ITR-6 e-filing glitch blocking s.10AA deduction and loss carry-forward: eligible unit profits computed separately; manual filing allowed

Where the e-filing utility for Form ITR-6 did not permit claiming deduction under s.10AA unless losses of an ineligible unit were set off, the HC held that prior to AY 2018-19, profits of an eligible unit for s.10AA had to be computed independently of the ineligible unit, and the assessee was entitled to carry forward losses of the ineligible unit for AY 2017-18. Relying on prior judicial practice of granting relief for software glitches that impede statutory claims, the HC directed the tax authorities to either accept the return manually or modify the software to enable online filing with such carry-forward claim within a stipulated time.

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Issues:
1. Difficulty in carrying forward business losses due to programming issue in online filing.
2. Discrepancy in online filing software not accepting deduction under Section 10AA.
3. Petitioner's request for manual filing and carry forward of losses.
4. Legal position regarding the amendment in Section 10AA and its applicability.
5. Court's direction to Respondents for manual filing or software alteration.

Analysis:

Issue 1: The Petitioner faced a programming difficulty preventing the carry forward of business losses due to online filing. The Petitioner engaged in manufacturing BOPP films and had units in both DTA and SEZ. The eligible unit qualified for deduction under Section 10AA since AY 2014-15.

Issue 2: The Petitioner reported income for AY 2017-18, but the online filing software did not accept the deduction under Section 10AA without setting off losses from the ineligible unit. This resulted in the denial of carry forward of losses, reducing the losses to 'Nil'.

Issue 3: The Petitioner approached the AO and CBDT regarding the discrepancy, highlighting the hardship faced. Despite reminders and representations, the issue persisted, leading to the filing of the present petition for direction.

Issue 4: The Respondents acknowledged the amendment in Section 10AA effective from April 1, 2018, clarifying the deduction should be from the total income of the assessee. The Court affirmed that pre-2018-19, the law explained by the Supreme Court applied, emphasizing the need to correct the E-filing software to align with legal requirements.

Issue 5: The Court directed the Respondents to accept manual returns or modify the software to enable online filing with carry forward of losses for the relevant AYs by May 31, 2019. The decision cited precedents where Courts permitted manual filing in case of software glitches affecting return filing or benefit claims.

In conclusion, the Court's judgment addressed the programming issue hindering the Petitioner's ability to carry forward losses, emphasizing the need for software compliance with legal provisions. The direction to allow manual filing or software modification aimed to resolve the Petitioner's hardship and ensure accurate income computation for the relevant assessment years.

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