Mahalaxmi Asphalt Private Limited Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad considered whether a domestic company could be denied the concessional tax regime under Section 115BAA merely because Form 10-IC was not filed electronically along with its return of income. Mahalaxmi Asphalt Private Limited filed its return for AY 2020-21 on 29.12.2020 declaring total income of Rs.25,89,450/- and opted for taxation under Section 115BAA. The assessee had selected the Section 115BAA regime both in its return of income and in the Tax Audit Report in Form 3CD. However, CPC, Bengaluru processed the return at the regular rate instead of the concessional rate and raised a tax demand of Rs.1,97,000/-, citing non-filing of the prescribed form. The resultant intimation under Section 143(1) was dated 14.12.2022.
The assessee challenged the adjustment before the CIT(A), but its appeal was rejected. Before the Tribunal, the assessee contended that there was no dispute about its status as a domestic company or its substantive eligibility for Section 115BAA. The only objection was that Form 10-IC had not been electronically furnished before the due date under Section 139(1). According to the assessee, Form 10-IC could not be uploaded because of a technical error on the ITBA portal, and AY 2020-21 was the first year in which it was seeking the benefit. The assessee subsequently furnished Form 10-IC on 29.01.2022 during appellate proceedings.
The assessee relied principally upon the jurisdictional Gujarat High Court decision in Gujarat Paguthan Energy Corporation (P) Ltd. Vs DCIT, where, in the context of Section 80-IA, an audit report furnished during assessment proceedings was considered sufficient and the deduction was allowed. Reliance was also placed upon CIT Vs Web Commerce (India) Pvt. Ltd. and several other authorities to contend that delayed compliance with a procedural filing requirement should not extinguish an otherwise available substantive tax benefit.
The Revenue argued that the precedents relied upon were distinguishable because Mahalaxmi Asphalt had not furnished Form 10-IC during assessment proceedings but only during appellate proceedings. According to the Revenue, the delay was substantial and could not be condoned for granting the concessional rate under Section 115BAA.
The Tribunal noted that the return itself, filed on 29.12.2020, applied the tax rate contemplated under Section 115BAA. The assessee’s only default was its failure to furnish Form 10-IC along with that return. It was also undisputed that AY 2020-21 was the first assessment year for claiming the Section 115BAA regime. Significantly, the Revenue did not contend that the assessee was substantively ineligible for the concessional tax rate; the controversy arose from the timing of Form 10-IC.
ITAT Ahmedabad held that the CIT(A) possesses co-terminus powers with the Assessing Officer and therefore could consider Form 10-IC furnished during appellate proceedings. In these circumstances, it was appropriate to take the form on record and consider it together with the return of income instead of finally denying the Section 115BAA claim merely because the form had not accompanied the original return.
Accordingly, the Tribunal directed the Assessing Officer to take Form 10-IC on record, verify it together with the assessee’s return and thereafter adjudicate whether the assessee was entitled to the concessional tax rate under Section 115BAA for AY 2020-21. The assessee was also directed to be afforded an opportunity of hearing in accordance with principles of natural justice. The appeal was partly allowed for statistical purposes. The subsequent TaxGuru report in JSW Minerals Trading Pvt. Ltd. Vs ITO also identifies Mahalaxmi Asphalt Private Limited as an authority directing consideration of Form 10-IC with the return and verification of the Section 115BAA entitlement.
Cases Discussed
- Gujarat Paguthan Energy Corporation (P) Ltd. Vs DCIT (Gujarat High Court), SCA No. 13825 of 2009, decided on 26.02.2014 — Jurisdictional High Court decision principally relied upon by the assessee. The Court had considered delayed furnishing of an audit report for Section 80-IA and held the assessee eligible where the report was furnished during assessment proceedings. The same precedent is subsequently recorded by TaxGuru as one of the authorities considered in the Form 10-IC line of cases.
- CIT Vs Web Commerce (India) Pvt. Ltd. (Delhi High Court), 318 ITR 135 — Relied upon by the assessee on delayed procedural compliance. The precedent is also identified in subsequent TaxGuru reporting as holding that furnishing the audit report with the return was directory where it was furnished before completion of assessment.
