Niteshkumar J. Shah, Ahmedabad V. The Dy.CIT, Circle-2(1)(1), Ahmedabad

ITA 189/AHD/2023

AI Insights

The case revolves around the denial of a deduction claimed under section 80-IA of the Income Tax Act, 1961, by the assessee, Niteshkumar J. Shah, for the assessment year 2019-20. The deduction was initially disallowed by the Central Processing Centre (CPC) due to the late filing of Form 10CCB, which is required to claim deductions under section 80-IA. The assessee's subsequent appeals to the National Faceless Appeal Centre (NFAC) and the CIT(A) were unsuccessful, leading to the filing of this appeal before the Income Tax Appellate Tribunal. The Tribunal examined whether the late filing of Form 10CCB, a procedural requirement, should result in the denial of the substantive benefit of the deduction under section 80-IA.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131531 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 28-03-2023
• Other Referred Cases: DCIT vs. Croygas Equipments Pvt. Ltd., Wipro Ltd. vs. Pr. CIT, Mother Superior Adoration Convent vs. State, Dilip Kumar's case, IPCA Laboratory Ltd. vs. Dy. CIT, Bajaj Tempo Ltd. vs. CIT, Kishorbhai Harjibhai Patel vs. ITO, State of Gujarat vs. S.A. Himnani Distributors (P.) Ltd., G. M. Knitting Industries (P.) Ltd. vs. Dy. CIT, Yokogawa India Ltd vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Tax effect; Revised return
• Section: 154; 139; 54F; 10AA; 80HHC; 139(5); 10B; 143(1); 250; 80IA; 274; 139(1); 43

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Niteshku mar J. Shah , 45, 4 t h Floo r, Avani Co mplex , B/h, Navrangp ura Police Station, Navrangpura PAN: AC VPS 6204P (Appellant) Vs DCIT, Circle-2(1)(1 ), Ah med abad (Resp ondent) Asses see b y : Shri Pa rin Shah, A. R. Revenue by : Shri Atul Pandey , S r. D. R. Date of hearing : 03-07 -2 023 Date of pronouncement : 12-07 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of National Faceless Appeal Centre, (NFAC), Delhi, in proceeding u/s. 250 vide order dated 10/03/2023 passed for the assessment year 2019-20. ITA No. 189/Ahd/2023 Assessment Year 2019-20 I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 2 2. The assessee has taken the following grounds of appeal:- Grounds of Appeal Tax effect relating to each Ground of appeal 1. The order passed by NFAC is bad in law and required to be quashed. N.A. 2 Ld. NFAC erred in law and on facts in disallowing deduction u/s 80IA of the Act of Rs.23,92,409 ignoring fact that 10CCB report filed belatedly by appellant and its procedural lapse which does not lead to withdrawal of deduction without verification. Rs. 10,47,380/- 3 Ld. NFAC erred in law and on facts in confirming action of CPC in disallowing deduction u/s 80 1 A of the Act while processing return u/s. 143(1) of the Act ignoring fact that it is beyond power given to CPC. N.A. being alternative contention to Ground No. 2. 4 Ld. NFA ought to have consider the submission of the appellant and ought to allow the deduction claimed in the return of income. N.A. being alternative contention to Ground No. 2. 5 Charging of interest u/s. 234C is not justified. Total tax effect Rs. 10,47,380/- I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 3 3. The brief facts of the case are that the assessee filed return of income for A.Y. 2019-20 on 08-10-2019 u/s. 139(1) of the Act by declaring total income of Rs. 2,04,58,660/-. In the said return of income, the assessee had claimed u/s. 80-IA of the Act amounting to Rs. 23,92,409/-, however, the assessee filed Form 10CCB claiming u/s. 80-IA of the Act on 05-11-2019 i.e. after the due prescribed date for filing Form 10CCB (31-10-2019). The return was processed by CPC u/s. 143(1) of the Act on 14-05-2020, in which the claim of deduction u/s. 80-IA of the Act was disallowed. Further, the assessee filed rectification application against the processing u/s. 143(1) of the Act and CPC passed order u/s. 154 on 25-07-2020 by disallowing deduction claimed of Rs. 23,92,409/- u/s. 80-IA of the Act. Thereafter, the assessee filed rectification application against the order passed u/s. 154 of the Act, which was found untenable vide order dated 09-02-2022. 4. The assessee filed appeal before ld. CIT(A) who dismissed the appeal by observing as follows:- “4.4 In view of the discussion made above, it is evident that the appellant filed the required Form 10CCB after due date in violation to the Rule 12(2) of Income Tax Rules 1962 and section 80-IA(7) of the Income Tax Act, 1961 Hence, it is concluded that the Assessing Officer has rightly disallowed the deduction of 23,92,409/- claimed u/s 80-1A and made the addition of the same to the total income of the appellant Further the appellant sought relief of the interest charged u/s 234A 234B, 234C and 234D of the Act Since, the charge of interest is the consequential effect of the addition made, therefore, no merit was found in this ground Accordingly I am not inclined to interfere with the decision of the Assessing Officer The above all grounds of appeal are hereby dismissed.” 5. The assessee is in appeal before us against the addition confirmed by ld. CIT(A) denying the benefit of deduction u/s. 80-IA of the Act. The I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 4 counsel for the assessee placed reliance on several judicial precedents in supports of the contention that filing Form 10CCB is a procedural requirement and not a mandatory requirement. In the instant facts, it has not been disputed that the assessee had filed form 10CCB on 05-11-2019, while the return of income as processed by CPC on 14-05-2020 i.e. after Form 10CCB was filed by the assessee. The counsel for the assessee placed reliance on several judicial precedents of the Jurisdictional Ahmedabad ITAT and also by the Gujarat High Court in support of the contention that even if Audit Report in Form 10CCB is filed beyond the due prescribed date, this cannot be a ground to deny claim of benefit u/s. 10-IA of the Act 6. In response, the ld. Departmental Representative placed reliance on the case of Wipro Ltd. 140 taxman.com 227, wherein the Supreme Court held that for claiming deduction u/s. 10B of the Act, furnishing of Form 56F along with return of income was a mandatory requirement. Accordingly, it was submitted that since the assessee failed to furnish Form 10CCB along with the return of income, the benefit of 80-IA of the Act cannot be given to the assessee. 