2018 (10) TMI 1090 - AT - Income Tax

Disallowance of the deduction u/s 80IA - delay of 31 days in the filing of the return of income - deduction not allowable u/s 80IA r.w.s. 80AC, if the return of income is filed beyond the due date under section 139(1) - Held that - The return was not filed within the time prescribed U/s 139(1) of the Act. There was clear violation of provisions of Section 80AC of the Act. The delay was of 31 days in filing the return of income We are of the view that the benefit U/s 80IA of the Act cannot be claimed without fulfilling the conditions laid down in Section 80AC of the Act. The provisions of Section 80AC of the Act are very clearly and unambiguous, therefore, there is no reason to find out whether the provisions are directory and mandatory. When the provision is clear and unambiguous then there is no scope for any authority to go beyond such unambiguous and clear provision of the law. The law clearly provides that the deduction shall not be allowed unless the return furnished on or before the due date specified under sub-section (1) of Section 139 of the Act - Decided against assessee

Issues Involved:
1. Disallowance of deduction under section 80IA due to delay in filing the return of income.
2. Compliance with provisions of section 80AC in relation to section 80IA.
3. Interpretation of section 139(1) and section 139(4) concerning the filing of returns.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IA Due to Delay in Filing the Return of Income:
The primary issue in the appeal was the disallowance of a deduction of ?88,51,859 claimed by the assessee under section 80IA of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed the deduction because the return of income was filed 31 days beyond the due date specified under section 139(1). The CIT(A) upheld this disallowance, emphasizing that the filing of the return within the prescribed time limit is a basic precondition for claiming deductions under section 80IA, as mandated by section 80AC.

2. Compliance with Provisions of Section 80AC in Relation to Section 80IA:
The assessee argued that the delay in filing the return was due to a shortage of funds, which prevented the timely payment of self-assessment tax. They contended that substantial compliance with the provisions should suffice, citing case laws where courts have held that section 139(4) is an extension of section 139(1). However, the CIT(A) and the ITAT emphasized that section 80AC explicitly states that no deduction under section 80IA shall be allowed unless the return is filed on or before the due date specified under section 139(1). The ITAT cited multiple judgments, including the Special Bench decision in Saffire Garments v. ITO, which held that the provisions of section 80AC are mandatory and not directory.

3. Interpretation of Section 139(1) and Section 139(4) Concerning the Filing of Returns:
The assessee's reliance on the interpretation that section 139(4) extends the due date specified under section 139(1) was rejected. The ITAT referred to several judicial precedents, including the decisions of the ITAT Rajkot Bench in Saffire Garments and the ITAT Bangalore Bench in Pooja Reality Pvt. Ltd., which clarified that the provisions of section 80AC are mandatory. The ITAT concluded that the law is clear and unambiguous, and the deduction cannot be allowed if the return is not filed within the due date specified under section 139(1).

Conclusion:
The ITAT upheld the disallowance of the deduction under section 80IA due to the assessee's failure to file the return within the due date specified under section 139(1), as required by section 80AC. The appeal of the assessee was dismissed, reaffirming that compliance with the prescribed timelines is mandatory for claiming deductions under the Income Tax Act.

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