2018 (12) TMI 899 - AT - Income Tax

Claim of deduction u/s 80IC - claim for initial year - mandation for claim for deduction to be made in the return of income filed u/s 139(1) in terms of section 80AC - claim is now being made in the revised return - Held that - The purpose of revised return u/s 139(5) is to ensure that any admission of omission or any wrong statement has to be voluntarily within the specified time limit. Further it is not a case of the AO that the requisite condition of filing of audit report in form 10CCB has not been filed during the course of the assessment proceedings. Whence, in the initial assessment years, i.e., A.Y.s 2009-10, 2010-11 and 2011-12 the claim of deduction u/s 80IC has been found to be otherwise allowable to the assessee and this being the 4th year of the claim based on same set of facts, then it cannot be held that the claim made by the revised return is not voluntarily and omission to make such claim in the original return of income was not bonafide. Even otherwise also, if one goes by the principle laid down in the case of Goetz India Ltd. 2006 (3) TMI 75 - SUPREME COURT if the claim has not been made before the AO by way of revised return then same can be made before the appellate authorities. Thus claim of deduction u/s 80IC to the assessee cannot be denied simply because such a claim was not made in the return field u/s 139 (1) albeit was made in the revised return u/s 139(5) filed within the stipulated time provided in the said section - decided in favour of assessee.

Issues Involved
1. Whether the Ld. CIT (A) is correct in deleting the disallowance of assessee’s claim of deduction under section 80IC of the Income Tax Act 1961 for the assessment years 2009-10 and 2010-11.
2. Whether the Ld. CIT (A) erred in confirming the disallowance of ?17,17,610/- claimed under section 80IC for the assessment year 2012-13 due to misinterpretation of section 80AC and section 80A(5).

Detailed Analysis

Issue 1: Deletion of Disallowance of Deduction under Section 80IC for Assessment Years 2009-10 and 2010-11

Background and Facts:
The assessee company, engaged in manufacturing food products at its plant in Himachal Pradesh, claimed a deduction of ?12,80,92,168/- under section 80IC for substantial expansion completed during the year. The AO raised several queries regarding the substantial expansion and ultimately disallowed the deduction, citing various reasons including lack of evidence and non-compliance with conditions under section 80IC.

AO’s Findings:
1. Consolidated capital work in progress without project-wise details.
2. Failure to classify goods under eligible items.
3. Lack of details on the commencement of original production and substantial expansion.
4. Failure to furnish mandatory Form 10CCB.
5. Tax auditor’s certification of no deduction claimed under Chapter VI-A.
6. No certification from DIC confirming substantial expansion.
7. Evidence of substantial expansion not meeting the 50% requirement.

CIT (A)’s Findings:
1. The actual cost of plant and machinery was correctly reflected at ?24.77 crores, and no depreciation was claimed in earlier years.
2. No machinery was purchased for other units in Gujarat and Rajasthan till 31st March 2008.
3. Central Excise Department confirmed the registration and commercial production commencement.
4. The inadvertent error by the CA in the tax audit report should not penalize the assessee.
5. All conditions for eligibility of deduction under section 80IC were fulfilled.

Tribunal’s Decision:
The Tribunal upheld the CIT (A)’s decision, affirming that the assessee’s claim for deduction under section 80IC was valid. The Tribunal noted that the substantial expansion was completed within the relevant period, all conditions were met, and the commercial production commenced as evidenced by the Central Excise Department’s confirmation. The Tribunal dismissed the revenue’s appeals for both assessment years 2009-10 and 2010-11.

Issue 2: Disallowance of ?17,17,610/- under Section 80IC for Assessment Year 2012-13

Background and Facts:
The AO disallowed the deduction claimed under section 80IC amounting to ?17,17,610/- on the grounds that the claim was not made in the original return filed under section 139(1) but in the revised return filed under section 139(5).

CIT (A)’s Findings:
The CIT (A) upheld the AO’s decision, citing that the deduction must be claimed in the original return filed under section 139(1) as per section 80AC and section 80A(5).

Tribunal’s Decision:
The Tribunal disagreed with the CIT (A) and AO’s interpretation. It held that the revised return under section 139(5) supersedes the original return and should be considered valid for claiming deductions. The Tribunal emphasized that the intention of section 80AC is to ensure the return is filed on time, and a revised return correcting an omission should not disqualify the claim. The Tribunal allowed the assessee’s appeal, granting the deduction under section 80IC.

Conclusion
The Tribunal’s detailed analysis and findings affirm the CIT (A)’s decision for the assessment years 2009-10 and 2010-11, allowing the deduction under section 80IC. For the assessment year 2012-13, the Tribunal overruled the CIT (A) and AO’s decision, allowing the deduction claimed in the revised return filed under section 139(5). The Tribunal’s decisions are based on a thorough examination of evidence, compliance with statutory conditions, and correct interpretation of relevant provisions.

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