2004 (9) TMI 588 - AT - Income Tax

Summary

Issues:
1. Whether the assessee is entitled to claim deductions under sections 80-IA and 80HHD for the first time in rectification proceedings under section 154.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the issue of whether the assessee could claim deductions under sections 80-IA and 80HHD for the first time during rectification proceedings under section 154. The case pertained to the relevant assessment year of 1996-97. Initially, the assessee had filed its return of income with a set off of unabsorbed brought forward depreciation, resulting in a nil total income. However, the Assessing Officer later found the correct amount of unabsorbed depreciation for the previous year to be lower than claimed by the assessee, leading to a rectification notice under section 154. The assessee then made additional claims for deductions under sections 80-IA and 80HHD during the rectification proceedings, which were initially disallowed by the Assessing Officer.

The Assessing Officer rejected the additional claims made by the assessee for deductions under sections 80-IA and 80HHD on the grounds that these claims were not included in the original return of income or during the assessment proceedings. The Assessing Officer emphasized that deductions could only be claimed if supported by prescribed documents and certificates along with the return of income. Consequently, the claims were disallowed, and the assessment was rectified to reflect a revised total income.

Upon appeal, the CIT(A) upheld the Assessing Officer's decision, stating that the claims made by the assessee during the rectification proceedings, which were not previously raised, were rightly rejected. The CIT(A) dismissed the appeal, leading to the matter being brought before the Tribunal.

During the Tribunal proceedings, it was argued that the assessee had no opportunity to claim the deductions under sections 80-IA and 80HHD earlier due to the absence of positive income when the return was initially filed. The correct amount of unabsorbed depreciation determined later resulted in a positive income for the assessee for the first time during the rectification proceedings. The Tribunal concluded that the assessee had the right to make claims for deductions during the rectification proceedings, as it was the first opportunity to do so, and the necessary documents were provided to support the claims.

Drawing parallels to a similar case, the Tribunal highlighted that the absence of an opportunity for the assessee to claim deductions earlier constituted a mistake apparent on record. Therefore, the Tribunal directed the Assessing Officer to rectify the assessment order and allow the deductions claimed by the assessee after verifying the necessary particulars.

In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing the right of the assessee to claim deductions under sections 80-IA and 80HHD during rectification proceedings when the opportunity first arose, and when supported by relevant documentation.