BRAHMOS REALTY PRIVATE LIMITED ,MUMBAI V. INCOME TAX OFFICER WARD 9(2)(1), MUMBAI

ITA 4119/MUM/2025

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Brahmos Realty Private Limited appealed against the order of the CIT(Appeals)/NFAC, which confirmed the tax liability under the new tax regime as per Section 115BAA of the Income Tax Act, 1961. The assessee had initially filed Form 10-IC opting for the new regime but later filed the return under the old regime, claiming MAT credit. The main contention was whether the assessee could withdraw the option exercised by filing Form 10-IC and whether the conditions for opting the new regime were fulfilled. The Tribunal considered various precedents and the principles of substantial compliance and beneficial interpretation of tax laws.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716452 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2024-2025
• Appeal Filed On: 16-06-2025
• Other Referred Cases: JSW Minerals Trading P. Ltd. Vs. ITO, DCIT Vs. Siddhi Vinayak Construction, CIT Vs. G.M Knitting Industries Pvt. Ltd, Kumar Medicare Pvt Ltd Mumbai vs Commissioner Of Income Tax Department, Fastner Commodeal Private Limited vs Adit (Cpc), Bengaluru, Mahalaxmi Asphalt Private Limited vs Ito, Ward-2(1)(1), Ahmedabad
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: B.N RAO; FILING
• Keywords: Set aside; Opportunity of being heard; Revised return; Depreciation; Additional depreciation; Principle of natural justice; Unabsorbed depreciation; Procedural lapse
• Section: 32; 139; 119(2)(b); 10AA

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ मुंबई मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, “J(SMC)” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.4119/MUM/2025 Ǔनधा[रण वष[ / Assessment Year :2024-25 Brahmos Realty Private Limited A-10002, Aristo Sappyhire, 2nd floor, Hasnabad Lane, Santakruz (W), Mumbai-400 054 (M.H) PAN: AADCR5685C ........अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-9(2)(1),Mumbai (M.H.) ……Ĥ×यथȸ / Respondent Assessee by : Shri B.N Rao Revenue by : Shri Aditya Rai, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing :13.08.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 19.08.2025 Printed from counselvise.com 2 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 आदेश / ORDER PER ARUN KHODPIA, AM: The present appeal filed by the assessee company is directed against the order passed by the Ld.CIT(Appeals)/NFAC, dated 15.04.2025 for the assessment year 2024-25, as per the following grounds of appeal: “1. The CIT (APPEAL) ADDL/JCIT(A)-2-DELI II has erred in not allowing to withdraw the exercised option u/s 115BAA. 2. The CIT (APPEAL) ADDL/JCIT(A)-2-DELHI has erred in not considering the option exercise in Income Tax Return and not allowing credit u/s 115JAA. 3. The CIT(APPEAL) ADDL/JCIT(A)-2-DELHI has erred in confirming the of taxation option u/s 115BAA. 4. The CIT(APPEAL) ADDL/JCIT(A)-2-DELHI has erred in considering inadvertently filed for 10-IC before filing return of Income. 5. The CIT (APPEAL) ADDL/JCIT(A)-2-DELHI has erred in selecting taxation option 115BAA but failed to take into consideration the appellant filed return of income under normal provision at the rate of 25 percent. 6. The CIT(APPEAL) ADDL/JCIT(A)-2-DELHI has erred in not allowing credit under section 115JAA. 7. The CIT(APPEAL) ADDL/JCIT(A)-2-DELHI has erred in levying interest of Rs.76,450/-. 8. The appellant serves the right to add, delete and modify any grounds of appeal.” 2. The brief facts of the case are that the assessee company had filed its return of income on 04.11.2024 declaring total income at Rs.47,53,300/- claiming normal taxation provision @25%. The return of Printed from counselvise.com 3 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 income filed by the assessee company thereafter was processed u/s. 143(1) of the Income Tax Act, 1961 (for short ‘the Act’), accordingly, intimation was issued on 13.02.2025, wherein though the income offered by the assessee has been accepted by the Centralized Processing Centre (CPC)/A.O, however the working of tax liability under old regime by the assessee has not been coincided by the CPC, thus, by processing of return culminates with enhancement in tax liability of Rs.2,48,670/-. 3. Aggrieved with the aforesaid additional tax liability, as worked out by the CPC/A.O, the assessee preferred an appeal before the Ld. CIT(Appeals)/NFAC, raising grievance that the assessee has inadvertently filed Form 10-IC on 25.10.2024,choosing the option available u/s. 115BAA of the Act. It wasfurther contended by the assessee company before the First Appellate Authority that the at the time of filing of return the assessee declined toavail benefit u/s. 115BA/115BAA or Section 115BAB and such option has been opted out in the return of income. The assessee before the First Appellate Authority stated that the return of income of the assessee was preparedfollowing the normal tax rate @ 25% plus health and education cess of 4% and accordingly, gross tax was computed at Rs.10,24,096/-. The assessee claimed that it is entitled for MAT credit of Rs.2,53,634/- and accordingly, has utilized while filing the return for