ITAT Delhi Grants Relief To Welkin Industries, Holds Form 10-IC Delay Cannot Deny 115BAA Benefit

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 26 May held that a procedural delay in filing Form 10-IC cannot deny a taxpayer the benefit of the concessional 22% corporate tax regime under Section 115BAA of the Income Tax Act, 1961.

Accountant Member S. Rifaur Rahman and Judicial Member Sudhir Kumar allowed the appeal filed by Welkin Industries Private Limited against the order of the Commissioner of Income Tax (Appeals), Lucknow, for Assessment Year 2022-23, and directed the Assessing Officer to recompute its tax liability under Section 115BAA. The Bench held:

"The intention to opt the new regime was very much clear that the assessee calculated the tax u/s 115BAA of the Act. Form 10-IC was available with the CPC at the time of processing the return of income. The reason given for the delay was bonafide where the Form 10-IC was filed with a delay of 22 days is a procedural lapse".

Welkin Industries filed its income tax return on 20 December 2022 under Section 139(4) and opted for the concessional regime under Section 115BAA. It filed Form 10-IC on 29 November 2022, but the filing crossed the due date prescribed under Section 139(1), resulting in a delay of 22 days.

During processing under Section 143(1), the Centralised Processing Centre denied the concessional tax rate and applied the normal corporate tax rate, citing non-compliance with the statutory timeline for filing Form 10-IC. The CIT(A) upheld this view and noted that the taxpayer had not obtained condonation of delay.

Before the ITAT, Welkin Industries argued that it expressed its intention to opt for the concessional regime in the return of income and tax computation, and it characterised the delay as purely procedural. It also submitted that the income tax portal did not provide an effective mechanism to seek condonation of delay in filing Form 10-IC.

The Tribunal held that the taxpayer clearly expressed its intention to opt for Section 115BAA and computed tax accordingly. It further noted that the CPC had Form 10-IC available at the time of processing and that the form remained valid and effective. The Bench held:

“The Form 10-IC was available at the time of processing the return of income with the CPC. The Form 10-IC was neither withdraw or rejected or made invalid but the same was effective at the time of processing the ITR...”

The Bench held that no dispute existed regarding eligibility for the concessional regime and ruled that authorities cannot deny the benefit solely on procedural grounds. It observed:

“There is no dispute regarding the assessee's eligibility for the lower tax rebate, then the denial of the benefit based solely on the lapses would be against the principal of equity and justice....the assessee could not be deprived from the concessional rate of tax available in the statute merely for the procedural lapse…”

It also noted that CBDT circulars extending timelines for filing similar forms in earlier years reflected administrative recognition that procedural delays should not defeat substantive benefits.

Accordingly, the ITAT set aside the denial of the concessional tax regime and directed the Assessing Officer to recompute the tax liability under Section 115BAA and allowed the appeal filed by Welkin Industries Private Limited.

For Appellant: Shri S. C. Garg, CA

For Respondent: Shri Harpreet Kaur Hansra, Sr, DR