M/S. SHIVALIK PRINTS LTD.,NEW DELHI vs. DCIT, NEW DELHI

4. The solitary effective ground raised in grounds no. 1 to 3 is against disallowance of deduction claimed u/s 80. JJAA of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), at Rs. 35,78,377/- claimed to have been made during the course of appellate proceedings.

4. Facts giving rise to the present appeal are that in this case assessee filed its return of income declaring total income of Rs. 14,07,59,581/- on 30.09.2011. The scrutiny and a notice u/s 143(2) of the Act was issued. The assessment was completed u/s 143(3) read with section 144C of the Act accepting the returned income. Against the assessment order so passed the assessee preferred appeal before learned CIT(Appeals), wherein vide ground no. 2 the assessee had taken a ground claiming deduction u/s 80 JJAA of the Act. After considering the submissions made by the assessee the learned CIT(Appeals) partly allowed the appeal. Thereby, in respect of interest on TDS credit the learned CIT(A) restored the issue to the Assessing Officer for examining the claim of the assessee from the records and allow the tax credit. However, the claim of the assessee regarding deduction u/s 80JJAA was rejected. Against this rejection, the assessee is in appeal before this Tribunal.

5. Apropos to the grounds of appeal

learned counsel for the assessee submitted that the authorities below failed to appreciate that the disallowance u/s 80. JJAA of the Act is a legal issue and can be raised at any stage. He submitted that the learned CIT(A) failed to appreciate the fact in right perspective. Further, he reiterated the submissions as made in the brief synopsis. For the sake of clarity the Brief Synopsis is reproduced herein below:

“BRIEF SYNOPSIS MAY IT PLEASE YOUR HONOURS & 2296/Del/2017 In supplement to the filings and oral submissions being made, the assessee respectfully submits a brief synopsis as under. This may please be seen with reference to paper book filed on 10.5.2022. 1. Grounds No. 1 & 2 relate to denial of new claim raised before the Ld. CIT(A)] as per the original grounds of appeal

. The specific Grounds read as under.

1. That on facts and in law, the Ld. Commissioner of Income tax (Appeals) [Ld. CIT(A)] has erred in not admitting the claim of deduction u/s 80JJAA amounting to Rs. 35,78,377/-, which was raised as per the Original grounds of appeal filed before him.

2. That the non-admission of the said claim of deduction u/s 80JJAA of Rs. 35,78,377/- by the Ld. CIT(A) is against the provisions of the Act, CBDT Circular and the judicial precedents in this regard. FACTS Reference to CIT (A) Order [Para 7 to 11 at Pages 3 to 7] 1.1Return was filed on 30.09.2011 declaring taxable income of Rs. 14,07,59,581/- Assessment was made u/s 143(3) vide assessment order dated 03.03.2015 assessing the income as returned at Rs. 14,07,59,581/-. 1.2 In appeal before the Ld. CIT(A), for the first time, the Appellant raised a claim of deduction u/s 80JJAA for Rs.35,78,377/- as per the original grounds of appeal

. 1.3 Deduction u/s 80JJAA relates to employment of new employees in Factories and was introduced to incentivize the employment in the country. As per the provisions of section 80JJAA applicable in this year, an assessee was entitled to deduction of 30% of eligible amount in 3 assessment years including the eligible year. To claim the deduction, sub section (2) of section 80JJAA prescribed certain conditions both in respect of substantive and procedural compliances. Towards procedural compliance, a report of the accountant in prescribed Form 10DA was required to be furnished alongwith the return of income. 1.4 Before the Ld. CIT(A), in support of its claim of deduction u/s 80JJAA of Rs.35,78,377, the Appellant, along with an application under Rule 46A filed & 2296/Del/2017 the report of accountant certifying the amount of eligible deduction in prescribed Form10DA dated 27.3.2015. Detail of such Form 10DA in respect of different factories of the assessee and the working of eligible amount in this year is given hereunder: S. No Factory Address Total eligible Amount eligible Amount in AY 2011-12[ 30% of total amount]

1. Plot No. 39, Sector 6, HUDA, 5,08,510 1,52,553 Faridabad 2 Plot No. 37F, Sector 6, HUDA, 31,60,614 9,48,184 Faridabad 2 Plot No. 23/7, Mathura Road, 24,94,743 7,48,423 Sector-59, Ballabhgarh, Faridabad 3 Plot No. 231-232, Sector-58, 3,30,205 99,062 Ballabgarh, Faridabad 4 Plot No. 138, Sector-24, 54,33,850 16,30,155 Faridabad TOTAL Rs. 1,19,27,922 Rs.35,78,377

