Rajasthan Pulses Private Limited Vs DDIT (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal allowed the appeal of Rajasthan Pulses Private Limited against the order of the learned Addl./JCIT (Appeals), Bhubaneswar dated 07.01.2026 for Assessment Year 2020-21. The dispute concerned the rate of tax applied by the Centralised Processing Centre (CPC), Bengaluru while processing the assessee’s return under section 143(1). The assessee had originally opted for the concessional regime under section 115BAA and paid tax at 22%, but subsequently accepted that it was not eligible for that regime because it had failed to file Form 10-IC within the prescribed time.
The assessee nevertheless contended that denial of section 115BAA did not justify charging tax at 30%. According to the assessee, once it was taxed under the normal provisions, the applicable rate had to be determined with reference to its turnover for FY 2017-18. Since the turnover for FY 2017-18 was only Rs.91.40 crore, below the statutory threshold of Rs.400 crore, the assessee claimed that tax should be charged at 25% rather than 30%.
The CPC rejected the assessee’s rectification application under section 154 and the CIT(A) dismissed the appeal, taking the view that the Act did not confer power upon the CPC or appellate authority to modify the return filed by the assessee. Before the Tribunal, the assessee relied upon the decision of the Mumbai Bench in Bholanath Precision Engineering (P.) Ltd. Vs CIT(A), where a similar issue concerning application of the lower domestic-company tax rate was considered.
The Tribunal accepted the assessee’s substantive contention. It recorded that the assessee itself accepted that it was not eligible for section 115BAA because the prescribed conditions had not been fulfilled. However, in such circumstances, the assessee was liable to tax at the normal rate determined on the basis of its turnover for FY 2017-18. Since that turnover did not exceed Rs.400 crore, the applicable rate was 25% and not 30%.
The Tribunal found the issue to be squarely covered by the Mumbai ITAT decision in Bholanath Precision Engineering (P.) Ltd. Vs CIT(A). Following that decision, it allowed the grounds raised by the assessee and directed the Assessing Officer to determine the applicable tax rate in accordance with law. The appeal was accordingly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT DELHI
1. This appeal is filed by the assessee against the order passed by the ld. Addl./JCIT (Appeals), Bhubaneswar dated 07.01.2026 for the Assessment Year 2020-21 raising following grounds of appeal :-
“1. The leaned CIT(A) erred both in law and on facts in upholding the action of CPC, Bengaluru in applying a tax rate of 30 percent (effective rate 33.384 percent) to the assessee company, while ignoring the fact that the (a) assessee was eligible to be taxed at 25 percent (effective rate 27.820 percent) under Section 115BA of the Act because the turnover of the assessee company tor AY 2017-18 was below 400 crores and (b) no additional conditions were required to be fulfilled for availing the concessional tax rate under Section 115BA. The CPC, therefore, committed an apparent mistake in applying the higher tax rate. Accordingly, appropriate directions should be issued to the Assessing Officer to levy tax at the correct rate in accordance with Section 115BA of the Act
2. The learned CIT(A) erred both in law and on facts in confirming the action of CPC, Bengaluru in applying the provisions of Section l15BA of the Act in a discretionary manner rather than in accordance with the statutory provisions, while ignoring that: (a) if Section 115BA is to be applied to the assessee, it must be applied in its entirety and all consequential effects must necessarily follow: and (b) the Assessing Officer is duty-bound to compute the correct tax liability strictly in accordance with law, and the principle of unjust enrichment is not available even to the Revenue. Accordingly, appropriate directions ought to be issued to the Assessing Officer to levy tax at the correct rates applicable to the assessee company.
3. The learned CIT(A) erred both in law and on facts in confirming the action of CPC, Bengaluru in not correcting its mistake to apply tax at the rate of 25 percent (effective rate 27.820 percent) under Section l15BA of the Act by holding that Act does not give such power to CPC ignoring that CPC acts as an assessing officer while issuing intimation u/s 143(1) of the Act and therefore enjoy same power as of the jurisdictional assessing officer to compute the correct tax liability of an assessee. Thus, the action of the CIT(A) taken on incorrect appreciation of the facts and provisions of law needs to be reversed.”
