ICSA (INDIA) Limited, Hyderabad V. Addl.CIT., Range-2, Hyderabad

ITA 340/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5536 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Opportunity of being heard; Question of law; Reasonable cause
• Section: 143(3); 80IB; 10B; 148; 54; 28; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1379/HYD/2012 A.Y. 2008'09 ITA NO. 1380/HYD/2012 A.Y. 2009'10 THE DEPUTY CIT CIRCLE'2(1) HYDERABAD VS. M/S. ICSA (INDIA) LTD. HYDERABAD PAN: AABCM5465F [APPELLANT] [RESPONDENT] ITA NO. 340/HYD/2013 A.Y. 2009'10 M/S. ICSA (INDIA) LTD. HYDERABAD PAN: AABCM5465F VS. THE ADDL. CIT RANGE'2 HYDERABAD [APPELLANT] [RESPONDENT] REVENUE BY: SRI D. SUDHAKAR RAO ASSESSEE BY: SRI P. MURALI MOHAN RAO DATE OF HEARING: 18.12.2013 DATE OF PRONOUNCEMENT: 22.01.2014 ORDER ORDER ORDER ORDER PER CHANDRA POOJARI, AM : ALL THE ABOVE THREE APPEALS BY THE REVENUE ARE DIR ECTED AGAINST DIFFERENT ORDERS OF CIT(A)'III, HYDERABAD D ATED 29 TH JUNE, 2012 FOR A.YS. 2008'09 AND 2009'10. ITA NO. 1379/H YD/2012 IS BY THE REVENUE FOR A.Y. 2008'09. ITA NO. 1380/HYD/201 2 BY THE REVENUE AND ITA NO. 340/HYD/2013 BY THE ASSESSEE AR E CROSS APPEALS FOR A.Y. 2009'10. SINCE THE ISSUES INVOLVED ARE IDENTICAL, ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 2 THESE APPEALS ARE CLUBBED AND HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. FIRST WE WILL TAKE UP REVENUE APPEAL IN ITA NO. 1380/HYD/2012 FOR A.Y. 2009'10. 3. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO G RANTING OF DEDUCTION U/S. 10A OF THE INCOME'TAX ACT, 1961. BR IEF FACTS OF THE ISSUE ARE THAT THE AO DISALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE U/S. 10A AT RS. 24,01,97,731 ON THE RE ASON THAT THE ASSESSEE HAS FAILED TO PRODUCE FIRCS TO SUPPORT ITS CLAIM. BEFORE THE CIT(A), THE ASSESSEE PRODUCED A COPY OF LETTER FROM BANK TO SHOW THAT THE FUNDS HAVE BEEN BROUGHT INTO INDIA. CONSIDERING THE PLEA OF THE ASSESSEE, THE CIT(A) OBSERVED THAT THE AO HAD NOT GIVEN EVEN ONE WEEK TIME TO THE ASSESSEE TO PRO DUCE FIRCS AND THE SAME WAS PRODUCED BEFORE THE CIT(A). THE C LAIM WAS DULY EXAMINED BY THE CIT(A) AND FOUND CORRECT. ACC ORDINGLY, THE CIT(A) DIRECTED THE AO TO GRANT THE DEDUCTION A FTER DUE VERIFICATION OF THE FIRCS. AGAINST THIS DIRECTION OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PE RUSED THE MATERIAL ON RECORD. THE CIT(A) HAS GIVEN A CAT EGORICAL FINDING IN HER ORDER THAT THE ASSESSEE HAS PRODUCED THE FIRCS FROM THE BANK TO SHOW THAT THE FUNDS HAVE BEEN BROU GHT INTO INDIA IN CONVERTIBLE FOREIGN EXCHANGE. THE LEARNED DR IS NOT ABLE TO CONTROVERT THE FINDING OF THE CIT(A). BEIN G SO, WE ARE ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 3 INCLINED TO CONFIRM THE ORDER OF THIS CIT(A) ON THI S COUNT. THIS GROUND BY THE REVENUE IS DISMISSED. 5. THE REVENUE RAISED ONE MORE GROUND IN THIS APPEAL W ITH REGARD TO GRANTING OF DEDUCTION U/S. 10A TO THE ASS ESSEE THOUGH A VALID RETURN WAS FILED BY THE ASSESSEE BEFORE DUE DATE AS REQUIRED UNDER PROVISO TO SECTION 10A(1A) OF THE AC T. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE CIT (A). THOUGH THIS WAS ONE OF THE REASONS TO DISALLOW THE CLAIM OF THE ASSESSEE BY THE AO, THERE WAS NO SUCH GROUND BEFORE THE CIT(A) ON THIS ISSUE. AS SUCH, WE ARE DECLINING TO ENTERTAIN THIS GROUND AT THIS POINT OF TIME. THE GROUND OF THE RE VENUE IS ALSO DISMISSED. 