Relief to EY GDS: ITAT Upholds S. 10AA Deduction, Rules Revised Return Irrelevant as No Changes in Claim [Read Order]

In a recent decision, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ), held that the revised return, which did not alter the original claim, was irrelevant to the entitlement of the deduction, as the original return had already met all the statutory requirements.

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The assessee EY Global Delivery Services is a Limited Liability Partnership (LLP) providing Information Technology-enabled Services (ITeS) through a Special Economic Zone (SEZ) unit, making it eligible for deduction under Section 10AA of the Income Tax Act, 1961, which grants benefits to units established in SEZs.

The assessee filed its original income return on 28.11.2022, well before the deadline of 30.11.2022, and also submitted Form 56F, which is required for claiming the deduction under Section 10AA of the Act. The Centralized Processing Centre (CPC) processed this return on 14.12.2022, but with some changes.

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The assessee later filed a revised return on 22.12.2022. Indeed, this change does not affect the amount or nature of the deduction claimed under Section 10AA of the Act. However, the CPC denied the deduction because the updated return was filed after the due date.

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Aggrieved by the CPC’s order, the assessee first approached the Commissioner of Income Tax (Appeal) (CIT(A)), and later, still aggrieved, took the matter before the tribunal.

CA Keerti Narayan & CA Chavali Narayan, representing the assessee, pointed out that the original return was filed within the due date and that the conditions under Section 10AA of the Income Tax Act of 1961 were met, including the timely filing of Form 56F.

They contended that since the revised return made no changes to the claim, the CPC’s disallowance was unjustified.

Meanwhile, Nandini Das, counsel for the department, opposed the claims of the assessee. The counsel maintained that the deduction was inadmissible as the claim appeared to be linked to a revised return filed after the due date.

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After hearing both sides, the bench, led by Waseem Ahmed (Accountant Member) and Prakash Chand Yadav (Judicial Member), examined the submissions made by both parties.

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The Tribunal noted that the assessee filed the return on time and satisfied all the statutory requirements for claiming the deduction under Section 10AA of the Income Tax Act, 1961. The bench also noted that the revised return did not change the amount of the deduction claimed under Section 10AA and was filed merely for procedural purposes.

The Tribunal thus held that the disallowance made by the CPC and sustained by the CIT(A) was unjustified, since the revised return had no impact on the figures or the eligibility of the deduction.

To Read the full text of the Order CLICK HERE

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