2023 (4) TMI 1170

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.....02.2020 denying the deduction claimed under section 10AA of the Act for not filing return of income within the due date specified under section 139(1) of the Act i.e. 30.09.2018 which was extended till 31.10.2018. Assessee preferred appeal before the ld. CIT (Appeals) and the ld. CIT (Appeals) sustained the action of the Assessing Officer/CPC in denying the deduction claimed under section 10AA of the Act as the assessee did not file return within the due date as specified under section 139(1) of the Act. 3. Before us the ld. Counsel for the assessee submits that the ld. CIT (Appeals) sustained the disallowance referring to the judgement of the Special Bench of Rajkot Tribunal in the case of M/s. Saffire Garments Vs. Income Tax Officer [28 taxmann.com 27] and the decision of the Hon'ble Supreme Court in the case of CIT Vs. Dilip Kumar & Company [(2018) 95 taxmann.com 327]. The ld. Counsel for the assessee submits that it is an admitted fact that the return of income has been filed on 29.11.2018 while it was to be filed by 31st October, 1998 under section 139(1) of the Act. The ld. Counsel submits that filing of return of income within the due date specified under section 139(1) of....

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....icer (supra) and the decision of the Hon'ble Supreme Court in the case of CIT Vs. Dilip Kumar & Company (supra). 6. Heard rival submissions perused the orders of the authorities below and the decisions relied on. The only issue to be decided as to whether the assessee is entitled for deduction under section 10AA of the Act when the return is not filed within the due date specified under section 139(1) of the Act. On perusal of the provisions of section 10A/10B and 10AA of the Act we notice that specific proviso was introduced in the provisions of section 10A and 10B stating that no deduction under the provisions of section 10A/10B shall be allowed to assessee who does not furnish a return of income on or before the due date specified under sub section (1) of section 139 of the Act. 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. 7. An identical issue came up before the Bangalore Bench of the Tribunal in the case of M/s. Opto Circuits (India) Limited Vs ACIT in IT....

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.... to an assessee who does not furnish a return of his income on or before the due date specified under subsection (1) of section139." (Note : There was no restriction originally and the said proviso u/s 10(1A) was inserted by the Finance Act, 2005 w.e.f. 01.04.2006; 8. On perusal of the CIT(A)'s finding extracted (supra), it is not forthcoming precisely why the denial of the deduction u/s 10AA of the I.T. Act is upheld. The CIT(A) has upheld the disallowance referring to sub-sections (5) & (6) of section 10A/10B of the I.T. Act, which are applicable to the deduction u/s 10AA of the I.T. Act also. The provisions of sub-sections (5) & (6) of section 10A of the I.T. Act shall apply to the exemption u/s 10AA of the I.T. Act also by virtue of subsection (8) of section 10AA of the I.T. Act. However, these subsections of 10A do not prescribe the precondition of filing of return within the specified due date u/s 139(1) of the I.T. Act to be eligible for the benefit of section 10AA of the I.T. Act. Sub-section (8) of section 10AA of the I.T. Act reads as follows:- "(8) The provisions of sub-sections (5)62 and (6) of section 10A shall apply to the articles or things or services referred ....

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....01; (iii) no deduction shall be allowed under section 80HH or section 80HHA or section 80-I or section 80- IA or section 80-IB in relation to the profits and gains of the undertaking; and (iv) in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the business of the undertaking shall be computed as if the assessee had claimed and been actually allowed the deduction in respect of depreciation for each of the relevant assessment year." 10. Reading the above sub-sections, we are of the view that the CIT(A) has misread the provisions of sub-sections (5) & (6) of section 10A / 10B of the I.T. Act and confirmed the disallowance without noticing these sub-sections do not mandate that the return of income should be filed within the specified due date u/s 139(1) of the I.T. Act in order to be entitled to the said deduction u/s 10AA of the I.T. Act. 11. From the aforesaid analysis, we hold that section 10AA of the I.T. Act has not mandated filing of return of income within the specified due date u/s 139(1) of the I.T. Act as one of the conditions precedent for claiming the deduction. The conditions to be fulfilled in or....

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....e of interpretation of Scott R. Bayman v. Commissioner of Incometax, Delhi (2012) 24 taxmann.com 214(Delhi) and referred to the above mentioned judgment of the Hon'ble Apex Court. When the Legislature has omitted such a restriction in section 10AA of the I.T. Act in its wisdom, it is not for the A.O. nor the CIT(A) to prescribe such a conditionality and impose it on an assessee. Therefore, the denial of the exemption on the ground of not filing the return of income within the specified due date u/s 139(1) of the I.T. Act is not legally correct. Since the A.O. had disallowed the claim of deduction u/s 10AA of the I.T. Act, at threshold for reason that the assessee has not filed the return of income u/s 139(1) of the I.T. Act, we are of the view that the matter needs to be examined whether the assessee has complied with any other conditions mandated u/s 10AA of the I.T. Act. Further, the A.O. shall also examine whether the assessee has correctly computed the claim [CIT(A) in the impugned order has stated that the assessee has claimed excess deduction u/s 10AA of the I.T. Act]." 8. We further observe that in the memorandum explaining the provisions in the Finance Bill, 2023, the Legi....