2023 (2) TMI 314 - AT - Income Tax

Delayed filling Return of income or not - Assessee was required to get its accounts audited - Disallowance of deduction u/s.80IA(7) - Non permitting carry forward of current year short term capital loss - Intimation u/s 143(1) - assessee filed return beyond the due date as prescribed u/s 139(1) of the Act - as per CIT-A held the assessee to be disentitled to the benefits on the ground that the extension did not apply to the assessee-HUF - HELD THAT - Clause (a)(ii) of Explanation 2 to section 139(1) deals with due date as concerning a person other than a company whose accounts are required to be audited under the Act or under any law for the time being in force. The accounts of the assessee were audited, which is an admitted position. CIT(A) has denied the benefit of the Board s Order by opining that an HUF cannot be considered as a person . In our considered opinion, this interpretation is not in accordance with law. Clause (a)(ii) of the Explanation 2 to section 139(1) covers any person whose accounts are required to be audited. Such a person may be Individual, HUF or a Body Corporate etc. Since the assessee- HUF was required to get its accounts audited, the case falls in Explanation 2(a)(ii) to section 139(1), entitling the assessee to the extended date of 31-10-2019. As the return was filed before the extended due date, we hold that the assessee is entitled to the benefit of deduction u/s.80IA(7) and also carry forward of the short term capital loss as discussed above. Assessee appeal is allowed.

Summary

Issues: Disallowance of deduction u/s.80IA(7) and non-permission of carry forward of short term capital loss due to late filing of return.

In this judgment by the Appellate Tribunal ITAT Pune, the only issue raised was the disallowance of deduction u/s.80IA(7) and the denial of carrying forward current year short term capital loss due to the late filing of the return. The assessee, an HUF, filed the return claiming the deduction and carry forward, but an Intimation u/s.143(1) disallowed these items citing late filing. The assessee challenged this before the CIT(A), arguing that the due date was extended to 31-10-2019. The CIT(A) found that the assessee was not covered under the extension and upheld the disallowance. The Tribunal noted that although the return was filed after the initial due date of 31-08-2019, it was within the extended date of 31-10-2019. The CIT(A's view that an HUF cannot be considered a 'person' under Explanation 2 to section 139(1) was deemed incorrect. The Tribunal held that since the HUF's accounts were audited, falling under Explanation 2(a)(ii), the extended due date applied. Therefore, the assessee was entitled to the deduction u/s.80IA(7) and carry forward of the short term capital loss.

The Tribunal's interpretation clarified that the term 'person' in Explanation 2 to section 139(1) includes entities like HUFs required to get their accounts audited, contrary to the CIT(A)'s view. By considering the legislative intent behind the extension of due date provisions, the Tribunal emphasized that entities such as HUFs fall within the ambit of 'person' under the law. The Tribunal's decision focused on the statutory language and purpose of the relevant provisions to ensure that legitimate benefits are not denied to assesses based on narrow interpretations. The judgment highlights the importance of a holistic understanding of the legal framework to uphold the rights of taxpayers and prevent unjust denial of legitimate claims due to technicalities.