Sidhe Petrochemicals (P.) Ltd. Vs DDIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, delivered a significant ruling in the case of Sidhe Petrochemicals (P.) Ltd. Vs DDIT (Deputy Director of Income Tax), allowing the assessee to claim the concessional tax rate under Section 115BAB of the Income Tax Act, 1961. The Tribunal’s decision centered on the principle of departmental consistency, noting that a subsequent detailed scrutiny assessment by the same tax department had already recognized the assessee as a manufacturer.
The Issue of Manufacturer Status
The dispute arose for the assessment year 2023-24. The assessee, a petrochemical company, filed its return of income, declaring a total income of approximately ₹2.38 crore, and paid tax at the reduced rate prescribed under Section 115BAB. This section offers a substantial tax concession to certain domestic manufacturing companies, provided they satisfy specific conditions, primarily that the company is engaged solely in the business of manufacture or production of any article or thing. The assessee had previously opted for this provision and filed the requisite Form 10-ID in the assessment year 2021-22, which was accepted.
However, the Centralised Processing Centre (CPC), Bengaluru, during the summary processing of the return under Section 143(1), denied the benefit of Section 115BAB. Consequently, the CPC charged the tax at the normal corporate rate of 30%. The assessee challenged this denial before the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the CPC’s order, concluding that the assessee was not a manufacturer and therefore ineligible for the concessional rate.
