By Geeta Jani, Dhishat B. Mehta, Chartered Accountants
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Part C — Tribunal and International Tax Decisions
21 Nicholas Applegate South East Asia Fund
Ltd. v. ADIT
(2009 TIOL 74 ITAT Mum-TM]
S. 139, 292B, Income-tax Act
A.Y. : 2001-02. Dated : 9-1-2009
Issue :
On facts, consolidated return filed after the date prescribed
in S. 139(1), held valid as in substance and in effect the relevant provision
was complied with.
Facts :
The assessee was a company incorporated in Mauritius under
the Protected Cells Companies Act. It had four Cells. For A.Y. 2001-02, it filed
separate returns of income of four Cells. These returns were filed on 30th
October 2001, i.e., within the time prescribed u/s.139(1) of Income-tax
Act. The assessee subsequently realised that being a single entity (company), it
was required to file consolidated return at entity level i.e., for all
four Cells. Accordingly, on 29th October 2002 it filed a consolidated return for
all four Cells.
The assessee had derived income from dividend (which was
claimed exempt u/s.10(33) of the Income-tax Act) and short-term capital loss,
which the AO had found in order. However, the AO issued show-cause notice to the
assessee to explain why consolidated return filed on 29th October 2002 should
not be considered as original return and four separate returns filed on 30th
October 2001 should not be considered invalid.
The assessee explained that it filed separate returns for
four Cells as it was of the view that the Cells had separate legal existence.
Further, the original returns of four Cells did not suffer from any defect
mentioned in S. 139(9) of the Income-tax Act and hence the subsequent
consolidated return filed on 29th October 2002 was only a revised return. The
AO, however, held that the earlier returns were invalid and only the subsequent
return was valid. Therefore, he did not allow carry forward of loss. The CIT(A)
upheld the order of the AO.
On account of differences in the views of Tribunal members,
the case was referred to the Third Member. The assessee put forth the following
propositions :
(i) Provisions of S. 139(1), S. 139(3) and S. 139(4) must
be harmoniously construed.
(ii) S. 139 is a machinery provision as against a fiscal
provision, and must be interpreted in a liberal and equitable manner.
(iii) The original returns filed by the Cells have only
been consolidated in the subsequent returns dated October 29, 2002 and as
observed by this Tribunal, there is no mala fide intention on the part
of the appellant in doing so.
(iv) Benefit u/s.139(5) cannot be denied on technical
grounds.
(v) The information contained in the revised return dated
October 29, 2002 is congruent to the information provided in the four separate
returns filed by the Cells and there is no variance whatsoever, hence there is
no loss of revenue. Further, information contained in the belated return
cannot be held as invalid so as to be overlooked by the Assessing Officer.
(vi) It is provided u/s.292B of the Income-tax Act that no
return of income furnished or made shall be invalid or shall be deemed to be
invalid merely by reason of any mistake, defect or omission in such return of
income, if such return of income is in substance and effect in conformity with
or according to the intent and purpose of this Act.
(vii) The ‘purpose’ of the Income-tax Act, as is evident
from S. 292B of the Income-tax Act, is to achieve/determine the correct total
income and when correct total income was given in four returns filed
simultaneously and later in the return consolidating figures were given, the
original four returns filed were valid.
The tax authorities contended that there was difference,
though minor, between the earlier four returns and the subsequent consolidated
return. Further, u/s.139(3) of the Income-tax Act, only a valid return can be
revised.
Held :
The Tribunal referred to the decisions in CIT v. Kulu
Valley Transport Co. P. Ltd., (1970) 77 ITR 518 (SC) and State Bank of
Patiala v. S. K. Sharma, (1996) 3 SCC 364 and held that as all the relevant
and correct information was given in prescribed time, the four Cells filing four
separate returns had complied in substance and in effect with the intent and
purpose of the Income-tax Act and that the subsequent consolidated return was
not revised return but mere consolidation of the four earlier returns.
Compilers note :
The issue whether a Protected Cell Company should file a
consolidated return or different returns for each cell was neither raised before
the Tribunal, nor was it examined by the Tribunal.
