2022 (5) TMI 889 - AT - Income Tax

Disallowing deduction claim u/s 80IA - non filling appeal in ROI - As per DR assessee had very well filed its books of account as well as computation but could not claim the impugned deduction in its return - HELD THAT - This crucial fact itself forms the most clinching reason for us to affirm to impugned disallowance. We note with the able assistance of from revenue side that legislature has not only prescribed filing of a return within the due date prescribed u/s. 139(1) as a pre condition for claiming section 80IA by way of inserting a special provision i.e. 80AC vide Finance Act 2007 w.e.f. 2008 but also Section 80A(5) further stipulates that chapter VI deduction is not to be allowed if the assessee fails to make a claim to this effect in its return of income. We therefore reject the assessee s arguments quoting Goetze India Ltd. 2006 (3) TMI 75 - SUPREME COURT and CIT V/s. Pruthvi Brokers Shareholders Pvt. Ltd 2012 (7) TMI 158 - BOMBAY HIGH COURT - We rather note that hon ble jurisdictional high court s decision in EBR Enterprises Vs. Union of India 2019 (6) TMI 484 - BOMBAY HIGH COURT holds that such a failure on the assessee s part is indeed very fatal to its deduction claim. We adopt stricter interpretation in light of Commissioner of customs V/s Dilip Kumar (2018) 9 SCC 1(SC) 2018 (7) TMI 1826 - SUPREME COURT to affirm CIT(A) s finding under challenge. Decided against assessee.

Issues Involved:
1. Disallowance of deduction claim under Section 80IA of the Income Tax Act, 1961.
2. Admissibility of claims not made in the original or revised Return of Income (ROI).
3. Applicability of CBDT Circular No. 14(XL-35) dated 11/04/1955.
4. Jurisdiction of Assessing Officer (AO) versus Appellate Authorities in admitting claims.
5. Interpretation of Section 80AC and the fourth proviso to Section 139(1) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction Claim Under Section 80IA:
The assessee's appeal concerns the disallowance of a deduction claim amounting to Rs. 14,96,121 under Section 80IA(4) of the Income Tax Act, 1961. The AO disallowed the claim on the grounds that the claim was not made in the original ROI nor in a revised ROI. The AO relied on the Supreme Court decision in Goetze India Ltd., which held that claims not made in the ROI or revised ROI cannot be entertained by the AO. The CIT(A) affirmed this decision, stating that the AO correctly disallowed the claim as it was not made in the original or revised ROI.

2. Admissibility of Claims Not Made in the Original or Revised ROI:
The assessee argued that the AO should have allowed the claim during the assessment proceedings, citing various case laws and a CBDT Circular. However, the CIT(A) noted that the CBDT Circular is advisory and does not override statutory provisions. The CIT(A) also distinguished the case laws cited by the assessee, noting that they pertain to the powers of appellate authorities and not the AO. The CIT(A) emphasized that the Supreme Court decision in Goetze India Ltd. is binding, and the AO cannot admit claims not made in the original or revised ROI.

3. Applicability of CBDT Circular No. 14(XL-35) Dated 11/04/1955:
The assessee relied on the CBDT Circular, which advises AOs to be lenient in allowing genuine claims. However, the CIT(A) clarified that the Circular is advisory and does not expect AOs to go beyond prescribed procedures and statutory provisions. The CIT(A) stated that the AO could have guided the assessee to file a revised ROI, but the time for filing a revised ROI had already lapsed by the time the assessment proceedings commenced.

4. Jurisdiction of AO Versus Appellate Authorities in Admitting Claims:
The assessee contended that the claim should be admitted at the appellate stage, citing the Bombay High Court decision in Pruthvi Brokers. The CIT(A) acknowledged that appellate authorities have the discretion to admit claims not made before the AO, but emphasized that this discretion must be exercised based on the facts and law applicable to each case. The CIT(A) ultimately decided not to admit the claim, citing the provisions of Section 80AC and the fourth proviso to Section 139(1).

5. Interpretation of Section 80AC and the Fourth Proviso to Section 139(1):
The CIT(A) highlighted that Section 80AC mandates that deductions under Section 80IA can only be claimed if the ROI is filed within the time specified under Section 139(1). The CIT(A) noted that the legislative intent behind Section 80AC and the fourth proviso to Section 139(1) is to ensure that claims for deductions are made within the specified time. The CIT(A) referred to a previous case involving the assessee where a similar claim was disallowed, and the decision was upheld by the CIT(A). The CIT(A) concluded that the assessee's failure to make the claim within the stipulated time rendered the claim ineligible.

Conclusion:
The appeal was dismissed, with the CIT(A) affirming the AO's disallowance of the deduction claim under Section 80IA. The CIT(A) emphasized the binding nature of the Supreme Court decision in Goetze India Ltd., the advisory nature of the CBDT Circular, and the mandatory provisions of Section 80AC and the fourth proviso to Section 139(1). The CIT(A) also exercised discretion in not admitting the claim at the appellate stage, based on the facts and law applicable to the case. The order was pronounced on May 10, 2022.

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