Section 115BAA Benefit Cannot Be Denied Merely for Late Filing of Form 10IC – ITAT Mumbai Ruling

Background and Overview

A significant ruling has emerged from the Income Tax Appellate Tribunal, Mumbai Bench, in the case of Electronfab Engineering Pvt Ltd. Vs CPT/ITO (ITAT Mumbai), which deals with a recurring and practically important question: Can the concessional tax benefit under Section 115BAA of the Income Tax Act 1961 be denied to a domestic company solely on the ground that Form 10IC was not filed along with the original return of income?

The Tribunal answered in the negative, holding that a procedural lapse cannot defeat a substantive statutory right, particularly when the assessee's intention to opt for the concessional tax regime was clearly and unambiguously demonstrated through subsequent compliance steps. The matter was restored to the Assessing Officer with specific directions to verify Form 10IC and grant the benefit if conditions were otherwise satisfied.

Profile of the Assessee and Basic Facts

The assessee is a company incorporated under the Companies Act 1956. It owns 11 residential flats and derives rental income by letting them out to Advance Power Display System Limited. For Assessment Year 2024-25, the assessee filed its original return of income on 15.11.2024, declaring a loss of Rs. 11,46,283/-. However, the original return did not include any claim under Section 115BAA of the Act.

During processing, the CPC Bengaluru computed the taxable income of the assessee at Rs. 2,02,89,906/- as book profit under Section 115JB of the Act. A defect notice was subsequently issued under Section 139(9) of the Act on 22.11.2024, pointing to a discrepancy between the figures reflected in Form 26AS and the turnover declared by the assessee in its return.

Sequence of Key Events

The timeline of events is crucial to understanding the legal controversy involved:

Note: The Form 10IC was filed on 02.12.2024, which was before the corrected return was submitted on 06.12.2024. Crucially, this Form was already on record when the CPC processed the return on 22.01.2025.

Processing Under Section 143(1) and Denial of Benefit

Despite the availability of Form 10IC on record at the time of processing, the CPC declined to grant the benefit of the concessional tax regime under Section 115BAA of the Act. A demand of Rs. 32,99,240/- was raised through the intimation under Section 143(1) of the Act.

The aggrieved assessee challenged this before the Commissioner of Income Tax (Appeals) [CIT(A)], ADDL/JCIT-(A), Bhubaneswar. However, the Ld. CIT(A) upheld the denial vide order dated 30.05.2025, passed under Section 250 of the Income Tax Act 1961. Thereafter, the assessee preferred an appeal before the ITAT Mumbai.

Submissions Made by the Assessee's Authorised Representative

Core Propositions Before ITAT

The Authorised Representative (AR) for the assessee advanced the following key arguments before the Tribunal:

1. Form 10IC was on record before processing: The assessee had filed Form 10IC under Rule 21AE of the Income Tax Rules, 1962 on 02.12.2024 — prior to the filing of the corrected return. This form was duly available with the CPC when the return was processed under Section 143(1).

2. Return under Section 139(9) is not a revised return: The return filed to rectify the defect was filed in response to the defect notice under Section 139(9) of the Act, and not as a revised return under Section 139(5). It was filed solely to rectify the discrepancy flagged by the CPC. All relevant fields were properly filled in this return.

3. Intimation issued without prior notice: The intimation under Section 143(1) was issued without giving any prior adjustment memo or notice to the assessee about the adverse adjustment proposed — rendering the intimation procedurally deficient.

4. Issue not capable of determination at Section 143(1) stage: The question of denying the concessional tax benefit under Section 115BAA is a complex issue requiring deliberation and cannot be adjudicated summarily during processing under Section 143(1) of the Act.