Power and Instrumentation (Gujarat) Ltd. Vs ACIT (ITAT Ahmedabad)
In the case of Power and Instrumentation (Gujarat) Ltd. Vs. ACIT (ITAT Ahmedabad), the Income Tax Appellate Tribunal (ITAT) ruled on the eligibility of the company for the concessional tax rate under the Finance Act, 2017. The assessee, engaged in electrical contracting and trading, had filed its return for the assessment year (AY) 2018-19, declaring an income of ₹3.10 crore. However, upon processing the return, the Assistant Commissioner of Income Tax (ACIT) raised a demand based on a turnover of ₹51.18 crore, including inter-branch transfers amounting to ₹1.41 crore. The appellant sought to exclude these transfers from the turnover for tax calculation, arguing that they represented internal transactions, not actual sales.
The dispute centers on the applicability of a concessional tax rate of 25% available to domestic companies under the Finance Act, 2017, for companies whose turnover in FY 2015-16 does not exceed ₹50 crore. The assessee contended that excluding the inter-branch transfer amount of ₹1.41 crore would reduce the total turnover below ₹50 crore, thus making it eligible for the concessional rate. However, the Commissioner of Income Tax (Appeals) (CIT(A)) upheld the ACIT’s decision, arguing that branch transfers should be included in turnover.
