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Facts
The assessee filed its return of income and claimed a deduction under section 80JJAA. However, the amount claimed was inadvertently lower than the eligible amount. During assessment proceedings, the assessee sought to claim the correct eligible amount, but did not file a revised return.
Held
The Tribunal held that while the lower authorities relied on the Goetze India Ltd. decision regarding revised returns, the Supreme Court's emphasis was on the Assessing Officer's power, not the Tribunal's. The Tribunal decided that the claim of deduction under section 80JJAA needs to be considered. However, since the details regarding the fulfillment of employee criteria were not available, the issue was remanded to the AO for verification.
Key Issues
Whether the assessee can claim deduction under section 80JJAA even if a revised return was not filed. Whether the issue of time-barring assessment order should be heard on merits.
Sections Cited
143(3), 1448, 153, 92CA(2), 92CA(3), 153(4), 80JJAA, 139, 143(2), 142(1), 28, 43B, 44, 10(34), 14A, 10(23AAB), 10(15), 254
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
Per: Smt. Beena Pillai, J.M.: The present appeals filed by the assessee arises out of order dated 21/09/2023 passed by NFAC, Delhi for assessment year 2019-20 on following grounds of appeal :
2 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited “1. Ground No. 1: The Assessment order passed under section 143(3) read with section 1448 of the Act is time barred and accordingly, null and void On the facts and circumstances of the case and in law, the Learned CIT(A) has: 1.1 erred in not considering the provisions of section 153 of the Act, which states that no order of assessment shall be made under section 143 or under section 144 of the Act, at any time after the expiry of twelve months from the end of relevant AY in which income was first assessable in respect of an order of assessment relating to the assessment year commencing on or after the 1st day of April, 2019; 1.2 erred in not appreciating the fact that there is no International Transaction between the Associated Enterprise during the year and accordingly a notice under section 92CA(2) of the Act dated 21 September, 2021 is invalid and bad in law; 1.3 erred in ignoring the submission filed by the appellant wherein it was categorically mentioned that no Country by Country Report (CBCR) has been filed by the appellant for the year under consideration as transfer pricing provisions were not applicable in the present case. Accordingly, a reference made to Transfer Pricing Officer ('TPO') basis to the above report or basis to the TP risk parameter is bad in law; 1.4 erred in not acknowledging the fact that the order passed under section 92CA(3) of the Act in the absence of any International Transaction between the Associated Enterprise and the appellant is bad in law and consequently the proceedings under section 143 (3) r.w s 1448 of the Act is beyond the time limit prescribed under the provisions of the Act and accordingly, the Order is time-barred null and void; In view of above, the appellant submits that the Learned AO grossly erred in passing an Assessment order under section 143(3) read with section 1448 of the Act on 28 September, 2022 1.e. beyond the time limit prescribed under the provisions of section 153(4) of the Act and accordingly, any subsequent proceedings thereto are time-barred and void.
3 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited 2. Ground No. 2: On account of not considering the claim of eligible deduction under section 80JJAA of the Act during the course of assessment On the facts and circumstances of the case and in law, the Learned CIT(A) has: 2.1. erred in not considering the fact that as per the provisions of section 80JJAA of the Act, the appellant is entitled to claim a deduction of Rs. 13,80,23,106 representing 30% of additional employee cost incurred during the Financial Year ('FY') 2018-19, however, the appellant had inadvertently claimed a deduction amounting to Rs. 4,37,47,671 under section 80JJAA of the Act while filing the Return of Income for the above captioned AY; 2.2. failed to appreciate the fact that the appellant has also made a detailed submission for the eligible claim of deduction under section 80JJAA of the Act along with documentary evidences thereof; 2.3. erred in ignoring the submission made by the appellant and has allowed a claim of deduction amounting to Rs. 4,37,47,671 as claimed by the appellant in its Return of Income for the year under consideration relying on the Apex Court's decision in case of Goetze (India) Ltd vs CIT ((284 ITR 323)) and Hon'ble Bombay High Court's decision in case of Ultratech Cement Limited vs Addl. CIT (ITA No. 1040 of 2014) wherein it is held that new claims cannot be accepted by Assessing Officer if the same are not claimed in Return of Income filed by the assessee under section 139 of the Act; 2.4. erred in not appreciating the fact that the claim of deduction under section 80JJAA of the Act was made in Return of Income and that no new claim was made during the course of assessment; 2.5. erred in not understanding the fact that the amount allowed as a deduction under section 80JJAA of the Act is Rs. 4,37,47,671 which was inadvertently claimed by the appellant in its Return of Income for the year under consideration instead of correct amount of Rs. 13,80,23,106 as claimed by the appellant during the course of assessment; 2.6. erred in not acknowledging the fact that Hon'ble Bombay High Court in case of Commissioner of Income-tax vs M/s Pruthvi Brokers & Shareholders Private Limited ((349 ITR 336)) has held
