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TMI Blog2022 (3) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... 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., S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected against the order of the Commissioner of Income Tax (Appeals) - 9, Bengaluru dated 21/09/2020 passed u/s. 250 of the Income-tax Act 1961 (the Act) for the assessment year 2012-13. 2. The grounds raised by the assessee for the purpose of this appeal are with respect to disallowance of deduction u/s. 80JJAA of the Act (Ground No. 2) and additions made to book profits u/s. 115JB of the Act (Ground No. 3). Ground No. 1 is general ground and Ground 4 and 5 are consequential nature. 3. Brief facts of the case are that the assessee is a 100% export oriented undertaking and is engaged in the business of manufacturing and export of premium denim based garments. For the assessment year 2012-13, the assessee filed its return of income on 22.12.2012 declaring a total income of ₹ 77,13,73,910/- after claiming a deduction of ₹ 94 under Section 80JJAA of the Act. As per the return of income, the tax payable under Section 115JB of the Act was ₹ 15,58,95,950/- as against the tax payable of ₹ 25,02,72,265/- under the normal provisions of the Act. Since the tax payable under the normal provisions of the Act was higher than the tax payable under Section 115JB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous financial year i.e. 2010-11, but completed 300 working days during the previous year relevant to assessment year 2012-13 for the purpose of deduction under section 80JJAA which was not acceptable 9. The CIT(A) confirmed the order passed by the AO on merits and by placing reliance on the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. v CIT 284 ITR 323 (SC) 10. The Ld. AR argued before us against each of the contentions mentioned in the order of the AO as well as CIT(A) and the Ld. DR made counter submissions wherever he wanted to bring any additional points for our consideration. 11. We have heard both the parties and perused the materials on record. We will consider each of the points contended here in the following paragraphs. 12. The Ld. AR submitted that a lawfully permissible deduction cannot be denied basis that the same was not claimed through a revised return u/s. 139(1) of the Act. The Ld. AR also submitted that in fact, in the present case, the assessee did make a claim in the original return but for a wrong amount which was rectified during the course of the asst. proceedings. The Ld. AR further submitted that there are many ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the said relief was filed before assessment and the same cannot be taken into consideration. 72. Section 139(5) of the Act provides that, if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of Section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The said provision refers to a return under sub-section (1). Sub-section (1) of Section 139 provides for filing of a return of income on or before the due date, furnishing a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. If in such return the assessee discovers any omission or any wrong statements therein which has to be necessarily with reference to his income and if it is sought to be corrected, then it could be done only by resorting to a revised return under Section 139(5) of the Act. The income contemplated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g forth such claim. Therefore, the assessing authority is legally bound to take into consideration the said letter where the assessee is claiming tax credit/relief and decide whether the assessee is entitled to such relief out of the tax liability on the total income in respect of which he has filed the return under Section 139(1) of the Act. 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) of the Act. What the assessee is claiming by way of a letter is to bring to notice of the assessing authority the statutory provisions as well as the provisions of the Double Taxation Avoidance Agreement under which the assessee is entitled to claim tax benefit, as the said benefit of tax was not claimed in the return filed under Section 139(1) of the Act. Once the assessee files the necessary partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly 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. The Allahabad High Court in the case of PCIT vs Surya Merchants (2016) 72 taxmann.com 16 (Allahabad) held that 19. In CIT v. Web Commerce (India) (P.) Ltd. [2009] 318 ITR 135/178 Taxman 310 (Delhi) the Delhi High Court examined the provisions of sub-section 10B(5) of the Act, which is similar to the provisions of sub-section 80IA(7) and Section 80J(6A) of the Act and observed, after placing reliance upon its earlier decisions in Contimeters Electricals (P.) Lid. (supra), that the provisions are directory and the requirement of the report of the accountant to be filed with the return of the income would stand satisfied if it is submitted before the assessment order is passed. 