the current year under normal taxation rate. Such claim should be allowed, as pre-conditions for opting u/s.115BAA i.e. filing of Form 10-IC and to claim Printed from counselvise.com 4 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 such option in the return of income are not simultaneously fulfilled by the assessee company. The issue has been deliberated upon by the Ld. CIT(Appeals)/NFAC at length, however, was not convinced with the contention raised by the assessee and accordingly, dismissed the appeal of the assessee company with following observations: “5. Decision: 5.1 The appellant was issued notice u/s 250 of the IT Act and in response to the notice, the appellant filed written submission. On the basis of the written submission, statements of facts and the documents furnished along with the Form 35, the appeal is decided on merit. 5.2 On perusal of the above grounds of appeal. it is seen that the appellant filed a return of income declaring total income of Rs. 47,53,300/- on 04.11.2024 taxable under normal taxation at the rate of 25 percent. The appellant filed Form 10-IC on 25.10.2024 opting for option under section 115BAA. The appellant had MAT credit of Rs.2,53,634/- and utilized it while return of income during the current year in the normal taxation. The total tax liability reflected in the return was Rs. 9,82,224/-. The CPC did not allow the credit of MAT under 115JAA of Rs.2,53,634/- and considered Form 10-IC as valid and adopted the taxation option under Section 115BAA because once Form 10 IC is filled so the appellant cannot change it from sec 115BAA to normal rate of taxation. 5.3 The attention is invited to the provision of Section 115BAA: Tax on income of certain domestic companies. 115BAA. (1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 1158A and section 115BA8, 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 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: Provided that where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall Printed from counselvise.com 5 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 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. (2) For the purposes of sub-section (1), the total income of the company shall be computed,- (i) without any deduction under the provisions of section 10AA or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) or sub- section (2AB) of section 35 or section 35AD or section 35CCC or section 35CCD or under any provisions of Chapter VI-A other than the provisions of section 80JJAA or section 80M; (ii) without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i): (iii) without set off of any loss or allowance for unabsorbed depreciation deemed so under section 72A, if such loss or depreciation is attributable to any of the deductions referred to in use (r); and (iv) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed. (3) The loss and depreciation referred to in clause (ii) and clause (iii) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year; Provided that where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2020, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2019 in the prescribed manner, if the option under sub-section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2020. (4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions contained in sub-section (2) shall be modified to the extent that the Printed from counselvise.com 6 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in the said section. Explanation.—For the purposes of this sub-section, the term \"Unit\" shall have the same meaning as assigned to it in clause (w) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005). (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 Mums 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: Provided that in case of a person, where the option exercised by it under section 115BAA 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. It has been clearly stated that once the option is exercised which is by filing the Form 10IC the same cannot be withdrawn for same or any other previous year 5.4 Accordingly, the appellant is not entitled to withdrawn the exercised option under Section 115BAA, thus, there is no infirmity with the order of the CPC. In view of the above grounds of appeal and submissions made by the appellant, the grounds of appeal of the appellant are hereby rejected and appeal dismissed.” 4. Being aggrieved with the aforesaid decision of the Ld. CIT(Appeals)/NFAC, the assessee company preferred the present appeal before us, which is under consideration in the present matter. 