The Tax Publishers

Income Tax--Return of Income

Recent Supreme Court Verdict on Filing Declaration Under Section 10B and Scope of Revised Returns

CA. Manoj Gupta

Recently in the case of PCIT v. Wipro Limited 2022 TaxPub(DT) 4593 (SC) an important issue came-up. In this case the assessee incurred loss but, in the original return, claimed deduction under Section 10B and did not opt for carry over of loss. Later, the assessee filed a revised return and claimed that loss be allowed to be carried over. For this purpose the assessee argued that filing of a declaration in terms of Section 10B opting out of Section 10B is declaratory and not mandatory. The Supreme Court held that for claiming the benefit under Section 10B(8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under Section 139(1) are to be satisfied and both are mandatorily to be complied with. In the process the Supreme Court also explained law regarding revised return and held that 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 assessee cannot be permitted to substitute the original return of income filed under Section 139(1) of the IT Act.

1. Relevant provisions

Section 10B(8) reads as under:

'10B(8) Notwithstanding anything contained in the foregoing provisions of this section, where the assessee, before the due date for furnishing the return of income under sub-section (1) of Section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years.'

2. Facts of the case in PCIT v. Wipro Limited 2022 TaxPub(DT) 4593 (SC)

The respondent-assessee was a 100% export-oriented unit and was engaged in the business of running a call centre and IT Enabled and Remote Processing Services. Assessee filed its return of income on 31.10.2001 for Assessment Year 2001-2002, declaring loss of Rs. 15,47,76,990 and claimed exemption under Section 10B of the IT Act. Along with the original return filed on 31-10-2001, the assessee annexed a note to the computation of income in which the assessee clearly stated that the company is a 100% export-oriented unit and entitled to claim exemption under Section 10B of the IT Act and therefore no loss is being carried forward. Thereafter, the assessee filed a declaration dated 24-10-2002 before the Assessing Officer (AO) stating that the assessee does not want to avail of the benefit under Section 10B of the IT Act for A.Y. 2001-02 as per Section 10B(8) of the IT Act. The assessee filed the revised return of income on 23-12-2002 wherein exemption under Section 10B of the IT Act was not claimed and the assessee claimed carry forward of losses.

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