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2022 (7) TMI 945 - AT - Income TaxDeduction u/s. 80IA(4)(v) - Claim denied as assessee did not make any claim of deduction in the original return of income and made this claim only in the revised return - HELD THAT - It is not in dispute that the assessee filed the original return of income before the due date of filing of return u/s.139(1) which in this case return was filed on 25-11-2014 as the extended due date was on 30-11-2014. It is also not in dispute that the assessee failed to make such claim of deduction u/s. 80IA(4)(v) in the original return of income and made the said claim subsequently in the revised return filed on 31-03-2016. Provisions of section 80IA(4)(v), 80IA(7) and 80AC and Rule 18BBB(2) and Rule 12(2) of the I.T Rules, 1962, we observe that one of the conditions for claiming deduction u/s. 80IA(4)(v) is that assessee needs to furnish the return of income before due date specified u/s. 139(1) - Another condition is that the assessee needs to obtain an audit report from a Chartered Accountants in Form 10CCB ( as per Rule 18BBB(2) and the same needs to be furnished electronically before the due date/specified date referred in section 44AB r.w.r.t section 139(1) of the Act. We note that for claiming such deduction if assessee has filed return of income before the due date specified u/s. 139(1) of the Act applicable to the assessee and has not made the claim u/s. 80IA in the original return, such claim can be made in a valid revised return. We find that there is no dispute to the fact that the assessee has filed original return of income before the due date specified u/s. 139(1) of the Act, but failed to make the claim u/s. 80IA(4)(v) of the Act in the original return and claimed it in a valid revised return. However, in the above referred decision there is no reference to electronically filing the audit report on Form 10CCB before the due date prescribed under the Act. We need to find that whether audit report in Form 10CCB electronically duly verified/certified by the Chartered Accountants has been filed electronically before the due date of filing of return of income applicable to the assessee, being subject to audit u/s. 44AB of the Act. On perusal of records, we find that nowhere in the proceedings below this aspect of furnishing of audit report on Form 10CCB for claiming of deduction u/s. 80IA(4)(v) has been dealt. Though during the course of hearing before us the Ld. Counsel for the assessee was asked about status of filing of such report, it was submitted that this matter was never in dispute. It is pertinent to observe that in the past when audit report prescribed under the Act were not required to be filed electronically, then if the assessee has obtained such audit report before the prescribed due date, but failed to attach it with the Income-tax return, then in such situation consistent view has been taken by various judicial forums that such mistake by the assessee of not enclosing the audit report with the income-tax return is a procedural lapse, which can be cured even at the stage of assessment proceedings, where such audit report can be filed. Subsequent to the amendments made in the Act audit report prescribed under the Act needs to be filed electronically on the Income-tax portal duly certified/verified by the Chartered Accountants. If such report is not furnished electronically before the due date prescribed under the Act for furnishing of such report, then such mistake cannot be considered as a procedural lapse because once report is to be filed electronically, then it will prove two things, firstly, assessee has obtained audit report before the due date and secondly, it is filed before the due date. Therefore, in case filing of audit report electronically there remains no option for the assessee to file such report at a later stage in the course of assessment proceedings and the assessee is mandatorily required to adhere to the provision of electronically filing the audit report before the due dates prescribed under the Act. We, therefore, are of the considered view that this is another important condition, which the assessee statutorily needs to fulfil in order to claim such deduction u/s. 80IA(4)(v) - Since this aspect of examination of the audit report on Form 10CCB having been filed electronically before the due date of filing of return has neither been discussed in the impugned order of the Ld. CIT(A) nor in the assessment order nor any information is available in the paper book and, therefore, this fact needs to be examined by the AO that whether the assessee has furnished the report as provided in section 80IA(vii) of the Act in prescribed Form 10CCB duly verified by a Chartered Accountant electronically before the due date of filing of return of income and if yes, then even if assessee forgot to claim such deduction u/s. 80IA(4)v) of the Act in the original return of income filed before the due date of filing return, such claim made in the revised return may be allowed. In case of the contrary situation, where the assessee neither claimed deduction u/s.80IA(4)(v) of the Act in the return of income filed before the due date nor filed the relevant tax audit report i.e Form No. 10CCB as per provisions of section 80IA(4(v) r.w. proviso to Rule 12(2) of the I.T Rules, 1962, then the assessee will fail to get such claim of deduction u/s. 80IA(4)(v) of the Act made in the revised return of income. Accordingly we direct the ld. AO to examine the factual aspect of assessee having furnished the tax audit report on Form 10CCB (Rule 18BBB) electronically as discussed above and decide the issue in accordance with law after giving reasonable opportunity of being heard to the assessee. We direct the assessee to furnish necessary details to ld.AO regarding proof of filing audit report on Form No. 10CCB u/s. 80IA(4)(v) of the Act electronically on Income-tax portal before the due date prescribed under the Act. Therefore, Ground No. I (a) (b) are allowed for statistical purpose.
