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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
ORDER
Per Shri M. Balaganesh, AM:
This appeal by revenue is arising out of order of CIT(A)-IV, Kolkata vide appeal No. 213/CIT(A)-IV/2008-09 dated 28.01.2014. Assessment was framed by ACIT, Circle- 4, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2006-07 vide his order dated 26.12.2008.
The only issue to be decided in this appeal is as to whether, the Ld. CIT(A) was justified in granting relief to the assessee in respect of deduction u/s. 80IA of the Act though the same was claimed only in the revised return by the assessee, in the facts and circumstances of the case.
The brief facts of this issue is that the assessee is engaged in the business of civil and structural construction work mainly on behalf of the Govt. of West Bengal. The assessee filed its original return of income on 29.11.2006 declaring taxable income of Rs.15,27,86,009/-. The due date of filing the return of income u/s. 139(1) of the Act was 30.11.2006. The assessee filed a revised return on 28.03.2008 declaring taxable income of Rs.5,83,98,641/- after claiming deduction u/s. 80IA of the Act amounting to Rs.9,43,87,368/-. The said deduction u/s. 80IA of the Act was admittedly not claimed by the assessee in the original return filed on 29.11.2006. The assessee stated before the AO that the reason for filing revised return was based on the advice of the tax consultant to claim deduction u/s. 80IA of the act which the assessee was legitimately entitled to. The assessee is a civil construction company, engaged in the construction and development of 2 Mackintosh Burn Ltd., AY 2006-07 infrastructure facilities like roads, bridges, water supply system, erection system etc. Such projects are obtained directly from the State Govt. or other statutory bodies after successful bidding through tenders. The assessee entered into an agreement with the State govt. and other authorities and undertakes to complete the projects in time within the tendered amount. The assessee stated that though it is entitled to the benefits of deduction u/s. 80IA of the Act, it did not claim such deduction in any of the earlier years as it was not advised properly. Based on the advice of the tax consultant the assessee obtained the Chartered Accountant’s certificate in Form No. 10CCB for claiming deduction u/s. 80IA of the Act on 24.03.2008 and filed the revised return on 28.03.2008 claiming deduction u/s. 80IA of the Act. The AO applied the provisions of section 80IA(7) of the Act and denied the benefit of deduction u/s. 80IA of the Act on the ground that the audit report in Form No. 10CCB should have been obtained and filed along with the return of income. The Ld. CIT(A) by interpreting the provisions of section 80A and 80AC of the Act allowed the claim of deduction of the assessee by holding that in order to claim such deduction; (a) the return of income has to be furnished within the due date of furnishing the return as specified in section 139(1) of the Act; (b) the accounts of the undertaking have to be audited by an Accountant as defined in the Act and (c) the claim has to be made in the return of income for the relevant assessment year. The Ld. CIT(A) had categorically held that there is no mention in the Act that the claim of deduction u/s. 80IA of the Act had to be made in the original return of income and the audit report had to be signed before the date of original return and hence, the disallowance of section 80IA of the Act by the AO is not tenable. He further held that the assessee had fulfilled all the conditions stated in the statute in order to avail the benefit u/s. 80IA of the Act. The Ld. CIT(A) further observed that section 139(5) of the Act provides that if any person having furnished any return u/s. 139(1) of the Act discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. The Ld. CIT(A) also relied on the decision of Hon’ble Apex court in the case of Goetze (India) Ltd. Vs. CIT reported in (2006) 284 ITR 323 (SC) wherein it was held that any deduction/allowance which was not claimed in the original return can only be claimed by way of a revised return to be filed within the time allowed u/s. 139(5) of the Act. The Ld. CIT(A) by placing reliance on the decision of the Hon’ble jurisdictional High Court in 3 Mackintosh Burn Ltd., AY 2006-07 the case of CIT Vs. Universal Trading Co. reported in (1978) 114 ITR 412 (Cal) held that if nothing is specifically stated in the statute then original return would include revised return of income. In the instant case, since only return of income has been stated in the statute and as such the return of income as mentioned in section 80IA of the Act would mean revised return of income. The Ld. CIT(A) also placed reliance on the decision of Coordinate Bench of Delhi ITAT in the case of Laxmi Rice Mills Vs. ITO, reported in (1982) 2 ITD 39 wherein the Tribunal held that if assessee can offer valid explanation for the delay in getting the accounts audited then the deduction u/s. 80J which is pari materia with section 80IA of the Act should be allowed. Based on the aforesaid observations, the Ld. CIT(A) granted deduction u/s. 80IA of the Act to the assessee. Aggrieved, the revenue is in appeal before us on the following grounds: “i)That on the facts and circumstances of the case and also in law, the Ld. CIT(A) has erred in allowing the claim of the assessee without considering the fact that Section 80IA(7) mandates that 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 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 its return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. ii) That on the facts and circumstances of the case and also in law, the Ld. CIT(A) has erred in ignoring the provisions of Section 44AB which clearly states that every person shall have its accounts of such previous year, audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. And that ‘specified date’ has been defined in section 139(1) as the due date which is 30th day of November of the assessment year.”