5. At the very outset, the Ld. Counsel representing the assessee company submitted that due to inadvertent mistake and wrong understanding of law on the part of the staff,the assessee company had Printed from counselvise.com 7 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 opted for taxation by filing Form 10-IC under new regime in terms with Section 115BAA of the Act r.w.sRule 21AE of the ITAT Rules, 1962 prior to filing of return of income u/s.139(1) of the Act. It was submitted that mistake was noticed subsequently when the tax audit was conducted and return of income was filed. The Ld. Counsel submitted that provisions of Section 115BAA of the Act provides for concessional rate of tax for domestic companies which are beneficial for the assessee. It was also submitted by him that under the provisions of Section 115BAA of the Act, if an assessee opts concessional rate of taxes, it cannot claim certain statutory deduction mentioned therein. Besides the above, the assessee is also not allowed to avail MAT credit available to it u/s. 115JAA of the Act, as per sub-section (2) of the said section. It is also submitted that the provisions relating to denial of MAT credit u/s. 115JAA of the Act are not mentioned in Section 115BAA of the Act, whereas, such denial is mentioned in the provisions of Section 115JAA of the Act. It was contended that assessee did not notice the provisions relating to denial of MAT credit and took a view that Section 115BAA is beneficial to the assessee company and accordingly, he uploaded Form 10-IC prior to the filing of return of income. 6. The Ld. Counsel further submitted that exercising option of new regime culminates only when two activities are successfully completed i.e. (i) filing of Form 10-IC and (ii) subsequent claim in the tax return. In the Printed from counselvise.com 8 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 instant case, though erroneously form was filed, the tax was paid as per old regime and the return was filed disregarding the Form 10-IC filed after deliberately mentioning in the Tax Audit Report that option under regime is selected as “No”.The copy of tax audit report in Form 3CA is placed before us in the paper book, wherein at Sr. No. (8)(a) the question “Whether the assessee has opted for taxation under section 115BA/115BAA/115BAB/115BAC(1A)/115BAD/115BAE?”, the assessee has opted “No”. From the aforesaid copy of tax audit report, it was intended that the assessee had made it clear that it did not intend to exercise option new tax regime while filing return of income. Copy of ITR-6 FILED ON 04/11/2024 is furnished for our attention, wherein under the saction “FILING STATUS” at sr. no (e) the question, ““Have you opted for taxation under section 115BA/ 115BAA/ 115BAB/ 115BAC(1A)/ 115BAD/ 115BAE?”, the assessee has again opted “No”. The Ld. Counsel also clarified that as per provisions to sub-section (1) of Section 115BAA of the Act, the option shall become invalid, if the assessee claimed any deductionwhich is mentioned in sub-section (2) of Section 115BAA of the Act. In effect, if any claim is made in the return of income, which is barred under the new tax regime, then the exercise of option by filing of form 10IC will become invalid. The Ld. Counsel specifically mentioned that the provisions to Section 115JAA(8) of the Act debars claiming of MAT credit, if the option is exercised u/s. 115BAA of the Act. Since the assessee has Printed from counselvise.com 9 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 claimed MAT credit in the return of income in violation of provisions of Section 115BAA of the Act following the spirit of the proviso to Section 115BAA(1)r.w.s. 115BAA(2) of the Act, the option inadvertently filed by the assessee should be considered as invalid. 7. The Ld. Counsel has placed reliance to the decision of the ITAT, Mumbai in the case of JSW Minerals Trading P. Ltd. Vs. ITO, reported in (2025) 39 NYPTTJ 199 (Mumbai), wherein emphasis is given to substance over from even though it was set aside. The Ld. Counsel further placed reliance on the decision of the ITAT, Pune in the case of DCIT Vs. Siddhi Vinayak Construction ITA No.988/PUN/2024, wherein it was observed that “Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim, in view of the various judicial precedents relied on by the Ld. CIT(A), however, he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deduction/exemption without claiming the same in the return of income.”The Ld. Counsel also refers to a judgment of the Hon’ble Supreme Court in the case of CIT Vs. G.M Knitting Industries Pvt. Ltd (2015) 376 ITR 456 (SC), wherein the claim of additional depreciation made by the assessee was upheld even though the claim in Form 3AA was not made while filing the return of income, which was furnished subsequently during the course of assessment proceedings. The Hon’ble Apex Court has held that “we concur with the aforesaid view of Printed from counselvise.com 10 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 the High Court and hold that even if Form 3AA was not filed along with return of income but the same was filed during the assessment proceedings and before the final order of assessment was made that would amount to sufficient compliance.” 8. In the backdrop of the aforesaid submission, it was claimed by the Ld. Counsel that in the present case since tax rate was adopted by the CPC/A.O and the matter was escalated to the first appellate authority, the Ld. CIT(A) ought to have considered the claim of the assessee as the order of the Ld.CIT(Appeals) gets co-terminus with that of the A.O. Accordingly, the claim of the assessee to invalidate the filing of Form 10-IC was requested to be accepted, as the claim of MAT credit bars the assessee to to claim lower tax rate u/s 115BAA being violating the provisions of section 115JAA, thus fails to satisfy the conditions contained in sub- section (2) of section 115BAA, accordingly 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. Consequently, the assessee would become ineligible to low claim tax rate under new regime. 