Can the Tribunal itself give me the s.115BAA rate where Form 10-IC was late, or must I go to the Commissioner under s.119(2)(b)?
The Mumbai Tribunal held that where the option was clearly exercised in the return itself and the tax computed accordingly, the substantive requirement of s.115BAA(5) is satisfied and the later filing of Form 10-IC is procedural, so the time limit for the Form is directory. It condoned a delay of about 45 days and directed the Assessing Officer to accept the option and recompute the tax at the concessional rate, without sending the assessee to the Commissioner.
Decided by the ITAT (Smt. Beena Pillai (Judicial Member) and Shri Girish Agrawal (Accountant Member)) on 2026-03-13, reported as I.T.A. No. 4872/Mum/2024 (ITAT Mumbai, 'K' Bench); Assessment Year 2020-21. It bears on section 115BAA, section 115BAA(5), section 139(1), section 119(2)(b), section 143(1) of the Income Tax Act 1961, in Assessment & Scrutiny and Appeals matters.
This is the appellate route, and it matters most where the three-year window in Circular No. 17/2024 has closed so that a s.119(2)(b) application is no longer available. The reasoning is confined and the confinement is the whole point: the Tribunal separated the substantive act of opting in the return from the procedural act of furnishing the Form, and gave relief only because the option was on the face of the return, no ineligible deduction had been claimed, every other condition of s.115BAA was met, and no prejudice was caused to the Revenue. It does not help an assessee who did not opt in the return at all — the order itself records that in such a case a belated Form 10-IC or a CBDT circular cannot cure the substantive defect, which is the line the Supreme Court took in Sarla Holdings. Expect the Revenue to argue, as it did here, that delay can be condoned only by the competent authority under s.119(2)(b) and not by an appellate authority.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For AY 2020-21 the assessee company was required by s.115BAA(5) to file Form 10-IC on or before the due date under s.139(1). A CBDT notification dated 31 December 2020 extended the due date for furnishing the return to 15 February 2021. The COVID-19 pandemic was active during the relevant period. The assessee filed its return of income on 31 March 2021 and Form 10-IC the following day, a delay of approximately 45 days. The option for the concessional regime had been exercised in the return itself and the tax liability computed accordingly. The Revenue's case was that the benefit of s.115BAA is not available in the absence of timely filing of Form 10-IC and that any delay can be condoned only under s.119(2)(b) by the competent authority. The dispute therefore centred on the nature of Form 10-IC, the scope of appellate jurisdiction to determine the correct rate of tax, and the effect of the delay on the substantive entitlement.
The appeal was partly allowed. On the s.115BAA ground the Tribunal held that the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of the option, condoned the delay, and directed the Assessing Officer to accept the option under s.115BAA and recompute the tax liability at the concessional rate in accordance with law. A separate ground on TDS credit was remitted to the Assessing Officer for verification against evidence.
Sub-section (5) of s.115BAA prescribes the time and manner for exercising the option and thus contains two components — the substantive act of opting for the new regime and the procedural requirement of furnishing the form as the mode of intimation. Where the assessee has clearly exercised the option in the return of income itself and computed its tax liability accordingly, the substantive requirement stands fulfilled and the subsequent filing of Form 10-IC assumes the character of procedural compliance. The section does not stipulate that the option would be invalid merely for delay in filing the form, nor does it contain any express bar on appellate authorities examining the correctness of the claim. Where the assessee has adhered to all the conditions of s.115BAA, has claimed no ineligible deductions and no prejudice is caused to the Revenue, the requirement of filing the Form within the prescribed time is to be regarded as directory. The Tribunal treated the later administrative recognition, in the CBDT circulars, that such delays occur for bona fide reasons and are capable of condonation as itself indicating that the time prescription is procedural and curable rather than a rigid substantive condition.
the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of option under section 115BAA, which was clearly made in the return of income and acted upon by the assessee while computing its total income.
