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TMI Blog2023 (10) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... e to FDR s kept with electricity board, environment board, for opening LC therefore, the impugned amount of interest has to be held derived from the eligible business entitle for deduction u/s. 80IC. However, amount of Rs. 54,680/- interest received on insurance claim cannot be held as derived from eligible business thus this part is should be reduced for the claim u/s. 80IC - Accordingly, ground no. 2 of assessee is partly allowed. Disallowance of deduction claimed u/s 80IC - late filling of income tax return - non-filing of return within prescribed time limit u/s. 139(1) - HELD THAT:- As the return of income of the assessee for AY 2015- 16 was filed beyond the prescribed time limit u/s 139(1) - CIT(A) has recorded a categorical finding that the assessee was prevented by sufficient cause in filing the return within the prescribed time limit perhaps due to illness of executive partner of assessee. Even in a situation the return of income of the assessee for AY 2015-16 is treated as belated return beyond the prescribed time limit provided u/s 139(1) then also, as per the judgement of case of G.M. Knitting Industries Pvt. Ltd. [ 2015 (11) TMI 397 - SC ORDER] which was followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 73 taxman 80 (Mad.) submitted that in respect of profit and gains from industrial under taking the interest received on deposit kept with electricity board should not be deducted from gross total income while computing the relief admissible u/s. 80I of the Income Tax Act 1961 (for short the Act ). 4. Replying to the above, the ld. Senior DR supported the orders of the authority below and submitted that the interest on FDR cannot be held as derived from eligible business under sub section 2 of section 80IC of the Act, therefore the Assessing Officer was right in disallowing the interest amount while computing the deduction u/s. 80IC of the Act. 5. On careful consideration of above rival submissions, we note that in para A at page 2 to 7 of assessment order the Assessing Officer has dealt the issue of allowability of interest from FDR s kept in four entities on account of power/electricity connection taken to run the factory, FDR against bank guarantee to Uttarakhand Environment Protection Pollution Control Board to get permission to run the plant, FDR for opening LC for import of goods, interest recovered from customers for credit term allowed against LC and bills were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws:- In this regard, we like to explain that Mr. Anil Mahajan is an executive partner of M/s Canadian Speciality Vinlys and taking all business decisions. However, his medical condition was critical and he has undergone medical treatments during March 2014 to 2017 in hospital. He was first diagnosed lungs infection in Sep-Oct 2012 and had to admit in hospital for treatment. He had been advised strict precaution, however in spite of that, the lungs problem again re-occurred in Nov 2013 and he was again admitted in the hospital. In the meantime, an acute pain started in his both the hips joints and doctor advised him a hip replacement. Since, both hips cannot be replaced together, Therefore he had his right hip replaced in March 2014, but his left hip joint was still causing regular pain. He further, diagnosed a heart blockage in the year 2014. He then got his bypass surgery of heart in September 2014. Due to this entire medical problem, he was relying upon his staff for all legal matters. Chartered Accountant of the assessee had duly audited the books of accounts and filed audit reports within time. Accountant of the assessee has been assigned the work to complete all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR supporting the orders of the authorities below submitted that for claiming deduction u/s. 80IC of the Act the claim is required to be made in the return of income file within prescribed time limit u/s. 139(1) of the Act which is a mandatory pre-requirement for claiming said deduction. He vehemently pointed out that the Assessing Officer as well as ld. CIT(A) in para 6.2.6 rightly noted that the non-compliance of said provision cannot be treated as directly and there are no exception to the said compliance. The ld. AR also submitted that there was no serious or plausible cause for the assessee for non-filing of return within prescribed time limit particularly when the complexities of the business carried on efficiently during relevant period by the company. Finally, the ld. Senior DR submitted that the authorities below were quite correct and justified in dismissing the claim of assessee u/s. 80IC of the Act on account of non-filing return of income within prescribed time limit. 12. On careful consideration of above submissions, first of all, from the order of the authorities below, we note that undisputedly the assessee filed audit report in form 10CCB along with tax audit re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139. 6. On going through the above provision, it is crystallized that the requirement of filing return before the time u/s 139(1) is sine qua non for claiming deduction under the six sections (80-IA or 80-IAB or 80-IB or 80-IC or 80-ID or 80-IE). In other words, if a return is filed belatedly u/s 139(4) or under any other section, claiming deduction under any of the six sections, the writ of the section 80AC will operate to prevent its granting. This section does not deal with granting or non-granting of deduction under any other sections of Part C of Chapter VI-A, including section 80P. Thus, to infer that since section 80AC does not cover section 80P, the latter section is immune from any other statutory requirement, is wholly incorrect. In fact, section 80AC is alien to deduction under any section except the specified six sections. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions, viz., first, claiming deduction u/s 80P and second, claiming such deduction in the return of income. There is no dispute on the first condition, which has been satisfied in this case as the assessee did claim the deduction albeit during the course of assessment proceedings. The whole controversy revolves around the second condition, which says that the claim should be made in the return of income. The assessee in the extant case did not file any return of income, but made a claim of the deduction in computation of income filed during the course of the assessment proceedings. The moot question is whether the requirement of making a claim in the return of income is a mandatory or a directory requirement. If it is held as mandatory, then the claim must be made in the return of income, failing which the benefit of deduction would be lost. Au contraire, if it is held as directory, then the claim made either in the return of income or in any manner before the conclusion of assessment proceedings, as is the case under consideration, would validate the entitlement. 11. The Hon'ble Supreme Court in CIT vs. G.M. Knitting Industries (P.) Ltd. (2015) 376 ITR 456 (SC) came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue before the Hon'ble Supreme Court. The assessee, inter alia, relied on the judgment of the Apex Court in G.M. Knitting Industries (supra). Their Lordships held that the requirement of filing the report in support of deduction u/s 10B was not a directory but a mandatory requirement. It further held that both the conditions of - filing the declaration and filing it before the time limit u/s 139(1) - were mandatory and had to be cumulatively satisfied. Rejecting the reliance on G.M. Knitting Industries (supra), the Hon'ble Supreme Court held that that decision was relevant in the context of deduction provisions and not the exemption provisions as given under Chapter III of the Act. As the Hon'ble Summit Court in Wipro Limited (supra) was dealing with section 10B, falling under Chapter III of the Act, it held qua G.M. Knitting Industries (supra) that: `Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VI-A of the Act operate in different realms and principles of Chapter III, which deals with incomes which do not form a part of total income , c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputing the total income. Therefore, it was held that the fulfillment of requirement for making a claim of exemption under the relevant sections of Chapter III in the return of income is mandatory, but, when it comes to the claim of a deduction, inter alia, under the relevant section of Chapter VI-A, such requirement become directory. In a case where the assessee claims deduction under Chapter VI-A of the Act, the making of a claim even after filing of return, but, before completion of the assessment proceedings and passing of assessment order meets the directory requirement of making a claim in the return of income. 15. In the present case, the assessee claimed deduction u/s. 80IC of the Act, which was disallowed by the Assessing Officer on the allegation of non-filing of return within prescribed time limit u/s. 139(1) of the Act. At the very outset we reiterate that it is not in dispute that the assessee filed audit report in Form 10CCB and tax audit report in Form 3CB/3CD within prescribed due date but the return was filed belatedly on 29.02.2016 claiming deduction u/s. 80IC of the Act. 16. Now, the grievance of the Revenue in this appeal is that the ld.CIT(A) has wrongly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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