2025 (7) TMI 1225 - AT - Income Tax

Application of correct rate of tax - assessee being resident corporate assessee filed return of income - CPC processed the same u/s 143(1) and applied normal tax rate of 30% as applicable to companies - assessee had applied concessional rate of 25% - assessee preferred rectification u/s 154 which was also rejected by CPC on the ground that the assessee could have filed appeal against intimation u/s 143(1) but the assessee filed appeal against intimation order issued u/s 154. Assessee appeal allowed. HELD THAT - We are of the opinion that separate cause of action had arisen for the assessee i.e. first against intimation passed u/s 143(1) and secondly against rectification intimation passed u/s 154. Both intimations are appealable before CIT(A). Therefore the appeal could not be dismissed merely on technical ground and the appellate door could not be shut against rectification intimation. Having said so we find that the lower rate of tax was not claimed by the assessee u/s 115BAA but the assessee has claimed general concessional rate of tax of 25% which was applicable to all corporate assessee having turnover of less than Rs. 250 Crores during previous year 2016-17. AR has placed on record financial statements for FY 2016-17 which would indicate that the turnover of the assessee in this year is merely Rs. 2.07 Crores. Accordingly the assessee is eligible to claim concessional basic rate of tax of 25%. Therefore AO is directed to make correct computations of tax payable by the assessee. The basic rate of tax as applicable to the assessee would be 25%.

Summary

The ITAT Chandigarh disposed of the appeal filed by the assessee for AY 2020-21 against the CIT(A)'s order rejecting rectification under section 154 of the Income Tax Act. The primary issue was the correct rate of tax applicable to the assessee, a resident corporate taxpayer. The assessee had declared income of Rs. 60.45 lakhs and the CPC applied the normal corporate tax rate of 30% under section 143(1), whereas the assessee claimed a concessional rate of 25%. The rectification application under section 154 was rejected, and the CIT(A) dismissed the appeal on the ground that the appeal should have been filed against the original intimation under section 143(1), not the rectification order under section 154. The Tribunal held that "separate cause of action had arisen" against both the original intimation under section 143(1) and the rectification order under section 154, both being appealable before the CIT(A). Therefore, dismissal on a mere technical ground was improper, and the appellate forum should not be closed against the rectification intimation. Substantively, the Tribunal found that the assessee was not claiming the concessional rate under section 115BAA but was entitled to the general concessional corporate tax rate of 25% applicable to companies with turnover below Rs. 250 crores in FY 2016-17. The assessee's turnover was Rs. 2.07 crores for that year, making it eligible for the 25% rate. The AO was directed to recompute the tax payable applying the correct basic tax rate of 25%. The appeal was allowed accordingly. Key holdings: - Both original intimation under section 143(1) and rectification order under section 154 constitute separate appealable causes of action. - Appeal cannot be dismissed on technical grounds preventing adjudication on merits. - Assessee eligible for concessional tax rate of 25% based on turnover criteria, not under section 115BAA. - AO directed to recompute tax at 25% rate. Order pronounced on 02-06-2025.