DCIT, SWARGATE PUNE vs. GRIHUM HOUSING FINANCE LIMITED, PUNE

Facts

The Revenue's appeal challenges the CIT(A)'s order allowing a concessional tax rate of 25% to the assessee for AY 2019-20. The CPC had applied a 30% tax rate, considering the assessee's turnover to be above Rs. 250 crores. The assessee argued that certain 'other income' items should not be included in turnover for determining the tax rate, and that the adjustment by CPC was outside the scope of Section 143(1) and lacked natural justice.

Held

The Tribunal held that the issue of whether 'other income' items constitute gross turnover for determining the tax rate is a debatable issue. Adjustments for debatable issues cannot be made under Section 143(1) without providing the assessee an opportunity to be heard. Since the CPC made the adjustment without hearing the assessee, it violated the principles of natural justice and was not proper.

Key Issues

Whether the CPC can adjust the applicable tax rate by including 'other income' in turnover under Section 143(1) without providing an opportunity for hearing, especially when the issue is debatable.