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Handle my notice → Ask a CA on WhatsAppThe Mumbai Tribunal held that where the option was clearly exercised in the return itself and the tax computed accordingly, the substantive requirement of s.115BAA(5) is satisfied and the later filing of Form 10-IC is procedural, so the time limit for the Form is directory. It condoned a delay of about 45 days and directed the Assessing Officer to accept the option and recompute the tax at the concessional rate, without sending the assessee to the Commissioner. This was decided by the ITAT (Smt. Beena Pillai (Judicial Member) and Shri Girish Agrawal (Accountant Member)) and bears on section 115BAA, section 115BAA(5), section 139(1), section 119(2)(b), section 143(1) of the Income Tax Act 1961. It is reported as I.T.A. No. 4872/Mum/2024 (ITAT Mumbai, 'K' Bench); Assessment Year 2020-21. This is the appellate route, and it matters most where the three-year window in Circular No. 17/2024 has closed so that a s.119(2)(b) application is no longer available. The reasoning is confined and the confinement is the whole point: the Tribunal separated the substantive act of opting in the return from the procedural act of furnishing the Form, and gave relief only because the option was on the face of the return, no ineligible deduction had been claimed, every other condition of s.115BAA was met, and no prejudice was caused to the Revenue. It does not help an assessee who did not opt in the return at all — the order itself records that in such a case a belated Form 10-IC or a CBDT circular cannot cure the substantive defect, which is the line the Supreme Court took in Sarla Holdings. Expect the Revenue to argue, as it did here, that delay can be condoned only by the competent authority under s.119(2)(b) and not by an appellate authority. If it applies to you, the first step is this: Before running this argument, confirm from the ITR itself that the s.115BAA option was recorded in the return and that the tax was computed at 22 per cent; without that the argument is not available.
For AY 2020-21 the assessee company was required by s.115BAA(5) to file Form 10-IC on or before the due date under s.139(1). A CBDT notification dated 31 December 2020 extended the due date for furnishing the return to 15 February 2021. The COVID-19 pandemic was active during the relevant period. The assessee filed its return of income on 31 March 2021 and Form 10-IC the following day, a delay of approximately 45 days. The option for the concessional regime had been exercised in the return itself and the tax liability computed accordingly. The Revenue's case was that the benefit of s.115BAA is not available in the absence of timely filing of Form 10-IC and that any delay can be condoned only under s.119(2)(b) by the competent authority. The dispute therefore centred on the nature of Form 10-IC, the scope of appellate jurisdiction to determine the correct rate of tax, and the effect of the delay on the substantive entitlement. The matter was decided on 2026-03-13 by the ITAT (Smt. Beena Pillai (Judicial Member) and Shri Girish Agrawal (Accountant Member)). On those facts the ITAT held as follows. The appeal was partly allowed. On the s.115BAA ground the Tribunal held that the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of the option, condoned the delay, and directed the Assessing Officer to accept the option under s.115BAA and recompute the tax liability at the concessional rate in accordance with law. A separate ground on TDS credit was remitted to the Assessing Officer for verification against evidence.
Sub-section (5) of s.115BAA prescribes the time and manner for exercising the option and thus contains two components — the substantive act of opting for the new regime and the procedural requirement of furnishing the form as the mode of intimation. Where the assessee has clearly exercised the option in the return of income itself and computed its tax liability accordingly, the substantive requirement stands fulfilled and the subsequent filing of Form 10-IC assumes the character of procedural compliance. The section does not stipulate that the option would be invalid merely for delay in filing the form, nor does it contain any express bar on appellate authorities examining the correctness of the claim. Where the assessee has adhered to all the conditions of s.115BAA, has claimed no ineligible deductions and no prejudice is caused to the Revenue, the requirement of filing the Form within the prescribed time is to be regarded as directory. The Tribunal treated the later administrative recognition, in the CBDT circulars, that such delays occur for bona fide reasons and are capable of condonation as itself indicating that the time prescription is procedural and curable rather than a rigid substantive condition. In the words reproduced by the source cited on this page: "the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of option under section 115BAA, which was clearly made in the return of income and acted upon by the assessee while computing its total income."
