Gujarat High Court

M/S Shree Colosperse Private Limited ... vs Pr Commissioner Of Income Tax, Vadodara ... on 15 July, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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                            C/SCA/21800/2023                              JUDGMENT DATED: 15/07/2025

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                                    IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 21800 of 2023


                       FOR APPROVAL AND SIGNATURE:


                       HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                       and
                       HONOURABLE MR. JUSTICE PRANAV TRIVEDI

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                                    Approved for Reporting               Yes            No
                                                                                    ✔
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                            M/S SHREE COLOSPERSE PRIVATE LIMITED THRO MANSUKH H
                                                  VEKARIA
                                                   Versus
                              PR COMMISSIONER OF INCOME TAX, VADODARA 1 & ANR.
                       ==========================================================
                       Appearance:
                       KRUTARTH K DESAI(9662) for the Petitioner(s) No. 1
                       KARAN G SANGHANI(7945), SR. ATANDING COUNSEL for the
                       Respondent(s) No. 1,2
                       ==========================================================

                         CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                               and
                               HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                                                     Date : 15/07/2025

                                            ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. Heard learned advocate Mr. Krutarth Desai

for the petitioner and learned Senior Standing

Counsel Mr.Karan Sanghani for the respondents.

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2. Rule, returnable forthwith. Learned Senior

Standing Counsel Mr.Karan Sanghani waives

service of notice of rule for and on behalf of

the respondents.

3. By way of this petition, the petitioner

has challenged the order dated 12.7.2023

passed by the Principal Commissioner of Income

Tax, Vadodara-1 while exercising jurisdiciton

under Section 119(2)(b) of the Income Tax Act,

1961 (for short 'the Act') rejecting the

application dated 16.10.2022 filed by the

petitioner to condone the delay in filing

Form 10-IC along with the return of income by

considering Form 10-IC filed within due date

for Assessment Year 2020-2021.

4. Considering the controversy in narrow

compass, the matter is heard finally with the

consent of the learned Advocates of the

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parties.

5. The brief facts of the case are that the

petitioner is a Private Limited Company

incorporated under the provisions of Companies

Act, 1956 and filed its return of income under

the provisions of Section 139(1) on 4.11.2020

declaring total income of Rs.17,08,980/- for

the Assessment Year 2020-2021.

5.1. The petitioner exercised the option

under Section 115BAA of the Act while filing

the return of income to pay the reduced rate

of tax at 22% excluding the surcharge and

education cess.

5.2. It is the case of the petitioner that

the requirement of filing of Form 10-IC is on

or before filing due date of Return under

section 139(1) of the Income Tax Act 1961.

However, the Central Board of Direct Tax, vide

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its circular dated 06/2022 dated 17.03.2022

has condoned the delay in filing the Form 10-

IC till 30.06.2022 or from the end of month in

which the circular is issued. The conditions

stated in the circular are stated as under:

 The return of Income for the

Assessment Year 2020-21-has been filed on

or before the due date specified under

section 139(1) of the Act.

 The assessee company has opted for

taxation u/s 115BAA of the Act in (e) of

"Filing Status" in "Part-AGEN" of the Form

of Return of Income ITR-6 and

 Form 10-IC is filed electronically on

or before June 30, 2022 or 3 months from

the end of the month in which this

Circular is issued, whichever is later.

5.3 It is the case of the petitioner that

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the Chartered Accountant of the petitioner had

made compliance of all the requirements as

stated in Circular No. 6/2022 dated 17.3.2022.

The petitioner company has inadvertently

failed to electronically file Form 10-IC along

with the return of income under the provisions

of Section 139(1) of the Act. It was bonafide

belief of the Chartered Accountant being

statutory auditor of the petitioner Company

that he had already filed Form 10-IC. However,

after having realised the fact of its non-

filing, the Chartered Accountant had filed

filed Form 10-IC on 15.9.2022 i.e. after two

and half months of specified dated 30.6.2022.

5.4 It is also the case of the petitioner that

they realised the fact that benefit of

concessional rate of tax of 22% has not been

given due to non-filing of Form 10-IC.

Therefore, the petitioner made an application

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before the Office of respondents under the

provisions of Section 119(2)(b) of the Act.

However, the respondent rejected the

application under Section 119(2)(b) of the Act

on the ground that he was not empowered to

condone delay in view of the Circular No. 6/22

and therefore the same cannot be considered

and, therefore, the application was rejected.

This has led to filing of the present petition

under Article 226 of the Constitution of

India.

