LQ PAY INDIA PRIVATE LIMITED,HYDERABAD V. ACIT., CIRCLE-5(1), HYDERABAD

ITA 1251/HYD/2024

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LQ Pay India Pvt Ltd appealed against the order of the CIT (A) which upheld the disallowance of a deduction claimed under section 80JJAA of the Income Tax Act, 1961. The deduction was initially allowed in the Intimation order under section 143(1) but was later disallowed by the CPC in a rectification order under section 154. The CIT (A) dismissed the appeal, stating that the issue was controversial and beyond the scope of section 154. The Tribunal, however, found that the CPC's disallowance was not valid as it exceeded the limited scope of section 154, which does not cover issues requiring extensive reasoning or decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26878 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAI PRASAD
• Keywords: Principle of natural justice
• Section: 154; 143(1); 40(a)(ia)

Judgement Text

" ITA No 1251 of 2024 LQ Pay India Pvt Ltd Page 1 of 5 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Manjunatha, G. Accountant Member आ.अपी.सं /ITA No.1251/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2021-22) LQ Pay India (P) Ltd Hyderabad PAN:AADCL8417G Vs. Asstt. Commissioner of Income Tax, Circle 5(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri K.A. Sai Prasad, CA राज̾ व Ȫारा/Revenue by:: Shri Srinath Sadanala, DR सुनवाई की तारीख/Date of hearing: 26/02/2025 घोषणा की तारीख/Pronouncement: 03/03/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal by the assessee is directed against the order dated, 27/09/2024 of the learned CIT (A)-NFAC, Delhi, for the A.Y.2021-22. 2. The assessee has raised the following grounds of appeal: “1. Violation of Principles of Natural Justice. ITA No 1251 of 2024 LQ Pay India Pvt Ltd Page 2 of 5 2. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate the fact that the appellant is eligible for deduction u/s 80JJAA as all the conditions laid down u/s 80JJAA have been complied with. 3. The Ld. Commissioner of Income Tax (Appeals) has erred in denying the deduction under section 80JJAA, failing to take into account that the deduction had already been allowed in the Intimation order under section 143(1) and that a claim for deduction was submitted through a Rectification Return under section 154. 4. The Ld. Commissioner of Income Tax (Appeals) has erred in upholding the CPC disallowance of deduction under section 80JJAA without giving due consideration to the fact that the claimed deduction aligns with the information provided in Form 10DA. 5. The Ld. Commissioner of Income Tax (Appeals) erred in disallowing the 80JJAA deduction under section 143(1)(a)(ii). 6. The Appellant craves leave to add, amend, alter or rescind any of the above grounds of appeal before or at the time of hearing.” 3. The assessee company filed its return of income on 22/02/2022 declaring total income of Rs.54,77,122/- after claiming deduction u/s 80JJAA of the I.T. Act, 1961 for Rs.6,12,505/-. The return was processed by CPC u/s 143(1) of the I.T. Act, 1961, dated 24/08/2022 whereby an adjustment on account of disallowance u/s 40(a)(ia) of the Act was made. The assessee filed rectification to point out that, there was a double disallowance u/s 40(a)(ia). The CPC while passing the rectification order dated 7/7/2023 u/s 154 of the I.T. Act, 1961 has rectified the mistake of double disallowance of the amount which was already disallowed u/s 40(a)(ia) of the Act. However, another ITA No 1251 of 2024 LQ Pay India Pvt Ltd Page 3 of 5 adjustment was made by disallowing the claim of deduction u/s 80JJAA of the Act. 4. The assessee challenged the action of the CPC before the learned CIT (A) NFAC, but the appeal of the assessee was dismissed vide the impugned order. 5. Before the Tribunal, the learned AR has submitted that the issue of disallowance u/s 80JJAA is a debatable issue and cannot be made in the proceedings u/s 143(i)(a) of the I.T. Act, 1961. He has further submitted that even otherwise, the rectification order was passed by the CPC on the petition filed for rectification of mistake of double disallowance and therefore, the disallowance of deduction u/s 80JJAA while passing the order u/s 154 of the I.T. Act, 1961 by the CPC is not valid as well as beyond the jurisdiction u/s 143(1) of the Act. He has pointed out that the learned CIT (A) though has observed that this issue is beyond the ambit of section 154 of the I.T. Act, 1961, however, the appeal of the assessee was dismissed. 6. On the other hand, the learned DR has relied upon the orders of the authorities below. 7. We have considered the rival submissions and carefully perused the orders passed by the CPC as well as the impugned order of the learned CIT (A). We find that the assessee claimed deduction u/s 80JJAA of the I.T. Act, 1961 of ITA No 1251 of 2024 LQ Pay India Pvt Ltd Page 4 of 5 Rs.6,12,505/-. The return of income was processed by the CPC u/s 143(i) (a) of the I.T. Act, 1961 vide order dated 24/08/2022 whereby an adjustment of Rs.39,287/- was made by the CPC u/s 40A whereas the same amount was also disallowed u/s 40(a)(ia) of the Act. To rectify the mistake, the assessee filed petition u/s 154 of the Act on 3/6/2023 and consequently, the CPC passed the order u/s 154 on 7/7/2023 whereby the mistake of double disallowance was rectified but another disallowance was made on account of deduction u/s 80JJAA of the Act. On appeal, the learned CIT (A) has dismissed the appeal of the assessee as under: “The above discussion makes it clear that the issue is a controversial one and is yet to attain finality. Therefore, being a controversial issue, this issue is beyond the ambit of provisions of section 154 of the Act. Various courts of law have time and again held that any controversial issue cannot be entertained u/s 154 of the Act, as the same cannot be stated to be \"mistake apparent on record\". Therefore, there is no scope in interfering with the Order and it is upheld.” 8. Thus, the learned CIT (A) has also observed that the claim of deduction u/s 80JJAA of the Act being a controversial issue is beyond the ambit of provisions of section 154 of the I.T. Act, 1961. It is pertinent to note that the scope of rectification of mistake u/s 154 of the Act is very limited and circumvented only to rectify the mistake apparent from record and cannot be extend ed to the issues which requires a long drawn reasoning and decisions. The claim of deduction u/s 80JJAA of the Act cannot be disallowed without examining the relevant facts as well as law on the point. Accordingly, in our considered opinion, the ITA No 1251 of 2024 LQ Pay India Pvt Ltd Page 5 of 5 disallowance of deduction u/s 80JJAA of the Act by the CPC u/s 154 of the Act is not valid as the said issue is beyond the scope of provisions of section 154 of the I.T. Act, 1961 and hence the disallowance is deleted. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 3rd March, 2025. Sd/- Sd/- (MANJUNATHA, G) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 3rd March, 2025 Vinodan/sps Copy to: S.No Addresses 1 LQ Pay India (P) Ltd, C/o 1-98/4/B/24, Patrika Nagar, Hi-Tech City Shaikpet, Hyderabad 500081 2 Asstt. Commissioner of Income Tax, Circle 5(1) IT Towers, Masab Tank, Hyderabad 500028 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "