Chennai ITAT: Delay in Filing Form 10-IC Due to Technical Glitch Cannot Deny Concessional Tax Regime

Metis Family Offers Services Pvt. Ltd. Vs DCIT (ITAT Chennai)

Chennai ITAT: Delay in Filing Form 10-IC Due to Technical Glitch Cannot Deny Concessional Tax Regime

Summary: The Chennai ITAT allowed the assessee’s appeal for statistical purposes and set aside the orders of the lower authorities in a case concerning denial of the concessional tax regime under Section 115BAA of the Income-tax Act for AY 2020-21. The assessee had opted for the concessional tax regime in ITR-6 but did not electronically file Form No. 10-IC within the prescribed time, stating that this was due to technical issues on the Income-tax portal. The CPC denied the benefit under Section 143(1), and the rectification application under Section 154 and subsequent appeal were also rejected. The Tribunal noted that the assessee had exercised the option in the return of income, produced the relevant ITR-6 and filed a physical copy of Form No. 10-IC before the Tribunal. Following the decision of the Mumbai Bench in Staubli Tec Systems India Pvt. Ltd. and the Gujarat High Court decision cited therein, the Tribunal held that the concessional tax regime should not be denied merely due to delayed or non-electronic filing of Form No. 10-IC where other statutory conditions are fulfilled. The matter was restored to the Assessing Officer to verify the claim and grant the benefit if the prescribed conditions are satisfied after providing an opportunity of hearing.

The Chennai ITAT held that a company cannot be denied the benefit of the concessional tax regime u/s 115BAA merely because Form 10-IC was not electronically filed within the prescribed time due to technical glitches. The assessee had opted for taxation under the concessional regime while filing its ITR-6, but could not upload Form 10-IC because of issues on the Income-tax portal. Consequently, the CPC processed the return under the old tax regime, raised a demand, and rejected the assessee’s rectification application u/s 154, which was also upheld by the CIT(A).

The Tribunal noted that the assessee had consistently maintained that the option under section 115BAA had been exercised in the return itself and had immediately raised a grievance on the portal upon receiving the intimation u/s 143(1). It also observed that the assessee had produced the relevant portion of ITR-6 evidencing the option exercised and had furnished a physical copy of Form 10-IC before the Tribunal.

Relying on the Mumbai ITAT decision in Staubli Tec Systems India Pvt. Ltd. and the Gujarat High Court ruling in PCIT v. KGY Glass Industries (P.) Ltd., the Tribunal held that a procedural lapse, such as delayed or non-electronic filing of Form 10-IC due to technical reasons, should not deprive an assessee of a substantive statutory benefit when all other conditions are satisfied. It set aside the orders of the lower authorities and restored the matter to the AO with a direction to verify the assessee’s eligibility and grant the benefit of the concessional tax regime if the statutory conditions are fulfilled, without rejecting the claim solely for delayed filing of Form 10-IC. The appeal was accordingly allowed for statistical purposes.

Cases Discussed:

• Staubli Tec Systems India Pvt. Ltd. v. DCIT, ITA No. 3968/Mum/2024 (order dated 31.10.2025)
• PCIT v. KGY Glass Industries (P.) Ltd., (2023) 156 taxman.com 18 (Guj.)

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal filed by the assessee is directed against the order of Addl/JCIT(A)-2, Hyderabad dated 09.02.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2020-21.

2. The solitary issue arising for our consideration in the present appeal is whether the First Appellate Authority (FAA) was justified in confirming the rectification order passed u/s. 154 of the Act, thereby upholding the intimation issued by the CPC u/s.143(1) of the Act, wherein the benefit of the concessional tax regime claimed by the assessee u/s.115BA of the Act was denied on the ground that Form No. 10-IC had not been furnished within the prescribed time.

3. Brief facts of the case are as follows: The assessee is a private limited company engaged in the business of providing Financial Advisory and Consulting Services. For the assessment year 2020-21, the assessee filed its return of income on 14.02.2021, opting for the concessional tax regime u/s.115BAA of the Act and duly disclosed the said option in ITR-6. However, the assessee could not electronically furnish Form No.10-IC, being the prescribed form for exercising the option u/s.115BAA, due to technical glitches encountered on the Income-tax portal. The return of income was processed by the Centralized Processing Centre (CPC), and an intimation u/s.143(1) of the Act dated 23.12.2021 was issued, computing the tax liability by treating the assessee as governed by the old tax regime and raising a demand of Rs.12,71,970/-. Immediately thereafter, the assessee raised a grievance on the Income-tax portal on 12.01.2022, pointing out the issue. However, the said grievance came to be closed without granting the relief sought. Thereafter, the assessee filed an application for rectification u/s.154 of the Act. The CPC, vide order dated 07.06.2024 passed u/s. 154 of the Act, rejected the assessee’s claim and confirmed the computation made in the intimation u/s.143(1) by continuing to apply the old tax regime.