Issues Involved:
1. Denial of the claim of deduction under Section 80IA of the Income-tax Act, 1961. 2. Computation of disallowance under Section 14A of the Income-tax Act, 1961. Detailed Analysis: 1. Denial of the Claim of Deduction under Section 80IA: - Facts: The assessee, a limited company, filed its original return of income on 25-11-2016, declaring an income of Rs. 13,66,64,028/-. Subsequently, it filed a revised return on 31-03-2016, claiming a deduction under Section 80IA(4)(v) amounting to Rs. 1,08,31,990/-, reducing the declared income to Rs. 12,63,73,639/-. The case was selected for complete scrutiny, and the Assessing Officer (AO) observed that the deduction claim was not made in the original return but only in the revised return. Consequently, the AO denied the claim based on Section 80AC, which mandates that such deductions must be claimed in the return filed on or before the due date specified under Section 139(1). - CIT(A) Decision: The Commissioner of Income-tax (Appeals) upheld the AO's decision, referring to judicial precedents that supported the denial of the deduction claim. - Assessee's Argument: The assessee contended that the original return was filed within the extended due date, and the revised return was also filed within the prescribed time limit. The assessee argued that the decision in the case of Suolificlo Lines Italia (India) (P) Ltd was not applicable as the facts differed. The assessee relied on the ITAT Kolkata decision in the case of DCIT, Circle-4, Kolkata Vs. M/s. Mackintosh Burn Ltd, which allowed the deduction if the original return was filed before the due date and the claim was made in the revised return. - Tribunal's Analysis: The Tribunal examined the provisions of Sections 80IA(4)(v), 80IA(7), and 80AC, along with Rules 18BBB(2) and 12(2) of the Income-tax Rules, 1962. It noted that one of the conditions for claiming the deduction is that the return must be filed before the due date specified under Section 139(1). Additionally, the audit report in Form 10CCB must be electronically filed before the due date. The Tribunal found that the assessee had filed the original return before the due date but failed to claim the deduction in it, making the claim in the revised return instead. - Decision: The Tribunal directed the AO to examine whether the audit report in Form 10CCB was filed electronically before the due date. If the audit report was filed on time, the deduction claim in the revised return should be allowed. If not, the claim should be denied. The Tribunal allowed the assessee's appeal for statistical purposes, directing the AO to verify the filing of the audit report and decide accordingly. 2. Computation of Disallowance under Section 14A: - Facts: The assessee challenged the computation of disallowance under Section 14A, which was directed by the CIT(A) to be Rs. 52,22,592/-. - Assessee's Argument: The assessee requested the AO to re-compute the disallowance under Section 14A read with Rule 8D(iii), considering only the securities that yielded tax-free income without linking it to the amount of Rs. 52,22,592/-. - Tribunal's Decision: At the outset, the assessee's counsel requested not to press Ground No. II (a) and (b) related to the disallowance under Section 14A. Consequently, the Tribunal dismissed these grounds. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, directing the AO to verify the electronic filing of the audit report in Form 10CCB and decide the issue of deduction under Section 80IA(4)(v) accordingly. The grounds related to the disallowance under Section 14A were dismissed.
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