BSC C&C JV,NEW DELHI vs. ACIT CIRCLE-62(1), NEW DELHI

The Learned CITA disposed of the appeal rejecting the additional ground of appeal

The learned AR before us has submitted that allowability of deduction under section 80 IA(4)(i) of the Act in respect of various infrastructural projects undertaken by the assessee is principally upheld by this Tribunal in assessee‟s own case for Assessment Year 2016-17 in /Del/ 2021 dated 30-11-2022 on merits. Further, he argued that the judgment of the Hon‟ble Supreme Court in the case of Goetze India Limited reported in 284 ITR 323(SC) does not curtail or affect in any manner the powers of the authorities other than the assessing officer to admit fresh claim as has been held by the Hon‟ble Supreme Court in the case of NTPC limited reported in 229 ITR 383 (SC). He submitted that no tax could be levied or collected by the State or Central Government except by an authority of law by referring to Article 265 of the Constitution of India. Further, he argued that the revenue authorities are duty bound to determine the correct taxable income and consider a legal / legitimate claim of deduction by referring to the Circular No. 14 (XL-35) dated 11-04- 1955. He also placed reliance on the decision of Hon‟ble Jurisdictional High Court in the case of CIT vs Sam Global Securities Limited reported in 360 ITR 682 (Del) among other decisions. He placed reliance on the decision of Hon‟ble Supreme Court in the case of CIT vs Shelly Products reported in 261 ITR 367 (SC) for the proposition that where any claim is erroneously / inadvertently not made in the return of income, it would not operate as an estoppel against the assessee to revise such stand and make a legitimate claim otherwise entitled in law. The learned AR sought to distinguish the decision of Hon‟ble Bombay High Court relied upon by the learned CITA in the case of Ultratech Cement Limited referred supra by stating that the said judgment was rendered on the peculiar facts of that case and that in that case, the Hon‟ble High Court appealed against the order of the Tribunal in not permitting the claim of deduction under section 80 IA of the Act raised for the first time before the Tribunal in the absence of any facts being brought on record for examination of the claim. Further in the case before the Hon‟ble Bombay High Court, the primary basis to reject the fresh claim was that the facts in relation to deduction particularly Form No. 10CCB which forms the basis of claim and is necessary for examination of eligibility was never filed / placed on record. Contrastingly, in the present case, the assessee has placed on record all the necessary documents / evidences including the report of chartered accountant in Form 10CCB, project wise details of deduction claimed, sample agreements and other factual papers etc. He argued that the filing of Form 10CCB is mandatory but timeline for filing the same before the due date of return under section 80 IA(7) of the Act is to be construed as directory in nature. He drew attention of this Bench to the decision of Nagpur Tribunal (SMC) in the case of Krushi Vibhag Karamchari Vrindh Sahakari Pat Sanstha Mariyadith vs ITO reported in 147 taxmann.com 449 and the decision of Surat Tribunal (SMC) in the case of Peshawar Vividh Karyakari Seva Sahakari Mandali Limited vs ITO reported in 172 taxmann.com 347 which relied on the decision of Nagpur Tribunal referred supra, for the proposition that claim not made in the return but before the Learned CITA for the first time need to be entertained. The Learned AR also placed reliance on the decision of Ahmedabad Tribunal in the case of Parameshwar Cold Storage private limited vs ACIT reported in 49 SOT 67 for the proposition that even in the context of section 80AC of the Act, delayed claim of deduction under section 80IB/ 80IC of the Act is held to be allowable if the return is filed in stipulated time although without claim of deduction being made in the return. He submitted that similar view was taken by the coordinate bench of Mumbai Tribunal in the case of ACIT vs Monarch Innovative Technologies private limited reported in 91 taxmann.com 267. He stated that in the present case before us, as the return of income was duly filed by the assessee within time specified under section 139(1) of the Act but no claim was made in the said return for deduction under section 80IA of the Act. With regard to rejection of additional evidences by the Learned CITA on the claim of deduction under section 80IA(4) of the Act is concerned, he submitted that the evidences submitted before the learned CITA were crucial for consideration of the claim of deduction and the same ought to have been admitted by the Learned CITA. He placed reliance on the decision of Hon‟ble Delhi High Court in the case of CIT vs Virgin Securities and Credits private limited reported in 332 ITR 396 (Del) and CIT vs Text Hundred India private limited reported in 239 CTR 263 (Del) for admission of the additional evidences in support of the claim of deduction. However, he fairly stated that for the year under consideration , the learned CITA had sought to completely reject the additional ground of appeal raised by the assessee and consequentially the additional evidences were also rejected by the learned CITA with regard to deduction under section 80IA(4) of the Act. He also submitted that there was no occasion for the learned CITA accordingly to examine the claim of deduction under section 80IA(4) of the Act on merits. The Learned AR also placed reliance on the decision of Hon‟ble Delhi High Court in the case of Shree Bhawani Power Projects P Ltd vs ITO reported in 475 ITR 155 (Del) which had distinguished the decision of Hon‟ble Supreme Court in the case of Wipro Ltd reported in 446 ITR 1(SC).

