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2025 (1) TMI 1501 - HC - Income TaxPIL - online utility provided by the respondents denied the assessees benefit of claiming a rebate u/s 87A of the Income-tax Act for the assessment year 2024-25 while filing online return against tax computed under various sections of Chapter XII of the Act - seeking direction or order directing the Respondents to allow assesses to file a manual return of income for claiming rebate Whether respondents are justified in modifying their utility whereby an assessee is debarred at the threshold from making a rebate claim under Section 87A while uploading his return of income online? - HELD THAT - As in the course of the hearing our attention was drawn to the subject matter of Writ Petition in the case of Lupin Ltd. 2024 (3) TMI 1406 - BOMBAY HIGH COURT wherein the assessee was prevented from making the claim of deduction based on the Supreme Court decision since electronic mode of filing the return was not permitting the assessee to do so. On a writ petition being filed and on a direction by this Court a manual return was permitted to be filed for making the said claim. We were informed that while processing the manual return the claim of the assessee was accepted. We are referring to this decision for the limited purpose to bring our point in support of our analysis that certainly the utility cannot be designed to prevent an assessee from making a claim which subsequently by adjudication and appeal process may be found to be correct. As in the case of Tata Sons Pvt. Ltd. 2024 (3) TMI 1405 - BOMBAY HIGH COURT also permitted the assessee to file paper return which came to be processed and thereafter an appeal against such processing was filed by the assessee. This decision is also relied upon to the limited extent that the online system did not provide to make a claim which was permitted by paper return and processed accordingly. Therefore it is not that an assessee can be debarred from making a claim in the return of income whether online or manual. If any such claim is made the revenue would certainly be free to examine the same as per the provisions of the Act. Both the revenue and the assessee have remedies under the Act for testing the validity of such a claim. We however refrain from expressing any views on whether the submissions made by the learned senior counsel for the petitioners or the learned ASG are correct since that would be something which has to be examined by the quasi-judicial authorities under the Act in the first instance and not by a writ court in its exercise of extraordinary jurisdiction. We agree with the learned ASG that unless there is a demand for justice which has been rejected or a failure on the part of the revenue to exercise its duty under the Act such a writ as prayed for in prayer clause (c) cannot be granted. We also agree with the learned ASG that unless there is some concrete instance the Court should grant no relief in such broad and general terms. Such reliefs in general terms are typically not to be granted because the ramifications would be unclear. For the present we do not propose to consider relief in terms of the prayer clause (c) of the petition by leaving the question open. Order - Hon ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ direction or order directing the Respondents to modify the utilities for filing of the return of income u/s 139 of the Act immediately thereby allowing assessees to make a claim of rebate u/s 87A of the Act read with the proviso to section 87A in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed under section 139 (5) of the Act. The issue of adjudication of eligibility of a claim under Section 87A is left to the authorities under the Act while processing the returns filed by the assessees.
1. ISSUES PRESENTED and CONSIDERED
The core issues considered by the Court were: A) Whether the respondents were justified in modifying their utility, thereby preventing an assessee from making a rebate claim under Section 87A while filing an income tax return online. B) Whether the claim proposed under Section 87A by an assessee is ex facie frivolous, justifying the respondents in modifying their utility to prevent such a claim at the threshold. C) The interpretation of the interplay between Section 87A and Section 115BAC, specifically whether a rebate under Section 87A can be claimed from the tax computed under Section 115BAC and other provisions of Chapter XII. 2. ISSUE-WISE DETAILED ANALYSIS A) Relevant Legal Framework and Precedents The legal framework revolves around Section 87A, which provides a rebate of income tax for certain individuals, and Section 115BAC, which introduces a new tax regime with specific tax rates. The Court examined the constitutional provisions, particularly Articles 265 and 300A, which mandate that taxes must be levied and collected by the authority of law. The Court also referenced precedents, such as the case of Samir Narain Bhojwani vs. DCIT, which emphasized the right of an assessee to make claims in their tax returns. B) Court's Interpretation and Reasoning The Court reasoned that the utility's modification, which prevents assessees from making claims under Section 87A, is contrary to the scheme of the Income-tax Act and unconstitutional. The Court emphasized that the Act allows an assessee to compute their income and make claims based on their understanding, which should be adjudicated later by the authorities. The utility should not preemptively deny such claims. C) Key Evidence and Findings The Court found that the utility's modification was not based on any explicit prohibition in the Income-tax Act. It noted that the legislative intent, as seen in the absence of explicit prohibitions like those in Section 112A(6), suggests that assessees should be allowed to make claims under Section 87A. D) Application of Law to Facts The Court applied the constitutional mandate and the scheme of the Income-tax Act to conclude that the utility's modification was unjustified. It held that the revenue's interpretation, which led to the modification, was debatable and should not prevent an assessee from making claims at the filing stage. E) Treatment of Competing Arguments The Court considered the arguments of the petitioners, who contended that the rebate under Section 87A should apply to the total tax computed, including under other provisions of Chapter XII. The respondents argued that the rebate should only apply to tax under Section 115BAC. The Court found the issue debatable and concluded that the utility should not prevent claims based on one interpretation. F) Conclusions The Court concluded that the utility should allow assessees to make claims under Section 87A. It held that the revenue's interpretation was not so clear-cut as to justify preventing claims at the threshold. 3. SIGNIFICANT HOLDINGS The Court's significant holdings include: - The utility modification preventing claims under Section 87A is contrary to the Income-tax Act and unconstitutional. - Assessees should be allowed to make claims based on their interpretation, which should be adjudicated by the authorities. - The issue of whether Section 87A rebates apply to taxes computed under other provisions of Chapter XII is debatable and should not be preemptively denied by the utility. ORDER (i) The Court issued a writ of mandamus directing the respondents to modify the utility for filing returns under Section 139, allowing claims under Section 87A. (ii) The Court did not adjudicate on the broader issue of filing returns based on personal belief, leaving it open for future consideration. (iii) The Court left the adjudication of eligibility for claims under Section 87A to the authorities under the Act. (iv) The Court rejected the prayer for a writ of prohibition, allowing the assessee to pursue remedies under the Act. (v) Interim orders were made absolute, and the rule was made absolute with no order as to costs.
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