Case Law Details
PCIT Vs KGY Glass Industries (P) Ltd (Gujarat High Court)
Benefit For Concessional Tax Rate On Account Of Technical Glitch In Uploading Of Form 10IC Cannot Be Denied
In a recent judgment, the Gujarat High Court addressed the issue of whether a taxpayer could be denied the benefit of a concessional tax rate under section 115BAA of the Income Tax Act due to a technical glitch in filing Form 10-IC for the assessment year 2020-21. The case of PCIT Vs KGY Glass Industries (P) Ltd highlights the importance of procedural compliance and the consequences of a failure to adhere to tax-related deadlines.
Background of the Case: PCIT Vs KGY Glass Industries (P) Ltd is a case that revolves around the eligibility of a domestic company in the textile business to avail the benefit of being taxed under Section 115BAA of the Income Tax Act. This section offers a concessional tax rate of twenty-two percent, provided certain conditions are met.
Form 10-IC Requirement: As per sub-section (5) of Section 115BAA of the Act, read with Rule 21AE of the Income-Tax Rules, 1962, eligible companies are required to submit Form 10-IC electronically on or before the due date of filing the return of income under section 139(1) of the Act. Failure to comply with this requirement results in the denial of the concessional tax rate.
Technical Glitch and Filing Delay: In this case, the taxpayer, KGY Glass Industries (P) Ltd, while intending to opt for the concessional tax rate, faced a technical problem when attempting to upload Form 10-IC on the Income Tax Business Application (ITBA) portal. Due to this technical error, the taxpayer could not meet the original deadline for filing the form.
Extension of Filing Period: During the relevant period, the due date for filing Form 10-IC was extended to June 30, 2022. Recognizing this extension, KGY Glass Industries (P) Ltd filed Form 10-IC with the Assessing Officer on June 29, 2022.
First-Year of Availing Benefits: Importantly, it was noted that this was the first year in which the taxpayer was seeking to avail the benefits provided by Section 115BAA. The Form 10-IC, which was a prerequisite for claiming the concessional tax rate, was submitted by the taxpayer on January 29, 2022.
Gujarat High Court Ruling: The Gujarat High Court examined the facts and circumstances of the case and concluded that the failure to upload Form 10-IC on the ITBA portal due to a technical error should not deprive the taxpayer of the benefits provided by Section 115BAA. The court emphasized that this was the taxpayer’s first year of availing such benefits and that the delay in filing the form was a result of a technical issue beyond the taxpayer’s control.
Conclusion: The judgment of the Gujarat High Court in PCIT Vs KGY Glass Industries (P) Ltd serves as a reminder of the significance of adhering to tax-related deadlines and procedural compliance. In this case, the court recognized that a technical glitch should not lead to the denial of a concessional tax rate when the taxpayer acted diligently to meet the requirements within the extended timeline. The decision underscores the importance of fairness in tax assessments, especially in cases where taxpayers are acting in good faith. Ultimately, this ruling ensures that the benefits of Section 115BAA are extended to eligible taxpayers who encounter genuine technical challenges during the filing process.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. This Appeal by the Revenue under section 260A of the Income Tax Act, 1961 (‘the Act’ for short) is directed against the order dated 11.05.2023 passed by the Income Tax Appellate Tribunal, Surat in A.Y.2020-2021.
2. The assessee is in the business of textile, filed its return of income for the A.Y.2020-21 on 15.01.2021 declaring income as NIL. The assessee while filing return of income opted to be taxed as per provisions of Section 115BAA of the Income Tax Act,1961 (for short “the Act”). The return of income was processed by the Central Processing Centre, Bengaluru (for short “CPC”) on 20.12.2021 and the income of assessee was taxed as per Section 115JB of the Act. The assessee was taxed as per section 115JB of the act for the reason that it had not filed Form No.10-IC, on or before the due date of filing of return of income.
