2022 (3) TMI 959 - AT - Income Tax

Revision u/s 263 by CIT - Allowability of claim of deduction u/s.80IA - HELD THAT - We noted that the PCIT himself admits that there are different views possible on this issue and issue is highly debatable. Once the issue is highly debatable no revision is possible invoking the provisions of section 263 of the Act. Hence, we quash the revision order passed by PCIT u/s.263 of the Act and allow the appeal of the assessee.

Summary

Issues:
Jurisdiction of PCIT under section 263 of the Income Tax Act regarding deduction u/s.80IA based on return filing date and audit report submission date.

Detailed Analysis:

Issue 1: Jurisdiction of PCIT under section 263
The appeal arose from the revision order passed by the Principal Commissioner of Income Tax-3, Coimbatore under section 263 of the Income Tax Act. The PCIT set aside the completed scrutiny assessment framed under section 143(3) of the Act, specifically focusing on the claim of deduction u/s.80IA. The PCIT's rationale was that the return of income filed by the assessee was beyond the due date specified under section 139(1) of the Act, rendering the claim of deduction invalid. The PCIT observed that the assessment order was erroneous and prejudicial to the revenue's interest as it did not duly examine the issue. Consequently, the PCIT directed the Assessing Officer to redo the assessment in accordance with the law and provide the assessee with a reasonable opportunity to be heard.

Issue 2: Claim of Deduction u/s.80IA
The contention in the appeal revolved around the claim of deduction u/s.80IA, which was allowed in the original assessment based on a decision of the Hyderabad Bench of ITAT. The assessee filed the return of income after the due date specified under section 139(1), which led to the PCIT's intervention. The PCIT, citing a decision of the Chennai Bench of ITAT, deemed the assessment as erroneous due to the AO's failure to follow the binding decision. However, the PCIT acknowledged the debatable nature of the issue, indicating that no revision was possible under section 263 in such circumstances. Ultimately, the Tribunal quashed the revision order by the PCIT, noting the highly debatable nature of the issue and allowed the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing the debatable nature of the issue regarding the deduction u/s.80IA and the PCIT's jurisdiction under section 263 of the Income Tax Act. The decision highlighted the importance of following legal provisions and precedents while also considering the interpretative nature of tax laws in assessing deductions and compliance with filing deadlines.