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2012 (12) TMI 1056

(10) of the Act afresh: - (i) Whether the assessee was prevented by a reasonable cause, as attributed by it in its affidavits (above), in furnishing its return of income belatedly? & - (ii) Whether the assessee has satisfied the other conditions stipulated in s. 80-IB of the Act to determine the quantum of deduction u/s 80IB of the Act? - ITA No.386/Bang/2012 - Dated:- 7-12-2012 - SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, J.M For the Appellant by : Shri B P Sachin Kumar, C.A. For the Respondent by : Shri Bijoy Kumar Panda, ACIT ORDER PER GEORGE GEORGE K : This appeal filed by the assessee company is directed against the order of the learned CIT (A)-III, Bangalore dated 12.01.2012. The relevant assessment year is 2008-09. 2. The assessee company has, in its grounds of appeal, raised ten grounds, in which, ground Nos. 1 and 3 are general in nature and, therefore, they do not survive for adjudication. Ground No.9 relates to the payment of cash of ₹ 4 lakhs for electrification work which did not attract TDS provisions of the Act. However, during the course of hearing, the Page 2 of 30 2 ITA No.386/Bang/2012 learned A R submitted that this ground i .....

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, the assessee was not liable to file a return since it had 'nil' income. 4.1. After due consideration of the assessee's submission, the CIT(A) had rejected the issue raised by the assessee for the reasons that as per the provisions of s. 80AC of the Act, return has to be filed within due date of filing return under section 139(1) and the case laws relied on by the assessee were found to be on general normative premises rather than in any interfering with the clarity of the legal requirement as per s. 80AC. As there was no infirmity with the order of the AO on this account, the denial of deduction u/s 80IB (10) of the Act was upheld. 5. Aggrieved, the assessee has come up with the present appeal. During the course of hearing, the submissions made by the learned AR are summarized as under: (i) that the provision under s.80AC of the Act as regards the time limit for filing the return of income is neither an inexorable rule of prescription nor an inviolable rule of restriction for allowance of deduction u/s 80IB of the Act; - that as per s. 80-IB, the deduction provided for therein shall be allowed in computing the total income of the assessee from the profits and gains de .....

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is claimed; - that it is clear, therefore, that the provision contained in s. 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 the time limit for filing the return. It is to be distinctly understood that such relaxation is statutory in nature (as it is allowed by the Statute itself) and not administrative in character; (iii) that the provisions of the Act relating to exemption, allowance and deduction, rebate or relief should be interpreted liberally and broadly. Relies on case laws: o Union of India v. Wood Papers Ltd (1991) 83 STC 251; o CIT v. Gwalior Rayon Silk Mfg. Co Ltd AIR 1992 SC 1782; o Controller of Estate Duty v. R. Kanakasabai (1973) 89 ITR 251 (SC); o Bajaj Tempo Ltd v. CIT (1992) 196 ITR 188 (SC); o ACIT v. Dhir Global Industrial (P) Ltd 133 TTJ (Del) 580; & o ITO v. Sri S Venkataiah - ITA NO.984/Hyd/2011 dt..31.5.2012 of the Hyderabad Bench 'B'. (iv) that the section 80AC of the Act restricts deduction available u/s 80IB of the Act where the return of income is not filed within the due dates provided u/s 139(1) of the Act; that the s. 139 .....

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ciaries have taken a liberal view while interpreting the beneficial provisions of the Act. 5.1. In furtherance, the learned AR sought the permission of this Bench vide the assessee's petition 31.10.2012, for admission of the additional evidences. The contents of the petition for admission of additional evidences read as follows:- "1. the petitioner, a company, engaged in the business of real estate has submitted its return of income for the assessment year under consideration declaring 'Nil' income after claiming the deduction u/s 80-IB of the Income-tax Act. Return of income was filed belatedly on 25.4.2009, after a delay of 207 days; 2. The assessment was completed under section 144 of the Act, determining the income of the appellant at ₹ 1,09,58,731/-. A sum of ₹ 1,18,65,656/- being deduction claimed u/s 80IB of the Act was disallowed by the AO on the ground that the return of income was submitted beyond the due date specified u/s 139(1) of the Act as stipulated u/s 80AC of the Act. 3. In this connection, it is humbly submitted that there was sufficient reason for filing the return belatedly and in support of the same, we wish to submit an affidavit .....