7. IN THE RESULT, ITA NO. 1380/HYD/2012 BY THE REVENUE IS DISMISSED. 8. NOW, WE TAKE UP THE ASSESSEE'S APPEAL IN ITA NO. 34 0/ HYD/2013 FOR A.Y. 2009'10. 9. THE FIRST ISSUE IN THIS APPEAL IS THAT THE CIT(A) H AD ERRED IN GRANTING DEDUCTION U/S. 10A OF THE ACT AT RS. 15,25 ,10,970 AS AGAINST ASSESSEE'S CLAIM OF RS. 24,01,97,731 U/S. 1 0A OF THE ACT. 10. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE CIT (A). THE CIT(A) DIRECTED THE AO TO VERIFY THE FIRCS AND ALLOWED DEDUCTION ACCORDINGLY. IT DOES NOT MEAN THAT THE C IT(A) LIMITED ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 4 THE DEDUCTION TO THE EXPENDITURE OF RS. 15,25,10,97 0 AS AGAINST THE CLAIM OF THE ASSESSEE AT RS. 24,01,97,731 U/S. 10A OF THE ACT. BEING SO, THIS GROUND RAISED BY THE ASSESSEE DOES N OT HAVE ANY MERIT AND THE SAME IS DISMISSED. 11. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF VE HICLE MAINTENANCE AND GENERAL EXPENSES AT RS. 11,73,590. FACTS OF THE ISSUE ARE THAT IT WAS OBSERVED BY THE AO THAT M ANY VOUCHERS IN RESPECT OF THESE EXPENSES ARE SELF'MADE AND WITHOUT COMPLETE EVIDENCE THEREOF. THE AO DISALLOW ED 10% OF THESE EXPENSES AND THE CIT(A) HAS CONFIRMED THE SAM E. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE HAS ASSESSEE IS A PUBLIC L IMITED COMPANY WHOSE ACCOUNTS ARE AUDITED BY STATUTORY AUD ITORS AND APPROVED BY ITS GENERAL BODY AND THERE CANNOT B E ANY EXPENDITURE OF PERSONAL NATURE. UNLESS AND UNTIL T HE AO POINTS OUT ANY SPECIFIC DISCREPANCY ON THE EXPENSES INCURR ED BY THE ASSESSEE, WE ARE NOT IN A POSITION TO DISALLOW ANY AMOUNT ON THIS COUNT. ACCORDINGLY, THE ORDER OF THE CIT(A) O N THIS ISSUE IS REVERSED AND THE GROUND TAKEN BY THE ASSESSEE IS AL LOWED. 13. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF RS . 22,47,657 TOWARDS CONVEYANCE AND TRAVELLING EXPENSE S. THE AO DISALLOWED 10% OF THIS EXPENDITURE ON THE REASON TH AT THE EXPENSES ARE NOT PROPERLY SUPPORTED BY VOUCHERS AND MOST OF THE VOUCHERS ARE SELF'MADE VOUCHERS. ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 5 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE HAS ASSESSEE IS A PUBLIC L IMITED COMPANY WHOSE ACCOUNTS ARE AUDITED BY STATUTORY AUD ITORS AND APPROVED BY ITS GENERAL BODY AND THERE CANNOT B E ANY EXPENDITURE OF PERSONAL NATURE. UNLESS AND UNTIL T HE AO POINTS OUT ANY SPECIFIC DISCREPANCY ON THE EXPENSES INCURR ED BY THE ASSESSEE, WE ARE NOT IN A POSITION TO DISALLOW ANY AMOUNT ON THIS COUNT. ACCORDINGLY, THE ORDER OF THE CIT(A) O N THIS ISSUE IS REVERSED AND THE GROUND TAKEN BY THE ASSESSEE IS AL LOWED. 15. IN THE RESULT, ASSESSEE APPEAL IN ITA NO. 340/HYD/2 013 IS PARTLY ALLOWED. 16. NOW WE WILL ADJUDICATE UPON THE REVENUE APPEAL IN I TA NO. 1379/HYD/2012 FOR A.Y. 2008'09. THE REVENUE RA ISED THE FOLLOWING GROUNDS OF APPEAL: I) THE CIT(A) ERRED IN LAW IN HOLDING THAT THE RECTIFICATION U/S. 154 FOR DISALLOWING DEDUCTION U/S. 10A ON THE GROUND THAT VALID RETURN WAS NOT FILED WITHIN DUE DATE IS NOT CORRECT. II) THE CIT(A) ERRED IN LAW IN HOLDING THAT THE ISSUE OF 'FILING OF RETURN WITHIN DUE DATE AS REQUIRED U/S. 10A(1A)' IS NOT A MISTAKE APPARENT FROM RECORD. 17. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE , A FIRM ENGAGED IN THE BUSINESS OF COMPUTER SOFTWARE SERVIC ES AND EMBEDDED SOLUTIONS, HAS FILED ITS RETURN OF INCOME BELATEDLY FOR ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 6 THE A.Y. 2008'09 ON 18.10.2008. ASSESSMENT WAS COM PLETED ON 22.12.2010 U/S. 143(3) OF THE ACT BY ALLOWING DEDUC TION U/S. 10A OF RS. 15,49,93,569 WHILE DETERMINING THE TOTAL INC OME AT RS. 108,80,05,446. BY TREATING IT A MISTAKE APPARENT F ROM RECORD, THE AO PASSED MODIFICATION ORDER U/S. 154 OF THE ACT ON 6.1.2012 WITHDRAWING THE DEDUCTION U/S. 10A OF RS. 15,49,93, 569 AND DETERMINED TOTAL INCOME AT RS. 124,29,99,015. 18. ON APPEAL, THE CIT(A) OBSERVED THAT THE AO CANNOT WITHDRAW THE DEDUCTION GRANTED TO THE ASSESSEE U/S. 10A OF THE ACT BY WAY OF PROCEEDINGS U/S. 154 OF THE ACT WHICH WAS DULY ALLOWED WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT AS THE ISSUE ITSELF IS VERY MUCH DEBATABLE. 19. THE LEARNED DR SUBMITTED THAT THE ISSUE IS NOT DEB ATABLE AND THERE IS A MISTAKE APPARENT ON RECORD WHICH SHO ULD BE RECTIFIED U/S. 154 OF THE ACT. 20. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT TH E ISSUE IS VERY MUCH DEBATABLE AND THERE ARE VARIOUS JUDGEMENTS IN FAVOUR OF THE ASSESSEE ON THIS ISSUE, PARTICULAR LY, HE DREW OUR ATTENTION TO THE FOLLOWING JUDGEMENTS: (A) M/S. RITHWIK PROJECTS PVT. LTD. VS. DCIT, ITA NO. 1 206/HYD/ 2012. THE TRIBUNAL VIDE ORDER DATED 7.12.2012 HELD AS FOL LOWS: '12. AS SEEN FROM THE ABOVE ORDERS OF THE TRIBUNAL IT IS A DEBATABLE ISSUE. AN ISSUE WHEN IT IS DEBATABLE, IT CANNOT BE DEALT WITH BY THE PROCEEDINGS U/S. 154 OF ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 7 THE ACT. BEING SO, IN OUR OPINION, THE ASSESSING O FFICER IS PRECLUDED FROM TAKING THE ISSUE IN THE PROCEEDIN GS U/S. 154 OF THE ACT. ACCORDINGLY, THE ORDER OF THE AO IS ANNULLED.' (B) ITO VS. SRI S. VENKATAIAH IN ITA NO. 984/HYD/2011. THE TRIBUNAL VIDE ORDER DATED 31.5.2012 HELD AS FOLLOWS : '13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE ADMITTEDLY, THE ASSESSEE FILED THE RETURN OF INCOME ON 23.12.2008. THE DUE DATE FOR FILING THE RETURN OF INCOME U/S. 139(1 ) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE CASE OF THE ASSESSEE IS 31.10.2008. AS SUCH TH E RETURN FILED BY THE ASSESSEE IS BELATED. IN THIS T HE ASSESSEE CLAIMED DEDUCTION U/S. 80IC OF THE ACT WHI CH WAS DISALLOWED BY THE ASSESSING OFFICER AS THE RETU RN OF THE ASSESSEE WAS NOT FILED WITHIN THE TIME AS PRESC RIBED U/S. 139(1) OF THE ACT. THE ASSESSEE HAS GIVEN REA SONS FOR DELAY IN FILING THE RETURN OF INCOME THAT THE ASSESSEE WAS PREPARING ITS ACCOUNTS THROUGH COMPUTE R AND THE COMPUTER GOT CORRUPTED DUE TO VIRUSES AND I N SPITE OF CONTINUOUS EFFORTS BY THE COMPUTER TECHNIC AL PERSONNEL TO RETRIEVE THE DATA IN TIME FOR FILING T HE RETURN OF INCOME, PROBLEM PERSISTED IN THE SYSTEM. BY TRYING TO RETRIEVE THE DATA FOR 4 DAYS THE REQUIRED DATA COULD NOT BE RETRIEVED AND THE BACKED UP DATA WERE AVAILABLE ONLY UP TO 31 ST JANUARY, 2008 IN THE CD AND THE ENTIRE DATA FOR THE TWO MONTHS PERIOD, FEBRUARY AND MARCH, 2008, HAD TO BE RE'ENTERED INTO THE COMPUTER SYSTEM AGAIN. ON PREPARATION OF THE FINAL ACCOUNTS AND FINALISING OF STATUTORY AUDIT IT TOOK A LITTLE EXTRA TIME THAT RESULTED IN BELATED FILING OF RETUR N OF INCOME. THUS THERE WAS A DELAY OF 74 DAYS IN FILIN G THE RETURN OF INCOME WHICH IS BEYOND THE CONTROL OF ASSESSEE. THIS WAS ALSO CONFIRMED BY THE STATUTORY AUDITOR VIDE HIS LETTER DATED 20.3.2011. BEING SO, IN OUR OPINION THERE IS A REASONABLE CAUSE FOR FILING THE RETURN ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 8 OF INCOME BELATEDLY AND THIS IS BEYOND THE CONTROL OF THE ASSESSEE. WHEN THE SUBSTANTIAL QUESTION OF JUS TICE INVOLVED TECHNICALITIES SHOULD BE IGNORED. FURTHER , WE ARE SUPPORTED BY THE ORDER OF THE TRIBUNAL IN ITA N OS. 1231 & 1199/HYD/2010 IN THE CASE OF DCIT VS. M/S. VEGA CONVEYORS & AUTOMATION LTD. ORDER DATED 31 ST DECEMBER, 2010 WHEREIN IN PARA 5 OF THE ORDER THE TRIBUNAL HELD AS FOLLOWS: '5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES, AND OT HER MATERIAL AVAILABLE ON RECORD, INCLUDING THE CASE'LA W RELIED UPON BY THE PARTIES. IT IS AN UNDISPUTED FA CT THAT THE ASSESSEE IN THE PRESENT CASE HAS FILED THE AUDI T REPORT IN FORM LOCCB DURING THE COURSE OF RE' ASSESSMENT PROCEEDINGS. THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80IB ON THE GROUND THAT THE AUDI T REPORT IN FORM 10CCB WAS NOT FILED ALONG WITH THE RETURN OF INCOME; OR WHETHER THE CIT(A) WAS CORRECT IN PROCEEDING ON THE BASIS OF FORM 10CCB FILED DURING THE COURSE OF RE'ASSESSMENT PROCEEDINGS AND DIRECTI NG THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASS ESSEE FOR DEDUCTION UNDER S. 80IB OF THE ACT. IT IS SETT LED POSITION OF LAW, AS CONSISTENTLY HELD BY VARIOUS BE NCHES OF THIS TRIBUNAL AND AS HELD IN VARIOUS DECISIONS R EFERRED TO BY THE CIT(A) IN THE IMPUGNED ORDER, THAT THOUGH FILING OF AUDIT REPORT IN FORM 10CCB IS MANDATORY A ND PRE'REQUISITE FOR DEDUCTION UNDER S. 80IB, NON'FILI NG OF THE SAME ALONG WITH THE RETURN OF INCOME IS ONLY A CURABLE DEFECT, AND ASSESSEE'S CLAIM FOR DEDUCTION HAS TO BE CONSIDERED ON ITS MERITS AS AND WHEN THE DEFECT IS CURED BY FILING FORM 10CCB. WE ARE FORTI FIED IN THIS BEHALF BY THE DECISION OF THE JURISDICTIONA L HIGH COURT IN THE CASE OF HEMSONS INDUSTRIES (SUPRA), RE LIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT I S CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE'S CLAIM FOR DEDUCT ION ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 9 UNDER S. 80IB CAN BE ENTERTAINED AND EXAMINED ON MERITS, WHEN THE AUDIT REPORT IS FILED BEFORE THE COMPLETION OF ASSESSMENT, WHICH HAS NOT BEEN DONE I N THE PRESENT CASE, SINCE THE AUDIT REPORT WAS FILED ONLY DURING THE COURSE OF RE'ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER, WHICH CANNOT EN D UP GIVING ADDITIONAL DEDUCTIONS/BENEFITS TO THE ASSESS EE. WE DO NOT FIND MERIT EVEN IN THIS CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THE CASE O F HEMSONS INDUSTRIES (SUPRA), BEFORE THE JURISDICTION AL HIGH COURT, FOR ONE OF THE YEARS UNDER APPEAL BEFOR E HONBLE HIGH COURT, VIZ., ASSESSMENT YEAR 1979'80, AUDIT REPORT WAS FILED DURING THE COURSE OF RE'ASSESSMENT PROCEEDINGS AND IN RESPONSE TO THE SHOW'CAUSE NOTICE UNDER S. 148 ISSUED BY THE ASSESSING OFFICER . IN THIS VIEW OF THE MATTER, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED ABO VE, AMONG OTHERS, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF THE REVENUE IN THIS APPEAL.' 