For the sake of convenience, the provisions of section 80A(5) and section 80AC of the Act are reproduced below:-

We find that on harmonius reading of provisions of section 80A(5) and 80AC of the Act, the following principles emerge:- a) Return should be filed within due date prescribed u/s 139(1) of the Act b) Claim of deduction u/s 80IA should be made in the return, though filed belatedly u/s 139(4) of the Act. c) 7. When no claim at all was made either in the return filed u/s 139(1) or 139(4) of the Act, then deduction u/s 80IA of the Act shall not be eligible to an assessee. This is what precisely Wipro Ltd decision of Hon‟ble Supreme Court reported in 446 ITR 1 (SC) held. The Learned AR placed reliance on the provisions of section 80IA(7) of the Act. In our considered opinion, the same speaks about filing of audit report in Form 10CCB within the specified date. This provision was held to be directory in nature by the Hon‟ble Supreme Court in the case of CIT vs G M Knitting Industries P Ltd reported in 376 ITR 456 (SC). But this is a procedural requirement for claiming deduction u/s 80IA of the Act and hence held to be directory in nature. The crucial requirement of the section 80A(5) is to Page | 7 make a claim, which is a substantive provision. Hence the same is to be construed as mandatory provision in order to entertain a claim of deduction in respect of certain incomes such as deduction u/s 80IA as is the case in the appeal before us. This view of ours is further fortified by the decision of Hon‟ble Supreme Court in the case of Wipro Ltd reported in 446 ITR 1 (SC). The Learned AR placed heavy reliance on the decision of Hon‟ble Jurisdictional High Court in the case of Shree Bhawani Power Projects P Ltd vs ITO reported in 475 ITR 155 (Del) in support of his claim. But we find that in that case, that assessee had made a claim of deduction u/s 80IA of the Act in the return but there was delay in filing of Form 10CCB. The said decision is more in line with the decision of Hon‟ble Supreme Court in the case of G M Knitting supra which was concerned only about filing of Form 10CCB by the assessee during the course of assessment proceedings. The Hon‟ble Supreme Court in the case of G M Knitting supra held that where claim of additional depreciation is made in the return, filing of Form 3AA is directory in nature. In our considered opinion, we hold that the decision of G M Knitting supra does not come to the rescue of the assessee herein as it is factually distinguishable as the assessee herein had not made a claim of deduction under section 80IA(4) of the Act at all in the return of income.

In the case of Wipro Ltd supra, the exemption u/s 10B of the Act was claimed in the return. However, the said claim was opted for withdrawal by a letter filed during the course of assessment proceedings. The issue before the Hon‟ble Supreme Court was whether such withdrawal was to be allowed , in view of section 10B(8) of the Act , since such withdrawal was made after the due date of filing the return of income u/s 139(1) of the Act. In those facts, the Hon‟ble Supreme Court held that the requirement of making such declaration for withdrawal before the due date u/s 139(1) of the Act, so prescribed, u/s 10B(8) of the Act is mandatory in nature and therefore, such withdrawal was rejected. Applying the aforesaid principle to the facts of the present case before us, it is seen that section 80A(5) of the Act mandates the claim of relevant deduction in the return of income itself, whether u/s 139(1) or 139(4) of the Act. Thus, the requirement of section 80A(5) of the Act is mandatory in nature.

