E-Return of income and E-tax audit report (with original due date as 30.09.13 ) Could be filed electronically by 31.10.13 so as to be deemed as filed within due date u/s 139(1)- board will do well to clarify that the order amount to extension of due date for all purposes including S. 40 and 43B to avoid disputes.

[CA DEV KUMAR KOTHARI]

Order u/s 119 issued by CBDT :

CBDT has issued an order u/s 119 vide file no. F. No. 225/117/ 2013/ ITA.II on 24^th of October, 2013. The operative portion of the same is reproduced below with highlights:

• In exercise of powers conferred under section 119 of the Income tax Act, 1961, the Central Board of direct Taxes, in continuation to order u/s 119 dated 26.09.2013 in F. No. 225/117/2013/ITA.II, hereby directs that in cases where the ‘due date’ of furnishing reports of audit and corresponding income-tax returns was 30^th September, 2013 and where the same are furnished electronically on or before 31^st October, 2013, such reports of audit and returns of income shall be deemed to have been furnished within the due date prescribed under section 139 of the Income-tax Act, 1961.

Applicable conditions are:

Due date should be 30.09.2013.

E-Tax audit report and E- ITR both must be required.

The E-ITR must be corresponding to E-TAR.

E-Tax audit report and E- ITR both must be filed on or before 31.10.2013.

Then it will be deemed that both have been filed within due date that is 30.09.2013.

Deemed timely filing:

This is an order or instruction to tax authorities and not a notification or circular for public. The order has not been issued in public interest for any given reasons of circumstances which require an order or where the Central Government consider it so expedient in public interest to reduce hardships etc.

The order is just some relaxation of conditions laid down in section 139.

From reading of the order, it appears that in the given circumstances, if the e-tax audit report and corresponding e- income-tax return where due date was 30.09.13 are filed on or before 31.10.13, then such e-tax audit report and e-ITR will be deemed to have been filed within due date. Therefore there is a fiction created by the order.

The order must specifically say that the due date will be deemed 31.10.13 or that the due date has been extended in specified cases. However, in absence of such clear language, there is disputable situation.

On plain reading of the Circular, it is debatable that the ‘due date’ has been extended to 31.10.2013. There is only relaxation that the report and return shall be deemed to have been filed within due date u/s 139 (1). Accordingly penalty for late filing will be relaxed.

Therefore, relief will be admissible only in respect of matters which concerns filing of return within due date. That is it will not be deemed that return has been filed late. The assessee will therefore, get benefit of extended period for payment of self assessment tax, no interest will be charged under section 234A if tax is paid on or before 31.10.13.

Benefit of S.43B and 80 :

In this case it is doubtful, whether benefit of carry forward of loss, and allowability of payments made against dues of various sums covered under section 43B will be allowed or not in respect of payment made after 30.09.13 and before 31.10.13.

This is because, benefit of payment is allowed in respect of payments made on or before due date for furnishing the return. The due date remains 30.09.13. As per order of CBDT, the tax authorities are directed to treat return filed on or before 31.10.13 as if filed within due date that is 30.09.13.

Therefore, a doubtful situation remains about applicability of date of 31.10.13 as due date under sections 40 (a) (ia), 43B and also section 80 read with section 139(3) which again requires reading with section 139(1).

Chance can be taken:

As per general understanding of tax payers and general tax practioners, and also as reflected and expressed in various websites, the general impression is that the due date has been extended to 31.10.13.

This view is a likely view and a view in favor of assessee must be adopted.

Accordingly, if return of loss has been filed after 30.09.2013 but before 31.10.13 and then carry forward of loss can be claimed.

Eligible payments under sections 40 (a) (ia), 43B, made after 30.09.13 and before 31.10.13 can also be claimed, if it is beneficial to assessee. Here it can also be said that the claims for payment made after previous year but before due date to file return is an option of the assessee. The assessee can claim in the year of accrual ( in the present consideration previous year ended 31.03.13) against income of assessment year 2013-14 or he can claim in year of actual payment that is previous year ended 31.03.2014 relevant to assessment year 2014.15. Therefore, if an assessee chose to make claim of payment made before due date ( even after 30.09.13 but before 31.10.13) in assessment year 2013-14, then he should not claim the same in assessment year 2014-15 to avoid double claim.

If a return has been filed before 30.09.13, a revised return can also be filed claiming due date as 31.10.13 and claiming benefit of S.43B to claim payments made before 31.10.13.

Clarification is required to avoid disputes and litigation:

It is desirable that the CBDT should clarify that the above order amount to and in reality extend the ‘dude date’ for filing of return of income / loss where e-tax audit report and e- ITR was required to be filed before 30.09.13. And therefore, this order is really meant to extend the due date u/s 139(1) for all purposes.

IN this regard the Board must also have due regard to the general understanding of tax payers and tax practioners so that the provisions of the Act are administered in a generally acceptable manner as per popular understanding.

A pragmatic view is required instead of pedantic view:

As recently held on 08.10.2013 by the Supreme Court in Commissioner of Income-tax v. Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] Assessing Officer is required to be pragmatic and not pedantic and revenue should not pursue litigation which is fruitless (on merits) that too when tax effect is minor/negligible. The Supreme Court also expressed the hope that the Revenue implements its litigation policy a little more practically and a little more seriously.

This is also applicable in relation to instructions and circulars issued by the CBDT. While issuing directions about administration of the Act the board must consider the general or popular understanding of the law and must try to avoid un-necessary litigation.

A claim made in assessment year 2013-14 or in assessment year 2014-15 will not make much difference on revenue in overall context. This is because even for assessment year 2014-15 two installments of advance tax have been paid by companies and one installment by other assessee. There is no difference in rate of tax for two years. Therefore, on this issue disputes must be avoided by revenue and payments made during October 2013 should also make assessee eligible to claim deductions when a payment of relevant sum or TDS thereon can be claimed based on payment within due date.