TaxTMI 
TaxTMI 
2026 (8) TMI 444
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....e as appellant has not gain anything by not filing of appeal within period of limitation. Therefore, delay of 38 days in filing of appeal is condoned. 3. Brief facts of the case are that the assessee company is engaged in business of providing security services, facility management services, HR outsourcing etc. The assessee filed its return of income on 29.12.2022 declaring income of Rs. 1,06,68,311/-. The return was processed u/s. 143(1) of the Act with an adjustment of income to the tune of Rs. 18,13,01,752/-. The only ground being disallowance was on account of claim of deduction u/s. 80JJAA of the Act by ld AO vide order dated 26.07.2023. Against the order dated 26.07.2023 of ld AO, the assessee filed appeal before the ld CIT(A) which was partly allowed vide order dated 30.12.2024. 4. Being aggrieved the Department of Revenue preferred present appeal by raised following grounds:- "1. Whether Ld. CTT(A) is correct in allowing deduction u/s. 80JJA when the ITR was not filed within the time limit prescribed u/s. 80AC(ii) r.w.s. 139(1) of the Act? 2. Whether ITR filed w/s 139(4) can be considered as ITR filed u/s. 139(1) of the Act. 3. Whether the u....
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....of adjustment u/s. 143(1)(a) includes denial of deduction where the return itself is belated, since such defect is apparent from record. • This ruling directly supports the CPC's action and negates the relief granted by CIT(A). 4. Distinction from G.M. Knitting Industries (SC) • The assessee's reliance on CIT v. G.M. Knitting Industries Pvt. Ltd. [2016] 71 taxmann.com 35 (SC) is misplaced. • In that case, the default was purely procedural - non-filing of audit forms (Form 3AA/10CCB) with the return. The return itself was filed within time, and the forms were subsequently filed during assessment proceedings. • In the present case, the defect is substantive belated filing of return itself, which strikes at the eligibility under Section 80AC(ii). • Moreover, the law at that time did not contain the wide mandate inserted by Finance Act, 2018. The later ruling in Wipro Ltd. (SC) now governs the issue, making timely filing u/s. 139(1) a mandatory condition. 5. Doctrine of Strict Compliance for Incentive Provisions • While incentive provisions are to be construed liberally in respect of....
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.... • This distinction has been recognized by the Hon'ble Supreme Court in Pr. CIT v. Wipro Ltd. [2022] 446 ITR 1 (SC), where it was held that the statute requiring filing of return within due date u/s. 139(1) as a condition precedent must be strictly complied with and that filing u/s. 139(4) cannot be treated as compliance. 2. Binding Judicial Precedents • • Pr. CIT v. Wipro Ltd. (SC) (supra): The Apex Court has categorically held that if the statute links deduction to filing within due date u/s. 139(1), such requirement is mandatory. Non-compliance disentitles the assessee. This ratio squarely applies post-Finance Act, 2018. • AA520 Veerappampalayam PACCS Ltd. v. DCIT [2022] 138 taxmann.com 571 (Madras HC): The Hon'ble Madras High Court held that in view of Section 80AC(ii), no claim under Part C of Chapter VIA is admissible in case of a belated return. It further upheld CPC's power u/s. 143(1)(a) to make such adjustment an error apparent from record. • These binding rulings override contrary decisions relied upon by the assessee and the CIT(A), which pertain either to pre-amendment law or to proce....
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....nder Section 143(1)(a), as recognized in AA520 Veerappampalayam PACCS Ltd. (Madras HC, 2022). DR's Contentions for Ground No. 3: 1. Plain Language of the Statute • • Section 80AC(ii), as substituted by the Finance Act, 2018, provides that "no deduction under any provision of this Chapter shall be allowed unless the return of income is furnished by the assessee on or before the due date specified under sub-section (1) of section 139." • The use of the word "shall" denotes a mandatory legislative command, leaving no discretion either to the Assessing Officer or to appellate authorities. • Had the Legislature intended flexibility, it would have used permissive expressions like "may" or provided an enabling clause for condonation of delay. The absence of such relaxation confirms that the condition is imperative and not merely directory. 2. Principles of Statutory Interpretation • • The settled rule of interpretation is that where the Legislature uses the word "shall", particularly in the context of conditions precedent for claiming statutory benefits, the requirement is mandator....
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.... • Reading "shall" as merely directory would defeat this legislative intent and render the amendment nugatory. 6. Doctrine of Strict Compliance for Incentive Provisions • • The Constitution Bench in Commissioner of Customs v. Dilip Kumar & Co. (2018) 9 SCC 1; MANU/SC/0789/2018 has held that in the case of exemption and incentive provisions, conditions prescribed by statute must be strictly complied with. • Hence, compliance with Section 80AC(ii) is mandatory, and no deduction can be allowed if the return is not filed within due date u/s. 139(1). DR's Contentions for Ground No. 4: 1. Legislative Supremacy and Express Statutory Mandate • • Section 80AC(ii), as substituted by the Finance Act, 2018, unequivocally provides that "no deduction under any provision of this Chapter shall be allowed unless the return of income is furnished on or before the due date specified under sub-section (1) of section 139." • The provision is couched in negative language, signifying a clear prohibition. The Legislature has consciously restricted deductions only to cases of timely filin....
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....he Act." 8. In para 8 and 8.1 the ld CIT(A) observed as under:- "8. Aforesaid discussions are summed up as under: (i) The only ground for invoking section 143(1)(a) by the AO, CPC under was that deduction claimed in the return of income by the Appellant is more than the deduction mentioned in the form 10DA. This is based on incorrect appreciation of fact as the claim of deductions per the return of income is INR 18,13,01,752/- as against claim made in form 10DA filed by the Chartered Accountant at Rs. 20,05,79,051/-. Accordingly, such adjustment is incorrect and liable for deletion. (ii) The claim of deduction under section 80JJAA was made by the appellant after the due date of filing of return under section 139(1) but before the prescribed due date of filing of return under section 139(4) of the Act. The legal position has been settled by the courts / Tribunals from time to time that claim of deduction under chapter VI-A made by the return of income filed before due date stipulated under section 139(4) is allowable. Accordingly, the appellant's claim of deduction under section 80JJAA of the Act by filing return of income within the time limit perm....