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Facts
The assessee, Vapco Packaging Industries Pvt. Ltd., appealed against the denial of the concessional corporate tax rate under Section 115BAB by the Addl. CIT(A). The lower authority denied the claim on the grounds that the assessee had not commenced manufacturing activity during the year, as indicated by the absence of debited expenses for raw materials, wages, power, etc.
Held
The Tribunal found that the Ld. Addl. CIT(A) had misinterpreted the return of income, as the assessee had indeed debited various expenses such as freight, power, fuel, salary, wages, and depreciation, and also reported closing stock of finished goods. These facts proved that manufacturing activity had commenced during the year. Consequently, the impugned order of the Addl. CIT(A) was set aside, and the Assessing Officer was directed to allow the claim.
Key Issues
Whether the assessee was eligible for the concessional tax rate under Section 115BAB of the Income Tax Act, 1961, given the dispute over the commencement of manufacturing activity during the relevant assessment year.
Sections Cited
115BAB
AI-generated summary — verify with the full judgment below
�थायी लेखा सं./PAN NO: AAJCV0621L अपीलाथ�/Appellant ��यथ�/Respondent ( Physical Hearing ) �नधा�रती क� ओर से/Assessee by : Shri B.M.Monga, Shri Rohit Kaura and Ms. Khyati Avnish, Advocates राज�व क� ओर से/ Revenue by :Dr. Ranjit Kaur, Addl. CIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 27.10.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 31.10.2025 आदेश/Order The present appeal has been preferred by the assessee against the order dated 23.06.2025 passed by the Ld. Addl. / JCIT (Appeals) [hereinafter referred to as ‘Addl. CIT(A)’], for the Assessment Year 2023-24.
1116 -Chd-2025 Vapco Packaging Industries Private Limited, Chandigarh 2 2. The Assessee in this appeal is aggrieved by the action of the lower authorities in denying the claim to the Assessee u/s 115BAB of the Income Tax Act, 1961 (in short 'the Act’) for a concessional corporate tax rate of 15% (plus surcharge and cess) for new manufacturing domestic companies subject to fulfilment of conditions as stipulated under the relevant provisions.
The Addl. CIT(A) has mentioned in his order that the Assessee, though, has complied with all the formalities / conditions for the claim u/s 115BAB, however, the Assessee had not debited any expenses on raw materials, wages, power, depreciation etc. and, hence, it indicated that the Assessee did not start his manufacturing activity during the year. He observed that section 115BAB requires actual manufacturing activity during the relevant year. He, therefore, observed that since the manufacturing activity of the Assessee had not commenced during the year, hence, the Assessee was not eligible for the aforesaid claim of concessional rate of tax u/s 115BAB of the Act.
1116 -Chd-2025 Vapco Packaging Industries Private Limited, Chandigarh 3 4. I have heard the rival contention and gone through the record. The ld. AR of the Assessee submitted that, in fact, the Ld. Addl. CIT(A) mistook from the return of income and relevant papers that the Assessee had not debited expenses towards raw material, wages, power, depreciation etc. from which he observed that the Assessee had not started its manufacturing activity. The ld. AR has brought my attention to the copy of the ITR alongwith computation of income and, in particular, page 24 of the paper book, a perusal of which reveals that the Assessee had duly debited freight outward expenses, power and fuel expenditure, salary and wages including contribution to recognized provident fund, depreciation amortization expenditure etc. Even the Assessee has duly shown the closing stock of furnished goods. All these facts indicate that the manufacturing activity was duly started during the year. The Ld. CIT(A) did not take proper notice of the relevant columns of the return of income.
The ld. DR could not rebut the aforesaid factual aspect on the file. In view of this, the impugned order of the Ld. CIT(A) is set aside and the Assessing Officer is 1116 -Chd-2025 Vapco Packaging Industries Private Limited, Chandigarh 4 directed to allow the claim of the Assessee u/s 115BAB of the Act.
The appeal of the Assessee stands allowed.
Order pronounced on 31.10.2025.