The Income Tax Appellate Tribunal Confirmed Thedecision Of The Assessing Officer And The Appellatecommissioner Relying On The Decision Of This Court Inrachna In v. Principalcommissioner Of Income Tax - 3 In Special Civilapplication

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 484 of 2022 ==========================================================M/S HAVMOR ICE CREAM PRIVATE LIMITED VersusDEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1)(1),AHMEDABAD ========================================================== Appearance:MR DHINAL A SHAH(12077) for the Appellant(s) No. 1 for the Opponent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAand HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 12/09/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned advocate Mr. Dhinal A Shah for theappellant. 2.The present Tax Appeal under Section 260A of theIncome Tax Act, 1961, arise out of order dated30.03.2022 passed by the Income Tax AppellateTribunal, 'C' Bench, Ahmedabad in Income Tax AppealNo. 2866 of 2017 in respect of Assessment Year 2013-14. 3.Theappellant-assesseewasacompanymanufacturing ice-cream and related product. Returnof income for the Assessment Year 2013-14 was filedbyt he appellant on 01.10.2013 declaring total incomeof Rs. 9,72,28,342/-. Thereafter, revised return was filed for income of Rs. 9,75,49,336/-. 3.1The case of the appellant was taken in scrutinyassessment. The assessment order dated 19.02.2016 waspassed making dis-allowance of interest expenditureto the tune of Rs. 15,52,172/-. 3.2The appellant was aggrieved, therefore hadpreferred appeal before Commissioner of Income Tax(Appeals). The appeal was dismissed on 12.10.2017affirming the dis-allowance, as above. 3.3The appellant further preferred appeal beforeIncome Tax Appellate Tribunal claiming the deductionunder section 80IB(11A) of the Income Tax Act, 1961(hereinafter referred to as the 'Act'). 3.4The Income Tax Appellate Tribunal confirmed thedecision of the Assessing Officer and the AppellateCommissioner relying on the decision of this Court inRachna Infrastructure Pvt. Ltd. vs. PrincipalCommissioner of Income Tax - 3 in Special CivilApplication No. 16364 of 2021 decided on 15.02.2022.It is against the said order of the Tribunal dated30.03.2022 that the present appeal came to bepreferred. 4.The appellant has proposed following question,claiming to be arisen as substantial question of law, Whether the Appellant Company is entitled for deduction under section 80-IB(11A) of the IncomeTax Act, 1961 even though the claim fordeduction was not made in the return of incomeas required by section 80A (5) of the Act? 4.1Two main submissions were raised on behalf ofthe appellant, firstly that the Tribunal erred in notallowing the deduction under 80IB(11A) of the ACt onthe ground that the claim for deduction was not madein the return on income as required by Section 80A(5) of the Act. It was therefore submitted that theappellant was entitled to claim the deduction underthe said provision. 5.There is no gainsaying that the very issue wasconsidered by the Division Bench of this Court inRachna Infrastructure Pvt. Ltd. (supra). The veryissue of rejection of claim of deduction undersection 80IA(5) was considered by the Court. 5.1The decision of the Division Bench of BombayHigh Court in EBR Enterprises vs. Union of India[(2019) 107 Taxmann.com 220 Bombay] was relied on bythe Division Bench of this Court inRachnaInfrastructure Pvt. Ltd. (supra). 5.2In EBR Enterprises (supra), the Division Benchof the Bombay High Court dealt with the factsituation where the assessee was engaged indevelopment of housing projects. It filed return ofincome for Assessment Year 2008-09. At that time, it 5.There is no gainsaying that the very issue wasconsidered by the Division Bench of this Court inRachna Infrastructure Pvt. Ltd. (supra). The veryissue of rejection of claim of deduction undersection 80IA(5) was considered by the Court. 5.1The decision of the Division Bench of BombayHigh Court in EBR Enterprises vs. Union of India[(2019) 107 Taxmann.com 220 Bombay] was relied on bythe Division Bench of this Court inRachnaInfrastructure Pvt. Ltd. (supra). 5.2In EBR Enterprises (supra), the Division Benchof the Bombay High Court dealt with the factsituation where the assessee was engaged indevelopment of housing projects. It filed return ofincome for Assessment Year 2008-09. At that time, it did not claim deduction under section 80IB(10) andsubsequent to the assessment claim by the AssessingOfficer, application was filed under section 264before the Commissioner to raise at that time, theclaim of deduction under the aforesaid provision.The Commissioner rejected the revision holding thatsince the assessee had not made the claim undersection 80IB(10) in the return of income by virtue ofsection 80A(5) of the Act, the claim was not liableto be granted. It was held by the Bombay High Courtthat the Commissioner was justified in this view. 5.3In Rachna Infrastructure Pvt. Ltd. (supra),theDivision Bench relied on the same judgment to observethus, "7. So far as the first relief which is soughtfor by the writ applicant as regards thechallenge to the impugned order dated 19.06.2020passed by the Principal Commissioner of IncomeTax-3, Ahmedabad is concerned, in our