4 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited that even assuming that the Assessing Officer ('AO') is not entitled to grant a deduction on the basis of a letter requesting an amendment to the return filed, the appellate authorities are entitled to consider the claim and to adjudicate the same; 2.7. erred in not appreciating the fact that Hon'ble Bombay High Court in case of Sesa Goa Limited vs Joint Commissioner of Income-tax, Panaji, Goa (423 ITR 426)) has held that even if we proceed on the basis that there was no obligation on the Assessing Officer to consider the claim for deduction in such letter, the Commissioner (Appeals) or the ITAT, before whom such deduction was specifically claimed was duty bound to consider such claim; In light of the above, the Appellant prays Learned CIT(A) to be directed to compute the correct claim of deduction under section 80JJAA of the Act in the light of details or submissions made by the Appellant company in this regard. The Appellant craves to leave to submit such further facts at any time before or at the time of hearing of the appeal, so as to enable the Learned Income Tax Appellate Tribunal (ITAT) to decide this appeal according to law.” Brief facts of the case are as under:
The assessee filed its return of income on 22/10/19, declaring total income at 1033,67,12,310/-. The case was selected for scrutiny and notice u/s. 143(2) and 142(1) was issued along with questioner. In response to the notice, the representative of the assessee appeared before the Ld. AO and filed requisite details through E-proceedings. 2.1 The Ld.AO noted that, the assessee is carrying on the business of life insurance including life annuity linked, non linked term, whole term assurance, pension business, long term health insurance, family insurance, group insurance, multiple cover insurance on linked and non linked platform and in account of assurance or insurance against any other kind of risk
5 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited liability whether direct or indirect arising from happening of no event or the fulfilment or non-fulfilment contingency, obligation or undertaking whatsoever and to carry on transfer or any every kind of life insurance and reinsurance whether indoor or outside ending. 2.2 During the assessment proceedings the Ld.AO issued show caused dated 23/03/2022 calling upon the assessee as to why the actuarial surplus in Form I should not be taxed as income of insurance business as per provisions of the Act. The Ld.AO also called upon the assessee to furnished as to why the net profit from shareholders account should not be taxed as income from other business activities as per provisions of section 28 to 43B other than the activity of insurance business as per section 44 of the Act. The Ld.AO also called upon the assessee to furnish the details as to why the dividend income claimed to be exempt u/s.10(34) of the Act should not be treated as income from other business activity in the hands of the assessee. The assessee was also called upon to furnished the expenditure u/s.14A not disallowed in the light of the income alleged to be exempt u/s.10(34) of the Act. The assessee was also called upon to justify the exemption claimed u/s.10(23AAB) and 10(15) of the Act. Based on the reply filed by the assessee on the above issue the Ld.AO rejected the contention of the assessee and made additions in respect of the issues under the head income from other sources. The Ld.AO also reduced the deduction claimed u/s.80JJAA to Rs.4,27,47,671/- as against the claim of assessee at Rs.13,80,23,106/-.
6 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld. CIT(A).
The assessee submitted that he is entitled to deduction of Rs.13,80,23,106/- representing 30% of additional employee cost incurred during the FY 2018-19. However inadvertently claimed deduction amounting to Rs.4,27,47,671/- under section 80JJAA of the Act while fling the Return of Income for the assessment year under consideration. Further the assessee made submission and explanation regarding the same during the course of assessment proceedings claiming the Rs. 13,80,23,106/- as deduction u/s. 80JJAA of the Act. 3.1 The Ld.CIT(A) however relied on the decision of Hon'ble Supreme Court in case of Goetze (India) Ltd. v. CIT reported in (2006) 284 in ITR 323 and held that new Claims needn't be accepted by Assessing Officers when made by Assessees through a Letter, if the same isn't claimed in return filed under section 139.
Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal.
At the outset, the Ld.AR submitted that Ground no. 1 raised by the assessee for A.Y. 2019-20 is challenging validity of assessment order passed beyond the period of limitation. He submitted that, this issue may be kept open at this stage and the appeal may be heard on merits.
7 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited Accordingly Ground No.1 raised by the assessee stands dismissed and liberty is granted to raise the issue in appropriate circumstances.
