GRIHANI FABRICS INDIA PVT LTD,SURAT vs. ITO WARD 1(1)(1), SURAT
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the assessee's contention regarding the lack of opportunity of being heard by the CPC was not explicitly decided. Regarding the second issue, the Tribunal noted that while the assessee claimed to have filed Form 10-ID for AY 2023-24, records indicated it was filed on 28-09-2022 for AY 2022-23. For AY 2023-24, Form 3CA-3CD was filed, but Form 10-ID was not. The Tribunal referred to Section 115BAB, which requires compliance with conditions in sub-section 2. It also considered Section 115BAA, proviso to sub-section 5, which states that if an option under Section 115BAB is invalid due to violations, the assessee may exercise the option under Section 115BAA, and once exercised, it cannot be withdrawn. The Tribunal found the revenue's contention justifiable, noting that the Mumbai Tribunal decisions did not consider the Supreme Court's decision in Wipro Ltd. Therefore, the appeal of the assessee was dismissed.
What were the facts?
The assessee, Grihani Fabrics India Pvt Ltd, filed its return of income for Assessment Year 2023-24 on September 28, 2023, declaring a total income of Rs. 63,24,540/- and opting for taxation under Section 115BAB of the Income Tax Act, 1961, by filing Form 10-ID on September 28, 2022. However, the CPC processed the return under Section 115BAA, taxing the income at 22%, resulting in a refund of Rs. 7,32,190/- instead of the Rs. 13,40,060/- declared. The CPC also disallowed TDS proportionately and issued an intimation order under Section 143(1) without providing a hearing. The assessee appealed to the CIT(A), which partly allowed the appeal. The assessee is now before the ITAT challenging the CIT(A)'s order.
What were the issues?
1. Whether the CPC erred in passing an intimation order under Section 143(1) without providing the assessee with an opportunity of being heard on the adjustments made (Section 143(1)). 2. Whether the CPC erred in not considering the Form 10-ID filed by the assessee under Section 115BAB and taxing the income under Section 115BAA, thereby denying the benefit of the beneficial tax rate under Section 115BAB (Sections 115BAB and 115BAA). Assessee's contentions: The CPC should have provided a hearing before making adjustments. Form 10-ID was filed, and the income should be taxed under the beneficial Section 115BAB, not Section 115BAA. The assessee relies on Mumbai Tribunal decisions in Brahmos Realty (P.) Ltd. vs. ITO and ACIT vs. Magik Kraft (P.) Ltd. Revenue's contentions: The assessee filed Form 10-ID afterwards, and the proviso to sub-section 5 of Section 115BAB prohibits granting taxation under Section 115BAB. The assessee had filed Form 10-IC in the earlier year. The revenue relies on the Supreme Court decision in PCIT vs. Wipro Ltd. and Gujarat High Court decisions distinguishing Wipro in the context of Section 115BAB.
Which sections of the Income-tax Act were involved?
Section 143(1),Section 115BAB,Section 115BAA,Section 139(1),Section 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI
IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.638/SRT/2025 (निर्धारण वर्ा/Assessment Year: 2023-24) GRIHANI FABRICS INDIA PVT ASSESSING OFFICER, CPC, LTD, BENGALURU / ITO WARD 1(1)(1), Surat 3614, GIDC SACHIN, SURAT-394230, GUJARAT 1ST FLOOR, PRESTIGE ALPHA NO 48/1 48/2, Vs. BERATENAAGRAHARA BEGUR, HOSUR RD, UTTARAHALLI HOBLI, BENGALURU-560100, KARNATAKA अपीलधर्थी Appellant प्रत्यर्थी Respondent
Permanent Account Number of Assessee: AAICG0493J
अपीलधर्थी द्वारा/Appellant represented by: Shri Kaushik Kejriwal, AR प्रत्यर्थी द्वारा/Respondent represented by: Shri Ashish Kumar, Sr. DR सुनवाई की तारीख / Date of conclusion of hearing: 19.08.2026 घोषणा की तारीख / Date of pronouncement: 30.10.2026 O R D E R PER : SUCHITRA KAMBLE, J M:
The appeal filed by the assessee is against the order passed by the Commissioner of Income Tax (Appeal), ADDL/JCIT(A)-4, Bengaluru [in short “CIT(A)”] dated 07.05.2025 for the Assessment Year (in short “AY”) 2023-24.
The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case as well as the law on the matter, the CPC has erred in passing an intimation order u/s. 143(1) of the Act, without
providing the Assessee with an opportunity of being heard on adjustments made by CPC.
On the facts and circumstances of the case as well as law on the matter, the CPC erred in not considering the Form 10-ID filed by the Assessee u/s. 115BAB of the Act and taxing his income under the 115BAA.
The appellant requests the learned CIT(A), to allow it the benefit of taxation available u/s. 115BAB of the Act and ask the concerned Assessing Officer to re- compute Assessee's tax liability, keeping in mind the beneficial interpretation of law.
