In a recent case, the Gujarat High Court upheld the allowance of concessional tax benefit by the Income Tax Appellate Tribunal(ITAT) as Form No.10-IC couldn’t uploaded on the ITBA portal due to technical glitches.
The Revenue under section 260A of the Income Tax Act, 1961 (‘the Act’) challenged the order passed by the Income Tax Appellate Tribunal(ITAT).
The assessee, KGY Glass Industries (P) Ltd is in the business of textiles, filed its return of income for the A.Y.2020-21 declaring income as NIL. The assessee while filing a return of income opted to be taxed as per provisions of Section 115BAA of the Income Tax Act,1961 (“the Act”). The return of income was processed by the Central Processing Centre, Bengaluru (“CPC”) and the income of the 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.
On appeal, the CIT (Appeal) confirmed the order of the 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. On appeal, the ITAT allowed the appeal of the assessee.
Counsel Mr Nikunt Raval for the appellant -revenue submitted that section 115BAA of the Income-tax Act, 1961 was inserted by the 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 per cent, 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 filing 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.
Further argued 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 per cent to such person and therefore, there is no illegality in the order of Assessing Officer, confirmed by the CIT (Appeal).
A division bench of Justice Biren Vaishnav and Justice Mauna M Bhatt observed that the assessee while filing a 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 a technical problem on the ITBA portal at the relevant time. During the relevant period, the time to file Form 10IC was extended up to 30.06.2022. The assessee filed such a Form before the Assessing Officer on 29.06.2022.
Further held 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.” The Court dismissed the writ petition.
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