Whether revised return filed u/s. 139(5) of the Income Tax Act, 1961 not considered as return filed by the assessee under provisions of Section 139(1) of the IT Act, 1961

M/s. Ujjivan Small Finance Bank Limited Vs. The Assistant Director of Income-tax, CPC, Bengaluru. ITAT, Bangalore 

Sub:  Whether revised return filed u/s. 139(5) of the Income Tax Act, 1961 not considered as return filed by the assessee under provisions of Section 139(1) of the IT Act, 1961.

BRIEF FACTS

The assessee is a small finance bank. For the assessment year 2020-2021, the return of income was filed on 21.12.2022 declaring total income of Rs.481,18,55,840 (return of income was filed within the due date u/s 139(1) of the I.T.Act,1961, since CBDT had extended the due date to 15.02.2021 vide Notification No.93/2020 dated 31.12.2020). 

The assessee subsequently filed revised return on 30.03.2021 declaring total income of Rs.481,22,57,300. The assessee had opted for the new tax regime u/s 115BAA of the I.T. Act. This fact is mentioned in the relevant column in ITR-6 filed in the original as well as revised return of income. 

The assessee did not file Form No.10-IC electronically within the due date. However, it was claimed it has filed the same physically on 18.11.2021. 

Subsequent to the Board Circular No.06/2022 dated 17.03.2022, the assessee furnished Form No.10-IC electrically on 06.04.2022.

The return of income filed by the assessee was processed u/s 143(1)(a) of the I.T.Act and intimation dated 23.12.2021 was received by the assessee. 

In the said intimation, deduction of Rs.35,94,77,201 claimed by the assessee u/s 80JJAA of the I.T.Act was denied. 

Further, the assessee was taxed at the normal rate and the benefit u/s 115BAA of the I.T.Act was denied. Further, interest u/s 234A, 234B and 234C of the I.T.Act was also charged. In addition to the above, penalty u/s 234F of the I.T.Act for delay in filing the return of income was also imposed.

Aggrieved by the intimation dated 23.12.2021, the assessee filed appeal before the first appellate authority. The CIT(A) passed the impugned order on 02.06.2022. The CIT(A) allowed the appeal of the assessee in part. The CIT(A) allowed the ground relating to deduction claimed u/s 80JJAA of the I.T.Act. However, the CIT(A) denied the benefit u/s 115BAA of the I.T.Act by holding that the assessee did not fulfil the condition 3(i) of the Board Circular No.06/2022 dated 17.03.2022. 

The CIT(A) dismissed the ground relating to section 234A, 234B and 234C of the I.T.Act by holding that the same are consequential in nature. He allowed ground relating to the penalty u/s 234F of the I.T.Act.

Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned AR reiterated the submissions made before the first appellate authority.

The learned Departmental Representative, on the other hand, supported the order of the CIT(A). 

OBSERVATIONS & DECISION OF ITAT

We have heard rival submissions and perused the material on record. The tax rate as per section 115BAA of the I.T. Act is 22% instead of 30% tax rate under the normal provision. The CPC in the intimation u/s 143(1) of the I.T. Act, denied the benefit of section 115BAA of the I.T. Act for the reason that requisite Form 10-IC could not be uploaded in the ITD system within the statutory time limit. 

Admittedly, the Form 10-IC has been electronically filed on 06.04.2022. The assessee before the CIT(A), relied on the CBDT Circular No.06/2022 dated 17.03.2022 for condoning the delay in filing Form 10-IC electronically in respect of assessment year 2020-2021. The CIT(A), however, held that the conditions laid down as per para 3(i) of the said Circular is not met by the assessee. The relevant finding of the CIT(A) in this regard reads as follows:-

“The Appellant has also relied on CBDT Circular No.06/2022 dated 17/03/2022 condoning the delay in furnishing Form 10-IC electronically in reference to A.Y.2020-21. However, the conditions laid down at para 3(i) of the said circular is not met by the Appellant. As per para 3, three conditions are to be met simultaneously to be covered under the said circular. One of such condition at 3(i) refers to return being filed u/s 139(1) of the Act. The Appellant has filed revised return u/s 139(5) of the Act. Therefore, the benefits provided under the said circular cannot be availed by the Appellant.”

The CBDT vide its Circular No.06/2022 (supra) had extended the time limit for filing Form 10-IC electronically on or before 30.06.2022 or 3 months from the end of the month in which the Circular was issued, whichever is later. 

