Form 10-IC lapse cannot justify tax above the statutory corporate rate; TDS credit must be verified and granted.

Failure to file Form 10-IC could justify denial of the concessional corporate tax regime, but it did not authorise taxation above the rate prescribed by the Finance Act. Where the company's turnover was below the relevant threshold, the applicable statutory rate remained 25%, so levy at 30% was not sustainable. The TDS credit claim was not rejected on merits and had to be verified against the supporting records, with credit granted in accordance with law. The substantive tax-rate issue was resolved in favour of the assessee, and the TDS matter was restored for verification and consequential relief.

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Issues: (i) whether a company, though having failed to file Form 10-IC for the relevant year, could still be subjected to tax at a rate higher than the rate prescribed by the Finance Act for companies within the specified turnover threshold; (ii) whether credit for tax deducted at source was required to be granted on verification of the relevant records.

Issue (i): whether a company, though having failed to file Form 10-IC for the relevant year, could still be subjected to tax at a rate higher than the rate prescribed by the Finance Act for companies within the specified turnover threshold.

Analysis: The return was processed under section 143(1) and the tax was computed at 30% after denial of the lower tax regime claim for want of Form 10-IC. The record showed that the assessee's turnover was below the threshold of Rs. 400 crores for the relevant assessment year. The prescribed corporate tax rate under the Finance Act for such companies was 25%. The absence of Form 10-IC could justify denial of the concessional regime, but it did not authorise levy of tax at a rate higher than the statutory rate applicable under the Finance Act.

Conclusion: The assessee could not be taxed at 30%; tax was to be charged only at the applicable statutory rate of 25%, and the excess levy was not sustainable.

Issue (ii): whether credit for tax deducted at source was required to be granted on verification of the relevant records.

Analysis: The claim for TDS credit was not rejected on merits; the appropriate course was verification of the supporting documents and grant of credit in accordance with law.

Conclusion: TDS credit was directed to be granted after due verification.

Final Conclusion: The substantive tax-rate dispute was decided in favour of the assessee, and the TDS-credit claim was restored for verification and consequential grant, resulting in relief to the assessee with one connected appeal becoming infructuous.

Ratio Decidendi: Denial of a concessional tax regime for procedural non-compliance does not permit assessment at a rate exceeding the rate statutorily prescribed by the applicable Finance Act.

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