2. IN OUR OPINION, IN VIEW OF THE ABOVE DISCUSSION, TH E CLAIM OF THE ASSESSEE CANNOT BE DENIED ON TECHNICALITIES WHEN THE ASSESSEE IS LEGALLY OTHERWI SE ENTITLED FOR DEDUCTION. AS SUCH WE ARE INCLINED TO DISMISS THE APPEAL FILED BY THE REVENUE AS DEVOID O F MERIT.' (C) ACIT VS. DHIR GLOBAL INDUSTRIES (P) LTD., 43 SOT 6 40 (DELHI) WHEREIN IT WAS HELD AS UNDER: '6.2 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT IT IS UNDISPUTED THAT A PROVISION HAS BEEN INSERTED DURING THE CURRENT YEAR IN SECTION 1OB(1) WHICH PROVIDES THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED TO AN ASSESSEE IF THE RETURN OF INCOME IS NOT FURNISHED ON OR BEFORE THE DUE DAT E ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 10 SPECIFIED UNDER SUB'SECTION (1) OF SECTION 139. NOW THIS SECTION WAS INTRODUCED W.E.F. 1'4' 2006 BY FINANCE ACT, 2006. THIS IS THE FIRST ASSESSMENT YEAR FROM W HICH THE SAID PROVISO HAS BEEN INTRODUCED. NOW SECTION 139(1) PROVIDES AS UNDER:' '139(1). E VERY PERSON ' (A) BEING A COMPANY (OR A FIRM) OR (B) BEING A PERSON OTHER THAN A COMPANY (FOR A FIRM ), IF HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER T HIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME'TAX, SHALL ON OR BEFORE THE DUE DATE, FURNISH A RETURN O F HIS INCOME OR THE INCOME OF SUCH OTHER PERSON DURING TH E PREVIOUS YEAR, IN THE PRESCRIBED YEAR, IN THE PRESC RIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. ' 6.3 WE FURTHER THAT ANOTHER PROVISO HAS BEEN INSERT ED IN SECT ION 139(1) W.E.F. 1'4'2006 BY FINANCE ACT, 2005 WHICH READS AS UNDER:' 'PROVIDED ALSO THAT EVERY PERSON BEING AN INDIVIDUA L OR A HINDU UNDIVIDED FAMILY OR AN ASSOCIATED OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, OR AN ARTIFICIAL JURID ICAL PERSON, IF HIS TOTAL INCOME OR THE TOTAL INCOME OF PREVIOUS YEAR, WITHOUT GIVING EFFECT TO THE PROVISI ONS OF SECTION 10A OR SECTION 10B OR SECTION 10BA OR CHAPT ER VI'A EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME'TAX, SHALL, ON OR BEFORE THE D UE DATE, FURNISH A RETURN OF HIS INCOME OR THE INCOME OF SUCH PERSON DURING THE PREVIOUS YEAR, IN THE PRESCR IBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. ' ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 11 6.4 A READING OF THE ABOVE MAKES IT CLEAR THAT SECT ION 139(1) MANDATED AN ASSESSEE TO FILE A RETURN IN HIS TOTAL INCOME ASSESSABLE UNDER THE ACT IN THE PREVIOUS YEA R EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX. ADMITTEDLY, WHEN EXEMPTION IS BEING GRANTED UNDER SECTION 10, THE INCOME WOULD NO T FORM PART OF THE TOTAL INCOME AND THUS THE TOTAL INCOME WOULD NOT EXCEED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME'TAX. TO TAKE CARE OF THIS SITUATION THE PROVISO MENTIONED ABOVE MANDATES THAT IF THE TOTAL INCOME OF A PERSON, WITH OUT GIVING EFFECT TO THE PROVISIONS OF SECTION 10A OR S ECTION 10B OR SECTION 10BA EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME'TAX, TO FURNISH A RETURN OF INCOME. 6.5 NOW CORRESPONDING PROVISION IS THERE IN SECTION 10B(1) WHICH PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED TO AN ASSESSEE UNDER THIS SECTION UNLESS RE TURN IS FURNISHED, ON OR BEFORE THE DUE DATE SPECIFIED U NDER SUB'SECTION (I) OF SECTION 139. 6.6 IN THE BACKGROUND OF THE AFORESAID SCHEME OF AC T AND THE DISCUSSION, WE FIND THAT THIS PROVISO IN SE CTION 10(B)( I) IS DIRECTORY AND NOT MANDATORY. FURTHER W HEN WE CONSIDER THE PROVISION OF SECTION 10(5) WHICH RE ADS AS UNDER:' 'THE DEDUCTION UNDER SUB'SECTION (1) SHALL NOT BE ADMISSIBLE FOR ANY ASSESSMENT YEAR'BEGINNING ON OR AFTER THE 1 ST DAY OF APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM, ALONG WITH THE RE TURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB'SECTION (2) OF SECTION 28 8, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION.' ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 12 6.7 HON'BLE JURISDICTIONAL HIGH COURT HAD AN OCCASI ON TO CONSIDER THIS PROVISION OF SECTION 10(5) IN THE CASE OF INTEGRATED DATABASE INDIA LTD. (SUPRA) AND WEB COMMERCE (INDIA) (P.) LTD. 'S CASE (SUPRA). THE HON'BLE COURT IN THE CASE OF WEB COMMERCE (INDIA) (P) LTD. (SUPRA) HAS HELD AS UNDER:' 'THIS COURT HAS ALREADY INTERPRETED THE LATTER PROV ISIONS AND HAS HELD THE SAME TO BE DIRECTORY AND NOT MANDATORY. THE CONTENTION OF THE REVENUE WAS THAT UNLESS AND UNTIL THE AUDIT REPORT IS FILED ALONG WI TH THE RETURN, THE BENEFIT OF SECTION 10A CANNOT BE AVAILA BLE TO THE ASSESSEE. RECENTLY, WE HAVE CONSIDERED THE IDENTICAL PROVISIONS OF SECTION 80'IA(7) IN THE CAS E OF CIT V. CONTIMETERS ELECTRICALS (P.) LTD. [2009] 317 ITR 249 (DELHI) : I.T.A. 1366/2008 DECIDED ON DECEMBER 2, 2 008, AND HELD THAT AS LONG AS THE AUDIT REPORT IS FILED BEFORE THE FRAMING OF THE ASSESSMENT, THE PROVISIONS OF SE CTION 80'IA(7) WOULD BE COMPLIED WITH INASMUCH AS THE SAME ARE DIRECTORY AND NOT MANDATORY. A SIMILAR VIE W WOULD HAVE TO BE TAKEN IN THE PRESENT CASE ALSO INASMUCH AS THE PROVISIONS ARE THE SAME. CONSEQUENTLY, WE DO NOT FIND ANY FAULT WITH THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL. NO SUBSTANT IAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. THE A PPEAL IS DISMISSED.' 6.8 WE FIND THAT THE PROVISO IN SECTION 10B(1) WHIC H HAS BEEN INSERTED REGARDING FILING OF RETURN WHICH WE A RE CONSIDERING NOW IS AKIN TO THE PROVISION OF SECTION 10(5) CONSIDERED BY THE HON'BLE HIGH COURT AS ABOVE. HON'BLE HIGH COURT HAD CLEARLY HELD THAT SUCH PROVI SION IS DIRECTORY AND NOT MANDATORY. 6.9 NOW IN THE PRESENT CASE, WE FIND THAT THERE WAS ONLY A MARGINAL DELAY OF I & Y2 MONTHS IN FILING THE RETURN OF INCOME. THE RETURN FILED WAS VALID ONE. T HE SAME HAS ALSO BEEN ACCEPTED AS A VALID RETURN BY TH E ASSESSING OFFICER. THE REASONABLE CAUSE ATTRIBUTED BY ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 13 THE ASSESSEE FOR THE DELAY IS THAT NEW PROVISION OF E' FILING THE RETURN WAS INTRODUCED FROM THE CURRENT ASSESSMENT YEAR. THERE WAS SOME PROBLEM UNDER THE NEW PROVISIONS DUE TO WHICH THE DATE OF FILING THE RETURN HAD EXTENDED BY THE CBDT FROM TIME TO TIME AND FROM 31'10'2006, THE SAME WAS EXTENDED TO 30' 11'2006. THE NEW PROVISION REGARDING E'TILING OF RE TURN WAS INTRODUCED AND IN THIS FIRST YEAR THE SOFTWARE DID NOT ACCEPT THE RETURN, IF SELF'ASSESSMENT TAX WAS NOT PAID. ASSESSEE'S CASE IS THAT DUE TO SOME FINANCIAL PROBLEMS IT COULD NOT PAY THE SELF'ASSESSMENT TAX O N TIME, AS A RESULT OF WHICH THERE WAS A DELAY IN THE PAYMENT OF TAX AND CONSEQUENT FILING OF RETURN BY ABOUT 1 & 1/2 MONTHS. IT WAS FURTHER CLAIMED THAT SUBSEQUENTLY THE SOFTWARE HAS BEEN MODIFIED AND NOW RETURNS ARE BEING ACCEPTED, EVEN WHEN SELF' ASSESSMENT TAX IS NOT PAID. THESE FACTUAL ASPECTS H AVE NOT BEEN DISPUTED BY THE REVENUE. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THERE WAS GENUINE AND VALID REASON FOR THE DELAY IN FILING OF RETURN AND MOREOVER AS WE HAVE ALREADY FOUND ABOVE THESE PROVISIONS ARE DIRECTORY AND NOT MANDATORY. ONCE THE VALIDITY OF THE RETURN HAS NOT BEEN QUESTIONED BY THE REVENUE, IN OUR CONSIDERED OPINIO N, THE REJECTION OF THE ASSESSEE'S CLAIM UNDER SECTION 10B(I) AT THE THRESHOLD BY THE ASSESSING OFFICER WA S NOT JUSTIFIED. IN THIS REGARD, THE CASE LAWS RELIED BY THE ASSESSEE AT GERMANE. IN THIS CONNECTION, WE REFER T O THE FOLLOWING CASE LAWS:' '' CONTINENTAL CONSTRUCTION (P.) LTD. 