7. We have heard the rival contentions and perused the material on record. We observe that recently, Ahmedabad Tribunal in the case of DCIT vs. Croygas Equipments Pvt. Ltd. in ITA No. 415/Ahd/2020 dated 16-06- 2023 have dealt aspect of whether benefit u/s. 10AA of the Act could be denied to the assessee if the assessee failed to file Form 56F along with return of income, which however was subsequently filed by the assessee before the Assessing Officer, before the conclusion of assessment. Further, I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 5 in this case, the ITAT Ahmedabad also distinguished the decision of Wipro Ltd. supra, which was rendered by the Hon’ble Supreme Court on a different set of facts. The relevant extracts of the Ahmedabad ITAT ruling are reproduced below for reference:- “6.1 In our view, it is a well accepted principle of law that beneficial provisions should be given a liberal construction and once the assessee has satisfied the conditions laid down for claiming deduction/exemption under the relevant beneficial provision, the same should not be denied. We are of the view that exemption benefits u/s 10AA cannot be denied to the assessee on account of a procedural lapse committed by the Chartered Accountant of the assessee. We must always keep the object of the Act in view while interpreting the section. The legislative intention must be the foundation of the court’s interpretation. In a recent judgment of Mother Superior Adoration Convent [2021] 126 taxmann.com 68 (SC), the Supreme Court held that beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. In reference to Dilip Kumar's case (Supreme Court), it held that the Constitution bench has not made any distinction between exemption granted generally and exemption provisions that have a beneficial purpose, therefore, it cannot be said that for beneficial exemption liberal rule of construction has been done away with. In other words, for construction of beneficial exemption strict rule of interpretation may not be required to be applied. The Supreme Court in this case observed as under: “This being the case, it is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions reached by the impugned judgments of the Division Bench and the Full Bench.” 6.2 In IPCA Laboratory Ltd. v. Dy. CIT [2004] 12 SCC 7421 the Supreme Court in the said judgment observed that section 80HHC has been incorporated with a view to provide incentive to export houses and this section must receive liberal interpretation. In Bajaj Tempo Ltd. v. CIT [1992] 3 SCC 78, the Supreme Court while interpreting section 15C of the Income-tax Act, 1922 observed that I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 6 the section, read as a whole, was a provision, directed towards encouraging industrialization by permitting an assessee setting up a new undertaking to claim benefit of not paying tax to certain extent on the capital employed. The Gujarat High Court in the case of Kishorbhai Harjibhai Patel v. ITO [2019] 107 taxmann.com 295 (Gujarat) held that section 54F is a beneficial provision and is applicable to an assessee when the old capital asset is replaced by a new capital asset in the form of a residential house. Once an assessee falls within the ambit of a beneficial provision, then the said provision should be liberally interpreted. In the case of State of Gujarat v. S.A. Himnani Distributors (P.) Ltd. [2014] 43 taxmann.com 358 (Gujarat), the Gujarat High Court held that when State is inclined to give some tax benefit to tax payers, terms or provisions of policy should be interpreted in a liberal manner and with an intention to see that purpose for which policy is framed is fulfilled and beneficiaries is helped and the interpretation must not be such which would frustrate objective of policy. Section 10AA of the Act is a beneficial provision aimed at encouraging exports of goods and services by setting up of industrial units in special economic zones. In our view, benefit of section 10AA should not be denied on account of a procedural/technical default by the assessee or his chartered accountant, if otherwise the assessee is eligible to claim deduction under the said exemption provision. 6.3 Another notable issue for consideration is that recently the Hon'ble Supreme Court was confronted with the claim of benefit u/s 10B in Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223/288 Taxman 491/446 ITR 1. The assessee furnished original return taking the benefit of section 10B and did not carry forward the loss. Thereafter, a revised return was filed foregoing the claim of deduction u/s 10B. The AO rejected the withdrawal of exemption under section 10B by holding that assessee did not furnish the necessary declaration in writing before due date of filing return of income, which was an essential requirement for not claiming the benefit of section 10B. The Hon'ble High Court decided the issue in favour of the assessee by holding that the requirement of filing the declaration was mandatory but filing it along with the return of income u/s 139(1) was a directory requirement. The matter was brought by the Revenue before the Hon'ble Supreme Court. The assessee, inter alia, relied on the judgment of the Apex Court in G.M. Knitting Industries (P.) Ltd. (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 (P.) Ltd. (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. I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 