20. The aforesaid decisions leave no manner of doubt that the requirement of sub-section (7) of Section 80IA of the Act, which is made applicable to section 80IB of the Act in view of the provisions of sub-section (13) of Section 80IB of the Act, that the audit report should be furnished along with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the rival submissions. We notice that the question of whether the assessee was formed by way of splitting up or reconstruction has reached finality and the decision of the coordinate Bench of this Tribunal is upheld by the Hon'ble Karnataka High Court and the SLP filed by Revenue is dismissed by the Supreme Court. For reference in this context the extract from the order of the Tribunal is reproduced below 6. Having heard the rival contentions and having considered the material on record, we find that the CIT(A) has considered the issue at length and has come to the conclusion that there was no transfer of old plant and machinery during the financial year 2004-05, 2005-06 and 2006-07 and further that the plant and machinery purchased by the assessee from FFIPL in the financial year 2007-08 also did not exceed 20% of the total plant and machinery of the assessee during the said financial year. He further observed that since there was no purchase of old plant and machinery from FFIPL in the earlier assessment year even as per contemporaneous records of the EOU/Customs authorities. The relevant date of the plant and machinery purchased by the assessee over the years is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction and eligible for deduction u/s. 80JJAA. 24. The next issue is regarding exclusion of 100 employees for the purpose of computing eligible deduction u/s. 80JJAA. The Ld. AR relied on the decision of the Delhi Tribunal in the case of Panacea Biotech Ltd., Vs. ACIT (2008) 25 SOT 1 Delhi, where it was held that the 100 employees need not be excluded for the purpose of computing the deduction u/s. 80JJAA where the employees are more than 100. 25. The Ld. DR once again submitted that he agrees with the view taken by the lower authorities. The coordinate bench of Bangalore Tribunal in the case of M/s. Honeywell Technology Solutions Lab Pvt. Ltd. vs DCIT (ITA No. 1210/Bang/2018) has considered the similar issue and held that 10. We may like to clarify that in a case if the assessee fulfils both the conditions that workmen employed during the year were 100 and percentage increase of regular workmen as compared to last day of preceding year is not less than 10 per cent, the assessee will be eligible for the benefit in excess of 100 workmen employed. In other words the law does not require that in the year the number of regular workmen appointed should be more than 100 and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA, Income-tax Appellate Tribunal, as also any other officer to always interpret and or apply the provisions of the Act, taking into consideration the intent and purport of the said provision. 16.9 The meaning or interpretation now sought to be given by Sri. Aravind, learned Senior Panel counsel is that only if the employee were employed for a period of 300 days in a particular financial year, only then deductions could be claimed, if not the deductions could not be claimed even though such employee has been employed for 300 continuous days or more. 16.10 We would disagree with the said contention. What is required is for a person to be employed for a period of 300 days continuously. There is no such criteria made out for a person to be employed in any particular year or otherwise. If such a restrictive interpretation is given, then any person employed post 5th June of a particular year would not entitle the Assessee to claim any deduction. Thus in order to claim the benefit under section 80JJ-AA, an employer would have to hire the workmen before 5th June of that year. As a corollary, since the Assessee would not get any benefit if the workmen were engaged post 5th June, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 's case (supra), wherein the Apex Court has held that a benevolent provision has to be read liberally and reasonably and if there is an ambiguity in favour of the Assessee. 16.14 The Apex Court in the case Vatika Township (P.) Ltd. (supra) has also held similarly, in that if there is a benefit conferred by legislation, the said benefit being legislative's object, there would be a presumption that such a legislation would operate with retrospective effect by giving a purposive construction. Thus the clarificatory amendment of the year 2018 can also be said to apply retrospectively for the benefit of the Assessee even though the Revenue contends that there was no provision in the year 2007 permitting the Assessee to avail the benefit of deduction when the employee works for a period of 300 days in consecutive years. 16.15 In view thereof, the substantial question No. I is answered by holding that the software professional/engineer is a workman within the meaning of section 2(s) of ID Act, so long as such a software professional does not discharge supervisory functions, the benefit of section 80JJ-AA can be claimed by an employer/assessee even if the employee were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that a minimum alternative tax to be paid by the companies as computed under the said provision. Sub-section (2) of Section 115JB requires every company for the purposes of the said section to prepare its profit and loss account in accordance with the provisions of paras 2 and 3 of Schedule 6 of the Companies Act. Explanation 1 to said section provides that for the purposes of the said section, book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by various items specified in Clauses (a) to (i) provided therein. Clause (c) thereof reads as thus: (c) The amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; Therefore as per the provisions, if an amount is specified for provision which is for meeting with the liabilities not ascertained such provision so made shall have to be added back to the book profit of the company. In other words if such provision is made for ascertained liability, no such addition back shall be made. In assessee's case the provision for gratuity and leave encashment is done based on the actuarial valua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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