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TMI Blog2013 (11) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, in brief, are discussed as under: 3.1 The assessee is engaged in the construction and real estate business. The assessee's premise was subjected to a survey u/s 133A of the Act on 4.1.2008. For the assessment year under consideration, according to the AO, the assessee had not filed its return of income as on the date of survey. Accordingly, a notice u/s 148 of the Act was served on the assessee on 17.2.2009, requiring the assessee to furnish its return of income. In compliance thereto, the assessee had furnished its return of income for the Assessment Year 2007-08 on 16.4.2009, admitting 'Nil' income after claiming deduction of Rs.1,98,02,225/- u/s 80IB of the Act. According to the AO, during the period under consideration, the assessee had offered income only from a residential project, styled, 'Solitaire' at Marthahalli, for which, deduction u/s 80 IB (10) of the Act was claimed. There was also another project called 'Vanshree Towers', at Marthahalli, for which, no income was, however, offered. After having verified the submission made by the assessee during the course of assessment proceedings, the AO had concluded the assessment, determining the assessee's income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B (10) of the Income-tax Act, 1961. According to the assessee, the alleged non-filing of return u/s 139(1) of the Income-tax Act, 1961is only technical flaw which does not debar the assessee company from claiming deduction u/s 80IB (10) of the Income-tax Act, 1961. I am not inclined to accept the submission of the assessee company that it is eligible for deduction u/s 80IB (10) of the Income-tax Act, 1961 because the condition as stipulated in section 80AC of the Income-tax Act, 1961, namely, filing of returns on or before due date as specified u/s 139 (1) of the Incometax Act, 1961 has not been complied with in the case of the assessee. Section 80AC of the Income-tax Act, 1961 stipulates that the assessee must file the return of income on or before the due date specified u/s 139 (1) of the Income-tax Act, 1961 in order to claim deduction u/s 80IB (10) of the Income-tax Act, 1961. It does not say that this condition can be waived in a case where the assessee is not under legal obligation to file the return of income u/s 139 (1) of the Income-tax Act, 1961. in other words, in order to claim deduction u/s 80IB (10) of the Income-tax Act, 1961an assessee is obliged to file the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue; that the jurisdiction cannot be invoked if the order passed by the AO was erroneous for any other reason or on any other ground; and that the jurisdiction cannot be invoked even if the order of the AO was erroneous but not prejudicial to the interests of the revenue; (iii) that actual prejudice or likelihood of prejudice to the revenue must be clearly established; that there was no question of any prejudice or likelihood of prejudice to the revenue in carrying out the provisions of the Act. Revenue is a creature of the Statute and a statutory body or authority has to act within the four corners of the Statute creating it, otherwise, any of its acts would be ultra virus. In the present case, the assessee had claimed the benefit of deduction legitimately available to it u/s 80 IB of the Act and, therefore, no prejudice was caused to the revenue; (iv) As ruled by the Hon'ble Supreme Court in the case of Malabar Industrial Company v. CIT reported in 243 ITR 83 (SC), the CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interest of revenue. If one of them is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue or where two views are possible and where AO has taken one of the views with which the CIT does not agree, it cannot be treated as the erroneous order prejudicial to the interest of revenue, unless the view taken by the AO is unsustainable in law; (c) the provisions of the Act relating to exemption, allowance and deduction, rebate or relief should be interpreted liberally and broadly. Moreover, the provision contained in section 80AC as regards the time limit for filing the return of income is directory but not mandatory in view of the aforesaid provisions of the Act permitting relaxation of time limit for filing the return; (d) the time limit for filing the return of income is neither inflexible nor inelastic. The question that arises, therefore, for consideration as regards the allowance of deduction u/s 80IB of the Act is whether the provisions of section 80IB are applicable to the assessee or whether the assessee falls within the ambit of the deduction u/s 80IB but not the time limit for filing the return of income as mentioned in section 80AC of the Act. 4.2. On the other hand, the learned D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction u/s 80IB despite the fact that the return was belated. There was thus incorrect assumption of facts and application of law which would satisfy the requirement of the order being erroneous. There was also no mention of as to what were those two views and as to how the AO intends to adopt one of the views. Thus, the CIT was right in passing the revisional order u/s 263 of the Act; 4.3. In conclusion, it was reiterated that the case laws relied on by the assessee are clearly distinguishable from the facts of the present case under consideration. It was, therefore, pleaded that the stand of the CIT in invoking the provisions of section 263 of the Act requires to be sustained. 