Commissioner of Income Tax vs Jyoti Jain

Heard learned Counsel for the parties.

This appeal has been filed by the revenue against the judgment of Tribunal dated 29-4-2005. Learned Tribunal had dismissed the appeal of the revenue, and affirmed the order of Commissioner (Appeals). Learned Commissioner (Appeals) allowed the appeal of the assessee, and held that since the assessee has produced the certificate obtained from District Industries Centre, wherein a sum of Rs. 4,83,449 was certified to have been converted into loan, the disallowance made u/s 43B was set aside, and the assessing officer was directed to allow the claim, after verification of the certificate. Then disallowance u/s 80-IA was also set aside, while holding, that the appellant had filed her return of income on 21-10-1998, along with the audit report as required by Section 44AB, and during the course of assessment proceedings, claim for deduction was also made u/s 80-IA, vide letter dated 13-11- 2000, contending that all the necessary conditions for claiming deduction are fulfilled, and also filed the report in Form No. 10CCD, as prescribed under Sub-section (7) of Section 80-IA. This was disallowed by the assessing officer, on the ground, the appellant was required to file the report in Form No. 10CCD "along with the return". It was contended before the Commissioner (Appeals), that the assessee did not claim any deduction u/s 80-IA in the return filed u/s 139(1). However, after filing of the return, it came to her notice, that the return did not take into account claim of the deduction u/s 80-IA, in respect of unit M/s Avani Minerals Industries. Accordingly, the account was got audited, and a report, as required by Sub-section (7) of Section 80-IA was obtained, and the claim for deduction was made, during the course of assessment proceedings. Learned Commissioner (Appeals), relying upon the judgment reported in (1987) 23 ITD 364 found the requirement of filing the report along with the return was directory, and held, that the claim of deduction is allowable.

The Tribunal held, that the requirement of filing report along with return of income is directory, and not mandatory, and if the said report is made available to the assessing officer during the course of assessment proceedings, the lawful deduction to the assessee should not be rejected.

The appeal was admitted on 18-4-2006, by framing the following substantial questions of law:

Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that for claiming deduction u/s 80-IA the Commissioner (Appeals) was justified in holding (sic-upholding) claim of the assessee though claim was made after filing the account and audit report and claimed during the course, of assessment ?

Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the assessee was entitled to deduction u/s 43B of the Act in respect of sales-tax amount deferred under the State Governments Deferment Scheme and without actual payment of tax u/s 43B of the Act ?

In our view, the question No. 1 is covered by a decision of Division Bench of this Court dated 15-2-2008, in IT Appeal No. 20 of 2005, CIT v. Kothari Impex, wherein considering the various judgments of different High Courts, and other provisions of the Act, it has been held, that the requirement cannot be said to be only directory. Of course, the learned Counsel for the assessee tried to distinguish the judgment by contending that in that case the report was filed after completion of assessment, while in the case in hand it had been filed during the assessment proceedings. In our view, this does not make any difference. Whether the report is filed during assessment proceedings or after assessment, if the requirement of filing "along with the return" is mandatory, the allowance of deduction cannot be made. On the other hand, if the requirement is directory, the permissibility of filing cannot be confined to the stage of "during the assessment proceedings". Thus, the distinction sought to be drawn cannot be accepted. In that view of the matter, for the reasons as given in CIT v. Kothari Impex (supra) the question No. 1 is answered in favour of the revenue, and against the assessee.

So far as question No. 2 is concerned, it is also covered, but against the revenue, and in favour of the assessee, by judgment of this Court dated 13-5-2008, in bunch of appeals, led by IT Appeal No. 30 of 2005. For the reasons as given in the judgment in Ravindra Platinums case (supra), the question No. 2 is answered against the revenue and in favour of the assessee.

Result of the aforesaid discussion, the appeal is partly allowed, the order of the Commissioner (Appeals), and Tribunal allowing deduction u/s 80-IA is set aside, and it is held, that the assessee was rightly disallowed the deduction u/s 80-IA by the assessing officer, and has rightly been allowed deduction u/s 43B by the Tribunal. The assessing officer to do the remaining needful. The parties shall bear their own costs of this appeal.