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of <h1>Tribunal favors assessee on Section 80IC deduction, emphasizing full disclosure.</h1> <h3>ACIT, Central Circle -18, New Delhi Versus Ultimate Flexipack Ltd. And DCIT, Central Circle -18, New Delhi Versus Ultimate Flexipack Ltd. And (Vice-Versa)</h3> ACIT, Central Circle -18, New Delhi Versus Ultimate Flexipack Ltd. And DCIT, Central Circle -18, New Delhi Versus Ultimate Flexipack Ltd. And (Vice-Versa) ... Issues Involved:1. Deduction under Section 80 IC of the Income Tax Act.2. Penalty proceedings under Section 271(1)(c) of the Income Tax Act.3. Validity of the original return versus the revised return filed under Section 153A.4. Condonation of delay in filing cross objections.Issue-wise Detailed Analysis:1. Deduction under Section 80 IC of the Income Tax Act:The assessee, a company engaged in manufacturing plastic film and printed articles, claimed a deduction under Section 80 IC of the Income Tax Act for the assessment year 2004-05. Initially, the assessee filed a return declaring nil income after claiming a deduction of Rs. 9,13,69,859/-. Following a search and seizure operation, the assessee filed a revised return excluding the income received from the license fee and declaring a lower income. The Assessing Officer (AO) allowed the deduction to the extent of Rs. 1,06,31,753/- and disallowed the excessive claim, suspecting manipulation in the accounts.2. Penalty Proceedings under Section 271(1)(c) of the Income Tax Act:The AO initiated penalty proceedings under Section 271(1)(c), alleging that the assessee furnished inaccurate particulars by claiming an excessive deduction under Section 80 IC. The assessee argued that the claim was based on an audit report and that there was no concealment or furnishing of inaccurate particulars. The AO, however, imposed a penalty of Rs. 2.90 crores, stating that the excessive claim was made without a sound legal basis.3. Validity of the Original Return versus the Revised Return Filed under Section 153A:The assessee contended that the return filed in response to Section 153A should be considered for penalty purposes, as it did not furnish inaccurate particulars in such return. The CIT(A) observed that the doctrine of eclipse applies, meaning the original return is eclipsed but not annulled. CIT(A) found that the assessee disclosed all particulars in the original return, including the audited profit and loss account, balance sheet, and certificate from a Chartered Accountant. The issue of whether income from sublicensing could be claimed under Section 80 IC was debatable and was settled by the Supreme Court in Liberty India Private Limited.4. Condonation of Delay in Filing Cross Objections:The assessee filed cross objections with a delay, citing realization of legal rights after a jurisdictional High Court judgment. The Tribunal allowed the condonation of delay, noting no prejudice to the Revenue and emphasizing the importance of rendering substantial justice over technicalities.Conclusion:The Tribunal upheld the CIT(A)'s order, finding no concealment or furnishing of inaccurate particulars by the assessee. The Tribunal agreed that the assessee had disclosed all material particulars in the original return and that merely making an incorrect claim does not amount to furnishing inaccurate particulars. The Tribunal dismissed the Revenue's appeals and the cross objections filed by the assessee as infructuous. The decision was pronounced in open court on 31st November 2019.
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