2011 (3) TMI 1813 - HC - Income Tax

Summary

Issues Involved:
1. Eligibility for deduction u/s 80HHE despite not claiming it in the original return.
2. Compliance with procedural requirements u/s 80HHE(4) and Section 80A(5).

Summary:

Issue 1: Eligibility for deduction u/s 80HHE despite not claiming it in the original return.

The revenue challenged the tribunal's order which upheld the Commissioner of Income Tax Appeals' decision to grant relief to the assessee u/s 80HHE, even though the benefit was not claimed in the original returns. The assessee, engaged in software development and export, initially claimed a deduction u/s 10B for the assessment year 2004-05. The Assessing Officer denied this claim as the ten-year holiday period had lapsed. The assessee then claimed a deduction u/s 80HHE for the first time during the appeal, providing the necessary audit report and certificate. The Commissioner allowed this claim, which was upheld by the Tribunal, leading to the revenue's appeal.

Issue 2: Compliance with procedural requirements u/s 80HHE(4) and Section 80A(5).

The revenue argued that u/s 80HHE(4), the assessee must furnish the prescribed form and accountant's report along with the return of income. Section 80A(5) mandates that deductions under Chapter 6(A) cannot be allowed if not claimed in the return. The Tribunal and appellate authority erred in allowing the deduction despite non-compliance with these provisions. The court emphasized that the claim for deduction must be made in the return, supported by the required documents, and failure to do so precludes the authorities from granting the deduction. The court set aside the appellate authority and Tribunal's orders, but noted that the assessee could file a revised return u/s 139(5) and seek condonation of delay u/s 119(2)(B).

Conclusion:

The substantial question of law was answered in favor of the revenue, highlighting the mandatory nature of procedural compliance for claiming deductions. The court allowed the possibility of filing a revised return to rectify the procedural lapse.