entitled to avail deductions under Chapter VIA. However, the tribunal's decision primarily focused on the first issue regarding the nature of filing Form 10-IE. As a result, the tribunal's ruling did not delve deeply into this secondary issue.

The tribunal's detailed analysis considered the legal nature of filing Form 10-IE and the precedents set by various courts and tribunals. The decision clarified that the requirement of filing the form is directory, not mandatory, and directed the CPC to consider the form and make appropriate orders.