2024 (10) TMI 854 - AT - Income Tax

Rectification u/s 154 - considering the income tax rate at 25% as per turnover of the assessee instead of tax rate charged @ 30% - HELD THAT - As perused the Guidance note of the Institute of Chartered Accountants of India on tax audit under section 44AB of the Income-tax Act, 1961 filed before us wherein it is mentioned that if, however, the excise duty and /or sales tax recovered are credited separately to excise duty or sales tax account (being separate accounts) and payments to the authority are debited in the same account, they would not be included in the turnover. However, sales of scrap shown separately under the heading miscellaneous income will have to be included in turnover. Assessee has also filed copy of central excise duty payable and service tax payable ledger account for the period 01.04.2015 to 31.03.2016 demonstrating that it had credited the excise duty and service tax recovered separately to the respective account separately maintained and the payment made to the tax authorities were debited in the same account therefore, the same would not be included in the turnover. We direct the AO to consider the income tax rate @ 25% instead of 30% since the turnover for the F.Y. 2015-16 in the case of assessee was below Rs. 50 crores, since it had maintained separate account for payment of both the taxes in which the taxes recovered were credited before making payment to the respective tax authorities as prescribed in the guidance notes on tax audit u/s 44AB - Assessee appeal allowed.

Summary

The ITAT Mumbai allowed the appeal of the assessee against the order of the Ld. Commissioner of Income Tax for AY 2018-19. The assessing officer was directed to consider the income tax rate at 25% instead of 30% due to turnover below Rs. 50 crores and separate accounts for taxes as per guidance notes. The appeal of the assessee was allowed.