TaxTMI 
TaxTMI 
2025 (5) TMI 2307
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.... 1961. The deduction was disallowed solely on technical grounds that the Form 10DA was not verified before the due date, without appreciating that the report was uploaded before the due date and verified shortly thereafter 3. The assessee prays your good self-indulgence to add, amend, modify or delete any or all grounds of appeal on or before the date of hearing." 2. The brief facts of the case are that the assessee company filed its return of income on 30.10.2023 declaring total income at Rs. 10,30,96,000/-In its return the assessee claimed Rs. 1,44,412/- as deduction u/s. 80JJA of the Act on account of additional employee cost incurred, but the report to be filed in Form No. 10DA as per Rule 19AB of the Rules was not uploaded/verified alongwith the return and tax audit report uploaded as mentioned (supra). The return of the assessee was processed u/s. 143(1) of the Act vide dated: 27.05.2024 and the claim of the assessee towards section 80JJA of the Act amounting to Rs. 1,44,412/- was disallowed on account of non-furnishing of report in Form No. 10DA. The assessee being aggrieved with the same preferred an appeal before the Ld. Addl./JCIT (A) ....
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....me 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', it is noted 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 (1) of section 139 required to be fulfilled and/or satisfied. Both the conditions are mandatory to be satisfied. 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 the Assessing Officer and to be furnished before the due date of filing the original return of income under subsection (1) of section 139 are same/similar. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an asse....
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....ling 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 Tribunal 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) on non-compliance of the twin conditions as provided under section 10B(8). [Para 14] Our observation : The citation relied upon by the Revenue is distinguishable in facts. The matter in Wipro Ltd. is altogether different on following grounds as under: i). Wipro Ltd. deals with the exemption matter which is being covered by section 10B (8) of the Act falling in chapter III, whereas in the present matter the assessee is claiming deduction u/s. 80JJA of the Act falling in chapter VI-A; ii). In Wipro's case the assessee put forward its claim in the revised return alongwith certain adjustments w.r.t. losses to be set-off and carried forward, whereas in this case there is no matter of revised return and any sort of tax planning/after thought of setting off of ....
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.... of exemption notification published under taxation statutes and in this area also, the decisions are galore. [Para 12] An Act of Parliament/Legislature cannot foresee all types of situations and all types of consequences. It is for the Court to see whether a particular case falls within the broad principles of law enacted by the Legislature. Here, the principles of interpretation of statutes come in handy. In spite of the fact that experts in the field assist in drafting the Acts and Rules, there are many occasions where the language used and the phrases employed in the statute are not perfect. Therefore, Judges and Courts need to interpret the words. [Para 14] In doing so, the principles of interpretation have been evolved in common law. It has also been the practice for the appropriate legislative body to enact Interpretation Acts or General Clauses Act. In all the Acts and Regulations, made either by the Parliament or Legislature, the words and phrases as defined in the General Clauses Act and the principles of interpretation laid down in General Clauses Act are to be necessarily kept in view. If while interpreting a Statutory law, any doubt arises as to the m....
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....ing any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose. Not only that, if the plain construction leads to anomaly and absurdity, the court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. [Para 20] In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision making. Insofar as taxation statutes are concerned, article 265 of the Constitution prohibits the State from extracting tax from the citizens w....
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....t, 'strict interpretation' does not encompass such literalism, which leads to absurdity and goes against the legislative intent. As noted above, if literalism is at the far end of the spectrum, wherein it accepts no implications or inferences, then 'strict interpretation' can be implied to accept some form of essential inferences which literal rule may not accept. [Para 24] The literal rule de hors the strict interpretation is not being suggested, nor one should ignore to ascertain the interplay between 'strict interpretation' and 'literal interpretation'. It needs to be reiterated that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute....
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.... Be that as it is, in our country, at least from 1955, there appears to be a consistent view that if the words in a taxing statute (not exemption clause) are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and it does not matter if the taxpayer escapes the tax net on account of Legislatures' failure to express itself clearly. [Para 28] On consideration of various authorities, it is observed that, it is true to say that there exists unsatisfactory state of law in relation to interpretation of exemption clauses. Various Benches which decided the question of interpretation of taxing statute on one hand and exemption notification on the other, have broadly assumed that the position is well settled in the interpretation of a taxing statute: It is the law that any ambiguity in a taxing statute should ensure to the benefit of the subject/assessee, but any ambiguity in the exemption clause of exemption notification must be conferred in favour of revenue - and such exemption should be allowed to be availed only to those subjects/assessee who demonstrate that a case for exemption squarely falls within the parameters enumerated in ....
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....and justifying a demand. Similar is the case in roping all persons within the tax net, in which event the State is to prove the liability of the persons, as may arise within the strict language of the law. There cannot be any implied concept either in identifying the subject of the tax or person liable to pay tax. That is why it is often said that subject is not to be taxed, unless the words of the statute unambiguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, it is to be reiterated that in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue, the aforesaid conclusions are expounded only as a prelude to better understand jurisprudential basis for the conclusion. [Para 43] The instant case concerns a situation ....
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....sh form 3AA along with the return of income. Admittedly, form 3AA was submitted during the course of assessment proceedings and it is not in dispute that the assessee is entitled to the additional depreciation. In these circumstances, in the light of the judgment of this Court in the case of Commissioner of Income Tax v. Shivanand Electronics [1994] 209 ITR 63 (Bom.), 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 3AA 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. Our observation : Certainly, the judicial pronouncement is in favour of the assessee and also matches with the facts of the case. Specifically, considering the judicial pronouncement in the case of [1973] 88 ITR 192 (SC)Commissioner of Income-tax vs. Vegetable Products Ltd., wherein the Hon'ble Court has held as under and consistently being followed by all the forums including Hon'ble High Co....
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....ssee under the provisional assessment under section 23B of the 1922 Act, was to be deducted from the amount of tax determined under section 23(2) of that Act in order to determine the amount of tax on which the computation of the penalty was to be based and in reducing the amount of the penalty imposed on the assessee. 5. Further, the Hon'ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer v. CIT [2023] 157 taxmann.com 550, while dealing with similar issue held that although the requirement of furnishing report was mandatory, filing thereof is a procedural aspect. Once, it is seen that the audit report, in Form 10B was available with the Assessing Officer at the time of framing of assessment, even though the same may not have been filed along with the return of income, the assessee is entitled to claim of exemption under section 11(1) and 11(2). Accordingly, looking into the instant facts, and the decisions of the Hon'ble Apex Court in the case of G.M. Knitting Industries Pvt. Ltd. and the decision by Hon'ble Gujarat High Court referred to above, it is viewed that the claim of the assessee/appellant for deduction under section 80JJA cannot be deni....