Avis International Ltd. vs Assistant Commissioner Of Income ...
1995 Latest Caselaw 213 Del

ORDER

T. V. RAJAGOPALA RAO, PRESIDENT :

This is a stay application filed by the assessee relating to asst. yr. 1989-90, ultimately seeking stay of demand of Rs. 16,84,563. The assessee prays to stay the above demand till the disposal of the second appeal by this Tribunal. In the second appeal, which is pending before this Tribunal, relief under s. 80HHC is the bone of contention.

2. The assessee is a company having its office at 8/32, Kriti Nagar Industrial Area, New Delhi. For asst. yr. 1989-90 for which the previous year was 31st March, 1989, it had filed a return of loss of Rs. 57,76,680 on 29th Dec., 1989. DDB I/L, CCS were claimed as exempt on the ground that they are capital receipts. The assessment was first completed under s. 143(1)(a) on 29th March, 1990, wherein the loss of Rs. 56,53,234 was accepted. In the said assessment, the computation as relating to CCS, etc. was also accepted. However, the learned Dy. CIT had issued a notice under s. 154/155 on 9th Oct., 1991, wherein he wanted to withdraw the claim of CCS, etc., from the statement of income finalised under s. 143(1)(a). The assessee filed its objections dt. 25th Oct., 1991, wherein it was pointed out that whereas the assessment was passed on 29th March, 1990. Finance Act, 1990, by which sub-ss. (iii)(a), (iii)(b) and (iii)(c) were inserted in s. 28 of the IT Act received the assent of the President on 31st May, 1990. Therefore, at the time of assessment, i.e., 29th March, 1990, CCS, DDB, I/L, etc., were not included in the taxable income of the assessee. It was also stated in the said letter that since it was a loss return filed, there was no opportunity for the assessee to claim deduction under s. 80HHC. On hearing the objections, the AO did not take any corrective action.

3. Afterwards, the AO issued notice under s. 143(2) for making regular assessments on 25th June, 1990. Then the assessee filed a revised computation on 28th Oct., 1991, wherein deduction under s. 80HHC at Rs. 20,30,088 was claimed. Further, the assessee also filed an auditors certificate in Form No. 10CCAC on 25th Oct., 1990, which is the earliest point of time. According to the assessee, there was no occasion either to file a certificate under s. 80HHC or to give a notice that in case s. 80HHC is made available to the assessee, a certificate would be furnished. The relief under s. 80HHC was denied to the assessee-company mainly for three reasons by the AO. Firstly, the assessee had filed its return only on 28th Dec., 1989, and it had not given any note on the issue regarding claim of deduction under s. 80HHC. It had also not furnished any note that in case the assessment results in an income a deduction under s. 80HHC should be granted. Secondly, along with the return, no certificate by the Chartered Accountant in the prescribed Form No. 10CCAC was furnished. Thirdly, notwithstanding the above, the assessee claimed deduction under s. 80HHC without taking into account the losses of earlier years, namely, asst. yrs. 1987-88 and 1988-89. In view of the categorical provisions of s. 80AB and sub-s. (5) of s. 80B, the gross total income of the assessee-company will be an income as reduced by the loss of the earlier years. Thus, if the earlier years losses were also taken into account, then there would not be any assessable income and the assessment would result in a loss only; and for that reason also s. 80HHC was not available to the assessee-company. Thus, having rejected the contention of the assessee with regard to relief under s. 80HHC, the total income of the assessee was computed as per the assessment dt. 29th Nov., 1991, at Rs. 19,06,249 by the Dy. CIT, Special Range, New Delhi, under s. 143(3) of the IT Act.

4. Aggrieved against the denial of relief under s. 80HHC, the assessee went in appeal before the learned CIT(A), III, New Delhi who disposed of the appeal by his impugned order dt. 13th July, 1992. Before the learned CIT(A), written submissions were filed by the assessee seeking to substantiate its grounds enabling it to seek the relief under s. 80HHC. In those submissions, it is submitted that after filing of the return, the retrospective amendment of s. 28 of the IT Act came into force whereby the receipts of CCS, DDB, I/L were treated as revenue receipts. Naturally, the assessee had to make the necessary changes in the computation to claim the benefit of s. 80HHC and the assessee also filed the auditors certificate required under s. 80HHC. However, the AO completed the assessment on technical grounds stating that revised return under s. 139(5) was not filed and auditors certificate was not annexed to the return. It was submitted that a correction was needed in the originally filed return because of the amendment to s. 28 by the Finance Act, 1990, and not a revised return. Even if the assessee had not filed the said certificate and amended computation, it was the duty of the AO to recompute the taxable income in accordance with the amended law. In the decision of the Delhi High Court in Continental Construction Ltd. vs. Union of India & Ors. (1990) 185 ITR 230 (Del), it was held that in view of the bona fide belief entertained by the petitioner, the Department ought not to stand on mere technicalities but ought to give the petitioner an opportunity to fulfill the requirements of s. 80HHC(3) and on such compliance within a reasonable time ought to grant the benefit of that section to the petitioner. Further, it was submitted that the Supreme Court interpreted the words shall be filed along with the return and has held that such a provision is basically procedural and should be treated as directory and not mandatory in 21 STC 154. The said decision has been followed by the Patna High Court reported in CIT vs. Sita Ram Bhagwandas (1976) 102 ITR 560 (Pat). The Patna decision was followed by the Tribunal while dealing with a similar matter of non-filing of auditors report under s. 12A of the IT Act in the case reported in ITO vs. Jeevdaya Khata (1981) 12 TTJ (Ctk) 394. It is contended that in view of the correction having been made to the original return by filing a revised computation, the certificate under s. 80HHC which was given during the assessment would form a part of the original return and so the essential requirements of sub-s. (4) of s. 80HHC would get sufficiently satisfied. Apart from filing its written submissions, the assessee also relied upon the Calcutta High Court in CIT vs. Rai Bhadur Bissesswar Lal Moti Lal Malwasie Trust (1992) 195 ITR 825 (Cal)

