1976 (1) TMI 35 - HC - Income Tax

Summary

Issues Involved:
1. Whether the requirement to furnish a certificate from the Tea Board in Form No. 5 along with the return of income is mandatory u/r 8A(d) of the Income-tax Rules, 1962.
2. Whether non-compliance with the requirement to furnish the certificate along with the return results in forfeiture of the claim for development allowance u/s 33A of the Income-tax Act, 1961.

Summary:

Issue 1: Mandatory Nature of Furnishing Certificate Along with Return
The primary issue was whether the assessee must furnish a certificate from the Tea Board in Form No. 5 along with the return of income to claim development allowance u/s 33A of the Income-tax Act, 1961, as mandated by rule 8A(d) of the Income-tax Rules, 1962. The Tribunal found that the term "shall" in rule 8A(d) should not be interpreted as mandatory but rather as directory. The court noted that the legislative practice of using "shall" does not always imply a mandatory rule, especially when non-compliance does not lead to invalidation. The court emphasized that the intention behind the rule is to ensure that the assessee has genuinely developed the tea estate, and the certificate serves as evidence of this. Therefore, the non-presentation of the certificate along with the return should not result in the loss of relief to the assessee.

Issue 2: Consequence of Non-Compliance with Rule 8A(d)
The court examined whether non-compliance with the requirement to furnish the certificate along with the return would result in forfeiture of the claim for development allowance. It was observed that the object of section 33A is to grant development allowance on proof of circumstances justifying such a claim. The court reasoned that it would be unreasonable to deny the allowance if the certificate is produced later, especially when the delay is not due to the assessee's fault. The court concluded that the requirement to file the certificate along with the return is not mandatory, and non-compliance should not disentitle the assessee from claiming the development allowance. However, the court clarified that the furnishing of the certificate itself is mandatory, but it need not be simultaneous with the filing of the return.

Conclusion:
The court answered the question in the affirmative, in favor of the assessee and against the revenue, stating that the requirement to furnish the certificate along with the return is directory and not mandatory. A copy of the judgment was directed to be sent to the Income-tax Appellate Tribunal, Cochin Bench, as required u/s 260(1) of the Act.