2023 (4) TMI 1170 - AT - Income Tax

Late-filed income tax returns and s.10AA SEZ deduction eligibility-denial solely u/s139(1) deadline set aside.

The dominant issue was whether deduction under s.10AA could be denied solely because the assessee filed its return after the due date under s.139(1). The ... Deduction u/s 10AA - claim denied as assessee did not file return within time specified u/s 139(1) - HELD THAT:- On reading of the provisions of section 10AA of the Act we observe that no such proviso was introduced making mandatory filing of return within the due date specified under sub section (1) of section 139 of the Act for availing deduction under section 10AA of the Act. An identical issue raised in the case of M/s. Opto Circuits (India) Limited [2022 (10) TMI 117 - ITAT BANGALORE]and M/S. OPTO CIRCUITS (INDIA) LIMITED [2022 (10) TMI 117 - ITAT BANGALORE] held that the denial of exemption claimed under section 10AA of the Act on the ground of not filing return of income within the due date specified under section 139(1) of the Act is not legally correct. For the year under consideration i.e. assessment year 2018-19 there is no mandatory requirement of filing the return of income within the due date specified under section 139(1)of the Act for availing exemption under section 10AA of the Act. Assessee appeal allowed. Issues Involved:1. Whether the assessee is entitled to deduction under section 10AA of the Income Tax Act when the return is not filed within the due date specified under section 139(1) of the Act.Summary:Issue 1: Entitlement to Deduction under Section 10AA Despite Late Filing of ReturnThe appeal is filed by the assessee against the denial of deduction under section 10AA of the Income Tax Act, 1961 for the assessment year 2018-19, due to the late filing of the return of income beyond the specified due date under section 139(1). The assessee filed the return on 29.11.2018, while the due date was extended to 31.10.2018. The return was processed under section 143(1), denying the deduction. The CIT (Appeals) upheld this denial, referencing the Special Bench decision in M/s. Saffire Garments Vs. Income Tax Officer and the Supreme Court decision in CIT Vs. Dilip Kumar & Company.The assessee argued that the filing of the return within the due date under section 139(1) is not mandatory for availing exemptions under section 10AA, unlike sections 10A and 10B, which have specific provisos mandating timely filing. The assessee submitted Form No. 56F, Form No. 3CB, and the tax audit report within the extended due date and cited reasonable cause for the delay due to hospitalization.The Tribunal noted that section 10AA does not contain a proviso mandating the filing of the return within the due date under section 139(1) for claiming the deduction. The Tribunal referenced a similar case, M/s. Opto Circuits (India) Limited Vs ACIT, where it was held that the denial of exemption under section 10AA due to late filing was not legally correct. The Tribunal emphasized that the conditions for claiming the deduction under section 10AA are stipulated in sub-sections (2) and (4), and there is no mandate for timely filing under section 139(1).The Tribunal also observed that the Finance Act, 2023, inserted a proviso in section 10AA, effective from 1.04.2024, mandating the filing of the return within the due date for availing the deduction. However, for the assessment year 2018-19, no such requirement existed.The Tribunal concluded that the assessee's claim for deduction under section 10AA could not be denied for the late filing of the return. The order of the CIT (Appeals) was set aside, and the Assessing Officer/CPC was directed to allow the deduction claimed by the assessee.Result:The appeal of the assessee was allowed.