TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1095
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.... 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 26.11.2020, the CPC issued an intimation under ....
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....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(Guj.)], It is vehemently argued that once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. 11.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 correctly determining the tax liability and the CPC ought not to have taken such hyper technical approa....
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.... 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 or revised return. It is important to note that Section 80A(5) only uses the word return of income and does not restrict it to a particular return. Hence,....
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....ditions 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 Chapter VIA and the same deals with 'Deductions' and thus, the High Court held that exemption and deduction provisions cannot be interpreted with similitude. 24. Further, in the following judicial precedents, the Hon'ble Courts ha....
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.... 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)] * Kumaon Exports Pvt. Ltd. v. DCIT [ITA No. 39/Del/2024)] * Aprameya Engineering Ltd. v. ITO [(2024) 164 taxmann.com 740 (Ahmedabad- Trib.)] * Jeans Knit (P.) Ltd. v. DCIT [(2022) 138 taxmann.com 480 (Bangalore-Trib.)] * Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha Maryadit v. Income-tax Officer [(2023) ....
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....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. ii) In terms of third proviso to section 147, the income in respect of matters which are subject matter of appeal cannot be reassessed. In support of the first objection, the assessee has relied upon various case laws. 3. The objections raised have been considered and are disposed off as under. i) The assessment u/s 143(3) of the Act for the year under consideration was made on 29.02.2016. Rule 12 o....
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....ave 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 Rules 2013 Amendment which is assailed by way of the present writ petitions. 6. Appearing for the writ petitioner, Mr. Sethi, learned counsel, contended that undisputedly in AYs 2013-14 and 2014-15, Form 10CCB and which were referable to Section 80-IA(7), were manually submitted before the AO on 12 February 2016 and 28 October 2016 respectively and thus prior to the finalization of the assessment proceedings. Mr. Sethi submitted this in light of the undisput....
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.... 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 is not mandatory but directory and that if the Audit Report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met." 8. Mr. Sethi also drew our attention to the statutory scheme as it existed originally and as it underwent amendments over time. Learned counsel pointed out that Section 80-IA(7) as existing in AYs 2013-14 and 2014-15 read as under: "(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissi....
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....b-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 explained by Mr. Sethi who drew our attention to the following extracts from the Memorandum explaining the provisions of the Finance Bill, 2020: "Further, to enable pre-filing of returns in case of persons having income from business or profession, it is required that the tax Audit Report may be furnished by the said assessee's at least one month prior to the due date of ling of return of income. This requires amendments in all the sections of the Act which mandates filing of Audit Report along with the return of income or by the due date of filing of return of income. Thus, provi....
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....de 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 Tax & Ors.7 16. It becomes pertinent to note that in Associated Chambers, we were called upon to examine whether reassessment would be justified in a case where an assessee had erred in digitally uploading Form 10 in accordance with the requirements of Section 11(2)(a) and (c) of the Act read along with Rule 17(3) of the 1962 Rules. While dealing with the aforesaid issue, we had observed as follows: "27. More fundamentally, we note that the action for reassessment is not founded on income liable to tax having escaped assessment. The respondents also do not question the acceptance of the accumulation....
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....urt 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 that the wording of the Section 10B(8) is very clear and unambiguous. For claiming the benefit under Section 10B(8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section 2022 SCC OnLine SC 831 2015 SCC OnLine SC 1015 (1) of section 139 of the IT Act are required to be fulfilled and/or satisfied. In our view, both the conditions to be satisfied are mandatory. It cannot be said that one of the conditions would be mandatory and the other would be directory, where the words used for furnishing the declaration to t....
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....e 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 filing of a return under section 139(1), as a check has been put in place by virtue of section 10B(5) to verify the correctness of claim of deduction at the time of filing the return. If an assessee claims an exemption under the Act by virtue of Section 10B, then the correctness of claim has already been verified under section 10B(5). Therefore, if the claim is withdrawn post the date of filing of return, the accountant's report under section 10B(5) would become falsified and would stand to be nullified. 41. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries Pvt. Ltd. (supra), relied upon by the learned couns....
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....B(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 satisfied and both are mandatorily to be complied with. Accordingly, the question of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under Section 10B(8) of the IT Act on non-compliance of the twin conditions as provided under Section 10B(8) of the IT Act, as observed hereinabove. The present Appeal is accordingly Allowed. However, in the facts and circumstances of the case, there shall be no order as to costs." It is the aforenoted rival submissions which fall for determination. 19. We at the outset note that alt....
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....y 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 of the provisions of Section 149 as it existed at the relevant time. The reassessment action, insofar as AY 2013-14 is concerned, being beyond the maximum window of six years would thus falter and fail on this score additionally. 23. That takes us to the principal question and concerning the legal requirements flowing from Section 80-IA read along with Rule 12. We find that insofar as the directory nature of Section 80-IA(7) is concerned, the same stands conclusively answered by this Court in Contimeters Electricals, and the aforesaid position having been followed consistently by various other High Courts. We thus find no justification to tread down a different path or deviate from a position in law which has clearly held the fiel....
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....ed 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 "Deductions in respect of certain payments" that an assessee may factor in while computing total income. Thus, we at a foundational plane, find ourselves unable to either place Sections 10B and 80-IA on an even pedestal nor hold that exemption and deduction provisions must be interpreted with similitude. 29. We also bear in mind the indubitable fact that Section 10B(8) is clearly couched in terms more imperative than Section 80-IA(7). This becomes manifest from a reading of that provision and which requires the assessee to furnish a declaration before the AO that it chooses not to be assessed in accordance with that provision and the said declaration being liable to be furnished before the due date for furnishing of a Return of Income under Section 139(1). This requirement has alw....
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....vision 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 enterprise. Sub-section (8) thereof enables an assessee to opt out of the exemption provisions contained therein subject to a requisite declaration being submitted. Since such a declaration would have an immediate and indelible bearing on the assessment of the Return of Income itself, it would clearly be liable to be viewed as a mandatory requirement warranting such a declaration being made at the outset itself and the statutory prescriptions made in that regard being liable to be strictly adhered to. 32. The aforesaid position may be contrasted with Section 80-IA(7), and which is principally concerned with deductions that may be claimed and the Audit Report being made available for examination by the AO. In these writ petitions, we are in any case concerned solely with whether a failure to digitally upload the Audit Repo....