2019 (7) TMI 438 - HC - Income Tax

Deduction u/s 80IA - claim not made in the return of income , after insertion of provisions vide Sec. 80A(5) in the Finance Act 2009 - CIT-A held that the appellate authorities can allow additional grounds, if to be raised by the assessee in the appeal if it is found that those grounds were not raised on account of any wilful omission and the assessee has a reasonable explanation - HELD THAT - On a reading of the assessment order dated 17.03.2015, it is evidently clear that books of accounts and all the details were furnished to the AOr which was perused by the AO and the case was discussed with the authorized representative of the assessee. In such situation, the assessee's case was foreclosed solely on the ground that he had not filed revised return of income. With regard to the loss incurred on cancellation of forward contract, on facts, the CIT(A) found that it is an act of omission on account of erroneous belief of complex legal position. With regard to the claim of deduction under Section 80IA, in respect of the income free windmills, the CIT(A) noted that legal disputes were pending before the Hon'ble Supreme Court and various Courts at the time of filing of returns and there was uncertainty in the legal position which could be taken as a reasonable cause for the assessee not claiming the deduction in the return of income. Further, it noted that all the facts are already recorded in the books and are available for verification. This very issue was considered and it was held that the appellate authorities can allow additional grounds to be canvassed, if it is found to be bonafide and the omission to seek for such relief was a bonafide omission. In the instant case, the records clearly show that all the details were available with the AO and no fresh details were required to be filed or taken into consideration. In such circumstances, we agree with the view taken by the Tribunal in confirming the order passed by the CIT(A). - Decided against the Revenue

Summary

Issues:
1. Eligibility of the assessee to claim deduction u/s 80IA after insertion of provisions in the Finance Act 2009.
2. Allowance of fresh claim of the assessee regarding losses on forward contracts and provisions written back.
3. Application of the ruling in M/s.Lakshmi Card Clothing Manufacturing Company P Ltd. vs DCIT regarding ignorance of not claiming reliefs.

Eligibility to Claim Deduction u/s 80IA:
The Revenue filed appeals challenging the ITAT's decision on the eligibility of the assessee to claim deduction u/s 80IA. The ITAT allowed the fresh claim of the assessee for losses on forward contracts and provisions written back, which the Revenue contended was based on distinguishable case laws. The ITAT also did not apply the ruling in M/s.Lakshmi Card Clothing Manufacturing Company P Ltd. vs DCIT, questioning the company's ignorance in not claiming reliefs. The CIT(A) and Tribunal supported the assessee's claims, citing precedents emphasizing correct assessment of tax liability. The Tribunal dismissed the Revenue's appeal and allowed the cross objection by the assessee, following the decision in NTPC vs. CIT. The Revenue argued that the claims required a revised return, but the Tribunal upheld the CIT(A)'s decision based on available material and inadvertent omissions.

Allowance of Fresh Claims:
The assessee, engaged in steel manufacturing, made fresh claims during assessment proceedings, which the Assessing Officer rejected citing the Goetze (India) Ltd. case. The CIT(A) considered the assessee's explanations and audit reports, allowing the claims based on precedents like Abhinitha Foundation (P) Ltd. The Tribunal upheld the CIT(A)'s decision, emphasizing correct tax assessment and allowing additional grounds if omitted unintentionally. The Revenue contended that the claims necessitated a revised return, but the Tribunal supported the assessee's position, noting all details were available with the Assessing Officer.

Application of Legal Ruling:
The Revenue invoked the M/s.Lakshmi Card Clothing Mfg. Co (P) Ltd. case to argue that the claims required a revised return, emphasizing the importance of correct tax assessment. However, the Tribunal and CIT(A) relied on precedents like NTPC vs. CIT and Abhinitha Foundation (P) Ltd., allowing the claims based on available material and inadvertent omissions. The Tribunal dismissed the Revenue's appeal and supported the assessee's cross objection, emphasizing the correct assessment of tax liability and the availability of necessary details with the Assessing Officer.

In conclusion, the High Court dismissed the tax case appeals, answering the substantial questions of law against the Revenue. The judgment emphasized the importance of correct tax assessment and the allowance of claims based on available material and inadvertent omissions, following established legal precedents.