IDHAYAM G FINANCE AND SERVICES LIMITED,VIRUDHUNAGAR vs. CORP. WARD 1, MDU, MADURAI

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ITA 1238/CHNY/2026Status: DisposedITAT Chennai11 June 2026AY 2018-195 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal held that disallowing ROC fees already disallowed by the assessee resulted in double disallowance and directed its deletion. For PF/ESI, it followed the Supreme Court decision. For the tax rate, it found merit in the assessee's claim and remitted the issue for re-computation.

What were the facts?

The assessee company, engaged in non-banking financial services, filed its return of income. Additions were made by the CPC and upheld by the CIT(A). The appeal concerns disallowance of ROC fees, disallowance for delayed PF/ESI contribution, and the applicable tax rate.

What were the issues?

Whether disallowance of ROC fees already disallowed by the assessee is permissible, and what is the correct tax rate applicable to the assessee for the assessment year.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(1),Section 28,Section 44BA,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: MS. PADMAVATHY.S & SHRI MANU KUMAR GIRI

आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A)-2, Jaipur (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 08.12.2025 for Assessment Year (AY) 2018-19.

2.

The assessee is a company carrying on non-banking financial services. The assessee filed a return of income for AY 2018-19 on 07.09.2018 declaring total income of Rs.3,60,33,702/-. The return was processed u/s.

ITA No.1238/Chny/2026 Idhayam G Finance and Services Ltd. :- 2 -: 143(1) of the Act by CPC, where additions to the tune of Rs. 30,79,810/- were made by the CPC. Aggrieved, the assessee filed further appeal before the CIT(A), who upheld the additions made.

Ground No.1 – Disallowance of fees paid towards increase in authorised capital: 3. The Ld. Authorized Representative (AR) of the assessee in this regard submitted that the assessee while filing the return of income has already disallowed the ROC fees paid. The Ld. AR further submitted that the CIT(A) has confirmed the disallowance on the ground that in the auditors report the auditors have stated the impugned amount as amount debited to the profit and loss account being in the nature of capital expenditure (para 6.2.1 of CIT(A) order). The Ld. AR drew our attention to the amount disallowed in the return of income as any other item or addition u/s. 28 to 44BA (Point No.23 of return of income as extracted in page 25 of CIT(A) order). The Ld. AR further drew our attention to the computation of income as extracted below to substantiate that the impugned amount is already disallowed by the assessee:

ITA No.1238/Chny/2026 Idhayam G Finance and Services Ltd. :- 3 -: 4. We have heard the parties, and perused the material available on record. From the perusal of the above computation, we notice that the assessee has made various disallowances while computing the total income and the said disallowance includes the ROC fees paid towards increase in authorised share capital amounting to Rs. 6,02,420/-. We further notice that the amount reflected in Point No.23 of the return of income (page 25 of CIT(A) order) reflects a sum of Rs. 31,75,975/- as amount added to the income which includes the ROC fees of Rs. 6,02,420. Therefore, we see merit in the argument of the Ld. AR that disallowing the amount once again by the lower authorities has resulted in double disallowances. We accordingly direct the A.O to delete the disallowance made in this regard.

Ground No.2 – Disallowance u/s. 36(1)(va) of the Act: 5. The Ld. AR submitted that at the time of filing the return of income the assessee has relied on the judicial precedence which was prevailing at that time. The Ld. AR further submitted that the Explanatory Memorandum to Finance Bill, 2026 has rationalized the due date for deposit of employee contribution which confirms the legislative intent that the employer and employee contribution towards PF are to be treated at par. The Ld. AR also submitted that the disallowance cannot be made based on the subsequent decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. CIT (2022) 448 ITR 518 (SC).

6.

We heard the parties and perused the material on record. The issue of disallowance towards delayed payments of PF/ESI is settled by the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra). Respectfully following the judicial precedents as laid down by the Hon'ble

ITA No.1238/Chny/2026 Idhayam G Finance and Services Ltd. :- 4 -: Supreme Court, we see no reason to interfere with the decision of the CIT(A) in confirming the disallowance made by the AO.

Ground No.3 – Tax rate applicable to the assessee: 7. The Ld. AR submitted that the tax rate applicable for AY 2018-19 in the case of a company is as under: Paragraph E In the case of a company,____ Rates of Income-tax I. In the case of domestic company,___ (i) where its total turnover of the gross receipt in the previous year 2015-16 does not exceed fifty crore rupees: - 25 per cent of the total income (ii) other than that referred to in item (i)- 30 per cent of the total income – 30 per cent of the total income 8. The Ld. AR further submitted that the assessee has inadvertently has chosen the wrong code due to which the rate of tax is computed at 30% whereas the applicable tax rate in assessee's case is only 25% since the total turnover of the assessee in a previous year 2015-16 has not exceeded Rs. 50 Crores. The Ld. AR in this regard drew our attention to the financial statements for the year ended 31.03.2016(page 227 of paper book) where the turnover of the assessee is stated to be nil and the total revenue including under income is Rs. 17.69 Lakhs.

9.

We have heard the parties, and perused the material available on record. A combined perusal of the facts as submitted by the Ld. AR hereinabove, we notice that there is merit in the submission that the correct rate of tax as applicable to the assessee is 25% of the total income. Therefore, we remit the issue back to the A.O with a direction to re-compute the tax

ITA No.1238/Chny/2026 Idhayam G Finance and Services Ltd. :- 5 -: liability of the assessee as per our directions after giving a reasonable opportunity of being heard to the assessee.

10.

In the result, the appeal of the assessee is partly allowed.

Order pronounced on 11th day of June, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार िग"र) (पदमावती यस) (Manu Kumar Giri) (Padmavathy.S) लेखा सद�य लेखा सद�य सद�य /Accountant Member सद�य �याियक �याियक सद�य �याियक �याियक सद�य सद�य / Judicial Member सद�य लेखा लेखा चे�नई/Chennai, �दनांक/Dated: 11th June, 2026. EDN, Sr. P.S आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु!/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF Digitally signed by EJTADA DURGA EJTADA DURGA NARESH NARESH Date: 2026.06.16 12:30:28 +05'30'

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