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Step 2 – Draft Generation
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Tribunal Orders Deletion of Disallowance, Grants Deduction Claim Under Sec. 80IC Due to Lack of Required Intimation. The Tribunal set aside the Ld CIT (A)'s order, directing the AO to delete the disallowance of the deduction claimed under sec. 80IC for AY 2016-17. The ...
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Tribunal Orders Deletion of Disallowance, Grants Deduction Claim Under Sec. 80IC Due to Lack of Required Intimation.
The Tribunal set aside the Ld CIT (A)'s order, directing the AO to delete the disallowance of the deduction claimed under sec. 80IC for AY 2016-17. The Tribunal found the adjustment inappropriate due to the lack of required intimation to the appellant, allowing the appeal and granting the deduction.
Issues: Disallowance of deduction claimed u/s 80IC of the Act due to late filing of return of income u/s 139(1) for AY 2016-17.
Analysis: The appellant, engaged in the production business, filed an appeal against the disallowance of the deduction claimed u/s 80IC of the Act for AY 2016-17 by the Ld CIT (A). The return of income was filed beyond the due date specified u/s 139(1) of the Act. The Ld CIT (A) upheld the disallowance citing sec. 143(1)(v), which specifies that the deduction u/s 80IC shall be disallowed if the return is furnished late. The appellant contended that the amended provisions of sec. 143(1)(v) inserted by the Finance Act, 2016, were not applicable for AY 2016-17. The Ld A.R argued that since the year under consideration was AY 2016-17, the amended provisions should not apply. The Ld D.R, however, maintained that the disallowance was justified as the return was processed after the effective date of the amendment.
The Tribunal observed that an intimation must be given to the assessee before making any adjustment as per the proviso inserted by the Finance Act, 2016. The appellant confirmed not receiving any such intimation. The revenue argued that the provisions of sec. 80AC mandate timely filing for claiming deductions. The Tribunal noted that the return was processed after the amendment's effective date, which could allow the application of the amended clauses. However, as no intimation was provided to the assessee as required by the proviso, the adjustment was deemed inappropriate. The Tribunal emphasized that the controversy pertained to the AO's power in processing returns under sec. 143(1) and deemed the examination of sec. 80AC unnecessary at this stage.
Consequently, the Tribunal set aside the Ld CIT (A)'s order and directed the AO to delete the disallowance of the deduction claimed u/s 80IC of the Act for AY 2016-17. The appeal of the assessee was allowed, and the order was pronounced on 17.3.2020.
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