Arvind Kumar Agarwal Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi ruled in favor of the assessee, Arvind Kumar Agarwal, allowing a deduction under Section 10AA of the Income Tax Act, 1961, despite the delayed filing of the income tax return for Assessment Year 2018-19. The appeal challenged the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], who had upheld the denial of the deduction on the ground that the return was not filed within the due date under Section 139(1). The ITAT examined whether the delayed filing barred the claim under Section 10AA, as it does under Sections 10A and 10B, which explicitly require timely filing for exemption eligibility.
The ITAT observed that while Sections 10A and 10B contain a specific proviso mandating return filing within the due date to avail of deductions, no such provision existed under Section 10AA for the relevant assessment year. The tribunal referred to judicial precedents, including the Special Bench ruling in Saffire Garments vs. ITO and the Supreme Court decision in CIT vs. Dilip Kumar & Company, which stress a strict interpretation of exemption provisions. However, it noted that in the absence of an explicit filing requirement under Section 10AA, the deduction could not be denied solely on the grounds of a late return.
The ITAT also considered the Finance Act, 2023, which introduced an amendment to Section 10AA, making timely filing a prerequisite for deductions from April 1, 2024, onwards. Since this amendment was not applicable to the assessment year in question, the tribunal held that the taxpayer’s claim could not be denied based on a provision that did not exist at the relevant time. Additionally, the assessee had submitted audit reports and tax forms within the extended due date, and the delay was attributed to medical reasons.
In conclusion, the ITAT set aside the order of the CIT(A) and directed the Assessing Officer to allow the deduction under Section 10AA for the assessment year 2018-19. The ruling clarifies that, prior to the 2023 amendment, filing a return within the due date was not a mandatory requirement for availing Section 10AA benefits, thereby providing relief to taxpayers in similar situations.