It was decided by the ITAT on 2026-03-13 and is reported as I.T.A. No. 4872/Mum/2024 (ITAT Mumbai, 'K' Bench); Assessment Year 2020-21. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 115BAA, section 115BAA(5), section 139(1), section 119(2)(b), section 143(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was partly allowed. On the s.115BAA ground the Tribunal held that the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of the option, condoned the delay, and directed the Assessing Officer to accept the option under s.115BAA and recompute the tax liability at the concessional rate in accordance with law. A separate ground on TDS credit was remitted to the Assessing Officer for verification against evidence. It arises in Assessment & Scrutiny and Appeals matters, on section 115BAA, section 115BAA(5), section 139(1), section 119(2)(b), section 143(1) of the Income Tax Act 1961, and was decided by Smt. Beena Pillai (Judicial Member) and Shri Girish Agrawal (Accountant Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Confirm that no deduction excluded by s.115BAA(2) was claimed, and say so in the grounds — the Tribunal relied on the absence of any ineligible claim. Take the scope-of-appellate-jurisdiction point expressly as a ground, since the Revenue's answer is that only the Commissioner can condone. Use the existence of Circulars 6/2022, 19/2023 and 17/2024 as evidence that the time prescription is procedural and curable, which is how the Tribunal used them, rather than as a source of entitlement. Where the option was not exercised in the return, do not run this argument; go to s.119(2)(b) if the window is open and otherwise to the correctness of the s.143(1) adjustment.
Validity check could not be completed. Validity check could not be completed. No search for later treatment was run. The decision must be read alongside Sarla Holdings P Ltd v PCIT (Delhi High Court 28 May 2025, affirmed by the Supreme Court 26 September 2025), where the benefit of s.115BAA was denied because the option was not exercised in the return at all. The present order itself distinguishes that situation, recording that where the option is not exercised in the return a belated Form 10-IC or a CBDT circular cannot cure the substantive defect, and that where the option is exercised in the return delay in filing Form 10-IC stands on a different footing. Nothing here should be read as allowing an appellate authority to grant the concessional rate where the return did not opt for it. Neither the Delhi High Court judgment in Sarla Holdings Private Limited v Pr Commissioner of Income Tax Delhi-7 of 28 May 2025 nor the Supreme Court's order of 26 September 2025 in the same matter was retrieved on this pass; both exist on indiankanoon under those dates and the High Court's holding is as stated here, but the Supreme Court order was not read and the word 'affirmed' rests on its existence and on the way the present order describes the case, not on that order's own text. Note also two features of the present order's own citation of it: it gives the report citation as (2025) 179 taxmann.com 83, and it groups Sarla Holdings with Gem Nuts & Produce Exports Co. (P.) Ltd. as decisions of the 'Hon'ble Bombay High Courts' — Sarla Holdings is a Delhi High Court decision, so the attribution in the order is wrong. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The paragraph numbering as reported does not run cleanly: the reasoning appears under '6.1.1' and the conclusion under '6.11'. The order as reported prints the date of filing of Form 10-IC as '01/04/20121', which is plainly a typographical error for 01/04/2021. The quote below was taken from the print view and then re-checked by a separate fragment fetch of the same document, which returned it word for word; the two passes agreed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was partly allowed. On the s.115BAA ground the Tribunal held that the delay in filing Form 10-IC is purely procedural and does not invalidate the substantive exercise of the option, condoned the delay, and directed the Assessing Officer to accept the option under s.115BAA and recompute the tax liability at the concessional rate in accordance with law. A separate ground on TDS credit was remitted to the Assessing Officer for verification against evidence.
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