High Court allows deduction claim under Section 10B despite not in revised returns

Sesa Goa Limited, Versus The Additional Commissioner of Income-Tax, Range 1, Panaji, Goa.

Sesa Goa Limited, Versus The Additional Commissioner of Income-Tax, Range 1, Panaji, Goa. - [2021] 430 ITR 114 (Bom) Issues:
1. Whether the Assessing Officer is duty-bound to consider a claim for deduction under Section 10B of the Income Tax Act made during assessment proceedingsRs.
2. Whether the Commissioner of Income Tax (Appeals) should have entertained the claim for deduction under Section 10B even if not supported by revised returnsRs.
3. Whether the Tribunal should have entertained the claim for deduction under Section 10B when all necessary facts were on recordRs.
4. How should sub-Section (5) of Section 80A of the Act, inserted with retrospective effect, be interpreted regarding prospective effect and existing vested rightsRs.

Analysis:

Issue 1:
The appellant inadvertently omitted to claim deduction under Section 10B for two Export Oriented Undertakings during the assessment year 2005-06. The Assessing Officer refused to consider the claim as it was not raised in the revised returns. The Commissioner of Income Tax (Appeals) and the ITAT upheld this decision based on the principle that claims made after filing returns cannot be entertained.

Issue 2:
The High Court found that the Appellate Authorities erred in relying on previous decisions and not considering the appellant's claim for deduction under Section 10B. They cited a previous case, Commissioner of Income Tax Vs. Pruthvi Brokers & Shareholders P. Ltd., to establish that the Appellate Authorities have the power to permit deductions even if not supported by revised returns.

Issue 3:
The High Court ruled in favor of the appellant, stating that the Commissioner of Income Tax (Appeals) and the ITAT should have considered the claim for deduction under Section 10B. They highlighted the wide powers of the Appellate Authorities in tax appeals to ascertain the correct tax liability of the assessee in accordance with the law.

Issue 4:
Regarding the interpretation of sub-Section (5) of Section 80A of the Act, the High Court clarified that this issue was not required to be decided at that stage. They emphasized that the Commissioner of Income Tax (Appeals) has the authority to consider claims for deduction under Section 10B, leaving the interpretation of Section 80A(5) for future consideration. The High Court set aside previous judgments and restored the appeal to the Commissioner of Income Tax (Appeals) for fresh adjudication on the deductions under Section 10B, directing expedited resolution within four months.