Choosing the concessional rate in the tax return fulfills the substantive requirement; Form 10-IC is a directory follow-up.
The Conflict
The assessee-company opted for the 22% tax rate (plus surcharge and cess) under Section 115BAA. While they correctly ticked the option in the ITR-6 form, they missed filing the standalone Form 10-IC by the due date because of pandemic-related disruptions. The Central Processing Centre (CPC) and the Assessing Officer (AO) denied the lower rate, treating the missing form as a fatal breach of law.
The Verdict
The Tribunal ruled in favour of the Assessee, remanding the matter with these core findings:
No New Information: Form 10-IC does not require any additional disclosure beyond what is already stated in the tax return (ITR-6). It is merely a “notice of exercise of option.”
Directory Nature: Since the intention to opt for the regime was clearly manifested in the timely filed return, the subsequent filing of the form is “directory” (procedural) rather than “mandatory” (substantive).
Pandemic Hardship: The court recognized that many companies missed the first-year implementation of this form due to nationwide lockdowns.
Transition to the Income-tax Act, 2025
Under the new law effective from April 1, 2026, the regime has been streamlined:
Section 115BAA (1961) ➔ Section 200 (2025): The optional 22% rate is now codified under Section 200.
Prescribed Manner: The “prescribed manner” of exercising the option still involves a form equivalent to 10-IC, but current administrative guidelines under the new Act provide wider powers for Condonation of Delay (under Section 119 equivalent) for genuine hardships.
Irrevocability: Under both the old and new Acts, once this option is successfully exercised (even if belatedly condoned), it cannot be withdrawn for any subsequent tax year.
Key Takeaways for Domestic Companies
The “ITR-6” Safeguard: If you missed Form 10-IC but correctly computed your tax at 22% in your return, you have a strong legal ground to demand the concessional rate.
Condonation Window: The CBDT has issued several circulars (notably Circular 6/2022 and Circular 17/2024) allowing for the condonation of delay in filing Form 10-IC for AY 2020-21 through 2022-23. Ensure you file a formal condonation application if you haven’t already.
Verify “None of the Above”: Be careful—if you accidentally selected “None of the above” in the return’s filing status, courts (like the Delhi High Court) have held that this is a substantive lapse that even a belated Form 10-IC cannot cure.
Electronic Record: Always ensure you have the electronic acknowledgment of the belatedly filed Form 10-IC when appearing before the AO or the Commissioner (Appeals).
IN THE ITAT MUMBAI BENCH ‘F’
Vinmar India (P.) Ltd.
v.
Income-tax Officer*
Rahul Chaudhary, Judicial Member
and Vikram Singh Yadav, Accountant Member
and Vikram Singh Yadav, Accountant Member
IT Appeal No. 9336 (Mum) of 2025
[Assessment year 2020-21]
[Assessment year 2020-21]
MARCH 27, 2026
Samir Shah for the Appellant. Vivek Perampurna, CIT-DR for the Respondent.
ORDER
Vikram Singh Yadav, Accountant Member.- This is an appeal filed by the assessee against the order of the Learned ADDL/JCIT(A)-2, Delhi [‘Ld.CIT(A)’], dated 10-11-2025, pertaining to Assessment Year (AY) 2020-21, wherein the assessee has challenged the order of the Ld.CIT(A), wherein he has confirmed the action of the CPC, Bengaluru in denying the applicability of lower tax rate provided u/s 115BAA of the Income Tax Act, 1961 (‘the Act’).
