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TMI Blog2024 (6) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of section 80J(6A) of the Act to extent it requires furnishing of auditor`s report in prescribed form along with return, is directory in nature and not mandatory. As held that the assessee can be permitted to produce such a report at later stage when question of disallowance arises during course of assessment proceedings. In the instant case, the Ld.A.O. as well as the Ld.CIT(A) has denied benefit of concessional tax rate u/s 115BAA of the Act on account of an inadvertent error on the part of the assessee in not e-filing Form 10IC before due date prescribed. We are, therefore, of the view that there is sufficient compliance if the Form 10IC has been filed during the course of assessment proceeding, since there is no material objective to be achieved by the assessee in not e-filing the same, once the intent was very well declared in Form 3CD. Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. SC ruling in the case of CIT v. G.M. Knitting Industries (P.) Ltd. [ 2015 (11) TMI 397 - SC ORDER] emphasized that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the filing of form is mandatory but directory in nature. The assessee also submitted that the delay in filing Form 10-IC should be condoned in accordance with the provisions of section 119(2)(b) of the Act. Ld. CIT(A), however, dismissed the appeal stating that the beneficial provisions should be strictly and literally complied with and, therefore, a strict interpretation should be adopted. While doing so, he relied on the judgement of Hon ble Apex court in the case of Principal Commissioner of Income Tax-III, Bangalore and another Vs. M/s.Wipro Limited (Judgment dated 11.07.2022 in the Civil Appeal No. 1449 OF 2022). While dismissing the plea of assessee to condone the delay in filing of form 10-IC, the Ld.CIT(A) stated that as per section 119(2)(b) of the Act, the first appellate authority does not have the power to condone the delay in filing such forms. 4. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before us with following grounds of appeal: 1. The Ld. CIT(A) has erred in confirming the order u/s.143(1) of the Income Tax Act, 1961 ( the Act ) passed by the Ld. AO by denying the benefit of the lower tax regime to tax at 22% opted by the appellant u/s. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of form No. 10B. ii. Ms. Brinda Rama Krishna Vs. Income Tax Officer, Ward 5(3)(1), Bangalore (ITA. No. 454/Bang/2021 dated 17-11-2021) which deals with filing of form No.67 iii. Niteshkumar J. Shah Vs DCIT, Circle-2(1)(1), Ahmedabad (ITA No. 430/Ahd/2022 dated 12-7-2023) which deals with filing of form No.10CCB. 5. On the other hand, the Ld.DR relied on the order of Ld.CIT(A). 6. We have considered the rival submissions and perused the material available on record. Section 115BBA of the Act was introduced for the purpose of granting benefit of reduced corporate tax rate for the domestic companies. In order to avail the benefit, such companies are required to exercise the option in prescribed manner on or before due date specified under section 139(1) for furnishing the return of income. As per the rule 21AE of the Income Tax Rules, 1962, such option can be exercised by filing Form 10-IC. Sub-section (5) of Section 115BAA of the Act, makes it mandatory to file this form on or before the due date of furnishing the return of income as specified u/s 139(1) of the Act. In present case, the assessee has filed this form belated i.e. on 1-12-2022. 7. The Ld.CIT(A) in his order has relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was a directory requirement. The matter was brought by the Revenue before the Hon`ble Supreme Court. The assessee, inter alia, relied on the judgment of the Apex Court in G.M. Knitting Industries (P.) Ltd. (supra). Their Lordships held that the requirement of filing the report in support of deduction u/s 10B was not a directory but a mandatory requirement. It further held that both the conditions of - filing the declaration and filing it before the time limit u/s 139(1) -were mandatory and had to be cumulatively satisfied. Rejecting the reliance on G.M. Knitting Industries (P.) Ltd. (supra), the Hon`ble Supreme Court held that that decision was relevant in the context of deduction provisions and not the exemption provisions as given under Chapter III of the Act. 6.3.1 In our view, the aforesaid decision would not apply to assessee`s set of facts and would not preclude/prohibit the assessee from claiming deduction u/s. 10AA of the Act, for the following reasons: (i) Firstly, in the case of Wipro Limited supra, the issue for consideration before the Hon`ble Supreme Court was that in the original return of income, the assessee had claimed deduction under section 10B of the Act, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions. Therefore, since it is well-settled principle of law that deduction provisions, which have been introduced in the Statute to provide incentive to the assessee, should be construed liberally , in our considered view, once it is not disputed that the instant set of facts, the assessee claimed the benefit of provisions under section 10AA in the return of income (which in our view is a mandatory/directory requirement), the benefit of section 10AA cannot be denied only on the ground that the assessee could not file Form 56F along with the return of income (being a procedural requirement), especially when Form 56F has been filed by the assessee at the assessment stage when such claim was being considered by the Assessing Officer. (iii) Besides the above, in the case of G. M. Knitting Industries (P.) Ltd. case supra, the Hon`ble Supreme Court further held that even though necessary certificate in Form 10CCB along with return of income had not been filed but same was filed before final order of assessment was made, assessee was entitled to claim deduction under section 80-IB of the Act as well. Therefore, in light of the decision of Yokogawa supra (which is held that section 10A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction is mandatory, but timing is directory. Even if the claim is made during the assessment proceedings, such a claim is to be allowed. 8.3. After considering the submissions, the judicial precedents cited and the specific facts of the case, we are of the opinion the delay in filing Form 10-IC, though a procedural requirement, should not invalidate the assessee's substantive right to the benefit of section 115BAA of the Act. 8.4. The CBDT's Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. These Circulars indicate a degree of administrative flexibility and a recognition that procedural lapses should not necessarily lead to the denial of substantive benefits. Moreover, denying the benefit based solely on this lapse would be against the principles of equity and justice, especially when there is no dispute regarding the assessee's eligibility for the lower tax rate. 8.5. In light of the above, the Ground Number 1 is allowed. Ground Number 2 is an alternative ground and, therefore, not adjudicated. Ground Numbers 3 and 4 are general in nature, which are also not adjudicated. 9. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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