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filing the return of income for the AY 2008-09; 2. During the relevant AY, there was confusion prevalent with regard to claim of deduction under sec. 80 IB of the Act. Assessees, professionals and even for that matter the Income-tax Department was not very clear as to whether deduction u/s 80IB (10) would be available on a year to year basis where an assessee admits profit on partial completion or it would be available only in the year of completion of the project. It was subsequently clarified by the Board by way of Instruction No.4 of 2009 dated 30th June 2009. 3. Due to this confusion, assessee company had to file the return of income admitting 'Nil' income and submissions were made to this effect before the learned Commissions of Income-tax (Appeals). 5.2. Yet again, in the subsequent hearing, the assessee through its petition dated 13.11.2012 sought the permission of this Bench to place further additional evidences. The contents of petition dated 13.11.2012 read as follows:- "1. The Statutory audit of accounts of the appellant for the previous year 2007-08 relevant to the AY 2008-09 are completed on 12.09.2008. However, tax audit u/s 44AB of the Act was completed .....

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completed then why the auditor's report in Form 10CCB could not be obtained? (iv) If both the audit report and report in Form 10CCB were obtained, then, what prevented the assessee to submit the same before the AO or before the CIT (A)? & (v) Whether and when the audit report is filed with the ROC which is a statutory requirement under the Companies Act? - that the assesee has filed a petition on 1.11.2012 before the Hon'ble Bench for admission of additional evidence which is not acceptable and may not be admitted. - extensively quoting the Rule 29 of Appellate Tribunal Rules 1963, it was contended that the assessee was disentitled to file the additional evidence before the Hon'ble Tribunal unless the Tribunal requires the assessee to do so; and that the mere fact that the evidence sought to be produced was vital and important did not provide a substantial reason to allow its admission at the appellate stage, especially, when the evidence was available to the party at the initial stage and had not been produced by it, without any reason. Relies on the following case laws: o CIT v. Jaipur Udyog Ltd. - 227 ITR 345 (Raj); o Velji Deoraj & Co., v. CIT - 68 ITR 708 .....

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207 days - no explanation was furnished before the AO for such a delay; (iii) no audit report was filed either with the return of income or during the assessment proceedings. No Form 10CCB which was mandatory and a pre-requisite for deduction u/s 80IB was filed with the return or in the subsequent proceedings; (iv) reason advanced was vague , unsubstantiated but an after thought which was supported by the fact that the assessee had brought no reason for the delay either before the AO or before the CIT (A); (v) there was no such problem which was beyond the control of the assessee; (vi) it appears the assessee was in the habit of filing its returns belatedly. For the AY 2007-08, the return was filed after issuance of a notice u/s 148 and, hence, the delay for filing the return be construed as intentional and not a mere technical flaw - that in the case of ACIT v. Dhir Global Industrial Pvt. Ltd [133 TTJ (Del) 580 relied on by the assessee, in fact, this case deals with s. 10B (1) of the Act, that the assessee could not pay self-assessment tax on time due to some financial problems; that the new provision regarding e-filing of return was introduced in this first year, the software d .....

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d view that there was no substance in the allegation of the assessee that the assessment was concluded without affording adequate opportunity of being heard. Accordingly, this ground is decided against the assessee. II. CIT (A) erred in invoking the provisions of s. 80AC of the Act and also confirmation of the disallowance of deduction u/s 80IB of the Act: (i) The assessee furnished its return of income for the assessment year under dispute on 25.4.2009, admitting a total income of ₹ 1.05 crores and also claiming of deduction of ₹ 1.18 crores under section 80IB of the Act. Admittedly, the return of income was belated. As there was no proper compliance to the notices as detailed above, the assessment was concluded by the AO u/s 144 of the Act on the basis of details/materials on record. While doing so, the assessee's claim, among others, for deduction u/s 80-IB of the Act was turned down on the premise that the return of income of the assessee was belated and, thus, the assessee was disentitled for such a claim. (ii) When the issue was taken up before the first appellate authority for relief, the CIT (A), placing reliance on the provisions of section 80AC of the Act, .....

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ed that - "5. There can be no dispute about the proposition that the term used in a fiscal legislation describing the subjects of taxation are to be normally understood in their popular sense unless the law itself indicates a different approach. Scientific and technical meanings are to be attributed to those words only when the context requires such meanings to be given. The normal rule is to give that meaning which to persons engaged in dealing with that subject matter attribute to that term, describing the subject. It is also true that a beneficial provision in a fiscal stature should be liberally construed to advance the purpose behind the Legislation........." (3) The Hon'ble 'B' Bench of the Delhi Tribunal in the case of ACIT v. Dhir Global Industrial (P) Ltd reported in (2011) 43 SOT 640 recorded its finding which is extracted as below: "A proviso has been inserted during the current year in s. 10B(1) which provides that no deduction under this section shall be allowed to an assessee if the return of income is not furnished on or before the due date specified under sub-section (1) of s. 139. This proviso in s. 10B(1) is directory and not mandatory. .....