9. Per contra, the Ld. Sr. DR representing the revenue submitted that as per provisions of Section 115BAA of the Act, option once exercised Printed from counselvise.com 11 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 cannot be withdrawn and therefore, the same shall apply to the year under consideration as well as to the subsequent assessment years. Since the assessee has filed Form 10-IC to opt for new tax regime, its subsequent withdrawal by not claiming the same in the return of income should not be accepted, accordingly the order passed by the CPC/A.O and confirmed by the Ld.CIT(A) deserves to be upheld. 10. We have heard the rival submissions and perused the material available on record and case laws relied upon by the parties. In the facts and circumstances of the present case, it transpires that the assessee had filed Form 10-IC to opt for new regime u/s. 115BAA r.w.s. 21AE of the ITAT Rules, 1962. Further while filing return of income and tax audit report, the assessee opted as “NO”for the benefit of Section 115BAA, thus had opted for old tax regime to avail the benefit of MAT tax credit available u/s 115JAA.However, as per the intimation issued u/s 143(1), having information of record about assessee’s opting u/s. 115BAA by filing Form 10-IC before the CPC/A.O, assessee’s claim under old tax regime has been denied, consequently, the rightto claim MAT credit available with the assessee for set off of the taxes failed, accordingly the impugned tax liability arose by way of the intimation u/s 143(1). 11. The controversy raised by the assessee hinges around certain issues, which were decided by the first appellate authority against the assessee Printed from counselvise.com 12 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 are,(Qi)whether after filing Form 10-IC optingthe new tax regime under the provisions of Section 115BAA, can the assessee have any option to withdraw the same? (Qii) Whether the conditions prescribe in sub-section (2) of Section 115BAA of the Act, are violated by the assessee or unbale to satisfy the same, in that case, the option exercised by the assessee by filing of Form 10-IC would become superfluous, as if the option had not been exercised for the year under consideration or subsequent assessment year? and (Qiii) if the assessee at the time of conducting the Tax Audit and/or filing return had opted as “No” to get benefit of new tax regime, thus, had computed its taxes in accordance with the provisions of old tax regime, would that constitute assessee’s failure in fulfilling condition of sub-section (2) of Section 115BAA or any other provisions of the Act which debars the assessee to get benefit of new tax regime, thus impliedly fall under the scope of old tax regime? 12. Before proceeding any further, it would be appropriate to refer to the provisions of Section 115BAA of the Act (extracted supra), so as to analyze the same and interpret, in the context of facts of the present case. On perusal of the aforesaid provisions of Section 115BAA of the Act, it emanates that such provisions are introduced for the benefit of the assessee and the same are further tagged riders / conditions to be fulfilled by the assessee to claim low tax benefit under new regime. Printed from counselvise.com 13 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 13. In the present case, according to the proviso to section 115BAA, though the assessee does not have any entitlement to opt out from option once exercised for any previous year or subsequent year, therefore our answer to (Qi) is “NO”. However, in terms proviso to sub-section (1) r.w. sub-section (2) of Section 115BAA, there are certain conditions imposed on the assessee which needs to be fulfilled before claiming of benefits of low tax regime. However, since the assessee while filing return had opted out from the aforesaid option and have also claimed MAT Credit deductions u/s 115JAA, which are not permissible under the new tax regime, therefore, it can be construed that the assessee had not fulfilled pre requisite condition to avail benefit of new tax regime and accordingly, the same would be treated as if option had not been exercised by the assessee in the relevant assessment year or in subsequent years, accordingly we answer (Qii& Q iii) in affirmative. 