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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri N.V.Vasudevan & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
Both appeal by the Revenue are against the order of Commissioner of Income Tax (Appeals)-III, Kolkata dated 29.11.2012. Assessments were framed by ACIT, CC-XXIII, Kolkata u/s 153A r.w.s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.12.2010 for assessment years 2008-09 & 2009-10 respectively. Shri G.Mallikarjuna, Ld. Departmental Representative appeared on behalf of Revenue and Shri A.K.Tulsyan, Ld. Authorized Representative appeared on behalf of assessee. 2. Both appeals are heard together and are being disposed of by way of common order for the sake of convenience.
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 2 3. As the issues raised in both the appeals are almost identical, therefore for the sake of convenience, we are adjudicating both the appeals by single common order. First we would like to reproduce the grounds of appeal in ITA No.342/Kol/2013 for A.Y. 2008-09.:- “The following grounds of appeal are approved for filing appeal to ITAT, Kolkata against the order dated 29/11/2012 of the Commissioner of Income TA (Appeals), Central-III, Kolkata in Appeal No.93 & 94/CC-XXIII/CIT(A) C- III/10-11/Kol, in the case of M/s Singhal Enterprises Pvt. Ltd. for the Assessment Year 2008-2009:- 1.That on the fact and circumstances of the case, Ld. CIT(A) erred in allowing claim of deduction u/s. 80I & 80IB of the IT Act, by accepting reasons of the appellant for submitting return beyond due date, without giving opportunity to the assessing officer to examine the same in violation of the provisions of Rule 46A(3) of the IT Rules. 2. That on the fact and circumstances of the case, Ld. CIT(A) erred in allowing claim of deduction u/s. 80IA & 80IB of the IT Act, without properly verifying it or getting it verified of the reasons of filing return of income belatedly. 2.1 That on the fact and circumstances of the case, Ld. CIT(A) erred in allowing claim of deduction u/s. 80IA & 80IB of the IT Act, without considering the fact that Books of Accounts of Raigarh Unit of the assessee company, (to which the deduction claim u/s 80IA & 80IB pertain) was, in fact, audited on 30th August, 2008, whereas, the return was filed on 01.11.2010, after a long gap and beyond the due date of filing of return and claim of deduction u/s. 80IA and 80IB was correctly disallowed as per statutory provisions of section 80AC of the IT Act. 3. That on the fact and circumstances of the case, Ld. CIT(A) erred in allowing assessee’s appeal to allow the deduction u/s. 80IA & 80IB, in spite of the fact of mandatory provisions of section 80AC f the IT Act, whereas no such deduction is allowable to the assessee for belated return of income filed us/s 139(4) of the IT Act. 3.1 That on the fact and circumstances of the case, Ld. CIT(A) erred both in facts as well as in law in allowing assessee’s appeal to allow the deductions u/s. 80IA & 80IB of the IT ct by accepting the plea of the appellant of demerger scheme petition pending before the High Court, which was never brought to the notice of the AO during the assessment proceedings. 3.2 That on the facts and circumstances of the case, Ld. CIT(A) erred both in facts as well as in law in allowing assessee’s appeal to allow the deductions u/s 80IA & 80IB of the IT Act on the ground of pending demerger petition before the High Court, which would not have been prevented the appellant in filing return of income in time.
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 3 4. That on the facts and circumstances of the case, Ld. CIT(A) erred both in facts as well as in law in allowing assessee’s appeal by observing that Ld. DGIT (investigation), East, Kolkata has given finding that the app’s claim of deduction us. 80IA & 80IB of the Act fulfills all the requirements of those sections except filing of return within the due date which is based on incorrect representation before the Ld. DGIT (investigation), East, Kolkata by the appellant. 4.1 That on the facts and circumstances of the case, Ld. CIT(A) erred grossly both in facts as well as in law in allowing assessee’s appeal stating that there was no reason for him to re-examine the factual aspect of appellant’s claim of deduction under those sections which is in fact never examined and deductions were summarily disallowed by the AO on the ground of filing return of income belatedly.”