2. During the course of hearing, the Ld.AR submitted that the assessee-company filed its return of income for the impugned assessment year on 06-12-2020 well before the extended due date of filing of the return of income. It was submitted that in the return of income, the assessee-company has exercised the option for concessional tax regime u/s. 115BAA of the Act and has selected the appropriate option in ITR-6 form. It was also submitted that the assessee-company satisfies all the conditions for availing the concessional tax regime u/s. 115BAA of the Act. It was submitted that being the first year of opting for section 115BAA, and due to Covid-pandemic, filing of Form-10IC was inadvertently missed. It was also submitted that the IT portal accepted the ITR form, without acknowledgment of Form-10IC. It was submitted that the CPC thereafter processed the return of income in terms of intimation u/s. 143(1) of the Act, dt. 24-12-2021, wherein the assessee-company has been denied the claim of lower tax rate u/s. 115BAA of the Act. However, before making such an adjustment, no opportunity has been given by the CPC to the assessee and thus, the principle of natural justice has been violated in absence of notice in terms of section 143(1)(a) of the Act and adjustment was made directly in the intimation u/s. 143(1) of the Act, issued to the assessee. It was submitted that upon receipt of the intimation, the assessee filed its submissions on e-filing portal confirming that the return was filed u/s. 115BAA of the Act. However, there was no communication from the CPC, Bengaluru or the Department regarding the actual reasons for the demand. The assessee thereafter approached the AO, seeking clarification on raising additional tax liability and later on, the assessee-company came to know about the default and procedural lapse of nonfiling of Form 10IC and subsequently, filed Form-10IC with the AO and by that time, unfortunately, the deadline for filing Form-10IC has also lapsed. It was also submitted that during the financial year 2019-20, the country was severely impacted by the Covid-19 pandemic, multiple lockdowns, staff shortage, closure of offices and logistical disruptions created immense compliance challenges and submitted that the procedural lapse in filing Form-10IC occurred inadvertently and under exceptional circumstances, despite the assessee’s intent and good faith.
3. It was reiterated that in the return of income, the assessee has clearly opted for lower tax rate provided 115BAA of the Act and thus, the intention of the assessee-company cannot be doubted and the assessee satisfy all the requisite conditions for claiming lower tax rate and in fact, no dispute has been raised by either CPC or by the Ld.CIT(A). It was further submitted that the Hon’ble Courts and the Tribunals have consistently held that filing of Form-10IC is directory and not mandatory and if intention of the assessee is apparently clear, because of procedural lapses, the relief cannot be denied. In this regard, our reference was drawn to various decisions of the Co-ordinate Benches of the Tribunal.
4. It was further submitted that the CPC, Bengaluru has also not given any opportunity before making adjustment while processing the return of income and had necessary opportunity being provided; the assessee would have filed the requisite Form-10IC well before processing of the return of income. It was submitted that in any case, the assessee has subsequently filed Form-10IC with the AO on 13-10-2025 well before the disposal of the appeal by the Ld.CIT(A) which the Ld.CIT(A) has also failed to consider.
5. It was also brought to our notice that in the subsequent assessment years i.e., AY. 2021-22 till AY. 2024-25, the assessee has opted for lower rate of tax and which has been duly allowed by the Revenue. It was accordingly submitted that the AO may be directed to take into consideration Form-10IC, which already forms part of record and allow the assessee the concessional tax rate as prescribed u/s. 115BAA of the Act.
6. Per contra, the Ld.DR is heard, who has submitted that the assessee has firstly failed to file Form-10IC within the prescribed due date as so laid down in the statute and Form-10IC filed subsequently was not available to the CPC, Bengaluru at the time of processing of return of income. It was further submitted that the assessee also does not satisfy the conditions laid down by the Board for condonation of delay in respect of filing of Form-10IC and in this regard, our reference was drawn to the findings of the Ld.CIT(A), wherein it has been held that there is a delay in filing the condonation application. Therefore, the assessee does not satisfy the condition laid down for condonation of delay with respect to filing of Form-10IC. It was further submitted that the assessee has separately moved a condonation petition before the Ld.CCIT, Mumbai-2, who vide order dt. 3006-2025 has rejected the condonation application, wherein it has been held that the assessee has filed application for condonation on 06-012025, which is beyond the stipulated time frame. Further, the assessee has not put forward any reasonable cause beyond its control which prevented it in filing Form-10IC within prescribed due date. Therefore, the application seeking condonation was rejected. He accordingly supported the order and the findings of the ld CIT(A) and submitted that no interference is called for and the appeal of the assessee deserve to be dismissed.
