TaxTMI 
TaxTMI 
2025 (7) TMI 1095
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....me of Rs. 2,12,79,140/-. The Assessee Company also declared book profit of Rs. 3,64,50,576/- under Section 115JB of the Act and paid tax amounting to Rs. 75,04,008/-. Pursuant to filing of the return, it was realised that the Assessee Company has inadvertently omitted to claim the deduction under Section 80IB(11A) of the Act. The Assessee Company revised its return of income under Section 139(5) of the Act on 29.09.2020. However, due to a software error while generating the XML, the brought forward business losses and unabsorbed depreciation of Rs. 6,93,916/- and Rs. 2,31,15,712/- respectively were not adjusted in this revised return. Hence, in order to rectify the aforesaid error, the Assessee Company filed a second revised return dated 10.11.2020 under Section 139(5) of the Act which included both the deduction under Section 80IB(11A) of the Act as well as the correct adjustment of carried forward losses and depreciation. It is pertinent to note that the aforementioned revised returns were filed within the extended timeline provided by CBDT Circular dated 30.09.2020, which allowed filing of revised returns for AY 2019-20 up to 30.11.2020 under Section 139(5) of the Act. 3. On ....
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....e Company filed its return of income on 21.10.2019 under Section 139(1) of the Act i.e., within the due date of filing of return of income where the Assessee Company inadvertently omitted to claim the deduction under Section 80IB of the Act. However, the same was claimed in a revised return filed under Section 139(5) of the Act. 10. In view of the aforesaid, it is the case of the Assessee Company that a revised return which has been filed validly ought to be considered as having been filed originally. The aforesaid position of law is supported by the decision rendered by the Hon'ble Allahabad High Court in the case of Dhampur Sugar Mills Ltd. v. Commissioner of Income-tax [(1973) 90 ITR 236 (All.)] and the Hon'ble Gujarat High Court in the case of PCIT-1 v. Babubhai Ramanbhai Patel [(2017) 249 Taxman 470 (Guj.)], It is vehemently argued that once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. 11. Thus, in a case where the return has been revised within time along with the correct claim under Section 80IB of the Act the same ought to have been considered for correc....
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....i High Court, the claim of the Assessee Company ought to be allowed. * Allowability of claim in view of Section 80A(5) and 80AC of the Act 16. It is humbly submitted that controversy at hand rests on the issue whether a valid return of income was filed by the Assessee Company. Admittedly, the Assessee Company had claimed deduction under Section 80IB of the Act by way of a revised return filed under Section 139(5) of the Act. Now, upon a bare perusal of the provisions of Section 80A(5) and Section 80AC of the Act, it is submitted that the Assessee Company is entitled to the deduction and fulfils the relevant conditions. Section 80A(5) of the Act prescribes that deduction under the Chapter can only if claimed in a return of income was filed. Further, Section 80AC of the Act stipulates that certain claims of deductions will be allowable only if the returns of income are filed within the due dates specified under Section 139(1) of the Act. 17. Now, what is required to observed and appreciated that while Section 80A(5) of the Act mandates that claim has to be made in return of income, it does not mandate whether the same has to be made in the original return o....
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....or apparent from the face of record. 21. It is humbly submitted that both the issues on which the additions have been made are contentious and debatable and require detailed examination. Hence, the additions which have been made are illegal, bad in law and without jurisdiction and therefore, the additions are liable to be quashed on this ground alone. * Non applicability of decision of Supreme Court in PCIT v. Wipro Limited 22. With regards to the issue at hand reference is also made to the decision of the Supreme Court in Principal Commissioner of Income Tax - III & Anr. v. Wipro Limited [(2022) 446 ITR 1 (SC)] which is not applicable herein. 23. The aforementioned decision has been distinguished by the Hon'ble jurisdictional High Court in the case of Shree Bhavani Power Projects (P.) Ltd. v. Income-tax Officer [(2024) 165 taxmann.com 733 (Del.)] wherein the Hon'ble High Court has noted that Wipro Limited was a decision which was rendered in the context of Section 10B(8) that .stands placed in Chapter III of the Act and which makes provisions with respect to exempt income. High Court took cognizance of the fact that Section 80-IA is placed in Ch....
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....held that where claim of deduction under section 80JJAA of the Act had been rejected by CPC for reason that assessee failed to file Form 10DA within prescribed time under Statute, however, requisite audit report was available with Assessing Officer before assessment order was framed, claim of deduction could not have been denied. * Tarasafe International (P.) Ltd. v. Deputy Director of Income-tax, CPC [2024] 168 taxmann.com 514 (Kolkata- Trib.) (Copy at Page 63 to 64 of the CLC): In this case the Hon'ble Kolkata Bench of the Tribunal allowed the assessee's appeal, granting a deduction under section 80JJAA despite the late filing of Form 10DA, based on the Supreme Court's decision in CIT v. G. M. Knitting Industries Pvt. Ltd. 25. To the same effect in the following decisions, the Hon'ble Courts have upheld the claim of the Assessee's relating to deductions claimed. * CIT v. G. M. Knitting Industries (P.) Ltd. [(2016) 71 taxmann.com 35 (SC)] * Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income Tax [(2023) 157 Taxmann.com 550 (Guj.)] * CIT v. Panama Chemical Works [(2007) 165 Taxman 135 (MP)] * K....
