Statutory housing organization gets Section 80IB(10) deductions despite late return filing due to reasonable cause

The HC upheld ITAT's decision allowing deductions under Section 80IB(10) to a statutory housing organization despite filing its return beyond the prescribed period under Section 139(1). While acknowledging that Section 80AC bars deductions when returns are filed late, the court recognized the assessee's reasonable bonafide cause for delayed filing due to late audit. The court emphasized that the assessee, being a statutory organization dealing with public money, should not bear taxes it is otherwise not liable to pay under law, despite the technical non-compliance with filing deadlines.

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Issues Involved:
1. Whether the deduction claimed under Section 80IB in a non-est return can be allowed.
2. Whether the deduction claimed by the assessee before the appellate authority, which was not claimed originally due to delayed audit, can be allowed.

Summary:

Issue 1: Deduction under Section 80IB in a Non-Est Return

The revenue filed an appeal against the ITAT's order allowing deductions under Section 80IB(10) of the Income Tax Act, despite the assessee filing the return beyond the period prescribed under Section 139(1) and claiming deductions in a revised return. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had declined the deduction, citing the bar under Section 80AC, which mandates filing the return by the due date specified under Section 139(1). The ITAT held that a non-est return does not exist in the eyes of law and cannot be acted upon. However, it also stated that the CIT should have considered the claim in its appellate jurisdiction if the assessee was otherwise entitled to the deduction.

Issue 2: Deduction Claimed Before Appellate Authority Due to Delayed Audit

The assessee, a statutory organization, claimed that the delay in filing the return was due to the local Audit Department's delay. The ITAT held that the CIT(A) and ITAT had concurrently found the assessee entitled to certain deductions under Section 80IB(10). The only contention was the timing of the original return. The court noted that Section 139(4) allows filing a return before the end of the assessment year or before the completion of the assessment, whichever is earlier. The court referenced the Supreme Court's judgment in Prakash Nath Khanna, which stated that a return filed under Section 139(4) does not meet the requirements of Section 139(1) in the context of Section 80AC.

The court also considered the Delhi High Court's decision in B.U. Bhandari Nandgude Patil Associates, which emphasized that statutory time limits must be adhered to unless compelling reasons are shown. In this case, the assessee's reason for delay, late audit, was accepted by the appellant. The court held that the assessee had a reasonable and bona fide cause for the delay and should not be burdened with taxes it is not liable to pay under law.

For these reasons, the appeal was dismissed, and all pending applications were disposed of.

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