Inter-connected sole issue raised by Revenue in all the ground of appeal is that Ld. CIT(A) erred in allowing deduction u/s 80IA and 80IB of the Act in contravention of the provision of Sec. 80IC of the Act.
The necessary facts of the case are that assessee in the present case is a Private Limited Company and engaged in the manufacturing business of sponge iron. The assessee, for the year under consideration filed its return of income declaring at NIL. Thereafter the case was selected for scrutiny and notice u/s. 143(2) was issued upon assessee. The assessee was completed u/s 143(3) of the Act after making certain disallowance / addition to the total income of assessee at Rs.27,23,38,095/-.
The assessee, for the year under consideration has claimed deduction us. 80IA for an amount of Rs.7,66,56,588/- and u/s. 80IB of the Act for Rs.6,49,65,494/- respectively. The assessee for the year under consideration filed its return of income on 31.03.2010 i.e. after due date of filing IT return as specified u/s. 139(1) of the Act. Accordingly, AO called upon assessee to justify why the deduction claimed under 80IA & 80IB should not be disallowed in pursuance to the provision of Sec. 80AC of the Act. In compliance the assessee submitted that the proposal to demerge the different manufacturing units of the assessee was filed before the Hon'ble jurisdictional High Court which was pending in the court of law and therefore the delay occurred. Thus
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 4 the assessee could not file its return of income on due date. However, the AO disregarded the plea of assessee and disallowed the deduction as claimed by assessee u/s. 80IA and 80IB of the Act. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A) by raising following grounds- “1. That the AO was wrong in not allowing deduction u/s. 80I of Rs.2,19,08,334/ for AY 2008-09 and of Rs.7,66,56,588/- for AY 2009-10 and u/s. 80IB of Rs.7,05,60,546/- for AY 2008-09 and of Rs.6,49,65,494/- for AY 2009-10 on the allegation that the return was filed after the due date u/s 1939(1) of the IT Act and disallowed as per provision of sec. 80AC of the IT Act. The AO has not considered the abnormal circumstances which prevent to file return in time and AO may be directed to allow deduction considering the abnormal condition assessee was faced for sake of natural justice. 2. That the AO was wrong in charging interest u/s. 234A, 234B & 234C of the IT Act on the amount.”
The assessee before Ld. CIT(A) submitted that the condition as specified u/s. 80AC of the Act for filing return of income is not mandatory but it is directory in nature. Therefore, the deduction should be allowed to assessee. After considering the submissions of assessee and facts and circumstances of the case the ld. CIT(A) deleted the addition made by AO by observing as under:- “In that case the Tribunal also observed that the CIT(A) should have considered the factual aspects of the merits of assessee’s claim of exemption u/s. 10B(1) since the AO had not examined the same. In has not made any discussion about the merit of the appellant’s claim u/s. 80IA and 80B. It is observed that deduction us. 80IB had been allowed to the appellant in early year. As regards claim of deduction u/s. 80IA, the year under appeal was the first year of appellant’s claim of deduction under that section. However, it is observed that the Learned Director General of Income Tax (Investigation), East, Kolkata on page 19 of his order dated 06/07/2012 u/s. 119 of the Act on appellant’s petition seeking waiver of interest u/s. 234A, 234B and 234C of the Act has given finding that the appellant’s claim of deduction u/s. 80IA & 80IB of the Act fulfills all the requirements of those sections except filing of return within the due date. Since, the Learned Director General has already given the finding of the appellant having fulfilled all the requirements of sections 80I and 80IB except the requirement of filing of return within due date, there is no reason for me to re-examine the factual aspect appellant’s claim of deduction under those sections. The appellant has explained the circumstances under which the returns for the assessment years under appeal were filed beyond the due date
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 5 prescribed u/s. 139(1). Although a family settlement had already been arrived at by the litigants vide Memoranda of Understanding dated 24.04.07 but from the petition dated 05.10.10 before the Hon'ble Calcutta High Court, it is clear that the non-co-operation by Sri Radha Krishan Agarwal prevented the appellant from getting the accounts audited and filing return of income within the due date. From the facts observed above, it is quite clear that the delay in filing of returns for the assessment year under appeal was for the reasons beyond app’s control and for a reasonable cause. Therefore, respectfully following the decisions of the Hon'ble Hyderbad Tribunal in the case of ITO vs. S. Venkaataish (supra) and of the Hon'ble Delhi Tribunal in the case of ACIT vs. Dhir Global Industrial Pvt. Ltd. (supra), the allowance of deduction us/s 80IA & 80IB of the Act, in my opinion, cannot be denied on technical ground in view of the unavoidable circumstances enumerated by the appellant in these cases. Accordingly, the AO is directed to allow deduction u/s. 80IA and 80IB for both Assessment Years 2008-09 & 20091-10.”
