2018 (5) TMI 638 - HC - Income Tax

Court stresses timely filing for Section 80-IB deductions, rejects post-filing compliance arguments.

The Court dismissed the appeal concerning the denial of benefits under Section 80-IB of the Income Tax Act, 1961 due to late filing of returns. It ... Deduction u/s 80-IB denied - appellant did not file its return for the relevant assessment year within the period prescribed u/s 139(1) - non filing return on time - seeking extension of time - Held that:- When the governing provision expressly mandates that no such deductions shall be allowed unless the assessee filed his returns of income “on or before the due dates specified under” Section 139 (1), there is no question of referring to the extended period permitted under Section 139(4) to seek the benefit. Indeed, if the embargo were not as strict as is evident from the relevant provision, the entirety of Section 139 would have been mentioned in the relevant expression in Section 80AC which would have included within its sweep the extended period under sub-section (4) thereof. But in such provision referring only to sub-section (1) of Section 139 of the Act, the reference to the other provisions of Section 139 must be understood to have been excluded. See judgment of Shelcon Properties P. Ltd. [2015 (3) TMI 579 - CALCUTTA HIGH COURT] - Decided against assessee. Issues:1. Claim for benefit under Section 80-IB of the Income Tax Act, 1961 denied due to late filing of return.2. Interpretation of Section 80AC of the Act and its impact on claiming deductions under Section 80-IB.3. Applicability of previous judgments on the current case.4. Consideration of the Supreme Court judgment in CIT v. Kulu Valley Transport Co. P. Ltd.5. Relevance of filing returns within the specified due dates under Section 139(1) for claiming deductions under Section 80-IB.Analysis:1. The judgment addresses the issue of the appellant's claim for the benefit under Section 80-IB of the Income Tax Act, 1961 being declined due to the late filing of the return. The condition for obtaining deductions under Section 80-IB is that the return for the relevant year should be filed within the time prescribed under Section 139(1) of the Act. The appellant's contention was that the returns were filed at a belated stage but in compliance with Section 139(4) of the Act. However, the Court emphasized that the condition imposed by Section 80AC of the Act specifically refers to Section 139(1) and not to Section 139 as a whole, highlighting the importance of timely filing of returns for claiming deductions.2. The interpretation of Section 80AC of the Act was crucial in this case. The Court noted that the provision imposes an embargo on conferring benefits under Section 80-IB if the return is not filed within the due date specified under Section 139(1). The Court rejected the appellant's argument that once the returns are filed and taken on record, the condition stipulated in Section 80AC would be deemed complied with. The judgment relied on previous decisions to support its interpretation, emphasizing the strict adherence to the statutory requirements for claiming deductions under Section 80-IB.3. The Court considered previous judgments, including an unreported judgment and a reported case, to analyze the legal issue raised by the appellant. While acknowledging the differing views in previous cases, the Court relied on the judgment in Shelcon Properties P. Ltd. to dismiss the appeal at the admission stage. The Court found that the legal issue raised was directly covered by the precedent set in Shelcon Properties P. Ltd., indicating a consistent approach in interpreting the relevant provisions of the Income Tax Act.4. The judgment also delved into the Supreme Court's decision in CIT v. Kulu Valley Transport Co. P. Ltd., which highlighted the significance of filing returns within the extended period provided by the statute. However, the Court distinguished the applicability of the Kulu Valley Transport judgment in cases where a benefit is conferred under specific conditions, as in the case of Section 80-IB of the Act. The Court emphasized that the strict wording of Section 80AC necessitates timely compliance with the filing requirements under Section 139(1) for claiming deductions under Section 80-IB.5. The Court's analysis underscored the importance of adhering to the statutory provisions, especially concerning the filing of returns within the specified due dates under Section 139(1) of the Act. The judgment emphasized that the express prohibition in Section 80AC, coupled with the negative wording, leaves no room for considering the extended period permitted under Section 139(4) to claim the benefit under Section 80-IB. The Court's decision to dismiss the appeal highlighted the significance of strict compliance with the statutory conditions for claiming deductions under the Income Tax Act.This comprehensive analysis of the judgment provides a detailed insight into the legal issues addressed by the Court regarding the denial of benefits under Section 80-IB of the Income Tax Act, 1961 due to the late filing of returns and the interpretation of relevant statutory provisions.