14. Coming to the case laws referred to by the assessee company, we may draw an analogy that tax regime is introduced by legislature for the benefit of the assessee and the assessee would be allowed to opt for such tax regime subject to fulfillment of certain conditions.If the assessee fails to comply with such conditions, benefit of low tax regime would not be allowed. The power of first appellate authority is co-terminus with that of the A.O who would have responsibility to decide such issue. In the present case, since tax audit was conducted and ITR was filed declining claim of Printed from counselvise.com 14 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 benefit of new tax regime and the tax liability was worked out in accordance with old tax regime, further assessee’s claim for MAT credit, bars it to claim low tax under new regime u/s 115BAA, the same can be construed as not fulfilling conditions as required under the provisions of Section 115BAA of the Act and accordingly, Form-10-IC which is filed by the assessee can be treated as had not been exercised by the assessee.Also, as per settled position of law as discussed in the case of JSW Minerals Trading (P) Ltd. Vs. ITO in ITA No.6137/MUM/2024, coordinate bench of Mumbai ITAT had observed as under: “6. We have duly considered all the relevant facts of the case. The issue involved in the above appeal pertains to denial of option u/s.115BAA on the ground that Form 10-IC was not submitted before the prescribed time i.e. due date u/s139(1). From the facts of the case and the contentions made, we find that the assessee had acted in bonafide manner in claiming the option of discharging tax under Section 115BAA of the Act, in as much as while filing the return, it made clear that option to pay tax under Section 115BAA was exercised. Importantly, tax has also been paid at 22% in accordance with provisions of Section 115BAA. The company has selected the OPTION under section 115BAA in return of income while calculating the tax as well as specified in clause 8(a) of Form 3CA which is clearly the beneficial one for the company. From tax calculated in the return and from clause 8(a) of Form 3CA, the intention and act of the assessee was very clear to opt new tax regime as per section 115BAA. There is no material objective to be achieved by the assessee in not e-filing papers before the due date of return of the same, once the intent was very well declared in Form 3CA. 6.1 We also find that, there has been substantial compliance of the requirement under Section 115BAA of the Act, as evident from the fact that while filing the returns, it was declared/stated by the assessee that the option to discharge the tax was exercised under Section 115BAA of the Act and taxes were in fact paid @ 22% without claiming deductions as contemplated under Section 115BAA of the Act. In this regard, it may be relevant to refer to the Hon'ble Supreme Court, in Printed from counselvise.com 15 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 the case of Dilip Kumar (2018) 9 SCC , wherein while deciding the Doctrine of Substantial Compliance held as under: “33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment. has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted.” 6.2 The authorities below failed to appreciate that if the failure to consider the claim of option to discharge tax under Section 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated under Section 115BAA would cause genuine hardship to the assessee. Rejection of the petition under Section 119(2)(b) to permit the petitioner to file Form 10-IC in support of its exercise of option under Section 115BAA of the Act would cause genuine hardship and it is desirable and expedient to permit the petitioner to file Form 10-IC in support of its claim / option under Section 115BAA of the Act and deal with such claim on merits in accordance with law. The CBDT's Circulars extending the due dates for filing such forms in earlier years indicate a recognition of such procedural difficulties. These Circulars indicate a degree of administrative flexibility and a recognition that procedural lapses should not necessarily lead to the denial of substantive benefits. Moreover, denying the benefit based solely on this lapse would be against the principles of equity and justice, especially when there is no dispute regarding the assessee's eligibility for the lower tax rate. Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. Supreme Court rulings always emphasized that the making of a claim of deduction is mandatory, but timing/format is directory. 6.3 It may be stated here that the coordinate bench of ITAT, Mumbai has considered similar issue in the case of Kumar Medicare Pvt Ltd Mumbai vs Commissioner Of Income Tax Department dated 21 August, 2024 in ITA Printed from counselvise.com 16 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 No.1675/Mum/2024.Relevant parts of the order are extracted below for ready reference: “5. In view of the above provisions, it is observed that the assessee is fulfilling all the conditions except filing of Form No. 10IC. Considering the principle of beneficial interpretation, the procedural requirements should not override substantive benefits. The Courts have taken a lenient view on procedural lapses when substantive benefits are involved. Supreme Court rulings always emphasized that the making of a claim of deduction is mandatory, but timing/format is directory. The assessee duly claimed the benefit in its return of income filed in Form No. ITR-6 and return was filed well within the time prescribed u/s. 139(1) of the Act. 6. The provisions of Section 143(1) of the Act are clear in their requirement that prior to passing an intimation order, the Assessing Officer must provide the taxpayer with a reasonable