ITAT Rejects Congress Party's Appeal To Exempt ₹199.15 Crore From Income Tax, Cites Belated Filing Of Return
The Income Tax Appellate Tribunal dismissed an appeal by the Indian National Congress seeking income tax exemption for the income of ₹199.15 crore during the assessment year 2018-19.The Tribunal rejected the party's claim for exemption on the ground that there was a violation of the conditions in Section 13A of the Income Tax Act. The returns were filed late, the ITAT noted. Calling for...
The Income Tax Appellate Tribunal dismissed an appeal by the Indian National Congress seeking income tax exemption for the income of ₹199.15 crore during the assessment year 2018-19.
The Tribunal rejected the party's claim for exemption on the ground that there was a violation of the conditions in Section 13A of the Income Tax Act. The returns were filed late, the ITAT noted. Calling for a strict interpretation of the exemption clause, the ITAT observed that "the moment there is violation of such a “due” date, section 13A 3rd proviso gets attracted, so as to result in denial of exemption to the political party concerned."
The Tribunal referred to the Delhi High Court's judgment which held that "no deduction can be allowed with respect to the expenditure incurred by the political party for any purpose whatsoever if it fails to comply with the basic requirements of section 13A of the Act."
The “due” date for the exemption was 31st October, 2018.
The Congress party filed its return on 02.02.2019 declaring "nil" income after claiming section 13A exemption of Rs.199,15,26,560/- The party contended that since the return was filed on 02.02.2019 much before the last date of filing of return of return on 31.03.2019 u/s 139(4) of the Act, the disallowance made and sustained is not in accordance with law.
The ITAT rejected the argument, stating that the return filed after the "due date" cannot be accepted.
The bench comprising Satbir Singh Godara (Judicial Member) and M Balaganesh(Accountant Member) observed in its order :
"All these assessee's vehement submissions fail to evoke our concurrence. This is for the precise reason that so far as an interpretation of such an exemption provision in a fiscal statute is concerned, not only the hon'ble jurisdiction high court's decision dated 23rd March, 2016 in the assessee's case itself for assessment year 1994-95 in para 95 has made it clear that section 13A has to be strictly complied with but also hon'ble apex court's landmark decision in Commissioner Vs. Dilip Kumar & Co. (2018) 9 SCC 1 (SC) (FB) has settled the issue that it is not liberal but stricter interpretation only in a taxing statute which has to be employed in an exemption claim. That being the case and in light of the fact that even section 139(4B) has stipulated filing of return within the “due” date i.e. required to be furnished u/s 139(1), we are of the considered view that the above former clause in fact restricts any further liberalism herein as clearly incorporating the expression of “due” date; and, therefore, the moment there is violation of such a “due” date, section 13A 3rd proviso gets attracted, so as to result in denial of exemption to the political party concerned. We thus conclude that the assessee's return filed on 02.02.2019 is not within the “due” date to make it eligible for the impugned exemption."
Since the return was rejected as belated, the Tribunal did not go into other arguments, saying that they had become academic.
The Congress party was represented by Senior Advocate PC Sen, Advocates Prasanna and N Bhalla, L.M. Garg, CA
The department was represented by Advocates Zoheb Hossain, Vipul Agrawal and Sanjeev Menon, Purvi Nanda, ACIT