M/s. Mahavir Construction v. DCIT, Central Circle-2, Baroda
[Citation -2016-LL-0926-57]

Citation 2016-LL-0926-57
Appellant Name M/s. Mahavir Construction
Respondent Name DCIT, Central Circle-2, Baroda
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 26/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags infrastructure development undertakings • initiation of penalty proceedings • failure to file return • gross total income • levy of interest • advance tax • time-limit
Bot Summary: 80IB could not be sustained on the ground that its return had not been furnished on or before the due date specified in sub- section(10 of Section 139 as required by Section 80AC. 2. In our considered opinion, provisions of Section 80AC of the Act squarely apply on the facts of the case in hand, Section 80AC reads as under:- 80AC. Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section of section 139. The Special Bench of the Tribunal at Rajkot had the occasion to consider the following facts in the case of Saffire Garments:- The assessee, a partnership firm, filed its return of income claiming deduction under section 10A in respect of its profit derived from the export of articles produced in SEZ. The Assessing Officer noted that the assessee had filed its return on 31.01.2007 whereas the extended due date for filing return of income for the assessee, being a firm, under the provisions of section 139(1) was 31.12.2006. A.Y. 2009-10 Accordingly, applying proviso to section 10A(1A), Assessing Officer denied deduction under section 10A. On appeal by the assessee, the Commissioner upheld the order of Assessing Officer. The Tribunal held provisions of the proviso to subsection of section 10A to be merely directory and not mandatory and on that basis held that even if return of income was not filed within the time-limit prescribed by section 139(1), the assessee could not be denied deduction under section 10A. Instant Special Bench of the Tribunal was constituted to consider the following questions. In respect of other persons such as individual, HUF, AOP or BOI and artificial Juridical person, the requirement is 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. Para 11 Consequences of failure to file return within due date It is found that the provisions of the proviso to section 10A(IA) is nothing but a consequence of failure of the assessee lo file the return of income within the due date prescribed under section 139(1). Such interest is payable from the date immediately following the due date for filing the return of income and is payable up to the date on which such return of income was furnished by the assessee and if the assessee has not furnished any return of income then the interest is payable till the date of completion of the assessment under section 144.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) IT(SS)A. No: 59/AHD/2012 (Assessment Year: 2009-10) M/s. Mahavir Construction V/S DCIT, Central Circle-2, 107, City Point, Nr. Paras Baroda Cinema Nadiad-387001 (Appellant) (Respondent) PAN: AANFM0076D Appellant by : Shri P. M. Mehta, AR Respondent by : Shri R. I. Patel, CIT/D.R. ORDER Date of hearing : 23 -09-2016 Date of Pronouncement : 26 -09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. This appeal by Assessee is preferred against order of Ld. CIT(A)-IV, Ahmedabad dated 25.11.2011 pertaining to A.Y. 2009-10. 2. substantive grievance of assessee reads as under:- 2 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 1. In law and in facts and circumstances of appellant s case, ld. CIT(A) has grossly erred in upholding disallowance of deduction u/s. 80-IB(10) even though, as he had himself categorically held in impugned order, appellant fulfilled al conditions stipulated in that provision u/s. 80-IB. Hence, rejection of appellants claim for deduction u/s. 80IB could not be sustained on ground that its return had not been furnished on or before due date specified in sub- section(10 of Section 139 as required by Section 80AC. 2. In law and in facts and circumstances of appellant s case, ld. CIT(A) has grossly erred in dismissing Ground No. 7 of appellant s appeal challenging levy of interest u/s. 234A, 234B and 234C on ground that it was mandatory and consequential in nature. 3. While scrutinizing return of income of assessee for year under consideration, A.O. found that assessee has claimed deduction u/s 80-IB(10) of Act. A.O. further noticed that assessee did not file return of income on or before due date of filing of return as per provisions of section 139(1) of Act. Invoking provisions of Section 80AC of Act, A.O. denied claim of deduction u/s 80-IB(10) of Act. 4. Assessee carried matter before ld. CIT(A) but could not convince First Appellate Authority so far as claim of deduction is concerned. While confirming assessment order, First Appellate Authority came to conclusion that provisions of Section 80AC of Act which were introduced with effect from 01.04.2006 squarely apply on facts of case. ld. CIT(A) also denied claim of deduction u/s 80-IB(10) of Act. 3 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 5. Aggrieved by this, assessee is before us. ld. counsel for assessee fairly conceded that identical issue was decided by Co- ordinate Bench against assessee in case of Anoli Holding Pvt. Ltd. in ITA No. 1042/Ahd/2012 dated 03/08/2016. copy of order was placed before us. ld. D.R. strongly relied upon decision of Tribunal (supra). 