7. We have heard the rival contentions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in a recent decision in the case of Getinge Medical India (P.) Ltd. v. Dy. CIT [2026] 184 taxmann.com 340 (Mumbai – Trib.)/ITA No. 4872/Mum/2024, dt. 13-03-2026) has extensively discussed the matter relating to delayed filing of Form-10IC and the impact thereof on the assessee substantive entitlement u/s. 115BAA of the Act and we can gainfully refer to the findings therein, which reads as under:
“6. The issue arising for our consideration is whether the assessee is entitled to be taxed at the concessional rate under section 115BAA of the Act. The assessee contends that it had duly exercised the option for the said regime in its return of income and had computed its tax liability accordingly, and that the subsequent filing of Form 10-IC with a short delay is only a procedural requirement which cannot defeat the substantive claim. It is further submitted that the Assessing Officer erred in applying the normal rate of tax while framing the assessment, and that the Tribunal is competent to adjudicate the correct rate of tax in the present appeal. The Revenue, on the other hand, contends that the benefit of section 115BAA is not available in the absence of timely filing of Form 10-IC, that any delay can be condoned only under section 119(2)(b) by the competent authority, and that since the issue originated from the intimation under section 143(1) and an appeal is pending before the Ld. CIT(A), the same cannot be examined in the present proceedings. The dispute thus centres on the nature of Form 10-IC, the scope of appellate jurisdiction to determine the correct rate of tax, and the effect of the alleged procedural delay on the assessee’s substantive entitlement under section 115BAA. Before we address the issues raised by both sides it is relevant to reproduce section 115BAA:
“115BAA. Tax on income of certain domestic companies.
(1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BA and section 115BAB, 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., if the conditions contained in sub- section (2) are satisfied:
Provided that where the person fails to satisfy the conditions contained in sub- section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and subsequent assessment years and other provisions of the Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years.
(2) For the purposes of sub-section (1), the total income of the company shall be computed, –
| (i) | without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or subclause (iii) of subsection (1) or sub-section (2AA) or subsection (2AB) of section 35 or section 35AD or section 35CCC or section 35CCD or under any provisions of Chapter VI- A under the heading “C”. Deductions in respect of certain incomes” other than the provisions of section 80JJAA; |
| (ii) | without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); |
| (iii) | without set off of any loss or allowance for unabsorbed depreciation deemed so under section 72A, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); and |
| (iv) | by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of subsection (1) of the said section, determined in such manner as may be prescribed. |
(3) The loss and depreciation referred to in clause (ii) and clause (iii) of subsection (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year:
Provided that where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2020, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2019 in the prescribed manner, if the option under sub-section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020.
(4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions contained in subsection (2) shall be modified to the extent that the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in the said section. Explanation. – For the purposes of this subsection, the term “Unit” shall have the same meaning as assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005.
(5) Nothing contained in this section shall apply unless the option is exercised by the person in the prescribed manner on or before the due date specified under subsection (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2020 and such option once exercised shall apply to subsequent assessment years:
Provided that in case of a person, where the option exercised by it under section 115BAB has been rendered invalid due to violation of conditions contained in sub- clause (ii) or sub-clause (iii) of clause (a), or clause (b) of sub-section (2) of said section, such person may exercise option under this section:
Provided further that once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year.”
