Deduction cannot be denied for delay in filing return due to loss of data on account of virus attack

I think ITO vs Yash Developers, ITA Nos. 809/Mum/2011 (AY 2007-08) and 3644/Mum/2012 (AY 2008-09), ITAT Mumbai “G” Bench Order dated 23 January 2014 is a good decision wherein claim for deduction under the provisions of the Act denied on technical default:- The relevant para of the order in relation to issue in case before the hon’ble Tribunal in appeal No. 3644/Mum/2012 for the AY 2008-09 is as under:

III. on the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was right in allowing assessee’s claim of deduction u/s 80IB(10) when the assessee has not filed return of income within the time limit u/s 139(1) and when section 80AC specifically provides that no deduction shall be allowed unless return is furnished within time limit of section 139(1).

6. It is also relevant to state that in respect of delay in filing the return of income on the basis of which the AO also denied deduction u/s 80IB(10) of the Act in respect of assessment year 2008-09, which are Ground Nos.3 and 4 of the appeal taken by department, the ld. CIT(A) has stated that the assessee filed return within extended time prescribed u/s 139(4) of the Act and the said return be treated as the one filed within the time limit prescribed u/s 139(1) of the Act and referred the decision of the Hon’ble Apex Court in the case of Kulu Valley Transport Co. P. Ltd. V/s CIT [1970] 77 ITR 518. Ld. CIT(A) has stated that similar issue in the context of section 54F also came before the Hon’ble Punjab and Haryana High Court in the case of CIT V/s Jagruti Agarwal (339 ITR 610) (P&H) and it was held that sub-section (4) of section 139 has to be read along with sub-section (1) of section 139 and therefore due date for furnishing the return of income according to section 139 was subject to extended period provided u/s 139(4) of the Act. Ld. CIT(A) stated that similar issue was also considered by the Hon’ble Jurisdictional High Court in the case of Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust V/s CIT [1994] 207 ITR 368 (BOM.) and the jurisdictional High Court held that sub-section (1) and (4) of section 139 have to be read together and in such a reading the return made within the specified time under sub-section (4) has to be considered as having been made within the time prescribed u/s 139(1) or (2) of the Act. The ld. CIT(A) also relied on the decisions of other High Courts, which we do not propose to refer to, particularly when the decision of the Hon’ble Bombay High Court has been considered hereinabove. However, it is relevant to state that the ITAT, Ahmedabad Bench also considered similar issue in the case of Parmeshwar Cold Storage P Ltd V/s ACIT (08 ITR (Trib) 172(Ahmd)) in the context of claim of deduction u/s 80IB wherein also the return was not filed within the time prescribed u/s 80AC of the Act but the Tribunal held that the claim of deduction/s 80IB of the Act should be adjudicated on merits and the matter was restored to CIT(A). The dl. CIT(A) has in para 9 also considered the decision of ITAT, Mumbai Bench in the case of Emerson Network Power India Pvt Ltd V/s ACIT reported in 122 TTJ 67(Mum) wherein it was held that the AO was obliged to give due relief to assessee or entertain its claims if admissible as per law even though the assessee had not filed revised return. Following the said decision, the ld. CIT(A) directed the AO to allow claim of the assessee made u/s 80IB(10) of the Act on merits even though the return of income was not filed within the time prescribed as per section 139(1) of the Act. In view of above, the department is in further appeals before the Tribunal.
9. In respect of grounds No.3 and 4, the relevant facts which we have already discussed hereinabove, we observe that the said issue is covered in favour of assessee by the decision of Hon’ble Bombay High Court in the case of Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust (supra) which has been considered by the ld. CIT(A) while deciding the same in favour of assessee and respectfully following the same, we hold that there is no reason to interfere with the order of ld. CIT(A). Therefore, the Grounds No.3 and 4 of the appeal taken by department for assessment year 2008-09 are also rejected by confirming the order of ld. CIT(A).

10. In the result, both the appeals filed by the department for assessment years 2007-08 and 2008-09 are dismissed.”