6. We have carefully gone through orders of authorities below. details of return of income filed by assessee is tabulated as under:- A.Y. Date of filing Due Date of Delay/Remarks Date of Date of of Return of filing of return notice filing of R/I income as per of income issued/served in response U/s 139(1) of u/s. 153C of to notice u/s Act Act 153C of Act 2007-08 29-10-2007 31-07-2007 03 months 29-08-2008 19-03-2010 03-09-2008 2008-09 31-03-2010 30-09-2008 18 months 29-08-2008 31-03-2010 03-09-2008 2009-10 12-10-2010 30-09-2009 return is -- -- filed in response to notice issued u/s 142(1) of Act dated 30-10-2009( 12 months) 7. It can be seen from above that assessee has filed return of income u/s 139(1) after long delay without any justifiable cause. 4 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 8. Co-ordinate Bench in case of M/s. Anoli Holding Pvt. Ltd. on identical facts has held as under:- 13. We have given thoughtful consideration to rival contentions; we have also carefully perused orders of authorities below. undisputed fact is that return of income for year under consideration was not furnished on or before due date as per provisions of Section 139(1) of Act. In our considered opinion, provisions of Section 80AC of Act squarely apply on facts of case in hand, Section 80AC reads as under:- 80AC. Where in computing total income of assessee of previous year relevant to assessment year commencing on 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80IA or section 80-IAB or section 80-IB or section 80-IC [or section 80-ID or section 80-IE], no such deduction shall be allowed to him unless he furnishes return of his income for such assessment year on or before due date specified under sub-section (1) of section 139]. 14. Special Bench of Tribunal at Rajkot had occasion to consider following facts in case of Saffire Garments (supra):- assessee, partnership firm, filed its return of income claiming deduction under section 10A in respect of its profit derived from export of articles produced in SEZ. Assessing Officer, however, noted that assessee had filed its return on 31.01.2007 whereas extended due date for filing return of income for assessee, being firm, under provisions of section 139(1) was 31.12.2006. Assessing Officer, further noted that as per proviso to sub-section (1A) of section 10A, introduced with effect from 1-4-2006, no deduction should be allowed to assessee who does not furnish return of income on or before due date. 5 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 Accordingly, applying proviso to section 10A(1A), Assessing Officer denied deduction under section 10A. On appeal by assessee, Commissioner (Appeals) upheld order of Assessing Officer. On further appeal by assessee. Tribunal held provisions of proviso to subsection (1A) of section 10A to be merely directory and not mandatory and, therefore, on that basis held that even if return of income was not filed within time-limit prescribed by section 139(1), assessee could not be denied deduction under section 10A. Instant Special Bench of Tribunal was constituted to consider following questions. 15. On aforementioned facts, Special Bench held as under:- Scheme of Act with regard to filing of returns In order to decide issue, I he whole scheme of Act needs to be considered. assessee is required to file return of income within prescribed time as per provisions of section 139(1). This provision of section 139(1) is applicable to all companies and firms irrespective of fact as to whether they are earning taxable income or not for current year i.e. from 1-4-2006. In respect of other persons such as individual, HUF, AOP or BOI and artificial Juridical person, requirement is that if such person is having taxable income before giving effect to provisions of section 10A, then also, he is required to file return of income before due date even if this person is not having taxable income after giving effect to provisions of section 10A. [Para 11] Consequences of failure to file return within due date It is found that provisions of proviso to section 10A(IA) is nothing but consequence of failure of assessee lo file return of income within due date prescribed under section 139(1). For such failure of assessee to file his return of income within due date prescribed under section 139( 1), this is not only consequence. One consequence of such failure is 6 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 prescribed in section 234A also as per which, assessee is liable to pay interest