Asst.C.I.T., Mangalore V. M/s Megha Fruit Processing Pvt. Ltd., Puttur

ITA 613/BANG/2015

• Counselvise Citation: 61321114 RSA 2015
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NANDINI DAS JT
• Section: 80IB; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.613/BANG/2015 ASSESSMENT YEAR : 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), MANGALORE. VS. M/S. MEGHA FRUIT PROCESSING PVT. LTD., SRI GANESH COMPLEX, MAIN ROAD, DARBE, PUTTUR 574 202. PAN : AADCM 9416C APPELLANT RESPONDENT APPELLANT BY : SMT. NANDINI DAS, JT. CIT(DR) RESPONDENT BY : SMT. PRATIBHA, R., ADVOCATE DATE OF HEARING : 03.08.2015 DATE OF PRONOUNCEMENT : 07.08.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 2.1.2015 OF THE CIT(APPEALS), MANGALORE RELATING TO ASSESSMENT YEAR 2011-12. 2. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY THE RE VENUE READS AS FOLLOWS:- ITA NO.613/BANG/2015 PAGE 2 OF 7 2.1 THE LD. C.I.T (APPEALS) ERRED IN ALLOWING THE DEDUCTION U/S 80IB IGNORING THE PROVISIONS OF SEC.8OAC. 2.2 THE LD. C.I.T (APPEALS) FAILED TO APPRECIATE T HE FACT THAT THE ASSESSEE HAS FAILED TO PROVE ANY GENUINE HARDSH IP PREVENTING HIM FROM FILING THE RETURN WITHIN THE TIME PROVIDED U/S 139(1). 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF FRUIT PROCESSING INDUSTRY. IT WAS ENTITLED TO CLAIM DEDU CTION U/S. 80IB(11A) OF THE ACT. AS FAR AS AY 2011-12 IS CONCERNED, THE ASSESS EE FILED A RETURN OF INCOME ON 16.10.2011 CLAIMING DEDUCTION U/S. U/S. 8 0IB(11A). THE DUE DATE FOR FILING THE RETURN OF INCOME FOR AY 2011-12 WAS, ADMITTEDLY, 30.9.2011. IN VIEW OF THE PROVISIONS OF SECTION 80 AC OF THE ACT, THE RETURN WHICH WAS PROCESSED BY THE CPC DENIED THE CLAIM OF ASSESSEE FOR DEDUCTION U/S. 80IB(11A). THE ASSESSEE FILED APPLI CATION U/S. 154 PRAYING FOR RECTIFICATION OF THE ERROR IN PROCESSING THE AS SESSEES RETURN OF INCOME WHEREBY CLAIM FOR DEDUCTION U/S. 80IB(11A) WAS DENI ED. THE SAID RECTIFICATION APPLICATION WAS DISMISSED BY AN ORDER DATED 30.9.13. 4. AGAINST THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS), WHO BY THE IMPUGNED ORDER, ALLOWED TH E CLAIM OF ASSESSEE FOR DEDUCTION U/S. 80IB(11A) OBSERVING AS FOLLOWS:- 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFUL LY. THE SOLITARY ISSUE INVOLVED IN THIS APPEAL IS DENIAL OF RECTIFICATION U/S 154 OF THE ORDER U/S 143(1). THE ISSUE INVOLVED IS DENIAL OF DEDUCTION U/S 80IB WHICH WAS SOUGHT TO BE RECTIFIED U/S 154. ADMITTED FACTS ARE THAT THE APPELLANT WAS TO FILE R ETURN U/S 139(1) ON 30.09.2011 WHICH WAS FILED ON 16.10.2011 AND THE RE WAS ITA NO.613/BANG/2015 PAGE 3 OF 7 ALMOST A FORTNIGHT DELAY IN FILING OF RETURN. HOWEV ER, THE RETURN WAS FIELD WITHIN THE DUE DATE U/S 139(4). THE ONLY REASON FOR WHICH THE APPELLANT WAS DENIED DEDUCTION U/S 80IB ( 11A) WAS THIS DELAY IN FILING OF RETURN U/S 139(1) WHICH IS HOWEVER FILED WITHIN THE TIME U/S.139(4) FOR THE A.Y.2011-12. THI S IS THE ONLY REASON FOR WHICH THE DEDUCTION WAS DENIED AND ADMIT TEDLY, THE APPELLANT SATISFIED ALL OTHER CONDITIONS. IN THE EA RLIER YEARS AND SUBSEQUENT YEARS, THE FILING WAS WITHIN TIME AND CL AIMS WERE ALLOWED. IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS CITED BY THE APPELLANT, I AM OF THE VIEW THAT THE APPELLANT IS E LIGIBLE FOR THE DEDUCTION. HENCE THE AO IS DIRECTED TO ALLOW THE SA ME. 5. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE REVE NUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS PER TH E PROVISIONS OF SEC.80AC OF THE ACT, DEDUCTION U/S.80-IB(11A) OF TH E ACT CANNOT BE ALLOWED IF THE ASSESSEE DOES NOT FILE THE RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED IN SEC.139(1) OF THE ACT. THE S AID PROVISIONS READS AS FOLLOWS: '80AC. DEDUCTION NOT TO BE ALLOWED UNLESS RETURN FU RNISHED-WHERE IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE OF THE PR EVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2006 OR ANY SUBSEQUENT ASSESSMENT YEAR, ANY DEDUCTION IS AD MISSIBLE 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 S HALL 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.'. SINCE THE ASSESSEE ADMITTEDLY FILED THE RETURN OF I NCOME ONLY ON 16.10.2011 WHICH WAS ADMITTED BEYOND THE DUE DATE S PECIFIED U/S.139(1) ITA NO.613/BANG/2015 PAGE 4 OF 7 OF THE ACT, THE AO DENIED THE DEDUCTION U/S.80-IB(1 1A) OF THE ACT CLAIMED BY THE ASSESSEE. 7. AT THE TIME OF HEARING THE LEARNED DR BROUGHT T O OUR NOTICE THAT A SPECIAL BENCH OF THE ITAT, RAJKOT BENCH, IN THE CAS E OF SAFFIRE GARMENTS VS. ITO (2013) 140 ITD 6 (RAJKOT)(SB) HAD AN OCCASI ON TO EXAMINE IDENTICAL PROVISIONS SUCH AS SEC.80AC VIZ., PROVISO TO SEC.10A(1A) OF THE ACT, AS TO WHETHER THE SAME WERE DIRECTORY OR MANDA TORY. THE PROVISIONS OF SEC.10A(1A) OF THE ACT ARE AS FOLLOWS: '[(1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SE CTION (1), THE DEDUCTION, IN COMPUTING THE TOTAL INCOME OF AN UNDE RTAKING, WHICH BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE DURING THE PREVIOUS YEAR RELEVANT TO ANY A SSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2003, IN ANY SPECIAL ECONOMIC ZONE, SHALL BE, (I) HUNDRED PER CENT OF PROFITS AND GAINS DERIVED F ROM THE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF FIVE CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH TH E ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH A RTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, AN D THEREAFTER, FIFTY PER CENT OF SUCH PROFITS AND GAIN S FOR FURTHER TWO CONSECUTIVE ASSESSMENT YEARS, AND THEREAFTER; (II) FOR THE NEXT THREE CONSECUTIVE ASSESSMENT YEAR S, SO MUCH OF THE AMOUNT NOT EXCEEDING FIFTY PER CENT OF THE PROF IT AS IS DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE PREVI OUS YEAR IN RESPECT OF WHICH THE DEDUCTION IS TO BE ALLOWED AND CREDITED TO A RESERVE ACCOUNT (TO BE CALLED THE 'SPECIAL ECONOMIC ZONE RE- INVESTMENT ALLOWANCE RESERVE ACCOUNT') TO BE CREATE D AND UTILISED FOR THE PURPOSES OF THE BUSINESS OF THE AS SESSEE IN THE MANNER LAID DOWN IN SUB-SECTION (1B) : PROVIDED 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 SUB-SECTION (1) OF SECTION 139 .' (UNDERLINING FOR EMPHASIS) ITA NO.613/BANG/2015 PAGE 5 OF 7 8. THE SPECIAL BENCH EXAMINED THE WHOLE SCHEME OF THE ACT. THE SPECIAL BENCH FOUND THAT ONE CONSEQUENCE OF FAILURE TO FILE RETURN OF INCOME ON OR BEFORE THE DUE DATE U/S.139(1) OF THE ACT WAS LEVY OF INTEREST U/S.234A OF THE ACT AS PER WHICH, THE ASSESSEE IS L IABLE TO PAY INTEREST ON THE TAX PAYABLE BY HIM AFTER