5. The learned CIT(A) found that the denial of relief by the AO is based primarily on the following reason :

(i) The assessee had failed to furnish a certificate in the prescribed form along with the return of income in accordance with the provisions of sub-s. (4) of s. 80HHC.

(ii) The assessee had not made any claim for deduction under s. 80HHC in the return filed on 28th Dec., 1989, and no revised return of income was filed.

(iii) The revised computation given on 28th Oct., 1991, cannot be legally admissible within the provisions of sub-s. (5) of s. 139 of the IT Act and that this revised computation cannot amount to revising of the return. The learned CIT ultimately agreed upon the important findings given by the ITO for denial of relief under s. 80HHC.

6. He held that it is a well settled proposition of law that in order to claim a deduction or a concession under the IT Act, the burden is on the assessee to prove that his case falls within a particular provision claimed by him. It is also well known that in order to successfully claim a deduction under any of the deductions of Chapter VI-A the assessee must fulfill all the requirements laid down in the relevant section. Sub-s. (4) of s. 80HHC lays down certain conditions without fulfillling which relief under that section is not admissible. It is not in dispute that in the present case, the report of the auditors in the prescribed form was not filed along with the return furnished on 28th Dec., 1989. The assessee had also not revised its return subsequently. In the IT return filed on 28th Dec., 1989, no claim of deduction under s. 80HHC was made nor was it accompanied by the report of the auditors in the prescribed form. No doubt the assessee during the course of the assessment proceedings made a claim under s. 80HHC and also filed a revised computation of its income, but filing of the revised computation of income does not meet the clear cut requirements of sub-s. (4) of s. 80HHC. The argument that even if the assessee had not filed the auditors certificate, it was the duty of the AO to allow such a deduction under s. 80HHC is without substance. In view of the plain language of s. 80A(1), deduction under any of the sections of Chapter VIA are to be allowed only if the assessee claims any of them and establishes the circumstances warranting such a deduction. If no such deduction is claimed, the assessing authority may not be bound to allow any such deduction. The decisions cited by the assessee including the Calcutta High Court (1992) 195 ITR 825 (Cal) (supra) are not direct authorities dealing with s. 80HHC. They are concerned with other provisions of the IT Act or the provisions of the U. P. Sale-tax Act. Thus, rejecting all the arguments advanced on behalf of the assessee, the learned CIT(A) had confirmed the order of the AO denying the relief under s. 80HHC to the assessee.

7. Against the impugned order of the CIT(A), the assessee filed second appeal before this Tribunal on 17th Sept., 1992.

8. During the pendency of the second appeal, the assessee had approached for stay of collection of tax. It had obtained the orders from the Dy. CIT, Spl. Range XV, New Delhi, in which it is clearly stated that out of the total demand of Rs. 18,05,410 raised under s. 143(3), the assessee had already made a payment of Rs. 7,59,722 and, therefore, the remaining demand was ordered to be stayed till the disposal of the appeal by the Tribunal, New Delhi. The said order of stay granted on 24th March, 1993, is provided at page 59 of the paper book marked annexure L filed along with the stay application. However, the Asstt. CIT, Companies Circle 2(6), C. R. Building, 4th Floor, I. P. Estate, New Delhi, purported to review the order of stay granted on 24th March, 1993, passed the following order on 22nd Nov., 1994. It is as follows :

"Sub : Outstanding demand in the case of Avis International Pvt. Ltd. - Asst. yrs. 1989-90, 1990-91, 1991-92 - Reg.

1. Asst. yr. 1989-90, out of the total demand raised under s. 143(3) at Rs. 18,05,410 a payment of Rs. 7,59,922 was made by you till 24th March, 1993. The balance of payment of demand was stayed by the Dy. CIT, Sub-Range XV, New Delhi, vide letter dt. 24th March, 1993 till the disposal of the appeal by the Tribunal, New Delhi. About one year and eight months have passed since the demand was stayed, to review the position, you are requested to intimate the latest position of the appeal pending before the Tribunal and also to see the undersigned on 2nd Dec., 1994."

