2019 (10) TMI 722 - AT - Income Tax

Deduction u/s 80IB(10) - assessee had not filed its return of income within the due date provided under section 139(1) as per section 80AC of the Act the assessee would not be eligible to claim deduction under section 80IB(10) - HELD THAT - Considering the overall facts and circumstances of the case in the light of the decisions referred to above and more particularly applying the ratio of the decision of the Hon'ble Supreme Court in Dilip Kumar Co. Ors. 2018 (7) TMI 1826 - SUPREME COURT we hold that the condition imposed under section 80AC of the Act has to be fulfilled for claiming deduction under section 80IB(10) of the Act. Since, the assessee has not fulfilled the aforesaid condition, deduction claimed under section 80IB(10) of the Act has been rightly denied by the Departmental Authorities. - Decided against assessee.

Summary

Issues Involved:
1. Disallowance of deduction claimed under section 80IB(10) of the Income-tax Act, 1961.
2. Interpretation of section 80AC of the Income-tax Act, 1961, regarding the mandatory nature of filing the return within the due date under section 139(1).

Issue-wise Detailed Analysis:

1. Disallowance of Deduction Claimed under Section 80IB(10):
The assessee, a partnership firm engaged in the business of builders and developers, claimed a deduction under section 80IB(10) for a housing project. The Assessing Officer disallowed the deduction on the grounds that the assessee did not comply with the conditions of section 80AC, specifically the requirement to file the return of income within the due date under section 139(1). The Commissioner of Income Tax (Appeals) upheld this disallowance, agreeing that non-compliance with section 80AC made the assessee ineligible for the deduction under section 80IB(10).

2. Interpretation of Section 80AC:
The primary issue was whether the condition under section 80AC, which mandates filing the return of income within the due date specified under section 139(1) for claiming deductions under section 80IB(10), is mandatory or directory.

Arguments by the Assessee:
The assessee argued that the requirement under section 80AC is directory, not mandatory. They contended that section 80IB(10) is a beneficial provision and should be construed liberally, citing several judicial precedents to support their claim.

Arguments by the Revenue:
The Revenue argued that the provision of section 80AC is mandatory. They cited the Hon’ble Calcutta High Court's decision in CIT v/s Shelcon Properties Pvt. Ltd., which held that the provision is mandatory. They also referenced the Supreme Court's decision in Commissioner of Customs (Import) v/s Dilip Kumar & Co. & Ors., emphasizing that the language of the statute should be interpreted strictly as per its plain and unambiguous wording.

Tribunal's Analysis and Conclusion:
The Tribunal examined the language of section 80AC, which clearly states that no deduction under certain provisions, including section 80IB, shall be allowed unless the return is furnished on or before the due date specified under section 139(1). The Tribunal found the language of section 80AC to be plain and unambiguous, leaving no room for alternative interpretations. They referred to the Supreme Court's decision in Dilip Kumar & Co. & Ors., which mandates a strict interpretation of tax statutes and exemption provisions.

The Tribunal concluded that the condition under section 80AC is mandatory. Therefore, the assessee's failure to file the return within the due date under section 139(1) rendered them ineligible for the deduction under section 80IB(10). The Tribunal upheld the disallowance of the deduction by the Departmental Authorities and dismissed the appeal.

Final Judgment:
The appeal was dismissed, and the order passed by the Commissioner (Appeals) was upheld. The Tribunal held that the condition under section 80AC must be fulfilled for claiming the deduction under section 80IB(10), and since the assessee did not meet this condition, the deduction was rightly denied.