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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI SANDEEP SINGH KARHAIL & SHRI GAGAN GOYAL
The present appeal has been filed by the assessee challenging the impugned order dated 09/08/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], which in turn arose from the intimation issued under section 143(1) of the Act, for the assessment year 2019–20.
In its appeal, the assessee has raised the following grounds:–
“1) The appellant submits that the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, ["CIT(Appeals)"] was Orbit Exports Limited ITA no.3582/Mum./2023 not justified in upholding the action of the Assessing Officer in making a disallowance of a sum of Rs.75,94,111/- claimed under section 80-1A of the Income-tax Act, 1961 while passing the intimation under section 143(1) of the Act. 2) The CIT (Appeals) erred in upholding the action of the Assessing Officer in making disallowance of a sum of Rs.85,466/-, while passing the intimation under section 143(1) of the Act, being employee's contribution to provident fund and ESIC paid beyond the prescribed due date under respective laws but paid within due date of filing of return of income. 3) Each of the above grounds of appeal are independent and without prejudice to each other. 4) The appellant craves liberty to add, to alter and/or amend the grounds of appeal as and when given.”
During the hearing, the learned Authorised Representative (“learned AR”) fairly submitted that ground no.2, raised in assessee’s appeal, pertaining to disallowance under section 36(1)(va) of the Act on account of delayed payment of employees’ contribution towards provident fund and ESIC is covered in favour of the Revenue by the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. Vs. CIT, [2022] 448 ITR 518 (SC). Accordingly, respectfully following the aforesaid decision of the Hon’ble Supreme Court, ground no.2 raised in assessee’s appeal is dismissed.
4. The issue arising in ground no.1, raised in assessee’s appeal, pertains to the disallowance of deduction claimed under section 80-IA of the Act.
The brief facts of the case pertaining to this issue, as emanating from the record, are: For the year under consideration, the assessee filed its original return of income on 28/11/2019 declaring a total income of Rs.22,53,47,320, after claiming a deduction of Rs.75,94,111 under section 80-IA of the Act. The original return of income filed by the assessee was processed vide intimation
Orbit Exports Limited ITA no.3582/Mum./2023 dated 05/06/2020 issued under section 143(1) of the Act by the Centralised Processing Centre, Bengaluru, (“CPC”) determining the total income at Rs.153,22,19,350 after disallowing the deduction claimed under section 80-IA of the Act on the basis that the assessee has failed to file Form no.10CCB within the due date. Thereafter, the rectification application filed by the assessee against the aforesaid intimation was also rejected by the CPC vide order dated 14/07/2020. Subsequently, the assessee filed the audit report in Form no.10CCB, as required under section 80-IA(7) of the Act, in support of its claim of deduction under section 80-IA of the Act. Thereafter, the assessee filed a revised return of income on 22/07/2020 declaring total income equivalent to the total income as declared in the original return of income, after claiming a deduction of Rs.75,94,111 under section 80-IA of the Act. The CPC vide intimation dated 15/09/2020 issued under section 143(1) of the Act processed the revised return of income filed by the assessee on 22/07/2020 and disallowed the deduction claimed under section 80-IA of the Act again on the basis that the assessee has failed to file Form no.10CCB within the due date. The rectification application filed by the assessee against the aforesaid intimation was also rejected by the CPC vide order dated 30/09/2020. In an appeal by the assessee against the aforesaid intimation dated 15/09/2020 issued under section 143(1) of the Act, the learned CIT(A) though agreed that the report in Form No.10CCB was filed by the assessee online on 11/06/2020, however, upheld the disallowance of deduction claimed under section 80-IA of the Act on the basis that the assessee failed to furnish the audit report in Form no.10CCB along with the return of income originally filed by the assessee on 28/11/2019. Being aggrieved, the assessee is in appeal before us. Page | 3
Orbit Exports Limited ITA no.3582/Mum./2023
