M/s Winro Commercial India Ltd., Kolkata V. DCIT, CIR-1(2), , Kolkata

ITA 1175/KOL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5869 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Procedural lapse; Revised return
• Section: 143(3); 14A; 139(5); 250; 80IA; 139(1); 44AB

Judgement Text

1. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL BENCH “C” KOLKATA Before: Shri Manish Borad, Accountant Member, and Shri Sonjoy Sarma, Judicial Member आयकर अपील सं.य/ ITA No. 1175/Kol/2019 Assessment Year:2014-15 M/s. Winro Commercial (India) Limited 209-210 Arcadia Building 195 Nariman Point, Mumbai-400 021. बनाम V/s. DCIT, Circle 1(2), Aaykar Bhavan, 7 th Fl., Room No. 14, P-7 Chowringhee Sq., Kolkata-700 069. PAN: AAACW 2748Q अपीलाथ /Appellant .. यथ /Respondent अपीलाथ क ओर से/By Appellant Shri Subash Agarwal, Advocate, Ld.AR यथ क ओर से/By Respondent Shri P.P Barman, Addl. CIT, Ld.DR स ु नवाई क तार ख/Date of Hearing 07-06-2022 घोषणा क तार ख/Date of Pronouncement 19-07 -2022 आदेश /O R D E R PER MANISH BORAD, AM : This appeal of the assessee for the assessment year 2014-15 is directed against the order dt. 28-02-2019 passed u/s. 250 of the Income-tax Act, 1961 [ hereinafter, referred to as ‘the Act’] by the ld. Commissioner of Income-tax, Appeals [ in short, hereafter referred to as ‘the Ld. CIT(A)], Kolkata-10, Kolkata, which is arising from the 2. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. assessment order dt. 29-12-2016 passed by the DCIT,Circle-1(2), Kolkata framed u/s. 143(3) of the Act. 2. The assessee has raised the following grounds of appeal:- GROUND NO. I a. On the facts and circumstances of the case, the Ld. ClT(A) erred in upholding denial of the claim of deduction u/s 80 lA of the Act amounting to Rs. 1,08,31,990/- on the ground that the Appellant has claimed the deduction u/s 80lA in the revised return filed u/s 139(5) of the Act and not under the return of income filed u/s 139(1) of the Act. b The Appellant prays that the learned AO may kindly be directed to allow deduction u/s. 80 - lA of the Act amounting to Rs. 1,08,31,990/- as claimed by the Appellant by filing the revised return under section 139(5) of Act. GROUND NO. II a. On the facts and circumstances of the case and in law, Hon'ble CIT(A) erred in directing the AO to compute the disallowance u/s 14A to an amount of Rs. 52,22,592/- even if the computation u/r 8D(2)(i) & (iii) considering the securities yielding tax-free income, was lower than the said amount. b. The Appellant prays that the learned AO may kindly be directed to re-compute the disallowance u/s 14A read with rule 8D (iii) Considering only the securities which yielded tax-free income without linking it with Rs. 52,22,592/-. GENERAL The Appellant craves leaves to add to, alter and/or amend the above grounds of appeal. 3. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. 3. At the outset, the Ld. Counsel for the assessee requested for not pressing Ground No. II (a) and (b) relating to disallowance made u/s. 14A of the I.T Act, 1961. Therefore, we dismiss ground nos. II (a) and II (b). 4. The effective ground no. I (a) & I (b) relates to claim of deduction u/s. 80 IA(4)(v) of the Act of the Act of Rs. 1,08,31,990/-. 5. Brief facts of the case confined to the issue before us are that the assessee is a limited company. It filed the original return of income on 25- 11-2016 declaring income at Rs.13,66,64.028/- and subsequently, revised this return on 31-03-2016 claiming deduction u/s. 80 IA(4)(v) of the Act at Rs. 1,08,31,990/- and declared income at Rs. 12,63,73,639/-. The case was selected for complete scrutiny and one of the reasons was “the deduction claimed under Chapter VIA”. During the course of assessment proceedings the Ld. AO observed that the assessee did not make any claim of deduction u/s. 80IA(4)(v) of the Act in the original return of income and made this claim only in the revised return. The Ld. AO in view of the provisions of section 80AC of the Act observed that the assessee could claim deduction u/s. 80IA(4)(v) of the Act only if it is made in the return of income furnished for such assessment year on or before the due date specified u/s. 139(1) of the Act. The Ld. AO accordingly denied the claim and assessed the income at Rs.13,73,59,152/-. 6. Aggrieved, the assessee challenged this action before the ld. CIT(A), but failed to succeed. The ld. CIT(A) referred to judicial precedence and denied such deduction u/s. 80IA(4)(v) of the Act. 7. Aggrieved, now the assessee is in appeal before this Tribunal. 4. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. 8. The Ld. Counsel for the assessee submitted that the original return was filed before the due date of filing of return of income for A.Y 2014-15 under consideration was extended upto 30-11-2014 and the assessee filed the original return of income on 25-11-2014 and also the revised return was filed within the prescribed time limit i.e on or before 31-03-2016. 