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TMI Blog2024 (10) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... ined 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. - Smt. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,790/- and opted for concessional rate of tax under the provisions of Section 115BAA of the Act. However, inadvertently the assessee omitted to file the requisite Form 10-IC within the permitted time. An intimation order under Section 143(1) of the Act was issued to the assessee, creating a tax demand of Rs. 40,52,170/-, computed @ 30% plus applicable surcharge under Section 115JAA of the Act (as against concessional rate of 22% offered to tax by the assessee). 4. In appeal, before CIT(A) the assessee contended that it had opted for concessional rate of tax under Section 115BAA, but failed to file Form No. 10-IC to officially exercise the option under sub-Section (5) of Section 115BAA. The first argument of the assessee was on the intent of the assessee to avail the concessional tax rate of 22%. The assessee submitted that while the intention to avail concessional rate of tax @22% was expressed in the Tax Audit Report (Form 3CA), an inadvertent error occurred while filing the Income Tax Return (ITR) for the current year, which did not allow for the option to be correctly exercised due to prior year details being filled erroneously in ITR-6. This mistake deprived the assessee of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent from the income tax return filed by the assessee for the impugned assessment year (A.Y. 2022-23). The counsel for the assessee drew our attention to the return of income filed by the assessee in Form ITR-6, wherein the assessee has specifically mentioned that the first year of claim by the assessee for concessional rate of tax was assessment year 2021-2022. Therefore, the counsel for the assessee submitted that the assessee is not required to submit claim for concessional rate of taxation under section 115BAA of the Act for each subsequent assessment year and such claim is required to be only filed for the first year only, and unless there is any change in circumstances, the assessee would continue to be governed by the concessional rate of taxation under section 115BAA of the Act. 7. In response, DR placed reliance on the observations made by Ld. CIT(Appeals) in the appellate order. 8. We have heard the rival contentions and perused the material on record. It would be useful to reproduce the relevant extracts of section 115BAA of the Act, for ready reference: 35 [Tax on income of certain domestic companies. 36 115BAA. (1) Notwithstanding anything contained in this Act but sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st day of April, 2020, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2019 in the prescribed manner, if the option under sub-section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020. (4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions contained in subsection (2) shall be modified to the extent that the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in the said section. Explanation. For the purposes of this sub-section, the term Unit shall have the same meaning as assigned to it in clause (zc) of section 238 of the Special Economic Zones Act, 2005 (28 of 2005). (5) Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner39 on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired 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. The ITAT made the following observations while passing the order: From perusal of the provision of section 115BAA, which is in regard to tax rate applicable to certain category of domestic companies, it is noticed that undisputedly the assessee falls in the category of domestic companies for the benefit of section 115BAA as provided under the Act. The assessee has validly filed option on Form 10IC for assessment year 2020-21 and has been given the benefit of section 115BAA and has been taxed at the rate of 22 per cent only. The only question is whether the assessee is required to opt for falling under section 115BAA in each year of its filing the income tax return or not. Sub-section (5) of section 115BAA provides that nothing contained in section 115BAA shall apply if the option is exercised by the person in the prescribed manner on or before the due date specified under section 139(1) for furnishing the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of section 115BAA was granted to the assessee for the assessment year 2020-21. In the impugned assessment year, the CPC and the first appellate authority have denied the benefit under section 115BAA simply for the reason that the assessee has not filed fresh Form 10IC, exercising its option for concessional rate of tax for the impugned assessment year. 6. This, in our view, is totally irrational and militates against the statutory provisions. The second proviso to section 115BAA(5) makes it abundantly clear that once option for concessional tax regime under section 115BAA is exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year. In fact, the department has issued a FAQ (copy placed at page 137 of the paper-book) clearly stating that if an assessee has opted for concessional rate of tax once, it shall apply to subsequent assessment years and cannot be withdrawn. Even, in the instructions issued by the Departmental for filing Form ITR 6, it has been specifically mentioned that Form 10IC is required to be filed only in the first year wherein concessional rate of taxes was opted for the first time by an assessee. 7. Thus, not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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