2017 (6) TMI 1038 - AT - Income Tax

Disallowance of deduction claimed u/s 80IB(11C) - non filing of return of income on or before the due date u/s 139(1) - Held that - The assessee has filed return on 1.3.2012. The assessee stated that the delay in filing the return of income is attributable to reconciliation of turnover quantified during the course of survey, which is having nexus with impounded material found during the course of survey, because of this, there was a delay in filing return of income within the due date specified u/s 139(1) of the Act, which is beyond its control. We find that the reasons given by the assessee for not filing return of income within the due date is neither intentional nor avoiding filing return, which is evident from the fact that the assessee has filed return within the due date specified u/s 139(4) of the Act. Deduction u/s 80IB(11C) is a beneficial provision, which entitles tax payers deduction towards profit derived from the hospital set up in a specified area to boost the economic activity of the locality. Therefore, deduction cannot be denied merely on the ground that the assessee has not filed the return within the due date u/s 139(1)inspite the assessee has explained the reasons for not filing the return. Considering the facts and circumstances of this case and also respectfully following the decision in case of CIT Vs. M/s. S. Venkatesh 2013 (6) TMI 715 - ANDHRA PRADESH HIGH COURT we are of the view that the assessee cannot be denied deduction u/s 80IB(11C) on technical issues when the assessee is otherwise entitled for deduction. - Decided in favour of assessee.

Summary

Issues involved:
1. Disallowance of deduction claimed u/s 80IB(11C) for non-filing of return of income on or before the due date u/s 139(1) of the Act.
2. Sustaining the addition of a certain amount made by the assessing officer towards alleged unaccounted receipts.
3. Whether net profit on the alleged unaccounted receipts should be estimated instead of bringing the whole amount to tax.

Detailed analysis:
1. The first issue pertains to the disallowance of deduction claimed u/s 80IB(11C) due to non-filing of the return of income on time. The assessee, a partnership firm running a hospital, claimed the deduction, but the assessing officer disallowed it for not filing the return on time. The AR argued that the deduction should not be denied solely for this reason as all other conditions were met, and the delay was due to reasons beyond control. The DR contended that timely filing is mandatory for claiming the deduction. The tribunal noted that while timely filing is required for deductions, if there is a reasonable cause for delay, the deduction cannot be denied. Citing relevant case laws, the tribunal held in favor of the assessee, emphasizing that the deduction should not be denied on technical grounds when the assessee is entitled to it.

2. The second issue involved the addition made towards alleged unaccounted receipts during a survey. The assessee explained that the delay in filing the return was due to reconciling turnover from the survey, which was beyond their control. The tribunal found the reasons genuine and noted that the deduction u/s 80IB(11C) is a beneficial provision to boost economic activity, thus directing the AO to allow the deduction. The tribunal relied on a previous judgment of the Hon'ble A.P. High Court to support its decision.

3. The third issue raised was whether the assessing officer should estimate net profit on alleged unaccounted receipts instead of taxing the whole amount. However, the tribunal did not delve into this issue as it primarily focused on the disallowance of the deduction and the addition made towards unaccounted receipts. Ultimately, the tribunal allowed the appeal filed by the assessee, directing the AO to grant the deduction u/s 80IB(11C) of the Act.