Taxpayer filing belated Return cannot claim benefit under section 10A: ITAT

Facts are, in brief, that the assessee is a private limited company providing Call Support Services to foreign companies. The assessee company is an STPI registered entity during the relevant financial year and the assessee is eligible to claim deduction under section 10A of the Act. The assessee company belatedly filed its return of income for the year under consideration claiming deduction under section 10A of the Act and the same was accepted by the Assessing Officer in the assessment order passed under section 143(3) of the Act dated 25.03.2013.

Subsequently, by exercising the power conferred under section 263 of the Act, the ld. CIT found that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue on the ground that the assessee has not filed its return of income in time under section 139 of the Act and therefore, the assessee is not entitled to claim deduction under section 10A of the Act. Without examining the claim of the assessee, the Assessing Officer has completed the assessment by allowing the claim of deduction under section 10A of the Act, which is erroneous and prejudicial to the interest of Revenue. Accordingly, the ld. CIT set aside the assessment order passed under section 143(3) of the Act dated 25.03.2013 and directed the Assessing Officer to revise the assessment by disallowing the deduction claimed under section 10A of the Act.

In pursuance to the directions given by the ld. CIT, the Assessing Officer has passed consequential order [giving effect to the order of the ld. CIT] under section 263 r.w.s. 143(3) of the Act dated 24.08.2015 and disallowed the claim of deduction under section 10A of the Act. On appeal, the ld. CIT(A) dismissed the appeal of the assessee.

Aggrieved, the assessee is in appeal before the Tribunal.

ITAT Order:

8. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The Assessing Officer has initially allowed the claim of deduction under section 10A of the Act of the assessee by his assessment order under section 143(3) of the Act dated 25.03.2013. Subsequently, the ld. CIT, by exercising the power conferred under section 263 of the Act, directed the Assessing Officer to disallow the claim of deduction under section 10A of the Act. Now the CBDT by order under section 119(2)(b) of the Act dated 10.10.2022 for the assessment year 2010- 11 condoned the delay and also clarified that the condonation of delay in filing the return of income will not amount to acceptance of claims made in the concerned ROI of the assessee and the Assessing Officer shall deal with it on merits. In view of the above, by considering the entire facts and circumstances of the case, we are of the considered opinion that the Assessing Officer has to examine the claim of the assessee under section 10A of the Act in accordance with law. Thus, we set aside the order passed by the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to decide the claim of the assessee under section 10A of the Act. Accordingly, the appeal in I.T.A. No. 522/Chny/2018 for the assessment year 2010-11 is allowed for statistical purposes.

9. So far as appeal in I.T.A. No. 254/Chny/2016 filed against the order passed under section 263 of the Act is concerned, we find that it is mere academic for the reason the issue is remitted back to the file of the Assessing Officer to adjudicate afresh and therefore, no separate adjudication is required and accordingly, the appeal filed by the assessee is dismissed.

10. So far as assessment years 2011-12 and 2012-13 are concerned, there was delay in filing the return of income and therefore, the Assessing Officer has denied the claim of deduction under section 10A of the Act. On appeal, the ld. CIT(A) has confirmed the order of the Assessing Officer. The assessee filed appeals before the Tribunal. The case of the assessee is that the belated filing of return of income and claiming the deduction under section 10A of the Act is directory in nature and not mandatory and relied upon the decision of the Coordinate Benches of the Tribunal in the case of ACIT v. Polyhose India Pvt. Ltd. in I.T.A. No. 122/Mds/2011 for the assessment year 2008-09 dated 30.06.2011 and submitted that the assessee is eligible for claiming deduction under section 10A of the Act.

11. On the other hand, the ld. DR has relied upon the decision of the Rajkot Special Bench of ITAT in the case of Saffire Garments v. ITO [2012] 28 taxmann.com 27 (Rajkot)(SB) and pleaded that the same should be followed.

12. We have heard the rival contentions and gone through the decision of the Rajkot Special Bench of the ITAT in the case of Saffire Garments v. ITO (supra), wherein, the Special Bench has held that to claim a benefit under section 10A of the Act, the return of income has to be filed under section 139 of the Act and it is a mandatory and not directory. Respectfully following the decision of the Rajkot Special Bench, we reject the arguments of the ld. Counsel for the assessee and the appeals filed by the assessee for the assessment years 2011- 12 and 2012-13 are dismissed.

13. So far as appeal for the assessment year 2009-10 is concerned, the assessee has not filed petition for condonation of delay before the CBDT. In view of our decision hereinabove, the return of income has to be filed as per section 139 of the Act and it is mandatory. Therefore, the claim of the assessee cannot be entertained. Accordingly, the appeal filed for the assessment year 2009-10 is dismissed.

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