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2010 (1) TMI 887 - AT - Income TaxDeduction under sec. 80-I/80-IB - Assessing Officer on an analysis of the provisions and the facts of the assessee s case arrived at the conclusion that assessee is not entitled for deduction under sec. 80-I rather it is entitled to claim deduction under sec.80-IB of the Act - Assessing Officer is bound to assess the correct income and for this purpose, the Assessing Officer may grant reliefs/refunds suo mote, or can do so on being pointed out by the assessee in the course of assessment proceedings for which assessee has not filed revised return, although, as per law, the assessee is required to file the revised return - Held that - CIT(A) directed to consider the claim of the assessee at the revised figures on merits and decide the same according to the provisions of sections 80HH and 80-I of the Act after hearing the assessee, lapse on the part of the assessee is in respect of wrong mentioning of section that should not be construed in such a way which deprived an assessee from the legitimate deduction, appeal filed by the revenue is dismissed.
Issues Involved:
1. Whether the assessee is entitled to claim a deduction under section 80-IB instead of section 80-I of the Income-tax Act, 1961. 2. Whether the Assessing Officer was justified in denying the deduction claim based on the procedural requirement of filing a revised return. Detailed Analysis: Issue 1: Entitlement to Deduction under Section 80-IB The core issue is whether the assessee can claim a deduction under section 80-IB of the Income-tax Act, 1961, despite initially claiming it under section 80-I due to a typographical error by the auditor. The assessee filed its return of income on 31.10.2006, declaring the income at nil and claimed a deduction of Rs.1,64,53,104 under section 80-I. Upon scrutiny, the Assessing Officer concluded that the assessee was not entitled to a deduction under section 80-I but could claim it under section 80-IB. The assessee acknowledged the error and requested the deduction under section 80-IB during the assessment proceedings. The CIT(Appeals) allowed the assessee's claim, noting that the conditions for deductions under sections 80-I and 80-IB are similar. The CIT(A) emphasized that the assessee had fulfilled all requisite conditions for claiming the deduction under section 80-IB, including filing the audit report in the prescribed form during the assessment proceedings. The CIT(A) cited various case laws and concluded that the claim under section 80-IB should be accepted as the conditions were met. Issue 2: Procedural Justification by the Assessing Officer The Assessing Officer denied the claim based on the procedural requirement that any claim made after the filing of the original return must be through a revised return, as per the Supreme Court's decision in Goetze (India) Ltd. vs. CIT. The CIT(A) disagreed, noting that the procedural lapse of not filing a revised return should not deprive the assessee of a legitimate deduction. The CIT(A) referenced the ITAT's decision in Chicago Pneumatic India Ltd. vs. DCIT, which emphasized the duty of the Assessing Officer to assess the correct income and grant reliefs or refunds suo-moto if the assessee is entitled to them. The ITAT upheld the CIT(A)'s decision, reiterating that the procedural error of mentioning the wrong section should not lead to the denial of a legitimate deduction. The ITAT cited the CBDT's Circular No. 14 (XL-35) dated 11th April 1955, which directs officers to assist taxpayers in claiming refunds and reliefs due to them, even if not claimed correctly in the return. Conclusion: The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order that the assessee is entitled to the deduction under section 80-IB. The ITAT emphasized that the procedural lapse of not filing a revised return should not result in the denial of a legitimate deduction, especially when the conditions for the deduction are met. The ITAT also highlighted the duty of the Assessing Officer to ensure the correct income is assessed and legitimate tax is collected, in line with the CBDT's guidelines. The appeal filed by the revenue was dismissed, and the addition of Rs.1,64,53,104 to the total income of the assessee was deleted.
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