We have considered the submissions of both sides and perused the material available on record. In the present case, it is evident from the record that the assessee vide its original return of income claimed a deduction of Rs.75,94,111 under section 80-IA of the Act. However, since along with the original return of income, the assessee did not file an audit report in Form no.10CCB in support of its claim of aforesaid deduction, the CPC while processing the original return of income vide intimation dated 05/06/2020 issued under section 143(1) of the Act disallowed the deduction claimed by the assessee under section 80-IA of the Act. It is also evident from the record that the assessee filed the audit report in Form no.10CCB in respect of its unit at Barmer, Rajasthan on 11/06/2020. From the perusal of the aforesaid audit report, forming part of the paper book from pages 155-159, we find that the undertaking commenced its operation on 24/12/2019 and the initial year of assessment from when the deduction is claimed by the assessee is the assessment year 2013-14. From the record, it is also evident that the aforesaid audit report is also on the records of the Department, as in para-5.4 of the impugned order, the learned CIT(A) upon verification of the database stated that the said report was filed online on 11/06/2020. Therefore, there is no dispute amongst the parties that the assessee filed the audit report in Form no.10CCB on 11/06/2020. After filing the audit report, the assessee filed the revised return of income on 22/07/2020, again claiming deduction under section 80-IA of the Act. From the perusal of the revised return of income filed by the assessee, forming part of the paper book from pages 160-250, we find that under the heading “Audit Details”, the assessee specifically mentioned the Orbit Exports Limited ITA no.3582/Mum./2023 date of furnishing of the audit report as required under section 80-IA of the Act. Further, on page 224, we find that the assessee claimed the deduction of Rs.75,94,111 in respect of the undertaking as referred to in section 80- IA(4)(iv) of the Act. It is further evident from the record that the revised return, filed by the assessee on 22/07/2020, was processed by the CPC vide intimation dated 15/09/2020, and the deduction claimed by the assessee under section 80-IA of the Act was again denied on the basis that the assessee has failed to file the audit report in Form no.10CCB within the due date. It is only this intimation issued under section 143(1) of the Act, which was challenged in appeal by the assessee before the learned CIT(A), and has resulted in the present appeal before us. As noted above, the learned CIT(A) has upheld the disallowance of deduction claimed under section 80-IA of the Act on the basis that the assessee did not file the audit report in Form no.10CCB along with its original return of income. Therefore, in view of the aforesaid facts, it needs to be examined whether the audit report in Form no.10CCB is only required to be furnished along with the original return of income, or the same can also be furnished with the revised return of income for the purpose of section 80-IA(7) of the Act. Before proceeding further, it is relevant to note the provisions of section 80-IA(7) of the Act, as it stood during the relevant year, which reads as under:-
“(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant.”
Orbit Exports Limited ITA no.3582/Mum./2023
Further, Rule 18BBB of the Income Tax Rules, 1962 provides that the audit report, as required under section 80-IA(7) of the Act, shall be in Form no.10CCB. Thus, from the plain reading of the provisions of section 80-IA(7) of the Act, as it stood during the relevant year, read with Rule 18BBB, it is evident that for claiming deduction under section 80-IA of the Act, the assessee is required to furnish the audit report in Form no.10CCB along with the return of income. It is pertinent to note that the provisions of section 80- IA(7) of the Act neither qualify the term “return of income” nor mention the specific provision of section 139 of the Act. Further, in the present case, there is no dispute that the original return of income filed by the assessee on 28/11/2019 was a valid return of income and was filed before the due date, as noted in the intimation issued under section 143(1) of the Act, i.e. 30/11/2019. Such being the facts of the present case, it also cannot be disputed that the revised return of income filed by the assessee on 22/07/2020 was also a valid return and was filed within the due date, i.e. at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier, as per section 139(5) of the Act. Thus, when the provisions of section 80-IA(7) of the Act do not qualify the term “return of income”, therefore we find no merits in the findings of the learned CIT(A) that the CPC is empowered to make the adjustment under section 143(1) of the Act as the audit report in Form no.10CCB was not filed by the assessee along with its original return of income filed under section 139(1) of the Act. Further, it is evident from the record that the assessee filed the audit report in Form no.10CCB on 11/06/2020 and made the reference to Orbit Exports Limited ITA no.3582/Mum./2023 the same while filing its revised return of income on 22/07/2020, which has also been confirmed in Revenue’s database.
8. We find that while dealing with a similar factual matrix, the coordinate bench of the Tribunal in Aquasub Engineering v/s DCIT, in ITA No. 78/Chny./2021, vide order dated 30/09/2022, allowed the deduction under section 80-IA of the Act, by observing as under:-
“3. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO, CPC, Bengaluru in disallowing the claim of deduction u/s.80IA of the Act for the reason that Form No.10CCB has not been filed along with the original return of income within the due date of filing of return of income.
