TaxTMI 
TaxTMI 
2024 (10) TMI 1839
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....w, the Ld. Commissioner of Income tax (Appeals) [Ld. CIT(A)] has erred in not admitting the claim of deduction u/s 80JJAA of Rs 35,78,377/-, which was raised in the grounds of appeal filed before him. 2. That the non-allowance of said claim of deduction u/s 80JJAA of Rs Rs 35,78,377/- by the Ld. CIT(A) is against the provisions of the Act, CBDT Circular and the judicial precedents in this regard. 3. That on facts and in law, the Ld.CIT (A) has erred in not allowing deduction as claimed u/s 80JJAA of Rs Rs 35,78,377/-. The said deduction is allowable in toto including as per prescribed auditor's certificates. 4. That the grounds of Appeal as herein are without prejudice to each other. 5. That the appellant respectfully craves leave to add, amend, alter and/or forego any ground(s) at or before the time of hearing." 3. Grounds no. 4 &5 are general in nature, need no specific adjudication. 4. The solitary effective ground raised in grounds no. 1 to 3 is against disallowance of deduction claimed u/s 80 JJAA of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), at Rs. 35,78,377/- claimed to have been made during the course of ap....
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.... judicial precedents in this regard. FACTS Reference to CIT (A) Order [Para 7 to 11 at Pages 3 to 7] 1.1 Return was filed on 30.09.2011 declaring taxable income of Rs. 14,07,59,581/- Assessment was made u/s 143(3) vide assessment order dated 03.03.2015 assessing the income as returned at Rs. 14,07,59,581/-. 1.2 In appeal before the Ld. CIT(A), for the first time, the Appellant raised a claim of deduction u/s 80JJAA for Rs. 35,78,377/- as per the original grounds of appeal. 1.3 Deduction u/s 80JJAA relates to employment of new employees in Factories and was introduced to incentivize the employment in the country. As per the provisions of section 80JJAA applicable in this year, an assessee was entitled to deduction of 30% of eligible amount in 3 assessment years including the eligible year. To claim the deduction, sub section (2) of section 80JJAA prescribed certain conditions both in respect of substantive and procedural compliances. Towards procedural compliance, a report of the accountant in prescribed Form 10DA was required to be furnished alongwith the return of income. 1.4 Before the Ld. CIT(A), in support of its cl....
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....cular being Circular No: 14 (XL-35) dated April 11, 1955 which states as under: "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." 2.1.2 The above circular has been judicially noted an....
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....ties in a civil litigation. Appellate Tribunal is competent to pass such orders on the appeal, as it thinks fit and it would be the duty of the Tribunal to decide all questions on fact and law before it. 2.3 The task of an appellate authority under the taxing statute, especially a non- departmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provisions governing his assessment. Since be-all and end-all of the statutory provisions, especially those relating to the administration and management of income tax is to ascertain the taxpayer's liability correctly to the last pie, if it were possible. The various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a lis or dispute as arises between two parties in a civil litigation. We may also humbly submit that it is the duty of the assessing officer to compute the correct taxable income and not only the income as returned by assessee. In this regard please refer the decision of Hon'ble High Court at Madras in the case of S.P.....
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.....03.2015. As such, it is submitted that the Appellant was prevented by sufficient cause in not claiming the subject deduction in the return as well as during assessment proceedings. 3.2 As borne out from the judicial precedents mentioned herein above, it is trite law that claims available under law to compute correct taxable income if not taken in the return or during assessment proceedings the same can be raised before the Appellate Authorities. In view of above stated facts and legal position it is submitted that the claim of the appellant of deduction u/s 80JJAA if not to be considered on merits, authorities below be directed to admit and decide the same in accordance with law. Rebuttal of findings of the Ld. CIT(A) 4. As regards basis of rejection of the claim by the Ld. CIT(A) it is submitted as under. 4.1 As regards the claim not based on any change in law post assessment, it is submitted that change in law post return or assessment is not the only reason for accepting a new claim during appellate proceedings. As per judicial precedents including that of Jute Corporation (supra), this may be one of the reasons for admitting the new claim. A....
