Failure to Opt u/s 115BAA and File Form 10‑IC Bars Concessional Tax: Supreme Court upholds Delhi HC Order Against Appellant [Read Order]
The apex court refused to interfere, affirming that statutory compliance is mandatory and CBDT’s condonation circular cannot cure substantive lapses. The ruling underscores the strict interpretation of Section 115BAA and its procedural requirements
The Supreme Court dismissed the appellant's Special Leave Petition, refusing to interfere with the Delhi High Court’s order. The bench held that the company’s failure to exercise the option for concessional taxation under Section 115BAA in its return, coupled with the belated filing of Form 10‑IC, rendered its claim untenable.
Sarla Holdings Pvt Ltd filed its income tax return for Assessment Year (AY) 2020‑21 on 13 February 2021, declaring taxable income of ₹60.93 lakh after set‑offs.
In the return, the company expressly marked “None of the above” against the option to be taxed under Sections 115BA/115BAA/115BAB. Section115BAA, introduced by the Taxation Laws (Amendment) Act, 2019, allows domestic companies to pay tax at a concessional rate of 22% subject to specific conditions and the timely exercise of the option.
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The company later filed a revised return on 26 March 2021, claiming inadvertence due to Covid‑19 disruptions and surrendering depreciation on goodwill. It also filed Form 10‑IC belatedly on 26 April 2022, relying on CBDT Circular No.6/2022, which condoned delays in filing Form 10‑IC for AY 2020‑21.
The Delhi High Court, in its judgment dated 28 May 2025, rejected the company’s plea. The Court emphasised that Section 115BAA(5) requires the option to be exercised in the prescribed manner on or before the due date under Section 139(1).
Since Sarla Holdings had filed its return within the extended deadline but expressly opted “None of the above,” it could not later claim the benefit.
The Court also clarified that CBDT Circular No.6/2022 condoned delays only where the assessee had already opted for Section 115BAA in the return but failed to file Form 10‑IC in time. In Sarla Holdings’ case, the primary condition was not satisfied, as the company had not opted for concessional taxation in its return. COVID-19 hardship pleas were found unpersuasive, given the clear statutory mandate.
Consequently, the assessment order under Section 143(3) read with Section 144B, taxing the company under Section 115JB (MAT) and raising a demand of ₹62.17 lakh, was upheld. The revision petition before the PCIT was also rightly rejected.
On appeal, the Supreme Court bench comprising Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar heard the matter. The Court categorically refused to interfere with the Delhi High Court’s judgment, dismissing the Special Leave Petition.
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