Case Law Details

Case Name : Patel Brass Works P. Ltd Vs ACIT (ITAT Rajkot)
Appeal Number : ITA No. 60/Rjt/2020
Date of Judgement/Order : 10/08/2022
Related Assessment Year : 2011-12

Patel Brass Works P. Ltd Vs ACIT (ITAT Rajkot)

The issue for consideration before us is that if the assessee has not claimed deduction under section 80-IA of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer.

A plain reading of section 80A(5) of the Act shows that the Statute is categorical in its language that in order to make claim for deduction under section 80-IA of the Act (forming part of Chapter-VI of the Act), the same has to be done in the return of income. The Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd.[2022] 138 taxmann.com 416 (Gujarat) has held that where assessee, engaged in development of infrastructural facilities, had not made a claim under section 80-IA in its return of income and raised claim for first time in revision application filed under section 264, by virtue of section 80A(5), said claim could not be granted.

it is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80-IA of the Act in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. However, in our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. In view of the plain language of the Statute, and respectfully following the decision of the Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [2022] 138 taxmann.com 416 (Gujarat), we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed. The other grounds of the assessee’s appeal are consequential in nature and hence do not require any specific adjudication.

FULL TEXT OF THE ORDER OF ITAT RAJKOT

This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A)-1, Rajkot dated 12-02-2020, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

2. The assessee has raised following grounds of appeal:-

“1. The Commissioner of Income Tax (Appeal) erred in confirming the rejection of the claim of the appellant under the provisions of section 801A of the Act. The claim was made during the course of the assessment proceedings and hence the rejection of the claim is not justified.

2. Without prejudice to ground no 1, The Commissioner of Income Tax (appeals) erred in holding that the appellant cannot make a new claim during the assessment proceedings.

3. Without prejudice to ground no 1, The Commissioner of Income Tax (appeals) erred in upholding the action of The Assessing Officer in completing the assessment based upon the original return without considering the revised statement filed by the appellant.”

3. Brief facts of the case are that the assessee engaged in manufacturing of plane shaft bearings and allied engineering goods and generation of electricity from Windmill. The assessee filed return of income on 16.09.2011 and during the course of assessment, the assessee filed revised computation of income claiming deduction of Rs 19,22,048/- u/s 80IA(4)(iv)(a) of the Act contending that this deduction was inadvertently not claimed in the return of income filed on 16.9.2011. The assessee filed a copy of audit report u/s 80IA(7) in form 10CCB dated 08.07.2013. The audit reports as well as claim of deduction were thus both belated, filed subsequent to filing of return of income. The AO observed that as per provisions of Section 139(5) of the Act, the assessee could file revised return of income up to 31.03.2013. The revised statement filed during assessment proceedings on 07.10.2013 was thus beyond even the stipulated last date of filing of revised return of income. The AO was of the view that in absence of revised return of income u/s 139(5), the claim of assessee could not be entertained. The assessing officer also placed reliance upon the decision of Hon. Supreme Court in the case of Goetz (India) Limited vs. Commissioner of Income Tax, (2006) 157 Taxman 1, wherein it was held that the assessee cannot claim deduction other than by filing of revised return. The AO also placed reliance upon the decision of Hon. ITAT, Rajkot in the case of ACIT Gandhidham vs. The Kutch District Co-op Bank Ltd. wherein the decision of Hon. Supreme court in the case of Goetze (India) vs. Commissioner of Income Tax, (2006) 157 Taxman 1 was followed and it was held that the AO was justified in completing the assessment on basis of original return filed u/s 139(1) without taking into consideration the revised statement filed in absence of revised return as contemplated u/s 139(5) of the IT Act. The AO further observed that as per section 80IA(7) r.w.s 18BBB the audit report in form no. 10CCB is to be obtained and furnished on or before due date of filing of return so as to entitle the assessee to said deduction. With above observation, the AO disallowed the claim of deduction u/s 80IA of the Act.