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....which it was passed. Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the noncompliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, t....
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....all be nil if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such undertaking as on the last day of the preceding year, (ii) "regular workman", does not include- (a) a casual workman; or (b) a workman employed through contract labour, or (c) any other workman employed for a period of less than three hundred days during the previous year, (iii) "workman" shall have the meaning assigned to it in clause (s) of section 2of the Industrial Disputes Act, 1947 (14 of 1947).] UNQUOTE 4.3.2 As may be seen from the provisions of section 80JJAA and the Memorandum explaining the Finance (No. 2) Bill, 1998, the same was introduced as a measure of tax incentive for encouraging employment. Relevant part of Memorandum explaining the Finance (No. 2) Act 1998 is reproduced hereunder: "The existing provisions of the Income-tax Act provide various fiscal concessions to spur growth of business and industry. The country is faced with problems relating to lack of employment opportunities. In order to encourage the employers to further generate ....
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.... needed, reliance is placed on following judicial precedents amongst others: Commissioner of Income Tax Vs. G.M. Knitting Industries (P) Ltd. [2015] 376 ITR 456 (SC) In this case, issue was regarding claim of additional depreciation u/s 32(1)(iia) of the Act. As per proviso to clause (iia) of section 32(1) as it stood prior to amendment by Finance Act 2005 w.e.f.1.4.2006, an Accountant certificate, in Form 3AA, certifying particulars of claim was required to be filed alongwith the return of income. Additional depreciation was denied to the assessee on the ground that the assessee has failed to furnish form 3AA along with the return of income. However, claim of the assessee was accepted by the ITAT and the order of the ITAT was confirmed by the High Court. Hon'ble Supreme Court, while confirming the order of the High Court held as under: ":1. It would be suffice to reproduce para 2 of the impugned order whereby action of Income Tax Appellate Tribunal was held to be justified in allowing additional depreciation as claimed by the respondent-assessee herein: "Additional depreciation is denied to the assessee on the ground that the assessee has fa....
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....as held that filing of audit report under section 32AB(1)/(5) along with return is not mandatory. A part of the statute has to be construed with reference to the context. Whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The intention of the Legislature is to be ascertained not only from the phraseology of the provision but also by considering its nature, its design and the consequences that would follow from construing it one way or the other. The word "shall" in a statutory provision though generally taken in a mandatory sense, but that does not necessarily mean that in every case it shall have that effect that the statute are to be punctiliously followed and in default the proceeding would be invalid. 4.4 Reliance by Ld. CIT(A) on the decisions of Hon'ble Supreme Court in the case of Jute Corporation (supra) and Gurjargravures Pvt. Ltd. (supra) is totally misplaced considering the earlier and subsequent larger Bench decisions of the Supreme Court. 4.4.1 In the case of Jute Corporation (supra) which is a subsequent decision of larger Bench, Hon'ble Supreme Cour....
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....as left to be claimed earlier because of good reasons as explained above. The bonafide of the assessee's claim is also borne out from the fact that in subsequent years where such claim of deduction u/s 80JJAA was made in return of income, in all such years, the said claim has always been accepted in assessment u/s 143(3) without any adverse inference. Accordingly, it is humbly prayed that the claim of the Appellant under section 80JJAA of the Act if not allowed, Ld. CIT(A) may please be directed to admit and decide the same. Ground No. 3 6. This Ground relates to non-allowance of deduction of Rs.35,78,377/- claimed u/s 80JJAA. Specific Ground reads as under: 3. That on facts and in law, the Ld. CIT(A) has erred in not allowing deduction as claimed u/s 30JJAA of Rs. 35,78,377/-. The said deduction is allowable in toto including as per prescribed auditor's certificates. 6.1 This ground is subject to decision on Ground No. 1 & 2 herein above which relates to admissibility of claim of deduction u/s 80JJAA. Regarding various conditions required to be fulfilled for claiming the subject deduction, it is submitted that the prescribed certificates....