6.1.1. Sub-section (5) of section 115BAA prescribes the time and manner for exercising the option to be taxed at the concessional rate. It requires that the option be exercised on or before the due date under section 139(1) and in the prescribed form, namely Form 10 IC. The provision thus contains two components — the substantive act of opting for the new regime and the procedural requirement of furnishing the form as the mode of intimation. Where the assessee has clearly exercised the option in the return of income itself and computed its tax liability accordingly, the substantive requirement stands fulfilled, and the subsequent filing of Form 10 IC assumes the character of a procedural compliance. The section does not stipulate that the option would be invalid merely for delay in filing the form, nor does it contain any express bar on the appellate authorities from examining the correctness of the claim. In circumstances where the assessee has adhered to all the conditions of section 115BAA, has not claimed any ineligible deductions, and no prejudice is caused to the Revenue, the requirement of filing Form 10 IC within the prescribed time is to be regarded as directory. This position is also consistent with the later administrative recognition that such delays may occur for bona fide reasons and are capable of condonation, thereby indicating that the time prescription is procedural and curable rather than a rigid substantive condition.
6.2. It is also relevant to consider the circular no.6/2022 dated 17/03/2022 that reads as under:
“Circular No.6/2022
F.No.173/32/2022-IT A-1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, the 17th March, 2022
Sub: Condonation of delay under section 119(2)(b) of the Income Tax Act, 1961 in filing of Form 10-IC for assessment year 2020-21 – Reg
Section 115BAA of the Income Tax Act, 1961 (the Act) 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 subsection (2) of the section.
1.2 As per sub-section (5) of section 115BAA of the act read with Rule 21AF of the Income Tax Rules, 1962 (the Rules), the assessee company is required to submit Form 10-IC electronically on or before the due date of filing of return of income u/s 139(1) of the Act and such option once exercised shall apply to subsequent assessment years.
1.3 Failure to furnish such option in the prescribed form on or before the due date specified u/s 139(1) of the Act results in denial of concessional rate of tax of twenty rate of tax of twenty-two per cent to such person.
2. Representations have been received by the Board stating that Form 10-IC could not be filed along with the return of income for AY 2020-21, which was the first year of filing of this form. It has been requested that the delay in filing of Form 10-IC may be condoned.
3. On consideration of the matter, with a view to avoid genuine hardship to the domestic companies in exercising the option u/s 115BAA of the Act, the Central Board of Direct Taxes, in exercise of the powers conferred under section 119(2)(b) of the Act, hereby directs that:-
The delay in filing of Form 10-IC as per Rule 21AE of the Rules for the previous year relevant to AY 2020-21 is condoned in cases where the following conditions are satisfied:
| (i) | The return of income for AY 2020-21 has been filed on or before the due date specified under section 139(1) of the Act. |
| (ii) | The assessee company has opted for taxation u/s 115BAA of the Act in (e) of “Filing Status” in “Part A-GEN” of the Form of Return of Income ITR-6 and |
| (iii) | Form 10-IC is filed electronically on or before 30.06.2022 or 3 months from the end of the month in which this Circular is issued, whichever is later. |
Sd/-
Sourabh Jain)
Under Secretary (ITA-1)”
6.2.1. Circular No.6/2022 (supra) lends further support to the view that the requirement of filing Form 10-IC within the due date is procedural in nature. The Circular was issued precisely to address cases where assessees had exercised the option for taxation under section 115BAA in the return of income but had failed to file Form 10-IC within the prescribed time. Recognising the genuine hardship caused due to technical and procedural difficulties, particularly in the initial years of implementation of the provision, the Board permitted such assessees to file Form 10-IC within an extended timeframe, subject to the condition that the option had been exercised in the return and the assessee had complied with all other substantive requirements of section 115BAA. The Circular thus makes a clear distinction between failure to exercise the option and delay in furnishing the prescribed form, and treats the latter as a curable procedural defect. This administrative clarification reinforces the interpretation that where the assessee has already opted for the concessional regime in the return of income and computed tax accordingly, a belated filing of Form 10-IC cannot be a ground to deny the statutory benefit.
