Delay in filing Form 10-IC held procedural and benefit of concessional tax @ 25.168% for a Company allowed

 Recently, the Hon’ble Mumbai Income-tax Appellate Tribunal (‘ITAT’) in the case of Staubli Tec Systems India Private Limited (‘the Company’) has allowed the company the benefit of the concessional rate under section 115BAA of the Income-tax act, 1961 (‘the Act’) despite delay in filing Form 10IC. The Tribunal held that delay in filing Form 10IC is a procedural issue and does not affect the substantive right of the assessee to claim the tax benefit.

The Company filed its return of income for AY 2020-21 declaring income under the concessional tax regime of Section 115BAA. However, it failed to file Form 10-IC due to an oversight. The Centralized Processing Centre (CPC) processed the return without granting the benefit of the lower tax rate. The CIT(A) upheld the CPC’s action, leading the assessee to file an appeal before the Tribunal, contending that the delay in filing Form 10-IC was inadvertent and procedural, and therefore should not deny the substantive benefit under Section 115BAA. Form 10-IC was filed first time before the Tribunal.

The Tribunal held that the delay in filing Form 10-IC could not be a valid ground to deny the benefit of the concessional tax rate under Section 115BAA. It observed that filing Form 10-IC is a procedural requirement, and a delay therein does not affect the assessee’s substantive right to opt for the new tax regime. Relying on the Gujarat High Court’s ruling in PCIT v. KGY Glass Industries (P) Ltd., the Tribunal noted that procedural lapses cannot deprive an assessee of such benefit. It also clarified that appellate proceedings are a continuation of the original assessment and, therefore, Form 10-IC filed during these proceedings must be considered. The Tribunal accordingly directed the Assessing Officer to allow the benefit under Section 115BAA after verifying other prescribed conditions.

This judgment establishes that taxpayers cannot be denied the benefit of concessional tax rate under Section 115BAA solely because of a delay in filing Form 10IC, which is a procedural requirement. The Tribunal clarified that procedural delays should not take away the substantive right of an assessee to claim the tax benefits they are entitled to. This judgment provides relief to taxpayers who may have missed deadlines for certain formalities but have otherwise complied with the conditions to claim lower tax rates. It sets a precedent reinforcing that technical or procedural errors should not be a ground for denying tax benefits, promoting fairness and preventing undue hardship for taxpayers.
A Copy of the judgement is enclosed for your reference.