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2025 (4) TMI 1452 - AT - Income TaxDeduction u/s 80IB(10) - due to a typographical error the claim of deduction was not mentioned in the I.T. Return - HELD THAT - A perusal of the Audit Report in Form No.10CCB shows the date of approval by the local authority as 30.03.2007 and the date of completion of the housing project as 31.03.2012. The deduction u/s 80IB(10) of the Act is also determined at Rs. 6, 12, 05, 192/-. Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim in view of the various judicial precedents relied on by CIT(A) however he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deductions / exemptions without claiming the same in the return of income as per the provisions of section 80A(5). However he has not done the same. We deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to adjudicate the issue of allowability of the claim in absence of claiming the same in the return of income as per provisions of section 80A(5) of the Act and pass a speaking order on this issue. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Allowability of deduction under section 80IB(10) when not claimed in original return Legal Framework and Precedents: Section 80IB(10) provides deduction for profits and gains from certain housing projects. Section 80A(5) of the Act stipulates that if an assessee fails to make a claim for deduction under specified sections (including section 80IB) in the return of income, no deduction shall be allowed thereafter. However, judicial precedents have clarified that appellate authorities may entertain fresh claims not made in the original return if relevant material is on record. Notably, the Supreme Court in National Thermal Power Co. Ltd. v. CIT held that appellate authorities have power to entertain fresh claims not taken before lower authorities. The Bombay High Court in CIT v. Pruthvi Brokers & Shareholders and the Madras High Court in CIT v. Abhinitha Foundation (P.) Ltd. have held that claims not made in the original or revised return can be considered if relevant documents are available. Court's Interpretation and Reasoning: The CIT(A) allowed the deduction under section 80IB(10) based on the assessee's submission that the omission to mention the deduction amount in the return was a bona fide oversight by the Chartered Accountant's staff during the COVID lockdown period. The project for which deduction was claimed had been consistently allowed in earlier years (AYs 2012-13, 2013-14, and 2014-15). The Form 10CCB quantifying the deduction was filed within the prescribed time and details were mentioned in the return, though the amount was inadvertently omitted. The CIT(A) relied on the principle that substantial compliance and availability of requisite information can justify allowing the deduction despite non-mention in the return. The appellate authority followed judicial precedents permitting fresh claims at the appellate stage where the claim is bona fide and supported by records. Key Evidence and Findings: The assessee's Form 10CCB was filed timely and quantified the deduction at Rs. 6,12,05,192/-. The project had valid building permission and occupancy certificates. Earlier years' assessments had allowed the deduction for the same project. The omission in the return was due to oversight during COVID-19 related disruptions. Application of Law to Facts: The CIT(A) applied the principle of allowing fresh claims supported by evidence and prior acceptance in earlier years, despite the claim not being explicitly made in the original return. The Tribunal noted that the AO (CPC) had not disallowed the deduction on merits but only due to non-mention in the return. Treatment of Competing Arguments: The Revenue contended that the CIT(A) lacked jurisdiction to allow a deduction not claimed in the original or revised return, relying on the Supreme Court decision in Goetze India Ltd. vs. CIT, which restricts appellate authorities from allowing claims not made in returns. The assessee relied on other High Court decisions permitting fresh claims at appellate stage if supported by records. Conclusions: While the CIT(A) allowed the deduction, the Tribunal observed that section 80A(5) prohibits allowance of deductions not claimed in the return. Although judicial precedents permit entertaining fresh claims, the appellate authority must adjudicate the allowability of such claims in light of section 80A(5). The CIT(A) had not passed a speaking order on this specific legal issue. Therefore, the Tribunal remanded the matter to the CIT(A) for fresh adjudication on whether the deduction can be allowed without claim in the return, directing a reasoned and speaking order after hearing the assessee. Issue 2: Jurisdiction of CIT(A) to admit and allow additional grounds without AO's comments Legal Framework and Precedents: Generally, appellate authorities admit additional grounds if they are relevant and connected to the subject matter of the appeal. However, procedural fairness requires that the AO be given an opportunity to comment on additional grounds to avoid prejudice. Court's Interpretation and Reasoning: The Revenue contended that the CIT(A) erred in admitting and deciding the additional ground relating to section 80IB(10) deduction without obtaining AO's comments. The Tribunal did not specifically rule on this procedural issue but implicitly recognized the need for due opportunity by directing the CIT(A) to hear the assessee and pass a reasoned order. Key Evidence and Findings: The additional ground was raised by the assessee before the CIT(A) challenging the disallowance of deduction. The AO had not disallowed the deduction on merits but the CPC had processed the return without the deduction claim. Application of Law to Facts: The appellate authority has discretion to admit additional grounds, but procedural fairness requires AO's comments. The Tribunal's direction to the CIT(A) to pass a speaking order after hearing the assessee indirectly addresses this concern. Treatment of Competing Arguments: Revenue argued that CIT(A) lacked jurisdiction and failed proper procedure. Assessee argued for allowance based on merits and precedents. Conclusions: The Tribunal did not expressly decide on this ground but remedied procedural concerns by remanding for fresh adjudication with due opportunity. Issue 3: Whether the AO disallowed the deduction under section 80IB(10) Legal Framework and Precedents: The CPC processed the return under section 115JC (Alternate Minimum Tax) as the deduction under section 80IB(10) was not claimed in the return. The AO did not explicitly disallow the deduction on merits. Court's Interpretation and Reasoning: The CIT(A) observed that the deduction was disallowed merely due to non-mention in the return and not on merits. The Tribunal agreed that the AO did not disallow the deduction on merits but the CPC's processing led to denial of the deduction. Key Evidence and Findings: The return was processed without the deduction claim; no separate assessment order disallowing the deduction was passed by the AO. Application of Law to Facts: The Tribunal recognized that the AO's action was limited to processing and not an adjudication on deduction merits. Treatment of Competing Arguments: Revenue argued that the deduction was not claimed and hence disallowed. Assessee argued that the deduction was not disallowed on merits. Conclusions: The Tribunal held that the deduction was not disallowed by the AO on merits but was not allowed due to non-claim in the return. Issue 4: Adjudication of original and additional grounds which are irrelevant or unfit Legal Framework and Precedents: Appellate authorities should decide only relevant and fit grounds based on facts and law. Court's Interpretation and Reasoning: The Revenue contended that the CIT(A) erred in adjudicating grounds which were not fit or relevant. The Tribunal did not specifically address this ground but by remanding the matter for fresh adjudication, implicitly recognized the need for proper adjudication on relevant grounds. Conclusions: The Tribunal's remand order ensures that only relevant grounds will be decided after due process. Issue 5: Applicability of section 80A(5) regarding non-claim of deduction in return Legal Framework and Precedents: Section 80A(5) states that no deduction under specified sections shall be allowed if not claimed in the return of income. However, judicial precedents have carved out exceptions permitting fresh claims at appellate stage if supported by records and bona fide. Court's Interpretation and Reasoning: The Tribunal emphasized that despite the precedents allowing fresh claims, the appellate authority must adjudicate the allowability of such claims in light of section 80A(5). The CIT(A) had not done so. Therefore, the issue was remanded for fresh consideration with a speaking order. Application of Law to Facts: The assessee's claim was not made in the original return but supported by Form 10CCB and prior years' acceptance. The Tribunal found that the CIT(A) must reconcile these facts with the statutory bar in section 80A(5). Conclusions: The Tribunal directed the CIT(A) to adjudicate the allowability of the deduction claim in the absence of its mention in the return, ensuring compliance with section 80A(5). The assessee is to be given opportunity of hearing. 3. SIGNIFICANT HOLDINGS "Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim, in view of the various judicial precedents relied on by Ld. CIT(A), however, he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deductions / exemptions without claiming the same in the return of income as per the provisions of section 80A(5). However, he has not done the same. Under these circumstances, we deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to adjudicate the issue of allowability of the claim in absence of claiming the same in the return of income as per provisions of section 80A(5) of the Act and pass a speaking order on this issue. Needless to say the Ld. CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law." Core principles established include:
Final determinations:
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