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2021 (7) TMI 153 - AT - Income TaxDeduction u/s 80JJA - whether the assessee satisfied the requisite conditions for claim of deduction u/s 80JJAA, had most arbitrarily allowed the same? - assessee had neither raised the claim for deduction u/s 80JJAA in its original return of income nor by way of filing of a revised return, the A.O, therefore, had declined to take cognizance of the same as was raised on the basis of a letter dated 04.03.2014 that was filed by the assessee along with the audit report of a Chartered accountant in Form No. 10DA - HELD THAT - As is discernible from the assessment order A.O despite declining to admit the assessee s claim for deduction u/s 80JJAA of the Act, had however, also dealt with the same on merits, and had concluded that qua the infirmities in the aforementioned claim the assessee was even otherwise not eligible for the same - in the course of the proceedings before the CIT(A), we find, that the assessee had point wise rebutted the observations of the A.O, and considering the same the CIT(A) had held the assessee to be eligible for claim of deduction u/s 80JJAA. We are unable to persuade ourselves to subscribe to the claim of the ld. D.R that the CIT(A) ought to have restored the matter to the file of the A.O for verifying the assessee s entitlement for claim of deduction u/s 80JJAA of the Act. Our aforesaid view is fortified by case of International Tractors ltd. 2021 (4) TMI 1033 - DELHI HIGH COURT wherein involving identical facts the Hon ble High Court had set-aside the order of the Tribunal that had restored the issue as regards the assessee s entitlement for deduction u/s 80JJAA to the file of the A.O. CIT(A) had allowed a legitimate claim of the assessee, therefore, there was no justification on the part of the Tribunal to have restored the matter to the file of the A.O for fresh adjudication. We also find that the A.O in the assessee s own case for A.Y. 2012-13 to A.Y. 2015-16 had held the assessee to be eligible for claim of deduction u/s 80JJAA of the Act. We are of the considered view that as the assessee s claim for deduction u/s 80JJAA is duly substantiated by the audit report filed by a Chartered accountant in Form No.10DA along with the notes appended thereto, there would thus be no justification in restoring the matter to the file of the A.O, which in our considered view would be an idle formality, neither in the interest of the revenue nor that of the assessee. We may herein observe that neither any infirmity as regards the assessee s entitlement for claim of deduction u/s 80JJAA is discernible from the records nor anything has been placed before us by the ld. D.R to negate the view taken by the CIT(A) that the assessee was eligible for deduction under the aforesaid statutory provision. In our considered view had rightly allowed the assessee s claim for deduction u/s 80JJAA. - Decided in favour of revenue.
Issues Involved:
1. Allowability of deduction under section 80JJAA of the Income Tax Act, 1961. 2. Procedural requirements for claiming deductions. 3. Powers and duties of the Assessing Officer (A.O) and appellate authorities in admitting claims not made in the original return. 4. Consistency in allowing deductions in subsequent assessment years. Issue-wise Detailed Analysis: 1. Allowability of Deduction under Section 80JJAA: The core issue revolves around the assessee's claim for deduction under section 80JJAA amounting to ?6,08,01,078/-. The assessee, engaged in software solutions and IT-enabled services, claimed this deduction for additional wages paid to new regular workmen employed in FY 2007-08 and FY 2009-10. The A.O rejected this claim on the grounds that it was not made in the original or revised return and also due to specific infirmities in the claim. However, the CIT(A) allowed the claim, emphasizing that the A.O is duty-bound to assess the correct income and allow legitimate deductions even if not claimed in the return, referencing the Central Board of Revenue Circular No. 14 (XL-35) dated 11 April 1955. 2. Procedural Requirements for Claiming Deductions: The A.O's rejection was based on the Supreme Court judgment in Goetze India Ltd. Vs. CIT (2006) 284 ITR 323 (SC), which precludes the A.O from allowing any claim not made in the return of income except through a revised return. However, the CIT(A) and the Tribunal noted that this restriction does not apply to appellate authorities, citing judgments from the Bombay High Court in CIT Vs. M/s Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom) and the Madras High Court in CIT, Chennai Vs. Abhinitha Foundations (Pvt.) Ltd. (2017) 396 ITR 251 (Mad). 3. Powers and Duties of the A.O and Appellate Authorities: The CIT(A) observed that the A.O is bound to assess the correct income and allow deductions even if not claimed in the return, provided the relevant material is available on record. This view is supported by various judicial pronouncements, including the Supreme Court judgment in Jute Corporation of India Limited v. CIT (187 ITR 688) and the Bombay High Court judgment in CIT v. Ramco International (221 CTR 491). The Tribunal upheld the CIT(A)'s decision, emphasizing that appellate authorities have the power to admit additional claims not made in the original return. 4. Consistency in Allowing Deductions in Subsequent Assessment Years: The CIT(A) and the Tribunal noted that the assessee's claim for deduction under section 80JJAA was allowed in subsequent assessment years (A.Y. 2012-13 to A.Y. 2015-16). The principle of consistency, supported by the Supreme Court judgment in Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC), was applied to argue that there was no valid reason to deny the claim for the year in question. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to allow the deduction under section 80JJAA. The Tribunal concurred with the CIT(A)'s view that the A.O is duty-bound to assess the correct income and allow legitimate deductions, and that appellate authorities have the power to admit claims not made in the original return. The Tribunal also emphasized the principle of consistency in allowing deductions in subsequent assessment years. The appeal filed by the revenue was deemed devoid and bereft of any merit. Order Pronounced: The appeal filed by the revenue was dismissed, and the order was pronounced in the open court on 28.06.2021.
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