6.2.2. Clause 3 of CBDT Circular No. 6/2022 dated 17.03.2022 specifically deals with the situation where an assessee has exercised the option for section 115BAA in the return of income but has failed to file Form 10-IC within the prescribed time. The Circular provides that in such cases, the delay in filing Form 10- IC shall be condoned and the assessee shall be allowed to file the form within the extended time, provided that the following conditions are satisfied:
| 1. | the assessee has exercised the option under section 115BAA in the return of income filed within the due date specified under section 139(1); |
| 2. | the assessee has not claimed any deduction or exemption which is inconsistent with the provisions of section 115BAA; and |
| 3. | the assessee has computed its income and tax liability in accordance with the concessional regime. |
6.2.3. The emphasis of Clause 3 is therefore on the substantive exercise of the option in the return, treating the filing of Form 10- IC as a procedural requirement capable of relaxation. The Circular does not contemplate any relaxation where the option itself was not exercised in the return, thereby drawing a clear distinction between a substantive defect and a procedural lapse.
6.2.4. Thus, Clause 3 supports the proposition that once the option is duly exercised in the return and the assessee has complied with all the conditions of section 115BAA, a delay in filing Form 10-IC does not invalidate the claim and is liable to be condoned. This administrative clarification reinforces the view that the requirement of filing Form 10-IC within the prescribed time is directory in nature and cannot be used to deny a substantive statutory benefit.
6.3. This Tribunal is therefore unable to concur with the contention of the Ld. DR that the delay in filing Form 10-IC is fatal to the assessee’s claim for the concessional rate of tax. The requirement of filing the prescribed form within the due date is thus procedural in nature and is intended to regulate the manner of exercising the option, and not to defeat a substantive right where the assessee has otherwise fulfilled all the conditions laid down under the Act. The material on record in the present facts clearly demonstrates that the assessee had, exercised the option within the prescribed time in its return of income and has consistently been assessed on that basis in subsequent years, and the delay in uploading the form is only a technical lapse without any revenue loss. The Ld. DR has not brought any provision which mandates automatic denial of the benefit in such circumstances, nor has any prejudice to the Revenue been demonstrated. In these facts, and following the settled principle that procedural requirements should not override substantive entitlement, thisTribunal finds no merit in the stand of the Ld. DR and holds that the benefit cannot be denied merely on account of delay in filing Form 10-IC.
6.4. The Ld. DR objected to the adjudication of the present ground on the premise that the assessee has already preferred an appeal before the Ld. CIT(A) against the intimation issued under section 143(1), wherein the issue of denial of concessional rate under section 115BAA is stated to be pending. It is contended that the assessee cannot agitate the same issue simultaneously before two fora.The said objection, in our considered view, is not sustainable.
6.4.1. At the outset, the present appeal arises from the assessment framed under section 143(3). Once a regular assessment has been completed and tax liability has been determined therein, the computation of tax including the rate applied forms an integral part of the assessment order. The assessee is therefore entitled to challenge the correctness of the rate of tax adopted in the assessment order under appeal. The fact that a similar issue arose earlier at the stage of intimation under section 143(1) does not denude this Tribunal of jurisdiction to examine the legality of the final tax computation in the assessment order presently before it.
6.4.2. It is trite law that appellate jurisdiction is co-terminus with the subject matter of the order appealed against. The question of applicability of section 115BAA directly impacts the ultimate tax liability determined in the assessment under section 143(3). Hence, it squarely arises from the impugned order. The mere pendency of an appeal against the intimation does not operate as a statutory bar against adjudication in the present proceedings.
6.4.3. Further, the principle against parallel proceedings is intended to prevent conflicting decisions in respect of identical proceedings between the same parties. In the present case, the subject matter of the appeal before the Ld.CIT(A) is the intimation under section 143(1), whereas the present appeal concerns the assessment order passed under section 143(3). These are distinct proceedings governed by separate statutory provisions. There is no prohibition in the Act preventing an assessee from pursuing statutory remedies available against separate orders.
