2025 (7) TMI 1509 - HC - Income Tax

Rejecting of application filed to condone the delay in filing Form 10-IC along with the return of income - petitioner exercised the option u/s 115BAA while filing the return of income to pay the reduced rate of tax at 22% excluding the surcharge and education cess. HELD THAT - It is the case of the petitioner that the requirement of filing of Form 10-IC is on or before filing due date of Return u/s 139(1) of the Income Tax Act 1961. The Central Board of Direct Tax vide its circular dated 06/2022 dated 17.03.2022 has condoned the delay in filing the Form 10- IC till 30.06.2022 or from the end of month in which the circular is issued. As per the provisions of Sub-section (5) of Section 115BAA of the Act the option is required to be exercised in prescribed manner at the time of filing of return of income u/s 139(1) of the Act. The prescribed manner is provided in Rule 21AE of the Rules for filing of Form 10IC to avail the benefit of provisions u/s 115BAA of the Act. Considering the confusion and technical issues the CBDT has issued the Circular No.6 of 2022 on 17.3.2022 permitting the assessees to file Form 10IC for the AY 2021 meaning thereby the filing of Form 10IC is only to confirm that the petitioner has exercised the option while filing the return of income u/s 139(1) as prescribed in Rule 21AE of the Rules which was relaxed by the CBDT. The respondent No.1 was required to consider the facts of the case by permitting the petitioner to file a fresh Form 10IC and condoning the delay in filing such Form by molding the prayer made by the petitioner to treat the Form 10IC filed by the petitioner for AY 2021-2022 to be treated as that of for AY 2021. The provisions of Section 119(2)(b) of the Act are meant for redressal of the grievance and hardships caused to the petitioner as held in case of R. Seshammal 1998 (9) TMI 56 - MADRAS HIGH COURT Petition succeeds and accordingly allowed. The petitioner is permitted to obtain Form 10IC for Assessment Year 2021 in the facts of the case and after obtaining such Form the petitioner shall make a fresh Application to condone the delay for the same.

Summary

ISSUES:

Whether delay in filing Form 10-IC for exercising option under Section 115BAA of the Income Tax Act, 1961 can be condoned under Section 119(2)(b) of the Act.Whether Form 10-IC filed for Assessment Year 2021-2022 can be treated as filed for Assessment Year 2020-2021 to enable the assessee to avail concessional tax rate under Section 115BAA.Whether the Circular No. 6/2022 issued by the CBDT exercising power under Section 119(2)(b) can be relied upon to condone delay in filing Form 10-IC beyond the prescribed due date.Whether the decision of the Supreme Court in Principal Commissioner of Income Tax versus Wipro Limited, regarding mandatory filing of option under Section 10B(8) of the Act, applies pari materia to the filing of Form 10-IC under Section 115BAA(5) of the Act.What is the scope of power under Section 119(2)(b) of the Act in condoning delay and providing relief in cases of genuine hardship.

RULINGS / HOLDINGS:

The Court held that the delay in filing Form 10-IC can be condoned under Section 119(2)(b) of the Act where genuine hardship is established and the conditions laid down in Circular No. 6/2022 are satisfied, emphasizing that the power under Section 119(2)(b) is meant for redressal of grievances and hardships.The Court directed that Form 10-IC filed for Assessment Year 2021-2022 may be treated as if filed for Assessment Year 2020-2021 to enable the petitioner to avail the benefit of reduced tax rate under Section 115BAA, subject to fresh application and consideration within twelve weeks.The Court recognized Circular No. 6/2022 as a valid exercise of power under Section 119(2)(b) to condone delay in filing Form 10-IC till 30.06.2022 or three months from the end of the month of issuance of the circular, whichever is later, for Assessment Year 2020-2021.The Court distinguished the Supreme Court's decision in Wipro Limited, holding that the strict mandatory filing requirement under Section 10B(8) does not apply pari materia to Section 115BAA(5), noting that Section 115BAA grants relief to domestic companies to pay tax at a reduced rate upon exercising option in prescribed manner.The Court emphasized that the power under Section 119(2)(b) should be exercised liberally and equitably to avoid hypertechnical denials of relief, citing precedent that "the phrase 'genuine hardship' should have been construed liberally."

RATIONALE:

The Court applied the statutory framework of Section 115BAA of the Income Tax Act, 1961, which mandates that the option for concessional tax rate must be exercised in the prescribed manner by filing Form 10-IC on or before the due date specified under Section 139(1).The Court considered Rule 21AE of the Income Tax Rules prescribing the manner of filing Form 10-IC and acknowledged the CBDT's Circular No. 6/2022 as a valid exercise of power under Section 119(2)(b) to condone delay due to genuine hardship.The Court analyzed the Supreme Court's ruling in Wipro Limited concerning the mandatory nature of filing option under Section 10B(8) and distinguished its applicability, noting the difference in the nature of the provisions and reliefs under Sections 10B and 115BAA.The Court relied on precedent from the Madras High Court and Gujarat High Court emphasizing a liberal and equitable approach in construing "genuine hardship" and the exercise of power under Section 119(2)(b), rejecting hypertechnical and pedantic approaches.The Court recognized that the petitioner's failure was due to bona fide human error by the Chartered Accountant and that the petitioner had otherwise complied with filing the return on time and opting for the concessional tax rate, justifying relief.The Court ordered that the petitioner be permitted to file a fresh Form 10-IC and make a fresh application for condonation of delay, directing the authority to consider the same within twelve weeks, thus molding the relief consistent with the statutory scheme and CBDT circular.