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2022 (3) TMI 244 - AT - Income TaxDisallowance of deduction u/s. 80JJAA - Assessee did not file a revised return to claim deduction under section 80JJAA of the Act and any claim made can be allowed only by way of a revised return and not otherwise - whether the assessee can claim for a lawful deduction which was not claimed in the return of income filed u/s. 139(1) ? - HELD THAT - As decided in M/S. WIPRO LIMITED VERSUS THE ADDITIONAL COMMISSIONER OF INCOME-TAX, CIRCLE 12 (5) BANGALORE 2020 (12) TMI 687 - KARNATAKA HIGH COURT as the tax liability is fastened on the assessee on the basis of the statutory provisions, if any statutory provision gives the assessee the tax benefit, the assessing authority is legally bound to consider the same and grant him relief. In the course of assessment the said claim cannot be rejected on the ground that the same is not made in the return filed under Section 139(1) and on the ground that no revised return is filed under Section 139(5) - assessing authority was not justified in rejecting the said claim on the ground that no revised return is filed under Section 139(5) - Thus we hold that the assessee's claim for 80JJAA need to be considered by the AO subject to the allowability of the claim on merits Non filing for Form 10DA - The proviso to Rule 12(2) was inserted effective from 01.04.2013, whereby the assessee was required to file the report electronically and prior to the amendment, there was not any provision to file the form electronically and hence the same could not be filed along with the return of income. The courts have consistently held that requirement of filing the auditors report is a directory requirement and that hence would stand satisfied if the accountant's report is furnished during the course of the assessment.We place reliance on the judicial pronouncements and hold that the assessee should be allowed the deduction u/s. 80JJAA since the Form 10DA was filed during the course of the assessment. DR during the course of the hearing brought to our attention that the amount mentioned in Form 10DA for the asst. year 2012-13 does not match with the amount actually claimed by the assessee for the said asst. year. To this the Ld. AR clarified that the amount mentioned in Form 10DA i.e., ₹ 3,78,70,242 is the eligible deduction with respect to new workmen employed during the year relevant to AY 2012-13 only. The provisions of section 80JJAA allows for deduction over a period of 3 years and hence the amount claimed u/s. 80JJAA i.e. ₹ 7,99,50,457 is the aggregate claim including workmen employed in AY 2010-11 and 2011-12. Since the Ld. DR did not have any further objection there is no requirement for any adjudication on this matter. Undertaking of the assessee was formed by way of splitting up or reconstruction - We respectfully follow the binding decision of the coordinate bench of the Tribunal in assessee's own case upheld by the Hon'ble Karnataka High Court and the SLP filed by Revenue as dismissed by the Supreme Court 2021 (7) TMI 476 - SC ORDER to confirm that the assessee is not formed by splitting up or reconstruction and eligible for deduction u/s. 80JJAA. Exclusion of 100 employees for the purpose of computing eligible deduction u/s. 80JJAA - As per the case of CIT Vs. Texas Instruments India Pvt. Ltd. 2021 (4) TMI 1049 - KARNATAKA HIGH COURT assessee is right in computing the eligibility criteria. 100 employees need not be excluded for the purpose of computing the deduction u/s. 80JJAA where the employees are more than 100. Additions made to book profits u/s. 115JB - AO during the course of asst. proceedings has added back the provisions created towards gratuity, leave encashment and bonus while computing the book profits of the assessee holding that the same to be an unascertained and contingent liabilities. The order of the AO was upheld by the CIT who relied on sec. 43B of the Act - HELD THAT - We are of the considered view that the AO is not right in adding back the provisions made by the assessee towards gratuity, leave encashment and bonus for computation of book profits u/s. 115JB on the ground that they are unascertained liability. Hence, we allow the appeal in favour of the assessee and direct the AO to give effect to the same in the computation of book profits u/s. 115JB of the Act.
Issues Involved:
1. Disallowance of deduction under Section 80JJAA of the Income-tax Act, 1961. 2. Additions made to book profits under Section 115JB of the Income-tax Act, 1961. Issue-Wise Detailed Analysis: 1. Disallowance of Deduction under Section 80JJAA: - Filing of Revised Return: The assessee initially claimed a deduction of ?94 under Section 80JJAA but later revised the claim to ?7,99,50,456 during the assessment proceedings. The Assessing Officer (AO) denied the revised claim, citing that it was not filed through a revised return as required under Section 139(1) and referenced the Supreme Court's decision in Goetze (India) Ltd. v CIT. - Form 10DA Submission: The AO also rejected the claim because Form 10DA was prepared after the return filing and not submitted electronically as required by Rule 12(2). The Tribunal noted that the requirement to file the form electronically came into effect from 01.04.2013, and prior to that, there was no provision for electronic submission. The Tribunal held that the requirement of filing the auditor's report is directory and can be satisfied if submitted during the assessment. - Splitting Up or Reconstruction: The AO contended that the assessee was formed by splitting up or reconstruction of an existing business. The Tribunal noted that this issue had been settled in the assessee's favor in previous years under Section 10B, upheld by the Karnataka High Court and the Supreme Court. - Exclusion of 100 Employees: The AO excluded 100 employees from the deduction computation. The Tribunal referred to the decision of the Delhi Tribunal in Panacea Biotech Ltd. and the Bangalore Tribunal in Honeywell Technology Solutions Lab Pvt. Ltd., holding that 100 employees need not be excluded if the total number exceeds 100. - 300 Days Employment Criteria: The AO disputed the inclusion of employees recruited in the previous financial year but completing 300 days in the relevant year. The Tribunal relied on the Karnataka High Court's decision in CIT Vs. Texas Instruments India Pvt. Ltd., allowing the inclusion of such employees. The Tribunal concluded that the assessee's claim under Section 80JJAA for ?7,99,50,456 should be considered by the AO, subject to the allowability on merits. 2. Additions to Book Profits under Section 115JB: - Gratuity, Leave Encashment, and Bonus Provisions: The AO added back provisions for gratuity, leave encashment, and bonus to the book profits, treating them as unascertained and contingent liabilities. The Tribunal noted that these provisions were based on actuarial valuations and statutory requirements, making them ascertained liabilities. - Judicial Precedents: The Tribunal cited the Karnataka High Court in CIT VS. Kirloskar Systems Ltd. and the Bombay High Court in CIT Vs. Echjay Forgings Pvt. Ltd., which held that actuarial valuations and statutory provisions for gratuity, leave encashment, and bonus are ascertained liabilities and should not be added back for computing book profits under Section 115JB. The Tribunal directed the AO to exclude these provisions from the book profits computation under Section 115JB. Conclusion: The appeal was allowed in favor of the assessee, directing the AO to reconsider the deduction under Section 80JJAA and to exclude the provisions for gratuity, leave encashment, and bonus from the book profits computation under Section 115JB. The order was pronounced on 21st February 2022.
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