The Ld. DR vehemently relied on the order of the AO. In response to this, the Ld. AR reiterated the facts and the submissions made before the Ld. CIT(A) and informed the list of dates and sequence of events which would be relevant for the said appeal. He argued that admittedly accounts of the assessee have been duly audited by the Accountant as defined in section 288 of the Act and accounts of the eligible undertaking have been kept separate and distinct by the assessee. He argued that the provisions of section 80IA(7) of the Act would apply only when audit report in the prescribed form is not filed along with the return of income. In the instant case, in the original return of income the deduction u/s. 80IA per se was not claimed by the assessee. Hence, there was no need for the assessee to obtain audit report in Form 10CCB and file it along with the original return of income. He stated that later based on the advice of the tax consultant the audit report
4 Mackintosh Burn Ltd., AY 2006-07 was obtained on 24.03.2008 and revised return filed on 28.03.2008 wherein deduction u/s. 80IA of the Act was claimed by the assessee. In this scenario, the provision of section 80IA(7) of the Act cannot be made applicable to the assessee. No deduction u/s. 80IA of the Act is applicable unless a person furnishes its return of income on or before the due date of filing the return of income u/s. 139(1) of the Act. In the instant case, the assessee admittedly had filed the return of income before the due date specified u/s. 139(1) of the Act. Admittedly, the accounts of the eligible undertaking had been duly audited by an accountant much before the due date of filing return of income u/s. 139(1) of the Act. It is only that the audit certificate in Form No. 10CCB was obtained after the filing of original return of income and the same was filed along with the revised return of income which is filed within the date specified u/s. 139(5) of the Act. Hence, he argued that the AO ought to have taken cognizance of the valid revised return that was very much available before him while framing assessment. In this regard, he placed reliance on the decision of the Hon’ble Allahabad High Court in the case of Dhampur Sugar Mills. Ltd. Vs. CIT (1973) 90 ITR 236 (All), wherein the question raised before the Hon’ble Allahabad High Court was whether, original return would continue to form the basis for the purpose of assessment even after it was substituted by a revised return. The Hon’ble High Court held that “when an assessment has to be made the assessee is given a right to file a correct and complete return if he discovers an error or omission in the return filed earlier. The assessment can be completed only on the basis of the correct and complete return. The earlier return, after a revised return has been filed, cannot form the basis of assessment although it may be used to indicate the conduct of the assessee. Hence, for the purpose of assessment of income, the effective return must be the revised return filed by the assessee ultimately. There is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment……. A return which has been substituted by a revised return is, for all practical purposes, the return of income as the assessment has to be completed on the basis of the revised return.”
5 Mackintosh Burn Ltd., AY 2006-07 5. He also placed reliance on the decision of the Coordinate Bench of Chennai Tribunal in the case of ACIT Vs. Precot Meridian Ltd. in ITA No. 1214/Mds/2012 dated 29.04.2013 which is squarely applicable to the facts of the instant case, wherein the assessee claimed deduction under section 80IA of the Act in the revised return and not in original return. The AO disallowed the said claim. The Hon'ble ITAT held that, “A plain reading of section 80AC makes it clear that from the assessment year 2006-07, deduction claimed under section 80IA/80-IB/80-IC/80-ID/80-IE shall not be allowed unless the assessee furnishes a return on or before due date specified under sub-section (1) of section 139. Nowhere in the section it was provided that unless the assessee makes a claim in its return filed under section 139(1), the said claim is allowable. The section does not speak of a claim to be made in the return filed under section 139(1). The section speaks of filing a return within the time specified under section 139(1) and nothing else. Here the assessee filed a return under section 139(1) within due date specified but no claim was made under section 80lA in such return. However, a revised return was filed under section 139(5) on 30.3.2010 claiming deduction under section 80lA at Rs. 37,27,928/-. The section says unless the assessee files a return under section 139(1) within the due date, deduction under section 80IA/80-IB/80-IC/80-ID/80-IE shall not be allowed and at the same time section 139(5) provides for filing a revised return, when the assessee discovers any omission or any wrong statement made in the return already filed under sub-section (1) of section 139 or return filed under sub- section (1) of section 142. This revised return can be filed at any time before expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. In view of our above observations, the submission of the Departmental Representative that since the assessee had not made any claim in its original return filed under section 139(1), no deduction is allowable under section 80lA of the Act, in view of the provisions of section 80AC, has no force."
