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Facts
The assessee, a partnership firm engaged in construction, filed its return of income where a deduction under Section 80IB(10) was not mentioned due to a clerical error. The CPC processed the return, disallowed the deduction, and calculated tax under Alternate Minimum Tax. The CIT(A) allowed the deduction, considering it a bonafide mistake.
Held
The Tribunal held that while the CIT(A) could entertain an additional claim, it was necessary to adjudicate the issue of allowability of the deduction without claiming it in the return, as per Section 80A(5). Since the CIT(A) did not do this, the issue was restored to the CIT(A) for a speaking order.
Key Issues
Whether the CIT(A) erred in allowing a deduction not claimed in the original return, and if so, whether the issue needs to be adjudicated as per Section 80A(5) before allowing the claim.
Sections Cited
80IB(10), 115JC, 80A(5), 139(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the Revenue is directed against the order dated 13.03.2024 of the Ld. CIT(A), Pune-12 relating to assessment year 2020-21.
Facts of the case, in brief, are that the assessee is a partnership firm engaged in construction of residential projects. It filed its return of income on 03.01.2021 which was processed by the CPC, Bengaluru on 14.02.2022 wherein the deduction u/s 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was disallowed and the tax was calculated under Alternate Minimum Tax as per the provisions of section 115JC of the Act.
Aggrieved with such order of the CPC, Bengaluru, the assessee filed an appeal before the Ld. CIT(A) challenging the computation of tax by applying the Alternate Minimum Tax. The assessee also took an additional ground before the Ld. CIT(A) challenging the disallowance of deduction of Rs.6,12,05,192/- u/s 80IB(10) of the Act. Based on the arguments advanced by the assessee, the Ld. CIT(A) allowed the claim of deduction u/s 80IB(10) of the Act made by the assessee by observing as under: “Findings on Additional Ground No. 1: 10.2 The appellant explained that the return of income was filed by the appellant for AY 2020-21, however, the amount of deduction u/s 80IB(10) was remained to be mentioned in the return of income. Consequently, the return of income was uploaded as 'self-assessment tax payable' and hence demand was raised in the intimation generated. Aggrieved, by the same, the appellant has preferred the present appeal, 10.3 In the submission filed, it was stated by the appellant that the return of income was filed during the Covid lockdown period. The Chartered Accountant of the appellant is a blood pressure patient and the managing partner of the firm was also suffering from serious disease and therefore they were not visiting the office regularly as the virus was more deadly to the people with comorbidities. During that phase the staff of the Chartered Accountant filed the return of income of the appellant and at the time of filing the return of income, the Form 10CCB was uploaded within the prescribed time limit. In the Return of Income filed, the details of the Form 10CCB along with the deduction is to be claimed u/s 80IB is mentioned. However, the amount of deduction u/s 80IB(10) was remained to be mentioned due to oversight from the staff. 10.4 On perusal of the submission made by the appellant, it is seen that the appellant has developed single housing project namely 'Kasliwal Marvel' and the building permission of the said project was obtained by the appellant on 30.03.2007 and occupancy certificate was obtained on 31.03.2012. The appellant has claimed the deduction u/s 80IB(10) for the same project in AY 2012-13. 2013 14 and 2014-15 and the same was allowed during the assessment /appellate proceedings. During the year under consideration the deduction of 80IB(10) is claimed for the same project, therefore, on perusal of the documents available on record, I am of the opinion that the appellant is eligible for the deduction u/s 80IB(10) and due to the bonafide mistake by the staff of the Chartered Accountant
the amount of the deduction was remained to be mentioned at the time of filing of the return and hence, the same was disallowed in the intimation. 10.5 Further, the appellant has submitted the copy of the income tax return and copy of Form 10CCB uploaded which revealed that the return of income of the appellant was filed u/s 139(1) within the prescribed time. The Form 10CCB was also filed within prescribed time and the details of Form 10CCB were also mentioned in the return of income including the section in which the deduction is to be claimed. The deduction was not allowed merely on the ground of non mentioning of amount and not on the merits of the claim, whereas the information required for granting deduction is available on record including the amount of deduction as the same is duly mentioned in the Form 10CCB. 10.6 The case laws relied upon by the appellant, paramount of which being the decision of the Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. v. CIT-[(1998) 229 ITR 383 (SC)] wherein the Hon'ble Apex Court has held that appellate authority has the power to entertain the fresh claim which is not taken before the lower authorities. Further, the Hon'ble Bombay High Court in case of CIT v. Pruthvi Brokers & Shareholders - [(2012) 349 ITR 336 (Bom)] has held that an assessee is entitled to raise additional claims during the appellate proceedings which were not made in the return of income filed. 10.7 In the present case, the appellant could not file the revised return as the time limit to file the same had expired and substantial compliance required for claiming the deduction u/s 80IB(10) has been duly complied by the appellant within the prescribed limit and the claim of the deduction is made in the return of income by filling the details of Form 10CCB and deduction to be claimed u/s 80IB(10), therefore, respectfully following the ratios laid down by the aforesaid judicial forums, the AO is directed to allow the claim of deduction u/s 80IB(10) of Rs.6,12,05,192/-, Accordingly, the additional ground raised by the appellant is hereby allowed.”
Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow the deduction u/s. 80IB(10) of Rs. 6,12,05,192/-which was not disallowed or rejected by the A.O. CPC, Bengaluru while processing the ITR for the A.Y. 2020-21 and ignoring the fact that the deduction u/s 80IB(10) was not claimed by Assessee in ITR filed for the A.Y. 2020-21.