REDUCING ADVANCE TAX A ND TDS/TCS IF ANY PAID BY HIM APART FROM SOME OTHER REDUCTIONS AND SUCH IN TEREST IS PAYABLE FROM THE DATE IMMEDIATELY FOLLOWING THE DUE DATE FOR FIL ING RETURN OF INCOME AND IS PAYABLE UP TO THE DATE ON WHICH SUCH RETURN OF I NCOME WAS FURNISHED BY THE ASSESSEE. PAYMENT OF INTEREST U/S.234A OF THE ACT WAS A CONSEQUENCE FOR FAILURE TO FILE RETURN OF INCOME ON OR BEFORE T HE DUE DATE U/.139(1) AND THE SAME IS MANDATORY. THE SPECIAL BENCH HELD THAT THE PROVISIONS OF THE PROVISO TO SECTION 10A(1A) IS NOTHING BUT A CONSEQU ENCE OF FAILURE OF THE ASSESSEE TO FILE THE RETURN OF INCOME WITHIN THE DU E DATE PRESCRIBED U/S 139(1) OF THE INCOME TAX ACT, 1961. FOR SUCH A FAIL URE OF THE ASSESSEE TO FILE HIS RETURN OF INCOME WITHIN THE DUE DATE PRESC RIBED U/S 139(1) OF THE INCOME TAX ACT, 1961, THIS IS ALSO ONLY OF THE MAND ATORY CONSEQUENCE. THE SPECIAL BENCH ACCORDINGLY HELD THAT PROVISIONS OF THE PROVISO TO SECTION 10A(1A) ARE MANDATORY AND NOT DIRECTORY, TH US DEDUCTION U/S 10A(1A) COULD NOT BE ALLOWED TO AN ASSESSEE WHO FAI LS TO FURNISH A RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED U/S 1 39(1). 9. THE DECISIONS RENDERED BY THE DIVISION BENCH OF TRIBUNAL ON WHICH THE CIT(A) PLACED RELIANCE ARE NO LONGER GOOD LAW I N VIEW OF THE LATER DECISION OF THE SPECIAL BENCH REFERRED TO ABOVE. ITA NO.613/BANG/2015 PAGE 6 OF 7 10. THE LEARNED DR ALSO BROUGHT TO OUR NOTICE THE DECISION RENDERED BY THE ITAT BANGALORE BENCH IN THE CASE OF AVASARALA T ECHNOLOGIES LTD. VS. DCIT ITA NO.951 TO 954/BNG/2011 ORDER DATED 8.3.201 3, WHEREIN IN THE CONTEXT OF DEDUCTION U/S.80-IB(10) OF THE ACT, THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SAFFIRE GARMENT (SUPRA) WAS FO LLOWED AND IT WAS HELD THAT THE PROVISIONS OF SEC.80AC OF THE ACT WERE MA NDATORY AND NOT DIRECTORY, THUS DEDUCTION U/S 80-IB(10) OF THE ACT COULD NOT BE ALLOWED TO AN ASSESSEE WHO FAILS TO FURNISH A RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED U/S 139(1). 11. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER R EITERATED HIS SUBMISSION THAT PROVISIONS OF SEC.80AC OF THE ACT H AVE TO BE CONSTRUED AS DIRECTORY AND THAT THE PROVISIONS OF SEC.80IB(10) O F THE ACT ARE BENEFICIAL PROVISIONS AND NEED TO BE INTERPRETED LIBERALLY TO FURTHER THE OBJECT OF THE SECTION. 12. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE AF ORESAID DECISION OF THE SPECIAL BENCH IN THE CASE OF SAFFIRE GARMENTS (SUPR A) AND AVASARALA TECHNOLOGIES LTD.(SUPRA), THE PLEA RAISED ON BEHALF OF THE ASSESSEE CANNOT BE ACCEPTED. ACCORDINGLY, WE HOLD THAT PROVISIONS OF SEC.80AC OF THE ACT WERE MANDATORY AND NOT DIRECTORY, THUS DEDUCTION U /S 80-IB(10) OF THE ACT COULD NOT BE ALLOWED TO AN ASSESSEE WHO FAILS TO FU RNISH A RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED U/S 139(1) OF T HE ACT. WE THEREFORE ITA NO.613/BANG/2015 PAGE 7 OF 7 REVERSE THE ORDER OF CIT(A) AND RESTORE THE ORDER O F THE AO. THE APPEAL OF THE REVENUE IS ACCORDINGLY ALLOWED. 13. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUGUST, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASU DEVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 7 TH AUGUST, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.