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Income Tax Appellate Tribunal, [ DELHIBENCH “H” : DELHI ]
Before: SHRI CHALLA NAGENDRA PRASAD, & SHRI PRADIP KUMAR KEDIA
आदेश / O R D E R PER C.N. PRASAD, J.M. :
This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals) [hereinafter referred to CIT (Appeals)] New Delhi/National Faceless Appeal Centre [NFAC] 1
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dated 10.03.2022 for assessment year 2018-19 in denying the assessee deduction claimed under section 10AA of the Income Tax Act, 1961 (the Act) on the ground that the assessee did not file return within time specified under section 139(1) of the Act.
Briefly stated the facts are that the assessee filed return of income on 29.11.2018 declaring income of Rs.15,26,820/- after claiming deduction of Rs.75,10,646/- under section 10AA of the Act. The return was processed by CPC, Bangalore, under section 143(1) of the Act, on 12.02.2020 denying the deduction claimed under section 10AA of the Act for not filing return of income within the due date specified under section 139(1) of the Act i.e. 30.09.2018 which was extended till 31.10.2018. Assessee preferred appeal before the ld. CIT (Appeals) and the ld. CIT (Appeals) sustained the action of the Assessing Officer/CPC in denying the deduction claimed under section 10AA of the Act as the assessee did not file return within the due date as specified under section 139(1) of the Act. 3. Before us the ld. Counsel for the assessee submits that the ld. CIT (Appeals) sustained the disallowance referring to the judgement of the Special Bench of Rajkot Tribunal in the case of M/s. Saffire Garments Vs. Income Tax Officer [28 taxmann.com 27] and the decision of the Hon’ble Supreme Court in the case of CIT Vs. Dilip Kumar & Company [(2018) 95 taxmann.com 327]. The ld. Counsel for the assessee submits that it is an admitted fact that the return of income has been filed on 29.11.2018 while it was to be filed by 31st October, 1998 under section 139(1) of the Act. The ld. Counsel submits that filing of return of income within the 2
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due date specified under section 139(1) of the Act is not mandatory to avail the exemptions under section 10AA of the Act. However, it is mandatory in filing return of income within the due date specified under section 139(1) for availing the exemptions under sections 10A and 10B of the Act. The ld. Counsel invited our attention to the provisions of section 10A, 10B and 10AA of the Act and submitted that there is a distinction between the provisions under section 10A/10B and the provisions under section 10AA of the Act. The ld. Counsel for the assessee referring to the provisions of section 10A and 10B of the Act submits that there is a specific proviso inserted in these provisions making mandatory for filing return of income within the due date specified under section 139(1) of the Act so as to avail the benefit of exemptions under section 10A and 10B of the Act whereas no such proviso was introduced in the provisions of section 10AA of the Act for mandatory filing of return within the due date specified under section 139(1) of the Act. Reliance was placed on the decision of the Bangalore Bench of ITAT in the case of M/s. Opto Circuits (India) Limited Vs ACIT, ITA. No. 1316/Bang/2017 dated 30.09.2022. 4. The ld. Counsel further submits that the assessee has furnished Form No. 56F, Form No. 3CB and tax audit report on 24.10.2018 which is within the extended due date specified for filing return of income under section 139(1) of the Act. The ld. Counsel further submits that the assessee has also paid all the taxes due as per the return of income within the due date specified under section 139(1) of the Act and only the return could not be filed within due date as the assessee was not well as he was hospitalized 3
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from 27.10.2018 to 15.11.2018. Therefore, the ld. Counsel for the assessee submits that there is a reasonable cause in not filing the return of income within the due date specified under section 139(1) of the Act and in any case filing return within the time specified under section 139(1) of the Act is not mandatory for availing the exemptions under section 10AA of the Act and therefore there is justification in denying the claim for exemptions under section 10AA of the Act to the Assessee. 5. The ld. DR strongly supported the order of the ld. CIT (Appeals) and also placed reliance on the decision of the Special Bench of the ITAT, Rajkot in the case of M/s. Saffire Garments Vs. Income Tax Officer (supra) and the decision of the Hon’ble Supreme Court in the case of CIT Vs. Dilip Kumar & Company (supra). 6. Heard rival submissions perused the orders of the authorities below and the decisions relied on. The only issue to be decided as to whether the assessee is entitled for deduction under section 10AA of the Act when the return is not filed within the due date specified under section 139(1) of the Act. On perusal of the provisions of section 10A/10B and 10AA of the Act we notice that specific proviso was introduced in the provisions of section 10A and 10B stating that no deduction under the provisions of section 10A/10B shall be allowed to assessee who does not furnish a return of income on or before the due date specified under sub section (1) of section 139 of the Act. On reading of the provisions of section 10AA of the Act we observe that no such proviso was introduced making mandatory filing of return 4
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within the due date specified under sub section (1) of section 139 of the Act for availing deduction under section 10AA of the Act.
An identical issue came up before the Bangalore Bench of the Tribunal in the case of M/s. Opto Circuits (India) Limited Vs ACIT in ITA. No. 1316/Bang/2017 for the assessment year 2013-14 and the Tribunal by order dated 30.09.2022 held that the denial of exemption claimed under section 10AA of the Act on the ground of not filing return of income within the due date specified under section 139(1) of the Act is not legally correct, observing as under:-
“7. We have heard rival submissions and perused the material on record. The A.O. has disallowed the claim of deduction u/s 10AA of the I.T. Act for the solitary reason that the return of income was not filed within the specified due date u/s 139(1) of the I.T. Act. The disallowance of exemption u/s 10AA of the I.T. Act was sustained by the CIT(A) as per the discussion in paras 6 & 6.1 of the impugned order. The CIT(A) merely affirmed the view of the AO. Under Chapter III of the Income-tax Act, 1961, special provision have been enacted to provide profit linked deductions, viz., sections 10A, 10AA, 10B, 10BA and 10C of the I.T.Act. Such special provisions have also been provided under Chapter VIA of the Income-tax Act, viz., sections 80IA, 80IAB, 80IB, 80IC of the I.T. Act. The Legislature, wherever it deemed necessary, has expressly laid down the pre-condition of filing the return of income within the specified due date u/s 139(1) of the I.T. Act either in the original enactment, or by amending the law and inserting appropriate clauses. For instance, sections 10A and 10B of the I.T. Act have been amended by inserting appropriate clauses and providing that the exemption shall not be allowed unless the return of income is filed within the specified due date u/s 139(1) of the I.T. Act. The restrictive clauses provided u/s 10A and 10B of the I.T. Act are tabulated as under:-
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Sl. Section Restrictive clause No. (i) 10A Proviso to sub section (1A) of section 10A reads as under: “(1A)……………… (i) (ii) Provided 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 sub section (1) of section 139.” (Note : There was no restriction originally and the said proviso u/s 10(1A) was inserted by the Finance Act, 2005 w.e.f. 01.04.2006; applicable to the AY 2006-07 onwards) (ii) 10B Fourth proviso to sub-section (1) of section 10B read as under: “10B. (1) ……….. Provided also 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 sub- section (1) of section139.” (Note : There was no restriction originally and the said proviso u/s 10(1A) was inserted by the Finance Act, 2005 w.e.f. 01.04.2006;
On perusal of the CIT(A)’s finding extracted (supra), it is not forthcoming precisely why the denial of the deduction u/s 10AA of the I.T. Act is upheld. The CIT(A) has upheld the disallowance referring to sub-sections (5) & (6) of section 10A/10B of the I.T. Act, which are applicable to the deduction u/s 10AA of the I.T. Act also. The provisions of sub-sections (5) & (6) of section 10A of the I.T. Act shall apply to the exemption u/s 10AA of the I.T. Act also by virtue of subsection (8) of section 10AA of the I.T. Act. However, these subsections of 10A 6
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do not prescribe the precondition of filing of return within the specified due date u/s 139(1) of the I.T. Act to be eligible for the benefit of section 10AA of the I.T. Act. Sub-section (8) of section 10AA of the I.T. Act reads as follows:- “(8) The provisions of sub-sections (5)62 and (6) of section 10A shall apply to the articles or things or services referred to in sub-section (1) as if — (a) for the figures, letters and word "1st April, 2001", the figures, letters and word "1st April, 2006" had been substituted; (b) for the word "undertaking", the words "undertaking, being the Unit" had been substituted.” 9. Sub-sections (5) & (6) of section10A of the I.T. Act applicable to the exemption u/s 10AA of the I.T. Act reads as follows:- “(5) The deduction under this section shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form, 59[***] the report of an accountant, as defined in the Explanation below sub-section (2) of section 288 60 [before the specified date referred to in section 44AB], certifying that the deduction has been correctly claimed in accordance with the provisions of this section. (6) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,— (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment 7
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years ending before the 1st day of April, 2001, in relation to any building, machinery, plant or furniture used for the purposes of the business of the undertaking in the previous year relevant to such assessment year or any expenditure incurred for the purposes of such business in such previous year had been given full effect to for that assessment year itself and accordingly subsection (2) of section 32, clause (ii) of sub-section (3) of section 32A, clause (ii) of sub- section (2) of section 33, sub-section (4) of section 35 or the second proviso to clause (ix) of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowance or deduction; (ii) no loss referred to in sub-section (1) of section 72 or subsection (1) or sub-section (3) of section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years ending before the 1st day of April, 2001; (iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80- IA or section 80-IB in relation to the profits and gains of the undertaking; and (iv) in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment year.” 10. Reading the above sub-sections, we are of the view that the CIT(A) has misread the provisions of sub-sections (5) & (6) of section 10A / 10B of the I.T. Act and confirmed the disallowance without noticing these sub-sections do not mandate that the return of income should be filed within the specified due date u/s 139(1) of the I.T. Act in order to be entitled to the said deduction u/s 10AA of the I.T. Act.
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From the aforesaid analysis, we hold that section 10AA of the I.T. Act has not mandated filing of return of income within the specified due date u/s 139(1) of the I.T. Act as one of the conditions precedent for claiming the deduction. The conditions to be fulfilled in order to claim the exemption are stipulated in sub-section (2) of section 10AA of the I.T. Act. Further, sub- section (4) has stipulated the conditions which ought not to be violated in order that an undertaking is not disentitled from claiming the exemption under the section. It is not the case of the Revenue for disallowing the claim u/s 10AA of the I.T. Act that the assessee has not fulfilled or violated any of the conditions mentioned in sub-sections (2) and (4) of section 10AA of the I.T. Act. 12. The precondition of filing the return before the specified due date u/s 139(1) of the I.T. Act was introduced in the following sections, namely, 10A, 10B, 80IA, 80IAB, 80IB, 80IC, etc., by amending the Law and making / inserting appropriate restrictive clauses in the relevant sections. These amendments are made effective from particular date and in some cases, retrospective effect has been given. That is to say that a conditionality of filing a return within the specified due date u/s 139(1) of the I.T. Act in order to be entitled to a particular deduction / exemption ought to be made in the section itself and cannot be superimposed. In other words, it is not for the AO or the CIT(A) to rewrite the Law and Rule that exemption is not to be allowed since the return of income was not filed within the specified due date u/s 139(1) of the I.T. Act. 13. Section 80AC of the I.T. Act was amended by the Finance Act, 2007 by inserting section 80ID / 80IE of the I.T. Act in order to extend the restrictive clause to the said sections, and it has application only for the post-amendment assessment years. In other words, in the absence of restrictive clause prior to the amendment, it is not permissible to impose the restriction in sections 80ID/80IE of the I.T. Act for the preamendment assessment years. It is settled law that express mention of one or more things in a particular context excludes all other found not mentioned. The maxims of statutory interpretation is the expression –unius est exclusion alterius applies in the present context – to express one thing is to exclude another. In this 9
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context, we rely on the judgment of the Hon’ble Apex Court in the following cases:-
(i) Dr.Venkatachalam v. Dy.Transport Commissioner – SAIR 1977 SC 842. (ii) Md.Alauddin Khan v. Karam Thamarjit Singh (2010) 7 SCC 530.
The Hon’ble High Court of Delhi has applied this doctrine of interpretation of Scott R. Bayman v. Commissioner of Income- tax, Delhi (2012) 24 taxmann.com 214(Delhi) and referred to the above mentioned judgment of the Hon’ble Apex Court. When the Legislature has omitted such a restriction in section 10AA of the I.T. Act in its wisdom, it is not for the A.O. nor the CIT(A) to prescribe such a conditionality and impose it on an assessee. Therefore, the denial of the exemption on the ground of not filing the return of income within the specified due date u/s 139(1) of the I.T. Act is not legally correct. Since the A.O. had disallowed the claim of deduction u/s 10AA of the I.T. Act, at threshold for reason that the assessee has not filed the return of income u/s 139(1) of the I.T. Act, we are of the view that the matter needs to be examined whether the assessee has complied with any other conditions mandated u/s 10AA of the I.T. Act. Further, the A.O. shall also examine whether the assessee has correctly computed the claim [CIT(A) in the impugned order has stated that the assessee has claimed excess deduction u/s 10AA of the I.T. Act].”
We further observe that in the memorandum explaining the provisions in the Finance Bill, 2023, the Legislature has proposed inserting proviso to sub section (1) of section 10AA of the Act stating no deduction under section 10AA shall be allowed to the assessee who does not furnish return of income on or before the due date specified under sub section (1) of section 139 of the
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Act. Accordingly a proviso was inserted after clause (ii) of sub section (1) of section 10AA by the Finance Act, 2023 with effect from 1.04.2024 inserting a condition for mandatory filing return of income within the due date specified under sub section (1) of section 139(1) of the Act so as to avail exemption under section 10AA of the Act. This amendment was brought into statute with effect from 1.04.2024. Therefore, we are of the considered view that for the year under consideration i.e. assessment year 2018-19 there is no mandatory requirement of filing the return of income within the due date specified under section 139(1)of the Act for availing exemption under section 10AA of the Act.
The decisions relied upon by the ld. DR are misplaced. Even applying the ratio of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Dilip Kumar & Company (supra) wherein it has been held that exemption notification should be interpreted strictly and the provisions of exemptions/ deductions shall have to be interpreted strictly, in the absence of any specific provision to deny claim for deduction under section 10AA of the Act for not filing return of income within the due date specified under section 139(1) of the Act the assessee’s claim for deduction under section 10AA of the Act cannot be denied. Thus, we set aside the order of the ld. CIT (Appeals) and direct the Assessing Officer/CPC to allow deduction claimed by the assessee under section 10AA of the Act for the assessment year under consideration. Grounds of appeal of the assessee are allowed. 11
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In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on : 26/04/2023.
Sd/- Sd/- (PRADIP KUMAR KEDIA) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 26/04/2023.
*MEHTA*