The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has provided significant relief to a company whose Form 10-ID contained an obvious clerical error that was subsequently corrected. According to the latest ITAT ruling, Vaaman Fab Private Limited was entitled to the concessional tax rate of 15% under section 115BAB despite filing a corrected Form 10-ID after the statutory deadline. The tribunal held that when a company filed Form 10-ID within the prescribed time but inadvertently mentioned a financial year during which the company was not even in existence, the mistake was an obvious clerical error capable of rectification. The corrected Form 10-ID filed pursuant to the advice of the Department's grievance cell could not be treated as a fresh and belated exercise of option, as the assessee had already filed a timely original form.
The case involved Vaaman Fab Private Limited, which had opted for the concessional taxation regime applicable to eligible new domestic manufacturing companies. The company filed Form 10-ID on April 1, 2021, but the form incorrectly stated that the option was being exercised for FY 2019-20 and subsequent years. The company had been incorporated only on July 24, 2020, making it impossible for it to have exercised an option for a financial year during which it had no legal existence. While processing the return for AY 2021-22 through an intimation under section 143(1) dated August 24, 2022, the Centralised Processing Centre (CPC) denied the benefit of the concessional rate based on the mismatch in Form 10-ID. After becoming aware of the problem, the assessee raised a grievance on the e-filing portal and was advised by the Department's grievance cell to submit another Form 10-ID containing the correct assessment year. Acting upon that advice, the assessee filed a corrected form on September 15, 2022.
The ITAT bench examined whether the corrected Form 10-ID could be treated as a fresh and belated exercise of option, or whether it related back to the original timely filing. The tribunal found that the original Form 10-ID contained a blatant and self-evident mistake that was apparent from the contents of the form itself. The contradiction between the company's date of incorporation and the incorrect financial year mentioned in the form proved the clerical nature of the error without requiring elaborate investigation. The fact that the corrected form was filed pursuant to the advice of the Department's own grievance cell materially strengthened the assessee's case. The tribunal held that when an apparent mistake in a statutory form is subsequently rectified, the correction relates back to the date of the original form. The corrected form should not be considered on a standalone basis for determining limitation, and the tribunal emphasized that the Department should facilitate the operation of the simplified regime rather than creating unnecessary procedural hurdles.
The ruling draws an important distinction between a belated exercise of an option and a belated correction of an option already exercised in time. The tribunal cited the Supreme Court judgment in Collector, Land Acquisition v. Mst. Katiji (1987) 167 ITR 471, which laid down that the expression 'sufficient cause' occurring in the Limitation Act should receive a liberal construction. The ITAT noted that the Department's effort should be to ensure the success of the Legislature's attempt to simplify the taxation system rather than creating unnecessary hurdles. The tribunal emphasized that Form 10-ID is merely a form submitted for exercising the concessional option, and the whole purpose is to reduce litigation and simplify the computation of income. The ruling should not be understood as dispensing with the statutory time limit for Form 10-ID in every case, but applies where a timely original form exists, the intention to opt for section 115BAB is clear, and the later filing merely repairs an obvious mistake.
