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2017 (7) TMI 999 - AT - Income TaxDeduction u/s 80IC - said deductions were not allowed while processing the return by the CPC, Bangalore for the reason that it was a belated return - assessee filed application u/s 154 seeking a claim of deduction - Held that - CIT(A) in the impugned order categorically stated that the return filed by the assessee was within the extended period so it could not be said to be delayed return. He also mentioned in para 5.2 of the impugned order that the downloaded e return for the relevant assessment year revealed that the assessee had claimed deduction both u/s 80IB and 80IC of the Act. The said observation is correct, as evident from Page No. 2 and 23 of the assessee s Paper Book which are copies of the computation of income and downloaded return of income in Form No. ITR V/. At Page No. 2 the assessee mentioned in the computation of income, the deduction u/s 80IB amounting to ₹ 428609/- and u/s 80IC for ₹ 29965494/-. The said figures are also mentioned at Page No. 23 which is copy of the return of income filed by the assessee. No valid reason to interfere with the finding of the ld CIT(A). - Decided against revenue
Issues Involved:
1. Whether the CIT(A) erred in allowing the deduction under Section 80IC of the Income Tax Act, 1961 despite the assessee not claiming it in the return of income. 2. Whether the Assessing Officer (AO) violated principles of natural justice by not providing the assessee an opportunity to be heard. 3. Whether the return of income filed by the assessee was within the extended due date. 4. Whether the assessee had claimed deductions under Section 80IB and 80IC in the return of income. 5. Whether the AO erred in rejecting the application under Section 154 due to the absence of an audit report in Form 10CCB. Detailed Analysis: Issue 1: Deduction under Section 80IC The department contended that the CIT(A) allowed a deduction of ?29,965,494 under Section 80IC without the assessee claiming it in the return of income. The CIT(A) found that the assessee had indeed claimed deductions under Sections 80IB and 80IC in the return of income, as evidenced by the downloaded e-return and the computation of income. Issue 2: Principles of Natural Justice The assessee argued that the AO rejected the application under Section 154 without providing an opportunity to be heard, violating principles of natural justice. The CIT(A) agreed, stating that the AO's action was contrary to Section 154(3) and the principles of natural justice, as the assessee was not heard before increasing its tax liability. Issue 3: Extended Due Date for Filing Return The AO disallowed the deductions on the grounds that the return was filed late. However, the CIT(A) noted that the due date for filing the return for the assessment year 2007-08 was extended to November 15, 2007, and the return was filed within this extended period. Thus, the return was not belated, and the deductions claimed could not be disallowed on this basis. Issue 4: Claiming Deductions in the Return The AO claimed that the assessee did not claim the deduction under Section 80IC in the return. The CIT(A) found this to be factually incorrect, as the downloaded e-return and the computation of income clearly showed that the assessee claimed deductions under both Sections 80IB and 80IC. This was further supported by the assessee's paper book. Issue 5: Absence of Audit Report in Form 10CCB The AO rejected the application under Section 154, citing the absence of an audit report in Form 10CCB. The CIT(A) clarified that after the introduction of annexure-less forms, audit reports were not required to be submitted with the return of income. The relevant circular (Circular No. 5/2007) indicated that audit reports should be obtained before the due date and retained by the taxpayer, to be furnished only during scrutiny proceedings. Therefore, the AO's reasoning was held to be erroneous. Conclusion: The CIT(A) directed the AO to allow the deductions under Sections 80IB and 80IC, as the return was filed within the extended due date, and the deductions were claimed in the return. The appeal by the department was dismissed, and the CIT(A)'s order was upheld, emphasizing adherence to principles of natural justice and proper interpretation of the Income Tax Act and relevant circulars.
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