- PCIT Vs KGY Glass Industries (P) Ltd. (Gujarat High Court), Tax Appeal No. 722 of 2023 — Relied upon by the assessee. The later TaxGuru report records this Gujarat High Court authority as dealing with technical difficulty in uploading Form 10-IC and the fact that it was the first year of the Section 115BAA benefit. Exact standalone TaxGuru judgment URL was not independently verified in the present search; accordingly shown in purple.
- Aurangabad Electricals Pvt. Ltd. (Supreme Court), 2010 SCC OnLine SC 1277 — Cited by the assessee. Exact TaxGuru judgment page was not independently verified; accordingly retained in purple.
- Medicaps Limited, 323 ITR 554 (Madhya Pradesh High Court) — Cited by the assessee. Exact TaxGuru judgment page was not independently verified.
- Zenith Processing Mills, 219 ITR 721 (Gujarat High Court) — Relied upon by the assessee as part of the authorities supporting its contention regarding procedural compliance.
- CIT Vs Contimeters Electricals (P) Limited (Delhi High Court), IT Appeal No. 1366 of 2008, decided on 02.12.2008 — Cited by the assessee in support of its procedural-compliance argument.
- ITO Vs Ramji Mandir Religious and Charitable Trust (ITAT Ahmedabad) — Cited by the assessee as Ramji Mandir Religious and Charitable Trust, 205 ITD 150 (Ahd). TaxGuru reports the decision concerning delayed Form 10/Form 10B and the principle that the substantive exemption claim should not automatically fail because of delayed procedural filing. :
- Surya Merchants Limited, 387 ITR 105 (Allahabad High Court) — Cited by the assessee. Exact TaxGuru judgment page was not independently verified.
- Niteshkumar J. Shah, ITA No. 430/Ahd/2022 (ITAT Ahmedabad) — Cited by the assessee. Exact TaxGuru judgment page was not independently verified and, being within the 2020–2026 category, is shown in purple under the applicable Cases Discussed treatment.
Alternative SEO Titles
Form 10-IC Filed During Appeal Can Be Considered for Section 115BAA Benefit: ITAT Ahmedabad
Section 115BAA Benefit Cannot Be Rejected Merely for Delayed Form 10-IC: ITAT Ahmedabad
AO Directed to Consider Delayed Form 10-IC for Section 115BAA Tax Rate: ITAT Ahmedabad
Procedural Delay in Form 10-IC Does Not Automatically Defeat Section 115BAA Claim: ITAT Ahmedabad
CIT(A) Can Consider Form 10-IC Filed During Appellate Proceedings: ITAT Ahmedabad
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the assessee against order dated 30.04.2024 passed by the Addl/JCIT(A)-3, Delhi for the Assessment Year 2020-21.
2. The assessee has raised the following grounds of appeal:-
“1. Intimation under Section 143(1) of the Act received from CPC, Bengaluru is bad in law and required to be rectified by giving appropriate direction.
2. Ld. JCIT(A) erred in law and on facts in confirming calculating tax at normal rate instead of rate specified in Section 115BAA of the Act.
3. Ld. JCIT(A) ought to have considered fact that non-filing of form 10IC is procedural lapse which does not lead to non-application of special provision.
4. Appellant prays that the required form 10IC has been physically filed and accordingly delay in filing the same shall be condoned by observing principle of natural justice.
5. Charging of interest under Section 234B and 234C is unjustifiable.”
3. The assessee is a Company and filed the return of income on 29.12.2020 thereby declaring total income of Rs.25,89,450/-. The assessee opted for special rate of taxation under Section 115BAA of the Income Tax Act, 1961 for the Assessment Year 2020-21. The assessee also selected taxation regime under Section 115BAA in the return of income as well as in Tax Audit Report in Form 3CD. While processing the return by CPC, Bengaluru, has computed tax at regular applicable rate instead on concessional rate and raised tax demand of Rs.1,97,000/- for the reason stating therein that non-filing of Form 10IE as per Rule 21AE of the Income Tax Rules, 1962. Intimation under Section 143(1) of the Act dated 14.12.2022 was passed.
