TMI Blog2016 (3) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 which is beyond the due date for filing return of income i.e. 30.09.2009 under section 139(1) of the Act for the assessment year 2009-10. Thus, respectfully following the Special Bench decision in the case of M/s. Saffire Garments [Saffire Garments] wherein held wherein it is held that proviso to section 10A(1A) and section 10B is mandatory and not merely directory, we reject the grounds of the assessee and sustain the order of the Commissioner of Income Tax (Appeals) in rejecting the claim for deduction under section 10B of the Act. - Decided against assessee - ITA No. 817/Mds/2013 - - - Dated:- 31-12-2015 - Chandra Poojari, AM And Challa Nagendra Prasad, JM For the Appellant : Mr S Sridhar, Adv For the Respondent : Mr A B Koli, JCIT ORDER Per Challa Nagendra Prasad, JM This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-XII, Chennai dated 25.02.2013 for the assessment year 2009-10. 2. Though the assessee has raised several grounds of appeal, the issues raised in the grounds are only two namely i) challenging the order of the Commissioner of Income Tax (Appeals) in sustaining the disallowance made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, in the interest of justice, we are remitting the issue back to the file of the Assessing Officer with direction to verify the claim of the assessee and the assessee shall place necessary evidence in support of his claim. 4. Further, we make it clear that if the impugned amount is not outstanding at the end of the close of the assessment year in respect of the expenses either as outstanding expenses or as sundry creditors, this amount cannot be disallowed. This ground is remitted back to the Assessing Officer for fresh consideration. 6. Respectfully following the said decision, we restore this issue for limited purpose of verification to the Assessing Officer as to whether the amounts were paid during the year or outstanding as on 31st March of the accounting year. The Assessing Officer is directed to verify and disallow only the outstanding amounts as on 31st March of the accounting year. 7. The next issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of deduction claimed under section 10B of the Act on the ground that assessee filed return of income belatedly. 8. Counsel for the assessee, at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling return of income for the assessee's, being a firm, as per the provisions of Section 139(1) of the Act was 31.12.2006. The A.O. also observed that the assessee failed to file its return of income on or before the due date specified under sub-section (1) of Section 139 of the Income tax Act, 1961. He further noted that as per the newly inserted proviso appended to section 10A of the Income tax Act, 1961, no deduction should be allowed to an assessee who does not furnish return of income on or before the due date specified under sub-section (1) of Section 139 of the Income tax Act, 1961. He also noted that the proviso was introduced by the Finance Act, 2005 which came into effect from 01.04.2006. The A.O. held that this proviso is applicable to the case of the assessee and hence, the assessee's claim for deduction u/s 10A of the Income tax Act, 1961 is to be disallowed. In this manner, the A.O. disallowed the claim of the assessee for deduction u/s 10A of the Income tax Act, 1961. Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) but without success and hence, the assessee is in further appeal before the Tribunal. 3. The questions referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Shivanand Electronics' case (supra) and submitted that this judgement supports the case of the assessee. He also submitted that relevant explanatory note on the provisions of Finance Act 2005 Circular No.3/2006 dated 27.02.2006 is available on page 47A of the paper book III filed by the assessee and as per the same, this provision was inserted with a view to widen the tax base and hence, it is a procedural provision and not substantive provision. 7. Regarding the reliance placed by the Ld. D.R. on the judgement of Hon'ble Apex Court rendered in the case of Prakash Nath Khanna (supra), it was submitted that this judgement is not applicable in the present case because in that case, the issue involved was with regard to offences and prosecution u/s 276CC and, therefore, the facts are different in the present case. Regarding the Tribunal decision rendered in the case of Bal Kishan Dhawan HUF (supra), it was submitted that this is a division bench decision and, therefore, not binding on the Special Bench. 8. We have considered the rival submissions and have gone through the judgements cited by both the sides. In our considered opinion, we have to decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to the provisions of section 10A or section 10B or section 10BA or Chapter VI-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. 