Income Tax Appellate Tribunal - Delhi
Manju Kapoor Dalmia, New Delhi vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'E' : NEW DELHI)
SHRI RAJPAL YADAV, JUDICIAL MEMBER
and
SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No.154/Del./2011
(ASSESSMENT YEAR : 2006-07)
Mrs. Manju Kapoor Dalmia, vs. ITO, Ward 31 (3),
C/o RRA Taxindia, New Delhi.
D-28, South Extension I,
New Delhi - 110 049.
(PAN : AAPPD6625F)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Ms. Poonam Ahuja, Advocate
REVENUE by : Shri Peeyush Sonkar, Senior DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
This appeal filed by the assessee arises out of the order of CIT (Appeals)- XXVI, New Delhi dated 21.10.2010. The grounds of appeal read as under :-
"1. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of deduction u/s 80QQB amounting to Rs.1,63,075/- as claimed by the assessee in the return of income on account of royalty received from outside India.
2. That in any case and in any view of the matter action of Ld. CIT (A) in confirming the action of Ld. A.O. in framing the impugned assessment order and not allowing the deduction u/s 80QQB is bad in law and against the facts and circumstances of the 2 ITA No.154/Del/2011 case and the same is not sustainable on various legal and factual grounds.
3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other."
2. The assessee is a reader in the University of Delhi. She is a writer and has authored the book "Difficult Daughters" and for the same, she has received the royalty. The income of the royalty has been included in the gross total income of the assessee. The only issue involved in the appeal is not allowing deduction u/s 80QQB amounting to Rs.1,63,075/- as claimed by the assessee in the return of income on account of royalty received from outside India.
3. The assessee has claimed that the certificate in a prescribed form No.10CCD received subsequent to the filing of return of income on 28th July, 2006, therefore, it could not be submitted along with the return of income. It is submitted by the learned AR that the scrutiny assessment proceedings were initiated in October, 2007 and thereafter the case was adjourned on various occasion without much of hearing. Finally the assessment proceedings were expedited in the month of December, 2008, and during that period, the tax counsel of the assessee, Shri M.K. Bhatia, CA, got sick and he was admitted in the Moolchand Hospital from where he was discharged only on 28.12.2008. These circumstances prevented to file the certificate before Assessing Officer. The assessee was prevented by sufficient cause from producing the certificate in Form 10CCD before the Assessing Officer. Appeal was filed against Assessing Officer's order and CIT (A) has all the power of 3 ITA No.154/Del/2011 Assessing Officer in respect of determination of income. The assessee made the request before the CIT (A) to admit the certificate. The certificate in Form No.10CCD was filed before CIT (A) and it was forwarded to the Assessing Officer for comments. After receiving the comments of the Assessing Officer, the CIT (A) held that Form No.10CCD is crucial for determination of the appeal, hence the same was admitted under Rule 46A (4). However, finally she held that as per the provisions of section 80QQB (3), there is the statutory requirement of filing the certificate in Form No.10CCD along with the return of income. She also observed that the assessee filed the return u/s 139(1) without the form 10CCAD when the assessee has not received the certificate. In such circumstances, the assessee could have waited for certificate and then filed the return u/s 139(4) and this liberty has been provided to the assessee by law. However, once return has been filed, it has to be accompanied by the Form No.10CCD. It is a statutory requirement that the Form No.10CCD has to be filed along with the return. Therefore, she sustained the disallowance u/s 80QQB.
4. Learned AR submitted that in the case of CIT vs. Trehan Enterprises 248 ITR 333 (J&K), Hon'ble Jammu & Kashmir High Court held as under :-
"A perusal of s. 251 clearly indicates that while hearing an appeal against an assessment order, the CIT(A) has virtually all the powers which are vested with the officer framing the assessment. In fact, it is in the nature of a plenary power authorising the CIT to confirm, reduce, enhance or annul the assessment. He is also competent to set aside the assessment and refer back the case to the AO for fresh assessment as per the direction. An examination of the powers conferred upon the CIT (A) under s. 251(1)(a) clearly shows that those are in the nature of reassessment. While confirming, reducing, 4 ITA No.154/Del/2011 or enhancing, it is implicit that in either of these situations, he will have to examine the case and it is only thereafter that one of such eventualities may arise. It may also be worthwhile to notice here that taxation appeals cannot be put at par with civil appeals under the CPC. There it is the adjudication of claims of two parties which is known as adversary system. This is not the situation in the tax appeals because in such appeals, the Revenue authority concerned is not an adversary or opponent in the sense of the term like in civil cases. The whole purpose of the Revenue authority being arrayed as an opponent is one to ensure that the assessment is made as per the requirements of law irrespective of its outcome. Even if it be assumed for the sake of argument that the necessary certificates in Form Nos.10C and 10D were not attached along with his return of income, still what could be done by the ITO and being within the competence of the CIT(A), he ought to have gone into it and then framed assessment or remitted the case back to the ITO to proceed in accordance with law in the face of such certificates. No exception can be taken to the orders passed by Tribunal in appeal as it was the only order it should have and in fact it had, passed which is perfectly legal and justified."
