Forward Of Losses Under Section 72 Of The Act. In Supportof Aforesaid Submissions, Learned Senior Counsel Hasreferred To Judgment Of Delhi High Court Dated14.05 v. Moser Baer Indialtd1 A7Commissioner Of Income Tax Vs, Ranapolycot Ltd.', 347 Itr 466 (P&H)And Decision Of Supreme Court In‘commissioner Of I

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 30 DAY OF NOVEMBER 2070.PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASADLT.A.§ NCO.462 OF 201 BETWEEN: 1.|PR, COMMISSIONER OF INCOME TAX-III BMTC COMPLEX, KORAMANGALA BANGALORE. 2.|DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-9(1), BANGALORE. (BY SRI. E.I. SANMATHI, ADV.,)- .., APPELLANTS~ AND* M/S. WIPRO LIMITED(WIPRO SPECTRA MIND SERVES LTD.,).DODDAKANNELLI, SARJAPUR ROADBANGALORE-5600 /6JPAN: AAE-CS-1943-B. (BY SRI. S. GANESH, SR. COUNSEL FOR| SMT. ANAGHA NAIR, ADV., FOR| SRI. R.B. KRISHNA, ADV.,) ~. RESPONDENT THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,|1961L ARISING OUT OF ORDER DATED 25.11.2016 PASSED IN ITANO.2402/DEL/2010°FOR.THE|ASSESSMENTYEAR|2001-02,PRAYING TO: (I) DECIDE THE FOREGOING QUESTION OF LAW AND/OR.SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BYTHE HON BLE COURT AS DEEMED FIT.| (II) SET ASIDE THE APPELLATE ORDER DATED 25-11-2016.PASSED BY THE ITAT, C BENCH, BENGALURU IN APPEALPROCEEDINGS ITA NO.2402/DEL/2010 AND GRANT SUCH OTHER.RELIEF AS DEEMED FIT, INTEREST OF JUSTICE. THIS ITA COMING ON FOR HEARING, THIS’ DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)nas been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 2001-02. The appeal was admitted by a bench of this Court videorder dated 05.07.2018 on the following substantialquestion of law: WhetherIn|thegivenfactsandcircumstances of the case, the Tribunal Iscorrect in law in holding that the assessee Is claim of carry forward of losses under sectionJ/2 Of the Act even when the assessee Nadfiled declaration as required under section10B(8) of Act after due date of filing originalreturn of income date Is over and therefore, the assessee cannot claim the benefit of carryforward of losses and provisions of section10B(8) are contravened? 2 |Thefactualbackground,Inwhichtheaforesaidsubstantialquestionoflawarises|for.consideration, needs mention. Tne assessee is asoftware company. The assessee had filed the return fortne Assessment Year 2001-02 on 31.10.2001 I.e., on theque date prescribed under Section 139(1) of the Act. Inthe return, exemption under Section 10B of the Act wasclaimed,thereafter,DY|acommunication dated24.10.2002, filed before the Assessing Officer, the.exemption was withdrawn before completion of theassessment i.e., 31.03.2004. Subsequently, revisedreturn was filed on 23.12.2002, in which exemptionUnder Section 10B of the Act was not claimed. In thereturn of income, loss of Rs.15,47,76,990/- wasdeclared. The case was selected for scrutiny and noticeunder Section 143(2) of the Act was issued and an order of assessment was passed on 31.03.2004 by makingvarious additions. One such addition was made insrespect of denial of claim of carrying forward of losses.under Section 7? of the Act. | 3.The assessee in respect of the denial of theaforesaid claim filed an appeal before the Commissionerof Income Tax (Appeals) who by an order dated19.01.2009 partly allowed the appeal preferred by the.assessee. Being aggrieved, the assessee as well as the.revenue filed an appeal before the Income Tax AppellateTribunal (hereinafter referred to as ‘the tribunal forshort). The tribunal by an order dated 25.11.2016 haspartly allowed both the appeals and has granted therelief to the assessee in respect of its claim for carryingforward of losses under Section 72 of the Act. In the!aforesaid factual background, the revenue is in appealbefore US. 3.The assessee in respect of the denial of theaforesaid claim filed an appeal before the Commissionerof Income Tax (Appeals) who by an order dated19.01.2009 partly allowed the appeal preferred by the.assessee. Being aggrieved, the assessee as well as the.revenue filed an appeal before the Income Tax AppellateTribunal (hereinafter referred to as ‘the tribunal forshort). The tribunal by an order dated 25.11.2016 haspartly allowed both the appeals and has granted therelief to the assessee in respect of its claim for carryingforward of losses under Section 72 of the Act. In the!aforesaid factual background, the revenue is in appealbefore US. 4Learned counsel for the revenue submittedthat the tribunal erred in holding that the assessee isentitled to claim of carrying forward of losses underSection 727 of the Act even when the assessee had filedthe declaration as required under Section 10B(8) of theAct after due date of filing original return of income wasover. It ought to Nave been appreciated by the tribunalthat the assessee cannot claim the benefit of carryingforward of losses as the provisions of Section 10B(8) ofthe Act were contravened. On the other hand, learnedSenior counsel for the assessee while inviting theattention of this court to Section 10B(8) of the Actcontendedthat|as|Der|theaforesaidprovision,|Submission of declaration is mandatory, whereas, date ofSubmission of declaration is a directory requirement andthe assessee had complied with the requirement ofSubmission of declaration before completion of theassessment and therefore, the tribunal has rightly held.the assessee to be entitled for benefit of carrying. forward of losses under Section 72 of the Act. In supportof aforesaid submissions, learned Senior counsel hasreferred to judgment of Delhi High Court dated14.05.7008 InCOMMISSIONER OF INCOME TAX,DELHI-IIIl, NEW DELHI VS. MOSER BAER INDIALTD1 a7COMMISSIONER OF INCOME TAX VS, RANA|POLYCOT LTD.', 347 ITR 466 (P&H)and decision of |Supreme Court in‘COMMISSIONER OF INCOME TAXVS. G.M.KNITTING INDUSTRIES (P.) LTD., 376 ITR|456 (SC). 5We have considered the submissions made bylearned counsel for the parties and have perused therecord. Section 10B of the Act deals with specialprovisions in respect of newly establisned 100% export oriented undertakings. Before proceeding further, it is.apposite to take note of Section 10B(8) of the Act, whichis reproduced below for facility of reference: | (8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date forfurnishing the return of income under sub-section (1) of section 139, furnishes to theAssessing Officer a declaration in writing that.the provisions of this section may not bemade applicable to him, the provisions ofthis section snall not apply to him for any ofthe relevant assessment year. Thus from perusal of aforesaid provision, it!containsCWINrequirements|VIZ.,theTilingofadeclaration and submission of such a declaration. — 6.Tne constitution bench of the Supreme CourtInSARDAR AMRIJIT SING KALARA VS. PRAMODGUPTAff(2003) 3 SCC 272has held that procedurallaws Nave always been viewed aS Nandmaid of justiceand not to namper the cause of justice. It has furtnerbeen held that technical objection which tend to bestumbling blocks to defeat and delay substantial andeffective justice should be viewed strictly for beingdiscouraged except when mandate of law inevitably Thus from perusal of aforesaid provision, it!containsCWINrequirements|VIZ.,theTilingofadeclaration and submission of such a declaration. — 6.Tne constitution bench of the Supreme CourtInSARDAR AMRIJIT SING KALARA VS. PRAMODGUPTAff(2003) 3 SCC 272has held that procedurallaws Nave always been viewed aS Nandmaid of justiceand not to namper the cause of justice. It has furtnerbeen held that technical objection which tend to bestumbling blocks to defeat and delay substantial andeffective justice should be viewed strictly for beingdiscouraged except when mandate of law inevitably necessitatesIt. (ALSOSEE:SAMBHAJTIYS.GANGABAI,(2008)17|SCO117,RAJENDRAPRASAD GUPTA VS. PRAKASH CHANDRA MISHRA.(2011) 11 SCALE 469|andRAMJT GUPTA AND ORS.VS. GOPI KRISHAN AGRAWAL (D) AND ORS. AIR)2013 SC 3099), InSTATE OF BIHAR AND ORS. VS.BIHAR RAJYA BHOOMI VIKAS BANK SAMITHI,(2018) 9 SCC 472, it has been held that if infraction of proceduralprovision.does|Notprovide|for.any|consequences, such a provision has to be construed asdirectory. In the instant case, Section 10B of the Actdoes not provide for non compliance of submission ofdeclaration. Therefore, the requirement of submission ofdeclaration in terms of Section 1LOB(8) of the Act has tobe treated as mandatory whereas, the requirement ofSubmission of declaration by a time limit has to betreated as directory as the provision does not provide forany consequence by non filing of the declaration by the.time limit. In any case, in the instant case, the declaration has been filed before the completion ofassessment. Similar view has been taken by High Courtof Delhi In Moser Baer India Ltd. with which we-respectfully concur. In view of preceding analysis, the substantialquestion of law framed a bench of this court is answeredagainst the revenue and in favour of the assessee. In.the result, we do not find any merit in this appeal, thesame fails and is hereby dismissed. Sd/-JUDGE. SS| Sd/-JUDGE.