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nal delay in filing of return" (4) An identical issue to that of the present one was considered by the Hon'ble 'B' Bench of Hyderabad Tribunal in the case of ITO v. Shri S Venkataiah in ITA No.984/Hyd/2011 dated 31.5.2012 for the assessment year 2008-09. The Revenue had, among others, approached the Hon'ble Tribunal with the following relevant grounds: "1.The order of the CIT(A)............................................................... 2. The CIT (A) erred in allowing the additional evidence without giving a reasonable opportunity to the AO to examine the evidence which is in contravention to the rule 46A(3) of IT Rules 1962; 3. The CIT (A) ought to have appreciated that the AO had rightly disallowed the deduction claimed u/s 80IC following the provisions of section 80AC; 4. The CIT (A) ought to have held that the explanation offered by the assessee was nothing but an after thought and devoid of any merit as no effort was made by him to take recourse u/s 119(2)(b) for extension of time for filing the return of income; 5. The CIT (A) erred in coming to a conclusion that the assessee was prevented by a genuine reason in filing the return belatedly; & .....

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der dated 31st December 2010 wherein in para 5 of the order, the Tribunal held as follows: '5. We have considered the rival submissions and perused the orders of the lower authorities, and other material available on record, including the case-law relied upon by the parties. It is an undisputed fact that the assessee in the present case has filed the audit report in Form 10CCB during the course of re-assessment proceedings. The issue that arises for consideration is whether the assessing officer was justified in disallowing the assessee's claim for deduction under s.80IB on the ground that the audit report in Form 10CCB was not filed along with the return of income; or whether the CIT (A) was correct in proceeding on the basis of Form 10CCB filed during the course of re-assessment proceedings and directing the assessing officer to allow the claim of the assessee for deduction under s. 80IB of the Act. It is settled position of law, as consistently held by various Benches of this Tribunal and as held in various decisions referred to by the CIT (A) in the impugned order, that though filing of audit report in Form 10CCB is mandatory and pre-requisite for deduction under s. 80I .....

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y, provided there was reasonable cause for filing of return of income belatedly. 7.1. However, a salient feature in the present case was that the claim of deduction u/s 80-IB (10) of the Act was denied by the AO primarily on the ground that the return of income was filed beyond the due date as specified u/s 139(1) of the Act. Since the assessment was concluded under section 144 of the Act, neither the AO had an occasion to verify the cause for such a delay in filing the return of income nor the assessee had an opportunity to defend itself for having furnished its return belatedly. In this connection, as narrated supra, the assessee, during the course of hearing, sought the permission of this Bench to adduce additional evidence and also an affidavit explaining the reason for delayed filing of return. According to the assessee, the additional evidence could not be furnished either before the AO or before the CIT (A) since the return was e-filed and no enclosures were to be attached and neither the Assessing Officer nor the CIT(A) called for 44AB audit or Form 10CCB, as the claim of the assessee under section 80IB was denied prima facie without much deliberation for the reason that re .....

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with the return of income." 7.3.1. At this point of time, we would like to recall that a similar situation had been confronted by the Hon'ble Delhi Bench of the Tribunal in the case of ACIT v. Dhir Global Industrial (P) Ltd (supra) wherein the Hon'ble Bench had, after taking cognizance of the peculiar situation in which that assessee was placed, observed that 'Act does not prohibit relief in this regard when genuine hardship is faced. ' 7.4. Furthermore, in the affidavit(s) furnished, the director of the present assessee had affirmed on oath that - "1. Return of income of the appellant company for the AY 2008-09 was filed belatedly on 25.4.2009. The delay was due to the following reasons: (a) Mr. Lokesh, Accountant who was working with us for quite long quit abruptly without providing prior intimation while finalizing the accounts for the financial year 2007-08; (b) We could not trace the password of the system despite our best efforts; (c) We tried to retrieve the data from the system with the help of hardware engineers, in the process lost couple of important data. Financial information of the company was one such data that was lost; (d) We tried to reco .....

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