The assessee, a domestic company engaged in the business of designing and manufacturing hand-embroidered apparel, filed its return of income for Assessment Year 2023-24 declaring total income of ₹1,27,35,880 and opted for taxation under the concessional regime provided in section 115BAA of the Income-tax Act, 1961. The assessee duly filed Form No. 10-IC on 31 October 2023, which was within the statutory due date prescribed under section 139(1).

However, the Centralised Processing Centre processed the return under section 143(1) by applying the normal corporate tax rates, ignoring the option exercised under section 115BAA, and raised a demand of ₹12,03,610. Aggrieved, the assessee preferred an appeal before the Commissioner (Appeals).

The Commissioner (Appeals) dismissed the appeal on the ground that the return of income was filed belatedly under section 139(4) and relied upon a CBDT Circular dated 18 November 2024 issued under section 119(2)(b), which deals with condonation of delay in filing Form 10-IC. According to the Commissioner (Appeals), the benefit of section 115BAA could not be granted unless the return was filed within the due date prescribed under section 139(1).

Before the Tribunal, the assessee contended that all substantive conditions of section 115BAA had been fulfilled, including timely filing of Form 10-IC, and that the CBDT circular relied upon by the Commissioner (Appeals) was inapplicable since there was no delay in filing Form 10-IC. It was further submitted that the Act does not expressly prohibit claiming the concessional tax regime merely because the return was filed under section 139(4).

The Tribunal examined the statutory provisions of section 115BAA and observed that while the section mandates timely exercise of the option in the prescribed manner, it does not expressly bar the benefit where the return is filed belatedly, provided the option has been validly exercised. The Tribunal further held that the CBDT circular relied upon by the Commissioner (Appeals) applies only to cases involving delay in filing Form 10-IC and not to cases where the form was filed within time.

Placing reliance on the decision of the co-ordinate bench in Aprameya Engineering Ltd. v. ITO, the Tribunal reiterated that procedural lapses cannot defeat substantive statutory rights, particularly where the assessee’s intention to opt for the concessional tax regime is evident from timely filing of Form 10-IC and compliance with all material conditions.

Accordingly, the Tribunal held that the assessee was entitled to be taxed at the concessional rate under section 115BAA and allowed the appeal. The remaining grounds were rendered academic.

Source Link- https://itat.gov.in/public/files/upload/1768285158-sFXrgH-1-TO.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.