2014 (8) TMI 674 - AT - Income Tax

Allowability of deduction u/s 80IC E-return filed after due date u/s 139(1) Held that - The manual filing of return before 30-09-2010 has not been denied by the Revenue - The AY. 2010-11 was the first AY from which furnishing of return in electronic mode was made mandatory - The accountants/tax consultants of the assessee may be due to oversight missed the amendment in the Rules - Since manual return of income was furnished well before the due date, the assessee has complied with the substantive provisions of the Act - deduction u/s.80-IC cannot be denied for the reason that return of income in e-mode is not filed in time - the assessee is entitled to claim deduction u/s.80-IC of the Act, if otherwise it has complied with the conditions laid down u/s.80IC - the authorities below have not examined genuineness of the claim of the assessee u/s.80-IC thus, the matter is remitted back to the AO for re-consideration of the claim of the assessee u/s.80-IC. - Decided in favor of assessee. For the AY 2011-12 - AY.2010-11 was the first year in which, furnishing of return electronically under digital signature was made mandatory. There were chances that the tax consultants may not be aware of the amended provisions in the first AY. The benefit of ignorance of tax consultants was given to the assessee in AY.2010-11. After committing the mistake once, if the same mistake is committed again in the next AY, it is un-pardonable. We are of the opinion that the assessee does not deserve any clemency. The assessee has not complied with the provisions of section 80AC and is thus not eligible to claim deduction u/s.80-IC. - The Income Tax Rules have been amended thereafter in the year 2010 - As per the amended provisions of Rule 12(3)(ab) w.e.f. 09-07-2010, a company is required to furnish return of income for AY.2010-11 and subsequent AYs electronically under digital signature Decided in favour of Revenue.

Summary

Issues:
- Allowability of deduction u/s.80-IC of the Income Tax Act, 1961 for Assessment Years (AYs) 2010-11 & 2011-12.
- Compliance with electronic filing requirements under section 139(1) of the Act.
- Interpretation of Rule 12(3)(ab) mandating electronic filing under digital signature.
- Consideration of technical fault beyond the control of the assessee.
- Examination of genuineness of the claim of the assessee u/s.80-IC.
- Application of case laws supporting the assessee's position.
- Assessment of the reasons for delay in filing returns under electronic mode.

Detailed Analysis:

1. The appeals were filed by the Revenue challenging the orders of the Commissioner of Income Tax(Appeals)-VI for AYs 2010-11 & 2011-12, specifically regarding the allowability of deduction u/s.80-IC due to electronic return filing after the due date specified in section 139(1) of the Act.

2. The assessee, a drug manufacturing company, initially filed manual returns for both AYs but later filed electronically. The Revenue disallowed the deduction u/s.80-IC citing non-compliance with filing deadlines. The CIT(Appeals) allowed the appeals, considering the fault as technical and beyond the assessee's control.

3. The Revenue argued that the assessee failed to comply with section 80AC, making them ineligible for u/s.80-IC deduction due to late electronic filings. Rule 12(3)(ab) mandates electronic filing under digital signature, which the assessee allegedly did not fulfill.

4. The assessee contended that for AY 2010-11, they filed manually before the due date, unaware of the e-filing requirement initially. They later corrected this by filing electronically. For AY 2011-12, the e-return was filed after the due date, attributing the delay to lack of awareness by their tax consultants.

5. The Tribunal noted the late electronic filings but considered the assessee's compliance with substantive provisions before the due date for manual filing. The case laws cited supported the assessee's position, emphasizing genuine compliance with statutory requirements.

6. The Tribunal remitted the file back to the Assessing Officer for further examination of the assessee's u/s.80-IC claim, emphasizing the need to assess compliance with statutory conditions.

7. Regarding AY 2011-12, the Tribunal found no valid reason for the delayed electronic filing, unlike the previous year where manual filing was done before the due date. Lack of plausible justification led to the denial of u/s.80-IC deduction for this year.

8. The Tribunal differentiated the present case from cited case laws, highlighting the mandatory electronic filing requirement from AY 2010-11 onwards. The amended Rule 12(3)(ab) necessitated electronic filing, rendering the previous case law inapplicable. Consequently, the appeal of the Revenue for AY 2011-12 was allowed, setting aside the CIT(Appeals) decision.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive understanding of the Tribunal's decision and the arguments presented by both parties.