Taxpayers denied new tax regime benefits for not filing Form 10IC; get relief from ITAT Mumbai for this reason
Dec 03, 2025
Synopsis
Taxpayers can now claim new tax regime benefits even if Form 10IC is filed late. The ITAT Mumbai ruled that technical errors or oversight should not deny these benefits. This decision follows a taxpayer's win against the income tax department. The tribunal emphasized that when audit reports are available, taxpayers should receive the benefits. This ruling offers relief to many.
On October 31, 2025, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled that a taxpayer’s claims under the new tax regime could not be rejected due to a delay in filing the Form 10IC, beyond the legal deadline.
This judgement came in the backdrop of a case filed by a taxpayer against the income tax department. He had filed his income tax return (ITR) on February 11, 2021 by declaring an income of Rs 8.7 crore and had opted for the new tax regime under Section 115BAA. However, he failed to file Form-10IC, leading the income tax officer/ centralised processing centre (CPC) to deny the concessional tax rate benefits under the new tax regime (Section 115BAA) while processing the ITR.
Feeling aggrieved, the taxpayer submitted an application under Section 154 before CPC but it was turned down. The CPC’s decision was later upheld by ld CIT(A). The taxpayer then took the case to ITAT Mumbai.
The taxpayer’s lawyer pointed out that there are several rulings from Tribunals and Gujarat High Court in PCIT Vs KGY Glass Industries (P) Ltd (2023) 156 taxman.com 18 (Gujarat), which consistently state that filing Form 10IC is directory and that delays in filing it can be excused.
Case law cited by the taxpayer’s lawyer:
PCIT Vs KGY Glass Industries (P) Ltd (2023) 156 taxman.com 18 (Guj),
KGY Glass Industries (P) Ltd Vs Add DIT (ITA No. 316/Srt/2022,
Aprameya Engineering Ltd Vs ITO (2024) 164 taxmann.com 740 (Ahd)
Shivam Wellness Pvt Ltd Vs Add IT ( ITA No 492 & 493/Srt/2023)
The income tax department’s senior representative said that the taxpayer had not filed Form 10-IC before lower authorities. The tax department’s senior representative also said that the power to condone the delay in filing Form-10IC is only with CBDT.
Thus he said that the request of the taxpayer under section 154 was rightly rejected by the CPC. Form-10IC must be filed within the date prescribed by CBDT and such a time limit is mandatory. The senior representative to support his submissions relied on the decision of Mumbai Tribunal in Bholanath Precision Engineering (P) Ltd Vs CIT (2022) 145 taxmann.com 180 (Mum-Trib).
Summary of the judgement
Chartered Accountant Suresh Surana said to ET Wealth Online: In the given case (ITA No. 3968/MUM/2024), the assessee filed its return of income for Assessment Year (AY) 2020–21 on 11 February 2021, declaring taxable income of Rs 8.70 crore.
Surana says that while computing its total income, the assessee opted for taxation under the concessional corporate tax regime provided in Section 115BAA of the Income-tax Act, 1961 (hereinafter referred to as ‘the IT Act’), which prescribes a reduced tax rate for domestic companies subject to fulfillment of specified conditions. However, the assessee inadvertently did not file Form 10-IC i.e. the prescribed form required to exercise this option along with its return.
During processing under Section 143(1), the Central Processing Centre (CPC) denied the benefit of the concessional rate on the ground that Form 10-IC was not filed within the due date prescribed under Section 139(1).
The assessee’s rectification request under Section 154 was rejected, and the Commissioner of Income-tax (Appeals) upheld this view, holding that timely filing of Form 10-IC was mandatory. Aggrieved by the same, the assessee appealed before the Income Tax Appellate Tribunal (ITAT), Mumbai, arguing that the delay was merely procedural and that substantive eligibility under Section 115BAA should not be denied.
Tribunal’s Analysis and Findings
According to Surana the ITAT noted that the only issue for adjudication was whether the assessee could be denied the concessional tax benefit under Section 115BAA merely because Form 10-IC was filed belatedly. The Tribunal observed that:
The income tax return clearly reflected that the assessee had opted for taxation under Section 115BAA.
The delay in filing Form 10-IC was due to oversight and was later rectified and the form was on record before the Tribunal.
The appeal is a continuation of the original assessment proceedings, and therefore, the form could be considered even at the appellate stage.
The ITAT relied on the Gujarat High Court ruling in PCIT v. KGY Glass Industries (P.) Ltd. (2023) 156 taxmann.com 18 (Guj), where it was held that an assessee could not be deprived of the benefit of Section 115BAA for mere delay or technical difficulty in uploading Form 10-IC, provided the substantive conditions were satisfied.
The Tribunal also referred to other consistent judicial precedents (e.g., Aprameya Engineering Ltd v. ITO, Shivam Wellness Pvt. Ltd.) holding that procedural lapses in filing statutory forms should not defeat genuine claims.
The Tribunal held that filing of Form 10-IC is directory and procedural, not mandatory in substance, when the intent to opt for Section 115BAA is otherwise evident from the return of income and supporting records. Denying the concessional rate for a mere procedural lapse would defeat the legislative intent of the provision.
