2025 (2) TMI 698 - AT - Income Tax

Denial of claim of calculating tax liability u/s 115BAA - failure of the assessee to file form 10-IC within the time provided for filing the return of income u/s 139(1) - as submitted by the CIT-DR that the last date for filing the return of income for A.Y. 20021-22 was 15.03.2022 and the assessee has filed the return of income belatedly on 29.03.2022 along with Form 10-IC - HELD THAT - Provisions of Section 115BAA are beneficial legislation aiming to extend certain benefits to domestic companies with a reduced rate of taxation. This essential provision was designed to boost the industries and reduce unnecessary litigation and it should not be denied on account of some technical reasons. In the present case admittedly the assessee has exercised his option for the previous year 2020-21 and thereafter based on the same declaration the assessee has filed the return of income for A.Y. 2022-23. However the CPC Bangalore has rejected the claim of the assessee to opt for the regime u/s 115BAA of the Act on the pretext that the same was filed belatedly for the earlier year. Law is fairly settled when the language used in the statute is clear and simple then literal meaning is required to be given to the words used in the Statute while interpreting the Statute. In the present case sub-section (5) of Section 115BAA of the Act has not restricted the application for one year alone even if it has filed belatedly however it has been extended and applicable for the subsequent assessment years. If the application has been filed belatedly for the earlier year as canvassed by the Revenue on 29.03.2022 i.e. after the due date of filing of return of income on 15.03.2022 then the Revenue can withhold or deny the benefit of Section 115BAA for A.Y. 2021-22. But for the purpose of giving benefit for A.Y. 2022-23 the Revenue cannot raise this issue of filing of Form 10-IC belatedly for A.Y. 2022-23. Needless to say the Frm 10-IC on 29.03.2022 for A.Y. 2021-22 will also be treated as filed for A.Y. 2022-23 and subsequent years. Therefore in our considered opinion the assessee is eligible for the benefit provided u/s 115BAA for the A.Y. 2022-23. Decided against revenue.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment were:

Whether the filing of Form 10-IC by the assessee on 29.03.2022 was valid for the Assessment Year (A.Y.) 2021-22 and whether it allows the assessee to avail the benefits of Section 115BAA for A.Y. 2022-23.
Whether the extension of due dates by the Hon'ble Supreme Court applied to the filing of Form 10-IC.
Whether the Central Processing Centre (CPC) was correct in processing the return under normal provisions instead of Section 115BAA due to the alleged late filing of Form 10-IC.
Whether the Revenue's appeal against the decision of the CIT(A) was justified.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Form 10-IC for A.Y. 2021-22 and its applicability to A.Y. 2022-23:

Relevant Legal Framework and Precedents: Section 115BAA(5) of the Income Tax Act, 1961, allows domestic companies to opt for a concessional tax regime by filing Form 10-IC. The option, once exercised, applies to subsequent assessment years.
Court's Interpretation and Reasoning: The Tribunal noted that the law provides that once the option is exercised, it cannot be withdrawn for the same or any other previous year. Thus, the filing of Form 10-IC on 29.03.2022, although after the due date for A.Y. 2021-22, was still valid for A.Y. 2022-23.
Key Evidence and Findings: The assessee filed Form 10-IC on 29.03.2022, and the Tribunal found that this filing was within the extended period as per the Supreme Court's order.
Application of Law to Facts: The Tribunal applied the statutory provisions and concluded that the assessee's filing was valid for A.Y. 2022-23, despite being late for A.Y. 2021-22.
Treatment of Competing Arguments: The Revenue argued that the form was filed late and thus invalid. However, the Tribunal emphasized the continuous applicability of the option once exercised.
Conclusions: The Tribunal held that the assessee was entitled to the benefits of Section 115BAA for A.Y. 2022-23.

2. Extension of Due Dates by the Supreme Court:

Relevant Legal Framework and Precedents: The Supreme Court's order extended the limitation period for various filings due to the COVID-19 pandemic.
Court's Interpretation and Reasoning: The Tribunal interpreted the Supreme Court's order as applicable to the filing of Form 10-IC, thereby validating the assessee's filing within the extended period.
Key Evidence and Findings: The Tribunal referred to the Supreme Court's order, which extended the limitation period to 30.05.2022.
Application of Law to Facts: The Tribunal found that the assessee's filing on 29.03.2022 was within the extended period.
Treatment of Competing Arguments: The Revenue contended that the extension did not apply to Form 10-IC, but the Tribunal disagreed, citing the broad language of the Supreme Court's order.
Conclusions: The Tribunal concluded that the extension applied, making the filing timely.

3. CPC's Processing of the Return:

Relevant Legal Framework and Precedents: Section 143(1) of the Income Tax Act governs the processing of returns by the CPC.
Court's Interpretation and Reasoning: The Tribunal held that the CPC erred in processing the return under normal provisions instead of Section 115BAA.
Key Evidence and Findings: The Tribunal noted that the CPC had acknowledged the receipt of Form 10-IC.
Application of Law to Facts: The Tribunal determined that the CPC lacked the authority to deny the benefit of Section 115BAA based on the timing of Form 10-IC's filing.
Treatment of Competing Arguments: The Revenue argued that the CPC acted correctly, but the Tribunal found no statutory basis for the CPC's action.
Conclusions: The Tribunal directed the CPC to recompute the tax liability under Section 115BAA.

SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal emphasized that once the option for a concessional tax regime is exercised, it applies to subsequent years and cannot be withdrawn.
Final Determinations on Each Issue: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decision, allowing the assessee to benefit from Section 115BAA for A.Y. 2022-23.
Verbatim Quotes of Crucial Legal Reasoning: "The option, once exercised, will be applicable for the subsequent assessment years."

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