The text of the order is at page 64 or Annexure P. Ultimately on 12/13th Dec., 1994, the following order is passed by the Asstt. CIT, Co. Cir. 2(6), New Delhi."The stay granted by the Dy. CIT, Spl. Range 15, vide letter dt. 24th March, 1993, has been reviewed and you are requested to please arrange for the payment of outstanding demand of Rs. 16,84,563 [Rs. 10,45,488 + Rs. 6,38,975 interest under s. 220(2)] within 15 days from the date of this letter". A stay application was filed on 26th Dec., 1994, before this Tribunal.

9. We have heard Shri O. P. Dua, the learned advocate for the assessee and Mrs. Surabhi Sinha, the learned Departmental Representative for the Department. We are of the opinion that this is pre-eminently a case which warrants grant of stay of the demand for the following reasons. It is no doubt true that the assessee filed only one return on 28th Dec., 1989. The assessment was completed under s. 143(1)(a) on 29th March, 1990 under which loss of Rs. 56,53,234 was determined. At that time, the law as interpreted by the Courts and Tribunal was that amounts received towards CCS, DDB and I/L were all capital receipts and cannot be included as income of the assessee. New sub-sections were inserted in s. 28 only on 31st May, 1990 by which time, the return was already filed. Notice under s. 143(2) for making a regular assessment was issued on 25th June, 1990. Though the return as such was not revised, but a revised computation was filed on 28th Oct., 1991, claiming deduction of Rs. 20,30,088 under s. 80HHC. Certificate in Form No. 10CCAC was also filed on 25th Sept., 1990, in fulfillment of requirements of s. 80HHC(4). The contention of the Revenue was that it is not a revised return but only a revised computation which was filed on 28th Oct., 1991. The time for filing revised return under s. 139(5) was already over, inasmuch as one year time from the completion of the assessment year with which it relates to is long over. A revised return under s. 139(5) can be filed either within one year from the end of the assessment year or the completion of the assessment proceedings whichever is earlier. The assessee wants to get over this hurdle stating that in view of the newly inserted provisions in s. 28, the amounts of CCS, DDB and I/L became taxable since they are to be considered as revenue receipts and in view of the change in legal position the assessee for the first time became entitled to s. 80HHC relief and, therefore, a mistake in the computation of its income should be corrected and for that purpose the revised computation on 28th Oct., 1991 was filed. A distinction is to be drawn between the revised return and a mere revised computation filed along with the return. The limitation of s. 139(5) would apply if it is only a revised return but does not apply if only a mistake is corrected in the statement filed along with the return. At present, we may say that this is the contentious point involved in the appeal. The next contentious point is whether the auditors certificate in Form No. 10CCAC is filed within time. It is submitted to us by Shri Dua that even if such an auditors certificate is filed during the course of proceedings it amounts to enough compliance of requirements of law, as per direct decisions rendered by this Tribunal in Mrs. Sudha Sharma vs. ITO (1993) 46 TTJ (Del) 276 : (1993) 44 ITD 351 (Del), in the case of Sudha Sharma and Calcutta High Court decision in CIT vs. Rai Bahadur Bissesswar Lal Motilal Malwasie Trust (supra). On the other hand, the learned Departmental Representative strongly opposing the prayer for stay relied upon the following decisions, namely (1977) 108 ITR 81 (P&H) (sic), CIT vs. Shivanand Electronics (1994) 209 ITR 63 (Bom) and V. M. Dujodwala vs. ITO (1991) 36 ITD 131 (Ahd) in which (108) ITR 81 (sic) was considered for the proposition that if the auditors report is not filed along with the return, the AO is not bound to communicate the defect to the assessee.

10. Thus, after surveying the facts of the case, we feel that the above noted are contentious points to be considered in the appeal. In the earlier stage, the assessee was able to convince the Revenue authorities and obtain stay from them under s. 220(6) or 225 of the IT Act. After having granted the stay and exercised his discretion does the same AO have power to review his order is the question for consideration. The order dt. 24th March, 1993, which we have already extracted above, is without any conditions and according to the order the stay should remain till the disposal of the appeal by the Tribunal, New Delhi. In those circumstances, having regard to ss. 220(6) and 225 since the nature of the order passed was unconditional, in our opinion, the orders when once passed cannot be reviewed. Therefore, we hold that the subsequent order dt. 12/13th Dec., 1994 is without jurisdiction and beyond the powers of the AO.

11. In view of what we consider about the legal position we hold that the orders dt. 24th March, 1993, should be deemed to be continuing.

12. Even otherwise, since this Tribunal itself is having inherent powers of stay in appropriate cases, we feel that after surveying the facts of the case and the contentions on either side, the balance of convenience lay very much on the side of the assessee. The balance of inconvenience in refusing stay to the assessee would be much more than the inconvenience to the Department by grant of stay. Therefore, we hold that there will be a grant of stay of collection of tax till the disposal of the second appeal before this Tribunal. The petition is accordingly allowed.