6.4.4. In any event, the Tribunal’s determination of the correct rate of tax applicable in the assessment order will effectively settle the issue for the year, rendering the parallel proceedings academic. The existence of another pending appeal cannot restrict thisTribunal’s duty to adjudicate grounds validly raised before it, particularly where the issue goes to the root of computation of tax.
6.4.5. Accordingly, the objection raised by the Ld. DR on the ground of alleged parallel proceedings is without merit and does not preclude this Tribunal from examining the assessee’s entitlement to the concessional rate under section 115BAA in the present appeal.
6.5. Next objection of the Ld. DR is that any delay in filing Form 10-IC can be condoned only by the CBDT or the jurisdictional authority under section 119(2)(b) of the Act and, in the absence of such condonation, this Tribunal cannot grant the benefit of section 115BAA. The said objection proceeds on a misconceived understanding of both the controversy involved and the scope of section 119(2)(b).
6.5.1. At the outset, the assessee is not seeking condonation of delay under any circular issued under section 119(2)(b), nor is any relaxation of a statutory time limit being prayed for. The case of the assessee is that the option under section 115BAA stood validly exercised in the return of income itself and the tax liability was computed accordingly. The filing of Form 10-IC is merely the prescribed procedural mode for intimating such option. Once the option is unequivocally exercised in the return, the substantive requirement of the provision stands fulfilled. The dispute, therefore, is not one of condonation of delay, but of recognition of a validly exercised statutory option on admitted facts.
6.5.2. Section 119(2)(b) is an enabling provision which empowers the Board to mitigate hardship in cases where a claim could not be made within the prescribed time. It does not operate as a fetter on the appellate jurisdiction of this Tribunal under section 254 to determine the correct tax liability in accordance with law. Where the material necessary for adjudication is already on record and the issue is purely legal, this Tribunal is fully competent to examine whether the assessee satisfies the conditions of section 115BAA and to grant the consequential relief. Such adjudication does not amount to usurping the power of condonation vested in the Board.
6.5.3. It is also relevant to note that, through various circulars extending the due date under section 139(1), the Board itself recognised the practical and systemic difficulties faced by taxpayers during the COVID-19 period. These administrative relaxations clearly reflect the legislative and executive intent that procedural lapses, particularly those not involving any dispute as to eligibility or any element of misuse, should not result in forfeiture of a substantive statutory benefit.
6.5.4. It is a settled principle that procedural prescriptions are intended to advance the cause of justice and not to defeat substantive rights, especially where there is no prejudice to the Revenue and the intention of the assessee is manifest from the return of income. The maxim that “procedure is the handmaid of justice” squarely applies. The requirement of filing Form 10-IC within time is a procedural mechanism to evidence the exercise of option and cannot be elevated to the status of a mandatory substantive condition so as to deny the benefit of section 115BAA where all other conditions stand satisfied.
6.5.5. This position stands further fortified by Circular No. 17/2024 dated 18.11.2024 issued by the Board, whereby the power to condone delay in filing Form 10-IC has been delegated to the Pr. CIT. The very issuance of such a circular demonstrates that the time limit for filing the form is treated as directory and procedural, and that the legislative intent is to ensure that bona fide and technical delays do not defeat a substantive benefit.
6.5.6. Accordingly, the objection that relief can be granted only upon condonation under section 119(2)(b) is misplaced. The issue before this Tribunal is not one of condonation, but of correct application of section 115BAA on admitted facts. The reliance placed by the Revenue on section 119(2)(b) therefore does not advance its case.
6.6. The reliance placed by the Ld. DR on the decision of the Hon’ble Bombay High Court in Little Angels Educational Society v. Union of India(supra) is misplaced. The said judgment was rendered in the context of condonation of delay in filing Form 10B beyond the period prescribed in the CBDT circular issued under section 119(2)(b), where the authority was held to have no power to condone delay exceeding the outer limit of 365 days.