Aggrieved by this, the Revenue has come up in appeal before us.
The ld. DR before us submitted that it is mandatory to file income tax return before the due date as specified under section 139(1) of the Act. The ld. DR in support of his claim has relied in the judgment of Hon’ble High Court of Karnataka in the case of M/s Unique Shelters Pvt. Ltd. Vs. CBDT writ petition No. 14825/2014 and in the order of Hon’ble ITAT in the case of Shri Mahesh Chaturbhuj Bhattad, Shegaon in ITA 368/NAG/2014 vide order dated 7th October 2016. The ld. DR also submitted that only CBDT has the authority to condone the delay occurred in filing the income tax return. The ld. DR vehemently supported the order of the AO. On the other hand the ld. AR filed a paper book which is running from pages 1 to 77 and submitted that there was some dispute with regard to the partition of the family property, so the delay occurred which was beyond the control of the assessee. For the dispute the demerger petition was pending before the Hon’ble High Court which was not settled till the date of filing the return of income as specified under section 139(1) of the Act. The ld. AR relied in the order of Hon’ble ITAT of Hyderabad in the case of ITO Vs. S. Venkataiah reported in 52 SOT 0437 vide order dated 31st May 2012 which was subsequently confirmed by the Hon’ble High Court of Andhra Pradesh in ITTA No. 114 of 2013. The ld. DR relied in the order of the ld. CIT(A).
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 6 9. We have given a thoughtful consideration to the rival contentions. The undisputed fact is that the return of income for the year under consideration was not furnished on or before the due date as per the provisions of section 139(1) of Act. In our considered opinion, provisions of section 80AC of the Act squarely apply on the facts of the case in hand, section 80AC 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 80-IAB or section 80-IB or section 80-IC [or section 80-ID or section 80- IE], 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].”
9.1 The Special Bench of the Tribunal at Rajkot had the occasion to consider the following facts in the case of Saffire Garments ITA No. 397/Rjt/2009, 20 ITR (T) 623 vide order dated 30th Nov. 2012 :-
• The assessee, a partnership firm, filed its return of income claiming deduction under section 10A in respect of its profit derived from the export of articles produced in SEZ. A.Y. 2008-09 • The Assessing Officer, however, noted that the assessee had filed its return on 31.01.2007 whereas the extended due date for filing return of income for the assessee, being a firm, under the provisions of section 139(1) was 31.12.2006. • The Assessing Officer, further noted that as per proviso to sub-section (1A) of section 10A, introduced with effect from 1-4-2006, no deduction should be allowed to assessee who does not furnish return of income on or before the due date. • Accordingly, applying proviso to section 10A(1A), Assessing Officer denied deduction under section 10A. • On appeal by the assessee, the Commissioner (Appeals) upheld the order of Assessing Officer. • On further appeal by the assessee. the Tribunal held provisions of the proviso to subsection (1A) of section 10A to be merely directory and not mandatory and, therefore, on that basis held that even if return of income was not filed within the time-limit prescribed by section 139(1), the assessee could not be denied deduction under section 10A. • Instant Special Bench of the Tribunal was constituted to consider the following questions.