on tax payable by him after reducing advance tax and TDS/TCS if any paid by him apart from some other reductions. Such interest is payable from date immediately following due date for filing return of income and is payable up to date on which such return of income was furnished by assessee and if assessee has not furnished any return of income then interest is payable till date of completion of assessment under section 144. It is held that above is also one of consequences of not filing return of income by assessee within due date. [Para 11] 16. similar issue was also considered by Co-ordinate Bench of Chandigarh in case of Lakshmi Energy & Foods Ltd. (supra), relevant facts and findings of Co-ordinate Bench read as under:- However, Hon'ble Supreme Court in case of Prem Nath Khanna (supra) held - that "due date" would mean due date as provided u/s 139(1). Therefore we are of opinion that decision of CIT Vs. MS Jagriti Aggarwal (supra) is not applicable particularly because there is specific provision u/s 80AC which prohibits deduction under Part "C" of Chapter VI unless returns are filed within time prescribed u/s 139(1). W hen specific provision is there in statute same cannot be interpreted in way to make provision redundant. Therefore in our opinion, principle laid down by Hon'ble High Court in case of CIT Vs. MS. Jagriti Aggarwal (Supra) cannot be applied while interpreting provision of Sec 80AC. 32 Ld. Counsel for assessee has also relied on decision of ACIT Vs. Dhir Global Industrial Pvt. Ltd (supra) wherein it was observed that though proviso to Sec l0B for filing of return u/s 139(1) for claiming deduction but same was of directory nature and not mandatory. In our opinion, this judgment of Division Benches is no more valid after pronouncement of decision of Special Bench in case off Saffire Garments Vs. ITO (supra). Similarly in ITO Vs. S. 7 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 Venktaya(supra), Hyderabad Bench of Tribunal held that if return was filed late then despite provisions of section 80AC deduction was held to be allowable if such delay is beyond control of assessee. This position also stands reversed after decision of Special Bench in case of Saffire Garments Vs. 1TO (supra) wherein it is clearly held that provisions of section 8oAC are of mandatory nature. As far as decision of Hon'ble Delhi High Court is concerned, same is distinguishable on facts because in that case assessee did not have positive gross total income in initial year, therefore could not claim deduction for such initial year. Thereafter for Assessment year 2001-02 assessee did not claim deduction despite of positive profits. This omission was noticed somewhere in 2004 by which time filing of revised return has elapsed and assessee moved petition u/s 264 which was held to be maintainable because deduction was not claimed because of bonafide mistake. Therefore clearly on these facts applicability of provisions of section 8oAC was not there for consideration because this provision was introduced only from Assessment year 2006-07 and therefore this case is distinguishable. 33 Ld. D.R. for Revenue has rightly pointed out to decision of Amritsar Bench of Tribunal in case of Balkishan Vs. ITO (supra) wherein it was clearly observed that provisions of section 80AC are mandatory. Head note reads as under: "Sec 80IB r.w.s. 80AC of Income-tax Act, 1961 deduction - profits and gains from industrial undertaking other than infrastructure development undertakings -Assessment year 2006-07 and 2007-08 - where assessee wants to avail deduction u/s 80IB, he has to necessarily furnish his return of income containing such claim before due date specified in Sec 139(1) - held Yes" Therefore in view of above legal position and discussion it is clear that once return is filed late beyond due date provided u/s .139(1) in Section 80AC then deduction u/s 8oIB cannot be allowed. 8 IT(SS)A No. 59/Ahd/2012 . A.Y. 2009-10 17. If, we consider facts of case in hand in light of decisions mentioned hereinabove, we find similarity in facts. Therefore, respectfully following decisions of Special Bench and Co-ordinate Bench (supra), we confirm findings of ld. CIT(A). Ground no. 1 is dismissed. 9. second grievance relates to levy of interest u/s 234A, 234B & 234C of Act. 10. levy of interest is mandatory, though consequential in nature. We, accordingly, direct A.O. to charge interest as per provisions of law. 11. assessee has also challenged initiation of penalty proceedings u/s 271(1)(c) of Act. This grievance of assessee is premature and is accordingly dismissed. 12. In result, appeal filed by Assessee is dismissed. Order pronounced in Open Court on 26 - 09- 2016. Sd/- Sd/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: True Copy Rajesh Copy of Order forwarded to:- 1. Appellant. 2. Respondent. 3. CIT (Appeals) 4. CIT concerned. M/s. Mahavir Construction v. DCIT, Central Circle-2, Baroda
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