I-T - Section 80IC benefit cannot be denied if revised return is filed within stipulated period as per Sec 139(5): ITAT
By TIOL News Service
NEW DELHI, NOV 21, 2018: THE ISSUE IS - Whether it is mandatory that claim for deduction u/s 80IC has to be made in the return of income filed u/s 139(1) and if claim is made in revised return, filed within stipuated time u/s 139(5) of Act the same can not be allowed. NO IS THE VERDICT.
Facts of the case
The assessee company engaged in the business of manufacturing food products, had filed return for relevant AY. After sometime it filed revised return claiming deduction u/s 80IC of Act. Earlier the assessee was in business of Mushroom cultivation and canning of Mushrooms and fruits and vegetables. In the year 2005, the company decided to expand into manufacturing of mozzarella cheese and ready to eat meals and also decided to expand its existing capacity of mushroom cultivation and canning. Such an expansion had been stated to be completed over the span of four year which commenced from the financial year, 2005-06 and the plant and machinery for such an expansion was purchased over a period of four years and such expansion was completed during the year under consideration. Hence, it was claimed that this was initial year and accordingly, deduction of Rs. 12,80,92,168/- was claimed u/s 80IC on the income earned from this unit. During assessment, the AO examined the claim of deduction u/s 80IC and raised several queries to the assessee to substantiate the substantial expansion in terms of section 80IC(8). The AO rejected the assessee's contention after detailed discussion. On appeal, CIT(A) held that restriction put in section 80IC was that return had to be filed in time and the claim had to be made in return filed u/s 139(1) only and any default would lead to his disentitlement of the deduction claimed.
Tribunal held that,
++ the assessee is otherwise eligible for claim of deduction u/s 80IC in respect of his Himachal Pradesh Unit which is being consistently allowed to the assessee for the assessment year 2009-10. The assessee has filed its return of income u/s 139(1) on 27.9.2012 showing an income of Rs. 17,17,610/-. Later on assessee filed revised return u/s 139(5) on 23.3.2013, declaring income at 'nil' and had stated that the claim of deduction u/80IC was by mistake omitted to be claimed in the original return of income. Therefore, such a claim is now being made in the revised return. Thereafter a notice u/s 143(2) was issued on 6.8.2013 to scrutinise the revised return of income. Even the AO has taken due cognizance of such revised return. The claim of section 80IC has been denied by the department on the ground that such a claim has not been made in the return filed u/s 139(1) albeit in the revised return u/s 139(5). The claim has been denied on interpretation of section 80AC read with section 80A (5). Section 80A(5) provides that, if the assessee fails to make a claim in his return of income for any deduction u/s 10A or section 10AA, 10B or 10BA or under any provision of chapter VIA if assessee fails to make a claim in his return of income. Here in this case, the assessee has made a claim in the return of income by way of revised return; therefore this provision will not disentitle the assessee for claiming u/s 80IC. However, section 80AC provides that deduction shall not be allowed unless return has been furnished u/s 139(1);
++ the intention of the legislature is that the assessee should furnish a return of his income on or before due date specified u/s 139 (1). Nowhere it has been clarified or stated that if assessee has fails to claim the deduction in return u/s 139(1) and later on makes a claim in the revised return u/s 139(5), then also it has to be denied. The said provision in our opinion will apply where the assessee does not file any return of income under sub section (1) of section 139, but does not envisages that such a claim has to be made only in the return filed u/s 139(1) and not u/s 139(5). Language in the section is absolutely clear that no deduction shall be allowed to him unless he furnishes his return of income u/s 139 (1). A revised return u/s 139(5) is filed where the assessee voluntarily and suo moto correct any omission or any wrong statement in the original return filed u/s 139(1). A revised return u/s 139(5) supersedes the return u/s 139(1), if is filed within the time. If revised return has been accepted by the AO and has not been held to be invalid then original return of income filed u/s 139(1) gets effaced and same is replaced by return filed u/s 139(5). The purpose of revised return u/s 139(5) is to ensure that any admission of omission or any wrong statement has to be voluntarily within the specified time limit. Further it is not a case of the AO that the requisite condition of filing of audit report in form 10CCB has not been filed during the course of the assessment proceedings. When, in the initial assessment years, AYs 2009-10, 2010-11 and 2011-12 the claim of deduction u/s 80IC has been found to be otherwise allowable to the assessee and this being the 4th year of the claim based on same set of facts, then it cannot be held that the claim made by the revised return is not voluntarily and omission to make such claim in the original return of income was not bonafide. Even otherwise also, if one goes by the principle laid down by the Supreme Court in the case of Goetz India Ltd, if the claim has not been made before the AO by way of revised return then same can be made before the appellate authorities. This principle has been reiterated and explained by various judgments like in the case of CIT vs. Ramco International. Accordingly, it was held that the claim of deduction u/s 80IC to the assessee cannot be denied simply because such a claim was not made in the return field u/s 139 (1) albeit was made in the revised return u/s 139(5) filed within the stipulated time provided in the said section; and further such a claim can always been entertained at the appellate stage if all the conditions laid down for such a claim is whether on the facts and material on record. Thus, the grounds raised by the assessee are allowed.
(See 2018-TIOL-2175-ITAT-DEL)
