Loading judgment…
Facts
The assessee opted for taxation under Section 115BAA at 22% for AY 2020-21, but missed filing Form 10-IC. The CPC accordingly computed tax at 30%, leading to a demand. The assessee's alternative claim for a 25% tax rate based on turnover in PY 2016-17 was denied by the CIT(A).
Held
The Tribunal held that the assessee's alternative claim for a 25% tax rate based on turnover less than Rs. 250 Crores in PY 2016-17, as per the Finance Act 2019, was substantial and applicable irrespective of other conditions. Therefore, the AO was directed to apply the concessional rate of 25% along with applicable surcharge and cess.
Key Issues
Whether the assessee is eligible for the concessional tax rate of 25% based on their turnover in the previous year, even if they missed filing the mandatory form for Section 115BAA?
Sections Cited
115BAA, 115BA, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
(िनधा(रणवष( / Assessment Year: 2020-21) Hydraguard International Pvt. Ltd. ITO #86, Polyhose Towers, 8th floor, बनाम/ Corporate Ward-2(3) Western Ring, Mount Road, Guindy, Chennai. Vs. Chennai-600 032. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AADCP-7219-C (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri S.M. Khaja Muyeenuddeen (CA)– Ld.AR � थ�कीओरसे/Respondent by : Shri AR.V. Sreenivasan(Addl.CIT)-Ld. Sr.DR सुनवाईकीतारीख/Date of Hearing : 07-11-2024 घोषणाकीतारीख /Date of Pronouncement : 07-11-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. In this appeal, the assessee seeks application of correct rate of tax. The impugned order has been passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 07-06-2024 in the matter of an intimation issued by CPC u/s 143(1) on 18-12-2021.
Upon perusal of impugned order, it could be seen that in its return of income for Assessment Year (AY) 2020-21, the assessee opted for taxation in terms of Sec.115BAA @22%. The assessee declared income of Rs.130.23 Lacs on turnover of Rs.12.20 Crores. However, the assessee missed to file the requisite form 10-IC in support of the same. Accordingly, CPC computed tax @30% and raised demand against the assessee. Aggrieved, the assessee preferred further appeal.
During first appeal, the assessee, in the alternative, stated that tax rate should be applied @25% since the turnover of the assessee for previous year 2017-18 was less than 400 Crores. The CPC should have allowed the benefit of reduced rates of tax @25% as applicable to such domestic companies. The Ld. CIT(A) held that since the assessee did not file mandatory Form No.10-IC, the concessional rate was rightly denied to the assessee. On the alternative claim, it was held that if the assessee wants to claim the benefit of Sec.115BA, then it has to fulfill specific conditions and opt for this rate by filing Form 10-IB. In the absence of such compliance, the concessional rate could not be granted to the assessee. Accordingly the appeal was dismissed against which the assessee is in further appeal before us.
The Ld. AR has stated that the assessee has not fulfilled the conditions of Sec.115BAA. However, the alternative claim as made by the assessee is not u/s 115BA but the assessee merely seek application of correct general rate of tax as applicable to all domestic companies whose turnover in previous year (PY) 2016-17 was less than Rs.250 Crores. For the same, Ld. AR has drawn our attention to tax rates prescribed by Finance Act, 2019. The Ld. AR has stated that since the turnover in PY 2016-17 was Rs.2.07 Crores, the applicable rate would be 25%. This rate is applicable irrespective of applicability of Sec.115BA / 115BAA or any other section. The concessional rate of tax as prescribed by Finance Act, 2019 is applicable to domestic company based on the turnover threshold without having to fulfill any other conditions whatsoever. In support of turnover for PY 2016-17, Ld. AR has placed on record relevant financial statements.
We find substance in the alternative claim of the assessee. The general rate of tax for domestic companies having turnover of less than Rs.250 Crores in PY 2016-17 is 25%. No other condition has been prescribed. Undisputedly, the assessee’s turnover in PY 2016-17 is less than the prescribed threshold limit. Therefore, we direct Ld. AO to apply concessional rate of 25% and applicable surcharge & cess and revise the demand as raised against the assessee.
The appeal stand allowed. Order pronounced on 07th November, 2024.