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2022 (3) TMI 256 - HC - Income TaxRevision u/s 264 - Fresh claim in Revision Application - denial of claim of deduction u/s 80IA(4) read with Section 80A(5) - HELD THAT - As decided in EBR ENTERPRISES ANR. VERSUS UNION OF INDIA AND ANR. 2019 (6) TMI 484 - BOMBAY HIGH COURT in plain terms, this Sub Section (5) of Section 80A of the Act imposes an additional condition for claim of deduction in relation to income under any of the provisions mentioned therein. Apart from the requirement of fulfillment of individual set of respective conditions for the purpose of claiming the concerned deduction, this plenary condition requires that the claim ought to have made in the return of income by the assessee and if the assessee fails to make such claim in the return of income, such deduction shall not allowed to him under the relevant provision. Admittedly, in the present case, the Petitioners had not raised any such claim in the return of income. In plain terms, the claim of the Petitioners under Section 80-IB (10) of the Act would be hit by Sub Section (5) of Section 80A of the act. We are conscious that in absence of the provision contained in Section 80A (5) of the Act, the Petitioners could have maintained the claim of deduction even before the CIT for the first time in Revision Application, though no such claim was made before the Assessing Officer, if from the facts on record, the Petitioners could sustain the said claim in law. This is very clear from the series of Judgments of various High Courts. No error of law in the impugned order passed by the Principal Commissioner of Income Tax-3, Ahmedabad.
Issues Involved:
1. Validity of the order dated 19.06.2020 passed by the Principal Commissioner of Income Tax rejecting the claim of deduction under Section 80IA(4) read with Section 80A(5) of the Income Tax Act for A.Y. 2015-16. 2. Constitutionality of Section 80A(5) of the Income Tax Act. 3. Powers of the Principal Commissioner of Income Tax under Section 264 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Validity of the Order Dated 19.06.2020: The writ applicant, a private limited company, challenged the order dated 19.06.2020, passed by the Principal Commissioner of Income Tax - 3, Ahmedabad, under Section 264 of the Income Tax Act, 1961, which rejected the claim of deduction under Section 80IA(4) read with Section 80A(5) for A.Y. 2015-16. The company had filed its return of income on 30.09.2015, declaring an income of ?3,82,16,320/-. During scrutiny, an addition was made under Section 36(1)(va) and interest thereon, resulting in a total income of ?3,85,48,984/-. The company did not claim the deduction under Section 80IA(4) in the original return but raised it for the first time in a revision under Section 264. The Principal Commissioner dismissed the revision, citing that the deduction cannot be allowed as per Section 80A(5) since it was not claimed in the original return. 2. Constitutionality of Section 80A(5): The writ applicant also challenged the constitutionality of Section 80A(5), arguing that it resulted in unequal treatment of assessees who are otherwise eligible for deductions. The applicant contended that this provision should be read down to apply only during assessment proceedings before the assessing officer and not restrict the powers of the Principal Commissioner or any appellate authority. The court, however, emphasized the principle of reading down statutes to uphold their constitutionality and referred to several precedents, including the cases of D.S. Nakara v. Union of India and Minerva Mills Ltd. v. Union of India, which elucidate the practice of reading down to avoid declaring a law unconstitutional. The court concluded that it was not inclined to go into the validity of Section 80A(5). 3. Powers of the Principal Commissioner under Section 264: The court examined whether the Principal Commissioner was justified in rejecting the revision application under Section 264, given that the claim for deduction under Section 80IA(4) was not made in the original return. The court referred to the Bombay High Court's decision in EBR Enterprises v. Union of India, which held that Section 80A(5) imposes an additional condition requiring the claim to be made in the return of income, and failure to do so means the deduction cannot be allowed. The court noted that this condition applies to all income tax authorities, including the Principal Commissioner, and that the wide powers under Section 264 cannot override this statutory provision. The court found no error in the impugned order dated 19.06.2020 and dismissed the writ application. Conclusion: The court upheld the order dated 19.06.2020 passed by the Principal Commissioner of Income Tax - 3, Ahmedabad, rejecting the claim for deduction under Section 80IA(4) read with Section 80A(5) for A.Y. 2015-16. The court did not find merit in the challenge to the constitutionality of Section 80A(5) and emphasized that the statutory provision must be enforced as it stands. The writ application was dismissed, and the notice was discharged.
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