7 6.3.1. In our view, the aforesaid decision would not apply to assessee’s set of facts and would not preclude / prohibit the assessee from claiming deduction u/s 10AA of the Act, for the following reasons: (i) Firstly, in the case of Wipro Limited supra, the issue for consideration before the Hon'ble Supreme Court was that in the original return of income, the assessee had claimed deduction under section 10B of the Act, whereas in the revised return filed under section 139(5) of the Act, assessee did not claim deduction under section 10B of the Act, and instead claimed benefit of carry forward of losses. It was in light of these facts that the Hon'ble Supreme Court held that on a plain reading of section 10B(8) of the Act, it is clear that where assessee claimed benefit under section 10B(8) by furnishing declaration in revised return much after due date prescribed under section 139(1), same was to be denied as requirement of furnishing declaration before AO before due date of filing original return under section 139(1) was a mandatory condition not directory. However, notably, there is no such equivalent/similar provision in section 10AA of the Act, which gives an option to the assessee to file a declaration before the due date of return of income under section 139(1) of the Act, to the effect that the provisions of this section may not be made applicable to him, for the impugned assessment year. Therefore, going by the strict language of section, the relevant statutory provisions on which the decision of Wipro was based, were on a different footing. Further, the issue for consideration in the Wipro case is also distinguishable, since in the assessee’s case, it had claimed benefit of deduction u/s. 10AA in the original return of income (and only Form 56F was omitted to be e-filed along-with return of income), whereas the issue for consideration in Wipro case supra was that once the assessee had claimed benefit of section 10B in the original return of income, whether such benefit could be foregone/withdrawn by filing declaration u/s. 10B(8) of the Act in the revised return of income filed u/s 139 (5) of the Act (and the assessee could, in turn, avail the benefit of carry forward losses in the revised return of income). (ii) Secondly, the Hon'ble Supreme Court in the case of Wipro Limited held that section 10B of the Act is an “exemption provision” and hence, assessee claiming such exemption has to be “strictly” comply with the exemption provisions. However, notably, the Hon'ble Supreme Court in the case of CIT v. Yokogawa India Ltd 391 ITR 274 (Supreme Court), held that section 10A of the Act is a “deduction provision ” and not an “exemption provision”. Therefore, apparently there seems to be a difference of opinion to whether section 10A/B provisions qualify as “Exemption” or Deduction” provisions. Therefore, since it is well-settled principle of law that deduction provisions, which have been introduced in the Statute to provide incentive to the assessee, should be construed I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 8 “liberally”, in our considered view, once it is not disputed that the instant set of facts, the assessee claimed the benefit of provisions under section 10AA in the return of income (which in our view is a mandatory/directory requirement), the benefit of section 10AA cannot be denied only on the ground that the assessee could not file Form 56F along with the return of income (being a procedural requirement), especially when Form 56F has been filed by the assessee at the assessment stage when such claim was being considered by the Assessing Officer. (iii) Besides the above, in the case of G. M. Knitting Industries (P.) Ltd. case supra, the Hon'ble Supreme Court further held that even though necessary certificate in Form 10CCB along with return of income had not been filed but same was filed before final order of assessment was made , assessee was entitled to claim deduction under section 80-IB of the Act as well. Therefore, in light of the decision of Yokogawa supra (which is held that section 10A of the Act is a “deduction provision ” not an “exemption provision”) and the decision of G. M. Knitting Industries case supra, which have been rendered on a similar facts as that of the assessee i.e. claim of deduction was made in the original return of income itself , in our view, the ratio laid down in the Wipro Ltd case would not disentitle assessee to claim benefit of section 10AA of the Act, since it has been rendered on a different set of facts. Therefore in our considered view, once such claim has been made in the original return of income and assessee has also furnished Form 56F during the course of assessment proceedings itself, before the assessment was finalized. The assessee should not be denied the benefit of s. 10AA of the Act. It is a well settled principle of law that if there is any ambiguity regarding interpretation of a Statutory provision, an interpretation favourable to the assessee may be taken, especially when we are dealing with Statutory provisions aimed at giving some incentive to the assessee.” 7.1 Accordingly, in the light of the above discussion, in our considered view, ld. CIT(A) has erred in facts and in law in not allowing the claim of the assessee on the ground that benefit of section 80-IA of the Act is not available to the assessee if the assessee does not e-file Form 10CCB along with return of income when the assessee admittedly furnished From 10CCB, before the return of income filed by the assessee was processed by the Department u/s. 143(1) of the Act. I.T.A No. 189/Ahd/2023 A.Y. 2019-20 Page No. Niteshkumar J. Shah vs. Dy. CIT 9 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12-07-2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 12/07/2023 (TRUE COPY) आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद