CREST COMMERCIAL PRIVATE LIMITED,NEW DELHI vs. ASSESSING OFFICER, NEW DELHI

Against the said order, the assessee preferred appeal before Ld. CIT(A), who dismissed the appeal by holding that statutory provisions of exemption as well as deduction are to be interpreted strictly and once the assessee has made incorrect claim, the same should not be allowed. For this, Ld.CIT(A) placed reliance on the judgment of CC vs Dilip Kumar & Company [2018] 95 taxmann.com 327 (SC).

Against the appellate order, the assessee has preferred an appeal before the Tribunal by taking following grounds of appeal:-

“The Ld. C'IT (A) NFAC has erred in upholding the disallowance of the deduction u/s 80JJAA by the AO for the AY 2020-21 and AY 2018-19 due to filing of three separate forms in place of one form as per amended provisions w.e.f. 18/12/2019. 2. Without prejudice, the Ld. CIT (A) NFAC has erred in holding the action of the AO of allowing the deduction for the AY 2019-20 in place of eligible amount of deduction for the AY 2020-21, if at all the deduction was to be allowed for only one year.

The Ld. CIT(A) NFAC has erred in upholding the action of the AO for not allowing the deduction u/s 80JJAA on mere technicality of filing three forms in place of one form as per amendment w.e.f. 18/12/2019, in spite of the fact that the amount of the deductions was duly mentioned in the ITR, in clause 33 of the form 3CD and three separate form 10DA filed by the appellant.

The Ld. CIT(A) NFAC has also erred in not considering the fact that there were serious conditions in the world due to COVID 19 pandemic. The reliance by the appellant company on various case laws has also been summarily rejected.

The Ld. CIT (A) NFAC has erred in placing reliance on the judgement of hon. SC in the case of CC Vs. Dilip Kumar & Company (2018) 95 taxmann.com 327/69 GST 239 holding that 5 provisions of exemption as well as deduction provided in the statue are to be interpreted strictly whereas the said judgement is on the issue of exemption and not deductions. There is vast difference in exemption and deduction.

The appellant craves leave to add, delete or modify any ground of appeal before or during the course of hearing of appeal.”

Before us, Ld.AR for the assessee submits that assessee has inadvertently filed 03 different reports in Form No.10DA duly certified by the Auditors wherein the amount of deduction pertaining to assessment year under appeal and of immediately preceding Two (02) assessment years were duly certified by the Auditors. Ld. AR further submits that in preceding year, 30% of the total deduction available was allowed however, claim of deduction u/s 80JJAA related to preceding assessment year was disallowed in the year under appeal solely for the reason that the report under Form 10DA was not filed in Modified/revised Form 10DA, in which figures of deduction for all the three (03) assessment years are to be filled in one Form as against 03 different Forms 10DA were filed by the assessee. Ld. AR submits that this error is only a technical error for which the assessee should be deprived of the eligible claim made therefore, the same deserves to be allowed.

On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has not made claim by filing prescribed Form 10DA in as per amended Rules therefore, CPC as well as Ld. CIT(A) has rightly disallowed the claim of the assessee and he requested for the confirmation of disallowance made.

Heard the contentions of both the parties and perused the material available on record. In the instant case, the Revenue has dismissed the claim of the assessee of deduction u/s 80JJAA for AY 2019-20 of INR 46,83,020/- and of INR 1,23,70,586/- for AY 2020- 21 solely for the reason that assessee has filed 03 (Three) separate Auditor’s report in Form 10DA prescribed for claiming deduction u/s 80JJAA of the Act. It is seen that Form 10DA was revised w.e.f. 18.12.2019 and it is the first year after such amendment that new Form 10DA was to be filled in by the Auditor/assessee. However, inadvertently Auditor issued 03 separate Reports in Form 10DA for each assessment year separately as against one consolidated Form 10DA wherein the figure of allowable deduction is to be filled. That alone cannot be made basis for disallowing the claim of the assessee when the Revenue has not disputed the amount of deduction claimed in any manner. The Hon’ble Supreme Court in the case of CIT v. G. M. Knitting Industries (P.) Ltd. reported in [2016] 376 ITR 456 (SC), has held that, even though it is necessary to file certificate in Form 10CCB along with the return of income, but even if the same has not been filed with the return of income, but the same was filed before the final order of assessment was made, the assessee was entitled to claim deduction u/s. 80-IB of the Act. In the present case assessee had filed the report in Form 10DA alongwith the return of income though it was not in correct format and was available with the CPC when the disallowance was made. It is also a matter of fact that CPC has allowed deduction for one assessment year meaning thereby the reports so filed by the assessee were accepted. It was also claimed by the assessee before the ld. CIT(A) that the form 10DA was filled online and if the same was revised w.e.f. 18.12.2019, why the portal has accepted three separate forms thus the IT portal was not updated as per the revised Rule in this regard.

The judgements relied upon by Ld. CIT(A) of Hon’ble Apex Court in the case of CC vs Dilip Kumar & Company (supra) relates to the exemptions where the Hon’ble Supreme Court has held that exemption provisions should be interpreted strictly. The Hon’ble 140 Taxmann.com 223 (SC) in para 11 of the judgment has clarified the position that the exemption provisions are to be strictly adhered to and further observed that “Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income"”. The relevant para 11 of the order of the Hon'ble Supreme Court in the case of Wipro Ltd. (supra) is reproduced below:

Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries (P.) Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income". Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under section 10B(8) of the IT Act.

In the instant case, no exemption under Chapter III of the Act was claimed by the assessee and deduction as provided under Chapter VIA of the Act was claimed but disallowed by the Revenue. AS observed above, the issue in hand is with respect to deduction u/s 80JJAA of the Act wherein Revenue has not disputed the claim of deduction and further allowed part deduction to the assessee i.e. deduction related to AY 2018-19 was allowed and for AYrs 2019-20 & 2020-21 was disallowed. Therefore, the ratio laid down by Hon’ble Supreme Court in the case of CC vs Dilip Kumar & Company (supra) is not applicable to the facts of the present case. Merely because three separate Form 10DA were filed by the assessee, deduction/s 80JJAA of the Act should not be denied when all the remaining conditions were accepted and part deduction stood allowed. If the assessee has filed the incorrect report in Form 10DA, no deduction should be allowed. In view of above discussion and by respectfully following the aforesaid judgement of Hon’ble Supreme Court in the case of G.M. Knitting (supra), we allow the deduction claimed u/s 80JJAA of the Act and the AO is directed accordingly. All the grounds of appeal of the assessee are thus, allowed.

In the result, the appeal of the assessee is allowed.