by this representation It is requested that CBDT may permit belated filing of Form 10IC for AY 2020-21 and condone the delay in belated filing of the said Form through an order under Section 119(2)(b) of the Act so as to remove the genuine hardships as enumerated earlier. Further, instructions may be issued to the CPC, Bengaluru to keep the recovery/demand proceedings, if any, wrt 143(1) intimations, in abeyance till the relevant Form 10IC is not furnished by the assessee.
Further Update on 17.03.2022- CBDT vide Income Tax Circular 06/2022 | Dated: 17th March, 2022 condoned the delay in filing of Form 10-IC for Assessment Year 2020-21. For more details please read the circular at below link-
Office Nos. 201-202
Wazirpur Industrial Area
Delhi – 110052
Dated : 03rd February, 2022
Central Board of Direct Taxes
Reg: Non filing of Form 10-IC for AY 2020-21 by the Companies
Subject: Request to permit filing of Form 10IC after expiration of time limit by condoning delay Issuance of Order under Section 119(2)(b) of the Act
Respect Sh. J. B. Mahapatra Sir,
At the outset, the undersigned, a Chartered Accountant, wishes to complement the entire department working under the able torch-bearer-ship of your goodself for the pivotal role being played in the Indian Economy.
The undersigned wishes to clarify and submit that the present petition is being filed to appraise your goodself about the problems being faced by a certain class of tax payers, being domestic companies, who had opted for being taxed as per the provisions of Section 115BAA of the Act for AY 2020-21.
In this regard, it is stated that the aforesaid Section 115BAA was inserted on the statue through Taxation Laws Amendment Act 2019, in order to simplify tax laws. The TLAA, which replaced The Taxation Laws (Amendment) Ordinance, 2019, sought to provide additional fiscal stimulus to attract investment, generate employment and boost the economy in the wake of economic developments post enactment of the Finance (No. 2) Act, 2019 and keeping in view the reduction of rate of corporate income tax by many countries world over. TLAA, inter alia, introduced section 115BAA in the Act so as to provide that an existing domestic company may opt to pay tax at 22 per cent, if it does not claim any incentive and deduction as provided in said section.
Accordingly, the companies, subject to certain conditions, were given option to pay tax at concessional rate of 22%. As per Section 115BAA(5), the assessee (i.e. companies) would be eligible to the concessional rate of tax of 22%, if they opt for the same. So in order to opt for the concessional rate of tax, the aforesaid Section 115BBA(5) provided as under:
“(5) Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2020 and such option once exercised shall apply to subsequent assessment years:”
A perusal of the above provisions, it would be clear that in order to be eligible to claim the benefit of concessional rate of tax @ 22%, a company should:
Accordingly, for opting in, the relevant Form 10-IC was Inserted vide Notification No. 10/2020 dated 12-02-2020. The aforesaid Form 10-IC has following features:
Thus, evidently, while provisions contained under Section 115BAA(1) of the Act are substantive provisions, the provisions relating to filing of Form 10-IC as contained under Section 115BAA(5) are procedural ones.
It is clear from the above that the provisions of Section 115BAA were made applicable wef AY 2020-21 (being the first year) and therefore being in the infancy stages, the filing of Form 10-IC, within the time permitted under Section 139(1) of the Act could not be done by various companies who had other wise opted for concessional rate of taxes under Section 115BAA of the Act in their e-filed Income Tax Returns. The fact that many companies could not file the said form, in-case your honour so wish, may be gotten internally/directly verified with DGIT(Systems) or with CPC-Bengaluru.
It is further imperative to state that in their respective Income Tax Returns for AY 2020-21, these assessees (i.e. those who had not filed Form 10-IC for AY 2020-21) have referred to have opted to Section 115BAA of the Act.
Thus, while tax provisions in the audited annual accounts and Tax Computations in the ITRs were made by these assessee’s based on Section 115BAA, on account of non-filing of Form 10-IC, the benefit of concessional rate of tax [i.e. 22%] could not be permitted to these assessee by CPC, Bengaluru at the time of processing their ITR under Section 143(1) of the Act.
Accordingly, the basic tax rate in such cases have been adopted by the CPC Bengaluru @ 25% in some cases and @ 30% in other cases at the time of processing their ITRs under Section 143(1) of the Act. Accordingly, either demands have been created or refunds have been reduced. Further, demands have arisen on account of additional interest computed under Section 234B/234C of the Act.
Unfortunately, the Income Tax Return Filing Utility (Form ITR-6) also is silent since it does not ask a tax payer to furnish the details of the date on which Form 10-IC was filed or the e-filing acknowledgment number of e-filed Form 10-IC. [on the contrary details are being sought wrt other similar form [i.e. Form 10-IE] from the assessees being individual and HUF’s]. Thus, even in the e-filing utilities released, there is inconsistency.
