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DCIT 15 (3) , Matru Mandir, Mumbai Versus Kamdhenu Builders and Developers

2016 (3) TMI 240 - ITAT MUMBAI

Eligibility of deduction of Section 80IB(10) - grievance of AO was that claim was made in the return filed u/s.139(1) - Held that:- CIT(A) recorded a finding to the effect that both the original return was filed well within the time limit prescribed under the law and the revised return filed before the AO completing the assessment that the assessee has fulfilled all the conditions u/s.80IB(10), therefore, entitled for deduction in respect of housing project. The findings recorded by the CIT(A) h .....

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his is an appeal filed by the Revenue against the order of CIT(A), for the assessment year 2007-08, in the matter u/s.143(3)(ii) of the I.T. Act, wherein the following three grounds taken of the assessee. (i) On the facts and circumstances of case and in law, the Ld. CIT(A) erred in holding that the assessee is entitled to deduction u/s 80IB (10) of ₹ 1,94,12,489/- inspite of the fact that the claim for deduction was not made in the original return and was only made in the return filed, fo .....

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s and circumstances of case and in law, the Ld. CIT(A) erred in allowing the deduction u/s 80IB(10) as the same only means that deduction can be claimed just by filling revised return u/s 139(5) has already elapsed, in the course of assessment proceedings, which is not at all acceptable in the light of amended provisions of section 80A(5), vide Finance (No.2) Bill, 2009. 2. Rival contentions have been heard and record perused. The brief fact of the case is that assessee is a partnership firm eng .....

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ected for scrutiny by the Assessing Officer and notice u/s 143(2) was issued on 29.09.2008 and thereafter assessment proceedings took place on various occasions. During pendency of assessment proceedings, assessee has filed the revised return of income on 31.08.2009 declaring Nil income as entire profit of ₹ 1,94,12,489/- was claimed to be allowable as deduction u/s.80IB(10) of the Income-tax Act. Ld. AO has not allowed the claim of deduction on the ground that revised return of income was .....

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of the AO, remand report, written submission of the appellant and counter representation vis-à-vis provision of law and various decisions of Hon‟ble ITAT, High Court and Supreme Court relevant to the issue. It transpires from the assessment order and remand report of AO dated 07.06.2010 that Ld. AO had denied or is not willing to give deduction u/s.80IB(10) merely on the ground of provision of law u/s.80A(5) irrespective of fulfillment of all the conditions prescribed by the appell .....

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viding that where the assessee failed to make claim in his return of income for any deduction u/s.10(A) or section 10(AA) or section 10(B) or section 10(BA) or under any provision of Chapter VIA under the head in C - deduction in respect of certain income‟, no deduction shall be allowed to him thereunder, means there is no restriction about the revised return of income but there is a provision of law for claiming such deduction through return of income‟ only. This provision of law do .....

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a law with reference to the prescribed date of return of income before any specified date, it has clearly identified and mentioned in expressed word. Some examples are worthwhile to mention as under: - Section Deduction through return of income filed within specified date 80AC Return of income has to be filed prior to due date as per section 139(1) 54(2) Refers to date of furnishing return as per section 139 139(3) Carry forward of loss is permitted if such return of loss is filed within the ti .....

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uring the assessment proceedings, provided the original return of income was filed within the time limit prescribed u/s.139(1). Obviously, appellant complies with the provision of section 80AC of the Income-tax Act. When the original return of income has been filed well within the due date‟, the revised return filed thereafter before the completion of assessment proceedings or assessment order is passed, it is a valid return of income to be considered by the Assessing Officer, otherwise ev .....

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urn cures the defects in the original return and does not obliterate the later, the assessment means on the basis of original return of income ignoring the revised return is liable to be set aside vide CIT vs. Chitranjali (1986) 159 ITR 801 (Cal). Similar view has also been taken in the case of CIT vs. Bansidhar Dalal and Sons (1994) 207 ITR 494 (Cal). It is also relevant to mention that Assessing Officer has important statutory functions to discharge. Such functions encompass power as well as d .....

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orthwhile to mention that in the case of DCIT vs. Lab India Instruments (P) Ltd., 93 ITD 120 Hon‟ble Pune ITAT has held as under: - Further, Rival submissions of the parties have been considered carefully in the light of case law referred to and the material placed before us. The first question to be considered is whether the claim of assessee under section 80-O can be denied merely on the ground that such claim was raised by the assessee in the revised return which was filed after the pre .....