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....almukund Acharya v. Dy.CIT 310 ITR 310(Bom.) d) Nirmala L. Mehta v. A. Balasubramaniam, CIT [2004] 269 ITR 1 (Bom.) [B] Powers of the CIT(A) are coterminous with that of the Assessing Officer and any admissible claim if not made before the AO can be made before the CIT(A) a) Jute Corporation of India Ltd Vs CIT (1990) 187 ITR 688 (SC) b) CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) [C] Under the taxing statute, various provisions relating to appeals can hardly be equated to a dispute as arises between two parties in a civil litigation. Appellate Tribunal is competent to pass such orders on the appeal, as it thinks fit and it would be the duty of the Tribunal to decide all questions on fact and law before it. S.P. Spinning Mills (P.) Ltd. v. ACIT, [2021] 124 taxmann.com 596 (Mad). [D] Provisions in the Act for entitlement of an exemption and deduction are mandatory which require strict interpretation in favour of revenue whereas procedural provisions being directory require liberal interpretation in favour of subject. A Deduction/Allowance cannot be denied merely on failure of the assessee to file the pre....
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.... Wipro's case. 3. As stated above, the issue involved in the case of Wipro related to interpretation of sec. 10B (Under Chapter III) which is an exemption provision whereas the issue in the case of the appellant relate to sec. 80JJAA (Under Chapter VIA) which is a deduction provision. Mechanism provided under both chapters is different. 4. In the case of Wipro while distinguishing the case of Hon'ble Supreme Court in the case of CIT v. G M Knitting Industries relied by assesse, revenue itself contended that exemption provisions and deduction provisions operate on different fields. Relevant portion of the Para 3.8 is reproduced hereunder: 3.9 It is next contended that there is a clear distinction between the provisions seeking exemption and the provisions for deduction. That Chapter III of the IT Act deals with exemptions. However, Chapter VIA deals with deductions. That section 10B of the IT Act is an exemption provision and the condition for seeking an exemption is required to be complied with strictly with the provision. G.M Knitting (SC) on facts involves filing of audit report before AO i.e. after filing of ITR for the following: ....
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....1) of section 139 are same/similar. ...... . However, in section 80JJAA, not only multiple conditions are provided separately, words used in each condition are different. [2017] 80 taxmann.com327 (Delhi) - Nath Brothers Exim International Ltd. V. Union of India Case relied by DR - Distinguished 1. The case of Nath Brothers (supra) being relied by the Ld. AR is distinguishable on facts and law from the facts of the assessee in this appeal before the Hon'ble Bench. 1.1 Rather the case of the assessee here is covered by the decision of the jurisdictional High Court at Delhi in the case of International Tractors Ltd. V. DCIT, (2021] 127 taxmann.com 822 (Del.) wherein, as in the case of assessee here, deduction u/s 80JJAA was not claimed in the return of income but was claimed during assessment proceedings. The claim of assessee was upheld by the CIT(A) as well as by the ITAT and the High Court. Copy of said decision filed on earlier date of hearing is again being attached as Annexure-A 2. It is settled law that a judgement is an authority on the facts of the case and the issue decided therein. Please refer CIT Vs Sun Engineering....
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....roceedings, such a claim has to be allowed. In view of the foregoing discussion, I am satisfied that the authorities below were not justified in rejecting the assessee's claim of deduction u/s 80P only on the ground that such a claim was not made in the return but during the course of assessment proceedings The impugned order is ergo set aside and the matter is remitted to the file of the AO for examining the claim of deduction u/s 80P on merits." [Bold & Underlining Ours] 5. Further, in the case of Nath Brothers, the issue was regarding denial of exemption u/s 10B which falls under Chapter III relating to exemption provisions. However, the case of assessee here relates to deduction u/s 80JJAA which falls under Chapter VI relating to deduction provisions which cannot be equated with mechanism provided under Chapter III .. In the case of Krushi Vibhag (supra) Hon'ble ITAT while distinguishing the decision of Hon'ble Supreme Court in the case of Wipro Limited [2012] 140 taxmann.com 223(SC), also relied by Ld. DR here. held that in WIPRO case Hon'ble Supreme Court has categorically held that Chapter III and Chapter VI of the Act operate in di....
