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Issues Involved:
The judgment involves the interpretation of the Income-tax Act, 1961 regarding the disallowance of deductions under sections 80HHE and 80GG, and the rectification of orders under section 154 based on the submission of proof or certificates subsequent to the filing of the return. Interpretation of Section 154 - Rectification of Mistake: The assessee, a software consultant, filed a rectification application under section 154 of the Income-tax Act, 1961, attaching certificates in support of deductions claimed under sections 80HHE and 80GG. The assessing authority initially declined to rectify the order, stating that the proof should have been filed with the original return. However, the Commissioner of Income-tax (Appeals) held that the proof could be furnished later with the rectification application, and allowed the claim in full. Application of Board Circular on Disallowance: The Revenue appealed the Commissioner's decision to the Tribunal, which was dismissed. The Tribunal relied on a circular of the Central Board of Direct Taxes, stating that disallowance should only be made for claims where required information is omitted at the time of filing the return. The circular emphasized that if evidence is subsequently furnished, rectification under section 154 should be carried out. The Tribunal held that the assessing authority erred in not rectifying the order after the assessee provided the necessary proof. Extension of Benefit to Assessee: The Board circular clarified that disallowance could be made if required information was not filed with the return, but rectification should be allowed upon subsequent submission of evidence. The Tribunal determined that the assessee should be entitled to deductions under sections 80HHE and 80GG based on the principles outlined in the circular, even though these sections were not explicitly mentioned. The Tribunal directed the Assessing Officer to rectify the order and grant the deductions to the assessee in accordance with the Board's circular. In conclusion, the High Court of Karnataka upheld the Tribunal's decision, ruling in favor of the assessee and against the Revenue, based on the correct interpretation of the Income-tax Act and the application of the Board circular regarding the rectification of orders and allowance of deductions under sections 80HHE and 80GG.
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