ITAT Kolkata on Section 115BAA: Delay in Form 10-IC Not a Bar to Concessional Rate Claim

Background of the Dispute

The Kolkata Bench of the Income Tax Appellate Tribunal in Fastner Commodeal Private Limited Vs ADIT (ITAT Kolkata) examined whether an assessee-company could be denied the concessional corporate tax rate under Section 115BAA merely because Form No. 10-IC was not filed electronically within the stipulated time.

The appeal related to Assessment Year 2020-21, arising from the order dated 31.07.2023 passed by the ld. Commissioner of Income-tax (Appeals), NFAC, Delhi in the case of Fastner Commodeal Private Limited.

Return Filing and Processing under Section 143(1)

  • The assessee, a domestic company, filed its return of income for AY 2020-21 declaring income of Rs. 58,69,56,530/-.

  • While filing the return, the assessee computed tax:

    • at 22%,
    • surcharge at 10%, and
    • health and education cess at 4%,
      on the basis that it had opted for taxation under Section 115BAA.

  • The Centralized Processing Centre (CPC), however, while issuing intimation under Section 143(1) on 24.12.2021, computed tax:

    • at 25%,
    • surcharge at 12%, and
    • cess at 4%,
      and levied consequential interest, resulting in a demand of Rs. 2,96,02,670/-.

CPC did not accept that the assessee had effectively exercised the option for the concessional regime under Section 115BAA, primarily because Form No. 10-IC was not found on record as having been filed electronically within the prescribed time.

Proceedings before the CIT(A)

Assessee’s Submissions

In appeal before the ld. CIT(A), the assessee contended:

  • That while filing its return of income electronically, it had chosen to be taxed under Section 115BAA.
  • That the concessional rate under Section 115BAA had been correctly applied in the self-assessment tax computation in the return.
  • That due to technical issues on the income-tax portal and the prevailing pandemic conditions, it could not upload Form No. 10-IC at the time of filing the return.
  • That all substantive conditions for eligibility under Section 115BAA were satisfied, and the only omission was non-filing of the prescribed form.
  • The assessee specifically requested an opportunity to file Form No. 10-IC so that the benefit of the lower tax rate could be granted.

The assessee also referred to the subsequently issued CBDT Circular No. 6/2022 dated 17.03.2022, which provided a mechanism for condonation of delay in filing Form 10-IC for AY 2020-21, and urged that the delay was only a procedural default.

Decision of the CIT(A)

The ld. CIT(A) sustained the adjustment made in the Section 143(1) intimation, holding:

  • That Form No. 10-IC was not filed along with the return of income or within the time limit prescribed under Section 139(1).
  • That even after issuance of CBDT Circular No. 6/2022 dated 17.03.2022, the assessee did not file the form within the extended period.

The Circular stipulated that delay in filing Form No. 10-IC for AY 2020-21 could be condoned, subject to conditions such as:

  • The return of income had been filed on or before the due date under Section 139(1), and
  • Form 10-IC was e-filed on or before 30.06.2022 or within three months from the end of the month in which the circular was issued, whichever was later.

Since the assessee had not filed the form even within this extended window, the ld. CIT(A) concluded that the benefit of Section 115BAA could not be allowed and upheld the tax computed at the normal corporate rate.

Appeal before ITAT Kolkata

Aggrieved, the assessee carried the matter before the Tribunal.

Arguments on Behalf of the Assessee

The ld. AR for the assessee submitted: