2015 (3) TMI 579 - HC - Income Tax

Court denies deduction under section 80-IB(10) for late tax return filing

The court held that the deduction under section 80-IB(10) of the Income-tax Act cannot be allowed if the return is filed beyond the due date specified ... Entitlement to deduction under section 80-IB(10) - assessee is engaged in the business of construction of housing projects - return was not filed on or before the due date specified under section 139(1)by assessee - Held that:- Benefit can only be availed of by the assessee if he has filed his return on time. If he has not filed his return on time, the benefits cannot be claimed. The benefit, in the present case, can only be claimed in case of fulfilment of the pre-conditions laid down under section 80AC of the Income-tax Act. When the pre-conditions have not been fulfilled, the benefit cannot be claimed. - Decided in favour of revenue. Issues Involved:1. Whether the deduction under section 80-IB(10) of the Income-tax Act can be allowed when the return was not filed on or before the due date specified under section 139(1) of the Income-tax Act.2. Whether section 80AC of the Income-tax Act allows any discretion in the case of delayed filing of returns.Issue-wise Detailed Analysis:1. Deduction under Section 80-IB(10) and Timely Filing of Return:The assessee, engaged in the construction of housing projects, filed a return of income for the assessment year 2009-10 showing a gross income of Rs. 1,47,06,878 and claimed a deduction of Rs. 94,67,987 under section 80-IB(10) of the Income-tax Act. The Assessing Officer disallowed the deduction as the return was filed on February 11, 2010, beyond the due date of September 30, 2009. The Commissioner of Income-tax (Appeals) upheld this decision. However, the Income-tax Appellate Tribunal reversed this, allowing the deduction, reasoning that the delay was not due to negligence on the part of the assessee but due to reliance on professional services. The Tribunal directed the Assessing Officer to accept the return and allow the deduction.2. Discretion under Section 80AC:The Tribunal's decision was challenged, arguing that section 80AC is explicit that deductions under section 80-IB(10) are only permissible if the return is filed by the due date specified under section 139(1). The Tribunal's focus on whether there was negligence or sufficient reason for the delay was deemed irrelevant because section 80AC leaves no room for discretion. The return must be filed on or before the due date to claim the deduction.Analysis of Relevant Judgments:- CIT v. Kulu Valley Transport Co. P. Ltd.: This case dealt with carrying forward losses under the Indian Income-tax Act, 1922, where the return was not filed within the specified time. The court held that the time limit should be read in conjunction with other provisions. However, this case did not involve the strict precondition set by section 80AC, making it inapplicable.- Fertilizer Corporation of India v. State of Bihar: This case discussed the rebate under the Bihar Sales Tax Act, where returns filed beyond the prescribed time were accepted under certain circumstances. The court inferred an extension of time from the conduct of the authorities. However, this judgment was found inapplicable as section 80AC does not allow such inference.- Bajaj Tempo Ltd. v. CIT: The court emphasized liberal interpretation of provisions promoting economic growth. The argument was that denying deductions for procedural delays frustrates the objective of section 80-IB(10). However, the court rejected this, stating that the requirement to file returns by the due date is mandatory.- CIT v. Berger Paints (India) Ltd.: This case involved the submission of an audit report with the return, which was deemed directory rather than mandatory. However, filing the return itself within the due date is a different requirement, and the court found this judgment unhelpful for the assessee.- CCE v. Hari Chand Shri Gopal: This judgment discussed substantial compliance, arguing that procedural lapses should not deny benefits if the essential requirements are met. The court, however, held that filing the return by the due date is a mandatory requirement under section 80AC, and substantial compliance does not apply.Conclusion:The court concluded that the benefit under section 80-IB(10) can only be availed if the return is filed within the prescribed period. Since the return was filed late, the deduction cannot be claimed. Both questions were answered in favor of the Revenue, setting aside the Tribunal's order and allowing the appeal.