Appeal allowed for tax rate verification, Section 10AA claim denial void ab initio.

The appeal was allowed for statistical purposes, with directions for the AO to verify the turnover and apply the correct tax rate. The Tribunal found the denial of deduction claim under Section 10AA to be a gross violation of natural justice and jurisdiction, deeming the disallowance void ab initio. The Tribunal emphasized that once a deduction is allowed in the initial year, it cannot be withdrawn in subsequent years without disturbing the initial allowance. The order was pronounced on the 10th day of July, 2023.

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Issues Involved:
1. Denial of deduction claim under Section 10AA of the Income Tax Act.
2. Incorrect calculation of tax rate at 30% instead of 25%.

Summary:

Issue 1: Denial of Deduction Claim under Section 10AA
The assessee appealed against the order of the National Faceless Appeal Centre (NFAC) which denied a deduction claim of Rs. 7,95,83,610/- under Section 10AA of the Income Tax Act, 1961. The assessee argued that this claim was allowed in the intimation order under Section 143(1) and subsequent assessment order under Section 143(3). The CIT(A) denied the claim citing that Form-56F lacked a name and signature, although the form was downloaded from the income tax portal, which should have been verified by the CIT(A). The Tribunal found that the deduction claim under Section 10AA was accepted in previous years and was not a subject matter of the grounds of appeal. The CIT(A)'s action was deemed a gross violation of natural justice and jurisdiction, rendering the disallowance void ab initio. The Tribunal relied on judicial precedents, emphasizing that once a deduction is allowed in the initial year, it cannot be withdrawn in subsequent years without disturbing the initial allowance. Consequently, the Tribunal allowed the assessee's ground on this issue.

Issue 2: Incorrect Calculation of Tax Rate
The assessee contended that the tax rate was incorrectly calculated at 30% instead of 25%, given that the company's turnover during A.Y. 2016-17 was below Rs. 50 Crores. The Tribunal found that the assessee's claim was correct, as the turnover was Rs. 46.95 Crores, making the company eligible for a lower tax rate. The Tribunal noted that neither the CPC Bangalore nor the AO had challenged this figure. The CIT(A) failed to adjudicate this issue despite it being raised. The Tribunal restored the matter to the Jurisdictional AO for verification, directing the AO to provide a reasonable opportunity for the assessee to be heard. The ground was allowed for statistical purposes.

Conclusion:
The appeal was allowed for statistical purposes, with directions for the AO to verify the turnover and apply the correct tax rate. The Tribunal's order was pronounced on the 10th day of July, 2023.

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