view, thesame is squarely covered by the decision of theBombay High Court in the case of EBR Enterprisesvs. Union of India, reported in [2019] 107taxmann.com 220. The question for considerationwhich arose before the Bombay High Court in theaforesaid case was that whether the Commissionerwas justified in exercise of powers conferredunder Section 264 of the Act in rejecting therevision application more particularly, when theassessee had failed to raise the claim ofdeductionunderSection80-IB(10)andsubsequentlybeingraisedbeforetheCommissioner for the first time in revision. Itappears that the attention of the Court wasdrawn to Section 80A(5) of the Act and similarcontention was raised by the assessee therein. The Bombay High Court after considering thesubmissions of the assessee therein as well astaking note of sub section (5) which wasinserted in Section 80A of the Act by Finance(2)Act, 2009 with retrospective effect from01.04.2003, ultimately held as under: “5. As per this provision, where the assesseefails to make a claim in his return of incomefor any deduction under Section 10A or Section10AA or Section 10B or Section 10BA or under anyprovision of the said Chapter – VI A under theheading “C.- Deduction in respect of certainincomes”, no deduction would be allowed to himunder the said provision. In plain terms, thisSub Section (5) of Section 80A of the Actimposes an additional condition for claim ofdeduction in relation to income under any of theprovisions mentioned therein. Apart from therequirement of fulfillment of individual set ofrespective conditions for the purpose ofclaiming the concerned deduction, this plenarycondition requires that the claim ought to havemade in the return of income by the assessee andif the assessee fails to make such claim in thereturn of income, such deduction shall notallowed to him under the relevant provision.Admittedly, in the present case, the Petitionershad not raised any such claim in the return ofincome. In plain terms, the claim of thePetitioners under Section 80-IB (10) of the Actwould be hit by Sub Section (5) of Section 80Aof the act. 6. We are conscious that in absence of theprovision contained in Section 80A (5) of theAct, the Petitioners could have maintained theclaim of deduction even before the CIT for thefirst time in Revision Application, though nosuch claim was made before the AssessingOfficer, if from the facts on record, thePetitioners could sustain the said claim in law.This is very clear from the series of Judgments of various High Courts. Reference can be made tothe decision of High Court of Gujarat in case ofC. Parikh & Co. v. CIT [1980] 4 Taxman 224/122ITR 610. In the said decision, the Court heldthat: “it is clear that under Section 264, the CIT isempowered to exercise revisional powers infavour of the assessee. In exercise of thispower, the CIT may, either of his own motion oron an application by the assessee, call for therecord of any proceeding under the Act and passsuch order thereon not being an orderprejudicial to the assessee, as the thinks fit.Sub – ss. (2) and (3) of Section 264 provide forlimitation of one year for the exercise of thisrevisional power, whether suo motu, or at theinstance of the assessee. Power is alsoconferred on the CIT to condone delay in case heis satisfied that the assessee was prevented bysufficient cause from making the applicationwithin the prescribed period. Sub-s. (4)provides that the CIT has no power to revise anyorder under S. 264 (1) : (i) while an appealagainst the order is pending before the AAC, and(ii) when the order has been subject to anappeal to the Tribunal. Subject to the abovelimitation, the revisional powers conferred onthe CIT under S. 264 are very wide. He has thediscretion to grant or refuse relief and thepower to pass such order in revision as he maythink fit. The discretion which the CIT has toexercise is undoubtedly to be exercisedjudicially and not arbitrarily according to hisfancy. Therefore, subject to the limitationprescribed in S. 264, the CIT in exercise of hisrevisional power under the said section may passsuch order as he thinks fit which is notprejudicial to the assessee. There is nothing inS. 264 which places any restriction on the CIT’srevisional power to give relief to the assesseein a case where the assessee detects mistakes onaccount of which he was over assessed after the assessment was completed. We do not read anysuch embargo in the CIT’s power as read by theCIT in the present case. It is open to the CITto entertain even a new ground not urged beforethe lower authorities while exercisingrevisional powers. Therefore, though thePetitioner had not raised the grounds regardingunder-totalling of purchases before the ITO, itwas within the power of the CIT to admit such aground in revision. The CIT was also not rightin holding that the over-assessment did notarise from the order the assessment. Once thePetitioner was able to satisfy that there was amistake in totaling purchases and that there wasunder- totalling of purchases to the tune ofRs.20,000, it is obvious that there was over-assessment. In other words, the assessment ofthe total income of the assessee is notcorrectly made in the assessment order and ithas resulted in over-assessment. The CIT wouldnot be acting de hors the IT