It is under this factual background that the present petition is being filed with your goodself and seeks quick, prompt and effacious redressal of this hyper-technical issue.
Having submitted Sir that while provisions of Section 115BAA(1) of the Act are substantive provisions & those relating to filing of Form 10-IC as contained under Section 115BAA(5) are procedural ones, it is submitted that Laws can be classified as either substantive law or procedural law.
Substantive law determines rights and liabilities of parties or defines the nature and extent of their legal duties. Procedural law prescribes the practice, procedure and machinery for the enforcement or recognition of legal rights and liabilities by the court of law. The procedural law can-not provide for things which are not given by substantive law and can-not take away that which has been provided by substantive law. [1. AIR 1998 SC 1624 : (1998) 4 SCC 349] Thus, procedural law is always subservient to substantive law.
The function of procedural law is to facilitate justice and further its ends. Therefore, the rules of procedure must be construed liberally and in such a manner so as to render effective the enforcement of substantive rights. A hyper technical view must not be adopted by in interpreting and applying procedural laws.
In the case of Dhannalal vs Kalawatibai & Ors [(2002) 6 SCC 16], Justice R.C.Lahoti (as he was then), while speaking for the Hon’ble Supreme Court of India, had observed as under:
“Procedural law cannot betray the substantive law by submitting to subordination of complexity. Courts equipped with power to interpret law are often posed with queries which may be ultimate. The judicial steps of judge then do stir to solve novel problems by neat innovations. When the statute does not provide the path and precedents abstain to lead, then they are the sound logic, rational reasoning, common sense and urge for public good which play as guides of those who decide. Wrong must not be left unredeemed and right not left unenforced. Forum ought to be revealed when it does not clearly exist or when it is doubted where it exists. When the law procedural or substantive does not debar any two seekers of justice from joining hands and moving together, they must have a common path. Multiplicity of proceedings should be avoided and same cause of action available to two at a time must not be forced to split and tried in two different fora as far as practicable and permissible.”
In Commissioner of Wealth Tax, Meerut vs. Sharvan Kumar Swarup & Sons[ (1994) 122 CTR (SC)380], the distinction between Substantive and Procedural Laws was explained by the Hon’ble Supreme Court of India as under:
“As a General Rule, laws which fix duties, establish rights and responsibilities among & for persons natural or otherwise are “Substantive laws”, while those which merely prescribe the manner in which such rights & responsibilities may be exercised & enforced in a Court are ‘Procedural Laws’.”
According to Salmond [Salmond, Jurisprudence (12th ed.), 461], The law of procedure may be defined as that branch of the law which governs the process of litigation. It includes all legal proceedings whether civil or criminal. All the residue is substantive law, it relates not to the process of litigation but to its purpose and subject matter.
In Saiyad Mohammad Bakar El-Edroos vs Abdulhabib Hasan Arab And Ors [(SC)-1998-4-58], Justice A.P. Misra held that,
“A procedural law is always in aid of justice, not in contradiction or to defeat the very object which is sought to be achieved. A procedural law is always subservient to the substantive law. Nothing can be given by a procedural law what is not sought to be given by a substantive law and nothing can be taken away be the procedural law what is given by the substantive law.”
It needs to be further appreciated that even in some specific sections like 80IA(7), 10A(5), 12A(b) etc, wherein there is specific provision for disallowance of deduction/exemption, if audit report in prescribed form is not filed along with the return, various Hon’ble High Courts had (in the past) taken a view that filing of audit report is directory and not mandatory. Reliance in this regard can be placed on the cases of: CIT vs Axis Computers (India) (P.) Ltd  178 Taxman 143 (Delhi) PCIT, Kanpur vs Surya Merchants Ltd  72 com 16 (Allahabad) CIT, Central Circle vs American Data Solutions India (P.) Ltd  45 com 379 (Karnataka) CIT-II vs Mantec Consultants (P.) Ltd  178 Taxman 429 (Delhi) CIT vs ACE Multitaxes Systems (P.) Ltd  317 ITR 207 (Karnataka).
Further, in the case of Commissioner of Income Tax vs. (1) M/s. G.M. Knitting Industries P. Ltd. (2) M/s. AKS ALLOYS P. Ltd. [(2015) 376 ITR 456(SC)], first substantial question of law, before the Hon’ble Supreme Court was as under:
“1. Whether, on the facts and in the circumstances of the case, the Income- tax Appellate Tribunal was right in holding that the assessee was entitled to claim deduction under section 80-IB respect of the unit at Pondicherry even though the assessee had not complied with the mandatory provision for filing the audit report in Form 10CCB in support of the claim as stipulated in section 80-IB(13)read with section 80-IA(7) of the Act by observing that it was enough if the audit report was filed before the assessment was completed?”
