| Question And Answer | |
|---|---|
| Subject: | Delay in exercising option as prescribed under 115BAA(5) |
| Category: | Income-Tax |
| Querist: | Guruprasad |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Delay in exercising option, Delay in filing Form no 10-IC, error in the portal, section 115BAA |
| Date: | October 20, 2021 |
Dear Expert,
A private company filed its tax return for FY 2019-20 and availed the benefit of lower tax rate as prescribed under section 115BAA
However, filing of form 10-IC as prescribed under sub section 5 of section 115BAA was done much later due to inadvertence. Return was filed within statutory due date but form 10IC was filed in Feb 2021 (about 2m delay).
Sub section (5) states 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 sub-section (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
Form 10IC could not be filed at the point of filing tax return as there was some error in the portal. But there is no proof of error available for record. In this scenario, can we take a position that filing of the Form is just a technical formality? Also note that Covid-19 related disruptions were prevailing at this time. Do we strictly interpret the section or whether we can conclude that even though the form is filed with a little delay tax payer could assert his choice to apply lower rate of tax u/s 115BAA? Thank you for shedding light on this issue.
As we understand, the assessee could not file Form 10-IC on or before the due date. The said Form is a mandatory requirement for claiming the benefit of a lower rate of tax.
The Hon’ble Bombay High Court in the case of Sitaldas K. Motwani vs DGIT [2010] 323 ITR 223 (Bom) (HC) held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
Therefore, in the event an intimation is received under section 143(1) of the Act, denying the lower rate of tax, it is advisable to file an application before the Central Board of Direct-taxes (Board) under 119 of the Act.
In the event, the Board is non-responsive to subsequent reminders or passes an order rejecting the application; the assessee should file a Writ Petition before the Jurisdictional High Court.