It distinguished the Revenue’s reliance on Bholanath Precision Engineering (P.) Ltd. v. CIT (2022) 145 taxmann.com 180 (Mum-Trib), where the assessee had never filed Form 10-IC even up to the appellate stage which is a fact pattern materially different from the present case.
Surana says: "Accordingly, the ITAT directed the Assessing Officer to allow the benefit of Section 115BAA once all other conditions are verified and held that the delay in filing Form 10-IC could not invalidate the assessee’s substantive right to concessional taxation."
ITAT Mumbai said this
ITAT Mumbai in its judgement (ITA No. 3968/MUM/2024) dated October 31, 2025 said that they find that there is a very short dispute in the present appeal. Admittedly, the Form 10-IC is filed for the first time before the Tribunal. Before ld CIT(A) the assessee (taxpayer) explained that Form-10IC was not filed due to oversight. It is a settled position under the law that appeal is the continuation of original proceedings.
ITAT Mumbai said that they find force in the judgement of Gujarat High Court in PCIT Vs KGY Glass Industries (P) Ltd where it was held that where the assessee could not upload Form10-IC due to technical error, there being no fault of the assessee, they could not be deprived of benefit under Section 115BAA (new tax regime).
The ITAT Mumbai said that they also find that in a series of decision, various High Courts as well as Tribunals have taken a consistent view that when audit report / Form 10B was filed even at a later stage and was available before assessing officer when return was processed, the assessee is entitled to exemption.
ITAT Mumbai said: “Thus, considering the facts of the case and keeping in view decision of Hon’ble Gujarat High Court in PCIT Vs KGY Glass Industries (P) Ltd (supra) the jurisdiction assessing officer is directed to allow benefit of section 115BAA, if the assessee fulfils all other requisite conditions.”
ITAT Mumbai said that as far as the decision cited by the senior representative of the income tax department in the judgement, Bholanath Precision Engineering (P) Ltd Vs CIT, is concerned, the assessee in that case has not filed Form-10IC even before the Tribunal as has been recorded in para -9 of the decision.
ITAT Mumbai said: “Thus, the reliance on such case law is not helpful to the revenue.”
Judgement: “In the result, the appeal of the assessee is allowed. The order was pronounced in the open Court on 31/10/2025.”
Ritika Nayyar, Partner, Singhania & Co, says: "The ITAT majorly relied on the case of Gujarat High Court in KGY Glass Industries, and confirmed that missing the Form 10-IC deadline is a technical lapse that should not invalidate a genuine claim. This offers critical relief to all corporate taxpayers who might have filed their tax returns opting for the lower rate but were late in uploading the accompanying Form 10-IC. It prioritizes a taxpayer's substantive right to a lower tax rate over a procedural error."
Tushar Kumar, Advocate, Supreme Court of India, says The judgment does not obviate the statutory requirement of filing Form 10-IC; it merely treats compliance with such requirement as directory rather than mandatory in circumstances where the delay is neither deliberate nor prejudicial to the interests of the Revenue.
Kumar says: "Taxpayers intending to avail of the new regime under Section 115BAA must, as a matter of prudence and statutory discipline, continue to furnish the prescribed form within the time limits stipulated under Section 139(1) read with the relevant Rules."
According to Kumar, this ruling now affords a measure of judicial protection in cases where the form has been filed belatedly but prior to completion of assessment or appellate proceedings, thereby ensuring that procedural lapses do not eclipse substantive justice.
Kumar says: "The pronouncement thus marks a welcome reaffirmation of judicial pragmatism and underscores the need for a balanced interpretation of tax law, one that preserves both the integrity of procedure and the equitable rights of the taxpayer."
Which type of taxpayers need to file Form10IC for filing ITR in new tax regime?
According to Surana, Form 10-IC must be filed by domestic companies that wish to opt for the concessional corporate tax regime under Section 115BAA of the Income-tax Act, 1961. This provision was introduced by the Taxation Laws (Amendment) Act, 2019, allowing domestic companies the option to pay income tax at a reduced rate of 22% (plus applicable surcharge and cess), provided they forego certain exemptions and deductions such as those under Sections 10AA, 32(1)(iia), 35, 35AD, etc. The option is available to:
Any domestic company (existing or new) incorporated in India,
Other than those already covered under Section 115BAB (which applies to new manufacturing companies opting for 15% tax rate).
In order to validly exercise this option, the company must electronically file Form 10-IC under Rule 21AE of the Income-tax Rules, on or before the due date for filing the return of income under Section 139(1).
Consequence of Not Filing Form 10-IC
According to Surana if a company fails to file Form 10-IC within the prescribed time, the option to be taxed under Section 115BAA is not considered validly exercised. The consequences are as follows:
The company’s income may be taxed at the regular corporate tax rate (i.e., 25% or 30% depending on turnover threshold) instead of the concessional 22%/ 15% rate.
Central Processing Centre (CPC) may automatically disallow the concessional rate during return processing under Section 143(1), as it cross-verifies whether Form 10-IC was filed by the due date.
The taxpayers may seek rectification under Section 154 or condonation from CBDT for late filing. However, unless the CBDT issues a specific condonation order, the benefit may be generally denied at the processing stage.
[The Economic Times]