2. At the time of hearing, ld. AR of the assessee submitted the relevant facts of the case and submitted his submissions as under. He submitted that the assessee filed its return of income for AY 2020-21 on 12.11.2020 and opted for Section l15BAA of the Act and paid taxes @ 22% and a copy of ITR form is placed at page nos. 21 to 109 of the paper book and referred page 21 of the same. He further submitted that however, the assessee failed to file Form 10-IC within the prescribed time. He submitted that the CPC processed the return u/s 143(1) of the Income-tax Act, 1961 (for short ‘the Act’) and denied the benefit of section 115BAA of the Act since Form 10-IC was not filed within the prescribed time and charged tax @ 30%. He submitted that the assessee filed a rectification application u/s 154 of the Act on 19.04.2024 by amending its ITR form and referred page 127 of the PB – rectified ITR form at page nos. 127 to 215 where the assessee did not claim the benefit of section 115BAA of the Act. He further mentioned that its turnover in FY 2017-18 is below Rs. 400 Crores. He submitted that the assessee paid tax at normal rates i.e. @ 25% since the turnover of the assessee for the FY 2017-18 did not exceed Rs.400 crores and referred the Audited Profit and Loss account of FY 2017-18 which is placed at page 116 of the paper book which shows the turnover for FY 2017-18 is Rs.91.40 crores which does not exceed Rs. 400 Crores. However, CPC rejected the rectification application of the assessee. He submitted that the assessee filed an appeal before the ld. CIT(A) who dismissed the appeal of the assessee holding that the Act does not provide this power to CPC or the appellate authority to modify the return filed by the assessee and referred para 5.1 on page 6 of the ld. CIT(A) order.
3. Ld. AR submitted that the assessee accepts that it is not eligible for the benefit of section 115BAA of the Act since it did not fulfill the prescribed conditions. However, in such a case, the assessee is liable to pay tax at normal rates which will be determined on the basis of its turnover for the FY 2017-l8. If the turnover of the assessee for the FY 2017-18 does not exceed Rs. 400 Crores then the tax will be charged at 25% and in any other case, it will be charged at 30%. He submitted that since in the case of the assessee the turnover for FY 2017-18 does not exceed Rs.400 crores, the income is liable to be charged to tax at 25% (and not 30% as charged by CPC).
4. Further, ld.AR relied on the decision of Bholanath Precision Engineering (P.) Ltd. Vs CIT(A) [2022] 145 taxmann.com 180 (Mumbai – Trib.) wherein the facts in that case are identical to the fact of this case and ITAT in the said decision was pleased to accept the contention of the assessee and held that it is chargeable to tax @ 25% in such situation.
5. In view of his above submissions, he pleaded that the income of the assessee is chargeable to tax @ 25% for the year under consideration and nnecessary directions may be issued.
6. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.
7. Considered the rival submissions and material placed on record. We observed that he assessee filed its return of income for AY 2020-21 on 12.11.2020 and opted for Section l15BAA of the Act and paid taxes @ 22%. We further observed that the assessee accepts that it is not eligible for the benefit of section 115BAA of the Act since it did not fulfill the prescribed conditions, however, in such a case, the assessee is liable to pay tax at normal rates which will be determined on the basis of its turnover for the FY 2017-l8 and if the turnover of the assessee for the FY 2017-18 does not exceed Rs. 400 Crores then the tax will be charged at 25% and in any other case, it will be charged at 30%. We observed that since the turnover for FY 2017-18 has not exceeded Rs.400 crores, the income is liable to be charged to tax at 25% and not 30% as charged by CPC. In this regard, we observed that this issue is squarely covered by the decision of ITAT, Mumbai Bench in the case of Bholanath Precision Engineering (P.) Ltd. Vs CIT(A) (supra) and the relevant findings are given below :-
“11. The assessee, vide ground No.2, has raised without prejudice ground that instead of computing the rate of tax @ 30, rate of tax @ 25% be applied. In this regard, the learned AR referred to the relevant provisions of Finance Act 2019, which is applicable to the Financial Year commencing on 01/04/2019. The learned AR by referring to Paragraph E of Part I of Finance Act, 2019 submitted that where the total turnover or the gross receipt in the previous year 2016–17 does not exceed Rs. 250 crore, the rate of income tax shall be 25% of the total income. The learned AR by referring to the profit and loss account for the year ending 31/03/2017 submitted that the gross revenue from operations of the assessee was Rs. 10.82 crore and thus in view of the aforesaid provision the rate of tax applicable in case of assessee should be 25%. On the other hand, learned DR submitted that this aspect, now raised by the assessee, be remanded to the AO for factual verification.
12. In view of the submissions made by both sides and having perused the material available on record, we deem it appropriate to remand this issue to the file of AO for necessary verification. We further direct that the tax liability of the assessee be computed by applying the rate of tax as per the applicable provisions of law. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. Accordingly, ground No. 2 raised in the assessee’s appeal is allowed for statistical purposes.”
8. Respectfully following the aforesaid decision and in the light of our above findings, we are inclined to allow the ground raised by the assessee in this regard and direct the Assessing Officer to determine the tax rate as discussed above. Accordingly, grounds raised by the assessee are allowed.
9. In the result, the appeal filed by the assessee is allowed as indicated above.
Order pronounced in the open court on this 19TH day of August, 2026.