4. Being aggrieved by the Intimation Order under Section 143(1) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) has rejected the appeal of the assessee.
5. The Ld. AR submitted that 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. The only objection of the Lower Authorities is that the assessee has not filed the Form 10IC electronically before the due date for filing the return of income under Section 139(1) of the Act. The Ld. AR submitted that Form 10IC could not be uploaded on ITBA Portal due to technical error and it was the first year of availing such benefit. The assessee furnished the said Form 10IC on 29.01.2022 at the time of appellate proceedings before the CIT(A). The only question is whether non-filing of Form 10IC on ITBA Portal is fatal to the assessee or not in availing the benefit of Section 115BAA of the Act. The Ld. AR relied upon the jurisdictional High Caourt’s decision in case of Gujarat Paguthan Energy Corporation (P) Limited vs. DCIT (SCA No.13825 of 2009 dated 26.02.2014). The jurisdictional High Court while considering the eligibility of deduction under Section 80IA of the Act wherein the assessee is required to furnish the Audit Report before due date of filing the return of income, and such Audit Report was filed during the assessment proceedings, held that the assessee is eligible for deduction under Section 80IA of the Act, The Ld. AR further relied upon the decision of Hon’ble Delhi High Court in case of CIT vs. Web Commerce (India) Pvt. Ltd., 318 ITR 135. The Ld. AR further relied upon the following decisions:-
1) KGY Glass Industries (P) Limited (Tax Appeal No.722 of 2023) (Guj.)
2) Aurangabad Electricals Pvt. Ltd. (Supreme Caourt) 2010 SCC Online SC 1277.
3) Medicaps Limited, 323 ITR 554 (Madhya Pradesh)
4) Zenith Processing Mills, 219 ITR 721 (Guj)
5) Web Commerce India (P) Limited, 318 ITR 135 (Del)
6) CIT vs. Contimeters Electricals (P) Limited (IT Appeal No.1366 of 2008 decided on 02.12.2008)
7) Ramji Mandir Religious and Charitable Trust, 205 ITD 150 (Ahd)
8) Surya Merchants Limited, 387 ITR 105 (All.)
9) Niteshkumar J. Shah (ITA No.430/Ahd/2022)
6. The Ld. DR submitted that the decisions relied by the assessee are distinguishable on facts as in the present case the assessee has filed the Form 10IC not during the assessment proceedings but at the time of appellate proceedings. Thus, there is exorbitant delay and the same cannot be condoned for granting the calculation of tax rate as per Section 115BAA of the Act. The Ld. DR relied upon the Intimation Order as well as the Order of the CIT(A).
7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has filed the return of income on 29.12.2020 thereby applying the tax rate as per Section 115BAA of the Act. The only fault of the assessee was that the assessee has not filed Form 10IC alongwith the said return. It is not disputed that for claiming tax rate under Section 115BAA of the Act, the Assessment Year 2020-21 is the very the first Assessment Year and due to the fault on the part of the System as mentioned by the assessee, it would have happened that the assessee has not filed the Form alongwith the return of income. It is not the case of the Revenue that the assessee is not entitled for the tax rate under Section 115BAA of the Act. If the assessee had filed Form 10IC within the prescribed time alongwith return of income, as held by various Hon’ble High Courts including the jurisdictional High Court, the CIT(A) has co-terminus power as that of the Assessing Officer. The CIT(A) is required to consider the report in Form 10IC and, therefore, it will be appropriate to take on record the Form 10IC and consider the same in consonance with the return of income filed by the assessee and after verifying the same, the Assessing Officer will adjudicate the issue whether the assessee is entitled for tax rate as per Section 115BAA of the Act in Assessment Year 2020-21 or not. Needless to say, the assessee be given opportunity of hearing by following the principals of natural justice.
8. In the result, appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on this 30th September, 2024.