We have heard rival contentions and gone through facts and circumstances of the case. Brief facts are that the assessee filed original return of income vide acknowledgement No.280954121311017 dated 31.10.2017 u/s.139(1) of the Act. But, this return was not accompanied by audit report in Form No.10CCB but made claim of deduction u/s.80IA of the Act. The CPC, Bengaluru issued intimation u/s.143(1) of the Act, whereby the claim of deduction u/s.80IA of the Act was denied amounting to Rs.20,70,31,480/- vide intimation dated 14.05.2018. Subsequently, the assessee filed revised return of income vide acknowledgment No.627323361280518 dated 28.05.2018 and claimed deduction u/s.80IA of the Act, as claimed originally and also filed audit report in Form no.10CCB. This return of income was also processed by CPC, Income Tax Department, Bengaluru and issued intimation on 25.03.2019 again disallowing the claim of deduction, which is impugned intimation u/s.143(1) of the Act. This return was revised by the assessee within the time limit available u/s.139(5) of the Act. The Department processed the return of income i.e., revised return filed on 28.05.2018, only on 23.05.2019 when the audit report in Form No.10CCB was available with the Department. It means that the Department has disallowed the claim of deduction even though the assessee was entitled for claim of deduction. This issue has been covered in favour of assessee and against the Revenue by the decision of the Co-ordinate Bench of the Tribunal in the case of ACIT vs. Shanthi Gears Ltd., in order dated 04.03.2022, wherein the Tribunal considered various case laws considered this issue vide para’s 6 to 8 as under:- 6. On the other hand, the learned Counsel for the Assessee however read out the relevant provision of Section 80AC of the Act and the relevant reads as under: “80AC : Where in computing the total income of an Assessee of the previous year relevant to the Assessment Year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80IA or section 80IAB or section 80IB or section 80IC (or section 80ID or section 80IE), no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.”
Orbit Exports Limited ITA no.3582/Mum./2023 The learned Counsel for the Assessee stated that the precondition of Section 80C of the Act is furnished on the return of income of the Assessee on or before the due date specified under sub-section 1 of Section 139 of the Act. The learned Counsel for the Assessee relied upon the various decisions which are as under: [1] ACIT, Company Circle-I(2), Coimbatore Vs. M/s. Precot Meridian Limited, Coimbatore in dated 29 th April, 2013. [2] DCIT-5(2)(1), Mumbai Vs. M/s. JSW Infrastructure Limited, Mumbai in ITA No.3708 & 3709/Mum/2018 dated 08.11.2019. [3] DCIT 15(3) Vs. Kamdhenu Builders and Developers, Navi Mumbai in ITA No.7010/Mum/2010 dated 27.01.2016. [4] ACIT vs. Monarch Innovative Technologies Private Limited in ITA No.4815/Mum/2016 dated 12.02.2018. [5] National Thermal Power Company Limited Vs. Commissioner of Income Tax in Tax Ref. Case No.4 of 1988 dated 04.12.1996. [6] Commissioner of Income Tax Vs. Jayant Patel in Tax Case No.1742 of 1986 dated 21.09.1998.
7. The learned Counsel for the Assessee particularly referred to the decision of the Co-ordinate Bench of Mumbai Tribunal in the case of DCIT, Mumbai Vs. M/s. JSW Infrastructure Limited, Mumbai (supra), wherein exactly identical issue was considered and decided in favour of the Assessee, wherein the Tribunal vide paragraph no.9 as under: “9. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below along with case laws cited by both parties. We find that the learned CIT(A) has recorded categorical findings, in light of the provision of section 80AC and held that nowhere, in the section, it was provided that unless, the Assessee makes a claim in its return filed u/s.139(1), the said claim is allowable. We further observed that as per provision of section 80AC, it is mandatory for the Assessee to file return of income on or before the due date specified u/s.139(1) to claim the benefit of any deduction provided u/s.80IA/80IB/80IC/80ID and 80IE, but nowhere in the said section, it was provided that unless, the Assessee makes claim for deduction in the return filed u/s.139(1), the said claim is allowable. We further noted that the learned CIT(A) recorded categorical finding, in the light of the decision of ITAT Chennai Bench, in the case of ACIT Vs. Precot Meridian Limited (supra), where it was held that, once original return is filed u/s.139(1) within due date specified under the Act, then any deduction claimed in the revised return filed within due date specified u/s.139(5) shall be allowed. We further, noted that the learned CIT(A) had also taken a support from the decision of ITAT, Mumbai Bench, in the case of Kamadhenu Builders & Developers Vs. Additional CIT, where it was observed that section 80A(5) only requires filing of return, but nowhere it suggest that claim should be made in the original return and not by way of original return, further when the original return of income was filed within the due date, then the revised return filed, thereafter before completion of assessment proceedings is to be considered by the Assessing Officer, because the Act has been given opportunity to the Assessee to file revised return u/s.139(4) for removal of any defect or any omissions in the original return and that if both the returns were filed within time limit prescribed under the law, then conditions prescribed u/s.80IB(1)) of the I.T.Act, 1961 are fulfilled. In this case, the Assessee has filed a return u/s.139(1) within due date specified date, but the claim for deduction u/s.80IA, in respect of second unit was not made, however a revised return was filed u/s.139(5) within due date specified under the Act and made additional claim for deduction, in respect of second unit. When original return was filed within due date specified u/s.139(1), then any revised return filed within the due date specified u/s.139(5) to rectify any mistakes or omissions or wrong statements made in the return already filed u/s.139(1), then the revised return takes, the nature of the original return filed within due date specified u/s.139(1) and consequently, the Assessee fulfills the conditions prescribed u/s.80AC of the Act, in order to be eligible for deduction u/s.80IA of the I.T. Act, 1961. The learned CIT(A) after considering the relevant facts has rightly deleted the additions made by the Assessing Officer towards Page | 8
Orbit Exports Limited ITA no.3582/Mum./2023 disallowances of deduction claimed u/s.80IA of the I.T.Act, 1961. We do not see any reasons to interfere in the order of the learned CIT(A) and hence, we are inclined to uphold the findings of the learned CIT(A) and reject the ground taken by the Revenue.”
