Revised Return filed within Time Limit u/s 139(5) of Income Tax Act is Valid Return: ITAT Deletes Disallowance of Unamortized Brokerage Expense [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance of unamortized brokerage expense as the revised return filed within the time limit prescribed under Section 139(5) of the Income Tax Act, 1961 was a valid return.

The assessee company, Deutsche Asset Management (India) Pvt. Ltd. Was an Asset management company of Deutsche Mutual Fund (DMF) and various other Deutsche Group Entities. 

During the year under consideration, the assessee filed original return of income on 4.11.2015 declaring a total income of Rs.23.03 crores. Subsequently, the assessee filed a revised return of income on 31.3.2017 declaring a total income of Rs.4.98 crores, wherein it claimed deduction of brokerage expenses.

The facts relating to this expenditure were that the assessee usually incurred brokerage expenses during the course of its business. As per the method of accounting followed by it, the upfront brokerage paid by the assessee for any scheme was amortised during the tenure of scheme in the books of accounts.

The assessee had been following the above said method of accounting. It so happened that the assessee had to discontinue its business in the succeeding financial year 2015-16. Accordingly, the unamortized brokerage expense outstanding as on 31.3.2016 was claimed as deduction in this current year, since the said expense was incurred during this year.

The Assessing Officer held that the assessee could not have claimed this deduction in the revised return of income filed under Section 139(5) of the Income Tax Act, since, as per this section139(5) a revised return of income could be filed only if the assessee had discovered any omission or any wrong statement.

Percy Pardiwala and Niraj D. Sheth appeared on behalf of the assessee and Riddhi Mishra appeared on behalf of the revenue.

The two-member Bench of B.R. Baskaran (Accountant Member) and Pavan Kumar Gadale (Judicial Member) dismissed the appeal filed by the revenue relying upon decision rendered by Supreme Court in Goetze P Ltd, which held that the assessee could make fresh claim by filing revised return of income.

The ITAT bench further held that even if the revised return of income was not filed, the tribunal could admit any fresh claim. In the instant case, the assessee had claimed the deduction of unamortized brokerage expenses through revised return so the same was admissible.

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