6. Learned advocate Mr. Krutarth Desai for

the petitioner submitted that the respondents

had adopted a pedantic, hypertechnical and

narrow approach while considering the

Application filed by the petitioner to treat

the Form 10IC filed for Assessment Year 2021-

2022 as if the same is filed for Assessment

Year 2021 so as to enable the petitioner to

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take the advantage of option of payment of

reduced rate of tax as opted by the petitioner

in the return of income. However, it was due

to mistaken belief and human error of

Chartered Accountant of the petitioner that

the Form 10IC was filed after two and half

months.

6.1. It was therefore submitted that

respondent No.1 ought to have considered the

Form 10IC and the application filed by the

petitioner for Year 2021-2022.

6.2. Learned advocate Mr. Krutarth Desai in

support of his submissions referred to and

relied upon the decision of this Court in case

of V.M.Procorn Private Limited Versus

Assistant Director of Income Tax and Another

in Special Civil Application No.9707 of 2024

rendered on 23rd August, 2024 wherein, in

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similar facts, when the assessee in the said

case could not opt for an option in the return

of income, was permitted to file Form 10IC so

as to take the benefit of reduced rate of tax

under Section 115BAA of the Act.

6.3. Learned advocate Mr. Krutarth Desai

further referred to and relied upon the

decision of this Court in case of Gujarat

Electric Company Limited versus Commissioner

of Income Tax reported in [2002] 255 ITR 396

(Guj) wherein, after taking into consideration

the decision of the Madras High Court in case

of R. Seshammal vesus Income Tax Officer and

Another reported in [1999] 237 ITR 185 held

that in view of the provisions of 119(2)(b) of

the Act, the phrase "genuine hardship" should

have been construed liberally.

6.4. It was therefore submitted that the

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respondent No.1 ought to have condoned the

delay in filing Form 10IC by considering the

Form filed for Assessment Year 2021-2022 as

that for Assessment Year 2021 so as to enable

the petitioner to take the benefit of reduced

rate of tax as per the provisions of Section

115BAA of the Act.

7. On the other hand, learned Senior Standing

Counsel Mr.Karan Sanghani for the respondent-

Authority submitted that admittedly the

petitioner has not filed any Form 10IC as

required under the provisions of Sub-section

(5) of Section 115BAA of the Act in the

prescribed manner and therefore, the

petitioner has failed to comply with the twin

conditions of filing Form 10IC along with the

return of income under Section 139(1) of the

Act for the Assessment Year 2021.

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7.1. In support of his submissions,

reliance was placed on the decision of the

Hon'ble Apex Court in case of Principal

Commissioner of Income Tax versus Wipro

Limited reported in [2022] 446 ITR Page 1

(SC) wherein, in the facts of the said case,

the Hon'ble Apex Court did not permit the

assessee to exercise the option as per

provisions of Section 10B(8) of the Act at the

time of filing of the revised return under

Section 139(5) of the Act. It was submitted

that the language of the Section 10B(8) of the

Act is pari materia to that of the Sub-section

(5) of Section 115BAA of the Act. It was

therefore submitted that the respondent No.1

has rightly rejected the Application filed by

the petitioner to consider the Form 10IC filed

for Assessment Year 2021-2022 as that of

Assessment Year 2021.

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7.2. It was further submitted that the

petitioner has also not provided any document/

evidence in support of the reason which has

been furnished by the petitioner which would

justify that the circumstances were beyond the

control of the petitioner and therefore, the

respondent No.1 has rightly relied upon the

Circular No.6 of 2022 issued by the CBDT to

hold that the petitioner has no case of

genuine hardship.

8. Considering the submissions made by the

learned Advocates for both the sides and on

perusal of the facts and material available on

record, it is revealed from the return of

income filed by the petitioner in Form ITR-6

that the petitioner had adopted the option for

taxation under Section 115BAA of the Act which

is further fortified from the intimation

issued under Section 143 of the Act,

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computation of income of the petitioner placed

on record wherein also, the petitioner has

computed the tax payable at the rate of 22%

instead of 30% as well as the intimation

issued by the CPC under Section 143(1) of the

Act accepting the return of income.

9. The relevant provisions of Section 115BAA

of the Act reads as under :

"115BAA(1): Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BA and section 115BAB, the income- tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall, at the option of such person, be computed at the rate of twenty-two per cent., if the conditions contained in sub-section (2) are satisfied:

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Provided that where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and subsequent assessment years and other provisions of the Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years.

115BAA(5) 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:

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Provided that in case of a person, where the option exercised by it under section 115BAB has been rendered invalid due to violation of conditions contained in sub-clause (ii) or sub- clause (iii) of clause (a), or clause

(b) of sub-section (2) of said section, such person may exercise option under this section:

Provided further that once the option has been exercised for any previous year, it cannot be subsequently withdrawn for the same or any other previous year."

