2016 (9) TMI 992 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decision on 80IB(10) Deduction Disallowance

The Tribunal upheld the CIT(A)'s decision, ruling that the disallowance of the deduction under section 80IB(10) for late filing was beyond the scope of ... Allowability of deduction claimed u/s 80IB(10) - contravention of the provisions of section 80AC of the Act in not filing the return of income for A.Y. 2012-13 within the period stipulated under section 139(1) - Held that:- CIT(A) has considered at length the issue of whether the AO’s disallowance of the assessee’s claim for deduction under section 80IB(10) of the Act, for the reason that the return of income for A.Y. 2012-13 was filed beyond the due date stipulated under section 139(1) of the Act (but was filed within the time allowed under section 139(4) of the Act), in view of the provisions of section 80AC of the Act is beyond the scope of the provisions of section 143(1) of the Act. We concur with the view of the learned CIT(A) that as per the ratio of the decisions of the Hon'ble Bombay High Court in Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust ( 1993 (9) TMI 75 - BOMBAY High Court )even in cases where the return of income is filed beyond the due date stipulated under section 139(1) of the Act, the deduction should not be disallowed under section 143(1) of the Act merely in view of the provisions of section 80C of the Act. We also find on a perusal of the provisions of section 143(1) of the Act, that the AO’s action in disallowing the assessee’s claim for deduction under section 80IB(10) of the Act, since the return of income was filed beyond the period stipulated under section 139(1) of the Act in view of the provisions of section 80AC, is beyond the scope of section 143(1) since there is neither an arithmetical error nor an incorrect claim apparent from the record. In this view of the matter, we uphold the finding of the learned CIT(A) that the AO was not justified in disallowing the assessee’s claim for deduction under section 80IB(10) of the Act and his direction to the AO to delete the disallowance thereof, made under section 143(1)(a)/143(1) of the Act. - Decided in favour of assessee. Issues Involved:1. Whether the deduction claimed under section 80IB(10) of the Income Tax Act, 1961 can be disallowed under section 143(1) due to the return being filed beyond the time limit specified under section 139(1).2. The scope of adjustments permissible under section 143(1) of the Income Tax Act, 1961.Detailed Analysis:1. Disallowance of Deduction under Section 80IB(10) for Late Filing of Return:The assessee firm filed its return of income for A.Y. 2012-13 on 31.03.2013, claiming a deduction of Rs. 3,53,17,770 under section 80IB(10). The return was processed under section 143(1), and the deduction was disallowed citing section 80AC since the return was filed beyond the time limit specified under section 139(1). The assessee contested this disallowance through a rectification application under section 154, which was rejected by the ACIT (CPC) on similar grounds.Upon appeal, the CIT(A)-1, Thane, observed that various judicial pronouncements, including those from the Hon'ble Bombay High Court and ITAT Benches, indicated that the deduction under section 80IB(10) should not be denied solely because the return was filed beyond the section 139(1) deadline. The CIT(A) held that the disallowance was beyond the scope of section 143(1), directing the AO to delete the disallowance.2. Scope of Adjustments under Section 143(1):The CIT(A) and the Tribunal examined whether the AO's disallowance of the deduction under section 80IB(10) due to late filing was within the permissible adjustments under section 143(1). Section 143(1) allows adjustments for arithmetical errors or incorrect claims apparent from the return. The Tribunal concurred with the CIT(A) that the issue of filing within the extended period under section 139(4) is debatable and not an apparent error, thus beyond the scope of section 143(1).The Tribunal referenced judicial decisions, including the Hon'ble Bombay High Court in Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust (207 ITR 368) and the Coordinate Bench in Yash Developers (ITA No. 809/Mum/2011), which held that returns filed within the extended period under section 139(4) should be considered as compliant with section 139(1).Conclusion:The Tribunal upheld the CIT(A)'s decision, stating that the AO's disallowance of the deduction under section 80IB(10) due to late filing was beyond the scope of section 143(1) adjustments. The Tribunal dismissed the Revenue's appeal, affirming that the deduction should not be disallowed merely because the return was filed beyond the section 139(1) deadline but within the extended period under section 139(4).Order:The appeal by Revenue for A.Y. 2012-13 is dismissed.