TaxTMI 
TaxTMI 
2010 (7) TMI 619
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....ct of Rs. 2,06,36,797. He found that as per the proviso to section 10B(1), which has been inserted by the Finance Act, 2006, w.e.f. A.Y. 2006-07, no deduction under the provisions of section 10B shall be allowed to an assessee if the return of income is not furnished on or before the due date specified under sub-section (1) of section 139 of the Income-tax Act, i.e., 30-11-2007 in the case of the assessee. 3.1 Assessing Officer referred to the relevant clause of section 10B as applicable for assessment year 2006-07 as under:- "Special provisions in respect of newly established hundred per cent export, oriented undertakings. 10B(1). Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export- oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: Provided that where in computing the total income of ....
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....chanical manner. It was further argued that the word 'shall' has not been used in absolute terms as in appropriate cases, where there is genuine reasons, the delay has to be taken into consideration. It was claimed that in the year under consideration, the date for filing the return as per section 139(1) is 31-10-2006, but on the basis of extension allowed from time to time, the due date was extended to 30-11-2006. It was further claimed that the year under consideration new provision regarding E filing of return was introduced and there were problems in software and for other various technical reasons, the time was extended from time to time by the CBDT. It was further submitted that all the audit report including the tax audit report were prepared well in time and the delay in filing the return was on account of the circumstances beyond the control of the assessee. It was further submitted that under the scheme of the Act, an assessee is entitled to the legal and statutory claim at any stage of the proceedings and this principle is well supported in the case of Continental Construction (P.) Ltd. v. Union of India [1990] 185 ITR 2301. Here the Hon'ble Delhi High Court for the firs....
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.... out that in section 10(b)(i) by Finance Act, 2006 a proviso has been inserted from 1-4-2006 which specifically provides that no deduction under this section shall be allowed to assessee who has not furnished any return of income on or before the due date specified under sub-section (1) of section 139. He claimed that the said proviso was very much applicable in the year under consideration. He argued that the language of the Act was very clear and since the assessee has not furnished the return on or before the due date, the assessee was not entitled to deduction u/s 10B(i). He argued that howsoever genuine, the assessee's hardship may be under such situation, the remedy lies under the provision 119(2)(b) which provides that "the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits....
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....ther particulars as may be prescribed." 6.3 We further that another proviso has been inserted in section 139(1) w.e.f. 1-4-2006 by Finance Act, 2005 which reads as under:- "Provided also that every person, being an individual or a Hindu undivided family or an associated or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of previous year, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed." 6.4 A reading of the above makes it clear that section 139(1) mandated an assessee to file a return in his total income assessable under the Act in the previous year exceeded the maximum amount which is not chargeable to tax. Admittedly, when exemption is being granted u/s 10, the income would not form part of the total income ....
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....not find any fault with the conclusions arrived at by the Tribunal. No substantial question of law arises for our consideration. The appeal is dismissed." 6.8 We find that the proviso in section 10(b)(1) which has been inserted regarding filing of return which we are considering now is akin to the provision of section 10(5) considered by the Hon'ble High Court as above. Hon'ble High Court had clearly held that such provision is directory and not mandatory. 6.9 Now in the present case, we find that there was only a marginal delay of 1 ½ month in filing the return of income. The return filed was valid one. The same has also been accepted as a valid return by the Assessing Officer. The reasonable cause attributed by the assessee for the delay is that new provision of E-filing the return was introduced from the current assessment year. There was some problem under the new provisions due to which the date of filing the return had extended by the CBDT from time to time and from 31-10-2006, the same was extended to 30-11-2006. The new provision regarding E-filing of return was introduced & in this first year the software did not accept the return, if self- assessment tax w....
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....tion or claim and deal with the same on merits in accordance with law." 6.11 The said provision makes it clear that the Board cannot give direction to appellate authorities. Further the Act does not prohibit that, relief in this regard when genuine hardship is faced, cannot be granted by Appellate Authority. We have already given a finding in preceding paragraph that there was genuine hardship on the part of the assessee, under which circumstances the return was filed after a marginal delay. 6.12 Further the very fact that the Act envisages that relief regarding exemption should be considered and granted when application is made after the specified period in cases of genuine hardship clearly indicates that provision in this regard is directory and not mandatory. Hence in case of genuine hardship the relief can be granted by the appellate authority. 6.13 However, we find that Ld. Commissioner of Income-tax (Appeals) has accepted the assessee's submission, that the delay in filing of return should not be a reason to deny the assessee's claim of exemption u/s 10B(1). However, the Ld. Commissioner of Income-tax (Appeals) has not considered the factual aspects of the merits of ....