1.5 Ld. CIT(A), for the reasons discussed in her Appellate order dated 31.01.2017, rejected the said claim of the Appellant mainly on the ground that no such claim was made in the return of income as well as during the course assessment proceedings. While rejecting the claim, Ld. CIT(A) referred the decisions in the case of Jute Corporation of India Ltd. Vs. CIT, (1990)187 ITR 688 (SC) and Add, CIT v. Gurjargravures Pvt. LTD, [1978] 111 ITR 1 (SC). SUBMISSIONS 2. Regarding justification of raising new claim during appellate proceedings and the powers of the Appellate authorities to entertain and decide the same, the Appellant submits as under: [A] No tax to be levied except by authority of law and only correct income to be taxed - Department not to take advantage of ignorance of an Assessee. 2.1 Article 265 of the Constitution of India lays down that no tax shall be levied except by authority of law. Hence only legitimate tax can be & 2296/Del/2017 recovered and even a concession by a tax-payer does not give authority to the tax collector to recover more than what is due from him under the law. Article 265 of the Constitution of India is reproduced hereunder: "265. Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law" 2.1.1 With this view of the matter and so as to safeguard the Assessee's Rights, Central Board of Direct Taxes has also issued a Circular being Circular No: 14 (XL-35) dated April 11, 1955 which states as under: "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." 2.1.2 The above circular has been judicially noted and approved in many judgments and has been relied upon in support of the Assessee's claim. In this regard please refer following judicial precedents amongst others. 81 ITR 303 (DEL) CIT vs. Bharat General Insurance Company Ltd. ACIT v. Technofab Engg. Ltd., 2009 TIOL, 664 ITAT (Del.) Balmukund Acharya v. Dy.CIT 310 ITR 310(Bom.) Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 (Bom.)

& 2296/Del/2017 [B] Powers of the CIT(A) are coterminous with that of the Assessing Officer and any admissible claim if not made before the AO can be made before the CIT(A) 2.2 It is submitted that the powers of the CIT(A) are co-terminus with that of the Assessing Officer. Hon'ble Supreme Court in the case of Jute Corporation of India Ltd Vs CIT (1990) 187 ITR 688 (SC) has held that if a claim is not made before the assessing officer, it can be made before appellate authorities. The Hon'ble Supreme Court in this decision referred to its earlier decisions by larger Benches in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) and came to the conclusion that "the power of the Appellate Commissioner was co-terminus with that of the ITO, and if that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. In the case of Kanpur Coal Syndicates case (supra) while considering the powers of Appellate authorities in appeal, three judge Bench of the Hon'ble Supreme Court has held as under “……The scope of his power is conterminous with that of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. If the ITO has the option to assess one or other of the entities in the alternative, the AAC can direct him to do what he should have done in the circumstances of a case …..” “…..The comprehensive phraseology used both in section 31 and section 33 of the 1922 Act does not countenance the attempt of the revenue to restrict the powers of the AAC or of the Appellate Tribunal: both of them have power to direct the appropriate authority to assess the members individually instead of the association of persons as a unit …..”. [C] Under the taxing statute, various provisions relating to appeals can hardly be equated to a dispute as arises between two parties in a civil litigation. Appellate Tribunal is competent to pass such orders on the appeal, as it thinks fit and it would be the duty of the Tribunal to decide all questions on fact and law before it. 2.3 The task of an appellate authority under the taxing statute, especially a non- departmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provisions & 2296/Del/2017 governing his assessment. Since be-all and end-all of the statutory provisions, especially those relating to the administration and management of income tax is to ascertain the taxpayer's liability correctly to the last pie, if it were possible. The various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a lis or dispute as arises between two parties in a civil litigation. We may also humbly submit that it is the duty of the assessing officer to compute the correct taxable income and not only the income as returned by assessee. In this regard please refer the decision of Hon'ble High Court at Madras in the case of S.P. Spinning Mills (P.) Ltd. v. ACIT, [2021] 124 taxmann.com 596 (Mad) wherein it was held as under.

by the assessee before the CIT(A) has been recorded in the order, the CIT(A) did not take a decision on the same. Similar ground was raised by the assessee before the Tribunal, which was not considered by the Tribunal, though the Tribunal refers to all the decisions relied on by the assessee, but would pin the assessee to his claim made under section 801A of the Act and accordingly, negatives it. This finding of the Tribunal is wholly erroneous and perverse. The Tribunal was expected to apply the law and take a decision in the matter and if the CIT(A) or the Assessing Officer had failed to apply the law, then the Tribunal was bound to apply the law. Justification of Appellant's claim