Thus, the CIT (A) has virtually all the powers which are vested with the Assessing Officer who has framed the assessment. The CIT (A) has all plenary power to confirm, reduce, enhance or annul the assessment. Further, he also pleaded that the Hon'ble Calcutta High Court in the case of CIT vs. Hardeodas Agarwalla Trust 198 ITR 511 (Cal.) held that it is a well settled law that a procedural provision, ordinarily, should not be construed as mandatory, if the defect in the act done in pursuance of it can be cured by permitting the appropriate rectification to be carried out at a subsequent stage. The procedural laws are devised and enacted for the purpose of advancing justice. It was submitted that filing the certificate along with the return of income is a procedural provision and which is a rectifiable act and for the purpose of advancing justice, it can be cured. When assessee has submitted the 5 ITA No.154/Del/2011 certificate before the CIT (A) who is having plenary power in respect of the assessment as he can confirm, reduce, enhance or annul the assessment, then it should be given the effect. Learned AR also relied on the decision of Indore Bench of the ITAT in the case of M.P. Rajya Van Vikas Nigam vs. DCIT where the ITAT held as under :-
"It is not in dispute that the assessee is a Government company. For the asst. yr. 1988-89, presently under consideration, it's previous year ended on 30th June, 1987. The assessee's claim of deduction under s. 32AB has been rejected on the sole ground that the audit report and the report in the prescribed Form No. 3AA had not been furnished along with the return. The assessee would be entitled to a deduction under s. 32AB of an amount upto 20% of the profits of 'eligible business or profession' if the said amount is deposited with the Development Bank within the period of six months from the end of the previous year or before furnishing the return whichever is earlier or is utilised during the previous year for purchase of any new ship, new aircraft or new machinery or plant. It is not in dispute that the assessee had deposited an amount of Rs. 10,00,000 in investment deposit account with the Development Bank on 30th Dec., 1987, which is within six months from the end of the previous year relevant to the asst. yr. 1988-89 presently under consideration. It is also not in dispute that the assessee had utilised an amount of Rs. 1,51,200 for purchase of new plant and machinery. Thus, the total of the deposit with Development Bank and the amount utilised for purchase of new plant and machinery worked out to Rs. 11,51,200. The assessee had claimed that the amount of Rs. 11,51,200 qualified for deduction under s. 32AB, as it was less than 20% of eligible profits worked out as per the audit report. In the case of Government company, the auditor is appointed by the Central Government on the advice of the C&AG If that be so the appointment of auditor is not within the control of the assessee-company. It was under the relevant provisions of the Companies Act, 1956, that the assessee was required to get its accounts audited. It is stipulated in the proviso to sub-s. (5) that in such cases, it shall be sufficient compliance of sub- s. (5) if the assessee gets the accounts audited under such law (in this case under the Companies Act of 1956) and furnishes the said audit report and further report in the prescribed Form No. 3AA for claiming deduction under S. 32AB. The requirement of filing the 6 ITA No.154/Del/2011 said audit report and report in the prescribed performa in Form No. 3AA along with the return of income is conspicuous by its absence in the proviso to sub-s. (5). It appears that it is not the intention of the legislature that if the case is covered under the proviso to sub-s. (5) the audit report and the report in Form No. 3AA should necessarily be filed along with the return of income. The intention of the legislature is clearly expressed by the language employed in the proviso. Even if the assessee has filed the audit report and the report in Form No. 3AA at the second appellate stage before the Tribunal, as these documents were not available to the assessee before the original assessment was completed and/or before the decision by the first appellate authority, the claim of the assessee for deduction under s. 32AB should be entertained, as the process of assessment begins but does not and with the assessment order made by the AO, which is a subject-matter of appeal and on the decision(s) of the appeal the original order merges in the appellate order(s)."