5.1. We have heard both the parties and carefully analyzed the submissions of the rival parties, perused the relevant case records, as well as the judicial decisions on which both the parties have placed their strong reliance. 5.2. Admittedly, the assessee's premise was subjected to a survey operation under section 133A of the Act on 4.1.2008. According to the AO, during the course of survey, the assessee was found to have failed to meet the criteria for qualifying for the claim of deduction u/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act? 5.6.2. At the outset, we would like to point out the return of income furnished by the assessee was, admittedly, belated; being filed after the expiry of time specified u/s 139 (4) of the Act and, thus, attract the provisions of section 80AC of the Act. At this juncture, we would like to recall that a similar issue to that of the present one came up for consideration before the Hon'ble Tribunal of Rajkot Special Bench in the case of Saffire Garments v. ITO reported in (2013) 151 TTJ (Rajkot) (SB) 114. After analyzing the issue in depth and also extensively quoting various provisions of sections of the Income-tax Act and judicial view on the issue, the Special Bench had observed that - "14. The 2nd submission of the Ld. A R in the written submission is (this) that requirement of filing of return of income is procedural aspect and, therefore, it should be considered as directory and not mandatory. In support of this contention also, reliance has been placed on various decisions submitted by the assessee in the paper book II and III. We do not find any merit in these submissions of the assessee also because when consequences of not filing the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished before the due date specified in section 139(1), the claim of the assessee for deduction cannot be entertained in contravention of the provisions of section 80AC. (Para 15)." 5.6.4. Considering the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs and also in conformity with the rulings of the Hon'ble Benches of the Tribunals cited supra, we are in agreement that secion 80AC of the Act prohibits deduction u/s 80IB of the Act if the return is not furnished on or before the due date as specified u/s 139(1) of the Act. It is ordered accordingly. 5.7.1 However, the assessee had, during the course of hearing, sought the permission of this Bench to raise the following additional grounds for the consideration of this Bench, namely: (i) that the CIT was not justified in holding that the order of the AO was erroneous and prejudicial to the interests of the Revenue; (ii) that the CIT had failed to appreciate that the view taken by the AO was sustainable in law; & (iii) that the AO had adopted one of the plausible views under the law; and, thus, the order cannot be treated as erroneous and prejudicial. 5.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer's action as erroneous. 5.7.4. To strengthen our perception, we recall the ruling of the Hon'ble Delhi High Court (Full Bench) in the case of CIT v. Kelvinator of India Limited reported in (2002) 256 ITR 1 (Del) = (2003-TII-19-HC-DEL-INTL-LB) wherein it has been observed that - "The submission .............................An order of assessment can be passed either in terms of sub-s. (1) of s.143 or sub-s. (3) of s. 143. When a regular order of assessment is passed in terms of said sub-s (3) of s. 143, a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of cl. (e) of s. 114 of the Indian Evidence Act , the judicial and official acts have been performed........." 5.7.5. Further, the Hon'ble Delhi High Court has, in its judgment in the case of CIT v. Honda Siel Power Products Ltd reported in (2011) 333 ITR 547 (Del), ruled as under: "The expression 'prejudicial to the interest of Revenue', appearing in s. 263 has to be read in conjunction with the expression 'erroneous' and every loss of revenue as a consequence of an order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he narration of facts in the Tribunal's order, it is clear that on the date when the CIT passed his orders under s. 263, the view taken by the AO was in consonance with the views taken by several Benches of the Tribunal. Therefore, the conclusion of the Tribunal that the CIT could not have invoked his jurisdiction under s. 263 was correct. The Tribunal was correct in law in cancelling the order passed by the CIT under s. 263 and in restoring the order of the AO by holding that the AO had taken a possible view at the relevant point of time." 5.7.6. Incidentally, a similar issue to that of the present one came up for consideration before the earlier Bench of this Tribunal in the case of M/s. Infosys BPO Ltd v. CIT in ITA Nos.698 & 1026/Bang/2009 dated 16.3.2012 for the assessment year 2005-06. After analyzing the rival submissions and also extensively quoting the ruling of the Hon'ble jurisdictional High Court in the case of CIT v. M/s. Infosys Technologies Limited in ITA NO.588 of 2006 dated 4.1.2012 = (2012-TII-04-HC-KAR-INTL), the Hon'ble Bench had observed thus: "7.................we find that the basic grievance before us is with regard to the validity of the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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