Facts of the Case

The petitioner, A.C. Surgipharma Private Limited, filed its income tax return for Assessment Year 2021–22, opting for taxation at the concessional rate of 22% under Section 115BAA of the Income Tax Act, 1961.

However, an intimation dated 13.11.2022 under Section 143(1) was issued by the Respondent, raising a demand of ₹1,03,94,820/-, on the sole ground that the petitioner had not filed Form 10-IC, which is required to exercise the option under Section 115BAA.

The petitioner contended that all relevant information indicating the exercise of the option under Section 115BAA was already available in the return of income.

Issues Involved

  1. Whether failure to file Form 10-IC along with the return disentitles the assessee from claiming benefit under Section 115BAA despite disclosure in the return.
  2. Whether the Assessing Officer should grant an opportunity to rectify such procedural defects before raising demand under Section 143(1).
  3. Whether the delay in filing Form 10-IC can be condoned in light of CBDT circulars issued under Section 119(2)(b).

Petitioner’s Arguments

  • The petitioner had clearly exercised the option under Section 115BAA in its income tax return.
  • The denial of benefit was merely due to non-filing of Form 10-IC, which is a procedural lapse.
  • The Assessing Officer ought to have provided an opportunity to rectify the defect before issuing the intimation.
  • Reliance was placed on CBDT Circular No. 19/2023 dated 23.10.2023, which condones delay in filing Form 10-IC under specified conditions.
  • The petitioner subsequently filed Form 10-IC electronically in compliance with the said circular.

Respondent’s Arguments

  • The Revenue contended that Section 115BAA read with Rule 21AE mandates filing of Form 10-IC along with the return of income.
  • Since the petitioner failed to comply with this mandatory requirement, the benefit could not be granted.
  • It was further argued that the petitioner had an alternate remedy under Section 246A of the Act.

Court’s Findings / Order

  • The Court observed that the only reason for denial of benefit under Section 115BAA was the failure to file Form 10-IC.
  • It took note of CBDT Circular No. 19/2023, which condones delay in filing Form 10-IC subject to conditions.
  • The Court recorded that the petitioner had fulfilled the conditions prescribed in the circular and had filed the form electronically.

Final Direction

  • The writ petition was disposed of with a direction to the CBDT to process the petitioner’s Form 10-IC.
  • The CBDT was directed to complete the process within 8 weeks.
  • Interim protection granted earlier was directed to continue during the processing period.

Important Clarification

  • Procedural lapses such as non-filing of Form 10-IC may not defeat substantive claims where:
    • The intent to opt for concessional taxation is evident from the return; and
    • Relief is supported by CBDT circulars issued under Section 119(2)(b) to mitigate genuine hardship.
  • The judgment emphasizes the principle that technical non-compliance should not override substantive rights, especially when curative provisions exist.

 

Sections Involved

  • Section 115BAA – Concessional tax rate for domestic companies
  • Section 143(1) – Intimation after processing of return
  • Section 119(2)(b) – Power of CBDT to condone delay
  • Section 246A – Appeal provisions
  • Rule 21AE – Filing of Form 10-IC

 

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS30112023CW170572022_114005.pdf

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