ITR E-Filing Mandatory for Companies from May 2007: Madras HC Denies S. 80-IC Deduction to Gemini Communication Ltd [Read Order]

The Madras High Court held that the companies had to file the income tax returns digitally from May 15, 2007. The court has upheld the decision to deny the deduction under Section 80IC to assessee.

Justice Anita Sumanth and Justice Mummineni Sudheer Kumar observed that any manual income tax returns filed post the notification of ITR to be filed electronically is invalid.

As per the division bench’s observation, the Rule 12(3) of income tax rules of 2007 mandated companies to file returns only electronically either with digital signature or through electronic transmission followed by ITR-V verification.

No manual filing allowed beyond limited transitional relaxations granted by CBDT Circular No.3/2007, said the court.

The appeal was filed by the income tax department against the respondent - Gemini Communications Ltd. The company had filed its income tax return AY 2008-09 manually on 30.09.2008 and subsequently filed an electronic return belatedly on 06.11.2008.

The officer after verification, denied the deduction under Section80-IC, holding that the assessee failed to file its return electronically within the prescribed due date.

The company contended that the manual return filed within time should be treated as a valid return. However, the Department rejected this claim on the ground that e-filing had become mandatory for companies from AY 2007-08 onwards.

The Commissioner (Appeals) upheld the disallowance, but the ITAT remanded the matter, observing that the Income Tax Act itself did not expressly mandate electronic filing. therefore the Revenue approached the Madras High Court

The court, after hearing the submissions, ruled in favour of the income tax department. It held that e-filing of returns by companies became mandatory with effect from 14.05.2007 as per amended Rule 12(3) of the Income Tax Rules, read with CBDT notifications and circulars.

The Rule 12(3) reads as follows:

“‘12.Return of income and return of fringe benefits.

(3) The return of income or return of fringe benefits referred to in sub-rule (1) may be furnished in any of the following manners, namely:-

(i) furnishing the return in a paper form;

(ii) furnishing the return electronically under digital signature;

(iii) transmitting the data in the return electronically and thereafter submitting the verification

of the return in Form ITR-V;

(iv) furnishing a bar-coded return in a paper form:

Provided that-

(a) a firm required to furnish the return in Form ITR-5 and to whom provisions of section 44AB are applicable or a company required to furnish the return in Form ITR-6 shall furnish the return in the manner specified in clause (ii) or clause (iii);

(b) a person required to furnish the return in Form ITR-7 shall furnish the return in the manner specified in clause (i).’”

‘While it is true that the impetus for the e-filing schemes emanated from the CBDT, there is nothing untoward in this, as the Board is the apex body to streamline and manage tax administration. Hence, there is no merit in the conclusion of the Tribunal that the CBDT has overridden statutory stipulations and rules’ said the court.

The high court added that the introduction of the e-filing schemes are in the interests of administrative efficiency, and are a necessary incident of progress. Such measures in fact, continue, even as on date. The appeal was allowed accordingly.

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