The appellant craves leave to add, alter, modify or delete all or any of the grounds of appeal.” 3. The assessee company filed its return of income for the relevant assessment year u/s. 139(1) of the Income Tax Act, 1961 (in short “the Act”) on 28th September 2023, declaring a total income of Rs.63,24,540/-. The assessee company offered its income for tax at the rate prescribed u/s. 115BAB of the Act. The Assessee Company opted for the aforesaid option by filling form 10-ID, u/s. 115BAB of the Act, with the Income Tax Department on 28th September 2022 (Α.Υ. 2022-23). However, while processing the Assessee Company's return of income for the relevant assessment year, CPC erroneously computed the tax on Assessee Company's income as per section 115BAA of the Act, i.e., at 22%. Thereby, CPC issued refund of Rs.7,32,190/-to the Assessee instead of Rs.13,40,060/- as per Assessee's return of income. Moreover, while processing the Assessee Company's return of income for the relevant assessment year, CPC proportionately disallowed TDS claimed by the Assessee under rule 37BA. Further, the Assessee Company was not given any opportunity of being heard by the CPC before making the above adjustments and directly an intimation order u/s. 143(1) of the Act was passed, issuing a tax refund of Rs. 7,32,190/- instead of Rs. 13,40,060/-. The detailed computation of the income for AY 2023-24 is as follows:
Being aggrieved by the intimation order u/s 143(1) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee for statistical purpose.
The Ld. Authorised Representative (in short “the Ld. AR”) submitted that the CPC erred in passing an intimation order u/s 143(1) of the Act without providing the assessee with an opportunity of being heard on adjustments made by the CPC. The Ld. AR further submitted that the CPC has not considered that the Form 10 ID filed by the assessee u/s 115BAB of the Act and the assessee’s income cannot be taxed u/s 115BAA of the Act. The Ld. AR submitted that the assessee should have been allowed the benefit of taxation available u/s 115BAB of the Act.
The Ld. Departmental Representative (in short “Ld. DR”) submitted that the assessee has filed Form 10-ID afterwards and thus proviso to sub- section 5 of section 115BAB categorially gives imbarbo for not granting taxation u/s 115BAB to the assessee. In fact, in earlier year the assessee has filed Form 10-IC. The Ld. DR also filed the short note/written note as follows: “1. At the outset, the Assessee would like to submit that the matter before the Hon'ble Supreme Court of India, in the aforesaid case of Wipro, pertained to exemption claimed u/s. 10B of the erstwhile Income Tax Act, 1961 ("the Act"), whereas the issue under dispute in the case of Assessee Company relates to denial of beneficial tax rate u/s. 115BAB of the Act. The same is duly noted at para 11 and 12 of the said order. Relevant extract of the same is placed below for ready reference.
“11. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, Section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income". Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 108 (8) of the IT Act.
Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 10B (8) to opt out of Section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 10B (8) as being mandatory also has no substance. As observed hereinabove, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement."
Further, Hon'ble Gujarat High Court has already distinguished the said judgement of Wipro in its order in the matter of CIT vs. Gujarat Energy Development Agency and Surat Smart City Development Limited vs. PCIT. The Hon'ble High Court has duly confirmed in the said judgement that the Supreme Court order in the case of Wipro is not applicable in the matter of sec. 115BAB of the Act. A copy of the order of Hon'ble Gujarat High Court in the matter of Surat Smart City Development Limited vs. PCIT duly discussing both the aforesaid order.” The Ld. DR relied upon the decision of Hon’ble Apex Court in case of PCIT vs. Wipro Ltd. (2022) 140 taxmann.com 223 (SC) (in civil appeal No.1449 of 2022 arising out of SLP (civil appeal No.7620/2025).
The Ld. AR, in rejoinder, relied upon the decision of the Mumbai Tribunal in case of Brahmos Realty (P.) Ltd. vs. ITO (2025) 178 taxmann.com 139 (Mum-Trib.) and ACIT vs. Magik Kraft (P.) Ltd. (2025) 179 taxmann.com 632 (Mum-Trib.). The Ld. AR submitted that the decision of Wipro Ltd. (supra) will not be applicable in assessee’s case. 4
We have heard both the parties and perused all the relevant materials available on record. The assessee though filed Form 10-IC for the earlier year in the present assessment year, the assessee filed Form 10-ID as per their submissions, but from the perusal of records it can be seen that the assessee filed Form 10ID on 28-09-2022 i.e. for AY 2022-23. For AY 2023-24, the assessee filed return of income on 28-09-2023 and Form 10ID was not filed, but Form 3CA-3CD was filed. As per Section 115BAB, the assessee has to comply with the conditions contained in sub section 2, and these conditions are set out in the said sub section. The Ld. AR relied upon sub section 5, but it will not help the assessee as Section 115BAA sub section 5 proviso clearly provided that in case of a person where the option exercised by it under Section 115BAB has been rendered invalid due to violation of conditions contained in sub-clause 2 or sub-clause 3 of clause A or clause B of sub section 2 of said section. Such person may exercise option under this section and once the option has been exercised for any previous year, it cannot be subsequently withdrawn from the same or any other previous year. Therefore, Section 115BAA and Section 115BAB are the guidelines and should be taken into account together. The decision of Hon'ble Apex Court in case of Wipro (supra) has not been taken into account by the decisions of the Mumbai Tribunal. Thus, the contention of the Ld. DR appears to be justifiable.
In result, appeal of the assessee is dismissed.
Order pronounced in the open court on 30.10.2026
Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated: 30.10.2026 * Kishore, Sr. P.S.
Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order, HEMA KISHORE Digitally signed by HEMA KISHORE JAKKA JAKKA Date: 2026.11.02 15:32:10 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench
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