opportunity to present their case and address any concerns or discrepancies. It is incumbent upon the tax authorities to afford taxpayers a fair hearing and a chance to clarify or contest any issues related to their tax assessment. In this specific case, it was not provided with any such opportunity to be heard. As observed that the assessee has not filed Form No. 10IC for claiming concessional rate of tax but on the other hand CPC, Bengaluru also has not followed the procedure prescribed by the law. It is reasonably assumed that the if the CPC, Bengaluru would have followed the procedure, i.e. giving the assessee a reasonable opportunity of hearing, the assessee would have filed the Form No. 10IC before the CPC, Bengaluru and this technical requirement would have been completed. 7. In view of this, the Jurisdictional AO is directed to give a fresh opportunity to the assessee ignoring this adjustment made by the CPC, Bengaluru and the assessee is directed to file the form no. 10IC electronically/before the Jurisdictional AO to comply with the rules. Once the assessee filed the Form 10IC, the Jurisdictional AO is directed to revise the tax computation of the assessee in compliance with the provisions of section 115BAA of the Act.” 6.4 The co-ordinate bench of ITAT,Kolkata has taken also considered the issue in hand as below in the case of Fastner Commodeal Private Limited vs Adit (Cpc), Bengaluru on 7 March, 2024 ITA No.1010/Kol/2023: “9. We after hearing the rival submission of the parties and perused the material available on record find that the assessee is a domestic company Printed from counselvise.com 17 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 and eligible to avail the benefit of tax u/s 115BAA of the Act, provided the assessee fulfilled the requisite condition for availing such benefit. The point of dispute in the appeal is only in relation to lower authorities are that assessee has not filed Form No. 10IC electronically before due date for filing return of income u/s 139(1) of the Act. The case of the assessee is that Form 10IC could not be uploaded on ITBA portal due to technical glitch and it was the first year of availing such benefit. The only question for our consideration is whether non-filing of Form No. 10IC on ITBA portal is fatal to the assessee or not in availing the benefit of section 115BAA. 10. We find that the Hon'ble High Court in Gujarat Paguthan Energy Corporation (P) Ltd. Vs DCIT (supra) while considering the eligibility of deduction of Section 80-IA of the Act, wherein the assessee is required to furnish audit report before due date of filing return of income, and such audit report was filed during assessment proceedings, the assessee was held to be eligible for deduction under Section 80-IA of the Act. Further, Hon'ble Delhi High Court in CIT vs Web Commerce (India) (P) Ltd. (2009) 318 ITR 135/178 Taxman 310 (Delhi) also held that once audit report is filed before framing of assessment, the provisions of Section 80-IA (7) would be complied as furnishing of such report at the time of filing of return is directory in nature and not mandatory. Considering the similar principle that the assessee prayed before the ld. CIT(A) to allow it to file Form 10-IC before the appropriate authority in order to claim the benefit u/s 115BAA of the Act. It is settled principles under law that appeal is a continuation of assessment proceedings and the ld. CIT(A) has co- terminus power as of Assessing Officer, therefore, the ld. CIT(A) was required to consider the report in Form 10-IC. In view of the above factual and legal discussion, the ground of appeal raised by the assessee is restored back to the file of assessing officer to consider the report in Form-10IC and allow relief to the assessee, if the assessee fulfil all other requisite condition as per law. In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose.” 6.5 The co-ordinate bench of ITAT, Ahmedabad has taken also considered the issue in hand as below in the case of Mahalaxmi Asphalt Private Limited vs Ito, Ward-2(1)(1), Ahmedabad dated 30 September, 2024 in ITA No.1291/Ahm/2024: Printed from counselvise.com 18 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 “7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee vide written submission made the assessee has filed the return of income on 29.12.2020 thereby applying the tax rate as per Section 115BAA of the Act. The only fault of the assessee was that the assessee has not filed Form 10IC alongwith the said return. It is not disputed that for claiming tax rate under Section 115BAA of the Act, the Assessment Year 2020-21 is the very the first Assessment Year and due to the fault on the part of the System as mentioned by the assessee, it would have happened that the assessee has not filed the Form alongwith the return of income. It is not the case of the Revenue that the assessee is not entitled for the tax rate under Section 115BAA of the Act. If the assessee had filed Form 10IC within the prescribed time alongwith return of income, as held by various Hon'ble High Courts including the jurisdictional High Court, the CIT(A) has co- terminus power as that of the Assessing Officer. The CIT(A) is required to consider the report in Form 10IC and, therefore, it will be appropriate to take on record the Form 10IC and consider the same in consonance with the return of income filed by the assessee and after verifying the same, the Assessing Officer will adjudicate the issue whether the assessee is entitled for tax rate as per Section 115BAA of the Act in Assessment Year 2020-21 or not. Needless to say, the assessee be given opportunity of hearing by following the principals of natural justice.” 