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.... respondents on the other hand would urge us to hold that the statutory prescriptions comprised in Section 80-IA(7) are mandatory and the actions initiated under Section 148 thus justified. 3. Since the reasons which ultimately weighed upon the respondents for invoking Section 148 are common to both the writ petitions, we, for the sake of brevity, take note of the reasons assigned while disposing of the objections preferred and as they stand recorded for AY 2013-14. Those reasons are extracted herein below: "Sub: Assessment proceedings for AY 2013-14 - disposal of objections raised - regarding Please refer to your letter dated 07.05.2019 thereby filing objections to the reopening of assessment proceedings for the above said assessment year. 2. The following objections have been raised :- i) In terms of first proviso to section 147, the assessment u/s 148 call be reopened upto four years relating to cases completed as a scrutiny assessment u/s 143(3) from the end of the assessment year unless there is a reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. i....
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....d manually before the Assessing Officer3 on 12 February 2016. The AO concluded the assessment in terms of Section 143(3), allowing the deductions claimed by virtue of Section 80-IA and which becomes evident from a perusal of the assessment order dated 29 February 2016. It is thereafter that the impugned notice under Section 148 came to be issued. 5. As is manifest from the reasons assigned for invocation of Section 148, we find that the respondents have taken the stand that Rule 12 of the Income Tax Rules, 19624, and which came to be amended by the Income Tax (Seventh Amendment) Rules, 20135 w.e.f. 01 April 2013 introduced the requirement of an online submission of the Audit Report in Form 10CCB. The respondents assert that the petitioner had failed to point out the failure to digitally submit the report and this would constitute a nondisclosure of true and complete particulars. It is on the aforesaid basis that they called upon the petitioner to show cause why action under Section 148 should not be initiated. The aforesaid reasoning was reiterated in the order disposing of the objections which had come to be preferred by the petitioners. It is the aforesaid view AO 1962 R....
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....uirement of filing of an Audit Report along with the return was only to be taken as directory in nature. The Gujarat High Court took the view that in case the Audit Report is submitted at any time before the framing of the assessment, there would be substantial compliance with the provisions of section 80J(6A). 6. The Tribunal also relied on the decision of the Madras High Court in CIT v. A. N. Arunachalam [1994] 208 ITR 481, which, again, while considering the provisions of section 80J(6A), took the same view as that of the Gujarat High s 7. We notice that there are other decisions of other courts taking the same view. The decisions being, CIT v. Shivanand Electronics [1994] 209 ITR 63 (Bom) ; Zenith Processing Mills v. CIT [1996] 219 ITR 721 (Guj) and CIT v. Jayant Patel [2001] 248 ITR 199 (Mad) and CIT v. Mahalaxmi Rice Factory [2007] 294 ITR 631 (P&H). 8. In view of this long line of decisions of various High Courts in considering the provisions of section 80J(6A) which are similar to the provisions of section 80-IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the Audit Report along with the return....
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....rst time introduced the requirement of an Audit Report contemplated under Section 80-IA being furnished electronically. We note that although the aforesaid requirement was introduced by virtue of the 2013 Amendment, Section 80-IA(7) as it stood at that time only spoke of the Audit Report being furnished in the prescribed form along with the Return of Income and being duly verified by an accountant of the assessee. 11. By virtue of Finance Act, 2020 sub-section (7), of Section 80-IA came to be amended and now reads as under: "(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below subsection (2) of Section 288, before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant." 12. The rationale underlying the amendment made to sub-section (7) of Section 80-IA was sought to be explain....
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....ion for reassessment, Mr. Sethi submitted that the reasons assigned in support of the decision to reopen assessment would clearly indicate that the respondents nowhere allege that there was a failure on the part of the petitioner to fully and truly disclose all material particulars. It becomes pertinent to note that the aforesaid submission proceeds on the basis of the First Proviso to Section 147 as it stood prior to the amendments introduced in that provision by virtue of Finance Act, 2021 and which came into effect from 01 April 2021. Mr. Sethi contended that since the original assessment had been made in accordance with Section 143(3), the respondents would have no authority to reopen an assessment concluded in accordance therewith unless it be found that there was a failure on the part of the assessee to make a complete and candid disclosure of all facts. In any case, according to Mr. Sethi, a failure to electronically submit the Audit Report would not be liable to constitute a justifiable reason for reopening assessment bearing in mind the legal position as enunciated by this Court in The Associated Chambers of Commerce and Industry of India vs. Deputy Commissioner of Income ....
