2024 (10) TMI 698 - AT - Income Tax

Tax on income of certain domestic companies u/s 115BAA - AO disallowing the benefit of lower tax u/s 115BAA to the assessee resulting into tax demand and interest - assessee inadvertently while filing the Income Tax Return for the Assessment Year 2022-23 could not file Form 10IC on the Income Tax Portal though the same has been claimed in ITR as well as Tax Audit Report - HELD THAT - In the case of Narayani Laxmi Viniyog (P.) Ltd. 2024 (7) TMI 1182 - ITAT KOLKATA the ITAT held that where assessee-company had validly opted for provisions of section 115BAA for assessment year 2020- 21 and revenue authorities having not found any error in such valid claim had allowed option exercised for lower tax rate for assessment year 2020- 21, assessee was not required to exercise option for subsequent assessment year under provision of section 115BAA(5) unless first option was rendered invalid due to violation of any condition contained in sub-clause (ii) or subclause (iii) of clause (a) or clause (b) of section 115BAB(2) of the Act. There is no dispute to the proposition that the assessee had validly claimed the concessional rate of tax under Section 115BAA of the Act, for the first time in assessment year 2021-22, in our view there is no requirement under the relevant statutory provisions for the assessee to make fresh claim for each subsequent assessment year by way of filing of Form 10-IC with respect to each subsequent year of claim. Once the assessee has validly opted for 115BAA for assessment year 2020-21 and Revenue Authorities having not found any error in such valid claim and has allowed the option exercised for lower tax rate for assessment year 2020-21, then the assessee is not required to exercise the option for the subsequent assessment year under the provision of Section 115BAA(5), unless the first option is rendered invalid due to violation of any condition contained in sub-clause (ii) or sub-clause (iii) of clause (a) or clause (b) of Section 115BAB(2). Appeal of assessee allowed.

Issues Involved:

1. Whether the filing of Form 10-IC is mandatory for each assessment year to avail the concessional tax rate under Section 115BAA.
2. Whether the assessee is entitled to the concessional tax rate under Section 115BAA despite failing to file Form 10-IC for the assessment year 2022-23.
3. Whether the tax rate applicable should be 25% instead of 30% based on the assessee's turnover.

Issue-wise Detailed Analysis:

1. Mandatory Filing of Form 10-IC:

The core issue revolves around whether Form 10-IC must be filed every assessment year to claim the concessional tax rate under Section 115BAA. The statutory provisions under Section 115BAA(5) clearly state that once the option for the concessional tax regime is exercised, it applies to subsequent assessment years and cannot be withdrawn. The Tribunal observed that the requirement to file Form 10-IC is only necessary in the first year of opting for the concessional rate. This interpretation is supported by judicial precedents, including the ITAT rulings in the cases of Narayani Laxmi Viniyog (P.) Ltd. and Concentrix Daksh Services India, which confirm that once the option is exercised, there is no need for re-filing the form in subsequent years unless the initial option is rendered invalid due to specific violations.

2. Entitlement to Concessional Tax Rate Despite Non-filing:

The assessee argued that the failure to file Form 10-IC for the assessment year 2022-23 should not disqualify it from availing the concessional tax rate of 22% under Section 115BAA, as the form is directory and not mandatory. The Tribunal agreed with this position, emphasizing that the intent to avail the concessional rate was evident from the Tax Audit Report and the income tax return filed for the previous year. The Tribunal noted that the assessee had already exercised the option in the first year (2021-22) and had complied with the requisite filing requirements at that time. Therefore, the Tribunal concluded that the assessee should not be denied the benefit of the concessional rate due to the non-filing of Form 10-IC for the subsequent year.

3. Applicable Tax Rate Based on Turnover:

The assessee also contended that the applicable tax rate should be 25% instead of 30% due to its turnover being below Rs. 250 crores. The CIT(A) recognized that the assessee's turnover indeed fell below the stipulated threshold, and thus, the correct tax rate should be 25%. Consequently, the assessing officer was directed to compute the tax at the rate of 25%, and the appeal was partly allowed for statistical purposes. The Tribunal upheld this finding, ensuring that the tax computation aligned with the turnover criteria.

Conclusion:

The Tribunal allowed the appeal of the assessee, affirming that the filing of Form 10-IC is not required for each subsequent assessment year once the option for the concessional tax rate under Section 115BAA is exercised. The Tribunal also confirmed the applicability of the 25% tax rate based on the assessee's turnover, thus providing relief to the assessee. The order was pronounced in open court on 09/10/2024.

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