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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee s directed against order of Ld. CIT(A) dated 3.11.2021. The assessee has raised ground with regard to non- granting of deduction u/s 80IA of the Income-tax Act,1961 ['the Act' for short], though assessee filed form No.10CCB before processing the return u/s 143(1) of the Act. The assessee also raised additional grounds as follows:-
M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 2 of 7 “Additional grounds of appeal:
Legal Issue 1 – Filing Form 10CCB, is not mandatory condition to claim of deduction u/s 80IA(1)
1. Filing of Audit report in Form 10CCB is only a discretionary condition and not a mandatory condition as held by Honourable Supreme court.
Legal Issue 2 -Revised Return steps into shoes of original return, for all purpose.
The revised return filed under section 139(4) within extended due date, by rectifying the defect in original return filed within due date under section 13911), substitutes the original return from the date the original return was filed.
3. The learned Assessing officer / CIT(A) is not justified in ignoring the revised return filed after rectifying the original return by filing report of an accountant in Form 10CCB.
Legal Issue 3 - relating to Finance Act 2020, applicability. 4. Amended provision of section 80IA(7) is applicable only with effect from 01/04/2020. Even the amended provision emphasis only on furnishing of Return of income as a mandatory condition (and filing of Form 10CCB only as discretionary condition as held by supreme court).
Legal Issue 4- relating to applicability of Department circular.
5. Rectification of return under section 139(4), has to be interpreted in accordance with the intention made out vide Department /Board's Circular No. 669 dated 25-10-1993 read with Smt. Mandira D. Vakharia 2001] 250 ITR 432 (Karnataka High court). I.e., on parity of reasoning Department circular has to be followed in a strict manner if the same is beneficial to assessee.
6. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal.
7. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.”
2. The assessee also filed petition for admission of additional grounds stating these grounds do not involve any investigation of any fresh facts, otherwise on record of the department and also pure question of law and prayed that the additional grounds may be M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 3 of 7 admitted and disposed of on merits in the advancement of substantial cause of justice and placed reliance on the judgement of Hon’ble Supreme Court in the case of NTPC Vs. CIT reported in 229 ITR 383 and also the judgement of Hon’ble Karnataka High Court in the case of Gundathur & Ors. Vs. CIT 70 ITR 70.
2.1. We have heard both the parties and perused the materials available on record on the admission of additional grounds. In our opinion, there is a good and sufficient reason for not raising these additional grounds on earlier occasion and accordingly, in the interest of justice, we admit these additional grounds for adjudication.
Now coming to the facts of the case are that the assessee is a Private Limited Company registered under the provisions of the Companies Act, 1956 and is in the business of carrying out the activities related to management of industrial, chemical. hospital and other kinds of hazardous waste. The assessee is assessed with the Deputy Commissioner of Income-Tax, Centralized Processing Center (CPC), Bangalore. For the Assessment Year 2017-2018 the assessee filed its original return of income on 02/11/2017 declaring a total income of Rs.2,02,26,563/-. However, the corresponding form for claiming deduction u/s 80IA of the Act was not filed before filing the return and hence revised return was filed on 03/09/2018 after filing the required form i.e Form 10CCB on 01/09/2018. The case of the assessee company for the Assessment Year 2017-18 was processed u/s 143(1) of the Act on 12.11.2018. The learned assessing officer made disallowances to a tune of Rs.2,02,26,570/- and completed the verification of returns and arrived the computation of Income and tax thereon. The learned assessing officer passed an order
M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 4 of 7 by intimating the applicant u/s 143(1) of the Act after making disallowances of Rs.2,02,26,563/- on 16.03.2018. In the notice issued under section 143(1)(A) of the Act, the Deputy Commissioner of Income-Tax proposed that under Chapter VI-A, part C, deduction has been claimed u/s. 80IA of the Act without filing corresponding form 1OCCB. Further, it is submitted that the learned Deputy Commissioner of Income-Tax (CPC) denied the claim made by the assessee under section 80IA of the Act by the reasons being that the assessee has not filed Form No.10CCB for claiming deduction under section 80IA of the Act along with the return of income for the AY 2017-18 which is a pre-requisite for claiming such deduction.