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 7 15. On the aforementioned facts, the Special Bench held as under:-
Scheme of the Act with regard to filing of returns in order to decide the issue, the whole scheme of the Act needs to be considered. The assessee is required to file the return of income within the prescribed time as per the provisions of section 139(1). This provision of section 139(1) is applicable to all companies and firms irrespective of the fact as to whether they are earning taxable income or not for the current year i.e. from 1-4-2006. In respect of other persons such as individual, HUF, AOP or BOI and artificial Juridical person, the requirement is that if such a person is having taxable income before giving effect to the provisions of section 10A, then also, he is required to file return of income before the due date even if this person is not having taxable income after giving effect to the provisions of sectionn10A. [Para 11]. A.Y. 2008-09 Consequences of failure to file return within due date it is found that the provisions of the proviso to section 10A(IA) is nothing but a consequence of failure of the assessee to file the return of income within the due date prescribed under section 139(1). For such a failure of the assessee to file his return of income within the due date prescribed under section 139(1), this is not the only consequence. One consequence of such failure is prescribed in section 234A also 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. Such interest is payable from the date immediately following the due date for filing the return of income and is payable up to the date on which such return of income was furnished by the assessee and if the assessee has not furnished any return of income then the interest is payable till the date of completion of the assessment under section 144. It is held that above is also one of the consequences of not filing return of income by the assessee within the due date. [Para 11]
A similar issue was also considered by the Co-ordinate Bench of Chandigarh in the case of Lakshmi Energy & Foods Ltd. 250 & 251/Chd/2013, the relevant order of the Co-ordinate Bench read as under:-
"Sec 80IB r.w.s. 80AC of the Income-tax Act, 1961 deduction - profits and gains from industrial undertaking other than infrastructure development undertakings -Assessment year 2006-07 and 2007-08 - where an assessee wants to avail deduction u/s 80IB, he has to necessarily furnish his return of income containing such claim before due date specified in Sec 139(1) - held Yes". A.Y. 2008-09 Therefore in view of the above legal position and discussion it is clear that once the return is filed late beyond due date provided u/s .139(1) in Section 80 AC then deduction u/s 80IB cannot be allowed."
ITA No.342-343/Kol/2013 A.Y. 08-09 & 09-10 DCIT CC-XXIII, Kol. vs. M/s Singhal Enterprises Pvt. Ltd. Page 8 If, we consider the facts of the case in hand in the light of the decisions mentioned hereinabove, we find similarity in the facts of the present case in hand. Therefore, we have no other option but to follow the decisions of the Special Bench and the Co-ordinate Bench (supra). In fact, this was communicated to the assessee when the appeal was heard. The reasons mentioned by the AR are of no relevance. As such, we find no substance in the order the ld. CIT(A) as the issue was squarely covered against the assessee as discussed above. Thus, in our considered view the appeal filed by Revenue is allowed. Coming to ITA No. 343/Kol/2013 in Revenue’s appeal for A.Y.09-10. 10. Since the facts and circumstances are identical except amount involved, both the parties are agreed whatever view taken in the above appeal in ITA No.432/Kol/2013 may be taken in this appeal also, we hold accordingly.
In the result, both appeal of Revenue stand allowed. Order pronounced in the open court 09/12/2016
Sd/- Sd/- (�या�यक सद�य) (लेखा सद�य) (N.V.Vasudevan) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata,
*Dkp, Sr.P.S �दनांकः- 09/12/2016 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. आवेदक /Assessee-M/s Singhal Enterprises Pvt. Ltd., 303, Century Tower, 45, Shakespeare Sarani, Kolkata-700 017 2. राज�व/Revenue-DCIT Central Circle-XXIII, Aayakar Bhawan, Poorva, 110, Santi Pally, 5th Floor, CC. XXIII, Kolkata-107 3. संबं�धत आयकर आयु�त / Concerned CIT Kolkata 4. आयकर आयु�त- अपील / CIT (A) Kolkata 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड� फाइल / Guard file. By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता ।