2023 (2) TMI 1356 - AT - Income Tax

Jurisdiction of the appellate authorities to consider a fresh or new ground/claim - Admissibility of Claims made through revised computation of income filed in course of assessment proceedings - CIT (A) has concluded that the Appellant has failed to provide any reason as to what prevented the Appellant from filing the revised return before issuance of scrutiny notice under section 143(2) - HELD THAT - Observations made by the CIT (A) don t take into account the fact that the Appellant had explained that inadvertently mistakes were made while filing the original return of income. There is nothing on record to show that the Appellant did not act in the bonafide manner. The observations made by the CIT (A) in the nature of conjecture and surmise and are, therefore, rejected. As rightly pointed out by Appellant the Assessing Officer accepted the revised claims which were beneficial to the Revenue an enhanced the income while declining to grant relief in respect revised claims which would have resulted in benefit to the Appellant on account of reduction of taxable income. The approach adopted by the Assessing Officer and the CIT (A) cannot be countenanced given the facts and circumstances of the present case. Accordingly, we admit the revise claims made by the Appellant in respect of (a) deduction under Section 35AC (while simultaneously withdrawing deduction claimed under Section 80G of the Act), (b) reduction of book profits by adding the correct amount of provisions for current tax to the net profits as per Profit Loss Account and (c) the claim of set-off of brought forward losses and unabsorbed depreciation. It is not the case of Revenue that the facts relevant to the adjudication of the aforesaid claims are not on record. Therefore, the Assessing Officer is directed to adjust/recompute the taxable income of the Appellant after verification of the aforesaid revised claims made by the Appellant. Denial of deduction u/s 10AA - export proceeds not realized within the aforesaid period of 6 months - HELD THAT - We find that the solitary issue raised stands decided in favour of Assessee by the decision of BT e-Serv (India) Private Limited 2017 (11) TMI 64 - ITAT DELHI as held since Section 10AA does not prescribe any time limit for realization of export proceeds, the benefit of Section 10AA cannot be denied to an Assessee merely because the export proceeds were realized after the expiry of 6 months from the end of relevant previous year in which export sales were made. In our view, in case an assessee is able to show that the consideration in respect of exports was received in India or brought into India, the deduction under Section 10AA of the Act should be allowed. In the present case the Appellant had filed the details of realization of export sales with the Assessing Officer and the CIT(A). Therefore, we direct the AO to allow deduction to the Appellant u/s 10AA of the Act by taking into account the export sales realized by the Appellant. Accordingly, the order passed by the Assessing Officer and the CIT (A) are set aside. Ground No raised in the appeal is allowed.

Summary

Issues Involved:

1. Whether the revised claims made by the Assessee during assessment proceedings should be admitted despite not being included in the original return of income.
2. Whether the deduction under Section 10AA of the Income Tax Act should be allowed for export proceeds realized after the prescribed time limit.

Issue-wise Detailed Analysis:

1. Admission of Revised Claims:

The Assessee filed revised computations during the assessment proceedings for the Assessment Year 2016-17, which were not included in the original return. The revised claims included adjustments for disallowance of interest, duplication of deductions under Section 10AA, incorrect deduction claims under Sections 80G and 35AC, and set-off of brought forward losses and unabsorbed depreciation. The Assessing Officer (AO) rejected these claims based on the Supreme Court's decision in M/s Goetze (India) Ltd vs. CIT, which mandates that revised claims should be made through a revised return.

Upon appeal, the CIT (A) upheld the AO's decision, stating that additional grounds could only be admitted if they were bona fide and could not have been raised earlier due to valid reasons. However, the Tribunal referred to the Bombay High Court's decision in CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd., which allows appellate authorities to consider additional claims not made in the original return. The Tribunal concluded that the revised claims were bona fide and should be admitted, directing the AO to adjust and recompute the taxable income after verifying the revised claims. Thus, the Assessee's appeal was allowed.

2. Deduction under Section 10AA for Export Proceeds Realized After Time Limit:

For the Assessment Years 2017-18 and 2018-19, the Assessee claimed deductions under Section 10AA for export proceeds realized beyond the six-month period from the end of the relevant previous year. The AO restricted the deduction, adhering to a six-month realization period similar to other sections like 10A and 10B. The CIT (A) upheld this view, emphasizing the need for timely realization of export proceeds.

The Tribunal, however, relied on the Delhi Tribunal's decision in BT e-Serv (India) Pvt. Ltd., which clarified that Section 10AA does not prescribe a specific time limit for the realization of export proceeds. The Tribunal agreed with this interpretation, stating that the benefit of Section 10AA cannot be denied if the export proceeds are realized after six months, provided they are eventually brought into India. The Tribunal directed the AO to allow the deduction by considering the export sales realized by the Assessee, thereby setting aside the orders of the AO and CIT (A). Consequently, the Assessee's appeals for both years were allowed.

In conclusion, the Tribunal allowed all three appeals filed by the Assessee, emphasizing the importance of considering additional claims and the absence of a strict time limit for export proceeds realization under Section 10AA.