10. When, we go through the provisions of Section 10A(1A) and its proviso along with the provisions of Section 139(1) and its 4th proviso, we find that the case of the revenue is this that as a consequence of assessee's failure to file the return of income within the time prescribed u/s 139(1), deduction is not allowable to the assessee u/s 10A of the Act. 11. The 1st question raised before us is this as to whether this proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement o the Act, interest is chargeable u/s 234B of the Income tax Act, 1961 if such advance tax paid by the assessee is less than 90% of the assessed tax. Such interest u/s 234B is payable from the first day of April of the relevant assessment year till the date of determination of the total income either u/s 143(1) or u/s 143(3) of the Act. The interest u/s 234A is payable from a date after the due date for filing the return of income and is payable up to the date on which the return of income is furnished by the assessee and if no return is furnished by the assessee at all then only, the interest is payable till the date of completion of the assessment u/s 144 of the Act. Under this factual and legal position, we have no hesitation in holding that the interest payable by the assessee u/s 234A is for his failure to file the return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961. This is by now a settled position of law that charging of interest under various sections including u/s 234A of the Income tax Act, 1961, is mandatory. When one of the consequences for not filing return of income within the due date prescribed u/s 139(1) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed return of income u/s 139(4), the same should be considered as return filed u/s 139(1) of the Income tax Act, 1961. On this aspect, we have already seen the judgement of Hon'ble Apex Court cited by the Ld. D.R. having been rendered in the case of Prakash Nath Khanna (supra), where it was held by Hon'ble Apex Court that the filing of return of income within the time allowed u/s 139(4) of the Income tax Act, 1961 cannot dilute the infraction in not furnishing return in due time as prescribed u/s 139(1) of the Income tax Act, 1961. In view of this judgement of Hon'ble Apex Court in this regard, the judgments cited by the Ld. A.R. i.e. CIT v. Ms. Jagriti Aggarwal [2011] 203 Taxman 203/ 15 taxmann.com 146 (Punj. Har.) and Trustees of Tulsidas Gopalji Charitable Chaleshwar Temple Trust v. CIT [1994] 73 Taxman 612(Bom.) are of no relevance because these judgements are of two different High Courts but this aspect of the matter is covered against the assessee by the judgement of Hon'ble Apex Court cited by the Ld. D.R. 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, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment is also not relevant in the present case. - The 3rd judgement cited is the judgement of Hon'ble Delhi High court rendered in the case of CIT v. Axis Computers (India) (P.) Ltd. [2009] 178 Taxman 143. In that case also, the dispute was regarding the requirement of filing of audit report along with return of income and not regarding filing of return of income within the due date and hence, this judgement of Hon'ble Delhi High Court is also not applicable in the present case. - The next judgement cited is the judgement of Hon'ble Apex Court rendered in the case of CIT v. National Taj Traders [1979] 2 Taxman 546. In that case, the dispute was regarding passing of order by CIT u/s 33B of 1922 Act corresponding to Section 263 of the present Act and hence, this judgement is also not relevant in the present case. - The next judgement cited before us is the judgement of Hon'ble Delhi High court rendered in the case of CIT v. Web Commerce (India) (P) Ltd. [2009] 178 Taxman 310. The dispute in that case is also similar to the dispute in the earlier decision of Hon'ble Delhi High Court rendered in the case of Axis Computers (India) (P) Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgement of Hon'ble Delhi High Court rendered in the case of Continental Contraction Ltd. v. Union of India [1990] 185 ITR 230/53 Taxman 213. This judgement is also not applicable in the present case because in that case, the issue was this as to when CBDT had approved agreement for such a project for the purpose of Section 80 O while in fact Section 80HHB was found applicable and it was held that assessee has to be given an opportunity for complying with the provisions of subsection (3) of Section 80HHB. Since the facts are different, this judgement is also not relevant in the present case. - The next judgement cited before us is the judgement of Hon'ble Bombay High court rendered in the case of Shivanand Electronics' case (supra). Very strong reliance was placed by the learned AR on this judgment but we find that for the same reasons as discussed above in respect of various judgements, this judgement is also not applicable in the present case because in that case also, the issue in dispute was regarding requirement of filing of audit report along with return of income for deduction u/s 80J(via) and it was held that it is not mandatory in strict sense. In the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative. Since we have found that this question is not required to be answered in the facts of the present case as per which we have decided the first question against the assessee by holding that the provisions of the proviso to Section 10A(1A) is mandatory and not merely directory, the 3rd question is also not required to be answered by us. 20. The only issue raised in this appeal is the one which we have considered in the question No.(a). We have held that the provisions of the proviso to Section 10A(1A) are mandatory and not directory i.e. in favour of the revenue and against the assessee. Therefore, we find that the order of Ld. CIT(A) is just and in accordance with law and the ground raised by the assessee is liable to be dismissed. 11. Admittedly, in this case assessee filed return of income on 15.10.2010 which is beyond the due date for filing return of income i.e. 30.09.2009 under section 139(1) of the Act for the assessment year 2009-10. Thus, respectfully following the Special Bench decision, we reject the grounds of the assessee and sustain the order of the Commissioner of Income Tax (Appeals) in rejecting the claim for deduction under section 10B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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