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....the furnishing of a Return of Income, it is liable to be viewed as a mandatory pre-condition for any benefit being claimed by an assessee. According to Mr. Agarwal, the decision of the Supreme Court, though rendered in the context of Section 10B(8) of the Act, would clearly lay to rest the controversy which arises. It was also Mr. Agarwal's submission that the earlier precedents rendered in the context of Section 80-IA, including that of our Court in Contimeters Electricals, rested upon the decision of the Supreme Court in Commissioner of Income Tax vs. G.M. Knitting Industries (P) Ltd.9 and which has been explained by the Supreme Court in its later decision in Wipro Limited. Mr. Agarwal laid stress upon the following passages appearing in Wipro Limited: "38. On a plain reading of Section 10B(8) of the IT Act as it is, i.e., "where the assessee, before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of Section 10B may not be made applicable to him, the provisions of Section 10B shall not apply to him for any of the relevant assessment years", we note t....
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....eturn of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 10B(8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature. 40. Even the submission on behalf of the assessee that it was not necessary to exercise the option under section 10B(8) of the IT Act and even without filing the revised return of income, the assessee could have submitted the declaration in writing to the assessing officer during the assessment proceedings has no substance and the same cannot be accepted. Even the submission made on behalf of the assessee that filing of the declaration subsequently and may be during the assessment proceedings would have made no difference also has no substance. The significance of filing a declaration under section 10B(8) can be said to be co-terminus with fili....
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....tted to take a contrary view is concerned, it is to be noted that the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) has been dismissed as withdrawn due to there being low tax effect and the question of law has specifically been kept open. Therefore, withdrawal of the special leave petition against the decision of the Delhi High Court in the case of Moser Baer (supra) cannot be held against the revenue. 44. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 10B(8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 10B(8) of the IT Act. We hold that for claiming the benefit under Section 10B(8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfi....
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....ary for his assessment, for that assessment year:" 21. Undisputedly, the petitioner had been assessed for AYs 2013-14 and 2014-15 in terms of Section 143(3). The Proviso thus clearly required the respondents to establish that income liable to tax had escaped assessment on account of a failure of the petitioner to make a full and true disclosure of all material facts. In our opinion a failure to digitally upload a Form cannot lead one to conclude that the assessee had failed to make a full and true disclosure. In any event, the respondents have woefully failed to establish or assert how that folly, if it may be so termed, resulted in escapement of income. The Section 148 action would thus and following the view taken by us in Associated Chambers be liable to be struck down on this short ground alone. 22. We also bear in mind that the reassessment actions for AYs 2013- 14 and 2014-15 were commenced with the issuance of notices under Section 148 on 26 March 2019. An action to reopen assessment prior to the amendments introduced by virtue of Finance Act, 2021 could have at best been initiated within a period of four years and subject to a maximum of six years in terms....
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....eport being directory and procedural were all rendered prior to the amendments introduced by Finance Act, 2020. These writ petitions too are concerned with actions initiated prior to the passing of Finance Act, 2020 and the amendments consequently made in Section 80-IA (7). The present decision is thus not liable to be read as an exposition on the legal position which would prevail post 2020 or the likely impact in light of the inclusion of the phrase "...before the specified date referred to in section 44AB...". We thus leave that question open to be examined in an appropriate case. 28. That only leaves us to evaluate the argument of Mr. Agarwal which rested on the decision of the Supreme Court in Wipro Limited. It must, and at the outset, be noted that Wipro Limited was a decision which was rendered in the context of Section 10B(8) that stands placed in Chapter III of the Act and which makes provisions with respect to exempt income. This is manifest from the Chapter Heading itself and which is titled "Incomes which do not form part of Total Income". Regard must be had to the fact that Section 80-IA on the other hand is placed in Chapter VIA, and which deals with "Deducti....
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....in CIT v. Shivanand Electronics [CIT v. Shivanand Electronics, 1993 SCC OnLine Bom 625 : (1994) 209 ITR 63], we see no merit in this appeal. The appeal is accordingly dismissed with no order as to costs." 2. We concur with the aforesaid view of the High Court and hold that even if Form 3-AA was not filed along with return of income but the same was filed during the assessment proceedings and before the final order of the assessment was made that would amount to sufficient compliance. These appeals are, accordingly, dismissed." 31. One of the reasons which appears to have weighed upon the Supreme Court while rendering its decision in Wipro Limited was of Section 10B being an exemption provision. This is evident from the Supreme Court significantly observing that Section 10B(8) being an exemption provision not being liable to be compared with Section 32(1)(ii-a) and which was concerned with a claim for additional depreciation. Regard must also be had to the fact that Section 10B(1) is essentially concerned with the grant of exemptions to newly established hundred per cent export-oriented undertakings and the deduction of profits and gains derived by such an enterpri....