3. Aggrieved by the order of A.O.s not assessing the assessee at concessional rate of tax under section 115BAA of the Act, it preferred an appeal before Ld. CIT (Appeal). The Ld. CIT (Appeal) vide order dated 11.10.2022 confirmed the order of Assessing Officer on the ground that filing of Form No.10-IC electronically, on or before the due date of filing of return is the mandatory requirement as per sub-section (5) of section 115BAA of the Act read with Rule 21AE of the Income-Tax Rules,1962.
4. Against the order of Ld. CIT (Appeal), the assessee preferred appeal before the Ld. ITAT and Ld. ITAT vide order dated 11.05.2023 allowed the appeal of the assessee. Aggrieved by the same, the present appeal is filed, proposing following substantial questions of law :
(i) Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in allowing the appeal of the Assessee without appreciating the meaning and applicability of section 115BAA of the I.T. Act.?
(ii) Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in allowing the relief claimed by the Assessee by totally ignoring the provisions of section 115BAA of the Act as well as the Circular No. 06/22 dated 17/03/2022 issued by the CBDT which is mandatory?
(iii) Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in not appreciating that relief claimed under section 115BAA of the I.T. Act cannot be allowed when the Assessee failed to submit Form 10-IC electronically on or before 30.06.2022 or 3 months from the end of the month in which the Circular is issued?
5. Heard learned Senior Standing Counsel Mr. Nikunt Raval for the appellant – revenue. Learned counsel submitted that section 115BAA of the Income-tax Act, 1961 was inserted by Taxation Laws (Amendment) Act, 2019 w.e.f. 01.04.2020. As per the said section, the income tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April,2020, shall, at the option of such person be computed at the rate of twenty-two percent, subject to satisfaction of conditions contained in sub-section (2) of Section 115BAA.
As per sub-section (5) of Section 115BAA of the Act read with Rule 21AE of the Income-Tax Rules,1962, the assessee company is required to submit Form 10-IC electronically on or before the due date of filling of return of income under section 139(1) of the Act and once such option is exercised, the same shall apply to subsequent assessment years.
Learned counsel submitted that failure to furnish From 10-IC, in the prescribed Form on or before the due date specified under section 139(1) of the Act results in denial of concessional rate of tax of twenty-two percent to such person and therefore, there is no illegality in the order of Assessing Officer, confirmed by the Ld. CIT (Appeal). He placed reliance on the findings recorded by the Ld. CIT (Appeal).
6. The ITAT in the order dated 11.05.2023 has held as under:
“7. We have considered the submissions of both the parties and gone through the orders of the lower authorities. There is no dispute that the assessee is a domestic company engaged in the business of textile and eligible to avail the benefit to be taxed under Section 115BAA of the Act, provided the assessee fulfilled the requisite condition for availing such benefit. The only objection of lower authorities are that the assessee has not filed Form 10-IC electronically before due date for filing return of income under Section 139(1) of the Act. The case of assessee is that Form 10-IC could not be uploaded on ITBA Portal due to technical error and it was the first year of availing such benefit. The assessee furnished such Form 10-IC on 29/01/2022, copy of acknowledgment of furnishing Form is filed on page No. 14 and 15 of the paper book. The only question for our consideration is whether non-filing of Form 10-IC on ITBA Portal is fatal to the assessee or not in availing the benefit of section 115BAA.”
- From the findings recorded by the Tribunal, it is noticed
that the assessee while filing return of income opted to be taxed as per provisions of Section 115BBA of the Act. However, it could not upload Form No.10-IC on account of technical problem on ITBA portal at the relevant time. During relevant period, the time to file Form 10IC was extended up to 30.06.2022. The assessee filed such Form before Assessing Officer on 29.06.2022. The copy of such form was placed before ld. CIT(A). It is also not in dispute that this is the first year, in which, the assessee was to avail such benefits. Further, Form 10-IC was furnished by the assessee on 29.01.2022 and therefore, we are of the opinion that since the assessee could not upload Form No.10-IC, on ITBA portal on account of technical error, there being no fault of the assessee, it could not be deprived of benefit particularly when this being the first year for availing such benefits.
8. Therefore, in our opinion, there is no error of fact and Law in the order of the ITAT. No substantial questions of law are involved in the present appeal; hence, the present appeal is dismissed.
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