RAMBAL PRIVATE LIMITED, Kanchipuram V. Commissioner of Income Tax (Appeal), Delhi

ITA 1147/CHNY/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8978 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-01-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 11-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M.G. RAMACHANDRAN

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1147/CHNY/2023 िनधाᭅरण वषᭅ/Assessment Year: 2018-19 Rambal Pvt. Ltd., Door No.115, Ediyankuppam Village, Thandalampanchayat, Thirukkazhukundram Road, Thiruporur – 603 110. PAN: AABCR 4471L Vs. The DCIT, Circle –I , LTU, Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri M.G. Ramachandran, F.C.A ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 31.01.2024 घोषणा कᳱ तारीख/Date of Pronouncement : 31.01.2024 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023- 24/1055164224(1) dated 16.08.2023. The assessment was framed by the Assessing Officer, National e-Assessment Centre, Delhi for the assessment year 2018-19 u/s.143(3) r.w.s. 143(3A) & 143(3B) of - 2 - ITA No.1147/Chny/2023 the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 08.07.2020. 2. The only issue remains for adjudication is whether the assessee’s turnover is exceeding Rs.50 crores or it is below Rs.50 crores for charging of rate of tax at 35% or 25%. 3. At the outset, the ld.counsel for the assessee filed copy of Tribunal’s order in assessee’s own case in ITA No.892/CHNY/2020 vide order dated 22.04.20222 which is against the processing of return u/s.143(1) of the Act by the CPC, Bangalore and subsequently, the matter was taken up for scrutiny and the impugned order is against the scrutiny assessment. According to the CIT(A), the assessee’s income is above Rs.50 crores and for this, he noted this fact as under:- Now, the appellant submits that it is a ‘manufacturer and seller of precision turned engineering components’. Its total receipts as per Profit & Loss Account for the year ended 31/03/2016 was Rs.50,60,28,522/-. However, this receipt included some ‘other income’ of Rs.7,78,26,420/-, the break up of which was as under:- Particulars Amount Exchange Fluctuation 86,03,814.00 Miscellaneous Receipts 35,04,490.00 Interest on Deposits 52,87,561.00 Creditors written back 25,06,903.00 Sale of MEIS Licence 8,03,276.00 Duty Draw Back 46,82,978.00 Service Tax Refund on Exports 1,38,086.00 - 3 - ITA No.1147/Chny/2023 Profit on Sale of Assets 22,89,312.00 Compensation Received 5,00,00,000.00 Total 7,78,16,420.00 The appellant submits that out of the above amount compensation received (Rs.5 croes), interest on deposits (Rs.52,87,561/-), profit on sale of fixed assets (Rs.22,89,312/-) and creditors written back (Rs.25,06,903/-) should be excluded from the total receipts to arrive at the turnover and if it is done its turnover will be less than Rs.50 crores and therefore applicable Income- tax rate will be 25%. 4. We noted that the Tribunal has recorded this fact and held that the assessee’s income is below Rs.50 crores after reducing the income from profit on sale of asset amounting to Rs.22,89,312/- and interest on deposits amounting to Rs.52, 87,561/-. The Tribunal recorded this finding of fact in para 5 as under:- 5. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. As per ITR-6 filed by the assessee for the AY 2018-19, the Revenue from operations was at Rs.42.82 Crs. The assessee had also shown other income of Rs.7.78 Crs. The total of credits to P & L A/c was at Rs.50.60 Crs. If you take income from operations, being sales Revenue, it is less than Rs.50 Crs. If you take total of credits to P & L A/c, which includes other income, which is more than Rs.50 Crs. The rate of tax applicable for domestic companies for the impugned AY, if turnover is less than Rs.50 Crs. was at 25%. In case, the turnover is above Rs.50 Crs. then the rate of tax is 30%. The DCIT-CPC has adopted 30% rate of tax on the ground that the turnover of the assessee for the year under consideration was more than Rs.50 Crs., which is based on total of credits to P & L A/c as reported by the assessee in ITR6. Otherwise, there is no dispute with regard to rate of tax applicable to domestic companies if turnover is less than Rs.50 Crs. In this case, the Revenue from operations being sale of goods/services was at Rs.42.82 Crs. The assessee has reported other income including interest income and profit on sale of fixed assets, which is at Rs.7.78 Crs. The total of sum credits to P & L A/c is Rs.50.60 Crs. The arguments of the assessee that interest income and profit on sale of fixed assets, cannot be considered as - 4 - ITA No.1147/Chny/2023 part of turnover. We find merit in the arguments of the assessee, because interest is in the nature of income from other sources, which cannot be part of operations from the Revenue. Similarly, profit on sale of fixed assets cannot be formed part of turnover. If you exclude above two items, the turnover of the assessee for the impugned assessment year comes below Rs.50 Crs. even if you include other items like miscellaneous income, profit on account of currency fluctuation, compensation received, etc. Therefore, we are of the considered view that the AO was erred in applying 30% rate of tax for computing tax liability of the assessee. Hence, we direct the AO to re-compute the turnover by excluding those items, which are not part of turnover of the assessee and apply 25% rate of tax as applicable to domestic company, in case the turnover of the assessee comes below Rs.50 Crs. as prescribed under the Act. As the issue is covered and the Tribunal has already recorded finding of fact in this assessment year, we are agreeing with the Tribunal’s order in assessee’s own case for the very same year and accordingly, allow the appeal of assessee. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 31 st January, 2024 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 31 st January, 2024 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.