6.6.1. The present facts does not involve any application for condonation under CBDT circular, nor does it concern eligibility to exemption dependent upon filing of an audit report. The assessee exercised the option under section 115BAA in the return of income and the filing of Form 10-IC is only a procedural intimation. The ratio of Little Angels Educational Society v. Union of India(supra), deals with the limits of delegated condonation power in respect of Form 10B, and has no application to a case where substantive compliance stands established and the issue relates only to a procedural delay in filing Form 10-IC.
6.6.2. Thus reliance placed by the Ld. DR on above decision by Hon’ble Bombay High Courtin case of Little Angels Educational Society vs.UOI (supra), concerning condonation of delay in filing Form 10B is distinguishable. In such cases, the filing of the audit report is a foundational condition for claiming exemption, and the authority’s power to condone delay was expressly circumscribed by a circular prescribing an outer time limit. In the present case, however, there is no statutory embargo providing that delayed filing of Form 10-IC, automatically invalidates an option already exercised in the return. The assessee’s eligibility to opt for section 115BAA is not in dispute; only the timing of filing the prescribed form is in question. Thus, the controversy in the present facts does not involve enlargement of delegated condonation power, but interpretation of the substantive provision.
6.7. The reliance placed by the Ld. DR on the decision of this Tribunal in MSC Agency (India) Pvt. Ltd (supra). is, in our considered view, misplaced and is factually distinguishable. In the said decision, thisTribunal examined the limited question whether, an addition made in an intimation issued under section 143(1), which was neither scrutinized nor adjudicated upon in the subsequent assessment framed under section 143(3), could be challenged in an appeal against the assessment order. This Tribunal held that in the absence of examination of that specific issue in the scrutiny assessment, there is no automatic merger of the intimation with the assessment order.
6.7.1. However, the present case stands on a materially different footing. The ground raised herein does not seek to independently challenge an adjustment made under section 143(1). Rather, the grievance pertains to the rate of tax applied while computing the final tax liability in the assessment order itself. Once an assessment under section 143(3) is framed and tax is computed therein, the rate adopted forms an integral part of the assessment order and is therefore subject to appellate scrutiny.
6.7.2. The doctrine of merger, as understood in law, is issuespecific and applies only to matters actually considered and decided in the subsequent proceedings. It cannot be invoked to preclude adjudication of a pure question of law relating to the correct computation of tax, especially when such issue arises from the assessment order under appeal. A procedural principle cannot operate to defeat a substantive statutory claim.
6.7.3. Further, the issue involved in the present case relates to the applicability of section 115BAA and the entitlement to a concessional rate of tax, which directly impacts the ultimate tax liability determined in the assessment. This is not comparable to a discrete addition confined to the intimation stage. Therefore, the factual matrix in MSC Agency (India) Pvt. Ltd. (supra) is clearly distinguishable and does not govern the present controversy. Accordingly, the reliance placed by the Ld. DR on the said decision does not advance revenue’s case.
6.8. It is by now well settled that where the option for a concessional regime is clearly exercised in the return of income and the tax has been computed in accordance therewith, the mere delay in filing the prescribed form does not invalidate the exercise of such option. The form is only a procedural mode of intimation and cannot override the substantive act of exercising the option in the return. Hon’ble Bombay High Courts in case of Gem Nuts & Produce Exports Co. (P.) Ltd.(supra) and Sarla Holdings (P.) Ltd.(supra) have recognised that a procedural requirement relating to filing of a form cannot defeat a substantive statutory benefit where the intention to opt for the concessional regime is manifest from the return and all eligibility conditions are fulfilled.
6.9. It is equally settled that the appellate powers of this Tribunal under section 254 are wide and are intended to determine the correct tax liability in accordance with law. Where all the relevant facts are on record and the issue is purely legal, this Tribunal is competent to grant a statutory benefit even if the claim was not made in the prescribed manner, provided the assessee is otherwise eligible. This principle has been consistently recognised in several decisions following the ratio of the Hon’ble Supreme Court that the purpose of assessment proceedings is to compute the correct income and tax liability in accordance with law and not to deny relief on technical grounds.
