Facts of the Case

The Petitioner, M/s LG Electronics India Private Limited, filed a writ petition challenging the intimation dated 31st March 2021 issued under Section 143(1) of the Income Tax Act, 1961. Alternatively, the Petitioner sought a direction for disposal of its rectification application dated 14th April 2021 filed under Section 154 of the Act.

The grievance of the Petitioner was that despite opting for taxation under Section 115BAA of the Act, which prescribes a concessional tax rate of 22%, the Respondents incorrectly applied a higher tax rate of 25% under Section 115BA while processing the return.

Issues Involved

  1. Whether the tax authorities erred in applying tax rate under Section 115BA instead of Section 115BAA.
  2. Whether rectification under Section 154 is applicable for correcting such apparent errors in intimation under Section 143(1).
  3. Whether the Petitioner is entitled to refund consequent to rectification of such error.

Petitioner’s Arguments

  • The Petitioner contended that it had expressly opted for taxation under Section 115BAA, which provides a reduced tax rate of 22%.
  • It was argued that the Respondents wrongly applied the tax rate of 25% under Section 115BA while issuing intimation under Section 143(1).
  • The Petitioner sought correction of this apparent error through rectification under Section 154 and appropriate refund.

Respondent’s Arguments

  • The Respondents submitted that rectification rights were restored to CPC (Centralized Processing Centre), Bengaluru after obtaining necessary approval.
  • It was stated that rectification of the intimation under Section 143(1) had already been carried out.
  • However, due to technical reasons, accounting of the rectification order under Section 154 could not be completed immediately but was expected to be finalized shortly.
  • It was further submitted that the demand raised earlier had been cancelled and refund would be determined upon completion of the process.

Court’s Findings / Order

  • The Court took note of the Respondents’ submission that rectification had been carried out and demand cancelled.
  • The Court directed the CPC to determine and process the refund in accordance with law once the rectification process is completed.
  • Accordingly, the writ petition was disposed of with directions.

Important Clarification

  • Errors in tax computation arising from incorrect application of tax provisions (such as wrong section applied) are rectifiable under Section 154 when apparent on record.
  • The case reinforces that procedural or technical delays at CPC cannot defeat the substantive right of the taxpayer to correct tax computation and obtain refund.
  • The Court emphasized timely processing of rectification and refund once the mistake is acknowledged.

Link to download the order https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:764-DB/MMH25022022CW30362022_154552.pdf

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