The Hon’ble Apex Court had considered a catena of judgments of various High Courts and held as follows:
“In the light of the above, by virtue of hierarchy of Judgments which are against the Revenue, the substantial question of law (1) would not arise at all for consideration.”
In a similar situation, in spite of the prescription in Rule 17 about time limit mentioned in such Rule 17 and Form 10, the Hon’ble Supreme Court in the case of CIT vs. Nagpur Hotel Owners Association [(2001) 247 ITR 201 SC] laid down the law that particulars required to be filed Form No. 10 can be filed any-time before completion of assessment to satisfy the requirement of law.
The law is settled that rendering substantial justice shall be paramount consideration of the authorities rather than deciding on hyper-technicalities. Further, the Tax, it is submitted can only be collected with the authority of Law (Article 265). In this regard, it would be pertinent to refer to the judgment rendered in the case of S.R. Koshti vs. CIT [146 Taxman 335 (Guj)], wherein the Hon’ble Gujarat High Court held as under:
“The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.
It would be appreciated that the Hon’ble CBDT had even in past condoned the delay in filing of Form-10 and Report of audit in Form-10B vide Circular No. 10/2019 and Circular No.02/2020.
Further, COVID-19 has been globally accepted as a pandemic, it is further submitted that in Suo Motu Writ Petition (Civil) No.3 of 2020 [Misc. Application No. 665/2021] of the Honb’le Supreme Court of India in the case of cognizance for extension of limitation wherein the Hon’ble Apex Court, vide order dated 27/04/2021 has held as under:
“This Court took suomotu cognizance of the situation arising out of the challenge faced by the country on account of COVID-19 Virus and resultant difficulties that could be faced by the litigants across the country. Consequently, it was directed vide order dated 23rd March, 2020 that the period of limitation in filing petitions/ applications/ suits/appeals/ all other proceedings, irrespective of the period of limitation prescribed under the general or special laws, shall stand extended with effect from 15th March, 2020 till further orders.
Thereafter on 8th March, 2021 it was noticed that the country is returning to normalcy and since all the Courts and Tribunals have started functioning either physically or by virtual mode, extension of limitation was regulated and brought to an end. The suo motu proceedings were, thus, disposed of issuing the following directions:
“1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.
2. In cases where the limitation would have expired during the period between 15.03.2020 till14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from15.03.2021. In the event the actual balance period of limitation remaining, with effect from15.03.2021, is greater than 90 days, that longer period shall apply.
3. The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12Aof the Commercial Courts Act, 2015 and provisos (b)and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.
4. The Government of India shall amend the guidelines for containment zones, to state.”
Supreme Court Advocate on Record Association (SCAORA) has now through this Interlocutory Application highlighted the daily surge in COVID cases in Delhi and how difficult it has become for the Advocates-on-Record and the litigants to institute cases in Supreme Court and other courts in Delhi. Consequently, restoration of the order dated 23rd March, 2020has been prayed for.
We have heard Mr. Shivaji M. Jadhav, President SCAORA in support of the prayer made in this application. Learned Attorney General and Learned Solicitor General have also given their valuable suggestions.
We also take judicial notice of the fact that the steep rise in COVID-19 Virus cases is not limited to Delhi alone but it has engulfed the entire nation. The extraordinary situation caused by the sudden and second outburst of COVID-19 Virus, thus, requires extraordinary measures to minimize the hardship of litigant–public in all the states. We, therefore, restore the order dated 23rd March, 2020 and in continuation of the order dated 8th March, 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders.
It is further clarified that the period from 14th March, 2021 till further orders shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29Aof the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.
We have passed this order in exercise of our powers under Article 142 read with Article 141 of the Constitution of India. Hence it shall be a binding order within the meaning of Article 141 on all Courts/Tribunals and Authorities.
This order may be brought to the notice of all High Courts for being communicated to all subordinate Courts/Tribunals within their respective jurisdiction.”
In view of the above submissions, it is the most earnest prayer that the Hon’ble CBDT may permit belated filing of Form 10IC for AY 2020-21 and condone the delay in belated filing of the said Form through an order under Section 119(2)(b) of the Act so as to remove the genuine hardships as enumerated earlier. Further, instructions may be issued to the CPC, Bengaluru to keep the recovery/demand proceedings, if any, wrt 143(1) intimations, in abeyance till the relevant Form 10IC is not furnished by the assessee.
Sir, it is hoped that the above cogent, bonafide and genuine prayer, in-case acceded to, would only be another example of the motto of the present Government i.e. Minimum Government and Maximum Governance.
In anticipation for a favorable response,
FCA, LLB, New Delhi