In the facts of the present case, it is seen that the disputed claim of deduction was neither made in the original return nor in any revised return till the conclusion of the assessment proceedings. The said claim was made for the first time before the Learned CITA as an additional ground sans any return. Thus the provisions of section 80A(5) of the Act are clearly attracted in the present facts, which in our considered view, is mandatory requirement, rendering the claim of deduction of the assessee to be not admissible.

The reliance placed by the Learned AR on the co-ordinate bench decision of Delhi Tribunal in assessee‟s own case for Assessment Year 2016-17 is also factually distinguishable in view of the fact that in Assessment Year 2016-17, the claim of deduction was indeed made by way of revised return. Hence the substantive provisions of section 80A(5) of the Act had been complied with by the assessee in that year. Hence the reliance placed on Tribunal decision for Asst Year 2016-17 does not advance the case of the assessee herein for the year under consideration.

Further reliance was placed on the decision of Single Member Bench of Nagpur Tribunal in the case of Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha Maryadit vs ITO reported in 147 taxmann.com 449 dated 7- 10.2022 by the Learned AR before us. In this case, the assessee co- operative society did not file any return of income. During the course of assessment proceedings, that assessee filed computation of income in which it claimed deduction under section 80P of the Act, which was sought to be denied by the Learned AO by applying provisions of section 80A(5) of the Act. It was held that section 80AC of the Act does not refer to claim of deduction under section 80P of the Act at all, the deduction under section 80P of the Act becomes automatically allowable without adhering to the requirement of section 80A(5) of the Act. In our considered opinion, the said decision is factually distinguishable with the assessee herein. In the instant case, we are concerned with the claim of deduction under section 80IA of the Act which is mentioned in both section 80A(5) as well as section 80AC of the Act. Whereas, in the case before Nagpur Tribunal, deduction under section 80P of the Act was involved and that section 80P was conspicuously not mentioned in section 80AC of the Act. In that factual matrix, the Nagpur Tribunal held that since section 80AC of the Act does not mention deduction under section 80P of the Act and hence section 80A(5) of the Act need not be adhered to. Further, the Nagpur Tribunal (SMC) had held that the claim made in the course of assessment proceedings is sufficient enough to comply with the provisions of section 80A(5) of the Act and that the requirement to claim deduction under section 80P of the Act in the return of income is to be held as directory in nature. In our considered opinion, the language of section 80A(5) of the Act as rightly pointed out by the Learned DR before us is very clear and unambiguous. It clearly stipulates that the claim is to be made in the return of income only, be it under section 139(1) or section 139(4) of the Act. Hence in view of plain and unambiguous language used in the statute i.e. section 80A(5) of the Act, we are not inclined to accept the proposition of Nagpur Tribunal in this regard. Either way, the decision of Nagpur Tribunal is rendered by a Single Member and the same is not binding on the Division Bench. Hence we hold that the reliance placed by the Learned AR on the decision of Nagpur Tribunal supra does not advance the case of the assessee herein.

The Learned AR also placed reliance on the decision of Surat Tribunal (SMC) in the case of Pishaver Vivadh Karyakari Seva Sahkari Mandali Ltd vs ITO reported in 172 taxmann.com 347 dated 23-10-2024. We find that the decision of Surat Tribunal also is a decision rendered by a Single Member which is not binding on the Division Bench. Further they had merely relied on the decision of Nagpur Tribunal supra and decided in favour of the assessee. Hence we hold that the reliance placed by the Learned AR on the decision of Surat Tribunal supra does not advance the case of the assessee herein.

