The Gujarat High Court has granted the benefit of concessional tax under Section 115BAA of the Income Tax Act due to the inability to upload Form No.10-IC on the Income Tax Business Application (ITBA) portal owing to technical glitches.
Justices Biren Vaishnav and Mauna M. Bhatt noted that the assessee provided Form 10-IC on January 29, 2022. Because the assessee was unable to upload Form No.10-IC to the ITBA portal due to a technical glitch, without any fault on their part, they should not be denied the benefit, especially considering this is their initial year for accessing such advantages.
Form 10-IC is needed to be filed if a domestic company opts to pay tax at a concessional rate of 22% under Section 115BAA of the Income Tax Act, 1961.
The textile-based respondent/assessee submitted its income return for the 2020–21 year on January 15, 2021, showing zero income. When filing the return, the assessee chose to be taxed according to the guidelines outlined in Section 115BAA of the Income Tax Act, 1961. The Central Processing Centre in Bengaluru processed the income return on December 20, 2021, taxing the assessee based on the provisions of Section 115JB of the Act.
The assessee incurred taxation under Section 115JB of the act due to the non-submission of Form No. 10-IC by the due date for filing the income return.
Displeased with the Assessing Officer’s decision not to assess the assessee at the reduced tax rate under Section 115BAA of the Act, the assessee appealed to the CIT (Appeal).
The CIT (Appeal) upheld the Assessing Officer’s ruling, citing the mandatory electronic filing requirement of Form No. 10-IC by the due date for filing the return, as specified in Section 115BAA (5) of the Income Tax Act in conjunction with Rule 21AE of the Income-Tax Rules, 1962.
In response to the CIT (Appeal) decision, the assessee appealed to the ITAT, which ruled in favour of the assessee.
The department argued that Section 115BAA of the Income-tax Act, 1961, was introduced by the Taxation Laws (Amendment) Act, 2019, effective from April 1, 2020. According to the section, a domestic company’s income tax for any previous year from the assessment year starting on or after April 1, 2020, may be calculated at a rate of twenty-two percent, subject to meeting the conditions outlined in subsection (2) of Section 115BAA.
The department contended that the absence of Form 10-IC in the specified format before the deadline outlined in Section 139(1) of the Act results in the denial of the twenty-two percent concessional rate. Hence, the assessing officer’s decision, as upheld by the CIT (Appeal), is considered lawful.
The court observed that the assessee while submitting the income return, chose to be taxed under the regulations of Section 115BAA of the Act. However, due to technical issues, they couldn’t upload Form No.10-IC on the ITBA portal within the required timeframe.
The court highlighted that there were no factual or legal inaccuracies in the ITAT’s decision.
| Case Title | KGY Glass Industries (P) Ltd Vs. Principal Commissioner Of Income Tax 1 |
| Citation | C/TAXAP/722/2023 |
| Date | 18.10.2023 |
| Counsel For Appellant | Nikunt Rawal |
| Gujarat High Court | Read Order |