3. The ground regarding claim of deduction u/s 80JJAA was duly taken in Appeal before the Ld. CIT(A). During the course of hearing, copy of prescribed Form 10DA were also filed alongwith application under Rule 46A wherein the Appellant duly explained the reasons for its failure to make the subject claim in the return of income. [Refer PB Pages 37 to 53] 3.1 Regarding reasons why the claim of deduction could not be claimed in the return of income, as also mentioned in the application filed under Rule 46A and submitted before the Ld. CIT(A), it is submitted that the Appellant was not informed of its eligibility of deduction u/s 80JJAA. While preparing the details and information during the course of assessment proceedings particularly in respect of salary and wages, it was noticed that the assessee may be eligible for deduction u/s 80JJAA. Accordingly, the Appellant & 2296/Del/2017 approached their Accountants to verify its claim u/s 80JJAA and if eligible to provide the prescribed Accountant's certificate in Form 10DA as required under section 80JJAA(2)(c) of the Act. Based on details provided by the Appellant and verification of the same, requisite certificates in prescribed Form 10DA were issued by the Accountant only on 27.03.2015. However, by that time, the Ld. AO had passed the assessment order on 03.03.2015. As such, it is submitted that the Appellant was prevented by sufficient cause in not claiming the subject deduction in the return as well as during assessment proceedings. 3.2 As borne out from the judicial precedents mentioned herein above, it is trite law that claims available under law to compute correct taxable income if not taken in the return or during assessment proceedings the same can be raised before the Appellate Authorities. In view of above stated facts and legal position it is submitted that the claim of the appellant of deduction u/s 80JJAA if not to be considered on merits, authorities below be directed to admit and decide the same in accordance with law. Rebuttal of findings of the Ld. CIT(A) 4. As regards basis of rejection of the claim by the Ld. CIT(A) it is submitted as under. 4.1 As regards the claim not based on any change in law post assessment, it is submitted that change in law post return or assessment is not the only reason for accepting a new claim during appellate proceedings. As per judicial precedents including that of Jute Corporation (supra), this may be one of the reasons for admitting the new claim. A new claim before the CIT(A) may also be permitted where the same was left to be claimed earlier due to other reasons. 4.2 Regarding various conditions required to be fulfilled for claiming the deduction, it is submitted that the prescribed certificates in Form 10DA are issued by the Accountant based on and after verification of requisite conditions required to be fulfilled for claiming the deduction u/s 80JJAA. For verification of the same, if necessary, Ld. CIT(A) would have called for the remand report from the Ld. AO. 4.3 Regarding rejection of claim on the ground of non-filing of prescribed certificate of the Accountant with the return of income it is submitted that the said observations of the Ld. CIT(A) are against the doctrine of substantial compliance.

& 2296/Del/2017 In this regard reliance is placed on the decision of Hon'ble Supreme Court in the case of Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal (2011) 1 SCC 236 wherein vide para 24 of the order, the doctrine of substantial compliance was explained as under. "24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the noncompliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the & 2296/Del/2017 "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential." [Underlining & Bold Ours] Appellant's Case 1.3.1 In this matter before your honours, the issue relates to interpretation of deduction provided under provisions of section 80JJAA. of the Act which were introduced by Finance (No. 2) Act 1998 w.e.f. 1.4.1999. Provisions of section80JJAA as applicable in AY 2011-12 are reproduced hereunder: QUOTE Deduction in respect of employment of new workmen. 80JJAA. (1) Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from any industrial undertaking engaged in the manufacture or production of article or thing, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided. (2) No deduction under sub-section (1) shall be allowed- (a) if the industrial undertaking is formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking, (b) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed. Explanation. For the purposes of this section, the expressions, - (i) "additional wages" means the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year:

& 2296/Del/2017 Provided that in the case of an existing undertaking, the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such undertaking as on the last day of the preceding year, (ii) "regular workman", does not include- (a) a casual workman; or (b) a workman employed through contract labour, or (c) any other workman employed for a period of less than three hundred days during the previous year, (iii) "workman" shall have the meaning assigned to it in clause (s) of section 2of the Industrial Disputes Act, 1947 (14 of 1947).] UNQUOTE 4.3.2 As may be seen from the provisions of section 80JJAA and the Memorandum explaining the Finance (No. 2) Bill, 1998, the same was introduced as a measure of tax incentive for encouraging employment. Relevant part of Memorandum explaining the Finance (No. 2) Act 1998 is reproduced hereunder: "The existing provisions of the Income-tax Act provide various fiscal concessions to spur growth of business and industry. The country is faced with problems relating to lack of employment opportunities. In order to encourage the employers to further generate more employment opportunities, it is proposed to insert a new section, i.e., 80JJAA to provide an incentive in the form of a special deduction against business profits of a company. This deduction would be over and above the expenditure on wages or salary, which is otherwise allowable as business expenditure to the company. The quantum of deduction is proposed to be thirty per cent, of the aggregate wages or salary paid to the new workers provided the following conditions are satisfied. In the case of a new undertakings, the number of workers should be at least 100. In the case of an existing undertaking, having a minimum of at least hundred employees, the total number of new employees should be at least ten per cent. more than the existing number of employees. The deduction in such cases would be allowed at the 30% of the additional wages to the new workmen. For the purposes of claiming the benefit, the term 'worker' shall have the same meaning as 'workman' as defined in the Industrial Workers Disputes Act. Such an employee should be & 2296/Del/2017 a regular worker and should have been employed for a period of at least 300 days in a year, and the return should be accompanied by particulars certified by the tax auditor in the prescribed form. The proposed amendment will take effect from 1st April, 1999 and will, accordingly, apply in relation to assessment year 1999-2000, and subsequent years." 4.3.3 Based on the objective of the legislature as mentioned above, it is evident that the requirements in sub-section (1) and in clause (a) of sub- section 2 of section 80JJAA which relate to employment of additional workman in existing factory relate to the "substance" or "essence" of the statute and strict adherence to those requirements is a precondition to give effect to the desired objective and purpose. On the other hand, the requirement of furnishing the report of the accountant alongwith the return of income being not of the "essence" of the thing to be done to achieve the object of the statute are procedural and directory and need no strict compliance. Eligibility and amount of deduction u/s80JJAA is duly certified by the Accountant as per the prescribed Form 10DA. 4-.3.4 In support of contention that the requirement of furnishing the report of the accountant alongwith the return of income being procedural in nature strict compliance is not needed, reliance is placed on following judicial precedents amongst others: Commissioner of Income Tax Vs. G.M. Knitting Industries (P) Ltd. [2015] 376 ITR 456 (SC) In this case, issue was regarding claim of additional depreciation u/s 32(1)(iia) of the Act. As per proviso to clause (iia) of section 32(1) as it stood prior to amendment by Finance Act 2005 w.e.f.1.4.2006, an Accountant certificate, in Form 3AA, certifying particulars of claim was required to be filed alongwith the return of income. Additional depreciation was denied to the assessee on the ground that the assessee has failed to furnish form 3AA along with the return of income. However, claim of the assessee was accepted by the ITAT and the order of the ITAT was confirmed by the High Court. Hon'ble Supreme Court, while confirming the order of the High Court held as under: ":1. It would be suffice to reproduce para 2 of the impugned order whereby action of Income Tax Appellate Tribunal was held to be justified in allowing additional depreciation as claimed by the respondent-assessee herein:

& 2296/Del/2017 "Additional depreciation is denied to the assessee on the ground that the assessee has failed to furnish form 3AA along with the return of income. Admittedly, Form 3AA was submitted during the course of assessment proceedings and it is not in dispute that the assessee is entitled to the additional depreciation. In these circumstances, in the light of the judgment of this Court in the case of Commissioner of Income Tax v. Shivanand Electronics [1994] 209 ITR 63 (Bom.), we see no merit in this appeal. The appeal is accordingly dismissed with no order as to costs."

2. We concur with the aforesaid view of the High Court and hold that even if Form 3AA was not filed along with return of income but the same was filed during the assessment proceedings and before the final order of the assessment was made that would amount to sufficient compliance. These appeals are, accordingly, dismissed." 4.3.5 It is submitted that the provisions requiring the compliance of filing prescribed certificate of accountant under clause (c) of section 80JJAA(2) are similar to 3rd proviso to section 32(1)(iia) which is reproduced hereunder "[Provided that no deduction shall be allowed under clause [A] or, as the case may be, clause [B], of the first proviso unless the assessee furnishes the details of machinery or plant and increase in the installed capacity of the production in such form, as may be prescribed, along with the return of income, and the report of an accountant, as defined 4.3.6 Also please refer following further case law in this regard: CIT Vs. Contimeters Electrical (P) Ltd. [2009] 317 ITR 249 (Del) In this case the issue was regarding compliance of provisions of section 80- IA(7) which require filing of Form 10CCB with the return of income. While confirming the order of the Tribunal, Hon'ble Delhi High Court held as under: "8. In view of this long line on decisions of various High Courts in considering the provisions of section 80J(6A) which are similar to the provisions of section 80-IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met."

& 2296/Del/2017 CIT v. Punjab Financial Corpn. [2002] 254 ITR 61 (Punj.& Har.) (FB) In this case it was held that filing of audit report under section 32AB(1)/(5) along with return is not mandatory. A part of the statute has to be construed with reference to the context. Whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The intention of the Legislature is to be ascertained not only from the phraseology ofthe provision but also by considering its nature, its design and the consequences that would follow from construing it one way or theother. The word "shall" in a statutory provision though generally takenin a mandatory sense, but that does not necessarily mean that in everycase it shall have that effect that the statute are to be punctiliously followed and in default the proceeding would be invalid. 4.4 Reliance by Ld. CIT(A) on the decisions of Hon'ble Supreme Court in the case of Jute Corporation (supra) and Gurjargravures Pvt. Ltd. (supra) is totally misplaced considering the earlier and subsequent larger Bench decisions of the Supreme Court. 4.4.1 In the case of Jute Corporation (supra) which is a subsequent decision of larger Bench, Hon'ble Supreme Court, relying on its earlier larger Bench decision in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), held as under: The declaration of law is clear that the power of the AAC is co- terminus with that of the ITO, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an appellate authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO."