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....escribed. No satisfactory reasons were given by the assessee for not making such compliance of the mandatory requirement. 8.2 The learned CIT(Appeals) without going into the issue whether the assessee is eligible for such deduction rejected its request for allowing the claim of deduction u/s 80JJAA of the Act purely on the basis that the report of the accountant as envisaged under the provisions was not furnished by the assessee within the time as prescribed under law. Moreover, no such claim was made before the AO. The assessee in its objections placed reliance on the judgment of the Hon'ble Delhi High Court rendered in the case of International Tractor Ltd. v. DCIT [2021] 435 ITR 85 (Delhi), wherein the Hon'ble High Court under identical facts has held as under: "14. Therefore, to our minds, once the Tribunal accepted the view taken by the CIT(A) that it could entertain fresh claims; a view which the CIT(A) has expressed in paragraph 6.6.2 of its order, all that the Tribunal was required to examine was: as to whether the CIT(A) had, scrupulously, verified the material placed before it before allowing deductions claimed by the assessee. The Tribunal, however, i....
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....991) 187 ITR 688 (SC) and held that the appellate forum could have entertained and decided the said aspect. The decision in the case of Goetze (India) Ltd. (supra) is distinguishable. In the said case the assessee had filed the return of income for the Assessment Year 1995- 96 on 30-11-1995. Thereafter, on 12-1-1998, the assessee wrote a letter to the Assessing Officer and made a new claim for a deduction, which was rejected by the Assessing Officer as there is no provision to amend the return. The Supreme Court further clarified that the issue raised in Goetze (India) Ltd. (supra) was limited to the power of assessing authority and did not impinge on the power of the tribunal as was in the case of National Thermal Power Ltd. (supra). In the present case also the appellate forum had entertained the claim made by the respondent-assessee and allowed the same. There is no dispute that the claim/deduction towards the expense is otherwise correct and allowable." Conclusion: 17. Therefore, in our view, the judgment of the Tribunal deserves to be set aside. The fresh claims made by the assessee, as allowed by the CIT(A), will have to be sustained. It is ordered according....
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.... of the Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. Vs CIT (1990) 187 ITR 688 and CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 as per which the power of the Appellate Commissioner is co-terminus with that of the ITO and there is no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. 4. That on facts and in law, the Ld. CIT (A) has erred in not allowing deduction as claimed u/s 80JJAA of Rs 42,64,264/-. The said deduction is allowable in toto including as per prescribed auditor's certificates. 5. That the grounds of Appeal as herein are without prejudice to each other. 6. That the appellant respectfully craves leave to add, amend, alter and/or forego any ground(s) at or before the time of hearing." 11. Grounds no. 5 & 6 are general in nature, need no specific adjudication. 12. The only effective issue for adjudication raised in grounds no. 1 to 4 is against disallowing the deduction claimed u/s 80 JJAA of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), at Rs. 42,64,264/- claimed to have been made during the course of a....
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....is claim was first time made during the appellate proceedings, which was rejected by Ld. CIT(A) vide order dated 31.01.2017. In the said order, Ld. CIT(A) has analyzed the relevant facts and legal provisions while examining the claim of appellant, which are applicable to this year also. Being the identical facts, the observations made by Ld. CIT(A) for A.Y. 2011-12 are applied to this year also and, therefore, claim of appellant is rejected. In the said appellate order, Ld. CIT(A) has followed the ratios as laid down by Hon'ble Supreme Court in the cases of Jute Corporation of India Ltd and in Gurajargeravures Pvt. Ltd while rejecting the claim of the appellant. However, recently in the case of Commissioner of Customs (Import), Mumbai vs. M/s. Dilip Kumar & Co. and Ors (CA No. 3327 of 2017), by overruling the earlier decision in the case of Sun Export Corporation, Bombay vs. Collector of Customs, Bombay, Hon'ble Court has held that the 'exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification'. It has been fur....