M/S POOJA REALITY PVT. LTD. vs. ITO,

Per Sunil Kumar Yadav, Judicial Member

“1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

2. The learned CIT[A] is not justified in confirming the action of the learned A.O. in not granting deduction u/s.80IB of the Act, on the ground that the return of income was not filed within the due date for filing the return u/s.139[1] of the Act, without appreciating the fact there was no income liable to tax warranting for filing the return u/s.139[1] of the Act and the return was filed validly u/s.139[4] of the Act and therefore, the due date should be taken as the due date to file the valid return u/s.139[4] of the Act and there is no justification for invoking the provisions of Section 80AC of the Act, to deny the legitimate claim u/s.80IB of the Act.

3. Without prejudice to the above, the provisions of Section 80AC of the Act are only directory and not mandatory and should be construed so as to advance the intention of the legislature to grant the incentive u/s.80IB of the Act and therefore, Section 80IB of the Act should have been liberally construed so long the return is filed validly u/s.139[4] of the Act and Section 80AC of the Act should not be pressed to set at naught the intention of legislature in granting the exemption. 4. Without prejudice to the above, the appellant's income is from a joint venture and such income is liable for assessment in the hands of the appellant and another company who jointly developed the venture and such enterprise or venture consisting of appellant or other alone is liable for assessment either as AOP or BOI having regard to the ratio of the decision of the Hon'ble Supreme Court in the case of MEERA & CO., reported in 224 ITR 635 and such income is chargeable in its hands and not in the hands of the appellant, such share of income attributable to appellant after the grant of deduction u/s.80OB of the Act, is entitled to rebate in view of provisions to section 86 of the Act and at any rate there is no liability to tax. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant

may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

“1. The authorities below have erred in assessing the income from the joint development under the agreement dated 18/03/2004 for the assessment year under appeal, even though the income from joint development agreement does not relate to the previous year relevant to the assessment year under appeal having regard to the ratio of the decision of the Hon’ble Karnataka High Court in the case of Dr. T.K.Dayalu reported in 60 DTR 403, which was noticed by the Hon'ble CIT [Appeals].”

But now through this additional ground, the assessee has tried to claim that the income is assessable as capital gain, not as business income, for which detailed investigation is called for and such type of additional ground cannot be admitted in the light of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT, 229 ITR 383 (SC).

7. The contention of the revenue was strongly refuted by the ld. Counsel for the assessee with the submission that assessee has been contending that he has entered into joint development agreement since beginning, but it was not taken into account by the AO. Since all evidences are available in this regard, the additional ground should be admitted and adjudicated at the threshold.

9. Having carefully examined the orders of authorities below and documents placed on record, we find that the assessee has filed return of income claiming deduction u/s. 80IB of the Act which was disallowed by the AO on the ground that the return was not filed before the due date prescribed u/s. 139(1) of the Act in the light of provisions of section 80AC of the Act.

“06. The Special Bench examined the whole scheme of the Act. The Special Bench found that One consequence of failure to file return of income on or before the due date u/s.139(1) of the Act was levy of interest u/s.234A of the Act as per which, the assessee is liable to pay interest on the tax payable by him after reducing advance tax and TDS/TCS if any paid by him apart from some other reductions and such interest is payable from the date immediately following the due date for filing return of income and is payable up to the date on which such return of income was furnished by the assessee. Payment of interest u/s.234A of the Act was a consequence for failure to file return of before the due date u/s. 139(1) and the same is mandatory. The Special Bench held that the provisions of the proviso to Section 10A(1A) is nothing but a consequence of failure of the assessee to file the return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961. For such a failure of the assessee to file his return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961, this is also only of the mandatory consequence. The Special Bench accordingly held that provisions of the proviso to section 10A(lA) are mandatory and not directory, thus deduction u/s 10A(lA) could not be allowed to an assessee who fails to furnish a return of income on or before the due date specified u/s 139(1). The decisions rendered by the division bench of Tribunal on which the CIT(A) placed reliance are no longer good law in view of the later decision of the Special Bench referred to above.

8. The ld. counsel for the Assessee however reiterated his submission that provisions of Sec.80AC have to be construed as directory and that the provisions of Sec.80IB(10) of the Act are beneficial provisions and need to be interpreted liberally to further the object of the section.

Pronounced in the open court on this 29th day of July, 2016.