We have heard the rival contentions and gone through the facts and circumstances of the case. We have noted that the provisions of Section 80IA(5) only requires filing of return of income but nowhere it states that the claim should be made in the original return and not by way of original return. Further, when the original return was filed within the due date, then the revised return filed, thereafter, before the completion of assessment proceedings, is to be considered by the Assessing Officer, because the Act has given an opportunity to the Assessee to file his return u/s.139(4) of the Act for the removal of defects or omission in the original return. 4.1 In view of the above, the revised return of income filed by the assessee on 28.05.2018 and consequent processing of return by the Department by issuing intimation u/s.143(1) of the Act dated 25.03.2019, the impugned order, the assessee has revised the return validly and within the time available u/s.139(5) of the Act and has also accompanied by the audit report in Form no.10CCB of the Act. Hence, we are of the view that the authorities below have wrongly disallowed the claim of deduction. Respectfully following the Co-ordinate Bench decision in the case of Shanthi Gears Ltd., supra, we allow the claim of assessee and direct the AO accordingly.”
From the perusal of the order dated 14/07/2022 passed by the coordinate bench of the Tribunal in DCIT v/s Kalyan Aqua & Marine Exports India Pvt. Ltd., in ITA No. 32/Viz./2021, upon which reliance has been placed by the learned CIT(A) in the impugned order, we find that in the facts of the case, the taxpayer could not produce a copy of the audit report in Form no.10CCB, though claimed to be filed after a delay. However, as noted above, in the present case, the learned CIT(A) upon verification of the database noted that the audit report in Form no.10CCB was filed by the assessee online on 11/06/2020. Therefore, we are of the considered view that the reliance placed by the learned CIT(A) on the aforesaid decision of the coordinate bench of the Tribunal is completely misplaced.
During the hearing, the learned Departmental Representative supported the conclusion reached by the lower authorities by placing reliance upon the Orbit Exports Limited ITA no.3582/Mum./2023 decision of the Hon’ble Supreme Court in PCIT v/s Wipro Ltd., [2022] 446 ITR 1 (SC). From the perusal of the aforesaid decision passed by the Hon’ble Supreme Court, we find that compliance with the provisions of section 10B(8) of the Act was under consideration before the Hon’ble Supreme Court, which specifically requires furnishing of declaration to the Assessing Officer before the due date of furnishing the return of income under sub-section (1) of section 139 of the Act. However, as noted above, the provisions of section 80- IA(7) of the Act neither qualify the term “return of income” nor mention the specific provision of section 139 of the Act. Therefore, we are of the considered view that the decision of the Hon’ble Supreme Court in Wipro Ltd (supra) does not support the case of the Revenue.
Before concluding, we may also note that the amendment to section 80- IA(7) of the Act, by the Finance Act, 2020, whereby the time period for audit and furnishing the audit report in Form no.10CCB has been laid down is made effective from 01/04/2020, and therefore, cannot apply to the assessment year under consideration. Since the audit report in Form no.10CCB has been found to have been filed on 11/06/2020 and the reference to the same was made by the assessee in its revised return of income filed on 22/07/2020, in the absence of any other allegation to deny the claim of deduction under section 80-IA of the Act, we are of the considered view that the learned CIT(A) erred in upholding the disallowance of deduction claimed under section 80-IA of the Act. Accordingly, on this issue, the impugned order is set aside, and ground no.1 raised in assessee’s appeal is allowed.
Orbit Exports Limited ITA no.3582/Mum./2023
In the result, the appeal by the assessee is partly allowed. Order pronounced in the open Court on 24/05/2024