Analysis of ITA No. 917/Del/2022 Judgement: Arvind Kumar Agarwal vs. ITO, Ward-18(1), Delhi

Introduction

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, in a landmark judgement ITA No. 917/Del/2022, dated 26 April 2023, allowed the appeal filed by Arvind Kumar Agarwal against the order of the Commissioner of Income Tax (Appeals), New Delhi. This case pertains to the assessment year 2018-19 and revolves around the denial of deduction under section 10AA of the Income Tax Act, 1961 by the assessing officer and upheld by the CIT(Appeals), raising pivotal questions about the mandatory filing of return under section 139(1) within the due date to claim exemptions under section 10AA.

Background

Arvind Kumar Agarwal, the appellant, had filed a return declaring an income of Rs.15,26,820 after claiming a deduction of Rs.75,10,646 under section 10AA. The assessing office, however, processed the return under section 143(1) of the Act, on 12 February 2020, denying the deduction for not filing the return within the due date prescribed under section 139(1) of the Act, which was extended till 31 October 2018. Despite the appellant’s efforts, the CIT(Appeals) sustained the action, leading the appellant to contest the decision at the ITAT.

Arguments and Verdict

The appellant’s representation highlighted the discrepancies in the application of the law regarding the filing of the return within the due date to avail the exemption under section 10AA compared to sections 10A and 10B. There is no explicit provision under section 10AA, unlike sections 10A and 10B, making the filing of return within the due date a condition precedent for availing exemptions. The Tribunal, examining these arguments, scrutinized the legislative intent and provisions, referring to various judgements and provisions under the Income Tax Act. In emphasizing the differences in the provision under section 10AA, the Tribunal observed that the denial of exemption on the grounds of not filing the return within the due date under section 139(1) was legally untenable.

The Tribunal, in its judgement, referenced the case of M/s. Opto Circuits (India) Limited vs. ACIT, wherein it was established that the disallowance of exemption under section 10AA on the basis of not filing the return within the specified due date was not correct. It further noted that the conditions to be fulfilled for claiming the exemption under section 10AA did not mandatorily require the filing of the return within the due date specified under section 139(1).

Conclusion

This judgement signifies a monumental stance on the interpretation of the provisions related to exemptions under section 10AA of the Income Tax Act. By allowing the appellant’s claim for the deduction, the Tribunal has clarified the application of the law, thereby setting a precedent for similar cases. The decision, dated 26 April 2023, underscores the Tribunal’s role in ensuring justice and the appropriate application of tax laws, facilitating a fair assessment process.

Analysis of ITA No. 917/Del/2022 Judgement: Arvind Kumar Agarwal vs. ITO, Ward-18(1), Delhi