6.6 The ld.AR has placed on record a copy of the letter addressed the NFAC,New Delhi dated 23.09.2024 as per page 3 of the paper book dated 15.01.2025 filed before us wherein on page-5 w.r.f. ground no.3,it is claimed that the assessee’s case is covered by the CBDT Circular no.19/2023 dated 23.10.2023 as the assessee has satisfied all the three conditions specified in the said Circular and has already filed Form no.10IC electronically on 19.10.2022 i.e. within the time frame laid by the Circular. 7. In view of the above factual position of the case and also the legal proposition emerging from the cited decisions (supra),respectfully following them, the ground of appeal raised by the assessee is restored back to the file of ld. Assessing officer with a direction to take on record the Form 10IC and consider the same in consonance with the CBDT Circular(supra) and the return of income filed by the assessee and after verifying the same, he will adjudicate the issue whether the assessee is entitled for tax rate as per Section 115BAA of the Act in Assessment Printed from counselvise.com 19 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 Year 2020-21 or not. Needless to say, the assessee would be given opportunity of hearing following the principles of natural justice and fairplay. 8. In the result, the appeal is allowed for statistical purposes.” 15. In view of the aforesaid facts and circumstances, following the settled principles of law as per jurisprudence referred to supra, we observe and take support that substantial compliance with an enactment is insisted and where mandatory and directory requirements are lumped together and if mandatory requirements are compiled with it will be proper compliance of the enactment. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirement that are important to invoke a tax or duty exemption and to forgive non- compliance for either unimportant and tangible requirements or requirements that are so confusing or incorrectly written, an earnest effort at compliance should be accepted. There should not be any hardship with the assessee, therefore, if the assessee is eligible for any deduction, following the principle beneficial interpretation, the procedural requirement should not override substantive benefits. For procedural lapses Hon’ble Courts had always emphasized that the making of claim for deduction is mandatory, but timing / format is directory. In view of such findings by the Hon’ble Courts the beneficial provisions of law should not be used to against the assessee to prevent it in availing the legitimate Printed from counselvise.com 20 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 reliefs / deductions available to it, only for the reason that there are technical glitches or inadvertent procedural lapses committed, which does not affect the spirit of the substantial compliance adversely. 16. In present case, as the assessee who does not have option to opt out once option exercised but since had not fulfilled the condition mandatory as per sub section (2) to Section 115BAA of the Act as well as provisions of Section 115JAA(8) which debars the claim of MAT credit,thus, the option once exercised u/s. 115BAA of the Act by filing of Form 10-IC would be construed as invalidated. 17. In the backdrop of the aforesaid facts and circumstances, respectfully following the analogy emerging from the jurisprudence, we found force in the contentions raised by the assessee, thus we upheld the same. However, since the assessee had claimed MAT credit u/s. 115JAA of the Act which at no occasion was verified by the Ld AO, the same needs verification from records, accordingly, the same has been restored to the file of the Ld. CIT(Appeals) for fresh adjudicationwith directions to allow the assessee tocompute its tax liability under old regime to allow legitimate claim of MAT credit therein. Printed from counselvise.com 21 Brahmos Realty Private Limited Vs. ITO, Ward-9(2)(1) ITA No. 4119/MUM/2025 18. In the result, appeal of the assessee is partly allowed for statistical purposes as per our aforesaid observations. Order pronounced in the open court on 19th August, 2025. Sd/- Sd/- AMIT SHUKLA ARUN KHODPIA (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) मुंबई/Mumbai; Ǒदनांक / Dated : 19th August, 2025. SB, Sr.PS (on Tour) आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ /The Appellant. 2. Ĥ×यथȸ /The Respondent. 3. आयकरआयुÈत/The CIT, Mumbai 4. Ĥधानआयकर आयुÈत/ Pr.CIT, Mumbai 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,मुंबई बɅच, मुंबई/DR, ITAT, Mumbai Benches, Mumbai. 6.गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण,मुंबई/ ITAT, Mumbai. Printed from counselvise.com "