CPC Cannot Deny 115BAB Concessional Tax Rate Without Hearing | ITAT

Case Details: GFCL EV Products Ltd. vs. ACIT - [2025] 180 taxmann.com 17 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• Siddhartha Nautiyal, Judicial Member & Narendra Prasad Sinha, Accountant Member
• Saurabh Soparkar, AR for the Appellant.
• Suresh Chand Meena, Sr. DR for the Respondent.

Facts of the Case

Assessee-company, engaged in manufacturing electric vehicles, filed its return of income for the relevant year, declaring a total income of Rs. 4.45 lakhs. The assessee claimed the benefit of a lower tax rate of 22 per cent as per section 115BAB. The return was processed under section 143(1) by the Centralised Processing Centre (CPC), Bengaluru, accepting the returned income.

While computing the tax liability, the CPC calculated the tax at the rate of 30 per cent under normal provisions instead of the concessional rate of 22 per cent as per section 115BAB. The reason for such calculation was that the assessee had not exercised the option under that section.

Aggrieved by the order, the assessee filed an appeal to the CIT(A), wherein the CIT(A) upheld the order of the AO. The matter then reached the Ahmedabad Tribunal.

ITAT Held

The Tribunal held that it was an admitted position that the assessee had duly exercised the option under section 115BAB for the immediately preceding assessment year 2022-23 by filing Form No. 10ID within the prescribed time. Once the option under section 115BAB is exercised, it continues to apply for all subsequent assessment years, and there is no requirement under the Act or the Rules to file Form No. 10ID again for each year.

Therefore, for the year under consideration, being the second year of claim, the assessee was eligible to continue under the concessional tax regime prescribed under section 115BAB. Further, the issue as to whether the assessee had actually commenced manufacturing or production activity within the meaning of section 115BAB(2)(a) was a matter requiring factual verification.

Such an issue is inherently debatable and does not constitute a mistake apparent from the record, which can be adjusted while processing a return under section 143(1). The eligibility of the assessee for the concessional rate under section 115BAB, depending upon the date and nature of commencement of manufacturing activity, cannot be decided without affording an opportunity of hearing to the assessee and not through a mechanical adjustment under section 143(1).

In the instant case, no such opportunity was given to the assessee before substituting the concessional rate of 22 per cent with the higher rate of 30 per cent. The impugned action of CPC, therefore, cannot be sustained either in law or on facts.