On appeal Ld. CIT(A) observed that as can be seen sub- section (5) of section 80A of the Act provides that where the assessee fails to make a claim in his return of income for any deduction under any provision of this Chapter under the heading "C—Deductions in respect of certain incomes, no deduction shall be allowed to him thereunder." It is an admitted fact that the assessee failed to make a claim of deduction in the return of income filed on 02/11/2017 where an amount of Rs. 2,02,26,563/- was declared as income. The assessee, then revised its return of income on 03.09.2018 to claim deduction of Rs. 2,02,26,563/- u/s 80IA of the Act. Section 80AC of the Act is clear in this regard which provides that no such deduction shall be allowed to the assessee unless he furnishes a return of his income for such assessment year on or before the due date specified u/s 139(1) of the Act.
4.1. Ld. CIT(A) further observed that a harmonious reading of section 80A and section 80AC of the Act shows that the assessee
M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 5 of 7 having failed to claim deduction u/s 80IA of the Act in his return of income filed within the due date specified u/s 139(1) of the Act, has clearly lost his eligibility to claim the benefit of deduction u/s 80IA of the Act. This cannot be done through a revised return. Ld. CIT(A) held accordingly. Against this assessee is in appeal before us.
We have heard the rival submissions and perused the materials available on record. The main contention of the assessee’s counsel is that assessee filed original return u/s 139(1) of the Act in time on 2.11.2017. Later the assessee filed revised return u/s 139(5) of the Act on 3.9.2018. This return was processed u/s 143(1) of the Act on 12.11.2018. According to the Ld. A.R., the form No.10CCB digitally filed at the time of filing the revised return on 3.9.2018 and this was available to AO(CPC, Bangalore) at the time of processing return u/s 143(1)(a) of the Act as such in view of the judgement of Karnataka High Court in the case of Sutures India Pvt. Ltd. Vs. CIT (2021) 125 Taxmann.com 226 (Kar), wherein held that assessee company could filed audit report in the form of Form No.10CCB even at the appeal stage so as to be eligible for deduction u/s 80IA of the Act. Further, Hon’ble Supreme Court in the case of CIT Vs. GM Knitting Industries Pvt. Ltd. 71 Taxmann.com 35 (SC), wherein held that even though necessary certificate in the form of 10CCB along with the return of income had not been filed but same was filed before final order of the assessment was made but the assessee was entitled to claim u/s 80IB of the Act. Further, coordinate bench in the case of Delhi MSW Solutions Ltd. In dated 24.2.2021 held as follows:-
“2.3. Learned authorised representative on the other had drew our attention to the clinching facts inter alia that the assessee had very well raised its sec. 8o IA deduction claim with original return
M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 6 of 7 filed u/s 139(1) followed by its revised return along with form 10 CCB which was processed u/s 143(1) of the Act disallowing the above relief. This clinching fact has gone unrebutted from department side. Coupled with this, we also wish to reiterate here that sec.8o IA r.w.s. 8o IA (7) expressly provides for the impugned relief. We therefore quote hon'ble apex court's landmark decision in KV Pillai vs. CIT (1967) 63 ITR 411 (SC) to express our complete agreement AY 2016-17 Dy CIT, Circle 17(1) vs. Delhi MSW Solutions Ltd. Hyd.”
5.1 The Ld. D.R. submitted that various case laws relied by the Ld. A.R. relating to the period prior to the introduction of section 80AC of the Act, which came into effect from 1.4.2006 by Finance Act, 2006. As such, the above judgements cannot be applied to the facts of the present case.
In our opinion, we are fully in agreement with the contention of the Ld. A.R. that if the audit report in form No.10CCB if made available to the AO before framing assessment or processing of return u/s 143(1) of the Act, the assessee is entitled for deduction u/s 80IA of the Act. However, the Ld. A.R. not able to demonstrate that assessee has actually and digitally filed the form No.10CCB (audit report) along with the revised return of income filed by the assessee digitally so as to make available to the AO. In view of this, we remit this issue to the file of the AO with the direction to the assessee to prove that assessee has actually filed the audit report in form No.10CCB before the AO before passing of the intimation u/s 143(1)(a) of the Act. Accordingly, the issue remitted to the file of the AO for de-novo consideration. Appeal of the assessee is partly allowed for statistical purposes. Since we have remitted the M/s. Mother Earth Environ Tech Pvt. Ltd., Bangalore
Page 7 of 7 impugned ground in this appeal, the additional grounds raised by the assessee have become infructuous and dismissed accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 6th Jul, 2022