Act, if he givesrelief to the assessee in a case where it isproved to his satisfaction that there is overassessment, whether such over-assessment is dueto a mistake detected by the assessee aftercompletion of assessment or otherwise. In ouropinion, the CIT has misconstrued the words“subject to the provisions of this Act” in S.264 (1) and read a restriction on his revisionalpower which does not exist. The CIT was,therefore, not right in holding that it was notopen to him to give relief to the Petitioner onaccount of the Petitioner’s own mistake which itdetected after the assessment was completed.Once it is found that there was a mistake inmaking an assessment, the CIT had power tocorrect it under S. 264 (1). In our opinion,therefore, the CIT was wrong in not givingrelief to the Petitioner in respect of over-assessment as a result of undertotalling of thepurchases to the extent of Rs.20,000.” 7. This was reiterated in case of Ramdev Exportsv. CIT [2002] 120 Taxman 315/[2001] 251 ITR 873 (Guj.). This Court also in case of DannyDenzongpa v. CIT [2010] 7 taxmann.com 81/194Taxman 415 [2012] 344 ITR 166, has taken asimilar view. 8. However, the Petitioners are faced with thestatutory provision contained in Sub Section (5)of Section 80A of the Act. The Petitioners’claim cannot therefore be accepted de hors thesaid statutory provision and ordinary principleof the wide powers of the CIT exercisingrevisional jurisdiction under Section 264 of theAct cannot be imported. What Sub Section (5) ofSection 80A of the Act mandates is that, if theassessee fails to make a claim in his return ofincome for any deduction under the provisionsspecified therein, the same would not be grantedto the assessee. This condition or restrictionis not relatable to the Assessing Officer or theIncome Tax Authority. This condition attaches tothe claim of the assessee and has to beimplemented by the Assessing Officer, CIT or theAppellate Tribunal as the case may be. There isno indication in Sub Section (5) of Section 80Aof the Act as to why the restriction containedtherein amounts to limiting the power ofAssessing Officer but not that of Commissioner. 9. This issue can be looked from slightlydifferent angle. In absence of the provisioncontained in Sub Section (5) of Section 80A ofthe Act has held by various decisions of theHigh Courts noted above, the CIT could entertaina fresh claim in Revision Application even ifthe claim was not made previously before theAssessing Officer. Provision contained in sub-section (5) of Section 80A is a statutoryinterdict which would prevent the CIT fromgranting any such claim in exercise of hisrevisional jurisdiction under Section 264 of theAct. As is often times stated, even High Courtin exercise of Writ jurisdiction under Article226 of the Constitution of India would not issue 9. This issue can be looked from slightlydifferent angle. In absence of the provisioncontained in Sub Section (5) of Section 80A ofthe Act has held by various decisions of theHigh Courts noted above, the CIT could entertaina fresh claim in Revision Application even ifthe claim was not made previously before theAssessing Officer. Provision contained in sub-section (5) of Section 80A is a statutoryinterdict which would prevent the CIT fromgranting any such claim in exercise of hisrevisional jurisdiction under Section 264 of theAct. As is often times stated, even High Courtin exercise of Writ jurisdiction under Article226 of the Constitution of India would not issue directions contrary to statutory provisions.Width of the powers of the CIT under Section 264of the Act would not permit him to ignore therequirement of Section 80A(5) of the Act orallow the claim of an assessee in breach of thecondition contained therein. We are thereforenot in agreement that the expression given bythe Income Tax Tribunal in case of MadhavConstruction(supra)holdingthattherestriction contained in Sub Section (5) ofSection 80A of the Act is to restrict the powerof Assessing Officer and not higher Income TaxAuthorities. 10. The Petitioners having given up thechallenge to the constitutionality of theretrospectivity to Section 80A (5) of the Act,cannot bring in the concept of the reading downof the provision in order to save if fromunconstitutionally. In plain terms, our dutywould be to enforce the provision contained inSub Section (5) of Section 80A of the Act, as itis stands in the statue book. The decision incase of Goetze ( India ) Limited (supra) wasrendered in different background. The SupremeCourt did not have any occasion to interpret theprovision of Section 80A (5) of the Act in thecontext of the power of the CIT or the AppellateTribunal. 11. In the result, we do not find any merit inthe Writ Petition, the same is thereforedismissed.” 8. In light of the aforesaid decision renderedby the Bombay High Court in similar facts andcircumstances of the case, we find no error oflaw in the impugned order dated 19.06.2020passed by the Principal Commissioner of IncomeTax-3, Ahmedabad. 6.In view of the above, the appeal standsmeritless. No question of law much less substantial question of law can be said to be arisen. No otherquestion question of law arise in the facts of thecase. 7.The appeal is summarily dismissed. (N.V.ANJARIA, J) BIJOY B. PILLAI (BHARGAV D. KARIA, J)