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2019 (5) TMI 845 - AT - Income TaxDeduction u/s 80IB(10) - claim denied solely for the reason that the deduction has not been claimed in the return - HELD THAT - If the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. On a comprehensive reading of the judgments and the legal position laid down thereof in the case of National Thermal Power Company Ltd 1996 (12) TMI 7 - SUPREME COURT ,Pruthvi Brokers Shareholders Pvt. Ltd 2012 (7) TMI 158 - BOMBAY HIGH COURT , Goetze (India) Limited 2006 (3) TMI 75 - SUPREME COURT and considering the fact that the assessee is eligible for claim of deduction which was otherwise eligible, which was denied solely for the reason that the deduction has not been claimed in the return, is hereby allowed. Method of calculation in determining the eligible deduction - As gone through the rationale and the method of calculation in determining the eligible deduction by the Ld. CIT(A) and find that the Ld. CIT(A) has determined the deduction based on the aggregate build up area, percentage of completion work, and the expenditure involved Accordingly out of the deduction claim of ₹ 2,25,43,724/- claimed by the assessee an amount of ₹ 21,10,455/- has been found to be taxable (as per the table below) and the remaining amount is hereby held to be eligible for deduction under section 80IB(10) Disallowance of contribution to pension fund u/s 36(1)(iv) - HELD THAT - As brought to our notice that the ld. CIT, Shimla has accorded approval under Sub Rule (1) of Rule 2 of Part-B of the Fourth Schedule of Income Tax Act,1961 w.e.f 31/03/2008 i.e; from the date of creation of fund under section. Hence the assessee would be eligible for the deduction as the approval has been given retrospectively. Appeal of the assessee on this ground is allowed. AO is hereby directed to allow the deduction after due verification of the approval granted by the Ld. CIT, Shimla. Appeal of assessee allowed.
Issues Involved:
1. Claim of deduction under Section 80 IB(10) for various assessment years. 2. Treatment of transfer charges. 3. Adequate opportunity for representation. 4. Contribution towards pension fund. Issue-wise Detailed Analysis: 1. Claim of Deduction under Section 80 IB(10): For A.Y. 2006-07: - The assessee filed a return on 31/03/2007, later revised on 31/03/2008, claiming a deduction of ?2,25,43,724 under Section 80 IB(10). The Assessing Officer (A.O.) rejected the claim due to late filing beyond the due date specified under Section 139(1), invoking Section 80AC. - The CIT(A) disallowed ?21,10,455 for specific projects and denied the remaining deduction due to late filing. - The tribunal examined whether deductions claimed in a non-est return (not filed within the prescribed time) can be allowed. It concluded that a non-est return is legally non-existent, thus no deductions can be based on it. - However, the tribunal considered whether the appellate authority could entertain claims not made in the original return. Citing judgments from the Supreme Court and High Courts, it held that appellate authorities could consider additional claims to determine the correct tax liability. - The tribunal allowed the deduction for A.Y. 2006-07, finding the assessee eligible for the claim, despite the delay in filing due to audit issues. For A.Y. 2007-08: - The assessee filed a return on 31/03/2008, claiming a deduction of ?5,60,76,048 under Section 80 IB(10). The tribunal treated the return as filed under Section 139(4) and allowed the deduction, acknowledging judicial precedents that delays beyond the assessee's control should not deny deductions. - The CIT(A) calculated ineligible deductions amounting to ?98,13,055, which the tribunal upheld after reviewing the computation methodology. 2. Treatment of Transfer Charges: - The assessee did not press the grounds related to transfer charges for A.Y. 2006-07 and 2007-08. 3. Adequate Opportunity for Representation: - For A.Y. 2009-10, the assessee claimed inadequate opportunity for representation as the CIT(A) proceeded with ex parte orders. However, specific details or resolutions regarding this issue were not elaborated in the judgment. 4. Contribution towards Pension Fund: - For A.Y. 2009-10, the assessee contested the disallowance of contributions to the pension fund under Section 36(1)(iv). The tribunal noted that the CIT, Shimla, had retrospectively approved the pension fund from 31/03/2008. Consequently, the tribunal allowed the deduction and directed the A.O. to verify the approval and allow the deduction accordingly. Conclusion: - The tribunal allowed the appeals for the assessee, granting deductions under Section 80 IB(10) for A.Y. 2006-07 and 2007-08, and allowed the pension fund contribution deduction for A.Y. 2009-10 after due verification. The treatment of transfer charges and the issue of adequate representation were not pressed or resolved in detail.
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