TMI Blog1992 (9) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... claim was raised to Rs. 48,71,332 on account of investment deposit scheme under section 32AB of the Act. No such revised return was filed for the assessment year 1990-91. The assessee had made a claim of Rs. 61,65,904 for the year concerned under section 32AB of the Act. 9. Before we enter into any discussion regarding the claim of the assessee under section 32A or 32AB, it would be better to find out the difference between the provisions of section 32A and the provisions of section 32AB of the Act. 10. The scheme provided under section 32AB differs from the provisions of section 32A regarding the investment allowance as under : (a) The provisions of the investment allowance apply to only those assessee--- (i) who purchase a ship or aircraft, which is first put to use in the business of the assessee ; or (ii) who install new machinery or plant in an industrial undertaking for the purposes only of business of construction, manufacture or production of any article or thing not specified in the Eleventh Schedule to the Income-tax Act. In the case of small scale industrial undertaking, this benefit is not denied even if such an undertaking produces a non-priority item liste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any brought forward from earlier year is set off under section 72 (vide amendment made by the Finance Act, 1987). It is notable that such deduction is not to be allowed to any partners, or members, or any assessee firm or AOP or BOI. (e) Under section 32AB, the deduction is not admissible unless the accounts of the business or profession of the assessee other than a company or a co-operative society have been audited by an accountant and the assessee furnishes along with the return of income, the report of such audit in the prescribed Form No. 3AA duly signed and verified by such an accountant. No such audit report is required as condition for availing of the benefit of the existing investment allowance. (f) Subject to the fulfilment of the required conditions, the benefit of investment allowance continues to be available if the sale or transfer of the ship or aircraft or plant and machinery is made as per a scheme of amalgamation. Under the provisions of section 32AB such deductions are not allowable perhaps because in India, such amalgamations usually arise infrequently. 11. Under section 32AB, it has been provided that the deposit with the Development Bank or the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 32A on plant and machinery worth Rs. 75,59,703. He found that in the financial year 1989-90 relevant to the assessment year 1990-91, the investment in the plant and machinery worth Rs. 1.2 crores were made. Further heavy Investments were required to be made to the tune of Rs. 82,000 crores. The Assessing Officer found that no audit report as required under section 32AB was filed along with the original return. He also held that there was no question of inadvertently making claim under section 32AB. He held that the mistake of not claiming the deduction under section 32AB in the original return was not an inadvertent mistake and, moreover, no revised return could have been legally filed in this case. Regarding the Board's Circular, in this regard the Assessing Officer observed that where the assessee, intentionally, claims relief under one section and afterwards because of certain changes finds it more beneficial to claim some other relief under some other section, will not be covered by the Board's circular. In view of the above facts, he held that the assessee was not entitled to file any revised return and claim relief under section 32AB instead of under section 32A a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as required under section 32AB in Form No. 3AA of the IT Rules, the assessee clearly showed his intention of claming the deduction under section 32AB of the Act. However, due to over-sight, the assessee computed the allowance only under section 32A of the Act. It was submitted that this was an error and omission on the part of the assessee and as such, the assessee could file a revised return under section 139(5) of the Act. 17. The Counsel further proceeded to submit that there are conflicting decisions of the various High Courts with regard to filing of return under section 139(5) in the cases where the original return was filed under section 139(4). Our attention was invited to the following decisions : (i) O. P. Malhotra v. CIT [1981] 129 ITR 379 (Delhi) ; (ii) Dr. S. B. Bhargava v. CIT [1982] 136 ITR 559 (All.) ; (iii) CIT v. Shah Bros. [1988] 171 ITR 19 (Raj.) ; and (iv) Kumar Jagadish Chandra Sinha v. CIT [ 1982] 137 ITR 722 (Cal.). It was submitted that this hyper-technical view should not be resorted by the revenue in denying the benefit to the assessee. Inviting our attention to pages 3348 and 3349 of the 4th Edition, 3rd Vol. of Chaturvedi and Pithisaria's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was, however, submitted that under section 32A(8C), there was no bar for the assessee for making claim under section 32AB. Inviting our attention to the Board's letter No. F. No. 81/27/65-IT(B) dated 18-5-1965, it was submitted that the Officers of the department must not take advantage of ignorance of an assessee as to his rights. It was submitted that it was the duty of the officer to assist a taxpayer in every reasonable way particularly in the matter of claiming and securing reliefs. It was submitted that as per that letter, it was the duty of the Assessing Officer to invite the attention of the assessee to any relief to which the assessee was clearly entitled but which he had omitted to claim for some reason or other. It was submitted that when the return of income was filed by the assessee, when the Assessing Officer found that the audit report in Form No. 3AA was available then it was his duty to inform the assessee about the provisions of section 32AB and to have allowed the claim of the assessee accordingly. It was submitted that the intention of the Board's circular is clearly available in para 6 of the said letter. It was submitted that the intention of the said cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court held that the deduction could be allowed from the income from other sources of certain items though not claimed by the assessee. It was submitted that on page 356 of the same case, it was held that there was a duty on the part of the ITO to consider whether the assessee was entitled to a deduction from the income from other source though no such specific claim was made by the assessee. It was submitted that the jurisdiction of the ITO to compute the total income which could be brought to tax in accordance with law, because if, in