& 2296/Del/2017 4.4.2 In the case of Jute Corporation, Hon'ble Supreme Court while considering the decision in the case of Gurjargravures (P.) Ltd. (supra) observed that; in Gurjargravures case the order of High Court was set aside by this Court as it was of the view that the AAC had no power to interfere with the order of assessment made by the ITO on a new ground not raised before the ITO, and, therefore, the Tribunal committed error in directing the AAC to allow the claim of the assessee under section 84. Apparently this view taken by two Judge Bench of the Supreme Court appears to be in conflict with the view taken by the three Judge bench of the Court in Kanpur Coal Syndicate's case (supra). It appears from the report of the decision in Gujarat High Court case that the three Judge Bench decision in Kanpur Coal Syndicate's case (supra) was not brought to the notice of the Bench in Gurjargravures case (supra). In the circumstances, the view of the larger Bench in Kanpur Coal Syndicate case holds the field.

5. In view of above stated facts and law it is submitted that the additional claim as made before the Ld. CIT(A) is a bona fide claim which was left to be claimed earlier because of good reasons as explained above. The bonafide of the assessee's claim is also borne out from the fact that in subsequent years where such claim of deduction u/s 80JJAA was made in return of income, in all such years, the said claim has always been accepted in assessment u/s 143(3) without any adverse inference. Accordingly, it is humbly prayed that the claim of the Appellant under section 80JJAA of the Act if not allowed, Ld. CIT(A) may please be directed to admit and decide the same. Ground No. 3 6. This Ground relates to non-allowance of deduction of Rs.35,78,377/- claimed u/s 80JJAA. Specific Ground reads as under: 3. That on facts and in law, the Ld. CIT (A) has erred in not allowing deduction as claimed u/s 30JJAA of Rs. 35, 78,377/-. The said deduction is allowable in toto including as per prescribed auditor's certificates. 6.1 This ground is subject to decision on Ground No. 1 & 2 herein above which relates to admissibility of claim of deduction u/s 80JJAA. Regarding various conditions required to be fulfilled for claiming the subject deduction, it is submitted that the prescribed certificates in Form 10DA were issued by the Accountant after verification of requisite conditions based on details and information provided by the assessee. For further verification of substantial & 2296/Del/2017 compliances, if required, Ld. CIT(A) could have called for the remand report from the Ld. AO. Accordingly, it is humbly prayed that the subject the claim of the appellant under section 80JJAA if not allowed, Ld. CIT(A) may please be directed to admit and decide the same as per the provisions of the Act.”

“GIST OF CASE LAW RELIED UPON [A] If the assessee has omitted to claim a deduction or exemption, to which he is otherwise entitled, the AO should guide the assessee so that the correct income is assessed as per the provisions of the Act. There cannot be any estoppel against the statute - No tax shall be levied or collected except by authority of law 1. CBDT Circular No. 14(XL-35) dated 11.04.1955 "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in quiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; & 2296/Del/2017 (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." CASE LAWS a) CIT vs. Bharat General Insurance Company Ltd.,81 ITR 303 (DEL) b) ACIT v. Technofab Engg. Ltd., 2009 TIOL, 664 ITAT (Del.) c) Balmukund Acharya v. Dy.CIT 310 ITR 310(Bom.) d) Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 (Bom.)

[B] Powers of the CIT(A) are coterminous with that of the Assessing Officer and any admissible claim if not made before the AO can be made before the CIT(A) a) Jute Corporation of India Ltd Vs CIT (1990) 187 ITR 688 (SC) b) CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC)

[C] Under the taxing statute, various provisions relating to appeals can hardly be equated to a dispute as arises between two parties in a civil litigation. Appellate Tribunal is competent to pass such orders on the appeal, as it thinks fit and it would be the duty of the Tribunal to decide all questions on fact and law before it. S.P. Spinning Mills (P.) Ltd. v. ACIT, [2021] 124 taxmann.com 596 (Mad). [D] Provisions in the Act for entitlement of an exemption and deduction are mandatory which require strict interpretation in favour of revenue whereas procedural provisions being directory require liberal interpretation in favour of subject. A Deduction/Allowance cannot be denied merely on failure of the assesse to file the prescribed Form/certificate alonwith the return of income if filed subsequently during assessment or Appellate proceedings. a) Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal (2011) 1 SCC 236 b) Commissioner of Income Tax Vs. G.M. Knitting Industries (P) Ltd. [2015] 376 ITR 456 (SC)

