2023 (12) TMI 460 - AT - Income Tax

Deduction u/s 80-IC - Adjustment u/s 143(1) - claim for eligible unit in Rudrapur Uttarakhand (8th year of claim) - Claim denied as Appellant did not file the Audit Report in Form 10CCB in respect its Rudrapur unit before the due date of filing the return of income - Determination of due date of filing the Return of Income - HELD THAT - For a case to fall under clause (aa) of Explanation-2 to section 139(1) of the Act the assessee is only required to furnish the report referred to in section 92E of the Act and there is no requirement under the aforesaid clause that the assessee has furnished the report referred to in section 92E of the Act. Therefore we find no basis in the conclusion of the learned CIT(A) that since the assessee has failed to comply with the provisions of section 92E of the Act the due date for filing the return of income was 31/10/2015. Vide Form 10CCB filed by the assessee on 29/11/2015 the assessee disclosed the name of the related concerns in India the nature of the transactions undertaken and the transaction amount. Thus from the said details not only the nature of specified domestic transactions undertaken by the Rudrapur unit of the assessee is evident but it is also evident that the aggregate of such transactions entered into by the assessee in the previous year exceeded a sum of Rs. 5, 00, 00, 000. Therefore we find no basis in the finding of the CIT(A) that there was no information before the AO while processing the return under section 143(1) of the Act whether the assessee had inter-alia specified domestic transactions for which it was required to comply with the provisions of section 92E - Details of international transactions and specified domestic transactions provided in Form 3CEB filed on 18/03/2017 also support the claim of the assessee that the assessee was required to furnish the report referred to in section 92E of the Act. Accordingly we are of the considered view that the due date for filing the return of income for the year under consideration in the case of the assessee is 30/11/2015 as per clause (aa) of Explanation-2 to section 139(1) of the Act and thus the original return filed by the assessee on 29/11/2015 is a valid return of income under section 139(1) of the Act. Revised return filed by the assessee on 29/03/2017 it is pertinent to note that vide intimation dated 26/11/2016 issued under section 143(1) of the Act the original return filed by the assessee on 29/11/2015 was processed and thus the revised return which was filed subsequently was not under consideration. Accordingly we are of the considered view that the revised return filed by the assessee on 29/03/2017 was not the subject matter of appeal before the learned CIT(A) and thus the finding vide impugned order that the AO is justified in not accepting the return filed later on 29/03/2017 has no basis. As the return of income filed by the assessee on 29/11/2015 has been found to have been filed on or before the due date specified under section 139(1) of the Act therefore the applicability of provisions of section 80-AC for denial of deduction under section 80-IC of the Act is also ruled out in the present case. AO has made the necessary adjustment while computing the total income as per section 143(1) of the Act by denying the claim of deduction under section 80-IC as the assessee failed to comply with the provisions laid down in section 80-IC(7) read with section 80-IA(7) of the Act - As evident from the record that the assessee filed Form 10CCB in respect of its claim of deduction under section 80-IC of the Act on 29/11/2015 i.e. on the date of filing the original return of income. CIT(A) also recorded this fact . Therefore the claim of deduction u/s 80-IC in its return of income was duly supported with Form 10CCB filed on 29/11/2015. Accordingly we are of the considered view that the case of the assessee does not fall within the meaning of section 143(1)(a)(ii) read with Explanation (a)(ii). Insofar as the issue whether Form 10CCB filed by the assessee on 29/11/2015 was in terms of provisions of section 80-IC(7) read with section 80-IA(7) of the Act and Rule 18BBB is concerned we are of the considered view that such an examination is not permissible under the limited scope of section 143(1) as under the said section during the assessment year 2015-16 only prima facie adjustments were permissible. Accordingly we find no merits in the aforesaid findings of the learned CIT(A) to support the conclusion of denial of deduction under section 80-IC vide intimation issued under section 143(1) - Impugned order upholding the intimation issued under section 143(1) of the Act is set aside. Accordingly grounds in assessee s appeal are allowed.

Summary

Issues Involved:
1. Disallowance of deduction under section 80-IC.
2. Filing of Audit Report in Form 10CCB.
3. Determination of the due date for filing the Return of Income.
4. Validity of Revised Return of Income.
5. Applicability of section 80AC.
6. Prima facie adjustments under section 143(1).
7. Levy of interest under section 234C.

Summary:

1. Disallowance of Deduction under Section 80-IC:
The assessee challenged the disallowance of Rs. 1,35,62,893 claimed under section 80-IC for its Rudrapur unit. The assessee filed its return on 29/11/2015, which was processed, and the deduction was denied. The CIT(A) upheld the disallowance, stating the return was belated and the audit report was not filed timely.

2. Filing of Audit Report in Form 10CCB:
The CIT(A) held the assessee did not file the audit report in Form 10CCB before the due date. The Tribunal found that the audit report was indeed filed on 29/11/2015, the same date as the return, and thus supported the deduction claim under section 80-IC.

3. Determination of the Due Date for Filing the Return of Income:
The CIT(A) considered the due date as 31/10/2015, while the assessee argued it was 30/11/2015 due to international and specified domestic transactions requiring a report under section 92E. The Tribunal agreed with the assessee, stating the due date was 30/11/2015, making the return filed on 29/11/2015 valid.

4. Validity of Revised Return of Income:
The CIT(A) held the revised return filed on 29/03/2017 was invalid as the original return was belated. The Tribunal found this irrelevant since the original return was valid under section 139(1), making the revised return a non-issue.

5. Applicability of Section 80AC:
Since the return filed on 29/11/2015 was within the due date, the provisions of section 80AC, which could deny the deduction for late filing, were not applicable.

6. Prima Facie Adjustments under Section 143(1):
The CIT(A) supported the AO's denial of the deduction under section 80-IC due to non-compliance with sections 80-IC(7) and 80-IA(7). The Tribunal found that such detailed examination was beyond the scope of section 143(1), which allows only prima facie adjustments.

7. Levy of Interest under Section 234C:
The issue of interest under section 234C was deemed consequential and required no separate adjudication.

Conclusion:
The Tribunal allowed the appeal, setting aside the CIT(A)'s order and recognizing the original return filed on 29/11/2015 as valid, thereby permitting the deduction claimed under section 80-IC. The interest issue under section 234C was noted as consequential.