Substantive exercise of tax option in ITR outweighs procedural delay in filing Form 10-IC.

The petitioner, a domestic company, filed its income tax return (ITR-6) for Assessment Year (AY) 2020–21 on 09.01.2021.

In the return, it opted for the concessional tax rate of 22% under Section 115BAA of the Income Tax Act, 1961.

However, the petitioner inadvertently failed to file the mandatory Form No. 10-IC by the due date. The Centralised Processing Centre (CPC) consequently applied the normal tax rate.

During remand proceedings, the petitioner filed Form 10-IC on 30.01.2023.

Subsequently, the petitioner sought condonation of delay under Section 119(2)(b) via an application dated 28.12.2024, citing CBDT Circular No. 17/2024.

The respondent rejected the application on 22.12.2025, asserting it was maintainable only if filed within three years from the end of the AY (i.e., by 31.03.2024).

1. Whether the rejection of the condonation application on the grounds of maintainability was legally sustainable when the relevant Form 10-IC had been filed within the three-year window.

2. Whether the substantive exercise of an option in the ITR-6 satisfies the requirements for concessional taxation despite a procedural delay in filing Form 10-IC.

Section 115BAA of the Income Tax Act, 1961, which provides a concessional tax regime for domestic companies.

Section 119(2)(b), which empowers the CBDT to authorize income tax authorities to admit belated applications for exemptions or reliefs to avoid genuine hardship.

CBDT Circular No. 17/2024 (and the preceding Circular No. 19/2023), which provides guidelines for condoning delays in filing Form 10-IC, provided the return was filed on time and the option was exercised in the "Filing Status" of ITR-6.

The principal that procedural requirements should not defeat substantive rights.

The Court found that the respondent erroneously conflated the date of filing the formal condonation application (28.12.2024) with the actual date of filing Form 10-IC (30.01.2023).

While the Circular mandates a three-year limit from the end of the AY (31.03.2024 for AY 2020-21), the Court noted that Form 10-IC was substantively filed well before this cutoff.

The Court observed that the petitioner satisfied all three conditions of Circular 17/2024: (i) the return was filed before the due date; (ii) the option was clearly selected in the ITR-6 form; and (iii) the delay was due to a bona fide oversight.

The Bench reasoned that since the intent to adopt the concessional rate was manifest in the original return, the delay in filing the form was a mere procedural technicality that should not result in the denial of a substantive benefit.

The Court allowed the writ petition and set aside the order dated 22.12.2025; it condoned the delay in filing Form 10-IC and remanded the matter to the competent authority for a fresh decision on merits, strictly directing that the issue of delay or limitation shall not be reconsidered.