DCIT, CENTRAL CIRCLE - 3(3), KOLKATA vs. M/S. KAUSHALYA INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., KOLKATA

order : May 01, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: Both the appeals have been preferred by the revenue against the separate orders dated 28.09.2018 of the Commissioner of Income Tax (Appeals)-21, Kolkata [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since, common issues are involved in both the appeals, hence these have been heard together and are being disposed of by this common order. The appeal in for assessment year 2006-07 is taken as lead case for the purpose of narration of facts.

3. In the set aside proceedings, the ld. CIT(A) vide impugned order dated 28.09.2018 has allowed the deduction u/s 80IA of the Act at Rs.43901295/-, whereas, the original claim of the assessee relating to deduction u/s 80IA was Rs.27201280/- only. Now, the Revenue has come in appeal pleading that in the set aside proceedings, the ld. CIT(A) was not justified in allowing more deduction than that was claimed by the assessee in its original return of income which was assessed u/s 143(3) of the Act. It has been claimed that the total income of the assessee as per return was Rs.7846260/- after claiming deduction of Rs.2,72,01280/- u/s 80IA of the Act. The Assessing Officer had disallowed the deduction u/s 80IA and assessed the income of the assessee at Rs.3,50,47,540/-. However, the ld. CIT(A) in the set aside proceedings has allowed the deduction more than that was claimed in the original return and after allowance of the said deduction, there will be loss of Rs.88,53755/-. That as per section 80A(2) of the Act, the aggregate amount of deduction in Chapter VIA shall not in any case cross the gross total income of the assessee.

4. We have heard the rival contention and gone through the record. A perusal of the aforesaid reproduced operating part of the order of this Tribunal dated 08.11.2016 would reveal that the Tribunal had observed that the assessee would be entitled to the deduction u/s 80IA in respect of contract directly obtained by the assessee from the Government. The Tribunal, therefore, restored the matter to the file of the CIT(A) to examine the claim of deduction u/s 80IA of the Act to the assessee afresh in accordance with all issues thereof left open. The assessee filed fresh details of break-up of contracts etc. and thereby, claimed the total deduction at Rs.43901295/-. The ld. CIT(A) after examining the claim of the assessee has allowed the said deduction. In this case, there was no I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd direction of the Tribunal that the deduction claimed by the assessee should be restricted to a particular amount, rather, the Tribunal after giving finding that the assessee would be entitled to the deduction in respect of the contracts directly awarded by the Government has directed the assessee to furnish bifurcation/break-up of contracts and thereafter, directed the CIT(A) to examine the claim afresh in accordance with all the issues left open. Therefore, there was no restriction to the CIT(A) to restrict the deduction to the extent it was originally claimed in the return of income. The ld. CIT(A) was justified to examine all the details furnished by the assessee to determine the eligible claim of deduction to the assessee.

The Hon’ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words ‘could not have been raised’ must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. The co-ordinate bench of the Tribunal in the case of “Shri Chandrashekhar Bahirwani” and 6599/M/2011 vide order dated 17.06.2015 while deciding the question as to whether the income cannot be assessed less than the returned income has observed as under:

“5. Now coming to the finding of the Ld. CIT(A), that income cannot be assessed less than the returned income, the Ld. A.R. of the assessee has submitted before us that the action of the Ld. CIT(A) in rejecting the claim of the assessee on this ground was not justified. He has further relied upon the decision of the Hon’ble Gujarat High Court in the case of “Gujarat Gas Ltd. vs. JCIT” (2000) 245 ITR 84. In the said case, the words of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned income was considered by the Hon’ble High Court and it was held that as per proviso to section 119 of the Act, the Board cannot issue instructions to the Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner as well as not to interfere with the discretion of the Commissioner in exercise of his appellate functions. It was further held that the AO, while exercising his quasi judicial powers, was not bound by the said circular and should have exercised his powers independently. The Hon’ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be I.T.A Nos.2543&2544/Kol/2018 Assessment years: 2006-07 & 2007-08 M/s Kaushalya Infra. Development Corp. Ltd further observed that the Hon’ble Bombay High Court in the case of ‘Pruthvi Brokers & Shareholders Pvt. Ltd.’ of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon’ble Supreme Court and other Hon’ble High Courts has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon’ble High Court has further observed that the decision of the Hon’ble Supreme Court in the case of ‘Goetze (India) Limited v. CIT’ (2006) 157 Taxman 1, relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. In view of our above observations, it is held that the assessee is not liable to pay Capital Gains Tax, though originally he had subjected himself to the said tax as per his return of income. The AO is directed to process the claim of refund in this respect as per provisions of the law.”