Similar view was taken by the Coordinate Bench of Mumbai Tribunal in the case of DCIT Vs. Kamdhenu Builders & Developers in dated 27.01.2016. He further placed reliance on the Coordinate Bench decision of Ahmedabad Tribunal in the case of Parmeshwar Cold Storage Pvt. Ltd. Vs. ACIT reported in (2011) 16 Taxmman.com 88 (Ahd), wherein it was held as under: “This section (section 80AC) does not require that the claim under section 80IB should be made only through the original retu5rn in time. It only prescribes the condition that the original return filed should be in time for enabling the assessee to make a claim. In other words, it is not a requirement to make the claim in the original return itself, which is to be filed within the time. We may further explain that for claiming deduction under section 80IB, the only condition is that the original return should be filed in time, but the claim need not necessarily be made in the original return, it can be made subsequent thereto also. ”
Finally, he placed reliance on the decision of Hon’ble Supreme Court in the case of CIT Vs. Mahalaxmi Sugar Mills Co. Ltd. reported in (1986) 160 ITR 920 (SC) wherein it was held that –
6 Mackintosh Burn Ltd., AY 2006-07 “In the second place there is a duty cast on the ITO to apply the relevant provisions of the Act for the purpose of determining the true figure of the assessee’s taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set off cannot relieve the ITO of his duty to apply section 24 in an appropriate case.”
He further stated that the beneficial provision should be interpreted in favour of the assessee if all the conditions eligible to claim the same were fulfilled by the assessee substantially and the same should not be denied merely on technical grounds, and that the provisions which is intended for promoting growth has to be interpreted liberally and does not get frustrated.
With regard to second ground raised by the revenue, he further argued that tax audit report u/s. 44AB of the Act has been signed prior to the date of filing the original return of income. He stated that the tax audit report was signed on 16th October, 2006, original return of income was filed on 29.11.2006 and the due date u/s. 139(1) of the Act is 30.11.2006. Accordingly, he argued that the ground taken by the revenue in this regard is factually incorrect.
We have heard rival submissions and gone through facts and circumstances of the case. The facts stated hereinabove remained undisputed and hence, the same are not reiterated for the sake of brevity. The analysis to the impugned issue by the Ld. CIT(A) and the various provisions of the Act relating to the impugned issue together with the various case laws relied on by the Ld. AR are not reiterated herein for the sake of brevity. We found it pertinent to analyse the applicability of the Special bench decision of the Rajkot Tribunal in the case of Saffire Garments Vs. ITO reported in (2012) 28 Taxman.com 27 (Rajkot S.B) dated 30.11.2012 to the facts of the instant case. We find that the Hon’ble Special bench observed that the proviso to section 10A(1A) of the Act states that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under section 139(1) of the Act and accordingly, it was held that the above proviso is mandatory and not directory. The Hon’ble Special Bench distinguished catena of cases relied on by the assessee and held that those decisions were in different context, viz., filing of audit report, form No. 10CCB etc. and hence, were not applicable to the assessee. While distinguishing the cases, the Hon’ble Special Bench observed that in the instant case the issue was filing of return itself and not filing of documents along with the return.
7 Mackintosh Burn Ltd., AY 2006-07 11. In the instant case before us, the assessee had filed the original return of income on 29.11.2006 which was before the due date specified u/s. 139(1) of the Act i.e. 30.11.2006. Thereafter, the assessee had filed revised return on 28.03.2008 wherein it claimed deduction u/s. 80IA of the Act. Since the assessee had filed its return of income before the due date specified u/s. 139(1) of the Act for the relevant year, the question of denying the benefit u/s. 80IA of the Act does not arise. Hence, the decision of the Hon’ble Special Bench cannot be made applicable to the facts of the instant case before us. On the contrary, we find that the said decision is to be interpreted in favour of the assessee since the assessee had filed its return before the due date and as such, is eligible for deduction. It is not the case that the assessee before the Hon’ble Special bench had filed its original return before the due date of filing the return for the relevant year and claimed deduction u/s. 10A of the Act in its revised return. The case before the Hon’ble Special Bench was that the assessee had filed the return itself after the due date of filing the return and hence, the Hon’ble Special bench decided the issue against the assessee, which is not the case of the assessee before us. We find that the Ld. CIT(A) had made the very same observation after interpreting the section 80AC of the Act [similar to proviso to sec. 10A(1A)] i.e. claim of section 80IA shall be allowed if return is furnished before the due date of filing the return and held that the assessee is squarely entitled for deduction u/s. 80IA of the Act as all the conditions therein were duly fulfilled by the assessee. The Ld. DR did not refute any of the findings of the Ld. CIT(A) by producing any cogent material or contrary evidence and the submissions made by the Ld. AR before us. In view of our aforesaid facts and findings and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. Appeal of revenue is dismissed.
In the result, appeal of revenue is dismissed.