Income tax - Whether condition of furnishing return of Income on or before due date specified u/s 139(1), in order to claim deduction u/s 10A(1A), is mandatory - YES: ITAT Special Bench
By TIOL News Service RAJKOT, DEC 05, 2012: THE issue before the Bench is - Whether the condition of furnishing return of Income on or before the due date specified u/s 139(1), in order to claim deduction u/s 10A(1A) is mandatory. And the verdict goes against the assessee. Facts of the case
Assessee is a partnership firm. It had filed ROI declaring total income of Rs 2,72,730/- which was processed u/s 143(1). Thereafter, the case was selected for scrutiny and notice u/s 143(2) was issued and served on 23.01.2008. The assessee had claimed deduction u/s 10A. When asked to explain this claim, the assessee submitted before the A.O. that it derived profit from export of articles produced in SEZ and the sale proceeds were brought in India in convertible foreign exchange and, therefore, deduction u/s 10A was allowable to it. Thereafter, it was noted by the A.O. in the assessment order that the assessee had filed its return of income on 31.01.2007 and the extended due date for filing return of income for the assessee, being a firm, as per the provisions of Section 139(1) was 31.12.2006. It was also observed that the assessee failed to file its ROI on or before the due date specified u/s 139(1). It was further noted that as per the newly inserted proviso appended to section 10A, no deduction should be allowed to an assessee who does not furnish return of income on or before the due date specified u/s 139(1). On appeal, CIT(A) dismissed the assessee's contentions.
Having heard the matter, the Tribunal held that: ++ assessee is required to file the return of income within the prescribed time as per the provisions of Section 139(1). This provision of Section 139(1) is applicable to all companies and firms irrespective of the fact as to whether they are earning taxable income or not for the current year. In respect of other persons such as individual, HUF, AOP or BOI and Artificial Judicial Person, the requirement is this that if such a person is having taxable income before giving effect to the provisions of Section 10A, then also, he is required to file return of income before the due date even if this person is not having taxable income after giving effect to the provisions of Section 10A. We find that the provisions of the proviso to Section 10A(1A) is nothing but a consequence of failure of the assessee to file the return of income within the due date prescribed u/s 139(1). Thus the provisions of the proviso to Section 10A(1A) is mandatory and not directory and, therefore, question (a) referred to us is answered in negative and it is held that this proviso to Section 10A(1A) is mandatory. (See 2012-TIOL-735-ITAT-RAJKOT-SB)
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