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2023 (8) TMI 813 - AT - Income TaxValidity of order of NFAC CIT(A) u/s 250 - Deduction u/s. 10AA - disallowance of claim as Form- 56F had no name and signature - HELD THAT - The issue of claiming exemption u/s. 10AA was never in dispute neither in this year nor in the previous years. Above this, this issue was not a subject matter of the grounds of appeal taken by the assessee still the Ld. CIT(A) out of his own whims and fancies disallowed the amount of exemption claimed u/s. 10AA. It s a gross violation of the principle of natural justice and the procedure defined to decide the appeal u/s 246(A) (1). While doing so Ld. CIT (A) ignored his jurisdiction to do so and moreover on merits also this action of Ld. CIT (A) is vitiated by law. This action of Ld. CIT (A) will fall in the category of enhancement of income without assuming jurisdiction hence, void ab initio. Reversal of exemption claimed u/s. 10A/10AA can only be done from the very first year itself once the claim of the assessee is allowed in the previous years, no rejection of the claim can be done in the balance succeeding years. In view of this we found the order of Ld. CIT (A) on this issue highly arbitrary, against law and bad on count of merits also. In the result ground no.1 along with its sub grounds is allowed. Wrong application of tax rate - HELD THAT - As in the relevant A.Y. assessee company was entitled to pay tax @ 25% instead of 30% as provided in the Act, if the turnover of the company in A.Y. 2016-17 is less than 50 cr. There is no new claim for contention raised by assessee rather assessee claim the same in its return of income and both CPC Bangalore and AO ignored this claim of CPC Bangalore. We found the claim of the assessee to be correct. In its submission, assessee categorically mentioned the figure of turnover in the relevant AY i.e. 46.95 crores which makes assessee eligible for lower rate of tax. As w.e.f. A.Y. 2018-19 as a measure to boost the industry the Hon ble Finance Minister reduce the tax rate for the companies having turnover less than 50 crore in A.Y. 2016-17. We found the contentions raised by the assessee as correct as there is no challenge to this figure at any stage by the department as the matter of the assessee already 3 barriers i.e. CPC Bangalore u/s 143(1), assessment order u/s. 143(3) and order passed by Ld. CIT (A) u/s 250. No adjudication on this issue has been done by the Ld. CIT (A) despite the fact that assessee has taken this ground before him also. We allow the claim of the assessee for statistical purposes by restoring the matter back to the file of Jurisdictional AO for verification of the claim of the assessee considering the figure of turnover at Rs. 46.95 crore for this purpose, which is not under challenge by the department including hearing before us. Ground no. 2 raised by the assessee is allowed for statistical purpose.
Issues Involved:
1. Denial of deduction claim under Section 10AA of the Income Tax Act. 2. Incorrect calculation of tax rate at 30% instead of 25%. Summary: Issue 1: Denial of Deduction Claim under Section 10AA The assessee appealed against the order of the National Faceless Appeal Centre (NFAC) which denied a deduction claim of Rs. 7,95,83,610/- under Section 10AA of the Income Tax Act, 1961. The assessee argued that this claim was allowed in the intimation order under Section 143(1) and subsequent assessment order under Section 143(3). The CIT(A) denied the claim citing that Form-56F lacked a name and signature, although the form was downloaded from the income tax portal, which should have been verified by the CIT(A). The Tribunal found that the deduction claim under Section 10AA was accepted in previous years and was not a subject matter of the grounds of appeal. The CIT(A)'s action was deemed a gross violation of natural justice and jurisdiction, rendering the disallowance void ab initio. The Tribunal relied on judicial precedents, emphasizing that once a deduction is allowed in the initial year, it cannot be withdrawn in subsequent years without disturbing the initial allowance. Consequently, the Tribunal allowed the assessee's ground on this issue. Issue 2: Incorrect Calculation of Tax Rate The assessee contended that the tax rate was incorrectly calculated at 30% instead of 25%, given that the company's turnover during A.Y. 2016-17 was below Rs. 50 Crores. The Tribunal found that the assessee's claim was correct, as the turnover was Rs. 46.95 Crores, making the company eligible for a lower tax rate. The Tribunal noted that neither the CPC Bangalore nor the AO had challenged this figure. The CIT(A) failed to adjudicate this issue despite it being raised. The Tribunal restored the matter to the Jurisdictional AO for verification, directing the AO to provide a reasonable opportunity for the assessee to be heard. The ground was allowed for statistical purposes. Conclusion: The appeal was allowed for statistical purposes, with directions for the AO to verify the turnover and apply the correct tax rate. The Tribunal's order was pronounced on the 10th day of July, 2023.
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