Hyderabad Tribunal grants 22% tax rate benefit despite belated filing of Form 10-IC

In case of Sandor Medicaids Pvt. Ltd. ^[1] (Taxpayer), the issue before the Hyderabad Tribunal was whether the taxpayer having filed a belated form 10-IC for tax year 2020-21 can continue to avail the benefit of concessional tax rate (CTR) under Section (s.) 115BAA of the Income Tax Act (ITA) for subsequent tax year 2021-22.

The Taxpayer filed its return of income (ROI) on 1 November 2022 for tax year 2021-22 opting for CTR benefit and also filed Form 10-IC on 29 March 2022 declaring that it will exercise option for CTR benefit for tax year 2020-21 and subsequent tax years. The Tax Authority processed the ROI as per normal provisions instead of giving effect to S.115BAA although Form 10-IC was already filed by the Taxpayer within the due date directed by the Supreme Court (SC) (30 May 2022) ^[2] but beyond the due date of filing the ROI (31 October 2021). The first appellate authority granted part relief on the ground that the Taxpayer has filed Form 10-IC on 29 March 2022 which is within the due date directed by the SC for tax year 2020-21 and, hence, the Taxpayer is entitled to CTR benefits. 

On tax authority’s appeal before the Tribunal, it held that Form 10-IC filed for tax year 2020-21 will be treated as valid for subsequent tax year 2021-22 and subsequent tax years and, accordingly, the Taxpayer is entitled for CTR benefit for following reasons:

• It is evident from the provisions that once the Taxpayer exercises the option for a particular tax year, the Taxpayer cannot specifically withdraw it for the same or any other tax year. 
• The Central Board of Direct Taxes (CBDT) has also issued FAQs conveying that where the taxpayer has exercised the option of CTR then the said option is applicable to subsequent tax years as well and cannot be withdrawn.
• Objective of S.115BAA is to boost the industries and reduce unnecessary litigation and hence, it should not be denied on account of technical issues. 
• Option was duly exercised for tax year 2020-21 ^[3]  and ROI for tax year 2021-22 was filed opting for CTR on the basis of such option already exercised for tax year 2020-21. 
• It is fairly settled that when language used in statute is clear and simple, literal meaning is required to be given to the words used in statute during interpretation.
• For filing of Form 10-IC belatedly, Tax Authority can withhold/deny CTR benefit for tax 2020-21 but cannot raise the issue of belated filing for tax year 2021-22.
• Reliance was placed on SC ruling in case of Dilip Kumar^[4]  wherein it was held that any  ambiguity in the taxing statute has to be interpreted for the benefit of the taxpayer.

[1] TS-101-ITAT-2025(HYD)
[2] SC extended the limitation period for various judicial and quasi-judicial proceedings including those related to tax matters vide SC order dated 10 January 2022 passed in Miscellaneous Application No. 21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo-Moto Writ petition (C) No. 3 of 2020. As per SC’s order, the period from 15 March 2020 to 28 February 2022, was excluded from the calculation of limitation periods considering the COVID-19 pandemic. In cases where the limitation period would have expired between 15 March 2020 and 28 February 2022, a 90-day extension was granted from 1 March 2022.
[3] The ruling does not convey anything about the fate of CTR claim for tax year 2020-21 as to whether it was granted or denied.
[4] Civil Appeal No. 3327 of 2007