2013 (10) TMI 1 - HC - Income Tax

Deduction u/s 80IB - Delayed filing of return u/s 139(4) - Power to condone the delay in filing return and allow the deduction u/s 80IB- vires of Section 80-AC - According to the petitioner the Assessing Officer rejected the claim for deduction on the premise of the strict application of Section 80-AC. - Held that - Under clauses (b) and (c) of Section 119 of the Act, it is the Central Board of Direct Taxes (CBDT) which has the jurisdiction to extend the benefit of condonation of delay since the claims for deduction under Sections 80-IB(10), 80-IA arising out of Section 80AC fall under chapter IV-A of the Act. Petitioners to file necessary applications enclosing all material information and records to the CBDT for a decision over condonation of the delay in filing the returns and if the CBDT has issued any circular/instructions delegating such powers to its officers, then the CBDT, it is needless to state, to forward the papers to the concerned delegate of the power to consider the applications and pass orders in accordance with law. If petitioners file the representation within one month from today, there is no reason to believe that the CBDT or its delegates would not pass orders within an outer limit of five months from the date of filing applications.

Summary

Issues:
1. Challenge to the vires of Section 80-AC of the Income Tax Act, 1961.
2. Rejection of deduction claims under Section 80-IB(10) and Section 80-IA based on the strict applicability of Section 80-AC.
3. Jurisdiction to extend the benefit of condonation of delay under Section 119 of the Act.

Analysis:
1. The petitioner in W.P.10798/12 contested the validity of Section 80-AC of the Income Tax Act, 1961, after the Assessing Officer rejected the deduction claim under Section 80-IB(10) for the assessment year 2009-10. The rejection was due to the strict application of Section 80-AC, which required filing the return under Section 139(1) of the Act. Despite a representation explaining the delay in filing the return, the claim was dismissed.

2. In W.P.46400/2011, the petitioner challenged the rejection of deduction claims under Section 80-IA for the years 2006-07, 2007-08, and 2008-09, citing the applicability of Section 80-AC. The Assessing Officer denied the deduction based on the stringent enforcement of Section 80-AC, even though the returns were filed within the specified time under Section 139(1) of the Act.

3. During the hearing, the petitioner's counsel expressed satisfaction with a direction to the Commissioner of Income Tax to review the representation for condoning the delay in filing returns under Section 139(4) of the Act, despite the requirement to file under Section 139(1). The respondent's counsel highlighted that the Central Board of Direct Taxes (CBDT) holds the authority under Section 119 of the Act to grant condonation of delay for claims arising from Section 80-IB(10) and Section 80-IA, falling under chapter IV-A of the Act.

4. Consequently, the court directed the petitioners to submit applications to the CBDT for consideration of condonation of delay in filing returns. The CBDT, or its delegates if empowered, were tasked with reviewing the applications and issuing orders within an estimated period of five months from the date of filing. The court emphasized that all arguments from both parties remained open for further consideration.