A beneficial tax rate was introduced by Income tax department for companies in form of Section 115BAA for the first time in FY 2019-20 and according to the provisions of section companies could take benefit of the provision by giving up various exemptions and deductions and pay tax at base rate of 22%.
However, to opt for this beneficial provisions the company had to file Form 10-IC on income tax e-filing website as per provision of section 115BAA(5) of the Income tax act which is reproduced as under:
“(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:”
However, many people failed to file the Form before filing the Income tax returns due to various reasons as listed below:
- It was the first year of filing such form and people were not aware whether such form should be filed or not and when to file the same.
- The Income tax return in FY 2019-20 would only ask for whether the company has opted for lower tax rate or not u/s 115BAA and did not ask for acknowledgement of form and hence there was no denial by the Income tax e-filing website also when people were filing Income tax return without filing Form 10-IC.
- Due to ongoing pandemic and lockdowns there were miscommunications between client and even internal team of professionals due to same.
Further, it has been seen that in case where companies had opted for lower tax rate under section 115BAA, then in that case in the Income tax return the turnover for FY 2017-18 was not mentioned and hence tax has been calculated in all companies at 30%+surcharge+cess even in case where turnover was below Rs. 400 crore in FY 2017-18 which is also an injustice faced by assessee company.
Another plea made by the assessee company is that assessee in it’s Income tax return and even auditor in their Tax audit report have mentioned that assessee company will opt for new provision and adjustments were made accordingly, then the assessee should be allowed the benefit of new provision even if Form 10-IC was not filed within due time.
Recently a writ was filed before Hon’ble Gujarat High Court in this regard wherein it was held by the Gujarat High court that the assessee company has the alternate remedy to make plea before CIT or file appeal before CIT(A) and hence they should approach the authorities accordingly rather than filing a writ.
To listen to the judgement CLICK HERE. [From 2:25:30]
Hence, as per the Hon’ble Gujarat High court, one should approach the commissioner or file appeal, however assessee are requesting for a relief from CBDT as many people are facing this problem and it was the first year of such requirement and going through the route of appeal will be a long route and the demands in all cases are also of big amount.
Earlier various representations were made before CBDT in this regard but no relief has been granted till date and hence it will be humbly requested to all the readers to vote on twitter on our poll where we have started a poll for same so that authorities can come to know, how many people are facing the problem and alternatively one should also write about same on twitter and via e-mail to CBDT.
One more query which needs to be answered is whether such companies have to again file Form 10-IC for AY 2021-22 to claim lower tax rate, if yes will they be able to opt for condonation and if no how will they claim lower tax rate in current year?
Link for twitter Poll: https://twitter.com/technicalCA/status/1486564358612156418
Link for LinkedIn Poll: https://www.linkedin.com/feed/update/urn:li:activity:6892329345831055360
Comment your thoughts below.
To read more about section 115BAA for claiming lower tax rate CLICK HERE.
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