& 2296/Del/2017 c) CIT Vs. Contimeters Electrical (P) Ltd. [2009] 317 ITR 249 (Del) / 2009] 178 Taxman 422 (Delhi) d) CIT v. Punjab Financial Corpn. [2002] 254 ITR 61 (Punj.& Har.) (FB) / [2002] 121 Taxman 656 (Punjab & Haryana) (FB) e) [2012] 20 taxmann.com 97 (DEL), Mrs. Manju Kapoor Dalmia v. ITO f) [2014] 41 taxmann.com 184 (Guj.), CIT v. Xavier Kelavani Mandal (P) Ltd.”

“PCIT v Wipro Ltd, [[2022] 140 taxmann.com 223 (SC)

Case Law relied by Revenue how distinguishable

2. The issue involved in Wipro relates to interpretation of sub-section (8) of section 10B which provides that an assessee can opt out of the applicability of provisions of section 10B by filing declaration before AO before due date of furnishing of ITR u/s 139(1). Question was whether filing of such declaration within due date of ITR is mandatory or directory. Hon'ble Supreme Court while allowing Revenue's appeal against Wipro Ltd., held that to opt out of exemption under Section 10B, the twin conditions under Section 10B(8) are required to be satisfied mandatorily: (i) furnishing a declaration before the Assessing Officer and (ii) declaration to be filed before the due date of filing the return of income under Section 139(1). Whereas; The issue involved in appellant's case before your Honour's arising out of CIT(A)'s order is that whether filing of audit report for claim of deduction u/s 80JJAA is mandatory or directory. Similar provisions for filing of audit & 2296/Del/2017 report for claim of exemption u/s 10B are also embedded in sub-section (5) of section 10B. However, this was not the issue in the Wipro's case.

3. As stated above, the issue involved in the case of Wipro related to interpretation of sec. 10B (Under Chapter III) which is an exemption provision whereas the issue in the case of the appellant relate to sec. 80JJAA (Under Chapter VIA) which is a deduction provision. Mechanism provided under both chapters is different.

4. In the case of Wipro while distinguishing the case of Hon'ble Supreme Court in the case of CIT v. G M Knitting Industries relied by assesse, revenue itself contended that exemption provisions and deduction provisions operate on different fields. Relevant portion of the Para 3.8 is reproduced hereunder: 3.9 It is next contended that there is a clear distinction between the provisions seeking exemption and the provisions for deduction. That Chapter III of the IT Act deals with exemptions. However, Chapter VIA deals with deductions. That section 10B of the IT Act is an exemption provision and the condition for seeking an exemption is required to be complied with strictly with the provision. G.M Knitting (SC) on facts involves filing of audit report before AO i.e. after filing of ITR for the following: - Form 3AA [Additional Depn u/s 32] -Form 10CCB [Deduction u/s 80-IB]-chapter VI-A Distinguishing the decision in the case of G.M. Knitting Industries (P.) Ltd., Hon'ble Supreme Court held as under:

“10. In view of the foregoing what emerges in the present case is that: i) No claim for deduction u/s 88JJAA was made by the appellant in the return of income filed by it on 30.09.2011. It is also not the case & 2296/Del/2017 where all the required documents for allowing the claim were filed along with return of income. ii) The reasons given for delay in submitting the report of the Accountant in Form No. 10DA do not indicate that the appellant was prevented by sufficient cause for not submitting the same at the time of filing the return/before AO till the completion of assessment. iii) The deduction claimed requires various conditions to be fulfilled and is not a claim which is clearly allowable. iv) It is not a case that there was any change in law position which warranted appellant to make a claim which was otherwise not available at the time of filing return. For aforementioned reasons, I am of the opinion that it is not a case where the claim could not be raised earlier for good and sufficient reasons. Following the ratio as laid down by Hon’ble Supreme Court in the case of Jute Corporation of India Limited and also the decision of Hon’ble Supreme Court in the case of in Gujragravures Pvt. Ltd., I decline to admit the additional claim of the appellant in respect of deduction u/s 88JJAA of the Act.” 8.1 The assessee is aggrieved by the decision of learned CIT(Appeals) for not admitting its claim of deduction as claimed u/s 80-JJAA of the Act. It is noticed from the impugned order that the learned CIT(Appeals) declined the claim of the assessee on the basis of mandatory requirement to furnish the return of income u/s 139(1) of the Act on or before due date, alongwith the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed. No satisfactory reasons were given by the assessee for not making such compliance of the mandatory requirement.