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irrespective of the nature of return filed by any person. An income which is not taxable cannot be taxed merely because the assessee forgot to claim the exemption/ deduction under some mistaken belief. For example, assessee‟s profit and loss account may include agricultural income, exempt under section 10(1) or share of profit from registered firm exempt under section 10(2A) or dividend income exempt under section 10(33) of the Act, but the assessee may forgot to claim such exemption in t .....

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the duty of Assessing Officer to apprise of the relevant provisions under which assessee is entitled to exemption/ deductions. Therefore, in our opinion, assessee is entitled to claim deduction if such claim is made by assessee before the completion of assessment proceedings. The above view of ours is also fortified by the judgment of Supreme Court in the case of Anchor Pressings (P) Ltd. vs. CIT (1986) 161 ITR 159 wherein it has been held that if on the basis of material placed on the record, .....

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relevant observations of their Lordships are extracted below: An obligation is imposed on the Income-tax Officer by section 84 of the Income-tax Act, 1961, to grant relief there under and the relief cannot be refused merely because the assessee has omitted to claim the relief, but the mere existence of such an obligation on the Income-tax Officer is not sufficient. Precise factual material and clear data must be contained in the record sufficient to enable the Income-tax Officer to consider whet .....

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nd of appeal to claim any deduction/ exemption provided no investigation into facts is required at appellate stage. It was further held that claim of assessee cannot be rejected merely on the ground that assessee himself had offered the receipts to tax in the return filed by him. If any income is not taxable under the Act, the assessee is entitled to claim the same by raising the additional ground of appeal before the appellate authorities. If the claim can be raised before the appellate authori .....

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ncome. The Hon‟ble Supreme Court in the case of National Thermal Power Co. Ltd. -Vs- CIT, 229 ITR 383 (SC), while deciding the issue of jurisdiction of the tribunal to deal with ground not raised before lower authorities, held The purpose of the assessment proceeding before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law . The Hon. Apex Court held that the tribunal could entertain a legitimate claim raised for the first time before it. .....

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not take advantage of the ignorance of the assessee as per the CBDT circular No.14 (XL-35)/1995, dated 11th April, 1955 quoted in Parekh Bros. vs. CIT & Ors (1983) 36 CTR (Ker) 372: (1984) 150 ITR 105 (Ker). Hence, it was the duty of the AO to ask information before completing the assessment under s. 143(3) of the Act. It may also be mentioned that the tax audit report along with return is not a mandatory condition as per the ratio laid down in the case of CIT cs. Rai Bahadur Bissesswarlal .....

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ture. The mistake was treated as a technical breach and the AO was duty bound to ask it before denying claim as observed in the following cases - CIT vs. Gujarat Oil & Allied Industries (1993) 109 CTR (Guj) 272 : (1193) 201 ITR 325 (Guj.) CIT vs. Berger Paints (India) Ltd. (2002) 174 CTR (Cal)269 : (2002) 254 ITR 503 (Cal.) In the instant case, the AO has not asked any information before denying the exemption for which the assessee was legally entitled. On the other hand, he has rejected the .....

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h the assessee had not filed revised return. It is further held by the Hon‟ble ITAT that the legitimate claim of assessee should not be rejected on technical grounds. The same proposition is also there in the case of Chicago Pneumatic India Ltd. vs. DCIT (2007) 15 SOT 252 (Mum). Therefore, in the background of all these decisions and facts of the case, the denial of claim of deduction of the appellant made through revised return of income during the course of assessment proceedings and wel .....

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isions of ensuing paragraphs having consequential effect on profit u/s. 80IB(10) of the Income-tax Act, to the appellant while giving appeal effect. 4. Against the above order of CIT(A), the revenue is in appeal before us. 5. It was contended by ld. DR that as per the provisions of Section 80A(5) effective from assessment year 2003-04, the assessee is not entitled for deduction unless the claim of deduction was made in the original return filed by him. 6. On the other hand, ld. AR contended that .....

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he assessee before the AO completing the assessment, should be allowed. 7. We have considered rival contentions, carefully gone through the orders of the authorities below and also deliberated on the judicial pronouncements cited at bar. From the record we found that assessee is engaged in development of housing project. However, the original return was filed well within the time u/s.139(1), wherein the assessee has not made any claim of deduction u/s.80IB(10). The assessee filed revised return .....

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