4. The assessee filed appeal before Ld. CIT(A) and during appellate proceedings, the assessee has not controverted the fact that deduction u/s 80IA was not claimed in the return of income, and that revised return of income was not filed within the stipulated time u/s 139(5) of the Act and that the audit report u/s 80IA(7) was not obtained and furnished before the due date of filing of return of income of 30.09.2012. The only contention of the assessee is that there are various decisions to the effect that the assessee is entitled to claim the deduction before appellate authorities if the same was not claimed in the original return or of income but was claimed during the assessment and the appellate proceedings. In particular the assessee has placed reliance upon the decision of Mumbai High Court in the case of Pruthvi Brokers & Shareholders Ltd. (Supra), the decision of Supreme Court in the case of Jute Corporation of India Limited (187 ITR 688 SC) and the decision of Gujarat Gas Co. Ltd. vs. Jt. Commissioner of Income Tax 245 ITR 84 (Gujarat). However, Ld. CIT(A) dismissed the assessee’s appeal with the following observations:

Having considered the facts and circumstances of the case, I find that the assessee does not fulfill the conditions of allowability of the deduction u/s 80IA. As has been brought out by AO the provisions of Section 80A(5) are very categorical that the deduction chapter VIA shall not be allowed where the assessee fails to make claim in his return on income. Besides, section 80IA(7) is also very categorical that the deduction under sub section 1 of section 80IA shall not be admissible unless the account of the undertaking of the previous year relevant to the assessment year for while the deduction is claimed have been audited by the accountant as defined in explanation section 288(2) and the assessee furnishes along-with return of income the report of the audit in the prescribed form duly signed and verified by such accountant.

I, thus find that not only the assessee failed to make the claim of deduction by a valid return of income or revised return of income, it also failed to fulfill the condition laid down in Section 80IA(7) of furnishing the requisite audit report. The claim of assessee is therefore not tenable not only by virtue of decision in the case of Goetze (India) Limited vs. Commissioner of Income Tax, (2006) 157 Taxman 1 (SC), as the claim was not made in the return or the revised return of income, it is not admissible also because of the categorical provisions of Section 80A(5) and 80IA(7) that the claim is not admissible unless it is claimed in the return of income and unless the audit form no. 10CCB is furnished along with the return of income. The Judicial decisions cited by assessee are therefore distinguishable on facts and circumstances of the case. Therefore, in view of the decision of the Hon. Supreme Court in the case of Goetze (India) Limited vs. Commissioner of Income Tax, (2006) 157 taxman 1, and of the Hon. ITAT, Rajkot in the case of ACIT Gandhidham vs. Kutch District Co-op Bank Ltd (Supra) and the fact that the assessee was not obtained and furnished audit report in 10CCD before the stipulated time and that the provision of Section 80A(5) make it mandatory to make such claim in the return of income, the contentions of the assessee are not tenable. The same are rejected. The ground of appeal is therefore rejected.

7. For statistical purpose, the appeal of the assessee is to be treated as dismissed.

5. The assessee is before against us against the aforesaid order by Ld. CIT(A). The issue for consideration before us is that if the assessee has not claimed deduction under section 80-IA of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer. At this stage, it would be useful to refer to the language of section 80A(5) of the Act, which reads as under:

Deductions to be made in computing total income.

80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”, no  deduction shall be allowed to him thereunder.]

6. A plain reading of section 80A(5) of the Act shows that the Statute is categorical in its language that in order to make claim for deduction under section 80-IA of the Act (forming part of Chapter-VI of the Act), the same has to be done in the return of income. The Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [2022] 138 taxmann.com 416 (Gujarat) has held that where assessee, engaged in development of infrastructural facilities, had not made a claim under section 80-IA in its return of income and raised claim for first time in revision application filed under section 264, by virtue of section 80A(5), said claim could not be granted. While passing the order, the Gujarat High Court made the following observations:

8. However, the Petitioners are faced with the statutory provision contained in sub-section (5) of section 80A of the Act. The Petitioners’ claim cannot therefore be accepted de hors the said statutory provision and ordinary principle of the wide powers of the CIT exercising revisional jurisdiction under section 264 of the Act  cannot be imported. What sub-section (5) of section 80A of the Act mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income-tax Authority. This condition attaches to the claim of the assessee and has to be implemented by the Assessing Officer, CIT or the  Appellate Tribunal as the case may be. There is no indication in sub­section (5) of section 80A of the Act as to why the restriction contained therein amounts to limiting the power of Assessing Officer but not that of Commissioner.