8.2 The learned CIT(Appeals) without going into the issue whether the assessee is eligible for such deduction rejected its request for allowing the claim of accountant as envisaged under the provisions was not furnished by the assessee within the time as prescribed under law. Moreover, no such claim was made before the AO. The assessee in its objections placed reliance on the judgment of the Hon’ble Delhi High Court rendered in the case of International Tractor Ltd. v.

DCIT [2021] 435 ITR 85 (Delhi), wherein the Hon’ble High Court under identical facts has held as under:

“14. Therefore, to our minds, once the Tribunal accepted the view taken by the CIT(A) that it could entertain fresh claims; a view which the CIT(A) has expressed in paragraph 6.6.2 of its order, all that the Tribunal was required to examine was: as to whether the CIT(A) had, scrupulously, verified the material placed before it before allowing deductions claimed by the assessee. The Tribunal, however, instead of examining this aspect of the matter, observed, and in our view, incorrectly, that because an opportunity was not given to the AD to examine the material, therefore, the matter needed to be remanded to the AO for a fresh verification.

15. In our view, unless the Tribunal would have reached to a conclusion and expressed its clear view, in that respect, as to what was wrong or missing in the examination made by the CIT(A), a remand was not called for. We agree with Mr. Seth's contention that the CIT(A) in the exercise of its powers under section 250(4) of the Act was entitled to seek production of documents and/or material to satisfy himself as to whether or not the deductions claimed were sustainable/viable in law. This was, however, a case where the details were placed before the AO, who declined to entertain the claims only on the ground that they did not form part of assessee's original return and that the assessee had not made a course correction by filing a revised return.

15.1 This view was based, as noticed above, on the judgment of the Supreme Court rendered in Goetze (India) Ltd. (supra). The CIT(A), squarely, dealt & 2296/Del/2017 with this and concluded, that a fresh claim could be entertained. Therefore, the Tribunal, as noticed above, has accepted this view of the CIT(A) and the revenue has not come up in appeal before us assailing this conclusion of the Tribunal.

"5. The ITAT has agreed the reasoning given by the CIT (Appeals) and has relied upon the decision of this Court in CIT v. Jai Parabolic Springs Ltd. (2008) 306 ITR 42 (Del.). In the said case Delhi High Court has referred to the powers of the appellate forum and the decisions of the Supreme Court in National Thermal Power Co. Ltd. v. Commissioner of Income-tax (1998) 229 ITR 383 (SC), Gedore Tools Pvt. Ltd. v. Commissioner of Income-tax (1999) 238 ITR 268, jute Corporation of India Ltd. v. Commissioner of Income-tax (1991) 187 ITR 688 (SC) and held that the appellate forum could have entertained and decided the said aspect. The decision in the case of Goetze (India) Ltd. (supra) is distinguishable. In the said case the assessee had filed the return of income for the Assessment Year 1995- 96 on 30-11-1995. Thereafter, on 12-1-1998, the assessee wrote a letter to the Assessing Officer and made a new claim for a deduction, which was rejected by the Assessing Officer as there is no provision to amend the return. The Supreme Court further clarified that the issue raised in Goetze (India) Ltd. (supra) was limited to the power of assessing authority and did not impinge on the power of the tribunal as was in the case of National Thermal Power Ltd. (supra). In the present case also the appellate forum had entertained the claim made by the respondent-assessee and allowed the same. There is no dispute that the claim/deduction towards the expense is otherwise correct and allowable."

Conclusion:

& 2296/Del/2017 17. Therefore, in our view, the judgment of the Tribunal deserves to be set aside. The fresh claims made by the assessee, as allowed by the CIT(A), will have to be sustained. It is ordered accordingly.”

8.3 However, in the present case the assessee is in appeal against the order of learned CIT(Appeals) who has rejected the claim of the assessee purely on the basis that the assessee failed to furnish report of the accountant in Form no. 10DA as defined in the Explanation below sub-section (2) of Section 288 of the Act.

Undisputedly, there is no decision by the lower authorities whether the assessee is eligible for deduction as claimed and whether it fulfills all the conditions as prescribed u/s 80JJAA of the Act. This aspect has not been examined by the lower authorities. Therefore, considering the totality of facts and respectfully following the decision of the Hon’ble Jurisdictinal High Court, the order of learned CIT(Appeals) is hereby set aside and the issue whether the assessee fulfills all the conditions as prescribed u/s 80JJAA is restored to the file of the Assessing Authority for verifying the correctness of the claim of the assessee that it is eligible for deduction and fulfills all the conditions as mandated by Section 80JJAA of the Act. If the Assessing Officer finds the claim of the assessee as correct in that event the Assessing Officer, in the light of the judgment of the Hon’ble Jurisdictional High Court in the case of International Tractor Ltd. v. DCIT (supra), would allow the claim of the assessee. We order accordingly. Grounds are allowed for statistical purpose. for A.Y. 2012-13, the assessee has raised following grounds of appeal:

“1. That on facts and in law, the Ld. Commissioner of Income tax (Appeals) [Ld.CIT(A)] has erred in sustaining the order of Ld. Assessing Officer (Ld. AO) not allowing the appellant's claim of deduction u/s 80JJAA of Rs 42,64,264/- made by the appellant in the course of assessment proceedings.

4. That on facts and in law, the Ld.CIT (A) has erred in not allowing deduction as claimed u/s 80JJAA of Rs 42,64,264/-. The said deduction is allowable in toto including as per prescribed auditor's certificates.

as herein are without prejudice to each other.

6. That the appellant respectfully craves leave to add, amend, alter and/or forego any ground(s) at or before the time of hearing.”

11. Grounds no. 5 & 6 are general in nature, need no specific adjudication. against disallowing the deduction claimed u/s 80 JJAA of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), at Rs. 42,64,264/- claimed to have been made during the course of appellate proceedings.

13. Undisputedly, facts for A.Y. 2012-13 in relation to claim u/s 88JJAA are similar to the facts as in A.Y. 2011-12. Herein also no claim for deduction u/s 88JJAA was made in the return of income and the assessee had taken a ground before the First Appellate Authority about disallowance of deduction u/s 80 JJAA of the Act. The learned CIT(A) rejected the claim on the ground that claim of deduction u/s 80JJAA of IT Act amounting to Rs. 42,64,264/- was not made by the assessee in its return of income filed u/s 139(1) of IT Act alongwith the report of the accountant in Form no. 10DA, inter alia, by observing as under:

6.1 I have considered the ground taken by appellant and submissions made in support of that. It reflects from the facts that the claim of deduction u/s 80JJAA of IT Act amounting to Rs. 42,64,264/- was not made by appellant in its return of income filed u/s 139(1) of IT Act, which was the mandatory requirement as per clause (b) of sub-section (2) of the said section, which says no deduction under sub-section (1) shall be allowed unless the assessee furnishes alongwith the return of income the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed. Even this claim was not made till the date of period of time available for revising the return of income. This claim was, first time, made vide letter dated 10.03.2016 addressed to Jt. CIT, Special Range-08, New Delhi wherein the reference of the letter dated 30.03.2015 addressed to ACIT, Circle-23(1), New Delhi was given mentioning that the claim of deduction of Rs. 6,85,887/- was made & 2296/Del/2017 under the aforesaid section in view of Auditors' report dated 27.03.2015 in Form No. 10DA. Thus, the appellant failed to fulfill the mandatory conditions as per provisions of the Act to avail the deduction under the said section. It has to be noted here that it was not the first time when despite of violating the mandatory relevant provisions, appellant has made the claim of deduction. In the preceding year i.e. Α.Υ. 2011-12 also, in the similar vein, appellant had not complied with mandatory provisions but claimed deduction under the said section. In that year, the appellant did not care to even making any claim while filing the return of or during the assessment proceedings, rather, this claim was first time made during the appellate proceedings, which was rejected by Ld. CIT(A) vide order dated 31.01.2017. In the said order, Ld. CIT(A) has analyzed the relevant facts and legal provisions while examining the claim of appellant, which are applicable to this year also. Being the identical facts, the observations made by Ld. CIT(A) for A.Y. 2011-12 are applied to this year also and, therefore, claim of appellant is rejected. In the said appellate order, Ld. CIT(A) has followed the ratios as laid down by Hon'ble Supreme Court in the cases of Jute Corporation of India Ltd and in Gurajargeravures Pvt. Ltd while rejecting the claim of the appellant. However, recently in the case of Commissioner of Customs (Import), Mumbai vs. M/s. Dilip Kumar & Co. and Ors (CA No. 3327 of 2017), by overruling the earlier decision in the case of Sun Export Corporation, Bombay vs. Collector of Customs, Bombay, Hon'ble Court has held that the 'exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification'. It has been further held by Hon'ble Court that 'when there is an ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue'. Hon'ble Court has further opined that a assessee, qualified to seek exemption, is required to comply with the pre-conditions for claiming exemption and, therefore, is not exempt or absolved from following the statutory requirements as contained in the Rules. In the case of appellant also, for claiming deduction u/s 80JJAA of the Act, it was a mandatory requirement to furnish the return of income u/s 139(1) of the Act on or before due date, alongwith the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed, but the said mandatory requirement was not fulfilled by appellant. No satisfactory & 2296/Del/2017 reasons have been given by appellant for not making compliance of these mandatory requirements. 6.2 In view of the above, the claim of appellant amounting to Rs. 42,64,264/- u/s 80JJAA of the Act is hereby rejected and the grounds taken by appellant are dismissed.