She also relied on the decision of ITAT Madras 'D' Bench in the case of Coromandel Steel Products vs. ITO (1982) 14 TTJ (MAD) 624 where the ITAT held as under :-
"Deduction under s. 80J-Audit report not furnished with return-The same filed before the AAC-The ITO disallowed the assessee's claim for deduction on the ground that filing of report along with the return was mandatory-AAC upheld the order of the ITO-AAC was wrong in not entertaining the belated audit report-Filing of audit report was merely directory-Tribunal set aside AAC's order and directed him to entertain the audit report and decide the appeal."
She further relied on the decision of ITAT Mumbai 'I' Bench in the case of Jawahar Lal Nehru Port Trust vs. DCIT (2010) 133 TTJ (Mumbai) 761 where the ITAT held as under :-
"Charitable trust-Exemption under s. 11-Registration under s. 12AA after filing return not claiming exemption under s. 11-Assessee, a major port trust, was eligible for exemption under s. 10(20) till asst. yr. 2002-03 as it was covered by the definition of 'local authority' for that purpose-However, the definition of 'local authority' was considerably narrowed down by the legislative amendment in s.7 ITA No.154/Del/2011
10(20) w.e.f. 1st April, 2003, and exemption under s. 10(20) was no longer available to the assessee-Even though the assessee was granted registration under s. 12AA, CIT(A) declined to grant the consequential benefits on procedural grounds, such as, assessee did not file the return in the status of a charitable institution, the return did not accompany the requisite audit report and other mandatory details, etc.-Not justified-In the facts and circumstances, interest of justice demanded that assessee's request for exemption be examined afresh-Restrictions on the powers of the AO do not affect the powers of the Tribunal to issue appropriate directions to the AO In the interest of justice-Hence, matter is remitted to the AO with a direction to examine the matter, on merits, for eligibility to exemption as a result of the registration under s. 12AA now available to the assessee and in the light of the requisite audit report and other documents now filed by the assessee and decide the matter by way of a speaking order, in accordance with the law.
Reliance was placed on the decision of CIT vs. Ace Multitaxes Systems (P) Limited 317 ITR 207 (Kar) and ITAT Chennai 'C' Bench in the case of ITO vs. Tamilnadu Minerals Ltd. (2010) 128 TTJ (Chennai) (TM) 386
5. On the other hand, learned DR relied on the orders of the authorities below.
6. After hearing both the sides, we find that assessee is an author of repute. She could not file the certificate along with return as same was not received. Thereafter, the circumstances prevented from filing the same before the Assessing Officer. It was filed before CIT (A) in appellate proceedings and she has admitted it but did not allow relief treating filing of certificate mandatory. In our considered view and in view of case laws relied upon, we hold that filing a certificate for claiming the deduction u/s 80QQB is a procedural provision and it should not be construed as mandatory. The defect in the act done (not filing before Assessing Officer) by the assessee can be cured by permitting the appropriate rectification at a subsequent 8 ITA No.154/Del/2011 stage as the procedural are devised and enacted for the purpose of advancing justice. The CIT (A) has virtually all the powers which are vested with the Assessing Officer. In the assessee's case, the CIT (A) has admitted this certificate under Rule 46A(4) but did not give the relief to the assessee by holding that filing of those factors u/s 80QQB is the statutory requirement for filing the certificate in form no.10CCD along with the return of income. She has also observed that there was no sufficient cause for not filing the certificate after its receipt but we find that she had admitted it as per rule 46A. In our considered view and for advancing the justice, the CIT (A) rightly admitted the additional evidence and we direct to grant necessary relief on the basis of certificate. CIT (A) is not justified in dismissing the claim of the assessee by holding that the assessee has failed to adhere to the statutory requirement. In our considered view, once the certificate has been admitted by following the procedure of section 46A and in the interest of justice and equity, the assessee's claim should have been considered. In view of this, we direct to give the deduction u/s 80QQB to the assessee.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on this 21st day of April, 2011.
Sd/- sd/-
(RAJPAL YADAV) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : the 21st day of April, 2011
TS
9 ITA No.154/Del/2011
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT (A)-XXVI, New Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT, NEW DELHI.