Ever had a 7-figure tax benefit denied because of a 3-day portal glitch or a simple human oversight?
The Mumbai ITAT just sent a loud message: “Substantive rights cannot be sacrificed at the altar of procedural technicalities.”
Under Section 115BAA, domestic companies can opt for a lower tax rate of 22%. The catch? You must file Form 10-IC by the ITR due date.
For many, this became a “Tax Trap.” A small delay in uploading the form (even if the ITR was on time) led to the CPC rejecting the lower rate and slapping a 30% tax rate plus interest.
In a series of landmark orders, the ITAT Mumbai Bench ruled:
- Filing Form 10-IC is a “directory” (optional/procedural) requirement to operationalize a right, not a “mandatory” condition to create the right.
- If an assessee tried to file but couldn’t due to technical errors (proven by screenshots), they shouldn’t be penalized.
- Even where the form was missed due to inadvertent error, if the intention was clear in the ITR, the benefit must be allowed.
The difference between the old 30% and new 22% regime is massive. For a company with ₹10 Cr profit, this “technical glitch” costs ₹80 Lakhs in extra tax.
Add Section 234A/B/C interest, and the “cost of a late click” becomes a financial nightmare.
If your 154 Rectification is rejected by the CPC for a delayed Form 10-IC, you have strong judicial ground to appeal and always document portal errors. The ITAT specifically noted screenshots of “Assignment to CA” as proof of intent.
CBDT Circular 17/2024: The Board has also delegated powers to Commissioners to condone delays of up to 365 days for AY 2020-21 to 2022-23.