6.1 The Cochin ITAT in the case of Kadachira Service Co-op. Bank Ltd. [2013] 30 taxmann.com 32 (Cochin – Trib.) held that filing of return of income and making a claim therein in respect of deduction under section 80P is mandatory. The Bombay High Court in the case of EBR Enterprises [2019] 107 taxmann.com 220 (Bombay) held that where assessee was engaged in development of housing projects and it in return of income filed for assessment year 2008-09 had not claimed deduction under section 80-IB(10) and subsequent to assessment framed by Assessing Officer it filed an application under section 264 before Commissioner and raised claim of deduction under section 80-IB(10) and Commissioner rejected revision application holding that since assessee had not made a claim under section 80-IB(10) in return of income, by virtue of section 80A(5), claim could not be granted, Commissioner was justified in his view. The Madras High Court in the case of Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. [2013] 40 taxmann.com 45 (Madras) has held that Fresh claims made by assessee relating to deduction under section 80P in response to notice under section 148 cannot be entertained. Again, the Mumbai ITAT in the case of Shree Datta Prasad Sahakari Patsanstha Ltd. [2022] 134 taxmann.com 324 (Mumbai – Trib.) has held that where assessee had not claimed deduction under section 80P(2)(a)(i) in its return of income, it could not be allowed such deduction in view of condition imposed under section 80A(5) even though it was otherwise eligible for such  deduction. While passing the order, the Tribunal observed as under:

10. Though, it may be a fact that the assessee is otherwise eligible to claim deduction under section 80P(2)(a)(i) of the Act; however, the provision contained in section 80A(5) of the Act stands as a bar in  allowing such deduction to the assessee. For the sake of completeness, we must observe, having carefully gone through the decisions cited by learned authorized representative of the assessee, we are of the view that in none of these decisions, the provision contained in section 80A(5) of the Act was taken note of. We are conscious of the fact that in case of MSEB Employees Co-operative Credit Society Ltd. (supra), the coordinate bench has held that even if the assessee has not claimed a deduction in the return of income, the appellate authorities have power to allow deduction which is allowable under the provisions of the Act. However, as it appears form a reading of the said decision, provision contained in section 80A(5) was not brought to the notice of the Tribunal. Further, the Tribunal did not have the benefit of the decision of the Hon’ble jurisdictional High Court in case of EBR Enterprises (supra) which was subsequently rendered.

11. It may be a fact that the Tribunal has allowed assessee’s claim of deduction under section 80P(2)(a)(i) of the Act in assessment years 2010-11 and 2012-13. However, there is nothing on record to suggest that there was any violation of section 80A(5) of the Act.  Therefore, the factual position based on which the decisions were rendered in assessment year 2010-11 and 2012-13 are different from the impugned assessment year. Thus, respectfully following the ratio laid down in the decision of the Hon’ble jurisdictional High Court in EBR Enterprises case (supra), we hold that the assessee cannot be allowed deduction under section 80P(2)(a)(i) of the Act, insofar as, the impugned assessment year is concerned due to non fulfillment of conditions contained in section 80A(5) of the Act.

6.2 In our considered view, it is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80-IA of the Act in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. However, in our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. In view of the plain language of the Statute, and respectfully following the decision of the Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [2022] 138 taxmann.com 416 (Gujarat), we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed. The other grounds of the assessee’s appeal are consequential in nature and hence do not require any specific adjudication.

7. In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 10-08-2022

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