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Judgment
ORDER
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned The Commissioner of Income-Tax, Appeal Addl/JCIT (A)-2, Ahmedabad [‘CIT(A)’ in short] dated 08.12.2025 under section 250 of the Income Tax Act, 1961 (‘the Act’) arising from the order dated 05.08.2024 (served on 05.08.2024 as per Form 35) passed by designated authority of CPC Bangalore under section 154 of the Act concerning Assessment Year (A.Y.) 2023-24.
The grounds raised by the assessee are as under :
“1.That assessee-company denies its liability to be assessed under section 154 of the Act at total income of Rs.2,59,45,160/- as against the returned income of Rs.2,59,45,160/- and accordingly denies his liability to pay any taxes, cess, and interest demanded thereon for the year under consideration.
2.That on the facts, in the circumstances of the case and in law also, action of Ld. CPC in not allowing the petition filed by the assessee-company under section of the Act and more so when there is mistakes apparent from record are present in the intimation order passed under section 143(1) of the Act.
3.That in any case and in any view of matter action of Ld. CPC in not allowing the petition filed under section 154 of the Act is bad in law and against the facts and circumstances of the case.
4.That, on the facts and in the circumstances of the present case and in law, the Ld. CPC erred in passing the impugned order without validly assuming jurisdiction as per law, without complying with the mandatory conditions prescribed under the Act, and without obtaining the requisite approval, wherever required. Accordingly, the impugned order is without authority of law and liable to be quashed.
5.That on the facts, in law as well as circumstances of the present case, Ld. CPC erred in denial the benefit of concessional tax rate under section 115BAB despite the assessee-company having duly exercised the said option in its return of income and having consistently availed the same in the preceding assessment years.
6.That on the facts, in law as well as circumstances of the present case, Ld. CPC erred in not appreciating the law that filing of Form 10D is directory in nature not mandatory.
7.That on the facts, in law as well as circumstances of the present case, Ld. CPC erred in making adjustments/variations while passing the intimation order under section 143(1), without issuing any prior notice and without granting an opportunity of being heard to assessee-company. The said action of Ld. CPC violates the principles of natural justice.
8.That the assessee craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Brief facts of the case are that the assessee is a private domestic company engaged in the manufacturing of e-vehicles, incorporated Manufacturing operations commenced on January 1, 2021. The Assessee opted for the concessional tax regime of 15% under Section 115BAB of the Income Tax Act, 1961 ("the Act") via Form 10ID filed on 23.03.2022 from AY 2021-22. The return of income of the AY 2021-22 was filed on 25.03.2022. A copy of the Form 10ID & acknowledgement receipt of the form are enclosed on Pages 7-9 of PPB.
The Assessee filed the return of income for the relevant AY 2023-24 on 30.10.2023 after availing the concessional tax rate u/s 115BAB and declared the total income of Rs. 2,59,45,160/-. The CPC issued the Intimation u/s 143(1) of the Act on 27.05.2024, wherein the returned income was accepted. However, CPC did not allow the benefit of section 115BAB of the Act without assigning any reasoning thereto and without providing the mandatory opportunity u/s 143(1)(a) of the Act.
The assessee filed the rectification application u/s 154, which was rejected by the CPC on 05.08.2024 again vide non-speaking order. The subsequent appeal was filed before the CIT(A), which was dismissed on 08.12.2025, on the reasoning that the assessee failed to meet the mandatory timeline for exercising the concessional tax option under Section 115BAB. As per CIT(A), filing of Form 10ID on or before the due date of the first return of income is the substantive and mandatory requirement. In this case, for the first assessment year (AY 2021-22), the assessee filed its return on March 25, 2022, which was after the extended deadline of March 15, 2022. Consequently, the option became invalid for that year and all subsequent years. Notably, the returns for AY 2022-23 (immediately preceding year), AY 2024-25, and AY 2025-26 (subsequent assessment years) were processed successfully under the concessional tax regime of 15% u/s 115BAB.
Aggrieved with this, the Assessee had filed the appeal before us.
The ld counsel of the assessee stated that to qualify for the 15% concessional tax rate under Section 115BAB, a domestic company must satisfy specific cumulative conditions. The Assessee has fulfilled all such criteria as follows: Firstly, the company must be set up and registered on or after October 1, 2019 which was complied where the Assessee was incorporated on June 6, 2020. Secondly, the commencement of Manufacturing: Operations must commence on or before March 31, 2024 whereas the Assessee commenced manufacturing e-vehicles on January 1, 2021. Thirdly, the nature of Business should be that the company must not be engaged in any business other than the manufacture or production of any article or thing whereas the Assessee is exclusively engaged in the manufacturing of e-vehicles. Fourthly, the company must compute total income without claiming specific deductions (e.g., Section 10AA, 32(1)(iia), or Chapter VI-A other than 80JJAA/80M) whereas the Assessee declared total income of ₹2,59,45,160 without claiming such prohibited exemptions/deductions. Fifthly, the business must not be formed by splitting up/reconstruction and must not use previously used machinery (subject to the 20% allowance for second-hand assets) whereas the Assessee set up a new manufacturing unit.
The ld AR further argued that Section 115BAB(7) and the requirement to file Form 10-ID before the due date specified u/s 139(1), are the procedural mechanisms for opting into the regime. The Assessee filed Form 10-ID and the first ITR (A.Y. 2021-22) after the Section 139(1) deadline but within the time allowed for a belated return u/s 139(4). The ld AR submitted that such procedural lapse should not be treated as a fatal flaw. The ld AR relied on the Hon'ble Delhi ITAT in the case of Cosmo Specialty Chemicals Private Limited v. ITO (ITA No. 809/DEL/2024).
Per contra the ld DR relied on the orders of the AO/CIT(A).
We have heard the rival submissions and have carefully perused the materials on record. It is an uncontroverted fact that the assessee has fulfilled all the statutory conditions for being eligible for the benefit of section 115BAB, of lower tax rate. We find that the Assessee has filed Form 10-ID and the first ITR (A.Y. 2021-22) after the due date as prescribed u/s 139(1) but within the time allowed for a belated return u/s 139(4). Thus though admittedly there is a procedural lapse, the assessee has undisputedly met the substantive conditions of the provisions under section 115BAB. We also find that it has been consistently held that such lapse, of not filing Form 10ID on or before the due date u/s 139(1), is a mere procedural formality if the substantive conditions of the sections are satisfied.
The facts in the Vivrn Foods Private Limited (Raipur ITAT) relied upon by the Revenue, is distinguishable as in that case Form 10ID was filed years after the first return whereas in the instant case, the Form 10ID was filed in the very first year of return of income itself. We therefore follow the Hon'ble Delhi ITAT in the case of Cosmo Specialty Chemicals Private Limited v. ITO (ITA No. 809/DEL/2024) which held that the benefit cannot be denied solely because Form 10-ID was filed after the Section 139(1) deadline, we hold that the procedural lapse of not filing the Form 10ID within due date u/s 139(1), on the part of the assessee may not be treated as fatal flaw for being eligible for the benefit of section 115BAB. The grounds 3 and 6 are allowed.
In the result the appeal of the assessee in ITA No. 252/Del/2026 is allowed.