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TMI Blog2024 (7) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst prescribed date of 31-10-2018. In our considered opinion, the assessee, in the present case, has fulfilled the substantive requirement as well as procedural requirement to lay claim on the impugned deduction. Decided in favour of assessee. - Hon ble Shri Mahavir Singh, VP And Hon ble Shri Manoj Kumar Aggarwal, Am For the Appellant : Shri P. Sajit Kumar (JCIT)- Ld. Sr. DR. For the Respondent : Shri T. Vasudevan (Advocate) -Ld. AR. ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2018-19 arises out of an order passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 18-07-2023 in the matter of rectification / intimation order issued by Centralized Processing Center (CPC) u/s. 154 of the Act on 28-01-2021. The grounds taken by the Revenue read as under:- 1. The order of the learned CIT (A) is contrary to law, facts and circumstances of the case. 2. The learned CIT (A) erred in allowing the Assessee's claim of Deduction u/s. 10AA wherein the Assessee has not filed the requisite Statutory Form 56F within the time limits as prescribed. 3. The learned CIT (A) has erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions and upon perusal of case records, our adjudication would be as under. Proceedings before lower authorities 4. From rectification order passed u/s 154 by CPC on 28-01-2021, it could be seen that the extended due date for filing of return of income for the assessee was 31-10-2018. The assessee has filed return of income on 16-10-2018 which is well within extended due date of filing of return of income. The assessee claimed deduction u/s 10AA. However, aforesaid deduction has been denied by CPC to the assessee while processing return of income u/s 143(1) since requisite Audit Report in Form No. 56F was not filed along with return of income. The said report has apparently been filed by the assessee on 20-12-2018 which was much before CPC raised the issue of disallowance. 5. During appellate proceedings, the assessee submitted that it was not mandatory to file this form and it was a regulatory measure only. Reliance was placed on the decision of Hon'ble Madras High Court in the case of CIT Vs Jayanthilal Patel (2001) (248 ITR 199) and Hon ble Delhi High Court in the case of CIT Vs. Web Commerce India Pvt. Ltd (2009) (318 ITR 135) to support the submissions. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the sixth year of claiming of impugned deduction. 10. The objective of requirement of Filing of Form 56F, in our considered opinion, is to enable the revenue to ascertain that the deduction has correctly been claimed by the assessee in accordance with law. The mere technical failure to comply with this condition would not, therefore, result into denial of deduction to the assessee. The assessee has already filed this form on 20-12-2018 as against prescribed date of 31-10-2018. 11. The Ld. Sr. DR has referred to the case of Hon ble Supreme Court in the case of Pr. CIT Vs Wipro Ltd. (2022) 140 Taxmann.com 223 (SC). In this decision, the facts were that the assessee claimed exemption u/s 10B in the return of income. The assessee declared loss. Along with original return of income, it annexed a note stating that it was eligible to claim exemption u/s 10B and therefore, no loss was being carried forward. However, before Ld. AO, the assessee contended that it did not want to avail the benefit u/s 10B of the Act in terms of Sec. 10B (8) of the Income Tax Act. The assessee also revised its return of income where this exemption was not claimed u/s 10B and the assessee claimed carry-forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a strict interpretation. Per contra, on behalf of the assessee, it was contended that on a true interpretation of Sec. 10B (5) and 10B(8) of the Act, the High Court has rightly observed and held that the requirement of filing the declaration was mandatory in nature, while the time limit for filing the declaration was directory in nature. It was submitted that the High Court had rightly held the requirement of filing the declaration by the time limit was directory as non-filing of the declaration within the time limit would not envisage any consequence. Another submission was that the accountant's certificate u/s 10B(5) would be required only if the assessee claims the deduction u/s 10B. This certificate only certifies the profit / loss of Section 10B unit and the amount of deduction u/s 10B(1), if any. The certificate, if already submitted, becomes irrelevant if the claim is withdrawn u/s 10B. In any event, the contents of this certificate regarding profit / loss are not in any way affected by the withdrawal of the Sec. 10B claim. It was submitted that in the present case, the loss set out in Sec. 10B certificate remained exactly the same after withdrawal of the claim made u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -called exemption relief under section 10B (8) of the IT Act, furnishing the declaration to the assessing officer is mandatory but furnishing the same before the due date of filing the original return of income is directory. In the present case, when the assessee submitted its original return of income under section 139(1) of the IT Act on 31- 10-2001, which was the due date for filing of the original return of income, the assessee specifically and clearly stated that it is a company and is a 100% export-oriented unit and entitled to claim exemption under section 10B of the IT Act and therefore no loss is being carried forward. Along with the original return filed on 31-10-2001, the assessee also annexed a note to the computation of income clearly stating as above. However, thereafter the assessee filed the revised return of income under section 139(5) of the IT Act on 23-12- 2002 and filed a declaration under section 10B (8) which admittedly was after the due date of filing of the original return under section 139(1), i.e., 31-10-2001. 7. It is the case on behalf of the Revenue that as there was a non-compliance of twin conditions under section 10B (8) of the IT Act, namely, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income under sub-section (1) of section 139 are same/similar. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee. 9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under section 139(1) and cannot transform it into a return under section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or set-off of any loss. Filing a revised return under section 139(5) of the IT Act and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provision which cannot be compared with claiming an additional depreciation under section 32(1) ( ii-a ) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. 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 VIA 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 , cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with deductions to be made in computing total income . Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under section 10B(8) of the IT Act. 12. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under section 10B(8) to opt out of section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under section 10B(8) as bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the Act were required to be fulfilled and/or satisfied. Both the conditions to be satisfied were mandatory in nature. It could not be said that one of the conditions would be mandatory whereas the other would be directory, where the words used for furnishing the declaration to the assessing officer and to be furnished before the due date of filing the original return of income under sub-section (1) of section 139 are same/similar. It could not be disputed that in a taxing statute, the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee. In such a situation, filing a revised return u/s 139(5) claiming carrying forward of losses subsequently would not help the assessee. For claiming the benefit u/s 10B (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income were mandatory in nature. The Hon ble Court distinguished the case law of G.M. Knitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations. Similarly, in the case of Britannia Industries Ltd Vs. CIT (2005) 148 Taxman 468 (SC), the Hon ble Supreme Court held that when the language of a statute is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give it a meaning which would cause violence to the provisions of the statute. In the present case before us, the assessee has duly fulfilled substantive requirement as well as procedural requirement though there is minor technical breach in fulfillment of procedural requirement. The said breach, in our opinion, would not be fatal to substantive claim of the assessee particularly when in all the earlier years, this claim has been allowed to the assessee and this is the sixth year of claiming impugned deduction. 14. Our aforesaid view is duly supported by the decision of jurisdictional High Court in the case of CIT Vs Jayanthilal Patel (2001) (248 I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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