Form 10IC filing confirmation confirms tax rate eligibility under Section 115BAA

Chola Business Services Ltd. vs ITO (ITAT Chennai)

In the case of Chola Business Services Ltd. vs. Income Tax Officer (ITO)the Income Tax Appellate Tribunal (ITAT) Chennai ruled in favor of the taxpayer, Chola Business Services, in respect of the concessional tax rate under section 115BAA of the Income-tax Act, 1961, for the assessment year (AY) 2021-22 . The company had filed its income return with a total income of ₹55,49,770 and a refund claim of ₹4,25,390. However, the Centralized Processing Center (CPC), Bengaluru, has issued a direction under Section 143(1) of the Act, calculating the tax at 30%, instead of the concessional rate of 22% for which the taxpayer had chosen. The company had filed Form 10IC on 15.12.2020, in compliance with the requirements to avail the concessional rate.

Despite this, the CPC calculated the tax at the normal rate of 30%, and the Commissioner of Income Tax (Appeals) upheld this decision, stating that the company had not opted for the concessional tax rate. However, the ITAT noted that the CPC itself in the communication acknowledged the company’s choice of the concessional rate. The court noted that the submission of Form 10IC and its recognition by CPC confirmed that the company qualifies for the concessional tax rate under section 115BAA. Therefore, the ITAT quashed the CIT(A) order and directed the tax officer to calculate the tax at the concessional rate as initially demanded by the company. The appeal has therefore been declared well-founded.

COMPLETE TEXT OF THE ORDER OF ITAT CHENNAI

The said appeal filed by the Assessing Officer for assessment year (AY) 2021-22 arises out of the order of the Learned Commissioner of Income Tax, Appeal, Addl/JCIT(A)-2, Gurugram (hereinafter “CIT(A)”) dated 23.02 . .2024 vide indication u/s. 143(1) of the Income-tax Act, 1961 (hereinafter “the Act”), issued by CPC, Bengaluru, dated 20.10.2022.

2. The only effective ground in this appeal of the taxpayer is against the confirmation of the notification issued by the CPC, Bengaluru, wherein the CPC has disallowed the concessional rate of tax even though the taxpayer has opted for the concessional rate u/s. 115BAA of the Act and submitted the required form within time.

3. The assessee company was incorporated on 9.12.2004 and was engaged in supplying labor to various companies. The taxpayer has electronically filed his income return for AY 2021-22 on 02.03.2022 declaring a total income of Rs. 55,49,770/- and demands refund of Rs.4,25,390/-. The CPC, Bengaluru, has passed u/s. 143(1) of the Act has calculated the tax at 30% instead of 22% calculated by the taxpayer. The taxpayer has contended that he filed Form-10IC on 15.12.2020 opting for the concessional tax rate u/s. 115BAA of the Act. The CPC, Bengaluru, in the notice, has also stated that the taxpayer has opted for a concessional tax rate of 115BAA from the Act, despite the CPC calculating the tax at 30%. The Ld. CIT(A) while observing in para 5.2 that the assessee has filed Form-10IC on time and also filed return of income u/s. 139 of the Act has held that the taxpayer has not opted for tax u/s. 115BAA of the Act.

4. The Ld. The authorized representative (AR) of the taxpayer has contended that from the notice itself it is clear that the taxpayer has opted for concessional tax rate u/s 115BAA of the Act, which is mentioned in Sr. No. 1 of the notification.

5. The Ld. The Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities.

6. We have heard the competing submissions and reviewed the available material. The taxpayer filed Form-10IC on 15.12.2020 and opted for concessional tax rate u/s. 115BAA of the Act. In the notification u/s 143(1) for AY 2021-22, Sr. No. 1 also clearly states that the taxpayer has opted for the concessional tax rate u/s 115BAA of the Act. Therefore, the Ld. CIT(A) was not justified in holding that the taxpayer has not opted for a concessional tax rate of 115BAA. We have accordingly received the order of Ld. CIT(A) and direct AO to calculate tax at concessional rate as opted by the taxpayer.

7. Accordingly, the assessor’s appeal is allowed.

Decision pronounced on 25^e October 2024.