In view of our aforesaid observations, we hold that the learned CITA was duly justified in rejecting the additional ground raised by the assessee with regard to the claim of deduction under Section 80IA(4) of the Act by placing reliance on the provisions of Section 80A(5) of the Act, which language is plain, clear and unambiguous. Further, since the claim of deduction per se has been sought to be dismissed by rejecting the additional ground, the admission of additional evidences under Rule 46A of the Income Tax Rules does not arise as those additional evidences are relevant only if the claim of deduction under Section 80IA(4) of the Act is to be entertained at the appellate stage. Hence, the action of the learned CITA in rejecting the additional evidences filed by the assessee is held to be in order. Accordingly, the reliance placed on the decision of Hon‟ble Delhi High Court in the case of CIT vs Virgin Securities and Credits Pvt. Ltd. reported in 332 ITR 396 and CIT vs. Text Hundred India Pvt. Ltd. reported in 239 CTR 263 by the Learned AR need not be gone into in view of the observations made by us hereinabove.

We find that the reliance was placed by the Learned AR on the decision of Ahmedabad Tribunal in the case of Parameshwar Cold Storage private limited vs ACIT reported in 49 SOT 67 wherein it was held that for claiming deduction under section 80IB of the Act, only condition is that original return should be filed in time and if the claim is not made in the original return, the same shall be allowed even if the claim is made during the appellate authority. Similar view was taken by the coordinate bench of Mumbai Tribunal in the case of ACIT vs Monarch Innovative Technologies private limited reported in 91 taxmann.com 267. But we find that both these decisions were rendered prior to the decision of the Hon‟ble Supreme Court in the case of Wipro limited reported in 446 ITR 1(SC). It is pertinent to note that the decision of the Wipro limited was rendered by the Hon‟ble Supreme Court in the year 2022 whereas the decision of Ahmedabad Tribunal referred supra was rendered on 3-7-2009 and decision of Mumbai Tribunal was rendered on 12-2-2018. Hence after the decision of Hon‟ble Supreme Court in the case of Wipro Limited, the decision of Ahmedabad Tribunal and Mumbai Tribunal referred supra relied upon by the learned AR does not come to the rescue of the assessee.

Finally, the Learned AR placed heavy reliance on the coordinate bench decision of this Tribunal in assessee's own case for Assessment year 2016-17, wherein the claim of deduction under section 80IA of the Act was allowed on merits. But on perusal of the order of the Tribunal for Assessment year 2016-17, we find in that year, the claim of deduction under section 80IA(4) of the Act was made by the assessee in the revised return filed within the prescribed time. Hence, the condition prescribed in section 80A(5) of the Act and the decision of the Hon‟ble Supreme Court in the case of Wipro Ltd, referred supra, stood substantially complied by the assessee for Assessment year 2016-17. In that scenario, entertaining the claim of deduction under section 80IA(4) of the Act would be in order. Hence, we hold that the reliance placed by the Learned AR on the decision of assessee's own case in Assessment year 2016-17 is factually distinguishable and does not advance the case of the assessee for the year under consideration.

Further, the Learned AR argued that the revenue is duty bound to assess the correct income of the assessee. We find that the provisions of the statute in section 80A(5) of the Act as stated earlier are very clear, plain and unambiguous. There is no need for any interpretation that is warranted in section 80A(5) of the Act .There cannot be any quarrel with regard to the fact that the revenue is duty bound to assess the correct income of the assessee, at the same time, it is to be noted that when a claim of deduction is being made by an assessee, the onus is on the assessee to strictly comply with the provisions contained in the statute for such claim of deduction. Once the eligibility condition to claim a particular deduction which is substantive in nature is complied with by the assessee, thereafter any procedural requirement for claiming such deduction could be liberally interpreted. The 3 Judges Bench of Hon‟ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai vs Dilip Kumar & Company reported in 95 taxmann.com 327 (SC) held that the eligibility condition for entertaining a particular claim of deduction should be viewed very strictly and thereafter the procedural requirement could be interpreted liberally in favour of the assessee. Respectfully following the ratio laid down by the Hon‟ble Supreme Court in the case of Dilip Kumar referred supra, we dismiss this line of argument advanced by the learned AR.

In view of the aforesaid detailed observations and respectfully following the various judicial precedents relied upon herein above, we hold that the learned CITA was duly justified in rejecting the additional ground of the assessee in not entertaining the claim of deduction under section 80IA(4) of the Act in the facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are hereby dismissed.

In the result, the appeal of the assessee is dismissed.