NIPUNAM TECHNOLOGIES PRIVATE LIMITED,MEDAK vs. DCIT CIRCLE-5(1), HYDERABAD

The return of income of the assessee company was processed by the AO/CPC, Bengaluru under Section 143(1) of the Act vide intimation dated 10.02.2025. The AO/CPC, while processing the return of income, made a disallowance aggregating to Rs. 65,370/- under Section 36(1)(va) and Section 43B of the Act and determined the total income of the assessee company at Rs.5,48,42,060/-. However, instead of computing the tax liability under section 115BAB of the Act, the AO/CPC computed the tax at the normal rate applicable to domestic companies.

Aggrieved by the intimation issued under Section 143(1) of the Act, the assessee company carried the matter in appeal before the CIT(A). However, the CIT(A) upheld the action of the AO/CPC by observing that the assessee company had claimed deduction of Rs.7,31,000/- under Section 80G of the Act and, therefore, was not entitled to the concessional rate of tax under Section 115BAB of the Act. Accordingly, the appeal of the assessee company was dismissed.

The assessee company being aggrieved with the CIT(A) order has carried the matter in appeal before us.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Shri. K.C Devdas, CA a/w Ms. S. Divya, CA, Ld. Authorized Representatives for the assessee company (for short, “Ld. AR”), submitted that the authorities below had proceeded on an entirely erroneous factual premise. It was submitted that, though due to an inadvertent clerical mistake, an amount of Rs. 7,31,000/- came to be reflected in "Schedule VI-A" of Form ITR-6, but the assessee company had never claimed any deduction under Section 80G of the Act. The Ld. AR drew our attention to "Schedule 80G - Details of donations entitled for deduction under section 80G", forming part of the return of income, and submitted that no particulars whatsoever of any donation or deduction under Section 80G had therein been furnished. It was further submitted that even the intimation issued by the AO/CPC under Section 143(1) of the Act dated 10.02.2025 does not record that any deduction under Section 80G was either claimed or allowed while processing the return.

The Ld. AR further submitted that the returned income of Rs.5,47,76,690/- was accepted by the AO/CPC, subject only to the adjustments of Rs.14,361/- under Section 36(1)(va) and Rs.51,009/- under Section 43B of the Act, resulting in the assessed income of Rs.5,48,42,060/-. The Ld. AR submitted that had any deduction under Section 80G of the Act actually been claimed, the returned income itself would have stood reduced to that extent, which admittedly is not the factual position. It was, therefore, submitted that the very foundation on which the AO/CPC and the CIT(A) denied the benefit of Section 115BAB was factually incorrect. The Ld. AR accordingly submitted that the assessee company be held entitled to the concessional rate of tax under Section 115BAB of the Act.

Per contra, Shri K Prasad, the Ld. Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the orders of the lower authorities.

We have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both parties in the backdrop of the orders of the authorities below. The short controversy involved in the present appeal is whether the assessee company was rightly denied the benefit of taxation under Section 115BAB of the Act on the ground that it had claimed deduction under Section 80G of the Act.

We have given thoughtful consideration and find substance in the submissions advanced by the Ld. AR. As is discernible from the record, the entire reasoning adopted by the AO/CPC, as affirmed by the CIT(A), proceeds on the assumption that the assessee company had in its return of income claimed deduction under Section 80G of the Act. However, on a perusal of the return of income placed before us, we find that though an amount of Rs.7,31,000/- was inadvertently reflected in "Schedule VI-A", the corresponding "Schedule 80G - Details of donations entitled for deduction under section 80G" does not disclose any donation or any claim of deduction under Section 80G of the Act. The factual position borne out from the return of income thus supports the contention of the assessee company that no deduction under Section 80G had actually been claimed.

We further find that the intimation issued by the AO/CPC under Section 143(1) of the Act also does not indicate that any deduction under Section 80G had either been claimed or allowed while processing the return of income. On the contrary, the returned income of Rs.5,47,76,690/- was accepted by the AO/CPC subject only to the adjustments on account of delayed deposit of employees' contribution towards Provident Fund (PF) and disallowance under Section 43B of the Act, resulting in the assessed income of Rs.5,48,42,060/-. Thus, the record itself establishes that no deduction under Section 80G had, in fact, been claimed as granted while processing the return of income.

We are of the view that once the factual foundation on which the authorities below proceeded is found to be incorrect, the consequential denial of the benefit under Section 115BAB cannot be sustained. The mere inadvertent reflection of an amount in Schedule VI-A, without there being any corresponding claim in Schedule 80G or any allowance of such deduction in the computation of total income, cannot be treated as an actual claim of deduction so as to render the assessee company ineligible for the concessional rate of tax under Section 115BAB of the Act.

In our considered view, the CIT(A) erred in sustaining the action of the AO/CPC merely on the basis of the aforesaid inadvertent disclosure without appreciating the complete return of income and the intimation issued under Section 143(1) of the Act. In our view, as the factual premise itself is found to be erroneous, the orders of the authorities below on this issue cannot be sustained.

We, therefore, set aside the order of the CIT(A) on the issue under consideration and direct the AO/CPC, Bengaluru to extend to the assessee company the benefit of taxation under Section 115BAB of the Act, subject to fulfillment of the other statutory conditions prescribed therein, which admittedly are not in dispute before us.

In the result, the appeal of the assessee company is allowed in terms of our aforesaid observations