2019 (6) TMI 484 - HC - Income Tax

Revision u/s 264 - deduction u/s 80-IB - HELD THAT - Petitioners claim cannot therefore be accepted de hors the said statutory provision and ordinary principle of the wide powers of the CIT exercising revisional jurisdiction u/s 264 of the Act cannot be imported. What Section 80A(5) mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income Tax Authority In absence of the provision contained in Section 80A(5) has held by various decisions of the High Courts noted above, the CIT could entertain a fresh claim in Revision Application even if the claim was not made previously before the AO. Provision contained in Section 80A(5) is a statutory interdict which would prevent the CIT from granting any such claim in exercise of his revisional jurisdiction u/s 264. As is often times stated, even High Court in exercise of Writ jurisdiction under Article 226 of the Constitution of India would not issue directions contrary to statutory provisions. Width of the powers of the CIT u/s 264 would not permit him to ignore the requirement of Section 80A(5) or allow the claim of an assessee in breach of the condition contained therein. We are therefore not in agreement that the expression given by the Income Tax Tribunal in case of Madhav Construction 2017 (8) TMI 1122 - ITAT MUMBAI holding that the restriction contained in Section 80A(5) is to restrict the power of AO and not higher Income Tax Authorities. The Petitioners having given up the challenge to the constitutionality of the retrospectivity to Section 80A (5), cannot bring in the concept of the reading down of the provision in order to save if from unconstitutionally. In plain terms, our duty would be to enforce the provision contained in Sub Section (5) of Section 80A, as it is stands in the statue book. The decision in case of Goetze (India) Limited 2006 (3) TMI 75 - SUPREME COURT was rendered in different background. The Supreme Court did not have any occasion to interpret the provision of Section 80A (5) in the context of the power of the CIT or the Appellate Tribunal. In the result, we do not find any merit in the Writ Petition, the same is therefore dismissed.

Summary

Issues Involved:
1. Whether the claim under Section 80-IB (10) of the Income Tax Act, 1961, can be considered on merits under Section 264 despite not being claimed in the return of income.
2. The retrospective application of Section 80A(5) of the Income Tax Act, 1961.
3. The scope of the powers of the Commissioner of Income Tax (CIT) under Section 264 of the Income Tax Act, 1961, in relation to claims not made in the return of income.

Detailed Analysis:

Issue 1: Consideration of Claim under Section 80-IB (10) on Merits under Section 264
The petitioners sought a Writ of Mandamus directing the respondent to consider their claim under Section 80-IB (10) on merits under Section 264, despite not claiming it in their return of income. The petitioners had not claimed the deduction in their return for the assessment year 2008-09 and filed a Revision Application before the CIT, which was ultimately rejected due to the restriction imposed by Section 80A(5). The court noted that Section 80A(5) of the Act mandates that if the assessee fails to make a claim in the return of income, no deduction shall be allowed. The court emphasized that this condition applies to the claim itself and must be implemented by the Assessing Officer, CIT, or the Appellate Tribunal.

Issue 2: Retrospective Application of Section 80A(5)
The petitioners initially challenged the retrospective introduction of Section 80A(5) as unconstitutional but later did not press this challenge. The court proceeded on this basis and did not address the constitutionality of the retrospective application. The court's duty was to enforce the provision as it stands in the statute book, thereby upholding the retrospective application of Section 80A(5).

Issue 3: Powers of the CIT under Section 264
The petitioners contended that the restriction imposed by Section 80A(5) should apply only to the Assessing Officer and not to the CIT in the exercise of revisional powers. They argued that the CIT has wide revisional powers under Section 264 to grant relief even if the claim was not made before the Assessing Officer. The court acknowledged the wide powers of the CIT under Section 264, as established in various judgments, including the Gujarat High Court's decision in C. Parikh and Company vs. Commissioner of Income Tax. However, the court held that the statutory provision in Section 80A(5) acts as an interdict preventing the CIT from granting such claims in revision if not made in the return of income. The court disagreed with the interpretation that Section 80A(5) restricts only the Assessing Officer's powers, noting that the restriction applies to the claim and must be enforced by all relevant authorities.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioners' arguments. The court upheld the statutory provision of Section 80A(5), emphasizing that it applies to the claim itself and must be enforced by the Assessing Officer, CIT, and the Appellate Tribunal. The retrospective application of Section 80A(5) was not challenged, and the court enforced the provision as it stands in the statute book.