Form No.10-IC Couldn’t Be Uploaded On ITBA Portal Due To Technical Problem: Gujarat High Court Allows Section 115BAA Concessional Tax Benefit

The Gujarat High Court has allowed the benefit of concessional tax under Section 115BAA of the Income Tax Act, as Form No.10-IC could not be uploaded on the Income Tax Business Application (ITBA) portal due to technical problems.

The bench of Justice Biren Vaishnav and Justice Mauna M. Bhatt has observed that Form 10-IC was furnished by the assessee on January 29, 2022. Since the assessee could not upload Form No.10-IC on the ITBA portal on account of a technical error, there being no fault of the assessee, it could not be deprived of benefit, particularly since this is the first year for availing of such benefits.

Form 10-IC is required to be filed only if a domestic company chooses to pay tax at a concessional rate of 22% under Section 115BAA of the Income Tax Act, 1961.

The respondent/assessee is in the business of textiles and filed its return of income for the year 2020–21 on January 15, 2021, declaring income as NIL. The assessee, while filing a return of income, opted to be taxed as per the provisions of Section 115BAA of the Income Tax Act, 1961. The return of income was processed by the Central Processing Centre, Bengaluru, on December 20, 2021, and the income of the assessee was taxed as per Section 115JB of the Act.

The assessee was taxed as per Section 115JB of the act for the reason that it had not filed Form No. 10-IC on or before the due date of filing the return of income.

The assessee was aggrieved by the order of the A.O. for not assessing the assessee at the concessional rate of tax under Section 115BAA of the Act; it preferred an appeal before CIT (appeal).

The CIT (Appeal) confirmed the order of the Assessing Officer on the ground that filing Form No. 10-IC electronically, on or before the due date of filing the return, is a mandatory requirement as per Section 115BAA (5) of the Income Tax Act read with Rule 21AE of the Income-Tax Rules,1962.

Against the order of CIT (appeal), the assessee preferred an appeal before the ITAT, and the ITAT allowed the appeal of the assessee.

The department contended that Section 115BAA of the Income-tax Act, 1961, was inserted by the Taxation Laws (Amendment) Act, 2019 w.e.f. 01.04.2020. As per the section, the income tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April 2020, shall, at the option of such person, be computed at the rate of twenty-two per cent, subject to satisfaction of conditions contained in sub-section (2) of Section 115BAA.

The department argued that failure to furnish Form 10-IC in the prescribed form on or before the due date specified under Section 139(1) of the Act results in the denial of a concessional rate of twenty-two per cent to such a person. Therefore, there is no illegality in the order of the assessing officer, as confirmed by the CIT (appeal).

The court noted that the assessee while filing a return of income, opted to be taxed as per the provisions of Section 115BBA of the Act. However, it could not upload Form No.10-IC on account of technical problems on the ITBA portal at the relevant time.

The court noted that there was no error of fact or law in the order of the ITAT.

Counsel For Appellant: Nikunt Rawal

Counsel For Respondent: None

LL Citation: 2023 LiveLaw (Guj) 174

Case Title: Principal Commissioner Of Income Tax 1 Versus KGY Glass Industries (P) Ltd

Case No.: R/TAX APPEAL NO. 722 of 2023

Click Here To Read The Order