2. Whether on the facts and in circumstances of the case and in law the Ld. CIT(A) has erred in admitting and allowing the additional grounds of appeal
without obtaining the AO's comments on the same.
3. Whether on the facts and in circumstances of the case and in law the Ld. CIT(A) has erred in holding that the AO CPC, Bengaluru has disallowed the deduction u/s. 80IB(10).
4. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in adjudicating original and additional grounds of appeal raised by the assessee which are not fit or irrelevant considering the facts of the case.
5. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.
The Ld. DR at the outset challenged the order of Ld. CIT(A) allowing the claim of deduction u/s 80IB(10) of the Act through an additional ground. Referring to the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs. CIT (2006) 284 ITR 323 (SC), he submitted that the Ld. CIT(A) has no jurisdiction to decide the matter and allow deduction u/s 80IB(10) of the Act. He submitted that since the assessee never claimed the same in the return filed originally nor filed a revised return to claim the said deduction, therefore, it was beyond the power of the Ld. CIT(A) to discuss and decide the issue.
The Ld. Counsel for the assessee on the other hand submitted that the assessee filed the return of income on 03.01.2021. Due date for filing of the return was 15.02.2021. Referring to page 51 of the paper book, he submitted that the audit report was furnished on 30.12.2020. Referring to page 63 of the paper book, he submitted that due to a typographical error, the claim of deduction u/s 80IB(10) of the Act was not mentioned in the I.T. Return. Referring to page 69 of the paper book, he submitted that the assessee in the Form No.10CCB has quantified the claim of deduction u/s 80IB(10) of the Act at Rs.6,12,05,192/-. He submitted that although the CPC has accepted the return, however, the rectification application u/s 154 of the Act was rejected. However, it is a matter of fact that the same project was continuing from assessment year 2012-13 onwards and the claim of deduction was allowed either during assessment proceedings or appeal proceedings. Therefore, the Ld. CIT(A) was fully justified in allowing the claim of the assessee.
Referring to the decision of Hon’ble Karnataka High Court in the case of Pr.CIT vs. Karnataka State Co-operative Federation Ltd. (2021) 128 taxmann.com 1 (Kar), he submitted that the Hon’ble High Court in the said decision has held that the assessee’s fresh claim before appellate authority is entertainable even if same is not claimed in original return of income nor assessee has filed revised return of income to make such claim.
Referring to the decision of Hon’ble Madras High Court in the case of CIT vs. Abhinitha Foundation (P.) Ltd. (2017) 396 ITR 251 (Mad), he submitted that the Hon’ble High Court in the said decision has held that even if a claim made by assessee-company does not form part of original return or even revised return, it can still be considered by Assessing Officer as well as appellate authorities, if relevant material is available on record. He also relied on the decision of Hon’ble High Court of Punjab and Haryana in the case of CIT vs. Ramco International (2011) 332 ITR 306 (P&H) and drew the attention of the Bench to the following head note: “Section 80-IB of the Income-tax Act, 1961 Deductions Profits and gains from industrial undertakings other than infrastructure development undertakings - Assessment year 2003-04 - Assessee had claimed deduction under section 80-IB and though Form 10CCB and other requisite documents had been furnished along with return, Assessing Officer made assessment without referring to said documents On appeal, claim of assessee was upheld - On appeal before Tribunal, revenue contended that assessee made claim by way of an application without filing a revised return and, therefore, deduction could not be allowed. Tribunal, however, upheld order of Commissioner (Appeals) holding that as assessee was not making any fresh claim and it had duly furnished requisite documents for claim under said section, there was no requirement for filing any revised return and claim of assessee was admissible-Held, yes Whether Tribunal had taken correct decision - Held, yes”
He accordingly submitted that the order of the Ld. CIT(A) being in accordance with law, the same should be upheld and the grounds raised by the Revenue be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the assessee in the instant case has not claimed the deduction u/s 80IB(10) of the Act in the proper column of the return although the quantification of the same has been determined at Rs.6,12,05,192/-. We find since the CPC in the instant case has calculated the tax under the provisions of section 115JC, the assessee filed an appeal before the Ld. CIT(A) wherein apart from challenging the computation of Alternate Minimum Tax as per the provisions of section 115JC, the assessee through an additional ground challenged the denial of deduction u/s 80IB(10) of the Act at Rs.6,12,05,192/-. We find the Ld. CIT(A) allowed the claim of the assessee, the reasons of which have been reproduced in the preceding paragraphs. It is the submission of the Ld. DR that the Ld. CIT(A) has no jurisdiction to discuss the matter in view of the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. vs. CIT (supra) since the assessee has neither claimed the deduction in the return of income filed originally nor claimed the same through revised return.
We find the provisions of section 80A(5) of the Act read as under: “80A(1)…. …… (5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder.”
A perusal of the Audit Report in Form No.10CCB shows the date of approval by the local authority as 30.03.2007 and the date of completion of the housing project as 31.03.2012. The deduction u/s 80IB(10) of the Act is also determined at Rs.6,12,05,192/-. Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim, in view of the various judicial precedents relied on by Ld. CIT(A), however, he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deductions / exemptions without claiming the same in the return of income as per the provisions of section 80A(5). However, he has not done the same. Under these circumstances, we deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to adjudicate the issue of allowability of the claim in absence of claiming the same in the return of income as per provisions of section 80A(5) of the Act and pass a speaking order on this issue. Needless to say the Ld. CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the open Court on 24th April, 2025.