6.10. Further, in the present case, there is no prejudice whatsoever caused to the Revenue. The option under section 115BAA results in a lower tax rate but simultaneously entails the forfeiture of specified deductions and incentives. Once the assessee has computed its income in accordance with the provisions of section 115BAA and has not claimed any ineligible deductions, the tax liability stands crystallised strictly in terms of the statutory scheme. There is therefore neither any loss of revenue beyond what the statute itself permits nor any possibility of misuse. The doctrine that procedural lapses which cause no prejudice to the Revenue should not defeat substantive rights squarely applies to the present facts of the case.
6.10.1. In these circumstances, the delay in filing Form 10-IC being purely procedural, the option having been exercised in the return of income, and there being no prejudice to the Revenue, the assessee cannot be denied the benefit of section 115BAA.
6.10.2. It is also relevant to note that the return of income itself was filed on 31.03.2021, which was beyond the due date of 15.02.2021 as extended by the CBDT vide notification dated 31.12.2020. However, this period is squarely covered by the orders of the Hon’ble Supreme Court in “Cognizance for Extension of Limitation, whereby all statutory timelines stood extended up to 30.06.2021 owing to the COVID-19 pandemic. Therefore, both the filing of the return of income and the subsequent filing of Form 10-IC on 01.04.2021 fall within the extended period recognised by the Hon’ble Supreme Court. In such circumstances, the delay cannot be viewed in isolation or treated as non-compliance with the statutory requirement, and the same stands sufficiently explained and liable to be condoned.
6.11. In view of the foregoing discussion, this Tribunal holds that, the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of option under section 115BAA, which was clearly made in the return of income and acted upon by the assessee while computing its total income. Having regard to the fact that all the conditions prescribed under section 115BAA stand duly complied with and there being no prejudice caused to the Revenue, the delay in filing Form 10-IC is condoned. The Ld.AO is accordingly directed to accept the assessee’s option under section 115BAA and recompute the tax liability at the concessional rate in accordance with law.
8. The Co-ordinate Bench has held that where the assessee has exercised the option in the return of income and computed its tax liability accordingly, the substantive requirement as mandated in section 115BAA stands fulfilled and subsequent filing of Form 10IC within the prescribed time is to be regarded as directory in nature. We find that Form 10-IC doesn’t contain any additional information/disclosure more than what has been stated by the assessee in the return of income, it thus merely supplements the exercise of option in the return of income. The Bench has referred to CBDT Circulars to emphasize the fact that even CBDT has recognized that delays can happen for bonafide reasons and are capable of condonation thereby indicating that the timelines so prescribed are procedural and curable rather than rigid substantive conditions for the purposes of availing the benefits of the provisions of section 115BAA. The Bench also dealt with the powers of the CBDT u/s 119(2)(b) on the administrative side to condone delays and mitigate hardships to the assessee vis-a-vis appellate jurisdiction of the Tribunal to determine the correct tax liability in the hands of the assessee in accordance with law. We agree with the view so expressed by the Coordinate Bench. In the instant case, admittedly, the assessee has exercise the option u/s 115BAA in the return of income filed on 06-12-2020 well before the extended due date of filing of the return of income. Form 10-IC admittedly was not filed earlier but was filed subsequently during the appellate proceedings and is thus available on record. It has been submitted before us that the assessee satisfy all the requisite conditions for claiming lower tax rate and in fact, no dispute has been raised by either CPC or by the Ld.CIT(A). Therefore, we set aside the impugned order and remand the matter to the file of the AO with a direction to take into consideration Form-10IC, so filed by the assessee and after due verification, allow the assessee the concessional tax rate as prescribed u/s. 115BAA of the Act.
9. In the result, the appeal filed by the assessee is allowed.