fact, and in law, the assessee was entitled to a deduction which would have ultimately affected his or her total income, the assessee could not be assessed on larger income. It was, therefore, submitted that the fact that the assessee had submitted the audit report in Form No. 3AA along with the original return shows that the assessee wanted to make this claim but due to over-sight, claimed the deduction under section 32A. It was also submitted that as this was an error on the part of the assessee, he rectified the same by filing the revised claim under section 139(5) of the Act. It was submitted that this was the claim made by the assessee whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. Our attention was invited to the commentary of learned authors Chaturvedi and Pithisaria on Income-tax Law, 4th edition, 3rd Vol. on pages 3348-3349 and it was submitted since under the provisions of new section 143(1), an assessment is not to be made now, the provisions of sub-sections (2) and (3) of section 143 have been recast and are entirely different from the old provisions. A notice under section 143 (2) will be issued only in cases fixed for scrutiny. He particularly invited our attention to the following observations of the learned authors :--- " This means that, under the new provisions, in an assessment order passed under section 143(3) in a scrutiny case, neither the income can be assessed at a figure higher than the returned loss, nor a further refund can be given except what was due on the basis of the returned income, and which would have already been allowed under the provisions of section 143(1)(a)(ii). " Our attention was further invited to para 5.14 of the same page of the Commentary to submit that since an assessment completed under section 143(3), neither the returned income could be assessed at lower figure nor can a further refund be granted, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the provisions of section 32AB amounted to Rs. 48,71,375. It was submitted that the claim of the assessee was always available to the Assessing Officer. It was, therefore, submitted that on the basis of these documents which were already available along with the original return, there was a clear omission on the part of the assessee to specifically claim the deduction under section 32AB ; the assessee, therefore, exercised his option to make the claim on revised basis. Our attention was invited to section 139(5) to submit that if any person having furnished return under section 139(1) or in pursuance of a notice issued under section 142(1) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of the one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. It was submitted that in view of the decision of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. (P.) Ltd [1970] 77 ITR 518, any return filed under section 139(4) is a return under section 139(1) and as such, can be revised under section 139(5). It was submitted that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sector. The new scheme should also help to neutralise the bias in favour of borrowings and needless capacity creation. From the above discussion it is clear that the provisions of section 32AB as compared to section 32A were brought in with a specific purpose of allowing the assessee proper incentive to reduce the premium on spending. It is clear that the provisions of section 32AB was considered as more beneficial to the national economy and to the corporate sector. We are, therefore, of the opinion that unless it is impossible to do so, the provision of law should be interpretated in such a way that it encourages the growth of industry as envisaged in long term financial policy. It was started by the Government of India in 1986. 22. Now the finding given by the CIT (Appeals) that the audit report of the assessee was filed along with the return in Form No. 3AA as prescribed under Rule 5 of the Income-tax Rules is undisputed. When the return was filed along with the full compliances of the terms and conditions prescribed under section 32AB of the Act, and under item No. 13 of Part III of such report, a figure of benefit available to the assessee under section 32AB was given whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee may be treated as a return filed under section 139(4) itself. However, as we have observed above, the Assessing Officer was duty bound to allow the assessee necessary relief under section 32AB of the Act compared to the claim of the assessee under section 32A as the figure of allowance under section 32AB was available with him at the time of passing of the order under section 143(1)(a) and even later on under section 143(3). The Assessing Officer was bound to invite the attention of the assessee to the higher deduction under section 32AB of the Act. This is particularly true because the assessee had complied with all other conditions prescribed under section 32AB read with Rule 5 and Form No. 3AA of the Income-tax Rules. 23. Though the learned Departmental Representative advanced an argument, which on the face of it, looks very forceful that once the intimation under section 143(1)(a) was sent to the assessee, then the assessee could not always expect issue of notice under section 143 (2) and hence could not expect to file a revised return still fact remains that in this case a notice under section 143(2) was issued. Once a notice under section 143(2) was issued then the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this adjustment could be made on the basis of the information available in the return or the documents accompanied with the return. The documents with return included the audit report as prescribed under section 32AB of the Income-tax Act read with rule 5AB and Form No. 3AA of the Income-tax Rules. The document in item No. 13 of Part III clearly mentions that the amount of deduction permissible in accordance with the provisions of section 32AB. Thus, we are of the opinion that at the time when the Assessing Officer made adjustment under section 143(1)(a), he was duty bound to allow the assessee this relief in respect of the deduction under section 32AB instead of deduction under section 32A of the Act. Various decisions quoted by the assessee's counsel and the Departmental Representative need not be repeated here. The decision of the ITAT Delhi Bench in Smt. Sheila Jauhar's case is passed on the basis of the Delhi High Court decision which was binding on the Bench. We have no such binding decision of the jurisdictional High Court. We have also held that as provisions of section 32AB were more beneficial to the assessee and as all the details were available in the return itself, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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