4. Aggrieved by the said rectification order, the assessee preferred an appeal before the FAA. The FAA, however, upheld the rectification order, thereby confirming the denial of the benefit of the concessional tax regime u/s.115BAA of the Act.

5. The Ld. AR submitted that, at the time of filing the return of income, the assessee could not upload Form No.10-IC due to certain technical issues encountered on the Income-tax portal. Upon receipt of the intimation issued under section 143(1) of the Act, the assessee immediately raised a grievance on the Income-tax portal on 12.01.2022. However, the grievance was closed by the Department stating that the assessee had selected “No” in the column relating to whether it had opted for taxation under sections 115BA/115BAA/115BAB of the Act. The Ld. AR submitted that the said observation is factually incorrect, as while filing the return in ITR-6, the assessee had specifically opted for taxation under section 115BA. In support of this contention, the Ld. AR produced a copy of the ITR-6 highlighting the relevant column evidencing the option exercised under section 115BA. The Ld.AR has also filed a physical copy of Form No.10-IC before the Tribunal. It was, therefore, contended that the assessee had unequivocally exercised its option to be governed by the concessional tax regime under section 115BA and that the non-filing of Form No.10-IC electronically was purely on account of technical difficulties. Accordingly, the Ld. AR submitted that the benefit of taxation under section 115BA ought not to be denied on account of a mere procedural lapse. The Ld.AR placed reliance on the order of the Mumbai Bench of the Tribunal in the case of Staubli Tec Systems India Pvt. Ltd. v. DCIT in ITA No.3968/Mum/2024 (order dated 31.10.2025).

6. The Ld.DR supported the order of the FAA.

7. We have heard the rival submissions and perused the material available on record. The sole issue for our consideration is whether the assessee is entitled to the benefit of taxation u/s.115BA of the Act despite the non-filing of Form No.10-IC electronically within the prescribed time. We find that the assessee has consistently maintained that it had exercised the option for taxation u/s.115BA in the return of income itself and that Form No.10-IC could not be uploaded due to technical issues on the Income-tax portal. The assessee has also placed on record a copy of the ITR-6 evidencing the exercise of the option. The assessee has filed the physical copy of Form No.10-IC before the Tribunal.

8. On identical facts, we find that the Coordinate Bench of the Mumbai Tribunal in the case of Staubli Tec Systems India Pvt. Ltd. (supra), after considering the decision of the Hon’ble Gujarat High Court in PCIT v. KGY Glass Industries (P.) Ltd., reported in (2023)156 taxman.com 18 (Guj) held that where Form No.10-IC could not be furnished within the prescribed time due to technical or inadvertent reasons, such procedural lapse should not deprive the assessee of the substantive benefit u/s.115BAA of the Act, provided all other statutory conditions are fulfilled. The Coordinate Bench also observed that an appeal is a continuation of the original proceedings and that the Form filed even at the appellate stage can be taken on record for granting the statutory benefit.

9. Respectfully following the aforesaid decision of the Coordinate Bench, we are of the considered view that the benefit of the concessional tax regime cannot be denied merely on account of a procedural lapse when the assessee has otherwise exercised the option in the return of income and has subsequently furnished Form No.10-IC. Accordingly, we set aside the orders of the lower authorities on this issue and restore the matter to the file of the AO with a direction to verify the assessee’s claim and, if it is found that the assessee has fulfilled all the other conditions prescribed u/s.115BA of the Act, grant the benefit of the concessional tax regime without denying the same merely for delayed or non-electronic filing of Form No.10-IC. The AO shall afford adequate opportunity of being heard to the assessee before passing a fresh order. It is ordered accordingly.

10. In the result, the appeal filed by the assessee is allowed for allowed for statistical purposes.

Order pronounced in the open court on 9th July,2026 at Chennai.