10. As per the provisions of Sub-section (5)

of Section 115BAA of the Act, the option is

required to be exercised in prescribed manner

at the time of filing of return of income

under Section 139(1) of the Act. The

prescribed manner is provided in Rule 21AE of

the Rules for filing of Form 10IC to avail the

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benefit of provisions under Section 115BAA of

the Act.

11. Considering the confusion and technical

issues, the CBDT has issued the Circular No.6

of 2022 on 17.3.2022 permitting the assessees

to file Form 10IC for the Assessment Year 2021

meaning thereby, the filing of Form 10IC is

only to confirm that the petitioner has

exercised the option while filing the return

of income under Section 139(1) of the Act as

prescribed in Rule 21AE of the Rules which was

relaxed by the CBDT. The Circular No.6 of 2022

reads as under :

"Sub: Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form 10IC for Assessment Year 2020-21- Reg.

Section 115BAA of the Income-tax Act, 1961 (the Act) was inserted by the

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Taxation Laws (Amendment) Act, 2019 w.e.f. 01.04.2020. As per the Section, the income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment ycar beginning on or after the Ist day of April, 2020, shall, at the option of such person be computed at the rate of twenty-two per cent subject to satisfaction of conditions contained in sub-section (2) of the Section.

1.2 As per subsection (5) of section 115 BAA of the Act read with Rule 2lAE of the Income-tax Rules, 1962 (the Rules), the assessee company is required to submit l'orm 10- IC electronically on or before the due date of filing of return of income w/s 139(1) of the Act and such option once exercised shall apply to subsequent assessment years.

1.3 Failure to furnish such option in the prescribed form on or before the due

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date specified u/s 139(1) of the Act results in denial of concessional rate of tax of twenty-two per cent 10) such person.

2. Representations have been received by the Board stating that Form 10-IC could not be filed along with the return of income for AY 2020-21, which was the first rear of fling of this form. It has been requested that the delay in filing of form 1o- may he condoned.

3. On consideration of the matter, with a view to avoid genuine hardship to the domestic companies in exercising the option u/s 11SBAA of the Act, the Central Board of Direct Taxes, In excreise of the powers conferred under section 119(2)(b) of the Act, hereby directs that :-

The delay in filing of Form 10-IC as per Rule 21AE of the Rules for the previous year relevant to A. Y 2020-21

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is condoned in cases where the following conditions are satisfied:

(i) The return of income for AY 2020-21 has been filed on or before the due date o specified under section 139(1) of the Act;

(ii) The assessee company has opted for taxation u/s 1ISBAA of the Act in (e) of "Filing Status" in "Part A-GEN" of the Form of Return of Income ITR-6 and

(iii) Forn 10-1C is filed clectronically on or before 30.06.2022 or 3 months from the end of the month in which this Circular is issued, whichever is later."

12. On perusal of the above circular, it

appears that on receipt of the representation,

the CBDT has exercised the powers under

Section 119(2)(b) of the Act to avoid the

genuine hardships to the domestic companies in

exercise of the option under Section 115BAA of

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the Act on fulfilling the above three

conditions. The petitioner, however, could not

file the Form electronically on or before 30th

June, 2022 because of genuine mistake of

Chartered Accountant. The petitioner, however,

was entitled to file the Form as per the

aforesaid Circular but the petitioner has not

filed the Form 10IC for the Assessment Year

2021-2022. The petitioner therefore had no

option but to make an application under

Section 119(2)(b) to treat Form 10IC filed for

Assessment Year 2021-2022 as if the same is

filed for Assessment Year 2021 as per the

aforesaid Circular.

13. The contention raised on behalf of the

respondent that in view of the decision of the

Hon'ble Apex Court in case of Wipro Limited

(Supra), the petitioner is not entitled to

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file Form 10IC belatedly after the filing of

the return under Section 139(1) of the Act is

concerned, the said aspect is taken into

consideration by this Court in case of

Commissioner of Income Tax versus Gujarat

Energy Developement Agency by considering the

decison of the Wipro Limited (Supra) vis-a-vis

the filing of Form 10B to claim the exumption

under Sections 11 and 12 of the Act as under :

"5. Reliance placed by the learned advocate for the appellant on the decision of M/s.Wipro Limited (supra) would not be applicable in the facts of the case, as in the facts of the present case, the assessee has claimed the exemption under Section 11 read with Section 12A(1)(b) of the Act which required the assessee to file audit report in Form of 10B which has nothing to do with claiming 100% exemption of total income in respect of newly established 100% Export Oriented

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Undertakings under Section 10B. Section 10B(8) requires the assessee to file an undertaking before the due date of furnishing of return of income under sub-section (1) of Section 139 before the Assessing Officer in writing that the provision of Section 10B may not be made applicable to him, otherwise the provision of this Section shall not apply to him for any of the relevant assessment year.

