The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the filing of the income tax return under section 139 of the Income Tax Act, 1961 is mandatory not directory to claim the tax benefit under section 10A of the Income Tax Act, 1961.
M/s. Redisolve Software P. Ltd, 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 Income Tax 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 Income Tax Act.
Subsequently, the matter of the assessee was subject to revision wherein the 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. The CIT observed that 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 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.
Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member held that “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.”
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