It is submitted that Ground No. 1 for A.Y. 2018-19 and Ground No. 2 for A.Y. 2019-20 pertain to the claim of deduction u/s. 80JJAA of the Act. 5.1 The Ld.AR submitted that, the assessee claimed deduction of Rs.4,37,47,671/- u/s. 80JJAA while filing the return of Income. During the course of assessment proceedings, the assessee submitted before the Ld.AO that it is entitled to deduction of Rs. 13,80,23,106 /- instead of Rs. 4,37,47,671 /- u/s. 80JJAA, however no revised return was filed by the assessee correcting the same. 5.2 He submitted that, in the return of income of AY 2017-18, the assessee claimed deduction of Rs.6,54,44,043/- representing. 30% of 'additional employee cost incurred during the financial year 2016-17. It is submitted that, as per section 80JJAA, the assessee is entitled to claim same amount (i.e. 6,54,44,043), as deduction for AY 2018-19 also, being the second year of deduction claim. However, while computing the eligible deduction under section 80JJAA for AY 2018-19, the Company failed to consider the aforesaid deduction amount of Rs.6,54,44,043/- and considered deduction only for Rs.2,88,31,392/- representing 30% of 'additional employee cost incurred during the financial year 2017-18. 5.3 It was submitted that, as per section 80JJAA, the assessee is entitled to deduction for a total sum of 9,42,75,435 computed by aggregating the deduction amount of 6,54,44,043 representing
8 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited 30% of the additional employee cost incurred during FY 2016-17 and the deduction amount of 2,88,31,392 representing 30% of additional employee cost incurred during FY 2017-18. 5.4 In support of the assessee enclosed revised manually signed Form 10DA obtained from a Chartered Accountant certifying the correct amount of deduction to be claimed in AY 2018-19 in aggregate, i.e. after considering claim of deduction pertaining to second year (i.e., AY 2018-19) of Rs. 6,54,44,043 in respect of additional employment cost of AY 2017-18. As regards deduction amount of 6,54,44,043 pertaining to additional employee cost incurred during FY 2016-17, a copy of Form 10DA certified by a Chartered Accountant was filed by the, assessee for AY 2017-18. 5.5 The Ld.AR submitted that both the authorities below rejected the claim of the assessee by observing that, the assessee had not made the claim by way of filing the revised return. The Ld.AR placed reliance on the decision of Hon’ble Supreme Court in case of Goetze (India) Ltd. v. CIT (supra). The relevant portion of the judgement is as under:
"4.4 The decision in question is that the power of the Tribunal under Section 254 of the Income Tax Act, 1961 is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the Assessing Authority and does not impinged on the power of the Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961. There shall be no order as to costs." 5.6 On the contrary, the Ld.DR relied on the orders passed by the authorities below.
9 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited We have perused the submissions advance by both sides in the light of record placed before us.
At the outset it is noted that the assessee is revising the original claim u/s. 80JJAA which is substantiated with a certificate issued by the Charted Accountant in Form 10DA. These were furnished before the Ld.AO during assessment proceedings. Admittedly the claim was raised by the assessee by manually filing form 10DA. It was under these circumstances that the authorities relied on the decision of Hon’ble SC in case of Goetz India Ltd. v/s. CIT(supra). However Hon’ble Supreme Court categorically emphasised the power of this Tribunal to consider the claim of an assessee otherwise than by a revised return. The reason being that, tax liability is fastened on the assessee on the basis of the statutory provisions. If any statutory provision gives the assessee any benefit, it cannot be denied. Thus in our view the claim of deduction u/s.80JJAA of the Act needs to be considered in accordance with law. 6.1 The deduction u/s.80JJAA of the Act is allowed for 3 years including the year in which the employment is provided hence in each year it has to be seen whether the employees were employed for at least 240 days during the previous year, deduction u/s.80JJAA of the Act is allowed for three years including the year in which the employment is provided. Hence, in each year it has to be seen that the employees were employed for at least 240 days during that previous year. 6.2 We note that, details regarding fulfillment of number of days of such employees, on whose salary deduction is claimed by 10 ITA 4095 & 4096/Mum/2023; A.Y.2018-19, 2019-20 SBI Life Insurance Company Limited assessee, are not available on record. We are therefore of opinion that the issue needs to be remanded to Ld.AO to verify these details in terms of new employees having satisfied the 240 days criteria during the year. 6.3 We direct assessee to provide all details regarding number of employees, number of new employees added for each of the immediately three preceding assessment years to Ld.AO. Ld.AO is then directed to analyse fulfillment of the condition in respect of new employees/workmen against whom the claim has been made by assessee under section 80JJAA of the Act. The Ld.AO is thus directed to allow deduction under section 80 JJAA of the Act in accordance with law. Accordingly the Ground No.1 for A.Y. 2018-19 & Ground No. 2 for A.Y. 2019-20 raised by the assessee stands allowed for statistical purposes. In the result both the appeals filed by the assessee for the years under consideration stands partly allowed for statistical purposes. Order pronounced in the open court on 23/07/2025