6. Considering the language of the provision of Section 10B(8) of the Act, the Hon'ble Supreme Court held that it was mandatory on part of the assessee to file declaration before the due date of filing of return under sub-section (1) of Section 139 of the Act, whereas in the facts of the said case the assessee filed such undertaking along with the revised return under sub-

section (5) of Section 139 of the Act and in such facts the Hon'ble Supreme Court held that the twin conditions prescribed under Section 10B(8) of the

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Act was mandatory to be fulfilled and it cannot be said that though the declaration is mandatory, the filing of such declaration within the due date of filing of return under sub-section (1) of Section 139 would be directory.

7. Reference to the aforesaid decision has no connection whatsoever remotely to the facts of the present case and therefore, in the facts of the present case, the Tribunal has rightly followed the decision of this Court in case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) in Special Civil Application No.6097 of 2020 decided on 09th December, 2020 as well as the decision in case of Social Security Scheme of GICEA (supra) to uphold the decision of the CIT (Appeals), wherein this Court has held that the approach of the authority in such type of cases should be equitable, balancing and judicious and respondent No.2 might be justified in denying the exemption under Section 11 of the Act

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being a technical in nature by rejecting such application. But, in the facts of the case, when the assessee has already uploaded the audit report in Form 10B as required under Section 10(23)C read with Section 12A(1)(b) of the Act before the Assessing Officer prior to the original asessment order under Section 143(3) passed on 06th April, 2021."

14. Learned advocate Mr.Krutarth Desai for the

petitioner also invited the attention of the

Court to paragraph No.10 of the decision of

the Hon'ble Apex Court in case of Wipro

Limited (Supra) wherein, the Hon'ble Apex

Court has held as under :

"10. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B (8) of the IT Act and even without filing the revised return of income,

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the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the assessment proceedings would have made no difference also has no substance.

The significance of filing a declaration under section 10B (8) can be said to be co-terminus with filing of a return under section 139(1), as a check has been put in place by virtue of section 10B (5) to verify the correctness of claim of deduction at the time of filing the return. If an assessee claims an exemption under the Act by virtue of Section 10B, then the correctness of claim has already been verified under section 10B(5). Therefore, if the claim is withdrawn post the date of filing of return, the accountant's report under section 10B(5) would become falsified and would

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stand to be nullified."

15. On perusal of the above observation of the

Hon'ble Apex Court, it is also apparent that

the Hon'ble Apex Court has considered the

significance of filing declaration under

Section 10B(8) of the Act considering the

provisons of Section 10B(5) of the Act being a

check to verify the correctness of the claim

of deduction at the time of filing of return

so that if an assessee claims an exemption

under the Act by virtue of Section 10B of the

Act, then the correctness of the claim has

already been verified under Sub-section (5) of

Section 10B and therefore, if the claim is

withdrawn post the date of filing of return,

the report of the Accountant filed under

Section 10B(5) of the Act would become

falsified and would stand to be nullified.

However, the provisions of Section 115BAA of

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the Act are in a way granting relief to the

assessee-Companies to enable them to pay the

reduced rate of tax at rate of 22% on exercise

of the option on the various conditions

mentioned therein.

16. In such circumstances, the respondent No.1

was required to consider the facts of the case

by permitting the petitioner to file a fresh

Form 10IC and condoning the delay in filing

such Form by molding the prayer made by the

petitioner to treat the Form 10IC filed by the

petitioner for Assessment Year 2021-2022 to be

treated as that of for Assessment Year 2021.

The provisions of Section 119(2)(b) of the Act

are meant for redressal of the grievance and

hardships caused to the petitioner as held by

the Hon'ble Madras High Court in case of R.

Seshammal (Supra) as under :

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"This is hardly the manner in which the State is expected to deal with the citizens, who under anxiety to comly with all the requiremnts of the Act pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and thereafter seek refund of the monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the hypertechnical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner's request for refund."

17. Considering the above facts as well as the

settled legal position, the petition succeeds

and accordingly allowed. The petitioner is

permitted to obtain Form 10IC for Assessment

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Year 2021 in the facts of the case and after

obtaining such Form, the petitioner shall make

a fresh Application to condone the delay for

the same and the respondent No.1 is directed

to consider such Application in light of the