The Hon’ble Supreme Court on 11th July, 2022 has passed an order in the case of PCIT vs. M/s. Wipro Limited Civil Appeal No. 1449 of 2022. The issue, before the Apex Court, was whether the declaration prescribed under section 10B(8) of the Income Tax Act, 1961 (The Act) in mandatory and should be filed along with return of income or not?. Without getting into the of facts in detail in short, the assesse before the Hon’ble Supreme Court claimed benefit of Section 10B of the Act for the Assessment Year 2001-02 and furnished the returns within due time allowed under section. 139(1) of the Act. However, the Asssessee didn’t file the declaration as required under section 10B(8) of the Act along with the return of income. The Assessee, before the Assessing Officer, filed the declaration dated 24/10/2002 stating that the assesse does not want to avail the benefit under section 10B the Act for Assessment Year 2001-02 and it should be allowed to carry forward basis under section 72 of the Act. The Ld. A.O. rejected the claim which was confirmed by the CIT(A). Before ITAT and High Court the assesse succeeded as it was held that obtaining declaration as prescribed under section 10B(8) of the Act is mandatory but the time limit to furnish the same is declaratory. Now, the Hon’ble Supreme Court has reversed this position under Law. While doing that in para 9 of the decision the Apex Court has made certain observations with respect to section 139(5) of the Act. According to me these observation are of far reaching consequences. The para 9 reads as under.
”9. In such a situation, filing a revised return under section 139(5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139(1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139(5) can only substitute its original return under Section 139(1) and cannot transform it into a return under Section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under Section 80 of the IT Act. The Assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139(5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or setoff of any loss. Filing a revised return under Section 139(5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assesse cannot be permitted to substitute the original return of income filed under section 139(1) of the IT Act. Therefore, claiming benefit under section 10B (8) and furnishing the declaration as required under section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee hascomplied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act. As observed hereinabove, for claiming the benefit under section 10B (8), both the conditions of furnishing the declaration and to file the same before the due date of filing the original return of income are mandatory in nature.”
I my humble opinion the underlined portion of the reproduced para of the Hon’ble Supreme Court decision is going create unwarranted hassles for the assesse and litigation.
In this issue of the Journal we are bring out our regular feature of tax companion. The members of my research team has devoted their valuable time in compiling the case Laws. Senior professional, who are part of the editorial board, were kind enough to accommodate us and take out time for the Journal from their busy schedule. I am grateful for their gesture I will fail in my duty if I don’t recognize the efforts of Advocate Neelam Jadhav who has been great support to me in bringing out this issue. I once again thank all the esteemed professionals for extending their co-operation.