A recent Mumbai ITAT ruling has delivered welcome relief to companies that missed filing Form 10 IC while opting for the concessional corporate tax regime under section 115BAA but had otherwise clearly chosen the regime in their return of income.
Form 10 IC Delay
Staubli Tec Systems India Pvt Ltd filed its return for AY 2020-21 on 11.02.2021, computing tax under section 115BAA and disclosing income of about Rs. 8.70 crore. However, Form 10 IC—mandated for exercising the 115BAA option—was not filed along with the return, apparently due to oversight. While processing the return, CPC denied the concessional rate and taxed the company at normal rates, and the rectification application under section 154 was also rejected, with the CIT(A) upholding CPC’s stand.
Arguments before the Tribunal
Before the ITAT, the assessee contended that:
- The return itself was filed under section 115BAA, clearly evidencing the option.
- Non-filing of Form 10 IC was a procedural lapse, not a substantive default.
- Various judicial precedents have treated such forms as directory and delays as condonable, especially where no mala fide intention exists.
The assessee relied on Gujarat High Court and Tribunal rulings, including PCIT v. KGY Glass Industries (P) Ltd and other ITAT decisions where delayed filing of Form 10-IC or similar statutory forms did not deprive taxpayers of substantive benefits. The Revenue, on the other hand, argued that only Central Board of Direct Taxes (CBDT) can condone delay in Form 10-IC, that timelines are mandatory, and cited the Mumbai ITAT ruling in Bholanath Precision Engineering (P) Ltd where relief was denied.
ITAT’s key findings
The Tribunal noted that:
- The assessee had opted for section 115BAA in the original return; only Form 10-IC was missing at that stage.
- Appeal is a continuation of the original proceedings, and Form 10-IC had been filed for the first time before the ITAT.
- Gujarat High Court in KGY Glass Industries held that where Form 10-IC could not be uploaded due to technical error and the assessee was otherwise eligible, benefit under section 115BAA cannot be denied.
The ITAT also referred to a line of decisions where delayed filing of audit reports/Form 10B, if available before the Assessing Officer when the return was processed or during appellate proceedings, did not disentitle the assessee from the exemption. The Bench distinguished Bholanath Precision Engineering by noting that in that case Form 10-IC had not been filed even before the Tribunal, unlike in Staubli Tec Systems where the form was produced at the appellate stage.
Direction and practical impact
Relying on the Gujarat High Court judgment and the broader principle that procedural lapses should not defeat substantive rights, the Mumbai Bench of Income Tax Appellate Tribunal directed the jurisdictional Assessing Officer to allow the benefit of section 115BAA, subject to verification that all other conditions under the section are fulfilled. As a result, Staubli Tec Systems’ appeal was allowed, restoring the concessional tax rate despite the earlier technical non-compliance with Form 10-IC filing.
Why this ruling matters for corporates
For corporates that:
- Clearly opted for section 115BAA in the return,
- Are otherwise fully eligible for the regime, and
- Missed or delayed filing Form 10-IC,
this ruling strengthens the argument that such omission is curable at the appellate stage and should not, by itself, lead to denial of the concessional rate. It also illustrates a growing judicial trend—backed by High Court authority—that distinguishes between substantive eligibility conditions and procedural compliances, giving taxpayers a valuable line of defence in Form 10-IC related disputes.