The conditions that has stipulated in the CBDT Circular No.06/2022, are as follows:- 

“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 is condoned in cases where the following conditions are satisfied: 
The return of income for AY 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 A-GEN” of the Form of Return of income ITR-6 and 
Form 10-IC is filed electronically on or before 30.06.2022 or 3 months from the end of the month in which this Circular is issued, whichever is later.”

The CIT(A) had denied the benefit of lower tax rate u/s 115BAA of the I.T. Act for the reason that the assessee has not filed the return of income on or before the due date specified u/s 139(1) of the I.T. Act. In this context, we notice that the assessee has filed the return within the due date specified u/s 139(1) of the I.T.  Act, i.e., on 31.12.2022. Copy of the acknowledgment for filing the return of income u/s 139(1) of the I.T. Act and the ITR-6 are enclosed at pages 108 and 109 of the appeal memo. The fact that the assessee has filed revised return subsequently cannot deny the fact that the assessee has not filed the return u/s 139(1) of the I.T. Act. 

DECISION

Since the CIT(A) has erred in holding that the assessee has not filed the return u/s 139(1) of the I.T. Act and denied the benefit u/s 115BAA of the I.T. Act, we reverse the decision of the CIT(A) on this point. Therefore, hold that the assessee is entitled to the benefit of section 115BAA of the I.T. Act. It is ordered accordingly.

DISCLAIMER: The article presented here is only for sharing information and knowledge with the readers. The views are personal. In case of necessity do consult with professionals. 

Footnotes

SECTION 115BAA 

Section 115BAA was introduced to offer a reduced tax rate for domestic companies. However, companies need to meet certain conditions to avail the benefits of Section 115BAA.

Major benefits under this section: 

a) Income is subject to tax at 22 % plus Surcharge  of 10 % and Cess of 4 %, thus ETR would be 25.17 % irrespective of amount of income.

b) Provisions of MAT not applicable, i.e. the entity will not be forced to pay tax under MAT if it opts for section 115BAA. Please note that MAT rate has been reduced from 18.5 % to 15 % with effect from FY 2019-20 itself.

Applicability

a) This section is applicable from the financial year 2019-20; 
b) It is applicable only to domestic companies (it is not applicable to foreign companies, firms, LLPs, individuals AOP etc).

How to avail benefits under this section

a) The benefit under this section is to be exercised prior to the due date for filing the return of income for the FY 2019-20; 
b) Such option is to be exercised before 30th  September or 30th  November for companies without international transactions/SDT or with such transactions as the case may be. 
c) Thus if a company fails to exercise this option prior to this date and files its return of income after these due dates but prior to the following 31st March (belated return) then the company will lose its right to opt in to this section.

Conditions of Section 115BAA

The new taxation scheme has slashed the corporate tax rate from 30% to 25.17% (22% tax rate + applicable cess and surcharge). However, here are a few income tax deductions and exemptions that aren’t allowed if you opt for Section 115BAA of the Income Tax Act applicability.

• Deductions mentioned under Section 10AA
• Provisions for additional depreciation under Section 32(1)(iia)
• Investment-linked deductions mentioned in Section 32AD
• Deductions under 33AB for rubber, tea, and coffee manufacturing companies
• Deduction under Section 35 for expenses incurred on scientific research, or an amount paid to a university, research association, National Laboratory, or IIT
• Claiming deductions for capital expenditure on businesses specified under Section 35AD
• Deductions towards expenses incurred on an agricultural extension project or skill development project under Section 35CCC and 35CCD respectively
• Deductions mentioned under Chapter VI-A, except Section 80JJAA, 80LA, and 80M.

Features of Section 115BAA

Let's understand the features of Section 115BAA of the Income Tax Act, 1961.

• Enables domestic companies to pay income tax at the rate of 22% plus the cess and surcharge;
• Companies can choose to steer clear of Minimum Alternate Tax (MAT);
• Domestic businesses that do not go for concessional tax and choose to avail exemptions must pay tax at the pre-amended rate;
• It is only an optional way of paying tax.

Eligibility Criteria for Section 115BAA

Here are a few prerequisites to avail the concessional taxation scheme under Section 115BAA.

• The company should have been commenced on or after October 1, 2019;
• The new organisation shouldn't be the result of a company splitting up;
• It shouldn't be established on a business that already exists;    
• The company shouldn’t utilise a building that was previously used as a hotel or convention centre for business operations.