'S CASE (SUPR A) (II ) THAT, HOWEVER, IN VIEW OF THE BONA FIDE BELIEF ENTERTAINED BY THE PETITIONER, THE DEPARTMENT OUGHT NOT TO STAND ON MERE TECHNICALITIES BUT OUGHT TO GI VE THE PETITIONER AN OPPORTUNITY TO FULFIL THE REQUIRE MENTS OF SECTION 80HHB(3) AND, ON SUCH COMPLIANCE WITHIN A REASONABLE TIME, OUGHT TO GRANT THE BENEFIT OF THAT SECTION TO THE PETITIONER.' ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 14 ' BAJAJ TEMPO LTD. 'S CASE (SUPRA) 'A PROVISION IN A TAXING STATUTE GRANTING INCENTIVE S FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY; AND SINCE A PROVISION FOR PROM OTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, TH E RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO FRUSTRATE.' 6.10 NOW WE DEAL WITH THE ID. DEPARTMENTAL REPRESENTATIVE'S SUBMISSION THAT ASSESSEE'S REMEDY LIED IN APPLYING TO THE CBDT UNDER SECTION 119(2)(B). TH E SAID SECTION READS UNDER:' 'THE BOARD MAY, IF IT CONSIDERS IT DESIRABLE OR EXP EDIENT SO TO DO FOR AVOIDING HARDSHIP IN ANY CASE OR CLASS OR CASES, BY GENERAL OR SPECIAL ORDER, AUTHORIZE [ANY INCOME'TAX AUTHORITY, NOT BEING A COMMISSIONER (APPEALS)] TO ADMIT AN APPLICATION OR CLAIM FOR ANY EXEMPT ION, DEDUCTION, REFUND OR ANY OTHER RELIEF UNDER THIS ACT AFTER THE EXPIRY OF THE PERIOD SPECI FIED BY OR UNDER THIS ACT FOR MAKING SUCH APPLICATION OR CLAIM AND DEAL WITH THE SAME ON MERITS IN ACCORDANCE WITH LAW.' 6.11 THE SAID PROVISION MAKES IT CLEAR THAT THE BOA RD CANNOT GIVE DIRECTION TO APPELLATE AUTHORITIES. FUR THER THE ACT DOES NOT PROHIBIT THAT, RELIEF IN THIS REGA RD WHEN GENUINE HARDSHIP IS FACED, CANNOT BE GRANTED BY APPELLATE AUTHORITY. WE HAVE ALREADY GIVEN A FINDING PRECEDING PARAGRAPH THAT THERE WAS GENUINE HARDSHIP ON THE PART OF THE ASSESSEE, UNDER WHICH CIRCUMSTANCES THE RETURN WAS FILED AFTER A MARGINAL DELAY. 6.12 FURTHER THE VERY FACT THAT THE ACT ENVISAGES T HAT RELIEF REGARDING EXEMPTION SHOULD BE CONSIDERED AND ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 15 GRANTED WHEN APPLICATION IS MADE AFTER THE SPECIFIE D PERIOD IN CASES OF GENUINE HARDSHIP CLEARLY INDICAT ES THAT PROVISION IN THIS REGARD IS DIRECTORY AND NOT MANDATORY. HENCE IN CASE OF GENUINE HARDSHIP THE RELIEF CAN BE GRANTED BY THE APPELLATE AUTHORITY. 6.13 HOWEVER, WE FIND THAT ID. COMMISSIONER OF INCOME'TAX (APPEALS) HAS ACCEPTED THE ASSESSEE'S SUBMISSION, THAT THE DELAY IN FILING OF RETURN SHOU LD NOT BE A REASON TO DENY THE ASSESSEE'S CLAIM OF EXEMPTI ON UNDER SECTION 10B(I). HOWEVER, THE ID. COMMISSIONER OF INCOME'TAX (APPEALS) HAS NOT CONSIDERED THE FACTUAL ASPECTS OF THE MERITS OF THE CASE. ASSESSING OFFICE R ALSO DISALLOWED THE ASSESSEE'S CLAIM BY STATING THAT THE RETURN WAS FILED ON TIME. HE ALSO HAD NOT GONE INTO THE OTHER ASPECTS OF THE MERITS OF THE CASE. IN THIS RE GARD, WE REFER THE DECISION OF THE HON'BLE APEX COURT DECISION M THE CASE OF KAPURCHAND SHRIMAL V. CL T [1981] 131 ITR 451, WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITY HAS JURISDICTION AS WELL AS THE DUTY TO CORRECT THE ERRORS IN THE PROCEEDINGS UNDER APPE AL AND TO ISSUE OF NECESSARY, APPROPRIATE DIRECTIONS T O THE AUTHORITY AGAINST WHOSE DECISION APPEAL IS PREFERRE D TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRE SH, UNLESS FORBIDDEN FROM DOING SO BY STATUTE. 