2025 (9) TMI 297

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....e Income Tax Department, Assessment Unit u/s 143(3) read with section 144C(13)/144B of the Income-tax Act, 1961 (for short 'the Act") for Assessment Year 2021-22 pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee's appeal being ITA No.5183/Del/2024 for AY 2021-22 as lead case to adjudicate the issues under consideration wherein the assessee has raised the following grounds of appeal :- "1. On the facts and circumstances of the appellant's case and in law, the Ld. DRP/Ld. A.O. has erred in referring the appellant's case to the L....

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....lant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing." 3. At the time of hearing, ld. AR of the assessee raised the preliminary issue of disallowance made by the AO under section 115BAB of the Income-tax Act, 1961 (for short 'the Act') and ground no.4 is on jurisdictional issue which was not pressed at the time of hearing. Ground No.5 is premature and ground no.6 is general in nature. 4. Relevant facts of the case are, assessee filed its return of income on 15.03.2022 declaring loss of Rs. 10,50,200/-. The case was selected for scrutiny under CASS for the reason "Large specified domestic transactions". The AO referred the matter to the A....

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....interest to VSMPL to the extent of Rs. 8,75,508/- by inferring that the ALP of interest on the transaction with VSMPL is Rs. 23,56,458/- whereas assessee has paid the interest to the extent of Rs. 14,80,950/-. Therefore, he made adjustment of Rs. 8,75,508/-. Further he observed that the assessee has not paid interest to AEPL, however ALP of interest on loan taken from AEPL of Rs. 1,13,620/-. Therefore, he proposed addition of Rs. 9,88,123/- as ALP adjustment 5. Aggrieved, assessee preferred an appeal before the ld. DRP and raised an additional ground wherein it was contested that assessee has not commenced manufacturing during the year and the beneficial tax rate provided under section 115BBA has not been availed by the assessee, therefo....

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..... 8,75,508/- and on account of interest to AEPL of Rs. 1,13,620/-. Further he submitted that TPO has also added the marginal cost lending rate plus 425 basis point to arrive at the interest rate of 11.311%, which is unjustified. He submitted that the AO has applied the provisions of section 115BAB and he brought to our notice section 115BAB and submitted that the provision is applied when the assessee earned the profit and submitted that as per the provision of section 115BAB, tax payable in respect of the total income of a person being a domestic company shall, at the option of such person, be computed @ 15%. Further he submitted that as per the First Proviso if there is any other income unconnected with the main activities of the assessee....

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....estic transaction will not apply this year and even the provision of section 115BAB is a provision for availing concessional rate on the income earned in new manufacturing in the domestic companies. We observe that when there is no profit earned by the assessee, there is no provision or question to levy concessional tax rate in the case of the assessee. In order to apply the provisions of concessional rate u/s 15BAB, there has to be taxable income. In the given case, there is no txable income even after adjustments. In our view, even First Proviso and Second Proviso are not applicable in case the assessee has not earned any income during the year. Since assessee has not commenced its business, there is no concept of shifting of profit appli....