9. The Ld. Counsel for the assessee further submitted that the decisions referred by the ld. CIT(A) in the impugned order are not applicable in the case of assessee as the facts and circumstances of the present case are different. In the decision cited/referred by the ld. CIT(A) in the case of Suolificlo Lines Italia (India) (P) Ltd Vs. JCIT Cir-6, Kolkata reported in (2018) 93 taxmann.com 462 (Kol), the original return was not filed before the due date of filing of return and therefore, Hon’ble Court decided the issue against the assessee. In the instant case, the original return was filed before the due date of filing of return. The Ld. Counsel for the assessee further stated that the issue raised in the instant appeal is squarely covered in favour of the assessee by the decision of this Tribunal (ITAT, Kolkata) in the case of DCIT, Circle-4, Kol kata Vs. M/s. Mackintosh Burn Ltd, ITA No. 790/Kol/2014 for the AY 2006-07, order dt. 15-03-2017, wherein it has been held that if the original return of income is filed before the due date and the assessee failed to make such claim of deduction u/s. 80IA of the Act in the original return, then the said claim will be allowed if made in the revised return. Regarding furnishing of audit report on Form 10CCB as provided in section 80IA(7) of the Act, it was stated that the same is not in dispute. 10. Per contra, the Ld. DR vehemently argued supporting the orders of both the lower authorities stating that assessee’s claim u/s. 80IA(4)(v) of the Act should not be entertained. 5. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. 11. We have heard the rival contentions and perused the material placed before us. The sole grievance of the assessee in this appeal is that the ld. CIT(A) erred in denying the claim of deduction u/s. 80IA(4)(v) of the Act made by the assessee in the revised return of income. 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) of the Act, 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) of Rs.1,08,31,990/- in the original return of income and made the said claim subsequently in the revised return filed on 31-03-2016. 12. Now to examine the issues, we will first like to go through the relevant provisions of the I.T Act, 1961 as well as I.T Rules, 1962. Provisions of section 80IA(4)(v), 80IA(7) and 80AC of the Act have a direct bearing on this issue and the relevant provisions of section are reproduced below: 80-IA. (4) (v) an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant, if— (a) such Indian company is formed before the 30th day of November, 2005 with majority equity participation by public sector companies for the purposes of enforcing the security interest of the lenders to the company owning the power generating plant and such Indian company is notified before the 31st day of December, 2005 by the Central Government for the purposes of this clause; (b) such undertaking begins to generate or transmit or distribute power before the 31st day of March, 2011; Section 80IA (7): (7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub- section (2) of section 288, 18 [before the specified date referred to in section 44AB and the assessee furnishes by that date] the report 6. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. of such audit in the prescribed form 19 duly signed and verified by such accountant. 80AC. Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after— (i) the 1st day of April, 2006 but before the 1st day of April, 2018, 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; (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes", 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. 13. We also find that Rule 18BBB(2) and Rule 12(2) of the I.T Rules, 1962 also has a direct bearing to the issue under consideration, which deals with furnishing of audit report electronically for claiming deduction and the relevant rules are reproduced below:- Rule:18BBB. (1) *** *** *** (2) A separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction under section 80-I or 80-IA or 80-IB [or 80-IC] and shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. Rule: 12(2): The return of income required to be furnished in Form SAHAJ (ITR- 1) or Form No. ITR-2 or Form No. ITR-3 or 18 [Form SUGAM (ITR- 4)] or Form No. ITR-5 or Form No. ITR-6 [or Form No. ITR-7] shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act:] [Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause 7. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. (23C) of section 10, section 10A[, section 10AA], clause (b) of sub- section (1) of section 12A, section 44AB [, section 44DA, section 50B], section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E, [section 115JB, 5 [section 115JC] or section 115VW] [or to give a notice under clause (a) of sub-section (2) of section 11] of the Act, he shall furnish the same electronically.] 14. Now from going through the above 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) of the Act is that assessee needs to furnish the return of income before due date specified u/s. 139(1) of the Act. Another condition is that the assessee needs to obtain an audit report from a Chartered Accountants in Form 10CCB ( as per Rule 18BBB(2) of the I.T Rules, 1962 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. 15. Before examining the facts of the case in the light of the above cited conditions we will first go through the finding of this tribunal in the case of M/s. Mackintosh Burn Ltd (supra), which has been heavily relied on by the Ld. Counsel for the assessee and the relevant extracts is reproduced below:- “10. We have heard rival submissions and gone through facts and circumstances of the case. The facts stated hereinabove remained undisputed and hence, the same are not reiterated for the sake of brevity. The analysis to the impugned issue by the Ld. CIT(A) and the various provisions of the Act relating to the impugned issue together with the various case laws relied on by the Ld. AR are not reiterated herein for the sake of brevity. We found it pertinent to analyse the applicability of the Special bench decision of the Rajkot Tribunal in the case of Saffire Garments Vs. ITO reported in (2012) 28 Taxman.com 27 (Rajkot S.B) dated 30.11.2012 to the facts of the instant case. We find that 8. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. the Hon'ble Special bench observed that the proviso to section 10A(IA) of the Act states that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under section 139(1) of the Act and accordingly, it was held that the above proviso is mandatory and not directory. The Hon'ble Special Bench distinguished catena of cases relied on by the assessee and held that those decisions were in different context, viz., filing of audit report, form No. 10CCB etc. and hence, were not applicable to the assessee. While distinguishing the cases, the Hon'ble Special Bench observed that in the instant case the issue was filing of return itself and not filing of documents along with the return. 11. In the instant case before us, the assessee had filed the original return of income on 29.11.2006 which was before the due date specified u/s. 139(1) of the Act i.e. 30.11.2006. Thereafter, the assessee had filed revised return on 28.03.2008 wherein it claimed deduction u/s. 80lA of the Act. Since the assessee had filed its return of income before the due date specified u/s. 139(1) of the Act for the relevant year, the question of denying the benefit u/s. 80lA of the Act does not arise. Hence, the decision of the Hon 'ble Special Bench cannot be made applicable to the facts of the instant case before us. On the contrary, we find that the said decision is to be interpreted in favour of the assessee since the assessee had filed its return before the due date and as such, is eligible for deduction. It is not the case that the assessee before the Hon'ble Special bench had filed its original return before the due date of filing the return for the relevant year and claimed deduction u/s. 10A of the Act in its revised return. The case before the Hon'ble Special Bench was that the assessee had filed the return itself after the due date of filing the return and hence, the Hon'ble Special bench decided the issue against the assessee, which is not the case of the assessee before us. We find that the Ld. CIT(A) had made the very same observation after interpreting the section 80AC of the Act [similar to proviso to sec. 10A(lA)] i.e. claim of section 80lA shall be allowed if return is furnished before the due date of filing the return and held that the assessee is squarely entitled for deduction u/s. 80lA of the Act as all the conditions therein were duly fulfilled by the assessee. The Ld. DR did not refute any of the findings of the Ld. CIT(A) by producing any cogent material or contrary evidence and the submissions made by the 9. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. Ld. AR before us. In view of our aforesaid facts and findings and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. Appeal of revenue is dismissed. 16. Now from perusal of the above finding of this Tribunal, 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 of the Act 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. 17. 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) of the Act 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. 18. 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 10. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. 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. However, 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. 19. 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. 8IA(4)(v) of the Act. 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 ld. AO that whether the assessee has furnished the report as provided in section 80IA(vii) of the Act in 11. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. 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. 20. In the result, the appeal of the assessee is partly allowed for statistical purpose. The order pronounced in the open Court on 19 -07-2022 Sd/- Sd/- (SANJOY SARMA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated :19 -07-2022 **PP/SPS 12. ITA No. 1175/Kol/2019 AY 2014-15 M/s. Winro Commercial (I) Ltd. आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1.अपीलाथ /Appellant/Assessee: M/s. Winro Commercial (India) Limited 209-210 Arcadia Building 195 Nariman Point, Mumbai-400 021. 2. यथ /Respondent/Revenue: DCIT, Circle 1(2), Aaykar Bhavan, 7 th Fl., Room No. 14, P-7 Chowringhee Sq., Kolkata-700 069. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त- अपील / CIT (A) 5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड फाइल / Guard file. /True Copy By order/आदेश से, Assistant Registrar / Senior Private Secretary ITAT, Kolkata