6.14 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE REMIT THIS ISSUE TO THE FILES OF THE ASSESSING OFFICER. HE SHALL EXAMINE THE MERITS OF T HE ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 10B. WE MAKE IT CLEAR THAT WE HAVE ALREADY ADJUDICATED THE ISSUE REGARDING DELAY IN FILING OF RETURN OF INCOME IN ASSESSEE'S FAVOUR IN THE FORGOING PARAGRAPHS, THE S AME SHALL NOT AGAIN FORM PART OF ADJUDICATION BY THE ASSESSING OFFICER. NEEDLESS TO ADD THAT THE ASSESSE E SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD . (D) FURTHER THE AR RELIED ON THE JUDGEMENT OF H.P. HIGH COURT IN THE CASE OF CIT VS. JAGISH RAM KRISHAN CHAND (304 I TR 45) ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 16 WHEREIN HELD THAT ASSESSEE CAN FILE A REVISED RETUR N AND CLAIM BENEFIT U/S. 80HH AND 80J EVEN IF THE SAID BE NEFITS WERE NOT CLAIMED IN THE ORIGINAL RETURN. (E) THE AR ALSO RELIED ON THE DECISION OF CHENNAI B BEN CH IN THE CASE OF M/S. BNAZRUM AGRO EXPORTS (P) LTD. VS. ACIT , IN ITA NO. 774/MDS/2012. THE TRIBUNAL VIDE ORDER DATED 18.9.2 012 HELD AS UNDER: '11. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO T HE CASE AND MORE PARTICULARLY, IN VIEW OF THE FACT THA T THE SUBSTANTIVE GROUND FOR REJECTING ASSESSEE'S DEDUCTI ON CLAIM IS ONLY THAT OF DELAY OF ONE MONTH (SUPRA) IN FILING 'RETURN', WE ARE OF THE OPINION THAT THE ASSESSEE H AS SUCCESSFULLY EXPLAINED THE DELAY. ACCORDINGLY, WE HOLD THAT THE ASSESSEE HAS FILED A VALID RETURN UNDER SE CTION 139(1) OF THE ACT. ACCORDINGLY, THE ASSESSEE IS AL SO HELD ENTITLED FOR GETTING THE DEDUCTION UNDER SECTI ON 10B OF THE ACT. 12. HENCE, WE ALLOW THE APPEAL.' 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE GRIEVANCE OF THE DEP ARTMENT WITH REGARD TO THE FINDING OF THE CIT(A) IS THAT THE DED UCTION GRANTED TO THE ASSESSEE U/S. 10A CANNOT BE WITHDRAWN U/S. 1 54 ON THE REASON THAT THE ASSESSEE FILED RETURN OF INCOME BEL ATEDLY. IN OUR OPINION, THE ISSUE DEALT WITH BY THE AO IN HIS ORDE R U/S. 154 OF THE ACT IS VERY MUCH DEBATABLE AS EVIDENCED BY THE VARIOUS JUDGEMENTS CITED BY THE LEARNED AR. IN OUR OPINION , A ITA NO. 1379/HYD/2012 & ORS. M/S. ICSA (INDIA) LIMITED =========================== 17 DEBATABLE ISSUE CANNOT BE CONSIDERED IN THE PROCEED INGS U/S. 154 OF THE ACT. CONSIDERING THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN ANNULLING THE ORDER U/S. 154 OF THE ACT. 22. IN THE RESULT, APPEAL OF THE DEPARTMENT IN ITA NO. 1379/ HYD/2012 IS DISMISSED. 23. TO SUM UP, BOTH THE APPEALS OF THE REVENUE IN ITA N O. 1380/HYD/2012 AND ITA NO. 1379/HYD/2012 ARE DISMISS ED AND ASSESSEE'S APPEAL IN ITA NO. 340/HYD/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2014. SD/' (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/' (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 22 ND JANUARY, 2014 TPRAO COPY FORWARDED TO: 1. THE DEPUTY CIT, CIRCLE'2(1), 8 TH FLOOR, B BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2. THE ADDL. CIT, RANGE'2, HYDERABAD. 3. M/S. ICSA (INDIA) LTD., C/O. M/S. P. MURALI & CO ., CHARTERED ACCOUNTANTS, 6'3'655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD'82. 4. THE CIT(A)'III, HYDERABAD. 5. THE CIT'II, HYDERABAD. 6. THE DR BENCH 'B', ITAT, HYDERABAD