Form 10-IC Procedural Lapse Cannot Deny Section 115BAA Benefit: ITAT Mumbai

Kumar Medicare Pvt. Ltd. Vs CIT/NFAC Delhi (ITAT Mumbai)

Summary: ITAT Mumbai partly allowed Kumar Medicare Pvt. Ltd.’s appeal for statistical purposes concerning denial of the concessional 22% tax rate under Section 115BAA for AY 2020-21 due to non-filing of Form 10-IC. The assessee had filed its return within the time prescribed under Section 139(1) and had opted for the concessional rate in its ITR-6, but Form 10-IC had not been filed. The Tribunal noted that this was the first year of operation of Section 115BAA and was also during the COVID period. After considering Section 115BAA and Rule 21AE, it held that procedural requirements should not override substantive benefits and observed that courts have taken a lenient approach to procedural lapses where substantive benefits are involved. The Tribunal further found that CPC, Bengaluru had not provided the assessee a reasonable opportunity before making the adjustment under Section 143(1). It therefore directed the jurisdictional AO to provide a fresh opportunity, ignoring the CPC adjustment, and directed the assessee to file Form 10-IC electronically/before the jurisdictional AO. Upon filing the form, the AO was directed to revise the tax computation in accordance with Section 115BAA. Grounds 1 and 2 were allowed for statistical purposes. The MAT-related ground concerning Section 115JB became infructuous and was dismissed without findings on merits.